February 12, 2013
Federal District Court in Virginia Rules for Bank/Lender Defendants in Foreclosure Case
In Horvath v. Bank of New York, 2010 WL 538039 (E.D. Va. Jan. 29, 2010) aff’d, 641 F.3d 617 (4th Cir. 2011), Plaintiff Homeowner defaulted on his loan and his was being foreclosed upon. Plaintiff filed complaint against the Bank of NY, Countrywide Home Loans and others. In Count I he was seeking a declaration that the foreclosure was “void.” This count was dismissed since declaratory relief is reserved for forward looking actions and foreclosure on the property had already occurred. In Count III he alleged that Defendant Equity Trustees as a trustee under the deeds of trust at issue breached its fiduciary duty owed to him by failing to perform “reasonable due diligence” before moving forward with the foreclosure. Under Virginia law, a trustee under a deed has no such duty, and only has the duties listed in the deed. Plaintiff did not allege that any such duties exist in the deed and therefore Count III was dismissed.
In Count IV Plaintiff also claimed that Defendants had no valid interest in the Property and sought quiet title, but he failed to allege sufficient facts to support his claim. The court in analyzing Plaintiff’s legal theory concluded that he was not “discharged from his obligation under the promissory note at issue because of his original lenders’ sale and assignment of the notes,” and also that the “split” of the promissory note from the deeds of trust does not render the deeds unenforceable.
Plaintiff also failed to allege facts sufficient to establish that Defendants Equity and Countrywide acted as debt collectors entitling him to make a claim against them under the Fair Debt Collection Practices Act.
Lastly, in Count VI, Plaintiff claimed fraud on the part of Equity and Countrywide by misrepresenting their authority to conduct a foreclosure, but failed to allege sufficient facts.
The District Court decision was later affirmed by the 4th Circuit after Plaintiff appealed. See opinion here.
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