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Jackson v. Ocwen Loan Servicing, LLC

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

March 31, 2016

LEROY T.JACKSON and ADELAIDE JACKSON, Plaintiffs,
v.
OCWEN LOAN SERVICING, LLC, et al., Defendants.

MEMORANDUM OPINION

M. HANNAH LAUCK UNITED STATES DISTRICT JUDGE

This matter comes before the Court on the Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6)[1] filed by Defendants Ocwen Loan Servicing, LLC ("Ocwen") and Deutsche Bank National Trust Company ("Deutsche Bank") (ECF No. 11), the Motion to Dismiss filed by Poore Substitute Trustee, Ltd. ("Poore") (ECF No. 13), and the Motion to Remand filed by Plaintiffs Leroy Jackson and Adelaide Jackson (collectively, the "Jacksons") (ECF No. 18). The motions have been fully briefed, and the matters are ripe for disposition. The Court exercises jurisdiction pursuant to 28 U.S.C. § 1332.[2] The Court dispenses with oral argument because the materials before the Court adequately present the facts and legal contentions, and argument would not aid the decisional process. For the reasons that follow, the Court will grant the Motions to Dismiss (ECF Nos. 11, 13) and deny the Motion to Remand (ECFNo. 18).

L 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) (citing 5 A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1356 (1990)). In considering a motion to dismiss for failure to state a claim, a plaintiffs well-pleaded allegations are taken as true and the complaint is viewed in the light most favorable to the plaintiff. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993); see also Martin, 980 F.2d at 952. This principle applies only to factual allegations, however, and "a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

The Federal Rules of Civil Procedure "require [ ] only *a short and plain statement of the claim showing that the pleader is entitled to relief, ' in order to 'give the defendant fair notice of what the ... claim is and the grounds upon which it rests."' Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (omission in original) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Plaintiffs cannot satisfy this standard with complaints containing only "labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Id. (citations omitted). Instead, a plaintiff must assert facts that rise above speculation and conceivability to those that "show" a claim that is "plausible on its face." Iqbal, 556 U.S. at 678-79 (citing Twombly, 550 U.S. at 570; Fed.R.Civ.P. 8(a)(2)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678 (citing Twombly, 550 U.S. at 556). Therefore, in order for a claim or complaint to survive dismissal for failure to state a claim, the plaintiff must "allege facts sufficient to state all the elements of [his or] her claim." Bass v. E.I. DuPont de Nemours & Co., 324 F.3d 761, 765 (4th Cir. 2003) (citations omitted).

"If, on a motion under Rule 12(b)(6)..., matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56, " and "[a] 11 parties must be given a reasonable opportunity to present all the material that is pertinent to the motion." Fed.R.Civ.P. 12(d); see Laughlin v. Metro. Wash. Airports Autk, 149 F.3d 253, 260-61 (4th Cir. 1998); Gay v. Wall, 761 F.2d 175, 177 (4th Cir. 1985). However, "a court may consider official public records, documents central to plaintiffs claim, and documents sufficiently referred to in the complaint [without converting a Rule 12(b)(6) motion into one for summary judgment] so long as the authenticity of these documents is not disputed." Witthohn v. Fed. Ins. Co., 164 F.App'x 395, 396-97 (4th Cir. 2006) (citing Alt. Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001); Phillips v. LCI Int'l, Inc., 190 F.3d 609, 618 (4th Cir. 1999); Gasner v. Cty. of Dinwiddie, 162 F.R.D. 280, 282 (E.D. Va. 1995)).

The Jacksons attach a December 23, 2003 note (the "Note") and a December 23, 2003 deed of trust (the "Deed of Trust") to their Amended Complaint. (ECF Nos. 8-1, 8-2.) Ocwen and Deutsche Bank attach the Deed of Trust, the Note, and a February 13, 2014 Notice of Sale (the "Notice of Sale") to their Memorandum in Support of the Motion to Dismiss. (ECF Nos. 12-1 to 12-3.) No party contests the authenticity of these documents, and the Jacksons refer to them in the Amended Complaint. Deeming them central to the claims, the Court will consider these documents. See Witthohn, 164 F.App'x at 396-97 (citations omitted).

II. Procedural and Factual Background

A. Summary of Allegations in the Amended Complaint[3]

The Jacksons own a home at 2847 Midland Road, Petersburg, Virginia 23805 (the "Property"). On December 23, 2003, the Jacksons entered into a mortgage loan with New Century Mortgage Corporation ("New Century") to purchase the Property. The Note, dated the same day, evinced the loan. The Deed of Trust, also dated December 23, 2003, secured the Note and appointed Steven C. Conte as trustee. New Century assigned the Note, and Deutsche Bank now claims ownership over the Note. After assuming ownership, Deutsche Bank appointed Poore as substitute trustee and engaged Litton Loan Services ("Litton"), and later Ocwen, as servicers of the loan.

The Jacksons contend that they paid the full monthly loan payments in June 2013 and July 2013. In August 2013, the Jacksons sent Litton a cashier's check for the monthly payment that they assert was the full, appropriate amount of $1, 303.97. The Jacksons state that Ocwen improperly told them that the payment was insufficient to "bring the loan current" and returned the payment. (Am. Compl. ¶ 15.) As a precaution, the Jacksons put the payment into a bank account to avoid spending the money. In September 2013, the Jacksons again sent a full monthly payment. However, Ocwen applied the September 2013 payment to the June 2013 payment. The next month, Ocwen applied the Jacksons' October 2013 payment to the July 2013 payment. This process continued until February 2014, with each payment applied to the payment due three months prior.

The Jacksons contend that on February 13 and 20, 2014, Poore advertised a trustee's sale of the Property in the Richmond Times Dispatch newspaper via the Notice of Sale. The Notice of Sale stated, in pertinent part:

TRUSTEE'S SALE OF 2847 MIDLAND RD. PETERSBURG, VIRGINIA 23805

In execution of a Deed of Trust in the original principal amount of $126, 000.00 from LEROY T. JACKSON AND ADELAIDE W. JACKSON dated December 23, 2003, recorded among the land records of the Circuit Court for PETERSBURG CITY as Instrument No. 03-005804 recorded December 31, 2013, the undersigned appointed Substitute Trustee[, Poore J will offer for sale at public auction on the courthouse steps at the front of the Circuit Court building for PETERSBURG CITY located [at] 7 COURTHOUSE AVENUE, PETERSBURG, VA 23802 on February 21, 2014 at 9:30 a.m.....

(Am. Compl. ¶¶ 25, 33; Mem. Supp. Mot. Dismiss Ex. 3 ("Notice of Sale"), ECF No. 5-3.) The Jacksons allege that the Notice of Sale defamed them "by announcing ... that the Jacksons were sufficiently in arrears on the [mortgage] loan ... and that the lender... was entitled to foreclosure" of the Property. (Am. Compl. ¶ 26.) The Notice of Sale did not report that the Jacksons were in default on the loan, only that a trustee's sale had been scheduled for the Property.

On an unspecified date, Poore sent the Jacksons a notice that it had scheduled a foreclosure of the Property for February 21, 2014. The Jacksons maintain that the scheduled foreclosure was improper because (1) they were current on their payments and (2) even if they were in arrears, Deutsche Bank did not send a 30-day cure notice as required by the Note and Deed of Trust.

After receiving the correspondence from Poore regarding the scheduled foreclosure, Adelaide Jackson and the Jacksons' daughter, Crystal L. J. Wynn, called Ocwen. They spoke with an Ocwen representative, who told Jackson and Wynn that the Jacksons would have to pay $13, 039.70-ten times the normal monthly amount-before February 21, 2014 to prevent the foreclosure and $6, 183.17 thereafter to bring the loan current. On February 20, 2014, the Jacksons paid the $13, 039.70 "under duress" to prevent the foreclosure. (Am. Compl. 147.) On March 5, 2014, "[a]t the demand of Deutsche [Bank], through Ocwen, " the Jacksons paid the additional $6, 183.17 to prevent the scheduling of any additional foreclosures. (Am. Compl. ¶ 49.) The February 21, 2014 foreclosure did not occur, and the Jacksons still own the Property. The Jacksons contend that the only amount they could have owed was $1, 303.97, the amount of the returned August 2013 payment. Thus, $17, 918.90 of the amount paid constituted an overpayment.[4] The Jacksons now seek this amount, plus interest, in damages, as well as a declaratory judgment that the Jacksons are current on the loan.

Since the near-foreclosure and subsequent payments, the Jacksons allege that Deutsche Bank has reported to credit bureaus that the Jacksons were more than 30 days in arrears on the Note and faced foreclosure, despite the Jacksons' continued allegations that they were and are current on the Note. As a result, the Jacksons' credit scores have declined. The Jacksons' original complaint sought $125, 000 in relief, but their Amended Complaint seeks an unspecified amount of compensatory damages for this decline.

B. Procedural History

On February 18, 2015, the Jacksons filed their Complaint in the Circuit Court of the City of Petersburg, Virginia, alleging defamation, overcharges, and breach of contract against Defendants. (ECFNo. 1-1.) On April 20, 2015, Defendants Deutsche Bank and Ocwen removed the action to this Court, arguing that Poore was fraudulently joined and that the Court should disregard its citizenship for diversity purposes. (ECFNo. 1.) Deutsche Bank and Ocwen then filed a Motion to Dismiss the Complaint. (ECF No. 4.) Thereafter, the Jacksons timely filed the Amended Complaint (ECF No. 8), rendering the first Motion to Dismiss moot. (See ECF No. 10.) In the Amended Complaint, the Jacksons allege the following counts:

Count I: Defamation against Ocwen for the posting of the Notice of Sale;
Count II: Defamation against Poore for the posting of the Notice of Sale;
Count III: Breach of the Note and the Deed of Trust for scheduling the foreclosure sale when the Jacksons were not in default on the mortgage; for requiring the overpayment when the Jacksons were current; and, for failing to provide a 30-day cure notice, against Deutsche Bank;
Count IV: Breach of Contract by reporting arrearages to credit reporting agencies, against Deutsche Bank;
Count V: Breach of the Implied Duty of Good Faith and Fair Dealing for all of the alleged actions, against Deutsche Bank; and,
Count VI: Declaratory Judgment, against all Defendants.

In response to the Amended Complaint, Deutsche Bank, Ocwen, and Poore filed their Motions to Dismiss. (ECF Nos. 11, 13.) The Jacksons responded to both motions. (ECF Nos. 15, 17.) Ocwen and Deutsche Bank filed a reply in support of their Motion to Dismiss. (ECF No. 16.) Poore did not file a reply in support of its Motion to Dismiss, and the time to do so has expired. The Jacksons also filed their Motion to Remand, arguing that the Court has no subject matter jurisdiction because complete diversity does not exist. (ECF No. 18.) Deutsche Bank and Ocwen responded to the Motion to Remand, and the Jacksons replied. (ECF Nos. 19, 20.) Poore did not respond to the Motion to Remand, and the time to do so has expired.

The matters are ripe for disposition. For the reasons that follow, the Court will deny the Motion to Remand, grant Poore's Motion to Dismiss, and grant in part and deny in ...


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