Christine Marais v. Chase Home Finance LLC

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 13a0332p.06

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________

X
-
CHRISTINE MARAIS,
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Plaintiff-Appellant,
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No. 12-4248
v.
,
>
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Defendant-Appellee. -
CHASE HOME FINANCE LLC,
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Appeal from the United States District Court
for the Southern District of Ohio at Columbus.
No. 2:11-cv-00314—George C. Smith, District Judge.
Argued: June 19, 2013
Decided and Filed: November 26, 2013
Before: GILMAN and GRIFFIN, Circuit Judges.*

_________________

COUNSEL
ARGUED: Troy J. Doucet, DOUCET & ASSOCIATES, LLC, Columbus, Ohio, for
Appellant. Daniel C. Gibson, BRICKER & ECKLER LLP, Columbus, Ohio, for
Appellee. ON BRIEF: Troy J. Doucet, Audra L. Tidball, DOUCET & ASSOCIATES,
LLC, Columbus, Ohio, for Appellant. Daniel C. Gibson, Anne Marie Sferra, Nelson M.
Reid, BRICKER & ECKLER LLP, Columbus, Ohio, for Appellee.
_________________

OPINION
_________________

PER CURIAM. Christine Marais appeals the dismissal of her claims under the
Truth in Lending Act (TILA), 15 U.S.C. § 1601, et seq., and the Real Estate Settlement
Procedures Act (RESPA), 12 U.S.C. § 2601, et seq., on Defendant Chase Home Finance

*
Following argument in this case, Judge White recused herself. This decision is filed by quorum
of the panel pursuant to 28 U.S.C. § 46(d).

1
No. 12-4248 Marais v. Chase Home Fin. Page 2

(Chase)’s motion for judgment on the pleadings. We AFFIRM the dismissal of the
TILA claim and REVERSE the dismissal of the RESPA claims.

I.

This case arises from a residential loan servicing agreement between Marais, the
obligor/borrower, and Chase, a servicer of her loan. The background facts set forth by
the district court are undisputed:

On or about September 25, 2006, Plaintiff executed a promissory
note and mortgage for the purpose of financing a residential property in
Franklin County, Ohio. The promissory note was between Plaintiff and
Residential Finance Corporation, designated as the “lender.” Although
the timing is unclear from the pleadings, at some point [Chase] became
the “servicer” of Plaintiff’s loan.
On January 3, 2011, Plaintiff sent a letter, designated as a
“Qualified Written Request” (QWR) to [Chase]. The letter stated that it
was being sent pursuant to [RESPA,] 12 U.S.C. [2]605(e)[,] and
requested information relating to Plaintiff’s loan. The QWR specifically
requested information such as the amount owed on the loan, the identity
of the “current holder” of the loan and the date on which the current
holder obtained the loan, the date [Chase] began servicing the loan, and
a breakdown of all charges accrued on the account. In her QWR,
Plaintiff disputed all late fees and other charges and noted that [Chase]
had refused to give her a loan modification for which she was qualified.
Plaintiff also noted that [Chase] had failed to provide a copy of the Note
which [she had requested] on November 22, 2010. Plaintiff requested
receipt of all documents within sixty days, as required under [RESPA,]
12 U.S.C. § 2605(e).
By letter dated January 7, 2011, [Chase] acknowledged receipt of
Plaintiff’s request. [Chase] then sent a letter dated February 28, 2011, to
Plaintiff. According to the letter, [Chase] was enclosing copies of the
Note, Security Instrument, Loan Transaction History, Escrow Disclosure
Statements, Appraisal and Payoff Quote. (Doc. 2-3). The letter further
stated that any information which was requested but not included was
either unavailable or considered proprietary and would not be provided.
(Id.) Although requested by Plaintiff, [Chase’s] letter did not provide the
identity of the owner of Plaintiff’s loan, did not provide information
related to the correctness of Plaintiff’s account, and did not provide any
contact information for an employee who could provide assistance to the
Plaintiff. (Complaint ¶ 23-27).
No. 12-4248 Marais v. Chase Home Fin. Page 3

Plaintiff alleges that between [January 13, 2009, and] August 13,
2009, she made excess payments totaling approximately $574.89 which
[Chase] failed to credit to Plaintiff’s principal balance. She further
alleges that on November 26, 2007, [Chase] received $221.21 for
Plaintiff’s account which was not credited to her principal balance.
According to Plaintiff, rather than crediting her account, [Chase] kept
these payments for its own benefit.
On April 12, 2011, Plaintiff filed the instant suit . . . alleg[ing]
claims for violation of [TILA], 15 U.S.C. § 1641(f)(2), [RESPA], 12
U.S.C. § 2605(e)(2), the Ohio Consumer Sales Practices Act, Ohio Rev.
Code § 1345.01, et seq., and for common law conversion.

PageID 626–28/R. 33.

Well after Marais filed the instant action and after Marais responded to Chase’s
motion for judgment on the pleadings, Chase for the first time identified the owner of
Marais’s loan, Federal National Mortgage Association (Fannie Mae).1

The district court granted Chase’s motion for judgment on the pleadings on the
TILA and RESPA claims, declined to exercise supplemental jurisdiction over the state
law claims, and dismissed the case in its entirety. PageID 626/R. 33.

II.

This court reviews the district court’s grant of judgment on the pleadings under
Fed. R. Civ. P. 12(c) applying the same de novo standard of review applicable to orders
of dismissal under Rule 12(b)(6). Poplar Creek Dev. Co. v. Chesapeake, 636 F.3d 235,
240 (6th Cir. 2011). “[A]ll well-pleaded material allegations of the pleadings of the
opposing party must be taken as true, and the motion may be granted only if the moving
party is nevertheless clearly entitled to judgment.” Id. (citation omitted); see also Coyer
v. HSBC Mortg. Servs., Inc., 701 F.3d 1104, 1107–08 (6th Cir. 2012).

1
Several months later, Marais moved for leave to file an amended complaint to add Fannie Mae
as a defendant and to “address some of the alleged defects” Chase raised in its motion for judgment on the
pleadings. The magistrate judge deemed Marais’s untimely motion a request to modify the case schedule
under Fed. R. Civ. P. 16(b)(4), and denied leave to amend, concluding that Marais had not shown that
despite due diligence she could not have reasonably met the scheduled deadlines. Marais acknowledged
at argument that she is not appealing the denial of her motion for leave to amend.
No. 12-4248 Marais v. Chase Home Fin. Page 4

Although a complaint need not contain “detailed factual allegations,” it
does require more than “labels and conclusions” or “a formulaic
recitation of the elements of a cause of action.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). Thus, a complaint survives a
motion to dismiss if it “contain[s] sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.” Ashcroft v.
Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009). And, “[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.” Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609
(6th Cir. 2009) (quoting Iqbal, 129 S. Ct. at 1949).

Reilly v. Vadlamudi, 680 F.3d 617, 622–23 (6th Cir. 2012).

III. TILA

The declared purpose of TILA, 15 U.S.C. § 1601, et seq., is “to assure a
meaningful disclosure of credit terms so that the consumer will be able to compare more
readily the various credit terms available to him and avoid the uninformed use of credit,
and to protect the consumer against inaccurate and unfair credit billing and credit card
practices.” Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412 (1998) (quoting 15 U.S.C.
§ 1601(a)). Accordingly, TILA requires creditors/owners to “provide borrowers with
clear and accurate disclosures of terms dealing with things like finance charges, annual
percentage rates of interest, and the borrower’s rights.” Id. (citing 15 U.S.C. §§ 1631,
1632, 1635, 1638). TILA is a remedial statute and should be given “a broad, liberal
construction in favor of the consumer.” Klemmer v. Key Bank Nat’l Ass’n, 539 F.3d
349, 353 (6th Cir. 2008); Begala v. PNC Bank, Ohio N.A., 163 F.3d 948, 950 (6th Cir.
1998).

TILA defines “creditor” as

only . . . a person who both (1) regularly extends . . . consumer credit .
. . , and (2) is the person to whom the debt arising from the consumer
credit transaction is initially payable . . .

15 U.S.C. § 1602(g) (formerly § 1602(f)).
No. 12-4248 Marais v. Chase Home Fin. Page 5

Because the debt was not initially payable to Chase, Marais has not alleged that Chase
is or was a creditor of her loan.

A.

Marais’s claim is based on her interpretation of amendments to TILA’s civil-
liability provision, § 1640, and liability-of-assignees provision, § 1641. She contends
that Chase’s liability does not depend on its being a creditor.

The TILA amendments on which Marais relies were part of the Helping Families
Save Their Homes Act of 2009, Pub. L. No. 111-22, § 404(g), 123 Stat. 1632, 1658,
which amended TILA in two ways. First, it added subsection (g) to § 1641, requiring
that new owner-assignees of loans (referred to as “new creditors”) notify the borrower
of certain information about the assignment. Second, and directly at issue here, it added
the phrase “subsection (f) or (g) of section 1641”2 (in bold type below) to the civil
liability provision, § 1640.

Section 1640 now provides:

(a) Individual or class action for damages; amount of award; factors
determining amount of award
Except as otherwise provided in this section, any creditor who fails to
comply with any requirement imposed under this part, including any
requirement under . . . subsection (f) or (g) of section 1641 of this title
. . . is liable to such person in an amount equal to the sum of –
(1) any actual damage sustained by such person as a result of the failure;
....
With respect to any failure to make disclosures required under this part
or part D or E of this subchapter, liability shall be imposed only upon the
creditor required to make disclosure, except as provided in [15 U.S.C.
§ 1641].

15 U.S.C. § 1640(a) (emphasis added).

2
Before the 2009 amendments, section 1640(a) provided: “including any requirement under
section 1635 of this title . . .” Section 1635 addresses “disclosure of obligor’s right to rescind,” and is not
at issue here.
No. 12-4248 Marais v. Chase Home Fin. Page 6

Section 1641, addressing the liability of assignees, provides that any civil action
that may be brought against a creditor may also be brought against a creditor’s voluntary
assignee only if the violation is apparent on the face of the disclosure statement:

(e) Liability of assignee for consumer credit transactions secured by real
property
(1) In general
Except as otherwise specifically provided in this
subchapter, any civil action against a creditor for a
violation of this subchapter, and any proceeding under
section 1607 of this title against a creditor, with respect
to a consumer credit transaction secured by real property
may be maintained against any assignee of such creditor
only if –
(A) the violation for which such action or proceeding is
brought is apparent on the face of the disclosure
statement provided in connection with such transaction
pursuant to this subchapter; and
(B) the assignment to the assignee was voluntary.
....

15 U.S.C. § 1641(e); see also § 1641(a).

Subsection (f), entitled “Treatment of servicer,” exempts servicers from liability
unless the servicer also is or was the owner/creditor of the obligation:

(f) Treatment of servicer[3]

(1) In general
A servicer of a consumer obligation arising from a
consumer credit transaction shall not be treated as an
assignee of such obligation for purposes of this section
unless the servicer is or was the owner of the obligation.

(2) Servicer not treated as owner on basis of assignment
for administrative convenience

3
Chase does not dispute that it is a servicer. Section 1641 defines “servicer” as “the person
responsible for servicing of a loan (including the person who makes or holds a loan if such person also
services the loan).” See 15 U.S.C. § 1641(f)(3) (adopting RESPA’s meaning of “servicer,” 12 U.S.C.
§ 2605(i)(2)).
No. 12-4248 Marais v. Chase Home Fin. Page 7

A servicer of a consumer obligation arising from a
consumer credit transaction shall not be treated as the
owner of the obligation for purposes of this section on the
basis of an assignment of the obligation from the creditor
or another assignee to the servicer solely for the
administrative convenience of the servicer in servicing
the obligation. Upon written request by the obligor, the
servicer shall provide the obligor, to the best knowledge
of the servicer, with the name, address, and telephone
number of the owner of the obligation or the master
servicer of the obligation.

15 U.S.C. § 1641(f)(1)–(2) (emphasis added). The italicized sentence is the basis for
Marais’s TILA claim.

Subsection (g), added by the 2009 amendments, is entitled “Notice of new
creditor,” and mandates that

not later than 30 days after the date on which a mortgage loan is sold or
otherwise transferred or assigned to a third party, the creditor that is the
new owner or assignee of the debt shall notify the borrower in writing of
such transfer.

15 U.S.C. § 1641(g)(1).

B.

Marais argues that by adding to the civil-liability provisions of § 1640(a) a
reference to the failure to meet a requirement under subsection (f) or (g) of § 1641,
Congress created a private cause of action for violation of those sections. And, because
only servicers can violate § 1641(f), Congress must have intended to create a cause of
action against servicers for failure to comply with § 1641(f)(2), notwithstanding that the
introductory language of § 1640 refers only to creditors.

Although this court has not addressed whether a mere servicer can be liable for
violating subsection 1641(f)(2) specifically, we have twice held that a TILA action may
not be maintained against a mere servicer, in one case for foreclosing on a borrower’s
No. 12-4248 Marais v. Chase Home Fin. Page 8

loan, Mourad v. Homeward Residential, Inc., 517 F. App’x 360, 364 (6th Cir. 2013), and
in the second case for fraud and misrepresentation, Coyer, 701 F.3d at 1109.

[A]n action under TILA can be brought only against creditors or their
assignees. 15 U.S.C. §§ 1640–1641. TILA defines a creditor as
someone who both regularly extends consumer credit and is initially due
payment for debt arising from a consumer-credit transaction. 15 U.S.C.
§ 1602(g). This definition does not include loan servicers like AHMSI.
Servicers are also excluded from the definition of assignees “unless the
servicer is or was the owner of the obligation.” Id. § 1641(f)(1). Mourad
does not dispute that AHMSI was merely the servicer, and not the owner,
of the loan. AHMSI is therefore not liable under TILA. See Coyer, 701
F.3d at 1109 (holding that the plaintiffs failed to state a TILA claim
against their mortgage servicer for alleged misrepresentation and fraud
at the time they entered the transaction because the servicer was not a
party to that transaction and instead bought the mortgage on the
secondary market).

Mourad, 517 F. App’x at 364.

Marais argues that notwithstanding these cases, the language of §§ 1640 and
1641 is

not as “plain” as Chase suggests. This is because, under Chase’s
argument, one has to reach the conclusion that Congress, knowing
borrowers frequently cannot identify the “creditor” of their obligation,
specifically amended TILA in 2009 to create civil liability against the
unidentifiable creditor for its violation of a provision under which the
creditor has no obligation.

Reply Br. at 1–2. Marais is not the first to comment on this conundrum; several scholars
and courts have as well:

Because the act does not impose liability upon a servicer who is not an
owner or assignee of a mortgage loan for b[r]eaches of [§] 1641(f)(2),
and because the owner cannot breach that provision since it requires
nothing of the owner, the cause of action against the owner created by [§]
1640(a) for failure to comply with requirements of [§] 1641(f) appears
to be meaningless.
To avoid rendering [§] 1640(a) meaningless, [several] judges
conclude that agency principles apply, so the owner of a mortgage loan
may be held vicariously liable for the violations of [§] 1641(f)(2) by its
No. 12-4248 Marais v. Chase Home Fin. Page 9

agent, the servicer. Kissinger v. Wells Fargo Bank, N.A., No. 12-60878-
CIV (S.D. Fla. Aug. 30, 2012) (2012 WL 37590034). The judge relied
heavily on Davis v. Greenpoint Mortgage Funding, Inc., No. 1:09-CV-
2719-CC-LTW (N.D. Ga. Mar. 1, 2011) (2011 WL 7070221), report and
recommendation adopted in part, rejected in part on other grounds, 2011
WL 7070222 (N.D. Ga., Sep. 19, 2011).

Earl Phillips, Is Owner of Mortgage Loan Liable for Servicer’s Breach? A.S. Pratt &
Sons, 10-12 Consumer Cred. & Truth-In-Lending Compl. Rep. 2 (October 2012). The
few decisions explicitly addressing whether a mere servicer may be liable for violating
§ 1641(f)(2), all from out-of-circuit district courts, have held in the negative, as did the
district court in the instant case. See Kelly v. Fairon & Assocs., 842 F. Supp. 2d 1157,
1161–62 (D. Minn. 2012), and cases cited therein, including Ording v. BAC Home Loans
Servicing, LP, No. 10-10670-MBB, 2011 WL 99016, at *3 (D. Mass. Jan. 10, 2011)
(“While it is the servicer of the loan that has the obligation to provide the information
to the borrower pursuant to section 1641(f), liability for violations of TILA rests
squarely and solely with creditors.”).

In Kelly, the district court rejected an argument Marais advances here–that since
§ 1641(f)(2) plainly obligates only the servicer, Congress intended for the entity
responsible for receiving scheduled payments—the only entity the borrower is likely to
deal with—to be obligated to respond to the borrower’s QWRs for the identity of the
owner of the loan, and that the reference to “subsection (f)” added to § 1640(a) in 2009
is meaningless unless it creates servicer liability:

Kelly argues that the reference in § 1640(a) to the servicer reporting
obligation under § 1641(f)(2) evidences an intent to hold servicers liable.
The court disagrees.
The crux of Kelly’s argument is that § 1640(a) was amended in
2009 to include a cross-reference to § 1641(f), thereby creating servicer
liability. See Helping Families Save Their Homes Act of 2009, Pub.L.
No. 111-22, § 404(b), 123 Stat. 1632, 1658. Kelly claims that a servicer
cause of action must exist, because otherwise the amendment would be
without effect. As other courts have noted, however, this amendment
may have been an attempt to hold creditors vicariously liable for servicer
violations of § 1641(f)(2). See e.g., Holcomb v. Fed. Home Loan Mortg.
Corp., No. 10-81186-CV, 2011 WL 5080324, at *6 (S.D. Fla. Oct. 26,
No. 12-4248 Marais v. Chase Home Fin. Page 10

2011); Consumer Solutions REO, LLC v. Hillery, No. C-08-04357, 2010
WL 144988, at *3 (N.D. Cal. Jan. 8, 2010) (“There is a fair chance
Congress intended vicarious liability . . . .”). Further, had Congress
intended to hold servicers liable for violations under § 1641(f)(2), it
would have included the word “servicer” in § 1640(a). Instead,
§ 1640(a) notes liability only for creditors, and § 1641 makes clear that
a servicer “shall not be treated as the owner of the obligation for
purposes of this section on the basis of an assignment of the obligation
from the creditor or another assignee to the servicer solely for the
administrative convenience of the servicer in servicing the obligation.”
15 U.S.C. § 1641(f)(2).
Moreover, this interpretation is consistent with a majority of
courts that hold that TILA does not allow a private cause of action
against servicers. See e.g., Sherrell v. Bank of Am., N.A., No. CV F 11-
1785, 2011 WL 6749765, at *11–12 (E.D. Cal. Dec. 22, 2011); Holcomb,
2011 WL 5080324, at *6; Consumer Solutions REO, LLC, 2010 WL
144988, at *3; Garcia v. Fannie Mae, 794 F. Supp. 2d 1155, 1172 (D.
Or. 2011); Selby, 2011 WL 902182, at *6; Ording v. BAC Home Loans
Servicing, LP, No. 10-10670, 2011 WL 99016, at *3 (D. Mass. Jan. 10,
2011) (“[L]iability for violations of TILA rests squarely and solely with
creditors.”) (citation omitted). But see Stephenson, 2011 WL 2006117,
at *3; Sam v. Am. Home Mortg. Servicing, No. S-09-2177, 2010 WL
761228, at *3 (E.D. Cal. Mar. 3, 2010) . . . . There is no evidence that
Chase is anything other than the servicer of Kelly’s mortgage.
Therefore, summary judgment in Kelly’s favor is not warranted as to the
TILA claim.

Kelly, 842 F. Supp. 2d at 1161–62 (footnote omitted).

Marais also points to language at the end of § 1640(a): “[w]ith respect to any
failure to make disclosures required under this part . . . . liability shall be imposed only
upon the creditor required to make disclosure, except as provided in section 1641.”
Marais asserts that the last clause indicates that liability may be imposed on entities
other than the creditors as provided by § 1641, which would include servicers. This
argument is unpersuasive because section 1641 clearly imposes liability, as opposed to
obligations, only on servicers who are also creditors or creditor-assignees. See Mourad,
517 F. App’x at 364.4

4
Chase also maintains that the section 1640(a) language Marais relies on is inapposite because
“disclosure” is a term of art referring to the manner in which a creditor must convey the information that
Congress deemed basic to an intelligent assessment of a credit transaction. See 15 U.S.C. §§ 1631,
No. 12-4248 Marais v. Chase Home Fin. Page 11

C.

The three unpublished out-of-circuit district court cases Marais cites to support
that the 2009 amendments created a private right of action against a mere servicer (two
of which the district court in Kelly cited) do involve § 1641(f)(2) claims that survived
motions to dismiss, but in none was the question whether a mere servicer is subject to
liability squarely presented, because none of the defendants raised that defense. See Sam
v. Am. Home Mortg. Servicing, No. CIV. S-09-2177, 2010 WL 761228, at *3 (E.D. Cal.
March 3, 2010) (12(b)(6) motion denied where defendants argued that § 1641(f)(2) does
not mandate that servicers provide the name of the owner on borrowers’ request “but
rather only makes such provision optional,” the district court holding that statute’s plain
language does so require); Stephenson v. Chase Home Fin., LLC, No. 10cv2639-L
(WMc), 2011 WL 2006117, at *2 (S.D. Cal. May 23, 2011) (denying 12(b)(6) motion
where Chase, the original refinance lender and subsequent servicer, responded to
borrower’s QWR by identifying lender but failed to identify the master servicer or
owner, and Chase argued that plaintiffs did not allege a violation of § 1641(f)(2) or
actual damages); Erickson v. PNC Mortg., No. 3:10-cv-0678-LRH-VPC, 2011 WL
1743875, at *3 (D. Nev. May 6, 2011) (denying PNC and Freddie Mac’s 12(b)(6)
motion where borrowers alleged they sent written request to defendant PNC asking who
owned their mortgage note and did not receive an appropriate response, the court
determining that allegations were sufficient to state a claim “against defendants” for
violation of TILA.)

1638(B)(13)–(19). However, not all courts interpret the term “disclosure” as applying only to documents
created at the time of the origination of the loan. See e.g., Cenat v. U.S. Bank, N.A., 930 F. Supp. 2d 1347,
1354 (S.D. Fla. 2013) (acknowledging that “many of the instances in TILA where disclosures are
mentioned address situations at the inception of the creditor-debtor relationship,” but holding that the term
“disclosure statement” can be construed to encompass postassignment disclosures, since § 1641(g)
provides that “‘[i]n addition to other disclosures required by this title,’ whenever a mortgage loan is sold,
transferred, or assigned, ‘the creditor that is the new owner or assignee’ must provide the obligor with
contact information”; that the term “disclosure statement” is not defined in § 1641(a); and that by the 2009
amendments “Congress then created a private right of action for violating th[e] new subsection [(g)], as
well as for violating 1641(f)(2).”).
No. 12-4248 Marais v. Chase Home Fin. Page 12

D.

We conclude that the district court properly dismissed the TILA claim because
Marais alleged only that Chase was a servicer of the loan and TILA expressly exempts
servicers from liability unless the servicer was also a creditor or a creditor’s assignee.
Marais’s argument that Congress intended the 2009 amendments to impose liability on
mere servicers finds virtually no support in caselaw. For these reasons, we conclude that
the district court did not err by holding that Chase, as a mere servicer, cannot be liable
for violating 15 U.S.C. § 1641(f)(2) and affirm the dismissal of the TILA claim.

IV. RESPA

The purposes underlying RESPA

are very similar to those of the Truth in Lending Act. Congress’s intent
was “to insure that consumers throughout the Nation are provided with
greater and more timely information on the nature and costs of the
settlement process and are protected from unnecessarily high settlement
charges caused by certain abusive practices that have developed in some
areas of the country.

Vega v. First Fed. Sav. & Loan Ass’n of Detroit, 622 F.2d 918, 923 (6th Cir. 1980)
(quoting 12 U.S.C. § 2601(a)). “Although the ‘settlement process’ targeted by the
statute was originally limited to the negotiation and execution of mortgage contracts, the
scope of the statute’s provisions was expanded in 1990 to encompass loan servicing.”
Medrano v. Flagstar Bank, FSB, 704 F.3d 661, 665–66 (9th Cir. 2012) (some internal
citations omitted). As a remedial statute, RESPA is construed broadly to effectuate its
purposes. In re Carter, 553 F.3d 979, 985–86, n.5 (6th Cir. 2009); see also Medrano,
704 F.3d at 665–66 (“RESPA’s provisions relating to loan servicing procedures should
be construed liberally to serve the statute’s remedial purpose.” (internal citation and
quotation marks omitted)).
No. 12-4248 Marais v. Chase Home Fin. Page 13

A.

12 U.S.C. §§ 2605(e)(2) and (e)(3) provided at pertinent times:5

(e) Duty of loan servicer to respond to borrower inquiries
...
(2) Action with respect to inquiry
Not later than 60 days . . . after the receipt from any
borrower of any qualified written request under paragraph
(1) and, if applicable, before taking any action with
respect to the inquiry of the borrower, the servicer shall—
(A) make appropriate corrections in the account of
the borrower, including the crediting of any late charges
or penalties, and transmit to the borrower a written
notification of such correction (which shall include the
name and telephone number of a representative of the
servicer who can provide assistance to the borrower);
(B) after conducting an investigation, provide the
borrower with a written explanation or clarification that
includes—
(i) to the extent applicable, a statement of the
reasons for which the servicer believes the account of the
borrower is correct as determined by the servicer; and
(ii) the name and telephone number of an
individual employed by, or the office or department of,
the servicer who can provide assistance to the borrower;
or
(C) after conducting an investigation, provide the
borrower with a written explanation or clarification that
includes—
(i) information requested by the borrower or an
explanation of why the information requested is
unavailable or cannot be obtained by the servicer; and
(ii) the name and telephone number of an
individual employed by, or the office or department of,
the servicer who can provide assistance to the borrower.

(3) Protection of credit rating
During the 60-day period beginning on the date of the
servicer’s receipt from any borrower of a qualified
written request relating to a dispute regarding the
borrower’s payments, a servicer may not provide

5
That is, in February 2011, when Chase deficiently responded to Marais’s QWR.
No. 12-4248 Marais v. Chase Home Fin. Page 14

information regarding any overdue payment, owed by
such borrower and relating to such period or qualified
written request, to any consumer reporting agency . . .
12 U.S.C. §§ 2605(e)(2), (3).

Section 2605(f) provided at pertinent times:

(f) Damages and costs
Whoever fails to comply with any provision of this section shall be liable
to the borrower for each such failure in the following amounts:
(1) Individuals
In the case of any action by an individual, an amount
equal to the sum of—
(A) any actual damages to the borrower as a result
of the failure; and
(B) any additional damages, as the court may
allow, in the case of a pattern or practice of
noncompliance with the requirements of this section, in
an amount not to exceed $1,000.

12 U.S.C. 2605(f)(1).

B.

Chase does not deny violating either RESPA provision; rather, its 12(c) motion
argued that Marais “fails to allege any damages purportedly flowing from Chase’s QWR
response with factual support sufficient to satisfy the plausibility pleading standard as
set forth . . . in Iqbal, 129 [S. Ct.] 1937, and Twombly, 550 U.S. 544, 555 (2007).”
PageID 88/R. 15 at 5. The district court agreed and dismissed both RESPA claims on
causation grounds, concluding that Marais did not allege a sufficient link between the
alleged actual damages and Chase’s deficient response to her QWR.

Marais’s complaint alleged that because Chase deficiently responded to her
QWR, it continued to misapply payments of approximately $800 and that she incurred
actual damages that included the amount of money Chase “converted” and “interest and
disgorgement interest.” Marais’s complaint at paragraphs 42 and 56 alleged that “[d]ue
to these violations, Defendant is liable to Plaintiff in the amount of her actual damages”
equaling the amount of money Chase converted plus interest. A reasonable inference
No. 12-4248 Marais v. Chase Home Fin. Page 15

arising from these allegations is that because Chase (undisputedly) failed to correct or
investigate the misapplied payments, Marais paid interest on a higher principal balance
than she should have.6 See, e.g., Johnstone v. Bank of Am., N.A., 173 F. Supp. 2d 809,
814 (N.D. Ill. 2001) (finding that borrower’s complaint alleged a causal connection
between bank’s alleged RESPA violations of section 2605(e) and late fees and
foreclosure where complaint alleged that “as a result of” bank violating section (e) by
failing to correct problems within 60 days and reporting plaintiff as delinquent to a credit
bureau within 60 days of receiving her QWR that disputed the amount of the debt,
plaintiff paid late fees and the bank foreclosed on her property.)

The district court did not have the benefit of two unpublished decisions issued
during the pendency of this appeal, both of which reversed district court dismissals of
RESPA claims based on assertedly inadequately pleaded damages. See Mellentine v.
Ameriquest Mortg. Co., 515 F. App’x 419, 424–25 (6th Cir. 2013) (reversing the
dismissal of RESPA claim under Rule 12(c) where plaintiffs alleged that defendant
responded to their QWR ten days after statutory time period and their complaint alleged
“damages in an amount not yet ascertained, to be proven at trial”); Houston v. U.S. Bank
Home Mortg. Wis. Servicing, 505 F. App’x 543, 548 (6th Cir. 2012) (reversing in part
the grant of summary judgment in bank’s favor where the borrower alleged financial and
emotional damages arising from RESPA violation that district court did not address, and
remanding for determination of what damages, if any, can fairly be traced to RESPA
violation, noting that “the district court was too quick to grant summary judgment
against the entirety of Houston’s RESPA claim.”)

These two decisions, albeit unpublished, support our conclusion that Marais’s
RESPA claim must be reinstated. The unpublished Eleventh Circuit decision on which
the district court relied is distinguishable in that it involved summary judgment, not a
12(c) motion for judgment on the pleadings. McLean v. GMAC Mortg. Corp., 398 F.
App’x 467, 471 (11th Cir. 2010). And, although it is unclear from the opinion, it appears

6
Marais explained in response to Chase’s 12(c) motion how Chase’s deficient response to her
QWR resulted in additional interest.
No. 12-4248 Marais v. Chase Home Fin. Page 16

that, unlike Marais, the McLean plaintiffs did not allege any pecuniary damages as a
result of the defendant servicer’s inadequate response to their QWRs. Moreover, the
court construed the term “actual damages” broadly, observing that “plaintiffs arguably
may recover for non-pecuniary damages, such as emotional distress and pain and
suffering,” but upheld the grant of summary judgment to the servicer because the
plaintiffs’ “conclusory allegations were insufficient to support a claim of emotional
distress” and they “were unable to articulate any specific injury that was caused by
GMAC’s failure to respond to their request for information.” Id. at 470–71.

The district court was obliged to view the facts alleged and inferences therefrom
in Marais’s favor. See Wee Care Child Ctr., Inc. v. Lumpkin, 680 F.3d 841, 846 (6th Cir.
2012) (in reviewing a district court’s decision on a 12(c) motion we must construe the
complaint in the light most favorable to the plaintiff). Marais’s complaint sufficiently
stated that interest damages flowed from Chase’s deficient response to her QWR because
any additional interest she paid on the principal balance after Chase deficiently
responded to her QWR on February 28, 2011, would flow from the deficient response.

In addition, the district court’s determination that costs Marais incurred
associated with preparing her QWR did not constitute actual damages, PageID 636 n.2,
did not take into account Marais’s argument that those costs were for naught due to
Chase’s deficient response, i.e., her QWR expenses became actual damages when Chase
ignored its statutory duties to adequately respond. The district could should consider
this argument on remand.

Marais also argues that her allegations that Chase provided information to
consumer reporting agencies regarding overdue payments that were related to her QWR
during the prohibited 60-day period sufficiently stated a RESPA violation. Again, we
conclude the complaint was sufficient. Marais pleaded that Chase engaged in a pattern
or practice of non-compliance with RESPA’s mortgage-servicer provisions, entitling her
to statutory damages, and her complaint also sought “actual damages.” See 12 U.S.C.
2605(f)(1). And, although neither of the two recent RESPA decisions of this court
discussed supra, Mellentine and Houston, involved a § 2605(e)(3) claim, their approach
No. 12-4248 Marais v. Chase Home Fin. Page 17

counsels against dismissal of RESPA claims on the basis of inartfully-pleaded actual
damages. See Mellentine, 515 F. App’x at 425 (reversing the dismissal of RESPA claim
under Rule 12(c) where plaintiffs alleged that defendant responded to their QWR ten
days after statutory time period and their complaint alleged “damages in an amount not
yet ascertained, to be proven at trial”); Houston, 505 F. App’x at 548 (reversing in part
grant of summary judgment where borrower alleged financial and emotional damages
that district court did not address, and remanding for determination of what damages can
fairly be traced to RESPA violation.).

V.

For these reasons, we AFFIRM the dismissal of the TILA claim, REVERSE the
dismissal of the RESPA claims, and REMAND for proceedings consistent with this
opinion.