Brady v. PNC Bank, N.A.

Filing 17

ORDER granting 14 Motion to Dismiss for Failure to State a Claim - Signed by District Judge Louise Wood Flanagan on 07/07/2015. (Baker, C.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
EASTERN DIVISION
NO. 4:15-CV-30-FL

WAYNE BRADY,
Plaintiff,
v.
PNC BANK, N.A.,
Defendant.

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ORDER

This matter comes before the court on defendant’s motion to dismiss, pursuant to Federal
Rules of Civil Procedure 12(b)(1) and 12(b)(6) for lack of subject matter jurisdiction and failure to
state a claim upon which relief can be granted. (DE 14). Plaintiff’s time for response has passed.
In this posture, the issues raised are ripe for ruling. For the reasons that follow, defendant’s motion
is granted.
BACKGROUND
Plaintiff, proceeding pro se, filed this action on February 19, 2015, alleging common law
claims for wrongful attempted foreclosure (“Count I”) and fraudulent misrepresentation (“Count
II”), as well as a statutory claim for violation of the Fair Debt Collection Practices Act (“FDCPA”),
15 U.S.C. § 1692f (“Count III”). Plaintiff seeks damages and an injunction prohibiting defendant
from conducting a foreclosure sale on his property in Craven County, North Carolina.
Plaintiff’s claims arise from defendant’s attempted foreclosure of his property by virtue of
a power of sale clause contained in the mortgage instrument. On March 3, 2014, pursuant to N.C.
Gen. Stat. § 45-21.16, the Craven County, North Carolina Clerk of Court held hearing on the

underlying foreclosure and authorized defendant to proceed with a public foreclosure sale. See In
re The Foreclosure of a Deed of Trust Executed by Wayne L. Brady and Charlotte H. Brady in the
Original Amount of $648,000.00 dated May 6, 2005, recorded in Book 2304, Page 210, and
Modification in Book 2992, Page 21, Craven County Registry Substitute Trustee Services, Inc.,
Substitute Trustee, 13 SP 259 (Order, March 3, 2014). Plaintiff did not appeal the Clerk’s decision.
See id.
For a period of approximately one year, defendant took no further action. On January 25,
2015, defendant provided plaintiff notice of a public sale of the property to occur on February 23,
2015. (Compl., DE 1, ¶15). In response, plaintiff filed this action. On February 20, 2015, this court
denied plaintiff’s motion for temporary restraining order. The court held hearing on plaintiff’s
motion for preliminary injunction on March 2, 2015, where the court denied such motion.
Defendant filed the instant motion to dismiss on March 6, 2015. Defendant primarily argues
that the court lacks subject matter jurisdiction over plaintiff’s claim by operation of the RookerFeldman doctrine. In addition, defendant argues plaintiff’s claims are legally and factually
insufficient and do not state a claim upon which relief can be granted.
DISCUSSION
A.

Standard of Review
1. Rule 12(b)(1)
To survive a Rule 12(b)(1) motion, the plaintiff bears the burden of showing that subject

matter jurisdiction is appropriate. See McNutt v. General Motors Acceptance Corp., 298 U.S. 178,
189 (1936); Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). Such a motion may attack the
existence of subject matter jurisdiction in fact, apart from the complaint. Adams, 697 F.2d at 1219.

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In that instance, “the district court is to regard the pleadings’ allegations as mere evidence on the
issue, and may consider evidence outside the pleadings without converting the proceeding to one
for summary judgment.” Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d
765, 768 (4th Cir. 1991). The standard of review, however, is the same as with a motion for
summary judgment. Thus, “the nonmoving party must set forth specific facts beyond the pleadings
to show that a genuine issue of material fact exists. The moving party should prevail only if the
material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter
of law.” Id. (citations omitted).
2. Rule 12(b)(6)
A motion to dismiss under Rule 12(b)(6) determines only whether a claim is stated; “it does
not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.”
Republican Party v. Martin, 980 F.2d 943, 952 (4th Cir. 1992). A claim is stated if the complaint
contains “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)). In evaluating whether a claim is stated, “[the] court accepts all well-pled facts as
true and construes these facts in the light most favorable to the plaintiff,” but does not consider
“legal conclusions, elements of a cause of action, ... bare assertions devoid of further factual
enhancement [,] ... unwarranted inferences, unreasonable conclusions, or arguments.” Nemet
Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009) (citations omitted).
In other words, this plausibility standard requires a plaintiff to articulate facts, that, when accepted
as true, demonstrate that the plaintiff has stated a claim that makes it plausible he is entitled to relief.
Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (quotations omitted).

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Courts must liberally construe pro se complaints, and “a pro se complaint, however inartfully
pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers.”
Erickson v. Pardus, 551 U.S. 89, 94 (2007) (quoting Estelle v. Gamble, 429 U.S. 97, 105 (1976)).
However, courts “cannot ignore a clear failure to allege facts” that set forth a cognizable claim.
Johnson v. BAC Home Loans Servicing, LP, 867 F.Supp.2d 766, 776 (E.D.N.C. 2011). “The
‘special judicial solicitude’ with which a district court should view such pro se complaints does not
transform the court into an advocate. Only those questions which are squarely presented to a court
may properly be addressed.” Weller v. Dep’t of Soc. Servs. for the City of Baltimore, 901 F.2d 387,
391 (4th Cir. 1990).
B.

Subject Matter Jurisdiction
Under the Rooker-Feldman doctrine, district courts lack subject matter jurisdiction to hear

actions “brought by state-court losers complaining of injuries caused by state-court judgments
rendered before the district court proceedings commenced and inviting district court review and
rejection of those judgments.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284
(2005). The doctrine only applies “when the loser in state court files suit in federal district court
seeking redress for an injury allegedly caused by the state court’s decision itself.” Davani v. Va.
Dep’t of Transp., 434 F.3d 712, 713 (4th Cir. 2006). By contrast, the doctrine does not apply where
a federal plaintiff asserts a claim independent of the prior state claim, such as where the injury
complained of in federal court was caused by a third party rather than by the state court judgment
itself. See Exxon, 554 U.S. at 293; Davani, 434 F.3d at 719.
The court lacks subject matter jurisdiction to hear Count I by virtue of the Rooker-Feldman
doctrine. To entertain Count I, the court would have to sit in review of the Craven County Clerk of

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Court’s judgment authorizing defendant to proceed with the foreclosure sale. Although plaintiff
grounds Count I in defendant’s actions, any challenge to defendant’s actions necessarily requires
review of the state court judgment. Thus, Count I really is a challenge to the state court’s judgment
and may not be entertained by this court.
Turning next to Counts II and III, the Rooker-Feldman doctrine also divests the court of
subject matter jurisdiction to hear these claims. Plaintiff suggests defendant committed fraud and
violated the FDCPA by proceeding to foreclosure sale without valid possession of the note.
However, § 45-21.16 requires the Clerk find that “the party seeking to foreclose is the holder” of
the note. N.C. Gen. Stat. § 45-21.16. Thus, again, Counts II and III would require the court to
assess the conclusions of law made by the Clerk. The Rooker-Feldman doctrine prohibits this court
from doing so. See Davani, 434 F.3d at 713.
C.

Failure to State a Claim
To the limited extent plaintiff alleges defendant committed fraud or violated the FDCPA

prior to the March 3, 2014, state court judgment, those allegations fail to state a claim upon which
relief can be granted.
1. Count II
Under North Carolina law, to state a claim for fraud plaintiff must allege a “(1) [f]alse
representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with
intent to deceive, (4) which does in fact deceive, (5) resulting in damage to the injured party.”
Ragsdale v. Kennedy, 286 N.C. 130, 138 (1974). Plaintiff alleges that defendant falsely represented
that it held the note on several occasions, but plaintiff fails to allege sufficient facts to satisfy each
element of fraud for any of those occasions. In particular, defendant did not make a false

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representation or concealment of material fact after March 2012, and plaintiff fails to allege intent
to deceive prior to March 2012.
With regard to the period from March 2012, to present, plaintiff has failed to allege
defendant made any actionable false statement. Plaintiff alleges that RBC Bank held the note
originally. (Compl. ¶12). Plaintiff concedes that defendant purchased RBC Bank in March 2012.
(Id. ¶5). Articles of Merger filed with the North Carolina Secretary of State reveal that this
“purchase” really was a merger.1 Through merger with RBC Bank, defendant is “deemed to be the
same corporation” as RBC Bank, and defendant became the note holder by operation of law. See
12 U.S.C. § 215a(e); see also Econo-Travel Motor Hotel Corp. v. Taylor, 301 N.C. 200, 204 (1980).
Thus, defendant became the note holder in March 2012. Because Count II is premised on defendant
falsely representing that it held the note, plaintiff cannot state a claim for any representations to that
effect made after March 2012.
With respect to the period preceding March 2012, the only false representation alleged to
have occurred during this period, is a “notice of assignment, sale or transfer of serving” received by
plaintiff in February 2012. (Compl. ¶6). To the extent plaintiff grounds Count II in this notice, this
claim must be dismissed because plaintiff has not alleged defendant’s intent to deceive him
sufficiently. Indeed, although plaintiff alleges that defendant orchestrated a “mortgage scam,”
(Compl. ¶20), which arguably implies intent, it would be unreasonable to infer intent to defraud

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The court may consider public records outside of the complaint without converting defendant’s motion to dismiss into
one for summary judgment. See Hall v. Virginia, 385 F.3d 421, 424 n.3 (4th Cir. 2004) (noting it was proper during Rule
12(b)(6) review to consider statistics publically available on an official Virginia Division of Legislative Services
website); see also Johnson v. BAC Home Loans Servicing, LP, 867 F.Supp.2d 766, 771 n.1 (E.D.N.C. 2011). The
Articles of Merger (with Certification of Approval from the Comptroller of the Currency) are available at
http://www.secretary.state nc.us/search/CorpFilings/4837480.

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where defendant purchased RBC Bank, the note holder, and validly became the note holder by
operation of law within the next month.
2. Count III
Finally, Count III must be dismissed because defendant is not a “debt collector” as defined
by the FDCPA. The FDCPA only applies to “debt collectors,” see 12 U.S.C. § 1692f; see also
Wilson v. Draper & Goldberg, P.L.L.C., 443 F.3d 373, 274-75 (4th Cir. 2006), which is defined as
a person who:
uses any instrumentality of interstate commerce or the mails in any business the principal
purpose of which is the collection of any debts, or who regularly collects or attempts to
collect, directly or indirectly, debts owed or due or asserted to be owed or due another.
12 U.S.C. § 1692a(6); see also Wilson, 443 F.3d at 379 n.2. However, not every person who
engages in collecting a debt qualifies as a “debt collector.” In particular, any person “attempting
to collect ... a debt which was not in default at the time it was obtained by such person is not a ‘debt
collector,’ and may not be sued under the FDCPA.” See Perry v. Stewart Title Co., 756 F.2d 1197,
1208 (5th Cir. 1985); see also Reaves v. Seterus, Inc., No. 5:15-CV-33-FL, 2015 WL 2401666, at
*3 (E.D.N.C. May 20, 2015) (quotations omitted).
In the case at bar, defendant became the note holder in March 2012. Plaintiff did not default
on the loan until February 2014 (Compl. ¶9). Accordingly, defendant is not a debt collector under
the FDCPA, and plaintiff cannot state a claim under the FDCPA. Accordingly, Count III must be
dismissed.
In sum, to the limited extent this court has subject matter jurisdiction to hear plaintiff’s
claims, plaintiff has failed to state a claim upon which relief can be granted. Defendant did not make

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a false representation or conceal a material fact after March 2012, and plaintiff fails to allege intent
to deceive prior to March 2012. Moreover, defendant is not a debt collector under the FDCPA.
CONCLUSION
Based on the foregoing, defendants’s motion to dismiss is GRANTED. (DE 14). The clerk
is DIRECTED to close this case.
SO ORDERED, this the 7th day of July, 2015.

_____________________________
LOUISE W. FLANAGAN
United States District Judge

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