Lancaster v. Nationwide Trustee Services, Inc. et al

Filing 46

ORDER denying 40 Plaintiff's Motion for Summary Judgment and granting 43 Defendant SunTrust Mortgage, Inc.'s Motion for Summary Judgment. Signed by District Judge Terrence W. Boyle on 7/23/11. (Tripp, S.)

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF NORTH CAROLINA

SOUTHERN DIVISION

No.7:09-CV-134-BO

JULIE HELMS LANCASTER AND
BRANNON C. LANCASTER,
Plaintiffs,

v.

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SUNTRUST MORTGAGE, INC., AND
ALL OTHER PERSONS CLAIMING
ANY EQUITABLE RIGHT, TITLE,
ESTATE, LIEN, OR INTEREST IN THE
PROPERTY DESCRIBED IN THE
COMPLAINT ADVERSE TO
PLAINTIFF'S CLAIMS,
Defendants.

ORDER

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This matter is before the Court on Plaintiffs' Motion for Summary Judgment and
Defendant Suntrust Mortgage's Motion for Summary Judgment, or in the Alternative, Motion to
Dismiss. The Plaintiffs' Motion is DENIED and the Defendant's Motion to Dismiss is
GRANTED.
FACTS
The facts are undisputed. Plaintiffs executed a note and deed of trust securing the
repayment of a $960,000 loan from Suntrust Mortgage, Inc. ("Suntrust"). The mortgage was
secured by the real property located at 816 Forest Hills Drive in Wilmington, North Carolina
("the Property"). Suntrust recorded the deed of trust with the register of deeds in New Hanover
County, North Carolina. The Deed of Trust named Mortgage Electronic Registration Systems

("MERS") as the beneficiary of the Deed of Trust solely as nominee for the Lender, SunTrust.
Shortly after the closing, the Note and Deed of Trust were sold to Bank of America.
Although SunTrust is not longer the owner of the note or of the security interest in the property,
Suntrust currently services the loan pursuant to a servicing agreement with Bank of America.
Suntrust also has limited power of attorney for Bank of America in this matter.
Suntrust commenced foreclosure proceedings against the Property on July 6, 2009. But
Suntrust voluntarily dismissed that action without prejudice upon admitting that it was not the
holder of the note. Although Plaintiffs have not made a mortgage payment since October 2008,
no foreclosure action is currently pending.
Plaintiffs originally brought this action pro se in New Hanover County Superior Court.
On August 24, 2009, this matter was removed to Federal Court. Plaintiffs obtained counsel and
filed an amended complaint on February 1, 2010.
In the Amended Complaint filed in this action, Plaintiffs sought statutory damages
against SunTrust pursuant to the Truth in Lending Act (the "TILA") and rescission of the loan
transaction pursuant to the TIL A. In addition, the Plaintiffs sought a declaratory judgment as to
the interests the Plaintiffs and Defendants have in the Property. Finally, Plaintiffs, through a
claim titled "Quiet Title Action," have asked this Court to make a determination that they hold
title to the Property in fee simple and that SunTrust has no rights in the Property. Plaintiffs
subsequently dismissed their TILA claims (Doc. #27), and on May 11, 2010, this Court
dismissed Plaintiffs' declaratory judgment claim. (Doc. #29). Therefore, all that remains of
Plaintiffs' Amended Complaint is a quiet title claim.

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DISCUSSION
Plaintiffs have not stated a valid quiet title action.
"An action [to quiet title] may be brought by any person against another who claims an
estate or interest in real property adverse to him for the purpose of determining such adverse
claims." N.C. Gen. Stat. § 41-10. The purpose of the statute creating a cause of action to quiet
title is to "free the land of the cloud resting upon it and make its title clear and indisputable, so
that it may enter the channels of commerce and trade unfettered and without the handicap of
suspicion .... " Resort Development Co.. Inc. v. Phillips, 278 N.C. 69 (1971) (quoting Christman
v. Hilliard, 167 N.C. 4,8,82 S.E. 949, 951 (1914)). "'A cloud upon title is, in itself: a title or
encumbrance, apparently valid, but in fact invalid."' York v. Neman, 2 N.C.App. 484, 488 (1968)
(quoting McArthur v. Griffith, 147 N.C. 545,549,(1908)).
Plaintiffs' quiet title action is dismissed. The purpose of a quiet title claim is to free the
land of a cloud resting upon it, not for the Court to determine who can enforce a valid
encumbrance. Here, Plaintiffs do not allege that the lien on their property is invalid. Plaintiffs are
also not asking the Court to free the Property from a cloud on title so the Property can "enter the
channels of commerce and trade unfettered and without the handicap of suspicion." Rather,
Plaintiffs are requesting the Court order that SunTrust does not have the right to enforce an
undisputed valid encumbrance on the Property. Stated more broadly, the Plaintiffs are asking the
Court to declare that a servicer cannot cause foreclosure proceedings to be initiated on behalf of
the owner of a security interest in a piece of property.
Because Plaintiffs are not seeking to remove an invalid encumbrance from the Property,
and in fact admit to the validity of the encumbrance, the action is dismissed for failure to state a

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claim.

CONCLUSION

Defendant's Motion to Dismiss is GRANTED.

SO ORDERED, this

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day of July, 2011.

~o~~(J~-UNITED STATES DISTRICT JUDGE

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