CARTER et al v. ROGERS, TOWNSEND, & THOMAS, P.C. et al
MEMORANDUM OPINION, ORDER, AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE L. PATRICK AULD on 02/28/2014; that Plaintiffs' Application for Leave to Proceed In Forma Pauperis and Affidavit/Declaration in Support (Dock et Entry 1 ) is GRANTED FOR THE LIMITED PURPOSE OF ALLOWING THE COURT TO CONSIDER A RECOMMENDATION OF DISMISSAL. FURTHER that Plaintiffs' Motion for Emergency Hearing (Docket Entry 4 ) be denied as moot. FURTHER that Defendants' Motion for Extension of Time to Respond to Plaintiffs' Complaint (Docket Entry 5 ) be denied as moot. RECOMMENDED that this action be dismissed pursuant to 28 U.S.C. § 1915(e)(2)(B)(ii). (Garland, Leah)
VIN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
JAMES J. CARTER and GLADYS M.
ROGERS, TOWNSEND, & THOMAS,
P.C., DAVID N., JOHN DOE, JOHN
P. FETNER, WALTER INVESTMENT
MANAGEMENT CORP., MARK J.
O’BRIEN, GREEN TREE SERVICING,
INC., and JOHN DOE,
MEMORANDUM OPINION, ORDER, AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
This case comes before the Court on Plaintiffs’ Application
for Leave to Proceed In Forma Pauperis (Docket Entry 1), filed in
conjunction with Plaintiffs’ pro se Complaint (Docket Entry 2).
Also before the Court are Plaintiffs’ Motion for Emergency Hearing
(Docket Entry 4) and Defendants’ Motion for Extension of Time to
Respond to Plaintiffs’ Complaint (Docket Entry 5).
The Court will
grant Plaintiffs’ request to proceed as a pauper for the limited
purpose of recommending dismissal of this action, under 28 U.S.C.
§ 1915(e)(2)(B)(ii), for failure to state a claim, and will deny
the pending motions as moot.
(Docket Entry 2 at 3)2 and filed said “foreclosure petition and
related documents in the Randolph County Superior Court” (id. at
(2) the foreclosure petition identified Green Tree Servicing
LLC (“Green Tree”) as the owner of the property at issue when in
fact Fannie Mae owned the property and Green Tree “is at most the
Servicer for the alleged debt” (id. at 9);
(3) the foreclosure petition identified the property at issue
Archdale, NC 27263 with a legal description of Lots 133, 134, and
135 in the LH Kinney Subdivision” when in fact the “correct legal
address of the property is 134a Renola Dr. Archdale, NC 27263 [and
t]he correct legal description of the property is Lots 133, 134,
135, and 136 in the LH Kinney Subdivision” (id.);
The Complaint identifies as Defendants Rogers, Townsend,
& Thomas, P.C., three attorneys with said firm, Walter Investment
Management Corp. and its “CEO,” as well as Green Tree Servicing,
LLC and its “CEO.” (Docket Entry 2 at 2.) Much of the Complaint
simply refers to “Defendants” as a group and repeats blocks of
conclusory language about their purported misconduct. (See id. at
All pin citations refer to the pagination in the footer
appended to each document by the CM/ECF system.
(4) Defendants “schedule[d] and then cancel[ed] a hearing
before the Clerk of Courts for the Randolph County Superior Court”
(id. at 19); and
(5) Defendants “failed to provide [Plaintiffs] with written
information proving the right of Green Tree  to pursue collection
of this debt” (id. at 21).
Based on the foregoing events, Plaintiffs apparently pursue
claims for: (1) fraud/mail fraud (id. at 3-4, 9-12, 14-16, 19-23);
(2) conspiracy under federal law (id. at 5-7); (3) violations of
the Racketeer Influenced and Corrupt Organizations Act (“RICO”)
(id. at 7-9); (4) slander (id. at 12-14); and (5) attempted grand
larceny (id. at 17-19). They demand (1) “judgment and relief in an
amount in excess of $100,000,000 in compensatory and punitive
damages for each claim in this Complaint and from each Defendant”
(id. at 23); (2) “triple the damages awarded on each claim . . .
for violations of the Federal RICO Act” (id. at 24); (3) that the
investigation of possible criminal violations” (id.); (4) that the
Court “refer this matter to the North Carolina State Bar for
committed violations of their duties as licensed attorneys and
Officers of the Court” (id.); (5) that “the Court order Defendants
to retract all statements related to the alleged debt and remove
any reference to an alleged debt to Green Tree  from any and all
Credit Bureaus or other locations whereby they have previously
reported it” (id.); and (6) that “the Court issue an immediate
injunction ordering Defendants and all other parties to cease and
desist any and all collection or foreclosure actions related to the
property in question until such time as this case reaches its
After filing their Complaint and Application for Leave to
Proceed In Forma Pauperis, Plaintiffs moved for a hearing “on the
grounds that Plaintiffs have been shut out of State Court . . .
[and] are suffering irreparable harm every day that they are not
allowed to defend themselves in State Court against false and
defamatory accusations Defendants in the above entitled matter have
filed against them in the Randolph County Superior Court.” (Docket
Entry 4 at 1.)
Defendants subsequently filed their instant Motion
for Extension of Time to Respond to Plaintiffs’ Complaint, in which
they stated that they had “received a copy of the Complaint by
certified mail along with unsigned summonses,” as well as a letter
from Plaintiffs “indicating that [they] will be moving for a
default judgment against  Defendants if a response to the
Complaint is not filed by July 18, 2012.”
(Docket Entry 5 at 2.)
In light of that demand, although “Defendants do not believe that
a civil action has been properly initiated in this Court or that
they have been properly served, [they] seek an extension of time
. . . to prepare and submit a response to the Complaint and Motion
for Emergency Hearing.”
Defendants thereafter responded to
Plaintiffs’ Application for Leave to Proceed In Forma Pauperis.
(Docket Entry 6.)
Plaintiffs did not reply.
(See Docket Entries
dated Aug. 8, 2012, to present.)
“The federal in forma pauperis statute, first enacted in 1892
[and now codified at 28 U.S.C. § 1915], is intended to guarantee
that no citizen shall be denied access to the courts ‘solely
because his poverty makes it impossible for him to pay or secure
Nasim v. Warden, Md. House of Corr., 64 F.3d 951, 953
(4th Cir. 1995) (en banc) (quoting Adkins v. E.I. DuPont de Nemours
& Co., 335 U.S. 331, 342 (1948)).
“Dispensing with filing fees,
however, [is] not without its problems.
Parties proceeding under
the statute d[o] not face the same financial constraints as
In particular, litigants suing in forma
pauperis d[o] not need to balance the prospects of successfully
obtaining relief against the administrative costs of bringing
Nagy v. Federal Med. Ctr. Butner, 376 F.3d 252, 255 (4th
provides, in relevant part, that “the court shall dismiss the case
at any time if the court determines that – . . . (B) the action or
appeal – . . . fails to state a claim on which relief may be
granted . . . .”
28 U.S.C. § 1915(e)(2).
Under this standard, a
complaint falls short when it does not “contain 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, 678
(2009) (emphasis added) (internal citations omitted) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
thus “demands more than an unadorned, the-defendant-unlawfullyharmed-me accusation.”
In other words, “the tenet that a
court must accept as true all of the allegations contained in a
recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.”
Plaintiffs first allege that Defendants committed fraud and/or
mail fraud against them by initiating and/or pursuing a foreclosure
Although the Supreme Court has reiterated that “[a]
document filed pro se is to be liberally construed 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) (internal citations and
quotation marks omitted), the United States Court of Appeals for
the Fourth Circuit has “not read Erickson to undermine Twombly’s
requirement that a pleading contain more than labels and
conclusions,” Giarratano v. Johnson, 521 F.3d 298, 304 n.5 (4th
Cir. 2008) (internal quotation marks omitted) (applying Twombly in
dismissing pro se complaint); accord Atherton v. District of
Columbia Office of Mayor, 567 F.3d 672, 681-82 (D.C. Cir. 2009) (“A
pro se complaint . . . ‘must be held to less stringent standards
than formal pleadings drafted by lawyers.’
But even a pro se
complainant must plead ‘factual matter’ that permits the court to
infer ‘more than the mere possibility of misconduct.’” (quoting
Erickson, 551 U.S. at 94, and Iqbal, 556 U.S. at 679,
proceeding based on false statements.
12, 14-16, 19-23.)
(Docket Entry 2 at 3-4, 9-
Under North Carolina law,4 fraud requires the
following elements: “(1) [f]alse representation or concealment of
a material fact, (2) reasonably calculated to deceive, (3) made
with the intent to deceive, (4) which does in fact deceive,
(5) resulting in damage to the injured party.”
Plaintiffs’ Complaint does not allege that any false representation
by Defendants actually deceived Plaintiffs.
(See Docket Entry 2.)
Rather, Plaintiffs apparently allege that Defendants directed the
deception at the Randolph County Superior Court.
(See id. at 3
(“[T]he documents . . . contained false statements intended to
induce the Randolph County Superior Court to fraudulently foreclose
on real property owned by [Plaintiffs] and to defraud Fannie Mae
out of a mortgage Fannie Mae is the legal owner of.”).)5
Moreover, the Complaint nowhere asserts that the Randolph
County Superior Court relied upon Defendants’ allegedly false
(See id. at 3-23.)
Further, although Plaintiffs
It would appear that North Carolina law would govern any
non-federal tort claims asserted in this case, given that the
alleged injurious act of filing the foreclosure petition occurred
See generally Bethel v. Federal Express Corp., No.
1:09CV613, 2010 WL 3242651, at *5 (M.D.N.C. Aug. 16, 2010)
(unpublished) (discussing choice of law standards).
To the extent Plaintiffs seek to prosecute this action on
behalf of Fannie Mae, they have failed to allege any facts
suggesting they have standing to do so. See generally Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).
request compensatory damages (see id. at 23), the Complaint fails
Plaintiffs (see id. at 3-24).
For example, the Complaint does not
allege that Plaintiffs lost their house as a result of Defendants’
“In North Carolina, a fraud claim
is fatally defective unless it alleges detrimental reliance, and
Food Lion, LLC v. Schuster Mktg. Corp., 382 F.
Supp. 2d 793, 798 (E.D.N.C. 2005) (citing Frank M. McDermott, Ltd.
v. Moretz, 898 F.2d 418, 421 (4th Cir. 1990)).
Additionally, the Fourth Circuit has recognized that the
federal mail fraud statute, 18 U.S.C. § 1341, does not create a
private right of action.
See Laupot v. Berley, No. 88-2137, 865
F.2d 255 (table), 1988 WL 131819, at *1 (4th Cir. Dec. 8, 1988)
In sum, Plaintiffs’ state-law fraud and federal
mail fraud claims fail as a matter of law.
The Complaint also purports to state a claim for “conspir[acy]
in violation of federal law [related to the] fraudulent foreclosure
petition and related documents . . . .”
(Docket Entry 2 at 5.)
specific federal conspiracy statute on which they rely, but instead
refer generally to “fraud, mail fraud, and grand larceny” (id.), as
well as “the RICO Act” (id. at 6).
To the extent Plaintiffs wish
to pursue a RICO conspiracy claim, for reasons described more fully
below, they cannot.
Nor do other frequently invoked federal civil
conspiracy statutes have apparent application in this context. See
generally Gray v. Laws, 915 F. Supp. 762, 763 (E.D.N.C. 1994)
(discussing requirements of 42 U.S.C. §§ 1983 and 1985), aff’d in
part and vacated in part on other grounds, 51 F.3d 426 (4th Cir.
Finally, the Complaint offers nothing more than conclusory
allegations as to any conspiracy, thus rendering this purported
cause of action fatally defective in any event.
Iqbal, 556 U.S. at 678.
Plaintiffs next contend that Defendants “violate[d] the [RICO]
Act by conspiring to file a fraudulent foreclosure petition and
related documents in the Randolph County Superior Court in an
attempt to steal real property worth at least $150,000.”
Entry 2 at 7.)
“The Supreme Court has explained that a civil RICO
enterprise; (3) through a pattern; (4) of racketeering activity.”
Whitney, Bradley & Brown, Inc. v. Kammermann, 436 F. App’x 257, 259
(4th Cir. 2011) (citing Sedima, S.P.R.L. v. Imrex Co., Inc., 473
U.S. 479, 496 (1985)).
“A plaintiff bringing a civil RICO action
. . . must adequately plead at least two predicate acts of
racketeering that form a ‘pattern of racketeering.’”
Chiropractic Ass’n v. Trigon Healthcare, Inc., 367 F.3d 212, 233
(4th Cir. 2004) (quoting 18 U.S.C. § 1961(5)). The Complaint falls
short as to a number of these requirements.
As an initial matter, Plaintiffs allege only one predicate act
(i.e., filing a fraudulent foreclosure petition), thus failing to
plead the requisite “pattern of racketeering.”
have refused to allow ‘litigation activities’ such as filing
fraudulent documents or engaging in baseless litigation to serve as
predicate acts for RICO . . . where such acts constitute ‘the only
allegedly fraudulent conduct.’”
Feld Entm’t Inc. v. American Soc.
for the Prevention of Cruelty to Animals, 873 F. Supp. 2d 288, 318
(D.D.C. 2012) (quoting Daddona v. Gaudio, 156 F. Supp. 2d 153, 162
(D. Conn. 2000)); see also Curtis & Assocs., P.C. v. Law Offices of
David M. Bushman, Esq., 758 F. Supp. 2d 153, 171 (E.D.N.Y. 2010)
(“[P]ersuasive authority in this and other jurisdictions suggests
that the litigation activities alleged in this Complaint [i.e., the
mailing of pleadings, discovery notices, requests for adjournments,
and other ministerial documents] cannot properly form the basis for
RICO predicate acts.”); Harris Custom Builders, Inc. v. Hoffmeyer,
No. 90 C 0741, 1994 WL 329962, at *4 (N.D. Ill. July 7, 1994)
(unpublished) (“The court finds that [the] alleged scheme of filing
lawsuits to enforce an allegedly illegally obtained copyright does
not constitute a predicate act of racketeering for purposes of
Similarly, “[a]ttempts to characterize abuse of process
or malicious prosecution claims as mail and wire fraud violations
for RICO purposes have been scrutinized by the courts, and have
been rejected where the only allegedly fraudulent conduct relates
to the filing of documents in litigation.”
Daddona, 156 F. Supp.
2d at 162; see also Nakahara v. Bal, No. 97 Civ.2027(DLC), 1998 WL
35123, at *8 (S.D.N.Y. Jan. 30, 1998) (unpublished) (finding “the
plaintiffs’ allegations constitute at most an incipient claim for
malicious prosecution, and that, as such, those allegations fail as
a matter of law to establish the requisite predicate acts for
purposes of their asserted RICO claim” where complaint alleged
criminal and civil proceedings against the plaintiffs”).
“enterprise” for purposes of RICO. A RICO enterprise “includes any
individual, partnership, corporation, association, or other legal
entity, and any union or group of individuals associated in fact
although not a legal entity.” 18 U.S.C. § 1961(4). An association
in fact “reaches ‘a group of persons associated together for a
common purpose of engaging in a course of conduct’ [and s]uch an
enterprise . . . ‘is proved by evidence of an ongoing organization,
formal or informal, and by evidence that the various associates
function as a continuing unit.’”
Boyle v. United States, 556 U.S.
938, 944-45 (2009) (quoting United States v. Turkette, 452 U.S.
576, 580, 583 (1981)).
Moreover, “the person committing the
racketeering acts must be separate from the ‘enterprise’ that
person participates in or conducts,” Foster v. Wintergreen Real
Estate Co., No. 3:08cv00031, 2008 WL 4829674, at *4 (W.D. Va. Nov.
6, 2008) (unpublished), and the plaintiff must show “that the
‘enterprise’s affairs,’ not just their own affairs,” Reves v. Ernst
& Young, 507 U.S. 170, 185 (1993).
In the instant case, even given
the benefit of liberal construction, the Complaint “merely explains
the roles of each Defendant without addressing the structure of the
enterprise or how Defendants’ activities benefitted the group as an
independent entity,” Okaya (U.S.A.), Inc. v. Denne Indus., Inc.,
No. 00 C 1203, 2000 WL 1727785, at *4 (N.D. Ill. Nov. 21, 2000)
(See Docket Entry 2 at 7-8.)
Finally, “[t]o recover civil RICO damages . . . an individual
must also allege that he was injured ‘by reason of’ the pattern of
racketeering activity,” American Chiropractic Ass’n, 367 F.3d at
233, in a manner that damaged his “business or property,” 18 U.S.C.
See also Dickerson v. TLC The Laser Eye Ctr. Inst.,
Inc., 493 F. App’x 390, 394 (4th Cir. 2012) (“[The plaintiff] can
only recover if he shows that his injury caused by the RICO
violation damaged his business or property.”).
In this case, the
Complaint does not allege that Plaintiffs in fact lost their home,
or that it suffered any damage, as a result of any actions of
(See Docket Entry 2 at 3-24.)
For all of the
foregoing reasons, Plaintiffs’ RICO claim fails as a matter of law.
The Complaint next alleges that, by filing a foreclosure
petition falsely stating that Plaintiffs defaulted on a debt owned
by Green Tree, Defendants slandered Plaintiffs.
(Id. at 12-13.)6
According to the Complaint, the “debt in question is owned by
Fannie Mae and if [Plaintiffs] defaulted on a debt to anyone, it
[Plaintiffs] defaulted on a debt to Fannie Mae, nor has Fannie Mae
[Plaintiffs] defaulted on a debt to Green Tree .”
establish a claim for libel or slander under North Carolina law, “a
plaintiff must prove: ‘(1) defendant spoke or published base or
defamatory words which tended to prejudice him in his reputation,
office, trade, business or means of livelihood or hold him up to
disgrace, ridicule or contempt; (2) the statement was false; and
(3) the statement was published or communicated to and understood
by a third person.’”
Cummings v. Lumbee Tribe of N.C., 590 F.
Supp. 2d 769, 774 (E.D.N.C. 2008) (quoting Friel v. Angell Care
Inc., 113 N.C. App. 505, 509, 440 S.E.2d 111, 113-14 (1994)).
In the instant case, the allegedly false statement concerns to
whom Plaintiffs owed a defaulted debt, not the fact of default
(Docket Entry 2 at 12-13.)
The Complaint lacks any
allegation that Plaintiffs did not in fact default on the alleged
Courts typically understand “slander” as a form of
defamation arising from oral communication of an injurious false
statement. See Boyce & Isley, PLLC v. Cooper, 153 N.C. App. 25,
29-30, 568 S.E.2d 893, 898 (2002). In the instant case, Plaintiffs
presumably mean “libel,” the form of defamation that arises from
publication of a writing, see id.
debt, but rather contends that Defendants incorrectly identified
the owner of that debt.
However, the types of injury
Plaintiffs claim - i.e., harm to credit scores and difficulty
obtaining employment due to credit history - relate to the fact of
(See id. at 13.)
In other words, the alleged false
statement here - that Plaintiffs owed a debt to Green Tree - does
not bear a causal connection to the forms of prejudice they claim.
On the other hand, to the extent reports of default may have
prejudiced Plaintiffs, they do not deny the truth of their default.
Plaintiffs thus have not stated a claim for defamation.
Lastly, the Complaint declares that “Defendants committed
attempted grand larceny against [Plaintiffs] by attempting to steal
real property worth at least $150,000.”
(Id. at 17 (emphasis
More specifically, the Complaint alleges that Defendants
fraudulent foreclosure petition.
Under North Carolina law,
“[a]ny person . . . who commits an act that is punishable under
[enumerated criminal statutes] is liable for civil damages to the
owner of the property.”
N.C. Gen. Stat. § 1-538.2(a).
applicable statutes include larceny, but do not include any attempt
The instant Complaint does not identify, and the
undersigned has not found, any North Carolina authority that
permits a civil litigant to recover damages for attempted larceny.
This claim therefore cannot proceed.
See Myers v. Sessoms &
Rogers, P.A., 781 F. Supp. 2d 264, 269 (E.D.N.C. 2011) (“Federal
courts applying state laws should not create or expand a state’s
common law or public policy.”).
Plaintiffs’ Complaint fails to state a claim upon which relief
can be granted.7
IT IS THEREFORE ORDERED that Plaintiffs’ Application for Leave
to Proceed In Forma Pauperis and Affidavit/Declaration in Support
(Docket Entry 1) is GRANTED FOR THE LIMITED PURPOSE OF ALLOWING THE
COURT TO CONSIDER A RECOMMENDATION OF DISMISSAL.
IT IS FURTHER ORDERED that Plaintiffs’ Motion for Emergency
Hearing (Docket Entry 4) be denied as moot.
IT IS FURTHER ORDERED that Defendants’ Motion for Extension of
Time to Respond to Plaintiffs’ Complaint (Docket Entry 5) be denied
The Complaint identifies Plaintiffs as residents of
Archdale, North Carolina, and Defendants Rogers, Townsend, &
Thomas, P.C., David N., John Doe, and John P. Fetner as residents
of Charlotte, North Carolina.
(Docket Entry 2 at 2.)
circumstances cannot satisfy the diversity jurisdiction statute.
See 28 U.S.C. § 1332(a); Exxon Mobil Corp. v. Allapattah Servs.,
Inc., 545 U.S. 546, 553 (2005).
Accordingly, upon finding the
federal claims in the Complaint deficient, the Court simply could
decline to exercise supplemental jurisdiction over the Complaint’s
state-law claims. See 28 U.S.C. § 1367(c)(3); United Mine Workers
of Am. v. Gibbs, 383 U.S. 715, 726 (1966). However, in light of
the patent defects in Plaintiffs’ state-law claims, the interests
of justice and efficiency warrant adjudication of the entire
Moreover, the recommendation of dismissal moots
Plaintiffs’ request for a hearing and Defendants’ request for more
time to respond to the Complaint.
IT IS RECOMMENDED that this action be dismissed pursuant to 28
U.S.C. § 1915(e)(2)(B)(ii).
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
February 28, 2014
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