GABRIEL v. FORSYTH COUNTY CLERK OF COURT MS. SUSAN FRYE OFFICE OF THE 21ST JUDICIAL DISTRICT COURT et al
Filing
35
MEMORANDUM OPINION AND ORDER signed by CHIEF JUDGE THOMAS D. SCHROEDER on 1/8/2019. The motions to dismiss by the Lender Defendants (Doc. 4 ) and the Trustee Defendants (Doc. 6 ) are GRANTED, and Gabriel's cl aims against these Defendants are DISMISSED WITH PREJUDICE except for those claims over which the court lacks subject-matter jurisdiction pursuant to Rooker-Feldman doctrine, which are DISMISSED WITHOUT PREJUDICE. FURTHER that Gabriel's motion for extension of time to serve (Doc. 31 ) is GRANTED and Gabriel shall have 30 days from the date of this order within which to serve the State Defendants, the State Defendants' motion to dismiss (Doc. 27 ) is DENIED WITHOUT PREJUDICE to its later consideration, Gabriel's motion to amend (Doc. 18 ) is DENIED. (Daniel, J)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
CHARLES GABRIEL,
Plaintiff,
v.
FORSYTH COUNTY CLERK OF COURT
MS. SUSAN FRYE OFFICE OF THE
21ST JUDICIAL DISTRICT COURT;
and her deputy assistant
HOLLEY ROBINSON; HOLLEY
ROBINSON, INDIVIDUALLY;
STATEBRIDGE COMPANY, LLC;
BROUGHAM REO OWNER, LP; JOHN
A. MANDULAK, HUTCHENS LAW
FIRM; JOHN A. MANDULAK,
INDIVIDUALLY; JOHN A.
MANDULAK, TRUSTEE; and
SUBSTITUTE TRUSTEE SERVICES,
INC.,
)
)
)
)
)
)
)
)
)
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)
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)
1:18-cv-354
Defendants.
MEMORANDUM OPINION AND ORDER
THOMAS D. SCHROEDER, Chief District Judge.
This action arises out of a home foreclosure proceeding in
the North Carolina state court system.
motions to dismiss from all Defendants:
Before the court are
Statebridge Company, LLC
and Brougham REO Owner, LP (together, the “Lender Defendants”)
(Doc. 4); John A. Mandulak, the Hutchens Law Firm, and Substitute
Trustee Services, Inc. (together, the “Trustee Defendants”) (Doc.
6); and Susan Frye and Holley Robinson (together, the “State
Defendants”) (Doc. 27).
In addition, Plaintiff Charles Gabriel
has moved to amend the complaint (Doc. 18) and to extend time to
serve the State Defendants (Doc. 31).
For the reasons set forth
below, the Lender and Trustee Defendants’ motions to dismiss will
be granted.
Gabriel’s motion for extension of time to serve the
State Defendants will also be granted, and the State Defendants’
motion to dismiss will be denied without prejudice.
Finally,
Gabriel’s motion to amend will be denied.
I.
BACKGROUND
The allegations of the complaint, along with the contents of
documents of which the court takes judicial notice, 1 show the
following:
1
The court may consider documents outside the pleadings without
converting a motion to dismiss into a motion for summary judgment if
those documents are “integral to and explicitly relied on in the
complaint” and their authenticity is unchallenged. Copeland v. Bieber,
789 F.3d 484, 490 (4th Cir. 2015) (quoting Phillips v. LCI Int’l, Inc.,
190 F.3d 609, 618 (4th Cir. 1999)). Pursuant to Federal Rule of Evidence
201, the court may also take judicial notice of facts contained in
documents that are part of the public record, so long as those facts are
“not subject to reasonable dispute.” Zak v. Chelsea Therapeutics Int’l,
Ltd., 780 F.3d 597, 607 (4th Cir. 2015); see also Colonial Penn Ins. Co.
v. Coil, 887 F.2d 1236, 1239 (4th Cir. 1989) (noting that the most common
subject of judicial notice is facts contained in court records). Both
Gabriel and the Lender Defendants have attached documents to their
briefs. As to the Lender Defendants’ attachments, Docs. 5-1, 5-3, 5-4,
5-5, 5-6, 5-7, 5-8, 5-9, 5-10, 5-11, 5-12 are clearly public records and
may be considered on that basis. Whether or not Doc. 5-2 (the promissory
note) is a public record, Gabriel relies on that note in his complaint
and does not dispute its authenticity — it is therefore considered on
that basis. As to Gabriel’s attachments: Docs. 15-1, 15-2, and 15-3 do
not bear on the court’s motion to dismiss analysis and therefore are not
considered. Docs. 19-1, 19-2, 19-3, and 19-4 are duplicative of the
Lender Defendants’ attachments and thus need not be considered. Doc.
19-5 appears to be a summary of a state statute governing foreclosure;
since any claim that the foreclosure hearing was not in compliance with
the state statute is precluded by the Rooker-Feldman doctrine, as
discussed below, the court need not consider Doc. 19-5.
2
On July 21, 2016, Substitute Trustee Services, Inc. filed a
“Notice of Hearing Prior to Foreclosure of Deed of Trust” in the
Forsyth County Superior Court, scheduled for August 31, 2016.
(Doc. 1 at 4; Doc. 5-1.)
The notice was served on Gabriel as well
as on Michelle Barber, the sole maker of the promissory note in
default.
(Doc. 1 at 5; Doc. 5-2.)
The related deed of trust,
meanwhile, had been executed by both Barber and Gabriel’s father.
(Doc. 5-3.)
Gabriel alleges that both Barber and his father
“transferred [their] entire interest” in the property to him at
some time in or after 2008.
(Doc. 1 at 4.)
Nevertheless, when
Gabriel appeared at the Forsyth County courthouse on August 31,
2016, he was denied entry into the hearing 2 by Holley Robinson,
deputy to Clerk of Court Susan Frye, on the ground that Gabriel’s
name did not appear on the promissory note or deed of trust.
(Id.
at 5–6.)
Present at the hearing was attorney John A. Mandulak, of the
Hutchens Law Firm, representing Substitute Trustee Services, Inc.,
which was the substitute trustee.
(Doc. 1 at 5–7; Doc. 5-1.)
Statebridge Company, LLC appears to have been the loan servicer.
(Doc. 1 at 4–5.)
It is unclear what role, if any, Brougham REO
Owner, LP played in the foreclosure proceedings.
The hearing proceeded without Gabriel and resulted in an order
2
The hearing was allegedly held in Robinson’s office.
3
(Doc. 1 at 6.)
permitting foreclosure.
(Doc. 5-7.)
Gabriel and Barber appealed
the order on September 12, 2016, and the appeal bond was set at
$5,526.07.
(Doc. 5-8); see also N.C. Gen. Stat. § 45-21.16(d1)
(“If an appeal is taken from the clerk’s findings, the appealing
party shall post a bond with sufficient surety as the clerk deems
adequate to protect the opposing party from any probable loss by
reason of appeal; and upon posting of the bond the clerk shall
stay the foreclosure pending appeal.”).
Gabriel
nor
Barber
posted
the
bond
However, because neither
(Doc.
5-11
at
3),
the
foreclosure sale was not stayed, and the property was sold on
September 21, 2016 (Doc. 5-9).
therefore dismissed as moot.
Gabriel and Barber’s appeal was
(Doc. 5-11.)
On April 30, 2018, Gabriel filed the present action.
1.)
(Doc.
Construed liberally, the complaint claims deprivations of his
constitutional due process rights and violation of the state
statute governing foreclosure on the part of the State Defendants, 3
as well as violation of U.S. Department of Housing and Urban
Development regulations (“HUD regulations”) and Consumer Financial
Protection Bureau regulations (“CFPB regulations”) on the part of
the Lender Defendants.
(Id. at 7–9.)
The complaint further
appears to make claims against all (or, at least, unspecified)
Defendants based on fraud, unfair and deceptive trade practices,
3
Gabriel appears to name Frye in her official capacity only.
Robinson in both her official and personal capacities.
4
He names
defamation,
mental
anguish,
embarrassment,
and
intentional
infliction of emotional distress. (Id. at 6–8, 10.) The complaint
was followed by motions to dismiss by the Lender Defendants (Doc.
4), the Trustee Defendants (Doc. 6), and the State Defendants (Doc.
27).
Gabriel filed a response to both the Lender and Trustee
Defendants’ motions to dismiss (Doc. 15), in which he construes
the complaint as making out a conspiracy claim against Mandulak
and Robinson and further references federal claims through 42
U.S.C. § 1983 against all Defendants.
(Id. at 4–5.)
Gabriel also
filed a response to the State Defendants’ motion to dismiss (Doc.
30), and — after the time for filing a response had elapsed — filed
a supplement entitled “Plaintiff’s Amended Memorandum in Support
of Plaintiff’s Opposition to Forsyh [sic] County Defendants Motion
to Dismiss” (Doc. 34). 4
On October 3, 2018, Gabriel filed a motion
4
The court will not consider Gabriel’s supplement (Doc. 34) in resolving
the State Defendants’ motion to dismiss. To the extent Gabriel meant
the supplement to be a surreply, the court’s local rules do not authorize
such a filing.
See Local Rule 7.3.
While courts sometimes allow
surreplies “when fairness dictates based on new arguments raised in the
previous reply,” DiPaulo v. Potter, 733 F. Supp. 2d 666, 670 (M.D.N.C.
2010), here the State Defendants did not even file a reply, let alone a
reply containing new arguments.
To the extent Gabriel meant the
supplement as an amended response, he is required to show excusable
neglect under Federal Rule of Civil Procedure 6(b)(1)(B), since his
deadline for filing a response had already passed. See Fed. R. Civ. P.
6(b)(1)(B) (“When an act may or must be done within a specified time,
the court may, for good cause, extend the time . . . after the time has
expired if the party failed to act because of excusable neglect.”);
Campbell v. Verizon Va., Inc., 812 F. Supp. 2d 748, 750 (E.D. Va. 2011)
(“The Court will deny Plaintiff’s Motion for Leave [to amend his
response] because the deadline for submitting his opposition to the
motion has expired and the Plaintiff has not established that the delay
results from excusable neglect.”).
Gabriel does not give any reason
5
to
amend
the
complaint
(Doc.
18),
which
Defendants (Doc. 23; Doc. 28 at 8–9).
moved
to
extend
Defendants.
the
time
(Doc. 31.)
within
is
opposed
by
all
On November 29, 2018, he
which
to
serve
the
State
No Defendant filed a response within the
deadline set by the court. 5 All motions are now ready for decision.
II.
ANALYSIS
A.
Defendants’ Motions to Dismiss
1.
Standards
Federal Rule of Civil Procedure 8(a)(2) provides that a
complaint must contain a short and plain statement of the claim
showing that the pleader is entitled to relief.
Rule
of
Civil
Procedure
12(b)(6),
“a
complaint
Under Federal
must
contain
sufficient factual matter . . . 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, 550 U.S. 544, 570
(2007)).
A claim is plausible “when the plaintiff pleads factual
content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.”
Id. at
678 (citing Twombly, 550 U.S. at 556).
“When reviewing a pro se complaint, federal courts should
examine carefully the plaintiff’s factual allegations, no matter
that an untimely amendment should be allowed, and the court cannot
discern one.
5
The Lender and Trustee Defendants filed a notice of intent not to
respond. (Doc. 33.)
6
how inartfully pleaded, to determine whether they could provide a
basis for relief.
In addition, in order to determine whether the
claim of a pro se plaintiff can withstand a motion to dismiss, it
is
appropriate
to
look
in
beyond
any
the
face
additional
of
the
materials
complaint
filed
by
to
allegations
made
the
plaintiff.”
Armstrong v. Rolm A. Siemans Co., No. 97-12222, 1997
WL 705376, at *1 (4th Cir. Nov. 13, 1997) (citations omitted)
(unpublished
table
decision).
Nevertheless,
the
liberal
construction of a pro se plaintiff’s pleading does not require the
court to ignore clear defects in pleading, Bustos v. Chamberlain,
No. 3:09-1760-HMH-JRM, 2009 WL 2782238, at *2 (D.S.C. Aug. 27,
2009), or to “conjure up questions never squarely presented in the
complaint,” Brice v. Jenkins, 489 F. Supp. 2d 538, 541 (E.D. Va.
2007) (internal quotation marks and citation omitted).
Nor does
it require that the court become an advocate for the unrepresented
party.
Weller v. Dep’t of Soc. Servs., 901 F.2d 387, 391 (4th
Cir. 1990).
2.
Lender Defendants’ Motion to Dismiss
Construed liberally, Gabriel’s materials can be read to make
out the following claims against the Lender Defendants: violation
of HUD and CFPB regulations, fraud, unfair and deceptive trade
practices,
defamation,
mental
7
anguish,
embarrassment,
and
intentional infliction of emotional distress. 6
To the extent Gabriel’s claims of regulatory violations and
fraud challenge the propriety of the foreclosure, see (Doc. 1 at
6–7
(alleging
that
“[n]ewly
discovered
documents
suggest
the
Attorney representing the Lender was fully aware that the property
which he was attempting to foreclose had been encumbered” and that
the foreclosure hearing should have been therefore “set . . .
aside”)), this court lacks jurisdiction to consider them under the
Rooker-Feldman
doctrine, 7
which
“prohibits
the
United
States
District Courts, with the exception of habeas corpus actions, from
‘sit[ting] in direct review of state court decisions.’”
Jordahl
v. Democratic Party of Va., 122 F.3d 192, 199 (4th Cir. 1997)
(alteration in original) (quoting D.C. Court of Appeals v. Feldman,
460 U.S. 462, 482 n.16 (1983)).
“The doctrine extends not only to
6
In his response brief, Gabriel also alleges in passing that his
inability to be heard at the foreclosure hearing was “in violation of
42 U.S.C. § 1983.” (Doc. 15 at 5.) Of course, § 1983 merely provides
a remedy for the deprivation of other “rights, privileges, or immunities
secured by the Constitution and laws.” 42 U.S.C. § 1983; see Chapman
v. Houston Welfare Rights Org., 441 U.S. 600, 617 (1979) (“[I]t remains
true that one cannot go into court and claim a ‘violation of § 1983’ —
for § 1983 by itself does not protect anyone against anything.”). At
any rate, any claim brought under § 1983 against the Lender or Trustee
Defendants necessarily fails because these Defendants are neither state
actors nor the equivalent thereof. See DeBauche v. Trani, 191 F.3d 499,
506 (4th Cir. 1999) (“To implicate 42 U.S.C. § 1983, conduct must be
fairly attributable to the State. The person charged must either be a
state actor or have a sufficiently close relationship with state actors
such that a court would conclude that the non-state actor is engaged in
the state’s actions.” (internal quotation marks and citations omitted)).
7
The doctrine derives its name from Rooker v. Fid. Trust Co., 263 U.S.
413 (1923), and D.C. Court of Appeals v. Feldman, 460 U.S. 462 (1983).
8
. . . claims presented or adjudicated by the state courts but also
to claims that are ‘inextricably intertwined’ with a state court
judgment.”
Id. (quoting Feldman, 460 U.S. at 486-87).
Claims are
“inextricably intertwined” with a state court ruling where, “in
order to grant the federal plaintiff the relief sought, the federal
court
must
determine
that
the
[state]
court
judgment
was
erroneously entered or must take action that would render the
judgment ineffectual.”
Id. at 202 (alteration in original).
As this court has previously noted, “Rooker-Feldman applies
to foreclosure proceedings before the Clerk of Superior Court and
appeals of those proceedings in State court.”
Broadnax v. BSI
Fin. Servs. Inc., No. 1:17cv42, 2017 WL 4220456, at *3 (M.D.N.C.
Sept. 21, 2017); see also N.C. Gen. Stat. § 45-21.16(d1) (“The act
of the clerk in so finding or refusing to so find [that foreclosure
is proper] is a judicial act . . . .”).
Since the Forsyth County
Superior Court Clerk approved the foreclosure at issue here, this
court lacks subject matter jurisdiction over any claim by Gabriel
seeking
to
disturb
that
foreclosure.
See
Broadnax,
2017
WL
4220456, at *3; Brumby v. Deutsche Bank Nat’l Trust Co., No.
1:09CV144, 2010 WL 617368, at *3–5 (M.D.N.C. Feb. 17, 2010),
adopted by 2010 WL 3219353 (M.D.N.C. Aug. 13, 2010).
Any remedy
available to Gabriel for defects in the foreclosure proceedings is
available through the state court system, not through the filing
9
of protests in federal court. 8
Gabriel’s claims attacking the
propriety of the foreclosure, and any other claims on which Gabriel
bases his prayer for “immediate return to the premises” (Doc. 1 at
10), must therefore be dismissed.
In his response brief, in an attempt to avoid the application
of Rooker-Feldman, Gabriel makes several conclusory allegations of
“extrinsic fraud” against all Defendants.
(Doc. 15 at 2, 4); see
Kougasian v. TMSL, Inc., 359 F.3d 1136, 1141 (9th Cir. 2004)
(“Rooker–Feldman . . . does not bar subject matter jurisdiction
when a federal plaintiff alleges a cause of action for extrinsic
fraud on a state court.”). To the extent Gabriel’s scattered fraud
accusations actually implicate extrinsic fraud, as opposed to
fraud “at the hands of the [state] court,” Jordahl, 122 F.3d at
203 (quoting Homola v. McNamara, 59 F.3d 647, 650 (9th Cir. 1995)),
these accusations fail to satisfy the heightened pleading standard
for fraud claims under Federal Rule of Civil Procedure 9(b).
8
See
Similarly, although Gabriel expresses his frustration that the Lender
Defendants “continue[d]” in their “shenanigans” by placing the property
at issue for sale without waiting for the resolution of Gabriel’s federal
claims against them (Doc. 15 at 4), his remedy for staying the
foreclosure was to post the bond set by the Forsyth County Superior
Court. See (Doc. 5-8 at 1–2); see also N.C. Gen. Stat. § 45-21.16(d1)
(directing the Clerk to stay foreclosure pending direct appeal if the
appealing party posts bond). Gabriel declined to do so. See (Doc. 511 at 3 (“Respondents failed to pay the bond to stay the sale.”)). Even
were Rooker-Feldman not to apply to the foreclosure sale, the court can
discern no possible claim against the Lender Defendants based upon the
fact that they promptly conducted the foreclosure sale authorized by the
Forsyth County Clerk.
10
Fed. R. Civ. P. 9(b) (“In alleging fraud or mistake, a party must
state with particularity the circumstances constituting fraud or
mistake.”).
In North Carolina, “[t]he essential elements of actionable
fraud are: ‘(1) [f]alse representation or concealment of a material
fact, (2) reasonably calculated to deceive, (3) made with intent
to deceive, (4) which does in fact deceive, (5) resulting in damage
to the injured party.’”
S.E.2d
905,
910
(N.C.
Becker v. Graber Builders, Inc., 561
Ct.
App.
2002)
(second
alteration
in
original) (quoting Ragsdale v. Kennedy, 209 S.E.2d 494, 500 (N.C.
1974)).
As to court proceedings, fraud is “extrinsic” when it
“deprives the unsuccessful party of an opportunity to present his
case to the court.” 9
Ct. App. 1976).
Stokley v. Stokley, 227 S.E.2d 131, 134 (N.C.
In the complaint, Gabriel alleges that the Lender
(and/or Trustee) Defendants knew the property was “encumbered
. . . which prevented the Plaintiff in this action from getting
refinanced” and that it was fraudulent for the Lender (and/or
Trustee) Defendants not to “share that information with the clerk”
so that the foreclosure hearing could be “set . . . aside.” 10
(Doc.
9
Extrinsic fraud “prevents a court from making a judgment on the merits
of a case,” whereas intrinsic fraud involves “matters that are involved
in the determination of a cause on its merits.” Wilson v. SunTrust Bank,
809 S.E.2d 286, 293 (N.C. Ct. App. 2017) (quoting Hooks v. Eckman, 587
S.E.2d 352, 354 (N.C. Ct. App. 2003)).
10
Although Gabriel refers to “the Attorney representing the Lender” in
the relevant passage, the surrounding text (Doc. 1 at 6–7) shows that
he may be referring to Mandulak, who was actually the attorney for the
11
1
at
6–7.)
But
Gabriel
does
not
explain
how
any
alleged
encumbrance was “a material fact,” allege with particularity how
the Lender Defendants intended to deceive anyone by not disclosing
the
alleged
encumbrance,
or
explain
how
any
nondisclosure
contributed to Robinson’s decision not to admit Gabriel into the
foreclosure hearing.
Gabriel’s response brief appears to link his
fraud claim to the Lender Defendants’ alleged violation of the
CFPB regulations, but — even assuming the Lender Defendants did
violate the CFPB regulations — this does not in itself constitute
actionable fraud.
Thus, to the extent Gabriel’s extrinsic fraud
claims could survive Rooker-Feldman, they will nevertheless be
dismissed under Rule 9(b).
See Walker v. Rushmore Loan Mgmt.
Servs., LLC, No. 3:15-CV-607-RJC-DCK, 2016 WL 3746577, at *4
(W.D.N.C. June 16, 2016) (“Plaintiffs seek an exception to the
Rooker-Feldman doctrine based on claims of extrinsic fraud. . . .
However, Plaintiffs fail to allege . . . facts showing Defendants
perpetrated
an
extrinsic
fraud
on
the
state
court
in
the
foreclosure proceeding.”), adopted by Walker v. SGB Corp., 2016 WL
3741873 (W.D.N.C. July 11, 2016).
To the extent Gabriel’s claims of regulatory violations are
substitute trustee (Doc. 5-1 at 3; Doc. 11 at 2). Gabriel also recognizes
elsewhere in the complaint that Mandulak represented the substitute
trustee. (Doc. 1 at 2, 6.) As such, Mandulak was legally precluded
from advocating for the Lender Defendants. See N.C. Gen. Stat. § 4510(a). At the end of the day, it is immaterial which party or parties
Gabriel meant to bring his extrinsic fraud claim against, as his claim
fails to meet Rule 9(b)’s heightened pleading standard in any case.
12
instead intended to be freestanding claims for damages, such claims
would survive Rooker-Feldman but fail for lack of a cause of
action.
As to Gabriel’s claim based on the Lender Defendants’
violation of HUD regulations — specifically 24 C.F.R. § 203.600,
requiring mortgagees to adapt “[c]ollection techniques . . . to
individual differences in mortgagors and take account of the
circumstances peculiar to each mortgagor” — it is clear that “the
HUD Regulations do not, on their own, establish a private cause of
action.”
Christenson v. Citimortgage, Inc., No. 12-cv-02600-CMA-
KLM, 2013 WL 5291947, at *7 (D. Colo. Sept. 18, 2013).
some
courts
have
determined
that
the
HUD
“[A]lthough
Regulations
become
enforceable by a private cause of action if they are incorporated
into a mortgagor’s loan documents, those courts represent the
minority position.”
Id.; see also id. (collecting cases).
Even
if the court were to agree that violations of HUD regulations may
be actionable through a breach of contract claim based on the
incorporation of HUD regulations into loan documents, see In re
Rutledge, 510 B.R. 491, 501–02 (Bankr. M.D.N.C. 2014), and even if
the court found such incorporation in the loan documents at issue
here, any such contract claim on Gabriel’s part would necessarily
fail because he is not a party to any of the relevant loan
documents.
The CFPB regulations, 12 C.F.R. §§ 1026 et seq., under which
Gabriel appears to claim he is a “successor in interest,” similarly
13
do not provide potential successors with a private cause of action
for violations. 11
See Amendments to the 2013 Mortgage Rules, 81
Fed. Reg. 72160, 72175 (Oct. 19, 2016) (“Despite the urging of
consumer advocacy groups, the final rule does not provide potential
successors in interest a private right of action . . . .
The
Bureau and other Federal and State agencies will review servicers’
compliance
with
respect
to
potential
successors
in
interest
through the agencies’ supervision and enforcement authority and
through
complaint
monitoring.”).
Even
assuming
that
Gabriel
qualifies as a successor in interest under the CFPB regulations,
then, any claim based on the Lender Defendants’ alleged violation
of those regulations must fail.
Gabriel’s
next
claim
is
for
unfair
and
deceptive
trade
practices under the North Carolina Unfair and Deceptive Trade
Practices Act (“UDTPA”), N.C. Gen. Stat. §§ 75-1.1 et seq.
As the
Lender and Trustee Defendants point out in their response brief,
the general provisions of the UDTPA do not normally apply to
alleged unfair or deceptive practices “in the specific context of
debt collection,” since in that context the North Carolina Debt
Collection Act (“DCA”), N.C. Gen. Stat. § 75-50 et seq., “provides
a claimant’s exclusive remedy.”
DIRECTV, Inc. v. Cephas, 294 F.
11
To the extent Gabriel meant his discussion of the CFPB regulations to
support a cause of action for fraud, that claim fails for the reasons
discussed previously.
14
Supp. 2d 760, 765 (M.D.N.C. 2003); see N.C. Gen. Stat. § 75-56
(“The
specific
and
general
provisions
of
[the
DCA]
shall
exclusively constitute the unfair or deceptive acts or practices
proscribed by [the UDTPA] in the area of commerce regulated by
[the DCA].”).
Claims based on mortgages and foreclosure are
normally treated as “in the area of commerce regulated by [the
DCA],” that is, the context of debt collection.
See, e.g., Cole
v. Wells Fargo Bank, N.A., 1:15-cv-00039-MR, 2016 WL 737943, at
*10 (W.D.N.C. Feb. 23, 2016).
But in order to state a DCA claim,
“a
the
plaintiff
must
allege
following
three
threshold
requirements: (1) that the plaintiff is a consumer who incurred an
obligation; (2) that the obligation incurred is debt; and (3) that
the
party
collector.”
attempting
to
collect
the
obligation
is
a
debt
Vecchione v. Prof’l Recovery Consultants, Inc., No.
1:13CV584, 2014 WL 6972397, at *5 (M.D.N.C. Dec. 9, 2014). Gabriel
has not alleged that he incurred any obligation relevant to the
mortgage; in fact, he specifically notes his frustration at the
fact that the Lender Defendants declined to allow him to “become
[an] obligor” under the loan.
(Doc. 1 at 8.)
Even if the court found the UDTPA, rather than the DCA,
applicable to this action, Gabriel’s complaint fails to plausibly
allege a claim because the allegations relevant to such a claim —
as best as the court can tell, since Gabriel simply lists the
15
elements of a UDTPA claim 12 without mentioning which facts satisfy
them (Doc. 1 at 10) — are alternately implausibly vague (see id.
at 4 (“The Plaintiff[] in this motion has been injured, as a result
[of]
the
Defendants[’]
insufficiently
deceptive
“[e]gregious
or
actions
aggravating,”
.
.
.
Becker
.”))
v.
and
Graber
Builders, Inc., 561 S.E.2d 905, 910 (N.C. Ct. App. 2002) (“[A]
mere breach of contract does not constitute an unfair or deceptive
act.”); see Joy v. MERSCORP, Inc., 935 F. Supp. 2d 848, 863–64
(E.D.N.C. 2013) (finding that “invalid, unauthorized or otherwise
defective” lender documents used in support of foreclosure did not
amount to egregious or aggravating conduct sufficient to state a
claim under the UDTPA).
As a result, any UDTPA or DCA claim in
the complaint must be dismissed.
This brings the court to Gabriel’s common-law tort claims for
defamation,
mental
anguish,
embarrassment,
infliction of emotional distress.
and
(Doc. 1 at 10.)
intentional
In North
Carolina, “mental anguish” is just another name for negligent
infliction of emotional distress.
See Johnson v. Ruark Obstetrics
& Gynecology Assocs., P.A., 395 S.E.2d 85, 89 (N.C. 1990) (noting
that negligent infliction of emotional distress is “often called
‘mental anguish’ or ‘mental distress’”).
12
There does not appear to
“To state a claim under the UDTPA, [the plaintiff] must show: (1) [the
defendant] committed an unfair or deceptive act or practice; (2) in or
affecting commerce; and (3) [the plaintiff] was injured by that act or
practice.” Cephas, 294 F. Supp. 2d at 765.
16
be a cause of action for “embarrassment” under North Carolina law
— at least as separate from claims of negligent or intentional
infliction of emotional distress.
Cf. Dixon v. Stuart, 354 S.E.2d
757 (N.C. Ct. App. 1987) (treating a plaintiff’s claims for the
“suffering of humiliation and embarrassment” as part of the tort
of intentional infliction of emotional distress).
In order to
establish either type of emotional distress claim, Gabriel would
have to plausibly allege — inter alia — that he suffered “severe
emotional
distress
disorder,
such
as,
. . .
which
for
example,
is:
‘any
emotional
neurosis,
or
psychosis,
mental
chronic
depression, phobia, or any other type of severe and disabling
emotional or mental condition which may be generally recognized
and diagnosed by professionals trained to do so.’”
Piro v.
McKeever, 782 S.E.2d 367, 371 (N.C. Ct. App. 2016) (emphasis added)
(quoting Holloway v. Wachovia Bank & Trust Co., 452 S.E.2d 233,
243 (N.C. 1994)); see also id. (noting that the “severe emotional
distress
required”
to
prevail
on
intentional
and
negligent
infliction of emotional distress claims “is the same” (quoting
Holloway, 452 S.E.2d at 243)).
Here, Gabriel has not alleged that
he suffered any emotional distress, let alone the “severe” distress
required under North Carolina law.
Similarly, although North
Carolina’s tort of defamation requires — inter alia — that a
defendant’s “statements were (1) false, (2) defamatory, and (3) of
or concerning [the] plaintiff[]” to be actionable, Boyce & Isley,
17
PLLC v. Cooper, 568 S.E.2d 893, 897 (N.C. Ct. App. 2002), Gabriel
has neither specified any allegedly false statements on the part
of the Lender (or Trustee) Defendants nor alleged any statement
that appears to malign or otherwise defame him.
As a result, he
fails to state a claim for defamation or for any type of emotional
distress. 13
3.
Trustee Defendants’ Motion to Dismiss
Most of Gabriel’s claims against the Trustee Defendants are
identical to his claims against the Lender Defendants, and they
will be dismissed for the same reasons. The only unique accusation
the court can make out against any of the Trustee Defendants is
Gabriel’s argument in his response brief that Mandulak personally
“formulated, directed, controlled, or participated in the scheme
and practices of Defendant Deputy Clerk Holley Robinson.” 14
(Doc.
13
Perhaps in recognition of the shortcomings of his claims against the
Lender Defendants, Gabriel’s proposed amended complaint (Doc. 19) drops
those claims altogether.
14
It is unclear whether Gabriel means to make out a freestanding claim
based on the allegation that Mandulak “violated his oath to practice
law.” (Doc. 15 at 4.) To the extent that Gabriel intended to bring a
legal malpractice claim against Mandulak, such a claim fails because
under North Carolina law “claims for relief for attorney malpractice are
actions sounding in contract and may properly be brought only by those
who are in privity of contract with such attorneys by virtue of a contract
providing for their employment.” Chicago Title Ins. Co. v. Holt, 244
S.E.2d 177, 180 (N.C. Ct. App. 1978).
Mandulak never represented
Gabriel. To the extent Gabriel intended instead to bring an analogue
tort claim for “the negligent breach of a common law duty of care flowing
from the parties’ working relationship” identified in United Leasing
Corp. v. Miller, 263 S.E.2d 313, 317 (N.C. Ct. App. 1980), he has alleged
no “working relationship” with Mandulak that would give rise to such a
duty of care. See Chase Dev. Grp. v. Fisher, Clinard & Cornwell PLLC,
710 S.E.2d 218, 226 (N.C. Ct. App. 2011) (explaining that Miller’s
18
15 at 4.)
Although phrases of this sort are generally used to
make a claim of individual liability for corporate acts, see, e.g.,
F.T.C. v. Holiday Enters., Inc., No. 1:06-CV-2939-CAP, 2008 WL
953358
(N.D.
individual
Ga.
Feb.
5,
defendants
participated
in
Defendants”),
the
2008)
(discussing
“formulated,
acts
Gabriel’s
and
claim
directed,
practices
is
allegations
not
made
of
in
that
controlled,
the
that
or
Corporate
context.
Instead, the court construes his claim as one for civil conspiracy
— or, more accurately under North Carolina law, a “claim for
damages resulting from a conspiracy.”
Fox v. Wilson, 354 S.E.2d
737, 743 (N.C. Ct. App. 1987); see Reid v. Holden, 88 S.E.2d 125,
130 (N.C. 1955) (“Accurately speaking, there is no such thing as
a civil action for conspiracy.
The action is for damages caused
by acts committed pursuant to a formed conspiracy, rather than by
the conspiracy itself; and unless something is actually done by
one or more of the conspirators which results in damage, no civil
action lies against anyone.”).
assertion
that
Mandulak
However, Gabriel’s single bare
“formulated,
directed,
controlled,
or
participated in” a scheme with Robinson is insufficient to make a
plausible claim that Mandulak and Robinson had “an agreement . . .
to do an unlawful act or to do a lawful act in an unlawful way” or
holding was predicated on the fact that the “express purpose” of the
attorney’s action had been “to induce plaintiff” to enter a transaction,
and that the transaction had been “directly intended to affect
plaintiff”).
19
that
they
injured
Gabriel
“pursuant
required under North Carolina law.
to
a
common
scheme,”
as
Piraino Bros., LLC v. Atl.
Fin. Grp., Inc., 712 S.E.2d 328, 333 (N.C. Ct. App. 2011); see
Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250,
255 (4th Cir. 2009) (“[L]egal conclusions, elements of a cause of
action, and bare assertions devoid of further factual enhancement
fail to constitute well-pled facts for Rule 12(b)(6) purposes.”). 15
For these reasons, the Trustee Defendants’ motion to dismiss
will be granted.
4.
State Defendants’ Motion to Dismiss and Gabriel’s
Motion for Extension of Time to Serve
The State Defendants argue that Gabriel’s claims against them
should be dismissed on a variety of bases, including for improper
service.
In response, Gabriel moves for an extension of time to
serve, and the State Defendants have not opposed the motion.
Federal Rule of Civil Procedure 4(c) places the burden on the
plaintiff to effect proper service.
“Dismissal of an action
against a defendant under Rule 12(b)(5) for insufficiency of
service is within the discretion of the court” and will not
necessarily be granted where there is no prejudice to the defendant
and proper service is likely to be accomplished.
15
Argot v. Harden,
To the extent scattered references to “Defendants[’] deceptive actions
in concert with the clerk” (Doc. 1 at 4) could be construed as making
out conspiracy claims against all Defendants, these claims are similarly
conclusory, see (Doc. 15 at 2 (admitting that “[t]he Plaintiff does not
know who exacted the scheme” but speculating, without basis, that it is
“highly unlikely [Robinson] acted alone”)), and are denied.
20
No. 4:11-2755-MBS-TER, 2012 WL 6839310, at *5 (D.S.C. Sept. 27,
2012).
Further, “[w]hen there is actual notice, every technical
violation of the rule or failure of strict compliance may not
invalidate the service of process.” Armco, Inc. v. Penrod-Stauffer
Bldg.
Sys.,
Inc.,
733
F.2d
1087,
1089
(4th
Cir.
1984).
Nevertheless, “the rules are there to be followed, and plain
requirements for the means of effecting service of process may not
be ignored.”
Id.
Here, Gabriel plainly failed to properly serve the State
Defendants in their official capacities.
Official-capacity claims
are treated as claims against the government entity of which the
officer is an agent.
(1985).
See Kentucky v. Graham, 473 U.S. 159, 166
A state or state-created governmental organization must
be served by “delivering a copy of the summons and of the complaint
to its chief executive officer” or “serving a copy of each in the
manner prescribed by that state’s law.”
Fed. R. Civ. P. 4(j)(2).
Under North Carolina law, a state official may be served by
personally delivering, mailing via registered or certified mail,
or depositing with a designated delivery service a copy of the
summons and complaint addressed to the state-designated process
agent.
N.C. Gen. Stat. § 1A-1, Rule 4(j)(4).
If the state agency
fails to designate a process agent, the agency may be served on
the state Attorney General or a deputy or assistant attorney
general.
Id.
21
Gabriel does not allege service on the State Defendants in
any of these ways; instead, he appears to have attempted service
on the State Defendants personally (Docs. 21, 21-2) and on the
Forsyth County Attorney (Doc. 22).
But “[s]ervice of process is
not freestyle, and courts are directed not to overlook procedural
deficiencies just because actual notice occurred.”
Shaver v.
Cooleemee Volunteer Fire Dep’t, No. 1:07cv00175, 2008 WL 942560,
at *2 (M.D.N.C. Apr. 7, 2008); see also Land v. Food Lion, LLC,
No. 3:12-cv-00006-GCM, 2012 WL 1669678, at *3 (W.D.N.C. May 14,
2012).
Gabriel also failed to properly serve Robinson as to his
personal-capacity claims against her.
In a sworn “affidavit of
non-service,” Gabriel’s process server — Patricia A. Mitchell —
states that she “attempted service” on Robinson personally but
that Robinson “would not accept” it.
(Doc. 21-2.)
“When a person
refuses to accept service, service may be effected by leaving the
papers at a location, such as on a table or on the floor, near
that person.”
Novak v. World Bank, 703 F.2d 1305, 1310 n.14 (D.C.
Cir. 1983); see also Fed. Fin. Co. v. Longiotti, 164 F.R.D. 419,
421–22 (E.D.N.C. 1996) (finding service sufficient when private
investigator attempted to serve the defendant at his residence by
giving the documents to the defendant’s wife, but — upon the wife’s
knowing refusal to accept service — left the documents on the
doorstep); 4A Charles Alan Wright et al., Federal Practice and
22
Procedure § 1095 n.8 (4th ed. 2018) (collecting cases).
However,
Gabriel’s process server does not report leaving the service
documents with Robinson or anywhere else (Doc. 21-2), and Gabriel
admits in his motion for extension of time to serve that he “ha[s]
not yet served the defendants” (Doc. 31 at 2).
Nevertheless, pro se plaintiffs are often allowed “a chance
to remedy technical insufficiencies in service of process.” Thomas
v. Nelms, No. 1:09-CV-491, 2013 WL 593419, at *1 (M.D.N.C. Feb.
14, 2013).
The provision of additional opportunities to serve are
at the court’s discretion when the plaintiff has not shown good
cause for the failure to serve, 16 see Fed. R. Civ. P. 4(m), and are
not always granted — for instance, where the plaintiff has already
been granted extensions of time to serve.
See, e.g., Spinks v.
Cohen, 1:17-cv-875, 2018 WL 6416511, at *1 (M.D.N.C. Dec. 6, 2018)
(“While pro se plaintiffs are often allowed ‘a chance to remedy
technical insufficiencies in service of process,’ [the plaintiff]
has already been given that chance.” (quoting Thomas, 2013 WL
593419, at *1)); Crespo v. Ocwen Loan Servicing, LLC, 1:16-cv-43,
2018 WL 1221862, at *4 (W.D.N.C. Jan. 23, 2018).
Here, Gabriel
has not previously sought or been granted an additional opportunity
to serve.
Moreover, the State Defendants failed to respond to his
16
Gabriel’s only excuse for improper service appears to be that the
State Defendants “refused to sign wavier [sic] of service.” (Doc. 31
at 2.) This does not constitute good cause.
23
motion for additional time to serve, making it an uncontested
motion.
See Local Rule 7.3(k) (“If a respondent fails to file a
response within the time required by this rule, the motion will be
considered and decided as an uncontested motion, and ordinarily
will be granted without further notice.”).
As a result, the court will grant Gabriel 30 days from the
date of this order in which to effect proper service; the court
will deny the State Defendants’ motion to dismiss without prejudice
to its later consideration.
If Gabriel fails to properly serve
the State Defendants within the 30-day period, his claims against
the State Defendants (and, as a result, the remainder of this
action) will be dismissed without further notice.
State
Defendants
may
either
move
to
dismiss
Otherwise, the
or
—
to
avoid
duplication of effort — simply file a notice that they wish to
rest on their current briefing, depending on the circumstances.
Upon the filing of either, Gabriel will have the typical 21 days
to file a response, 17 and the State Defendants will have 14 days
to file a reply.
B.
See Local Rule 7.3(f), (h).
Gabriel’s Motion to Amend
Gabriel also moves to amend his complaint to drop his claims
against all Defendants other than Robinson and Mandulak and to add
17
If Gabriel chooses to effect proper service and continue with the
case, he should be prepared to explain why his claims should survive the
bases for dismissal already referenced in the State Defendants’ briefing,
including Rooker-Feldman, the Eleventh Amendment, and judicial immunity.
24
claims against those two.
(Docs. 18, 19.)
The Lender and Trustee
Defendants oppose the motion on grounds of futility. 18
(Doc. 23.)
Local Rule 15.1 requires that an amended complaint be attached
to the motion to amend.
Here, Gabriel has merely incorporated a
list of new counts into his “Memorandum in Support of Plaintiff’s
First Motion for Leave to Amend and Supplement Complaint” (Doc.
19), making it difficult for the court to determine which parts of
the document are intended to comprise the proposed new complaint,
as opposed to being mere briefing in support of the motion for
leave to amend.
Confusion of this sort is one of the results the
local rule is intended to prevent, and the Fourth Circuit has held
that a motion to amend may be denied on this basis alone.
See
U.S. ex rel. Rostholder v. Omnicare, Inc., 745 F.3d 694, 703 (4th
Cir. 2014) (finding that a plaintiff’s “failure to comply” with a
local rule “requir[ing] that a plaintiff attach to a motion to
amend ‘the proposed amended pleading’ . . . justified the district
court’s denial of leave to amend”).
will be denied on this basis.
Gabriel’s
pro
se
status,
and
As a result, Gabriel’s motion
However, in consideration of
because
the
court
can
readily
determine that the new counts Gabriel lists in his motion are
fatally flawed, the motion to amend will also be denied on the
18
While the State Defendants did not respond to Gabriel’s motion to
amend, they briefly argue against Gabriel’s proposed new claims in their
motion to dismiss the complaint. (Doc. 28 at 8–9.)
25
merits.
Federal Rule of Civil Procedure 15 governs leave to amend,
and provides that leave should be “freely” granted “when justice
so requires.” 19
Fed. R. Civ. P. 15(a)(2).
Although this rule is
a “liberal” one, leave will nevertheless be denied “when the
amendment would be prejudicial to the opposing party, there has
been bad faith on the part of the moving party, or the amendment
would have been futile.”
Laber v. Harvey, 438 F.3d 404, 426 (4th
Cir. 2006) (en banc) (quoting Johnson v. Oroweat Foods Co., 785
F.2d 503, 509 (4th Cir. 1986)).
“Futility is apparent if the
proposed amended complaint fails to state a claim . . . .”
Katyle
v. Penn Nat’l Gaming, Inc., 637 F.3d 462, 471 (4th Cir. 2011).
None of the fourteen counts Gabriel proposes states a claim.
Counts
2
(fraud
unauthorized
on
practice
the
court,
deprivation
of
law), 20
5
(fraud
on
of
rights,
the
court
and
“by
obstruction,” 18 U.S.C. § 1503), 6 (mail fraud, 18 U.S.C. § 1341),
19
Gabriel’s proposed amendment did not occur within 21 days after service
of the original complaint or 21 days after the Lender Defendants’ Rule
12(b) motion.
Thus, absent Defendants’ written consent, Gabriel may
only amend with the court’s leave. Fed. R. Civ. P. 15(a).
20
Count 2 against Robinson does not cite to a criminal statute, but it
is presented as bringing a claim against her for the “unauthorized
practice of law without a license.” (Doc. 19 at 4.) Although there may
be “statutory criminal penalties for engaging in the unauthorized
practice of law,” In re Medley, No. 05-12299, 2005 WL 3093392, at *2
(Bankr. M.D.N.C. 2005), Gabriel does not explain how Robinson’s alleged
unauthorized practice of law amounts to the deprivation of a federal
right or privilege secured to him and actionable in a civil suit under
42 U.S.C. § 1983.
26
and 7 (subornation of perjury, 18 U.S.C. § 1622) against Robinson
and
counts
3
(“aid
and
abet
fraud
constructive
by
judicial
misconduct”), 21 4 (obstruction, 18 U.S.C. § 1503), 6 (mail fraud,
18 U.S.C. § 1341), and 7 (subornation of perjury, 18 U.S.C. § 1622)
against Mandulak allege violations of various criminal statutes.
“[I]t is beyond the Court’s purview in this civil matter to provide
relief under criminal statutes.”
Fontell v. Hassett, 870 F. Supp.
2d 395, 414 (D. Md. 2012) (citing United States v. Batchelder, 442
U.S.
114,
124
misconduct”),
(“fraud[u]lent
3
(1979)).
Counts
1
(“judicial
misconduct
foreclosure”)
against
(“perjury
and
and
official
perjury”),
Robinson
and
and
4
counts
2
(“trustee misconduct”) and 5 (action for neglect, 42 U.S.C. § 1986)
against Mandulak are “claim[s] seeking redress for an injury caused
by the state-court decision itself” and would require that this
court review the foreclosure proceedings for error.
Davani v. Va.
Dep’t of Transp., 434 F.3d 712, 719 (4th Cir. 2006).
These claims
are therefore outside of this court’s subject matter jurisdiction
pursuant to the Rooker-Feldman doctrine, as discussed earlier.
21
Count 3 against Mandulak does not cite to a criminal statute, but it
is presented as bringing a claim against him for “aiding and abetting”
Robinson’s misconduct and revolves around the four elements apparently
necessary for convicting a criminal defendant under an “aiding and
abetting” theory. See Department of Justice, 2474. Elements of Aiding
and
Abetting,
Criminal
Resource
Manual,
https://www.justice.gov/jm/criminal-resource-manual-2474-elementsaiding-and-abetting (last visited Jan. 7, 2019). To the extent Gabriel
may have meant this to be a civil conspiracy claim, such a claim would
fail for the same reasons his conspiracy claims in the original complaint
failed.
27
See id. (also noting that it is immaterial for Rooker-Feldman
purposes whether or not the claim at issue was “asserted to the
state
court”);
Broadnax,
2017
WL
4220456,
at
*3.
Count
1
(“Conspiracy to commit Fraud Upon the Court”) against Mandulak,
finally, is identical to Gabriel’s conspiracy claim in the original
complaint, and would fail for the same reasons.
As a result,
Gabriel’s amended complaint would fail to state any viable claims,
and his motion to amend is denied on that basis as well.
III. CONCLUSION
For the reasons set forth above, therefore,
IT IS ORDERED that the motions to dismiss by the Lender
Defendants
GRANTED,
(Doc.
and
4)
and
Gabriel’s
the
Trustee
claims
Defendants
against
these
(Doc.
6)
are
Defendants
are
DISMISSED WITH PREJUDICE except for those claims over which the
court lacks subject-matter jurisdiction pursuant to Rooker-Feldman
doctrine, which are DISMISSED WITHOUT PREJUDICE.
IT IS FURTHER ORDERED that Gabriel’s motion for extension of
time to serve (Doc. 31) is GRANTED and Gabriel shall have 30 days
from the date of this order within which to serve the State
Defendants, the State Defendants’ motion to dismiss (Doc. 27) is
DENIED WITHOUT PREJUDICE to its later consideration, and Gabriel’s
motion to amend (Doc. 18) is DENIED.
/s/
Thomas D. Schroeder
United States District Judge
January 8, 2019
28
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