United States District Court, W.D. Virginia, Charlottesville Division
WALTER B. RALLS, Plaintiff,
FEDERAL NATIONAL MORTGAGE ASSOCIATION, et al, Defendants.
Glen E. Conrad Senior United States District Judge.
B. Ralls filed this action for fraud and breach of contract
against Federal National Mortgage Association ("Fannie
Mae") and Seterus, Inc. ("Seterus"). The case
is presently before the court on the defendants' motion
to dismiss. For the reasons set forth below, the motion will
be granted in part and denied in part.
following facts are taken from the complaint and documents
relied on therein. See Phillips v. LCI Int'l.
Inc., 190 F.3d 609, 618 (4th Cir. 1999) (noting that the
court can properly consider documents that are "integral
to and explicitly relied on in the complaint" when
ruling on a motion to dismiss).
February of 2005, Ralls obtained a refinance loan from
Countrywide Home Loans, Inc. The loan was evidenced by a note
signed by Ralls, and secured by a deed of trust on rental
property located at 234 Stribling Avenue in Charlottesville,
Virginia (the "Property"). The note was later
assigned to Fannie Mae.
point thereafter, Ralls defaulted on the note by failing to
make monthly mortgage payments. See Compl. ¶ 10, Dkt.
No. 1-1 ("Ralls fell into arrears on the note.");
Note ¶ 6(B) ("If I do not pay the full amount of
each monthly payment on the date it is due, I will be in
default."). Seterus, acting as the loan servicer and
agent for Fannie Mae, initiated foreclosure proceedings.
Seterus engaged the law firm of Orlans, P.C.
("Orlans") to serve as foreclosure counsel, and
directed ALG Trustee, LLC ("ALG"), the substitute
trustee, to foreclose on the Property.
July 2017, Ralls, realizing he was in arrears, called Seterus
to inquire about the status of the loan." Compl. ¶
14. A representative of Seterus (the "First Seterus
Representative") "told him that the loan was in a
foreclosure process." Id. Ralls inquired as to
the amount of money that would be required to bring the loan
current. The First Seterus Representative told Ralls that he
would need to make a payment of $13, 671.
letter dated August 1, 2017, Orlans notified Ralls that a
foreclosure sale would occur on August 22, 2017 at 2:30 p.m.
The notice was sent to the physical address of the Property.
point during the first half of August, Ralls called Seterus
and spoke to another representative (the "Second Seterus
Representative"). During the telephone conversation, the
Second Seterus Representative indicated at least twice that
the foreclosure sale was scheduled for August 24, 2017,
rather than August 22, 2017. Ralls did not have the written
notice with him during the conversation and therefore was
unaware of any discrepancy between the notice and the
information provided by the Second Seterus Representative.
August 16, 2017, Ralls contacted Robert Rowley, a friend who
had helped him avoid foreclosure in the past. Ralls advised
Rowley that he needed to make a payment of $13, 671 to stop
the foreclosure on the Property and reinstate the loan.
Rowley, who was preparing to drive to Indiana that same day,
made arrangements to borrow the necessary funds from a third
party. Rowley also arranged for his friend Sharon Millner to
assist in facilitating the transaction.
was aware that he could stop the foreclosure sale of the
Property by filing a Chapter 13 bankruptcy petition. He also
knew a local bankruptcy attorney who could assist him in
doing so. However, Ralls did not want to file a bankruptcy
petition if he could avoid foreclosure by bringing the loan
morning of August 22, 2017, Ralls went to his car and found
the August 1, 2017 notice from Orlans. Upon reading the
notice, Ralls realized that the foreclosure sale was
scheduled for 2:30 p.m. that day, as opposed to August 24,
2017. Ralls called Orlans and inquired as to whether he could
send the law firm the amount needed to reinstate the loan and
stop the foreclosure sale. An Orlans representative advised
Ralls that the law firm was not authorized to accept any
reinstatement funds and that Ralls should contact Seterus.
immediately called Seterus and spoke to a manager (the
"Seterus Manager")- The Seterus Manager confirmed
that Ralls would need to make a payment of $13, 671 to stop
the foreclosure sale and reinstate the loan. Ralls explained
that he had previously been told that the foreclosure sale
was scheduled for August 24, 2017, and that he had made
arrangements to pay the required amount by that date. The
Seterus Manager instructed Ralls to wire the $13, 671 payment
to Seterus as soon as possible, and to send the Seterus
Manager the wire transfer number. Ralls and the Seterus
Manager then discussed the fact that it would take up to two
days for Seterus to actually receive the wired funds. The
Seterus Manager advised Ralls that he would consider the loan
reinstated upon receipt of the wire transfer number, and that
he would then instruct Orlans to stop the foreclosure sale.
that it would take some time to get the funds wired, Ralls
asked the Seterus Manager "whether the sale would be
stopped if confirmation of the wiring of the funds came at or
slightly after the sale time." Compl. ¶ 37. The
Seterus Manager "told Ralls that the sale could be
undone even after the sale and assured Ralls that if the
wiring notification came soon after the foreclosure, the
[Seterus Manager] would take the action ...