Edwards v. Ocwen Loan Servicing, LLC

• Decision Date: 01 March 2014
• Docket Number: Case No. 13–cv–709 RJL
• Citation: 24 F.Supp.3d 21
• Court: U.S. District Court — District of Columbia
• Parties: Janice A. Edwards, Plaintiff, v. Ocwen Loan Servicing, LLC and Ocwen Financial Corporation, Defendants.

24 F.Supp.3d 21

Janice A. Edwards, Plaintiff

v.Ocwen Loan Servicing, LLC and Ocwen Financial Corporation, Defendants.

Case No. 13–cv–709 RJL

United States District Court, District of Columbia.

Signed March 1, 2014

Filed March 5, 2014

Dean Gregory, Law Offices of Dean Gregory, Washington, DC, for Plaintiff.

Christopher M. Corchiarino, Goodell, Devries, Leech & Dann, LLP, Baltimore, MD, for Defendants.

[Dkt. # 10]

MEMORANDUM OPINION

RICHARD J. LEON, United States District Judge

Plaintiff Janice Edwards (“plaintiff or “Edwards”) is suing Ocwen Loan Servicing, LLC and Ocwen Financial Corporation (collectively “defendants” or “Ocwen”) for various wrongs allegedly committed while servicing plaintiff's mortgage. See generally Compl. [Dkt. # 1]. Defendants move to dismiss under Federal Rule of Civil Procedure 12(b)(6) on the basis that plaintiff has failed to state a claim. See Defs.' Mot. to Dismiss [Dkt. # 10]. Upon consideration of the parties' pleadings, relevant law, and the entire record therein, the motion is GRANTED in part and DENIED in part.¹

BACKGROUND

Plaintiff's complaint alleges the following facts, which I accept as true and construe in the light most favorable to her.² On February 18, 2003, Edwards closed on a $64,000 mortgage from SouthStar Funding, LLC (“SouthStar”), which was to be used to refinance debt on a home that plaintiff was not occupying, and did not intend to occupy, as a primary residence. See Compl. ¶ 20 & Exs. A, D [Dkt. # # 10–1, 10–4]. SouthStar later assigned its servicing rights to Litton Loan Servicing, LP (“Litton”). See id. ¶ 22.

Although Edwards made her monthly escrow and mortgage payments and was not in default on the loan, Litton failed to remit tax payments for 2009, and the property was sold in a January 2011 public tax sale. See id. ¶¶ 24–25. In mid–2011, Ocwen acquired Litton. See id. ¶ 27. In late–2011, the purchaser of the property initiated foreclosure proceedings; however, Ocwen redeemed the property, and the Complaint to Foreclose the Right of Redemption was dismissed in mid–2012.See id. ¶¶ 30–33.

Defendants then force-placed hazard insurance on the property and told Edwards that she owed a total of $42,100.03, of which $7,813.76 was in default. See id. ¶¶ 35–38. Her monthly payment ballooned from $509.22 to $4,278.84. See id. ¶ 39. To avoid defaulting, plaintiff sold the property in March 2013 for $150,000, and defendants retained $106,939.05 of the proceeds. See id. ¶¶ 44, 47.

Plaintiff now claims that Ocwen “engaged in illegal, unfair and unlawful predatory mortgage servicing practices,” entitling her to actual, statutory, and punitive damages, costs and attorney's fees, and pre- and post-judgment interest, all totaling $25,000,000. See id. ¶ 49 & p. 19. Her complaint pleads eleven causes of action—two under federal statutes, one under a D.C. statute, and eight sounding in common law tort and contract.³

Defendants now contend that “[p]laintiff uses her [complaint] as a soap box,” but “when all of the venomous rhetoric is scrubbed from [it], what remains is a Complaint in which [pjlaintiff fails to state a claim.” See Defs.' Mem at 1. I mostly agree, but find that plaintiff has stated a viable claim for breach of an escrow agent's fiduciary duty.

LEGAL STANDARD

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) (internal quotation marks omitted). “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. “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 entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations and internal quotation marks omitted); see id. (facts alleged “must be enough to raise a right to relief above the speculative level”).

“[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show [n]’—‘that the pleader is entitled to relief.” ’ Iqbal, 556 U.S. at 679, 129 S.Ct. 1937 (quoting Fed. R. Civ. P. 8(a)(2) ). I must “treat the complaint's factual allegations as true” and “grant plaintiff the benefit of all inferences that can be derived from the facts alleged.” Sparrow, 216 F.3d at 1113 (citation and internal quotation marks omitted). But I “need not accept inferences drawn by plaintiff[ ] if such inferences are unsupported by the facts set out in the complaint. Nor must the court accept legal conclusions cast in the form of factual allegations.” Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C.Cir.1994).

ANALYSIS

A. Statutory Claims

Plaintiff's claims under the Fair Debt Collection Practices Act (“FDCPA”), Real Estate Settlement Procedures Act (“RESPA”), and D.C.'s Consumer Protection Procedures Act (“CPPA”) must be dismissed because her mortgage loan does not fall within the scope of those statutes. The FDCPA provisions on which plaintiff relies, 15 U.S.C. §§ 1692d and 1692e, apply only to the collection of “debt[s],” which are defined as “any obligation ... to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes ” § 1692a(5) (emphasis added). Plaintiff has failed to plead facts sufficient to establish that her mortgage was a “debt” under the FDCPA. Although she states that the loan “was for personal, family or household purposes,” Compl. ¶ 2, she puts no factual meat on that bare bone of statutory language. Moreover, it is clear from an exhibit attached to plaintiff's complaint that she did not reside at the subject address nor did she intend to do so when she refinanced the debt on that property, leaving me to speculate about what “personal, family, or household purposes” the property possibly could have served. See Compl., Ex. D [Dkt. # 1–4].⁴

Plaintiff maintains that a debt's “purpose” is determined by looking at the owner's intent at time the collateral was purchased, not her intent at the time of refinancing. See Pl.'s Opp'n to Mot. to Dismiss (“PL's Opp'n”) at 7 [Dkt. # 13]. But even if that is true—and even if contemporaneous occupancy in the home is not required for a mortgage to be for personal, family, or household purposes—I am still left with no factual averments whatsoever about how plaintiff ever intended to use this property or loan.⁵ Plaintiff's repeated recitations of the statutory language, see Compl. ¶ 2; Pl.'s Opp'n at 7, 8, 23, 24, without more, are insufficient to allege that her mortgage loan meets the FDCPA's definition of a “debt.” See Hardy v. N. Leasing Sys., Inc., 953 F.Supp.2d 150, 160 (D.D.C.2013) ( “[N]otwithstanding the plaintiff's unsupported assertion that ‘said equipment, if used, was for personal use only[,]’... she fails to establish that the underlying debt was a consumer debt primarily for personal, family, or household purposes.” (citation omitted; quoting Am. Compl.)); see also Twombly, 550 U.S. at 555, 127 S.Ct. 1955.

Plaintiff's RESPA and CPPA claims fail for the same reason. The RESPA “does not apply to credit transactions involving extensions of credit ... primarily for business, commercial, or agricultural purposes,” 12 U.S.C. § 2606(a), including mortgage loans on non-owner-occupied rental properties, see, e.g., Henok v. Chase Home Fin., LLC, 947 F.Supp.2d 6, 7 (D.D.C.2013). And the CPPA “protects only consumers,” which our Circuit Court defines as persons “who receive[ ] or demand[ ] goods or services that are primarily for personal, household, or family use.” Shaw v. Marriott Int'l Inc., 605 F.3d 1039, 1043 (D.C.Cir.2010) (citing Ford v. ChartOne, Inc., 908 A.2d 72, 81 (D.C.2006), and D.C. Code § 28–3901(a)(2) ). Thus, plaintiff has not pleaded facts sufficient to support a plausible claim under the RESPA or the CPPA.⁶

B. Contract and Tort Claims

1. Breach of Contract and Implied Covenant of Good Faith and Fair Dealing. To state a claim for breach of contract or breach of the implied covenant of good faith and fair dealing, a plaintiff must first and foremost allege that there was “a valid contract between the parties.” Tsintolas Realty Co. v. Mendez, 984 A.2d 181, 187 (D.C.2009) ; see Brown v. District of Columbia, 919 F.Supp.2d 105, 113 & n. 5 (D.D.C.2013). Edwards dutifully recites this element in her third and fifth claims for relief, see Compl. ¶¶ 85, 95, but she does not plead facts in support. Instead, she alleges that Ocwen's acquisition of Litton (which years earlier had been assigned SouthStar's servicing rights) “created privity of contract between Edwards and the [d]efendants, as agents for Litton.” Id. ¶¶ 22–29. Judges around the country—including at least two of my colleagues—have held that a loan servicer, as a lender's agent, has no contractual relationship or privity with the borrower and therefore cannot be sued for breach of contract.See, e.g., Petty v. Countrywide Home Loans, Inc., No. 3:12cv6677, 2013 WL 1837932, at *10 (S.D.W.Va. May 1, 2013) (collecting cases); Robinson v. Deutsche BankNat'l Trust Co., 932 F.Supp.2d 95, 109 (D.D.C.2013) ; Edmond v. Am. Educ. Servs., No. 10cv0578, 2010 WL 4269129, at *2 (D.D.C. Oct. 28, 2010). As a matter of law, then, plaintiff cannot proceed on a theory that Ocwen is liable as the agent of either Litton or SouthStar.⁷

Moreover, even if Ocwen can be held liable as the successor to assignee-Litton's servicing rights, see Compl. ¶ 22,⁸ plaintiff does not state such a claim merely by alleging...