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Glanzer v. Bank of America, N.A.

United States District Court, W.D. Missouri, Western Division

November 20, 2014

JAY B. GLANZER and PENNY L. GLANZER, Plaintiffs,
v.
BANK OF AMERICA, N.A., Defendant.

ORDER GRANTING IN PART DEFENDANT'S MOTION TO DISMISS

ROBERT E. LARSEN, Magistrate Judge.

Before the court is a motion to dismiss the amended complaint on the grounds that (1) the claims for slander of credit are preempted by the Fair Credit Reporting Act, (2) the negligence claim fails because the relationship between and lender and a borrower is one of contractual obligation rather than duty, (3) the breach of contract and promissory estoppel claim fails because it does not identify the contractual terms or promise which defendant allegedly breached and it does not plead any acts to support an allegation of breach of contractual obligation, (4) the Fair Credit Reporting Act claim fails to allege sufficient facts to show that false information was furnished with malice or willful intent to injure plaintiffs, and (5) any claim based on conduct prior to October 5, 2011, is barred by the doctrine of res judicata. Based on the following, defendant's motion to dismiss will be granted in part.

I. BACKGROUND

According to the facts alleged in the first amended complaint, which are assumed to be true for purposes of this motion, and the attachments thereto, [1] plaintiffs (husband and wife) borrowed approximately $251, 000 in March 2008 from Platte Valley Bank secured by their residence located at 19310 Quinn Road, Trimble, Missouri. Monthly payments were $1, 997.00. The loan was thereafter transferred to BAC Home Loans Servicing, LP. Plaintiffs made their monthly payments through November 2009. In December 2009, plaintiff Penny Glanzer advised BAC that plaintiff Jay Glanzer had lost his job and that she was a student only working part time. BAC advised Penny that plaintiffs qualified for mortgage relief under the Obama Loan Modification Program. BAC sent a packet of materials to plaintiffs which indicated that their monthly payments had been reduced to $677.97; a new loan number had been assigned; and to the extent the $677.96 monthly payments were not sufficient to pay taxes, insurance and principal, the arrearage would be tacked on to the end of the term of the loan. Plaintiffs made their payments each month; and in September 2010, Penny advised BAC that Jay had secured a full-time job, that she had graduated and secured full-time employment, and that they would be able to resume making the $1, 977.00 monthly mortgage payments. BAC advised Penny that because she and Jay were now both employed full time, they no longer qualified for the Obama Mortgage Relief program and, as a result, were now in default. On September 14, 2010, BAC sent plaintiffs a notice of intent to accelerate, calling due the entire balance of the loan.

At various times during 2009 and 2010, BAC represented to credit reporting agencies and others that plaintiffs were delinquent in the payment of their mortgage. Plaintiffs were advised that foreclosure of their residence would take place on December 3, 2010. On November 22, 2010, plaintiffs sued BAC in the Circuit Court of Clay County, Missouri. A temporary restraining order was issued to prevent the December 3, 2010, foreclosure sale. On December 23, 2010, BAC removed the lawsuit to federal court (case number 10-1283-CV-W-JTM). While that lawsuit was pending, BAC was taken over by defendant Bank of America, N.A. Plaintiffs and defendant entered into a confidential settlement agreement and release in August 2011 and a Stipulation of Dismissal was signed by the parties on October 5, 2011.

Approximately one year later, plaintiffs and defendant entered into a loan modification agreement in which plaintiffs certified that they were experiencing financial hardship and did not have sufficient income or assets to make their monthly mortgage payments. All unpaid and deferred amounts were added to the principle which totaled $254, 733.81, and the loan repayment was for a term of 40 years at 5% interest with monthly payments of $1, 673.89 to begin December 1, 2012. Plaintiffs made all payments as required. In October 2013 defendant sent plaintiffs a notice indicating they were past due. The notice showed $13, 468.38 in past-due payments and $42, 123.89 in outstanding late charges and fees. On February 4, 2014, plaintiffs were notified by Millsap & Singer that a foreclosure sale was scheduled for March 10, 2014. At various times during 2013 and 2014, defendant stated to credit reporting agencies and others that plaintiffs were delinquent in the payment of their mortgage.

On March 4, 2014, plaintiffs filed a petition in Clay County Circuit Court against defendant Bank of America, N.A., and Millsap & Singer Law Firm. Plaintiffs alleged the following:

Count one: Slander of credit alleging that defendants falsely stated to major credit reporting agencies and others that plaintiffs were delinquent in the payment of their mortgage.

Count two: Negligence dealing with the facts described in count one.

Count three: Breach of contract and promissory estoppel.

Count four: Requesting temporary restraining order, preliminary injunction and permanent injunction enjoining the foreclosure sale.

On March 7, 2014, the Clay County Circuit Court entered a temporary restraining order enjoining the foreclosure sale. The parties entered into an agreement canceling the foreclosure sale; therefore, no injunction was required. On March 27, 2014, plaintiffs dismissed the Millsap & Singer law firm as a defendant. On March 31, 2014, defendant Bank of America removed the case to federal district court and the case was assigned to Judge Maughmer as a related case to 10-1283-CV-W-JTM. On April 1, 2014, defendant filed a motion to dismiss the petition for failure to state a claim. On that same day, defendant filed a motion for leave to file a motion to enforce a settlement agreement under seal. On May 7, 2014, plaintiffs filed a motion for leave to file a first amended complaint.

On June 3, 2014, Judge Maughmer entered an Order of Recusal and the case was transferred to me. The following day, I entered an order granting the motion for leave to file a motion to enforce settlement agreement under seal; however, to date, no such motion has been filed. On July 2, 2014, the motion to file an amended complaint was granted, and on July 3, 2014, the first amended complaint was filed, alleging the following:

Count one: Slander of credit. Plaintiffs seek $1, 000, 000.00 in compensatory damages and $1, 000, 000.00 in punitive damages.

Count two: Negligence. Plaintiffs seek $1, 000, 000.00 in compensatory damages and $1, 000, 000.00 in punitive damages.

Count three: Breach of contract and promissory estoppel. Plaintiffs seek $1, 000, 000.00 in compensatory damages.

Count four: Violations of the Fair Credit Reporting Act. Plaintiffs seek "One Million Dollars ($1, 000, 000.00) compensatory damages, One Million Dollars ($1, 000, 000.00), and as for punitive damages to punish Defendant Bank of America and to deter Defendant Bank of America and others from like conduct in the future, Five Hundred Thousand Dollars ($500, 000.00) and as for attorney fees, together with their costs herein incurred and expended." It is unclear what form of damages the second million dollars in this count represents.

On July 13, 2014, defendant filed a motion to dismiss the amended complaint. On July 15, 2014, plaintiffs filed a response in opposition, and on July 28, 2014, defendant filed a reply.

II. MOTION TO DISMISS

A motion to dismiss for failure to state a claim should be granted only if it appears beyond doubt that the plaintiff can prove no set of facts which would entitle him to relief. Ritchie Capital Management, L.L.C. v. Jeffries, 653 F.3d 755, 764 (8th Cir. 2011); Craig Outdoor Advertising, Inc. v. Viacom Outdoor, Inc., 528 F.3d 1001, 1023-24 (8th Cir. 2008), cert. denied, 555 U.S. 1136 (2009). In ruling a motion to dismiss, the court is required to view all facts in the complaint as true. CN v. Willmar Public Schools, 591 F.3d 624, 629 (8th Cir. 2010); Owen v. General Motors Corp., 533 F.3d 913, 918 (8th Cir. 2008). Although a complaint need not include 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." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations and alteration omitted). Instead, the complaint must set forth "enough facts to state a claim to relief that is plausible on its face." Id. at 570.

[A] court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.

Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). "The essential function of a complaint under the Federal Rules of Civil Procedure is to give the opposing party fair notice of the nature and basis or grounds for a claim, and a general indication of the type of litigation involved.'" Topchian v. JPMorgan Chase Bank, N.A., 760 F.3d 843, 848 (8th Cir. 2014) (quoting Hopkins v. Saunders, 199 F.3d 968, 973 (8th Cir. 1999) (quoting Redland Ins. Co. v. Shelter Gen. Ins. Cos., 121 F.3d 443, 446 (8th Cir. 1997))). "The well-pleaded facts alleged in the complaint, not the legal theories of recovery or legal conclusions identified therein, must be viewed to determine whether the pleading party provided the necessary notice and thereby stated a claim in the manner contemplated by the federal rules." Topchian v. JPMorgan Chase Bank, N.A., 760 F.3d at 848 (quoting Parkhill v. Minn. Mut. Life Ins. Co., 286 F.3d 1051, 1057-1058 (8th Cir. 2002)).

Defendant specifically denies providing any false information about plaintiffs. However for purposes of this motion I will assume that the information was false since that is what is alleged in the amended complaint.

A. COUNTS ONE AND TWO

Defendant argues that counts one and two (defamation of credit and negligence) are entirely preempted by federal law and that even if the court were to find that these claims are not entirely preempted, the claims fail as a matter of law because they do not allege a willful intent to injure as required by the Fair Credit Reporting Act in order to escape the qualified immunity defense provided in that Act.

Plaintiffs argue that these claims are not preempted because they are "based, primarily, upon the fact that on February 14, February 21, February 28, and March 7, 2014, Bank of America published a Trustee's Sale notice in The Excelsior Springs Standard wherein it was falsely stated that the Glanzers had defaulted on their home mortgage.... This has nothing to do with what Bank of America may have provided the credit reporting agencies; rather this has to do with Defendant making a false statement in the Glanzer's home-county newspaper that the Glanzers either cannot or will not pay their debts."

In its reply, defendant points out that a plaintiff relying on different grounds of recovery must state facts in support of the separate counts, and that "[f]ailure to plead separate counts results in the assumption that the plaintiff intended to rely on only a single ground; thus, the plaintiff will be confined to the ground that appears to be stated."

1. Preemption based on reporting of false information to consumer reporting agencies

The Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681, et. seq., preempts common law claims which are based on furnishing information to consumer reporting agencies. Section 1681s-2(a) states as follows:

(a) Duty of furnishers of information to provide accurate information
(1) Prohibition
(A) Reporting information with actual knowledge of errors - A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.
(B) Reporting information after notice and confirmation of errors - A person shall not furnish information relating to a consumer to any consumer reporting agency if-
(i) the person has been notified by the consumer, at the address specified by the person for such notices, that specific information is inaccurate; and
(ii) the information is, in fact, inaccurate.

The FCRA contains two, arguably overlapping, preemption provisions. The doctrine of preemption derives from the Supremacy Clause of Article VI of the United States Constitution which provides, in pertinent part, that the laws of the United States "shall be the supreme Law of the Land." U.S. Const., art. VI, § 1, cl. 2. Preemption may be either express or implied and "is compelled whether Congress' command is explicitly stated in the statute's language or implicitly contained in its structure and purpose." Fidelity Fed. Sav. & Loan Ass'n v. De La Cuesta, 458 U.S. 141, 152-153 (1982). Section 1681t(b)(1)(F) of the FCRA provides that, "No requirement or prohibition may be imposed under the laws of any State with respect to any subject matter regulated under section 1681s-2 of this title, relating to the responsibilities of persons who furnish information to consumer reporting agencies." This provision is known as the "absolute immunity" provision and was part of the Consumer Credit Reporting Reform Act of 1996. Section 1681h(e) is the FCRA's original preemption section. In it, Congress preempted all state actions against the furnishers of credit information that are "in the nature of defamation, invasion of privacy, or negligence... except as to false information furnished with malice or willful intent [to] injure [the] customer." 15 U.S.C. § 1681h(e). Section 1681h(e), therefore, permits state actions to survive a motion to dismiss, so long as their proponents allege malice or willful intent.

Clearly any defamation of credit and negligence claims in the amended complaint which are based on defendant's allegedly reporting inaccurate information to a credit reporting company are preempted by the FCRA. Plaintiffs' attempt to escape dismissal of those claims due to preemption consists of the following argument: These claims are not preempted because they are "based, primarily, upon the fact that on February 14, February 21, February 28, and March 7, 2014, Bank of America published a Trustee's Sale notice in The Excelsior Springs Standard wherein it was falsely stated that the Glanzers had defaulted on their home mortgage.... This has nothing to do with what Bank of America may have provided the credit reporting agencies; rather this has to do with Defendant making a false statement in the Glanzer's home-county newspaper that the Glanzers either cannot or will not pay their debts."

First, I note that in the original petition, the Trustee's Sale notice in The Excelsior Springs Standard was never mentioned. In the amended complaint, this notice of sale is mentioned in two paragraphs out of the 16-page complaint. Counts one and two of the amended complaint are lengthy and focus almost exclusively on defendant's report of inaccurate information to consumer reporting agencies:

COUNT I

CLAIM AGAINST BANK OF AMERICA, N.A. FOR DEFAMATION (SLANDER OF CREDIT)

COME NOW Plaintiffs and for Count I of their cause of action against Defendant Bank of America, N.A. state:

THE PARTIES

1. Plaintiffs are husband and wife and are, and at all relevant times have been, citizens and residents of Clay County, Missouri, residing at the address set forth in the caption.

2. Defendant Bank of America, N.A. (hereinafter sometimes referred to as "Bank of America") is and at all relevant times has been a federally-chartered bank, doing business in Clay County, Missouri and authorized to do business in the State of Missouri. Defendant Bank of America, N.A. is amenable to service of process in the manner set forth in the caption.

BACKGROUND

3. In approximately March, 2008, Plaintiffs borrowed approximately $251, 000.00 from Platte Valley Bank and secured the loan with a Deed of Trust on their real estate and the improvements thereon in Clay County, Missouri. The mailing address of Plaintiffs' home is 19310 Quinn Road, Trimble, Missouri 64492....

4. Pursuant to the terms and conditions of the aforesaid home loan, Plaintiffs were to pay to Platte Valley Bank the sum of approximately $1, 977.00 on the first (1st) day of each month, which sum represented payment of principal, interest, taxes and insurance.

5. Plaintiffs were advised that their aforesaid obligation to Platte Valley Bank was transferred to BAC Home Loans Servicing, LP [hereinafter sometimes referred to as "BAC"] and, thereafter, Plaintiffs made their monthly payments of $1, 977.00 to BAC until and including the November 1, 2009 payment.

6. In December, 2009, Plaintiff Penny Glanzer (hereinafter referred to as "Penny"), telephoned BAC and advised BAC that Plaintiff Jay Glanzer (hereinafter referred to as "Jay") had lost his job, that she was a student who was only working part time, and asked if she and her husband would qualify for any mortgage relief. The phone conversation lasted approximately 30 minutes and, at the conclusion of the conversation, BAC advised Penny that she and Jay did in fact qualify for mortgage relief under the Obama Loan Modification Program and that BAC would FedEx a packet of materials to them.

7. In December, 2009, Jay and Penny received the packet of materials from BAC, which package of materials advised Plaintiffs that:

(a) their monthly payment had been reduced from $1, 977.00 per month to $677.96 per month, effective December 1, 2009;

(b) a new loan number had been assigned to Plaintiffs;

(c) Plaintiffs could no longer make their payments on-line but, instead, had to make their payments by check;

(d) Plaintiffs' monthly payments to BAC would have to be sent to a new address; and

(e) to the extent that the $677.96 monthly payments were not sufficient to pay taxes, insurance, and reduce the principal on the loan, the arrearage would be tacked on to the end of the term of the loan and could be paid then.

8. Jay and Penny honored the aforesaid agreement and mailed their checks to BAC along with temporary payment coupons (printed on pink paper) that BAC provided to Plaintiffs and which showed the new monthly payment of $677.96. In fact, the correspondence that Jay and Penny received from BAC stated: "If you and BAC Home Loans Servicing, LP have entered into an agreement to address your monthly payments, please make payments in agreement to address your monthly payments, please make payments in accordance with this agreement."

9. In September, 2010, Plaintiffs' fortunes improved in that:

(a) Jay had secured full-time employment; and

(b) Penny had graduated from nursing school and had secured full-time employment as well. Penny telephoned BAC and advised BAC of Plaintiffs' improved circumstances and advised BAC that Plaintiffs would now be able to resume paying $1, 977.00 per month. BAC responded by telling Penny that, because she and Jay were now both employed full-time, they no longer qualified for the Obama Mortgage Relief program and, as a result, they were now in default.

10. Then, on or about September 14, 2010, without any just cause or excuse, without any basis in law or fact, and in direct violation of Plaintiffs' aforesaid agreement with BAC, BAC sent to Plaintiffs a "Notice of Intent to Accelerate", purporting to call due the entire balance of Plaintiffs' aforesaid loan.

11. Further evidencing that Plaintiffs were never delinquent in their obligation to BAC is this: In 2009, Jay and Penny sustained a casualty loss for which they were paid approximately $30, 000.00 by their insurer, Farmers Insurance Company. During the period between November, 2009 and September, 2010, Plaintiffs mailed to BAC a series of checks from Farmer's Insurance Company, totaling approximately $30, 000.00. Each of the checks had been endorsed over to BAC by Plaintiffs. Had BAC believed that Plaintiffs were behind in their payments (and, in fact, Plaintiffs were not behind in their payments), BAC could have retained the money and applied the funds to any alleged arrearage. Instead, BAC deposited each check and issued its own check to Plaintiffs representing, in each instance, the full amount of each Farmer's check. In one instance, in approximately February, 2010, Plaintiffs sent to BAC a Farmer's check in the sum of $3, 328.30 (which Plaintiffs had endorsed) and accompanied the check with a letter requesting BAC to keep these funds and apply them to the monthly payments of $677.96 that were to become due in March, April, May, June, July, and August, 2010 and, in fact, BAC did so.

12. Plaintiffs have timely made each monthly payment and have never been delinquent in the making of any payment.

13. From the point in time that BAC purchased the loan from Platte Valley Bank, BAC made numerous misstatements and misrepresentations to Plaintiffs and made numerous promises and given numerous assurances that BAC later disavowed and/or breached.

14. At various times in 2009 and 2010, [2] BAC stated and represented to others, including the major credit reporting agencies, that Jay and Penny were delinquent in the payment of their mortgage. When Jay and Penny pointed out to BAC that, in fact, they were not delinquent in the payment of their mortgage and that they have never been delinquent in the payment of their mortgage, BAC falsely stated and represented to others, including the major credit reporting agencies, that Jay and Penny were, indeed, delinquent in the payment of their mortgage.

15. BAC published and disseminated the statements contained in ¶14 among those in the financial, banking, and credit industries, ...


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