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McCray v. Federal Home Loan Mortgage Corporation

United States District Court, Fourth Circuit

January 24, 2014

RENEE L. McCRAY, Plaintiff,
v.
FEDERAL HOME LOAN MORTGAGE CORPORATION, et al., Defendants.

MEMORANDUM OPINION

GEORGE L. RUSSELL, III, District Judge.

Pending before the Court are Defendants Wells Fargo Bank, N.A. ("Wells Fargo") and Federal Home Loan Mortgage Corporation's ("Freddie Mac") Motion to Dismiss Plaintiff Renee L. McCray's Amended Complaint or in the Alternative Motion for Summary Judgment (ECF No. 8), and Defendants Samuel I. White, P.C. ("SIWPC") and individually named Substitute Trustees'[1] (jointly, the "SIWPC Defendants") Motion to Dismiss the Amended Complaint (ECF No. 13). Also pending are McCray's Motion to Strike the SIWPC Defendants' Exhibit 4 and Request for Sanctions (ECF No. 26), Motion for Leave to File Amended Complaint (ECF No. 35), and Motions for leave to file surreplies to the Defendants' motions for summary judgment (ECF Nos. 37, 38).

McCray brought this action pro se alleging the Defendants attempted to foreclose on her property without proving they have a legal right to do so in violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq. (2012) (Count I), the Maryland Fair Debt Collection Act ("MFDCA"), Md. Code Ann., Com. Law §§ 14-201 et seq. (West 2014) (Count II), the Maryland Consumer Protection Act ("MCPA"), Md. Code Ann., Com. Law §§ 13-101 et seq. (West 2014) (Count III), the Truth in Lending Act ("TILA"), 15 U.S.C. § 1641(g) (2012) (Count IV), and the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601 et seq. (2012) (Count V). It is important to note that McCray does not directly challenge the foreclosure proceeding itself, currently pending in the Circuit Court for Baltimore City, Maryland, on any grounds. She challenges only the Defendants' legal right to foreclose without having established ownership of the Note.

Having reviewed the pleadings and supporting documents, the Court finds no hearing necessary. See Local Rule 105.6 (D.Md. 2011). For the reasons below, the Court will rule as follows: (1) McCray's Motion for Leave to File Amended Complaint will be granted, (2) McCray's Motion to Strike and Request for Sanctions will be denied, and (3) McCray's Motions for leave to file surreplies will be denied. Further, (1) the SIWPC Defendants' Motion to Dismiss will be granted, and (2) Wells Fargo and Freddie Mac's Motion to Dismiss will be granted in part and denied in part.

I. BACKGROUND[2]

A. The Promissory Note and Deed of Trust

McCray executed a Promissory Note and Deed of Trust with American Home Mortgage Corporation ("AHMC") on October 7, 2005, to refinance her home in Baltimore, Maryland. The Note provided that AHMC could transfer the Note, and that anyone who obtained the Note by transfer was entitled to receive payments under the Note as the Note Holder. (Compl. Ex. A, at 1, ECF No. 1-2). A copy of the Note filed in the foreclosure action also evidences endorsements by AHMC and Wells Fargo, making the Note payable to Wells Fargo as the Note Holder. (Defs.' Mem. Supp. Mot. to Dismiss Am. Compl. or Alt. Mot. for Summ. J. ["Defs.' Mem. I"] Ex. 1, at 3, ECF No. 8-2).

The Deed of Trust recognizes AHMC as the original lender but also identifies the Mortgage Electronic Registration Systems, Inc. ("MERS") "as nominee for Lender and Lender's successors and assigns." (Compl. Ex. B, at 3, ECF No. 1-3).

B. McCray's Attempts to Seek Validation and Proof of Ownership of the Note

On June 14, 2011, McCray sent Wells Fargo a qualified written request ("QWR") disputing the amount owed in a monthly billing statement. In the QWR, McCray specifically requested (1) a complete payment history of her loan, (2) a breakdown of the alleged arrears, (3) proof of any and all assignments, sales, and transfers of the Note, (4) the payment dates, purpose of payment, and recipients of all escrow items charged to her account, (5) a breakdown of the current escrow charges with explanations for any increases, and (6) copies of any escrow statements, and notices of shortages, deficiencies, or surpluses sent to her throughout the life of her loan. (Defs.' Mem. I Ex. 3, ECF No. 8-4). She also acknowledged Wells Fargo as the servicer of her loan. (Id.)

McCray alleges Wells Fargo failed to respond timely, and that she sent Wells Fargo numerous follow-up requests to respond to her six inquiries point by point to no avail. She also alleges that she solicited assistance or information from ten attorneys, law firms, government agencies, and private organizations to get a more satisfactory response from Wells Fargo. Consequently, on September 14, 2011, McCray sent Wells Fargo a "Certificate of Non-Response/Notice of Default" indicating it had failed to respond to her QWR within sixty days.

Wells Fargo finally responded to McCray's QWR on October 10, 2011, providing her a summary of her loan payment history, an escrow analysis, and copies of the Note and Deed of Trust. (Defs.' Mem. I Ex. 5, at 1, ECF No. 8-6). Wells Fargo also responded to McCray's "Certificate of Non-Response/Notice of Default" two weeks later on October 25, 2011. In its response, Wells Fargo informed McCray that all inquiries should be addressed to it as servicer of the loan, identified Freddie Mac as the investor of the loan, and again provided McCray copies of the Note and Deed of Trust. (Defs.' Mem. I Ex. 6, ECF No. 8-7).

On June 26, 2012, Wells Fargo entered a Corporate Assignment of Deed of Trust in the Circuit Court for Baltimore City, Maryland, conveying from MERS to Wells Fargo the "beneficial interest under the Deed of Trust." (Compl. Ex. D, at 1, ECF No. 1-5). Later, on August 20, 2012, Wells Fargo sent McCray a notice that she had defaulted on her mortgage loan. In response, McCray requested validation of the alleged debt. Again, McCray alleges she never heard from Wells Fargo about her requested validation.

On October 4, 2012, SIWPC sent McCray a Notice of Intent to Foreclose. Two days later, McCray requested validation of the debt from SIWPC and alleges, once more, that she never received a response. SIWPC initiated the Foreclosure Action on February 23, 2013, filing an Order to Docket and four affidavits. The first affidavit certified that Freddie Mac owns the loan evidenced by the Note, and that it authorized Wells Fargo as the Note Holder for the purposes of conducting the foreclosure action. (Defs.' Mem. I Ex. 8, ECF No. 8-9). The second affidavit certified that Wells Fargo possesses the Note and is responsible for pursuing any delinquencies. (Defs.' Mem. I Ex. 9, ECF No. 8-10). The third affidavit confirmed that McCray defaulted on her loan on May 2, 2012, by failing to make payments, and the final affidavit certified that the copies of the Deed of Trust and Substitution of Trustee filed with the Order to Docket were true and accurate reproductions of their originals. (Defs.' Mem. I Ex. 10, ECF No. 8-11; Defs.' Mem. I Ex. 11, ECF No. 8-12).

On February 25, 2013, in response to finding a Notice of Foreclosure Action posted to her front door, McCray again requested validation of the debt from SIWPC, the Substitute Trustees, and Freddie Mac's chief financial officer but still received no response.

McCray then attempted to receive validation for the debt three more times. On March 8, 2013, three days after sending Wells Fargo another QWR, McCray filed a Notice of Dispute and a Request for Validation with the Circuit Court for Baltimore City. Afterward, she sent another letter to Wells Fargo, requesting it answer additional questions about her debt and its validation on April 8, 2013. McCray alleges that Wells Fargo never validated the debt and failed to address her questions point by point. Nevertheless, McCray received another Notice of Foreclosure Action on April 20, 2013.

C. Procedural Background

McCray filed her initial five-count, pro se Complaint in this Court on May 23, 2013, against Freddie Mac, Wells Fargo, SIWPC, the Substitute Trustees, and twenty unknown individuals or entities that may claim an interest in her property, listed in the Complaint as "John Does 1-20." (Compl. ¶ 6(j)). On June 13, 2013, McCray filed an Amended Complaint bolstering her allegations and reducing the award requested to $62, 068.39. Wells Fargo and Freddie Mac filed their Motion to Dismiss or in the Alternative Motion for Summary Judgment on July 1, 2013. The SIWPC Defendants filed their Motion to Dismiss the same day.

McCray filed a series of motions over the following two months. On August 20, 2013, McCray filed a Motion to Strike Exhibit 4 of the SIWPC Defendants' memorandum in support of their Motion to Dismiss, as well as a request for sanctions against them for filing a false document. McCray then filed a Motion for Leave to file a Second Amended Complaint on September 3, 2013. Finally, on September 9, 2013, McCray filed two Motions for Leave to File Sur-Reply, one for the SIWPC Defendants' Motion to Dismiss, and the other for Wells Fargo and Freddie Mac's Motion to Dismiss. The Court will address each of these motions below.

II. DISCUSSION

A. McCray's Motion for Leave to File Amended Complaint

1. Leave to File Second Amended Complaint

The Court will grant McCray's Motion for Leave to file her Second Amended Complaint. The decision to grant McCray's Motion, however, will not moot the Defendants' pending Motions to Dismiss. Under Federal Rule of Civil Procedure 15(a), "[t]he court should freely give leave [to amend a complaint] when justice so requires." Fed.R.Civ.P. 15(a)(2). Although the federal rules favor granting leave to amend, the decision lies within the sound discretion of the district court. Medigen of Ky., Inc. v. Pub. Serv. Comm'n of W.Va. , 985 F.2d 164, 167-68 (4th Cir. 1993). Leave to amend is properly denied when amendment would prejudice the opposing party, the moving party has exhibited bad faith, or amendment would be futile. Edell & Assocs., P.C. v. Law Offices of Peter G. Angelos , 264 F.3d 424, 446 (4th Cir. 2001).

The most significant change McCray makes in her proposed Second Amended Complaint is withdrawing Counts II and III of her Amended Complaint. She also adds Wells Fargo Home Mortgage, Inc. d/b/a America's Servicing Company ("Wells Fargo Home Mortgage") as a defendant and augments her allegations with additional facts discovered "upon continued investigation." (Pl.'s Mot. Leave to File Am. Compl. at 2, ECF No. 35). Because the Defendants consent to McCray withdrawing Counts II and III of her Amended Complaint, the Court will allow her to do so.[3]

2. The Effect on the Defendants' Pending Motions

The Defendants remain neutral as to whether McCray's other proposed changes merit amendment. They argue only that their pending Motions to Dismiss should remain unaffected if the Court grants leave because Wells Fargo Home Mortgage is not a new party and McCray's additional allegations are restatements of the allegations already contained in the Amended Complaint. The Court agrees.

When a plaintiff files an amended complaint, it generally moots any pending motions to dismiss because the original complaint is superseded. See Pac. Bell Tel. Co. v. Linkline Commc'ns, Inc. , 555 U.S. 438, 456 n.4 (2009) ("Normally, an amended complaint supersedes the original complaint."). In certain instances, however:

Defendants should not be required to file a new motion to dismiss simply because an amended pleading was introduced while their motion was pending. If some of the defects raised in the original motion remain in the new pleading, the court simply may consider the motion as being addressed to the ...

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