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Reaves v. Jp Morgan Chase Bank, N.A.

United States District Court, M.D. North Carolina

December 2, 2014

TONIA M. REAVES, Plaintiff,


JOI ELIZABETH PEAKE, Magistrate Judge.

This breach of contract action comes before the Court on a Motion to Dismiss [Doc. #2] filed by Defendant JP Morgan Chase Bank, N.A. ("Defendant Chase") pursuant to Federal Rule of Civil Procedure 12(b)(6), seeking dismissal of all claims asserted by Plaintiff Tonia M. Reaves ("Plaintiff" or "Plaintiff Reaves"). In the Complaint in this case, Plaintiff Reaves brings six causes of action in addition to a request for declaratory relief. Plaintiff's claims arise out of a 2010 Settlement Agreement between the parties, which settled a prior state court dispute involving alleged wrongful mortgage foreclosure proceedings. Plaintiff now contends that Defendant breached the Settlement Agreement and wrongfully threatened further foreclosure proceedings. In the Motion to Dismiss, Defendant contends that there has been no breach, and that Plaintiff's remaining claims are either barred by the Settlement Agreement or are attempts to recover in tort for a breach of contract claim. For the reasons set out below, the Court recommends that Defendant Chase's Motion to Dismiss be denied as to Plaintiff's breach of contract claim and request for declaratory relief, but otherwise be granted.


The property underlying the present dispute is Plaintiff's residence in High Point, North Carolina. In the Complaint, Plaintiff alleges that she mortgaged the property with Flick Mortgage Investors, Inc. The mortgage was later assigned to Washington Mutual Savings and Loan, and was then purchased by and reassigned to Defendant Chase. Plaintiff further alleges that Defendant Chase wrongfully brought a foreclosure proceeding against her in Guilford County Superior Court in 2009. According to Plaintiff, the default underlying the foreclosure action arose because Defendant Chase incorrectly designated one of her monthly mortgage payments in 2009 and placed it into a holding account. Plaintiff alleges that she attempted to pay her monthly mortgage payments to Defendant in December 2009 and January 2010, but Defendant electronically refunded those payments on January 25, 2010. Plaintiff further states that upon the advice of the office of the Guilford County Clerk of Superior Court, she did not pay her monthly mortgage payments for February, March, and April 2010. The foreclosure action came on for hearing on May 21, 2010, during which Defendant's representative demanded payment of approximately $12, 000.00 to prevent foreclosure, which Plaintiff paid. Her mortgage was reinstated.

Plaintiff alleges that in September 2011, Defendant again placed one of her monthly mortgage payments into a holding account and brought foreclosure proceedings. In November 2011, Plaintiff brought suit against Defendant in state court for return of money she alleged that she overpaid on May 21, 2010, and for fraud, negligent misrepresentation, and duress. In January 2012, Plaintiff entered into a settlement agreement and release with Defendant ("the Agreement"). Paragraph 6 of the Agreement states that "[e]ach party shall bear its own costs, expenses and attorneys' fees incurred in connection with the Lawsuit, its settlement and this Agreement." (Agreement [Doc. #9-10] at 3.) Pursuant to the terms of the Agreement, the "Lawsuit" refers to Plaintiff's case against Defendant which was then pending. As part of the Agreement, Plaintiff released all of her claims against Defendant, which included all of Plaintiff's claims related to the 2009 and 2011 foreclosure proceedings.

After entering into the Agreement, Defendant Chase sent Plaintiff a letter in January 2012 demanding payment of her monthly mortgage plus approximately $3, 000 for "Other Fees and Advances." Plaintiff inquired about these other fees and was told by Defendant that they were attorneys' fees relating to their prior foreclosure action. Plaintiff made her January mortgage payment. She alleges that she also made a payment on January 30, 2012, but that Defendant rejected and refunded that payment. Plaintiff states that she tried to make payments thereafter, but that Defendant rejected them while demanding payment of certain amounts plus the amount for "other fees." In September 2012, Defendant began contacting Plaintiff regarding initiating foreclosure proceedings. Plaintiff contends that in December 2012 Defendant contacted an assessor to go to Plaintiff's home to take photographs in anticipation of foreclosure.

Based upon these alleged facts, Plaintiff filed the present suit raising six causes of action: (1) breach of contract; (2) negligent misrepresentation; (3) unfair and deceptive trade practices under N.C. Gen. Stat. § 75-1.1; (4) negligent infliction of emotional distress; (5) punitive damages; and (6) reasonable reliance. Plaintiff also includes a request for declaratory relief under state law. Defendant argues that as to each of these claims, Plaintiff has failed to state a claim upon which relief may be granted, and that the entire action should be dismissed.


A. Standard

A plaintiff fails to state a claim on which relief may be granted under Federal Rule of Civil Procedure 12(b)(6) when the complaint does not "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678.

B. First Cause of Action: Breach of Contract

In her first cause of action, Plaintiff alleges that Defendant breached paragraph 6 of the Settlement Agreement. Paragraph 6 of the Agreement states that "[e]ach party shall bear its own costs, expenses and attorneys' fees incurred in connection with the Lawsuit, its settlement and this Agreement." (Agreement [Doc. #9-10] at 3.) Plaintiff alleges that Defendant breached paragraph 6 of the Agreement by using Plaintiff's mortgage account to collect attorneys' fees and by assessing late fees to which Defendant is not entitled. Defendant Chase argues that it did not breach the Agreement by attempting to collect attorneys' fees relating to the foreclosure. (Def's. Br. [Doc. #3] at 5-6.) According to Defendant Chase, paragraph 6 of the Agreement refers only to attorneys' fees related to Plaintiff's then-pending superior court action, and Defendant contends that its prior foreclosure action was a separate and distinct action which was not affected by the Agreement. (Id.) In response, Plaintiff argues that her complaint in state superior court alleged that Defendant committed fraud by misrepresenting what she owed to Defendant and by asserting that it had a right to foreclose Plaintiff's mortgage. (Pl.'s Br. [Doc. #9] at 10.) Plaintiff therefore argues that the foreclosure action was related to "the Lawsuit, its settlement and this Agreement." The parties therefore disagree on the meaning of paragraph 6 of the Agreement. Defendant Chase also notes that attorneys' fees are mentioned in paragraph 3 of the Agreement, in addition to paragraph 6. In paragraph 3, Plaintiff released Defendant of any and all claims arising out of the facts, transactions, circumstances and occurrences relating to the Lawsuit. Defendant contends that it made no similar release in favor of Plaintiff.

The Agreement states that it "shall be governed by and interpreted in accordance with the laws of the State of North Carolina." (Agreement [Doc. #9-10] ¶ 9(b).) Under North Carolina law, contract language that is clear on its face is interpreted by the court as a matter of law; however, if the language is ambiguous and the intention of the parties is not clear, interpretation of the contract is for the jury. Int'l Paper Co. v. Corporex Constructors, Inc., 385 S.E.2d 553, 556 ( N.C. Ct. App. 1989).

The well-pled facts at this stage are construed in the light most favorable to the plaintiff. Nemet Chevrolet, Ltd. v., Inc., 591 F.3d 250, 255 (4th Cir. 2009). Defendant Chase does not dispute that Plaintiff's state court suit resulted from Defendant's managing of Plaintiff's mortgage account and Defendant's attempt to foreclose her mortgage. In addition, the Agreement settled all of Plaintiff's claims against Defendant, including all claims related to the allegedly wrongful foreclosure proceedings in 2009 and 2011. Although Plaintiff released Defendant Chase from a wide variety of claims in paragraph 3 and there is no similar provision releasing Plaintiff, it remains that Defendant Chase waived attorneys' fees in paragraph 6, and paragraph 3 does not otherwise limit or clarify the interpretation of paragraph 6. Indeed, Paragraph 3 can be read as reflecting the broad scope of claims settled by and included within the Agreement, which lends support to Plaintiff's broad reading of paragraph 6 waiving attorney's fees incurred "in connection with the Lawsuit, its settlement and this Agreement." Having considered the parties' contentions, the Court concludes that the quoted language of paragraph 6 could be reasonably interpreted to pertain to the attorneys' fees of Plaintiff's superior court action only, or the language could be reasonably interpreted to cover ...

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