Tubwell v. Specialized Loan Servicing, LLC
3:17-cv-00015
N.D. Miss.Sep 22, 2017Background
- Plaintiff Joe Tubwell sued Specialized Loan Servicing LLC and Morgan Stanley Mortgage Capital Holdings LLC alleging they mishandled a 2005 refinance loan (Loan No. 1012441108), failed to acknowledge him as a co-borrower, refused payments, misreported payments to credit bureaus, and attempted foreclosure.
- Tubwell asserted 12 counts including gross negligence (credit reporting), fraud/misrepresentation, multiple breach-of-contract claims, FDCPA, loan-gouging, breach of good faith and fair dealing, wrongful foreclosure, ECOA-style discrimination, negligence (recordkeeping), and TILA rescission/ability-to-repay claims; he sought rescission, damages, injunctive relief, and fees.
- Defendants removed to federal court asserting federal-question and diversity jurisdiction, moved to dismiss, and later amended jurisdictional allegations after the Court found federal-question jurisdiction but initially insufficient diversity allegations.
- The Court denied Tubwell’s motion to strike the defendants’ amendment to their jurisdictional allegations and concluded diversity (and amount in controversy) was sufficiently alleged when asserted.
- On the merits, the Court applied Rule 12(b)(6) standards (Twombly/Iqbal) and dismissed several counts without prejudice while allowing others to proceed; Tubwell was granted leave to amend within 14 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness / form of defendants’ §1653 amendment; motion to strike | Tubwell: amendment cites case law (violating local rule) and was untimely | Defendants: amendment authorized by Court; timely filed within 14 days | Court denied motion to strike; amendment not a local-rule motion and was timely |
| Jurisdiction — diversity & amount in controversy | N/A (Tubwell moved to remand for untimely removal) | Defendants: later alleged complete diversity and evidence supporting >$75K (property value + possible punitive damages) | Court found federal-question jurisdiction; when diversity re-asserted, defendants adequately alleged diversity and amount in controversy |
| Count 1 — Gross negligence (credit reporting) | Tubwell: defendants knowingly misreported/payments, causing credit harm | Defendants: claim preempted by FCRA and pleaded vaguely; tied to contract | Court: pleadings sufficiently alleged malice/recklessness under FCRA exception; claim allowed to proceed |
| Count 2 — Fraud / intentional misrepresentation | Tubwell: defendants told potential lenders he was not on the loan, causing refinancing denial | Defendants: fails Rule 9(b) particularity (who/when/where/how) | Court dismissed fraud/intentional misrepresentation for failure to plead particulars |
| Negligent misrepresentation (as to Count 2) | — | Defendants: same facts as fraud; Rule 9(b) heightened pleading applies | Court dismissed negligent misrepresentation as based on same insufficient allegations |
| Counts 3,4,8 — Breach of contract | Tubwell: alleges he was party to original loan and defendants breached servicing obligations | Defendants: no contract attached; no terms identified; Tubwell not party to loan | Court found factual allegations sufficient to plead existence and breach of contract; breach claims proceed |
| Count 5 — FDCPA | Tubwell: defendants’ reporting/foreclosure efforts are collection activity and defendants are debt collectors | Defendants: no collection activity alleged, not debt collectors; foreclosure efforts not FDCPA collection | Court dismissed FDCPA claim for failure to plead that defendants were debt collectors or that actions were in connection with debt collection |
| Count 6 — Loan gouging | Tubwell: alleges excessive fees / gouging | Defendants: no recognized cause of action | Court dismissed loan-gouging as not a recognized separate claim |
| Count 7 — Entitlement to damages (good faith & wrongful foreclosure) | Tubwell: defendants acted in bad faith to force foreclosure and obtained improper fees | Defendants: ordinary lender conduct; no wrongful foreclosure facts | Court allowed claim to the extent it alleges breach of duty of good faith but dismissed wrongful foreclosure portion for lack of factual support |
| Count 9 — Unlawful discrimination (ECOA theory) | Tubwell: discriminated due to race, poverty, age, income | Defendants: no statute cited; Tubwell not an applicant and defendants not originator/creditor | Court dismissed; ECOA inapplicable because Tubwell did not plead applicant/creditor relationship and defendants acted on secondary-market purchase |
| Count 10 — Negligence re: recordkeeping / death records | Tubwell: defendants ignored notice of co-borrower’s death and quitclaim, refused to accept payments | Defendants: claim not recognized or duplicative of contract | Court found a plausible tort duty (recordkeeping/fairness) and denied dismissal of this negligence claim |
| Counts 11–12 — TILA rescission & ability-to-repay | Tubwell: seeks rescission and TILA damages for disclosure failures and ability-to-repay violations | Defendants: no TILA disclosure failure pleaded; rescission time‑barred; §1693(a) irrelevant | Court dismissed rescission (time-bar / transaction not covered) and dismissed Count 12 as unrelated to TILA provisions cited |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading plausibility standard under Rule 8)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility and pleading requirements)
- Morris v. Equifax Info. Servs., LLC, 457 F.3d 460 (FCRA preemption and malice exception)
- Cousin v. Trans Union Corp., 246 F.3d 359 (actual malice standard for credit reporting)
- St. Amant v. Thompson, 390 U.S. 727 (reckless disregard standard)
- Farkas v. GMAC Mortg., L.L.C., 737 F.3d 338 (property value as amount in controversy for injunctive relief)
- Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880 (use of evidence contemporaneous to removal for amount-in-controversy valuation)
- St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250 (including punitive damages in amount-in-controversy when available)
- Tewari De-Ox Sys., Inc. v. Mtn. States/Rosen, Ltd. Liab. Corp., 757 F.3d 481 (LLC citizenship for diversity jurisdiction)
- Lone Star Ladies Inv. Club v. Scholtzsky’s Inc., 238 F.3d 363 (Rule 9(b) applies broadly to fraud averments)
- Benchmark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719 (Rule 9(b) particularity — who, what, when, where, how)
- Young v. Equifax Credit Info. Servs., Inc., 294 F.3d 631 (FCRA and malice/willful intent exception)
- Vantage Drilling Co. v. Hsin-Chi Su, 741 F.3d 535 (§1332(c)(1) and corporate citizenship principles)
- Clausell v. Bourque, 158 So.3d 384 (Mississippi law: contract breach not tort unless independent duty exists)