Morris v. Wilmington Savings Fund Society, FSB, No. 5:2018cv00076 - Document 13 (W.D. Va. 2018)
Court Description: MEMORANDUM OPINION. Signed by Chief Judge Michael F. Urbanski on 12/18/18. (kld)
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IN TH E U N ITE D STATE S D ISTRICT COU RT FO R TH E W ESTE RN D ISTRICT O F W RGIN IA H ARRISO N BU RG D IW SION CLERK'S OFFICE U ,S.DIST.COURT AT RIM NGKE,VA FILED M T H ERIN E M O R RIS, DE: 1S2218 JUL C. ' LPf,CLERK BY: ' D PUW C- Plaintiff, Case N o.5:18-cv-76 V. W ILM IN GT ON SAV IN G S FU N D SO CIE TY , By:H on.M ichaelF.U tbansld ClziefU .S.DistdctJudge D efendant. M E M O RAN D U M O PIN ION PlaindffKatherineMorris(Morris)bringsthisacdon agninstW ilmington Savings Fund Society(WSFS),asserting,in fourcounts,threebreach ofcontractclnimsand afourth clnim forviolation offederallending laws.Thism atterisbefore the courton W SFS'Sm odon to dism iss. M orris'scom plaintwas flled in the CitcuitCourtforthe County ofPage,Virginia on oraboutApril16,2018 and rem oved to federalcourton M ay 17,2018.ECF N o.1,2.The clnim scenteron M orris'sdefaulton herm ortgageon the propertylocated at133 Trackside Lanef/k/a210 1stStteet,Shenandoah,Virgirlia(theProperty)andW SFS'Ssubsequent mniling ofthefTNoticeofDefaultandIntenttoAccelerate''(pre-acceleration notice)and Morris v. Wilmington Savings Fund Society, FSB Doc. 13 fozeclosute.ECF N o.1-2,2.CountIallegesbreach ofconttactby clnim ing thatW SFS failed togivenodceaccordingto thetezmsoftheDeed ofTrust(DOX by sendingthepreacceletation nodceviacettfed m ail,ratherthan fust-classm ail,asrequited by Secdon 15 of theD O T.CountII,also a bzeach ofcontractclnim ,allegesthatW SFS violated Section 22 of Dockets.Justia.com theD OT by failing to provide apre-acceleration noécein com pliance with Section 22's tet'ms(again becauseW SFSsentthenotkebycertifiedmail).Count111,Morris'sfinalbreach ofcontractchim ,allegesthatW SFS ffm adeitim possibleunderSection 19 oftheD OT fot M orris)to reinstatetheloan hvedayspriorto thesaleoftheProperty.''Finally,CountIV allegesviolationsoftheTruthinLendingAct(I' lT,A)andtheRealEstateSettlement ProceduresAct(RESPA)associatedwithW SFS'Salleged failuretoprovidepayoffbalances within a stattztorily setperiod oftim e. W ith respectto Count1,W SFS contendsM orris'sbreach ofcontractclnim fails becauseitisditectly contradicted by the pre-acceleradon notice,attached asan exhibitto M orris'scom plaint.ECF N o.4,5.Speciik ally,W SFS m aintainsthe pre-acceleraéon notice sentto M orrisTY ia Certified M ail''constitaztesfirst-classm ailforpurposesofthe D OT.1d. at5.W SFS m ovesfordisnnissalasto CountI1,contending furtherthatthe noéce sentm et a1lthe reqtzirem entsofSection 22 ofthe D O T.Jdxat6.W SFSmovesfordismissalasto - Countl11on the groundsthatVirginia1aw doesnotrecognizean im plied covenantofgood faith and faitdealingwith respectto theD O T.JIL at9.W SFSallegesCountIIItherefore -. failsasam atter oflaw .Ld-sLastly,W SFS m oves fozdism issalofCountIV because the statutesupon wlzich M orrisreliesapply only to high-costm ortgages.Ldsat10.W SFS . contendsthesubjectloanisnotahigh-costmottgage.ld.Even ifthestattztesMorrisrelies upon apply,W SFS furtherallegesCountIV should bedisnûssed because M orrisdid not allegeawritten requestforareinstatem entquote asreq''ited by statute.1d.at11. A. 2 KatherineMorris(ffMorris7),azesidentofVirginia,allegessheownsthePageCounty propertyin dispute.M orrisenteredinto aloan for$65,195sectzred bythePropertyand executed by CitiM ortgage,lnc.The note fozthatloan isnow held by W SFS.M orrispaid full and tim ely m ortgagepaym ents for8.5 years.O n O ctober12,2016,loan serdcerBSl FinancialSerdcessentthepost-acceleraéon notice,w hich stated thatM orrisneeded to britlg herm ortgage paym entscurrentby N ovem ber16,2016 orfaceacceleration oftheloan and saleoftheProperty.M orriswassixteen m ortgage paym entsbellind atthatHm e,which amounted to $11,447.90.M orrisneverreceived thepre-acceleraéon nodceand clid not obtain a copy ofituntilthe day ofthe detainerhearing on D ecem ber8,2017. W SFS appointed Com m onwealth Trustees,LLC assubstim tetrustee to sellthe Property on D ecem ber 14,2016.M orrisreceived aN odce ofSubstitazteTm stee'sSaleon A pzil10,2017 stating a fozeclosure sale ofthe Propertywasscheduled forM ay 8,2017. M orrisim m ediately requested areinstatem entquote from the subsequentservicer,Fay Serdcing,on six occasions.M orrisneeded areinstatem entquotein atim ely m annerso she couldwithdraw fundsfrom her401$)tetirementaccount.FayServicingprovidedthe reinstatem entquoteon M ay 4,2017.M orris'sretitem entaccountcom pany could notzelease h . fundsuntilM ay 10,2017.M orrishad the m eansto pay thepre-acceleration defaultam ount, butcould notaccessthe fundsbyM ay 8,2017. W SFS,through itssubstim tetrustee,sold thePropertyby auction on M ay 8,2017. A fterthe sale,Fay Serdcing offered M orristhe oppoztaznity to voluntarily vacatethe Propertythtough affcash forK eysA gzeem entand Release''ifM orriswaived al1rightsto theProperty.Morrisrefused.W SFS nodfied Mozzisonluly17,2017thatshewastovacate 3 the Propettyw ithin ten days.O n August8,2017,W SFS filed an unlawfuldetainetactbn againstM orrisin Page County G eneralD istrictCom t.M orrischallenged thevalidity of W SFS'Stitleto the Propertybased on itsbreach ofm aterialtezm softhedeed in orderto sell the Property.The courtdeterrnined M ozris'sclnim swould likely sutvivedem urrerbutruled itlackedsubjectmatterjurisdictiontodecidevaliclityofthetitleofDecember8,2017.W SFS filed anotherunlawfuldetaineraction againstM orrisin PageCountyCitclzitColzrton January29,2018,wllich waspending atthetimethiscomplaintwasfiled. M ozristhen filed tllisaction in Page County CitcuitColztton April16,2018 alleging bzeach ofcontractasto Sections15,22,and 19 oftheD O T and violationsofTILA and RESPA . B. Tosurdveamotion todisnzissunderFederalRuleofCivilProcedure129$(6),a complaintneed only contain sufficientfactualmatterwhich,ifaccepted astrue,ffstategsja clqim toreliefthatisplausibleonitsface.''Ashcroftv.I bal,556U.S.662,678 (2009) (quotingBellAtl.Cor .v.Twombl,550U.S.544,570 (2007)).A complaintisRfacially plausible'?when thefactsalleged ffallowg thecouttto draw thereasonableinferencethatthe defendantisliable forthenlisconductalleged.7'Id.This ffstandard isnotaldn to a fprobabilityreqllirem ent,'butitasksform orethan a sheerpossibility thatadefendanthas acted unlaw fully.''I. I. L W hen ruling on am otion to disnniss,tlae cotutm ustffacceptthew ell. pled allegationsofthe com plaintastrue''and f'constt'ue the factsand reasonableinferences derivedthezefrom in thelkhtmostfavorableto theplaintiff.''Ibarrav.UnitedStates,120 F.3d472,474(4thCir.1997). 4 W hile the courtm ustacceptastttze allwell-pled factazalallegations,thesam eisnot tzue forlegalconclusions.f'Threadbarerecitalsofthe elem entsofacause ofaction, supportedbymereconclusorystatements,donotsuffice.''Lqb-al,556U.S' .at6789seealso W a MoreDo sLLC v.Cozart,680F.3d359,365(4thCit.2012)(ffAlthoughweare consttained to take the factsin thelightm ostfavozable to theplninéff,we need notaccept legalconclusionscouched asfactsorunwarranted inferences,unreasonableconclusions,or argtzments.''(internalquotationmazksomittedl). ln considering a m otion to dism iss,thecouztisffgenezally lim ited to areview ofthe ailegationsofthecom plaintitself.''G oinesv.Valley Cm ty.Selvs.Bd.,822 F.3d 159,165-66 (4th Cir.2016).However,otherevidencem ay sometimesbeconstzlted: Fhe courtl also considers documents that ate explicitly incorporated into the com plaintby reference,Tellabs,lnc.v.M akor lssues& IU htsLtd.,551U.S.308,322(2007),andthoseattached to thecomplaintasexhibits,seeFed.R.Civ.P.10(c).And ...gthe couttqmay considera documentsubnùtted bythemovantthatwas notattached to or expressly incorporated in a com plaint,so long as the docum entwasintegralto the com plaintand there isno clispute aboutthe document'sauthenticity.gsec' ofState for Defencev.) Tzimble F av.Ltd.q,484 F.3d g700),705 (/t11 Cir.2007)j;Am. Chito ractic A ss'n v.Tri on H ealthcare Inc.,367 F.3d 212,234 (4th Cir.2004)9Phillisv.LCIInt'l lnc.,190 F.3d 609,618 (4th Cir.1999). Id.at166. C. W SFS arguesM orris'sbreach ofcontractclaim due to insufficientnoticein CountI failsbecauseW SFS sentthe pre-acceleration noticeviacerto ed m ail.The D O T statesin Secdon15,çrAnynoticetoBorrowerinconjunctionwiththisSectzritylnstnzmentshallbe deem ed to havebeen given to Borzowerwhen m ailed by frstclassm ailorwhen acm ally 5 delivered to Borrow er'snoéceaddressifsentby otherm eans.''ECF N o.1-2,29.M orris claim sW SFS solely used Tfotherm eans':because the pre-acceleration noticew assentvia certified m ailand certified m ailisnotfust-classm ailasintended by theD O T.W SPS,on the othezhand,clnim sthatcertified m ailisfran optionalfeatazre offttst-classm ail,77and nota separate type ofm ailinplECF N o.9,2. W hile certified m ailnnightindeed bean extraavailable option w hen attempting to send fust-classm ail,m any courtsdo treatthe tavo asseparatem ailing m echanism sfor purposesofm eeting noticerequitem ents.Certified m ailand frst-classm ailare disdngaishablebecausecertified mailreqllirestherecipient'ssignatuiefordelivery.Jonesv. Flowers,547U.S.220,234-35(2006).W hileceztihedmailprotectsagainstlnisdelivery,T'use ofcetqifiedmailnaightmakeactualnodcelesslikelyin somecasesèecausejthelettercannot beleftlike regularm ail....7>Id.at235.Futthet,ifarecipientisnothom ewhen certified m ail isdelivezed,thatpiece ofm ailisrettzrned to thepostoffice and can tfonly beretrieved from thepostoffice fora specified peziod oftim e.''1d. Otherjurisdictionshaveheld that,wherenoéceisreqllitedbyTfmaily''noticesentvia ceréfied m ailonly com plies'with the ffm niling':reqllitem entupon acttzalreceipt.See e.., AuroraLoan Servs.,LLC v.Condron,181 Conn.App.248,272-73,186 A.3d 708,725-26 (2018)(ruling that,wheninterpretingthetermsofamortgagedeedrequiring noticeeither ffm ailed by flrstclassm ail':orffacttzally delivered to Borzower'snodce addressifsentby otherm eans,':certified m ailconsétuted otherm eans,reqlliting actualdeliveryin otderto 1W SFS claim sM orris'sattached ekhibit,the copy ofthenoticethatshe received atthedetqinezheating,show sthatit wassentby Erst-classmail.ECF No.4,2.'Though theenvelopeislabeled ffFirst-classMail,''theletterislabeled ffsent Via Cerdtied M ai1.''ECF N o.1-2,33 & 34.A scertz ed m ailis considered an add-on feature offirst-classm ailby the USPS,itis consistentwith the factsalleged in the cofnplaintthatthe nodce envelone wotlld be m arked with a ''FirstClassM ail''label. X' saésfythetermsofthedeed);Certification from U.S.CourtofA ealsforNinth Circlzitv. Kachman,165W ash.2d404,411,198P.3d505,508-09(Wash.2008)(quesdoncertifiedin CornhuskerCasualtyIns.Co.v.Kachman,514F.3d982,987-88(9thCir.2008)Solding thatcertified m ailfellinto the <çactualdeliveryprong''ofa W ashington state statutereqtziring noticeofcancellation ofinsuzance policiesto inslzred individualseithezby m ailorby actual deliveryl.zOtherwise,noticesentbycerdfiedm ailqualifiesonlyasan attemptatdelivery. Certification from U .S.CourtofA eals forN inth Citcuit,165W ash.2d at411,198 P.3d at 508-09;seealso Fidelity& Cas.Co.ofN.Y.v.Riley,168Md.430,430178A.250,253 (Md. 1935)(finclingtvvo cancellation noticessentbyregistered mailwereattemptsatdelivery becauseneitherw ere actuallyreceived,asintended by the insurance policy'sffm Zl'i reqllirementl3;Larocquev.R.1.JointReinsuranceAss'n,536A.2d529,530,5321 .1. 1988)SoldingthatunderaRhodeIslandstatutereqllitinginsurersto''givenotice''of cancellation to insureds,actazalreceiptofsuch noticeisreqlzired and ''m ay bepresum ed by proofofan ordinarym ailing,''butnotw here an insuter,''by sending noticevia cerdfied m ail instead ofregtzlarpostage,increased theriskofnondelivery''l.zf Courtshavedistinguished between certm ed m ailand flzst-classm ailbecause flrst- classm ailcan sim plybe deliveted to the addressand the addresseeneed notbehom e.ln Re Fzaziez,394 B.R.399,400 (Bankr.E.D.Va.2008).Ceréfied mailincludesareceiptupon 2The W ashington stattzte dictating notice tequirem entsrequired thatwritten nodce ofcancelladon ofa policy be eithet TT actually delivered''orffmailed''to the named insured.CorzzhuskerCas.Ins.Co.,514 F.3d at985 (cititzg RCW j 48.18.290).Similarly,theDOT signedbyMorrisrequirednoécebeGmailedbyftrstclassmail''orffact-uallydelivered''to theBorrower'snoticeaddress. 3Again,the policy addressed in Fidelity & Cas.Co.of New York required Tf w ritten noéce delivered to the instued or m ailed to ilislastaddressasshown by the recordsofthecom panp''168 M d.at430,178 A.at251. 4'The courtisaware thatm any ofthe above cited cases dealwith nodce ofthe cancelladon ofinsuzance policies,which incom orate specihc public policy consideradons.See Cornhusker Cas.Ins.Co.,514 F.3d at9879Fideli & Cas.Co.of N .Y.,168 M d.at430,178 A .at253;Laroc ue,536 A.2d at530.The parallelsbetween the notice requirem ents ofthe above referenced statute and policies and those of the D OT,as well as the com parisons m ade by courts between certified and fzrst-classm ail,stilloffergaidancein determining the issueathand. delivery,butifthezecipientisnothom e,them ailcannotbe leftand there isarisk the m ail m ay neverbedelivered to the recipient.Id.Further,certified m ailTfreqllitesan affltm ative act''by therecipient.In zeSheffer,440B.R.121,122(Bankr.E.D.Va.2009).Therecipient m usteithersign fol'them ailupon delivery otgo to thepostoffice to pick up the m ail,ifit couldnotbedelivezedearlier.Forthiszeason,courtsinmanyjutisdictionsreqlzirethat, when a certified m ailing goesunclnim ed,futthezacdon m ustbetaken to ensurenotice requirem entsare m et.See H agiev.O ceana CountyTreasurer,N o.340161,2018W L 1881137,at*3 (Mich.Ct.App.Apr.19,2018)(rulingthatnoticerequirementsweremet when thedefendant,afterflrstsending two noticesby certified m ail,sentseveralm ore noécestluough flrst-classmailandpubhshed noécein alocalnewspaper). The courtfindsserviceby certz ed m ailisnotsufficientunlesstherecipierïtactually receivesthe m ail.H ete,W SFS hasnotptesented evidence ofreceiptofthe certified m ailand hasnotshow n evidence ofan additionaleffortto send the pte-acceleraéon notice thtough otherm eans.M orrishassatisfied herburden atthisstagein theproceedingsby stating a plausibleclnim asto Count1.The m oéon to disnnissCountIisD EN IE D . D. Count11allegesthatW SFS breached thetetm softhe D O T by violating Secéon 22: 't endershallgivenoticeto Borrowerpriorto acceleradon following Borrower's breachofanycovenantoragreementinthisSecuritylns% ment$utnotpriorto acceleration underSection 18unlessApplicableiaw pzovidesotherwise).Thenotice shallsp' ecify:(a)thedefault;$)theaction requited to curethedefault;(c)adate,not lessthan 30 daysfzom the date ofthe nodce given to the Borrower,bywllich the defaultmustbecuzed;and (d)thatfailureto curethedefaulton orbeforethedate specified in the noticem ayresultin acceleratbn ofthe s'zm ssecured by thisSecurity lnstttzm entand sale ofthe Property.7'ECF N o.1-2,31. 8 M orrisallegesthatW SFS failed to provideapre-acceleration noticein compliance5471t13these . term sbecauseM ozrisneverreceived such anotice.sThereasonsforthisand whether W SFS'Seffortsto givenoticem etthetezm softheD OT have been fully addressed in the above section discussingW SFS'Sm otion asitpertainsto Count1.The courttherefore D EN IE S W SFS'Sm otion to disnaissCount1l. E. CountI11allegesa bzeach ofSecéon 19 oftheD OT,alleging thatW SFS did not tim ely provide areinstatem entquote,bzealdng the implied covenantofgood faith and fair dealing.W SFS contendsthatthiscquntfailsbecauseVitginia1aw doesnotrecognize the implied covenantoutsideoftheVitginiaUniform CommezcialCode(UCC).To the contrary,ffthe United StatesCourtofAppealsforthe Fourth Circuithasconsistently held thatVirginiadoeszecognizean im plied dutyofgood faith and fairdealing in com m on law contracts.''6Stone G len LLC v.Southern Bank and TrustCo.,944 F.Supp.2d.460,465 (2013).SeeW olfv.Fed.Nat.Mott.Ass'n,512F.App'x336,345(4thCit.2013)(quoéng Enomotov.S aceAdventures Ltd.,624F.Supp.2d443,450 (E.D.Va.2009)(f<...gjn Virginia,everycontractcontninsan implied covenantofgood faith and fairdealinp7l).The 5Thepre-acceleradon nodce attached to the com plaintcontainsallelem entslisted in Secdon 22 ofthe D OT.See ECF N o.1-2,34-36.W SFS'Sonly plausiblealleged violaéon ofthissecdon isthe failureto deliverthe nodce properly,as discussed above. 6W SFS reliesupon a nllmberofcasesin clqim ing the im plied duty ofgood faith and fairdealing doesnotapply to tzansfersofrealestatein Vizginia.Thefirst,Jon-esv.FultonBank-N.A.,dismissesacbl 'm ofbreach oftheimplied covenantofgood faith and fairdealitzg in a realestate contractbecause itwaspled undertheUrliform Com mercialCode and asa separatetort,notbecauseVirginia doesnotrecognizeany such implied covenantoutside oftheU CC.565 F. App'x 251,253 (4t. h Cir.2014).Thesecond,Hazoimeh v.U.S.BankNat.Ass' n,quotesHarrison v.U.S.Barlk Nat. Ass'n.,basingitsdecision onthatholding.94F.Supp.3d741,751(E.D.Va.2015))3:12-CV-00224,2012WL 2366163 (. E. D .Va.June20,2012).Insoholcling,however,theHarrisoncourtmisreadsGreenwoodAssocs.Inc.v.CrestarBank, in which the Virginia Suprem e Courtheld thatthe statt ztory duty ofgood faith and faiz dealing wasinapplicable to a non-UCC contract.248Va.265,269,448S.E.2d399,4O2(1994).Barringapplicaéonofastatmorydutydoesnoterase an implied duty,nor wasit the Virginia Suprem e Court'sintendon to do so- a low erVirginia Courthad already held thatan im plied covenantofgood faith and fairdealitlg appliesin realestate contractsywithoutdishubance.See Stepp v. OutdoorW orldCorp.,Va.Cir.106,1989WL 1143875,at*4(' Va.Cir.Ct.1989). 9 elementsofaclnim forbreach oftheimplied covenantofgoodfaith and fairdealingare:1)a conttactualzelaéonship betweentheparties;and 2)abteach oftheimplied covenant.Stone G len,LLC,944 F.Supp.2d.at466.Plaintiffsm ustbring thisclnim aspartofacountfot breach ofcontract,zatherthan asan independenttort.Ld. aat465. Fozthisclnim ,M ortisrelieson Section 19 ofthe deed w hich states: ffBorrower shallhave the rightto enforcem entof this Sectuity Instrumentdiscontinued atanyémepriorto theearliestof:(1) five dayspriorto the sale ofthe Property puzsuantto anypower of sale contained in this Security Instrum ent....Those conditions are thatBorrower:(a)paysLender all.sums which then would be due underthisSecurity Instrum entand theN ote asifno acceleration had occurred;$)curesanydefaultofany othercovenantsoragreements;(c)paysallexpensesincutred in enforcing thisSecurity Insttnlm ent,inclucling,butnotlim ited to, reasonable attorneys' fee, pzoperty inspection and valuation fees; and other fees incurred for the purpose of protecting Lendet's intezestin the Property and rights under this Security lnstrument;and (d)takessuch action asLendermayreasonably requite to assure that Lender's interest in the Property and rights underthe Security Instrum ent,and Borrower'sobligaéon to pay the sum s secured by tllis Security lns% m ent, shall continue unchanged. Lender m ay require that Borrower pay such reinstatem ent sum s and expenses in one or m ore of the following forms,as selected by Lender: (a) cash;(b) money order; (c) certified check, bank check,tteasurer's check or cashier's check, provided such check is draw n upon an institaztion whose deposits are insured by a federal agency, instrumentality or enéty; or (d) Electtonic Funds Transfer. Upon reinstatem entby Bozrowet,this Security Instrum entand obligations sectzted hereby shallrem ain fully effective asif no accelezation had occutred.'' ECF N o.1-2,29-30.M orriscontendsW SFS breached theim plied covenantofgood faith and faizdealing becauseitwasim possible forM orristo reinstate theloan :vedaysbefore the sale.W SFS,foritspart,arguesthatthe acceleradon oftheloan upon M orris'sdefault and theresuldng foreclosurewere nothing m ore than the exercise ofexplicitcontracttzal 10 rights,and thata claim ofbreach oftheim plied covenantofgood faith and faitdealing requiresffthatthe alleged breach wasdishonestand in bad faitly''ratherthan m erely an acéon thatisunfavorableto theplaintiff.ECF N o.4,10.SeeEnom oto,624 F.Supp.2d at 450-51(finding thatplainéffspleadingofabreach oftheimpliedcovenantofgood faith and faizdealing due to defendant'sfailureto ptovide him with aspace flightand failure to inform him ofthehigh likelihood ofm edicaldisqualification afterthree or fout nonrefundablepaym entswassufficientbecause italleged dishonest,ratherthan m erely unfavorable,conduct). Section 19 oftheD OT grantsto M orristherightto haltforeclosuteproceedingsand reinstate the term sofherloan ifshe curesherdefaultand paysallfeesassociated with the default.A tilrstglance,thissection seem sto createtightsforthe bozrower,zathezthan place duéeson the lender.A logicaland unavoidable condiion precedentto theexerciseofthese rights,however,isknowledge ofwhatconditionstheborrow erm ustm eetto discontinue enforcem entofthe Security Instrum ent.lndeed,Secéon 19 includesalong 2stofpotential paym entsand feestheborrow erm ay orm ay nothave to m eet,and even alludesto other potentialpaym entsthatare notlisted.Thefullreckoning ofwhatabortowerm ustdo to halt foreclosureproceedingsisentirely within thecontrolofthe lender- here,W SFS tlntough its appointed serdcer,Fay Serdcing.lm plied by thegranting oftheserights,thetefore,isthat W SFS alertM orris ofw hatshe ow es.M otris allegesthatshe requested a reinstatem entquote on A pril12,2017.ECF N o.1-2,4.Essenéally,M orrisasked whatconditionsshe would haveto m eetin orderto exercise herSection 19 rights.W SFS did notprovideM orrisv'itlaa teinstatem entquoteuntilM ay 4,2017,22 daysaftethettequestand fourdaysbefore the Propertywassold ataucéon.ECF N o.1-2,4. The duty ofgood faith and faitdealing in Virginia doesnotpteventaparty ftom exercising conttactualrights.Vir 'niaV ernniculite Ltd.V .W .R.G race & Co.,156 F.3d 535, 543(4thCit.1998).Itdoes,however,pzeventapartyfzom doinganytlningthatwillhavethe effectofinjudngorfrustrating therightoftheotherpartyto receivetheftnlitsofthe contzactbetweenthem.SeeRestatement(Second)ofConttactsj205(1990)(describingthe conceptofT'good faitlf'in c'ontracts)(K<A' completecatalogueoftypesofbad faith is impossible,butthefollowingtypesareamongthosewhich havebeenrecognizedinjuclicial decisions:evasiop ofthe spiritofthebatgain,lack ofriiligence and slaclting off,willful rendering ofim perfectperform ance,abuse ofapowezto specify term s,and interfezence witl aorfailureto cooperatein theotherparty'spezformance.>)W hilecouttsin thiscitcuit have found thatexercising contractualrightsby acceletadng aloan doesnotconstitm e a breach oftheunderlying contract,the courthasfound no casesin wlnich aborroweralleged inability to haltforeclosuzepursuantto acontracttzalrightbecause ofthe lender'sdelay. Rehbein v.CitiM ozt a e Inc.,forinstance,involved apl/intiffwho,afterfalling behind in m ortgagepaym ents,applied to the defendantforaloan m odificadon.937 F.Supp. 2d 753,757 (E.D.Va.2013).Thedefendantgrantedatemppratymoclification,butdenied the finalm odificadon.Id.Thedefendantinitiated foreclosure proceedings;theplaintiffflled slzitto haltthese proceedings,alleging that,by fniling to granttheloan m odifkation,the defendanthad breached theim plied covenantofgood faith and fairdealing.J-I. L The coutt clisagreed and ruled thatnothing in the prornissory noteotthe deed oftrustobligated the 12 defendantto granttheplaintiffaloan m odifk ation,and thatby foreclosing,the defendant had been exetcising a clearcontractuallight.Id. H ere,however,itisM orrisw ho had aclearconttactualright.H ercom plaintaEeges thatshe wasnotattem pting to alter the term sofhercontract,asthe plaintiffin Rehbein did, butto fulfillthe tezm softhe conttactaswritten.To do that,howevei,sheneeded a reinstatem entquotewhich she could only secutewith theopposing party'scooperaéon.She clid notreceivetlaisreinstatem entquoteuntilitwastoo late forherto exerciseherrights. O thercasesdealing with theim plied covenantand acceletaéon ofm ortgagesare sirnilarly distinguishable.Cook v.CitiFinancial,lnc.,N o.3:14-cv-00007,2014 W L 2040070,at*6 (W .D.Va.May 16,2014)(plainéff'sclqim ofbreach oftheimplied covenantofgood faith and fai. rdealing disnnissed because itw aspled pursuantto theU CC,asan independenttort, and inresponsedefendant'sfoteclosureafterarefusaltomodifytheloan);Vazzanav. CitiMort a e Inc.,No.7:12-cv-00497,2013WL 2423092,at*4 (W.D.Va.June4,2013) (disrnissingaclaim ofbreachoftheimpliedcovenantofgoodfaithandfairdealingwhenthe plaintiffmadenoattemptto reinstatetheloan afternoticewassent). M otdshassuffkiently pled aplausiblebreach oftheim plied covenantofgood faith andfaitdealingtopassthethres 'holdof12q$(6).W SFS'SmotiontodisnlissCount111is thezefore D EN IED . E. Finally,MorzisallegesviolationsoftheTrtzth in LendingAct(ç<T1LA'')15U.S.C.j 1639(t)(2)andtlzeRealEstateSettlementProceduresAct(T<RESPA')12C.F.R.j 226.36(c)(1)(iii).ThestamteM orrisrelieson (15U.S.C.j1639(t)(2)),anditsimplementing 13 regtzlation (12 C.F.R.j226.36(c)(1)(iii)),applyonlyto high-costmortgages.See15U.S.C.j 1639(a),(t)(1)(A)(TTpayofftheoutstandingbalanceonahigh-costmortgage').7A high-cost m ortgageisatransaction wit .h arate thattTwillexceed bym ozethan 6.5 percentagepoints... theaverageprimeofferrate.''15U.S.C.j1602>b)(1)(A)(i)(I).Theavezageprimeofferrate ffm eanstheavezagepzim e offetzate foza com pazable ttansaction asofthe date on wlùch theinterestrateforthetzansactionisset,aspublished bytheButeau.''15U.S.C.j 1639c$)(2)(B). H ere,theloan w asa30-yearflxed ratem ortgage w1:. 14an 11.5% intetestrate entered intoon Octobez26,2007.D OT IJF.According to theFedezz FinancialInstituéons ExaminationCouncil(TKFFEIC') theavezageprimeoffetrateonOctober26,2007fora30yearfixed loan was6.450/0.8The stattztory tlnreshold,6.504,plustheaverageprim eofferrate, 6.450/0,equals12.9504.See15U.S.C.j1602$b)(1)(A)(i)(l).Thistotal,12.95% exceeds M orris'srate of11.1504.Therefore,M orris'sloan isnota dfhigh-cost'?m ortgagewitlnin the meaningoftheTruthinLendingAct(TTILAA) 15U.S.C.j1639(t)(2)oztheRealEstate SettlementProceduresAct(C<RESPA') 12 C.F.R.j226.36(c)(1)(iii).Thesestattztesare inapplicable to M orris'sD OT,therefore,them otion to disrnissCountIV isGRA N TE D . F. 7Courtsrecognizetheprovisionsof15U.S.C.j1639wereanamendmentaddedtoTIT,A fTbyHOEPA,whichrequires lendersto m ake adclidonaldisclosuresto borrowersofThigh-cost'or f high-zate'loans.''Cunnin ham v.N adonscredit Fin.Servs.Co .497F.3d714,717(7thCir.2007);seealsoSte hensv.BankofAm.HomeLoansInc.,No.5:16-cv66O-F,2017WL 384315,at*4(E.D.N.C.Jan.25,2017).Also,because15U.S.C.j1639 istheimplemenéngauthodty for12C. F.R.j226.36(c)(1)(iii),12C.F.R.j226.36(c)(1)(iii)isalsospecihctohigh-costmortgages.SeeTt' uthinLending Act 73 FR 445522-01,44526 thru 44527. 8Seefr ztvera ePrim eOfferRates''Tables,FEDERALFINANCIALINSTITUTIONSEXAMINATION COUNCIL hups://- .fhec.gov/ratespread/apoztables.h% (calculatingtheAveragePri meOfferRateandpublishingweekly updates). 14 A ccordingly,and forthe reasonssetforth herein,thecourtG RAN TS them oéon to disnlissCounts1,I1,and 111,and D EN IE S them otion to disrnissCountIV. An appropziateorderwillbe entered. Entered: /7//J//û..' 4 /- 4u f K &,,2-' M ichaelF.Urba sld ChiefUnited StatesDisttictludge 15
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