We'll never know if the Toones' claims were valid. Well, we have a pretty good idea, actually, thanks to the court's dicta on the matter, but we can't help but wonder if they would've had a chance to adduce additional evidence that would've supported their claims had they made it to discovery. Instead, their case becomes another reminder as to the importance of proper pleading and paperwork.
The Toones' mortgage, like many others in this historic recession, went into foreclosure. It was passed around between banks, like children playing "hot potato." They attempted to save their home through a "Home Affordable Modification Program Loan Trial Period (HAMP) Agreement and by suing every bank and lawyer that ever came into contact with the mortgage. The lawsuit was eventually transferred to federal court and dismissed via 12(b)(6).
One of their primary contentions was that the mortgage transfers were invalid. The initial transfer was signed by a lackey of the transferree instead of the transferror. Unfortunately for the Toones, that lackey was not only an employee of one bank, but an authorized agent of the other (banks are a bit incestuous like that).
The Toones also alleged that the subsequent transfers were invalid due to "robo-signing," which made the transfers fraudulent, but alas, "bald allegations of robo-signing do not suffice under the Rule 8(a)(2) standard set by Iqbal." They also pled no facts to support any other allegations of fraud.
Their next cause of action was a Fair Debt Collection Practices Act violation. However, again, they failed to plead facts with sufficient specificity. The court speculated that the facts in a paragraph elsewhere in the brief could have been meant to support the FDCPA claims, specifically facts arguing that the Toomes were not in default because they made their HAMP payments.
However, the court noted two problems with such an argument: first, you can't raise an issue for the first time during your oral argument on appeal. Second, the Toomes never sent in the HAMP-required paperwork.
Breach of contract? Not enough facts. Breach of covenant of good faith and fair dealing? Not enough facts. RESPA violations for not responding to written requests for information? Forgot to plead actual damages.
And though we're skipping through a few other deficient claims and arguments here, the final point comes from the denied leave to amend the complaint. That's right -- the court refused to allow them to revise their paperwork to plead sufficient facts, and you'll never guess why.
The amended complaint failed to plead sufficient facts ... again. The lower court held that the revised complaint wouldn't have fixed the deficient claims, and therefore properly denied the leave to amend.
There were a number of claims here, from FDCPA to RESPA, all of which failed because two attempts to plead properly were fumbled. This makes us wonder -- are they and their attorney that terrible at paperwork, or did their case simply lack merit to begin with?
- Toone v. Wells Fargo (Tenth Circuit Court of Appeals)
- Does the Rooker-Feldman Doctrine Bar Your Foreclosure Appeal? (FindLaw's Tenth Circuit Blog)
- No Split-Note Defense: MERS Can Foreclose on Homes (FindLaw's Tenth Circuit Blog)