Summary:
The Joneses brought a breach of contract claim against Fulton Bank, alleging that Fulton Bank failed to send them a proper thirty-day pre-acceleration notice. See Bayview Loan Servicing, LLC v. Simmons, 654 S.E.2d 898, 901 (Va. 2008). The Joneses also challenged the appointment by Fulton Bank of a Substitute Trustee with instructions to commence foreclosure as not complying with the Deed of Trust. In their third cause of action, the Joneses contended that Fulton Bank breached the implied covenant of good faith and fair dealing under the Uniform Commercial Code. Lastly, the Joneses sought to quiet title to the property.
The district court dismissed the breach of contract claim for failing to send a proper thirty-day pre-acceleration notice, finding that the elements of breach of contract in Virginia are:
(1) a legally enforceable obligation of a defendant to a plaintiff;
(2) the defendant's violation or breach of that obligation; and
(3) injury or damage to the plaintiff caused by the breach of obligation.
Filak v. George, 594 S.E.2d 610, 614 (Va. 2004).
As the Joneses did not sufficiently plead any damages resulting from the breach in failing to send the pre-acceleration notice, the Court of Appeals affirmed the dismissal of this such cause of action. It also agreed with the district court that the Joneses standing to challenge the appointment of a Substitute Trustee. The UCC claim failed both the UCC as does not apply to transfers of real property, Greenwood Assocs., Inc. v. Crestar Bank, 448 S.E.2d 399, 402 (Va. 1994), and because it was pled as a separate tort claim, whereas the breach of the implied duty under the UCC only gives rise to a cause of action for breach of contract. See Charles E. Brauer Co. v. NationsBank of Va. N.A., 466 S.E.2d 382, 385 (Va. 1996). The quiet title action was also dismissed as the Joneses failed to allege that they had satisfied their legal obligations to Fulton Bank and, thus, maintained a superior interest in the property. Tapia v. U.S. Bank, N.A., 718 F. Supp.2d 689, 700 (E.D. Va. 2010), aff'd, 441 F. App'x 166 (4th Cir. 2010) (No. 10-1856).
For a copy of the opinion, please see:
Jones v. Fulton Bank- Breach of Contract Requires Actual Damages; Standing to Object to Appointment of Substitute Trustee
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