United States District Court, M.D. North Carolina
DAVID L. KELLIS, Plaintiff,
U.S. BANK, N.A., FEDERAL DEPOSIT INSURANCE CORPORATION, OCWEN LOAN SERVICING, LLC., HSBC BANK USA, N.A., and TRUSTEE SERVICES OF CAROLINA, LLC., Defendants.
MEMORANDUM OPINION AND ORDER
CARLTON TILLEY, JR. SENIOR UNITED STATES DISTRICT JUDGE
David L. Kellis, proceeding pro se, has asserted
various claims under both federal and North Carolina state
law regarding the foreclosure of his property in Burlington,
North Carolina. This matter is before the Court on four
motions: (1) Defendant Trustee Services of Carolina's
(“Trustee Services”) Motion to Dismiss [Doc.
#13], (2) Defendant U.S. Bank, N.A.'s (“U.S.
Bank”) Motion to Dismiss [Doc. #20], Defendant Federal
Deposit Insurance Corporation's (“FDIC”)
Motion to Dismiss [Doc. #26], and Defendants Ocwen Loan
Servicing, LLC (“Ocwen”) and HSBC Bank USA,
N.A.'s (“HSBC”) Motion to Dismiss [Doc. #31].
Court has considered all Defendants' Motions to Dismiss
[Docs. #13, 20, 26, 31] and supporting documents [Docs. #14,
21, 27, 32]. Mr. Kellis has not filed responses to any of the
Defendants' Motions despite being notified several times
of his right to do so. (June 20, 2016 Letters [Docs. #22,
23]; July 1, 2016 Letter [Doc. #29]; July 12, 2016 Letter
[Doc. #33].) Under Local Rule 7.3(k), a motion that is
uncontested may be granted without further notice.
Nevertheless, because one claim is barred by the
Rooker-Feldman doctrine, because three defendants
were not properly served, and because the remaining
allegations fail to state a claim, this matter will be
dismissed on the merits.
instant action arises out of the foreclosure of Mr.
Kellis' residence at 1434 Greenwood Drive, Burlington,
North Carolina. Mr. Kellis alleges that in December 2002, he
executed a promissory note (“Note”) naming U.S.
Bank as Lender, which was secured by a deed of trust
(“Deed”) also naming U.S. Bank as the Lender.
(Compl. [Doc. #1] at ¶ 10.) The same month, the Deed was
recorded in Alamance County, North Carolina. (Id.
¶ 11.) From 2004 through 2015, several appointments of
substitute trustee were recorded in Alamance County
culminating in the appointment of Trustee Services as
Trustee. (Id. ¶¶ 13-16.) In addition, in
2015, three Assignments of Deed of Trust were filed in
Alamance County resulting in all rights being assigned to
HSBC. (Id. ¶¶ 17-19.) On February 18,
2016, Mr. Kellis' property was sold at a foreclosure
sale. (Ex. I, Report of Foreclosure Sale/Resale [Doc.
to the Complaint, sometime around March 18, 2016, Mr. Kellis
received a “Notice to Vacate” the subject
property. (Id. ¶ 20.) Mr. Kellis claims that
this was the first notice of any type that he received about
any foreclosure proceeding. (Id.) Sometime around
April 13, 2016, Mr. Kellis wrote to Trustee Services raising
concerns about the lack of notice and the nature of the
transfers and assignments of the deed of trust. (Id.
¶ 24.) As of the date of filing his Complaint, Mr.
Kellis had not received any response from Trustee Services.
(Id. ¶ 25.)
April 29, 2016, Mr. Kellis commenced the present action
against Defendants U.S. Bank, FDIC, Trustee Services, HSBC,
and Ocwen (collectively “Defendants”). The
Complaint asserts claims for: (1) Violations of Real Estate
Settlement Procedures Act (“RESPA”) against Ocwen
(Id. ¶¶ 52-55); (2) Violations of Federal
Truth-In-Lending Act (“TILA”) against U.S. Bank
(Id. ¶¶ 56-60); (3) Misrepresentation
against all Defendants (Id. ¶¶ 61-67); (4)
Conversion against U.S. Bank, Ocwen, and HSBC (Id.
¶¶ 68-72); (5) To Set Aside Wrongful Foreclosure
against all Defendants (Id. ¶¶ 73-80); (6)
Civil Conspiracy against all Defendants (Id.
¶¶ 81-86); and (7) Slander of Title against all
Defendants (Id. ¶¶ 87-100).
Kellis' Complaint references attached exhibits, but no
exhibits were ever filed. Trustee Services alerted Mr. Kellis
to this in its Memorandum in Support of Motion to Dismiss.
([Doc. #14] at 3.) Twice, Mr. Kellis moved for an extension
of time to address the motions to dismiss (July 19, 2016 Mot.
for Extension of Time [Doc. #34]; August 25, 2016 Mot. for
Extension of Time [Doc. #35]) and, both times, his motion was
granted. (July 22, 2016 Text Order; August 29, 2016 Text
Order.) Despite this extra time, Mr. Kellis has not responded
to any of the motions to dismiss nor has he filed any
exhibits. The time for Mr. Kellis to respond has passed
making all motions to dismiss ripe for review. For the
reasons discussed below, the Defendants' motions will be
granted and this matter will be dismissed.
Defendants argue that the claim to set aside the state
foreclosure is barred in the present action pursuant to the
Rooker-Feldman doctrine. A motion to dismiss for lack
of subject matter jurisdiction, filed pursuant to Federal
Rule of Civil Procedure 12(b)(1), raises the fundamental
question of whether a court has jurisdiction to adjudicate
the matter before it. Arbaugh v. Y & H Corp.,
546 U.S. 500, 514 (2006). It is the plaintiff's burden to
prove jurisdiction. Richmond, Fredericksburg &
Potomac R.R. Co. v. United States, 945 F.2d 765, 768
(4th Cir. 1991).
Defendants argue they were inadequately served with process,
making the exercise of personal jurisdiction over them
improper pursuant to Federal Rule of Civil Procedure 12(b)(2)
and 12(b)(5). A motion pursuant to Federal Rule of Civil
Procedure 12(b)(5) is the appropriate means for challenging
the sufficiency of service of process. Plant Genetic
Sys., N.V. v. Ciba Seeds, 933 F.Supp. 519, 526 (M.D.
N.C. 1996). The plaintiff bears the burden of establishing
that the service of process has been performed in accordance
with the requirements of Federal Rule of Civil Procedure 4.
Defendants assert that Mr. Kellis has failed to state any
claim upon which relief can be granted. “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.'” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atlantic Corp. V. Twombly,
550 U.S. 544, 570 (2007)). A claim is facially plausible
provided the plaintiff provides enough factual content to
enable the court to reasonably infer that the defendant is
liable for the misconduct alleged. Id. The pleading
setting forth the claim must be “liberally
construed” in the light most favorable to the nonmoving
party, and allegations made therein are taken as true.
Jenkins v. McKeithen, 395 U.S. 411, 421 (1969).
However, “the requirement of liberal construction does
not mean that the court can ignore a clear failure in the
pleadings to allege any facts [that] set forth a
claim.” Lindsay v. Nichino America, Inc., 202
F.Supp.3d 524, 528 (M.D. N.C. 2016)(quoting Estate of
Williams-Moore v. Alliance One Receivables Mgmt., Inc.,
335 F.Supp.2d 636, 646 (M.D. N.C. 2004)).
12(b)(6) protects against meritless litigation by requiring
sufficient factual allegations “to raise a right to
relief above the speculative level” so as to
“nudge[ ] the[ ] claims across the line from
conceivable to plausible.” Twombly, 500 U.S.
at 555, 570; see Iqbal, 556 U.S. at 662. Under
Iqbal, the court performs a two-step analysis.
First, it separates factual allegations from allegations not
entitled to the assumption of truth (i.e., conclusory
allegations, bare assertions amounting to nothing more than a
“formulaic recitation of the elements”). Second,
it determines whether the factual allegations, which are
accepted as true, “plausibly suggest an entitlement to
relief.” 556 U.S. at 681.
party is proceeding pro se, that party's filings
are “to be liberally construed and a pro se
complaint, however inartfully pleaded, must be held to less
stringent standards than formal pleadings drafted by
lawyers.” Erickson v. Pardus, 551 U.S. 89, 94
(2007) (internal citations and quotation marks omitted). It
is important to note that, in the case of a pro se
plaintiff, the United States Court of Appeals for the Fourth
Circuit has “not read Erickson to undermine
Twombly's requirement that a pleading contain
more than labels and conclusions.” Giarratano v.
Johnson, 521 F.3d 298, 304 n.5 (4th Cir. 2008) (internal
quotation marks omitted) (dismissing pro se
to Federal Rule of Civil Procedure 12(b)(1), U.S. Bank, HSBC,
and Ocwen assert that this action is an appeal of the state
court foreclosure which is not properly before the Court. The
Rooker-Feldman doctrine is a jurisdictional rule
that prohibits a federal district court from hearing
“cases brought by state-court losers complaining of
injuries caused by state-court judgments rendered before the
district court proceedings commenced and inviting district
court review and rejection of those judgments.”
Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544
U.S. 280, 284 (2005). In other words, the doctrine precludes
claims that seek redress for an injury caused by a
state-court decision, because such a claim essentially asks
“the federal district court to conduct an appellate
review of the state-court decision.” Adkins v.
Rumsfeld, 464 F.3d 456, 464 (4th Cir. 2006) (quoting
Davani v. Va. Dep't of Transp., 434 F.3d 712,
719 (4th Cir. 2006)).
January, 2016, Mr. Kellis' property was foreclosed. (Ex.
H, Order to Allow Foreclosure Sale [Doc. #21-8].) The
property was ultimately sold at a foreclosure sale on
February 18, 2016. (Ex. I, Report of Foreclosure Sale/Resale
[Doc. #21-9].) In North Carolina, the Clerk of Superior Court
presides over power-of-sale foreclosure actions. See
N.C. Gen. Stat. § 45-21.16(d). To find that a
foreclosure initiated under a power of sale is valid, the
clerk of court must determine that a valid debt exists, the
debtor is in default, the trustee has the right to foreclose,
and sufficient notice was given. See N.C. Gen. Stat.
§ 45-21.16(d)-(d1); Phil Mech. Const. Co. v.
Haywood, 325 S.E.2d 1, 3 ( N.C. Ct. App. 1985). Any
issue that the clerk decides in a foreclosure proceeding
under N.C. Gen. Stat. § 45-21.16(d) is conclusive unless
appealed and reversed and cannot be relitigated in a
subsequent lawsuit. See In re Atkinson-Clark Canal
Co., 67 S.E.2d 276, 278 ( N.C. 1951); Douglas v.
Pennamco, Inc., 331 S.E.2d 298, 300 ( N.C. Ct. App.
1985). A party may appeal a decision of the clerk of court to
the superior court, which reviews de novo the same issues
that the clerk resolved. See N.C. Gen. Stat. §
to these statutes, the Clerk of Superior Court in Alamance
County made a determination that: (1) HSBC was the holder of
the Kellis note; (2) the note was a valid debt; (3) the note
was in default and HSBC had the right to foreclose under a
power of sale; (4) notice of the hearing had been served on
the record owners of the real estate to be foreclosed; (5)
pre-foreclosure notice was provided pursuant to N.C. Gen.
Stat. § 45-102; and that (6) Mr. Kellis had not shown
any valid legal reason why the foreclosure should not
proceed. (Ex. H, Order to Allow Foreclosure Sale [Doc.
#21-8].) In his claim to set aside wrongful foreclosure, Mr.
Kellis alleges that the Defendants never “were properly
authorized to initiate such foreclosure and sale.”
(Compl. ¶ 75.) However, ...