Smith v. Flagstar Bank, F.S.B., No. 3:2014cv00741 - Document 21 (E.D. Va. 2015)
Court Description: MEMORANDUM OPINION. Signed by District Judge James R. Spencer on 3/17/2015. (sbea, )
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Smith v. Flagstar Bank, F.S.B. Doc. 21 EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION J AMES B. SMITH, Plaintiff, Civil Action No. 3:14-CV-741 v. FLAGSTAR BANK, F.S.B., Defendant. MEMORAN D U M OPIN ION THIS MATTER is before the Court on the Motion of Defendant, Flagstar Bank, F.S.B., to Dism iss Am ended Com plaint Pursuant to Fed. R. Civ. P. 12(b)(6) (“Motion”) (ECF No. 13). Plaintiff filed a response in Opposition on J anuary 21, 210 5 (“Opp’n Mem .”) (ECF No. 14), and Defendant subsequently filed a reply on J anuary 30 , 20 15 (“Reply Mem .”) (ECF No. 18).1 A hearing was held on Friday, March 13, 20 15. For the reasons set forth below, the Motion is GRANTED in part and DENIED in part. I. BACKGROU N D a. Fa ct u a l Ba ck g r o u n d Plaintiff, J am es B. Sm ith (“Sm ith” or “Plaintiff”), owned a hom e located at 17137 Claiborne Street, Richm ond, Virginia 23220 . On February 4, 20 0 9, Sm ith entered into a hom e m ortgage loan in the am ount of $ 224,257.0 0 , in which he was the borrower and Defendant, Flagstar Bank, F.S.B. (“Flagstar” or “Defendant”), was the lender. The loan was evidenced by a note signed by Sm ith and secured by a deed of trust. On August 2, 20 11, Sm ith called Flagstar for the purpose of pursuing a Hom e Affordable Modification Program (“HAMP”) loan m odification.2 Under this program , the federal 1 The Court granted Defendant’s Motion for Extension of Tim e to File its Reply, which provided Defendant three additional days, up to and including J anuary 30 , 20 15, to file its brief. (ECF No. 17). 2 This is a federal program created pursuant to the Emergency Econom ic Stabilization Act, 12 U.S.C. § 520 1 et seq. 1 Dockets.Justia.com governm ent incentivized participating servicers to enter into agreem ents with struggling hom eowners to m ake adjustm ents to existing m ortgage obligations in order to m ake the m onthly paym ents m ore affordable. Flagstar was a participant in HAMP. At the tim e Sm ith called Flagstar, he was one day in arrears as to the August 20 11 paym ent on the note. Sm ith spoke to a Flagstar representative who told Sm ith that he could not qualify for a HAMP loan m odification unless Sm ith fell at least 30 days in arrears on the note. Based on that conversation, Sm ith stopped m aking paym ents on the note and fell m ore than 30 days behind. Because of his late paym ents, Flagstar then m ade negative credit reports to credit reporting agencies, which caused a significant reduction in Sm ith’s credit score. Recently, Flagstar has sent notices to Sm ith indicating that Flagstar is near a decision to seek foreclosure on Sm ith’s hom e. b. Pr o ce d u r a l Ba ck g r o u n d On Septem ber 10 , 20 14, Sm ith com m enced the underlying state court action in the Circuit Court for the City of Richm ond, and on Septem ber 30 , 20 14, the Sum m ons and Com plaint were served on the Secretary of the Com m onwealth of Virginia. The original fivecount Com plaint alleged (1) actual fraud; (2) constructive fraud; (3) breach of the im plied covenant of good faith under the Uniform Com m ercial Code; (4) breach of the im plied covenant of good faith and fair dealing under com m on law; and (5) seeks declaratory judgm ent to enjoin Flagstar from foreclosing on the hom e. In his prayer for relief, Sm ith requested a judgm ent for com pensatory dam ages and $ 350 ,0 0 0 in punitive dam ages as well as reasonable attorney’s fees. Flagstar rem oved the case to this Court on October 30 , 20 14 (ECF No. 1) and subsequently filed a Motion to Dism iss. On Decem ber 10 , 20 14, Sm ith filed an Am ended Com plaint, thus m ooting the original Motion to Dism iss. The Am ended Com plaint alleges the sam e five counts as identified above. Flagstar then filed its present Motion to Dism iss the Am ended Com plaint. II. LEGAL STAN D ARD Rule 12 of the Federal Rules of Civil Procedure allows a defendant to raise a num ber of 2 defenses to a com plaint at the pleading stage, including failure to state a claim . A m otion to dism iss for failure to state a claim upon which relief can be granted challenges the legal sufficiency of a claim , rather than the facts supporting it. Fed. R. Civ. P. 12(b)(6); Goodm an v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 20 0 7); Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992). A court ruling on a Rule 12(b)(6) m otion m ust accept all of the factual allegations in the com plaint as true, see Edw ards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999); W arner v. Buck Creek N ursery , Inc., 149 F. Supp. 2d 246, 254– 55 (W.D. Va. 20 0 1), in addition to any provable facts consistent with those allegations, Hishon v. King & Spalding, 467 U.S. 69, 73 (1984), and m ust view these facts in the light m ost favorable to the plaintiff, Christopher v. Harbury , 536 U.S. 40 3, 40 6 (20 0 2). To survive a m otion to dism iss, a com plaint m ust contain factual allegations sufficient to provide the defendant with “notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Tw om bly , 550 U.S. 544, 555 (20 0 7) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Rule 8(a)(2) requires the com plaint to allege facts showing that the plaintiff’s claim is plausible, and these “[f]actual allegations m ust be enough to raise a right to relief above the speculative level.” Tw om bly , 550 U.S. at 555 & n.3. In other words, the plaintiff’s com plaint m ust consist of m ore than “a form ulaic recitation of the elem ents of a cause of action” or “naked assertion[s] devoid of further factual enhancem ent.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (20 0 9) (citations om itted). The Court need not accept legal conclusions that are presented as factual allegations, Tw om bly , 550 U.S. at 555, or “unwarranted inferences, unreasonable conclusions, or argum ents,” E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P’ship, 213 F.3d 175, 180 (4th Cir. 20 0 0 ). Further, in ruling on a m otion to dism iss, “a court m ay consider official public records, docum ents central to plaintiff’s claim , and docum ents sufficiently referred to in the com plaint so long as the authenticity of these docum ents is not disputed.” W itthohn v. Federal Ins. Co., 164 F. App’x 395, 396 (4th Cir. 20 0 6) (citations om itted); see also Sec’y of State for Defence v. Trim ble N avigation Ltd., 484 F.3d 70 0 , 70 5 (4th Cir. 20 0 7) (internal citations om itted) (“We m ay 3 consider docum ents attached to the com plaint, as well as those attached to the m otion to dism iss, so long as they are integral to the com plaint and authentic.”). III. D ISCU SSION a. Cla im 1: Th e Am e n d e d Co m p la in t D o e s N o t Sa t is fy R u le 9 ( b ) Rule 9(b) of the Federal Rules of Civil Procedure requires that com plainants plead “the circum stances constituting fraud or m istake . . . with particularity.” At a m inim um , a plaintiff alleging fraud m ust describe “the tim e, place, and contents of the false representations, as well as the identity of the person m aking the m isrepresentation and what he obtained thereby.” W ilson v. Kellogg Brow n & Root, Inc., 525 F.3d 370 , 379 (4th Cir. 20 0 8) (citation and internal quotation m arks om itted). “[L]ack of com pliance with Rule 9(b)’s pleading requirem ents is treated as a failure to state a claim under Rule 12(b)(6).” Harrison v. W estinghouse Savannah River Co., 176 F.3d 776, 783 n.5 (4th Cir. 1999). However, “[a] court should hesitate to dism iss a com plaint under Rule 9(b) if the court is satisfied (1) that the defendant has been m ade aware of the particular circum stances for which she will have to prepare a defense at trial, and (2) that plaintiff has substantial pre-discovery evidence of those facts.” Id. at 784. In its Motion, Defendant argues that Plaintiff has failed to identify the individual who allegedly m ade the m isrepresentation as well as what Flagstar would have obtained through its supposed m isrepresentation. The Court finds Defendant’s argum ent without m erit. First, with regards to pleading the “tim e, place and nature of the fraud,” Plaintiff has sufficiently stated a claim . He pled the exact date of the alleged m isrepresentation, August 2, 20 11, and he also pled the specific nature of the fraud. (Am . Com pl. ¶¶ 16, 18, 19.) Additionally, with regard to the “identity of the person m aking the m isrepresentation,” Harrison, 176 F.3d at 784, Sm ith’s claim that he spoke with a “wom an representative of Flagstar,” (Am . Com pl. ¶ 16), is sufficient to satisfy Rule 9(b). In N ahigian v. Juno Loudoun, LLC, 684 F. Supp. 2d 731, 738 (E.D. Va. 20 10 ), the plaintiff alleged that he spoke with a representative of the defendant, without specifically identifying the person who m ade the alleged false statem ent. The Court 4 found that “it was sufficient that the plaintiff had nam ed the entity, though not the specific person, m aking the m isrepresentations.” Id. at 738– 39. Because the defendants were “am ply aware of the ‘particular circum stances for which [they] will have to prepare a defense,’” the Court refused to dism iss the Com plaint based on Rule 9(b). Id. at 739; see also Matanic v. W ells Fargo Bank, N .A., No. 3:12CV472, 20 12 WL 4321634, at *6 (E.D. Va. Sept. 19, 20 12) (“Though [Plaintiff] does not identify the exact nam e of the representative he spoke with, he identifies the representative as an agent of [Defendant], which is sufficient to survive a m otion to dism iss.”); Scott v. GMAC Motg., LLC, No. 3:10 cv0 0 0 24, 20 10 WL 3340 5518, at *8 (W.D. Va. Aug. 25, 20 10 ) (holding that Plaintiffs have alleged the elem ents of their actual fraud claim with sufficient particularity although Plaintiffs only identify the entity for which the alleged m isrepresenting party was em ployed). As to what the “person m aking the m isrepresentation obtained thereby,” Plaintiff sufficiently pleads that the m isrepresentation “was likely to lead to an advantage for Flagstar and a disadvantage to Sm ith because, upon Sm ith becom ing m ore than 30 days in arrears, he thereby was bound to be in a weaker position vis a vis Flagstar as to any future dealings, negotiations, and/ or dispute(s) between Flagstar and Sm ith.” (Am . Com pl. ¶ 27.) In sum , Plaintiff’s fraud claim s are sufficiently particularized to survive a m otion to dism iss. b . Cla im 2 : Pla in t iff’s Fr a u d Cla im s Ar e Tim e -Ba r r e d If all facts necessary for such a defense clearly appear on the face of the com plaint, then“[t]he statute of lim itations is an affirm ative defense that m ay be raised in a Rule 12(b)(6) m otion to dism iss for failure to state a claim .” United States v. Kivanc, 714 F.3d 782, 789 (4th Cir. 20 13) (citing Dean v. Pilgrim ’s Pride Corp., 395 F.3d 471, 474 (4th Cir. 20 0 5)). In a federal diversity action, state law governs the existence and interpretation of any statute of lim itations. Va. Im ports, Inc. v. Kirin Brew ery of Am ., LLC, 296 F. Supp. 2d 691, 699 (E.D. Va. 20 0 3). Virginia law sets a two-year lim itations period for claim s of fraud and constructive fraud. Va. Code § 8.0 1-243 (“[E]very action for dam ages resulting from fraud, shall be brought within two 5 years after the cause of action accrues.”). Va. Code § 8.0 1-249 provides that a cause of action shall be deem ed to accrue “when such fraud . . . is discovered or by the exercise of due diligence reasonably should have been discovered.” Va. Code § 8.0 1-249(1). To exercise due diligence, the plaintiff bears the burden of proving that he used “‘[s]uch a m easure of prudence, activity, or assiduity, as is properly to be expected from , and ordinarily exercised by, a reasonable and prudent [person] under the particular circum stan ces; not m easured by any absolute standard, but depending on the relative facts of the special case.’” Va. Im ports, Inc., 296 F. Supp. 2d at 699 (quoting STB Mktg. Corp. v. Zolfaghari, 393 S.E.2d 394, 397 (Va. 1990 )). In the Am ended Com plaint, Plaintiff claim s that a wom an Flagstar representative m ade the alleged m isrepresentation on August 2, 20 11. Pursuant to Va. Code §§ 8.0 1-243 and 8.0 1249, Plaintiff’s claim would be barred two years from the date that Plaintiff discovered or through the exercise of due diligence reasonably should have discovered the fraud. Plaintiff asserts that he did not discover the fraud until May 20 13 when his wife applied for a refinancing of an FHA loan and relayed the availability of a potential FHA stream line refinance option to Plaintiff. (Am . Com pl. ¶ 38.) Plaintiff then researched the potential for a stream lined FHA refinance, and in the process of such research, discovered that the alleged m isrepresentation was false because he was not required to fall behind m ore than thirty days to qualify for HAMP. (Id.) In its Motion, Defendant counters that Plaintiff cannot allege that his fraud claim s accrued at som e later date, predicated on the discovery rule. HAMP is a federal program and operates under federal law. The requirem ents are publicly available online. Defendant thus argues that Plaintiff is charged with knowing the law. However, at this stage of the litigation, the Court cannot conclude as a m atter of law whether Plaintiff’s claim s are tim e-barred. The Am ended Com plaint does not indicate when Plaintiff, by the exercise of due diligence, should have discovered the alleged fraud. In other words, the face of the Am ended Com plaint does not plead facts which conclusively show that Plaintiff should have known of the alleged fraud by Septem ber 10 , 20 12, two years prior to filing 6 of the Com plaint. Because this affirm ative defense does not clearly appear on the face of the Com plaint, see Richm ond, Fredericksburg & Potom ac R.R. Co. v. Forst, 4 F.3d 244, 250 (4th Cir. 1993), a determ ination of tim eliness is best left to a later date once the facts of the case are better developed, see Carlucci v. Han, 8 86 F. Supp. 2d 497, 516 (E.D. Va. 20 12) (“[W]hen [Plaintiff] discovered, or should have discovered, the alleged fraud is a factual question that m ay not be appropriately resolved at [the m otion to dism iss] stage of the litigation.”); Jones v. Shooshan, 8 55 F. Supp. 2d 594, 60 4 (E.D. Va. 20 12) (holding that whether public docum ents were reasonably accessibly to plaintiff and whether plaintiff exercised due diligence is a question of fact which cannot be resolved at the m otion to dism iss stage). c. Cla im 3 : Co u n t s I a n d II fo r Fr a u d Fa il a s a M a t t e r o f La w Be ca u s e Pla in t iff Co u ld N o t H a v e R e a s o n a b ly R e lie d o n Fla g s t a r ’s Alle g e d M is r e p r e s e n t a t io n , a n d Be ca u s e Th e r e is N o Ca u s a l Co n n e ct io n Be t w e e n Pla in t iff’s Alle g e d In ju r y a n d Fla g s t a r ’s Pu r p o r t e d S t a t e m e n t Third, Defendant argues that Counts I and II fail as a m atter of law because Plaintiff cannot dem onstrate that he reasonably relied on Defendant’s m isrepresentation, and because the dam ages com plained of are not causally connected to Defendant’s alleged statem ent. Specifically, Defendant argues that because HAMP guidelines are a m atter of federal law, Plaintiff could not have reasonably relied on Defendant’s alleged m isrepresentation. See Hicks v. W y nn, 137 Va. 186, 186 (1923) (finding that m isrepresentations of law cannot constitute fraud). Defendant also argues that there is no causal connection between its alleged m isrepresentation and the claim ed harm to Plaintiff’s credit. Plaintiff does not claim that he defaulted on the Loan in reliance on Flagstar’s purported statem ent, and was later denied a m odification on the basis of his default. In fact, Plaintiff does not allege that he ever applied for a m odification. Plaintiff also does not contend that Flagstar agreed not to report any default, or that Flagstar represented that there would be no adverse consequences should Plaintiff choose to withhold paym ents. As an initial m atter, Defendant’s general statem ent that “m isrepresentation[s] of law cannot constitute fraud,” (Def.’s Mem . in Opp. at 12), is true. See Hicks, 119 S.E. at 135. 7 However, Defendant is too quick to categorize the statem ent as a m isstatem ent of the law. As one court has stated, “Depending on how the statem ent was worded, it m ight have been a straightforward statem ent about how [Plaintiff] could legally qualify for a loan m odification under HAMP. However, it m ay have also been a factual statem ent about when [Defendant] would consider [Plaintiff] for a loan m odification.” Fletcher v. OneW est Bank, FSB, 798 F. Supp. 2d 925, 934 (N.D. Ill. 20 11). In other words, viewing the facts in light m ost favorable to Plaintiff, the alleged m isrepresentation was not necessarily explaining what the federal guidelines were. Therefore, the Court will analyze whether the rem aining elem ents required for fraud were properly plead. Under Virginia law, a claim for actual fraud requires “(1) a false representation, (2) of m aterial fact, (3) m ade intentionally and knowingly, (4) with intent to m islead, [and] (5) reliance by the party m isled, . . . (6) resulting [in] dam age to [that] party.” State Farm Mut. Auto. Ins. Co. v. Rem ley , 618 S.E.2d 316, 321 (Va. 20 0 5) (citation om itted). “Alternatively, a negligent (but not knowingly false) m isrepresentation m ay support an action for constructive fraud in Virginia; all other elem ents rem ain the sam e.” Condel v. Bank of Am ., N .A., No. 3:12CV212-HEH, 20 12 WL 2673167, at *9 (E.D. Va. J uly 5, 20 12). Specifically, in order to prove reliance, a plaintiff m ust not only dem onstrate that he acted to his detrim ent in response to the defendant’s false representation, but m ust also dem onstrate that his reliance was reasonable. Hitachi Credit Am . Corp. v. Signet Bank, 166 F.3d 614, 629 (4th Cir. 1999). “The touchstone of reasonableness is prudent investigation.” Id.; see also Horner v. Ahern, 153 S.E.2d 216, 219 (Va. 1967) (citation and internal quotation m arks om itted) (“[I]f false representations are m ade regarding m atters of fact, and the m eans of knowledge are at hand and equally available to both parties, and the party, instead of resorting to them , sees fit to trust him self in the hands of one whose interest it is to m islead him , the law, in general, will leave him where he has been placed by his own im prudent confidence.”). 8 On the face of his Com plaint Plaintiff pleads reasonable reliance by stating, “Sm ith relied on the false representation by the August 2, 20 11 Flagstar representative . . . because Sm ith believed it to be true” and “Sm ith’s said reliance on such false representation was reasonable because (a) it was well known that lenders, including Flagstar Bank, entered into loan m odifications, including HARP and HAMP loan m odifications; (b) the false representation by Flagstar Bank . . . was not inherently im plausible; and (c) Sm ith had no reason to believe that Flagstar Bank would intentionally m islead him about the term s of the HARP and HAMP loan m odification process.” (Am . Com p. ¶ 29.) Although Plaintiff does not plead any prudent investigation on his part, at this stage in the litigation the Court cannot say as a m atter of law that Plaintiff acted unreasonably. See Carlucci, 90 7 F. Supp. 2d at 741 (“[R]eliance is a factintensive inquiry that is usually inappropriate for a m otion to dism iss.”); Elliott v. Great Point Partners, Nos. 1:10 cv10 19, 1:10 cv10 47, 20 11 WL 63657, at *7 (E.D. Va. J an. 5, 20 11) (“Whether Plaintiffs’ failure to investigate was unreasonable in these circum stances is a question of fact that cannot be resolved on a m otion to dism iss.”); Cook v. CitiFinancial, Inc., No. 3:14CV0 0 0 0 7, 20 14 WL 20 40 0 70 , at *4 (W.D. Va. May 16, 20 14) (“The issue of whether a party reasonably relied on representations is ordinarily a question for the trier of fact to determ ine.”). With regards to the causation issue, “a plaintiff m ust prove dam ages which are caused by his detrim ental reliance on a defendant’s m aterial m isrepresentation.” Murray v. Hadid, 385 S.E.2d 898, 90 3 (Va. 1989) (citing W inn v. Aleda Const. Co., 315 S.E.2d 193, 195 (Va. 1984)). Here, Plaintiff pled that he relied on the m isrepresentation, (Am . Com pl. ¶ 29), and stopped m aking paym ents on the note, (id. at ¶ 31). Plaintiff pled that as a proxim ate result of his reliance on the m isrepresentation he sustained econom ic dam age and em otional distress. (Id. at ¶¶ 32, 36.) With this in m ind, Plaintiff sufficiently pled reasonable reliance and causation in Counts I and II. // 9 d . Cla im 4 : Co u n t s III a n d IV Fa il Be ca u s e Th e y Ar e N o t Via b le , In d e p e n d e n t Ca u s e s o f Act io n U n d e r Vir g in ia La w “In Virginia, every contact contains an im plied covenant of good faith and fair dealing.” Enom oto v. Space Adventures, Ltd., 624 F. Supp. 2d 443, 450 (E.D. Va. 20 0 9) (citations om itted). To establish a claim for breach of the im plied covenant of good faith, a plaintiff m ust prove (1) a contractual relationship between the parties, and (2) a breach of the im plied covenant. Id. (citing Charles E. Brauer Co., Inc. v. NationsBank of Va., N.A., 466 S.E.2d 38 2, 386 (Va. 1996)). Defendant correctly states that “Virginia does not recognize independent causes of action for breach of the im plied covenants of good faith and fair dealing.” (Br. in Supp. of Mot. to Dism iss at 13). The Virginia Suprem e Court has held that “the failure to act in good faith . . . does not am ount to an independent tort,” but “gives rise only to a cause of action for breach of contract.” Charles E. Brauer Co., 466 S.E.2d at 385 (citation om itted). Likewise, a breach of the im plied duty of good faith and fair dealing under the Uniform Com m ercial Code gives rise only to a cause of action for breach of contract, and does not am ount to an independent tort. Id. Under Virginia law, “[a] deed of trust is construed as a contract.” Mathew s v. PHH Motg. Corp., 724 S.E.2d 196, 20 0 (Va. 20 12) (citation om itted). Here, Plaintiff has attem pted to assert a separate cause of action for breach of the im plied duty of good faith, and thus he has not stated a claim upon which relief m ay be granted under Virginia law. See Jones v. Fulton Bank, N .A., No. 3:13-CV-126, 20 13 WL 3788428, at *7 (E.D. Va. J uly 18, 20 13). Moreover, Plaintiff would not be able to plead breach of contract as there was no language in the note or deed of trust requiring Defendant to m odify Plaintiff’s loan. Plaintiff cannot em ploy the im plied duty of good faith and fair dealing to create obligations with respect to loan m odification that were not present in the underlying contracts. Plaintiff relies on Bourdelais v. JPMorgan Chase Bank, N .A., No. 3:10 CV670 , 20 12 WL 540 40 8 4 (E.D. Va. Nov. 5, 20 12), to support his argum ent. However, Bourdelais is 10 distinguishable from the instant case. In Bourdelais, the plaintiff claim ed that the defendant induced her to breach the Note and Deed of Trust by incorrectly advising her that she would need to skip her m ortgage paym ent in order to qualify for the requested HAMP program . 20 12 WL 540 40 8 4, at *1. The plaintiff had never m ade any late paym ents on the m ortgage before defendant’s m isrepresentation. Id. In denying the m otion to dism iss the claim for breach of the im plied covenant of good faith and fair dealing, the court found that (1) the Note and Deed of Trust constituted a contract; (2) the defendant’s actions, if true, would be unreasonable and in bad faith; and (3) by inducing the plaintiff to default, the defendant “arguably ‘acted in such a m anner as to prevent [her] from perform ing [her] obligations under the contract.’” Id. at *6 (quoting SunTrust Mortg., Inc. v. Mortgs. Unlim ited, Inc., No. 3:11CV861-HEH, 20 12 WL 19420 56, at *3 (May 29, 20 12)); see also Acuna v. Chase Hom e Fin., LLC, No. 3:10 -CV-90 5, 20 11 WL 18830 89, at *6 (E.D. Va. May 17, 20 11) (denying a m otion to dism iss a claim for breach of the im plied covenant in part because plaintiff alleged that defendant induced him to default by telling him his chances of receiving a loan m odification would increase if he did so). In this case, the Note and Deed of Trust would sim ilarly constitute a contract, and Defendant’s actions, if true, m ay be unreasonable. However, in contrast to Bourdelais, Plaintiff was already in default. (Am . Com pl. ¶ 17.) Thus, Defendant’s alleged m isrepresentation did not induce him to default and Defendant did not act in such a m anner as to prevent Plaintiff from perform ing his obligations under the contract. See SunTrust Mortg., Inc., 20 12 WL 19420 56, at *3. Therefore, the Court GRANTS the Motion as to Claim 4 and accordingly dism isses Counts Three and Four of the Am ended Com plaint. e . Cla im 5: Co u n t V fo r D e cla r a t o r y Ju d g m e n t is N o t a n In d e p e n d e n t Ca u s e o f Act io n , Bu t Ev e n If It W a s , Pla in t iff H a s N o t Es t a b lis h e d An y Ba s e s fo r En t r y o f a D e cla r a t o r y Ju d g m e n t In H is Fa v o r The Declaratory J udgm ent Act, 28 U.S.C. § 220 1, provides that “[i]n a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an 11 appropriate pleading, m ay declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 220 1(a).3 “In order to properly state a claim for declaratory relief, the plaintiff m ust allege that an actual controversy exists within the Court’s jurisdiction and that it is an interested party.” Pei P’ship Architects, LLP v. Celebrate Va. South, LLC, No. 3:13-CV-48, 20 13 WL 1163463, at *3 (E.D. Va. Mar. 19, 20 13). For an actual controversy to exist, “the facts alleged, under all the circum stances, [m ust] show that there is a substantial controversy, between parties having adverse legal interests, of sufficient im m ediacy and reality to warrant the issuance of a declaratory judgm ent.” Id. (citation and internal quotation m arks om itted). Additionally, “the trial court, in its discretion, m ust be satisfied that declaratory relief is appropriate.” W hite v. N at’l Union Fire Ins. Co. of Pittsburg, Pa., 913 F.2d 165, 167 (4th Cir. 1990 ). With regards to the court’s discretion, two questions need to be asked: “(1) whether the judgm ent will serve a useful purpose in clarifying the legal relations in issue, or (2) whether the judgm ent will term inate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.” Id. at 168 (citations and internal quotation m arks om itted). In this case, Sm ith seeks a declaratory judgm ent that Flagstar Bank is not currently entitled to foreclose on his hom e. (Am . Com pl. ¶ 68.) However, there is no dispute that Sm ith fell m ore than thirty days in arrears in paym ent on the note. (Id. at ¶ 29.) He stopped m aking all paym ents on the note. (Id. at ¶ 30 , 32.) The Deed of Trust and Note executed by Plaintiff in this m atter clearly provide that in the event of Plaintiff’s default, lender has the right to require im m ediate paym ent in full if borrower defaults by failing to pay in full any m onthly paym ent or by failing, for a period of thirty days, to perform any other obligations contained in the security instrum ent. (See Br. in Supp. of Mot. to Dism iss Exs. 1, 2.) If lender requires im m ediate 3 “Federal standards guide the inquiry as to the propriety of declaratory relief in federal courts, even when the case is under the court’s diversity jurisdiction.” W hite v. Nat’l Union Fire Ins. Co. of Pittsburg, Pa., 913 F.2d 165, 167 (4th Cir. 1990 ); see also The Hipage Co., Inc. v. Access2Go, Inc., 589 F. Supp. 2d 60 2 (E.D. Va. 20 0 8) (applying the Declaratory J udgm ent Act to a declaratory action that was originally filed in state court and subsequently rem oved to federal court). 12 paym ent in full, then lender m ay invoke the power of sale and other rem edies perm itted by applicable law. (Br. in Supp. of Mot. to Dism iss Ex. 2 at pg. 6.) There is no controversy that Defendant is entitled to foreclose on Plaintiff’s property. Therefore, the Court GRANTS the Motion with respect to Claim 5 and accordingly dism isses Count Five of the Am ended Com plaint. IV. CON CLU SION For the foregoing reasons, the Motion is GRANTED in part and DENIED in part. Specifically, the Motion is DENIED as to Counts One and Two of Plaintiff’s Am ended Com plaint, and GRANTED as to Counts Three, Four and Five. Let the Clerk send a copy of this Mem orandum Opinion to all counsel of record. An appropriate Order will issue. ENTERED this ______________________/s/_________________ James R. Spencer Senior U. S. District Judge _ 17th_ _ day of March 20 15. 13
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