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Chalk v. Lender Process Services, Inc.

United States District Court, Fourth Circuit

December 31, 2013

TRACEY L. CHALK On Behalf of a Class of Similar Persons


CATHERINE C. BLAKE, District Judge.

Counter Plaintiff Tracey L. Chalk ("Ms. Chalk") initiated this action against Counter Defendant Lender Processing Services, Inc. ("LPS"), alleging violations of federal and state debt collection statutes. Specifically, Ms. Chalk alleges that LPS threatened foreclosure actions against her and others without a license to act as a collection agency in Maryland. Ms. Chalk alleges violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and the Maryland Mortgage Fraud Protection Act ("MMFPA"), Md. Code Ann., Real Prop. § 7-401 et seq. She seeks certification of a class action based on these alleged violations, and seeks compensatory and statutory damages, injunctive relief, declaratory relief, and attorney's fees. Now pending are LPS's motion to strike, [ECF No. 11], and its motion to dismiss the complaint for failure to state a claim upon which relief can be granted, [ECF No. 15].

This court has jurisdiction over the federal claims under 28 U.S.C. § 1331 and has supplemental jurisdiction over the state law claims under 28 U.S.C. § 1367. The issues in this case have been fully briefed and no hearing is necessary. See Local Rule 105.6 (D. Md. 2011). For the following reasons, LPS's motion to dismiss will be granted, and LPS's motion to strike will be denied as moot.


Taken in the light most favorable to the plaintiff, the facts of this case are as follows. Ms. Chalk and her then husband, Donald Chalk, ("Mr. Chalk") purchased a home in Anne Arundel County, Maryland "nearly 15 years ago." Counter-compl. ¶¶ 40, 41. On or about May 18, 2005, Mr. Chalk entered into a loan with National City Mortgage, part of National City Bank of Indiana, and Ms. Chalk endorsed the Deed of Trust as security for the May 18, 2005 loan.[1] Id. at ¶ 41-42. In February and March 2009, Mr. and Ms. Chalk entered into a loan modification with National City Mortgage. Id. at ¶ 43. Later, at an unspecified time, Mr. Chalk ceased all support for Ms. Chalk, and she was unable to afford the monthly payments. Id. On or about March 31, 2010, Ms. Chalk received a Notice of Intent to Foreclose ("NOITF") that identified PNC Mortgage ("PNC") as a secured party and servicer of the loan.[2] Id. at ¶ 44. Ms. Chalk alleges that the NOITF was "deficient" and "misleading" because it did not identify all secured parties on the loan, including Freddie Mac, owner of the subject loan. Id. at ¶¶ 45, 48. Shapiro & Burson commenced foreclosure proceedings on Ms. Chalk's home on or about May 20, 2010 in the Circuit Court for Anne Arundel County, Maryland, but moved to dismiss the case less than nine months later. Id.

In April 2011 another law firm, Rosenberg & Associates, received a referral from PNC to begin foreclosure activity on Ms. Chalk's property. Mark D. Meyer Aff. ¶ 10. In an October 2011 phone call, PNC informed Ms. Chalk that it had scheduled a foreclosure sale on her property for November 2011. Counter-compl. ¶ 50. Over the course of ten months in 2011 and 2012, Ms. Chalk received three separate NOITFs from Rosenberg & Associates, none of which identified Freddie Mac, whom Ms. Chalk contends was statutorily required to be listed as a secured party on the notice. Id. ¶¶ 49, 51, 53. At some point, Rosenberg & Associates was instructed to put the foreclosure on hold. Meyer Aff. ¶ 12. However, "on or about June 13, 2012, Rosenberg & Associates was instructed by LPS, a service provider for PNC, to commence with a foreclosure." Id. Rosenberg & Associates subsequently sent Mr. and Mrs. Chalk another NOITF on or about June 25, 2012. [ECF No. 17, Exh. 1, at 19]. It listed PNC Bank as a secured party and PNC Financial Services Group as the loan servicer, and provided a contact number. Id. at 22.

On January 8, 2013, Plaintiffs Diane Rosenberg, et al., ("the Rosenberg plaintiffs") initiated foreclosure proceedings on Ms. Chalk's property in the Circuit Court for Anne Arundel County. Counter-compl. ¶ 54. Included in the filing were two affidavits: an affidavit of note ownership identifying the Federal Home Loan Mortgage Corporation ("Freddie Mac") as the owner of the May 18, 2005 note, [ECF No. 17, Exh. 1, at 45], and another affidavit attesting that the June 25, 2012 NOITF was accurate, id. at 68-69. On March 15, 2013, the Rosenberg plaintiffs moved for voluntary dismissal of the foreclosure action so that they could send Ms. Chalk a new NOITF and thereby eliminate her complaint that the NOITFs she received were defective. [ECF No. 17, Exh. 17].

Before that motion for voluntary dismissal was ruled on, Ms. Chalk filed this class action counter-complaint, on behalf of herself and all others similarly situated, against LPS, alleging that LPS illegally acts as a debt collection agency in the state of Maryland without license to do so.[3] [ECF No. 17, Exh. 14]. On April 16, 2013, Judge Paul A. Hackner granted the Rosenberg motion for voluntary dismissal. [ECF No. 17, Exh. 21]. Ms. Chalk's putative class action was removed to the United States District Court for the District of Maryland on May 31, 2013. [ECF No. 1]. The counter-complaint includes four counts. Count One seeks declaratory relief, an injunction to enjoin LPS from continuing to operate without a license in Maryland, and that LPS be ordered to disgorge all amounts it obtained while allegedly acting as a collection agency in Maryland. Counter-compl. ¶¶ 75-78. Count Two alleges violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. Counter-compl. ¶¶ 79-84. Count Three alleges violations of the Maryland Mortgage Fraud Protection Act, Md. Code Ann., Real Prop. § 7-401 et seq. Counter-compl. ¶ ¶ 85-94. Count Four alleges that LPS benefited in unjust enrichment as a result of its illegal collection actions. Id. ¶¶ 95-99. Ms. Chalk seeks total damages in excess of $10, 000 for herself and $10 million for the class, as well as treble damages, injunctive relief, attorney's fees, and litigation costs.


I. Preliminary Procedural Issue

Before discussing the merits of LPS's motions, it is necessary to address Ms. Chalk's preliminary argument that the motion to dismiss is procedurally barred. In general, Rule 12(g) restricts a party from making further motions under Rule 12 where a defense or objection could have been made in an earlier motion, but was omitted. Fed.R.Civ.P. 12(g)(2). LPS filed a motion to strike pursuant to Fed. R. Civ. P 12(f) on June 7, 2013, alleging that a number of paragraphs in Ms. Chalk's counter-complaint were "redundant, immaterial, impertinent, or scandalous." [ECF No. 11-12]. On June 21, 2013, LPS filed a motion to dismiss pursuant to Fed. R. Civ. P 12(b)(6). [ECF 15].

Rule 12(g) was designed to avoid delays caused by successive pretrial motions 5C Wright & Miller, Federal Practice and Procedure § 1384, at 208 (3d ed. 2004); see also Ennenga v. Starns, 677 F.3d 766, 773 (7th Cir. 2012) ("The policy behind Rule 12(g) is to prevent piecemeal litigation in which a defendant moves to dismiss on one ground, loses, then files a second motion on another ground.") (citing Pilgrim Badge & Label Corp. v. Barrios, 857 F.2d 1, 3 (1st Cir.1988))). No such delay was incurred here. LPS filed its motion to dismiss fourteen days after the motion to strike, before the first motion was ruled on. Moreover, Ms. Chalk was not prejudiced by the timing of the motions. Rule 15(a)(1)(B) allowed her twenty-one days after service of the Rule 12(f) motion to strike to amend her complaint as a matter of course. Fed.R.Civ.P. 15(a)(1)(B). She chose not to amend her complaint even after the motion to dismiss was submitted, instead filing an opposition to LPS's motion to strike. Furthermore, the Rule 12(b)(6) defense of failure to state a claim for relief is one of the enumerated defenses protected against waiver under Rule 12(g). Fed. R. Civ.P. 12(h)(2). A number of courts have taken a permissive approach to Rule 12(g) and allowed those enumerated defenses to be raised at other times, which comports with the underlying purpose of Rule 12(h)(2) - to preserve defenses. Wright & Miller, § 1392. Because LPS's timing of the motion to dismiss neither caused a delay, nor induced Ms. Chalk to waive the right to amend her complaint, I consider both motions below.[4]

II. Motion to Dismiss

LPS contends that Ms. Chalk's complaint should be dismissed for failure to state a claim under Fed.R.Civ.P. 12(b)(6). A Rule 12(b)(6) motion tests the sufficiency of a complaint and does not "resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006) (quoting Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999)). When ruling on such a motion, the court must "accept the well-pled allegations of the complaint as true" and "construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff." Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997) (citing Little v. Federal Bureau of Investigation, 1 F.3d 255, 256 (4th Cir.1993)). The court may consider documents attached to the complaint, as well as those attached to the motion to dismiss, so long as they are "integral to and explicitly relied on in the complaint ...

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