House v. Fed. Home Loan Mortg. Corp.

• Decision Date: 28 September 2016
• Docket Number: No. 4:14–CV–129–D,4:14–CV–129–D
• Citation: 261 F.Supp.3d 623
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: Shontay HOUSE, and Mary Vega, Plaintiffs, v. FEDERAL HOME LOAN MORTGAGE CORPORATION, and Brock & Scott Pllc, Defendants.

261 F.Supp.3d 623

Shontay HOUSE, and Mary Vega, Plaintiffs,

v.FEDERAL HOME LOAN MORTGAGE CORPORATION, and Brock & Scott Pllc, Defendants.

No. 4:14–CV–129–D

United States District Court, E.D. North Carolina, Eastern Division.

Signed September 28, 2016

Jeremy Clayton King, Lanier, King & Paysour, PLLC, Steven F. Johnson, II, Steven F. Johnson II, PA, Greenville, NC, for Plaintiffs.

Franklin L. Greene, Brock & Scott, PLLC, Charlotte, NC, for Defendants.

ORDER

JAMES C. DEVER III, Chief United States District Judge

On June 23, 2014, Shontay House ("House") and Mary Vega ("Vega") (collectively, "plaintiffs") filed suit against Federal Home Loan Mortgage Corporation ("Freddie Mac") and Brock & Scott PLLC ("Brock & Scott") (collectively, "defendants") in Pitt County Superior Court. See [D.E. 1–2] 2–9. On July 23, 2014, defendants removed plaintiffs' action to this court [D.E. 1]. On July 30, 2014, defendants moved to dismiss plaintiffs' complaint [D.E. 5] and filed a memorandum in support [D.E. 6]. On January 9, 2015, the court granted in part and denied in part defendants' motion to dismiss and allowed plaintiffs' claims for breach of lease, trespass, trespass to chattels, and conversion to proceed. See [D.E. 13].

On January 21, 2016, both parties moved for summary judgment and filed memoranda in support [D.E. 26–29]. As explained below, the court grants defendants' motion for summary judgment and denies plaintiffs' motion for summary judgment.

I.

On March 15, 2013, plaintiffs entered into a one-year agreement with Steven Mills ("Mills") to lease Mills's residential property at 2912 Satterfield Drive in Greenville, North Carolina ("the rental property"). Compl. [D.E. 1–2] ¶¶ 7–8; Ans. [D.E. 15] ¶ 7; see [D.E. 27–2] 2–3. In relevant part, plaintiffs agreed to pay Mills $1000 per month for twelve months, that the lease would begin on March 15, 2013, and that the lease would expire on March 31, 2014. See [D.E. 27–2] 3. On March 22, 2013, plaintiffs moved into the rental property. House Dep. [D.E. 27–8] 156–57; Vega Dep. [D.E. 27–9] 81. During the first few months of the lease, Vega paid rent directly to Mills using certified funds from the Local Government Federal Credit Union. See Vega Dep. [D.E. 27–9] 63–64; House Dep. [D.E. 27–8] 86–87.

Sometime before November 1, 2013, Mills stopped making mortgage payments on the rental property. See [D.E. 27–3] 6–9. During this period of non-payment, Mills communicated to plaintiffs that he had ceased making mortgage payments. See Vega Dep. [D.E. 27–9] 86; House Dep. [D.E. 27–8] 161. Accordingly, plaintiffs stopped paying rent to him "right before Christmas." Vega Dep. [D.E. 27–9] 87; see House Dep. [D.E. 27–8] 161 ("After you found out Mr. Mills wasn't paying his mortgage ... did you make any more monthly [rent] payments to him?" "Oh no, that's when—uh-uh, no."). Instead, plaintiffs kept their rent money and put it "[i]n savings." House Dep. [D.E. 27–8] 161.¹

In February 2014, the rental property was the subject of a foreclosure action and, on February 5, 2014, foreclosure took place. Compl. ¶ 11; Ans. ¶ 11; see [D.E. 27–3] 6 (11/04/2013 foreclosure notice); [D.E. 27–4] (01/09/2014 Pitt County Superior Court foreclosure order); [D.E. 27–6] 2 (02/05/2014 Pitt County Superior Court report of foreclosure sale). On February 18, 2014, Freddie Mac obtained equitable title to the rental property. [D.E. 27–7] 2–3 (02/18/2014 Pitt County deed conveying title to Freddie Mac). At some point after the foreclosure, Brock & Scott communicated with plaintiffs about their lease and asked whether they wished to "stay in the property" or receive "some money to move out," but plaintiffs did not agree to either proposal. See House Dep. [D.E. 27–8] 82; Vega Dep. [D.E. 27–9] 64. On February 28, 2015, Brock & Scott, on behalf of Freddie Mac, mailed "Steve E. Mills and Autumn N. Mills or the Current Occupants ... [of] 2912 Satterfield Drive, Greenville, NC," a "Notice to Vacate." [D.E. 27–11] 2. In the notice to vacate, Brock & Scott notified plaintiffs that the rental property was foreclosed upon and that eviction would take place within 90 days "in the event [plaintiffs were] ... bona fide tenant[s] of the mortgagor of the Deed of Trust." Id. 2. Brock & Scott requested notification "within five (5) business days" of plaintiffs' bona-fide-tenant status. Id.

On March 3, 2014, Freddie Mac recorded the title transfer. Compl. ¶ 11; Ans. ¶ 11. On March 31, 2014, plaintiffs' pre-foreclosure lease expired. See [D.E. 27–2] 3. Plaintiffs never paid "Freddie Mac ... or Brock & Scott ... any money to stay" in the rental property after Freddie Mac obtained title. House Dep. [D.E. 27–8] 161, 184 ("Isn't it true that you have never paid one dime of rent to Freddie Mac to live at 2912 Satterfield Drive?" "That is so not true." "Who did, who did you pay at Freddie Mac and when did you pay at Freddie Mac?" "Not Freddie Mac, I paid to Steven Mills, and that was to live at 2912 Satterfield Drive.").

On June 5, 2014, 94 days after mailing notice to the plaintiffs, defendants applied for an order for possession under N.C. Gen. Stat. § 45–21.29(k) with the clerk of Pitt County Superior Court. Compl. ¶ 14; Ans. ¶ 14; [D.E. 27–12] 2 (06/05/2014 application for order for possession in Pitt County Superior Court).² Also on June 5, 2014, the clerk granted the application, finding that "all of the requisites of the General Statutes of North Carolina ha[d] been complied with as well as all other applicable legal requirements." [D.E. 27–12] 4 (06/05/2014 Pitt County Superior Court order for possession).

On June 9, 2014, the Pitt County Office of the Sheriff served plaintiffs with an ejectment notice. See Compl. ¶ 14; Ans. ¶ 14; [D.E. 27–13] 4. The ejectment notice stated that the sheriff would forcibly eject plaintiffs if they failed to vacate the rental property by June 16, 2014. Compl. ¶ 14; Ans. ¶ 14; [D.E. 27–13] 4. On June 16, 2014, plaintiffs had failed to vacate the premises, and the sheriff evicted them by locking them out of the residence. House Dep. [D.E. 27–8] 137–39; see [D.E. 28] ¶ 27; Compl. ¶ 15; Ans. ¶ 15. A locksmith accompanied the sheriff and changed the locks on the doors to the rental property. House Dep. [D.E. 27–8] 137. Following the lockout, plaintiffs returned to the residence on a few occasions to obtain personal items, with the permission of a banker named Ray Harrington. Vega Dep. [D.E. 27–9] 98–99; House Dep. [D.E. 27–8] 137.

On June 23, 2014, plaintiffs filed suit in Pitt County Superior Court alleging numerous violations of North Carolina law. Compl. ¶¶ 21–72. On June 24, 2014, Judge Arnold Jones of the Pitt County Superior Court entered an order enjoining Freddie Mac from evicting plaintiffs from the rental property. [D.E. 1–2] 12–13. As a result, plaintiffs returned to the rental property. [D.E. 28] ¶ 30. The Pitt County Superior Court scheduled a preliminary injunction hearing for July 3, 2014. [D.E. 1–2] 13. However, on July 3, 2014, plaintiffs agreed to voluntarily vacate the rental property by July 7, 2014, thereby mooting plaintiffs' request for injunctive relief. See id. 14–16. On July 23, 2014, Freddie Mac removed the action to this court pursuant to 28 U.S.C. §§ 1331 and 1442 and 12 U.S.C. § 1452(f). [D.E. 1].

On July 30, 2014, defendants moved to dismiss plaintiffs' complaint under Federal Rule of Civil Procedure 12(b)(6). [D.E. 5]. On January 9, 2015, this court granted in part and denied in part defendants' motion. [D.E. 13]. Following this court's order of January 9, 2015, plaintiffs' claims for (1) breach of lease; (2) trespass; (3) trespass to chattels; and, (4) conversion remained. See id. On January 21, 2016, defendants moved for summary judgment [D.E. 26] and filed a memorandum in support [D.E. 27]. That same day, plaintiffs moved for partial summary judgment on the remaining claims [D.E. 28] and filed a memorandum in support [D.E. 29].

II.

Summary judgment is appropriate if the moving party demonstrates that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The party seeking summary judgment must initially show an absence of a genuine dispute of material fact or the absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If a moving party meets its burden, the nonmoving party must "come forward with specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quotation and emphasis omitted). A genuine issue for trial exists if there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "The mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient ...." Id. at 252, 106 S.Ct. 2505 ; see Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985) ("The nonmoving party, however, cannot create a genuine issue of material fact through mere speculation or the building of one inference upon another."). Only factual disputes that might affect the outcome under substantive law properly preclude summary judgment. Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

In reviewing the factual record, the court views the facts in the light most favorable to the nonmoving party and draws reasonable inferences in that party's favor. Matsushita, 475 U.S. at 587–88, 106 S.Ct. 1348. "When cross-motions for summary judgment are before a court, the court examines each motion separately, employing the familiar standard under Rule 56 of the Federal Rules of Civil Procedure." Desmond v. PNGI Charles Town Gaming, L.L.C., 630 F.3d 351, 354 (4th Cir. 2011).

Additionally, the parties' cross-motions require this court to apply North Carolina law. See [D.E. 13] 3–4 (identifying North...