Goodreau v. US Bank Trust National Association

          MEMORANDUM OPINION

          John E. Ott Chief United States Magistrate Judge.

         In this action, Plaintiff Jan Goodreau has alleged a variety of federal and state law claims against Defendants U.S. Bank National Association (“US Bank”), as Trustee of the Igloo Series II Trust, and BSI Financial Services (“BSI”).^[1] (Doc. 23). The claims are based on allegations that Defendants falsely reported that Goodreau was in default on a mortgage loan and wrongfully initiated foreclosure proceedings on her property, among other things. (Id.). Defendants have moved to dismiss all claims contained in the amended complaint except the alleged violations of the Fair Credit Reporting Act and Fair Debt Collection Practices Act. (Doc. 31 at 2). For the reasons that follow, the court^[2] concludes that the motion is due to be granted in part and denied in part.

         I. PROCEDURAL HISTORY

         Goodreau 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 3-22). Defendants removed the action to this court and then moved to dismiss the claims contained in the complaint. (Docs. 1, 6, 8).

         In response to the motion to dismiss, Goodreau filed a motion for leave to file an amended complaint, noting the different pleading standards in federal and state court. (Doc. 15, 16). The court granted Goodreau's motion to file an amended complaint, (doc. 17), and, after an extension, Goodreau filed her amended complaint on March 31, 2019.^[3] (Doc. 23). The amended complaint contains a more detailed set of factual allegations, removed the fraud claim, and set out through the individual counts which Defendant is being sued for each specific claim, but otherwise the differences between the two complaints are minimal. (Compare Docs. 1-1 at 3-22 with Doc. 23). U.S. Bank and BSI have moved to dismiss all the claims in the amended complaint except the alleged violations of the Fair Credit Reporting Act and Fair Debt Collection Practices Act. (Doc. 31). 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).

         III. STATEMENT OF FACTS

         Goodreau alleges that she bought property located at 4133 Alston Lane in Birmingham, Alabama, financed the purchase with SouthTrust Mortgage Corporation, and executed a mortgage with MERS, “acting solely as nominee for SouthTrust Mortgage Corporation, ” on December 1, 2004. (Doc. 23 ¶ 5). The loan was later “sold and transferred” and/or assigned to both U.S. Bank and BSI. (Id. ¶¶ 7, 10). Although the allegations of the amended complaint are anything but clear, from what the court can glean from the allegations, Goodreau seems to allege that MERS sold and transferred and/or assigned the loan to “the Trust maintained by U.S. Bank” and BSI serviced the loan. (Id. ¶¶ 7, 9). Then, at some other point in time, the loan was transferred to BSI and BSI remained the servicer of the loan. (Id.). Goodreau “disputes the validity” of the transfers and/or assignments, (id. ¶¶ 7, 10, 15, 17), 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.

         On September 1, 2018, U.S. Bank and BSI initiated foreclosure proceedings on Goodreau's property. (Id. ¶¶ 11, 13, 23, 24). The foreclosure sale was reported to the national credit bureaus, which damaged Goodreau's credit and reputation. (Id. ¶¶ 14, 20, 25). Additionally, the foreclosure sale date was published in the Alabama Messenger in September, October, November, December 2018 and January and February 2019, and included false information regarding her alleged default. (Id. ¶ 25).

         According to Goodreau, she was not in default on her loan and Defendants knew she was not in default at the time they began foreclosure proceedings. (Id. ¶¶ 13, 16, 24). She alleges that she was not behind on her payments and that the note was improperly accelerated. (Id. ¶¶ 16, 26). Despite this knowledge, “Defendants set foreclosure sales for October 30, 2018, January 8, 2019, and February 8, 2019, ” but they were cancelled. (Id. ¶ 11).

         Goodreau alleges that prior to April 2018, Defendants^[4] accepted and cashed her monthly payments, but did not properly apply them to her account “pursuant to paragraph 2 of the mortgage contract.” (Id. ¶¶ 21, 22). When she sent her monthly payment to Defendants in October, November and December 2018, Defendants refused the payment and returned it to her without explanation. (Id. ¶ 21). When Goodreau 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 Goodreau they would not accept any further payments and her account was being turned over for foreclosure. (Id.).

         On October 26, 2018 and December 13, 2018, Goodreau sent a qualified written request (“QWR”)^[5] to both BSI and the attorney for BSI. (Id. ¶ 99). The letter included a statement for the reasons Goodreau believed there was an error regarding her mortgage loan and included sufficient details for BSI to respond. (Id.). BSI never acknowledged receipt of either QWR and never responded to them. (Id. ¶ 100).

         “[W]hile this action was pending, the Defendants improperly and illegally foreclosed on Goodreau's property on March 1, 2019.” (Id. ¶ 11). Goodreau, however, alleges that she and her husband currently reside in the property at issue. (Id. ¶ 6).

         IV. DISCUSSION

         In her amended complaint, Goodreau states four federal violations, eight state law violations, and a count for declaratory judgment.^[6] (Doc. 23 at 8-33). The court begins with the alleged federal violations and then moves to the state law claims.

         A. The Federal Claims

         In her amended complaint, Goodreau alleges that BSI violated four federal statutes: the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq. (Count Fourteen); the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601 et seq. (Count Fifteen); the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681 et seq. (Count Sixteen); and the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq. (Count Seventeen). (Doc. 23 at 23-33). BSI has moved to dismiss Counts Fourteen and Fifteen.^[7] (Doc. 31 at 2, 17-20).

         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 because of the failure and, with certain limitations, statutory damages. 15 U.S.C. § 1640(a).

         In Count Fourteen of the amended complaint, Goodreau alleges that BSI violated both TILA and Regulation Z.^[8] (Doc. 23 ¶¶ 90-97). Specifically, she alleges that BSI 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. ¶ 93). She also alleges BSI 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. ¶¶ 94, 96). Finally, she contends BSI failed to send proper monthly statements. (Id. ¶ 96).

         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).

         Goodreau's factual allegations demonstrate that BSI is not, in fact, the person to whom the debt arising from the loan transaction was initially payable. According to her amended complaint, Goodreau financed the purchase of the home with SouthTrust Mortgage. (Doc. 23 ¶ 5). As such, BSI is not a “creditor” within the meaning of TILA because it is not the party to whom the loan was initially payable. Goodreau's TILA claim against BSI is due to be dismissed.

         Additionally, even if the court is incorrect in its conclusion that BSI 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 December 1, 2004, more than thirteen years before the complaint was filed, well ...