Hayes v. Fay Servicing, LLC
| Decision Date | 03 April 2023 |
| Docket Number | 6:22-cv-00040 |
| Parties | RALPH L. HAYES, Plaintiff, v. FAY SERVICING, LLC, Defendant. |
| Court | U.S. District Court — Western District of Virginia |
Plaintiff Ralph Hayes, proceeding pro se, brings several claims against Defendant Fay Servicing, LLC, claiming that Defendant lacks the authority to foreclose on his property. Defendant moves to dismiss the case and Plaintiff moves for a preliminary injunction. For the following reasons, the Court will grant Defendant's motion to dismiss the case and will deny Plaintiff's motion for a preliminary injunction.
Background[1]
On or around May 2002, Plaintiff Hayes, a Virginia citizen, and his wife, Catherine Hayes, purchased property located at 1107 Ashburn Drive, Forest, VA 24551 and obtained a loan through the Bank of America for approximately $255,000. Dkt. 3 ¶¶ 1.1, 2.1. On or around November 2003, Hayes and his wife refinanced the property with Homecomings Financial in the amount of $353,100. Id. ¶ 2.2.
On or around December 8, 2005, Hayes and his wife met with a notary who requested that they sign loan documents from United Mortgage Lenders, Inc. Id. ¶ 2.4. After reviewing the documents, Hayes and his wife decided not to sign the documents and contacted their loan processor. Id. On the following day, Hayes and his wife marked the documents that they wanted changed and delivered the loan documents to the notary's home. Id. ¶ 2.5.
On December 10, 2005, Hayes' wife stated that the notary told her that “United Mortgage Lenders, Inc. made [him] change the dates from the 9th to the 8th on some of [their] documents” without Hayes' or his wife's consent. Id. ¶ 2.7. A few days later, Hayes and his wife signed Notice of Right to Cancel letters, claiming the documents contained incorrect loan numbers, had been altered by having the date changed, and had an incorrect payment amount to Homecomings Financial. Id. ¶¶ 2.8-2.10. On or around December 8, 2005, Hayes and his wife executed a Note and a Deed of Trust on the property with United Mortgage Lenders, Inc. Dkt. 10-1 at 2-22.[2]
The mortgage was transferred to HSBC Mortgage Services. Id. ¶ 2.6.[3] On or around December 2007, HSBC escalated the loan due to non-payment. Id. ¶ 2.12. On January 22, 2008, Hayes and his wife filed for Chapter 13 bankruptcy to stop the foreclosure, but it was dismissed because their counsel purportedly failed to attach the Deed of Trust to their filing. Id. ¶ 2.13.
On or around February 2012, HSBC agreed for Hayes to settle the mortgage for a fraction of the balance. Id. ¶ 2.15. Hayes, however, does not allege that HSBC formally agreed to settle the mortgage. In March 2012, Hayes made his last payment to HSBC. Id. ¶ 2.16. In May 2012 HSBC accelerated Hayes' and his wife's loan. Id. ¶ 2.17.
On November 1, 2013, their loan was transferred to Caliber Home Loans, Inc. Id. ¶ 2.18. In March 2015, Caliber accelerated the loan and moved for foreclosure on Hayes' property. Id. ¶ 2.20. On April 21, 2015, Hayes again filed for Chapter 13 bankruptcy to stop the foreclosure, claiming he had “cancelled the loan” and that HSBC and Caliber had “only produced illegal loan documents.” Id. ¶ 2.21. On September 15, 2015, the bankruptcy case was dismissed. Id. On April 24, 2015, their loan was transferred back to HSBC. Id. ¶ 2.22.
From 2005 to 2016, Hayes sent loss mitigation applications[4] and qualified written requests[5] to HSBC and Caliber. Id. ¶¶ 2.14, 2.24. HSBC and Caliber did not send notices to Hayes acknowledging receipt of his applications within five days but notified Hayes that they “need[ed] more time.” Id. ¶ 2.24. Id. Since 2007, Hayes claims that he has attempted to refinance his property. Id. ¶ 2.27.
Hayes' and his wife's loan was transferred to Defendant Fay. Id. ¶ 2.29.[6] Around January 2021, Fay claims that it sent out a change of services notification to Hayes. Id. ¶ 2.31. Hayes alleges that he never received such notice. Id. In April 2021, Orlans, PC a company contracted by Fay, notified Hayes of a foreclosure sale on May 12, 2021. Id. ¶ 2.32. In that same month, Hayes and his wife submitted a loss mitigation application to Fay. Id. ¶ 2.34. Fay requested additional documents for the application. Id. On June 15, 2021, Hayes emailed additional documents to Fay. Id. Fay has not yet responded to the application or sent acknowledgement of it. Id. ¶ 2.35.
On May 11, 2022, Fay hired Orlans to commence the foreclosure sale on Hayes' property on July 13, 2022. Id. ¶ 2.37. On June 8, 2022, Hayes, through counsel, disputed the loan and forwarded a qualified written request to Orlans and Fay. Id. ¶ 2.38. Neither Orlans nor Fay has responded to the request. Id.
In his First Amended Complaint, Hayes asserts the following claims against Fay: (1) wrongful foreclosure, (2) slander of title (3) violation of various state and federal consumer laws, (4) slander of credit, and (5) infliction of emotional distress. Id. at 6-9.
A motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) tests the legal sufficiency of a complaint to determine whether a plaintiff has properly stated a claim. The complaint's “[f]actual allegations must be enough to raise a right to relief above the speculative level,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007), with all its allegations taken as true and all reasonable inferences drawn in a plaintiff's favor, Rubenstein, 825 F.3d at 212. A motion to dismiss “does not, however, resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Id. at 214.
Although the complaint “does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. A court need not “accept the legal conclusions drawn from the facts” or “accept as true unwarranted inferences, unreasonable conclusions, or arguments.” Simmons v. United Mortg. & Loan Inv., LLC, 634 F.3d 754, 768 (4th Cir. 2011) (internal quotation marks omitted). This is not to say Rule 12(b)(6) requires “heightened fact pleading of specifics,” instead a plaintiff must plead “only enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; see Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (providing that “only a complaint that states a plausible claim for relief survives a motion to dismiss”).
Courts are to construe the filings of pro se litigants liberally, Haines v. Kerner, 404 U.S. 519, 520 (1970), but nonetheless, a pro se complaint must state a plausible claim to relief, see Iqbal, 556 U.S. at 679.
Defendant moves to dismiss Plaintiff's First Amended Complaint for failure to state a claim. Dkt. 9.[7] In assessing this motion the Court proceeds by liberally construing the allegations in the First Amended Complaint and analyzing each cause of action alleged by Plaintiff.
Plaintiff fails to state a wrongful foreclosure claim because Virginia does not recognize such a cause of action. See Hardnett v. M&T Bank, 204 F.Supp.3d 851, 857 (E.D. Va. 2016), aff'd sub nom., 699 Fed.Appx. 242 (4th Cir. 2017); Grenadier v. BWW L. Grp., No. 1:14-cv-827, 2015 WL 417839, at *8 (E.D. Va. Jan. 30, 2015), aff'd, 612 Fed.Appx. 190 (4th Cir. 2015) (); Hien Pham v. Bank of New York, 856 F.Supp.2d 804, 811 (E.D. Va. 2012) ().
Plaintiff asserts a slander of title claim against Defendant, claiming that it impaired his title by producing documents that had been altered and changed without his consent. Dkt. 3 ¶¶ 4.1-4.3. To state a slander of title claim under Virginia law, Plaintiff must allege (1) the publication of slanderous words by Defendant, (2) the falsity of Defendant's words, (3) that Defendant's words were made with malice or in reckless disregard of the truth, and (4) special damages. Lodal v. Verizon Va., Inc., No. cl-2007-2178, 2007 WL 5984179 (Va. Cir. Aug. 22, 2007); Celebrate Va. S. Holding Co., LLC v. CVAS Prop. Mgmt., LLC, 569 F.Supp.3d 316, 346 (E.D. Va. 2021); Evans v. PlusOne Sports, LLC, 686 Fed.Appx. 198, 206 (4th Cir. 2017).
Plaintiff fails to allege facts showing that the false statements were made with malice or in reckless disregard of the truth. The Supreme Court of Virginia has defined malice as “some sinister or corrupt motive such as hatred, revenge, personal spite, ill will, or desire to injure the plaintiff” or a communication “made with such gross indifference and recklessness as to amount to a wanton or willful disregard of the rights of the plaintiff.” Poindexter v. Mercedes-Benz Credit Corp., 792 F.3d 406, 411 (4th Cir. 2015) (quoting Great Coastal Express, Inc. v. Ellington, 334 S.E.2d 846, 851 n. 3 (Va. 1984), overruled on other grounds by Cashion v. Smith, 749 S.E.2d 526, 532 (Va. 2013)). Reckless disregard is defined as “something substantially higher than ordinary negligence, akin to willful and wanton behavior,” that is in disregard to another person's rights or to any consequences, “with the defendant aware, from his knowledge of existing circumstances and conditions, that his conduct probably would cause injury to another.” Id. (internal quotation marks omitted). Plaintiff fails to allege any facts to support an inference that Defendant had a “sinister or corrupt motive” or acted willfully when it allegedly altered Plaintiff's loan documents. See Poindexter, 792 F.3d at 411.
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