Peterson v. Wells Fargo Bank, N.A. ( 2023 )

22-1343-cv
Peterson v. Wells Fargo Bank, N.A.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER
FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square,
in the City of New York, on the 6th day of July, two thousand twenty-three.
PRESENT:
GERARD E. LYNCH,
JOSEPH F. BIANCO,
MYRNA PÉREZ,
Circuit Judges.
_____________________________________
Alyssa S. Peterson,
Plaintiff-Appellant,
v. 22-1343-cv
Wells Fargo Bank, N.A.,
Defendant-Appellee.
_____________________________________
FOR PLAINTIFF-APPELLANT: ALYSSA S. PETERSON, pro se,
Hartford, CT.
FOR DEFENDANT-APPELLEE: SEAN R. HIGGINS, K&L
Gates LLP, Boston, MA.
Appeal from a judgment of the United States District Court for the District of Connecticut
(Underhill, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED.
Plaintiff-appellant Alyssa Peterson, proceeding pro se, appeals the dismissal of her
complaint against Wells Fargo Bank, N.A. (“Wells Fargo”), in which Peterson asserted various
claims arising from foreclosure proceedings initiated by Wells Fargo in North Carolina state court.
We assume the parties’ familiarity with the underlying facts, the procedural history, and the issues
on appeal, which we reference only as necessary to explain our decision to affirm.
According to the operative complaint, in 2008, Peterson defaulted on a loan that was
secured by her property in Kure Beach, North Carolina (“North Carolina property”). As a result,
Wells Fargo, the holder of the promissory note, sought to execute a foreclosure sale on Peterson’s
North Carolina property. Before the foreclosure sale could take place, Peterson filed for Chapter
13 bankruptcy protection, staying the North Carolina foreclosure proceedings. In re Peterson, No.
2:10-bk-23429 (Bankr. D. Conn. 2010). Eventually, Peterson and Wells Fargo settled, agreeing
that Peterson would make payments towards her outstanding debt. However, Peterson defaulted
on these post-settlement payments. In 2017, Wells Fargo filed a notice of termination of the
automatic bankruptcy stay on the North Carolina property by operation of law pursuant to 11
U.S.C. § 362(e)(2) to move forward with the foreclosure. On May 23, 2018, Peterson received an
amended notice of foreclosure sale, which cited the initial collection file number and the initial
foreclosure case number. Peterson expected that lifting the automatic stay would permit
foreclosure proceedings to resume but believed that Wells Fargo was legally required to start the
foreclosure process from the beginning, rather than resurrecting the initial file. Before the
foreclosure sale could occur, Peterson paid the outstanding debt in full.
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In 2020, Peterson filed the instant suit against Wells Fargo, alleging that the bank
improperly reinstated the existing North Carolina foreclosure case instead of filing a new
foreclosure action. Her initial complaint included both federal and state law claims. Wells Fargo
filed its first motion to dismiss the complaint in its entirety on Rule 12(b)(1) and Rule 12(b)(6)
grounds. The district court granted Wells Fargo’s motion, dismissing Peterson’s Full Faith and
Credit Act claim with prejudice for failure to state a claim, bankruptcy-related claims for lack of
jurisdiction, and Fair Debt Collections Practices Act claims without prejudice for failure to state a
claim. Finally, the district court declined to exercise supplemental jurisdiction over Peterson’s
state law claims.
In 2021, Peterson filed an amended complaint, which Wells Fargo also moved to dismiss.
Thereafter, Peterson filed a Second Amended Complaint (“SAC”), which asserted five causes of
actions: (1) violations of the Connecticut Unfair Trade Practices Act (“CUTPA”); (2) breach of
contract; (3) breach of the implied covenant of good faith and fair dealing; (4) negligent
misrepresentation; and (5) wrongful foreclosure. SAC at 11–21, Peterson v. Wells Fargo Bank,
N.A., No. 3:20-cv-781 (D. Conn. June 4, 2021), ECF No. 34 at 11–21. Wells Fargo again moved
to dismiss. At Peterson’s request, the district court permitted her to submit additional documents
supplementing the record and advised the parties that it might convert the motions to dismiss under
Federal Rule of Civil Procedure 12 into motions for summary judgment under Rule 56 after
reviewing the documents supplementing the record. On November 30, 2021, Peterson submitted
twenty supplemental documents. On December 11, 2021, Wells Fargo filed a response.
On March 31, 2022, the district court dismissed all claims with prejudice. In its decision,
the district court noted that it decided not to convert the motion to dismiss to a motion for summary
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judgment and did not rely on Peterson’s supplemental documents, nor on Wells Fargo’s response.
Peterson unsuccessfully moved for reconsideration and then timely appealed. 1
I. Consideration of Extrinsic Documents
Peterson first challenges the district court’s decision not to convert the motion to dismiss
into a motion for summary judgment under Rule 12(d), and (liberally construed) its concomitant
decision to consider some documents external to the complaint but not her supplemental
submissions. We review both decisions for abuse of discretion. See Parada v. Banco Indus. de
Venezuela, C.A., 753 F.3d 62, 67–68 (2d Cir. 2014) (Rule 12(d) conversion to summary judgment);
Staehr v. Hartford Fin. Servs. Grp., Inc., 547 F.3d 406, 424 (2d Cir. 2008) (consideration of
documents under Rule 12(b)(6)).
We find no abuse of discretion as to either decision. When presented with matters outside
the pleadings that are not properly considered on a Rule 12(b)(6) motion, a district court can either
elect to exclude documents and rule on a motion to dismiss, or consider the documents and
“convert the motion to one for summary judgment and give the parties an opportunity to conduct
appropriate discovery and submit the additional supporting material contemplated by Rule 56.”
Chambers v. Time Warner, Inc., 282 F.3d 147, 154 (2d Cir. 2002). Here, the district court
acknowledged that conversion to summary judgment was permissible because the parties were on
1
As a preliminary matter, Peterson does not address, in her appellate brief, the district court’s bases for
dismissal of her claims under CUTPA (or its North Carolina equivalent, which the district court construed
her complaint liberally to assert), breach of the implied covenant of good faith and fair dealing, negligent
misrepresentation, or wrongful foreclosure. Accordingly, she has waived any challenges to the dismissal
of these claims. See LoSacco v. City of Middletown, 71 F.3d 88, 92 (2d Cir. 1995) (holding that pro se
litigant abandoned challenge to the district court’s adverse ruling because “he did not raise [the] issue in
his appellate brief”). In any event, even if we were to overlook that waiver, we would nevertheless affirm
the dismissal of these claims for substantially the same reasons given by the district court in its thorough
and well-reasoned decision.
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notice that the court was considering the possibility and had the opportunity to submit additional
materials to be considered by the court. Although the district court ultimately declined to do so,
its decision was not an abuse of discretion. “[W]here there is a legitimate possibility that the
district court relied on inappropriate material in granting [a motion to dismiss],” we may reverse
for failure to convert the motion into one for summary judgment. Amaker v. Weiner, 179 F.3d 48,
50 (2d Cir. 1999). However, “reversal for lack of conversion is not required unless there is reason
to believe that the extrinsic evidence actually affected the district court’s decision.” Id. at 51.
Here, the district court expressly stated that it had “excluded” both parties’ supplemental
submissions from consideration. Peterson v. Wells Fargo Bank, N.A., No. 3:20-cv-781, 2022 WL
972415, at *8 (D. Conn. Mar. 31, 2022), adhered to on reconsideration, No. 3:20-cv-781, 2022
WL 1605468 (D. Conn. May 20, 2022). Specifically, the district court acknowledged Peterson’s
supplemental submissions in its recitation of the case’s procedural history, but made abundantly
clear in its analysis that it was otherwise excluding the documents, as well as Wells Fargo’s
response to Peterson’s submission, from consideration in the motion to dismiss decision. 2 Thus,
the district court was well within its discretion in declining to convert the motion to dismiss into a
motion for summary judgment.
To the extent the district court did rely on certain other external documents in its decision
on the motion to dismiss, it similarly did not abuse its discretion in doing so. It is well settled that
a district court’s “[c]onsideration of materials outside the complaint is not entirely foreclosed on a
12(b)(6) motion.” Faulkner v. Beer, 463 F.3d 130, 134 (2d Cir. 2006). For example, under Federal
2
In addition, we note that Peterson does not persuasively explain how converting the motion to one for
summary judgment, and consideration of the excluded materials that she submitted, would have allowed
her claims to survive dismissal.
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Rule of Evidence 201, courts may take judicial notice of facts from publicly available documents
that “can be accurately and readily determined from sources whose accuracy cannot reasonably be
questioned.” Fed. R. Evid. 201(b)(2); see Kramer v. Time Warner Inc., 937 F.2d 767, 774 (2d Cir.
1991) (“[C]ourts routinely take judicial notice of documents filed in other courts . . . to establish
the fact of such litigation and related filings.”). Moreover, “the complaint is deemed to include
any written instrument attached to it as an exhibit or any statements or documents incorporated in
it by reference.” Chambers, 282 F.3d at 152 (internal quotation marks and citation omitted). Here,
the district court considered “documents that Peterson appended to or referred to in the [SAC]”
and “specific filings in both the Foreclosure and Bankruptcy Cases,” which Peterson repeatedly
referenced. Peterson, 2022 WL 972415, at *8. Accordingly, the district court was permitted to
consider such documents under Rule 12(b)(6) without converting the motion to dismiss into a
summary judgment motion.
II. Breach of Contract Claim
Peterson next challenges the district court’s dismissal of her breach of contract claim. “We
review de novo a district court’s grant of a dismissal under Rule 12(b)(6).” MacNaughton v.
Young Living Essential Oils, LC, 67 F.4th 89, 95 (2d Cir. 2023). In conducting that review, “we
accept all factual allegations as true and draw every reasonable inference from those facts in the
plaintiff’s favor.” Id. (internal quotation marks and citation omitted). “[W]hile a complaint
attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a
plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than labels
and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Mayor
of Baltimore v. Citigroup, Inc., 709 F.3d 129, 135 (2d Cir. 2013) (quoting Bell Atl. Corp. v.
6
Twombly, 550 U.S. 544, 555 (2007)). Therefore, “[t]o survive dismissal, a complaint must provide
‘enough facts to state a claim to relief that is plausible on its face.’” Id. at 135 (quoting Twombly,
550 U.S. at 570).
Peterson’s breach of contract claim is premised on her allegations that Wells Fargo
breached the bankruptcy settlement. In particular, she alleges that, despite the fact that a
“bankruptcy court issued a ruling affirming the pre-petition collection matter was ‘moot’ and
settled,” Wells Fargo breached the settlement agreement “by resurrecting the extinguished pre-
petition collection file and related court case, and falsely us[ing] them as a legal means or a vehicle
to issue and serve a so-called ‘amended’ notice of foreclosure.” SAC at 12–13, ¶¶ 63, 65 (internal
citations omitted).
The district court analyzed this claim under the heightened pleading standard under Rule
9(b), which governs averments of fraud, because the court determined that “Peterson’s breach
claim incorporate[d] allegations of fraud.” Peterson, 2022 WL 972415, at *21. However, we need
not address whether Rule 9 applies because we conclude that, even under the less demanding Rule
8 pleading standard, Peterson failed to state a plausible claim for breach of contract. See Freedom
Holdings, Inc. v. Spitzer, 408 F.3d 112, 114 (2d Cir. 2005) (“[W]e may affirm on any ground
supported by the record.” (internal quotation marks and citation omitted)).
Under Connecticut law, 3 to state a breach of contract claim, a plaintiff must plead “the
formation of an agreement, performance by one party, breach of the agreement by the other party,
and damages.” CCT Commc’ns, Inc. v. Zone Telecom, Inc., 172 A.3d 1228, 1240 (Conn. 2017)
(internal quotation marks and citation omitted). Here, Peterson failed to indicate which contractual
3
Peterson does not contest that Connecticut law applies to her breach of contract claim.
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term Wells Fargo breached or why Wells Fargo’s use of the pre-petition collection file number
violated the settlement agreement. Indeed, her failure to make post-settlement payments triggered
the resumption of the foreclosure proceedings notwithstanding the settlement agreement. Cf.
Weiss v. Smulders, 96 A.3d 1175, 1197 (Conn. 2014) (“Under contract law, it is well settled that
a material breach by one party discharges the other party’s subsequent duty to perform on the
contract.”). Accordingly, Peterson failed to state a plausible claim for breach of contract.
III. Amendment
Finally, Peterson challenges the district court’s failure to allow leave to amend her
complaint for the third time. This Court “review[s] the district court’s denial of leave to amend
for abuse of discretion.” Kim v. Kimm, 884 F.3d 98, 105 (2d Cir. 2018). “Although Rule 15(a)
of the Federal Rules of Civil Procedure provides that leave to amend shall be freely given when
justice so requires, it is within the sound discretion of the district court to grant or deny leave to
amend.” McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007) (internal
quotation marks and citation omitted). “A district court has discretion to deny leave for good
reason, including futility, bad faith, undue delay, or undue prejudice to the opposing party.” Id.However, “[o]utright refusal to grant the leave without any justifying reason for the denial is an
abuse of discretion.” Jin v. Metro. Life Ins. Co., 310 F.3d 84, 101 (2d Cir. 2002). In addition,
denial of leave to amend on futility grounds is reviewed de novo. Melendez v. Sirius XM Radio,
Inc., 50 F.4th 294, 309 (2d Cir. 2022).
Here, the district court explained its reasoning for declining Peterson an opportunity to
amend her complaint a third time. Specifically, the district noted that “Peterson ha[d] already been
granted leave to amend several times” and that “granting leave to amend the claim [again] would
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be futile.” Peterson, 2022 WL 972415, at *10; see also id. at *18–21, 24–25. Peterson, having
been previously granted leave to amend, has not identified how a third amendment would allow
her to correct the numerous pleading deficiencies identified by the district court in her SAC.
Therefore, the district court correctly denied leave to amend.
We have considered Peterson’s remaining arguments and find them to be without merit.
Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
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