Hadley v. Bank of Am., N.A.

• Decision Date: 27 August 2018
• Docket Number: CIVIL ACTION NO. 1:17-CV-1522-TWT-LTW
• Parties: WILLIAM HADLEY and WENDY HADLEY, Plaintiffs, v. BANK OF AMERICA, N.A., et al., Defendants.
• Court: U.S. District Court — Northern District of Georgia

WILLIAM HADLEY and WENDY HADLEY, Plaintiffs, v. BANK OF AMERICA, N.A., et al., Defendants.

CIVIL ACTION NO. 1:17-CV-1522-TWT-LTW

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION

August 27, 2018

MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

This case is before the Court on (1) Defendants Selene Finance L.P. and U.S. Bank, N.A. as Trustee for BCAT 2016-18TT's Motion to Dismiss Plaintiffs' Second Amended Complaint (Doc. 30); (2) Defendant McCalla Raymer Leibert Pierce, LLC's Motion to Dismiss Plaintiffs' Second Amended Complaint (Doc. 31); and (3) Defendants Bank of America, N.A. and BOFA Merrill Lynch Asset Holdings, Inc.'s Motion to Dismiss Plaintiffs' Second Amended Complaint (Doc. 32). For the reasons discussed below, Selene Finance L.P. and US Bank, N.A. as Trustee for BCAT 2016-18TT's Motion to Dismiss Plaintiffs' Second Amended Complaint should be GRANTED IN PART AND DENIED IN PART (Doc. 30), McCalla Raymer Leibert Pierce, LLC's Motion to Dismiss Plaintiffs' Second Amended Complaint should be GRANTED (Doc. 31), and Bank of America, N.A. and BOFA Merrill Lynch Asset Holdings, Inc.'s Motion to Dismiss Plaintiffs' Second Amended Complaint should be GRANTED IN PART AND DENIED IN PART (Doc. 32).

BACKGROUND

Pro se Plaintiffs William and Wendy Hadley ("Plaintiffs") filed the instant lawsuit against Defendants Bank of America, N.A. ("BANA"), Bank of America Merrill Lynch Asset Holdings, Inc. ("BOFA"),¹ Selene Finance L.P. ("Selene"), and US Bank, N.A. as Trustee for BCAT 2016-18TT ("U.S. Bank") in the Superior Court of Cherokee County on April 28, 2017. (Doc. 1, Ex. A). Defendants BANA and BOFA removed the case to this Court on April 28, 2017, on the grounds that Plaintiffs' Complaint raised a claim under federal law and the parties were completely diverse. (Doc 1). On May 5, 2017, Selene and U.S. Bank moved to dismiss Plaintiffs' Complaint. (Doc. 3). Defendants BANA and BOFA also moved to dismiss Plaintiffs' Complaint on the same day. (Doc. 5). Plaintiffs filed an Amended Complaint as a matter of right on May 22, 2017. (Doc. 6). Defendants Selene and U.S. Bank as well as Defendants BANA and BOFA subsequently moved to dismiss Plaintiffs' Amended Complaint. (Docs. 9, 12).

This Court found Plaintiffs' Amended Complaint was inadequately pled and failed to state a claim.² (R&R 7-9, Doc. 23). Because Plaintiffs are proceeding pro se and thisCourt could not conclude at that time that Plaintiffs could not state a claim, this Court gave them one opportunity to amend and cure the deficiencies within fourteen (14) days of December 28, 2017.³ (Id. at 9-10). The Court warned that Plaintiffs' failure to timely file their repleaded complaint and cure the deficiencies would result in this Court's recommendation that the case be dismissed with prejudice. (Id. at 10). The Court's Report and Recommendation was approved and adopted on January 30, 2018. (Order, Doc. 29).

Plaintiffs filed a Second Amended Complaint on January 16, 2018 - five days after the deadline imposed by this Court. (SAC, Doc. 27). Because Plaintiffs are proceeding pro se and the filing was only five days late, this Court declines to dismiss the case on that basis. See Tannenbaum v. U.S., 148 F.3d 1262, 1263 (11th Cir. 1998) ("pro se pleadings are held to a less stringent standard than pleadings drafted byattorneys . . .").

Plaintiffs' Second Amended Complaint brings claims against BANA, BOFA, Selene, U.S. Bank, and McCalla Raymer Leibert Pierce, LLC ("McCalla") (collectively, "Defendants"). (SAC 21-55). Plaintiffs claim this is their third lawsuit related to the mismanagement of their payments and inappropriate use of escrow accounts. (SAC 2-4). Plaintiffs allege that in 2013, they entered into a settlement agreement ("Settlement Agreement") and loan modification ("Loan Modification") with BANA that waived their escrow. (SAC 8-9, ¶ 13). Plaintiffs state that the Settlement Agreement permanently modified the escrow terms in their original security deed ("Security Deed") and original note ("Note") from 2005. (SAC 16, ¶¶ 42-44). In October of 2013, Plaintiffs proffer that BANA offered them a loan modification with principal reduction, but they declined it because it would have required an escrow. (SAC 9, ¶ 11). In November of 2013, Plaintiffs claim they received two mortgage statements, one of which included a payment amount for escrow. (SAC 9, 15, ¶¶ 12, 38). When Plaintiffs attempted to make their regular December 2013 payment without the escrow amount, BANA refused the payment and Plaintiffs were forced to mail their payments from December 2013 until November 2016. (SAC 9-10, ¶¶ 13-14, 38). Plaintiffs received a notice from BANA dated January 10, 2014, stating that their "work out plan" required a monthly escrow of $304. 95. (SAC 10-11, ¶ 17). Plaintiffs allege they never requested or agreed to a work out plan after their Loan Modification. (Id.).

Plaintiffs claim that BANA breached the Settlement Agreement by adding anescrow that increased their monthly payment, and applied their monthly payments to escrow and a suspense account instead of to the principal and interest of their loan. (SAC 11, 14, 15, ¶¶ 20, 34-36, 41). Plaintiffs state that they sent letters to BANA to notify them of the error, but BANA responded with a letter of Intent to Accelerate (SAC 11, ¶¶ 18-19, 21, 52-54). According to Plaintiffs, BANA never correctly posted the principal and interest payments, and charged unauthorized inspection fees and late charges to their account. (SAC 15, ¶¶ 39, 40). Plaintiffs contend this failure to correct the application of payments shows bad faith. (SAC 16, ¶ 45).

In 2016, BANA sold their mortgage loan to BOFA, and BOFA then sold their interest to U.S. Bank. (SAC 12, 19, ¶¶ 22, 24, 61). Plaintiffs argue U.S. Bank and BOFA have "duties" under the Security Deed, and that U.S. Bank also has duties under the Loan Modification, and Settlement Agreement. (SAC 19, ¶¶ 58-60). Without providing a date, Plaintiffs allege BANA sold the servicing rights associated with their mortgage loan to Selene. (SAC 12, ¶ 25). Selene accepted Plaintiffs' payments of $1,247.37 for a few months and then started returning them. (SAC 12, 16, ¶¶ 26, 46). Selene charged Plaintiffs late fees and inspection fees, and Selene's agents hung door hangers on Plaintiffs' front door without their permission that were visible to neighbors and the general public. (SAC 11, 18, ¶¶ 27, 54-55). When Plaintiffs' requested that Selene adhere to the terms of the Settlement Agreement and Loan Modification, Selene sent notices of intent to accelerate. (SAC 18, ¶ 54).

Plaintiffs state that McCalla, acting on behalf of Selene, sent them a debtcollection letter dated March 4, 2017, which Plaintiffs disputed by responding in writing. (SAC 12-13, ¶¶ 28-29). McCalla replied in a letter dated March 17, 2017, accusing Plaintiffs of attempting to unilaterally alter the terms of their mortgage and stating that their home was scheduled for foreclosure sale on May 2, 2017. (SAC 13, ¶ 30.)

Plaintiffs argue they have tendered all payments due under the terms of the Settlement Agreement and Loan Modification, which were specific amounts to be applied to principal and interest only. (SAC 14, 17 ¶¶ 33, 47). Plaintiffs also allege they have paid all the taxes and insurance premiums as required by the Settlement Agreement. (SAC 17, ¶ 51). Plaintiffs contend their credit has been damaged and they have suffered severe emotional distress that affected their marriage and forced them to seek marriage counseling. (SAC 17, 19 ¶¶ 48, 49, 57).

Plaintiff brings claims against BANA for breaching and intentionally breaching the Settlement Agreement, Loan Modification, and Security Deed when BANA added the escrow account and applied Plaintiffs' monthly payments to escrow. (SAC 20-34). Plaintiffs also assert a claim for negligent infliction of emotional distress for BANA's refusal to correct escrow errors, and a claim for conversion based on BANA's improper application of Plaintiffs' payments to an escrow account and refusal to correct the error. (SAC 35-38). Plaintiffs also bring claims for specific performance, punitive damages, and fees and costs. (SAC 41-44).

Against Selene, Plaintiffs brings claims for attempted wrongful foreclosure and infliction of emotional distress based on Selene's referring their loan to McCalla forforeclosure when it did not hold the Security Deed and Plaintiffs' loan was not in default. (SAC 44-45). Plaintiffs also allege Selene breached the Loan Modification and Note by not accepting payments according to their terms. (SAC 47-48). Plaintiffs also request attorney's fees from Selene. (SAC 48-49).

Plaintiffs argue U.S. Bank⁴ breached the Loan Modification and Note by refusing Plaintiffs' principal and interest payments, and Plaintiffs also request attorney's fees from U.S. Bank. (SAC 50-51). Finally, Plaintiffs assert claims against McCalla for wrongful attempted foreclosure and intentional infliction of emotional distress. (SAC 52-54). Both claims are rooted in the letter Plaintiffs received from McCalla stating their home was scheduled for foreclosure. (Id.). Plaintiffs do not specifically bring any claims against BOFA in their Second Amended Complaint. (SAC, Doc. 27).

Selene and U.S. Bank filed a Motion to Dismiss Plaintiffs' Second Amended Complaint on January 30, 2018. (Selene and U.S. Bank Motion to Dismiss, Doc. 30). Selene and U.S. Bank argue Plaintiffs have not pled the essential elements of a claim for attempted wrongful foreclosure, that there is no physical injury to support a claim of negligent infliction of emotional distress, and that initiating foreclosure proceedings cannot sustain an intentional infliction of emotional distress claim. (Id. 8-10). Selene and U.S. Bank aver that Plaintiffs' breach of contract claim should fail because Plaintiffs neither identify the specific provision of an agreement that Selene and U.S. Bankbreached nor allege that Selene is a...