United States District Court, W.D. North Carolina, Statesville Division
MICHAEL J. GARVEY, Plaintiff,
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.
Richard L. Voorhees United States District Judge.
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). 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.
a Response to Seterus's Answer, (Doc. 29);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
Plaintiffs Complaint 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). 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. 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
August 3, 2012, STSI, by and through its counsel, the
Hutchens Law Firm, LP, 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)).
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). 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).
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). 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).
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.
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." (See
Doc. 17; Doc. 18; Doc. 19).
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).
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.").
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
Hutchens/STSI Motion under Fed.R.Civ.P. 12(b)(4).
12(b)(5) and 12(b)(2) as to Defendants Moore, Salver, and
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).
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
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)).
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.
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).
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). 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).").
S&I Motion and Hutchens/STSI Motion under
Standard of Review
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 ...