United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM AND ORDER
L. WHITE UNITED STATES DISTRICT JUDGE
pro se action is before the Court on motions to dismiss filed
by the seven Defendants pursuant to Federal Rule of Civil
Procedure 12(b)(6) and on a motion by Kimberly Bolin and
Donald Bolin ("Plaintiffs") for leave to file a
second amended complaint. With the exception of the motion to
dismiss filed by defendant Mortgage Electronic Registration
Systems, Inc. ("MERS"), each motion is
nine-count amended complaint has its genesis in a mortgage
obtained by Plaintiffs for the property at 5019 Meadow Drive,
Imperial, Jefferson County, Missouri. The allegations in the
complaint are, for purposes of the motions to dismiss,
accepted as true and are as follows.
November 2004, Plaintiffs met with a mortgage officer from
defendant First Option Mortgage ("First Option")
about obtaining a mortgage for the Meadow Drive property.
(Am. Compl. ¶ (V)(20), ECF No. 33.) First Option took
their loan application, requesting only that they sign the
application and explaining that the rest would be completed
once documentation had been received. (Id.) The
following week, First Option informed Plaintiffs that their
mortgage had been approved through defendant Intervale
Mortgage Corporation ("Intervale"). (Id.
December 2004, Plaintiffs closed on the Meadow Drive property
at the offices of defendant Commonwealth Land and Title
("Commonwealth"). (Id. ¶¶
(III)(6), (V)(22)). The deed of trust and other documents
listed Intervale as the lender and defendant Decision One
Mortgage ("Decision One") as the servicer.
(Id. ¶¶(III)(5), (V)(21)). Plaintiffs
"believed they were executing an adjustable rate note
and mortgage for the Meadow Drive property."
(Id. ¶ (IV)(A)). Intervale was allegedly the
mortgagor and was listed as such on the deed of trust and the
note. (Id. ¶¶ (III)(4), (IV)(A)). At the
same time, Plaintiffs signed a second mortgage from
Intervale. (Id. ¶ (IV)(A)). This was secured by
a ten-year balloon note. (Id.) Defendant HSBC
Mortgage Services ("HSBC") is allegedly the
"[a]ssignee/original 'lender' named on the
mortgage/deed of trust" and the servicer of the
mortgage. (Id. ¶¶ (III)(1), (IV)(C)).
"No notification of a right to rescission was ever
implied or given to Plaintiffs." (Id. ¶
(IV)(B)). Commonwealth refused to allow Plaintiffs to read
the loan documents before they signed them.
2005, Commonwealth issued title insurance on the Meadow Drive
property. (Id. ¶ (V)(26)). This included a
recording of the deed of trust; the documents had been
altered, including the addition of a legal description of the
property and of a notarized statement alleging Plaintiffs had
agreed to such recording. (Id.) They had not, and
were unaware of the changes until May 2013. (Id.)
February and March 2012, Plaintiffs mailed HSBC "a
Qualified Written Request and Debt Validation letter."
(Id. ¶¶(IV)(D), (V)(16)). HSBC failed to
timely respond. (Id. ¶ (IV)(E)). HSBC also
failed "to provide Plaintiffs written notice within 60
days after HSBC was assigned the original promissory
note." (Id. ¶(IV)(G)). Plaintiffs allege
"they never received notice of the date of any
assignment." (Id. ¶ (IV)(H)).
HSBC (a) "told Plaintiffs they qualified for a loan
modification"; (b) "asked Plaintiffs to make trial
payments for a period of time"; (c) "made false
statements to Plaintiffs about the character and the amount
that was due after payments were applied"; (d)
"harmed Plaintiffs by refusing to create a permanent
loan modification"; and (e) "caused the default by
not applying payments made and by charging late fees when
payments were not late." (Id. ¶¶
(IV)(I)(J), (L)-(N), (V)(12)). HSBC also "caused [a]
default by a practice known as dual tracking so they could
foreclose and steal the equity in the home."
(Id. ¶ (IV)(R)).
default was "[o]n or about December 1, 2011."
(Id. ¶ (V)(7)). Plaintiffs had been attempting
to obtain a permanent modification of their mortgage and had
been told "they must be at least 60 days behind on their
mortgage." (Id.) In February 2012, HSBC
"extorted money from Plaintiffs by claiming to be
putting funds towards a modification" and then not doing
so. (Id. ¶ (V)(8)). Three times - once in June
2010, once in February 2011, and once in November 2011 - HSBC
tried to impose an insurance policy on the deed of trust
without authorization or need, as Plaintiffs'
homeowners' insurance policy never lapsed. (Id.)
And, HSBC reported falsely reported that Plaintiffs were late
over a period of 2007 to 2012. (Id. ¶ (V)(13)).
September 2012, HSBC "removed any record of any mortgage
of any kind taken out by the Plaintiffs, " which
deception resulted in Plaintiffs being unable to purchase or
rent another residence. (Id. ¶ (V)(14)).
2013 and again in July 2013, HSBC and Richard L. Martin
"filed, fabricated, forged and intentionally altered
documents with the Record of Deeds in Jefferson County,
Missouri." (Id. ¶ (V)(17)). In May, HSBC
requested, and received, from MERS an assignment of the deed
of trust. (Id. ¶ (V)(43), (44)). The assignment
was allegedly from Intervale to HSBC. (Id. ¶
(V)(44)). Neither MERS nor Intervale had the authority to
issue an assignment of Plaintiffs' mortgage.
(Id.) Also in May, this fraudulent assignment was
recorded by defendant Martin Leigh P.C. ("Leigh"),
a law firm specializing in foreclosure proceedings.
(Id. ¶¶ (III)(2), (V)(46)). HSBC then
named Leigh as a successor trustee and recorded the
assignment in July. (Id. ¶ (V)(46)).
August 2013, Leigh was informed by letter of defects in
HSBC's documents. (Id. ¶ (V)(l 1)). Leigh
ignored the letter. (Id.) That same month, HSBC
wrongfully foreclosed, with Leigh's knowledge and without
standing, on Plaintiffs' residence. (Id. ¶
fashion nine counts from the foregoing allegations. Count One
is against HSBC and Leigh for a breach of fiduciary duty. The
underlying acts are the default caused by HSBC in December
2011; the solicitation in February 2012 by HSBC of money for
a modification; the three attempts by HSBC to force
Plaintiffs to buy a homeowners' insurance policy they did
not need; the consistent unmerited assessment by HSBC of late
fees; the reporting by HSBC of false information to credit
agencies; the removal by HSBC in September 2012 of any record
of Plaintiffs' mortgage; and the disregard of Leigh to
the letter sent on behalf of Plaintiffs about the defects in
the HSBC documents. HSBC and Leigh argue that this count
fails to state a claim because there was no fiduciary duty
and, regardless, the claim is time-barred.
Two is against HSBC and Leigh for a breach of the implied
covenant of the duty of good faith and fair dealing. This
breach is evidenced by HSBC's failure to timely and
accurately credit Plaintiffs' mortgage payments;
HSBC's disregard of the qualified written request letter
sent in February 2012; the forging, with Leigh, in May and
July 2013 of documents filed with the Recorder of Deeds; and
the wrongful foreclosure, with Leigh's awareness, in
August 2013. HSBC and Leigh argue that the complained-of
actions were permitted by the Deed of Trust contract and
there is no loan modification contract.
Three is for fraud and collusion and is against all
Defendants. Plaintiffs also cite the Missouri Merchandising
Practices Act ("MMPA"), Mo.Rev.Stat. §
407.020. The underlying acts are those surrounding the 2004
loan application, mortgage, and closing and the 2005
alteration of recorded documents. Plaintiffs allege they were
unaware of the 2004 acts until September 2017, including that
the original loan application was sent to Decision One, not
Intervale, for approval, and were unaware of the altered
documents until May 2013. They further allege that they have
only "recently learned that Intervale never lent them
any money." (Id. ¶ (V)(22)). Because of
the deception practiced when the mortgage was obtained and
recorded, the loans are void and the foreclosure illegal.
Defendants argue the allegations fail to include the
specificity required by Rule 9(b) of the Federal Rules of
Four is against HSBC and Leigh and is for violations of the
Fair Debt Collection Practices Act ("FDCPA"), 15
U.S.C. §§ 1629d-f
Five is against HSBC only and is for unjust enrichment.
Specifically, HSBC was unjustly enriched by accepting
payments that were not properly credited and charging, and
receiving, late fees for payments that were not late.
Additionally, HSBC fraudulently represented that taxes were
not paid, although they had been up to foreclosure, and
violated the Home Ownership and Equity Protection Act
("HOEPA"), 15 U.S.C. § 1602 et seq.,
by refusing to refinance or modify the terms of
Plaintiffs' loan. HSBC contends that an unjust enrichment
claim does not lie when the parties' relationship is
governed by contract and the HOEPA claims are time-barred.
Six is against HSBC and Leigh and is for fraud upon the
court. This count is premised on Plaintiffs' allegation
about Leigh recording the fraudulent assignment in May 2013
and the assignment of a successor trustee in July. HSBC
argues that Plaintiffs have fatally failed to allege a
required element of there being no fault or negligence on
their part and have failed to plead this claim with the
Seven is against all Defendants and is for the infliction of
emotional and physical distress. Movants note in the pending
three motions to dismiss that Plaintiffs have failed to
identify whether they are pleading intentional or negligent
infliction of emotional distress. If the former, the
allegations are insufficient; if the latter, Plaintiffs fail
to allege a duty owed to them.
Eight is against HSBC for violations of the Fair Credit
Reporting Act ("FCRA"), 15 U.S.C. § 1681
et seq. HSBC argues this count fails for lack of any
allegation that the required notice of a dispute was given.
Nine is titled "Fraudulent Practices, " is against
all Defendants, and includes the earlier allegations. Movants
argue that this count lacks the specificity required by Rule
request leave to file a second amended complaint. They argue
that such is not untimely; that no new parties would be
added; and that they have recently "obtained new and
further evidence of fraud and collusion, " including
that they received a refinance rather than a purchase loan.
They state that a second amended complaint would resolve any
question about the specificity of their allegations,
"including in most cases, the specific persons, the
places, dates and times, some of which only recently came
into [their] possession." (Pls.' Mot. at 4, ECF No.
95.) Also, they anticipate that they will learn of additional
relevant information after a disciplinary hearing scheduled
for February 2018 on their complaints against the attorney
who represented them in the state court foreclosure
survive a 12(b)(6) motion to dismiss, 'a complaint must
contain sufficient factual matter, accepted as true, to state
a claim to relief that is plausible on its face."'
McShane Constr. Co. v. Gotham Ins. Co., 867 F.3d
923, 927 (8th Cir. 2017) (quoting Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009)). "A claim has
facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct
alleged.'" Id. (quoting Iqbal, 556
U.S. at 678). "'[Determining whether a complaint
states a plausible claim for relief ... [is] a
context-specific task that requires [this] [C]ourt to draw on
its judicial experience and common sense.'"
Id. (quoting Iqbal, 556 U.S. at 678-79)
(second and third alterations in original).
"[t]hough pro se complaints are to be construed
liberally, they must still allege sufficient facts to support
the claims advanced." Stone v. Harry, 364 F.3d
912, 914 (8thCir. 2004) (interim citation
omitted). "[I]f the essence of an allegation is
discernible, even though it is not pleaded with legal nicety,
then the district court should construe the complaint in a
way that permits the layperson's claim to be considered
within the proper legal framework." Id. at 915.
One: Breach of Fiduciary Duty.
prove a breach of fiduciary duty under Missouri law, a
plaintiff must establish, among other elements, that a
fiduciary duty existed and was breached." Wivell v.
Wells Fargo Bank, N.A., 773 F.3d 887, 894
(8th Cir. 2014). "Missouri law recognizes a
fiduciary relationship between the trustee of a deed of trust
and both the debtor and creditor." Id. But,
"[t]he general rule in Missouri is that 'the
relationship between a lender and a borrower is one of
contractual obligation, not one of duty."'
Jean-Gilles v. Fabiola Jean Gilles, Esq.,
2014 WL 6751115, *7 (E.D. Mo. Dec. 1, 2014) (quoting
Kulovic v. BAC Home Loan Servicing, L.P.,
2011 WL 1483374, *11 (E.D. Mo. Apr. 19, 2011)). A fiduciary
relationship does arise between a borrower and lender,
however, "where the borrower can show that it has become
subservient to the dominant will of the lender."
Id. (citing Yoesef v. Farm Credit Bank
of St. Louis, 832 S.W.2d 325, 328 (Mo.Ct.App. 1992)). A
borrower may allege a fiduciary relationship by showing that,
due to the borrower's ignorance, the borrower has
become subservient to the dominant will of another, that the
property of the subservient person has come into the
possession of management of the dominant person, that the
subservient person has surrendered his independence, and that
there has been some manipulation of the actions of the
subservient party who has placed his trust and confidence in
the dominant person.
Yoesef, 832 S.W.2d at 328 (rejecting claim of breach
by lender of fiduciary duty when plaintiffs were experienced
borrowers and had borrowed from lender for many years).
construing Plaintiffs' complaint, they sufficiently
allege a breach of fiduciary duty by HSBC. They also allege a
breach by the trustee, Leigh. See Wivell, 773 F.3d
and Leigh further argue that Plaintiffs' claim must still
be dismissed because it was not filed within the five-year
statute of limitations.
a general rule, 'the possible existence of a statute of
limitations defense is not ordinarily a ground for Rule
12(b)(6) dismissal unless the complaint itself establishes
the defense."' Joyce v. Armstrong Teasdale,
LLP,635 F.3d 364, 367 (8th Cir. 2011)
(quoting Jessie v. Potter,516 F.3d 709, 713 n.2
(8th Cir. 2008)). Missouri's five-year statute
of limitations, Mo.Rev.Stat. §516.120(4), ...