L. Wаlter Quinn, III; Terry Quinn, Appellants, v. Ocwen Federal Bank FSB; Wilson & Associates, P.L.L.C., Appellees.
No. 06-1982
United States Court of Appeals FOR THE EIGHTH CIRCUIT
December 8, 2006
Submitted: October 18, 2006 [PUBLISHED]
PER CURIAM.
L. Walter Quinn and Terry Quinn appeal the dismissal of their case for failure to state a claim upon which relief can be granted. Having jurisdiction under
In August 2002, the Quinns mortgaged their home to Provident Bank, which is not a party to this litigation. The Quinns also executed an automated clearing house (ACH) authorization рermitting Provident Bank, or its successors and assigns, to automatically withdraw the monthly mortgage payment from the Quinns’ account at another bank. The ACH authorization provides that an automatic debit will occur on a specified day of the month, but in the next sentence, in all capital letters, places responsibility for payment on the account holder, who acknowledges:
I AM RESPONSIBLE FOR MAKING PAYMENTS ON THE NOTE BY OTHER MEANS IF MY PAYMENT IS NOT DRAFTED ON THE DAY SPECIFIED NO MATTER THE CAUSE.
In October 2002, Provident Bank sold the Quinns’ mortgage to Wells Fargo, which engaged Ocwen Federal Bank to service the loan. The Quinns did not execute another ACH authorization permitting Wells Fargo or Ocwen to withdraw from any bank account. Through a series of discussions during the rest of 2002, the Quinns demanded that Ocwen use the ACH authorization (naming Provident Bank or its successors and assigns) to withdraw the monthly mortgage payment from the Quinns’ bank account. During this period, the Quinns periodically paid the mortgage by personal check.
On January 13, 2003, Walter Quinn wrote Ocwen stating that an ACH authorization previously had been executed by the Quinns authorizing Provident Bank, or its successors and assigns, to automatically withdraw the monthly mortgage payment. Mr. Quinn further stated that had he known the payment would not be
Ocwen answered on January 24, writing that it had not made an adverse report to any credit reporting agency about late payment of the mortgage. Ocwen further stated the loan was set up on the ACH program, and the first automatic withdraw is effective on February 15. Ocwen also informed the Quinns that when the servicing of a loan is transferred to Ocwen, аutomatic draft information is not transferred, and a new application is necessary to begin an automatic draft program with Ocwen. “While Ocwen advised that a new ACH automatic draft application was necessary to begin the automatic draft program with Ocwen, the Quinns had advised Ocwen that they would not be executing a new ACH authorizаtion since the ACH authorization the Quinns executed in favor of Provident had already been assigned to Ocwen.” (Complaint ¶ 9).
By June 2003, the mortgage had not been paid in any way for the months of March, April and May. The Quinns agreed to pay for these months via personal check. Subsequently, the mortgage payments for June, July and August were not paid by ACH withdraw or by сheck.
In August 2003, Ocwen notified the Quinns that their account was transferred to Ocwen‘s Early Intervention Department, and if necessary, the loan may transfer to the Foreclosure Department. The Quinns did not dispute the validity of the debt, but notified Ocwen that they would make no further payments unless Ocwen used the ACH authorization previously executed naming Provident, or its successors and assigns. Correspondence continued throughout the fall.
In June 2004, the Quinns sued Ocwen and Wilson in Arkansas state court asserting six claims under state and federal law: Count I, Breach of Contract against Ocwen; Count II, Negligence against Ocwen; Count III, Defamation against Ocwen; Count IV, Violation of Fair Debt Collection Practices Act against Ocwen and Wilson; Count V, Violation of Arkansas statute against Ocwen and Wilson; Count VI, Equitable Relief to Remove Cloud on Title against Ocwen and Wilson. The case was removed to federal court under federal question jurisdiction. Both Ocwen and Wilson moved to dismiss for failure to state a claim. The district court1 granted their motions, dismissing all claims with prejudice.
II.
This court reviews de novo the grant of a motion to dismiss for failure to state a claim under
A. Breach of Contract Under Arkansas Law.
The original ACH authorization between the Quinns and Provident is clear. It authorizes Provident, or its successors and assigns, to withdraw the monthly mortgage payment from the Quinns’ bank account. In the ACH authorization document, Provident makes no promise to transfer the authorization to a buyer or assignee of the mortgage. Williamson v. Sanofi Winthrop Pharm., Inc., 60 S.W.3d 428, 434 (Ark. 2001) (“it is well settled that in order to make a contract there must be a meeting of the minds as to all terms, using objective indicators“).
In the ACH authorization document, the account holder (the Quinns) assume certain duties. The Quinns agree: “I will provide the Financial Institution with all documents that the Financial Institution may require to implement the automatic deduction of my monthly payments.” Additionally, the Quinns accept responsibility “FOR MAKING PAYMENTS ON THE NOTE BY OTHER MEANS IF MY PAYMENT IS NOT DRAFTED ON THE DAY SPECIFIED NO MATTER THE CAUSE.” Provident, by the terms of the ACH authorization, had no duty to assign the authorization to a buyer or assignee of the mortgage.
There is no express ACH authorization between the Quinns and Ocwen. The Quinns emphasize Ocwen‘s letter of January 24, 2003, whiсh does state that the loan “has been set up on the ACH program.” However, the Quinns ignore the later sentences of the same paragraph of the January 24 letter:
When the servicing of a loan is transferred to Ocwen, automatic draft information is not transferred with the loan. A new application is necessary to begin an automatiс draft program with Ocwen.
As the complaint says:
While Ocwen advised that a new ACH automatic draft application was necessary to begin the automatic draft program with Ocwen, the Quinns had advised Ocwen that they would not be executing a new ACH authorization since the ACH authorization the Quinns executed in favor of Provident had already been assigned to Ocwen.
Because the Quinns cannot show the existence of a valid contract with Ocwen, they can prove no set of facts entitling them to relief, and the district court properly dismissed their breach of contract claim.
The Quinns assert Ocwen owed a duty to draft their bank account and negligently failed to do so, pursuant to the ACH authorization. “In order to prove negligence, there must be a failure to exercise proper care in the performance of a legal duty that the defendant owed the plaintiff under the circumstances surrounding them.” Shannon v. Wilson, 947 S.W.2d 349, 356 (Ark. 1997). “The law of negligence requires as essential elements that the plaintiff show that a duty was owed and that the duty was breached.” Young v. Paxton, 873 S.W.2d 546, 549 (Ark. 1994).
As discussed, taking as true all factual allegations of the complaint, the Quinns cannot show that Ocwen owed a legal duty to debit the Quinns’ bank account under the ACH authorization. Their negligence claim was correctly dismissed.
C. Defamation Under Arkansas Law.
Taking the Quinns’ factual assertions as true, after sporadically paying their mortgage via personal check for several months, they mаde the last monthly payment in June 2003. In August when the mortgage was two months in arrears, the Quinns notified Ocwen that they would make no further payment, unless Ocwen used the ACH authorization. By October, Ocwen reported credit information to TransUnion, Experian and/or Equifax, which are national credit reporting agencies. In November, after months of discussion and when thе mortgage was five month in arrears, Wells Fargo notified the Quinns that a foreclosure sale was scheduled for December 2003.
The Quinns state that Ocwen‘s adverse credit reports constitute the tort of defamation. Under Arkansas law, among other elements, the Quinns must show fault
In the present case, Ocwen‘s report to credit agencies regarding the course of payment, or non-payment, of the mortgage is truthful. No set of facts consistent with the Quinns’ allegations would entitle them to relief for defamation. This claim was rightfully dismissed.
D. Violation of Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq.
The Quinns assert violation of the Fair Debt Collection Practices Act (“FDCPA“),
E. Violation of Arkansas Code § 5-37-226.
The Quinns assert that Ocwen and Wilson violated
In the present case, the Notice is a bona fide filing of a legitimate notice or a protective filing. Specifically,
As to Wilson‘s filing of the Notice, Wilson & Associates is a law firm retained by Wells Fargo to conduct the statutory foreclosure. There is no privity of contract between Wilson and the Quinns. Under Arkansas law, Wilson cannot be held liable to the Quinns for (non-privity) professional services rendered, including the filing of the Notice. In Arkansas, for conduct in connection with рrofessional services, an attorney enjoys immunity from actions brought by persons not in privity. Fleming v. Cox Law Firm, 363 Ark. 17, 2005WL1485216 at *2 (Ark. June 23, 2005);
The Quinns assert that filing of the Notice created a cloud on their title. They seek equitable relief to remove it. Under the Arkansas statute, the mortgagee is empowered to file a notice of default and intention to sell.
In December 2003, after the filing of the Notice and before the foreclosure sale, the Quinns refinanced the mortgage with another lender. Section
In this case, the mortgagee is Wells Fargo. Wells Fargo is not a party in this case, and any claim against it (in law or equity) is not before this court. Any successor to Wells Fargo is also not a party in this case, and no сlaim (in law or equity) against it is before this court.
The Quinns bring the equitable claim against Ocwen and Wilson. Ocwen, pursuant to Arkansas statutory foreclosure
Wilson is the law firm retained by the mortgagee, Wells Fargo, to conduct the statutory foreclosure. There is no privity of contract between the Quinns and Wilson. Under
G. State Law Claims.
The Quinns assert that the district court erred in dismissing their state law claims with prejudice, as opposed to without prejudice. Prior to the district court‘s judgment, the Quinns did not mоve the district court to decline supplemental jurisdiction if it dismissed the federal claims. After full briefing, the district court entered a single order dismissing all counts for failure to state a claim.
It is within the district court‘s discretion to exercise supplemental jurisdiction after dismissal of the federal claim. Kan. Pub. Employees Ret. Sys., 77 F.3d at 1067-68. Balancing factors such as judicial economy, convenience, fairness and comity in regard to exercise of supplemental jurisdiction over pendent state law claims, the district court did not err in determining all claims, given the factual allegations and admissions of the Quinns’ complaint. See Grain Land Coop v. Kar Kim Farms, Inc., 199 F.3d 983, 993 (8th Cir. 1999).
III.
The judgment of the district court is affirmed.