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Pitts v. Wells Fargo Bank, N.A

United States District Court, District of Columbia

September 29, 2015

RICHARD PITTS, et al., Plaintiff-Relators,
WELLS FARGO BANK, N.A., et al., Defendants.


CHRISTOPHER R. COOPER United States District Judge

This is one of a recent slew of cases filed in this Court by homeowners elsewhere in the country who stand to lose their homes to foreclosure after defaulting on their adjustable-rate mortgages. In a rambling, 42-page Complaint, Maryland homeowners Richard Pitts and Bruce McKoy seek to prevent Wells Fargo Bank and two law firms from foreclosing on their properties due to alleged violations of federal disclosure requirements and Maryland common law. For the reasons explained below, the Court will grant Defendants’ motion to dismiss the Complaint.

I. Background

Richard Pitts owns real property with his wife in Capitol Heights, Maryland. Bruce McKoy owns real property in Landover, Maryland. Both have been parties to lawsuits in Maryland state court concerning foreclosure of their properties. In 2012, Pitts brought a quiet title action against Wells Fargo in the Circuit Court for the County of Prince George’s, Maryland. That case was dismissed, and Pitts’s appeal was denied. Pitts also filed counterclaims against Wells Fargo in a subsequent foreclosure proceeding, which were also dismissed. In 2014, a foreclosure proceeding brought against McKoy was stayed following his bankruptcy filing, but that case is now proceeding toward a foreclosure auction.

Pitts and McKoy, proceeding pro se, now bring a four-count Complaint in this Court, seeking an injunction against foreclosure of their properties and an award of damages. They name as defendants Wells Fargo-which they identify as the servicer of their mortgages-and two law firms that acted as trustees in the foreclosure proceedings. In Count I, they allege that the originators of their loans (who are not named as Defendants) violated the Truth in Lending Act (“TILA”) by failing to make proper disclosures, misrepresenting the finance charges and interest rates associated with the loans, and not verifying their ability to repay the loans. They also claim that Wells Fargo has violated TILA by failing to disclose the identities of the current note holders. In Counts II and III, Plaintiffs bring state law claims for breach of fiduciary duty and fraud, respectively. They allege that the loan originators breached their fiduciary duties to them by failing to procure their mortgages on the best terms available, and that they committed fraud by knowingly making false and misleading representations of fact in order to induce them to take out the loans. Elsewhere in their submissions, Plaintiffs assert breach of fiduciary duty and fraud claims against Wells Fargo based on the bank’s alleged failure to disclose the identities of the current note holders. In Count IV, Pitts and McKoy seek to enforce a consent judgment entered into between several banks, including Wells Fargo, and the federal government in a prior case in this district. See Consent Judgment, ECF No. 14, United States v. Bank of Am. Corp., No. 12-361 (D.D.C. Apr. 4, 2012) (“Consent Judgment”). They allege that the Consent Judgment prevents Wells Fargo from foreclosing on their properties. Finally, in their prayer for relief, Plaintiffs present a claim of intentional infliction of emotional distress against the two law firms, which, presumably, represented Wells Fargo in the foreclosure proceedings, alleging that they knew or should have known that their client bank does not have standing to foreclose on their properties. Plaintiffs also seek to bring their claims as relators on behalf of the United States.

The Defendants have moved to dismiss all of Plaintiffs’ claims, contending that: (1) Pitts and McKoy cannot bring a claim to enforce the Consent Judgment because they were not parties to the underlying action that resulted in the Judgment; (2) venue is improper in the District of Columbia because none of the Defendants is a citizen of this district and the alleged events giving rise to the claims occurred in Maryland; (3) the claims are barred by the applicable statutes of limitations; (4) the suit is foreclosed by prior Maryland state court judgments; and (5) the claims are otherwise unmeritorious.

II. Standard of Review

Under Federal Rule of Civil Procedure 12(b)(3), a defendant may move to dismiss a suit for improper venue. “In considering a Rule 12(b)(3) motion, the court accepts the plaintiff’s well-pled factual allegations regarding venue as true, draws all reasonable inferences from those allegations in the plaintiff’s favor, and resolves any factual conflicts in the plaintiff’s favor.” Hunter v. Johanns, 517 F.Supp.2d 340, 343 (D.D.C. 2007) (quoting Darby v. Dep’t of Energy, 231 F.Supp.2d 274, 276 (D.D.C. 2002)) (internal quotation marks omitted). The factual allegations put forward by a plaintiff proceeding pro se are held “to less stringent standards than formal pleadings drafted by lawyers.” Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 n.2 (D.C. Cir. 2000) (quotations omitted). Indeed, the D.C. Circuit recently held that a district court erred by failing to consider a pro se plaintiff’s allegations that were set forth in his opposition to a motion to dismiss. Brown v. Whole Foods Market Grp., 789 F.3d 146 (D.C. Cir. 2015) (“We have previously held that a district court errs in failing to consider a pro se litigant’s complaint ‘in light of’ all filings, including filings responsive to a motion to dismiss.” (quoting Richardson v. United States, 193 F.3d 545, 548 (D.C. Cir. 1999))).

Under Federal Rule of Civil Procedure 12(b)(6), a court must dismiss a complaint that fails to state a legally valid claim. The complaint must contain facts “stat[ing] a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

III. Analysis

A. Consent Judgment

In 2012, the federal government, 49 states, and the District of Columbia brought suit against Wells Fargo and a number of other financial institutions, alleging deceptive and illegal practices related to servicing mortgages and foreclosing on houses before and during the 2008 financial crisis. Compl., ECF No. 1, Bank of Am., No. 12-cv-361. The United States settled its claims against Wells Fargo with a consent judgment, which sets forth, among other things, a set of servicing standards with which the bank must comply in future foreclosure proceedings. Consent Judgment, Ex. A. Pitts and McKoy argue that the Consent Judgment establishes jurisdiction over their claims in this District.

They are mistaken. A consent decree “is not enforceable directly or in collateral proceedings by those who are not parties to it even though they were intended to be benefited by it.” SEC v. Prudential Sec. Inc., 136 F.3d 153, 157 (D.C. Cir. 1998) (quoting Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 750 (1975)) (internal quotation mark omitted). This rule applies with even greater force when the government is a party to the judgment. See Beckett v. Air Line Pilots Ass’n, 995 F.2d 280, 288 (D.C. Cir. 1993). Because they were not parties to the Consent Judgment and the Judgment does not ...

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