Opinion ID: 8704900
Heading Depth: 4
Heading Rank: 2

Heading: Wrongful Foreclosure Claim Against MERS and the Trustee Defendants

Text: With respect to MERS, Count II of the complaint alleges that “the Deed of Appointment of Substitute Trustee is defective because MERS did not have the authority as merely the ‘nominee’ to appoint the Substitute Trustee. Only the noteholder has the authority to nominate the Substitute Trustee and, in this case, the noteholder did not appear as a party to the Deed of Appointment of Substitute Trustee.” Compl. ¶ 30. As to the Trustee Defendants, the complaint alleges that “the Notice of Foreclosure was defective because ... Clarke ... did not have the authority to act as the Trustee at the time that the Notice of Foreclosure was recorded.” Id. ¶ 29. The plaintiff does not explain how these allegations give rise to a common law claim of wrongful foreclosure against MERS or the Trustee Defendants. See Pl.’s Lender Defs. Opp’n at 7-8; Pl.’s Trustee Defs. Opp’n at 5-6. While she does assert that the defendants’ conduct collectively violated the foreclosure statute, see Compl. ¶¶ 32-36, that statute only imposes obligations upon “the holder of the note ... or its agent,” D.C.Code § 42-815(b)-(c), which in this case is Aurora. Furthermore, the complaint alleges that Aurora initiated the foreclosure proceedings, not MERS or the Trustee Defendants. See Compl. ¶¶ 18, 31. Based on these allegations, the Court finds that the complaint fails to state a plausible claim for wrongful foreclosure against MERS or the Trustee Defendants. Accordingly, the Court will grant the defendants’ motions to dismiss Count II of the complaint. 3. Count III of the Complaint (Violation of D.C.Code § 47-1431 Against MERS, Clarke, and Atlantic Law) Count III of the complaint alleges that MERS, Clarke, and Atlantic Law violated D.C.Code § 47-1431 (2001) by failing to properly assign the Deed of Trust to Aurora. 3 Compl. ¶¶ 38-41. Section 47-1431 provides in pertinent part that: Within 30 days after ... an economic interest in real property is transferred ... all transferees of, and all holders of the security interest in, real property shall record a fully acknowledged copy of the deed or other document, including the lot and square number of the real property transferred or encumbered, with the Recorder of Deeds of the District of Columbia. D.C.Code § 47-1431(a). “If a person fails to record the deed or other document, as required by § 47-1431, there shall be imposed on the person an additional penalty in the amount of $250.” Id. § 47-1433(c). The defendants argue that § 47-1431(a) does not create a private right of action and that the plaintiffs claim thus fails as a matter of law. See Lender Defs.’ Mem. at 9; Trustee Defs.’ Mem. at 5. Section 47-1431(a) does not expressly confer a private right of action; rather, violators of the statute face only a monetary fíne. See D.C.Code § 47-1433(c). So “[i]f a private right of action for damages under [the statute] is to exist, ... it must be judicially inferred, or as is commonly stated, implied.” Dorsey v. U.S. Dep’t of Labor, 41 F.3d 1551, 1554 (D.C.Cir.1994). And “[t]he burden is on [the plaintiff] to demonstrate that, in spite of the absence of any explicit authorization, the D.C. Council intended to imply a right to sue for damages for violations of’ § 47-1431(a). Coates v. Elzie, 768 A.2d 997, 1001 (D.C.2001) (discussing the factors relevant to determining whether a District of Columbia statute gives rise to an implied cause of action). The plaintiff has failed to carry this burden. Indeed, she provides no analysis on the point and simply assumes that she may sue for a violation of the statute. Because the plaintiff has not shown that § 47-1341(a) authorizes a private right of action, the Court will grant the defendants’ motions to dismiss Count III of the complaint. 4. Count IV of the Complaint (Violation of D.C.Code § 28-3904 Against All Defendants) Count IV of the complaint alleges that all defendants violated an unspecified provision of the D.C. Consumer Protection Act by “proceeding with a wrongful foreclosure sale with [an] erroneous Notice of Foreclosure Sale that did not reflect the proper noteholder and did not accurately state the amount owed on the note or the cure amount,” and by Aurora’s “filing [of] a wrongful complaint for possession in the Superior Court.” Compl. ¶¶ 43-46. This count is duplicative of Count II and must be dismissed for the reasons discussed supra at 61-63. Namely, the claim is barred by the claim preclusion doctrine insofar as it challenges Aurora’s actions relating to the foreclosure on the Property because the plaintiff could have raised the claim in the Superior Court action, and is precluded from doing so now as a result of the Superior Court’s final judgment on the merits. And to the extent that the claim seeks to hold the non-Aurora defendants liable for wrongful foreclosure, it fails to state a plausible claim to relief. In addition, the plaintiff fails to respond to the Lender Defendants’ contention that a foreclosure is not a “consumer transaction” to which the D.C. Consumer Protection Act applies, see Lender Defs.’ Mem. at 10-11; Pl.’s Opp’n to Lender Defs.’ Mem. at 10, so the Court will deem this argument conceded. See Lewis v. Dist. of Columbia, No. 10-5275, 2011 WL 321711, at  (D.C.Cir. Feb. 2, 2011) (per curiam) (“ ‘It is well understood in this Circuit that when a plaintiff files an opposition to a dispositive motion and addresses only certain arguments raised by the defendant, a. court may treat those arguments that the plaintiff failed to address as conceded.’ ” (quoting Hopkins v. Women’s Div., Gen. Bd. of Global Ministries, 284 F.Supp.2d 15, 25 (D.D.C.2003), aff'd, 98 Fed.Appx. 8 (D.C.Cir.2004))). Accordingly, the Court will grant the defendants’ motions to dismiss Count IV of the complaint. 5. Count V of the Complaint (Breach of Contract Against All Defendants) Count V of the complaint alleges that the defendants breached their contractual obligations to the plaintiff by “failing to properly assign the Note and Deed of Trust, failing to follow proper procedure in the foreclosure on the Property[,] and failing to properly transfer the [Property to Aurora.” Compl. ¶¶ 48-51. As to Aurora, this claim must be dismissed for several reasons. First, the plaintiff does not respond to Aurora’s arguments urging dismissal of the claim, see Lender Defs.’ Mem. at 12; PL’s Lender Defs. Opp’n at 11, so the arguments will be deemed conceded. See Lewis, 2011 WL 321711, at . Second, even if the Court were to reach the merits of the claim, it does not state a plausible claim to relief because, as Aurora points out, see Lender Defs.’ Mem. at 12, the plaintiffs allegations are contradictory and self-defeating. The plaintiffs theory appears to be that Aurora breached its contractual obligations under the Note and Deed of Trust by, among other things, failing to ensure that the Note was assigned properly from American Brokers Conduit (the original lender) to Aurora. But if, as the plaintiff alleges, Aurora was not the holder of the Note, then Aurora was not a party to the contract. And Aurora could not have breached a contract to which it was not a party. See Tsintolas Realty Co. v. Mendez, 984 A.2d 181, 187 (D.C.2009) (“To prevail on a claim of breach of contract, a party must establish,” among other things, “a valid contract between the parties.”). Third, insofar as the breach of contract claim challenges the manner in which Aurora foreclosed on the Property, it is barred by claim preclusion for the reasons discussed supra at 61-63. The plaintiffs breach of contract claim fares no better against MERS or the Trustee Defendants. The claim only alleges a contractual relationship between the plaintiff and Aurora. See Compl. ¶¶ 50-51 (alleging that “[t]he contract between [the pjlaintijf and Aurora was breached” and that the plaintiff suffered damages “[a]s a result of the Aurora breaches of the contract”) (emphasis added). Thus, it fails to state a plausible claim for breach of contract against the non-Aurora defendants. See Tsintolas Realty, 984 A.2d at 187. The Court will therefore grant the defendants’ motions to dismiss Count V of the complaint. 6. Count VI of the Complaint (Tortious Interference with a Contract Against All Defendants) Count VI of the complaint alleges that all defendants tortiously interfered with “the contract” by “wrongfully foreclosing on the Property.” Compl. ¶¶ 54-55. This claim is duplicative of the plaintiffs other wrongful foreclosure-based claims, and must be dismissed for the reasons set forth supra at 61-63. Count VI also alleges that the defendants tortiously interfered with “the contract” by “interfering with the [plaintiffs ability to perform under the Note.” Id. ¶ 55. “To prevail on a claim of tortious interference with [a] contract, a plaintiff must establish: ‘(1) the existence of a contract, (2) defendant’s knowledge of the contract, (3) defendant’s intentional procurement of the contract’s breach, and (4) damages resulting from the breach.’ ” Murray, 953 A.2d at 325 (citation omitted). The complaint does not identify what “contract” Count VI is referencing, but the Court will assume it is referring to the Note and Deed of Trust. Proceeding under this assumption, the complaint fails to state' a plausible claim of tortious interference with a contract against any defendant. Specifically, the complaint provides no factual enhancement for the conclusory allegation that the defendants intentionally procured the breach of the plaintiffs contractual obligations, and thus fails to nudge the plaintiffs claim “across the line from conceivable to plausible.” Iqbal, 556 U.S. at 680, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). And insofar as the claim alleges that Aurora breached its own contractual obligations by interfering with the plaintiffs’ contractual performance, it fails as a matter of law. See Raskauskas v. Temple Realty Co., 589 A.2d 17, 26 (D.C.1991) (recognizing “the hornbook rule that ‘the defendant’s breach of his own contract with the plaintiff is of course not a basis for the tort’ of interference with contractual relations,” which “stems from the common sense notion that a plaintiff should not be allowed to convert a breach of contract claim into a claim for tortious interference” (internal citation omitted)). Accordingly, the Court will grant the defendants’ motions to dismiss Count VI of the complaint. 7. Count VII of the Complaint (Breach of the Duty of Good Faith and Fair Dealing Against All Defendants) Count VII of the complaint alleges .that all defendants breached “their duty of good faith and fair dealing” by “destroying] the [p]laintiff s ability to enjoy the benefits of the contract — the quiet use and enjoyment of her home that [s]he had purchased.” Compl. ¶¶ 58-60. In the District of Columbia, “all contracts contain an implied duty of good faith and fair dealing.” Murray, 953 A.2d at 321 (citation omitted). Under this duty, • “neither party [to a contract] shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.” Id. (citation omitted). Nor may a party to a contract “evade[] the spirit of the contract, willfully renderf ] imperfect performance, or interfere[] with performance by the other party.” Id. (citation omitted). Count VII fails to state a plausible claim to relief under this standard. To begin with, the implied.duty of good faith and'fair dealing only applies in the context of a party’s contractual performance, see id., yet Count VII fails to identify any contract as the predicate for the claim. Nor does Count VII provide any details concerning the conduct of the defendants that purportedly breached the implied duty of good faith and fair dealing, but instead refers to the “[defendants’ actions” in vague terms. See Compl. ¶¶ 58-GO. Because these legally deficient and eonclusory allegations fail to state a plausible claim for breach of the implied duty of good faith and fair dealing, the Court will grant the defendants’ motions .'.to • dismiss Count VII of the complaint. 8. Count VIII (Breach of Fiduciary Duty Against Clarke and Atlantic Law) Count VIII of the complaint alleges that the Trustee Defendants breached fiduciary duties to the plaintiff. Compl. ¶¶ 63-64. Regarding the fiduciary duties of trustees and substitute trustees, the District of Columbia Court of Appeals explained in Murray that a trustee under a deed of trust owes fiduciary duties both to the noteholder and to the borrower. Substitute trustees •, under a deed of trust have, of course, a fiduciary relationship with both the lender and the borrower. As-a general proposition, trustees of deeds have only those powers and duties imposed by the trust instrument itself, coupled with the’ applicable statute governing foreclosure sales in the District of Columbia .... [I]n the absence of fraud, misrepresentation, overreaching, or self-dealing, trustees are not subject to any general fiduciary duties beyond those already required by law. 953 A.2d at 324-25 (internal citations, quotation marks, and alterations omitted). Thus, for borrowers “to state a claim for breach of fiduciary duty upon which relief could be granted, it [is] necessary ... [to] allege some action on the part of the .... trustees that violated a duty conferred on the trustees by the trust instrument or the foreclosure statute,” or to “allege that the ... trustees committed fraud, misrepresentation, self-dealing, or over-reaching.” Id. at 325. As an initial matter, the Trustee Defendants argue that the complaint presents no basis for holding Atlantic Law liable for breach of a fiduciary duty.. Trustee Defs.’ Mem. at 7. The plaintiff does not respond to this argument, see Pl.’s Trustee Defs. Opp’n at 10-11, so the Court will deem it conceded. See Lewis, 2011 WL 321711, at . However, even if the ruling was based on the merits of the argument, the Court would agree with the Trustee Defendants’ position. The complaint alleges that Clarke “purportedly served as the Substitute Trustee,” Compl. ¶ 5, and that “[u]pon information and belief, ... Clarke is a member of [Atlantic Law],” id. ¶ 6. But it makes no specific allegations regarding Atlantic Law’s conduct. While Atlantic Law could conceivably be held liable for Clarke’s actions based on an agency theory, no such theory is pleaded in the complaint and the Court cannot advance it on the plaintiffs behalf. See Kiobel v. Royal Dutch Petro. Co., 621 F.3d 111, 195 (2d Cir.2010) (a plaintiff must plead facts that plausibly support an inference that an agency relationship existed in order to survive a Rule 12(b)(6) motion); Acosta Orellana v. CropLife Int'l 711 F.Supp.2d 81, 111 n. 36 (D.D.C.2010) (same). Thus, Count VIII must be dismissed as to Atlantic Law. As to Clarke, the complaint alleges that he breached his fiduciary duties as substitute trustee .by “proceeding] with the erroneous Notice of Foreclosure Sale that failed to state' the noteholder,” the accurate “amount owed on the note,” and “the cure amount.” Compl. ¶ 63. But Clarke had no such fiduciary duties. Both the District of Columbia foreclosure statute and the Deed of Trust require the “holder of the note ... or its agent” (i.e., the lender), not the trustee, to provide adequate notice of default and intent to foreclose. See D.C.Code § 42-815(b), (c)(1)(A); 4 Compl., Ex. 1 (Deed of Trust) ¶ 22 (requiring the “Lender” to give notice to the Borrower of default and intent to foreclose “as prescribed by Applicable Law”); Evans v. Chase Manhattan Mortg. Corp., No. 04-2185, 2007 WL 902306, at  (D.D.C. Mar. 23, 2007) (construing Deed of Trust with identical language to the one at issue in this case and stating that “the Deed of Trust makes clear that it is the responsibility of the lender, not the trustee, to notify the borrower that default has occurred and foreclosure is imminent,” and that that this “provision is consistent with [District of Columbia] law, which requires that the requisite notice be provided by ‘the holder of the note ... or its agent’ ” (internal citations omitted)). Thus, the plaintiffs allegations concerning the inadequate notice of foreclosure sale do not show that Clarke, as substitute trustee, violated “a duty conferred ... by the trust instrument or the foreclosure statute.” Murray, 953 A.2d at 325. On the eontrary, “in the absence of fraud, misrepresentation, over-reaching, or self-dealing,” id., which are not alleged in Count VIII of the complaint, Clarke had a fiduciary duty under the Deed of Trust to conduct the foreclosure sale upon Aurora’s invocation of the power of sale provision, see Compl., Ex. 1 (Deed of Trust) ¶ 22. The complaint also alleges that Clarke breached a fiduciary duty to the plaintiff by attempting “to convey title to Aurora with an erroneous Trustee’s Deed that contained language reflecting the improper appointment of [Clarke] as the Substitute Trustee and the improper transfer of the Property to Aurora.” Compl. ¶ 64. But the complaint does not explain how this alleged conduct violated the trust instrument or the foreclosure statute, nor does it allege fraud, misrepresentation, over-reaching, or self-dealing. See Murray, 953 A.2d at 325. And insofar as this claim is based on the plaintiffs assertion that “Clarke was not, in fact, the trustee with the authority to facilitate the foreclosure sale,” Pl.’s Trustee Defs. Opp’n at 10, it is self-defeating. Indeed, if Clarke was not a substitute trustee under the Deed of Trust at the time of the foreclosure sale, then he did not owe the plaintiff any fiduciary duties based on a trustee relationship at that time. Accordingly, the Court will grant the Trustee Defendants’ motion to dismiss Count VIII of the complaint. 9. Count IX of the Complaint (Violation of 12 U.S.C. § 2605 Against Aurora and MERS) Count IX of the complaint alleges that the Lender Defendants violated a provision of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605 (2006), by failing “to provide [the p]laintiff with notice of when the servicing of the loan was assigned, sold[,] or transferred.” Compl. ¶¶ 67-68. The Lender Defendants move to dismiss this claim on several grounds, including that the plaintiff has failed to allege (1) that either Aurora or MERS was a covered “transferor or transferee servicer” within the meaning of the RESPA; (2) that “there was any servicing transfer that would require any notice” under the RE SPA; and (3) that she suffered the type of damages necessary to sustain a claim under § 2605 of the RES-PA. Lender Defs.’ Mem. at 14-15. The plaintiff fails to respond to any of these arguments in her opposition brief, see Pl.’s Lender Defs. Opp’n at 12-13, so the Court will deem the arguments conceded. See Lewis, 2011 WL 321711, at . Thus, the Lender Defendants’ motion to dismiss Count IX of the complaint will be granted. 10. Count X of the Complaint (Declaratory Relief/Quiet Title Against All Defendants) Count X of the complaint seeks a judgment declaring that “Aurora has no legal right to enforce the Note and Deed of Trust” and voiding the foreclosure sale. See Compl. ¶¶ 71-77. This claim is barred under the claim preclusion doctrine by the Superior Court’s ruling in the Landlord Tenant Action finding Aurora in lawful possession of the Property. See supra at 61-63. Furthermore, the Lender Defendants raise several arguments urging dismissal of this claim to which the plaintiff fails to respond. See Lender Defs.’ Mem. at 16-17 & n. 1 (arguing that (1) Count X fails to state a claim against Aurora because it does not “identify or join as a party the entity that she claims was the actual holder of the note,” and (2) the plaintiff has conceded in documents attached to the complaint that “Aurora is entitled to enforce the [N]ote, and effectuate the foreclosure”); PL’s Lender Defs. Opp’n at 13. Again, the plaintiff fails to respond to the arguments raised by the Trustee Defendants urging dismissal of the claim. See Trustee Defs.’ Mem. at 12-13 (moving to dismiss Count X because “none of the allegations in ... Count X relate[ ] to [the Trustee Defendants]”); Pl.’s Trustee Defs. Opp’n at 11. Accordingly, the Court will deem these arguments conceded, see Lewis, 2011 WL 321711, at , and the defendants’ motions to dismiss Count X of the complaint will be granted. 11.Count XI of the Complaint (Equitable Estoppel Against All Defendants) Count XI of the complaint does not assert an independent claim for relief, but instead invokes the doctrine of equitable estoppel in a preemptive response to any statute of limitations defenses that may be raised by the defendants. See Compl. ¶¶ 78-82. Because the Court rejected the plaintiffs equitable estoppel argument in its consideration of Count I of the complaint, see supra at 59-60, which is the only count of the complaint the Court deems time-barred, Count XI of the complaint will be dismissed. 12. Count XII of the Complaint (Unjust Enrichment Against All Defendants) Count XII of the complaint asserts a claim for unjust enrichment against all defendants, alleging that they “have wrongfully benefitted by charging and receiving artificially inflated mortgage payments from [the p]laintiff,” and that “[i]t would be inequitable for [the defendants to retain the profits, benefits, and other compensation obtained by them from their wrongful conduct.” Compl. ¶¶ 84-85. The Lender Defendants move to dismiss this claim on the grounds that an unjust enrichment claim cannot be asserted where an express contract exists between the parties, and the plaintiffs own allegation acknowledge the existence of such a contract. Lender Defs.’ Mem. at 18. The Trustee Defendants move to dismiss the claim because the complaint does not allege that the plaintiff made any payments to them. Trustee Defs.’ Mem. at 13. The plaintiff yet again fails to respond to these arguments, see Pl.’s Lender Defs. Opp’n at 13-14; Pl.’s Trustee Defs. Opp’n at 11-12, so the Court will deem them conceded. See Lewis, 2011 WL 321711, at . Accordingly, the defendants’ motions to dismiss Count XII of the complaint will be granted. 13. Count XIII of the Complaint (Injunctive Relief Against All Defendants) Count XIII of the complaint “seek[s] a permanent injunction against [the defendants to prevent [the defendants from evicting the [p]laintiff, taking possession of the Property,” and “selling the Property to a third party.” Compl. ¶ 88. Because this claim challenges Aurora’s foreclosure on and ownership interest in the Property, it is barred under the claim preclusion doctrine as a result of the Superior Court’s judgment finding Aurora in lawful possession of the Property. See supra at 61-63. Furthermore, the plaintiff has again failed to respond to the defendants’ arguments urging dismissal of this claim, see Lender Defs.’ Mem. at 19; Trustee Defs.’ Mem. at 14; Pl.’s Lender Defs. Opp’n at 14; Pl.’s Trustee Defs. Opp’n at 12, which the Court will therefore deem conceded. See Lewis, 2011 WL 321711, at . Thus, the defendants’ motions to dismiss Count XIII of the complaint will be granted.