Shedd et al v. Barclays Capital Real Estate, Inc. et al

Filing 201

ORDER granting in part and denying in part Plaintiff's 170 Motion to Dismiss Counterclaims. Wells Fargo's counterclaim for breach of contract is dismissed. Monument's counterclaim for breach of contract is NOT dismissed. The counterclaim for unjust enrichment is dismissed in its entirety. Signed by Senior Judge Charles R. Butler, Jr on 5/16/2016. copies to parties. (sdb)

IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION

GEORGE P. SHEDD, JR., et
al.,

Plaintiffs.

v.

WELLS FARGO HOME
MORTGAGE, INC., et al.,

Defendants.

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CIVIL ACTION NO.
14-00275-CB-M

ORDER

This matter is before the Court on Plaintiffs’ motion to dismiss the

counterclaims filed against them by Defendants Wells Fargo Bank, N.A. and
Monument Street Funding, II, LLC1 (Doc. 170) and on Defendants’ response to the
motion (Doc. 190). For reasons discussed below, the motion is denied, in part, and
granted, in part.
Procedural Background

The tortuous history of this action is well documented in prior orders.

Currently at issue is the First Amended Counterclaim filed by Defendants Wells
Fargo Bank, N.A. (Wells Fargo) and Monument Street Funding, II, LLC. (Monument)
which asserts a claim for breach of contract against Pamela Shedd and a claim for
unjust enrichment against both Pamela Shedd and George Shedd. The facts in
support of those claims are relatively brief. In 2001 Pamela Shedd executed a
promissory note to the Mortgage Outlet, Inc. (Countercl. ¶ 4.) That promissory note

1 Defendants’ First Amended Counterclaim is part of their Answer to Third
Amended Complaint and Amended Summary Statement of Facts. (Doc. 164.)

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was secured by mortgage on 566 Brawood Drive in Mobile. George Shedd cosigned
the mortgage, but he was not obligated on the promissory note. (Id. 5.) The note
and mortgage were subsequently transferred and assigned to Monument, a wholly
owned subsidiary of Wells Fargo. (Ans. ¶ 6.) The Shedds subsequently failed to
make payments on the Note and, in 2008, filed a Chapter 11 bankruptcy petition.
(Countercl. ¶¶ 6-7.) Ultimately, the bankruptcy plan required the Shedds to make
the payments as set out in the promissory note and to pay an additional amount per
month for 60 months to cure their pre-petition arrearage. (Id. ¶ 8.) According to
Wells Fargo and Monument, “[t]he Shedds subsequently failed to remit the required
direct monthly payments on the [l]oan and the pre-petition arrearage,” and the loan
“remains in default.” (Id. ¶¶ 13-15.)
Legal Analysis2

Pamela Shedd argues that the breach of contract claim is due to be dismissed

for two reasons. First, she argues that it is impossible for both Wells Fargo and
Monument to hold the note and claim the debt. In response to this argument Wells
Fargo and Monument assert, without explaining how, they have each sufficiently
alleged breach of contract claims. They argue that “as the owner of Monument,
Wells Fargo is in privity of any contractual agreement to which Monument is a
party.” (Defs.’ Br. 4, Doc. 190.) Alabama law directly contradicts this assertion. In
Russell v. Birmingham Oxygen Serv., Inc., 408 So. 2d 90, 93 (Ala. 1981), the plaintiff

2 As this Court has stated repeatedly in various orders addressing motions to
dismiss for failure to state a claim, facts pleaded in the complaint (or, in this case,
the counterclaim) are taken as true but conclusions are not. Randall v. Scott, 610
F.3d 701, 709-10 (11th Cir. 2010). The court’s task is to determine whether the
factual allegations plausibly give rise to a claim for relief. Id. at 710.

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made a similar claim, arguing that it did not matter which of two related
corporations sued to enforce a contract because both were owned by the same
individual. The Alabama Supreme Court disagreed. “A corporation is an entity
created by compliance with statutory requirements. A corporation has the right to
sue and be sued just like a natural person. A corporation, just like an individual, must
enforce its own rights and privileges.” Id. (internal citation omitted) (emphasis
added). Wells Fargo’s status as owner of Monument does not give it standing to sue
for breach of contract. Therefore, Wells Fargo’s breach of contract counterclaim is
due to be dismissed.

Pamela Shedd also argues that the breach of contract claim is due to be

dismissed because the counterclaim fails to allege that either counterclaim plaintiff
performed as required by the terms of promissory note, as modified by the
bankruptcy plan. This argument is without merit because, as the counterclaim
plaintiffs point out, the bankruptcy plan’s effect on the terms of the promissory note
is a legal issue.

Next, both Pamela Shedd and George Shedd argue that the facts asserted do

not support an unjust enrichment claim. The Alabama supreme court defines unjust
enrichment as follows:
The retention of a benefit is unjust if (1) the donor of the benefit ...
acted under a mistake of fact or in misreliance on a right or duty, or
(2) the recipient of the benefit ... engaged in some unconscionable
conduct, such as fraud, coercion, or abuse of a confidential
relationship. In the absence of mistake or misreliance by the donor or
wrongful conduct by the recipient, the recipient may have been
enriched, but he is not deemed to have been unjustly enriched.

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Mantiply v. Mantiply, 951 So. 2d 638, 654-55 (Ala. 2006) (internal citations and
quotation marks omitted). As the Shedds point out, the counterclaim contains no
facts that would plausibly suggest that either Wells Fargo or Monument acted under
a mistake or misreliance or that the Shedds engaged in wrongful conduct. In their
response, Wells Fargo and Monument casually overlook the omission of crucial
supporting facts from the counterclaim and argue simply that the Shedds’ ability to
remain in their home without remitting payment due amounts to unjust
enrichment.3
Conclusion

For the reasons set forth above, the motion to dismiss is granted, in part,

and denied, in part, as follows:
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Monument’s counterclaim for breach of contract is not dismissed.

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Wells Fargo’s counterclaim for breach of contract is dismissed.

The counterclaim for unjust enrichment is dismissed in its entirety.
DONE and ORDERED this the 16th day of May, 2016.

s/Charles R. Butler, Jr.

Senior United States District Judge

3 In an argument consisting of three sentences and a two-page string cite,
Wells Fargo and Monument point out that they are entitled to plead alternative
theories of recovery. While that may be true, none of the cases cited relieve them
from asserting facts to support the elements of each alternative claim.

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