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Shedd v. Wells Fargo Home Mortgage, Inc.

United States District Court, S.D. Alabama, Southern Division

November 17, 2014

GEORGE P. SHEDD, JR., al. Plaintiffs.
v.
WELLS FARGO HOME MORTGAGE, INC., et al., Defendants.

ORDER

CHARLES R. BUTLER, Jr., Senior District Judge.

This matter is before the Court on a Renewed Motion to Dismiss filed by Defendants Wells Fargo Home Mortgage, Inc. and Monument Street Funding, II, LLC seeking dismissal of various counts of the First Amended Complaint ("the Amended Complaint") for failure to state a claim upon which relief can be granted and supporting brief. (Docs. 24 & 25.) Plaintiffs have filed a brief in response. (Doc. 27.) As discussed below, the Court finds that some counts are due to be dismissed and others are not.

Procedural Background

On May 9, 2014, Plaintiffs George P. Shedd, Jr. and Pamela J. Shedd ("the Shedds") filed a complaint in the Circuit Court of Mobile, Alabama against defendants Wells Fargo Home Mortgage, Inc. ("Wells Fargo"), Monument Street Funding, II, LLC ("Monument"), and Barclays Capital Real Estate, Inc. ("Barclays"). The complaint asserted sought various state law causes of action and ought damages and injunctive relief against the Defendants in connection with the Shedds' home mortgage on property located in Mobile, Alabama. The Defendants removed the action to this Court asserting removal jurisdiction based on diversity of citizenship. Shortly after removal all Defendants filed motions to dismiss the complaint. Plaintiffs responded with an amended complaint, which expanded the factual allegations and added several causes of action. Defendants' renewed motions to dismiss followed.

The Amended Complaint

The First Amended Complaint ("the Amended Complaint") is based on events related to the servicing of the Shedds' mortgage by the Defendants. In 2001, the Shedds signed a promissory note and executed a mortgage, secured by their residence in Mobile, Alabama, to The Mortgage Outlet. Barclays serviced the loan pursuant to a contract with The Mortgage Company. Barclays continued to service the loan after the loan and mortgage were assigned to Monument, which is owned by Wells Fargo, in 2007. In 2008, the Shedds filed a Chapter 11 plan of reorganization in the United States Bankruptcy Court for the Southern District of Alabama. Barclays, the loan servicer, represented to the bankruptcy court that it was the creditor and sought a relief from the automatic stay. In an order dated April 25, 2008, the bankruptcy court "noted that Barclays and Plaintiffs had entered into an adequate protection agreement" and that "Plaintiffs would pay Barclays their regular mortgage payment plus an additional $306.62 monthly, beginning with the April 2008 payment, and upon confirmation of the Plan of Reorganization, the terms of the confirmed plan shall control, ' including the additional payment to be made HomeEq for purposes of paying out the pre-petition arrearage and charges.'" (Am. Compl. ¶ 7, Doc 17.) The bankruptcy court ultimately confirmed the reorganization plan, which required the Shedds to pay the additional $306.62 for 60 months to satisfy the pre-petition arrearage of $16, 500 in full.

The Shedds began paying the $306.62 as required, and continued to do so, but Barclays (and Monument) failed to apply the payments to the pre-petition arrearage as agreed. In September 2008, Barclays notified the Shedds the loan was in default, accelerated the debt and scheduled a foreclosure. "Throughout 2009 and in 2010... Barclays continued to... wrongfully initiat[e] foreclosure proceedings; misallocate[e] payments [or refuse] payments... fail[] to properly credit mortgage interest, [incorrectly] report[ed] Plaintiffs to credit reporting agencies as delinquent. ( Id. ¶ 9(M).) Also, in 2009 and in 2010, "Barclays... wrongfully disburs[ed] $3, 576.3 for hazard insurance' to unknown third parties, in violation of [the loan agreement] and fail[ed] to notify Plaintiffs" that it had done so. ( Id. ¶ 9(N).)

In September 2010, Wells Fargo took over as servicing agent for Monument, but the same problems continued. The loan was placed in foreclosure, payments were misapplied, the Shedds were reported delinquent to credit reporting agencies, mortgage interest was underreported on IRS Form 1098 for tax years 2010-13. In addition, Wells Fargo "force-placed insurance... each year" even though the Shedds already had hazard insurance and had notified Wells Fargo of that fact. (¶ 17(F).)

Based on these facts, the Shedds have asserted the following claims:

Count Cause of Action Defendants One Breach of Contract All Two Breach Covenant of Good All Faith/Fair Dealing Three Breach of Fiduciary Duty All Four Negligence All Five Wantonness Wells Fargo & Monument Six Fraud All Seven Promissory Fraud All Eight Fraudulent All Suppression/Concealment Nine Unconscionability All Ten Unjust Enrichment All Eleven Conversion All Twelve Injunctive Relief All Thirteen Real Estate Settlement Wells Fargo & Monument Procedures Act, 12 U.S.C. § 2601 (RESPA) violation (Escrow Payments) Fourteen RESPA violation (Error Wells Fargo & Monument Resolution/Info Requests) Fifteen RESPA violation (Force-Placed Wells Fargo & Monument Hazard Insurance) Sixteen Truth in Lending Act, 15 Wells Fargo & Monument U.S.C. § 1601 (TILA) & Regulation Z violation (Payment Crediting) Seventeen TILA/Regulation Z Wells Fargo & Monument violation (Periodic Statements) Eighteen RESPA Violation (Loss Wells Fargo & Monument Mitigation)

Issues Raised

Wells Fargo and Monument (collectively, "the Defendants"), seek dismissal of Counts Two through Ten, Thirteen and Count Eighteen in their entirety and portions of Counts Thirteen through Fifteen. Below, the Court sets forth the applicable Standard of Review before addressing each of these claims.standard of review

Standard of Review

A complaint must "set forth a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the Supreme Court set forth the parameters of a well-pleaded complaint. A claim for relief "must set forth enough factual matter (taken as true) to suggest [the required elements of a cause of action]." Id. at 556; see also Watts v. Florida Int'l University, 495 F.3d 1289, 1295 (11th Cir. 2007) (applying Twombly ). Furthermore, a complaint must "provide the defendant with fair notice of the factual grounds on which the complaint rests." Jackson v. Bellsouth Telecommc'ns, Inc., 372 F.3d 1250, 1271 (11th Cir. 2004).

In Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937 (2009), the Supreme Court further refined the threshold ...


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