Marks v. PHH Mortg. Corp.
| Full Citation | Marks v. PHH Mortg. Corp., CASE NO. 5:11-CV-167 (CAR) (M.D. Ga. Nov 09, 2011) |
| Decision Date | 09 November 2011 |
| Docket Number | CASE NO. 5:11-CV-167 (CAR) |
| Parties | JERRY MARKS and CHERYL MARKS, Plaintiffs, v. PHH MORTGAGE CORPORATION, d/b/a COLDWELL BANKER MORTGAGE, Defendant. |
| Court | U.S. District Court — Middle District of Georgia |
ORDER ON DEFENDANT'S MOTION TO DISMISS
Currently before the Court is Defendant PHH Mortgage Corporation's ("PHH") Motion to Dismiss Plaintiffs' Amended Complaint. [Doc. 20]. In its motion, Defendant contends that Plaintiffs' Amended Complaint, containing eight counts, should be dismissed in its entirety. Having considered the matter and relevant case law, the Court finds that Defendant's motion is GRANTED in part and DENIED in part for the reasons discussed below.
Applicable Standard
On a motion to dismiss, the Court must accept as true all well-pleaded facts in a plaintiff's complaint. Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260 (11th Cir. 2009). To avoid dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6), "a complaintmust contain specific factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible where the plaintiff alleges factual content that "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. The plausibility standard requires that a plaintiff allege sufficient facts "to raise a reasonable expectation that discovery will reveal evidence" that supports a plaintiff's claims. Bell Atlantic Corp., 550 U.S. at 556.
Background
Plaintiffs Jerry and Cheryl Marks's well-pleaded allegations are as follows. In October 2001, Plaintiffs entered into a promissory note and mortgage contract with PHH. In 2003, Plaintiffs fell behind on their mortgage payments and filed a Chapter 13 bankruptcy. They were discharged from bankruptcy in July 2008, and were current on their mortgage. Plaintiffs allege that almost immediately after they were discharged, PHH attempted to collect money Plaintiffs did not owe and threatened them with foreclosure.
In October 2008, PHH refused to accept payment from Plaintiffs and claimed they were in arrears of $10,024.54 on the mortgage. After unsuccessfully attempting to work directly with PHH, Plaintiffs reopened their bankruptcy case and filed anadversary proceeding against PHH. On April 13, 2010, Plaintiffs and PHH entered into a consent order that settled all claims between the parties and terminated Plaintiffs' escrow account. Specifically, the order required PHH: (1) to write off approximately $10,000 of Plaintiffs' loan and approximately $5,000 in fees; (2) to return any funds left in Plaintiffs' escrow account; and (3) to send Plaintiffs monthly statements. In turn, Plaintiffs agreed to resume monthly payments and released PHH from any claims that could have been asserted up to and including the date of April 14, 2010.
Plaintiffs made regular mortgage payments from May to September 2010. PHH returned Plaintiffs' payments in September, October, and November 2010, telling them their loan was now in default. Plaintiffs continued to attempt to make the required monthly payments, and made their December 2010 payment through PHH's attorney, Daniel Wilder. PHH again refused Plaintiffs' January 2011 payment, but accepted and cashed Plaintiffs' payments in February, March, and April 2011.
Plaintiffs assert PHH falsely reported to the credit bureaus that they were in default. Plaintiffs allege that between July 24, 2010, and October 27, 2010, they sent five letters disputing PHH's information regarding Plaintiffs' loan, each of which was a qualified written request ("QWR") under the Real Estate Settlement Procedures Act ("RESPA"). Plaintiffs received no responses to these letters. In addition, they alsoallege they did not receive funds from their escrow account as required by the April 2010 consent order.
Plaintiffs attempted to refinance their mortgage, but they have been unable to do so because of the false information reported by PHH. Plaintiffs allege that they have suffered both physically and financially because of PHH's actions, and they seek compensatory and punitive damages, as well as attorneys' fees and costs. Plaintiffs initially filed a Complaint against PHH in May 2011, alleging violations of RESPA and state tort law. Plaintiffs amended their Complaint in July 2011, and PHH asserts that it should be dismissed in its entirety.
Plaintiffs bring eight counts. In Count One, Plaintiffs allege PHH intentionally and negligently failed to exercise due care in servicing their loan. In Counts Two and Eight, Plaintiffs allege PHH violated RESPA by failing to respond to their QWRs. In Count Three, Plaintiffs allege PHH committed defamation by reporting false information to the credit bureaus. In Count Four, Plaintiffs allege intentional infliction of emotional distress. In Counts Five and Six, Plaintiffs seek attorneys' fees and costs as well as punitive damages. Finally, in Count Seven, Plaintiffs allege conversion of the funds in their escrow account.
Discussion
As a preliminary issue, PHH asserts that Plaintiffs' claims are barred by the consent order the parties signed on April 13, 2010. In response, Plaintiffs allege that their claims arise from PHH's conduct after the April 2010 consent order, and any information about PHH's actions before the adversary proceeding is mere background. To the extent that Plaintiffs assert claims arising out of conduct prior to the April 2010 release, those claims are barred.
Counts Two and Eight of Plaintiffs' Amended Complaint allege that PHH violated RESPA by failing to respond to multiple QWRs. To ensure that consumers are provided with greater and timely information, RESPA establishes certain disclosure requirements for entities responsible for servicing1 a federally related mortgage loan. McCarley v. KPMG Int'l, 293 Fed. App'x 719, 722 (11th Cir. 2008); 12 U.S.C. § 2601. RESPA also sets deadlines for servicers to respond to written requests from borrowers.
When a loan servicer receives a "qualified written request," the servicer must send the borrower a written acknowledgement within twenty (20) days, and a fullresponse is due to the borrower within sixty (60) days. 12 U.S.C. § 2605(e)(1)(A), (B). A "qualified written request" is defined as:
a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that (i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and (ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.
12 U.S.C. § 2605(e)(1)(B). If the servicer does not comply with RESPA's deadlines, the borrower can recover actual damages for the failure to communicate, but the borrower is limited to actual damages unless there is a "pattern or practice of noncompliance." 12 U.S.C. § 2605(f).
Plaintiffs allege that they never received a response to the five QWRs they sent to PHH. For purposes of this motion, PHH argues that two of Plaintiffs' five letters were not QWRs: a letter sent to PHH's attorney, Daniel Wilder, on October 18, 2010, and a letter sent directly to PHH on October 27, 2010.2
PHH asserts that the October 18 letter fails to qualify as a QWR because it was sent to PHH's attorney and not directly to PHH. The issue of whether correspondence sent to a servicer's outside attorney is a QWR is not settled. The Eleventh Circuit hasnot addressed this issue in a published opinion, but at least one district court in this circuit has held that communication with a servicer's attorney can be a QWR. Compare McLean v. GMAC Mortgage Corp., Inc., 2008 WL 5246149 (S.D. Fla. Dec. 16, 2008), aff'd 398 Fed. App'x 467 (11th Cir. 2010) ( letter sent to outside bankruptcy counsel could be QWR where counsel forwarded the letter to the servicer and did not advise plaintiffs to speak directly with the servicer); with Gorham-DiMaggio v. Countrywide Home Loans, Inc., 592 F. Supp. 2d 283 (N.D.N.Y. 2008) (). Thus, the Court will not find at this stage of the litigation that the October 18 letter did not qualify as a QWR.
PHH asserts that the October 27 letter fails to qualify as a QWR because it did not identify a potential loan error, but instead requested a payment book or statement. However, the definition of a QWR is in the disjunctive; the request may identify an error or include a statement that "provides sufficient detail to the servicer regarding other information sought by the borrower." 12 U.S.C. § 2605(e)(1)(B) (emphasis added). See e.g., Goldman v. Aurora Loan Svc., LLC, No. 1:09-CV-3337-RWS, 2011 WL 3845498 (N.D. Ga. Aug. 29, 2011) (). Plaintiffs' Amended Complaint adequately statesclaims under RESPA, and PHH's request to dismiss Plaintiffs' RESPA claims is DENIED.
PHH asserts that Plaintiffs' negligence and defamation claims, Count One and Count Three, are preempted by the Fair Credit Reporting Act ("FCRA"). However, PHH admits that this Court has previously addressed the issue of whether state common law claims are preempted by FCRA. In Baker v. General Electric Capital, Corp., No. 3:10-CV-62(CAR), 2011 WL 1743610 (M.D. Ga. May 6, 2011), this Court adopted the statutory approach, finding that 15 U.S.C. § 1681t(b) does not preempt common law tort causes of action. Although PHH urges this Court to abandon its previous position and adopt a total preemption approach, which it finds "more persuasive," the Court declines to do so. For the reasons stated in this Court's...
To continue reading
Request your trial