Maria Nino v. Flagstar Bank, FSB ( 2019 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 19a0107n.06
No. 18-1503
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT FILED
Mar 06, 2019
MARIA DEL PILAR NINO, DEBORAH S. HUNT, Clerk
Plaintiff-Appellant,
ON APPEAL FROM THE UNITED
v. STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF MICHIGAN
FLAGSTAR BANK, FSB,
Defendant-Appellee.
BEFORE: CLAY, McKEAGUE, and WHITE, Circuit Judges.
CLAY, Circuit Judge. Plaintiff Maria Del Pilar Nino appeals the district court’s March
30, 2018 order granting Defendant Flagstar Bank, FSB’s motion to dismiss Plaintiff’s amended
complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff’s amended complaint
alleges that Defendant’s handling of her mortgage modification (1) violated the Florida Deceptive
and Unfair Trade Practices Act, Fla. Stat. Ann. § 501.204; (2) violated the Real Estate Settlement
Procedures Act, 12 U.S.C. § 2605(e); (3) constituted breach of contract under Florida contract law;
and (4) constituted breach of the covenant of good faith and fair dealing under Florida contract
law. For the reasons set forth below, we AFFIRM the district court’s dismissal.
BACKGROUND
Factual Background
In 2006, Plaintiff obtained a mortgage on real property in Miami, Florida. Sometime
between 2006 and 2010, Defendant, a Michigan-based bank, became the holder of Plaintiff’s
No. 18-1503
mortgage. In March 2010, Plaintiff defaulted on the mortgage, and Defendant initiated foreclosure
proceedings in Florida circuit court. Over the next three years, Plaintiff worked with Defendant to
modify her mortgage and prevent foreclosure.
In December 2011, Defendant approved Plaintiff’s entry into a trial period plan (“TPP”)
under the Home Affordable Modification Program. The TPP provided that if Plaintiff made three
trial period payments and submitted documents confirming her eligibility for a TPP, Defendant
would send Plaintiff a permanent mortgage modification agreement. However, the TPP further
provided that until that time, Plaintiff’s existing loan obligations would remain in effect. Plaintiff
made all three trial period payments. Accordingly, in March 2012, Defendant told Plaintiff that
she had satisfactorily completed the trial period, and that it would send her a permanent mortgage
modification agreement.
By May 2013, Plaintiff had not received a permanent mortgage modification agreement.
As a result, from June 2013 to August 2013, Plaintiff’s attorney reached out to Defendant’s
attorney on several occasions to inquire about the status of Plaintiff’s agreement. In December
2013, Defendant provided Plaintiff with a permanent mortgage modification agreement for her
review. Plaintiff promptly signed and returned the agreement. And in March 2014, Defendant
executed the agreement and cancelled the foreclosure proceedings on Plaintiff’s property.
Procedural History
In December 2016, Plaintiff filed a complaint against Defendant in the United States
District Court for the Eastern District of Michigan. In February 2017, after Defendant filed a
motion to dismiss Plaintiff’s complaint pursuant to Federal Rule of Civil Procedure 12(b)(6),
Plaintiff filed an amended complaint. Plaintiff’s amended complaint alleges that Defendant’s
handling of her loan modification (1) violated the Florida Deceptive and Unfair Trade Practices
2
No. 18-1503
Act, Fla. Stat. Ann. § 501.204, (2) violated the Real Estate Settlement Procedures Act, 12 U.S.C.
§ 2605, (3) constituted breach of contract under Florida contract law, and (4) constituted breach of
the covenant of good faith and air dealing under Florida contract law.
In March 2017, Defendant filed a second motion to dismiss Plaintiff’s amended complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6). The district court referred the motion to a
magistrate judge for report and recommendation. In December 2017, the magistrate judge
recommended granting Defendant’s motion to dismiss in its entirety. And on March 30, 2018, the
district court adopted the recommendation, granting Defendant’s motion to dismiss because (1)
the Florida Deceptive and Unfair Trade Practices Act does not apply to Defendant, (2) Plaintiff’s
Real Estate Settlement Procedures claim is barred by the statute of limitations, and (3) Plaintiff
did not allege consideration for the TPP. The district court also denied Plaintiff leave to further
amend the complaint.
This appeal followed.
DISCUSSION
I. Standard of Review
We review a district court’s grant of a motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6) de novo, accepting all factual allegations as true and construing the complaint
in the light most favorable to the non-moving party. Stimmel v. Sessions, 879 F.3d 198, 202 (6th
Cir. 2018). We review a district court’s denial of a motion for leave to amend a complaint for
abuse of discretion, which occurs when the district court “appl[ies] a incorrect legal standard,
misapply[ies] the correct one, or rel[ies] on clearly erroneous facts.” Pulte Homes, Inc. v.
Laborers’ Int’l. Union of N. Am., 648 F.3d 295, 305 (6th Cir. 2011).
3
No. 18-1503
II. Analysis
A. Florida Deceptive and Unfair Trade Practices Act
The Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”) prohibits “[u]nfair
competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the
conduct of any trade or commerce.” Fla. Stat. Ann. § 501.204(1). However, the FDUTPA “does
not apply to . . . [b]anks, credit unions, and savings and loan associations regulated by federal
agencies.” Id. § 505.212(4)(c). Defendant is a federally regulated bank. Thus, we hold that the
FDUTPA does not apply to Defendant.
To be sure, “[a] review of the governing case law reveals some ambiguity in regard to
whether being regulated by a federal agency is sufficient in and of itself to be exempt under
[§ 501.212(4)(c)] or if, in addition to being federally regulated, the activity at issue must be subject
to the federal regulatory authority.” Regions Bank v. Legal Outsource PA, 2015 WL 7777516, at
*5 (Fla. Dist. Ct. App. Dec. 3, 2015) (emphasis added). According to the latter position, the
FDUTPA might apply to a federally regulated bank if the activity at issue was not banking. See,
e.g., Larach v. Standard Chartered Bank Int’l Ltd., 724 F. Supp. 2d 1228, 1238 (S.D. Fla. 2010)
(denying a motion to dismiss because the activity at issue was securities brokering); Diaz v. U.S.
Bank, 2014 WL 4639431, at *5 (S.D. Fla. Sept. 16, 2014) (denying a motion to dismiss because
the activity at issue was loan servicing); U.S. Bank v. Capparelli, 2014 WL 2807648, at *4–5 (S.D.
Fla. June 20, 2014) (denying a motion to dismiss because the activity at issue was loan servicing).
4
No. 18-1503
However, “the majority of Florida courts take the former position,” that being regulated by
a federal agency is sufficient in and of itself to be exempt under § 501.212(4)(c). Regions Bank,
2015 WL 7777516, at *4.1 And that is with good reason—the text of the statute is clear. “By its
express terms,” the FDUTPA does not apply to federally regulated banks, regardless of the activity
at issue. 77 Wilson, F. Supp. 3d at 1221.
Moreover, those cases that have held that the activity at issue must also be subject to the
federal regulatory authority have done so with little explanation, and in reliance on inapposite
precedent. For instance, the court in Larach stated only that “[i]t would be premature at the motion
to dismiss stage to determine whether [the defendants] were acting as banks or brokers, and thus,
would be exempted from application of FDUTPA,” and provided no citation for that proposition.
724 F. Supp. 2d at 1238. The court in Capparelli cited only to cases analyzing a different provision
of the FDUTPA, § 501.212(4)(d). See 2014 WL 2807648, at * 5. And the court in Diaz cited only
to Larach and to a case analyzing a different issue, whether the FDUTPA applies to bank
subsidiaries, affiliates, or agents. See 2014 WL 4639431, at *5. Thus, none of these cases are
persuasive, and all are distinguishable.
B. Real Estate Settlement Procedures Act
The Real Estate Settlement Procedures Act (“RESPA”) requires mortgage loan servicers
to respond to a “qualified written request” received from a borrower by acknowledging receipt of
the request and taking action on it within 60 business days of receipt. 12 U.S.C. § 2605(e).2
1
See, e.g., Brexendorf v. Bank of Am., 319 F. Supp. 3d 1257, 1266 (M.D. Fla. 2018); Wilson v. EverBank,
77 F. Supp. 3d 1202, 1221 (S.D. Fla. 2015); Sovereign Bonds Exch. LLC v. Federal Republic of Germany, 899 F.
Supp. 2d 1304, 1315–16 (S.D. Fla. 2010); Caban v. Morgan Chase & Co., 606 F. Supp. 2d 1361, 1371 (S.D. Fla.
2009); Bankers Tr. Co. v. Basciano, 960 So. 2d 773, 778 (Fla. Dist. Ct. App. 2007).
2
Section 2605(e) has since been amended to require a response within 30 business days of receipt, but the
version in effect at the time Plaintiff submitted her alleged qualified written requests required a response within 60
business days of receipt.
5
No. 18-1503
However, RESPA’s statute of limitations provides that “[a]ny action pursuant to the provisions of
section 2605 . . . [must] be brought . . . within 3 years . . . from the date of the occurrence of the
violation.” Id. § 2614; see also Collins v. CitiMortgage, Inc., 974 F. Supp. 2d 1034, 1041 (E.D.
Mich. 2013). Plaintiff’s latest alleged qualified written request was sent to Defendant on August
13, 2013, and Defendant’s latest alleged violation of § 2605(e) occurred 60 business days
thereafter. Yet Plaintiff did not file her complaint until December 19, 2016—more than 3 years
from that date. Thus, we hold that Plaintiff’s RESPA claim is barred by the statute of limitations.
C. Florida Contract Law
Under Florida contract law, a valid contract exists if there is “[an] offer, acceptance,
consideration and sufficient specification of essential terms.” St. Joe Corp. v. McIver, 875 So. 2d
375, 381 (Fla. 2004). “[T]o constitute valid consideration there must be either a benefit to the
promisor or a detriment to the promisee.” In re Standard Jury Instructions—Contract and Business
Cases, 116 So. 3d 284, 305 (Fla. 2013) (citing Mangus v. Present, 135 So. 2d 417, 418 (Fla. 1961)).
Plaintiff argues that the TPP was a contract under Florida contract law, whereby Defendant
promised to send Plaintiff a permanent mortgage modification agreement if Plaintiff made three
trial period payments and submitted documents confirming her eligibility for a TPP. However, in
support of that argument, Plaintiff’s only allegation with regard to the existence of consideration
for the formation of a contract is that she “was forced to declare chapter 13 bankruptcy.”3 (RE 12,
PageID # 262; Brief for Appellant at 20.)4 This allegation is plainly belied by the record. The TPP
did not require Plaintiff to file for bankruptcy, nor did Defendant at any time require Plaintiff to
3
Plaintiff’s counsel reaffirmed at oral argument that this is Plaintiff’s only allegation with regard to
consideration.
4
Except as otherwise indicated, record citations refer to the record in district court action No. 16-cv-14407.
6
No. 18-1503
file for bankruptcy. Rather, “Plaintiff’s ‘forced’ bankruptcy appears to be a path chosen to
[subordinate a second loan Plaintiff had obtained on the property],” something she was already
required to do under her existing loan obligations.5 (RE 34, PageID # 932; RE 15-3, PageID # 372;
RE 15-8, PageID # 415.) Thus, we hold that Plaintiff failed to adequately allege consideration
under Florida contract law.
D. Leave to Amend
A district court may deny a motion for leave to amend a complaint for a variety of reasons,
including “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to
cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by
virtue of allowance of the amendment, [and] futility of amendment.” Pittman v. Experian
Information Solutions, Inc., 901 F.3d 619, 640 (6th Cir. 2018). In this case, the district court denied
Plaintiff’s request for leave to amend the complaint on the grounds that there was undue delay and
repeated failure to cure deficiencies.
Specifically, the district court noted that Defendant filed a motion to dismiss in response
to Plaintiff’s first complaint. That motion asserted the same legal deficiencies in Plaintiff’s
complaint that remain at issue in this appeal. Yet Plaintiff subsequently filed an amended
complaint that failed to address any of these deficiencies. And the district court validly noted that
litigation regarding the sufficiency of Plaintiff’s complaint has now lasted for over a year, during
which Plaintiff has had ample opportunity to amend the complaint, but has failed to do so.
5
As a result, this case is distinguishable from Pittman v. Experian Information Solutions, Inc., in which this
Court held that a similar TPP was a contract under Michigan law. 901 F.3d 619, 334 (6th Cir. 2018). This Court in
Pittman relied on Wigod v. Wells Fargo Bank, in which the Seventh Circuit held that another similar TPP was a
contract under Illinois law. 673 F.3d 547, 563–64 (7th Cir. 2012). In that case, the plaintiff alleged “cognizable legal
detriments” incurred as a result of the TPP, including “open[ing] new escrow accounts” and “undergo[ing] credit
counseling.” Id. at 564. In this case, Plaintiff makes no such allegations.
7
No. 18-1503
Accordingly, we hold that the district court’s denial of Plaintiff’s motion for leave to further amend
the complaint was not an abuse of discretion.
CONCLUSION
For the reasons set forth above, we AFFIRM the district court’s dismissal.
8