Barrett v. Shapiro & Ingles LLP et al
ORDER denying as moot 18 Motion to Dismiss for Failure to State a Claim; granting as to HSBC and denying as to Decision One Mortgage Company LLC 20 Motion to Dismiss. Signed by Chief Judge Frank D. Whitney on 1/15/2014. (Pro se litigant served by US Mail.)(blf)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CIVIL NO. 3:13-cv-550-FDW-DSC
SHAPIRO & INGLE, L.L.P, HSBC
MORTGAGE SERVICES, INC. &
DECISION ONE MORTGAGE
THIS MATTER is before the Court on HSBC Mortgage Services, Inc. and
Decision One Mortgage Company, LLC’s Motion to Dismiss Plaintiff’s Amended Complaint
pursuant to Federal Rules of Civil Procedure 12(b)(1), (b)(5), and (b)(6), and Memorandum in
Support of Motion to Dismiss (Doc. No. 20), Plaintiff’s Response (Doc. No. 22), and
Defendants’ Reply (Doc. No. 23). Also before the Court is Defendant Shapiro & Ingle, LLP’s
Motion to Dismiss Plaintiff’s Amended Complaint and Memorandum in Support (Doc. Nos. 18
and 19) and Plaintiff’s Response. (Doc. No. 22). On December 11, 2013, the Court issued a
Roseboro notice due to Plaintiff’s pro se status (Doc. No. 21), advising Plaintiff of her right to
respond to Defendants’ Motions to Dismiss on or before December 26, 2013. For the reasons
stated herein, Defendant HSBC’s motion (Doc. No. 20) is GRANTED as to Defendant HSBC
and Plaintiff’s Amended Complaint is DISMISSED. The motion is DENIED as moot as to
Defendant Decision One Mortgage Company LLC.
Defendants Decision One Mortgage
Company and Shapiro & Ingle are dismissed without prejudice and Defendant’s Shapiro &
Ingle’s motion (Doc. No. 18) is DENIED as moot.
On July 20, 2006, Plaintiff executed and delivered a promissory note to Decision One,
secured by a deed of trust on Plaintiff’s residence located at 2625 Fairstone Avenue in Charlotte,
North Carolina. (Doc. No. 15, Ex. C1). Defendant HSBC later became the holder of the
promissory note and owner of the deed of trust, but Plaintiff disputes this stating that she
“received no information or assignment from the lender” of such. (Doc. No. 1). Following
Plaintiff’s default under the promissory note, Defendant HSBC, through its substitute trustee
Defendants Shapiro & Ingle, LLP, initiated foreclosure proceedings in state court. 2 On March
22, 2013, Assistant Clerk of Superior Court M. Joanne Romano conducted a hearing and entered
an order allowing the deed of trust to be foreclosed by power of sale. (Doc. No. 20, Ex. 2).
Plaintiff did not appeal the order allowing foreclosure or enjoin the foreclosure sale, and the
property was sold at foreclosure on April 12, 2013. (Doc. No. 20, Ex. 3 and 4). The sale of
Plaintiff’s property was confirmed by the Clerk on June 19, 2013 to the highest bidder, IH2
Property North Carolina, L.P. for $74,000. (Doc. No. 20, Ex. 5). A trustee’s deed was recorded
with the Mecklenburg County Register of Deeds on July 6, 2013. (Doc. No. 20, Ex. 6).
On September 30, 2013, Plaintiff, who is appearing pro se, filed a Complaint against
Shapiro & Ingle, LLP (Substitute Trustee for HSBC); HSBC Mortgage Services, Inc., and
Decision One Mortgage Company, LLC (Doc. No. 1) seeking: (1) an order to set aside the
Mecklenburg County Superior Court’s (hereafter “state court”) foreclosure and enjoin any
Plaintiff’s Amended Complaint refers to exhibits that are not attached. It appears that the exhibits referenced in
Plaintiff’s Amended Complaint are actually attached to an “Affidavit of Fact” that she filed on November 26, 2013.
(Doc. No. 17).
A copy of the Notice of Hearing on Foreclosure of Deed of Trust filed in Mecklenburg County Superior Court is
attached to Plaintiff’s Motion as Exhibit 1. This Court may take judicial notice of this and other foreclosure
filings—which are all public record, integral to Barrett’s complaint, and authentic—without converting this to a
summary judgment motion. Philips v. Pitt Cnty. Mem. Hosp., 572 F.3d 176, 180 (4th Cir. 2009); Fed. R. Evid.
further action by the state court and defendants related to the foreclosure; and a (2) determination
that Defendant HSBC is not the holder of the Adjustable Rate Note and did not have authority to
foreclose, and thus did not have the standing to initiate the order. (Doc. No. 1). Plaintiff also
claimed that the note transfer was not properly disclosed to her in violation of the Truth in
Lending Act (TILA) and requested that Defendants submit a debt disclosure statement in
accordance with the Fair Debt Collection Practices Act (FDCPA). (Id.). On November 25,
2013, Plaintiff filed an Amended Complaint naming only HSBC still seeking declaratory relief
and remedy from injury based on alleged FDCPA and TILA due to their “acting in bad faith via
unauthorized acts.” (Doc. No. 15).
STANDARD OF REVIEW
The plaintiff has the burden of proving that subject matter jurisdiction exists. See
Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th
Cir.1991). The existence of subject matter jurisdiction is a threshold issue the court must address
before considering the merits of the case. Jones v. Am. Postal Workers Union, 192 F.3d 417, 422
(4th Cir.1999). When a defendant challenges subject matter jurisdiction pursuant to Federal
Rule of Civil Procedure 12(b)(1), “the district court is to regard the pleadings as mere evidence
on the issue, and may consider evidence outside the pleadings without converting the proceeding
to one for summary judgment.” Richmond, 945 F.2d at 768. The district court should grant the
Rule 12(b)(1) motion to dismiss “only if the material jurisdictional facts are not in dispute and
the moving party is entitled to prevail as a matter of law.” Id.; see also Evans v. B.F. Perkins Co.,
166 F.3d 642, 647 (4th Cir.1999).
In order to survive a Rule 12(b)(6) motion, the Complaint must contain enough facts so
as 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 has facial
plausibility when the plaintiff pleads factual content that allows the court to draw a reasonable
inference that the defendant is liable for the misconduct alleged.” Id.
Further, while the Court
accepts plausible factual allegations in the complaint as true and considers those facts in the light
most favorable to a plaintiff in ruling on a motion to dismiss, a court “need not accept as true
unwarranted inferences, unreasonable conclusions, or arguments.” Eastern Shore Mkt.’s Inc. v.
J.D. Assoc.’s, LLP, 213 F. 3d 175, 180 (4th Cir. 2000).
A court cannot “accept as true
allegations that contradict matters properly subject to judicial notice or by exhibit.” Venev v.
Wyche, 293 F. 3d 726, 730 (4th Cir. 2002) (citations and internal quotations omitted). While
courts apply a more liberal standard to pro se complaints, even holding complaints written by pro
se plaintiffs to “less stringent standards than formal pleadings drafted by lawyers,” courts still are
not bound by a plaintiff’s legal conclusions. Haines v. Kerner, 404 U.S. 519, 520 (1972);
Randall v. United States, 30 F.3d 518, 521 (4th Cir. 1994); Beaudett v. City of Hampton, 775
F.2d 1274, 1278 (4th Cir. 1985).
Defendant Shapiro & Ingle’s Motion
Defendant Shapiro & Ingle note that they are not named as a defendant in Plaintiff’s
Amended Complaint and that Plaintiff does not pray for any relief as to Shapiro & Ingle. (Doc.
No. 15). Plaintiff acknowledges that it appears that Shapiro & Ingle was acting on behalf of
HSBC. (Id.). Shapiro & Ingle opine that “Plaintiff [may have] simply overlooked her need to
file a notice of dismissal.”
The Court has reviewed Plaintiff’s pleadings and agrees that Plaintiff has not named
Shapiro & Ingle or Decision One Mortgage Company LLC as Defendants in the caption of her
Indeed, in response to the pending motions to dismiss, Plaintiff
affirmatively states that she “has removed all other parties originally named in the initial verified
complaint except HSBC Mortgage Services Inc.” Plaintiff further states that her “sole intent is
to establish for the record the rights and interests and true status of HSBC’s Mortgage Service’s
Inc, and the legality of their actions prior to the foreclosure proceedings.” (Doc. No. 22 at 2).
The Court construe’s these statements together with Plaintiff’s Amended Complaint, which only
names HSBC Mortgage Services, as Plaintiff’s attempt to voluntarily dismiss Shapiro & Ingle
and Decision One Mortgage Company. Therefore, the Court will dismiss Shapiro & Ingle and
Decision One Mortgage Company LLC without prejudice and will deny Shapiro & Ingle’s
Motion to Dismiss (Doc. No. 18) as moot.
HSBC Mortgage Service’s Motion
Defendant contends as a threshold matter that this Court lacks subject matter jurisdiction
because Plaintiff's suit attempts to challenge a final and binding order of the Clerk of Superior
Court for Mecklenburg County, and in the alternative, that Plaintiff fails to state a claim upon
which relief can be granted. Specifically, Defendant contends that Plaintiff’s Complaint should
be dismissed because the Court’s review of the state court’s decision is barred by the RookerFeldman doctrine, and her claims are barred by res judicata because these claims were already
decided by the state court and cannot be re-litigated. Defendant also argues that HSBC is not a
“debt collector” under the Fair Debt Collection Practices Act (“FDCPA”) and Plaintiff’s Truth in
Lending Act (“TILA”) claim is time-barred. In the alternative, HSBC argues that Plaintiff failed
to properly serve them in accordance with Rule 4(c)(2).3
The Court need not address Defendant’s arguments with respect to the FDCPA and TILA as this Court has
determined that it is without jurisdiction over this case pursuant to the Rooker-Feldman doctrine and because
Plaintiff’s Amended Complaint would be barred by the doctrine of res judicata. For the same reason, the Court need
not address Defendant’s argument that it was improperly served.
A. Rooker-Feldman doctrine
Defendant first argues that the Rooker-Feldman doctrine bars this Court from reviewing the
underlying state court judgment. See District of Columbia Court of Appeals v. Feldman, 460
U.S. 462 (1983); Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923). The Rooker–Feldman
doctrine prohibits “lower federal courts ... from exercising appellate jurisdiction over final statecourt judgments.” Lance v. Dennis, 546 U.S. 459, 463 (2006) (per curiam). Rooker–Feldman is a
“narrow doctrine,” id., which deprives district courts of subject matter jurisdiction over “cases
brought by state-court losers complaining of injuries caused by state-court judgments rendered
before the district court proceedings commenced and inviting district court review and rejection
of those judgments.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005).
In other words, the doctrine applies “where a party in effect seeks to take an appeal of an
unfavorable state-court decision to a lower federal court.” Lance, 546 U.S. 459 at 466; see also
Adkins v. Rumsfeld, 464 F.3d 456, 463–64 (4th Cir.2006).
Here, although Plaintiff removed some of the explicit requests in her original complaint
that this Court review the state court foreclosure proceedings, she still effectively seeks review of
a completed state court foreclosure. For example, she complains that HSBC did not provide any
evidence that it was the holder of the note and the owner of the deed of trust (Doc. No. at 15 ¶¶
(f)-(i)), and asks this Court to determine “the lawful owner of the note … prior to the foreclosure
proceedings.” (Doc. No. 15 at 10 ¶¶ 1, 2). The state court already determined that HSBC was
the holder of the note and owner of the deed of trust. Plaintiff effectively seeks to appeal the
determination of the Mecklenburg County Superior Court to this Court, and invite this Court to
reject the findings of the Superior Court.
Under the Rooker–Feldman doctrine, this Court lacks jurisdiction over the claims in
Plaintiff's Amended Complaint that arise out of the state court foreclosure action. The United
States Supreme Court has declared that “a party losing in state court is barred from seeking what
in substance would be appellate review of the state judgment in a United States district court,
based on the losing party's claim that the state judgment itself violates the loser's federal rights.”
Johnson v. De Grandy, 512 U.S. 997, 1005–06 (1994) (citing Feldman, 460 U.S. at 482; Rooker,
263 U.S. at 416). This bar applies not only to issues actually presented to and decided upon by a
state court, but to constitutional claims that are “inextricably intertwined with” those questions
ruled upon by a state court. Plyler v. Moore, 129 F.3d 728, 731 (4th Cir.1997). And it precludes
federal review not only of adjudications of a state's highest court, but also decisions of its lower
courts. Jordahl v. Democratic Party of Va., 122 F.3d 192, 199 (4th Cir.1997). Thus, this Court
lacks subject matter jurisdiction over Plaintiff's Amended Complaint which seeks redress for
injuries allegedly caused by the state court's order of foreclosure.
B. Res Judicata
Plaintiff’s Amended Complaint hinges on her argument that HSBC was not the holder of
the note. The determination of the legitimate holder of Plaintiff’s note was exactly what the state
court decided and was necessarily encompassed within that decision.
Under North Carolina law, a clerk hearing a foreclosure of a deed of trust by power of
sale must find: (i) a valid debt of which the foreclosing party is the holder; (ii) default; (iii) right
to foreclose by power of sale under the debt instrument; (iv) notice to all parties entitled to it; (v)
compliance with various consumer-protection notice provisions; and (vi) that the debtor is not an
active-duty member of the armed services. N.C. Gen. Stat. § 45-21.16(d). Decisions of the clerk
under N.C. Gen. Stat. § 45-21.1 are appealable to the superior court within 10 days and become
final, non-appealable orders if not appealed by the deadline. Phil Mechanical Constr. Co. v.
Hillier, 72 N.C. App. 318, 325 (1985).
Here, in the March 22, 2013 order, Assistant Clerk Romano found that HSBC “is the
holder of [the Note], and that balance on [the Note] constitutes a valid debt to” HSBC.
Plaintiff’s 10-day deadline to appeal the order allowing foreclosure was April 1, 2013 and she
did not appeal the order. The issues decided by the Clerk are therefore res judicata and neither
the holder of the note nor the validity of the debt can be relitigated in this action. Id. at 322 (
[W]hen a mortgagee or trustee elects to proceed [by foreclosure under power of sale], issues
decided [by the clerk] therein as to the validity of the debt and the trustee’s right to foreclose are
res judicata and cannot be relitigated . . . .”). Therefore, Plaintiff’s Amended Complaint, which
hinges on Plaintiff’s claim that HSBC is not the holder of the note, is barred by the doctrine of
res judicata and must be dismissed with prejudice.
IT IS HEREBY ORDERED that:
(1) Defendant HSBC Mortgage Services, Inc’s Motion to Dismiss Plaintiff’s Amended
Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1), (b)(5), and (b)(6)
(Doc. No. 20) is GRANTED as to HSBC and DENIED as moot as to Defendant
Decision One Mortgage Company LLC ;
(2) Defendants Shapiro & Ingle and Decision One Mortgage Company are dismissed
(3) Defendant Shapiro & Ingle’s Motion to Dismiss (Doc. NO. 18) is DENIED as moot.
IT IS SO ORDERED.
Signed: January 15, 2014
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