Funderburk v. JPMorgan Chase Bank, N.A.

• Decision Date: 16 June 2015
• Docket Number: No. COA14–1258.,COA14–1258.
• Citation: 241 N.C.App. 415,775 S.E.2d 1
• Court: North Carolina Court of Appeals
• Parties: Mark E. FUNDERBURK and Teri F. Funderburk, Plaintiffs, v. JPMORGAN CHASE BANK, N.A., Shapiro and Ingle, LLP, Substitute Trustee, and Trustee Services of Carolina, LLC, Substitute Trustee, Defendants.

241 N.C.App. 415

775 S.E.2d 1

Mark E. FUNDERBURK and Teri F. Funderburk, Plaintiffs,

v.JPMORGAN CHASE BANK, N.A., Shapiro and Ingle, LLP, Substitute Trustee, and Trustee Services of Carolina, LLC, Substitute Trustee, Defendants.

No. COA14–1258.

Court of Appeals of North Carolina.

June 16, 2015.

Tuggle Duggins, P.A., Greensboro, by Emma C. Merritt, for plaintiff-appellants.

Bell, Davis & Pitt, P.A., Winston-Salem, by Bradley C. Friesen and Andrew A. Freeman, for defendant-appellee.

McCULLOUGH, Judge.

Mark E. Funderburk and Teri F. Funderburk (together "plaintiffs") appeal the Rule 12(b)(6) dismissal of their case. For the following reasons, we affirm.

I. Background

This appeal concerns the trial court's Rule 12(b)(6) dismissal of a suit initiated 8 October 2013 by plaintiffs against JPMorgan Chase Bank, N.A. ("Chase"), and substitute trustees Shapiro and Ingle, LLP ("S & I"), and Trustee Services of Carolina, LLC ("Trustee Services"). By order entered 10 April 2014 following the filing of plaintiffs' original complaint, answers by the substitute trustees, orders denying plaintiffs' motions for preliminary injunctions, and an answer and motion to dismiss by Chase, the trial court granted a motion by plaintiffs for leave to amend their complaint. Plaintiffs then filed an amended complaint and separate motions for ex parte, temporary and permanent injunctive relief on 10 April 2014.

As set forth in the amended complaint, plaintiffs purchased the following eight rental properties in Greensboro between 2002 and 2003:(1) 406 Andrews Street, (2) 2020 Martin Luther King, Jr. Drive, (3) 2018 Martin Luther King, Jr. Drive, (4) 2313 Phillips Avenue, (5) 603 East Florida Street, (6) 4002 Oak Grove Avenue, (7) 4004 Oak Grove Avenue, and (8) 608 East Lee Street (together the "properties"). Plaintiffs obtained mortgage loans in order to purchase the properties and, in return for the loans, executed promissory notes and deeds of trust for each property in favor of Washington Mutual Bank, FA, the original lender. Sometime thereafter, Chase acquired Washington Mutual Bank's interests and became the holder of the promissory notes and the beneficiary under the deeds of trust. S & I and Trustee Services were then named substitute trustees for the benefit of Chase.¹

Sometime prior to July 2011, Chase attempted to foreclose on the 603 East Florida Street property and plaintiffs filed an action against Chase for wrongful foreclosure. That action was settled via an agreement whereby plaintiffs agreed to bring the mortgage current by paying $4,800 to Chase in exchange for Chase's reinstatement of the mortgage. Plaintiffs then made the $4,800 payment in accordance with the agreement and continued to make monthly payments on the eight properties near the end of each month.

Plaintiffs allege in the amended complaint that Chase failed to comply with the terms of the agreement in that Chase refused to accept payments on the eight properties. Specifically, plaintiffs tendered an online payment to Chase for the eight properties on 31 October 2011 and Chase refunded and re-deposited the mortgage payment electronically on 3 November 2011. Plaintiffs then tendered an online payment to Chase for the eight properties on 14 November 2011 and Chase refunded and re-deposited the mortgage payment electronically on 21 November 2011. Plaintiffs then stopped tendering payments in anticipation that the payments would be rejected.

After Chase refunded and re-deposited plaintiffs' mortgage payments on 3 and 21 November 2011, Chase initiated foreclosure proceedings on all eight properties. Between 4 June 2013 and 24 September 2013, foreclosure hearings were held in which the clerk entered orders authorizing foreclosure sales of all eight properties. Plaintiffs appealed the orders authorizing foreclosure sales of six of the properties. The other two properties were sold at foreclosure on 3 and 22 October 2013.

Plaintiffs further alleged in the amended complaint that since initiating the foreclosure proceedings, someone purporting to be an agent of Chase contacted tenants in the eight properties and instructed those tenants that plaintiffs no longer owned the properties and they must vacate the premises. Plaintiffs alleged they lost tenants and rental payments as a result.

Based on these allegations, plaintiffs asserted causes of action for breach of contract, promissory estoppel, negligent misrepresentation, tortious interference with contracts and business expectancy, and quantum meruit.

On 6 February 2014, plaintiffs' appeals of the six foreclosure orders came on for hearing in Guilford County Superior Court. Upon consideration of each case, the superior court entered orders authorizing the substitute trustee to proceed with the foreclosures of the properties. Plaintiffs did not appeal the orders and the remaining six properties were eventually sold at foreclosure.²

On 1 May 2014, Chase responded to plaintiffs' amended complaint by filing a motion to strike, motion to dismiss, and answer to amended complaint. Chase's motions, along with a motion to dismiss by S & I, came on for hearing in Guilford County Superior Court before the Honorable V. Bradford Long on 19 May 2014.

At the hearing, Chase clarified its position that "the claims are—all depend upon a determination that the plaintiffs are not in default on the loans at issue, and a conclusive default determination has been made in the foreclosure proceedings." Thus, Chase asserted there was a conclusive defect in each claim and the claims should be dismissed pursuant to Rule 12(b)(6). Chase further argued the issue of default could not be re-litigated and, therefore, the claims are barred by collateral estoppel. In support of its position, Chase presented numerous cases for the court's consideration, many of which were unpublished.

In response, plaintiffs correctly emphasized the unpublished cases were not binding. Plaintiffs then argued the present case was not about stopping the foreclosures, but about damages they allegedly incurred. Nevertheless, plaintiffs continued to argue against default stating this is not a case where they "blew this off, weren't making payments, were a year behind, six months behind. [Plaintiffs] were maybe a couple weeks behind, maybe, if that, and these payments were accepted over and over and over again." Plaintiffs believed "a breach of contract did occur because payments were accepted and then after months then all of a sudden they weren't accepted and then they were returned." When the trial court reiterated that default had been determined in the prior foreclosure proceedings, plaintiffs responded that they would argue there was no default, but even assuming there was a default, the claims for breach of contract, tortious interference, and quantum meruit were still viable.

Upon consideration of the arguments and the case law presented by Chase, the superior court judge granted Chase's Rule 12(b)(6) motion to dismiss the case. In so deciding, the trial court explained:

Gentlemen, it appears to me that each of these stays contingent upon there not being a default existing or the claims are barred by other principles, the promissory estoppel claims of defense, and that's set out in each one of these cases, published or unpublished.

It's a defense, it's not a claim you can assert. The claims are by and large predicated on the fact that they cannot exist when a default is found and the foreclosure has proceeded to termination, and that's what's happened in this case, whether at the Superior Court level or the District Court level.

Two days later on 21 May 2014, the trial court entered an order memorializing its determination that "[t]he [a]mended [c]omplaint fails to state a claim upon which relief may be granted, and should be dismissed pursuant to Rule 12(b)(6)." In addition, the trial court granted Chase's motion to strike plaintiffs' motions for injunctive relief.

On 20 June 2014, plaintiffs filed notice of appeal from the 21 May 2014 order. Approximately three months later, plaintiffs filed a stipulation and notice of partial withdrawal of appeal in which plaintiffs withdrew their appeal as to S & I and Trustee Services. In doing so, plaintiffs acknowledged that the substitute trustees' involvement in the matter was moot because the foreclosures of the deeds of trust were complete and were not challenged in this case. Furthermore, plaintiffs clarified that they "seek consideration by [this Court] only of the dismissal of [their] claims against [Chase] for breach of contract, promissory estoppel, negligent misrepresentation, tortious interference with contracts and business expectancy, and quantum meruit."

II. Discussion

On appeal, plaintiffs contend the trial court erred in granting defendant's motion to dismiss the case pursuant to Rule 12(b)(6). In general,

[t]he motion to dismiss under [ N.C. Gen.Stat. § 1A–1, Rule] 12(b)(6) tests the legal sufficiency of the complaint. In ruling on the motion the allegations of the complaint must be viewed as admitted, and on that basis the court must determine as a matter of law whether the allegations state a claim for which relief may be granted.

Stanback v. Stanback, 297 N.C. 181, 185, 254 S.E.2d 611, 615 (1979) (citations omitted). "This Court must conduct a de novo review of the pleadings to determine their legal sufficiency and to determine whether the trial court's ruling on the motion to dismiss was correct." Leary v. N.C. Forest Prods., Inc., 157 N.C.App. 396, 400, 580 S.E.2d 1, 4, aff'd per curiam, 357 N.C. 567, 597 S.E.2d 673 (2003).

A complaint may be dismissed pursuant to Rule 12(b)(6) where (1) the complaint on its face reveals that no law supports a plaintiff's claim, (2) the complaint on its face reveals the absence of facts sufficient to make a good claim, or (3) the complaint discloses some fact that necessarily defeats a plaintiff's claim.

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