Shedd et al v. Barclays Capital Real Estate, Inc. et al, No. 1:2014cv00275 - Document 104 (S.D. Ala. 2015)

Court Description: ORDER granting in part and denying in part 81 Motion to Dismiss by Barclays Capital Real Estate, Inc.. Plaintiffs' claims for breach of the duty of good faith and fair dealing (Count Two), fraudulent suppression or concealment (Count Seven), unconscionability (Count Eight), and accounting (Count Ten) are dismissed in their entirety. Signed by Senior Judge Charles R. Butler, Jr on 10/26/2015. copies to parties. (sdb)
Download PDF
Shedd et al v. Barclays Capital Real Estate, Inc. et al ! Doc. 104 IN#THE#UNITED#STATES#DISTRICT#COURT#FOR#THE# SOUTHERN#DISTRICT#OF#ALABAMA# SOUTHERN#DIVISION# ! GEORGE!P.!SHEDD,!JR.,!et# al.,! ! Plaintiffs.! ! v.! ! WELLS!FARGO!HOME! MORTGAGE,!INC.,!et#al.,! ! Defendants.! ! )! )! )! )! )! )! )! )! )! )! )! ! ! ! ! CIVIL!ACTION!NO.! 14D00275DCBDM! ! ORDER# ! ! This!matter!is!before!the!Court!on!a!Motion!to!Dismiss!the!Second!Amended! Complaint!filed!by!defendant!Barclays!Capital!Real!Estate,!Inc.!(Barclays),!Plaintiffs’! response,!and!Defendant’s!reply.!!(Docs.!82,!92,!&!97.)!!After!due!consideration!of!all! issues,!the!Court!finds!the!motion!is!due!to!be!granted,!in!part,!and!denied,!in!part.! I.##Procedural#Background# !! In!October!and!November!2014,!the!Court!entered!an!order!(Doc.!31)!as! amended!(Doc.!35)!granting,!in!part,!and!denying,!in!part,!this!Defendant’s!motion!to! dismiss!the!First!Amended!Complaint!(FAC).!!Most!counts!against!Barclays!were! dismissed!(e.g.,!fraudulent!suppression!or!concealment,!unconscionability).!! Plaintiffs’!breach!of!contract!claim!survived!(except!insofar!as!Plaintiffs’!relied!on!a! thirdDparty!beneficiary!theory)!as!did!their!unjust!enrichment!claim.!!Because! Barclays’!motion!to!dismiss!misinterpreted!Plaintiffs’!claim!for!breach!of!breach!of! the!duty!of!good!faith!and!fair!dealing,!that!claim!also!survived.!After!some! discovery,!the!Magistrate!Judge!stayed!this!action!and!held!a!settlement!conference.!! Dockets.Justia.com The!case!did!not!settle,!and!a!new!deadline!for!amending!pleadings!was!set.!! Plaintiffs!filed!a!motion!for!leave!to!file!a!Second!Amended!Complaint!(SAC).!!(Doc.! 68.)!!The!motion!for!leave!to!amend!was!granted!without!objection.!!(Doc.!73.)!!The! most!recent!complaint,!like!the!previous!one,!is!based!on!events!related!to!the! servicing!of!the!Shedds’!mortgage!by!the!Defendants!and!contains!substantially!the! same!causes!of!action,!including!those!that!were!dismissed.1!!!! II.##The#Second#Amended#Complaint! ! The!SAC!provides!greater!factual!detail!than!the!FAC!but!does!not!alter!the! basic!outline!of!events!giving!rise!to!Plaintiffs’!causes!of!action,!with!one!exception.!! The!FAC!alleged!that!both!George!Shedd!and!Pamela!Shedd!signed!the!promissory! note!that!is!the!basis!of!this!action.!!The!SAC,!however,!alleges!that!only!Pamela! Shedd!signed!the!promissory!note,!although!both!George!Shedd!and!Pamela!Shedd! signed!the!mortgage!on!the!family!residence!that!secured!the!promissory!note.!! Those!documents!were!executed!in!2001.!! ! Defendant!Barclays!initially!serviced!the!loan!and!continued!to!do!so!after!it! was!assigned!to!Monument!Street!Financing!II,!LLC!(Monument).!!Loan!payments! fell!behind,!and!in!2008!the!Shedds!filed!a!Chapter!11!bankruptcy!petition!in!this! district.!!Barclays,!the!loan!servicer,!represented!to!the!bankruptcy!court!that!it!was! the!creditor!and!sought!a!relief!from!the!automatic!stay.!!On!April!25,!2008,!the! bankruptcy!court!entered!an!order!finding!the!parties!had!entered!into!an!adequate! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1The!primary!distinction!between!the!two!complaints!is!length.!!The!FAC!was! 65!pages!(including!“only”!20!pages!of!facts).!!The!SAC!is!151!pages!(including!70! pages!of!facts).!!The!problems!caused!by!this!inflated!pleading!was!discussed!with! the!parties!in!a!conference!call,!and!the!Court!has!fashioned!a!remedy!that!will! permit!Defendants!to!file!an!answer!without!having!to!address!each!factual! allegation!in!the!SAC.!(Doc.!102.)! ! 2! protection!agreement!that!required!the!Shedds!to!pay!their!regular!mortgage! payment!plus!an!additional!$306.62!monthly!beginning!with!the!April!2008! payment.!!Subsequently,!the!bankruptcy!court!confirmed!the!reorganization!plan,! which!required!the!Shedds!to!pay!the!additional!$306.62!for!60!months!to!satisfy!in! full!a!preDpetition!arrearage!of!$16,500.! ! Barclays!used!a!software!package!from!a!third!party!vendor!that!was!not! equipped!to!handle!bankruptcy!payments.!!As!a!result,!payments!made!by!the! Shedds!after!April!2008!were!mishandled.!!For!example,!payments!that!should!have! been!applied!to!the!arrearage!were!held!in!suspense!or!rejected;!payments!that! should!have!been!applied!to!current!monthly!loan!payments!were!applied!to!past! due!amounts,!fees!and!expenses.!!Not!surprisingly,!Barclays’!inability!to!correctly! apply!the!payments!created!a!nightmare!for!the!SheddsDDthe!loan!was!placed!in! default,!foreclosure!proceedings!were!initiated,!various!fees!were!added,!their! mortgage!interest!was!misreported,!the!Shedds’!credit!suffered.!!For!more!than!two! years,!the!Shedds!worked!with!Barclays!to!correct!the!problem,!but!it!was!never! resolved.!!On!September!1,!2010,!Monument!transferred!servicing!to!defendant! Wells!Fargo!Home!Mortgage,!Inc.!(Wells!Fargo).!!Plaintiffs’!problems!persisted!after! Wells!Fargo!took!over.! ! ! ! ! ! ! 3! ! ! Plaintiffs’!claims!arising!from!these!events!are!set!forth!on!the!following! chart:! Count# Cause#of#Action! Defendants# One! Breach!of!Contract! All! Two! Breach!of!Duty!of!Good!Faith!&!Fair! Dealing# ! All! Three! Breach!of!Fiduciary!Duty! Wells!Fargo! Four! Wantonness! Wells!Fargo! Five! Fraud! Wells!Fargo! Six! Promissory!Fraud! Wells!Fargo! Seven! Fraudulent! Suppression/Concealment! ! Wells!Fargo,!Barclays! Eight! Unconscionability! All! Nine! Unjust!Enrichment! Wells!Fargo,!Barclays! Ten! Accounting! Wells!Fargo,!Barclays! Eleven! RESPA!§2605(m)! Wells!Fargo! Twelve! RESPA!§!2605(e)! Wells!Fargo! Thirteen! FCRA! Wells!Fargo! Fourteen! TILA! Wells!Fargo,!Monument! Fifteen! TILA! Wells!Fargo,!Monument! Sixteen! FDCPA! Wells!Fargo,!Monument! ! # # # ! 4! # # III.##Legal#Analysis! ! ! Barclays!has!moved!to!dismiss!each!cause!of!action!against!it!for!failure!to! state!a!claim!upon!which!relief!can!be!granted.2!Each!count!is!addressed!separately! below.# A.##Breach#of#Contract#(Count#One)! # Barclays!concedes!that!its!arguments!have!already!been!rejected!by!the!Court! in!the!order!denying!the!FAC.!!!!It!reasserts!these!arguments!to!preserve!them!for! appeal.!!For!the!reasons!stated!in!the!order!dated!October!15,!2014,!amended! November!17,!2014,!the!motion!to!dismiss!Plaintiffs’!breach!of!contract!claim!is! denied.! B.##Breach#of#Contractual#Duty#of#Good#Faith#&#Fair#Dealing#(Count#Two)! ! In!its!motion!to!dismiss!the!FAC,!Barclays!interpreted!this!claim!as!a!tort! claim,!rather!than!a!contract!claim.!!For!that!reason!this!Defendant’s!motion!to! dismiss!was!denied.!!Plaintiffs!have!reasserted!the!claim!and!argue!that!additional! facts!alleged!in!the!SAC!support!this!cause!of!action,!which!was!dismissed!as!to!the! other!Defendants.!!! This!Court!previously!set!out!the!law!regarding!this!claim!as!follows:! Alabama!recognizes!that!every!contract!carries!an!implied!obligation! of!good!faith!and!fair!dealing,!which!has!been!defined!as!“an!implied! covenant!that!neither!party!shall!do!anything!which!will!have!the! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 2!The!standard!for!reviewing!a!Rule!12(b)(6)!motion!to!dismiss!was!set!forth! in!the!Court’s!October!15,!2014!order!(Doc.!31),!as!amended!(Doc.!35),!and!need!not! be!repeated!in!detail!here.!!Suffice!it!to!say,!facts!pleaded!in!the!complaint!are!taken! as!true!but!conclusions!are!not.!!Randall#v.#Scott,!610!F.3d!701,!709D10!(11th!Cir.! 2010).!!!A!court!must!take!the!factual!allegations!as!true!and!determine!whether! they!plausibly!give!rise!to!a!claim!for!relief.!!!Id.!at!710! ! 5! effect!of!destroying!or!injuring!the!rights!of!the!other!party!to!receive! the!fruits!of!the!contract.”!!Lloyd#Noland#Found.,#Inc.#v.#City#of#Fairfield# Healthcare#Auth.,!837!So.!2d!253,!267!(Ala.!2002)!(quoting!Seller#v.# Head,!261!Ala.!212,!217,!73!So.2d!747,!751!(1954)).!!The!parameters! of!this!claim!have!not!been!well!defined.!However,!it!is!clear!that!the! obligation!is!not!actionable!unless!the!breach!of!that!duty!can!be!tied! to!the!performance!of!a!specific!term!of!the!contract.!!Lake# Martin/Alabama#Power#Licensee#Assoc.#v.#Alabama#Power#Co.,#Inc.,!601! So.!2d!942,!945!(Ala.!1992).!!More!specifically,!Alabama!courts!have! recognized!the!duty!of!good!faith!and!fair!dealing!when!“the!contract! fails!to!specify!all!the!duties!and!obligations!intended!to!be!assumed.”! Lloyd#Noland#Found.,!837!So.2d!at!267.#In!those!instances,!“the!law!will! imply!an!agreement!to!do!those!things!that!according!to!reason!and! justice!the!parties!should!do!in!order!to!carry!out!the!purpose!for! which!the!contract!was!made.”!Id.# # (Order!dated!Nov.!17,!2014!at!7D8,!Doc.!34.)! ! In!response!to!Defendants’!motion!to!dismiss,!Plaintiffs!have!failed!to!point!to! any!allegation!in!the!SAC!that!would!tie!their!claim!to!any!specific!contractual!term.!! Instead,!they!point!to!allegations!that!the!Defendants!failed!to!comply!with!implied! requirements!of!the!Chapter!11!Plan!that!they!bring!the!loan!current!and!that!they! create!a!separate!arrearage!account.!!Because!Plaintiffs’!SAC!does!not!allege!a!breach! of!duty!related!to!any!specific!contractual!term,!their!claim!for!breach!of!implied! duty!of!good!faith!and!fair!dealing!is!due!to!be!dismissed.! C.!!Fraudulent#Suppression#(Count#Seven)! # Plaintiffs’!fraudulent!suppression!claim!fails!because!a!party!cannot!be!held! liable!for!suppressing!information!it!had!no!duty!to!disclose.! ! The!first!element!of!a!fraudulent!suppression!claim!requires! the!showing!of!a!duty!to!disclose.!!“In!the!absence!of!special! circumstances,!Alabama!law!considers!the!lenderDborrower! relationship!to!be!armsDlength!and!does!not!place!a!duty!of!disclosure! on!the!lender.”!! # ! 6! Branch#Banking#&#Trust#Co.#v.#EBR#Investments#LLC,!!Civil!Action!No.!2:14DCDV01578D WMA,!2015!WL!225457,!at!*3!(N.D.!Ala.!Jan.!16,!2015)!(quoting!Buckentin#v.# SunTrust#Mortgage#Corp.,!928!F.Supp.2d!1273,!1285!(N.D.Ala.2013)).!!“When!both! parties!are!intelligent!and!fully!capable!of!taking!care!of!themselves!and!dealing!at! arm’s!length,!with!no!confidential!relationship,!no!duty!to!disclose!exists!when! information!is!not!requested,!and!mere!silence!is!not!a!fraud.”!!Bank#of#Red#Bay#v.# King,!482!So.!2d!274,!285D86!(1985).!!!The!relationship!of!Plaintiffs!and!Barclays!!is! akin!to!that!of!lenderDborrower;!therefore,!Plaintiffs!must!plead!facts!from!which!a! special!relationship!could!be!inferred.!!!! ! In!response!to!the!motion!to!dismiss,!Plaintiffs!argue!that!the!duty!to!disclose! arose!from!Barclays’!knowledge!of!the!internal!problems!it!had!encountered!with! Plaintiffs’!account!and!similar!accounts.!!However,!superior!knowledge!does!not! amount!to!special!circumstances!imposing!a!duty!to!disclose.!!Surrett#v.#TIG#Premier# Ins.#Co.,!869!F.!Supp.!919,!924D25!(M.D.!Ala!1994);!see#also##Mason#v.#Chrysler#Corp.,! 653!So.!2d!951,!954D55!(Ala.!1995)!(dealership’s!knowledge!of!recurring!defect!in! automobile!model!purchased!by!customer!did!not!give!rise!to!duty!to!disclose).!!In! sum,!the!factual!allegations!of!the!SAC!do!not!support!a!claim!for!fraudulent! suppression!or!concealment.!!! D.##Unconscionability#(Count#Eight)# # Plaintiffs!concede!this!cause!of!action!is!due!to!be!dismissed!as!to!Barclays.! E.###Unjust#Enrichment#(Count#Nine)### # Barclays’!motion!to!dismiss!this!claim!from!the!FAC!was!denied.!!For! appellate!purposes,!Barclays!reasserts!the!same!grounds!for!dismissal!as!previously! ! 7! raised.!!For!reasons!stated!in!the!previous!order,!the!Court!again!denies!the!motion! to!dismiss!this!cause!of!action.! ! F.##Accounting!(Count#Ten)! ! Count!Ten!asserts!a!separate!claim!for!an!accounting!of!mortgage!interest! and!amortization.!!In!general,!the!equitable!remedy!of!accounting!is!appropriate! when!there!is!a!fiduciary!relationship!between!the!parties,!where!the!defendant!has! engaged!in!fraud,!or!where!the!account!is!unusually!complicated!or!difficult.!!Givens# v.#Saxon#Mortg.#Services,#Inc.,!Civil!Action!No.!13D00245DKDDN,!2014!WL!2452891! (S.D.!Ala.!May!30,!2014).!!The!Court!finds!that!the!facts!alleged!in!the!SAC!do!not! support!a!claim!for!accounting.3! III.##Conclusion# The!motion!to!dismiss!filed!by!Barclays!Capital!Real!Estate,!Inc.!granted,!in!part,! and!denied,!in!part,!as!follows:! • • ! # # ! ! ! ! ! Plaintiffs’!claims!for!breach!of!the!duty!of!good!faith!and!fair!dealing!(Count! Two),!fraudulent!suppression!or!concealment!(Count!Seven),! unconscionability!(Count!Eight),!and!accounting!(Count!Ten)!are!dismissed! in!their!entirety.! Plaintiffs’!claims!for!breach!of!contract!(Count!One)!and!unjust!enrichment! (Count!Nine)!survive.!!! ! DONE#and!ORDERED!this!the!26th!day!of!October,!2015.! ! ! # ! ! ! ! ! ! ! ! s/Charles#R.#Butler,#Jr.# # # Senior#United#States#District#Judge! # !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 3!The!SAC!does!not!allege!facts!giving!rise!to!a!fiduciary!relationship!or!fraud.!! While!the!mortgage!account!is!undoubtedly!complicated,!it!is!unlikely!that!an! accounting!would!make!it!any!less!so!or!that!an!accounting!would!accomplish! anything!that!could!not!be!accomplished!through!discovery.! ! 8!