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Harris v. Bank of America, N.A.

United States District Court, S.D. West Virginia, Charleston Division

July 17, 2017

DAVID HARRIS, et al., Plaintiffs,
BANK OF AMERICA, N.A., et al, Defendants.



         Pending before the Court is Defendants Bank of America, N.A. (“BANA”) and Countrywide Home Loans, Inc.'s (“Countrywide”) Motion to Dismiss (ECF No. 5) and Plaintiff David and Michelle Harris's (“Plaintiffs”) Notice of Voluntary Dismissal of Count I Against Defendant PennyMac Loan Services, LLC (ECF No. 7).[1] For the following reasons, the Motion to Dismiss (ECF No 5) is GRANTED IN PART and DENIED IN PART


         This action arises out of a complaint (“the Complaint”) Plaintiffs filed in the Circuit Court of Boone County, West Virginia on October 24, 2016. Defendant Pennymac Loan Services, LLC filed a timely notice of removal on December 5, 2016. Countrywide and BANA consented to removal on December 22, 2016. (ECF No. 4.)

         In 2007, Plaintiffs located a home they wished to purchase in Madison, West Virginia. (Complaint ¶ 7(a)-(b).) Plaintiffs and the sellers agreed on a purchase price of $175, 000 for the home (the “Property”). (Compl. ¶ 7(c).) Plaintiffs then contacted Countrywide about financing, and provided loan application information over the phone. (Compl. ¶ 8(b).) Countrywide arranged for an appraisal of the Property with an appraiser Countrywide knew would provide an inflated appraisal. (Compl. ¶ 9(a).) The appraiser stated that the Property's value was over $175, 000, though at the time it only had a fair market value of $127, 000. (Compl. ¶ 9(b)-(c).) On May 31, 2007, Plaintiffs executed a Deed of Trust securing a mortgage loan with the Defendants for a principal balance of $172, 296, payable over 30 years. (Compl. ¶¶ 11-12(a).) In September 2016, Plaintiffs found out that the actual fair market value of the Property at the time of the loan was only $127, 000. (Compl. ¶ 17.)


         Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Allegations “must be simple, concise, and direct” and “[n]o technical form is required.” Fed.R.Civ.P. 8(d)(1). A motion to dismiss under Fed.R.Civ.P. 12(b)(6) tests the legal sufficiency of a civil complaint. See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). “[I]t does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citing 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1356 (1990)).

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court decides whether this standard is met by separating the legal conclusions from the factual allegations, assuming the truth of only the factual allegations, and then determining whether those allegations allow the court to reasonably infer that “the defendant is liable for the misconduct alleged.” Id. A motion to dismiss will be granted if, “after accepting all well-pled allegations in the plaintiff's complaint as true and drawing all reasonable factual inferences from those facts in the plaintiff's favor, it appears certain that the plaintiff cannot prove any set of facts in support of his claim entitling him to relief.” Edwards, 178 F.3d at 244.


         A. Unconscionability

         Count I of the Complaint raises claims under the WVCCPA, alleging both that the loan agreement was unconscionable at formation and that Plaintiffs were unconscionably induced into making the agreement.[2]

         1. Unconscionability at Formation

         The first variety of unconscionability-unconscionability when the contract was made- is well-established in West Virginia law. In the context of this claim, “[t]he doctrine of unconscionability means that, because of an overall and gross imbalance, one-sidedness or lop-sidedness in a contract, a court may be justified in refusing to enforce the contract as written.” Syl. Pt. 4, Brown v. Genesis Healthcare Corp., 229 W.Va. 382, 729 S.E.2d 217, 220 (2012). This form of unconscionability “requires a showing of both substantive unconscionability, or unfairness in the contract itself, and procedural unconscionability, or unfairness in the bargaining process.” McFarland, 810 F.3d at 277 (citing Genesis Healthcare, 729 S.E.2d at 221); Genesis Healthcare, 729 S.E.2d at 227 (noting a contract term is unenforceable only if it is both procedurally and substantively unconscionable, though both need not be present to the same degree).

         Defendants' Motion to Dismiss briefing focuses on Plaintiffs' inability to show substantive unconscionability. Defendants argue that the only allegation in the Complaint potentially related to unfairness in the contract itself is that the loan far exceeded the value of the Property. A review of the Complaint and Plaintiffs' briefing shows that to be an accurate assessment. This dooms Plaintiffs' claim, as the Fourth Circuit has held that “a mortgage agreement would not be deemed substantively unconscionable solely because it provides a borrower with more money than his home is worth.” McFarland, 810 F.3d at 280 (4th Cir. 2016); see also Blizzard v. Infinity Home Mortgages, LLC, No. 2:15-CV-13553, 2016 WL 5329614, at *3 (S.D. W.Va. Sept. 21, 2016) (finding, for the purposes of a motion to remand, that a plaintiff had “no chance of success” on a unconscionability claim where the only allegation of substantive unconscionability was an inflated appraisal). Given that Plaintiffs must allege both substantive and procedural unconscionability in order to state a claim that the loan agreement was unconscionable when it was made, and they have not alleged sufficient facts relevant to substantive unconscionability, there is no need to consider whether they have sufficiently alleged procedural unconscionability.

         Accordingly, to the extent Plaintiffs attempt to assert a claim that the loan agreement was unconscionable at formation, and the Motion to Dismiss seeks dismissal of that claim, the motion is GRANTED. Plaintiffs' claim ...

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