CALLIE V.S. GRANADE, District Judge.
On August 16, 2013, Magistrate Judge Bivins submitted a report and recommendation (Doc. 24) on Defendants' motion to dismiss (Doc. 10). Judge Bivins recommended that the court dismiss all Plaintiff's claims except her claim for breach of contract. Plaintiff did not object, but Defendants did. The matter comes before the court on Defendants' objection to Judge Bivins's recommendation on the contract claim. (Doc. 25.)
The contract at issue is a forbearance agreement between Plaintiff and Defendant SunTrust dated May 23, 2009. The way Judge Bivins read that agreement, SunTrust agreed not to foreclose on Plaintiff's home so long as Plaintiff made four timely payments of $1,400. Although Plaintiff allegedly made all four payments on time, the complaint says that Defendants foreclosed on her home anyway. Judge Bivins found that those facts stated a claim for breach of contract and denied the motion to dismiss that count.
Defendants object to that conclusion, arguing that the forbearance agreement was only valid until the end of September 2009. If that's the case, then they couldn't have breached the agreement by foreclosing on Plaintiff's home when they did, "nearly seven ... months after the forbearance agreement expired by its stated terms." (Doc. 25 ¶ 4.)
The problem with that argument is that no "stated terms" in the agreement set an expiration date — by all appearances the agreement's term was indefinite. To argue otherwise, Defendants rely on a provision of the agreement that is literally nonsense: "*Note: On or before [_____]; you must send updated [_____]. At that time, your account will be reviewed for a possible Loss Mitigation workout." (Doc. 25-1 at 2 (bracketed blanks indicate empty space in the agreement).) Perhaps if there were a date supplied after the words "on or before," then there would be something to Defendants' argument. But there wasn't one, so Judge Bivins was quite correct to find the forbearance agreement had not expired when Plaintiff's home was foreclosed upon.
Likewise, Defendants' objection based on the statute of frauds is without merit. As Judge Bivins correctly noted, "[b]ecause the parties' forbearance agreement was in writing, it does not run afoul of the Statute of Frauds." (Doc. 24 at 1368 n. 6.)
Therefore, after due and proper consideration of all portions of this file deemed relevant to the issues raised, and a de novo determination of those portions of the Report and Recommendation to which objection is made, the Report and Recommendation of the Magistrate Judge made under 28 U.S.C. § 636(b)(1)(B) is
Report and Recommendation
SONJA F. BIVINS, United States Magistrate Judge.
This matter is before the Court on Defendants SunTrust and Federal National Mortgage Association's Motion to Dismiss Plaintiff's Complaint (Doc. 10). The motion has been fully briefed and has been referred to the undersigned Magistrate Judge for entry of a Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). For the reasons set forth below, the undersigned RECOMMENDS that Defendants' motion be
I. Background Facts
Plaintiff Margaret Wallace (hereinafter "Plaintiff" or "Wallace") brought this action against SunTrust Mortgage, Inc. (hereinafter "SunTrust") and Federal National Mortgage Association (hereinafter "Fannie Mae") following the foreclosure on her home located at 69 South Julia Street in Mobile, Alabama.
Wallace contends that she made all the payments pursuant to the terms of the forbearance agreement, and although she occasionally contacted SunTrust to ensure
Wallace avers that she continued to make her monthly payments, and that on May 22, 2010, without notice or explanation, SunTrust sent her a letter along with a refund check in the amount of $2582.02. (Id. at ¶ 7). According to Wallace, the letter advised her that her loan was delinquent, that $2582.02 was being refunded to her because it was not sufficient to bring her loan current and that $19,494.99 was required in order to bring her loan current. (Id.). Wallace avers that over an unspecified two-year period, she and her legal counsel have communicated with SunTrust and its various representatives in an effort to obtain information about the status of her loan and the steps necessary to bring her loan current, and have further provided any and all information SunTrust and its representatives have requested. (Id. at ¶ 8). Wallace contends that SunTrust and its representatives promised to work with her to bring her loan current; however, they provided her inconsistent information about the status of her loan, and foreclosed on her house on April 21, 2011. (Id. at ¶¶ 9-10). Fannie Mae filed an eviction proceeding against Wallace in state court on July 13, 2012 in an effort to dispossess her of the subject property; however, Wallace remains in possession of the property. (Id. at ¶¶ 10-11).
In her complaint, Wallace asserts the following claims against SunTrust: (I) wrongful foreclosure, (II) fraud, (III) breach of contract, (IV) breach of implied covenant of good faith and fair dealing (V) intentional infliction of emotional distress, (VI) negligence (VII) wantonness and (VIII) slander of title. Wallace has asserted a single claim against Fannie Mae for transfer of title (XI).
Pending before the Court is Defendants' motion to dismiss Wallace's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendants assert that Wallace's negligence, wantonness, and fraud claims are barred by the applicable statutes of limitation and the Statute of Frauds. Defendants further assert that all of Wallace's tort claims are substantively deficient. Additionally, Defendants assert that Wallace's breach of contract claim fails because SunTrust did not breach the forbearance agreement and any allegations regarding an unwritten permanent modification agreement are barred by the Statute of Frauds. In opposition to Defendants' motion, Wallace has submitted a brief conclusory response that is wholly devoid of any case authority.
A. Legal Standard for Fed. R. Civ. Pro. 12(b)(6).
Rule 8(a) of the Federal Rules of Civil Procedure requires that a plaintiff present "a short and plain statement of the claim showing that the pleader is entitled to relief, in order to give the defendant fair notice of what the ... claim is and the grounds upon which it rests," Bell Alt. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964, 167 L.Ed.2d 929 (2007) (citing Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)) (internal citations omitted). To survive a motion to dismiss, a plaintiff must plead "only enough facts to state a claim to relief that is plausible on its face." Id., 550 U.S. at 570, 127 S.Ct. 1955.
In considering a Rule 12(b)(6) motion to dismiss, the court accepts the non-moving party's allegations as true; however, the
In Iqbal, the Supreme Court reiterated that although Rule 8 of the Federal Rules of Civil Procedure does not require detailed factual allegations, it does demand "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. A complaint must state a plausible claim for relief, and "[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. The mere possibility the defendant acted unlawfully is insufficient to survive a motion to dismiss. Id. The well-pled allegations must nudge the claim "across the line from conceivable to plausible." Twombly, 550 U.S. at 570, 127 S.Ct. 1955.
B. Wrongful Foreclosure Claim (Count I).
In Count One of Wallace's complaint, she asserts a claim against SunTrust for wrongful foreclosure. In support of her claim, Warren alleges that "SunTrust initiated a foreclosure against [her] in violation of the law" because she "is not now, nor has she ever been in default of her Mortgage loan. As a result, there was no default on which to base a mortgage foreclosure action." (Doc. 1-1, ¶ 13-16).
SunTrust seeks dismissal of this claim on the ground that it is improperly plead. Specifically, SunTrust asserts that Alabama law permits wrongful foreclosure claims only when "`a mortgagee uses the power of sale given under a mortgage for a purpose other than to secure the debt owed by the mortgager.'" (Doc. 11 at 15 (citing Jackson v. Wells Fargo Bank, N.A., 90 So.3d 168, 171 (Ala.2012)).) SunTrust avers that because Wallace alleges that the foreclosure was wrongful solely because she was not in default on her mortgage loan and she does not allege that the foreclosure was instituted for a purpose other than to secure the debt owned by her, then, Plaintiff's complaint fails to state a cognizable claim for wrongful foreclosure under Alabama law. (Doc. 11 at 16).
"Alabama law is crystal clear that a wrongful foreclosure action lies only where the power of sale is exercised for an improper purpose". Selman v. CitiMortgage, Inc., 2013 U.S. Dist. LEXIS 37017, 2013 WL 838193 (S.D.Ala. March 5, 2013) (citing Jackson v. Wells Fargo Bank, N.A., 90 So.3d 168, 171 (Ala.2012)). In Jackson, the Alabama Supreme Court observed that:
Id. 90 So.3d at 171-172. The Court concluded that because the plaintiffs had not argued or alleged that the power of sale was exercised for any purpose "other than to secure the debt owed by [them]", the trial court did not err in dismissing their negligent foreclosure claim on summary judgment. Id.; see also Phillips v. Mortgage Electronic Registration Systems, Inc., 2013 U.S. Dist. LEXIS 49352 *fn. 13, 2013 WL 1498956 *fn. 13 (N.D.Ala. April 5, 2013) (A claim for "wrongful foreclosure" exists under Alabama law only to the extent that it is alleged and evidence shows that the foreclosure was undertaken for an improper purpose); Selman v. CitiMortgage, Inc., 2013 U.S. Dist. LEXIS 37017, 2013 WL 838193 (S.D.Ala. March 5, 2013) (because plaintiffs' pleading reveals that no foreclosure sale occurred and imputes no improper motive to CitiMortgage for conducting any such foreclosure (had a sale taken place), plaintiffs have failed to state a cognizable claim for wrongful foreclosure under Alabama law); In re Sharpe, 391 B.R. 117, 153 (Bankr.N.D.Ala.2008) ("Under Alabama law, if an action by a mortgagee was for the purpose of securing the debt owed by the mortgagor, while it may be wrong for other reasons, it cannot, unless some other malady exists, be wrongful foreclosure."); Ford v. Central Loan Admin., 2011 U.S. Dist. LEXIS 115292, 2011 WL 4702912 (S.D.Ala. Oct. 5, 2011) (dismissing wrongful foreclosure cause of action where complaint established that "plaintiff does not know whether a foreclosure sale has taken place" and "says nothing about any improper purpose, ill motive, or action outside the boundaries of the applicable contract").
In the instant action, Wallace claims that "[o]n April 21, 2011, despite repeated requests not to, SunTrust foreclosed on the mortgage that was given by Wallace to secure the debt." (Doc. 1-1, ¶ 10) (emphasis added). Through this language in her complaint, Wallace expressly acknowledges that the foreclosure sale was conducted in order to secure the debt on her mortgage. Moreover, the complaint is totally devoid of any allegations that the foreclosure sale was conducted for an improper purpose, or that SunTrust acted with ill will, malice, or ulterior motive in proceeding with the foreclosure sale. In the absence of allegations that the foreclosure was instituted for an improper purpose, Wallace has failed to state a claim for wrongful foreclosure under Alabama law. Thus, Defendants' motion to dismiss this claim is due to be
C. Fraud Claim (Count II).
Wallace's allegations in reference to her fraud claim are:
(Doc. 1-1, at 6-7).
SunTrust argues that this claim should be dismissed because it is time-barred and because Wallace has failed to satisfy the heightened pleading standard imposed by Federal Rule of Civil Procedure 9(b). Wallace argues that the claim is properly plead and that the statute of limitations did not commence until April 21, 2011 when the property was foreclosed upon.
Under Alabama law, the statute of limitations applicable to a fraud claims is two years. Ala.Code 1975 § 6-2-38(1). "Under [Ala.Code § 6-2-3] the two-year statute of limitations does not begin to run in a fraud case until `the discovery by the aggrieved party of the fact constituting the fraud.' Ala.Code § 6-2-3." Waldrup v. Hartford Life Ins. Co., 598 F.Supp.2d 1219, 1226 (N.D.Ala.2008). However, if a plaintiff establishes fraudulent concealment tolling, "the limitations period commences once the fraud is readily discoverable or the potential plaintiff is on notice that a fraud may have been perpetrated." Lampliter Dinner Theater, Inc. v. Liberty Mut. Ins. Co., 792 F.2d 1036, 1043 (11th Cir.1986) (citing Johnson v. Shenandoah Life Ins. Co., 291 Ala. 389, 281 So.2d 636, 642-43 (Ala.1973)).
As a preliminary matter, the undersigned observes that Wallace's fraud claim is not the model of clarity. Taking the factual allegations in the narrative portion of Wallace's complaint, together with the factual allegations in the fraud section of Wallace's complaint, it appears that Wallace is contending that in 2009, she began making increased mortgage payments in compliance with her forbearance agreement with SunTrust, that in her discussions with SunTrust, they did not tell her that the increased payments were not being applied to her loan or that her loan was in a delinquent status, and that she did not learn that SunTrust deemed her loan delinquent until May 2010 when her payment was returned, and SunTrust sent her a letter advising that she needed to tender a payment of $19,494.66 to bring her loan current. According to Wallace, SunTrust and its representatives suppressed from her information about the true status of her loan, and what she was required to do in order to bring her loan current. Wallace further contends that she and her attorney had numerous discussions with SunTrust or its representatives during which she was promised that they would work with her in order to bring her loan current and to protect her credit.
Assuming the truth of Wallace's assertions, which is required at this stage of the proceedings, the undersigned finds that SunTrust's alleged representations that adherence to the foreclosure agreement would bring Wallace's loan current are time-barred in light of the fact that Wallace acknowledges that in May 2010, SunTrust rejected her payment and advised her that her loan was delinquent and that she needed to tender a payment of $19,494.66 to bring the loan current
With respect to Wallace's claim that SunTrust suppressed information regarding the true status of her loan
The requirements of Rule 9(b) must also be harmonized with Rule 8, which directs that a complaint need only provide "a short and plain statement of the claim showing that the pleader is entitled to relief" and that averments of the complaint should "be simple, concise, and direct." Rule 8(a)(2), (d)(1); see also Brooks, 116 F.3d at 1371 (recognizing necessity of reading Rule 9(b) together with Rule 8); Friedlander v. Nims, 755 F.2d 810, 813 n. 3 (11th Cir.1985) ("a court considering a motion to dismiss for failure to plead fraud with particularity should always be careful to harmonize the directives of Rule 9(b) with the broader policy of notice pleading.").
Under well established law, Rule 9(b) is satisfied if the complaint sets forth the following: "(1) precisely what statements were made in what documents or oral representations or what omissions were made, and (2) the time and place of each such statement and the person responsible for making (or, in the case of omissions, not making) same, and (3) the content of such statements and the manner in which they misled the plaintiff, and (4) what the defendants obtained as a consequence of the fraud." United States ex rel. Clausen v.
As outlined above, Wallace contends that SunTrust suppressed information regarding the true status of her loan, and promised to work with her to bring the loan current. However, Wallace does not specifically outline the individuals or agents of SunTrust who intentionally mislead her nor does she cite the dates on which the alleged misrepresentations occurred. Specifically, Wallace does not identify the specific agents of SunTrust who "confirm[ed] that [she] was incompliance with the terms of the forbearance" so as to intentionally mislead her about the status of her loan and the forthcoming foreclosure, nor does she provide dates on when the alleged misrepresentations occurred. Additionally, Wallace has not indicated what SunTrust obtained as a consequence of the alleged fraud. As noted, Wallace acknowledges that in May 2010, SunTrust returned her payment and advised her of the amount that was required to bring her account current, but the complaint is devoid of any facts that indicate that Wallace continued to make any payments on the loan, or that SunTrust benefitted by providing her with inconsistent information after May 2010 regarding the status of her loan. To the contrary, while the record reflects that Wallace continues to occupy the subject property, there is no indication that she made any payments after May 2010. Accordingly, the Court concludes that Wallace has not satisfied the particularity requirements set forth in Rule 9(b). As a result, SunTrust's motion to dismiss is due to be
D. Breach of Contract Claim (Count III).
Next, Wallace claims that SunTrust breached the forbearance agreement by deeming her loan to be delinquent, and conducting the foreclosure sale although she complied with the terms of the forbearance agreement, and continued to make payments as required. (Doc. 1-1, ¶ 22-26). "`The elements of a breach-of-contract claim under Alabama law are (1) a valid contract binding the parties; (2) the plaintiffs' performance under the contract;
Defendant argues that Wallace's breach of contract claim should be dismissed because SunTrust has not breached the forbearance agreement and because Plaintiff's claim is barred by the Statute of Frauds
E. Breach of Implied Covenant of Good Faith and Fair Dealing (Count IV).
Defendant contends that Count Seven of the complaint is due to be dismissed because Alabama law does not recognize claims for breach of the covenant of good faith and fair dealing outside the insurance policy context. (Doc. 11 at 19). Defendant is correct that Alabama has refused to recognize a tort claim for breach of the duty of good faith outside the insurance context. See Lake Martin/Alabama Power Licensee Ass'n, Inc. v. Ala. Power Co., Inc., 601 So.2d 942, 944 (Ala.1992) (quoting Tanner v. Church's Fried Chicken, Inc., 582 So.2d 449, 451 (Ala.1991)) ("We are not prepared to extend the tort of bad faith beyond the area of insurance policy cases."); Kennedy Electric Co. v. Moore-Handley, Inc., 437 So.2d 76, 81 (Ala.1983) (same). Accordingly, Defendants' motion is due to be
F. Intentional Infliction of Emotional Distress (Count V).
Count Five of Plaintiff's complaint asserts a claim for intentional infliction of emotional distress, which is better known within the state of Alabama as the tort of outrage. In order to recover on the tort of
The Alabama Supreme Court has "consistently held that the tort of outrage is a very limited cause of action that is available only in the most egregious circumstances. As a consequence, [the Alabama Supreme Court] has held in a large majority of the outrage cases reviewed that no jury question was presented." Thomas v. BSE Indus. Contractors, Inc., 624 So.2d 1041, 1044 (Ala.1993) (citing multiple cases). In fact, the Alabama Supreme Court recently explained that the tort of outrage is "so limited that this Court has recognized it in regard to only three kinds of conduct: (1) wrongful conduct in the family-burial context; (2) barbaric methods employed to coerce an insurance settlement; and (3) egregious sexual harassment." Little v. Robinson, 72 So.3d 1168, 1172 (Ala.2011) (quoting Potts v. Hayes, 771 So.2d 462, 465 (Ala.2000)).
Wallace's claim stems from the servicing of her mortgage loan and the subsequent foreclosure on her home. Assuming the truth of her assertions, they simply do not rise to the necessary level of egregious conduct nor do they arise within the three contexts in which the Alabama Supreme Court has recognized outrage claims. Indeed, several federal courts have dismissed outrage claims based on similar allegations of mortgage servicing deficiencies. See, e.g., Jackson v. Countrywide Home Loans, Inc., 2012 U.S. Dist. LEXIS 29994, 2012 WL 777180, at *8 (M.D.Ala. Mar. 7, 2012) ("Plaintiff's tort of outrage claim, which is related to Defendants' alleged debt collection efforts and which does not fall into one of the presently recognized contexts in which a tort of outrage claim is appropriate, is due to be dismissed."). For these reasons, SunTrust's motion to dismiss Wallace's outrage claim is due to be
G. Negligence and Wantonness Claims (VI and VII).
In Counts Six and Seven, Wallace asserts common-law negligence and wantonness claims, and asserts that SunTrust negligently and wantonly "handled, serviced and processed payment, fees and all aspects of [her] Mortgage loan." (Doc. 1-1 ¶¶ 35, 39). For each claim, Wallace requests compensatory damages, including mental anguish and economic injury. (Id., at ¶¶ 36, 40).
Wallace's claims fail as a matter of law. Recent federal precedent interpreting Alabama law has uniformly found that no cause of action for negligent or wanton servicing of a mortgage account exists under Alabama law, at least in the absence of personal injury or property damage (neither of which are alleged by Plaintiff). See, e.g., Blake v. Bank of America, N.A., 845 F.Supp.2d 1206, 1210-11 (M.D.Ala. 2012) ("Alabama law does not recognize a cause of action for negligent or wanton mortgage servicing"); Webb v. Ocwen Loan Servicing, LLC, 2012 U.S. Dist. LEXIS 167079, 2012 WL 5906729, *7 (S.D.Ala. Nov. 26, 2012) ("under Alabama law a cause of action for negligent servicing of a mortgage against Ocwen cannot be maintained where the damages are economic, i.e., lost commissions"); Forester v. Bank of America, N.A., 2012 U.S. Dist. LEXIS 111346, 2012 WL 3206471, *5 (S.D.Ala. Aug. 7, 2012) ("Under Alabama law, an agent, like BAC, could only incur tort liability while servicing a mortgage by causing personal injury or property damage as a result of a breach of the duty of
While Wallace alleges that SunTrust's negligence and wantonness has caused mental anguish, she has failed to assert any facts suggesting that she has suffered physical injury or experienced an immediate risk of physical injury on account of SunTrust's conduct such that it could be liable for the torts of negligence or wantonness. See Brown v. First Federal Bank, 95 So.3d 803, 818 (Ala.Civ.App. 2012) ("Damages for mental anguish are not recoverable for negligence except where the plaintiff has suffered a physical injury as a result of the negligent conduct or was placed in an immediate risk of physical injury by that conduct."). Accordingly, Defendants' motion to dismiss Wallace's negligence and wantonness claims is due to be
H. Slander of Title Claim (VIII).
Count Eight of Wallace's complaint contains a state law claim for slander of title. The elements of slander of title under Alabama law are:
Merchants Nat. Bank of Mobile v. Steiner, 404 So.2d 14, 21 (Ala.1981) (citing Womack v. McDonald, 219 Ala. 75, 121 So. 57, 59 (1929)).
Wallace's allegations related to her slander of title claim are as follows:
(Doc. 1-1 at 10, ¶¶ 41-43). Defendants contend that these allegations fail to allege facts satisfying the elements of slander of title. Specifically, SunTrust argues that Wallace has not alleged publication of false information because she has admitted that she fell behind on her mortgage payments. (Doc. 11 at 27). Wallace, in response, asserts that "SunTrust had no right to publish information stating that the property belonged to them when the Plaintiff was not in breach of the mortgage or forbearance agreement." (Doc. 21-1 at 4). Here again, Wallace's complaint is not the model of clarity. The complaint fails to set forth to whom such information was published. Additionally, as noted with respect to her wrongful foreclosure claim, Wallace has not alleged that SunTrust acted for an improper purpose, let alone that SunTrust acted with malice. The act of the defendant "against which a slander-oftitle action is taken must have been false and malicious when it was performed." Folmar v. Empire Fire & Marine Ins. Co., 856 So.2d 807, 809 (Ala.2003). Because Wallace has failed to state a cognizable claim for slander of title, Defendants' motion to dismiss this claim is due to be
I. Transfer of Title Claim (IX).
Wallace's final claim is entitled "Transfer of Title" and is asserted against Defendant Fannie Mae. Wallace requests that the title to her property be conveyed back to her. As best the Court can discern, Wallace's "Transfer of Title" claim is based on her theory that if she was able to prevail on her wrongful foreclosure claim, then she would be entitled to recover the title to her property. See Cooper v. Fannie Mae, 96 So.3d 102, 104 (Ala.Civ.App. 2011) (finding that if a claimant were able to prove that a foreclosure sale was wrongful she could set aside the foreclosure sale). However, in light of the undersigned's finding that Wallace has failed to state a cognizable claim for wrongful foreclosure, her "Transfer of Title" claim must fail. Accordingly, Defendants' Motion to Dismiss this claim is due to be
Based on the foregoing, the undersigned RECOMMENDS, for the reasons stated herein, that Defendants' motion be
Notice of Right to File Objections
A copy of this report and recommendation shall be served on all parties in the manner provided by law. Any party who objects to this recommendation or anything in it must, within fourteen (14) days of the date of service of this document, file specific written objections with the Clerk of this Court. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); S.D. ALA. L.R. 72.4. In order to be specific, an objection must identify the specific finding or recommendation to which objection is made, state the basis for the objection, and specify the place in the Magistrate Judge's report and