Tapia v. U.S. Bank

• Decision Date: 22 June 2010
• Docket Number: Case No. 1:09cv1025 (GBL).
• Citation: 718 F.Supp.2d 689
• Parties: Julio E. TAPIA and Edith M. Tapia, Plaintiffs, v. U.S. BANK, N.A., as Trustee for RFMSI 2006-S3 Trust, RFMSI Series 2006-S3 Trust, Homecomings Financial LLC, GMAC Mortgage LLC, Bank of America, N.A., United Guaranty Residential Insurance Company of North Carolina, Residential Funding Company, LLC, Mortgage Electronic Registration System, Inc., and Samuel I. White, P.C., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

718 F.Supp.2d 689

Julio E. TAPIA and Edith M. Tapia, Plaintiffs,

v.U.S. BANK, N.A., as Trustee for RFMSI 2006-S3 Trust, RFMSI Series 2006-S3 Trust, Homecomings Financial LLC, GMAC Mortgage LLC, Bank of America, N.A., United Guaranty Residential Insurance Company of North Carolina, Residential Funding Company, LLC, Mortgage Electronic Registration System, Inc., and Samuel I. White, P.C., Defendants.

Case No. 1:09cv1025 (GBL).

United States District Court,E.D. Virginia, Alexandria Division.

June 22, 2010.

Christopher E. Brown, R. Michael Smith, Brown, Brown & Brown, P.C., Alexandria, VA, for Plaintiffs, Julio E. Tapia and Edith M. Tapia.

John C. Lynch, Troutman Sanders LLP, Virginia Beach, VA, Jon S. Hubbard, Troutman Sanders LLP, Richmond, VA, for Defendants, Goldman Sachs Mortgage Company, Litton Loan Servicing LP, and Mortgage Electronic Registration Systems, Inc. Harry M. Johnson, III, William P. Childress, Hunton & Williams LLP, Richmond, VA, for Defendants, United Guaranty Residential Insurance Company of North Carolina and Bank of America, N.A.

MEMORANDUM OPINION

GERALD BRUCE LEE, District Judge.

THIS MATTER is before the Court on Defendants U.S. Bank, N.A., as Trustee for RFMSI 2006-S3 Trust(“U.S. Bank”); RFMSI Series 2006-S3 Trust; Homecomings Financial LLC (“Homecomings”); GMAC Mortgage LLC (“GMAC”); Residential Funding Company LLC (“Residential”); Mortgage Electronic Registration Systems, Inc. (“MERS”); and Samuel I White, P.C.'s (“SIW”) Motion to Dismiss First Amended Complaint (Dkt. No. 41) and Defendants United Guaranty Residential Insurance Company of North Carolina (“United Guaranty”) and Bank of America, N.A.'s (“Bank of America”) Motion to Dismiss all Claims in the Amended Complaint Asserted Against United Guaranty Residential Insurance Company of North Carolina and Bank of America, N.A. (Dkt. No. 43). This case concerns Plaintiffs' allegations that Defendants improperly instituted a non-judicial foreclosure proceeding on their home. There are five issues before the Court. The first issue is whether Plaintiffs sufficiently allege a claim for declaratory relief where the foreclosure sale has already occurred but they now ask the Court to declare that the foreclosure on the property is void and that none of the Defendants has any right, title, or interest in the First Promissory Note. The second issue is whether Plaintiffs sufficiently assert a similar declaratory action seeking a declaration that none of the Defendants has any right, title, or interest in the Second Promissory Note. The third issue is whether Plaintiffs sufficiently state a breach of fiduciary duty claim against SIW where Plaintiffs allege that SIW failed to ensure the entities that sought to enforce the First Deed of Trust (the “Deed of Trust”) and foreclose Plaintiffs' property had the legal right to do so. The fourth issue is whether Plaintiffs state a plausible quiet title claim where they acknowledge that they received demands from Defendants for payments on the promissory notes but refused to pay. The fifth issue is whether Plaintiffs sufficiently state a claim against SIW under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., where Plaintiffs allege that SIW, as a debt collector, misrepresented the status, amount, and ownership of the debt owed by Plaintiffs on the promissory notes. ¹

The Court grants Defendants U.S. Bank, RFMSI Series 2006-S3 Trust, Homecomings, GMAC, Residential, MERS, and SIW's (collectively, “U.S. Bank Defendants”) Motion to Dismiss Counts I, II, III, IV, and V of the Amended Complaint and Defendants United Guaranty and Bank of America's (collectively, “United Guaranty Defendants”) Motion to Dismiss Counts II, IV and V of the Amended Complaint. ² The Court grants the U.S. Bank Defendants' Motion to Dismiss as to Count I (Declaratory Action on the First Trust Note) because declaratory relief is not available where the alleged wrongs have already been suffered and, alternatively, because Plaintiffs fail to state plausible grounds for declaratory relief. The Court grants both Motions to Dismiss as to Count II (Declaratory Action on the Second Trust Note) because Plaintiffs fail to allege facts plausibly suggesting that no Defendant has any right, title, or interest in the Second Promissory Note. The Court grants the U.S. Bank Defendants' Motion to Dismiss as to Count III (Breach of Fiduciary Duty) because Plaintiffs fail to state a plausible basis for a breach of fiduciary duty claim against SIW as the allegations fail to show that Defendants lacked authority to enforce the Deed of Trust. The Court grants both Motions to Dismiss as to Count IV (Quiet Title) because the facts Plaintiffs allege fail to plausibly suggest that Plaintiffs have superior title. The Court grants both Motions to Dismiss as to Count V (Violation of the FDCPA) because the Amended Complaint does not allege sufficient facts to support a FDCPA claim against SIW. ³

I. BACKGROUND

This action arises from a residential mortgage foreclosure. Plaintiffs Julio and Edith Tapia purchased the property located at 25759 Tullow Place, South Riding, VA 20152 (the “Property”) on January 31, 2006. They signed two deeds of trust and two promissory notes in the amounts of $625,800.00 (“First Promissory Note”) and $100,00.00 (“Second Promissory Note”), ⁴ respectively, each naming First Savings Mortgage Corporation (“First Savings”) as the Lender and MERS as the beneficiary. ⁵

In 2008, Plaintiffs began receiving demands for payment and threats of foreclosure from entities including SIW ⁶ and Homecomings, alleging that the first loan was in default. ⁷ On October 14, 2008, Plaintiffs, through counsel, sent out a “Qualified Written Request” (“QWR”) pursuant to the FDCPA and Section 6 of the Real Estate Settlement Procedures Act (“RESPA”). ⁸ On October 28, 2008, Homecomings responded to the QWR by providing copies of the First Promissory Note, the Deed of Trust, the settlement statement, and the payment history of the account. The Deed of Trust ⁹ states that “[t]he beneficiary of this Security Instrument is MERS (solely as nominee for Lender and Lender's successors and assigns) and the successors and assigns of MERS.” (Deed of Trust 4.) The Deed of Trust also provides

Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: to exercise any or all of these interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to releasing and canceling this Security Instrument.

(Deed of Trust 4.) The Deed of Trust further provides “[t]he [First Promissory] Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower.” (Deed of Trust 12.)

Plaintiffs continued receiving further correspondence from SIW and GMAC regarding the First Promissory Note. On March 20, 2009, SIW sent Plaintiffs a letter describing itself as a debt collector, indicating that U.S. Bank was creditor, and stating that the amount of the debt was $673,104.01. On April 24, 2009, SIW sent Plaintiffs a letter stating that the amount of the debt was $684,027.24. ¹⁰ On June 10, 2009, GMAC sent a letter to Plaintiffs informing Plaintiffs that GMAC was servicing the account on behalf of Residential, which “currently owns” the interest in the account. According to GMAC, as of June 4, 2009, the amount of debt was $687,166.13. By letter dated July 20, 2009, SIW informed Plaintiffs that the Property would be foreclosed on August 14, 2009. The letter included a document titled “SUBSTITUTION OF TRUSTEE” allegedly executed by MERS on May 12, 2008, in which MERS appointed SIW as substitute trustee. The property was foreclosed on August 14, 2009.

As to the Second Promissory Note, Plaintiffs sent a QWR to Countrywide Home Loans, Inc. (“Countrywide”) ¹¹ on August 14, 2009. In response to the QWR, Countrywide informed Plaintiffs that it was the servicer of the second loan. ¹² Plaintiffs then received demands for payment from LTD Financial on behalf of United Guaranty which claimed to have an interest in the Second Promissory Note. United Guaranty's claim of interest in the note stemmed from its alleged pay-out to Countrywide on a credit enhancement policy. ¹³ On August 13, 2009, Plaintiffs filed a complaint in the Circuit Court for Loudoun County alleging (1) Defendants Homecomings, GMAC, SIW, Bank of America, United Guaranty, MERS, and LTD Financial violated the FDCPA during the foreclosure process; (2) an entitlement to a judgment declaring the foreclosure unlawful; (3) SIW breached its fiduciary duty during the foreclosure process; (4) the title of the Property was vested in Plaintiffs alone; (5) an entitlement to an injunction staying the foreclosure on the Property; and (6) MERS and SIW fraudulently misrepresented their authority to conduct the foreclosure. ¹⁴ On September 10, 2009, Defendants removed the action to this Court pursuant to 28 U.S.C. § 1331. On September 17 and 18, 2009, Bank of America (Dkt. No. 3) and United Guaranty (Dkt. No. 5) moved the Court to dismiss the Complaint for failure to state a claim upon which relief could be granted and Homecomings, GMAC, Residential, MERS, and SIW filed a Motion for Judgment on the Pleadings on September 24, 2009 (Dkt. No. 7). The Court granted these motions on November 20, 2009. On January 8, 2010, Plaintiffs filed an Amended Complaint which includes the following counts:

Count I (Declaratory Action on the First Trust Note), Defendants Homecomings, GMAC, Residential, U.S. Bank, RFMSI Series 2006-S3 Trust, MERS and SIW;

Count II (Declaratory Action on the Second Trust Note), Defendants Bank of America and Countrywide, LTD Financial, ¹...