Spurlock et al v. PHH Mortgage Corporation et al
Filing
51
MEMORANDUM OPINION AND ORDER granting in part 13 MOTION to Dismiss with respect to Plaintiffs' due process claims and Denies the motion with respect to the statutory claim; granting 11 PHH's MOTION to Dismiss the Claims of Kathy Robin Spurlock and to Dismiss Kathy Robin Spurlock as a Party Plaintiff. Signed by Judge Robert C. Chambers on 6/17/2011. (cc: attys; any unrepresented party) (skm)
IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION
PAUL RICHARD SPURLOCK AND
KATHY ROBIN SPURLOCK,
Debtors,
PAUL RICHARD SPURLOCK AND
KATHY ROBIN SPURLOCK,
Plaintiffs,
v.
CIVIL ACTION NO. 3:10-1252
PHH MORTGAGE CORPORATION AND
FEDERAL NATIONAL MORTGAGE
ASSOCIATION
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendant PHH Mortgage Corporation’s (PHH) Motion
to Dismiss Count 1 of the Complaint [doc. No. 13] and PHH’s Motion to Dismiss the Claims of
Kathy Robin Spurlock and Dismiss Kathy Robin Spurlock as a Party Plaintiff [doc. no. 11]. For the
following reasons, the Court GRANTS, in part, and DENIES, in part, the Motion to Dismiss
Count 1, and GRANTS the Motion to Dismiss the Claims of Kathy Robin Spurlock and Dismiss
Kathy Robin Spurlock as a Party Plaintiff.
I.
FACTS
In their Complaint, Plaintiffs Paul and Kathy Spurlock state they purchased a house
in Huntington, West Virginia on November 17, 2006, and financed the house by executing first and
second Deeds of Trust in favor of PHH. Both instruments were prepared by PHH. At some point
thereafter, Plaintiffs went into default on their mortgage. On or about April 16, 2009, Plaintiffs state
they received a certified letter from PHH’s attorney stating that a trustee sale of the house would
occur on May 7, 2009. Upon receipt, Mr. Spurlock alleges he called PHH’s attorney to work out
a payment plan and to cancel the sale. A representative of the attorney’s office allegedly told Mr.
Spurlock that the sale already was cancelled and would not occur. Mr. Spurlock further asserts he
discussed with the representative a payoff to reinstate the loan and a “Cash for Keys” program.
Plaintiffs state they received no further communication from Defendants about rescheduling the sale
or working out a payment plan.
On September 30, 2009, PHH foreclosed on the house and sold it by public auction
to Defendant Federal National Mortgage Association (“Fannie Mae”). The Trustee Deed, dated
October 9, 2009, was recorded in the office of the County Clerk for Cabell County, West Virginia.
Plaintiffs state they knew nothing of the sale until they received a “NOTICE TO VACATE” on or
about October 9, 2009, from a law firm representing Fannie Mae.
In Count I of their Complaint, Plaintiffs allege the sale violated their due process
rights and West Virginia Code § 38-1-1 et seq. PHH moves to dismiss this count for failure to state
a claim. In their Response, Plaintiffs concede that their due process claim must be dismissed as
there was insufficient state action. See Dennison v. Jack, 304 S.E.2d 300 (W. Va. 1983) (holding that
foreclosure proceedings under West Virginia Code § 38-1-1 et seq. do not involve significant state
action). However, Plaintiffs argue they have stated a valid claim that PHH violated West Virginia
Code § 38-1-4.
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II.
STANDARD OF REVIEW
In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the United States Supreme
Court disavowed the “no set of facts” language found in Conley v. Gibson, 355 U.S. 41 (1957),
which was long used to evaluate complaints subject to 12(b)(6) motions. 550 U.S. at 563. In its
place, courts must now look for “plausibility” in the complaint. This standard requires a plaintiff
to set forth the “grounds” for an “entitle[ment] to relief” that is more than mere “labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555
(internal quotation marks and citations omitted). Accepting the factual allegations in the complaint
as true (even when doubtful), the allegations “must be enough to raise a right to relief above the
speculative level . . . .” Id. (citations omitted). If the allegations in the complaint, assuming their
truth, do “not raise a claim of entitlement to relief, this basic deficiency should . . . be exposed at the
point of minimum expenditure of time and money by the parties and the court.” Id. at 558 (internal
quotation marks and citations omitted).
In Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), the Supreme Court explained the
requirements of Rule 8 and the “plausibility standard” in more detail. In Iqbal, the Supreme Court
reiterated that Rule 8 does not demand “detailed factual allegations[.]” 129 S. Ct. at 1949 (internal
quotation marks and citations omitted). However, a mere “unadorned, the-defendant-unlawfullyharmed-me accusation” is insufficient. Id. “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.’” Id. (quoting Twombly, 550 U.S. at 570). Facial plausibility exists when a claim contains
“factual content that allows the court to draw the reasonable inference that the defendant is liable
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for the misconduct alleged.” Id. (citation omitted). The Supreme Court continued by explaining that,
although factual allegations in a complaint must be accepted as true for purposes of a motion to
dismiss, this tenet does not apply to legal conclusions. Id. “Threadbare recitals of the elements of
a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citation omitted).
Whether a plausible claim is stated in a complaint requires a court to conduct a
context-specific analysis, drawing upon the court’s own judicial experience and common sense. Id.
at 1950. If the court finds from its analysis that “the well-pleaded facts do not permit the court to
infer more than the mere possibility of misconduct, the complaint has alleged-but it has not
‘show[n]’-‘that the pleader is entitled to relief.’” Id. (quoting, in part, Fed. R. Civ. P. 8(a)(2)). The
Supreme Court further articulated that “a court considering a motion to dismiss can choose to begin
by identifying pleadings that, because they are no more than conclusions, are not entitled to the
assumption of truth. While legal conclusions can provide the framework of a complaint, they must
be supported by factual allegations.” Id.
Plaintiffs assert, however, that Rule 12(b)(6) does not apply because PHH has
attached to its motions a copy of the Deed, the Deed of Trust, the notice, the letter dated April 16,
2009, and the Note. Therefore, Plaintiffs argue this Court must treat the motions to dismiss as ones
for summary judgment. However, Rule 12(b)(6) does not require this Court to consider a motion
to dismiss as a motion for summary judgment simply because exhibits are attached to the motion
and are considered by the court. Pueschel v. U.S., 369 F.3d 345, 354 n.3 (4th Cir. 2004). “[W]hen
a defendant attaches a document to its motion to dismiss, a court may consider it in determining
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whether to dismiss the complaint if it was integral to and explicitly relied on in the complaint and
if the plaintiffs do not challenge its authenticity.” American Chiropractic Ass’n v. Trigon
Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004) (alterations and internal quotation marks
omitted). In addition, “a court may consider official public records[.]” Witthohn v. Federal Ins. Co.,
164 Fed. Appx. 395, *1 (4th Cir. 2006) (citations omitted). The Rule requires conversion when the
motion or exhibits “present matters outside the nonmoving party's pleadings and the district court
does not exclude such matters.” Pueschel, 369 F.3d at 354 n.3 (citing, in part, Fed. R. Civ. P.
12(b)(6) (providing that “[i]f, on a motion . . . to dismiss . . . matters outside the pleading are
presented to and not excluded by the court, the motion shall be treated as one for summary judgment
and disposed of as provided in Rule 56”); Harrison v. U.S. Postal Serv., 840 F.2d 1149, 1152 n. 7
(4th Cir. 1988) (noting that the district court's reliance on attachments to a motion to dismiss did not
convert the motion into one for summary judgment because all “the facts to which the court so
referred were either alleged in the amended complaint or contained in the exhibits thereto”)).
In this case, the Complaint specifically references the Deed of Trust and the letter
sent from PHH’s counsel setting the sale for May 7, 2009. In addition, the Deed and Deed of Trust
are part of the public record. In any event, the Court does not rely upon these documents in making
its decision with respect to PHH’s motion to dismiss Count I, as the predominate issue is whether
West Virginia law requires personal notice of a foreclosure sale. Likewise, with respect to the
motion seeking dismissal of Mrs. Spurlock’s claims, the Court finds the relevant documents are
integral to the Complaint and explicitly relied upon therein, and Plaintiff does not challenge their
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authenticity. Therefore, the Court will not convert PHH’s motions to dismiss into ones for summary
judgment.
III.
DISCUSSION
A.
Motion to Dismiss Count I
The current version of West Virginia Code § 38-1-4 provides, in relevant part:
Unless property is to be sold under a deed of trust
executed and delivered prior to . . . [July 1, 1980] . .
. which contains a provision waiving the requirement
of published notice, the trustee shall publish a notice
of a trustee's sale as a Class II legal advertisement . .
..
Except as expressly provided in this section, no trust
deed shall waive the requirements of publication of
notice required by this section.
In all cases, a copy of such notice shall be served on
the grantor in such trust deed . . . by certified mail,
return receipt requested, directed to the address shown
by the grantors on the deed of trust or such other
address given to the beneficiary of said trust deed or
said beneficiary's agent or assignee in writing by the
said grantor subsequent to the execution and delivery
of the trust deed and notice shall be deemed complete
when such notice is mailed to the aforesaid address,
notwithstanding the fact that such mail may be
returned as refused or undeliverable . . . .
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.
*
*
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*
The provisions of this section relating to the methods
of serving notice are not exclusive. In addition to, but
not in lieu of, any service of notice required by the
provisions of this section, service of such notice may
be also made by any other method authorized for
service of original process in the circuit courts of this
state by statute or by the rules of civil procedure for
trial courts of record.
West Virginia Code § 38-1-4 (1987).
As recognized by both parties, the language in this statute clearly provides that notice
of the sale must be published and sent to the grantor in the deed of trust. PHH points out, however,
the statute further states that the notice by publication may not be waived, while the statute is silent
as to whether a grantor of a deed of trust may waive personal notice of the sale. PHH argues this
silence is significant because it indicates that the West Virginia Legislature did not foreclose waiver
of personal notice like it did with the publication requirement. In other words, the West Virginia
Legislature clearly could have put an anti-waiver clause in the statute with respect to personal
service, as it did with the notice of publication requirement, but it chose not to do so. Thus, PHH
argues there is nothing that prevents a grantor from contractually waiving personal notice, which
is exactly what happened in this case.1 PHH further asserts its position is bolstered by the fact the
West Virginia Supreme Court has long recognized the validity of waivers of personal service in
deeds of trust. See Smith v. Bell, 41 S.E.2d 695, 702 (W. Va. 1947) (holding a waiver by a grantor
“in a deed of trust[] of the provision of the statute that a copy of the notice of sale be served on the
1
Paragraph 22 of the Deed of Trust provides, in part: “Borrower hereby waives personal
service of notice of any sale made hereunder, upon Borrower . . . and also waives the posting of
notice of sale at the courthouse.” Deed of Trust, at ¶22, in part.
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grantor in the deed . . . is a valid and binding waiver and it operates to satisfy or dispense with that
requirement of the statute”).
The Court agrees with PHH that the West Virginia Supreme Court had long permitted
waivers of personal service in a deed of trust. However, the statute has been significantly amended
over the years and the applicability of those early cases is now limited. For instance, in Smith, the
West Virginia Supreme Court decided that a grantor may waive personal service in a deed of trust
under the 1923 version of the statute found at Chapter 72, Section 7. 41 S.E.2d at 696-97. The 1923
version provided that personal notice was to be given only to a grantor who lived within the county
in which the property to be sold was located. There was no statutory requirement that a grantor
outside the county was to be given personal notice. Id. In determining that a within-county grantor
could waive personal notice in a deed of trust, the court found that such a grantor could learn of the
sale by publication in the local newspaper or on the court house door. Id. at 698. Additionally, the
Court emphasized that a lack of personal notice to a within-county grantor does not put such grantor
at any unfair disadvantage considering that a grantor who resides outside the county is not entitled
to any notice. Id. at 698-99. Given that the right to personal notice was not extended to all grantors
under the statute, the court decided that a grantor may waive the right to such notice without
violating public policy. Id. at 699-700.
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The 1923 version of the statute also allowed publication of the sale to be waived in
the deed of trust.2 In 1980, however, the statute was amended and expressly prohibited the waiver
of published notice by including language which read that, “except as expressly provided in this
section, no trust deed shall waive the requirements of publication of notice as required by this
section.” W. Va. Code § 38-1-4 (1980), as amended, in part. Also included in the 1980 version was
language which expressly permitted the waiver of personal service of such notice of a within-county
grantor. Id. (providing, in part, “in all cases whether the notice be published or not, a copy of such
notice shall be served on the grantor in such trust deed . . . if he or they be within the county, . . .
unless service of such notice be expressly waived by the grantor in any such trust deed”). The 1980
version of the statute, however, still contained no requirement that those grantors living outside the
county be given personal notice.
The statute was amended again in 1985 and 1987. Significantly, the 1987 version,
which is the version applicable to the instant case, continued to require a copy of the notice be
served upon the grantor, but it removed the language which made it applicable only to those within
the county and removed the language which expressly allowed such notice to be waived by the
grantor in the deed of trust. Thus, the notice requirement was extended to all grantors regardless of
whether they lived in the county in which the property was located and the express language
allowing waiver of personal service in the deed of trust no longer existed. In light of this history,
the Court finds the fact the statute contains express language prohibiting waiver of publication, but
2
Chapter 72, Section 7, Code 1923 provides, in part: “When any property is about to be sold
under a deed of trust, the trustee shall, unless it be otherwise provided in the deed of trust . . . publish
a notice of such sale . . . .”
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no language with respect to waiver of personal service, is not as significant as PHH argues. The
publication language is simply residual language from the 1980 amended version when the West
Virginia legislature took away the right to waive the publication requirement. Although it would
have preferable for the 1987 amendment to have added anti-waiver language with respect to
personal notice, the fact the legislature broadened the notice requirement to all grantors and removed
the language expressly allowing waiver of personal notice is indicative that such waivers are no
longer valid.
Indeed, in discussing the 1987 version of West Virginia Code § 38-1-4, the West
Virginia Supreme Court reached this same conclusion in Joy v. Chessie Employees Federal Credit
Union, 411 S.E.2d 261 (W. Va. 1991). In Joy, the court was analyzing another part of the statute
that required 20 day notice to the grantor prior to the sale. In 1987, the legislature removed the 20
day requirement for notice. 411 S.E.2d at 264. Despite the fact there now was no firm time limit for
notice, the court held the legislature actually strengthened West Virginia Code 38-1-4. Although
not discussing the historical treatment of waivers, the court stated: “Grantors may no longer waive
notice. Previously, grantors could waive notice altogether; and it does not take a great deal of
knowledge about the credit industry to understand that if grantors can waive notice, creditors will
make such waiver a standard part of their form agreements.” Id. at 264-65 (emphasis added). Given
this decision and the statutory history, the Court finds the waiver of personal notice in the Deed of
Trust in this case is unenforceable under West Virginia law.
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PHH further argues that, even if the provision is unenforceable, Plaintiff’s actually
received notice of the sale in April of 2009. Although the sale did not occur on May 7, 2009, as set
forth in the notice, PHH argues there is no requirement the notice be reissued. The Court disagrees.
West Virginia Code § 38-1-4 clearly provides: “Every notice of sale by a trustee under a trust deed
shall show the following particulars: (a) The time and place of the sale . . . .” W. Va. Code § 38-1-4,
in part. In this case, Plaintiffs allege the sale was cancelled and did not occur until September 30,
2009. Plaintiffs further state they had no contact with PHH after they were told the sale was
cancelled. As notice must provide the time of the sale, if the sale is cancelled and later rescheduled,
then it is only common sense that the trustee must inform the grantor of new day and time so the
grantor has the notice required by law.3
Lastly, PHH also claims that, even if Plaintiffs can show they were entitled to notice
and did not receive it, they cannot show they have suffered any harm. In the Complaint, Plaintiffs
assert the harm they suffered is the loss of their house. PHH states that the notice requirement is
designed to give notice to the public of the sale so there is not a “sacrificial” sale of the property due
to lack of bidders. Russell v. Webster Springs Nat. Bank, 265 S.E.2d 762, 764 (W. Va. 1980) (stating
“[t]he object of a notice of sale is to secure bidders by informing the public of the nature and
3
This case is unlike Russell v. Webster Springs National Bank, 265 S.E.2d 762 (W. Va.
1980), where the West Virginia Supreme Court found a one hour difference “between the time given
in the notice of sale . . . and the actual time of sale . . . was not such a material and substantial
departure from the provisions of the trust deed or notice of sale as to vitiate the sale.” 265 S.E.2d
at 764. To the contrary, in this case, there was nearly a five-month gap between the date given in
the notice and the actual sale. In addition, Plaintiffs allege they contacted PHH’s attorney and were
told the sale was cancelled. They assert they were never told the sale was rescheduled for another
day.
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condition of the property to be sold, and of the time, place and terms of sale so as to prevent a
sacrifice of the property”). As there is no allegation in the Complaint that the property was sold at
a sacrifice, PHH claims Plaintiffs cannot show they suffered harm. Moreover, PHH states, even if
Plaintiffs had notice of the actual day of the sale, they could not have prevented the sale from taking
place. Thus, the fact the house was sold is not a compensable harm.
In considering these arguments, the Court finds that Russell should not be read so
broadly. First, Russell was decided prior to the 1987 amendment which this Court finds requires
notice to the grantor in the deed of trust. Second, although Russell does speak to the purpose of
publishing notice, it does not state it is the only purpose of notice. This Court finds it difficult to
believe that the West Virginia Supreme Court would hold that the legislature’s decision to revoke
the waiver of the personal notice provision serves no purpose beyond the publication requirement
to obtain bidders at auction. Clearly, requiring notice to the grantor serves a very different purpose
than merely securing bidders for the property.
Particularly in today’s foreclosure mess, a grantor may have grounds to seek an
injunction of a foreclosure based upon bad lending practices or other insidious act when the loan was
originated. In addition, personal notice may impress urgency upon a grantor to make one last effort
to cure the default or work out an arrangement so the foreclosure does not occur. Indeed, this last
ditch effort is exactly what Plaintiffs allege occurred in this case, in that, after receiving the notice
in April of 2009, Plaintiffs assert Mr. Spurlock called to work out an arrangement to prevent the
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foreclosure.4 Thus, as Plaintiffs assert they pursed an alternative to foreclosure and were told the
sale was cancelled, the fact the sale occurred months later without any other personal notice is
certainly enough to state a plausible claim they were harmed as a result of PHH’s failure to follow
state foreclosure law. At this time, the Court expresses no opinion as to the merits of the claim, but
it is certainly a claim that can survive a motion to dismiss. Accordingly, for the foregoing reasons,
the Court DENIES PHH’s motion to dismiss Count 1 of the Complaint.
B.
PHH’s Motion to Dismiss the Claims
of Mrs. Spurlock
In PHH’s other Motion to Dismiss [doc. no. 11], it asserts Plaintiff Kathy Robin
Spurlock should be dismissed as a party plaintiff because only her husband, Plaintiff Paul Spurlock,
signed the mortgage and is listed as the grantor on the Deed of Trust. In addition, the letter sent
from PHH’s attorney is addressed only to Mr. Spurlock. Therefore, PHH argues that Mrs.
Spurlock’s claims against PHH cannot be maintained.
As stated above, the only surviving claim in Count I is for failing to provide personal
notice under West Virginia Code § 38-1-4 to the grantor of the Deed of Trust. Although the
Complaint alleges that Plaintiffs purchased the house, it is undisputed that Mr. Spurlock is the only
grantor named on the Deed of Trust. As Mrs. Spurlock is not a grantor, she was not entitled to
4
Moreover, although not critical to this Court’s decision, even in the letter sent by counsel
with the notice of the sale, there were listed a number of options Plaintiffs could take to prevent
foreclosure, such as a procedure to reinstate the loan, payoff opportunities, loss mitigation or
workout plans, and counseling services to avoid foreclosures. The letter specifically states, “[e]ven
though the time period for the right to cure has expired we will work with you to resolve a possible
reinstatement if you will contact this office.” Letter from Golden & Amos, P.L.L.C., to Paul R.
Spurlock, at 3 (Apr. 16, 2009).
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personal notice under the statute, and the Court agrees with PHH that her claim for violating the
statute must be dismissed.
In Count II, Plaintiffs assert a claim for a violation of West Virginia Consumer Credit
Protection Act (WVCCPA). Specifically, Plaintiffs allege that the Second Deed of Trust contains
a Balloon Rider which was not identified with certain specific and conspicuous language as required
by West Virginia Code § 46A-2-105.5 With respect to Mrs. Spurlock, however, PHH argues she is
not a “consumer” within the meaning of the WVCCPA because she did not sign the note and was
not obligated under it. West Virginia Code § 46A-1-102(12) defines a “consumer” as “a natural
person who incurs debt pursuant to . . . a consumer loan . . . .” W. Va. Code § 46A-1-102(12). The
Court agrees with PHH. Although Mrs. Spurlock asserts she has a marital interest in the house, it
5
West Virginia Code § 46A-1-105(2) provides:
With respect to a consumer credit sale or
consumer loan whenever any scheduled payment is at
least twice as large as the smallest of all earlier
scheduled payments other than any down payment,
any writing purporting to contain the agreement of the
parties shall contain the following language
typewritten or printed in a conspicuous manner. THIS
CONTRACT IS NOT PAYABLE IN
INSTALLMENTS OF EQUAL AMOUNTS:
Followed, if there is only one installment which is at
least twice as large as the smallest of all earlier
scheduled payments other than any down payment,
by: AN INSTALLMENT OF $... WILL BE DUE ON
. . . or, if there is more than one such installment, by:
LARGER INSTALLMENTS WILL BE DUE AS
FOLLOWS: (The amount of every such installment
and its due date shall be inserted).
W. Va. Code § 46A-1-105(2).
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does not mean she is a consumer for purposes of the loan. As Mrs. Spurlock did not sign for the
loan, she cannot assert a claim as a consumer. Therefore, the Court GRANTS PHH’s motion to
dismiss her claim under the WVCCPA in Count II. Accord Bishop v. Quicken Loans, Inc., No. 2:0901076, 2010 WL 3522128, *8 (S.D. W. Va. Sept. 8, 2010) (dismissing wife’s claim under the
WVCCPA, inter alia, because she did not sign the mortgage and was not a party to the agreement).
In Counts III and IV, Plaintiffs assert claims for breach of contract and breach of the
duty of good faith and fair dealing. Again, PHH argues as Mrs. Spurlock did not sign the Deed of
Trust, these claims must be dismissed because she was not a party to the agreement. Plaintiffs
contend the motion is premature because she has a maritial interest in the property and it is yet to
be determined whether or not she is a third-party beneficiary to original contract or the subsequent
attempt to modify the loan. Plaintiffs assert if Mrs. Spurlock is deemed a third-party beneficiary,
she may sue to enforce any covenant or promise made for her benefit pursuant to West Virginia
Code § 55-8-12.
West Virginia Code § 55-8-12 states:
If a covenant or promise be made for the sole benefit
of a person with whom it is not made, or with whom
it is made jointly with others, such person may
maintain, in his own name, any action thereon which
he might maintain in case it had been made with him
only, and the consideration had moved from him to
the party making such covenant or promise.
W. Va. Code § 55-8-12. In its Reply, PHH points out that this statute provides the covenant or
promise must “be made for the sole benefit” of Mrs. Spurlock to be actionable. Indeed, in
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interpreting this statute, the West Virginia Supreme Court has “consistently given force to the ‘sole
benefit’ requirement.” Eastern Steel Constructors, Inc. v. City of Salem, 549 S.E.2d 266, 277
(W. Va. 2001). It further has stated:
“In the absence of a provision in a contract
specifically stating that such contract shall inure to
the benefit of a third person, there is a presumption
that the contracting parties did not so intend and in
order to overcome such presumption the implication
from the contract as a whole and the surrounding
circumstances must be so strong as to be tantamount
to an express declaration.”
Id. at 278 (quoting Syl. Pt. 2, Ison v. Daniel Crisp Corp., 122 S.E.2d 553 (W. Va. 1961)). Although
Plaintiffs assert PHH’s motion is premature, the Court disagrees.
In this case, there is no allegation in the Complaint that the contract was entered into
for the sole benefit of Mrs. Spurlock. Indeed, Plaintiffs’ contention that the house is their marital
home would belie such an allegation if it were made. Moreover, there is nothing in the Deed of
Trust specifically stating it is for her sole benefit. Thus, Plaintiffs must overcome a strong
presumption it was not so intended to be for her sole benefit by demonstrating that an “implication
from the contract as a whole and the surrounding circumstances” present such a strong showing that
it is “tantamount to an express declaration.” Id. Plaintiffs have set forth no allegations in their
Complaint which, even assuming their truth, could result in such a showing. Thus, as Plaintiffs
cannot met the Twombly and Iqbal’s plausibility requirement, this Court GRANTS PHH’s motion
to dismiss Mrs. Spurlock’s claims under Counts III and IV. See Ashcroft v. Iqbal, 129 S. Ct. at 1949
(quoting Twombly, 550 U.S. at 570) (requiring a complaint to “contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face’”).
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Finally, PHH also moves to dismiss Mrs. Spurlock’s claims in Counts V and VI for
intentional and negligent misrepresentation. Specifically, Plaintiffs allege PHH either intentionally
or negligently misrepresented the sale scheduled for May 7, 2009, was cancelled and their property
would not be subject to foreclosure. PHH moves to dismiss Mrs. Spurlock’s claims on the grounds
it had no contractual duty to her and it directed its correspondence only to Mr. Spurlock, as he was
the grantor in the Deed of Trust. The Court agrees with PHH and notes that Plaintiffs’ factual
allegations in the Complaint even profess it was Mr. Spurlock who called and was allegedly told the
sale was cancelled, and Plaintiffs had no further communication with PHH. Thus, the Court
GRANTS PHH’s motion to dismiss Mrs. Spurlock’s claim under Counts V and VI. As the Court
has determined all of Mrs. Spurlock’s claims should be dismissed, the Court further GRANTS
PHH’s motion to dismiss her as a party plaintiff.
III.
CONCLUSION
Accordingly, as to PHH’s Motion to Dismiss Count 1 of the Complaint [doc. no. 13],
the Court GRANTS the motion with respect to Plaintiffs’ due process claims and DENIES the
motion with respect to the statutory claim. The Court further GRANTS in full PHH’s Motion to
Dismiss the Claims of Kathy Robin Spurlock and to Dismiss Kathy Robin Spurlock as a Party
Plaintiff [doc. no. 11].
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The Court DIRECTS the Clerk to send a copy of this written Opinion and Order to
counsel of record and any unrepresented parties.
ENTER:
June 17, 2011
ROBERT C. CHAMBERS
UNITED STATES DISTRICT JUDGE
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