Shugart v. Ocwen Loan Servicing Llc

747 F.Supp.2d 938

Jason SHUGART, Plaintiff,

v.OCWEN LOAN SERVICING, LLC, et al., Defendants.

Case No. 2:09–cv–1123.

United States District Court, S.D. Ohio, Eastern Division.

Sept. 28, 2010.

John T. Murray, Leslie O. Murray, Murray & Murray, Sandusky, OH, for Plaintiff.Charles E. Ticknor, III, Martha Van Hoy Asseff, Dinsmore & Shohl, LLP, Allison E. Haedt, Jones Day, Columbus, OH, Patricia A. Screen, Brouse McDowell, Jerome W. Cook, Erin K. Walsh, McDonald Hopkins Co. LPA, Cleveland, OH, Stephanie Cope, King & Spalding LLP, Atlanta, GA, Robert J. Schuckit, Laura K. Rang, William R. Brown, Schuckit & Associates, P.C., Zionsville, IN, for Defendants.

OPINION AND ORDER

MICHAEL H. WATSON, District Judge.

Plaintiff Jason Shugart brings suit against Defendants Ocwen Loan Servicing, LLC (“Ocwen”) and Paymap Inc. Plaintiff also sues credit reporting agencies Experion Information Solutions, Inc., Equifax Information Services, LLC, and Trans Union, LLC (collectively, “Credit Reporting Agencies”). Plaintiff's claims arise out of Ocwen's servicing of Plaintiff's mortgage and note, Ocwen's reporting of information related to Plaintiff's mortgage and note to the Credit Reporting Agencies, and the Credit Reporting Agencies' handling of disputed information on Plaintiff's credit history.

Ocwen moves to dismiss a number of Plaintiff's claims pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. (Mot. Dismiss (Doc. 27).) The challenged claims are: breach of contract (Count Two), violation of the federal Fair Debt Collection Practices Act (Count Five), violations of the Ohio Consumer Sales Practices Act (Count Six), violations of the federal Fair Claims Reporting Act (Counts Eight and Nine), intentional infliction of emotional distress (Count Twelve), defamation (Count Thirteen), and invasion of privacy (Count Fourteen). The Court has federal subject matter jurisdiction pursuant to 28 U.S.C. § 1331.

The Court GRANTS Ocwen's Motion to Dismiss Count Two, GRANTS IN PART Ocwen's Motion to Dismiss Count Six, and DENIES Ocwen's Motion to Dismiss the remaining challenged claims.

I. FACTS

Plaintiff purchased a home in Columbus, Ohio with a first mortgage and subsequently refinanced the loan. Ocwen became the servicer of the note and mortgage. Plaintiff asserts, among other things, that Ocwen misapplied payments, resulting in the assessment of improper late fees, ignored Plaintiff's written requests for corrections to his account, provided false information relating to Plaintiff's note and mortgage to the Credit Reporting Agencies, and failed to conduct necessary investigations of Plaintiff's account. As a result, Plaintiff alleges he was denied a later refinance on his mortgage and has suffered emotional distress and injuries to his reputation. Plaintiff brought suit against Ocwen, Paymap Inc., and the Credit Reporting Agencies for various state and federal law violations. Ocwen now moves to dismiss a number of these claims pursuant to Rule 12(b)(6).

II. STANDARD OF REVIEW

A claim survives a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) if it “contain[s] sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, ––– U.S. ––––, 129 S.Ct. 1937, 1949, 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)). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. A complaint's “[f]actual 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.” Twombly, 550 U.S. at 555–56, 127 S.Ct. 1955 (internal citations omitted).

A court must “construe the complaint in the light most favorable to the plaintiff.” Inge v. Rock Fin. Corp., 281 F.3d 613, 619 (6th Cir.2002) (citing Turker v. Ohio Dep't of Rehab. & Corr., 157 F.3d 453, 456 (6th Cir.1998)). To survive a Rule 12(b)(6) motion, however, a plaintiff's complaint must provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955; see also Iqbal, 129 S.Ct. at 1949 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”); Ass'n of Cleveland Fire Fighters v. City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir.2007). The Court must read Twombly in conjunction with Federal Rule of Procedure 8(a)(2), which requires only a “short and plain statement of the claim showing that the pleader is entitled to relief.” Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir.2009). “[A] naked assertion ... gets the complaint close to stating a claim, but without some further factual enhancement it stops short of the line between possibility and plausibility....” Twombly, 550 U.S. at 557, 127 S.Ct. 1955. Thus, “something beyond a mere possibility of [relief] must be alleged, lest a plaintiff with a largely groundless claim be allowed to take up the time of a number of other people, with the right to do so representing an in terrorem increment of the settlement value.” Id. at 557–58, 127 S.Ct. 1955 (internal citations omitted).

III. ANALYSIS

A. Count Two: Breach of Contract

Plaintiff alleges Ocwen violated the terms of the note and mortgage and is therefore liable for breach of contract. Ocwen moves to dismiss on the basis that Plaintiff failed to allege Ocwen was a party to the note and mortgage, a necessary element of the claim for breach of contract. See Wildi v. Hondros Coll., No. 09AP–346, 2009 WL 3155136, at *4 (Ohio Ct.App. 10 Dist. Sept. 30, 2009) (“The elements for a breach of contract are the existence of a contract, performance by the plaintiff, breach by the defendant, and damage or loss to the plaintiff.”). Plaintiff responds that he pled sufficient facts. The Court agrees with Ocwen.

Plaintiff alleges Ocwen is a servicer of the note and mortgage, not a party to or holder of or assignee of the note or mortgage. Plaintiff provides multiple examples of Ocwen's alleged violations of the language of the note and mortgage, but never alleges that Ocwen was bound by the note and mortgage. Indeed, Plaintiff alludes to ignorance of Ocwen's relationship to the note and mortgage, and states that he intended to determine that the extent of the relationship in discovery. (Pl.'s Opp. Mot. Dismiss (Doc. 31) 6.) After Twombly, however, Plaintiff cannot simply hope that discovery will reveal the existence of contractual privity between Plaintiff and Ocwen. Instead, Plaintiff must plead, with a good faith basis in their veracity, facts that, if proved, would entitle him to relief for a breach of contract claim.

Plaintiff cites to two cases in support of his position: Cairns v. Ohio Sav. Bank, 109 Ohio App.3d 644, 672 N.E.2d 1058 (Ohio Ct.App. 8th Dist.1996) and Webb v. Chase Manhattan Mortgage Corp., No. 2:05–cv–0548, 2007 WL 709335 (S.D.Ohio Mar. 5, 2007). Both are inapposite. In Cairns, the Ohio Court of Appeals examined part of a complaint and found the allegations omitting a time line were sufficiently specific to support a breach of contract claim. The court was silent as to whether or not the plaintiffs alleged the existence of a contract between the plaintiffs and defendant. Although Cairns may support the legal possibility of borrower-servicer privity, neither that case nor the mere possibility of privity alleviates Plaintiffs need to allege the existence of contractual privity with Ocwen.

Webb is also not controlling. Plaintiff cites the case for the proposition that a breach of contract claim against a servicer can conceivably survive a motion to dismiss. This is not disputed. In the instant case, the dispute arises as to whether Plaintiff must specifically plead the existence of a contract. Webb examined whether specific provisions of the underlying contract must be identified as those that were violated, not whether a contract's existence is a necessary allegation.

Merely “pleading that Ocwen has breached a contract with [Plaintiff]” (Pl.'s Opp. Mot. Dismiss (Doc. 31) 8) is insufficient to withstand a motion to dismiss. This legal conclusion, which need not be taken as true, does not suffice to allege the existence of contractual privity between Plaintiff and Ocwen. The Court grants Ocwen's Motion to Dismiss Count Two. Plaintiff's claim against Ocwen for breach of contract is dismissed for failure to state a claim.

B. Count Five: Violation of the Fair Debt Collection Practices Act

In Count Five, Plaintiff argues Ocwen violated the federal Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692e and 1692f, by engaging in false, deceptive, and misleading practices, and by engaging in unfair and unconscionable means of collection. Ocwen contends that Count Five fails because §§ 1692e and 1692f only regulate “debt collectors” as defined by the FDCPA, and Ocwen is not a “debt collector”.

The FDCPA defines a “debt collector” as

any person ... who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.... The term does not include—... (F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; ... [or] (iii) concerns a debt which was not in default at the time it was obtained by such person[.]

15 U.S.C. § 1692a(6).

Ocwen argues it is not a “debt collector” because even if Plaintiff's loan was in default at the time Ocwen began to service it, and Ocwen does not concede this, Ocwen's actions were incidental to a bona fide fiduciary obligation owed to the mortgage owner. Plaintiff responds that while it is true the FDCPA does not apply to...