WILKERSON v. HSBC MORTGAGE SERVICES, INC. et al

Filing 25

MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE JOE L. WEBSTER on 11/20/2014; that the court GRANT Defendant Caliber's motion to dismiss under Rule 12(b)(6) for failure to state a claim. (Docket Entry 13 .) (Garland, Leah)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
JOHN SCOT:I ìTTLKERSON,

)
)
Plaintiff,
)
)
v
)
)
HSBC MORTGAGE SE,RVICES, INC., )
CAIIBER HOME, LOANS, INC.,
)
PREMIER MORTGÂGE FUNDING, )
INC., and TRUSTEE SERVICES OF'
)
CÂROLINA, LLC,
)
)
Defendants.
)

'1,:1,4CY276

MEMORANDUM OPINION AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE

This matter is befote the court on Defendant Calibet Home Loan,

Inc.'s

("Defendant" or "Calibet") motion to dismiss for failure to state a clakn. (Docket Entty 13.)
The motion has been fully briefed and the matter is rþe for disposition. For the reasons
that follow, it is recommended that Defendant Caliber's motion be gtanted.

I.

FACTUAL AND PROCEDURAL BACKGROUND
John Scott lØilketson ("Plaintiff' or "\Wilkerson") filed this action in the Supedot

Coutt of Alamance County, Notth Carohna on Febtuary 7,

201.4, against

four defendants:

HSBC Mottgage Services, Inc. ("HSBC"), Ptemiet Mortgage Funding, Inc. ("Ptemiet"),
Caliber, and substitute trustee Trustee Services

of

Carolina,

LLC ("Trustee

Services")

(Docket Entty 8.) After Plaintiff voluntadly dismissed non-diversepaLrty Ttustee Services on
Match 3,21,04, HSBC and Caliber jointly removed this action to this Court on April 1,2014

pursuant

to 28 U.S.C.

$S 1332, 1,441,, and

1446. Q)ocket Enties 1, 1-5.) Plaintiff

subsequently dismissed HSBC and Ptemiet from this

action. @ocket Entties '1.6, 23.)

PlaintifPs claims against Calibet are all that rcmain of the present action.

In his complaint, Plaintiff

alleges the

following facts, which this Court must accept

true fot pu{poses of the motion to dismiss. Giarrantano

u.

Johnson, 521.

as

tr.3d 298,302 (4th Cit.

2008). In2001, Plaintiff purchased a home in Mebane, North Catolina with proceeds from
mottgage loan. (Compl. fl 6.)

In

a

early 2006, Plaintiff expedenced financial difûculties due to

divorce and debt, and refinanced his mortgage loan with assistance from Ptemiet. Qd.ln 6-

9.)

,{.ccotding to the complaint, Plaintiff entered into a contract with Defendant Ptemiet

Mottgage Funding, Inc. ("Premier")

fot the provision of

mortgage services, and

subsequendy closed two mortgages on his propetty, with Ptemier acting as "his mortgage

broker." (Id. n rc.) Plaintiff executed and delivered two ptomissory notes (the "Notes") in
the odginal principal amounts of $137,000 and fi34,250, tespectively, to

"Original Lendet"). (Id.fflt

1,1,-1,2.) These loans

M&I Bank, FSB (the

were secured by deeds of trust gtanting the

Original Lendet fìrst- and second-pdodty liens on Plaintiffs tesidence (collectively the
"loans").

Qd.

ffil 6, "1."1., 1.2.)

Plaintiff alleges that Ptemiet ftaudulendy induced him into closing the loans by
misrepresenting the loan terms. Specifically, Plaintiff claims that Ptemiet's tepresentative,

Mike Otlando, promised to find Plainnff a fìxed-rate mortgage with "fair and equitable

tems" that Premiet would refìnance into one loan withiî
Plaintiff that his loan would have a fixed interest r^te
company. (Id.

a ye

^nd

t

and that Otlando assuted

would not be sold to another

ll 19.) Plaintiff alleges that before the closing Premiet ptesented him with
2

notes and deeds of trust that contained variable interest rates that were highet than what had

been promised

to Plaintiff. (Id. ffl 25-29.) Upon noticing the highet rates, Plaintiff

questioned Premier about the terms of the notes and deeds of trust but still proceeded with

the closing. (1d.1[31.) In October2006, HSBC acquked the notes and deeds of trust. (Id.

Íl +t .¡'

Plaintiff paid off the 2006 second mortgage loan in 2009, but the property remains

to the 2006 first mortgage loan. (Compl. T 13 ) Plaintiff

subject

alleges that

"in

recent

months" Calibet became the servicer of the 2006 {ìrst mottgage loan. Qd. 111 48-49.) A
foreclosure proceeding is currently pending in.,\lamance County Supetiot Court.

In this action, which was filed pdor to a foreclosure hearing in
alleges

fout

causes

of action against

Calibet: bteach

of

27

II.

in violation of the North

Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat.

.) Plainttff seeks

court, Plaintiff

contract, negligence, negligent

misrepresentation, and unfau and deceptive trade ptactices
Carolsna

state

S

75-1.1. (Compl.

^t22-

acttal, incidental, and punitive damages. Qd.)

STANDARD OF REVIEW
Defendant seeks dismissal pursuant to Federal Rule of Civil Procedure 12þ)(6) fot

failure to state a claim. A motion to dismiss undet Rule 12þ)(6) should be granted

complaint does not "contain sufficient factual

r--:rattet, accepted as

if

the

true, to 'state a claim to

relief that is plausible on its face." Ashroft u. Iqbal,556 U.S. 662, 678 (2009) (qtottng Bell

1

InJune 2009,Plantiff participated in a proceeding before the North Caroltna Commissioner of
Banks ("NCCOB") in which the NCCOB found that Premiet had facthtated origination for North
Carolina mortgages, including the loan to Wilkerson, by individuals not licensed as loan officers in
North Carohna, and assessed a civil penalty against Premiet. (Compl. Í|n34-36; NCCOB Order at23, HSBC Mem. Snpp.Mot. to Dismiss Ex. 1, Docket Enfty 15-1.) The NCCOB made no findings
about the validity or enforceabìlity of the notes and deeds of trust. (Jae NCCOB Otdet at1 -8.)
-)

Atlantic u. Twombþ, 550 U.S. 544, 570 Q007)).

"A

claim has facial plausibility when the

plaintiff pleads factual content that allows the coutt to dtaw the teasonable infetence that the
defendant is liable fot the misconduct.

Id. In othet wotds, to survive

a 1,2þ)(6) motion,

a

complaint must "^dv^nce the plaintiffs claim 'across the line ftom conceivable to
plausible."'

lYalters a. McMahen, 684

F.3d 435,439 (4th Cir.

201,2)

(quoting Twonbþ,550 U.S.

at 570).

In making this determination, a court must "assume the truth of all facts alleged in

the complaint and the existence
complaint's allegations." E.

Sltore

of

any fact that can be ptoved, consistent with the

Mkts. Inc.

u.

J.D. Assocs. Ltd. P'shþ,213 tr.3d 175, 180 (4th

Cir. 2000). However, a court need not considet "legal conclusions, elements of a cause of
action,

. . . bare

assertions devoid

of facttal enhancement[] .

uffeasorìable conclusions, or arguments." Nemet

Cheuro/et,

Ltd.

unwarranted infetences,

u. Consumerffiirs.nm, Lnc.,591

F.3d 250, 255 (4th Cu.2009) (citations omitted).

III.

DISCUSSION

a.

'îs

Generally
an initial m^tter, a court is not bound by conclusory allegattons and unsupponed

assettions." Bryant a. I[/e//: Fnryo Bacþ., Nøt. Asr'n,861 F. Srrpp. 2d 646,663 (E.D.N.C 201,2).

The Court notes that in spite of the length of Plaintiffs complaint, Plaintiff has done little

more than offer, in conclusory fashion, the elements of his claims without ptoviding
sufficient facts
standards.

See

to

state claims against Caliber undet the Iqbal/Twonbþ fedetal pleading

A{qa.

Alcolac, Lnc.,658 F.3d 388, 391,

(4th C11.201,1)

(a

complaint must allege

facts sufficient "to taise a dght to telief above the speculative level," theteby nudging the

4

claims actoss the line ftom conceivable to plausible.") (quoting Twonbþ, 550 U.S. 544, 555
Q007).

In PlaintifPs complaint, consistingof 1,57 pangraphs over 31 pages, he makes m^îy
conclusory statements about unidentifìed actions of all the defendants, but nowhere does he
make an allega:j.on as to what actions

contract or negligence.

In

of Calibet

specifìcally resulted

in eithet a breach of

fact, Plaintiff simply makes btoad allegations about the thtee

defendants in the breach of conttact and negligence causes of action, Iisting in one paragraph

for each claim the actions atúibuted to all three defendants without specifìcally
wrongful conduct as to each defendant.

(Jee

Compl.,

assetting

IT 1,28, '1,40.) In the negligent

misteptesentation claim, Plaintiff does not identift a single misrepresentation that anyone
made to him, stating only that "Defendants HSBC and Calibet negligendy misreptesented to

Plaintiff existing facts to affect the essence of the transactionwith Plaintiff in regards to the
enforceability of the" loans. Qd.11146.)

b.

Breach of Contract (Ninth Cause of Action)2

Calibet argues that Plaintiff has failed to ptoperþ plead all elements of a bteach
contract claim so as to survive a 12þ)(6) motion to dismiss.

In ordet to state a clatm for

bteach of conttact, the following essential elements must be alleged: (1) a legal obligation

defendant

of

of

to the plaintiff; Q) a violation or breach of that right ot duty; and Q) u

consequential injury ot damage to the defendant. See Metro. Grp., Inc. u. Meridian Indøs., Inn,

869 F. Srrpp. 2d 692,702 CX/.D.N.C. 2012), citing Inuestmenî Properties u. Norbum,281 N.C.
191, 188 S.E.2d 342 (1,972). 'ùØhen alleging that a defendant has breached a contt^ct,
^

z

The fust eight causes of action of Plaintiffs complaint are assetted solely against Premiet, which
is no longer a party to this action.
5

plaintiff must allege the specific provisions of the contract that were bteached.
Inc. a. Poþqerc,1nc.,133 N.C.

Poþgenex

Int'/,

App. 245,252,515 S.E.2d 457,462 (1999).

Plaintiffs claim is based upon his allegations that Calibet was "contractually obligated
to act

as the mortgage loan

. . . servicer . . . fot PlaintifPs 2006 Home Motgage Refinance

Loans." (Compl. 11121.) Plaintiff

alleges that Calibet:

fotced Plaintiff to pay fraudulent and excessive fees by attempting to enfotce
mortgage loans ptocued by fraud; have put Plaintiff in an untenable positions
causing default; have caused Plaintiff to lose equity and other financing
opportunities regarding his home; have caused Plaintiffs credit score to be

have fotced Plaintiff to p3y exotbitant fees and
payments; have caused Plaintiff to face foteclosure of his Home, thus causing
loweted

d:øLr-:..attcally;

him to incut attorney's fees; and have otherwise wronged Plaintiff.
(Id. n

n8.)

Plaintiff alleges that Caliber breached its obligation by unethically attempting to

enfotce the ioan contract that it knew ot should have known was ftaudulendy induced. (Id.
1112e.)

"The North Carolina Court of Appeals has held that whete a defendant is not

to a contràct,'as a r-:rattef of law he cannot be held liable for
occuffed."' Bryanî,861 tr.Supp.2d 646,657 (E.D.N .C.

201,2),

^p^rty

any bteach that may have

citing Canadl

u.

Mann,107 N.C.

App.252,259,41,9 S.E.2d 957,601. (1992). Plaintiff here does not allege any

facts

supporting his claim regarding the existence of a corfita;ct between himself and Caliber, nor
does he allege any specifìc contractual tetms which were breached by Calibet. Instead,

mentioned above, the factual allegations
Premiet

-

as

in the Complaint refer only to a contract with

the company that Plaintiff entered into the loan conttacts with in 2006. There is

no dispute that Caliber was not

^

parly

to the odginal loan agreements when those

documents were initially executed. Apart from noting that Calibet has since become the

('¡

loan servicer of the loans, Plaintiff does not allege any existing contract between Plaintiff and

Defendant. Plaintiff has not cited a case involving facts like the ones in this case, whete
mortgagor successfully brought a breach

of conttact action against a

a

subsequent loan

servicer based on promises made between the original panies to the contract, not has this

court independendy found such a case.3 The allegations in this claim against Calibet are not
consistent

with any theory of liability and fall far shon of the line of "plausibility of

entitle[ment]

to relief."

Twombþ,

550 U.S. at 557. It is therefore tecommended

that

Plaintiffls' bteach of conttact claim against Calibet be dismissed fot failure to state a clum.

c. Negligence

and Negligent Misrepresentation (Tenth and Eleventh Causes

of Action)

Plaintiff next alleges claims for negligence and negligent misrepresentation against
Caliber. The essential elements of a cause of action for negligence in
duty, bteach of duty, ptoximate cause, and damages. Carualier
460 S.E.2d 133, 136 (1995).

In a negligent

u.

Noth

Carohna are

Jffies,340 N.C. 699,706,

misrepresentation claim, a plainttff must allege

that he justifiably relied to his detriment on information ptepated without reasonable care by
a person

who owed the relying p^tq a duty of carc. Angell

u.

Ke/þ,336 tr. Srrpp. 2d 540,549

(X4.D.N.C. 2004); Hødson-Cole Deu. Corp. u. Beemer,132 N.C. App. 341,346,

51,1.

S.E.2d 309,

312 (1999). Thus, both negligence and negligent misteptesentation claims require an
allegation of a duty owed to the plaintiff by the defendant.
and Trust Co., 1,23 N.C.

See e.g., Carlson u. Branch

Banking

App. 306, 312, 473 S.E.2d 631, 635 (1996) (noting that "fFlot

plaintiffs to recover on a theory of negligence, they must

ftst

show the existence of a legal

3 In an analogous

case, a federal district court in West Virginia held that a loan servicer who was not a party
to the loan agreement at the time of odgination could not be held liable for alleged fraudulent acts of the

original mortgagee. Croy

u. GreenPoint Mort¿.

Fønding [nc.,740 F. Supp. 2d788,801 (S.D.W.Ya. 2Ol0).
7

duty owed to them by defendant."); Brinkmaa

u. Barrett

Kryt

ù

Assoc.,

P.A.,

"1.55

N.C. ,\pp.

738,740,575 S.E.2d 40,43 Q003) (noting that "'to the extent that plaintiff . . . ha[s] alleged

a

bteach of that duty of due care and that the bteach was a ptoximate cause of their injury,
they have stated a cause of action [for negligent misreptesentation]."') (quoting Dauidson and
Jones, Inc. u.

Cnfl

of New

Hanouer,4l N.C. App. 661, 669,255 S.E.2d 580, 585 (1,979)).

In suppott of his negligence-based

causes

of action, Plaintiff

alleges that Defendant

owed him a "drty to act in the same manner as reasonable home mortgage loan . . . servicets

. . . in [its] relationship and dealings with Plaintiffs," and that Defendant "owed Plaintiff
duty of c^re." (Compl.

lill

a

139, 151.) Flowever, Plaintiff has not cited, not has the Coutt

found, a cofirnon law or statutory basis fot Plaintiffs conclusion that Caliber owed him
such a duty under Notth Catolina law

-

especially given the lack

of a conüact between the

t'wo parties. See, e.!., Robinson a. Deatsche Bank Nat. Trast Co, No. 5:12-CV-590-F, 201,3 UL
"1452933, at*1.7 CX/.D.N.C.

Apt. 9,201,3) (noting that Notth Caroltna courts have "declined

to impose any duty fowed by a mottgage servicet] beyond those expressly provided fot in
the agreement.") (quoting
S.E.2d 273, 2006

IYagner u. Branch Bankiag

t

Trast Co., 1,79 N.C.App. 436, 634

WL 2528495, at x2 (Sept. 5, 2006)); ¡ee also IWittenberg u. lYells Fargo Bank,

N.A.,852 tr.Supp.2d 73'1,,752-53 (1.{.D.ìø. Ya.

201,2),

afd, No. 12-1323,

201,3

WI'

3929082

(4th Cir. July 31, 201,3) (holding that a loan servicer has no obligation under the Fair Debt
Collection Practices Act to investigate whether a debt is valid befote attempting to collect
the debt); BennetÍ u. Itnding Soløtions Inc., Cív. Action No. 2:L0-cv-1,201.,201.1. WL 4596913, at
x5 (S.D.W. Va. Sept. 30,2011) (loan servicet that was uninvolved in loan odgination cannot

be liable fot negligent andfot fraudulent acts of lendet in loan otigination). Rathet,

8

Plaintiffls entire argument seems ptedicated on a legal conclusion

doty

-

-

that Calibet owed him

which is unsupported and which the Cout need not accept as

a

true. Without

additional allegations to explain what legal duty was owed to Plaintiff by Calibet, such

a

claim carìnot survive a 12þ)(6) motion to dismiss under the incteased pleading requirements

of Twonbþ/Iqbal.

d. Unfair and Deceptive Trade Practices (Twelfth

Cause of Action)

Under Noth Carolina's unfair tade ptactices statute, "wfait methods of
competition" and "unfair ot deceptive acts ot ptactices" are declared unlawful. N.C. Gen.
Stat. $ 75-1.1. To state a clatrr' under this section, a plaintiff must allege sufficient facts to

show (1) an unfair or deceptive act or practice, or aî unfair method of competition, (2) in ot

affecting conìtnerce, (3) which proximately caused actual injury to the

plaintiff.

basing Iruc. a. Pollard,101 N.C. -,{pp. 450, 460-61,,400 S.E.2d 476, 482 (1991).
need not show "ftaud, bad faith, delibetate acts of deception

show that the acts had a tendency

or

cap^city

to

mislead

,\

Spartan

plaintiff

or acttal deception, but must

ot

cteated the likelihood

of

deception." Id. at 482. A bteach of conttact claim must also allege egtegious ot aggtavating
circumstances to constitute antnfatt or deceptive act under $ 75-1.1. Sæ Ha@ a. Underhill,

211 N.C. App. 546, 554,71.0 S.E.2d 327,333 Q011) (finding that plaintiffs'claim against

loan servicet in connection with a for.l¡eatance agreement was a basic breach of conttact
claim which, standing alone, could not form the basis

In his UDTPA

of

art

UDT?A claim).

claim, Plaintiff simply incorporates all the pdor allegations

of

the

Complaint and alleges that "[t]he actions of HSBC and Caliber constitute unfair or deceptive

tade practices in violation of . . . S 75-1.1." (Compl.
9

1[

155.) As discussed above, Plaintiff

has failed to adequately allege any undetlying claims against Defendant. PlaintifPs claims

unfatr and deceptive trade

fot

ptutti..., therefote, must also fatI. Janes u. Vanderbilt Mortg. and

r-in.,Inc., No. 3:11CV498-MOC-DSC, 201.2WL 441170, at x5 (\ø.D.N.C. Jan.23,2012¡.+

e.

Statute of Limitations

Finally, Defendant atgues that PlaintifPs claims ate barted

by the statute of

limitatjons. This argument has medt. Plaintiffs claims against Calibet are all based upon the
actions

of Defendant Ptemier in originating the subject loans. Plaintiff

alleges that these

loans were entered into in September 2006 and that the Commissioner of Banks issued an

Otderrelated to the actions of Premierin October2009. (Compl.

lnÍ-1,2.)

Plaintiff knew

or should have known about any fraudulent inducement to entet into the subject
agreements

loan

at the time of the loan closing, or, at the latest, at the time that the

Commissioner of Banks issued his otder. Plaintiff has thus failed to bring his action within
the applicable three year statute of limitations under Notth Carolrnalaw.
S
o

See

N.C. Gen. Stat.

1-52. Defendant taised this issue in its brief in support of its motion to dismiss Qocket

No. 5:72-CY-703-D,2073 WL 4095524 @,.D.N.C. Atg. 1,3, 2012),
the Eastetn District of Noth Carolina allowed ¿ similar UDTPA claim to survive a motion to
dismiss. The court found that the plaintiff had plausibly stated a clakn that the defendant mortgage
servicer was in violation of the North Carohna Debt Collection Act ('NCDC,\"), a statute
encompâssed by the UDTPA. Howevet, Glenn is distinguishable from the facts in this case in that
Glenn alleged that he had engaged in direct communication with defendant FNF, and despite this
communication, FNF still refused to investigate the basis fot Glenn's denial of liability. It was this
failure to investigate that the court found to be an unfair act in violation of the statute. Id. at *2-3.
In the present case, Plaintiff does not allege that he had any communication with Calibet. At best,
Plaintiff alleges that Defendant HSBC had a duty to communicate to Calibet the information
Plaintiff gave HSBC about the reasons behind his denial of liability to Caliber. (Compl. at 10.)
Furthermore, the present action is also distinguishable ftom Glenn because Plaintiff has not alleged
any facts supporting the injury requirement of a UDTPA claim. Fot example,'tn Clenn, the plaintiff
alleged facts showing how the defendant's actions caused his credit score to dtop from the high
600's to the low 500's. In comparison, ìØilketson also tries to allege an tnjury through teduced
credit scores, but only proffets conclusory statements that the Coutt need not consider. (Compl. at

ln

Glenn z. Fl\F Seruicing 12r.,

25.) Nemet

Cbeurolet,

Ltd.,591 F.3d at255.
10

Entty 14 at 5) and Plaintiff did not tespond to this argument. Because the statute of
limitations has cleatly run on these claims, and Plaintiff has ptovided no basis fot tolling the
statute, the Coutt finds as an alterntive basis that the complaint should be dismissed on the

gtounds that it is untimely under the statute of limitations.

IV.

CONCLUSION

IT IS RECOMMENDED that the court GRANT
motion to dismiss undet Rule 12@)(6) fot failure to state a clakn.

F'ot the reasons stated above,

Defendant Calibet's

pocket Entry

13.)

L \I'elxter
Suter i\lagistote Judge

November 20,2014
Dutham, Notth Carohna

1,1