Pike v. Wells Fargo Bank, N.A.
| Decision Date | 15 June 2021 |
| Docket Number | CASE NO. 7:20-CV-00219-M |
| Court | U.S. District Court — Eastern District of North Carolina |
| Parties | JOHN H. PIKE and IMMACOLATA PIKE, Plaintiffs, v. WELLS FARGO BANK, N.A. et al., Defendants. |
Plaintiffs filed suit to recoup damages stemming from Defendants' alleged failure to inform Plaintiffs that the home they purchased with debt partially refinanced by Defendants was located in a flood zone. This matter is before the court on two motions filed by Defendants: the Motion to Dismiss [DE-13] and the Motion to Strike Plaintiffs' Surreply [DE-35].
As alleged in the Complaint, in 2005 Plaintiffs secured two mortgage loans from Bank of America to finance the purchase of land and construction of a home in Hampstead, North Carolina. Compl. ¶¶ 6-7, DE-1-1. In November 2007, Plaintiffs secured a mortgage from Defendants' predecessor bank, Wachovia. Id. ¶¶ 8-9. Wachovia represented to Plaintiffs that it would obtain an accurate assessment of whether or not the home was located in a flood zone necessitating flood insurance, a requirement for federally funded lending institutions. Id. ¶¶ 10, 12. Wachovia informed Plaintiffs that the home was not located in a "Special Flood Hazard Area" ("SFHA") and therefore did not require flood insurance. Id. ¶ 11. This information was inaccurate; at all relevant times, Plaintiffs' property was in fact located in a SFHA. Id. ¶ 14.1
When Hurricane Florence struck southeastern North Carolina in September 2018, it caused torrential rain and catastrophic flooding. Id. ¶ 15. The Plaintiffs' home was "inundated up to its roof, causing it to be a complete loss." Id. It was only when the Plaintiffs sought assistance in the aftermath of the hurricane that they learned their home was in a designated flood zone. Id. ¶ 16. Defendants were informed of this by written verification provided by the Pender County Floodplain Administrator and the Pender County Planning and Community Development Director. Id. ¶ 17.
Defendants instituted foreclosure proceedings against the Plaintiffs and have refused to acknowledge that the subject property was, at all relevant times, located in a designated flood zone requiring insurance. Id. ¶¶ 18-19, 21-22. Defendants have "used unconscionable means to try to extort financial information and payments from [Plaintiffs]; [ ] continued to refer [Plaintiffs] to many various employees, none of whom had any authority nor insight to address the issues; [ ] failed and refused to provide documents from the closing; [ ] never provided any accurate 'SFHD', particularly the one that they allege was obtained in 2013; has force placed [sic] flood and casualty insurance on a home that is valueless; has instituted the vindictive foreclosure proceedings but denied having done so; has refused to refer the matter to an Attorney or any person with authority; and has destroyed [Plaintiffs'] credit." Id. ¶ 22.
Plaintiffs filed suit in Pender County Superior Court on October 7, 2020, alleging three causes of action against Defendants arising under North Carolina state law: negligence, negligent misrepresentation, and a violation of N.C. Gen. Stat. § 75-1.1, Unfair and Deceptive Acts andPractices. Id. at 4, 7-9.2 Defendants timely removed the case to federal court pursuant to diversity jurisdiction. Notice of Removal ¶¶ 5-11, DE-1. After being granted an extension of time to answer or otherwise respond to Plaintiffs' Complaint, see DE-6, Defendants filed the instant motion to dismiss for failure to state a claim on December 16, 2020 [DE-13]. Plaintiffs responded in opposition on January 22, 2021 [DE-24], after they too sought and received an extension of time, see DE-20 and DE-21. Defendants replied on February 3, 2021 [DE-30]. Plaintiffs thereafter filed a surreply [DE-33], without first seeking leave of the court to do so. Defendants then filed a motion to strike the surreply [DE-35] and Plaintiffs responded in opposition [DE-37].
In the first instance, pursuant to the Local Civil Rules of Practice and Procedure in the United States District Court for the Eastern District of North Carolina, "[r]eplies to responses are discouraged." Local Civil Rule 7.1(g)(1). Sur-replies are not mentioned in the rule on motion practice, Local Civil Rule 7.1, and are only twice mentioned in the Local Civil Rules as a whole, both times referencing a "surreply memorandum (where allowed)," Local Civil Rule 7.2(f)(2)(C), 7.2(f)(3)(C) (emphasis added). However, "a judge or magistrate judge, for good cause and in his or her discretion, may alter these rules in any particular case." Local Civil Rule 1.1.
Pursuant to Federal Rule of Civil Procedure 12, "[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter" by acting on its own or on a motion made by a party. Fed. R. Civ. P. 12(f). District courts have considerable discretion in deciding Rule-12(f) motions to strike. See United States v. Ancient Coin Collectors Guild, 899 F.3d 295, 325 (4th Cir. 2018) (); seealso Charles Alan Wright & Arthur R. Miller, 5C Fed. Prac. & Proc. Civ. § 1382 (3d ed. 2021) ().
Here, Plaintiffs did not move the court for leave to file a surreply and instead filed it directly on the docket [DE-33]. As such, Plaintiffs failed to demonstrate good cause for altering the Local Civil Rules in this particular case. Therefore, the court, in its discretion, GRANTS Defendants' Motion to Strike Plaintiffs' Surreply [DE-35]. Docket Entry 33 will not be considered in the court's determination of the Motion to Dismiss.
In considering a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure for "failure to state a claim upon which relief can be granted," a court must determine whether the complaint is legally and factually sufficient. Fed. R. Civ. P. 12(b)(6); see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008).
In doing so, the court must accept all well-pled allegations in the complaint as true and must construe all factual allegations in the light most favorable to the plaintiff. Mylan Lab'ys, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). However, a court need not accept a complaint's legal conclusions, elements of a cause of action, and conclusory statements. Iqbal, 556 U.S. at 678; see also Giarratano, 521 F.3d at 302. Nor must a court accept as true "unwarranted inferences, unreasonable conclusions, or arguments." E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000). To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must contain facts sufficient to "state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570.
As a general rule, "a defense based on the statute of limitations must be raised by the defendant through an affirmative defense, see Fed. R. Civ. P. 8(c), and the burden of establishing the affirmative defense rests on the defendant." Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007). A defendant's statute of limitations affirmative defense can be raised in a Rule 12(b)(6) motion to dismiss; however, it is seldom appropriate to do so. See Richmond, Fredericksburg & Potomac R.R. Co. v. Forst, 4 F.3d 244, 250 (4th Cir. 1993) (). Accordingly, a statute of limitations defense must "clearly appear[ ] on the face of the complaint." Id. In other words, the complaint must clearly allege "all facts necessary to the affirmative defense." Goodman, 494 F.3d at 464.
As a federal court sitting in diversity, the court will apply North Carolina substantive law when assessing Plaintiffs' claims. Castillo v. Emergency Med. Assocs., P.A., 372 F.3d 643, 646 (4th Cir. 2004) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)).
"To state a claim for negligence under North Carolina law, a plaintiff must sufficiently allege the existence of a legal duty, breach of that duty, proximate causation, and damages." Farmer v. Eagle Sys. & Servs., Inc., No. 5:14-CV-403, 2015 WL 134019, at *6 (E.D.N.C. Jan. 9, 2015) (citing Little v. Omega Meats I, Inc., 171 N.C. App. 583, 586, 615 S.E.2d 45, 48 (2005)). A claim for negligence must be made within three years of "the wrong giving rise to the right to bring suit is committed, even though the damages at that time be nominal and the injuries cannot be discovered until a later date." Birtha v. Stonemor, North Carolina, LLC, 220 N.C. App. 286, 292,727 S.E.2d 1, 7 (2012) (citation omitted); see also N.C. Gen. Stat. § 1-52(5). The negligent act Plaintiffs complain of occurred when they underwent their mortgage loan transaction with Wells Fargo's predecessor bank in November 2007. DE-1-1 ¶¶ 8-10, 23-27. Because suit was filed in September 2020, nearly thirteen years after the alleged wrong, Plaintiffs' negligence claim is time-barred and therefore must be dismissed without reaching the merits.
"The tort of negligent misrepresentation occurs when a party justifiably relies to his detriment on information prepared without reasonable care by one who owed the relying party a duty of care." Rountree v. Chowan Cnty., 252 N.C. App. 155, 158-59, 796 S.E.2d 827, 830 (2017) (citations omitted). "If the...
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