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Miller v. Caliber Home Loans, Inc.

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

February 16, 2018



          David J. Hale, Judge.

         This action arises from events following Plaintiff Evelyn Miller's default on her home-mortgage loan. Miller sued the original servicer of the loan, Defendant SunTrust Mortgage, alleging violations of federal and state law related to SunTrust's initiation of foreclosure proceedings. (Docket No. 1) Miller also sued Defendant Caliber Home Loans, the current servicer of the loan, alleging that Caliber failed to evaluate potential alternatives to foreclosure. (Id.) Caliber has moved to dismiss Count X of Miller's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (D.N. 10) SunTrust seeks dismissal of all claims against it. (D.N. 11) For the reasons set forth below, the Court will grant both motions.

         I. Background

         In 2008, Miller obtained a home-mortgage loan from SunTrust to purchase a home in Louisville, Kentucky. (D.N. 1, PageID # 3) In 2013, Miller fell behind on her monthly payments to SunTrust and defaulted on the loan. (Id.) She applied for and received public assistance in the form of an Unemployment Bridge Loan, which made payments to SunTrust from January to September 2014. (Id.; see also D.N. 16, PageID # 218)

         The sequence of events that followed is central to Miller's claims against SunTrust. In September 2014, Miller applied to SunTrust for loss mitigation, a foreclosure alternative commonly offered by loan servicers. (D.N. 1, PageID # 3) Miller heard nothing from SunTrust until November 3, 2014, when she received a letter informing her that she was in default and that SunTrust was accelerating her debt. (Id.) On November 7, 2014, SunTrust initiated foreclosure proceedings against Miller in Jefferson County, Kentucky Circuit Court. SunTrust Mortg., Inc. v. Evelyn Miller, et al., Case No. 14-CI-402183. (Id.) Finally, on November 14, 2014, SunTrust provided Miller notice that her loss-mitigation application had been denied. (Id.)

         Miller reapplied for loss mitigation with SunTrust in December 2014; SunTrust denied the application shortly thereafter. (Id., PageID # 4) She appealed the decision, but SunTrust denied the appeal on March 27, 2015. (Id.) Miller applied again in April 2015. (Id.) SunTrust denied that application in July 2015. (Id.) After retaining counsel, Miller reapplied in September 2015. (Id.) SunTrust denied this final application in January 2016. (Id., PageID # 5)

         In mid-December 2015, Caliber became the new servicer of Miller's loan. (See D.N. 11-1, PageID # 189) Once Miller learned that the loan had been transferred to Caliber, Miller initiated loss-mitigation efforts with Caliber, but Miller and Caliber were unable to agree on terms. (D.N. 1, PageID # 6-9)

         On January 20, 2016, the Jefferson County Circuit Court dismissed SunTrust's foreclosure action without prejudice for failure to prosecute. (Id., PageID # 5) Miller filed a motion to vacate the dismissal in order to bring counterclaims against SunTrust, but the court denied the motion. (D.N. 16, PageID # 220) The pleadings indicate that no further foreclosure proceedings have been initiated against Miller. (D.N. 16, PageID # 221)

         Miller next brought this action against SunTrust and Caliber, alleging violations of federal and state law. Miller asserts six claims against SunTrust: (i) violation of the regulations pertaining to the Real Estate Settlement Procedures Act (RESPA), (ii) negligence, (iii) gross negligence, (iv) breach of contract, (v) wrongful foreclosure, and (vi) wrongful use of judicial process. (D.N. 1, PageID # 9-11) Additionally, Miller claims that Caliber violated RESPA and the Fair Debt Collection Practices Act (FDCPA) and breached the terms of the loan and mortgage by violating the duty of good faith and fair dealing. (Id., PageID # 11-14) SunTrust has moved to dismiss all claims against it. (D.N. 11) Caliber seeks dismissal of the breach-of-contract claim only. (D.N. 10)

         II. Standards

         In order to avoid dismissal for failure to state a claim, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. If “the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, ” the plaintiff has not shown that she is entitled to relief. Id. at 679. The complaint need not contain “detailed factual allegations, ” but it must provide “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. (citing Twombly, 550 U.S. at 555). For purposes of a motion to dismiss, “a district court must (1) view the complaint in the light most favorable to the plaintiff and (2) take all well-pleaded factual allegations as true.” Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009) (citing Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir. 2009)). Finally, on a motion to dismiss, any attachments to the pleadings are treated as part of the pleadings. Fed.R.Civ.P. 10(c).

         III. Discussion

         a. Regulation X Claim

         In Count I of her complaint, Miller alleges that SunTrust violated 12 C.F.R. § 1024.41 (“Regulation X” of RESPA). (D.N. 1, PageID # 9) Regulation X is a Consumer Financial Protection Bureau regulation promulgated pursuant to section 1022(b) of the Dodd-Frank Act, 12 U.S.C. § 5512(b), and RESPA, 12 U.S.C. § 2601 et seq. The regulation prohibits a loan servicer from foreclosing on a property if the borrower has submitted a complete loss-mitigation application. 12 C.F.R. § 1024.41(g). Specifically, Regulation X provides:

If a borrower submits a complete loss mitigation application . . . before a servicer has [initiated foreclosure proceedings], a servicer shall not [foreclose] unless: (i) The servicer has sent the borrower a notice . . . that the borrower is not eligible for any loss mitigation option and the appeal process . . . is not applicable, the borrower has not requested an appeal within the applicable time period for requesting an appeal, or the borrower's appeal has been denied . . . .

         The regulation further states that “[a] borrower may enforce the provisions of this section pursuant to section 6(f) of RESPA (12 ...

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