Harrell et al v. Caliber Home Loans, Inc. et al

Filing 7

MEMORANDUM OPINION and FINAL ORDER Granting Defendant's Motion to Dismiss. The Plaintiff's Complaint is hereby Dismissed.. Signed by Chief District Judge Rebecca Beach Smith on 2/4/14. (tbro)

FILED
UNITED

STATES

DISTRICT

EASTERN DISTRICT

Norfolk

COURT

FEB -4 2014

OF VIRGINIA

Division

CI LHK, U S. DIS1RIC1 COURT

BARRY HARRELL and BEATRICE HARRELL,

NORFOLK. VA

Plaintiffs,
CIVIL

v.

CALIBER HOME LOANS,

INC.

NO.

2:13cv602

et al,

Defendants.

MEMORANDUM OPINION AND

This

matter

comes

before

the

FINAL

court

on

ORDER

the

Motion

to

Dismiss

for Failure to State a Claim ("Motion") filed by the Defendant,1
Caliber

Home

Loans,

Inc.

("Caliber")

on

November

25, 2013.

The

Plaintiffs have not responded to the Motion as required by Local
Rule

7(F),

and the time to do so has passed.

ripe for review.

For the reasons

The matter is now

stated below,

the Motion is

GRANTED.

I.

In

loan

March

("Note")

of

FACTS AND

2007,

the

PROCEDURAL HISTORY

Plaintiffs

entered

secured by a Deed of Trust

("DOT")

property located at 2512 Effingham Street,
("Property"). Ex. A,
On

March

Plaintiffs

10,

that

into

a

mortgage

for their real

Portsmouth,

Virginia

Notice of Removal 9 [hereinafter "Compl."].

2011,

they

the

loanholder,

were

in

Caliber,

default.

Compl.

notified

at

4.

the

On

1 There are three named defendants in this case. Throughout this
Order, "the Defendant" refers to the movant party, Caliber.

September 12,

2011,

Caliber

appointed

Equity

Trustees

as

the

substitute trustee for the DOT, replacing the original trustee.
Id.

Equity

conducted

Trustees
a

trustee's

Investments,

Inc.

February 26,

assigned all

of

("Suffolk

detainer
District

foreclosure
of

the

Mozart

5.

In

rights

in

the

Suffolk

against

the

Property

April

Golf

Property
then

Plaintiffs

October

Compl.

Trustees,

Solomon

L.L.C.,

to

and

the

on

buyers

Suffolk Golf,

initiated

unlawful

Portsmouth

in

an

General

Id.

15, 2013,

relief regarding the

2;

to

of 2013,

the

Plaintiffs

filed

the Circuit Court of the City of Portsmouth,

at

proceedings

Investments,

at

Golf").

Court.

On

Compl.

their

suit

sale

and

2013.

Inc.

initiated

at

The

Complaint

and Suffolk Golf as defendants.

Complaint

in

seeking declaratory

foreclosure proceedings.

8-9.

a

Notice of Removal

names

Caliber,

Equity

The Complaint alleges

that the DOT is missing a page containing material terms of the
contract,

and

consequently

that

the

DOT

is

unenforceable.

The

Complaint seeks a declaratory judgment that, inter alia, the DOT
is unenforceable;

without

authority,

Plaintiffs

Although

Complaint

the appointment of the

are

titled

also

the

as

and
title

a

therefore
owners

request

seeks

null

of

for

equitable

a

the

substitute trustee was

and

void;

Property

declaratory

remedies,

in

and

the

question.

judgment,

including

the

the

rescission of the

trustee's

sale

and an

make appropriate corrections to the
Compl.

order

that Caliber

Plaintiffs'

credit reports.

November

13,

2013,

Caliber

removed

the

court pursuant to 28 U.S.C.
diversity

federal

action

§§ 1331 and 1332(a),

November

jurisdiction
19, 2013,

case

should

jurisdiction.

been

and

the
not

court
be

Caliber

November 25, 2013,
had

remanded

for
to

lack

the

to

this

asserting both

jurisdiction.
to

show cause

of

subject

Show

Cause

On
why

matter

Order

on

asserting that all the non-diverse defendants

jurisdiction

joined,

pursuant

days prior to that Response,
the

question

ordered Caliber

responded

fraudulently

diversity

filed

to

at 8-9.

On

the

is

instant

Motion.

and

to

therefore

28

U.S.C.

the

§ 1332(a).

on November 19, 2013,
The

Plaintiffs

response to the Motion within the

time

court

have

required,

has

A

few

Caliber also
not

filed

a

and therefore

the matter is ripe for review.
II.

Before

establish

SUBJECT MATTER JURISDICTION

reaching the merits

that

it

has

subject

of

the Motion,

matter

this

court must

jurisdiction.

Caliber

argues that this court has

subject matter jurisdiction under 28

U.S.C.

to establish

§ 1332(a).

a plaintiff must
and

the

amount

In order

not
in

share

diversity

jurisdiction,

common citizenship with a defendant

controversy

must

exceed

$75,000.

See

28

U.S.C.

§

1332(a).

plaintiffs.

All

Mayes

v.

defendants

Rapoport,

must

198

be

F.3d

diverse

457,

from

461

(4th

all

Cir.

1999).

In
the
v.

suits

involving

claims

property determines
Litton

2011)

Loan

the

Servicing,

(finding the amount

to

real

property,

in

controversy.

amount

796

in

F.

Supp.

2d

753,

the

value

See

766

of

Sherman

(E.D.

controversy was met based on

Va.

"the

manifest fact that the value of the Property exceeds $75,000").
Here,

the

value

of

Notice of Removal,

the

Property

is

more

so the only issue is

than

$75,000,

Ex.

B,

the complete diversity

requirement of 28 U.S.C. § 1332(a).
There

are

three

named

defendants

which is the removing party,

in

this

case:

Caliber,

and two non-diverse co-defendants,

Equity Trustees and Suffolk Golf. Compl. at 2. Caliber does not

argue that Equity Trustees and Suffolk Golf are diverse; instead
it

asserts

"fraudulently

that

the

joined,"

two

and

non-diverse

therefore

defendants

that

were

the

diversity

that

"diversity

requirement of 28 U.S.C. § 1332(a) is met.
The
is

not

"fraudulent joinder" doctrine provides
defeated

by

the

joinder

of

parties

against

whom

the

plaintiff has no reasonable hope of recovery." 17th St. Assocs.,
LLP

v.

(E.D.

Markel

Va.

Int' 1

2005);

see

Ins.

also

Co.

Ltd.,

Mayes,

373

198

F.

F.3d

Supp.

at

2d

461.

584,

"To

595

show

fraudulent

joinder,

'outright
facts'
be

fraud

or that

able

to

defendant

F.3d

the

in

removing

plaintiff's

state

424

Sales Corp.,

party

must

demonstrate

pleading

of

either

jurisdictional

'there is no possibility that the plaintiff would

establish

in

422,

the

a

cause

court.'"

(4th

Cir.

6 F.3d 229,

of

action

Hartley

1999)
232

v.

against

CSX

(quoting

(4th Cir.

allegation of bad faith on the part

the

Transp.,

Marshall

1993)).

of the

in-state
Inc.,

v.

187

Manville

There has been no

Plaintiffs,

so the

issue is whether the Plaintiffs have any possibility of recovery

against
show

the

that

non-diverse

the

Defendants.

plaintiff

cannot

The

removing

establish

a

party

"must

even

after

claim

resolving all issues of law and fact in the plaintiff's favor."

Hartley,

187 F.3d at 424 (citations omitted). This standard is

"even more

motion

favorable to the plaintiff" than the standard for a

to dismiss pursuant

12(b)(6).

joinder,

Id.

making

the court

pleadings,
determine

but
the

Counseling
F.2d

In

is

may
basis

Publications,

1004
Inc.,

a

of

Cir.

the

"consider the

joinder

Centers

(4th

determination

not bound by

instead

& Testing

1000,

to Federal Rule of Civil Procedure

v.

by

any

Grp.

1990)

as

fraudulent

allegations
entire

means

W

to

of

the

record,

and

available."

Television,

(quoting

329 F.2d 82, 85 (10th Cir.

Dodd
1964)).

Inc.,
v.

AIDS

903

Fawcett

In

the

Complaint,

declaratory

and

Plaintiffs

substitute

injunctive

relief

order stating:

request for an
the

the

(1)

trustee

was

in

ask

what

for
is

a

mix

essentially

the DOT is unenforceable;

appointed

without

a

(2)

authority

and therefore the

Deed of Appointment

null and void;

the trustee's sale and conveyance of title to

Suffolk Golf

the

is

Plaintiffs

Caliber

is

(3)

to

to

be

are

of

proper

of

Substitute Trustee

rescinded

and declared

title

of

the

correct

the

owners

credit

null

and

void

(4)

Property;

the

profiles

is

and

(5)

of

the

Plaintiffs.

Compl. at 8-9.

Although it is unclear from the Complaint which causes of
action are being asserted against which Defendants,
that

the

claims

involving

allegations regarding
to Suffolk Golf;

and

(1)
(2)

the

non-diverse

Equity Trustees'

it appears

defendants

are

the

sale of the Property

whether Suffolk Golf is the true title

owner of the Property.

A.

The

Plaintiffs

Equity Trustees

request

a

declaratory

foreclosure sale is null and void.

occurred,

a

inappropriate.
689,

696

declaratory

See

(E.D. Va.

Tapia
2010)

judgment

v.

U.S.

aff'd,

judgment

that

the

Because the sale has already

to

Bank,

that

N.A.,

effect

718

441 F. App'x 166

F.

would

Supp.

(4th Cir.

be

2d

2011)

(noting that declaratory relief is necessarily forward-looking,

and

is

"untimely

Alvarez

if

v.

Loan

2934473,
or
a

Aurora

at

*3

(E.D.

questionable
declaratory

v.

damages
Servs.,

Va.

Va.

relief

Mar.

foreclosed

on,

Defendants'

already

LLC,

July 21,

No.

accrued");

is

2010)

19,

inappropriate

No.

("as

and

thus,

in

this

matter");

("Plaintiffs'

home

a

WL

(the foreclosure),

2010 WL

seeking

2010

the alleged wrong

1:09-cv-1121,

2010)

Ramirez-

01:09-cv-1306,

conduct has already occurred

EMC Mortgage Corp.,

(E.D.

have

1039842,

has

declaratory

Merino
at

already

judgment

title and interest in the property is

*4

been

as

to

inapposite to

the underlying purpose of declaratory relief.").

The

Plaintiffs

of

rescission

on

this

of

claim

the

No.

l:12-cv-9,

(holding

that

rescission

of

the

for

foreclosure

also

foreclosure

rescission,

sale.

2012

a

request

See

WL

sale.

1144613,

at

could

foreclosure

they
Fed.

*4

are

of

their

they were not a party to the sale) . Moreover,
not

allege

"fraud,

any

mistake,

of

the

usual

illegality,
v.

grounds

for

disability,

Helvestine,

succeed

to

Mortgage Ass'n,

Apr.

5,

a

claim

in

property

2012)

for

because

the Plaintiffs do

rescission,

Va.

form

parties

concealment,

256

the

cannot

Va.

succeed

in

not

Nat.

(W.D.

not

sale

relief,

Plaintiffs

because

Browning v.

plaintiff

the

equitable

1,

such

[or]

influence."

Runion

10

Accordingly,

their claim for rescission cannot succeed.

as

undue

(1998).

B.

It

is

also

Plaintiffs
their

are

unclear

Property

would

against

from

asserting

assertion

that

Suffolk Golf

against

they

implicate

Equity Trustees,

the

are

Suffolk
the

Suffolk
the

Complaint

Golf,

true

Golf.

which

Plaintiffs

but

title

As

it

the

appears

owners

with

cannot

claims

of

their

the

claims

succeed on

this

claim.

"[A]n action to quiet title is based on the premise that a
person

with

should

not

title."

good

State

to

certain

real

subjected

be

title

to

various

future

of

Maine

(quoting Neff v. Ryman,

v.

Adams,

100 Va.

277

or

personal

claims

Va.

521, 524

against

230,

(1902).

property

238

that

(2009)

In cases

like

the present one, plaintiffs must allege that they have superior
title

by

satisfying

Morgan Chase Bank,
Va.

Mar.

27,

(dismissing
allege
also,

*8

that

No.

2012),

a

claim
they

Jones v.

their

obligations.

3:12-cv-l,

aff'd,

for

had

loan

475

quiet

Fulton Bank,

(E.D. Va. July 18, 2013)

No.

2012 WL 1030115,
F.

App'x

title

satisfied

See

852

where

their

loan

3:13-cv-126,

(4th

Blick
at

v.

*4

Cir.

plaintiffs

JP

(W.D.
2012)

did

obligations);

not
see

2013 WL 3788428,

at

("To assert a claim for quiet title,

the plaintiff must plead that

he

has

obligations to the party in interest").

fully satisfied all

legal

Here,

the

Plaintiffs

have

not

alleged

any

suggest they have superior title to the Property.
the

Complaint

have

contains

satisfied

Without

their

alleging

no

facts

that

obligations

facts

to

that

would

under

effect,

that

Specifically,

suggest

the

the

facts

that

loan

they

agreement.

Plaintiffs

have

not

Plaintiffs

have

no

stated a claim for quiet title.2
For

the

reasons

"reasonable

hope

Defendants,

Equity

court

joined.
to

FINDS

that

of

the

the

above,

recovery"

Trustees

Accordingly,

consider

stated

and

against
Suffolk

non-diverse

this court has

Motion

to

the

the

Golf.

defendants

non-diverse
Therefore

are

the

fraudulently

subject matter jurisdiction

Dismiss,

pursuant

to

28

U.S.C.

§ 1332(a).

2 Moreover,

although the DOT

and the

Note

are "separate and

distinct
documents,"
"notes
and
contemporaneous
written
agreements executed as part of the same transaction will be
construed together as forming one contract." Horvath v. Bank of
New

York,

N.A.,

641

F.3d

617,

624

(4th

Cir.

2011)

(citations

omitted). Consequently, if the Plaintiffs are correct that the
DOT is lacking material terms, then no transaction took place;
essentially, they were never part of a transaction to buy the
Property in the first place. This result is supported by the
very cases the Plaintiffs cite in their Complaint. See Smith v.
Farrell,
199 Va.
121,
128
(1957)
("If any portion of the
proposed terms is not settled, or no mode is agreed on by which
it may be settled,
there is no agreement.");
Bocek v.
JGA
Assocs., LLC, 537 F. App'x 169, 175 (4th Cir. 2013) (granting
summary judgment for the defendant on a breach of contract claim
because the contract was missing an essential term).

III.

MOTION

TO DISMISS

Federal Rule of Civil Procedure 8(a)
part,

"[a]

provides,

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 ....

complaint

Rule

[A]

8

formulaic

Twombly,

dismiss,

a

550

U.S.

complaint

accepted as true, to
on

its

face.'"

544,
must

the

for the
556) . It

facts

reasonable

misconduct
is,

contain

v.

550 U.S.

that a "plaintiff pleads
draw

The

recitation

of

the

Bell Atlantic Corp.

survive a motion to

sufficient

factual

matter,

Iqbal,

556

U.S.

662,

678

(2009)

factual content that allows the court
inference

alleged."

therefore,

demonstrating

at

"To

than

at 570) . Facial plausibility means

not

a

Id.

that

the

defendant

(citing Twombly,

enough

"sheer

consist[ency]" with unlawful
U.S.

(2007).

have

'state a claim to relief that is plausible

Ashcroft

(quoting Twombly,

to

555

not
more

"requires

elements of a cause of action will not do."

v.

need

for

a

conduct.

Id.

(citing

liable

550 U.S.

plaintiff

possibility"

is

or

to

at

allege

"mere[]

Twombly,

550

557) .

Supreme Court,

in Twombly and

Iqbal,

offered guidance

to courts evaluating a motion to dismiss:

In
keeping
with
these
principles
a
court
considering a motion to dismiss can choose to begin by
10

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

veracity and then determine whether
give rise to an entitlement to relief.
Iqbal,

556 U.S.

at

679.

That is,

assume

they

their

plausibly

the court accepts facts alleged

in the complaint as true and views those facts in the light most
favorable

to

418,

(4th

420

complaint

the

plaintiff.

Cir.

states

2005).

Overall,

a plausible

context-specific task that

Venkatraman

v.

REI

"[d]etermining

claim for

relief will

417

F.3d

whether

...

requires the reviewing court

on its judicial experience and common sense."
at

Sys.,

Iqbal,

a

be

a

to draw

556 U.S.

679.

On this Motion to Dismiss,

the claims against
have been

Caliber,

fraudulently

Plaintiffs'

claims

missing material

because the other

joined.

stem

from

terms,

the court needs to consider only

See supra

their

named Defendants

Part

assertion

and was therefore

II.

that

All
the

of the
DOT

unenforceable.

was

From

this premise they conclude that Caliber had no authority under
the

DOT

to

subsequent

appoint

the

foreclosure

substitute
actions

by

trustee,
the

and

substitute

therefore
trustee

the
were

unlawful. Compl. at 5-9.3

3 As an initial matter,

the Virginia code confirms that Caliber

had the authority to appoint Equity Trustees as the substitute
11

The

Plaintiffs

lack

"First,

the plaintiff must have suffered an

the

will

be

as

of Wildlife,

opposed

to

504 U.S.

of

requires

...

merely

.

their

three

claims

elements:

'injury in fact'

Third,

'speculative, '

favorable decision."

555,

Plaintiffs

foreclosure.

. .

560-61

it

that

must

the

Lujan v.

be

injury

Defenders

(1992).

presumably

have

suffered

injury

by

the

Where their claims fall short is their lack of any

facts

to

prove

causation,

'fairly

complained

redressed by a

The

of

there must be a causal connection between the injury

conduct

'likely,'

standing

any

Caliber.

and

III

for

against

. . Second,

Article

standing

support

can

be

defendant.'"

causality

a

and

plaintiff
traced

Bishop

v.

redressability.

must

demonstrate

the

challenged

to

Bartlett,

2009)

(quoting Simon v.

41-42

575

F.3d

"In

that

order

the

action

419,

injury
of

the

(4th

425

Cir.

(1976)).

Here,

(1)

E. Ky. Welfare Rights Org.,

to

the claims against Caliber allege that

appointed

a

substitute

foreclosed on the Property;

trustee;
(3)

(2)

through

426 U.S.

26,

it wrongfully

that

trustee,

executed a sale of the Property

trustee. "The party secured by the deed of trust, or the holders
of greater than fifty percent of the monetary obligations
secured thereby, shall have the right and power to appoint a
substitute trustee or trustees for any reason." Va. Code Ann.
§ 55-59(9);

see

also

Merino,

2010

As

the

holder of the monetary obligation of the Note,
Caliber
authorized by statute to appoint a substitute trustee.

was

12

WL

1039842,

at

*3.

through that trustee,
bureaus.

of

(4)

reported the foreclosure to credit

None of these actions are wrongful if the substitution

the

trustee

allege

and

that

is

the

lawful.

Consequently,

foreclosure

process

the

would

Complaint

not

have

must

happened

without the allegedly unlawful appointment of Equity Trustees as
the

substitute

780,

2013 WL

trustee.

1652232,

that under similar
relationship

See

at

*5

facts,

between

Greene

v.

LNV

(E.D. Va.

Corp.,

Apr.

16,

the Complaint must

the

substitution

of

No.

3:12-cv-

2013)

(finding

allege the causal

the

trustee

and

the

injuries).
To
was

allege

the

cause

plead

that

that
of

the

their

appointment
injuries,

Substitution

default."

Douglas

854,

2013

WL

lack

of

v.

Branch

1683663,

causality

substitution

the

at

under

happened

the

of

(E.D.

similar

after

the

the

substitute

Plaintiffs

Trustee

Banking

*4

of

&

Va.

"would have

occurred

Trust

Co.,

Apr.

the

No.

3:12-cv-

(finding

where

default).

before

to

2013)

17,

facts,

trustee

the

The

trustee

Plaintiffs

received notice that they were in default six months before the

substitute
alleged

trustee

that

the

Note,

are

due

to

was

they

are

so

their

and
any

actions

appointed.
able

to

satisfy

Complaint
other

Compl.

than

13

at

their

fails
their

to

4.

They

obligations

allege

own.

have

the

not

under

injuries

Therefore,

their

claims

do

not

meet

the

causality

requirement

of

Article

III

standing.

The

Complaint

also

does

not

allege

redressability requirement of Article
court were to
for,

facts

III

that

standing.

meet

the

Even if the

issue an order with everything the Plaintiffs ask

unless the Plaintiffs are able to meet the requirements of

their loan or have already done so, they will find themselves in
foreclosure

reports.4
suggests

again,

There
that

injuries.

similar

See

a

foreclose

for

is

judgment

same

in

blemish

alleged

in

their

favor

WL

1652232,

"[ajlthough
which

second time,

it in their pleadings,

4 With

the

in

2013

that

scenario
a

with

nothing

Greene,

facts,

hypothetical

and

[the

the

on

their

at

there

their

pleadings

would

that

redress

their

(holding,

*6

under

might

defendant]

[plaintiffs]

credit

exist

decides
have

not

some
not

to

alleged

and it is within neither the province nor

regard to their

request

for Caliber

to correct

their

credit reports, even if this court were to liberally construe
the Plaintiffs' request as an attempt to assert a claim under
the Fair Credit Reporting Act,
it would be insufficient. See
Blick, 2012 WL 1030137, at *9 ("[T]he FCRA does not provide a
private right of action for a credit furnisher's alleged failure
to report accurate information. Rather, a furnisher only faces
liability if a complaint alleges that a furnisher failed to
conduct a reasonable investigation of a consumer's dispute after
being notified of a dispute directly by a credit reporting
agency.").

14

expertise of this Court to allege it for them").5 Accordingly,
the

allegations

asserted

against

Caliber

fail

to

state

a

claim

for lack of standing.
IV.

For

the

Dismiss,

ECF

hereby

reasons

No.

DISMISSED.

4,

stated

is
The

Conclusion

above,

GRANTED.
Clerk

is

the

The

Defendant's

Plaintiffs'

DIRECTED

to

Motion

to

Complaint

is

forward

a

copy

of

this Memorandum Opinion and Final Order to counsel of record for
the parties.
IT

IS

SO

ORDERED.

bl
Rebecca Beach Smith
Chief

United States District Judge __£$L
REBECCA

BEACH

SMITH

CHIEF UNITED STATES

DISTRICT

JUDGE

February *-f , 2014

Moreover, as noted previously, the Plaintiffs' own legal theory
precludes the relief sought. If the court were to conclude that
the DOT is unenforceable for lack of certain material terms, it
would necessarily have to conclude that the entire transaction,

including the execution of the Note, never took place. See supra
note 2. Simply put, there is no legal scenario in which the

Plaintiffs obtain title to the Property without paying for it.
15