Maddox v. Wells Fargo Bank, N.A.
| Decision Date | 07 March 2019 |
| Docket Number | Case No. 17-cv-2634 (CRC) |
| Citation | 374 F.Supp.3d 146 |
| Parties | Rhonda MADDOX, Plaintiff, v. WELLS FARGO BANK, N.A., et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Rhonda Michelle Maddox, Washington, DC, pro se.
Daniel J. Tobin, Ballard Spahr LLP, Washington, DC, for Defendants.
In 2017, Defendant Wells Fargo Bank foreclosed on Rhonda Maddox's Washington, D.C. home. Ms. Maddox, proceeding pro se , sued Wells Fargo and the entities for which it was acting as a trustee, alleging violations of the Dodd-Frank Act. Specifically, she contends that Wells Fargo refused to consider her loss mitigation application before foreclosing on her home, and that Defendants acted in bad faith by intentionally undervaluing her home in the foreclosure sale. Defendants move to dismiss the Complaint. Because Maddox has not pled any facts suggesting that she submitted a proper loss mitigation application—instead relying on her Chapter 13 bankruptcy plan—and because her challenge to the foreclosure sale amounts to an improper collateral challenge to a state-court judgement under the Rooker - Feldman doctrine, the Court will grant the motion.
In March 2007, Maddox executed a note and a deed of trust in favor of Defendants secured by real property located in Southeast D.C. See Mot. Dismiss ("MTD") at 3. The following month, she executed a second note and deed of trust in favor of Defendants secured by the same property. Id.
In February 2013, Maddox defaulted on the earlier Note. Id. at 4. Defendants filed a foreclosure action in District of Columbia Superior Court. See Wells Fargo Bank, N.A. v. United States, et al., No. 2015 CA 005406 R(RP) (D.C. Super. filed July 17, 2015) ("Foreclosure Matter"); see also MTD at 4; MTD Ex. 1. Maddox subsequently filed a Chapter 13 bankruptcy petition in the federal bankruptcy court. See In Re Maddox, No. 16-0344 (SMT) (Bankr. D.D.C. filed July 13, 2016) ("Bankruptcy Matter") at ECF No. 1; see also MTD at 4. The bankruptcy filing triggered an automatic stay in the foreclosure matter, pursuant to 11 U.S.C. § 362. See Foreclosure Matter at Entry Nos. 37, 39, Ord. (D.C. Super. filed Sept. 21, 2016); see also MTD at 4–5.
In bankruptcy court, Defendants filed proof of claim related to both notes and deeds. See Bankruptcy Matter at Claim Nos. 3–1, 4–1; see also MTD at 5; MTD Ex. 2. Maddox, pursuant to Bankruptcy Code requirements, filed an original and two amended Chapter 13 plans for discharging her debts. Her Second Amended Chapter 13 Plan proposed to sell the property within one year and satisfy her mortgage and tax obligations from the proceeds, which she claimed would exceed those obligations. See Bankruptcy Matter at ECF No. 37. She also proposed two months of relief from payment to the third-party bankruptcy trustee, to be followed by payments of $ 300 per month. See id.
Meanwhile, Maddox failed to make full post-bankruptcy-petition payments for the months of August 2016 through March 2017. See id.; see also MTD at 5. Defendants moved for relief from the automatic stay in March 2017, see Bankruptcy Matter at ECF No. 70; see also MTD at 5, which Maddox opposed on the grounds that Defendants were adequately protected because her total obligations were less than the value of the property. See Bankruptcy Matter at ECF No. 80; see also MTD at 5–6; Opp. at 4. However, she did not contest that she had defaulted on her post-petition payments. See Bankruptcy Matter at ECF No. 80. After a hearing on the matter, Bankruptcy Judge Teel granted Defendants' motion. See id. at ECF Nos. 82, 84, 85, Ord. (Bankr. D.D.C. filed Mar. 31, 2017); see also MTD at 6. In April 2017, Maddox voluntarily dismissed her bankruptcy petition, and the matter was closed in June 2017. See Bankruptcy Matter at ECF No. 87; see also MTD at 6; Opp. at 4. She later moved to reopen the case and stay foreclosure, arguing that Defendants misrepresented the value of the property to the Court. See Bankruptcy Matter at ECF No. 90; see also MTD at 6. Judge Teel denied that motion. See Bankruptcy Matter at ECF No. 91, Mem. Op. & Ord. (Bankr. D.D.C. filed Jul. 20, 2017); MTD at 6.
With the stay lifted, the foreclosure proceeding resumed, see Foreclosure Matter at Entry Nos. 46–47, and the property was sold at auction on July 20, 2017. See MTD at 6. On August 16, 2017, a trustees' verified report of sale was filed contemporaneously with a motion to ratify the sale. See Foreclosure Matter at Entry Nos. 49–50; see also MTD at 6; MTD Ex. 3. Ms. Maddox opposed, arguing that Defendants intentionally sold the property for less than fair-market value in order to deprive her of equity she claimed to have in the property. See Foreclosure Matter at Entry No. 51; see also MTD at 6; MTD Ex. 6. Superior Court Judge Pan entered orders ratifying the foreclosure sale and the trustees' accounting and distribution of funds. See Foreclosure Matter at Entry Nos. 53–54, 59, Ords. (D.C. Super. filed Sept. 15 & Nov. 2, 2017); see also MTD at 7; MTD Exs. 3, 7.
Maddox appealed to the D.C. Court of Appeals on October 16, 2017. See Maddox v. Wells Fargo Bank, N.A., No. 17-CV-1429 (D.C. Ct. App. filed Oct. 16, 2017) ("Foreclosure Appeal"), at Entry No. 1; see also MTD at 7; Opp. at 3. She also moved in Superior Court to stay the foreclosure pending her appeal. See Foreclosure Matter at Entry No. 60; see also MTD at 7; MTD Ex. 9. The Superior Court denied that motion. See Foreclosure Matter at Entry No. 61, Ord. (D.C. Super. filed Nov. 28, 2017); see also MTD at 7; MTD Ex. 10. Maddox also filed an emergency motion to stay in her foreclosure appeal, which was denied on January 2, 2018. See Foreclosure Appeal at Entry Nos. 2, 5, Ord. (D.C. filed Jan. 2, 2018); see also MTD at 8; MTD Exs. 8, 12.
Maddox brought this suit on November 20, 2017. See Compl. She initially alleged that Defendants committed unspecified violations of the Dodd-Frank Act, and improperly sold her house below market value at auction and then repurchased it. Id. at 3, 5, 7. She also sought review of various decisions in the foreclosure and bankruptcy actions, including a request to enjoin the order and decree of sale of the property. Id. at 4, 5, 7. Maddox requested compensatory and punitive damages in excess of $ 1 million. Id. at 5, 7. Since filing her complaint, Maddox has withdrawn her request for injunctive relief. Opp. at 5. She now alleges that Defendants violated the Dodd-Frank Act by "not offering a [loss] mitigation plan and by not considering the [loss] mitigation plan [she] offered [and] proposed in the chapter[ ] 13 plan." Compl. at 7; see also Opp. at 2. She also continues to allege that Defendants purposely sold the property below market value. Compl. at 5, 7; Opp. at 3.
Defendants move to dismiss Maddox's complaint for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) and for failure to state a claim under Rule 12(b)(6). When analyzing a motion to dismiss, the "court assumes the truth of all well-pleaded factual allegations in the complaint and construes reasonable inferences from those allegations in the plaintiff's favor but is not required to accept the plaintiff's legal conclusions as correct." Sissel v. U.S. Dep't of Health & Human Servs., 760 F.3d 1, 4 (D.C. Cir. 2014) (citation omitted) ( Rule 12(b)(6) ); Jerome Stevens Pharm., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005) ( Rule 12(b)(1) ). To survive a 12(b)(6) motion, the complaint must contain sufficient facts that, if accepted as true, state a plausible claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). To defeat a 12(b)(1) motion, plaintiff must show "by a preponderance of the evidence that the Court has subject matter jurisdiction[.]" Biton v. Palestinian Interim Self-Gov't Auth., 310 F.Supp.2d 172, 176 (D.D.C. 2004). Where, as here, a plaintiff proceeds pro se , the Court must "consider [her] filings as a whole before dismissing a complaint," Schnitzler v. United States, 761 F.3d 33, 38 (D.C. Cir. 2014) (citing Richardson v. United States, 193 F.3d 545, 548 (D.C. Cir. 1999) ), because such complaints are held "to less stringent standards than formal pleadings drafted by lawyers," Haines v. Kerner, 404 U.S. 519, 520, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972). Nevertheless, a court need not accept inferences drawn by a plaintiff, pro se or otherwise, if those inferences are unsupported by facts alleged in the complaint, nor must it accept plaintiff's legal conclusions. See Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994).
Ms. Maddox's primary contention is that Defendants violated the Dodd-Frank Act, Pub. L. 111–203, H.R. 4173 (July 21, 2010), by failing to consider a loss mitigation application. While she does not cite any particular provision of the law or its implementing regulations, the Court presumes she refers to 12 C.F.R. § 1024.41, which establishes "[l]oss mitigation procedures" for mortgage loans.
Defendants respond that Maddox's claim must be dismissed because Dodd-Frank does not confer a private right of action. That contention appears incorrect in this context, however. The loss mitigation procedures in 12 C.F.R. § 1024.41 were promulgated to implement Dodd-Frank's amendments to the Real Estate Settlement Procedures Act of 1974 ("RESPA"), 12 U.S.C. § 2601, et seq. The specific measures seemingly invoked by Maddox are the Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act ("Regulation X"), see 78 Fed. Reg. 10,696 (codified at 12 C.F.R. § 1024). RESPA establishes a private right of action authorizing borrowers to sue for damages as a result of a creditor's failure to comply with the statute and its implementing regulations. See 12 U.S.C. § 2605(f). Regulation X...
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