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Zander v. Saxon Mortgage Service, Inc.

United States District Court, M.D. North Carolina

August 26, 2014

KARIN KIRKSEY ZANDER, Plaintiff,
v.
SAXON MORTGAGE SERVICE, INC., and OCWEN FINANCIAL CORPORATION, Defendants.

MEMORANDUM OPINION AND ORDER

WILLIAM L. OSTEEN, Jr., District Judge.

Plaintiff Karin Kirksey Zander ("Plaintiff"), proceeding pro se, has asserted several claims under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., and various claims under North Carolina state law. Presently before this court is a motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) filed by Defendant Ocwen Financial Corporation ("Ocwen"). (Doc. 8.) Defendant Saxon Mortgage Service, Inc. ("Saxon") (collectively with Ocwen, "Defendants") has filed a motion to join, adopt, and incorporate Defendant Ocwen's motion to dismiss. (Doc. 15.) Plaintiff has responded in opposition (Doc. 18), and Defendants have separately replied (Docs. 19, 21). This motion is now ripe for adjudication, and, for the reasons that follow, Defendants' motion will be granted with respect to Plaintiff's FCRA claims. Because the FCRA claims were the sole basis for this court's original jurisdiction, this court will decline to exercise supplemental jurisdiction over Plaintiff's remaining state law claims pursuant to 28 U.S.C. § 1367(c)(3).

I. BACKGROUND

The following facts are taken as alleged in Plaintiff's Complaint.

In 2006, Plaintiff held a residential mortgage on her home serviced by Ocwen. (Verified Complaint ("Compl.") (Doc. 5) ¶ 9.) In May 2006, Plaintiff refinanced her mortgage through Saxon, extinguishing the original mortgage serviced by Ocwen. (Id.) On or about July 19, 2007, Plaintiff notified Saxon that Plaintiff's residence (on which Saxon held the refinanced mortgage) was in escrow, had passed inspection, and had pre-approved buyers. (Id.) The accepted purchase amount was sufficient to cover the entire outstanding amount of the mortgage. (Id.) Plaintiff further informed Saxon that the closing date was set for August 15, 2007. (Id.) Several days after the July notification, Saxon initiated a "Special Proceedings action" in Wake County Superior Court. (Id.) On or about August 20, 2007, Saxon voluntarily dismissed the action "following it's [sic] receipt of payment for the full amount listed as due to pay off plaintiff's home mortgage loan in full." (Id.) Plaintiff claims that the voluntarily dismissal of the "special proceeding" in August 2007 was Plaintiff's last direct involvement with Saxon.[1] (See id. ¶ 12.)

In April 2013, over five years after the foreclosure was instituted and discontinued, Plaintiff applied for a home loan to pursue an opportunity to purchase a foreclosed home. (Id. ¶ 13.) Her loan application was denied by Bank of America and Wells Fargo Bank because "Saxon had reported incorrect information to one or more of the major credit bureaus, and allowed the report to remain in place as of April 2013...." (Id. ¶ 14.) Specifically, Plaintiff alleges that Saxon "caused a foreclosure to be listed" on Plaintiff's credit report. (Id.) In 2012, Ocwen purchased Saxon and now the two corporations are alleged to have "complete unity of interest and ownership so that separate identities between the defendants do not exist." (Id. ¶ 10.)

In May 2013, Plaintiff filed a formal written dispute "with each of the three major credit bureaus contesting the derogatory information furnished by Saxon." (Id. ¶ 15.) Over the next several months, each reporting bureau responded "that Saxon had allegedly investigated and verified its claim so that the derogatory information would remain on plaintiff's credit reports." (Id. ¶ 18.) In August 2013, Plaintiff wrote directly to Saxon to "validate and verify" the foreclosure proceeding furnished by Saxon and appearing on Plaintiff's credit reports. (Id. ¶ 19.) Over 180 days later, Saxon had still not responded to Plaintiff's direct written request for information concerning the foreclosure proceeding appearing on her credit report. (Id.)

II. LEGAL STANDARD

Defendants have moved to dismiss Plaintiff's FCRA claims pursuant to Federal Rule of Civil Procedure 12(b)(6). Because the pleadings have subsequently closed and this court finds that consideration of the Answer clarifies ambiguities otherwise present in the pro se Complaint, this court will sua sponte convert Defendants' motion into a Rule 12(c) motion for judgment on the pleadings. See Pullen-Walker v. Roosevelt Univ., No. 09 CV 5426, 2010 WL 652986, at *2 (N.D. Ill. Feb. 19, 2010), vacated on other grounds, 405 F.Appx. 46 (7th Cir. 2010). "A motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) is analyzed under the same standard as a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6)." Alexander v. City of Greensboro , 801 F.Supp.2d 429, 433 (M.D. N.C. 2011) (citing Burbach Broad. Co. of Del. v. Elkins Radio Corp. , 278 F.3d 401, 405-06 (4th Cir. 2002)). In deciding a motion to dismiss for failure to state a claim under Rule 12(b)(6), the trial court must accept factual allegations as true. E.g., Erickson v. Pardus , 551 U.S. 89, 91 (2007). A motion under Rule 12(b)(6) is proper when the complaint's factual allegations fail as a matter of law to state a plausible claim for relief. Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id . However, a court is not required to accept "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements...." Id.

"Unlike on a Rule 12(b)(6) motion, however, on a Rule 12(c) motion the court may consider the Answer as well." Alexander , 801 F.Supp.2d at 433. "[T]he fact allegations of the complaint are taken as true, but those of the answer are taken as true only where and to the extent they have not been denied or do not conflict with the complaint." Jadoff v. Gleason , 140 F.R.D. 330, 331 (M.D. N.C. 1991).

Courts testing the sufficiency of a complaint with a motion under Rule 12(b)(6) or 12(c) generally cannot reach the legal adequacy of an affirmative defense, such as an affirmative assertion that a claim is barred by the statute of limitations. Goodman v. Praxair, Inc. , 494 F.3d 458, 464 (4th Cir. 2007) (en banc). "But in the relatively rare circumstances where facts sufficient to rule on an affirmative defense are alleged in the complaint, the defense may be reached by a motion to dismiss filed under Rule 12(b)(6)." Id .; see Suarez Corp. Indus. v. McGraw , 125 F.3d 222, 229 (4th Cir. 1997). In other words, in order to grant a motion to dismiss alleging an affirmative defense, the complaint must be self-defeating. See Goodman , 494 F.3d at 464 ("This principle only applies, however, if all facts necessary to the affirmative defense clearly appear[] on the face of the complaint.'" (alterations in original) (quoting Richmond, Fredericksburg & Potomac R.R. v. Forst , 4 F.3d 244, 250 (4th Cir. 1993))).

III. ANALYSIS

Plaintiff brings four claims under the FCRA: (1) willful failure to validate under 15 U.S.C. § 1681n; (2) willful misrepresentation under 15 U.S.C. § 1681n; (3) negligent failure to accurately report credit history information under 15 U.S.C. § 1681o; and (4) negligent failure to validate under 15 U.S.C. § 1681o. (Compl. (Doc. 5) at 7-10.)

A. Statute of Limitations

Defendants first argue that Plaintiff's asserted causes of action under the FRCA are time-barred by the applicable statute of limitations because they are based on the 2007 foreclosure ...


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