United States District Court, W.D. Virginia, Charlottesville Division
Freeman H. Cave, Plaintiff,
Wells Fargo Bank, N.A., et al., Defendants.
K. MOON SENIOR L Nil ED STATES DIS TRIG T JUDGE
the Court is the motion to dismiss for failure to state a
claim, submitted by Defendants Wells Fargo Bank, N.A.
(“Wells Fargo”) and Federal National Mortgage
Association (“Fannie Mae”). On May 6, 2019,
Plaintiff Freeman Cave filed a complaint alleging three
counts against Defendants Wells Fargo, Dyck-O'Neal, Inc.,
and Fannie Mae. Count I alleged violations by all three
defendants of his automatic stay and discharge injunction
resulting from his Chapter 7 bankruptcy proceedings. Count II
alleged violations by Dyck-O'Neal of the Federal Debt
Collection Practices Act (“FDCPA”). Count III
alleged fraud under Virginia state law as against all three
defendants. Dkt. 1 at 10-17.
19, 2019, Defendants Wells Fargo and Fannie Mae filed a
motion to dismiss for failure to state a claim under
Fed.R.Civ.P. 12(b)(6), which Defendant Dyck-O'Neal did
not join. Dkt. 19. Dyck-O'Neal filed its answer to
Plaintiff's complaint on June 27, 2019. Dkt. 22. In his
memorandum in opposition to Wells Fargo and Fannie Mae's
motion to dismiss, Plaintiff requested that this case be
transferred in its entirety to the bankruptcy court under
Local Rule 3(a). On September 5, 2019, a hearing was held on
the motion to dismiss. Dkt. 32.
foregoing reasons, the Court will grant Wells Fargo and
Fannie Mae's motion to dismiss the claims against them
pursuant to Rule 12(b)(6), dismissing Counts I and III as
against those Defendants. The Court will decline to refer any
claims to the Bankruptcy Court.
Alleged Factual Background
2007, Plaintiff Freeman H. Cave obtained a home equity loan
from Wells Fargo in the amount of $32, 000, secured by a
mortgage on Plaintiff's home located at 13426 Stonehouse
Mountain Road, Culpeper, Virginia. Dkt. 1 at ¶¶
9-10. In 2012, Plaintiff obtained another loan from Wells
Fargo in the amount of $176, 000, also secured by a mortgage
against Plaintiff's home in Culpeper. Id. at
¶ 11. Sometime shortly after Plaintiff obtained the home
equity loan, Wells Fargo sold the loan to Fannie Mae, while
Wells Fargo continued to act as the loan's servicer and
was the only entity with which Plaintiff interacted with
regarding this loan. Id. at ¶ 13.
March 13, 2013, Plaintiff filed for Chapter 7 Bankruptcy in
the bankruptcy court for the Charlottesville Division of the
Western District of Virginia (Bankruptcy No. 13-60549),
listing both aforementioned loans as debts to be discharged
in his petition. Id. at ¶¶ 14-15.
Plaintiff further alleges that Wells Fargo was informed of
Plaintiff's bankruptcy filing and did not file any
documents objecting to the discharge of these loans.
Id. at ¶¶ 16-17. On June 12, 2013, the
bankruptcy court entered its order discharging
Plaintiff's debts, including the loans at issue in
Plaintiff's complaint. Id. at ¶ 19.
continued to reside in his home at 13426 Stonehouse Mountain
Road for several years after the entry of the bankruptcy
court's discharge order. Id. at ¶ 22.
During this time, Plaintiff “voluntarily submitted
monthly mortgage payments to Wells Fargo, following the terms
of his original mortgage agreement with them.”
Id. at ¶ 23. Wells Fargo voluntarily accepted these
mortgage payments during this period. Despite the payments,
Plaintiff alleges that Wells Fargo had not entered into any
formal agreement with Plaintiff regarding these payments or
the status of the mortgage against the home. Id. at
¶ 23. In 2016, Plaintiff stopped making these monthly
mortgage payments to Wells Fargo, and he moved out of his
home at Stonehouse Mountain Road in late 2016, advising Wells
Fargo of the same. Id. at ¶¶ 24-25.
Plaintiff further alleges that, after he left his home, Wells
Fargo continued to send Plaintiff loan statements and
communicate with Plaintiff in order to collect on them.
Id. at ¶ 26.
alleges that, in May 2017, Wells Fargo sent him a letter
advising him the bank was willing to accept a deed in lieu of
foreclosure to avoid foreclosing on his home at Stonehouse
Mountain Road. Id. at ¶ 27(a). Plaintiff
alleges that this letter stated Wells Fargo would
“release [him] from [his] obligation to repay [his]
mortgage balance” and that the value of the home was
sufficient to cover the remaining balance on his mortgage
loan. Id. Plaintiff further alleges that Wells Fargo
offered to pay $6, 000 to the Wells Fargo Home Equity
division, cancelling the remaining balance on the home equity
loan. Id. at ¶ 27(b). Lastly, Plaintiff alleges
that, as a precondition for Wells Fargo to take these steps,
Plaintiff was required to sign a promissory note with
Dyck-O'Neal, promising to pay $28, 254. Id. at
¶ 27(c). This promissory note was, as Plaintiff alleges,
for the purpose of compensating Fannie Mae for “losses
they would suffer relating to [Plaintiff's] mortgage loan
if the deed in leu of foreclosure was executed.”
Id. at ¶ 29. Plaintiff, at the time, did not
take any actions challenging this letter, alleging that he
was under the belief that Wells Fargo was “acting in a
manner which was permitted by law.” Id. at
¶ 28. Plaintiff admits that, on an unspecified date, he
agreed to the terms of Wells Fargo's May 2017 letter,
id. at ¶ 30, signing a promissory note to
Dyck-O'Neal in the amount of $28, 200. This note required
Plaintiff to make payments to Dyck-O'Neal for $235 per
month for ten years. Id.
alleges that, on August 15, 2017, Wells Fargo sent him a
letter asking, contrary to the terms of Wells Fargo's May
2017 letter, that Plaintiff arrange to pay $6, 000 to Wells
Fargo in order to settle the outstanding balance on his home
equity loan. Id. at ¶ 32. Although Plaintiff
neither responded to this letter, nor paid the amount
requested, he received from Wells Fargo a Certificate and
Affidavit of Satisfaction relating to the home equity loan.
Id. at ¶ 33. This document, dated September 19,
2017, stated that the home equity loan “has been paid
in full, and the lien therein created and retained is hereby
undisclosed point in 2018, Plaintiff began missing his
payments on his promissory note to Dyck-O'Neal.
Id. at ¶ 35. Plaintiff alleges that, as a
result, Dyck-O'Neal began contacting Plaintiff to
“attempt to pressure him into paying the amounts set
out in the Promissory Note.” Id. There is no
indication in the Complaint as to how often and on what dates
Dyck-O'Neal contacted Plaintiff. Plaintiff also alleges
that Dyck-O'Neal “put information on
[Plaintiff's] credit reports indicating that he was
seriously behind on these debts, ” which adversely
impacted his credit score and his ability to obtain credit.
Id. at ¶ 36.
undisclosed time, after seeking legal assistance,
Plaintiff's counsel contacted Wells Fargo about this
matter. Wells Fargo agreed that “because of the
bankruptcy, Plaintiff Cave did not owe them anything on
either his home equity or his home mortgage loan.”
Id. at ¶ 37. The Complaint alleges that
Plaintiff and Wells Fargo further agreed that he did not have
to pay any money to Dyck-O'Neal. Id. Plaintiff
further contends that the parties arranged for
Dyck-O'Neal to refund the sums that Plaintiff had
previously paid that company under Plaintiff's promissory
note. Id. at ¶ 37.
filed this complaint on May 6, 2019, seeking compensatory
damages, punitive damages, and any other relief that the
Court deems just and proper. Dkt. 1 at 17. On June 19, 2019,
Wells Fargo and Fannie Mae filed a joint motion to dismiss
for failure to state a claim pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure. This matter is now fully
briefed and ripe for disposition.
has requested that this Court transfer this case to the
Bankruptcy Court, pursuant to its authority under 28 U.S.C.
§ 157(a) and Local Rule 3(a), despite his choice to file
the action before this Court. Based on the nature of the
Court's reasoning for the dismissal of the claims against
Wells Fargo and Fannie Mae in Counts I and III of the
Complaint, this Memorandum Opinion declines to analyze those
claims' eligibility for referral as against any of the
three defendants in this case. The Court will consider,
however, whether Count II against Dyck-O'Neal-which has
not joined Wells Fargo and Fannie Mae in their motion to
dismiss under Fed.R.Civ.P. 12(b)(6)-should be referred to the
Bankruptcy Court. The Court will then address the claims for
review pursuant to Wells Fargo and Fannie Mae's motion to
Referral to Bankruptcy Court Under Local Rule 3(a)
U.S.C. § 1334(b) grants federal district courts
original, but not exclusive, jurisdiction over “all
civil proceedings arising under title 11, or arising in or
related to cases under title 11.” Pursuant to 28 U.S.C.
§ 157(a), district courts may refer such proceedings to
the bankruptcy judges for their respective districts. Making
use of this statutory authority, the United States District
Court for the Western District of Virginia has promulgated
Local Rule 3(a), which dictates that “all cases under
Title 11 of the United States Code and all proceedings