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Whala v. PNC Bank National Association

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

September 30, 2014

BALWINDER S. WHALA, et al., Plaintiffs,


JAMES C. CACHERIS, District Judge.

This matter is before the Court on Defendant PNC Bank National Association's ("Defendant" or "PNC") Motion to Dismiss, [Dkt. 14], and corresponding Memorandum in Support, [Dkt. 15]. Plaintiffs Balwinder S. Whala and Jatinder K. Whala ("Plaintiffs" or "the Whalas") seek a judgment awarding them compensatory damages following the foreclosure of their home as well as the disgorgement of money PNC received from the alleged improper foreclosure. ( See Am. Compl. [Dkt. 11] ¶¶ 27, 52, 67.) For the reasons set forth below, the Court will grant in part and deny in part Defendant's motion.

I. Background

As required by Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court assumes Plaintiffs' well-pled allegations to be true, and views all facts in the light most favorable to Plaintiffs. See Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). Plaintiffs' Complaint contains the following factual allegations.

On April 17, 2007, Plaintiffs obtained a home mortgage loan from Taylor Bean & Walker Mortgage Corporation ("Taylor Bean") for property located in Fairfax County, Virginia. (Am. Compl. ¶ 5.) The loan was evidenced by a note (the "Note") and secured by a deed of trust (the "Deed of Trust"). Upon default, Paragraph 6(C) of the Note entitles the holder to demand payment of the full unpaid amount after providing written notice to the borrowers. ( Id. ) The notice must specify a date after which full repayment may be requested that is at least thirty days following the mailing or delivery of the written notice. ( Id. ¶ 6.) Similarly, in the event of borrower breach, Paragraph 22 of the Deed of Trust provides that the lender will give notice specifying the default, the actions needed to cure the default, a date by which the default must be cured, and an explanation that a failure to cure by the specified date may result in acceleration and the sale of the property. ( Id. ¶ 7.) Paragraph 22 requires that the date by which the borrower must cure the default be no less than thirty days from the date notice is given. ( Id. )

On October 14, 2010, Taylor Bean, acting through its purported agent Mortgage Electronic Registration Systems, Inc. ("MERS"), assigned the Note to Defendant. (Am. Compl. ¶ 53.) As explained in greater detail below, Plaintiffs claim that MERS lacked authority to assign the Note, and thus, on October 14, 2010, Defendant was not in fact holder of the Note.

At some point following the assignment described above, Plaintiffs defaulted on the Note. ( See Def.'s Mem. in Support at 2.) Defendant sent Plaintiffs a notice letter dated May 4, 2010. (Am. Compl. ¶ 10; Am. Compl., Ex. C.) The notice letter informed Plaintiffs that the mortgage payments would be accelerated and that foreclosure proceedings would be initiated if the default was not cured on or before June 3, 2010. (Am. Compl. ¶ 12.) Plaintiffs apparently did not cure the default. Defendant then appointed Samuel I. White, P.C. ("White") as a substitute trustee under the Deed of Trust and initiated foreclosure proceedings. (Am. Compl. ¶ 15-16.) White, acting on Defendant's behalf, conducted a foreclosure sale on May 2, 2011, and Venus Properties, LLC obtained title to the home. ( Id. ¶¶ 21-24.) Venus Properties commenced an unlawful detainer action and Plaintiffs were forced to vacate the property. ( Id. ¶ 29.)

Plaintiffs initially filed this action in Fairfax County Circuit Court. Defendant removed the case to this Court shortly after service on June 16, 2014. (Notice of Removal [Dkt. 1].) Plaintiffs then amended their complaint, per Federal Rule of Civil Procedure 15(a)(1)(B). Plaintiffs' Complaint contains three counts. Count One alleges that Defendant breached the Note and Deed of Trust by providing insufficient notice of Defendant's intent to accelerate and foreclose the loan. (Am. Compl. ¶¶ 6-31.) According to Plaintiffs, Defendant's notice letter "over-stated the [amount] necessary to cure the default" and provided only twenty-eight days to cure. ( Id. ¶ 13.) As a result, "PNC had no right to instruct White to foreclose on the home[.]" ( Id. ¶ 17.) Count Two is significantly harder to decipher. It appears Plaintiffs are arguing that MERS lacked authority to assign the Note to Defendant, and thus Defendant "was not entitled to foreclose on the home" or appoint a substitute trustee to do the same. ( Id. ¶¶ 32-59.) Count Three alleges that PNC has been unjustly enriched as a result of the improper foreclosure. ( Id. ¶¶ 60-67.) Plaintiffs request PNC to disgorge $89, 680, the amount of equity in their home that they lost as a result of the foreclosure. ( Id. ¶ 67.)

PNC has now moved to dismiss all counts, claiming Plaintiffs have failed to state a valid claim to relief. ( See Def.'s Mem. in Support at 1.) Having been fully briefed and argued, PNC's Motion to Dismiss is ripe for adjudication.

II. Standard of Review

"A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citation omitted). The Supreme Court has stated that in order "[t]o survive a motion to dismiss, a [c]omplaint 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)). "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

"Determining whether a complaint states a plausible claim for relief [is]... a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679 (citations omitted). While legal conclusions can provide the framework for a complaint, all claims must be supported by factual allegations. Id. Based upon these allegations, the court must determine whether the plaintiff's pleadings plausibly give rise to an entitlement to relief. Id. Legal conclusions couched as factual allegations are not sufficient, Twombly, 550 U.S. at 555, nor are "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). The plaintiff, however, does not have to show a likelihood of success; rather, the complaint must merely allege - directly or indirectly - each element of a "viable legal theory." Twombly, 550 U.S. at 562-63.

At the motion to dismiss stage, the court must construe the complaint in the light most favorable to the plaintiff, read the complaint as a whole, and take the facts asserted therein as true. Iqbal, 556 U.S. at 678. Generally, a district court does not consider extrinsic materials when evaluating a complaint under Rule 12(b)(6). It may, however, consider "documents incorporated into the complaint by reference." Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); see also Blankenship v. Manchin, 471 F.3d 523, 526 n.1 (4th Cir. 2006). In addition, the court may consider documents attached to the defendant's motion to dismiss if those documents are central to the plaintiff's claim or ...

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