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

• Decision Date: 18 May 2016
• Docket Number: Case No. 16-CV-119-GKF-FHM
• Citation: 189 F.Supp.3d 1286
• Parties: Mark E. Horton and Sharon L. Horton, Plaintiffs, v. Bank of America, N.A., Defendant.
• Court: U.S. District Court — Northern District of Oklahoma

189 F.Supp.3d 1286

Mark E. Horton and Sharon L. Horton, Plaintiffs,

v.Bank of America, N.A., Defendant.

Case No. 16-CV-119-GKF-FHM

United States District Court, N.D. Oklahoma.

Signed May 18, 2016

Edward Glen Lindsey, Lindsey Law Firm, Tulsa, OK, for Plaintiffs.

Anthony J. Hendricks, William H. Hoch, Crowe & Dunlevy, Oklahoma City, OK, Jon Howard Patterson, Sean Charles Wagner, Bradley Arant Blount Cummings LLP, Charlotte, NC, for Defendant.

OPINION AND ORDER

GREGORY K. FRIZZELL, CHIEF JUDGE, UNITED STATES DISTRICT COURT

Before the court is the Motion for Partial Judgment on the Pleadings [Dkt. # 13] of defendant the Bank of America, N.A. ("BANA"). This case involves a dispute over a residential mortgage taken out by plaintiffs Mark and Sharon Horton in December 1985. The Hortons brought this action against BANA in January 2016, alleging breach of contract, unjust enrichment, negligence, fraud, violation of the Oklahoma Consumer Protection Act ("OCPA"), and slander of title. BANA moves for judgment on the pleadings as to the plaintiffs' unjust enrichment, negligence, fraud, and OCPA claims. For the reasons set forth in this Opinion and Order, BANA's motion is granted in part and denied in part.

I. FACTUAL ALLEGATIONS

On December 23, 1985, the Hortons borrowed $48,163.00 from Investor Universal Service Corp., secured by a mortgage on their home. The mortgage note called for monthly payments of $370.33, starting on February 1, 1986, and required a final payment of any unpaid balance by January 1, 2016. The mortgage allowed for an adjustable interest rate, and required the holder of the mortgage to give the borrower written notice of any such adjustments on or before the change date.

BANA later became the holder of the Hortons' mortgage loan. According to the complaint, between February 1986 and January 2016, the Hortons consistently paid their mortgage and never received notice of an adjustment to their applicable interest rate. Shortly before their final payment, BANA sent the Hortons notice that their ordinary payment of $370.33 would not extinguish their debt and that a balloon payment was required. The Hortons claim that they have satisfied their obligations under the mortgage note. They filed this action on January 19, 2016.

II. DISCUSSION

Federal Rule of Civil Procedure 12(c) allows a party to move for judgment on the pleadings. "A motion for judgment on the pleadings under Rule 12(c) is treated as a motion to dismiss under Rule 12(b)(6)." Atl. Richfield Co. v. Farm Credit Bank of Wichita , 226 F.3d 1138, 1160 (10th Cir.2000). "To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain ‘enough facts to state a claim to relief that is plausible on its face.’ " Schrock v. Wyeth, Inc. , 727 F.3d 1273, 1280 (10th Cir.2013) (quoting Bell Atl. Corp. 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." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). When applying this standard, a court must accept as true all well-pleaded factual allegations and then ask whether those facts state a plausible claim for relief. See id. at 679, 129 S.Ct. 1937. Allegations that state "legal conclusions" or "[t]hreadbare recitals of the elements of a cause of action" "are not entitled to the assumption of truth." Id. at 678–79, 129 S.Ct. 1937.

Here, BANA contends that this case is purely a breach-of-contract dispute and that the Hortons' unjust enrichment, negligence, fraud, and OCPA actions should be dismissed for failure to state a claim. The court considers these claims in turn.

A. Unjust Enrichment

Unjust enrichment "is a recognized ground for recovery in Oklahoma," N.C. Corff P'ship, Ltd. v. OXY USA, Inc. , 929 P.2d 288, 295 (Okla.Civ.App.1996), and describes "a condition which results from the failure of a party to make restitution in circumstances where it is inequitable," Harvell v. Goodyear Tire & Rubber Co. , 164 P.3d 1028, 1035 (Okla.2006). "Under Oklahoma law, a party may only recover under this theory by showing ‘enrichment to another coupled with a resulting injustice.’ " Cty. Line Inv. Co. v. Tinney , 933 F.2d 1508, 1518 (10th Cir.1991) (quoting Teel v. Public Serv. Co., 767 P.2d 391, 398 (Okla.1985) ). As an equitable claim, unjust enrichment generally is unavailable where the plaintiff has an adequate remedy at law, Harvell , 164 P.3d at 1035, such as "when an enforceable express contract regulates the relations of the parties with respect to the disputed issue," Member Servs. Life Ins. Co. v. Am. Nat. Bank & Trust Co. of Sapulpa , 130 F.3d 950, 957 (10th Cir.1997).

Here, BANA contends that a valid contract governs the parties' dispute and, consequently, that the Hortons cannot state a claim for unjust enrichment. In response, the Hortons contend that their unjust enrichment and breach-of-contract claims are alternative theories of recovery and that any unjust enrichment in this case occurred outside of the parties' contract.

The court agrees with BANA. The Hortons contest neither the validity of the parties' mortgage contract nor the applicability of that contract to the dispute at issue in this case. Rather, the Hortons merely contend that BANA collected more money under the mortgage than it was contractually entitled. Plaintiffs can fully recover any such improperly collected funds via a claim for breach of contract. Thus, because an adequate remedy at law is available, BANA is entitled to judgment on plaintiffs' unjust enrichment claim.

B. Negligence

The court next considers plaintiffs' negligence claim. In Oklahoma, "[t]he threshold question in any negligence action is whether the defendant has a duty to the plaintiff." Sholer v. ERC Mgmt. Grp., LLC , 256 P.3d 38, 43 (Okla.2011). "Duty is a question of law for the court in a negligence action although the existence of a duty often depends on the relationship of the parties." First Nat. Bank in Durant v. Honey Creek Entm't Corp. , 54 P.3d 100, 105 (Okla.2002). As a general matter, an individual owes a duty of care to others who are foreseeably endangered by his or her conduct. See Lowery v. Echostar Satellite Corp. , 160 P.3d 959, 964 (Okla.2007).

Here, BANA submits that it owes no extra-contractual duties to the Hortons and, consequently, that their negligence claim fails as a matter of law. In response, the Hortons contend that BANA owed them a duty of ordinary care and that the damages they suffered were a foreseeable consequence of BANA's negligent collection practices.

The court agrees with the Hortons. "Oklahoma law has long recognized that an action for breach of contract and an action in tort may arise from the same set of facts." Finnell v. Seismic , 67 P.3d 339, 344 (Okla.2003). In particular, the Oklahoma Supreme Court has held that "inherent in every contract [is] a common-law duty to perform its obligations with care, skill, reasonable experience and faithfulness," id. and that "a negligent failure to observe any of these conditions is a tort, as well as a breach of contract," Keel v. Titan Const. Corp. , 639 P.2d 1228, 1232 (Okla.1981). Thus, "[a] person injured by the substandard performance of a duty derived from a contractual relationship may rely on a breach-of-contract or tort theory, or both," but, importantly, "can achieve [only] a single recovery." See Finnell , 67 P.3d at 344. Here, BANA owed the Hortons a duty to perform its obligations under the mortgage with care, skill, reasonable experience, and faithfulness. For this reason, BANA's motion for judgment on the pleadings as to the Hortons' negligence claim is denied.

C. Fraud

BANA next seeks dismissal of plaintiffs' fraud claim. As this court has consistently recognized, "Oklahoma law does not permit the simultaneous pursuit of fraud and breach of contract claims where the two claims are not sufficiently distinct."

Atkinson, Haskins, Nellis, Brittingham, Gladd & Fiasco, P.C. v. Oceanus Ins. Grp. , No. 13–CV–762–JED–PJC, 2014 WL 3891267, at *5 (N.D.Okla. Aug. 7, 2014) ; accord McGregor v. Nat'l Steak Processors, Inc. , No. 11–CV–0570–CVE–TLW, 2012 WL 314059, at *3 (N.D.Okla. Feb. 1, 2012) (collecting cases). "Thus, where ‘the facts alleged in a plaintiff's [fraud] claim are precisely the same as those alleged in his contract claim,’ a separate [fraud] claim will not be allowed." McGregor , 2012 WL 314059, at *3 (alterations in original omitted) (quoting Isler v. Tex. Oil & Gas Corp. , 749 F.2d 22, 24 (10th Cir.1984) ).

Here, BANA contends that the plaintiffs' fraud and breach-of-contract claims are based on the same facts and, consequently, that the fraud action should be dismissed for failure to state a claim. In response, the Hortons submit that they have alleged facts constituting fraud and that those facts are "clearly distinct" from their breach-of-contract claim. In particular, plaintiffs point to their allegations that BANA "provided [them] with inaccurate information" about their account statuses, "knowingly ... represented ... that [their] loan was in or nearing default," and "misrepresented to [them] that making a balloon payment would prevent foreclosure efforts." [Dkt. # 1, p. 19].

The court agrees with BANA. The Hortons' fraud and breach-of-contract claims are based on precisely the same conduct, namely, that BANA collected or attempted to collect more money under the mortgage than it was contractually entitled. "Plaintiff[s] cannot convert an ordinary breach of contract claim into a tort merely by alleging that defendants concealed their intention to breach the contract." McGregor , 2012 WL 314059, at *3 ; accord Myklatun v. Flotek Indus., Inc. , 734 F.3d 1230, 1236 (10th Cir.2013) ("[T]he proper remedy for a breach of contract will be found in a breach of contract claim, not in a claim of fraud based on the breaching party's failure to...