United States District Court, S.D. Mississippi, Southern Division
JOHN W. HOWARD, AND TAMMY T. HOWARD, Plaintiffs,
CITIMORTGAGE, INC. and its predecessor in interest, ABN AMRO MORTGAGE, INC., Defendants.
MEMORANDUM OPINION AND ORDER
KEITH STARRETT, District Judge.
This matter is before the Court on the Motion to Dismiss Plaintiffs' First Amended Complaint  of the Defendant CitiMortgage, Inc. ("CitiMortgage" or "CMI"), individually and as successor by merger to ABN AMRO Mortgage Group, Inc. ("ABN"). Having considered the submissions of the parties, the record, and the applicable law, the Court finds that the motion should be granted in part and denied in part.
The Plaintiffs John W. Howard and Tammy T. Howard are the owners of certain real property located in Greene County, Mississippi (the "Subject Property"). On November 24, 2003, Plaintiffs executed a Note [28-1] and Deed of Trust [28-2], encumbering the Subject Property, in order to secure a loan in the amount of $128, 000.00. Plaintiffs also executed an Escrow Waiver Agreement [28-3] enabling them to pay certain items, such as taxes and insurance premiums, directly to the appropriate authorities without having to establish an escrow account with the Lender. ABN is listed as the "Lender" under the Note, Deed of Trust, and Escrow Waiver Agreement. In 2007, ABN and CitiMortgage merged with only CitiMortgage surviving the merger. In August of that same year, Plaintiffs received a letter stating that the servicing of their mortgage loan was being transferred from ABN to CitiMortgage, and that future loan payments should be forwarded to CitiMortgage. ( See August 10, 2007 Letter [28-4].)
On June 24, 2013, Tammy Howard filed suit against ABN, CitiMortgage, Federal Home Loan Bank Chicago c/o Wells Fargo ("FHLB"), and Wells Fargo in the Circuit Court of Greene County, Mississippi, alleging numerous federal and state law claims relating to the mortgage loan. ( See Compl. [1-1 at ECF p. 8].) On July 29, 2013, CitiMortgage and ABN (sometimes collectively referred to as "CitiMortgage") removed the proceeding to this Court. ( See Notice of Removal .) The Notice of Removal asserts that the Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §§ 1331 (federal question), 1332 (diversity of citizenship), and 1367 (supplemental jurisdiction). All of the Defendants subsequently moved for the dismissal of the Complaint. On March 26, 2014, the Court entered its Memorandum Opinion and Order , dismissing Wells Fargo and FHLB from the action without prejudice; requiring the joinder of John Howard pursuant to Federal Rule of Civil Procedure 19(a); and, denying CitiMortgage's request for dismissal without prejudice to its ability to again move for dismissal after the issue of Mr. Howard's joinder was resolved.
On April 16, 2014, John Howard joined the litigation via the filing of Plaintiffs' First Amended Complaint . CitiMortgage has again moved for dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6). The Court has fully considered the parties' competing positions and is ready to rule.
A. Standard of Review
To withstand a motion to dismiss under Rule 12(b)(6), "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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (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 .; see also In re Great Lakes Dredge & Dock Co., 624 F.3d 201, 210 (5th Cir. 2010) ("To be plausible, the complaint's [f]actual allegations must be enough to raise a right to relief above the speculative level.'") (quoting Twombly, 550 U.S. at 555). A complaint containing mere "labels and conclusions, or a formulaic recitation of the elements" is insufficient. Bowlby v. City of Aberdeen, Miss., 681 F.3d 215, 219 (5th Cir. 2012) (citation and internal quotation marks omitted). Although courts are to accept all well-pleaded facts as true and view those facts in the light most favorable to the nonmoving party, courts are not required "to accept as true a legal conclusion couched as factual allegation." Randall D. Wolcott, M.D., P.A. v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011) (citations omitted). Ultimately, the court's task "is to determine whether the plaintiff has stated a legally cognizable claim that is plausible, not to evaluate the plaintiff's likelihood of success." In re McCoy, 666 F.3d 924, 926 (5th Cir. 2012) (citing Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010)). A court may consider matters of public record and documents that are referenced in the complaint and central to the plaintiff's claim in deciding a Rule 12(b)(6) motion. See Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 570 n.2 (5th Cir. 2005) (citations omitted).
1. Federal Claims
a. Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA") and Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. ("FCRA")
Paragraph 9 of the First Amended Complaint references the FDCPA and FCRA in support of liability:
This is a federally related mortgage loan. The Defendant is liable for violations of the Fair Debt Collection Practices Act and Fair Credit Reporting Act by reporting this loan as late due to the manufactured and incorrect charges which Plaintiff did not owe which damaged Plaintiff's credit standing and access to financing and credit. The improper reporting to credit bureaus such as Experian, Equifax and Transunion have [sic] harmed the Plaintiff [sic] financial standing and caused an inability to access to [sic] credit and financing, more favorable interest rates and other damages which naturally flow from this type of misconduct.
(1st Am. Compl.  at ¶ 9.) CitiMortgage argues that the Plaintiffs' FDCPA claim must be dismissed because it is not a "debt collector" subject to the Act. This argument is well taken.
The FDCPA allows for the imposition of civil liability against "a debt collector" that fails to comply with any of its provisions. Wagstaff v. U.S. Dep't of Educ., 509 F.3d 661, 663 (5th Cir. 2007) (citing 15 U.S.C. § 1692k(a)). Any person attempting to collect "a debt which was originated by such person; [or, ] a debt which was not in default at the time it was obtained by such person" is specifically excluded from the definition of a "debt collector" under the FDCPA. 15 U.S.C. § 1692a(6)(F). It is clear within the Fifth Circuit that "mortgage lenders are not debt collectors' within the meaning of the FDCPA." Hopson v. Chase Home Fin. LLC, 14 F.Supp. 3d 774, 789 (S.D.Miss. 2014) (quoting Montgomery v. Wells Fargo Bank, N.A., 459 Fed.Appx. 424, 428 n.1 (5th Cir. 2012)); see also Brush v. Wells Fargo Bank, N.A., 911 F.Supp.2d 445, 477-78 (S.D. Tex. 2012) (holding that the FDCPA did not apply to a lender seeking to recover its own debt). Also excluded from the scope of the FDCPA is "a mortgage servicing company, or an assignee of a debt, as long as the debt was not in default at the time it was assigned." Teeuwissen v. JP Morgan Chase Bank, N.A., 902 F.Supp.2d 826, 835 (S.D.Miss. 2011) (quoting Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985)).
For present purposes, the First Amended Complaint establishes that ABN was the original mortgage lender in connection with the Plaintiffs' loan. ( See 1st Am. Compl.  at ¶ 3.) The Court must also accept as true the assertion that CitiMortgage became the servicer on the loan in 2007. ( See 1st Am. Compl.  at ¶ 4.) Plaintiffs present no allegations to the effect that the loan was in default at the time of the merger between ABN and CitiMortgage leaving CitiMortgage as the surviving entity. Therefore, the First Amended Complaint fails to offer any plausible basis for imposing FDCPA liability against a debt collector and this claim will be dismissed. Cf. Montgomery, 459 Fed.Appx. at 428 n.1 (finding that the plaintiff's FDCPA claim failed because a mortgage lender does not fall within the FDCPA's definition of a debt collector); Brumberger v. Sallie Mae Servicing Corp., 84 Fed.Appx. 458, 459 (5th Cir. 2004) (affirming the district court's dismissal of the plaintiff's FDCPA claim since the plaintiff failed to allege that he was in default when the defendant began servicing the loan); Hopson, 14 F.Supp. 3d at 788-89 (dismissing the plaintiffs' FDCPA claims against a mortgage lender and mortgage servicers); Teeuwissen, 902 F.Supp.2d at 835-36 (ordering dismissal where the plaintiffs failed to allege that they were in default prior to the defendant's acquisition of the loan).
CitiMortgage also argues that the Plaintiffs have not adequately pled any violation of the FCRA. The FCRA was enacted "to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy." Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007) (citations omitted). "Under 15 U.S.C. § 1681s-2(a), furnishers' of information that transmit information to a credit reporting agency concerning a debt owed by a consumer have a duty to provide accurate information...." Hopson, 14 F.Supp. 3d at 789 (citation omitted). However, there is no private right of action under § 1681s-2(a) since the Federal Trade Commission ("FTC") is charged with enforcement of this provision. See id.; see also Young v. Equifax Credit Info. Servs., Inc., 294 F.3d 631, 639 (5th Cir. 2002) ("enforcement of Section 1681s-2(a) shall be by government officials"). "Section 1681s-2(b) imposes duties on furnishers of information to, inter alia, investigate disputed information and report the results of any such investigation to the consumer reporting agency." Young, 294 F.3d at 639. The Fifth Circuit has not decided whether a private individual can maintain a claim against a furnisher of information under § 1681s-2(b). See id.  Nonetheless, the Fifth Circuit has held that a necessary element of any such claim is the existence of notice from a credit reporting agency to a furnisher of information that a consumer is contesting certain credit information. See Young, 294 F.3d at 639; Bank One, N.A. v. Colley, 294 F.Supp.2d 864, 870 (M.D. La. 2003) ("[T]he duties created by § 1681s-2(b) do not arise until the furnisher of information receives notice from a consumer reporting agency... that a consumer is disputing credit information.") (citation omitted).
In opposing dismissal, Plaintiffs contend they have pled sufficient facts to state a claim against CitiMortgage for negligently reporting inaccurate credit information under the FCRA. The Court disagrees. Plaintiffs' allegations of inaccurate credit reporting fail to allow for recovery under § 1681s-2(a) since "plaintiffs have no private right of action" under this provision. Hopson, 14 F.Supp. 3d at 789; see also Smith v. CitiMortgage, Inc., No. 3:08cv492, 2009 WL 1976513, at *3 (S.D.Miss. July 7, 2009) (holding that the defendant was entitled to judgment as a matter of law on the plaintiff's FCRA claims since only the FTC can enforce § 1681s-2(a)). Without deciding whether Plaintiffs can maintain a private action pursuant to § 1681s-2(b), the Court is able to conclude that the First Amended Complaint lacks allegations satisfying "the notice element" of this Code section. Young, 294 F.3d at 640. "Plaintiffs do not allege that... [CitiMortgage] was ever provided with notice of a dispute they filed with a consumer reporting agency and accordingly they have not stated a cognizable FCRA claim." Hopson, 14 F.Supp. 3d at 790; see also Fagan v. Lawrence Nathan Assocs., Inc., 957 F.Supp.2d ...