Anderson v. Bank of W.

• Court: U.S. District Court — District of Nebraska
• Writing for the Court: Robert F. Rossiter, Jr. United States District Judge
• Decision Date: 22 July 2020
• Docket Number: 8:20CV114
• Citation: Anderson v. Bank of West, 8:20CV114 (D. Neb. Jul 22, 2020)
• Parties: DAVID R. ANDERSON, Plaintiff, v. BANK OF THE WEST, JOHN DOE, and U.S. BANK NATIONAL ASSOCIATION, Defendants.

DAVID R. ANDERSON, Plaintiff, v. BANK OF THE WEST, JOHN DOE, and U.S. BANK NATIONAL ASSOCIATION, Defendants.

8:20CV114

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEBRASKA

July 22, 2020

MEMORANDUM AND ORDER

This matter is before the Court on defendant U.S. Bank National Association's ("U.S. Bank") Motion to Dismiss (Filing No. 14) plaintiff David R. Anderson's ("Anderson") Second Amended Complaint (Filing No. 9) pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. For the reasons stated below, the Motion to Dismiss the Second Amended Complaint as to U.S. Bank is granted.

I. BACKGROUND

Anderson resides in Lancaster County, Nebraska. In 2005, Anderson obtained a home loan from a predecessor of U.S. Bank for a parcel of residential real estate located at 7040 North Hampton Road, Lincoln, Nebraska (the "property"). The loan was secured by a promissory note and a deed of trust.¹

On February 12, 2019, the property was sold at a purported trustee's sale. At the time, the property was subject to three different deeds of trust. Defendant Bank of the West ("Bank of the West") was the high bidder.

On April 24, 2019, Anderson sued Bank of the West and John Doe ("Doe") in the District Court of Lancaster County, Nebraska ("state court"), trying to vacate the sale. See Case No. CI 19-1292. On Bank of the West's motion, see Neb. Ct. R. of Pldg. § 6-1112(b)(6), the state court dismissed Anderson's complaint on December 5, 2019, for failure to state a claim.

A couple of months later, Anderson filed an Amended Complaint (Filing No. 1-1) in that same case, again naming Bank of the West and Doe as defendants and adding U.S. Bank as a defendant. Anderson, who was the record owner of the property before the sale, seeks to have the "sale, and its resulting conveyance(s) set aside, and to have title to the [p]roperty quiet in [him]." Anderson asserts the trustee did not have authority to conduct the sale and Bank of the West "was not, and is not a bona fide purchaser or encumbrancer for value and without notice."

With Bank of the West's consent (Filing No. 1-3), U.S. Bank removed (Filing No. 1) the case to this Court pursuant to 28 U.S.C. §§ 1331, 1367, 1441, and 1446.² U.S. Bank then filed a motion to dismiss (Filing No. 5), which the Court denied as moot (Filing No. 11) when Anderson filed his Second Amended Complaint.

On May 11, 2020, U.S. Bank filed the present motion to dismiss the Second Amended Complaint for failure to state a claim. Anderson opposes (Filing No. 20) the motion, arguing he has stated plausible claims for relief. Alternatively, Anderson "makes a protective request, should the Court disagree, for leave to further amend his operative Complaint." Anderson has not filed a motion or provided a proposed amended pleading in conjunction with that request. See NECivR 15.1(a).

II. DISCUSSION

A. Standard of Review

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." A plaintiff need not provide "'detailed factual allegations'" but must give "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. (quoting Twombly, 550 U.S. at 570). A claim is facially plausible "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.

In deciding a Rule 12(b)(6) motion, the Court accepts "as true all factual allegations in the complaint and draw[s] all reasonable inferences in favor of the nonmoving party." McDonough v. Anoka County, 799 F.3d 931, 945 (8th Cir. 2015). But the Court is "not bound to accept as true '[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements' or legal conclusions couched as factual allegations." Id. (alteration in original) (quoting Iqbal, 556 U.S. at 678). "The [C]ourt generally must ignore materials outside the pleadings, but it may consider some materials that are part of the public record or do not contradict the complaint, as well as materials that are necessarily embraced by the pleadings." Ashford v. Douglas County, 880 F.3d 990, 992 (8th Cir. 2018) (quoting Smithrud v. City of St. Paul, 746 F.3d 391, 395 (8th Cir. 2014)).

"A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, 'it stopsshort of the line between possibility and plausibility'" and must be dismissed. Id. (quoting Twombly, 550 U.S. at 556-57).

B. U.S. Bank

As he did in his original state-court complaint, Anderson questions the validity of the trustee's sale and the transfer of title to the property to Bank of the West. Anderson broadly alleges his "Home Loan was maintained and serviced in a manner or manners which violated the Fair Debt Collection Practices Act [("FDCPA")] and the Real Estate Settlement Procedures Act [("RESPA")]." Anderson further alleges U.S. Bank and others "failed to comply with" certain "foreclosure avoidance procedures" required by (1) "a consent judgment adopted through the case styled, United States v. Bank of America Corp., United States District Court for the District of Columbia Case No. 1:12-cv-00361 (April 4, 2012)," (2) 24 C.F.R. § 203.600 et seq., and (3) 12 C.F.R. §§ 1024.39, 1024.40, and 1024.41 and thus "breached the terms of the original, underlying loan documents and agreements." According to Anderson, those failures rendered any foreclosure activities either void or voidable under Nebraska law.

U.S. Bank takes issue with Anderson's allegations. In U.S. Bank's view, the Second Amended Complaint is "chock full of legal conclusions" but "lacks facts sufficient to state a claim and attempts to bring claims where none exist." U.S. Bank gives two main reasons to dismiss the Second Amended Complaint.

First, aptly noting that "Anderson does not separate the causes of action into separately designated counts," U.S. Bank contends Anderson has neither identified an actionable FDCPA or RESPA violation nor properly pled any other cause of action. In particular, U.S. Bank faults Anderson for relying on broad legal requirements that do not apply to U.S. Bank in these circumstances and for failing to provide even basic facts to support a viable claim. According to U.S. Bank, Anderson's conclusory allegations have left it and this Court to guess at the nature of his claims and his asserted grounds for relief.

Second, U.S. Bank argues that even if Anderson could plead a cause of action "for violating RESPA, the FDCPA, or another federal law or regulation, it would not be sufficient to unwind the non-judicial sale." The parties agree this second question is controlled by Gilroy v. Ryberg, 667 N.W.2d 544, 552-54 (Neb. 2003), in which the Nebraska Supreme Court decided that although the Act does not provide a remedy for defects in a trustee's foreclosure sale, the trustor can, in certain circumstances, bring an equitable action to set aside a defective sale.

In defining the scope of that equitable remedy, the Ryberg Court joined those jurisdictions refusing "to adopt a rule that would set aside every sale that does not strictly comply with the requirements of the trust deed or relevant statutes." Id. at 553. Instead, the Ryberg Court recognized three categories of defect in a trustee's sale: "(1) those that render the sale void, (2) those that render the sale voidable, and (3) those that are inconsequential." Id. Defects that void a sale are rare. Id. at 554. They generally occur when the trustee had no power to conduct the sale (forgery, no default) or when the trustee egregiously fails "to comply with fundamental procedural requirements while exercising the power of sale." Id. "When a sale is void," neither legal nor equitable title passes—even to a bona fide purchaser. Id.

"[T]o establish a defect that renders the trustee's sale voidable, the party seeking to set aside the sale must show not only the defect, but also that the defect caused the party prejudice," such as by reducing the sales price or the number of bidders. Id. at 555, 558. Absent such a showing, the defect does not justify setting the sale aside. Id. at 555. When a sale is voidable, only legal title passes to a sale purchaser. Id. at 554. "An injured party can have the sale set aside" unless legal title has passed to a bona fide purchaser. Id.; see also Neb. Rev. Stat. § 76-1010(1) (permitting a trust deed to provide additional protections to a bona fide purchaser for value).

Here, U.S. Bank contends Anderson has not alleged any facts that would render the sale void or voidable. According to U.S. Bank, any alleged violations of federal law arenot grounds to unwind a judicial sale under Ryberg because they do not impact the validity of the sale under the Act.

Anderson sees things differently. Although he acknowledges that U.S. Bank raises several issues regarding the Second Amended Complaint that are at least "debatable," Anderson rejects U.S. Bank's contention that he failed to provide enough factual and legal support to state a plausible claim.

As Anderson sees it, he "sets forth at least two (2), recognizable claims, one illustrated in paragraph 15 of the Second Amended Complaint, and another in paragraph 16." Anderson asserts, "Paragraph 15 makes a claim for one or more violations of Federal law; paragraph 16 sets out . . . a 'Ryberg...