470 F.3d 1240 (8th Cir. 2006), 06-1982, Quinn v. Ocwen Federal Bank FSB

Docket Nº:06-1982.
Citation:470 F.3d 1240
Party Name:L. Walter QUINN, III; Terry Quinn, Appellants, v. OCWEN FEDERAL BANK FSB; Wilson & Associates, P.L.L.C., Appellees.
Case Date:December 08, 2006
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

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470 F.3d 1240 (8th Cir. 2006)

L. Walter QUINN, III; Terry Quinn, Appellants,


OCWEN FEDERAL BANK FSB; Wilson & Associates, P.L.L.C., Appellees.

No. 06-1982.

United States Court of Appeals, Eighth Circuit.

December 8, 2006

Submitted: October 18, 2006.

Appeal from the United States District Court for the Eastern District of Arkansas.

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[Copyrighted Material Omitted]

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George Jay Bequette, Jr., argued, Little Rock, AR, for appellant.

Rufus E. Wolff, argued, Little Rock, AR (Aaron L. Squyres, Little Rock, AR, on the brief), for appellee.

Before MELLOY, BENTON, and SHEPHERD, Circuit Judges.

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L. Walter Quinn and Terry Quinn appeal the dismissal of their case for failure to state a claim upon which relief can be granted. Having jurisdiction under 28 U.S.C. § 1291, this court affirms.


In August 2002, the Quinns mortgaged their home to Provident Bank, which is not a party to this litigation. The Quinns also executed an automated clearing house (ACH) authorization permitting Provident Bank, or its successors and assigns, to automatically withdraw the monthly mortgage payment from the Quinns' account at another bank. The ACH authorization provides that an automatic debit will occur on a specified day of the month, but in the next sentence, in all capital letters, places responsibility for payment on the account holder, who acknowledges:


In October 2002, Provident Bank sold the Quinns' mortgage to Wells Fargo, which engaged Ocwen Federal Bank to service the loan. The Quinns did not execute another ACH authorization permitting Wells Fargo or Ocwen to withdraw from any bank account. Through a series of discussions during the rest of 2002, the Quinns demanded that Ocwen use the ACH authorization (naming Provident Bank or its successors and assigns) to withdraw the monthly mortgage payment from the Quinns' bank account. During this period, the Quinns periodically paid the mortgage by personal check.

On January 13, 2003, Walter Quinn wrote Ocwen stating that an ACH authorization previously had been executed by the Quinns authorizing Provident Bank, or its successors and assigns, to automatically withdraw the monthly mortgage payment. Mr. Quinn further stated that had he known the payment would not be drafted pursuant to the previous ACH authorization, he would have made payment as scheduled. Mr. Quinn also requested that Ocwen take any steps necessary to reverse derogatory reports issued to credit reporting agencies.

Ocwen answered on January 24, writing that it had not made an adverse report to any credit reporting agency about late payment of the mortgage. Ocwen further stated the loan was set up on the ACH program, and the first automatic withdraw is effective on February 15. Ocwen also informed the Quinns that when the servicing of a loan is transferred to Ocwen, automatic draft information is not transferred, and a new application is necessary to begin an automatic draft program with Ocwen. "While Ocwen advised that a new ACH automatic draft application was necessary to begin the automatic draft program with Ocwen, the Quinns had advised Ocwen that they would not be executing a new ACH authorization since the ACH authorization the Quinns executed in favor of Provident had already been assigned to Ocwen." (Complaint ¶ 9).

By June 2003, the mortgage had not been paid in any way for the months of March, April and May. The Quinns agreed to pay for these months via personal check. Subsequently, the mortgage payments for June, July and August were not paid by ACH withdraw or by check.

In August 2003, Ocwen notified the Quinns that their account was transferred to Ocwen's Early Intervention Department, and if necessary, the loan may transfer to the Foreclosure Department. The Quinns did not dispute the validity of the

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debt, but notified Ocwen that they would make no further payments unless Ocwen used the ACH authorization previously executed naming Provident, or its successors and assigns. Correspondence continued throughout the fall.

By November 2003, no mortgage payment had been made by ACH withdraw or by check since June 2003. The mortgagee, Wells Fargo, by its counsel, Wilson & Associates ("Wilson"), notified the Quinns that a foreclosure sale would take place in December. Additionally, pursuant to the Arkansas foreclosure statute, Wilson, on behalf of Wells Fargo, filed a Notice of Default and Intention to Sell. Later, the foreclosure sale was cancelled, and the Quinns refinanced their mortgage with another lender.

In June 2004, the Quinns sued Ocwen and Wilson in Arkansas state court asserting six claims under state and federal law: Count I, Breach of Contract against Ocwen; Count II, Negligence against Ocwen; Count III, Defamation against Ocwen; Count IV, Violation of Fair Debt Collection Practices Act against Ocwen and Wilson; Count V, Violation of Arkansas statute against Ocwen and Wilson; Count VI, Equitable Relief to Remove Cloud on Title against Ocwen and Wilson. The case was removed to federal court under federal question jurisdiction. Both Ocwen and Wilson moved to dismiss for failure to state a claim. The district court1 granted their motions, dismissing all claims with prejudice.


This court reviews de novo the grant of a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) and affirms only if plaintiffs can prove no set of facts entitling them to relief...

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