Beasley v. FV-I, Inc. et al

Filing 16

MEMORANDUM OPINION re Motion to Dismiss. Signed by District Judge James C. Cacheris on 3/21/13. (klau, )

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
(
(
(
(
v.
1:13-cv-116 (JCC/TRJ)
(
(
FV-I, INC., et al.,
(
(
Defendants.
(
(
(
M E M O R A N D U M
O P I N I O N
DAMON D. BEASLEY,
Plaintiff,

This matter is before the Court on the Motions of
Defendants FV-I, Inc. (hereafter referred to as “FV-I”) [Dkt. 8]
and CitiMortgage, Inc. (hereafter referred to as “CitiMortgage”)
[Dkt. 11] to Dismiss the Complaint of Plaintiff Damon D. Beasley
(collectively, the “Motions”).

For the following reasons, the

Court will grant Defendants’ Motions.
I. Background
1. Factual Background
Plaintiff is a resident of Virginia, who received a
$650,000 mortgage loan from CitiMortgage in September of 2007
(hereafter referred to as the “Loan”) 1. [Dkt. 1-1.]

The Loan was

secured by the property located at 278 Richland Road,
Fredericksburg, Virginia (hereafter referred to as the
“Property”). (Note 1.) Plaintiff signed a promissory note
1

Addressing an initial matter, the Court notes that filings of a pro se party
are construed liberally. See Haines v. Kerner, 404 U.S. 519, 520 (1972).

1

(hereafter referred to as the “Note”) evidencing his obligation
to repay the Loan. (Id.) The express terms of the Note itself
provide that the Note is freely transferable and states that the
“Lender or anyone who takes [the] Note by transfer and who is
entitled receive payments under [the] Note is called the ‘Note
Holder.’" (Id.)

The Loan was also evidenced by a Deed of Trust.

Plaintiff alleges that, at some point, the Note was
“securitized” by Citi “to Morgan Stanley Mortgage Loan Trust
2007-8XS, Mortgage Pass Through Certificates Series 2007-8XS”
(hereafter referred to as the “Trust”).

In describing Defendant

FV-I, Plaintiff states in the Complaint that “FV-I, Inc. in
trust for Morgan Stanley Mortgage Capital Holdings LLC is a
collection agency that repurchased Plaintiff’s loan and took it
out of the Trust.” (Pl. Compl. 2.)
Though the manner in which Plaintiff has articulated
his position has rendered the substance of their Complaint
somewhat difficult to decipher, Plaintiff accuses Defendants and
other entities that are not parties to the instant action of
having committed various duplicitous actions in connection to
the Loan that Plaintiff received in 2007.

In addition to

disputing title and ownership of the Property, according to
Plaintiff,
the originating mortgage lender, and others
alleged to have ownership, have unlawfully
sold, assigned and/or transferred their
2

ownership and security interest in a
Promissory Note and/or Deed of Trust related
to the Property, and, thus, do not have
lawful ownership or a security interest in
Plaintiff’s property.
(Id. at 1-2.)

The accusations of Plaintiff’s Complaint rely

substantially upon the idea that, as a consequence of
Defendants’ purported inability to demonstrate “proper receipt,
possession, transfer, negotiations, assignment[,] and ownership
of [Plaintiff’s] original [p]romissory Note and Deed of Trust,”
and further inability to “establish proper assignment of the
Deed of Trust,” that therefore “none of the Defendants have
perfect any claim of title or security interest in the
Property.” (Id.) Relying upon the results of a Securitization
Compliance Audit conducted by C.J. Maxx Group, L.L.C. (hereafter
referred to as “C.J. Maxx”), a report the substance of which was
“based exclusively on the documentation provided by [Plaintiff]
and attorney,” and the compilation of which entailed “no attempt
by [C.J. Maxx] to contact the lender, broker, title company[,]
or servicer,” Plaintiff argues that there exists no evidence to
support the notion that Defendants have perfected any such claim
of title or security interest in Plaintiff’s property.
Plaintiff contends that the Note was transferred through
securitization without his consent and also claims that there is
no evidence to support the proposition that he was ever provided
with the actual monetary amount of the loan, instead
3

representing that he did not receive anything in exchange for
his signature upon the Note. (Id. at 5.)
2. Procedural Background
On January 28, 2013, Plaintiff filed their Complaint
and accompanying attachments. [Dkt. 1.]

Plaintiff also filed a

Motion for Leave to Proceed in forma pauperis. [Dkt. 2.]

On

March 4, 2013, Defendant FV-I filed a Motion to Dismiss for
Failure to State a Claim, as well as an accompanying Memorandum.
[Dkt. 8-1.]

On March 5, 2013, Defendant CitiMortgage filed a

Motion to Dismiss.

They also filed a Memorandum in Support of

their Motion to Dismiss. [Dkt. 11-1.]
II. Standard of Review
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

A

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). In addition to
the complaint, the Court may consider documents integral to and
explicitly relied on in the complaint if the plaintiff does not
challenge their authenticity.

Am. Chiropractic Ass’n v. Trigon
4

Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004).

The Court

may also take judicial notice of matters of public record.
Philips v. Pitt Cnty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir.
2009).
To survive a motion to dismiss, “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, 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 the reasonable inference that the
defendant is liable for the misconduct alleged.”

Id.

To meet

this standard, a plaintiff must provide “more than labels and
conclusions, and a formulaic recitation of a cause of action’s
elements will not do.”

Twombly, 550 U.S. at 555.

“Factual

allegations must be enough to raise a right to relief above the
speculative level . . . .”

Id.

Moreover, a court “is not bound

to accept as true a legal conclusion couched as a factual
allegation.”

Iqbal, 556 U.S. at 678.

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
5

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 Adams, 697 F.2d at 1219; Ocean
Breeze Festival Park, Inc. v. Reich, 853 F. Supp. 906, 911 (E.D.
Va. 1994).

In either case, 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.
Rule 9(b) imposes a heightened pleading standard for
fraud claims.

“In alleging fraud or mistake, a party must state

with particularity the circumstances constituting fraud or
mistake.

Malice, intent, knowledge, and other conditions of a

person’s mind may be alleged generally.”
6

Fed. R. Civ. P. 9(b).

To satisfy the heightened pleading standard of Rule 9(b), a
plaintiff must state with particularity “the time, place, and
contents of the false representations, as well as the identity
of the person making the misrepresentation and what he obtained
thereby.”

In re Mut. Funds Inv. Litig., 566 F.3d 111, 120 (4th

Cir. 2009)(quoting Harrison v. Westinghouse Savannah River Co.,
176 F.3d 776, 784 (4th Cir. 1999)), rev’d sub nom. on other
grounds Janus Capital Grp., Inc. v. First Derivative Traders,
131 S.Ct. 2296 (2011).
III. Analysis
1. Count I: Actual Fraud
Plaintiff has attempted to state a claim of actual
fraud against both Defendants.

A plaintiff asserting a claim of

actual fraud must demonstrate (1) a false representation by the
defendant, (2) of a material fact, (3) made intentionally and
knowingly, (4) with intent to mislead, (5) reliance by the
misled party, and (6) resulting injury to the party misled.

See

Diaz Vicente v. Obenauer, 736 F. Supp. 679, 690 (E.D.Va. 1990).
Under the Federal Rules of Civil Procedure, claims alleging
fraud are subjected to a heightened pleading standard, which
requires the plaintiff to “state with particularity the
circumstances constituting fraud.” Fed.R.Civ.P. 9(b).

A

plaintiff claiming fraud must allege “the time, place and
contents of the false representations, as well as the identity
7

of the person making the misrepresentation and what he obtained
thereby.” United States ex rel. Wilson v. Kellogg Brown & Root,
Inc., 525 F.3d 370, 379 (4th Cir. 2008)(quoting In re Mut. Funds
Inv. Litig., 566 F.3d 111, 120 (4th Cir. 2009). “[L]ack of
compliance with Rule 9(b)'s pleading requirements is treated as
a failure to state a claim under Rule 12(b)(6).” Harrison v.
Westinghouse Savannah River Co., 176 F.3d 776, 783 n. 5 (4th
Cir. 1999).
The Court finds that Plaintiff has failed to state a
fraud claim against Defendant FV-I. Plaintiff’s Complaint simply
does not provide sufficient factual detail as to how FV-I
participated in any alleged fraud.

The Complaint contains no

allegations that FV-I made any specific false representation of
material fact.

To the extent that Plaintiff has attempted to

allege any misrepresentation on the part of FV-I through his
generalized allegations against the “Defendants,” Plaintiff has
failed to distinguish the actions of FV-I from those of
CitiMortgage, and has further failed to detail precisely what
particular action was taken on the part of FV-I. 2

Plaintiff has

also failed to allege sufficiently “the time, place and contents
of the false representations, as well as the identity of the

2

The Court also notes that, to the extent that Plaintiff asserts wrongdoing
on the part of Mortgage Electronic Registration System, Inc. (hereafter
referred to as “MERS”), Morgan Stanley Mortgage Capital, Inc., J.P. Morgan
Capital, or other entities mentioned in the Complaint, the Court notes that
those entities are not parties to the instant proceeding.

8

person making the misrepresentation,” thereby failing to meet
the heightened pleading standard for fraud as required by the
Federal Rules of Civil Procedure. Kellogg Brown & Root, 525 F.3d
at 379.

Consequently, Count I must be dismissed as to Defendant

FV-I.
Similarly, the Court finds that Plaintiff has failed
to state a fraud claim against Defendant CitiMortgage. Indeed,
Plaintiff fails to allege any specific false statement by
CitiMortgage.

Plaintiff has also failed to allege sufficiently

“the time, place and contents of the false representations, as
well as the identity of the person making the
misrepresentation,” thereby failing to meet the heightened
pleading standard for fraud as required by the Federal Rules of
Civil Procedure. Kellogg Brown & Root, 525 F.3d at 379.

As to

Plaintiff’s contention that there exists no evidence that he
ever received a monetary loan, the Court finds such a notion to
be implausible and insufficiently supported by factual evidence,
particularly so when the subject Note bearing his signature
contains a section entitled “Borrower’s Promise to Repay” that
expressly states that “[i]n return for a loan that I have
received, [Borrower] promise[s] to pay $650,000.00 ..., plus
interest, to the order of the Lender.” (Note 1)(emphasis added.)
It appears that Plaintiff also complains that the subject Note
has been securitized and therefore rendered unenforceable as to
9

him.

Plaintiff presents no plausible legal argument to bolster

this assertion.

Whether or not there has been transfer of the

Loan, there are no facts alleged which would relieve Plaintiff
of his obligation to pay.

Brown v. HSBC Mortg. Corp., 2011 U.S.

Dist. LEXIS 80943 (E.D.Va. July 22, 2011); see also Upperman v.
Deutsche Bank Nat'l Trust Co., 2010 U.S. Dist. LEXIS 38827 (E.D.
Va. Apr. 16, 2010) (stating that “[t]here is no authority ...
that the mere existence of a pooling and servicing agreement or
investment trust can relieve borrowers of their obligations to
perform under a duly executed promissory note and deed of
trust”).

To the extent that Plaintiff Complaint is littered

with bold assertions of the fraudulence of CitiMortgage’s
actions through their interactions with Plaintiff, a court is
“not bound to accept as true a legal conclusion couched as a
factual allegation.”

Iqbal, 556 U.S. at 678.

In light of the

aforementioned deficiencies of the Complaint, Count I must be
dismissed as to Defendant CitiMortgage as well.
In summation, Plaintiff’s Complaint does not allege
sufficient facts in order to state a cognizable claim for fraud
against Defendants, especially in light of the heightened
pleading requirements for fraud claims under Fed. R. Civ. P
9(b), and thus, consequently, Count I must be dismissed.
2. Count II: Conspiracy to Defraud

10

“In Virginia, the elements of a common law civil
conspiracy are (i) an agreement between two or more persons (ii)
to accomplish an unlawful purpose or to accomplish a lawful
purpose by unlawful means, which (iii) results in damage to
plaintiff.” Firestone v. Wiley, 485 F.Supp.2d 694, 703 (E.D.Va.
2007); see Glass v. Glass, 228 Va. 39, 47 (1984). A claim for
civil conspiracy “requires proof that the underlying tort was
committed”. Id. (quoting Almy v. Grisham, 639 S.E.2d 182, 189
(2007)).

Where “there is no actionable claim for the underlying

alleged wrong, there can be no action for civil conspiracy based
on that wrong.” Id.
Conclusory or general allegations of conspiracy are
insufficient to withstand a motion to dismiss. Bay Tobacco, LLC
v. Bell Quality Tobacco Prods., LLC, 261 F.Supp.2d 483, 499–500
(E.D.Va. 2003) (stating to that to survive a motion to dismiss
on common law civil conspiracy, plaintiff must plead agreement
in more than mere conclusory language because “a conspiracy
claim asserted in mere conclusory language is based on
inferences that are not fairly or justly drawn from the facts
alleged”); Johnson v. Kaugars, 14 Va. Cir. 172, 176 (Va. Cir.
1988) (“[I]t is not enough merely to state that a conspiracy
took place.”). Stated differently, Virginia requires a plaintiff
to allege “some details of time and place and the alleged effect
of the conspiracy.” Johnson, 14 Va. Cir. at 176. Where there are
11

only vague, conclusory allegations of conspiracy, the claim
fails at the threshold. Firestone, 485 F.Supp.2d 704; see also
Connor v. Real Title Corp., 165 F.2d 291, 294 (4th Cir. 1947)
(concluding that conclusory allegations of “vicious conspiracy
and collaboration” between three named defendants were
insufficient).
This Court has discussed Plaintiff’s failure to state
a claim for fraud against either Defendant, and will not further
belabor the issue except to state that there does not exist an
actionable claim for the underlying alleged wrong of fraud, and
thus there can be no action for civil conspiracy based
thereupon.

The Court further notes that the allegations of the

Complaint constitute the very sort of vague, conclusory
allegations of conspiracy that fail to withstand a motion to
dismiss.

Plaintiff’s nebulous contention that the Defendants

“proceeded together to deprive Plaintiff of his legal rights
regarding his own financial asset (the Note) and to deprive him
of his legal rights to the subject real property” is
insufficient to state a claim for conspiracy to commit fraud.
The Complaint neither identifies nor details any sort of
agreement between FV-I and CitiMortgage, nor does the Complaint
describe the manner in which the Defendants colluded.
As a consequence of the foregoing considerations, the
Court finds that Plaintiff has failed to state a claim of
12

conspiracy to defraud against either Defendant. Consequently,
Count II must be dismissed in its entirety.
3. Count III: Breach of Implied Covenant of Good Faith and
Fair Dealing
Under Virginia law, every contract contains an implied
covenant of good faith and fair dealing; however, a breach of
those duties only gives rise to a breach of contract claim.

It

does not constitute a separate cause of action. See Charles E.
Brauer Co. v. NationsBank of Va., N.A., 251 Va. 28, 466 S.E.2d
382, 385 (Va. 1996) (holding that “the failure to act in good
faith ... does not amount to an independent tort” and “the
breach of the implied duty ... gives rise only to a cause of
action for breach of contract”); see also L & E Corp. v. Days
Inns of America, Inc., 992 F.2d 55, 59 n. 2 (4th Cir. 1993)
(noting that Virginia does not recognize an independent claim
for breach of the implied covenant of good faith and fair
dealing).
An implied duty under a contract is simply a
manifestation of conditions inherent in expressed promises.

The

duty “simply prohibits one party to a contract from acting in
such a manner as to prevent the other party from performing his
obligations under the contract.” E. Shore Markets, Inc. v. J.D.
Associates Ltd. P'ship, 213 F.3d 175, 182-83 (4th Cir. 2000).
The implied covenant of good faith and fair dealing does not

13

compel a party to take affirmative actions that the party is not
obligated to take under the terms of the contract. Id.
Furthermore, the implied covenant cannot "rewrite[e] an
unambiguous contract in order to create terms that do not
otherwise exist." McInnis v. BAC Home Loan Servicing, LP,
2:11CV468, 2012 U.S. Dist. LEXIS 13653, 2012 WL 383590 (E.D.Va.
Jan. 13, 2012) report and recommendation adopted, McInnis v. BAC
Home Loan Servicing, LP, 2:11CV468, 2012 U.S. Dist. LEXIS 13602,
2012 WL 368282 (E.D.Va. Feb. 3, 2012).
The Court notes that Plaintiff has not brought a breach
of contract action, and does not expressly identify the precise
contract upon which he has based his claim of breach of implied
contract of good faith and fair dealing. Consequently, Count III
cannot stand independently as a cause of action against Defendants
in the absence of a claim for breach of contract.

These facts

alone render Plaintiff’s pleading of Count III fatally deficient.
In addition to the undisputed fact that breach of implied
contract of good faith and fair dealing cannot stand independently
as a cause of action in the absence of a claim for breach of
contract, the Court will not attempt to read into the Complaint
factual information or argument regarding breach of contract that
simply does not exist in the Complaint.

Plaintiff has failed to

identify a provision of an identified contract that he believes to
have been breached, or the actions undertaken by either Defendant

14

that resulted in any such breach.

Indeed, it is not clear whether

Plaintiff, through Count III, is referring to a single unspecified
contract or even multiple contracts, as evidenced through his
contention that he was “injured of the right ... to receive
benefits of the subject contracts.” (Pl. Compl. 8.)

As to

Defendant CitiMortgage, it is unclear the precise manner in which
they are alleged to have breached a specified contract with
Plaintiff or the associated implied provision of good faith and
fair dealing.

As to Defendant FV-I, there is no allegation in the

Complaint that FV-I is even a party to any contract with Plaintiff.
As a consequence of the aforementioned pleading
deficiencies and other stated considerations, the Court finds that
Plaintiff has failed to state a claim for breach of implied
covenant of good faith and fair dealing against either Defendant. 3
IV. Conclusion

For the foregoing reasons, the Court will grant the
Defendants’ Motions to Dismiss.
An appropriate Order will issue.

/s/
March 21, 2013
Alexandria, Virginia

James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE

3

Having found that each cause of action may be dismissed on other grounds,
the Court need not reach CitiMortgage’s arguments as to standing.

15