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Devlin v. Wells Fargo Bank, N.A.

United States District Court, W.D. North Carolina, Asheville Division

March 21, 2014

WELLS FARGO BANK, N.A., Defendant.



THIS MATTER is before the Court on the Defendant Wells Fargo Bank, N.A.'s Motion to Dismiss [Doc. 12].


This civil action was brought in relation to the Plaintiffs' purchase of Lot 3, 31 Cotswolds Court, Arden, North Carolina 28704 in Buncombe County, North Carolina ("the property"). [Doc. 1-1]. The Plaintiffs filed suit against Wells Fargo Bank, N.A. ("Wells Fargo" or "the Bank"), asserting claims for breach of duty of good faith and fair dealing; fraud; violations of the North Carolina Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1, et seq. ("Chapter 75"); and injunctive relief, all arising from the Defendant's alleged involvement in fraudulently inflating the Plaintiffs' incomes on their loan applications in order to provide loans to the Plaintiffs for which they did not qualify. [Id. and Doc. 11].

The Plaintiffs originally filed this action in the Buncombe County North Carolina General Court of Justice, Superior Court Division, on November 2, 2012. [Doc. 1-1]. On November 6, 2012, the Defendant properly removed this action to this Court. [Doc. 1]. After the Defendant moved to dismiss the Plaintiffs' Complaint on January 3, 2013 [Doc. 4], the Plaintiffs brought a motion to amend their Complaint. [Doc. 6]. After the Plaintiffs filed their Amended Complaint on August 19, 2013 [Doc. 11], the Defendant renewed its motion to dismiss pursuant to Rule 9 and Rule 12(b)(6) of the Federal Rules of Civil Procedure. [Doc. 12].


In reviewing a motion to dismiss filed pursuant to Rule 12(b)(6), the Court is guided by the Supreme Court's instructions in Bell Atlantic Corp. v. Twombly , 550 U.S. 544 (2007) and Ashcroft v. Iqbal , 556 U.S. 662 (2009). As the Fourth Circuit has noted, "those decisions require that complaints in civil actions be alleged with greater specificity than previously was required." Walters v. McMahen , 684 F.3d 435, 439 (4th Cir. 2012).

In order 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). To be "plausible on its face, " a plaintiff must demonstrate more than "a sheer possibility that a defendant has acted unlawfully." Iqbal , 556 U.S. at 678.

Determining whether a complaint states a plausible claim for relief is "a context-specific task, " Francis v. Giacomelli , 588 F.3d 186, 193 (4th Cir. 2009), which requires the Court to assess whether the factual allegations of the complaint are sufficient "to raise a right to relief above the speculative level, " Twombly , 550 U.S. at 555. As the Fourth Circuit has recently explained:

To satisfy this standard, a plaintiff need not forecast evidence sufficient to prove the elements of the claim. However, the complaint must allege sufficient facts to establish those elements. Thus, while a plaintiff does not need to demonstrate in a complaint that the right to relief is probable, the complaint must advance the plaintiff's claim across the line from conceivable to plausible.

Walters , 684 F.3d at 439 (citations and internal quotation marks omitted).

In reviewing a complaint, the Court must accept the truthfulness of all factual allegations but is not required to assume the truth of "bare legal conclusions." Aziz v. Alcolac, Inc. , 658 F.3d 388, 391 (4th Cir. 2011). "The mere recital of elements of a cause of action, supported only by conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6)." Walters , 684 F.3d at 439. Notably, a Rule 12(b)(6) motion "does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Edwards v. City of Goldsboro , 178 F.3d 231, 243-44 (4th Cir. 1999) (quoting Republican Party v. Martin , 980 F.2d 943, 952 (4th Cir. 1992)).

This Court sits in federal diversity jurisdiction over this civil case.[1] In "transactions bearing an appropriate relation to the state, " "in the absence of an agreement between the parties" to the contrary, generally "state law will be applied" according to N.C. Gen. Stat. § 25-1-105(1). See Boudreau v. Baughman , 322 N.C. 331, 336, 368 S.E.2d 849, 854 (1988). "For actions sounding in tort, the state where the injury occurred is considered the situs of the claim." Id. at 335, 368 S.E.2d at 854. Similarly, in cases involving claims for unfair or deceptive trade practices, North Carolina courts have applied the law of the state where the injuries were sustained. See ITCO Corp. v. Michelin Tire Corp. , 722 F.2d 42, 49 n.11 (4th Cir. 1983); Lloyd v. Carnation Co. , 61 N.C.App. 381, 387-88, 301 S.E.2d 414, 418 (1983); United Va. Bank v. Air-Lift Assoc., Inc. , 79 N.C.App. 315, 321, 339 S.E.2d 90, 94 (1986). In cases involving financial injuries, courts have considered the injury to be sustained "where the economic loss was felt." Clifford v. Am. Int'l Specialty Lines Ins. Co., No. 1:04CV486, 2005 WL 2313907, at *8 (M.D. N.C. Sep. 21, 2005). Thus, North Carolina law will be applied in this action, since the property at issue is situated in North Carolina, the representations at issue are alleged to have been made in North Carolina, and the closing documents on the property were signed in North Carolina. [Docs. 1-1, 11].


Taking the well-pled factual allegations[2] of the Amended Complaint[3] as true, the following is a summary of the relevant facts.

In 2004, the Plaintiffs sought the help of mortgage broker JV WFHM Prosperity Mortgage ("Prosperity") as they desired to buy a home in Cotswolds Court, Arden, North Carolina. [Doc. 1-1 at ¶¶ 3-5]. The Plaintiffs provided necessary documentation to Prosperity, and Prosperity's agent requested the Plaintiffs to sign documents in blank to be later filled out by Prosperity's agent and then submitted to the Bank. [Id. at ¶¶ 7-8]. The Plaintiffs complied with Prosperity's requests and applied for a $409, 600 loan in addition to a $99, 800 equity loan on the property. [Id. at ¶ 9]. The Plaintiffs claim that they were "assured by both Prosperity and Wells Fargo Bank that said loans complied with all federal codes and regulations and that their loan was in fact an acceptable and good loan' for purposes of the transaction therein." [Id. at ¶ 10]. On November 29, 2004, the Plaintiffs executed the documentation to close on the property, based upon the documents that the Plaintiffs had provided to Prosperity's agent in addition to the loan applications that the Plaintiffs had signed and given to Prosperity's agent to complete and then give to the Bank. [Id. at ¶¶ 8, 11].

The Plaintiffs maintained their loan payments to the Defendant until "during the real estate collapse and the economic collapse which began in 2007 and continues to this day, " after which "the Plaintiffs have been unable to keep up with the strenuous loan payment associated with the original loan and equity line." [Id. at ¶ 12]. The Plaintiffs tried to obtain a loan modification from the Defendant but were unsuccessful in doing so. [Id. at ¶ 13]. During their attempted modification process, however, the Plaintiffs discovered that Prosperity's agent "fraudulently and illegally filled out various loan application documents as well as other federally mandated documents with false information related to the... income of the Plaintiffs." [Id. at ¶ 14]. Particularly, the income of the Plaintiff Lucksavage "was amplified three times its original amount" and the ...

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