Source: http://tx.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20170620_0001147.ETX.htm/qx
Timestamp: 2017-07-22 18:41:42
Document Index: 26044269

Matched Legal Cases: ['§\n636', '§ 636', '§ 1681', '§ 1681', '§ 1681', '§ 1681', '§ 1681']

| Hernandez v. Servis One, Inc.
Hernandez v. Servis One, Inc.
MARIA D. HERNANDEZ, FERNANDO SALAZARv.SERVIS ONE, INC., CARRINGTON MORTGAGE SERVICES, LLC, STANWICH MORTGAGE LOAN TRUST, SERIES 2012-10, C/O CHRISTIANA TRUST, A DIVISION OF WILMINGTON SAVINGS FUND SOCIETY, FSB AS TRUSTEE
MEMORANDUM ADOPTING REPORT AND RECOMMENDATION OF
L. MAZZANT UNITED STATES DISTRICT JUDGE.
for consideration the report of the United States Magistrate
Judge in this action, this matter having been heretofore
referred to the Magistrate Judge pursuant to 28 U.S.C. §
636. On January 25, 2017, the report of the Magistrate Judge
(Dkt. #96) was entered containing proposed findings of fact
and recommendations that Defendant Stanwich Mortgage Loan
Trust, Series 2012-10's (“Defendant” or
“Stanwich”) Motion to Dismiss for Failure to
State a Claim (Dkt. #91) be granted in part and denied in
part. Having received the report of the Magistrate Judge
(Dkt. #96), having considered each of Defendant's timely
filed objections (Dkt. #102), and having conducted a de novo
review, the Court is of the opinion that the findings and
conclusions of the Magistrate Judge are correct, and the
Court hereby adopts the Magistrate Judge's report (Dkt.
#96) as the findings and conclusions of the Court.
suit relates to a mortgage loan obtained by Plaintiffs Maria
D. Hernandez and Fernando Salazar (“Plaintiffs”)
on October 29, 2007, from Equifirst Corporation to purchase
property located at 5904 Legend Lane, The Colony, Texas 75056
(“Property”). The underlying facts recited in the
Report and Recommendation are pertinent and thus are restated
One, Inc. d/b/a BSI Financial Services, Inc.
(“BSI”) was the initial servicer of
Plaintiffs' Loan, and serviced Plaintiffs' Loan from
approximately July 2010 through October 2012. In or around
May 2012, BSI believed Plaintiffs allowed their hazard
insurance on the Property to lapse; accordingly, BSI force
placed such insurance and thereafter added the insurance
premiums to Plaintiffs' indebtedness. Plaintiffs allege
they provided proof of insurance for all relevant times and
continued to pay their regular monthly payments under the
Loan; however, BSI began reporting “slow pays” on
Plaintiffs' credit and charged Plaintiffs late fees and
penalties because the Loan was in “default.” In
October 2012, Defendant Carrington Mortgage Services, LLC
(“Carrington”) began servicing the
loan.[1]
September 4, 2013, Plaintiffs filed suit against Carrington
and BSI in the 393rd Denton County District Court, and the
suit was subsequently removed to the Court. Following
removal, Plaintiffs aver they discovered that the holders of
Plaintiffs Note-Stanwich and The Bank of New York Mellon
Trust Company National Association, As Grantor Trustee of the
Protium Master Grantor Trust-also caused Plaintiffs damage.
On October 8, 2015, Plaintiffs filed their First Amended
Complaint, adding Stanwich Mortgage Acquisition Company II,
LLC and The Bank of New York Mellon Trust Company National
Association, As Grantor Trustee of the Protium Master Grantor
Trust as defendants to the suit. Stanwich Mortgage
Acquisition Company II, LLC was improperly named and
subsequently dismissed, but the Court granted Plaintiffs
leave to amend their complaint to name the proper Stanwich
party. On August 24, 2016, Plaintiffs filed their Second
Amended Complaint naming Stanwich as a defendant. Stanwich, a
New York common law trust, is the current holder of the Note
and not a mortgage servicer. Plaintiffs allege that Stanwich
engaged in wrongful conduct and had knowledge of its
servicers'-namely Carrington's-wrongful conduct, and
that this wrongful conduct “was done knowingly and
intentionally, and with . . . complete disregard for
Plaintiffs' rights.”
October 28, 2016, Stanwich moved to dismiss Plaintiffs'
Second Amended Complaint, alleging Plaintiffs had failed to
state a claim. On November 14, 2016, Plaintiffs filed their
Response to Defendant Stanwich Mortgage Loan Trust's
Motion to Dismiss for Failure to State a Claim. The
Magistrate Judge entered a report and recommendation on
January 25, 2017, recommending Defendant's Motion to
Dismiss for Failure to State a Claim be granted in part and
denied in part (Dkt. #96). Specifically, the Magistrate Judge
found that Plaintiffs did not plead a Fair Credit Reporting
Act claim, that Plaintiffs' Real Estate Settlement
Procedures Act claim should be dismissed, and that
Plaintiffs' breach of contract/specific performance,
negligence, gross negligence, Texas Debt Collection Act, and
injunctive relief claims should not be dismissed. On February
8, 2017, Defendant filed an objection to the Magistrate
Judge's report and recommendation. On February 10, 2017,
Plaintiffs filed a Response.
the law, a party who files timely written objections to a
magistrate judge's report and recommendation is entitled
to a de novo determination of those findings or
recommendations to which the party specifically objects. 28
U.S.C. § 636(b)(1)(c); Fed.R.Civ.P. 72(b)(2)-(3). At the
outset, the Court notes neither Party objects to the
Magistrate Judge's findings regarding Plaintiffs'
breach of contract/specific performance, Texas Debt
Collection Act, Real Estate Settlement Procedures Act, or
injunctive relief claims. As such, and after de novo review
of the record, the Court holds these findings are correct.
The Court now turns to Defendant's objection, which
centers solely on Plaintiffs' negligence claims.
objects to the Magistrate Judge's finding that
Plaintiffs' negligence claims should not be dismissed,
arguing “Plaintiffs' [negligence] claims against
Stanwich [are] rooted in negligent credit reporting . . .
[and] should have been dismissed” because the claims
are preempted by the Fair Credit Reporting Act. Defendant
asserts “Plaintiffs have not pled that any action taken
by Stanwich relative to Stanwich's furnishing of credit
information was furnished with malice or willful intent to
injure.” In response, Plaintiffs continue to assert
that they do not plead any cause of action arising under the
Fair Credit Reporting Act and that “Plaintiffs does
[sic] not have a cause of action for negligent credit
reporting.” Notwithstanding, Plaintiffs agree with
Stanwich that “negligent reporting claims” would
be preempted by the FCRA had Plaintiffs failed to plead that
Stanwich acted with malice or willful intent to injure them.
Plaintiffs contend that here they pleaded sufficient facts to
show their negligence claims are not preempted.
FCRA contains two relevant preemption sections, 15 U.S.C.
§ 1681t(b)(1)(F) and 15 U.S.C. § 1681h(e). Section
1681t(b)(1)(F) broadly preempts state law claims by
providing, “[n]o requirement or prohibition may be
imposed under the law of any State-(1) with respect to any
subject matter regulated under . . . (F) section 1681s-2 of
this title, relating to the responsibilities of persons who
furnish information to consumer reporting agencies.” 15
U.S.C. § 1681t(b).[2] In contrast, section 1681h(e) preempts
“any action or proceeding in the nature of defamation,
invasion of privacy, or negligence . . . except as to false
information furnished with malice or willful intent to injure
such consumer.” 15 U.S.C. § 1681h(e). Stanwich
argues it “is entitled to the qualified immunity
defense provided in 15 U.S.C. § 1681(h)(e).” The
Fifth Circuit has consistently held that section 1681h(e)
does not preempt state law causes of action against
furnishers that are premised on the furnishment of false
information with malice or willful intent. E.g.,
Young v. Equifax Credit Info. Servs., Inc., 294 F.3d
631, 638 (5th Cir. 2002); Morris v. Equifax Info. Servs.,
LLC, 457 F.3d 460, 471-72 (5th Cir. 2006); Hamaker
v. Chase Manhattan Mortg. Corp., No. 4:12-CV-773, 2013
WL 1195886, at *2 (E.D. Tex. Jan. 30, 2013), report and
recommendation adopted, No. 4:12-CV-773, 2013 WL 1196570
(E.D. Tex. Mar. 22, 2013). Although the FCRA does not define
malice, the Fifth Circuit has previously applied the
common-law standard for malice when both parties agreed to
such application. See Cousin v. Trans Union Corp.,
246 F.3d 359, 375 (5th Cir. 2001) (requiring the plaintiff to
show that “the defendant when he published the
words-(1) either knew they were false, or (2) published them
in reckless disregard of whether they were true or
not”). The Court applies such standard herein. To
define the “willful” exception, Plaintiffs rely
on Rivera v. Countrywide Financial Corp., No.
1:04CV103, 2006 WL 2431391, at *4 (S.D.Miss. Aug. 21, 2006),
an FCRA case in which the court stated “[t]he term
‘willful' in this context has been interpreted to
require that a defendant knowingly and intentionally commit
an act in conscious disregard to the rights of others.”
Second Amended Complaint specifically alleges that
&ldquo;Defendants&#39; conduct and negligence was done
knowingly and intentionally, and with such complete disregard
for Plaintiffs&#39; rights, &rdquo; and that
&ldquo;Defendants were repeatedly given the proof, documents,
and opportunities to correct their reporting of
Plaintiffs&#39; Loan, to correct with the credit bureaus the
wrongful reporting, and to date, Defendants continue to
negatively report Plaintiffs to the credit bureaus.&rdquo;
These facts, if true (which the Court must assume at this
stage), would be sufficient to support a finding of
&ldquo;willful&rdquo; intent. See Rivera, 2006 WL
2431391, at *4 (denying summary judgment as to
plaintiff's claims of defamation, intentional infliction
of emotional distress, and invasion of privacy when
consideration of the evidence could have lead to a finding of
malice). Since Plaintiffs allege “willful” intent