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Moree v. Wells Fargo Bank

United States District Court, S.D. Alabama, Southern Division

June 7, 2019

JAMES KEVIN MOREE, Plaintiff,
v.
WELLS FARGO BANK, et al., Defendants.

          ORDER

          WILLIAM H. STEELE UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on the following motions: (1) the motion of defendant Wells Fargo Bank, N.A. (“Wells Fargo”) to dismiss, (Doc. 4); (2) the motion of defendant Specialized Loan Servicing, LLC (“Specialized”) to dismiss, (Doc. 11); (3) the plaintiff's motion to remand, (Doc. 13); and (4) the plaintiff's motion “to find judgment.” (Doc. 15).

         The defendants removed this action from state court based on diversity of citizenship. Diversity jurisdiction plainly exists: the plaintiff is a citizen of Alabama, the defendants are citizens of South Dakota and Australia, respectively, and the complaint explicitly demands recovery in excess of $75, 000, exclusive of interest and costs. (Doc. 1 at 2-3; Doc. 1-2 at 6, 8). Although the plaintiff's motion is styled as one to remand, it does not identify any jurisdictional or procedural defect with removal, and none exists. Accordingly, the motion to remand is denied.

         The plaintiff's second motion seeks entry of default and default judgment against Specialized for failure to respond to the complaint in the time allowed by law. “When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, ” it is subject to entry of default. Fed.R.Civ.P. 55(a). But a defendant is under no obligation to plead or otherwise defend until and unless it is “served with the summons and complaint.” Id. Rule 12(a)(1)(A)(i); accord Securities and Exchange Commission v. Wright, 261 Fed.Appx. 259, 261 (11th Cir. 2008). Thus, “[b]efore a default can be entered, … the party must have been effectively served with process.” 10 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 2682 at 14 (3rd ed. 1998).

         Specialized argues, correctly, that good service of process was never effected on it. (Doc. 18). The plaintiff attempted to serve Specialized by certified mail directed to the entity at a post office address; no individual recipient was identified. (Doc. 1-2 at 36). Alabama law is clear that “service on a corporation or business entity cannot be perfected by certified mail addressed merely to the entity itself.” Ex parte Lereta, LLC, 226 So.3d 140, 145 (Ala. 2016). In addition, by federal law a defendant is provided a minimum of seven days following removal in which to file a responsive pleading. Fed.R.Civ.P. 81(c)(2)(C). Removal was accomplished on April 15, 2019, and Specialized answered the complaint on April 22, 2019, seven days later. (Doc. 2). For both these reasons, the plaintiff's motion for entry of default and default judgment is denied.[1]

         The pro se complaint is not a model of clarity and consists chiefly of documents rather than allegations, but the general drift is as follows. The plaintiff borrowed money from Wells Fargo or its predecessor and gave Wells Fargo a note and mortgage. In October 2016, the plaintiff became a “private banker, ” reflected by his receipt of a certificate from the Private Banker National Banking Association (“the Association”). The Association authorized the plaintiff to create promissory notes to pay off his debts, with the notes purportedly issued against the federal government's obligations and purportedly constituting legal tender and United States currency. (Doc. 1-2 at 26-27).

         In November 2016, the plaintiff as private banker issued a promissory note, by which he promised to pay Wells Fargo the amount of $242, 000, to be paid in monthly installments of $1, 400 against the obligations of the United States to that part of the public debt due its principals and sureties. The note included the following language:

After acceptance and not returned no later than the second banking day after receipt, Holder has accepted this payoff and full settlement and discharge of this debt by acquiescence under FRCP, rule 8 and the Administrative Act of 1946. The payment or payoff is to be obtained on this day from the ISSUER at 5100 Zimco Road Grove Hill, Alabama 36451.

(Doc. 1-2 at 20, 24). The plaintiff mailed the note to Wells Fargo's CFO, along with a cover letter confirming that the note was in “full satisfaction of the claimed loan” to the plaintiff. (Id. at 21, 25).

         Sometime later, the plaintiff wrote the CFO asserting that: Wells Fargo failed to appear on his doorstep on December 7, 2016 to pick up a check for $242, 000, as specified by the plaintiff's note; that this failure resulted in Wells Fargo's acceptance of the plaintiff's note as a new contract; that, by this new contract, the plaintiff paid off the original note with his note, resulting in a zero balance on the original loan; and that Wells Fargo undoubtedly had traded the plaintiff's note at its face value and thereby had been paid in full for the plaintiff's underlying debt. (Doc. 1-2 at 22).

         The only cause of action alleged in the complaint is against Wells Fargo for breach of contract. (Doc. 1-2 at 6, 7, 8, 10, 11, 12, 14, 15, 16). The contract at issue is a “bilateral mortgage payoff contract” allegedly formed by the plaintiff's presentation of his note and Wells Fargo's failure to reject it in the manner and within the time specified by the plaintiff in the note; the breach is alleged to consist in Wells Fargo's continued demand for payment of the original debt and in its transfer of the original note and mortgage to Specialized. (Id. at 7, 11, 15; Doc. 13 at 2).

         The complaint and the plaintiff's note reference, among other statutes, Public Law 73-10. (Doc. 1-2 at 19, 24). This statute, pursuant to which the United States went off the gold standard, is the fount of many an “untenable legal theory, ” Wilkerson v. Gozdan, 2014 WL 4093279 at *4 (M.D. Ala. 2014), and in an abundance of caution Wells Fargo addresses these theories. (Doc. 4 at 4-8). The plaintiff, however, expressly disavows any “vapor money” theory, (Doc. 13 at 1), and while his letter to Wells Fargo's CFO mentions “redemption, ” (Doc. 1-2 at 22), he plainly does not invoke redemption theory. See Wilkerson, 2014 WL 4093279 at *5 (describing this theory). Any other theory the plaintiff might envision based on Public Law 73-10 (though he asserts none) would be equally bankrupt, as reflected in Wilkerson and cases cited therein.

         The plaintiff's actual claim is the more mundane one that he extended an offer to Wells Fargo via his promissory note, which offer Wells Fargo accepted by inaction. Pursuant to this new contract, the original debt was paid off and thereby terminated and/or canceled, rendering efforts to collect the debt or to transfer the debt instruments breaches of the new contract. (Doc. 1-2 at 22). The plaintiff, in short, asserts a novation or substituted contract. See generally Safeco Insurance Co. v. Graybar Electric Co., 59 So.3d 649, 656 (Ala. 2010) (identifying the elements of a novation or substituted contract and the difference between them).

         “The basic elements of a contract are an offer and an acceptance, consideration, and mutual assent to the essential terms of the agreement.” Stacey v. Peed, 142 So.3d 529, 531 (Ala. 2013) (internal quotes omitted). Wells Fargo argues that, assuming the plaintiff's note constituted an offer, ...


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