Malek v. Flagstar Bank

Decision Date29 September 2014
Docket NumberCivil Action No. 13–01597 BAH
PartiesGilda Malek, Plaintiff, v. Flagstar Bank, Defendant.
CourtU.S. District Court — District of Columbia

Afshin Pishevar, Pishevar & Associates, P.C., Rockville, MD, for Plaintiff.

Christine M. Debevec, Stradley Ronon Stevens & Young, LLP, Philadelphia, PA, John Alexander Nader, Stradley, Ronon, Stevens & Young, LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

BERYL A. HOWELL, United States District Judge

The plaintiff, Gilda Malek, filed this action against the defendant Flagstar Bank, a federally chartered savings bank, to challenge the recording of a deed of trust that was executed by the plaintiff's husband in exchange for a $500,000 loan secured by the couple's house. See generally Compl., ECF No. 1. The defendant has moved, under Federal Rule of Civil Procedure 12(b)(6), to dismiss the Complaint for failure to state a claim. See Def.'s Mot. to Dismiss (Def.'s Mot.), ECF No. 6. For the reasons explained below, the defendant's motion is denied in part and granted in part.

I. BACKGROUND

On March 15, 2000, the plaintiff and her husband, Farshied Malek (Mr. Malek), acquired fee simple title by deed as tenants by the entireties to their house, which is located at 4836 Van Ness Street, N.W., Washington, D.C. Compl. ¶¶ 6–7, ECF No. 1–1; Def.'s Mot., Ex. A (Residential Property Deed, dated March 15, 2000) at 1, ECF No. 6–2. Five years later, on November 15, 2005, Mr. Malek obtained from the defendant a $500,000 Home Equity Line of Credit (“Home Equity Loan”), with an initial advance of $200,000 and a ten year repayment period. Compl. ¶ 8; Def.'s Mot., Ex. B (Home Equity Line of Credit Agreement), ECF No. 6–3. To secure this loan, Mr. Malek executed a “Credit Line Deed of Trust” (“Deed of Trust”) for the benefit of the defendant that encumbered the couple's house. Compl. ¶ 8; Def.'s Mot., Ex. C (Credit Line Deed of Trust), ECF No. 6–4. The parties do not dispute that the plaintiff did not execute the Home Equity Loan, the Deed of Trust, or any other document in connection with the loan made by the defendant to the plaintiff's spouse. Compl. ¶ 10; see generally Def.'s Mot., Ex. C.

On November 28, 2005, the defendant recorded the Deed of Trust with the Office of the Recorder of Deeds of the District of Columbia. Compl. ¶¶ 9–10. Almost eight years later and about two years before repayment of of the Home Equity Loan was due in full, the plaintiff filed suit, on July 18, 2013, against the defendant asserting three claims: (1) that the Deed of Trust should be declared invalid (“Count I”), id. ¶¶ 11–12; (2) fraud (“Count II”), id. ¶¶ 13–17; and (3) negligence (“Count III), id. ¶¶ 18–20. The case was originally filed in the Superior Court of the District of Columbia and subsequently removed to this Court based on diversity jurisdiction.1 See Notice of Removal, ECF No. 1. Shortly thereafter, the defendant filed the pending motion to dismiss the Complaint with prejudice.

II. LEGAL STANDARDS

Federal Rule of Civil Procedure 8(a)(2) requires that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief,” to encourage brevity and, at the same time, “give the defendant fair notice of what the ... claim is and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (ellipses in original; internal quotations and citations omitted); Tellabs, Inc. v. Makor Issues & Rights, Ltd ., 551 U.S. 308, 319, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007). The Supreme Court has cautioned that although Rule 8 marks a notable and generous departure from the hyper-technical, code- pleading regime of a prior era, [ ] it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678–79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the “complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Wood v. Moss, ––– U.S. ––––, 134 S.Ct. 2056, 2067, 188 L.Ed.2d 1039 (2014) (quoting Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 ). A claim is facially plausible when the plaintiff pleads factual content that is more than “merely consistent with a defendant's liability,” but allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 678, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 557, 127 S.Ct. 1955 ); see also Rudder v. Williams, 666 F.3d 790, 794 (D.C.Cir.2012). Although “detailed factual allegations” are not required to withstand a Rule 12(b)(6) motion, a complaint must offer “more than labels and conclusions” or “formulaic recitation of the elements of a cause of action” to provide “grounds” of “entitle[ment] to relief,” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (alteration in original), and “nudge[ ][the] claims across the line from conceivable to plausible,” id . at 570, 127 S.Ct. 1955. Thus, “a complaint [does not] suffice if it tenders ‘naked assertion[s] devoid of ‘further factual enhancement.’ Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955 ).

In considering a motion to dismiss for failure to plead a claim on which relief can be granted, the court must consider the complaint in its entirety, accepting all factual allegations in the complaint as true, even if doubtful in fact. Twombly, 550 U.S. at 555–56, 127 S.Ct. 1955 ; Sissel v. United States Dep't of Health and Human Servs., 760 F.3d 1, 4 (D.C.Cir.2014) (in considering a Rule 12(b)(6) motion, 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”) (internal quotations and citations omitted). In addition, courts may “ordinarily examine” other sources “when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Tellabs, 551 U.S. at 322, 127 S.Ct. 2499 (citing 5B Wright & Miller § 1357 (3d ed.2004 and Supp.2007) ).

III. DISCUSSION

The plaintiff filed this action for a declaratory judgment that the Deed of Trust executed by the defendant is invalid. Compl. ¶¶ 11–12. In addition, the plaintiff alleges that she is owed damages in excess of $1,000,000 because of the defendant's fraudulent, id. ¶¶ 13–17, and negligent, id. ¶¶ 18–20, conduct in allegedly wrongfully recording the Deed of Trust. The defendant counters that all three claims “must be dismissed pursuant to Rule 12(b)(6) for failure to state a claim” because the plaintiff's “claims are devoid of any supporting factual allegations and do not state any legally cognizable claim against [the defendant].” Def.'s Mem. Supp. Mot. to Dismiss (“Def.'s Mem.”) at 1. The Court evaluates the sufficiency of the factual allegations underlying each of the plaintiff's claims seriatim below.

A. Count I For Declaratory Judgment

In Count I, the plaintiff seeks a declaratory judgment, pursuant to D.C. Superior Court Rule of Civil Procedure (“D.C. SCR–Civil Rule”) 57, “that the Deed of Trust is invalid because the House encumbered by the Deed of Trust is owned by [the plaintiff] as a tenant by the entirety, and [the plaintiff] did not execute the Deed of Trust.”2 Compl. ¶¶ 11–12. The defendant seeks to dismiss this claim because a declaratory judgment is a type of relief and cannot form the basis for a separate cause of action. See Def.'s Mem. at 4.

D.C. SCR–Civil Rule 57, pertaining to declaratory judgments, is substantially identical to Federal Rule of Civil Procedure 57 and provides, in pertinent part, that [t]he procedure for obtaining a declaratory judgment pursuant to Title 28 U.S.C. § 2201 or otherwise shall be in accordance with these Rules.” The use of the phrase “or otherwise” in this local procedural rule is intended to include “authority for issuance of declaratory judgments founded on Congressional grant to the Superior Court of general equity powers,” but “like any other remedy,” a declaratory judgment “may only be granted in cases properly within the court's jurisdiction.” D.C. Sup.Ct. R. 57 cmt. The Declaratory Judgment Act, 28 U.S.C. § 2201, in turn, authorizes federal courts to grant declaratory relief as a remedy and is not, standing alone, a cause of action.3 As the defendant correctly notes, “a count for a declaratory judgment ‘is not cognizable as a separate cause of action, but is more properly included in the [ ] prayer for relief.’ Def.'s Mem. at 4 (quoting Intelsat USA Sales Corp. v. Juch–Tech, Inc., 935 F.Supp.2d 101, 120 (D.D.C.2013) (citing Walpin v. Corp. for Nat. & Cmty. Serv., 718 F.Supp.2d 18, 24 (D.D.C.2010) ); Def.'s Reply Supp. Mot. Dismiss (“Def.'s Reply”) at 1 (same); see also C&E Servs., Inc. of Washington v. D.C. Water & Sewer Auth., 310 F.3d 197, 201 (D.C.Cir.2002) (“the Declaratory Judgment Act ‘is not an independent source of federal jurisdiction’ but only “presupposes the existence of a judicially remediable right.” (quoting Schilling v. Rogers, 363 U.S. 666, 677, 80 S.Ct. 1288, 4 L.Ed.2d 1478 (1960) ).

The plaintiff concedes that her “request for declaratory relief may be stylistically deficient, [but] it is sufficient to put the Defendant on notice of the relief sought and the basis for the relief.” Pl.'s Opp'n to Def.'s Mot. to Dismiss (“Pl.'s Opp'n”) at 4. The relief requested in Count I is “that the Court enter an order declaring that the Deed of Trust is invalid because the House encumbered by the Deed of Trust is owned by [the plaintiff] as a tenant by the entirety, and Plaintiff did not execute the Deed of Trust.” Compl. ¶ 12. The plaintiff explains that Count I is requesting “the Court to declare the lien on the property, arising...

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