Jones v. HSBC Mortg. Servs. Inc. (In re Jones)

• Decision Date: 30 September 2013
• Docket Number: AP No.: 13-00015-BGC,Case No.: 11-02024-BGC13
• Parties: In re: Kizer Jones, Debtor. Kizer Jones, Plaintiff, v. HSBC Mortgage Services Inc., Household Finance Corporation of Alabama, and Household Life Insurance Company Defendants.
• Court: U.S. Bankruptcy Court — Northern District of Alabama

In re: Kizer Jones, Debtor.

Kizer Jones, Plaintiff, v. HSBC Mortgage Services Inc., Household Finance Corporation of Alabama,and Household Life Insurance Company Defendants.

Case No.: 11-02024-BGC13

AP No.: 13-00015-BGC

UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

Dated: September 30, 2013

Memorandum Opinion on the Defendants' Motion to Dismiss

Certain Counts of the Plaintiff's Complaint

The matter before the Court is the Defendants' Motion to Dismiss Counts II, III, VI, VII and VIII and Memorandum of Law in Support Thereof (Doc.#11) filed by HSBC Mortgage Services Inc., Household Finance Corporation of Alabama, and Household Life Insurance Company. A hearing was held on April 17, 2013. Appearing were the plaintiff; his attorney, Kenneth J. Lay; Alan D. Leeth, the defendants' attorney; and Ms. Mary Francis Fallaw, an attorney with the Chapter 13 Trustee's office. The matter was submitted on the pleadings, the record in this case, and the arguments and briefs of counsel. Based on the same, it appears to the Court that the motion is due to be granted. The counts unaffected by the motion will be administered in the normal course.

I. Relevant Facts

The plaintiff's adversary proceeding arises from a note secured by a mortgage on his home. According to his complaint, and admitted by the defendants in their answer, the mortgagee is Household Finance Corporation of Alabama ("HFCA"). HSBC Mortgage Services Inc. ("HSBC") is its servicing agent. And Household Life Insurance Company ("HLIC"), which was incorrectly designated in the complaint as "HSBC Insurance," issued a credit disability policy to the plaintiff when he executed the note and mortgage to HFCA.

In summary, the plaintiff alleges miscellaneous acts of malfeasance in connection with HFCA and HSBC's handling of his loan payments which purportedly resulted in their claiming that the note was in default, and accelerating the debt, and attempting to foreclose on his home. With respect to HLIC, he alleges that when he became disabled and unable to work, and hence unable to make his mortgage payments, that entity failed to abide by its insurance contract and make the payments in his stead.

The complaint begins with a preamble which includes statements of jurisdictional justification; a description of the parties; and a litany of underlying facts. It then outlays eight counts, each describing distinct causes of action.

Count I is for violation of the automatic stay by HFCA and HSBC.¹

Count II is for violations of the Fair Debt Collection Practices Act by HFCA and HSBC.

Count III is for fraudulent misrepresentation by HFCA and HSBC.

Count IV is for breach of the mortgage contract by HFCA and HSBC.²

Count V is for breach of the credit disability contract by HLIC.³

Count VI is for intentional infliction of emotional distress by HFCA and HSBC.

Count VII is for negligence by HFCA and HSBC.

And Count VIII is for wantonness by HFCA and HSBC.

Each specific count is followed by a conclusory section stating the plaintiff's prayer for relief.

While not included in any of the particular "Counts" of the complaint, the plaintiff alleges in his preambulatory statement of facts that HFCA and HSBC failed or refused to comply with the Home Affordable Modification Program. Moreover, in his prayer for relief, the plaintiff alleges, in addition, that HFCA and HSBC failed to "comply with any part of Section 2605 of Title 12 of the United States Code pursuant to Section 2605(f)of Title 12 of the United States Code and Section 3500.21 (f) of Reg. X...." and requests damages and attorneys fees for that noncompliance. Complaint at 10, A.P. Docket No.1.⁴

The defendants seek dismissal of Counts II, III, VI, VII, and VIII of the plaintiff's complaint, as well as any causes of action based on HAMP and 12 U.S.C. § 2605, pursuant to Fed. R. Civ. P. 12(b)(6), made applicable to adversary proceedings in bankruptcy by Fed. R. Bankr. P. 7012(b).

II. Conclusions of Law

A. Fed. R. Civ. P. 12(b)(6) Dismissal Standards

The standards for dismissal pursuant to Fed. R. Civ. P. 12(b)(6) are expounded in Speaker v. U.S. Dept. of Health and Human Services Centers for Disease Control and Prevention, 623 F.3d 1371 (11^th Cir. 2010), in light of the tenants established in Bell Atlantic Corporation v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009):

In Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), the United States Supreme Court instructed that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. at 45-46, 78 S.Ct. at 102. In 2007, the Supreme Court in Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed. 2d 929 (2007), retired Conley's "no set of facts" test in favor of a new formulation of Rule 12(b)(6)'s pleading standard. Id. at 562-63, 127 S.Ct. at 1969.

In Twombly, the Supreme Court distinguished "plausible" claims from allegations that were merely "conceivable," and stated that the Court "[did] not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. at 1974. The Supreme Court explained that a complaint "does not need detailed factual allegations," but the allegations "must be enough to raise a right to relief above the speculative level." Id. at 555, 127 S.Ct. at 1964-65. Furthermore, "a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely." Id. at 556, 127 S.Ct. at 1965 (quotation marks omitted).

Subsequently, in Iqbal the Supreme Court clarified that "[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. at 1949; see also Watts v. Fla. Int'l Univ., 495 F.3d 1289, 1295-96 (11th Cir. 2007)("The Court has instructed us that the rule 'does not impose a probability requirement at the pleading stage,' but instead 'simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of' the necessary element.")(quoting Twombly, 550 U.S. at 556, 127 S.Ct. at 1965). Given the Twombly and Iqbal plausibility standard, we turn to whether Speaker's Amended Complaint states a claim under the Privacy Act.

...

Moreover, given the pleading standards announced in Twombly and Iqbal, Speaker must do more than recite these statutory elements in conclusory fashion. Rather, his allegations must proffer enough factual content to "raise a right to relief above the speculative level." Twombly 550 U.S. at 555, 127 S.Ct. at 1965. Accordingly, to state a claim, Speaker must do more than allege that the CDC did not fulfill its record-keeping obligation. Speaker must allege the specific nature of the record-keeping obligation the CDC failed to satisfy.

...

Furthermore, Plaintiff Speaker has pleaded enough factual content to "nudge[ ] [ his] claims across the line from conceivable to plausible." Twombly, 550 U.S. at 570, 127 S.Ct. at 1974. Importantly, Speaker's allegations are not barren recitals of the statutory elements, shorn of factual specificity. Seeid. at 555, 127 S.Ct. at 1964-65 (stating that "a plaintiff's obligation to provide grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do" (quotation marks and brackets omitted)).

623 F.3d at 1380; 1381; 1384.

Ordinarily, when analyzing motions to dismiss, courts may only consider the recitations contained in the complaint; documents attached to the complaint; and documents attached to the defendant's motion to dismiss if those documents are referred to in the complaint, and are central to the plaintiff's claims, and their contents are not in dispute. Financial Sec. Assur., Inc. v. Stephens, Inc., 500 F.3d 1276, 1284 (11th Cir. 2007). If other evidence is considered, the motion must be treated as one for summary judgment and all parties must be given a reasonable opportunity to present all the material that is pertinent to the motion. Fed. R. Civ. P. 12(d).

B. Numbered Counts in the Complaint

1. Count II - Violations of the FairDebt Collection Practices Act

As indicated above, according to the plaintiff's complaint HFCA is his mortgagee and HSBC is the mortgagee's loan servicing agent.

Neither a mortgagee nor a mortgage loan servicing company is subject to the Fair Debt Collection Practices Act, 15 U.S.C. § 1692a, et seq. Llewellyn v. Allstate Home Loans, Inc., 711 F.3d 1173, 1187 (10^th Cir. 2013); Glazer v. Chase Home Finance LLC, 704 F.3d 453, 457 (6^th Cir. 2013); McWeay v. Citibank, N.A., --- Fed. Appx. ----, 2013 WL 2450844, *3 (11^th Cir., June 5, 2013); Hixson v. French, 517 Fed. Appx. 767, 769, 2013 WL 1731685, *2 (11^th Cir., April 22, 2013); Hasbun v. Recontrust Co., 508 Fed. Appx. 941, 942, 2013 WL 531071, *1 (11^th Cir., February 13, 2013); Kennedy v. United States, 478 Fed. Appx. 584, 586, 2012 WL 1758660, 1 (11^th Cir., May 17, 2012); Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5^th Cir. 1985); Nwoke v. Countrywide Home Loans, Inc., 251 Fed. Appx. 363, 365, 2007 WL 3037118, *1 (7^th Cir., October 18, 2007); Buckentin v. SunTrust Mortg. Corp., 928 F. Supp. 2d 1273 (N.D. Ala. 2013); Patrick v. PHH Mortg. Corp., 2013 WL 1314538, *11 (N.D.W.Va., March 27, 2013); Allen v. Bank of America, N.A., 2013 WL 1164898, *7 (D. Md., March 19, 2013); Dolan v. Fairbanks Capital Corp., 2013 WL 991002, *15 (E.D.N.Y., March 13, 2013); Garrett v. BNC Mortg., Inc., 2013 WL 878749, *5 (D. Colo., March 07, 2013); McDonald v. OneWest Bank, FSB, 2013 WL 858178, *12 (W.D. Wash., March 07, 2013); Fenello v. Bank of America, N.A., 926 F. Supp. 2d 1342, 1350-1351 (N.D. Ga. 2013); Ogle v. BAC Home...