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Palmer v. Homecomings Financial

January 6, 2010


The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge


This lawsuit arises out of a home mortgage loan transaction between Plaintiff Shauna Palmer and Defendant Homecomings Financial LLC ("Homecomings"). Palmer refinanced her existing home mortgage loan in April 2007, and she claims that Homecomings violated various statutes and regulations by, among other things, charging her fees that were unrelated to the work performed in connection with her loan. This Court granted-in-part and denied-in-part Homecomings' motion to dismiss Palmer's Amended Complaint, dismissing three of Palmer's four claims but holding that Palmer stated a claim under the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601, et seq. See [31] Order (June 25, 2009); [32] Memo. Op. (June 25, 2009). Palmer filed a Third Amended Complaint restating her RESPA claim and asserting a claim under the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. §§ 1691 et seq. Currently pending before the Court is Homecomings' motion to dismiss the Third Amended Complaint. Homecomings has asserted statute of limitations defenses with respect to both claims and further contends that Palmer has failed to state a claim for relief under the ECOA. For the reasons explained below, the Court shall GRANT Homecomings' Motion to Dismiss Palmer's RESPA claim on statute of limitations grounds and HOLD IN ABEYANCE Homecomings' Motion to Dismiss Palmer's ECOA claim for failure to state a claim upon which relief can be granted.


On April 26, 2007, Palmer refinanced her existing first mortgage loan on her home in Washington, D.C., with a loan from Homecomings. See Third Am. Compl. ¶ 23. Although her credit score exceeded 700, Palmer was given a loan with an adjustable rate of nearly nine percent, although she believes she qualified for a fixed rate of around six percent. Id. ¶ 24. Palmer paid $19,000 in points and fees in connection with the loan. Id. ¶ 25. Palmer claims that she was not given an opportunity to read the loan documents at closing and was not informed what her broker's total compensation would be prior to the closing. Id. ¶¶ 27-28. Palmer alleges generally that the terms of the loan were unlawful, predatory, and discriminatory. Id. ¶ 29.

Palmer initiated this action on March 13, 2008 when she filed a complaint in the Superior Court for the District of Columbia. After Palmer filed an amended complaint on October 9, 2008, Homecomings removed the case to federal court on October 27, 2008.


The Federal Rules of Civil Procedure require that a complaint contain "'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); accord Erickson v. Pardus, 551 U.S. 89, 93 (per curiam). Although "detailed factual allegations" are not necessary to withstand a Rule 12(b)(6) motion to dismiss, to provide the "grounds" of "entitle[ment] to relief," a plaintiff must furnish "more than labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Id. at 1964-65; see also Papasan v. Allain, 478 U.S. 265, 286 (1986). Instead, a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. "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." Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556).

In evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, the court must construe the complaint in a light most favorable to the plaintiff and must accept as true all reasonable factual inferences drawn from well-pleaded factual allegations. In re United Mine Workers of Am. Employee Benefit Plans Litig., 854 F. Supp. 914, 915 (D.D.C. 1994); see also Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir. 1979) ("The complaint must be 'liberally construed in favor of the plaintiff,' who must be granted the benefit of all inferences that can be derived from the facts alleged."). However, as the Supreme Court recently made clear, a plaintiff must provide more than just "a sheer possibility that a defendant has acted unlawfully." Iqbal, 129 S.Ct. at 1950. Where the well-pleaded facts set forth in the complaint do not permit a court, drawing on its judicial experience and common sense, to infer more than the "mere possibility of misconduct," the complaint has not shown that the pleader is entitled to relief. Id. at 1950.


Palmer's Third Amended Complaint asserts two claims: (1) that Homecomings violated provisions of the Real Estate Settlement Procedures Act by giving kickbacks to Palmer's mortgage broker for the referral of business to Homecomings and giving the broker a split of the settlement charges other than for services actually performed; and (2) that Homecomings violated the Equal Credit Opportunity Act by discriminating against Palmer on the basis of her race and/or sex. Homecomings has moved to dismiss on the ground that each of these claims is barred by the statute of limitations in their respective statutes. Palmer contends that her RESPA and ECOA claims are timely because they relate back to earlier pleadings that were timely filed. Homecomings has also moved to dismiss the ECOA claim on the ground that Palmer has failed to state a claim for relief. The Court shall address each argument in turn.

A. RESPA Statute of Limitations

Palmer's Third Amended Complaint alleges violations of RESPA Section 8, 12 U.S.C. § 2607. Palmer actually alleges two separate violations of the statute: (i) giving kickbacks to mortgage brokers for the referral of business in violation of § 2607(a) and (ii) splitting settlement charges with brokers for services not actually performed in violation of § 2607(b). See Third Am. Compl. ¶¶ 31-32. The statute of limitations for claims under § 2607 is one year. 12 U.S.C. § 2614; Winstead v. EMC Mortgage Corp., 621 F. Supp. 2d 1, 4 (D.D.C. 2009). A cause of action under § 2607 accrues on the date of the closing. See Snow v. First Am. Title Ins. Co., 332 F.3d 356, 359 (5th Cir. 2003) (holding that the "date of the occurrence of the violation" language in § 2614 refers to the closing); Winstead, 621 F. Supp. 2d at 4. Therefore, Palmer's claim accrued in April 2007, the closing date for her refinancing. See Third Am. Compl. ¶ 23. Palmer first stated her RESPA claim in the Amended Complaint filed on October 9, 2008. See [22] Am. Compl. ¶¶ 33-36. Palmer does not dispute that this was more than one year after her claim accrued. Rather, she argues that the RESPA claim in her Amended Complaint relates back to the filing of her original Complaint, which was filed within a year of the closing. See Pls.' Mem. Opp'n to Def.'s Mot. to Dismiss ("Opp'n") at 7.

Palmer's original Complaint, filed pro se, is not a model of clarity. Among the numerous claims it asserts are breach of contract, transacting business without a certificate of authority, misrepresentation, constructive fraud, quasi-contract and unjust enrichment, conversion, gross negligence, and unlawful entry and detainer. See Opp'n, Ex. 1 (Complaint) at 7-10. The crux of its allegations, however, is that the Defendant*fn1 "is not the actual and/or legal holder of the debt [Palmer] owe[s]" and therefore cannot foreclose on the property. See id. at 1, 6; see also id. at 4 ("From the Defendants' own records they have shown that it is impossible for them to currently be the holder of this note."). The Complaint alleges that Defendant sold the mortgage and promissory note to a government sponsored enterprise several months after the closing and therefore no longer owns the debt. Id. at 1-2. It then goes on to state that

Pursuant to the Defendant's Liability for Failure to Comply with any provision of Section 6 RESPA (24 CFR 3500.21) and the terms of the note ...

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