United States District Court, E.D. Virginia, Richmond Division
ORLANDO C. WOODY, Plaintiff,
NATIONSTAR MORTGAGE LLC, et al, Defendants.
MEMORANDUM OPINION (DENYING PLAINTIFFS MOTION TO
REMAND AND GRANTING DEFENDANT'S MOTION TO COMPEL
E. Hudson United States District Judge
MATTER is before the Court on Plaintiff Orlando C.
Woody's ("Woody" or "Plaintiff) Motion to
Remand (ECF No. 13, corrected in ECF No. 14), Defendant
Professional Foreclosure Corporation of Virginia's
("PFC") Motion to Dismiss Pursuant to Federal Rule
of Civil Procedure 12(b)(6) (ECF No. 23), and Defendants U.S.
Bank, National Association as Indenture Trustee for
Springleaf Mortgage Loan Trust 2012-2 ("U.S. Bank")
and Nationstar Mortgage LLC's ("Nationstar, "
and together with U.S. Bank, the "Defendants")
Motion to Compel Arbitration and Dismiss or Stay this Action
Pending Binding Arbitration. (ECF Nos. 6, 7, 8).
side has filed memoranda supporting their respective
positions. The Court will dispense with oral argument because
the facts and legal contentions are adequately presented in
the materials before the Court, and oral argument would not
aid in the decisional process. E.D. Va. Loc. Civ. R. 7(J).
following reasons, the Court will deny Plaintiffs Motion to
Remand and grant Defendants' Motion to Compel
Arbitration. The Court will dismiss Count VII against PFC
with prejudice and dismiss PFC from this case. Since the
Court is Granting Defendants' Motion to Compel
Arbitration, Counts I-VI against Defendants will be dismissed
required by Rule 12(b)(6) of the Federal Rules of Civil
Procedure, the Court assumes Plaintiffs well-pleaded
allegations to be true and views all facts in the light most
favorable to him. T.G. Slater & Son v. Donald P.
& Patricia A. Brennan LLC, 385 F.3d 836, 841 (4th
Cir. 2004) (citing Mylan Labs, Inc. v. Matkari, 7
F.3d 1130, 1134 (4th Cir. 1993)). At this stage, the
Court's analysis is both informed and constrained by the
four corners of Plaintiff s Complaint. Viewed through
this lens, the facts are as follows.
September 25, 2003, Bertha Woody entered into a loan for $30,
000 with American General Financial Services Inc.
("American General"), evidenced by a note signed by
both parties. (Compl. ECF No. 1-1.) The loan was secured by a
deed of trust, encumbering property at 2295 Desha Road in
Tappahannock, Virginia. (Id. ¶¶ 6-7.) The
deed of trust was duly recorded in the Essex County public
land records in Deed Book 283, beginning at Page 702.
(Id. ¶ 7.) American General subsequently
assigned the note to U.S. Bank in July 2015, who engaged
Nationstar as its servicer. (Id. ¶ 14-15.)
Home Equity Line of Credit Agreement ("HELOC
Agreement") accompanying Bertha Woody's deed of
trust contained an Arbitration Agreement that encompassed all
claims and disputes arising out of, in connection with, or
My loan from lender today ... all documents, promotions,
advertising, actions or omissions relating to this or any
loan or Retail Contract made by or assigned to Lender...
whether the claim or dispute must be arbitrated; the validity
and enforceability of this Arbitration Agreement, and the
Agreement, my understanding of them, or any defenses as to
the validity of the Agreement and this Arbitration Agreement;
any negotiations between Lender and me; the closing,
servicing, collecting, or enforcement of any transaction
covered by this Agreement; any allegation of fraud or
misrepresentation; any claim based on or arising under any
federal, state, or local law, statute, regulation, ordinance,
or rule; any claim based state or federal property laws; any
claim or dispute based on any alleged tort (wrong), including
intentional torts; and any claim for injunctive, declaratory,
or equitable relief.
(ECF No. 9-l, at7.)
Moreover, the Arbitration Agreement "applies to and runs
to the benefit of [both parties'] assigns,
successors, executors, heirs, and/or
representatives.'''' (Id. at 8 (emphasis
Woody died intestate on November 9, 2014, leaving her only
son, Orlando C. Woody, as her sole heir. (Compl. ¶ 10.)
On April 24, 2015, Nationstar-acting as servicer of U.S.
Bank-executed a document stating that it was appointing PFC
as a substitute trustee under the deed of Trust.
(Id. ¶ 13.) Woody claims that this document
"did not, in fact, remove [the original trustee] and did
not, in fact, appoint PFC as substitute trustee on the deed
of trust because U.S. Bank was not [the] holder of the note
on April 24, 2015." (Id.) In its capacity as
substitute trustee, PFC placed an advertisement in a
newspaper with general circulation in Essex County, Virginia,
giving notice that it intended to conduct a foreclosure sale
on the property encumbered by the deed of trust.
(Id. ¶ 18.) And on February 16, 2016, PFC
conducted the foreclosure sale and sold the property to
Herbert Reynolds ("Reynolds"). (Id. ¶
who was living in the home on February 16, 2016, avers that
he was unaware that the foreclosure sale was taking place and
that he was attempting to obtain a loan from his credit union
to pay off his mother's debt. (Id. ¶ 22.)
Reynolds gave Woody a date to move out, and Woody remained in
the home beyond that deadline. (Id. ¶ 26.)
Reynolds evicted Woody from the home and changed the locks
but still allowed him to return and pick up some of his
personal property. (Id. ¶ 28.) Nevertheless,
Woody was unable to retrieve all of his personal items, and
some of the property that he was able to obtain was damaged
in the move. (See id.)
result, Woody filed a seven-count Complaint against
Nationstar, U.S. Bank, and PFC in the Circuit Court of Essex
County, Virginia on September 8, 2016, seeking damages from
the foreclosure of his mother's home. In Count I,
Plaintiff alleges that Nationstar breached the deed of trust
by failing to give Plaintiff notice of default prior to
foreclosure. (Id. ¶¶ 16-31.) Count II
asserts that U.S. Bank wrongfully appointed PFC to act as
substitute trustee because U.S. Bank was not the holder of
the note at the time the substitution took place.
(Id. ¶¶ 40-42.) In Counts III, IV, and V,
Plaintiff alleges that Nationstar committed actual or
constructive fraud by misleading Plaintiff to prevent him
from pursuing Chapter 13 Bankruptcy and that U.S. Bank is
vicariously liable for Nationstar's fraudulent acts.
(Id. ¶¶ 43-83.) Alternatively, Woody
contends in Count VI that the same fraudulent acts previously
alleged in Counts III, IV, and V constituted a breach of an
implied covenant of good faith. (Id. ¶ 84-88.)
Finally, in Count VII, Plaintiff alleges "[interference
by [PFC] with Contract Rights of [Plaintiff]."
(Id. ¶¶ 89-96.)
seeks compensatory and punitive damages in the total amount
of $1, 250, 000, as well as attorney's fees as they
pertain to Count II. (Id. ¶¶ 19-20.)
is a limited liability company, and is a citizen of Texas and
Delaware. (Notice of Removal ¶ 26, ECF No. 1.) U.S. Bank
is a national banking association with its main office in
Ohio. (Id. ¶ 27.) PFC is a Virginia Corporation
with its principal place of business in Virginia.
(Id. ¶ 29.) And Plaintiff is a citizen of the
Commonwealth of Virginia. (Compl. ¶ 1.)
without PFC, removed the action to this Court pursuant to 28
U.S.C. § 1332(a) on October 7, 2016, well within the
thirty-day timeline required by 28 U.S.C. § 1446.
(See Notice of Removal.) They argue that, although
Plaintiff and PFC are both citizens of Virginia, PFC was
fraudulently joined in this action to prevent complete
diversity. (Id.) Woody filed a Motion to Remand (ECF
No. 13, corrected in ECF No. 14), opposing removal.
Defendants filed a Motion to Compel Arbitration pursuant to
the provisions in the HELOC Agreement. (ECF No. 6, 7, 8.) And
PFC filed a Motion to Dismiss Pursuant to Federal Rule of
Civil Procedure 12(b)(6) on December 1, 2016. (ECF No. 23.)