The opinion of the court was delivered by: Guzman, District Judge.
MEMORANDUM OPINION AND ORDER
Heather Ploog ("Ploog") has sued First Chicago NBD Mortgage
Co.'s ("First Chicago") for breach of contract and breach of
fiduciary duty and has sued HomeSide Lending, Inc. ("HomeSide")
for violating the Cranston-Gonzales Amendments to the Real
Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2605 et
seq., as well as for negligence, and breach of fiduciary duty.
Before the Court is First Chicago's motion to dismiss Ploog's
breach of contract (Count II) and breach of fiduciary duty
(Count III) claims pursuant to Federal Rule of Civil Procedure
("Rule") 12(b)(6) and 12(b)(7) and 28 U.S.C. § 1367(c)(4). Also
before the Court is HomeSide's motion to dismiss Counts I, IV,
and V pursuant to Rule 12(b)(1). For the reasons provided in
this Memorandum
Opinion and Order, both motions are denied.
On April 30, 1998, Ploog and her husband, David B. Bixby
("Bixby") purchased a home with a residential mortgage loan
("Bixby-Ploog Mortgage") from First Chicago. (Second Am. Compl.
¶ 7.) First Chicago paid several property taxes based on the
Property Identification Numbers ("PIN") in the Bixby-Ploog
Mortgage for which Ploog was not responsible with Ploog's escrow
funds which created a negative tax escrow balance of $5,919.77.
(Id. ¶ 8.) Thereafter, servicing of the Bixby-Ploog Mortgage
was transferred to HomeSide. (Id. ¶ 9.) On June 4, 1999,
HomeSide sent Ploog a letter stating that her tax escrow balance
was a negative $5,919.77. (Id. ¶ 10.)
On June 7, 1999, Ploog made a phone call to HomeSide and
inquired as to the nature of this negative escrow balance.
(Id. ¶ 11.) Between June 1999 and November 1999, Ploog made
several phone calls to HomeSide asking that her escrow balance
be corrected. (Id. ¶ 12.) On November 18, 1999, Ploog
determined that HomeSide had four PIN numbers on her account
that were all incorrect. (Id. ¶ 13.) On November 18, 1999,
Ploog sent HomeSide a letter informing it that taxes were
incorrectly paid from her account, giving HomeSide her correct
PIN number and demanding that HomeSide correct its records, and
requesting that HomeSide make no escrow payments from her
account. (Id. ¶ 14.) Despite this letter, HomeSide made an
incorrect tax payment on December 20, 1999. (Id. ¶ 15.) Ploog
made additional attempts to correct her account with HomeSide.
(Id. ¶ 16-20.)
Prior to the filing of her original complaint, Ploog never
received a substantive response in writing from HomeSide
regarding her November 18, 1999 letter or her March 6, 2000
letter. (Id. ¶ 21.) As of the date of filing her original
complaint, HomeSide had not corrected Ploog's tax escrow
problem. (Id. ¶ 22.) HomeSide had not corrected Ploog's tax
escrow problem within 60 business days of either her November
18, 1999 letter or her March 6, 2000 letter. (Id. ¶ 23.)
On October 30, 2000, after HomeSide had purportedly corrected
Ploog's tax escrow problem, HomeSide sent Ploog a letter stating
that her scheduled payment was $2,488.96, which was incorrect,
and that her payment of $1,059.76 was insufficient to complete
her escrow payment. (Id. ¶ 25-26.) Ploog wrote HomeSide again
on December 1, 2000, requesting that HomeSide correct her tax
escrow account and change her scheduled payment to $1,059.12.
(Id. ¶ 27.) Ploog also enclosed an escrow waiver and requested
that she be allowed to make her own tax payments. (Id.) HomeSide
sent Ploog a letter that did not address the issues in her
letter, but stated that Ploog's escrow payments were overdue and
charging her a $52.96 late fee. (Id. ¶ 28.) The letter from
HomeSide also stated that it would report Ploog to the credit
bureaus if she did not bring her loan current. (Id. ¶ 28.)
Ploog wrote to HomeSide on January 2, 2001 requesting that
HomeSide correct its miscalculation and demanding that HomeSide
not report her to any credit bureau. (Id. ¶ 29.) On January
12, 2001, HomeSide sent Ploog a letter addressing her escrow,
but this letter did not mention any of the previous letters from
Ploog, except to state that her escrow payment would be
$1,059.12. (Id. ¶ 30.) Shortly thereafter, Ploog received a
letter from HomeSide dated January 11, 2001 and postmarked
January 19, 2001 stating that she was in default. (Id. ¶ 31.)
On January 23, 2001, HomeSide sent Ploog two letters stating
that Ploog and Bixby were reported to a credit bureau as being
delinquent and that
HomeSide had requested a correction. (Id. ¶ 32.)
Ploog filed this lawsuit, three counts of which assert claims
against HomeSide and two counts of which assert claims against
First Chicago. In Count I, she asserts a class claim and an
individual claim against HomeSide for violations of the
Cranston-Gonzales Amendments to the Real Estate Settlement
Procedures Act ("RESPA"), 12 U.S.C. § 2606. On September 28,
2001, this Court denied Ploog's motion to certify the classes,
so the entire complaint must be viewed as alleging individual
claims. Count I, Count IV and Count V are against HomeSide. In
Count I, Ploog claims HomeSide violated RESPA. In Count IV, she
claims HomeSide was negligent for continually paying the wrong
taxes from her escrow account. In Count V, Ploog alleges that
HomeSide breached a fiduciary duty.
Counts II and III are against First Chicago. In Count II,
Ploog alleges breach of contract for First Chicago's paying
property taxes from her escrow account to properties not owned
by her. In Count III, Ploog claims that First Chicago breached a
fiduciary duty.
HomeSide has moved to dismiss Count I based on their
Rule 68 offer, which they claim is greater than any award Ploog can
receive in trial and thus makes Count I moot. HomeSide has also
moved to dismiss Counts IV and V based on Rule 12(b)(1) for lack
of Subject Matter Jurisdiction over the state law claims once
the only federal claim is dismissed.
First Chicago has moved to dismiss Counts II and III pursuant
to Rule 12(b)(6) and 12(b)(7) for failure to state a claim upon
which relief can be granted and the failure to add an
indispensable party, namely Bixby. First Chicago also argues
that this Court should exercise its discretion to deny
supplemental jurisdiction with regard to Counts II and III
because there is no common basis of fact or evidence between
Ploog's claims against them and Ploog's RESPA claim, the only
claim over which the Court has original jurisdiction.
In ruling on a motion to dismiss, the Court must accept all
factual allegations in the complaint as true and draw all
reasonable inferences in favor of the plaintiff. Gomez v. Ill.
State Bd. of Educ., 811 F.2d 1030, 1039 (7th Cir. 1987). If,
when viewed in the light most favorable to the plaintiff, the
complaint fails to state a claim upon which relief can be
granted, the court must dismiss the case. FED. R. CIV. P.
12(b)(6); Gomez, 811 F.2d at 1039. A motion to dismiss may be
granted only if the court concludes that "no relief could be
granted under any set of facts that could be proved consistent
with the allegations." Hishon v. King & Spalding, 467 U.S. 69,
73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984).
Ploog claims that HomeSide has violated RESPA by failing to
take corrective action pursuant to 12 U.S.C. § 2605(e), by
failing to provide a response in writing within 60 business days
setting out the corrective action taken or why corrective action
is not warranted pursuant to 12 U.S.C. § 2605(c), and for
reporting persons to credit bureaus within 60 days of those
persons sending in a qualified written request pursuant to
12 U.S.C. § 2605(c)(3). Ploog identifies five instances where
HomeSide failed to respond to her qualified written requests:
November 18, 1999; March 6, 2000; October 30, 2000; December 1,
2001; and January 2, 2001. Ploog argues that she has
demonstrated a "pattern or practice of noncompliance" through
these five qualified written requests and is entitled to $1,000
for each totaling $5,000 on the face of her complaint. Ploog
alleges that she
has suffered actual damages as well, in that HomeSide's actions
has affected her job and caused her mental anguish. HomeSide
argues that 12 U.S.C. § 2605(f)(1)(B)'s granting a maximum of
$1,000 for demonstrating a "pattern or practice of
noncompliance" is not for every violation and so a $1,000
statutory maximum is all Ploog could recover. Further, HomeSide
asserts that mental anguish is not included in "actual damages"
under 12 U.S.C. § 2605(f). HomeSide asserts that their $6,000
offer of settlement with regard to Count I is therefore more
than Ploog could recover in court, thus making her Count I claim
moot.
The Cranston-Gonzales Amendments to RESPA place requirements
on servicers of federally related mortgage loans when they
receive a qualified written request from a borrower.
12 U.S.C. § 2605 et seq. The servicer must provide a written response
acknowledging the receipt of a qualified written request within
20 days of receiving the borrower's letter.
12 U.S.C. § 2605(e)(1)(A).
The servicer must then do one of three things within
sixty days of receiving the letter:
(1) correct the borrower's account and inform the
borrower of those corrections in writing; (2)
investigate and provide a written explanation to
the borrower of the reasons that the servicer believes
the borrower's account is correct; or (3) investigate
and provide a written explanation to the borrower of
the reasons ...