Loan documents signed by decedent did not give standing to executrix

Where an executrix of an estate had been gifted property by the decedent and a bank later sold that property at a foreclosure sale, the executrix did not have standing to bring a breach of contract claim against the bank because she did not qualify as a third-party beneficiary to the loan documents executed by the bank and the decedent.

Background

In 2004, Morie D. Grantham purchased a home in Midlothian. Grantham financed the purchase with a loan, reflected in a note and secured by a deed of trust. In 2013, Grantham gave the property to Jody C. Coonley, who later became the executrix of Grantham’s estate after Grantham’s death.

On Aug. 10, 2016, Wells Fargo Bank National Association sent a notice to the “Estate of Morie D. Grantham” stating that Grantham had defaulted in the amount of $4,644.76 and that Wells Fargo could accelerate the loan if the estate did not pay by Sept. 14, 2016. Wells Fargo did not accelerate the loan on that date and Coonley paid the $4,644.76 to Wells Fargo on behalf of the estate on Sept. 25, 2016. Coonley did not receive any statements addressed to her, Grantham or Grantham’s estate after making that payment, and she did not make any further payments. Wells Fargo claims that a statement was sent in December 2016.

On April 13, 2017, Wells Fargo conducted a foreclosure sale and the property was purchased by Peppertree Investments LLC. On April 27, 2017, Peppertree filed an unlawful detainer action against Coonley, and the General District Court of Chesterfield County awarded possession of the property to Peppertree on May 12, 2017. Coonley appealed the order and the parties settled while the appeal was pending. Coonely agreed to move out and pay an unspecified sum of money to Peppertree.

Coonley then brought this suit for breach of contract against Wells Fargo in the Richmond Circuit Court, alleging that Wells Fargo breached the deed of trust by failing to send monthly statements, failing to allow Coonley to cure the default and reporting the foreclosure sale to credit agencies. These actions purportedly damaged Coonley’s credit rating, caused her to incur significant expenses, and forced her to suffer various personal property damage and loss.

Wells Fargo removed the action to this court and now moves to dismiss the complaint in its entirety for failure to state a cause of action.

Analysis

As Coonley was not an original party to either the deed of trust or the note on which the suit is based, she only has standing if she qualifies as a third-party beneficiary to those documents.

Section 15 of the deed of trust states that “any Successor in Interest of Borrower who assumes Borrower’s obligation under this Deed of Trust in writing, and is approved by Lender, shall obtain all of Borrower’s rights and benefits under this Deed of Trust.” A plain reading of this language indicates that the original parties did not intend to confer any benefits upon a third party unless the lender approved.

Here, Wells Fargo never approved of Coonley as a successor in interest. Because Coonley only received incidental or indirect benefits from the deed of trust, she is not a third-party beneficiary to it.

Coonley also argues that she qualifies as a third-party beneficiary to the note because Grantham gave the property to her by a deed of gift. However, nothing in the four corners of the note indicates that the original parties intended to benefit Coonley. As such, she does not qualify as a third-party beneficiary under the note.

Under these circumstances, Coonley has failed to demonstrate that she has standing to bring her breach of contract claims. Moreover, because Coonley attached the loan documents to the complaint, and because they show she does not qualify as a third-party beneficiary to the note or the deed of trust, Coonley can plead no additional facts to establish she has a viable claim for relief and granting her leave to amend would be futile.

Motion to dismiss granted.

Coonley v. Wells Fargo Bank National Association, Case No. 3:18-cv-192, Dec. 26, 2018. EDVA at Richmond (Gibney). VLW 019-3-332. 6 pp.