Opinion ID: 8704064
Heading Depth: 3
Heading Rank: 2

Heading: Count III: Negligence

Text: Comcast next maintains that Plaintiffs negligence claim fails because he did not sufficiently allege that Comcast owed him any duty of care; without such a duty, the mere negligent breach of a contract cannot sustain an action sounding in tort. See Mot. at 9-10. Himmelstein disputes this, arguing that the special relationship between a creditor and a debtor gives rise to an independent duty upon which his negligence claim is based. See Opp. at 15-17. After first discussing this duty question, the Court will address two other issues related to the negligence claim: the liability-limitation provision in the contract and the economic-loss doctrine.
To establish a negligence claim, a plaintiff must show “(1) a duty, owed by the defendant to the plaintiff, to conform to a certain standard of care; (2) a breach of this duty by the defendant; and (3) an injury to the plaintiff proximately caused by the defendant’s breach.” Dist. of Columbia v. Fowler, 497 A.2d 456, 462 n. 13 (D.C.1985). A negligence claim based solely on a breach of the duty to fulfill one’s obligations under a contract, however, is duplicative and unsustainable. See, e.g., Choharis v. State Farm Fire and Cas. Co., 961 A.2d 1080, 1089 (D.C.2008) (“[T]he tort must exist in its own right independent of the contract, and any duty upon which the tort is based must flow from considerations other than the contractual relationship. The tort must stand as a tort even if the contractual relationship did not exist.”). Plaintiff must thus allege an independent duty to support his negligence claim. Whether such a duty exists is a question of law for the Court. Hedgepeth v. Whitman Walker Clinic, 22 A.3d 789, 811 (D.C.2011). At issue, then, is “essentially a question of whether the policy of the law will extend the responsibility for the conduct to the consequences which have in fact occurred.” Id. at 793 (internal quotation marks and citation omitted); see also Islam v. Option One Mortg. Corp., 432 F.Supp.2d 181, 195 (D.Mass.2006) (“ ‘[T]he problem of duty is as broad as the whole law of negligence, and ... no universal test for it ever has been formulated. It is a shorthand statement of a conclusion, rather than an aid to analysis in itself____ [D]uty is not sacrosanct in itself, but is only an expression of the sum total of those considerations of policy which lead the law to say that the plaintiff is entitled to protection.’ ”) (quoting William L. Prosser & W. Page Keeton, Prosser & Keeton on Torts, § 53, at 357-58 (5th ed.1984)). Plaintiff maintains that District of Columbia law “expressly recognizes” a duty resulting from the special relationship between a creditor and debtor. See Opp. at 16. He cites no authority from this jurisdiction, however, showing that a debt- or-creditor relationship standing alone creates an independent duty that would support a negligence claim. Instead, Plaintiff directs the Court to dicta in a footnote in Waldon v. Covington, 415 A.2d 1070 (D.C. 1980), which noted that certain conduct may support a claim of intentional infliction of emotional distress where there is a special relationship, such as a debtor-creditor relationship. See id. at 1076 n. 21 (citation omitted). Neither Waldon —nor the 1939 D.C. Circuit case upon which it relies — discussed the central question identified in Hedgepeth of whether, as a matter of policy, the law should extend the responsibility for negligent conduct to a creditor in a simple creditor-debtor relationship. In fact, there are at least two cases from this District suggesting that the creditor-debtor relationship may not create such a duty. In Overseas Private Inv. Corp. v. Industria de Pesca, N.A., Inc., 920 F.Supp. 207 (D.D.C.1996), Judge Paul Friedman dismissed a counterclaim against OPIC, finding that no fiduciary duty existed between the creditor and debtor. See id. at 209-10. The Court stated that it was not persuaded that defendants/counter-plaintiffs have alleged the basis for finding a fiduciary relationship. The relationship between a debtor and a creditor in a loan transaction is “ordinarily a contractual relationship ... and is not fiduciary in nature.” Yousef v. Trustbank Sav., FSB, 81 Md.App. 527, 568 A.2d 1134, 1138 (1990); see Paradise Hotel Corp. v. Bank of Nova Scotia, 842 F.2d 47, 53 (3d Cir.1988); Reid v. Key Bank of Southern Maine, 821 F.2d 9, 16-18 (1st Cir.1987). Id. at 210. The court further noted that there were “no special circumstances” or any provisions in the parties’ contract that supported an argument that the lender had “assumed any special relationship of trust or confidence in this particular case.” Id. Subsequently, in Ponder v. Chase Home Finance, LLC, 666 F.Supp.2d 45 (D.D.C.2009), another court in this District dismissed a borrower’s claim of negligence arising from the lender’s alleged failure to accurately deliver loan documents, finding there was no special duty owed by the defendant to the plaintiff. Id. at 49-50. In so holding, the court recognized that “[t]he relationship between a debtor and a creditor is ordinarily a contractual relationship and not a fiduciary relationship.” Id. at 49 (citing Overseas Private Inv. Corp., 920 F.Supp. at 210). Authority from outside this jurisdiction only further complicates the matter, with cases reaching conflicting outcomes on the issue of whether the debtor-creditor relationship creates an independent duty sufficient to support a negligence claim. Compare Verizon Advanced Data v. FrogNet, Inc., No. 05-955, 2010 WL 1433325, at  (S.D.Ohio April 2, 2010) (billing disputes between contracting parties may only be resolved “through a contract action because Verizon did not have any legal duties in this regard separate and apart from those it assumed in the agreement. Without a duty owed separately from that created by the contract, FrogNet’s claim for negligence cannot stand.”) (internal quotation marks and citations omitted); Mercado v. Bank of America, N.A., No. 12-1123, 2012 WL 5629749, at  (D.N.J. Nov. 15, 2012) (dismissing negligence claims and noting that “‘[t]he virtually unanimous rule is that creditor-debtor relationships rarely give rise to a fiduciary duty’ ”) (quoting United Jersey Bank v. Kensey, 306 N.J.Super. 540, 704 A.2d 38 (N.J.App. Div.1997)); Muller-Paisner v. TIAA, 881 F.Supp.2d 579, 587-88 (S.D.N.Y.2012) (recognizing duty does not normally arise between parties in commercial transactions — including creditor-debtor relationship — unless there is a “relationship of confidence, trust, or superior knowledge or control”) (internal quotation marks and citations omitted); LaPosta v. Lyle, No. 11-177, 2012 WL 1752550, at  (N.D.W.Va. May 16, 2012) (no duty sufficient to support negligence claim unless plaintiffs could establish “that the relationship between the parties was such that the creditor went above and beyond the normal relationship between debtor and creditor so as to create a ‘special relationship’ ”) (internal citation omitted); Zaffrullah v. Countrywide Home Loans, Inc., No. 09-61142, 2010 WL 503074, at  (S.D.Fla. Feb. 8, 2010) (dismissing negligence claim where party “failed to plead a recognizable duty in what was an arms-length creditor/debtor relationship”); In re Montague, No. 08-10916, 2010 WL 271347, at  (Bankr.D.Vt. Jan. 22, 2010) (no duty sufficient to support negligence claim by debt- or against creditor where “the sources of ‘dut/ ... are contract claims garbed in negligence clothing and are therefore insufficient to state a claim. [There is no duty] owed to him, independent of its contractual duty, and thus the negligence claim fails as a matter of law”); with Vickie M. Champion v. Global Credit Card Serv., LLC, No. 12-1966, 2012 WL 3542225, at  (N.D.Ala. Aug. 15, 2012) (recognizing “duties owed by a creditor to individuals to whom it issues credit are, e.g., a duty to maintain accurate records and a duty not to report false information about those individuals to third parties”); Colo. Capital v. Owens, 227 F.R.D. 181, 188 (E.D.N.Y.2005) (finding that creditor owed debtor “a duty of reasonable care in the handling of his account, which includes the collection of his debt”); Tourgeman v. Collins Financial Serv., Inc., No. 08-1392, 2010 WL 4817990, at  (S.D.Cal. Nov. 22, 2010) (citing Colo. Capital as support for creditor-debtor duty). In a lengthy analysis of whether such a duty should be recognized, a district court in Massachusetts recognized the “uncertainty surrounding the existence of a negligence duty.” Islam, 432 F.Supp.2d at 198. The court there ultimately permitted the negligence claims to move forward, but noted that if the plaintiffs were successful on those claims, “the Court may consider it appropriate to certify this question — and the fully developed record — to the Supreme Judicial Court of Massachusetts ... for a definitive answer.” Id. Finding the question of duty similarly unresolved here, the Court will permit Plaintiffs claims to proceed at this stage of the litigation, pending further briefing by the parties after some discovery.
Comcast also challenges the scope of damages that Plaintiff may obtain through his negligence claim, maintaining that he is preempted from seeking consequential damages by the limitation-of-liability provision in the contract. See Mot. at 10. Himmelstein contends that “the actual limitation of liability clause is far narrower” than Comcast contends and thus does not bar his claims. Opp. at 5; see also id. at 5-10. The Court agrees. The parameters of these limitations are set forth in Section 11 of the Comcast Agreement for Residential Services, which is entitled “Limitation of Comcast’s Liability.” See Mot., Exh. A (Agreement) at 10-15. In subsection (a), entitled “Application,” the agreement states: The limitations of liability set forth in this Section apply to any acts, omissions, and negligence of Comcast and its underlying third-party service providers, agents, suppliers, distributors, licensors and business partners (and their respective officers, employees, agents, contractors or representatives) which, but for that provision, would give rise to a cause of action in contract, tort or under any other legal doctrine. Id. at 10-11 (emphasis added). The limitations are thus bounded by the subsequent provisions identifying the acts and omissions that are covered by the clause. These subsequent subsections of (b)-(g) set forth limitations on liability related to: “Customer Equipment,” “Other Services or Equipment,” “Software,” “Disruption of Services,” “Directory Listings,” and “Third Parties.” Id. at 11-14. In each of these subsections, the agreement identifies the specific type of harms covered by the limitation provision, as well as the scope of remedies available to the customer pursuant to these limitations. See id. Defendant appears to acknowledge that none of these provisions expressly covers the underlying actions here, but maintains that “Milling for services, and any alleged billing errors and attendant collection activities, plainly result directly or indirectly from or in connection with Mr. Himmelstein’s use of Comcast’s service. But for his subscription to and use of Comcast’s services, Mr. Himmelstein would not have any dispute with Comcast.” Reply at 4. This reasoning, however, would render the specific provisions identifying the covered actions in subsections ll(b)-(g) meaningless, as it would limit Comcast’s liability for any act or omission of any sort, since all such acts would “plainly result directly or indirectly from or in connection with Mr. Himmelstein’s use of Comcast’s service.” Because the agreement circumscribes the limitations on liability to specific harms, and the harm here is not covered by any of these provisions, Himmelstein is not barred from seeking consequential damages by the liability-limitation provision in the agreement.
The Court, however, cautions that it has serious concerns that Plaintiffs claims may alternatively be barred by the economic-loss doctrine — an issue that has not been discussed by the parties, but should be addressed in subsequent pleadings. The economic-loss rule “bars a plaintiff from recovering for purely economic losses under a tort theory of negligence.” In re Michaels Stores Pin Pad Litig., 880 F.Supp.2d 518, 528 (N.D.Ill. 2011); see also Potomac Plaza Terraces, Inc. v. QSC Prod., Inc., 868 F.Supp. 346, 354 (D.D.C.1994) (adopting economic-loss doctrine); RLI Ins. Co. v. Pohl, Inc. of America, 468 F.Supp.2d 91, 94 (D.D.C. 2006) (finding “the District of Columbia ‘has not authorized tort recovery for purely economic losses in a contract setting’ ”) (quoting Furash & Co. v. McClave, 130 F.Supp.2d 48, 56 (D.D.C.2001)). Almost all of the loss here results from the higher cost of financing for Himmelstein’s mortgage. See Compl., ¶ 54 (“Himmelstein has suffered damages related to: unpaid refunds of prepaid fees; fees charged by mortgage lenders' on Himmelstein’s March 2011 refinance; prefiling attorney’s fees related to correction of the improper accounting; post-filing attorney’s fees; and other fees and costs.... ”). While there do not appear to be any cases within this jurisdiction where a court has reviewed such damages under the economic-loss doctrine, there are several cases from Texas that have rejected similar claims involving damages resulting from increased borrowing costs. In Blanche v. First Nationwide Mortg. Corp., 74 S.W.3d 444 (Tex.App.2002), the court rejected a negligence claim stemming from the lender’s handling of the borrower’s account and incorrect reporting of account information to credit bureaus, where the specified damages included “the denial of various loans and the payment of higher interest rates.” Id. at 453. Additionally, in Belanger v. BAC Home Loans Servicing, L.P., 839 F.Supp.2d 873 (W.D.Tex.2011), relying upon Blanche, a district court held that Belanger’s negligence claim was barred where “the only damages claimed by Belanger are the increased costs of borrowing,” due to the damage to his credit score. Id. at 877; see also Sanghera v. Wells Fargo Bank, N.A., No. 10-2414, 2012 WL 555155, at  (N.D.Tex. Feb. 21, 2012) (loss of creditworthiness an economic damage arising from breach of parties’ contractual relationship, which was barred by economic-loss rule); In re Thrash, 433 B.R. 585, 598-600 (N.D.Tex.Bankr.2010) (court did not reach question of whether duty existed, finding negligence claims were otherwise barred because parties’ inability to refinance their home and increased interest rates resulting from delinquency defendant reported to credit bureaus were not damages that supported a negligence claim). While none of these cases is controlling, the Court nonetheless finds the reasoning sufficiently persuasive to require Plaintiff to explain in further submissions why his negligence claim should survive.