Powell et al v. Bank of America, N.A. et al
Filing
65
MEMORANDUM OPINION AND ORDER denying plaintiffs' 9 MOTION to Remand; granting Thomas A. Zamow's 39 MOTION to Dismiss; denying defendants Countrywide, BAC, and Mellon's 43 MOTION to Dismiss with respect to Counts I and II; and granting BAC's 43 MOTION to dismiss with respect to Counts IV and V. Counts VI, VII, and VIII remain as to BAC. Signed by Judge John T. Copenhaver, Jr. on 2/2/2012. (cc: attys; any unrepresented parties) (taq)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
SCOTTY POWELL and
REBECCA POWELL,
Plaintiffs,
v.
Civil Action No. 2:11-00335
BANK OF AMERICA, N.A. d/b/a
BANK OF AMERICA HOME LOANS f/k/a
COUNTRYWIDE HOME LOANS, INC.,
THOMAS A. ZAMOW,
BAC HOME LOANS SERVICING, LP and
BANK OF NEW YORK MELLON, N.A.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending is plaintiffs’ motion to remand, filed May 31,
2011.
Also pending are the motion of defendant Thomas A. Zamow
(“nondiverse defendant”) to dismiss, filed September 8, 2011,
and the motion of defendants Bank of America, N.A.
(“Countrywide”), BAC Home Loans Servicing, LP (“BAC”), and The
Bank of New York Mellon, N.A. (“Mellon”) (collectively, “diverse
defendants”) to dismiss, filed September 14, 2011.
When, as here, a motion to remand and a Rule 12(b)(6)
motion to dismiss are both made, it is ordinarily improper to
resolve the Rule 12(b)(6) motion before deciding the motion to
remand.
The question arising on the motion to remand as to
whether there has been a fraudulent joinder is a jurisdictional
inquiry.
See Batoff v. State Farm Ins. Co., 977 F.2d 848, 852
(3rd Cir. 1992); cf. Mayes v. Rapoport, 198 F.3d 457, 460 (4th
1999) (observing that the propriety of removal and fraudulent
joinder are jurisdictional questions).
I.
Background
This action arises out of a consumer credit
transaction entered into by plaintiffs in connection with a deed
of trust (sometimes, “mortgage”) loan on residential property
located in Boone County, West Virginia.
Plaintiffs Scotty and
Rebecca Powell are residents of Boone County, West Virginia.
Thomas A. Zamow is a resident of West Virginia.
Compl. ¶ 3).
(Second Am.
Countrywide is a New York corporation with its
principal place of business in California.
(Def. Countrywide,
BAC, and Mellon’s Ans. to Second Am. Compl. ¶ 4).
BAC is a
Texas limited partnership with its principal place of business
in Texas.
(Id. ¶ 5).
Mellon is a national bank with corporate
2
headquarters located at One Wall Street, New York, New York,
10286.
(Id. ¶ 6).1
Around October 2006, plaintiffs sought financing for
the purchase of a new residence, which they offered to buy for
$59,000.
(Second Am. Compl. ¶ 7).
Following acceptance of this
offer, plaintiffs were referred to defendant Countrywide for
financing.
(Id. ¶ 8).
Upon contacting Countrywide, plaintiffs
applied for a loan over the phone and discussed its terms with a
Countrywide agent.
(Id. ¶ 9).
Countrywide’s agent represented
to plaintiffs that their monthly payments would be approximately
$548, and that the interest rate would not thereafter increase.
(Id. ¶ 10).
Countrywide further represented to plaintiffs that
if payments on the deed of trust were made for a year,
plaintiffs could refinance the loan at a lower interest rate.
(Id. ¶ 11).
The plaintiffs received no disclosures prior to the
closing of the loan.
(Id. ¶ 12).
1
Plaintiffs allege that defendant Mellon’s principal place
of business is 5730 Katella Avenue, Cypress, CA 90630. Whether
Mellon’s principal place of business is in California or New
York is irrelevant for the purposes of plaintiffs’ motion to
remand.
3
To the extent that specific allegations are made as to
the nondiverse defendant, Thomas Zamow, an attorney, they are
confined to the closing of the loan.
(Id. ¶¶ 3, 13).
The
closing occurred on November 3, 2006, and was conducted by an
employee of Zamow.
(Id. ¶¶ 12, 13(a)).
The complaint does not
describe the relationship between Zamow and plaintiffs other
than to indicate that he was the closing attorney.
At the
closing, which lasted only 10 to 15 minutes, plaintiffs were
instructed where to sign and initial and were given “no
meaningful opportunity” to understand the terms of the
transaction.
(Id. ¶ 13(a)-(b)).
They state that the net
purchase price was not accurately reflected on the closing
documents, but do not describe the inaccuracy.
(Id. ¶ 13(d)).
Plaintiffs allege that they agreed to proceed with the loan
transaction based on “representations made prior to and at
closing regarding the payments and interest rate,” but do not
state what representations were made at closing.
(Id. ¶ 13(e)).
They merely allege that “[a]t the closing, there was no mention
of an adjustable rate mortgage [ARM] or a potentially higher
payment.”
(Id. ¶ 13(c)).
Plaintiffs’ allegations with respect
to closing conclude with the further allegation that, contrary
to representations made at and prior to closing, the loan
4
agreement called for an ARM loan with an interest rate ranging
from 12.25% to over 19%; but the representations at closing are
not stated.
(Id. ¶ 45(b)).
After a year, plaintiffs sought a reduction of the
interest rate, but were refused.
(Id. ¶ 14).
Around July 2008,
the monthly loan service payments increased such that plaintiffs
began to struggle to pay.
(Id. ¶¶ 15-16).
In June or July 2008, plaintiffs contacted defendant
BAC to request assistance managing the increased monthly
payments.
(Id. ¶ 17).
After submitting an application for a
loan modification, plaintiffs were informed by BAC that the
plaintiffs would not go into default or foreclosure while the
modification was being processed.
(Id. ¶ 18).
Meanwhile, BAC
allegedly refused any offers of payments from plaintiffs.
¶ 18(b)).
(Id.
For several months thereafter, plaintiffs claim that
they were given confusing and conflicting information regarding
their obligations under the loan.
(Id. ¶ 18(c)).
During the period following their contact with BAC,
plaintiffs received several telephone calls from various BAC
agents.
In a call in late summer 2009, plaintiffs told BAC they
5
were not able to make increased payments.
(Id. ¶ 20(a)).
In
response, a BAC agent allegedly said, “West Virginians like to
have yard sales, so why don’t you have a yard sale to make up
the difference?”
(Id. ¶ 20(b)).
On a similar call during the
same period, a BAC agent asked plaintiff Rebecca Powell, “Why
did you buy the place if you can’t make the payments?”
21(b)).
(Id. ¶
Plaintiffs state that they were extremely offended and
upset by these remarks.
(Id. ¶¶ 20(c), 21(c)).
Around September 2009, BAC presented plaintiffs with a
loan modification agreement.
(Id. ¶ 22).
The modification
capitalized a claimed past due amount of $10,419.06, and reduced
the interest rate from 12.25% to 11.25%.
(Id. ¶ 23(a)).
The
modification provided for a “monthly payment of $628.11,” as
well as interest-only payments for 10 years.
(Id. ¶ 23(b)).
Plaintiffs agreed to the modification with the understanding
that if they did not accept the agreement, plaintiffs’ home
would be foreclosed upon.
(Id. ¶ 23(c)).
into effect on December 1, 2009.
(Id. ¶
The modification went
24(a)).
Thereafter,
plaintiffs began receiving statements demanding higher monthly
payments of over $700.
(Id. ¶ 24(b)).
Plaintiffs contacted BAC
about the reason for the higher payments in March 2010, and
“insisted upon sending in a $648.11 payment” as provided for by
6
the loan modification.
(Id. ¶ 25(b)).2
On at least two
occasions, once in or around February 2010 and again in March, a
BAC agent “visited plaintiff’s home and presented them with a
note stating that it was ‘Urgent! Urgent! Urgent! Urgent!’” that
plaintiffs call BAC.
(Id. ¶ 26).
By letter dated February 18, 2010, plaintiffs
requested a copy of their account history, information regarding
the holder of the loan, and informed BAC that they were
represented by counsel, to whom further communication was to be
directed.
(Id. ¶ 27(a)).
February 24, 2010.
BAC received plaintiffs’ letter on
(Id. ¶ 27(b)).
In response to their letter,
plaintiffs received an incomplete payment history and no
information regarding the holder of the loan.
(d)).
(Id. ¶ 27(c)-
Despite being informed that plaintiffs were represented
by counsel, BAC contacted plaintiffs on at least the following
four occasions seeking to collect on the loan:
on or about
April 14, 2010, at approximately 8:45 p.m.; on or about April
2
In paragraph 23(b) of the Second Amended Complaint,
plaintiffs allege that the loan modification provided for a
monthly payment of “$628.11.” However, in paragraph 25(b), they
allege that the monthly payment as provided for by the loan
modification was “$648.11.” The reason for the inconsistency is
unclear.
7
24, 2010; on or about May 28, 2010, at approximately 8:02 p.m.;
and on or about May 29, 2010.
(Id. ¶ 27(e)).3
On June 28, 2010, plaintiffs filed a complaint against
defendants Countrywide and BAC, and against Hometown Real
Estate, Inc., Rosanna Trent, and “John Doe Holder,” in the
Circuit Court of Boone County, West Virginia.
Removal ¶ 1).
(Notice of
On April 13, 2011, plaintiffs filed an amended
complaint (“First Amended Complaint”) against defendants
Countrywide, BAC, Zamow, and “John Doe Holder.”
On May 12,
2011, Countrywide and BAC filed a timely notice of removal on
diversity grounds.
31, 2011.4
Zamow filed his consent to removal on May
Plaintiffs filed their motion to remand on the same
day.
3
Plaintiffs do not describe the method by which agents of
defendant BAC allegedly contacted plaintiffs, though one may
presume it was by telephone.
4
In their memorandum of law in support of remand,
plaintiffs argue that defendant Zamow failed to file a timely
consent to removal, and that therefore remand is proper on this
basis alone. The record indicates that Mr. Zamow was served
with the First Amended Complaint on April 28, 2011, which set
the 30-day period to expire on May 28. As noted, Mr. Zamow
filed his consent on May 31. Pursuant to Federal Rule of Civil
Procedure 6(a)(1)(C), however, if the last day of the period
specified in the rules is a Saturday, Sunday, or legal holiday,
(contin.)
8
On August 24, 2011, the court granted plaintiff’s
motion to amend their First Amended Complaint in which Bank of
New York Mellon, N.A., was substituted as a defendant for “John
Doe Holder.”
(“Second Amended Complaint”).
The Second Amended Complaint sets forth eight counts:
Counts I and II allege fraud against all defendants; Count III
alleges unconscionable contract against all defendants; Count IV
alleges breach of contract against BAC; and Counts V through
VIII allege illegal debt collection against BAC.
Plaintiffs
have moved to remand, asserting that the nondiverse defendant,
Mr. Zamow, defeats complete diversity and that this court thus
lacks subject matter jurisdiction.
In opposition to remand,
defendants claim that the nondiverse defendant was fraudulently
joined solely for the purpose of defeating diversity
jurisdiction.
Nondiverse defendant Zamow moved to dismiss all
the period continues to run until the end of the next day that
is not a Saturday, Sunday, or legal holiday. Inasmuch as May 28
was a Saturday, May 29 a Sunday, and May 30 a legal holiday
(Memorial Day), the last day for filing his consent to removal
was May 31. With the filing of Zamow’s consent on May 31,
plaintiffs’ contention is without merit.
9
counts against him, and the diverse defendants also moved to
dismiss on several grounds discussed below.5
II.
A.
Motion to Remand
Governing Standard
“A defendant may remove any action from a state court
to a federal court if the case could have originally been
brought in federal court.”
Yarnevic v. Brink's, Inc., 102 F.3d
753, 754 (4th Cir. 1996) (citing 28 U.S.C. § 1441).
Federal
district courts have original jurisdiction over actions between
citizens of different states in which the matter in controversy
exceeds $75,000, exclusive of interest and costs.
28 U.S.C.
§ 1332(a).
The doctrine of fraudulent joinder permits a district
court to “disregard, for jurisdictional purposes, the
5
The diverse defendants initially sought dismissal of
Counts III and V through VIII on the basis of National Bank Act
(“NBA”) preemption. (Diverse Def.’s Mot. 2). In their reply
brief, however, they withdrew their NBA preemption argument.
(Diverse Def.’s Reply at 1 n. 2). Inasmuch as the diverse
defendants offer no argument for the dismissal of plaintiffs’
Count III unconscionable contract claim, it is not addressed and
thus survives diverse defendants’ motion.
10
citizenship of certain nondiverse defendants, assume
jurisdiction over a case, dismiss the nondiverse defendants, and
thereby retain jurisdiction.”
461 (4th Cir. 1999).
Mayes v. Rapoport, 198 F.3d 457,
Our court of appeals lays a “heavy burden”
upon a defendant claiming fraudulent joinder:
“In order to establish that a nondiverse defendant has
been fraudulently joined, the removing party must
establish either: [t]hat there is no possibility that
the plaintiff would be able to establish a cause of
action against the in-state defendant in state court;
or [t]hat there has been outright fraud in the
plaintiff’s pleading of jurisdictional facts.”
Id. at 464 (emphasis in original) (quoting Marshall v. Manville
Sales Corp., 6 F.3d 229, 232 (4th Cir. 1993)).
The applicable
standard “is even more favorable to the plaintiff than the
standard for ruling on a motion to dismiss.”
Hartley v. CSX
Transp., Inc., 187 F.3d 422, 424 (4th Cir. 1999).
Indeed, “‘the
defendant must show that the plaintiff cannot establish a claim
against the nondiverse defendant even after resolving all issues
of fact and law in the plaintiff’s favor.’”
Mayes, 198 F.3d at
464 (quoting Marshall, 6 F.3d at 232–33)).
As Hartley illustrates, fraudulent joinder claims are
subject to a rather black-and-white analysis in this circuit.
Any shades of gray are resolved in favor of remand.
11
See
Hartley, 187 F.3d at 425.
Hartley specifies that a plaintiff
need only demonstrate a “glimmer of hope” in order to have his
claims remanded:
We cannot predict with certainty how a state court and
state jury would resolve the legal issues and weigh
the factual evidence in this case. [Plaintiff’s]
claims may not succeed ultimately, but ultimate
success is not required . . . . Rather, there need be
only a slight possibility of a right to relief. Once
the court identifies this glimmer of hope for the
plaintiff, the jurisdictional inquiry ends.
Id. at 425-26 (citations omitted).
In determining “whether an
attempted joinder is fraudulent, the court is not bound by the
allegations of the pleadings, but may instead consider the
entire record, and determine the basis of joinder by any means
available.”
Mayes, 198 F.3d at 464 (internal quotations
omitted).
Inasmuch as defendants do not allege any outright
fraud in the pleading of jurisdictional facts, the only question
for fraudulent joinder purposes is whether plaintiffs have any
possibility of recovery against the nondiverse defendant, Thomas
Zamow.
As to him, the Second Amended Complaint sets forth the
two counts of fraud (Counts I and II) and a count for
unconscionable contract (Count III).
(Compl. ¶¶ 29-46).
Those
same three counts are alleged against all the other defendants
12
as well, but will not be dealt with as to them, the diverse
defendants, until the motion to remand is resolved herein.
B.
Counts I and II: Fraud -- The Nondiverse Defendant
In order to establish a claim for fraud, plaintiffs
must allege
“(1) that the act claimed to be fraudulent was the act
of the defendant or induced by him; (2) that it was
material and false; that plaintiff relied upon it and
was justified under the circumstances in relying upon
it; and (3) that he was damaged because he relied upon
it.”
Syl. pt. 2, Jennings v. Farmers Mut. Ins. Co., 687 S.E.2d 574,
575 (W. Va. 2009) (quoting Syl. pt. 1, Lengyel v. Lint, 280
S.E.2d 66 (W. Va. 1981) (citation omitted)).
The Count II fraud
allegations read as follows:
30. Defendants suppressed from the Plaintiffs material
terms of the mortgage loan including an unaffordable
adjustable rate mortgage.
31. Defendants misrepresented that Plaintiffs’
payments and interest rate would not increase.
32. This misrepresentation was material and
intentional and was made in order to induce Plaintiffs
into the transaction at issue.
33. Plaintiffs reasonably relied on the
misrepresentation of material terms and that the loan
was originated consistent with prudent lending
practices when entering into the transaction.
13
(Second Amend. Compl. ¶¶ 30-33).
As a result, plaintiffs allege
that they “were damaged by the Defendants’ acts of fraud by
having entered into the transaction.” (Id. ¶ 35).
The Count II
fraud allegations state:
37. Defendants misrepresented that Plaintiffs would be
able to refinance after one year of making payments on
their mortgage loan.
38. This misrepresentation was material and
intentional and was made in order to induce Plaintiffs
into to [sic] the transaction at issue.
39. Plaintiffs reasonably relied on the suppressions
and misrepresentations of material terms and that the
loan was originated consistent with prudent lending
practices when entering into the transaction.
40. Plaintiffs were damaged by the Defendants’ acts of
fraud by having entered into the transaction.
(Id. ¶¶ 37-40).
Defendants respond by contending that no claim
for relief exists against the nondiverse defendant inasmuch as
no acts of Mr. Zamow or his alleged employee, the closing agent,
give rise to an actionable claim in fraud.
(Bank of America
Defs.’s Response at 2-5).
Plaintiffs fail to allege any specific act by Mr.
Zamow or his employee that would support a fraud claim, such as
identifying an act or misleading omission made by either that
14
was false.6
Indeed, the complaint alleges facts specifically
indicating that it was an agent of defendant Countrywide -- not
of Mr. Zamow -- who made the purported misrepresentations
underlying the fraud claims in Counts I and II.
(See Compl. ¶¶
10-11).7
As to representations by Zamow and his employee, the
plaintiffs merely allege at paragraph 13(e) of each the First
and Second Amended Complaints, as follows:
“Plaintiffs agreed
to proceed with the loan transaction based on representations
6
While it is of course true that omissions as well as acts
may constitute fraud, such conduct must “involve a breach of
legal duty, trust or confidence justly reposed
. . . .” Stanley v. Sewell Coal Co., 285 S.E.2d 679, 682 (W.
Va. 1981). To the extent plaintiffs’ allegations may be
construed as wrongful omissions on the part of the nondiverse
defendant in Counts I and II, it is not evident how such
omissions by the closing agent are actionable in the absence of
a legal duty, trust, or confidence justly reposed.
7
The allegations are as follows:
10.
Defendant Countrywide’s loan agent represented
to Plaintiffs that their monthly payments would be
approximately $548 and the interest rate would never
go up.
11.
Defendant Countrywide’s loan agent also
represented to Plaintiffs that if they made payments
on their mortgage for a year, they could refinance at
a lower interest rate after one year.
15
made prior to and at closing regarding the payments and interest
rate.”
There is no specific allegation that Zamow or his
employee misrepresented anything.
In making that same equivocal
allegation in their Second Amended Complaint filed on August 24,
2011, plaintiffs do so long after Zamow filed on May 31, 2011,
his motion to dismiss the First Amended Complaint that had been
filed in state court.
In that motion, Zamow sought dismissal on
various grounds including a failure to allege fraud with
particularity as required by Rule 9(b) of the Federal Rules of
Civil Procedure.
(Def. Zamow’s First Motion to Dismiss at 1-2).
The motion to dismiss was accompanied by a memorandum supporting
at length the requirement of Rule 9(b) which specifies that,
“[i]n alleging fraud . . . , a party must state with
particularity the circumstances constituting fraud.”8
The
plaintiffs then filed, as noted, the Second Amended Complaint
without remedying the Rule 9(b) failure.
Zamow raised the same Rule 9(b) issue in his response
on June 3, 2011, to plaintiff’s motion to remand.
Response at 7-8).
(Def. Zamow’s
With respect to allegations of fraud, Rule
8
Rule 9(b) of the West Virginia Rules of Civil Procedure
similarly requires that the circumstances constituting fraud
“shall” be alleged with particularity.
16
9(b) is generally interpreted as requiring a statement of not
only the time and place and the identity of the maker but also
the contents of the false representations.
See Harrison v.
Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir.
1999) (“[T]he ‘circumstances’ required to be pled with
particularity under Rule 9(b) are ‘the time, place, and contents
of the false representations, as well as the identity of the
person making the misrepresentation and what he obtained
thereby.’” (quoting 5 Wright & Miller, Federal Practice &
Procedure § 1297 (2d ed. 1990))); Lasercomb America, Inc. v.
Reynolds, 911 F.2d 970, 980 (4th Cir. 1990) (citing Rule 9(b),
stating that “a complaint which fails to specifically allege the
time, place and nature of the fraud is subject to
dismissal. . . .”).9
As set forth, supra, at pp. 4-5,
misrepresentations as to Zamow or his employee are not alleged
9
See also Brooks v. Blue Cross and Blue Shield of Florida,
Inc., 116 F.3d 1364, 1380-81 (11th Cir. 1997) (Rule 9(b)
standard not met where plaintiffs “simply ‘lumped together’ all
of the defendants in their allegations of fraud”); Vicom, Inc.
v. Harbridge Merchant Servs., Inc., 20 F.3d 771, 778 (7th Cir.
1994) (“[I]n a case involving multiple defendants . . . the
complaint should inform each defendant of the nature of his
alleged participation in the fraud.”) (internal quotation
omitted); Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d
Cir. 1993) (“Rule 9(b) is not satisfied where the complaint
vaguely attributes the alleged fraudulent statements to
‘defendants.’”).
17
and even the representations allegedly made by him or his
employee are not stated.
Plaintiffs having failed to allege fraud as to Zamow
with the requisite particularity and having couched their
allegations, to the extent misrepresentations are alleged, only
in vague collective “Defendants” terms as to Zamow, the court
finds that plaintiffs have no possibility of relief in fraud as
against the nondiverse defendant.10
See Cavallini v. State Farm
Mut. Auto Ins., 44 F.3d 256, 260-61 (5th Cir. 1995) (finding
fraudulent joinder when nondiverse defendant was not named
individually in any counts of complaint, though was named in
caption, introductory paragraph, and otherwise only referred to
in allegations against collective “Defendants”).
10
Indeed, the frank admissions of the plaintiffs at their
depositions taken on December 7, 2011, belie the allegations
aimed at Zamow in the Second Amended Complaint. Plaintiffs
neither spoke with Mr. Zamow or his employee about what their
interest rate or mortgage payment would be, nor did they discuss
their refinancing rights under the loan. (Rebecca Powell Dep.
8-9; Scotty Powell Dep. 34-36). To their knowledge, neither Mr.
Zamow nor his employee concealed any loan terms from them.
(Rebecca Powell Dep. 11-12, Scotty Powell Dep. 34-36).
Plaintiffs also admitted that no terms of their loan were
discussed with them at the closing conducted by Zamow’s
employee, including whether the loan was fixed or adjustable or
whether they could refinance their loan after one year.
(Rebecca Powell Dep. 15-16, Scotty Powell Dep. 34-36).
18
C.
Count III: Unconscionable Contract -- The Nondiverse
Defendant
The count of unconscionable contract states as
follows:
42. The Defendants have engaged in a pattern of
predatory lending practices.
43. The Plaintiffs are unsophisticated consumers with
little understanding of financial matters.
44. The Plaintiffs were induced into the loan through
misrepresentations and suppressions of terms, and were
not afforded a meaningful opportunity to understand
the essential elements of the transaction.
45. The loan agreement contained the following unfair
terms, which amounted to an unfair surprise to the
Plaintiffs:
(a) excessive closing costs and fees, including
but not limited to, bogus recording and document
preparation fees;
(b) an exploding ARM loan, which could adjust
upward to over 19%, but which could never decrease
below the initial rate of 12.25% that was not
explained and that was contrary to representations
made prior to and at closing.
46. The agreement provided to the Plaintiffs was
induced by unconscionable conduct and contains unfair
terms, under all circumstances alleged, and therefore
is unenforceable pursuant to section 46A-2-121 of the
West Virginia Code.
(Compl. §§ 42-46).
In this count, plaintiffs allege that the loan issued
to them was unconscionable in violation of West Virginia Code §
19
46A-2-121.
Section 46A-2-121 provides a remedy for consumers
who have entered into consumer loans that contain unconscionable
terms or were induced by unconscionable conduct.
It prescribes
in relevant part:
(1) With respect to a transaction which is or gives
rise to a consumer credit sale, consumer lease or
consumer loan, if the court as a matter of law finds:
(a) The agreement or transaction to have been
unconscionable at the time it was made, or to
have been induced by unconscionable conduct, the
court may refuse to enforce the agreement, or
(b) Any term or part of the agreement or
transaction to have been unconscionable at the
time it was made, the court may refuse to enforce
the agreement, or may enforce the remainder of
the agreement without the unconscionable term or
part, or may so limit the application of any
unconscionable term or part as to avoid any
unconscionable result.
W. Va. Code § 46A-2-121.
The West Virginia Supreme Court of Appeals recently
gave comprehensive treatment to the doctrine of
unconscionability, though the court left the principles
expounded in prior cases largely intact.
See Brown v. Genesis
Healthcare Corp., __ S.E.2d __, 2011 WL 2611327 (W. Va. June 29,
2011).
In determining unconscionability, a court “must focus on
the relative positions of the parties, the adequacy of the
bargaining position, and the meaningful alternatives available
20
to the plaintiff and the ‘existence of unfair terms in the
contract.’”
Syl. pt. 14, id. (quoting Syl. pt. 4 Art’s Flower
Shop, Inc. v. Chesapeake and Potomac Tel. Co. of W. Va., Inc.,
413 S.E.2d 670, 671 (W. Va. 1991)).
This inquiry considers the
circumstances under which the loan is made and is not limited to
the terms of the contract itself.
See Syl. pt. 13, id. (quoting
Syl. pt. 3, Troy Mining Corp. v. Itmann Coal Co., 346 S.E.2d
749, 750 (W. Va. 1986)).
More fundamentally,
[a] contract term is unenforceable if it is both
procedurally and substantively unconscionable.
However, both need not be present to the same degree.
Courts should apply a “sliding scale” in making this
determination: the more substantively oppressive the
contract term, the less evidence of procedural
unconscionability is required to come to the
conclusion that the clause is unenforceable, and vice
versa.
Syl. pt. 20, id.
Like the fraud counts, plaintiffs’ claim of
unconscionable contract is asserted generally against all
defendants.
The only allegations of the complaint that
specifically refer to the nondiverse defendant in Count III are
those that mention “closing” in paragraphs 13 and 45(b) as set
forth, supra at pp. 4-4.
Neither there nor elsewhere is Zamow
or his employee alleged to be a party to the underlying
contract.
It is not alleged that Zamow breached any duties that
21
he might have owed to plaintiffs.
While the doctrine of
unconscionability is a defense against the enforcement of a
contract term, Zamow is not alleged to have been a party to any
contract with plaintiffs.
Accordingly, under the count claiming
unconscionable contract, no relief may be sought from him on
that ground.11
D.
Conclusion:
The Nondiverse Defendant
Having found that plaintiffs have no possibility of
relief as against the nondiverse defendant under Counts I, II,
and III, the court finds that Mr. Zamow was fraudulently joined.
His motion to dismiss is granted and Mr. Zamow is dismissed from
this action.
Diversity jurisdiction thus lies.
11
There is some question as to whether Zamow should be
properly considered as part of the collective “Defendants”
referred to by plaintiffs in Count III, though defendants do not
advance the contention. Regardless, that plaintiffs have no
possibility of relief against the nondiverse defendant in Count
III is plain enough.
22
III.
A.
Motion to Dismiss -- The Diverse Defendants
Governing Standard
Federal Rule of Civil Procedure 8(a)(2) requires that
a pleader provide “a short and plain statement of the claim
showing . . . entitle[ment] to relief.”
Fed. R. Civ. P.
8(a)(2); Erickson v. Pardus, 127 S. Ct. 2197, 2200 (2007).
Rule
12(b)(6) correspondingly permits a defendant to challenge a
complaint when it “fail[s] to state a claim upon which relief
can be granted . . . .”
Fed. R. Civ. P. 12(b)(6).
The required “short and plain statement” must provide
“‘fair notice of what the . . . claim is and the grounds upon
which it rests.’”
Bell Atlantic Corp. v. Twombly, 127 S. Ct.
1955, 1964 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47
(1957), overruled on other grounds, Twombly, 127 S. Ct. at
1969)); see also Anderson v. Sara Lee Corp., 508 F.3d 181, 188
(4th Cir. 2007).
Additionally, the showing of an “entitlement
to relief” amounts to “more than labels and conclusions . . . .”
Twombly, 127 S. Ct. at 1965.
It is now settled that “a
formulaic recitation of the elements of a cause of action will
not do.” Id.; Giarratano v. Johnson, 521 F.3d 298, 304 (4th Cir.
2008).
23
The complaint need not, however, "make a case" against
a defendant or even "forecast evidence sufficient to prove an
element" of the claim.
Chao v. Rivendell Woods, Inc., 415 F.3d
342, 349 (4th Cir. 2005) (quoting Iodice v. United States, 289
F.3d 270, 281 (4th Cir. 2002)).
Instead, the opening pleading
need only contain “[f]actual allegations . . . [sufficient] to
raise a right to relief above the speculative level.”
Twombly,
127 S. Ct. at 1965; Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949
(2009) (noting the opening pleading “does not require ‘detailed
factual allegations,’ but it demands more than an unadorned,
the-defendant-unlawfully-harmed-me accusation.”).
Stated
another way, the complaint must allege "enough facts to state a
claim to relief that is plausible on its face."
Id. at 1974;
Giarratano, 521 F.3d at 302.
As noted in Iqbal, the Supreme Court has consistently
interpreted the Rule 12(b)(6) standard to require a district
court to “‘accept as true all of the factual allegations
contained in the complaint . . . .’”
Erickson, 127 S. Ct. at
2200 (quoting Twombly, 127 S. Ct. at 1965); see also S.C. Dep’t
of Health and Envtl. Control v. Commerce and Indus. Ins. Co.,
372 F.3d 245, 255 (4th Cir. 2004) (quoting Franks v. Ross, 313
24
F.3d 184, 192 (4th Cir. 2002)).
The court is additionally
required to “draw[] all reasonable . . . inferences from those
facts in the plaintiff's favor . . . .”
Edwards v. City of
Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).
The diverse defendants -- Countrywide, BAC, and Mellon
-- initially sought dismissal of all counts, relying heavily on
National Bank Act preemption as the basis for dismissal of
Counts III and V through VIII.
As noted above, however, the
diverse defendants abandoned their preemption argument in the
reply memorandum.
(See Diverse Def.’s Reply at 1 n. 2).
Accordingly, the diverse defendants seek dismissal of Counts I
and II (all defendants -- fraud), Count IV (BAC -- breach of
contract), and Count V (BAC -- illegal debt collection).
B.
Counts I and II: Fraud -- The Diverse Defendants
In support of dismissal, the diverse defendants first
assert that plaintiffs’ fraud claims (Counts I and II) are
barred by the two-year statute of limitations, and that to the
extent that plaintiffs invoke the discovery rule, it is
inapplicable.
See Syl. pt. 3, Dunn v. Rockwell, 689 S.E.2d 255,
262 (W. Va. 2009) (explaining discovery rule).
25
As an initial matter, the court observes that
plaintiffs’ Count I fraud claim seeks a remedy at law, namely,
damages, while the Count II fraud claim seeks only equitable
relief.
(See Second Amend. Compl. ¶¶ 35, 40).
With respect to
a limitations challenge, the distinction in remedy sought is
critical:
“Where a suit based on fraud is not for damages but
seeks to rescind a writing or impose a trust or other
equitable relief, it is not a common law action for
fraud but is equitable in nature. Consequently, the
doctrine of laches is applicable rather than any
specific statute of limitations period.”
Syl. pt. 7, id. at 258-59 (citation omitted) (quoting Syl. pt.
3, Laurie v. Thomas, 294 S.E.2d 78, 79 (W. Va. 1982)).
Inasmuch
as the Count I fraud claim requests damages -- a legal remedy -the two-year statute of limitations period set forth in West
Virginia Code § 55-2-12 governs.
See Brown v. Cmty. Moving &
Storage, Inc., 455 S.E.2d 545, 547 n. 3 (W. Va. 1995).
In
contrast, the Count II request for “appropriate equitable
relief” requires application of the doctrine of laches.
Amend. Compl. ¶ 40).
(Second
See Syl. pt. 7, Dunn, 689 S.E.2d at 258-
59; see also White v. Daniel, 909 F.2d 99, 102 (4th Cir. 1990)
(laches is “properly relevant only where the claims presented
may be characterized as equitable, rather than legal”).
26
Laches and statute of limitations challenges are
affirmative defenses.
See Fed. R. Civ. Pro. 8(c).
As such,
these defenses are often not appropriate for disposition under
Rule 12(b)(6).
See Goodman v. Praxair, Inc., 494 F.3d 458, 464
(4th Cir. 2007) (noting a Rule 12(b)(6) challenge, “which tests
the sufficiency of the complaint, generally cannot reach the
merits of an affirmative defense, such as the defense that the
plaintiff's claim is time-barred.”).
An exception exists for
the “relatively rare circumstances where facts sufficient to
rule on an affirmative defense are alleged in the complaint
. . . .”
Id.
The exception is strictly construed, requiring
that all “facts necessary to the affirmative defense ‘clearly
appear[] on the face of the complaint.’”
Id. (quoting Richmond,
Fredericksburg & Potomac R.R. v. Forst, 4 F.3d 244, 250 (4th
Cir. 1993)).
In Count I, plaintiffs allege that defendants
“suppressed from the Plaintiffs material terms” of the loan,
including an “adjustable rate mortgage” and further
“misrepresented that Plaintiffs’ payments and interest rate
would not increase.”
(Second Amend. Compl. ¶¶ 30-31).
Here, it
does not clearly appear on the face of plaintiffs’ complaint
that the discovery rule does not apply to toll the two-year
27
statute of limitations.
See W. Va. Code § 55-2-12.
Plaintiffs
allege that although the closing took place on November 3, 2006
-- over three years before filing suit on June 28, 2010 -- they
did not discover that the loan terms had been “suppressed” until
their monthly payment increased in July 2008.
(Id. ¶¶ 15-16).
While defendants’ arguments made with reference to the deed of
trust and accompanying note may be persuasive at a later stage
of the proceedings, the current procedural posture precludes the
court from looking beyond the confines of plaintiffs’ complaint.
See Forst, 4 F.3d at 250.
Thus, the court cannot say at this
juncture whether the discovery rule tolls the two-year
limitations period as to Count I.
Count II is another matter.
As noted, this count
asserts a fraud claim that requests only equitable relief.
Consequently, the doctrine of laches, rather than the two-year
statute of limitations, governs this claim.
“The elements of laches consist of (1) unreasonable
delay and (2) prejudice.”
904 (W. Va. 1996).
Province v. Province, 473 S.E.2d 894,
“Contrasted with the defense at law of the
running of the statute of limitations, the controlling element
of the equitable defense of laches is prejudice, rather than the
28
amount of time which has elapsed without asserting a known right
or claim.”
Maynard v. Bd. of Edu. of Wayne Cnty., 357 S.E.2d
246, 253 (W. Va. 1987).
And so, “[m]ere delay will not bar
relief in equity on the ground of laches.
‘Laches is a delay in
the assertion of a known right which works to the disadvantage
of another, or such delay as will warrant the presumption that
the party has waived his right.’”
Syl. pt. 4, State v. Morris,
466 S.E.2d 827, 828 (W. Va. 1995) (quoting Syl. pt. 1, State v.
Abbot, 418, S.E.2d 575, 576 (W. Va. 1992)).
“No rigid rule can
be laid down as to what delay will constitute prejudice; every
claim must depend upon its own circumstances.”
Province, 473
S.E.2d at 904.12
It has also been observed that “[a]lthough the doctrine
of laches is not bound by any statute of limitations, the
statute of limitations is one measure of whether a claim has
become stale. Laches and statutes of limitations are analogs.”
Province, 473 S.E.2d at 904 n. 21. With respect to defendants’
assertions, the maxim “equity follows law” is not without some
force here. The West Virginia Supreme Court of Appeals has
explained that
12
[w]ith respect to claims for equitable relief, a court
of equity will normally invoke the maxim of equity
which states that “equity follows the law” and will
generally look first to what the statute of
limitations would be for any analogous right or remedy
at law. However, a court of equity, in examining the
delay in asserting a claim for equitable relief, is
(contin.)
29
In Count II, plaintiffs’ fraud claim rests on the
allegation that “Defendants misrepresented that Plaintiffs would
be able to refinance after one year of making payments on their
mortgage loan.”
(Second Amend. Compl. ¶ 37).
The complaint
also alleges that the Countrywide loan agent told plaintiffs
that “they could refinance at a lower interest rate after one
year” (id. ¶ 11), and, furthermore, that “[p]laintiffs inquired
with Defendant about the promised reduction in interest rate
after one year and Defendant refused.”
closed the loan on November 3, 2006.
(Id. ¶ 14).
Plaintiffs
Accepting the unambiguous
allegations as true, plaintiffs were plainly aware in November
2007 -- over two years before filing suit -- that defendants
would not refinance their loan after one year of making
payments.
That Count II may be time-barred by the statute of
limitations under these facts, as defendants contend, is not the
question.
Rather, it is whether the face of the complaint
not bound by any analogous statute of limitations. In
a given case involving equitable relief which is
alleged to be barred by laches, the analogy of the
statute of limitations may be applied; or a longer
period than that prescribed by the statute may be
required; or a shorter time may be sufficient to bar
the claim for equitable relief.
Maynard v. Bd. of Educ. of Wayne Cnty., 357 S.E.2d 246 (W.
Va. 1987).
30
clearly indicates that plaintiffs brought the claim with such
unreasonable delay that defendants were prejudiced under the
doctrine of laches.
See Forst, 4 F.3d at 250.
Strictly
construed, the face of the complaint does not manifest such
prejudicial delay.
Therefore, resolution of this affirmative
defense is also inappropriate at this stage of the proceedings.
Defendants advance several additional arguments aimed
at defeating plaintiffs’ fraud claims.
As to their assertion of
the statute of frauds, defendants argue that “[c]laims based
upon a verbal promise or agreement related to real estate, such
as in regards to an alleged refinance, are prohibited.”
Mem. 15).
(Def.’s
It has been long-recognized that the purpose of the
statute of frauds is “‘to prevent the fraudulent enforcement of
unmade contracts,’ rather than the legitimate enforcement of
contracts which were, in fact, made.”
Holbrook v. Holbrook, 474
S.E.2d 900, 903-04 (W. Va. 1996) (quoting Timberlake v. Heflin,
379 S.E.2d 149, 153 (W. Va. 1989)).13
Inasmuch as plaintiffs’
See also Gibson v. Stalnaker, 106 S.E. 243 (W. Va. 1921)
(citing Wright v. Pucket, 1872 WL 5207, 22 Gratt. 370 (Va. 1872)
(“The statute of frauds was founded in wisdom and sound policy.
Its primary object was to prevent the setting up of pretended
agreements, and then supporting them by perjury.”)); Heth v.
Wooldridge, 1828 WL 1043, 6 Rand. 605 (Va. 1828).
13
31
fraud claims sound in tort and they are not there seeking to
enforce a contract term, the statute of frauds defense appears
inapplicable.
Next, defendants briefly assert that the fraud claims
must fail inasmuch as they are predicated on an alleged
misrepresentation of a future event.
While defendants are
correct that “actionable fraud must ordinarily be predicated
upon an intentional misrepresentation of a past or existing fact
and not upon a misrepresentation as to a future occurrence,” a
claim for fraud will still lie if plaintiffs allege “the nonexistence of intention to fulfill the promise at the time it was
made.”
Croston v. Emax Oil Co., 464 S.E.2d 728, 732 (W. Va.
1995) (citing Janssen v. Carolina Lumber Co., 73 S.E.2d 12 (W.
Va. 1952)).
The specific allegations of fraud -- that
defendants induced plaintiffs to agree to the loan by
misrepresenting that the interest rate and payments would not
increase, by suppressing from plaintiffs that the loan was an
adjustable rate mortgage, and by misrepresenting that plaintiffs
could refinance after one year -- are sufficient to permit the
inference that defendants did not intend to fulfill any of those
32
terms or representations at the time made.
(Second Am. Compl.
¶¶ 30-32, 37-39).
Finally, defendants assert that the fraud claims must
be dismissed inasmuch as plaintiffs failed to plead them with
particularity.
See Fed. R. of Civ. Pro. 9(b).
As earlier
noted, our court of appeals has explained that “the
‘circumstances’ required to be pled with particularity under
Rule 9(b) are ‘the time, place, and contents of the false
representations, as well as the identity of the person making
the misrepresentation and what he obtained thereby.’”
Harrison
v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir.
1999) (quoting 5 Wright & Miller, Federal Practice and Procedure
§ 1297 (2d. 1990)).
Even so, the court cautioned that “[a]
court should hesitate to dismiss a complaint under Rule 9(b) if
the court is satisfied (1) that the defendant has been made
aware of the particular circumstances for which she will have to
prepare a defense at trial, and (2) that plaintiff has
substantial prediscovery evidence of those facts.”
Id.
Simply
put, the Counts I and II fraud claims as alleged against the
diverse defendants are sufficient to place them on notice of the
particular circumstances for which they will have to prepare a
33
defense at trial, and it appears that plaintiffs have sufficient
prediscovery evidence of those facts.
Id.
Accordingly, defendants’ motion to dismiss Counts I
and II as to the diverse defendants is denied.
C.
Count IV: Breach of Contract -- BAC
In moving to dismiss Count IV, defendant BAC contends
that plaintiffs failed to allege the breach of any contractual
obligation by BAC inasmuch as BAC was under no obligation to
enter into a loan modification with plaintiffs and had the
express right to foreclose.
In response, plaintiffs maintain
that although BAC was not required to grant him a loan
modification, BAC’s discretion under the contract was
constrained by the implied contractual duty of good faith and
fair dealing.
(Second Amend. Compl. ¶ 48).
The Powells further
assert that BAC breached the implied duty by “engag[ing] in a
practice of systematically reassuring delinquent borrowers that
a loan modification will be provided,” while
nevertheless prolonging the presentation of a
reasonable loan modification while allowing borrowers’
indebtedness to mount, then presenting borrowers with
a loan modification that is unwise and unfair to
borrowers on terms favorable to Defendant, such as the
instant case where Defendant presented Plaintiffs with
a loan modification that was interest-only for ten
34
years, precluding any ability of Plaintiffs to build
any equity in their home after paying over $75,000.
(Id. ¶ 52).
The court has previously observed that West Virginia
law “implies a covenant of good faith and fair dealing in every
contract for purposes of evaluating a party’s performance of
that contract.”
Stand Energy Corp. v. Columbia Gas
Transmission, 373 F. Supp. 2d 631, 644 (S.D. W. Va. 2005)
(quoting Hoffmaster v. Guiffrida, 630 F. Supp. 1289, 1291 (S.D.
W. Va. 1986)).
The court has also found, however, that the West
Virginia Supreme Court of Appeals has “declined to recognize an
independent claim for a breach of the common law duty of good
faith,” and has instead held that such a claim sounds in breach
of contract.
Doyle v. Fleetwood Homes of Virginia, 650 F. Supp.
2d 535, 541 (S.D. W. Va. 2009) (citing Highmark West Virginia,
Inc. v. Jamie, 655 S.E.2d 509, 514 (W. Va. 2007) (“it has been
held that an implied covenant of good faith and fair dealing
does not provide a cause of action apart from a breach of
contract claim.”)).
By the same token, “[t]he implied covenant
of good faith and fair dealing cannot give contracting parties
rights which are inconsistent with those set out in the
35
contract.”
Barn-Chestnut, Inc. v. CFM Dev. Corp., 457 S.E.2d
502, 509 (W. Va. 1995).
Plaintiffs couch their claim in breach of contract
terms, asserting that BAC breached the contract by performing in
a manner inconsistent with the implied duty of good faith.
Inasmuch as plaintiffs seem to argue that breaching the implied
covenant of good faith and fair dealing (a non-cognizable claim)
necessarily constitutes breach of contract (a cognizable claim),
this is just a roundabout way of asserting an independent claim
for breach of the implied covenant.
Nevertheless, the court
will proceed to analyze plaintiffs’ claim as it would a breach
of contract claim.
The court strains to identify a claim for breach of
contract in Count IV.
The only allegation in Count IV that
indicates an express breach of contract is that after entering
into the loan modification, defendants “refus[ed] to honor the
agreement providing for lower monthly payments.”
Compl. ¶ 53(d)).
(Second Amend.
The bulk of the Count IV allegations involve
only the alleged breach of the covenant of good faith and fair
dealing.
36
With respect to the specific allegations of bad faith
and fair dealing, plaintiffs do not specify what “contract” was
breached, nor do they point to any contractual provision
violated by defendants.
The court concludes that plaintiffs
must be referring either to the note supporting the loan to
plaintiffs, or the deed of trust which secured the note, since
these are the only contracts alleged to exist between the
parties relevant to the allegations of bad faith and fair
dealing.
After reviewing these documents, it is not apparent to
the court that BAC breached either contract.14
The deed of trust gives defendants an unqualified
right to foreclose in the event of default by the borrower.
(See Def.’s Mem., Ex. A ¶ 22) (“If the default is not cured
. . . Lender at its option may require immediate payment . . .
and may invoke the power of sale and any other remedies
permitted by Applicable Law.”) (emphasis added).
Plaintiffs
concede that neither contract requires defendants to pursue
14
When ruling on a Rule 12(b)(6) motion to dismiss, the
court may consider documents “attached to the motion to dismiss,
so long as they are integral to the complaint and authentic.”
Philips v. Pitt Cnty. Mem. Hosp., 572 F.3d 176, 180 (4th Cir.
2009) (citing Blankenship v. Manchin, 471 F.3d 523, 526 n. 1
(4th Cir. 2006)).
37
alternative remedies before seeking foreclosure.
(See Second
Amend. Compl. ¶ 50) (stating that under the deed of trust,
“Defendant may engage in loss mitigation efforts . . . rather
than pursue foreclosure”) (emphasis added)).
Relying on Virginia Vermiculite, Ltd. v. W.R. Grace &
Co., 156 F.3d 535 (4th Cir. 1998), plaintiffs maintain that
BAC’s right of foreclosure is qualified by a duty to act in good
faith.
Virginia Vermiculite concerned a contract between a
landowner and a mining company that granted the mining company
the right to mine the land in its “sole discretion.”
at 541.
156 F.3d
The district court, applying Virginia law, held that
the mining company had no implicit contractual duty to use good
faith in exercising its discretion under the contract.
541.
Id. at
Our court of appeals reversed, holding that “it is a basic
principle of contract law in Virginia . . . that although the
duty of good faith does not prevent a party from exercising its
explicit contractual rights, a party may not exercise
contractual discretion in bad faith, even when such discretion
is vested solely in that party.”
Id. at 542 (emphasis added).
Regardless of whether BAC properly exercised “its
explicit contractual rights” or whether it abused its
38
“contractual discretion” by acting in bad faith, Virginia
Vermiculite is inapplicable here because that case concerned
Virginia rather than West Virginia law.
This distinction is
significant inasmuch as “Virginia contract law recognizes a
cause of action for failure to exercise contractual discretion
in good faith.”
Virginia Vermiculite, Ltd. v. W.R. Grace & Co.,
144 F. Supp. 2d 558, 606 (W.D. Va. 2001); see also Enomoto v.
Space Adventures, Ltd., 624 F. Supp. 2d 443, 450 (E.D. Va. 2009)
(citing Charles E. Brauer Co., v. NationsBank of Va., 466 S.E.2d
382, 386 (Va. 1996)) (listing elements for breach of implied
covenant of good faith and fair dealing claim).
As noted above,
however, West Virginia recognizes no such claim, and claims for
breach of the implied covenant must be predicated on a breach of
contract.
See Highmark, 655 S.E.2d at 514.
Because BAC was within its contractual rights in
foreclosing on the property when plaintiffs defaulted, and
because the implied covenant “cannot give contracting parties
rights which are inconsistent with those set out in the
contract,” Barn-Chestnut, 457 S.E.2d at 509, plaintiffs’ claim
fails as a matter of law.
Count IV is therefore dismissed.
39
D.
Count V: Illegal Debt Collection -- BAC
In Count V, plaintiffs claim that defendant BAC
violated the West Virginia Consumer Credit and Protection Act
(“WVCCPA”).
See W. Va. Code § 46A-2-122, et. seq.
The WVCCPA
provides, in relevant part, that:
[n]o debt collector shall unreasonably oppress or
abuse any person in connection with the collection of
or attempt to collect any claim alleged to be due and
owing by that person or another. Without limiting the
general application of the foregoing, the following
conduct is deemed to violate this section:
(a)
The use of profane or obscene language or
language that is intended to unreasonably abuse
the hearer or reader . . . .
West Virginia Code § 46A-2-125 (the “Abuse Provision”).
The
West Virginia Supreme Court of Appeals has indicated that the
WVCCPA is to be construed broadly:
The purpose of the [WVCCPA] is to protect consumers
from unfair, illegal, and deceptive acts or practices
by providing an avenue of relief for consumers who
would otherwise have difficulty proving their case
under a more traditional cause of action. As
suggested by the court in State v. Custom Pools, 150
Vt. 533, 536, 556 A.2d 72, 74 (1988), “[i]t must be
our primary objective to give meaning and effect to
this legislative purpose.” Where an act is clearly
remedial in nature, we must construe the statute
liberally so as to furnish and accomplish all the
purposes intended.
40
McGraw v. Scott Runyan Pontiac-Buick, Inc., 461 S.E.2d 516, 523
(W. Va. 1995) (internal citations omitted).
In Count V, plaintiffs claim that defendant BAC
“unreasonably abused” them “[b]y routinely insulting Plaintiffs
about their struggle and circumstance in the court [sic] of
servicing the mortgage loan at issue . . . .”
Compl. ¶ 58).
(Second Amend.
A BAC representative allegedly told plaintiffs
that “West Virginians like to have yard sales, so why don’t you
have a yard sale to make up the difference?” and also inquired,
“Why did you buy the place if you can’t make the payments?”
(See id. ¶¶ 20-21).
BAC strenuously denies that these
statements were ever made, and contends that even if made, they
are not so “profane, obscene, or unreasonably abusive” such that
they constituted a viable claim under West Virginia Code § 46A2-125(b).
(Def.’s Mem. 11-12).
Defendant’s attempt to characterize these statements
as unactionable “preclaims assistance” is unavailing.
BAC
relies heavily on the unpublished decision in Seals v. Nat’l
Student Loan Program, No. 5:02-cv-101 (N.D. W. Va. October 8,
2003).
In that case, plaintiff alleged that defendants made
statements such as “I can’t believe you can’t get a job,” and
41
that plaintiff should “try to help himself” by suggesting that
he take a job at “McDonald’s or Burger King.”
19.
Id. at *16, 18-
The court found that “these statements are not sufficiently
‘profane,’ ‘obscene,’ or ‘unreasonably abusive’ in nature to
make [§ 46A-2-125(a)] applicable.”
Id. at *16-18.
Further, the
court found that defendant’s suggestion “that plaintiff work at
McDonald’s or Burger King” was “likely made as a form of
‘preclaims assistance,’ which allows a lender to counsel the
borrower on how to avoid default.”
Id. at *18.
Unlike Seals,
the annoying comments at issue in Count V can hardly be said to
be the product of a desire to render preclaims assistance.
In any event, the remarks at issue in this case are
neither “profane” nor “obscene.”
While the statement that “West
Virginians like to have yard sales, so why don’t you have a yard
sale to make up the difference?” may be considered as
condescending, it is not actionable as unreasonably abusive.
Neither is the comment asking “Why did you buy the place if you
can’t make the payments?”
Accordingly, Count V is dismissed.
42
IV.
Conclusion
In sum, the court finds that Counts IV and V must be
dismissed for failure to state a claim, while Counts I and II
(fraud), as well as Count III (unconscionable contract) survive
as against the diverse defendants.
Counts VI, VII, and VIII
remain as to BAC.
Based on the foregoing reasons, the court ORDERS as
follows:
1.
That plaintiffs’ motion to remand be, and it hereby
is, denied;
2.
That defendant Zamow’s motion to dismiss be, and it
hereby is, granted;
3.
That defendants Countrywide, BAC, and Mellon’s
motion to dismiss be, and it hereby is, denied with
respect to Counts I and II; and
4.
That defendant BAC’s motion to dismiss be, and it
hereby is, granted with respect to Counts IV and V,
which are dismissed.
The Clerk is directed to forward copies of this
written opinion and order to all counsel of record and any
unrepresented parties.
Enter: February 2, 2012
John T. Copenhaver, Jr.
United States District Judge
43
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?