Travis et al v. JP Morgan Chase Bank, N.A. et al

Filing 30

MEMORANDUM OPINION AND ORDER: This Court concludes that Chases Partial Motion to Dismiss 8 and BofAs Motion to Dismiss 11 should GRANTED and BofA is hereby DISMISSED. In addition, this Court concludes that the plaintiffs Motion for Leave to Amend Pleadings [Doc. 17] should be DENIED. Signed by Chief Judge John Preston Bailey on 8/6/12. (jss)

IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF WEST VIRGINIA
CLARKSBURG

LOVELL TRAVIS and
SHIRLEY TRAVIS,
Plaintiffs,
v.

Civil Action No. 1:12-CV-89
(BAILEY)

JP MORGAN CHASE BANK, N.A., and
BANK OF AMERICA, N.A.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before this Court are defendant JP Morgan Chase Bank, N.A.’s Partial
Motion to Dismiss [Doc. 8], filed May 31, 2012; defendant Bank of America, N.A.’s Motion
to Dismiss [Doc. 11], filed June 26, 2012; and plaintiffs Lovell Travis’ and Shirley Travis’
Motion for Leave to Amend Pleadings [Doc. 17], filed July 16, 2012. These motions have
been briefed and are now ripe for decision. Having reviewed the record and considered
the arguments of the parties, this Court concludes that the defendants’ motions should be
GRANTED and the plaintiffs’ motion should be DENIED.
BACKGROUND
I.

Factual Allegations
Pursuant to a Note dated December 11, 2000, plaintiffs Lovell and Shirley Travis

promised to pay Alliance Funding (“Alliance”), a division of Superior Bank, F.S.B.,
$59,300.00 not later than January 1, 2031, in return for a loan on their Preston County,

1

West Virginia, home. Specifically, the plaintiffs promised to pay a monthly principal and
interest payment of $632.88, beginning on February 1, 2001. To secure their promise to
pay, the plaintiffs granted Alliance a security interest in their home pursuant to a Deed of
Trust also dated December 11, 2000. Subsequent to origination, Alliance transferred its
servicing rights to Electronic Mortgage Corporation (“EMC”).
In July 2009, the plaintiffs fell behind on their payments due to loss of employment,
causing the plaintiffs to seek a loan modification. On July 27, 2009, the plaintiffs entered
into a loan modification agreement with EMC which brought their mortgage current. The
plaintiffs thereafter made payments pursuant to the loan modification until “the Defendant’s
servicer” began rejecting and returning payments on October 30, 2010. (See [Doc.3-1] at
¶ 6). After discovering that EMC had transferred its servicing rights to JP Morgan Chase
Bank, N.A. (“Chase”), the plaintiffs contacted EMC and Chase seeking recognition and
performance of the loan modification agreement.
By letter dated November 7, 2011, Seneca Trustees, Inc. (“Seneca”) notified the
plaintiffs that it had been asked as trustee to foreclose on their home. Seneca explained
that the Chase-provided reinstatement amount was $68,493.82. Seneca further advised
that Bank of America, N.A. (“BofA”) was the current holder of the plaintiffs’ Note as
successor to LaSalle Bank, N.A. The plaintiffs responded by letter dated November 14,
2011, requesting a loan modification. By letter dated November 22, 2011, Seneca replied
that any applications for a loan modification should be directed to Chase. The plaintiffs
subsequently applied for a loan modification from Chase and was advised that their
application was being processed. Despite this representation, Seneca notified the plaintiffs
on February 17, 2012, that Chase had instructed it to foreclose.
2

By separate

correspondence dated March 8, 2012, Seneca notified the plaintiffs that Chase and BofA
had instructed it to conduct a foreclosure sale, which it scheduled for March 23, 2012. Upon
learning of this action, however, Seneca indefinitely postponed the foreclosure sale.
II.

Procedural History
On March 14, 2012, the plaintiffs sued BofA, Chase, and Seneca in the Circuit Court

of Preston County, West Virginia. The plaintiffs filed the challenged Amended Complaint
[Doc. 3-1] in state court on April 23, 2012, removing Seneca and making minor changes
to the factual allegations. The Amended Complaint contains a number of causes of action
against BofA and Chase arising from the failure of those defendants to honor the July 27,
2009, loan modification agreement. These causes of action, which are not delineated into
counts, include claims for unfair and deceptive trade practices prohibited by the West
Virginia Consumer Credit and Protection Act (“WVCCPA”), W.Va. Code § 46A-1-1, et seq.,
common law fraud, emotional distress, and breach of contract. As relief, the plaintiffs seek,
inter alia, an award of punitive damages and a declaration that the Note and Deed of Trust
are void “as being fraudulent.” ([Doc. 3-1] at 7).
On May 23, 2012, Chase removed the above-styled action to this Court without the
consent of BofA, as is proper because BofA had not been served at the time of removal.
See 28 U.S.C. § 1446(b)(2)(A). The asserted basis for jurisdiction is diversity jurisdiction
pursuant to 28 U.S.C. § 1332.
On May 31, 2012, Chase filed the instant Partial Motion to Dismiss [Doc. 8] pursuant
to Federal Rule of Civil Procedure 12(b)(6). First, Chase asserts that punitive damages are
not recoverable pursuant to the WVCCPA as a matter of law and that the plaintiffs have
otherwise failed to plead facts sufficient to support a common law award of punitive
3

damages. Second, Chase argues that the plaintiffs have failed to state a claim for either
intentional infliction of emotional distress or negligent infliction of emotional distress. Finally,
Chase contends that the plaintiffs have failed to state a claim for fraud that would support
a declaration that their Note and Deed of Trust are void.
On June 26, 2012, BofA noted its special appearance [Doc. 10] and filed the instant
Motion to Dismiss [Doc. 11] pursuant to Rule 12(b)(6) and Rule 12(b)(5). First, BofA
argues that the allegation that it was the holder which directed foreclosure is insufficient to
support a claim against it. Second, BofA alleges that it has still not been properly served
in this action and, for that alternative reason, should be dismissed.
On July 16, 2012, the plaintiffs filed a combined Response [Doc. 16] to the
defendants’ motions to dismiss, while concurrently filing their instant Motion for Leave to
Amend Pleadings [Doc. 17] seeking to file a Second Amended Complaint. In opposing the
motions to dismiss, the plaintiffs assert that their proposed Second Amended Complaint
will “clearly satisfy the Defendants’ confusion,” while contending alternatively that they
“believe the pleadings when read in a light most favorable to [them] . . . [contain] sufficient
facts to support [their] request for denial” of both motions. ([Doc. 16] at 2). With specific
reference to BofA, the plaintiffs argue that BofA can be held liable based upon its principalagent relationship with Chase and that BofA’s service arguments are premature to the
extent that the plaintiffs still have time to perfect service. The plaintiffs failed to attach a
proposed Second Amended Complaint to their motion for leave.
On July 20, 2012, Chase replied in support of its motion to dismiss and opposed the
plaintiffs’ motion for leave [Docs. 19 & 20]. Specifically, Chase reasserts its previous
arguments in support of partial dismissal and argues that the plaintiffs’ proposed pleading
4

would be futile.
On July 23, 2012, BofA replied in support of its motion to dismiss, supplementing its
previous arguments in support of dismissal [Doc. 23]. In particular, BofA argues that there
is no presumption that Chase acted as its agent and that the plaintiffs have otherwise failed
to adequately plead the existence of such a relationship.
On July 25, 2012, the plaintiffs filed their proposed Second Amended Complaint
[Doc. 24]. In addition to adding the allegation multiple times that the defendants “never
intended to honor” the loan modification agreement, the plaintiffs seek to buttress their
claim for emotional distress by alleging that the defendants’ failure to honor the modification
agreement was “intolerable, atrocious, and outrageous” and caused emotional distress “no
reasonable person could be expected to endure.” (See [Doc. 24] at ¶¶ 15, 24, & 25).
On July 30, 2012, BofA noted its opposition to the plaintiffs’ proposed Second
Amended Complaint as futile, arguing that the “proposed pleading simply would add more
conclusory allegations and fraud buzzwords that do not satisfy the heightened pleading
requirements” of Rule 9(b). ([Doc. 27] at 4).
DISCUSSION
I.

Rule 12(b)(6) Standard
In assessing a Rule 12(b)(6) motion for failure to state a claim, the court must accept

the factual allegations contained in the complaint as true. Advanced Health-Care Servs.,
Inc. v. Radford Cmty. Hosp., 910 F.2d 139, 143 (4th Cir. 1990). A complaint must be
dismissed if it does not allege “enough facts to state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) (emphasis added).

5

“A complaint need only give ‘a short and plain statement of the claim showing that
the pleader is entitled to relief.’” In re Mills, 287 Fed.Appx. 273, 280 (4th Cir. 2008)
(quoting Fed. R. Civ. P. 8(a)(2)). “Specific facts are not necessary; the statement need
only give the defendant fair notice of what the ... claim is and the grounds upon which it
rests.” Id. (internal quotations and citations omitted).

“[T]he pleading standard Rule 8

announces does not require detailed factual allegations, but it demands more than an
unadorned, the-defendant-unlawfully-harmed-me accusation. A pleading that offers labels
and conclusions or a formulaic recitation of the elements of a cause of action will not do.
Nor does a complaint suffice if it tenders naked assertions devoid of further factual
enhancements.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations and
quotations omitted).
II.

Analysis
A.

Chase Partial Motion to Dismiss

Chase asks this Court to dismiss those parts of the Amended Complaint in which
the plaintiffs seek punitive damages, damages for emotional distress, and a declaration that
the Note and Deed of Trust are void as fraudulent. The Court will consider each request
in turn.
1.

Punitive Damages

First, Chase argues that the plaintiffs are precluded as a matter of law from
recovering punitive damages for their WVCCPA claims. This Court agrees.
As this Court has previously held, “the penalty provision of the WVCCPA has been
interpreted to preclude the award of punitive damages.” Tucker v. Navy Federal Credit

6

Union, 2011 WL 6219852, *9 (N.D. W.Va. Dec. 14, 2011) (citing One Valley Bank of Oak
Hill, Inc. v. Bolen, 188 W.Va. 687, 692, 425 S.E.2d 829, 834 (1992) (“[P]unitive damages
are not available under the fraud or unconscionable conduct provisions of [the
WVCCPA].”)). In Paragraph 4 of their ad damnum clause, the plaintiffs seek an award of
“punitive damages under the [WVCCPA].” ([Doc. 3-1] at 7). The rationale articulated in
Tucker and Bolen, however, applies with equal force here to preclude the plaintiffs from
seeking punitive damages pursuant to the WVCCPA in either their Amended Complaint or
their proposed Second Amended Complaint.
Second, Chase argues that the plaintiffs have failed to plead facts which would
support an award of punitive damages for any of their common law tort claims. This Court
agrees.
To state a plausible claim for punitive damages, a plaintiff must plead facts to
support a finding that the alleged tortfeasor acted with “gross fraud, malice, oppression, or
wanton, willful, or reckless conduct or criminal indifference to civil obligations affecting the
rights of others . . ..” Syl. pt. 4 Alkire v. First Nat. Bank of Parsons, 197 W.Va. 122, 475
S.E.2d 122 (1996). An award of punitive damages “is the exception, not the rule, as the
level of bad conduct on the part of a defendant must be very high in order to meet the
punitive standard.” Perrine v. E.I. du Pont de Nemours & Co., 225 W.Va. 482, 577, 294
S.E.2d 815, 910 (2010). Here, neither the Amended Complaint nor the proposed Second
Amended Complaint contain allegations of bad conduct of a sufficiently high level to meet
the punitive standard. The Amended Complaint alleges at most that the defendants acted
fraudulently.

The conclusory allegation added to the proposed Second Amended

7

Complaint that the defendants “knew or should have known that their actions . . . we so
reckless that emotional distress would and did result” is inadequate to raise the level of
alleged conduct to the punitive standard. (See [Doc. 24] at ¶ 25) (emphasis added).
Accordingly, the plaintiffs’ claim for punitive damages should be DISMISSED.
2.

Emotional Distress

In West Virginia, a plaintiff may recover damages for emotional distress pursuant to
one of two distinct causes of action, namely: (1) intentional infliction of emotional distress
or (2) negligent infliction of emotional distress. Because the plaintiffs are unclear as to
which cause of action they assert, this Court will consider the plausibility of each in turn.
i.

Intentional Infliction of Emotional Distress

“In order for a plaintiff to prevail on a claim for intentional or reckless infliction of
emotional distress, four elements must be established. It must be shown: (1) that the
defendant’s conduct was atrocious, intolerable, and so extreme and outrageous as to
exceed the bounds of decency; (2) that the defendant acted with the intent to inflict
emotional distress, or acted recklessly when it was certain or substantially certain emotional
distress would result from his conduct; (3) that the actions of the defendant caused the
plaintiff to suffer emotional distress; and, (4) that the emotional distress suffered by the
plaintiff was so severe that no reasonable person could be expected to endure it.” Syl. pt.
7, Hatfield v. Health Mgmt. Assocs. of W.Va., Inc., 223 W.Va. 259, 672 S.E.2d 395
(2008) (quoting Syl. pt. 3, Travis v. Alcon Labs., Inc., 202 W.Va. 369, 504 S.E.2d 419
(1998)).

8

Even assuming the plaintiffs have adequately pled the first three elements of this
cause of action, this Court concludes that neither the Amended Complaint nor the proposed
Second Amended Complaint contain sufficient factual allegations to plead the fourth
element, i.e., that the plaintiffs’ emotional distress was “so severe that no reasonable
person could be expected to endure it.”
The plaintiffs’ sole allegation with respect to emotional distress in the Amended
Complaint is: “As a result of each of the Defendants’ actions your Plaintiffs have suffered
severe emotional and psychological pain and stress at losing their home of over 11 years.”
([Doc. 3-1] at ¶ 30) (emphasis added). In the proposed Second Amended Complaint, the
plaintiffs allege that “[e]ach of the Defendants knew or should have known that their actions
. . . were so reckless that emotional distress would and did result there from [sic], that no
reasonable person could be expected to endure.” ([Doc. 24] at ¶ 25) (emphasis added).
However, as stated above, “[a] pleading that offers [these types of] labels and conclusions
or a formulaic recitation of the elements of a cause of action will not do.” Iqbal, 556 U.S.
at 678.
Accordingly, the plaintiffs’ intentional infliction of emotional distress claim should be
DISMISSED.
ii.

Negligent Infliction of Emotional Distress

To date, the Supreme Court of Appeals of West Virginia has announced two
separate tests for negligent infliction of emotional distress claims. As explained below,
neither the Amended Complaint nor the proposed Second Amended Complaint contain
factual allegations sufficient to satisfy either test.

9

In Heldreth v. Marrs, 188 W.Va. 481, 485, 425 S.E.2d 157, 161 (1992), the
Supreme Court of Appeals held that “[a] defendant may be held liable for negligently
causing a plaintiff to experience serious emotional distress, after the plaintiff witnesses
a person closely related to the plaintiff suffer critical injury or death as a result of the
defendant’s negligent conduct, even though such distress did not result in physical
injury, if the serious emotional distress was reasonably foreseeable.” (Emphasis added).
Here, the plaintiffs do not allege that either of their alleged emotional distress resulted from
witnesses a person closely related to them suffer critical injury or death as a result of the
defendants’ allegedly negligent conduct. As such, the plaintiffs have failed to state a claim
for negligent infliction of emotional distress pursuant to the Heldreth test.
In Marlin v. Bill Rich Constr., Inc., 198 W.Va. 635, 638, 482 S.E.2d 620, 653
(1996), the Supreme Court of Appeals permitted workers exposed to asbestos to recover
for negligent infliction of emotional distress, even when the workers had not developed
symptoms of asbestosis:
In order to recover for negligent infliction of emotional distress based upon
the fear of contracting a disease, a plaintiff must prove that he or she was
actually exposed to the disease by the negligent conduct of the defendant,
that his or her serious emotional distress was reasonably foreseeable, and
that he or she actually suffered serious emotional distress as a direct result
of the exposure.

(Emphasis added). This expansion of Heldreth appears to be limited to cases involving
a fear of contracting a disease caused by a defendant’s negligent conduct. See Peters v.
Small, 413 F.Supp.2d 760, 762 (S.D. W.Va. 2006) (characterizing Marlin as a “narrow
10

holding, limited to plaintiffs exposed to a disease”). This case, which obviously does not
involve allegations concerning a fear of contracting a disease, falls well outside the limited
holding of Marlin.1
Accordingly, the plaintiffs’ negligent infliction of emotional distress claim should be
DISMISSED.
3.

Validity of Note and Deed of Trust

Chase argues that the plaintiffs have failed to plead entitlement to a declaration that
the Note and Deed of Trust are void as fraudulent. This Court agrees.
To the extent that the plaintiffs seek cancellation of their secured debt, their request
is explicitly foreclosed by the WVCCPA. See W.Va. Code § 46A-5-105 (empowering a
court to cancel unsecured debt only). To the extent that the plaintiffs seek a declaration
that their Note and Deed of Trust are unenforceable because the agreements are
unconscionable or were induced by unconscionable conduct, the plaintiffs have failed to
allege that either agreement was induced by unconscionable conduct or that either
agreement contains an unconscionable term. In fact, the gravamen of both the Amended
Complaint and the proposed Second Amended Complaint is that the defendants failed to
honor a loan modification agreement. Neither pleading provides any details concerning the
closing or the terms of the loan beyond the principal amount and term.

1

In addition, this Court notes that the plaintiffs have failed to plead the existence of
a special relationship with Chase from which a duty would arise to support a claim based
in negligence because they fail to allege that Chase performed any services not normally
provided by a servicer to a borrower. See Koontz v. Wells Fargo, N.A., 2011 WL
1297519, *11 (S.D. W.Va. Mar. 31, 2011) (citing Warden v. PHH Mortgage Corp., 2010
WL 3720128, *9 (N.D. W.Va. Sept. 16, 2010)).
11

Accordingly, the plaintiffs’ claim for a declaration that their Note and Deed of Trust
are void as fraudulent should be DISMISSED.
B.

BofA Motion to Dismiss

BofA contends that it should be dismissed from this action because the allegation
that it was the holder which directed foreclosure is insufficient to support a claim against
it, especially because there is no presumption that Chase acted as its agent and because
the plaintiffs have otherwise failed to adequately plead the existence of such a relationship.
This Court agrees.
As an initial matter, this Court agrees that because no claim is specifically directed
against BofA, the plaintiffs may only proceed against BofA based upon a theory that Chase
acted as BofA’s agent. In this regard, the Supreme Court of Appeals of West Virginia
recently reaffirmed the long-standing principle that “[t]he law indulges no presumption that
an agency exists; on the contrary a person is legally presumed to be acting for himself and
not as the agent of another person; and the burden of proving an agency rests upon him
who alleges the existence of the agency.” Syl. pt. 4, All Med, LLC v. Randolph Eng’g
Co., 723 S.E.2d 864 (2012) (quoting Syl. pt. 1, Lohr Funeral Home, Inc. v. Hess &
Eisenhardt, 152 W.Va. 723, 166 S.E.2d 141 (1969)). “One of the essential elements of
an agency relationship is the existence of some degree of control by the principal over the
conduct and activities of the agent.” Syl. pt. 2, All Med, LLC (quoting Syl. pt. 3, Teter v.
Old Colony Co., 190 W.Va. 711, 441 S.E.2d 728 (1994)).
Here, however, neither the Amended Complaint nor the proposed Second Amended
Complaint contain factual allegations sufficient to plead the existence of a principal-agent

12

relationship because neither pleading alleges that BofA exerted control over the activities
of Chase. See Syl. pt. 5, Paxton v. Crabtree, 184 W.Va. 237, 400 S.E.2d 245 (1990)
(recognizing the element of control as “determinative”).
Accordingly, BofA should be DISMISSED from this action because the plaintiffs have
failed to state a claim against it upon which relief can be granted.
C.

Plaintiffs’ Motion for Leave

As noted above, the plaintiffs moved this Court for leave to file their proposed
Second Amended Complaint during the briefing of the defendants’ motions to dismiss the
Amended Complaint. In opposing leave, the defendants argue that the plaintiffs should be
denied leave because their proposed amendment is futile. This Court agrees.
“A trial court is permitted to deny leave to amend a complaint if the proposed
amendment would be futile. An amendment would be futile if the complaint, as amended,
would not withstand a motion to dismiss. Elrod v. Busch Entertainment Corp., 2012 WL
2402668, *1 (4th Cir. June 27, 2012) (internal citations omitted).

In analyzing the

defendants’ motions to dismiss, this Court considered the plaintiffs’ proposed Second
Amended Complaint, finding nevertheless that the motions should be granted. As such,
the plaintiffs’ proposed amendment is futile.
Accordingly, the plaintiffs’ motion for leave should be DENIED as futile.
CONCLUSION
For the foregoing reasons, this Court concludes that Chase’s Partial Motion to
Dismiss [Doc. 8] and BofA’s Motion to Dismiss [Doc. 11] should be, and hereby are,
GRANTED. Accordingly, BofA is hereby DISMISSED. In addition, this Court concludes

13

that the plaintiffs’ Motion for Leave to Amend Pleadings [Doc. 17] should be, and hereby
is, DENIED.
It is so ORDERED.
The Clerk is directed to transmit copies of this Order to counsel of record herein.
DATED: August 6, 2012.

14