Christiana Trust, of Wilmington Sav. Fund Soc'y, FSB v. Riddle
911 F.3d 799
5th Cir.2018Background
- Riddle took a home-equity loan from Bank of America (BoA); servicers Ocwen and later BSI serviced the loan; BoA later assigned the loan to Christiana Trust.
- Riddle faced foreclosure by Christiana Trust and filed counterclaims and a third-party complaint asserting RESPA violations by servicers and vicarious liability against BoA.
- Riddle alleged Ocwen and BSI failed to evaluate and notify her of loss-mitigation options after receiving timely applications in violation of 12 C.F.R. § 1024.41(c)(1).
- Her amended third-party complaint did not allege facts showing an agency relationship between BoA and the servicers; her brief argued she sought vicarious liability because the servicer was BoA’s agent.
- The district court dismissed Riddle’s claims against BoA under Rule 12(b)(6); the Fifth Circuit affirmed on two independent grounds: failure to plead agency and, alternatively, that BoA cannot be held vicariously liable for servicer RESPA violations as a matter of law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complaint sufficiently pleads an agency relationship between BoA and servicers | Riddle: Ocwen was BoA’s servicing agent, so BoA is vicariously liable for RESPA violations | BoA: Complaint lacks factual allegations showing control or consent required for agency | Held: Dismissed — complaint fails to plead agency (pleading insufficient under Iqbal/Twombly) |
| Whether a principal (lender) can be vicariously liable for servicer’s violations of 12 C.F.R. § 1024.41 | Riddle: traditional vicarious liability should apply to statutory torts absent contrary intent | BoA: The statute and regulation impose duties on “servicers” only; Congress confined liability to servicers | Held: As a matter of law, BoA cannot be vicariously liable for servicers’ RESPA violations; dismissal affirmed |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility pleading standard applies)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (complaints must state a plausible claim)
- Meyer v. Holley, 537 U.S. 280 (vicarious liability depends on agency; Restatement of Agency controls)
- Digital Realty Trust, Inc. v. Somers, 138 S. Ct. 767 (differences in statutory text imply differences in meaning)
- BMC Software, Inc. v. C.I.R., 780 F.3d 669 (plain, unambiguous statutory text governs interpretation)