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Boster v. Live Well Financial, Inc.

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

March 30, 2018

WILLIAM W. BOSTER, JR., Plaintiff,
v.
LIVE WELL FINANCIAL, INC., And COMPU-LINK CORPORATION d/b/a Celink, Defendants.

          MEMORANDUM OPINION AND ORDER

          John T. Copenhaver, Jr. United States District Judge

         Pending is the motion to dismiss, filed by defendant Live Well Financial, Inc. on August 28, 2017, and the joinder motion to dismiss, filed by defendant Compu-Link Corporation d/b/a Celink on August 29, 2017.

         I. Factual and Procedural Background

This is a civil action to quiet plaintiff's title in his personal residence. Compl. ¶ 1. Plaintiff, William Boster, resides in a home that was previously owned by his parents, William Wayne Boster, Sr. and Wanda Jean Boster. Id. at ¶¶ 5-6, 8. Following his father's death, Wanda Boster “deeded ownership of the home in which she lived to plaintiff . . . reserving to herself a life estate.” Id. at ¶ 7. Mr. Boster later moved into the home to care for his mother. Id. at ¶ 8. On July 9, 2007, Wanda Boster granted her son “a durable power of attorney authorizing plaintiff to handle her personal, medical, and financial affairs, including power to encumber the life estate which constituted her only real property.” Id. at ¶ 9.

         Because of Wanda Boster's deteriorating health and associated costs, in 2014, Mr. Boster, on his mother's behalf, obtained a Home Equity Conversion Mortgage, known commonly as a reverse mortgage, on the home from Proficio Mortgage Ventures LLC (“Proficio”). Id. at ¶¶ 11, 23-25. Proficio was authorized to make reverse mortgages, between the years 2006 and 2016, pursuant to the license issued to it by the West Virginia Commissioner of Financial Institutions. Compl. ¶¶ 11-12. A reverse mortgage is “a nonrecourse loan secured by real property which[] (1) [p]rovides cash advances to a borrower based on the equity in a borrower's owner-occupied principal residence . . . [and] (2) [r]equires no payment of principal or interest until the entire loan becomes due and payable.” W.Va. Code § 47-24-3; see also Reverse Annuity Mortgage, Black's Law Dictionary (10th ed. 2014).

         Proficio represented to Mr. Boster, on behalf of his mother, “that it would extend an open-end, revolving reverse mortgage loan to [his] 79 year-old mother.” Compl. ¶ 27. Because Ms. Boster only had a life estate in the property, Proficio also “required [that] plaintiff separately obligat[e] his own fee simple remainder interest to secure payment by [cosigning] the Deeds of Trust in Proficio's favor, even though plaintiff would not have any contractual right to obtain [or] use the line of credit in his personal capacity.” Id. at ¶¶ 28-29. At the closing of the reverse mortgage loan, plaintiff signed “two[1] Fixed Rate Note-Open End (Home Equity Conversion) instruments” on behalf of his mother, a “Home Equity Conversion Mortgage Loan Agreement Open End” on behalf of his mother, and Deeds of Trust[2] which he signed both on behalf of his mother and separately in his personal capacity. Id. at ¶¶ 30-34. The Deeds of Trust identified plaintiff as “remainderman” and Ms. Boster as the “grantor/borrower.” Id. at ¶¶ 33-34. Only the Deeds of Trust were signed by the plaintiff in his personal capacity.

         At some point after the reverse mortgage loan was made, defendant Live Well Financial, Inc. (“Live Well”) took the loan by assignment from Proficio. Id. at ¶ 16. Live Well is also authorized to make and own reverse mortgage loans in West Virginia pursuant to the license issued to it by the West Virginia Commissioner of Financial Institutions. Id. at ¶¶ 14-15. The loan is serviced by defendant Compu-Link Corporation d/b/a Celink (“Celink”) who is similarly licensed to service loans in West Virginia. Id. ¶ 20.

         Ms. Boster's full debt was due on April 14, 2085, but the lender was allowed to accelerate the debt if, in pertinent part:

(i) A Borrower dies and the Property is not the principal residence of at least one surviving Borrower; or . . .
(iii) The Property ceases to be the principal residence of a Borrower for reasons other than death and the Property is not the principal residence of at least one other Borrower; or
(iv) For a period of longer than 12 consecutive months, a Borrower fails to occupy the Property because of physical or mental illness and the Property is not the principal residence of at least one other Borrower; or
(v) An obligation of the Borrower under this Security Instrument is not performed.

Fixed Rate Home Equity Conversion Second Deed of Trust a Credit Line Deed of Trust[3] Ex. 2 to Pl.'s Resp. to Def. Live Well's Mot. Dismiss at pp. 1, 4; see also W.Va. Code § 47-24-4(g). Ms. Boster's health further declined such that she was transferred into a nursing home in November of 2016. Compl. ¶ 37. On November 25, 2016, Ms. Boster passed away. Id.

         Plaintiff alleges that “[b]eginning when his mother required nursing home care, defendants wrongly began attempts to collect payment of Ms. Boster's reverse mortgage loan.” Id. at ¶ 38. Celink told Mr. Boster that “unless he personally paid the amount claimed due, ” Live Well would sell the home to pay off the loan. Id. at ¶ 39. On November 16, 2016, defendants, by their debt collection agent Samuel L. White, P.C., “falsely represented that the terms of the Fixed Rate Note-Open End [(“the Notes”)] had been breached ‘by reason of your failure to pay the installments'” because the Notes required no installment payments. Id. at ¶ 40. The letter demanded payment of the entire loan by December 16, 2016 in order to cure the purported breach. Id. at ¶ 41. Plaintiff asserts that the amount demanded included “fees and charges not allowed by West Virginia law, including ‘property inspection' fees, ” and that the letter “wrongfully and unlawfully [represented] that defendants could sell plaintiff's home if the amount demanded was not paid by the date stated.” Id. at ¶¶ 42-43. Mr. Boster received a second letter on December 27, 2016, which was sent by defendants' debt collection agent Seneca Trustees, Inc. Id. at ¶ 44. This letter “wrongfully and unlawfully” represented that defendants would collect the amount due “by selling plaintiff's home on the steps of the Kanawha County courthouse on February 9, 2017.” Id.

         In January of 2017, Mr. Boster “discovered facts constituting all the elements of a cause of a cause of action under W.Va. Code Article § 31-17 and Article § 47-24, and their implementing regulations.” Id. at ¶ 47. Mr. Boster alleges that Proficio contracted for and collected illegal charges and fees, took a security interest in excess of that permitted by W.Va. Code R. § 106-9-6.6, and “otherwise failed to comply with the prerequisites [of W.Va. Code] Article § 47-24 and its implementing regulations.” Id. at ¶¶ 48-49. Mr. Boster argues that the reverse mortgage and Deeds of Trust securing it are “void and unenforceable by operation of law, including pursuant to W.Va. Code § 31-17-17.” Id. at ¶ 52. Therefore, plaintiff states that he may not be held liable for the repayment of the reverse mortgage loan through the sale of the home. Id. at ¶ 55.

         On July 3, 2017, Mr. Boster brought this action in the Circuit Court of Kanawha County, West Virginia. With the consent of Celink, Live Well timely removed the case to this court, invoking diversity jurisdiction pursuant to 28 U.S.C. § 1332. Notice of Removal at ¶¶ 6, 11. Plaintiff asserts two counts against the defendants in connection with these events. First, Mr. Boster asks that the court “declare defendants' claimed lien void and unenforceable, and to enter a preliminary and a permanent injunction barring defendants from any action to enforce or assign it.” Id. at ¶ 59. Mr. Boster asserts that the lien is unenforceable because the reverse mortgage violates the West Virginia Residential Mortgage Lender, Broker, and Servicer Act (“RMLBSA”), W.Va. Code § 31-17-1, et seq., the West Virginia Reverse Mortgage Enabling Act (“Reverse Mortgage Act”), W.Va. Code § 47-24-1, et seq., and the West Virginia Consumer Credit and Protection Act (“WVCCPA”), W.Va. Code § 46A-2-104(a). See Id. at ¶¶ 47-49, 53-55. Second, he asserts that defendants engaged in illegal debt collection acts in violation of provisions of the WVCCPA, W.Va. Code §§ 46A-2-127, 46A-2-128. Id. ¶¶ 66-67.

         Defendants seek to dismiss the entire two-count complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. Defendant Live Well asserts that Count I of the complaint fails because it is (1) untimely, (2) does not adequately plead any violations of the RMBLSA, (3) pleads no facts to support a violation of the Reverse Mortgage Act, and (4) Mr. Boster is not a “cosigner” eligible for protection under the WVCCPA. See Def. Live Well's Mem. Supp. Mot. Dismiss (“Live Well Mem.”) at 7-12. Furthermore, Live Well seeks to dismiss Count II of the complaint, alleging that Mr. Boster does not have standing to bring the claim, as he is not a “consumer” under the WVCCPA. Id. at 4. Defendant Celink joins and adopts all of these arguments for dismissal, and further adds that Count II fails because the complaint fails to include sufficient factual allegations to support plaintiff's claims for fraudulent, deceptive, or misleading representations, and unfair and unconscionable means of collection under the WVCCPA. Def. Celink's Mem. Supp. Mot. Dismiss (“Celink Mem.”) at 2-3.

         II. Governing Standard

         Federal Rule of Civil Procedure 8(a)(2) requires that a pleading “contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief.” Correspondingly, Rule 12(b)(6) provides that a pleading may be dismissed for a “failure to state a claim upon which relief can be granted.

         To survive a motion to dismiss, a pleading must recite “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Monroe v. City of Charlottesville, 579 F.3d 380, 386 (4th Cir. 2009) (quoting Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008)). In other words, the “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555 (citation omitted); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“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.”); Andrew v. Clark, 561 F.3d 261, 266 (4th Cir. 2009) (quoting Twombly, 550 U.S. at 555).

         A district court's evaluation of a motion to dismiss is underlain by two principles. First, when considering a motion to dismiss, the court “must accept as true all of the factual allegations contained in the [pleading].” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citation omitted); see also Twombly, 550 U.S. at 555 (“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).”) (citations omitted). In doing so, factual allegations should be distinguished from “mere conclusory statements, ” which are not to be regarded as true. Iqbal, 556 U.S. at 678 (“[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.”). Second, the court must “draw[] all reasonable factual inferences . . . in the [nonmovant's] favor.” Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999); see also Jenkins v. McKeithen, 395 U.S. 411, 421 (1969) (“[T]he complaint is to be liberally construed in favor of plaintiff.”).

         III. ...


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