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McGee v. JPMorgan Chase Bank, N.A.

United States District Court, S.D. Mississippi, Northern Division

December 3, 2014

ARTHUR K. McGEE and RHONDA R. McGEE, Plaintiffs,


DANIEL P. JORDAN, III, District Judge.

This mortgage-loan dispute is before the Court on Defendant JPMorgan Chase Bank, N.A.'s ("Chase") Motion to Dismiss [32] pursuant to Federal Rule of Civil Procedure 12(b)(6). In general terms, Plaintiffs Arthur K. McGee and Rhonda R. McGee claim that Defendants foreclosed on their home despite telling the McGees the foreclosure had been postponed. The Court has considered the memoranda and submissions of the parties, along with the pertinent authorities, and finds that Chase's motion should be granted but that the McGees should be given an opportunity to file a motion seeking leave to amend as to all claims against Chase except those based on emotional distress.

I. Facts and Procedural History

On May 21, 2012, the McGees filed this action in the Chancery Court of Neshoba County, Mississippi. Compl. [3-1]. The following allegations from the Complaint are assumed true under Rule 12(b)(6). In February 2005, the McGees signed a promissory note and deed of trust on their home; Chase later assumed the loan in 2006. Id. ¶¶ 10, 11. Several years later, the McGees faced financial difficulties and fell behind on their loan obligations. Id. ¶ 12. So in June 2010, they submitted a request for loan modification under the Home Affordable Modification Program ("HAMP"). Id. ¶ 13.

Despite their request, the McGees saw a newspaper advertisement for a July 7, 2010 foreclosure sale on their home. Id. ¶ 15. Concerned, the McGees contacted Defendant Johnson Freedman, LLC, the law firm representing Defendant Nationwide Trustee Services, Inc., in connection with the foreclosure sale. Id. ¶ 16. The McGees assert that Johnson Freedman employees thrice informed them that no foreclosure would occur while their HAMP application remained pending. Id. ¶¶ 16-18. In the final conversation, the McGees were told that the foreclosure "was postponed.'" Id. ¶ 18. Yet on July 7, Christopher Collins, an agent of Johnson Freedman, sold the McGees' home at a foreclosure sale to Federal National Mortgage Association ("Fannie Mae"). Id. ¶ 19.

When Defendants refused to rescind the sale, the McGees filed suit in state court, claiming, among other things, that they relied on Johnson Freedman's representations and therefore did not take steps to prevent foreclosure. Id. ¶ 21. The case has been removed from state court, the McGees have voluntarily dismissed Defendants Fannie Mae and Collins, and Chase now seeks dismissal. The Court has personal and subject-matter jurisdiction and is prepared to rule.[1]

II. Standard of Review

In considering a motion under Rule 12(b)(6), the "court accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.'" Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004) (quoting Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999) (per curiam)). To overcome a Rule 12(b)(6) motion, Plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. at 555 (citations and footnote omitted).

"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." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). It follows that "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not show[n]'-that the pleader is entitled to relief.'" Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)). "This standard simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of' the necessary claims or elements." In re S. Scrap Material Co., LLC, 541 F.3d 584, 587 (5th Cir. 2008) (citing Twombly, 550 U.S. at 556).

Moreover, when a party alleges a claim of fraud, that "party must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). "To plead fraud adequately, the plaintiff must specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.'" Sullivan v. Leor Energy, LLC, 600 F.3d 542, 551 (5th Cir. 2010).

III. Analysis

The McGees assert six causes of action against Chase. All six are based on the Johnson Freedman statements that the foreclosure would be or had been postponed. The claims include: (1) misrepresentation and detrimental reliance; (2) negligence; (3) wrongful foreclosure; (4) breach of good faith and fair dealing; (5) negligent infliction of emotional distress ("NIED") and/or intentional infliction of emotional distress ("IIED"); and (6) exemplary damages. This Order begins the analysis with the NIED and IIED claims before addressing the rest.

A. Negligent/Intentional Infliction of Emotional Distress

The NIED and IIED claims are both fatally flawed. First, NIED requires physical injury. Paz v. Brush Engineered Materials, Inc., 949 So.2d 1, 4 (Miss. 2007) (en banc). The McGees made no such averments in their Complaint and now ...

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