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Bart Sangabriel Tubalinal, Jr. and Yolanda T. Tubalinal v. Bac Home Loans Servicing

July 18, 2012


The opinion of the court was delivered by: Judge Edmond E. Chang


Plaintiffs Bart and Yolanda Tubalinal, who are litigating this case pro se, filed a fourth amended complaint against Defendants BAC Home Loans Servicing, L.P., and Bank of America, N.A., alleging various claims related to Plaintiffs' mortgage loan.*fn1 R. 39. Defendant Bank of America moves to dismiss the fourth amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).*fn2 R. 48. For reasons explained more fully below, the motion to dismiss is granted. With one exception, the dismissal is with prejudice (meaning the claims cannot be refiled); as to the breach of contract claim only, Plaintiffs may move for leave to file a fifth amended complaint in accordance with the Court's ruling below. If Plaintiffs do not so move by August 6, 2012, then the dismissal on the breach of contract will convert automatically to a dismissal with prejudice.


In evaluating a motion to dismiss, the Court must accept as true the complaint's factual allegations. In 2006, Bart and Yolanda Tubalinal obtained a mortgage loan from Countrywide Home Loans, which was later acquired by Defendant Bank of America. R. 39 (Am. Compl.) ¶¶ 3.01, 3.11. According to the mortgage note, Plaintiffs agreed to pay Countrywide (now Bank of America) $775.18 on the first day of each month beginning on December 1, 2006. Id. ¶ 3.06; R. 39-3, Pls.' Exh. B. After making the first two payments, Plaintiffs enrolled in an accelerated loan repayment program and their mortgage loan payments were automatically drafted each week from Plaintiffs' checking account. Am. Compl. ¶¶ 3.09-3.10.

The automatic weekly mortgage payments continued through March 19, 2010. Id. ¶ 3.12. Plaintiffs claim that Bank of America unilaterally cancelled the automatic payments without notice after it received Plaintiffs' application for a mortgage loan modification. Id. ¶ 3.17. No mortgage payments were made between March 26 and June 11, 2010. Id. ¶ 3.24. In June 2010, Plaintiffs discovered that the automatic weekly payments had ceased without their consent. Id. ¶ 3.17. Plaintiffs assumed that the payment stoppage was related to the loan modification application they submitted to Bank of America in March. Id. ¶ 3.18. In addition, a customer service representative from Bank of America had advised Plaintiffs to comply with the loan modification "trial period." Id. ¶ 3.18. Pursuant to the trial period, Plaintiffs made several consecutive monthly payments of $781.50 between June 21 and November 10, 2010. Id. ¶¶ 3.18-3.19. Bank of America told Plaintiffs that all mortgage payments, including the trial period payments, would be applied to the amounts past due on their mortgage once the loan modification was approved. Id. ¶ 3.28. Therefore, Plaintiffs believed that they did not have to take action regarding the missed payments from March, April, May, and June 2010. Id.

Plaintiffs also believed that their participation in the accelerated loan repayment program meant that they were ahead on payments and, as a result, the mortgage could not be in default status. Id. Plaintiffs' accelerated weekly payments always resulted in a higher monthly payment than the $775.81 per month payment required by Plaintiffs' mortgage note. Id. ¶ 3.11. This belief, combined with their attempt to modify the loan, caused Plaintiffs to disregard a letter they received from Bank of America dated June 14, 2010 notifying Plaintiffs that their home loan was past due. Id. ¶ 3.28. Despite the missed payments, Plaintiffs did not believe that they were in default and they continued to wait for Bank of America to approve their loan modification.

In October 2010, Bank of America sent Plaintiffs another notice stating that "[a] loan in default status that is being considered for a loan modification remains in default status through the modification process until the loan is permanently modified." Id. ¶ 3.29; R. 41-1, Pls.' Exh. 5.02. Thus, Plaintiffs' mortgage could be subject to fees unrelated to their loan modification. Id. In November, Bank of America again notified Plaintiffs that their loan was in serious default because the required payments had not been made. Id. ¶ 3.30; R. 41-2, Pls.' Exh. 5.03. Bank of America's letter set forth the amount owed by Plaintiffs and the process by which Plaintiffs could cure the default. Id. Again, Plaintiffs maintained their belief that they could not be in default due to their accelerated payments and participation in the loan modification process, and did not attempt to cure the default or take any action with respect to these notices. Id. ¶ 3.32.

Plaintiffs eventually learned that Bank of America denied their application for a loan modification due to lack of documentation. Id. ¶ 3.33. In late November 2010, Plaintiffs faxed additional documents to Bank of America and filed an online complaint with the Office of the Comptroller of the Currency. Id. Bank of America responded that, under the October 2006 mortgage note, accelerated payments made during the regular servicing of Plaintiffs' loan do not impede or prevent Bank of America's right to collect monthly payments on the loan. See id. ¶ 3.34; R. 42-4, Pls.' Exh. 5.10. Bank of America also defended its decision to cancel Plaintiffs' automatic weekly payments; specifically, Bank of America claimed that the drafts were discontinued because Plaintiffs entered into a new agreement (the trial modification program), which replaced their prior agreement with Bank of America to automatically debit the payments from Plaintiffs' checking account. Pls.' Exh. 5.10.

The parties continued to correspond about modifying the loan and, in January 2011, Bank of America approved Plaintiffs' application for a loan modification. Am. Compl. ¶ 3.37. But because the modified loan principal included penalties and late charges assessed while the loan was in default, Plaintiffs refused to accept the loan modification as proposed by Bank of America. Id. ¶¶ 3.38-3.39. In February 2011, Bank of America initiated foreclosure proceedings, and this suit followed. Id. ¶ 3.41.

Plaintiffs' fourth amended complaint alleges ten claims against Bank of America: breach of contract, negligence, fraud, wrongful foreclosure, breach of the implied covenant of good faith and fair dealing, unjust enrichment, slander of title, injury to creditworthiness, intentional infliction of emotional distress, and the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601.*fn3


Under the Federal Rules of Civil Procedure, a complaint need only include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). But only certain allegations-factual ones-count toward assessing whether a complaint states a plausible claim. A "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. v. Twombly, 550 U.S. 544, 570 (2009)). Determining plausibility is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

When ruling on a defendant's motion to dismiss pursuant to Rule 12(b)(6), the Court must accept the plaintiff's factual allegations as true and draw reasonable inferences in the plaintiff's favor. McGowan v. Hulick, 612 F.3d 636, 637 (7th Cir. 2010). Additionally, pro se complaints are to be liberally construed. Maddox v. Love, 655 F.3d 709, 718 (7th Cir. 2011).


A. Breach of Contract

Plaintiffs allege that Bank of America breached the parties' original mortgage agreement by initiating foreclosure proceedings when Plaintiffs' account was not in default. Am. Compl. ¶¶ 3.64-3.69. Although Plaintiffs attached a copy of the mortgage note to their complaint, they do not identify the specific provision(s) that Bank of America allegedly breached. See R. 39-3, Pls.' Exh. B.

Bank of America argues that Plaintiffs' failure to make monthly loan payments in April and May of 2010, or at least after November 2010, caused them to be in default on their mortgage loan. Def.'s Br. at 4-5. As Bank of America points out, Plaintiffs' participation in the accelerated loan repayment program did not relieve Plaintiffs of their obligation to continue making their scheduled monthly payments under the mortgage note. Def.'s Br. at 5. The note provides that although Plaintiffs have the right to make payments of principal at any time before they are due, such "prepayments" do not change "the due date or . . . amount of [Plaintiffs'] monthly payment unless the Note Holder agrees in writing to those changes." Id. (quoting Pls.' Exh. B ยง 4). Moreover, the mortgage agreement does not specifically address either Plaintiffs' enrollment in the accelerated repayment program or their assent to Bank of America's automatic weekly withdrawals. Thus, Bank of ...

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