Muhammad v. PNC Bank, N.A.

Filing 17

MEMORANDUM OPINION & ORDER denying 6 MOTION to Dismiss Complaint Attached to 1 Notice of Removal. Signed by Judge Joseph R. Goodwin on 2/29/2016. (cc: counsel of record; any unrepresented party) (tmh)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION

JAMES A. MUHAMMAD,
Plaintiff,
v.

CIVIL ACTION NO. 2:15-cv-16190

PNC BANK, N.A.,
Defendant.
MEMORANDUM OPINION & ORDER
Pending before the court is the Motion to Dismiss [ECF No. 6] filed by the
defendant, PNC Bank, N.A. The plaintiff, James A. Muhammad, has responded to
and the defendant has replied in support of the Motion, making the Motion ripe for
adjudication. Resp. [ECF No. 12]; Reply [ECF No. 14]. For the reasons stated below,
the court DENIES the Motion.
I.

Background
The plaintiff has a “home-secured loan” with the defendant. Compl. ¶ 4 [ECF

No. 1-1]. Although neither the plaintiff’s “Note nor . . . Deed of Trust provide for the
assessment of speed pay fees or document request fees,” the defendant charged the
plaintiff “numerous speed pay fees” and “several document fees.” Id. ¶¶ 5–6, 9; see

also id. ¶ 7, 10 (alleging the plaintiff was charged a $12 speed pay fee in November
2013 and a $5 document fee in December 2014). Further, neither fee “reflect[s] the
actual cost of the service.” Id. ¶ 8; accord id. ¶ 11. The assessment of these fees,

according to the plaintiff, violates the West Virginia Consumer Credit & Protection
Act (“Credit & Protection Act”).
Speed pay fees—which are the subject of the Motion—are incurred when a
borrower, like the plaintiff, elects to use the defendant’s speed pay service. The speed
pay service is offered “[a]s a convenience to customers” and “allow[s] borrowers to
have their payment immediately credited to their mortgage amount.” Mem. Supp.
Mot. Dismiss 2 [ECF No. 7].
On August 31, 2015, the plaintiff, on behalf of himself and all other similarly
situated individuals, filed his Complaint in the Circuit Court of Kanawha County,
West Virginia. The plaintiff alleges three causes of action. In Count One, the plaintiff
alleges violations of section 46A-2-128(d) of the West Virginia Code in relation to the
speed pay fees. The plaintiff claims the speed pay fees violate section 46A-2-128(d)
because the fees, which are incidental to the plaintiff’s principal obligation, are not
authorized by agreement or by statute. In Count Two, the plaintiff alleges violations
of section 46A-2-128(d) in relation to the document fees. The plaintiff claims the
document fees violate section 46A-2-128(d) because the fees, which are incidental to
the plaintiff’s principal obligation, are not authorized by the agreement or by statute.
In Count Three, the plaintiff alleges violations of section 46A-2-127 of the West
Virginia Code. The plaintiff claims the defendant misrepresented the amount of a
claim “[b]y assessing or collecting speed pay and document fees that it had no right
to assess.” Compl. ¶ 29.

2

This case was removed to the United States District Court for the Southern
District of West Virginia on December 16, 2015. Notice of Removal [ECF No. 1].
Subsequently, the defendant filed its Motion requesting dismissal of Count One in its
entirety and of Count Three insofar as it relates to the speed pay fees.
II.

Jurisdiction
The court has jurisdiction pursuant to 28 U.S.C. § 1332(d) because this class

action involves more than 100 individuals, the amount in controversy exceeds $5
million, and the proposed class (i.e., West Virginia residents) and the defendant (i.e.,
a citizen of Delaware) are diverse. 28 U.S.C. § 1332(d)(2); see also Notice of Removal
5–12 (noting the class includes at least 1169 individuals, indicating the citizenship of
the parties, and discussing the amount in controversy).
III.

Legal Standard

A pleading must contain a “short and plain statement of the claim showing
that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). This standard “does not
require ‘detailed factual allegations,’ but it demands more than an unadorned, thedefendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To survive a
motion to dismiss, “a complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting Twombly, 550
U.S. at 570). A facially plausible claim is one accompanied by facts allowing the court
to draw the reasonable inference that the defendant is liable, facts moving the claim
beyond the realm of mere possibility. Id. Mere “labels and conclusions” or “formulaic

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recitation[s] of the elements of a cause of action” are insufficient. Twombly, 550 U.S.
at 555.1
IV.

Discussion
The Motion focuses on the speed pay fees assessed by the defendant and the

two counts of the Complaint concerning the assessment of these fees. See Compl. ¶¶
17–22, 28–29 (alleging the defendant assessed the speed pay fees in violation of
section 46A-2-128(d) and the defendant, by assessing the speed pay fees,
misrepresented a claim in violation of section 46A-2-127). The defendant argues these
claims must be dismissed because they are insufficiently pled.2
The defendant argues that the plaintiff “fails to describe the charge or any of
the circumstances associated with its application” and “conclud[es] the fee is
incidental to the principal obligation.” Mem. Supp. Mot. Dismiss 3. The heart of the
defendant’s Motion is the defendant’s contention that, based on the allegations of the
Complaint, the speed pay fees are not incidental to the principal obligation and,
therefore, are not assessed in violation of section 46A-2-128(d). As a result, according
to the defendant, the plaintiff’s claims related to the speed pay fees should be
dismissed. The court disagrees with the defendant, and the court concludes the
factual allegations regarding the speed pay fees are sufficient to allege a violation of
section 46A-2-128(d).

While the legal questions presented seem readily capable of resolution, a motion to dismiss merely
tests the legal sufficiency of the pleading and is not, therefore, the proper mechanism for final
resolution of these matters.
1

The defendant’s argument that the plaintiff’s section 46A-2-127 claim should be dismissed insofar as
it relates to the speed pay fees is wholly dependent upon dismissal of the plaintiff’s section 46A-2128(d) claim related to the speed pay fees (i.e., Count One of the Complaint).

2

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Section 46A-2-128(d) prohibits “[t]he collection of or the attempt to collect any
interest or other charge, fee[,] or expense incidental to the principal obligation unless
. . . expressly authorized by the agreement creating or modifying the obligation and
by statute or regulation.” W. Va. Code § 46A-2-128(d). To fall within the scope of this
provision, the speed pay fees must be incidental to the plaintiff’s principal obligation
(i.e., the plaintiff’s loan). Even though neither the Credit & Protection Act nor the
Supreme Court of Appeals of West Virginia have defined “incidental” for the purposes
of this section, the Supreme Court of Appeals of West Virginia “has consistently
stated that the [Credit & Protection Act] is to be given a broad and liberal
construction.” Bourne v. Mapother & Mapother, P.S.C., 998 F. Supp. 2d 495, 500 (S.D.
W. Va. 2014) (citing State ex rel. McGraw v. Scott Runyan Pontiac-Buick, Inc., 461
S.E.2d 516, 523 (1995)).
In an attempt to show that assessing the speed pay fees cannot give rise to a
claim under section 46A-2-128(d), the defendant directs the court to several cases
concerning fees and loans. Mem. Supp. Mot. Dismiss 5–9 (discussing, for example,

Chatman v. Fairbanks Capital Corp., No. 02-c-665, 2002 WL 1338492 (N.D. Ill. June
18, 2002); Cappellini v. Mellon Mortg. Co., 991 F. Supp. 31 (D. Mass. 1997); Stone v.

Mellon Mortg. Co., 771 So. 2d 451 (Ala. 2000)). The court finds these cases of little
persuasive value because these cases do not concern whether the fees at issue were
incidental to the obligation at issue for the purposes of a consumer protection statute.
Instead, these cases concern whether charging the fees constituted a breach of

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contract. E.g., Chatman, 2002 WL 1338492, at *3 (“Plaintiff has failed to state a legal
claim for a breach of contract regarding ‘speed pay’ fees.”).
In a case more analogous than those cited by the defendant, the Eastern
District of New York concluded processing fees were incidental to the primary
obligation for purposes of the Fair Debt Collection Practices Act.3 Quinteros v. MBI

Assocs., Inc., 999 F. Supp. 2d 434, 439 (E.D.N.Y. 2014). In Quinteros, the plaintiff
alleged—among other things—the defendant violated 15 U.S.C. § 1692f(1) by
assessing processing fees related to the method of payment, which were incidental to
the principal obligation but not authorized by agreement or law. In part, the
defendant argued the processing fees were not incidental because the fees had
“nothing to do with the amount of the underlying debt or transaction” and were,
instead, “the cost of doing business.” Id.
The Quinteros court found the defendant’s arguments unavailing. Considering
the remedial nature of the Fair Debt Collection Practices Act, the court concluded the
defendant’s narrow construction of “incidental” was without any legal basis.

Quinteros, 999 F. Supp. 2d at 439 (noting the Fair Debt Collection Practices Act “is a
remedial statute which should be liberally construed” (quoting Harrison v. NBD Inc.,
968 F. Supp. 837, 844 (E.D.N.Y. 1997))). “Indeed,” the court noted, “courts in the

3 The relevant provisions of the Fair Debt Collection Practices Act and the Credit & Protection Act use
similar language. Compare 15 U.S.C. § 1692f(1) (prohibiting “[t]he collection of any amount (including
any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is
expressly authorized by the agreement creating the debt or permitted by law”), with W. Va. Code §
46A-2-128(d) (prohibiting “[t]he collection of or the attempt to collect any interest or other charge, fee[,]
or expense incidental to the principal obligation unless . . . expressly authorized by the agreement
creating or modifying the obligation and by statute or regulation”). Considering the similar language,
cases interpreting the Fair Debt Collection Practices Act provide persuasive authority.

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Second Circuit have applied § 1652f(1) to processing or transaction fees similar to the
one at issue here, even though those fees were not penalties or connected to the
underlying debt or the amount of principal owed.” Id. (citing Tuttle v. Equifax Check,
190 F.3d 9, 11, 15 (2d Cir. 1999); Shami v. National Enter. Sys., No. 09-cv-722, 2010
WL 3824151, at *2–4 (E.D.N.Y. Sept. 23, 2010)).
In this case, the speed pay fees—like the fees at issue in Quiteros—are
processing or transaction fees associated with the primary obligation. Based on the
allegations and reasonable inferences drawn therefrom, the speed pay fees are paid
to expedite crediting of payment on the principal obligation. The plaintiff was charged
these fees in connection with his loan. These facts are enough to allege the speed pay
fees were incidental to the loan. Cf. Incidental, New Oxford Am. Dictionary (3d ed.
2010) (defining “incidental” as “accompanying but not a major part of something” and
“occurring by chance in connection with something else”); Webster’s New Dictionary
of Synonyms 11 (1978) (noting the term “typically suggests a real and often a designed
relationship, but one which is secondary and nonessential”). As a result, these facts
are enough to state a claim for violations of section 46A-2-128(d).
Accordingly, the Complaint contains allegations sufficient to state a claim
under section 46A-2-128(d) because it alleges facts showing the speed pay fees were
incidental to the plaintiff’s loan. The plaintiff’s claim is not subject to dismissal, and
the court DENIES the Motion.
V.

Conclusion
The court DENIES the Motion to Dismiss [ECF No. 6].

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The court DIRECTS the Clerk to send a copy of this Memorandum Opinion &
Order to counsel of record and any unrepresented party.

ENTER:

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February 29, 2016