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Boler v. Bank of America, N.A.

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

December 22, 2017

PHILIP BOLER, Plaintiff,
v.
BANK OF AMERICA, N.A. and SPECIALIZED LOAN SERVICING LLC, Defendants.

          MEMORANDUM OPINION

          JOHN E. OTT, CHIEF UNITED STATES MAGISTRATE JUDGE

         This case is before the Court on the Defendants' motions to dismiss plaintiff Philip Boler's amended complaint. The case arises out of the Defendants' alleged improper servicing of Boler's mortgage loan. In his amended complaint, Boler alleges that the Defendants violated the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq., breached the terms of his note and mortgage, and committed a variety of state law torts. (Doc. 12).[1] Defendant Bank of America, N.A. (“BANA”) has moved for dismissal of all of Boler's claims, while defendant Specialized Loan Servicing LLC (“SLS”) has moved for dismissal of all the claims except for the RESPA claim. (Docs. 18 & 21). For the reasons discussed below, BANA's motion to dismiss will be granted in part and denied in part and SLS's motion will be granted in its entirety.

         BACKGROUND

         Boler initiated this action against BANA and SLS in the Circuit Court of Jefferson County, Alabama. In his original complaint, Boler alleged that he owned a house secured by a mortgage and that “at some point” in time BANA and SLS began servicing his mortgage loan. (Doc. 1-1, ¶¶ 7-8). He based his complaint on three general sets of allegations. First, Boler alleged that he suffered a loss on his house and that his insurer paid the insurance proceeds, which were to be used to repair the house, to SLS. According to Boler, SLS refused to give him the insurance money for many months, which rendered him unable to repair the house and ultimately resulted in its demolition by the City of Birmingham. (Id., ¶¶ 9-14). Second, Boler alleged that he sent numerous letters to the Defendants seeking loan servicing information and requesting the Defendants to fix servicing errors, but the Defendants failed to properly acknowledge and respond to the letters.[2] (Id., ¶¶ 18-31). Third, Boler alleged that the Defendants sent him false monthly mortgage statements and threatened foreclosure and other “illegal” collection activities. (Id., ¶¶ 32-39). He asserted claims for violations of RESPA, breach of contract, conversion, negligent/wanton/intentional hiring and supervision of incompetent debt collectors, wanton conduct, and invasion of privacy. His conversion claim was asserted against SLS; all of his other claims were asserted against both Defendants.

         The Defendants removed the action to this court and then filed separate motions to dismiss the complaint. (Docs. 6 & 7). In response, Boler filed an amended complaint that amplifies some of his allegations and revises others. (Doc. 12). In particular, the amended complaint adds the allegation that BANA and SLS are both parties to his note and mortgage, the “contracts” they allegedly breached. (Id., ¶¶ 8-10, 99). The amended complaint also alleges that BANA and SLS “have acted at all relevant times as a servicer on this loan and discovery will reveal which entity at which time was a master servicer and which entity was a sub servicer ….” (Id., ¶ 13).

         In contrast to his initial complaint, Boler's amended complaint alleges that “Defendants”-not just SLS-received the insurance money that was to be used to repair his house and that “Defendants” had an obligation to transmit the money to him but refused to do so for many months. (Doc. 12, ¶¶ 16-21). As before, Boler alleges that he was unable to repair the house without the insurance money and that the house was ultimately demolished by the City of Birmingham due to the lack of repairs. (Id., ¶¶ 23-25). In a footnote, Boler asserts that it is “unclear if it was only Defendant SLS acting alone or if Defendant [BANA] was also involved as a servicer (master or sub) … so both Defendants are alleged to have been involved [in] and responsible for this misconduct.” (Id., n.2).

         Boler's amended complaint also includes, as exhibits, copies of the letters he claims he sent to SLS and BANA, including two letters he allegedly sent to BANA on March 8, 2016, and two letters he allegedly sent to BANA on June 10, 2016. (Doc. 12, Exhibits A-G). In keeping with his original complaint, Boler alleges that SLS and BANA failed to timely and/or substantively respond to his letters. (Id., ¶¶ 46-82).

         Similar to his initial complaint, Boler's amended complaint alleges that the Defendants sent him inaccurate monthly mortgage statements and threatened foreclosure and other “illegal” collection activities. (Doc. 12, ¶¶ 45, 85-88). The amended complaint also adds the specific allegation that on December 22, 2014, “agents and attorneys” for the Defendants told the City of Birmingham that his property had been foreclosed when in fact it had not. (Id., ¶¶ 29-30).

         Boler's amended complaint contains eight claims: violations of RESPA (Count I); breach of contract (Count II); conversion (Count III); negligent hiring, training and supervision of incompetent debt collectors (Count IV); wanton hiring, training and supervision of incompetent debt collectors (Count V); intentional hiring, training and supervision of incompetent debt collectors (Count VI); negligent and wanton conduct (Count VII); and invasion of privacy (Count VIII). All of the claims, including the conversion claim, are asserted against both BANA and SLS.

         As before, the Defendants have filed motions to dismiss Boler's amended complaint. BANA has moved for dismissal of all of Boler's claims. (Doc. 18). SLS has moved for dismissal of Boler's state law claims, but not his RESPA claim. (Doc. 21). The motions have been fully briefed and are ripe for decision. Because the motions raise many similar arguments, the Court will consider both motions together.

         STANDARD OF REVIEW

         Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes a motion to dismiss an action on the ground that the allegations in the complaint fail to state a claim upon which relief can be granted. On such a motion, the “issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.” Little v. City of North Miami, 805 F.2d 962, 965 (11th Cir. 1986) (quoting Scheur v. Rhodes, 416 U.S. 232, 236 (1974)) (internal quotation marks omitted). In considering a motion to dismiss, the court assumes the factual allegations in the complaint are true and gives the plaintiff the benefit of all reasonable factual inferences. Hazewood v. Foundation Financial Group, LLC, 551 F.3d 1223, 1224 (11th Cir. 2008) (per curiam).

         Rule 12(b)(6) is read in light of Rule 8(a)(2), which requires “a short and plain statement of the claim showing that the pleader is entitled to relief, ” in order to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555(2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)) (internal quotation marks omitted). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (citations, brackets, and internal quotations omitted). “Factual allegations must be enough to raise a right to relief above the speculative level . . . .” Id. Thus, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face, '” i.e., its “factual content . . . allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citations omitted). “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 557).

         ANALYSIS

         1. Boler's RESPA claim against BANA

         In Count I of his amended complaint, Boler alleges that the Defendants violated RESPA by failing to acknowledge receipt of his notice-of-error and request-for-information letters in a timely manner, and by failing to provide him with timely substantive responses to his letters. (Doc. 12, ¶¶ 93-95). Although his RESPA claim is asserted against both Defendants, only BANA has moved for dismissal of this claim.

         BANA first argues that Boler's RESPA claim should be dismissed because he has “fail[ed] to allege that BANA, and not SLS, was the servicer of [his] loan when he sent the March 8 and June 10 [2016] letters to BANA.” (Doc. 18 at 7). Under RESPA, a “servicer” is “the person responsible for servicing of a loan (including the person who makes or holds a loan if such person also services the loan).” 12 U.S.C. § 2605(i)(2). Here, Boler has expressly alleged in his amended complaint that BANA is a “servicer” under RESPA; that BANA and SLS acted “at all relevant times” as a “servicer” for his loan; and that “each Defendant (individually and jointly) has always acted as a servicer” for the loan. (Doc. 12, ¶¶ 4, 13). In addition, the first letter Boler allegedly sent to BANA on March 8, 2016, requested a copy of the “complete servicing file” for his loan, and the follow-up letter Boler allegedly sent to BANA on June 10, 2016, confirms that BANA sent him the servicing file on March 22, 2016, as requested. (Id., Ex. D at 89, Ex. G at 111). The Court is satisfied that Boler has sufficiently alleged that BANA was a servicer of his loan at the time he sent his letters to BANA in March and June 2016.

         BANA also argues Boler's RESPA claim should be dismissed because he has “fail[ed] to establish that any of the letters [he sent to BANA] constitutes a QWR [qualified written request] relating to the servicing of his loan.” (Doc. 18 at 7). The “servicing” of a loan consists of “receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan, including amounts for escrow accounts …, and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the loan.” 12 U.S.C. § 2605(i)(3). A “qualified written request” is written correspondence to the servicer that “(i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and (ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.” 12 U.S.C. § 2605(e)(1)(B). BANA argues that “none of [Boler's letters to BANA] constitutes a QWR because they do not relate to [Boler's] periodic payments of interest and principal … [and] do not relate to the servicing of [his] loan and cannot form the basis” of his RESPA claim. (Doc. 18 at 7).

         BANA's argument ignores Regulation X, RESPA's implementing regulation. 12 C.F.R. § 1024 (2015). As implemented by Regulation X, RESPA “allows borrowers to notify mortgage servicers of possible account errors.” Nunez v. J.P. Morgan Chase Bank, N.A., 648 F. App'x 905, 907 (11th Cir. 2016)[3] (citing 12 C.F.R. § 1024.35). “A qualified written request that asserts an error relating to the servicing of a mortgage loan is a notice of error” for purposes of Regulation X. 12 C.F.R. § 1024.35(a). However, the “[s]cope of error resolution” includes a variety of categories of covered errors, including “[i]mposition of a fee or charge that the servicer lacks a reasonable basis to impose upon the borrower” and “[a]ny other error relating to the servicing of a borrower's mortgage loan.” 12 C.F.R. § 1024.35(b); see Nunez, 648 F. App'x at 907 (“Account errors are broadly defined by § 1024.35(b)”). Once a servicer has been properly notified of a possible account error, the servicer “must respond in one of two ways:

(A) Correct[ ] the error or errors identified by the borrower and provid[e] the borrower with a written notification of the correction, the effective date of the correction, and contact information, including ...

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