Holman v. Fifth Third Bank
| Decision Date | 30 November 2021 |
| Docket Number | 21-CV-02247-EFM-TJJ |
| Parties | TAMMIE HOLMAN, Plaintiff, v. FIFTH THIRD BANK, N.A., et al., Defendants. |
| Court | U.S. District Court — District of Kansas |
TAMMIE HOLMAN, Plaintiff,
v.
FIFTH THIRD BANK, N.A., et al., Defendants.
No. 21-CV-02247-EFM-TJJ
United States District Court, D. Kansas
November 30, 2021
MEMORANDUM AND ORDER
ERIC F. MELGREN, UNITED STATES DISTRICT JUDGE
Plaintiff Tammie Holman's story begins with her purchase of a Kia Optima. Plaintiff made a down payment and began to pay back the balance with regular monthly payments, which she did without incident for a time thereafter. Things soon turned sour though, as they often do before they reach this Court. Plaintiff was surprised to discover that she was delinquent on several payments and that the amount required of her each month had greatly increased. According to Plaintiff, Defendant Fifth Third Bank, N.A., by then the lienholder on Plaintiff's Kia, started charging her for additional insurance on the vehicle, even though she alleges it was always sufficiently insured. Plaintiff alleges Defendant G.D. Van Wagenen Financial Services, Inc., in providing insurance monitoring services to Fifth Third, misrepresented that Plaintiff's Kia was uninsured and wrongfully “foisted” lender-placed insurance on her Kia, the charges for which
eventually landed in Plaintiff's lap.[1] After what appears to be a bitterly fought but ultimately unsuccessful battle with several customer service departments, Plaintiff seeks relief from this Court. Against Van Wagenen, she alleges violations of the Kansas Consumer Protection Act (“KCPA”), conversion, unjust enrichment, negligence. She also seeks a declaratory judgment that Van Wagenen wrongfully placed lender-placed insurance on her vehicle. Van Wagenen moves to dismiss all counts alleged against it. For the reasons set out below, the Court grants in part and denies in part Van Wagenen's Motion to Dismiss (Doc. 29).
I. Factual and Procedural Background[2]
In 2016, Plaintiff purchased her Kia Optima from Laird Noller Automotive pursuant to a retail installment sales contract. Under that contract, she paid $2, 500 down towards a total sale price of $19, 453.75. The contract provided that Plaintiff would repay the remaining balance, plus an annual rate of 3.89% interest, over the course of 75 months with a payment of $226.05 per month. The contract further specified:
You [Plaintiff] agree to have physical damage insurance covering loss of or damage to the vehicle for the term of this contract. The insurance must cover our interest in the vehicle. If you do not have this insurance, we [the current lienholder] may, if we choose, buy physical damage insurance.[3]
Plaintiff states that she maintained physical damage insurance on her Kia at all times relevant to this lawsuit.
After Plaintiff purchased the Kia, Laird Noller assigned its interest on the contract to Fifth Third Bank. Fifth Third, sometime prior to the events of this lawsuit, contracted with Van
Wagenen to provide insurance monitoring services for its book of automotive loans, including Plaintiff's. Plaintiff states that Fifth Third and Van Wagenen terminated their contractual relationship in or around March 2019.
In April 2019, Plaintiff was surprised to receive a Credit Karma report stating that she was delinquent on three or four payments to Fifth Third. Because Plaintiff had set up automatic car payments of the appropriate amount under the contract, she could not understand how her payments were delinquent. Plaintiff called Fifth Third for clarification and, after what she describes as an “endless, time-consuming, futile, and fundamentally unfair process, ” Fifth Third informed Plaintiff that she had incurred lender-placed insurance (“LPI”) on her Kia.[4]
LPI is exactly what its name suggests: insurance placed on an asset by a lender who has a financial interest in the asset. A lender typically applies LPI to an asset when the debtor's own insurance as to that asset has lapsed or is deficient in some way, thus allowing the lender to protect its financial interest. This is what is contemplated in the provision of Plaintiff's original contract that reads, “[i]f you do not have this insurance, we may, if we choose, buy physical damage insurance.”[5] The problem, according to Plaintiff, is that her insurance on her Kia never lapsed and thus LPI was unnecessary.
Plaintiff believes that Fifth Third first applied her scheduled automatic payments to the cost of this LPI, leaving her original car payment and any other charges in excess of her scheduled payments unpaid and delinquent. Plaintiff alleges she has since incurred many months of LPI-related charges and late charges, beginning in January 2019 and continuing to the present. Though
Plaintiff sought to rectify the situation directly with Fifth Third, she states she was unable to penetrate the “faceless bureaucracy” that characterizes Fifth Third's customer service operations.[6]
Plaintiff believes this whole unfortunate process began with the actions of Van Wagenen. Van Wagenen, pursuant to its contract with Fifth Third, was tasked with monitoring Fifth Third's portfolio of automotive loans for any problems that might affect Fifth Third's interest in a particular loan, such as a deficiency in physical damage insurance on the vehicle. Plaintiff alleges that despite the fact that she had sufficient physical damage insurance on her Kia, Van Wagenen wrongfully concluded her Kia was uninsured. Plaintiff's Complaint does not offer precise dates as to when exactly Van Wagenen made this conclusion nor when Van Wagenen acquired the LPI for Plaintiff's Kia. Still, Plaintiff does allege her delinquency owing to the increased charges of the LPI began in or around January 2019. According to Plaintiff, sometime during this period, Van Wagenen acquired LPI for the Kia, and passed the cost of the LPI on to Fifth Third, who in turn passed the cost on to Plaintiff.
Plaintiff seeks relief from this Court for these alleged wrongs. As to Van Wagenen, Plaintiff alleges six counts of wrongful conduct: two counts that allege Van Wagenen violated the KCPA, one count alleging conversion, one count alleging unjust enrichment, one count alleging negligence, and one count seeking a declaratory judgment that Van Wagenen wrongfully placed LPI on her Kia. Van Wagenen now moves to dismiss every count alleged against it under Rule 12(b)(6).
II. Legal Standard
Under Rule 12(b)(6), a defendant may move for dismissal of any claim for which the plaintiff has failed to state a claim upon which relief can be granted.[7] Upon such motion, the court must decide “whether the complaint contains ‘enough facts to state a claim to relief that is plausible on its face.' ”[8] A claim is facially plausible if the plaintiff pleads facts sufficient for the court to reasonably infer that the defendant is liable for the alleged misconduct.[9] The plausibility standard reflects the requirement in Rule 8 that pleadings provide defendants with fair notice of the nature of claims as well the grounds on which each claim rests.[10] Under Rule 12(b)(6), the court must accept as true all factual allegations in the complaint, but need not afford such a presumption to legal conclusions.[11] Viewing the complaint in this manner, the court must decide whether the plaintiff's allegations give rise to more than speculative possibilities.[12]
III. Analysis
As noted above, six counts of Plaintiff's Complaint relate to Van Wagenen. Five of these allege violations of Kansas law, specifically that Van Wagenen: (1) violated the KCPA on or after July 1, 2019; (2) violated the KCPA before July 1, 2019; (3) unlawfully converted Plaintiff's funds; (4) was unjustly enriched by Plaintiff; and (5) was negligent with respect to Plaintiff. Plaintiff's
sixth count as to Van Wagenen seeks a declaratory judgment that Van Wagenen wrongfully placed LPI on Plaintiff's Kia. The Court examines each of these in turn.
A. KCPA Claims
1. On or After July 1, 2019
Plaintiff's claim that Van Wagenen violated the KCPA on or after July 1, 2019, fails based solely on the facts alleged in her Complaint. A KCPA claim requires, at base, an allegation that the defendant engaged in deceptive or unconscionable acts or practices.[13] All deceptive and unconscionable practices that Van Wagenen allegedly committed occurred in the context of its contractual relationship with Fifth Third, such as its alleged willful misrepresentation to Fifth Third that Plaintiff's Kia was not sufficiently insured and allegedly frivolous placing of LPI on the Kia. The problem for Plaintiff is that she herself states this relationship between Van Wagenen and Fifth Third ended in or around March 2019, and thus so did Van Wagenen's...
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