Perry v. Matrix Financial Services Corp.

          MEMORANDUM OPINION

         In this action, Plaintiff Annie P. Perry has alleged a variety of federal and state law claims against Defendants Matrix Financial Services Corporation (“Matrix”), Nationstar Mortgage, LLC (“Nationstar”), and Mortgage Electronic Registration System, Inc. (“MERS”). (Doc. 24). The claims are based on allegations that Defendants falsely reported that Perry was in default on a mortgage loan and wrongfully initiated foreclosure proceedings on her property, among other things. (Id.). Defendants have moved to dismiss the amended complaint in its entirety. (Doc. 26). For the reasons that follow, the court^[1] concludes that the motion is due to be granted in full with regard to Defendant MERS and granted in part and denied in part with regard to the other two Defendants.

         I. PROCEDURAL HISTORY

         Perry filed this action in the Circuit Court of Jefferson County, Alabama, asserting fourteen separate claims against Defendants: negligence, wantonness, unjust enrichment, wrongful foreclosure, slander of title, breach of contract, fraud, false light, defamation/libel/slander, violation of the Truth in Lending Act, violation of the Real Estate Settlement Procedures Act, violation of the Fair Credit Reporting Act, violation of the Fair Debt Collection Practices Act, and a claim for declaratory relief. (Doc. 1-1 at 3-40). Defendants removed the action to this court and then moved to dismiss all of the claims contained in the complaint, or, to the extent any claims remained, moved for a more definite statement of those claims. (Docs. 1, 8).

         In response to the motion to dismiss, Perry filed a motion for leave to file an amended complaint, noting the different pleading standards in federal and state court. (Doc. 15). Despite Defendants argument that any amendment would most likely be futile, (doc. 16), the court granted Perry's motion to file an amended complaint. (Doc. 17). After two extensions, (docs. 20 & 25), Perry filed her amended complaint on January 14, 2019.^[2] (Doc. 24). The amended complaint contains a more detailed set of factual allegations and deleted two claims (wrongful foreclosure and slander of title), but otherwise the differences between the two complaints are minimal. As before, Defendants have moved to dismiss all the claims in the amended complaint. (Doc. 26). The motion has been fully briefed and is now ripe for decision.

         II. STANDARD OF REVIEW

         Defendants have moved for dismissal pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, which authorizes the dismissal of all or some of the claims in a complaint if the allegations fail to state a claim upon which relief can be granted. Federal Rule of Civil Procedure 8(a)(2) requires only “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.” Conley v. Gibson, 355 U.S. 41, 47 (1957). 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). However, “courts ‘are not bound to accept as true a legal conclusion couched as a factual allegation.'” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)); see also Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009) (“Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.”). Nor is it proper to assume that a plaintiff can prove facts he has not alleged or that the defendants have violated the law in ways that have not been alleged. Twombly, 550 U.S. at 563 n.8 (citing Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U.S. 519, 526 (1983)).

         “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.” Id., 550 U.S. at 555 (citations, brackets, and internal quotation marks 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.” Iqbal, 556 U.S. at 678 (citations omitted).

         Defendants have also moved for a dismissal of Perry's fraud claim pursuant to Rule 9(b). Rule 9(b) requires that “in all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” Fed.R.Civ.P. 9(b). The “particularity” requirement “serves an important purpose in fraud actions by alerting defendants to the ‘precise misconduct with which they are charged' and protecting defendants ‘against spurious charges of immoral and fraudulent behavior.'” Ziemba v. Cascade Int'l, Inc., 256 F.3d 1194, 1202 (11th Cir. 2001) (citation omitted).

         III. STATEMENT OF FACTS

         Perry alleges that she bought property located at 333 Normandy Lane in Chelsea Alabama, financed the purchase with Movement Mortgage, LLC, and executed a mortgage with MERS, “acting solely as nominee for Movement Mortgage, ” on November 24, 2015. (Doc. 24 ¶ 5). The loan was later “sold and transferred” and/or assigned to both Nationstar and Matrix. (Id. ¶ 7). Although the allegations of the amended complaint are anything but clear as to the timing or order of the alleged sales/transfers/assignments, from what the court can glean, Perry seems to allege that MERS sold and transferred and/or assigned the loan to Nationstar, and Nationstar also serviced the loan. (Id.). Then, at some later point, the loan was transferred to Matrix and Nationstar remained the servicer of the loan. (Id.). Perry “disputes the validity” of the transfers and/or assignments, (id. ¶¶ 7, 13), but provides no factual basis for this allegation and does not attach a copy of any allegedly defective or invalid transfers, sales or assignments to the amended complaint.

         In June 2017, Perry complained to Defendants^[3] that they were improperly maintaining her escrow account by charging fees to the account and by demanding payment to the account when no payment was due. (Id. ¶ 22). Perry alleges Defendants did nothing to address the situation. (Id.). Additionally, she alleges Defendants “continually during 2017 improperly held [her] payments in a ‘suspense account'” and “charged late fees and interest as if the payments had not been made even though they had received the payments.” (Id.).

         On December 5, 2017, Perry sent a qualified written request (“QWR”)^[4] to both Nationstar and the attorney for Nationstar. (Id. ¶ 88). The letter included a statement for the reasons Perry believed there was an error regarding her mortgage loan and included sufficient details for Nationstar to respond. (Id.). Nationstar never acknowledged receipt of the QWR and never responded to it. (Id. ¶ 89).

         On June 6, 2018, Defendants^[5] initiated foreclosure proceedings on Perry's property. (Id. ¶¶ 9, 23). The foreclosure sale was reported to the national credit bureaus, which damaged Perry's reputation and credit. (Id. ¶¶ 12, 25). Additionally, the foreclosure sale date was published in the Shelby County Reporter in June, July, August and September 2018, and included false information regarding her alleged default. (Id. ¶ 25).

         According to Perry, she was not in default on her loan and Defendants knew she was not in default at the time they began foreclosure proceedings. (Id. ¶¶ 11, 14, 26). On September 6, 2018, Perry alleges she sent another QWR, as well as a notice of error (“NOE”) to Nationstar and its attorneys. (Id. ¶ 88). Nationstar did not respond. (Id. ¶ 89).

         Perry alleges that prior to September 2017, Defendants^[6] accepted and cashed her monthly payments, but did not properly apply them to her account “pursuant to paragraph 2 of the mortgage contract.” (Id. ¶¶ 20, 21). When she sent her monthly payment to Defendants in October, November and December 2017 and January 2018, Defendants refused the payment and returned it to her without explanation. (Id. ¶ 20). When Perry called and asked about the returned payments, Defendants told her she was in default for failure to make payments without any further explanation. (Id.). Defendants told Perry they would not accept any further payments and her account was being turned over for foreclosure. (Id.).

         As of the time Perry filed her amended complaint, she continued to reside in the property. (Id. ¶ 6). It is unclear from the amended complaint whether a foreclosure sale was ever scheduled.

         IV. DISCUSSION

         In her amended complaint, Perry states twelve counts - four federal violations, seven state law violations, and a count for declaratory judgment. (Doc. 24 at 7-26). Under each count, there is a parenthetical that states the name of a Defendant or Defendants. (Id.). The court assumes that the defendants named in those parentheticals are the defendants against which she brings the specific claim.^[7] That being said, the amended complaint does not allege a single count against MERS.^[8] Additionally, the court cannot find any allegation in the amended complaint accusing MERS of any alleged wrongdoing. As such, the motion to dismiss as it relates to MERS is due to be granted in full.

         A. The Federal Claims

         In her amended complaint, Perry alleges that Nationstar violated four federal statutes: the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq. (Count Eight); the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601 et seq. (Count Nine); the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681 et seq. (Count Ten); and the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq. (Count Eleven). (Doc. 24 at 20-26). She also alleges that Matrix violated the FCRA. (Id. at 23-25). Nationstar and Matrix have moved to dismiss all federal claims alleged in the amended complaint.

         1. TILA

         TILA is a remedial consumer protection statute designed to “assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.” 15 U.S.C. § 1601(a); see Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412 (1998). TILA requires creditors to provide consumers with “clear and accurate disclosures of terms dealing with things like finance charges, annual percentage rates of interest, and the borrower's rights.” Id. at 412. TILA provides a private right of action against “any creditor” who violates the requirements of the statute's credit transactions section and allows for actual damages as a result of the failure and, with certain limitations, statutory damages. 15 U.S.C. § 1640(a).

         In Count Eight of the amended complaint, Perry alleges that Nationstar violated both TILA and Regulation Z.^[9] (Doc. 24 ¶¶ 77-86). Specifically, she alleges that Nationstar failed to provide required disclosures “prior to consummation” of her loan transaction, failed to make required disclosures “clearly and conspicuously in writing, ” and failed to “include in the finance charge certain charges imposed . . . [and] payable by plaintiff incident to the extension of credit . . ., thus improperly disclosing the finance charge.” (Id. ¶ 81). She also alleges Nationstar made unauthorized charges in the form of attorney fees and other fees not authorized by the mortgage contract, as well as “improperly amortizing the loan.” (Id. ¶¶ 83, 85).

         As stated above, by its plain language, TILA's private right of action applies only to actions against “creditors.” 15 U.S.C. § 1604(a). A “creditor” is defined as:

a person who both (1) regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence. . . .

15 U.S.C. § 1602(g). The civil liability provision of TILA does not apply generally to every person the statute regulates, but only to originating creditors. Gregory v. Select Portfolio Servicing, Inc., 2016 WL 4540891, at *14 (N.D. Ala. Aug. 31, 2016).

         Perry's factual allegations demonstrate that Nationstar is not, in fact, the person to whom the debt arising from the loan transaction was initially payable. According to her amended complaint, Perry financed the purchase of the home with Movement Mortgage, LLC. (Doc. 24 ¶ 5). As such, Nationstar is not a “creditor” within the meaning of TILA because it is not the party to whom the loan was initially payable. Perry's TILA claim against Nationstar is due to be dismissed.

         Additionally, even if the court is incorrect in its conclusion that Nationstar is a “creditor” within the meaning of TILA, the claim is time-barred. TILA provides for a one year statute of limitations that begins to run from the date that the borrower entered into the loan transaction. 15 U.S.C. § 1640(e); In re Smith, 737 F.2d 1549, 1552 (11th Cir. 1984). The loan here was signed on November 24, 2015, almost three years before the complaint was filed, well outside the limitations period. Perry's TILA claim against Nationstar is due to be dismissed for this separate, additional reason.

         2. RESPA

         In Count Nine, Perry alleges that Nationstar violated RESPA by “failing to acknowledge or properly respond to [her] Qualified Written Request (QWR).” (Doc. 24 ¶ 87). RESPA establishes the procedures a loan servicer must follow, and certain actions it must take, upon receiving a QWR from a borrower. 12 U.S.C. § 2605(e). Section 2605(e) of the RESPA requires a loan servicer to send a written acknowledgement of the borrower's QWR within five days and a written response to the QWR within thirty days. 12 U.S.C. § 2605 (e)(1)(A), (e)(2). Failure to adequately respond to a QWR results in liability “to the borrower for each such failure in . . . an amount equal to the sum of any actual damages to the borrower as a result of the failure. . . .” 12 U.S.C. § 2605(f)(1)(A). To succeed on a claim under § 2605(e), Plaintiff “must show: (1) that Defendant is a servicer; (2) that Defendant received a QWR from the borrower; (3) ...