Pryor v. Bank of Am., N.A. (In re Pryor)

• Decision Date: 25 September 2012
• Docket Number: Adversary No. 12–00055–8–JRL.,Bankruptcy No. 10–02137–8–JRL.
• Court: U.S. Bankruptcy Court — Eastern District of North Carolina
• Parties: In re Derek Christopher PRYOR and Tammy Shawntae Pryor, Debtors. Derek Christopher Pryor and Tammy Shawntae Pryor, Plaintiffs, v. Bank of America, N.A. and Bank of America Corporation, Defendants.

479 B.R. 694

In re Derek Christopher PRYOR and Tammy Shawntae Pryor, Debtors.Derek Christopher Pryor and Tammy Shawntae Pryor, Plaintiffs,

v.Bank of America, N.A. and Bank of America Corporation, Defendants.

Bankruptcy No. 10–02137–8–JRL.

Adversary No. 12–00055–8–JRL.

United States Bankruptcy Court,

E.D. North Carolina,

Raleigh Division.

Sept. 25, 2012.

Joseph A. Bledsoe, III, The Bledsoe Law Firm, Fayetteville, NC, for Plaintiffs.

Lauren Byers Loftis, McGuireWoods LLP, Charlotte, NC, for Defendants.

ORDER

J. RICH LEONARD, Bankruptcy Judge.

This matter came before the court on Bank of America, N.A. and Bank of AmericaCorporation's (“defendants”) motion to dismiss the second and third causes of action asserted by Derek Christopher Pryor and Tammy Shawntae Pryor (“plaintiffs”) for failure to state a claim upon which relief can be granted. A hearing on the matter was held in Raleigh, North Carolina on July 26, 2012.

The plaintiffs filed their petition for relief under Chapter 13 of the Bankruptcy Code on March 18, 2010. On March 28, 2012, the plaintiffs filed the current adversary proceeding alleging violations of the automatic stay, the North Carolina Debt Collection Act (“NCDCA”), N.C. Gen.Stat. §§ 75–50 et seq., and the Telephone Consumer Protection Act of 1992 (“TCPA”), codified at 47 U.S.C. § 227. The defendants responded on May 30, 2012, with their motion to dismiss the plaintiffs' second and third claims for relief. The plaintiffs responded to the motion to dismiss on June 20, 2012.

JURISDICTION

This court has jurisdiction over the parties and the subject matter of this proceeding pursuant to 28 U.S.C. §§ 151, 157, and 1334, and the General Order of Reference entered by the United States District Court for the Eastern District of North Carolina on August 3, 1984.

BACKGROUND¹

The plaintiffs were owners of record of real property located in Franklin County, North Carolina at 10 Rolling Cloud Drive, Louisburg, NC 27549 (“property”). The plaintiffs executed a loan for the property with the defendants. As a result of the loan and home purchase, the defendants hold a duly executed and enforceable deed of trust against the property securing the mortgage loan.

After the plaintiffs filed for bankruptcy protection on March 18, 2010, the court served notice of the § 341 meeting on the defendants on March 21, 2010. The plaintiffs assert that the notice was received by the defendants because its was not returned undelivered. Following service, the plaintiffs continued to receive telephonic and written collection notices from the defendants.

On May 27, 2010, the defendants filed a motion for relief from stay in order to foreclose on the property. In their motion, defendants admitted that they had knowledge of the plaintiffs' plan to surrender the property in the bankruptcy proceeding. Thereafter, on June 14, 2010, the trustee filed the minutes of the § 341 meeting and a motion for confirmation of the plan. The certificate of service attached to the motion indicated that the defendants were served with notice of the motion, which indicated the plaintiffs' plan to surrender the property. During this period, the defendants continued to call and send written notices to the plaintiffs concerning collection of the underlying debt.

The plaintiffs also assert in their complaint that they began answering the collection calls from the defendants in April 2010 and informing the defendants of their bankruptcy proceeding, providing the relevant case number and the contact information of their attorney. In addition to the official notices received through the bankruptcy proceedings, the plaintiffs personally provided the defendants with written communication of their bankruptcy proceeding, along with requests to cease collection calls. These communications were sent through plaintiffs' counsel on September 17, 2010, October 7, 2010, and February2, 2011. The defendants have denied all of the allegations advanced by the plaintiffs. As a result of the continued collection activities of the defendants, the plaintiffs filed the current adversary proceeding.

STANDARD OF REVIEW

A pleading which states a claim for relief must contain “a short and plain statement of the claim showing that the pleader is entitled to relief....” Fed.R.Civ.P. 8(a)(2); Fed. R. Bankr.P. 7008. A statement showing entitlement to relief under Rule 8(a)(2) must include “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a party may move to dismiss a complaint for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6); Fed. R. Bankr.P. 7012(b)(6). In order to survive a motion to dismiss under Rule 12(b)(6), a plaintiff must provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)).

DISCUSSION

I. Motion to Dismiss Plaintiffs' Second Cause of Action

The plaintiffs' second cause of action is for defendants' violation of the NCDCA. In response, the defendants filed a motion to dismiss asserting their status as a national bank regulated by the National Bank Act of 1864 (“NBA”), which ultimately preempts plaintiffs' state law claim.

A. Preemption

Pursuant to the Supremacy Clause in the United States Constitution,² any state law that conflicts with a federal law is preempted. Cox v. Shalala, 112 F.3d 151, 154 (4th Cir.1997). Any inquiry into the preemptive effect awarded to a particular statute is guided by the maxim that “the purpose of Congress is the ultimate touchstone in every pre-emption case.” Altria Group, Inc. v. Good, 555 U.S. 70, 76, 129 S.Ct. 538, 543, 172 L.Ed.2d 398 (2008) (internal quotation marks and citations omitted).

[Preemption] [a]nalysis begins with the presumption that Congress did not intend to displace state law. Where ... the field which Congress is said to have pre-empted has been traditionally occupied by the States, ... the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.

Gade v. National Solid Wastes Management Ass'n, 505 U.S. 88, 116, 112 S.Ct. 2374, 2392, 120 L.Ed.2d 73 (1992) (Souter, J., dissenting) (internal quotations and citations omitted).

The Supreme Court has recognized three methods of preemption Congress may use to preempt state laws: express, implied, and conflict preemption. English v. Gen. Elec. Co., 496 U.S. 72, 78–79, 110 S.Ct. 2270, 2275, 110 L.Ed.2d 65 (1990). Express preemption occurs when Congress has made its intent to preempt state authority known through its use of explicit statutory language to that effect. Id. The second type, field preemption,³ occurs where Congress occupies the field by “regulating so pervasively that there is no room left for the states to supplement federal law.” Cox, 112 F.3d at 154 (citing Fidelity Fed. Sav. & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 153, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982)). Finally, there is conflict preemption, which can occur in two ways. Conflict preemption arises where compliance with both state and federal law is impossible or when a state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941) (citation omitted); Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142–143, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963).

“[Consumer protection] laws have historically fallen into the purview of the states' broad police powers, to which the courts have afforded special solemnity.” Sukumar v. Nautilus, Inc., 829 F.Supp.2d 386, 392 (W.D.Va.2011); see, e.g., California v. ARC Am. Corp., 490 U.S. 93, 101, 109 S.Ct. 1661, 1665, 104 L.Ed.2d 86 (1989) (describing unfair and/or deceptive business practices as “an area traditionally regulated by the States”); Aguayo v. U.S. Bank, 653 F.3d 912, 917 (9th Cir.2011) (“[UCL] claims, rooted in California's consumer-protection laws, fall in an area that is traditionally within the state's police powers to protect its own citizens”); Greenwood Trust Co. v. Massachusetts, 971 F.2d 818, 828 (1st Cir.1992) (“We reach this conclusion mindful of the fact that the state statute here at issue visits two areas which are squarely within the ambit of the states' historic powers ... banking ... and consumer protection.”). Thus, any analysis on preemption should start “with the assumption that the historic police powers of the States [are] not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” Altria, 555 U.S. at 77, 129 S.Ct. 538;see Maryland v. Louisiana, 451 U.S. 725, 746, 101 S.Ct. 2114, 68 L.Ed.2d 576 (1981) (explaining that there is a “basic assumption [in preemption jurisprudence] that Congress did not intend to displace state law.”).

B. Relationship Between the NBA, the Dodd–Frank Act and OCC Regulations

The NBA was enacted “to facilitate ... a national banking system” and to “protect[ ] national banks against intrusive state regulation [.]” Montgomery v. Bank of Am. Corp., 515 F.Supp.2d 1106, 1110 (C.D.Cal.2007) (internal quotation marks and citations omitted). Pursuant to the NBA, the Office of the Comptroller of the Currency (“OCC”) is vested with the authority to regulate national banking institutions. See, e.g.,12 U.S.C. § 93a; 12 U.S.C. § 371 (giving the OCC authority over regulations for real-estate lending for all national banks). The NBA, when enacted, did not address preemption. However, the OCC promulgated regulations addressing preemption in relation to the operation of national banks in the United States. 12 C.F.R. 34.4 (2012). The Dodd–Frank Wall Street Reform and...