49 F. Supp. 3d 583
D. Minnesota2014Background
- Plaintiff Kathleen Zimmerschied holds mortgages on real property; Chase (successor to Chase Home Finance) serviced one mortgage after March 2003.
- Beginning in 2006 (and continuing thereafter), Zimmerschied alleges Chase repeatedly withdrew multiple payments monthly from her checking account and TCF line of credit but did not apply those funds to her mortgage, charged late fees, and caused overdrafts and a threatened foreclosure.
- Zimmerschied filed an amended complaint asserting statutory and common-law claims (including fraud, fraudulent nondisclosure, breach of contract, negligent misrepresentation, unjust enrichment, and various Minnesota statutory claims).
- Chase moved to dismiss; Zimmerschied conceded six claims were overreaching and did not oppose dismissal of those counts.
- The court dismissed six counts with prejudice, dismissed the fraud and fraudulent nondisclosure counts without prejudice for failure to satisfy Rule 9(b) (granting a final opportunity to amend), and denied dismissal of the breach of contract claim as plausibly pleaded under Rule 12(b)(6).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Abandonment of several claims (Minn. statutes, negligent misrep., unjust enrichment) | Zimmerschied conceded some claims were overreaching but argued core claims remained | Chase sought dismissal of all claims; pointed to plaintiff's concession/lack of opposition | Court treated failure to oppose as abandonment and dismissed Counts I–IV, VII, IX with prejudice |
| Fraud (Count V) — Rule 9(b) particularity | Zimmerschied alleges Chase made false statements about payments and withdrawals, and she relied on them | Chase argued fraud pleadings lacked who/what/when/where/how, failed to plead reasonable reliance, and may be time-barred | Court dismissed fraud claim without prejudice for failure to meet Rule 9(b); allowed one final amendment but cautioned reliance and statute-of-limitations issues must be addressed |
| Fraudulent nondisclosure (Count VI) — duty & Rule 9(b) | Zimmerschied alleges defendants concealed material facts and owed a duty based on a fiduciary/confidential relationship or special knowledge | Chase argued the claim lacked particularity, alleged no duty to disclose, and is barred by the independent-duty rule (contract preempts tort) | Court dismissed nondisclosure claim without prejudice for Rule 9(b) defects; allowed amendment but warned plaintiff must plead a disclosure duty independent of the mortgage contract |
| Breach of contract (Count VIII) — plausibility under Rule 12(b)(6) | Zimmerschied alleges timely payments were made but Chase failed to apply funds to the mortgage and withdrew excess sums | Chase argued allegations are implausible (two different servicers making identical, prolonged errors; math discrepancies) | Court denied dismissal: accepting allegations as true, plaintiff stated a plausible breach claim and survives 12(b)(6) |
Key Cases Cited
- Gomez v. Wells Fargo Bank, N.A., 676 F.3d 655 (8th Cir.) (pleading plausibility standard discussion)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standards and plausibility requirements)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (standard for stating a claim under Rule 8)
- Freitas v. Wells Fargo Home Mortg., Inc., 703 F.3d 436 (8th Cir.) (Rule 9(b) fraud particularity guidance)
- Valspar Refinish, Inc. v. Gaylord’s Inc., 764 N.W.2d 359 (Minn.) (elements of fraud under Minnesota law)
- Neitzke v. Williams, 490 U.S. 319 (12(b)(6) can dispose of claims based on dispositive legal issues)
- E-Shops Corp. v. U.S. Bank Nat’l Ass’n, 678 F.3d 659 (8th Cir.) (level of particularity for Rule 9(b) depends on case nature)
- BJC Health Sys. v. Columbia Cas. Co., 478 F.3d 908 (8th Cir.) (conclusory fraud allegations insufficient under Rule 9(b))