United States District Court, W.D. Virginia, Charlottesville Division
January 5, 2017
Harold Blick, Plaintiff,
Shapiro & Brown, LLP, Professional Foreclosure Corporation of Virginia, Select Portfolio Servicing, Inc., Defendants.
K. MOON, UNITED STATES DISTRICT JUDGE
Norman K. Moon Plaintiff has moved this Court to grant him
leave to amend his complaint after most of his claims were
dismissed upon Defendant's prior motion. However,
Plaintiff fails to remedy the flaws in his complaint that
caused those claims to be dismissed in the first place.
Plaintiff's amended complaint, therefore, fails for the
largely same reasons that his claims were previously
dismissed. While this Court must freely grant amendment if
justice so requires, it will not do so when such amendment
would be futile. Accordingly, Plaintiff's motion to amend
will be denied.
Facts as Alleged
controversy stems from the foreclosure sale of
Plaintiff's property located at 6525 Dick Woods Road,
Charlottesville, Virginia (“the Property”). (Dkt.
15 at 5.) Plaintiff and his then wife obtained a loan in 2005
secured by a Deed of Trust on the Property (“Deed of
Trust”). (Id.) 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.
(Id.) Deutsche Bank National Trust Company
(“Deutsche”) is a prior trustee for 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 6.)
Because the copy of the original promissory note
(“Note”) attached to the response letter
contained a specific endorsement to the Long Beach Mortgage
Company (“Long Beach”) - and no further
endorsements - Plaintiff contends that later holders of the
Note other than Long Beach cannot enforce it against him.
(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. at 7.) 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.) Pro Foreclosure sold the Property
at auction on June 6, 2014. (Dkt. 15 at 7.)
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 res judicata is
applicable to several of Plaintiff's claims, 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, and because the Note had been improperly
securitized; (3) violations of the Fair Debt Collection
Practices Act (“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. 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 Cir. 2012).
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).
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.
in an Order and Memorandum Opinion on December 2, 2016, I
dismissed all but one of Plaintiff's claims in the
current litigation. (Dkts. 12, 13). Plaintiff's breach of
contract claims were dismissed without prejudice because he
failed to allege any damages resulting from the breach.
Plaintiff's claims under Virginia Code § 18.2-59.1
were dismissed with prejudice because they relied on a legal
claim that this Court previously rejected in Blick
I. Plaintiff's claim under 15 U.S.C. § 1692e
was dismissed without prejudice because Plaintiff did not
specify the nature of the misrepresentations made. His claim
under 15 U.S.C. 1692g was adequately pled and is currently
being litigated before this court.
Standard of Review
matter is before the Court upon Plaintiff's motion for
leave to amend his complaint. Under Federal Rule of Civil
Procedure 15(a)(2), leave to amend should be given
“freely . . . when justice so requires.”
Accordingly, leave to amend should only be denied “when
the amendment would be prejudicial to the opposing party,
there has been bad faith on the part of the moving party, or
the amendment would be futile.” Johnson v. Oroweat
Foods Co., 785 F.2d 503, 509-10 (4th Cir. 1986).
“Futility is apparent if the proposed amended complaint
fails to state a claim under the applicable rules and
accompanying standards: A district court may deny leave if
amending the complaint would be futile-that is, if the
proposed amended complaint fails to satisfy the requirements
of the federal rules.” Katyle v. Penn Nat. Gaming,
Inc., 637 F.3d 462, 471 (4th Cir. 2011). Accordingly,
this Court will evaluate the futility of this motion under
the Rule 12(b)(6) standard.
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).
Count I - Fraud and Misrepresentation Under Virginia Code
Against Deutsche Bank National Trust Company
attempts to assert a fraud claim against Deutsche, alleging
that it is responsible for the wrongful misrepresentation of
the Note as a negotiable bearer instrument. (Dkt. 15 at 13.)
Instead, Plaintiff alleges, it was specially endorsed to Long
Beach Trust Company (“Long Beach”), and only that
organization - or one to which it endorsed the Note - could
initiate foreclosure on the Property for default on the Note.
(Id. at 14.) Further, Plaintiff alleges that Long
Beach has not endorsed the Note to any other party, and thus
the debt is only payable to Long Beach and not to the
Defendants that foreclosed on the Property. (Id.)
This claim, however, is barred by res judicata,
specifically, issue preclusion.
Court must apply Virginia law on res judicata
because the case on which preclusion is based (Blick
I) was tried in Virginia under diversity jurisdiction.
See Semtek Int'l Inc. v. Lockheed Martin Corp.,
531 U.S. 497, 508 (2001); Q Intern. Courier Inc. v.
Smoak, 441 F.3d 214, 218 (4th Cir. 2006). Under Virginia
law, res judicata consists of both claim preclusion
and issue preclusion. Lee v. Spoden, 290 Va. 235,
245 (2015). “Under the doctrine of claim preclusion, a
final judgment forecloses successive litigation of the very
same claim, whether or not relitigation of the claim raises
the same issues as the earlier suit.” Id.
(internal quotation marks omitted). “Issue preclusion,
on the other hand, bars successive litigation of an issue of
fact or law actually litigated and resolved in a valid court
determination essential to the prior judgment, even if the
issue recurs in the context of a different claim.”
Id. (internal quotations omitted).
Blick I, Plaintiff brought a similar challenge to
the negotiability of the same note. In deciding that issue in
favor of Deutsche, this Court stated that there existed valid
successors-in-interest to Long Beach that could possess and
enforce the Note. See Blick I at *4 (JP Morgan Chase
. . . as Successor-in-Interest to Washington Mutual Bank . .
. as Successor in Interest to Long Beach Mortgage
Company . . . .”)(emphasis added); id. at
*14 (“[T]he note then founds its way to Deutsche Bank
National Trust Company.”) Further, this Court stated
that the Note was “blank-indorsed” and that its
holder could “enforce the note pursuant to the deed of
trust, and is therefore entitled to foreclose on the
property.” Id. at *17. Here, by contrast,
Plaintiff is asking this Court to rule that the Note is not
blank-indorsed, and that Long Beach is the only legitimate
holder of the Note that could foreclose on his property.
Plaintiff is thus asking this Court to reverse its own prior
conclusion on an issue that was litigated and won by Deutsche
in Blick I. Allowing such a claim would not be
permissible under the doctrine of issue preclusion. Thus,
Plaintiff's claim is barred by res judicata and
Against All Other Defendants
order on Defendant's motion to dismiss, I ordered that
claims against the original defendants under Virginia Code
§ 18.2-178 be dismissed with prejudice. Plaintiff here
has reasserted the same claim that was dismissed, that a
fraud was committed by virtue of Defendants'
representation of the Note as a negotiable bearer instrument.
Accordingly, a motion to amend the complaint to reassert
those same claims would be barred by the law of the case
doctrine and futile under Rule 15. See Arizona v.
California, 460 U.S. 605, 618 (1983) (law of the case
doctrine). Further, Plaintiff does not state a fraud claim
with sufficient specificity, claiming only that Shapiro, SPS,
and Pro Foreclosure “were complicit in committing fraud
and misrepresentations” against him, but not stating
facts to support that contention. (Dkt. 15 at 14.) The only
facts stated that might support fraud are those asserting
that the Note was specially endorsed to Long Beach and not
endorsed to any other party thereafter. As noted above, this
factual issue was already decided against Plaintiff in
Blick I and cannot be re-litigated here. For these
reasons, the motion to amend to add this claim would be
futile and will be denied.
Count II - Breach of Contract
asserts a breach of contract claim, claiming that Defendant
Shapiro failed to give him a 30-day pre-acceleration notice
or a full and complete accounting of the debt, as required by
the terms of the Deed of Trust. (Dkt. 15 at 14-15.) 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)).
Attempting to amend the deficiencies of his original
complaint, Plaintiff claims that the breach caused him
damages in the form of the loss of his home and other,
unspecified harm. (Dkt. 15 at 15.) However, as reasoned in
the December 2, 2016 Memorandum Opinion, Plaintiff must state
facts to describe why the alleged breaches caused
the loss of his home. (See dkt. 12 at 8); see
also O'Connor, 2014 WL 4983487 at *5 (“Because
there are no facts indicating a causal connection between
Defendants' breach and the loss of Plaintiff's
property, I will dismiss Count Five of Plaintiff's
complaint . . . .”).
does not allege that he did not default on his loan, or that
he would have been able to repay the loan had he been given
more notice or a full accounting. Nor do any of the facts
alleged suggest a causal connection between the alleged
breaches and the loss of his home. From the facts alleged,
the loss of the home appears caused by Plaintiff's
default on the Note, and not by a failure of notice. While
the Court must make reasonable inferences in interpreting the
complaint, Iqbal, 556 U.S. at 678, it is too large a
leap to infer that the failure to give timely notice of
default here caused the loss of the house, particularly when
actual notice was obtained eleven days later and several
months elapsed before the Property was sold at
auction. Absent the allegation of some facts
plausibly connecting the breach and loss of the Property at
auction, Plaintiff has failed to state a claim for breach of
contract and his motion to amend must be denied.
Against All Other Defendants
attempts to extend his claim against Shapiro against the
other Defendants as well, arguing that they
“conspired” to breach the rights allegedly
breached by Shapiro. The bald assertion of conspiracy is
insufficient to plead a case in federal court. Further, any
liability of the other Defendants is predicated on the
existence of a valid claim against Shapiro, which, as
discussed above, is not adequately pled. Therefore,
Plaintiff's claim would be futile and will not be allowed
to be added via the amended pleading.
Count III - Fair Debt Collection Practices Act
U.S.C. § 1692g(b)
attempt to reassert his § 1692g(b) claim serves no legal
purpose, and granting it would not be required to advance the
cause of justice. See Fed. R. Civ. Pro. 15(a)(2).
Plaintiff's § 1692g(b) claim was properly pled in
his prior complaint and is currently pending before this
Court. His current formulation makes only minor changes to
the wording of the prior claim, and does not meaningfully
alter its substance. Further, “the grant or denial of
an opportunity to amend is within the discretion of the
District Court.” Pittston Co. v. United
States, 199 F.3d 694, 705 (4th Cir. 1999). Allowing
Plaintiff's to amend solely to reassert a claim already
properly before this Court, therefore, will not be permitted.
U.S.C. § 1692e
attempts to reassert his claim under § 1692e that
Shapiro made a false or misleading statement in connection
with the collection of a debt. Plaintiff, however, fails to
specify the false or misleading statement made by Shapiro.
The only conduct mentioned by Shapiro in connection with this
claim is Shapiro's failure to respond to Plaintiff's
letters. That failure to respond is relevant to the §
1692g claim, but not the § 1692e one at issue. Further,
the only potential misrepresentation that could be inferred
from the complaint is Plaintiff's non-negotiability of
the Note theory, rejected in Blick I. Thus,
Plaintiff has failed to state a claim under § 1692e with
sufficient specificity and the motion to amend to allow this
claim will be denied.
of the FDCPA claim already pending before this Court,
Plaintiff's amended complaint does not adequately state a
claim, and he will not be permitted to add it to this
litigation. Viewed broadly, Plaintiff is essentially
asserting two new harms, neither of which amounts to a legal
claim. First, he asserts that a fraud has been committed on
him by virtue of parties other than Long Beach representing
that they could initiate foreclosure on the Property based on
the Note. Claims based on this theory are barred by res
judicata, as this Court has already held that the Note
was blank-indorsed and enforceable by parties other than Long
Beach. Second, Plaintiff asserts that failures to comply with
the notice requirements of the Deed of Trust constituted a
breach of contract that caused him to lose his house at the
foreclosure action. However, Plaintiff has not adequately
alleged a causal connection plausibly suggesting how the
failure in notice caused the loss of his home. Finally,
Plaintiff's revised FDCPA claim under 15 U.S.C. §
1692g(b) does not perceptibly alter the litigation, and this
Court will exercise its discretion to deny its amendment.
Thus, Plaintiff's motion to amend will be denied. An
appropriate order will issue.
Clerk of the Court is directed to send a certified copy of
this Memorandum Opinion to counsel for the Defendants and to
the pro se Plaintiff. Dated this t day of January, 2017.
 Blick v. JP Morgan Chase Bank,
N.A., No. 3:12-cv-00001, 2012 U.S. Dist. LEXIS 41265
(W.D. Va. Mar. 27, 2012), aff'd, 475 F.
App'x 852 (4th Cir. 2012) [hereinafter “Blick
I”]; Blick v. Long Beach Mortgage Loan Trust
2005-WL3, No. 3:13-cv-00002, 2013 U.S. Dist. LEXIS 46442
(W.D. Va. Mar. 29, 2013), aff'd, 539 F.
App'x 126 (4th Cir. 2013) [hereinafter “Blick
II”]; Blick v. Deutsche Bank Nat. Trust
Co., No. 3:14-CV-00022, 2014 WL 4052820 (W.D.
Va. Aug. 15, 2014), aff'd, 591 F. App'x 231
(4th Cir. 2015), cert. denied, 136 S.Ct. 114 (2015),
reh'g denied, 136 S.Ct. 575 (2015) [hereinafter
 Blick v. Wells Fargo Bank,
N.A., No. 3:11-cv-00081, 2012 U.S. Dist. LEXIS 41265
(W.D. Va. Mar. 27, 2012), aff'd, 474 F.
App'x 932 (4th Cir. 2012), and then in a second action on
res judicata grounds. Blick v. Soundview Home Loan Trust
2006-WF1, No. 3:12-cv-00062, 2013 U.S. Dist. LEXIS 4186
(W.D. Va. Jan. 10, 2013), aff'd, 521 F.
App'x 207 (4th Cir. 2013).
 The Court construes Plaintiff's
claim that “Defendants actions violate Virginia's
Code § 8.3A-205(a) as being subsumed within
Plaintiff's § 18.2-178 claim. (See Dkt. 15 at 13.)
That is, it appears Plaintiff is using § 18.2-178 as a
cause of action to enforce the violation of
§8.3A-205(a)'s distinction between special and blank
endorsements. However, to the extent Plaintiff alleges §
8.3A-205(a) as a separate cause of action, it would fail for
the same reasons as his § 18.2-178 claim.
 Plaintiff himself alleges actual
notice in that he alleges he responded to the required notice
eleven days after it was sent to his former wife. (Dkt. 15 at