Bass v. Leatherwood

• Decision Date: 21 July 2014
• Docket Number: No. 13-cv-2882-JDT-tmp,13-cv-2882-JDT-tmp
• Parties: MYRON BASS, et al., Plaintiffs, v. TOM LEATHERWOOD, et al., Defendants.
• Court: U.S. District Court — Western District of Tennessee

MYRON BASS, et al., Plaintiffs, v. TOM LEATHERWOOD, et al., Defendants.

No. 13-cv-2882-JDT-tmp

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE WESTERN DIVISION

July 21, 2014

REPORT AND RECOMMENDATION

Before the court are various motions to dismiss filed by the Defendants and a motion to amend the complaint filed by the plaintiffs. The motions to dismiss pending before the court include the motion to dismiss filed by Mortgage Electronic Registration Services, Inc. ("MERS") on December 16, 2013 (ECF No. 13); the motion to dismiss filed by Greenpoint Mortgage Funding, Inc. ("GMF") on December 17, 2013 (ECF No. 15); the motion to dismiss filed by Sidney Gelernter, Mccurdy & Candler, and Patrick Taggart on January 13, 2014 (ECF No. 21); the motion to dismiss filed by Tom Leatherwood and Joseph Reves on January 15, 2014 (ECF No. 24); and the motion to dismiss filed by Bank of America, N.A., GMAC Mortgage, LLC ("GMAC"),Recontrust Co. ("Recontrust"), N.A., U.S. Bank, N.A., and Deutsche Bank Trust Co. America ("Deutsche") on January 21, 2014 (ECF No. 26).¹ Plaintiffs Sarahs Dream Unincorporated, Karen Mobley Gunn Estate, and Lawrence Everett Reed Estate (collectively "Plaintiffs")² filed a response to the various motions to dismiss on February 4, 2014. (ECF No. 30.) Leatherwood and Reves filed a reply on February 21. (ECF No. 42.) Plaintiffs filed their motion to amend the complaint on February 4, 2014. (ECF No. 31.) Defendants filed a joint response in opposition on February 18, 2014. (ECF No. 34.) For the reasons below, it is recommended that the Plaintiffs' motion to amend be denied, and that the defendants' motions to dismiss be granted.

I. PROPOSED FINDINGS OF FACT

On November 12, 2013, Plaintiffs filed a 13-page complaint against the following defendants: Tom Leatherwood; Joseph Reves; McCurdy & Chandler, LLC; Patrick Taggart; U.S. Bank; Andy Cecere; Deutsche; Josef Ackerman; MERS; Bill Beckman; Melanie D. Cowen; Chester Levings; Weiss, Spicer & Cash; Arnold Weiss; GMAC; MichaelCarpenter; Gregory Griffin; T.A. Jones Enterprise; Tony A. Jones; GMF; David J. Petrini; Bank of America; Brian T. Moynihan; Recontrust; and Gregory Markarian. (ECF No. 2.) While Plaintiffs' Complaint is difficult to interpret, Plaintiffs appear to allege that the defendants illegally and fraudulently transferred various real estate properties in Shelby County, Tennessee, and failed to follow proper procedures for selling properties encumbered by outstanding liens. Plaintiffs do not identify themselves except to state that they are secured parties and the owners of certain properties described in the Complaint. (Compl., p. 4, ¶¶ 1-4; pp. 8-9, ¶¶ 15, 24, 26.) Plaintiffs cite to the Racketeer Influenced and Corrupt Organizations Act ("RICO"), and 42 U.S.C. § 1983. Plaintiffs allege that defendant Tom Leatherwood, who heads the Shelby County register of deeds office, overcharged fees and "illegally purges documents" in violation of Tennessee's Uniform Commercial Code ("UCC"). (Compl., p. 6, ¶¶ 3-4.) Plaintiffs further allege that on April 1, 2013, defendant Leatherwood "unlawfully purged a U.C.C. lien from the permanent archive allowing properties to be sold without liens being satisfied, wherein Defendants get a commission (cut) for the illegal sale." (Compl., p. 7, ¶ 6.) Plaintiffs then allege that each defendant "has their part to play therein and participates in a pattern of racketeering." (Compl. ¶ 7.)

Plaintiffs allege that defendant GMAC sold homes without satisfying proper liens. (Compl., p. 7, ¶ 11.) Defendant Gregory Griffin, a private investor, unlawfully purchased from GMAC real property located at 4843 Harvest Knoll Lane (the "Harvest Knoll Lane property") in Memphis, Tennessee, which was owned by Plaintiffs. (Compl., p. 5, ¶ 16; p. 8, ¶ 15.) Griffin allegedly knew that a lien of $500, 000, 000.00 existed on the property but said he would not pay off the lien. (Compl., p. 8, ¶¶ 15-16.) Griffin then conspired with Leatherwood and GMAC to transfer the Harvest Knoll Lane property to himself without paying the UCC lien. (Compl. ¶¶ 18, 22.) Griffin also allegedly conspired with defendant T.A. Jones by falsifying served documents. (Compl. ¶¶ 19-21.) Griffin allegedly "made telephonic threats to commit bodily harm to Plaintiff Mobley-Gunn if Plaintiff did not remove the lien from said property." (Compl., p. 9, ¶ 23.)

Plaintiffs allege that defendants McCurdy & Candler Law Firm and Patrick Taggart conspired with Leatherwood, Joseph Reves, MERS, GMAC, Deutsche, and Griffin "to illegally remove property without proper transfer statements, falsify and alter records, and transfer Plaintiffs' property in the commission of racketeering and grand larceny." (Compl., p. 9, ¶ 24.) Plaintiffs claim that MERS and Bank of America, N.A. illegally transferred the Harvest KnollLane property as well as Plaintiffs' properties located at 6682 Stonetrace Drive ("the Stonetrace Drive property") and 5367 Bare Oaks Drive ("the Bare Oaks property") with " total and blatant disregard to the liens collectively totaling well over $700,000,000.00." (Compl. pp. 9-10, ¶¶ 26, 29.)

Plaintiffs allege that defendant U.S. Bank, N.A. illegally transferred the Bare Oaks property with disregard for the liens, which total "well over $100,000,000.00." (Compl. p. 10, ¶ 30.) Plaintiffs likewise allege that Deutsche illegally transferred the Harvest Knoll Lane property and the Stonetrace Drive property. (Compl. pp. 9-10, ¶ 28.) Plaintiffs allege that "all Defendants, with the exception of Defendant Jones, transferred said properties without a transfer statement as required by TCA § 47-9-619." (Compl. p. 9, ¶ 27.)

Plaintiffs claim that defendant Weiss, Spicer and Cash, a law firm, conspired with defendants Leatherwood, MERS, Bank of America, and GMF "to illegally transferred [sic] property with a transfer statements and sale property, falsify and alter records, and transfer Plaintiffs' property in the commission of racketeering and grand larceny." (Compl. p. 10, ¶ 31.) Plaintiffs also allege that GMF illegally transferred the Stonetrace Drive propertywith disregard to the liens "totaling well over $100,000,000.00." (Compl. ¶ 32.)

Plaintiffs next allege that defendant Recontrust likewise conspired to illegally transfer properties and that defendant Griffin, U.S. Bank, N.A., Bank of America, and Recontrust "did unlawfully enter premises owned by Secured Parties and illegally remove, destroy and steal items." (Compl. ¶ 34.) Defendants Griffin and unknown defendants are allegedly " guilty of conspiring together in trafficking stolen property" when they "unlawfully evicted Plaintiff Mobley-Gunn" and stole unidentified "personal items." (Compl. p. 11, ¶ 1.)

Plaintiffs then include a number of allegations directed at the defendants generally, stating that " All Defendants are guilty of criminal profiteering," (Compl. ¶ 2), all defendants " knowingly received proceeds" from their acts, (Compl. ¶ 4), and "Defendants . . . are guilty of larceny, falsifying records, perjury, illegal transfers, conspiracy and racketeering." (Compl. ¶ 5). Plaintiffs further allege that "[a]ll Defendants . . . conspired together and participated in an effort to defraud the public" and "participated in illegal trafficking of stolen property." (Compl. ¶¶ 6-7.) Plaintiffs also allege that all defendants "are guilty of deceptive business practices pursuant to TCA § 39-14-127," andhave also violated TCA § 39-14-116. (Compl., p. 12, ¶¶ 11, 15.) Plaintiffs' Complaint requests that the defendants transfer back to the Plaintiffs all property that was illegally sold, that the defendants be ordered to pay all liens that existed at the time of the property transfer and to pay treble damages "totaling $980,000.00," and punitive damages of "at least $1,000,000.00." (Compl. pp. 12-13.)

The defendants have filed several motions to dismiss, each arguing that the Complaint is conclusory, ambiguous, and insufficient to state a claim. The defendants also argue that the Complaint alleges fraud, but that the Complaint fails to meet the heightened pleading requirement of Federal Rule of Civil Procedure 9. After the defendants filed their motions to dismiss, the Plaintiffs filed a Proposed Amended Complaint ("Proposed Amendment"). (ECF No. 31-1.) The Proposed Amendment is a fifty-page, three-hundred paragraph document that cites to several dozen federal and state statutes. The Plaintiffs argue that the Proposed Amendment remedies the deficiencies cited by the defendants in their motions to dismiss.

II. PROPOSED CONCLUSIONS OF LAW

A. Standard of Review

1. Motion to Dismiss

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) should be granted if Plaintiff has failed to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). In considering a motion to dismiss, a court "must construe the complaint in the light most favorable to the plaintiff, accept all well-pleaded factual allegations as true, and determine whether the plaintiff undoubtedly can prove no set of facts consistent with its allegations that would entitle it to relief." La. Sch. Emps.' Retirement Sys. v. Ernst & Young, LLP, 622 F.3d 471, 477-78 (6th Cir. 2010). The U.S. Supreme Court explained that the purpose of Rule 8(a)(2) was to "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). While factual allegations do not have to be detailed, they must contain more than "labels and conclusions;" a formulaic recitation of the elements of a cause will not do. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). The Supreme Court has stated that Rule 8 demands more than an unadorned, "the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). Finally, "[a]lthough material allegations in the complaint must be accepted as...