Ward v. Sec. Atlantic Mortg. Elec. Registration Sys., Inc.

Decision Date14 March 2012
Docket NumberNo. 5:10–CV–119–F.,5:10–CV–119–F.
Citation858 F.Supp.2d 561
CourtU.S. District Court — Eastern District of North Carolina
PartiesGregory WARD, Regina Ward, Plaintiffs, v. SECURITY ATLANTIC MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. Bank of America (BAG) Home Loans Servicing, LP., Defendants.


Gregory Ward, Raleigh, NC, pro se.

Regina Ward, Raleigh, NC, pro se.

A. Todd Brown, Megan E. Miller, Hunton & Williams, LLP, Charlotte, NC, for Defendants.


JAMES C. FOX, Senior District Judge.

This matter is before the court on the Second Motion to Dismiss [DE–17] filed by Defendants BAC Home Loans Servicing, LP (“BAC”) 1 and Mortgage Electronic Registration Systems, Inc. (“MERS”) (collectively Defendants) pursuant to Rule 12(b)(6).


Plaintiffs, proceeding pro se, commenced this action on March 23, 2010, seeking monetary damages and declaratory relief related to Defendants' and Security Atlantic Mortgage's (SAM) alleged violations of the Truth In Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., and its implementing regulation, 12 C.F.R. § 226.1 et seq. (“Regulation Z”); the Home Ownership and Equity Protection Act (“HOEPA”), 15 U.S.C. § 1639 et seq., a 1994 amendment to TILA; the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq.; the Fair Credit Reporting Act (“FCRA”), 11 U.S.C. § 1681 et seq.; the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691 et seq.; and the Federal Trade Commission Act (“FTCA”), 15 U.S.C. § 41 et seq. Compl. at 2–3, 5 [DE–1]. Plaintiffs also seek punitive damages for “harassment, emotional distress and displacement.” Id. at 6. The complaint relates to a deed of trust and promissory note in favor of SAM executed by Plaintiffs on September 11, 2007, which secures a mortgage in the amount of $153,315.00 related to the refinance of property in Raleigh, North Carolina. Id. at 1–2. In support of their claims, Plaintiffs cite caselaw from numerous jurisdictions.

In its February Order, the court granted Defendants' motion to dismiss. [DE–14]. In particular, the court found as follows: (1) Plaintiffs failed to state any allegations of wrongdoing by MERS; (2) Plaintiffs failed to make any allegations that give rise to the plausible inference that BAC is a “creditor” or “assignee” within the meaning of TILA; (3) Plaintiffs' allegation that BAC did not give notice of the transfer of Plaintiffs' mortgage loan 15 days prior to the transfer did not state a claim under § 2605(c) of RESPA; (4) Plaintiffs did not allege any actual damages in support of their claim under § 2605(e) of RESPA that BAC failed to respond to Plaintiffs' qualified written request; (5) Plaintiffs' claim under § 2607 of RESPA for illegal kickbacks was barred by the statute of limitations, and (6) to the extent Plaintiffs attempted to state a claim for violations of the FCRA, FTCA and ECOA, or for “harassment, emotional distress and displacement,” the claims were dismissed. The court, however, allowed Plaintiffs 21 days to amend the complaint to correct the pleading deficiencies therein with respect to all of their claims, except the illegal kickback claim which was dismissed with prejudice. The court also ordered Plaintiffs to show, within 21 days, good cause for their failure to make service on SAM within 120 days of the filing of the complaint in this action. The court specifically warned Plaintiffs that the failure to respond to the order and/or demonstrate good cause would result in the dismissal of this action as to SAM.

On February 25, 2011, Plaintiffs filed an Amended Complaint [DE–15], naming SAM, BAG and MERS as Defendants. Despite the February Order's instructions as to SAM, Plaintiffs failed to file any response addressing the lack of proof of service thereon. Accordingly, on March 9, 2011, the court dismissed Plaintiffs' claims against SAM without prejudice. [DE–16]. On March 14, 2011, Defendants BAC and MERS filed a motion to dismiss the amended complaint. [DE–17]. Thereafter, Plaintiffs filed their response [DE–25], and Defendants BAC and MERS filed a reply [DE–27].2


The purpose of a motion to dismiss under Rule 12(b)(6) is to test the legal sufficiency of the complaint, not to resolve conflicts of fact or to decide the merits of the action. Edwards v. City of Goldsboro, 178 F.3d 231, 243–44 (4th Cir.1999). In considering a motion to dismiss, the court assumes the truth of all facts alleged in the complaint and the existence of any fact that can be proved, consistent with the complaint's allegations. Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). “The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.” Revene v. Charles County Comm'rs, 882 F.2d 870, 872 (4th Cir.1989) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)).

However, the [f]actual allegations must be enough to raise a right to relief above the speculative level’ and have ‘enough facts to state a claim to relief that is plausible on its face.’ Wahi v. Charleston Area Med. Ctr., Inc., 562 F.3d 599, 616 n. 26 (4th Cir.2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). See also Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009) (“While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.”). “[A] plaintiffs obligation to provide the ‘grounds' of his ‘entitle[ment] to relief requiresmore than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (citations omitted). Moreover, a court “need not accept the legal conclusions drawn from the facts” nor “accept as true unwarranted inferences, unreasonable conclusions, or arguments.” Eastern Shore Mkts., Inc. v. J.D. Assocs. Ltd. Pshp., 213 F.3d 175, 180 (4th Cir.2000).

The standard for evaluating the sufficiency of the pleading in the instant case is particularly flexible because [a] document filed pro se is to be liberally construed, and a pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers.” Erickson, 551 U.S. at 93, 127 S.Ct. 2197 (internal citation omitted). Notwithstanding the court's obligation to liberally construe a pro se plaintiff's allegations, however, the court is not required to accept a pro se plaintiffs contentions as true, Denton v. Hernandez, 504 U.S. 25, 32, 112 S.Ct. 1728, 118 L.Ed.2d 340 (1992), and cannot ignore a clear failure to allege facts which set forth a claim cognizable in a federal district court. See Weller v. Dep't of Soc. Servs., 901 F.2d 387, 391 (4th Cir.1990) (“The ‘special judicial solicitude’ with which a district court should view such pro se complaints does not transform the court into an advocate. Only those questions which are squarely presented to a court may properly be addressed.”).


Defendants BAC and MERS again move to dismiss all claims against them, arguing that Plaintiffs' amended complaint fails to cure the deficiencies of the original complaint and still fails to allege sufficient facts to support any claim. As Defendants note, with the exception of a few changes, the factual allegations in the amended complaint are identical to the original complaint. In particular, the amended complaint differs factually from the complaint in the following respects:

(1) it does not contain the allegation [t]his loan is apart [sic] of a pool of securities that have been sold for investment on wall [sic] Street;”

(2) the allegation [t]he closing documents were not given to the Plaintiff [sic] has been changed to [a]ll closing documents were not given to the Plaintiff [sic];”

(3) the word “asked” in the allegation that BAC “has failed to give an accounting of all payments received when asked” was replaced with “requested;”

(4) it contains the following additional allegations;

a. “Bank of America [sic] cannot show by the [sic] way of proof from the United States Postal Service or any other carrier services that the plaintiff's [sic] were given notice as required by law;”

b. “MERS did not have the legal authority to transfer or assign this or any note to another Lender/servicer. (See Exhibit “C”) Security Deed [sic];” and

c. [t]he plaintiffs [sic] have tried many times to resolve this matter with no avail.”

Am. Compl. at 2–4 (emphasis added). The amended complaint also contains the following exhibits:

(1) Qualified Written Request dated March 19, 2010, Ex. A [DE–15.1]

(2) Notice of Removal filed March 19, 2010 with the Wake County Register of Deeds and recorded in Book 13882 Page 2323, Ex. B [DE–15.2]

(3) Notice of Right to Cancel and Release and Cancellation, Ex. C [DE–15.3]; and (4) Notice of Insufficient Validation, Ex. D [DE–15.4].

With the above changes and exhibits in mind, the court now turns to Plaintiffs' claims.

A. TILA Claims

TILA “has the broad purpose of promoting ‘the informed use of credit’ by assuring ‘meaningful disclosure of credit terms' to consumers.” Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 559, 100 S.Ct. 790, 63 L.Ed.2d 22 (1980). See U.S.C. § 1601(a). Accordingly, creditors are required “to provide borrowers with clear and accurate disclosures of terms dealing with things like finance charges, annual percentage rates of interest, and the borrower's rights.” Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412, 118 S.Ct. 1408, 140 L.Ed.2d 566 (1998). With respect to TILA violations, Plaintiffs argue Defendants failed to (1) provide unspecified material disclosures regarding their loan,3 (2) include the required copies of the Notice of Right to Cancel form at the time Plaintiffs' loan was consummated,4 and (3) honor Plaintiffs' March 2010 rescission of the loan. Am. Compl. at 2, 5; Ex. C [DE–15.3]. Plaintiffs...

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