Foster v. Wells Fargo, NA

• Court: Court of Appeals of North Carolina
• Decided: March 4, 2014
• Docket: 13-974
• Status: Unpublished

Opinion

An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

NO. COA13-974 NORTH CAROLINA COURT OF APPEALS

Filed: 4 March 2013

RALPH M. FOSTER and SHYVONNE L. STEED-FOSTER, Plaintiffs,

v. Durham County No. 12 CVS 6015 WELLS FARGO, NA; FEDERAL NATIONAL MORTGAGE ASSOCIATION, AKA FANNIE MAE; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INCORPORATED, AKA, MERS; and SHAPIRO AND INGLE; Defendants.

Appeal by plaintiffs from order entered 29 April 2013 by

Judge Paul G. Gessner in Durham County Superior Court. Heard in

the Court of Appeals 9 January 2014.

Ralph M. Foster and Shyvonne L. Steed-Foster, pro se, plaintiffs-appellants.

Womble, Carlyle, Sandridge, and Rice, LLP, by Amanda G. Ray and Jesse A. Schaefer, for defendants-appellees.

HUNTER, JR., Robert N., Judge.

Ralph M. Foster and Shyvonne L. Steed-Foster (“Plaintiffs”)

appeal from a final order dismissing their complaint with

prejudice for failure to state a claim upon which relief can be -2- granted. Plaintiffs contend that their complaint is

sufficiently particular to state causes of action for fraud,

unfair and deceptive trade practices, and civil conspiracy

against Wells Fargo, Federal National Mortgage Association

(“Fannie Mae”), Mortgage Electronic Registration Systems

Incorporated (“MERS”), and the law firm of Shapiro and Ingle

(collectively, “Defendants”). Plaintiffs also contend that the

trial court erred in dismissing the complaint with prejudice

without issuing a written order disposing of Plaintiffs’ pending

motions. For the following reasons, we affirm the trial court’s

order.

I. Factual & Procedural History

On 10 December 2012, Plaintiffs filed a complaint against

Defendants in Durham County Superior Court alleging fraud,

unfair and deceptive trade practices, and civil conspiracy. The

complaint requested damages and a permanent injunction

preventing Wells Fargo from foreclosing on Plaintiffs’ property.

The body of Plaintiffs’ complaint characterizes the foreclosure

practices of Defendants as a “scheme” devised by Fannie Mae to

defraud the court. Most of Plaintiffs’ allegations are general

in nature, with only a few alleging specific facts that took -3- place in Plaintiffs’ case. The specific facts that are alleged,

and that are pertinent to our review, are as follows.

On 26 February 2012, Plaintiffs executed a promissory note

in the amount of $340,506 in favor of TBI Mortgage Company in

order to purchase property at 308 South Bend Drive in Durham.

The note was secured by a deed of trust, which was attached and

incorporated into the complaint by reference. The deed of trust

identifies MERS as TBI Mortgage Company’s nominee. The

complaint also included a copy of a corporate assignment of the

deed of trust from MERS, as nominee of TBI Mortgage Company, to

Wells Fargo. A copy of the promissory note was not attached to

the complaint.

Plaintiffs allege that the promissory note was indorsed in

blank by TBI Mortgage Company and sold to Fannie Mae, who

securitized the loan. Plaintiffs allege that Fannie Mae

required Wells Fargo to make false representations to Plaintiffs

regarding Wells Fargo’s status as an owner and holder of the

promissory note. Specifically, Plaintiffs allege that Wells

Fargo represented itself as a loan servicer for TBI Mortgage

Company and as the owner and holder of both the promissory note

and deed of trust. Plaintiffs further allege that these

representations were false and that in reliance on these -4- representations, Plaintiffs were induced to pay principal and

interest payments on their mortgage to “Wells Fargo and/or

Fannie Mae.” According to Plaintiffs, they had no choice but to

rely on these representations because “Wells Fargo controlled

the relevant document and information regarding the true

ownership of their loan but chose to hide such information from

[P]laintiffs.” Shapiro and Ingle allegedly perpetuated Wells

Fargo’s false representations by sending collection letters to

Plaintiffs corroborating Wells Fargo’s claims.

On 5 February 2013, Defendant Shapiro and Ingle filed a

motion to dismiss the complaint pursuant to N.C. R. Civ. P.

12(b)(6). On 15 February 2013, the remaining Defendants also

filed a motion to dismiss Plaintiffs’ complaint. Thereafter,

Plaintiffs filed an amended complaint adding a claim to quiet

title to their property and a claim for injunctive relief.

Plaintiffs also filed a motion for “Permanent and or Temporary

Injunctive Relief” asking the trial court to “issue a permanent

injunction against any attempt by defendants and Wells Fargo

Bank, NA to commence future foreclosure proceedings against

their property.”

A hearing on the motions was scheduled for 11 April 2013.

Before the hearing took place, Plaintiffs filed a motion for -5- leave to file a second amended complaint and withdrew their

first amended complaint. At the hearing, Plaintiffs advised the

trial court that they wished to proceed under their original

complaint. By order dated 29 April 2013, the trial court

dismissed Plaintiffs’ complaint with prejudice. Plaintiffs

filed timely notice of appeal.

II. Jurisdiction

Plaintiffs’ appeal from the superior court’s order

dismissing the complaint with prejudice lies of right to this

Court pursuant to N.C. Gen. Stat. § 7A-27(b) (2013).

III. Analysis

Plaintiffs’ appeal presents two questions for our review:

(1) whether the trial court erred in dismissing Plaintiff’s

complaint pursuant to N.C. R. Civ. P. 12(b)(6); and (2) whether

the trial court properly considered Plaintiff’s pending motions

prior to entry of the dismissal order. We address each in turn.

A. Dismissal Pursuant to Rule 12(b)(6)

Plaintiffs’ contend that their complaint is sufficiently

particular to state claims of fraud, unfair and deceptive trade

practices, and civil conspiracy against Defendants. We

disagree. -6- In reviewing the trial court’s decision to dismiss

Plaintiffs’ complaint, “[t]his Court must conduct a de novo

review of the pleadings to determine their legal sufficiency and

to determine whether the trial court’s ruling on the motion to

dismiss was correct.” Leary v. N.C. Forest Prods., Inc., 157

N.C. App. 396, 400, 580 S.E.2d 1, 4, aff’d per curiam, 357 N.C.

567, 597 S.E.2d 673 (2003). “‘On a Rule 12(b)(6) motion to

dismiss, the question is whether, as a matter of law, the

allegations of the complaint, treated as true, state a claim

upon which relief can be granted.’” Allred v. Capital Area

Soccer League, Inc., 194 N.C. App. 280, 282, 669 S.E.2d 777, 778

(2008) (quoting Wood v. Guilford Cty., 355 N.C. 161, 166, 558

S.E.2d 490, 494 (2002)). Accordingly, we must consider

Plaintiffs’ complaint “to determine whether, when liberally

construed, it states enough to give the substantive elements of

a legally recognized claim.”1 Governors Club, Inc. v. Governors

Club Ltd. P’Ship, 152 N.C. App. 240, 246, 567 S.E.2d 781, 786

(2002) (internal citations omitted), aff’d per curiam, 357 N.C.

46, 577 S.E.2d 620 (2003).

1 Both parties cite to material outside of the four corners of Plaintiffs’ original complaint for factual propositions and to support their argument. However, the trial court’s dismissal order addressed Plaintiffs’ original complaint and our review is limited to that document on appeal. -7- 1. Fraud

Plaintiffs’ first cause of action against Defendants is for

fraud. The essential elements of actionable fraud are “(1)

[f]alse representation or concealment of a material fact, (2)

reasonably calculated to deceive, (3) made with intent to

deceive, (4) which does in fact deceive, (5) resulting in damage

to the injured party.” Ragsdale v. Kennedy, 286 N.C. 130, 138,

209 S.E.2d 494, 500 (1974).

“Allegations of fraud are subject to more exacting pleading

requirements than are generally demanded by our liberal rules of

notice pleading.” Harrold v. Dowd, 149 N.C. App. 777, 782, 561

S.E.2d 914, 918 (2002) (quotation marks and citation omitted).

Pursuant to N.C. R. Civ. P. 9(b), “[i]n all averments of

fraud . . . the circumstances constituting fraud or mistake

shall be stated with particularity.” Furthermore, “the

particularity requirement is met by alleging time, place and

content of the fraudulent representation, identity of the person

making the representation and what was obtained as a result of

the fraudulent acts or representations.” Terry v. Terry, 302

N.C. 77, 85, 273 S.E.2d 674, 678 (1981).

Here, Plaintiffs’ claims of fraud relate to the alleged

false representations made by Wells Fargo concerning its status -8- as a loan servicer for TBI Mortgage Company and its status as a

holder of the promissory note. However, Plaintiffs’ complaint

fails to specifically identify any individual acting on behalf

of Wells Fargo (or any other defendant) who allegedly made these

representations. Accordingly, Plaintiff’s allegations of fraud

were properly dismissed. See Trull v. Cent. Carolina Bank &

Trust Co., 117 N.C. App. 220, 224, 450 S.E.2d 542, 545 (1994)

(“A complaint charging fraud against a corporation must

specifically allege the time and occasion of the

misrepresentation or concealment of material fact and the

individual who made the misrepresentation or concealment in

order to satisfy the requirements of Rule 9(b).”); Coley v. N.C.

Nat. Bank, 41 N.C. App. 121, 125, 254 S.E.2d 217, 220 (1979)

(“It is not sufficient to conclusorily allege that a corporation

made fraudulent misrepresentations; the pleader in such a

situation must allege specifically the individuals who made the

misrepresentations of material fact, the time the alleged

misstatements were made, and the place or occasion at which they

were made.”).

2. Unfair and Deceptive Trade Practices

Plaintiffs’ complaint also alleges that Defendants engaged

in unfair and deceptive trade practices in violation of N.C. -9- Gen. Stat. § 75-1.1 (2013). “To state a claim for unfair and/or

deceptive trade practices, the plaintiffs must allege that (1)

the defendants committed an unfair or deceptive act or practice,

or an unfair method of competition, (2) in or affecting

commerce, (3) which proximately caused actual injury to the

plaintiffs or to the plaintiffs’ business.” Birtha v. Stonemor,

N. Carolina, LLC, ___ N.C. App. ___, ___, 727 S.E.2d 1, 10

(2012).

Plaintiffs’ complaint does not allege new conduct by

Defendants constituting an unfair and deceptive trade practice.

Rather, the complaint merely references the same conduct alleged

as being fraud, i.e., Wells Fargo’s alleged false

representations concerning its right to collect payment on the

promissory note. In reviewing whether this alleged conduct is

sufficiently particular to state a claim for relief under N.C.

R. Civ. P. 8(a), we note that this Court is not required to

accept as true allegations that are “merely conclusory,

unwarranted deductions of fact, or unreasonable inferences.”

Good Hope Hosp., Inc. v. N.C. Dep’t of Health & Human Servs.,

174 N.C. App. 266, 274, 620 S.E.2d 873, 880 (2005) (quotation

marks and citation omitted). Furthermore, “[d]ismissal is proper

when . . . the complaint on its face reveals the absence of -10- facts sufficient to make a good claim.” Bissette v. Harrod, ___

N.C. App. ___, ___, 738 S.E.2d 792, 797 (2013) (quotation marks

and citations omitted).

Here, Plaintiffs’ assertion that Wells Fargo committed an

unfair or deceptive act is premised on Plaintiffs’ unsupported

characterization of the mortgage industry’s foreclosure

practices as a “fraudulent [s]cheme” and assumptions made

therefrom. We do not accept as true those allegations in

Plaintiffs’ complaint which are based on unwarranted deductions

of fact and unreasonable inferences.

Moreover, Plaintiffs’ complaint alleges that their

promissory note was indorsed in blank and sold to Fannie Mae.

Later, the complaint alleges that Wells Fargo “controlled the

relevant document and information regarding the true ownership

of their loan.” The complaint also alleges that Wells Fargo was

never the owner of the deed of trust, yet includes a copy of a

corporate assignment of the deed of trust from MERS, acting as

nominee for TBI Mortgage Company, to Wells Fargo. Given these

allegations, it is insufficient for Plaintiffs to allege that

they paid principal and interest payments to Wells Fargo “to

their damage.” Plaintiffs have failed to allege that the sums

paid were not applied to their outstanding mortgage debt. -11- Without such an allegation, Plaintiffs have not alleged an

actual injury proximately resulting from Wells Fargo’s alleged

misrepresentations. Accordingly, Plaintiffs’ unfair and

deceptive trade practices claim was properly dismissed.

3. Civil Conspiracy

The final claim asserted in Plaintiffs’ complaint is civil

conspiracy. Again, the basis of Plaintiffs’ claim is the

alleged false representations made by Wells Fargo in connection

with its right to collect on the promissory note. However,

“there is not a separate civil action for civil conspiracy in

North Carolina.” Dove v. Harvey, 168 N.C. App. 687, 690, 608

S.E.2d 798, 800 (2005).

In civil conspiracy, recovery must be on the basis of sufficiently alleged wrongful overt acts. The charge of conspiracy itself does nothing more than associate the defendants together and perhaps liberalize the rules of evidence to the extent that under proper circumstances the acts and conduct of one might be admissible against all.

Id. (quotation marks and citation omitted). Because we hold

Plaintiffs have not sufficiently alleged the underlying wrongful

acts of fraud or unfair and deceptive trade practices,

Plaintiffs’ civil conspiracy claim is without merit. -12- B. Plaintiffs’ Pending Motions

Finally, Plaintiffs contend that the trial court erred in

dismissing their complaint with prejudice without issuing a

written order disposing of Plaintiffs’ motion for injunctive

relief and their motion for leave to file a second amended

complaint. This argument is without merit because the trial

court’s order does address the substance of these motions. The

order includes the following:

8. During the April 11, 2013[] hearing, Plaintiffs advised the Court that they wished to proceed under their original Complaint rather than the Amended Complaint.

9. Withdrawal of the Amended Complaint arguably effectuates a dismissal of this civil action, but the Court will rule on the merits of the Motions in light of Plaintiffs’ desire to proceed under their original Complaint and to promote judicial economy.

10. Plaintiffs appear to seek a permanent injunction against any foreclosure sale under the Deed of Trust without regard to whether there is a present—or future—default under the promissory note secured by the Deed of Trust.

11. Plaintiffs are not entitled to a permanent injunction against a foreclosure sale of the Property. Likewise, Plaintiff’s [sic] remaining claims fail to state a claim on which relief may be granted. -13- We affirm the trial court’s dismissal order in its entirety.

IV. Conclusion

For the foregoing reasons, we affirm the trial court’s

order dismissing Plaintiffs’ complaint with prejudice.

Affirmed.

Judges STROUD and DILLON concur.

Report per rule 30(e).