Collins et al v. Branch Banking and Trust Company et al
Filing
23
MEMORANDUM OPINION AND ORDER granting in part and denying in part Defendant Seneca Trustees, Inc.'s 6 MOTION to Dismiss; granting in part as to Counts I and III; and denying in part as to Count II; Counts I and III against Seneca are DISMISSED. Signed by Judge Thomas E. Johnston on 2/24/2017. (cc: counsel of record; any unrepresented party) (taq)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION
DANNY R. COLLINS, et al.,
Plaintiffs,
v.
CIVIL ACTION NO. 2:16-cv-04151
BRANCH BANKING AND TRUST COMPANY, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the court is Defendant Seneca Trustees, Inc.’s Motion to Dismiss (ECF No.
6).1 The Motion to Dismiss is GRANTED IN PART as to Counts I and III and DENIED IN
PART as to Count II.
I.
BACKGROUND
This action arises out of a complaint Plaintiffs Danny and Mary Beth Collins (“Plaintiffs”)
filed in the Circuit Court of Jackson County, West Virginia on June 12, 2015. According to the
Complaint, Plaintiffs purchased a house at 35 Second Street, Cottageville, West Virginia, in 2002.
While they initially financed the house through another bank, Defendant Branch Banking and
Trust Company (“BB&T”) purchased that bank and took over as the servicer of the loan.
Defendant Seneca Trustees, Inc. (“Seneca”) served as the trustee on the Deed of Trust for the
mortgage.
1
Plaintiff’s Complaint also requests a Temporary Restraining Order to halt Defendants from further eviction
proceedings. The docket sheet from the Jackson County Circuit Court indicates that this TRO was granted prior to
removal on June 16, 2015. (ECF No. 1-3 at 1.)
The Complaint also contains the following allegations. In October 2014, Plaintiffs asked
for a forbearance on the loan, which BB&T granted in November or December 2014. In March
2015, a BB&T representative named Tammy Dawson contacted Plaintiffs, and they discussed a
loan modification with her. Ms. Dawson indicated to Plaintiffs that they could modify the loan
terms if they paid a sum of $2,000. Plaintiffs paid the sum and believed their loan was modified
as they had desired. However, BB&T initiated foreclosure proceedings on their home anyway,
and BB&T bought Plaintiffs’ home at foreclosure on March 3, 2015, and then conveyed the
property to Defendant Federal Home Loan Mortgage Companies (“Freddie Mac”). Prior to the
sale, BB&T and Seneca failed to notify Plaintiffs of the sale or provide an opportunity to reinstate
the loan. During the relevant period, BB&T also failed to credit some payments Plaintiffs made
and demanded payments that were not due.
The Complaint alleges a claim for Breach of the Duty of Good Faith and Fair Dealing
(Count I) against all three Defendants, a Breach of Fiduciary Duty of Trustee claim (Count II)
against Seneca, and an Illegal Debt Collection claim under West Virginia Code § 46A-2-127
(Count III) against all three Defendants. Invoking the Court’s jurisdiction under 12 U.S.C. §
1452(f)(3), Defendant Freddie Mac filed a timely notice of removal on May 4, 2016, to which
Defendants BB&T and Seneca consented. Seneca filed this Motion to Dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6) on May 20, 2016, and Plaintiffs have not filed a response.
II.
LEGAL STANDARD
Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain “a short and plain
statement of the claim showing that the pleader is entitled to relief.” Allegations “must be simple,
concise, and direct” and “[n]o technical form is required.” Fed. R. Civ. P. 8(d)(1). A motion to
2
dismiss under Fed. R. Civ. P. 12(b)(6) tests the legal sufficiency of a civil complaint. See Edwards
v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). “[I]t does not resolve contests surrounding
the facts, the merits of a claim, or the applicability of defenses.” Republican Party of N.C. v.
Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citing 5A C. Wright & A. Miller, Federal Practice and
Procedure § 1356 (1990)).
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, ‘to state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court
decides whether this standard is met by separating the legal conclusions from the factual
allegations, assuming the truth of only the factual allegations, and then determining whether those
allegations allow the court to reasonably infer that “the defendant is liable for the misconduct
alleged.” Id. A motion to dismiss will be granted if, “after accepting all well-pleaded allegations
in the plaintiff's complaint as true and drawing all reasonable factual inferences from those facts
in the plaintiff's favor, it appears certain that the plaintiff cannot prove any set of facts in support
of his claim entitling him to relief.” Edwards, 178 F.3d at 244.
III.
DISCUSSION
A. Count One - Breach of Duty of Good Faith and Fair Dealing
Seneca moves to dismiss Count I on the grounds that Plaintiffs have not alleged a
contractual relationship with Seneca.
West Virginia law “implies a covenant of good faith and fair dealing in every contract for
the purposes of evaluating a party’s performance of that contract.” Hoffmaster v. Guiffrida, 630
F. Supp. 1289, 1290 (S.D. W. Va. 1986). In the absence of a definitive holding from the Supreme
3
Court of Appeals of West Virginia (“WVSCA”), this Court has interpreted West Virginia law not
to recognize this duty outside of a contract.
See Stand Energy Corp. v. Columbia Gas
Transmission Corp., 373 F. Supp. 2d 631, 644 (S.D. W. Va. 2005). The WVSCA has recognized
this ruling, noting without disagreeing “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.” Highmark
W. Va., Inc. v. Jamie, 655 S.E.2d 509, 514 (W. Va. 2007); see also Hanlon v. AXA Equitable Life
Ins. Co., No. 15-0337, 2016 WL 2968990, at *3 (W. Va. May 20, 2016) (affirming summary
judgment on the basis that there is no cause of action for a breach of the duty of good faith and fair
dealing independent of a contract).
As Seneca points out, the Complaint does not allege that it is a party to any contract with
Plaintiffs. Accordingly, Plaintiffs cannot state a claim for a breach of the duty of good faith and
fair dealing against Seneca.
B. Count Two – Breach of Fiduciary Duty of Trustee
Seneca moves to dismiss Count II of the Complaint on the grounds that it has complied
with the fiduciary duties of a trustee.
Under West Virginia law, a trustee is a third party who acts as an agent of both the creditor
and debtor with respect to a debt secured by a piece of property. See Lucas v. Fairbanks Capital
Corp., 618 S.E.2d 488, 493 (W.Va. 2005) (citing Syl. pt. 7, Hartman v. Evans, 18 S.E. 810 (W.Va.
1893)). A trustee’s duties with regard to a sale of such property are provided by statute:
The trustee in any trust deed given as security shall, whenever required by any
creditor secured or any surety indemnified by the deed, or the assignee or personal
representative of any such creditor or surety, after the debt due to such creditor or
for which such surety may be liable shall have become payable and default shall
have been made in the payment thereof, or any part thereof, by the grantor or other
person owing such debt, and if all other conditions precedent to sale by the trustee,
4
as expressed in the trust deed, shall have happened, sell the property conveyed by
the deed, or so much thereof as may be necessary, at public auction, having first
given notice of such sale as prescribed in the following section.
W. Va. Code § 38-1-3.
As Seneca notes, the complaint contains only one paragraph with factual assertions relating
directly to Seneca as the trustee. That paragraph alleges:
Defendants BB&T and [Seneca] failed to provide any notice to the Plaintiffs of any
impending foreclosure. Further, they failed to provide the reinstatement amount or
the deadline by which any reinstatement amount should be paid. Defendants BB&T
and [Seneca] failed to provide Plaintiffs with any opportunity to reinstate the
subject loan.
(ECF No. 1-3 ¶ 12.) Seneca does not argue that this allegation does not state a plausible claim or
that it had no fiduciary duty. Rather, Seneca argues that it properly provided notice of the sale as
required by the Deed of Trust and W. Va. Code § 38-1-4.2 However, in support of this assertion,
Seneca directs the Court to evidence outside the pleadings, including a letter from BB&T to
Plaintiffs, a letter from Seneca to Plaintiffs, Seneca’s foreclosure notice, and a notice of the
foreclosure sale that was published in the Jackson Herald newspaper.
Elsewhere in its
memorandum, Seneca asserts that these attached documents are “matters of public record” which
2
The Deed of Trust requires that:
All notices given by Borrower or Lender in connection with this Security Agreement must be in
writing. Any notice to Borrower in connection with this Security Agreement shall be deemed to
have been given to the Borrower when mailed by first class mail or when actually delivered to
Borrower’s notice address if sent by other means.
(ECF No. 6-3 ¶ 15.) W. Va. Code § 38-1-4 requires:
[T]rustee shall publish a notice of a trustee's sale as a Class II legal advertisement in compliance
with the provisions of article three, chapter fifty-nine of this code, and the publication area for such
publication shall be the county where the property is located . . . . [A] copy of such notice shall be
served on the grantor in such trust deed, or his agent or personal representative, by certified mail,
return receipt requested, directed to the address shown by the grantors on the deed of trust . . . .
Every notice of sale by a trustee under a trust deed shall show the following particulars: (a) The time
and place of sale; (b) the names of the parties to the deed under which it will be made; (c) the date
of the deed; (d) the office and book in which it is recorded; (e) the quantity and description of the
land or other property or both conveyed thereby; and (f) the terms of sale.
W. Va. Code § 38-1-4.
5
the Court can take judicial notice of without converting Seneca’s Motion to Dismiss into a motion
for summary judgment. (ECF No. 7 at 3 n.1.)
A court typically “cannot consider allegations made outside of the pleadings” when
considering a motion to dismiss. Cunningham Energy, LLC v. Outman, Civil Action No. 2:13–
cv–20748, 2013 WL 5274361, at *4 (S.D. W. Va. Sept. 18, 2013) (citation omitted). However, a
court “may . . . consider documents attached to the complaint . . . as well as those attached to the
motion to dismiss, so long as they are integral to the complaint and authentic.” Phillips v. Pitt Cty.
Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (citations omitted). A court may also “properly
take judicial notice of matters of public record.” Id. (citing Hall v. Virginia, 385 F.3d 421, 424
(4th Cir. 2004)).
This Court has previously declined to consider several of the types of documents submitted
here at the motion to dismiss stage. See Corbett v. Duerring, 780 F. Supp. 2d 486, 494 (S.D. W.
Va. 2011) (declining to take judicial notice of newspaper articles on a 12(b)(6) motion to dismiss);3
Koontz v. Wells Fargo, N.A., No. 2:10-CV-00864, 2011 WL 1297519, at *7 (S.D. W. Va. Mar. 31,
2011) (declining to consider foreclosure notices attached to a motion to dismiss). While Plaintiffs
have not responded to Seneca’s Motion to Dismiss and thus have not challenged the authenticity
of any of the attached documents, the Complaint does not rely on either of the letters mentioned
3
Seneca relies on four extraneous documents in its argument that it complied with its fiduciary duty: (1) a letter from
BB&T to Plaintiffs regarding their default, the amount necessary to cure, and the right to reinstate; (2) a letter from
Seneca to Plaintiffs advising them of the foreclosure proceedings and noting the full amount of the debt; (3) a
foreclosure notice; and (4) a notice of the foreclosure sale published in the Jackson Herald. While Seneca does not
argue specifically why these documents are integral to the complaint or subject to judicial notice, the Court notes that
the notice of foreclosure sale published in the Jackson Herald is the closest question. See Bradacs v. Haley, 58 F.
Supp. 3d 499, 511 (D.S.C. 2014) (“Generally, a news article cannot be judicially noticed for the truth of what is
reported, but can be judicially noticed for facts such that a fact was printed.”). While it could be proper for the Court
to take judicial notice of the fact that the notice was printed in the Jackson Herald, this alone would be insufficient to
establish that Seneca complied with the notice requirements of the Deed of Trust and West Virginia law.
6
in Seneca’s Memorandum, its foreclosure notice, or the notice posted in the Jackson Herald.
Accordingly, the extraneous materials that Seneca asks the Court to consider are not matters of
public record, nor are they integral to the complaint.
Were the Court to consider this extrinsic evidence, it would be required to convert Seneca’s
12(b)(6) motion into one for summary judgment. Fed. R. Civ. P. 12(d) (“If, on a motion under
Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the
court, the motion must be treated as one for summary judgment under Rule 56. All parties must
be given a reasonable opportunity to present all the material that is pertinent to the motion.”). The
Fourth Circuit has interpreted “reasonable opportunity” to require that the court give notice to the
parties that it is treating a motion to dismiss as one for summary judgment, so the opposing party
can pursue reasonable discovery. Gay v. Wall, 761 F.2d 175, 177 (4th Cir. 1985) (citing Johnson
v. RAC Corp., 491 F.2d 510, 513 (4th Cir. 1974)). Subject to this requirement, this Court has
previously recognized that the decision to consider documents attached to a motion to dismiss and
convert the motion to one for summary judgment is one of “complete discretion” for district courts.
Gilmore v. Bostic, 636 F. Supp. 2d 496, 513 (S.D. W. Va. 2009) (citing 5C Charles A. Wright &
Arthur R. Miller, Federal Practice and Procedure § 1366). The Court notes that in the present
litigation, the parties are pursuing discovery and the dispositive motions deadline is in less than
two months. Accordingly, the Court deems it more appropriate to make summary judgment
decisions at that time and declines to consider the extraneous documents outside the Complaint.
Because Seneca’s grounds for dismissal of Count II rely on documents outside the
Complaint that the Court declines to consider, the Court does not find that the Count II fails to
state a claim.
7
C. Count III – Illegal Debt Collection
Seneca offers four grounds for dismissal of Count III: (1) there are no relevant allegations
against Seneca and the complaint lacks the requisite specificity, (2) the relevant allegations go
beyond the duties of an independent trustee, (3) this claim is barred by Plaintiffs’ bankruptcy
discharge, and (4) this claim is time-barred.
Count III alleges that the Defendants “employed unfair and unconscionable collection
tactics in violation of West Virginia Code § 46A-2-127.” (ECF No. 1-3 ¶ 21.) That section
provides that “[n]o debt collector shall use any fraudulent, deceptive or misleading representation
or means to collect or attempt to collect claims or to obtain information concerning consumers,”
and provides a non-exhaustive list of violative conduct. W. Va. Code § 46A-2-127. Seneca asserts
that Paragraph 20 of the Complaint, which states “Defendant BB&T refused to accept and/or credit
payments to the Plaintiffs’ account and then demanded monies that were not due,” is the only
factual allegation in support of this claim, and since it relates exclusively to BB&T, Count III fails
to state a claim against Seneca. (ECF No. 1-3 ¶ 20.) While the Court notes that Paragraphs 6-11
allege that a BB&T representative misrepresented to Plaintiffs the status of the loan terms, these
allegations also relate to BB&T, not Seneca. (ECF No. 1-3 ¶ 6-11.)
Accordingly, the only allegation relevant to Count III that addresses Seneca is the legal
conclusion in Paragraph 21 that asserts that the Defendants violated § 46A-2-127. While the Court
must accept as true all well-pleaded factual allegations in evaluating this motion, this tenet “is
inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Because
Paragraph 21 of the Complaint makes a legal conclusion, it is not entitled to a presumption of truth.
Accordingly, the Complaint does not allege facts that state a plausible claim against Seneca for a
8
violation of § 46A-2-127. Because the Court determines that Count III of the Complaint does not
state a claim against Seneca, it is unnecessary to analyze Seneca’s other grounds for dismissal of
this Count.
IV.
CONCLUSION
Based on the foregoing, Seneca’s Motion to Dismiss (ECF No. 6) is GRANTED IN
PART as to Counts I and III and DENIED IN PART as to Count II. Counts I and III against
Seneca are DISMISSED.
IT IS SO ORDERED.
The Court DIRECTS the Clerk to send a copy of this Order to counsel of record and any
unrepresented party.
ENTER:
9
February 24, 2017
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?