Opinion
C/A No. 3:20-2932-JFA-PJG
11-18-2020
John C. Nelums; Delmarshi H. Nelums, Plaintiffs, v. Deutsche Bank National Trust Company as Trustee for Residential Asset Securitization Trust 2005-A8CB Mortgage Pass-Through Certificates Series 2005-H; Ocwen Loan Servicing LLC; Mortgage Electronic Registration System; PHH Mortgage Services; John Does, 1-100, Defendants.
REPORT AND RECOMMENDATION
Plaintiffs John and Delmarshi Nelums, self-represented litigants, filed this action in the Richland County Court of Common Pleas seeking declaratory, injunctive, and equitable relief regarding a note and mortgage. Defendants removed this matter asserting diversity jurisdiction. This matter is before the court pursuant to 28 U.S.C. § 636(b) and Local Civil Rule 73.02(B)(2) (D.S.C.) for a Report and Recommendation on Defendants' motion to dismiss. (ECF No. 11.) Pursuant to Roseboro v. Garrison, 528 F.2d 309 (4th Cir. 1975), the court advised Plaintiffs of the summary judgment and dismissal procedures and the possible consequences if they failed to respond adequately to Defendants' motion. (ECF No. 12.) Plaintiffs filed a response in opposition to the motion. (ECF No. 21.) Having reviewed the record presented and the applicable law, the court finds Defendants' motion should be granted.
BACKGROUND
The following allegations are taken as true for purposes of resolving Defendants' motion to dismiss. On January 27, 2003, Plaintiffs executed a promissory note in favor of IndyMac Bank, F.S.B., for a loan secured by residential property in Columbia, South Carolina. The original mortgage servicer was Ocwen Loan Servicing, LLC, which merged with PHH Mortgage in June 2019. PHH Mortgage Corporation is now the mortgage servicer on behalf of Deutsche Bank.
Plaintiffs filed this action asserting that Defendants do not have lawful ownership of the mortgage and note. Plaintiffs claim that when their mortgage and note were securitized, they did not receive the proper endorsements to show a proper chain of ownership from the original holder of the note to Deutsche Bank. (Compl. ¶¶ 32-34, 42, ECF No. 1-1 at 13, 15.) Plaintiffs also claim that Washington Mutual underwrote the loan without verifying Plaintiffs' income with the proper IRS documentation and found Plaintiffs qualified for the loan when it knew, or should have known, that Plaintiffs could not afford the loan. (Id. ¶¶ 49-50, ECF No. 1-1 at 17.) Plaintiffs seek to quiet title to the subject property and damages for various causes of action. Plaintiffs list the following causes of action against Defendants: "[l]ack of standing;" fraud in the concealment; fraud in the inducement; intentional infliction of emotional distress; slander of title; quiet title; "declaratory relief;" violation of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq.; violation of the Real Estate Settlement Procedures Act of 1974 ("RESPA"), 1 U.S.C. §§ 2601 et seq.; and rescission.
DISCUSSION
A. Rule 12(b)(6) Standard
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) examines the legal sufficiency of the facts alleged on the face of the complaint. Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). To survive a Rule 12(b)(6) motion, "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The "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 Twombly, 550 U.S. at 570). A claim is facially plausible when the factual content allows the court to reasonably infer that the defendant is liable for the misconduct alleged. Id. When considering a motion to dismiss, the court must accept as true all of the factual allegations contained in the complaint. Erickson v. Pardus, 551 U.S. 89, 94 (2007). The court "may also consider documents attached to the complaint, see Fed. R. Civ. P. 10(c), as well as those attached to the motion to dismiss, so long as they are integral to the complaint and authentic." Philips v. Pitt Cty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (citing Blankenship v. Manchin, 471 F.3d 523, 526 n.1 (4th Cir. 2006)).
Further, while the federal court is charged with liberally construing a complaint filed by a pro se litigant to allow the development of a potentially meritorious case, see, e.g., Erickson, 551 U.S. 89, the requirement of liberal construction does not mean that the court can ignore a clear failure in the pleadings to allege facts which set forth a federal claim, nor can the court assume the existence of a genuine issue of material fact where none exists. Weller v. Dep't of Soc. Servs., 901 F.2d 387 (4th Cir. 1990).
B. Defendants' Motion to Dismiss
Initially, Defendants argue that Plaintiffs' claims should be dismissed because they are "so incomprehensible that it is unclear what claims are being asserted." (Defs.' Mem. Supp. Mot. to Dismiss, ECF No. 11-1 at 5.) Thus, Defendants argue, Plaintiffs' claims fail to comply with Federal Rule of Civil Procedure Rule 8. See Fed. R. Civ. P. 8 (requiring that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief"); Iqbal, 556 U.S. at 678 (stating Federal Rule of Civil Procedure 8 does not require detailed factual allegations, but it requires more than a plain accusation that the defendant unlawfully harmed the plaintiff, devoid of factual support). The court disagrees. Here, Plaintiffs provide sufficient facts to alert Defendants as to the factual basis for each of the causes of action.
Defendants also argue that Plaintiffs' claims should be dismissed because they are all supported by the "false allegation that Deutsche Bank cannot enforce the note." (Defs.' Mem. Supp. Mot. to Dismiss, ECF No. 11-1 at 5.) Specifically, Defendants claim that Deutsche Bank possesses the note and is entitled to enforce it because the note is endorsed in blank. (Id. Ex. A, ECF No. 11-2 at 4) ("Pay to the order of without recourse Indymac Bank F.S.B."). Plaintiffs do not contest this fact, and instead, they vaguely argue that Deutsche Bank cannot enforce the note because it was not validly assigned. See Am. Chiropractic Ass'n v. Trigon Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004) ("Although as a general rule extrinsic evidence should not be considered at the 12(b)(6) stage, we have held that when a defendant attaches a document to its motion to dismiss, 'a court may consider it in determining 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.' ") (quoting Phillips v. LCI Int'l, Inc., 190 F.3d 609, 618 (4th Cir. 1999)). The court agrees that the undisputed facts show that Deutsche Bank possesses the note and has a right to enforce it. However, the court does not agree that this fact requires dismissal of all of Plaintiffs' claims. Rather, that fact clearly precludes only Plaintiffs' causes of action for slander of title, quiet title, and the causes of action titled "declaratory relief" and "lack of standing," under all of which Plaintiffs assert that Defendants do not have a right to enforce the note. Consequently, Plaintiffs' causes of action for quiet title, slander of title, declaratory relief, and lack of standing should be dismissed for failure to state a claim upon which relief can be granted. And to the extent Plaintiffs' request for rescission is based on any of these causes of action, it should also be dismissed.
Defendants assert they can find no evidence of a current or pending foreclosure action against Plaintiffs, and Plaintiffs provide no facts to suggest that such an action exists.
1. Statute of Limitations
Defendants argue that Plaintiffs' claims pursuant to TILA and RESPA are barred by those statutes' respective statutes of limitation. The court agrees.
TILA protects borrowers from predatory lending practices by requiring certain disclosures be made, see 15 U.S.C. §§ 1639 et seq., but has one-year and three-year statutes of limitation depending on the type of violation, see 15 U.S.C. § 1640(e). Here, Plaintiffs' TILA claim is based on Defendants' purported failure to make certain disclosures when making the loan. (Compl., ECF No. 1-1 at 29.) Because Plaintiffs entered into this loan agreement in 2003, Plaintiffs are well beyond either limitations period. Plaintiffs assert in the Complaint that the statutes of limitations were tolled because Defendants failed to make the disclosures. However, the statutes of limitations begin to run on "the date of the occurrence of the violation," see 15 U.S.C. § 1640(e), rather than when a plaintiff discovers the violation. See Strickland-Lucas v. Citibank, N.A., 256 F. Supp. 3d 616, 627 (D. Md. 2017) (finding the discovery rule does not apply to TILA claims). Accordingly, Plaintiffs' TILA claim should be dismissed. And to the extent Plaintiffs' request for rescission is based on a violation of TILA, it should also be dismissed.
Alternatively, for the reasons stated in Defendants' motion to dismiss, the court finds that Plaintiffs fail to state a TILA claim upon which relief can be granted because Plaintiffs do not specify which disclosures Defendants purportedly failed to make. For the same reason, to the extent Plaintiffs argue that the statute of limitations should be tolled under the equitable doctrine of fraudulent concealment, see Strickland-Lucas, 256 F. Supp. 3d at 627, Plaintiffs fail to allege facts plausibly showing that Defendants fraudulently concealed any information.
Similarly, RESPA requires mortgage originators to make certain disclosures to loan recipients and prohibits certain fee arrangements, see 12 U.S.C. §§ 2605, 2607, 2610; and sets one- year or three-year statutes of limitation on civil actions depending on which section was violated, see 12 U.S.C. § 2614. Here again, because Plaintiffs entered into this loan agreement in 2003, Plaintiffs are well beyond either limitations period, and therefore, Plaintiffs' RESPA claim should be dismissed.
2. Fraud Claims
Defendants argue that Plaintiffs' fraud claims fail to meet the heightened federal pleading standard for fraud claims. The court agrees. Federal Rule of Civil Procedure 9(b) requires plaintiffs to plead "with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). Thus, the plaintiffs must plead with particularity the time, place, and contents of the false representations; the identity of the person making the misrepresentations; and what that person obtained. See Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir. 1999) (quoting 5 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1297 (2d ed. 1990)). Here, Plaintiffs do not identify any particular person who made false representations, nor do they describe the time and place of those misrepresentations. Instead, Plaintiffs generally allege that all of the defendants concealed information about the note and misrepresented their ownership interests in the note. (Compl., ECF No. 1-1 at 22-24.) Therefore, Plaintiffs fail to state claims for fraud in the concealment and fraud in the inducement upon which relief can be granted. To the extent Plaintiffs' request for rescission is based on these causes of action, it should also be dismissed.
3. Intentional Infliction of Emotional Distress
Defendants argue that Plaintiffs fail to plausibly allege facts that could support a claim for intentional infliction of emotional distress. The court agrees.
"To recover for outrage—otherwise known as intentional infliction of emotional distress—a plaintiff must establish the following: (1) the defendant intentionally or recklessly inflicted severe emotional distress, or was certain, or substantially certain, that such distress would result from his conduct; (2) the conduct was so 'extreme and outrageous' so as to exceed 'all possible bounds of decency' and must be regarded as 'atrocious, and utterly intolerable in a civilized community;' (3) the actions of the defendant caused plaintiff's emotional distress; and (4) the emotional distress suffered by the plaintiff was 'severe' such that 'no reasonable man could be expected to endure it.' " Bass v. S.C. Dep't of Soc. Servs., 780 S.E.2d 252, 260-61 (S.C. 2015) (quoting Argoe v. Three Rivers Behavioral Health, L.L.C., 710 S.E.2d 67, 74 (S.C. 2011)). Here, Plaintiffs claim Defendants have asserted an ownership interest in a note securing a mortgage without the proper endorsements to prove ownership. Such actions, without more, cannot plausibly be considered "extreme and outrageous." Consequently, Plaintiffs fail to state an outrage claim upon which relief can be granted.
RECOMMENDATION
Based on the foregoing, the court recommends Defendants' motion to dismiss (ECF No. 11) be granted. November 18, 2020
Columbia, South Carolina
/s/_________
Paige J. Gossett
UNITED STATES MAGISTRATE JUDGE
The parties' attention is directed to the important notice on the next page.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. "[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must 'only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.' " Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed. R. Civ. P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); see Fed. R. Civ. P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
901 Richland Street
Columbia, South Carolina 29201
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).