Cox v. PNC Bank, National Association et al
Filing
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ORDER granting with prejudice Defendant's ECF No. 8 Motion to Dismiss. Signed by Judge Richard F. Boulware, II on 10/5/2017. (Copies have been distributed pursuant to the NEF - KR)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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***
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JAMES COX,
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Plaintiff,
ORDER
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Case No. 2:16-cv-02506-RFB-CWH
v.
PNC BANK, NAT’L ASS’N, et al.
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Defendants.
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I.
INTRODUCTION
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This case is before the Court on Defendant PNC Bank N.A.’s Motion to Dismiss. (ECF
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No. 8).
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II.
BACKGROUND
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On October 27, 2016, this case was removed to federal court on the basis of diversity
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jurisdiction. Plaintiff asserts an unjust enrichment claim against Defendants PNC Bank, N.A., and
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Clear Recon Corporation. The Court held a hearing on the motion on July 26, 2017.
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A. Alleged Facts
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On or about January 22, 2003, John Williams approached James Cox and requested that
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Cox arrange for the purchase of five residential lots from Stephen L Hawley (“The Lots”).
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Williams did not have sufficient funds to purchase the lots, and requested that Cox help him
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negotiate/arrange the sales price and financing for the purchase of the lots. Cox was able to arrange
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for the sale of the lots to Williams for a total purchase price of $345,000.00 ($69,000 per lot).
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Hawley agreed to sell the lots to Williams with $172,500 to be paid up-front, and the remaining
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$172,500 to be paid upon the sale of the lots after homes had been constructed on the lots. Cox
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arranged for Williams to receive private funding from the David Stoebling Trust for the up-front
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payment of $172,500.
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The sale of the lots from Hawley to Williams occurred on September 19, 2003.
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Subsequently, at Williams’ request, Cox arranged for Williams to receive a construction loan in
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the approximate amount of $825,000; the construction loan funded on or about May 10, 2004.
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Proceeds of the loan were used to pay off the $172,500 loan from the David Stoebling Trust, and
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the loan proceeds were also used to construct homes on the lots. Cox then assisted Williams with
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selling and arranging financing for the homes, once constructed, on Lots 12 and 15; Cox
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landscaped those lots as well. Lot 12 sold on April 4, 2005, and Lot 15 sold on February 25, 2005.
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In return for Cox’s efforts and accomplishments related to the original purchase of the Lots,
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arranging the financing, and assisting with the re-sale of the homes and landscaping, Williams
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agreed that Cox would receive Lot 10 free and clear of any and all liens; additionally, it was agreed
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that Williams Construction would construct a home on Lot 10 for Cox at cost. As part of the
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agreement, Cox was to live in the home built on Lot 11 until the home on Lot 10 was completed.
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All of the aforementioned dealings involved Cox, Williams, as well as the other owners of
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Williams Construction.
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On or about July 21, 2005, Williams unexpectedly passed away. On or about December
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20, 2005, the other owners decided not to honor the agreements made with Cox. Instead, Williams
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Jr. and Cox entered into an agreement whereby Cox agreed to take Lot 7 instead of Lot 10, and
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Williams obtained a construction loan and built a 4,000 square foot home on Lot 7; once completed
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Cox could either sell the property or keep it at the cost of construction. Cox then arranged for the
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sale of Lot 10, along with a contract to construct a 3,500 square foot home on the lot. Cox arranged
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for the buyer to obtain a construction loan.
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Williams, Jr. obtained the subject construction loan for Lot 7 from National City Mortgage
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(now PNC Bank). The loan funded on or about May 10, 2007; however, when Williams Jr.
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attempted to get a permit to build the home, it was revealed that the building codes had changed
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and the entire project had to be re-engineered with new plans drafted in order to satisfy the building
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codes. On or about October 1, 2007, National City Mortgage wrote a letter to Williams Jr.
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demanding that construction on Lot 7 commence immediately, or else the loan would be in default,
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the interest rate would increase to 11.75%, and foreclosure proceedings would commence.
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Construction then commenced on Lots 7 and 10.
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Cox ultimately learned that National City Mortgage had re-appraised the home and Lot 7
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in October 2007; National City Mortgage did not disclose to either Williams Jr. or Cox that the
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appraised value had dropped over $200,000. Once the home on Lot 7 was constructed, Cox
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installed and completed all the landscaping, installed in excess of 3,000 square feet of exotic
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hardwood flooring, installed paved driveways and patios, installed rock in the fireplace and kitchen
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island, sealed and painted the garage floor, and installed granite countertops, amongst other
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improvements. When the home on Lot 7 was fully constructed in December 2008, the home value
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had dropped from $998,000 to $280,000. National City Mortgage refused to discuss loan
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modification options with Williams Jr and began foreclosure proceedings; Williams Jr was forced
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to file a Chapter 11 bankruptcy.
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During the bankruptcy, Cox paid adequate protection payments and it was agreed that the
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home value was $320,000. Upon successful completion of Williams Jr’s Chapter 11 Plan of
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Reorganization, Cox was to purchase the home on Lot 7. Ultimately, Williams Jr became frustrated
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with the bankruptcy and, without informing Cox or transferring the title to the home to Cox,
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converted the bankruptcy filing to a Chapter 7 bankruptcy on October 3, 2014. PNC Bank is the
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current holder of the Deed of Trust and loan at issue and is currently pursuing a foreclosure sale
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of the home on Lot 7. Clear Recon is the trustee that is conducting the foreclosure sale. On or about
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October 8, 2015, Clear Recon and PNC Bank issued a Notice of Trustee’s Sale, setting a
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foreclosure sale date of November 9, 2015.
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Cox alleges that he holds an interest in the home built on Lot 7, adverse to PNC Bank’s
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interest, and that his intention is to pay PNC Bank the $320,000, the home value agreed upon
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during the Chapter 11 bankruptcy, for clear title to the home. Cox alleges that as a result of the
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foreclosure activity, he has been damaged in an amount in excess of $10,000.
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III.
LEGAL STANDARD
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In order to state a claim upon which relief can be granted, a pleading must contain “a short
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and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.
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8(a)(2). In ruling on a motion to dismiss for failure to state a claim, “[a]ll well-pleaded allegations
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of material fact in the complaint are accepted as true and are construed in the light most favorable
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to the non-moving party.” Faulkner v. ADT Sec. Servs., Inc., 706 F.3d 1017, 1019 (9th Cir. 2013).
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To survive a motion to dismiss, a complaint must contain “sufficient factual matter, accepted as
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true, to state a claim to relief that is plausible on its face,” meaning that the court can reasonably
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infer “that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
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(2009) (citation and internal quotation marks omitted).
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IV.
ANALYSIS
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Defendant PNC Bank seeks to dismiss the sole claim for unjust enrichment.
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A. Unjust Enrichment – Legal Standard
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The elements of an unjust enrichment claim are as follows: 1) plaintiff confers a benefit on
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the defendant; 2) the defendant appreciates such benefit; and 3) there is “acceptance and retention
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by the defendant of such benefit under circumstances such that it would be inequitable for him to
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retain the benefit without payment of the value thereof.” UnionAmerica Mortgage v. McDonald,
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97 Nev. 210, 212 (Nev. 1981). A “benefit” includes “services beneficial to or at the request of the
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other.” Topaz Mutual Co. v. Marsh, 108 Nev. 845, 856 (Nev. 1992).
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B. Analysis
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Defendant argues that Plaintiff has asserted no basis for interest in the real property adverse
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to PNC’s mortgage. Plaintiff does not hold legal title to the property and PNC has a mortgage
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secured by a deed of trust on the property. Plaintiff asserts that based on his descriptions of
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agreements/contracts with third parties, that he is now entitled to an interest in the real property.
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Defendant argues that the unjust enrichment claim fails because Plaintiff has never conferred a
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benefit onto PNC at PNC’s request. The Court agrees.
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Plaintiff has alleged that he made improvements to the Property, which benefited the
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Defendant. However, the improvements were not made at the request of PNC, and the Complaint
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does not allege that any communications occurred between PNC and Plaintiff at any time.
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Defendant argues that the alleged benefit was conferred on Williams Jr., Williams Sr., or one of
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the other parties to the Williams estate, with whom Plaintiff made direct agreements. Plaintiff
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states that he conferred a benefit on PNC by improvements he made to the property, and that PNC
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appreciated that benefit in the form of value added to the home. Yet the allegations of the
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Complaint do not state that the property was in the possession of PNC at the time. The property is
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owned by Williams, and PNC, in initiating foreclosure proceedings, could at some time possess
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the property. Therefore, it is unclear what benefit PNC has presently retained from the Plaintiff.
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PNC has not retained the property, or any money from Plaintiff, and no services were made at the
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request of PNC. Furthermore, Plaintiff’s Complaint does not clarify the circumstances making it
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inequitable for PNC Bank to “retain the benefit without payment of the value thereof.” PNC Bank
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provided the loan to finance the construction of the property, and was not involved in any of the
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agreements between Williams and Plaintiff. Therefore, the Court finds that Plaintiff has failed to
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state an unjust enrichment claim against PNC Bank.
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V.
CONCLUSION
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For the reasons stated in this opinion,
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IT IS ORDERED that Defendant’s Motion to Dismiss (ECF No. 8) is GRANTED with
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prejudice.
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DATED: October 5, 2017.
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____________________________
RICHARD F. BOULWARE, II
United States District Judge
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