Stoler v. PennyMac Loan Services, LLC

Filing 33

ORDER granting in part and denying in part 4 Motion by PennyMac Loan Services, LLC to Dismiss; directing that defendant's motion to dismiss is denied with respect to plaintiff's WVCCPA claims (Count I); and defendant's motion to dismiss is granted with respect to plaintiff's negligence claim (Count II), tortious interference with contract claim (Count III), and estoppel claim (Count IV). Signed by Judge John T. Copenhaver, Jr. on 2/19/2019. (cc: counsel of record; any unrepresented parties) (taq)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
JESSICA A. STOLER,
Plaintiff,
v.

Civil Action no. 2:18-cv-00988

PENNYMAC LOAN SERVICES, LLC,
Defendant.
MEMORANDUM OPINION AND ORDER
Pending is the defendant PennyMac Loan Services, LLC’s
(“PennyMac”) motion to dismiss, filed June 15, 2018.

The

plaintiff, Jessica A. Stoler, filed a response on July 13, 2018.
Briefing on the motion was thereafter stayed until the court’s
denial of the plaintiff’s motion to remand on December 6, 2018;
the defendant’s reply was subsequently filed on December 20,
2018.
I.

Background

This case involves the plaintiff’s April 2014
$109,693.00 Single Family Housing Guaranteed Loan Program
mortgage loan, serviced by defendant PennyMac.

Compl. at ¶ 4.

In February 2017, plaintiff began having difficulty affording
her monthly loan payments; she requested but was denied
assistance from PennyMac.

Id. at ¶¶ 7-8.

In May 2017,

plaintiff’s situation worsened when she lost her job; she again
requested assistance from PennyMac.

Id. at ¶ 9.

PennyMac then

provided plaintiff with a forbearance plan, allegedly with the
assurance that, at the end of it, her loan would be permanently
modified.

Id. at ¶ 10.
In November 2017, plaintiff became unable to make her

forbearance payments because her unemployment income expired.
Id. at ¶ 11.

She then contacted PennyMac several times over a

six-week period to inquire about permanent modification of her
loan.

Id. at ¶¶ 12-13.

PennyMac allegedly did not respond to

these inquiries until January, after it had already scheduled a
foreclosure sale for January 30, 2018.

Id. at ¶¶ 13, 15, 16.

PennyMac denied the plaintiff’s request because, according to
the language found in the complaint, it was “made within 37 days
of a scheduled foreclosure[,]” although the plaintiff claims
that the request was made far earlier than PennyMac represented.
Id. at ¶ 16.

By early January 2018, plaintiff regained

employment and was able to make her monthly mortgage payments
but could not afford the arrearage that had accumulated during
the prior months.

Id. at ¶ 14.

On January 25, 2018, plaintiff contacted PennyMac,
notifying it of alleged servicing violations and requesting that
future communications be directed to plaintiff’s counsel.
2

Id.

at ¶ 17.

Plaintiff accuses PennyMac of nonetheless continuing

to contact her directly to collect payment.

Id. at ¶ 18.

Plaintiff further accuses PennyMac of failing to put forth a
good faith effort to achieve a sustainable payment plan and
refusing to properly process her requests for loss mitigation.
Id. at ¶ 19.

Plaintiff asserts that she remains able to pay her

regular monthly payments but cannot afford the “accrued
arrears.”

Id. at ¶ 21.
Plaintiff filed this action in the Circuit Court of

Kanawha County on May 2, 2018, asserting four counts: Count I
alleges violations of the West Virginia Consumer Credit
Protection Act (“WVCCPA”), W. Va. Code §§ 46A-2-127 and -128;
Count II alleges negligence; Count III alleges tortious
interference with contract; and Count IV alleges estoppel.
PennyMac removed the action to this court on June 1,
2018, pursuant to the court’s diversity jurisdiction.

The

plaintiff’s motion to remand was denied.
II.

Governing Standard

Federal Rule of Civil Procedure 8(a)(2) requires that
a pleader provide “a short and plain statement of the claim
showing ... entitle[ment] to relief.”

Fed.R.Civ.P. 8(a)(2);

Erickson v. Pardus, 551 U.S. 89, 93 (2007).
3

Rule 12(b)(6)

correspondingly permits a defendant to challenge a complaint
when it “fail[s] to state a claim upon which relief can be
granted.”

Fed. R. Civ. P. 12(b)(6).

The required “short and

plain statement” must provide “‘fair notice of what the ...
claim is and the grounds upon which it rests.’”

Bell Atlantic

Corp. v. Twombly, 550 U.S. 544, 545 (2007) (quoting Conley v.
Gibson, 355 U.S. 41, 47 (1957), overruled on other grounds,
Twombly, 550 U.S. at 563).

In order 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.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(quoting Twombly, 550 U.S. at 570); see also Monroe v. City of
Charlottesville, 579 F.3d 380, 386 (4th Cir. 2009).

The court

must also “draw[ ] all reasonable ... inferences from th[e]
facts in the plaintiff's favor.”

Edwards v. City of Goldsboro,

178 F.3d 231, 244 (4th Cir. 1999).
III. Discussion
A. Count I: Violations of the WVCCPA
In Count I of the complaint, the plaintiff alleges
that the defendant used “fraudulent, deceptive, or misleading
representations or means to collect or attempt to collect [a
claim] or to obtain information concerning Plaintiff, in
violation of section 46A-2-127 of the West Virginia Code.”
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Compl. ¶ 24.

The complaint further alleges that the defendant

used “unfair or unconscionable means in efforts to collect a
debt, in violation of section 46A-2-128 of the West Virginia
code.”

Id. at ¶ 25.
W. Va. Code § 46A-2-127 states pertinently that “[n]o

debt collector shall use any fraudulent, deceptive or misleading
representation or means to collect or attempt to collect claims
or to obtain information concerning consumers.”
The defendant contends that Fed. R. Civ. P. 9(b)’s
heightened pleading standard, which requires that “[i]n alleging
fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake[,]” is applicable to
this claim because it sounds in fraud.

“[T]he determination of

whether [Rule 9(b)’s] heightened standards apply depends on the
complaint's factual allegations.”

Wamsley v. LifeNet Transplant

Servs. Inc., No. 2:10-CV-00990, 2011 WL 5520245, at *4 (S.D.W.
Va. Nov. 10, 2011) (citing Borsellino v. Goldman Sachs Grp.,
Inc., 477 F.3d 502, 507 (7th Cir.2007)).

In making this

determination, the court examines “whether the claim requires an
essential showing of fraud.”

Baltimore Cty. v. Cigna

Healthcare, 238 F. App'x 914, 921 (4th Cir. 2007).
The defendant provides no caselaw, nor has the court
found any, wherein a court has applied the 9(b) standard to this
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section of the WVCCPA.

Instead, this court has regularly

applied the Rule 8(a)(2) “short and plain statement” standard in
such instances.

See e.g., Ranson v. Bank of Am., N.A., No.

3:12-CV-5616, 2013 WL 1077093, at *7 (S.D.W. Va. Mar. 14, 2013)
(applying Rule 9(b) standard to common law fraud claim and Rule
8(a)(2) standard to WVCCPA claims, including § 46A-2-127),
Hanson v. Amerihome Mortg. Co., LLC, No. 2:17-CV-03691, 2017 WL
6626328, at *3 (S.D.W. Va. Dec. 28, 2017) (applying Rule 8(a)(2)
standard to WVCCPA claims, including § 46A-2-127), and McNeely
v. Wells Fargo Bank, N.A., No. 2:13-CV-25114, 2014 WL 7005598,
at *2 (S.D.W. Va. Dec. 10, 2014) (same).
The same is appropriate here.

§ 46A-2-127 of the

WVCCPA does not require an essential showing of common law
fraud.

Rather, common law claims have consistently remained

distinct and separate from WVCCPA claims.

See e.g., Pemberton

v. U.S. Bank, No. 5:11-CV-00630, 2012 WL 37113, at *3 (S.D.W.
Va. Jan. 5, 2012) (“this Court finds that the common law claims
must be supported by the particular facts of the case, and these
claims must be separate or distinct from the claims contained in
the [WVCCPA].”).

This is consistent with the purpose of the

WVCCPA, which is to broaden the protections available to
consumers beyond mere common law claims: “The legislative
history of the Act makes it clear that the purpose of creating

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the Act was because so many consumers failed to accomplish any
results at common law against creditors.”

Casillas v. Tuscarora

Land Co., 186 W. Va. 391, 394, 412 S.E.2d 792, 795 (1991).
Accordingly, the court applies the Rule 8(a)(2)
standard here, which the plaintiff has met.

The complaint

alleges, inter alia, that the defendant misrepresented its
reasons for denying Ms. Stoler’s request for loss mitigation
when it claimed that the request was made too near to a
foreclosure sale even though Ms. Stoler had in fact made the
request far earlier.

Compl. ¶ 17.

This misrepresentation, if

true, could support a claim under § 46A-2-127 for using
fraudulent, deceptive, or misleading representations to collect
a claim.

Accordingly, this claim survives.
The plaintiff’s second WVCCPA claim alleges that the

defendant used unfair or unconscionable means in efforts to
collect a debt, in violation of § 46A-2-128.

That section

states: “No debt collector may use unfair or unconscionable
means to collect or attempt to collect any claim[,]” and lists
six instances, (a)-(f), of conduct deemed to violate the
section, but does not limit its scope to those six.

W. Va. Code

§ 46A-2-128.
From the complaint, it appears that two events
possibly form the basis for this count: first, the defendant
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scheduling the foreclosure sale instead of responding to Ms.
Stoler’s requests for additional loss mitigation; and second,
the defendant’s contacts with Ms. Stoler individually after
learning she was represented by an attorney.
As for the first possible claim -- that PennyMac
ignored Ms. Stoler’s requests for additional loss mitigation
after she failed to make her forbearance plan payments and
instead scheduled foreclosure -- the court finds this to be a
plausible claim for relief.

See, e.g., Hanson v. Amerihome

Mortg. Co., LLC, at *5 (“the Hansons plead enough facts in their
other allegations that Amerihome scheduled the foreclosure sale
during the loss mitigation process and failed to advise them of
their appeal rights for a jury to find that Amerihome violated
this section of the statute.”).
As for the second, that PennyMac contacted Ms. Stoler
individually after it was advised that she was represented by
counsel, subsection (e) of the statute specifically provides
that “[a]ny communication with a consumer made more than three
business days after the debt collector receives written notice
from the consumer or his or her attorney that the consumer is
represented by an attorney specifically with regard to the
subject debt[,]” constitutes unfair or unconscionable conduct.
The subsection further provides:
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To be effective under this subsection, such notice
must clearly state the attorney's name, address and
telephone number and be sent by certified mail, return
receipt requested, to the debt collector's registered
agent[.] . . . Regular account statements provided to
the consumer and notices required to be provided to
the consumer pursuant to applicable law shall not
constitute prohibited communications under this
section[.]
W. Va. Code § 46A-2-128(e).

PennyMac faults the complaint for

not specifying the content of PennyMac’s correspondence with Ms.
Stoler or addressing the possibility that any written
correspondence was a regular account statement.

The complaint

does state, however, that the defendant contacted her, instead
of her attorney, “seeking to collect.”

Compl. ¶ 18.

Moreover,

“[i]t is not a requirement that the Complaint set forth each and
every fact known to Plaintiffs.”

Petty v. Countrywide Home

Loans, Inc., No. 3:12-CV-6677, 2013 WL 1837932, at *13 (S.D.W.
Va. May 1, 2013), disagreed with on other grounds by McFarland
v. Wells Fargo Bank, N.A., 810 F.3d 273, 282 (4th Cir. 2016).
Although the plaintiff has not set forth each fact giving rise
to this claim -- i.e. the content of PennyMac’s correspondence
and whether Ms. Stoler’s notice to PennyMac was sent by
certified mail, meeting all the requirements in subsection (e) - such detail is not necessary.

See e.g., id. (“Defendants

argue that the claim should be dismissed because the Complaint
does not identify the name and address of counsel. The Court

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soundly rejects this argument.”)

Drawing all reasonable

inferences in the plaintiff’s favor, as is required, this claim
survives.
Accordingly, the motion to dismiss is denied as to
Count I, alleging violations of the WVCCPA.
B. Count II: Negligence
The defendant seeks to dismiss Count II, alleging
negligence, as being barred by the economic loss doctrine.

That

doctrine provides that “absent a ‘special relationship’ between
the parties, a plaintiff ‘cannot maintain an action in tort for
an alleged breach of a contractual duty.’”

McNeely v. Wells

Fargo Bank, N.A., at *5 (quoting Lockhart v. Airco Heating &
Cooling, Inc., 211 W. Va. 609, 567 S.E.2d 619, 624 (W.Va.2002)).
The parties dispute whether PennyMac, a servicer but
not the owner of the loan, is in a contractual relationship with
the plaintiff.

PennyMac claims that it is in a contractual

relationship with the plaintiff because it is bound by the terms
of the loan contract.

The plaintiff, on the other hand, claims

that it is not, although its only support for such a contention
is, confusingly, that PennyMac claims not to be a party to the
contract: “according to Defendant, Defendant is not a party to
the contract[,]”

Compl. ¶ 28, and that “Defendant is not bound
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to the contract (as Defendant would certainly argue if
Plaintiffs asserted a breach of contract claim against it)[.]”
Plaintiff’s Response, ECF # 10 at 12.

Quite to the contrary,

the complaint does, in fact, seek to bind PennyMac to the
requirements of the loan contract, stating: “pursuant to the
requirements of Plaintiff’s RHA insured loan, Defendant owed a
duty to Plaintiff . . . [.]”

Compl. ¶ 27.

Nonetheless, because plaintiff’s negligence claim does
not differ in substance from her WVCCPA claims, Count II still
cannot survive without the existence of a special relationship,
even if no contractual relationship exists between the parties.
As this court has explained:
To be clear, even if the court assumes that Nationstar
was not party to the Deeds of Trust, as the plaintiffs
suggest in their Response, the negligence claim still
cannot survive without this special relationship. This
conclusion stems from the WVCCPA. While a plaintiff
may pursue common law claims alongside claims under
the WVCCPA, see W. Va. Code § 46A–2–101(3) (“Nothing
contained in this section shall be construed as
affecting any buyer's or lessee's right of action,
claim or defense which is otherwise provided for
[under] common law.”), the West Virginia Supreme Court
of Appeals has held that common law actions may be
maintained only to the extent that they exist
“separate from the Act.” Casillas v. Tuscarora Land
Co., 186 W.Va. 391, 412 S.E.2d 792, 795 (W.Va.1991).
McNeely v. Wells Fargo Bank, N.A., at *6.

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Here, the plaintiff’s negligence claim does not differ
in substance from her WVCCPA claims.

Rather, they both concern

the defendant’s alleged failure to adequately and properly
consider the plaintiff’s request for loss mitigation.

Indeed,

insofar as the defendant denied the plaintiff’s first request,
which does not appear to be the source of any claim, and granted
plaintiff’s second request, whereafter the plaintiff ceased
making payments, the plaintiff’s only possible claim for breach
of a duty must relate to the defendant’s failure to timely
respond to the third request and misrepresentation thereof,
which is covered in full by the WVCCPA claims.

The plaintiff

must therefore demonstrate the existence of a special
relationship, because the plaintiff has not shown that the
defendant owed her any duty apart from that which is imposed by
the WVCCPA.

See e.g., O'Brien v. Quicken Loans, Inc., No. 2:12-

CV-5138, 2013 WL 2319248, at *10 (S.D.W. Va. May 28, 2013) (“In
the absence of a special relationship, O'Brien has alleged no
duty apart from the WVCCPA.

Claims stemming from the violation

of those duties do not sound in tort, and Count V fails to state
a cognizable negligence claim.”).
“The existence of a special relationship will be
determined largely by the extent to which the particular
plaintiff is affected differently from society in general.”

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Glascock v. City Nat'l Bank of W. Va., 213 W.Va. 61, 66 (2002).
In the lender-borrower context, or, here, the servicer-borrower
context, a special relationship may exist where a lender
performs services not normally provided by a lender to a
borrower.

See id. at 67 (“[W]here a lender making a

construction loan to a borrower creates a special relationship
with the borrower by maintaining oversight of, or intervening
in, the construction process, that relationship brings with it a
duty to disclose any information that would be critical to the
integrity of the construction project.”).

The possession of

information unique to the lender can also indicate a special
relationship.

See id. (finding a special relationship where

“the bank possessed information of no interest to ‘society in
general,’ but of great interest to the [plaintiffs]”).
The plaintiff, in apparent anticipation of this
argument, states in the complaint that “Defendant servicer
engaged in significant communications and activities with
Plaintiff and the loan thereby creating a special relationship
with Plaintiff[.]”

Compl. ¶ 27.

The remainder of the complaint

does not support this contention, however, inasmuch as the
defendant performed only those services customarily provided by
a loan servicer to a borrower.

See e.g., McNeely v. Wells Fargo

Bank, N.A., at *6 (“Here, Nationstar assisted the plaintiffs in

13

applying for a loan modification, conducted the loan
modification review process, and handled the plaintiffs'
mortgage payments. These are services normally provided to a
borrower by a loan servicer.” (citations omitted)).
Accordingly, the motion is granted as to Count II and
that count is dismissed.
C. Count III: Tortious Interference with Contract
Count III in the complaint alleges tortious
interference with contract.

To assert a prima facie claim for

tortious interference with contract, a plaintiff must show: “(1)
existence of a contractual or business relationship or
expectancy; (2) an intentional act of interference by a party
outside that relationship or expectancy; (3) proof that the
interference caused the harm sustained; and (4) damages.”
Hatfield v. Health Mgmt. Assocs. of W. Virginia, 223 W. Va. 259,
267, (2008) (emphasis omitted).
Plaintiff states that PennyMac is not a party to the
contract, relying again on PennyMac’s supposed belief thereof:
“According to PennyMac, Massachusetts Mutual Life Insurance
Company c/o Barings LLC is the owner of the subject mortgage
loan and Defendant is not a party to the contract.”
33.

Compl. ¶

The defendant seeks to dismiss the plaintiff’s claim,
14

stating, inter alia, that PennyMac, even if not a party to the
contract, is an agent of a contracting party, and thus cannot
interfere with its principal’s contract.

The defendant is

correct in this regard.
“This Court has held that generally, an agent,
although not a party to the contract, is not liable for tortious
interference for interfering with the contract of its
principal.”

Hanson v. Amerihome Mortg. Co., LLC, at *7 (citing

Cavcon, Inc. v. Endress Hauser, Inc., 557 F. Supp. 2d 706, 725
(S.D. W. Va. 2008).

As the court found in Hanson, a loan

servicer, as an agent of the principal loan holder, cannot be
liable for tortious interference with its principal’s contract
unless “the agent was acting in its own interest and not in the
interest of the principal.”

Id. (citing Parker v. BAC Home

Loans Servicing LP, 831 F. Supp. 2d 88 (D.D.C. 2011)).
Accordingly, PennyMac, as an agent of Massachusetts Mutual Life
Insurance Company, cannot be held liable for tortious
interference with its principal’s contract unless it was acting
outside the scope of its agency, of which no suggestion is made
here.

Accordingly, the motion is granted as to Count III and

that count is dismissed.

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D. Count IV: Estoppel
Lastly, the defendant seeks to dismiss the plaintiff’s
final count, which seeks estoppel, a viable cause of action in
West Virginia.

See, e.g., Folio v. City of Clarksburg, 655

S.E.2d 143, 148 (W.Va.2007) (per curiam).

As the defendant

notes, this court has previously held claims for equitable
estoppel to the heightened 9(b) pleading standard.

See

Holtzapfel v. Wells Fargo Bank, N.A., No. 2:12-CV-00937, 2013 WL
1337283, at *6 (S.D.W. Va. Mar. 29, 2013) (“In addition to fraud
and mistake, causes of action arising from ‘inequitable
conduct,’ such as equitable estoppel, have been held subject to
the heightened pleading standard of Rule 9(b).” (citing Stowe
Woodward, L.L.C. v. Sensor Prods., Inc., 230 F.R.D. 463, 465 &
n. 1 (W.D.Va.2005), Guerrero v. Gates, 442 F.3d 697, 706–07 (9th
Cir.2006), and Vess v. Ciba–Geigy Corp. USA, 317 F.3d 1097,
1103–04 (9th Cir.2003))).
To satisfy the heightened standard, a plaintiff must,
“at a minimum, describe ‘the time, place, and contents of the
false representations, as well as the identity of the person
making the misrepresentation and what he obtained thereby.’”
United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525
F.3d 370, 379 (4th Cir.2008) (quoting Harrison v. Westinghouse
Savannah River Co., 176 F.3d 776, 784 (4th Cir.1999)).
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“A court

should hesitate to dismiss a complaint under Rule 9(b) if the
court is satisfied (1) that the defendant has been made aware of
the particular circumstances for which she will have to prepare
a defense at trial, and (2) that plaintiff has substantial
prediscovery evidence of those facts.”
784.

Harrison, 176 F.3d at

The complaint may suffice if it alleges a general time of

year during which the misrepresentations are said to have
occurred and refers generally to the organization from which
they emanated.

See McCauley v. Home Loan Inv. Bank, F.S.B., 710

F.3d 551, 559 (4th Cir. 2013).
The plaintiff’s claim for estoppel alleges that
“Defendant’s agents represented to Plaintiff that Defendant
would provide assistance to keep Plaintiff and her family in
their home rather than pursue foreclosure.”

Compl. ¶ 38.

This

is the first mention of any such representation, however, and
there is no reference to when it occurred.

The closest

reference to any such misrepresentation in the complaint is when
“PennyMac provided Plaintiff with a forbearance plan with the
assurance that at the end of the forbearance plan, her loan
would be permanently modified.”

Id. at ¶ 10.

This is a

different representation, however, than the one alleged in Count
IV -- that the defendant would provide assistance to the

17

plaintiff rather than pursue foreclosure.

It is unclear when,

even generally, that representation occurred.
Moreover, even if the complaint met the 9(b)
standards, it nonetheless fails to state a claim on this count.
To maintain a claim for estoppel in West Virginia, a plaintiff
must show:
[(1)] a false representation or a concealment of
material facts; [(2)] it must have been made with
knowledge, actual or constructive of the facts; [(3)]
the party to whom it was made must have been without
knowledge or the means of knowledge of the real facts;
[(4)] it must have been made with the intention that
it should be acted on; and [(5)] the party to whom it
was made must have relied on or acted on it to his
prejudice.
Syl. Pt. 3, Folio v. City of Clarksburg, 655 S.E.2d 143
(W.Va.2007) (quoting Syl. Pt. 6, Stuart v. Lake Washington
Realty Corp., 92 S.E.2d 891 (W.Va.1956)).

The complaint alleges

that “Plaintiff had a reasonable expectation that Defendant
would provide her with assistance of some form and not proceed
with foreclosure on her home, as promised.”

Compl. ¶ 41.

It is

undisputed, however, that the plaintiff was, in fact, receiving
assistance from PennyMac, through the forbearance plan, at the
time the foreclosure sale was scheduled.

It is further

undisputed that the plaintiff ceased making payments under the
forbearance plan before the foreclosure sale was scheduled.
Although she made additional requests for assistance, it is not
18

alleged, and indeed common sense would not suggest, that
PennyMac represented to the plaintiff that it would provide
assistance and not pursue foreclosure in all circumstances -even if the plaintiff became unable to make any payments.
Accordingly, insofar as the defendant represented that it would
provide assistance to the plaintiff, and insofar as the
defendant provided such assistance before pursuing foreclosure,
the plaintiff cannot show that any false representation was made
in that regard.
Accordingly, the motion is granted as to Count IV and
that count is dismissed.
IV.

Conclusion

For the reasons set forth above, the court accordingly
ORDERS that:
1.

Defendant’s motion to dismiss be, and it hereby

is, denied with respect to plaintiff’s WVCCPA claims (Count I);
and
2.

Defendant’s motion to dismiss be, and it hereby

is, granted with respect to plaintiff’s negligence claim (Count
II), tortious interference with contract claim (Count III), and
estoppel claim (Count IV).

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The Clerk is directed to transmit copies of this order
to all counsel of record and to any unrepresented parties.
ENTER: February 19, 2019

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