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Lowe v. Wells Fargo Bank, N.A.

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

October 18, 2017

JONATHAN LOWE and JENNIFER LOWE. Plaintiffs,
v.
WELLS FARGO BANK, N.A., Defendant.

          MEMORANDUM OPINION

          Roderick C. Young United States Magistrate Judge.

         This matter is before the Court on Defendant's Motion to Dismiss (ECF No. 3) and Plaintiffs Motion to Remand (ECF No. 18). Jonathan and Jennifer Lowe ("Plaintiffs") bring this action against Wells Fargo Bank, N. A. ("Defendant") alleging a breach of a loan modification offer in Count I and violation of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., in Count II. Defendant removed this case to federal court and moves to dismiss the action. Plaintiff moves to remand the action to Chesterfield County Circuit Court. The motions have been fully briefed, and the Court dispenses 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). For the reasons stated below, the Motion to Dismiss will be granted as to Count II and denied as moot as to Count I. The Motion to Remand will be granted as to Count I and denied as moot as to Count II.

         I. BACKGROUND

         Plaintiffs are the record owners of property in Chesterfield County located at 8100 Fallbrook Drive, North Chesterfield, Virginia 23225 (the "Property"). (Compl. ¶ 2, ECF No 1-2.) Defendant holds the promissory note (the "Note") executed by Plaintiffs to secure the mortgage on the Property. (Id. ¶ 3.) Plaintiffs owe arrearages on the Property, although the amount owed is the subject of this litigation. (Id.)

         In 2011, Plaintiffs could not meet their payment obligations under the Note and worked with Defendant to modify the terms of the Note (the "First Modification"). (Id. ¶ 4.) Plaintiffs still could not meet their payment obligations under the First Modification and subsequently filed a petition for Chapter 13 bankruptcy in the United States Bankruptcy Court for the Eastern District of Virginia on July 15, 2011. (Id.)

         On October 23, 2013, Defendant offered Plaintiffs a new trial modification plan while their petition was pending in the United States Bankruptcy Court. (Id. ¶ 5.) The trial plan required Plaintiffs to make three consecutive payments to secure a permanent modification of the Note. (Id.) Plaintiffs allege that they accepted Defendant's offer, completed the payments, and Defendant offered Plaintiffs a permanent modification (the "Second Modification") on February 19, 2013. (Id.)

         In a letter dated June 7, 2013, Defendant notified Plaintiffs that Defendant rescinded the Second Modification because the Bankruptcy Court did not approve of the plan. (Id. ¶ 7.) Nonetheless, and pursuant to the Second Modification's terms, Plaintiffs' bankruptcy attorney filed a petition to modify the plan (the "Amended Plan") on June 12, 2013. (Id. ¶ 6.) Defendant responded on July 17, 2013 by filing an Objection to the Plaintiffs' Amended Plan with the Bankruptcy Court, claiming the Amended Plan "fail[ed] to provide for pre-petition arrearages." (Id. ¶8.)

         From March 2013 through August 2013, Plaintiffs made monthly payments of $816.65, as required by the trial modification plan, under the assumption that the Second Modification was in effect. (Id. ¶ 9.) After this time period, Plaintiffs ceased making payments on the Note, vacated the Property, notified Defendant thereafter, and asked Defendant to take ownership of the Property through a deed in lieu. (Id.) Defendant never responded. (Id.) On November 9, 2016, Plaintiffs' counsel again mailed a letter to Defendant offering a deed in lieu, but Defendant did not respond. (Id. ¶ 12.)

         On July 7, 2017, Plaintiffs filed their Complaint in Chesterfield County Circuit Court, Chesterfield, Virginia. In Count I of the Complaint, Plaintiffs advance a state law breach of contract claim, arguing that Defendant breached the Second Modification by refusing to honor its terms. (Id. ¶¶ 16-18.) In Count II of the Complaint, Plaintiffs allege that Defendant "willfully failed to properly credit the Plaintiffs' payments of the Note." (Id. ¶ 20.) As Plaintiffs request relief under 15 U.S.C. § 1640, the Court presumes the predicate of Count II arises under TILA. (Id. ¶ 21.)

         II. MOTION TO DISMISS

         The TILA claim alleged in the Complaint would allow the Court to exercise supplemental jurisdiction over the state law breach of contract claim because all claims arise out of the same nucleus of operative facts. See United Mine Workers Am. v. Gibbs, 383 U.S. 715, 725 (1966); 28 U.S.C. § 1367. The existence of Plaintiff s TILA claim has direct bearing on the disposition of the Motion to Remand. Accordingly, the Court addresses the Motion to Dismiss with respect to the TILA claim first.

         A. LEGAL STANDARD

         "A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, 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). Dismissals under Rule 12(b)(6) are generally disfavored by the courts because of their res judicata effect. Fayetteville Investors v. Commercial Builders, Inc.,936 F.2d 1462, 1471 (4th Cir. 1991). The Federal Rules of Civil Procedure only require that a complaint set forth '"a short and plain statement of the claim showing that the pleader is entitled to relief, ' in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Bell Atl Corp. v. Twombly,550 U.S. 544, 555 (2007) (omission in original) (quoting Conley v. Gibson,355 U.S. 41, 47 (1957)). While the complaint's "[f]actual allegations must be enough to raise a right to relief above the speculative level, " "detailed factual allegations" are not required in order to satisfy the pleading requirement of Federal Rule 8(a)(2). Id. (emphasis added). In considering a motion to dismiss for ...


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