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Coonley v. Wells Fargo Bank, National Association

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

December 26, 2018

JODY C. COONLEY, Plaintiff,


          John A. Gibney, Jr. United States District Judge

         The plaintiff, Jody C. Coonley, brings two breach of contract claims against the defendant, Wells Fargo Bank. Wells Fargo has moved to dismiss Coonley's complaint for failure to state a claim. Because Coonley does not qualify as a third party beneficiary to either contract in dispute, the Court will grant Wells Fargo's motion to dismiss.


         In 2004, Morie D. Grantham purchased a home in Midlothian, Virginia. Grantham financed the purchase with a loan, reflected in a note[1] secured by a deed of trust.[2] In 2013, Grantham gave the property to Coonley, who later became the executrix of Grantham's estate after Grantham's death.

         On August 10, 2016, Wells Fargo sent a notice to the "Estate of Morie D. Grantham" stating that Grantham had defaulted in the amount of $4, 644.76, and that Wells Fargo could accelerate the loan if her estate did not pay by September 14, 2016. Although Wells Fargo did not accelerate the loan, on September 25, 2016, Coonley paid Wells Fargo $4, 644.76 on behalf of Grantham's estate. Coonley made no further payments.

         Coonley says that Wells Fargo had an obligation to send monthly bills to her, either as personal representative of Grantham's estate or as the homeowner. Coonley never received any statements addressed to her, Grantham, or Grantham's estate after her September 2016 payment. Wells Fargo claims that it sent a monthly statement for December 2016.

         On April 13, 2017, Wells Fargo conducted a foreclosure sale of the property. Peppertree Investments, LLC, purchased the property. Wells Fargo reported the foreclosure to credit reporting agencies, allegedly damaging Coonley's credit score and causing her to pay a substantially higher interest rate to purchase a new home.

         On April 27, 2017, Peppertree filed an unlawful detainer action against Coonley in the General District Court of Chesterfield County, Virginia. On May 12, 2017, the General District Court awarded possession of the property to Peppertree. Coonley appealed the eviction order. The parties settled the appeal, with Coonley agreeing to move out and pay a sum of money to Peppertree. Coonley claims that she incurred expenses, lost personal property, and suffered personal property damage due to relocation.

         Coonley sued Wells Fargo in the Richmond Circuit Court, alleging two counts of breach of contract. She attached the loan documents to her complaint. Coonley claims that Wells Fargo breached the deed of trust by failing to send monthly statements, failing to allow a chance to cure the default, and reporting the foreclosure to credit agencies. Wells Fargo removed the action to this Court and moved to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), arguing that Coonley lacks standing to bring her claims.

         II. DISCUSSION[3]

         A. Motion to Dismiss

         The parties agree that Coonley was not an original party to either the deed of trust or the note on which she bases her suit. Coonley has standing to bring her breach of contract claims, therefore, only if she qualifies as a third party beneficiary to the deed of trust and the note.

         In Virginia, a third party may sue for breach of contract only when the original parties to the contract intended "to bestow a benefit upon the third party." Envtl. Staffing Acquisition Corp. v. B&R Consrt. Mgmt., Inc., 283 Va. 787, 793, 725 S.E.2d 550, 553 (2012); see also Va. Code § 55-22. The original parties to the contract must have directly intended to benefit the third party to confer third party beneficiary status upon that person. See Zuberi v. Hirezi, No. 1:16-cv-1077, 2017 WL 436278, at *8 (E.D. Va. Jan. 30, 2017) ("The third party must show that the contracting parties clearly and definitely intended that the contract confer a benefit upon him."). A third party who would only "indirectly" or "incidentally" benefit from performance of the contract does not qualify as a third party beneficiary, even if failure to perform would injure the third party. Valley Landscape Co. v. Rolland, 218 Va. 257, 266, 327 S.E.2d 120, 124 (1977). To determine whether the original parties intended to benefit a third party, Virginia courts look to the plain language of the contract. See Envtl. Staffing Acquisition Corp., 283 Va. at 794, 725 S.E.2d at 554.

         Section 15 of the deed of trust states that "any Successor in Interest of Borrower who assumes Borrower's obligations under this Deed of Trust in writing, and is approved by Lender, shall obtain all of Borrower's rights and benefits under this Deed of Trust." (Compl., Ex. B.¶10.) The plain language of the deed of trust, therefore, indicates that the original parties did not intend to confer any benefits upon a third party unless the lender approved. Wells Fargo never approved of Coonley as a successor in interest under the deed of trust. Coonley points to no other language in the deed of trust indicating that the parties intended for their agreement to benefit her. Because Coonley only received "incidental" or ...

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