Davis v. Wells Fargo, U.S. Bank Nat'l Ass'n

Decision Date27 May 2016
Docket NumberNo. 15–2658,15–2658
Citation824 F.3d 333
PartiesMichael Earl Davis, Appellant, v. Wells Fargo, U.S. Bank National Association as Trustee for the Structured Asset Investment Loan Trust, Loan Trust 2005–11; Assurant, Inc.
CourtU.S. Court of Appeals — Third Circuit

Earl D. Raynor, Jr. [Argued], 234 North Peach St., Philadelphia, PA 19139, Counsel for Appellant.

Craig A. Hirneisen, Stacey A. Scrivani [Argued], Stevens & Lee, 111 North Sixth St., P.O. Box 679, Reading, PA 19603, Counsel for Appellee, Wells Fargo, U.S. Bank National Association as Trustee for the Structured Asset Investment Loan Trust, 2005–11.

Matthew P. Faranda–Diedrich [Argued], Alexander J. Nassar, Dilworth Paxson, 1500 Market St.—Suite 3500E, Philadelphia, PA 19102, Counsel for Appellee, Assurant, Inc.

Before: JORDAN, GREENBERG, and SCIRICA, Circuit Judges.



, Circuit Judge.

In this federal follow-up to a foreclosure case, Michael Earl Davis is pursuing a variety of claims against an entity that he calls Wells Fargo U.S. Bank National Association as Trustee for the Structured Asset Investment Loan Trust, 2005–11.” It is the purported holder of Davis's mortgage, and we will refer to it as Wells Fargo or “the bank.”1 Davis has also sued Assurant, Inc., believing it to be the provider of insurance on his home. His claims against both Wells Fargo and Assurant arise from damage that occurred to his house after Wells Fargo had locked him out of it, damage that went unrepaired and worsened into severe structural problems. The United States District Court for the Eastern District of Pennsylvania dismissed Davis's claims against Wells Fargo, pursuant to Federal Rule of Civil Procedure 12(b)(6)

, on the grounds that claim preclusion and a statute of limitations barred recovery. We will affirm that portion of the District Court's order.

The District Court also dismissed all of Davis's claims against Assurant, pursuant to Federal Rule of Civil Procedure 12(b)(1)

, for lack of subject matter jurisdiction. The Court reasoned that Davis lacked standing to bring those claims because he sued the wrong corporate entity, namely Assurant, when he should have sued Assurant's wholly-owned subsidiary, American Security Insurance Company (“ASIC”). That conclusion about standing was in error. Standing is indeed a jurisdictional predicate, but, rightly understood, this case is not about standing at all. An analysis of standing generally focuses on whether the plaintiff is the right party to bring particular claims, not on whether the plaintiff has sued the right party . The latter question goes not to standing and jurisdiction but to the merits of the claims themselves. Therefore, the District Court erred in considering the claims against Assurant under Rule 12(b)(1) rather than Rule 12(b)(6). That difference has important consequences here. In the end, the difference between those rules of procedure dictates that we vacate that portion of the District Court's order dismissing Davis's breach of contract claim against Assurant and remand for further proceedings.

I. Background
A. Factual Background2

Davis is a resident of Philadelphia. On July 29, 2005, he executed a mortgage on a house there (“the Property”), with BNC Mortgage, Inc. (“BNC”) as the mortgagee. Two-and-a-half years later, on January 5, 2008, it was Wells Fargo that—claiming to be an assignee of the mortgage—locked Davis out of the Property. The amended complaint alleges that Wells Fargo did so “on the pretense that it held a valid mortgage contract” (S28), but that it, in fact, acted without holding the note, a mortgage assignment, or any other legal interest in the Property. Three weeks later, on January 24, 2008, Wells Fargo commenced a foreclosure action against Davis in state court, in which it obtained a default judgment. The details of how and when Davis's mortgage was assigned to Wells Fargo are not clear from the record before us, but we do know that on February 8, 2008, Mortgage Electronic Registration Systems, Inc. (“MERS”), as nominee for BNC, purported to assign the mortgage to Wells Fargo. Davis alleges that BNC had not authorized MERS to assign the mortgage or note to Wells Fargo, rendering the assignment “fraudulent.” (S4, ¶ 11.) Regardless, the assignment was recorded in Philadelphia County on February 20, 2008. As the foregoing dates show, this assignment was made after Davis had already been locked out of the Property and after foreclosure proceedings had already begun.

Davis is also a Lieutenant Colonel in the United States Army Reserve, and, on September 15, 2008, the Army placed him on active duty. He promptly provided a copy of his military orders to Wells Fargo, because of the foreclosure action that it had brought against him. Upon receiving the copy of those orders, Wells Fargo filed a motion to vacate the default judgment it had obtained. The judgment was vacated shortly thereafter.

Davis remained on active duty from October 1, 2008, through October 1, 2011. While he was away, in April 2009, Wells Fargo obtained “force-placed” insurance on the Property, i.e. , insurance placed by a mortgagee rather than the property owner. The identity of the carrier is in dispute. According to Assurant, the carrier is ASIC, a wholly-owned subsidiary of Assurant. Davis has alleged that Assurant is the entity actually responsible for the insurance coverage. Davis's amended complaint also alleges that Wells Fargo and Assurant conspired to extract excessive premiums from him through the force-placed insurance, in a scheme that paid Wells Fargo kickbacks in exchange for the bank making Assurant the exclusive provider of force-placed insurance for bank-related properties.

Less than two weeks after Davis returned from active duty, on October 12, 2011, MERS, as nominee for BNC, again purported to assign Davis's mortgage on the Property to Wells Fargo. Soon thereafter, Wells Fargo inspected the Property and “discovered a roof leak in the master bedroom that was also damaging the ceiling, wall and flooring” (S5 ¶ 19), and the following day filed an insurance claim. An adjuster examined the property and filed a report estimating that repairs would cost $817. The amended complaint alleges that, in late November, 2011, Wells Fargo and Assurant Insurance Company fraudulently negotiated a $317 settlement of the roof leak damage claim that did not address the roof.” (S5 ¶ 22.) Exhibits to the amended complaint indicate that the $317 payment is the amount of the adjuster's damage assessment, after a $500 deductible. Wells Fargo kept the money. Despite the insurance claim it made, the bank did not fix the leak, and the Property continued to deteriorate. All of this occurred without Davis's knowledge.

Nearly a year later, Davis received a notice from the City of Philadelphia, saying that the Property had been designated unsafe due to a partially collapsed wall. The notice directed Davis to make all necessary repairs or take down the wall within 30 days. Still locked out, Davis told Wells Fargo of the problem and obtained access to the Property. He filed a claim with Assurant the next day for the property damage, being unaware that Wells Fargo had already settled a claim for the roof leak. Assurant denied his claim on October 28, 2012.

B. Procedural Background

Earlier that same month, on October 18, 2012, Davis brought his first lawsuit against Wells Fargo in the District Court. Davis v. U.S. Bank Nat'l Ass'n , No. 2:12–cv–05943–TJS (the 2012 action”). He filed an amended, two-count complaint on December 7, 2012, asserting claims against Wells Fargo for trespass and violation of the Servicemembers Civil Relief Act, 50 U.S.C. §§ 3901, et seq .

(“SCRA”).3 The District Court dismissed the SCRA claim and declined to exercise supplemental jurisdiction over the state-law trespass claim. The Court went on to explain that Davis would not be barred by the statute of limitations from reasserting his trespass claim if he “promptly file [d] a certified transcript of the judgment and pleadings” from the District Court in a court of the Commonwealth of Pennsylvania. (S279 n.1; see also 42 Pa. Cons. Stat. § 5103(b).) Unfortunately for Davis, he did not do so.

Instead, he waited nearly two years and then commenced this second action in the District Court on December 11, 2014. In his amended complaint in the present case, he makes claims against Wells Fargo for trespass (Count I), breach of contract (Count II), negligence (Count IV), fraud (Count VI), breach of the implied covenant of good faith and fair dealing (Count X), and violation of the anti-tying provision of the Bank Holding Company Act, 12 U.S.C. §§ 1972, et seq.

(Count XI). The amended complaint also asserts claims against Assurant for breach of contract (Count III), negligence (Count V), fraud (Count VI), and bad faith (Count VII). Finally, the amended complaint requests that the mortgage assignments to Wells Fargo be set aside as fraudulent (Count IX).4

Wells Fargo moved to dismiss the claims asserted against it pursuant to Rule 12(b)(6)

, and Assurant moved to dismiss the claims asserted against it pursuant to Rules 12(b)(1) and 12(b)(6). With its motion, Assurant filed a signed declaration from one of its corporate officers distinguishing Assurant from ASIC as separate corporate entities. The District Court granted both motions in an opinion and order dated June 8, 2015. Davis v. Wells Fargo U.S. Bank Nat'l Ass'n , No. 14–07014, 2015 WL 3555301 (E.D. Pa. June 8, 2015). The Court dismissed all of Davis's claims against Wells Fargo, with the exception of his trespass claim, on the basis of claim preclusion, because it determined that Davis could have brought those claims in his 2012 action. It dismissed the trespass claim as time-barred under Pennsylvania's two-year statute of limitations. The Court also dismissed all of Davis's claims against Assurant under Rule 12(b)(1) for lack of subject matter jurisdiction, concluding that Davis...

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