Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Garvey v. Seterus, Inc.

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

June 23, 2017

MICHAEL J. GARVEY, Plaintiff,
v.
SETERUS, INC., SUBSTITUTE TRUSTEES SERVICES, INC., HUTCHENS LAW FIRM, LP, LACEY M. MOORE, CHRISTOPHER T. SALYER, SHIANN SCHMIDT, SHAPIRO & INGLE, LLP, MICHAEL JAY EMREY, and KYLE STEWART, Defendants.

          ORDER

          Richard L. Voorhees United States District Judge.

         THIS MATTER IS BEFORE THE COURT on two motions to dismiss and a motion for judgment on the pleadings. (Docs. 25, 27, 34). Defendants Shapiro & Ingle, LLP, Michael Jay Emrey ("Emrey"), and Kyle Stewart's ("Stewart") (collectively "S&I Parties") move to dismiss Plaintiffs action under Fed.R.Civ.P. 12(b)(6) ("S&I Motion"), (Doc. 25). Defendants Substitute Trustee Services, Inc. ("STSI"), Hutchens Law Firm, LLP, Christopher T. Salyer ("Salyer"), and Shiann Schmidt's ("Schmidt") (collectively "Hutchens Parties") move to dismiss Plaintiffs action under Fed.R.Civ.P. 12(b)(6) with respect to STSI and the Hutchens Parties and under Fed.R.Civ.P. 12(b)(2), 12(b)(4), and 12(b)(5) with respect to Salyer, and Schmidt ("Hutchens/STSI Motion"). (Doc. 27).[1] Defendant Seterus, Inc.'s ("Seterus") filed an Answer (Doc. 24) to Plaintiffs Complaint and moved for judgment on the pleadings under Fed.R.Civ.P. 12(c) ("Seterus Motion"), (Doc. 34). Plaintiff Michael J. Garvey ("Plaintiff) filed a Response to the S&I Motion, (Doc. 30); a Response to the Hutchens/STSI Motion, (Doc. 31); an Amended Response to the Hutchens/STSI Motion, (Doc. 33);[2] a Response to Seterus's Answer, (Doc. 29);[3]and a Response to the Seterus Motion, (Doc. 36). None of the Defendants have filed reply briefs and the time to do so has elapsed. For the reasons stated below the S&I Motion, (Doc. 25), is GRANTED; the Hutchens/STSI Motion, (Doc. 27), is GRANTED; and the Seterus Motion, (Doc. 34), is DENIED WITHOUT PREJUDICE

         I. BACKGROUND

         A. Factual Background

         Although Plaintiffs Complaint[4] is less than a model of clarity with respect to the specific claims he seeks to raise, the gist of Plaintiff s Complaint is that Defendants "continued to attempt to collect an alleged debt without providing verified evidence they had a legal right to do so[.]" (Doc. 1 at 6). According to the Complaint, "[t]he property at issue is personal, private property of the [Plaintiff] which was obtained for personal, family, and household use[.]" Id. at 7. The debt underlying Plaintiffs Complaint was secured by real property located in Ashe County, North Carolina, at the address 330 Walter Godbrey Road, West Jefferson, North Carolina 28694 ("Subject Property"). (See Doc. 1-3; Doc. 1-4; Doc. 1-5).[5] The debt arises out of a Promissory Note ("Note"), which was executed by Plaintiff on March 9, 2004 with Quicken Loans Inc. in the amount of $80, 700.00. In re Garvey, 772 S.E.2d 747, 748 ( N.C. Ct. App. 2015). The Note was secured by a Deed of Trust ("Deed of Trust") executed by Plaintiff Michael J. Garvey, Jane Holzer Godbrey, and Jaqueline Holzer, which granted a lien or encumbrance on the Subject Property. Id. Plaintiff defaulted under the payment provisions of the Note. Id.[6] On July 16, 2012, an Appointment of Substitute Trustee was recorded with the Ashe County Register of Deeds in Book 00431 at Page 1058, appointing Defendant STSI as the substitute trustee for the Deed of Trust. (See Doc. 28-1).

         On August 3, 2012, STSI, by and through its counsel, the Hutchens Law Firm, LP, [7]commenced foreclosure proceedings in Ashe County ("Foreclosure Action") on behalf of the lender, Bank of America, NA. Garvey, 772 S.E.2d at 748; see In re Garvey, Case No. 12-SP-98 ( N.C. Super. Ct); (Doc. 1-3). "On January 8, 2012, Pam W. Barlow, Clerk of Superior Court for Ashe County [("Barlow")], held a hearing on whether STSI was entitled to foreclose by power of sale." Garvey, 772 S.E.2d at 749. That same day, Barlow entered an order ("January 8 Order"), '"finding that STSI could proceed with foreclosure under the terms of the Deed of Trust.'" Garvey, 772 S.E.2d at 749 (ellipses omitted) (quoting Garvey, Case No. 12-SP-98, 2012 WL 11045623 ( N.C. Super. Ct. Jan. 8, 2012)).

         Subsequently, Plaintiff appealed the January 8 Order and, on August 12, 2013, a hearing was held in Ashe County Superior Court. Id; see Garvey, Case No. 12-SP-98 ( N.C. Super. Ct.). That same day, the Superior Court entered an order ("August 12 Order"), affirming Barlow's January 8 Order. Garvey, 772 S.E.2d at 749. Plaintiff appealed the August 12 Order to the North Carolina Court of Appeals, which reversed and remanded the case because the August 12 Order did not contain sufficient factual findings. See Id. at 751. In 2015, Bank of America transferred the loan to the Federal National Mortgage Association ("Fannie Mae"). Garvey, Case No. 12-SP-98 ( N.C. Super. Ct. Jan. 13, 2016). Defendant Seterus, as loan servicer on behalf of Fannie Mae, initiated contact with Plaintiff regarding the debt. (Doc. 1 at 7; see also Doc. 1-1).[8] Upon remand, the Superior Court issued an order that allowed STSI to proceed with the foreclosure under the terms of the Deed of Trust. Garvey, Case No. 12-SP-98 ( N.C. Super. Ct. Jan. 13, 2016); (see Doc. 28-5). Plaintiff appealed the Superior Court's decision to the North Carolina Court of Appeals; however, the appeal was dismissed in April 2017. See In re Garvey, Case No. 16-756 ( N.C. Ct. App. Apr. 12, 2017).

         On August 26, 2016, Plaintiff filed for Chapter 13 bankruptcy protection with the Bankruptcy Court for the Western District of North Carolina ("Bankruptcy Matter"). See In re Garvey, Case No. 5:16-bk-50518 (Bankr. W.D. N.C. Aug. 26, 2016); (Doc. 28-6). In the Bankruptcy Matter, the S&I Parties, as counsel for Seterus-the subservicer for Fannie Mae- filed a Notice of Appearance and an Objection to Confirmation. (Doc. 1 at 10-11; see Doc. 1-7; Doc. 1-9).[9] The Bankruptcy Matter was dismissed, with Plaintiff receiving no protection under Chapter 13. Garvey, Case No. 5:16-bk-50518 (Bankr. W.D. N.C. Oct. 24, 2016); (see Doc. 28-6).

         B. Procedural Background

         Plaintiff brought the present claim pursuant to the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 etseq. ("FDCPA"). (Doc. 1). Plaintiffs Complaint primarily alleges that one or more of the Defendants violated the FDCPA by failing to validate and verify the debt as required by § 1692g, by engaging in improper communications with Plaintiff as regulated by § 1692c, by using false and deceptive means in connection with their collection of the debt as prohibited by § 1692e, and by using unfair or unconscionable means to collect the debt as regulated by § 1692f Id.

         On November 21, 2016, this Court granted Plaintiffs motion to proceed in forma pauperis, directed the Clerk's Office to prepare summons for Defendants, and directed the U.S. Marshal Service ("USMS") to serve the summons and copies of the Complaint on each Defendant. (Doc.3). The Clerk issued summons to the USMS for service on each Defendant. (Doc. 4). The summons issued to Defendants Moore, Salyer, and Schmidt, all of whom are natural persons named in their individual capacity, were addressed to the respective individual at "Hutchens Law Firm, 4317 Ramsey Street, Fayetteville, NC 28311" for service on "Resident Agent, H. Terry Hutchens" at the same address. (See Doc. 17; Doc. 18; Doc. 19). On December 12, 2016, the USMS filed three Summons Returned Executed as to Moore, Salyer, and Schmidt, attaching copies of the certified mail return receipts. (See Doc. 17; Doc. 18; Doc. 19). The three return receipts attached to the Process Receipts and Returns bear the signature of "Shonell Adams."[10] (See Doc. 17; Doc. 18; Doc. 19).

         The S&I Parties move to dismiss Plaintiffs Complaint under Fed.R.Civ.P. 12(b)(6), arguing that they had no obligation to provide verification of the debt under 15 U.S.C. § 1692g(b) and that they were not required to obtain Plaintiffs consent to file pleadings in the Bankruptcy Matter. (Doc. 25; Doc. 26 at 4-10). Defendants Moore, Salyer, and Schmidt move to dismiss Plaintiffs Complaint for insufficient process pursuant to Fed.R.Civ.P. 12(b)(4), for insufficient service of process pursuant to Fed.R.Civ.P. 12(b)(5), and for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). (Doc. 27; Doc. 28 at 5-7). Defendants STSI, the Hutchens Parties, and Moore move to dismiss Plaintiffs Complaint under Fed.R.Civ.P. 12(b)(6), arguing that (1) the Complaint, as to Defendant Moore, fails to satisfy the notice pleading requirements of Fed.R.Civ.P. 8(a); (2) they had no obligation to provide verification of the debt under § 1692g(b); and (3) Plaintiffs FDCPA claims relative to the Foreclosure Action are time barred by 15 U.S.C. § 1692k(d). (Doc. 28 at 9-11). After timely answering Plaintiffs Complaint, Seterus filed a Motion for Judgment on the Pleadings under Fed.R.Civ.P. 12(c), (see Docs. 24, 34), arguing that it complied with the verification requirements in 15 U.S.C. § 1692g of the FDCPA and that the Complaint does not state a claim regarding prohibited communication under §§ 1692c or 1692g, (Doc. 35 at 5-14).

         II. DISCUSSION

         A. Jurisdiction

         This Court's jurisdiction is based on 28 U.S.C. § 1331 and on the FDCPA, the latter of which provides that "[a]n action to enforce any liability created by this subchapter may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within one year from the date on which the violation occurs, " 15 U.S.C. § 1692k(d). "[I]n determining when the [one-year] limitations period begins, the majority of courts look to the date at which the defendant engaged in the allegedly abusive action (such as the date a defendant mails a debt communication letter) rather than any subsequent date at which the plaintiff may have felt the harm." Fontell v. Hassett, 870 F.Supp.2d 395, 404 (D. Md. 2012) (citing Maloy v. Phillips, 64 F.3d 607, 608 (11th Cir. 1995); Mattson v. U.S. W. Commc 'ns, Inc., 967 F.2d 259, 261 (8th Cir. 1992)). An FDCPA action may also accrue '"when the debtor should have known of the violation, even if the debtor may not be actually aware of the violation.'" Ross v. Gordon & Weinberg, P.C., 2011 WL 3841549, at *3 (W.D. N.C. Aug. 30, 2011) (quoting Boccone v. Am. Express Co., 2007 WL 2914909, at *4 (D. Md. Oct. 4, 2007)); see Lembach v. Bierman, 528 F.App'x 297, 302 (4th Cir. 2013) ("We see no reason not to apply the discovery rule to [plaintiffs FDCPA claim]."). Furthermore, "the limitations period for FDCPA claims commences from the date of the first violation, and subsequent violations of the same type do not restart the limitations period." Bey v. Shapiro Brown & Alt, LLP, 997 F.Supp.2d 310, 316 (D. Md.), aff'd, 584 F.App'x 135 (4th Cir. 2014) (quotation marks omitted). Accordingly, courts have routinely rejected a continuing violation theory within the context of FDCPA's statute of limitations. Id.; see also Fontell, 870 F.Supp.2d at 404) (rejecting continuing violation theory); Nutter v. Messerli & Kramer, P.A., 500 F.Supp.2d 1219, 1223 (D. Minn. 2007) ("[N]ew communications concerning an old claim [do] not start a new period of limitations.").

         In addition to the constraint on bringing claims under the FDCPA imposed by the one-year statute of limitations, the Rooker-Feldman doctrine is a jurisdictional doctrine that may be raised sua sponte. Friedman's, Inc. v. Dunlap, 290 F.3d 191, 195-96 (4th Cir. 2002) (noting court was "obliged to address [Rooker-Feldman doctrine] before proceeding"). "[T]he Rooker-Feldman doctrine applies only when the loser in state court files suit in federal district court seeking redress for an injury allegedly caused by the state court's decision itself." Davani v. Virginia Dep 't of Transp., 434F.3d712, 713 (4th Cir. 2006) (citing Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (2005)). The doctrine "is confined to . . . 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, 544 U.S. at 284. Here, the Rooker-Feldman doctrine does not bar Plaintiffs claims because Plaintiff filed his Complaint in the present case in November 2016, (see Doc. 1), while the Foreclosure Action did not become final until after the North Carolina Court of Appeals dismissed Plaintiffs second appeal in 2017, see Garvey, Case No. 16-756 ( N.C. Ct. App. 2017). See Nicholson v. Shafe, 558 F.3d 1266, 1275 (11th Cir. 2009) (concluding Rooker-Feldman doctrine does not apply where state court judgment is pending on appeal at time federal plaintiff commences federal court action). Accordingly, the Court can proceed to evaluate the Defendants' motions.

         B. Hutchens/STSI Motion under Fed.R.Civ.P. 12(b)(4). 12(b)(5) and 12(b)(2) as to Defendants Moore, Salver, and Schmidt

         Defendants Moore, Salyer, and Schmidt move to dismiss Plaintiffs Complaint for insufficient process pursuant to Fed.R.Civ.P. 12(b)(4), for insufficient service of process pursuant to Fed.R.Civ.P. 12(b)(5), and for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). (Doc. 28 at 5). Specifically, Moore, Salyer, and Schmidt contend that service was not properly effectuated under Fed.R.Civ.P. 4(e) when the USMS mailed the respective process to Hutchens Law Firm for service on the registered agent and, as a result, this Court lacks personal jurisdiction over them. (Doc. 28 at 5-6). In response, Plaintiff argues that, since Moore, Salyer, and Schmidt are employees of Hutchens Law Firm and the registered agent for Hutchens Law Firm was served, service on the three individuals was proper. (Doc. 33 at 3). In addition, Plaintiff asserts that "[i]f Defendants/Debt Collectors have an issue with service, then they need to address the court clerk and the Marshal who executed service for [Plaintiff]." (Doc. 33 at 3).[11]

         "Rules 12(b)(4) and 12(b)(5) are often confused. Rule 12(b)(4) concerns the sufficiency of the form of the process, rather than the manner or method by which it is served. Rule 12(b)(5), on the other hand, challenges the mode of delivery or the lack of delivery of the summons and complaint." Davies v. Jobs & Adverts Online, Gmbh, 94 F.Supp.2d 719, 721 n.5 (E.D. Va. 2000) (citing 5A Wright & Miller, Fed. Prac. & Proc. § 1353 (2d 1990)). Here, since Moore, Salyer, and Schmidt challenge the manner of service, this Court will review the motion under Rule 12(b)(5).

         When a plaintiff proceeds in forma pauperis, the district court must direct the USMS to effectuate service of process. See 28 U.S.C. § 1915(d) (2012); Fed.R.Civ.P. 4(c)(3). However, a plaintiff is responsible for providing "sufficient information to identify the defendant" with "reasonable effort." Odom v. Ozmint, 517 F.Supp.2d 764, 768 (D.S.C. 2007). A plaintiff bears the burden of establishing that the service of process has been performed in accordance with the requirements of Rule 4. Scott v. Maryland State Dep 't of Labor, 673 F.App'x 299, 303 (4th Cir. 2016) (citing Dickerson v. Napalitano, 604 F.3d 732, 752 (2d Cir. 2010). "The real purpose of service of process is to give notice to the defendant, and mere technicalities should not stand in the way of consideration of a case on its merits." Id. at 304 (brackets, internal citations, and quotation marks omitted). '"Actual notice', however, is not the controlling standard." Id. Although courts typically liberally construe rules governing service of process when the defendant receives actual notice, the rules '"are there to be followed, and plain requirements may not be ignored.'" Id. (ellipses omitted) (quoting Armco, Inc. v. Penrod-Stauffer Bldg. Sys., Inc., 733 F.2d 1087, 1089 (4th Cir. 1984)).

         Under Fed.R.Civ.P. 4(e), a natural person may be served by: (1) delivering a copy of the summons and complaint to the party personally; (2) leaving a copy of the summons and complaint at the party's dwelling or usual place of abode with someone of suitable age and discretion who resides there; (3) delivering a copy of the summons and complaint to an agent authorized by appointment or by law to receive service of process; or (4) by following state law procedures. Fed.R.Civ.P. 4(e). Relevant here, under North Carolina law, an individual may be served "[b]y mailing a copy of the summons and of the complaint, registered or certified mail, return receipt requested, addressed to the party to be served, and delivering to the addressee." N.C. R. Civ. P. 40Xl)(c).

         Here, Plaintiff failed to properly effect service upon Defendants Moore, Salyer, and Schmidt in accordance with Fed.R.Civ.P. 4(e) or N.C. R. Civ. P. 4(j)(1)(c). The caption of Plaintiffs Complaint explicitly states that process for Moore, Salyer, and Schmidt was to be "serve[d] on H. Terry Hutchens, Resident Agent, Hutchens Law Firm, 4317 Ramsey Street, Fayetteville, NC 28311." (Doc. 1 at 1-2). Process intended for Moore, Salyer, and Schmidt was sent via certified mail for service upon H. Terry Hutchens, resident agent of Hutchens Law Firm, and the return receipts were signed by Shonell Adams, an unknown individual. (See Docs. 17, 18, 19). The process was not left at the parties' dwelling or usual place of abode, and Plaintiff has not demonstrated that either Shonell Adams or H. Terry Hutchens is an agent authorized to accept service of process for Moore, Salyer, or Schmidt. Therefore, Plaintiff has not satisfied his burden of showing that Moore, Salyer, and Schmidt were properly served with process in accordance with Fed.R.Civ.P. 4(e) or N.C. R. Civ. P. 4(j)(1)(c). See Williams v. Hetzel, 2012 WL 2577042, at *1 (W.D. N.C. July 3, 2012) (concluding that defendant named in individual capacity was not properly served where process was sent via certified mail to defendant's office, but was not signed for by defendant).

         Plaintiffs failure to properly complete service provides ample basis for granting Moore, Salyer, and Schmidt's motion to dismiss under Fed.R.Civ.P. 12(b)(5).[12] However, a dismissal under Rule 12(b)(5) for failure to properly complete service is a dismissal without prejudice, typically permitting the Plaintiff an opportunity to refile his complaint and properly effectuate service of process. See Pitts v. O 'Geary, 914 F.Supp.2d 729, 735 (E.D. N.C. 2012). To limit the refiling of complaints that do not properly state a claim, a court that concludes that service was not properly completed for purposes of Rule 12(b)(5) may proceed and consider a defendant's alternative argument for dismissal for failure to state a claim under Fed.R.Civ.P. 12(b)(6). See Scott, 673 F.App'x at 307 ("[R]egardless of whether the individual defendants were properly served, the district court correctly concluded that the violations of Title VII and the ADEA alleged in the complaint failed to state a claim for relief against them."); Anderson v. Gates, 20 F.Supp.3d 114, 120 (D.D.C. 2013) ("[A]lthough the Court lacks personal jurisdiction over defendants in their individual capacities [due to insufficient service of process], it will nonetheless analyze Anderson's constitutional claims against them and dismiss those claims under Rule 12(b)(6).").

         C. S&I Motion and Hutchens/STSI Motion under Fed.R.Civ.P. 12(b)(6)

         i. Standard of Review

         Rule 12(b)(6) provides for the dismissal of a claim based upon a plaintiff's "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). A complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). In evaluating a motion to dismiss, a court must construe the complaint's factual allegations "in the light most favorable to the plaintiff and "must accept as true all well-pleaded allegations." Randall v. United States, 30 F.3d 518, 522 (4th Cir. 1994). A court, however, "need not accept the legal conclusions drawn from the facts, " nor "accept as true unwarranted ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.