Busby v. Capital One, N.A. , 932 F. Supp. 2d 114 ( 2013 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
WANDA BUSBY,
Plaintiff,
v. Civil Action No. 11-01172 (CKK)
CAPITAL ONE, N.A., et al.
Defendants.
MEMORANDUM OPINION
(March 25, 2013)
Plaintiff Wanda Busby (“Busby”), proceeding pro se, brings the above-captioned action
against Defendants Capital One, 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
1
Busby sued former District of Columbia Recorder of Deeds, Larry Todd, in is official capacity.
Upon her appointment to the position of District of Columbia Recorder of Deeds, Ida Williams
was automatically substituted as the defendant of record. See FED. R. CIV. P. 25(d).
2
Notice of Removal, ECF No. [1]; Pl.’s Am. Compl., ECF [6-1], at 22-60; Pl.’s Mot. for an
Order Remanding this Case to the District of Columbia Superior Court & Mem. of P. & A. in
Supp. of Pl.’s Mot. to Remand (“Pl.’s Mem.”), ECF No. [26]; Capital One, N.A.’s Opp’n to Pl.’s
Mot. to Remand (“Capital One’s Opp’n”), ECF No. [27]; Pl.’s Reply to Capital One, N.A.’s
Opp’n to Pl.’s Mot. to Remand (“Pl.’s Reply”), ECF No. [32]; Def. Capital One’s Mot. to
1
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 (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
Dismiss & Stmt. of P. & A. in Supp. of Capital One’s Mot. to Dismiss (“Capital One’s Mem.”),
ECF No. [19]; Pl.’s Mem. of P. & A. in Supp. of Pl.’s Opp’n to Capital One’s Mot. to Dismiss
(“Pl.’s Opp’n”), ECF No. [28]; Reply Mem. in Supp. of Mot. to Dismiss Pl.’s Amended Compl.
(“Capital One’s Reply”), ECF No. [33]. In exercise of its discretion, the Court finds that holding
oral argument would not be of assistance in rendering a decision. See LCvR 7(f).
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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 (Count I) and a breach of fiduciary duty claim against
Prensky (Count XI).
I. BACKGROUND
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
3
The Court may consider the Note, which was attached as Exhibit A to Capital One’s motion in
ruling on Capital One’s Motion to Dismiss. See Hinton v. Corr. Corp. of Am., 624 F. Supp. 2d
45, 46 (D.D.C. 2009) (“Matters that are not ‘outside’ the pleadings that a court may consider on
a motion to dismiss include the facts alleged in the complaint, documents attached as exhibits or
incorporated by reference in the complaint, or documents upon which the plaintiff’s complaint
necessarily relies even if the document is produced not by the plaintiff in the complaint but by
the defendant in a motion to dismiss.”) (internal citations and quotation marks omitted).
3
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. 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.
4
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
5
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 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
6
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
7
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) (“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
8
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.
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II. DISCUSSION
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 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 (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 (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
jurisdiction over this case. For the below reasons, the Court finds both arguments without merit.
10
1. Capital One’s Notice of Removal was procedurally proper.
Defendants intending to remove actions to federal court must file a notice of removal
within thirty days after the defendant receives the complaint – either by service or otherwise. 28
U.S.C. § 1446(b)(1). Further, for removal to be proper, in cases with multiple defendants, each
defendant must consent to removal. Chi. Rock Island & Pac. Ry. Co. v. Martin, 178 U.S. 245,
247-48 (1900); Williams v. Howard Univ., 984 F. Supp. 27, 30 (D.D.C. 1997). Three well-
established exceptions exist to this rule of unanimity: 1) where one or more defendants has not
been served with the initial pleading at the time the removal petition was filed; 2) where a
defendant is merely a nominal or formal party-defendant; or 3) where the removed claim is
separate and independent claim under 28 U.S.C. § 1441(c). Williams, 984 F. Supp. at 30 n.5.
In this case, Busby argues first that Capital One failed to remove this action within thirty
days of the date on which she served Capital One. Pl.’s Mem. at 4-5. Capital One counters that
it was never properly served in this action, but, in any event, filed its notice of removal twenty
days after receiving the Amended Complaint. 4 Capital One’s Opp’n at 10-12. Second, Busby
argues that, even if Capital One’s removal was timely, it was nonetheless procedurally improper
because Capital One failed to obtain the consent of the Recorder. Pl.’s Mem. at 5, 11-12.
Capital One contends that the consent of the Recorder was unnecessary because she is a nominal
party. Capital One’s Opp’n at 18-19, n.14.
Preliminarily, the Court observes that Busby first moved to remand this action on July 25,
2011 – thirty-three days after Capital One filed its Notice of Removal. See Notice of Removal;
4
The Court observes that, although Capital One is free to argue that it was never properly served
for purposes of rebutting Busby’s remand motion, because Capital One has not included
insufficiency of service of process as one of the grounds in its pre-answer motion to dismiss,
Capital One has waived any argument that the Court should dismiss this action due to
insufficient service of process. See FED. R. CIV. P. 12(h)(1).
11
Mot. to Remand, ECF No. [8]. Further, once the Court lifted the stay of this action, effective
May 15, 2012, Busby waited an additional forty-one days to refile her motion to remand. See
Order (May 2, 2012), ECF No. [14]; Pl.’s Mem. This given, Busby’s motion to remand, insofar
as it asserts a procedural challenge, is itself untimely and should be rejected as waived on that
basis alone. See 28 U.S.C. § 1447(c) (“A motion to remand the case on the basis of any defect
other than lack of subject matter jurisdiction must be made within 30 days after the filing of the
notice of removal under section 1446(a).”); see also Cades v. H&R Block, 43 F.3d 869, 873 (4th
Cir. 1994) (“An untimely removal is a defect in removal procedure.”). In any event, even if
Busby had timely asserted her two procedural objections to Capital One’s removal, the Court
would find both of those objections unavailing for the below reasons.
First, Busby has failed to provide proof of proper service on Capital One, or to disprove
Capital One’s assertion that it did not receive the Amended Complaint until twenty days prior to
its filing of the Notice of Removal. When challenged, the burden lies with the plaintiff to prove
proper service. Light v. Wolf, 816 F.2d 746, 751 (D.C. Cir. 1987); Hilksa v. Jones, 217 F.R.D.
16, 20 (D.D.C. 2003). District of Columbia Superior Court Rule of Civil Procedure 4(c) requires
that service be effected by “any person who is not a party and who is at least 18 years of age.”
D.C. Supp. Ct. R. Civ. P. 4(c)(2) (emphasis added). District of Columbia Superior Court Rule of
Civil Procedure 4(h) allows a corporation to be served by “by delivering a copy of the summons,
complaint and initial order to an officer, a managing or general agent, or any other agent
authorized by appointment or by law to receive service of process and, if the agent is one
authorized by statute to receive service and the statute so requires, by also mailing a copy to the
defendant.” D.C. Supp. Ct. R. Civ. P. 4(h)(1).
12
Busby has failed to prove proper service on Capital One. While Busby broadly asserts
that, on April 25, 2011, she mailed a copy of the summons, complaint, and Amended Complaint
“to Capital One,” see Pl.’s Mem. at 4; Original File, ECF No. [6-1], at 21, she made the mailing
herself, in contravention of Rule 4(c)(2). More fatally, Busby has failed to provide the requisite
proof that Capital One in fact received the mail, such as a signed return receipt, see D.C. Supp.
Ct. R. Civ. P. 4(l), or a return envelope, see D.C. Supp. Ct. R. Civ. P. 4(c)(4). 5 While Busby also
avers that on April 28, 2011, she served the summons, complaint, and Amended Complaint on
the D.C. Superintendent of Corporations, Department of Consumer and Regulatory Affairs
(“DCRA”), see Pl.’s Mem. at 2; Original File, ECF No. [6-1], at 21, this alleged service was
likewise improper. First, as aforementioned, Busby cannot effect service herself as she did.
Second, DCRA is not the statutory agent of Capital One. To be sure, for corporations who are
registered to do business in the District of Columbia, service may be effected by serving the
Mayor or his designee, the DCRA. See D.C. Code § 29-104.12(b). Here, however, Busby has
specifically – and correctly – alleged that Capital One is a foreign corporation not registered to
do business in the District of Columbia. Am. Compl. ¶ 10; see also Capital One’s Opp’n at 11
n.10 (noting that Capital One does not need to register to do business in the District of Columbia
because it is a national bank) (citing Watters v. Wachovia Bank, N.A., 550 U.S. 1, 11-14 (2007)).
Accordingly, because the DCRA is not Capital One’s authorized agent for purposes of accepting
service, Busby’s attempt to serve Capital One by serving the DCRA was not proper. 6
5
Indeed, as Capital One points out in its brief, Busby’s only certificate of mailing is directed to a
P.O. Box at the D.C. Department of Consumer and Regulatory Affairs. See Original File, ECF
No. [6-1] at 15.
6
In her reply brief, Busby asserts that she was instructed by the D.C. Superior Court to serve
Capital One by mailing the summons, order, and complaint on Capital One through the DCRA.
See Pl.’s Reply at 4. Busby provides no evidence to support this assertion, but, in any event, the
fact remains that regardless of the instructions Busby may or may not have received, service was
13
Capital One contends that although it never received any copy of the summons,
complaint, and Amended Complaint directly from Busby, the DCRA did ultimately forward to it
a copy of the complaint and Amended Complaint. See Notice of Removal at ¶14. Capital One
represents that it received the copy of the complaint and Amended Complaint from the DCRA on
7
June 2, 2011. Id. Capital One removed the action twenty days later, on June 22, 2011 – within
the thirty-day period prescribed by 28 U.S.C. § 1446(b). Therefore, Capital One timely removed
this action to federal court.
The Court also finds unavailing Busby’s argument that Capital One failed to obtain the
requisite consents to removal. As aforementioned, in multi-defendant cases, each defendant
must consent to removal except where 1) one or more defendants has not been served with the
initial pleading at the time the removal petition was filed; 2) a defendant is merely a nominal or
formal party-defendant; or 3) the removed claim is separate and independent claim under 28
U.S.C. § 1441(c). Williams, 984 F. Supp. at 30 n.5. Here, as Busby herself acknowledges,
Prensky has not yet been served in this action. See Pl.’s Mem. at 2. Therefore, Prensky’s
consent to removal was not required. See Williams, 984 F. Supp. at 30 n.5. While Busby argues
that Capital One failed to obtain the Recorder’s consent prior to removal, see Pl.’s Mem. at 11-
12, the Court agrees with Capital One that the Recorder’s consent to removal was unnecessary
because, as explained in further detail infra Part II.A.2, the Recorder is merely a nominal party to
this action. Williams, 984 F. Supp. at 30 n.5.
not properly made on Capital One in accordance with the District of Columbia Superior Court
Rules of Civil Procedure.
7
Although Busby argues that Capital One has provided no evidence that it received the
documents on June 2, 2011, the Court notes that counsel has a duty to make truthful
representations to the Court, and therefore relies on Capital One’s assertions. See Fed. R. Civ. P.
11(b).
14
2. The Court has subject matter jurisdiction over this action.
A district court has original subject matter jurisdiction where the parties at interest are
citizens of different states and the amount in controversy exceeds $75,000. See 28 U.S.C. §
1332. Here, Busby argues that because this action satisfies neither the diversity of citizenship
requirement nor the amount in controversy threshold, the Court must remand to the District of
Columbia Superior Court. The Court disagrees. Because here, the Court finds that the real
parties in interest are diverse and the amount in controversy exceeds $75,000, the Court finds
that it possesses subject matter jurisdiction over this action under 28 U.S.C. § 1332, and Busby’s
motion to remand must therefore be denied.
a. Diversity of citizenship exists in this case.
Where the district court’s jurisdiction is dependent solely on the basis of diversity of
citizenship between the parties, there must be “complete diversity,” meaning that no plaintiff
may have the same citizenship as any defendant. See, e.g., Owen Equip. & Erection Co. v.
Kroger, 437 U.S. 365, 373-74, 98 S. Ct. 2396, 57 L. Ed. 2d 274 (1978). Here, there is no dispute
that Busby is a resident and citizen of the District of Columbia, and that Capital One and Prensky
are citizens of Virginia. See Notice of Removal at ¶¶15-16, 18, 23; see also Capital One’s Opp’n
at 13 & n.11. While Busby argues that this Court does not have subject matter jurisdiction over
this case because the Recorder, a District of Columbia citizen, shares Busby’s citizenship, Mot.
to Remand at 12, the Court agrees with Capital One that because the Recorder is merely a
nominal party to this lawsuit, the Court must disregard her citizenship in making its jurisdictional
determination. 8
8
Capital One also argues that the Court should disregard the Recorder’s citizenship because
Busby fraudulently joined the Recorder for the sole purpose of defeating diversity jurisdiction,
despite the complete absence of a viable cause of action against the Recorder in this case. See
15
“A federal court must disregard nominal or formal parties and rest jurisdiction only upon
the citizenship of real parties to the controversy.” Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 461
(1980). Parties are not “real” when they are joined “only as the designated performer of a
ministerial act,” or have no “control of, impact on, or stake in the controversy.” Cf. Lincoln
Prop. Co. v. Roche, 546 U.S. 81, 92 (2005) (the court, citing cases, described these factors to
find that a party was a real party because it did not fall into any of the named categories). This
rule attempts to bar state court plaintiffs from doing exactly what Capital One contends Busby
tried to do here – preventing the real defendants from exercising their statutory removal right.
See Lloyd v. Travelers Prop. Cas. Ins. Co., 699 F. Supp. 2d 812, 816 (E.D. Va. 2010).
Upon a scrutinizing review of Busby’s 395-paragraph complaint, the Court can identify
only two substantive references to the Recorder. First, Busby claims that the Recorder accepted
the allegedly fraudulent Notice of Foreclosure Sale and Deed of Appointment for recording in
the District of Columbia land records. Am. Compl. ¶ 94. Second, Busby prays in Count I for
“declaratory relief” against the Recorder – which is, in substance, a request for an injunction
ordering the Recorder to strike the allegedly fraudulent documents from the District’s publicly
available land records. Am Compl. ¶¶ 202-07. Other references to the Recorder are in passing
or as background, see, e.g., Am. Compl. ¶¶ 15, 20, 30, 41, and, tellingly, appear to present the
Defs’ Opp’n at 14. Courts in this Circuit have set a high bar for fraudulent joinder, as the
defendant “must show either that there is no possibility that the plaintiff would be able to
establish a cause of action against the in-state defendant in state court; or that there has been
outright fraud in the plaintiff’s pleadings of jurisdictional facts.” Brown v. Brown & Williamson
Tobacco Corp., 26 F. Supp. 2d 74, 76-77 (D.D.C. 1998) (citations omitted). The Court harbors
serious concern that Busby’s naming of the Recorder as a defendant in this action – by way of a
single count for declaratory and injunctive relief relating to the Recorder’s purely ministerial
functions in connection with the receipt of the mortgage documents at issue here – amounts to no
more than jurisdictional trickery. Nevertheless, in view of the demanding showing required to
prove fraudulent joinder, and the fact that the Court concludes for reasons stated infra that the
D.C. Recorder is indubitably none other than a nominal party, the Court need not reach Capital
One’s fraudulent joinder argument.
16
Recorder as a fellow victim of Capital One’s alleged fraud and deception, see Am. Compl. ¶¶
132, 140, 223, 245, 279, 305, 311, 312, 329, 347(i), 371. Also indicative of the Recorder’s
nominal role in this action the very first paragraph of the Amended Complaint, which reads, in
pertinent part: “Although the D.C. Recorder is a defendant in this action, when this term is
capitalized and plural (‘Defendants’), it refers only to Prensky and Capital One, and not to the
D.C. Recorder of Deeds.” Am. Compl. ¶ 1.
As is clear from the Complaint, Busby takes issue with the Recorder only insofar as she,
in her official capacity as collector and recorder of the District’s land records, received and
recorded from third parties what Busby now alleges to have been fraudulent documents. Put
differently, Busby has named the Recorder “only as the designated performer of a ministerial
act,” and has failed entirely to point to any “control of, impact on, or stake in the controversy”
maintained by the Recorder. Lincoln Prop. Co., 546 U.S. at 92. While Busby relies on Mayers
v. Ridley, 465 F.2d 630 (D.C. Cir. 1972), to argue that the Recorder is not merely a performer of
a ministerial act, but has discretion to reject certain documents, such reliance is misplaced. See
Pl.’s Mem. at 9-11. In Mayers, the Court of Appeals held that the Fair Housing Act of 1968, 42
U.S.C. § 3604(c), which makes it unlawful to publish any notice regarding the sale of a dwelling
that indicates any preference based on race, prohibits the District of Columbia Recorder of Deeds
from accepting for filing instruments which contain racially restrictive covenants. Id. Unlike
Busby, the Mayers plaintiffs – District of Columbia homeowners whose deeds contained racially
restrictive covenants – brought a class action suit seeking injunctive relief based on the
Constitution and federal civil rights statutes, on their own behalf and on behalf of all District of
Columbia homeowners similarly situated, against only the Recorder of Deeds and the
Commissioner of the District of Columbia for the District’s own violation of the Fair Housing
17
Act. 465 F.2d 630. The crux of Busby’s suit, by contrast, is not a challenge to an allegedly
illegal policy or practices of the District of Columbia government, but rather a direct challenge to
the authenticity of the Notice of Foreclosure Sale and Deed of Appointment allegedly
fraudulently created by Capital One and Prensky. The Recorder’s role in this case was none
other than ministerial.
Finally, as Capital One astutely observes, the peripheral nature of Busby’s claims against
the Recorder is further evident from the fact that the Amended Complaint nowhere alleges that
Busby has ever even spoken with anyone at the office of the Recorder, see generally Am.
Compl., as well as the fact that the Recorder himself has filed an Answer denying all knowledge
of any fact in this case, see Original File, ECF No. [6-1], at 4-9.
For all of the foregoing reasons, the Court finds that the Recorder is a nominal party
whose citizenship shall not be considered for diversity purposes. Accordingly, because complete
diversity of citizenship exists between Busby and the two real parties in interest, Capital One and
Prensky, this action satisfies the diversity of citizenship requirement of 28 U.S.C. § 1332.
b. The amount in controversy exceeds $75,000.
Busby also argues that the Court should remand her action because Capital One has failed
to establish the amount in controversy prong of 28 U.S.C. § 1332. First, Busby appears to argue
that Capital One’s Notice of Removal was defective because it failed to set forth the underlying
facts supporting its assertion that the amount in controversy exceeds $75,000. See Pl’s Mem. at
13. For reasons already stated supra, Part II.A.1, to the extent Busby is arguing that the Notice
of Removal was procedurally inadequate, Busby has waived such challenge by failing to assert
this objection within thirty days of the filing of the notice of removal. But more to the point, a
18
plain read of Capital One’s Notice of Removal reveals that Capital One has, in fact, pled
satisfaction of the jurisdictional threshold. See Notice of Removal, ECF No. [1] at ¶ 28.9
Of course, procedural defects concerning a notice of removal must be distinguished from
a meritorious challenge to a federal court’s lack of subject matter jurisdiction which, as
previously noted, requires mandatory remand at all times prior to final judgment. 28 U.S.C. §
1447(c); Philip Morris, 287 F.3d at 196. Here, Busby argues that as a factual matter, Capital
One has not – and cannot – show that the amount in controversy in her case exceeds $75,000.
Pl.’s Mem. at 16-17.
Busby does not demand a specific monetary figure in her complaint; she instead requests
damages pursuant to her common law claims, the statutory claims, and declaratory and
injunctive relief. See Am. Compl. ¶ 1; id. at 42. If a complaint fails to specify the amount in
controversy, a court may independently determine whether that amount meets jurisdictional
requirements. Wilson v. U.S. Dep’t of Transp., 759 F. Supp. 2d 55, 64 (D.D.C. 2011). As a
general matter, the amount in controversy in declaratory relief or injunction cases is measured by
the value of the object of the litigation. Hunt v. Wash. State. Apple Adver. Comm’n, 432 U.S.
333, 347 (1977) (citing cases). In assessing whether a complaint meets the jurisdictional
threshold, courts look to either the value of the right the plaintiff seeks to enforce or the cost to
the defendants to remedy the alleged denial of that right. Smith v. Washington, 593 F.2d 1097,
1099 (D.C. Cir. 1978) (internal citations omitted).
9
In her opening brief, Busby fixates on a typographical error in the relevant paragraph in the
Notice of Removal to argue, by way of a three-page grammar tutorial, that the “fragment” failed
to “express a complete thought” and therefore Capital One “neglected to write down its theory”
regarding the amount in controversy. See Pl.’s Mem. at 13-16. Suffice it to say that the Court
considers Busby’s argument meritless, disingenuous, and frankly, a waste of the Court and the
parties’ time and resources.
19
Notably, Judge Urbina applied these principles in a well-reasoned opinion denying a
similar request to remand asserted by Busby in Busby I, holding as follows:
In cases in which the plaintiff seeks to rescind a loan or prevent foreclosure, the amount
in controversy is equal to the amount of the loan. Davis v. World Savings Bank, FSB,
[869 F. Supp. 2d 159, 165 (D.D.C. 2011)]; see also Hancock v. HomEq Servicing
Corp., 526 F.3d 785, 785 n.2 (D.C. Cir. 2008); Nguyen v. Wells Fargo Bank, N.A., 749
F. Supp. 2d 1022, 1028 (N.D. Cal. 2010). Here, the plaintiff seeks rescission of the
transaction underlying her $207,000 Note and Mortgage, and she asks the court to
“permanently enjoin Defendants . . . from foreclosing on the Note.” Am. Compl. at 11.
The plaintiff’s complaint includes an attached copy of the Deed of Trust, which
confirms that the plaintiff’s original Note evidenced a debt of $207,000. See Am.
Compl., Ex. B. (Deed of Trust). Because the plaintiff’s complaint and the materials
attached thereto make clear that the plaintiff’s action challenges a legal instrument
valued at $207,000, the court concludes that the amount-in-controversy requirement is
satisfied and subject-matter jurisdiction exists. Accordingly, the court denies the
plaintiff’s motion to remand.
Busby v. Capital One, N.A., 841 F. Supp. 2d 49, 54 (D.D.C. 2012). Because here, Busby once
again requests the Court to “permanently enjoin Capital One, Prensky, their agents, successors or
assigns, from foreclosing on the Note,” Am. Compl. at 42, ¶ 6, and again attaches to her
Amended Complaint a copy of the same Deed of Trust, documenting a debt in the amount of
$207,000, see Am. Compl., Ex. B, the Court is satisfied that the jurisdictional threshold is met.
See also, e.g., Duma v. J.P. Morgan Chase, 828 F. Supp. 2d 83 (D.D.C. 2011) (district court
possessed diversity jurisdiction over action seeking to quiet title on property following alleged
unlawful foreclosure, notwithstanding the fact that the plaintiff sought only $40,000 in her
complaint, because the outstanding balance on the loan secured by the subject property exceeded
$500,000), aff’d on other grounds, No. 11-7147, 2012 WL 1450548 (D.C. Cir. April 20, 2012),
reh’g en banc denied (Sept. 5, 2012). While Busby argues that the value of a temporary delay in
foreclosure – not the value of the note – is a more appropriate measure of the “object of the
litigation” in this case, she cites no cases within this district to support this approach.
20
For all of the foregoing reasons, Busby’s motion to remand is denied. Capital One’s
notice of removal was procedurally proper, and this Court has subject matter jurisdiction because
the real parties at interest are completely diverse, and the amount in controversy exceeds
$75,000.
B. Motion to Dismiss
Federal Rule of Civil Procedure 12(b)(6) provides that a party may move to dismiss on
the grounds that the complaint “fail[s] to state a claim upon which relief can be granted.” A
complaint must contain “a short and plain statement of the claim showing that the pleader is
entitled to relief,” FED .R. CIV. P. (8)(a), “in order to give the defendant fair notice of what the . .
. claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555,
127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007) (citation omitted). Although “detailed factual
allegations” are not necessary to withstand a Rule 12(b)(6) motion to dismiss for failure to state a
claim, a plaintiff must furnish “more than labels and conclusions” or “a formulaic recitation of
the elements of a cause of action.” Id. “Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678,
129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009). “Nor does a complaint suffice if it tenders naked
assertion[s] devoid of further factual enhancement.” Id. (citation omitted). 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, 556 U.S. at 663.
In evaluating a Rule 12(b)(6) motion to dismiss, a court may consider “the facts alleged
in the complaint, documents attached as exhibits or incorporated by reference in the complaint,”
21
or “documents upon which the plaintiff’s complaint necessarily relies even if the document is
produced not by [the parties].” Ward v. D.C. Dep’t of Youth Rehab. Servs., 768 F. Supp. 2d 117,
119 (D.D.C. 2011) (citations omitted). The court must view the complaint in a light most
favorable to the plaintiff and must accept as true all reasonable factual inferences drawn from
well-pleaded factual allegations. In re United Mine Workers of Am. Employee Benefit Plans
Litig., 854 F. Supp. 914, 915 (D.D.C. 1994); see also Schuler v. United States, 617 F.2d 605, 608
(D.C. Cir. 1979) (“The complaint must be ‘liberally construed in favor of the plaintiff,’ who
must be granted the benefit of all inferences that can be derived from the facts alleged.”). While
the court must construe the complaint in the plaintiff’s favor, it “need not accept inferences
drawn by the plaintiff if such inferences are unsupported by the facts set out in the complaint.”
Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). Moreover, the court is
“not bound to accept as true a legal conclusion couched as a factual allegation.” Twombly, 550
U.S. at 555 (citation omitted); accord Taylor v. FDIC, 132 F.3d 753, 762 (D.C. Cir. 1997).
While pro se complaints are held to a less stringent standard than complaints drafted by counsel,
Moore v. Motz, 437 F. Supp. 2d 88, 90 (D.D.C. 2006) (citations omitted), “[e]ven a pro se
plaintiff’s inferences . . . need not be accepted if such inferences are unsupported by the facts set
out in the complaint.” Id. (citations and internal quotation marks omitted). “A pro se complaint,
like any other, must state a claim upon which relief can be granted by the court.” Id. (citing
Crisafi v. Holland, 655 F.2d 1305, 1308 (D.C. Cir. 1981)).
In her Amended Complaint, Busby asserts eleven counts, 10 including: declaratory relief
toward the Recorder; fraud and intentional misrepresentation; conspiracy to commit fraud;
10
In their briefs, both parties have operated under the understanding that District of Columbia
law governs Busby’s common law claims. See generally Capital One’s Mem.; Pl.’s Opp’n.
Where, as here, “all parties assume that District of Columbia law controls,” “[t]he Court need not
22
wrongful attempted foreclosure; violation of the D.C. Usury Statute, D.C. Code § 28-3312, and
the CPPA, D.C. Code § 28-3904; conversion, civil conspiracy; negligence; unconscionability,
bad faith and unfair dealing; emotional distress; breach of fiduciary duties; and a request for a
permanent injunction against Capital One and Prensky. See generally Am. Compl. Aside from
the first count for declaratory relief, which is asserted only against the Recorder, and the D.C.
Usury Statute claim, which is asserted only against Capital One, each claim is asserted against
both Prensky and Capital One. Id.Capital One has moved pursuant to Rule 12(b)(6) to dismiss all claims asserted against it.
The Court shall address each claim below but pauses to make two preliminary observations
about the parties’ arguments and the scope of the Court’s consideration thereof.
First, at the center of Busby’s Amended Complaint is an allegation that Capital One is
not the holder of the Note and therefore had no authority to commence a foreclosure, appoint a
substitute trustee, collect payments, or take any other action in connection with the Deed of
Trust. See generally Am. Compl. Busby roots this charge in the alleged facts that there was no
recordation of the transfer of the Deed of Trust from B.F. Saul to any other entity, that
inconsistent representations had been made to her by Capital One representatives and Prensky,
and that Capital One has failed to produce to her documentary proof of its status. See Am.
Compl. ¶¶ 94-193.
Capital One contends that because it did, in fact, have the requisite authority to collect
payments and foreclose, all of Busby’s claims are without merit and the entirety of Busby’s
Complaint should be dismissed with prejudice as a result. See Capital One’s Mem. at 14; Capital
One’s Reply at 3-4. On a motion to dismiss, however, the Court cannot dismiss Busby’s claims
… question the parties’ assumptions on that point.” Davis v. Grant Park Nursing Home LP, 639
F. Supp. 2d 60, 65 (D.D.C. 2009).
23
based on bare assertions of counsel that it had authority to collect payments and foreclose. This
is particularly true where Capital One’s own briefing is inconsistent in this regard. Capital One
requests the Court to consider the face of the Note, which reveals that it was assigned by B.F.
Saul to Chevy Chase Bank, F.S.B. (“Chevy Chase”) and that Chevy Chase subsequently
conveyed the Note with an endorsement in blank. See Capital One’s Mem., Ex. A (Note).
Capital One’s opening brief, somewhat cryptically, represents that in February 2009, upon
Capital One Financial Corporation’s merger with Chevy Chase, Chevy Chase’s rights and
obligations as servicer were transferred to Capital One, as successor by merger. Capital One’s
Mem. at 4 & n.3. The opening brief also suggests that, because District law authorizes a Note
holder “or its agent” to give notice of a foreclosure sale, Capital One may have had “the authority
to conduct Fannie Mae’s legal affairs relating to servicing Busby’s loan.” Id. at 14 (citing D.C.
Code § 42-815(b) (2011). Not until its reply brief does Capital One represent that “it has
repeatedly advised [Busby] that Capital one possesses the original Deed and the original Note,
which has been endorsed in blank, making Capital One the holder of the Note.” Capital One’s
Reply at 3 (citing D.C. Code § 28:3-205(b) (“When indorsed in blank, an instrument becomes
payable to bearer and may be negotiated by transfer of possession alone until specially
indorsed.”)).
Capital One argues, therefore, that the Court need not accept Busby’s allegation that
Capital One is not the Note holder because this allegation is contradicted by the judicially
noticeable fact that Capital One is in possession of the Note, which it attached to its submissions
as an exhibit. Id. Capital One is mistaken. First, the Court declines to consider this argument
raised for the first time in a reply brief. See, e.g., Am. Wildlands v. Kempthorne, 530 F.3d 991,
1001 (D.C.Cir.2008) (“We need not consider this argument because plaintiffs ... raised it for the
24
first time in their reply brief.”); McBride v. Merrell Dow & Pharm., 800 F.2d 1208, 1211
(D.C.Cir.1986) (“Considering an argument advanced for the first time in a reply brief ... is not
only unfair to an appellee, but also entails the risk of an improvident or ill-advised opinion on the
legal issues tendered.”) (internal citation omitted). Second, while it is true that a Court may
consider documents, such as the Note, “upon which the plaintiff’s complaint necessarily relies
even if the document is not produced by the plaintiff,” see Hinton, 624 F. Supp. 2d at 46, Capital
One has pointed to no authority suggesting that the unsworn representation of the fact that
Capital One possesses the document is subject to judicial notice. The Court is especially
disinclined to credit such representation in light of Capital One’s equivocal briefing on the issue.
Second, Capital One points the Court’s attention to the fact that Busby admitted in her
complaint in Busby I that, before any of the alleged fraud occurred, she had fallen three months
behind on her payments. See Capital One’s Mem. at 11-12. Capital One argues these missed
payments caused her to default under the terms of the loan and that therefore Busby’s allegations
regarding the allegedly unauthorized overpayments are directly contradicted by the Note and
Deed of Trust, which specifically allow for the imposition of the fees incurred, including the
escrow charges, in the event of default. Id. Accordingly, Capital One contends repeatedly that
Busby herself is responsible for any alleged injury suffered in connection with the enforcement
of the Note. See generally Capital One’s Mem.; Capital One’s Reply.
To the extent Busby has in fact strategically omitted allegations regarding missed
payments from the Amended Complaint presently before the Court, the Court reminds Busby
about her obligations to be none other than forthcoming in her representations to the Court. See
FED. R. CIV. P. 11(b). However, as Busby argues, and Capital One concedes, on a motion to
dismiss, allegations pled by a plaintiff in a prior proceeding should not be accepted as true or
25
read into the complaint actually before the court. See Pl.’s Opp’n at 8; Capital One’s Reply at 4,
n.3; see also Howard v. Gutierrez, 474 F. Supp. 2d 41, 52 n.5 (D.D.C. 2007). In any event, the
Court would be hard-pressed to conclusively hold, on the inadequate record before it, that three
missed payments entitled the Note holder to impose the (unspecified) amount of fees purportedly
charged and to invoke the power of sale.
In summary, in considering each claim, the Court shall – giving Busby the benefit of all
inferences that can be derived from the facts alleged as is required on a Rule 12(b)(6) analysis –
disregard any arguments by Capital One regarding Busby’s alleged default or its purported
authority to collect payments, impose fees, or invoke the power of sale.
1. Fraud & Intentional Misrepresentation (Count II)
“Under District of Columbia law, an allegation of fraud must include the following
essential elements: “(1) a false representation, (2) concerning a material fact, (3) made with
knowledge of its falsity, (4) with the intent to deceive, and (5) upon which reliance is placed.”
Acosta Orellana v. CropLife Intern, 711 F. Supp. 2d 81, 96 (D.D.C. 2010) (citing In re Estate of
McKenney, 953 A.2d 336, 341 (D.C. 2008)). To prevail on such a claim, “the plaintiff must also
have suffered some injury as a consequence of his reliance on the misrepresentation.” Chedick v.
Nash, 151 F.3d 1077, 1081 (D.C. Cir. 1998) (citation omitted). Importantly, “[f]raud is never
presumed and must be particularly pleaded … [The pleader] must allege such facts as will reveal
the existence of all the requisite elements of fraud.” Bennett v. Kiggins, 377 A.2d 57, 59-60
(D.C. 1977).
Furthermore, “[a] complaint alleging fraud must also ‘meet the requirements of Rule 9(b)
of the Federal Rules of Civil Procedure.’” Acosta Orellana, 711 F. Supp. 2d at 96. Rule 9(b)
requires that a party alleging fraud “must state with particularity the circumstances constituting
26
[the] fraud.” FED. R. CIV. P. 9(b). In this Circuit, the circumstances that the claimant must plead
with particularity include matters such as the “time, place, and content of the false
misrepresentations, the fact misrepresented and what was retained or given up as a consequence
of the fraud,” as well as the “identi[ty] [of the] individuals allegedly involved in the fraud.”
United States ex rel. Williams v. Martin-Baker Aircraft Co., 389 F.3d 1251, 1256 (D.C. Cir.
2004) (citations omitted). “Unless a complaint pleads with particularity a defendant’s alleged
fraudulent representations, the plaintiff will not be permitted to maintain the claim. This
requirement is imposed because to permit a fraud claim to go forth on less specific allegations
would permit ‘the discovery of unknown wrongs,’ which Rule 9(b) seeks to prevent.” Acosta
Orellana, 711 F. Supp. 2d at 96 (internal editing and citations omitted). See also Williams (D.C.
Cir. 2004) (The heightened pleading standard for fraud “discourage[s] the initiation of suits
brought solely for their nuisance value, and safeguards potential defendants from frivolous
accusations of moral turpitude.”). Furthermore, “because ‘fraud’ encompasses a wide variety of
activities, the requirements of Rule 9(b) guarantee all defendants sufficient information to allow
for preparation of a response.” Id.Preliminarily, the Court observes that Busby’s forty-two page, 395-paragraph-long
Amended Complaint is repetitious, replete with conclusory assertions devoid of factual content,
and as such is far from a model of clarity. Based upon the Court’s careful review of Busby’s
allegations, and construing the Amended Complaint generously, Busby appears to allege three
substantively distinct factual misrepresentations by Capital One. First, Busby alleges that
Capital One executed and filed a fraudulent Notice of Foreclosure Sale (which Busby alleges
misrepresented that Capital One was the holder of the Note and misrepresented the amounts
27
owed by Busby) and a fraudulent Deed of Appointment 11 (which Busby alleges misrepresented
that Prensky was authorized to act as a trustee on behalf of the note holder in foreclosure
proceedings). See Am. Compl. ¶ 94-193. Second, Busby alleges that, during several telephone
conversations from as early as September 2009 through April 2010, Capital One represented to
Busby that it was the lender, knowing that it was not the lender and intending to deceive and
induce Busby into making payments to it. Am. Compl. ¶ 66-67, 209-211. Third, Busby alleges
that Capital One made misrepresentations regarding the amounts owed by Busby by misapplying
her mortgage payments toward wrongfully inflated escrow charges and by accelerating amounts
added into the balance of her mortgage. Am. Compl. ¶ 199.
In Busby I, the Court considered – and dismissed without prejudice – substantively
similar allegations, on the grounds that Busby had failed to plead that she took any steps in
reasonable reliance on the Capital One’s allegedly fraudulent statements. See Busby, 772 F.
Supp. 2d at 276-77. Judge Urbina reasoned as follows:
The plaintiff first suggests that the reliance element needed to establish her fraud
claim is satisfied by her allegation that the D.C. Recorder of Deeds and other third
parties relied on the misrepresentations made in the Notice and Deed of Appointment. .
. . Yet under D.C. law, “[a] plaintiff may recover for a defendant’s fraudulent statement
only if the plaintiff took some action in reliance on that statement.” Aktieselskabet AF
21. Nov. 2001 v. Fame Jeans Inc., 525 F.3d 8, 22–23 (D.C. Cir. 2008) . . . Thus, the
plaintiff's allegations concerning actions taken by the D.C. Recorder of Deeds or any
other third parties cannot, standing alone, satisfy the detrimental reliance element
required for fraud claims under D.C. law.
The plaintiff also contends that she relied to her detriment on the defendants’
fraudulent statements by consulting legal counsel. Pl.'s Opp'n at 17. This allegation,
however, does not appear in the amended complaint. . . [and] even if this allegation
were considered part of the plaintiff's pleadings, it has not been pled with the requisite
specificity, as the plaintiff has offered no indication of what steps she took to consult
11
Busby also alleges that on June 4, 2010, Prensky filed a second deed of appointment of
substitute trustee, dated May 20, 2010, which likewise falsely represents Capital One as the note
holder and as having the authority to appoint a trustee under the Deed of Trust. Am Compl. ¶¶
175-77.
28
with legal counsel or what costs she incurred as a result. … Finally, even if the plaintiff
had alleged that she had offered some factual allegation to substantiate her claim of
loss, it is far from clear that the cost of legal services can constitute detrimental reliance
for purposes of fraud, given the American Rule against fee shifting. See Oliver T. Carr
Co. v. United Tech. Commc'ns Co., 604 A.2d 881, 883 (D.C. 1992) (“[T]his jurisdiction
follows ‘the American Rule under which ... every party to a case shoulders its own
attorneys' fees, and recovers from other litigants only in the presence of statutory
authority, a contractual arrangement, or certain narrowly-defined common law
exceptions' such as the conventional ‘bad faith’ exception.” (internal quotation marks
omitted) (quoting Dalo v. Kivitz, 596 A.2d 35, 37, 39 (D.C.1991))); see also Sloan v.
Urban Title Servs., Inc., 689 F.Supp.2d 94, 121 (D.D.C.2010) (holding that a party
asserting fraud “must provide legal authority in support of his apparent claim that he is
entitled to attorney's fees and costs”). Accordingly, the plaintiff's assertion in her
opposition that she consulted legal counsel as a result of the defendants’ fraudulent
representations does not satisfy the detrimental reliance requirement.
Id. at 276.
Judge Urbina also considered – and rejected as inadequately pled – Busby’s allegations
that Capital One committed fraud by misrepresenting the escrow amounts owed and other
penalties due because, in addition to Busby’s failure to plead with the requisite specificity, “the
amended complaint indicate[d] that after the defendants filed the Notice and Deed of
Appointment, which contained the allegedly fraudulent statements at issue, the plaintiff did not
make any additional payments to Capital One.” Id. at 277. Accordingly, Judge Urbina rejected
Busby’s argument that she acted in reliance on Capital One’s alleged misrepresentations
regarding the amounts owed by “pay[ing] some of the amounts demanded” because Busby’s
purported payments “were made before the defendants’ alleged misrepresentations and plainly
were not taken in reliance on them.” Id.Here, Capital One argues that Busby’s allegations of fraud in this action have failed to
cure the pleading defects highlighted by the Court in Busby I. Upon a scrupulous review of the
Busby’s Amended Complaint, this Court agrees that Busby has again insufficiently pled that
Capital One committed fraud. Regarding Busby’s allegations relating to the issuance and filing
29
of the Notice of Foreclosure Sale and Deed of Appointment, it remains the case that her only
allegations of reliance on the allegedly fraudulent documents concern actions taken by third
parties (specifically, the acceptance for public filing of the documents by the Recorder; the
posting of the property by an auctioneer on its website; and the consideration of purchase of the
property by “members of the public,” see Am. Compl.¶¶ 222-23, 225-27), and her vaguely
alleged payment of fees in connection with her consultation of legal counsel and commencement
of litigation to stop the foreclosure (albeit again without any reference to the timing or amounts
of the payments or specific steps to consult counsel), see Am. Compl. ¶ 224. Accordingly, for
the same reasons articulated in Judge Urbina’s well-reasoned opinion in Busby I, and because
Busby has not here supplemented her Amended Complaint with any facts – none – sufficient to
cure the previous deficiencies, the Court finds that Busby’s Amended Complaint fails entirely to
plead that she relied, in any way, on the allegedly fraudulent Notice of Foreclosure Sale and
Deed of Appointment to her detriment and has therefore failed to plead fraud on the basis of the
issuance or public filing of those documents.
Turning to Busby’s allegations regarding the allegedly fraudulent misrepresentations
made by Capital One relating to payments made by Busby, the Amended Complaint has made
some – albeit ultimately still woefully insufficient – clarifications in this regard. As
aforementioned, the mainstay of Judge Urbina’s analysis of these allegations was that Busby did
not, and could not, have pled detrimental reliance on Capital One’s misstatements regarding its
status as lender and amounts owed because those alleged misstatements were made in connection
with the issuance of the Notice of Foreclosure Sale and because Busby had clearly alleged that
all payments she had made occurred before the filing of the Notice of Sale. See Busby, 772 F.
Supp. 2d at 277. However, in the Amended Complaint before this Court, Busby alleges that
30
during several telephone conversations beginning as early as September 2009 and through April
2010, Capital One told her that it was the lender; that based on those representations, Busby
made payments to Capital One, believing that she was making payments under the Note; and that
Capital One made those representations knowing that it was not the lender, intending to deceive
and induce Busby into making payments to it. Am Compl. ¶¶ 66-67; 209-211. Relatedly, Busby
alleges that she later discovered that the amounts she had been paying as of September 2009 had
been misapplied to “unauthorized, overstated, [and] improper” escrow fees; essentially, she
alleges that she was “tricked into paying more than the amounts actually due and owing” to
Capital One, an entity that was not entitled to the payments. Am. Compl. ¶¶ 68-69; 76-79; 217-
220.
While Busby’s pleading has arguably resolved the sequencing predicament observed by
Judge Urbina, in that the timing of events alleged here makes it conceivable that Busby, acting
subsequent to and in reliance on Capital One’s representations, made overpayments to the wrong
entity, Busby has nevertheless failed to “allege more by way of factual content to ‘nudge’ her
claim … across the line from conceivable to plausible” as required by the Supreme Court’s
construction of Rule 8, Iqbal, 556 U.S. at 683 (citing Twombly, 550 U.S. at 570). See also
Busby, 772 F. Supp. 2d 268, 285 (It is “not enough for the plaintiff to assert that there could be a
set of facts consistent with her pleadings that would entitle her to relief. . . . Rather, the plaintiff
must plead sufficient factual content to allow ‘the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”) (citing Iqbal, 129 S. Ct. at 1949)). And she has
certainly not satisfied the more demanding pleading standard of Rule 9(b), which requires her to
plead the “who, what, when, where, and how” concerning the circumstances of the alleged fraud.
See Anderson v. USAA Cas. Ins. Co., 221 F.R.D. 250, 253 (D.D.C. 2004) (internal citations
31
omitted). Busby’s claim is essentially that during several telephone conversations, spanning a
period of several months, sometime after September 2009, “Capital One” “represented” to Busby
that it was the lender, and that Busby, at unspecified points in time, made unspecified amounts of
payments, which she later learned were “unauthorized, overstated, improper, and not owed.”
Busby has failed entirely to allege specific conversations, the identity of the individual(s) who
made the statements, what exactly was said, how payment amounts were communicated to her
and what those amounts were, how or why the alleged statements and amounts were erroneous,
or any circumstances surrounding her payments to Capital One. Most fatally, she has failed to
even plead the dates or amounts of the payments “retained [by Capital One] or given up [by her]
as a consequence of the fraud.” See Williams, 389 F.3d at 1256. Nor does she at any point allege
that the payments she made were not credited to her loan in some way, or that there is any other
party who, as true lender, was entitled to those payments. What is more, although Judge Urbina
did not rely exclusively on similar pleading deficiencies in his dismissal order in Busby I, Busby
was specifically placed on notice that without them, a fraud claim could not succeed. See Busby,
772 F. Supp. 2d at 277 n.4 (“Furthermore, the amended complaint contains no indication of why
the escrow charges and other penalty fees assessed by Capital One were erroneous. … The
absence of such allegations renders the plaintiff’s fraud claim deficient under Rule 9(b). See
Skypala v. Mortg. Elec. Registration Sys., Inc., 655 F.Supp.2d 451, 458 (D.N.J. 2009)
(concluding that the plaintiff failed to state a fraud claim based on allegedly unwarranted “Late
Charges” and other charges demanded by the defendant because the plaintiff had offered no
explanation for its assertion that these charges were unwarranted)”).
For all of the foregoing reasons, the Court finds that Busby’s failure to plead her fraud
and intentional misrepresentation claim against Capital One with sufficient specificity warrants
32
dismissal of that claim. Further, the Court notes that Busby has amended her claims in both this
action and in Busby I, giving her four opportunities to assert a colorable claim of fraud, has failed
to heed Judge Urbina’s detailed guidance regarding pleading her claims with the requisite
particularity, and has not here requested another opportunity to amend. Accordingly, because
Busby “has had the opportunity to cure any deficiencies [in her Amended Complaint] but either
has not or cannot do so,” the Court shall dismiss her fraud and intentional claim against Capital
One with prejudice. Phrasavang v. Deutsche Bank, 656 F. Supp. 2d 196, 205-206.
2. Conspiracy to Commit Fraud (Count III) & Civil Conspiracy (Count VII)
Busby alleges that Capital One is liable for conspiracy to commit fraud and civil
conspiracy. Simply stated, Busby alleges that Capital One conspired with Prensky to create
fraudulent documents and record them with the Recorder. See Am. Compl. ¶¶ 238-256, 307-
349. Preliminarily, the Court observes that there is no independent action in the District of
Columbia for civil conspiracy; rather, it is a means for establishing vicarious liability for an
underlying tort. Exec. Sandwich Shoppe, Inc. v. Carr Realty Corp., 749 A.3d 724, 738 (D.C.
2000). Here, because both of Busby’s conspiracy counts are premised on allegedly fraudulent
conduct, and because Busby has failed to plead the circumstances constituting the underlying
alleged fraud with particularity, see supra Part II.B.1, the Court would be hard-pressed to find
that Busby has adequately pled a conspiracy to commit fraud. See, e.g. Carter v. Bank of Am.,
N.A., 888 F. Supp. 2d 1, 25 (D.D.C. 2012) (“Since the plaintiff has failed to state a claim for
common law fraud, as discussed supra, her claim for conspiracy to commit fraud cannot stand
alone and is thus also unavailing.”); Geir v. Conway, Homer & Chin-Caplan, P.C., --- F. Supp.
2d ---, Civ. A. No. 12-1171, 2013 WL 471663, *16 (D.D.C. Feb. 8, 2013) (applying Rule 9(b)’s
heightened pleading standard to a civil conspiracy to commit fraud claim). But even without
33
applying the requirements of Rule 9(b), the Court finds that because Busby has failed to satisfy
even the pleading standard of Rule 8(a), her conspiracy claims must be dismissed.
In order to state a claim for conspiracy under District of Columbia law, Busby must
allege, “(1) an agreement between two or more persons (2) to participate in an unlawful act, and
(3) injury caused by an unlawful overt act performed by one of the parties to the agreement, and
in furtherance of the common scheme.” Busby I, 772 F. Supp. 2d at 278 (citing Hill v. Medlantic
Health Care Grp., 933 A.2d 314 (D.C. 2007)). Here, even if Busby had sufficiently pled the
underlying unlawful act of fraud – which she has not – Busby has failed entirely to allege facts
supporting an agreement between two parties. Busby’s only factual allegation of an agreement is
that both Prensky’s and Capital One’s names appear on the allegedly fraudulent documents, and
thereafter they were filed with the Recorder, which means, according to Busby, that the parties
worked together to create the documents. Am. Compl. ¶ 240. But conclusory allegations of an
agreement do not suffice; parties must allege facts showing the existence or establishment of an
agreement. See, e.g., Kissi v. Panzer, 664 F. Supp. 2d 120, 126 (D.D.C. 2009); Graves v. United
States, 961 F. Supp. 314, 320 (D.D.C. 1997). Therefore, because Busby has failed to state a
claim for civil conspiracy, the Court dismisses Counts III and VII. Further, because Busby
asserted nearly identical claims for conspiracy to commit fraud in Busby I, which were rejected
by Judge Urbina as inadequately pled for the same reasons the Court rejects the claims today, see
Busby, 772 F. Supp. 2d at 277-78, Counts III and VII shall be dismissed with prejudice. 12
12
Indeed, Capital One has suggested that Busby has merely attempted to peddle her failed RICO
claim from Busby I as a civil conspiracy claim in this action. Capital One’s Mem. at 25, n.11.
Upon a comparison of the two complaints, it does appear that Busby has merely cut-and-pasted
the entirety of her RICO allegations from Busby I into her Amended Complaint and simply
retitled the count. See Am. Compl. ¶¶ 307-349.
34
3. Wrongful Attempted Foreclosure (Count IV)
Busby also alleges that Capital One attempted to wrongfully foreclose on her property.
Am. Compl. ¶ 257-62. “The District of Columbia courts have held that ‘an action for wrongful
or improper foreclosure may lie where the property owner sustains damages by reason of a
foreclosure executed in a manner contrary to law.’” Jackson v. ASA Holdings, 751 F. Supp. 2d
91, 100-101 (D.D.C. 2010) (Kollar-Kotelly, J.) (quoting Johnson v. Fairfax Vill. Condo. IV Unit
Owners Ass’n, 641 A.2d 495, 505 (D.C. 1994)). However, there is no dispute here that no
foreclosure has taken place, and in fact, Busby herself alleges that the foreclosure sale that was
originally scheduled for May of 2010 – almost three years ago – had been cancelled. Am.
Compl. ¶ 173. Busby has not cited a single authority demonstrating that the District of Columbia
courts recognize a common law cause of action for wrongful attempted foreclosure, and this
Court has found none. 13 Cf. Young v. 1st Am. Fin. Servs., 992 F. Supp. 440, 445 (D.D.C. 1998)
(“[A] claim of wrongful foreclosure is premature at this point because defendants … have not yet
transferred title to plaintiffs’ home, so there is not yet a foreclosure sale to set aside.”).
Busby alleges that, pursuant to District of Columbia law – and specifically, an October
27, 2010 enforcement statement issued by the Attorney General for the District of Columbia –
Capital One was obligated to confirm that the District’s land records demonstrated that Capital
One was in fact the holder of the Note before so indicating in the Notice of Foreclosure Sale.
See Am. Compl. ¶¶ 260-61 & Ex. A (Statement of Enforcement Intent Regarding Deceptive
Foreclosure Sale Notices). However, Busby has provided no authority or argument to suggest
13
Busby’s reliance on Osbourne v. Capital City Mortgage Corp. is misplaced. 667 A.2d 1321(D.C. 1995). Although Osbourne provided for the possibility of damages in connection with a
foreclosure that had been commenced but ultimately postponed by agreement of the parties
pending the outcome of the lawsuit, this was in the context of a claim of intentional
misrepresentation; the court did not suggest the availability of a free-standing tort for wrongful
attempted foreclosure. Id.35
that the Attorney General’s enforcement statement creates a private right of action, and cases in
this District in fact suggest that it does not. See, e.g., Carter, 888 F. Supp. 2d at 15 (dismissing
the plaintiff’s claim that the defendant violated District of Columbia law by failing to prove its
status as a holder of the instrument or its entitlement to enforce the instrument where the plaintiff
had not pled sufficient factual allegations to demonstrate either that she had sustained damages
or that there was a foreclosure executed contrary to the law); Henok v. Chase Home Finance, ---
F. Supp. 2d ---, Civ. A. No. 12-336, 2013 WL 167941, *7 (D.D.C. Jan. 16, 2013) (granting the
defendant’s motion to dismiss a claim under D.C. Code § 47-1431(a), which obliges all
transferees of real property to record a fully acknowledged copy of the deed with the Recorder
within 30 days after the transfer, because the plaintiff did “not carr[y] his burden of showing that
there is a private right of action for damages under this statute.”) (citation omitted).
Accordingly, because Busby has failed entirely to show that the District of Columbia
recognizes a claim for wrongful attempted foreclosure, the court will dismiss Count IV, with
prejudice, for failure to state a cause of action within the Court’s subject matter jurisdiction.
4. D.C. Usury Statute and the D.C. Consumer Protection Procedures Act (Count V)
Busby also claims that Capital One violated the D.C. Usury Statute, D.C. Code § 28-
3312, “by both misrepresenting material facts and failing to state material facts,” and “mis-
applying payments toward fraudulent and inflated escrow accounts,” Am. Compl. ¶ 267, and
that it violated the D.C. Consumer Protection Procedures Act (“CPPA”), D.C. Code § 28-3904,
by those same allegedly fraudulently misapplied payments. Am. Compl. ¶ 275. These same
claims were considered and, for good reason, rejected in Busby I. See Busby, 772 F. Supp. 2d at
278.
36
Specifically, Judge Urbina dismissed Busby’s claims regarding the D.C. Usury Statute
because, although the statute applies to “lenders,” all of Busby’s claims were premised on the
theory that Capital One was not in fact the lender for this loan transaction. See id. Nothing has
changed in this case, as the Amended Complaint repeatedly asserts that Capital One is not, and
never was, the lender, see, e.g., Am. Compl. ¶¶ 47-48; 211, 264. Indeed, Busby’s fraud claim is
premised entirely on the assertion that Capital One misrepresented itself as the lender and/or the
holder of the Note. See supra Part II.B.1. Busby has attempted to cure her claim by alleging that
“even though Capital One is not the Lender … in its ordinary course of business, it acts as a
lender,” Am. Compl. ¶ 264; however, Busby previously asserted a similar argument in her briefs
in Busby I, in response to which Judge Urbina cautioned Busby to provide some “authority [or]
cogent argument” in support of this assertion. Busby, 772 F. Supp. 2d 279. She has failed to do
so. See Pl.’s Opp’n at 22-24; see also, e.g., Young, 992 F. Supp. at 444 n.7 (“Plaintiffs allege that
1st American fraudulently led them to believe that 1st American was the lender rather than the
broker, and that 1st American should therefore be liable under the usury statute. While such
misrepresentations, if they were made, may be relevant to the fraud counts, they do not change
the fact that the usury statute applies only to lenders, and that 1st American was not a lender in
this transaction.”) (internal citation omitted). Accordingly, because Busby has, once again,
failed to plead facts supporting that Capital One, as lender, made a material misrepresentation to
her, or that the D.C. Usury statute otherwise applies to Capital One’s conduct, the Court shall
dismiss with prejudice this claim against Capital One.
Busby also alleges that Capital One violated the CPPA, which prohibits merchants from
making material misrepresentations to consumers; however, as Judge Urbina held previously,
and as this Court finds today, Busby has alleged no facts establishing that the CPPA applies to
37
this case. “The CPPA prohibits a wide variety of deceptive trade practices perpetrated against
consumers.” Busby, 772 F. Supp. 2d at 279 (citing D.C. Code § 28–3904). “The practices
prohibited by the statute include misrepresenting the existence of a sponsorship or affiliation,
misrepresenting a material fact which has the tendency to mislead and failing to state a material
fact which has the tendency to mislead. The purpose of the CPPA is to protect consumers from a
broad spectrum of unscrupulous practices by merchants, therefore the statute should be read
broadly to assure that the purposes are carried out.” Id. (citations omitted). Despite its broad
reach, however, “the CPPA applies only to consumer-merchant relationships.” Id. (citing cases).
The statute itself defines a “consumer” as “a person who does or would purchase, lease
(from), or receive consumer goods or services . . . or a person who does or would provide the
economic demand for a trade practice.” D.C. Code § 28–3901(a)(2). A “merchant” is defined as
an “individual, firm, corporation, partnership, cooperative, associations, or any other
organization, legal entity, or group of individuals however organized” who “in the ordinary
course of business does or would sell, lease (to), or transfer, either directly or indirectly,
consumer goods or services” or who “does or would supply the goods or services which are or
would be the subject matter of a trade practice.” Id. § 28–3901(a)(3).
Here, Busby’s Amended Complaint contains no factual allegations indicating the
existence of a consumer-merchant relationship between Busby and Capital One. See generally
Am. Compl. To be sure, courts have applied the CPPA to lenders’ practices in connection with
residential mortgage transactions. See, e.g. Williams v. First Gov’t Mort. & Invest. Corp, 225
F.3d 738, 744 (D.C. Cir. 2000) (upholding jury verdict that home refinancing lender violated
CPPA by making loan to debtor whom the lender either knew would be unable to repay or by
taking advantage of debtor’s inability to protect his own interests during negotiations); Hughes v.
38
Abell, 794 F. Supp. 2d 1, 8 (D.D.C. 2010) (denying motion to dismiss CPPA claim where the
plaintiff alleged that the lender knew that the terms of the loan required payments equal to almost
half of his income). However, here, the Amended Complaint contains no such allegations of
predatory lending by Capital One. To the contrary, as discussed at length above, Busby has
specifically alleged that Capital One was not the lender, and has never been, the lender. See
generally Am. Compl.
Accordingly, as Busby has failed to cure the defects in her prior complaint and has
ultimately failed to state a claim under the CPPA, the court dismisses Busby’s CPPA claim
against Capital One, with prejudice.
5. Conversion (Count VI)
In the District of Columbia, conversion “has generally been defined as any unlawful
exercise of ownership, dominion or control over the personal property of another in denial or
repudiation of [her] rights thereto.” Chase Manhattan Bank v. Burden, 489 A.2d 494, 495 (D.C.
1985); accord O’Callaghan v. Dist. of Columbia, 741 F. Supp. 273, 279 (D.D.C. 1990).
Importantly, “[w]here there has been no dispossession of property rights, there can be no action
for conversion.” Kaempe v. Myers, 367 F.3d 958, 964 (D.C. Cir. 2004).
Here Busby’s conversion count asserts two acts of conversion – only one of which was
considered, and dismissed, in Busby I. First, Busby asserts that Capital One unlawfully asserted
ownership interests in the Note and Deed of Trust through the execution of the allegedly
fraudulent Notice of Sale and Deed of Appointment. Am. Compl. ¶¶ 301-306. Essentially,
Busby argues that when she conveyed legal title to the trustee in the Deed of Trust, she
maintained a “beneficial” interest in both the property and the Deed of Trust. See Pl.’s Opp’n at
30-33. Judge Urbina easily rejected this theory in Busby I, explaining that “The Deed of Trust is
39
a security instrument given by the plaintiff for the benefit of the lender … The authorities relied
on by the plaintiff stand only for the proposition that the mortgagor has a beneficial interest in
the underlying property securing the transaction, not in the deed of trust itself.” Busby, 772 F.
Supp. 2d at 280 (citing Democratic Cent. Comm. of Dist. of Columbia v. Wash. Metro. Area
Transit Comm’n, 21 F.3d 1145, 1153 (D.C.Cir.1994)). Further, Judge Urbina observed that,
while it is true that courts in other jurisdictions have permitted conversion claims to proceed
based on the mortgagor’s refusal to return a deed of trust to the mortgagee after fully satisfying
his or her loan obligations, because Busby did not (and here, still has not) alleged full satisfaction
of her debt, she was not entitled to return of either the Note or the Deed of Trust under the terms
of either document. Id. at 280-81 (citing cases). Because Busby’s allegations regarding the
alleged conversion of the Note, Deed of Trust, and property are in every material respect the
same as those before Judge Urbina, and because the Court agrees with Judge Urbina’s well-
reasoned rationale summarized above, the Court finds that Busby has failed to state a claim for
conversion of the Note, Deed of Trust, or property.
However, Busby has supplemented her conversion allegations in one noticeable way.
Unlike in Busby I, Busby now avers that Capital One converted her property when it “misapplied
her mortgage payments,” which Busby believed were going toward principle and interest, “and
instead, directed them toward overly inflated escrow charges.” Am. Compl. ¶¶ 288. Busby also
alleges that Capital One lacked authority to divert the funds (or to even collect them in the first
instance) and that Capital One failed to redirect the payments to payment of the Note after Busby
alerted them to the errors. See Am. Compl. ¶¶ 63-79.
Capital One’s only argument in response to these allegations is that “because Busby was
in default, Capital One was authorized to apply her payments as necessary, pursuant to the Note
40
and Deed Trust’s default provisions.” Capital One’s Mem. at 18. This given, Capital One
argues, nothing in the Amended Complaint supports the allegation that Capital One’s actions
were an unlawful exercise of control. Id. In her opposition brief, Busby argues that the Court
should disregard this argument in the context of its ruling on Capital One’s motion to dismiss
because it directly contradicts facts alleged in her Amended Complaint. Pl.’s Opp’n at 29-30.
The Court agrees. For reasons discussed at length above, see supra Part II.B., the Court has
determined that Capital One’s repeated arguments regarding Busby’s alleged default or Capital
One’s purported authority to collect payments are supported by neither Busby’s Amended
Complaint nor any of its exhibits or other documents upon which it necessarily relies – or by
anything else in the record, for that matter, whether properly considered on a motion to dismiss
or not.
In its reply, Capital One neglected entirely to respond to Busby’s argument regarding its
improper reliance upon her purported “default” in the context of her conversion claim, instead
focusing exclusively on arguments relating to the inadequacy of her claim insofar as it asserted
conversion of the Deed of Trust. See Capital One’s Opp’n at 16-18. Because Capital One has
failed to offer any other arguments as to why Busby has failed to plead conversion of her loan
payments, and because the Amended Complaint itself contains sufficient factual allegations that,
if accepted as true, state a claim that Capital One – without lawful authority under the terms of
the loan’s governing documents – exercised “ownership, dominion, or control” over Busby’s
loan payments, “in denial or repudiation of [her] right” to have such payments directed towards
payment of the Note, the Court finds that Busby has adequately pled conversion of her loan
41
payments. Burden, 489 A.2d at 495. 14 While the Court notes that Busby has failed to plead any
details regarding the timing or amounts of the alleged payments made, or how, exactly, they
were erroneously misapplied, the Court also notes that, unlike fraud, a common law conversion
claim mandates no special pleading standard. Although the Amended Complaint would certainly
be stronger with such detail, the absence thereof does not show a failure to comply with Rule 8
of the Federal Rules of Civil Procedure and cannot support a dismissal under Rule 12(b)(6).
For the foregoing reasons, the Court shall GRANT Capital One’s motion to dismiss
Count VI, insofar as the count is premised upon alleged conversion of the Deed of Trust.
However, the Court shall DENY Capital One’s motion to dismiss Count VI, insofar as the count
is premised upon alleged conversion of Busby’s loan payments, as the Court finds that Busby has
sufficiently stated a claim upon which relief may be granted in this regard. Finally, because
Busby has pled the conversion claim against Prensky only insofar as he was allegedly involved
in the conversion of the Deed of Trust, and has not alleged that Prensky was involved with
collecting or misappropriating her loan payments, the Court shall dismiss the entirety of Busby’s
conversion claim against Prensky.
6. Negligence (Count VIII)
The elements of a common law claim for negligence in the District of Columbia are “(1)
a duty of care owed by the defendant to the plaintiff, (2) a breach of that duty by the defendant,
and (3) damage to the plaintiff, proximately caused by the breach of duty.” Powell v. Dist. of
14
While it is true that, as a general principle, a cause of action for conversion may not be
maintained to enforce a mere contractual obligation for payment of money, money can be the
subject matter of a conversion claim if the plaintiff has a right to an identifiable fund or funds of
money. Cf. Curaflex Health Servs., Inc. v. Bruni, 877 F. Supp. 30, 33 (D.D.C. 1995). Because
here, Busby alleges conversion of all funds which she intended to be applied to the Note, but
which Capital One allegedly misdirected, and because Busby in fact disclaims the existence of
any contractual relationship with Capital One, a conversion claim is not unfitting. See The Cuneo
Law Group, P.C. v. Joseph, 669 F. Supp. 2d 99, 124 (D.D.C. 2009).
42
Columbia, 634 A.3d 403, 406 (D.C. 1993). “Whether a duty exists is a question of law for the
Court.” Findlay v. CitiMortgage, Inc., 813 F. Supp. 2d 108, 120 (D.D.C. 2011) (citing
Hedgepeth v. Whitman Walker Clinic, 22 A.3d 789, 793 (D.C. 2011)). “Making this
determination is ‘essentially a question of whether the policy of the law will extend the
responsibility for the conduct to the consequences which have in fact occurred.’” Id. (citing
Hedgepeth, 22 A.3d at 793).
While, as aforementioned, Busby’s Amended Complaint is far from a picture of clarity,
Busby appears to allege that Capital One acted negligently in: recording false documents with
the Recorder (and thereby causing her public embarrassment by causing the listing of her
property as in foreclosure on a public website); concealing the identity of the Note holder;
forging the Deed of Substitution (thereby causing transfer of title of the property to Prensky);
failing to communicate accurate information to Busby about the relationship of Capital One and
Prensky to the Note; failing to communicate accurate information about the amounts due and
owing from Busby; overcharging Busby for escrow, improper foreclosure related fees, and other
items; and failing to train its employees regarding amounts due and owing for escrow payments
under security instruments. Am. Compl. ¶¶ 350-368.
Preliminarily, the Court observes that the alleged conduct pled as part of Busby’s
negligence claim is, in large part, not negligence at all but rather a reassertion of the alleged
intentional misrepresentation, which, for the reasons stated supra Part II.B.1, requires dismissal.
Insofar as the count can be fairly (indeed generously) read as premised upon Capital One’s
allegedly negligent failure to confirm the authenticity of documents filed with the Recorder, to
communicate accurate information about Busby’s payments and Capital One’s status in relation
to the Note, and/or to train and monitor its employees, the claim must nevertheless fail due to
43
Busby’s failure to allege any facts which would support the finding of a duty of care. Although
Busby conclusorily alleges that Capital One “had duties, fiduciary and otherwise” to her, id. ¶
352, the Amended Complaint states no facts supporting the existence of a fiduciary or any other
relationship which might give rise to a duty of care. See generally id. Busby does not allege –
and in fact expressly disclaims – any debtor-creditor or even loan servicing relationship, see id.
¶¶ 45-65 (although the Court observes that, even if she had, subject to narrow exceptions not
here applicable, “the relationship between a debtor and creditor is ordinarily a contractual one,
lacking any fiduciary duties.” Findlay, 813 F. Supp. 2d at 120); see e.g., Henok, 2013 WL
167941 at *5 (denying the plaintiff leave to amend his complaint to add a negligence claim
against his lender relating to misrepresentations in a notice of foreclosure sale because the
plaintiff did “not allege any facts to establish any duty independent of the contractual
relationship created by the mortgage documents, or facts separable from the terms of those
documents upon which the torts may independently rest”)). In fact, Busby has failed to allege
any relationship at all with Capital One beyond their “tricking” her into thinking they were her
lender and submitting payments to them. See, e.g., Am. Compl. ¶ 63 (“Although Capital One
collected payments from Plaintiff, upon information and belief, Capital One has not been
authorized by any entity having authority to provide such authorization under the [Note].”).
Busby’s argument in her opposition brief that “[o]nce Capital One chose to interact with [her], it
had a duty of care to her” is simply too vague and devoid of legal support. Pl.’s Opp’n at 37.
Further, the Court notes that even if Busby had sufficiently alleged that Capital One owed
her a duty of care – which she has not – and that Capital One negligently misrepresented
information regarding her mortgage loan, Busby has, for the very same reasons discussed at
length supra Part II.B.1, in the context of Capital One’s allegedly fraudulent misrepresentations,
44
failed to plead that she acted in reliance on those negligent misrepresentations to her detriment.
See Henok, 2013 WL 167941 at *5 (noting that among the elements of negligent
misrepresentation under D.C. law is that “the plaintiff reasonably relied on the false information
to [her] detriment”). Indeed, Judge Urbina, in dismissing Busby’s comparable negligence claim
in Busby I, likewise found that Busby had not pled that she had made payments to Capital One in
reliance on its alleged misrepresentations, nor provided any indication as to how Capital One’s
employees improperly assessed escrow charges or any other fees against Busby. 772 F. Supp. 2d
283. Accordingly, Judge Urbina concluded that Busby had failed to show that Capital One’s
allegedly negligent misrepresentations or negligent supervision proximately caused her harm.
Because Busby has added nothing of substance to the Amended Complaint presently before the
Court, the Court shall dismiss her negligence claims against Capital One, with prejudice.
7. Unconscionability, Bad Faith, and Unfair Dealing (Count IX)
On this count, Busby alleges that Capital One used its “superior position as a financial
institution . . . to take oppressive and unfair advantage of [her]” by filing the allegedly fraudulent
documents. Am Compl. ¶ 370. However, as the Court previously made unambiguously clear in
Busby I, claims of unconsciounability, bad faith and unfair dealing require the existence of a
contractual relationship between the parties. See Busby I, 772 F. Supp. 2d at 284 (citing
Williams v. First Gov. Mortg. & Investors Corp., 225 F.3d 738, 748 (D.C. Cir. 2000) (“Liability
for common law unconscionability requires two findings: ‘an absence of meaningful choice on
the part of one of the parties together with contract terms which are unreasonably favorable to
the other party.”) (citation omitted and emphasis added); Kerrigan v. Britches of Georgetowne,
Inc., 705 A.2d 624, 627 (D.C. 1997) (concluding that because the plaintiff, “as an employee at
will, not under contract,” had no basis for claiming that the defendant breached the implied
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covenant of good faith and fair dealing); Brown v. Countrywide Home Loans, Inc., 319 B.R. 278,
290 (D.D.C. 2004) (granting summary judgment to the defendant on the plaintiff's claim that the
defendant breached the implied covenant of good faith and fair dealing because “no reasonable
fact-finder could determine that a contract existed between [the parties]”); Choharis v. State
Farm Fire & Casualty Co., 961 A.2d 1080, 1089 (D.C. 2008) (concluding that D.C. law does not
recognize an independent tort of bad faith)).
Once again, Busby’s Amended Complaint nowhere alleges the existence of a contractual
relationship – neither express nor implied – with Capital One. Accordingly, Count IX must be
dismissed with prejudice for failure to state a claim upon which relief can be granted.
8. Emotional Distress (Count X)
Busby also claims “emotional distress” based on Capital One and Prensky’s “extreme and
outrageous” conduct, which the Court understands from her pleading to be an attempt to assert a
claim of the tort of intentional infliction of emotional distress. See Am. Compl. ¶¶ 377-385.
Under District of Columbia law, the tort of intentional infliction of emotional distress requires
(1) “extreme and outrageous conduct” by the defendant that (2) “intentionally or recklessly” (3)
causes the plaintiff “severe emotional distress.” Kotsch v. District of Columbia, 924 A.2d 1040,
1045 (D.C. 2007) (internal quotation marks omitted). The plaintiff must allege conduct that is
“so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of
decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.”
District of Columbia v. Tulin, 994 A.2d 788, 800 (D.C. 2010) (internal quotation marks and
citations omitted). Deciding whether the plaintiff’s allegations are sufficient to meet this
demanding standard is, in the first instance, a question for the court. Homan v. Goyal, 711 A.2d
812, 818 (D.C. 1998), amended by 720 A.2d 1152 (D.C. 1998).
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In Busby I, Judge Urbina found that although Busby’s complaint in that action did not
specify the precise conduct on which Busby grounded her claim, the conduct alleged in the
complaint generally, which stemmed from the parties’ disagreements over their rights and
obligations in a commercial loan transaction, was not sufficiently “atrocious” to support an
intentional infliction of emotional distress claim.” 772 F. Supp. 2d at 285-86 (citation omitted).
The Court agrees. Although here, Busby has pled with slightly more detail in that she has
specified that Capital One caused her severe emotional distress by causing her home to be
“wrongful[ly] publish[ed] … on the internet” (presumably by way of the public filing of the
Notice of Sale), Am. Compl.¶ 380, and by misrepresenting itself as the lender, Am. Compl. ¶
381, this conduct – whether considered separately or together with all other allegations contained
in the Amended Complaint – could not plausibly constitute conduct “so outrageous in character,
and so extreme in degree, as to go beyond all possible bounds of decency[.]” Tulin, 994 A.2d at
800. See e.g., Haynes v. Navy Fed. Credit Union, 825 F. Supp. 2d 285, 294 (D.D.C. 2011)
(concluding that allegations that the defendant had called plaintiff’s home on “numerous
occasions,” had “falsely reported to credit agencies that he is in arrears on his loan,” had “refused
to provide him with an Interest Statement,” and may at some point in the future “initiate
foreclosure proceedings,” whether considered together or independently, failed to state a claim
for intentional infliction of emotional distress) (internal editing omitted); Ihebereme v. Capital
One, N.A., 730 F. Supp. 2d 40, 54-55 (D.D.C. 2010) (finding that plaintiff’s allegations that
defendant refused to accept mortgage payments, failed to timely credit mortgage payments,
overcharged plaintiff, and discriminated against plaintiff were not sufficiently outrageous to give
rise to intentional infliction of emotional distress claims).
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Because Busby has again failed to state a claim for intentional infliction of emotional
distress, this count shall be dismissed with prejudice.
9. Request for a Permanent Injunction Against Capital One & Prensky (Count XII)
Finally, Busby requests that the Court order the following injunctive relief against both
Capital One and Prensky: permanently enjoin them from foreclosing on the Note; permanently
enjoin them from engaging in the unlawful practices alleged in the Amended Complaint; enter a
declaratory judgment that the transactions resulting from those unlawful practices are void; and
order rescission of the transactions resulting from their unlawful practices. See Am. Compl. at
42. The only substantive claims against Capital One and Prensky surviving the Court’s Opinion
today are conversion (insofar as it is asserted against Capital One in connection with Capital
One’s alleged collection and misappropriation of Busby’s loan payments) and breach of
fiduciary duty (which Busby has asserted only against Prensky, whom she has not yet served in
this action). To the extent Busby prevails on her conversion claim, she would be remedied by a
return of her funds, not any form of injunctive relief. Because the Court finds today that the
other claims against Capital One and Prensky must be dismissed with prejudice, Busby’s claims
for declaratory and injunctive relief in connection with those claims must also fail. See, e.g., Am.
Immig. Lawyers Ass’n v. Reno, 18 F. Supp. 2d 38, 62 (D.D.C. 1998) (“Given that plaintiffs are
not entitled to any relief on their substantive claims because they fail to state a claim under Rule
12(b)(6), it follows that their final claim requesting a declaratory judgment is dismissed as
well.”). Further, because, as Busby herself acknowledges, the previously scheduled foreclosure
sale was cancelled almost three years ago, there exists nothing, at this time, for the Court to
enjoin even if the Court were to find Capital One without authority to invoke the power of sale
provision under the Deed of Trust. See, e.g., Wilson v. ABN AMRO Mortg. Group, Civ. A. No.
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05-0042, 2005 WL 3275849, at *3 (D.D.C. 2005) (denying injunction when no foreclosure was
scheduled or threatened); accord Carter, 888 F. Supp. 2d at 153 (cause of action for declaratory
relief under District of Columbia foreclosure law accrues with the filing of a notice of
foreclosure sale) (citing Murray v. Wells Fargo Home Mortg., 953 A.2d 308, 322 (D.C. 2008)).
III. CONCLUSION
For the reasons stated herein, the Busby’s Motion to Remand Case is DENIED and
Capital One’s Motion to Dismiss is GRANTED-IN-PART and DENIED-IN-PART.
Specifically, the following claims are dismissed 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 all of the
pleading deficiencies discussed in this Memorandum Opinion afflict the claims insofar as they
are asserted against both Capital One and Prensky, the Court shall dismiss these claims in their
entirety. See Baker, 916 F.2d at 727. Further, because Busby was previously warned about
these deficiencies in connection with prior litigation before Judge Urbina and has not requested
leave to amend in this action, the Court shall dismiss these claims with prejudice. See generally
Busby, 772 F. Supp. 2d 268. Finally, because Busby has failed to demonstrate her entitlement to
declaratory or injunctive relief against Capital One or Prensky, the Court shall dismiss those
claims.
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However, because the Court concludes that Busby has adequately – albeit barely – pled
conversion (Count VI), the Court shall deny Capital One’s motion 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 (Count I) and a breach of fiduciary duty claim against
Prensky (Count XI).
An appropriate Order accompanies this Memorandum Opinion.
Date: March 25, 2013
_____/s/______________________
COLLEEN KOLLAR-KOTELLY
United States District Judge
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