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Morris v. Wilmington Savings Fund Society

United States District Court, W.D. Virginia, Harrisonburg Division

December 18, 2018

KATHERINE MORRIS, Plaintiff,
v.
WILMINGTON SAVINGS FUND SOCIETY, Defendant.

          MEMORANDUM OPINION

          Hon. Michael F. Urbanski, Chief U.S. District Judge

         Plaintiff Katherine Morris (Morris) brings this action against Wilmington Savings Fund Society (WSFS), asserting, in four counts, three breach of contract claims and a fourth claim for violation of federal lending laws. This matter is before the court on WSFS's motion to dismiss.

         Morris's complaint was filed in the Circuit Court for the County of Page, Virginia on or about April 16, 2018 and removed to federal court on May 17, 2018. ECF No. 1, 2. The claims center on Morris's default on her mortgage on die property located at 133 Trackside Lane f/k/a 210 1st Street, Shenandoah, Virginia (die Property) and WSFS's subsequent mailing of die "Notice of Default and Intent to Accelerate" (pre-acceleration notice) and foreclosure. ECF No. 1-2, 2. Count I alleges breach of contract by claiming that WSFS failed to give notice according to the terms of the Deed of Trust (DOT) by sending die pre-acceleration notice via certified mail, rather than first-class mail, as required by Section 15 of the DOT. Count II, also a breach of contract claim, alleges that WSFS violated Section 22 of the DOT by failing to provide a pre-acceleration notice in compliance with Section 22's terms (again because WSFS sent the notice by certified mail). Count III, Morris's final breach of contract claim, alleges that WSFS "made it impossible under Section 19 of the DOT for [Morris] to reinstate the loan five days prior to the sale of the Property." Finally, Count IV alleges violations of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) associated with WSFS's alleged failure to provide payoff balances within a statutorily set period of time.

         With respect to Count I, WSFS contends Morris's breach of contract claim fails because it is directly contradicted by the pre-acceleration notice, attached as an exhibit to Morris's complaint. ECF No. 4, 5. Specifically, WSFS maintains the pre-acceleration notice sent to Morris "Via Certified Mail" constitutes first-class mail for purposes of the DOT. Id. at 5. WSFS moves for dismissal as to Count II, contending further that the notice sent met all the requirements of Section 22 of the DOT. Id. at 6. WSFS moves for dismissal as to Count III on the grounds that Virginia law does not recognize an implied covenant of good faith and fair dealing with respect to the DOT. RL at 9. WSFS alleges Count III therefore fails as a matter of law. Id. Lastly, WSFS moves for dismissal of Count IV because the statutes upon which Morris relies apply only to high-cost mortgages. Id. at 10. WSFS contends the subject loan is not a high-cost mortgage. Id. Even if the statutes Morris relies upon apply, WSFS further alleges Count IV should be dismissed because Morris did not allege a written request for a reinstatement quote as required by statute. Id. at 11.

         A.

         Katherine Morris ("Morris"), a resident of Virginia, alleges she owns the Page County property in dispute. Morris entered into a loan for $65, 195 secured by the Property and executed by CitiMortgage, Inc. The note for that loan is now held by WSFS. Morris paid full and timely mortgage payments for 8.5 years. On October 12, 2016, loan servicer BSI Financial Services sent the post-acceleration notice, which stated that Morris needed to bring her mortgage payments current by November 16, 2016 or face acceleration of the loan and sale of the Property. Morris was sixteen mortgage payments behind at that time, which amounted to $11, 447.90. Morris never received the pre-acceleration notice and did not obtain a copy of it until the day of the detainer hearing on December 8, 2017.

         WSFS appointed Commonwealth Trustees, LLC as substitute trustee to sell the Property on December 14, 2016. Morris received a Notice of Substitute Trustee's Sale on April 10, 2017 stating a foreclosure sale of the Property was scheduled for May 8, 2017. Morris immediately requested a reinstatement quote from the subsequent servicer, Fay Servicing, on six occasions. Morris needed a reinstatement quote in a timely manner so she could withdraw funds from her 401(k) retirement account. Fay Servicing provided the reinstatement quote on May 4, 2017. Morris's retirement account company could not release funds until May 10, 2017. Morris had the means to pay the pre-acceleration default amount, but could not access the funds by May 8, 2017.

         WSFS, through its substitute trustee, sold the Property by auction on May 8, 2017. After the sale, Fay Servicing offered Morris the opportunity to voluntarily vacate the Property through a "Cash for Keys Agreement and Release" if Morris waived all rights to the Property. Morris refused. WSFS notified Morris on July 17, 2017 that she was to vacate the Property within ten days. On August 8, 2017, WSFS filed an unlawful detainer action against Morris in Page County General District Court. Morris challenged the validity of WSFS's tide to the Property based on its breach of material terms of the deed in order to sell the Property. The court determined Morris's claims would likely survive demurrer but ruled it lacked subject matter jurisdiction to decide validity of the title of December 8, 2017. WSFS filed another unlawful detainer action against Morris in Page County Circuit Court on January 29, 2018, which was pending at the time this complaint was filed.

         Morris then filed this action in Page County Circuit Court on April 16, 2018 alleging breach of contract as to Sections 15, 22, and 19 of the DOT and violations of TILA and RESPA.

         B.

         To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint need only contain sufficient factual matter which, if accepted as true, "state[s] a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint is "facially plausible" when the facts alleged "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. This "standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. When ruling on a motion to dismiss, the court must "accept the well-pled allegations of the complaint as true" and "construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff." Ibarra v. United States, 120 F.3d 472, 474 (4th Or. 1997).

         While the court must accept as true all well-pled factual allegations, the same is not true for legal conclusions. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678; see also Wag More Dogs. LLC v. Cozart, 680 F.3d 359, 365 (4th Or. 2012) ("Although we are constrained to take the facts in the light most favorable to the plaintiff, we need not accept legal conclusions couched as facts or unwarranted inferences, unreasonable conclusions, or arguments." (internal quotation marks omitted)).

         In considering a motion to dismiss, the court is "generally limited to a review of the allegations of the complaint itself." Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 165-66 (4th Cir. 2016). However, other evidence may sometimes be consulted:

[The court] also considers documents that are explicitly incorporated into the complaint by reference, Tellabs, Inc. v. Makor Issues & Rights. Ltd.,551 U.S. 308, 322 (2007), and those attached to the complaint as exhibits, see Fed.R.Civ.P. 10(c). And . . . [the court] may consider a document submitted by the movant that was not attached to or expressly incorporated in a complaint, so long as the document was integral to the complaint and there is no dispute about the document's authenticity. [Sec'y of State for Defence v.] Trimble [Nav. Ltd.]. 484 F.3d [700], 705 [(4th Cir. 2007)]; Am. ...

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