Wilkerson v. HSBC Mortg. Servs., Inc.

JOHN SCOTT WILKERSON, Plaintiff, v. HSBC MORTGAGE SERVICES, INC., CALIBER HOME LOANS, INC.,PREMIER MORTGAGE FUNDING, INC., andTRUSTEE SERVICES OF CAROLINA, LLC, Defendants.

1:14CV276

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

November 20, 2014

MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

This matter is before the court on Defendant Caliber Home Loan, Inc.'s ("Defendant" or "Caliber") motion to dismiss for failure to state a claim. (Docket Entry 13.) The motion has been fully briefed and the matter is ripe for disposition. For the reasons that follow, it is recommended that Defendant Caliber's motion be granted.

I. FACTUAL AND PROCEDURAL BACKGROUND

John Scott Wilkerson ("Plaintiff" or "Wilkerson") filed this action in the Superior Court of Alamance County, North Carolina on February 7, 2014, against four defendants: HSBC Mortgage Services, Inc. ("HSBC"), Premier Mortgage Funding, Inc. ("Premier"), Caliber, and substitute trustee Trustee Services of Carolina, LLC ("Trustee Services"). (Docket Entry 8.) After Plaintiff voluntarily dismissed non-diverse party Trustee Services on March 3, 2104, HSBC and Caliber jointly removed this action to this Court on April 1, 2014pursuant to 28 U.S.C. §§ 1332, 1441, and 1446. (Docket Entries 1, 1-5.) Plaintiff subsequently dismissed HSBC and Premier from this action. (Docket Entries 16, 23.) Plaintiff s claims against Caliber are all that remain of the present action.

In his complaint, Plaintiff alleges the following facts, which this Court must accept as true for purposes of the motion to dismiss. Giarrantano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008). In 2001, Plaintiff purchased a home in Mebane, North Carolina with proceeds from a mortgage loan. (Compl. ¶ 6.) In early 2006, Plaintiff experienced financial difficulties due to divorce and debt, and refinanced his mortgage loan with assistance from Premier. (Id. ¶¶ 6-9.) According to the complaint, Plaintiff entered into a contract with Defendant Premier Mortgage Funding, Inc. ("Premier") for the provision of mortgage services, and subsequently closed two mortgages on his property, with Premier acting as "his mortgage broker." (Id. ¶ 10.) Plaintiff executed and delivered two promissory notes (the "Notes") in the original principal amounts of $137,000 and $34,250, respectively, to M&I Bank, FSB (the "Original Lender"). (Id. ¶¶ 11-12.) These loans were secured by deeds of trust granting the Original Lender first- and second-priority liens on Plaintiff's residence (collectively the "loans"). (Id. ¶¶6, 11, 12.)

Plaintiff alleges that Premier fraudulently induced him into closing the loans by misrepresenting the loan terms. Specifically, Plaintiff claims that Premier's representative, Mike Orlando, promised to find Plaintiff a fixed-rate mortgage with "fair and equitable terms" that Premier would refinance into one loan within a year and that Orlando assured Plaintiff that his loan would have a fixed interest rate and would not be sold to another company. (Id. ¶ 19.) Plaintiff alleges that before the closing Premier presented him withnotes and deeds of trust that contained variable interest rates that were higher than what had been promised to Plaintiff. (Id. ¶¶ 25-29.) Upon noticing the higher rates, Plaintiff questioned Premier about the terms of the notes and deeds of trust but still proceeded with the closing. (Id. ¶ 31.) In October 2006, HSBC acquired the notes and deeds of trust. (Id. ¶ 47.)¹

Plaintiff paid off the 2006 second mortgage loan in 2009, but the property remains subject to the 2006 first mortgage loan. (Compl. ¶ 13.) Plaintiff alleges that "in recent months" Caliber became the servicer of the 2006 first mortgage loan. (Id. ¶¶ 48-49.) A foreclosure proceeding is currently pending in Alamance County Superior Court.

In this action, which was filed prior to a foreclosure hearing in state court, Plaintiff alleges four causes of action against Caliber: breach of contract, negligence, negligent misrepresentation, and unfair and deceptive trade practices in violation of the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1. (Compl. at 22-27.) Plaintiff seeks actual, incidental, and punitive damages. (Id.)

II. STANDARD OF REVIEW

Defendant seeks dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. A motion to dismiss under Rule 12(b)(6) should be granted if the complaint does not "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 BellAtlantic v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct. Id. In other words, to survive a 12(b)(6) motion, a complaint must "advance the plaintiff's claim 'across the line from conceivable to plausible.'" Walters v. McMahen, 684 F.3d 435, 439 (4th Or. 2012) (quoting Tmmbly, 550 U.S. at 570).

In making this determination, a court must "assume the truth of all facts alleged in the complaint and the existence of any fact that can be proved, consistent with the complaint's allegations." E. Shore Mkts. Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000). However, a court need not consider "legal conclusions, elements of a cause of action, . . . bare assertions devoid of factual enhancement[,] . . . unwarranted inferences, unreasonable conclusions, or arguments." Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009) (citations omitted).

III. DISCUSSION

a. Generally

"As an initial matter, a court is not bound by conclusory allegations and unsupported assertions." Bryant v. Wells Fargo Back, Nat. Ass'n, 861 F. Supp. 2d 646, 663 (E.D.N.C 2012). The Court notes that in spite of the length of Plaintiff's complaint, Plaintiff has done little more than offer, in conclusory fashion, the elements of his claims without providing sufficient facts to state claims against Caliber under the Iqbal/Twombly federal pleading standards. See Aziz v. Alcolac, Inc., 658 F.3d 388, 391 (4th Cir. 2011) (a complaint must allege facts sufficient "to raise a right to relief above the speculative level," thereby nudging theclaims across the line from conceivable to plausible.") (quoting Twombly, 550 U.S. 544, 555 (2007).

In Plaintiff's complaint, consisting of 157 paragraphs over 31 pages, he makes many conclusory statements about unidentified actions of all the defendants, but nowhere does he make an allegation as to what actions of Caliber specifically resulted in either a breach of contract or negligence. In fact, Plaintiff simply makes broad allegations about the three defendants in the breach of contract and negligence causes of action, listing in one paragraph for each claim the actions attributed to all three defendants without specifically asserting wrongful conduct as to each defendant. (See Compl., ¶¶ 128, 140.) In the negligent misrepresentation claim, Plaintiff does not identify a single misrepresentation that anyone made to him, stating only that "Defendants HSBC and Caliber negligently misrepresented to Plaintiff existing facts to affect the essence of the transaction with Plaintiff in regards to the enforceability of the" loans. (Id. ¶ 146.)

b. Breach of Contract (Ninth Cause of Action)²

Caliber argues that Plaintiff has failed to properly plead all elements of a breach of contract claim so as to survive a 12(b)(6) motion to dismiss. In order to state a claim for breach of contract, the following essential elements must be alleged: (1) a legal obligation of defendant to the plaintiff; (2) a violation or breach of that right or duty; and (3) a consequential injury or damage to the defendant. See Metro. Grp., Inc. v. Meridian Indus., Inc., 869 F. Supp. 2d 692, 702 (W.D.N.C 2012), citing Investment Properties v. Norburn, 281 N.C. 191, 188 S.E.2d 342 (1972). When alleging that a defendant has breached a contract, aplaintiff must allege the specific provisions of the contract that were breached. Polygenex Int'l, Inc. v. Polyzen, Inc., 133 N.C. App. 245, 252, 515 S.E.2d 457, 462 (1999).

Plaintiff's claim is based upon his allegations that Caliber was "contractually obligated to act as the mortgage loan . . . servicer . . . for Plaintiff's 2006 Home Mortgage Refinance Loans." (Compl. ¶ 127.) Plaintiff alleges that Caliber:

forced Plaintiff to pay fraudulent and excessive fees by attempting to enforce mortgage loans procured by fraud; have put Plaintiff in an untenable positions causing default; have caused Plaintiff to lose equity and other financing opportunities regarding his home; have caused Plaintiff's credit score to be lowered dramatically; have forced Plaintiff to pay exorbitant fees and payments; have caused Plaintiff to face foreclosure of his Home, thus causing him to incur attorney's fees; and have otherwise wronged Plaintiff.

(Id. ¶ 128.) Plaintiff alleges that Caliber breached its obligation by unethically attempting to enforce the loan contract that it knew or should have known was fraudulently induced. (Id. ¶ 129.)

"The North Carolina Court of Appeals has held that where a defendant is not a party to a contract, 'as a matter of law he cannot be held liable for any breach that may have occurred.'" Bryant, 861 F.Supp.2d 646, 657 (E.D.N.C. 2012), citing Canady v. Mann, 107 N.C. App. 252, 259, 419 S.E.2d 957, 601 (1992). Plaintiff here does not allege any facts supporting his claim regarding the existence of a contract between himself and Caliber, nor does he allege any specific contractual terms which were breached by Caliber. Instead, as mentioned above, the factual allegations in the Complaint refer only to a contract with Premier — the company that Plaintiff entered into the loan contracts with in 2006. There is no dispute that Caliber was not a...