Parker v. Wells Fargo Home Mortgage

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
JOYCE ANN PARKER,
Debtor.
___________________________
JOYCE ANN PARKER,
Plaintiff,
v.
WELLS FARGO HOME MORTGAGE,
INC.,
Defendant.
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Case No. 	05-01021
(Chapter 13)
Adversary Proceeding
No. 06-10038
Not for Publication in
West’s Bankruptcy Reporter
MEMORANDUM DECISION RE MOTION
TO DISMISS FIRST AMENDED COMPLAINT
On April 27, 2006, the plaintiff Parker commenced this
adversary proceeding against Wells Fargo Home Mortgage, Inc.
(“Wells Fargo”), which held a claim secured by a mortgage (in the
form of a deed of trust) against her home. 	Among other claims,
Parker sought a determination that Wells Fargo was owed less than
it was claiming to be owed because it had in the past imposed
improper mortgage charges against her. 	On November 28, 2006,
The decision below is signed as a decision of
the court.
Signed: May 21, 2007.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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1 	Because the sale occurred after the filing of the
Complaint, the Complaint arguably is a supplemental complaint in
that regard under Fed. R. Bankr. P. 7015(d) even though the
payment upon the sale was an outgrowth of what the original
complaint addressed (Wells Fargo’s assertion of excessive amounts
owed it). 	Wells Fargo has not sought dismissal on the basis that
the Complaint is a supplemental complaint that may be filed only
upon permission of the court. 	To the extent the Complaint is a
supplemental complaint, permission is hereby given retroactive to
the date of the filing of the Complaint for the assertion of the
supplemental complaint.
2
Parker sold her home. 	Parker filed an amended complaint
(“Complaint” or “Compl.”) on January 18, 2007, alleging that when
she sold her home she paid off the amount that Wells Fargo
claimed to be owed, and renewing her allegation that Wells Fargo
had claimed more than it was actually owed. 1 	Wells Fargo has
filed a motion to dismiss the Complaint on the basis of Federal
Rule of Civil Procedure 12(b)(6) and in the alternative seeking
summary judgment.
In seeking summary judgment, Wells Fargo has only appended
papers relating to a civil action Parker filed in the Superior
Court for the District of Columbia on September 22, 2003, in
which Parker made allegations that are not inconsistent with the
allegations of the Complaint. 	Accordingly, its request for
summary judgment adds nothing: the motion will turn on whether
the Complaint states a claim upon which relief can be granted.
I
In invoking Rule 12(b)(6), Wells Fargo’s motion raises
principally the defense of the statute of limitations. 	When
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deciding a motion under Rule 12(b)(6) to dismiss a complaint for
failure to state a claim upon which relief may be granted, the
court must take the factual allegations of the complaint as true
and resolve any ambiguities or doubts concerning the sufficiency
of the claim in favor of the pleader. 	See Doe v. U.S. Dep’t of
Justice, 753 F.2d 1092, 1102 (D.C. Cir. 1985). 	Likewise, “a
complaint should not be dismissed for failure to state a claim
unless it appears beyond a doubt that the plaintiff can prove no
set of facts in support of his [or her] claim which would
entitled him [or her] to relief.” 	Id. (quoting Conley v. Gibson,
355 U.S. 41, 45-46 (1957)). 	The court may only grant a 12(b)(6)
motion on statute of limitations grounds if the applicability of
the defense is conclusive on the face of the Complaint. 	See id.
at 1115 (citing Richards v. Mileski, 662 F.2d 65, 73 (D.C. Cir.
1981)); Jones v. Rogers Mem’l Hosp., 442 F.2d 773, 775 (D.C. Cir.
1971).
II
THE BREACH OF CONTRACT CLAIM
In the Complaint’s first count (entitled “Breach of
Contract - Misappropriation of Mortgage Payments” and mislabeled
Count V), the plaintiff seeks a recovery of the amount overpaid
to Wells Fargo from the proceeds of the sale.
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A.
The overpayment claim arose as of the date of the alleged
overpayment in November 2006, after Parker filed her Complaint,
and thus it is not barred by any possible statute of limitations.
This is true even though the excessive charges Wells Fargo
allegedly made to Parker’s account were, in many cases, imposed
many years ago. 	She was not obligated to sue Wells Fargo when
Wells Fargo made an excessive charge. 	Instead, she was free to
defend against Wells Fargo’s claims by asserting that she owed
less than Wells Fargo claimed to be owed. 	There is no statute of
limitations on defending against a claim. 	It was not until
Parker paid Wells Fargo more than was necessary to satisfy the
claim that she was cast in the posture of having to sue within a
statute of limitations for a recovery of the excess amounts paid
to Wells Fargo.
Specifically, Wells Fargo claims that many of its errors
occurred more than three years ago (and thus beyond what it
claims is the applicable statute of limitations). 	However, it
was Wells Fargo’s refusal, within that three-year period, to
correct its errors that resulted in Parker having to pay more
than was owed. 	Accordingly, the breach of contract claim to
recover excessive amounts paid is timely.
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B.
As part of the first count, Parker claims that she is
entitled to actual and treble damages, plus attorney’s fees and
expenses, pursuant to the D.C. Consumer Protection and Procedures
Act, D.C. Code § 28-3901(2000), et seq. (“DCCPPA”). 	She repeats
this claim in the Complaint’s final count which is devoted to all
of her DCCPPA claims. 	Part V of this decision addresses those
DCCPPA claims, including the DCCPPA claims relating to the first
count of the Complaint.
III
THE PLAINTIFF’S CLAIMS UNDER THE
REAL ESTATE SETTLEMENT PROCEDURES ACT
Parker alleges in the second count of the Complaint
(mislabeled Count VI) that Wells Fargo violated the requirements
of 12 U.S.C. § 2605, part of the codified provisions of the Real
Estate Settlement Procedures Act (“RESPA”), by failing to:
(a) promptly post payments received in a timely manner;
(b) timely apply payments to principal and interest on
her account;
(c) make timely payments of escrow funds for casualty
insurance premiums and property taxes; and
(d) timely and adequately acknowledge, investigate and
respond to her qualified written request for information
about the servicing of her loans and escrow accounts.
Compl. ¶ 50. 	No provision in § 2605 imposes the requirements set
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2 	Section 2605(g) governs the administration of escrow
accounts by servicers of federally related mortgage loans.
Paragraph 50(c) of the Complaint alleges that Wells Fargo failed
to “[m]ake timely payments of escrow funds for casualty insurance
premiums and property taxes. . . .” 	Nowhere does the Complaint
identify an insurance premium or a property tax that Wells Fargo
failed timely to pay.
3 	Section 2605(e) addresses the duty of loan servicers to
respond to borrower inquiries relating to the servicing of loans.
The duty only arises when the servicer receives a “qualified
written request” (a term defined at some length in §
2605(e)(1)(B)). 	Paragraph 50(d) of the Complaint asserts that
Wells Fargo violated RESPA in numerous instances by failing to
“[t]imely and adequately acknowledge, investigate and respond to
consumers’ qualified written request for information about the
servicing of their [meaning, presumably, the plaintiff’s] loans
and escrow accounts.” 	Nowhere does the Complaint identify any
such qualified written request.
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forth in paragraphs 50(a) and (b) of the Complaint, and,
accordingly, I will treat them as meaningless for RESPA purposes.
However, paragraphs 50(c) and (d) of the Complaint state,
albeit in conclusory terms, violations of, respectively, §§
2605(g) 2 and 2605(e). 3 	Despite the conclusory nature of the
allegations, Wells Fargo seeks dismissal only on the basis of the
statute of limitations. 	The face of the Complaint, however, does
not establish when the violations occurred, and, accordingly,
Wells Fargo has not established a statute of limitations
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4 	The limitations periods applicable to RESPA claims are
set forth in 12 U.S.C. § 2614, which provides in relevant part
that:
Any action pursuant to the provisions of section 2605
. . . of this title may be brought . . . within 3 years
. . . from the date of the occurrence of the violation
. . . .
[Emphasis added.] 	The statute of limitations runs from the date
of the violation. 	See Mullinax v. Radian Guar., Inc., 199 F.
Supp.2d 311, 324 (M.D.N.C. 2002) (limitations period for RESPA
claims begins to run “from the date of the occurrence of the
violation” rather than from when the action accrues, and must be
measured with reference to this discrete event).
The allegations of the Complaint span several years,
beginning with the District of Columbia’s erroneous issuance of a
tax bill on the plaintiff’s home in August of 2002 and ending
with the payment of allegedly excessive amounts claimed by Wells
Fargo in November of 2006. 	Conceivably the alleged RESPA
violations occurred outside of the three-year period preceding
the commencement of this proceeding. 	However, if so, the court
will then have to decide whether a trustee’s more liberal statute
of limitations under 11 U.S.C. § 108(a) may be invoked by Parker
as a chapter 13 debtor in exercising a trustee’s power to sue
under 11 U.S.C. § 363 pursuant to 11 U.S.C. § 1303.
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defense. 4
IV
THE PLAINTIFF’S CLAIM FOR WRONGFUL FORECLOSURE
In the Complaint’s third count (entitled “Breach of Contract
- Wrongful Foreclosure” and mislabeled Count VII), Parker repeats
the allegations of the first count, which is also for breach of
contract, but elaborates on those allegations.
A.
Parker has clarified in her response to the motion to
dismiss that she does not seek damages for a wrongful foreclosure
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5 	If Parker seeks to amend her Complaint, to assert either
an unjust enrichment claim or (beyond what may already have been
pled) a negligence claim, she needs to do so by motion. 	It would
be best if she includes a proposed amended complaint as part of
the motion so that the specific claims she seeks to pursue are
clearly articulated.
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(no foreclosure having taken place), but she does not appear to
have consented to dismissal of the count insofar as it seeks
relief relating to the breach of contract. 	Because the count
seeks the same relief as the first count (a refund of the
excessive amounts paid Wells Fargo upon the sale of the home),
the count is timely with respect to that claim for the same
reasons the first count is timely.
B.
Like the first count, the third count additionally seeks
relief under the DCCPPA. 	The timeliness of the DCCPPA claims is
addressed in part V, below.
C.
Before turning in part V to the DCCPPA claims, it is
necessary to note that in consenting to dismissal of any claim
for wrongful foreclosure, Parker seeks to recast her claim as
being additionally one for negligence or unjust enrichment for
the wrongful institution of foreclosure proceedings, stating that
she will amend her Complaint to include such claims. 	The request
to amend the Complaint is denied without prejudice to filing a
motion to amend the Complaint. 5 	I question whether Parker has
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6 	Parker does not cite case law explaining why she has a
claim for “unjust enrichment” or needs to pursue that claim in
addition to the array of other claims already asserted.
Regarding “negligence,” the Complaint already includes
allegations establishing that Wells Fargo wrongfully overstated
the amounts owed by Parker, thus breaching the parties’ contract.
There is an issue whether the same allegations establish a claim
for negligence (specifically, whether a party which fails to
comply with a contract can ever be sued for negligence instead of
only breach of the contract). 	I need not decide that issue as it
appears to be purely academic: a negligence claim would appear to
overlap the breach of contract claim (as Parker has not
articulated any reason why recovery under a negligence claim
would be greater than for a breach of contract claim or why Wells
Fargo’s defenses would be treated any differently depending on
whether Parker’s claims are for breach of contract or
negligence).
9
demonstrated that she can file a proper claim for “unjust
enrichment” or “negligence” or needs to do so. 6
V
THE PLAINTIFF’S CLAIM UNDER THE DISTRICT OF
COLUMBIA CONSUMER PROTECTION AND PROCEDURES ACT
In the Complaint’s fourth and final count (mislabeled Count
VIII), Parker asserts DCCPPA claims, and renews the allegations
of the earlier counts, which, as pertinent to the DCCPPA claims,
may be summarized as follows. 	In 2002, Wells Fargo received an
erroneous tax bill from the District of Columbia that it knew or
should have known ought not be paid but nevertheless paid the
bill in error in September 2002. 	As a consequence it erroneously
increased payments Parker was required to make under the
mortgage. 	On March 12, 2003, it asked the District for a refund
of the erroneous tax payment. 	On April 3, 2003, it sent Parker a
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notice that she was in default in the amount of $6,373.56 (which
she alleges in the Complaint ¶¶ 52 and 53, part of the third
count, was a wrongful misrepresentation, because Wells Fargo knew
or should have known that the amount involved the erroneous tax
payment to the District). 	On June 18, 2003, Wells Fargo sent a
letter to Parker pursuing collection from Parker of all amounts
it viewed as outstanding, which included the amount erroneously
paid to the District. 	On July 2, 2003, Wells Fargo received a
refund of the erroneous tax payment. 	On August 25, 2003, it
instituted foreclosure proceedings in which it overstated the
amount necessary to cure the mortgage arrears by including the
erroneous tax payment to the District as part of the amount that
had to be cured. 	When Parker sought to enjoin the foreclosure
sale, Wells Fargo sought to collect attorney’s fees incurred in
the injunction litigation. 	Wells Fargo later wrongfully asserted
that $29,599.10 was in arrears as part of the pay-off Parker was
forced to pay when she sold her home in November 2006.
Based on these facts, Parker asserts various claims under
the DCCPPA, alleging that Wells Fargo:
• 	violated DCCPPA § 28-3904(e) when it misrepresented to
Parker that she was responsible for attorney’s fees
(corporate advances) that it incurred while trying to
collect upon a debt erroneously created, through no
fault of Parker, by Wells Fargo’s failure to
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7 	There are two sets of paragraphs 59 and 60 in the
Complaint, one set in the wrongful foreclosure count, and another
set in the later DCCPPA count.
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acknowledge an escrow account error (Compl. second ¶
60); 7
• 	violated DCCPPA § 28-3904(f) when it failed to inform
plaintiff that it had known of, and actually received
reimbursement for, the erroneous DC tax payment in the
amount of $4,651.93 (Compl. ¶ 61);
• 	violated DCCPPA § 28-3904(f) when it continued to
collect from Parker, the erroneous DC tax payment in
the amount of $4,651.93 that it knew or should have
known had been reimbursed to it by the District of
Columbia on July 2, 2003 (Compl. ¶ 62); and
• 	unreasonably failed to forbear from foreclosure, as
required by HUD regulations, thus engaging in an unfair
trade practice in violation of DCCPPA for which Wells
Fargo is liable for damages incurred by the plaintiff,
i.e., the attorney’s fees and costs for which it has
been held liable. (Compl. ¶ 63.)
Wells Fargo contends that Parker’s DCCPPA claims are subject to
and time-barred by a one-year statute of limitations contained in
D.C. Code § 12-301(5) (2001). 	That provision, however, applies
only to an action “for a statutory penalty or forfeiture.” 	The
damages Parker seeks under DCCPPA are compensatory in nature, and
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8 	The DCCPPA creates a “private right to recover for a
private wrong . . . .” and is thus not an action for a statutory
penalty or forfeiture. Shenk v. Cohen, 51 A.2d 298, 301 (D.C.
App. 1947) (discussing the meaning of the word “penalty” and
holding that the plaintiff’s private right of action to recover
double damages under the Rent Act was remedial in nature rather
than an action for a statutory penalty or forfeiture subject to
the one-year limitations period of an earlier version of § 12-
301(5)); Pavarini & Wyne, Inc. v. Title Guar. & Sur. Co., 36 App.
D.C. 348 *2 (1911) (“[N]either the liability imposed for the
benefit of private persons, nor the remedy given for its
enforcement by civil action, is a statutory penalty in the proper
legal sense.”); B LACK ’S L AW DICTIONARY 1154 (7th ed. 1999)(defining
a statutory penalty as “[a] penalty imposed for a statutory
violation; esp., a penalty imposing automatic liability on a
wrongdoer for violation of a statute’s terms without reference to
any actual damages suffered.”).
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thus her DCCPPA claims are not for a statutory penalty or
forfeiture, and are not subject to § 12-301(5). 8 	DCCPPA does not
have its own statute of limitations, and in the District of
Columbia, claims “for which a limitation is not otherwise
specially prescribed” are subject to a three-year limitations
period. 	See D.C. Code § 12-301(8)(2001). 	Accordingly, the
plaintiff was required to bring any claims arising under the
DCCPPA within three years “from the time the right to maintain
the action accrue[d].” 	See id.; Johnson v. Long Beach Mortgage
Loan Trust, 451 F. Supp.2d 16, 48 (D.D.C. 2006) (DCCPPA claim
subject to D.C.’s three-year residual statute of limitation);
District Cablevision Ltd. P’ship v. Bassin, 828 A.2d 714 (D.C.
2003)(same).
To the extent that Parker’s DCCPPA claims relate to Wells
Fargo having required an excessive payoff amount when she sold
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her home in 2006, those claims are plainly timely under the
applicable three-year statute of limitations. 	To the extent that
the DCCPPA claims relate to damages arising at an earlier date,
however, it is necessary to address the specific dates on which
those claims accrued. 	Parker alleges that the defendant
initiated foreclosure proceedings on or about August 25, 2003, a
date falling within the three-year limitations period because
Parker commenced the adversary proceeding in April 2006. 	Compl.
¶ 31. 	Likewise, it is reasonably inferred that the allegations
relating to the defendant’s continued pursuit of those
foreclosure proceedings fall within the applicable limitations
period, notwithstanding the plaintiff’s failure to assign dates
to those allegations. 	Accordingly, the court concludes that the
plaintiff’s DCCPPA claims relating to the 2003 foreclosure
efforts and subsequent events are not time-barred and the
defendant’s 12(b)(6) motion must be denied as to those claims.
The Complaint alleges that the foreclosure action was based
on Wells Fargo having made erroneous charges to the account
because Wells Fargo made a payment in September 2002 of an
erroneous tax bill issued by the District of Columbia, and as a
consequence over-billed Parker for amounts owed on the mortgage
account. 	Although some of the over-billing occurred more than
three years prior to the commencement of this adversary
proceeding, Wells Fargo continued (within the pertinent three-
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9 	Unlike the limitations periods provided for under RESPA
and the FDCPA, which begin to run as of the date the actionable
violation occurred, the limitations period applicable to a DCCPPA
claim only begins to run when the right to maintain the action
accrues. 	Thus, even if some of the allegations giving rise to
the plaintiff’s DCCPPA claim were to fall outside of the
limitations period, the question of precisely when the
plaintiff’s DCCPPA claim accrued is a question of fact not
properly resolved on a motion to dismiss.
10 	Even if some of Parker’s DCCPPA claims arose more than
three years before she commenced her adversary proceeding, it
would be necessary to address the applicability of 11 U.S.C. §
108(a)’s two-year tolling provision to these proceedings before
determining whether those claims are time-barred.
14	O:\Laura\OPINIONS\Parker v Wells Fargo\Order - Parker v Wells Fargo - MTD Mem Decsn- FINAL VERSION2.wpd
year period) to take actions based on those errors.
Specifically, it was Wells Fargo’s decision to continue to act
based on those errors and to proceed with foreclosure efforts in
August 2003 (less than three years before Parker commenced this
proceeding) that appears to have resulted in the harm to Parker:
had Wells Fargo rectified its errors and not proceeded with
foreclosure, it appears that Parker would not have been harmed. 9
Accordingly, the court will deny Wells Fargo’s motion with
respect to the DCCPPA claims. 10
VI
An order follows.
[Signed and dated above.]
Copies to: 	All counsel of record.
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