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Beasley v. Wells Fargo Bank, N.A.

United States District Court, M.D. Tennessee, Nashville Division

August 7, 2017

TERRY JOE BEASLEY, Plaintiff,
v.
WELLS FARGO BANK, N.A., ET AL., Defendants

          MEMORANDUM

          ALETA A. TRAUGER UNITED, STATES DISTRICT JUDCE.

         Before the court is the Motion for Judgment on the Pleadings (Doc. No. 8), filed by defendants Wells Fargo Bank, N.A., as Trustee for the Certificate Holders of Park Place Securities, Inc., Asset-Backed-Pass-Through Certificates, Series 2004-MCW1, and Wells Fargo Bank, N.A., individually (collectively referred to herein, in the singular, as Wells Fargo). The plaintiff has responded to that motion, in part, by filing a Motion to Amend the Complaint and by addressing Wells Fargo's arguments as they pertain to the Amended Complaint. (Doc. No. 17.) For the reasons set forth herein, the court will grant leave to amend the Complaint, but finds that the Amended Complaint fails to state a claim for which relief may be granted. The court will therefore grant Wells Fargo's Motion for Judgment on the Pleadings (Doc. No. 8).

         Further, although defendant Small Business Administration (“SBA”) has apparently never been served with the Complaint (or Amended Complaint), has never entered an appearance, and did not join in the Motion for Judgment on the Pleadings, the court finds that the Amended Complaint does not actually state any claims against the SBA and that the plaintiff lacks standing to assert claims on behalf of SBA against Wells Fargo. The Amended Complaint will therefore be dismissed in its entirety.

         I.FACTUAL AND PROCEDURAL BACKGROUND

         In his Amended Complaint, plaintiff Terry Joe Beasley alleges that he is a resident of 37130 (“the Property”). He brings suit against defendants Wells Fargo and the SBA based on the allegedly wrongful foreclosure sale of the Property on January 17, 2017.

         Even in the Amended Complaint, the plaintiff fails to allege facts that draw much of a connection between Wells Fargo and the foreclosure sale of the Property. The defendants attached to their Answer, by way of background, the June 23, 2004 Fixed Rate Note documenting a loan from Ameriquest Mortgage Company (“Ameriquest”) to the plaintiff in the amount of $189, 000.000, which he used to purchase the Property. (Note, Answer Ex. 1, Doc. No. 7-1.) Ameriquest recorded a Deed of Trust securing its interest in the Property. (Deed of Trust, Answer Ex. 2, Doc. No. 7-2.) The Deed of Trust provides that the lender may sell its interest in the Note without notice to the borrower. (Id. ¶ 20.) On January 8, 2014, Ameriquest “transferred, sold, assigned, conveyed, and set over to” Wells Fargo Bank, N.A., as Trustee for the Certificate Holders of Park Place Securities, Inc., Asset-Backed-Pass-Through Certificates, Series 2004-MCW1, all of Ameriquest's “right, title and interest in and to that certain Deed of Trust.” (Transfer and Assignment of Deed of Trust, Answer Ex. 3, Doc. No. 7-3.) Ameriquest also conveyed to Wells Fargo as Trustee the “indebtedness” that is secured by the Deed of Trust. (Id.) This “indebtedness” refers to the Note dated June 23, 2004, which is secured by the Deed of Trust. (See Deed of Trust, Doc. No. 7-2, at 2; Note, Doc. No. 7-1.)

         At the time the plaintiff executed the Note and Deed of Trust, he had already obtained a loan from the SBA (“SBA loan”). (Am. Compl. ¶ 12.) That loan is also secured by the Property. (Id.) The plaintiff has made all of the required payments and remains current on the SBA loan. (Id.)

         On December 14, 2009, SBA and Wells Fargo executed a Limited Subordination Agreement, “which required any proceeds over $100, 000 to be paid to the [SBA]” in the event of a foreclosure sale of the Property.[1] (Am. Compl. ¶ 11; Ltd. Subordination Agreement, Compl. Ex. A, Doc. No. 6-1, at 7-8.[2]) Specifically, pursuant to the Limited Subordination Agreement, the SBA agreed as follows:

The SBA Deed of Trust and the secured indebtedness described therein, including the lien [against the Property] evidenced by said Deed of Trust, is hereby subordinated to the Wells Fargo Deed of Trust, but only to the extent of the first $100, 000.00 of foreclosure proceeds. The SBA is entitled to all proceeds from foreclosure of its Deed of Trust, or other remedies, after the first $100, 000.00 is paid to Wells Fargo, up and to the full amount of the indebtedness and obligations secured by the SBA Deed of Trust. In essence, the Wells Fargo Deed of Trust shall be treated as a first priority Deed of Trust, up to the amount of $100, 000.00. . . . Wells Fargo may commence foreclosure proceedings, and upon conclusion thereof, the SBA Deed of Trust shall be considered no longer a lien on the Property, provided that any sale proceeds above $100, 000.00 are paid to the SBA (which in no event shall exceed the SBA secured indebtedness).

(Subordination Agreement 1-2.)

         Although the record does not reveal when or by how much, it is clear that the plaintiff, at some point, fell behind on his mortgage payments to Wells Fargo on the Property. On April 11, 2016, Rubin Lublin TN, PLLC (“Rubin Lublin”), in its role as substitute trustee, sent a “Notice of Acceleration and Foreclosure” to the plaintiff. (Am. Compl. ¶ 8; Notice of Acceleration and Foreclosure, Answer Ex. 4, Doc. No. 7-4.) This Notice advised the plaintiff that the Property would be sold in foreclosure if he did not pay the remaining debt in full. (Am. Compl. ¶ 8.) The Notice also directed the plaintiff to a website that contained “information relative to loss mitigation options and saving [his] home from foreclosure.” (Notice of Acceleration and Foreclosure 2.)

         On April 18, 2016, April 25, 2016, and May 2, 2016, The Murfreesboro Post published notice of the foreclosure sale of the Property. (Am. Compl. ¶ 9; Notice of Publication, Answer Ex. 7, Doc. No. 7-7.) On June 28, 2016, Rubin Lublin sent the plaintiff a Notice of Postponement, informing the plaintiff that the foreclosure sale was postponed to July 11, 2016 at 2:00 p.m. at the courthouse door in Murfreesboro, Tennessee. (Notice of Postponement, Answer Ex. 5, Doc. No. 7-5.)

         The Property apparently was not sold on that date, however. Instead, without further notice to the plaintiff or to the SBA, the Property was sold at foreclosure on January 17, 2017. (Am. Compl. ¶ 10.) The plaintiff alleges that, at this sale, Wells Fargo purchased the Property for $100, 000. (Id.) The actual value of the Property is approximately $175, 000. (Am. Compl. ¶ 11.) The plaintiff also points out that the sale took place while a prior federal lawsuit filed by the plaintiff in this court was still pending.[3]

         The plaintiff alleges that, “[a]s late as November of 2016, ” he offered Wells Fargo $110, 000 to resolve the debt and have the loan released, but that offer was refused. (Am. Compl. ¶ 13.) However, the plaintiff does not allege that he kept up with his mortgage payments or that he has paid the debt in full.

         The plaintiff asserts that, by proceeding with the non-judicial foreclosure sale of the Property on January 17, 2017, without notice to him or to the SBA, Wells Fargo interfered with the contract between the plaintiff and the SBA and deprived the plaintiff and the SBA of approximately $75, 000. (Am. Compl. ¶ 14.) He also asserts a claim for “wrongful foreclosure” under Tennessee law, which caused him and the SBA damages in the amount of $75, 000. (Am. Compl. ¶¶ 15-23.) He seeks judgment in his favor, as well as an injunction “preventing Defendants or [their] agents from further foreclosure and eviction actions against Plaintiff's home.” (Am. Compl., Prayer for Relief ¶ ...


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