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Lohman v. Beneficial Financial I, Inc.

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

March 30, 2018

BENEFICIAL FINANCIAL I, INC., et al., Defendants.


          Michael R. Barrett, Judge, United States District Court.

         This matter is before the Court on Defendants Beneficial Financial I, Inc. (“Beneficial”), and Household Realty Corporation's (“HRC”) (collectively, “Defendants”) Motion to Dismiss Complaint Pursuant to Fed. Civ. R. Proc. 12(b)(6). (Doc. 4). Plaintiffs Robert and Melissa Lohman (collectively, “Plaintiffs”) filed a response in opposition (Doc. 7), and Defendants filed a reply. (Doc. 8). In addition, Plaintiffs, believing that Defendants raised new arguments in their reply brief, filed a Motion for Leave to File a Sur-Reply. (Doc. 9). Defendants did not substantively oppose Plaintiffs' Motion (Doc. 9), though they do raise a couple of additional points in their response (Doc. 12). This matter is now ripe for review.

         I. BACKGROUND

         Plaintiffs entered into a mortgage loan agreement in December 2000. (Doc. 1, PageID 3). The loan was owned and serviced by Defendant Beneficial (Id. at PageID 3-4). In July 2014, Plaintiffs sough a loan modification, but their request was denied because Plaintiffs' “disposable income exceeded the modification guidelines.” (Doc. 4-2, PageID 33).

         On July 25, 2015, Plaintiffs sent a Qualified Written Request and Notice of Error (“QWR”) to Defendants requesting certain information related to the mortgage.[1] (Doc. 1, PageID 4). Pursuant to the Real Estate Settlement and Procedures Act (“RESPA”), Defendants were required to provide the identity and contact information of the owner of Plaintiffs' loan within 10 business days of receiving the QWR. 12 U.S.C. § 2605(e).

         Defendants responded on August 8, 2016 (Doc. 4-2, PageID 32). Defendants identified HFC as “[t]he current note holder and servicer of the loan, ” and provided the mailing address for any subsequent QWRs. (Id.). In addition, Defendants provided Plaintiffs copies of 1) the Mortgage; 2) the Loan Repayment and Security Agreement; 3) the Notice of Right to Cancel; 4) the Property Tax & Homeowners Insurance Notice; and 5) the Servicing Transfer & Disclosure Statement. (Doc. 4-2). Defendants denied Plaintiffs' request for written correspondence or other communications, categorizing this information as “confidential, proprietary, and/or privileged information.” (Doc. 4-2, PageID 32-33). Plaintiffs' request for a “copy of all appraisals, property inspections, and risk assessments completed for this account, ” also went unanswered, but without an accompanying explanation. (Id.).

         Plaintiffs bring the following claims against Defendants: (1) Violation of 12 U.S.C. §§ 2605(e) and 2605(k) of the Real Estate Settlement Procedures Act (“RESPA”), and 12 C.F.R. §§ 1024.35 and 1024.36 of Regulation X; (2) Violation of 15 U.S.C. § 1641(f)(2) of the Truth in Lending Act (“TILA”). Defendants move to dismiss Plaintiffs' Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).

         II. STANDARD

         A claim for relief requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. Proc. 8(a)(2). When reviewing a Fed. Civ. R. Proc. 12(b)(6) motion to dismiss for failure to state a claim, this Court must “construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008) (quoting Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007)). However, this Court does not “need to accept as true legal conclusions couched as factual allegations.” Campbell v. Nationstar Mortg., 611 Fed. App'x 288, 291 (6th Cir. 2015). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

         III. ANALYSIS

         Plaintiffs did not attach a copy of the QWR or Defendants' response thereto to their Complaint. Defendants, however, attached the QWR and Defendants' response to its Motion. (Docs. 4-1, 4-2). This Court may consider “exhibits attached to defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein.” Bassett, 528 F.3d at 430 (citing Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir. 2001)). Because there is no question the attached documents are central to Plaintiffs' claims, the Court will consider them.

         1. RESPA

         Pursuant to RESPA, QWR is “a correspondence that identifies a borrower's account and includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.” Valandingham v. Springleaf Fin. Servs., 2016 U.S. Dist. LEXIS 150434, at *4 (S.D. Ohio Oct. 31, 2016). RESPA requires a mortgage servicer to do one of the following upon receipt of a QWR: 1) correct the errors identified in the QWR; or 2) provide the borrower with a written explanation or clarification stating that the servicer believes the account is accurate. 12 U.S.C. § 2605(e)(2). Moreover, RESPA requires certain information related to loan servicing to be provided to the borrower. 12 C.F.R. § 1024.36(f). Mortgage loan servicers who fail to adequately respond to a QWR risk liability for damages under RESPA. Id.

         A claim under RESPA can survive a 12(b)(6) dismissal when an entity fails to respond to a valid QWR. E.g., Moore v. Caliber Home Loans, Inc., 2015 U.S. Dist. LEXIS 117737, *17-21 (S.D. Ohio, Sept. 3, 2015). Plaintiffs do not dispute that Defendants properly responded to their notice of error within the QWR. (Doc. 7, PageID 93). Therefore, the plausibility of this claim only concerns the latter part of ยง 2605(e)(1)(B)(ii) - that ...

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