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Luther v. Wells Fargo Bank, N.A.

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

July 15, 2016

JAMES T. LUTHER, Plaintiff,
WELLS FARGO BANK, N.A., et al., Defendants.


          Robert S. Ballou United States Magistrate Judge.

         Defendants Wells Fargo Bank (“Wells Fargo”) and Atlantic Law Group (“Atlantic”) move to dismiss James T. Luther’s (“Luther”) complaint with prejudice under Federal Rules of Civil Procedure 12(b)(6), Rule 8(a) (Dkt. No. 4), and also seek a pre-filing injunction. Dkt. No. 6. The motions will be GRANTED.

         Procedural History and Facts

         This case represents Luther’s third attempt to forestall the foreclosure of his home located at 2194 Dogwood Lane in Fieldale, Virginia. Luther filed his first complaint against Wells Fargo on December 7, 2011 alleging fraud, violations of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601, and the Real Estate Settlement and Procedures Act (“RESPA”), 12 U.S.C. § 2605. See Luther v. Wells Fargo, Case No. 4:11cv00057 (“the 2011 case” or “4:11cv00057”). The court entered an order adopting the recommendation of the magistrate judge and dismissing the case with prejudice on September 25, 2012. See id. at Dkt. No. 45. Luther filed a second lawsuit on December 17, 2013 against Wells Fargo and Atlantic alleging violations of the Fair Debt Collection Practices Act, wrongful foreclosure, fraud, and mail fraud. See Luther v. Wells Fargo, Case No. 4:13cv00072 (“the 2013 case” or “4:13cv00072”). The court again adopted the Case 4:16-cv-00013-RSB Document 24 Filed 07/18/16 Page 1 of 14 Pageid#: 267 magistrate judge’s recommendation and dismissed the case with prejudice. See id. at Dkt. Nos. 60 & 61. Luther filed a motion to reconsider pursuant to Rule 59(e), which the court denied. See id. at Dkt. Nos. 64 & 65. Luther then appealed the 2013 case to the Fourth Circuit Court of Appeals and that court affirmed the district court’s decision on December 2, 2015. See id. at Dkt Nos. 74 & 75. Luther next filed a motion to set aside the judgment in both cases on February 10, 2016. See id. at Dkt. No. 81. Luther’s motion was denied on February 11, 2016. See id. at Dkt. Nos. 83 & 84.

         In the instant case, Luther originally filed his complaint in the Henry County Circuit Court, stating that “Defendant has agreed to default provision of contracting in this matter and has failed [sic] specific performance of releasing liens and deeds and return of fees and notes and misapplied payments.” Dkt. No. 1-5, p. 3.[1] Luther also seeks to quiet title “pursuant to title 55-66.5c and [for] return of fees and specific performance of default provisions agreed to by defendants.” Id. Attached to his complaint are two exhibits. Exhibit 1 is a letter Luther wrote on March 8, 2011 to John G. Stumpf (“Stumpf”), CEO of Wells Fargo. Dkt. No. 1-5, p. 16. Exhibit 2 is a second letter Luther wrote to Stumpf on or about June 13, 2011. Dkt. No. 1-5, p. 52. The first letter is a purported “qualified written request” (“QWR”)[2] that seeks certain confirmation and information from Stumpf about Luther’s loan with Wells Fargo. At the end of that letter, Luther wrote verbatim:

WELLS FARGO BANK MR. JOHN G. STUMPF, CEO or any agents, transfers, or assigns omissions of or agreement by silence of this RESPA REQUEST via certified rebuttal of any and all points herein this RESPA REQUEST, agrees and consents to including but not limited by any violations of law and/or immediate terminate/remove any and all right, title and interest (liens) in JAMES THOMAS LUTHER or any property or collateral connected to JAMES THOMAS Luther or account REDACTED and waives any and all immunities or defenses in claims and or violations agreed to in this RESPA REQUEST including but not limited by any and all:

         The letter continues by including a list of what appear to be Luther’s demands. In a final section entitled “Power of Attorney, ” Luther wrote:

When WELLS FARGO BANK MR. JOHN G. STUMPF, CEO fails by not rebutting to any part of this RESPA REQUEST WELLS FARGO BANK MR. JOHN G. STUMPF, CEP agrees with the granting unto JAMES THOMAS LUTHER’S unlimited Power of Attorney and any and all full authorization in signing and endorsing WELLS FARGO BANK MR. JOHN G. STUMPF, CEO’s name upon any instruments in satisfaction of the obligations of this RESPA REQUEST/Agreement or any agreement arising from this agreement.

         Exhibit 2 notes that Wells Fargo and Stumpf have failed to respond to the first letter and that this failure “is their admission that the ‘Default Provisions under this QUALIFIED WRITTEN REQUEST’ are in full effect.” It appears Luther believes that by sending this letter to which Wells Fargo and Stumpf never responded, that Wells Fargo and Stumpf have agreed to Luther’s demands and consented to granting him power of attorney over Wells Fargo’s affairs. Luther’s complaint itself is very brief and states that Defendants have agreed to these “default provisions” and that he seeks to quiet title to his property. The complaint is devoid of facts and instead contains fifty-eight pages of exhibits, including his state court notice of lis pendens, a notice of federal claim of common law lien, an application in the state court for a temporary restraining order, a proposed order to quiet title, a letter Luther wrote to Atlantic, and the letters noted above. Defendants have moved to dismiss Luther’s complaint on res judicata grounds, for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), and for failure to satisfy the minimum pleading requirements as enumerated in Ashcroft v. Iqbal, 556 U.S. 662 (2009), Bell Atlantic v. Twombly, 550 U.S. 544 (2007), and Rule 8. Defendants also request that the court deny any leave to amend the complaint because such amendment would be futile and would be made in bad faith.

         Motion to Dismiss

         Res Judicata[3]

         The doctrine of res judicata means that a “final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action.” Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 298 (1981). “By precluding parties in a subsequent proceeding from raising claims that were or could have been raised in a prior proceeding, ‘[r]es judicata . . . encourages reliance on judicial decisions, bars vexatious litigation, and frees the courts to resolve other disputes.’” Canterbury v. J.P. Morgan Acquisition Corp., 958 F.Supp.2d 637, 645 (W.D. Va. 2013) (quoting Brown v. Felsen, 442 U.S. 127, 131 (1979)). Res judicata applies when there has been “(1) a final judgment on the merits in an earlier suit, (2) an identity of the cause of action in both the earlier and the later suit, and (3) an identity of parties or their privies in the two suits.” Nash Cnty. Bd. of Ed. v. Biltmore Co., 640 F.2d 484, 486 (4th Cir. 1981).

         Here, all three requirements have been met and res judicata bars Luther’s claims. The first requirement has been met because Luther has brought two previous suits regarding the foreclosure of his home, both of which were dismissed with prejudice following a Rule 12(b)(6) motion to dismiss.[4] The third requirement has also been met because Luther’s 2013 case named both Wells Fargo and Atlantic as defendants, the same parties named in the instant case.

         As for the second requirement, the court uses a transactional approach to determine whether a plaintiff’s “new” claims in a subsequent lawsuit are barred under res judicata. “[T]he appropriate inquiry is whether the new claim arises out of the same transaction or series of transactions as the claim resolved by the prior judgment.” Keith v. Alridge, 900 F.2d 736, 740 (4th Cir. 1990) (quoting Harnett v. Billman, 800 F.2d 1308, 1313 (4th Cir. 1986)). A plaintiff who could have brought his claims in a prior proceeding but did not is barred from bringing tharose claims in a subsequent action if those claims arose out of the same transaction. Laurel Sand & Gravel, Inc. v. Wilson, 519 F.3d 156, 164 (4th Cir. 2008); Canterbury, 958 F.Supp.2d at 645; see also Brown, 442 U.S. at 131 (holding that ...

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