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.

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CIVIL!ACTION!NO.

14D00275DCBDM

ORDER

This!matter!is!before!the!Court!on!a!Motion!to!Dismiss!the!Second!Amended!

Complaint!filed!by!defendant Barclays!Capital!Real!Estate,!Inc. (Barclays), Plaintiffs’

response,!and!Defendant’s reply.!!(Docs.!82,!92,!&!97.)!!After!due!consideration!of!all!

issues,!the!Court!finds!the!motion!is!due!to!be!granted,!in!part,!and!denied,!in!part.

I.##Procedural#Background

In!October!and!November!2014,!the!Court!entered!an!order!(Doc.!31)!as!

amended!(Doc.!35)!granting,!in!part,!and!denying,!in!part,!this!Defendant’s!motion!to!

dismiss!the!First!Amended!Complaint!(FAC).! Most!counts!against!Barclays!were!

dismissed!(e.g.,!fraudulent!suppression!or!concealment,!unconscionability).!!

Plaintiffs’!breach!of!contract!claim!survived!(except!insofar!as!Plaintiffs’!relied!on!a!

thirdDparty!beneficiary!theory) as!did!their!unjust!enrichment!claim.!!Because!

Barclays’!motion!to!dismiss misinterpreted!Plaintiffs’ claim!for!breach!of!breach!of!

the!duty of!good!faith!and!fair!dealing,!that!claim!also!survived. After!some!

discovery,!the!Magistrate!Judge!stayed!this!action!and!held!a!settlement!conference.!!

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The!case!did!not!settle,!and!a!new!deadline!for!amending!pleadings!was!set.!!

Plaintiffs!filed!a!motion!for!leave to!file!a!Second!Amended!Complaint (SAC).!!(Doc.!

68.)!!The!motion!for!leave!to!amend!was!granted!without!objection.!!(Doc.!73.)!!The!

most!recent!complaint,!like!the!previous!one,!is!based!on!events!related!to!the!

servicing!of!the!Shedds’!mortgage!by!the!Defendants!and!contains!substantially!the!

same!causes!of!action,!including!those!that!were!dismissed.1!!!

II.##The#Second#Amended#Complaint

The!SAC!provides!greater!factual!detail!than!the!FAC!but!does!not!alter!the!

basic!outline!of!events!giving!rise!to!Plaintiffs’!causes!of!action,!with!one!exception.!!

The!FAC!alleged!that!both!George!Shedd!and!Pamela!Shedd!signed!the!promissory!

note!that!is!the!basis!of!this!action.!!The!SAC,!however, alleges!that!only!Pamela!

Shedd!signed!the!promissory!note,!although both!George!Shedd!and!Pamela!Shedd!

signed!the!mortgage!on!the!family!residence!that!secured!the!promissory!note.!!

Those!documents!were!executed!in!2001.!

Defendant!Barclays!initially!serviced!the!loan!and!continued!to!do!so!after!it!

was!assigned!to!Monument!Street!Financing II,!LLC!(Monument).!!Loan!payments!

fell!behind,!and!in!2008!the!Shedds!filed!a!Chapter!11!bankruptcy!petition!in!this!

district.!!Barclays,!the!loan!servicer,!represented!to!the!bankruptcy!court!that!it!was!

the!creditor!and!sought!a!relief!from!the!automatic!stay.!!On!April!25,!2008,!the!

bankruptcy!court!entered!an!order!finding!the!parties!had!entered!into!an!adequate!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1The!primary!distinction!between!the!two!complaints!is!length.!!The!FAC!was!

65!pages!(including!“only”!20!pages!of!facts).!!The!SAC!is!151!pages!(including!70!

pages!of!facts).!!The!problems!caused!by!this!inflated!pleading!was!discussed!with!

the!parties!in!a!conference!call,!and!the!Court!has!fashioned!a!remedy!that!will!

permit!Defendants!to!file!an!answer!without!having!to!address!each!factual!

allegation!in!the SAC.!(Doc.!102.)

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protection!agreement!that required!the!Shedds!to!pay!their!regular!mortgage!

payment!plus!an!additional!$306.62!monthly!beginning!with!the!April!2008!

payment.!!Subsequently,!the!bankruptcy!court!confirmed!the!reorganization!plan,!

which!required!the!Shedds!to!pay!the!additional!$306.62!for!60!months!to!satisfy!in!

full!a!preDpetition!arrearage!of!$16,500.

Barclays!used!a!software!package!from!a!third!party!vendor that!was!not!

equipped!to!handle!bankruptcy!payments.!!As!a!result,!payments!made!by!the!

Shedds!after!April!2008!were!mishandled.!!For!example,!payments!that!should!have!

been!applied!to!the!arrearage!were!held!in!suspense or!rejected; payments!that!

should!have!been!applied!to!current!monthly!loan!payments!were!applied!to!past!

due!amounts,!fees!and!expenses.!!Not!surprisingly,!Barclays’!inability!to!correctly!

apply!the!payments!created!a!nightmare!for!the!SheddsDDthe!loan!was!placed!in!

default,!foreclosure proceedings!were!initiated,!various!fees!were!added,!their!

mortgage!interest!was!misreported,!the!Shedds’ credit!suffered.!!For!more!than!two!

years,!the!Shedds!worked!with!Barclays!to!correct!the!problem,!but!it!was!never!

resolved.!!On!September!1,!2010,!Monument!transferred!servicing!to!defendant!

Wells!Fargo!Home!Mortgage,!Inc. (Wells!Fargo).!!Plaintiffs’!problems!persisted!after!

Wells!Fargo!took!over.

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Plaintiffs’!claims!arising!from!these!events!are!set!forth!on!the!following

chart:

Count Cause#of#Action Defendants

One Breach!of!Contract All

Two Breach!of!Duty!of!Good!Faith!&!Fair!

Dealing All

Three Breach!of!Fiduciary!Duty Wells!Fargo

Four Wantonness Wells!Fargo

Five Fraud Wells!Fargo

Six Promissory!Fraud Wells!Fargo

Seven Fraudulent!

Suppression/Concealment Wells!Fargo,!Barclays

Eight Unconscionability All

Nine Unjust!Enrichment Wells!Fargo,!Barclays

Ten Accounting Wells!Fargo,!Barclays

Eleven RESPA!§2605(m) Wells!Fargo

Twelve RESPA!§!2605(e) Wells!Fargo

Thirteen FCRA Wells!Fargo

Fourteen TILA Wells!Fargo,!Monument

Fifteen TILA Wells!Fargo,!Monument

Sixteen FDCPA Wells!Fargo,!Monument

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III.##Legal#Analysis

Barclays has moved!to!dismiss!each!cause!of!action against!it for!failure!to!

state!a!claim!upon!which!relief!can!be!granted.

2 Each!count!is!addressed!separately!

below.

A.##Breach#of#Contract (Count#One)

Barclays!concedes!that!its!arguments!have!already!been!rejected!by!the!Court!

in!the!order!denying!the!FAC.!!!!It!reasserts!these!arguments!to!preserve!them!for!

appeal.!!For!the!reasons!stated!in!the!order!dated!October!15,!2014,!amended

November!17,!2014,!the!motion!to!dismiss!Plaintiffs’!breach!of!contract!claim!is!

denied.

B.# Breach#of#Contractual#Duty#of#Good Faith#&#Fair#Dealing (Count#Two)

In!its!motion!to!dismiss!the!FAC,!Barclays!interpreted!this!claim!as!a!tort!

claim,!rather!than!a!contract!claim.!!For!that!reason!this!Defendant’s!motion!to!

dismiss!was!denied.!!Plaintiffs!have!reasserted!the!claim!and!argue!that!additional!

facts!alleged in!the!SAC support!this!cause!of!action,!which!was!dismissed!as!to!the!

other!Defendants.!!

This!Court!previously!set!out!the law!regarding!this!claim!as!follows:

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!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 2 The!standard!for!reviewing!a!Rule!12(b)(6)!motion!to!dismiss!was!set!forth!

in!the!Court’s!October!15,!2014!order!(Doc.!31),!as!amended!(Doc.!35),!and!need!not!

be!repeated!in!detail!here.!!Suffice!it!to!say,!facts!pleaded!in!the!complaint!are!taken!

as!true!but!conclusions!are!not.!!Randall#v.#Scott,!610!F.3d!701,!709D10!(11th Cir.!

2010).!!!A!court!must!take!the!factual!allegations!as!true!and!determine!whether!

they!plausibly!give!rise!to!a!claim!for!relief.!!!Id. at!710

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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.!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!according!to!reason!and!

justice!the!parties!should!do!in!order!to!carry!out!the!purpose!for!

which!the!contract!was!made.”!Id.

(Order!dated!Nov.!17,!2014!at!7D8,!Doc.!34.)

In!response!to!Defendants’!motion!to!dismiss,!Plaintiffs!have!failed!to!point!to!

any!allegation!in!the!SAC!that!would!tie!their!claim!to!any!specific!contractual!term.!!

Instead,!they!point!to!allegations!that!the!Defendants!failed!to!comply!with!implied

requirements!of the!Chapter!11!Plan!that!they!bring!the!loan!current!and!that!they!

create!a!separate!arrearage!account.!!Because!Plaintiffs’!SAC!does!not!allege!a!breach!

of!duty!related!to!any!specific!contractual!term,!their!claim!for!breach!of!implied!

duty!of!good!faith!and!fair!dealing!is!due!to!be!dismissed.

C.!!Fraudulent#Suppression#(Count#Seven)

Plaintiffs’!fraudulent!suppression!claim!fails!because!a!party!cannot!be!held!

liable!for!suppressing!information!it!had!no!duty!to!disclose.

The!first!element!of!a!fraudulent!suppression!claim!requires!

the!showing!of!a!duty!to!disclose.!!“In!the!absence!of!special!

circumstances,!Alabama!law!considers!the!lenderDborrower!

relationship!to!be!armsDlength!and!does!not!place!a!duty!of!disclosure!

on!the!lender.”!

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Branch#Banking#&#Trust#Co.#v.#EBR#Investments#LLC,! Civil!Action!No.!2:14DCDV01578D

WMA,!2015!WL!225457,!at!*3!(N.D.!Ala.!Jan.!16,!2015) (quoting!Buckentin#v.#

SunTrust#Mortgage#Corp.,!928!F.Supp.2d!1273,!1285!(N.D.Ala.2013)).!!“When!both!

parties!are!intelligent!and!fully!capable!of!taking!care!of!themselves!and!dealing!at!

arm’s!length,!with!no!confidential!relationship,!no!duty!to!disclose!exists!when!

information!is!not!requested,!and!mere!silence!is!not!a!fraud.”!!Bank#of#Red Bay#v.

King,!482!So.!2d!274,!285D86 (1985).!!!The!relationship!of!Plaintiffs!and!Barclays! is!

akin!to!that!of!lenderDborrower;!therefore,!Plaintiffs!must!plead!facts!from!which!a!

special!relationship!could!be!inferred.!!

In!response!to!the!motion!to!dismiss,!Plaintiffs!argue!that!the!duty!to!disclose!

arose!from!Barclays’ knowledge!of!the!internal!problems!it!had!encountered!with!

Plaintiffs’!account!and!similar!accounts.!!However, superior!knowledge!does!not!

amount!to!special!circumstances!imposing!a!duty to!disclose.!!Surrett#v.#TIG#Premier#

Ins.#Co.,!869!F.!Supp.!919,!924D25!(M.D.!Ala!1994);!see#also##Mason#v.#Chrysler#Corp.,!

653!So.!2d!951,!954D55!(Ala.!1995) (dealership’s!knowledge!of!recurring!defect!in!

automobile!model!purchased!by!customer!did!not!give!rise!to!duty!to!disclose).!!In!

sum,!the!factual!allegations!of!the!SAC!do!not!support!a!claim!for!fraudulent!

suppression!or!concealment.!!

D.# Unconscionability (Count#Eight)

Plaintiffs concede!this!cause!of!action is!due!to!be!dismissed!as!to!Barclays.

E.###Unjust#Enrichment (Count#Nine)##

Barclays’ motion!to!dismiss!this!claim!from!the!FAC!was!denied.!!For!

appellate!purposes,!Barclays!reasserts!the!same!grounds!for!dismissal!as!previously!

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raised.!!For!reasons!stated!in!the!previous!order,!the!Court!again!denies!the!motion!

to!dismiss!this!cause!of!action.

F.##Accounting (Count#Ten)

Count!Ten!asserts!a!separate!claim!for!an!accounting!of!mortgage!interest!

and!amortization.!!In!general,!the!equitable!remedy!of!accounting!is!appropriate!

when!there!is!a!fiduciary!relationship!between!the!parties,!where!the!defendant!has!

engaged!in!fraud,!or!where!the!account!is!unusually!complicated!or!difficult.!!Givens#

v.#Saxon#Mortg.#Services,#Inc.,!Civil!Action!No.!13D00245DKDDN,!2014!WL!2452891!

(S.D.!Ala.!May!30,!2014).!!The Court!finds!that!the facts!alleged!in!the!SAC!do!not!

support!a!claim!for!accounting.3

III.##Conclusion

The!motion!to!dismiss!filed!by!Barclays!Capital!Real!Estate,!Inc.!granted,!in!part,!

and!denied,!in!part,!as!follows:

• Plaintiffs’!claims!for!breach!of!the!duty!of!good!faith!and!fair!dealing (Count!

Two),!fraudulent!suppression!or!concealment (Count!Seven),!

unconscionability (Count!Eight),!and!accounting (Count!Ten) are!dismissed

in!their!entirety.

• Plaintiffs’!claims!for!breach!of!contract (Count!One) and unjust!enrichment!

(Count!Nine)!survive.!!

DONE#and!ORDERED this!the!26th day!of!October,!2015.

s/Charles#R.#Butler,#Jr.

Senior#United#States#District#Judge

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 3 The!SAC!does!not allege!facts!giving!rise!to!a!fiduciary!relationship!or!fraud.!!

While!the!mortgage!account!is!undoubtedly!complicated,!it!is!unlikely!that!an!

accounting!would!make!it!any!less!so!or!that!an!accounting!would!accomplish!

anything!that!could!not!be!accomplished!through!discovery.

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