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The Money Source Inc. v. Paymap Inc.

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

October 29, 2018

PAYMAP, INC., Defendant.



         This matter comes before the Court on defendant's Motion to Dismiss First Amended Complaint (doc. 30). The Motion has been briefed and is now ripe.

         I. Relevant Background.

         This litigation is a spin-off case from another action filed in this District Court, styled Anastasia P. Diehl v. The Money Source Inc., et al., Civil Action 17-0125-TM-B (the “Diehl Action”). In the Diehl Action, the plaintiff, Anastasia Diehl, asserted various claims against her loan servicer, The Money Source Inc. (“TMS”), relating to the misapplication of certain payments she made on her residential mortgage. In particular, Diehl alleges that TMS violated the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 et seq., by failing to conduct a reasonable investigation when Diehl brought these errors to its attention; that TMS breached the mortgage agreement by misapplying a payment in August 2016; that TMS wrongfully invaded her privacy by threatening loss of her home, making harassing collection calls, and contacting her ex-husband about the alleged default; and that TMS violated the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq., by failing to conduct a reasonable investigation of Diehl's dispute of its reporting of false and derogatory credit information. The Diehl Action remains pending at this time, with pretrial and trial deadlines having been continued to facilitate ongoing mediation efforts.

         In this related action, TMS brings various claims against Paymap, Inc., based on Paymap's role in allegedly collecting and misrouting Diehl's payments. The well-pleaded factual allegations of the First Amended Complaint include the following:[1] (i) Paymap collected Diehl's monthly mortgage payments for August 2015 - January 2016 and April 2016, and misrouted them to an entity called LoanCare, rather than to TMS, which had taken over the servicing of Diehl's loan from LoanCare beginning in August 2015; (ii) through such misrouting, Paymap caused the delinquency of Diehl's loan; (iii) the misrouting of Diehl's payments breached Paymap's October 2011 agreement with LoanCare, which agreement set forth Paymap's responsibilities to ensure that payments were routed to the proper loan servicer / transferee; and (iv) Paymap's actions have harmed TMS by damaging its customer / servicer relationship with Diehl, and causing TMS to accrue legal fees and costs to defend itself in the Diehl Action. (Doc. 27, ¶¶ 2-5, 25-27, 30.)

         On the strength of these allegations, among others, TMS asserts causes of action against Paymap for breach of contract / third-party beneficiary (Count One), negligence (Count Two), wantonness (Count Three), money had and received (Count Four), failure to indemnify (Count Five) and unjust enrichment (Count Six). Paymap now moves for dismissal of all claims and causes of action asserted by TMS pursuant to Rule 12(b)(6), Fed.R.Civ.P., for failure to state a claim on which relief can be granted.

         II. Analysis.

         A. Governing Legal Standard.

         To withstand Rule 12(b)(6) scrutiny and satisfy the minimum pleading requirements prescribed by Rule 8(a), a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face, ” so as to “nudge[] [its] claims across the line from conceivable to plausible.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation omitted). “This necessarily requires that a plaintiff include factual allegations for each essential element of his or her claim.” GeorgiaCarry.Org, Inc. v. Georgia, 687 F.3d 1244, 1254 (11th Cir. 2012). Thus, minimum pleading standards “require[] 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. As the Eleventh Circuit has explained, Twombly / Iqbal principles demand that a complaint's allegations be “enough to raise a right to relief above the speculative level.” Speaker v. U.S. Dep't of Health and Human Services Centers for Disease Control and Prevention, 623 F.3d 1371, 1380 (11th Cir. 2010) (citations omitted). “To survive a 12(b)(6) motion to dismiss, the complaint does not need detailed factual allegations, … but must give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.” Randall v. Scott, 610 F.3d 701, 705 (11th Cir. 2010) (citations and internal quotation marks omitted). The allegations must “state a claim for relief that is plausible - and not merely possible - on its face.” Almanza v. United Airlines, Inc., 851 F.3d 1060, 1066 (11th Cir. 2017).

         B. Whether TMS's Claims are Unripe for Lack of Damages.

         As an initial matter, Paymap moves for dismissal of the Amended Complaint in its entirety on the ground that “TMS has sustained no damages upon which it can rely to pursue these causes of action.” (Doc. 30, at 6.) Paymap's position is that the damages claimed by TMS are speculative and uncertain because they are predicated on the mere possibility that TMS will ultimately be found liable for money damages in the Diehl Action.[2]

         The threshold problem with Paymap's contention is that it is rooted in the inaccurate premise that all of TMS's claims require proof of actual damages. They do not. After all, Counts One (breach of contract) and Five (failure to provide contractual indemnification) of the Amended Complaint are contract-based claims. Applicable law provides that a plaintiff who proves a breach of contract may recover nominal damages at trial, even in the absence of actual damage to the plaintiff or proof of actual damage by the plaintiff. See, e.g., City of Westminster v. Centric-Jones Constructors, 100 P.3d 472, 481 (Colo.App. 2003) (“Nominal damages are recoverable for a breach of contract even if no actual damages resulted or if the amount of actual damages has not been proved.”).[3] Thus, even if Paymap's characterization of the Amended Complaint as failing to plead any actual damages incurred to date were accurate, dismissal of Counts One and Five would be inappropriate on that basis because TMS may recover nominal damages at trial on those contract-based claims even if it suffered no actual damages.

         As for the tort claims set forth at Counts Two (negligence) and Three (wantonness), movant's premise that a plaintiff must show actual injury appears valid. See, e.g., Adams-Arapahoe School Dist. No. 28-J v. GAF Corp., 959 F.2d 868, 872 (10th Cir. 1992) (“[A]ctual physical injury is an essential element of any negligence claim. … This basic tort principle makes clear that damages may not be awarded for injuries not yet suffered.”); Bayly, Martin & Fay, Inc. v. Pete's Satire, Inc., 739 P.2d 239, 242 (Colo. 1987) (“A cause of action founded on negligence requires proof of … actual loss or damage resulting to the interests of the plaintiff.”).[4] TMS's principal response to this argument is that Paymap “ignores the very real and actual damages already suffered by TMS and averred to in TMS's First Amended Complaint.” (Doc. 36, at 4.)[5] Those damages enumerated in TMS's pleading consist of “damages to its customer / servicer relationship with Diehl, and the monetary damages it has suffered in the form of the legal fees and costs that it has incurred and paid as a result of having to defendant itself in the Diehl Action due to Paymap's wrongful misrouting of Diehl's monthly payments.” (Doc. 27, ¶ 30; see also id., ¶¶ 39, 46, 52, 64, 67.)

         Clearly, then, TMS's Amended Complaint alleges reputational injury in the form of “damages to its customer / servicer relationship with Diehl” caused by the wrongful conduct attributed to Paymap. In response, movant identifies no persuasive basis for concluding that such harm does not constitute an actual injury that might support an award of damages against Paymap on TMS's tort claims. Indeed, Paymap's only rejoinder to TMS's reliance on this category of damages is as follows: “other than simply saying that Plaintiff has suffered ‘reputation' damages, there is no proof in any form that this is damage that has occurred as opposed to pure speculation.” (Doc. 37, at 3.) Of course, this action is at the Rule 12(b)(6) stage, not the summary judgment stage. The rules of civil procedure do not obligate a plaintiff to “prove” anything in its complaint; therefore, Paymap's “no-proof” argument is misguided. At this point in the proceedings, a plaintiff merely must plead sufficient facts to state a plausible claim for relief. TMS has plausibly pleaded reputational harm arising from the errors that it attributes to Paymap in the processing of Diehl's mortgage payments; indeed, it is entirely plausible that a loan servicer's relationship with its customer would be damaged by a third party's mishandling of mortgage payments by that customer, resulting in such payments never being credited to the customer's loan. Nothing more is required for TMS to plead “reputational injury” as a basis for recovery in tort in this action, and the Court rejects Paymap's contention that dismissal is necessary ...

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