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Thorsted v. Chase Home Mortgage

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

May 5, 2016

David Thorsted, Plaintiff,
v.
Chase Home Mortgage a/k/a JPMorgan Chase Bank, N.A., Defendant.

MEMORANDUM OPINION

NORMAN K. MOON JUDGE

Judge Norman K. Moon This matter is before the Court on Defendant’s motion to dismiss. Dkt. 3. Plaintiff David Thorsted filed this action against JPMorgan Chase Bank, N.A. (“Chase” or “Defendant”), referred to as Chase Home Mortgage in his complaint, for allegedly violating Virginia law by failing to provide proper notice of the foreclosure sale of his home. Additionally, Thorsted has alleged that Chase has violated the “automatic stay” imposed by 11 U.S.C. § 362. Because Thorsted has failed to allege facts sufficient to sustain causes of action for improper notice, actual fraud, inadequacy of price at the foreclosure sale, and violation of a stay, I will grant Chase’s motion to dismiss.[1]

I. FAA actsslleged[2]

The Plaintiff, David Thorsted, was a homeowner in Rhoadesville, Virginia and, according to public record, secured his home on 27539 Constitution Highway with a mortgage totaling $374, 400. See Dkt. 4; Exhibit A. In June 2012, Thorsted submitted a loan modification application regarding his mortgage. Compl. at 1, ¶ 3. In September 2012, Thorsted contacted Chase inquiring into the status of both his loan modification application and the possible foreclosure of his home. Compl. at 2, ¶¶ 4-6.

Believing that the loan modification application was under review, Thorsted contacted Chase to ensure that while the application was processing his house would not be foreclosed upon. Id. According to Thorsted, he was informed by Chase that the foreclosure would be “continued, ” and that he should call again the next morning to confirm. Compl. at 2, ¶¶ 4-5. The next morning, however, Thorsted was informed by Chase that the foreclosure would proceed notwithstanding the loan modification application. Compl. at 2, ¶ 6. With this new information, Thorsted then filed for bankruptcy protection at 11:04 AM on September 25, 2012. Compl. at 2, ¶ 7. Thorsted’s filing was nearly an hour after the home had been sold by Chase in foreclosure proceedings. See Compl. at 2, ¶ 7-8. Thorsted alleges, and Chase’s records confirm, that the sale was consummated at 10:08 AM on September 25, 2012. See Compl. at 2, ¶ 8; Dkt. 4, Exhibit B at 2.

II. Standard of Review

When evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, the Court must accept as true all well-pleaded allegations. See Vitol, S.A. v. Primerose Shipping Co., 708 F.3d 527, 539 (4th Cir. 2013); see also Erickson v. Pardus, 551 U.S. 89, 94 (2007). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations and quotation marks omitted). Stated differently, in order 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 Twombly, 550 U.S. at 570).

III. Analysis

A. Wrongful Foreclosure

Virginia law is unsettled as to whether a cause of action for “wrongful foreclosure” exists. This Court in the past has skeptically questioned the cause of action. See Sheppard v. BAC Home Loans Servicing, LP, No. 3:11-CV-00062, 2012 WL 204288, at *8 (W.D. Va. Jan. 24, 2012) (“[I]t is unclear whether Virginia even recognizes the tort of ‘wrongful foreclosure.’”). Elsewhere courts have differed on whether the cause of action exists. Compare Hien Pham v. Bank of New York, 856 F.Supp.2d 804, 811 (E.D. Va. 2012) (“Virginia does not recognize a cause of action for wrongful foreclosure.”); with Mathews v. PHH Mortgage Corp., 283 Va. 723, 724 S.E.2d 196 (2012) (recognizing that damages can be awarded for a foreclosure sale that has been improperly conducted or equitable relief can be granted before a sale occurs); Mayo v. Wells Fargo Bank, N.A., 30 F.Supp. 3d 485, 498 (E.D. Va. 2014), aff’d, 622 F. App’x 250 (4th Cir. 2015) (“Virginia precedents [allow] the setting aside of foreclosure sales in equity.”).

Although the precedent leans in favor of recognizing a cause of action for wrongful foreclosure, we need not answer that question here because Thorsted has failed to establish that his foreclosure was wrongful.

B. Proper Notice

The Code of Virginia states “[t]he inadvertent failure to give notice as required by this subsection shall not impose liability on either the trustee or the secured party.” Va. Code Ann. § 55-59.1(A). The statute continues:

When the written notice of proposed sale is given as provided herein, there shall be a rebuttable presumption that the lienholder has complied with any requirement to provide notice of default contained in a deed of trust. Failure to comply with the requirements of notice contained in this section shall not affect the validity of the sale, and a purchaser for ...

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