Alvarez et al v. Wells Fargo Bank, N.A.
Filing
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MEMORANDUM OF DECISION AND ORDER severing from this action all claims asserted by the Pltfs, with the exception of claims asserted by Pltfs Melissa Alvarez, Art Anders, and Linda Anders; denying without prejudice 7 Motion to Dismiss for Failure to State a Claim (see Order for further details). Signed by District Judge Martin Reidinger on 6/6/12. (ejb)
THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 1:11cv306
MELISSA ALVAREZ, ARTHUR ANDERS,
LINDA ANDERS, JAMIE BARNARD,
SCOTT CLEMENTS, NICOLE CLEMENTS,
CHRIS S. FIORENZI, RINA A. FIORENZI,
WILLIAM C. GATTONI, DEBORAH A.
GATTONI, JOSEPH P. GRUSSER,
KATHERINE V. GRUSSER, EDWARD R.
HOCHSTADTER, JR., DARA
HOCHSTADTER, BRAHAM HORWITZ,
DIANE HORWITZ, HARRY D. JONES,
HARRIET G. JONES, MICHAEL LAVIGNA,
HEATHER J. LAVIGNA, OLIVER MORARD,
LINDA MORARD, DAVID WHITMER, SR.,
PATRICIA WHITMER, and MARK
ZURAWEL,
Plaintiffs,
vs.
WELLS FARGO BANK, N.A.,
Defendants.
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MEMORANDUM OF
DECISION AND
ORDER
THIS MATTER is before the Court on the Magistrate Judge’s Show
Cause Order entered January 23, 2012 [Doc. 10]; the Defendant’s Response
to Show Cause Order [Doc. 13]; and the Plaintiffs’ Memorandum in Support
of Joinder [Doc. 14].
I.
PROCEDURAL BACKGROUND
This is an action brought by 25 purchasers of subdivision lots in a failed
real estate development known as the Grey Rock subdivision in Lake Lure,
North Carolina (“Grey Rock”). [Complaint, Doc. 1 at ¶ 1]. The Plaintiffs have
brought suit against Wells Fargo Bank, N.A. (“Wells Fargo”), the successor in
interest to Wachovia Bank, N.A., for violation of the Interstate Land Sales Act,
15 U.S.C. § 1703(a)(2) (“ILSA”); violation of the North Carolina Deceptive
Trade Practices Act, N.C. Gen. Stat. § 75-1.1, et seq. (“Chapter 75”);
negligent misrepresentation; and fraud, arising from the Defendant’s alleged
involvement in a scheme to artificially inflate the value of the lots in Grey
Rock.1 The Defendant has moved to dismiss the entire Complaint pursuant
to Rule 12(b)(6) of the Federal Rules of Civil Procedure. [Doc. 7].
On January 23, 2012, the Magistrate Judge entered an Order
questioning whether the Plaintiffs are properly joined in this action pursuant
to Rule 20 of the Federal Rules of Civil Procedure. The Magistrate Judge
ordered the parties to show cause why the Plaintiffs should not be severed in
this case and why each should not be required to pay the requisite filing fee.
1
Many of the Plaintiffs in the present action also brought suit against various
individuals for similar claims arising out of their purchase of lots in the Grey Rock
development. See Alvarez v. Ward, No. 1:11cv003 (W.D.N.C.). That case was
dismissed on January 13, 2012. [See id., Doc. 39].
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[Doc. 10]. The Defendant responded to the Magistrate Judge’s Show Cause
Order on February 2, 2012. [Doc. 13]. The Plaintiffs filed a Memorandum in
Support of Joinder on the same day. [Doc. 14].
Having been fully briefed, this matter is ripe for disposition.
II.
DISCUSSION
Rule 20 of the Federal Rules of Civil Procedure provides that persons
may be joined as plaintiffs in one action if:
(A) they assert any right to relief jointly, severally, or
in the alternative with respect to or arising out of the
same, transaction, occurrence, or series of
transactions or occurrences; and
(B) any question of law or fact common to all plaintiffs
will arise in the action.
Fed. R. Civ. P. 20(a)(1). The “transaction or occurrence” test set forth in Rule
20 “is designed to permit all reasonably related claims for relief by or against
different parties to be tried in a single proceeding.” Advamtel, LLC v. AT&T
Corp., 105 F.Supp.2d 507, 514 (E.D. Va. 2000). “Absolute identity of all
events is not necessary, and the rule should be construed in light of its
purpose, which is to promote trial convenience and expedite the final
determination of disputes, thereby preventing multiple lawsuits.” Id.
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Joinder is not a substantive right; it is a procedural mechanism that
allows parties with similar substantive claims to enforce them jointly. See
Saval v. BL Ltd., 710 F.2d 1027, 1031 (4th Cir. 1983). Courts have “wide
discretion concerning the permissive joinder of parties” under Rule 20.
Aleman v. Chugach Support Servs., Inc., 485 F.3d 206, 218 n.5 (4th Cir.
2007). As the Fourth Circuit has recognized, whether claims are properly
joined under Rule 20 is a determination that must be made on a case-by-case
basis. Saval, 710 F.2d at 1031. The Court may act upon motion by a party
or sua sponte to remedy improperly joined parties. Fed. R. Civ. P. 21. Where
plaintiffs are improperly joined, the proper remedy is not to dismiss the
misjoined parties but rather to sever all misjoined claims. See Grennell v.
Western Southern Life Ins. Co., 298 F.Supp.2d 390, 399 (S.D. W. Va. 2004).
In the present case, the Plaintiffs contend that they are properly joined
in this action because their claims all arise from the same series of
transactions or occurrences, namely, the purchase of lots in Grey Rock.
Beyond the mere fact that the Plaintiffs are all purchasers in the same
subdivision, however, there is little commonality between the Plaintiffs’ claims.
Each of the claims arise out of the purchase of a separate lot (or lots) that
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were purchased at different times and relate to financing that occurred under
circumstances entirely different from every other lot purchase.
Further, to the extent that the Plaintiffs assert claims based on
misrepresentations and fraud, such claims are entirely dependent on facts
specific to each Plaintiff, such as the particular misrepresentation made and
the reasonableness of any reliance by the particular Plaintiff on such
misrepresentation.
Given the variation in the Plaintiffs’ claims, and the
uniquely personal nature of the deception claims in particular, each Plaintiff
will require a “mini-trial,” each involving different evidence and testimony.
Such a trial would be an “enormous burden” on the Court and would
substantially hinder the fair administration of justice. CineTel Films, Inc. v.
Does 1-1,052, __ F.Supp.2d __, Civil No. JFM 8:11-cv-02438, 2012 WL
1142272, at *8 (D. Md. Apr. 4, 2012).
The Court further notes that the filing of these claims as a single lawsuit
when they are in fact separate lawsuits causes inaccuracies in the filing
statistics of this District. Such inaccuracies are not insignificant. As another
Court in this District has noted, “[s]uch statistical data is extremely important
as it determines the resources that are necessarily allotted to this district.
Thus, the misfiling of these cases could result in less resource[s] being
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allocated to the district than it is entitled to which, of course, could have
negative consequences.” Slep-Tone Entertainment Corp. v. Mainville, No.
3:11-cv-00122, 2011 WL 4713230, at *5 n.3 (W.D.N.C. Oct. 6, 2011) (Mullen,
J.). Moreover, the filing of the Plaintiffs’ claims as a single action, with the
payment of a one-time $350 filing fee, does little to compensate the Court “for
this significant drain on judicial resources.” CineTel, 2012 WL 1142272, at *8
n.4.
Complicating matters is the fact that the Complaint often fails to specify
precisely the theory under which the Plaintiffs allege to be entitled to relief
against this Defendant. While all of the Plaintiffs in this action assert claims
against Wells Fargo, only a fraction of them actually obtained their financing
through this Defendant. Notably, nineteen of the named Plaintiffs financed the
purchase of their Grey Rock lots through other lenders and only subsequently
refinanced their loans through Wells Fargo. Of these nineteen Plaintiffs,
sixteen are also plaintiffs in Barnard v. SunTrust Bank, No. 1:110cv289
(W.D.N.C.), in which they assert similar claims arising out of the same land
purchase transaction and related financing that are at issue here.
Despite
the lack of a lending relationship with the Defendant at the time of the lot
purchases, these Plaintiffs nevertheless have asserted claims against the
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Defendant in the present case arising from such purchases. These causes
of action must be clarified.
The Complaint further fails to plead with any type of specificity the
nature of the misrepresentations allegedly made to each Plaintiff by the
Defendants.
While the Complaint identifies the general nature of the
misrepresentations made to the Plaintiffs, such allegations are not sufficient
under Rule 9(b) to state fraud claims on behalf of every Plaintiff named.
In arguing in favor of joinder, the Plaintiffs note that the Court previously
consolidated a similar group of individually-filed cases in Synovus Bank v.
Karp, 1:10cv172. The eight individual cases in Karp, however, have been
consolidated only for the purposes of pretrial proceedings, and the issue of
whether those cases should be consolidated for trial purposes remains to be
resolved. The claims asserted by the Plaintiffs in the present case may have
enough commonality to justify a limited consolidated for some purposes of
pretrial proceedings, as in Karp. For the reasons discussed above, however,
what limited commonality these claims have does not justify the continued
joinder of such a disparate group of 25 Plaintiffs in this one civil action.
In sum, the Court concludes that there is no legitimate basis for joining
all of the Plaintiffs together in a single lawsuit. The Plaintiffs’ claims lack the
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requisite commonality to justify joinder pursuant to Rule 20(a). Accordingly,
the Court concludes that all of the claims asserted by the Plaintiffs in this
matter, aside from the claims asserted by the Plaintiffs Melissa Alvarez, Art
Anders, and Linda Anders 2, shall be severed from this action and refiled, upon
payment of the requisite filing fees, as new, separate actions. Such claims
shall be filed based upon the particular lot purchased and shall include only
those Plaintiffs and Defendants associated with that particular lot purchase.
Any Complaints that are filed further must include factual allegations of
sufficient particularity to conform to the standards of Rule 9(b) of the Federal
Rules of Civil Procedure and otherwise should provide an adequate
description of the basis for the specific claims asserted against the named
Defendant.
IT IS, THEREFORE, ORDERED that all claims asserted by the
Plaintiffs, with the exception of the claims asserted by the Plaintiffs Melissa
Alvarez, Art Anders, and Linda Anders, are hereby SEVERED from this
action.
IT IS FURTHER ORDERED that within thirty (30) days of the entry of
this Order and upon payment of the requisite filing fees, the severed Plaintiffs
2
It is alleged that Melissa Alvarez, Art Anders, and Linda Anders purchased Lot
61 together in 2007. [Complaint, Doc. 1 at ¶ 81].
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may refile their claims as separate lawsuits against the Defendant or seek
dismissal of their claims.
IT IS FURTHER ORDERED that the Defendant’s Motion to Dismiss
[Doc. 7] is DENIED WITHOUT PREJUDICE.
IT IS FURTHER ORDERED that the Defendant shall have thirty (30)
days from service of the newly filed Complaints to answer or otherwise
respond.
IT IS SO ORDERED.
Signed: June 6, 2012
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