United States District Court, E.D. Virginia, Richmond Division
DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST SERIES INABS 2006-A, HOME EQUITY MORTGAGE LOAN ASSET-BACKED CERTIFICATES SERIES INABS 2006-A, Plaintiff,
CRAIG BUCK, and THE BUCK LAW FIRM, PC, Defendants, and Third-Party Plaintiffs,
ALTISOURCE PORTFOLIO SOLUTIONS, INC., Third-Party Defendant.
Hannah Lauck, United States District Judge
matter comes before the Court on Third-Party Defendant
Altisource Portfolio Solutions, Inc.'s
("Altisource") Motion to Dismiss the Buck
Parties' Third-Party Complaint (the "Motion to
Dismiss"). (ECF No. 12.) The Buck Parties responded,
(ECF No. 16), and Altisource replied, (ECF No. 17). This
matter is ripe for disposition. The Court dispenses with oral
argument because the materials before it adequately present
the facts and legal contentions, and argument would not aid
the decisional process. The Court properly exercises
jurisdiction pursuant to 28 U.S.C. § 1332. For the reasons
that follow, the Court will grant the Motion to Dismiss and
grant the Buck Parties leave to amend the Buck Third-Party
Procedural and Factual Background
filed a two-count complaint against the Buck Parties,
asserting one breach of contract claim and one negligence
claim. The Buck Parties timely filed an Answer to the
Deutsche Complaint. (ECF No. 4.)
days after they filed their Answer, the Buck Parties filed
their Third-Party Complaint against Altisource, alleging
claims for contribution and equitable indemnification.
Altisource filed the Motion to Dismiss, the Buck Parties
responded in opposition, and Altisource replied.
allegations in both the Deutsche Complaint and the Buck
Third-Party Complaint arise from a real estate transaction in
which an unidentified, non-party hacker (the
caused funds to be misdirected to the Hacker and away from
the proper party, Deutsche. Deutsche had engaged the Buck
Parties to perform the closing as part of the real estate
transaction. Deutsche had also engaged Altisource to act on
its behalf in effectuating the real estate transaction. In
its role, Altisource "communicate[d] with the parties to
the transaction and facilitate[d] the sale and
[c]losing." (Buck Third-Party Compl. ¶ 9.) As part
of its duties, Altisource communicated with the Buck Parties
and "convey[ed] to the [Buck Parties] payoff
instructions for the [c]losing." (Id.
to the Buck Parties, prior to closing the real estate
transaction the Hacker obtained access to "confidential
email communications containing the financial information of
Altisource's customers, like Deutsche."
(Id. ¶ 13.) From this breach, the Hacker
learned of the upcoming funds transfer between the buyer of
the real estate and Deutsche. With this knowledge, the Hacker
"mimicked" the email address Altisource used and
provided fraudulent wiring instructions to the Buck Parties.
(Id. ¶ 16.) The Buck Parties received the
transfer money from the buyer and, following the fraudulent
wiring instructions, wired the money to a bank account that
presumably belonged to the Hacker. At the time, the Buck
Parties believed they had wired the money to a Deutsche
Buck Parties contend that "Altisource knew or should
have known of the hacking that had been taking place in its
email... and... failed to notify and warn its customers (like
Deutsche ...) or those with whom it had business (like the
[Buck Parties]...)." (Id. ¶ 18.) The Buck
Parties aver that, even though the closing took place on
March 15, 2016, and the Buck Parties transferred the funds on
March 18, 2016, Altisource did not inquire about the transfer
until "the latter part of April 2016."
(Id. ¶¶ 17, 19.) According to the Buck
Parties, Altisource's delay made it impossible to track
the misdirected funds.
Standard of Review: Federal Rule of Civil Procedure
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) (citing 5 A
Charles A. Wright & Arthur R. Miller, Federal
Practice and Procedure § 1356 (1990)). To survive
Rule 12(b)(6) scrutiny, a third-party complaint must contain
sufficient factual information to "state a claim to
relief that is plausible on its face." Bell Ail.
Corp. v. Twombly, 550 U.S. 544, 570 (2007); see
also Fed. R. Civ. P. 8(a)(2) ("A pleading that
states a claim for relief must contain... a short and plain
statement of the claim showing that the pleader is entitled
to relief.") Mere labels and conclusions declaring that
the plaintiff is entitled to relief are not enough.
Twombly, 550 U.S. at 555. Thus, "naked
assertions of wrongdoing necessitate some factual enhancement
within the [third-party] complaint to cross the line between
possibility and plausibility of entitlement to relief."
Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir.
2009) (internal quotation marks omitted).
third-party complaint achieves facial plausibility when the
facts contained therein support a reasonable inference that
the defendant is liable for the misconduct alleged.
Twombly, 550 U.S. at 556; see also Ashcroft v.
Iqbal, 556 U.S. 662 (2009). This analysis is
context-specific and requires "the reviewing court to
draw on its judicial experience and common sense."
Francis, 588 F.3d at 193. The Court must assume all
well-pleaded factual allegations to be true and determine
whether, viewed in the light most favorable to the plaintiff,
they "plausibly give rise to an entitlement to
relief." Iqbal, 556 U.S. at 678-79.
Court Will Grant the Motion to Dismiss Because the Buck
Third-Party Complaint Fails to Identify a Duty
Altisource Owed to Deutsche
Materials Beyond the Scope of the Court's
briefing by all parties extends far beyond allegations in the
Buck Third-Party Complaint, the Court feels constrained to
clarify what allegations and arguments it will not consider
in assessing the Motion to Dismiss, and why. Altisource has
not demonstrated how or why the Court can incorporate the
Deutsche allegations when weighing dismissal of an entirely
separate Third-Party Complaint. Nor does the record reflect
that the Buck Parties agree to considering such facts.
Especially because the Court reviews all well-pleaded factual
allegations in the Buck Third-Party Complaint favorably to
the Buck Parties, the Court will not look to these
allegations for purposes of the third-party Motion to
Altisource's Argument Regarding the Source of Duty Rule
Fails Because the Existence of a Contract Lies Beyond the
Scope of the Court's Consideration
citing both the Deutsche Complaint and the Buck Third-Party
Complaint, Altisource contends that a contract governs the
relationship between Altisource and Deutsche. Altisource then
invokes Virginia's source-of-duty rule, which provides
that "[a] tort action cannot be based solely on a
negligent breach of contract." Richmond Metro. Auth.
v. McDevitt St. Bovis, Inc., 507 S.E.2d 344,
347 (Va. 1998). According to Altisource, because a contract
governs, the Buck Parties cannot sustain the tort-based
negligence claims that stand before the Court.
the source-of-duty rule, the Court must determine whether the
"source of the duty" originates in tort or
contract. Richmond Metro. Auth., 507 S.E.2d at 347.
The Supreme Court of Virginia has found that "in certain
circumstances [a party can] show both a breach of contract
and a tortious breach of duty," but "the duty
tortiously or negligently breached must be a common law duty,
not one existing between the parties solely by virtue ...