United States District Court, E.D. Virginia, Norfolk Division
EMETERIO H. SIMON, et al, Plaintiffs,
PNC BANK, NATIONAL ASSOCIATION, et al., Defendants.
MEMORANDUM OPINION AND ORDER
L. WRIGHT ALLEN UNITED STATES DISTRICT JUDGE.
too many homeowners affected by the great recession,
Plaintiffs Emeterio Simon and Diana Simon ("the
Homeowners" or "the Simons") fell behind on
their mortgage payments. As a result, Defendant PNC Bank
National Association ("the Lender") foreclosed on
their Virginia Beach home in 2013. The Simons have remained
in the home while the parties to this case have litigated the
foreclosure's legality in the state and federal courts.
This suit is the latest iteration of that ongoing legal
Simons seek to rescind the foreclosure sale based on the
Lender's alleged breaches of its obligations to provide
notice before foreclosing on the property and to comply with
applicable law throughout the foreclosure process. At this
juncture, the Defendants-various parties to the loan and
foreclosure-have moved to dismiss the Amended Complaint.
Because the Homeowners have failed to allege facts
establishing that the foreclosure was illegal, the motions to
dismiss are granted.
ruling on a motion to dismiss for failure to state a claim,
courts accept a complaint's well-pled factual allegations
as true, and draw any reasonable inferences in favor of the
plaintiff. See Wag More Dogs, LLC v. Cozart, 680
F.3d 359, 365 (4th Cir. 2012). Accordingly, the Court recites
the facts as alleged by Plaintiff. See Am. Compl.
(ECF No. 27).
2006, the Simons obtained a $317, 200 loan, provided by the
Lender and partially guaranteed by Defendant Federal Home
Loan Mortgage Corporation ("the
Backer"). See Am. Compl. ¶¶ 8,
22. To secure the loan, the Simons used their Virginia Beach
home as collateral. See Id. They executed a
promissory note ("the Note") reflecting this
encumbrance on the property and the corresponding debt.
See Id. ¶¶ 8, 12. To further secure this
arrangement, the Simons placed the title to their home in
trust. See Id. ¶ 8. The terms of that trust
were set forth in an agreement among the parties, the
"Deed of Trust." See Deed of Trust (ECF No.
27-1). This arrangement is known commonly as a mortgage.
Deed of Trust provided that if the Homeowners defaulted on
the loan by failing to make monthly payments Defendant Samuel
I. White P.C. ("the Trustee") could foreclose,
at the Lender's behest. See Am. Compl. ¶
10, 65. Before selling the home, the Trustee was required to
ensure that the Lender had fulfilled certain conditions.
See Id. Two of these conditions included providing
adequate notice of the default and complying with applicable
law. See Id. ¶¶ 9, 66.
The Notice Requirement
the Note and the Deed of Trust contained clauses governing
how the Lender would notify the Simons if they were in
default. See Id. ¶¶ 9, 10. The Note's
notice of default provision, Paragraph 6(c) provided in
If I am in default, the Note Holder may send me a written
notice telling me that if I do not pay the overdue amount by
a certain date, the Note Holder may require me to pay
immediately the full amount of principal that has not been
paid and all the interest that I owe on that amount. That
date must be at least 30 days after the date on which the
notice is delivered or mailed to me.
Id. ¶ 9. The Deed of Trust's notice of
default provision, Paragraph 22, provided in pertinent part:
Lender shall give notice to Borrower . . . following
Borrower's breach of any covenant or agreement in this
The notice shall specify (a) the default; (b) the action
required to cure the default; (c) a date, not less than 30
days from the date of notice is given to the Borrower, by
which the default must be cured; and (d) that failure to cure
the default on or before the date specified in the notice may
result in acceleration of the sums secured by this Security
Instrument and sale of the Property.
Id. ¶ 10; see also Deed of Trust
¶ 22. If the thirty-day deadline for curing the default
elapsed without payment, the Deed of Trust entitled to Lender
to invoke its power to sell the home. See
id. ¶ 65.
The "Applicable Law" Requirement
Deed of Trust also required that the foreclosure comply with
applicable law. See Id. ¶ 66. Specifically,
Paragraph 16 stated that "[a]ll rights ... contained in
this Security Instrument are subject to any requirements and
limitations of Applicable Law." Deed of Trust ¶ 16.
In its "Definitions" section, the Deed of Trust
defined "Applicable Law" 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 all applicable final,
non-appealable judicial opinions." Id. at 3.
early 2012, the Homeowners began missing mortgage payments.
See Am. Compl. ¶ 13. The Lender responded by
sending them a notice of default, dated July 23, 2012
("the Notice of Default" or "the
Notice"). See Notice at 1 (ECF No. 27-2). That
letter informed the Simons of their default and stated that
they were required to pay $3, 534.15 by August 22, to avoid
acceleration of their payments and foreclosure under the Deed
of Trust. See Id. ¶¶ 14-15.
listed sum included the amount past due on the Simons'
mortgage and a future installment payment that was not yet
due, but would be due on August 1, before the specified
payment date. See Id. ¶¶ 13-14. The Notice
of Default advised the Homeowners of this fact. See
Notice at 1 ("This amount includes the 8/1/2012 payment
and applicable late charges, property inspection fees and
non-sufficient funds fees.").
not pled, the Simons' failure to cure the outstanding
arrearage at that time or afterwards appears undisputed. On
May 13, 2013, they sought to resolve their default by
applying for a loan modification from the Lender.
See Am. Compl. at ¶ 73.
The Foreclosure Sale
29, 2013, the Trustee, acting on behalf of the Lender, sold
the Simons' home at a foreclosure auction. See
Id. ¶¶ 22-23, 29. The Simons allege that the
Lender did not issue a written response to their
loan-modification application before the sale. See
Id. at ¶ 74.
winning bid of $253, 623 was submitted by the Lender itself,
but subsequently was assigned to the Backer, who had
guaranteed the loan. See Id. ¶¶ 31-32,
38-39. The Trustee then executed a trustee's deed
conveying the property to the Backer. See Id. ¶
thereafter, the Backer filed an unlawful detainer summons in
Virginia Beach General District Court, which entered an order
awarding possession to the Backer. See Id. ¶
44- 45. The legal wrangling continued for some time in state
court, and appears to remain ongoing today. See Id.