Kurkowski v. Wells Fargo Bank, N.A.

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF NORTH CAROLINA

STATESVILLE DIVISION

CIVIL ACTION NO. 5:21-CV-00131-KDB

JOHN M. KURKOWSKI,

Plaintiffs,

v. ORDER

WELLS FARGO BANK, N.A.,

Defendants.

THIS MATTER is before the Court on Defendant’s Motion to Dismiss Plaintiff’s

Complaint with prejudice pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6) (Doc.

No. 5). The Court has carefully considered this motion and the parties’ briefs and exhibits. For the

reasons discussed below, the Court finds that Plaintiff has not plausibly alleged any valid legal

claim. Therefore, Defendant’s motion will be GRANTED.

I. LEGAL STANDARD

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for “failure to state a

claim upon which relief can be granted” tests whether the complaint is legally and factually

sufficient. See Fed. R. Civ. P. 12(b)(6); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp.

v.Twombly, 550 U.S. 544, 570 (2007); Coleman v. Md. Court of Appeals, 626 F.3d 187, 190 (4th

Cir. 2010), aff'd, 566 U.S. 30 (2012). A court need not accept a complaint's “legal conclusions,

elements of a cause of action, and bare assertions devoid of further factual enhancement.” Nemet

Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009). The court,

however, “accepts all well-pled facts as true and construes these facts in the light most favorable

to the plaintiff in weighing the legal sufficiency of the complaint.” Id. Construing the facts in this

manner, a complaint must contain “sufficient factual matter, accepted as true, to state a claim to

relief that is plausible on its face.” Id. Thus, a motion to dismiss under Rule 12(b)(6) determines

only whether a claim is stated; “it does not resolve contests surrounding the facts, the merits of a

claim, or the applicability of defenses.” Republican Party v. Martin, 980 F.2d 943, 952 (4th Cir.

1992).

II. FACTS AND PROCEDURAL HISTORY

On approximately October 31, 2008, Plaintiff John M. Kurkowski obtained a loan in the

principal amount of $400,000 from Granite Mortgage, Inc. (“Granite”). Complaint, ¶ 6. This

agreement was memorialized by a Note that secured Mr. Kurkowski’s obligations under the loan

and gave Granite a lien on real property referred to in the Note as Tract #2 of the Family

Subdivision for John M. Kurkowski (“Note”). Id. The real property is more commonly known as

8320 Graham Road, Denver, North Carolina in a Deed of Trust recorded in Book 2075 at Page

665 in the Lincoln County Registry of Deeds (Doc. No. 5-1). On April 20, 2009, Mr. Kurkowski

and his wife, Carolyn Kay Kurkowski, filed a Chapter 13 Bankruptcy Petition in the United States

Bankruptcy Court for the Western District of North Carolina. In 2012, the Note was assigned to

Wells Fargo, and a Corporate Assignment of Deed of Trust was recorded in Book 2314 at Page

459 in the Lincoln County Registry of Deeds (Doc. No. 5-2). On January 29, 2013, the Bankruptcy

Court dismissed the Kurkowski’s case because their Chapter 13 plan payments were in substantial

default.

During the banking relationship, the Plaintiff sought the advice and counsel from the

Defendant’s local representatives or managers for issues related to refinancing or restructuring of

his loan due to anticipated changes in his employment and financial capacity to pay. Complaint, ¶

12. During these conferences, Plaintiff states an unknown bank employee told him that the bank

could do nothing to help until he was at least three payments behind on his loan. Id. Plaintiff asserts

he followed the advice believing it to be accurate. Id. Plaintiff states he was current with his

mortgage payments at the time of this statement; however, he does allege that he anticipated his

ability to pay would change. Id. Wells Fargo subsequently assigned the Note to Wilmington

Savings Fund and Wells Fargo stopped servicing the loan in February 2020 (Doc. No. 5-3).

Plaintiff’s complaint alleges several causes of action against Wells Fargo. First, he alleges

that Wells Fargo breached a contract by providing false or misleading advice on Plaintiff’s

refinancing or restructuring options. Complaint, ¶ 7. Second, he asserts that Wells Fargo either

committed fraud and/or misrepresentation when discussing the terms of Mr. Kurkowski’s debt. Id.

at ¶¶ 15, 37. Third, he claims that Wells Fargo breached their fiduciary duty to him by offering

false or misleading advice regarding possibly refinancing or restructuring his debt to Wells Fargo.

Id. at ¶ 11-12. Fourth, he alleges that Wells Fargo negligently reported his loan to credit reporting

agencies. Id. at ¶ 48. And lastly, he claims that Wells Fargo violated the Fair Debt Collection

Practices Act (“FDCPA”). Id. at ¶ 19(e).

III. DISCUSSION

Generally, pro se litigants are held to a “less stringent standard than trained attorneys; the

Court must afford a pro se complaint generous construction.” Sado v. Leland Memorial Hospital,

933 F.Supp. 490, 493 (1996) (citing Haines v. Kerner, 404 U.S. 519 (1972)). Pro se litigants with

“otherwise meritorious claims are not to be defeated by failure to observe technical niceties.” Id.

(citing Gordon v. Leeke, 574 F.2d 1147 (4th Cir. 1978)). Nonetheless, the United States Court of

Appeals for the Fourth Circuit has recognized limits on this principle. Beaudett v. City of Hampton,

775 F.2d 1274 (4th Cir. 1985), cert. denied, 475 U.S. 1088, 106 S.Ct. 1475, 89 L.Ed.2d 729 (1986).

A pro se plaintiff still must allege facts that state a cause of action. Id.

I. Fair Debt Collection Practices Act Claim

Plaintiff claims that Wells Fargo engaged in violations of the Fair Debt Collection Practices

Act (“FDCPA”). Complaint, ¶ 19(e). To plead a plausible FDCPA claim, a plaintiff must allege

facts to show that (i) he has been the object of collection activity arising from a consumer debt,

(ii) Wells Fargo is a debt collector as defined by the FDCPA, and (iii) Wells Fargo has engaged in

an act or omission prohibited by the FDCPA. Womack v. Ward, 2018 WL 3729038 *6 (D. Md.

Aug. 6, 2018).

Even assuming, without deciding, that Plaintiff has sufficiently pled the remaining

elements of his FDCPA claim, Plaintiff has failed to plead a plausible FDCPA claim because Wells

Fargo is not a debt collector as defined by the FDCPA. The act defines debt collector as anyone

who “regularly collects or attempts to collect ... debts owed or due ... another.” 15 U.S.C. §

1692a(6). Thus, the act explicitly excludes entities that are attempting to collection a debt owed to

them. See Henson v. Santander Consumer USA Inc., 137 S.Ct. 1718, 1721-22 (2017). Plaintiff

concedes that he had “originally dealt with Bank of Granite and its affiliates for the construction

loan which was converted to a mortgage and thereafter sold or transferred to the Defendant….”

Complaint, ¶ 6. Therefore, all actions taken by Wells Fargo were to collect a debt owed to them,

not another, which makes Plaintiff’s FDCPA claim insufficient as a matter of law and requires this

Court to dismiss the FDCPA claim.

II. Breach of Contract Claim

Plaintiff alleges that Wells Fargo breached a valid and enforceable contract that existed

between the parties without lawful excuse. Complaint, ¶ 31-34. The elements of a claim for breach

of contract in North Carolina1 are (1) existence of a valid contract and (2) breach of the terms of

1 The parties agree that North Carolina law applies to Plaintiff’s state law claims.

the contract. McLamb v. T.P. Inc., 173 N.C. App. 586, 588, 619 S.E.2d 577, 580 (2005). Plaintiff

has failed to allege sufficient facts that establish Wells Fargo breached any contract with the

Plaintiff.

The only valid and enforceable contract between the parties is the loan agreement.

However, the Plaintiff has failed to allege Wells Fargo has violated any provision of that

agreement. Instead, Plaintiff alleges that Wells Fargo made promises to him, but he does not allege

the substance of those alleged promises or facts that establish those “promises” constitute a

contract or that Wells Fargo breached those alleged promises. Complaint, ¶ 7. Plaintiff also claims

that Wells Fargo promised to help him avoid foreclosure, but Plaintiff does not allege that any

consideration was exchanged for this promise or that Wells Fargo failed to perform this alleged

promise. Id. at 19(d). Similarly, Plaintiff suggests that Wells Fargo charged him unauthorized fees,

but he does not identify any actual unauthorized fee. Complaint, ¶ 19(c). Finally, Plaintiff claims

that Wells Fargo failed to return his calls promptly, failed to return his counsel’s calls promptly,

and engaged in a variety of undefined wrongdoing. Id. at ¶ 19. At best, these claims are generalized

allegations that Wells Fargo provided inadequate customer service, which are not actionable legal

claims. Pike v. Wells Fargo Bank, N.A., 2021 WL 2445893 *5 (E.D.N.C. June 15, 2021).

Therefore, Plaintiff’s breach of contract claim will be dismissed.

III. Fraud/Misrepresentation Claim

Plaintiff alleges that Wells Fargo committed fraud and/or misrepresentation because, inter

alia, an unnamed Wells Fargo employee told him that “the bank could do nothing to help the

Plaintiff until he was at least three (3) payments behind on his loan.” Complaint at ¶ 12, 35-41.

Fraud and negligent misrepresentation share two essential elements “(1) the supplying by the

defendant of false information and (2) reliance on the false statement by the plaintiff.” Vernon v.

Steven L Mabe Builders, 110 N.C. App. 552, 557, 430 S.E.2d 676, 679 (1993), overruled on other

grounds by 336 N.C. 425, 444 S.E.2d 191; see also Harton v. Harton, 81 N.C. App. 295, 297, 344

S.E.2d 117, 119 (1986) (Fraud is based on “an affirmative misrepresentation of a material fact or

a failure to disclose a material fact relating to a transaction which the parties had a duty to

disclose”); Raritan River Steel Co. v. Cherry Bekaert & Holland, 322 N.C. 200, 206, 367 S.E.2d

609, 612 (1988) (“The tort of negligent misrepresentation occurs when a party justifiably relies to

his detriment on information prepared without reasonable care by one who owed the relying party

a duty of care”). Additionally, when alleging fraud, there is a heightened standard of pleading.

Pursuant to Federal Rule of Civil Procedure 9(b), “a party must state with particularity the

circumstances constituting fraud or mistake.” To adequately allege fraud with particularity, a

plaintiff must allege the time, place, and contents of the false representations, as well as the identity

of the person making the misrepresentation and what he obtained thereby. United States ex rel.

Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 379 (4th Cir. 2008). Plaintiff has failed to

meet this heightened standard.

Plaintiff does not allege the name of any person who made any misrepresentation, the date

on which any misrepresentation was allegedly made, or the substance of an alleged

misrepresentation. Plaintiff states that an unnamed Wells Fargo employee told him that “the bank

could do nothing to help the Plaintiff until he was at least three (3) payments behind on his loan.”

Id. at ¶ 12. Plaintiff does not allege that statement to be a misrepresentation or false in any way.

Instead, Plaintiff generically alleges that Wells Fargo made misrepresentations. Id. at ¶¶ 15, 37.

Accordingly, even taking into account that he is pro se, Plaintiff has not alleged even the most

fundamental facts of a fraud claim, including falsity, with the particularity required by Rule 9(b).

Therefore, this Court will dismiss his fraud claim.

IV. Breach of Fiduciary Duty Claim

Plaintiff alleges that Wells Fargo breached its fiduciary duty through “their acts and

omissions.” Complaint, ¶ 42-45. To plead a breach of fiduciary duty claim, a plaintiff must allege

facts to show that (i) the defendant owed the plaintiff a fiduciary duty of care, (ii) the defendant

violated that fiduciary duty of care, and (iii) this breach of duty proximately caused injury to the

plaintiff. Farndale Co., LLC v. Gibellini, 176 N.C. App. 60, 68, 628 S.E.2d 15, 20 (2006). Under

North Carolina law, fiduciary relationships are characterized by “confidence reposed on one side

and resulting domination and influence on the other.” Dallaire v. Bank of America, N.A., 367 N.C.

363, 760 S.E.2d 263, 266 (2014).

Under North Carolina law, however, ordinary borrower-lender transactions are considered

arm's length and do not typically give rise to fiduciary duties. Sec. Nat'l Bank of Greensboro v.

Educators Mut. Life Ins. Co., 265 N.C. 86, 95, 143 S.E.2d 270, 276 (1965) (“There was no

fiduciary relationship; the relation was that of debtor and creditor.”). Therefore, Plaintiff must

allege facts that show that something other than the borrower-lender relationship between himself

and Wells Fargo created a fiduciary duty. He has failed to do so.

Plaintiff claims that a fiduciary relationship existed between Wells Fargo and himself for

two reasons. First, he argues that as part of his loan agreement, he was “required to pay a certain

portion of his monthly payment into an escrow account maintained by [Wells Fargo] for the

purpose of paying the County property taxes owed on the Plaintiff’s property in a timely [fashion].”

Complaint, ¶ 11. Second, he claims that Wells Fargo is a fiduciary because he discussed

refinancing or restructuring his debt to Wells Fargo with Wells Fargo employees. Id. at ¶ 12.

The fact that the loan agreement requires Plaintiff to make payments, a portion of which

would be allocated to maintenance of an escrow account, does not create a fiduciary duty. The

maintenance of an escrow account to pay taxes is an integral part of a home mortgage loan, which

as stated above is an arms-length transaction. Additionally, the escrow account was maintained for

the lender’s benefit, not Plaintiff’s benefit. Wells Fargo can waive the escrow requirement at any

time, and Wells Fargo can force the Plaintiff to pay escrowed amounts even if Plaintiff does not

want Wells Fargo to do so. See Exh. A, § 3, 9. Actions taken by a lender, with the sole purpose of

protecting its own interest, are not sufficient to show a borrower reposed in a lender the special

confidence required for a fiduciary relationship.

Additionally, no fiduciary relationship arose when Wells Fargo employees discussed

refinancing or restructuring Plaintiff’s debt with him. Complaint, ¶ 12. The discussion of potential

modifications of the loan relationship is a normal part of borrower-lender business activities, which

as noted above does not create a fiduciary relationship. Branch Banking & Trust Co. v. Thompson,

107 N.C.App. 53, 61, 418 S.E.2d 694, 699 (1992) (The “mere existence of a debtor-creditor

relationship between [the parties does] not create a fiduciary relationship.”). Therefore, Plaintiff’s

breach of fiduciary duty claim must be dismissed.

V. Negligence Claim

Finally, Plaintiff alleges that Wells Fargo was negligent in its reporting of Plaintiff’s loan

to the credit reporting agencies. Complaint, ¶ 48. The Court need not and does address the

substance of this state common law claim because Plaintiff cannot recover for inaccurate credit

reporting other than under the federal Fair Credit Reporting Act (“FCRA”), which preempts any

state law claim. The FCRA provides that:

No requirement or prohibition may be imposed under the laws of any State with

respect to any subject matter regulated under section 1681s-2 of this title, relating

to the responsibilities of persons who furnish information to consumer reporting

agencies, except that this paragraph shall not apply—(i) with respect to section

54A(a) of chapter 93 of the Massachusetts Annotated Laws (as in effect on

September 30, 1996); or (ii) with respect to section 1785.25(a) of the California

Civil Code (as in effect on September 30, 1996);

15 U.S.C. § 1681t(b)(1)(F). Pursuant to § 1681t(b)(1)(F)’s plain language, the FCRA preempts all

state laws that attempt to regulate the provision of inaccurate information to credit reporting

agencies or the failure to correct the same. Scott v. First So. Nat’l Bank, 936 F.3d 509, 521 (2nd

Cir. 2019); Purcell v. Bank of America, 659 F.3d 622 (7th Cir. 2011). Since Plaintiffs negligence

claim purports to arise from Wells Fargo’s inaccurate credit reporting, the Act preempts the claim

and consequently the Court must dismiss it.

IV. ORDER

NOW THEREFORE IT IS ORDERED THAT:

1. The Wells Fargo’s Motion to Dismiss (Doc. No. 5) is GRANTED;

2. Plaintiffs claims asserted in the Complaint are dismissed with prejudice; and

3. The Clerk is directed to close this matter in accordance with this Order.

SO ORDERED ADJUDGED AND DECREED.

Signed: November 5, 2021

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Kenneth D. Bell Vy,

United States District Judge i f