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Hurt v. Vanderbilt Mortgage and Finance, Inc.

United States District Court, W.D. Oklahoma

July 12, 2019




         Before the Court is the Motion to Dismiss of Defendant Vanderbilt Mortgage and Finance, Inc. (Vanderbilt) [Doc. No. 7]. Plaintiff has responded [Doc. No. 8] and Vanderbilt has replied [Doc. No. 9]. The matter is fully briefed and ready for determination.

         I. Introduction

         Plaintiff initiated this action in the District Court of Cleveland County, State of Oklahoma and Vanderbilt removed the action to this Court. See Notice of Removal [Doc. No. 1]. The only issued summons reflected in the record is to Vanderbilt. After removal, Plaintiff voluntarily dismissed Defendant Ford Motor Credit. See Dismissal Without Prejudice of Ford Motor Credit [Doc. No. 6]. The other Defendants have not been served.

         Plaintiff seeks a declaratory judgment against Vanderbilt and additionally brings claims for conversion, violations of the Oklahoma Consumer Protection Act, violations of the Oklahoma Consumer Credit Code (supervised lender provisions), unjust enrichment and unconscionability. Vanderbilt seeks dismissal of all claims brought against it.

         II. Governing Standard

         “[A] 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) (internal quotation marks omitted). Federal Rule of Civil Procedure 8(a)(2) requires a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). “[T]he pleading standard Rule 8 announces does not require detailed factual allegations, but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft, 556 U.S. at 678. Dismissal is proper “if, viewing the well-pleaded factual allegations in the complaint as true and in the light most favorable to the non-moving party, the complaint does not contain ‘enough facts to state a claim to relief that is plausible on its face.'” MacArthur v. San Juan County, 497 F.3d 1057, 1064 (10th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 550 (2009)); see Iqbal, 556 U.S. at 676-80. The plaintiff cannot merely give “labels and conclusions, and a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. Conclusory allegations are not entitled to the court's presumption; rather the plaintiff must plead facts that at least make the claims plausible and raise the “right of relief above the speculative level.” Id. at 555.

         III. Factual Allegations of the Petition

         The following factual allegations are taken from the Petition and the Court accepts the allegations as true for purposes of ruling on Vanderbilt's Rule 12(b)(6) motion. See Young v. Davis, 554 F.3d 1254, 1256 (10th Cir. 2009).

         In 1996, David L. Hurt entered into a Manufactured Home Retail Installment Contract/Security Agreement (Contract) with Total Housing for the purchase of a manufactured home. The Contract is attached to the Petition. See Pet., Ex. A. The amount financed under the Contract was $69, 485.50 with an annual percentage rate of interest of 11.030%. The Contract was assigned to Ford Motor Credit. Vanderbilt began servicing the loan in December 2006.

         Mr. Hurt died in April 2017 and Erin Hurt was appointed as the personal representative of his estate in May 2017. To date, Mr. Hurt has paid $174, 403.19 to Defendants. Vanderbilt continues to send monthly statements to Plaintiff for payment but did not file any claim in the probate of the estate.

         As of September 28, 2018, the purported principal amount due under the Contract was $69, 283.27. Plaintiff has requested a complete accounting of payments made pursuant to the Contract, from its origination, but Vanderbilt has informed Plaintiff that it has no payment records prior to obtaining the servicing rights. Plaintiff further alleges that “had the loan been amortized in accordance with a regular amortization schedule, that loan would have been paid off in 2008.” Pet., ¶ 68. And, Plaintiff alleges that on June 19, 2017, Vanderbilt “sent a new amortization schedule showing that the loan would not be paid in fully until December 2046 after an additional 355 payments were made on a loan which originally contemplated 360 payments.” Id., ¶ 69.

         IV. Discussion

         A. Declaratory Relief and Violation of the Oklahoma Consumer Credit Code

         Plaintiff seeks a declaratory judgment against Vanderbilt that: (1) the Contract is void and that the Estate of David L. Hurt is not obligated to pay the principal, the loan finance charge or any other charges added to the account; and (2) the Estate of David L. Hurt is entitled to recover each and every payment, with interest, tendered to Vanderbilt and its predecessors. Plaintiff bases her right to this relief on allegations that Total Housing was not a supervised lender at the time the loan originated and, therefore, the requirements of Oklahoma law that “only a supervised lender may make or take the assignment of a supervised loan” have been violated. Pet., ¶ 21.

         Plaintiff's claim arises under Oklahoma's Uniform Consumer Credit Code, Okla. Stat. tit. 14A, §1-101 et seq. (U3C). In addition to her request for declaratory relief, Plaintiff brings a separate claim for relief alleging a violation of the U3C. See Pet., ¶¶ 58-65.[1]

         The U3C applies only to “consumer loans” and provides that “[u]nless a person is a supervised financial organization or has first obtained a license . . . authorizing him to make supervised loans, he shall not engage in the business of (1) making supervised loans; or (2) taking assignments and undertaking direct collection of payment from or enforcement of rights against debtors arising from supervised loans.” Okla. Stat. tit. 14A, § 3-502 (1996).[2]A violation of § 3-502 deems the loan void. Id., § 5-202(2).

         As Vanderbilt correctly asserts, under the U3C a “supervised loan” is a type of “consumer loan” and loans that exceed $45, 000.00 in principal amount are excluded from the definition of a consumer loan. Id., §§ 3-104 and 3-501(1) (1996). Here, the loan at issue as alleged in the Petition exceeds $45, 000 in principal amount and, therefore, Plaintiff fails to state a claim under the U3C.[3]

         Plaintiff wholly fails to address this issue in her response and thus has confessed the issue. Instead, Plaintiff now argues that her request for declaratory relief remains sufficient independent of the U3C. See Pl.'s Resp. at 3 (“[Vanderbilt] mischaracterizes Plaintiff's claims as solely stemming from violations of the [U3C].”). Plaintiff contends Vanderbilt has no contractual rights to the loan. See id. (“Plaintiff has alleged facts to show the contract is void not only under the U3C but also as a result of not actually receiving the contractual rights to the loan, not having records for the loan prior to the years Vanderbilt began demanding payment on ...

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