MICHAEL A. WILLNER, Debtor in Possession; MARGUERITE EVANS WILLNER, Plaintiffs - Appellants,
JAMES DIMON, individually, as President and CEO of JP Morgan Chase Bank, National Association; JP MORGAN CHASE BANK, N.A., a national banking association; SELECT PORTFOLIO SERVICING, INC., a Utah Corporation; DOES (1-19) inclusive, persons yet to be determined, if any, involved in the acts complained of herein; U.S. BANK NATIONAL ASSOCIATION, as Trustee, successor in interest to Bank of America, N.A., as Trustee, successor by merger to LaSalleBank, N.A., as Trustee, of the WaMuMortgage Pass-Through Certificates Series 2006-AR15 Trust, a national banking association, Defendants-Appellees.
Argued: October 25, 2016
from the United States District Court for the Eastern
District of Virginia, at Alexandria. Anthony J. Trenga,
District Judge. (1:14-cv-01708-AJT-MSN)
Benjamin Stark Softness, KELLOGG, HUBER, HANSEN, TODD, EVANS
& FIGEL, P.L.L.C., Washington, D.C.; Michael A. Willner,
Lorton, Virginia, for Appellants.
J. McIntosh, SULLIVAN & CROMWELL, Washington, D.C.;
Matthew Douglas Patterson, NELSON MULLINS RILEY &
SCARBOROUGH LLP, Columbia, South Carolina, for Appellees.
C. Frederick, KELLOGG, HUBER, HANSEN, TODD, EVANS &
FIGEL, P.L.L.C., Washington, D.C., for Appellant Marguerite
M. Barnwell, NELSON MULLINS RILEY & SCARBOROUGH LLP,
Columbia, South Carolina; John Curtis Lynch, Mary Catherine
Zinsner, Harrison Scott Kelly, TROUTMAN SANDERS LLP, Virginia
Beach, Virginia, for Appellees.
AGEE, DIAZ, and THACKER, Circuit Judges.
Willner (an attorney) and Marguerite Willner appeal the
district court's dismissal of their pro se complaint
wherein they seek, inter alia, a declaration that JP Morgan
Chase Bank ("Chase") and U.S. Bank cannot foreclose
on their home. The district court dismissed certain Counts
for lack of subject matter jurisdiction pursuant to the
Financial Institutions Reform, Recovery and Enforcement Act
of 1989 and other Counts for failure to state a claim. As we
explain below, the district court lacked subject matter
jurisdiction over most of the Counts that the Willners appeal
because they did not first submit the claims underlying those
Counts to administrative review. The other Counts relevant
here fail to state a claim. Accordingly, we affirm.
reviewing a district court's grant of a motion to dismiss
under Federal Rule of Civil Procedure 12(b)(1) or 12(b)(6) in
response to a defendant's facial challenge to a
complaint, we accept as true all factual allegations set
forth in the complaint. Kerns v. United States, 585
F.3d 187, 192 (4th Cir. 2009). Applying that standard to the
Willners' complaint, we assume the following facts.
Willners purchased as tenants by the entirety property (the
"Property") in Lorton, Virginia, in 1989 and built
a house thereupon. In August 2006, the Willners considered
selling the Property but instead decided to refinance after
speaking with an agent from Washington Mutual Bank, FA
("WMBFA"). The WMBFA agent told Mr. Willner to
contact a Washington Mutual Bank ("WMB") agent to
fill out a loan application. Mr. Willner did so, and told the
WMB agent that he expected to earn about $52, 000 in 2006.
The WMBFA agent also told the Willners that the Property was
worth in excess of $5 million. The same agent led the
Willners to believe that WMBFA wouldn't foreclose on the
Property in the event of a missed payment.
September 2006, the Willners closed on a $3 million loan (the
"Loan") from WMBFA. Mr. Willner signed a note (the
"Note"); Mrs. Willner did not. Mrs. Willner had
previously told the WMBFA agent that she didn't want to
put her ownership interest in the Property at risk, and said
the same to a title agent at the closing. Based upon each
agent's response, Mrs. Willner believed that her interest
in the Property would remain unencumbered. However, both Mr.
and Mrs. Willner signed a deed of trust (the "Deed of
Trust"), which secured the Loan and for which WMBFA was
Deed of Trust provided that "any Borrower who co-signs
this Security Instrument but does not execute the Note . . .
is co-signing this Security Instrument only to mortgage,
grant and convey the co-signer's interest in the Property
. . . [and] is not personally obligated to pay the sums
secured by this Security Instrument." J.A. 489. Mr.
Willner also signed an "Affiliated Business Arrangement
Disclosure Statement Notice" which "indicated"
that WMBFA and WMB "existed concurrently as separate and
distinct entities." J.A. 40-41.
than two months after the closing, WMB sold the Note to WaMu
Asset Acceptance Corporation, which securitized the Note by
depositing it into the WaMu Mortgage Pass-Through
Certificates Series 2006-AR15 (the "2006-AR15
Trust"), "a special purpose entity controlled by
WMB." J.A. 42. WMB was the sponsor and servicer of the
2006-AR15 Trust (and Note), while LaSalle Bank was the
trustee. WMBFA remained the beneficiary under the Deed of
September 25, 2008, the Office of Thrift Supervision declared
WMB insolvent and appointed the Federal Deposit Insurance
Corporation (the "FDIC") as receiver. On that same
day, Chase entered into a Purchase and Assumption Agreement
with the FDIC, whereby Chase purchased substantially all of
WMB's assets and assumed substantially all of its
liabilities. Under the Purchase and Assumption Agreement,
Chase did not assume any liability for WMB's acts or
omissions. Chase purchased the right to service the Loan, but
allegedly did not purchase the Note or Deed of Trust because
"WMB sold the Note and [Deed of Trust] on or before
October of 2006." J.A. 47-48.
October 2008, the Willners received notice that the Office of
Thrift Supervision had closed WMB and appointed the FDIC as
receiver. Also in October 2008, LaSalle Bank merged into Bank
of America, which became the trustee for the 2006-AR15 Trust.
At some later point, U.S. Bank became the trustee for the
2006-AR15 Trust as successor in interest to Bank of America,
and it remains so today.
2010, the Willners attempted to refinance the Property
through Chase. A Chase agent told the Willners that their
income wasn't sufficient to qualify for a loan. Mr.
Willner spoke with Chase representatives, who directed him to
Chase's website. One suggestion on the Chase website was
to list the home for sale, which Mr. Willner did to no avail.
In April 2011, Chase CEO James Dimon signed a Consent Order
with the Office of the Comptroller of the Currency, in which
Chase agreed to correct problems with its servicing and
foreclosure practices. In May 2011, the Willners defaulted.
2011, Mr. Willner applied for a loan modification from Chase
through the Making Home Affordable Program. In August 2011,
Chase identified the Note for collection through foreclosure,
and Mrs. Willner tried to call Dimon to discuss the
foreclosure process but was only able to speak with one of
September 2011, Mr. Willner came upon WMB documents from 2006
which showed that his financial status had not qualified him
for the loan which he had ultimately received. One of those
documents listed his annual income for 2006 at $624, 000. In
March 2012, Mr. Willner discovered other information,
including: a WMB document which showed that WMB had conducted
another appraisal in 2006 prior to the closing, and that the
Property was appraised for only $4 million; a WMB document
from the 2006 closing which listed his income at $52, 000 per
month; and Securities and Exchange Commission filings which
showed that as of April 4, 2005, WMBFA allegedly ceased to
2012, Chase informed Mr. Willner that he was not eligible for
a modification under the Making Home Affordable Program. That
program allegedly only applied to loans for $759, 000 or
less, and allegedly required that eligibility determinations
be made within 30 days. On November 30, 2012, Chase informed
the Willners that it intended to foreclose on the Property
and auction it on December 18, 2012. On December 13, 2012,
Mr. Willner (but not Mrs. Willner) filed for Chapter 11
bankruptcy in the U.S. Bankruptcy Court for the Eastern
District of Virginia. U.S. Bank then filed a proof of claim
in the bankruptcy court claiming the right to foreclose on
2013, U.S. Bank re-appointed Chase as the master servicer of
the 2006-AR15 Trust, and in August 2013, Chase appointed
Select Portfolio Servicing as the sub-servicer. U.S. Bank
moved for relief from stay in the bankruptcy court in
Mrs. Willner filed a pro se 27-Count complaint against Chase,
Chase's CEO James Dimon, U.S. Bank, and Select Portfolio
Servicing. Of those 27 Counts, only the following are
relevant to this appeal:
• Count 1 (against Chase and U.S. Bank) for a
declaratory judgment that there is no right to foreclose
under the Deed of Trust;
• Count 2 (against Chase and U.S. Bank) for breach of
contract based on absence of right to foreclose because the
Note is defective;
• Count 3 (against Chase and U.S. Bank) for negligence
based on breach of duty to Mr. Willner to seek the aid and
direction of a court of equity before foreclosing;
• Count 5 (against Chase, U.S. Bank, and Select
Portfolio Servicing) for a declaratory judgment that the Note
and Deed of Trust are unenforceable;
• Count 6 (against Chase and U.S. Bank) for a
declaratory judgment that the Note is not secured by Mrs.
Willner's ownership interest in the Property;
• Count 7 (against U.S. Bank) for fraudulent concealment
in the loan origination;
• Count 8 (against Chase, U.S. Bank, and Select
Portfolio Servicing) for a declaratory judgment that the Deed
of Trust is void based on lack of meeting of the minds;
• Count 9 (against U.S. Bank) for equitable estoppel
related to misrepresentations made during the loan
• Count 14 (against Chase and U.S. Bank) for
constructive fraud "in the servicing" of the Note;
• Count 15 (against Chase and U.S. Bank) for negligence
"in the servicing" of the Note;
• Count 16 (against Chase, U.S. Bank, and Select
Portfolio Servicing) to quiet title on the Property based on
defects in the Deed of Trust;
• Count 17 (against Chase and U.S. Bank) for unjust
enrichment premised upon misrepresentations by WMB ...