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Babak Movahedi v. Us Bank

March 27, 2012

BABAK MOVAHEDI, PLAINTIFF,
v.
US BANK, N.A., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge

MEMORANDUM OPINION

Plaintiff Babak Movahedi, filed suit against U.S. Bank, N.A., as Trustee for the Chevy Chase Funding, LLC Mortgage Backed Certificates, Series 2005-3, and Capital One Bank, N.A. Although Plaintiff does not articulateany specific causes of action, the Complaint in general terms alleges Defendants wrongfully foreclosed on Plaintiff's property and subsequently denied Plaintiff access to the property to recover certain furnishings. Presently before the Court is Defendants' [5] Motion to Dismiss. The motion is now fully briefed and ripe for adjudication.*fn1

For the reasons stated below, Defendants' Motion is GRANTED IN PART and DENIED IN PART. Defendants' motion is GRANTED as to Plaintiff's claims for wrongful foreclosure, wrongful eviction, and conversion of rental payments and DENIED as to Plaintiff's claims for conversion of furnishings and unjust enrichment.

I. BACKGROUND

Plaintiff is the owner of "residential property" located at 1700 Q Street in Northwest Washington, D.C. Compl. ¶ 1. In May 2005, Plaintiff borrowed $1,432,750 from Chevy Chase Bank, F.S.B., secured with a Deed of Trust on the property. Defs.' Ex. A (Adjustable Rate Note), at 1; Defs.' Ex. B (Deed of Trust). While residing at the property, Plaintiff installed "three unique antique chandeliers as well as other furnishings." Compl. ¶ 8. In 2010, Plaintiff began leasing the property to a number of tenants. Id. at ¶ 9. On July 14, 2010, Plaintiff received a Notice of Foreclosure from Capital One Bank ("Capital One"). Id. at ¶ 10. Plaintiff alleges that over the next several months, Capital One noticed and cancelled several foreclosure auctions while the bank considered a short sale offer to purchase the property. Id. at ¶¶ 11-12. On October 18, 2010, Capital One issued a foreclosure notice indicating the property would be sold at auction on November 23, 2010. Id. at ¶ 13. Plaintiff claims he assumed this sale "like previously set dates, was cancelled pending negotiations" for the sale of the property to the short sale purchaser. Id. At 11:30 AM the day of the foreclosure sale, Plaintiff received a call informing him that the short sale was not approved. Id. at ¶ 14. One hour later, "Defendant, Capital One, NA took back the Property on reserve bid of $1,014,081.39-$300,000 less than the short sale offer presented to the Defendants." Id. at ¶ 16 (emphasis and errors in original).*fn2

Capital One purportedly failed to inform Plaintiff that the sale had taken place. Id. at ¶¶ 17-18.

In December 2010, Plaintiff responded to a maintenance request from a tenant, and installed a new washing machine and arranged for repairs to the heating system at the property. Id. at ¶ 19. Upon attempting to collect rent from the tenants in January 2011, Plaintiff discovered the foreclosure sale actually took place in November 2010. Id. at ¶ 20. U.S. Bank recorded the transfer of the Deed of Trust on February 9, 2011, and has since denied Plaintiff access to the property. Id. at ¶ 22. Plaintiff filed suit in the Superior Court for the District of Columbia on September 13, 2011. Defendants removed the action to this Court on the basis of diversity jurisdiction and filed the instant motion to dismiss.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) provides that a party may challenge the sufficiency of a complaint on the grounds it "fail[s] to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). When evaluating a motion to dismiss for failure to state a claim, the district court must accept as true the well-pleaded factual allegations contained in the complaint. Atherton v. D.C. Office of Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009), cert. denied, 130 S. Ct. 2064 (2010). "[A] complaint [does not] suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)). Rather, a complaint must contain sufficient factual allegations that, if accepted as true, "state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. "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." Iqbal, 129 S. Ct. at 1949. Additionally, in deciding a Rule 12(b)(6) motion, a court may consider "'the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint,'" Ward v. D.C. Dep't of Youth Rehab. Servs., 768 F. Supp. 2d 117, 119 (D.D.C. 2011) (quoting Gustave--Schmidt v. Chao, 226 F. Supp. 2d 191, 196 (D.D.C. 2002)), or "'documents upon which the plaintiff's complaint necessarily relies' even if the document is produced not by [the parties]," id. (quoting Hinton v. Corr. Corp. of Am., 624 F. Supp. 2d 45, 46 (D.D.C. 2009)).

III. DISCUSSION

Before addressing the specific claims in this case, Defendants urge the Court to dismiss the Complaint (at least in part) on two grounds. First, Defendants urge the Court to dismiss the Complaint for failure to allege any specific causes of action. Although the Court agrees the Complaint is far from well-pleaded, the Complaint can be reasonably construed to include a "short and plain statement" of four claims: (1) wrongful foreclosure; (2) wrongful eviction; (3) conversion; and (4) unjust enrichment. Fed. R. Civ. P. 28(a)(2). Second, Defendants contend U.S. Bank should be dismissed as a Defendant because there are no specific allegations against U.S. Bank in the Complaint. Defendants overlook the allegations in the Complaint that specifically allege U.S. Bank has denied Plaintiff access to the property to recover his personal property. Compl. ¶ 23. Moreover, at the point the Complaint alleges U.S. Bank purchased the property at the foreclosure sale, the reference to "Defendants" in allegations regarding post-sale conduct can reasonably be construed to include U.S. Bank. Finally, the Court notes that ownership of the note and the relationship between the Defendants and the original lender is complex to say the least. See Defs.' Reply at 3 n.3. The Court declines to penalize Plaintiff for any errors in referring to the proper Defendant when the Defendants themselves did not understand their relationship to the note until filing their reply brief. Id. In terms of the specific claims at issue in this case, as explained below, based on the allegations in the Complaint, Plaintiff fails to state a claim for wrongful foreclosure, wrongful eviction, and conversion of rental payments. At this stage of the proceedings Plaintiff has stated a claim for conversion of furnishings and unjust enrichment.

A. Wrongful Foreclosure

Plaintiff's Complaint initially asks the Court to set aside the foreclosure sale based on a litany of purported errors with the notice of foreclosure and the sale itself. None of these contentions are persuasive. First, Plaintiff alleges Capital One Bank did not have authority to foreclose on the property because there was no recordation of the transfer of the Deed of Trust from Chevy Chase Bank to Capital One, the latter of which is listed as the note holder on the Notice of Foreclosure. Defs.' Ex. C (Notice of Foreclosure Sale), at 1. Defendants contend that Capital One, as the loan servicer, was the agent of the lender and therefore authorized to proceed with the foreclosure. On a motion to dismiss however, the Court cannot dismiss this claim based on Defendant's bare assertion that it was an agent of the lender.*fn3 Nevertheless, the Court agrees that this is not a basis on which the Court can invalidate the sale. Under District of Columbia law, a notice of intent to foreclose on a property must be issued by the holder of the note or its agent. D.C. Code § 42-815(c)(1)(A). The Notice of Foreclosure Sale in this case was issued by David N. Prensky, Defs.' Ex. C. at 2, who is also listed as the lender's Trustee on the original Deed of Trust, Defs.' Ex. B at 2. Any transfer of ownership of the note notwithstanding, based on the face of the Deed of Trust, the Notice of Foreclosure was issued by the note holder's agent, thus Plaintiff's claim of wrongful foreclosure on this basis must fail.

Second, Plaintiff alleges the Notice of Foreclosure was invalid because it failed to state a "cure" or reinstatement amount necessary for the Plaintiff to avoid foreclosure. Plaintiff clarifies this allegation in his Opposition by claiming the cure amount was impermissibly vague insofar as it failed to state the specific amount of "attorney's fees, foreclosure costs, and all other charges and accruals" owed in addition to the deficiency in the loan payments. Pl.'s Opp'n at 5-6; Defs.' Ex. C, at 1. As Defendants note, "a complaint may not be amended by the briefs in opposition to a motion to dismiss." Arbitraje Casa de Cambio, S.A. de C.V. v. U.S. Postal Serv., 297 F. Supp. 2d 165, 170 (D.D.C. 2003). The new ...


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