Glanton et al v. Bank of America et al, No. 7:2009cv00089 - Document 267 (E.D.N.C. 2011)
Court Description: ORDER denying 211 Motion to Vacate ; granting 238 Motion for Leave to File; granting 251 Motion to Amend/Correct; granting in part and denying in part 44 Motion to Dismiss; granting in part and denying in part 47 Motion to Dismiss; granting in part and denying in part 50 Motion to Dismiss; granting in part and denying in part 57 Motion to Dismiss; granting in part and denying in part 68 Motion to Dismiss; granting in part and denying in part 71 Motion to Dismiss; granting in pa rt and denying in part 76 Motion to Dismiss; granting 129 Motion to Amend/Correct; granting in part and denying in part 157 Motion to Dismiss. Counsel see order for further rulings. Signed by Senior District Judge Malcolm J. Howard on 3/29/2011. (Heath, D.)
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Glanton et al v. Bank of America et al Doc. 267 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA SOUTHERN DIVISION NO.: 7:09-CV-89-H CAMILLA THOMPSON, et al. , Plaintiffs, ) ) ) v. ) ) ) ) ORDER ) ) ) ) BANK OF AMERICA, et al. , ) Defendants. ) This matter is before the court on motions to dismiss filed by defendants Branch Banking and Trust Company [DE #44]; Bank of America [DE #47]; Maryville Partners, Development, Inc., R.A. North Inc. [DE #50]; R.A. Development I, Inc., Randolph Allen, William Allen and Southeastern Waterfront Marketing, [DE #57]; Carolina First Bank [DE #68]; RBC Bank (USA) Craven's Grant Homeowner's Association, Inc. [DE North Inc. [DE #71] ; #76]; and SunTrust Bank [DE #157]; and on plaintiffs' multiple motions for leave to plaintiffs' amend their motion to complaint vacate [DE their #129, 238 voluntary & 251] dismissal and with prejudice of Richard Mace Watts [DE #211] . Dockets.Justia.com On February William A. 24, 2011, Webb filed a recommending that the motion for [DE #129], plaintiffs' [DE #238]' States Magistrate Memorandum and Recommendation motions plaintiffs' misnomer united to dismiss leave to file a motion and for leave plaintiffs' be granted ("M&R"), and that third amended complaint to amend motion voluntary dismissal of Watts be denied. Judge (Mem. to to correct a vacate the & Recommendation [DE #254] .)' Plaintiffs object to the M&R, arguing that adequately address the allegations of plaintiffs' amended complaint, focusing instead on contained Plaintiffs contend allegations in their third amended complaint leave to amend) demonstrating that the scheme to this are based on especially newly to proposed third second amended error, is failed sufficiency of allegations for in plaintiffs' the it the complaint. since the (and their motion discovered evidence "the Defendants knew of and participated in churn lots at artificially inflated prices for ' Plaintiffs' motion for leave to amend filed at DE #251 was not before Judge Webb. 'The M&R also addressed a number of motions pending in 2433 South Blvd., LLC, et al. v. Bank of America, et al., No. 7:10 CV-28-H (E.D.N.C.), and recommended that this action and the 2433 South Blvd. action be consolidated pursuant to Rule 42 (a) of the Federal Rules of Civil Procedure. The court will address the 2433 South Blvd. motions, as well as the issue of consolidation, by separate order entered in due course. 2 financial gain." (Plfs.' Obj. Mem. Recommendation & [DE #259] at 8.) Relying on a number of emails procured by plaintiffs' counsel as a plaintiffs result argue asserts viable, other lenders of that discussions the with Richard Mace proposed third complaint plausible claims that Bank of America and the "actively participated with the other Defendants to procure knowingly inflated appraisals" plaintiffs. amended Watts,3 used to defraud the (Plfs.' Obj. Mem. & Recommendation at 12.) The court agrees with Judge Webb that plaintiffs' claim (as stated "Lender in all versions Defendants" Disclosure Act, 15 U.S.C. not financial (prohibiting 1709(a) for plaintiffs' under state a claim for relief. agents, of the § Interstate 1701 et ~, against Land Sales ("ILSA") the Full fails to ILSA applies to developers and their See 15 U.S.C. institutions. enumerated complaint) activities by "developer §§ or 1703 (a) agent"), (authorizing civil action against a "developer or agent" violation of institution acts § 1703 (a) ) . beyond its It is ordinary only where course of a financial dealing as a lending institution and participates in the actual development, 3This court previously found that plaintiffs' counsel violated Rule 4.2 (a) of the North Carolina Revised Rules of Professional Conduct by communicating directly with Watts about matters for which Watts had secured legal representation. As a consequence of the unethical behavior, counsel received a written reprimand and a monetary sanction. (See Disciplinary Order [DE #237] . ) 3 marketing or ILSA. sale of property that Cumberland Capital Corp. v. liability may arise Harris, 621 F.2d 246, under 250-51 (6th Cir. 1980); Feeley v. Total Realty Management, 660 F. SUpp. 2d 700, 709-710 (E.D. Va. 2009). Although plaintiffs assert that the lender defendants are developers within the meaning of ILSA, they fail to allege sufficient facts to support such a finding. Plaintiffs' negligence, claims for negligent misrepresentation, and violation of North Carolina's Mortgage Lending Act and South Carolina's Licensing of Mortgage Brokers Act also The Mortgage Lending Act, which has since been repealed, fail. prohibited lenders from engaging in certain activities, such as fraud or the misrepresentation or concealment of material facts "likely to influence, persuade or induce an applicant take a mortgage (repealed eff. loan." N.C. July 1, Gen. 2009). Stat. § . 53-243.11(1), South Carolina's to (8) Licensing of Mortgage Brokers Act provides similar prohibitions on fraud and misrepresentation by lenders. acts provides a § private 40-58-70. neither action. See Ahmed v. Porter, No. 1:09-CV-101, 2009 WL 2581615, (W.D.N.C. 2009) these Code Ann. However, at *24 of See S.C. right of ("[T]he court cannot find a reported case in which it was held that [the Mortgage Lending Act] 4 provides a private of cause s.c. action.") ; Code Ann. 40-58-80 § (preserving statutory and common law rights) . To the extent the Mortgage Lending Act may have created a duty of care negligent allege their that could form misrepresentation suf ficient complaint, intentional and facts the basis claim, fraudulent a plaintiffs to support plaintiffs of such a assert they conduct of have failed claim. were the negligence or to Throughout injured by defendants. At the no point do plaintiffs allege any facts to support a finding that any of the defendants unintentionally breached any duty owed to plaintiffs. The second court also amended respects. agrees complaint is with numerous banks conclusory through the in number a plaintiffs' of other the second amended complaint is which group-pleading (M&R at 14.) p lainti ff s' dismissal of plaintiffs' that lump second together designation "fails to satisfy the requirements of Rule 9 (b) ." to Webb allegations Defendants'" and, as such, limited Judge deficient As noted in the M&R, "replete review with 'Lender [particularity] Were the court's amended complaint, claims against these defendants would be appropriate. However, since the filing of the motions to dismiss presently before the court, plaintiffs have twice moved to amend 5 their complaint based on what they contend is newly discovered evidence. By way of plaintiffs seek first three to their proposed third amended remedy complaints,' some to of the reinstate complaint, deficiencies their of claims their against Richard Mace Watts (a previously named defendant whom plaintiffs dismissed with prejudice), and to add a civil RICO claim against all of the named defendants. a fourth amended complaint, permission to William G. Allen and R.A. (the wife of add In their motion for leave to file yet plaintiffs another William G. claim alleging ~ ("UFTA"). that Allen) and MLA Income N.C. seek defendants North conspired with Minok L. violate the Uniform Fraudulent Transfer Act, 39-23.1 et purportedly Allen Properties Gen. Stat. to § The proposed complaint attached to plaintiffs' motion includes not only the proposed UFTA claim but also seeks to hold Minok L. Allen and MLA Income Properties liable on plaintiffs' ILSA and RICO claims. 'For example, plaintiffs now allege that each of the plaintiffs rescinded their contract within two years. These allegations are no doubt a response to defendants' motions to dismiss plaintiffs' ILSA rescission claims as barred by the statute of limitations. (See,~, Maryville's Mem. Supp. Mot. Dismiss [DE #51] at 10 ("The Second Amended Complaint fails to allege that any Plaintiff revoked their contract to purchase the property in Cravens Grant within two years.").) 6 For sure, complaints has specifically which of Allen conduct. of been a what Enterprise") have failed the in court the defendants defendant of America, in Lenders," is to performed by plaintiffs' that unable a case. certain \\Developers I" allegedly state this proposed fail pleading the adequately against any of Bank to or Plaintiffs allegedly "Defendant engaged to were instead (~1 defendants complaints clarity. S acts resorting Nevertheless, plaintiffs plaintiffs' model of identify defendants, groups "the none to injurious say plausible At recent that claim least as filings to have included more specific facts to support their alleged fraud and conspiracy claims. It is for this reason that the court has decided to grant plaintiffs order to one final restate particularity. The opportunity any to remaining court warns amend their claims plaintiffs complaint with that in sufficient wholesale blanket assertions of wrongdoing, such as those recently alleged against Minok L. Allen and MLA Investment Properties, will not SIn fact, the record in this case is replete with irregularities in plaintiffs' filings, including plaintiffs' filing of a "Second Amended Complaint" without leave of court, the filing of numerous "corrections," the filing of two different versions of a proposed fourth amended complaint, plaintiffs' failure to attach exhibits to their third and fourth proposed amended complaints, and misrepresentations made by plaintiffs' counsel during this court's investigation of ethical violations by counsel. 7 suffice. must In order to avoid subsequent dismissal, state with sufficient particularity the plaintiffs facts upon which plaintiffs seek to hold each of the defendants liable. circumstances, exceptional further Following plaintiffs' allowed. an opportunity to amendment amendment, answer or otherwise will Absent be not defendants will have respond to plaintiffs' claims as provided by the Federal Rules of civil Procedure.' Finally, the the court addresses plaintiffs' voluntary dismissal of Richard Mace motion to vacate Watts. Watts former employee of Southeastern Waterfront Marketing, was originally named as a defendant to this action. plaintiffs 2010, claims against voluntarily Watts. dismissed Relying on Rule with 60 (b) Inc., a who In January prejudice of is the their Federal Rules of Civil Procedure, plaintiffs now seek to reinstate Watts as a defendant. JUdge failed to meet Rule Webb 60 (b) 's concluded standard. that plaintiffs have The court agrees and, therefore, DENIES plaintiffs' motion [DE #211J CONCLUSION For the foregoing reasons, the court GRANTS in part and DENIES in part the motions to dismiss filed by Branch Banking and Trust Company of South Carolina [DE #47] Maryville Partners, Inc. [DE #44]; [DE Bank of America #50]; R.A. North 'Any arguments previously made for dismissal of plaintiffs' claims may be renewed if deemed appropriate by defendants. 8 Development, Inc., R.A. North Development I, Inc., Randolph Allen, William Allen and Southeastern Waterfront Marketing, Inc. [DE #57]; Carolina First Bank [DE #68]; RBC Bank (USA) SunTrust Bank Association, Inc. [DE [DE #157] ; #76]. and Craven's Pursuant to Grant Rule [DE #71] ; Homeowners 12 (b) (6), the following claims are DISMISSED for failure to state a claim upon which relief can be granted: 1. Plaintiffs' ILSA claims against Branch Banking and Trust Company, Bank of America, Carolina First Bank, RBC Bank (USA) and SunTrust Bank; 2. Plaintiffs' negligent misrepresentation claims against Branch Banking and Trust Company, Bank of America, Maryville Partners, Inc., R.A. North Development, Inc., R.A. North Development I, Inc., Randolph Allen, William Allen and Southeastern Waterfront Marketing, Inc., Carolina First Bank, RBC Bank (USA), Craven's Grant Homeowner's Association, Inc., and SunTrust Bank; 3. Plaintiffs' North Carolina Mortgage Lending Act claims against Branch Banking and Trust Company, Bank of America, Maryville Partners, Inc., R.A. North Development, Inc., R.A. North Development I, Inc., Randolph Allen, William Allen and Southeastern Waterfront Marketing, Inc., Carolina First Bank, RBC Bank (USA), Craven's Grant Homeowner's Association, Inc., and SunTrust Bank; South Carolina Licensing of 4. Plaintiffs' Mortgage Brokers Act claim against defendant Maryville Partners, Inc.; 5. Plaintiffs' negligence claim against Branch Banking and Trust Company, Bank of America, Carolina First Bank, RBC Bank (USA) and SunTrust Bank. 9 Plaintiffs' motions for leave to amend 251] are (30) days their GRANTED from the complaint Plaintiffs' insofar motion date under as plaintiffs this order the terms to vacate the prejudice as to Richard Mace Watts q/)J This ~ day of March 2011. At Greenville, NC #31 10 [DE #129, shall is have entered set forth 238 & thirty to herein. voluntary dismissal [DE #211] amend is DENIED. with
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