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McGhee v. JP Morgan Chase Bank, N.A.

United States District Court, Fourth Circuit

August 20, 2013

RICHARD McGHEE, et al.
v.
JP MORGAN CHASE BANK, N.A., et al.

MEMORANDUM OPINION

DEBORAH K. CHASANOW, District Judge.

Presently pending and ready for review are the motions to dismiss filed by Defendants JP Morgan Chase Bank, N.A. ("JP Morgan") and Mortgage Electronic Registration Systems ("MERS") (ECF No. 9); Kondaur Capital Corporation ("Kondaur") (ECF No. 7); Fulton Bank, N.A. (ECF No. 5); Signature Group Holdings, Inc. ("Signature") (ECF No. 4); Shapiro & Burson, L.L.P. (ECF No. 3), and BWW Law Group, L.L.C. (ECF No. 15).[1] The issues have been fully briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, the motions to dismiss will be granted.

I. Background

The following facts are either set forth in the complaint, evidenced by documents referenced or relied upon in the complaint, or are matters of public record of which the court may take judicial notice.[2]

A. Thornville Drive Property

On February 2, 2007, Plaintiffs Richard McGhee and Jacqueline McGhee obtained a loan of $480, 000 from Signature as part of a refinance transaction on Plaintiffs' property at Thornville Drive in Fort Washington, Maryland ("Thornville Drive"). (ECF No. 4-1).[3] The loan was secured by a deed of trust granting Signature a security interest in the property, and the deed of trust was recorded among the land records of Prince George's County. ( Id. ). MERS was listed as the deed of trust's beneficiary. (ECF No. 4-2). On March 23, 2009, MERS assigned the deed of trust to JP Morgan and it was recorded among the land records of Prince George's County. (ECF No. 9-4). On April 15, 2009, JP Morgan appointed John Burson and others from the law firm Shapiro & Burson, LLP, as substitute trustees of the deed of trust.[4] This appointment was recorded among the land records of Prince George's County. (ECF No. 9-5).

On June 15, 2009, John Burson - as substitute trustee - initiated foreclosure proceedings on the Thornville Drive property in the Circuit Court for Prince George's County, Maryland. (ECF No. 9-6, docket for case number CAE09-17323). On or about September 11, 2009, Shapiro, by its agents, filed an affidavit of indebtedness in the foreclosure case. (ECF No. 1 ¶ 20). JP Morgan bought the property at a foreclosure sale. ( Id. at ¶ 21). On November 12, 2010, Plaintiffs filed a "Verified Counter Complaint and Injunctive Relief Pursuant to Civ. R. 65." (ECF No. 3-4). The counterclaim alleged that Shapiro & Burson, John Burson, and JP Morgan failed to disclose material information pertaining to the loan and to provide Plaintiffs important documents in violation of numerous provisions of federal law, resulting in loss of property and damages. ( Id. ). The circuit court did not credit these allegations and ratified the foreclosure sale on December 29, 2010 (ECF No. 9-7); ratified the auditor's report on April 15, 2011 (ECF 9-6, dkt. no. 25); and awarded possession of Thornville Drive to JP Morgan on September 20, 2011. ( Id., dkt. no. 034).

Plaintiffs subsequently appealed this ruling to the Court of Special Appeals of Maryland and filed an Emergency Motion to stay the judgment in the circuit court. ( Id., dkt nos. 19, 28). The emergency motion was denied by the circuit court and the Court of Special Appeals, ( Id., dkt nos. 33, 35), and Plaintiffs' appeal was dismissed by the Court of Special Appeals on its own motion pursuant to Maryland Rule 8-602(a)(8) for failure to comply with the rules on style and formatting of court filings. (ECF No. 3-5, order of the Maryland Court of Special Appeals). On March 19, 2012, Plaintiffs filed a motion in the circuit court for an ex parte temporary restraining order and permanent injunction. ( Id., dkt. no. 43). This motion was denied by the circuit court. (ECF No. 9-9). The circuit court acknowledged Plaintiffs' continued allegations of fraud on the part of the substitute trustees in the form of produced and filed fraudulent documents upon the court, but found that the allegations did not rise to the level of extrinsic fraud necessary for a court to revise an enrolled order of ratification. ( Id. at 2). The circuit court explained that extrinsic fraud is when the fraud "actually prevents an adversarial trial' as opposed to intrinsic, when fraud is employed during the course of the hearing which provides the forum for the truth to appear, albeit, the truth was distorted by the complained of fraud.'" ( Id. ( quoting Jones v. Rosenberg, 178 Md.App. 54, 73 (2008))).

B. Old Fort Road Property

On December 4, 2006, Plaintiffs obtained a loan of $684, 000 from Fulton Bank.[5] The loan was secured by a deed of trust granting Fulton Bank a security interest in Plaintiffs' property located at Old Fort Road, in Fort Washington, Maryland, and the deed of trust was recorded among the land records of Prince George's County ("Old Fort Road"). (ECF No. 15, Ex. A). On February 18, 2010, DLJ Mortgage Capital, Inc., appointed Jacob Gessing and others from the BWW Law Group as substitute trustees. (ECF No. 7-2).[6] This appointment was recorded among the land records of Prince George's County. (ECF No. 1 ¶ 28). On March 26, 2010, Jacob Gessing, as substitute trustee, initiated foreclosure proceedings in the Circuit Court for Prince George's County, Maryland. (ECF No. 5-2, docket for case number CAE10-08656). On April 12, 2010, DLJ Mortgage Capital recorded an assignment of the deed of trust to Kondaur. (ECF No. 1 ¶ 30). On or about September 27th, 2010, Shapiro, by its agents, filed an affidavit of indebtedness in the foreclosure case. (ECF No. 1 ¶ 31). Kondaur bought back the property at a foreclosure sale. ( Id. at ¶ 32). The circuit court ratified the sale on February 2, 2011 (ECF No. 7-3); the auditor's report on March 29, 2011 (ECF No. 5-2, dkt no. 23); and awarded possession of Old Fort Road to Kondaur on June 15, 2011 ( Id., dkt. no. 29).

Plaintiffs subsequently appealed this ruling to the Court of Special Appeals and concomitantly filed an emergency motion to stay the judgment in the circuit court. ( Id., dkt nos. 30, 38). The emergency motion was denied by the circuit court and the Court of Special Appeals ( Id., dkt nos. 39, 41), and Plaintiffs' appeal was dismissed by the Court of Special Appeals on its own motion pursuant to Maryland Rule 8-602(a)(8) for failure to comply with the rules on style and formatting of court filings. ( Id., dkt. no. 46). On March 19, 2012, Plaintiffs filed a motion for an ex parte temporary restraining order and permanent injunction. ( Id., dkt. no. 47). This motion was denied by the circuit court with an opinion identical to the Thornville Drive opinion, finding that Plaintiffs' allegations of fraud did not rise to the level of extrinsic fraud necessary to revise an enrolled order of ratification. (ECF No. 5-5).

C. Bankruptcy Filing

On July 25, 2012, Plaintiff Jacqueline McGhee filed a Chapter 7 Voluntary Petition in the United States Bankruptcy Court for the District of Maryland. (ECF 5-4, docket for Bankruptcy Case No. 12-23657, dkt no. 1). Kondaur and JP Morgan filed motions for relief from the automatic stay on the Old Fort Road and Thornville Drive properties, respectively. ( Id., dkt nos. 16, 19). These motions were granted by the bankruptcy court. ( Id., dkt. no. 27). Jacqueline McGhee filed adversary proceedings in the bankruptcy court against JP Morgan and Kondaur in which she sought to quiet title to the two properties. McGhee alleged that JP Morgan and Kondaur "did not have standing to bring the foreclosure action[s] either because the Deed of Trust was not properly assigned to [JP Morgan/Kondaur] or the Deed of Trust was unsecured at the time the foreclosure action was filed, " and that JP Morgan and Kondaur "engaged in practices that can fairly be said to constitute intrinsic fraud in so far as [JP Morgan/Kondaur] made intentional misrepresentations in the foreclosure action in order to force a sale of the Property." (ECF No. 5-5, at 2-3; ECF 9-10, at 2-3). The bankruptcy court granted JP Morgan and Kondaur's motions to dismiss and dismissed the complaints with prejudice on October 30, 2012. (ECF No. 5-6; ECF No. 9-12).

On October 18, 2012, Plaintiffs filed a complaint in this court. (ECF No. 1). Plaintiffs contend that Defendants violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq.; the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq.; "wrongful foreclosure"; and seek an order quieting title. Defendants moved to dismiss the complaint. (ECF Nos. 3-5, 7, ...


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