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Hardwick v. Bank of America, N.A.

United States District Court, D. South Carolina, Florence Division

June 8, 2016

Nancy C. Hardwick, Plaintiff,
Bank of America, N.A., Defendant.


          KAYMANI D. WEST, Magistrate Judge.

         Plaintiff, Nancy C. Hardwick ("Plaintiff" or "Hardwick"), proceeding pro se, filed this action against Bank of America, N.A. ("Defendant" or "BANA") in the Horry County Court of Common Pleas on May 1, 2015. Defendant removed the matter to this court based on diversity of citizenship and filed an answer to the Complaint on June 2, 2015. ECF Nos. 1, 1-1, and 4. After discovery, Defendant filed a Motion for Summary Judgment, ECF No. 33, which is before the undersigned for a Report and Recommendation ("Report").[1] After considering the Motion; Plaintiff's response, ECF No. 37; and Defendant's Reply, ECF No. 39, the undersigned issues this Report recommending Defendant's Motion for Summary Judgment, ECF No. 33, be denied.

         I. Background facts and procedural history

         Defendant seeks summary judgment as to Plaintiff's Complaint, claiming that, even construing all facts in the light most favorable to Plaintiff, Defendant is entitled to have this matter dismissed based on legal grounds. Accordingly, the court provides this factual and procedural background in which the facts are considered in the light most favorable to Plaintiff.

         A. The instant action

         In her Complaint Plaintiff takes issue with Defendant's "administration of its Home Affordable Modification Program ("HAMP"), " claiming "Defendant's actions in dealing with the Plaintiff's mortgage loan were fraudulent and negligent at a minimum." Compl., ECF No. 1-1 at 7. Plaintiff's claims concerning Defendant's actions relate to a 2007 promissory note (the "Note") Plaintiff executed in favor of BANA for the principal amount of $160, 000. The note was secured by a mortgage (the "Mortgage") on Plaintiff's real property located at 34 Pine Valley Lane, Surfside Beach, S.C. (the "Pine Valley Property"). The note and mortgage were both executed on February 28, 2007. See id.

         Plaintiff's causes of action against BANA, briefly summarized, follow:

         â€¢ breach of contract: Plaintiff alleges she and BANA had entered into negotiations to modify the Note under HAMP, BANA failed in its obligations, and did not permit Plaintiff to exercise certain rights under the contract;

         â€¢ unfair business practices and unfair and deceptive acts: Plaintiff alleges BANA's practices in handling her financial affairs and misleading her throughout the modification process were unfair and deceptive; a portion of this cause of action alleges a foreclosure action has an effect on the public interest and notes the South Carolina Supreme Court issued administrative orders in 2009 and 2011 requiring "financial institutions prove their efforts to mitigate foreclosure proceedings, " and that BANA "flagrantly violated that order";

         â€¢ negligence: Plaintiff alleges BANA was "negligent in its fraudulent handling of the Mortgage Modification process[, ]" and BANA's actions caused Plaintiff "undue stress and emotional suffering and deprived the Plaintiff of the peaceful enjoyment of home ownership.";

         â€¢ breach of fiduciary duty: Plaintiff alleges that, as a BANA employee on medical leave, she put her "full trust and faith" in BANA and its Associate Banking Division, relying on BANA's advice that the HAMP modification was the "best option" for Plaintiff to pursue, although BANA could have offered other alternatives;

         â€¢ breach of the covenant of good faith and fair dealing: Plaintiff avers BANA's "delay tactics, followed by an outcome of denial" of a modification impaired her "home ownership enjoyment" rights, breaching the covenant of good faith and fair dealing implicit in any contract; and

         â€¢ fraud: Plaintiff claims BANA falsely misrepresented its intentions concerning potential modification of the terms of her Note and Mortgage and that the denial of her modification was part of a "larger scheme to deny modifications."

          See Compl., ECF No. 1-1. Both Plaintiff and BANA note that these causes of action are the same ones she attempted to pursue in earlier litigation in this court.[2] See Compl. 1-2; Def.'s Mem. 6 (noting Plaintiff now raises the same causes of action raised in prior federal action).

         In her prayer for relief, Plaintiff seeks a "permanent loan modification, " as to the Pine Valley Property loan, including modification of interest, reduction of principal, waiver of all fees, and removal of her account from credit bureaus. Compl., ECF No. 1-1 at 12. Plaintiff also seeks a $120, 000 judgment against Defendant for "damages for severe and unrelenting mental and emotional anguish and suffering and embarrassment and humiliation, " as well as punitive damages and costs. Id.

         B. Other relevant litigation

         1. The 2010 state-court foreclosure action[3]

         The following description of the "2010 Foreclosure Action" is taken from publicly available information and documents, [4] or undisputed information provided by the parties to this case. The undersigned notes that Plaintiff takes issue with the foreclosure judgment and that her appeal of that judgment is pending with the South Carolina Court of Appeals. At this juncture of this federal-court litigation, however, the court must consider Defendant's legal challenges brought in its pending Motion for Summary Judgment, which concern in part this court's authority to make decisions as to evidence or arguments concerning the state-court litigation. Accordingly, it is not necessary to fully explore Plaintiff's factual challenges and defenses to the 2010 Foreclosure Action.

         Hardwick defaulted on her loan obligations as to the Pine Valley Property note and mortgage. Pl.'s Resps. Def.'s 1st Req. for Admission ¶¶ 1, 5, ECF No. 33-2. On December 21, 2010, BANA filed a foreclosure complaint to foreclose on the Pine Valley Property. 2010-CP-26-11806. A copy of the Foreclosure Complaint is available at ECF No. 33-3. In addition to Hardwick the Foreclosure Complaint includes two additional defendants: BANA (pursuant to a junior $30, 000 mortgage) and Caropines Community Association (as to "any homeowners liens or assessments"). Foreclosure Compl. 2.

         On September 22, 2015, Horry County Master in Equity Cynthia Graham Howe entered a Master in Equity's Order and Judgment of Foreclosure and Sale. A copy of the Order and Judgment of Foreclosure and Sale ("Foreclosure Order") is available at ECF No. 33-6. The Foreclosure Sale Order lists the "Ventures Trust 2013-I-H-R by MCM Capital Partners, LLC, its trustee" [hereinafter "Ventures Trust"] as the foreclosure plaintiff. The available docket information indicates a motion to substitute the foreclosure plaintiff was filed and granted on May 14, 2015.[5] The Horry County docket information now lists "Ventures Trust" as the plaintiff for all matters, including the suit's filing in December 2010; however, the undersigned takes judicial notice from copies of documents provided in this action and in the 2012 federal action that BANA initiated the suit and remained the foreclosure plaintiff until the motion to substitute was granted on May 14, 2015. E.g., 2010 Foreclosure Compl., ECF No. 33-3 (Bank of America, N.A. listed as plaintiff); Foreclosure Order, noting Bank of America, N.A. initially held the mortgage and plaintiff was substituted thereafter). The Foreclosure Sale Order indicates the mortgage on Hardwick's Pine Valley Property was "assigned to Ventures Trust 2013-I-H-R by MCM Capital Partners, LLC by assignment recorded on February 13, 2015 in Book 5655 at Page 1945." Foreclosure Sale Order 2, available at ECF No. 33-6. Available online public real estate records from Horry County indicate the February 13, 2015 assignment was from BANA to Ventures Trust.[6] The record contains no additional information regarding the terms of the BANA-to-Ventures-Trust assignment.

         The Foreclosure Sale Order found all of the foreclosure defendants-Hardwick, BANA in capacity as junior-mortgage holder, and Caropines Community Association-to be in default. In the Foreclosure Order, the Master in Equity indicated she held a hearing at which Hardwick appeared pro se. Foreclosure Order 1. The Foreclosure Sale Order notes that the foreclosure plaintiff at the time of the Order-Ventures Trust 2013-I-H-R by MCM Capital Partners, LLC, its trustee-had been assigned the Note and Mortgage after the Foreclosure Action was commenced, but that "no party raised the Plaintiff's standing to sue[, ]" and that issue has been waived. Id. at 2. The Foreclosure Order removes the junior mortgages of BANA (for the $30, 000 mortgage) and Caropines Community Association from the title of the Pine Valley Property. Id. at 4.

         The Foreclosure Sale Order also notes the foreclosure plaintiff completed the HAMP "modification process specified by the Guidelines or a Supplemental Directive, " but did not result in a modification "because the borrower failed to respond to the HMP Solicitation." Id. Further, that Order indicated the foreclosure plaintiff complied with Administrative Order 2011-05-02-1 issued by the South Carolina Supreme Court. Id. The Foreclosure Order entered a judgment of foreclosure of the Mortgage and ordered the Pine Valley Property be sold "at public auction[, ]" and included details regarding the manner in which the sale would be conducted. Id. at 4-7.

         Hardwick filed a Motion to Reconsider the Foreclosure Order on October 6, 2015, see ECF No. 33-7 at 7-8, at which time Hardwick raised several defenses to the Foreclosure Order. In the state-court motion, Hardwick briefly set out the following arguments:

• Hardwick argued that the foreclosure plaintiff (Ventures Trust) lacked standing to sue;
• Hardwick sought judgment in her favor pursuant to "Rule 56 of SCRCP, " noting Rule 12(b)(8) and that another action was pending between the same parties, [7] arguing Ventures Trust was aware of the other pending litigation and was subject to the claims;
• Hardwick argues the Supreme Court of South Carolina's Administrative Order 2011-05-02-01 was violated and there had "never been any such foreclosure intervention' in this action[, ]" arguing neither Ventures Trust nor BANA complied with the Administrative Order; Hardwick also submits that Ventures Trust purchased the Note from BANA at a discount and was aware of the pending litigation and the failure to comply with the Administrative Order; and
• Hardwick submits that, "[a]s clearly stated in the Master in Equity hearing, " she disputes the amount due and owing and reiterates her request for an accounting.

         ECF No. 33-7.

         The Horry County Master in Equity denied the Motion to Reconsider on October 22, 2015. See ECF No. 33-7 at 10-11. In that order, the court noted Hardwick was in default because she had not answered the foreclosure complaint. ECF No. 33-7 at 10. "Therefore, " the Master in Equity stated, "any defense [Hardwick] may have raised to the allegations, including those she now raises in her motion for reconsideration [listing the arguments noted above[8] have been waived." Id. Further, the Master in Equity stated the question of whether the lenders complied with the Administrative Order had been "reviewed at the hearing on September 10, 2015, and properly disposed of[, ]" noting the foreclosure plaintiff sent a "Request for Foreclosure Intervention" to Hardwick on January 9, 2013, "based on a Certificate of Service on file with the Court." Id.

         Hardwick then appealed the matter to the South Carolina Court of Appeals and sought an emergency Motion to Stay Foreclosure on November 24, 2015. The Court of Appeals denied that emergency Motion on November 25, 2015.[9] A copy of the Motion to Stay Foreclosure and Order denying that motion are available at ECF Nos. 33-7 and 33-8. The appeal to the Court of Appeals remains pending, but, according to the Court of Appeals' Case Management System, the matter is held in abeyance based on a March 30, 2016 Order.[10] A March 1, 2016 entry on the Horry County Court of Common Pleas docket indicates that matter is stayed due to a bankruptcy filing.[11]

         2. Plaintiff's 2012 federal litigation

         As Plaintiff notes in the instant Complaint, the causes of action now before the court "were originally filed in a Complaint filed with the Court of Common Pleas, Horry County, SC, on April 12, 2012, as File No. 2012-CP-26-2971." Compl., ECF No. 1-1 at 6-7. BANA, also defendant in the 2012 litigation, removed that matter to this court. Hardwick v. Bank of America, N.A., C/A No. 4:12-1286-MGL-KDW.

         The 2012 complaint concerned actions surrounding two mortgage loan transactions Plaintiff had entered into with BANA: one mortgage/loan concerned the Pine Valley Property; the other concerned property located on Magnolia Drive in Surfside Beach, SC. The 2012 complaint focused on Defendant's actions in its dealings with Plaintiff concerning requested modifications of the mortgages and Defendant's foreclosure actions as to the referenced properties. See 2012 Compl. 1-10, ECF No. 1-1 in 4:12-1286. The 2012 complaint included the following causes of action: Breach of Contract; Breach of Covenant of Fair Dealing and Good Faith; Breach of Fiduciary Duty; Negligence; Unfair Business Practices; Unfair and Deceptive Acts; and Fraud. Id.

         After a hearing and consideration of the parties' memoranda, the undersigned recommended that matter be dismissed. See R&R in 2012 Action, ECF No. 62 in 4:12-1286. After a recommended finding that Plaintiff's claims passed muster under the pleading rules of Rule 8, the undersigned noted the 2010 foreclosure action as to the Pine Valley Property, 2010-CP-26-11806, had been restored to the state court's active docket and remained pending. The undersigned recommended the court abstain from further proceedings based on Younger v. Harris,401 U.S. 37 (1971). See R&R in 2012 Action 14-15. Plaintiff did not object to that portion of the undersigned's January 29, 2013 Report and Recommendation, and ...

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