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Wilson-McClain v. Specialized Loan Servicing, LLC

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

September 29, 2016




         This matter comes before the Court on three motions: (1) the Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6)[1] filed by Defendant Specialized Loan Services, LLC ("SLS"), (ECF No. 6), (2) the Motion to Remand filed by Plaintiff Charline Wilson-McClain, proceeding pro se, (ECF No. 12); and, (3) the Motion to Vacate Foreclosure Judgment also filed by Wilson-McClain, (ECF No. 14.) Wilson-McClain failed to file a response to the Motion to Dismiss, and the time to do so has expired.[2] SLS responded to both the Motion to Remand and the Motion to Vacate. (ECF Nos. 7, 15.) Wilson-McClain did not file replies, and the time to do so has expired. The matters are ripe for disposition. The Court exercises jurisdiction pursuant to 28 U.S.C. § 1332.[3] 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 Motion to Dismiss; deny the Motion to Remand; and, deny the Motion to Vacate. The Court will dismiss the Complaint, giving Plaintiff an opportunity to amend her complaint.

         I. 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 5A 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]ll 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 Auth., 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) (citations omitted).

         Wilson-McClain attaches to her Complaint an August 14, 2009 Note between Branch Banking & Trust and Charline M. McClain and William E. McClain (the "Note"). (ECF No. 1-2.) SLS also attaches the Note to its Motion to Dismiss, along with an August 14, 2009 deed of trust (the "Deed of Trust"). (ECF Nos. 13-1, 13-2.) No party contests the authenticity of these documents. Wilson-McClain refers to both the Note and the Deed of Trust in the Complaint.[4] Deeming these two documents central to the claims, the Court will consider the Note and the Deed of Trust. See Witthohn, 164 F.App'x at 396-97 (citations omitted).

         II. Procedural and Factual Background

         A. Summary of Allegations in the Complaint[5]

         The Complaint lacks logical flow, rendering Wilson-McClain's claims difficult to discern. At base, Wilson-McClain contends that the Defendants, especially Atlantic and SLS, engaged in wrongful conduct by threatening to begin foreclosure proceedings on the Property.[6]Wilson-McClain neither disputes nor admits that she defaulted on her loan. She instead scatters legal terms associated with various doctrines throughout her Complaint (and her motions), seeking to challenge a foreclosure action taken, or threatened, against her. The Complaint contains unattributed quotes or legal citations, including record cites to exhibits not filed. See supra note 4. Wilson-McClain also fails to elucidate the roles played by the many entities she mentions in her Complaint.[7]

         Construing the complaint liberally, however, Wilson-McClain contends the following: On August 14, 2009, she and another person entered into a mortgage loan with Branch Banking and Trust Company ("BB&T") to purchase the property at 7256 Loralea Drive in Mechanicsville, Virginia (the "Property"). The Note, dated the same day, evinced the loan. The Deed of Trust, also dated August 14, 2009, secured the Note and appointed BB&T-VA Collateral Service Corporation (BB&T-VA") as trustee. At some point, BB&T and Atlantic transferred their rights under the Deed of Trust to Morgan Stanley Mortgage Capital Holdings LLC. SLS, in its role as noteholder and loan servicer, sent Wilson-McClain several notices about payments she owed pursuant to the Deed of Trust. In 2012, Atlantic was appointed substitute trustee. Thereafter, Atlantic began foreclosure proceedings on the Property.

         The Complaint lists only one cause of action. However, heeding the obligation to construe the Complaint liberally, the Court interprets Wilson-McClain to raise three claims:

Count I: Breach of fiduciary duty by Atlantic for lack of impartiality, failing to conduct due diligence, and by initiating a foreclosure action against Wilson-McClain;
Count II: Breach of Contract by SLS; and,
Count III: Fraud against SLS and Atlantic.

         The same spirit of liberal construction requires the Court to find that Wilson-McClain has named SLS, Atlantic, and John Does 1-10 as defendants.[8] Wilson-McClain seeks the following relief from her claims: (1) compensatory and punitive damages; (2) injunctive relief to protect or grant relief from the foreclosure sale; and, (3) declaratory judgment that SLS has no interest in the Property, and that the Deed of Trust is a "nullity"; and, (4) an order that the Deed of Trust be "stricken from the land records." (Compl. 9.)

         B. Procedural History

         In response to the Complaint, SLS filed its first motion to dismiss. Wilson-McClain filed her Motion to Remand. SLS opposed the Motion to Remand. After examining the Complaint and the Notice of Removal, the Court denied without prejudice SLS's first motion to dismiss; took under advisement the Motion to Remand; and, ordered SLS to file a statement regarding this Court's subject matter jurisdiction.

         On August 10, 2016, SLS filed its Jurisdictional Statement. That same day, SLS properly filed a revised Motion to Dismiss. Wilson-McClain did not respond. On August 26, 2016, Wilson-McClain filed her Motion to Vacate. SLS responded to the Motion to Vacate. Wilson-McClain did not file replies, and the time to do so has expired. For the reasons that follow, the Court will grant SLS's Motion to Dismiss, and will deny Wilson-McClain's Motion to Remand, and Motion to Vacate. The Court will dismiss the Complaint, allowing leave to amend.

         III. Analysis: SLS Motion to Dismiss

         Attempting to invoke several theories, Wilson-McClain contends that the scheduled foreclosure on the Property was unlawful. To recover her losses for the alleged failures, she filed her Complaint against the Defendants.

         A. Wilson-McClain Fails to State a Claim for a Breach of Fiduciary Duty Against Atlantic, the Substitute Trustee

         Wilson-McClain fails to state a claim for breach of fiduciary duty against Atlantic because she cannot identify such a duty within the Deed of Trust. Further, she has no standing to challenge the appointment of Atlantic, the substitute trustee. Pending determination of Wilson-McClain's motions, the Court will dismiss Count I.

         1. Wilson-McClain Does Not Allege Duties Articulated in the Deeds of Trust

         A deed of trust gives rise to certain fiduciary duties. Carter v. Countrywide Home Loans, Inc., No. 3:07cv651, 2008 WL 4167931, at *11 (E.D. Va. Sept. 3, 2008) (Dohnal, J.). However, "deeds of trust are treated under the same principles as contracts, and the trustee only owes those duties that are listed in the deed of trust itself." Id. A trustee under a deed of trust has no due diligence duty and owes only duties listed in the deed of trust. Horvath v. Bank of N.Y, N.A., Civil Action No. I:09cvll29, 2010 WL 538039, at *1 (E.D. Va. Jan. 29, 2010) (Trenga, J.) (dismissing breach of trustee's fiduciary duty claim and finding that plaintiff did not allege any such duties existed in the deed of trust or facts establishing impartiality). Wilson-McClain fails to identify a fiduciary duty, including any duty of impartiality, within the Deed of Trust before the Court. Because Atlantic has no duty of impartiality, even a liberal construction of Wilson- McClain's claim that Atlantic violated that fiduciary duty by initiating a foreclosure against her, the borrower, cannot proceed.[9] Accordingly, Wilson-McClain cannot state a claim for a breach of fiduciary duty against Atlantic, the substitute trustee.

         2. Wilson-McClain Lacks Standing to Challenge Appointment of the Substitute Trustee

         To the extent that she attempts to challenge the appointment of Atlantic, the substitute trustee, Wilson-McClain lacks standing. She is neither a party to the appointment nor the intended beneficiary of the appointment. Bennett v. Bank of Am., N.A., No. 3:12cv34, 2012 WL 1354546, at *7 (E.D. Va. Apr. 18, 2012) (noting that "the validity of the assignment does not affect whether [a] [b]orrower owes its obligations, but only to whom [a] [b]orrower is obligated" (alterations in original) (citation omitted)); Wolf v. Fed Nat'l Mortg. Ass'n830 F.Supp.2d 153, 161 (W.D. Va. 2011), aff'd, 512 F.App'x 336 (4th Cir. 2013). Because Wilson-McClain lacks standing to challenge the ...

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