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Muncy v. Centex Home Equity Company, LLC

United States District Court, W.D. Virginia, Abingdon Division

July 9, 2014

RALPH MUNCY AND RITA D. MUNCY, Plaintiffs,
v.
CENTEX HOME EQUITY COMPANY, L.L.C., ET AL., Defendants.

Ralph Muncy and Rita D. Muncy, Pro Se Plaintiffs.

Brian E. Hanna, McGuireWoods LLP, Richmond, Virginia, for Defendants.

OPINION

JAMES P. JONES, District Judge.

The plaintiffs, proceeding pro se, have filed this action against their former mortgage lender pursuant to the diversity jurisdiction of this court, seeking rescission of a foreclosure and damages as a result of alleged fraud and other actionable conduct by the lender. The defendant has filed a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6), contending that the Complaint fails to state a claim upon which relief can be granted. For the following reasons, I will grant the motion.

I.

In considering a motion under Rule 12(b)(6), I must accept as true the factual allegations of the Complaint. Those allegations are as follows.

Ralph and Rita D. Muncy were the owners of real property located in this judicial district ("the property"), and had owned it without encumbrance since 1997. In December 2002, "due to a family emergency, " the Muncys obtained a mortgage loan secured by the property from defendant Nationstar Mortgage, LLC, ("Nationstar")[1]. (Compl. ¶ 16, ECF No. 3.) The Muncys allege that they "did not possess an income that was sufficient to justify" this mortgage. ( Id. )

In April 2005, for home improvements, the Muncys obtained a second mortgage loan from Nationstar at an adjustable interest rate. Nationstar loan officer David Slayton forgot to include the "Notification for Virginia Mortgage Loan Applicants" and "various other documents" in the previously executed closing documents for this loan, and when Mr. Muncy was not available, "Slayton [] coaxed Plaintiff Rita D. Muncy to commit fraud and sign [and backdate] the remaining closing documents in Plaintiff Ralph Muncy's place." ( Id. ¶ 18.) Again, the couple alleges that they had insufficient income to justify the loan.

Subsequently, the Muncys "faced hardships that caused them to experience financial difficulty and fall behind in their loan payment." ( Id. ¶ 19.) In August 2005, Nationstar contacted the Muncys and "advised they apply for another refinance to bring the loan current, " and threatened to foreclose if they failed to satisfy all late payments. ( Id. ) That same month, the Muncys obtained a third mortgage loan from Nationstar; they aver they also had insufficient income to justify this obligation.

The plaintiffs allege that Nationstar failed to explain the terms of the third loan and hurried them into applying for and obtaining it. They were also never provided the assistance of a loan officer or representative during the processing of the final loan. Despite the refinancing, the Muncys fell further behind on the mortgage payments.

On December 1, 2010, Nationstar offered to modify the third loan, reducing the interest rate, in exchange for a payment of $2, 690. The modification reduced the interest of the third loan from its adjustable rate to a rate of 2.25 percent for a fixed two year period, "before abruptly resetting to 10.85% at the close of the two (2) year period, causing [the plaintiffs] to be unable to afford the mortgage payments." ( Id. ¶ 23.) The loan fell into default.

By correspondence dated August 22, 2013, Nationstar gave notice of a foreclosure sale. On September 10, 2013, as scheduled, the property was sold at auction. Nationstar has thereafter attempted to obtain possession of the property by an action in state court.

II.

The plaintiffs have asserted ten separate causes of action, including alleged statutory violations of the Federal Trade Commission Act ("FTCA"), the Fair Debt Collection Practices Act ("FDCPA"), and the Virginia Consumer Protection Act ("VCPA"), as well as nonstatutory claims of violation of due process; unlawful foreclosure; fraud and misrepresentation; negligence, and equitable estoppel.

A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of a complaint to determine whether the pleader has properly stated a cognizable claim. See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). As the Fourth Circuit has explained,

The plausibility standard requires a plaintiff to demonstrate more than "a sheer possibility that a defendant has acted unlawfully." It requires the plaintiff to articulate facts, when accepted as true, that "show" that the plaintiff has stated a claim entitling ...

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