Sites v. Nationstar Mortg. LLC

• Decision Date: 16 January 2009
• Docket Number: Civil Action No. 1:07-cv-00469.
• Parties: Cory SITES and Carrie Sites, Plaintiffs v. NATIONSTAR MORTGAGE LLC, Defendant.
• Court: U.S. District Court — Middle District of Pennsylvania

646 F.Supp.2d 699

Cory SITES and Carrie Sites, Plaintiffs v. NATIONSTAR MORTGAGE LLC, Defendant.

Civil Action No. 1:07-cv-00469.

United States District Court, M.D. Pennsylvania.

January 16, 2009.

COPYRIGHT MATERIAL OMITTED

Kevin M. Taccino, Arnoult, Taccino & Hamilton, LLC, Chambersburg, PA, for Plaintiffs.

John E. Lucian, Blank Rome, LLP, Philadelphia, PA, for Defendant.

MEMORANDUM

YVETTE KANE, Chief Judge.

The above-captioned action, in which Plaintiffs Corey and Carrie Sites claim monetary damages in excess of $537,000 from Defendant Nationstar Mortgage LLC, has its origins in a single mortgage loan payment of $814.36. According to Plaintiffs, Defendant untimely credited the payment to their account and falsely reported the loan as delinquent to major credit bureaus with the sole purpose of frustrating the Sites' efforts to refinance the loan. In their amended complaint (Doc. No. 12), Plaintiffs assert claims for defamation, intentional interference with prospective contractual relations, fraud, and a single, unspecified violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 Pa. Cons.Stat. Ann. §§ 201-1 to -9.3 (West 2008).

Before the Court is Defendant's motion to dismiss Plaintiffs' amended complaint pursuant to Federal Rule of Civil Procedure 12(b) (6). (Doc. No. 14.) In the instant motion, Defendant argues that all of plaintiffs' claims must be dismissed as entirely preempted by the Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681x (2006). (Id. at 1.) For the reasons that follow, the Court will grant Defendant's motion to dismiss with respect to Plaintiffs' claim under Pennsylvania's Unfair Trade Practices and Consumer Protection Law and deny Defendant's motion with respect to Plaintiffs' claims of defamation, intentional interference with prospective contractual relations, and fraud.

I. INTRODUCTION

A. Procedural History

Plaintiffs Cory and Carrie Sites filed their original complaint against Defendant Nationstar Mortgage LLC, formerly Centrex Home Equity Company LLC, on March 12, 2007, asserting claims of defamation, intentional interference with prospective contractual relations, fraud, and a single, unspecified violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 Pa. Cons.Stat. Ann. §§ 201-1 to -9.3. (Doc. No. 1.) On June 4, 2007, Defendant filed a motion to dismiss the complaint, in which it argued that the Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681x, preempted Plaintiffs' claims. (Doc. No. 7) Plaintiffs filed an amended complaint soon thereafter, rendering Defendant's then-pending motion moot. (Doc. No. 12.) On July 2, 2007, Defendant filed the instant motion to dismiss Plaintiffs' amended complaint (Doc. No. 14) and brief in support thereof (Doc. No. 15), renewing its preemption argument. Plaintiff timely filed a brief in opposition to the motion (Doc. No. 16), after which Defendant timely filed a brief in reply (Doc. No. 17).

B. Jurisdiction

The Plaintiffs are citizens of the Commonwealth of Pennsylvania. (Doc. No. 12, at 1.) Defendant is a Texas corporation with its principal place of business in Dallas, Texas. (Id.) Plaintiffs claim monetary damages in excess of $537,000. (Id. at 7, 12.) Because the parties are citizens of different states and the amount in controversy exceeds $75,000, the Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332 (2006).

C. Factual Background

Accepting as true all well-pleaded allegations of fact and any reasonable inferences that may be drawn therefrom, the factual background of the instant action is as follows. See Kopec v. Tate, 361 F.3d 772, 775 (3d Cir.2004) (explaining that a court must take a non-movant's allegations as true "when supported by proper proofs" on a motion for summary judgment).

Working with Defendant's branch manager Steve ("Branch Manager"), whose last name is unknown, Plaintiffs secured a mortgage loan from Defendant in September 2004. (Am.Compl.¶¶ 4, 5.) Plaintiffs' monthly payment on the loan at all times relevant to this action was $814.36. (Id. ¶ 6.) In November 2005, Plaintiffs tendered a check for $814.36 to Defendant in full satisfaction of their monthly loan payment. (Id. ¶ 7.) Defendant, however, erroneously credited Plaintiffs' account for $314.36, rather than the full amount. (Id. ¶ 8.) Upon learning of Defendant's mistake, Plaintiffs tendered an additional payment of $500 to Defendant by way of a wire transfer made November 22, 2005. (Id. ¶¶ 9, 10.) Subsequent monthly loan payments cleared Plaintiffs' bank account on December 15, 2005; January 3, 2006; February 9, 2006; and March 10, 2006. (Id. ¶ 11.)

In early March 2006, Plaintiffs approached CoreStar Financial Group ("CoreStar"), a competing lender, about refinancing their mortgage loan. (Id. ¶ 12.) A few days later, CoreStar requested the "payoff" amount for Plaintiffs' loan from Defendant. (Id. ¶ 13.) Prior to fulfilling that request, however, Defendant reported Plaintiffs' February 2006 loan payment as past due to the three major credit bureaus, Equifax, Experian, and TransUnion. (Id. ¶ 14.) Almost immediately thereafter, the Branch Manager contacted Plaintiffs and proposed that they refinance their loan through Defendant rather than CoreStar. (Id. ¶ 15.) Several days of discussions followed, but Plaintiffs ultimately reached the conclusion that Defendant could not better the terms offered by CoreStar. (Id. ¶ 16.)

Defendant provided CoreStar with the requested payoff amount on March 13, 2006. (Id. ¶ 22.) That same day, Defendant provided Plaintiffs with a good faith estimate and proposed loan agreement for a refinancing loan with a 30-year term and a fixed interest rate of 7.57%. (Id. ¶ 23.) On March 15, 2006, CoreStar received an updated copy of Plaintiffs' credit report indicating that Plaintiffs' mortgage loan had been delinquent for thirty days. (Id. ¶ 24.) CoreStar responded to the report by modifying the terms of the proposed refinancing loan (id. ¶ 25) "from a 30-year note with a fixed interest rate of 7.75% to a 30-year note with a variable interest rate of 8.55% for three years and up to a maximum interest rate of 14.55%" (id. ¶ 26).

At some point during the first few weeks of March—exactly when is not clear from the face of Plaintiffs' amended complaint— the Branch Manager contacted a debt collection agent ("Agent") at Paragon Way, a collection agency seeking repayment of a debt, unrelated to Plaintiffs' mortgage loan, owed by Plaintiff Carrie Sites. (Id. ¶ 17.) Impersonating Plaintiff Cory Sites the Branch Manager attempted to settle the debt for less than fifty cents on the dollar with the promise that she would discharge any outstanding obligations by means of a cash payout from the proposed refinancing loan. (Id. ¶ 18.) All of this was done without Plaintiffs' knowledge or consent (id. ¶ 19), and the Agent has since identified the Branch Manager's voice in a message left on Plaintiffs' answering machine as that of the individual who had negotiated the settlement of Plaintiff Carrie Sites's debt (id. ¶ 21).

Plaintiffs closed on the refinancing loan with CoreStar under the modified terms on March 26, 2006. (Id. ¶ 28.) Two days later, a representative of Defendant's Customer Relations Office wrote Plaintiffs to inform them that it had "adjusted Plaintiffs['] account and reported the correct information to the three major credit bureaus." (Id. ¶ 29.)

II. STANDARD OF REVIEW

A motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6) is properly granted when, accepting all factual allegations and inferences as true, the moving party is entitled to judgment as a matter of law. Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir.1990). Although the moving party bears the burden of showing that no claim has been stated, Hedges v. United States, 404 F.3d 744, 750 (3d Cir.2005), the complaint must allege facts sufficient to "raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)," Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964, 167 L.Ed.2d 929 (2007) (citations omitted). Moreover, in order to satisfy federal pleading requirements, a plaintiff's obligation "to provide the 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." Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir.2008) (brackets and quotation marks omitted) (quoting Twombly, 127 S.Ct. at 1964-65).

III. DISCUSSION

In its motion to dismiss, Defendant argues that the Fair Credit Reporting Act ("FCRA") preempts Plaintiffs' claims of defamation and intentional interference with prospective contractual relations and, to the extent that Plaintiffs predicate their claim of fraud upon an allegation that Defendant furnished the credit bureaus with inaccurate information, Plaintiffs' claim of fraud as well. (Doc. No. 14, at 5.) Defendant vigorously objects to Plaintiffs' "outlandish" allegation—new to the amended complaint—that its Branch Manager assumed the guise of Plaintiff Cory Sites in order to negotiate "a 50% reduction of the debt owed." (Id. at 21.) Defendant argues that, "even accepting the new allegation as true ..., the Court must dismiss the claims that rely on this allegation because Plaintiffs have not, and cannot, allege actual damages." (Id. at 21.) As to why "Plaintiffs have not, and cannot, allege actual damages," Defendant contends that, "[s]ince Plaintiffs admit that they paid only the full amount for which they were legally obligated to Paragon Way and not one cent more, their allegations, even if accepted as true, fail to allege any actual damages." (Doc. No. 17, at 13.)

The purpose of the FCRA is to "insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer's...