CitiMortgage, Inc. v. Rudzik

[Cite as CitiMortgage, Inc. v. Rudzik, 2014-Ohio-1472.]

STATE OF OHIO, MAHONING COUNTY

IN THE COURT OF APPEALS

SEVENTH DISTRICT

CITIMORTGAGE, INC., )
) CASE NO. 13 MA 20
PLAINTIFF-APPELLEE, )
)
VS. ) OPINION
)
JOSEPH RUDZIK, et al., )
)
DEFENDANTS-APPELLANTS. )

CHARACTER OF PROCEEDINGS: Civil Appeal from Common Pleas Court,
Case No. 12CV2113.

JUDGMENT: Affirmed in part; Reversed and
Remanded in Part.

APPEARANCES:
For Plaintiff-Appellee: Attorney John Greiner
Attorney Brittany Griggs
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202-3157

For Defendants-Appellants: Attorney Rhys Cartwright-Jones
42 North Phelps Street
Youngstown, Ohio 44503-1130

JUDGES:
Hon. Joseph J. Vukovich
Hon. Gene Donofrio
Hon. Mary DeGenaro

Dated: March 31, 2014
[Cite as CitiMortgage, Inc. v. Rudzik, 2014-Ohio-1472.]
VUKOVICH, J.

{¶1} Defendants-appellants Joseph Rudzik and Erika Kieffer, n.k.a. Rudzik,
appeal the decision of the Mahoning County Common Pleas Court granting plaintiff-
appellee CitiMortgage, Inc.’s Civ.R. 12(B)(6) motion to dismiss appellants’
counterclaims. Four issues are raised in this appeal. The first is whether there is a
civil cause of action for theft when the person being accused of theft has not been
convicted criminally of the offense. The second issue is whether under the Truth in
Lending Act (TILA) a creditor is required to make disclosures when a “trial period” for
loan modification is entered into by the parties. The third issue is whether the
Rudziks have pled all of the necessary elements of a Fair Credit Reporting Act
(FCRA) claim to survive a Civ.R. 12(B)(6) motion. The fourth issue is whether the
complaint sufficiently pled a Consumer Sales Practices Act (CSPA) violation.
{¶2} For the reasons expressed below, the second, third, and fourth issues
have no merit, and thus, the trial court’s dismissal of the TILA, FCRA and CSPA
claims are hereby affirmed. Regarding the first issue, this argument has merit.
Pursuant to R.C 2307.60 and 2307.61, there is a civil cause of action for damages
that result from a theft offense. Furthermore, R.C. 2307.61(G) specifically indicates
that recovery of damages in a civil action for a theft offense does not require a
criminal conviction. Thus, taking all factual allegations in the counterclaim as true
and considering all reasonable inferences, the counterclaim adequately pled a theft
offense. Consequently, the trial court’s decision to dismiss the theft counterclaim on
a Civ.R. 12(B)(6) motion is hereby reversed and the cause is remanded for further
proceedings.
Statement of the Case
{¶3} In August 2007, a mortgage and note were executed for the property
located at 220 Maplewood Avenue, Struthers, Mahoning County, Ohio. Union
Capital Mortgage was listed as the lender and Joseph Rudzik and Erika Kieffer were
listed as the borrower. That mortgage and note were eventually assigned to
appellee.
 -2-

{¶4} In July 2012, CitiMortgage brought a foreclosure action against the
Rudziks claiming that they were in default on their note. In response to the
complaint, the Rudziks filed an answer and counterclaim. 08/21/12 and 09/04/12
Answer and Counterclaim. In the counterclaim, they factually assert that in 2009 they
learned about home loan modifications and inquired of CitiMortgage as to whether
they would be eligible for such a program. Allegedly CitiMortgage informed them that
they would likely be eligible and solicited an application from the Rudziks.
Thereafter, the Rudziks talked to a “specialist” from CitiMortgage on multiple
occasions and were told that they qualified for modification. The parties then
allegedly entered into a “trial period” where the date of the Rudziks’ payments
changed and the amount was reduced. The Rudziks contend that they faithfully
made the reduced payments. After months passed, the Rudziks received a letter
saying they were late on their payments. They claim that they called the “specialist”
and she allegedly told them to ignore the letter. They then proceeded to pay the
reduced amount. A later conversation revealed that the “trial period” payments were
put in escrow. The Rudziks claim that this action was done to cause them to default
on the loan. CitiMortgage then moved for foreclosure and stopped accepting
payments, even though according to the Rudziks they made the payments on time in
the amount told to them by CitiMortgage.
{¶5} Based on these facts, the Rudziks asserted four counterclaims. First,
they contended that CitiMortgage is civilly liable for theft and embezzlement under
Revised Code Chapters 2913 and 2307. Second, they asserted that CitiMortgage
violated the Truth in Lending Act (TILA) when it failed to make disclosures prior to the
“trial period” of the loan modification. Consequently, they contend CitiMortgage is
liable for monetary damages under the TILA. Third, they assert that CitiMortgage
violated the Fair Credit Report Act (FCRA) and that they are entitled to monetary
damages under that act. Lastly, they asserted that CitiMortgage violated the
Consumer Sales Practices Act (CSPA) because CitiMortgage’s actions were
deceptive and unconscionable practices under the CSPA. Specifically, the violations
of TILA and FCRA and CitiMortgage’s deliberate intent or reckless institutional
 -3-

incompetence baited and deceived the Rudziks into reliance on the “specialist’s”
representations.
{¶6} In response to the counterclaim, CitiMortgage filed a motion to dismiss
based on Civ.R. 12(B)(6), failure to state a claim upon which relief can be granted. It
asserted that the “theft and embezzlement” action fails because Revised Code
Chapter 2307 does not create a cause of action. Furthermore, it asserted that a
criminal violation cannot support a finding of civil liability unless it was actually
convicted of the referenced crime. In regards to the TILA claim, it asserted that such
a claim is barred by the statute of limitations and that even if it was not, the TILA
disclosures do not apply to trial periods or loan modifications. In regards to the
FCRA, it claims that the Rudziks failed to plead the satisfaction of the condition
precedent to bring the claim. Lastly, as to the CSPA claim, it asserted that the claim
was not pled sufficiently and that the claims are preempted by the TILA and FCRA.
{¶7} The Rudziks filed a motion in opposition. 12/10/12 Opposition Brief.
CitiMortgage then filed a reply brief. 12/31/12 Reply Brief. After considering each
party’s arguments, the trial court sustained the motion and dismissed all
counterclaims. 01/22/13 J.E.; 04/05/13 J.E. Thus, the only claim remaining before
the trial court was CitiMortgage’s foreclosure cause of action.
{¶8} The Rudziks filed a timely notice of appeal from those orders.
Assignment of Error
{¶9} “The Trial Court erred in granting the appellee’s motion to dismiss,
where the complaint allowed a plausible set of facts giving rise to relief.”
{¶10} A Civ.R. 12(B)(6) motion to dismiss for failure to state a claim upon
which relief can be granted is a procedural motion that tests the sufficiency of the
complaint. State ex rel. Hanson v. Guernsey Cty. Bd. of Commrs., 65 Ohio St.3d
545, 548, 605 N.E.2d 378 (1992). In order to dismiss a complaint for failure to state a
claim upon which relief can be granted, the court must find beyond doubt that
appellant can prove no set of facts warranting relief after it presumes all factual
allegations in the complaint are true, and construes all reasonable inferences in
appellant's favor. State ex rel. Seikbert v. Wilkinson, 69 Ohio St.3d 489, 490, 633
N.E.2d 1128 (1994). Therefore, the standard of review for a Civ.R. 12(B)(6) motion
 -4-

to dismiss is de novo; the appellate court is required to independently review the
complaint or counterclaim to determine if the dismissal was appropriate. Ferreri v.
Plain Dealer Publishing Co., 142 Ohio App.3d 629, 639, 756 N.E.2d 712 (8th
Dist.2001).
{¶11} As aforementioned, the Rudziks asserted four counterclaims. Each will
be addressed in turn.
1. Theft
{¶12} At the outset it is noted that the Rudziks’ counterclaim is for both “theft”
and “embezzlement.” Embezzlement has been codified in the theft statute in R.C.
2913.02(A)(2). State v. Dobbins, 4th Dist. No. 11CA6, 2011-Ohio-6777, ¶ 14, citing
State v. Dortch, 2d Dist. No. 17700, 1999 WL 819569 (Oct. 15, 1999). Thus, in
referring to this cause of action it will be referred to solely as theft since theft
encompasses embezzlement.
{¶13} Their theft counterclaim is based on R.C. 2307.60 and 2307.61. These
provisions provide:
(A)(1) Anyone injured in person or property by a criminal act has,
and may recover full damages in, a civil action unless specifically
excepted by law, may recover the costs of maintaining the civil action
and attorney's fees if authorized by any provision of the Rules of Civil
Procedure or another section of the Revised Code or under the
common law of this state, and may recover punitive or exemplary
damages if authorized by section 2315.21 or another section of the
Revised Code.
R.C. 2307.60(A)(1).
(A) If a property owner brings a civil action pursuant to division
(A) of section 2307.60 of the Revised Code to recover damages from
any person who willfully damages the owner's property or who commits
a theft offense, as defined in section 2913.01 of the Revised Code,
involving the owner's property, the property owner may recover as
follows: * * *
R.C. 2307.61(A).
 -5-

{¶14} The Rudziks contend that these two sections create a civil action for
willful damage or theft. CitiMortgage agrees that these provisions create a civil action
for theft offenses as defined in R.C. 2913.01. From the plain language of the statute,
both parties are correct in their positions; a reading of the two provisions does appear
to create a civil action for theft as defined in R.C. 2913.01.
{¶15} CitiMortgage, however, contends that even though a civil action for theft
offenses as defined in R.C. 2913.01 exists, the matter was still properly dismissed for
two reasons. First, it contends that the facts asserted by the Rudziks do not amount
to a theft offense as defined in R.C. 2913.01. Second, it contends that it is well-
settled that a criminal violation cannot support a finding of liability for a civil claim
unless the defendant was actually convicted of the referenced crime.
{¶16} Starting with CitiMortgage’s first position, we must determine,
presuming all factual allegations in the complaint are true, if those facts fit into the
definition of one of the theft offenses as defined in R.C. 2913.01. That section states:
(K) “Theft offense” means any of the following:
(1) A violation of section 2911.01, 2911.02, 2911.11, 2911.12,
2911.13, 2911.31, 2911.32, 2913.02, 2913.03, 2913.04, 2913.041,
2913.05, 2913.06, 2913.11, 2913.21, 2913.31, 2913.32, 2913.33,
2913.34, 2913.40, 2913.42, 2913.43, 2913.44, 2913.45, 2913.47,
2913.48, former section 2913.47 or 2913.48, or section 2913.51,
2915.05, or 2921.41 of the Revised Code;
R.C. 2913.01(K)(1).
{¶17} A review of all of these sections reveals that at least one of those
statutes could potentially apply, R.C. 2913.02, theft. Section (A)(2) and (3) of that
statute states:
No person, with purpose to deprive the owner of property or
services, shall knowingly obtain or exert control over either the property
or services in any of the following ways:
***
(2) Beyond the scope of the express or implied consent of the
owner or person authorized to give consent;
 -6-

(3) By deception;
R.C. 2913.02(A)(2), (3).
{¶18} As previously stated, (A)(2) is a codification of the common law crime of
embezzlement. Typically, embezzlement occurs when an employee steals money
from its employer. Section (A)(2) is not specific just to the typical embezzlement, it
can also apply any time a person acts beyond the scope of the consent of the owner.
{¶19} The factual allegations asserted in the counterclaim were that the
Rudziks asked CitiMortgage whether they were eligible for a home loan modification.
CitiMortgage told them there was a program and solicited an application from them.
In completing the applications, they had a number of conferences with a specialist
from CitiMortgage. The Rudziks were told that they qualified and that they would be
entering a trial period and they were to make a specified reduced payment during the
trial period. They did this. After months of making the reduced payments, they
received a letter saying that they were late on the payments, which seemed “odd” to
them since they never missed a payment. The Rudziks then called the specialist
who told them to ignore the letter and that everything was under control. They
continued to make the reduced payments. A subsequent conversation with
CitiMortgage revealed that the trial period payments were put in escrow. This caused
the Rudziks to default on the loan. As a result, CitiMortgage moved to foreclose.
{¶20} Considering these allegations and the logical inferences drawn from
them, the Rudziks could be claiming that CitiMortgage acted beyond the scope of
their express or implied consent. The Rudziks were consenting for the trial period
payments to be used to pay the loan; this was an agreement for a loan modification
with a reduced payment. The Rudziks were under the impression that a permanent
modification was forthcoming. However, CitiMortgage put the trial period payments
in escrow. This was beyond the scope of what the Rudziks agreed to. Furthermore,
there is an allegation that it was done for the purpose of causing the Rudziks to
default on the loan. Possibly, this may fit theft by deception. According to the
Rudziks, they were told to pay a reduced payment during the trial period, and they
did that. However, CitiMortgage took that money and put it in escrow as a means to
cause them to default on the loan.
 -7-

{¶21} Given the asserted facts and logical inferences, we hold, for purposes
of reviewing this cause of action against a failure to state a claim attack, that this
complaint adequately raises a theft cause of action.
{¶22} CitiMortgage contends that even if we hold as such, the cause of action
was still properly dismissed. According to CitiMortgage, it is well-settled that a
criminal violation cannot support a finding of liability for a civil claim unless the
alleged offender was actually convicted of the referenced crime. CitiMortgage cites
case law in support of its position.
{¶23} Although it does cite us to case law supporting its position, our analysis
starts with provision (G) in R.C. 2307.61. That section provides:
(G)(1) In a civil action to recover damages for willful property
damage or for a theft offense, the trier of fact may determine that an
owner's property was willfully damaged or that a theft offense involving
the owner's property has been committed, whether or not any person
has pleaded guilty to or has been convicted of any criminal offense or
has been adjudicated a delinquent child in relation to any act involving
the owner's property.
R.C. 2307.61(G)(1).
{¶24} This section clearly indicates recovery of damages in a civil action for a
theft offense is not dependent upon a criminal conviction.
{¶25} The cases cited by CitiMortgage either disregard this section and/or do
not deal with a theft offense. Cook v. Criminger, 9th Dist. No. 22313, 2005-Ohio-
1949, ¶ 15 (there was a theft offense, however, no discussion of the implications of
R.C. 2307.61(G)(1)); Tri-State Computer Exchange, Inc. v. Burt, 1st Dist. No. C-
0200345, 2003-Ohio-3197, ¶ 22-23 (no discussion of the implications of R.C.
2307.61(G)(1) and it does not appear that there were theft offenses); Hite v. Brown,
100 Ohio App.3d 606, 611, 654 N.E.2d 452 (8th Dist.1995) (no discussion of R.C.
2307.61(G)(1) and the allegations were based on sexual battery, not theft); Ivancic v.
Cleveland Elec. Illum. Co., 8th Dist. No. 63372, 1993 WL 367092 (coercion, not theft
offenses and no discussing of R.C. 2307.61(G)(1)). Furthermore, these cases are
 -8-

appellate court cases that are not from our district and as such are not binding upon
us. At most these cases could potentially provide persuasive authority.
{¶26} That said, we find no guidance from them because they do not consider
the language of R.C. 2307.61(G)(1). An independent review reveals that there is
authority from one of our sister districts that considered R.C. 2307.61(G)(1), in the
context of a theft offense. H & W Door Co. v. Stemple, 11th Dist. No. 93-P-0031,
1994 WL 116257. That court stated, “It is clear that R.C. 2307.61 is a civil remedy
and that it is available even though the defendant has not pled guilty to, or been
convicted of, any criminal offense in relation to any act involving the owner's
property.” Id. Considering the language of R.C. 2307.61(G)(1) that statement
appears to be correct.
{¶27} Consequently, given the above, and specifically relying on the clear
language of R.C. 2307.61(G)(1), we hold that a criminal conviction is not required.
{¶28} Therefore, since the counterclaim raised a valid theft cause of action,
the trial court erred when it dismissed the theft counterclaim; no criminal conviction is
required to maintain a civil cause of action for damages caused by a theft offense.
2. TILA
{¶29} The second counterclaim asserts a Truth in Lending Act cause of
action, 15 U.S. C. 1601, et seq. The Rudziks claim that the loan modification and
trial period was an extension of credit by CitiMortgage. Therefore, they assert that
under the TILA certain disclosures were required to be made. For instance, the
annual percentage rate, the term of the loan, the length of the trial period, and the
total costs to appellants. By failing to disclose those terms, the Rudziks allege that
CitiMortgage violated the TILA. While they acknowledge that the one year statute of
limitations has run, they assert that a discovery period should apply.
{¶30} In response, CitiMortgage asserts that home loan modifications are not
extensions of credit as defined by the TILA and thus, there is no requirement for
disclosures. Furthermore, even if it is and there are required disclosures, the one
year statute of limitations has run. Therefore, the claim is untimely. It asserts that a
discovery period for tolling the statute of limitations is not needed because the TILA
claim is based solely on the allegation that appellee failed to make disclosures at the
 -9-

time the trial modification was offered in 2009. Any alleged violation could have been
discovered upon reasonable inspection.
{¶31} CitiMortgage cites numerous cases that are directly on point.
Admittedly, those cases are not from this district, the Ohio Supreme Court or the
Federal Sixth Circuit Court of Appeals.
{¶32} The starting point for the discussion of whether the TILA has been
violated is to look at the TILA and what is it intended to do. The District Court of
Vermont has succinctly explained:
The TILA is a consumer protection act that seeks to “avoid the
uninformed use of credit.” 15 U.S.C. § 1601(a). It is designed to help a
consumer more readily compare “the various credit terms available to
him[.]” Schnall v. Marine Midland Bank, 225 F.3d 263, 267 (2d
Cir.2000) * * * “To this end, the TILA requires creditors to disclose
clearly and accurately all the material terms of a credit transaction.”
Palmer, 465 F.3d at 27 * * * “Since the statute is remedial in nature, its
terms must be construed in liberal fashion if the underlying
[c]ongressional purpose is to be effectuated.” N.C. Freed Co., 473 F.2d
at 1214 (citations omitted). Creditors who fail to comply with the TILA
disclosure requirements are subject to civil liability. See 15 U.S.C. §
1640(a). However, despite its broad protections, the TILA “is not a
general prohibition of fraud in consumer transactions or even in
consumer credit transactions. Its limited office is to protect consumers
from being misled about the cost of credit.” Gibson v. Bob Watson
Chevrolet-Geo, Inc., 112 F.3d 283, 285 (7th Cir.1997).
Pursuant to its authority “to elaborate and expand the legal
framework governing commerce in credit” the Federal Reserve Board
has implemented governing regulations under the TILA, commonly
referred to as “Regulation Z.” 12 C.F.R. part 226 (1999); see also Ford
Motor Credit Co. v. Milhollin, 444 U.S. 555, 559-60 (1980). Regulation
Z mandates that disclosures be made clearly and conspicuously in
writing and include, among other things, the amount financed, the
 -10-

finance charge, the annual percentage rate, total payments and total
sale price. See 12 C.F.R. §§ 226.17(A), 226.18(B), (d), (e), (g), (j).
Norton-Griffiths v. Wells Fargo Home Mortg., D.Vt. 5:10-CV-169, 2011 WL 61609
(Jan. 4, 2011).
{¶33} TILA provides borrowers with two remedies for disclosure violations: (1)
rescission, 15 U.S.C. 1635(A), and (2) damages, 15 U.S.C. 1640. The action for
damages, which is what is sought in this case, has a one year statute of limitations.
Washington v. Natl. City Mortg., Co., N.D. Cal. No. C 10-5042 SBA, 2011 WL
1842836 (May 16, 2011).
{¶34} With that basic understanding of TILA, we now turn to the question of
whether this “trial period” that was implemented required TILA disclosures.
{¶35} In Norton-Griffith, the Forbearance Agreement temporarily modified the
amount of the monthly mortgage payment for a four month trial period. The Vermont
Federal District Court stated that this temporary modification did not require TILA
disclosures. Norton-Griffiths v. Wells Fargo Home Mortg., D.Vt. 5:10-CV-169, 2011
WL 61609 (Jan. 4, 2011). It cited a bankruptcy court case for the proposition that an
agreement with respect to the principal reduction does not constitute refinancings
that require new TILA disclosure because the existing obligation was not satisfied or
replaced by the reduction agreement. In re Hart, 246 B.R. 709, 738 (Bankr.
D.Mass.2000). Furthermore, the Norton-Griffith decision stated that even if the “trial
period” was considered a loan modification agreement, it would still be exempt from
the TILA disclosure requirements because a loan modification does not constitute an
extension of new credit or a “refinancing.” Norton-Griffiths, citing 12 C.F.R.
226.20(A)(2) (excluding from the disclosure requirements for “refinancings” “[a]
reduction in the annual percentage rate with a corresponding change in the payment
schedule”). See also Diamond v. One West Bank, D.Ariz. No. CV-09-1593-PHX-
FJM, 2010 WL 1742536 (Apr. 29, 2010) (“A loan modification does not require
additional TILA disclosures, particularly where no new monies are advanced.”);
Sheppard v. GMAC Mortg. Corp., 299 B.R. 753, 760-63 (Bankr.E.D.Pa.2003) (loan
modification was not a refinancing under 12 C.F.R. 226.20(A) and therefore
defendant did not have to provide TILA disclosures, even when additional sum was
 -11-

added to plaintiffs’ original loan amount, as new obligation did not completely replace
the prior one); Castrillo v. Am. Home Mortg. Servicing, Inc., 670 F.Supp.2d 516, 528
(E.D.La.2009) (holding that where a loan modification agreement does not
“completely replace” an earlier mortgage, but rather “amends and supplements” it,
the document does “not give rise to disclosure requirements or rescission rights
under TILA.”); Washington v. Natl. City Mortg., Co., N.D. Cal. No. C 10-5042 SBA,
2011 WL 1842836 (May 16, 2011) (same); Green v. CitiMorgage, Inc., W.D.Vir. No.
5:11CV032, 2011 WL 5866230 (TILA disclosure requirements do not apply to
forbearance or loan modification agreements that simply reduce the interest rate and
payment schedule of a loan).
{¶36} Here, it appears from the pleadings that this “trial period” or loan
modification, never replaced the earlier mortgage. Specifically, by referring to it as a
trial period, it must be concluded that the modification was temporary and not
permanent. Furthermore, typically trial periods precede approval of a loan
modification. If a loan modification itself does not require disclosures under the TILA
then it would follow that a “trial period” that precedes the approval of the loan
modification would likewise not require disclosure under TILA. Thus, considering the
above cases, we conclude that the trial court properly dismissed this claim.
{¶37} However, that is not the only reason the trial court properly dismissed
the claim. As discussed above, there is a one year statute of limitations for seeking
damages for a TILA violation. The Rudziks’ counterclaim indicates that the attempt
to have a loan modification began in 2009. However, the counterclaim was not filed
until September 2012. Thus, the statute of limitations had expired.
{¶38} The Rudziks want this court to find that a discovery period is applicable.
In Washington, the Federal Northern District Court of California recognized that in the
context of a TILA damages claim, equitable tolling can “suspend the limitations period
until the borrower discovers or had a reasonable opportunity to discovery the fraud or
nondisclosures that form the basis of the * * * action.” Washington, N.D.Cal. No. C
10-5042 SBA, 2011 WL 1842836. It then stated, “The salient question is whether
‘the TILA violations alleged could * * * have been discovered by due diligence during
 -12-

the one-year statutory period[.]” Id., quoting Lingad v. Indymac Federal Bank, 682
F.Supp.2d 1142, 1147 (E.D.Cal.2010).
{¶39} In Washington, the reason the Plaintiffs had for failing to discover the
alleged nondisclosures were they “did not have any reason to question Defendants’
motives or tactics until things began to go wrong.” Id. This is similar to the reason
provided in this case. Here, they did not check for the possibility of nondisclosures
until the foreclosure. From their allegations and briefs, there is nothing to indicate
that there was any impediment to their ability to discover the alleged TILA violations
within the one year period. The fact that things did not go wrong until later does not
provide a basis for tolling the statute of limitations.
{¶40} Therefore, the trial court also properly dismissed the TILA claim
because the statute of limitations had expired. Consequently, for the above reasons,
the TILA claim was properly dismissed.
3. FCRA
{¶41} The Rudziks’ Fair Credit Reporting Act claim is based on 15 U.S.C.
1681s-2(a) and (b). In the appellate brief, they correctly admit that there is no
individual right of action under (a). Therefore, our analysis is directed solely to
division (b) and whether the pleadings were sufficient. 15 U.S.C. 1681s-2 is titled
Responsibilities of Furnishers of Information to Consumer Reporting Agencies.
Section (b) provides:
(b) Duties of furnishers of information upon notice of dispute
(1) In general
After receiving notice pursuant to section 1681i(a)(2) of this title
of a dispute with regard to the completeness or accuracy of any
information provided by a person to a consumer reporting agency, the
person shall—
(A) conduct an investigation with respect to the disputed
information;
(B) review all relevant information provided by the consumer
reporting agency pursuant to section 1681i(a)(2) of this title;
 -13-

(C) report the results of the investigation to the consumer
reporting agency;
(D) if the investigation finds that the information is incomplete or
inaccurate, report those results to all other consumer reporting
agencies to which the person furnished the information and that
compile and maintain files on consumers on a nationwide basis; and
(E) if an item of information disputed by a consumer is found to
be inaccurate or incomplete or cannot be verified after any
reinvestigation under paragraph (1), for purposes of reporting to a
consumer reporting agency only, as appropriate, based on the results
of the reinvestigation promptly—
(i) modify that item of information;
(ii) delete that item of information; or
(iii) permanently block the reporting of that item of information.
15 U.S.C. 1681s-2(b)(1).
{¶42} The Southern District Court of Ohio in discussing 15 U.S.C. 1681s-2(b)
has explained:
The Fair Credit Reporting Act is remedial legislation, which is to
be liberally construed in favor of consumers. See Jones v. Federated
Fin. Reserve Corp., 144 F.3d 961 (6th Cir.1998). Simply stated, FCRA
regulates the communication of consumer reports by credit reporting
agencies. 15 U.S.C. § 1681 et seq. The FCRA places specific
requirements upon individuals and entities that qualify as consumer
reporting agencies when they communicate consumer information that
constitutes a “consumer report” under FCRA. Id.
One such requirement is that “furnishers of credit information”
must “report accurate information to consumer reporting agencies
regarding a consumer's credit.” Bach v. First Union Nat'l Bank, 149
F.App'x 354, 358 (6th Cir.2005) (citing 15 U.S.C. § 1681s–2(a)(1)(A)). If
a consumer disputes the accuracy of information furnished to a credit
reporting agency, the furnisher is obligated to investigate the dispute
 -14-

and correct any inaccuracies discovered. Id. (citing 15 U.S.C. § 1681s–
2(b)(1)(A)-(D)). A plaintiff alleging violations of § 1681s–2(b) may bring
a private cause of action to enforce his rights against the furnisher, id.,
but only if the plaintiff can “show that the furnisher received notice from
a consumer reporting agency, not the plaintiff, that the credit
information is disputed,” Downs v. Clayton Homes, Inc., 88 Fed. App'x
851, 853–54 (6th Cir.2004) (citing Young v. Equifax Credit Info. Servs.,
Inc., 294 F.3d 631, 639–40 (5th Cir.2002)).
In this case, the Plaintiff has not alleged that he disputed the
accuracy of the information the Defendants reported or that the
Defendants received notice from a credit reporting agency of the
dispute. The Plaintiff has therefore failed to plead all of the necessary
elements of an FCRA claim. See Downs, 88 F. App'x at 854 (“In this
case, the [plaintiffs] did not allege that they had filed a dispute with a
credit reporting agency. Accordingly, they had no claim under the
FCRA.”); Bridge v. Ocwen Fed. Bank, 669 F.Supp.2d 853, 861–62
(N.D.Ohio 2009) (granting motion to dismiss § 1681 s–2(b) claim
because plaintiff had “not alleged compliance with the statutory notice
requirements”). The Court accordingly GRANTS the Defendants'
motion to dismiss Count XIII.
Miller v. Countrywide Home Loans, S.D.Ohio No. 2:11-CV-393, 2012 WL 4503553
(Sept. 28, 2012), quoting Hammond v. CITIBANK. N.A., S.D.Ohio No. 2:10–CV–
1071, 2011 WL 4484416 (Sept. 27, 2011).
{¶43} CitiMortgage claims that the Rudziks failed to allege that they filed a
dispute with a credit reporting agency and that CitiMortgage received notice of the
dispute from a credit reporting agency. Thus, according to it, the claim fails as a
matter of law.
{¶44} The Rudziks argue that they did plead these things in paragraphs 10
through 15 of the counterclaim. Those paragraphs state:
 -15-

(10) After the months passed Mr. Rudzik and Ms. Kieffer we
[sic] received a letter in the mail saying they were late on our
payments–odd, because they never missed a payment.
(11) Mr. Rudzik and Ms. Kieffer called Ms. Patterson [the
specialist], who–giving rise to another reasonable reliance–said to
ignore the letter, which Mr. Rudzik and Ms. Kieffer did, reasonably
thinking Ms. Patterson was competent and had everything under
control.
(12) After that, Mr. Rudzik and Ms. Kieffer hadn’t heard from Ms.
Patterson relative to any “trial period” or, as a logical complement, any
permanent modification, so they proceeded to pay their normal house
payment.
(13) A subsequent conversation revealed that CitiMortgage, Inc.
put the “trial period” payments in escrow, such to default Mr. Rudzik
and Ms. Kieffer.
(14) CitiMortgage, Inc. moved for foreclosure, and stopped
accepting payments, despite the fact that Mr. Rudzik and Ms. Kieffer
made all payments timely, and in the amounts CitiMortgage Requested
[sic].
(15) As a direct and proximate cause of the foregoing, Mr.
Rudzik and Ms. Kieffer have endured financial and reputations
damages as well as distress beyond what a normal person would be
reasonably expected to endure.
09/04/12 Counterclaim.
{¶45} Considering the above statements and the law regarding what must be
pled for a FCRA claim, we hold that the trial court correctly dismissed the claim; the
counterclaim did not plead all necessary elements, namely that they disputed the
accuracy of the information that CitiMortgage reported or that CitiMortgage received
notice from a credit reporting agency of the dispute. See Miller and Hammond.
 -16-

4. CSPA
{¶46} The final counterclaim is based on the Consumer Sales Practice Act
found at R.C. 1345 et seq. Part of the action under the CSPA is based on alleged
violations of the TILA and FCRA. Since both of those arguments fail, the CSPA
violation that is based upon them also fails.
{¶47} That said, the claim is also based on the language in the CPSA, which
states, “No supplier shall commit an unfair or deceptive act or practice in connection
with a consumer transaction. Such an unfair or deceptive act or practice by a
supplier violates this section whether it occurs before, during, or after the
transaction.” R.C. 1345.02(A). In the appellate brief, the Rudziks claim that the
“consumer transaction” is the offer and acceptance of the mortgage modification. In
response, CitiMortgage contends that mortgage or a modification of a mortgage is
not a “consumer transaction” and cites to a recent Ohio Supreme Court’s decision.
{¶48} R.C. 1345.01(A) defines a “consumer transaction as:
[The] sale, lease, assignment, award by chance, or other transfer
of an item of goods, a service, a franchise, or an intangible, to an
individual for purposes that are primarily personal, family, or household,
or solicitation to supply any of these things. “Consumer transaction”
does not include transactions between persons, defined in sections
4905.03 and 5725.01 of the Revised Code, and their customers, except
for transactions involving a loan made pursuant to sections 1321.35 to
1321.48 of the Revised Code and transactions in connection with
residential mortgages between loan officers, mortgage brokers, or
nonbank mortgage lenders and their customers; transactions involving
a home construction service contract as defined in section 4722.01 of
the Revised Code; transactions between certified public accountants or
public accountants and their clients; transactions between attorneys,
physicians, or dentists and their clients or patients; and transactions
between veterinarians and their patients that pertain to medical
treatment but not ancillary services.
R.C. 1345.01(A).
 -17-

{¶49} The Ohio Supreme Court has recently reviewed this provision in the
context of determining whether the servicing of a residential mortgage loan is a
“consumer transaction.” Anderson v. Barclay's Capital Real Estate, Inc., 136 Ohio
St. 3d 31, 32 (2013). It determined that it is not and that an “entity that services a
residential mortgage loan is not a ‘supplier’ as defined in R.C. 1345.01(C).” Id. It
went on to explain:
In the servicing of a real estate mortgage, one essential element
of R.C. 1345.01(A) is not met: there is no sale, lease, assignment,
award by chance, or other transfer of a service to a consumer.
Mortgage servicing is a contractual agreement between the
mortgage servicer and the financial institution that owns both the note
and mortgage. Mortgage servicing is carried out in the absence of a
contract between the borrower and the mortgage servicer. We
recognize that the mortgage servicer's duties may involve direct and
indirect interactions with borrowers on behalf of the financial institution.
Sometimes the mortgage servicer may even assist the borrower in
modifying the terms of the note, but the mortgage servicer undertakes
the negotiation not for itself but on behalf of the financial institution.
These interactions do not satisfy the language found in R.C.
1345.01(A). Instead, mortgage servicing, similar to appraisal services
and title services, is a “collateral service” associated with a pure real
estate transaction. Except for the transactions specified in the statute,
the CSPA does not apply to “collateral services that are solely
associated with the sale of real estate and are necessary to effectuate a
‘pure’ real estate transaction.” U.S. Bank v. Amir, 8th Dist. No. 97438,
2012-Ohio-2772, 2012 WL 2355620, ¶ 42–43, * * *.
Moreover, transactions between mortgage-service providers and
homeowners are not “consumer transactions” within the meaning of the
CSPA because there is no “transfer of an item of goods, a service, a
franchise, or an intangible, to an individual.” See R.C. 1345.01(A) (“
‘Consumer transaction’ means a sale, lease, assignment, award by
 -18-

chance, or other transfer of an item of goods, a service, a franchise, or
an intangible, to an individual for purposes that are primarily personal,
family, or household, or solicitation to supply any of these things”). A
financial institution may contract with a mortgage servicer to service the
loan, but the mortgage servicer does not transfer a service to the
borrower, which is what would be required in order to trigger the CSPA.
Id. at ¶ 12-15.
{¶50} Consequently, based upon that decision, the CSPA claim was properly
dismissed.
Conclusion
{¶51} For the foregoing reasons, the trial court correctly dismissed the TILA,
FCRA and CSPA claims. Those decisions are hereby affirmed. As to the theft claim,
given the allegations in the counterclaim and all reasonable inferences, this claim
survives the Civ.R. 12(B)(6) motion. Thus, the trial court’s decision to the contrary is
reversed and the cause of action is remanded to proceed on the theft claim.

Donofrio, J.,
DeGenaro, P.J.,

DeGenaro, P.J., concurring in part and dissenting in part.
{¶52} I must dissent from my colleagues' conclusion that the Rudziks
asserted a civil claim of theft sufficient to survive a motion to dismiss, but concur with
the balance of the majority opinion.
{¶53} The transaction between the parties involves a note and mortgage to
memorialize and secure a loan from CitiMortgage to finance the Rudziks' purchase of
a home. At some point the Rudziks defaulted on the note and according to the
Rudziks, the parties agreed to a 'trial modification period.' As this is an appeal of a
judgment pursuant to Civ.R. 12(B)(6), we must presume these facts are true and
construe them in favor of the Rudziks. Nonetheless, the Rudziks have failed to
sufficiently plead a claim of theft against CitiMortgage.
 -19-

{¶54} As noted by the majority in its discussion affirming the dismissal of the
TILA claim, the trial period/loan modification never replaced the mortgage. Majority
Opinion, ¶36. Thus, the Rudziks were still bound by the terms of the note and
mortgage to make the monthly payments in the full amount agreed upon. Because
the Rudziks' fell into arrears pursuant to those terms, CitiMortgage properly exercised
its contractual remedy of filing a foreclosure complaint.
{¶55} Framing the parties' contractual relationship with the elements of the
theft statute relied upon by the majority, R.C. 2913.02, the Rudziks consented to
CitiMortgage applying any funds it received from them to the outstanding loan. The
Rudziks have not alleged that CitiMortgage deprived them of their property and, for
example, applied the funds to another customer's loan. The Rudziks had a
contractual obligation to make the full monthly payment. Once they made their
monthly payment, either the full or the reduced amount, the funds became
CitiMortgage's property. The Rudziks do not, nor can they, claim that CitiMortgage
was not entitled to receive or retain these reduced monthly payments. Escrowing the
reduced payments was a bookkeeping choice that CitiMortgage made; it does not
affect ownership of those funds.
{¶56} Even if CitiMortgage had followed the bookkeeping practice suggested
by the Rudziks' argument, and 'applied' the reduced payments to their loan, this is a
distinction without a difference. As noted above, the majority correctly held that the
Rudziks were still bound by the original terms because the trial period did not result in
a loan modification, which would then govern the parties' transaction. Pursuant to
the terms of the note and mortgage, the Rudziks were in default which triggered
CitiMortgage's contractual right to seek foreclosure.
{¶57} For these reasons, the Rudziks' have failed to sufficiently plead a claim
of civil theft against CitiMortgage; thus the trial court's decision should be affirmed in
its entirety.