Michael v. Michelle Ruth Cash (In re Michelle Ruth Cash)

• Decision Date: 29 October 2018
• Docket Number: Case No. 16-00663,Adversary Proceeding No. 17-10018
• Parties: In re MICHELLE RUTH CASH, Debtor. MICHAEL A JACKSON, Plaintiff, v. MICHELLE RUTH CASH, Defendant.
• Court: United States Bankruptcy Courts – District of Columbia Circuit

In re MICHELLE RUTH CASH, Debtor.

MICHAEL A JACKSON, Plaintiff, v. MICHELLE RUTH CASH, Defendant.

Case No. 16-00663

Adversary Proceeding No. 17-10018

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF COLUMBIA

October 29, 2018

(Chapter 11)

Not for Publication in West's Bankruptcy Reporter.

MEMORANDUM DECISION AND ORDER RE DEFENDANT'S MOTION TO DISMISS

This adversary proceeding relates to real property located at 1235 Irving Street, NE, Washington, D.C. 20017 (the "Property"). The debtor, Michelle Ruth Cash, as the defendant in this adversary proceeding, has filed Debtor/defendant Michelle R. Cash's Motion to Dismiss the Amended Complaint of Plaintiff Michael A. Jackson ("Motion to Dismiss") (Dkt. No. 47) seeking dismissal of the Third Amended Complaint (Dkt. No. 46) pursuant to Fed. R. Civ. P. 12(b)(6), made applicable by Fed. R. Bankr. P. 7012, for failure to state a claim upon which relief can be granted.

Cash contends, first, that based on positions Jackson took in a civil action in the Superior Court of the District of Columbia, Case No. 2013 CA 004159 R (RP), he is estopped from asserting that his signature on the Special Warrenty [sic] Deed ("Deed") at issue is a forgery and that he did not sign the Deed or the related Secured Agreement at issue in the presence of the notary, Jacqueline Littlejohn. Cash contends that Counts I through V and VII fail based on such estoppel and must be dismissed. Cash contends, second, that the statute of limitations bars Count IV, to the extent Count IV is a quasi-contract-based claim, and Count VI.

For the reasons set forth below, I find that the statute of limitations bars Count VI to the extent that it is a cause of action at law seeking damages on a breach of contract claim and I will grant dismissal as to Count VI to that extent. However, to the extent the Count VI seeks any identifiable and viable equitable remedies, Count VI shall survive. Cash asserted that Count IV is time-barred by the statute of limitations for the first time in her reply. The parties have more fully argued that issue in their motions for summary judgment. Accordingly, the court will address that issue by way of the motions for summaryjudgment. Cash has not shown that it is appropriate to estop Jackson from asserting that his signature on the Deed is a forgery and that the notary was not present to properly notarize the Secured Agreement and the Deed. Accordingly, I will deny the remainder of the Motion to Dismiss.

I

On December 27, 2016, Cash filed a voluntary petition commencing the underlying bankruptcy case, Case No. 16-00663. Cash exempted the Property under her homestead exemption. On May 19, 2017, Jackson filed a complaint initiating this adversary proceeding, and on January 3, 2018, he filed the Third Amended Complaint at issue.¹

The facts, according to the Third Amended Complaint and matters of public record, are these.

Jackson purchased the Property on February 21, 2006, for $580,000. Jackson took out two mortgages to finance the purchase of the Property. In 2007, Jackson faced financial difficulty and feared that the Property would fall into foreclosure.

In 2007, Cash had worked for Chesapeake Mortgage as an assistant to the broker for five years. Cash had the responsibility, among other things, to prepare mortgage documents. Additionally, Cash had taken classes in mortgage lending.

The parties agree that on February 10, 2007, Jackson and Cash, along with Jackson's wife, met at a Red Lobster Restaurant where the parties executed a Secured Agreement, which both parties agree was a contract for the sale of the Property to Cash. The Secured Agreement and the Deed purport to have been signed by Jackson before Jacqueline Littlejohn, as a notary public, on February 10, 2007, the date of the meeting at Red Lobster. On September 10, 2015, Cash recorded the Deed with the District of Columbia Recorder of Deeds. The Deed, prepared by Cash, purports to convey the Property from Jackson to Cash, and on its face makes Cash the record owner of the Property.

In the Third Amended Complaint, Jackson alleges that he never executed the Deed; that Littlejohn, who was Cash's co-worker at Chesapeake Mortgage, was not present at the meeting to witness Jackson's execution of the Secured Agreement; that Littlejohn notarized the Secured Agreement and Deed outside of the presence of Jackson; and that Jackson, after the meeting at Red Lobster, did not acknowledge to Littlejohn that the execution of the Secured Agreement or the Deed was his act and deed.

The Secured Agreement provided:

The Seller (Michael A. Jackson) agrees as follow:

1. The Seller will receive $15,000.00 cash for Sale of Property;

2. The Seller will Deed property to Michelle R. Cash in Fee Simple as Sole Owner;

3. The Seller will keep EMC Mortgage Corporation in his name for two years from the date of this agreement;

4. The Seller will keep the Homeowners Insurance Policy in his name for two years from the date of this agreement; and

5. The Seller will file the property interest on his income taxes for two years from the date of the Agreement tax year.

The Buyer (Michelle R. Cash) agrees as follow:

1. The Buyer will pay legal, title and filing fees;

2. The Buyer, in fee simple as Sole Owner shall assume the monthly payments to EMC Mortgage Corporation as of 1st of February, 2007;

3. The Buyer will refinance the mortgage from EMC Mortgage Corporation after two years or until the buyer is able due to lender's approval and settling on the property; and

4. The Buyer will transfer from the Homeowners insurance after two years or until number 3 of this agreement by buyer has been fully completed and resolved.

Jackson alleges that he understood that the Secured Agreement set forth three conditions whereupon he would transfer ownership of the Property to Cash. He contends that the agreement was that Jackson would transfer the Property to Cash only after Cash (1)paid Jackson $15,000; (2) properly and timely paid both mortgages for two years, commencing February 1, 2007; and (3) paid off the mortgages through refinancing at the end of two years. Jackson alleges that none of those conditions were met; nevertheless, Cash filed the Deed, with a forged signature, with the D.C. Recorder of Deeds.

Section IV(A) below lays out the facts of public record relating to Cash's contention that Jackson took positions in the Superior Court that estop him from asserting that his signature on the Deed is a forgery and that he did not sign the Deed or the Secured Agreement at issue in the presence of Jacqueline Littlejohn. Section V(A) lays out additional facts relating to Cash's contention that Jackson's breach of contract claim is time barred by the statute of limitations.

II

A court will dismiss a complaint if it does not plead sufficient facts to state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6). The purpose of a Rule 12(b)(6) motion is to test the sufficiency of the complaint. Herron v. Fannie Mae, 861 F.3d 160, 173 (D.C. Cir. 2017). A court assumes that all allegations made in the complaint are true when considering a Rule 12(b)(6) motion. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). The allegations and facts in the complaint must be construed in the plaintiff's favor. Kowalv. MCI Communications Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). "However, the court need not accept inferences or conclusory allegations that are unsupported by the facts set forth in the complaint." Gustave-Schmidt v. Chao, 226 F. Supp. 2d 191, 196 (D.D.C. 2002). "In deciding whether to dismiss a claim under Rule 12(b)(6), the Court may only consider the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint, and matters about which the Court may take judicial notice." Id. "A court may take judicial notice of public records from other proceedings." Jones v. Lieber, 579 F. Supp. 2d 175, 179 (D.D.C. 2008). "The movant has the burden of proof on a 12(b)(6) motion." Burrell v. University of Texas Medical Branch, No. H-09-3932, 2010 WL 1640939, at *2 (S.D. Tex. April 21, 2010).

III

Jackson's alleged failure to have the Deed "acknowledged and certified" in the presence of Littlejohn, as required by D.C. Code § 42-401,² is not fatal to the effectiveness of the Deed.Because that section:

deals with acknowledgment, certification, and recordation as protections for "creditors and subsequent bona fide purchasers," . . . [t]hose requirements do not bar the operation of a signed, sealed, and delivered deed against parties and their assignees.

Lumpkins v. CSL Locksmith, LLC, 911 A.2d 418, 425 (D.C. 2006) (quoting Clay Props., Inc. v. Washington Post. Co., 604 A.2d 890, 894 (D.C. 1992) (en banc) and Munsey Trust Co. v. Alexander, Inc., 42 F.2d 604 (D.C. Cir. 1930)); see also Juergens v. Urban Title Services, Inc., 533 F. Supp. 2d 64, 79 (D.D.C. 2008).³ The Deed, however, would be void if the signature on the Deed does not belong to Jackson. See D.C. Code § 42-306(b) (requiring the use of a deed "signed and sealed by the grantor" for a transfer of an interest in property for a term of longer than one year to be effective).

IV

Cash contends that Jackson should be equitably estopped or judicially estopped from asserting that his signature on the Deed is a forgery and that the Secured Agreement and Deed were not notarized by Littlejohn in Jackson's presence because Jackson haspreviously admitted in the Superior Court action to signing the Secured Agreement and the Deed in the presence of the notary. Cash contends that if Jackson is estopped from alleging that the Deed is a forgery, then Counts I through V and VII must be dismissed because they are all dependent on the Deed being a forgery. For the following reasons, I do not find cause to estop Jackson from contending that his signature on the Deed is a forgery and that Littlejohn did not properly notarize the documents.

A. Pertinent Facts

In opposing the Motion to Dismiss, Jackson alleges that...