United States District Court, E.D. Kentucky, Southern Division, London
MEMORANDUM OPINION AND ORDER
C. REEVES UNITED STATES DISTRICT JUDGE
matter is pending for consideration of Defendant Flagstar
Bank's (“Flagstar”) motion for judgment on
the pleadings and Plaintiff Pamela Mills' motion for
leave to file an Amended Complaint. [Record Nos. 9, 13]
Mills' original Complaint was filed in the Clay Circuit
Court and included four counts: (i) breach of fiduciary
relationship; (ii) violations of the Kentucky Consumer
Protection Act; (iii) breach of contract; and (iv) fraudulent
misrepresentation. [Record No. 1-1] Flagstar removed the
matter to this Court and filed a motion for judgment on the
pleadings. [Record Nos. 1, 9] Mills now seeks leave to file
an Amended Complaint that omits the breach of fiduciary
relationship claim and adds factual allegations in support of
her remaining counts. [Record No. 13-4] Flagstar opposes this
request, contending that the proposed amendment would be
futile because the Amended Complaint would not survive its
pending motion for judgment on the pleadings. [Record No. 15]
The Court agrees, and will grant Flagstar's motion for
judgment on the pleadings. Mills' motion for leave to
file an Amended Complaint will be denied for the reasons that
to the proposed Amended Complaint, Mills purchased a home in
2003 for a total cash purchase price of approximately $75,
000.00. [Record No. 13-4 ¶ 8] She took out a loan in the
amount of $76, 000.00, on or about December 30, 2009. The
loan was secured by a mortgage on the property. [Id.
¶ 9] The mortgage was assigned to and serviced by
Flagstar. [Id. ¶ 13] Mills made timely payments
on the note until the summer of 2010. [Id. ¶
15-16] At that time, she was an employee of the Kentucky
Cabinet of Health and Family Services, and received
diminished pay due to a State-imposed furlough. [Id.
¶ 15] As a result, Mills was approximately ten days late
in submitting one of her payments. [Id. ¶
15-16] When she tendered the late payment, Mills also
included a payment covering the amount which would come due
the following month. [Id. ¶ 16-17]
the check did not clear her bank account, Mills began making
telephone calls to Flagstar to inquire about the receipt of
her payments and the status of her mortgage. [Id.
¶ 18] However, she was either unable to talk to a
Flagstar representative, or was put on hold by a
representative that never returned to the call. Consequently,
Mills was unable to obtain the information she requested.
[Id.] Flagstar returned Mills' check
approximately sixty days after its submission together with a
handwritten note indicating that only a payment for three
months would be accepted. [Id. ¶ 19]
received a notice from the Christopher Hill & Associates
Law Firm (the “Hill Law Firm”) shortly
thereafter, informing her that her mortgage was in default
and would be the subject of a foreclosure action.
[Id. ¶ 20] Mills called the Hill Law Firm
approximately one month after receiving the notice and spoke
with Kelly Vaden. [Id. ¶ 21] Vaden informed
Mills that, to resolve the foreclosure proceedings, she
should apply for a loan modification from Flagstar.
[Id. ¶ 22] Mills called the number that the
Hill Law Firm provided and requested an application for the
loan modification. [Id. ¶ 23] She completed the
application and sent it via facsimile to Flagstar
along with sixty pages of required information including bank
statements and paycheck stubs. [Id. ¶ 24] On
several occasions over the next several months, Flagstar told
Mills that it had not received this information. As a result,
Mills was required to re-send the information multiple times.
[Id. ¶¶ 26-27]
attempted to inquire about the status of her application, but
was either unable to connect with a Flagstar representative
or was not provided with any substantive information.
[Id. ¶ 28] She was never told whether she
qualified for a loan modification. [Id. ¶ 29]
pursued a foreclosure action regarding Mills' property
during this same time period. [Id. ¶ 30] Mills
did not defend in the action because, based on
representations made by the Hill Law Firm, by Flagstar's
agents, and in Flagstar's loan modification program
materials and correspondence, she believed that seeking a
loan modification was the proper means to stop the
proceeding. [Id. ¶ 32] Flagstar filed a Report
of Sale on August 14, 2012, and the foreclosure sale was
confirmed by Order dated January 3, 2013, resulting in a deed
divesting Mills of her interest in the property.
[Id. ¶ 33]
year and a half later, the Consumer Financial Protection
Bureau (“CFPB”) found that Flagstar had committed
unfair acts or practices by impeding the borrowers'
access to loss mitigation. [Record No. 13-7] Flagstar entered
into a Consent Order with the CFPB on September 24, 2014, in
which the CFPB found, in relevant part, that Flagstar: (i)
failed to review loss mitigation applications within a
reasonable time; (ii) withheld information the borrowers
needed to complete their loss mitigation applications; (iii)
improperly denied borrower requests for loan modifications
and violated loss mitigation provisions found in federal
regulations; and (iv) committed deceptive acts and practices
regarding its borrowers. [Id.; see also
Record No. 13-4, ¶ 36] Flagstar agreed to pay $27.5
million to approximately 6, 500 consumers whose loans it
serviced, with at least $20 million to be distributed to
approximately 2, 000 consumers who were foreclosed upon as of
September 4, 2014. [Record No. 13-7, ¶¶ 7, 106-110]
Flagstar also agreed to help the CFPB determine the identity
and location of the affected customers and create and
maintain business records of the type of loan Flagstar
serviced, the affected customers' information, and the
status of the loan as of 2014. [Id.; see
also Record No. 13-4, ¶ 39]
received a letter from the CFPB dated October 2, 2015,
informing her that she was identified as a borrower entitled
to compensation under the settlement between Flagstar and the
CFPB, and enclosing a check in the amount of $9, 994.28.
[Record No. 13-4, ¶ 37; Record No. 13-8] She received a
second letter from the CFPB dated June 20, 2017, which
included a check in the amount of $1, 894.83. [Record No.
13-4, ¶ 37; Record No. 13-9] Both letters advised Mills
that “[c]ashing the check enclosed does not stop you
from making any legal claims that may be available to
you.” [Record Nos. 13-8, 13-9]
alleges that she did not know that she may have any claim
against Flagstar until receiving the letters from the CFPB,
and that the payments she received failed to make her whole.
[Id. ¶ 40-41] Mills filed the action in the
Clay Circuit Court on September 28, 2017. [Record No. 1-1]
Flagstar then removed the matter to this Court and filed a
motion for judgment on the pleadings. [Record Nos. 4, 9]
Mills now seeks leave to file an Amended Complaint asserting
three counts: (i) violations of the KCPA; (ii) breach of
contract; and (iii) fraudulent misrepresentation. [Record No.
13-4, ¶¶ 42-74]
Rule 15(a)(2) of the Federal Rules of Civil Procedure, the
Court may allow a party to amend a complaint without the
other party's consent, and should freely grant leave
“when justice so requires.” However, the Court
need not grant a motion for leave to amend a complaint under
Rule 15 if the amendment would be futile. Miller v.
Calhoun Cnty., 408 F.3d 803, 817 (6th Cir. 2005);
see also Riverview Health Inst. LLC v. Med. Mut. of
Ohio, 601 F.3d 505, 519 (6th Cir. 2010) (citing
Foman v. Davis, 178');">371 U.S. 178, 182 (1962)). Futility
exists if “the proposed amendment would not permit the
complaint to survive a motion to dismiss.”
Miller, 408 F.3d at 817 (citing Neighborhood
Dev. Corp. v. Advisory Council on Historic Pres., 632
F.2d 21, 23 (6th Cir. 1980)).
same standard of review applies to motions for judgment on
the pleadings under Rule 12(c) and motions to dismiss under
Rule 12(b)(6). See Roth v. Guzman, 650 F.3d 603, 605
(6th Cir. 2011); Horen v. Bd. of Educ. of Toledo City
School Dist., 594 F.Supp.2d 833, 841 (N.D. Ohio 2009).
Under that standard, the Court must determine whether the
complaint alleges “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)). The plausibility standard is met
“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.
(citing Twombly, 550 U.S. at 556).
the subject complaint need not contain “detailed
factual allegations” to survive a motion to dismiss,
the “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.” Twombly, 550
U.S. at 555 (internal quotation marks and citation omitted).
Further, while the Court is required to accept all of the
plaintiff's factual allegations as true, “the tenet
that a court must accept as true all of the allegations
contained in a complaint is inapplicable to legal
conclusions.” Iqbal, 556 U.S. at 678.
general, where “matters outside the pleadings are
presented to and not excluded by the court, the motion will
be treated as one for summary judgment under Rule 56.”
Fed.R.Civ.P. 12(d). However, a court may consider
“exhibits attached to the complaint, public records,
items appearing in the record of the case and exhibits
attached to the defendant's motion to dismiss so long as
they are referred to in the complaint and are central to the
claims therein without converting the motion to one for