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Johnson v. Synovus Bank

United States District Court, W.D. Tennessee, Western Division

July 1, 2015

B. JOHNSON and M. JOHNSON, Plaintiffs,


S. THOMAS ANDERSON, District Judge.

Before the Court are two Motions to Dismiss. Defendant Statebridge Company, LLC ("Statebridge") and Defendant Synovus Bank ("Synovus") filed separate Motions to Dismiss on January 16, 2015. (ECF Nos. 24, 27). Plaintiffs Brian Johnson and Monika Johnson ("the Johnsons") failed to timely respond to either of those Motions. On March 2, 2015, Statebridge filed a notice of the Plaintiffs' failure to respond to Statebridge's Motion to Dismiss. (ECF No. 33). The Plaintiffs' counsel then failed to appear at the scheduling conference on March 13, 2015. The Court entered a show-cause order on March 17, 2015, and the Plaintiffs' counsel satisfactorily responded to that order. (ECF Nos. 35, 42). The Plaintiffs still did not respond to the either of the Motions to Dismiss. The Court then entered a second order directing the Plaintiffs to respond to the Motions to Dismiss by April 17, 2015. (ECF No. 44). The Court gave notice that it would consider a failure to respond good grounds for granting the relief requested by the moving parties.

The Plaintiffs responded to Synovus's Motion to dismiss on April 17, 2015 (ECF No. 46), to which the Synovus filed its Reply. (ECF No. 49). The Plaintiffs filed a one-page response to Statebridge's Motion to Dismiss and incorrectly indicated that they simultaneously filed an accompanying memorandum of law. (ECF No. 47). Statebridge filed a reply, stating that counsel for Statebridge informed the Plaintiffs of their failure to attach a memorandum of law, but that the Plaintiffs did not respond. (ECF No. 48). The Plaintiffs have not addressed the arguments set forth in Statebridge's Motion to Dismiss. The Court gave the Plaintiffs multiple opportunities to remedy their failure to file a response and gave notice that a failure to comply with the court's order would result in granting the relief requested. Thus, as an initial matter, Statebridge's Motion is GRANTED. The Plaintiffs' claims against Statebridge are dismissed with prejudice for failure to comply with a court order.

Despite the Plaintiffs' late-filed response, the Court here considers Synovus's Motion to Dismiss for Failure to State a Claim. For the reasons stated below, the Motion is GRANTED.


The Court treats all well-pleaded facts in the Plaintiffs' Amended Complaint as true and draws reasonable inferences in favor of the Plaintiffs.[1] The Johnsons allege that on or about September 4, 2003, they secured a $656, 700.00 loan from Trust One Bank to purchase a home in Cordova, Tennessee, and executed a deed of trust. (Am. Compl. ¶¶ 22-23, ECF No. 1-1). After merger, Synovus became the successor in interest to Trust One. The Johnsons first began experiencing "a decrease in income production" in 2011 and "decided to pursue loan modification alternatives" through Trust One. ( Id. ¶ 27). They began discussions with Thomas Willingham, Senior Vice President of Managed Assets at Trust One Bank. ( Id. ¶ 28). After discussions, Willingham forwarded the Johnsons proposed terms for a loan modification. ( Id. ¶ 31). The Johnsons allege that "upon reviewing the proposed modification, [they] began to question why the proposed terms were different from the terms previously discussed." ( Id. at ¶ 32). After a "heated exchange, " Willingham asked the Johnsons to itemize their list of concerns, and Willingham ultimately responded to those concerns by email. ( Id. ¶¶ 36-40). Willingham then sent the Johnsons the "Loan Modification and Agreement" (the "Modification Agreement") on December 15, 2011.

The Modification Agreement separated the Johnsons' original loan into two notes. Among other terms, the Modification Agreement included the following relevant provisions:

• Effective with the January 1, 2012 loan payment, the amount will be $2, 665.00 per month based on a principal loan balance of $296, 000 amortized over a twelve (12) year term, Note A. Said payment amount will be due and payable the first day of each following month through and including December 1, 2013.
• The loan will mature on January 1, 2014. Prior to this maturity, a review will be made as to financial condition, income, payment history, etc. to determine a possibly revised monthly payment and rate reduction.
• During this two year period, Shelby County property taxes shall be kept current. Presently, 2010 taxes are past due and 2011 taxes are due. Receipts of periodic payments on the 2010 property taxes will be sent to my attention at a minimum of every 90 days and shall continue as such until all 2010 property taxes have been paid in full.
• If possible, all loan payments are to be sent to [Willingham's] attention at Trust One Bank, 1715 Aaron Brenner Drive, Memphis, TN 38120.
• During the initial two year payment period, all default terms and conditions in original loan documents remain applicable.
• Note B represents the outstanding principal in the amount of $271, 381.16 and will be an unsecured loan. The interest rate will continue to accrue interest at 5.00, but is subject to a possible rate reduction during review period(s).
• Upon payment in full of all principal and interest related to Note A, the repayment for Note B regarding it's [sic] terms and conditions will be decided based upon mutually agreeable terms at Note B's inception date.
• Nothing in this Loan Modification and Agreement shall impair, reduce, or change any and all rights of Trust One Bank, a division of Synovus Bank, regarding it's [sic] priority position on said Deed of Trust and related mortgage loan documents except as those expressly noted here.

(Modification Agreement, Shelby County Register of Deeds Instrument No. 12073828, ECF No. 27-2). The Modification Agreement left all unaltered terms of the original loan documents as effective terms. ( Id . ¶ ¶ 8, 11). Below the terms, the Johnsons each signed the Modification Agreement before a notary public, dated January 5, 2012. In November 2012, the Johnsons once again contacted Willingham to express interest in another "refinance product that would allow them to combine Note A and Note B and also lower their mortgage payment and interest." (Am. Compl. ¶ 43). Willingham advised the Johnsons that he was having a senior officer in the consumer-lending department look into alternatives for their benefit. ( Id. ¶ 44). The Johnsons allege that while Willingham "led them to believe" that he was working on a refinancing option for them, the loans had already been sold. ( Id. ¶ 56).

Synovus assigned the loan to Defendant Crimson Portfolio, LLC ("Crimson").[2] ( Id. ¶ 47). Synovus notified the Johnsons that it had transferred servicing rights to Defendant Carrington Mortgage Services, LLC ("Carrington") on March 8, 2013. (Notice of Assignment, Ex. 10 to Am. Compl., ECF No. 1-1, PageID 99). That letter informed the Johnsons that Synovus would stop accepting payments after March 31, 2013, and on April 1, 2013, Carrington would start accepting mortgage payments as servicer. ( Id. ). At an undisclosed date, the Johnsons allege that a non-party to this lawsuit, "Sabal, " became the loan servicer for Carrington. (Am. Compl. ¶¶ 50-51). Sabal "was confused about the servicing of [the Johnsons'] loan, " and the Johnsons continued to seek help from Willingham, who attempted to provide assistance by contacting other entities. ( Id. ¶¶ 51-52). On February 12, 2013, Willingham emailed Monika Johnson, copying Sabal employees, and stated the following:

I talked with [Sabal employee] Nick [Martinez] and gave him the full circumstances regarding all three loans. I made him aware of the Modification Agreement that was entered into splitting the single first mortgage into two mortgage notes.
I further explained that the payment history on 18627-11, Note A, has been satisfactory and currently due for 2/1/2013, and that 18727-10, Note B, was not a reportable charge off, only set back until Note A is paid in full, then payments proceed to Note B.
I was not aware how much information was originally sent on each loan at the time of sale, but now Nick is up to date.

(Email from Thomas Willingham to Monika Johnson (Feb. 12, 2013, 2:13 PM), Ex. 9 to Am. Compl., ECF No. 1-1, PageID 96). Sabal later advised the Johnsons that Carrington would be servicing the loan as split into Note A and Note B. (Am. Compl. ¶ 53). The Johnsons allege that they "did not receive a notice of assignment, sale, or transfer of servicing rights from Synovus, merged with Trust One, until March 8, 2013." ( Id. ¶ 54). The Johnsons were to continue paying Synovus until March 31, 2013; on April 1, 2013, they were to remit payment to Carrington. (Notice of Assignment, Ex. 10 to Am. Compl., PageID 90). Furthermore, they allege that "Carrington failed to send any communication regarding the servicing of [their] loan until April 26, 2013" and that "Crimson Portfolio and Carrington refuse to honor the terms of [the Johnsons'] loan modification agreement." (Am. Compl. ¶ 56, 58).

The Johnsons also allege that they "voiced concerns" involving inaccurate credit reporting in January 2013. ( Id. ¶ 59). This was the result of Trust One allegedly reporting their loans as charge-offs and not as transferred notes. ( Id. ¶ 60). After the Johnsons contacted him, Willingham reported back that all items on their credit report regarding the Trust One loans had been changed to accurately reflect a transferred note. ( Id. ¶ 61). Upon checking his credit profile, Brian Johnson reported to Willingham that the changes had not been made. Willingham attempted to help the Johnsons with this problem throughout the relevant period. ( See Exs. 12-14 to Am. Compl., ECF No. 1-1, PageID 103-08). The Johnsons allege that "[a]s of November 14, 2013, [their] credit profiles have not been corrected and still show their loans as charge-offs and in collections." (Am. Compl. ¶ 66). This, they allege, led to "substantial credit impairment, financial loss, " and the risk of foreclosure.[3]


A defendant may move to dismiss a claim "for failure to state a claim upon which relief can be granted" under Federal Rule of Civil Procedure 12(b)(6). When considering a Rule 12(b)(6) motion, the Court must treat all of the well-pleaded allegations of the pleadings as true and construe all of the allegations in the light most favorable to the non-moving party.[4] Legal conclusions or unwarranted factual inferences, however, need not be accepted as true.[5] "To avoid dismissal under Rule 12(b)(6), a complaint must contain either direct or inferential allegations with respect to all material elements of the claim."[6] Under Rule 8, a complaint need only contain "a short and plain statement of the claim showing that the pleader is entitled to relief."[7] Although this standard does not require "detailed factual allegations, " it does require more than "labels and conclusions" or "a formulaic recitation of the elements of a cause of action."[8] In order to survive a motion to dismiss, the plaintiff must allege facts that, if accepted as true, are sufficient "to raise a right to relief above ...

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