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McCord v. Resurgent Mortgage Servicing

United States District Court, W.D. Kentucky, Louisville Division

August 20, 2014

JAMES McCORD and EDITH McCORD, Plaintiffs,


JOSEPH H. McKINLEY, Jr., Chief District Judge.

In this action, the Plaintiffs allege that Resurgent Mortgage Servicing ("Resurgent") and Bank of America, N.A. ("BOA") violated the Fair Debt Collections Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq., which prohibits debt collectors from engaging in abusive, deceptive, and unfair collection practices. The Plaintiffs also bring fraud and negligent misrepresentation claims. This matter is before the Court on Resurgent's Motion to Dismiss [DN 15] and BOA's Motion to Dismiss [DN 6]. This matter is also before the Court on the Plaintiffs' Motion to File their First Amended Complaint [DN 14] and their Motion to Strike and Substitute Document [DN 16]. Fully briefed, this matter is ripe for decision. For the following reasons, Resurgent's motion is DENIED, BOA's motion [DN 6] is DENIED, and the Plaintiffs' motions [DNs 14, 16] are GRANTED.


In their initial complaint in this action, the Plaintiffs allege that on October 19, 2005, they executed a note and mortgage on their home with Countrywide Home Loans, Inc. (Compl. [DN 1-2] ¶ 9.) At some point, the note became in default. Thereafter, on August 5, 2008, the Bank of New York brought a state-court action for foreclosure and judicial sale of the Plaintiffs' home. (Id. ¶ 11.) The Plaintiffs moved to dismiss the action on the grounds that the Bank of New York did not have standing, as the Bank did not produce a copy of the note on the Plaintiffs' home. (Id. ¶ 12.) In response, the Bank of New York produced a document that included an endorsement and assignment of the note to it. (Id. ¶ 13.) Thereafter, on February 27, 2009, the Bank of New York moved to substitute Countrywide Home Loans Servicing, LP ("Countrywide") as the plaintiff, as it had assigned the note to Countrywide. (Id. ¶ 15.) The court granted this motion and ultimately awarded summary judgment to Countrywide. (Id. ¶ 18.)

On January 22, 2012, the Plaintiffs filed for bankruptcy. (Id. ¶ 20.) The Plaintiffs listed BOA as one of their creditors, as BOA had purchased Countrywide. (Id. ¶ 21.) On September 25, 2012, the bankruptcy court issued an order of discharge. The Plaintiffs did not reaffirm their loan with BOA or any other lender. (Id. ¶ 21-22.) In late April or early May of 2013, the Plaintiffs received notice that their home was scheduled to be sold at a public auction on May 21, 2013. (Id. ¶ 23.) The Plaintiffs allege that around the same time, Resurgent contacted them by phone and told them that Resurgent had purchased their loan from BOA. (Id. ¶¶ 24-25.)

In this phone call, Resurgent told the Plaintiffs that their home would not be auctioned off and that the payment due was approximately $895. Resurgent then sent the Plaintiffs a statement showing a current balance due of $895.20. (Id. ¶¶ 27-28.) The Plaintiffs allege that they mailed Resurgent a payment of $895.20, which Resurgent accepted. Thereafter, the Plaintiffs continued to make payments. Resurgent, however, returned the payments to them. The Plaintiffs allege that Resurgent contacted them for the purpose of inducing them to pay on their BOA loan, despite the fact that the loan was discharged in their Chapter 7 bankruptcy, preying on their desire to keep their home. The Plaintiffs state that Resurgent falsely led them to believe that they would be able to keep their home if they made the payments set forth in the account statement. Resurgent knew, however, that the Plaintiffs could not stay in their home despite making the payments. (Id. ¶¶ 36-37, 2.) The Plaintiffs state that on information and belief, Resurgent is the servicer of the Plaintiffs' loan with BOA and was acting on behalf of BOA at all times. (Id. ¶ 26.)


On February 19, 2014, BOA moved to dismiss the Plaintiffs' complaint. BOA argues that there is no basis in the complaint under which it could be held liable, as "Resurgent purchased the servicing rights, Resurgent serviced Plaintiffs' loan during the relevant times, and all of the alleged conduct that forms the basis of Plaintiffs' claims is directed at Resurgent." (BOA's Mem. in Supp. of Mot. to Dismiss [DN 6-1] 1.) Thereafter, on March 31, 2014, the Plaintiffs moved to file their First Amended Complaint, which includes additional allegations regarding the timing of Resurgent's communications with, and alleged false representations to, the Plaintiffs. (See Pls.' Mot. to File their 1st Am. Compl. [DN 14] 2.) That same date, Resurgent filed a motion to dismiss under Fed.R.Civ.P. 12(b)(6). (See Resurgent's Mot. to Dismiss for Fail. to State a Cl. [DN 15].) Soon thereafter, on April 2, 2014, the Plaintiffs moved to strike the tendered First Amended Complaint [DN 14-2] and substitute an updated First Amended Complaint [DN 16-1]. The proposed updated complaint is in response to Resurgent's motion to dismiss, as well as in response to the Plaintiffs' receipt of a notice that their home had been scheduled for judicial sale on April 8, 2014. (Mot. to Strike & Substitute Doc. [DN 16] 1.)

The Court will first consider the Plaintiffs' motion to strike and substitute [DN 16], as well as their motion to file an amended complaint [DN 14]. The Court will then consider BOA's motion to dismiss [DN 6] and Resurgent's motion to dismiss [DN 15].


After moving to amend their complaint, but before BOA or Resurgent responded to their motion to amend, the Plaintiffs moved to strike the tendered First Amended Complaint [DN 14-2] and substitute an updated First Amended Complaint [DN 16-1]. The Plaintiffs' motion to strike and substitute [DN 16] is GRANTED. Thus, the Court will consider the updated First Amended Complaint [DN 16-1] when deciding whether the Plaintiffs shall be granted leave to amend.


The Plaintiffs have filed a motion for leave to file their First Amended Complaint [DN 14]. This motion is governed by Fed.R.Civ.P. 15(a)(2), which states that absent the opposing party's consent, the Plaintiffs may not amend their pleading without the Court's leave. A court should "freely give leave when justice so requires." Fed.R.Civ.P. 15(a)(2). But the court "should deny a motion to amend where the proposed amended complaint could not withstand a Fed.R.Civ.P. 12(b)(6) motion." Massingill v. Ohio Adult Par. Auth., 28 Fed.App'x 510, 511 (6th Cir. 2002) (citation omitted). In other words, a court "may deny a plaintiff leave to amend... when the proposed amendment would be futile." Kottmyer v. Maas , 436 F.3d 684, 692 (6th Cir. 2006).

The proposed First Amended Complaint alleges that on April 23, 2013, the "Resurgent employee or representative who called the McCords identified herself as Tanqunera' [and] told the McCords that Resurgent had purchased their home loan from Bank of America." (1st Am. Compl. [DN 16-1] ¶¶ 24-25.) The First Amended Complaint further alleges that the Plaintiffs both "understood and believed... Tanqunera's representation that if they began making mortgage payments of $895.00 a month, [they] would be allowed to retain and remain in their home for as long as they continued to make timely payments of $895.00 a month." (Id. ¶ 32.) The Plaintiffs allege that "[a]s the servicer of the McCords' home loan and mortgage, Resurgent was acting as Bank of America's agent." (Id. ¶ 29.) The Plaintiffs also allege that under the facts of the case, "both Resurgent and Bank of America are debt collectors within the meaning of the FDCPA, because the McCords' mortgage was undeniably in default when Bank of America acquired the McCord's mortgage from the Bank of New York and the McCord's mortgage was ...

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