Claxton v. Oriental Bank

• Decision Date: 25 August 2022
• Docket Number: Civil Action 19-cv-0069 (KAJ)
• Parties: LA VERN A. CLAXTON, Plaintiff v. ORIENTAL BANK formerly BANK OF NOVA SCOTIA and JOHN DOES 1-10, Defendants.
• Court: U.S. District Court — Virgin Islands

LA VERN A. CLAXTON, Plaintiff
v.
ORIENTAL BANK formerly BANK OF NOVA SCOTIA and JOHN DOES 1-10, Defendants.

Civil Action No. 19-cv-0069 (KAJ)

United States District Court, D. Virgin Islands, Division of ST. Croix

August 25, 2022

Lee J. Rohn, Lee J. Rohn & Associates, 1101 King Street, St. Croix, VI 00820, Counsel for Plaintiff

Carol Ann Rich, Malorie Diaz, Dudley Rich, 5194 Dronningens Gade, Suite 3, St. Thomas, VI 00802, Counsel for Defendant

MEMORANDUM OPINION

JORDAN, CIRCUIT JUDGE

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I. INTRODUCTION

This case arises from a dispute over a mortgage loan between borrower Lavem A. Claxton and lender Oriental Bank, the successor-in-interest to The Bank of Nova Scotia (the “Bank”).^[1] The Bank has moved to dismiss Claxton's fifteen-count second amended complaint (the “Complaint”), which alleges that the Bank breached the terms of its mortgage agreement with Claxton and violated federal and Virgin Islands law. Claxton's claims all draw on a common core of operative fact, with one fact above all in importance: the Bank purchased insurance for Claxton's property after she neglected to do so. The insurance policy was acquired to protect the Bank's security interest and did not fully protect Claxton financially against the damage her house suffered when Hurricane Maria struck in 2017. Because Claxton's terrible misfortune does not render plausible any of the fifteen counts in the Complaint, I will grant the Bank's motion to dismiss. The dismissal is with prejudice because Claxton's claims remain conclusory, at best, after three rounds of briefing over two and a half years, and she has given no indication of how' they would be improved if she were given further leave to amend.

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II. BACKGROUND^[2]

In April 2009, Claxton executed a $233,000 mortgage note with the Bank, secured by property she purchased on St. Thomas. (D.I. 41-1 (mortgage agreement).)^[3] The mortgage agreement required, among other things, that Claxton maintain insurance for the mortgaged property to cover loss or damage, including from natural disasters, like hurricanes. (Id. §6.1.) If Claxton did not procure insurance, the mortgage agreement allowed the Bank to obtain coverage to protect its security interest. (See id. § 6.4 (“Should Mortgagor fail at any time to maintain such insurance coverage, Mortgagee may, but shall not be required, to obtain such coverage[.]”).) In that event, the Bank would pay the premiums and any other fees, which it would then charge to Claxton, along with any penalties or interest. (See id. § 6.3 (“Mortgagee may ... make the required premium payment together with any interest and penalties then owing.”); D.I. 36 (the Complaint) ¶ 7.) Claxton refers to that arrangement as the Bank “force-plac[ing]” insurance (D.I. 36 ¶ 7), and, understanding that to be common terminology, so do I. If the property was destroyed or damaged while the principal on the mortgage note

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remained outstanding, the Bank could, “in its absolute discretion,” apply the proceeds of the force-placed insurance policy to pay off the principal amount of the loan or to fund the repair of the property. (D.I. 41-1 § 6.7.)

Because Claxton did not purchase insurance for the property, the Bank obtained force-placed insurance beginning in 2014 at the latest. (D.I. 36 ¶ 7.) In September 2017, Hurricane Maria devastated the region, causing “substantial damage to [Claxton] 's dwelling and property.” (Id. ¶ 8.) Six months later, she submitted a claim of loss under the force-placed insurance. (Id. ¶ 9.) The insurance provider then sent adjusters to appraise the damage to her home, resulting in a $20,000 estimate. (Id. ¶¶ 12-17.) At around the same time, she separately obtained an estimate of $125,000 in damage. (Id. ¶¶ 15-16.) The lower figure was ultimately paid on her claim.^[4] (Id. ¶ 17.) According to Claxton, the unresolved damage to her property resulted in the loss of rental income she had previously had from her home, depriving her of the ability to pay her mortgage. (Id. ¶28.)

She filed suit, and the latest version of her Complaint sets out fifteen counts: (I) misrepresentation, (II) breach of express and implied contract; (III) estoppel; (IV) negligence, sounding in negligent misrepresentation; (V) fraud; (VI) illegal tying under the Bank Holding Company Act (the “BHCA”), 12 U.S.C. § 1972; (VII) breach of fiduciary duties; (VIII) breach of implied covenant of good faith and fair dealing; (IX)

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violation of the Real Estate Settlement Procedures Act (the “RESPA”), 12 U.S.C. § 2601, et seq.-, (X) unjust enrichment; (XI) tortious interference with a business relationship; (XII) conversion of chattels or personal property; (XIII) intentional or negligent infliction of emotional distress; (XIV) breach of mortgage agreement; and (XV) deceptive trade practices under 22 V.I.C. § 1201 et seq.

III. DISCUSSION

Each of Claxton's claims depends on either conclusory allegations or an incorrect interpretation of the law.

A. Legal Standard

Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a defendant may move to dismiss a...