Locklear v. Federal Home Loan Mortgage Corporation et al

Filing 24

ORDER granting 16 Motion to Dismiss. Locklear's motion to have the pro bono panel review the case for consideration [D.E. 20] is DENIED as moot. Signed by Chief Judge James C. Dever III on 5/1/2017. (Briggeman, N.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
No. 7:16-CV-344-D

HENRY T. LOCKLEAR,
Plaintiff,

v.

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)
)
)

ORDER

)

FEDERAL HOME MORTGAGE
CORPORATION, and
WELLS FARGO BANK, N.A.,
Defendants.

)
)
)
)
)
)

On January 30, 2017, Wells Fargo Bank, N.A. ("Wells Fargo" or "defendant") moved to
dismiss this action for lack of subject-matter jurisdiction and failure to state a claim [D.E. 16]. See
Fed. R. Civ. P. 12(b)(1 ), (6). On January 31, 2017, the court notified Henry T. Locklear ("Locklear"
or "plaintiff') about the motion to dismiss and the consequences of failing to respond [D.E. 18]. See
Roseboro v. Garriso!l, 528 F.2d 309, 310 (4th Cir. 1975) (per curiam). Locklear did not respond,
although on February 24,2017, Locklear asked the pro bono panel to review his case [D.E. 20]. As
explained below, the court grants Wells Fargo's ,,motion to dismiss, denies Locklear's request that
the pro bono panel review his case, and dismisses Locklear's action for lack of subject-matter
jurisdiction.

I.
On or about September 26, 2005, Locklear and his wife ("Ms. Locklear") obtained a
$115,000 loan from Sidus Financial, LLC ("Sidus"). Compl. [D.E. 7]

~~5-6.

Locklear and Ms.

Locklear memorialized their loan obligations in a Promissory Note (the ''Note") and secured their
obligations with a Deed ofTrust encumbering their residence at 1823 Snake Road, Lumberton, North

Carolina (the "Collateral Property"). ld.

~~

6-7; [D.E. 16-1] (Note); [D.E. 16-2] (Deed of Trust).

On September 28, 2005, the Deed of Trust was recorded in Book D 1491 at Page 889 of the Robeson
County, North Carolina Public Registry.
Pl8.intiff and Ms. Locklear defaulted on their loan payments. On June 14, 2007, the Clerk
of Robeson County Superior Court ("Clerk") entered an Order to Allow Foreclosure Sale (the
"Foreclosure Order"). [D .E. 16-3]. Plaintiff and Ms. Locklear appealed the Foreclosure Order, but,
on October 4, 2007, the Robeson County Superior Court dismissed their appeal in an Order to
Dismiss Appeal. [D.E. 16-4]. Plaintiffand Ms. Locklear sought reconsideration in Robeson County
Superior Court, but they withdrew their motion for reconsideration on January 17, 2008. [D.E. 165].
Between March 17, 2008, and October 16, 2013, Locklear and Ms. Locklear filed numerous
voluntary bankruptcy petitions in the United States Bankruptcy Court for the Eastern District of
North Carolina (the "Bankruptcy Court"). Each time Locklear or Ms. Locklear filed a voluntary
bankruptcy petition, the Substitute Trustee had to advertise notice of the foreclosure sale, delaying
the actual foreclosure of the property. See N.C. Gen. Stat.§ 45-21.22(c).
On January 9, 2013, Locklear filed a voluntary petition under Chapter 13 in the Bankruptcy
Court, and the case was assigned case number 13-00155-9-SWH (the "January Bankruptcy Case").
[D.E. 16-6]. On February 26, 2013, the Bankruptcy Court dismissed the January Bankruptcy Case.
[D.E. 16-7]. On May 24, 2013, Locklear filed another voluntary petition under Chapter 13 in the
Bankruptcy Court, and the case was assigned case number 13-03385-5-RDD (the "May Bankruptcy
Case"). [D.E. 16-8]. On May 24, 2013, the Bankruptcy Court dismissed the May Bankruptcy Case.
[D.E. 16-9]. On August 5, 2013, the Clerk re-activated the 2007 foreclosure proceeding in an Order
Rendering File Active. [D.E. 16-10]. On October 16, 2013, pursuant to the Foreclosure Order,

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Wells Fargo purchased the Collateral Property at a foreclosure sale. On October 16, 2013, Locklear
f

filed another bankruptcy petition and the case was assigned case number 13-06493-8-DMW (the
"October Bankruptcy Case"). [D .E. 16-11]. On December 3, 2013, the Bankruptcy Court dismissed
the October Bankruptcy Case. [D.E. 16-12]. On April25, 2014, the Bankruptcy Court entered an
Order Confirming the Automatic Stay is Not in Effect in which the Bankruptcy Court held that
because Locklear filed two prior bankruptcy cases in 2013 that were dismissed for failure to pay the
filing fee, Locklear's filing of the October Bankruptcy Case had not triggered the automatic stay.
See [D.E. 16-13]; 11 U.S.C. § 362(c)(4)(A)(i).
Wells Fargo assigned its bid to Federal Home Loan Mortgage Corporation ("Freddie Mac"),
and the Substitute Trustee conveyed title to the Collateral Property to Freddie Mac in the Substitute
Trustee's Deed. See [D.E.16-15, 16-16]. OnNovember25,2013,theSubstituteTrustee'sDeedwas
recorded in Book D 1930, Page 163 of the Robeson County, North Carolina Registry of Deeds.
On February 28, 2014, Locklear filed a complaint against Wells Fargo and Freddie Mac (the
"State Court Complaint") in Robeson County Superior Court, Case 14 CVS 00451 (the "State Court
Actiqn"). [D.E. 16-17]. The complaint in the State Court Action essentially replicates the instant
complaint. Compare id. with Compl. On May 2, 2014, the Robeson County Superior Court entered
an order denying Locklear's request for a preliminary injunction to enjoin the enforcement of a Writ
of Possession of the Collateral Property (the "Order"). [D.E. 16-18]. On May 19, 2014, Locklear
voluntarily dismissed the State Court Action. See [D.E. 16-19].
II.
In Locklear's complaint, Locklear makes five claims for relief against Wells Fargo -breach

of contract, abuse of process, libel, slander, and request for a restrainingorder. See [D.E. 7] Compl.
~~ 42-62.

All five claims concern the foreclosure. See id.

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A.
A motion to dismiss under Rule 12(b)(l) tests subject-matter jurisdiction, which is the
court's "statutory or constitutional power to adjudicate the case." Steel Co. v. Citizens for a Better
Env't, 523 U.S. 83, 89 (1998) (emphasis omitted); see Holloway v. Pagan River Dockside Seafood.
Inc., 669 F .3d 448, 453 (4th Cir. 2012); Constantine v. Rectors & Visitors of George Mason Univ.,
411 F.3d 474, 479-80 (4th Cir. 2005). As the party asserting that this court has subject-matter
jurisdiction, Locklear must prove that subject-matter jurisdiction exists. See, ~' Steel Co., 523
U.S. at 104; Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999); Richmond.
Fredericksburg& PotomacR.R. v. United States, 945 F.2d 765,768 (4th Cir. 1991). In considering
a motion to dismiss for lack of subject-matter jurisdiction, the court may consider evidence outside
the pleadings without converting the motion into one for summary judgment. See, ~' Evans, 166
F.3dat647.
The Rooker-Feldman doctrine prohibits a "party losing in state court ... from seeking what
in substance would be appellate review of the state judgment in a United States district court, based
on the losing party's claim that the state judgment itself violates the loser's federal rights." Johnson
v. De Grandy, 512 U.S. 997, 1005--06 (1994); see D.C. Court of Ap_peals v. Feldm~ 460 U.S. 462,
476 (1983); Thana v. Bd. of License Comm'rs for Charles Cty., 827 F.3d 314, 318-20 (4th Cir.
2016); Washington v. Wilmore, 407 F.3d 274,279 (4th Cir. 2005). The Rooker-Feldman doctrine
encompasses "not only review of adjudications of the state's highest court, but also the decisions of
its lower courts." Brown & Root. Inc. v. Breckenridge, 211 F .3d 194, 199 (4th Cir. 2000) (quotation
omitted). Rooker-Feldman "reinforces the important principle that review of state court decisions
must be made to the state appellate courts, and eventually to the Supreme Court, not by federal
district courts or courts of appeal." Id. (quotation omitted). "The doctrine [also] preserves

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federalism by ensuring respect for the finality of state court judgments." W ashingto!l, 407 F .3d at
279.
Rooker-Feldman is a "narrow doctrine." Lance v. Dennis, 546 U.S. 459, 464 (2006); Than~
827 F.3d at 318-20. It applies only to "cases 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 Com. v. Saudi Basic
Indus., 544 U.S. 280,284 (2005); see Skinnerv. Switzer, 562 U.S. 521, 531-33 (2011); Than~ 827
F.3d at 318-20. For the doctrine to apply, the party seeking relief in federal court must be asking
the federal court to "reverse or modify the state court decree." AdkinS v. Rumsfeld, 464 F.3d 456,
464 (4th Cir. 2006) (quotation omitted); Thana, 827 F .3d at 318-20. Accordingly, the court
"examine[s] whether the state-court loser who files suit in federal district court seeks redress for an
injury caused by the state-court decision itself. If [the state-court loser] is not challenging the statecourt decision, the Rooker-Feldman doctrine does not apply." Davani v. Va. Dep't ofTransp, 434
F.3d 712, 718 (4th Cir. 2006) (footnote omitted); see Thani!, 827 F.3d at 318-20.
Locklear's complaint asks this court to review and reverse the Foreclosure Order. See
Compl. ~~ 42-62 & prayer for relief. The Rooker-Feldman doctrine provides that the federal courts
lack subject-matter jurisdiction to act as the functional equivalent of state appellate courts. Than~
827 F.3d at 318-20; Shooting Point L.L.C. v. Cumming, 368 F.3d 379, 383 (4th Cir. 2004).
Therefore,the Rooker-Feldman doctrine bars this court from considering Locklear's complaint, and
the court dismisses the complaint for lack of subject-matter jurisdiction.

B.
'

Alternatively, even ifthe Rooker-Feldman doctrine did not apply, Locklear has failed to state
a claim upon which relief can be granted. A motion to dismiss under Rule 12(b)(6) for "failure to

5

state a claim upon which relief can be granted" tests the complaint's legal and factual sufficiency.
See Fed. R. Civ. P. 12(b)(6); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v.
Twombly, 550U.S. 544, 570(2007); Coleman v.Md. Court ofAppeals, 626F.3d 187, 190(4thCir.
2010), aff'd, 566 U.S. 30 (2012); Giarratano v. Johnson, 521 F.3d 298,302 (4th Cir. 2008); accord
Erickson v. Pardus, 551 U.S. 89, 93-94 (2007) (per curiam). A court need not accept a complaint's
"legal concltisions, 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). However, the court "accepts all well-pled facts as true and construes these facts in the light
most favorable to the plaintiff in weighing the legal sufficiency of the complaint." Id. Construing
the facts in this manner, a complaint must contain "sufficient factual matter, accepted as true, to state
a claim to relief that is plausible on its face." Id. (quotation omitted).
The standard used to evaluate a pleading's sufficiency is flexible, "and a pro se complaint,
however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted
by lawyers." Erickso!l,551 U.S. at 94 (quotation omitted). Erickso!l, however, does not "undermine
[the] requirement that a pleading contain 'more than labels and conclusions."' Giarratano, 521 F .3d
at 304 n.5 (quoting Twombly, 550 U.S. at 555); see Ashcroft v. Iqbal, 556 U.S. 662, 677-83 (2009);
Colemml, 626 F.3d at 190; Nemet Chevrolet Ltd., 591 F.3d at 255-56; Francis v. Giacomelli, 588
F.3d 186, 193 (4th Cir. 2009).
Locklear's complaint fails to meet the Twombly/Iqbal standard. First, Locklear argues that
Wells Fargo breached its obligations under the Note by refusing to accept partial payments. See
Compl. ~~ 16-17. Locklear, however, does not allege that Wells Fargo was under any obligation to
accept partial payments from Locklear. The Note does not require Wells Fargo to accept partial
payments, explicitly states that Locklear's monthly payments were to be $939.65, and makes no

6

provision under which Locklear may make his monthly payments in partial payments. [D.E. 16-1]
2. 1 Locklear also contends that his October Bankruptcy Case should have prevented the foreclosure
sale of the Collateral Property. Id. ~ 27. As the bankruptcy court explained in its Order Confirming
the Automatic Stay is not in Effect, however, the October Bankruptcy Case did not result in an
automatic stay of the foreclosure proceeding. See [D.E. 16-13]. Finally, to the extent Locklear
argues that he should be granted a restraining order, Locklear bases that argument on the immediate
and irreparable injury that being forced to vacate his home would cause Locklear. See Compl. ~~
29-34, 60--62. This portion of Locklear's complaint reiterates the request for a restraining order in
Locklear's State Court Action, and Locklear cannot plausibly allege that he faces immediate and
irreparable injury today on the basis ofactions which transpired in 2014. Thus, Locklear's complaint
fails to state a claim upon which relief can be granted.
To the extent that Locklear attempts to recover the Collateral Property, the complaint is moot.
"[W]hen the trustee's deed has been recorded after a foreclosure sale, and the sale was not stayed,
the parties['] rights to the real property become fixed, and any attempt to disturb the sale is moot."
In re Comblum, 220 N.C. App. 100, 106, 727 S.E.2d 338, 342 (2012). Because the sale of the real

property at issue in this case was not stayed, the parties' rights to the real property at issue in the
complaint became fixed when the Substitute Trustee's Deed was filed. Thus, Locklear's attempt to
have the Substitute Trustee's Deed set aside is moot. See id. at 106-07, 727 S.E.2d at 342-43; In re
Hackley, 212 N.C. App. 596, 605-06, 713 S.E.2d 119, 125 (2011).
Alternatively, res judicata bars Locklear's claims. In North Carolina, the res judicata
doctrine provides that "any right, fact, or question in issue and directly adjudicated on or necessarily

1

The Note does, by contrast, explicitly provide for partial payments of prepayment funds,
but not of normal monthly payment funds. ld.

7

involved in the determination of an action before a competent court ... on the merits i~ conclusively
settled by the judgment therein and.cannot again be litigated between the parties and privies."
Gaither Corp. v. Skinner, 241 N.C. 532, 535, 85 S.E.2d 909, 911 (1955). The res judicata doctrine
bars re-litigation of "every point which properly belonged to the subject litigation and which the
parties, exercising reasonable diligence, might have brought forward." Painter v. Wake Cty. Bd. of
Educ.,288N.C. 165,217 S.E.2d650, 655 (N.C. 1975)(quotationomitted). It also bars the assertion
of defenses, as well as claims or counterclaims, that were or could have been litigated in the earlier
proceeding. See Goins v. Cone Mills Corp., 90 N.C. App. 90, 93, 367 S.E.2d 335, 336-37 (1988).
Chapter 45, Article 2A of the North Carolina General Statutes provides the procedure for
foreclosure of a deed of trust under a power of sale in North Carolina. See N.C. Gen. Stat.§§ 4521.1, et seq. In 2007, to obtain a foreclosure pursuant to a power of sale required a hearing before
the Clerk of Superior Court to determine, among other things: (1) the existence of a valid debt, (2)
the debtor's default, (3) the trustee's right to foreclose, and (4) sufficient notice to record owners.
N.C. Gen. Stat. § 45-21.16; see In re Helms, 55 N.C. App. 68, 71, 284 S.E. 2d 553, 555 (1981). A
party may appeal a decision of the Clerk of Court to the Superior Court, which reviews the Clerk's
decision de novo. See N.C. Gen. Stat.§ 45-21.16. § 45-21.16(d1); Phil Mechanic Construction Co ..
Inc. v. Haywood, 72N.C. App. 318,322,325 S.E.2d 1, 3 (1985). The SuperiorCourtmayconsider
evidence oflegal defenses tending to negate any ofthe findings required under N.C. Gen. Stat. § 4521.16. See In re Foreclosure of Deed of Trust, 334 N.C.

369~

371,432 S.E.2d 855, 859 (1993).

A party may raise equitable defenses in a separate action to enjoin the foreclosure sale under
N.C. Gen. Stat.§ 45-21.34. Seeid.,432 S.E.2dat859. Section45-21.34providesthat"[a]nyowner
of real estate ... may apply to a judge of the superior court, prior to the time that the rights of the
parties to the sale or resale becoming fixed ... to enjoin such sale ... upon any ... legal or equitable

8

ground which the court may deem sufficient." N.C. Gen. Stat.§ 45-21.34. The rights oftheparties
"become fixed" at the expiration of a ten-day period for filing upset bids. Id. § 45-21.29A; In re
Smith, 24 B.R. 19, 23 (Bankr. W.D.N.C. 1982).
"[I]ssues decided [in a proceeding under sections 45-21.1, et seq.] as to the validity of the
debt and the trustee's right to foreclose are res judicata and cannot be relitigated." Phil Mechanic
Construction Co., 72 N.C. App. at 322, 325 S.E.2d at 3; see Carmichael v. Irwin Mortgage Corp.,
2014 WL 7205099, at *3-4 (E.D.N.C. Dec. 17, 2014) (unpublished). In the Foreclosure Order, the
Clerk determined that the Note represented a valid debt, that Locklear had defaulted on his payment
obligations, that there was a right to foreclose, and that there was no reason the foreclosure should
not commence. See [D.E. 16-3]. Because Locklear failed to raise the alleged breaches of the Note
and Deed of Trust or any of his other arguments during the foreclosure proceedings, the rights ofthe
parties became fixed at the expiration of the upset bid period, and Locklear is barred from raising
them in this action. See, y,., Carmichael, 2014 WL 7205099, at *2-4. Thus, res judicata bars
Locklear's claims.

ill.
In sum, the court GRANTS Wells Fargo's motion to dismiss [D.E. 16] and DISMISSES the
action for lack of subject-matter jurisdiction. Alternatively, Locklear has failed to state a claim upon
which relief can be granted. Locklear's motion to have the pro bono panel review the case for
consideration [D.E. 20] is DENIED as moot.
SO ORDERED. This _l_day of May 2017.

Chief United States District Judge

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