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Tauss v. Midland States Bank

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

August 30, 2017

CALVIN A. TAUSS, Plaintiff,


          Richard L. Voorhees United States District Judge

         THIS MATTER IS BEFORE THE COURT on Defendant Midland States Bank's Motion to Dismiss Pro Se Complaint as Amended (Doc. 13; see Doc. 16) and on Defendant's Motion to Strike Plaintiff Calvin A. Tauss' “Memorandum Act of RESPA” (“Motion to Strike”) (Doc. 19). Following the Court's June 26, 2017 Roseboro Notice, Plaintiff filed a response to the Motion to Dismiss on July 17, 2017. (Doc. 21). The time for filing a reply has passed and both Motions are ripe for review. For the reasons set out below, Defendant's Motion to Dismiss Pro Se Complaint as Amended (Doc. 13) is DENIED, Defendant's Motion to Strike (Doc. 19) is GRANTED and Plaintiff's “Memorandum Act of RESPA” (Doc. 18) is STRICKEN.


          This is an action alleging violations of the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 et seq. (“RESPA”). As made clear in pro se Plaintiff's pleadings and as construed by the Court, Plaintiff brings claims under 12 U.S.C. § 2605. Any action pursuant to § 2605 “may be brought in the United States district court . . . for the district in which the property involved is located, or where the violation is alleged to have occurred, within 3 years in the case of a violation of section 2605 of this title . . . from the date of the occurrence of the violation.” 12 U.S.C. § 2614.

         Plaintiff alleges that the property involved is located at 527 Margaret Drive, Statesville, North Carolina, an allegation not disputed by Defendant in its Motion to Dismiss and an allegation supported by documents filed with Plaintiff's pleadings. (See Doc. 10 at 1, 19). Statesville is located in the Statesville Division of the Western District of North Carolina. Plaintiff filed this action in a proper district court and proper division. Plaintiff alleges, as a violation of § 2605, a lapse in insurance coverage as of September 2015 due to Defendant's failure to pay premiums from an escrow account. (Doc. 10 at 2). Plaintiff also alleges later-occurring violations of § 2605. (Doc. 10 at 3-4, 17; Doc. 15-1). Plaintiff filed the original Complaint on September 23, 2016 (Doc. 3), an Amended Complaint on October 17, 2016 (Doc. 10), and a supplemental pleading on February 16, 2017 (Docs. 15, 15-1). All pleadings have been filed well-within three years from the date of the occurrence of the first violation. The Court, therefore, has jurisdiction under 12 U.S.C. § 2614.


         Plaintiff, proceeding pro se, commenced this action on September 19, 2016, by moving for an emergency order directing Defendant to authorize restoration of normal water service at Plaintiff's home. (Doc. 1). On that same day, Plaintiff filed a Motion to Proceed in Forma Pauperis. (Doc. 2). On September 23, 2016, Plaintiff filed his original Complaint (Doc. 3) and the Court denied Plaintiff's motion for an emergency order (Doc. 4). On September 27, 2016, the Court granted Plaintiff's Motion to Proceed in Forma Pauperis. (Doc. 5). Within 21 days following service of the original Complaint, Plaintiff filed an Amended Complaint. (Doc. 10). Defendant timely responded with a Motion to Dismiss Pro Se Complaint as Amended pursuant to Fed.R.Civ.P. 12(b)(6) (“Motion to Dismiss”). (Doc. 13).

         Plaintiff did not respond to the Motion to Dismiss and, before the Court issued a Roseboro Notice, Plaintiff filed a “second” Amended Complaint on February 16, 2017, without first seeking leave of the Court or Defendant's written consent. (Doc. 15). Defendant responded to the “second” Amended Complaint, incorporating its prior Motion to Dismiss. (Doc. 16).

         On April 17, 2017, Plaintiff filed a “Memorandum Act of RESPA.” (Doc. 18). Defendant moves to strike the “Memorandum Act of RESPA” on the grounds that Plaintiff failed to first obtain leave to file the additional pleading and the content of the pleading appears to be irrelevant to the matter presently before the Court. (Doc. 19).

         The Court provided Defendant with a Roseboro Notice (Doc. 20) and Plaintiff timely responded to the Motion to Dismiss (Doc. 21). The time for a reply has passed.


         Rule 12(b)(6) of the Federal Rules of Civil Procedure 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 inferences, unreasonable conclusions, or arguments.'” Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (quoting E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000)).

         While Fed.R.Civ.P. 8(a)(2) does not require “detailed factual allegations, ” a complaint must offer more than “naked assertion[s]” and unadorned “labels and conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In order to survive a Fed.R.Civ.P. 12(b)(6) motion to dismiss, the facts alleged must be sufficient to “raise a right to relief above the speculative level” and “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). Requiring plausibility “does not impose a probability requirement at the pleading stage” id. at 556, but does demand more than “a sheer possibility that a defendant has acted unlawfully, ” Iqbal, 556 U.S. at 678. Ultimately, a claim is facially plausible when the factual content allows for the reasonable inference that the defendant is liable for the misconduct alleged. Id.

         In applying this standard, the Supreme Court has reiterated that “[a] document filed pro se is 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). However, the Fourth Circuit has “not read Erickson to undermine Twombly's requirement that a pleading contain more than labels and conclusions[.]” Giarratano, 521 F.3d at 304 n.5 (internal quotation marks omitted); accord Atherton v. Dist. of Columbia Off. of Mayor, 567 F.3d 672, 681-82 (D.C. Cir. 2009) (“But even a pro se complainant must plead ‘factual matter' that permits the court to infer ‘more than the mere possibility of misconduct.'” (quoting Erickson, 551 U.S. at 94; Iqbal, 556 U.S. at 679)). The rules governing the generous construction of pro se pleadings “do[] not relieve the plaintiff of the burden of alleging sufficient facts on which a recognized legal claim could be based.” Ashby v. City of Charlotte, 121 F.Supp.3d 560, 562 (W.D. N.C. 2015) (internal quotation marks omitted).

         IV. ANALYSIS

         The Court will first consider Defendant's Motion to Dismiss Pro Se Complaint as Amended (Doc. 13). The Court will separately consider Defendant's Motion to Strike (Doc. 19).

         A. Allegations Relevant to Motion to Dismiss

          i. Pleadings Properly Before the Court

          A threshold question is which pleadings may be considered by the Court in addressing the Motion to Dismiss. Plaintiff filed his first Amended Complaint on October 17, 2016, which included RESPA claims. (Doc. 10). A party may amend its pleading once as a matter of course within 21 days after serving it. Fed.R.Civ.P. 15(a)(1)(A). The summons and original Complaint were served on October 3, 2016. (Doc. 9 at 1, 4). Thus, Plaintiff's first Amended Complaint, which is titled “Amended Complaint Act of RESPA, ” was filed within the 21-day period and, therefore, properly filed as a matter of course under Fed.R.Civ.P. 15(a)(1)(A). Defendant filed a Motion to Dismiss Pro Se Complaint as Amended on November 23, 2016. (Doc. 13).

         Without seeking leave of Court, Plaintiff filed a “second” Amended Complaint on February 16, 2017. (Docs. 15, 15-1 (“Amended #2 Act of RESPA”)). The “second” Amended Complaint repeats the language of the first Amended Complaint and then adds language relating to an alleged failure by Defendant to pay 2016 real property taxes from an escrow account, claimed to be a further violation of RESPA. (Doc. 15-1 at 1-2). After amending once as a matter of course, a party may amend its pleading only with the opposing party's written consent or the court's leave. Fed.R.Civ.P. 15(a)(2). Defendant did not specifically object to the “second” Amended Complaint but instead responded by incorporating its earlier Motion to Dismiss. (Doc. 16). The Court does not view Defendant's response as written consent to a second amendment.

         The “second” Amended Complaint may be construed as a supplemental pleading because the events described in new allegations occurred after Plaintiff filed the first Amended Complaint on October 17, 2016. The “second” Amended Complaint alleges that on February 10, 2017, Plaintiff received a notice of delinquent taxes for the property subject to the mortgage. (Doc. 15- 1 at 4). Plaintiff included a copy of a monthly statement provided by Defendant which showed payments being made to an escrow account for taxes and insurance. (Doc. 15-1 at 3). These events occurred months after the filing of the first Amended Complaint. The filing of February 16, 2017, occurred promptly after the events alleged. Thus, the “second” Amended Complaint will be construed as an attempted supplemental pleading under Fed.R.Civ.P. 15(d).

         Rule 15(d) provides that “[o]n motion and reasonable notice, the court may, on just terms, permit a party to serve a supplemental pleading setting out any transaction, occurrence, or event that happened after the date of the pleading to be supplemented.” Plaintiff has not moved to supplement his pleadings. Courts in this Circuit, however, have liberally construed a pro se pleading as a motion seeking leave to supplement a complaint. See, e.g., Dicks v. Flury, 2015 WL 847409, at *2 (D. Md. Feb. 25, 2015) (declining to strike supplement to amended complaint even though pro se party failed to seek permission as required by Rule 15(d)); Smith v. Stevenson, 2010 WL 1257510, at *6 n.6 (D.S.C. Mar. 24, 2010) (addressing pro se supplemental pleading despite fact party failed to file a proper motion under Rule 15(d)). The Court will, therefore, consider whether to grant leave with respect to the pro se supplemental pleading.

         “Rule 15(d) motions are to be evaluated under the same standards used to evaluate motions to amend pleadings under Rule 15(a), which generally states that leave to amend should be freely granted when justice requires unless there are valid reasons for denying leave, such as undue delay, bad faith or futility.” Estate of Williams-Moore v. Alliance One Receivables Mgmt., Inc., 335 F.Supp.2d 636, 644 (M.D. N.C. 2004). The Court finds that because the supplemental pleading arises from the same alleged obligations of Defendant to make timely payments from the escrow account related to Plaintiff's mortgage, no valid reason for denying leave to supplement exists. Plaintiff filed the supplemental pleading within one week of the alleged receipt of the delinquent tax notice (Doc. 15-1 at 1) and there is no indication of bad faith or futility as the new allegations are of the type contained in the first amended Complaint. Defendant has responded to the supplemental pleading (Doc. 16) and leave to file will not delay resolution of the Motion to Dismiss. The Court, therefore, grants leave to file the supplemental pleading.

         For purposes of addressing the Motion to Dismiss, the operative pleading is the “Amended Complaint Act of RESPA, ” including exhibits (Doc. 10), as supplemented by “Amended #2 Act of RESPA, ” including exhibits (Doc. 15-1), collectively the “Supplemented Complaint.”[1]

          ii. Allegations

         The relevant Supplemented Complaint allegations, taken as true for purposes of a Rule 12(b)(6) motion to dismiss, are as follows:

(1) Plaintiff had a loan from Midland States Bank on which he made payments on principal and interest as well as into an escrow account for taxes and insurance. (Doc. 15-1 at 3).
(2) In December 2015, torrential rains and inclement weather caused severe damage to Plaintiff's home, including the roof and interior. Plaintiff informed his homeowners insurance company of the event and the insurance company sent an adjuster to survey the damage. (Doc. 10 at 1).
(3) Shortly thereafter, Plaintiff learned that his homeowners insurance had been cancelled in September 2015 because premiums had ...

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