Needham v. Fannie Mae
| Decision Date | 21 February 2012 |
| Docket Number | Case No. 2–11–CV–00260 DN. |
| Citation | 854 F.Supp.2d 1145 |
| Parties | Aaron NEEDHAM aka Aaron D.T. Needham, an individual, Plaintiff, v. FANNIE MAE; eTitle Insurance Agency, a Utah limited liability company; Wells Fargo Bank, N.A., a South Dakota Corporation; Shalom Rubanowitz, an individual; 2020 Properties LLC, a Utah limited liability company; Kristine J. Carter, an individual; and Does 1–25 [Individual, Partnerships, Corporations or anyone claiming any interest to the property described herein], Defendants. |
| Court | U.S. District Court — District of Utah |
OPINION TEXT STARTS HERE
Benjamin S. Ruesch, Roger J. Sanders, Sanders Ruesch & Reeve PLLC, Hurricane, UT, for Plaintiff.
M. Lane Molen, Amy F. Sorenson, James Delos Gardner, Snell & Wilmer, Christopher L. Stout, Zimmerman Jones Booher LLC, Salt Lake City, UT, Dana Thomas Farmer, Smith Knowles PC, Ogden, UT, for Defendants.
Kristine J. Carter, St. George, UT, pro se.
This case is before the magistrate judge by consent of the parties pursuant to 28 U.S.C. § 636(c). The magistrate judge has reviewed Defendant Wells Fargo Bank, N.A.'s (Wells Fargo) Motion for Judgment on the Pleadings. 1 For the reasons set forth below, Wells Fargo's motion is GRANTED.
This case was removed from Fifth Judicial District Court, Washington County, State of Utah by the consent of all defendants served.2 Wells Fargo seeks a judgment of dismissal based on the pleadings, pursuant to 12(c) of the Federal Rules of Civil Procedure, on Needham's twelve claims for (i) breach of contract; (ii) breach of the implied covenant of good faith and fair dealing; (iii) promissory estoppel; (iv) unjust enrichment; (v) fraud; (vi) setting aside the trustee's sale; (vii) voiding the trustee's deed; (viii) voiding assignment of the trustee's deed; (ix) negligence; (x) wrongful foreclosure; (xi) declaratory relief and quiet title; and (xii) violation of the federal Fair Housing Act.3
The factual setting for these claims is complex. This paragraph will provide a summary overview of relevant facts.
Needham borrowed money from Wells Fargo and from a superior lender. Wells Fargo foreclosed its lien unaware of Needham's bankruptcy filing. Therefore, Wells Fargo modified its loan terms by agreement with Needham, and received payments from Needham. Needham fell ill and stopped making payments. The superior lender foreclosed on the Needham property. Wells Fargo's lien was foreclosed along with Needham's equity position. Excess proceeds from that trustee's sale were interplead and adjudicated in Fifth District Court in Washington County, Utah.
The standard of review for dismissal under Rule 12(c) is the same as the standard for dismissal under Rule 12(b)(6).4 Accordingly, the Court takes as true all of Plaintiff's well-pleaded factual allegations, but need not accept “legal conclusions,” or “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” 5 The Court should dismiss Plaintiff's claims unless the well-pleaded allegations in the Complaint “state a claim for relief that is plausible on its face.” 6 Consistent with the approach that this motion is a true motion for judgment on the pleadings, Wells Fargo relied in its motion on facts “either taken from Plaintiff's Complaint ... or ... from the attached exhibits, which are copies of documents referred to in Plaintiff's Complaint and central to Plaintiff's claims.” 7
Needham has objected to the use of this standard because Wells Fargo has “introduced several exhibits as part of their motion for judgment on the pleadings” which “are not part of the initial complaint and its exhibits.” 8 Therefore, Needham says “the motion to dismiss must be converted to one for summary judgment.” 9
However, all exhibits Wells Fargo has introduced are copies of documents referred to in Plaintiff's Complaint and central to Plaintiff's claims. The use of exhibits specifically referenced by Plaintiff does not convert a pleadings-based motion to a motion for summary judgment.
[I]f a plaintiff does not incorporate by reference or attach a document to its complaint, but the document is referred to in the complaint and is central to the plaintiff's claim, a defendant may submit an indisputably authentic copy to the court to be considered on a motion to dismiss.
If the rule were otherwise, a plaintiff with a deficient claim could survive a motion to dismiss simply by not attaching a dispositive document upon which the plaintiff relied. Moreover, conversion to summary judgment when a district court considers outside materials is to afford the plaintiff an opportunity to respond in kind. When a complaint refers to a document and the document is central to the plaintiff's claim, the plaintiff is obviously on notice of the document's contents, and this rationale for conversion to summary judgment dissipates.10
Because Needham is obviously aware of documents he referenced in, but failed to attach to his complaint, Wells Fargo is entitled to supply the actual documents to the court and rely on them in a motion for judgment on the pleadings.
Needham did file an affidavit alleging facts outside the complaint. 11 These facts relate to a defective foreclosure conducted by Wells Fargo before a loan modification between the parties and before the foreclosure sale of another trust deed which eventually resulted in Needham's eviction from the home. Therefore, the four factual paragraphs of his affidavit are not material to any viable claims. That affidavit does not convert this motion to a motion for summary judgment.
Needham also provided (without authentication) a copy of the Notice of Trustee's Sale from the defective Wells Fargo foreclosure; 12 and documents from the Office of the Comptroller of the Currency; 13 and a court docket from the interpleader of funds from the actual foreclosure sale. 14 None of these are pertinent to an analysis of claims under the Complaint.
Wells Fargo's opening memorandum 15 relied on the following facts, “either taken from Plaintiff's Complaint ... or ... from ... copies of documents referred to in Plaintiff's Complaint....” 16 The facts retain the numbering given in Wells Fargo's Supporting Memorandum. Citations to the Complaint are omitted.
1. Plaintiff purchased property described as “All of lot ninety-seven (97), Pine View Estates—Phase 5, a residential subdivision, according to the official plat thereof on file in the office of the Washington County Recorders Office, State of Utah (the “Property”) in September 1995 under a purchase money mortgage provided by Zions First National Bank (“Zions”). Plaintiff paid off that loan in March 1996.
2. In May 1997, Plaintiff obtained a second loan from Zions, again secured by the Property.
3. In June 1999, Plaintiff obtained yet another loan, this time from Sunbelt National Mortgage, which was again secured by the Property. The Zions deed of trust was subordinated to this Sunbelt deed of trust, so that Sunbelt was in first position and Zions was in second.
4. On or about May 16, 2003, Plaintiff executed an “EquityLine with Convertible Loan Feature Account Agreement” (the “line of credit”) from Wells Fargo, pursuant to which he was authorized to borrow up to $73,000 from Wells Fargo.
5. As security for the line of credit, Plaintiff executed a Short Form Deed of Trust to the Property in favor of Wells Fargo which incorporated by reference a Master Form Deed of Trust previously recorded by Wells Fargo.
6. Plaintiff borrowed funds from Wells Fargo under the line of credit and then defaulted on his loan.
7. On or about July 9, 2008, the trustee under the Wells Fargo Deed of Trust executed a Notice of Default and Election to Sell (the “Notice of Default”) and recorded the Notice of Default in the official records of the Washington County Recorder, with an entry number of 20080027726. 8. Plaintiff did not cure his default. On December 17, 2009, the trustee under the Wells Fargo Deed of Trust conducted a non-judicial foreclosure of the Property.
9. Wells Fargo purchased the Property at the December 17 foreclosure sale, and paid funds to discharge Plaintiff's debt to the two senior lenders in an attempt to elevate the priority of its third-position lien.
10. On December 17, 2009, without notice to Wells Fargo, Plaintiff filed for bankruptcy under Chapter 13 of the United States Bankruptcy Code. As a result, once Wells Fargo learned of this second bankruptcy, it sought to rescind its payoffs to the two senior lenders. The first position lender returned the funds; the second position lender, Zions Bank, did not. Instead, Zions credited Plaintiff's account and recorded a Deed of Reconveyance releasing its security interest in the Property.
11. Plaintiff did not move to set aside Wells Fargo's foreclosure during this second bankruptcy. Instead, he sought a continuance of his bankruptcy confirmation hearing to enable Wells Fargo to resolve these issues with the other lenders.
12. During that time, Plaintiff, who was represented by bankruptcy counsel, negotiated with Wells Fargo to restructure his Wells Fargo and Zions debts. As a result, the amount Wells Fargo paid to Zions was made part of Plaintiff's principal obligation to Wells Fargo. Plaintiff's monthly payment amounts were reduced to $388.58 per month and the interest rate, which previously was variable, with a floor of 4.49%, was reduced to 0.0%.
13. Thereafter, Plaintiff's chapter 13 bankruptcy was dismissed on or about June 7, 2010.
14, Later that month, on June 23, 2010, the trustee under the Fannie Mae deed of trust, the successor on the original Sunbelt Deed of Trust, recorded a notice of default. Five months later, on November 4, 2010, Fannie Mae foreclosed on the Property—not ...
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