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Rice v. Seterus Inc.

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

January 23, 2018

SETERUS, INC., et al., Defendants.



         This case is before the court on Defendant JPMorgan Chase Bank, N.A.'s (“Chase”) Motion to Dismiss Plaintiff's Amended Complaint (Doc. # 30) and Defendants Seterus, Inc., Federal National Mortgage Association (“Fannie Mae”), and Mortgage Electronic Registration Systems, Inc.'s (“MERS”) Motion to Dismiss Plaintiff's Amended Complaint (Doc. # 33). The Motions to Dismiss are fully briefed and under submission. (Docs. # 39-42). After careful review, and for the reasons explained below, the court concludes that Defendants' Motions to Dismiss are due to be granted in part and denied in part.

         I. Background

         This case concerns a mortgage on Plaintiff's residence and whether Defendants violated the terms of a settlement agreement -- as well as several federal statutes -- while servicing the mortgage and conducting foreclosure proceedings. Plaintiff's Amended Complaint (Doc. # 22) asserts the following claims:

1. Count One-Negligence
2. Count Two-Wantonness
3. Count Three-Unjust Enrichment
4. Count Four-Wrongful Foreclosure
5. Count Five-Slander of Title
6. Count Six-Breach of Contract
7. Count Seven-Fraud
8. Count Eight-Placed in a False Light
9. Count Nine-Defamation, Libel, and Slander
10. Count Ten-Violations of the Truth in Lending Act (“TILA”)
11. Count Eleven-Violations of the Real Estate Settlement Procedures Act (“RESPA”)
12. Count Twelve-Violations of the Fair Credit Reporting Act (“FCRA”)
13. Count Thirteen-Violations of the Fair Debt Collection Practices Act (“FDCPA”)
14. Count Fourteen-Claim for Declaratory Relief

(Doc. # 22). Defendants move for dismissal of all of the claims, except for the breach-of-contract, FDCPA, and declaratory relief claims.

         II. The Amended Complaint's Allegations

         According to his Amended Complaint, in June 2007, Plaintiff purchased property located at 3813 East Second Avenue, Tuscaloosa, Alabama 35405 (the “Property”) for approximately $122, 700.00. (Doc. # 22 at ¶ 5). Plaintiff financed the purchase with a loan from Mortgage America, Inc. (Id.). Defendant MERS obtained the mortgage instrument on behalf of Mortgage America. (Id.). In 2008, Cenlar began servicing Plaintiff's mortgage. (Id. at ¶ 7).

         In April 2008, Plaintiff filed a Chapter 13 bankruptcy petition. (Id. at ¶ 9). Cenlar filed a proof of claim with the bankruptcy court and received payments pursuant to Plaintiff's bankruptcy plan. (Id.). In September 2010, while Plaintiff remained under the protection of the bankruptcy plan, Defendant Chase commenced servicing of the loan. (Id. at ¶¶ 7, 9). Plaintiff challenges the validity of the mortgage assignment to Chase. (See Id. at ¶ 7 & n. 1). In August 2011, Plaintiff received a bankruptcy discharge. (Id. at ¶ 10).

         In September 2011, Chase allegedly sent Plaintiff a notice of default for failing to tender mortgage payments that were actually paid by a bankruptcy trustee. (Id.). Plaintiff continued to send monthly payments to Chase, but it responded with more default notices. (Id. at ¶ 11). In January 2013, Chase commenced foreclosure proceedings on the Property, which Plaintiff contested as invalid. (Id. at ¶ 13). Plaintiff filed a lawsuit to stop the foreclosure sale in January 2014. (Id. at ¶ 14). That lawsuit was removed to federal court. (Id.). In May 2015, after the removal and engaging in subsequent litigation, Plaintiff and Defendant Chase entered into a formal settlement agreement resolving the claims brought in that suit. (Id. at ¶ 15). Pursuant to the settlement agreement, Chase agreed “to bring [Plaintiff's] account current for the month of June 2015.” (Id. at ¶ 16).

         Plaintiff alleges that Defendant Chase violated the terms of the settlement agreement. (Id.). Although Plaintiff resumed his mortgage payments, Chase did not accept them and sent them back to him. (Id. at ¶ 17). Chase sent Plaintiff demands for additional payments in May, June, July, August, and September 2015 - payments that Plaintiff contends were not owed under the settlement agreement. (Id. at ¶ 18). Plaintiff also asserts that Chase sent written communications to Plaintiff in May, June, July, August, and September 2015 which reflected incorrect amounts due on the mortgage account. (Id.). Plaintiff asked Chase for “a detailed explanation of the escrow fees and an escrow analysis of his account, ” but Chase failed to provide the requested information. (Id. at ¶ 19). Moreover, Plaintiff notified Chase that it was violating the settlement agreement and that its communications to him misstated the debt he owed, in violation of the RESPA and the FDCPA. (Id.). In August 2015, Chase allegedly increased Plaintiff's monthly payment from $1, 100 per month to over $2, 200 per month. (Id. at ¶ 20). In August 2015, December 2015, and January 2016, Plaintiff sent Chase Qualified Written Requests (“QWR”) under the RESPA, but it did not respond to the QWRs. (Id. at ¶¶ 21, 112).

         In February 2016, Defendant Seterus began servicing Plaintiff's mortgage. (Id. at ¶ 22). It allegedly relied on Chase's records regarding the mortgage loan, which incorrectly reflected that the account was in default status. (Id.). Defendant Seterus immediately sent default notices to Plaintiff and accelerated the mortgage loan. (Id. at ¶ 23). Plaintiff informed Seterus that Chase had failed to fix errors in the mortgage loan records, but Seterus refused to correct those errors. (Id. at ¶ 24). In November 2016, Defendants Seterus and Fannie Mae began foreclosure proceedings on the Property. (Id. at ¶ 25). Plaintiff alleges that the foreclosure proceedings were improper because Defendants “refused to engage in a legitimate and good faith mortgage foreclosure avoidance workout, [refused to] accept the proper payments, inflated the amount due, and [ ] threatened to foreclose on Plaintiff[ ] without any basis to do so.” (Id.). Plaintiff also alleges that he sent QWRs to Seterus in February 2016, May 2016, November 2016, January 2017, and February 2017. (Id. at ¶ 112).

         During the foreclosure proceedings, notices were published in the Tuscaloosa News that allegedly contained false information about the default. (See Id. at ¶¶ 26-27). Inaccurate information about the default also was reported to the national credit bureaus, which Plaintiff asserts damaged his credit record. (Id. at ¶ 28). Several neighbors approached Plaintiff and asked him about the foreclosure sale, which they learned about from the sale notices. (Id. at ¶ 29). Several of Plaintiff's clients also asked him about the foreclosure sale, and some of those clients stopped doing business with him thereafter. (Id.). Plaintiff sent a letter disputing the debt to the firm handling the foreclosure in February 2017, along with the QWR he sent to Seterus. (Id. at ¶ 30).

         Plaintiff alleges that Defendant wrongfully accelerated the mortgage loan and wrongfully commenced foreclosure proceedings. (Id. at ¶¶ 32-33). He contests the standing of Defendants Seterus and Fannie Mae to conduct foreclosure proceedings. (Id. at ¶ 33). Notably, Plaintiff has not alleged in the Amended Complaint that any Defendant completed a foreclosure sale of the Property.

         III. Standard of Review

         The Federal Rules of Civil Procedure require that a complaint provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). However, the complaint must include enough facts “to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Pleadings that contain nothing more than “a formulaic recitation of the elements of a cause of action” do not meet Rule 8 standards, nor do pleadings suffice that are based merely upon “labels and conclusions” or “naked assertion[s]” without supporting factual allegations. Id. at 555, 557. In deciding a Rule 12(b)(6) motion to dismiss, courts view the allegations in the complaint in the light most favorable to the non-moving party. Watts v. Fla. Int'l Univ., 495 F.3d 1289, 1295 (11th Cir. 2007).

         To survive a motion to dismiss, a complaint must “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads factual content that 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). Although “[t]he plausibility standard is not akin to a ‘probability requirement, '” the complaint must demonstrate “more than a sheer possibility that a defendant has acted unlawfully.” Id. A plausible ...

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