Newton v. Nationstar Mortg. LLC
| Decision Date | 26 May 2015 |
| Docket Number | No. 7:15-CV-16-D,7:15-CV-16-D |
| Court | U.S. District Court — Eastern District of North Carolina |
| Parties | FAIRLEY W. NEWTON, Plaintiff, v. NATIONSTAR MORTGAGE LLC, Defendants. |
Fairley W. Newton ("Newton" or "plaintiff") is upset about a state-court foreclosure action involving himself and two of his deceased relatives, Mildred T. Newton and Odell Tinnin. See Compl. [D.E. 3-1]. On January 27, 2015, Nationstar Mortgage, LLC ("Nationstar") moved to dismiss Newton's complaint for failure to state a claim upon which relief can be granted and to cancel a lis pendens. See [D.E. 7]. On April 3, 2015, Newton responded in opposition. See [D.E. 15]. As explained below, the court grants Nationstar's motion to dismiss and cancels the lis pendens.
On December 15, 2003, Mildred T. Newton and Odell Tinnin, now deceased, executed a promissory note ("note") for $124,000.00 in favor of America's Wholesale Lender. Compl. ¶¶ 5-6; Note [D.E. 3-5].1 The note was secured by a deed of trust ("deed of trust") that Newton, MildredNewton, and Odell Tinnin executed on December 15, 2003, concerning real property located in Elizabethtown, North Carolina ("property"). See Compl. ¶¶ 5-6; Deed of Trust [D.E. 3-2]. BAC Home Loans Servicing, LP ("BAC") was the loan servicer until it transferred the loan servicing rights to Nationstar. See Compl. ¶¶ 4, 6-8.
On September 11, 2014, pursuant to N.C. Gen. Stat. § 45-21.16, the Bladen County Clerk of Court issued an order allowing foreclosure of the property. See Compl. ¶ 29; see [D.E. 5-3]. The clerk found that (i) Nationstar held a valid debt and the power to foreclose under the deed of trust, (ii) the note was in default, and (iii) Nationstar provided an acceleration warning pursuant to N.C. Gen. Stat. § 45-102 in which the interested parties were given 45 days to cure the default. See [D.E. 5-3]. The clerk also found that proper notice was given to all required parties and concluded that foreclosure was proper. Id. Each of these issues was a necessary part of the foreclosure proceeding because the clerk must find all of these elements in order to authorize foreclosure. Newton failed to appeal the clerk's order to the Bladen County Superior Court. Cf. N.C. Gen. Stat. § 45-21.16(d1). On December 4, 2014, the foreclosure sale was held. See Compl. ¶ 29; [D.E. 5-4].
On December 15, 2014, Newton filed suit in Bladen County Superior Court. See Compl. Newton also filed a notice of lis pendens. See Notice of Lis Pendens [D.E. 3-1]; N.C. Gen. Stat. § 1-116. On January 21, 2015, Nationstar removed the action to this court based on diversity jurisdiction. See [D.E. 3].
In his complaint, Newton alleges: (1) a violation of the North Carolina Debt Collection Act("NCDCA"); (2) a violation of the North Carolina Unfair and Deceptive Trade Practices Act ("UDTPA"); (3) unjust enrichment; (4) the need for a constructive trust; (5) the need for an injunction pursuant to N.C. Gen. Stat. § 45-21.34; and (6) a violation of N.C. Gen. Stat. § 45-93. See Compl. ¶¶ 39-44. Newton asks this court to set aside the foreclosure sale and to award him damages, attorney fees, and costs. See id. 9.
Newton's complaint is difficult to understand. Newton appears to allege that non-party BAC refused to deposit some unspecified checks from Newton. See Compl. ¶ 21. The exhibits to Newton's complaint appear to reflect that Newton acquired five cashier's checks from his bank at various times between August 2011 and January 2012. See Compl., Exs. 1-2. Newton also alleges that, by January 2013, he knew that Nationstar was the loan servicer, but inexplicably had his bank reissue these same checks to BAC and Bank of America Home Loans ("Bank of America") in May 2013. See Compl. ¶ 14 & Exs. 3-12. Newton does not allege what he did with the reissued checks, why he had the checks reissued to BAC and Bank of America, or why he attached them to his complaint. Nonetheless, Newton admits that he did not attempt to pay any money to Nationstar until after the foreclosure proceeding began. See Compl. ¶¶ 17, 32. Furthermore, Newton's $1,446.03 check was insufficient to bring the account current, and Newton acknowledges an arrearage of approximately $73,000. See Compl. ¶¶ 27, 32.
A Rule 12(b)(6) motion tests whether the complaint is legally and factually sufficient. See Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 562-63, 570 (2007); Coleman v. Md. Court of Appeals, 626 F.3d 187, 190 (4th Cir. 2010), aff'd, 132 S. Ct. 1327 (2012); Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008); accord Erickson v. Pardus, 551 U.S. 89, 93-94 (2007) (per curiam). In considering a motion to dismiss, a court need not accept a complaint's legal conclusions drawn from the facts. See, e.g., Iqbal, 556 U.S. at 678. Similarly,a court "need not accept as true unwarranted inferences, unreasonable conclusions, or arguments." Giarratano, 521 F.3d at 302 (quotation omitted); see Iqbal, 556 U.S. at 677-79.
First, Nationstar argues that collateral estoppel bars Newton's claims. Newton's claims arise from the September 2014 foreclosure proceeding under N.C. Gen. Stat. § 45-21.16 in Bladen County Superior Court. Under the doctrine of collateral estoppel, "a final judgment on the merits prevents relitigation of issues actually litigated and necessary to the outcome of the prior action in a later suit involving a different cause of action between the parties or their privies." Thomas M. McInnis & Assocs., Inc. v. Hall, 318 N.C. 421, 428, 349 S.E.2d 552, 557 (1986). This doctrine requires (1) a prior suit resulting in a final judgment on the merits; (2) identical issues involved; (3) the issue was actually litigated in the prior suit and necessary to the judgment; and (4) the issue was actually determined. See id. at 429, 349 S.E.2d at 557; see also Allen v. McCurry, 449 U.S. 90, 94-95 (1980); Sartin v. Macik, 535 F.3d 284, 287-88 (4th Cir. 2008); Meehan v. Cable, 127 N.C. App. 336, 339-40, 489 S.E.2d 440, 443 (1997).
In North Carolina, the Clerk of Superior Court presides over power of sale foreclosure actions. See N.C. Gen. Stat. § 45-21.16(d). A clerk's judgment "will stand as [the] judgment of the court." In re Atkinson-Clark Canal Co., 234 N.C. 374, 377, 67 S.E.2d 276, 278 (1951). Any issue that the clerk decides in a foreclosure proceeding pursuant to N.C. Gen. Stat. § 45-21.16(d) is conclusive unless appealed and reversed and cannot be relitigated in a subsequent lawsuit. See Haughton v. HSBC Bank USA, N.A., 737 S.E.2d 191, 2013 WL 432575, at *3 (N.C. Ct. App. 2013) (unpublished table decision); see also Carmichael v. Irwin Mortg. Corp., No. 5:14-CV-122-D, 2014 WL 7205099, at *4 (E.D.N.C. Dec. 17, 2014) (unpublished); Lewis v. Kesterson, No. 7:12-CV-352-BO, 2013 WL 5525663, at *1-2 (E.D.N.C. Oct. 3, 2013) (unpublished); Oketch v. JPMorgan Chase & Co., Inc., No. 3:12-CV-00102, 2012 WL 2155049, at *4 (W.D.N.C. June 13, 2012) (unpublished);Jones v. HSBC Bank USA, N.A., No. RWT 09CV2904, 2011 WL 382371, at *5 (D. Md. Feb. 3, 2011) (unpublished); Coleman v. Countrywide Home Loans, Inc., Civil Case No. L-10-2297, 2010 WL 5055788, at *3-4 (D. Md. Dec. 3, 2010) (unpublished); Merrill Lynch Bus. Fin. Servs., Inc. v. Cobb, No. 5:07-CV-129-D, 2008 WL 6155804, at *3 (E.D.N.C. Mar. 18, 2008) (unpublished); Douglas v. Pennamco, Inc., 75 N.C. App. 644, 646, 331 S.E.2d 298, 300 (1985); Phil Mech. Constr. Co. v. Haywood, 72 N.C. App. 318, 320-23, 325 S.E.2d 1, 1-3 (1985).
Essentially, the issues that Newton raises in his complaint are identical to those that the clerk determined on September 14, 2014. In counts one and two, Newton attempts to contest the default on the note, which is a fact specifically found in the order allowing foreclosure. See Compl. ¶¶ 39-40; cf. [D.E. 5-3]. Notably, a lender's wrongful refusal of payment is sufficient grounds for denying foreclosure order. See, e.g., In re Foreclosure of Bigelow, 185 N.C. App. 142, 147, 649 S.E.2d 10, 14 (2007). Accordingly, the order allowing foreclosure implicitly rejects Newton's wrongful-refusal theory.
In count three, Newton contests the validity of some unspecified "contract," presumably the note or deed of trust. See Compl. ¶ 41. In counts four and six, Newton contests Nationstar's right to enforce the order allowing foreclosure by requesting that the property be returned to Newton via a constructive trust or that he receive the "fair market value" of the property. Id. ¶¶ 42, 44. Collateral estoppel bars Newton from relitigating the validity of the note or deed of trust.2 The clerk resolved those issues against him in the foreclosure proceeding.
Alternatively, Newton's claims fail on the merits. Newton alleges that "Nationstar repeatedly and willfully violated [N.C. Gen. Stat. § 75-54] by misrepresenting the amount due" and violated N.C. Gen. Stat. § 75-55 "by refusing to accept full and timely payment for the purpose of forcing [Newton] into default and foreclosing on his home." See Compl. ¶ 39. Section 75-54 states that "[n]o debt collector shall collect or attempt to collect a debt or obtain information concerning a consumer by any fraudulent, deceptive or misleading representation." N.C. Gen. Stat. § 75-54. Section 75-54 then provides eight illustrative examples of conduct that constitutes such representations. See id.
To state a claim under section 75-54, a plaintiff need not cite a specific subsection of section 75-54, which provides eight nonexclusive examples of deceptive representations. See, e.g., Wilkes Nat'l Bank v. Halvorsen, 126 N.C. App. 179, 183, 484 S.E.2d 582, 584 (1997). Nor must a plaintiff allege "deliberate acts of deceit or bad faith." Forsyth Mem'l Hosp., Inc. v. Contreras, 107 N.C. App. 611, 614, 421 S.E.2d 167, 169-70 (1992). Nonetheless, a plaintiff must plausibly allege that "the act complained of possessed the tendency or capacity to mislead, or created the likelihood of deception." Id., 421 S.E.2d at 170 (quotation omitted); see, e....
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