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Neighbor v. JP Morgan Chase Bank, N.A.

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

October 25, 2019

PAMELA NEIGHBOR and NAOMI QUILLEN, Plaintiffs,
v.
JP MORGAN CHASE BANK, N.A. and SETERUS, INC., Defendants.

          ORDER

          Max O. Cogburn Jr., United States District Judge.

         THIS MATTER is before the Court on a Partial Motion to Dismiss Amended Complaint (Doc. No. 26), which was filed by Defendant Nationstar Mortgage LLC as successor-in-interest to Seterus, and which Defendant JP Morgan Chase joins in part (Doc. No. 29). For reasons that follow, the Court denies the motion.

         I. FACTUAL BACKGROUND

         The following facts are taken from Plaintiffs' Amended Complaint and are assumed true for this motion. In June 2005, non-party Dennis Neighbor executed a Promissory Note, by which he agreed to repay a home mortgage loan in the amount of $172, 350.00, plus interest. As security, Dennis Neighbor, as well as Plaintiffs Pamela Neighbor and Naomi Quillen, executed a Deed of Trust granting the lender and its successors and assigns a security interest in a home located at 15 Country Road in Hendersonville, North Carolina. (Doc. No. 10 ¶ 7).

         Around March 2010, the Country Road home was destroyed by an explosion. (Id. ¶ 9). Before, the home “was in pre-foreclosure, ” so an “investigation was done to determine the cause of the explosion.” (Id. ¶¶ 10-11). Allegedly, the “investigation concluded that Plaintiffs were innocent and were completely clear of any liability for the destruction of the house.” (Id. ¶ 12).

         After the explosion, Plaintiffs learned that the remaining balance on the mortgage loan was $158, 055.00. (Id. ¶ 13). Plaintiffs claim their insurer sent payment for that amount in October 2010 to Diamont & Associates, who forwarded the amount “to Defendant.” (Id. ¶ 15). Plaintiffs assert that this payment “satisfied the mortgage debt Plaintiffs owed to Defendant.” (Id. ¶ 16).

         Despite the supposed payoff, “Defendant initiated [home] foreclosure proceedings” on January 15, 2013. (Id. ¶ 17). Plaintiffs maintain they were “unaware of these proceedings” because “they no longer lived at the property” and believed the mortgage was “satisfied three years prior.” (Id. ¶¶ 18-19). Purportedly, “[o]n January 23, 2013, an Order Permitting Foreclosure was filed [with] the Henderson County Clerk of Court” and on September 4, 2015, the home “was sold on the courthouse steps.” (Id. ¶¶ 20-21). Then, “[o]n October 29, 2015, a final report and account of Foreclosure Sale was filed with the [clerk] for Plaintiffs' property.” (Id ¶ 22).

         On October 29, 2018, Plaintiffs filed this lawsuit against Defendant JP Morgan Chase in the Superior Court of Henderson County, North Carolina. (Doc. No. 1). Defendant JP Morgan Chase removed the action to this Court on December 13, 2018. (Id.). On February 26, 2019, Plaintiffs filed an Amended Complaint, which named Seterus as a defendant for the first time. (Doc. No. 10). Plaintiff served Seterus with a summons and a copy of the Amended Complaint on June 10, 2019 by certified mail to Seterus's registered agent. (Doc. No. 27-5).

         II. DISCUSSION

         Defendant Nationstar moves to dismiss the Amended Complaint on two grounds. First, Nationstar moves to dismiss the entire complaint for insufficient service of process. See Fed.R.Civ.P. 12(b)(5). Nationstar contends that service was insufficient because Plaintiffs failed to serve it with a summons within 90 days of filing the Amended Complaint. (Doc. No. 27 at 12). Second, Nationstar moves to partially dismiss the Amended Complaint because it fails to state a claim upon which relief can be granted. See Fed.R.Civ.P. 12(b)(6). Specifically, Nationstar argues the complaint reveals that Plaintiffs' claims are time-barred. (Doc. No. 27 at 1). Defendant JP Morgan Chase joins the latter contention. (Doc. No. 29). The Court rejects each argument in turn.

         A. Insufficient Service of Process

         “Before a federal court may exercise personal jurisdiction over a defendant, the procedural requirement of service of summons must be satisfied.” Omni Capital Int'l v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987). The purpose of service “is to give notice to the defendant.” Scott v. Maryland State Dep't of Labor, 673 Fed.Appx. 299, 304 (4th Cir. 2016) (quoting Karlsson v. Rabinowitz, 318 F.2d 666, 669 (4th Cir. 1963)). As such, “[w]hen the process gives the defendant actual notice of the pendency of the action, [service] rules, in general, are entitled to a liberal construction.” Armco v. Penrod-Stauffer Bldg. Sys., 733 F.2d 1087, 1089 (4th Cir. 1984); see also Torres v. Oakland Scavenger Co., 487 U.S. 312, 316 (1988) (noting “‘mere technicalities' should not stand in the way of consideration of a case on its merits”). Still, “actual notice” is not the controlling standard. Mining Energy v. Office of Workers' Comp., 391 F.3d 571, 576 (4th Cir. 2004). Service “rules are there to be followed, and plain requirements for the means of effectuating service of process may not be ignored.” Armco, 733 F.2d at 1089.

         Federal Rule of Civil Procedure 4 sets forth the formal requirements for the issuance of a summons and for service of process in proceedings brought in federal court. Where a defendant alleges a defect in service, the plaintiff bears the burden of demonstrating that the procedure used to perfect service complied with the requirements of Rule 4. See Mann v. Castiel, 681 F.3d 368, 372 (D.C. Cir. 2012); Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004).

         Rule 4(m) requires a plaintiff to serve a summons and complaint on each defendant within 90 days of filing a complaint. If a plaintiff fails to timely serve a defendant, the Court “must dismiss the action without prejudice against that defendant or order that service be made within a specified time.” Fed.R.Civ.P. 4(m). Where a plaintiff demonstrates “good cause” for failing to timely serve a defendant, the Court “must extend the time for service for an appropriate period.” Id. But “even if there is no good cause shown, ” “[district] courts have been accorded discretion to enlarge” the period for service. Henderson v. United ...


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