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Cantrell v. New Penn Financial, LLC

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

June 20, 2017

KEVIN CANTRELL, and ANNAMARIE CANTRELL, Plaintiffs,
v.
NEW PENN FINANCIAL, LLC, AVENUE 365 LENDER SERVICES, JAKE BROWN, and SHELL POINT, Defendants.

          MEMORANDUM OPINION AND ORDER GRANTING IN PART, DENYING IN PART, AND DENYING WITHOUT PREJUDICE IN PART DEFENDANTS' MOTION TO DISMISS AND GRANTING PLAINTIFFS LEAVE TO AMEND THE COMPLAINT

          MARY GEIGER LEWIS UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         This is an action for violation of the Real Estate Settlement Procedures Act (RESPA), specifically 12 U.S.C. § 2607, and related state law claims arising out of the refinancing of Plaintiffs' home loan. The Court has jurisdiction over this matter under 28 U.S.C. §§ 1331 and 1367.

         Pending before the Court is Defendants' Partial Motion to Dismiss the Amended Complaint (Motion to Dismiss) under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The Court notes that because Defendants filed their answer and Motion to Dismiss simultaneously, the Motion to Dismiss technically should have been filed under Rule 12(c). See Walker v. Kelly, 589 F.3d 127, 139 (4th Cir. 2009). The distinction, however, is one without a difference because motions under Rule 12(c) are evaluated under the same standard as those under Rule 12(b)(6). See Id. The Court will therefore assess the Motion to Dismiss under the standard for Rule 12(b)(6) motions. Having carefully considered the motion, the response, the reply, the record, and the applicable law, it is the judgment of the Court Defendants' Motion to Dismiss will be granted in part, denied in part, and denied without prejudice in part with leave to refile, and Plaintiffs will be granted leave to amend their Amended Complaint (Complaint).

         II. FACTUAL AND PROCEDURAL HISTORY

         This action arises out of Plaintiffs' refinancing of their home loan with Defendants. Plaintiffs complain of alleged improprieties in the closing of their loan, including Defendants' failure to honor their attorney preference and failure to disclose the relationship among Defendants and others involved in the closing of their loan. The Complaint asserts claims against Defendants collectively for fraud/constructive fraud/fraud in the inducement, violation of the South Carolina Unfair Trades Practices Act (UTPA), negligence, violations of the South Carolina Consumer Protection Code (CPC), breach of fiduciary duty, violation of RESPA, and violation of the Licensing of Mortgage Brokers Act (Mortgage Brokers Act). ECF No. 1-1 at 70-78.

         Plaintiffs filed their initial complaint in the South Carolina Court of Common Pleas for Spartanburg County on October 31, 2016. Id. at 3-11. Defendants filed an answer and a motion to dismiss the initial Complaint on January 6, 2017. Id. at 12-64. On February 9, 2017, Plaintiffs filed a motion to amend the initial Complaint, id. at 65, and the Spartanburg County Court of Common Pleas entered a consent order on April 4, 2017, granting Plaintiffs leave to amend the complaint, id. at 66-68.

         Plaintiffs filed the Complaint currently at issue in the Spartanburg County Court of Common Pleas on April 10, 2017. Id. at 70-78. The Complaint asserts two additional causes of action not previously included in the initial complaint, including one for violation of RESPA.

         Defendants removed this action on April 25, 2017. ECF No. 1. That same day, Defendants filed an answer to the Complaint as well as their Motion to Dismiss currently before the Court. ECF Nos. 4 and 5. Plaintiffs responded to Defendants' Motion to Dismiss on May 9, 2017, ECF No. 10, and Defendants filed a reply on May 16, 2017, ECF No. 13. Having been fully briefed on the relevant issues, the Court is now prepared to discuss the merits of Defendants' Motion to Dismiss.

         III. STANDARD OF REVIEW

         “The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint.” Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). To survive a motion to dismiss, the Federal Rules of Civil Procedure require a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 9(b) requires a heightened standard of pleading “[i]n alleging fraud or mistake, ” under which “a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b).

         Rule 8(a) does not require “detailed factual allegations, ” but “more than an unadorned, the-defendant-unlawfully-harmed-me accusation, ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp v. Twombly, 550 U.S. 554, 555 (2007)), to “‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests, '” Twombly, 550 U.S. at 555 (quoting Conley v. Gibson, 255 U.S. 41, 47 (1957)). In other words, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that it plausible on its face, '” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). A claim is considered facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556).

         In considering a motion to dismiss, a plaintiff's well-pled allegations are taken as true, and the complaint and all reasonable inferences are liberally construed in the plaintiff's favor. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). The Court may consider only the facts alleged in the complaint, which may include any documents either attached to or incorporated in the complaint, and matters of which the Court may take judicial notice. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). Although the Court must accept the plaintiff's factual allegations as true, any conclusory allegations are unentitled to an assumption of truth, and even those allegations pled with factual support need to be accepted only to the extent “they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679. In sum, the factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true, even if doubtful in fact. Twombly, 550 U.S. 544, 555 (2007).

         “The court should freely give leave [to amend a complaint] when justice so requires.” Fed.R.Civ.P. 15(a)(2). “[L]eave to amend a pleading should be denied only when the amendment would be prejudicial to the opposing party, there has been bad faith on the part of the moving party, or the amendment would be ...


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