CaseKIM SQUIRE KING v. VIRGINIA HOUSING DEVELOPMENT AUTHORITY, ET AL.
(Record Number 130494)
FromThe Circuit Court of the City of Norfolk; Everett A. Martin, Jr., Judge.
CounselHenry W. McLaughlin and Drew D. Sarrett [Law Office of Henry McLaughlin, P.C.] and Lenard Myers, III [Fortress Proprietas, P.C.] for appellant.
Godfrey T. Pinn, Jr. [Harrell & Chambliss] for appellees Virginia Housing Development Authority and Evans & Bryant, P.L.C.; Thomas S. Carnes [Roy, Larsen, Carnes & Romm, P.C.] for appellee A.J. Potter Investments, LLC.
Assignments of Error
- The Circuit Court of the City of Norfolk, Virginia ("the trial court") erred in entering its final order of December 19, 2012 dismissing the second amended complaint of appellant, Kim Squire King ("King") because such final order was erroneously based on holdings (a) that King's second amended complaint did not plead a triable claim for damages against Virginia Housing Development Authority ("VHDA") for violation through foreclosure ("the foreclosure") of the provision of the deed of trust on King's home at 513 Fauquier Street, Norfolk, Virginia 23523- 1229 ("the home") incorporating by reference all FHA regulations related to pre-conditions for foreclosure; (b) that King's second amended complaint did not plead a triable claim for damages against Evans & Bryant, P. L. C. ("Evans & Bryant") for breach by Evans & Bryant of a fiduciary duty to King because Evans & Bryant conducted the foreclosure despite being on notice of a good faith defense against the foreclosure by King; (c) that King's second amended complaint did not plead a triable claim, including against A.J. Potter Investments, , L.L.C. ("Potter"), VHDA, Monarch Bank ("Monarch") and Evans & Bryant for rescission of the trustee's deed from Evans & Bryant to Potter of the home on grounds (i) the foreclosure was conducted in breach of the aforesaid FHA regulations incorporated into the deed of trust; (ii) Potter was aware prior to the foreclosure that there was a dispute regarding the validity of the foreclosure; and (iii) Potter's high bid at the foreclosure was for much less than the actual value of the home; and (d) that King did not plead a triable case to quiet title in her favor as to the home and/or for rescission on grounds the foreclosure and trustee's deed were invalid for the reasons set forth in (c) herein.
- The trial court erred in its ruling set forth on the third page of the trial court's opinion letter of September 6, 2012 stating, inter alia, "I conclude the failure to conduct or arrange for a face-to-face meeting .... Is not a sufficient ground to award compensatory damages ...." thereby holding that King could not recover compensatory damages for substantial loss of equity in the home, moving expenses, and other economic damages proximately caused by the action by VHDA in foreclosing on the home in breach of 24 C.F.R. Section 203.604 (b) incorporated into the deed of trust requiring VHDA , as a precondition to foreclosure, to have conducted or to have offered a face-to-face meeting with King before she fell three months in arrears.
- The trial court erred in holding that the second amended complaint failed to aver that King was less than three months in arrears when VHDA initiated foreclosure proceedings and, on the basis of such holding, in ruling that King had not averred a breach of that part of the deed of trust that incorporated 24 C.F.R. Section 203.606 (a) and that therefore King could not recover compensatory damages from VHDA for substantial loss of equity in the home, moving expenses, and other economic damages which she averred were proximately caused by what she averred was such a breach.
- The trial court erred in holding that the averments in the second amended complaint failed sufficiently to aver a claim by King against Bryant & Evans, which was substitute trustee, for breach of fiduciary duty even though King averred that she called Bryant & Evans and offered the cure the arrearage on the loan but Bryant & Evans responded "there was nothing [King] could do" and thereafter conducted the foreclosure and executed the trustee's deed even though VHDA had not complied with the aforesaid FHA regulations and although "the arrearage was a point of dispute [between King and VHDA]" and King "was nevertheless in a financial position to cure the arrearage subsequent to the forbearance period and in May 2011 offered to do so'" indirectly through the trustee (Evans & Bryant) but was refused by both defendants" (including Evans and Bryant) and even though King averred compensatory damages of loss of equity, moving costs and other economic loss.
- The trial court erred in its ruling set forth on the third page of the trial court's opinion letter of September 6, 2012 stating, inter alia, "I conclude the failure to conduct or arrange for a face-to-face meeting .... Is not a sufficient ground to . . . set aside a completed foreclosure sale to a stranger to the deed of trust without notice of any defect in the sale, especially when the plaintiff has not alleged she was ever ready and able to redeem the property or cure the default before the sale." King assigns this ruling as error on the following grounds: (a) the second amended complaint averred that King notified an agent of Potter prior to the foreclosure that the issue of foreclosure was "in litigation" and that King intended to pursue the protection of her property rights in court, if necessary; (b) King averred that, prior to the sale, she offered to bring the loan current and was rebuffed; and (c) King contends that a failure to comply with the terms of the deed of trust, both by VHDA and by Evans & Bryant, gave rise to a claim to set aside the foreclosure and the trustee's deed as against a buyer who purchased the property at much less than its assessed valuation and with notice of a dispute regarding the validity of the foreclosure.