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Vaughn v. Wells Fargo Bank N.A.

United States District Court, W.D. Arkansas, Fayetteville Division

April 25, 2017


          OPINION & ORDER


         Currently before the Court is a Partial Motion to Dismiss (Doc. 8) filed by Defendant Wells Fargo Bank, N.A. ("Wells Fargo") on March 1, 2017. Plaintiffs Matthew and Jennifer Vaughn filed their Amended Response (Doc. 13) on March 22, 2017, and Wells Fargo filed its Reply (Doc. 15) on March 29, 2017. For the reasons stated herein, the Court GRANTS Wells Fargo's Partial Motion to Dismiss.

         I. BACKGROUND

         According to the Vaughns' Complaint (Doc. 3), they purchased their home at 1557 East Cortland St. in Fayetteville, Arkansas, in 2002 by executing a promissory note and mortgage that was subsequently assigned to Wells Fargo. From the time of their purchase to 2015, the Vaughns did not miss a single mortgage payment. Unfortunately, on December 22, 2014, Matthew Vaughn was in a serious car accident, from which he is still rehabilitating. The medical bills and lost income from this incident caused the Vaughns to deplete their savings by September of 2015, leaving them unable to make their mortgage payments. Accordingly, they began working with Wells Fargo to modify their loan. Despite their continued participation in the loan modification process, the Vaughns received a Notice of Default and Intention to Sell from Wells Fargo's trustee dated April 6, 2016, listing a sale date of June 13, 2016. (Doc. 3-1, pp. 2-3). They then received Amended Notices of Default and Intention to Sell dated: (i) July 11, 2016, postponing the foreclosure sale until August 8, 2016; (ii) September 12, 2016, postponing the foreclosure sale until October 17, 2016; (iii) October 11, 2016, postponing the foreclosure sale until November 14, 2016; and (iv) November 14, 2016, postponing the foreclosure sale until December 12, 2016. (Doc. 3-1). These notices were respectively recorded with the Washington County Circuit Clerk on April 8, 2016; July 11, 2016; September 16, 2016; October 17, 2016; and November 18, 2016. Id.

         The Vaughns contacted Wells Fargo in response to receiving each of these notices. On each occasion, Wells Fargo assured the Vaughns that their house would not be foreclosed upon while they were in the loan modification process. Despite these assurances, the Vaughns learned from a friend that their house was sold at auction on December 12, 2016. This prompted the Vaughns to file the instant suit in the Circuit Court of Washington County, Arkansas, which Wells Fargo then removed to this Court on February 8, 2017. The Vaughns' Complaint alleges that Wells Fargo violated three provisions of the Arkansas Statutory Foreclosure Act ("ASFA"), violated the Arkansas Fair Debt Collection Practices Act ("AFDCPA"), and violated the Arkansas Deceptive Trade Practices Act; that Wells Fargo committed fraud and constructive fraud; and that the principles of promissory estoppel and equitable estoppel invalidate Wells Fargo's sale of their home.

         Wells Fargo filed the instant Partial Motion to Dismiss (Doc. 8) pursuant to Fed.R.Civ.P. 12(b)(6) on March 1, 2017. The Motion contends that the Vaughns' AFDCPA claim and one of their ASFA claims fail to state claims upon which relief may be granted. Specifically, Wells Fargo argues that the AFDCPA does not apply to it because it is not a "debt collector" as defined by that statute. Wells Fargo also contends that it complied with the ASFA's provisions concerning the postponement of foreclosure sales. The Vaughns' response does not address the former argument, but does take issue with the latter. For the reasons stated herein, the Court agrees with Wells Fargo's interpretation of both statutes, and therefore GRANTS its Motion (Doc. 3).


         To survive a motion to dismiss, a complaint must provide "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). The purpose of this requirement is to "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting BellAtl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The Court must accept all of the Vaughns' Complaint's factual allegations as true, and construe them in the light most favorable to them, drawing all reasonable inferences in their favor. See Ashley Cnty., Ark. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009).

         However, the Vaughns' Complaint "must contain 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, 678 (2009) (quoting 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." Id. "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.' Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Id. In other words, while "the pleading standard that Rule 8 announces does not require 'detailed factual allegations, '... it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Id.


         Wells Fargo's issue with the Vaughns' AFDCPA claim is straightforward. That Act imposes civil liability on any "debt collector" who fails to comply with its provisions. Ark. Code. Ann. § 17-24-512. The AFDCPA defines "debt collector" as a person "who uses an instrumentality of interstate commerce or the mails in a business whose principal purpose is the collection of debts or who regularly collects or attempts to collect.. . debts owed or due or asserted to be owed or due another." Ark. Code Ann. § 17-24-502(5)(A). For purposes of Ark. Code Ann. § 17-24-507(b)(6)-a subsection of the AFDCPA-the Act also includes in the definition of "debt collector, " a person "who uses an instrumentality of interstate commerce or the mails in a business whose principal purpose is the enforcement of security interests." Ark. Code. Ann. § 17-24-502(5)(C). Subsection 507(b)(6) prevents the collection of a debt through the taking or threatened taking of a non-judicial action to effect dispossession of property when: (a) no present right exists to the property claimed as collateral; (b) the collector has no present intention to take possession of the property; or (c) the property is exempt by law from dispossession. See Ark. Code Ann. § 17-24-507(b)(6)(A)-(C). This subsection applies, for example, when:

a debtor owns two cars, a Ford and a Buick, and a creditor has a security interest in the Buick but not in the Ford. The debtor defaults, and the creditor hires [a defendant] to repossess the Buick. If, in order to put more pressure on the debtor to pay, [a defendant] repossessed the Ford as well, it would be violating the statutory provision that [the Court] ha[s] just [summarized].

Nadalin v. Auto. Recovery Bureau, Inc., 169 F.3d 1084, 1085 (7th Cir. 1999) (Posner, C.J.) (interpreting a materially identical provision of the federal FDCPA, 15 U.S.C. § 1692a(6)). Because one of the Vaughns' AFDCPA claims pertains to subsection 507(b)(6), the definition of "debt collector" from subsection 502(5)(C) is also relevant to Wells Fargo's Motion.

         The Court has previously addressed the question of whether a mortgage lender, such as Wells Fargo, fits within the former definition of "debt collector." In Silberstein v. Federal National Mortgage ...

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