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Jackson v. Standard Mortgage Corp.

United States District Court, W.D. Louisiana, Lafayette Division

December 11, 2019

SAMANTHA J. JACKSON
v.
STANDARD MORTGAGE CORP., FEDERAL NATIONAL MORTGAGE ASSOCIATION, FEDERAL HOME MORTGAGE CORP.

          MEMORANDUM RULING

          PATRICK J. HANNA, UNITED STATES MAGISTRATE JUDGE

         Currently pending are three motions to dismiss (Rec. Docs. 54, 55, and 56), which were filed by defendants Federal Home Loan Mortgage Corporation (“Freddie Mac”), Federal National Mortgage Association (“Fannie Mae”), and Standard Mortgage Corporation, respectively. The motions are opposed (Rec. Doc. 76, 78, 80).[1] Considering the evidence, the law, and the arguments of the parties, and for the reasons fully explained below, the motions are granted in part and denied in part.

         Background

         The plaintiff, Samantha J. Jackson, entered into loan agreements with defendant Standard Mortgage Corporation in 2013 and again in 2016. On both occasions, she mortgaged her property located at 221 Tennessee Street, Lafayette, Louisiana.[2] In this lawsuit, Ms. Jackson sued Standard Mortgage (the mortgagee on both of her mortgages), Freddie Mac (to whom the 2016 mortgage was allegedly sold), and Fannie Mae. When Ms. Jackson obtained the later mortgage, her earlier loan was paid off in full. Ms. Jackson alleged, in connection with the two loans, that the defendants violated the Truth-in-Lending Act (“TILA”), 15 U.S.C.§ 601 et seq., the Federal Trade Commission Act, 15 U.S.C. § 45, and the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq. She also asserted a breach of contract claim and a claim based on the alleged sharing of sensitive personal information in violation of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801 et seq.

         The plaintiff is not represented by legal counsel. Her factual allegations are lengthy, and it is difficult to determine from the face of the second amended complaint precisely what it is that she alleges each of the defendants did that purportedly violated the referenced statutes. At a minimum, she alleged that interest on the loans was calculated on the basis of a 360 day year rather than on the basis of a 365 day year; that she was told she had simple interest loans when her loans were actually amortized; that only $879.45 rather than $889.88 was refunded toward the new loan's escrow balance; that the final payoff for the earlier loan was $48, 456.80 instead of $48, 486.67; that the defendants “failed to ensure the accuracy of the figures in the mortgages;” that Freddie Mac did not require “the agent” to include her name and identification number on the mortgage; that Standard Mortgage did not notify her that the loans were being sold prior to the sales; that Standard Mortgage failed to pay off her earlier loan within twenty-four hours after closing on the new loan; that the plaintiff's mortgage payments were credited as of the due date instead of the date received; that Standard Mortgage charged the plaintiff a tax service fee and outsourced the tax escrow to a third-party although the mortgage stated there would be no charge for escrowing; that multiple truth-in-lending disclosures were given for the 2013 loan with different figures; that multiple HUD-1 statement were used at the closing for the 2013 loan resulting in higher charges to the plaintiff; that unearned interest from July 22, 2016 was not refunded during payoff; that Standard Mortgage provided the plaintiff's personal information to Mortgage Electronic Registration Systems, Inc.; that a tax certificate fee was charged by the closing agent; and that Standard Mortgage did not carefully review the documents to ensure that their calculations were correct.

         This Court's careful reading of the plaintiff's second amended complaint revealed that the only allegations regarding defendant Freddie Mac are the following: that Freddie Mac reported erroneous figures in the loan documents and failed to ensure that mortgage disclosure laws were adhered to (Rec. Doc. 44 at 11, ¶26); that Freddie Mac did not require “the Agent” to include her name on the mortgage or report errors in the documents (Rec. Doc. 44 at 12-13, ¶27); that Freddie Mac changed the interest calculation method from a 365 day year to a 360 day year (Rec. Doc. 44 at 12, ¶32); that Freddie Mac failed to disclose the alleged transfer of loan servicing (Rec. Doc. 44 at 19, ¶69); and that Freddie Mac failed to properly apply advance escrow account deposits (Rec. Doc. 44 at 19, ¶70).

         This Court's careful reading of the plaintiff's second amended complaint revealed that the only allegations regarding defendant Fannie Mae are the following: that Fannie Mae reported erroneous figures in the loan documents and failed to ensure that mortgage disclosure laws were adhered to (Rec. Doc. 44 at 11, ¶26); that Fannie Mae changed the interest calculation method from a 365 day year to a 360 day year (Rec. Doc. 44 at 12, ¶32); that Fannie Mae failed to notify the plaintiff that a loan had been purchased (Rec. Doc. 44 at 16, ¶53); that Fannie Mae failed to disclose the alleged transfer of loan servicing (Rec. Doc. 44 at 19, ¶69); and that Fannie Mae failed to properly apply advance escrow account deposits (Rec. Doc. 44 at 19, ¶70). Notably, the plaintiff did not allege in the second amended complaint that either loan was sold to Fannie Mae.

         The defendants responded to the plaintiff's complaint with the instant motions to dismiss, arguing that the court lacks subject-matter jurisdiction, that certain of the plaintiff's claims have prescribed, and that certain of the plaintiff's claims cannot be remedied in a private action such as this lawsuit.

         Law and Analysis

         A. The Standard for Evaluating a Pro Se Litigant's Pleadings

         A pro se litigant's pleadings are construed liberally[3] and held to “less stringent standards than formal pleadings drafted by lawyers.”[4] However, a pro se plaintiff “must prove, by a preponderance of the evidence, that the court has jurisdiction based on the complaint and evidence.”[5] Furthermore, a pro se plaintiff must also abide by the rules that govern federal courts[6] and properly plead sufficient facts that, when liberally construed, state a plausible claim to relief.[7] A court may sua sponte dismiss a plaintiff's claims on its own motion under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim so long as the procedure is fair, which typically means that the plaintiff has notice of the court's intention to do so and an opportunity to respond.[8] However, a court should generally allow a pro se plaintiff an opportunity to amend his or her complaint before dismissing it for failure to state a claim.[9]

         Ms. Jackson is cautioned that she should, in future briefing, provide accurate citations for cases in addition to stating the names of the parties to the suit and should (unless no such cases exist) cite to cases from the Fifth Circuit Court of Appeals or courts within that circuit.

         Ms. Jackson filed three identical briefs in opposition to the defendants' motions, which resulted in a waste of significant judicial time and effort. Ms. Jackson is cautioned that such needless duplication should be avoided in the future.

         B. The Standard for Evaluating a Rule 12(b)(1) Motion to Dismiss

         A motion to dismiss brought under Fed.R.Civ.P. 12(b)(1) challenges the exercise of the court's subject-matter jurisdiction. A federal court must consider a Rule 12(b)(1) motion to dismiss before taking up any other motion because a court must have subject-matter jurisdiction before determining the validity of a claim.[10]

         The party asserting jurisdiction bears the burden of proving that subject-matter jurisdiction exists.[11] When, as in this case, the Rule 12(b)(1) motion to dismiss is based on the complaint alone, it is a facial attack, and the court must decide whether the allegations in the complaint sufficiently state a basis for subject-matter jurisdiction.[12] A motion to dismiss under Rule 12(b)(1) for lack of subject-matter jurisdiction is analyzed under the same standard as a motion to dismiss under Fed.R.Civ.P. 12(b)(6).[13]

         C. The Standard for Evaluating a Rule 12(b)(6) Motion to Dismiss

         A motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6) is properly granted when a defendant attacks the complaint because it fails to state a legally cognizable claim.[14] When considering such a motion, a district court must limit itself to the contents of the pleadings, including any attachments thereto, [15]accept all well-pleaded facts as true, and view the facts in a light most favorable to the plaintiff.[16] However, conclusory allegations and unwarranted deductions of fact are not accepted as true, [17] and courts “are not bound to accept as true a legal conclusion couched as a factual allegation.”[18]

         To survive a Rule 12(b)(6) motion, the plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.”[19] The allegations must be sufficient “to raise a right to relief above the speculative level, ”[20] and “the pleading must contain something more. . . than. . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of action.”[21] “While a complaint. . . does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”[22] If the plaintiff fails to allege facts sufficient to “nudge[ ][his] claims across the line from conceivable to plausible, [his] complaint must be dismissed.”[23]

         A claim meets the test for facial plausibility “when the plaintiff pleads the factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”[24] “[D]etermining whether a complaint states a plausible claim for relief. . . [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.”[25]Therefore, “[t]he complaint (1) on its face (2) must contain enough factual matter (taken as true) (3) to raise a reasonable hope or expectation (4) that discovery will reveal relevant evidence of each element of a claim.”[26]

         A Rule 12(b)(6) motion to dismiss for failure to state a claim is the proper procedural device to raise a statute of limitations defense and may be granted when it is evident from the pleadings that the action is time barred and the pleadings fail to raise some basis for tolling the applicable prescriptive period.[27]

         D. Subject-Matter Jurisdiction

         The defendants argued that the court lacks subject-matter jurisdiction because there is no actual controversy between the parties to the lawsuit concerning the plaintiff's 2013 loan and because any claim that the plaintiff might have regarding the 2016 loan is not yet ripe. Federal courts only have the power to decide actual cases or controversies.[28] “[A]bstract injury is not enough.”[29] “Rather, the allegations must establish that the plaintiff either has sustained an injury or is in immediate danger of sustaining an injury.”[30]

         The mere fact that the 2013 loan was paid in full does not mean that there cannot be a current controversy regarding that loan. However, whether Ms. Jackson's claims concerning her 2013 loan are timely does not implicate the court's subject-matter jurisdiction but is an issue to be resolved under Rule 12(b)(6).

         The defendants' ripeness argument is based on their assertion that there will be no concrete controversy over the amount of interest charged by the mortgagee on the 2016 loan until the plaintiff's loan matures and is paid in full. Ripeness distinguishes matters that are hypothetical or speculative - and therefore premature - from those that are appropriate for judicial review.[31] To determine whether a matter is ripe for judicial review, a court must evaluate “the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration.”[32] “A claim is not ripe for adjudication if it rests upon ‘contingent future events that may not occur as anticipated, or indeed may not occur at all.'”[33]

         The defendants' ripeness argument is not persuasive. The plaintiff alleged - among other things - that she was given incorrect information at the time of closing the 2016 loan regarding the interest rate to be charged on the money that she borrowed. Because her loan was secured by a mortgage, and her payments were amortized over time, she is paying interest in each monthly mortgage payment.

         Accordingly, the amount of interest being charged is not speculative or hypothetical but a currently determinable amount giving rise to a current claim that she is being charged an incorrect amount of interest. Ms. Jackson's claim that she is being charged a different interest rate from the one disclosed at closing is a ripe issue, ready for resolution. Furthermore, the interest rate dispute is not the only issue raised by the plaintiff in her complaint.

         Thus, the defendants did not establish that the court lacks subject-matter jurisdiction over the claims asserted by the plaintiff with regard to either loan. Accordingly, to the extent that the defendants seek dismissal of Ms. Jackson's claims under Fed.R.Civ.P. 12(b)(1), the pending motions are denied.

         E. The Plaintiff's Federal Trade Commission Act Claim and her Gramm- Leach-Bliley Act Claim

         “[T]he fact that a federal statute has been violated and some person harmed does not automatically give rise to a private cause of action in favor of that person.”[34] Instead, the statute must either explicitly create a right of action or implicitly contain one.[35] In creating a private cause of action, Congress must act unambiguously and with a clear voice.[36] Absent congressional creation of a private cause of action, a private cause of action does not exist and cannot be created by a court.[37]

         The defendants argued that Ms. Jackson lacks the right to assert her Federal Trade Commission Act claim. They did not make the same argument regarding the plaintiff's Gramm-Leach-Bliley Act claim. However, the plaintiff asserted claims under both of those statutes, neither of which affords private litigants a cause of action. Accordingly, the same analysis applies to both claims.

         1. The Federal Trade Commission Act

         In her complaint, Ms. Jackson alleged that Standard Mortgage changed the interest calculation method from a 365 day year to a 360 day year, provided erroneous figures in disclosures, failed to retain all documents for five years after the 2013 closing, failed to properly refund escrowed amounts, failed to provide an accurate payoff balance, failed to properly refund unearned interest, failed to apply payments properly, failed to correct errors in calculations, failed to acknowledge notices of errors, failed to include its agent's name on the 2016 mortgage, all in violation of the Federal Trade Commission Act, 15 U.S.C. § 45. However, the Federal Trade Commission Act does not permit private causes of action.[38] Although Ms. Jackson attempted to refute this argument by citation to jurisprudence, none of the cases she cited were from the Fifth Circuit or any courts within the Fifth Circuit. Therefore, the cases she cited are neither persuasive nor binding on this Court. Accordingly, in keeping with relevant Fifth Circuit jurisprudence, Ms. Jackson cannot pursue a claim against Standard Mortgage or any other defendant under this statute. Her Federal Trade Commission Act claim fails as a matter of law and therefore is dismissed with prejudice.

         2. Gramm-Leach-Bliley Act

         Ms. Jackson alleged in her complaint that Standard Mortgage's agent shared the plaintiff's personal information, which was stored in the company's database, with Mortgage Electronic Registration Systems, Inc. prior to the loan application being completed and signed by the plaintiff in 2016. She further alleged that this violated the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801 et seq. Although the defendants did not raise this issue, this Court, acting sua sponte, must address whether Ms. Jackson can assert a claim under that statute.

         Although it does not appear that the Fifth Circuit has addressed the issue, the Eighth Circuit and several district courts in the Fifth Circuit have held that this statute does not permit a litigant to bring a private right of action.[39] This Court finds these authorities to be persuasive and further finds that Ms. Jackson cannot assert a claim under that statute. This Court further finds that it would be a futile exercise to permit the plaintiff or the defendants to submit more briefing with regard to the plaintiff's authority to assert claims under this statute. Accordingly, Ms. Jackson's Gramm-Leach-Bliley Act claim fails as a matter of law and therefore is dismissed with prejudice. Ms. Jackson did not assert a claim under any other statute for the alleged sharing of her personal information. Therefore, any and all claims that she might have regarding the sharing of her personal information are dismissed in their entirety.

         F. Are the TILA and RESPA Claims Time-Barred?

         The plaintiff asserted claims under TILA and RESPA. TILA “has the broad purpose of promoting ‘the informed use of credit' by assuring ‘meaningful disclosure of credit terms' to consumers.”[40] “The primary purpose of RESPA is to provide consumers with information on the nature and costs of the real estate settlement process and to protect consumers from abusive, ...


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