Funderburk v. JPMorgan Chase Bank, N.A.
775 S.E.2d 1
N.C. Ct. App.2015Background
- Plaintiffs filed suit on 8 October 2013 seeking relief against Chase, S & I, and Trustee Services; trial court dismissed under Rule 12(b)(6) and plaintiffs amended their complaint.
- Plaintiffs purchased eight Greensboro rental properties between 2002 and 2003, securing loans with Washington Mutual Bank and later Chase as holder; S & I and Trustee Services acted as substitute trustees.
- Chase foreclosed on the eight properties after refunds and redeposits of late 2011 payments; six foreclosures were finalized at clerk/superior court levels, two properties foreclosed later in October 2013.
- Plaintiffs alleged breach of contract, promissory estoppel, negligent misrepresentation, tortious interference with contracts/business, and quantum meruit, based on Chase’s handling of payments and tenant communications.
- Foreclosure orders and related documents, along with promissory notes and deeds of trust, were presented to and considered by the trial court in its Rule 12(b)(6) ruling.
- Plaintiffs appealed the May 21, 2014 dismissal order and later narrowed the appeal to claims against Chase for contract-related relief; the court affirmed dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court properly dismissed under Rule 12(b)(6) | Plaintiffs argue claims survive despite default findings. | Chase contends default in foreclosure defeats claims and collateral estoppel bars relitigation. | Yes; default determinations fatal to claims; dismissal affirmed. |
| Whether collateral estoppel/res judicata bars the present claims | Plaintiffs contend issues could be relitigated in a new action. | Foreclosure orders resolved necessary issues, estopping relitigation. | Yes; plaintiffs are collaterally estopped from relitigating default-related issues. |
| Whether the court could consider promissory notes/deeds of trust on Rule 12(b)(6) review | Notes/deeds referenced in complaint should be ignored or not considered. | Notes/deeds are proper to review as they relate to the contract and foreclosure. | Yes; documents referred to in the complaint properly before review. |
| Whether plaintiffs’ remaining claims are viable after foreclosure determinations | Equitable claims and damages could survive. | Damages arise from foreclosures; defenses were resolved; claims fail. | No; claims barred by foreclosure determinations. |
| Whether punitive damages or good-faith claim survive | Plaintiff seeks punitive damages and a good-faith/fair-dealing claim. | Without compensatory damages and with default results, these fail. | No; punitive damages and implied covenant claims fail. |
Key Cases Cited
- Stanback v. Stanback, 297 N.C. 181 (1979) (standard for Rule 12(b)(6) de novo review; pleadings taken as true)
- Leary v. N.C. Forest Prods., Inc., 157 N.C.App. 396 (2003) (de novo review; pleading sufficiency standard)
- Horne v. Cumberland Cnty. Hosp. Sys., Inc., --- N.C.App. ---- (2013) (rule on dismissal for lack of state-law claim)
- Oberlin Capital, L.P. v. Slavin, 147 N.C.App. 52 (2001) (court may consider contracts referenced in complaint on Rule 12(b)(6))
- Phil Mechanic Constr. Co., Inc. v. Haywood, 72 N.C.App. 318 (1985) (res judicata effects in foreclosure-related litigation)
- In re Foreclosure of Goforth Props., Inc., 334 N.C. 369 (1993) (equitable defenses to foreclosure may be raised in separate action; merits)
- In re Hudson, 182 N.C.App. 499 (2007) (scope of issues in de novo review of foreclosure)
- Williams v. Peabody, 217 N.C.App. 1 (2011) (definition of collateral estoppel elements)