ZANDER v. SAXON MORTGAGE SERVICE, INC. et al
Filing
46
MEMORANDUM OPINION, AND ORDER signed by CHIEF JUDGE WILLIAM L. OSTEEN JR. on 06/18/2015, that Plaintiff's Motion to Remand (Doc. 20 ) is DENIED. FURTHER that Defendant Ocwen Financial Corporation's Motion to Dismiss Amended Complaint (Doc. 10 ) is GRANTED, that Defendants Morgan Stanley & Company, LLC and Saxon Mortgage Service, Inc.'s Motion to Dismiss Plaintiff's Amended Complaint (Doc. 29 ) is GRANTED, and that this case is DISMISSED. A judgment consistent with this Memorandum Opinion and Order will be entered contemporaneously herewith.(Taylor, Abby)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
KARIN KIRKSEY ZANDER,
)
)
Plaintiff,
)
)
v.
)
)
SAXON MORTGAGE SERVICE, INC.,
)
MORGAN STANLEY & COMPANY, INC., )
and OCWEN FINANCIAL
)
CORPORATION,
)
)
Defendants.
)
1:14CV857
MEMORANDUM OPINION AND ORDER
OSTEEN, JR., District Judge
Plaintiff Karin Kirksey Zander (“Plaintiff”), proceeding
pro se, has asserted various claims under North Carolina state
law regarding the reporting of a foreclosure proceeding. This
matter comes before this court on three motions: (1) Plaintiff’s
Motion to Remand (Doc. 20); (2) a Motion to Dismiss filed by
Defendant Ocwen Financial Corporation (“Ocwen”) (Doc. 10); and
(3) a Motion to Dismiss filed by Defendants Morgan Stanley &
Company, LLC1 (“Morgan Stanley”) and Saxon Mortgage Service, Inc.
(“Saxon”) (Doc. 29).
This court has carefully considered Plaintiff’s Motion to
1
As Defendant Morgan Stanley explains, “Plaintiff name[d]
‘Morgan Stanley and Company, Inc.’ in the Amended Complaint.
Morgan Stanley & Co., Inc. was merged into Morgan Stanley & Co,
LLC on or about June 1, 2011.” (Notice of Removal (Doc. 1) at 1
n.1.)
Remand (“Plaintiff’s Motion”), Defendants’ responses in
opposition (Docs. 28, 32, 33), and Plaintiff’s reply (Doc. 35).
For the reasons stated fully below, this court will deny
Plaintiff’s Motion. In addition, this court has carefully
considered both Motions to Dismiss filed by Defendants (Docs.
10, 29), their supporting documents (Docs. 11, 30, 31, 40, 43),
and Plaintiff’s responses (Docs. 22, 27, 36, 37, 42). For the
reasons stated fully below, this court will grant Defendants’
motions and dismiss the present action for failure to state a
claim pursuant to Federal Rule of Civil Procedure 12(b)(6).
I.
BACKGROUND
Plaintiff commenced the present action2 in Durham County
Superior Court on September 17, 2014, against Defendants Saxon,
2
The present action is a continuation of a related case
before this court, 1:13CV1141 (the “initial action”). Plaintiff,
proceeding pro se, commenced the initial action by filing a
complaint against Saxon and Ocwen in Durham County Superior
Court on November 25, 2013. Ocwen removed the action to this
court on December 27, 2013 based on federal question
jurisdiction. (1:13CV1141 (Doc. 1).) Ocwen then moved to dismiss
this action pursuant to Rule 12(b)(6) on January 3, 2014.
(1:13CV1141 (Doc. 8).) Saxon joined Ocwen’s motion to dismiss on
January 13, 2014. (1:13CV1141 (Doc. 15).) Saxon filed its Answer
to Plaintiff’s Complaint on January 24, 2014. (1:13CV1141 (Doc.
17).) On August 26, 2014, this court entered a Memorandum
Opinion and Order and Judgment granting the Motions to Dismiss
for Failure to State a Claim filed by Defendants Ocwen and
Saxon, dismissing Plaintiff’s Fair Credit Reporting Act (“FCRA”)
claims, and remanding the other claims back to state court. (See
1:13CV1141 (Docs. 28, 29).) The Fourth Circuit has since
affirmed that decision. See Zander v. Saxon Mortg. Servs., Inc.,
599 Fed. Appx. 521, 522 (4th Cir. 2015).
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Morgan Stanley, and Ocwen (collectively “Defendants”). Morgan
Stanley removed the action to this court on October 9, 2014,
pursuant to both diversity and federal question jurisdiction.
(Morgan Stanley’s Removal Notice (Doc. 1) at 1.) On October 17,
2014, Ocwen filed a Motion to Dismiss for Failure to State a
Claim and a corresponding Memorandum. (Docs. 10, 11.) On
October 20, 2014, Plaintiff filed a Motion for Entry of Default
against Ocwen, claiming Ocwen’s motion was not timely. (Doc.
15.) On October 21, 2014, Ocwen filed a Response in Opposition
to the Entry of Default and a Motion for Extension of Time and
to Deem Motion to Dismiss and Supporting Memorandum Timely
Filed. (Docs. 16, 17.) Per this court’s November 6, 2014 Text
Order, the court requested that any response by Plaintiff to
Ocwen’s Motion to Deem Motion to Dismiss Timely Filed be filed
by November 21, 2014.
Plaintiff timely filed her response in
opposition. (See Doc. 25.) In addition, Plaintiff filed a Motion
to Remand to State Court. (Doc. 20.)
On November 25, 2014, this court held a status conference.
At that status conference, this court denied Plaintiff’s Motion
for Entry of Default and granted Ocwen’s Motion for Extension of
Time and to Deem Motion to Dismiss and Supporting Memorandum
Timely Filed (Doc. 17). In addition, this court set a filing
schedule allowing Plaintiff twenty days to file supplemental
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briefing stating “specific facts upon which [Plaintiff] relies
to allege that any reporting of the institution of foreclosure
proceedings was false, fraudulent, misleading, or not
legitimate.” (Minute Entry 11/25/2014.) Due dates for any
supplemental responsive pleadings were also set at the status
conference, and this court extended the response deadline as to
Plaintiff’s Motion to be due on the same date as any
supplemental pleadings were filed. (Id.)
Plaintiff filed her
Supplemental Brief on December 15, 2014. (Doc. 27.) On
December 30, 2014, all Defendants filed briefs in opposition to
Plaintiff’s Motion to Remand. (Docs. 28, 32, 33.)
On January 15, 2015, Plaintiff filed a Reply in Response to
Motion to Remand to State Court. (Doc. 35.) Also on January 15,
2015, Plaintiff filed a Motion for Entry of Default against
Morgan Stanley and Saxon for not complying with the scheduling
order. (Doc. 38.) For the reasons fully stated in this court’s
January 22, 2015 Order, this court denied Plaintiff’s Default
Motion against Morgan Stanley and Saxon and amended the pleading
schedule. (Doc. 39.) In accordance with the January 22, 2015
Order, all parties subsequently submitted Replies and Reponses
(Docs. 40, 42, 43), and the present motions are ripe for review.
This court will first address Plaintiff’s Motion to Remand and
then turn to Defendants’ Motions to Dismiss.
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II.
MOTION TO REMAND
A.
Standard of Review
“Federal courts are courts of limited jurisdiction, and
[must] presume that a cause lies outside this limited
jurisdiction.” Wheeling Hosp., Inc. v. Health Plan of the Upper
Ohio Valley, Inc., 683 F.3d 577, 583-84 (4th Cir. 2012). “The
burden of establishing federal jurisdiction is placed upon the
party seeking removal. Because removal jurisdiction raises
significant federalism concerns, [courts] must strictly construe
removal jurisdiction. If federal jurisdiction is doubtful, a
remand is necessary.” Mulcahey v. Columbia Organic Chems. Co.,
29 F.3d 148, 151 (4th Cir. 1994) (citations omitted).
A state court action may be removed by a defendant to
federal district court only if the state court action could have
been originally filed in federal district court. 28 U.S.C.
§ 1441. Generally, a case may be filed in a federal district
court if there is “federal question” jurisdiction under 28
U.S.C. § 1331 or diversity of citizenship under 28 U.S.C.
§ 1332. Accordingly, “a defendant may remove a case to federal
court if: 1) the parties are diverse and the statutory
requirements for diversity jurisdiction are met; 2) the face of
the complaint raises a federal question; or 3) on the basis of a
narrow exception to the well-pleaded complaint rule known as the
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‘complete preemption doctrine.’” Chappell v. Int'l Bhd. Elec.
Workers Local Union 772, Civil Action No. 3:14-cv-02153, 2014 WL
4748607, at *1 (D.S.C. Sept. 23, 2014).
B.
Analysis
Morgan Stanley removed the present action to this court on
October 9, 2014, alleging both federal question and diversity
jurisdiction. (Removal Notice (Doc. 1) at 1.) The first
iteration of this action was originally commenced in state
court, removed based on federal question jurisdiction, and
eventually remanded back to state court. See supra note 2.
Morgan Stanley was not a defendant in the original complaint but
was added as a defendant when Plaintiff filed an amended
complaint in Durham County Superior Court on September 17, 2014.
(See Removal Notice, Ex. 1, State Court Record as to Morgan
Stanley (Doc. 1-1).) Plaintiff filed her Motion to Remand on
October 23, 2014. (Pl.’s Mot. to Remand (“Pl.’s Mot.”) (Doc.
20).)
Plaintiff asserts four arguments in support of her motion
to remand: (1) Morgan Stanley is bound by this court’s
August 26, 2014 Memorandum Opinion and Order and Judgment in the
initial action in this court (1:13CV1141); (2) removal is barred
pursuant to this court’s prior 28 U.S.C. § 1367(c) ruling, which
is the “law of the case”; (3) removal is improper pursuant to 28
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U.S.C. § 1441; and (4) removal is sought for an improper purpose
and in bad faith. (Id.) This court will address Plaintiff’s
arguments in that order.
1.
Morgan Stanley is not bound by this court’s
August 26, 2014 Memorandum Opinion and Order and
Judgment in the initial action (1:13CV1141)
Plaintiff asserts that removal is improper in the current
action because, “defendant Morgan Stanley [] is clearly in
privity with defendant Saxon [] and a real party-in-interest in
this action.” (Pl.’s Mot. (Doc. 20) at 1.) Plaintiff argues that
this privity causes Morgan Stanley to be bound by this court’s
August 26, 2014 Memorandum Opinion and Order and Judgment in the
initial action that granted then Defendants Ocwen and Saxon’s
Motions to Dismiss for Failure to State a Claim, dismissed
Plaintiff’s FCRA claims, and remanded the other claims back to
state court. Plaintiff “submits that the identities of the
parties in the first and still pending removal action, case
number 1:13-cv-01141, are unquestionably the same as the parties
here in the second removal case number 1:14-cv-00857.” (Id. at
3.) Plaintiff goes on to argue that because Saxon and Morgan
Stanley are the same party, Morgan Stanley has been on notice of
this action since it originally commenced with the filing of the
initial action between Plaintiff and Saxon. (Id. at 4.)
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Plaintiff’s argument does not have a sound basis in law.
Morgan Stanley was not a party to the initial action and did not
become a party until Plaintiff filed an Amended Verified
Complaint on September 17, 2014, after this court remanded the
initial action. Morgan Stanley filed its Notice of Removal
pursuant to 28 U.S.C. § 1446(b) on October 9, 2014 (see Removal
Notice (Doc. 1)), and Plaintiff concedes this removal was
timely.
(See Pl.’s Mot. (Doc. 20) at 5.) Morgan Stanley
responded to Plaintiff’s Motion (Doc. 28), citing United States
v. Martinez, in which the Supreme Court held, “For obvious
reasons, a party brought into court by an amendment, and who
has, for the first time, an opportunity to make defense to the
action, has a right to treat the proceeding, as to him, as
commenced by the process which brings him into court.”
United
States v. Martinez, 195 U.S. 469, 473 (1904). Until Morgan
Stanley was made a party to the lawsuit, Morgan Stanley could
not assert its removal rights. Thus, Morgan Stanley is not bound
by any action they were not a party to, as is the case here.
2.
Removal is not barred pursuant to this court’s
prior 28 U.S.C. § 1367(c) ruling which is the
“law of the case”
Plaintiff next argues that this court’s remanding of the
initial action between the parties bars Morgan Stanley from
removing the present action. Plaintiff references the doctrine
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of “law of the case.” (Pl.’s Mot. (Doc. 20) at 5.) “[T]he
doctrine of law of the case restricts a court to legal decisions
it has made on the same issues in the same case.” MacDonald v.
Moose, 710 F.3d 154, 161 n.10 (4th Cir.), cert. denied, ____
U.S. ____, 134 S. Ct. 200 (2013). Jurisdiction in the initial
action was based on federal question. Currently, Morgan Stanley
seeks removal based on diversity. Morgan Stanley notes in its
response:
This Court’s previous order dismissed Plaintiff’s
Fair Credit Reporting Act claims and “decline[d]” to
exercise supplemental jurisdiction of Plaintiff’s
state law claims under 28 U.S.C. § 1367. The issue of
this Court’s diversity jurisdiction under 28 U.S.C.
§ 1332(a) was not raised in the original removal
filing and was not decided by this Court.
(Morgan Stanley’s Resp. to Pl.’s Mot. to Remand (Doc. 28) at 4
(alteration in original) (citations omitted).) When faced with
the same issue, a district court in this circuit did not allow
the plaintiffs’ “law of the case” argument to prevail.
The Plaintiffs . . . argue that, because this Court
already determined that it did not have subject matter
jurisdiction over this case, the law of the case
doctrine bars the Defendants from raising a different
legal theory upon which to now base jurisdiction.
Because the Defendants removed on grounds that were
not considered — much less decided — in the Court's
October 5, 2012 remand opinion, the law of the case
doctrine has no relevance here.
Feldman's Med. Ctr. Pharmacy, Inc. v. CareFirst, Inc., 959 F.
Supp. 2d 783, 794 n.26 (D. Md. 2013) (internal quotations and
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citations omitted) (citing Carter v. Monsanto Co., 635 F. Supp.
2d 479, 485 (S.D.W. Va. 2009) (“Where the question at issue has
not already been decided in the case, explicitly or by necessary
implication, the law of the case doctrine does not apply.”). In
the present action, diversity jurisdiction is presented for the
first time and there is no “law of the case” on this topic.
3.
Removal is proper pursuant to 28 U.S.C. § 1441
Plaintiff next argues that her Amended Verified Complaint
relies “exclusively on state law and is, therefore, not
removable.” (Pl.’s Mot. (Doc. 20) at 7.) Plaintiff cites
Beneficial National Bank v. Anderson for the proposition that
she is the “master of the claim” and can “avoid federal
jurisdiction by exclusive reliance on state law,” see Beneficial
Nat’l Bank v. Anderson, 539 U.S. 1, 12 (2003) (Scalia, J.,
dissenting), attempting to bolster her argument that removal is
improper in the present action due to the state law torts
alleged in Plaintiff’s complaint. However, Plaintiff fails to
point out that her citation comes from the dissent and that the
majority in Beneficial National Bank specifically held, “As a
general rule, absent diversity jurisdiction, a case will not be
removable if the complaint does not affirmatively allege a
federal claim.” Id. at 6 (emphasis added).
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Morgan Stanley removed the present action under both
federal question and diversity jurisdiction. Plaintiff makes no
claims contesting diversity jurisdiction in the present action.
Therefore, there is no evidence to suggest that Morgan Stanley’s
removal based on diversity jurisdiction is improper in the
present action.
4.
Removal is not sought for an improper purpose or
in bad faith
Plaintiff’s final argument in support of remand is that
“[t]he Notice of Removal is a desperate attempt with unsupported
conclusory allegations that new federal questions have been
added.” (Pl.’s Mot. (Doc. 20) at 8.) Morgan Stanley’s Notice of
Removal was based on both diversity and federal question
jurisdiction. (See Removal Notice (Doc. 1) at 1.) The conditions
for this court’s exercise of diversity jurisdiction exist in the
present action. (See id. at 2-3.) As the Fourth Circuit has
explained, “Since diversity always vests original jurisdiction
in the district courts, diversity also generates removal
jurisdiction.” Lontz v. Tharp, 413 F.3d 435, 439 (4th Cir.
2005). Therefore, there is no basis for this court to find that
the Removal Notice was filed in bad faith.
In addition, Plaintiff claims that the removal is “intended
to enable Saxon to escape the consequences of impending default
for its failure to timely file an answer in the previous removal
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action case number 1:13-cv-01141.” (Pl.’s Mot. (Doc. 20) at 8.)
This portion of Plaintiff’s Motion reasserts arguments that this
court addressed in favor of Saxon on November 5, 2014.3 (Order
1:13CV1141 (Doc. 39).) For the reasons previously articulated in
that Order, this court did not find Saxon in default.
Additionally, other than Plaintiff’s privity arguments, it is
unclear why any timeliness issues with Saxon are informative to,
or binding on, Morgan Stanley’s present attempt to remove the
action.
Morgan Stanley is a newly-named defendant to an ongoing
dispute. As a newly-named defendant, Morgan Stanley has the
right to remove the action to federal court if the statutory
prerequisites exist and the filing is timely. In her Motion for
Remand, Plaintiff does not argue that the parties are not
completely diverse or that the amount in controversy is not met.
Plaintiff also concedes that Morgan Stanley’s Removal Notice was
timely filed. (Pl.’s Mot. (Doc. 20) at 5.) Morgan Stanley filed
its Notice of Removal within thirty days of being served with
the Verified Amended Complaint.
In addition, the one-year absolute bar does not prevent
diversity removal. “In diversity cases, the [removal] statute
explicitly safeguards against . . . strategic delay[s] by
3
In fairness, Plaintiff’s present Motion was filed before
this court issued that order.
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erecting an absolute bar to removal of cases in which
jurisdiction is premised on 28 U.S.C. § 1332 ‘more than 1 year
after commencement of the action.’” Lovern v. Gen. Motors Corp.,
121 F.3d 160, 163 (4th Cir. 1997) (quoting 28 U.S.C. § 1446(b)).
The initial action was filed on November 25, 2013 in Durham
County Superior Court. This date is the absolute earliest this
action could be considered to have commenced. Morgan Stanley
filed its Notice of Removal on October 9, 2014, less than a year
after the action initially commenced. Accordingly, the one-year
bar does not serve as a basis for ordering a remand, even
assuming that the action’s time in federal court did not toll
the calculation, which it may well have.
Nowhere in the present Motion does Plaintiff articulate
specific facts to show that (1) diversity jurisdiction is
unavailable or inappropriate in the present action or (2) Morgan
Stanley was untimely in filing its Notice of Removal. Therefore,
this court will deny Plaintiff’s Motion to Remand.
III. MOTIONS TO DISMISS
A.
Standard of Review
“To survive a motion to dismiss, a complaint must 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) (quoting Bell Atl. Corp. v. Twombly,
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550 U.S. 544, 570 (2007)). A claim is facially plausible
provided the plaintiff provides enough factual content to enable
the court to reasonably infer that the defendant is liable for
the misconduct alleged. Id. The pleading setting forth the claim
must be “liberally construed” in the light most favorable to the
nonmoving party, and allegations made therein are taken as true.
Jenkins v. McKeithen, 395 U.S. 411, 421 (1969). However, “the
requirement of liberal construction does not mean that the court
can ignore a clear failure in the pleadings to allege any facts
[that] set forth a claim.” Estate of Williams-Moore v. Alliance
One Receivables Mgmt., Inc., 335 F. Supp. 2d 636, 646 (M.D.N.C.
2004).
Fed. R. Civ. P. 12(b)(6) protects against meritless
litigation by requiring sufficient factual allegations “to raise
a right to relief above the speculative level” so as to “nudge[]
the[] claims across the line from conceivable to plausible.”
Twombly, 550 U.S. at 555, 570; see Iqbal, 556 U.S. at 678. Under
Iqbal, the court performs a two-step analysis. First, it
separates factual allegations from allegations not entitled to
the assumption of truth - i.e., conclusory allegations, bare
assertions amounting to nothing more than a “formulaic
recitation of the elements.” Iqbal, 556 U.S. at 681.
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Second, it
determines whether the factual allegations, which are accepted
as true, “plausibly suggest an entitlement to relief.” Id.
When a party is proceeding pro se, that party’s filings are
“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). Nevertheless, it is important to note that, in the
case of a pro se plaintiff, 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) (dismissing pro se complaint).
B.
Analysis
Plaintiff alleges causes of action all stemming from her
allegation that “Saxon wilfully and knowingly reported and
furnished fraudulent, false and inaccurate information to one or
more of the major credit bureaus alleging that it had initiated
legitimate foreclosure proceedings against Plaintiff.” (Amended
Verified Complaint (“Am. Verified Compl.”) (Doc. 4) at 3.) Also
alleged by Plaintiff is both Morgan Stanley and Ocwen’s
complicity in Saxon’s alleged misreporting of the foreclosure
proceeding. (Id. at 7.)
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1.
Plaintiff Fails to State a Claim upon which
Relief can be Granted
All of Plaintiff’s causes of action are premised on Saxon’s
alleged publication of “false, inaccurate, and misleading
information regarding Plaintiff.” (Id. at 1.) Because this court
could not ascertain any specific facts, or infer from the facts
presented, that Saxon’s reporting of foreclosure proceedings was
in fact “false, inaccurate, and misleading,” this court issued a
bench ruling allowing Plaintiff twenty days from November 25,
2014, to file supplemental briefing “stating specific facts upon
which she relies to allege that any reporting of the institution
of foreclosure proceedings was false, fraudulent, misleading, or
not legitimate.” (Minute Entry 11/25/2014.) Pursuant to the
bench order, Plaintiff filed her Supplemental Briefing on
December 15, 2014.4 (Doc. 27.)
In her Supplemental Briefing, Plaintiff gives a detailed
timeline of her mortgage. (Pl.’s Supplemental Br. (Doc. 27) at
5-18.) According to Plaintiff, in January 2006, she secured a
mortgage for a residence in Raleigh from First NLC Financial
Services, LLC. (Id. at 5.) Plaintiff made payments to Ocwen, who
4
The lack of specific facts is particularly significant
here, as Plaintiff had previously filed an identical action
against Ocwen and Saxon. Zander v. Saxon Mortg. Service, Inc.,
No. 1:13CV1141, 2014 WL 4246156, at *1 (M.D.N.C. 2014), aff’d,
599 Fed. Appx. 521 (4th Cir. 2015). However, following remand of
that action, Plaintiff filed an amended complaint adding Morgan
Stanley and modifying her allegations.
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serviced her loan. (Id.) In May 2006, Plaintiff refinanced her
mortgage through Decision One Mortgage Company, LLC. (Id.) After
refinancing, Plaintiff made her monthly payments to Saxon, who
serviced the loan. (Id.) In December 2006, Morgan Stanley
acquired Saxon. (Id. at 7.) In June 2007, Plaintiff communicated
to Saxon that she intended to sell the property. (Id. at 8.)
Saxon did not respond to Plaintiff’s communications. (Id.) On or
about July 19, 2007, Plaintiff informed Saxon that the property
was in escrow and the home would be sold on August 15, 2007.
(Id.)
Plaintiff then states that Saxon “initiated or instigated
the filing [of] a non-judicial Special Proceedings action, No.
07SP3400, in Wake County Superior Court as a first step to
foreclose against Plaintiff’s residential property.” (Id. at 9.)
Plaintiff does not give any specific date for this action.
Plaintiff received notice of the hearing date that was set
“shortly after the scheduled August 15, 2007, closing.” (Id.)
Again, Plaintiff fails to assert a specific date. The home was
sold on August 15, 2007 and the mortgage was paid in full on
August 20. (Id.) Saxon dismissed the foreclosure proceedings on
or about August 20, 2007. (Id. at 10.)
In the summer 2013, Plaintiff attempted to secure a
mortgage for a residential property in Durham. (Id.) Mortgage
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lenders informed Plaintiff that she was denied financing because
Plaintiff’s credit report showed that Saxon had commenced
foreclosure proceedings on her previous property. (Id. at 11.)
It is the reporting of the initiation of foreclosure proceedings
by Saxon to the Credit Reporting Agencies (“CRAs”) that
Plaintiff claims is “false, inaccurate, and misleading.” (Am.
Verified Compl. (Doc. 4) at 1.) However, Plaintiff does not deny
that a foreclosure proceeding was initiated. Because Plaintiff
has failed to allege that the information furnished by Saxon to
the CRAs was in any way false, inaccurate, or misleading,
Plaintiff has failed to state a claim upon which this court can
grant her relief, just as this court found in the previous
action.
2.
Plaintiff’s State Law Claims are Preempted by the
FCRA or are Time-Barred
In the alternative, even if Plaintiff has included
allegations to show the possibility that the information Saxon
provided to the CRAs was false or fraudulent, Plaintiff’s state
law claims are either preempted by the FCRA or are time-barred
and must therefore be dismissed on those grounds.
Plaintiff alleges thirteen claims for relief all based in
North Carolina statutory and common law. (Id. at 8-17.)
Plaintiff specifically alleges that Saxon is a “‘furnisher’ of
information to credit reporting agencies within the meaning of
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FCRA, 15 U.S.C. § 1692s-2.”5 (Id. at 1.) Plaintiff then premises
all thirteen of her claims for relief on Saxon allegedly
furnishing fraudulent information to CRAs. (See, e.g., id.
¶¶ 37, 44, 70.)
Plaintiff’s first through fifth claims for relief all
allege violations of the North Carolina Unfair and Deceptive
Trade Practices Act, codified at N.C. Gen. Stat. § 75-1.1. (Id.
at 8-11.) Plaintiff claims that Defendants’ reporting of “an
alleged foreclosure sale” to “one or more CRAs” violated N.C.
Gen. Stat. § 75-1.1. (See, e.g., id. at 9.) These claims are
expressly preempted by the FCRA.
“The FCRA is a comprehensive statutory scheme designed to
regulate the consumer reporting industry.” Ross v. FDIC, 625
F.3d 808, 812-13 (4th Cir. 2010) (citing 15 U.S.C. § 1681(a)).
Section 1681s–2 of the FCRA “describes the responsibilities of
those who report credit information to CRAs. Section 1681s–2(a)
explains the ‘[d]uty of furnishers of information to provide
accurate information,’ which includes correcting any errors in
5
In her Amended Verified Complaint, Plaintiff cites “FCRA,
15 U.S.C. § 1692s-2.” (Doc. 4.) In Plaintiff’s Supplemental
Briefing, Plaintiff refers to FCRA, 15 U.S.C. 1682s-2.
Responsibilities of furnishers of information to consumer
reporting agencies is codified in 15 U.S.C. § 1681s-2. (Doc.
27.) Therefore, this court will assume that Plaintiff’s
references to § 1692s-2 in her Amended Verified Complaint is a
typographical error.
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reporting.” Id. at 813 (quoting 15 U.S.C. § 1681s-2(a)). As a
result, a claim under N.C. Gen. Stat. 75–1.1 “runs into the
teeth of the FCRA preemption provision” when the claim concerns
reporting of inaccurate credit information to CRAs, an area
regulated in great detail under § 1681s–2(a)–(b). Id.
Section 1681h(e) provides that, while many state law claims
concerning credit reporting are barred by the FCRA, there is one
exception:
Except as provided in sections 1681n and 1681o of this
title, no consumer may bring any action or proceeding
in the nature of defamation, invasion of privacy, or
negligence with respect to the reporting of
information against any consumer reporting agency, any
user of information, or any person who furnishes
information to a consumer reporting agency, based on
information disclosed pursuant to section 1681g,
1681h, or 1681m of this title, or based on information
disclosed by a user of a consumer report to or for a
consumer against whom the user has taken adverse
action, based in whole or in part on the report except
as to false information furnished with malice or
willful intent to injure such consumer.
15 U.S.C. § 1681h(e) (emphasis added). Therefore, under the
FCRA, the only way Plaintiff may bring her action under N.C.
Gen. Stat. § 75-1.1 against Defendants as “furnishers of
information” is if she can plausibly allege and later proves
“malice or willful intent to injure” her. See id.
This court utilizes a two-step inquiry when assessing
whether or not Plaintiff may go forward with her causes of
action under N.C. Gen. Stat. § 75-1.1.
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First, we ask whether the claim falls within the scope
of § 1681h(e), which includes only claims “based on
information disclosed pursuant to section 1681g,
1681h, or 1681m of this title, or based on information
disclosed by a user of a consumer report to or for a
consumer against whom the user has taken adverse
action, based in whole or in part on the report.” The
second step in the analysis involves determining
whether the “malice or willful intent to injure”
exception to the general bar against state law actions
applies.
Ross, 625 F.3d at 814 (quoting 15 U.S.C. § 1681h(e)).
Plaintiff’s claims stem from information provided under 15
U.S.C. § 1681m, which, in part, regulates “[d]uties of users
taking adverse actions on basis of information contained in
consumer reports.” See 15 U.S.C. § 1681m(a). Plaintiff alleges
she was denied financing when she attempted to purchase property
due to the information Saxon provided to CRAs. (Am. Verified
Compl. (Doc. 4) at 5.) This indicates that prong one of this
court’s inquiry is met.
However, Plaintiff fails on prong two of the inquiry.
Viewing her allegations in the light most favorable to
Plaintiff, Plaintiff has not alleged that any Defendant acted
with “malice or willful intent to injure,” as required to meet
the § 1681h(e) exception. Other than liberally using the words
“willful” and “intentional” throughout her pleadings, nowhere
does Plaintiff allege facts to indicate that the information
Saxon provided to the CRAs was false in any way, and if it was
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false, that Saxon provided false information with any malice or
willful intent to injure Plaintiff.
Plaintiff next asserts six state tort causes of action: (1)
Defamation Per Se (Sixth Claim for Relief); (2) Negligent
Infliction of Emotional Distress (Seventh Claim for Relief);
(3) Intentional Infliction of Emotional Distress (Eighth Claim
for Relief); (4) Tortious Interference with Economic Advantage
(Ninth Claim for Relief); (5) Fraud (Eleventh Claim for Relief);
and (6) Civil Conspiracy (Thirteenth Claim for Relief).6 (Id. at
11-17.) Using the same analysis, stated supra, Plaintiff’s state
law tort claims are also preempted by the FCRA. Plaintiff has
not alleged that the information provided by Saxon to the CRAs
was false in any way. And if it was false, there is no
allegation of any malice or willful intent to injure Plaintiff
on the part of any Defendant, indicating that Plaintiff’s claims
do not qualify for the FCRA preemption exception.
Plaintiff’s ninth claim for relief asserts Tortious
Interference with Economic Advantage stemming from Defendants
intentionally “induc[ing] Bank of America, Wells Fargo Bank, and
6
“[I]t [is] undisputed that there is no independent
cause of action for civil conspiracy in North Carolina.”
Feldman v. Law Enforcement Assocs. Corp., 779 F. Supp. 2d
472, 497 (E.D.N.C. 2011) (citing Shope v. Boyer, 268 N.C.
401, 150 S.E.2d 771, 774 (1966)). Because the underlying
claims asserted by Plaintiff are preempted or time-barred,
this claim cannot survive the motion to dismiss.
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several other financial institutions to deny credit to
plaintiff” through Defendants’ false reporting of foreclosure
proceedings. (Id. at 13-14.) However, this claim is also
deficient on the merits.
To make out a claim for tortious interference with
prospective economic advantage, the plaintiff must
show that the defendant induced a third party to
refrain from entering into a contract with the
plaintiff without justification. Additionally, the
plaintiff must show that the contract would have
ensued but for the defendant's interference.
N.C. Motorcoach Ass'n v. Guilford Cnty. Bd. of Educ., 315 F.
Supp. 2d 784, 810 (M.D.N.C. 2004) (internal alterations and
quotation marks omitted). There are no allegations to support
such a claim. Plaintiff alleges she was denied credit based on
information that was accurate - a foreclosure proceeding had
been initiated. As a result, Plaintiff has not alleged that any
Defendant induced any third party to refrain from extending
credit to Plaintiff without justification.
Plaintiff’s tenth claim for relief asserts a violation of
the North Carolina Debt Collection Act, codified at N.C. Gen.
Stat. § 58-70-90 et seq. (“NCDCA”). (Am. Verified Compl. (Doc.
4) at 14.) In Ross, the Fourth Circuit held that NCDCA claims
stemming from reporting of false credit information are
preempted by the FCRA. Ross, 625 F.3d at 817 (“As a preliminary
matter, to the extent [the plaintiff’s] claims rely on [the
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defendants’] reporting of false credit information, they are
preempted . . . . [Plaintiff] would be attempting to use the
NCDCA as a requirement or prohibition of North Carolina law
concerning conduct regulated under section 1681s–2 . . .
relating to the responsibilities of persons who furnish
information to consumer reporting agencies.” (internal quotation
marks omitted) (last alteration in original)). This court finds
that Ross is binding here and that Plaintiff’s NCDCA claim is
preempted.
Plaintiff’s twelfth claim for relief is a contract claim
for breach of the implied covenant of good faith and fair
dealing. (Am. Verified Compl. (Doc. 4) at 15-16.) Plaintiff
asserts that Defendants breached an “enforceable mortgage
contract” by “improperly foreclosing upon the property and
falsely claiming that foreclosure proceedings had been
initiated.” (Id. at 16.) This court finds two bases for
rejecting this argument. First, to the extent Plaintiff’s claim
is predicated on an improper foreclosure proceeding initiated in
August 2007, the claim is time-barred. Generally, North Carolina
courts will only recognize breach of good faith claims when
dealing with breach of contract claims. See Hogan v. City of
Winston-Salem, 121 N.C. App. 414, 422, 466 S.E.2d 303, 308
(1996). Thus, Plaintiff’s claim is subject to the three-year
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statute of limitations for actions based in contract. See N.C.
Gen. Stat. § 1-52(1). Here, the alleged breach occurred in
August 2007. (See Pl.’s Supplemental Br. (Doc. 27) at 9
(acknowledging that Plaintiff received notice of Saxon’s intent
to foreclose and of a hearing date in August 2007).) Because
Plaintiff filed the initial action in 2011, any action stemming
from an alleged breach that occurred when Defendants commenced
foreclosure proceeding is outside of the limitations period.7
Second, to the extent Plaintiff’s claim is predicated on
Defendants reporting a foreclosure proceeding to CRAs, that
claim is deficient because the contract between the parties was
no longer valid. See Kyles v. S. Holding Corp., 5 N.C. App. 465,
468, 168 S.E.2d 502, 504 (1969) (recognizing that payment of the
debt voids a deed of trust or mortgage). Thus, Plaintiff’s
breach of good faith claim does not assert a viable claim for
relief or is, as explained supra, preempted by the FCRA.
Ultimately, because Plaintiff has not alleged facts to
suggest that the information reported by Defendants to CRAs was
in any way false, inaccurate, or misleading, Plaintiff has not
stated a plausible claims for relief, and as a result, this case
must be dismissed.
7
Plaintiff’s additional arguments presented in her
supplemental briefing regarding Defendants’ legal authority to
foreclose does not offset the timeliness issue. (See Pl.’s
Supplement in Opp’n to Defs.’ Mot. to Dismiss (Doc. 42) at 5-7.)
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IV.
CONCLUSION
IT IS THEREFORE ORDERED that Plaintiff’s Motion to Remand
(Doc. 20) is DENIED.
IT IS FURTHER ORDERED that Defendant Ocwen Financial
Corporation’s Motion to Dismiss Amended Complaint (Doc. 10) is
GRANTED, that Defendants Morgan Stanley & Company, LLC and Saxon
Mortgage Service, Inc.’s Motion to Dismiss Plaintiff’s Amended
Complaint (Doc. 29) is GRANTED, and that this case is DISMISSED.
A judgment consistent with this Memorandum Opinion and
Order will be entered contemporaneously herewith.
This the 18th day of June, 2015.
_____________________________________
United States District Judge
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