UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

HAMMOND DIVISION

DONALD STENDER and )

DIANE STENDER, )

)

Plaintiffs, )

)

v. ) No. 2:12 CV 41

)

BAC HOME LOANS SERVICING LP, and )

BANK OF AMERICA NA, )

)

Defendants. )

OPINION and ORDER

I. BACKGROUND

Plaintiffs Donald and Diane Stender allege that they mortgaged two properties,

referred to in this opinion as the “Lowell property” and the “Monell property,” in April

of 2007. (Compl. at 1, 3.) Though it is not clear from the pleadings who originated the 1

loans, at some point defendant BAC Home Loans Servicing LP (“BAC”) acquired them.

According to defendants’ answer, BAC and Bank of America NA (“BANA”) merged in

2011, and are now known simply as BANA. (Ans. ¶ 2.) It is undisputed that at some

point, plaintiffs defaulted on the mortgages.

Plaintiffs claim that in December of 2009 and February of 2010, plaintiffs sought

loan modification agreements for the Monee and Lowell properties, respectively.

 A copy of the Monee mortgage submitted by defendants suggests that the 1

Monee property was originally mortgaged in 2006 (DE # 16-2 at 1), but this discrepancy

has no effect on the present motion.
(Compl. at 1, 3.) Plaintiffs allege that they timely accepted the modification agreements

and completed all the steps required of them. (Id.) They further allege that at least with

respect to the Lowell property, they made monthly payments in accordance with the

modification agreement. (Id. at 2.) Plaintiffs claim that defendants, who now service the

mortgages, refuse to honor the modification agreements. (Id. at 2, 3.)

Plaintiffs sued for damages, claiming breach of each of the loan modification

contracts (Counts I and II), negligence (Count III), negligent and/or intentional

infliction of emotional distress (Count IV), and violation of the Fair Debt Collection

Practices Act (“FDCPA”) (Count V). (DE # 1.) Defendants answered (DE # 13), and have

now moved for judgment on the pleadings on all counts (DE # 16.) Plaintiffs responded,

conceding that their negligent infliction of emotional distress claim should be

dismissed, but opposing defendants’ motion as to the remaining claims. (DE # 18.)

Defendants have replied (DE # 20), and the motion is now ripe for ruling.

II. LEGAL STANDARD

In reviewing a motion for judgment on the pleadings pursuant to FEDERAL RULE

OF CIVIL PROCEDURE 12(c), the court applies the same standard that is applied when

reviewing a motion to dismiss pursuant to RULE 12(b)(6). Pisciotta v. Old Nat’l Bancorp.,

499 F.3d 629, 633 (7th Cir. 2007). That means that the court “take[s] the facts alleged in

the complaint as true, drawing all reasonable inferences in favor of the plaintiff.” Id. The

complaint must contain only “a short and plain statement of the claim showing that the

pleader is entitled to relief.” RULE 8(a)(2). While there is no need for detailed factual

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allegations, the complaint must “give the defendant fair notice of what the . . . claim is

and the grounds upon which it rests.” Pisciotta, 499 F.3d at 633 (citation omitted).

Factual allegations also must be enough to raise a right to relief above the “speculative

level” to the level of “plausible.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 570

(2007); Ashcroft v. Iqbal, 129 S. Ct. 1937 (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.” Iqbal, 129 S. Ct. at 1949. In

examining the facts and matching them up with the stated legal claims, the court must

give “the plaintiff the benefit of imagination, so long as the hypotheses are consistent

with the complaint.” Sanjuan v. Am. Bd. of Psych. & Neur., Inc., 40 F.3d 247, 251 (7th Cir.

1994).

III. DISCUSSION

A. Breach of Contract

The dispute regarding plaintiffs’ contract claims (Counts I and II) revolves

around Indiana’s statute of frauds. The statute requires a contract involving the sale of

real estate to be in writing and signed by “the party against whom the action is

brought.” IND. CODE § 32–21–1–1(b). A document modifying a mortgage is such a

contract. Woodall v. Citizens Banking Co., 507 N.E.2d 999, 1000 (Ind. Ct. App. 1987). In a

proceeding for enforcement of the document, only the “party against whom the action

is brought” needs to have signed it. Grabill Cabinet Co., Inc. v. Sullivan, 919 N.E.2d 1162,

1166-67 (Ind. Ct. App. 2010); see also Graham v. Henderson Elevator Co., 111 N.E. 332, 335

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(Ind. Ct. App. 1916) (“‘The party to be charged,’ under the statute of frauds, means the

defendant to the action. The memorandum must be signed by him but need not

necessarily be signed by the plaintiff in the suit.”). According to defendants, the loan

modification is signed by plaintiffs, only, suggesting that there was no meeting of the

minds and meaning that, under the statute of frauds, it cannot be enforced by plaintiffs

against defendants. 

Plaintiffs do not dispute the fact that defendants did not sign the loan

modification agreement, but they allege that a signed cover letter, which accompanied

the modification offer at least as to the Lowell residence, satisfies the signature

requirement of the statute of frauds. Defendants argue that the court cannot even

consider the possibility of cover letters, because plaintiffs did not allege any facts

regarding their existence in their complaint.

Defendant’s argument is incorrect for two reasons. First, it is entirely appropriate

for plaintiffs to articulate facts in their response to a motion like defendants’ to support

their argument that their contract claim should not be dismissed. Reynolds v. CB Sports

Bar, Inc., 623 F.3d 1143, 1147 (7th Cir. 2010) (nothing precludes plaintiff from suggesting

to the court a set of facts, consistent with the well-pleaded complaint, that shows that

the complaint should not be dismissed).; Milazzo v. O’Connell, 925 F. Supp. 1331, 1340

(N.D. Ill. 1996) (“Milazzo’s complaint adequately describes her procedural due process

claim, and she is not forbidden from alleging new facts, or even new legal theories

about that claim, in her response brief.”).

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Second, the statute of frauds is an affirmative defense. Oedekerk v. Muncie Gear

Works, 179 F.2d 821, 824 (7th Cir. 1950) (interpreting Indiana law). “[C]omplaints need

not anticipate and attempt to plead around defenses.” United States v. N. Trust Co., 372

F.3d 886, 888 (7th Cir. 2004). True, “[a] litigant may plead itself out of court by alleging

(and thus admitting) the ingredients of a defense,” U.S. Gypsum Co. v. Ind. Gas Co., Inc.,

350 F.3d 623, 626 (7th Cir. 2003), but a plaintiff’s omission of facts from her complaint

which would ultimately defeat an affirmative defense does not justify dismissal. Id.;

Hollander v. Brown, 457 F.3d 688, 691 n.1 (7th Cir. 2006). Accordingly, it is not fatal to

plaintiffs’ complaint that it does not contain facts regarding the precise method by

which the signature requirement of the statute of frauds was satisfied. Plaintiffs were

not required to plead such facts, and their omission is not grounds for dismissal.

Interestingly, at least one other court has concluded that a cover letter defendant

BAC sent along with a loan modification offer satisfied the signature requirement of the

statute of frauds. See, e.g., White v. BAC Home Loan Serv., No. 10–cv–0119, 2011 WL

4479299, at *8 (N.D. Ga. Sept. 26, 2011) (Georgia law). But at this stage of the litigation, it

really makes no difference whether the court considers the alleged existence of cover

letters or not. What matters is whether, under Indiana law, the signature requirement of

the statute of frauds must be satisfied with a pen-and-ink signature at the end of a

contract. If it must, then defendants are correct that the lack of such a signature on the

loan modification documents in this case damns plaintiffs’ contract claims. But if the

signature requirement can be satisfied in other ways, then defendants’ argument fails.

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“The [Indiana statute of frauds] is designed to preclude fraudulent claims which

would probably arise when one person’s word is pitted against another’s.” Hrezo v. City

of Lawrenceburg, 934 N.E.2d 1221, 1227 (Ind. Ct. App. 2010). To satisfy the statute, an

enforceable contract for the sale of land must be evidenced by some “writing”: (1)

which has been signed by the party against whom the contract is to be enforced or his

authorized agent; (2) which describes with reasonable certainty each party and the land;

and (3) which states with reasonable certainty the terms and conditions of the promises

and by whom and to whom the promises were made. Id. 

The “writing” need not be the contract itself; for example, the terms of a contract

can be extracted from written communications between two parties. Highland Inv. Co. v.

Kirk Co., 184 N.E. 308 (Ind. Ct. App. 1933) (contract to dispose of property by will

discerned from letters and telegrams). Of course, the aforementioned Hezro

requirements must still be met. Thus, when a series of communications fails to

sufficiently provide the terms and conditions of the contract, the statute of frauds is not

satisfied. Mason Produce Co. v. Harry C. Gilbert Co., 141 N.E. 613 (Ind. 1923) (series of

telegrams omitting number of pounds to be sold and the sellers name did not satisfy

statute of frauds because essential parts of a contract of sale were missing).

Under Indiana law, the contract must also be “signed,” but the signature can

come in several forms. For example, use of the drafter’s own name in the title of the

document can satisfy the signature requirement. Thrift Trust Co. v. White, 167 N.E. 141

(Ind. Ct. App. 1929) (deceased use of her own name in title of document, “The Will of

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Belle Stockman,” was sufficient to satisfy signature requirement of statute of frauds).

Additionally, a company logo can constitute a signature, depending on the intent of the

drafter. Owen v. Kroger Co, 936 F. Supp. 579, 583-84 (S.D. Ind. 1996) (interpreting

signature requirement of Indiana U.C.C. statute of frauds). Further, an admission by the

party to be charged can satisfy the signature requirement. Consol. Servs. Inc. v. KeyBank

Nat’l Ass’n, 185 F.3d 817, 820 (7th Cir. 1999) (interpreting Indiana law).

In short, there are a number of ways by which a “memorandum” memorializing

a contract can be formed under the statute of frauds, and a number of ways by which

the statute’s signature requirement can be satisfied other than a pen-and-ink signature

at the end of the document. Defendants have pointed out that they did not physically

sign the end of the loan modification document like plaintiffs did, but that is all. They

have not demonstrated that the signature requirement has not been satisfied, as is their

burden on an affirmative defense. See Laouini v. CLM Freight Lines, Inc., 586 F.3d 473, 475

(7th Cir. 2009). Accordingly, plantiffs’ contract claims survive this stage of the litigation.

B. Negligence

Plaintiffs have also sued for negligence (Count III), claiming that defendants

negligently failed to comply with the terms of the loan modification agreements.

Defendants argue that the claim is barred by the economic loss doctrine.

The economic loss doctrine precludes tort liability for purely economic loss—that

is, pecuniary loss unaccompanied by any property damage or personal injury.

Indianapolis-Marion County Pub. Library v. Charlier Clark & Linard, P.C., 929 N.E.2d 722,

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727 (Ind. 2010). In the context of contract disputes, the doctrine has been phrased as

requiring that where a contract exists, the contract is the only available remedy

(provided that the loss is solely economic in nature and there is an absence of damage

to other property or persons). Thalheimer v. Halum, 973 N.E.2d 1145, 1151 (Ind. Ct. App.

2012). However, the economic loss doctrine prohibits tort liability for pure economic

loss whether or not the parties are technically in privity of contract. Indianapolis-Marion

County, 929 N.E.2d at 736.

Plaintiffs argue that their alleged losses are not purely economic, because in

addition to pecuniary losses, they also suffered injuries to their credit score and

reputations. However, Indiana law appears to reject the concept of intangible harm as

justifying recovery through a claim of negligence. In Bamberger & Feibleman v.

Indianapolis Power & Light Co., 665 N.E.2d 933 (Ind. Ct. App. 1996), the Indiana Court of

Appeals rejected the plaintiffs’ argument that harm to their intangible interest in the

practice of law was tantamount to physical harm to property, and thus exempt from the

economic loss doctrine. Id. at 939. The court reasoned that “[n]egligence theory protects

interests related to safety or freedom from physical harm. This includes not only

personal injury but damage caused by defective personal property. However, when

there is no accident and no physical harm so that the only loss is pecuniary in nature,

courts have denied recovery under the rule that purely economic interests are not

entitled to protection against mere negligence.” Id. at 938.

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Given Bamberger, this court must reject plaintiffs’ argument that intangible

alleged harms such as injuries to their credit score and reputations can be remedied

with a claim for negligence. Because plaintiffs’ claims are purely economic in nature,

plaintiffs’ negligence claim is barred by the economic loss doctrine, and must be

dismissed.

C. Intentional Infliction of Emotional Distress

Plaintiffs also claim intentional infliction of emotional distress (“IIED”) (Count

IV). To establish the tort of IIED under Indiana law, a plaintiff must show that the

defendant (1) engaged in extreme and outrageous conduct, (2) that intentionally or

recklessly, (3) caused, (4) severe emotional distress to another. Doe v. Methodist Hosp.,

690 N.E.2d 681, 691 (Ind. 1997). Defendants argue that plaintiffs have not alleged

sufficiently extreme and outrageous conduct, nor have they plausibly alleged that

defendants intended to cause plaintiffs emotional harm.

This court agrees. Historically, Indiana courts have not permitted IIED claims

based on contractual or economic harm, finding the conduct insufficiently extreme and

outrageous to justify the tort as a matter of law. Comfax v. N. Am. Van Lines, Inc., 587

N.E.2d 118, 127 (Ind. Ct. App. 1992) (economic loss not sufficiently serious in nature to

justify IIED claim); Mehling v. Dubois County Farm Bur. Coop. Ass’n, 601 N.E.2d 5, 9 (Ind.

Ct. App. 1992) (IIED unavailable in breach of contract case); McCreary v. Libbey

–Owens–Ford Co., 132 F.3d 1159, 1167 (7th Cir. 1997) ( “Indiana courts have been

reluctant to award damages for intentional infliction of emotional distress in

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employment cases.”). This court similarly declines to permit an IIED claim based on

contractual and/or economic harm, such as that alleged by plaintiffs.

Further, plaintiffs are unable to establish that their IIED claim is plausible

enough to satisfy RULE 8. “The intent to harm emotionally constitutes the basis for the

tort of an intentional infliction of emotional distress.” Ledbetter v. Ross, 725 N.E.2d 120,

124 (Ind. Ct. App. 2000). In other words, intent is a necessary element of the tort. See id.;

Cullison v. Medley, 570 N.E.2d 27, 31 (Ind. 1991). The plausibility standard applies even

to allegations regarding states of mind, like intent. Iqbal, 129 S. Ct. at 1952. Plaintiffs

allegations – that defendants lured them into signing loan modification agreements but

now refuse to honor them – suggest that perhaps defendants are dishonest and acted

with selfish economic motivation. But plaintiffs’ allegations do not permit any plausible

inference that defendants’ intention was to harm plaintiffs emotionally. Accordingly,

plaintiffs’ IIED claim is dismissed.

D. Fair Debt Collection Practices Act

Plaintiffs’ final claim is that defendants violated the FDCPA (Count V).

Defendants present two arguments for the dismissal of this claim. Defendants’ first

argument is that plaintiffs’ FDCPA allegations lack plausibility generally. The court

disagrees. Plaintiffs allege that defendants have refused to honor a valid loan

modification contract, and as a result have attempted to collect amounts in violation of

the statute. (Compl. at 5.) Plaintiffs further propose in their response brief, as they are

permitted to do, Reynolds, 623 F.3d at 1147, that defendants have attempted to collect

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late fees and interest above and beyond what is allowed pursuant to what plaintiffs

claim are valid loan modification agreements. These allegations are sufficient to put

defendants on notice of a plausible claim under the FDCPA. See 15 U.S.C.A. § 1692f

(prohibiting “[t]he collection of any amount (including any interest, fee, charge, or

expense incidental to the principal obligation) unless such amount is expressly

authorized by the agreement creating the debt or permitted by law”). 

Defendants’ second argument is that the current mortgage servicer, BANA, is a

“creditor,” not a “debt collector,” under the FDCPA, thus exempting it from the

statute’s provisions. Plaintiffs retort that because BANA did not originate the loan, only

later acquired it, it should be classified as a “debt collector,” not a “creditor.” Neither

party disputes that the loans did not originate with BANA but were at one point

assigned to BANA; the parties simply dispute the legal significance of this assignment.

The FDCPA distinguishes between “debt collectors” and “creditors.” Creditors,

“who generally are restrained by the desire to protect their good will when collecting

past due accounts,” S. Rep. 95–382, at 2 (1977), reprinted in 1977 U.S.C.C.A.N. 1695,

1696, are not covered by the statute. Instead, the FDCPA is aimed at debt collectors,

who may have “no future contact with the consumer and often are unconcerned with

the consumer’s opinion of them.” See id.

As the Seventh Circuit Court of Appeals has explained, “[f]or purposes of

applying the [FDCPA] to a particular debt, these two categories—debt collectors and

creditors—are mutually exclusive.” Schlosser v. Fairbanks Capital Corp., 323 F.3d 534, 536

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(7th Cir. 2003). “However, for debts that do not originate with the one attempting

collection, but are acquired from another, the collection activity related to that debt

could logically fall into either category. If the one who acquired the debt continues to

service it, it is acting much like the original creditor that created the debt. On the other

hand, if it simply acquires the debt for collection, it is acting more like a debt collector.”

Id. In order to distinguish between these two categories, the FDCPA uses the status of

the debt at the time of the assignment:

(6) The term “debt collector” means any person who . . . regularly collects or

attempts to collect, directly orindirectly, debts owed or due or asserted to be

owed or due another. . . . The term does not include—

(F) any person collecting or attempting to collect any debt owed or due or

asserted to be owed or due another to the extent such activity . . . (iii)

concerns a debt which was not in default at the time it was obtained by such

person.

15 U.S.C. § 1692a. “In other words, the Act treats assignees as debt collectors if the debt

sought to be collected was in default when acquired by the assignee, and as creditors if

it was not.” Schlosser, 323 F.3d at 536; see also S. Rep. 95–382, 95th Cong. 1st Session 4,

reprinted in 1977 U.S.C.C.A.N. 1695, 1698 (1977) (“[T]he committee does not intend the

definition [of debt collector] to cover . . . mortgage service companies and others who

service outstanding debts for others, so long as the debts were not in default when

taken for servicing[.]”).

Of critical importance to this determination is precisely when each of plaintiffs’

mortgages went into default and when the assignment of the mortgages to defendants

occurred. Plaintiffs did not allege these facts in their complaint, but this omission is not

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fatal. As explained above, “once the plaintiff pleads sufficient factual material to state a

plausible claim – that is, sufficient to put the defendant on notice of a plausible claim

against it, nothing in Iqbal or Twombly precludes the plaintiff from later suggesting to

the court a set of facts, consistent with the well-pleaded complaint, that shows that the

complaint should not be dismissed.” Reynolds, 623 F.3d at 1147. As this court has

already stated, plaintiffs have pleaded a plausible FDCPA claim. Further, plaintiffs

hypothesized in their response brief that their debts could have been in default when

defendants acquired the mortgages. The court is to give “the plaintiff the benefit of

imagination, so long as the hypotheses are consistent with the complaint.” Sanjuan, 40

F.3d at 251. Thus, the question is whether plaintiffs’ hypothesis that plaintiffs were in

default on their mortgages when the mortgages were assigned to defendants is

consistent with the complaint’s allegations.

In a somewhat half-hearted attempt to prevail on this issue, defendants have

submitted a document entitled an “Assignment of Mortgage,” showing that the Lowell

property (only) was assigned to BAC in 2011. (DE # 16-6.) The court could consider this

document upon converting the present motion into one for summary judgment. FED. R.

CIV. P. 12(d) (requiring court to convert RULE 12(c) motion into RULE 56 motion if

matters outside the pleadings are presented to and not excluded by the court).

However, such a conversion is unnecessary, as this document proves nothing without

additional evidence of the dates of default (not to mention evidence regarding

assignment of the Monee mortgage).

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In any event, plaintiffs allege in their complaint that they sought loan

modifications in 2009 and 2010. It is entirely consistent with these allegations for

plaintiffs to suggest that they had done so because by that point they had defaulted on

their mortgages. This would have occurred before 2011, when defendants suggest the

Lowell property was assigned to them. If plaintiffs’ hypothesis proves correct, and they

were in default before the mortgages were assigned to defendants, then defendants

would qualify as “debt collectors.” Put simply, at this time, a set of facts consistent with

the plausible allegations of the complaint could establish that defendants were “debt

collectors” under the FDCPA, so the court cannot dismiss plaintiffs’ FDCPA claim

based on defendants’ argument.

IV. CONCLUSION

For the foregoing reasons, defendants motion for judgment on the pleadings is

GRANTED as to counts III and IV, and DENIED as to Counts I, II, and V. (DE # 16.)

SO ORDERED.

Date: March 6, 2013

s/James T. Moody 

JUDGE JAMES T. MOODY

UNITED STATES DISTRICT COURT

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