Johnson v. BAC Home Loans Servicing, LP

• Decision Date: 29 September 2011
• Docket Number: No. 5:10-CV-303-F,5:10-CV-303-F
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: EDGAR JOHNSON, Plaintiff, v. BAC HOME LOANS SERVICING, LP, BROCK & SCOTT, PLLC, JEREMY B. WILKINS, and LAUREN REEVES, Defendants.

EDGAR JOHNSON, Plaintiff,

v. BAC HOME LOANS SERVICING, LP, BROCK & SCOTT, PLLC,JEREMY B. WILKINS, and LAUREN REEVES, Defendants.

No. 5:10-CV-303-F

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION

Dated: September 29, 2011

ORDER

This matter is before the court on the following motions:

1. Motion to Dismiss the Complaint pursuant to 12(b)(1) and 12(b)(6) filed by Defendant BAC Home Loans Servicing, LP [DE-13];

2. Motion to Dismiss the Complaint pursuant to 12(b)(1) and 12(b)(6) or alternatively, Motion for a More Definite Statement pursuant to 12(3), filed by Defendants Brock & Scott, PLLC, Jeremy B. Wilkins and Lauren Reeves [DE-17];

3. Motion to Dismiss the Amended Complaint pursuant to 12(b)(1) and 12(b)(6) filed by Defendants Brock & Scott, PLLC, Jeremy B. Wilkins and Lauren Reeves [DE-21]; and

4. Motion to Dismiss the Amended Complaint pursuant to 12(b)(1) and 12(b)(6) filed by Defendant BAC Home Loans Servicing, LP [DE-24].

All briefing, responses and replies are complete. Accordingly, the motions are ripe for ruling.¹

I. PROCEDURAL HISTORY

Plaintiff Edgar Johnson ("Plaintiff or "Johnson"), proceeding pro se, initiated this action by Complaint [DE-1] filed July 29, 2010. The original complaint, 57 pages in length, named as defendants BAC Home Loans Servicing, LP ("BAC"), Brock & Scott, PLLC ("B&S"), Lauren Reeves ("Reeves"), Jeremy B. Wilkins ("Wilkins") and the State of North Carolina and included the labels "FRAUD, BANK FRAUD[,] CONSPIRACY/OBSTRUCTION OF JUSTICE[,] TAX FRAUD, MONEY LAUNDERING, WIRE FRAUD, PERJURY, U.S. Patriot Act Title III" and "PETITION IN THE NATURE OF A SUIT FOR DEPRIVATION I OF FEDERALLY PROTECTED RIGHTS TITLE 42 USC 1983, 1981, 1985, 19-8, TITLE 18 USC 241, 242, 1512, 1968, 1964, FOR INJUNCTIVE AND DECLARATORY RELIEF AND OTHER DAMAGES AS THE COURT SHALL DETERMINE REASONABLE, LAWFUL, AND JUST." The complaint, which contained no obvious causes of action or factual allegations against the named defendants, is comprised primarily of a nonsensical memorandum of law on "bank fraud" and excerpts from caselaw from several jurisdictions allegedly considering the issues discussed in the "bank fraud" memorandum. Compl. [DE-1.1 at 1]. On September 23, 2010, Plaintiff filed an Amended Complaint [DE-20], removing the State of North Carolina as a defendant and alleging six counts. Count I alleges a violation of the Fair Debt Collection Practices Act ("FDCPA"), 15U.S.C. § 1692 et seq. The remaining counts recite the following state law claims: breach of contract (Count II), breach of implied duty of good faith (Count III), breach of fiduciary duty (Count IV), and violations of the North Carolina Mortgage Debt Collection and Servicing Act, N.C. Gen. Stat. § 45-90 et seq. (Count V), and the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1 et seq. (Count VI). Plaintiff alleges the claims arise out of "improprieties surrounding theservicing of a note and deed of trust secured by real property purchased by" Plaintiff, which eventually resulted in Plaintiff's property being sold at a foreclosure sale. Am. Compl. ¶¶ 1,4 [DE-20]. The court's jurisdiction over Plaintiff's FDCPA claim arises under 28 U.S.C. § 1331 and 15 U.S.C. § 1692k(d), and over Plaintiff's state-law claims under 28 U.S.C. § 1367.

On September 28, 2010, Defendants B&S, Reeves and Wilkins filed a Motion to Dismiss [DE-21]. On October 7, 2010, Defendant BAC filed a Motion to Dismiss [DE-24] and an Answer [DE-25], generally denying the allegations of the amended complaint and raising several affirmative defenses. On October 21, 2010, Plaintiff filed a joint response [DE-28] to both motions to dismiss to which Defendant BAC filed a Reply [DE-29] on October 28, 2010.²

II. FACTUAL BACKGROUND

As is proper when considering a motion to dismiss, this court will consider the facts in a light most favorable to Plaintiff.³ According to the allegations in the amended complaint, in 2003,Plaintiff executed a note evidencing a loan in the amount of $240,000, for the benefit of Countrywide Home Loans, Inc. ("Countrywide"), which was secured by a deed of trust on 122 Red Mountain Road, Rougemont, North Carolina recorded on July 1, 2003 in Book 3979 Page 155 of the Durham County Registry. Am. Compl. ¶¶ 1, 20; BAC Mot. Dismiss, Ex. B [DE-24.2]. According to Plaintiff, during the transition from Countrywide to Bank of America, Defendant BAC did not apply a mortgage payment to Plaintiff's account, causing the account "to appear one month deficient," and refused to assist Plaintiff in resolving the issue regarding the lost payment. Id. ¶ 24. In February 2010, Defendant BAC initiated foreclosure proceedings against Plaintiff. Id.¶ 25. Defendant BAC did not offer Plaintiff "loss mitigation" or "pre-foreclosure" services and did not consider whether Plaintiff qualified for a loan modification under the federal Home Affordable Modification Program ("HAMP). Id. Defendant B&S served as the substitute trustee handling the foreclosure proceedings and Defendants Wilkins and Reeves ("the Individual Defendants") served as agents thereof. Id. f 27. The Individual Defendants "were personally involved in handling the foreclosure proceedings in connection with Plaintiffs' (sic) property." Id. ¶ 5.

On July 9, 2010, the Clerk of Superior Court for Durham County held a foreclosure hearing for the Deed of Trust. BAC Mot. Dismiss, Ex. A [DE-24.1]. At the hearing, the Clerk entered anorder ("the July 2010 order") allowing the foreclosure sale which included the following findings of fact:

5. BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing, L.P., is the holder of the note sought to be foreclosed and it evidences a valid debt owed by Edgar Johnson.

6. That said note is now in default and the instrument securing said debt gives the noteholder the right to foreclose under a power of sale.

7. That notice of this hearing has been served on the record owners of the real estate and to all other persons against whom the noteholder intends to assert liability for the debt.

8. That the Notice of Hearing for this proceeding was filed after the effective date for the Emergency Program to Reduce Home Foreclosures; however, the underlying mortgage debt is not a subprime loan as defined in N.C.G.S. 45-101(4) and any notices required under N.C.G.S. 45-102, et seq do not apply to this proceeding.

9. That the debtors have shown no valid legal reason why foreclosure should not commence.

BAC Mot. Dismiss, Ex. A [DE-24.1]. At the time of the July 2010 foreclosure hearing, Plaintiff's loan was "at least 60 days delinquent." Am. Compl. ¶ 18. Plaintiff alleges that he did not receive the statutorily required information to which he was entitled prior to the hearing, including the foreclosure hearing notice. Am. Compl. ¶ 28. Plaintiff alleges further that the foreclosure hearing was not conducted as required under North Carolina law in that "there was no evidence presented at the hearing as to prove the owner and holder of the note." Id.

On September 3, 2010, Plaintiff filed a Motion for Temporary Restraining Order in Durham County Superior Court, requesting the court continue the foreclosure sale pending resolution of the instant matter. Am. Compl. ¶ 31. On September 13, 2010, Superior Court Judge Michael R. Morgan entered an order denying Plaintiff's motion. BAC Mot. Dismiss, Ex. C [DE-24.3]. In thatorder, Judge Morgan noted that because Plaintiff failed to file an appeal of the July 2010 order within 10 days as required by N.C. Gen. Stat. §§ 1-301.2 and 45-21.16, the July 2010 order had become "fully and finally adjudicated." BAC Mot. Dismiss, Ex. C [DE-24.3]. On September 7, 2010, an agent for Defendant B&S sold the subject property at the Durham County Courthouse. Am. Compl. ¶ 33.

Based on the foregoing, Plaintiff alleges the following claims against Defendant BAC: breach of contract, breach of implied duty of good faith and violations of the North Carolina Mortgage Debt Collection and Servicing Act and the North Carolina Unfair and Deceptive Trade Practices Act. Plaintiff alleges the remaining defendants (collectively, the "FDCPA Defendants"), by handling the foreclosure proceedings, violated the FDCPA and breached a fiduciary duty owed Plaintiff.

III. RULE 12(B)(1) MOTIONS TO DISMISS

It is a fundamental rule that a court has "jurisdiction to determine [its] jurisdiction." Greenwich Fin. Servs. Distressed Mortg. Fund 3 LLC v. Countrywide Fin. Corp., 603 F.3d 23, 27 (2d Cir. 2010). Federal subject matter jurisdiction is limited to actions in which the claim asserted by the plaintiff raises a federal question or in which there is diversity of citizenship between the plaintiff and the defendant. 28 U.S.C. §§ 1331, 1332. Federal question subject matter jurisdiction exists where the plaintiff alleges a violation of the "Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Subject matter jurisdiction based on diversity of citizenship requires the plaintiff to demonstrate that none of the defendants holds citizenship in the same state as the plaintiff, and the amount in controversy exceeds $ 75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a).

A defendant may challenge subject matter jurisdiction facially or factually. Wollman v. Geren, 603 F. Supp. 2d 879, 882 (E.D. Va. 2009). If the defendant presents a facial challenge by arguing the complaint fails to allege facts upon which subject matter jurisdiction can be based, all facts alleged in the complaint are presumed true. See Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). Alternatively, if the defendant presents a factual challenge by arguing that jurisdictional facts alleged in the complaint are untrue, the court may consider extrinsic information beyond the complaint to determine whether subject matter jurisdiction exists. See Wollman, 603 F. Supp. 2d at 882 (citation omitted). In both situations, the burden rests with the plaintiff to prove that...