IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE EASTERN DISTRICT OF VIRGINIA 

Alexandria Division 

IN RE: ) 

 ) 

ALEX MEHRABI ) Case No. 15-11395-RGM 

 ) Chapter 13 

 Debtor ) 

 ) 

Alex Mehrabi ) 

 ) 

 Plaintiff ) 

 ) 

v. ) Adv. Pro. No. 15-01097-RGM 

 ) 

Chicago Title Insurance Company, et al. ) 

 ) 

 Defendants ) 

WELLS FARGO BANK, N.A.’S 

MEMORANDUM IN SUPPORT OF ITS MOTION TO DISMISS 

 Wells Fargo Bank, N.A. (“Wells Fargo”), by counsel, files its Memorandum in Support 

of its Motion to Dismiss Debtor/Plaintiff, Alex Mehrabi’s Complaint pursuant to Bankruptcy 

Rule 7012(b) and Rule 12(b)(6) of the Federal Rules of Procedure. 

Material Facts

 This matter arises out of a dispute regarding the ownership of real property located at 

4817 Autumn Glory Way in Chantilly, Virginia (the “Property”). Comp. ¶ 4. The essence of 

Plaintiff’s claim is that his mother-in-law, Iran Zolfaghar (“Zolfaghar”), is named as a grantee in 

the deed of conveyance to the Property (in addition to Plaintiff and his ex-wife, Sharbou Azar 

Hijian). Comp. ¶¶ 10-11. Plaintiff does not believe that Zolfaghar should have been included in 

the deed or have an interest in the Property. Id. 

 Although named as a grantee on the deed of conveyance, Zolfaghar did not execute the 

purchase money deed of trust (the “Deed of Trust”). Comp. ¶ 13. As a result, Wells Fargo 

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initiated a suit in the Fairfax County Circuit Court to reform the Deed of Trust or otherwise make 

Zolfaghar’ s interest in the Property made subject to the Deed of Trust. Comp. ¶ 17. That suit has 

been resolved and Plaintiff has attempted an appeal to the Virginia Supreme Court. Comp. ¶ 20. 

Importantly, Plaintiff does not contend that he did not sign the Deed of Trust or that his interest 

in the Property is not subject to the Deed of Trust. 

 As set forth more fully below, the Complaint fails to state a claim against Wells Fargo 

and is barred by the doctrine of res judicata. 

Argument 

I. Standard of Review 

 Under the U.S. Supreme Court’s decisions in Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) 

and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007), in order to survive a motion to 

dismiss under Rule 12(b)(6) (as incorporated by Bankruptcy Rule 7012), the complaint must 

state a claim that is plausible on its face. “A claim has facial plausibility when the plaintiff pleads 

factual content that allows the court to draw the reasonable inference that the defendant is liable 

for the misconduct alleged. Hackman v. Wilson (In re Hackman), Case No. 10-17176-BFK, 2015 

Bankr. LEXIS 2378, *13 (Bankr. E.D. Va. July 20, 2015) (citing Twombly, 550 U.S. at 556). 

While the Court must accept as true all well-pleaded facts in the complaint, it is not required to 

accept allegations that are legal conclusions. Id. (citing Walters v. McMahen, 684 F.3d 435 (4th 

Cir. 2012). Moreover, “[t]he mere recital of elements of a cause of action, supported only by 

conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6).” 

Walters, 684 F.3d 435 (citing Iqbal, 556 U.S. at 678. 

 

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Argument 

II. The Complaint Fails to State a Claim against Wells Fargo. 

 Plaintiff’s cause of action against Wells Fargo appears to be based solely on a “breach of 

dealing in good faith with their borrower, Alex Mehrabi”. Comp. ¶ 23. As his factual support of 

that claim, Plaintiff alleges that Wells Fargo: (1) acquired the loan secured by the Deed of Trust 

and discovered that Zolfaghar had not joined in the Deed of Trust, even though she had an 

interest in the Property; (Comp. ¶ 13); (2) made a claim on its title insurance policy (Comp. ¶ 

14); (3) employed counsel (Comp. ¶ 15); and (4) filed a suit in the Fairfax County Circuit Court 

to reform the Deed of Trust to include Zolfaghar’s interest in the Property. Plaintiff’s allegations 

are insufficient to sustain an action based on a claim of a breach of a duty to deal in good faith, if

a separate cause of action of this nature actually exists under Virginia law. 

A. Virginia law does not recognize a separate cause of action for breach of an implied 

warranty of good faith and fair dealing.

The Virginia Supreme Court has held, unequivocally, “in Virginia, when parties to a 

contract create valid and binding rights, an implied covenant of good faith and fair dealing is 

inapplicable to those rights. This is so under either the common law or the Uniform Commercial 

Code.” Ward’s Equip. v. New Holland N. Am., 254 Va. 379, (1997) (emphasis supplied). In 

addition, “[g]enerally, such a covenant cannot be the vehicle for rewriting an unambiguous 

contract in order to create duties that do not otherwise exist. Id. 

The Circuit Court for the City of Richmond rejected Plaintiff’s exact claim on demurrer 

in Emanuel v. Bank of Am., N.A., 89 Va. Cir. 272 (Va. Cir. Ct. 2014). In that case, the court 

said, “there is no Virginia authority that a cause of action of good faith and fair dealing exists.” 

Id. at 273. Not only is there no common law cause of action, the Virginia Supreme Court has 

said that there is no such independent statutory cause of action in Virginia under the Uniform 

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Commercial Code. Charles E. Brauer Co. v. Nationsbank of Va., N.A., 251 Va. 28, 33 (1986). 

As a result, the court in Emanuel sustained Bank of America’s demurrer and dismissed the count 

for breach of implied covenant of good faith and fair dealing. 89 Va. Cir. at 273. Because 

Virginia law does not support an independent cause of action for breach of an implied covenant 

of good faith and fair dealing, the Motion to Dismiss should be granted and the Complaint 

dismissed as against Wells Fargo. 

B. Even if Virginia law did recognize a cause of action for breach of an implied 

covenant of good faith and fair dealing, Plaintiff has failed to plead sufficient facts to 

make such a claim facially plausible.

Notwithstanding the Virginia Supreme Court’s clear statement in Ward’s Equip., and the 

circuit court’s view in Emanuel, some federal courts have suggested that such a covenant does 

exist. However, even those courts have make clear that breach of those duties only gives rise to a 

breach of contract claim, not a separate cause of action. Frank Brunckhorst Co., L.L.C. v. 

Coastal Atl., Inc., 542 F. Supp. 2d 452, 462, (E.D. Va. 2008). "[T]he implied covenant of good 

faith and fair dealing does not create affirmative obligations, but rather is 'simply a manifestation 

of conditions inherent in expressed promises,' and is designed to prevent a party from 'acting in 

such a manner as to prevent the other party from performing his [or her] obligations under the 

contract.’” Cagle v. CitiMortgage, Inc., No. 3:13cv807, 2015 U.S. Dist. LEXIS 57612, *30 (E.D. 

Va. May 1, 2015) (quoting Chance v. Wells Fargo Bank, N.A., No. 3:12cv320-JRS, 2012 U.S. 

Dist. LEXIS 137507, 2012 WL 4461495 (E.D. Va. Sept. 24, 2012). Here, there is no allegation 

that Wells Fargo acted in such a manner as to prevent Plaintiff from performing his obligations 

under the Deed of Trust.

In addition, Plaintiff has not alleged a breach of any provisions of the Deed of Trust, or of 

any other contractual duty that Wells Fargo might have owed Plaintiff. On the contrary, Plaintiff 

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simply pleads that Wells Fargo took action necessary to protect its security interest in the 

Property by filing suit in the Fairfax County Circuit Court. There is no allegation that such an act 

was a breach of any contractual obligation between Wells Fargo and Plaintiff. Moreover, the act 

of filing such suit is subject to absolute privilege. Mansfield v. Bernabei, 284 Va. 116 (2012); 

Penick v. Ratcliffe, 149 Va. 618 (1927). As a result, Plaintiff’s Complaint fails to state a claim 

against Wells Fargo and it must be dismissed. 

III. The Complaint is barred by res judicata. 

A. Virginia’s principles governing res judicata apply to this matter. 

Under 28 U.S.C. § 1738, federal courts must “apply the law of the rendering state to 

determine the extent to which a state court judgment should have preclusive effect in a federal 

action.” RFT Mgmt. Co., LLC v. Powell, No. 14-1488, 2015 U.S. App. LEXIS 5743 (4th Cir. 

Jan. 29, 2015) (unpublished opinion). Rule 1:6 of the Rules of the Supreme Court of Virginia 

governs the law of res judicata in the Commonwealth and says, in pertinent part: 

A party whose claim for relief arising from identified conduct, a transaction, or an 

occurrence, is decided on the merits by a final judgment, shall be forever barred 

from prosecuting any second or subsequent civil action against the same opposing 

party or parties on any claim or cause of action that arises from that same conduct, 

transaction or occurrence, whether or not the legal theory or rights asserted in the 

second or subsequent action were raised in the prior lawsuit, and regardless of the 

legal elements or the evidence upon which any claims in the prior proceeding 

depended, or the particular remedies sought. A claim for relief pursuant to this 

rule includes those set forth in a complaint, counterclaim, cross-claim or thirdparty pleading. 

Importantly, under Virginia law, res judicata not only bars claims actually brought or 

asserted, but also those claims that could have been litigated. Va. S. Ct. R. 1:6; Smith v. Ware, 

244 Va. 374, 376 (1992). Because Plaintiff’s prior suit against Wells Fargo was dismissed with 

prejudice on the merits, he is forever barred from prosecuting any second action against Wells 

Fargo regarding the same conduct, transaction or occurrence, including this action. 

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B. Plaintiff already filed a prior action against Wells Fargo.

As alleged in his Complaint, Wells Fargo filed suit in the Fairfax County Circuit Court to 

reform the Deed of Trust to subject Zolfaghar’s interest in the Property to that lien (the “Prior 

Action”). Conveniently, Plaintiff omitted that he filed a Counterclaim against Wells Fargo in the 

Prior Action.1 In addition, Plaintiff misstates the procedural status of the Prior Action. 

Although Plaintiff was named as a party in the Prior Action, he was named solely 

because he had an interest in the Property. However, as is evident from the pleadings, Wells 

Fargo did not seek any relief against Plaintiff.2

Zolfaghar consented to the relief sought by Wells Fargo and on July 14, 2014, the Fairfax 

County Circuit Court entered an Order reforming the Deed of Trust to include her interest (the 

“Reformation Order”). That Order is recorded among the land records of Fairfax County in Deed 

Book 23729 at Page 83. For each of reference a copy of the Reformation Order is attached as 

Exhibit 2. 

Thereafter, on July 18, 2014, even though Wells Fargo had already obtained the relief it 

requested, Plaintiff filed a responsive pleading that included a Counterclaim against Wells Fargo. 

A copy of that pleading is attached as Exhibit 3. Wells Fargo responded to the Counterclaim by 

filing a Demurrer and Plea in Bar. After the parties fully briefed the issues and the circuit court 

 

1

 Because he refers to the Prior Action in his Complaint and the pleadings in that case are 

public documents, this Court can refer to them without converting this Motion to Dismiss into a 

Motion for Summary Judgment. Norfolk Fed’n. of Bus. Dists. V. Hud, 932 F. Supp. 730, 737 

(E.D. Va. 1996) (holding that a public document may be considered by the court in making a 

determination under Rule 12(b)(6) without converting the motion into one for summary 

judgment); see also 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 

1357 (1990); Enervations, Inc. v. 3M, 380 F.3d 1066, 1069 (8th Cir. 2004) (“documents 

‘necessarily embraced by the complaint’ are not matters outside the pleading.”) (external 

citations omitted). 

2

 A true and correct copy of the Complaint filed by Wells Fargo is attached as Exhibit 1. 

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held a hearing, on October 14, 2014, the court entered an order sustaining the Plea in Bar and 

dismissing the Counterclaim with prejudice. A copy of that Order is attached as Exhibit 4. 

On December 19, 2014, after the Court dismissed his Counterclaim, Plaintiff moved to 

vacate the Reformation Order. Because Wells Fargo did not seek any relief against Plaintiff and 

the Reformation Order granted all the relief Wells Fargo sought, Wells Fargo nonsuited the 

matter as to the remaining defendants, including Plaintiff. On January 23, 2015, the circuit court 

entered a final order nonsuiting the remainder of the case. A copy of that Order is attached as 

Exhibit 5. 

Under Virginia Supreme Court Rule 1:1, that order – as well as the order dismissing 

Plaintiff’s Counterclaim – became final on February 13, 2015 (21 days later). From that point 

forward, Plaintiff was “forever barred from prosecuting any second or subsequent civil action” 

against Wells Fargo “on any claim or cause of action that arises from that same conduct, 

transaction or occurrence.” Va. Sup. Ct. R. 1:6. 

C. The claims raised in Plaintiff’s Counterclaim arise from the same transaction or 

occurrence as those contained in this case. 

Under Virginia law, res judicata not only bars claims actually brought or asserts in an 

earlier lawsuit, but also those claims that could have been brought. Va. S. Ct. R. 1:6; Smith v. 

Ware, 244 Va. 374, 376 (1992). In addition, as Rule 1:6 says, res judicata applies to a claim for 

relief raised in a “counterclaim.” 

In his Counterclaim in the Prior Action, Plaintiff alleged “unbeknown to Defendant 

Mehrabi, the name of Iran Zolfaghar was added by the Bank and the title company to the Deed 

transferring the property to the parties.” Ex. 3, Counterclaim ¶ 3. In addition, Plaintiff alleged 

“The Bank had an affirmative duty of care and an obligation to inform Mr. Mehrabi of the 

addition of Ms. Zolfaghar’s name to the title to this property. Id.¶ 5. Plaintiff further alleged, “In

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gross violation of this duty and obligation and with wanton disregard, the Bank and its agents the 

mortgage company and First Washington Title Company, failed to inform he Defendant as to the 

addition of this name. Id. ¶ 6. Based on these allegations, and others, Plaintiff alleged that he 

“has suffered damages in and is also entitled to recover punitive damages in the amount of 

$5,000,000.00.” Id. Ad. Damnum. In addition, Plaintiff sought entry of an order “decreeing that 

the Deed of Trust to this property cannot be reformed. Id. Ad. Damnum. 

As these allegations clearly show, the Complaint here arises from the same conduct, 

transaction, or occurrence as the Prior Action. Consequently, it is barred by res judicata. 

D. The Prior Action was decided by a final decision on the merits. 

Under Virginia law, "[a] general demurrer which denies the right of the plaintiff to 

recover on the cause of action alleged, which is sustained, is a decision on the merits." Carter v. 

Brooks, 77 Va. Cir. 363, 366 (Va. Cir. Ct. 2009) (citing Brunner v. Cook, 134 Va. 266 (1922)); 

see also Raley v. Haider, 286 Va. 164 (2013) ("As a general proposition, a judgment of dismissal 

that expressly provides it is 'with prejudice' operates as res judicata and is conclusive of the 

rights of the parties as if the suit had been prosecuted to a final disposition adverse to the 

plaintiff."). The Reformation Order entered by the circuit court granted all of the relief sought by 

Wells Fargo in the Prior Action and was a final decision on the merits as to those matters. 

Moreover, the order dismissing the Counterclaim likewise was a final decision on the merits 

because it dismissed the Counterclaim with prejudice. 

E. Plaintiff filed a Notice of Appeal but did not timely file a Petition for Appeal with 

the Virginia Supreme Court and the Prior Action is now final and un-appealable. 

On February 20, 2015, Plaintiff timely filed a Notice of Appeal with the Fairfax Circuit 

Court. Under Rule 5:17(a)(1) of the Rules of the Supreme Court of Virginia, Plaintiff had until 

April 23, 2015 to file his Petition for Appeal (3 months after the date of entry of the final order). 

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Unlike the appeal in his divorce case, Plaintiff’s appeal in the Prior Action was not an appeal of 

right. See Va. Sup. Ct. Rule 5:20. On April 20, 2015, three days before his Petition for Appeal 

was due, Plaintiff requested an extension of time in which to file his Petition from the Virginia 

Supreme Court. The next day, the Virginia Supreme Court denied that request. See Exhibit 6. 

On April 23, 2015, Plaintiff filed his Petition in Bankruptcy with this Court. Contrary to 

his allegation in Paragraph 20 of his Complaint, the filing of the Petition in Bankruptcy did not 

stay the appeal process with respect to the Prior Action for multiple reasons. First, unlike the 

Virginia Court of Appeals, the Virginia Supreme Court has not entered an order indicating that it 

has stayed Plaintiff’s appeal or extended the time to file his Petition. Second, regarding the 

appeal of the denial of the Counterclaim, that appeal was of an action initiated by Plaintiff. 

Consequently, the stay imposed by § 362 of the Bankruptcy Code does not apply to that appeal. 

Crosby v. Monroe County, 394 F.3d 1328 (11th Cir. 2004), see also Kozich v. Cavallaro (In re 

Kozich), 406 B.R. 949, (Bankr. S.D. Fla. 2009), Neal v. Residential Credit Solutions, Inc., 2013 

U.S. Dist. LEXIS 52335, 2013 WL 1561163 (D. Md. Apr. 11, 2013).Third, as it relates to Wells 

Fargo’s original complaint in the Prior Action, the bankruptcy stay is likewise inapplicable 

because the purpose of that claim was not to recover or enforce a pre-petition claim against the 

debtor. The only relief sought by Wells Fargo in that case was against Zolfaghar. Plaintiff was 

merely named out of an abundance of caution because he had an ownership interest in the 

Property. However, it is undisputed that his interest in the Property was already subject to the 

lien of the Deed of Trust. In addition, Plaintiff has no possible right to appeal any issue related to

the entry of the Reformation Order. Consequently, the automatic stay does not apply here. 

Because Plaintiff failed to timely file his Petition for Appeal with the Virginia Supreme 

Court, all matters in the Prior Action are now final and un-appealable. 

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Conclusion 

Not satisfied with the results of the Prior Action, Plaintiff seeks to use this Bankruptcy 

proceeding to re-litigate issues that were already decided by the Fairfax County Circuit Court. 

Plaintiff failed to preserve his appeal rights and the orders in the Prior Action are now final and 

un-appealable. In addition, Plaintiff has not, and cannot, adequately plead a cause of action 

against Wells Fargo based on an alleged breach of a duty of good faith and fair dealing. 

Therefore, Wells Fargo respectfully submits that its Rule 12(b)(6) Motion to Dismiss Plaintiff’s 

claims should be granted and the Complaint dismissed with prejudice. 

 Respectfully submitted, 

 

Wells Fargo Bank, N.A. 

 By Counsel 

 

Dated: July 27, 2015 WALSH, COLUCCI, LUBELEY, & WALSH, P.C. 

/s/ John E. Rinaldi 

John E. Rinaldi, VSB No. 31580 

Matthew A. Westover, VSB No. 82798 

4310 Prince William Parkway, Suite 300 

Prince William, Virginia 22192 

Telephone: (703) 680-4664 

Facsimile: (703) 680-2161 

jrinaldi@thelandlawyers.com 

mwestover@thelandlawyers.com

 

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CERTIFICATE OF SERVICE 

I, the undersigned, hereby certify that on this 27th day of July, 2015, I filed the foregoing 

by using the CM/ECF system, which will send a notice of electronic filing through the Court’s 

electronic filing systems to counsel for the Plaintiff and all parties who have entered an 

appearance in this matter. 

In addition, I hereby certify that the following parties that have not yet entered an 

appearance were served via First-Class Mail postage prepaid at the following address: 

Jae Kim, Esq. 

2000 P Street, NW 

Suite 740 

Washington D.C. 20036 

/s/ John E. Rinaldi 

 

P0574271.DOCX 

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