FOREMAN v. U.S. BANK NATIONAL ASSOCIATION et al

Filing 18

RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE P. TREVOR SHARP on 9/16/2008, that Defendants' motion to dismiss under Rule 12(b)(6) (Docket No. 10 ) be granted in full. Defendant U.S. Bank is entitled to judgment based upon principles of res judicata and for Plaintiff's failure to state a legal claim. Defendant Ocwen is entitled to judgment for Plaintiff's failure to state a legal claim upon which relief can be granted. (Lloyd, Donna)

IN THE UNITED STATES DISTRICT COURT F O R THE MIDDLE DISTRICT OF NORTH CAROLINA

B R E N D A M. FOREMAN, P l a i n t i f f, v. U .S . BANK NATIONAL ASSOCIATION a n d OCWEN LOAN SERVICING, LLC, D e f e n d a n t s.

) ) ) ) ) ) ) ) ) )

1 :0 8 C V 2 8 7

R E C O M M E N D A T I O N OF UNITED STATES MAGISTRATE JUDGE

O n March 24, 2008, pro se Plaintiff Brenda M. Foreman commenced this action by f ilin g a complaint in the Superior Court of Durham County, North Carolina. Defendants U.S. B a n k National Association ("U.S. Bank") and Ocwen Loan Servicing, LLC ("Ocwen") tim e ly removed the case to this court on April 25, 2008. Plaintiff's complaint against D e f en d a n ts appears to allege claims for: (1) unfair and deceptive trade practices; (2) in f l ic tio n of emotional distress; (3) breach of fiduciary duty; (4) right to redeem or otherwise o b tain title to the subject property; and (5) state and federal fair housing violations. In re s p o n se to the complaint, Defendants filed a motion to dismiss pursuant to Fed. R. Civ. P. 1 2 (b )(6 ) on grounds of bar by res judicata and for failure to state a legal claim. Plaintiff has f ile d a response in opposition, and Defendants have filed a reply. The motion to dismiss (D o c k e t No. 10) is ready for a ruling.

F A C T U A L BACKGROUND P la in t if f Foreman was the owner of the real property involved in this litigation, lo c a te d at 4920 Glendarion Drive in Durham County, North Carolina. (Docket No. 4, C o m p lain t ("Compl.") ¶¶ 1, 4.) Foreclosure proceedings against the property were

c o m p le te d in 2005 and 2006, and U.S. Bank is now the owner of the subject property. (Id. ¶ 2.) Plaintiff was legally removed from the property after foreclosure. (Id. ¶ 4.) After completion of the foreclosure proceedings, Plaintiff filed a complaint in S u p e rio r Court of Durham County, 06 CVS 2154, on December 14, 2006. (Docket No. 11, D ef s.' Mem. of Law in Supp. of Mot. to Dismiss, Ex. 1, Previous Complaint.) The Court's re v ie w of that previous complaint and the complaint in this action shows that most of the a lle g a tio n s and claims in the prior complaint are identical or nearly identical to those in the p re s e n t action. U.S. Bank was the sole defendant in the prior action. On September 10, 2007, a superior court judge granted U.S. Bank's motion to dismiss th e Plaintiff's case with prejudice. (Id., Ex. 2.) DISCUSSION A. R e s Judicata A motion to dismiss pursuant to Rule 12(b)(6) is properly granted if the claims a ss e rte d by a plaintiff are barred by the doctrine of res judicata. Cassell v. United States, 348 F . Supp. 2d 602, 604 (M.D.N.C. 2004). Under principles of res judicata, if "later litigation arises from the same cause of action as the first, then the judgment in the prior action bars -2-

litig atio n `not only of every matter actually adjudicated in the earlier case, but also of every c la im that might have been presented.'" Orca Yachts, L.L.C. v. Mollicam, Inc., 287 F.3d 3 1 6 , 318 (4th Cir. 2002) (quoting In re Varat Enters., Inc., 81 F.3d 1310, 1315 (4th Cir. 1 9 9 6 ). Defendants argue that because Plaintiff has already sued U.S. Bank on claims arising o u t of the events immediately following foreclosure of her former home ­ and the state court d ism iss e d that case with prejudice ­ Plaintiff's current complaint is prohibited. Defendants f u rth e r contend that since Ocwen is sued merely as an agent of U.S. Bank, Plaintiff's claims a re barred against Ocwen as well. See Compl. ¶ 3 ("Ocwen Loan Servicing, LLC is the agent o f the Bank for purposes related to the management, disposition, and resale of the p r o p e r t y. " ) . Res judicata "relieve[s] parties of the cost and vexation of multiple lawsuits, c o n s e r v e [ s ] judicial resources, and, by preventing inconsistent decisions, encourage[s] re lia n c e on adjudication." Allen v. McCurry, 449 U.S. 90, 94 (1980). When a state court has a d ju d ica ted a claim or issue, the doctrine also serves to "promote the comity between state a n d federal courts that has been recognized as a bulwark of the federal system. Id. at 96. U n d er 28 U.S.C. § 1738, federal courts must give the same preclusive effect to state court ju d g m e n ts that those judgments would be given in the courts of the State from which the ju d g m e n t emerged. Kremer v. Chem. Const. Corp., 456 U.S. 461 (1982).

-3-

U n d e r the doctrine of res judicata, or "claim preclusion," a final judgment on the m e rits in one action precludes a second suit based on the same cause of action between the s a m e parties or their privies. Whitacre P'ship v. Biosignia, Inc., 358 N.C. 1, 15, 591 S.E.2d 8 7 0 , 880 (2004). The doctrine prevents the relitigation of all matters that were or should h a v e been adjudicated in the prior action. Id.; Thomas M. McInnis & Assocs., Inc. v. Hall, 3 1 8 N.C. 421, 428, 349 S.E.2d 552, 557 (1986). "`A final judgment is one which disposes o f the cause as to all the parties, leaving nothing to be judicially determined between them in the trial court.'" Foreman v. Foreman, 144 N.C. App. 582, 586, 550 S.E.2d 792, 795 (2 0 0 1 ) (quoting Veazey v. Durham, 231 N.C. 357, 361-62, 57 S.E.2d 377, 381 (1950). In the case at bar, Plaintiff's previous case against U.S. Bank was dismissed with p re ju d ic e . Consequently, a final judgment has been issued. Moreover, the previous c o m p la in t alleged claims for unfair and deceptive trade practices; infliction of emotional d is tre ss ; an accounting of U.S. Bank; a right to redeem; and an apparent claim of racial d i s c rim in a tio n claim. All of these claims were said to arise out of the foreclosure of P la in tif f 's property. In the present action, Plaintiff appears to allege unfair and deceptive tra d e practices; infliction of emotional distress; breach of fiduciary duty; right to redeem a n d /o r otherwise obtain title to the subject property; and state and federal fair housing v io la tio n s . The claims for unfair and deceptive trade practices, infliction of emotional d is tre ss , and to obtain title to the property in the two actions are identical. Breach of f id u c ia ry duty in the present action is a tort action for breach of duty similar to the claim for -4-

in f lic tio n of emotional distress, and accordingly "should have been adjudicated in the prior a c tio n ." Foreman, 144 N.C. App. at 586, 550 S.E.2d at 795; Veazey, 231 N.C. at 361-62, 57 S .E .2 d at 381. Similarly, if fair housing act violations are satisfactorily alleged in the current co m p lain t, they are predicated on the same allegations of racial discrimination as were a lle g e d in the previous complaint, and therefore either have been adjudicated or "should have b e e n adjudicated in the prior action." Id. F in a lly, the previous action and this action were and are, at least as to U.S. Bank, b e tw e e n the same parties or their privies. Whitacre, 358 N.C. at 15, 591 S.E.2d at 879. F o r e m a n was the plaintiff in the previous case and U.S. Bank was the sole defendant. In the p re se n t complaint, Foreman has added Ocwen as a defendant; her complaint notes that O c w e n is merely the agent of U.S. Bank. (Compl. ¶ 3 ("Ocwen Loan Servicing, LLC is the a g e n t of the Bank for purposes related to the management, disposition, and resale of the p ro p e rty" ).) While Ocwen contends that it is in privity with U.S. Bank by reason of the a g e n cy relationship, Ocwen cites no North Carolina case which would support a finding of p riv ity in this case at the pleading stage sufficient for the application of bar by res judicata. G e n e ra lly, under North Carolina law, privity exists "if the person has acquired an interest in th e subject matter of the action whether by succession, inheritance, or purchase from the p a rty subsequent to the action." See Strong's N.C. Index 4th, 19 N.C. Index 4th Judgments § 199 (2008). Ocwen is not shown at this stage to have a relationship with U.S. Bank or the p rop erty in question sufficient for a finding of privity under North Carolina law. Discovery -5-

o r matters outside the pleadings might show a sufficient relationship for a finding of privity, b u t that determination is beyond the reach of Defendants' Rule 12(b)(6) motion. For reasons set forth above, the Court finds and concludes that Plaintiff's current c o m p la in t is barred as to U.S. Bank by the doctrine of res judicata, because her previous, n e a rly identical complaint against that defendant was dismissed with prejudice in September 2 0 0 7 . Her present complaint should be dismissed with prejudice as to U.S. Bank for failure to state a claim upon which relief may be granted. Her claims against Defendant Ocwen are n o t subject to dismissal on res judicata grounds at this time. B. Failure to State a Claim D e f en d a n ts have moved for dismissal pursuant to Rule 12(b)(6) on the alternative g ro u n d that Plaintiff has stated no legal claim in the complaint filed March 24, 2008. D ism iss a l is proper under Rule12(b)(6) where a plaintiff fails to plead a short and plain s ta te m e n t of the claim showing the pleader is entitled to relief. Republican Party of North C a ro lin a v. Martin, 980 F.2d 943, 952 (4th Cir. 1992). For the purposes of Rule 12(b)(6), the Court is not required to accept as true the legal conclusions set forth in a plaintiff's c o m p la in t. District 28, United Mine Workers of Am., Inc. v. Wellmore Coal Corp., 609 F.2d 1 0 8 3 , 1085 (4th Cir. 1979). A plaintiff must plead "enough facts to state a claim to relief that is plausible on its face," as opposed to merely conceivable on some undisclosed set of facts. B e ll Atl. Corp. v. Twombly, 550 U.S. , 127 S. Ct. 1955, 1974 (2007). Specifically,

" [ w ]h ile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed -6-

f a c tu a l allegations, a plaintiff's obligation to provide the 'grounds' of his `entitlement to re lief ' requires more than labels and conclusions, and a formulaic recitation of the elements o f a cause of actions will not do." Id. at 1964-65. 1. U n f a i r or Deceptive Trade Practices

In order to establish a claim for unfair or deceptive trade practices, a plaintiff must a lle g e sufficient facts tending to show that the defendant committed an unfair or deceptive trad e practice, the act in question affected commerce, and the act proximately caused injury to the plaintiff. Dalton v. Camp, 353 N.C. 647, 656, 548 S.E.2d 704, 710-11 (2001). An u n f a ir act or practice is conduct which amounts to an inequitable assertion of power or p o s itio n , or is immoral, unethical, oppressive, unscrupulous, or substantially injurious. S o u th e a ste rn Shelter Corp. v. BTU, Inc., 154 N.C. App. 321, 330, 572 S.E.2d 200, 206 (2 0 0 2 ); Pierce v. Reichard, 163 N.C. App. 294, 301, 593 S.E.2d 787, 791-92 (2004). In this case, Plaintiff Foreman has alleged that after foreclosure, Defendants were not a s responsive as Plaintiff believes they should have been regarding her offers to "redeem" (p o st-f o re c lo su re ) the property. However, there is no right under North Carolina law to re d e e m post-foreclosure. See N.C. Gen. Stat. § 45-21; Anderson v. Moore, 233 N.C. 299, 3 0 1 -0 2 , 63 S.E.2d 641, 643-44 (1951). Plaintiff alleges various effects of the foreclosure, b u t these allegations, which demonstrate nothing more than that Defendants pursued a right u n d e r law (foreclosure), cannot rise to the level of "immoral, unethical, oppressive, u n s c ru p u lo u s " acts. Pro se Plaintiff Foreman makes broad arguments in briefing like "[t]he -7-

c o n tin u in g and mounting `mortgage crisis' has significantly altered the factual context and ref ram ed the public policy issues presented in Plaintiff's Complaint." (Docket No. 16, Pl.'s M e m . of Law in Opp'n to Defs.' Mot. to Dismiss at 2.) But this argument does not address th e legal issues before the Court. The Court finds no allegations of the present complaint that w o u ld support a claim for unfair or deceptive trade practices. 2. I n f lic tio n of Emotional Distress

The elements of a claim for intentional infliction of emotional distress are extreme and o u tra g e o u s conduct, which is intended to cause and does cause severe emotional distress to a n o th e r. Dickens v. Puryear, 302 N.C. 437, 452, 276 S.E.2d 325, 334-35 (1981). The initial d e te rm in a tio n of whether conduct is extreme and outrageous is a question of law for the c o u rt. Briggs v. Rosenthal, 73 N.C. App. 672, 676, 327 S.E.2d 308, 311 (1985). Plaintiff F o r e m a n alleges that she has suffered distress because of her "legal removal attendant to f o re c lo s u re ." (Compl. ¶ 4.) Such a claim does not rise to the level of infliction of emotional d is tre s s as a matter of law. 3. B re a c h of Fiduciary Duty

P la in tif f 's primary allegation in support of her claim based upon fiduciary duty by D e f e n d a n ts is the assertion that: "The Bank stands in a fiduciary relationship to Foreman." (C o m p l. ¶ 7.) However, the mere recitation of the phrase "fiduciary relationship" is in s u f f ic ie n t. Bell Atlantic, 550 U.S. , 127 S. Ct. at 1964-1965. A fiduciary relationship

e x is ts when one person reposes a special confidence in another, in which event the one -8-

tru s te d is bound to act in good faith and with due regard to the interests of the other. Adams v . Moore, 96 N.C. App. 359, 362, 385 S.E.2d 799, 801 (1989); Abbitt v. Gregory, 201 N.C. 5 7 7 , 160 S.E. 896 (1931). Nonetheless, the complaint in this action makes it clear there was n o fiduciary relationship between Plaintiff and either of the Defendants. See Pinney v. State F a r m Mut. Ins. Co., 146 N.C. App. 248, 552 S.E.2d 186 (2001) (complaint failed where legal p re c e d e n t established that no fiduciary duty existed); Wells v. North Carolina Nat'l Bank, 44 N .C . App. 592, 596, 261 S.E.2d 296, 298 (1980) (summary judgment for lender affirmed w h e re plaintiff alleged lender had promised to procure fire insurance for financed property, b u t failed to do so, and property was destroyed by fire; there was "no indication that a f id u c iar y relationship . . . existed between plaintiff and [the lender] such that would create a duty on the part of [the lender] to attend to details of plaintiff's purchase other than the f in a n c ial services it offered"); Stern v. Great Western Bank, 959 F. Supp. 478, 487 (N.D. Ill. 1 9 9 7 ) (dismissing fiduciary duty claims and holding: "Generally, a lender is not considered a fiduciary of its borrower. . . . [T]he conventional mortgagor-mortgagee relationship, stan d ing alone, is insufficient to sustain an allegation of a fiduciary or special relationship."). T h e re f o re , Plaintiff fails to state a claim for breach of fiduciary duty. 4. R e d e m p t io n and/or Repurchase

U n d e r North Carolina law, there exists no right to redeem post-foreclosure. See N.C. G e n . Stat. § 45-21; Anderson, 233 N.C. at 301-02, 63 S.E.2d at 643-44. Nor is there shown

-9-

to be any special right to repurchase property post-foreclosure. Plaintiff's present complaint th e re f o re fails to state a claim for redemption or similar relief. 5. V io la tio n of Federal and/or State Fair Housing Laws

P lain tiff alleges generally that Defendants' "callous" treatment of Plaintiff is due to h e r status as an African American and/or female, in contravention of "state and federal fair h o u s in g laws." (Compl. ¶ 13.) This allegation fails to specify any improper action by D e f e n d a n ts. Plaintiff alleges that, after foreclosure and eviction, she has had difficulty in d e a lin g with Defendants. This is not sufficient to state a claim for unspecified "state and f e d era l fair housing laws." See Bell Atlantic, 550 U.S. , 127 S. Ct. at 1974 (holding that

R u le 12(b)(6) requires specific allegations of fact which show that plaintiff's claims are p la u s ib le on their face). CONCLUSION F o r reasons set forth above, IT IS RECOMMENDED that Defendants' motion to d i s m is s under Rule 12(b)(6) (Docket No. 10) be granted in full. Defendant U.S. Bank is e n title d to judgment based upon principles of res judicata and for Plaintiff's failure to state a legal claim. Defendant Ocwen is entitled to judgment for Plaintiff's failure to state a legal c la im upon which relief can be granted.

/s/ P. Trevor Sharp United States Magistrate Judge

D a te : September 16, 2008 -10-