Malek v. Flagstar Bank
70 F. Supp. 3d 23
D.D.C.2014Background
- Gilda Malek and her husband acquired the subject property as tenants by the entireties in 2000.
- In 2005 Mr. Malek obtained a $500,000 home equity line from Flagstar; the loan documents and deed of trust were signed only by Mr. Malek and recorded.
- Mrs. Malek did not sign any loan or deed documents but the recorded deed of trust encumbers the couple’s house.
- Mrs. Malek sued Flagstar in Superior Court (removed to federal court), seeking (1) declaratory relief/quiet title (that the deed of trust is invalid), (2) fraud, and (3) negligence, and requested over $1,000,000 in damages.
- Flagstar moved to dismiss under Rule 12(b)(6); the court considered the recorded documents referenced in the complaint.
- The court denied dismissal of Count I (quiet title/declaratory relief) but dismissed Counts II (fraud) and III (negligence) without prejudice for deficient pleadings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of deed of trust / quiet title | Deed is invalid as property is held by Mrs. Malek and husband as tenants by the entireties and she did not execute the deed | Declaratory relief is stylistically improper as a standalone cause of action | Court treated claim as a quiet-title/declaratory relief claim in equity and denied dismissal; Count I survives |
| Fraud (common law) | Flagstar knowingly recorded the deed despite knowing Mrs. Malek did not sign, causing damages | Pleading is conclusory; fails Rule 9(b): no particular misrepresentation, no who/what/when/where/how, no pleaded reasonable reliance | Fraud claim dismissed without prejudice for failure to plead particularized misrepresentations and reliance |
| Negligence | Recording an encumbrance without the co-owner’s signature or due diligence was negligent and created a relationship | Bank owed no duty to a noncustomer; no factual allegations showing breach-caused damages | Negligence claim dismissed without prejudice for failing to allege duty/breach/proximate damages |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading conclusions insufficient; factual plausibility required)
- Wood v. Moss, 134 S. Ct. 2056 (quoting Iqbal on plausibility standard)
- In re Tyree, 493 A.2d 314 (D.C. 1985) (quiet title/authority of equity courts to remove cloud on title)
- Morrison v. Potter, 764 A.2d 234 (D.C. 2000) (tenancy by the entireties recognized in D.C.)
- Graves v. Ashburn, 215 U.S. 331 (U.S. 1909) (invalidity of instrument may rest on extrinsic evidence; supports quiet-title actions)