Opinion
Case No. 3:21-bk-00276 Adv. Proc. No. 3:21-ap-90037 (Lead Adversary Proceeding) Adv. Proc. No. 3:21-ap-90051 C/w 3:21-ap-90037
09-09-2021
IN RE: David Silas CONNOR, Debtor. David Connor, Plaintiff, v. Property Fund 629, LLC, 1 Public Homes, LLC, Edward Dale Russell, and Trent Notestine, Defendants. David S. Connor and Courtney T. Connor, Plaintiffs, v. MEB Loan Trust IV (aka Specialized Loan Servicing, LLC), Edward Dale Russell, 1 Public Homes, LLC, Property Fund 629, LLC, Mackie Wolf Zientz & Mann, P.C., and Eric Sox, Defendants.
Keith David Slocum, Harlan Slocum & Quillen, Columbia, and G. Kline Preston, IV, Kline Preston Law Group, Nashville, for David and Courtney Connor, Plaintiffs. Robert T. Lieber, Jr., Mackie Wolf Zientz & Mann, P.C., Brentwood, for MEB Loan Trust IV, Specialized Loan Servicing, LLC, Mackie Wolf Zientz & Mann, P.C. (the "Foreclosure Defendants").
Keith David Slocum, Harlan Slocum & Quillen, Columbia, and G. Kline Preston, IV, Kline Preston Law Group, Nashville, for David and Courtney Connor, Plaintiffs.
Robert T. Lieber, Jr., Mackie Wolf Zientz & Mann, P.C., Brentwood, for MEB Loan Trust IV, Specialized Loan Servicing, LLC, Mackie Wolf Zientz & Mann, P.C. (the "Foreclosure Defendants").
MEMORANDUM OPINION REGARDING FORECLOSURE DEFENDANTS’ MOTION TO DISMISS
Judge Randal S. Mashburn
David and Courtney Connor filed this lawsuit for wrongful foreclosure, wrongful eviction, and related claims against multiple defendants who may be loosely categorized as the Foreclosure Defendants and the Eviction Defendants. The Foreclosure Defendants include MEB Loan Trust IV ("MEB"), Specialized Loan Servicing, LLC ("SLS"), and their counsel, Mackie Wolf Zientz & Mann, P.C.
Generally, the Connors allege the Foreclosure Defendants wrongfully foreclosed on the Connors’ residence. After the foreclosure, they allege that the Eviction Defendants all participated in some manner in the subsequent eviction of the Connor family from their home. To tie it all together, the Connors contend that the Foreclosure Defendants and the Eviction Defendants are linked through a civil conspiracy.
The Foreclosure Defendants moved to dismiss the Complaint against them under Fed. R. Civ. P. 12(b)(6) because they assert that, based on the Complaint and documents supplied by the Foreclosure Defendants in their motion, the Connors failed to state a claim for breach of contract or wrongful foreclosure. Additionally, the Foreclosure Defendants assert that the Connors failed to state a claim against them for civil conspiracy, negligence, intentional or negligent infliction of emotional distress, or any of the eviction-related claims.
In their response to the motion to dismiss, the Connors argue that the notices of default, acceleration and foreclosure attached to the motion to dismiss are not properly authenticated, are not admissible evidence, and do not prove that any of the notices in question actually were delivered. (The Connors also misread the date on one of the notices by one year and included a separate argument based on their erroneous understanding of the date. In light of the issue over whether that notice was sent, the timing is ultimately not the critical concern.)
In conjunction with the response to the motion to dismiss, the Connors requested permission to amend their Complaint. The Court considered the Connors’ proposed amended complaint in ruling on the motion to dismiss, but the amendments do not change the ruling on any of the issues.
For the reasons discussed herein, the Foreclosure Defendants’ motion to dismiss is denied in part and granted in part. The motion to amend is granted to the extent of the claims that survive the motion to dismiss and denied to the extent of the claims being dismissed.
STANDARD OF REVIEW
"A motion to dismiss pursuant to Rule 12(b)(6) tests the sufficiency of a complaint." Smith v. Bank of Am. Corp. , 485 F. App'x 749, 751 (6th Cir. 2012). To survive a Rule 12(b)(6) motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S. Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L.Ed.2d 929 (2007) ). It is not enough to allege facts that show a "mere possibility of misconduct" or "that are merely consistent with a defendant's liability." Ashcroft , 556 U.S. at 678–79, 129 S.Ct. 1937 (internal quotation marks omitted). Additionally, the court need not consider mere recitals of the elements or conclusory legal statements. Id. at 678, 129 S. Ct. 1937, 1949. The plaintiff must "plead enough ‘factual matter’ to raise a ‘plausible’ inference of wrongdoing." 16630 Southfield Ltd. P'ship v. Flagstar Bank, F.S.B. , 727 F.3d 502, 504 (6th Cir. 2013) (quoting Ashcroft , 556 U.S. at 678, 129 S.Ct. 1937 ). This pleading standard is construed liberally. Ryan v. Blackwell , 979 F.3d 519, 524 (6th Cir. 2020). "[I]f a plaintiff's claim is plausible, the availability of other explanations—even more likely explanations—does not bar the door to discovery." 16630 Southfield Ltd. P'ship , 727 F.3d. at 505.
Fed. R. Civ. P. 12(b)(6) is made applicable to adversary proceedings by Fed. R. Bankr. P. 7012(b).
Generally, when considering a motion to dismiss, a court must test the facial sufficiency of the complaint without referring to material outside the pleadings. Gavitt v. Born , 835 F.3d 623, 640 (6th Cir. 2016). If outside material is considered, the standard of review is converted to that of a motion for summary judgment. Id.
An exception to this general rule regarding outside material is that "a court may consider exhibits attached to the complaint, public records, items appearing in the record of the case, and exhibits attached to defendant's motion to dismiss, so long as they are referred to in the complaint and are central to the claims contained therein, without converting the motion to one for summary judgment." Id. This exception is supported by Rule 10(c), which makes exhibits to a pleading "a part of the pleading for all purposes." Fed. R. Bankr. P. 7010 ; Fed. R. Civ. P. 10(c). "Where the plaintiff ‘fails to introduce a pertinent document as part of his pleading, defendant may introduce the exhibit as part of his motion attacking the pleading.’ " Thomas v. Publishers Clearing House, Inc. , 29 F. App'x 319, 322, 2002 WL 193935 at *2 (6th Cir. Feb. 5, 2002) (quoting 5 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE & PROCEDURE § 1327 (2d ed. 1990) ).
Although a court may generally consider exhibits attached to a motion to dismiss if they are referred to in the complaint and are central to the plaintiff's claims, there are exceptions. "[I]t must ... be clear that there exist no material disputed issues of fact regarding the relevance of the document." Mediacom Se. LLC v. BellSouth Telecommunications, Inc. , 672 F.3d 396, 400 (6th Cir. 2012) (citation omitted). Additionally, "if the authenticity, validity, or enforceability of a document" is in dispute, or there is "a genuine dispute as to the legal sufficiency of a document," the court must consider the issue under a motion for summary judgment standard. Lewis Lumber & Milling, Inc. v. Mereen-Johnson, LLC , No. 3:17-CV-00643, 2018 WL 6181356, at *2 (M.D. Tenn. Nov. 27, 2018).
As applicable here, "a court may not consider materials outside the pleading that ‘rebut, challenge, or contradict anything in the plaintiffs’ complaint’ without converting the motion to one for summary judgment." Id. (quoting Song v. City of Elyria , 985 F.2d 840, 842 (6th Cir. 1993) ); see, e.g., Mediacom Se. LLC , 672 F.3d at 399 (reversing the district court's dismissal when it relied upon material that directly conflicted with facts set forth in the plaintiff's complaint).
DISCUSSION
A. Consideration of Additional Documents
The Foreclosure Defendants would have the Court consider the following documents, copies of which are attached to their motion to dismiss without any testamentary authentication:
(i)Deed of Trust between the original lender (Bank of America) and Debtors and signed by the Debtors on June 1, 2004 ("Deed of Trust");
(ii) Substitute Trustee's Deed conveying the subject property to the buyer at foreclosure ("Substitute Trustee's Deed");
(iii) an advertisement posted in the Williamson County Herald ("Sale Advertisement");
(iv) a letter identified as a Notice of Default and Intent to Foreclose dated October 9, 2019, from SLS and addressed to the Connors ("Notice of Default");
(v) two identical letters identified as a Notice of Acceleration of Loan Maturity dated April 17, 2020, from Mackie Wolf Zientz & Mann, P.C. and addressed to the Connors separately with "CERT MAIL" typed above the addressee section ("Notice of Acceleration"); and
(vi) two apparently electronically-generated envelopes noted "RETURN RECEIPT REQUESTED" from Mackie Wolf Zientz & Mann, P.C. and addressed to the Connors separately (but spelled "Conner"), along with a document titled Substitute Trustee's Sale, which appears to contain the same content as the Sale Advertisement ("Notice of Sale").
Whether the Court may consider the Deed of Trust and Substitute Trustee's Deed is straightforward. The Deed of Trust is referred to in the Complaint (Compl. ¶ 12), and it is central to the Connors’ claims since it is the contract that the Foreclosure Defendants allegedly breached. The Complaint even purports to have a copy of the Deed of Trust attached (id. ), but that attachment appears instead to be a copy of the subsequent assignment of the Deed of Trust from Bank of America to Defendant MEB (id. at Ex. 1). The Connors failed to attach the Deed of Trust, so the Foreclosure Defendants are permitted to introduce it as part of their motion to dismiss. See Thomas , 2002 WL 193935 at *2.
Although the Substitute Trustee's Deed is not specifically referred to in the Complaint, the Connors do allege that their home was sold at foreclosure by Mackie Wolf Zeintz & Mann, P.C. to Property Fund 629, LLC on November 5, 2020, for $410,000. (Compl. ¶¶ 17, 20.) The Substitute Trustee's Deed evidences the conveyance that the Connors admit occurred. The Connors did not dispute the authenticity of the copy of the Deed of Trust or the Substitute Trustee's Deed or otherwise contest the Court's consideration of them. Therefore, the Court may and does consider the Deed of Trust and the Substitute Trustee's Deed in its ruling.
The Sale Advertisement could likewise be considered for purposes of the motion to dismiss since it was also referenced in the Complaint, and a copy was attached to the Complaint. However, for reasons discussed later, that document does not become pertinent to the Court's ruling because of the issues relating to the notices.
The rest of the documents relied upon by the Foreclosure Defendants cannot be considered for purposes of the motion to dismiss. The Notice of Default, Notice of Acceleration, and Notice of Sale all have the same problem. Those notices are not referred to in the Complaint. Instead, the Connors specifically deny having been provided with proper notice of foreclosure as required by the Deed of Trust and Tennessee statutes.
The Connors’ denials are entitled to a presumption of truth. Ashcroft , 556 U.S. at 678, 129 S.Ct. 1937. The Foreclosure Defendants offer the copies of the notices to counter the Connors denials. Because of the dispute, the Court may not consider the notices absent a properly substantiated motion for summary judgment. See Lewis Lumber & Milling, Inc. , 2018 WL 6181356, at *2 ; Mediacom Se. LLC , 672 F.3d at 399 ; Fed. R. Bankr. P. 7056 ; Fed. R. Civ. P. 56(c).
For example:
"The Plaintiff, David S. Connor, understood that his loan was in some sort of suspense, forbearance and or relief based on COVID and was not receiving monthly statements or any notices or information from his lender." (Comp. ¶ 13).
"The Plaintiffs aver that the Defendants, SLS and Mackie Wolf Zeintz and Mann, PC, foreclosed on the Connors’ second mortgage only without giving the Connors’ actual notices of the foreclosure or sale as required by Tenn. Code Ann. § 35-5-101, et seq., by notice in the newspaper Williamson County Herald or by notice via registered or certified mail as required by Tenn. Code Ann. § 35-5-101(e)." (Compl. ¶ 16).
"The Plaintiffs were not provided the required notices pursuant to the June 7, 2004 Deed of Trust nor Tenn. Code Ann. § 35-5-101." (Compl. ¶ 17).
The Plaintiffs alleged that the Foreclosure Defendants breached the Deed of Trust by "failing to provide the Plaintiffs with the notices set forth therein as required by Tenn. Code Ann. § 35-5-101, et seq." (Compl. ¶¶ 38-40).
The fundamental flaw in the Foreclosure Defendants’ argument is that they do not acknowledge the distinction between the existence of a document and the sending, delivery or receipt of the document. Merely attaching a copy of a notice to the motion provides no evidentiary assistance to the Court in knowing whether any such notice was actually sent to the Connors and sent according to the method required by contract or law. While the sending of the notices is in dispute, the Court cannot resolve any issue that is tied to the notices at this stage in the litigation.
B. Breach of Contract and Wrongful Foreclosure
The act, timing, and method of service of notice is central to the Connors’ breach of contract and wrongful foreclosure claims. Prior to proceeding with foreclosure, the Deed of Trust requires the Lender to provide certain notices. First, the Lender must provide notice of default, not less than 30 days to cure the default, and notice that "failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument and sale of the Property." (Deed of Trust, p. 7, "Sale of the Property".)
If the Lender decides to foreclose, the Deed of Trust requires the Trustee to "give notice of sale by public advertisement in the county in which the Property is located ..., and Lender or Trustee shall mail a copy of the notice of sale to Grantor." (Id. ; see also id. , at p. 6, "Rights and Remedies on Default".) The Deed of Trust requires that notices of default and sale be in writing, and it defines that they "shall be effective when actually delivered, ... or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Deed of Trust." (Id. , at p. 8, "Notices.")
Similarly, Tennessee has certain statutory requirements for providing notice of foreclosure sales to debtors. A trustee must advertise a foreclosure sale in a newspaper published in the county, Tenn. Code Ann. § 35-5-101(a), and the trustee must send the debtor a copy of the advertisement "on or before the first date of publication," § 35-5-101(e). The advertisement notice must be sent "by registered or certified mail, return receipt requested." § 35-5-101(e).
The Foreclosure Defendants’ argument for dismissal of the breach of contract and wrongful foreclosure claims relies on the notices attached their motion, which the Court has determined it may not consider in the current procedural posture. The Foreclosure Defendants have not presented admissible evidence of the type permitted by Fed. R. Civ. P. 56 to prove the act, timing, and method of service of notice. As previously noted, the Connors deny that any of the notices required by the Deed of Trust or statute were provided, and their denial is entitled to a presumption of truth. By denying that required notices were provided, the Connors state plausible claims for breach of contract and wrongful foreclosure. The motion to dismiss is denied as to these claims.
Another issue that may ultimately be critical to the outcome of the breach of contract and wrongful foreclosure claims is the impact of an incorrect spelling of the Connors’ name in the foreclosure advertisement. The advertisement referred to Conner with an "e" rather than Connor with an "o." The Foreclosure Defendants assert that this is a harmless error that does not render the foreclosure defective and ask for a ruling to that effect. The Connors contend this is not merely a minor misspelling but rather a different name from the correct one.
As a general proposition, Tennessee does accept the concept that some errors are harmless in the foreclosure context. See, e.g., Home Fed. Bank, FSB, of Middlesboro, Kentucky v. First Nat. Bank of LaFollette, Tennessee , 110 S.W.3d 433, 442 (Tenn. Ct. App. 2002) (holding that failure to identify the holder of the second deed of trust in the advertisement was harmless error when a copy of the advertisement was delivered to and admittedly received by the holder of the second deed of trust). However, it is premature at this point for the Court to determine how the incorrect name spelling fits into Tennessee law's consideration of harmless error.
Since it is possible that the alleged notice failure could be dispositive of the claims for wrongful foreclosure and breach of contract, there is a scenario where the name spelling issue would never need to be addressed. Accordingly, any ruling on that point at this stage would be merely advisory and may not dispose of those causes of action. The Court therefore declines to rule on that question at this stage of the proceedings.
C. Negligence
The Connors claim that Defendants "had a duty to conduct the sale and foreclosure ... in accordance with the [Deed of Trust] and Tenn. Code Ann. § 35-5-101, et. seq." (Compl. ¶ 59). They further allege that the Foreclosure Defendants’ violation of the Deed of Trust and the Tennessee foreclosure statute is negligence per se. (Compl. at ¶ 63).
To state a claim for negligence under Tennessee law, the Connors must show: (1) a duty of care owed by the defendant to the plaintiff; (2) conduct by the defendant falling below the applicable standard of care that amounts to a breach of that duty; (3) an injury or loss; (4) causation in fact; and (5) proximate, or legal, causation. Staples v. CBL & Assocs., Inc. , 15 S.W.3d 83, 89 (Tenn. 2000).
Where the alleged duty is based on a contract and the alleged breach is of a contractual obligation, the cause of action remains in contract and there can be no parallel negligence claim. Doe v. Belmont Univ. , 367 F. Supp. 3d 732, 762–63 (M.D. Tenn. 2019) (collecting cases). Additionally, "Tennessee common law generally does not impose fiduciary or similar duties on banks with respect to their customers, depositors, or borrowers absent special circumstances." Power & Tel. Supply Co. v. SunTrust Banks, Inc. , 447 F.3d 923, 932 (6th Cir. 2006). Without such "special circumstances, Tennessee courts have dismissed negligence claims related to the handling and servicing of mortgage loans." Howard v. Nationstar Mortg., LLC , 2017 WL 9807334, at *2 (W.D. Tenn. June 13, 2017).
The Connors do not allege that the Foreclosure Defendants owed the Connors any special duty other than the obligations stated in the Deed of Trust and Tennessee statute. The Connors’ negligence claims (including gross negligence and negligence per se) fail because the claims are contractual in nature and the Connors have not alleged that the Foreclosure Defendants owed the Connors any special duty of care.
Additionally, the Connors misunderstand negligence per se. Negligence per se is not a cause of action separate from ordinary negligence. Rains v. Bend of the River , 124 S.W.3d 580, 588–91 (Tenn. Ct. App. 2003). If a duty of care were owed by the Foreclosure Defendants (contrary to the Court's decision above), the common law would typically supply the "reasonable person" standard of care. Id. at 588. In addition to the common law standard, standards of care may be set by the legislature, as explained by the Tennessee Court of Appeals:
[T]he common law is not the only source of legal duties or standards of conduct in negligence cases. In addition to the general duty to act reasonably to avoid harming others, more specific duties governing particular situations and relationships may be imposed by the General Assembly. Cook v. Spinnaker's of Rivergate, Inc. , 878 S.W.2d 934, 937 (Tenn. 1994). Legislatively created legal duties arise in two ways. First, the General Assembly may create a legal duty and then provide a civil cause of action for its breach. Second, the General Assembly may enact a penal statute that does not explicitly provide a civil remedy, and the courts may then derive a civil legal duty from the penal statute. "Negligence per se" is the term used to describe one
of the two doctrines associated with the latter process.
The negligence per se doctrine enables the courts to mold standards of conduct in penal statutes into rules of civil liability....
Id. at 588-89.
In this case, the Tennessee legislature set requirements for conducting foreclosure sales and providing notice in Tenn. Code Ann. § 35-5-101, et. seq. In the same statute, the legislature also provided a civil cause of action for its breach:
Any officer, or other person, referenced in § 35-5-106 who fails to comply with this chapter commits a Class C misdemeanor and is, moreover, liable to the party injured by the noncompliance, for all damages resulting from the failure.
§ 35-5-107. In contrast to a standard of care inferred from a penal statute, there is no need to infer a standard of care from the foreclosure statute. It expressly provides a standard of care and provides a civil cause of action for its breach. The Connors have a claim for violation of Tenn. Code Ann. § 35-5-101, et. seq. in their "wrongful foreclosure" claim. There is no parallel negligence or negligence per se claim.
D. Intentional or Negligent Infliction of Emotional Distress
"The elements of an intentional infliction of emotional distress claim are that the defendant's conduct was (1) intentional or reckless, (2) so outrageous that it is not tolerated by civilized society, and (3) resulted in serious mental injury to the plaintiff." Rogers v. Louisville Land Co., 367 S.W.3d 196, 205 (Tenn. 2012) (citations omitted).
To meet the second element, a "plaintiff must show that the defendant's conduct was ‘so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency and to be regarded as atrocious, and utterly intolerable in a civilized community.’ " Lourcey v. Estate of Scarlett , 146 S.W.3d 48, 51 (Tenn. 2004) (citations omitted). To meet the third element, a plaintiff must also show that the "outrageous" conduct of the defendant also caused emotional distress "so severe that no reasonable [person] could be expected to endure it." Levy v. Franks , 159 S.W.3d 66, 85 (Tenn. Ct. App. 2004).
"[A] breach of contract, even if clear, is not by itself actionable under the tort of outrageous conduct, nor will a negligent or inadvertent act give rise to such a claim." In re Jenkins , 488 B.R. 601, 617 (Bankr. E.D. Tenn. 2013) (quoting Chandler v. Prudential Ins. Co. , 715 S.W.2d 615, 623 (Tenn. Ct. App. 1986) ). Courts considering claims for intentional infliction of emotional distress in the context of a foreclosure sale typically find that the facts do not rise to the level of outrageous conduct. Harris v. Wells Fargo , 2019 WL 3779535, at *7 (W.D. Tenn. Feb. 19, 2019) (collecting cases).
The Connors allege the Foreclosure Defendants failed to send required notices of foreclosure and used the incorrect last name -- "Conner" instead of "Connor"-- in the advertisement of the foreclosure sale. They state claims for breach of contract and wrongful foreclosure by violation of the Tennessee foreclosure statute, both of which, if proven, may entitle them to damages.
Counsel for the Conners has used colorful language (e.g., "the Defendants’ actions are not permitted in a civilized society and they are beyond the pale of human decency;" the actions "were heartless, mean and taken in order to earn a profit at the expense of the Plaintiffs" (Compl. ¶ 35)). However, expressive wording without facts is not sufficient to allege conduct "so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency and to be regarded as atrocious, and utterly intolerable in a civilized community." Lourcey , 146 S.W.3d at 51. The Connors fail to state a claim for intentional infliction of emotional distress against the Foreclosure Defendants.
The related claim for negligent infliction of emotional distress has a similar problem. "The elements of a claim for negligent infliction of emotional distress include the elements of a general negligence claim, which are duty, breach of duty, injury or loss, causation in fact, and proximate causation." Rogers , 367 S.W.3d at 206. Additionally, the plaintiff must prove that the defendant's conduct caused a serious or severe emotional injury. Id. As discussed above, the Connors fail to state a plausible claim for negligence against the Foreclosure Defendants. As their negligence claim fails, so must their negligent infliction of emotional distress claim.
E. Eviction-Related Claims and Conspiracy
Abuse of Process, Wrongful Eviction, and Trespass.
The Connors included in their Complaint the following claims relating to their family's eviction from the Property: abuse of process relating to the detainer/eviction proceeding in state court; wrongful eviction; and trespass. The Connors also included a claim of conspiracy. The Connors assert these claims generally against all "Defendants," which would include the Foreclosure Defendants and the Eviction Defendants. The Foreclosure Defendants argued in their motion to dismiss that the Connors have failed to state a claim against them for any of these causes of action.
The Connors do not allege in their Complaint or proposed amended complaint that any of the Foreclosure Defendants participated in any direct way in the eviction. Further, the Connors do not allege that any of the Eviction Defendants acted as agent for any of the Foreclosure Defendants with respect to the eviction or otherwise.
When the Connors’ counsel was questioned at the hearing on the motion to dismiss about his theory of the Foreclosure Defendants’ liability for any of the eviction-related claims, he explained that it hinged on the Connors’ conspiracy claim. If the conspiracy claim were to be dismissed, he admitted the eviction-related claims would fail as against the Foreclosure Defendants.
The Connors offered no written argument against dismissal of these claims in their filed response to the motion to dismiss.
The Tennessee Supreme Court has stated that "[a]n actionable civil conspiracy is a combination of two or more persons who, each having the intent and knowledge of the other's intent, accomplish by concert an unlawful purpose, or accomplish a lawful purpose by unlawful means, which results in damage to the plaintiff." Trau–Med of Am., Inc. v. Allstate Ins. Co. , 71 S.W.3d 691, 703 (Tenn. 2002).
The elements of civil conspiracy are: "(1) a common design between two or more persons, (2) to accomplish by concerted action an unlawful purpose, or a lawful purpose by unlawful means, (3) an overt act in furtherance of the conspiracy, and (4) resulting injury." Pagliara v. Moses , 605 S.W.3d 619, 627 (Tenn. Ct. App. 2020), appeal denied (June 4, 2020) (quoting Kincaid v. SouthTrust Bank , 221 S.W.3d 32, 38 (Tenn. Ct. App. 2006) ). In addition, a claim for civil conspiracy "requires an underlying predicate tort allegedly committed pursuant to the conspiracy." Watson's Carpet & Floor Coverings, Inc. v. McCormick , 247 S.W.3d 169, 180 (Tenn. Ct. App. 2007).
If the underlying tort is not actionable, the conspiracy claim is not actionable. Id. at 179-80 ; see also Levy v. Franks , 159 S.W.3d 66, 82 (Tenn. Ct. App. 2004). ("[T]here is no liability under a theory of civil conspiracy unless there is underlying wrongful conduct."). In Tennessee, conspiracy claims must be pled with some degree of specificity. Lapinsky v. Cook , 536 S.W.3d 425, 444 (Tenn. Ct. App. 2016) (citing Kincaid , 221 S.W.3d at 38 ; and McGee v. Best , 106 S.W.3d 48, 64 (Tenn. Ct. App. 2002) ).
In support of their conspiracy claim, the Connors vaguely allege that "the Defendants" – without specifying which defendants did what – "worked in concert in a covin and conspiracy to deprive them of their property rights and forcibly evicted them from their home without the true, legal right to do so." (Compl. ¶ 25). They further "aver that the Defendants entered into an agreement, compact and covin to foreclose on the Plaintiffs’ real property and to take possession of the Plaintiffs’ real property unlawfully." (Id. ¶ 57). Their proposed amended complaint would add: "The Defendants all worked in concert and by agreement to earn a profit at the expense of the Connors’ rights. " (Am. Compl. ¶ 58.)
In an apparent attempt to enhance their conspiracy claim, the Connors also seek to add the italicized allegations below to their proposed amended complaint:
Non-italicized text is in the original Complaint or summarizes content in the original Complaint.
The Plaintiffs aver that Defendant, Property Fund 629, LLC, submitted the highest bid in the amount of $410,000.00. The Defendants engaged in an illegal and unlawful foreclosure to deprive the Plaintiffs of their property. (Am. Compl. ¶ 19).
[Defendant 1 Public Homes filed a detainer warrant.] (Id. ¶ 20.)
The Plaintiffs aver that pursuant to the wrongful foreclosure sale, the purported legal owner was Defendant, Property Fund 629, LLC. The Defendants worked in concert with a united goal to deprive the Connors of their property. (Id. ¶ 21).
Additionally, at the end of several paragraphs describing alleged acts by one or more Eviction Defendants or causes of action based on the eviction, the Connors seek to add this sentence: "This is a continuation of the wrongful foreclosure by all Defendants. " (Id. ¶¶ 22, 23, 44 (under "Abuse of Process"), 56 (under "Trespass")).
The vague allegations that all Defendants acted "in concert," "in a covin and conspiracy," and "in agreement" are conclusions and recitations of elements of a conspiracy cause of action. These conclusions are not entitled to any presumption of truth, and the Court need not consider them. Ashcroft , 556 U.S. at 678, 129 S.Ct. 1937. The Connors failed to provide any factual allegations to support these conclusions.
Based on the factual allegations in the Complaint, and ignoring the colorful language, the connection between any Foreclosure Defendant and any Eviction Defendant begins and ends with the foreclosure sale at which Property Fund 629, LLC was the highest bidder and purchased the property. The Complaint contains no allegation that Property Fund 629, LLC was an insider or in any way related to the Foreclosure Defendants or that the sale was anything other than an arms-length transaction.
Neither the Complaint, nor the Connors’ proposed amendment, contains factual allegations sufficient to state a plausible claim for any "common design" or "concerted action" between any Foreclosure Defendant and any Eviction Defendant. There is nothing in the Complaint or the proposed amendment to suggest that the foreclosure and eviction, though allegedly sloppy, were anything other than "unchoreographed, free-market behavior." Ashcroft , 556 U.S. at 680, 129 S. Ct. at 1950. Therefore, the Connors fail to state a claim of civil conspiracy against the Foreclosure Defendants.
With no allegation that the Foreclosure Defendants actually took part in the legal or physical eviction and no conspiracy claim to tie the Foreclosure Defendants to any of the eviction-related torts, the Connors also fail to state a claim against the Foreclosure Defendants for abuse of process, wrongful eviction, and trespass.
F. Declaratory Judgment
The Connors included in their Complaint a request for declaratory judgment as to their ownership interest the property at issue. The Foreclosure Defendants moved for dismissal of the declaratory judgment count arguing that since all other claims against them should be dismissed, there is no actual controversy between the parties. The Court has determined that the Connors do state claims for breach of contract and wrongful foreclosure, so, to that extent, the Foreclosure Defendants’ basis for dismissal of the declaratory judgment claim does not apply.
The Connors also seek declaratory judgment as to their possessory interest in the property, but that claim seems to apply to the Eviction Defendants who have not moved to dismiss it.
It does not appear that the Connors necessarily seek any relief that would be solely dependent on the declaratory judgment cause of action. That count may merely be redundant of the claims for breach of contract and wrongful foreclosure. However, since the Court is allowing the Connors to proceed on those two counts, it will not dismiss the declaratory judgment claim at this time to the extent it is related to the relief that might be available regarding the contract and wrongful foreclosure claims.
CONCLUSION
For the reasons stated herein, the following claims will be dismissed by separate order as against the Foreclosure Defendants:
Count 2: Abuse of Process
Count 4: Wrongful Eviction
Count 5: Intentional and Negligent Infliction of Emotional Distress
Count 6: Trespass
Count 7: Civil Conspiracy
Count 8: Negligence, Gross Negligence, and Negligence Per Se
The remaining claims asserted against the Foreclosure Defendants are:
Count 1: Breach of Contract
Count 3: Wrongful Foreclosure
Count 9: Declaratory Judgment.
The Court also grants the motion to amend the Complaint to the extent it relates to the three counts that remain. The proposed amendments as to the other counts would be insufficient to overcome the motion to dismiss. Since amendment of those counts would be futile, the motion to amend is denied to that extent. For clarity of the docket, a separate order will be entered relating to the motion to amend.