Juliе M. Dunnigan, Plaintiff, v. Federal Home Loan Mortgage Corporation d/b/a Freddie Mac, Defendant.
Case No. 15-cv-2626 (SRN/JSM)
UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA
April 27, 2016
SUSAN RICHARD NELSON, United States District Judge
Document 55 Filed 04/27/16
Ashley M. DeMinck and Ellen B. Silverman, Hinshaw & Culbertson, LLP, 333 South 7th St., Ste. 2000, Minneapolis, MN 55402, for Defendant.
MEMORANDUM OPINION AND ORDER
SUSAN RICHARD NELSON, United States District Judge
This matter is before the Court on Defendant Federal Home Loan Mortgage Corporation d/b/a Freddie Mac’s (“Freddie Mac“) Motion to Dismiss [Doc. No. 25]. For the reasons set forth below, the Motion is granted in part and denied in part.
I. BACKGROUND
A. Factual History1
Plaintiff Julie M. Dunnigan (“Dunnigan“) lives in Minnesota and is a member of a low- or moderate-income family. (Second Am. Compl. (“Compl.“) at ¶¶ 2, 7 [Doc. No. 51].)
Freddie Mac is a government sponsored enterprise (“GSE“) created in part to facilitate financing of affordable housing for low- and moderate-income families.2 (See Compl. at ¶ 6 (citing
To assist lenders in knowing whether Freddie Mac will purchase a potential mortgage, Freddie Mac provides lenders with automated mortgage underwriting software called Loan Prospector (“LP“).3 (Id. at ¶ 11.) Dunnigan alleges that LP is a proprietary system, not subject to the control of the lenders, which assembles and evaluates consumer credit information, as well as other information. (See id. at ¶¶ 12–14.) Using data input into the system by the loan originator—such as credit reports from credit reporting agencies4 and information provided by the borrower in his/her loan application—LP generates a “Risk Class” evaluation which classifies a prospective mortgage as “Accept” or “Caution.” (See id. at ¶¶ 15–17.) LP also provides a “Feedback Certificate” to the
lender which includes the Risk Class, an assessment of whether the potential mortgage is eligible for purchase by Freddie Mac, “Credit Report Information,” “Credit Risk Comments,” and “Loan Processing Information.” (See id. at ¶¶ 18–21.) Dunnigan claims that LP uses interstate commerce to prepare and communicate these Feedback Certificates and that lenders pay a fee to use the software. (See id. at ¶¶ 22, 30.)
Important to the present matter, Dunnigan alleges that the Feedback Certificates generated by LP communicate more than just whether Freddie Mac will subsequently purchase the potential mortgage. (Id. at ¶ 23.) According to her, they also communicate Freddie Mac’s assessment of the likelihood of default and the borrower’s credit worthiness. (Id. at ¶¶ 23–25, 28.) If LP returns a Risk Class of “Caution,” the lender is required to manually underwrite the mortgage, which is difficult for the lender. (See id. at ¶¶ 26–27.)
Dunnigan had a home mortgage loan through M & T Bank (“M & T“). (Compl. at ¶ 31.) She was never delinquent on her mortgage payments. (Id. at ¶¶ 32, 34.) In 2008, Dunnigan discharged the M & T mortgage in Chapter 7 bankruptcy. (Id. at ¶ 33.) However, it was not until early 2013 that M & T reported Dunnigan’s 2008 mortgage discharge to Equifax. (Id. at ¶ 35.) Important to her claims, Dunnigan alleges that although M & T reported the 2008 discharge in 2013, it did not report that the discharge occurred in 2013. (Id. at ¶ 36.)
In July of 2013, Dunnigan аpplied for a refinanced mortgage loan through the Home Affordable Refinance Program (“HARP“). (Id. at ¶¶ 37–38.) Dunnigan’s lender
submitted her loan application and other information to LP. (See id. at ¶ 40.) LP returned a Feedback Certificate containing a “Caution” Risk Class and other statements which suggested Dunnigan was recently delinquent on her M & T mortgage. (See id. at ¶¶ 58–61.) Dunnigan claims that despite both M & T and Equifax correctly reporting that her mortgage was discharged via bankruptcy in 2008, LP treated the mortgage as 90 or more days delinquent within twelve months of July 2013. (See id. at ¶¶ 41–44.) Dunnigan alleges that LP’s classification of her M & T mortgage as delinquent was false and misleading, the product of an “intentional design,” and ultimately resulted in the “Caution” Risk Class assessment. (See id. at
Upon learning her mortgage was not approved because of the LP Feedback Certificate, Dunnigan contacted Freddie Mac to investigate. (Id. at ¶ 63.) A Freddie Mac representative informed her that Equifax was reporting a delinquency related to the M & T mortgage.5 (Id. at ¶ 64.) Dunnigan disputed that she was delinquent on that account,
but was told to contact M & T. (Id. at ¶¶ 66, 68.) When Dunnigan contacted M & T, it denied reporting any delinquencies on her mortgage. (Id. at ¶ 69.)
After speaking with M & T, Dunnigan contacted Freddie Mac again to dispute the delinquency report. (Id. at ¶ 70.) A Freddie Mac representative again claimed that Equifax was reporting the delinquency and said that he would provide Dunnigan what she needed to “fight” Equifax’s report. (Id. at ¶ 72.) At about this same time, Dunnigan was denied a refinance mortgage by a different lender as a result of another LP Feedback Certificate with the same “Caution” Risk Class assessment and other information related to Dunnigan’s supposed mortgage delinquency. (See id. at ¶¶ 74–79.) Dunnigan claims she was subsequently denied the ability to refinance her mortgage by at least two other lenders based оn LP Feedback Certificates containing the same information. (See id. at ¶¶ 80–82, 85–87, 91–93.)
From August through November of 2013, Dunnigan continued to contact Freddie Mac and dispute the delinquency and related Feedback Certificates. (See id. at ¶¶ 83, 88–90, 96–99.) According to Dunnigan, by September 6, 2013, Freddie Mac knew that LP’s classification of her M & T mortgage as delinquent was the result of LP’s erroneous treatment of the reporting date of Dunnigan’s bankruptcy as the date of the bankruptcy itself. (Id. at ¶ 88.) Despite this fact, Dunnigan contends Freddie Mac continued to represent that the problem was how Equifax was reporting the bankruptcy. (Id. at ¶¶ 90, 96, 99, 101.) Furthermore, Dunnigan claims Freddie Mac representatives falsely told her that they sent the information needed to resolve the problem to Equifax, but that Equifax
refused to correct its error. (Id. at ¶¶ 96–99.) She also alleges that Freddie Mac refused to provide her with copies of what Equifax was reporting. (Id. at ¶ 95.)
In reliance on these alleged false representations by Freddie Mac, Dunnigan spent “many infuriating hours making telephone calls and written correspondence to Equifax and M & T,” as well as time, effort, and money filing a complaint against Equifax with the Minnesota Attorney General’s Office and a lawsuit against Equifax. (See id. at ¶¶ 102–04.) Moreover, she alleges that because of Freddie Mac’s actions and omissions, she was denied credit, experienced delays in receiving credit, received credit on less favorable terms, incurred “out-of-pocket expenses,” suffered damage to her crеdit rating, and harm to her reputation. (See id. at ¶ 127.) Dunnigan also claims she suffered “substantial
B. Procedural History
Based on the facts described above, Dunnigan brings various claims against Freddie Mac. (See Compl., Counts I–VII.) Dunnigan alleges that Freddie Mac violated the Fair Credit Reporting Act (“FCRA“) in at least two ways. First, she claims Freddie Mac “willfully and/or negligently” failed to follow reasonable procedures to ensure the “maximum possible accuracy” of her consumer reports. (Compl., Count I at ¶¶ 131–35.) Second, Dunnigan contends Freddie Mac “willfully and/or negligently” failed to conduct a “reasonable reinvestigation” of her dispute(s) and failed to “appropriately delete or modify information in [Dunnigan’s] file.” (Compl., Count II at ¶¶ 136–40.) In addition to her FCRA claims, Dunnigan asserts state common law claims for defamation, (Compl., Count III at ¶¶ 141–44), negligence, (Compl., Count IV at ¶¶ 145–48), fraud (Compl., Count V at ¶¶ 149–52), negligent misrepresentation (Compl., Count VI at ¶¶ 153–56), and intentional infliction of emotional distress, (Compl., Count VII at ¶¶ 157–61) (collectively, the “State Law Claims“).
Freddie Mac now moves to dismiss the FCRA claims as well as the state law claims for negligence, negligent misrepresentation, and fraud. (See Mot. to Dismiss.) Freddie Mac argues that it is not a credit/consumer reporting agency7 (“CRA“) and does not generate consumer reports, making the provisions of the FCRA inapplicable to it. (Def.’s Mem. of Law in Supp. (“Mem. in Supp.“) at 7–20 [Doc. No. 31]; Def.’s Reply Mem. of Law in Supp. (“Reply“) at 2–13 [Doc. No. 36].) Freddie Mac further contends that it did not owe Dunnigan any duty of care and thus her claims of negligence and
negligent misrepresentation should be dismissed. (Mem. in Supp. at 20–22; Reply at 13–16.) Lastly, Freddie Mac argues that Dunnigan’s fraud claim must be dismissed because she failed to plead the necessary elements of reasonable reliance and pecuniary damages. (Mem. in Supp. at 23–24; Reply at 16.) Dunnigan argues that she has adequately pled all of her claims. (See Pl.’s Mem. of Law in Opp. (“Mem. in Opp.“) [Doc. No. 22].)
II. DISCUSSION
A. Standard of Review
When evaluating a motion to dismiss, the Court assumes the facts in the complaint to be true and construes all reasonable inferences from those facts in the light most favorable to the plaintiff. Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). However, the Court need not accept as true wholly conclusory allegаtions, Hanten v. School District of Riverview Gardens, 183 F.3d 799, 805 (8th Cir. 1999), or legal conclusions the plaintiff draws from the facts pled, Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). To survive a motion to dismiss, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although a complaint need not contain “detailed factual allegations,” it must contain facts with enough specificity “to raise a right to relief above the speculative level.” Id. at 555. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,” will not pass muster. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). In sum, this standard “calls for enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of [the claim].” Twombly, 550
U.S. at 556.
B. The FCRA Claims
The parties disрute whether Freddie Mac is a CRA subject to the requirements of the FCRA. The FCRA defines a CRA as:
any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.
1. Freddie Mac’s Argument and Supporting Documentation
Freddie Mac maintains it is not a CRA because it does not regularly assemble or evaluate credit information as contemplated by the FCRA, but rather licenses software (LP) to lenders that allows the lenders to perform these tasks. (See Mem. in Supp. at 8–
12; Reply at 2–6.) Furthermore, Freddie Mac claims it is not a CRA even if a lender’s use of LP were attributable to it. (See Mem. in Supp. at 15–17; Reply 9–12.) Lastly, Freddie Mac contends that the materials generated by LP are not consumer reports that fall within the FCRA. (See Mem. in Supp. at 17–19; Reply at 12–13.)
In support of its cоntentions, Freddie Mac relies heavily on an LP User Agreement (“User Agreement“) and Single Family Seller/Servicer Guide (“Guide“). (See Appendix to Mem. in Supp. [Doc. No. 27].) No affidavit explaining these documents or attesting to their authenticity was provided. Nonetheless, Freddie Mac claims the Court may consider them because they are “referenced in the Amended Complaint . . . .” (Mem. in Supp. at 3, n.2.) Freddie Mac also relies on the argument and assertions of its counsel regarding
As an initial matter, the Court must decide whether or not these documents are embraced by the pleadings. See Stahl v. U.S. Dep‘t of Agric., 327 F.3d 697, 701 (8th Cir. 2003) (“The court has complete discretion to determine whether or not to accept any material beyond the pleadings that is offered in conjunction with a Rule 12(b)(6)
motion.” (quotations omitted)). For the reasons that follow, the Court will not consider them.
Courts ordinarily do not consider matters outside the pleadings on a motion to dismiss. See
A court may, however, consider exhibits attached to the complaint, documents that are necessarily embraced by the pleadings, and public records. Little Gem Life Scis., LLC v. Orphan Med., Inc., 537 F.3d 913, 916 (8th Cir. 2008). “Documents necessarily embraced by the pleadings include ‘documents whose contents are alleged in a cоmplaint and whose authenticity no party questions, but which are not physically attached to the pleading.’” Ashanti v. City of Golden Valley, 666 F.3d 1148, 1151 (8th Cir. 2012) (quoting Kushner v. Beverly Enters., Inc., 317 F.3d 820, 831 (8th Cir. 2003)). For instance, the contract upon which a claim rests is necessarily embraced by the pleadings and may be considered. Gorog v. Best Buy Co., 760 F.3d 787, 791 (8th Cir. 2014).
The Court will not consider Freddie Mac’s User Agreement and Guide or the unsupported assertions of its counsel regarding those documents. First, Freddie Mac is
simply incorrect that the User Agreement and Guide are referenced in—and thus embraced by—Dunnigan’s complaint. The Second Amended Complaint discusses the LP software, but there is no mention of the User Agreement or Guide. Nor can the Court fairly conclude that the content of those documents is referenced in the Secоnd Amended Complaint.
Second, Freddie Mac offers the User Agreement and Guide for the purpose of contradicting Dunnigan’s claims about who uses the LP software, how it functions, and what it generates. Materials outside the pleadings offered for such contradictory or supplementary purposes may not be considered. See Wieland v. U.S. Dep‘t of Health & Human Servs., 793 F.3d 949, 953 (8th Cir. 2015) (certain materials which “do not contradict the complaint” may be considered on a motion to dismiss); Loeffler v. City of Anoka, 79 F. Supp. 3d 986, 993 (D. Minn. 2015) (refusing to consider defendants’ exhibits since they were not just more complete versions of an exhibit attached to the complaint, but rather contained different information entirely). Furthermore, Dunnigan disputes
Third, the assertions of Freddie Mac’s counsel related to the User Agreement, Guide, and the LP software are matters outside the pleadings that will not be considered. See Folger, 43 F. Supp. 3d at 930. The case Johnson v. Casey‘s Gen. Stores, Inc., 116 F.
Supp. 3d 944 (W.D. Mo. 2015) offers a useful comparison. There, the plaintiff alleged that the defendant violated the FCRA by procuring her consumer reports without first disclosing that those reports could be obtained for employment purposes. Johnson, 116 F. Supp. 3d at 945. The defendant moved to dismiss the complaint and argued that the report it obtained was not a consumer report under the FCRA. Id. at 946–47. The court held:
At this time, the only issue before the Court is whether Plaintiff has alleged enough in her Complaint to proceed. Defendant‘s arguments go well beyond what is pled in Plaintiff‘s Complaint. The specific terms of [the defendant’s] alleged background check policy; why any such background checks were procured; who may or may not have had access to the background report; and whether the report was investigative are all issues that would require analysis of information and evidence beyond Plaintiff‘s initial allegations. In analyzing the pending Motion to Dismiss, the Court will not venture beyond Plaintiff‘s Complaint.
Id. at 947. Considering Freddie Mac’s arguments about how the LP software functions, why it is used, who uses it, and what it generates “would require analysis of information and evidence beyond” Dunnigan’s initial allegations. See id. When analyzing the pending Motion to Dismiss, this Court tоo “will not venture beyond” Dunnigan’s complaint. See id.
2. The Sufficiency of Dunnigan’s FCRA Claims
Dunnigan has sufficiently pled her FCRA claims so as to survive Freddie Mac’s Motion to Dismiss. She provides factual allegations about what LP does and the Feedback Certificates it produces, (Compl. at ¶¶ 11–30), argues that their actions constitute assembling and evaluating credit information, (id. at ¶¶ 12–13), claims Freddie
Mac is paid by lenders for their use of LP, (id. at ¶ 30), and asserts that Freddie Mac uses interstate commerce to both prepare and furnish the Feedback Certificates, (id. at ¶ 22).
However, the Court remains skeptical of Dunnigan’s claim that Freddie Mac is a CRA subject to the FCRA’s requirements. Dunnigan points to a single case supporting her position that Freddie Mac is a CRA. See Zabriskie, 109 F. Supp. 3d 1178 (denying defendant Fannie Mae’s motion to dismiss the plaintiff’s FCRA claims and finding that Fannie Mae was a CRA by virtue of its automated underwriting software).8 At least three other courts, including a judge from the same federal district as the judge in Zabriskie, support Freddie Mac’s position that it is not a CRA. See McCalmont, 2014 WL 3571700 (holding that Fannie Mae was not a CRA by virtue of its automated underwriting software and dismissing the plaintiff’s FCRA claims); Weidman v. Fed. Home Loan Mortgage Corp., 338 F. Supp. 2d 571 (E.D. Pa. 2004) (granting Freddie Mac summary
difficult to see how Freddie Mac could be considered a CRA as set forth in
C. The State Law Claims
1. Preemption and Qualified Immunity
Freddie Mac challenges Dunnigan’s negligence, negligent misrepresentation, and fraud claims. However, in raising those challenges and responding to them, neither party addressed the issue of preemption and qualified immunity under the FCRA.11
The FCRA provides in relevant part:
Except as provided in sections 1681n [willful violations of the FCRA] and 1681o [negligent violations of the FCRA] of this title, no consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, any user of information, or any person who furnishes information to a consumer reporting agency, based on information disclosed pursuant to section 1681g [governing disclosures to consumers by CRAs and others], 1681h, or 1681m [governing disclosures by users of consumer reports] of this title, . . . except as to false information furnished with malice or willful intent to injure such consumer.
The statute carves out an exception to this qualified immunity where the false information is produced with “malice or willful intent to injure [the] consumer.”
Dunnigan’s State Law Claims are based on the same acts and omissions as her FCRA claims. See Edeh v. Equifax Info. Servs., LLC, No. 11-cv-2671 (SRN/JSM), 2012 WL 4378189, at *1 (D. Minn. Sept. 25, 2012) (noting that state law claims stemming from acts that form the basis of a plaintiff’s FCRA claims are generally preempted). As described above, her State Law Claims are of the exact type numerous other courts have found preempted by the FCRA. The remaining question is whether
on the preemption issue if and when Freddie Mac moves for summary judgment in this case.
Thе Court now turns to Freddie Mac’s challenges to Dunnigan’s negligence, negligent misrepresentation, and fraud claims.
2. Negligence and Negligent Misrepresentation
Freddie Mac argues that it did not owe a duty of care to Dunnigan, and to the extent it did, it did not breach that duty. (See Mem. in Supp. at 20–22; Reply at 13–16.) In response, Dunnigan claims that Freddie Mac owed her statutory duties as well as a general duty of reasonable care that were breached when Freddie Mac communicated the allegedly erroneous Feedback Certificates to her lenders and mislead her about the reason for the “Caution” Risk Class assessment. (See Mem. in Opp. at 40–42.)
In Minnesota, the existence of a duty of care and breach of that duty are essential elements for claims of both negligence and negligent misreprеsentation. See Lubbers v. Anderson, 539 N.W.2d 398, 401 (Minn. 1995) (discussing the elements for a claim of negligence); Williams v. Smith, 820 N.W.2d 807, 815 (Minn. 2012) (discussing the elements for a claim of
or by a statute designed for the protection of others.” Wendinger v. Forst Farms, Inc., 662 N.W.2d 546, 554 (Minn. Ct. App. 2003).
a. Statutory Duty
In what is often referred to as “negligence per se,” a legislature may impose a duty and standard of care beyond those that exist generally. See Anderson v. State, Dep‘t of Nat. Res., 693 N.W.2d 181, 189–90 (Minn. 2005). However, “[f]or a statutory violation to satisfy the duty and breach elements, the person harmed by the violation must bе among those the legislature intended to protect, and the harm must be of the type the legislature intended to prevent by enacting the statute.” Anderson, 693 N.W.2d at 190. Negligence per se statutes are usually, if not always, meant to protect a class of persons from dangerous situations or activities. See Seim v. Garavalia, 306 N.W.2d 806, 810 (Minn. 1981) (“Such statutes are often penal statutes that do not provide for a civil action. The statute is said to express a policy for the protection of a certain class of persons.” (collecting cases addressing negligence per se related to dangerous activities)).
Dunnigan’s contention that Freddie Mac owed her a statutory duty under
Congress also charged Freddie Mac with a “duty” to “design programs and products that facilitate the use of assistance provided by the Federal Government and State and local governments,”
b. Common Law Duty and Breach
Minnesota law imposes “a duty to act with reasonable care for the protection of others” in two instances:
First, . . . general negligence law imposes a general duty of reasonable care when the defendant‘s own conduct creates a foreseeable risk of injury to a foreseeable plaintiff. Second, a defendant owes a duty to protect a plaintiff when action by someone other than the defendant creates a foreseeable risk of harm to the plaintiff and the defendant and plaintiff stand in a special relationship.
Domagala, 805 N.W.2d at 23. Dunnigan does not claim a special relationship between her and Freddie Mac and does not argue negligence based on Freddie Mac’s
“Under general concepts of tort law, ‘duty’ is defined as an obligation, to which the law will give recognition and effect, to conform to a particular standard of conduct
toward another.” L & H Airco, Inc. v. Rapistan Corp., 446 N.W.2d 372, 378 (Minn. 1989) (quotations omitted). “The essential question in determining whether a defendant owes a duty is whether the plaintiff‘s intеrests are entitled to legal protection against the defendant‘s conduct.” Safeco Ins. Co. of Am. v. Dain Bosworth Inc., 531 N.W.2d 867, 871 (Minn. Ct. App. 1995) (quotations omitted). In Minnesota, “[l]enders owe no fiduciary duty to a borrower unless the ‘bank knows or has reason to know that the customer is placing his trust and confidence in the bank and is relying on the bank so to counsel and inform him.’” Kichler v. Wells Fargo Bank, N.A., No. 12-cv-1206 (JRT/AJB), 2013 WL 4050204, at *4 (D. Minn. Aug. 9, 2013) (quoting Klein v. First Edina Nat‘l Bank, 196 N.W.2d 619, 623 (Minn. 1972)). With no fiduciary relationship (i.e., special relationship) between lenders and borrowers, courts routinely dismiss negligence and negligent misrepresentation claims brought by borrowers against lenders. See Roers v. Countrywide Home Loans, Inc., 728 F.3d 832, 838 (8th Cir. 2013) (affirming district court’s dismissal of borrower’s negligent misrepresentation claim and holding that in a typical borrower-lender relatiоnship, lenders “owe[] no duty of care” to borrowers); Kichler, 2013 WL 4050204 at *4 (dismissing borrowers’ negligent misrepresentation claim which alleged that the lender breached its common law duty to accurately disclose loan terms).
Dunnigan does not claim that she and Freddie Mac shared any sort of special relationship. Freddie Mac was not Dunnigan’s lender.12 Since whatever relationship
existed between Freddie Mac and Dunnigan was more attenuated than the relationship between Dunnigan and her lenders, and lenders owe no general duty of care to borrowers, the Court cannot conclude that Freddie Mac owed Dunnigan a duty of care to ensure that the LP Feedback Certificates were accurate.
3. Fraud
Freddie Mac argues that Dunnigan fails to state a claim for fraud. (See Mem. in Supp. at 23–24; Reply at 16.) Specifically, it contends that Dunnigan “cannot plausibly demonstrate that she relied to her detriment on [Freddie Mac’s alleged misrepresentations] and that she suffered pecuniary damages as a result of her reliance.” (Mem. in Supp. at 23.) The Court finds that Dunnigan’s fraud claim suffers from a more fundamental fatal flaw.
In Minnesota, a claim for fraudulent misrepresentation requires:
(1) a false representation by [the defendant] of a past or existing material fact susceptible of knowledge; (2) made with knowledge of the falsity of the representation or made without knowing whether it was true or false; (3) with the intention to induce [the plaintiff] to act in reliance thereon; (4) that the representation caused [the plaintiff] to act in reliаnce thereon; and (5) that [the plaintiff] suffered pecuniary damages as a result of the reliance.
Valspar Refinish, Inc. v. Gaylord’s, Inc., 764 N.W.2d 359, 368 (Minn. 2009). A party’s reliance is “generally evaluated in the context of the aggrieved party‘s intelligence, experience, and opportunity to investigate the facts at issue.” Valspar Refinish, 764 N.W.2d at 369. Pecuniary (i.e., money) damages are an essential element of fraud. Nodland v. Chirpich, 240 N.W.2d 513, 517 (Minn. 1976). Claims of fraud must be pled with particularity, see
Dunnigan alleges that she relied on Freddie Mac’s misrepresentations to her and to her lenders that Equifax’s reporting was the “cause” of the negative Feedback Certificates. (See Compl. at ¶¶ 102–04.) She also contends that neither Freddie Mac nor Equifax would provide her with what Equifax was reporting to Freddie Mac. (Id. at ¶ 95.) Easily inferred is the claim that Dunnigan had little choice but to rely on what Freddie Mac told her about the cause of the negative Feedback Certificates because she had no means to independently investigate the issue. This is enough to sufficiently plead reasonable reliance.
Based on this reliance, Dunnigan claims she “spent time, effort, and money lodging a complaint against Equifax with thе Minnesota Attorney General.” (Id. at ¶ 103
(emphasis added).) She also filed a civil law suit against Equifax. (Id. at ¶ 104.) Presumably, filing that civil suit cost money (e.g., filing fees, attorney’s fees, etc.). Dunnigan also generally alleges she incurred “out-of-pocket expenses” as a result of Freddie Mac’s misrepresentations. (Id. at ¶¶ 106, 131.) Again, this is enough to survive a motion to dismiss. Martino-Catt v. E.I. duPont de Nemours & Co., 213 F.R.D. 308, 323 (S.D. Iowa 2003) (“At the pleading stage, a plaintiff need not specify an actual amount of damages or the precise basis on which damages should be determined. A general allegation of damages and causation, such as the Complaint here alleges, is enough. While [the plaintiff’s] failure to plead the specific amount of her alleged losses weakens her fraud allegations, it is not itself a pleading deficiency.” (citations omitted)).
However, the Court finds that Dunnigan’s fraud claim suffers from a more fundamental deficiency. In order to provide the notice required under
sub nom. Cmty. Voice Line, L.L.C. v. Great Lakes Commc‘n Corp., No. C 12-4048-MWB, 2014 WL 272646 (N.D. Iowa Jan. 23, 2014) (quoting Brown v. N. Cent. F.S., Inc., 987 F. Supp. 1150, 1156 (N.D. Iowa 1997)).
Dunnigan contends that by September 6, 2013, “Freddie Mac knew” that its allegedly erroneous Feedback Certificates were the result of the LP software. (Compl. at ¶ 88.) She also claims that “Freddie Mac intended that [Dunnigan] would rely on its false representations,” about the cause of the allegedly erroneous Feedback Certificates, (id. at ¶ 101), and that its misrepresentations to her “were intentional and malicious,” (id. at ¶ 150). However, besides Dunnigan’s conclusory statements, she points to no specific facts that show Freddie Mac’s intent to mislead her, maliciousness in doing so, or how/why Freddie Mac knew about the cause of the allegedly erroneous Feedback Certificates. At most, what Dunnigan alleges supports a claim that Freddie Mac was incompetent in addressing her concerns about the erroneous Feedback Certificates. Because it is plausible that Dunnigan could amend her claim to address these deficiencies, the Court dismisses her fraud claim without prejudice.
III. ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS HEREBY ORDERED THAT:
- Federal Home Loan Mortgage Corporation d/b/a Freddie Mac’s (“Freddie Mac“) Motion to Dismiss [Doc. No. 25] is GRANTED IN PART AND DENIED IN PART as follows:
- Plaintiff Julie M. Dunnigan’s (“Dunnigan“) claims for negligence (Count IV) and negligent misrepresentation (Count VI) [Doc. No. 51] are dismissed with prejudice;
- Dunnigan’s fraud claim (Count V) is dismissed without prejudice;
- Freddie Mac’s Motion to Dismiss is otherwise denied without prejudice.
Dated: April 27, 2016
s/ Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge