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Witengier v. U.S. Bank NA

United States District Court, E.D. Missouri, Eastern Division

April 21, 2017

U.S. BANK NA, et al., Defendants.



         This matter is before the Court on the motion of defendant U.S. Bank, N.A. to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiffs have responded in opposition, and the issues are fully briefed.[1]

         I. Background

         On January 21, 2010, defendant U.S. Bank issued a loan to plaintiffs for the purchase of real property, secured by a note and deed of trust. The parties recorded the deed of trust with the St. Louis County Recorder of Deeds on February 2, 2010. Several years later, on August 1, 2014, the parties purportedly entered into a loan modification agreement.[2]

         Defendants contend that plaintiffs defaulted on the loan, and plaintiffs do not dispute that claim.[3] [Doc. #17 at 1 n.1]. Plaintiffs allege that they contacted Anthony Catlin, a U.S. Bank employee who was assigned to help them find a solution to their mortgage difficulties. However, Catlin did not help them but instead referred them to SouthLaw, P.C..

         On September 14, 2016, defendant U.S. Bank appointed SouthLaw as the successor trustee under the deed of trust. [Doc. #15-1]. The Recorder of Deeds filed that instrument on September 21, 2016. Id. Defendants state that on September 26, 2016, SouthLaw sent notice to plaintiffs that a trustee's sale would take place on October 13, 2016. [Doc. #17 at 2; Doc. #15 at 1]. That notification also allegedly identified SouthLaw as the successor trustee.[4] [Doc. #17 at 2]. Plaintiffs successfully halted the foreclosure after filing for bankruptcy.[5] [Doc. #15 at 2].

         Plaintiffs initiated this action pro se in the Twenty-First Judicial Circuit Court of Missouri (County of St. Louis) after the attempted foreclosure. See [Doc. #1-1]. Defendant U.S. Bank subsequently removed the action to this Court on the basis of diversity of citizenship jurisdiction, 28 U.S.C. § 1332. Plaintiffs are Missouri citizens and defendants U.S. Bank and Catlin are Ohio citizens.[6] In the complaint, plaintiffs assert claims of breach of contract and breach of the covenant of good faith and fair dealing. They also assert a quiet title claim.[7]

         Plaintiffs base their claims on a number of alleged defects in the both the security instruments and the attempted foreclosure process. First, with regard to the security instruments, plaintiffs allege that (1) they did not receive an executed copy of the modified loan agreement, (2) Southlaw was not properly designated as the successor trustee, [8] and (3) U.S. Bank fraudulently assigned the note and concealed its “true” holder.[9] [Doc. #1-1 at 4, 10]. Plaintiffs additionally contend that defendants did not provide adequate notice of the trustee's sale. Specifically, defendants allegedly (1) directed notice to a “doe tenant, ” (2) sent notice fewer than twenty days before the scheduled foreclosure sale, and (3) did not record such notice in “official records.” Id. at 4; see Mo. Rev. Stat. § 443.325. Furthermore, plaintiffs claim that upon inquiry, defendants did not provide a “single point of contact” and evaded plaintiffs' attempts to ascertain the reinstatement amount. Id. at 5-8.[10] Finally, plaintiffs summarily assert that U.S. Bank and Southlaw perpetrated “a series of fraudulent transactions” by “modifying loan documents, manipulating property values and making loans that were in violation of a multiplicity of [s]tate laws.” Id. at 9.[11]

         In the instant motion, defendant U.S. Bank argues that Counts I and II assert a claim for attempted wrongful foreclosure, which is not a cause of action under Missouri law. The defendant also argues that plaintiffs' contract claims are negated by plaintiffs' allegation that the alleged contract with U.S. Bank is “ineffective.” Finally, defendant U.S. Bank argues that Count II should be dismissed because plaintiffs have failed to allege the requisite elements of a quiet title action under Missouri law.

         II. Legal Standard

         The purpose of a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure is to test the legal sufficiency of the complaint. The factual allegations of a complaint are assumed true and construed in favor of the plaintiff, “even if it strikes a savvy judge that actual proof of those facts is improbable.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007) (citing Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508 n.1 (2002)); Neitzke v. Williams, 490 U.S. 319, 327 (1989) (“Rule 12(b)(6) does not countenance . . . dismissals based on a judge's disbelief of a complaint's factual allegations”); Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (a well-pleaded complaint may proceed even if it appears “that a recovery is very remote and unlikely”). The issue is not whether the plaintiff will ultimately prevail, but whether the plaintiff is entitled to present evidence in support of his claim. Id. A viable complaint must include “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp., 550 U.S. at 570; see also Id. at 563 (“no set of facts” language in Conley v. Gibson, 355 U.S. 41, 45-46 (1957), “has earned its retirement.”). “Factual allegations must be enough to raise a right to relief above the speculative level.” Id. at 555.[12] A district court may consider public records on a motion to dismiss. Stahl v. United States Dep't of Agric., 327 F.3d 697 (8th Cir. 2006).

         III. Discussion

         Breach of Contract and Covenant of Good Faith & Fair Dealing

         Under Missouri law, extrajudicial foreclosure is not a statutory right but rather “‘a contractual right established by the power of sale provision in the deed of trust.'” Mildfelt v. Circuit Court of Jackson Cty., Mo., 827 F.2d 343, 346 (8th Cir. 1987) (quoting Fed. Nat'l Mortg. Ass'n v. Howlett, 521 S.W.2d 428, 432 (Mo. 1975) (en banc)). And, under Missouri law, a breach of contract claim requires a showing of (1) “the existence of an enforceable contract between the parties, ” (2) “mutual obligations arising under the terms of the contract, ” (3) ...

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