Rehbein v. CitiMortgage et al
Filing
22
MEMORANDUM OPINION AND ORDER that Rehbein's 10 Motion to Remand is DENIED and the Defendants' Motions to Dismiss, ECF Nos. 4 & 8, are GRANTED. Rehbein's Complaint is DISMISSED. Signed by Chief U.S. District Judge Rebecca Beach Smith and filed on 4/4/2013. (rsim, )
FILED
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
APR
Norfolk Division
4 2013
CLERK,U.S. DISTRICT COURT
NORFOLK, VA
NORMA REHBEIN,
Plaintiff,
ACTION NO.
v.
CITIMORTGAGE,
2:13cv65
INC.
and
SHAPIRO BROWN & ALT,
LLP,
Defendants.
MEMORANDUM OPINION AND ORDER
Defendant CitiMortgage,
Brown
&
Alt
Memoranda
("SBA")
in
filed
Support
February 15, 2013,
("Citi")
Motions
on
to
Norma
Rehbein
to
Court
and
On
("Rehbein"),
an
Dismiss
Dismiss
the Motion
accompanying
13,
filed
accompanying
to Remand
and
February
a
2013,
22,
and
2013,
Motion
Memorandum
These Motions are now ripe for review.1
forth below,
and Defendant Shapiro
February
respectively.
Plaintiff,
State
Inc.
to
in
the
Remand
Support.
For the reasons set
is DENIED
and the Motions
to
are GRANTED.
1 On February 14, 2013, Citi requested a hearing on its Motion to
Dismiss.
After
full
examination
of
the
briefs
and
the
record,
the court has determined that a hearing is unnecessary, as the
facts and legal arguments are adequately presented,
and the
decisional process would not be aided significantly by oral
argument.
See Fed. R. Civ.
P. 78(b); Local Civ.
R.
7(J).
I.
Rehbein
Court
in
is
Factual and Procedural History
the
Virginia
resides.
Compl.
owner
Beach
51 1.
of
a
home
located
("Oaklawn Court
On June 10, 2008,
at
2132
Property'7),
Oaklawn
where
she
Rehbein entered into a
mortgage loan contract with Citi; she executed a Promissory Note
secured
Compl.
by
SISI
household
a
Deed
4-5.
of
In
income,
mortgage payments.
Trust
2008,
which
Compl.
on
the
Rehbein
caused
SI 8.
Oaklawn
Court
experienced
her
to
fall
a
Property.
reduction
behind
least
11.
initially,
As
review
of
for a
initiated
denied a final modification.
January 11, 2013,
Rehbein's
loan modification.
Compl.
foreclosure
proceedings;
scheduled for January 16, 2013.
On
Circuit
January 11, 2013,
Court
for
the
the
but was,
SI 15.
SISI 9,
remained
under
Meanwhile,
loan
Compl.
Citi
foreclosure
auction
was
Compl. SISI 18, 34.2
Rehbein
City
her
She applied to Citi for a loan
modification and was granted a temporary modification,
at
on
in
of
commenced
an
action
Virginia
Beach,
in
seeking
the
a
preliminary injunction enjoining the Defendants from instituting
forfeiture proceedings
prior to
proper loan modification review
2 Rehbein does not allege that the foreclosure sale has occurred.
SBA claims that "[t]he Chesapeake Circuit Court granted a stay
of 60 days of the sale upon posting of a bond."
SBA's Mem.
However, the Complaint was filed in
Supp. Mot. Dismiss at 2.
the
Circuit
Court
for
the
City
of
Virginia
Beach,
not
Chesapeake.
Notice of Removal at 1.
Thus,
the court is
hesitant to rely on Defendant SBA's statement.
and requesting compensatory damages.
removed the case to federal court,
On February 7, 2012,
Citi
with the consent of SBA.
On
February 13, 2013, Citi filed a Motion to Dismiss for Failure to
State
a
Claim.
SBA
February 15, 2013.
to
Remand
the
Virginia
filed
separate
Beach,
to
to
the
Circuit
which
now
Motions
to
Dismiss
on
for
Citi
the
City
responded
of
on
Rehbein did not file a reply to Defendant Citi's
lapsed.
to
Court
Defendant
response to her Motion to Remand,
has
Motion
On February 22, 2013, Rehbein filed a Motion
action
March 5, 2013.
a
Rehbein
Dismiss
on
filed
and the time for her to do so
a
response
March 8, 2013,
replied on March 29, 2013.3
to
to
which
These Motions
the
Defendants'
Defendant
are now ripe
Citi
for
review.
II.
Before
Motions,
it
jurisdiction
312,
316
the
court
must
over
(4th Cir.
Motion
can
reach
determine
the
claims.
2006)
("It is
to Remand
the
merits
that
it
See
Miller
well
of
has
v.
the
Defendants'
subject
Brown,
matter
462
F.3d
established that before a
3 Rehbein's response was untimely, and she did not seek leave of
the court before filing it.
On March 14, 2013, the court
entered an Order notifying the parties that Rehbein's Memorandum
in Opposition to
stricken from the
the Defendants' Motions to
record, absent a motion for
Dismiss would be
extension of time
by Rehbein.
Rehbein filed a Motion for Extension of Time, and
on March 28, 2013,
the court granted her leave to file an
untimely response.
The court simultaneously granted Defendant
Citi's motion for extension of time to file its reply.
federal
court
can
decide
the merits
of
a
claim,
invoke the jurisdiction of the court.").
Motion to Remand,
has
under the
at
claim must
Rehbein has
filed a
alleging that this court lacks subject matter
jurisdiction over her claims.
court
the
subject
matter
The Defendants contend that this
jurisdiction
diversity statute,
28 U.S.C.
over
the
instant
§ 1332.
claims
Removal Notice
2-5.
Under
28
U.S.C.
§ 1332(a),
jurisdiction of civil
actions
district
where
the
courts
amount
have
in controversy
exceeds $75,000 and the parties are completely diverse,
that the citizenship of every plaintiff must
the citizenship of every defendant."
Mt. State Carbon, LLC,
636 F.3d 101,
A.
Defendants
103
"meaning
be different from
W. Va. Energy Co. v.
(4th Cir.
2011).
Amount in Controversy
In her Complaint,
The
Cent.
original
Rehbein seeks only $29,000 in damages.4
contend
that
because
the
cost
to
Citi
in
complying with the injunction Rehbein seeks exceeds $75,000, the
jurisdictional minimum is met.
Removal Notice SI 19.
xx[T]he test for determining the amount in controversy in a
diversity
proceeding
which
judgment would produce.'"
[a]
is
*the
pecuniary
result
Dixon v.
to
either
Edwards,
party
290 F.3d
4 This amount consists of $25,000 in compensatory damages from
Citi and $4,000 from SBA.
699,
710
(4th Cir.
327 F.2d 568,
In
569
suits
2002)
(4th Cir.
involving
controversy
is
amount
damages
of
the
No.
*10
Aug.
Va.
of
the
to
the
real
real
plaintiff
2:llcv678,
20,
Ins.
Co.
v. Lally,
the
amount
1964)).
claims
value
Servicing Co.,
(E.D.
(quoting Gov't Emps.
2012
2012)
property,
property,
seeks.
U.S.
(Davis,
present value of the plaintiffs'
simply the
Monton
Dist.
J.)
not
v.
LEXIS
(the
in
Am.'s
117259,
at
that
the
fact
real property exceeded $75,000
"by itself, appears sufficient to demonstrate that the amount in
controversy is exceeded in this
Servicing,
amount
796 F. Supp.
case");
2d 753, 766
Sherman v. Litton Loan
(E.D. Va. 2011)
in controversy was met based on
(finding the
"the manifest
fact
that
the value of the Property exceeds $75,000").
Where
injunctive
controversy
litigation."
is
relief
measured
by
Hunt v. Wash.
333,
347
(1977) .
"an
appropriate
the
is
sought,
value
of
"the
the
State Apple Adver.
object
Comm'n,
see also
consideration
2010)
v. Kucan,
JTH Tax,
("[L]ike
of
in
the
432 U.S.
The cost of complying with the injunction is
when
determining
amount-in-controversy requirement has been met."
& Trust Co.
amount
245 F. App'x 308,
Inc.
v.
requests
Frashier,
for
624
money
injunctive relief must be valued.").
314-15
the
Republic Bank
(4th Cir.
F.3d 635,
damages,
whether
639
2007);
(4th Cir.
requests
for
In
this
exceeds
amount
case,
the
$400,000.
of
value
Resp.
Rehbein's
of
Mot.
home
the
Remand
mortgage
Oaklawn
Ex.
loan
Court
8.
was
The
Ex.
indicates
I.5
The
that,
as
uncontested
of
the
date
evidence
of
SI 4.
Thus,
balance
the
on
Moreover,
value
Rehbein's
the
cost
of
the
loan
to
Citi
before
Resp.
property
in
complying
the
court
the
amount
Mot Remand Ex. 7
and
unquestionably
as
Citi's Mot.
removal,
outstanding on the loan was $316,249.19.
principal
$292,450.00,
reflected in the Promissory Note Rehbein executed.
Dismiss
Property
the
outstanding
exceed
with
an
$75,000.
injunction
enjoining foreclosure sale of the property could exceed $75,000.
Accordingly,
this
case.
Sherman,
the
amount
Monton,
in
2012
diversity
completely diverse.
Virginia,
is
statute
28
U.S.
LEXIS
Dist.
is
117259
met
at
in
*10;
Diversity
also
U.S.C.
requires
§ 1332.
that
the
Rehbein,
a
parties
be
citizen
of
indisputably diverse from Defendant Citi,
a New York corporation with
Missouri.
requirement
796 F. Supp. 2d at 766.
B.
The
controversy
its
Removal Notice SI 6-7.
principal place of
which is
business
SBA is a Virginia citizen,
in
and
5 While the Promissory Note was not attached to the Complaint,
the
court may consider it because it is integral to the
Complaint and its authenticity is not contested.
See Sec'y of
State for Defence v. Trimble Navigation Ltd., 484 F.3d 700, 705
(4th Cir.
2007).
thus
not
diverse
from
Rehbein.
This
apparently
diversity would ordinarily preclude federal
Supp.
of
Mot.
Remand at 3.
this
district,
is
doctrine
fraudulent
Dist.
of
LEXIS
2:llcv477,
2,
2012)
2011
2012 U.S.
(Jackson,
U.S.
(Allen,
immaterial
117259,
Dist.
the
to
the
Dist.
J.);
court
Mem.
Correll
Kenny
v.
v.
Monton,
2012
U.S.
of
Am.,
No.
(E.D.
Va.
Feb.
at
Bank
at *16-17
Bank
*6-10
of
SBA's
under
e.g.,
LEXIS 12960,
that
analysis
See,
*13;
139168,
finds
diversity
joinder.
at
LEXIS
jurisdiction.
In keeping with many recent decisions
however,
citizenship
incomplete
Am.,
(E.D.
No.
Va.
the
4:llcvl20,
Dec.
5,
2011)
J.).
The
doctrine
"disregard,
for
of
fraudulent
certain nondiverse defendants,
dismiss
the
jurisdiction."
1999).6
nondiverse
Mayes
v.
allows
purposes,
jurisdictional
joinder
the
assume
court
to
citizenship
of
jurisdiction over a case,
defendants,
Rapoport,
the
198
and
thereby
F.3d 457,
461
retain
(4th Cir.
"[T]he party seeking removal bears the Aheavy' burden of
demonstrating
would be
able
Athat
to
there
is
establish
no
a
possibility that
cause
of
action
the
against
plaintiff
the
in-
6 As the Fourth Circuit has explained, "[t]he term ^fraudulent
joinder' is a bit misleading, inasmuch as the doctrine requires
neither
a
showing
of
fraud,
nor
joinder.
In
fact,
it
is
irrelevant whether the defendants were ^joined' to the case or
originally included as
defendants;
rather,
the doctrine
is
potentially applicable to each defendant named by the plaintiff
either in the original complaint or anytime prior to removal."
Mayes,
198 F.3d at 461 n.8
(internal citations omitted).
7
state
U.S.
defendant.'"
Dist.
Mayes,
In
Bennett
Bank
of
at *7
LEXIS 54725,
v.
(E.D.
Am.,
Va.
No.
Apr.
18,
2012)
the instant case,
there is
(quoting
undisputed evidence that SBA
Professional
Foreclosure
Corporation
not SBA,7 is the substitute trustee.
of
ECF No.
Virginia
Id.
Mot. Remand at 2.8
allege any facts
of
at
action against
all
fraudulent joinder,
the
of
SBA
analysis.
Mayes,
198
citizenship
of
for
Defendant
7 Rehbein
the
F.3d
Mem.
Supp.
at
a
Indeed,
it does
Therefore,
under
the court will not consider
purposes
Citi,
principal place of business
SBA.
concerning SBA.
the doctrine of
of Virginia,
("PFCV"),
The Complaint does not allege any facts that
would support a cause
citizenship
12, Att.
Rehbein admits that
her Complaint "improperly named" SBA as a defendant.
not
2012
198 F.3d at 464).
is a misidentified party to these proceedings.
1.
3:12cv34,
of
461.
New
its
jurisdictional
Considering
York
in Missouri,
only
corporation
and Rehbein,
the
with
a
a citizen
there is complete diversity in this case.
does
not
contest,
and
offers
no
evidence
to
the
contrary, that "SBA is a law firm retained to assist Citi and
its substitute trustee," PFVS, in performing foreclosure sales.
SBA's Mem. Supp. Mot. Dismiss at 1.
See infra note 8 and
accompanying text.
8 Notwithstanding the court's previous warning that until Rehbein
amended the Complaint to add PFCV as a defendant, PFCV is not a
party to the suit, Rehbein did not amend her Complaint to name
the correct party. See Order, March 13, 2013, at 1 n.l.
8
Accordingly,
jurisdiction
are
because
met,
the
requirements
Rehbein's
Motion
to
for
Remand
diversity
for
lack
of
jurisdiction is DENIED.
Ill.
Each
Defendant
Motions
separately
to Dismiss
filed
a
Motion
to
Dismiss
the
Complaint for failure to state a claim upon which relief can be
granted.
Rehbein
filed a reply.9
responded
For
the
to
these
reasons
Motions;
Defendant
discussed below,
Citi
Rehbein's
Complaint fails to state a claim on which relief can be granted.
Consequently,
the
court
GRANTS
the
Defendants'
Motions
to
Dismiss.
A.
Standard of Review
Federal Rule of Civil Procedure 8 (a) provides,
part, "[a]
in pertinent
pleading that states a claim for relief must contain
. . . a short and plain statement of the claim showing that the
pleader
is
detailed
labels
entitled
factual
and
to
relief."
allegations,
The
but
conclusions ....
[A]
complaint
Rule
8
Twombly,
550
dismiss,
a
accepted as
U.S.
544,
complaint
true,
to
555
must
(2007).
contain
"requires
formulaic
elements of a cause of action will not do."
"To
need
not
have
more
than
recitation
Bell Atl.
survive
sufficient
a
of
the
Corp.
v.
motion
to
factual
matter,
^state a claim to relief that is plausible
See supra note 3 and accompanying text.
9
on
its
face.'"
Ashcroft
v.
Iqbal,
556
U.S.
662,
678
(2009)
(quoting Twombly, 550 U.S. at 570).
The
in Twombly and
Supreme Court,
Iqbal,
offered guidance
to courts evaluating motions to dismiss:
keeping
with
these
principles
a
court
In
considering a motion to dismiss can choose to begin by
identifying pleadings that, because they are no more
than conclusions, are not entitled to the assumption
of truth.
While legal conclusions can provide the
framework of a complaint, they must be supported by
factual allegations.
When there are well-pleaded
factual
allegations,
a
court
should assume
their
veracity and then determine whether they plausibly
give rise to an entitlement to relief.
Iqbal,
556
U.S.
at
679.
That
alleged in the complaint
is,
as true
the
and views
light most favorable to the plaintiff.
417
F.3d
whether
418,
a
420
(4th
complaint
. . .
be
a
court
to
draw
Iqbal,
556 U.S.
Cir.
states
context-specific
on
its
judicial
facts
those facts in the
Overall,
plausible
task
accepts
Venkatraman v. REI Sys.,
2005).
a
court
claim
that
"[determining
for
requires
experience
and
relief
the
will
reviewing
common
sense."
at 679.
B. No Allegations Against SBA
SBA has produced evidence,
that PFVC,
1;
supra
admits
Mem.
not SBA,
notes
that
Supp.
7
&
SBA was
Mot.
which Rehbein does not contest,
is the substitute trustee.
ECF No.
8
In
and
accompanying
improperly
Remand
at
named
2.
The
10
text.
as
a
fact,
party to
Complaint
12, Att.
Rehbein
this
levels
suit.
factual
allegations against the substitute trustee, not SBA, and so does
not
state
a
plausible
claim
for
relief
against
SBA.
Accordingly, SBA's Motion to Dismiss is GRANTED.
C. The Plaintiff Has No Enforcement Rights Under the National
Mortgage Settlement
On March 12, 2012,
the
United States
and the attorneys general of
of
Columbia
servicers,
Compl.
filed
a
5 19;
Citi's
complaint
Supp.
Mot.
filed,
(the "National Mortgage
Settlement"),
Consent
Judgment
April 4, 2012,
District
The
of
Consent
by
United
Columbia.
Judgment
Citi's
sets
protecting homeowners.
these
standards.
third-party
Compl.
beneficiary
judgments
enforcement
purposes
ITT
Baking
Cont.
Thompson
v.
U.S.
Pep't
at
3.
Shortly
which was memorialized by
Judgment")
States
Mem.
forth
District
Supp.
entered
Court
Mot.
servicing
for
Dismiss,
standards
on
the
Ex.5.
aimed
at
SI 19.
Rehbein
alleges
that
she
is
of
Consent
Judgment
and,
as
such,
the
Br. Opp.
and
decrees
basically as
Co.,
mortgage
The mortgage servicers must comply with
has a right to enforce it.
Consent
five
the parties reached a settlement
("Consent
the
Justice
foreclosure abuses.
Dismiss
after the complaint was
a
against
alleging various
Mem.
of
forty-nine states and the District
joint
including Citi,
Department
420
U.S.
of Housing
11
a
Mot.
are
Dismiss at 5.
"to
contract."
223,
a
238
& Urban
be
construed
for
United States
(1975);
Dev. , 404
v.
see
also
F.3d
821,
821,
832
(4th
enforcement
Cir.
of
a
2005)
("Issues
consent
decree
of
interpretation
typically
traditional rules of contract interpretation
Countrywide
at *7-8
Bank,
2:llcv271,
(D. Utah July 26, 2012)
Settlement as
that
No.
"[a]
a contract).
nonparty
promised in a contract
intend."
1347
Astra USA,
(2011).
enforceable
are
not
As
benefited by
U.S.
723,
to
750
v.
in
it
it."
is
LEXIS
entitled
Santa Clara Cnty.,
matter,
to
104728,
a
benefit
even
1975).
consent
131 S. Ct.
decrees
collateral proceedings
though
Blue Chip Stamps
(U.S.
Dist.
Bell v.
a basic tenet of contract law
legally
general
directly or
parties
. . . .");
to
. . . only if the contracting parties so
Inc.
a
U.S.
subject
(analyzing the National Mortgage
It
becomes
2012
are
and
they
were
v. Manor
1342,
are
"not
by those
intended
to
Drug Stores,
who
be
421
In order to have enforcement rights,
third parties to a consent decree must demonstrate that they are
intended
beneficiaries,
beneficiaries.
Cir.
SEC
v.
as
opposed
Prudential
Sec,
to
136
merely
F.3d
incidental
153,
158
(D.C.
1998).
"[B]ecause
the
government
public interest,
third parties
government]
presumed
intended
Contracts
are
beneficiaries.
§ 313
cmt.
to
Id. ;
a
usually
acts
in
the
general
[to consent decrees involving the
be
incidental
see
(1981)
12
also
beneficiaries,"
Restatement
("Government
(Second)
contracts
not
of
often
benefit
the
treated as
public,
but
individual
members
incidental beneficiaries unless
is manifested.").
of
the
public
a different
are
intention
To overcome this presumption and qualify as an
intended beneficiary,
the third party must demonstrate that the
contracting parties "intended the third party to be able to sue
to protect
third
party;
parties
Sec,
[the]
benefit" the consent judgment conferred on the
it
is
had some
not
intent
sufficient
to
benefit
to
show
simply
that
the third party.
the
Prudential
136 F.3d at 159.
Although the National Mortgage Settlement certainly aims to
benefit
to
individual
borrowers
through
more stringent servicing standards,
from
which
intended
the
court
could
beneficiaries
beneficiaries.
The
implementation
of
Rehbein has alleged no facts
conclude
rather
language of
the
that
these
than
the
merely
Consent
that the parties to the agreement did not
borrowers
are
incidental
Judgment
indicates
intend the individual
borrowers to be able to sue to protect the benefits the consent
judgment confers.
Citi's Mem.
Supp.
1-16; see also Prudential Sec,
The
Consent
Judgment
Mot.
Dismiss Ex.5,
Ex. E at
136 F.3d at 159.
expressly
provides
a
mechanism
by
which its terms are to be enforced, and appoints an independent
monitor to oversee the servicers'
compliance with the servicing
standards.
Dismiss
Citi's Mem.
Supp.
Mot.
13
Ex.5,
Ex.
E at
1-16.
The
Consent
Judgment
specifies
that
"[a]ny
enforcement
action
under this Consent Judgment may be brought by any Party to this
Consent Judgment or the Monitoring Committee." Id., Ex. 5 at 15.
Third party borrowers
are
conspicuously absent
from this
list.
Under the principle of expressio unius est exclusio alterius,
follows
that,
individual
pursuant
borrowers
actions.
See
Smith
F.3d
861
(4th
858,
to
the
are
not
Barney,
Cir.
Consent
eligible
Inc.
2000)
unius est exclusio alterius to
v.
Judgment's
own
to
enforcement
Critical
(using
it
bring
Health
principle
of
terms,
Sys.,
212
expressio
interpret a contract's choice of
forum clause) .10
Moreover,
not
all
failures
to
meet
the
Consent
Judgment's
servicing standards constitute violations of the agreement; only
where
the
the
servicer
particular
Mot.
has
metric
Dismiss Ex.5,
Ex.
exceeded
in
a
the
given
E at ll.11
threshold error
quarter.
rate
Citi's
set
Mem.
for
Supp.
The servicer would then have
10 Rehbein erroneously cites this principle of construction for
the proposition "that what
included."
Br. Opp. Mot.
is not excluded ... is therefore
Dismiss at 6.
In fact, the maxim
roughly translates as "the expression of one thing implies the
exclusion of another."
Ayes v. U.S. Dep't Veterans Affairs, 473
F.3d 104,
110-111
(4th Cir.
2006). When the principle is
afforded its proper meaning, it unquestionably weighs against
interpreting
the
Consent
Judgment
to
provide
individual
borrowers enforcement rights.
11
For
example,
only
when
the
number
of loans
referred
to
foreclosure in violation of dual-track provisions exceeds five
percent in
the quarter would a potential violation occur.
Citi's Mem. Supp. Mot. Dismiss Ex. 5, Ex. El at 13.
14
the right to cure the potential violation before any further
enforcement action
may be taken.
Id. , Ex.
E at 11.
Permitting
individual borrowers to sue to enforce any failure by a servicer
to meet
the
servicing
standards
would be
incongruous
with
the
definition of "potential violation" to which the parties to the
consent judgment agreed.
Rehbein
has
failed
individual borrowers
National
Mortgage
third-party
suits
See Id., Ex. El at 13.
are
to
overcome
the
presumption
that
merely incidental beneficiaries of the
Settlement,
and
to
the
enforce
so
have
Consent
no
right
Judgment.
to
bring
Thus,
any
claims that allege a violation of the Consent Judgment should be
dismissed.12
alleges
Accordingly,
that
the
Count
"Defendants
IV of the
have
violated
Complaint,
the
terms
which
of
the
Settlement Agreement by dual tracking Plaintiff for both a home
loan
modification
while
continuing
to
pursue
foreclosure,"
is
DISMISSED.
D.
In
the
remaining
State Law Claims
claims
of
the Complaint,
it
appears
that
Rehbein may be attempting to couch National Mortgage Settlement
12 Even if the court were to find that individual borrowers had
enforcement
rights
under
the
Consent
Judgment,
any
claims
seeking to enforce the Consent Judgment's terms could not move
forward in this court because the Consent Judgment provides that
the servicer's obligations under the Consent Judgment are only
enforceable
of
Columbia.
in
the
United
Citi's Mem.
States
Supp.
District
Mot.
15.
15
Court
for
Dismiss Ex.5,
the
District
Ex.
E at
14-
violation
claims
as
claims
advanced under
state
law.
the court is skeptical of such characterizations,
proceed
to
assess
individually.
2012 U.S.
of
Rehbein's
the court will
state
law
See Monton v. Am.'s Servicing Co.,
Dist.
(analyzing
each
LEXIS 117259,
state
law
claims
at *19-23
predicated
(E.D. Va.
on
the
Although
claims
No. 2:llcv68,
Aug.
Home
20, 2012)
Affordable
Modification Program ("HAMP")).
i. Breach of Contract Arising from the Implied Covenant of Good
Faith and Fair Dealing
Rehbein
alleges
that
the
Defendants
breached
the
covenant
of good faith and fair dealing found in the Promissory Note and
the Deed of Trust "by
[sic]
for
properly
a
(i)
modification
review
failing to properly review Plaintiffs
of
their
Plaintiffs
[sic]
[sic]
loan
for
(ii)
the
failing
to
alternative
modification programs such as a repayment plan or the Department
of
Justice
modification
loan
[and]
service Plaintiffs' [sic] loan."
(iii)
failing
to
properly
Compl. $ 26.13
13 At times, Rehbein appears to suggest that her cause of action
arises from Citi's breach of the duty of good faith and
dealing under the National Mortgage Settlement.
See Compl.
("Defendant
Bank
is
in
breach
of
contract
as
a
matter
fair
1 26
of
Virginia Law by failing to conduct themselves [sic] with the
principles embodied by the Settlement Agreement's covenant of
good faith and fair dealing as defined by the Settlement."). To
the extent that Rehbein' s claim is so based, her claim must fail
because she was not a party to the National Mortgage Settlement
and does not have enforcement rights under that agreement.
See
supra Part III.e.
16
The
Fourth
Circuit
has
held
that
contracts
governed
by
Virginia law contain an implied covenant of good faith and fair
dealing.
4300
Wolf v.
(4th
Adventures,
Cir.
Feb.
Ltd.,
624
Vermiculite,
Cir.
Ltd.
1998).
in
solely
that
However,
binding
v.
bad
W.R.
11-2419,
2013)
F. Supp.
"a
2d 443,
party
even
party."
a
implied
covenant
Am.,
493
S.E.2d
516
156
(Va.
Space
541-42
is
F.3d
vested
at
542.
valid
and
and
fair
faith
Ward's Equip,
1997).
(4th
contractual
create
good
dealing is inapplicable to those rights."
Holland N.
v.
discretion
contract
of
LEXIS
2009)); Va.
exercise
Vermiculite,
to
Va.
156 F.3d 535,
not
App.
Enomoto
(E.D.
such
parties
an
450
may
when
Va.
2013 U.S.
(citing
Grace & Co.,
faith,
"when
rights,
No.
28,
Moreover,
discretion
in
Fannie Mae,
v. New
Simply put,
"the
duty of good faith does not prevent a party from exercising its
explicit contractual rights."
Thus,
Va.
Vermiculite,
156 F.3d at 542.
"the covenant does not compel a party to take affirmative
action
not
otherwise
required
establish independent
parties,
and cannot
contractual
duties
be
rights."
not
invoked
Monton,
under
the
contract,
otherwise
agreed
to undercut
2012 U.S.
does
upon
a party's
Dist.
LEXIS
not
by
the
express
117259,
at
*21.
Here,
creates
a
neither
duty
the
on
Promissory
the
part
17
of
Note
nor
Citi
the
to
Deed
of
Trust
facilitate
loan
modification.
The terms of the Promissory Note and the Deed of
Trust expressly allow Citi to foreclose upon the property if the
borrower
defaults
on
the
loan.
The
undisputed
evidence
demonstrates that Rehbein fell into arrears on the loan payments
and defaulted on
Mot.
Dismiss
her mortgage.
property.
1.
right
contractual
at
to
Mem.
As
Compl.
a
result,
accelerate
Supp.
Mot.
St 8;
Citi
payment
Dismiss
Citi's
and
1 f
Ex.
had
6.
Mem.
the
Supp.
express
foreclose
on
the
Because a party
does not breach the implied duty of good faith when it exercises
express rights under the contract,
Va.
Vermiculite,
156 F.3d at
542, Citi's decision to accelerate payment and start foreclosure
proceedings does not constitute a breach of any duty created by
the Promissory Note or the Deed of Trust.
Moreover,
contains
neither the Promissory Note nor the Deed of Trust
provisions
modification
in
payments.
short,
covenant
In
of
good
obliging
the
Citi
to
event
Rehbein
failed
Rehbein's
claim
arising
faith
and fair dealing
fails
facilitate
loan
to
make
timely
from
the
implied
because
she
has
alleged no facts demonstrating any "discretion" under either the
Promissory Note or the Deed of Trust that Citi exercised in bad
faith.
18
ii. Breach of Contract Arising from Alleged Violations of the
National Mortgage Settlement's Servicing Standards
Rehbein
alleges
modification
standards
that
by
application
set
forth
in
failing
in
the
to
review
accordance
National
breached the express terms of
Rehbein's
with
Mortgage
the
loan
servicing
Settlement,
the Deed of Trust.
Compl.
Citi
5 25.
She argues that the Defendants "had an obligation under the Deed
of Trust to follow all Federal and State law," and they breached
this
obligation
deliberate
servicing
are a party."
It
"when
is
they
chose
standards
in
Br. Opp. Mot.
a
basic
at
the
time
of
the
ignore
the
clear
and
agreement
to
which
they
Dismiss at 9-10.
tenant
generally understood to
to
of
contract
law
that
"contracts
are
incorporate only those laws which exist
formation."
Condel
v.
Bank
of
Am.,
Dist. LEXIS 93206, at *24 (E.D. Va. July 5, 2012)
2012
U.S.
(citing Gazale
v. Gazale, 250 S.E.2d 365 (Va. 1979)).
"[A]bsent clear language
to
interpret
the
contrary,
courts
should
not
incorporate future changes to the law."
LEXIS 93206,
Here,
obligations
Condel,
contracts
to
2012 U.S. Dist.
at *24 .
the
are
Deed
of
subject
Trust
to
provides
requirements
that
of
all
rights
"Applicable
and
Law,"
which is defined as "all controlling applicable federal, state,
and local statutes ... as well as all applicable final, non
appealable
judicial
opinions."
Citi's
19
Mem.
Supp.
Mot.
Dismiss
Ex. 2 at 3 & II 16. This provision "refers to the then-existing
body
of
law
question [;]"
that
it
applies
does
already applicable
directly
not "incorporate
to
the
laws
contract
in
[were]
not
which
(even if otherwise relevant)
to the parties
or their agreement" at the time they entered into the contract.
Condel,
the
2012 U.S. Dist.
Deed
of
Settlement,
Trust
as
on
LEXIS 93206,
June 10,
reflected
in
at *23.
2008.
the
Rehbein executed
The
Consent
National
Mortgage
Judgment,
was
not
entered by the District Court for the District of Columbia until
April 4, 2012,
signed.
nearly
four
years
after
Deed
of
Trust
was
Consequently, it does not qualify as "Applicable Law"
under the Deed of Trust. See id.14
Citi's
the
purported
Settlement's
Thus, Rehbein cannot rely on
violations
servicing
of
standards
the
as
National
grounds
for
Mortgage
breach
of
contract.
iii. Duty to Mitigate Damages
Finally,
Rehbein alleges that the "Defendants are required
by law and have a duty to mitigate their damages," and they have
14
Even if the
court
were
to
interpret
"Applicable Law"
to
include
future
changes
to
the
law,
the
National
Mortgage
Settlement Agreement is not an "applicable" judicial opinion
because Rehbein has no right to sue to enforce the Consent
Judgment.
See supra Part III.C; see also Lubitz v. Wells Fargo
Bank,
No.
CL12-3800,
2012
Va.
Cir.
LEXIS
97,
at
*3
(Sept. 20, 2012)
(finding
that
HUD
regulations
"applicable law" under a deed of trust because they
provide the plaintiff with a private right of action).
20
are
did
not
not
breached this duty by
initiating
the foreclosure process
Rehbein claims she is eligible for a loan modification.
f
37-38.
Citi
Rehbein
will
avoided
contends
incur
if
Citi
that
significant
modifies
The
Virginia
Compl.
foreclosing on her property
economic
her
Rehbein to repay Citi fully.
by
when
loan,
losses
thereby
that
could
allegedly
be
enabling
Id. SI 37.
Supreme
Court
has
'^long
recognized
the
obligation of an injured party to mitigate damages,'"
but "an
assertion that
damages
an
injured party has
is an affirmative defense," not an
Monton,
2012
v. Rapp,
U.S.
Dist.
Here,
foreclose
Defendant
on
her loan.
at *23-25
(quoting Forbes
595-96 (Va. 2005)).
Citi
Rehbein's
independent cause of action.
LEXIS 117259,
611 S.E.2d 592,
failed to mitigate
had
an
property
express
once
contractual
she
fell
into
right
to
arrears
on
There is no common law noncontractual duty regarding
loan modification
that
would
to exercise this right.
require Citi
Id. at *24-25.
to forego
As a result,
its
option
Rehbein's
claim for breach of duty to mitigate damages is DISMISSED.
D. Injunctive Relief
Rehbein
foreclosure
loan
Compl.
has
at
seeks
a
proceedings
been
7.
"properly
She
preliminary
on
injunction
Rehbein's
considered"
argues
that
21
property
for
without
a
enjoining
until
loan
an
the
Rehbein's
modification.
injunction,
her
property will be sold at a foreclosure sale and Rehbein "will
suffer serious detriment to her credit score."
Id.
SI 45.
Before a preliminary injunction may be granted,
must establish that 1)
2)
"he is
likely to
preliminary
his
interest."
and
on
the
3)
4)
has
To
foregoing
NRDC,
not
the merits.
"that
"that
Winter v.
Rehbein
"he is likely to succeed on the merits";
suffer irreparable harm in the
relief";
favor";
the
an
balance
555 U.S.
Inc.,
20
analysis
contrary,
that
she
the
Rehbein
Rehbein's
request
7,
is
court
has
absence of
equities
is
established that
the
of
injunction
claim upon which relief can be granted.
Consequently,
a plaintiff
in
tips
the
in
public
(2008).
likely to
has
failed
succeed
concluded upon
to
state
any
See supra Part III.A-D.
for a preliminary injunction is
DENIED.
IV.
For
ECF
reasons
10,
ECF No.
the
is
Nos.
4
DISMISSED.
&
stated
DENIED
8,
The
and
Conclusion
above,
Rehbein's
the
Defendants'
are
GRANTED.
Rehbein's
court
DIRECTS
the
Clerk
Motion
Motions
to
to
Complaint
to
forward
Remand,
Dismiss,
is
a
hereby
copy
of
this Memorandum Opinion and Order to counsel for all parties.
IT IS SO ORDERED.
,.
Rebecca Beach Smith
United States District Judge^W"
Norfolk,
April
lA
Virginia
, 2013
REBECCA BEACH SMITH
CHIEF UNITED STATES DISTRICT JUDGE
22
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?