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Liveoak v. Loancare LLC

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

November 8, 2019

THOMAS BLACK LIVEOAK Plaintiff,
v.
LOANCARE, LLC, et al., Defendants.

          MEMORANDUM OPINION

          ANNEMARIE CARNEY AXON UNITED STATES DISTRICT JUDGE.

         Before the court is Defendants Loancare, LLC, and Lakeview Loan Servicing, LLC's unopposed motion to dismiss the complaint. (Doc. 4).

         Plaintiff Thomas Blake Liveoak alleges that, after he fell behind on his mortgage payments, Defendants made it difficult for him to seek loss mitigation options and disregarded the loss mitigation package he eventually submitted. In this lawsuit he asserts that they are liable for (1) negligent hiring/supervision/training (“Count One”); (2) misrepresentation/innocent fraud (“Count Two”); (3) fraudulent suppression (“Count Three”); and (4) negligence (“Count Four”). (Doc. 1-5 at 7- 10).

         Defendants have moved to dismiss the complaint. (Doc. 4). Because Mr. Liveoak's negligence claims arise out of a contractual duty, the court WILL GRANT the motion to dismiss Counts One and Four and WILL DISMISS those claims WITHOUT PREJUDICE. And because Mr. Liveoak has not pleaded his fraud-based claims with particularity, as required by Federal Rule of Civil Procedure 9(b), the court WILL GRANT the motion to dismiss Counts Two and Three and WILL DISMISS those claims WITHOUT PREJUDICE.

         I. BACKGROUND

         At this stage, the court must accept as true the factual allegations in the complaint and construe them in the light most favorable to the plaintiff. Butler v. Sheriff of Palm Beach Cty., 685 F.3d 1261, 1265 (11th Cir. 2012).

         Mr. Liveoak alleges that he owns a property in Vestavia Hills, Alabama, the purchase of which he financed with a mortgage. (Doc. 1-5 at 7 ¶¶ 1-2). He recently fell behind on his mortgage payments and contacted Loancare and Lakeview Loan Servicing to seek assistance paying his mortgage. (Id. at 7 ¶ 6). Mr. Liveoak states that “the mortgage was not with Defendants LoanCare, LLC and Lakeview Loan Servicing, LLC” (id. at 7 ¶ 3), but it appears that Defendants were the mortgage servicers (see generally Id. at 7-8 ¶¶ 6-8). Defendants made it difficult to seek assistance, but told him that they would offer him a forbearance plan, that they did not intend to foreclose on the home, that they would review a “Loss Modification Package” if he submitted one, and that they would offer him assistance to retain his home. (Doc. 1-5 at 7-8 ¶ 6, 9 ¶ 16). Eventually Mr. Liveoak was able to contact Defendants' Loss Mitigation Department, which provided Mr. Liveoak with a loss mitigation package. (Id. at 7-8 ¶ 6-7). He completed the package and submitted it, but Defendants have never reviewed it or responded to it. (Id. at 8 ¶ 8).

         II. DISCUSSION

         “To survive a motion to dismiss, the plaintiff must plead ‘a claim to relief that is plausible on its face.'” Butler, 685 F.3d at 1265 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (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 (2009).

         1. Count One (Negligent Hiring/Supervision/Training) and Count Four (Negligence)

         In Count One, Mr. Liveoak alleges that Defendants negligently supervised, inspected, hired, trained, instructed, or educated its employees, agents, and affiliates, apparently based on the difficulty he experienced when he contacted Defendants to seek assistance in making mortgage payments. (Doc. 1-5 at 8 ¶ 11). In Count Four, he alleges that Defendants were negligent, without offering any facts in support of that allegation. (Id. at 10 ¶¶ 32-37).

         Defendants seek dismissal of the negligence claims on the bases that (1) these claims arise out of a contractual relationship and therefore cannot support a tort-based cause of action; (2) mortgage servicers cannot be held liable for economic losses; and (3) Alabama law does not recognize a claim for negligent mortgage servicing. (Doc. 5 at 3-9).

         Alabama law does not recognize claims of negligence arising out of breach of contractual duties. See U.S. Bank Ass'n v. Shepherd, 202 So.3d 302, 314 (Ala. 2015); see also Vines v. Crescent Transit Co., 85 So.2d 436, 440 (Ala. 1956) (“[A] negligent failure to perform a contract . . . is but a breach of the contract.”). Based on that general rule, the Alabama Supreme Court has held that no cause of action for negligent servicing of a mortgage is available under Alabama law. Id. at 314-15. And a number of federal courts have found that because Alabama law does not provide for negligent servicing of a mortgage, a plaintiff cannot assert a claim for negligent hiring, supervision, or training arising out of negligent servicing of a mortgage. See James v. Nationstar Mortg., LLC, 92 F.Supp.3d 1190, 1200-01 (S.D. Ala. 2015); Costine v. BAC Home Loans, 946 F.Supp.2d 1224, 1235 (N.D. Ala. 2013); Tidmore v. Bank of Am., N.A., no. 4:15-cv-2210-JEO, 2017 WL 467473, at *4-6 (N.D. Ala. Feb. 3, 2017).

         These holdings foreclose Mr. Liveoak's claims of negligence against Defendants. Although his factual allegations are sparse, even construed in the light most favorable to him the negligence claims arise out of the contractual obligations made in the mortgage. Accordingly, he cannot assert tort claims for ...


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