Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_14-cv-00275/USCOURTS-alsd-1_14-cv-00275-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 12:191 Bank Foreclosure

---

IN	THE	UNITED	STATES	DISTRICT	COURT	FOR	THE

SOUTHERN	DISTRICT	OF	ALABAMA

SOUTHERN	DIVISION

GEORGE	P.	SHEDD,	JR.,	et	

al.,

Plaintiffs.

v.

WELLS	FARGO	HOME	

MORTGAGE,	INC.,	et	al.,

Defendants.

)

)

)

)

)

)

)

)

)

)

)

CIVIL	ACTION	NO.

14-00275-CB-M

ORDER

This	matter	is	before	the	Court	on	a	Renewed	Motion	to	Dismiss	filed	by	

Defendants	Wells	Fargo	Home Mortgage,	Inc.	and	Monument	Street	Funding,	II,	LLC	

seeking	dismissal	of	various	counts	of	the	First	Amended	Complaint	(“the	Amended	

Complaint”)	for failure	to	state	a	claim	upon	which	relief	can	be	granted and	

supporting	brief.		(Docs.	24	&	25.)		Plaintiffs	have	filed	a	brief	in	response.		(Doc.	27.)		

As	discussed	below,	the	Court	finds	that	some	counts	are	due	to	be	dismissed	and	

others	are	not.

Procedural	Background

On	May	9,	2014,	Plaintiffs	George	P.	Shedd,	Jr.	and	Pamela	J.	Shedd	(“the	

Shedds”)	filed	a	complaint	in	the	Circuit	Court	of	Mobile,	Alabama	against	

defendants	Wells	Fargo Home	Mortgage,	Inc. (“Wells	Fargo”),	Monument	Street	

Funding,	II,	LLC	(“Monument”),	and	Barclays	Capital	Real	Estate,	Inc.	(“Barclays”).		

The	complaint	asserted sought	various	state	law	causes	of	action	and	ought	

damages	and	injunctive	relief	against	the	Defendants	in	connection	with	the	Shedds’

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 1 of 16
2

home	mortgage	on	property	located	in	Mobile,	Alabama.		The	Defendants	removed	

the	action	to	this	Court	asserting	removal	jurisdiction	based	on	diversity	of	

citizenship.	Shortly	after	removal	all	Defendants	filed	motions	to	dismiss	the	

complaint.		Plaintiffs	responded	with	an	amended	complaint,	which	expanded	the	

factual	allegations	and	added	several	causes	of	action.		Defendants’	renewed	

motions	to	dismiss	followed.

The	Amended	Complaint

The	First	Amended	Complaint	(“the	Amended	Complaint”) is	based	on	events	

related	to	the	servicing	of	the	Shedds’ mortgage	by	the	Defendants.		In	2001,	the	

Shedds	signed	a	promissory	note	and	executed	a	mortgage,	secured	by	their	

residence in	Mobile,	Alabama,	to	The	Mortgage	Outlet.		Barclays	serviced	the	loan	

pursuant	to	a	contract	with	The	Mortgage	Company.		Barclays	continued	to	service	

the	loan	after	the	loan	and	mortgage	were	assigned	to	Monument,	which	is	owned	

by	Wells	Fargo, in 2007.		In	2008,	the	Shedds	filed	a	Chapter	11	plan	of	

reorganization	in	the	United	States	Bankruptcy	Court	for	the	Southern	District	of	

Alabama.		Barclays,	the	loan	servicer,	represented	to	the	bankruptcy	court	that	it	

was	the	creditor	and	sought	a	relief from	the	automatic	stay.			In	an	order	dated	

April	25,	2008,	the	bankruptcy	court	“noted	that	Barclays	and	Plaintiffs	had	entered	

into	an	adequate	protection	agreement”	and	that	“Plaintiffs	would	pay	Barclays	

their	regular	mortgage	payment	plus	an	additional	$306.62	monthly,	beginning	with	

the	April	2008	payment,	and	‘upon	confirmation	of	the	Plan	of	Reorganization,	the	

terms	of	the	confirmed	plan	shall	control,’	including	‘the	additional	payment	to	be	

made	HomeEq	for	purposes	of	paying	out	the	pre-petition	arrearage	and	charges.’”		

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 2 of 16
3

(Am.	Compl.	¶	7,	Doc	17.)		The	bankruptcy	court	ultimately	confirmed	the	

reorganization	plan,	which	required	the	Shedds	to	pay	the	additional	$306.62	for	60	

months	to	satisfy	the	pre-petition	arrearage	of	$16,500	in	full.		

The Shedds	began	paying	the	$306.62	as	required,	and	continued	to	do	so,	

but	Barclays	(and	Monument)	failed	to	apply	the	payments	to	the	pre-petition	

arrearage	as	agreed.		In	September	2008,	Barclays	notified	the	Shedds	the	loan	was	

in	default,	accelerated	the	debt	and	scheduled	a	foreclosure.		“Throughout	2009	and	

in	2010	.	.	.	Barclays	continued	to	.	.	.	wrongfully	initiat[e]	foreclosure	proceedings;	

misallocate[e]	payments	[or	refuse]	payments	.	.	.	fail[	]	to	properly	credit	mortgage	

interest,		[incorrectly]	report[ed]	Plaintiffs	to	credit	reporting	agencies	as	

delinquent.		(Id. ¶	9(M).)	 Also,	in	2009	and	in	2010,	“Barclays	.	.	.		wrongfully	

disburs[ed]	$3,576.3	for	‘hazard	insurance’	to	unknown	third	parties,	in	violation	of	

[the	loan	agreement]	and	fail[ed]	to	notify	Plaintiffs”	that	it	had	done	so.		(Id. ¶	

9(N).)

In	September	2010,	Wells	Fargo	took	over	as	servicing	agent	for	Monument,	

but	the	same	problems	continued.		The	loan	was	placed	in	foreclosure,	payments	

were	misapplied,	the	Shedds	were	reported	delinquent	to	credit	reporting	agencies,	

mortgage	interest	was	underreported	on	IRS	Form	1098	for	tax	years	2010-13.		In	

addition,	Wells	Fargo	“force-placed	insurance	.	.	.	each	year”	even	though	the	Shedds	

already	had	hazard	insurance	and	had	notified	Wells	Fargo	of	that	fact. (¶	17(F).)		

Based	on	these	facts,	the	Shedds	have	asserted	the	following	claims:

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 3 of 16
4

Count Cause	of	Action Defendants

One Breach	of	Contract All

Two Breach	Covenant of	Good	

Faith/Fair	Dealing

All

Three Breach	of	Fiduciary	Duty All

Four Negligence All

Five Wantonness Wells	Fargo	&	Monument

Six Fraud All

Seven Promissory	Fraud All

Eight Fraudulent	

Suppression/Concealment

All

Nine Unconscionability All

Ten Unjust	Enrichment All

Eleven Conversion All

Twelve Injunctive	Relief All

Thirteen Real	Estate	Settlement	

Procedures	Act,	12	U.S.C.	§	

2601	(RESPA)	violation	

(Escrow	Payments)

Wells	Fargo	&	Monument

Fourteen RESPA	violation	(Error	

Resolution/Info	Requests)

Wells	Fargo	&	Monument

Fifteen RESPA	violation	(ForcePlaced	Hazard	Insurance)Wells	Fargo	&	Monument

Sixteen Truth	in	Lending	Act	,	15	

U.S.C.	§	1601	(TILA)	&	

Regulation	Z	violation	

(Payment	Crediting)

Wells	Fargo	&	Monument

Seventeen TILA/Regulation	Z	

violation	(Periodic	

Statements)

Wells	Fargo	&	Monument

Eighteen RESPA	Violation	(Loss	

Mitigation)

Wells	Fargo	&	Monument

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 4 of 16
5

Issues	Raised

Wells	Fargo	and	Monument	(collectively,	“the	Defendants”),	seek	dismissal	of	

Counts	Two	through	Ten,	Thirteen	and	Count	Eighteen	in	their	entirety	and	portions	

of	Counts	Thirteen	through	Fifteen.		Below,	the	Court	sets	forth the	applicable	

standard	of	review	before	addressing	each	of	these claims.

Standard	of	Review

A	complaint	must	“set	forth	a	short	and	plain	statement	of	the	claim	showing	

that	the	pleader	is	entitled	to	relief.”		Fed.	R.	Civ.	P.	8(a)(2).		In	Bell	Atlantic	Corp.	v.	

Twombly,	550	U.S.	544	(2007),	the	Supreme	Court	set	forth	the	parameters	of	a	wellpleaded	complaint.		A	claim	for	relief	“must	set	forth	enough	factual	matter	(taken	as	

true)	to	suggest	[the	required	elements	of	a	cause	of	action].”			Id. at	556;	see	also	

Watts	v.	Florida	Int’l	University,	495	F.3d	1289,	1295	(11th	Cir.	2007)	(applying	

Twombly).			Furthermore,	a	complaint	must	“provide	the	defendant	with	fair	notice	

of	the	factual	grounds	on	which	the	complaint	rests.”		Jackson	v.	Bellsouth	

Telecommc’ns,	Inc.,	372	F.3d	1250,	1271	(11th	Cir.	2004).			

In	Ashcroft	v.	Iqbal,	556	U.S.	662,	129	S.Ct.	1937	(2009),	the	Supreme	Court	

further	refined	the	threshold	requirements	for	a	claim	under	Rule	8(a)(2).			

Two	working	principles	underlie	our	decision	in	Twombly.	First,	the	

tenet	that	a	court	must	accept	as	true	all	of	the	allegations	contained	

in	a	complaint	is	inapplicable	to	legal	conclusions.	Threadbare	recitals	

of	the	elements	of	a	cause	of	action,	supported	by	mere	conclusory	

statements,	do	not	suffice.		Rule	8	marks	a	notable	and	generous	

departure	from	the	hyper-technical,	code-pleading	regime	of	a	prior	

era,	but	it	does	not	unlock	the	doors	of	discovery	for	a	plaintiff	armed	

with	nothing	more	than	conclusions.	Second,	only	a	complaint	that	

states	a	plausible	claim	for	relief	survives	a	motion	to	dismiss.	

Determining	whether	a	complaint	states	a	plausible	claim	for	relief	

will	.	.	.	be	a	context-specific	task	that	requires	the	reviewing	court	to	

draw	on	its	judicial	experience	and	common	sense.	But	where	the	

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 5 of 16
6

well-pleaded	facts	do	not	permit	the	court	to	infer	more	than	the	mere	

possibility	of	misconduct,	the	complaint	has	alleged-but	it	has	not	

“show[n]”-“that	the	pleader	is	entitled	to	relief.”	

Iqbal,	129	S.Ct.	at	1949-50	(quoting	Fed.	R.	Civ.	P.	8(a)(2))	(other	citations	omitted).		

“When	considering	a	motion	to	dismiss,	all	facts	set	forth	in	the	plaintiff’s

complaint	‘are	to	be	accepted	as	true.”		Grossman	v.	Nationsbank,	N.A.,	225	F.3d	

1228,	1232	(11th Cir.	2000)(per	curiam).		Conclusory	allegations,	however,	are	not.		

“A district	court	considering	a	motion	to	dismiss	shall	begin	by	identifying	

conclusory	allegations	that	are	not	entitled	to	an	assumption	of	truth—legal	

conclusions	must	be	supported	by	factual	allegations.”		Randall, 610	F.	3d	at	709-10.			

Next,	the	court	“should	assume,	on	a	case-by-case	basis,	that	well	pleaded	factual	

allegations	are	true	and	then	determine	whether	they	plausibly	give	rise	to	an	

entitlement	to	relief.”		Id.	at	710.		Plausibility	means	something	more	than	

allegations	that	are	“merely	consistent	with”	liability.		Iqbal,	129	S.Ct.	at	1949.		The	

facts	alleged	must	“allow[	]	the	court	to	draw	the	reasonable	inference	that	the	

defendant	is	liable	for	the	misconduct	alleged.”		Id.		

Legal	Analysis

Breach	of	the	Duty	of	Good	Faith	and	Fair	Dealing	(Count	Two)

Defendants	argue that	this	claim	should	be	dismissed	because	no	duty	of	

good	faith	and	fair	dealing	arose	from	the	mortgage	contract.		Plaintiffs	respond	that	

Alabama	law	recognizes	cause	of	action	for	breach	of	the	duty	of	good	faith	and	fair	

dealing	arising	from	contract	and	argue	that	the	Amended	Complaint	sufficiently	

alleges	such	a	cause	of	action.	Plaintiffs	are	correct	that	the	cause	of	action	exists;	

however,	their	factual	allegations	fall	short.

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 6 of 16
7

Alabama	recognizes	that	every	contract	carries	an	implied	obligation	of	good	

faith	and	fair	dealing,	which	has	been	defined	as	“an	implied	covenant	that	neither	

party	shall	do	anything	which	will	have	the	effect	of	destroying	or	injuring	the	rights	

of	the	other	party	to	receive	the	fruits	of	the	contract.”		Lloyd	Noland	Found.,	Inc.	v.	

City	of	Fairfield	Healthcare	Auth.,	837	So.	2d	253,	267	(Ala.	2002) (quoting	Seller	v.	

Head,	261	Ala.	212,	217,	73	So.2d	747,	751	(1954)).		The	parameters	of	this	claim	

have	not	been	well	defined.1 However,	it	is	clear	that	the	obligation	is	not	actionable	

unless	the	breach	of	that	duty	can	be	tied	to	the	performance	of	a	specific	term	of	

the	contract.		Lake	Martin/Alabama	Power	Licensee	Assoc.	v.	Alabama	Power	Co.,	Inc.,	

601	So.	2d	942,	945	(Ala.	1992).		More	specifically, Alabama	courts	have	recognized	

the	duty	of	good	faith	and	fair	dealing	when	“the	contract	fails	to	specify	all	the	

duties	and	obligations	intended	to	be	assumed.”	Lloyd	Noland	Found., 837	So.2d	at	

267. In	those	instances,	“the law	will	imply	an	agreement	to	do	those	things	that	

																																																							 1 Alabama	cases	in	which	recovery	on	such	a	claim	has	been	upheld	are	few.		

The	only	cases	this	Court	has	been	able	to	locate	involve	employment	contracts.		In	

Eager	Beaver	Buick, Inc	v.	Burt,	503	So.2d	819	(Ala.	1987),	overruled	on	other	

grounds,	 Elmore	Co.	Comm’n	v.	Ragena,	540	So.2d	720	(Ala.	1989),	the	employer	(an	

automobile	dealer)	had	insisted	that	the	plaintiff	(its	sales	manager)	falsify	

documents	so	that	the	dealership	could	avoid	sales	tax,	which	would	have	been	a	

violation	of	the	law.		The	plaintiff	refused,	but	the	dealership’s	owners	harassed	him	

and	made	his	job	so	difficult	that	he	could	not	perform	and	ultimately	resigned.		The	

court	held	that	the	defendant	breached	its	duty	of	good	faith	and	fair	dealing	by	

making	it	impossible	for	the	plaintiff	to	perform	his	duties	under	his	employment	

contract.		In Hoffman-LaRoche,	Inc.	v.	Campbell,	512	So2d	725	(Ala.	1987),	the	

Alabama	supreme	court	upheld	a	jury	verdict	in	favor	of	the	plaintiff	for	breach	of	

the	duty	of	good	faith	and	fair	dealing.		The	plaintiff’s	employment	contract	provided	

that	an	employee	could	be	discharged	for	failure	to	meet	job	requirements,	and	

plaintiff	was	ostensibly	terminated	for	that	reason.	But because	the	defendant,	

knowing	plaintiff’s	physical	limitations,	gave	him	duties	that	were	impossible	to	

perform,	the	court	found	the	duty	of	good	faith	included	an	implied	or	constructive	

condition	precedent	[for	discharge]	unsatisfactory	performance,	i.e.	that	he	be	

physically	able	to	satisfactorily	perform.”		Id. at	738.			

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 7 of 16
8

according	to	reason	and	justice	the	parties	should	do	in	order	to	carry	out	the	

purpose	for	which	the	contract	was	made.”	Id.

Plaintiffs argue	that	they	have	sufficiently	alleged	a	breach	of	this	duty	with	

respect	to	the	following	specific	contractual	terms:

1. Defendants	as	the	secured	creditor	or	acting	on	its	behalf	under	the	mortgage	

loan	were	subject	to	particular	terms	of	the	mortgage	loan,	which	included	

proper	applications	of	Plaintiffs’	payments	under	Paragraph	3	of	the	

mortgage	loan.	.	.	.

2. Wells	Fargo,	based	on	additional	promises	made	to	Plaintiffs	that	the	loan	

would	be	deemed	current	after	showing	it	delinquent	and	initiating	

foreclosure,	“induced	Plaintiffs	not	to	resort”	to	legal	action	on	every	

occasion	“set	out	above	that	Defendants	promised	Plaintiffs that	Defendants	

would	no	longer	breach	the	above	contracts.

3. Plaintiffs	were	a	third	party	beneficiary	of	Wells	Fargo’s Servicing	contract	

with	Monument.	

(Pls.’	Br.	11.)

The	two	latter	arguments	can	easily	be	dismissed	because	neither	point	to	

any	contractual	provision	that	was	breached	by	Defendants’	alleged	bad	faith	

actions.		The	first	argument	does	identify	a	specific	contractual	provision,	but	it	is	

not	the	type	of	provision	to	which	the	duty	of	good	faith	and	fair	dealing	applies.			

Although	Plaintiffs	above	refer	to	“proper	applications	of	the	mortgage	payments,”	

the	contract	is	actually	very	specific	with	respect	to	the	allocation	of	mortgage	

payments.2		Proper	application	is	not	left	to	the	discretion	of	the	Defendants;	instead	

there	is	a	specific	order	“in	which	payments	on	the	loan	would	be	applied”	to	

principle,	interest,	escrow,	late	fees,	etc.		(Am.	Compl.	¶	6.)		Failure	to	properly	apply	

																																																							 2 According	to	the	Amended	Complaint,	the	mortgage	set	forth	the	specific	

order	in	which	payments	on	the	loan	would	be	applied	to	principle,	interest,	escrow,	

late	fees,	etc.		(Am.	Compl.	¶	6.)

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 8 of 16
9

payments	would	be	a	violation	of	a	specific	contractual	term,	not	a	violation	of	the	

duty	of	good	faith	and	fair	dealing.

In	sum,	the	Amended	Complaint	does	not	allege	facts	that	would	support	a	

cause	of	action	for	breach	of	the	duty	of	good	faith	and	fair	dealing	under	Alabama	

law.		Accordingly,	Plaintiffs’	claims	against	Well	Fargo	and	Monument	in	Count	Two	

of	the	Amended	Complaint	are	due	to	be	dismissed.

Breach	of	Fiduciary	Duty	(Count	Three)

Defendants	point	out	that	Alabama	law	generally	does	not	recognize	a	

fiduciary	relationship	between	a	lender	and	a	borrower or	a	mortgagor	and	a	

mortgagee.		See,	e.g., K	&	C	Dev.	Corp.	v.	AmSouth	Bank,	N.A., 597	So.	2d	671	(Ala.	

1992);		Nettles	v.	First	Nat.	Bank	of	Birmingham,	388	So.	2d	916	(Ala.	1980).		An	

exception	may	arise,	however,	“when	the	customer	reposes	trust	in	a	bank	and	

relies	on	the	bank	for	financial	advice,	or	in	other	special	circumstances.”		Baylor	v.	

Jordan, 445	So.	2d	254,	256	(Ala.	1984).		In	response,	Plaintiffs	argue	that	the	

Amended	Complaint	asserts	facts	giving	rise	to	a	“heightened,	special	relationship”	

between	Plaintiffs	and	Defendants	resulting	in	a	fiduciary	duty	on	Defendants’	part.		

However,	Plaintiffs	fail	to	point	out	what	those	facts	are.		Alternatively,	Plaintiffs	

argue	that	a	motion	to	dismiss	is	premature	because	“[e]vidence	of	the	special	

relationship	of	trust	will	be	heightened	beyond	the	current	factual	allegations	as	

discovery	unfolds.”		(Pls.’	Br.	12,	Doc.	27.)		

To	survive	a	motion	to	dismiss	“[f]actual	allegations	must	be	enough	to	raise	

a	right	to	relief	above	the	speculative	level.”		Bell	Atlantic Corp.	v.	Twombly,	550	U.S.	

544,	555,	127	S.	Ct.	1955,	1965,	167	L.	Ed.	2d	929	(2007)	(citing	5	C.	Wright	&	A.	

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 9 of 16
10

Miller,	Federal	Practice	and	Procedure	§	1216,	pp.	235–236	(3d	ed.2004)).		

Unspecified	allegations	and	the	hope	that	evidence	may	be	uncovered	in	discovery	

are	not	enough.		Plaintiffs’	breach	of	fiduciary	duty	claim	against	these	Defendants	is	

due	to	be	dismissed.

Tort	Claims—Negligence,	Wantonness	&	Fraud	(Counts	Four	through

Eight)

Defendants	lump	together	Plaintiffs’	claims	for	negligence,	wantonness,	

fraud,	promissory	fraud,	and	fraudulent	suppression/concealment	and	argue	that	all

are	due	to	be	dismissed	for	either	of two	reason.		First,	they	point	out	that	“Alabama	

law	does	not	recognize	a	tort-like	cause	of	action	for	the	breach	of a	duty	created	by	

contract.”		(Defs.’	Br. 3.) (2)	Alternatively,	even	if	this	principle does	not	apply,3 they	

argue	that	Plaintiffs	cannot	recover	for	tortious	conduct	in	the absence	of	physical	

injuries,	immediate	risk	of	physical	injury	or	property	damage.” (Id. 5.)	 The

persuasiveness	of	these	arguments	depends	upon	the	claim	or	claims	to	which	they	

are	directed.		

First,	the arguments	do	not	apply	at	all	to	Plaintiffs’	fraud-based	claims.		

These	claims	are	based	alleged	misrepresentations outside	the contract,	not	on	any	

contractual	duties	or	obligations.		Likewise,	Defendants’	absence-of-damages	

argument	holds	no	sway	with	respect	to	fraud	claims	because a	plaintiff	need	only	

prove	nominal	damages to	recover.		See,	e.g.,	Life	Ins.	Co.	of	Georgia	v.	Smith,	719	So.	

2d	797	(Ala.	1998); Wilson	v.	Draper,	406	So.	2d	429,	432-33	(Ala.	Civ.	App.	1981).

																																																							 3 Defendants	acknowledge	that	Wells	Fargo	was	not	a	party	to	the	contract	

from	which	the	duties	arose.

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 10 of 16
11

With	regard	to	the	negligence	claim,	the	principle upon	which	Defendants

rely	is that	“negligent	failure	to	perform	a	contract	.	.	.	is	but	a	breach	of	the	

contract.”		Vines	v.	Crescent	Transit	Co.,	264	Ala.	114,	119,	85	So.2d	436,	440	(1956).	

Thus,	it	is	true	that	Monument	cannot	be	held	liable	for	negligent	breach of	its	

contract	with	Plaintiffs,	but	Wells	Fargo	was	not	a	party	to that	contract.	 Alabama	

courts	have	held	that	“’[e]ven	when	a	third	party	is	not	in	privity	with	the	parties	to	

a	contract	and	is	not	a	third-party	beneficiary	to	the	contract,	the	third	party	may	

recover	in	negligence	for	breach	of	a	duty	imposed	by	that	contract	if	the	breaching	

party	negligently	performs	the	contract	with	knowledge	that	others	are	relying	on	

proper	performance	and	the	resulting	harm	is	reasonably	foreseeable.’”	Temploy,	

Inc.	v.	Nat'l	Council	on	Comp.	Ins.,	650	F.	Supp.	2d	1145,	1153	(S.D.	Ala.	2009)	

(quoting	QORE,	Inc.	v.	Bradford	Bldg.	Co.,	Inc.,	25	So.	3d	1116,	1124	(Ala.	2009)). 		

Nevertheless,	Plaintiffs	have	failed	to	state	a	negligence	claim	against	either	

Defendant	because there	can	be	no	recovery	for	negligence	under	Alabama	law	

absent	physical	injury,	an	immediate	risk	of	physical	injury, or property	damage.		

See Wallace	v.	SunTrust	Mortg.,	Inc.,	974	F.Supp.	2d	1358,	1369-70	(S.D.	Ala.	2013)	

(and	cases	cited	therein).	Physical	injury,	as	defined	by	Black’s	Law	Dictionary	is	

“physical	damage	to	a	person’s body.”		Black’s	Law	Dictionary	p.	906	(10th	ed.	

2009).		Plaintiffs’	allegations	of		“physical	distress”	and	“physical	discomfort”	are	

insufficient.	

Wantonness	is	a separate	and	distinct	creature	from	negligence.		See	Ex	Parte	

Capstone	Bldg	Corp.,	96	So.	3d	77,	85	(Ala.	2012)	(“’[w]antonness	is	not	merely	a	

higher	degree	of	culpability	than	negligence’”).		 Physical	injury	is	not	a	prerequisite	

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 11 of 16
12

for	recovery.		Brown	v.	First	Fed.	Bank,	95	So.3d	803,	818	(Ala.	2012).		 However,	

wantonness	(like	negligence)	is	not	an	alternative	theory	of	recovery	for	breach	of	

contract	between	two	contracting	parties.	 See,	e.g.,	Blake	v	Bank	of	North	America,	

845	F.Supp.	2d	1206,	1210	(M.D.	Ala.	2012)	(dismissing	negligence	and	wantonness	

claims	because	“Alabama	does	not	recognize	a	tort-like	cause	of	action	for	breach	of	

a	duty	created	by	contract”).		Consequently, Plaintiffs’ wantonness	claim	against	

Wells	Fargo	survives,	but	their	wantonness	claim	against	Monument	does	not.

Unconscionability	(Count	Nine)

Although	Defendants’ motion	to	dismiss	includes Count	Nine	as	one	of	the	

counts	due	to	be	dismissed,	neither	the	motion	to	dismiss	nor	the	supporting	brief	

asserts	any	grounds	for	dismissal.		For	that	reason,	the	motion	is	denied.

Unjust	Enrichment	(Count	Ten)

Defendants	seek	dismissal	of	Plaintiffs’	unjust	enrichment	claim “due	to	the	

existence	of	a	valid	contract.”		(Defs.’	Br.	9,	Doc.	25.) “[U]njust	enrichment	is	an	

equitable	remedy	only	to	be	invoked	when	there	is	no	available	remedy	at	law.”		

Northern	Assur.	Co.	of	Am. v.	Bayside	Marine	Constr.,	Inc.,	2009	WL	151023	(S.D.	Ala.	

Jan.	21,	2009);	see	also	American	Family	Care,	Inc.	v.	Irwin,	571	So.2d	1053,	1061	

(Ala.	1990)	(“Equity	is	a	system	of	remedies	that	evolved	to	redress	wrongs	that	

were	not	recognized by	or	adequately	righted	by	the	common	law.”)		Thus,	it	is	true	

that	breach	of	contract	and	unjust	enrichment are mutually	exclusive	when	both	

claims	are	based	on	the	same	set	of	facts.		See	White	v.	Microsoft	Corp,	454 F.Supp.2d	

1118,	1133-34	(S.D.	Ala.	2006)	(granting	summary	judgment	on	unjust	enrichment	

claim	where	plaintiff	also	sought	recovery	on	express	warranty).	 And	if	the	

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 12 of 16
13

existence	of	the	contract	is	undisputed,	then	there	is	no	reason	for	the	unjust	

enrichment	claim	to	proceed.		Id.		However,	if	the	existence	of	an	express	contract	is	

disputed,	then	the	two	claims	may	coexist	as	alternative	theories	of	recovery.		See	

Kennedy	v.	Polar-BEK	Baker	Wildwood	P’ship,	682	So.2d	443	(Ala.	1996)	(trial	court	

properly	submitted	alternative	theories	of	breach	of	contract	and	implied	contract	

to	jury).	

The	Amended	Complaint	refers	to	“contracts” that	were	“accepted	by	one	or	

more	Defendants,”	but there	is	no undisputed	express	contract	involving	either	of	

these	Defendants other	than	the	mortgage	loan	agreement.		And,	as	far	as	the	Court	

can	determine,	only	Monument	is	alleged	to	be	a	party	to	that	contract.		Therefore,	

to	the	extent	the	unjust	enrichment	claim	and	the	breach	the	mortgage	loan	

agreement	claims	overlap,	the	unjust	enrichment	claim	against	Monument	is	due	to	

be	dismissed.		In	all	other	respects,	Defendants’	motion	to	dismiss	the	unjust	

enrichment	claim	is	denied.

RESPA	Claims (Counts	Thirteen	through	Fifteen	&	Eighteen)

The	First	Amended	Complaint	asserts	several	claims	under	the	Real	Estate	

Settlement	Procedures	Act		(RESPA),	12	U.S.C.	§	2601	et	seq.,	as	amended	by	Pub.L.	

11-203,	125	Stat.	1376	(the	Dodd-Frank	Wall	Street	Reform	and	Consumer	Act	or	

“Dodd-Frank”).		Defendants	raise	two	arguments,	the	first	of	which	is	not	disputed.		

Defendants point	out	that	claims	arising	more	than	three	years	prior	to	the	filing	of	

this	action	are	time-barred	under	RESPA’s	three-year	statute	of	limitations,	12	U.S.C.	

§	2614.		Plaintiffs	agree that	they	cannot	recover	for	acts	that	occurred	prior	to	July	

3,	2011.

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 13 of 16
14

Defendants’ second	argument	relates	only	to	Counts	Thirteen and	Eighteen.		

Both	of	those	counts,	Defendants	contend,	are	based	on	non-retroactive	

amendments	to	RESPA--§	2605(k)	and	(l)--that	were	not	in	effect	at	the	time	of	the	

events	on	which	the	claims	are	based.		Before	reaching	that	issue,	the	Court	must	

address	an	additional	hurdle,	to-wit,	Count	Thirteen	specifically	alleges	a	violation	

of §	2605(g),	which	was	in	effect	during	the	relevant	time	period.		Nevertheless,	

Defendants	argue,	and	the	Court	agrees, that the	claim	is	not	what	it	purports	to	be.		

The	caption	to	Count	Thirteen	describes	it	as	“RESPA—Failure	to	Make	Timely	

Payments	from	Escrow” which	would	be	a	violation	of	§	2605(g),	if	facts	were	

alleged	to	support	that	claim.

4		However,	the	gravamen	Plaintiffs’	claim	in	Count	

Thirteen	is	that	“Wells	Fargo	purchased	force-placed	hazard	insurance”	even	though	

“Plaintiffs	provided	proof	.	.	of	such	hazard	insurance”	during	the	relevant	time	

periods.		(Am.	Compl.	¶	65.)		This	claim	is	governed	by	§ 2605(k)	and	(l),	Plaintiffs’	

labels	notwithstanding.			Subsection	(k)(1)	prohibits	a	loan	service	provider	from,	

among	other	things,	obtaining	force-placed	hazard	insurance	“unless	there	is	a	

reasonable	basis	to	believe	that	the	borrower	has	[failed	to	do	so].”		12	U.S.C.	§	

2605(k)(1)(A).		Subsection (l)	defines	the	requirements	that	must	be	met	before	a	

loan	service	provider	can	have	a	“reasonable	basis”	for	that	belief.		Thus,	Count	

Thirteen asserts	a	claim	under	§	2605(k)	and	(l)	and	does	not	assert	a	claim	under	§	

2605(k).		Count	Eighteen	does	not	invoke	a	specific	subsection	of	§	2605,	but	

																																																							 4 That	subsection	provides:	“If	the	terms	of	any	federally	related	mortgage	

loan	require	the	borrower	to	make	payments	to	the	servicer	of	the loan	for	deposit	

into	an	escrow	account	for	the	purpose	of	assuring	payment	of	taxes,	insurance	

premiums,	and	other	charges	with	respect	to	the	property,	the	servicer	shall	make	

payments	from	the	escrow	account	for	such	taxes,	insurance	premiums,	and	other	

charges	in	a	timely	manner	as	such	payments	become	due.”	12	U.S.C.	§	2605(g).

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 14 of 16
15

Plaintiffs	do	not	contest	Defendants’	characterization	of	Count	Eighteen	as	a	claim	

under	§	2605(k)(1)(E)	of	RESPA.5

Because Counts Thirteen and	Eighteen	allege	violations	of	subsections	(k)	

and/or	(l)	of	section	2605,	the Court	must	decide	whether	the	events	described	took	

place	after	those	subsections became	effective.	 Subsections	k,	l,	and	m	§	2605	were	

added	as	part	of	the	“Mortgage	Reform	and	Anti-Predatory	Lending	Act,”	(Title	XIV	

of	Dodd-Frank)	and	became	effective	January	10,	2014.	Berneike	v.	CitiMortgage,	

Inc.,	708	F.3d	1141, 1146	(10th Cir.	2013).	6		The	acts	giving	rise to	the	claims	in	

Counts	Thirteen and	Eighteen	took	place	prior	to	that	date.

In	summary,	Counts	Thirteen	and	Eighteen	are	due	to	be	dismissed	in	their	

entirety.		Furthermore,	events	alleged	in	Counts	Fourteen	and	Fifteen	that	occurred	

																																																							 5 That	subsection	makes	it	unlawful	for	a	loan	service	provider	to	“fail	to	

comply	with	any	other	obligation	found	by	the	Bureau	of	Consumer	Financial	

Protection,	by	regulation,	to	be	appropriate	to	carry	out	the	consumer	protection	

purposes	of	this	chapter.		12	U.S.C.	§	2605(k)(1)(E).		Count	Eighteen	asserts	that	the	

Defendants	violated	Regulation	X	implemented	by	the	Consumer	Finance	Protection	

Board	under	the	authority	delegated	by	RESPA.

6 Finding	the	effective	date	of	these	particular	amendments	is	not	an	easy	

feat	and	requires	careful	sifting	through	the	applicable	legislation	and	regulations.		

First,	the	Mortgage	Reform	and	Predatory	Lending	Act,	has	its	own	effective	date

found	in	Section	1400	of	Dodd-Frank	(unhelpfully	entitled	“Short	Title	Designations	

as	Enumerated	Consumer	Law”).		But	one	date	does	not	apply	to	all.		Instead,	

Section	1400(c)	states	“’a	section,	or	provision	thereof,	of	this	title	shall	take	effect	

on	the	date	on	which	the	final	regulations	implementing	such	section,	or	provision,	

take	effect”	or,	if	no	regulations	have	been	issued,	“on	the	date	that	is	18	months	

after	the	designated	transfer	date.”	Pub.L.	111–203	§§	1400(c),	1463,	124	Stat.	

1376,	2183–84.		The	“transfer	date”	is July	21,	2011.		Berneike 708	F.3d	1146	n.	3.	

The	effective	date	would	be	January	21,	2013,	unless	a	final	regulation	was	issued	

before	the	date.		In	this	case,	it	was.		On	January	17,	2013,	the	Consumer	Finance	

Protection	Bureau	issued	a	final	rule	implementing	the	Dodd–Frank	amendments	to	

RESPA	and	amending	Regulation	X,	with	an	effective	date	of	January	10,	2014.		See

78	Fed.	Register	10696-01	Part	I	(E).

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 15 of 16
16

prior	to July	3,	2011	are	barred	by	the	statute	of	limitations	and	are due	to	be	

dismissed.

Conclusion

For	the	reasons	set	forth	above,	the	motion	to	dismiss	is	granted in	part	in	

part	as	follows:

Counts	Two,	Three,	Four,	Thirteen	and	Eighteen are	dismissed in	their	

entirety;

Count	Five is	dismissed only	as	to	Monument;

Count	Ten	is	dismissed,	in	part;

Counts	Fourteen	and	Fifteen are	dismissed,	in	part.

As	to	all	other	issues	raised,	the	motion	to	dismiss	is	denied.

DONE and	ORDERED this	the	17th day	of	November,	2014.

s/Charles	R.	Butler,	Jr.

Senior	United	States	District	Judge

Case 1:14-cv-00275-WS-M Document 34 Filed 11/17/14 Page 16 of 16