Devlin v. Wells Fargo Bank, N.A.

• Decision Date: 21 March 2014
• Docket Number: CIVIL CASE NO. 1:12-cv-000388-MR-DLH
• Court: U.S. District Court — Western District of North Carolina
• Parties: WILLIAM N. DEVLIN and wife CARRI A. LUCKSAVAGE, Plaintiffs, v. WELLS FARGO BANK, N.A., Defendant.

WILLIAM N. DEVLIN and wife CARRI A. LUCKSAVAGE, Plaintiffs, v. WELLS FARGO BANK, N.A., Defendant.

CIVIL CASE NO. 1:12-cv-000388-MR-DLH

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA ASHEVILLE DIVISION

Signed: March 21, 2014

ORDER

THIS MATTER is before the Court on the Defendant Wells Fargo Bank, N.A.'s Motion to Dismiss [Doc. 12].

I. PROCEDURAL BACKGROUND

This civil action was brought in relation to the Plaintiffs' purchase of Lot 3, 31 Cotswolds Court, Arden, North Carolina 28704 in Buncombe County, North Carolina ("the property"). [Doc. 1-1]. The Plaintiffs filed suit against Wells Fargo Bank, N.A. ("Wells Fargo" or "the Bank"), asserting claims for breach of duty of good faith and fair dealing; fraud; violations of the North Carolina Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1, et seq. ("Chapter 75"); and injunctive relief, all arising from the Defendant'salleged involvement in fraudulently inflating the Plaintiffs' incomes on their loan applications in order to provide loans to the Plaintiffs for which they did not qualify. [Id. and Doc. 11].

The Plaintiffs originally filed this action in the Buncombe County North Carolina General Court of Justice, Superior Court Division, on November 2, 2012. [Doc. 1-1]. On November 6, 2012, the Defendant properly removed this action to this Court. [Doc. 1]. After the Defendant moved to dismiss the Plaintiffs' Complaint on January 3, 2013 [Doc. 4], the Plaintiffs brought a motion to amend their Complaint. [Doc. 6]. After the Plaintiffs filed their Amended Complaint on August 19, 2013 [Doc. 11], the Defendant renewed its motion to dismiss pursuant to Rule 9 and Rule 12(b)(6) of the Federal Rules of Civil Procedure. [Doc. 12].

II. STANDARD OF REVIEW

In reviewing a motion to dismiss filed pursuant to Rule 12(b)(6), the Court is guided by the Supreme Court's instructions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). As the Fourth Circuit has noted, "those decisions require that complaints in civil actions be alleged with greater specificity than previously was required." Walters v. McMahen, 684 F.3d 435, 439 (4^th Cir. 2012).

In order to survive a motion to dismiss pursuant to Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). To be "plausible on its face," a plaintiff must demonstrate more than "a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678.

Determining whether a complaint states a plausible claim for relief is "a context-specific task," Francis v. Giacomelli, 588 F.3d 186, 193 (4^th Cir. 2009), which requires the Court to assess whether the factual allegations of the complaint are sufficient "to raise a right to relief above the speculative level," Twombly, 550 U.S. at 555. As the Fourth Circuit has recently explained:

To satisfy this standard, a plaintiff need not forecast evidence sufficient to prove the elements of the claim. However, the complaint must allege sufficient facts to establish those elements. Thus, while a plaintiff does not need to demonstrate in a complaint that the right to relief is probable, the complaint must advance the plaintiff's claim across the line from conceivable to plausible.

Walters, 684 F.3d at 439 (citations and internal quotation marks omitted).

In reviewing a complaint, the Court must accept the truthfulness of all factual allegations but is not required to assume the truth of "bare legalconclusions." Aziz v. Alcolac, Inc., 658 F.3d 388, 391 (4^th Cir. 2011). "The mere recital of elements of a cause of action, supported only by conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6)." Walters, 684 F.3d at 439. Notably, a Rule 12(b)(6) motion "does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Edwards v. City of Goldsboro, 178 F.3d 231, 243-44 (4^th Cir. 1999) (quoting Republican Party v. Martin, 980 F.2d 943, 952 (4^th Cir. 1992)).

This Court sits in federal diversity jurisdiction over this civil case.¹ In "transactions bearing an appropriate relation to the state," "in the absence of an agreement between the parties" to the contrary, generally "state law will be applied" according to N.C. Gen. Stat. § 25-1-105(1). See Boudreau v. Baughman, 322 N.C. 331, 336, 368 S.E.2d 849, 854 (1988). "For actions sounding in tort, the state where the injury occurred is considered the situs of the claim." Id. at 335, 368 S.E.2d at 854. Similarly, in cases involving claims for unfair or deceptive trade practices, North Carolinacourts have applied the law of the state where the injuries were sustained. See ITCO Corp. v. Michelin Tire Corp., 722 F.2d 42, 49 n.11 (4^th Cir. 1983); Lloyd v. Carnation Co., 61 N.C. App. 381, 387-88, 301 S.E.2d 414, 418 (1983); United Va. Bank v. Air-Lilt Assoc., Inc., 79 N.C. App. 315, 321, 339 S.E.2d 90, 94 (1986). In cases involving financial injuries, courts have considered the injury to be sustained "where the economic loss was felt." Clifford v. Am. Int'l Specialty Lines Ins. Co., No. 1:04CV486, 2005 WL 2313907, at *8 (M.D.N.C. Sep. 21, 2005). Thus, North Carolina law will be applied in this action, since the property at issue is situated in North Carolina, the representations at issue are alleged to have been made in North Carolina, and the closing documents on the property were signed in North Carolina. [Docs. 1-1, 11].

III. FACTUAL BACKGROUND

Taking the well-pled factual allegations² of the Amended Complaint³ as true, the following is a summary of the relevant facts.

In 2004, the Plaintiffs sought the help of mortgage broker JV WFHM Prosperity Mortgage ("Prosperity") as they desired to buy a home in Cotswolds Court, Arden, North Carolina. [Doc. 1-1 at ¶¶ 3-5]. The Plaintiffs provided necessary documentation to Prosperity, and Prosperity's agent requested the Plaintiffs to sign documents in blank to be later filled out by Prosperity's agent and then submitted to the Bank. [Id. at ¶¶ 7-8]. The Plaintiffs complied with Prosperity's requests and applied for a $409,600 loan in addition to a $99,800 equity loan on the property. [Id. at ¶ 9]. The Plaintiffs claim that they were "assured by both Prosperity and Wells Fargo Bank that said loans complied with all federal codes and regulations and that their loan was in fact 'an acceptable and good loan' for purposes of the transaction therein." [Id. at ¶ 10]. On November 29, 2004, the Plaintiffs executed the documentation to close on the property, based upon the documents that the Plaintiffs had provided to Prosperity's agent in addition to the loan applications that the Plaintiffs had signed and given to Prosperity's agent to complete and then give to the Bank. [Id. at ¶¶ 8, 11].

The Plaintiffs maintained their loan payments to the Defendant until "during the real estate collapse and the economic collapse which began in 2007 and continues to this day," after which "the Plaintiffs have been unable to keep up with the strenuous loan payment associated with theoriginal loan and equity line." [Id. at ¶ 12]. The Plaintiffs tried to obtain a loan modification from the Defendant but were unsuccessful in doing so. [Id. at ¶ 13]. During their attempted modification process, however, the Plaintiffs discovered that Prosperity's agent "fraudulently and illegally filled out various loan application documents as well as other federally mandated documents with false information related to the . . . income of the Plaintiffs." [Id. at ¶ 14]. Particularly, the income of the Plaintiff Lucksavage "was amplified three times its original amount" and the income of the Plaintiff Devlin was falsely represented since he was self-employed but the agents indicated that he had received W-2 income as well as other income "which was simply and totally false in nature." [Id. at ¶ 14].

Further, in their Amended Complaint, [Doc. 11], the Plaintiffs note that the Bank has commenced foreclosure proceedings against them regarding the property at issue in Buncombe County, North Carolina state court. [Id. at ¶ 31]. It is further alleged that the Bank "has agreed and consented to undergo a number of steps designed to remedy the deficiencies and unsafe or unsound business practices identified by federal regulatory officials with respect to [the Bank's] residential mortgage servicing and foreclosure processes" through a federal Consent Cease and Desist Order ("National Mortgage Settlement"). [Id. at ¶ 28]. The Plaintiffs claim that the Bankviolated the terms of this Order by continuing to attempt to foreclose on the Plaintiffs' property after the Plaintiffs gave notice to the servicer "that application for immediate assistance by way of the . . . national mortgage settlement was underway." [Id. at ¶ 30].

IV. ANALYSIS

A. Whether Plaintiffs' Claims are Barred by the Applicable Statutes of Limitations

The Bank first argues that because all of the Plaintiffs' claims are premised on actions or representations that occurred at the time of the property closing in November 2004, their claims are now time barred.

"[A]sserting an affirmative defense, like a statute of limitations defense, in a motion to dismiss presents a particular 'procedural stumbling block' for defendants." CSX Transp., Inc. v. Gilkison, 406 F. App'x 723, 728 (4^th Cir. 2010) (per curiam) (quoting Fredericksburg & Potomac R.R. v. Forst, 4 F.3d 244, 250 (4^th Cir. 1993)). As the Fourth Circuit has explained:

[A] motion to dismiss filed under Federal Rule of Procedure 12(b)(6), which tests the sufficiency of the complaint, generally cannot reach the merits of an affirmative defense, such as the defense that the plaintiff's claim is time-barred. But in the relatively rare circumstances where facts sufficient to rule on an affirmative defense are alleged in the complaint, the defense may be reached by a

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