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Muncy v. Centex Home Equity Co., L.L.C.

United States District Court, Western District of Virginia, Abingdon Division

October 20, 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, UNITED STATES DISTRICT JUDGE.

The plaintiffs seek relief against a mortgage lender as a result of alleged fraud and misrepresentation. The defendant has filed a Motion to Dismiss Plaintiffs’ First Amended Complaint under Federal Rule of Civil Procedure 12(b)(6), contending that the plaintiffs have failed 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 made by the plaintiffs. 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 unexpected pressing financial needs, ” the Muncys obtained a $25, 000 mortgage loan from defendant Nationstar Mortgage, LLC, (“Nationstar”) secured by the Property.[1] (First Am. Compl. ¶ 16, ECF No. 20.) This mortgage had an interest rate of 10.3 percent and was payable over 15 years at $273.26 per month. The Muncys allege that their “income was not high enough to meet the debt to income ratio standards utilized by mortgage lenders when determining whether or not to approve potential borrowers for such loans.” (Id.)

In April 2005, for home improvements, the Muncys obtained a second mortgage loan in the principal amount of $53, 500 from Nationstar at an adjustable interest rate. The 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 then coaxed Plaintiff Rita D. Muncy to commit fraud and sign [and backdate] the remaining closing documents in Plaintiff Ralph Muncy’s absence.” (Id. ¶ 21.) Again, the plaintiffs allege that they had insufficient income to justify the loan “according to the standard debt to income ratio analysis conducted by mortgage lenders when examining applications for such loans.” (Id. ¶ 19.)

Subsequently, the Muncys “faced hardships that caused them to experience financial difficulty and fall behind in their loan payment.” (Id. ¶ 23.) 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 in the principal amount of $71, 550 with an “adjustable interest rate of 10.85%.” (Id. ¶ 27.) They again aver they had insufficient income to justify this obligation. 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. ¶ 31.) 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. The present action was filed on April 3, 2014. Jurisdiction of this court is based upon diversity of citizenship and amount in controversy. See 28 U.S.C. § 1332(a). Virginia substantive law applies. See Erie R.R. v. Tomkins, 304 U.S. 64, 78 (1938).

In their initial Complaint, the plaintiffs asserted ten separate causes of action. On a motion of Nationstar, I dismissed all of them, but allowed the plaintiffs to replead their fraud and misrepresentation causes of action. Muncy v. Centrex Home Equity Co., No. 1:14CV00016, 2014 WL 3359335, at *7 (W.D. Va. July 9, 2014).

The plaintiffs timely filed a First Amended Complaint as to their fraud and misrepresentation counts, to which Nationstar again has moved to dismiss. The motion has ...


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