Facts

Lora Smith and Cynthia Himple, individually and on behalf of the class of all others similarly situated sued Bank of America NA relating to their home mortgages.

PLAINTIFFS' CONTENTIONS:
Plaintiffs obtained home mortgage loans that were subsequently acquired by Bank of America. After plaintiffs' loans fell into default, the loans were modified. They alleged that Bank of America violated 26 USC Section 6050H, which relates to the reporting of interest to the IRS. They brought a class action, bringing claims for breach of contract, breach of the covenant of good faith and fair dealing, violation of unfair competition law, declaratory relief, fraud, and violation of 26 USC Section 6050H.

Result

The court held that USC Section 6050H does not create a private cause of action. However, after dismissing that claim on that basis, the court then dismissed all other contractual and tort claims and held the IRS had exclusive jurisdiction to decide this matter because it related to taxes. It granted Bank of America's motion to dismiss without prejudice.

Other Information

Plaintiffs intend to file an appeal, claiming that the claims made do not relate to taxes, instead they relate to the contractual and statutory requirements imposed upon a lender to report interest received, in the year received, to borrowers on 1098 Forms. According to plaintiffs, what the Bank or the borrower / taxpayers do with that information is not the issue in this case, nor within the relationship between the taxpayer and the borrower. FILING DATE: Aug. 25, 2014.