Campbell v. Inkelaar et al (TV3)

Filing 25

MEMORANDUM AND OPINION as set forth in following order.Signed by Chief District Judge Thomas A Varlan on 2/4/13. (c/m)(ABF)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT GREENEVILLE
GLENN R. CAMPBELL,
Plaintiff,
v.
STEPHANIE INKELAAR,
FIDELITY BANK,
GERALD M. SHAPIRO,
JOE M. KIRSCH, and
SHAPIRO AND KIRSCH, LLP,
Defendants.

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No.: 2:12-CV-283
(VARLAN/GUYTON)

MEMORANDUM OPINION
This civil action is before the Court on defendants Stephanie Inkelaar (“Inkelaar”)
and Fidelity Bank’s (“Fidelity”) (collectively, “Fidelity defendants”) Corrected Motion to
Dismiss [Doc. 10] and a separate Motion to Dismiss [Doc. 12] filed by defendants Gerald
Shapiro (“Shapiro”), Joe Kirsch (“Kirsch”), and Shapiro and Kirsch, LLP (“Shapiro &
Kirsch”) (collectively, “Shapiro & Kirsch defendants”). In response, plaintiff, appearing
pro se, filed a Motion for Leave [Doc. 15] in which plaintiff requests leave to file an
amended complaint. Defendants responded [Docs. 16, 17]. For the reasons discussed
herein, the Fidelity defendants’ motion to dismiss [Doc. 10] will be GRANTED, the
Shapiro & Kirsch defendants’ motion to dismiss [Doc. 12] will also be GRANTED, and
plaintiff’s motion to amend [Doc. 15] will be DENIED.
DISMISSED, and the case will be CLOSED.

All defendants will be

I.

Facts
This case involves real property located at 3213 Duchess Drive in Kingsport,

Tennessee, where plaintiff resided after purchasing the home on December 17, 1999 and
assuming the mortgage payments from its previous owner [Doc. 4 ¶1]. One of the
mortgage lenders was Fidelity [Id. ¶ 6]. Although it is unclear from the complaint, at
some point plaintiff defaulted on his mortgage obligations and Fidelity initiated nonjudicial foreclosure proceedings, with Shapiro & Kirsch acting as Fidelity’s agent in
executing the foreclosure [Doc. 1]. On April 4, 2012, plaintiff allegedly attempted to pay
off the mortgage obligation by sending to Fidelity, via Electronic Funds Transfer (EFT),
$69,477.78, the amount plaintiff contends was quoted by Shapiro & Kirsch as the total
payoff amount for the home [Id. at 1:15]. Inkelaar, acting as an employee of Fidelity, did
not accept this payment [Id.].
On April 18, 2012, plaintiff sent a letter to Shapiro & Kirsch requesting
information related to Shapiro & Kirsch’s business and arguing that Fidelity’s rejection
of his payment settled his payment obligations on the note [Id.]. On May 7, 2012,
plaintiff sent a letter to Fidelity via certified mail requesting an unencumbered deed to the
property [Id. at 1:18]. Defendants did not respond to these letters.
Plaintiff then filed this pro se lawsuit on July 11, 2012. In his complaint, plaintiff
asserts three claims against defendants: 1) “deliberate fraud and attempted theft by
remaining silent . . . and continuing with a non-judicial foreclosure[;]” 2) a cause of
action for “denying the plaintiff’s rights to Amendment V11 [sic] of the United States of
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America by fraud by silence[;]” and 3) a claim entitled “full payment refused” [Doc. 1 at
1:18]. Plaintiff seeks compensatory damages in the amount of $50,000 to “reimburse
him for his time” as well as an unencumbered deed to his property [Id. at 2:23]. On July
24, 2012, Fidelity responded with the present motion [Doc. 10], contending that the Court
lacks subject matter jurisdiction and that plaintiff failed to state a claim upon which relief
could be granted [Id. at 1]. Shapiro & Kirsch filed its motion on August 6, 2012, arguing
that plaintiff failed to state a claim for relief [Doc. 12].
On July 26, 2012, plaintiff’s home was sold at a foreclosure auction for
$75,453.52, at which time plaintiff informed “the substitute trustee” conducting the
auction that a lawsuit had been filed [Doc. 15-1 at ¶ 13].1 When plaintiff asked for a
copy of the court order authorizing the foreclosure, the substitute trustee refused to
provide him with that information [Id. at ¶ 14].
Plaintiff then filed his motion to amend [Doc. 15] on August 21, 2012. In the
proposed amended complaint [Doc. 15-1], plaintiff appears to continue to pursue a claim
for fraud against all defendants as well as assert a claim under 42 U.S.C. § 1983. The
Fidelity defendants and Shapiro & Kirsch defendants submitted separate responses in
opposition to the motion to amend [Docs. 16, 17].

1

A typographical error in the complaint causes the numbering to be repetitive.
3

II.

Analysis
A.

Motions to Dismiss
1.

Standard of Review

Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must
contain “a short and plain statement of the claim showing that the pleader is entitled to
relief.” Fed. R. Civ. P. 8(a)(2). A party may move to dismiss for failure to state a claim
pursuant to Rule 12(b)(6). In order to survive a Rule 12(b)(6) motion, a complaint must
contain allegations supporting all material elements of the claims. Bishop v. Lucent
Techs., Inc., 520 F.3d 516, 519 (6th Cir. 2008). In determining whether to grant a motion
to dismiss, all well-pleaded allegations must be taken as true and must be construed most
favorably toward the non-movant. Trzebuckowski v. City of Cleveland, 319 F.3d 853,
855 (6th Cir. 2003).

Detailed factual allegations are not required, but a party’s

“obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than
labels and conclusions and a formulaic recitation of a cause of action’s elements will not
do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Nor will an “unadorned, thedefendant-unlawfully harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). Rather, the complaint must contain “enough facts to state a claim to relief that is
plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. A
pleading must “contain either direct or inferential allegations respecting all the material
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elements to sustain a recovery under some viable legal theory.” Scheid v. Fanny Farmer
Candy Shops, Inc., 859 F.2d 434, 436-37 (6th Cir. 1988) (quoting Car Carriers, Inc. v.
Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984)).
As noted, plaintiff has elected to proceed pro se. “[T]he allegations of a complaint
drafted by a pro se litigant are held to less stringent standards than formal pleadings
drafted by lawyers in the sense that a pro se complaint will be liberally construed in
determining whether it fails to state a claim upon which relief could be granted.”
Jourdan v. Jabe, 951 F.2d 108, 110 (6th Cir. 1991) (citing Estelle v. Gamble , 429 U.S.
97, 106 (1976)); see also Haines v. Kerner , 404 U.S. 519, 520 (1972). However, the
“lenient treatment generally accorded to pro se litigants has limits.” Pilgrim v. Littlefield,
92 F.3d 413, 416 (6th Cir. 1996). Courts have not been “willing to abrogate basic
pleading essentials in pro se suits.” Wells v. Brown, 891 F.2d 591, 594 (6th Cir. 1989)
(citing cases). Liberal federal pleading standards do not permit litigants—even those
acting pro se —to proceed on pleadings that are not readily comprehensible. Cf. Becker
v. Ohio State Legal Servs. Ass’n, 19 F. App’x 321, 322 (6th Cir. 2001) (upholding district
court’s dismissal of pro se complaint containing “vague and conclusory allegations
unsupported by material facts”); Janita Theresa Corp. v. United States Attorney, No. 961706, 1997 WL 211247, at *1 (6th Cir. Apr. 28, 1997) (upholding district court’s
dismissal of pro se complaint whose allegations were “far too muddled to serve as a basis
for a proper suit”).

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2.

Position of the Parties

In support of their motion to dismiss, the Fidelity defendants first contend that the
Court lacks subject matter jurisdiction, given the fact that at the time plaintiff filed his
lawsuit his home was only subject to a prospective foreclosure and had not yet been
foreclosed upon [Doc. 10 at 1]. The Fidelity defendants also contend that the complaint
fails to state a claim upon which relief can be granted [Id.]. The Shapiro & Kirsch
defendants similarly argue that plaintiff fails to state a claim against them [Doc. 12 at 1].
Specifically, the Shapiro & Kirsch defendants argue that plaintiff has not met the
standards for alleging fraud with particularity under Rule 9(b) of the Federal Rules of
Civil Procedure [Doc. 13 at 5]. The Shapiro & Kirsch defendants contend that plaintiff
has not alleged any fraudulent “statement, action, or omission by Shapiro & Kirsch” and
has not put forward any allegation “setting forth the time, place and content of any fraud”
[Id.]. The Shapiro & Kirsch defendants also argue that plaintiff’s Seventh Amendment
claim fails because that amendment does not create a private cause of action [Id. at 6],
and that plaintiff’s third claim does not set forth “what claim is being brought” and
whether it “stands a plausible chance at being successful” [Id.]. As the same analysis
applies to all defendants, the Court will analyze whether any of plaintiffs’ claims
adequately state a claim for which relief can be granted.
3.

Fraud

Under Rule 9(b) of the Federal Rules of Civil Procedure, “[i]n alleging fraud or
mistake, a party must state with particularity the circumstances constituting fraud or
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mistake.” See Advocacy Org. for Patients and Providers v. Auto Club Ins. Ass’n, 176
F.3d 315, 322 (6th Cir. 1999) (“‘[A]llegations of fraudulent misrepresentation[s] must be
made with sufficient particularity and with a sufficient factual basis to support an
inference that they were knowingly made.’”) (quoting Coffey v. Foamex L.P., 2 F.3d 157,
162 (6th Cir. 1993)).
[A] complaint is sufficient under Rule 9(b) if it alleges the
time, place, and content of the alleged misrepresentation on
which [the deceived party] relied; the fraudulent scheme; the
fraudulent intent of the defendants; and the injury resulting
from the fraud, and enables defendants to prepare an
informed pleading responsive to the specific allegations of
fraud.
United States ex rel. Poteet v. Medtronic, Inc., 552 F.3d 503, 518 (6th Cir. 2009) (internal
quotations omitted). “A court need not accept claims that consist of no more than mere
assertions and unsupported or unsupportable conclusions.”

Sanderson v. HCA-The

Healthcare Co., 447 F.3d 873, 876 (6th Cir. 2006) (citing Kottmyer v. Maas, 436 F.3d
684, 688 (6th Cir. 2006)).
In order to state a claim for fraud under Tennessee law, a plaintiff must plead the
following elements: (1) a representation of an existing or past fact; (2) the representation
was false when made; (3) the representation was in regard to a material fact, (4) the false
representation was made knowingly, without belief in its truth, or recklessly; (5) the
plaintiff reasonably relied on the misrepresentation; and (6) the plaintiff suffered
damages as a result of the misrepresentation. Walker v. Sunrise Pontiac-GMC Truck,

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Inc., 249 S.W.3d 301, 311 (Tenn. 2008); see also Dobbs v. Guenther, 846 S.W.2d 270,
274 (Tenn. Ct. App. 1992) (grouping the requirements into four elements).
Upon review of plaintiff’s complaint, and construing all inferences in plaintiff’s
favor, plaintiff has failed to plead adequately a claim of fraud against either the Fidelity
or Shapiro & Kirsch defendants, even under the lenient standard applied to pro se
plaintiffs. Plaintiff alleges that he tried to remit a payment to Fidelity based on a quote
given to him by Shapiro & Kirsch, and that Fidelity returned the payment and continued
with the non-judicial foreclosure sale [Doc. 1 at 1:14-16]. Plaintiff further claims that
when he tried to contact defendants they “failed to respond to demands for information
requested” [Id. at 2:4-5].

From these facts, plaintiff cannot establish the elements

required for fraud under Tennessee law.
As to the Shapiro & Kirsch defendants, Plaintiff has not alleged that Shapiro &
Kirsch made any knowingly false statements of material fact to him. Plaintiff alleges that
Shapiro & Kirsch gave plaintiff a payoff amount, which would entitle him to keep his
home. However, plaintiff does not specifically identify the communication in which
Shapiro & Kirsch made this representation to him, thus failing to provide notice to
Shapiro & Kirsch as to what statement is being claimed as false. Plaintiff further does
not allege that the payoff amount given to him by Shapiro & Kirsch was false or
incorrect, nor does plaintiff allege that Shapiro & Kirsch knew the payoff amount was
false when they related this information to him. Plaintiff similarly does not allege that
Fidelity rejected his payoff amount because it was incorrect, so that he was damaged as a
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result of Shapiro & Kirsch’s alleged misrepresentation. Without alleging any facts to
substantiate the claim, plaintiff asks the Court to infer that, because Fidelity rejected
plaintiff’s payment, Shapiro & Kirsch knowingly told plaintiff the wrong payoff amount.
Plaintiff’s complaint lacks the specificity required under Rule 9(b), and his claims
amount to no more than “bare assertions” of fraud against Shapiro & Kirsch. Sanderson,
447 F.3d at 876. Because plaintiff has not alleged facts necessary to support the elements
for a claim of fraud against Shapiro & Kirsch, his fraud claim against these defendants
will be dismissed.
Plaintiff has similarly failed to allege specific facts to show that Fidelity’s
rejection of his payoff and subsequent foreclosure of his home were part of a fraudulent
scheme. Plaintiff’s allegations against the Fidelity defendants center on Fidelity’s lack of
response by “remaining silent and not responding to my demands and continuing with a
non-judicial foreclosure” [Doc. 1 at 2:15]. Plaintiff does not allege any misrepresentation
by the Fidelity defendants, nor does he allege that the Fidelity defendants had a duty to
disclose something to him and failed to do so. Plaintiff infers that because his payment
was rejected, and he was not given information as to why his payment was rejected after
he requested it, the rejection was part of a fraudulent scheme to deprive plaintiff of his
home. However, plaintiff has not alleged any specific facts to support this conclusion.
Such conclusory allegations are proscribed by Twombly and Iqbal and are further
inadequate under the specificity requirements of Rule 9(b). Accordingly, plaintiff’s
claim of fraud against the Fidelity defendants will be dismissed.
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4.

Seventh Amendment

Plaintiff asserts a claim against defendants for “denying the plaintiff’s rights to
Amendment V11 [sic] of the United States of America by fraud by silence by continuing
with a non-judicial foreclosure sale” [Doc. 1 at 2:16]. Defendants assert that the Seventh
Amendment does not create a private right of action.
“The Seventh Amendment protects a litigant’s right to a jury trial where there
exists a cause of action at common law, or one analogous thereto, for legal relief, where
the amount in controversy exceeds twenty dollars.” Martin v. Telectronics Pacing Sys.,
Inc., 105 F.3d 1090, 1101 (6th Cir. 1997) (quotation marks omitted). Plaintiff has not
alleged any facts tending to show that the acts of defendants in conducting a non-judicial
foreclosure sale violated his Seventh Amendment right to a jury trial, particularly as there
was no action pending in any court at the time of the foreclosure.2 Plaintiff has not stated
a claim for relief against defendants, even under the liberal pleading standards of Rule 8
and the leniency afforded to pro se plaintiffs. Accordingly, this claim will be dismissed
as to all defendants.
5.

“Full Payment refused”

Plaintiff lists “Count 3” of his complaint as a claim for “Full Payment refused”
[Doc. 1 at 1:18]. Although it is unclear from the face of the complaint, it appears that this

2

To the extent plaintiff argues that the non-judicial foreclosure sale itself was
unconstitutional, that argument is addressed, infra, in discussing plaintiff’s motion to amend and
due process claims.
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portion of the complaint does not apply to the Shapiro & Kirsch defendants, as plaintiff
only alleges that Fidelity, acting through Inkelaar, rejected the payment he submitted.
Plaintiff has not stated any claim against the Fidelity defendants upon which this
Court could grant relief. Even under the leniency afforded to pro se plaintiffs, plaintiff
does not describe to what claim the act of refusing payment is related. Plaintiff does not
provide any “viable legal theory” for which this Court could grant plaintiff recovery or
any factual allegations to support his claim. Scheid, 859 F.2d at 436-37. The claim that
his payment was refused, without more, amounts to the type of “the-defendantunlawfully harmed-me accusation” the Iqbal Court found to be inadequate under Rule 8.
556 U.S. at 678. Accordingly, this claim against Fidelity will be dismissed.3
B.

Plaintiffs’ Motion to Amend
1.

Standard of Review

“[A] party may amend its pleading only with the opposing party’s written consent
or the court’s leave.” Fed. R. Civ. P. 15(a)(2). “The court should freely give leave,”
however, “when justice so requires.” Id. Leave is appropriate “[i]n the absence of any
apparent or declared reason,” which may include, but is not limited to, “undue delay, bad
faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to the opposing party by virtue of
allowance of the amendment, [or] futility of the amendment.” Leary v. Daeschner, 349
3

Because the Court finds dismissal under Rule 12(b)(6) for failure to state a claim to be
appropriate as to the Fidelity defendants, the Court need not address Fidelity’s argument
concerning subject matter jurisdiction.
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F.3d 888, 905 (6th Cir. 2003) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)); see
also Courie v. Alcoa Wheel & Forged Prods., 577 F.3d 625, 633 (6th Cir. 2009).
“Amendment of a complaint is futile when the proposed amendment would not permit
the complaint to survive a motion to dismiss.” Miller v. Calhoun Cnty., 408 F.3d 803,
807 (6th Cir. 2005) (citing Neighborhood Dev. Corp. v. Advisory Council on Historic
Pres., 632 F.2d 21, 23 (6th Cir. 1980)).
Plaintiff contends that granting the motion to amend [Doc. 15] would render moot
the respective defendants’ motions to dismiss. In his proposed amended complaint,
plaintiff continues to assert a claim of fraud but also seeks to bring a claim against
defendants for a violation of his civil rights under 42 U.S.C. § 1983 [Doc. 15-1 at 1:9].
Specifically, plaintiff references the Due Process clauses of the Fifth and Fourteenth
Amendments, and appears to argue that the foreclosure of his home by defendants
violated his due process rights [Id. at 1:10-11]. In response, the Shapiro & Kirsch
defendants argue that amendment is improper because plaintiff’s proposed amendments
are futile, as the proposed amended complaint fails to state a claim upon which relief
could be granted [Doc. 16 at 3]. The Fidelity defendants adopt this argument [Doc. 17 at
1].
2.

Fraud

As to plaintiff’s continued assertion of a claim of fraud against defendants, the
amended complaint suffers from the same flaw as plaintiff’s initial complaint, in that it
does not set forth the alleged fraudulent scheme in which defendants were involved, or
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how plaintiff relied on this fraud to his detriment. The additional facts plaintiff sets forth
do not adequately allege that either the Fidelity or Shapiro & Kirsch defendants engaged
in any fraudulent acts towards plaintiff and do not aid plaintiff in establishing a plausible
claim. The Court finds that permitting plaintiff to amend his complaint would thus be
futile; accordingly, plaintiff’s motion to amend the portion of his complaint related to the
claim of fraud will be denied.
3.

Due Process Violation

Plaintiff’s proposed amended complaint also includes a cause of action under §
1983 for a violation of his Fifth and Fourteenth Amendment due process rights.
Defendants argue that plaintiff can assert no claim under § 1983 because neither was
acting under color of state law. 4
In pertinent part, the Fourteenth Amendment provides: “[n]o State shall make or
enforce any law which shall . . . deprive any person of life, liberty, or property, without
due process of law; nor deny to any person within its jurisdiction the equal protection of
the laws.”

U.S. Const. amend. XIV.

The Due Process Clause of the Fourteenth

Amendment applies only to state action, not private conduct. Flagg Bros., Inc. v. Brooks,
436 U.S. 149, 156 (1978); Craft v. Memphis Light, Gas, and Water Div., 867 F.2d 684,
4

The Court notes that, although plaintiff cites to the Fifth Amendment’s Due Process
Clause, that clause only circumscribes actions by the federal government. Scott v. Clay Cnty.,
205 F.3d 867, 873, n. 8 (6th Cir. 2000). As it is state law that enables the foreclosure procedures
at issue in this case, the Court will analyze the claim under the Fourteenth Amendment. See
Cornwell v. Bradshaw, 559 F.3d 398, 410, n. 6 (6th Cir. 2009) (construing Fifth Amendment due
process claim as a Fourteenth Amendment claim since state was responsible actor, rather than
federal government).
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687 (6th Cir. 1976) (“[T]he Fourteenth Amendment requires due process only if ‘state
action’ is ‘depriv(ing) any person of life, liberty or property.’”) (internal quotation marks
and citation omitted). Similarly, a plaintiff bringing a claim under § 1983 must show he
was deprived of a federal constitutional right “by a person acting under color of state
law.” Paige v. Coyner, 614 F.3d 273, 278 (6th Cir. 2010) (emphasis in original). In
Paige, the Sixth Circuit recognized that the state action analysis for the Fourteenth
Amendment and § 1983 are the same because both proscribe “only states (as opposed to
private entities) from depriving individuals of due process.” Id.
“A private party’s actions constitute ‘state action’ where those actions may be
fairly attributable to the state.” Chapman v. Higbee Co., 319 F.3d 825, 833 (6th Cir.
2003) (en banc). “[T]he actions of a private party will not be attributed to the state unless
the state actually compels the action.” King v. Emery, No. 87-5419, 1988 WL 1101, at *1
(6th Cir. Jan. 11, 1988); see also United States v. Coleman, 628 F.2d 961, 964 (6th Cir.
1980) (“[W]here state involvement in private action constitutes no more than
acquiescence or tacit approval, the private action is not transformed into state action if the
private party would not have acted without the authorization of state law.”).
In King, the Sixth Circuit addressed a constitutional challenge to several
Tennessee statutes, which recognized and enforced non-judicial foreclosures, as well as a
lawsuit against the lenders who brought foreclosure, as violations of the Due Process
clause. King, 1988 WL 1101 at *1. The court affirmed the district court’s conclusion
that a private foreclosure sale does not constitute state action and that the mere
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recognition or allowance of a private foreclosure does not amount to the level of
compulsion required to establish state action. Id. (citing Flagg, 436 U.S. 149). The Sixth
Circuit had previously held that state statutes enforcing and regulating self-help
repossession under power of sale provisions do not constitute state action. Northrip v.
Fed. Nat’l Mortg. Ass’n, 527 F.2d 23, 29 (6th Cir. 1975). Since King, this Court and
others have consistently held that non-judicial foreclosures do not amount to state action.
See Drake v. Citimortgage, Inc., No. 1:10-CV-305, 2011 WL 1396774, at *3-4 (E.D.
Tenn. Apr. 13, 2011) (citing cases); Holton v. Wells Fargo Bank, N.A., No. 1:11-CV-65,
2012 WL 928060, at *5-6 (citing to Drake and other cases finding that non-judicial
foreclosures do not constitute state action).
In light of the Sixth Circuit’s decision in King and this Court’s findings in Drake
and Holton, plaintiff has not alleged any facts that the act of foreclosing upon his home
by these private defendants constituted state action. Accordingly, plaintiff cannot assert
that defendants acted under the color of state law to violate his Fourteenth Amendment
due process rights or otherwise state a plausible claim for relief under § 1983. As the
proposed amended complaint does not state a claim upon which relief could be granted,
the Court will deny plaintiff’s Motion to Amend [Doc. 15] as futile.
III.

Conclusion
Accordingly, and for the reasons stated, the Fidelity defendants’ motion to dismiss

[Doc. 10] will be GRANTED, the Shapiro & Kirsch defendants’ motion to dismiss [Doc.
12] will be GRANTED, and plaintiff’s claims against all defendants will be
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DISMISSED. Plaintiff’s motion to amend [Doc. 15] will be DENIED, and this matter
will be CLOSED.
ORDER ACCORDINGLY.

s/ Thomas A. Varlan
CHIEF UNITED STATES DISTRICT JUDGE

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