Crouch et al v. Bank of America, N.A. et al

Filing 17

ORDER ADOPTING REPORT AND RECOMMENDATIONS; granting 5 Motion to Dismiss; denying 7 Motion to Remand to State Court; this case is dismissed with prejudice. Signed by District Judge Raymond A. Jackson and filed on 1/30/12. (jcow, )

IN THE UNITED STATES DISTRICT COUR

MLbU

FOR THE EASTERN DISTRICT OF VIRGIN
Norfolk Division

JAN 3 0 2012
CLErX. US r::v::Kn COURT

ALAN CROUCH, and
NORA CROUCH,
Plaintiffs,

CIVIL ACTION NO. 2:llcv433

v.

BANK OF AMERICA, N.A., and
RECONTRUST COMPANY, N.A.
AND ALG TRUSTEE, L.L.C.,

AS SUBSTITUTE TRUSTEE,

Defendants.

ORDER

This matter is currently before the Court to resolve one objection to the Magistrate
Judge's report and recommendation.

Plaintiffs, Alan and Nora Crouch, brought several claims in the Circuit Court for the City
of Virginia Beach against Defendants, Bank of America, N.A. ("BOA"), and Recontrust
Company, N.A. and ALG Trustee, L.L.C., as Substitute Trustee. Plaintiffs attempt to recover
losses associated with BOA's refusal to modify Plaintiffs' loan according to the Home
Affordable Modification Program ("HAMP").

On August 4, 2011, Defendants removed this case to this Court and filed a Motion to
Dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiffs did not file an

opposition to the motion and instead filed a Motion to Remand the case to the Circuit Court for
1

the City of Virginia Beach.

This Court, on October 5, 2011 and November 8,2011, entered orders designating United
States Magistrate Judge Tommy E. Miller ("Magistrate Judge Miller") to conduct hearings and

submit proposed findings of fact and, if applicable, recommendations for the disposition of these
motions.1 On November 29,2011, Magistrate Judge Miller filed his report and recommendation
("the Report") in which he recommended that Defendants' Motion to Dismiss be GRANTED

and the Plaintiffs' Motion to Remand be DENIED. The Report also advised the parties of their
right to file written objections to Magistrate Judge Miller's findings and recommendations. On
December 19,2011, Plaintiffs filed an objection to the Report, and on January 4, 2012,
Defendants filed their opposition to Plaintiffs' objection.

Under Rule 72(b)(3) of the Federal Rules of Civil Procedure, on dispositive motions, a

judge is required to "determine de novo any part of the magistrate judge's disposition that has
been properly objected to." Fed. R. Civ. P. 72(b)(3). The phrase "de novo determination", as

used in Rule 72, means that a district court judge must give "fresh consideration" to portions of
the magistrate judge's report and recommendation. United States v. Raddatz, 447 U.S. 667, 675
(1980). In other words," 'the Court should make an independent determination of the issues'
and should not give any special weight to the prior determination." Id. (quoting United States v.

First City National Bank, 386 U.S. 361, 368 (1967)). "The district judge may accept, reject, or
modify the recommended decision; receive further evidence; or recommit the matter to the
magistrate judge with instructions." Fed. R. Civ. P. 72(b)(3).

1 Under 28 U.S.C. § 636(b)(l)(B), "a judge may also designate a magistrate judge to
conduct hearings, including evidentiary hearings, and to submit to a judge of the court proposed
findings of fact and recommendations for the disposition ..."

Plaintiffs only object to Magistrate Judge Miller's finding that Defendant Substitute
trustee is a nominal party. The crux of Plaintiffs' objection is their belief that the Substitute
trustee is a necessary party because Virginia law holds that any person appointed a substitute
trustee may be proceeded against in the same manner as an original trustee. VA Code § 26-55.

Defendants claimed that the Substitute Trustee was fraudulently joined to this litigation because
the Plaintiffs have no claims against them.

In order to establish that Plaintiffs fraudulently joined the Substitute Trustee, Defendants
must show either that Plaintiffs cannot establish a cause of action in state court against the
Substitute Trustee, or that there has been an outright fraud in Plaintiffs' pleading of jurisdictional
facts. Payne v. Bank ofAm., No. 3:09cv80, 2010 U.S. Dist. LEXIS 12076, at *8 (W.D. Va. Feb.
11, 2010) (citing Baltimore Cnty. v. Cigna Healthcare, 238 F. App'x 914, 920 (4th Cir. 2007)).
Plaintiffs cannot establish a cause of action against the Substitute Trustee. It is wellsettled that there is no private right of action for violations of HAMP. See, e.g., Mosley v. Wells

Fargo Bank, N.A., 2011 WL 3439243 (E.D. Va. Aug. 5,2011); Sherman v. Litton Loan
Servicing, L.P., 2011 U.S. Dist. LEXIS 71756, at *6 (E.D. Va. July 5, 2011); Winn v. Chase
Mortgage Services et al, No. 2:10cv359, at *5 (E.D. Va. Oct. 29, 2010); Hoffman v. Bankof
Am., N.A., No. C 10-2171 SI, 2010 U.S. Dist. LEXIS 70455, at *14-15 (N.D. Cal. June 30,

2010); Marks v. Bank ofAm., N.A., No. 3:10-cv-08039,2010 U.S. Dist. LEXIS 61489-PHX-

JAT, at * 16 (D. Ariz. June 21, 2010). Plaintiffs attempt to circumvent HAMP by arguing that
this is a breach of contract case. "Under Virginia law, a party claiming breach of contract must
establish three elements to prevail: (1) a legally enforceable obligation under the contract, (2) a

breach of that obligation, and (3) injury or damage to the plaintiff flowing from that breach."

Sanders v. UDR, Inc., No. 3:10cv459,2010 U.S. Dist. LEXIS, at *7 (E.D. Va. Oct. 4,2010)
(citing Eplus Tech., Inc. v. Nat'I R.R. Passenger Corp., 407 F. Supp. 2d 758,761 (E.D. Va.

2005); Sunrise Continuing Care, LLC. v. Wright, 671 S.E.2d 132, 135 (Va. 2009)). Plaintiffs
have not provided the Court with sufficient evidence to establish that there was a legally
enforceable obligation under a contract. A legally enforceable agreement is created upon
"acceptance of an offer, as well as valuable consideration." Montagna v. Holiday Inns, Inc., 269

S.E.2d 838, 844 (Va. 1980) (citations omitted). In their Complaint, Plaintiffs refer to BOA's

"solicitation" on their website as sufficient evidence that BOA made an "irrevocable offer" to

Plaintiffs. Compl. ffi| 22,27, 29. However, "[a] mere expression of intention or general
willingness to do something on the happening of a particular event or in return for something to
be received does not amount to offer." See Williston on Contracts, Vol. 1, § 4.9. The solicitation
was not directed at any party. Nothing in HAMP requires mortgage lenders or servicers to
modify loans. See, e.g., Pennington v. PNC Mortgage, No. 2:10cv361, 2010 U.S. Dist. LEXIS

143157, at * 13. Having found no evidence of a mutually agreed upon promise between the
parties, the Court concludes that no contract exists.

While Plaintiffs argue that the substitute trustee should be joined to this litigation in the

same fashion as an original trustee, there is no evidence that the substitute trustee has ever held
title to the property, taken any action regarding foreclosure proceedings, or committed any acts

against the Plaintiffs. There has been no foreclosure sale in this case. A party has been joined as
a nominal party when the Plaintiff cannot, in any way, establish a cause of action against that

party. The Substitute Trustee has never had any interest in the property. Therefore, the Plaintiffs
are incapable of establishing any cause of action against them.

The Court has carefully and independently reviewed the record in this case and the
objections to the Report. Having done so, the Court finds that there is no merit to the objections
of the Plaintiffs. Accordingly, the Court does hereby accept the findings and recommendations
set forth in Magistrate Judge Miller's report in the case at bar.

It is, therefore, ORDERED that Defendant's Motion to Dismiss is GRANTED and
Plaintiffs Motion to Remand is DENIED.

This case is hereby DISMISSED with prejudice.

The Clerk of the Court is DIRECTED to send a copy of this Order to counsel of record.
IT IS SO ORDERED.

Norfolk, Virginia

Januaryto ,2012

Raymond A. Jackson
United States District Judge