United States District Court, E.D. Virginia, Norfolk Division
January 4, 2017
MICHAEL L. CASEY, Plaintiff,
BANK OF AMERICA, N.A., Defendants.
OPINION & ORDER
COKE MORGAN, JR. SENIOR UNITED STATES DISTRICT JUDGE
matter is before the Court pursuant to Defendant Bank of
America, N.A.'s ("Defendant" or
"BANA") Motion to Dismiss ("Motion").
Doc. 6. For the reasons stated herein, the Court DENIES the
Motion as to Counts I and II and GRANTS the Motion as to
March 21, 1994, Michael L. Casey ("Plaintiff) entered
into a mortgage loan, evidenced by a note and secured by a
deed of trust, to purchase a home. Am. Compl. ¶ 8. Bank
One Mortgage Corporation was the original lender on the
mortgage and BANA became the holder of the note. Id.
At some point, Plaintiff fell behind on his mortgage
payments. Am. Compl. ¶ 10. In early 2009, Plaintiff
entered into discussions with BANA regarding loan
modification. Am. Compl. ¶ 11.
April 26, 2010, when Plaintiff was in arrears and BANA was
threatening foreclosure, a BANA representative "assured
[Plaintiff] that if he paid [BANA] $11, 000 in spendable
funds within 48 hours thereafter, he would be current and
would not face any foreclosure action." Am. Compl.
¶ 18. BANA further assured Plaintiff that "he would
remain current on what would be a loan modification by making
ten monthly payments of $1, 390, with the first of those $1,
390 payments to be made on May 26, 2010 and the remaining
payments on the 26 day of successive months." Id; Doc. 9
at 2. Plaintiff timely delivered $11, 000 in spendable funds,
in the form of a cashier's check, to a branch office of
BANA in Norfolk "and delivered the same to Linda
Rudnick, Personal Banker at that branch of [BANA]." Am.
Compl. ¶ 21. BANA, through Ms. Rudnick, accepted
Plaintiffs $11, 000 cashier's check. Am. Compl. ¶
22. In accepting Plaintiffs funds, Ms. Rudnick repeated the
assurances made by the initial BANA representative, "to
wit: that if [Plaintiff] paid the $11, 000 in spendable funds
within 48 hours, he would be current and would not face any
foreclosure action." Am. Compl. ¶¶ 18, 22;
Doc. 9 at 2. Plaintiff avers that BANA, in accepting his
funds and making such statements, did so fraudulently and
without any intent to abide by its [ ] fraudulent
assurance." Am. Compl. ¶ 22. Further, Plaintiff
claims Ms. Rudnick, "in repeating the said assurances,
made such assurances as an intentional falsehood with intent
to mislead [Plaintiff], and did mislead [Plaintiff]."
claims BANA retained Plaintiffs $11, 000 "for a material
period of time before returning the same to
[Plaintiff]." Am. Compl. ¶ 23. "After
accepting the $11, 000 cashier's check, [BANA] instructed
a substitute trustee to foreclose on the home. The substitute
trustee advertised the home for sale on May 26, 2010."
Am. Compl. ¶¶ 25, 26. After the advertisement was
published, BANA sent Plaintiff documents and instructed
Plaintiff "to return the documents along with a
considerable sum of money to be considered for a loan
modification." Am. Compl. ¶ 27. BANA then called
Plaintiff and informed him "a 'negotiator' would
call him to discuss." Am. Compl. ¶ 28. Plaintiff
obtained legal counsel and filed a lawsuit that resulted in
the cancelation of the foreclosure scheduled for May 26,
2010. Am. Compl. ¶ 29.
case was removed to this Court on August 5, 2016. Doc. 1. On
August 15, 2016, Plaintiff filed the Amended Complaint in
this Court. Doc. 5. On August 31, 2016, BANA filed the
instant Motion to Dismiss. Doc. 6. On September 15, 2016,
Plaintiff responded in opposition to BANA's Motion. Doc.
9. Also on September 15, 2016, Plaintiff filed a Motion for
Leave to File Late Memorandum in Opposition to Motion to
Dismiss ("Motion for Leave"). Doc. 10. On October
7, 2016, the Court DISMISSED Plaintiffs Motion for Leave as
MOOT. Doc. 13. On October 11, 2016, Plaintiffs counsel filed
a Motion to Withdraw Appearance as Counsel and for Removal
from Electronic Notification Lists ("Motion to
Withdraw"). Doc. 14. On October 26, 2016, the Court
GRANTED Plaintiffs counsel's Motion to Withdraw. Doc. 17.
Federal Rule of Civil Procedure 12(b)(6), a motion to dismiss
tests the sufficiency of a complaint; 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). "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) (citing
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)); see also Venkatraman v. REI Sys.. Inc., 417
F.3d 418, 420 (4th Cir. 2005) ("In considering a motion
to dismiss, we accept as true all well-pleaded allegations
and view the complaint in the light most favorable to the
plaintiff) (citing Mylan Labs.. Inc. v. Matkari. 7
F.3d 1130, 1134 (4th Cir. 1993)). A complaint establishes
facial plausibility "once the factual content of a
complaint allows the court to draw the reasonable inference
that the defendant is liable for the misconduct
alleged." Nemet Chevrolet Ltd. v.
Consumeraffairs.com. Inc., 591 F.3d 250, 256 (4th Cir.
2009) (quoting Iqbal, 556 U.S. at 678). Therefore,
the complaint need not include "detailed factual
allegations" as long as it pleads "sufficient facts
to allow a court, drawing on judicial experience and common
sense, to infer more than the mere possibility of
misconduct." Id. Although a court must accept
as true all well-pleaded factual allegations, the same is not
true for legal conclusions. "Threadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements, do not suffice." Iqbal, 556 U.S. at
deciding the motion, a court may consider the facts alleged
on the face of the complaint as well as "'matters of
public record, orders, items appearing in the record of the
case, and exhibits attached to the complaint.'"
Moore v. Flagstar Bank, 6 F.Supp.2d 496, 500 (E.D.
Va. 1997) (quoting 5A Charles A. Wright & Arthur R.
Miller, Federal Practice & Procedure § 1357 (1990)).
The court may look to documents attached to the complaint and
those incorporated by reference without converting a Rule
12(b)(6) motion into a Rule 56 motion for summary judgment.
See Pueschel v. United States, 369 F.3d 345, 353 n.3
(4th Cir. 2004) (citations omitted).
"[i]n alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or
mistake." Fed.R.Civ.P. 9(b). To satisfy the heightened
pleading standard of Rule 9(b), a Plaintiff must plead with
particularity "the time, place, and contents of the
false representations, as well as the identity of the person
making the misrepresentation and what he obtained
thereby." In re Mut. Funds Inv. Litig., 566
F.3d 111, 120 (4th Cir. 2009) (quoting Harrison v.
Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th
Cir. 1999)). However, "Rule 9(b) allows conclusory
allegations of defendant's knowledge as to the true facts
and of defendant's intent to deceive."
Harrison, 176 F.3d at 786; see also
Fed.R.Civ.P. 9(b) ("Malice, intent, knowledge, and other
condition of mind of a person may be averred
generally."). In fraud cases, "lack of compliance
with Rule 9(b)'s pleading requirements is treated as a
failure to state a claim under Rule 12(b)(6)."
Id. at 785 n.5 (internal citations omitted).
Count I: Actual Fraud
Virginia law, a "litigant who prosecutes a cause of
action for actual fraud must prove by clear and convincing
evidence: (1) a false representation, (2) of a material fact,
(3) made intentionally and knowingly, (4) with intent to
mislead, (5) reliance by the party misled, and (6) resulting
damage to the party misled." State Farm Mut. Auto.
Ins. Co. v. Remley, 270 Va. 209, 218 (2005) (citations
omitted). Generally, fraud "must relate to a present or
preexisting fact, and cannot ordinarily be predicated on
unfulfilled promises or statements as to future events."
Patrick v. Summers, 235 Va. 452, 454 (1988). With
regard to promises and future events: "if a defendant
makes a promise that, when made, he has no intention of
performing, that promise is considered a misrepresentation of
present fact and may form the basis for a claim of actual
fraud." SuperValu, Inc. v. Johnson, 276 Va.
356, 368 (2008). However, "the plaintiff must clearly
allege that the promisor did not intend to perform the
promise at the time the promisor made the purportedly
fraudulent statement." Bennett v. Bank of Am..
N.A., 3:12cv34, 2012 WL 1354546, at *7 (E.D. Va. Apr.
18, 2012) (citing Station #2, LLC v. Lynch, 280 Va.
166, 172 (2010)).
argues Count I fails because Plaintiff does not allege
BANA's intent to deceive or cause harm, fails to identify
any breach of contract, and has no damages to recover. Doc. 7
at 5-8. Defendant notes that the Amended Complaint does not
"specifically allege the actual amount owed or when
Plaintiff came to learn of the actual amount owed" on
the loan. Id. at 6. However, "Plaintiffs theory
necessary implies that BANA intentionally misled Plaintiff
into delivering a payment that BANA did not want, did not
keep and which Plaintiff does not deny was less than the
full amount owed." Id. at 6. As BANA received
nothing, Defendant claims "there is no basis for
inferring that BANA's representative intended to deceive
Plaintiff. And, insofar as BANA's representative did not
know that Plaintiff would suffer the harm Plaintiff seeks to
recover, there is no basis for inferring that he or she acted
maliciously." Id. Also, Plaintiff "does
not allege that [the BANA representative] had knowledge of
Plaintiff s plan to liquidate his retirement account, and
incur some penalty in the process, in order to make the
payment." Id. at 7. Further, "Plaintiff
cannot satisfy Rule 9(b)'s requirement of alleging
'what was obtained' because BANA obtained nothing
from this purported scheme, other than the administrative
hassle of returning Plaintiffs money." Id. at
claims Count I also fails because Plaintiff has no
recoverable damages and "Plaintiffs allegations of
reliance and harm are illusory." Id. at 7-8.
Defendant notes that "Plaintiff has no basis to complain
about negative credit reporting, loss of quiet enjoyment, or
his lawsuit to stop the foreclosure because Plaintiff has not
alleged that... he would have avoided these outcomes" by
not obtaining the $11, 000 cashier's check. Id.
at 7. Further, "because Plaintiff was in default on his
Loan, it cannot be gainsaid that he should have expected to
face these outcomes unless he paid his lender the amounts due
under the Note and Deed of Trust." Id.
alleges that BANA, through its initial representative's
statements, and confirmed by Ms. Rudnick, "intentionally
sought to mislead [Plaintiff]." Am. Compl. ¶ 19.
Plaintiff claims that "he relied on such false
information and, because of such reliance, went to
considerable expense, including making expensive loans on
retirement, incurring penalty thereby, not knowing that he
was relying on incorrect information." Doc. 9 at 2.
Further, Plaintiff alleges that BANA's assurances
"were intentionally false and part of a pattern and
practice by [BANA] of giving borrowers false assurances of
safety from foreclosures to prevent borrowers from stopping
foreclosures, including through bankruptcies."
Id. at 3. Also, if BANA had not made such
"intentionally false assurances[J ... [Plaintiff] would
not have gone to the expense and considerable trouble to
obtain the $11, 000 in spendable funds that he paid to
[BANA]." Id. at 4.
stage of the proceedings, Plaintiff pleads fraud with
sufficient particularity by alleging the time, place, and
contents of the false representation. Plaintiff alleges that
on April 26, 2010 a BANA representative "assured Casey
that if he paid [BANA] $11, 000 in spendable funds within 48
hours thereafter, he would be current and would not fact any
foreclosure action." Am. Compl. ¶ 18. Plaintiff
contends this assurance was repeated by Ms. Rudnick, a
personal banker at a Norfolk branch office of BANA. Am.
Compl. ¶ 21. Plaintiff claims damages as a result of his
reliance on this representation, namely the "financial
loss of the penalty expense necessary to obtain the $11,
000." Doc. 9 at 18. Additionally, this matter is similar
to Matanic v. Wells Fargo Bank. N.A., 3:12cv472,
2012 WL 4321634, at *6 (E.D. Va. Sept. 18, 2012). In
Matanic, this Court did not dismiss a fraud claim
where a servicer, on the day before a foreclosure, allegedly
gave false assurance to a borrower that the servicer would
cancel the foreclosure if the borrower promptly transmitted
certain tax information. Id. Taking Plaintiffs
allegations as true, such allegations are sufficient to
survive a motion to dismiss. Therefore, the Court DENIES
Defendant's Motion to Dismiss as to Count I.
Count II: Constructive Fraud
prevail on a constructive fraud claim, a plaintiff must show
by clear and convincing evidence that the defendant
negligently or innocently made a false representation of
material fact, and that the plaintiff suffered damage as a
result of his reliance upon that misrepresentation."
SuperValu. Inc., 276 Va. at 367-68. "Under no
circumstances, however, will a promise of future action
support a claim of constructive fraud." Id. at
argues Count II fails because Plaintiff had no basis for
relying on BANA's alleged representation. Doc. 7 at 9.
Defendant claims that "[b]ecause Plaintiff is precluded
from relying on any unperformed promise theory, Plaintiff
must show that some statement of existing fact was false and
that plaintiff reasonable [sic] relied on that
statement." Id. Defendant contends that
"Plaintiff simply cannot accomplish this objective
without alleging the actual amount owed under the Loan and
some reason his belief in BANA's false representation
that he only owed $11, 000 was reasonable." Id.
According to Defendant,
if the amount actually owed exceeded $11, 000 (which it quite
obviously did or Plaintiff would have sued BANA for failing
to abide by the Loan) and Plaintiff could have added up the
payments he missed and determined that $11, 000 would not
have brought the Loan current, then he had no basis for
relying on BANA's alleged representation.
Id. Additionally, "Plaintiff still has no
damages to recover as previously discussed.
Plaintiffs claim for constructive fraud must also be
dismissed." Id. Plaintiff claims he properly
pled a claim for constructive fraud. Doc. 9 at 19. Plaintiff
acknowledges that "a claim for constructive fraud cannot
relate to an assurance regarding the future."
Id. Plaintiff, however, avers that "when
[Plaintiff] paid the $11, 000 to the bank, Rudnick assured
him he was current, which was a false statement as to a
present fact." Id.
Parties, in large part, rely on the same arguments made
regarding Count I for actual fraud. Viewing the alleged facts
in the light most favorable to the Plaintiff, and for the
same reasoning provided for Count I above, the Court finds
the Plaintiff sufficiently pled a claim for constructive
fraud. As such, the Court DENIES Defendant's Motion to
Dismiss with regard to Count II.
Count III: Breach of Covenant of Good Faith and Fair Dealing
Virginia law, every contract contains an implied covenant of
good faith and fair dealing; however, a breach of those
duties only gives rise to a breach of contract claim, not a
separate cause of action." Frank Brunckhorst Co.,
L.L.C. v. Coastal Atlantic. Inc., 542 F.Supp.2d 452, 462
(E.D. Va. 2008); see also Charles E. Brauer Co., Inc. v.
NationsBank of Virginia. N.A., 251 Va. 28, 33 (1996).
Additionally, a party does not violate the obligation to act
in good faith by "enforcing a contractual right."
Albright v. Burke & Herbert Bank & Trust
Co., 249 Va. 463, 467 (1995). This implied covenant is
not recognized "in contracts outside of those governed
by the Uniform Commercial Code ("U.C.C."), and the
U.C.C. 'expressly excludes the transfer of realty from
its provisions.'" Harrison v. U.S. Bank
Nat'l Ass'n, No. 3:12cv224, 2012 WL 2366163, at
*4 (E.D. Va. June 20, 2012) (quoting Greenwood Assocs..
Inc. v. Crestar Bank, 248 Va. 265, 270 (Va. 1994));
see also Va. Code § 8.9A-109(d)(l 1)
("This title does not apply to the creation or transfer
of an interest in or lien on real property, including a lease
or rents thereunder . . . ."). Authorities in Virginia
do not support the existence of a claim for breach of the
implied covenant of good faith and fair dealing except in
contracts governed by the U.C.C, a body of law which
expressly excludes the transfer of realty from its
provisions. Consequently, the Court GRANTS the Motion as to
Count III and accordingly DISMISSES Count III with prejudice,
for failing to state a claim.
reasons stated above, the Court DENIES the Motion as to
Counts I and II and GRANTS the Motion as to Count III. Doc.
6. Accordingly, the Court DISMISSES Count III with prejudice,
for failing to state a claim.
Clerk is REQUESTED to send a copy of this Order to all
counsel of record.
 "In considering a motion to
dismiss, [the Court] accept[s] as true all well-pleaded
allegations and view[s] the complaint in the light most
favorable to the plaintiff." Venkatraman v. RE1
Sys.. Inc., 417 F.3d 418, 420 (4th Cir. 2005) (citing
Mylan Labs.. Inc. v. Matkari, 7 F.3d 1130, 1134 (4th
Cir. 1993)). The Court cautions, however, that the facts
alleged by Plaintiff are recited here for the limited purpose
of deciding the instant Motion to Dismiss. The recited facts
are not factual findings upon which the parties may rely for
any other issue in this proceeding.