United States District Court, D. Columbia
ETHEL KEMP, Plaintiff: Amy R. Mix, LEAD ATTORNEY, LEGAL
COUNSEL FOR THE ELDERLY, Washington, DC; Erik Goodman, LEAD
ATTORNEY, PRO HAC VICE, LEGAL COUNSEL FOR THE ELDERLY,
DERRICK K. EILAND, Defendant: Philip M. Musolino, LEAD
ATTORNEY, MUSOLINO & DESSEL PLLC, Washington, DC.
WORLD SAVINGS BANK, FSB, WACHOVIA CORPORATION, WELLS FARGO &
COMPANY, WELLS FARGO BANK, N.A., Defendants: Anand Vijay
Ramana, MCGUIREWOODS LLP, Washington, DC.
S. CHUTKAN, United States District Judge
Ethel Kemp alleges a decade-long scheme by Defendant Derrick
Eiland to fraudulently transfer ownership in property from
Kemp to himself. Kemp filed suit against Eiland and the
holder of a mortgage on the subject property
to quiet title to the property, and otherwise obtain monetary
and equitable relief against the Defendants. The Bank
Defendants moved to dismiss the Complaint for failure to
state a claim. Eiland answered the Complaint and subsequently
moved to dismiss for failure to state a claim or, in the
alternative, for pre-discovery summary judgment. Kemp opposed
the motions and cross-moved for discovery pursuant to
Fed.R.Civ.P. 56(d). For the reasons set forth below,
Defendants' motions are granted in part and denied in
part. Plaintiff's cross-motion for discovery is denied.
Plaintiff's motion for leave to file an amended complaint
is denied without prejudice for failure to comply with the
Local Rules. Plaintiff may refile the motion in
accordance with the Local Rules within ten (10) days from the
issuance of this Opinion.
81-year old Plaintiff, Ethel Kemp, lives at 1637 V Street
N.W. Washington, D.C. (the " Property" ). (Compl.
¶ ¶ 17-18). Mrs. Kemp and her late husband Roger
Kemp purchased the Property in 1979. ( Id. ¶
17). In or around 2001, the Kemps began falling behind on
their mortgage payments, and as a result, faced foreclosure.
( Id. ¶ ¶ 19-20). Defendant Eiland
approached the Kemps and offered to help them save their
home. ( Id. ¶ ¶ 20-21). The Kemps agreed
to work with Eiland because " they believed he was
helping them keep their long-time home." ( Id.
Kemps signed a document entitled a " Declaration of
Trust and Land Agreement" (the " Declaration of
Trust" ) on February 8, 2001. ( Id. ¶ 23).
That document, written by Mr. Eiland and his former
co-defendant, Denise Cowley, purported to transfer title of
the Property to the newly created " 1637 V. St. Land
Trust" . ( Id. ¶ ¶ 24, 26, 28, 31).
The Declaration of Trust did not contain any explicit
language identifying any beneficiary of the Trust. (
Id. ¶ 32). Plaintiff alleges that the
Declaration of Trust " lacks explicit language stating
that the Kemps intended to create a trust or that the Kemps
intended to place title of their home into the Trust once
created." ( Id. ¶ 27). Plaintiff also
points out that the Kemps' names " are not
identified in the Declaration of Trust other than by the
appearance of their signatures on the next-to-last page of
the document, above the words ' % Beneficiary,'"
which is left blank. ( Id. ¶ 33). The
Declaration of Trust was recorded two years after it was
signed. ( Id. ¶ ¶ 36-37). In addition to
the Declaration of Trust, the Kemps signed a Warranty Deed
(the " 2001 Deed" ), which purported to transfer
the Property to the Trust. ( Id. ¶ 38). Like
the Declaration of Trust, it was recorded two years after it
was signed. ( Id. ¶ 40).
Complaint references no other documents signed on February 8,
2001. Eiland's motion for summary judgment identifies
additional documents signed on that date, which Kemp's
subsequent filings acknowledge. (Pl. Summ. J. Opp'n at
12). But because, as is discussed below, the Court denies
Eiland's motion for summary judgment as premature, and
these documents are not " documents upon which the
plaintiff's complaint necessarily relies," the Court
does not look to them in its evaluation of the
Defendants' motions to dismiss. Bullock v.
Donohoe 71 F.Supp.3d 31, 34 (D.D.C. 2014).
in 2007, Eiland and Cowley created and executed a new Deed
(the " 2007 Deed" ), purporting to transfer title
of the Property from the Trust to " Derrick Eiland, sole
owner." (Compl. ¶ 41). Eiland executed the 2007
Deed as " Substitute Trustee" of the Trust, even
though the Declaration of Trust neither names a substitute
trustee nor conveys authority on the trustees to appoint a
substitute, and no appointment of a substitute trustee was
filed among the land records. ( Id. ¶ ¶
42-45). The 2007 Deed was executed in the District of
Columbia but notarized by a Maryland notary public. (
Id. ¶ ¶ 25, 39, 47). It was subsequently
recorded in the land records. ( Id. ¶ 46). On
or about November 19, 2007, Eiland obtained a $300,000
mortgage from Defendant World Savings Bank (" WSB"
) secured by the Property pursuant to a Deed of Trust ("
2007 Deed of Trust" ). ( Id. ¶
asserts that " Eiland used the 2007 Deed and Deed of
Trust to strip the equity in the Kemps' home for his own
benefit or for the benefit of himself and Defendant
Cowley." ( Id. ¶ 51). Additionally, Eiland
instructed the Kemps to make direct payments to him instead
of their lenders. ( Id. ¶ 53). The Kemps
complied with that request until June 2014, making monthly
payments of $941, which Plaintiff " believed . . . were
going toward her mortgage." ( Id. ¶ ¶
54-55). Altogether, Eiland is alleged to have received at
least $135,000 from Plaintiff since 2001. ( Id.
¶ 56). Finally, " [i]n May 2014, Defendant Eiland
threatened to 'evict' Mrs. Kemp from her home for
'nonpayment of rent.'" ( Id. ¶
30, 2014 Plaintiff filed suit in the Superior Court for the
District of Columbia against Defendants Eiland and Cowley, as
well as Defendants Wells Fargo & Company (" WFC" ),
Wachovia Corporation, and WSB (collectively, the " Bank
Defendants" ). The Complaint contains five claims: Count
I (against all Defendants), seeks to quiet title to the
Property by setting aside all deeds and deeds of trust on the
grounds that the documents involved were either facially
deficient, void, voidable, fraudulently induced, or otherwise
unconscionable ( Id. ¶ ¶ 59-77); Count II
(against Eiland), alleges a breach of the fiduciary duty of
loyalty ( Id. ¶ ¶ 78-84); Count III
(against all Defendants), seeks injunctive relief prohibiting
" any further conveyance, encumbrance, or other
transactions involving her home, including any eviction
proceeding to evict Mrs. Kemp from her home" (
Id. ¶ ¶ 85-86); Count IV (against Eiland),
alleges unjust enrichment ( Id. ¶ ¶
87-94); and Count V (against all Defendants), alleges slander
of title ( Id. ¶ ¶ 95-109).
September 16, 2014, the Bank Defendants removed the case to
this court pursuant to 28 U.S.C. § 1441, asserting
diversity jurisdiction. Eiland filed an answer on September
23, 2014, and on the same day, both the Bank Defendants and
Cowley filed motions to dismiss.
February 6, 2015, Eiland filed his own motion to dismiss, or,
in the alternative, for summary judgment. Plaintiff opposed
the motion and countered with a motion to permit discovery
pursuant to Rule 56(d).
Motion to Dismiss
motion to dismiss under Fed.R.Civ.P. 12(b)(6) for failure to
state a claim tests the legal sufficiency of a complaint.
Browning v. Clinton, 292 F.3d 235, 242, 352
U.S.App.D.C. 4 (D.C. Cir. 2002). " To survive a motion
to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is
plausible on its face." Ashcroft v. Iqbal, 556
U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)
(internal quotation marks and citation omitted). A claim is
plausible when the factual content allows the Court to "
draw the reasonable inference that the defendant is liable
for the misconduct alleged." Id. Thus, although
a plaintiff may survive a Rule 12(b)(6) motion even where
" recovery is very remote and unlikely," the facts
alleged in the complaint " must be enough to raise a
right to relief above the speculative level." Bell
A. Corp. v. Twombly, 550 U.S. 544, 555-56, 127 S.Ct.
1955, 167 L.Ed.2d 929 (2007) (internal quotation marks and
citation omitted). Evaluating a 12(b)(6) motion is a "
context-specific task that requires the reviewing court to
draw on its judicial experience and common sense."
Iqbal, 556 U.S. at 679. The reviewing court may
" consider only the facts alleged in the complaint, any
documents either attached to or incorporated in the complaint
and matters of which [the court] may take judicial
notice." E.E.O.C. v. St. Francis Xavier Parochial
Sch., 117 F.3d 621, 624, 326 U.S.App.D.C. 67 (D.C. Cir.
Motion for Summary Judgment
judgment is appropriate where there is no disputed genuine
issue of material fact, and the movant is entitled to
judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex
Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91
L.Ed.2d 265 (1986). In determining whether a genuine issue of
material fact exists, the court must view all facts in the
light most favorable to the non-moving party. See
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The
moving party bears the " initial responsibility of
informing the district court of the basis for its motion, and
identifying those portions of the pleadings, depositions,
answers to interrogatories, and admissions on file, together
with the affidavits . . . which it believes demonstrate the
absence of a genuine issue of material fact."
Celotex Corp., 477 U.S. at 323 (internal quotation
marks omitted). The nonmoving party, in response, must "
go beyond the pleadings and by [its] own affidavits, or by
the depositions, answers to interrogatories, and admissions
on file, designate specific facts showing that there is a
genuine issue for trial." Id. at 324 (internal
quotation marks omitted). " If the evidence is merely
colorable, or is not significantly probative, summary
judgment may be granted." Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 91 L.Ed.2d
202 (1986) (citations omitted). " [A]t the summary
judgment stage the judge's function is not himself to
weigh the evidence and determine the truth of the matter but
to determine whether there is a genuine issue for
trial." Id., at 249.
judgment is often inappropriate when the parties have not yet
engaged in discovery. The D.C. Circuit has repeatedly
cautioned that " summary judgment is premature unless
all parties have 'had a full opportunity to conduct
discovery.'" Convertino v. U.S. Dep't of
Justice, 684 F.3d 93, 99, 401 U.S.App.D.C. 297 (D.C.
Cir. 2012) (citing Liberty Lobby, Inc., 477 U.S. at
257); Americable Int'l, Inc. v. Dep't of
Navy, 129 F.3d 1271, 1274, 327 U.S.App.D.C. 159 (D.C.
Cir. 1997) (" As we have stated before, summary judgment
ordinarily 'is proper only after the plaintiff has been
given adequate time for discovery.'" ) (citing
First Chicago Int'l v. United Exch. Co., 836
F.2d 1375, 1380, 267 U.S.App.D.C. 27 (D.C. Cir. 1988));
see also Celotex Corp., 477 U.S. at 322
(summary judgment appropriate only " after adequate time
for discovery" ).
moves for summary judgment largely on the basis of: (1)
documents disclosed in his Motion, purporting to reflect
agreements between Eiland and the Kemps, Eiland and the
Trust, and Eiland and the Bank Defendants; and (2) his sworn
declaration, attached as an exhibit to his Motion. Normally,
at the summary judgment stage, Eiland's reliance on these
documents would not be improper: it does appear that the text
of the documents, which purportedly bear Plaintiff's
signature, may provide a defense to her allegations. See,
e.g., Hughes v. Abell, 867 F.Supp.2d 76, 94-95
(D.D.C. 2012) (holding that documents of undisputed
authenticity unambiguously demonstrated transfer of
at this stage of the litigation, a summary judgment motion is
premature. As noted above, summary judgment is normally
appropriate only after the parties have had an opportunity to
engage in discovery. See Convertino, 684
F.3d at 99. When a party moves for pre-discovery summary
judgment, it " bears the heavy burden of establishing
that the merits of his case are so clear that expedited
action is justified." Taxpayers Watchdog, Inc. v.
Stanley, 819 F.2d 294, 297, 260 U.S.App.D.C. 334 (D.C.
Cir. 1987). Eiland does not meet this heavy burden. Kemp has
alleged that she was fundamentally misled about the effect of
the various agreements, and implies--although does not
explicitly assert--that the authenticity of the documents
upon which Eiland relies is unsettled. Proof of these
allegations necessarily goes beyond the text of the
transaction documents and requires discovery into what, if
any, representations Eiland made to Kemp and any other
circumstances indicating that the text of the documents
should not control. See, e.g., Barrer v.
Women's Nat'l Bank, 761 F.2d 752, 758-60, 245
U.S.App.D.C. 349 (D.C. Cir. 1985) (describing the
fact-intensive inquiry under D.C. law into whether even
innocent misrepresentations can be the basis for rescission
of a contract). Indeed, even in Hughes, the court
considered deposition testimony by the homeowner that he did
not understand the transactions, but ultimately concluded
that this testimony was not credible " in light of the
written documents in the record," which were "
extremely clear." Hughes, 867 F.Supp.2d at 94.
Where a plaintiff has not had the opportunity to adduce
evidence relating to the circumstances under which the
documents were created, summary judgment must be denied
without prejudice. Because Defendant's motion for summary
judgment is denied, the court also denies the Plaintiff's
FED. R. CIV. P 56(d) motion for discovery as moot.
Court now proceeds to address whether Counts I through V
state claims for relief under Rule 12(b)(6).
Count I -- Quiet Title (All Defendants)
It is well established that courts may hear a common law
action to quiet title in order to prove title, secure title,
or to remove obstacles which hinder its enjoyment."
Jessup v. Progressive Funding, 35 F.Supp.3d 25, 34
(D.D.C. 2014) (quoting In re Tyree, 493 A.2d 314,
317 (D.C.1985)). " In a quiet title action, the
plaintiff asks the court to declare that he or she has good
title to the property in question and compels any adverse
claimant to prove a competing ownership claim or forever be
barred from asserting it." 65 Am.Jur.2d Quieting Title
§ 1. In these actions, " 'the Plaintiff has the
burden of showing a title or right superior to that of the
defendant as a prima facie case,' which means that
'the plaintiff [must] at least prove a title better than
that of the defendant, which, if not overcome by the
defendant, is sufficient.'" Jessup, 35
F.Supp.3d at 36 (quoting 74 C.J.S. Quieting Title § 77
(2014)). " If the defendant has established the due
execution of an instrument, the burden is again cast on the
plaintiff to show facts in avoidance." 74 C.J.S.
Quieting Title § 77 (2014).
court notes at the outset that Defendants place great
reliance on Jessup v. Progressive Funding. But,
Plaintiff points out, that case differed from this one in
several respects. " Jessup's complaint contains no
allegation that she has superior title to the property, let
alone any facts that would support such an allegation."
Id., 35 F.Supp.3d at 36. Jessup also did not allege
" facts showing that this conveyance was invalid in the
first instance," whereas here, Plaintiff alleges that
the conveyance was invalid due to facial deficiencies in the
trust instrument, unauthorized actions under the trust,
self-dealing, fraudulent inducement, and unconscionability.
Id. Further, there were no allegations in
Jessup, as there are here, that due to deceit, the
Plaintiff unknowingly and unintentionally entered into a
transaction which clouded the title to her property.
Allegations of deception suffice to state a claim to quiet
title. Lancaster v. Fox, 72 F.Supp.3d 319, 322
(D.D.C. 2014) (" were [plaintiff] successful in proving
his fraud allegations . . . he could clear the title to the
property of any cloud created by the contested deeds" );
see also 65 Am.Jur.2d Quieting Title § 21
(" a title or lien that has been procured by fraud,
deceit, or misrepresentation casts upon the property a cloud
that may be removed by a suit to quiet title" (citing
Graves v. Ashburn, 215 U.S. 331, 30 S.Ct. 108, 54
L.Ed. 217 (1909))).
Eiland and Kemp also
devote substantial resources arguing whether the
irregularities Plaintiff has identified suffice to justify an
order quieting title in Kemp's favor. As Eiland reads the
Complaint, Plaintiff alleges that:
she is entitled to an order quieting title for five reasons:
deficiencies in the 2001 Declaration of Trust and the 2001
Deed, Compl., at ¶ ¶ [sic]; Eiland's
'unauthorized acts' void the 2007 transaction,
Compl., at ¶ ¶ 62-64; self-dealing in the 2007
transaction, Compl., ¶ ¶ 64-70; fraudulent
inducement, Compl., at ¶ ¶ 71-73; and
unconscionability. Compl., at ¶ ¶ 74-76.
Eiland Mot. at 27 (footnote omitted). Eiland argues that none
of these grounds can void the documents purporting to
transfer the Property. Kemp responds that these are not
stand-alone claims, but rather " reasons why this Court,
in equity, should quiet title in Mrs. Kemp's
favor." (Kemp Summ. J. Opp'n at 14 (emphasis in
original)). Kemp also correctly notes that " [i]n the
District of Columbia, an action to quiet title may not be
dismissed for failure to state a claim when the complaint
alleges, as appellants' complaint does, that the
plaintiffs are the owners of the land in fee simple."
In re Tyree, 493 A.2d at 317. However, to properly
allege superior title, Kemp must proffer facts supporting
that assertion, meaning she must allege a basis for finding
as void the documents which she argues cloud her title. The
court must, accordingly, analyze the extent to which she has
alleged such a basis, and does so below by evaluating each
theory for quieting title. See, e.g., Diaby v.
Bierman, 795 F.Supp.2d 108, 112 (D.D.C. 2011)
(dismissing quiet title complaint when plaintiff's
allegations that defendants lacked standing to foreclose on
his property were unsupported by the law). The court also
notes that other cases in this District have noted that
" it is premature to consider dismissal of [a quiet
title count], which may or may not constitute an appropriate
remedy depending on the evidence yet to be adduced in this
case." Hughes v. Abell, 867 F.Supp.2d at 90 (
citing Armenian Genocide Museum and Mem'l,
Inc. v. Cafesjian Family Found., Inc., 595 F.Supp.2d
110, 119 (D.D.C.2009)).
discussed below, the court finds that Kemp's allegations
provide a sufficient basis on which to challenge the
documents that she alleges cloud her title. Defendants'
motion to dismiss as to Count I is therefore denied.
Invalidity of the 2001 Trust and Deed
District of Columbia has adopted the Uniform Trust Code,
which requires a " definite beneficiary" in order
to create a trust. D.C. Code § 19-1304.02(a)(3); see
also In re D.M.B., 979 A.2d 15, 21 (D.C. 2009).
A beneficiary is definite " if the beneficiary can be
ascertained now or in the future." D.C. Code §
19-1304.02(b). Kemp alleges that the Trust is " facially
deficient" due to a failure " to specifically name
the Kemps (or anyone else) as beneficiaries and the failure
to include language demonstrating the intent of the Kemps to
create a trust and to transfer title of their home into the
Trust." (Compl. ¶ 60).
responds that because the beneficiary could be ascertained in
the future, the Trust is not defective on its face. However,
this argument misconstrues the meaning of 19-1304.02(a)(3),
is simply a codification of the common-law rule of the
Restatement (Second) of Trusts § 112, which states that
a trust is not created unless there is a beneficiary who is
definitely ascertained at the time of the creation of the
trust or definitely ascertainable within the period of the
rule against perpetuities.
Newman v. Liebig, 282 Neb. 609, 613-14, 810 N.W.2d
408 (2011) (interpreting Nebraska's codification of the
Uniform Trust Code); see D.C. Code § 19-1301.06
(" The common law of trusts and principles of equity
supplement" the Uniform Trust Code.). The Restatement
(Second) of Trusts § 112 comments provide that a
beneficiary " must be either (1) specifically named; or
(2) capable of ascertainment from facts existing at the time
of the creation of the trust; or (3) capable of ascertainment
from facts which although not existing at the time must
necessarily be in existence at some time within the period of
the rule against perpetuities." Restatement (Second) of
Trusts § 112 comment a. While a beneficiary can be
" designated by description," id. at
comment c, the thrust of this rule is that the trust
instrument itself must designate some manner of identifying
the beneficiary. The trust at issue in Newman failed
because the " beneficiary must be ascertainable from
the trust instrument" and " no beneficiary
[was] designated by the trust
instrument." Newman, 282 Neb., at 614
(emphasis in original).
Declaration of Trust in this case (attached as Ex. 10B to
Eiland Mot.), does not identify the Kemps, or any other
party, as beneficiaries of the Trust. However, the Kemps did
sign above two lines line stating " % Beneficiary."
The Declaration of Trust also does not confer power on the
Trustee to nominate a beneficiary from a broadly defined
class. Thus the identity of any beneficiary in the
Declaration of Trust is unsettled or missing entirely, and
therefore Plaintiff raises " a claim to relief that is
plausible on its face." Iqbal, 556 U.S. at 678.
maintains that, in any event, a defect in the trust agreement
does not " vest title in the grantor" but instead
the " transferee takes title free of trust."
(Eiland Mot. at 28 n.11 (citing Restatement (Third) of Trusts
§ 8 comment f)). This again misreads the law, which
provides that if " the transferor received from
the transferee consideration for the transfer as an agreed
exchange," the transferee holds the title free of trust.
Restatement (Third) of Trusts § 8 comment f. Here, the