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Combs v. U.S. Bank National Association

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

June 28, 2017

Barbara L. Combs, Plaintiff,
v.
U.S. Bank National Association, as Trustee for JP ALT 2006-SI, Defendant.

          Hon. John F. Anderson

          MEMORANDUM OPINION

          LIME O'GRADY United States District Judge

         This case comes before the Court on Defendants' motions to dismiss. Specifically, U.S. Bank has filed a substantive motion to dismiss for failure to state a claim. (Dkt. No. 3). Co-Defendant Surety Trustees, LLC ("Surety") has also filed a motion to dismiss in which it joins with, and incorporates the reasons for, U.S. Bank's motion. (Dkt. No. 10). Plaintiff concedes that Surety is only a "nominal party" but contends that it is also a necessary party under Virginia law because Plaintiff seeks rescission of a foreclosure action. Opp'n at 2 (Dkt. No. 15). The matter has been fully briefed and the Court found that oral argument was not necessary for the resolution of the motions. For the following reasons, the Court finds good cause to GRANT Defendants' motions. Accordingly, Counts II and III will be dismissed with prejudice. Count I will be dismissed without prejudice.

         I. BACKGROUND

         The subject of this dispute is a piece of real properly located at 20760 Dewberry Court, Ashbury, Virginia 20147 (the "Property"). On April 26, 2006, Plaintiff entered into a mortgage loan, which was evinced by a note and secured by a duly-recorded deed of trust. Defendant U.S. Bank subsequently claimed ownership of the note and appointed Defendant Surety Trustees as substitute trustee on the deed of trust. On August 28, 2014, U.S. Bank instructed Surety Trustees to foreclose on the Property.

         The deed of trust required that any foreclosure proceeding comport with "Applicable Law." Compl. ¶ 23. "Applicable Law, " in rum, is defined in the deed of trust as "all controlling applicable federal, state, and local statutes, regulations, ordinances and administrative rules and orders (that have the effect of law) as well as ali applicable final, non-appealable judicial opinions." Compl. ¶25.

         Plaintiff alleges that "[a]fter U.S. Bank . . . made the first filing towards the applicable foreclosure, and more than 37 days before August 28, 2014, Combs property [sic] submitted a loan modification application for modification of the loan." Compl. ¶ 10. U.S. Bank apparently did not act in response to this application, but instead continued with the foreclosure proceeding. After the foreclosure, U.S. Bank "made negative reports to credit reporting agencies that it had properly foreclosed on the home, which damaged Combs' credit rating to her economic prejudice." Compl. ¶16.

         Plaintiff claims the following damages: (1) loss of title; (2) deprivation of quiet enjoyment; (3) loss of equity in her home; (4) damaged credit rating; (5) legal costs and attorney's fees; (6) cost of paying bond; (7) inconvenience; and (8) loss of "interest on the aforesaid damages." Compl. ¶ 18. She seeks $200, 000 in damages and rescission of the foreclosure of her home.

         II. LEGAL STANDARD

         In considering a motion to dismiss, the Court accepts as true all of the factual allegations contained in the complaint, construing them in the light most favorable to the plaintiff. United States ex rel Oberg v. Pa. Higher Educ. Assistance Agency, 745 F.3d 131, 136 (4th Cir. 2014). To defeat the motion, the Plaintiff must allege enough allegations of fact "to state a claim for relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). In this regard, bald legal assertions without factual support need not be accepted. Id. Indeed, the Court may not rely on mere "labels and conclusions" or the complaint's "formulaic recitation of the elements of a given cause of action in deciding the motion. Id. at 555.

         III. DISCUSSION

         Plaintiffs Complaint alleges three counts against Defendants: (1) breach of Dodd-Frank; (2) breach of "Applicable Law" provision in the deed of trust for violation of Dodd-Frank; and (3) breach of "Applicable Law" provision in the deed of trust for a breach of the consent order entered into by U.S. Bank on April 13, 2011 with the Comptroller of Currency. The first claim cannot succeed as pled; however, the Court will give Plaintiff an opportunity to re-plead this Count. In doing so, however, the Court notes that rescission of foreclosure is not a permissible remedy. The breach of contract claims fail as a matter of law and will be dismissed with prejudice. These claims will be addressed in turn.

         A. Count I: Violation of RESPA

         As Defendants point out, Plaintiffs claim for a "breach of Dodd-Frank" does not allege which provision of the Dodd-Frank Act was actually violated. Rather, the Complaint appears to allege a violation of the Consumer Financial Protection Bureau's ("CFPB") federal loss mitigation procedures governing foreclosures.[1] These regulations are related to the Dodd-Frank Act because they were promulgated by the CFPB, which was authorized by the Dodd-Frank Act to enact binding rules under Real Estate Settlement Procedures Act ...


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