Levings v. Dimont & Assocs.
| Decision Date | 29 November 2022 |
| Docket Number | CIV-21-21-PRW |
| Parties | MARGARET LEVINGS and JAMES LEVINGS, Plaintiffs, v. DIMONT & ASSOCIATES, LLC and JP MORGAN CHASE BANK, NA, Defendants. |
| Court | U.S. District Court — Eastern District of Oklahoma |
This case comes before the Court on Defendant JPMorgan Chase Bank N.A.'s Motion to Dismiss (Dkt. 8) and Defendant Dimont & Associates, LLC's Motion to Dismiss (Dkt. 10). For the reasons that follow, the Motions (Dkts. 8 & 10) are GRANTED, and this case is DISMISSED with prejudice.
The dispute in this case arises out of a single phone call placed in response to a single letter.[1]Plaintiffs Margaret and James Levings entered into a mortgage agreement with Defendant JPMorgan for a home in Pocola, Oklahoma. In 2020, as part of bankruptcy proceedings in the Eastern District of Oklahoma Plaintiffs entered into a settlement agreement with JPMorgan, in which Plaintiffs agreed to vacate the home and relinquish possession of the property to JPMorgan. About a month after Plaintiffs vacated the home, Defendant Dimont & Associates, LLC-a third party administrator who handles hazard insurance claims on foreclosed homes on behalf of JPMorgan-sent a one and a half page letter to the Pocola Police Department regarding the home.
The letter, which is the center of Plaintiffs' claims in this lawsuit, “notif[ied]” the Police Department “of a loss caused by Theft and/or Vandalism” at the home.[2] Specifically, the letter alleged the theft of a range and refrigerator-two objects that Plaintiffs allege the settlement agreement permitted them to take when they vacated the property. The letter explained that Dimont was “obligated under insurance policy provisions to notify [the Police Department] of this Theft and/or Vandalism,” and requested that the Department “assign a case, incident report, or reference number regarding this notification.”[3]
Although the letter makes no reference to Plaintiffs, Plaintiffs allege that both Defendants, acting in a “joint venture,” “fabricated the crimes described in [the letter] and made a false report to law enforcement authorities anticipating that the Pocola Police Department would threaten the [Plaintiffs] with criminal prosecution and that [Defendants] would collect on a false and fraudulent insurance claim.”[4] After the letter was sent, Pocola Police made a single phone call to Plaintiffs regarding the home.[5]Apparently, after the phone call, nothing else came of the letter.
The letter gives rise to all of Plaintiffs' six claims in this suit. Plaintiffs allege that the letter constituted a malicious abuse of process, libel per se, a violation of the Oklahoma Consumer Protection Act, and negligence by Defendants causing harm to Plaintiffs. Plaintiffs' Complaint also seeks a declaratory judgment for a “determination of their rights under Oklahoma law to be protected from the transmission of a fabricated report to the police of crimes that implicate them in criminal activity.”[6]
In response, both Defendants filed separate motions to dismiss. Defendants argue that Plaintiffs' claims all fail as a matter of law because Dimont's letter notifying the police of potential crimes is privileged under Oklahoma law and absolutely immune from civil liability. Defendants also argue that, even accepting the allegations in the Complaint as true, there are several other reasons why Plaintiffs' Complaint fails to plead any plausible claims against Defendants upon which relief can be granted, and as such, Plaintiffs' claims should be dismissed with prejudice pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
“A cause of action may be dismissed under [Rule] 12(b)(6) either when it asserts a legal theory that is not cognizable as a matter of law, or if it fails to allege sufficient facts to support an otherwise cognizable legal claim.”[7]When reviewing a Rule 12(b)(6) motion to dismiss, all well-pleaded allegations in the complaint must be accepted as true and viewed “in the light most favorable to the plaintiff.”[8]“The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted.”[9]At this stage, a plaintiff bears the “obligation to provide the grounds of [their] entitle[ment] to relief,” which requires “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”[10]The pleaded facts must be sufficient to establish that the claim is plausible.[11]Ultimately, the Court may “dismiss a claim on the basis of a[ny] dispositive issue of law.”[12]
The parties agree that each claim in this diversity action is governed by the substantive law of Oklahoma. As such, the Court must apply Oklahoma law as it is “declared by its Legislature in a statute or by its highest court”[13]In a diversity case “[14] In the state's highest court has not addressed the issue presented,”[15]federal courts must engage in what is often referred to as the “Erie-guess.”[16]That is, “the federal court must determine what decision the state [high] court would make if faced with the same facts and issue.”[17]
In making the Erie-guess, the Court is “free, just as state judges are, to consider all the data the highest court of the state would use in an effort to determine how” that court would decide the issue.[18]At the very least, courts “should consider state court decisions, decisions of other states, federal decisions, and the general weight and trend of authority.”[19]Sources such as the Restatements of Law, treatises, and other commentary may be consulted, particularly where the state high court has relied on those exact sources before in a similar context.[20]In conducting this analysis, the Court must always be mindful that its “function is not to choose the rule that it would adopt for itself, if free to do so, but to choose the rule that it believes the state court, from all that is known about its methods of reaching decisions, is likely in the future to adopt.”[21]
With these principles in mind, the Court proceeds to the merits of Defendants' motions to dismiss. The Court first addresses counts one, two, four, and five of Plaintiffs' Complaint, and then turns to counts three and six.
Defendants first argue that counts one, two, four, and five of Plaintiffs' Complaint fail as a matter of law because Dimont's letter notifying the police of potential crimes is privileged under Oklahoma law and absolutely immune from civil liability.[22]As Defendants' theory goes, if the report to the police is privileged, none of these counts state a claim upon which relief can be granted. Plaintiffs do not dispute that last point. And they agree that Oklahoma has recognized a privilege for certain litigation activities, like a witness's testimony at trial. Instead, Plaintiffs argue that Oklahoma's common law privilege does not and should not extend to reports to the police or-at the very least- false reports.
The Oklahoma Supreme Court has long recognized “an absolute privilege” (sometimes called an “immunity”) for communications (1) made “during” various “judicial or other proceedings authorized by law” and (2) “made preliminary to a proposed [legal] proceeding.”[23]When the privilege applies, it absolutely prohibits the speaker from being hauled into court and held liable for a variety of civil claims.[24]The court has applied the privilege to, among other things, witness testimony given at a trial or other “quasi-judicial” administrative proceeding, as well as affidavits and other statements submitted to such proceedings.[25]The question in this case is whether Dimont's report to the police is a statement “made preliminary to a proposed [legal] proceeding”[26]or otherwise falls within the scope of the privilege.
The parties have not identified controlling state law on that precise issue. As far as the Court is aware, the Oklahoma Supreme Court has never decided whether the litigation privilege extends to allegedly false police reports or, for that matter, police reports generally. So, the Court must conduct the Erie-guess and determine whether the Oklahoma Supreme Court would extend privilege and absolute civil immunity to Dimont's letter to the police.
Although the Oklahoma Supreme Court has not yet weighed in on the issue, the weight of authority suggests that the Oklahoma Supreme Court would extend privilege and absolute civil immunity to reports of potential crimes made to the police and that the privilege would extend to counts one, two, four, and five of Plaintiffs' Complaint. As Defendants point out, another federal judge sitting in this state extended Oklahoma's litigation privilege to police reports.[27] And while the analysis in that case is brief and carries no precedential effect,[28]its conclusion is in line with broader principles of Oklahoma law.
Start with what the Oklahoma Supreme Court has said. The court has “recognize[d] an absolute privilege for communications made preliminary to proposed judicial or quasijudicial proceedings . . . generally under the standards set forth at the Restatement (Second) of Torts §§ 586, 587 and 588 and the comments thereto.”[29]In other words Oklahoma's “common law” in this area is “embodied in the Restatement.”[30]That is significant here because the Restatement itself explicitly supports extending the litigation privilege to reports made to the police: “Formal or informal complaints to a prosecuting attorney or other...
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