Flucker v. Gantt (In re Flucke)
| Decision Date | 24 October 2011 |
| Docket Number | C/A No. 11-03801-HB,Adv. Pro. No. 11-80078-HB |
| Court | U.S. Bankruptcy Court — District of South Carolina |
| Parties | In re, William Leonard Flucker and Bobbie Jo Janine Flucker, Debtor(s). Bobbie Jo Janine Flucker William Leonard Flucker, Plaintiff(s), v. David Gantt Pfeiffer Gantt & Gleaton PA Terence M Morgan aka Terrence Morgan Federal National Mortgage Association National Real Estate Services.com Inc. Michael K Cockrell Jenny Cockrell The Rental Home Store, Defendant(s). |
The relief set forth on the following pages, for a total of 18 pages including this page, is hereby ORDERED.
THIS MATTER comes before the Court upon the Motion to Dismiss1 filed by Defendant Pfeiffer Gleaton Wyatt Hewitt, PA f/k/a Pfeiffer Gantt & Gleaton, PA ("Firm"), pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure2 , made applicable to this adversary proceeding by Rule 7012 of the Federal Rules of Bankruptcy Procedure. Plaintiffs filed this action against various Defendants listing causes of action, including a request for the Court to determine the extent of a lien, for damages for fraud and/or constructive fraud, negligence and/or negligent misrepresentation, conspiracy, conversion,breach of contract with fraudulent conduct, and unfair trade practices.3 After a review of the pleadings and considering the arguments presented by the parties, the Court finds that the Motion to Dismiss should be granted and the Firm should be dismissed from this lawsuit.
The Complaint and record include the following relevant allegations and information4 :
1. On February 2, 2007, Defendant Terence Morgan purchased a tract of real property located at 515 Tomotley Court, Greer, South Carolina in Spartanburg County ("Subject Property").5 To secure the loan to purchase the Subject Property, Morgan executed a mortgage agreement with Bankline Mortgage Corp. that was subsequently assigned to Federal National Mortgage Association ("Fannie Mae").6
2. Defendant National Real Estate Services.com, Inc. ("NRES") placed an advertisement on the website "Craig's List"7 which advertised the purchase of homes through a "Beat the Bank" program. Plaintiffs saw this ad on the internet in June 2009.
3. Knowing they had a marginal creditor score, Plaintiffs inquired into the "Beat the Bank" program and were provided a brochure and explanation of the program byDefendant Michael Cockrell.8 Through this program, Plaintiffs would make all payments on their home directly to NRES.9
4. Plaintiffs informed NRES of their interest in the Subject Property (owned by Defendant Terence Morgan and allegedly encumbered by a mortgage), which at the time was advertised as being for sale by a third party real estate agent. NRES contacted the seller, Morgan.10 Thereafter, Defendant Michael Cockrell presented a Contract Report to the Plaintiffs. The Report indicated that the "net worth" of the Subject Property after ten years would be $263,313, based on the home value increasing at 4% each year. However, there was no indication of the source of the 4% appreciation figure.11
5. On July 10, 2009, Plaintiffs signed a "Contract for Sale" prepared by NRES for the purchase of the Subject Property.12 Shortly thereafter, Morgan agreed to and executed the Contract for Sale.
6. The Contract for Sale provided that Morgan was to convey marketable title and deliver a general warranty deed to Plaintiffs. Despite this provision, a "Bond for Title" was drafted by NRES instead.13
7. On or about the same date, Plaintiffs entered into an Escrow/Payment Management Agreement ("Debtor Payment Agreement") with NRES. Pursuant to thisagreement, Plaintiffs were to make all payments associated with the Subject Property (i.e, mortgage payments, property tax, etc.) directly to NRES.14
8. Shortly thereafter, Morgan entered into a Payment/Escrow Management Agreement ("Seller Payment Agreement") with NRES, where Morgan represented that all mortgage payments on the property were current and that the property was free of any liens or encumbrances.15
9. The closing on the Subject Property occurred on July 22, 2009, at Firm's office and was conducted by Defendant David Gantt, who was an attorney practicing at the Firm at that time.16
10. At the closing, the Plaintiffs were presented with a Bond for Title instead of a general warranty deed. Plaintiffs allege that they were assured that this arrangement was in their best interests, and it appears from the allegations of the Complaint that Mr. Gantt allegedly communicated this assurance. Plaintiffs were not provided any disclosure regarding who Mr. Gantt represented and did not pay Mr. Gantt for his services.17 Throughout the Complaint, Plaintiffs refer to Defendants David Gantt and the Firm collectively as "Gantt," moving back and forth between the plural and singular. The Complaint states "David Gantt and Pfeifer Gantt Gleaton PA (collectively Gantt) is an attorney and his firm is located in Greenville SC who provided closing services on thesubject Bond for Title, and it is alleged they co-conspired or were joint venturers/partners or agent of Management Agent."18 Without a distinction between the parties and with these vague inconsistencies, it is difficult for the Court to discern whether the individual or the Firm participated in certain acts mentioned therein. However, in context the Court does not understand that Plaintiff intended to allege that the entire firm made any direct representation to Plaintiffs, but rather that Gantt did so.
11. The Seller Payment Agreement was disclosed to Plaintiffs after the closing. Plaintiffs allege that Mr. Gantt was aware of the Seller Payment Agreement between Morgan and NRES, as Gantt and the Firm drafted the Agreement.19
12. Plaintiffs were not provided a disclosure as to where their funds were disbursed.20 However, after the closing, they continually made the mortgage payment on the Subject Property from September 2009 through April 2011. At first, Plaintiffs sent their payments directly to a bank account provided by NRES; however, in 2011 Plaintiffs began making payments directly to NRES at its new business, The Rental Store.21
13. Despite the fact that Plaintiffs diligently made their payments each month pursuant to the various agreements, the mortgagee, Fannie Mae, filed an action to foreclosure on its interest in the Subject Property.22 Their last payment for the mortgage on the Subject Property was credited to the payment due for December 2010.23
14. Plaintiffs allege that not all of the payments paid by them to NRES were sent to the mortgagee. The mortgage was in default as of January 2011 and the amount of thearrearage was approximately $10,000.24 Regular monthly payments were scheduled at approximately $1,500.00.25
15. Plaintiffs assert that NRES and The Rental Store did not apply their payments to the mortgage and, instead, used the funds for their own pecuniary interest.26
16. In an attempt to stay the foreclosure proceedings and the loss of any interest Plaintiffs may have in the Subject Property, Plaintiffs filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code on June 14, 2011.27 Through their Chapter 13 plan28 , Plaintiffs seek to cure the arrearage on the mortgage being foreclosed on by Fannie Mae. Plaintiffs' plan has not yet been confirmed.29
17. According to Plaintiffs' bankruptcy schedules, two Homeowner's Associations have liens on the Subject Property in addition to the mortgage.
18. Plaintiffs allege that they have been damaged because their payments were not applied appropriately, causing a foreclosure action to be initiated on the Subject Property. In addition, Plaintiffs allege that damages arise from NRES's failure to add Plaintiffs to Morgan's property insurance policy as loss payees because there was subsequent roof damage that left Plaintiffs without recourse for insurance coverage.30
19. Plaintiffs' first, fifth and sixth claims for relief do not involve the Firm.
Plaintiffs allege that the Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and Local Civil Rule 83.XI.01, DSC and that venue is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409.
Fed. R. Civ. P. 12(b)(6) provides that a party may move to dismiss a complaint for failure to state a claim upon which relief can be granted. In reviewing claims for failure to state a claim, a court must construe the allegations in the light most favorable to the plaintiff. In order to survive a motion to dismiss, the pleader must provide more than mere "labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1965 (2007) (citations omitted). Pursuant to Rule 8 of the Federal Rules of Civil Procedure, a pleading does not require detailed factual allegations; however, it demands more than an unadorned assertion that the plaintiff is entitled to relief. Id. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements are insufficient. Ashcroft v. Iqbal, _ U.S. _, 129 S.Ct. 1937, 1949 (2009).
Only a complaint that states a plausible claim for relief survives a motion to dismiss. Id. at 1950. A motion pursuant to Rule 12(b)(6) challenges the legal sufficiency of a complaint and should be considered with the assumption that the facts alleged in the complaint are true. Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009) (citations omitted...
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