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
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