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Vinal v. Federal National Mortgage Association

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

February 12, 2014

PETER S. VINAL, Plaintiff,


JAMES C. DEVER, III, Chief District Judge.

On June 26, 2013, Peter S. Vinal sued SunTrust Mortgage, Inc., several of SunTrust's employees, the Federal National Mortgage Association ("Fannie Mae"), and Safeguard Properties, LLC 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.

Vinal has dropped all claims against the Federal National Mortgage Association and the individual SunTrust employees, leaving only SunTrust and Safeguard as defendants. See [D.E. 31]. Against the remaining defendants, Vinal has dropped all but four claims. Only the trespass, tortious-interference, constructive-fraud, and unfair-and-deceptive-trade-practices claims remain, and all arise under North Carolina law. See id. 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]; see Fed.R.Civ.P. 12(b)(6). As explained below, the court grants SunTrust's motion.


Vinal is a real-estate agent in Wilmington, North Carolina. Compl. ¶ 7. Between 2005 and 2007, he 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. Id . ¶ 6. To finance those purchases, he took out nine interest-only loans from SunTrust. Id . The loans were secured by deeds of trust on the five properties. See id., Exs. A-E. 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 ¶ 3(A).

At first, Vinal made timely payments on all the loans. After the housing market crashed in 2008, Vinal suffered a "drastic reduction" in his income, and began struggling to meet his obligations to SunTrust. Id . ¶ 7. In March 2009, SunTrust and Vinal met to discuss the status of the loan associated with the Arboretum Drive property, which was six months past maturity but remained unpaid. Id . ¶ 8. 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. Id . At that point, Vinal notified SunTrust that he would soon become unable to make timely payments on his loans. Id.

After that March 2009 meeting, Vinal began efforts to avoid foreclosure. First, he contacted SunTrust's loss mitigation department. Id . ¶ 41. 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." Id . Starting in June 2009, Vinal defaulted on his mortgage payments. Id . ¶ 42. Although employees in SunTrust's loss mitigation department had told Vinal that SunTrust would not report Vinal's default to any credit bureau, id. ¶ 47, Vinal's defaults ended up "severely reducing his credit score." Id . ¶ 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 then began attempting to short-sell his properties. Id . ¶ 11. On three of his properties-the Arboretum Drive property, the Sandfiddler Pointe property, and the Edgewater Club Road property-Vinal received offers to purchase, and entered into purchase contracts with the potential buyers. Id . ¶¶ 11, 32; see Def. Mem. Supp. Mot. Dismiss, Ex. 1 [D.E. 16-2]. 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 Def. Mem. Supp. Mot. Dismiss, Ex. 1, at 9, 20, 30, 41. Each purchase contract afforded the buyer the right to unilaterally withdraw at any point before SunTrust approved the short sales. See id.

Once Vinal submitted the short-sale offers to SunTrust, SunTrust allegedly "delay[ed] and obstruct[ed] the short sale process by losing important documents, requesting outrageous demands throughout the application process, deliberately shuffling Vinal's files around to different employees, and... misrepresenting the approval of buyers' offers." Compl. ¶ 12; see also id. ¶ 33. The offerors ultimately withdrew their offers, and Vinal never completed a short sale. Id . ¶ 33.

In 2010, SunTrust began the process of foreclosing on Vinal's properties. See [D.E. 16-3] (orders allowing foreclosure for each property). As part of that process, SunTrust retained Safeguard to secure the properties. "[N]o fewer than five times" before Vinal's properties had been sold at auction, Safeguard, "acting as a hired contractor for SunTrust, " entered Vinal's properties to change the locks. Compl. ¶ 24. In particular, on June 8, 2010, Safeguard changed the locks on the Arboretum Drive property, despite Vinal's instructions to the gated neighborhood's guards not to let Safeguard in the neighborhood. Compl. ¶¶ 25-26. Moreover, "[o]n two separate occasions in May and June of 2010, SunTrust hired Safeguard to change the locks on Vinal's property at 1536 South 41st Street." Id . ¶ 28.

When foreclosure proceedings were ongoing, Vinal had tenants residing at 1530 South 41st Street and 1536 South 41st Street. See id., Ex. G. After foreclosure, Fannie Mae owned both properties. See id. ¶ 35; [D.E. 16-5]. Fannie Mae renegotiated the lease associated with 1536 South 41st Street, and evicted the tenants of 1530 South 41st Street. Compl. ¶¶ 35-36. Ultimately, with all five of his properties in foreclosure, Vinal filed for bankruptcy, and obtained a discharge of all debt owed to SunTrust. See id. ¶ 14; [D.E. 16-9].


A federal court sitting in diversity applies the substantive law of the forum state (in this case, North Carolina), but applies federal procedural law. Erie R.R. Co. v. Tompkins , 304 U.S. 64, 78 (1938). When state law conflicts with the Federal Rules of Civil Procedure, the Rules govern. Hanna v. Plumer , 380 U.S. 460, 473-74 (1965). This principle applies even when the action was originally filed in state court and removed to federal court. See Fed.R.Civ.P. 81(c)(1). The Federal Rules of Civil Procedure do not have meaning independent of the federal cases that interpret them. Thus, in considering SunTrust's motion to dismiss pursuant to Rule 12(b)(6), this court applies the standard set forth in Ashcroft v. Iqbal , 556 U.S. 662 (2009), and Bell Atl. Corp. v. Twombly , 550 U.S. 544 (2007).

To survive a motion to dismiss pursuant to Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Iqbal , 556 U.S. at 678 (quoting Twombly , 550 U.S. at 570); Coleman v. Md. Court of Appeals , 626 F.3d 187, 190 (4th Cir. 2010), aff'd, 132 S.Ct. 1327 (2012); Giarratano v. Johnson , 521 F.3d 298, 302 (4th Cir. 2008); Goodman v. Praxair, Inc. , 494 F.3d 458, 464 (4th Cir. 2007) (en banc). In considering the motion, "a court accepts all well-pled facts as true and construes these facts in the light most favorable to the plaintiff, " but need not accept a complaint's "legal conclusions, elements of a cause of action, [or] bare assertions devoid of further factual enhancement." Nemet Chevrolet, Ltd. v., Inc. , 591 F.3d 250, 255 (4th Cir. 2009). The court may consider documents attached to the complaint or to the motion to dismiss, "so long as they are integral to the complaint and ...

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