GIORDANO v. MGC MORTGAGE, INC et al, No. 2:2015cv04399 - Document 20 (D.N.J. 2016)
Court Description: OPINION. Signed by Judge Jose L. Linares on 2/16/2016. (nr, )
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GIORDANO v. MGC MORTGAGE, INC et al Doc. 20 NOT FOR PUBLICATION UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY AMELIA GIORDANO, Civil Action No.: 15-4399 (JL L) Plaintiff, V. OPINION MGC MORTGAGE, INC, Defendant. L1NARES, District Judge. Presently before the Court is a mo tion to dismiss Plaintiff’s am ended complaint by Defendant pursuant to Feder al Rule of Civil Procedure 12 (b)(6). No oral argument was heard pursuant to Rule 78 of the Federal Rules of Civil Proced ure. After considering the submissions of the partie s in support of and in oppositi on to the motion, the Court grants Defendant’s motion to dis miss. I. BACKGROUND Plaintiff brought this suit all eging violations of the Real Estate Settlement Procedures Act (“RESPA”). (Am. Compl. (ECF No. 14), Co unt I.) In February 1999, Plaintiff entered into a mortg age loan agreement. (Id ¶ 5.) Plaintiff alleges that Defendant has been the loan ser vicing company for the mortg age since November 2011. (Id. ¶ 9,) Plaintiff further allege s that on March 18, 2015, she sent Defendant a “Request for Information (“RFI”) and Qualified Written Request (“Q WR”) pursuant to 12 U.S.C. 2605 and 12 C.F.R. 1024.36 .” (Id. ¶ 10.) Plaintiff claims tha t Defendant failed to follow I Dockets.Justia.com the procedures outlined in 12 U.S.C. 2605 and 12 C.F.R. 10 24.36 after receiving “the RF I and QWR letter,” and as a result she suffered damages. (Id. 11 ¶ , 17-24.) Plaintiff filed her original com plaint on June 25, 2015. (EC F No. 1.) Defendant moved to dismiss the complaint , arguing that RESPA claims require a Plaintiff to allege either actual damages or sta tutory damages as a result of a “pattern or practice” of violations, and that Plaintiff had done neither. Plaintiff did no t dispute that she had not alleged actual damages.’ Ins tead, she asserted that she had sufficiently alleged facts to support statutory damages. Th is Court disagreed, and grante d Defendant’s first motion to dismiss. (See ECF No. 13 (O rder, Nov. 3, 2015 (“Nov. 3 Order”)) ¶ 8.) The dismissa l was without prejudice to all ow Plaintiff to file an amend ed complaint curing the identified deficiencies. (Id. at 3.) Subsequently, Plaintiff file d an amended complaint on December 3, 2015. (ECF No . 14.) In the amended compla int, Plaintiff now alleges tha t she has suffered actual damage s in the form of postage and legal fees in preparing and sending the letter to Defen dant as well as damages for emotional distress from Defendant’s failure to respo nd to the RFIIQWR letter. (See Am. Compl. ¶J 26-27.) Defendant presently moves to dismiss the amended compla int in its entirety. IL LEGAL STANDARD Under Rule 8(a), for a compla int to survive dismissal, it “m ust contain sufficient factual matter, accepted as tru e, to ‘state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 66 2, 678 (2009) (citing Bell At! . Corp. v. Twombly, 550 U.S. See 1 ECF No. 11 (Pl.’s Op p’n to Def.’s First Mot. to Di smiss) at 3 (“MGC is aware recovery of statutory dam that ages is not dependent upon successful recovery of act damages. Plaintiffs Comp ual laint clearly alleges that MG C has exhibited a pattern practice of noncompliance wi or th the requirements of RESP A.”) (citation omitted). 2 544, 570 (2007)). In determining the sufficiency of a complaint, the Third Circuit has outlined a three-step process: First, the court must “tak[e] note of the elements a plaintiff must plead to state a claim.” Second, the court sho uld identify allegations that, “becau se they are no more than conclusion s, are not entitled to the assumption of truth.” Finally, “where there are wel l-pleaded factual allegations, a cou rt should assume their veracity and then determine whether they plausibl y give rise to an entitlement for relief.” Santiago v. Warminster Tp., 629 F.3 d 121, 130 (3d Cir. 2010) (quoting Iqb al, 129 S.Ct. at 1947, 50.) Thus, “[t]hreadbare reci tals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. HI. DISCUSSION As this Court previously stated in dismissing Plaintiffs original com plaint, in order to bring a claim under RESPA , a plaintiff “must sufficiently allege one of two types of damages: (1) actual damages to the borrower as a result of the failure to comply with § 2605; or (2) statutory damages in the case of a pattern or practice of non compliance with the requirements of 2605.” (No § v. 3 Order ¶ 4 (quoting Gorbaty v. Wells Fargo Bank, NA., No. 10-CV-3291, 2012 WL 1372260, at *5 (E.D.N.Y. Apr . 18, 2012)).) Additionally, when basing a clai m on actual damages, “the borrower has the responsibility to present specific evid ence to establish a causal link betw een the financing institution’s violation and their inju ries.” Straker v. Deutsche Ban k Nat ‘1 Trust, No. 2012 WL 7829989, at *11 (M.D. Pa. Apr. 26, 2012) (internal quotati ons omitted); see also Gorbaty, 2012 WL 1372260, at *5 (“A plaintiff seeking actual damages under § 2605 must allege that the damage s were proximately caused by the defendant’s violation of RESPA.”); Hutchinson v. Delawa re Say. Bank FSB, 410 F. Supp. 2d 374, 383 (D.N.J. 2006) (“[Ajlleging a breach of RE SPA duties alone does not state a claim under RESPA. 3 Plaintiffs must, at a minimum, also allege that the breach resulted in actual damages.”) (citing 12 U.S.C. § 2605(f)(1)(A)). Defendant argues that Plaintiff’s ame nded complaint again fails to adequately plead dam ages. A. Postage and Legal Fees Plaintiff alleges that her “actual damages include the cost of postage to send the RFI and QWR letter, [and] the cos t of fees paid to legal counsel who assisted in preparing the RFI and QWR letter.” (Am. Com pi. ¶ 26.) Defendant argues that “[c]osts incurred by a plaintiff in preparing and sen ding a QWR are not actionable und er RESPA because such costs are incurred before the alleged RESPA violation, and ther efore could not have been caused by the defendant’s alle ged failure to comply with RESPA ; further, such costs would have been incurred whether or not the defendant had complie d with RESPA, and therefore do not constitute actual damages.” (Def.’s Mot. at 6 (em phasis in original).) Plaintiff, in response, argues that her “initial expenses in sending the QWR became damages when Defendant refused to comply with RESPA.” (Pl.’s Opp’n at 9 (emphasis added). In support of her position, Plainti ff cites to Palmer v. MGC Mortg. , Inc., 13-1734, 2013 WL 6524648 (E.D. Pa. Dec . 10, 2013), which cites to Cortez v. Keystone Bank, Inc., No. 98—2457, 2000 WL 536 666, at *12 (E.D. Pa. May 2, 200 0). Both of these cases state that “courts have found ‘act ual damages’ to mean ‘pecuniary loss including such things as time spent away from employment while preparing cor respondence to the loan servicer, and expenses for pre paring, photocopying and obtaini ng certified copies of correspondence.” Palmer, 201 3 WL 6524648, at *5 (quoting Cortez, 2000 WL 536666, * 12) at . Plaintiff is reading a general phrase out of context with the actual findings of 4 those cases. Neither case found that the cos ts of postage and fees related to sending the initial letter—prior to any alleged violation— sufficiently alleged actual damages under RESPA. The court in Palmer found that allegations of “a forced default in her mortga ge payment obligations, injury to Plaintiff’s reputation, out-of-pocket expenses, physica l, emotional and mental pain and anguish and pecuniary loss” were sufficient to stat e a claim. See id. at *6. The Court in Cortez found that “Plaintiffs have presented com petent evidence that their available credit was dec reased by the amount of outstanding interest charges on the account during any given week and they were thus unable to earn inte rest on other accounts. Insofar as a denial of access to the full amount of the cred it line resulted from an improper failure to correct the assessment of interest charges, this wou ld constitute actual damages for which Key stone could be liable.” 2000 WL 536666 , at *12 Courts that have directly considered the issu e of pre-violation letter preparation costs have found that such costs are not actual damages under RESPA because RESPA requires the damages to flow as a result of the violation. See Zeich v. Select Por tfolio Servicing, Inc., No. 15-1005, 2015 U.S . Dist. LEXIS 151519, at *5 (D. Or. Oct . 30, 2015) (“[Tb the extent plaintiff incurred fees for pos tage, he cannot recover for mailing the qualified written request itself.”); Steele v. Quantum Servicing Corp., No. 12-289 7, 2013 U.S. Dist. LEXIS 88812, at *27 (N. D. Tex. June 25, 2013) (“[Tjhe costs allegedly incurred by Plaintiffs in preparing and sending the March 30, 2012 letter to Qua ntum are not actionable under RESPA because any such costs would have necessarily been incurred before the alleged RESPA vio lation.”) (emphasis in original); Gorton v. Wells Fargo Bank NA, No. 12-1245, 2012 U.S . Dist. LEXIS 168158, at *23 (E.D. Ca. Nov. 27, 5 2012) (“Plaintiff alleges she incurred copying and postage costs, but that [was] the result of her sending of the QWR, not to any failure to respond adequate ly to it.”); Skaggs v. HSBC Bank USA, N.A., No. 10-247 , 2011 U.S. Dist. LEXIS 98057, *46 (D. Haw. Aug. 31. 2011) (“Plaintiff seeks the cos t of mailing a QWR itself, not any subsequent costs incurred by the failure to respond to that QWR. [Cortez] did not find that such QWR costs constituted ‘actual damages’ under RESPA.”) (emphasis in orig inal). The Court finds these latter, on poi nt, cases persuasive. First, the statute contains an express requirement that dam ages accrue “as a result of the fail ure” to comply with the provisions. See 12 U.S.C. 260 5(f). Expenses that would be incu § rred regardless of a violation do not occur “as a result ” of the violation. Second, a fin ding that costs related to preparing and mailing the initial letter are actual damages under RESPA would make the actual damage pre-requisite to suit meaningless as there will alw ays be some costs related to the initial letter. See, e.g., Lal v. Am. Home Servicing, Inc., 680 F. Supp. 2d 1218, 1223 (E.D. Ca. 2010) (“N or does simply having to file suit suffice as a harm warranting actual damages. If suc h were the case, every RESPA suit would inherently have a claim for damages built in.” ). For these reasons, the Court finds that the postage and other costs related to the init ial letter—as pled by Plaintiff— are not actionable as damages under RESPA. B. Additional Fees In her brief, Plaintiff asserts that “[h]aving received no res ponse [to the RFIIQWR], Plaintiff then incurr ed additional damages including further costs of counsel, initiation of this litigation, and additional damages caused by emotional distress and anxiety caused by Defendant’s disobedience to federal law and lack of communication.” 6 (Pl,’s Opp’n at 11-12.) Plaintiff further asserts that “the delay in Def endant’s response caused economic harm by delayin g the opportunity for Plaintiff to engage in the loss mitigation process. As each day passed, Plaintiff was being charged interest and penalties by Defendant as the def ault period continued.” (Id. at 11.) Neither of these allegations appear in Plaintiff’s amended complaint, and they will not be considered here for purpos es of Defendant’s present motion to dismiss. See Corn. of Pa. cx rd. Zimmerman v. Pep siCo, Inc., 836 F.2d 173, 181 (3d Cir. 1988) (“[I]t is axiomatic that the complaint may not be amended by the briefs in opp osition to a motion to dismiss.”) (alteration in original ). However, because Defendant seeks dismissal of the claims with prejudice and Plaint iff has already been permitted one chance to amend the complaint, the Court will address each of these arguments briefly. First, Plaintiff has cited no cases in the section of her brief introducing these new alleged damages in support of her position. (See P1. ’s Opp’n at 11-13.) Second, with respect to litigatio n expenses, many courts have found such costs insufficient to satisfy the actual damages pre-requisite to suit. See ,e.g., Whittier v. Ocwen Loan Servicing, L.L.C., 594 F. App’x 833, (5th Cir. 2014) (agreei ng that “attorney’s fees and expenses of litigation incurred cannot, as a matter of law, satisfy the actual damages requirement of a RESPA claim” because “RESPA allows for fees and expenses in addition to actual damages”) (emphasis in original) (citing 12 U.S.C. § 2605(f)); see also Kassner v. Chase Home Fin., LLC, 2012 U.S. Dist. LEX IS 10358, at *21 (D. Mass. Jan. 27, 2012) (“[A]ttorney’s fees for bringing a RESPA suit are not actual damages under the statute.”) (collecting cases); Allen v. United Fin. Mortg. Corp., 660 F. Supp. 2d 1089, 1097 (N.D. Cal. 200 9) (“[Ajttorneys’ fees are not ‘actual damages’ as . . . 7 contemplated by in § 2605(f)( I) and instead are separately enumerated as recoverable losses § 2605(fj(3).”). The Court finds the reasoning in the se cases persua sive as a contrary finding would render the portion of the statute directly addressing “costs of the action” ( 2605(f)(3)) superfluous. See Un ited States v. Cooper, 396 F.3d 308 , 312 (3d Cir. 2005) (“It is a well known canon of sta tutory construction that courts sho uld construe statutory language to avoid interpretation s that would render any phrase sup erfluous.”). Therefore, the Court finds that leave to am end to add this allegation would be futile. Third, with respect to alleged int erest and penalties, it is not eno ugh to say that charges were incurred; Plaintiff must allege that the charges were incurred as a result of the RESPA violation. Compare Chung v. Shapiro & Denardo, LLC , No. 14-6899, ECF No. 14-6899, at 3 n.2 (D.N.J. Jan . 29, 2016) (“Here, Plaintiff has specifically identified the problem (he could not discer n how much he had to pay to bring the loan current) and specifically identified the harm (his loan remained in default, wi th additional attendant charges, due to his inability to pay it off). Here, Plaintiff has alleged tha t a QWR response “would have enabled Pla intiff to determine the precise am ount due to reinstate the loan.”), with Roth v. CitiM ortgage Inc., No. 12-2446, 201 3 WL 5205775, at *7 (E.D,N,Y, Sept. 11, 2013) aff’ d, 756 F.3d 178 (2d Cir. 2014 ) (finding allegations of a variety of interest charges and late fees due to failure to correc t the account were too conclusory to state a claim); Gorton v. Wells Fargo Bank NA , 2012 U.S. Dist. LEXIS 168158, at *23 (C.D. Cal. No v. 27, 2012) (“Plaintiff also alleges incurrence of late payment fees and damages to her credit rating; however, the se cannot be said to be incurred ‘as a result of the failure ’ to respond to the QWR. Th ese damages are related to Plaintiff’s failure to make tim ely mortgage payments rather than a failure to respond to . 8 . . Plaintiffs QWR.”). As Plaintiff has framed the new allegation in her brie f, it would not survive a motion to dismiss becaus e it is conclusory and does not pro vide any explanation for how the alleged damages resu lted from the alleged RESPA violation. However, unlike the new litigation fees alle gation, Plaintiff may be able to provide additional allegations establishing the requisi te causation, and therefore she wil l be permitted an opportunity to correct this deficiency . C. Emotional Distress Plaintiff now alleges that her “actual damages also include non -pecuniary damages caused by the stress, anx iety and emotional distress that occurred when MGC failed to respond to the RFI and QW R letter.” (Am. Compl. 27.) Defend ant argues that ¶ “for purposes of RESPA, ‘actual damages’ are limited to pecuniary damages, and emotional distress and other non-pe cuniary ‘damages’ are not recover able in an action under RESPA.” (DeE’s Reply at 1.) Both parties agree that there is no controlling authority on this point, and that dist rict courts are split on the issue. (See Def.’s Mot. at 7; ,‘s Opp’n at 6-7.) Two circ uits that have addressed the issue have found such nonpecuniary damages to be recover able under RESPA. See Catalan v. GMAC Mortg. Corp., 629 F.3d 676, 696 (7th Cir . 2011) (“[Ejmotional distress dam ages are available as actual damages under RESPA, at least as a matter of law.”); McLea n v. GMAC Mortg. Corp., 398 F. App’x 467, 471 (11 th Cir. 2010) (“[Pjlaintiffs may recover for nonpecuniary damages, such as emo tional distress and pain and sufferin g, under RESPA.”); see also Benner v. Bank of Am ., NA., 917 F. Supp. 2d 338 , 365 (E.D. Pa 2013) (“Defendant also contends that eve n if its RESPA duties were trigger ed, Plaintiff has not pled sufficient facts to show he suffered actual damages as a resu lt. The Court again . 9 . . disagrees. Plaintiff alleges she has suffered fear, anxiety and other emotional distress as a result of Defendant’s actions.”) (internal quotations omitted). The Court finds that the position allowing emotional dist ress damages is consistent wit h the statute’s express language providing recovery for “any actual damages to the bo rrower.” 12 U.S.C. § 2605(f) (emphasis added). How ever, the Court also agrees that bare conclusory statements—-even if such damage s are permitted—fail to satisfy Rule 8(a) much less RESPA’s requirement that dam ages be “as a result of’ the alle ged violation. See id.; Moore V. Mortg. Elec. Registra tion Sys., Inc., 848 F. Supp. 2d 107, 123 (D.N.H. 2012) (Under RESPA, “actual damage s’ include damages for emotional distress (provided, of course, that there is a causal rel ationship between that distress and the alleged RESPA violation[)]. . . Here, with respect to emotional distress, Plaintiff alleges: • The RFI and QWR letter ask s MGC to disclose all loss mi tigation options available to Plaintiff (Am . Compl. ¶ 15); • The request was made becaus e Plaintiff, having faced a tem porary financial hardship, was seekin g to know if a loan modificatio n could be obtained (id.); • Plaintiff felt anxious and exp erienced side effects from anx iety resulting from the uncertainty of whether loss mitigation options would be made available (id.); and • Plaintiffs actual damages also include non-pecuniary damage s caused by the stress, anxiety and emotion al distress that occurred when MGC failed to respond to the RFI and QWR letter (id. ¶ 27). The Court finds that Plaintiffs bare allegations are insufficient as they do not establish that the alleged distress was “as a result of’ the failure to respo nd to the RFI!QWR letter as opposed to the financial har dships she was already experie ncing. See, e.g., Skaggs, 2011 U.S. Dist. LEXIS 98057, *48.4 9 (“Even construing the at allegationsj in Plaintiffs 10 favor, her distress was not related to the April 29, 2010 QWR letter.” ). If a plaintiff simply can allege that failure to resp ond to a letter caused distress, without more, any RESPA claim would survive a motion to dismiss. D. Statutory Damages In this Court’s prior order grantin g Defendant’s motion to dismiss Plaintiff’s original complaint, the Court held that “[c]ontrary to Plaintiff’s pos ition, courts after implementation of the amendments have continued to find no pattern or practice on facts similar to this case [one request].” (Nov. 3 Order ¶ 7.) The Court further held that “Plaintiff’s argument that she may be able to identify other violations through discovery is without merit. Plaintiff must be able to state a claim prior to disc overy.” (Id. ¶ 8 (internal citation omitted).) Plainti ff’s original allegation, on which these holdings were based, was that “MGC has exhibit ed a pattern and practice of noncom pliance with the requirements of [RESPA].” (Co mpl. ¶ 21.) Despite the above holding, Plaintiff’s amended complaint continues to allege statutory damages based on a “pattern or practice” and merely edits the allegation to state that “[o]n information and bel ief MGC maintains a pattern and practice of not resp onding to RFI and QWR letters and Plaintiff is a victim of this pattern and practice.” (Am . Compi. ¶ 32.) The amended alle gation is essentially the same allegation that the Cou rt has already ruled is insufficient . Thus, for the same reasons stated in the Court’s prio r Order, Plaintiff’s claims of stat utory damages are insufficient, and the Court will not permit a second repleading of this issue. 11 E. Repleading Defendant argues that “[b]ecaus e this Court has already given Plaintiff the opportunity to amend her pleadi ng to plausibly assert a claim under RESPA, and she has been unable to do so,” the Cou rt should “dismiss Plaintiffs Am ended Complaint with prejudice.” (Def. ‘s Mot. at 10 n.2 .) Plaintiff has already been afforde d one opportunity to cure the pleading deficiencies, and has not done so. Additionally, Plaintiff originally pled no actual damages, and did not argue that actual damages exist in opposition to Defendant’s first motion to dism iss (even as a reason to permi t re-pleading). Actual damages appeared for the first tim e in the Amended Complaint, and then expanded via briefing in response to Defen dant’s arguments in its second mo tion to dismiss. An opportunity for re-pleading at this stage is not for the purpose of trying to identify something new that may state a claim. Rather, it is meant to per mit an opportunity to expand on existing factual allegati ons to add sufficient substance to the claims. With this in mind, the Court will permit Pla intiff to amend her complaint one more time. However, for the reasons identified in this Opinion, the amendment may not claim actual damages based on the postage and other fees associated with the initial QW R letter or the litigation costs in bringing this suit. An am endment also may not add more damage theories. The amendment is being permitted for the limited purpose of sufficien tly pleading damages related to Plaintiffs interest and penalties and emotional distress allegations. Finally, an amendment may not re-assert a claim for statutory damage s based on a pattern or practice. If Defendant believes that the amendment (if filed) is frivolously made (based 12 on the prior rulings of this Court and/or case law), it may include a motion for sanctions along with a new motion to dismi 2 ss. IV. CONCLUSION For the reasons set forth above, Defendant’s second motion to dis miss is granted. An appropriate Order accompan ies this Opinion. DATED: February (,2Ol6 JOSE L. LINARES VS. DISTRICT JUDGE 2 Such a motion will not automati cally be granted even if Defen dant prevails on a future motion to dismiss. However, Plaintiff is on notice that any am endment must include non conclusory allegations that any damages resulted from the all eged RE SPA violation. The Court believes that such an approach liberally permits Plaintiff the opportunity to cure pleading deficiencies wh ile also recognizing that frivolo us amendments (especially multiple amendments) unnecess arily increase the costs of litigat ion. 13
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