Waddell v. U.S. Bank Nat'l Ass'n

• Decision Date: 29 July 2019
• Docket Number: No. 7:19-CV-10-D,7:19-CV-10-D
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: Vivian WADDELL, Plaintiff, v. U.S. BANK NATIONAL ASSOCIATION, Defendant.

395 F.Supp.3d 676

Vivian WADDELL, Plaintiff,

v.U.S. BANK NATIONAL ASSOCIATION, Defendant.

No. 7:19-CV-10-D

United States District Court, E.D. North Carolina.

Signed July 29, 2019

Benjamin Matthew Sheridan, Klein & Sheridan, LC, Hurricane, WV, James L. Kauffman, Bailey & Glasser LLP, Washington, DC, W. Stacy Miller, II, Miller Law Group, PLLC, Raleigh, NC, for Plaintiff.

Aaron A. Wagner, John Michael Kearns, II, Locke Lord LLP, Atlanta, GA, Lindsey E. Kress, Locke Lord LLP, San Francisco, CA, Thomas J. Cunningham, Locke Lord LLP, West Palm Beach, FL, for Defendant.

ORDER

JAMES C. DEVER III, United States District Judge

On December 3, 2018, Vivian Waddell ("Waddell" or "plaintiff"), on behalf of herself and others similarly situated, filed a complaint in Columbus County Superior Court against U.S. Bank National Association ("U.S. Bank" or "defendant") [D.E. 1-1].¹ On January 16, 2019, U.S. Bank removed the action to this court under the Class Action Fairness Act of 2005 [D.E. 1], On February 15, 2019, U.S. Bank moved to dismiss Waddell's complaint [D.E. 20] and filed a memorandum in support [D.E. 21]. See Fed. R Civ. P. 12(b)(6).

On March 7, 2019, Waddell filed an amended complaint. Essentially, Waddell claims that charging a service fee for an optional payment method (i.e., pay by phone) violates the North Carolina Debt Collection Act ("NCDCA"), N.C. Gen. Stat. § 75-50 et seq., violates the North Carolina Unfair and Deceptive Trade Practices Act ("UDTPA"), N.C. Gen. Stat. § 75-1 et seq., and violates her deed of trust [D.E. 27]. On March 21, 2019, U.S. Bank moved to dismiss Waddell's amended complaint [D.E. 29] and filed a memorandum in support [D.E. 30]. On April 18, 2019, Waddell responded in opposition [D.E. 38]. On May 2, 2019, U.S. Bank replied [D.E. 41]. As explained below, the court denies as moot U.S. Bank's motion to dismiss the original complaint, grants U.S. Bank's motion to dismiss the amended complaint, and dismisses Waddell's amended complaint.

I.

On August 27, 2001, Waddell purchased a home in Riegelwood, North Carolina. See Am. Compl. [D.E. 27] ¶¶ 7, 9. Waddell financed the purchase through a loan from Firstar Bank secured by a deed of trust. See id. ¶ 9. U.S. Bank, "one of the nation's leading loan servicing companies," is a corporate subsidiary of U.S. Bancorp. Id. ¶ 8. U.S. Bank currently services Waddell's mortgage. See id. ¶¶ 7, 10.

Waddell could have mailed her monthly mortgage payments or paid on-line and incurred no transaction fee. See [D.E. 22-1, 22-3, 22-4, 31-1, 31-3, 31-4]. Waddell, however, regularly made monthly mortgage payments through U.S. Bank's pay-by-phone system, and U.S. Bank charges $11 per transaction to pay via a customer service representative and $5 per transaction to pay via the automated system. See [D.E. 27] ¶ 11; [D.E. 22-3] 3; [D.E. 22-4] 3; [D.E. 31-3] 3; [D.E. 31-4] 3. Waddell alleges that U.S. Bank "concealed the true cost of these transactions" from Waddell "and thereby made false and deceptive representations to her." Am. Compl. [D.E. 27] ¶ 14. Waddell also alleges that these pay-by-phone fees breach several provisions of her deed of trust. See id. ¶¶ 11, 15-21.

Waddell claims that, despite its actual processing costs being "likely less than $1.00," U.S. Bank has collected $1.6 million in pay-to-pay transaction fees from over one hundred thousand transactions during the last four years. Id. ¶¶ 1-2. Waddell purports to bring her claims on behalf of the following putative class:

All persons with a North Carolina address to whom [U.S.] Bank and its agents charged, collected, or attempted to collect fees for the use of debit card or debit automatic clearing house ("ACH") mortgage payments during the applicable statutes of limitations for [Waddell's] claims through the date a class is certified.

Id. ¶ 24. Waddell seeks class certification, damages, and other forms of relief. See id. at 10.

II.

A motion to dismiss under Rule 12(b)(6) tests the complaint's legal and factual sufficiency. See Ashcroft v. Iqbal, 556 U.S. 662, 677-80, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554-63, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; Coleman v. Md. Court of Appeals, 626 F.3d 187, 190 (4th Cir. 2010), aff'd, 566 U.S. 30, 132 S.Ct. 1327, 182 L.Ed.2d 296 (2012) ; Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009) ; Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008). To withstand a Rule 12(b)(6) motion, a pleading "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quotation omitted); see Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ; Giarratano, 521 F.3d at 302. In considering the motion, the court must construe the facts and reasonable inferences "in the light most favorable to the [nonmoving party]." Massey v. Ojaniit, 759 F.3d 343, 352 (4th Cir. 2014) (quotation omitted); see Clatterbuck v. City of Charlottesville, 708 F.3d 549, 557 (4th Cir. 2013), abrogated on other grounds by Reed v. Town of Gilbert, ––– U.S. ––––, 135 S. Ct. 2218, 192 L.Ed.2d 236 (2015). A court need not accept as true a complaint's legal conclusions, "unwarranted inferences, unreasonable conclusions, or arguments." Giarratano, 521 F.3d at 302 (quotation omitted); see Iqbal, 556 U.S. at 678-79, 129 S.Ct. 1937. Rather, a plaintiff's allegations must "nudge[ ] [her] claims," Twombly, 550 U.S. at 570, 127 S.Ct. 1955, beyond the realm of "mere possibility" into "plausibility." Iqbal, 556 U.S. at 678-79, 129 S.Ct. 1937.

When evaluating a motion to dismiss, a court considers the pleadings and any materials "attached or incorporated into the complaint." E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011) ; see Fed. R. Civ. P. 10(c) ; Thompson v. Greene, 427 F.3d 263, 268 (4th Cir. 2005). A court also may consider a document submitted by a moving party if it is "integral to the complaint and there is no dispute about the document's authenticity" without converting the motion into one for summary judgment. Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 165-66 (4th Cir. 2016). Additionally, a court may take judicial notice of public records when evaluating a motion to dismiss for failure to state a claim. See, e.g., Fed. R. Evid. 201 ; Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) ; Philips v. Pitt Cty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009).

The motion to dismiss requires the court to consider Waddell's state law claims, and the parties agree that North Carolina law applies. Accordingly, this court must predict how the Supreme Court of North Carolina would rule on any disputed state law issues. See Twin City Fire Ins. Co. v. Ben Arnold-Sunbelt Beverage Co. of S.C., 433 F.3d 365, 369 (4th Cir. 2005). In doing so, the court must look first to opinions of the Supreme Court of North Carolina. See id.; Stahle v. CTS Corp., 817 F.3d 96, 100 (4th Cir. 2016). If there are no governing opinions from that court, this court may consider the opinions of the North Carolina Court of Appeals, treatises, and "the practices of other states." Twin City Fire Ins. Co., 433 F.3d at 369 (quotation omitted).² In predicting how the highest court of a state would address an issue, this court must "follow the decision of an intermediate state appellate court unless there [are] persuasive data that the highest court would decide differently." Toloczko, 728 F.3d at 398 (quotation omitted); see Hicks v. Feiock, 485 U.S. 624, 630 & n.3, 108 S.Ct. 1423, 99 L.Ed.2d 721 (1988). Moreover, in predicting how the highest court of a state would address an issue, this court "should not create or expand a [s]tate's public policy." Time Warner Entm't-Advance/Newhouse P'ship v. Carteret-Craven Elec. Membership Corp., 506 F.3d 304, 314 (4th Cir. 2007) (alteration and quotation omitted); see Day & Zimmerman, Inc. v. Challoner, 423 U.S. 3, 4, 96 S.Ct. 167, 46 L.Ed.2d 3 (1975) (per curiam); Wade v. Danek Med., Inc., 182 F.3d 281, 286 (4th Cir. 1999).

A.

As for Waddell's NCDCA claim, "[t]he NCDCA prohibits debt collectors from engaging in unfair debt collection practices, including the use of threats, coercion, harassment, unreasonable publications of the consumer's debt, deceptive representations to the consumer, or other unconscionable means." Ross v. FDIC, 625 F.3d 808, 817 (4th Cir. 2010) ; see N.C. Gen. Stat. §§ 75-50 -75-56. An NCDCA claim has three threshold requirements. See Davis Lake Cmty. Ass'n v. Feldmann, 138 N.C. App. 292, 295, 530 S.E.2d 865, 868 (2000) ; Reid v. Ayers, 138 N.C. App. 261, 263, 531 S.E.2d 231, 233 (2000). First, the "obligation owed must be a ‘debt;’ second, the one owing the obligation must be a ‘consumer;’ and third, the one trying to collect the obligation must be a ‘debt collector.’ " Reid, 138 N.C. App. at 263, 531 S.E.2d at 233 ; see Glenn v. FNF Servicing, Inc., No. 5:12-CV-703-D, 2013 WL 4095524, at *3 (E.D.N.C. Aug. 13, 2013) (unpublished).

If a plaintiff meets these threshold requirements, a plaintiff must establish the elements of a UDTPA claim: (1) an unfair or deceptive act (2) in or affecting commerce (3) proximately causing injury. See Ross, 625 F.3d at 817 ; Campbell v. Wells Fargo Bank, N.A., 73 F. Supp. 3d 644, 649 (E.D.N.C. 2014) ; Feldmann, 138 N.C. App. at 296, 530 S.E.2d at 868 ; Reid, 138 N.C. App. at 266, 531 S.E.2d at 235. An act "is unfair when it offends public policy and when [it] is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers." Walker v. Branch Banking & Tr. Co., 133 N.C. App. 580, 583, 515 S.E.2d 727, 729 (1999) (quotation omitted); see Fritz v. Duke Energy Carolinas, LLC, No. 5:13-CV-724-D, 2014 WL 3721373, at *3 (E.D.N.C. July 24, 2014) (unpublished).

Whether a debt collector's charge of a service fee for an optional payment method (such as pay-by-phone) violates the NCDCA is an issue...