Peterson v. Wells Fargo Bank

• Decision Date: 31 March 2022
• Docket Number: 3:20-cv-781 (SRU)
• Parties: ALYSSA S. PETERSON, Plaintiff, v. WELLS FARGO BANK, N.A., Defendant.
• Court: U.S. District Court — District of Connecticut

ALYSSA S. PETERSON, Plaintiff, v. WELLS FARGO BANK, N.A., Defendant.

No. 3:20-cv-781 (SRU)

United States District Court, D. Connecticut

March 31, 2022

RULING ON MOTIONS TO DISMISS

STEFAN R. UNDERHILL, United States District Judge.

In 2008, plaintiff Alyssa Peterson (“Peterson”) defaulted on a loan collateralized by a family home in North Carolina. The holder of the promissory note, defendant Wells Fargo Bank, N.A. (“Wells Fargo”), sought to exercise a power-of-sale provision in the deed of trust and execute a nonjudicial foreclosure. Peterson declared bankruptcy, and the foreclosure proceeding was stayed by operation of law. After curing the pre-bankruptcy default through her bankruptcy plan, Peterson soon defaulted again. In 2018, the bankruptcy stay was lifted and Wells Fargo sought to proceed with the foreclosure sale. Before the foreclosure sale occurred, Peterson paid off the note and Wells Fargo terminated the foreclosure proceeding.

Two years later, Peterson, proceeding pro se, filed the instant suit against Wells Fargo, raising several claims arising out of Wells Fargo's decision to proceed with the foreclosure sale in 2018. Before me are Wells Fargo's two motions to dismiss Peterson's Second Amended Complaint for failure to plead sufficiently pursuant to Rule 9(b) and failure to state a colorable claim under Rule 12(b)(6). Docs No. 27, 35. For the reasons that follow, I grant the motions to dismiss and dismiss Peterson's claims with prejudice.

I. Background^[1]

A. Allegations

Peterson is a resident of Connecticut who, jointly with family members, owns a parcel of real property located at 213 Atlantic Avenue, Kure Beach, North Carolina (“Kure Beach Property”). Second Amended Complaint (“SAC” or “the operative complaint”) Doc. No. 34, at 3 ¶ 12.

On October 16, 2006, Peterson obtained a home loan in the original amount of $100, 000 from Ohio Savings Bank; she signed the note as the sole borrower, secured by a deed of trust on the Kure Beach Property (“Note” and “Deed of Trust”). See Id. at 3 ¶ 13; see also Note and Deed of Trust, In re Peterson, Dkt. No. 2:10-bk-23429 (Bankr. D. Conn. Aug 15, 2017) (“Bankruptcy Case”), Doc. No. 538-1. Ohio Savings Bank thereafter assigned the deed of trust to Wells Fargo. Doc. No. 34, at 34.

1. The 2008 Pre-Petition Default and 2009 Authorization of Foreclosure Sale

In 2008, the Note went into default (“Pre-Petition Default”). SAC, Doc. No. 34, at 4 ¶ 14; Affidavit of Default, Foreclosure Case (N.C. Super. Ct. Oct. 19, 2009 (averring that Peterson's last payment was in the payment period ending October 31, 2008). As a result, Wells Fargo initiated a collection file bearing case number 09-10856 on the Kure Beach Property. SAC, Doc No. 34, at 5-6 ¶ 25. Thereafter, on June 16, 2009, Wells Fargo's Substitute Trustee Brock & Scott, PLLC (“Substitute Trustee”) initiated a special proceeding for a nonjudicial foreclosure in the General Court of Justice, Superior Court Division of New Hanover County, North Carolina (“Superior Court”). See generally In re: Foreclosure of Real Property Under Deed of Trust from Alyssa S Peterson et al., in the original amount of $100, 000, payable to Ohio Savings Bank, dated October 16, 2006 in Book 5092 at Page 2396, New Hanover County Registry, Dkt. No. 09 SP 681 (N.C. Super. Ct. June 16, 2009) (“Foreclosure Case”).

On October 19, 2009, the Clerk of Superior Court of New Hanover County, “having heard evidence and examined the appropriate affidavits and certified copies of documents, ” issued an Order to Allow Foreclosure Sale concluding that: Wells Fargo was the holder of the Note; the Note was in default; Wells Fargo had the right to foreclose under a power-of-sale pursuant to the Deed of Trust; notice of a hearing was served on the record owners of the property and others; statutory requirements were met; Peterson showed no valid reason why foreclosure should not commence; and the Substitute Trustee could proceed to foreclose on the property. Order to Allow Foreclosure Sale, Foreclosure Case (N.C. Super. Ct. Oct. 19, 2009) (“Clerk's Order to Allow Foreclosure Sale” or “Clerk's Order”).

On October 27, 2009, Peterson appealed the Clerk's Order. See Notice of Appeal, Foreclosure Case ( N.C. Super. Ct. Oct. 27, 2009).

On December 7, 2009, the North Carolina Superior Court held a hearing regarding Peterson's foreclosure appeal. At the hearing, Judge Cobb of the Superior Court evaluated the evidence de novo and made the following findings of fact:

1. Alyssa Peterson (herein “Respondent”) executed a Note in favor of Ohio Savings Bank. Alyssa Peterson . . . executed a Deed of Trust in favor of Ohio Savings Bank secured by the property described in said Deed of Trust. . . . The Deed of Trust contains a power of sale provision that authorized the holder of the note to foreclose; and

2. A valid debt exists and is owed by the Respondent to Wells Fargo Bank, N.A. successor by merger to Wells Fargo Home Mortgage, Inc.; and

3. The Respondent is in default of her debt under the Note and Deed of Trust; and 4. Proper notice was given to all Parties that were required to receive Notice pursuant to N.C. G.S. §45-21.16. The Respondent . . . received notice under N.C. G.S. §45-21.16. All parties received notice of this hearing in accordance with the Rules of Civil Procedure. The Respondent appeared and argued on the merits during the hearing held on December 7, 2009; and

5. The Court finds that Wells Fargo Bank, N.A. . . . is the current owner and holder of the note and deed of trust at issue in this matter; and

6. The Respondent was mailed the pre-foreclosure notice required under N.C. Gen. Stat. §45-102 more than 45 days prior to the filing of the Notice of Hearing; and

7. The pre-foreclosure notice requirements under N.C. Gen. Stat. §45-102 were met. . . .

Order, Foreclosure Case (N.C. Super. Ct. Dec. 7, 2009) (“Superior Court's Order Authorizing Foreclosure Sale”). Based on those findings of fact, Judge Cobb concluded that the Substitute Trustee was “entitled to proceed to a foreclosure sale under the terms of the above-described Deed of Trust”; therefore, he authorized Wells Fargo to give notice of and conduct a foreclosure sale. Id. The Substitute Trustee noticed a sale date of June 25, 2010. Amended Notice of Foreclosure Sale, Foreclosure Case (N.C. Super. Ct. May 28, 2010).

Before the scheduled foreclosure sale took place, the Substitute Trustee notified the Superior Court that Peterson had filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code. Notice of Bankruptcy Petition, Foreclosure Case (N.C. Super. Ct. June 28, 2010) (citing In re Peterson, Dkt. No. 2:10-bk-22129 (Bankr. D. Conn. 2010)).^[2] Due to the bankruptcy petition, the Substitute Trustee indicated that it was “unable to proceed with the foreclosure action as a matter of law.” Id. However, the Substitute Trustee expressly indicated that it was “neither dismissing [the] action nor waiving any rights which it has under this foreclosure.” Id.

2. The 2010 Bankruptcy Case and the 2013 Cure

On October 5, 2010, Peterson filed a bankruptcy petition in the United States Bankruptcy Court for the District of Connecticut. See In re Peterson, Dkt. No. 2:10-bk-23429, Doc. No. 2. (Bankr. D. Conn. 2010) (“Bankruptcy Case”).

Thereafter, Wells Fargo filed a proof of claim, Claim Number 4, to recover the indebtedness of the Note. See SAC, Doc. No. 34, at 4 ¶ 14. Wells Fargo asserted that Peterson owed $136, 273.73. Bankruptcy Case, Doc. No. 85. Peterson, through counsel, objected to the claim. SAC, Doc. No. 34, at 4 ¶ 15; Bankruptcy Case, Doc. No. 85.

The Bankruptcy Court issued an order scheduling an evidentiary hearing to determine the amount of Wells Fargo's claim. See Bankruptcy Case, Doc. No. 223. In that same order, the Bankruptcy Court determined that, in light of Superior Court's Order Authorizing Foreclosure Sale, the doctrine of collateral estoppel precluded the parties from relitigating the issues decided by the Superior Court. See SAC, Doc. No. 34, at 4 ¶ 16; Bankruptcy Case, Doc. No. 223, at 9-10. Because the Superior Court did not and could not have decided the amount of the debt in question, however, the Bankruptcy Court held that neither collateral estoppel nor res judicata precluded it from determining that issue. See SAC, Doc. No. 34, at 4 ¶ 17; Bankruptcy Case, Doc. No. 223, at 9-10.

Prior to the hearing, on March 7, 2013, Peterson filed her Fifth Amended Chapter 13 Plan (“Bankruptcy Plan” or “the Plan”), which provided for payment of the pre-petition arrearage on the Kure Beach Property through the Plan, and maintenance of post-petition payments by Peterson outside of the Plan. See Bankruptcy Case, Doc. No. 245, at 5, 6. On March 8, 2013, the Bankruptcy Court confirmed the Plan. See Bankruptcy Case, Doc. No. 247.

Following the hearing, Peterson and Wells Fargo notified the Bankruptcy Court that they were in the process of finalizing a settlement agreement. See SAC, Doc. No. 34, at 5 ¶ 19; Bankruptcy Case, Doc. No. 279, at 1. On September 10, 2013, Wells Fargo filed a second amended proof of claim, which set forth a stipulated pre-petition arrearage amount of $29, 046.54, and a total debt of $125, 043.76. See SAC, Doc. No. 34, at 5 ¶ 19; Proof of Claim, Doc. No. 34, at 23. The claim provided that the amount of arrearage as of the petition date was “per settlement.” Id. Peterson thereafter withdrew her objection to Wells Fargo's claim. See Doc. No. 34, at 5 ¶ 20; Bankruptcy Case, Doc. No. 295.

On April 15, 2013, the stipulated Pre-Petition Default arrearage of $29.046.54 was cured by disbursement by the Chapter 13 Standing Trustee (“Bankruptcy Trustee”). SAC Doc. No. 34, at 5 ¶ 21; Bankruptcy Case, Doc. No. 616, at 8. The Bankruptcy Trustee...