Bolin v. HSBC Mortg. Servs.
| Decision Date | 05 March 2018 |
| Docket Number | Case No. 4:17-CV-1903 RLW |
| Parties | KIMBERLY BOLIN and DONALD BOLIN, Plaintiffs, v. HSBC MORTGAGE SERVICES, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
This pro se action is before the Court on motions to dismiss filed by the seven Defendants1 pursuant to Federal Rule of Civil Procedure 12(b)(6) and on a motion by Kimberly Bolin and Donald Bolin ("Plaintiffs") for leave to file a second amended complaint. With the exception of the motion to dismiss filed by defendant Mortgage Electronic Registration Systems, Inc. ("MERS"), each motion is opposed.2
The nine-count amended complaint has its genesis in a mortgage obtained by Plaintiffs for the property at 5019 Meadow Drive, Imperial, Jefferson County, Missouri. The allegations in the complaint are, for purposes of the motions to dismiss, accepted as true3 and are as follows.
In November 2004, Plaintiffs met with a mortgage officer from defendant First Option Mortgage ("First Option") about obtaining a mortgage for the Meadow Drive property. (Am.Compl. ¶ (V)(20), ECF No. 33.) First Option took their loan application, requesting only that they sign the application and explaining that the rest would be completed once documentation had been received. (Id.) The following week, First Option informed Plaintiffs that their mortgage had been approved through defendant Intervale Mortgage Corporation ("Intervale"). (Id. ¶ (V)(21)).
In December 2004, Plaintiffs closed on the Meadow Drive property at the offices of defendant Commonwealth Land and Title ("Commonwealth"). (Id. ¶¶ (III)(6), (V)(22)). The deed of trust and other documents listed Intervale as the lender and defendant Decision One Mortgage ("Decision One") as the servicer. (Id. ¶¶ (III)(5), (V)(21)). Plaintiffs "believed they were executing an adjustable rate note and mortgage for the Meadow Drive property." (Id. ¶ (IV)(A)). Intervale was allegedly the mortgagor and was listed as such on the deed of trust and the note. (Id. ¶¶ (III)(4), (IV)(A)). At the same time, Plaintiffs signed a second mortgage from Intervale. (Id. ¶ (IV)(A)). This was secured by a ten-year balloon note. (Id.) Defendant HSBC Mortgage Services ("HSBC") is allegedly the "[a]ssignee/original 'lender' named on the mortgage/deed of trust" and the servicer of the mortgage. (Id. ¶¶ (III)(1), (IV)(C)). "No notification of a right to rescission was ever implied or given to Plaintiffs." (Id. ¶ (IV)(B)). Commonwealth refused to allow Plaintiffs to read the loan documents before they signed them. (Id. ¶ (V)(67)).
In June 2005, Commonwealth issued title insurance on the Meadow Drive property. (Id. ¶ (V)(26)). This included a recording of the deed of trust; the documents had been altered, including the addition of a legal description of the property and of a notarized statement alleging Plaintiffs had agreed to such recording. (Id.) They had not, and were unaware of the changes until May 2013. (Id.)
In February and March 2012, Plaintiffs mailed HSBC "a Qualified Written Request and Debt Validation letter." (Id. ¶¶ (IV)(D), (V)(16)). HSBC failed to timely respond. (Id. ¶ (IV)(E)). HSBC also failed "to provide Plaintiffs written notice within 60 days after HSBC was assigned the original promissory note." (Id. ¶ (IV)(G)). Plaintiffs allege "they never received notice of the date of any assignment." (Id. ¶ (IV)(H)).
And, HSBC (a) "told Plaintiffs they qualified for a loan modification"; (b) "asked Plaintiffs to make trial payments for a period of time"; (c) "made false statements to Plaintiffs about the character and the amount that was due after payments were applied"; (d) "harmed Plaintiffs by refusing to create a permanent loan modification"; and (e) "caused the default by not applying payments made and by charging late fees when payments were not late." (Id. ¶¶ (IV)(I)(J),(L)-(N), (V)(12)). HSBC also "caused [a] default by a practice known as dual tracking so they could foreclose and steal the equity in the home." (Id. ¶ (IV)(R)).
The default was "[o]n or about December 1, 2011." (Id. ¶ (V)(7)). Plaintiffs had been attempting to obtain a permanent modification of their mortgage and had been told "they must be at least 60 days behind on their mortgage." (Id.) In February 2012, HSBC "extorted money from Plaintiffs by claiming to be putting funds towards a modification" and then not doing so. (Id. ¶ (V)(8)). Three times - once in June 2010, once in February 2011, and once in November 2011 - HSBC tried to impose an insurance policy on the deed of trust without authorization or need, as Plaintiffs' homeowners' insurance policy never lapsed. (Id.) And, HSBC reported falsely reported that Plaintiffs were late over a period of 2007 to 2012. (Id. ¶ (V)(13)).
In September 2012, HSBC "removed any record of any mortgage of any kind taken out by the Plaintiffs," which deception resulted in Plaintiffs being unable to purchase or rent another residence. (Id. ¶ (V)(14)).
In May 2013 and again in July 2013, HSBC and Richard L. Martin "filed, fabricated, forged and intentionally altered documents with the Record of Deeds in Jefferson County, Missouri." (Id. ¶ (V)(17)). In May, HSBC requested, and received, from MERS an assignment of the deed of trust. (Id. ¶ (V)(43), (44)). The assignment was allegedly from Intervale to HSBC. (Id. ¶ (V)(44)). Neither MERS nor Intervale had the authority to issue an assignment of Plaintiffs' mortgage. (Id.) Also in May, this fraudulent assignment was recorded by defendant Martin Leigh P.C. ("Leigh"), a law firm specializing in foreclosure proceedings. (Id. ¶¶ (III)(2), (V)(46)). HSBC then named Leigh as a successor trustee and recorded the assignment in July. (Id. ¶ (V)(46)).
In August 2013, Leigh was informed by letter of defects in HSBC's documents. (Id. ¶ (V)(11)). Leigh ignored the letter. (Id.) That same month, HSBC wrongfully foreclosed, with Leigh's knowledge and without standing, on Plaintiffs' residence. (Id. ¶ (V)(18)).
Plaintiffs fashion nine counts from the foregoing allegations. Count One is against HSBC and Leigh for a breach of fiduciary duty. The underlying acts are the default caused by HSBC in December 2011; the solicitation in February 2012 by HSBC of money for a modification; the three attempts by HSBC to force Plaintiffs to buy a homeowners' insurance policy they did not need; the consistent unmerited assessment by HSBC of late fees; the reporting by HSBC of false information to credit agencies; the removal by HSBC in September 2012 of any record of Plaintiffs' mortgage; and the disregard of Leigh to the letter sent on behalf of Plaintiffs about the defects in the HSBC documents. HSBC and Leigh argue that this count fails to state a claim because there was no fiduciary duty and, regardless, the claim is time-barred.
Count Two is against HSBC and Leigh for a breach of the implied covenant of the duty of good faith and fair dealing. This breach is evidenced by HSBC's failure to timely and accurately credit Plaintiffs' mortgage payments; HSBC's disregard of the qualified written request letter sent in February 2012; the forging, with Leigh, in May and July 2013 of documents filed with the Recorder of Deeds; and the wrongful foreclosure, with Leigh's awareness, in August 2013. HSBC and Leigh argue that the complained-of actions were permitted by the Deed of Trust contract and there is no loan modification contract.
Count Three is for fraud and collusion and is against all Defendants. Plaintiffs also cite the Missouri Merchandising Practices Act ("MMPA"), Mo.Rev.Stat. § 407.020. The underlying acts are those surrounding the 2004 loan application, mortgage, and closing and the 2005 alteration of recorded documents. Plaintiffs allege they were unaware of the 2004 acts until September 2017, including that the original loan application was sent to Decision One, not Intervale, for approval, and were unaware of the altered documents until May 2013. They further allege that they have only "recently learned that Intervale never lent them any money." (Id. ¶ (V)(22)). Because of the deception practiced when the mortgage was obtained and recorded, the loans are void and the foreclosure illegal. Defendants argue the allegations fail to include the specificity required by Rule 9(b) of the Federal Rules of Civil Procedure.4
Count Four is against HSBC and Leigh and is for violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1629d-f.
Count Five is against HSBC only and is for unjust enrichment. Specifically, HSBC was unjustly enriched by accepting payments that were not properly credited and charging, andreceiving, late fees for payments that were not late. Additionally, HSBC fraudulently represented that taxes were not paid, although they had been up to foreclosure, and violated the Home Ownership and Equity Protection Act ("HOEPA"), 15 U.S.C. § 1602 et seq., by refusing to refinance or modify the terms of Plaintiffs' loan. HSBC contends that an unjust enrichment claim does not lie when the parties' relationship is governed by contract and the HOEPA claims are time-barred.
Count Six is against HSBC and Leigh and is for fraud upon the court. This count is premised on Plaintiffs' allegation about Leigh recording the fraudulent assignment in May 2013 and the assignment of a successor trustee in July. HSBC argues that Plaintiffs have fatally failed to allege a required element of there being no fault or negligence on their part and have failed to plead this claim with the necessary specificity.
Count Seven is against all Defendants and is for the infliction of emotional and physical distress. Movants note in the pending three motions to dismiss that Plaintiffs have failed to identify whether they are pleading intentional or negligent infliction of emotional distress. If the former, the allegations are insufficient; if the latter, Plaintiffs fail to allege a duty owed to them.
Count Eight is against HSBC for violations of the Fair...
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