Vinal v. Fed. Nat'l Mortg. Ass'n

131 F.Supp.3d 529

Peter S. VINAL, Plaintiff,

v.FEDERAL NATIONAL MORTGAGE ASSOCIATION, et al., Defendants.

No. 7:13–CV–159–D.

United States District Court, E.D. North Carolina, Southern Division.

Signed Sept. 18, 2015.

James W. Lea, III, The Lea/Schultz Law Firm, Wilmington, NC, for Plaintiff.

David S. Coats, John Thomas Crook, Bailey & Dixon, L.L.P., Raleigh, NC, for Defendants.

ORDER

JAMES C. DEVER III, Chief Judge.

On June 26, 2013, Peter S. Vinal ("Vinal" or "plaintiff") sued SunTrust Mortgage, Inc. ("SunTrust"), several of SunTrust's employees, the Federal National Mortgage Association ("Fannie Mae"), and Safeguard Properties, LLC ("Safeguard"), in New Hanover County Superior Court. See Compl. [D.E. 1–2] 1–19. SunTrust financed Vinal's purchase of several properties in Wilmington, North Carolina, and the lawsuit arises out of the parties' interactions after Vinal failed to make payments on the loans. Vinal alleged a litany of claims, including breach of contract, trespass, tortious interference with contract, fraudulent inducement, fraudulent misrepresentation, constructive fraud, unfair and deceptive trade practices, violation of North Carolina's Racketeer Influenced and Corrupt Organizations ("RICO") Act, civil conspiracy, and unjust enrichment. See id. 5–18. On July 31, 2013, with Safeguard's consent, SunTrust and its defendant-employees and Fannie Mae removed the case to this court. See [D.E. 1].

Vinal subsequently dropped all claims against Fannie Mae and the individual SunTrust employees, leaving only SunTrust and Safeguard as defendants. See [D.E. 24, 31]. Against the remaining defendants, Vinal voluntarily dismissed all but four claims. See [D.E. 24]. On August 30, 2013, SunTrust moved to dismiss those claims against it for failure to state a claim upon which relief can be granted [D.E. 19]. On February 14, 2014, the court granted SunTrust's motion to dismiss and dismissed SunTrust as a defendant [D.E. 36].

The only remaining claim is Vinal's trespass claim against Safeguard. On October 14, 2014, Safeguard moved for summary judgment [D.E. 47] and filed a supporting affidavit [D.E. 48] and a supporting memorandum with attached exhibits [D.E. 49]. On November 4, 2014, Vinal responded in opposition to Safeguard's motion for summary judgment [D.E. 51]. As explained below, the court grants Safeguard's motion for summary judgment.

I.

Vinal is a real-estate broker in Wilmington, North Carolina. Vinal Dep. [D.E. 49–8] 7–8 (deposition pages 15–16, 20–21). Between 2005 and 2007, Vinal purchased five properties in Wilmington, at 1153 Arboretum Drive, 619 Sandfiddler Pointe, 1233 Edgewater Club Road, 1530 South 41st Street, and 1536 South 41st Street. Compl. [D.E. 1–2] ¶ 6; cf. Vinal Dep. [D.E. 49–8] 8–9 (deposition pages 21–22, 24–25). To finance those purchases, Vinal took out nine interest-only loans with SunTrust. Vinal Dep. [D.E. 49–8] 810, 19 (deposition pages 22–23, 25, 27, 63–64). The loans were secured by deeds of trust on the five properties. See Compl., Exs. A–E. Each deed of trust contained the following provisions:

Preservation, Maintenance and Protection of the Property; Inspections. Borrower shall not destroy, damage or impair the Property, allow the Property to deteriorate or commit waste on the Property. Whether or not Borrower is residing in the Property, Borrower shall maintain the Property in order to prevent the Property from deteriorating or decreasing in value due to its condition. Unless it is determined pursuant to Section 5 that repair or restoration is not economically feasible, Borrower shall promptly repair the Property if damaged to avoid further deterioration or damage. If insurance or condemnation proceeds are paid in connection with damage to, or the taking of, the Property, Borrower shall be responsible for repairing or restoring the Property only if Lender has released proceeds for such purposes. Lender may disburse proceeds for the repairs and restoration in a single payment or in a series of progress payments as the work is completed. If the insurance or condemnation proceeds are not sufficient to repair or restore the Property, Borrower is not relieved of Borrower's obligation for the completion of such repair or restoration.

Lender or its agent may make reasonable entries upon and inspection of the Property. If it has reasonable cause, Lender may inspect the interior of the improvements on the Property. Lender shall give Borrower notice at the time of or prior to such an interior inspection specifying such reasonable cause.

* * *

Protection of Lender's Interest in the Property and Rights Under this Security Agreement. If ... Borrower fails to perform the covenants and agreements contained in this Security Instrument, ... then Lender may do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property and rights under this Security Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing the Property.... Securing the Property includes, but is not limited to, entering the Property to make repairs, change locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or dangerous conditions, and have utilities turned on or off.

Id. Most of the loans were long-term mortgages, with maturity dates between 2035 and 2037. See id., Exs. B–E. The loan associated with the Arboretum Drive property, though, matured on September 1, 2008. Id., Ex. A.

At first, Vinal made timely payments on the loans. After the housing market crashed in 2008, Vinal suffered a "drastic reduction" in his income and began struggling to meet his mortgage obligations. Id. ¶ 7. In March 2009, SunTrust and Vinal met to discuss the status of the loan associated with the Arboretum Drive property. Id. ¶ 8; cf. Vinal Dep. [D.E. 49–8] 15, 20, 37 (deposition pages 50, 67, 137–38). Vinal had hoped to refinance his debt to make it more manageable, but at the meeting, SunTrust informed him that, due to a change in Fannie Mae guidelines, he was ineligible for refinancing. Compl. ¶ 8; cf. Vinal Dep. [D.E. 49–8] 15, 20, 37 (deposition page 50, 67, 13738). At that point, Vinal notified SunTrust that he would soon become unable to make timely payments on his loans. Compl. ¶ 8.

After that March 2009 meeting, Vinal began efforts to avoid foreclosure. First, he contacted SunTrust's loss mitigation department. Id. ¶ 41; cf. Vinal Dep. [D.E. 49–8] 15, 37 (deposition pages 50, 138). Employees in the loss mitigation department told Vinal that, if he missed his payments for three months, he would become eligible for "several modification or refinancing programs." Compl. ¶ 41. Starting in June 2009, Vinal defaulted on his mortgage payments. Id. ¶¶ 10, 42.

In late 2009, the fair market value of Vinal's properties had diminished to well below the remaining principal on his loans. Id. ¶ 8; Vinal Dep. [D.E. 49–8] 39 (deposition pages 145–46). Vinal then began attempting to short-sell his properties. Compl. ¶ 11; Vinal Dep. [D.E. 49–8] 12, 14, 18, 20, 22 (deposition pages 36, 44–45, 59–62, 68–70, 76). On three of his properties—the Arboretum Drive property, the Sandfiddler Pointe property, and the Edgewater Club property—Vinal received offers to purchase, and entered into purchase contracts with the potential buyers. Compl. ¶¶ 11, 32; see [D.E. 16–2]; Vinal Dep. [D.E. 49–8] 12, 20, 22, 38 (deposition page 35–37, 69–70, 76, 139). For each of the purchase contracts, SunTrust's approval of the short sale was a condition precedent to any contractual obligations arising, and each contract specifically noted that SunTrust was not obligated to give that approval. See [D.E. 16–2] 9, 20, 30, 41. Each purchase contract also gave the buyer the unilateral right to withdraw at any point before SunTrust approved the short sales. See id.

Vinal submitted the short-sale offers to SunTrust, but SunTrust either denied the offers or took too long to respond. Thus, the buyers withdrew their offers. See Vinal Dep. [D.E. 49–8] 12, 20–21, 26, 38–39 (deposition pages 36–37, 70–71, 93, 139–44). Vinal never completed a short sale.

In late 2009, SunTrust began sending work orders for Vinal's five properties to Safeguard, a company which "performs preservation services for its clients who are typically banks, lenders, and loan servicers, on residential dwellings, by hiring local independent contractors who perform the work on a per order basis." Meyer Aff. [D.E. 48] ¶¶ 2, 5, 7. At first, SunTrust only sent work orders for exterior inspections of the properties. Id. ¶ 14. In 2010, however, Safeguard "received work orders from SunTrust, ordering an initial secure for the Arboretum Property ..., the proprieties at 1530 and 1536 South 41st Street ..., and the property at 1233 Edgewater Club Road." Id. ¶ 15. An "initial secure" includes the following services: (1) changing the locks and securing the property; (2) boarding broken windows; (3) cutting the grass and/or winterizing the property; (4) capping any and all exposed wires and gas lines; (5) removing any hazards from the property; and, (6) submitting a bid for any damages that must be cured. Id. ¶ 11. In turn, Safeguard "submitted work orders to independent contractors in and around New Hanover County, North Carolina, to perform the ordered preservation services at the Properties," and the contractors performed the requested work throughout 2010. Id. ¶ 16; see id. ¶¶ 17–21. As part of their orders, Safeguard's contractors changed the locks on the Arboretum Drive property, the Edgewater Club property, and the two properties on South 41st Street. See Vinal Dep. [D.E. 49–8] 9, 12, 14–15, 17 (deposition pages 24, 37–38, 44–47, 55–56); Meyer Aff. ¶¶ 17–20. Safeguard's contractors did not change the locks at the Sandfiddler Pointe property. Vinal Dep. [D.E. 49–8] 22 (deposition page 76); cf. Meyer Aff. ¶ 21.

On March 26, 2010, Safeguard received a work order "to secure and winterize" the Arboretum Drive...