Roger Jaldin v. ReconTrust Company, N.A.

Filing

UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 1:12-cv-01117-AJT-JFA. Copies to all parties and the district court/agency. [999183121]. [13-1214]

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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 13-1214

ROGER JALDIN; JANET JALDIN,
Plaintiffs - Appellants,
v.
RECONTRUST COMPANY, N.A.; BANK OF AMERICA, N.A.; JOHN DOE,
Defendants - Appellees.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.
Anthony J. Trenga,
District Judge. (1:12-cv-01117-AJT-JFA)

Submitted:

August 13, 2013

Decided:

August 29, 2013

Before GREGORY, SHEDD, and FLOYD, Circuit Judges.

Affirmed by unpublished per curiam opinion.

Gregory
Bryl,
BRYL
LAW
OFFICES,
Washington,
D.C.,
for
Appellants.
Joseph Jason Patry, BLANK ROME LLP, Washington,
D.C., for Appellees.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:
Roger

and

Janet

Jaldin

appeal

the

district

court’s

dismissal of their claims for declaratory and injunctive relief,
breach of contract, removal of cloud on title, and violations of
the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq. and
the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692
et seq.

Finding no error, we affirm.

I.
On

May

9,

2007,

Mr.

Jaldin

executed

a

deed

of

trust

securing a loan on the property located at 7370 Kincheloe Road
in

Clifton,

Virginia.

The

deed

of

trust,

which

secured

a

promissory note in the amount of $700,000, named “Countrywide
Home Loans, Inc., dba America’s Wholesale Lender” as the lender.
Paragraph 22 of the deed of trust establishes that, in the event
of default, the “Lender shall give notice to Borrower prior to
acceleration.”

J.A.

53.

The

deed

of

trust

specifies

that

notice of intent to accelerate must allow the Borrower thirty
days from the date of receipt of the notice to cure the default.
In

November

2010,

BAC

Home

Loans

Servicing,

Defendant-

Appellee Bank of America, N.A.’s (BANA) predecessor in interest,

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sent a notice of intent to accelerate to the Jaldins 1 stating
that they had until December 16, 2010, to cure their default by
paying

the

overdue

amount

of

$11,927.98.

The

notice,

November 16, 2010, arrived on November 22, 2010.
did not cure the default.

dated

The Jaldins

However, BAC Home Loans Servicing did

not take any action against the Jaldins or the subject property.
On

October

26,

2011,

BANA

executed

a

substitution

of

trustees for the deed of trust, appointing Defendant-Appellee
ReconTrust Company, N.A., 2 based in Texas, and ALG Trustee, based
in Virginia, as the new deed of trust trustees.

On October 27,

2011, ReconTrust sent the Jaldins a letter stating that it was
accelerating

the

loan

referenced

in

the

deed

of

trust.

In

November or December 2011, April 2012, and July or August 2012,
ReconTrust sent Jaldin separate notices of upcoming trustee’s
sales at which the property would be sold.

However, ReconTrust

never held a trustee’s sale nor sold the property.
retain

possession,

even

though

they

have

not

The Jaldins

made

a

payment

since September 2010.

1

Even though the deed of trust and related documents
identify Mr. Jaldin as the Borrower, the first amended complaint
states that Jaldin’s wife, Janet, also has an interest in the
property as a title holder.
She is a named Plaintiff in this
case. As such, we treat the Jaldins as a unit for purposes of
our analysis.
2

ReconTrust is a wholly-owned subsidiary of BANA.

3

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In December, 2011, upon the Jaldins’ request, BANA sent a
letter to the Jaldins identifying the owner of the note as “Bank
of

America,

N.A.,

Successor

by

merger

to

BAC

Home

Loan

Servicing, LP FKA Countrywide Home Loan Servicing, LP for the
Benefit of the Halo 2007-2 Trust.”
however,

did

not

find

BANA

J.A. 25.

listed

on

the

The Jaldins,

publicly

documents associated with the HALO 2007-2 Trust.

available

On April 25,

2012, the Jaldins’ counsel wrote to BANA, again requesting the
identity of the owner of the debt.

BANA responded, stating that

the owner of the debt was “Deutsche Bank National Trust Company,
as Trustee for holders of the HSI Asset Loan Obligation Trust
2007-2.”

J.A. 236.

On August 24, 2012, the Jaldins filed suit against BANA,
ReconTrust, and a John Doe Defendant in the Circuit Court of
Fairfax

County,

Virginia,

seeking

relief,

removal

of

on

cloud

declaratory

title,

various TILA and FDCPA violations.

breach

of

and

injunctive

contract,

and

BANA and ReconTrust removed

the case to federal court and made a motion to dismiss pursuant
to Federal Rule of Civil Procedure 12(b)(6).
On November 9, 2012, the district court granted the motion
to dismiss with leave to amend.

After the Jaldins filed their

Amended Complaint, BANA and ReconTrust again moved to dismiss.
The district court granted the motion and denied the Jaldins’

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motion for leave to amend.

Pg: 5 of 15

The Jaldins filed a timely appeal of

which we have jurisdiction pursuant to 28 U.S.C. § 1291.

II.
We

review

a

district

court’s

dismissal

of

a

complaint

pursuant to Federal Rule of Civil Procedure 12(b)(6) de novo,
accepting all factual allegations in the complaint as true and
drawing all reasonable inferences in favor of the non-moving
party.

Kensington

Volunteer

Fire

Dep’t,

Inc.

v.

Montgomery

Cnty., Md., 684 F.3d 462, 467 (4th Cir. 2012).
A.
As a preliminary matter, BANA and ReconTrust argue that the
claims for injunctive and declaratory relief are moot because
they have cancelled the trustee sale.
Constitution

authorizes

federal

courts

Appellee’s Br 11.
to

hear

The

“Cases”

and

“Controversies,” but forbids consideration of matters that are
no longer “live” or where the parties “lack a legally cognizable
interest in the outcome.”
McCormack,

395

U.S.

486,

U.S. Const. art. III, § 2; Powell v.
496

(1969).

There

is

a

well-

established exception to the mootness doctrine, however, where a
controversy is “capable of repetition, yet evading review.”

S.

Pac. Terminal Co. v. Interstate Commerce Comm’n, 219 U.S. 498,
515 (1911).

Even though currently there is no pending sale of

the Jaldins’ property, if we find these claims moot, BANA and
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ReconTrust would be able to schedule and execute such a sale in
short order.

Indeed, the Jaldins allege facts indicating that

BANA and ReconTrust have initiated and canceled at least three
trustee sales.

There is no indication that BANA and ReconTrust

do not have plans to initiate such a sale upon resolution of
this case.

Thus, we perceive no basis for concluding that the

Jaldins’ claims for injunctive and declaratory relief are moot.
B.
The Jaldins first argue that ReconTrust cannot act as a
deed of trust trustee with the power to execute a foreclosure in
Virginia because Virginia Code § 55-58.1 does not allow out-ofstate

entities

to

serve

Appellant’s Br. 13-26.

as

trustees

of

a

security

trust.

BANA and ReconTrust urge us to find that

the 12 U.S.C. § 92(a) of the National Banking Act (NBA) preempts
Virginia Code § 55-58.1.
Preemption
intent.
There

is

Appellee’s Br. 12-24.

fundamentally

a

question

of

congressional

English v. Gen. Elec. Co., 496 U.S. 72, 78-79 (1990).
are

three

types

of

federal

preemption:

(1)

express

preemption, where Congress explicitly establishes its intent to
preempt

state

law;

(2)

field

preemption,

where

Congress

pervasively occupies an area of law such that there is no room
left for states to supplement the relevant federal law, and; (3)
conflict

preemption,

federal law.

where

state

law

actually

conflicts

with

Decohen v. Capital One, N.A., 703 F.3d 216, 223
6

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(4th

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Cir.

argument

Filed: 08/29/2013

2012).

to

Here,

conflict

Pg: 7 of 15

BANA

and

preemption.

ReconTrust
Courts

restrict

will

find

their

conflict

preemption where it is impossible for a party to comply with
both state and federal law or where state law “stands as an
obstacle

to

the

accomplishment

and

execution

purposes and objectives of Congress.”

of

the

full

English, 496 U.S. at 79

(internal quotations omitted).
The

Supreme

Court

enumerated

and

grants

authority

of

has

incidental
not

clarified

that

‘powers’

to

normally

“grants

national

limited

ordinarily pre-empting, contrary state law.”

by,

of

both

banks

[are]

but

rather

Barnett Bank of

Marion Cnty., N.A. v. Nelson, 517 U.S. 25, 32 (1996).

The NBA

grants national banks the power to engage in mortgage lending.
12 U.S.C. § 371(a); Watters v. Wachovia Bank, N.A., 550 U.S. 1,
12 (2007).

“A state law may not significantly burden a national

bank’s own exercise of its real estate lending power, just as it
may not curtail or hinder a national bank’s efficient exercise
of

any

other

power.”

Id.

at

13.

As

the

Eighth

Circuit

explained in a recent decision, “it is . . . clear that the
power to foreclose is incidental to the express power to make
mortgage loans.”

JPMorgan Chase Bank, N.A. v. Johnson, 719 F.3d

1010, 1017 (8th Cir. 2013).
real

estate

lending

would

Indeed, “[t]he power to engage in
be

rendered

7

a

nullity

if

national

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banks could not also foreclose when the borrower defaulted.”
Id. at 1018 (internal quotations omitted).
ReconTrust is authorized by the Office of the Comptroller
of the Currency (OCC) as a national bank.

Section 92a(a) of the

NBA states that the OCC may grant authority to national banks to
act as “trustee,” and in all other “fiduciary capacit[ies].”
U.S.C. § 92a(a).
national

bank

12

However, Virginia Code § 55-58.1(2) prevents a

that

does

not

have

its

principal

office

in

Virginia from acting as the trustee of a security trust.

As

such, Virginia law stifles the ability of a national bank such
as ReconTrust from acting as a deed of trust trustee and from
executing foreclosures.
interferes”

with

Therefore, Virginia law “substantially

ReconTrust’s

ability

to

execute

a

power

incidental to its express mortgage lending powers under the NBA.
See JPMorgan Chase Bank, 719 F.3d at 1018.
It

is

subjects

true,

national

as

the

banks

to

Jaldins
state

argue,
laws,

that
but

the

only

state-based competitors are subject to the same laws.
§ 92a(b).

NBA

insofar

as

12 U.S.C.

Section 92a(b) establishes that

[w]henever the laws of such State authorize or permit
the exercise of any or all of the foregoing powers by
State banks, trust companies, or other corporations
which compete with national banks, the granting to and
the exercise of such powers by national banks shall
not be deemed to be in contravention of State or local
law within the meaning of this section.

8

also

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Because

Virginia

national

banks

Code
that

§
do

Pg: 9 of 15

55-58.1
not

grants

have

state

their

banks,

principal

but

not

office

in

Virginia, the power to serve as trustee of a security trust, the
NBA preempts the law.

See also Cox v. ReconTrust Co., N.A.,

2011 WL 835893, at *3 – 5 (D. Utah Mar. 3, 2011) (unpublished)
(explaining that where state law gives trustee powers to state
entities it does not give to national banks, the NBA preempts
the state law).
NBA,

has

support

The OCC, the agency authorized to implement the

issued
for

establishes

interpretive

this
that

letters

conclusion.
“[a]

state

A
may

that

1995
limit

provide

additional

interpretive
national

letter

banks

from

exercising any or all fiduciary powers in that state, but only
if it also bars its own institutions from exercising the same
powers.”
(1995);

OCC Interpretive Letter No. 695, 1995 WL 788827, at *5
see

also

OCC

Interpretive

Letter

No.

1103,

2008

WL

7448056, at *2 (2008) (explaining that the NBA preempted a North
Carolina

law

that

placed

requirements

on

out-of-state

banks

exercising fiduciary duties that it did not place on state banks
exercising fiduciary duties).
The Jaldins argue that the NBA does not preempt § 55-58.1
because

deed

of

trust

trustees

are

not

fiduciaries within the coverage of the NBA.

true

trustees

or

Appellant’s Br. 18.

As such, they urge us to find that ReconTrust cannot derive

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authority to engage in debt collection by foreclosure by virtue
of its permit from the OCC.

Id. at 23.

Even if we find that reference to “trustees” in § 92a(a) of
the NBA refers to a different type of trustee, deed of trust
trustees fit within the parameters of the catch-all provision of
§ 92a(a) which applies the NBA to national banks serving in “any
other fiduciary capacity.”

The Supreme Court of Virginia has

repeatedly explained that deed of trust trustees have fiduciary
duties.

Smith v. Credico Indus. Loan Co., 362 S.E.2d 735, 736

(Va. 1987) (“A trustee under a deed of trust is a fiduciary for
both

debtor

and

creditor

and

must

act

impartially

between

them.”) (citing Whitlow v. Mountain Trust Bank, 207 S.E.2d 837,
840 (Va. 1974)). 3
includes
trustees.

provisions

Further, Virginia law governing fiduciaries
applying

explicitly

to

deed

of

trust

See Va. Code. Ann. § 64.2-1423.

We find that Virginia Code § 55-58.1 “stands as an obstacle
to the accomplishment and execution of the full purposes and
objectives of Congress” because it interferes with ReconTrust’s
3

The Jaldins also cite to a Virginia Supreme Court case,
Warner v. Clementson, 492 S.E.2d 655, 657 (Va. 1997), to support
the contrary proposition that deed of trust trustees are not
bound by fiduciary duties.
However, the court in that case
distinguished Smith and Whitlow by explaining that those cases
involved an action by a debtor against trustees while Warner
dealt with a case by a guarantor against a trustee. Id. at 657
n.3. Given that the Jaldins are debtors, not guarantors, Smith
and Whitlow provide the relevant authority in this case.

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authority under the NBA to act as a deed of trust trustee and to
execute foreclosures -- a power incidental to its real estate
lending power.

See English, 496 U.S. at 79; JPMorgan Chase

Bank, 719 F.3d at 1017-18.
C.
The Jaldins next argue that the district court improperly
dismissed their claims for breach of contract because BANA and
ReconTrust did not comply with the terms of the deed of trust.
Appellant’s Br. 27-31.

Specifically, they complain that BANA

and ReconTrust improperly drafted and delivered acceleration and
trustee sale notices.
BANA’s

Id. at 27.

predecessor

in

interest

appears

to

have

sent

a

notice of intent to accelerate to the Jaldins without providing
adequate time to cure.

However, the Jaldins fail to show how

any such violation has damaged them.

See Filak v. George, 594

S.E.2d 610, 614 (Va. 2004) (explaining that “injury or damage to
the plaintiff caused by the breach of the obligation” is an
element of any action for breach of contract).
no

foreclosure

property.
deed

of

and

the

Jaldins

remain

in

There has been

possession

of

the

Their contention that the breach in the terms of the
trust

damaged

them

because

it

forced

counsel and other “professionals” is unavailing.

them

to

hire

There does not

appear to be any dispute that the Jaldins were in default of
their loan.

Nothing establishes that they hired counsel and
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professionals

because

the

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notice

provided too little time to cure.
Nor

do

the

Jaldins

provide

of

intent

to

accelerate

See Filak, 594 S.E.2d at 614.

any

factual

support

in

their

complaint for their allegation that the breach caused “emotional
distress, embarrassment, and loss of enjoyment of life.”

See

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (explaining that a
pleading
factual

that

“tenders

(internal

enhancement”
quotations

naked

will

assertions

omitted)).

of

further

survive

not

devoid
motion

to

dismiss

We

a
find

no

error

in

the

district court’s decision to dismiss the Jaldins’ claims for
breach of contract.
D.
The Jaldins next argue that the district court erred in
dismissing its TILA claims that alleged a failure to “disclose
the

name

[of

the

owner

of

the

debt]

either

directly

§ 1641(g)) or through [BANA] (under § 1641(f)(2)).”
Br.

32.

TILA

requires

that

“[u]pon

written

(under

Appellant’s

request

by

the

obligor, the servicer shall provide the obligor, to the best
knowledge of the servicer, with the name, address, and telephone
number of the owner of his obligation or the master servicer of
the obligation.” 4

15 U.S.C. § 1641(f)(2).

4

TILA also provides that a “new owner or assignee of [the]
debt” must provide identifying information to the borrower upon
request. 15 U.S.C. § 1641(g).

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According to the Jaldins’ complaint, when they made written
request for clarification pursuant to TILA, BANA’s December 2,
2011, response identified the owner of the debt as “Bank of
America, N.A. . . . for the benefit of the HALO 2007-2 Trust.”
J.A. 236.

In response to a second request, BANA sent a letter

stating that the owner of the debt was “Deutsche Bank National
Trust Company, as Trustee for holders of the HSI Asset Loan
Obligation Trust 2007-2.”

While BANA may have failed in its

first response to identify Deutsche Bank, each response to the
Jaldins identified the HALO Trust as the ultimate owner of the
debt.
985,

See O’Dell v. Deutsche Bank Nat. Trust Co., No. 1:12-cv2013

WL

2389874,

at

*12

(E.D.

Va.

May

30,

2013)

(unpublished) (finding that where a loan was placed in a trust,
the trust was the owner of the debt).

Further, the Jaldins’

complaint admits that the publicly available documents for the
HALO 2007-2 trust identified Deutsche Bank as trustee for the
HALO 2007-2 trust.

Therefore, we find that BANA’s responses,

while not a model of clarity, were sufficient under TILA.
The Jaldins’ TILA claims also fail because they made no
showing of detrimental reliance.
element

of

a

TILA

claim

for

Detrimental reliance is an
actual

damages.

Turner

v.

Beneficial Corp., 242 F.3d 1023, 1026 (11th Cir. 2001); Santos
v. Fed. Nat’l Mortg. Ass’n, 889 F. Supp. 2d 1363, 1368 (S.D.
Fla. 2012) (dismissing TILA claim under § 1641(f)(2) for failure
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to plead sufficient facts supporting detrimental reliance).

The

Jaldins’

any

claims

explanation
reliance.

of

for
how

damages
the

under

alleged

TILA

do

violation

not

include

caused

detrimental

As such, we conclude that the district court did not

err in dismissing the Jaldins’ TILA claims.
E.
The Jaldins’ next argue that ReconTrust violated the FDCPA
by threatening to take non-judicial action when it had “no right
to do so,” because ReconTrust was acting as an out-of-state deed
of trust trustee.

Appellant’s Br. 35.

Further, they allege

that BANA violated the FDCPA by falsely claiming it was the
owner of the Jaldins’ debt.
authorized
Jaldins.

ReconTrust

to

Id.

take

As explained above, the NBA

foreclosure

action

against

the

Further, BANA’s response to the Jaldins’ request for

clarification

regarding

identified

the

HALO

addressed

these

the

2007-2

issues,

we

owner

of

their

debt

Trust.

Because

we

need

recycle

the

not

accurately

have

already

analysis

to

dispose of the Jaldins’ FDCPA claims.
Similarly, we need not address the Jaldins’ claim that the
district court erred when it dismissed their “remove cloud on
title” claim.

That claim rested on the Jaldins’ assertion that

BANA unlawfully appointed ReconTrust as the substitute trustee
of the deed of trust.

Again, ReconTrust derives its relevant

authority from the NBA, which preempts Virginia Code 55-58.1
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insofar as it prevented ReconTrust from acting in this capacity.
We

find

that

the

district

court

committed

no

error

when

it

dismissed the Jaldins’ claims for violation of the FDCPA and
removal of cloud on title.

III.
We dispense with oral argument because the facts and legal
contentions are adequately presented in the materials before the
court and argument would not aid in the decisional process.
the

reasons

stated

above,

the

ruling

of

the

district

For
court

granting BANA and ReconTrust’s motion to dismiss is
AFFIRMED.

15