923 F. Supp. 2d 828
D. W.Va.2013Background
- Plaintiffs Velma and Landon Townsend sued Fannie Mae, SIWPC, and Wells Fargo over a foreclosure on their Scottsville, VA home.
- Loan originated in 2007 from American Home Mortgage; Wells Fargo later acquired the note and served as the primary creditor.
- Wells Fargo sent July 17, 2011 and August 22, 2011 acceleration notices threatening immediate payment and foreclosure.
- SIWPC, as substitute trustee, issued a foreclosure notice and conducted a November 10, 2011 sale; Wells Fargo bought at auction and title transferred to Fannie Mae.
- Plaintiffs filed an Amended Complaint asserting breach of contract (Note and Deed of Trust), FDCPA violations, and a quiet-title claim; Defendants moved to dismiss under Rule 12(b)(6).
- Court will grant in part and deny in part, addressing FDCPA claims and various contract/quiet-title theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §20 Deed of Trust notice is a dismissible per se defense | Plaintiffs argue Wells Fargo not a party to the Deed and notice defense should be reserved for summary judgment. | Defendants contend the failure-to-notice is an affirmative defense that could bar claims, at least where facially shown on complaint. | Not dismissed at 12(b)(6); notice defense deemed inappropriate for early dismissal. |
| Whether acceleration notices violated the Note/Deed by inflating amount due or cure requirements | Plaintiffs claim notices required payment of not-yet-due amounts and thus breached cure terms. | Courts have held cure can require payment of future amounts to cure default; no clear breach. | Acceleration notices did not breach the Note/Deed; cure requirement upheld—amounts tied to curing default. |
| Whether the acceleration notices violated the Deed’s right-to-defend provisions | Notices failed to state right to sue/defend against acceleration and foreclosure as required by §22. | Language substantially complies; exact wording not essential; substantial compliance acceptable. | Not a breach; notices comport with the Deed’s purposes and case law. |
| Whether SIWPC violated the FDCPA and whether Wells Fargo is liable through the Deed | SIWPC’s foreclosure after a written dispute violated §1692g(b); Wells Fargo liable via agency/contract. | SIWPC might be a debt collector; only debt collectors can violate the FDCPA; Wells Fargo not liable as creditor. | SIWPC is a debt collector; §1692g(b) violation shown; Counts against SIWPC survive; Deed does not incorporate FDCPA as Applicable Law to create breach by Wells Fargo. |
| Whether the Deed of Trust incorporates the FDCPA as Applicable Law to support a quiet-title claim | Plaintiffs rely on Applicable Law clause to breach FDCPA and void foreclosure; quiet-title follows from FDCPA violation. | FDCPA not incorporated as Applicable Law; no basis for a quiet-title independent of FDCPA claim. | Deed does not incorporate the FDCPA as Applicable Law; quiet-title claims dismissed. |
Key Cases Cited
- Wilson v. Draper & Goldberg, P.L.L.C., 443 F.3d 373 (4th Cir. 2006) (trustees foreclosing can be debt collectors under FDCPA)
- Mathews v. PHH Mortg. Corp., 283 Va. 723, 724 S.E.2d 196 (Va. 2012) (Virginia Supreme Court on Deed-of-Trust scope and Applicable Law concepts)