Waites v. Wells Fargo Bank, NA

Filing 18

MEMORANDUM OPINION AND ORDER Denying 13 Motion to Dismiss for Failure to State a Claim. Signed by District Judge Mark S. Davis and filed on 2/16/16. Copies distributed to all counsel of record 2/17/16. (ldab, )

FILED
UNITED

STATES DISTRICT COURT

EASTERN DISTRICT OF VIRGINIA

FEB 1 6 2016

Norfolk Division

CLERK. US DISTRICT COURT
MOn"OI K VA

CARDISSIA WAITES,

Plaintiff,
Civil

V.

WELLS

FARGO

BANK,

No.

2:15cv353

N.A.,

Defendant

MEMORANDUM OPINION

This

dismiss,
Fargo")

matter

is

before

the

Court

filed by Wells Fargo Bank,
pursuant to Rule 12(b)(6)

Procedure.

ECF

record,

Court

the

because

the

presented.

No.

13.

facts

Fed.

and

R. Civ.

on

N.A.,

an

amended

motion

to

("Defendant" or "Wells

of the Federal Rules of Civil

After

determines

and ORDER

examining

that

oral

legal

the

argument

E.D. Va.

and

the

Loc.

is

unnecessary

are

contentions

P. 78(b);

briefs

adequately

R.

7(J).

A.

The instant civil
Court

for

removed

the

to

jurisdiction,

City

this
and

of

Waites

set

forth

initially filed in the

Norfolk,

Court

Virginia.

pursuant

neither

Court's jurisdiction,

As

suit was

the

to

It

thereafter

diversity

removal,

of

was

Court's

the

propriety

Circuit

nor

this

are in question.

in

("Plaintiff"),

the
the

civil

complaint

instant

filed

action

by

arises

Cardissia
out

of

Plaintiff's failure to timely pay her mortgage payments,

ultimately led to the foreclosure of her home.
ECF No. 1-2.

which

Compl. 11 6-7,

After Plaintiff fell more than three months behind

on her payments to Defendant, on "April 25, 2010, Plaintiff and
Defendant

executed

a

xSpecial

Forbearance

Agreement'

where

Plaintiff would be allowed to make monthly reduced payments of

$579.41 beginning May 15,

2010."

Id.

1 8.

The forbearance

period was scheduled to end on September 15, 2010, at which time

all past due payments (approximately $20,000) were due.
& Ex.B.

In conjunction with signing the forbearance agreement,

Plaintiff

required

submitted

$

579.41

a

check

to

forbearance

Defendant

payment,

Defendant's error processing such check,

rejected.
lacked

Id. 1 8

Id.

11 10-16.

sufficient

funds

to

far

but

exceeding

due

entirely

the

to

the timely payment was

Mistakenly believing that Plaintiff
cover

the

first

forbearance

Defendant declared in a written notice dated May 28,

check,

2010,

that

Plaintiff had failed to comply with the terms of the forbearance

agreement.

Id.

1

17

&

Ex.F.

Defendant

therefore

resumed

foreclosure activities, rejected Plaintiff's subsequent attempts
to make additional payments under the
agreement,

and

ultimately

caused

Plaintiff's home on July 7, 2010.

terms of

the

the forbearance

foreclosure

sale

of

Id. 11 17-22.

Plaintiff filed the instant action on July 7, 2015, exactly
five years after the foreclosure sale,

alleging violations of

the note/deed of trust

removed

the

Defendant

case

was

to

and violations of the

(Counts II and IV).

forbearance agreement

(Counts I and III)

Defendant thereafter

this

Court

subsequently

and

given

filed

a

to

to

leave

motion

file

dismiss.

the

amended

motion to dismiss currently pending before this Court,

and such

motion is now fully briefed and ripe for adjudication.
B.

Neither

party's

established 12(b)(6)

briefing

calls

into

standard of review,

question

the

well-

which permits dismissal

when a plaintiff "fail[s] to state a claim upon which relief can

be granted."

Fed. R. Civ. P. 12(b)(6).

To survive a 12(b)(6)

motion, a complaint must include enough facts for a claim to be

"plausible on its face"
above

and thereby "raise a right to relief

the speculative level." Bell Atl.

U.S. 544, 555, 570 (2007).
claim,

Corp.

v.

Twombly,

In determining the plausibility of a

district courts are required to assume that all well-pled

factual allegations are true "even if doubtful in fact,"
555,

the

and must

also

plaintiff,"

County,

550

684

"draw all

Kensington

F.3d

462,

reasonable

inferences

Volunteer
(4th Cir.

467

Fire

Dep't

2012)

id. at

in favor of

v.

Montgomery

(internal

quotation

marks and citation omitted).

Although
allegations,
accepted.

the
a

Court

plaintiff's

Ashcroft v.

must

accept

legal

Iqbal,

all

conclusions

556 U.S.

662,

well-pled
are
678

not

factual
similarly

(2009)

(citing

Twombly,
not

550 U.S.

at

appropriate

defenses

at

complaint,"

to

Additionally,

consider

the

circumstances"
affirmative

555).

the

12(b)(6)

where

all

defense

viability

stage,

of

the

clearly

in

(4th Cir. 2007)

Goodman v.

affirmative

rare

"necessary

to

the

the

on

of

the

face

including a defense seeking

to demonstrate that a case is time-barred,
motion to dismiss.

of

"relatively

facts

appear

an affirmative defense,

while it is generally

Praxair,

may be resolved on a

Inc.,

494

F.3d 458,

464

(internal quotation marks and citation omitted).
c.

1.

It

is

governing

Statute of Limitations

undisputed

Virginia

that

contract

the

-

All

Counts

five-year

actions

limitations

applies

in

this

period

diversity

action and is further undisputed that Plaintiff filed this case
exactly five years from the date of the foreclosure sale of her
home.

Cir.

American

2002)

Defendant's
allegations

breaches

L.P.

(quoting

Va.

12(b)(6)

all

four counts

Va.

Code

prior
of

8.01-230

v.

Wolf,

28

Code

Ann.

§

motion

demonstrate

months

§

Inn,

the

that

Defendant

foreclosure

Plaintiff's
(indicating

civil
that

App'x

316,

8.01-246(2)).

argues

that

to

F.

319

However,

Plaintiff's

committed

sale,

complaint
breach of

(4th

own

contractual

thus

rendering

untimely.
contract

Cf.
claims

accrue and the limitations period begins to run "when the breach
of

contract

occurs

in

actions

ex

contractu

and

not

when

the

resulting

damage

is

discovered").

Plaintiff

responds

in

opposition to dismissal by arguing that damage is an element of

a breach of contract action and that the limitations period did

not

begin

to

run

in

this

case

until

the

foreclosure

sale

occurred because all claimed damages flow from that sale and/or
events occurring after such sale.

Initially,
Plaintiff's
the

date

of

Defendant's

the

Court

contention
the

highlights

disagreement

no

that

its
were

suffered prior

foreclosure

reply

brief,

damages

sale.

the

As

stated

effectively

purpose

of

with

argued

the

to
in

parties'

forbearance agreement was to permit Plaintiff a defined period
of

time

which

to resolve

Defendant

or improve her financial

promised

to

accept

situation,

during

payments.

When

reduced

Defendant refused Plaintiff's valid and timely payment under the

forbearance

agreement,

"disregarded

Agreement,"

"resume[d]

foreclosure

Plaintiff's

subsequent

payments

forbearance agreement,"

multiple

breaches

the

or

causes of action."

1993

WL

opinion)

114820,

(citation

at

.

.

occurrences

*3

.

omitted).

and

"refused

the

surely damaged,

"Virginia
can

give

Alcon Surgical,

(4th

under

Forbearance

special

at

least

recognizes

that

Compl. 11 17-19.

above,

Park v.

Special

proceedings"

Plaintiff was

to a degree, by such breaches.
Notwithstanding

the

Cir.

The

1993)

Virginia

rise
Inc.,

to

separate

991 F.2d 790,

(unpublished

Supreme

Court

table

has

explained such concept as

follows,

"when wrongful acts are not

continuous but occur only at intervals,
a

new

injury

action."
235,

239

and

gives

rise

Hampton Roads

to

a

each occurrence inflicts

new

and

separate

cause

v.

McDonnell,

234

Sanitation Dist.

of
Va.

While the Hampton Roads Sanitation case dealt

(1987).

with trespass, "the same principle applies to contracts."

Park,

1993 WL 114820, at *4 (citing Burns v. Board of Supervisors, 227

Va.

354,

Fed'n

357,

of

(2 006)

364

State

(1984));

Boards

of

cf^ Am.
Physical

Physical Therapy Ass'n v.
Therapy,

271

Va.

481,

485

(finding that where each of the challenged acts caused a

new and distinct

injury

they "constituted distinct,

separate

breaches," and thus, "separate cause[s] of action accrued").
Here,

Plaintiff's

brief

in

opposition

to

dismissal

of

Counts II and IV highlights the fact that such claims are not

limited to alleging breaches of the forbearance agreement based
on refusal

to accept monthly payments,

but also allege

that

Defendant ignored Plaintiff's continued efforts to perform and
wrongly

foreclosed

on

Plaintiff's

home

expiration of the forbearance agreement.

prior

to

the

stated

Assuming Plaintiff's

factual allegations to be true, and in the absence of proof that
the forbearance
by Defendant,
was

a

agreement was effectively voided or terminated

Plaintiff

separate

and

has

alleged that

distinct

breach

the foreclosure

from

refusals to accept timely monthly payments.

Defendant's

sale
prior

Because Plaintiff

alleges

separate

and

differing injuries,
that

the

distinct

causing

distinct

and

Defendant fails at this time to demonstrate

limitations

necessarily

acts,

clock

encompasses

the foreclosure sale.

the
Cf.

for

the

later

first

breach

alleged

occurring

the

breach
of

234 Va.

Hampton Roads Sanitation,

day

at

239 (indicating that a distinct wrongful act that inflicts a new

injury gives rise to a separate cause of action)-1
Plaintiff's
III

that

complaint separately asserts in Counts I and

Defendant

breached

foreclosing

on

foreclosure

"face-to-face"

Federal

her

Housing

home

the

note

without

first

meeting,

Administration

and

as

(FHA)

deed

of

trust

conducting

required

by

regulations

incorporated into the note and deed of trust.

a

by

pre-

relevant

that

were

Plaintiff asserts

in opposition to dismissal that her causes of action on the note
and deed of trust accrued on the date of

because,

on that day,

the

foreclosure sale

Defendant caused her home to be sold in

1 Although not squarely addressed by the parties, this Court's review
of the pending motion included consideration of the doctrine of
repudiation/anticipatory breach. Bennett v. Sage Payment Sols., Inc.,
282 Va. 49,
that

55-58

(2011) .

Such doctrine,

however,

does not dictate

a cause of action accrue at the time of an initial repudiation,

but instead generally gives the non-breaching party the option to
Franconia Associates v.
treat the repudiation as a present breach.
United States,

536 U.S. 129, 142-44 (2002).

Moreover, here, while not

conclusively resolved by the current record,
that

Defendant

did

not

"repudiate"

the

it appears more likely

forbearance

agreement,

but

instead sought to invoke express termination rights included in such
written agreement.
However, to the extent Defendant lacked authority
to invoke such termination rights,
and to the extent Plaintiff
continued to perform under the agreement by remitting payments, the
current record does not clearly demonstrate that the forbearance
agreement was effectively terminated, voided, or otherwise no longer
in force on the date of the foreclosure sale.

violation

argues

of

the

that

limitations

contractual

Plaintiff's
clock

terms.

claims

started

Defendant,

are

ticking

in

untimely

on

an

contrast,

because

earlier

date

the
when,

pursuant to the FHA regulations, Defendant should have conducted
the

face-to-face

meeting.

regulation reveals

that

A

review

of

the contemplated date

face meeting referenced by Defendant is
"default

occurs

and here,

in

a

Plaintiff

the

repayment

plan,"

clearly asserts

relevant

for the

C.F.R.

in her

fails

to

demonstrate

at

the

complaint

12(b)(6)

after

§ 203.604(b),

never defaulted on the forbearance repayment plan.2
Defendant

face-to-

"within 30 days"
24

FHA

that

she

Accordingly,

stage

that

the

record clearly reveals that Plaintiff's claims are untimely.

2. "Good Faith and Fair Dealing" - Counts III & IV
Counts
assert

a

III

claim

and

IV

based

of

on

Plaintiff's

Defendant's

complaint

breach

covenant of good faith and fair dealing."
The

parties

further
contract,

Virginia

agree

agree
not

law

that,
in

that

Virginia

under
tort.

recognizes

law

Virginia

a

claim

covenant only in cases governed by

for
the

such

"implied

94.

claims

and

claims

of

to

11 87,

such

however,

breach

the

Compl.

governs

law,

Defendant,

of

purport

sound

asserts

such

in

that

implied

Uniform Commercial Code

2 The Court rejects Defendant's contention that "default occurs on a
repayment plan" irrespective of the reason that a payment is missed,
especially when the Plaintiff expressly alleges that payments were
timely and properly submitted and the Defendant wrongly refused to
accept such payments.
8

("U.C.C."),

which does not apply to transfers

No.

6.

14,

at

federal

Notwithstanding Defendant's

district

court

cases

in realty.

ECF

identification of

that have held that Virginia does

not recognize such a claim outside of the U.C.C. context,3 this
Court finds more persuasive the opposing line of cases,

which

rely on Fourth Circuit precedent interpreting Virginia law.
Wolf v.

2013)

Fed. Nat.

("[I]n

Mortg. Ass'n,

Virginia,

every

512 F. App'x 336,

contract

contains

covenant of good faith and fair dealing."
Space

Adventures,

2009)));

Land

2:llCV239,

Ltd.,

& Marine

2012

WL

624

F.

Supp.

Remediation,

2415552,

at

*11

345

See

(4th Cir.

an

implied

(quoting Enomoto v.

2d

443,

Inc.

v.

(E.D.

450
BASF

Va.

(E.D.

Va.

Corp.,

No.

June

26,

2012)

("The United States Court of Appeals for the Fourth Circuit has

recognized

that

contracts

governed

contain an

implied covenant of

by Virginia

law

generally

good faith and fair dealing."

(citing Va. Vermiculite, Ltd. v. W.R. Grace & Co., 156 F.3d 535,
541-42

Co. ,
that,

(4th

944 F.

Cir.

Supp.

1998)));

2d 460,

Stoney Glen,

465,

n.6

LLC v.

(E.D.

Va.

S.

2013)

Bank

& Trust

(explaining

while "Virginia law on the implied duty of good faith and

3 Page six of Defendant's opening brief erroneously attributes a quote
from a federal district court to the Virginia Supreme Court.
See Harrison
v. US Bank Nat. Ass'n, No. 3:12-CV-00224, 2012 WL 2366163, at *2 (E.D. Va.
June 20, 2012) (quoting Greenwood Assocs., Inc. v. Crestar Bank, 248 Va.
265, 270 (1994)).
While this Court must apply the holdings of the

Virginia Supreme Court, the Greenwood Associates opinion does not squarely
address the existence of an implied covenant outside the U.C.C.

but instead rejects the application of the U.C.C.
which the U.C.C. was plainly inapplicable.

context,

covenant to a case in

fair dealing is not exceptionally clear . . . the Fourth Circuit

and this

Court

have been clear on the duty existing

contracts,"

and such prior rulings

will

intervening

Virginia

Accordingly,

decision").

be

followed

to

in all

"absent an

the

extent

Defendant seeks dismissal of Counts III and IV on the grounds
that

this

case falls

outside of

the U.C.C,

Defendant's motion

is denied.4
D.

For the reasons set forth above, Defendant's Rule 12(b)(6)
amended motion to dismiss is DENIED.

ECF No.

13.5

The Clerk is REQUESTED to send a copy of this Memorandum
Opinion to all counsel of record.
IT

IS

SO

ORDERED.

•"ftnggy

/s/
Mark

S.

Davis

UNITED STATES DISTRICT JUDGE

Norfolk,

Virginia

February 16, 2016

As clarified in the undersigned judge's Land & Marine opinion, the
implied covenant applies to the exercise of contractual discretion,
not the exercise of an explicit contractual right.
Land & Marine,
2012 WL 2415552, at *11-13; cf^ Ward's Equip., Inc. v. New Holland N.
Am., Inc., 254 Va. 379, 385 (1997).
This Court does not evaluate the
viability of Plaintiff's claims on this basis as the matter was not
raised in the pending motion.

Consistent with this Court's general practice of encouraging counsel
to consider mitigating risks by opening a dialogue at the earliest
possible

point

in

a

case

to

determine

whether

settlement

is

a

possibility, the current record suggests that such a conversation may
be beneficial to both parties to this case.
10