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Childress v. Bank of America, N.A.

United States District Court, E.D. Kentucky, Northern Division, Covington

August 9, 2019



          David L. Bunning United States District Judge


         Plaintiff brings this consumer-protection action under the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 (FDCPA), along with related state-law claims, arising out of Defendant's alleged misconduct in servicing Plaintiff's home-mortgage loan, misrepresentation in loan-modification negotiations, and the charging and collecting of improper and excessive fees. The matter is now before the Court on Defendant's Motion to Dismiss. (Doc. # 9). The Motion has been fully briefed, (Docs. # 12 and 15), and is now ripe for the Court's review. For the reasons set forth herein, the Motion is granted in part and denied in part.


         Plaintiff obtained a mortgage in 2008 for the purchase of her home in Villa Hills, Kentucky. (Doc. # 1 ¶¶ 6-7). In 2010, Plaintiff had difficulty making her mortgage payments and reached out to Bank of America (“BOA”), the servicer of her mortgage loan.[1] Id. ¶¶ 9-12. In May 2010, BOA sent Plaintiff a letter informing her she was approved for “workout assistance” in the form of a loan modification. Id. ¶ 14. BOA requested that Plaintiff complete loan-modification documents and return them with a cashier's check. Id. ¶ 16.

         On June 3, 2010, Plaintiff claims to have executed and returned the requested documents, with a cashier's check attached. (Docs. # 1 ¶ 16 and 1-5). Plaintiff argues that BOA subsequently claimed to have lost the documents, including the check; however, she asserts that this was merely a ruse, evidenced by the fact that BOA cashed the purportedly lost check. (Doc. # 12 at 1) (citing Doc. # 1 ¶¶ 19-20). BOA alternatively asserts that Plaintiff returned the “Loan Modification Agreement” (the “2010 modification”) unsigned. (Doc. # 9-1 at 2). Regardless, it is undisputed that the 2010 modification was never recorded. Even though BOA asserts that Plaintiff “never executed” the loan-modification agreement, BOA admits that it implemented the terms of the 2010 modification as if she had done so; the modification increased the principal balance of the mortgage loan and lowered the interest rate. (Doc. # 9-1 at 2) (citing Doc. # 1-5 at 2).

         Plaintiff claims that, thereafter, she made “up to date payments” and was current on her account. (Doc. # 1 ¶¶ 28, 42). BOA argues, however, that the loan history attached to Plaintiff's Complaint shows that Plaintiff continued to have trouble making payments after the 2010 modification. (Doc. # 9-1 at 2). In early 2012, BOA requested that Plaintiff enter into a trial-period plan to prove that she could make payments under the 2010 modification. (Docs. # 1 ¶ 44 and 9-1 at 2). Plaintiff claims that BOA made this request “even though she was maintaining the monthly payments on her [m]ortgage consistently since 2010.” (Doc. # 1 ¶ 44). BOA claims the plan was offered because Plaintiff had been in default, including missing payments for October, November, and December 2011. (Doc. # 9-1 at 2) (citing Doc. # 1-17).

         In a letter dated February 8, 2013, BOA informed Plaintiff she had completed her trial plan and was approved for a second loan modification. (Docs. # 1 ¶ 45, 9-1 at 2, and 1-9). In the same letter, BOA indicated there was an error in the 2010 loan-modification documents and that Plaintiff needed to execute a new agreement. (Docs. # 1 ¶ 46, 1-9, and 9-1 at 3). Accordingly, Plaintiff executed a second Loan Modification Agreement (the “2013 modification”), again lowering the interest rate and increasing the principal balance of her mortgage loan. (Docs. # 1 ¶ 49, 1-10 at 3, and 9-1 at 3).

         It appears that Plaintiff also executed-or “re-executed”-the 2010 modification at the same time. (Docs. # 1-11 and 9-1 at 3). See also (Doc. # 1 ¶¶ 46-53). BOA admits that the agreement Plaintiff “re-executed” was “not identical” to the loan-modification agreement presented for her signature in 2010; however, BOA asserts that “it reflected the same terms as the 2010 Loan Modification.” (Doc. # 9-1 at 3) (contrasting Doc. # 1-5 with Doc. # 1-11). Plaintiff tells a different story, alleging that she “was repeatedly told that the documents were lost, ” was required to fill out packet after packet, and “that the documents she was re-executing were the same documents.”[2] (Doc. # 1 ¶¶ 45-53). See also (Doc. # 12 at 1). Plaintiff alleges that, over the course of eight years, at the request of BOA she executed and returned “over ten (10) modification packets.” (Doc. # 1 ¶ 96). Regardless, it appears that by early 2013, the parties finally resolved-for a time-the issue of the 2010 modification, and by June 2013, BOA informed Plaintiff that her 2013 modification was complete. (Docs. # 1 ¶ 53 and 9-1 at 3).

         Plaintiff alleges that both packets she executed in 2013 were recorded, resulting in an erroneous “double modification.” (Docs. # 1 ¶¶ 54, 94 and 12 at 1). She argues that “Defendant's misconduct in filing two consecutive modifications in two (2) months started a wave of assessed fees, costs, interest, ‘other deferred amounts,' and ‘other unapplied funds' associated with the Plaintiff's account inappropriately.” (Doc. # 12 at 2) (citing Doc. # 1 ¶¶ 54, 64-76). BOA asserts that the 2013 Loan Modification Agreement (LMA) was properly recorded, and the second modification recorded was merely “intended to . . . correct the 2010 LMA.” (Doc. # 9-1 at 3 n.4).

         In addition to the issue of the loan-modification agreements, the parties dispute the propriety and amount of fees charged in connection with the modification process. See (Doc. # 1 ¶ 94) (alleging that BOA improperly and repeatedly assessed late fees in violation of the mortgage agreement). In the same February 8, 2013 correspondence from BOA to Plaintiff discussed supra, BOA informed Plaintiff that during the time it took to process the 2013 modification, Plaintiff did not make all of her mortgage payments in full, creating a shortage that BOA was forced to pay to the owner of the loan (investors) called “Other Deferred Amounts.” (Doc. # 9-1 at 3) (citing Doc. # 1-9). The letter went on to state that Plaintiff would owe these “Other Deferred Amounts”-consisting of $7, 424.19-at the maturity of the loan agreement. Id. However, in a September 28, 2013 letter from BOA to Plaintiff, BOA stated that it had made another mistake-this time on the amount Plaintiff owed under the “Other Deferred Amounts” in the 2013 LMA. (Doc. # 9-1 at 4) (citing Docs. # 1 ¶ 70, 1-9, and 1-14). The letter advised that the “Other Deferred Amounts” actually totaled $3, 422.71, not $7, 424.19. Id.

         Plaintiff alleges that BOA improperly applied her July and August mortgage payments to “Other Deferred Amounts, ” thereby causing the decreased balance (from $7, 424.19 to $3, 422.71) and resulting in improper calculation of what she owed. (Doc. # 1 ¶¶ 64-70). BOA, on the other hand, insists that Plaintiff is merely confused about the calculation being adjusted because her July and August 2013 payments were late. (Doc. # 9-1 at 4). BOA argues that Plaintiff paid her July 1, 2013 payment on July 16, 2013, and her August 1, 2013 payment on August 23, 2013. Id. (citing Doc. # 1-17). BOA asserts that Plaintiff's late July 2013 payment was placed in a suspense account titled “Unapplied Total” and that Plaintiff is confusing this account with the term “Other Deferred Amounts.” Id. BOA argues that the late July 2013 payment was ultimately applied to principal and interest on August 14, 2013; similarly, BOA argues that the late August 2013 payment was applied to principal, interest, and escrow, but was not placed in the “Unapplied Total” account. Id. (citing Docs. # 1-14 and 1-17). BOA further represents that Plaintiff was late on her September, October, and November 2013 mortgage payments as well, and, therefore, on November 15, 2013, BOA sent Plaintiff a notice advising her that it had received her mortgage payment, but the payment was less than needed to bring the loan current-resulting in “overdue payments, fees, and charges.” Id. at 5 (citing Doc. # 1-16). Plaintiff disputes this account, including BOA's calculations, and alleges that she “continued to pay her mortgage as always” but received correspondence that she missed her July and August 2013 payments and continued to be charged inappropriate fees. (Doc. # 1 ¶¶ 64-74). Plaintiff alleges-and BOA concedes-that since 2013 Plaintiff has remained current on her mortgage loan payments. (Doc. # 1 ¶ 79). See also (Doc. # 9-1 at 5) (citing Doc. # 1-17).

         In addition to the assessment of fees and calculation of late charges, the parties also dispute the propriety of communications that took place after the 2013 modification. Due to another mistake by BOA, between December 2014 and December 2015, BOA sent Plaintiff multiple letters. (Doc. # 1 ¶ 80). These letters, referred to in Plaintiff's Complaint, advised that “there was an error in the format” of the 2013 modification and requested that Plaintiff re-execute the LMA. (Doc. # 9-1 at 5) (citing (Doc. # 1-19).

         Plaintiff retained counsel in September 2017 and notified BOA she was represented. (Docs. # 1 ¶¶ 82-85). Plaintiff alleges that BOA continued to contact her directly after being notified of her representation, “about foreclosing on her account and otherwise trying to harass her into signing another modification.” Id. ¶ 86. See also (Doc. # 12 at 2) (citing Doc. # 1 ¶¶ 83-84). Plaintiff asserts that Defendant spent “years harassing Plaintiff with threats of foreclosure, despite Plaintiff being current on her mortgage.” (Doc. # 12 at 2) (citing Doc. # 1 ¶¶ 75-79). Plaintiff also alleges that BOA “repeatedly denied [Plaintiff] access” to records of her account despite being the “keeper of . . . all records pertaining to the internal treatment of Plaintiff's account.” Id. (citing Doc. # 1 ¶¶ 83-84).

         Plaintiff brought this action on August 29, 2018, alleging violations of the federal FDCPA (Count One), along with six state-law claims: breach of contract (Count Two); negligent misrepresentation (Count Three); fraud (Count Four); constructive fraud (Count Five); breach of the duty of good faith and fair dealing (Count Six); and breach of fiduciary duty (Count Seven). (Doc. # 1). She seeks statutory damages under 15 U.S.C. § 1692k(a)(1) and (a)(2)(a) as well as attorney's fees, costs, and punitive damages; Plaintiff also seeks injunctive relief to “prevent[] Bank of America from employing any of the unlawful conduct, methods, acts, or practices” under the FDCPA. Id. at 21-22. On October 17, 2018, Defendant BOA filed a Motion to Dismiss pursuant to Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure, which has been briefed and is now ripe for adjudication. (Docs. # 9, 12 and 15).

         III. ANALYSIS

         A. Standard of Review

         A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of a complaint by providing for dismissal of actions that fail to state a claim upon which relief can be granted. RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996). To be legally sufficient, a complaint “must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). As the Supreme Court explained, this means that “[t]o survive a motion to dismiss, 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 has facial plausibility 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 plausibility standard “does not impose a probability requirement at the pleading stage; it simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal [conduct].” Twombly, 550 U.S. at 556. In deciding whether a plaintiff has set forth a “plausible” claim, a court must construe the claim at issue in the light most favorable to the non-moving party, accept all factual allegations as true, and make reasonable inferences in favor of the non-moving party. Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008) (citations omitted). See also Garner v. Select Portfolio Servicing, Inc., No. 17-1303, 2017 WL 8294293, at *3 (6th Cir. 2017) (citing Johnson v. Moseley, 790 F.3d 649, 652 (6th Cir. 2015)). However, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). Ultimately, “[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679.

         The Court may consider documents extrinsic to a complaint without converting a motion to dismiss into a motion for summary judgment if the documents a defendant submits in its motion are referred to in the complaint and are central to the plaintiff's claim. Garner, 2017 WL 8294293, at *3 (citing Shaughnessy v. Interpublic Grp. of Cos., Inc., 506 Fed.Appx. 369, 372 (6th Cir. 2012)). See also Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008) (stating that, in ruling on a 12(b)(6) motion, a court “may consider the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein”).

         B. FDCPA Claims

         Plaintiff alleges six violations of the FDCPA. Each will be addressed in turn.

         i. Unauthorized Fees

         Plaintiff's Complaint alleges that BOA violated the provision of the FDCPA which prohibits a debt collector from “[t]he collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.” (Doc. # 12 at 4); 15 U.S.C. § 1692f(1). The Complaint alleges that BOA violated the fifteen-day grace period set forth in the mortgage note, wherein Plaintiff could pay the mortgage payment by the fifteenth day of each month without penalty. Id. (citing Doc. # 1 ¶¶ 116-118). Plaintiff argues that BOA “has been prematurely penalizing [her] for paying within that grace period . . . [since] 2013.” Id. (citing Doc. # 1 ¶¶ 94, 121). Additionally, Plaintiff points to her allegations that BOA made an “inappropriate double modification of the Plaintiff's mortgage, ” and she asserts that BOA's own “misconduct” in imposing two modifications at once resulted in the assessment of improper fees. Id. at 4-5 (citing Doc. # 1 ¶¶ 54, 60, 64-80, 94-96).

         The Complaint concerns transactions that occurred between 2010 and 2013. Although the Complaint vaguely alleges that some of the late fees “continued” after the 2013 modification, and even construing Plaintiff's allegations in the light most favorable to her as the Court must do at this stage in the proceedings, that allegation is insufficient to put BOA on notice of claims that occurred outside the 2010 to 2013 window of time. As Plaintiff's Complaint was filed on August 29, 2018, that window falls far outside the scope of the FDCPA one-year statute of limitations. As BOA points out, Plaintiff does not refute its argument that her FDCPA claims are barred by the statute of limitations. (Doc. # 15 at 2) (citing Doc. # 12). Accordingly, BOA's Motion to Dismiss on this ground is granted.

         ii. Communications

         Plaintiff next claims that BOA failed to cease direct communications with her after she retained counsel in violation of the FDCPA, which prohibits a “debt collector” from “communicat[ing] with a consumer in connection with the collection of any debt . . . if the debt collector knows the consumer is represented by an attorney[.]” (Doc. # 1 ¶ 102); 15 U.S.C. § 1692c(a)(2). BOA moves to dismiss on this ground, arguing that the Complaint does not make any specific allegation that BOA contacted her after September 29, 2017-the date BOA was notified of Plaintiff's representation-specifically seeking to collect a debt. (Doc. # 9-1 at 8).

         In response, Plaintiff points out that-as BOA concedes in its briefing-BOA was notified on September 29, 2017 that Plaintiff was represented by counsel. (Doc. # 12 at 5); see (Doc. # 9-1 at 6) (citing Doc. # 1-20). Plaintiff points to the allegations in her Complaint that BOA, after receiving notice of Plaintiff's representation, continued to contact Plaintiff “threatening to foreclose on her account and harassing her into signing another modification.” (Doc. # 12 at 5) (citing Doc. # 1 ¶ 86). Further, referring to the documents attached to her Complaint, Plaintiff specifies that BOA sent messages to her on (1) November 21, 2017, (2) November 27, 2017, (3) December 4, 2017, (4) December 21, 2017, and (5) January 4, 2018. (Doc. # 12 at 5-6) (citing Doc. # 1-7). All of these communications occurred within the one-year statute of limitations applicable to Plaintiff's FDCPA claims. Plaintiff alleges that these communications were collection attempts consisting of “threats to foreclose on Plaintiff's home and further harassment about signing another modification.” Id. at 6 (citing Doc. # 1 ¶ 86). In reply, BOA advances its own interpretation of its document, arguing that “the notes do not show what was stated” and “the call notes indicate that [BOA] never spoke with [Plaintiff].” (Doc. # 9-1 at 8) (citing Doc. # 1-7).

         The Court finds that Plaintiff's Complaint states a plausible claim for relief for the purposes of a Rule 12(b)(6) motion. Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). The document setting forth the BOA communications may be considered at this stage because it is referred to in Plaintiff's Complaint, see (Doc. # 1 ¶ 73), and the transactions described therein are central to the Complaint. Garner, 2017 WL 8294293, at *3. However, the document is not as clear as BOA portrays in its briefing. It does appear that BOA communicated or attempted to communicate with Plaintiff after BOA was notified of her representation, and Plaintiff's Complaint makes specific factual assertions about the content of those communications. Precisely what the document signifies is ambiguous, leaving an issue of fact that is more appropriate for discoery. On a motion to dismiss, the entirety of the complaint and its attachments are to be considered, resolving inferences and ambiguities in a plaintiff's favor. Rembisz v. Lew, 590 Fed.Appx. 501, 504 (6th Cir. 2014). Accordingly, BOA's Motion to Dismiss on this ground is denied.

         iii. False Representations/Deceptive Means to Collect a Debt

         Plaintiff's third FDCPA claim is that BOA violated 15 U.S.C. § 1692e(10), which generally prohibits a debt collector from using false, deceptive, or misleading representations or means in connection with the collection of a debt. (Doc. # 1 ¶ 103). BOA argues that “it is unclear from the general allegations what actions by [Defendant] were false and deceptive in order to collect a debt” from Plaintiff. (Doc. # 9-1 at 8). This argument lacks merit because Plaintiff's Complaint does not merely recite the language of the statute; rather, Plaintiff makes specific factual assertions regarding the representations she alleges were false.

         Plaintiff points to the allegation in her Complaint that BOA management informed her that “any unapplied funds should have been zeroed out during the modification.” (Doc. # 12 at 6) (citing Doc. # 1 ¶ 68). It appears that Plaintiff interpreted this to mean that “Defendant made representations to Plaintiff that all assessed fees on her account were to be taken care of by her 2013 modification.” Id. Because she was thereafter charged “other amounts, ” as well as interest and accumulating fees, Plaintiff concludes that “[s]uch representations were false.” Id. (citing Doc. # 1 ¶ 72). Further, Plaintiff asserts that “Defendant admitted that it had made a mistake with applying fees onto Plaintiff's account, but continued to send foreclosure notices to her informing her that her account was in default.” Id. (citing Docs. # 1 ¶¶ 68-76 and 1-19).

         Plaintiff makes specific factual assertions regarding the representations she alleges were false, resulting in a plausible claim for relief. However, as Plaintiff appears to concede, any representations made more than one year prior to the filing of Plaintiff's Complaint-including any representations in 2013-are barred on statute-of-limitations grounds. 15 U.S.C. § 1692k(d). Although the Complaint vaguely alleges that some of BOA's violative conduct “continued, ” even construing Plaintiff's allegations in the light most favorable to her, that allegation did not put BOA on notice of claims that occurred outside of the 2010 to 2013 window. As Plaintiff's Complaint was filed on August 29, 2018, allegations of misconduct between 2010 and 2013 are far outside the scope of the one-year statute of limitations. Again, Plaintiff does not refute BOA's argument that her FDCPA claims are barred by the statute of limitations. (Doc. # 15 at 2) (citing Doc. # 12). Accordingly, BOA's Motion to Dismiss Plaintiff's FDCPA claim under 15 U.S.C. § 1692e(10) is granted.

         iv. False Representations Regarding the Status of a Debt

         Plaintiff's fourth FDCPA claim is that BOA violated 15 U.S.C. § 1692e(2) by using false representations regarding the legal status of a debt. (Doc. # 1 ¶ 104). Again, BOA argues that the Complaint is unclear “what the false representations were and why they were false.” (Doc. # 9-1 at 8). Further, BOA argues that, “[a]lthough unclear, if [Plaintiff] is referring to any alleged misrepresentations in the November 2013 statement or August ...

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