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McLaughlin v. Ocwen Loan Servicing LLC

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

June 26, 2018

OCWEN LOAN SERVICING, LLC, et al., Defendants.



         After receiving notice of default and a foreclosure on their residence, James McLaughlin and Sherry McLaughlin filed this lawsuit alleging claims under state law and federal statutes against Ocwen Loan Servicing, LLC (“Ocwen”) and the Bank of New York Mellon Trust Company National Association (“Mellon”). The court has for consideration the Defendants' Motion for Summary Judgment, doc. 32. The motion is fully briefed, docs. 32-1, 40, and ripe for review. For the reasons explained more fully below, except for the claim in Count XI relating to two of the qualified written requests (QWRs), the Defendants' motion is due to be granted. As for Count XI, to bring finality for the parties, the court SETS this matter for a pretrial conference on July 20, 2018 at 12:15 p.m., and for trial on August 20, 2018[1] at 9:00 a.m. in Courtroom 4A of the Hugo L. Black United States Courthouse. The parties are directed to the attached pretrial instructions.


         Under Federal Rule of Civil Procedure 56(a), summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” “Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the initial burden of proving the absence of a genuine dispute of material fact. Id. at 323. The burden then shifts to the non-moving party, who is required to go “beyond the pleadings” to establish that there is a “genuine issue for trial.” Id. at 324 (internal citations and quotation marks omitted). A dispute about a material fact is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         The court must construe the evidence and all reasonable inferences arising from it in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); see also Anderson, 477 U.S. at 244 (all justifiable inferences must be drawn in the non-moving party's favor). Any factual dispute will be resolved in the non-moving party's favor when sufficient competent evidence supports that party's version of the disputed facts. But see Pace v. Capobianco, 283 F.3d 1275, 1276-78 (11th Cir. 2002) (a court is not required to resolve disputes in the non-moving party's favor when that party's version of events is supported by insufficient evidence). However, “mere conclusions and unsupported factual allegations are legally insufficient to defeat a summary judgment motion.” Ellis v. England, 432 F.3d 1321, 1326 (11th Cir. 2005) (citing Bald Mountain Park, Ltd. v. Oliver, 863 F.2d 1560, 1563 (11th Cir. 1989)). Moreover, “[a] mere ‘scintilla' of evidence supporting the opposing party's position will not suffice; there must be enough of a showing that a jury could reasonably find for that party.” Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990) (citing Anderson, 477 U.S. at 252).


         In March 2004, the Plaintiffs executed a mortgage on their residence with Homecomings Financial Network, Inc. in support of a promissory note. Docs. 32-1 at 4-5; 40 at 3. The note passed from Homecomings through a succession of other creditors, and eventually to Mellon. Doc. 32-1 at 5. The original servicer, GMAC Mortgage, declared the Plaintiffs in default after they failed to make multiple mortgage payments. Id. Subsequently, Ocwen began servicing the loan. Id. The Plaintiffs brought the loan current in June 2014, but subsequently fell behind again on their payments. Id. at 6. As a result, in September 2015, Ocwen sent the Plaintiffs a notice of default and requested a $15, 378.91 payment to cure the default, which the Plaintiffs never fully paid off. Id. at 7. Consequently, in January 2016, the Defendants accelerated the loan. Id. at 8. The Plaintiffs have never attempted to repay the full amount, and have stopped making payments. Id. at 7-8.

         Following the acceleration, the Plaintiffs submitted credit disputes concerning Ocwen to the consumer reporting agencies (“CRAs”) Experian and Equifax. Id. Ocwen received notice of the disputes, conducted an investigation, and subsequently deleted the disputed reporting. Id. The Plaintiffs' counsel submitted multiple QWRs to the Defendants. Id. at 9. The parties agree Ocwen responded to two QWRs. Docs. 32-1 at 9; 40 at 6.

         The Defendants scheduled a foreclosure sale for November 2016 and published notices in local newspapers and online. Docs. 32-1 at 9; 40 at 6. This lawsuit caused the Defendants to cancel the foreclosure sale. Doc. 32-1 at 9-10.

         III. ANALYSIS[3]

         The Plaintiffs plead nine claims under Alabama law: negligence (Count I), wantonness (Count II), unjust enrichment (Count III), wrongful foreclosure (Count IV), slander of title (Count V), breach of contract (Count VI), fraud (Count VII), false light (Count VIII), and defamation (Count IX). Doc. 14 at 8-16, 25. The Plaintiffs also plead alleged violations of federal laws: the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq. (Count X); the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq. (Count XI); the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq. (Count XII); the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. (Count XIII); the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227 et seq. (Count XIV); and the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691 et seq. (Count XV). Id. at 17-25. Finally, the Plaintiffs plead a claim for declaratory relief (Count XVI). Id. at 25. The Defendants contend these claims fail for several reasons, which the court addresses in turn.

         A. Claims Abandoned by the Plaintiffs

         The Plaintiffs have not responded to the Defendants' arguments concerning Counts V, VII, XIV, XV, and XVI, other than to note that they pleaded these claims in their complaint. See doc. 40. But “[i]n opposing a motion for summary judgment, a party may not rely on his pleadings to avoid judgment against him.” Resolution Trust Corp. v. Dunmar Corp., 43 F.3d 587, 599 (11th Cir. 1995) (citations and internal quotation marks omitted). Moreover, “[t]here is no burden upon the district court to distill every potential argument that could be made based upon the materials before it on summary judgment.” Id. Rather, “the onus is upon the parties to formulate arguments; grounds alleged in the complaint but not relied upon in summary judgment are deemed abandoned.” Id.; see Wilkerson v. Grinnell Corp., 270 F.3d 1314, 1322 (11th Cir. 2001) (finding claim abandoned and affirming grant of summary judgment on claim presented in complaint but not raised in initial response to motion for summary judgment); Coalition for the Abolition of Marijuana Prohibition v. City of Atlanta, 219 F.3d 1301, 1325 (11th Cir. 2000) (finding claim abandoned where it was not briefed and argued in party's response to motion for summary judgment). Accordingly, the motion is due to be granted as to Counts V, VII, XIV, XV, and XVI.

         B. The Negligence and Wantonness Claims (Counts I and II)

         Under Alabama law, “[t]he elements of a negligence claim are a duty, a breach of that duty, causation, and damage.” Prill v. Marrone, 23 So.3d 1, 6 (Ala. 2009) (quoting Armstrong Bus. Servs., Inc. v. AmSouth Bank, 817 So.2d 665, 679 (Ala. 2001)). “To establish wantonness, the plaintiff must prove that the defendant, with reckless indifference to the consequences, consciously and intentionally did some wrongful act or omitted some known duty.” Martin v. Arnold, 643 So.2d 564, 567 (Ala. 1994). Further, “[t]o be actionable, that act or omission must proximately cause the injury of which the plaintiff complains.” Id. (citing Smith v. Davis, 599 So.2d 586 (Ala. 1992)).

         Turning to the specifics here, the Plaintiffs plead the Defendants negligently and wantonly foreclosed on their residence and made misrepresentations to the Plaintiffs. Doc. 14 at 8-9. These claims fail because “Alabama law does not recognize a cause of action for negligent or wanton mortgage servicing, ” as there is no independent duty of care upon which to base such a claim. Duke v. JPMorgan Chase Bank Nat. Ass'n, No. 2:14-CV-422-RDP, 2014 WL 5770583, at *4 (N.D. Ala. Nov. 5, 2014) (quoting McClung v. Mortg. Elec. Registration Sys., Inc., No. 2:11-CV-03621-RDP, 2012 WL 1642209, at *7 (N.D. Ala. May 7, 2012)) (internal quotation marks omitted). The duty, if any, is contractual, as it arises from the relevant mortgage agreement, promissory note, and any loan modifications. Id. While the Plaintiffs contend the Defendants breached their duty “to provide truthful and accurate information about the status of the loan account, ” doc. 40 at 33-34, they do not plead, however, that this duty exists independently of the contractual duties, or cite any cases stating they can plead negligence and wantonness claims against a mortgage servicer. Accordingly, the motion is due to be granted as to Counts I and II.

         C. The Unjust Enrichment Claim (Count III)

         The Plaintiffs allege the Defendants improperly charged them, resulting in unjust enrichment. Doc. 14 at 9-10. To prevail on a theory of unjust enrichment, the plaintiff must show “that defendant holds money which, in equity and good conscience, belongs to plaintiff or holds money which was improperly paid to defendant because of mistake or fraud.” Dickinson v. Cosmos Broad. Co., 782 So.2d 260, 266 (Ala. 2000) (quoting Hancock-Hazlett Gen. Constr. Co. v. Trane Co., 499 So.2d 1385, 1387 (Ala. 1986)) (emphasis omitted). Alabama courts will imply a contract in law “to prevent a manifest injustice or unjust enrichment[.]” Mantiply v. Mantiply, 951 So.2d 638, 656 (Ala. 2006) (quoting Green v. Hospital Bldg. Auth. of Bessemer, 294 Ala. 467, 470 (1975)). However, “[t]he existence of an express contract on a given subject generally excludes an implied agreement on the same subject, ” barring unjust enrichment claims. Id. (citing Brannan & Guy, P.C. v. City of Montgomery, 828 So.2d 914, 921 (Ala. 2002); Vardaman v. Florence City Bd. of Educ., 544 So.2d 962 (Ala. 1989)).

         The Defendants contend that the mortgage and promissory note constitute an express contract. Doc. 32-1 at 12. The Plaintiffs do not dispute this, and, indeed, base their breach of contract claim upon that contract. See doc. 40. In the presence of an express contract, the court will not imply a contract in law. See Mantiply, 951 So.2d at 656. Accordingly, the motion is due to be granted as to Count III.

         D. The Wrongful Foreclosure Claim (Count IV)

         In Count IV, the Plaintiffs plead a claim for wrongful foreclosure. “Under Alabama law, a mortgagor has a wrongful foreclosure action whenever a mortgagee uses the power of sale given under a mortgage for a purpose other than to secure the debt owed by the mortgagor.” Buckentin v. SunTrust Mortg. Corp., 928 F.Supp.2d 1273, 1282 (N.D. Ala. 2013) (quoting Reeves Cedarhurst Dev. Corp. v. First Am. Fed. Sav. and Loan, 607 So.2d 180, 182 (Ala. 1992)) (internal citations omitted). Critically, “in order to state a claim for wrongful foreclosure, a foreclosure sale must have actually taken place.” Id. (citing Hardy v. Jim Walter Homes, Inc., 2007 WL 174391, at *6 (S.D. Ala. 2007)); see Zanaty v. Wells Fargo Bank, N.A., No. 2:16-CV-0277-VEH, 2016 WL 6610443, ...

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