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Busby v. Capital One, N.A.

United States District Court, District of Columbia

March 25, 2013

WANDA BUSBY, Plaintiff,
CAPITAL ONE, N.A., et al., Defendants

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WANDA BUSBY, Plaintiff, Pro se, Washington, DC.

For CAPITAL ONE, N.A., Defendant: Anand V. Ramana, LEAD ATTORNEY, MCGUIREWOODS LLP, Washington, DC; Adrienne J. Lawrence, GREENBERG TRAURIG, LLP, Los Angeles, CA.

For IDA WILLIAMS, in her capacity as D.C. Recorder of Deeds, Defendant: David Fisher, LEAD ATTORNEY, DISTRICT OF COLUMBIA ATTORNEY GENERAL, Washington, DC.

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COLLEEN KOLLAR-KOTELLY, United States District Judge.

Plaintiff Wanda Busby (" Busby" ), proceeding pro se, brings the above-captioned action against Defendants Capital One,

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N.A. (" Capital One" ), David N. Prensky, Esq. (" Prensky" ), and Ida Williams, in her official capacity as the District of Columbia Recorder of Deeds [1] (" Recorder" ), asserting various causes of action in connection with a promissory note and deed of trust executed by Busby in 1996. Before the court is Busby's [26] Motion for an Order Remanding this Case to the D.C. Superior Court. Also before the Court is Capital One's [19] Motion to Dismiss, which requests the Court to dismiss, with prejudice, all claims against Capital One pursuant to Federal Rule of Civil Procedure 12(b)(6). Both motions are fully briefed and ripe for the Court's consideration. Upon careful review of the parties' submissions, [2] the relevant authorities, and the entire record, and for the foregoing reasons, the Court shall DENY Busby's Motion to Remand Case and GRANT-IN-PART and DENY-IN-PART Capital One's Motion to Dismiss.

Specifically, the Court shall dismiss the following claims for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6): fraud and intentional misrepresentation (Count II); conspiracy to commit fraud (Count III); wrongful attempted foreclosure (Count IV); violation of the District of Columbia Interest Rate Ceiling Amendment Act (" D.C. Usury Statute" ), D.C. Code § 28-3312, and the District of Columbia Consumer Protection Procedures Act (" CPPA" ), D.C. Code § 28-3904 (Count V); civil conspiracy (Count VII); negligence (Count VIII); unconscionability, bad faith, and unfair dealing (Count IX); and emotional distress (Count X). Because the pleading deficiencies discussed below afflict the claims insofar as they are asserted against both Capital One and Prensky, who has not yet been served in this action, the Court shall dismiss these claims in their entirety. See Baker v. Director, U.S. Parole Comm'n, 916 F.2d 725, 727, 286 U.S. App. D.C. 310 (D.C. Cir. 1990) (observing that sua sponte dismissal pursuant to Rule 12(b)(6) is appropriate when it is patently obvious that the plaintiff cannot prevail based on the facts alleged in the complaint). Further, because Busby was previously warned about these deficiencies in connection with prior litigation and has not here requested leave to amend, the Court shall dismiss these claims with prejudice.

However, because the Court concludes that Busby has adequately - albeit barely - pled conversion (Count VI), the Court shall deny Capital One's motion's insofar as it seeks dismissal of that claim. Accordingly, the only remaining claims in this action include conversion (Count VI), and claims asserted against the other two defendants: Busby's request for declaratory and injunctive relief against the Recorder

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(Count I) and a breach of fiduciary duty claim against Prensky (Count XI).


A. Factual Background

As alleged in Busby's Amended Complaint, on December 20, 1996, Busby purchased real property located in Northwest Washington, D.C., which she financed with a $207,000 loan from the B.F. Saul Mortgage Company (" B.F. Saul" ). Am. Compl. ¶ 30; id. Ex. B (Deed of Trust). The loan was documented by a promissory note (the " Note" ), id. ; Capital One's Mem., Ex. A (Note), [3] and secured by a deed of trust (the " Deed of Trust" ), which was filed with the Recorder on December 24, 1996. Am. Compl. ¶ 30 & Ex. B (Deed of Trust).

According to Busby, there exists no recorded transfer of the Deed of Trust from B.F. Saul to any other entity. Id. ¶ 42. While Busby alleges that Capital One " collected payments from" her (without specifying when this alleged collection of payments began), see id. ¶ 63, she also alleges, upon information and belief, that Capital One is not the lender or note holder, has never been the lender or note holder, does not have physical possession of the note, and has not been authorized to collect payments by any entity having authority to provide such authorization under the terms of the Deed of Trust. See id. ¶ ¶ 45-81. Further, Busby alleges that as early as September 2009, Capital One represented to Busby that it was the lender, even though it was not the lender. Id. ¶ 66. Busby alleges that sometime in early April 2010, during a conversation with Capital One, she discovered that Capital One had " misapplied" payments that she had made. Id. ¶ 68. Specifically, she alleges that Capital One told her that as early as September 2009, Capital One had been allocating Busby's payments to her escrow account to cover " exorbitant" and " unauthorized" insurance charges, instead of to the principal and interest. Id. ¶ ¶ 69-71, 78. She alleges that Capital One also told her that despite that allocation, there remained a sizeable underpayment of her escrow account. Id. ¶ 73. Busby contends that she communicated that the amounts were mistaken and that, during the time she was attempting to resolve the errors (and unbeknownst to her), Capital One " fraudulently and without authority to do so, took actions to invoke the power of sale provisions under the [Deed of Trust]." Id. ¶ ¶ 74-80.

On April 12, 2010, Busby was issued a notice of foreclosure sale (" Notice of Foreclosure Sale" ), advising her that she owed $168,842.38 on the Note as of that date and that her property would be sold at a foreclosure sale on May 19, 2010, see id. ¶ 94 & Ex. D (Notice of Foreclosure Sale). The Notice of Foreclosure identifies Capital One as the holder of the Note. Id. ¶ 96 & Ex. D (Notice of Foreclosure Sale). The Notice of Foreclosure also indicated that if Busby wanted to stop the foreclosure sale, she should contact Defendant Prensky, who had purportedly been appointed as trustee pursuant to a deed of appointment of substituted trustee (" Deed of Appointment" ), dated December 1, 2009.

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Id. ¶ 159; id., Ex. D (Notice of Foreclosure Sale); id., Ex. C (Deed of Appointment). Both the Notice of Foreclosure Sale and the Deed of Appointment were filed with the Recorder on April 14, 2010. Id. ¶ 94.

Busby alleges that both the Notice of Foreclosure Sale and the Deed of Appointment are fraudulent documents. See Am. Compl. ¶ ¶ 94-193. Specifically, she alleges, relying upon the statutory five year term of expiration for notaries under District of Columbia law, that the Deed of Appointment was backdated and was executed by officers of Chevy Chase Bank (with whom Capital One later merged) at a time when Chevy Chase Bank was no longer in existence. Am. Compl. See id. ¶ 132. Further, Busby contends that, because at the time of execution of the Deed of Appointment, neither Chevy Chase Bank nor Capital One were the lender or otherwise had authority to substitute a trustee, Prensky is not the true trustee. Id. ¶ 154.

Regarding the Notice of Foreclosure Sale, Busby alleges it is fraudulent because the amounts due and owing by Busby stated therein are overstated and not owed, see id. ¶ 171, and also because it represents that Capital One is the Note holder, but Capital One is not, and never was, the Note holder. See id. ¶ 45-81, 135, 155. Busby contends that she at first believed the information in the Notice of Foreclosure Sale because Capital One had previously represented to her over several months that it was the lender. Id. ¶ 158. However, on May 12, 2010, Busby allegedly telephoned Prensky to request postponement of the scheduled sale date of the property. Id. ¶ 159. Busby further alleges that Prensky referred her to a representative at Capital One, who indicated that Capital One was not the holder of the note (but rather, that Fannie Mae was), and Capital One therefore could not authorize postponement of the foreclosure sale. Id. ¶ ¶ 160-64. However, Busby also alleges that on May 18, 2010, after Busby commenced litigation against Capital One and Prensky, Prensky telephoned Busby to inform her that the Capital One representative with whom Busby had spoken was incorrect when she represented that Capital One was not the Note Holder and also that Capital One had cancelled the foreclosure sale scheduled for May 19, 2010. Id. ¶ 173. Subsequently, from June 2010 to August 2010, Busby avers that she repeatedly requested, both verbally and in writing, that Capital One's counsel provide her with documentation showing that it had the right to enforce the Note, but that Capital One has been " unable to provide such evidence." See id. ¶ ¶ 81, 184-192.

B. Procedural Background

1. Busby I (Civil Action No. 10-1025)

On May 18, 2010, Busby commenced an action against Defendants Capital One and Prensky in the Superior Court of the District of Columbia (hereinafter " Busby I " ). See Busby v. Capital One, N.A., 772 F.Supp.2d 268, 273 (D.D.C. 2011). After being served with the complaint, Prensky informed Busby that Capital One had agreed to cancel the foreclosure sale, which had been scheduled for May 19, 2010, but left open the possibility that the sale would be rescheduled for a later date. Id. (citing Original Action Am. Compl. ¶ ¶ 95-96). Busby filed an amended complaint in the Superior Court on June 9, 2010, and Capital One and Prensky removed the action to this District on June 17, 2010. Id. at 273-74. Judge Ricardo M. Urbina presided over the action and described Busby's ten-count amended complaint as follows:

" [T]he plaintiff alleges that the Notice [of Foreclosure] was fraudulent and ineffective because it misrepresented Capital

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One as the holder of the note, when, in reality, Capital One was acting, at best, as the loan servicer. . . . The plaintiff also alleges that in the Notice, the defendants misrepresented the amounts owed by the plaintiff. In addition, the plaintiff claims that the Deed of Appointment is fraudulent and ineffective. The plaintiff asserts that there are errors in the notarization on the form, and that although the Deed of Appointment was executed by an individual on behalf of Chevy Chase[,] ... Chevy Chase had merged with Capital One four months earlier and therefore did not exist as of the date the Deed of Appointment was executed."

Id. at 273 (citing Original Action Am. Compl.). The complaint asserted a litany of statutory and common law claims - specifically: fraud; breach of fiduciary duty; violations of the D.C. Interest Rate Ceiling Amendment Act (" D.C. Usury Statute" ), D.C. Code § 28-3312, and the D.C. Consumer Protection Procedures Act (" CPPA" ), D.C. Code § 28-3904; conversion; violations of the Racketeer Influenced and Corrupt Organization Act (" RICO" ), 18 U.S.C. § § 1961 et seq. ; negligence; unconscionability; bad faith and unfair dealing; and emotional distress. Id. at 273-274. Aside from the breach of fiduciary duty claim, which was asserted only against Prensky, and the D.C. Usury Statute claim, which was asserted only against Capital One, each claim was asserted against both Prensky and Capital One. Id.

Capital One and Prensky separately filed motions to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6). Id. at 274. Capital One sought the dismissal of all claims asserted against it; Prensky moved to dismiss all but one of the claims against him. Id. On March 28, 2011, Judge Urbina granted both motions. Specifically, the Court found that " nearly all of the plaintiff's claims, as set forth in the amended complaint, are seriously flawed and insufficient to withstand the defendants' motions to dismiss." Id. at 286. Accordingly, Judge Urbina dismissed all of Busby's claims, with the exception of her breach of fiduciary duty claim against Prensky, which Prensky did not move to dismiss. This dismissal was without prejudice because, as the Court reasoned, although Busby's complaint was " woefully inadequate," it was not entirely clear at that stage in the litigation that Busby could not remedy the deficiencies in her pleading with additional factual allegations. Id. at 286-87.

On April 8, 2011, Busby filed an appeal of the Court's decision in Busby I, which the Circuit Court summarily rejected as premature in view of the fact that claims against Prensky remained live before the District Court. See generally Busby v. Capital One, N.A., Case No. 11-7035, Order, (D.C. Cir. Sept. 19, 2011). In September 2011, Busby filed a motion for remand or, in the alternative, for voluntary dismissal of her claims without prejudice, which the Court denied in part and granted in part. See Busby v. Capital One, N.A., Civ. A. No. 10-1025, ECF No. [59]. Specifically, the Court declined to remand the action, finding that it possessed subject matter jurisdiction over Busby's remaining claim against Prensky; however, because the Court found that neither Capital One nor Prensky would suffer prejudice by voluntary dismissal, it granted Busby's motion to voluntarily dismiss her remaining claim without prejudice. Id.

Because Judge Urbina dismissed all of Busby's claims without prejudice, she is not precluded from bringing those same claims again in this action. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 396, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990)

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(" Dismissal without prejudice is a dismissal that does not operate as an adjudication upon the merits, and thus does not have a res judicata effect." ) (citation and internal marks omitted).

2. The Current Action

On April 7, 2011, ten days after Judge Urbina issued his dismissal order in Busby I (and one day before Busby appealed that order), Busby filed the instant action in the District of Columbia Superior Court against Capital One, Prensky, and the Recorder. See Original File, ECF No. [6]. The claims asserted in Busby's Amended Complaint, all of which are based upon the same documents and events at issue in Busby I, bear unsurprisingly striking similarity to those advanced in Busby I (and are indeed in large part reasserted verbatim). While Busby has, in some instances, supplemented her claims with additional factual allegations, as well as added several conclusory legal assertions, the crux of Busby's challenge remains the same: that Capital One lacked authority to commence foreclosure on her property, that Capital One made fraudulent misrepresentations regarding its authority to foreclose and the amounts owed by Busby, and that the Deed of Appointment appointing Prensky as trustee was also fraudulent because it was made by two representatives of Chevy Chase Bank after it merged with Capital One. See generally Am. Compl. One notable difference, however, is Busby's having added as defendant the Recorder, against whom she seeks declaratory and injunctive relief - essentially, an order directing the Recorder to strike the Notice of Foreclosure Sale and Deed of Appointment from the District's publicly available land records. See id. ¶ ¶ 202-207.

On June 22, 2011, Capital One removed this matter to federal court on the basis of diversity of citizenship jurisdiction, see Notice of Removal, and the case was assigned to Judge Urbina, as an action related to Busby I. Capital One then moved to dismiss, or, in the alternative, to stay the case pending Busby's appeal of Busby I, see ECF No. [4]. On July 20, 2011, Judge Urbina stayed the action pending the appeal. See Min. Order (July 7, 2011). Subsequent to the D.C. Circuit's dismissal of the Busby I appeal, and Busby's voluntary dismissal of the remaining claim against Prensky in Busby I, see supra Part I.B.1, the undersigned, whom inherited the instant action upon Judge Urbina's retirement, lifted the stay and set a schedule for the briefing of pre-discovery dispositive motions. See Order (May 2, 2012). Busby subsequently moved to remand this matter back to Superior Court, see Pl.'s Mem., and Capital One moved to dismiss, see Capital One's Mem.

Capital One's motion to dismiss is the only dispositive motion before this Court, as the Recorder filed an Answer in Superior Court on June 30, 2011, see Original File, ECF No. [6-1], at 4, and Prensky has not yet been served with process. Both Busby's motion to remand and Capital One's motion to dismiss have been fully briefed and are ripe for this Court's consideration. Busby's motion to remand for lack of subject matter jurisdiction necessarily precedes Capital One's motion to dismiss for failure to state a claim; accordingly, the Court shall address the remand motion first.


A. Motion to Remand

A defendant has the right to remove to federal court an action brought in state court where the federal court has original subject matter jurisdiction, including on the basis of diversity of citizenship. 28 U.S.C. § 1441(a). Diversity jurisdiction exists when the action involves citizens of

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different states, and the amount in controversy exceeds $75,000.00 per plaintiff, exclusive of interest and costs. 28 U.S.C. § 1332(a). When the plaintiff makes a motion to remand on the basis of a lack of subject matter jurisdiction, the defendant bears the burden of establishing that federal subject matter jurisdiction exists. Wexler v. United Air Lines, 496 F.Supp.2d 150, 152 (D.D.C. 2007). Courts must strictly construe removal statutes, resolving any ambiguities regarding the existence of removal jurisdiction in favor of remand. Id, see also Williams v. Howard Univ., 984 F.Supp. 27, 29 (D.D.C. 1997) (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 107-09, 61 S.Ct. 868, 85 L.Ed. 1214 (1941)). If the removal court determines at any time prior to final judgment that it lacks subject matter jurisdiction, remand of the case back to the state court is mandatory. 28 U.S.C. § 1447(c); Republic of Venezuela v. Philip Morris, Inc., 287 F.3d 192, 196, 351 U.S. App. D.C. 108 (D.C. Cir. 2002). A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made by the plaintiff within thirty days after the filing of the notice of removal. 28 U.S.C. § 1447(c).

Here, Busby makes two arguments in support of her motion to remand to the District of Columbia Superior Court. First, Busby argues that Capital One's removal was procedurally defective because it was untimely and because Capital One failed to obtain the Recorder's consent to removal. Second, Busby argues that this Court does not possess subject matter ...

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