Adler v. Am. Home Mortg. Servicing, Inc.

Decision Date05 September 2012
Docket NumberCivil Case No. 12–cv–00291–LTB–MEH.
Citation882 F.Supp.2d 1237
PartiesGary ADLER, Plaintiff, v. AMERICAN HOME MORTGAGE SERVICING, INC., Defendant.
CourtU.S. District Court — District of Colorado


Jay Toivo Jambeck, Leigh Law Group, San Francisco, CA, for Plaintiff.

Jamie Grant Siler, Maris S. Davies, Bloom Murr Accomazzo & Siler, P.C., Denver, CO, for Defendant.


BABCOCK, District Judge.

This matter is before me on two motions by American Home Mortgage Servicing, Inc. (American). The first is its Motion to Dismiss Plaintiff Gary Adler's original complaint [Doc # 7]. The second is its Motion to Dismiss Adler's Amended Complaint [Doc # 24]. Jurisdiction is proper under 28 U.S.C. § 1331. After considering the parties' arguments, and for the reasons herein, I DENY the first motion as moot and GRANT the second.

I. Background

This case concerns alleged discrimination in connection with the servicing of a residential mortgage. Adler alleges the following in his amended complaint:

Adler is a Colorado citizen who is visually impaired. He was declared legally blind in 1993 and is considered handicapped under pertinent law. American is a Delaware corporation with its principal place of business in Irving, Texas. American, through its participation in certain federal programs, received federal funding for making loan modifications.

In February 2003, Adler purchased a home in Castle Rock, Colorado, taking out a mortgage for $279,903 to do so. Six years later, in 2009, his mortgage was sold to American for servicing.

In or around 2009, Adler requested that American issue all its correspondence to him in 24–point bold font due to his visual impairment. This accommodation was necessary for Adler to read the documents American would send regarding his mortgage. American refused and continued issuing all its correspondence to him in its standard type. Because he could not read the correspondence, Adler says he did not understand his rights and duties and was injured as a result.

That same year, Adler resubmitted his request to American in connection with his applications for a mortgage modification pursuant to the Home Affordable Modification Program (“HAMP”), a program enacted under the Emergency Economic Stabilization Act of 2008 and made part of the Making Home Affordable Program, enacted by the Financial Stability Act of 2009. American again refused. As a result, Adler says he could not read the materials pertaining to his HAMP applications, although he did submit multiple applications. His applications were ultimately denied. Similarly, due to its typeface, font, and colors, Adler also says he could not read American's website to access forms and other information regarding his mortgage. In 2011, Adler's home was foreclosed.

Feeling aggrieved, Adler commenced this action on February 3, 2011, bringing claims under the Fair Housing Act (the “FHA”), 42 U.S.C. § 3601 et seq.,Section 504 of the Rehabilitation Act, 29 U.S.C. § 701 et seq., and the Americans with Disabilities Act (the “ADA”), 42 U.S.C. § 12181 et seq. American then filed its first motion to dismiss Adler's original complaint. See Docket # 7. In response, Adler moved for leave to file an amended complaint pursuant to Fed.R.Civ.P. 15(a). See Pl.'s Mot. Docket # 17. I granted Adler's motion and accepted his first amended complaint tendered therewith. See Docket # 18. Consequently, I deny American's first motion as moot. American now moves pursuant to Fed. R. Civ. P 12(b)(6) to dismiss the first amended complaint.

II. Standard of Review

To survive a motion to dismiss under Rule 12(b)(6), a complaint “must contain sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.’ Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell 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.” Id. (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). “Plausibility” in this context “refer[s] to the scope of allegations in a complaint: if they are so general that they encompass a wide swath of conduct, much of it innocent, then the plaintiffs have not nudged their claims across the line from conceivable to plausible.” Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir.2008) (internal quotations omitted). As a corollary, [t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Rather, the [f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955. When deciding a motion to dismiss under Rule 12(b)(6), the court must assume the truth of all well-pleaded facts in the complaint and draw all reasonableinferences therefrom in the light most favorable to the plaintiff. Teigen v. Renfrow, 511 F.3d 1072, 1078 (10th Cir.2007). Legal conclusions, however, do not receive this treatment. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.

III. Discussion

American's second motion asserts that each of Adler's three causes of action fails to state a plausible claim for which relief can be granted. I address his claims seriatim.

A. The FHA Claim

Adler's first claim is that American violated the FHA by failing to send its correspondence to him in the larger, bolded typeface he requested. Adler's complaint does not specify a particular FHA provision upon which his first claim rests, but his response elucidates that the claim rests upon § 3604(f)(2). See Pl.'s Resp. Docket # 25 at 8 (Plaintiff is not complaining of a real estate transaction as contemplated by § 3605 ... but of a service provided in connection with his dwelling.... The actual servicing of loans does not fall under the ambit of § 3605 but rather § 3604.”). I therefore cabin my analysis to whether Adler states a claim under that provision.

Section 3604(f)(2) makes it unlawful [t]o discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection with such dwelling, because of a handicap of that person; or a person residing in ... that dwelling after it is so sold....” American contends that Adler fails to state a claim because § 3604 does not cover mortgage servicing and because the alleged discrimination was not in connection with the purchase of Adler's home. Adler disagrees. He argues that mortgaging servicing is a “service” within the meaning of § 3604 and that discrimination need not relate to the sale of his home, but rather, to his home in general. Hence, I must address these two issues, beginning with whether American was providing a “service” under § 3604. For the reasons below, I conclude that Adler fails to sufficiently allege that American was providing him a service as contemplated by § 3604(f)(2). I therefore need not and do not decide whether the provision of services must be “in connection with” the purchase of Adler's home or with his home in general.

Adler fails to establish that by the statute's plain language, “services” includes mortgage servicing. He does not even attempt to do so, for good reason. The statute does not define “services,” and the provision's drafting leaves the term ambiguous. See N.A.A.C.P. v. American Family Mut. Ins. Co., 978 F.2d 287, 298 (7th Cir.1992); see also42 U.S.C. § 3604. Nor does the term “loan” or “mortgage” appear in § 3604. See42 U.S.C. § 3604.

Compare this to the next section: Section 3605 makes it “unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of ... handicap.” 42 U.S.C. § 3605(a) (emphasis added). “Residential real estate transactions” means [t]he making or purchasing of loans or providing other financial assistance—(A) for purchasing, constructing, improving, repairing, or maintaining a dwelling; or (B) secured by residential real estate.” Id. § 3605(b)(1).

The regulations promulgated by the Department of Housing and Urban Development (“HUD”) to effectuate the FHA mirror this contrast and apparent allocation of coverage. Compare24 C.F.R. §§ 100.50–.90, .200–205 (providing HUD's interpretation of conduct that is unlawful housing discrimination under § 3604 and not mentioning mortgage loans), with24 C.F.R. §§ 100.110–.148 (providing HUD's interpretation of the conduct that is unlawful housing discrimination under § 3605, and making numerous explicit references to loans and mortgages). “HUD's views about the meaning of the FHA are entitled to ‘great weight.’ Bloch v. Frischholz, 587 F.3d 771, 781 (7th Cir.2009) (quoting Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 210, 93 S.Ct. 364, 34 L.Ed.2d 415 (1972)). Furthermore, § 100.70(b) and (d) indicates that HUD interprets “services” in § 3604 to mean municipal services and property and hazard insurance for dwellings. See24 C.F.R. § 100.70(b), (d).

While the Tenth Circuit has not addressed whether § 3604 covers claims of discrimination in mortgage matters, some courts have held that the plain language of §§ 3604 and 3605 and their corresponding regulations shows that such a claim must be brought under § 3605. See, e.g., Webster Bank v. Oakley, 265 Conn. 539, 830 A.2d 139, 151–52, 155 (2003) ([W]e conclude that the defendant's claims of discrimination in the enforcement of mortgage loan agreements unambiguously falls within the ambit of 42 U.S.C. § 3605.... Indeed, we conclude further that the specific applicability of § 3605 to the context of enforcement of mortgage loan agreements...

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