319 F. Supp. 3d 1257
M.D. Fla.2018Background
- Plaintiff Carmen Brexendorf obtained a mortgage serviced by Bank of America (BOA) and applied for a HAMP modification after financial hardship beginning in 2009; she made nine trial-period payments but BOA foreclosed in 2014 and later denied her HAMP application.
- HAMP process involves a Trial Payment Period followed by a written Modification Agreement if trial payments are complied with; BOA had a Servicer Participation Agreement requiring "reasonable efforts."
- Brexendorf asserts common-law fraud and FDUTPA claims based on five alleged misrepresentations/omissions: (1) advising she must be in default to qualify for HAMP; (2) falsely stating supporting documents were not received/incomplete; (3) orally approving HAMP and instructing trial payments; (4) failing to disclose placing trial payments into unapplied accounts; and (5) failing to disclose inspection fee application.
- BOA moved to dismiss under Fed. R. Civ. P. 12(b)(6), arguing statute of limitations, Florida's Banking Statute of Frauds, failure to satisfy a condition precedent, failure to plead fraud with particularity (Rule 9(b)), and FDUTPA preemption for federally regulated banks.
- The court denied dismissal in part and granted it in part: some fraud and FDUTPA theories dismissed with prejudice (time-barred or barred by Banking Statute of Frauds), others dismissed without prejudice for failure to meet Rule 9(b) particularity, and some claims survived.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fraud claims are time-barred | Brexendorf invokes delayed discovery for fraud; many misleading acts concealed accrual | BOA: alleged misrepresentations occurred in 2009–2010, claims filed 2017 are untimely | Court: Fraud claims based on acts before cutoff largely barred for inspection fees and FDUTPA; other fraud theories may have accrued later and survive at pleading stage (partial denial) |
| Whether FDUTPA claim is time-barred | FDUTPA claim timely because damages flowed from BOA’s ongoing scheme | BOA: FDUTPA has 4-year limit and delayed-discovery does not apply | Court: Delayed discovery does not apply to FDUTPA; FDUTPA claims for pre-12/1/2013 conduct are dismissed with prejudice; limited post-12/1/2013 inspection-fee theory dismissed without prejudice |
| Whether Banking Statute of Frauds bars oral promise to modify credit | Brexendorf relies on oral approval and trial payments as fraud basis | BOA: Florida Banking Statute of Frauds bars oral credit agreements | Held: HAMP Approval Misrepresentation (oral credit accommodation) is barred and dismissed with prejudice; other fraud theories not barred by statute of frauds |
| Whether fraud pleadings satisfy Rule 9(b) | Plaintiff alleges specific misrepresentations and omissions by BOA employees | BOA: allegations are conclusory, lack precise who/when/how for each misrepresentation/omission | Held: HAMP Eligibility Misrepresentation survives Rule 9(b); Supporting Documents Misrepresentation, Trial Payment Omission, and timely Inspection Fee Omissions dismissed without prejudice for lack of particularity |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for dismissal under Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (application of Twombly; disregard conclusory allegations)
- La Grasta v. First Union Secs., Inc., 358 F.3d 840 (11th Cir. 2004) (statute-of-limitations dismissal appropriate only if claim is time-barred on complaint face)
- Brooks v. Blue Cross & Blue Shield of Fla., 116 F.3d 1364 (11th Cir. 1997) (Rule 9(b) heightened pleading for fraud)
- U.S. ex rel. Matheny v. Medco Health Sols., Inc., 671 F.3d 1217 (11th Cir. 2012) (particularity requirement: time, place, substance of fraud)
- American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974) (tolling principles for class actions)