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Hayes v. Self-Help Credit Union

United States District Court, M.D. North Carolina

August 22, 2014

ANNETTE M. HAYES, Plaintiff,
SELF-HELP CREDIT UNION, et al., Defendants.


CATHERINE C. EAGLES, District Judge.

Annette Hayes asserts nineteen statutory and common law causes of action against the credit union which holds a mortgage on her home and its alleged agents, arising out of what Ms. Hayes characterizes as unwarranted, illegal, and botched efforts to foreclose on her home and take possession of her real and personal property. While many of her tort claims fail to state a claim, she has alleged sufficient facts to support claims for breach of contract, trespass, defamation, negligent infliction of emotional distress, negligent supervision, and conspiracy. Her claims pursuant to several consumer protection statutes also survive to the extent they are not based on acts pre-dating her bankruptcy.

According to the complaint, Ms. Hayes obtained a mortgage on her home from the defendant Self-Help Credit Union. Defendant RoundPoint Mortgage Servicing Corp. serviced the mortgage, and defendant Five Brothers Mortgage Company Services and Securing was hired by SHCU and RoundPoint to evict Ms. Hayes after SHCU falsely claimed that she defaulted on the mortgage. Five Brothers hired Douglas Stuart, the fourth defendant, who locked Ms. Hayes out of her house twice and caused her electricity to be cut off by pretending to be a prosecutor. SHCU, RoundPoint, and Five Brothers have filed motions to dismiss or, in the alternative, motions for judgment on the pleadings as to all nineteen causes of action.

Procedural and Background Issues

RoundPoint and SHCU filed an answer to the complaint in October 2013. (Doc. 7.) Their pending motion, filed in April 2014, is captioned as a "Motion to Dismiss or for Judgment on the Pleadings." (Doc. 38.) Five Brothers filed an answer and an amended answer in November 2013, (Docs. 11, 13), and in June 2014 filed their pending motion, captioned as a "Motion to Dismiss or, in the Alternative, Motion for Judgment on the Pleadings." (Doc. 43.) While the answers contained defenses characterized as motions to dismiss for failure to state a claim, neither filed a separate motion or brief at that time.

Because the motions were filed after the defendants' answers, the Court will treat the motions as motions for judgment on the pleadings under Rule 12(c). See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999); Fed.R.Civ.P. 12(h)(2). The standard for motions under Rule 12(b)(6) and Rule 12(c) is the same when the question is whether a complaint states a claim; "the distinction is one without a difference, as... [courts apply] the same standard for Rule 12(c) motions as for motions made pursuant to Rule 12(b)(6)."[1] Burbach Broad. Co. of Del. v. Elkins Radio Corp., 278 F.3d 401, 405-06 (4th Cir. 2002); see also 5C Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1368.

In a case with facts spanning 10 years, four defendants, nineteen causes of action, and separate moving parties, the task before the Court is complicated, to say the least. All counsel in their briefs have further muddied the waters by their use of colorful but unhelpful language, by excessive assertions of their own opinions, and by their tendencies to rely on adverbs rather than arguments.

The extravagant use of adverbs is distracting at best and constitutes little more than opinions of counsel. Indignation does not support a claim for relief or justify a motion to dismiss, and histrionics have no place in legal briefs. Words like "mischaracterize" and "misrepresent" do little more than insinuate wrongdoing by opposing counsel, and their casual overuse in briefs is unnecessary, irrelevant, and unacceptable.[2] The Court directs all counsel to limit any future briefs to statements of fact supported by citations to the record and to discussions of relevant statutes and case law and their application to the dispute at hand.

In addition, the plaintiff has made numerous arguments as to which she has cited no legal authority of any kind. The defendants have followed the same path on occasion, though to a much lesser extent. It is not the role or the responsibility of the Court to undertake the legal research needed to support or rebut a perfunctory argument. See Gordon v. Leeke, 574 F.2d 1147, 1151 (4th Cir. 1978) (recognizing in a pro se case that the district court is not expected to assume the role of advocate for a pro se plaintiff); Beaudett v. City of Hampton, 775 F.2d 1274, 1278 (4th Cir. 1985) (stating district judges "cannot be expected to construct full blown claims from sentence fragments"); see also Spath v. Hayes Wheels Int'l-Ind., Inc., 211 F.3d 392, 397 (7th Cir. 2000) ("[I]t is not this court's responsibility to research and construct the parties' arguments." (quotation marks omitted)). The Court deems these arguments to be waived.

As an initial matter, Ms. Hayes contends that the motions should be denied because they violate the Local Rules[3] and Federal Rule of Civil Procedure 81.[4] If Ms. Hayes's reading of these rules were correct, a party could not file a motion for failure to state a claim or for judgment on the pleadings until after discovery was completed. Nor could a court ever dismiss a case filed in state court and then removed to federal court because of factual allegations inadequate to support a cause of action. The Court rejects these illogical interpretations and will reach the merits of the two motions.

Much of the argument made by the defendants is based on the contention that the complaint does not meet the pleading requirements of Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). While Twombly and Iqbal do not allow a case to go forward with only conclusory allegations and require that a complaint "plausibly suggest an entitlement to relief, " Iqbal, 556 U.S. at 681, those cases do not hold that a plaintiff must prove the elements of a cause of action in their pleading. See FDIC v. Baldini, 983 F.Supp.2d 772, 785 (S.D. W.Va. 2013). Indeed, Twombly explicitly states that a complaint "does not need detailed factual allegations." 550 U.S. at 555. The defendants' contentions to the contrary are not persuasive. The Court will evaluate the complaint according to the standards set forth in those two cases and as explained in detail by the Fourth Circuit in Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009), and Nemet Chevrolet, Ltd. v., Inc., 591 F.3d 250, 255-56 (4th Cir. 2009).


In her complaint, Ms. Hayes numbered her causes of action; the Court will use those same numbers for convenience and clarity. Paragraph numbers are all from the complaint, on file at CM/ECF Docket Number 4.

1. Wrongful Foreclosure: ¶¶ 95-99 (against SHCU and RoundPoint)

2. Attempted Wrongful Foreclosure: ¶¶ 100-04 (against SHCU and RoundPoint)

SHCU and RoundPoint contend that current North Carolina law does not recognize these causes of action on the facts alleged because Ms. Hayes was able to stop the foreclosures and retain her property. See, e.g., Patterson v. DAC Corp. of N.C. , 66 N.C.App. 110, 113, 310 S.E.2d 783, 785 (1984) (holding that the claim "accrues when the mortgagee conveys the property to a third party"); accord Porterfield v. JP Morgan Chase Bank, N.A., No. 4:13-CV-00128-BO, 2013 WL 5755499, at *2 (E.D. N.C. Oct. 23, 2013). Ms. Hayes acknowledges that this is so.[5] (Doc. 42 at 9.) The Court will dismiss Ms. Hayes's wrongful foreclosure and attempted wrongful foreclosure claims against SHCU and RoundPoint.

Five Brothers seeks dismissal of these claims because the complaint "describes no act or omission of the Five Brothers Defendant to impose liability for these claims." (Doc. 44 at 4-5.) That is not surprising, as the plaintiff explicitly made those claims only against SHCU and RoundPoint. As the claims are not stated against Five Brothers, its motion will be denied.

3. Abuse of Process: ¶¶ 105-08 (against SHCU and RoundPoint)

Abuse of process has two elements: "[f]irst, the existence of an ulterior purpose and, second, an act in the use of the process not proper in the regular prosecution of the proceeding." Barnette v. Woody, 242 N.C. 424, 431, 88 S.E.2d 223, 227-28 (1955); accord Turner v. Thomas, No. COA13-1131, 2014 WL 3821014, at *8-9 ( N.C. Ct. App. Aug. 5, 2014). Ms. Hayes alleges that SHCU and RoundPoint had the ulterior purpose of obtaining her house for less than market value, and that they scheduled, noticed, and conducted a foreclosure sale based on a delinquency that did not exist. Such allegations are insufficient, as they allege only that the defendants used the foreclosure process for its intended purpose: foreclosing on real property. Abuse of process requires "the malicious perversion of a regularly issued process whereby a result not lawfully or properly attainable under it is secured." Ellis v. Wellons, 224 N.C. 269, 271, 29 S.E.2d 884, 885 (1944); accord Franklin v. Yancey Cnty., Civil No. 1:09cv199, 2010 WL 317804, at *5 (W.D. N.C. Jan. 19, 2010) (holding that abuse of process entails more than "merely the issuance of process with a malicious motive and without probable cause").

Because Ms. Hayes failed to allege facts to indicate that either SHCU or RoundPoint misused the process issued in the foreclosure case, their motion will be granted as to Cause of Action Three for abuse of process. Five Brothers also seeks dismissal of this claim, but again the complaint does not state this claim against Five Brothers. As there is no claim stated against Five Brothers, its motion will be denied.

4. Breach of Contract and Implied Covenants: ¶¶ 109-14 (against SHCU and RoundPoint)

Ms. Hayes alleges that she was party to a valid mortgage contract and, later, a valid reinstatement contract with SHCU and RoundPoint and that SHCU and RoundPoint breached those contracts and the implied covenants of good faith and fair dealing in the contracts by improperly foreclosing upon her home and in other ways. SHCU and RoundPoint contend that this is simply another way of stating a wrongful foreclosure claim, which is precluded by North Carolina law. However, the cases cited by SHCU and RoundPoint do not specifically say that a mortgagee cannot sue her lender for breach of contract just because the breach leads to an improper foreclosure action. Patterson specifically noted that the plaintiff did not bring a claim for breach of contract and held that the wrongful foreclosure claim is "based on fraud." 66 N.C.App. at 113 , 310 S.E.2d at 785. Parker v. Sheldon involved a claim for wrongful foreclosure, not for breach of contract, and while the basis for the court's decision is not completely clear, it appears based in substantial part on the plaintiff's failure to prove damages. 47 N.C.App. 493, 495, 267 S.E.2d 403, 404 (1980).

The plaintiff alleges that SHCU and RoundPoint took a number of actions which breached the contracts she had with those defendants. The defendants as moving parties bear the burden to show this cause of action should be dismissed. The Court is not satisfied that a party to a valid contract cannot sue for breach of that contract just because the breach leads to an attempted foreclosure.[6]

The Court will deny the motion to dismiss Ms. Hayes's breach of the implied covenant of good faith and fair dealing claim against SHCU and RoundPoint. Five Brothers seeks dismissal of this claim, but as the complaint does not purport to state this claim against Five Brothers, its motion will be denied.

5. Unjust Enrichment: ¶¶ 115-19 (against SHCU and RoundPoint)

In the alternative to her breach of contract claims, Ms. Hayes alleges that SHCU and RoundPoint have been unjustly enriched. SHCU and RoundPoint contend that because there is a contract between the parties, the unjust enrichment claim cannot proceed. "If there is a contract between the parties, the contract governs the claim and the law will not imply a contract." Se. Shelter Corp. v. BTU, Inc., 154 N.C.App. 321, 331, 572 S.E.2d 200, 206 (2002) (citing Vetco Concrete Co. v. Troy Lumber Co., 256 N.C. 709, 713, 124 S.E.2d 905, 908 (1962)). While many of Ms. Hayes' allegations throughout the complaint are premised upon the existence of a mortgage contract with SHCU, (Doc. 4 at ¶¶ 22, 111-12), others post-date the contract and are premised upon more ambiguous circumstances. ( See e.g., id. at ¶¶ 45-60.) Nonetheless, these allegations are also premised upon the fact that Ms. Hayes owed money to SHCU pursuant to the mortgage and that she paid money to SHCU towards that mortgage. It is difficult to understand how her payment of money owed could constitute unjust enrichment, and she has offered no logical explanation in support of this claim. The Court will dismiss Ms. Hayes's unjust enrichment claim against SHCU and RoundPoint.

Five Brothers also seeks dismissal of this claim. As the complaint does not purport to state this claim against Five Brothers, its motion will be denied.

6. Trespass on March 1, 2013: ¶¶ 120-23 (against all defendants)

7. Trespass on March 17, 2013: ¶¶ 124-27 (against ...

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