Cabrera, et al v. Bank of America, N.A., et al
ORDER denying 28 Motion to Amend Complaint; granting 9 Motion to Dismiss for Failure to State a Claim; granting 12 Motion to Dismiss for Failure to State a Claim; and, adopting in part and rejecting in part 32 Memorandum and Recommendations - Signed by District Judge Louise Wood Flanagan on 02/12/2013. (Baker, C.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
LUIS RAUL CABRERA and
ROSALIE JEANESE CABRERA,
BANK OF AMERICA, N.A., BANK
OF AMERICA HOME LOAN
SERVICING, LP and LOAN
This matter is before the court on motions to dismiss under Federal Rule of Civil Procedure
12(b)(6) by defendants Bank of America, N.A. (“BOA”),1 and Loan Resolution Corporation
(“LRC”) (DE ## 9,12). Pursuant to 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure
72(b), United States Magistrate Judge Robert B. Jones, Jr., entered a memorandum and
recommendation ("M&R") (DE # 32) wherein he recommends that the court grant in part and deny
in part defendant BAC's motion, and grant defendant LRC’s motion. Plaintiffs timely filed objection
to the M&R. Defendant BAC also filed objection to that part of the M&R recommending denial in
part of its motion to dismiss, and both defendants have responded to plaintiffs’ objection. After the
M&R was entered, plaintiffs filed a motion to amend complaint (DE # 29), to which defendants have
responded. In this posture, the issues raised are ripe for ruling.
BOA states it is successor by merger to defendant BAC Home Loans Servicing, L.P. (“BAC”) and responds
on behalf thereof to plaintiffs’ complaint. (See DE #12).
On October 17, 2011, plaintiffs filed complaint in this diversity action seeking damages and
equitable relief arising out of an unconsummated short sale of plaintiffs’ real property located in
Raleigh, North Carolina. A detailed recitation of the factual allegations alleged in the complaint is
found in the M&R. See M&R 2-5. Upon de novo review, the factual background of the case as set
forth in the M&R is incorporated here by reference. The court will address in further detail the
factual allegations in the complaint in those instances where plaintiffs’ object to factual
determinations made in the M&R.
Plaintiffs assert five causes of action against both defendants: breach of contract,
misrepresentation, promissory estoppel, unfair and deceptive trade practices, and unjust enrichment.
The magistrate judge recommends dismissal of all claims against both defendants, except for the
breach of contract claim against BOA. In the discussion below, the court first will address the
determination regarding the breach of contract claim against LRC and BOA, to which BOA objects,
and then the determination regarding the remaining claims, to which plaintiffs object in part.
A. Standard of Review
The purpose of a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which
relief can be granted is to eliminate claims that are factually or legally insufficient. Fed. R. Civ. P.
12(b)(6); Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007). To survive a motion to dismiss, a pleading must contain “sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678
(quoting Twombly, 550 U.S. at 570). In evaluating whether a counterclaim is stated, “a court
accepts all well-pled facts as true and construes these facts in the light most favorable” to the
claimant, but does not consider “legal conclusions, elements of a cause of action, and bare assertions
devoid of further factual enhancement.” Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591
F.3d 250, 255 (4th Cir. 2009). Nor must the court accept "unwarranted inferences, unreasonable
conclusions, or arguments.” Id.
The court may designate a magistrate judge “to submit . . . proposed findings of fact and
recommendations for the disposition” of motions to dismiss for failure to state a claim. 28 U.S.C.
§ 636(b)(1)(B). The parties may object to the magistrate judge's findings and recommendations, and
the court "shall make a de novo determination of those portions of the report or specified proposed
findings or recommendations to which objection is made." Id. § 636(b)(1)(C). Absent a specific
and timely filed objection, the court reviews only for "clear error," and need not give any
explanation for adopting the M&R. Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310, 315
(4th Cir. 2005); Camby v. Davis, 718 F.2d 198, 200 (4th Cir.1983). Upon careful review of the
record, "the court may accept, reject, or modify, in whole or in part, the findings or
recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(1)(C).
1. Breach of contract
The magistrate judge first recommends dismissal of plaintiffs’ breach of contract claim
against defendant LRC. Plaintiffs do not raise any specific objection as to the magistrate judge’s
determination with respect to the breach of contract claim against defendant LRC. Instead, plaintiffs
generally state that they object to the recommendation to grant the motion to dismiss filed by
defendant LRC. (Objection at 1). Plaintiffs also state that “[t]here were flaws in the Complaint
which Plaintiffs sought to address by amending it,” referencing their motion to amend complaint
filed August 7, 2012. The only claim referenced in their objection is the unfair and deceptive trade
practice act claim, discussed further below. See Objection at 2. Accordingly, where plaintiffs have
failed to raise any specific objections as to the magistrate judge’s determination of the breach of
contract claim against defendant LRC, the court will adopt the magistrate judge’s recommendation
to dismiss this claim having satisfied itself that there is no clear error on the face of the record. See
Diamond, 416 F.3d at 316.
By contrast, the magistrate judge recommends allowing the breach of contract claim against
BAC to proceed.
Defendant BAC raises specific objection as to the magistrate judge’s
determination with respect to this claim, and considering this claim de novo, the court will reject the
magistrate judge’s recommendation. For the reasons stated below, plaintiffs have failed to allege
sufficient facts to state a claim to relief that is plausible on its face. Accordingly, defendant BAC’s
motion to dismiss the breach of contract claim will be granted.
In order for parties to enter into a contract, “[t]he offer must be communicated, must be
complete, and must be accepted in its exact terms.” Yeager v. Dobbins, 252 N.C. 824, 828 (1960).
“If any portion of the proposed terms is not settled, or no mode agreed on by which they may be
settled, there is no agreement.” Boyce v. McMahan, 285 N.C. 730, 734 (1974) (internal quotations
omitted). “[A] contract must be sufficiently definite in order that a court may enforce it.” Brooks
v. Hackney, 329 N.C. 166, 170 (1991). Accordingly, “a contract, or offer to contract, leaving
material portions open for future agreement is nugatory and void for indefiniteness.” Boyce, 285
N.C. at 734.
In addition to setting forth its terms with the requisite level of certainty, to be enforceable
a contract must contain an expression of mutual assent. See Chappell v. Roth, 353 N.C. 690, 692
(2001). “To constitute a valid contract, the parties must assent to the same thing in the same sense,
and their minds must meet as to all the terms.” Boyce, 285 N.C. at 734; see Horton v. Humble Oil
& Refining Co., 255 N.C. 675, 679 (1961) (“[I]t is necessary that the minds of the parties meet upon
a definite proposition. There is no contract unless the parties thereto assent, and they must assent
to the same thing, in the same sense.”).
Applying these principles here, plaintiffs have failed to allege any facts stating a breach of
contract claim that is plausible on its face. Plaintiffs claim in their complaint that “an Offer of
$190,000 was made by the Plaintiffs, and the HAFA documents, correspondence, and oral
agreements as explicitly made by BOA, BAC, by and through its agent, LRC, constitute a contract.”
(Compl. ¶ 29). But, plaintiffs fail to allege what the terms of this contract were, and this omission
is critical to the failure of their claim. While, at one point, plaintiffs suggest that the “offer” of
$190,000 was for a “short sale,” they allege at the same time that the defendants “fail[ed] to accept”
this offer. (Compl. ¶ 35). Thus, because defendants did not accept plaintiffs’ offer of a short sale,
the offer was not “accepted in its exact terms,” and no contract was formed. Yeager, 252 N.C. at
828. Boyce, 285 N.C. at 734.
Plaintiffs also suggest that their “offer” was something other than an offer for a “short sale,”
and that defendants “fail[ed] to perform [their] end of the contract.” (Compl. ¶ 35). Exactly what
was offered, and what was accepted, however, short of a completed sale of plaintiffs’ property, is
not clear from the face of the complaint. Plaintiffs suggest, for example, that the offer that was
accepted by defendants was to “initiate the short sale” or to “approve” plaintiffs “to participate in
the short sales program.” (Compl. ¶¶ 29, 31; see also Compl. ¶16 (“Plaintiffs executed [a Request
for Modification and Affidavit] which initiated the agreement between Plaintiffs and the BOA”)).
Such an offer, however, is not “sufficiently definite in order that a court may enforce it.” Brooks,
329 N.C. at 170. Indeed, an agreement to “initiate” a short sale, or to “participate in the short sales
program,” apart from the consummated short sale itself, could include innumerable variations on
terms. For example, it is not clear whether the offer to “initiate” or “participate in” a short sale
program includes as a term that the lender must “complete” the short sale. If the offer did include
such a term, it is not alleged with any definiteness in the complaint, and there are no facts alleged
in the complaint that would permit the inference that defendant BAC agreed to such a term.
Plaintiffs also suggest that BOA entered into a contract in which one of the terms was “to
provide Plaintiffs with the opportunity to close on the accepted short sale.” (Compl. ¶ 30). Again,
however, the terms of this alleged contract are indefinite and not supported by any facts alleged in
the complaint. Because, as noted above, plaintiffs allege that defendants “fail[ed] to accept
Plaintiff’s firm offer of $190,000, for a short sale,” (Compl. ¶ 35), it is unclear in what respect the
short sale was to have been “accepted” before proceeding to closing. While plaintiffs suggest that
defendants approved the short sale in some preliminary respect before finally “accepting” the short
sale at closing, (see Compl. ¶22), the contract, as thus alleged, would be one “leaving material
portions open for future agreement.” Boyce, 285 N.C. at 734. In particular, the most notable
material portion open for future agreement was whether BOA would in fact enter into a contract for
the short sale of plaintiffs’ property. Thus, any such preliminary “acceptance” of the short sale in
advance of closing “is nugatory and void for indefiniteness.” Boyce, 285 N.C. at 734.
In sum, plaintiffs have failed to allege that defendant BOA breached any contract with terms
that were “sufficiently definite in order that a court may enforce it.” Brooks, 329 N.C. at 170.
Accordingly plaintiffs’ breach of contract claim fails as a matter of law and will be dismissed.
2. Misrepresentation, Promissory Estoppel, Unjust Enrichment
Where plaintiffs do not raise any specific objection as to the magistrate judge’s determination
of the motions to dismiss these claims, the court will adopt the recommendation of the magistrate
judge to dismiss the misrepresentation claim without prejudice, to dismiss the promissory estoppel
claim with prejudice, and to dismiss the unjust enrichment claim without prejudice. See Diamond,
416 F.3d at 316.2
3. Unfair and Deceptive Trade Practices
Plaintiffs object to the magistrate judge’s determination of defendants’ motions to dismiss
plaintiffs’ claim under the North Carolina Unfair and Deceptive Trade Practices Act (“UDTPA”),
N.C. Gen. Stat. §§ 75-1.1, et seq. (See Objection at 2). Upon de novo review, for the reasons stated
below, the court finds that the magistrate judge properly determined that this claim should be
To state a claim under the UDTPA, a claimant must allege (1) an unfair or deceptive act or
practice, (2) in or affecting commerce, (3) that proximately caused actual injury to plaintiff. See
Dalton v. Camp, 353 N.C. 647, 656, 548 S.E.2d 704, 711 (2001). “A practice is unfair if it is
unethical and unscrupulous, and it is deceptive if it has a tendency to deceive.” Id. An assertion that
defendants breached contractual obligations, even intentionally, does not rise to an unfair or
Plaintiffs also do not raise any specific objection to the magistrate judge’s determination that “[t]o the extent
plaintiffs attempt to assert an independent cause of action for breach of covenant of good faith and fair dealing, they have
failed to sufficiently plead such a claim.” M&R at 7 n. 4. Accordingly, the court also adopts the magistrate judge’s
determination as to this issue.
deceptive trade practice claim. Kelly v. Georgia-Pacific LLC, 671 F. Supp. 2d 785, 799 (E.D.N.C.
2009) (citing Broussard v. Meineke Disc. Muffler Shops, Inc., 155 F.3d 331, 347 (4th Cir. 1998)).
Rather, a party must allege “substantial aggravating circumstances” to support a claim under the
UDTPA. Broussard, 155 F.3d at 347 (citations omitted); see Ellis v. Louisiana-Pac. Corp., 699 F.3d
778, 787 (4th Cir. 2012) (“Egregious or aggravating circumstances must be alleged before the
provisions of the [UDTPA] may take effect.”) (citation omitted). Courts “relegate claims regarding
the existence of an agreement, the terms contained in an agreement, and the interpretation of an
agreement to the arena of contract law.” Id. (citations omitted).
Plaintiffs have failed to allege acts constituting unfair or deceptive acts or practices, meeting
these requirements under North Carolina law. Rather, plaintiffs have alleged failure of defendants
to follow through with activities that plaintiffs claim were required in negotiating a short sale of
plaintiffs’ property. Plaintiffs allege, for example, that defendants engaged in deceptive acts or
practices by “leading Plaintiffs to believe that it [sic] will honor and execute obligations to follow
through the requirements for affecting the short sale transaction.” (Compl. ¶ 51). According to
plaintiffs, defendants “were duty-bound to Plaintiffs to act honorably as participants under [the
Home Affordable Modification Program] . . . but held their own interests above those of the
homeowners.” (Id.). Plaintiffs have done no more than restate their contract claims, previously
addressed, where the claims raised presume the “existence of an agreement, the terms contained in
an agreement, and the interpretation of an agreement.” Broussard, 155 F.3d at 347. As such, these
issues must be relegated to the arena of contract law, and are not appropriate for resolution under
the UDTPA. See id.; see also Strum v. Exxon Co., U.S.A., 15 F.3d 327, 333 (4th Cir. 1994) (“We
think it unlikely that an independent tort could arise in the course of contractual performance, since
those sorts of claims are most appropriately addressed by asking simply whether a party adequately
fulfilled its contractual obligations.”).
Additional facts alleged by plaintiffs similarly do not rise to the level of egregious or
aggravating circumstances that must be alleged to establish a UDTPA claim. For example, plaintiffs
claim that defendants “all acted in concert with malice and fraudulent intent, to hinder, delay and
ultimately prevent the transaction from occuring [sic] as scheduled.” (Compl. ¶ 53). Plaintiffs
allege that defendants “played a ‘shell game’ with the Plaintiff[s’] lives and with their Property,
switching representatives throughout the matter, routinely demanding documentation already in its
files . . . and exhibited all manner of dishonest dealing.” (Id.). Putting aside those portions of the
allegations above which are not factual in nature, but rather argumentative inferences from the facts,
see Nemet, 591 F.3d at 255, plaintiffs have described delays and repetitive requests that frustrated
the contract finalization process. The factual background to the claims describes in more detail the
manner in which the loan modification file was “passed on” through various individuals at LRC and
BOA, and “no less than nine versions of the RESPA HUD-1 Form had been prepared and reprepared at LRC’s direction,” and BOA agreed on a closing date and approved the HUD-1 Form,
only to have an individual at LRC declare that “the appraisal of record had expired.” (Compl. ¶¶
18-22). While this conduct frustrated the loan modification process, derailing the closing that they
had hoped for, it is not egregious or aggravating circumstances that would bring these allegations
into the realm of unfair or deceptive trade practices. Cf. Big Red, LLC v. Davines S.P.A., 31 F.
App'x 216, 225 (4th Cir. 2002) (holding that manufacturer did not engage in sufficiently egregious
conduct to trigger unfair trade practices statute when it did not finalize alleged oral agreement, and
instead entered into written agreement with another distributor).
Plaintiffs also allege that “Defendants misled Plaintiffs to rely on their deceptions and
incessant campaign of misinformation.”
(Compl. ¶ 53).
Beyond delays and switching
representatives, however, it is not specified what acts by defendants constitute deceptions and a
“campaign of misinformation.” (Id.). While plaintiffs state, for example, that defendants approved
the HUD-1 form and agreed on a close date (see Compl. ¶22), plaintiffs do not allege that this itself
was “misinformation,” but rather suggest that these approvals and scheduling activities constituted
binding promises. (See Compl. ¶¶ 29-35). Where this alleged conduct is insufficient to establish
even breach of contract on the part of defendants, as discussed above, however, it is lacking the
“substantial aggravating circumstances” needed to support a claim under the UDTPA. Broussard,
155 F.3d at 347 (citations omitted); see Big Red, LLC, 31 F. App'x at 220 (“In this case, of course,
there are no aggravating circumstances accompanying a breach of contract, because there is no
enforceable contract at all”); see also Curtis B. Pearson Music Co. v. Everitt, 368 F. App'x 450, 456
(4th Cir. 2010) (“Misunderstandings, despite their capacity to deceive, ordinarily are insufficient to
sustain a claim of deceptive conduct under the UDTPA.” ); Bartolomeo v. S.B. Thomas, Inc., 889
F.2d 530, 535–36 (4th Cir.1989) (finding that substantial aggravating circumstances did not exist
where plaintiff's employer allegedly breached an oral agreement by “deceiv[ing]” him about the
status of his distributorship, as that claim was “at most, [a] simple breach[ ] of contract”).3
Apart from conduct leading up to the closing which plaintiffs claim was scheduled for September 2011,
plaintiffs also allege that defendants engaged in conduct after that date that violates the UDTPA. For example, plaintiffs
allege that defendants made another “offer” “inviting the Plaintiffs to participate” in the Home Affordable Modification
Program. (Compl. ¶ 54). BOA has sent additional “packages” to plaintiffs and made telephone calls “about participating
in this process again.” (Compl. ¶ 55). The described acts do not meet the requirements of unfair and deceptive trade
practices under North Carolina law. Although this conduct is unwanted on the part of plaintiffs, there is no authority
for finding the act of offering again to do what the parties could not bring to fruition the first time around is either
unethical nor deceitful.
In sum, where plaintiffs have failed to allege facts supporting a claim under the UDPTA, this
claim will be dismissed without prejudice.
4. Motion for Leave to Amend Complaint
Plaintiffs filed a motion to amend complaint on August 7, 2012, stating that they will submit
an amended complaint once leave to amend has been granted. In their memorandum in support of
the motion to amend, plaintiffs state that they seek to amend their complaint in order “to
revise/revisit the claims already submitted.” (Mem. at 2). They note that “[a]s both Defendants
have alleged deficiencies in the Complaint, Plaintiffs will take this opportunity to replead their
claims.” Id. Plaintiffs also forecast that they will assert claims “arising after the original Complaint
was filed (e.g., BOA’s aggressive collection efforts, threats and communications outside of this legal
process).” Defendants oppose amendment on grounds that an amendment would be futile and
Federal Rule of Civil Procedure 15(a) directs that leave to amend shall be freely given when
justice so requires. Fed. R. Civ. P. 15(a). “In the absence of any apparent or declared reason-such
as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of
allowance of the amendment, futility of amendment, etc.-the leave sought should, as the rules
require, be ‘freely given.’” Foman v. Davis, 371 U.S. 178, 182 (1962). “An amendment would be
futile if the amended claim would fail to survive a motion to dismiss for failure to state a claim
pursuant to Federal Rule of Civil Procedure 12(b)(6).” Syngenta Crop Prot., Inc. v. U.S.E.P.A., 222
F.R.D. 271, 278 (M.D.N.C. 2004). “Of course, the grant or denial of an opportunity to amend is
within the discretion of the District Court.” Foman, 371 U.S. at 182.
In this case, although plaintiffs’ acknowledge that defendants have identified “deficiencies
in the Complaint,” plaintiffs do not provide or forecast any additional facts, beyond what is stated
in the complaint, to further support their claims. (Mem. at 2). Absent any showing of how an
amended complaint will overcome the deficiencies identified in this opinion, the court finds that an
amendment to the complaint, stated in the general manner forecasted in the motion to amend, would
be futile. Furthermore, where plaintiffs state that they seek leave to amend the complaint to plead
claims based upon conduct arising after the original complaint was filed, plaintiffs have not, at this
point provided facts supporting any claims based upon “BOA’s aggressive collection efforts, or
threats and communications outside of this legal process.” (Mem. at 2-3).
Accordingly, the court will deny without prejudice plaintiffs’ motion to amend.
Based on the foregoing, the court ADOPTS IN PART and REJECTS IN PART the
recommendation of the magistrate judge. The court adopts the recommendation of the magistrate
judge with respect to all claims against defendant LRC and all claims but breach of contract against
defendant BOA. The court rejects the recommendation of the magistrate judge with respect to the
breach of contract claim against defendant BOA. The court GRANTS defendants’ motions (DE ##
9, 12) to dismiss in their entirety. Plaintiffs’ contract, misrepresentation, unfair and deceptive trade
practices, and unjust enrichment claims are DISMISSED WITHOUT PREJUDICE. Plaintiffs’
promissory estoppel claim is DISMISSED WITH PREJUDICE. Plaintiffs’ motion for leave to file
amended complaint (DE # 29) is DENIED WITHOUT PREJUDICE.
SO ORDERED, this the 12th day of February, 2013.
LOUISE W. FLANAGAN
United States District Court Judge
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