Velez v. The Bank of New York Mellon Trust Company N.A et al
Filing
12
MEMORANDUM OPINION re 2 Motion to Dismiss and 6 Motion to Dismiss. Signed by District Judge James C. Cacheris on 10/23/2012. (rban, )
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
JOSHUA I VELEZ,
Plaintiff,
v.
THE BANK OF NEW YORK MELLON
TRUST COMPANY N.A., et al.,
Defendants.
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1:12cv1008 (JCC/TCB)
M E M O R A N D U M
O P I N I O N
This matter is before the Court on the Motion to
Dismiss by Defendants The Bank of New York Mellon Trust Co. N.A.
(“Bank of New York”) and Mortgage Registration Systems, Inc.
(“MERS”) [Dkt. 2], and the Motion to Dismiss by Defendant Samuel
I. White, P.C. (“SIWPC”) [Dkt. 6].
For the following reasons,
the Court will grant Defendants’ Motions.
I.
A.
Background
Factual Background
The pertinent factual allegations in this case are as
follows.
On or about December 15, 2004, Plaintiff signed a
promissory note and Deed of Trust which placed a security
interest on his home (the “Property”) with Defendant Bank of New
York.
(Compl. [Dkt. 1-1] ¶ 7.)
After executing these
documents, Plaintiff began making payments to Defendant Bank of
1
New York’s agent, America’s Servicing Company (“ASC”).
9.)
(Id. ¶
In 2011, Plaintiff began receiving demands for payment from
ASC on behalf of Defendants Bank of New York, MERS, and SIWPC.
(Id. ¶ 10-11.)
B.
Procedural Background
Plaintiff filed his Complaint in the Circuit Court for
Fairfax County, Virginia on August 3, 2012.
[Dkt. 1]
The
Complaint contains seven counts: (1) violation of the Fair Debt
Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq.
(2000) (Count I); (2) declaratory judgment (Count II); (3)
slander of title (Count III); (4) fraud (Count IV); (5) “illegal
substitution of trustee” (Count V); (6) civil conspiracy (Count
VI); and (7) quiet title (Count VII).
(Compl. [Dkt. 1-1].)
Defendants Bank of New York and MERS, with the consent of
Defendant SIWPC, timely removed the action to this Court on
September 10, 2012.
[Id.]
On September 17, 2012, Defendants
Bank of New York and MERS filed a Motion to Dismiss along with a
supporting memorandum and Roseboro notice.
[Dkt. 2-4.]
That
same day, Defendant SIWPC also filed a Motion to Dismiss,
memorandum in support, and Roseboro notice.
[Dkt. 6-8.]
Plaintiff did not file any opposition to either motion.
Plaintiff did not attend the hearing on the Motions on October
19, 2012.
Defendants’ Motions are now before this Court.
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II.
A.
Standard of Review
Jurisdiction
Pursuant to Rule 12(b)(1), a claim may be dismissed
for lack of subject matter jurisdiction.
12(b)(1).
Fed. R. Civ. P.
Defendants may attack subject matter jurisdiction in
one of two ways. First, defendants may contend that the
complaint fails to allege facts upon which subject matter
jurisdiction may be based.
See Adams v. Bain, 697 F.2d 1213,
1219 (4th Cir. 1982); King v. Riverside Reg'l Med. Ctr., 211 F.
Supp. 2d 779, 780 (E.D. Va. 2002).
In such instances, all facts
alleged in the complaint are presumed to be true.
Adams, 697
F.2d at 1219; Virginia v. United States, 926 F. Supp. 537, 540
(E.D. Va. 1995).
Alternatively, defendants may argue that the
jurisdictional facts alleged in the complaint are untrue.
Adams, 697 F.2d at 1219; King, 211 F. Supp. 2d at 780.
In that
situation, “the Court may ‘look beyond the jurisdictional
allegations of the complaint and view whatever evidence has been
submitted on the issue to determine whether in fact subject
matter jurisdiction exists.’”
Virginia v. United States, 926 F.
Supp. at 540 (citing Capitol Leasing Co. v. FDIC, 999 F.2d 188,
191 (7th Cir. 1993)); see also Velasco v. Gov't of Indonesia,
370 F.3d 393, 398 (4th Cir. 2004) (holding that “the district
court may regard the pleadings as mere evidence on the issue and
3
may consider evidence outside the pleadings without converting
the proceeding to one for summary judgment”); Adams, 697 F.2d at
1219; Ocean Breeze Festival Park, Inc. v. Reich, 853 F. Supp.
906, 911 (E.D. Va. 1994).
In either circumstance, the burden of
proving subject matter jurisdiction falls on the plaintiff.
McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189
(1936); Adams, 697 F.2d at 1219; Johnson v. Portfolio Recovery
Assocs., 682 F. Supp. 2d 560, 566 (E.D. Va. 2009) (holding that
“having filed this suit and thereby seeking to invoke the
jurisdiction of the Court, Plaintiff bears the burden of proving
that this Court has subject matter jurisdiction”).
B.
Failure to State a Claim
Federal Rule of Civil Procedure 12(b)(6) allows a
court to dismiss those allegations which fail “to state a claim
upon which relief can be granted.”
Fed. R. Civ. P. 12(b)(6).
Rule 12(b)(6) motion tests the legal sufficiency of the
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complaint.
2008).
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir.
A court reviewing a complaint on a Rule 12(b)(6) motion
must accept well-pleaded allegations as true and must construe
factual allegations in favor of the plaintiff.
See Randall v.
United States, 30 F.3d 518, 522 (4th Cir.1994).
A court must also be mindful of the liberal pleading
standards under Rule 8, which require only “a short and plain
statement of the claim showing that the pleader is entitled to
4
relief.”
Fed. R. Civ. P. 8.
While Rule 8 does not require
“detailed factual allegations,” a plaintiff must still provide
“more than labels and conclusions” because “a formulaic
recitation of the elements of a cause of action will not do.”
Bell Atl. Corp. v. Twombly, 550 U .S. 544, 555–56 (2007)
(citation omitted).
To survive a Rule 12(b)(6) motion, “a complaint must
contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’”
Ashcroft v.
Iqbal, 556 U.S. 662 (2009) (quoting 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.”
Id.
However, “[t]hreadbare recitals of the elements
of a cause of action, supported by mere conclusory statements,
do not suffice” to meet this standard, id., and a plaintiff's
“[f]actual allegations must be enough to raise a right to relief
above the speculative level . . . .”
Twombly, 550 U.S. at 555.
Moreover, a court “is not bound to accept as true a legal
conclusion couched as a factual allegation.”
Iqbal, 129 S. Ct.
at 1949–50.
C.
Pro Se Plaintiff
Complaints filed by pro se plaintiffs are construed
more liberally than those drafted by an attorney.
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See Haines v.
Kerner, 404 U.S. 519, 520 (1972).
“However inartfully pleaded
by a pro se plaintiff, allegations are sufficient to call for an
opportunity to offer supporting evidence unless it is beyond
doubt that the plaintiff can prove no set of facts entitling him
to relief.”
Thompson v. Echols, No. 99–6304, 1999 WL 717280
(4th Cir. 1999) (citing Cruz v. Beto, 405 U.S. 319 (1972)).
While a court is not expected to develop tangential claims from
scant assertions in a complaint, if a pro se complaint contains
potentially cognizable claims, the plaintiff should be allowed
to particularize those claims.
Id. (citing Beaudett v. City of
Hampton, 775 F.2d 1274 (4th Cir. 1985); Coleman v. Peyton, 340
F.2d 603, 604 (4th Cir. 1965)).
III.
Analysis
A. Jurisdiction over Counts I-III
Defendants Bank of New York and MERS first argue that
this Court does not have jurisdiction over Counts I-III of
Plaintiff’s Complaint because they assert Plaintiff lacks
standing over these claims.
Mem. [Dkt. 3] at 4-5.)
(Defs. Bank of New York and MERS
Instead, they argue that these claims
are part of the bankruptcy estate.
(Id.)
The Court finds that Plaintiff has standing over these
claims and thus there is subject matter jurisdiction over them.
Under 11 U.S.C. § 541(a)(1), the bankruptcy estate is defined as
including “all legal or equitable interests of the debtor in
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property as of the commencement of the [bankruptcy] case.”
This
definition includes causes of action by the debtor against his
creditors which the debtor either had accrued by that time or
which were “sufficiently rooted” in pre-bankruptcy petition
conduct.
Field v. Transcontinental Insurance Co., 219 B.R. 115,
118-19 (E.D. Va. 1998); Jenkins v. AT Massey, 410 B.R. 182, 19192 (Bankr. W.D. Va. 2008).
In this case, Plaintiff filed for Chapter 7 bankruptcy
protection on September 4, 2009.
(Ex. C, Defs. Bank of New York
and MERS Mem. [Dkt. 3-1] at 39.)
The claims in Count I
(violation of FDCPA), Count II (declaratory judgment), and Count
III (slander of title), however, relate to Plaintiff’s
allegations regarding the demands for payment sent on behalf of
Defendants in 2011.
(Compl. [Dkt. 1-1] ¶ 10-26.)
As a result,
the Court finds that these claims are not sufficiently rooted in
pre-bankruptcy conduct as to be subsumed in the bankruptcy
estate.
Thus, Plaintiff retains standing for these claims, and
this Court has subject matter jurisdiction over them.
B. Failure to State a Claim in Counts IV-VII
In their motions, both Defendants Bank of New York and
MERS and Defendant SIWPC (collectively, “Defendants”) argue that
all of Plaintiff’s claims should be dismissed for failure to
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state a claim. 1
(Defs. Bank of New York and MERS Mem. [Dkt. 3]
at 1; Def. SIWPC Mem. [Dkt. 7.] at 1.)
As discussed below, the
Court finds that each of Plaintiff’s claims should be dismissed
because Plaintiff has failed to allege facts sufficient to
support a plausible claim under any of the counts.
A. Count I - Violation of the FDCPA
In Count I, Plaintiff asserts that Defendants “engaged
in practices that violate the FDCPA” because Defendants
allegedly do not have the right or authority to enforce his debt
obligations or because Plaintiff’s debt obligations allegedly
are unenforceable because they have been extinguished, satisfied
or split.
(Compl. [Dkt. 1-1] ¶ 10-12, 20-21.)
Plaintiff fails to state a claim against Defendants
for a violation of the FDCPA.
Plaintiff fails to allege facts
indicating that the FDCPA applies to any of the Defendants or
1
Defendants Bank of New York and MERS rely in their memorandum
on a number of materials outside of the pleadings which were not
attached to Plaintiff’s Complaint. Although in analyzing a
motion to dismiss under Rule 12(b)(6) the Court generally must
only rely on the pleadings, courts have held that it also is
appropriate to consider documents integral to, relied on, or
referenced to in the complaint, as well as official public
records pertinent to the plaintiff’s claims. See Witthohn v.
Fed. Ins. Co., 164 F. App'x 395, 396 (4th Cir. 2006); Gasner v.
County of Dinwiddie, 162 F.R.D. 280, 282 (E.D. Va. 1995). All
of the exhibits fall in one or both of these categories. (See
Compl. [Dkt. 1-1]; Ex. A-H, Defs. Bank of New York and MERS Mem.
[Dkt. 3-1].) As a result, in ruling on Defendants’ Motions to
Dismiss under 12(b)(6), the Court may consider these documents
without converting the motions to ones for summary judgment.
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their alleged actions.
The FDCPA only applies to “debt
collectors,” defined as:
any person who uses any instrumentality of interstate
commerce or the mails in any business the principal
purpose of which is the collection of any debts, or
who
regularly
collects
or
attempts
to
collect,
directly or indirectly, debts owed or due or asserted
to be owed or due another. Notwithstanding the
exclusion provided by clause (F) of the last sentence
of this paragraph, the term includes any creditor who,
in the process of collecting his own debts, uses any
name other than his own which would indicate that a
third person is collecting or attempting to collect
such debts. For the purpose of section 808(6) [15
U.S.C. § 1692f(6)], such term also includes any person
who uses any instrumentality of interstate commerce or
the mails in any business the principal purpose of
which is the enforcement of security interests. The
term does not include . . .
(F) any person collecting or attempting to collect any
debt owed or due or asserted to be owed or due another
to the extent such activity (i) is incidental to a
bona fide fiduciary obligation or a bona fide escrow
arrangement; (ii) concerns a debt which was originated
by such person; (iii) concerns a debt which was not in
default at the time it was obtained by such person; or
(iv) concerns a debt obtained by such person as a
secured party in a commercial credit transaction
involving the creditor.
15 U.S.C. § 1692a(6).
In his complaint, Plaintiff did not
allege that any of the Defendants were debt collectors and did
not allege any facts supporting a finding that they were debt
collectors.
It is well-established in this District that debt
collectors do not include creditors, mortgagors, mortgage
servicing companies, trustees exercising their fiduciary duties,
or assignees of debt so long as the debt was not in default at
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the time it was assigned.
See Ruggia v. Washington Mut., 719 F.
Supp. 2d 642, 648 (E.D. Va. 2010) (collecting and reviewing
cases).
In addition, even if the FDCPA did apply, Plaintiff
does not set out any factual allegations supporting a cause of
action under FDCPA based on Defendants’ actions, but rather
relies solely on legal conclusions regarding Defendants’
authority to enforce the debt obligations, the current validity
and enforceability of the debt obligation, and the truth or
falsity of Defendants’ representations in their payment demands.
As this Court noted in substantially similar litigation in
Ruggia, the crux of Plaintiff’s FDCPA claim and other claims is
“the specious premise that the named Defendants somehow have no
right, title, or interest in the Deed or the Note.”
Supp. 2d at 648.
719 F.
The Court is not obligated to accept such
legal conclusions and other merely conclusory statements as
true.
As a result, Plaintiff fails to state a claim for a
violation of the FDCPA and Count I therefore is dismissed.
B. Count II - Declaratory Judgment
In Count II, Plaintiff claims that he is entitled to a
declaration that the Deed of Trust is void because Defendants
either have no legal or equitable right or interest in his Note
and/or the Deed of Trust or because the debt obligation arising
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from these instruments has been extinguished, satisfied, voided,
or split.
(Compl. [Dkt. 1-1] ¶ 22-23.)
Under the Declaratory Judgment Act, “[i]n a case of
actual controversy within its jurisdiction . . . any court of
the United States . . . may declare the rights and other legal
relations of any interested party seeking such declaration.”
U.S.C. § 2201.
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Thus, in order for a court to exercise its power
to grant declaratory relief, there must be an actual case of
controversy, that is, “the facts alleged, under all the
circumstances, [must] show that there is a substantial
controversy, between parties having adverse legal interests, of
sufficient immediacy and reality to warrant relief.”
Medimmune,
Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (quoting
Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270,
273 (1941)).
Plaintiff fails to allege the requisite actual case or
controversy, instead proffering only a legal conclusion that
either Defendants have no rights in the security instruments or
that the debt obligation is unenforceable.
Such a conclusory
allegation is insufficient under Twombly and Iqbal to provide
plausible grounds for the requested declaratory relief.
See
Ruggia v. Washington Mutual, 719 F. Supp. 2d at 648-49.
As a
result, the Court dismisses Count II.
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C. Count III - Slander of Title
In Count III, Plaintiff brings a claim for slander of
title.
(Compl. [Dkt. 1-1] ¶ 24-26.)
In order to state a valid
slander of title claim under Virginia law, a plaintiff must
allege facts showing “(1) the uttering and publication of the
slanderous words by the defendant, (2) the falsity of the words,
(3) malice, (4) and special damages.”
Allison v. Shapiro &
Burson, LLP, 1:09CV00057, 2009 WL 4015410 (W.D. Va. Nov. 19,
2009) report and recommendation adopted, 1:09CV00057, 2009 WL
4931388 (W.D. Va. Dec. 14, 2009) (quoting Lodal v. Verizon Va.,
Inc., 74 Va. Cir. 110, 2007 WL 1360893, at *5 (Va. Cir. Ct.
2006)).
Plaintiff fails to present factual allegations
supporting any of these elements.
Plaintiff only alleges --
without factual support -- that although Defendants demanded
payment from him, he is the “only party to this matter that can
prove legal and equitable ownership interest in the Property”
and that this “slandering of the Plaintiff’s property [] caused
[him] him to suffer injuries and damages.”
10-11, 14, 24-26.)
(Compl. [Dkt. 1-1] ¶
This a conclusory allegation which does not
provide factual support for publication of any statements, the
truth or falsity of any statements made, Defendants’ state of
mind in making the statements, and any resulting damages.
III therefore is dismissed.
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Count
D. Count IV - Fraud
In Count IV, Plaintiff brings a claim for fraud under
Virginia law, asserting that Defendants “acted as if the
appointment of the trustee” conformed to the Deed and to
Virginia’s laws, that by this “misrepresentation,” Defendants
“have fraudulently set themselves up as having the right to
commence or effectuate foreclosures” in Virginia, and that
“[b]ased on misrepresentation,” the Defendants “fraudulently
misrepresented and ascertained authority and illegally
demand[ed] payment from Plaintiff when debt has not been
validated.”
(Compl. [Dkt. 1-1] ¶ 18, 29-30.)
Under Virginia law, a plaintiff pleading fraud “must
show specifically in what the fraud consists;” the alleged fraud
“must be distinctly stated.”
Mortarino v. Consultant Eng’g
Servs., 467 S.E.2d 778, 782 (Va. 1996).
Plaintiff must plead
with specificity the following elements: “(1) a false
representation, (2) of a material fact, (3) made intentionally
and knowingly, (4) with intent to mislead, (5) reliance by the
party mislead, and (6) resulting damage to him.”
v.Snead, 441 S.E. 2d 207, 209.
Van Deusen
Plaintiff has failed to do so.
As with the previous counts, Plaintiff’s allegations consist of
nothing more than legal conclusions and other conclusory
allegations.
Plaintiff does not allege any facts regarding
Defendants’ intent in making the alleged misrepresentations, or
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allege that Plaintiffs reasonably or detrimentally relied on any
alleged misrepresentations.
As Plaintiff provides no specific
facts supporting a plausible claim of fraud, Count IV is
dismissed.
E. Count V - “Illegal Substitution of Trustee”
In Count V, Plaintiff brings a claim for “illegal
substitution of trustee.”
Plaintiff alleges that the Deed of
Trust states that only the “Lender” may substitute the trustee,
that the “Lender” is defined in that instrument as Pinnacle
Financial Corporation, and that because “[t]here is nothing in
the DOT that gives any subsequent noteholder the right to
substitute the Trustee,” the “Deed of substitution is invalid
and the successor trustee name[d] in that instrument has no
authority to notice or conduct a foreclosure sale.”
(Compl.
[Dkt. 1-1] ¶ 31-34.)
As an initial matter, Plaintiff fails to state a claim
in this count because, as Defendants note, no cause of action
exists for illegal substitution of trustee in Virginia.
(Defs.
Bank of New York and MERS Mem. [Dkt. 3] at 12; Def. SIWPC Mem.
[Dkt. 7] at 7.)
Moreover, in this case, Defendant MERS acted
appropriately in appointing a successor trustee.
Here, the Deed
of Trust states that “if necessary to comply with the law or
custom, MERS (as nominee for Lender and Lender’s successors and
assigns) has the right: to exercise any or all of those
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interests, including but not limited to, the right to foreclose
and sell the Property; and to take any action required of
Lender.”
(Ex. B, Defs. Bank of New York and MERS Mem. [Dkt. 3-
1] at 9 (emphasis added).)
Thus, under the terms of the Deed,
MERS had the authority to take any action required of Lender,
including appointing a successor trustee as provided by
paragraph 24 of the Deed of Trust.
Id. ¶ 24; see also Ruiz v.
Samuel I. White, P.C., CIV.A. 1:09CV688, 2009 WL 4823933, at *12 (E.D. Va. Dec. 11, 2009) (holding that identical language in a
deed of trust gave MERS the authority to appoint successor
trustees).
As a result, Count V is dismissed with prejudice.
F. Count VI - Civil Conspiracy
In Count VI, Plaintiff brings a civil conspiracy
claim, alleging that Defendants “engaged in an unlawful
combination and conspiracy to foreclose on Plaintiff’s home loan
for the purpose of unjustly enriching themselves in violation of
the law,” and as a result, “civil wrongs were committed against
the Plaintiff.”
(Compl. [Dkt. 1-1] ¶ 35-39.)
Under Virginia law, the elements of a civil conspiracy
claim are (1) “an agreement between two or more persons” (2) “to
accomplish an unlawful purpose or to accomplish a lawful purpose
by unlawful means,” which (3) “results in damage to plaintiff.”
Firestone v. Wiley, 485 F. Supp. 2d 694, 703 (E.D. Va. 2007)
(citing Glass v. Glass, 321 S.E. 2d 69 (Va. 1984).
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In addition,
such a claim “generally requires proof that the underlying tort
was committed.”
Tire Eng’g & Distribution, LLC v. Shandong
Linglong Rubber Co., Ltd., 682 F.3d 292, 311 (4th Cir. 2012)
(quoting Almy, 639 S.E. 2d 182, 189 (Va. 2007)).
“Thus, where
‘there is no actionable claim for the underlying alleged wrong,
there can be no action for civil conspiracy based on that
wrong.’”
Taylor v. CNA Corp., 782 F. Supp. 2d 182, 204-05 (E.D.
Va. 2010) (quoting Citizens for Fauquier County v. SPR Corp., 37
Va. Cir. 44, 50 (1995)).
Here, there is no actionable claim for the underlying
alleged wrong: Defendants’ actions to foreclose on Plaintiff’s
home loan.
Plaintiff concedes that Defendant Bank of New York
is the beneficiary under the Deed of Trust and that Plaintiff
has made payments to Defendant after signing the Note and Deed.
Compl. [Dkt. 1-1] ¶ 7, 9.)
As a result, Defendant Bank of New
York had the authority to enforce the terms of the security
instruments and foreclose the property.
Therefore, there is no
underlying tort sufficient to sustain Plaintiff’s civil
conspiracy claim.
Count VI therefore must be dismissed.
G. Count VII - Quiet Title
Finally, in Count VII, Plaintiff brings an action to
quiet title, alleging that he is “the only party to this matter
that can prove legal and equitable ownership interest in the
Property.”
(Compl. [Dkt. 1-1] ¶ 40-41.)
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Since an action to quiet title “is based on the
premise that a person with good title to certain real or
personal property should not be subjected to various future
claims against that title,” a party asserting such an action
must plead that he has superior title to the property at issue.
Maine v. Adams, 277 Va. 230, 238 (2009).
Plaintiff alleges no
facts in support of his legal conclusion that he is the only
party to this matter that can prove legal and equitable
ownership interest in the property at issue.
Moreover, in his
Complaint, he concedes that he signed a Note and Deed of Trust
encumbering the property.
(Compl. [Dkt. 1-1] ¶ 7.)
As in
Ruggia, in this claim, Plaintiff “essentially seeks a
declaration that none of the Defendants hold any claim to or
interest in the property, but does so in a wholly conclusory
fashion, without any plausible factual pleadings in support.”
719 F. Supp. 2d at 648-49.
As a result, Plaintiff fails to
state a claim and Count VII therefore is dismissed.
IV.
Conclusion
For the foregoing reasons, the Court will grant
Defendants’ Motions to Dismiss.
An appropriate Order will issue.
October 23, 2012
Alexandria, Virginia
/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
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