FRANK W. VOLK, Bankruptcy Judge.
Pending are the Motion by Defendant City National Bank of West Virginia ("City National") to Dismiss Adversary Proceeding [Dckt. 29] and the Motion by Bernard Richard Webb and Judy Maye Webb for Summary Judgment [Dckt. 34].
Defendant City National is a federally-chartered bank operating in many West Virginia counties. City National has its principal office in Charleston, West Virginia. Plaintiff-debtor Bernard R. Webb is a high school graduate residing in Wayne County, West Virginia. He is disabled. Plaintiff-debtor Judy M. Webb also graduated from Wayne High School. She is not employed outside the home.
The Court sets forth below the "Factual and Procedural Background" found in Webb v. City National Bank of West Virginia, N.A., ___ W. Va. ___, ___ S.E.2d ___, 2017 WL 2210148 (2017), a case in the chain of litigation involving the parties:
Id., 2017 WL 2210148, at *1-2.
The appeal terminated with entry of the mandate on the Webb opinion quoted immediately above. While the appeal was pending, and inasmuch as the Webbs continued in their refusal to comply with the "Judgment Order" directing them to execute a Promissory Note and Deed of Trust, City National moved to compel their compliance with the circuit court's "Judgment Order," and a hearing was held on September 6, 2016. That same day, the circuit court granted City National's compliance request. On September 13, 2016, approximately ten months after the Webbs filed their bankruptcy petition and over two months after they converted to a Chapter 13 proceeding, they signed the Promissory Note and Deed of Trust.
On September 16, 2016, however, the Webbs instituted this adversary proceeding. In sum, they contend that the July 6, 2015, MSAR, and the September 13, 2016, Promissory Note and Deed of Trust signed pursuant thereto as directed by the circuit court, amount to consumer credit and residential mortgage transactions subject to the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601-1667f and its implementing regulation, known as Regulation Z, 12 C.F.R. 1026 et seq.
They assert the following: (1) a claim for the failure to adequately disclose the credit terms and the Webb's putative right to rescind the transactions under TILA and Regulation Z (Count One), (2) the request for a declaration that the Webbs were entitled to rescind the July 6, 2015, and September 13, 2016, documents within three days "from the closing thereof" pursuant to TILA (Compl. ¶ 69) (Count Two), (3) the request for a declaration that City National engaged in the unlawful collection of a claim owed or due in violation of, inter alia, West Virginia Code § 46A-2-117 (prohibiting a consumer from authorizing any person to confess judgment on a claim arising out of a consumer loan) and § 46A-2-128 (using unfair or unconscionable means to collect a debt) (Count Three)
Federal Rule of Civil Procedure 8(a)(2) requires that a pleader provide "a short and plain statement of the claim showing . . . entitle[ment] to relief." Fed. R. Civ. P. 8(a)(2); Erickson v. Pardus, 127 S.Ct. 2197, 2200 (2007). Rule 12(b)(6) correspondingly permits a defendant to challenge a complaint when it "fail[s] to state a claim upon which relief can be granted. . . ." Fed. R. Civ. P. 12(b)(6).
The required "short and plain statement" must provide "`fair notice of what the . . . claim is and the grounds upon which it rests.'" Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957), overruled on other grounds, Twombly, 550 U.S. at 562-63); McCleary-Evans v. Maryland Dep't of Transp., State Highway Admin., 780 F.3d 582, 585 (4th Cir. 2015). Additionally, the showing of an "entitlement to relief" amounts to "more than labels and conclusions. . . ." Twombly, 550 U.S. at 558. It is now settled that "a formulaic recitation of the elements of a cause of action will not do." Id. at 555; McCleary-Evans, 780 F.3d at 585; Giarratano v. Johnson, 521 F.3d 298, 304 (4th Cir. 2008).
The complaint need not "forecast evidence sufficient to prove the elements of [a] claim," but it must "allege sufficient facts to establish those elements." Wright v. N. Carolina, 787 F.3d 256, 270 (4th Cir. 2015); Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (internal quotation marks and citation omitted). Stated another way, the operative pleading need only contain "[f]actual allegations . . . [sufficient] to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555; Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (noting the opening pleading "does not require `detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation."). In sum, the complaint must allege "enough facts to state a claim to relief that is plausible on its face." Twombly 550 U.S. at 570.
The decision in Iqbal provides some additional markers concerning the plausibility requirement:
Iqbal, 556 U.S. at 678-79 (citations omitted).
As noted in Iqbal, the Supreme Court has consistently interpreted the Rule 12(b)(6) standard to require a court to "`accept as true all of the factual allegations contained in the complaint. . . .'" Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citing Twombly, 550 U.S. at 555); see also South Carolina Dept. of Health and Environmental Control v. Commerce and Industry Ins. Co., 372 F.3d 245, 255 (4th Cir. 2004) (quoting Franks v. Ross, 313 F.3d 184, 192 (4th Cir. 2002)). The court is additionally required to "draw[] all reasonable . . . inferences from those facts in the plaintiff's favor. . . ." Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).
In those instances when res judicata is the ground upon which dismissal is sought, the Rule 12(b)(6) standard may morph a bit:
Andrews v. Daw, 201 F.3d 521, 524 (4th Cir. 2000); see also Q Int'l Courier Inc. v. Smoak, 441 F.3d 214, 216 (4th Cir. 2006); Harrison v. Burford, 2012 WL 2064499, at *3 (S.D. W. Va. 2012) ("In this case, the plaintiff has not disputed the factual accuracy of the record in the prior state court action. Accordingly, the court will take judicial notice of the prior proceeding.").
A fundamental canon of West Virginia preclusion law is that a claim once prosecuted and later repeated may be barred if it was adjudicated, or could have been adjudicated, in the first proceeding. The Supreme Court of Appeals recognized this principle as recently as 2017, quoting this traditional formulation:
Cabot Oil & Gas Corporation v. Beaver Coal Co., Ltd, 2017 WL 5192490, at *7 (2017) (quoting Syl. Pt. 4, Blake v. Charleston Area Med. Ctr., Inc., 201 W.Va. 469, 498 S.E.2d 41 (1997).
Regarding Counts One through Three, there was a final adjudication on the merits of the MSAR and its enforceability. On July 6, 2015, the MSAR was signed by the parties. When a controversy arose respecting its enforceability, City National moved to enforce the MSAR and the circuit court heard the matter. The circuit court enforced the accord, ordering the Webbs again to execute all documents required for effectuation. Additionally, the Supreme Court of Appeals' decision conclusively established that the circuit court was vested with jurisdiction over the parties' dispute concerning the MSAR.
Respecting the second element, it is undisputed that the adversary proceeding involves the identical parties to the circuit court litigation. The third element is likewise satisfied. The Webbs could have raised, or did raise, all of the challenges they now embody within the federal and state claims found in Counts One through Three. Although the Webbs attempt a technical dodge of this requirement by asserting they had no obligation to "plead" the claims found in Counts One through Three, and that they need not have raised them as defenses either, they were obliged to raise in the circuit court any and all matters in defense to enforcement of the MSAR. They utterly failed to do so, perhaps aware that the secreted arguments might later provide one more opportunity to delay their unquestionable obligations under the MSAR. That is not a result the Court will sanction. Consequently, the claims are barred by res judicata.
It is, accordingly,
As noted in the May 4, 2016, Memorandum Opinion and Order lifting the stay, the MSAR obliged the Webbs to "sign a new promissory note and deed of trust." (Memo. Op. at 1). The Court additionally observed as follows respecting the circuit court litigation for which stay relief was sought: "City National seeks only to compel the Webbs to follow through with their putative settlement obligations." (Id. at 5). Respecting those settlement obligations, the September 13, 2016, order entered by the circuit court commanded the Webbs "to execute the Promissory Note and Deed of Trust" no later than September 13, 2016. (Def.'s Ex. 10 at 3).
Consequently, neither the September 6, 2016, circuit court order, nor the efforts of City National urging entry of such an order, give rise to a stay violation. City National sought, and the circuit court granted, the precise proceedings and remedy authorized by the May 4, 2016, Memorandum Opinion and Order.
It is, accordingly,
It is further
