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Farley v. Bank of America, N.A.

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

June 11, 2015

ALECIA Y. FARLEY, et al., Plaintiffs,
v.
BANK OF AMERICA, N.A., et al., Defendants.

MEMORANDUM OPINION

JAMES R. SPENCER, Senior District Judge.

THIS MATTER is before the Court on Defendants Bank of America, N.A.'s and Bank of America Home Loan Servicing L.P.'s ("BANA's") Motion to Dismiss ("Motion"), ECF No. 9 and Motion for Sanctions, ECF No. 17. Also before the Court is a Motion to Deny Defendant's Notice of Waiver of Oral Argument, ECF. No. 19, a Motion for Leave to File Plaintiff's Response and Motion to Dismiss Defendant's Motion for Sanctions, ECF No. 37, a Motion for Leave to File Plaintiff's Second Motion to Dismiss Defendant's Motion for Sanctions, ECF No. 39, and a Motion to Seek Leave for Court to Initiate and Direct an Order for Discovery From Defendants, ECF No. 48, filed by Plaintiffs Alecia Y. Farley and Marvin A. Farley ("Farleys").

For the reasons explained in the Memorandum Opinion, the Court will: (1) GRANT BANA's Motion to Dismiss, ECF No. 9, and the Complaint will be DISMISSED WITH PREJUDICE, ECF No. 9; (2) GRANT BANA's Motion for Sanctions, ECF No. 17; (3) DENY the Farleys' Motion to Deny Defendant's Notice of Waiver of Oral Argument, ECF. No. 19; (4) DENY AS MOOT the Farleys' Motion for Leave to File Plaintiff's Response and Motion to Dismiss Defendant's Motion for Sanctions, ECF No. 37; (5) DENY AS MOOT the Farleys' Motion for Leave to File Plaintiff's Second Motion to Dismiss Defendant's Motion for Sanctions, ECF No. 39; and (6) DENY the Farleys' Motion to Seek Leave for Court to Initiate and Direct an Order for Discovery From Defendants, ECF No. 48.

I. PROCEDURAL BACKGROUND

On August 12, 2014, the Farleys filed a Complaint in this Court against BANA, who appears to be the holder and servicer of a note and mortgage to property the Farleys own or owned at one time. The comprehensive, thirty-one (31) page complaint alleges the following claims against BANA: Count I: Violation of the Virginia Consumer Protection Act; Count II: Violation of 15 U.S.C. § 1692(f)(1) (Unfair Practices); Count III: Conversion; Count IV: Fraudulent Concealment; Count V: Violation of criminal code 18 U.S.C. § 1341 (Fraud and Swindles); and Count VI: Violation of Uniform Commercial Code ("UCC") § 8-102 (Adverse Claim) and § 3-305 (Recoupment).[1] The allegations stem from the Farleys' belief that BANA obtained the Farleys' financial information through illicit means and entered them into a loan modification without their knowledge or consent. The Farleys have now filed seven lawsuits arising out of the mortgage loan and the attempted foreclosure sale of the property located at 1240 New Bethel Road, Meherrin, Virginia. In sum, the Farleys attempt to distinguish the instant suit from their four state courts lawsuits, which were dismissed with prejudice by the Circuit Court for Price Edward County, Virginia, by claiming that their current lawsuit arises from BANA unilaterally creating a new loan contract.

On September 5, 2014, BANA filed a Motion to Dismiss the Farleys' Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. ECF No. 9. On September 23, 2014, The Farleys filed a response entitled, "Counter-Claim for Motion to Dismiss." ECF No. 12. Subsequently, BANA filed its reply on September 29, 2014. ECF No. 13; see ECF No. 35.

II. FACTUAL BACKGROUND

On May 5, 2006, the Farleys obtained a mortgage loan from America's Wholesale Lender ("AWL") in the amount of $98, 800.00 (the "Loan"). In conjunction with the Loan, the Farleys executed an Adjustable Rate Note (the "Note") and a Deed of Trust (the "Deed") on May 5, 2006.

On August 30, 2012, the Farleys allege that they sent "a Qualified Written Request and a CEASE and DESIST" letter to BANA (the "August 30, 2012 Letter"). Complaint ("Compl.") ¶ 4. In the August 30, 2012 letter, the Farleys demanded that BANA cease all collection efforts associated with their mortgage loan and further demand that BANA respond to the August 30, 2012 letter by affidavit within ten days. Id. Subsequently, on October 6, 2012, the Farleys contend that BANA sent them a letter regarding a potential loan modification as a result of the United States Department of Justice and State Attorneys General global settlement. Id. ¶ 6. According to the Farleys, BANA was "clandestinely" attempting to get the Farleys to believe they were approved for a loan modification. Id. ¶ 8. The October 6, 2012 letter indicates that the Farleys were being evaluated for loan modification options.

On October 11, 2012, BANA responded to the August 30, 2012 letter by identifying the owner of the Note and the servicer information for the Farleys' mortgage loan. Id. ¶ 11. The October 11, 2012 response also indicated that BANA would provide the Farleys with a detailed payoff statement. Id. On October 16, 2012, the Farleys declined BANA's offer to explore a loan modification. Id. ¶ 12. On October 17, 2012, BANA provided the Farleys with a loan payment history, a verification of the debt, and a notice that there was no foreclosure sale scheduled at that time. Id. ¶ 15. According to the Farleys, BANA's correspondence was part of a scheme designed to "throw Plaintiffs off the scent." Id. ¶ 16.

On October 23, 2012, the Farleys received an "Escrow Account Review." Id. ¶ 18. On December 5, 2012, BANA sent the Farleys another notice of escrow review. Id. ¶ 19. On December 28, 2012, the Farleys sent a letter to BANA again declining a loan modification. Id. ¶ 20. According to the Farleys, at this point, BANA "clandestinely' entered the Plaintiffs into a home-made' contract...." Id. ¶ 22. Subsequently, on February 1, 2013, the Farleys received an account statement. Id. ¶ 23. On February 5, 2013, BANA sent the Farleys a letter, which confirmed that the Farleys' original loan documents were still in effect and BANA would continue to service the loan pursuant to the original loan documents. Id. ¶ 24.

On May 31, 2013, the Farleys sent BANA a "Notification of Adverse Claim Recoupment Claim, " which purported to place some obligations on BANA to respond and accept the claims. Id. ¶ 25. By not responding, the Farleys allege that BANA is in default of various UCC letters and filings. Id. ¶¶ 25, 26. The Farleys further allege that, subsequently, they sent BANA several letters that requested BANA explain how it "creat[ed] and activate[d] a new escrow account [for the Farleys] from ghost' financials." Id. ¶ 27. In conclusion, the Farleys "have [made] several attempts to remedy the matter administratively." Id. ¶ 28.

III. LEGAL STANDARD

A motion to dismiss for failure to state a claim upon which relief can be granted challenges the legal sufficiency of a claim, rather than the facts supporting it. Fed.R.Civ.P. 12(b)(6); Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007); Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992). A court ruling on a Rule 12(b)(6) motion must therefore accept all of the factual allegations in the complaint as true, see Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999); Warner v. Buck Creek Nursery, Inc., 149 F.Supp.2d 246, 254-55 (W.D. Va. 2001), in addition to any provable facts consistent with those allegations, Hishon v. King & Spalding, 467 U.S. 69, 73 (1984), and must view these facts in the light most favorable to the plaintiff, Christopher v. Harbury, 536 U.S. 403, 406 (2002). The Court can consider the complaint, its attachments, and documents "attached to the motion to dismiss, so long as they are integral to the complaint and authentic." Sec'y of State for Defence v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007).

To survive a motion to dismiss, a complaint must contain factual allegations sufficient to provide the defendant "notice of what the... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Rule 8(a)(2) requires the complaint to allege facts showing that the claim is plausible, and these "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly, 540 U.S. at 555; see id. at 555 n.3. The Court need not accept legal conclusions presented as factual allegations, id. at 555, or "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).

IV. DISCUSSION

A. Parties' Arguments

In its Motion to Dismiss, BANA essentially makes three arguments. First, BANA argues that the Complaint generally fails to comply with Rule 8 and Rule 12(b)(6) of the Federal Rules of Civil Procedure. Second, BANA argues that the Farleys' claims are barred by res judicata. Third, BANA contends that each of the Farleys' claims fail as a matter of law.

Because the Court finds BANA's third argument dispositive, the parties' arguments only as to BANA's contention that each of the Farleys' claims fail as a matter of law are set forth below.

BANA argues, specifically, that the Farleys fail to state a claim for violation of the Virginia Consumer Protection Act ("VCPA"). Specifically, the Farleys allege that BANA violated the VCPA "by mailing Plaintiffs communications which were deceptive, fraudulent, and misrepresentations of actual[] facts...." Compl. ¶ 32. However, BANA argues that this claim is without merit for the following reasons: (1) this lawsuit does not involve a consumer transaction as defined under the VCPA and (2) the VCPA does not apply to banks, savings institutions, credit unions, and mortgage lenders.

In response, the Farleys for the first time contend that this suit involves a consumer transaction because BANA sent them letters, which the Farleys now characterize as "advertisements" under the VCPA. For support, the Farleys allege that BANA's October 6, 2012 letter to them (wherein BANA addresses the loan modification review process) was an advertisement.

Next, BANA argues that the Farleys fail to state a claim pursuant to § 1692(f)(1) of the Fair Debt Collection Practices Act ("FDCPA"). BANA explains that § 1692f(1) provides that collecting any amount that is not expressly authorized by the agreement creating the debt or permitted by law is an FDCPA violation and further asserts that FDCPA claims pursuant to § 1692f(1) are governed by a one year statute of limitations. See 15 U.S.C. § 1692k; Thomas v. Wells Fargo Bank, N.A., No. 4:10-CV-00060, 2011 WL 1877674, at *2 (W.D. Va. May 17, 2011). Here, BANA contends, the Farleys' FDCPA claim is barred by the one year statute of limitations because the communications referenced in support of their FDCPA claim were sent to the Farleys in October and December 2012 and February ...


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