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Cannon v. Wells Fargo Bank, N.A.

United States District Court, D. Maryland, Southern Division

February 20, 2014

ANDREA JACKSON CANNON, Plaintiff,
v.
WELLS FARGO BANK, N.A., et al., Defendant.

MEMORANDUM OPINION

PAUL W. GRIMM, District Judge.

This Memorandum and Order addresses:

1) Defendants Wells Fargo Bank, N.A. ("WFB") and Wells Fargo Insurance, Inc.'s ("WFI" and, collectively with WFB, "Wells Fargo" or "WF") Motion to Dismiss, ECF No. 12, and supporting Memorandum ("WF Dismiss Mem."), ECF No. 12-1; Plaintiff Andrea Jackson Cannon's Opposition ("Pl.'s WF Opp'n"), ECF No. 22; and Wells Fargo's Reply, ECF No. 26;
2) Defendant QBE Insurance Corp.'s ("QBE") Motion to Dismiss, ECF No. 18, and supporting Memorandum ("QBE Mem."), ECF No. 18-1; Plaintiff's Opposition ("Pl.'s QBE Opp'n"), ECF No. 20; and QBE's Reply, ECF No. 25;
3) Plaintiff's Motion for Conversion, ECF No. 27, and supporting Memorandum ("Pl.'s Conv. Mem."), ECF No. 27-1; Wells Fargo's Opposition ("WF Conv. Opp'n"), ECF No. 29; and Plaintiff's Reply ("Pl.'s WF Conv. Reply"), ECF No. 30; and QBE's Opposition ("QBE Conv. Opp'n"), ECF No. 31, and Plaintiff's Reply ("Pl.'s QBE Conv. Reply").

I find that a hearing is unnecessary in this case. See Local Rule 105.6. For the reasons stated below, Wells Fargo's Motion to Dismiss is GRANTED, QBE's Motion to Dismiss is GRANTED, and Plaintiff's Motion to Convert is DENIED.

I. BACKGROUND

For purposes of considering a motion to dismiss, this Court accepts the well-pleaded facts that Plaintiff has alleged in her complaint as true. See Aziz v. Alcolac, 658 F.3d 388, 390 (4th Cir. 2011). Here, because Plaintiff's lengthy complaint is densely populated by improper argument, conclusory assertions of counsel, and despairingly few factual allegations, I have relied heavily on Plaintiff's exhibits and the parties' motion papers in order to decode Plaintiff's allegations. Although many of the material facts alleged in the Amended Complaint are contradicted by Plaintiff's own exhibits, ECF No. 2, "in the event of conflict between the bare allegations of the complaint and any exhibit attached pursuant to Rule 10(c), ... the exhibit prevails." Fayetteville Investors v. Commercial Builders, Inc., 936 F.2d 1462, 1465 (4th Cir. 1991).[1]

The core of Plaintiff's complaint seems to revolve around the allegedly improper placement of policies commonly known as either "Lender Placed Insurance" or "Force-Placed Insurance" ("LPI") policies on property owned by Plaintiff and subject to a mortgage in favor of Defendant Wells Fargo Bank, N.A. ("WFB"). Am. Compl. ¶ 7, ECF No. 2.[2]

Plaintiff is the owner of a property located at 12400 Old Fort Washington Road, Fort Washington, Maryland 20744 (the "Property"). Deed of Trust, Am. Compl. Ex. 1, ECF No. 2-2. But see Compl. ¶ 16 (identifying Plaintiff's property as located at "1200 Fort Washington, and Road Fort Washington, Maryland, 20744").[3] The Amended Complaint alleges that Plaintiff's interest in the property is subject to $178, 859.60 in debt originally owed to Wachovia Bank, N.A. ("Wachovia"), secured by a Deed of Trust executed by Plaintiff and Wachovia and dated May 8, 2007. Deed of Trust 1. Although the complaint incorrectly asserts that "Plaintiff and WFB executed [the] Deed of Trust, " Compl. ¶ 17, WFB has explained - and Plaintiff does not dispute - that it is the successor to Wachovia. WFB Dismiss Mem. 1.

Section five of the Deed of Trust requires Plaintiff to maintain a certain level of insurance coverage on the Property as security for the loan. Deed of Trust § 5, ¶ 1. It also provides that if Plaintiff should fail to maintain adequate coverage, the mortgagee may obtain a lender-placed policy, at Plaintiff's expense, in order to protect its interest. Specifically, the Deed of Trust states, in relevant part:

If Trustor fails to maintain any of the coverages described above, Lender may obtain insurance coverage, at Lender's option and Borrower's expense. Lender is under no obligation to purchase any particular type or amount of coverage. Therefore, such coverage shall cover Lender, but might or might not protect Trustor, Trustor's equity in the Property, or the contents of the Property, against any risk, hazard or liability and might provide greater or lesser coverage than was previously in effect. Borrower acknowledges that the cost of the insurance coverage so obtained might significantly exceed the cost of insurance that Trustor could have obtained. Any amounts disbursed by Lender under this Section 5 shall become additional debt of Borrower secured by this Security Instrument. These amounts shall bear interest at the rate applicable to the Debt Instrument from time to time, from the date of disbursement and shall be payable, with such interest, upon notice from Lender to Borrower requesting payment.

Id. § 5, ¶ 2. The Deed of Trust goes on to state that the lender has the right to disapprove of Plaintiff's insurance policies and that, "[i]f Lender requires, Trustor shall promptly give to Lender copies of all policies, renewal certificates, receipts of paid premiums and renewal notices." Id. § 5, ¶ 3.

In 2010, Plaintiff cancelled one of her existing insurance policies (the "Traveler's Policy"), which resulted in the issuance of a Notice of Cancellation. Notice of Cancellation, Am. Compl. Ex. 14, ECF No. 2-15; see also Am. Compl. ¶ 18. However, Plaintiff maintains that she remained insured by other policies at all times relevant to this case. Am. Compl. ¶ 18. The Notice of Cancellation appears to have been sent to Wachovia as well as to Plaintiff, Notice of Cancellation 1, but the Amended Complaint does not appear to contain any allegations with respect to communications between Plaintiff and Wells Fargo or Wachovia after the Notice of Cancellation was sent. See Am. Compl. That is to say, it is not clear that Plaintiff ever clarified that she remained insured notwithstanding the cancellation of the Traveler's Policy.

Plaintiff alleges that Wells Fargo placed LPI policies on the Property through Defendant QBE even though Plaintiff had adequate insurance coverage. Compl. ¶ 18. According to the complaint, the following LPI policies were placed on the property:

• A QBE 90-Day Binder bearing the notification date May 20, 2010, covering a term from May 5, 2010 to May 5, 2011, and providing $834, 500 in coverage on the Property for a premium of $7, 844.30, Am. Compl. Ex. 5, ECF No. 2-6;
• An Additional Named Insured Certificate bearing the notification date August 3, 2010, covering a term from May 5, 2010 to May 5, 2011, and providing $834, 500 in coverage on the Property for a premium of $7, 844.30, Am. Compl. Ex. 6, ECF No. 2-7;
• An Additional Named Insured Certificate bearing the notification date May 17, 2011, covering a term from May 5, 2011 to May 5, 2012, and providing $834, 500 in coverage on the Property for a premium of $8, 011.20, Am. Compl. Ex. 7, ECF No. 2-8; and
• An Additional Named Insured Certificate (the "2012 Certificate") bearing the notification date July 19, 2012, covering a term from May 5, 2012 to May 5, 2013, and providing $704, 000 in coverage on the Property for a premium of $6, 758.40, Am. Compl. Ex. 9, ECF No. 2-10.

According to Plaintiff, at least the 2012 Certificate should not have been issued because "Wells Fargo... had personal knowledge that Plaintiff maintained coverage on the property." Am. Compl. ¶ 40.b. Although Plaintiff attaches a document that she characterizes as "Proof of Insurance, " 2011 Great Am. Cover Page, Am. Compl. Ex. 11, ECF No. 2-12, that document appears to document insurance terminating on April 25, 2012, before coverage under the 2012 Certificate commenced. Plaintiff also has attached a copy of a mortgage statement with a handwritten note saying, "I have hazard insurance, and have always had with my insurance. Please remove and return funds with any interest or penalties I paid. See enclosed information." July 2012 Mortgage Statement, Am. Compl. Ex. 8, ECF No. 2-9. Although it can be assumed from context that this note was sent to Wells Fargo, neither the exhibit nor the Amended Complaint contains any suggestion as to what the "enclosed information" was or any evidence that Plaintiff ever tendered a relevant policy to Wells Fargo. But see Letter from Lynn R. Thurman to Wells Fargo Bank (July 2, 2013), Pl.'s WF Opp'n Ex. 1-A, ECF No. 22-5 (asserting in 2013 that Plaintiff had maintained adequate insurance coverage during the period in question).

On February 7, 2012, Plaintiff filed a complaint in this Court against WFB (" Cannon I "). Compl., Cannon v. Wells Fargo Bank, No. RWT-12-377 (D. Md. Feb. 7, 2012), ECF No. 1. The original complaint alleged (1) "BREACH OF CONTRACT; DUTY OF CARE"; (2) "VIOLATION OF MARYLAND UNFAIR OR DECEPTIVE TRADE PRACTICE ACT"; (3) "FRAUDULENT CONCEALMENT AND FRAUDULENT MISREPRESENTATION"; (4) breach of fiduciary duty; (5) unjust enrichment; (6) conversion; and (7) "COMMON LAW NEGLIGENCE; ALTERNATIVELY; NEGLIGENT MISREPRESENTATION. Id. On April 23, 2012, Plaintiff filed a motion for leave to amend her complaint, seeking to add QBE as a defendant and to add a claim for "Malicious breach of contract; UNDER THE THEORY OF COMMON LAW FRAUD"; multiple fraud counts against QBE; and a claim for "FRAUDULENT CONSEALMENT [ sic ]." See Am. Compl. (the " Cannon I Compl."), Pl.'s Mot. for Leave of Court to File an Am. Compl. Ex. 1, Cannon v. Wells Fargo Bank, No. RWT-12-377 (D. Md. Apr. 23, 2012), ECF No. 16-1.

Judge Titus held a hearing on Wells Fargo's motion to dismiss in open court on June 8, 2012. Cannon I Hr'g Tr., Cannon v. Wells Fargo Bank, N.A., No. RWT-12-377 (D. Md. June 8, 2012), WF Dismiss Mem. Ex. B, ECF No. 12-3. At that hearing, Wells Fargo's counsel (who remains their counsel in this case), represented that Wells Fargo had sent several notices to Plaintiff requesting that she send proof of insurance and advising her that, if she did not provide satisfactory proof of insurance, an LPI policy would be placed on the Property, and that Plaintiff did not respond. Id. at 3:10-4:21. Plaintiff never responded, and LPI policies were obtained. Id. In January 2012, when Plaintiff belatedly provided notice that "there had not been a lapse in insurance, " Wells Fargo notified her that the LPI policies would be retroactively cancelled and the posting of premiums to her account would be reversed. Id. at 4:22-5:8. According to Wells Fargo, the LPI policies were cancelled about a month before Plaintiff ever filed her complaint in Cannon I. Id. at 5:9-10. Proof that those policies were cancelled has been attached to Plaintiff's Amended Complaint. See 2010 Policy Cancellation Notice, Am. Compl. Ex. 12, ECF No. 2-13; 2011 Policy Cancellation Notice Cover Page, Am. Compl. Ex. 13, ECF No. 2-14 (omitting exhibit but describing similar document to 2010 Policy Cancellation Notice).

Nevertheless, in responding to Wells Fargo's counsel's argument during the hearing, Plaintiff's counsel seemed unclear on a theory of damages or even whether he believed that he could in good faith dispute Wells Fargo's representations. The following colloquy is illustrative of Plaintiff's position at that hearing:

THE COURT: Well, my simple question is this. Counsel for the defense as an officer of the Court has represented to me that whatever charges were assessed against [Plaintiff's] mortgage account with respect to lender placed insurance have been reversed. And all I want to know is, do you dispute that the lender, the lender has reversed those charges and they no longer appear on her account? That's all I want to know.
MR. SPIKES: I don't know what appears on her account.
Yes, I do dispute that, Judge. I'm saying to the Court that I need discovery in order to say to the Court with some specificity -
THE COURT: Well, you need to have something more than speculation to bring a lawsuit. I mean, you're in possession of your own client's mortgage account. You can tell whether it's been credited back or not.
MR. SPIKES: No, I can't, Your Honor.
THE COURT: I mean, I don't know whether we're here with serious business or not. I mean, if your client has suffered no loss, then that's a fact that I need to take into account in deciding what to do with this case.
MR. SPIKES: Well, she has suffered a loss.
THE COURT: What loss has she suffered?
MR. SPIKES: And she just may have -
Well, Judge, let's assume that they charged her account, and let's assume she made payments on that money, on the money that they charged her. And then let's assume that they reversed it. That's damages. She paid.
THE COURT: How is that damages if they reversed it?
MR. SPIKES: If she actually paid - if someone take your credit card and charge something on your card, and when you come to understand that this has been unlawfully charged, they re-credit, they credit you, ...

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