United States District Court, W.D. Virginia, Charlottesville Division
K. Moon, United States District Judge
brings several causes of action challenging the validity of a
foreclosure on his property. This is his fourth suit
attacking the foreclosure on this particular property and his
seventh suit challenging foreclosure on any one of his
properties. In this suit, Plaintiff alleges violations of
notice requirements in the Deed of Trust, two violations of
the Virginia Code, one violation of the Truth in Lending Act
(“TILA”), and two violations of the Federal Debt
Collection Practices Act (“FDCPA”). Defendants,
in response, assert various affirmative defenses, including
res judicata, statute of limitations, and failure to
state a claim under the FDCPA. Considering the asserted
affirmative defenses and Plaintiff's insufficiently pled
complaint, the majority of claims will be dismissed. However,
one of the FDCPA claims against defendant Shapiro & Brown
LLC (“Shapiro”) will be allowed to proceed
because it is adequately stated and not otherwise barred.
Facts as Alleged
controversy stems from the foreclosure sale of
Plaintiff's property located at 6525 Dick Woods Road,
Charlottesville, Virginia (“the Property”). (Dkt.
1-1 at 1.) Plaintiff and his then wife obtained a loan in
2005 secured by a deed of trust on the Property.
(Id. at 3.) In 2013, servicing on the loan
associated with the Deed of Trust was transferred to Select
Portfolio Servicing, Inc. (“SPS”). (Id.)
Professional Foreclosure Corporation of Virginia (“Pro
Foreclosure”) is the substitute trustee for the
property, which gives it the right to foreclose upon the
property in the event of a default. (Id.) Shapiro
& Brown LLC (“Shapiro”) is a law firm
associated with Pro Foreclosure that was retained with
respect to enforcement of the Deed of Trust on the Property.
series of letters creates the basis of Plaintiff's
claims. On August 2, 2013, Plaintiff received a letter from
SPS in response to his request for validation of the debt
associated with the Deed of Trust. (Id. at 4.)
Because the copy of the original promissory note
(“Note”) attached to the response letter was not
endorsed as a negotiable instrument, Plaintiff claims that
SPS has no right to service the loan. (Id.)
Plaintiff also alleges he never received the notice of
default required under the Deed of Trust because notice was
sent to his former wife but not to him on August 3, 2015.
(Id.) However, eleven days later, Plaintiff sent a
letter to Shapiro in which he explicitly responded to the
August 3rd letter and disputed the validity of the debt.
(Id.) Shapiro never responded to this request for
validation (Id.) On May 11, 2016, Shapiro sent a
letter to Plaintiff notifying him of the foreclosure sale on
the Property by Pro Foreclosure scheduled for June 6, 2016.
(Id.) However, on its last two pages, the letter
mistakenly described a different property and different
substitute trustee. (See dkt. 9-7.) After Plaintiff
wrote complaining of this discrepancy, Shapiro sent another
notice dated May 23, 2016, but which was sent on May 24th and
did not reach Plaintiff until May 27th. (See dkt.
9-13.) Plaintiff contends that the foreclosure sale was
improper because he personally was never notified of his
default and because he was not properly notified of the
foreclosure sale at least fourteen days beforehand.
Additionally, Plaintiff alleges that Defendants' conduct
violated several statutes, discussed below. Plaintiff seeks
several remedies as a result of these alleged violations,
including actual damages, legal costs, declaratory judgment,
and criminal penalties.
present litigation is the fourth in a series of cases that
Plaintiff has brought seeking to invalidate the foreclosure
and sale of the Property. Additionally, Plaintiff brought two
similar cases related to the foreclosure of his adjacent
property. Because Defendants in large part rely upon
the theory of res judicata, a review of the prior
proceedings is prudent.
Blick I, Plaintiff brought four claims against two
defendants: (1) to quiet title on the property, (2) improper
foreclosure on the property because he had not been shown the
original note, (3) violations of the FDCPA, and (4)
derogatory reporting of debt to credit agencies under the
Fair Credit Reporting Act (“FCRA”). Blick
I at *2. The claims were brought against mortgage
servicer JP Morgan Chase, N.A. (“JP Morgan”) and
substitute trustee Deutsche Bank National Trust Company
(“Deutsche”). Id. at *1-2. Ultimately,
this Court rejected Plaintiff's core theory that transfer
of a note and inability to produce the original note
invalidated the foreclosure, and was subsequently affirmed by
the Fourth Circuit. See 475 F. App'x 852 (4th
Blick II, Plaintiff brought similar claims against
the trust itself, rather than the trustee that was sued in
Blick I. See Blick II at *3. This Court
held that all claims were barred by res judicata.
Id. at *12. Applying the relevant Virginia factors,
this Court found that the trust and trustee were in privity
for purposes of res judicata, and that all claims
brought in Blick II could have been brought in the
earlier action. Id. at *9. Again, the Fourth Circuit
affirmed. See 539 F. App'x 126 (4th Cir. 2013).
in Blick III, Plaintiff brought another claim
against Deutsche, alleging that invalid documents submitted
in the Blick I litigation constituted fraud.
Blick III at *1. This court dismissed the claims
upon the defenses of res judicata and statute of
limitations. Id. at *7. Under the statute of
limitations analysis, the dispositive factor was that the
claim accrued when the allegedly fraudulent document was
submitted to the court more than two years prior.
Id. at *5.
case, Plaintiff brings three types of claims against three
Defendants. First, Plaintiff argues that Defendants failed to
notify him of the foreclosure in violation both of the terms
of the Deed of Trust and Virginia law. (Dkt. 1-1 at 7-8.)
Second, Plaintiff alleges violations of the FDCPA stemming
from a failure to validate debts and misrepresentations made
in communications. (Id.) Finally, Plaintiff asserts
a claim under Virginia Code § 18.2-178 for fraudulent
misrepresentation of ownership of the Note. (Id. at
8.) The defendants in this case are SPS (loan servicer), Pro
Foreclosure (substitute trustee), and Shapiro & Brown LLP
(law firm working on behalf of Pro Foreclosure to enforce
Standard of Review
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).
Failure to Notice Claims
brings three separate claims alleging a failure to properly
notice him of foreclosure activities. First, Plaintiff
alleges that he was never notified of his default in
violation of the terms of the Deed of Trust. (Dkt. 1-1, Claim
1(a).) The Deed of Trust required that he be notified of
acceleration of his debt thirty days in advance of entering a
default, so that he might have time to cure it. (Dkt. 9-3 at
12.) According to Plaintiff, notice of the default was only
sent to his ex-wife, a former co-owner of the property.
(Id. at 4.) Second, Plaintiff claims that Defendants
violated Virginia Code § 55-59.1 by failing to notify
him of the foreclosure sale at least fourteen days
beforehand. (Id., Claim 2(a).) See Va. Code
§ 55-59.1(A) (“Mailing of a copy of the
advertisement or a notice containing the same information to
the owner by certified or registered mail no less than 14
days prior to such sale . . . .”). While he did receive
a letter on May 11, 2016 that was properly fourteen days
prior to the sale, that letter identified the incorrect
property and substitute trustee on two pages. The corrected
notice was dated fourteen days prior to the foreclosure sale,
but was mailed only thirteen days prior to the sale.
(See dkt. 9-13.) Third, by violating § 55-59.1,
Plaintiff alleges that Defendants also breached the terms of
the Deed of Trust, which required “notice of sale as
required by Applicable Law.” (Dkt. 1-1, Claim 1(b).)
response to all notice claims, Defendants argue that
Plaintiff received adequate notice years prior in the
preceding foreclosure efforts and accompanying
litigation. Citing admissions made in the prior
litigations and in his attached exhibits, Defendants assert
that Plaintiff for several years prior had actual knowledge
of (1) a default on the loan, (2) Pro Foreclosure's
appointment as substitute trustee, and (3) the intent by Pro
Foreclosure to foreclose on the Property. Therefore,
Defendants argue, Plaintiff had actual knowledge of all
relevant issues, and the timing and sufficiency of mailings
in 2016 is irrelevant.
Breach of Contract
argument supports a finding that Plaintiff has failed to
state a claim for breach of contract, although not for the
reason articulated by Defendants. Plaintiff seeks damages
stemming from two counts of breach of contract (i.e.
the Deed of Trust). Under Virginia law, a claim for breach of
contract must allege: “(1) a legally enforceable
obligation of a defendant to a plaintiff; (2) defendant's
breach or violation of that obligation; and (3) injury or
damage to the plaintiff caused by the breach of
obligation.” O'Connor v. Sand Canyon
Corp., No. 6:14-CV- 00024, 2014 WL 4983487, at *5 (W.D.
Va. Oct. 6, 2014) (citing Sunrise Continuing Care, LLC v.
Wright, 671 S.E.2d 132, 135 (Va. 2009)). However,
Plaintiff has failed to allege facts here indicating that
that he incurred damages. See Mayo v. Wells Fargo Bank,
N.A., 30 F.Supp.3d 485, 493 (E.D. Va. 2014),
aff'd, 622 F. App'x 250 (4th Cir. 2015)
(finding in a case challenging the validity of notice under a
deed of trust that “to raise a viable breach of
contract claim under Virginia law, Plaintiff must demonstrate
that she was injured by the breach.”). Plaintiff merely
makes conclusory legal statements that he is entitled to
actual damages, but does not allege any facts making it
plausible that he was injured by Defendants' breach.
as Defendants argue, Plaintiff had knowledge of all the
necessary facts well before the required notice periods.
Accordingly, none of the alleged failures in notice would
have been likely to cause injury to Plaintiff. The complaint
illustrates that Plaintiff was aware of the alleged default
on his loan at all relevant times. For instance, Plaintiff
describes the lengthy procedural history of the attempts to
foreclose on his house dating back several years.
(See dkt. 1-1 at 5.) The litigation in these cases
centered around whether the exact loan at issue here was in
default, so Plaintiff must have had some notice that his
lender considered the loan in default. More recently,