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Morgan v. HSBC Mortgage Services, Inc.

United States District Court, E.D. Kentucky, Southern Division

March 12, 2013

CALEB MORGAN, Plaintiff,
v.
HSBC MORTGAGE SERVICES, INC., Defendants

For Caleb Morgan, Plaintiff: William V. Meader, Hyden, KY.

For HSBC Mortgage Services, Inc., Defendant: Peter Matthew Cummins, Frost Brown Todd LLC - Louisville, Louisville, KY.

OPINION

Page 834

Gregory F. Van Tatenhove, United States District Judge.

MEMORANDUM OPINION & ORDER

Caleb Morgan alleges that the HSBC, mortgagee of his personal residence, harmed his credit rating and his personal reputation when it misapplied his mortgage payments and inappropriately reported a deficiency to the credit rating agencies. [R. 1-1]. Morgan claims that HSBC's actions give rise to liability under the Equal Credit Opportunity Act and Fair Credit Reporting Act, as well as the state law torts of negligence and outrage. HSBC moved for dismissal under Federal Rule of Civil Procedure 12(b)(6) [R. 4], but because of the complaint's vagueness, the

Page 835

Court denied HSBC's motion and instead ordered Morgan to amend his complaint to provide a more definite statement. [R. 8]. Morgan has filed an amended complaint [R. 9], and it is now sufficiently clear that dismissal of each claim is appropriate. As such, HSBC's renewed motion to dismiss [R. 10] is granted.

I

Caleb Morgan borrowed money from HSBC. The loan was secured by a mortgage on his home requiring payments of $506.09. In 2009, HSBC began collecting an additional escrow amount of $142.54 per month from Morgan to cover a deficiency in his escrow account, which occurred when HSBC made property tax payments on behalf of Morgan. Morgan alleges that after he paid the deficiency, HSBC continued to apply his $506.09 monthly payment first to the additional escrow amount of $142.54 and then applied the remaining $353.55 to his monthly mortgage obligation amount, causing his payments to be insufficient. As a result, Morgan says he incurred inappropriate late fees, but more relevant to his complaint, he claims that HSBC reported his account as delinquent to the three major credit reporting agencies. Morgan claims that HSBC did this despite the fact that he had disputed the deficiencies with HSBC.

Morgan filed suit in state court on June 22, 2011. HSBC removed the action to this Court on July 21, 2011. [R. 1]. On July 28, HSBC filed its first motion to dismiss [R. 4]. It was not until October 24 that Morgan filed a response, which the Court struck pursuant to Local Rule 7.1(c). However, the Court did not at that time dismiss the complaint, but invoked Federal Rule of Civil Procedure 12(e), requiring a more definite statement when the pleading is " so vague or ambiguous that the party cannot reasonably prepare a response." Fed.R.Civ.P. 12(e).

In an attempt to more clearly articulate his claims, Morgan filed his amended complaint on March 14, 2012. [R. 9]. In this complaint Morgan claims HSBC's errant reporting of his payment delinquency to the credit reporting agencies gives rise to federal claims under the Equal Credit Opportunity Act and Fair Credit Reporting Act as well as the state claims for negligence and outrage. HSBC countered by raising afresh its motion to dismiss each of these claims. [R. 10]. On October 22, 2012, over six months after the motion to dismiss was filed, Morgan filed his response. [R. 11]. HSBC submitted its reply, but also filed a motion to strike Morgan's response pursuant to Local Rule 7.1(c).

As a preliminary matter it should be noted that " [a] party opposing a motion must file a response memorandum within twenty-one (21) days of service of the motion. Failure to timely respond to a motion may be grounds for granting the motion." LR 7.1(c). The Court previously struck Morgan's prior late response, and as the response to this renewed motion is substantially later, and Morgan again failed to seek an extension nor proffered an explanation for his tardiness, the Court shall once again grant HSBC's motion to strike Morgan's response. [R. 14]. Accordingly, any arguments raised in Morgan's response [R. 11], as well as those arguments raised in HSBC's reply [R. 13] will not be considered by the Court in ruling on HSBC's motion for dismissal, which is now ripe for review by this Court.

II

A

HSBC argues, pursuant to Federal Rule of Civil Procedure 12(b)(6), that each of the theories for relief contained in the ...


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