Edwards v. Ocwen Loan Servicing, LLC
2014 U.S. Dist. LEXIS 29095
| D.D.C. | 2014Background
- Edwards refinanced a non-owner-occupied home in 2003 with SouthStar Funding, whose servicing was later assigned to Litton and then Ocwen after Litton’s acquisition.
- Litton failed to remit 2009 taxes leading to a public tax sale in 2011; Ocwen redeemed the property in 2011 and a foreclosure proceeding was dismissed in 2012.
- Ocwen force-placed hazard insurance and claimed Edwards owed over $42,000, causing her monthly payments to balloon dramatically; she eventually sold the property in 2013 and Ocwen retained over $106,939 of sale proceeds.
- Edwards filed eleven claims, including FDCPA, RESPA, CPPA, and multiple contract and tort theories; Defendants moved to dismiss under Rule 12(b)(6).
- The court dismissed most claims but allowed a fiduciary-duty claim related to Ocwen’s escrow role to proceed as pleaded, denying other claims.
- Conclusion: motion granted in part and denied in part; all claims except breach of fiduciary duty are dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FDCPA/RESPA/CPPA applicability to the loan | Edwards contends loan falls within ‘debt’ and consumer-protection statutes. | Ocwen argues the loan is not a consumer debt and RESPA/CPPA do not apply. | These claims dismissed; not plausibly a consumer debt. |
| Breach of contract/implied covenant viability | Ocwen as successor to Litton/SouthStar bound by contract terms. | No privity and no specific contract terms alleged linking Ocwen to the contract. | Dismissed; no contractual basis pleaded. |
| Unjust enrichment viability | Ocwen unjustly retained funds from the sale proceeds. | No contract or identifiable benefit to Ocwen; unjust enrichment not stated. | Dismissed; no viable unjust enrichment claim. |
| Breach of fiduciary duty viability | Ocwen as escrow agent owed fiduciary duties in handling Edwards’ escrow and related funds. | Loan servicers generally owe no fiduciary duty to borrowers; escrow duties are limited. | Survives to the extent it alleges escrow-fiduciary duties; other fiduciary theories not disputed. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading standard; plausibility required)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (no formulaic recitation; facts must raise plausible entitlement to relief)
- Sparrow v. United Air Lines, Inc., 216 F.3d 1111 (D.C. Cir. 2000) (documents incorporated in the complaint may be considered)
- Rosenthal v. Nat'l Produce Co., 573 A.2d 365 (D.C. 1990) (principal disclosed; agent not liable absent definite terms binding the agent)
- Wagman v. Lee, 457 A.2d 401 (D.C. 1983) (escrow agents owe fiduciary duties to fund principals and payees)
- In re Austern, 524 A.2d 680 (D.C. 1987) (escrow relationships involve trust; fiduciary duties arise in escrow context)