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Fidelity National Title Insurance Company, In Its Individual v. Vincent E. Craven

November 20, 2012

FIDELITY NATIONAL TITLE INSURANCE COMPANY, IN ITS INDIVIDUAL CAPACITY AND AS SUBROGEE OF JP MORGAN BANK, N.A., SUCCESSOR TO WASHINGTON MUTUAL BANK, F.A., PLAINTIFF,
v.
VINCENT E. CRAVEN, JR., ET. AL.,
DEFENDANTS.



The opinion of the court was delivered by: Buckwalter, S.J.

MEMORANDUM

Currently pending before the Court are Defendants Vincent E. Craven, Aimee F. Craven, and Valerie A. Craven (collectively "the Cravens") Motion to Dismiss Plaintiff Fidelity National Title Insurance Company ("Fidelity")'s Complaint and Defendant Tammi M. Torbik's Motion to Dismiss Fidelity's Complaint. For the following reasons, the Motions are granted in part and denied in part.

I. FACTUAL AND PROCEDURAL BACKGROUND

This suit arises out of an alleged conspiracy to defraud Plaintiff Fidelity and other lenders by taking out mortgages and failing to record them properly so that they went unpaid at foreclosure. The facts of the case, as set forth in the Complaint, focus on Defendants' actions in the mortgaging and sales of three properties.

A. 328 Fifth Avenue, Conshohocken, PA

On or about January 15, 2003, Valerie Craven conveyed the real property located at 328 Fifth Avenue, Conshohocken, PA ("The Conshohocken Property") to Vincent Craven, her father, via deed. (Compl. ¶ 10.) The deed was properly recorded with the Office of the Recorder of Deeds of Montgomery County. (Id.) On or about March 4, 2005, Mr. Craven executed and delivered two mortgages against the Conshohocken Property. (Id. ¶ 11.) The first was an open-end mortgage in favor of Wachovia Bank, FSB ("Wachovia") in the amount of $105,000.00. (Id.) This mortgage was recorded on March 24, 2005. (Id.) Secondly, also on March 4, Mr. Craven executed a mortgage in favor of Washington Mutual Bank, F.A. ("Washington Mutual") in the amount of $213,750.00. (Id.) This mortgage was recorded on April 14, 2005. (Id.)

After these mortgages were taken out, Whitford Land Transfer, Inc. ("Whitford"), an authorized title agent of Fidelity, issued a Loan Policy of Title Insurance ("The March 2005 Loan Policy") to Washington Mutual, insuring that its mortgage was a first position mortgage lien against the Conshohocken Property. (Id. ¶ 12.) Defendant Torbik, in her capacity as a closing agent for Whitford, processed the March 2005 Loan Policy. (Id. ¶ 13.) Neither Mr. Craven nor Ms. Torbik disclosed to Fidelity that the Wachovia mortgage and the Washington Mutual mortgage were executed on the same day. (Id. ¶¶ 14--15.) Because the Wachovia mortgage was recorded ahead of the Washington Mutual mortgage, the Washington Mutual mortgage was not a first position mortgage lien. (Id. ¶ 16.) As a result, Washington Mutual tendered a claim under the March 2005 Loan Policy. (Id. ¶ 17.)

On or about October 11, 2005, Mr. Craven conveyed the Conshohocken property to his wife, Aimee Craven, under a deed dated September 23, 2005. (Id. ¶ 18.) This deed was recorded on November 20, 2006. (Id.) In conjunction with this sale, on or about October 11, Aimee Craven executed a purchase money mortgage against the Conshohocken Property in favor of Washington Mutual for $312,000.00. (Id.) This mortgage was recorded on October 5, 2006. (Id.) Ms. Torbik also processed this transaction wherein Aimee Craven "purchased" and mortgaged the Conshohocken Property from her husband. (Id. ¶ 20.) After doing so, Ms. Torbik issued a check payable to Washington Mutual for an amount sufficient to satisfy the debt from the March 2005 Washington Mutual mortgage. (Id. ¶ 21.) However, instead of delivering the check to Washington Mutual, Ms. Torbik delivered it to Mr. Craven. (Id. ¶ 22.) Mr. Craven then fraudulently negotiated the check and deposited the funds to a bank account owned by his own company, Monument Mortgage. (Id. ¶ 23.) As a result of these actions, neither the Wachovia nor the Washington Mutual March 2005 mortgage was paid off. (Id. ¶ 24--25.) Both Ms. Torbik and Aimee Craven were aware of these mortgages at the time of the sale from Mr. Craven to Aimee. (Id. ¶ 26--27.)

In connection with the October 2005 sale from Mr. Craven to his wife, Aimee, and the corresponding purchase money mortgage, Ms. Torbik and Whitford issued another Loan Policy of Title Insurance, which insured the purchase money mortgage as a first position mortgage lien against the Conshohocken Property. (Id. ¶ 28.) However, despite committing Fidelity (via its agent, Whitford) to insure the October 2005 purchase money mortgage as a first position mortgage lien, Ms. Torbik recorded this mortgage as a third position mortgage lien behind the original Wachovia and Washington Mutual mortgages. (Id. ¶ 29.)

Aimee Craven eventually defaulted on the loan secured by the 2005 purchase money mortgage. (Id. ¶ 30.) While preparing to initiate foreclosure, Washington Mutual obtained a title report indicating that both the Wachovia and original Washington Mutual mortgages remained of record. (Id. ¶ 31.) Mr. Craven defaulted on both of these mortgages. (Id. ¶ 32.) As a result of Mr. Craven's default on its loan, Wachovia secured a judgment in mortgage foreclosure against Mr. Craven and scheduled a Sheriff's sale of the property for June 23, 2010. (Id. ¶ 33.) In order to avoid a divestiture of both the March 2005 insured mortgage and the October 2005 insured mortgage, Fidelity paid off Mr. Craven's loan secured by the Wachovia mortgage. (Id. ¶ 34.)

JPMorgan Chase Bank, N.A. (Chase), through the acquisition of certain assets of Washington Mutual, is now the holder of the March 2005 and October 2005 insured mortgages. (Id. ¶ 35.) Pursuant to its obligations under the October 2005 loan policy, Fidelity is tendering payments to Chase in satisfaction of the March 2005 mortgage. (Id. ¶ 36.)

B. 922 Montgomery Avenue, Unit C-5, Bryn Mawr, PA

On or about March 9, 2004, Valerie Craven conveyed the real property at 922 Montgomery Avenue, Unit C-5, Bryn Mawr, PA ("The Bryn Mawr C-5 Property") to her father, Mr. Craven, under a deed which was never recorded. (Id. ¶ 37.) Also on or about March 9, 2004, Mr. Craven executed a mortgage against the Bryn Mawr C-5 Property in favor of Washington Mutual for $140,000.00. (Id. ¶ 38.) On behalf of Fidelity, Whitford and Ms. Torbik issued a loan policy insuring this mortgage as a first position mortgage lien against the property. (Id. ¶ 39.) Ms. Torbik, however, failed to record the mortgage. (Id. ¶ 40.)

On or about September 23, 2005, Mr. Craven sold the Bryn Mawr C-5 Property to his wife, Aimee, under a deed that was recorded on April 18, 2006. (Id. ¶ 42.) At this time, the insured C-5 mortgage was not paid off. (Id. ¶ 43.) Subsequently, on July 24, 2006, Aimee Craven conveyed the Bryn Mawr C-5 Property to Vincent Varvolis, under a deed recorded on March 15, 2007. (Id. ¶ 44.) Mr. Varvolis also executed a mortgage against the property in the amount of $180,000.00, which was recorded on March 15, 2007. (Id. ¶ 46.) The original insured C-5 mortgage executed by Mr. Craven was still not paid off. (Id. ¶ 45.)

Because neither the original insured C-5 mortgage nor the deed conveying the house from Valerie Craven to Vincent Craven was ever recorded, the insured C-5 mortgage was never perfected as a lien. (Id. at ¶ 47.) Moreover, the insured C-5 mortgage did not attach to the property when it was conveyed from Mr. Craven to Mr. Varvolis. (Id. ¶ 48.) As a result, Plaintiff Fidelity paid Chase (the successor to Washington Mutual) for the insured C-5 mortgage. (Id. ¶ 49.)

C. 922 Montgomery Avenue, Unit E-5, Bryn Mawr, PA

The facts for the real property at 922 Montgomery Avenue, Unit C-5, Bryn Mawr, PA ("The Bryn Mawr E-5 Property") are almost identical to those for the Bryn Mawr C-5 Property. On or about March 9, 2004, Valerie Craven conveyed the Bryn Mawr E-5 Property to her father, Mr. Craven, under a deed which was never recorded. (Id. ¶ 50.) Also on or about March 9, 2004, Mr. Craven executed a mortgage against the Brywn Mawr E-5 Property in favor of Washington Mutual for $138,000.00. (Id. ¶ 51.) On behalf of Fidelity, Whitford and Ms. Torbik issued a loan policy insuring this mortgage as a first position mortgage lien against the property. (Id. ¶ 52.) Ms. Torbik, however, failed to record the mortgage. (Id. ¶ 53.)

On or about July 19, 2006, Aimee Craven conveyed the Bryn Mawr E-5 Property to Mr. Varvolis, under a deed recorded on March 15, 2007. (Id. ¶ 55.) Mr. Varvolis also executed a mortgage against the property in the amount of $180,000.00, which was recorded on March 20, 2007. (Id. ¶ 46.) The original insured E-5 mortgage executed by Mr. Craven was still not paid off. (Id. ¶ 45.)

Because neither the original insured E-5 mortgage nor the deed conveying the house from Valerie Craven to Vincent Craven was ever recorded, the insured E-5 mortgage was never perfected as a lien. (Id. at ¶ 58.) Moreover, the insured E-5 mortgage did not attach to the property when it was conveyed to Mr. Varvolis. (Id. ¶ 59.) As a result, Plaintiff Fidelity paid Chase (the successor to Washington Mutual) for the insured E-5 mortgage. (Id. ¶ 60--61.)

D. Procedural History

Plaintiff Fidelity brought suit on July 30, 2012, alleging ten counts, including (1) fraud against Vincent Craven, Aimee Craven, and Monument Mortgage for failing to disclose to Fidelity the existence of the Wachovia mortgage and the numerous transfers and sales of the properties in question; (2) fraud against Vincent Craven, Aimee Craven, and Valerie Craven for directing Tammi Torbik to not record the various mortgages and for failing to inform Fidelity that the instruments were never recorded; (3) fraud against Tammi Torbik for failing to disclose the above information and for directing the Washington Mutual payoff check for the 2005 Conshohocken property mortgage to Mr. Craven; (4) negligence against Tammi Torbik; (5) breach of fiduciary duty against Tammiy Torbik; (6) breach of contract against Vincent Craven and Aimee Craven; (7) unjust enrichment against Vincent Craven, Aimee Craven, Valerie Craven, and Monument Mortgage; (8) conversion against Vincent Craven, Aimee Craven, Valerie Craven, and Monument Mortgage; (9) civil conspiracy against Vincent Craven, Aimee Craven, Valerie Craven, and Tammi Torbik; and (10) violations of the Racketeer Influence and Corrupt Organizations (RICO) Act, 18 U.S.C. § 1962 et. seq.

Defendants Vincent, Valerie, and Aimee Craven filed a Motion to Dismiss Claims I, II, VI, VII, VIII, IX, and X on September 7, 2012. Fidelity filed a Response in Opposition on September 21, and the Cravens filed a Reply Brief on September 27. Defendant Tammi Torbik filed her own Motion to Dismiss Claims III, IV, V, IX, and X on September 27, 2012. Fidelity filed a Response in Opposition on October 26. The Court will now consider the merits of these Motions.

II. STANDARD OF REVIEW

Under Rule 12(b)(6), a defendant bears the burden of demonstrating that the plaintiff has not stated a claim upon which relief can be granted. Fed. R. Civ. P.12(b)(6); see also Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), the United States Supreme Court recognized that "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555. Following these basic dictates, the Supreme Court, in Ashcroft v. Iqbal, 556 U.S. 662 (2009), subsequently defined a two-pronged approach to a court's review of a motion to dismiss. "First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 678. Thus, although "Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era . . . it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Id. at 678--79. Second, the Supreme Court emphasized that "only a complaint that states a plausible claim for relief survives a motion to dismiss." Id. at 679. "Determining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. A complaint does not show an entitlement to relief when the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct. Id.; see also Phillips v. Cnty. of Allegheny, 515 F.3d 224, 232--34 (3d Cir. 2008) (holding that: (1) factual allegations of complaint must provide notice to defendant; (2) complaint must allege facts suggestive of the proscribed conduct; and (3) the complaint's "'factual allegations must be enough to raise a right to relief above the speculative level'") (quoting Twombly, 550 U.S. at 555)).

Notwithstanding these new dictates, the basic tenets of the Rule 12(b)(6) standard of review have remained static. Spence v. Brownsville Area Sch. Dist., No. Civ.A.08-626, 2008 WL 2779079, at *2 (W.D. Pa. July 15, 2008). The general rules of pleading still require only a short and plain statement of the claim showing that the pleader is entitled to relief and need not contain detailed factual allegations. Phillips, 515 F.3d at 233. Further, the court must "accept all factual allegations in the complaint as true and view them in the light most favorable to the plaintiff." Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006). Finally, the court must ...


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