United States District Court, D. Maryland
PHILLIP WARD, et al. Plaintiffs,
BRANCH BANKING & TRUST CO. et al., Defendants.
ELLEN LIPTON HOLLANDER, District Judge.
Plaintiffs Phillip Ward and Deidre B. Ward, who are self-represented, filed suit against defendants Branch Banking & Trust Co. ("BB&T") and Fisher Law Group, PLLC ("Fisher"), in connection with a mortgage loan plaintiffs obtained on July 25, 2005, in the sum of $356, 000. The mortgage loan was used to finance plaintiffs' purchase of real property located at 9710 Dubarry Street, Glendale, Maryland 20769 (the "Property"). During most of the relevant time period, BB&T was the servicer of the mortgage loan. A dispute arose because of BB&T's alleged refusal to disclose, and plaintiffs' resultant inability to determine, the identity of the current owner of the mortgage loan. Over time, the dispute developed into one centered on plaintiffs' failure to make their loan payments, BB&T's alleged failure to comply with various mortgage-related laws, and the nature of BB&T's interest in the Property.
Plaintiffs, frustrated by their inability to uncover the owner of the Note, and afraid they were the victims of mortgage fraud, eventually stopped making payments on the Note. In April 2013, BB&T, which ostensibly acquired a security interest in the loan, directed its substitute trustees, who were represented by Fisher, to initiate foreclosure proceedings in the Circuit Court for Prince George's County, Maryland. See Fisher v. Ward, Case No. CAE13-09860 (the "Foreclosure Action"). Several of plaintiffs' claims in this case relate to the authenticity vel non of the documents presented by defendants in the Foreclosure Action.
On June 6, 2013, after the Foreclosure Action was initiated, plaintiffs filed the underlying suit against defendants. At the outset, BB&T filed a motion to dismiss for insufficient service of process. ECF 8. Judge Alexander Williams, to whom the case was initially assigned, granted that motion in part, while also granting plaintiffs an extension of time to file an Amended Complaint and to effectuate service of process. ECF 12. Plaintiffs filed an Amended Complaint ("Am. Comp., " ECF 14) on September 9, 2013, to which numerous exhibits were appended. In the Amended Complaint, plaintiffs alleged Wrongful Foreclosure and Fraud (Count I); violations of the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq. (Count II); violations of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (Count III); unjust enrichment (Count IV); and violation of the Maryland Uniform Commercial Code (Count V). In addition, they seek to enjoin defendants "from taking any further foreclosure action or asserting any further debt or economic interest" in the Property; the "awarding of Quiet Title to plaintiffs" with respect to the Property; as well as compensatory and punitive damages. See ECF 14 at 12-13.
Both defendants filed motions to dismiss the Amended Complaint. BB&T's Motion ("BB&T Motion) is at ECF 17, and is supported by a Memorandum of Law ("BB&T Memo, " ECF 17-1), and several exhibits. Fisher's motion, which includes its legal memorandum, ("Fisher Motion"), is at ECF 20, and is also supported by exhibits. Plaintiffs submitted a combined opposition to both motions ("Opp., " ECF 24), supported by exhibits. Thereafter, on December 13, 2013, the case was reassigned to me. BB&T subsequently filed a Reply (ECF 25).
In the meantime, on November 15, 2013, the Property was sold at public auction to Fannie Mae. See ECF 20 at 2. According to Fisher, the Foreclosure sale awaits ratification in State Court. Id.
No hearing is necessary to resolve the defense motions. See Local Rule 105.6. For the reasons set forth below, the Fisher Motion will be granted and the BB&T Motion will be granted, in part, and denied, in part. Because plaintiffs have already amended their Complaint once, and because further amendment would likely be futile, I will not grant plaintiffs leave to further amend their Amended Complaint. However, if plaintiffs believe that amendment would not be futile, they may file a motion for leave to amend, explaining the nature of the proposed amendments and why the amendments would not be futile. See Anand v. Ocwen Loan Servicing, LLC, ___ F.3d ___, No. 13-1900, slip op. at 10 (4th Cir. June 6, 2014) (noting that leave to amend may "be denied on the ground of futility when the proposed amendment is clearly insufficient or frivolous on its face.'") (quoting Johnson v. Oroweat Foods Co., 785 F.2d 503, 510 (4th Cir. 1986) (alteration in Anand )).
The briefing does not paint a clear picture of the loan's history. But, it appears that on or about July 25, 2005, plaintiffs borrowed $356, 000 from Southern Trust Mortgage, LLC ("Southern Trust") to finance their purchase of the Property. Am. Comp. ¶ 12. In connection with the mortgage loan, plaintiffs executed a promissory note on July 25, 2005 (the "Note"), in the amount of $356, 000, in favor of Southern Trust. See id.; Note, Ex. A to BB&T Mot., ECF 17-2. On the same date, plaintiffs also executed a first-priority Deed of Trust for the same amount, encumbering the Property and securing payment of the Note. Am. Comp. ¶ 12; see Deed of Trust, Ex. B to BB&T Mot., ECF 17-3. The Deed of Trust is recorded in the land records of Prince George's County.
Soon thereafter, BB&T contacted plaintiffs to notify them that BB&T had become the servicer of the loan. Am. Comp. ¶ 13. From that point forward, plaintiffs made payments on the loan directly to BB&T. Id.
At some point, Southern Trust assigned the Note and the Deed of Trust to another entity, but the "when" and the "to whom" of that transaction remain unclear. Plaintiffs allege that they made several inquiries to BB&T regarding the identity of the new owner of the Note, but were repeatedly rebuffed.
Plaintiffs later learned "from well publicized news reports and common knowledge" that "many homeowners had been wrongfully scammed out of their homes by dishonest financial institutions and the self-serving lawyers who worked for them." Id. ¶ 14. Accordingly, plaintiffs contacted BB&T and "asked them to simply answer a few questions regarding the actual owner of [plaintiffs'] debt and the validity of [plaintiffs'] loan." Id. However, "instead of receiving simple answers regarding the actual financier of their debt[, ] Plaintiffs received stonewalling and no answers." Id. According to plaintiffs, "[s]imple and reasonable questions asked were met with major resistance, " and BB&T refused to disclose the owner of plaintiffs' debt. Id. ¶ 16. As time went on, BB&T's "actions become more bizarre" and plaintiffs "started to rethink this blind trust they had for [BB&T] and started to doubt [BB&T's] veracity." Id. ¶ 17.
According to plaintiffs, as a result of "the financial crisis of 2008, " which "was engendered in large part due to the securitization of mortgage notes, " such notes were transformed into "investment vehicles" that were ultimately unenforceable. Id. ¶ 19. They assert that, as a result of the government "bail out" of "big banks, " many "toxic loans were paid off or extinguished as a matter of law." Id. ¶ 10. Yet, "these financial institutions unscrupulously required payment again from the same homeowner who had been initially victimized by "the inappropriate loan practices" of these "financial institutions." Id.
Plaintiffs explain that, "after receiving no independent proof regarding who was the actual owner of their debt obligation, " they stopped making their monthly mortgage payments and "demanded proof that the debt they owed - which they have never disputed - was in fact owed to the mysterious financier that Defendant BB&T represented as its servicer." Id. ¶ 21. Plaintiffs sent "multiple letters and made multiple calls to the Defendants demanding that they provide written documentation explaining who actually owned their loan and allegedly had a legal right to payments from them." Id. ¶ 22. However, BB&T did not provide "any independent legal proof of who allegedly owns the note in question, " id., and the information BB&T did provide "tended to conflict" with other information BB&T had provided or with information BB&T provided to the Court in connection with the first motion to dismiss. Id. ¶ 23.
On April 12, 2013, BB&T's substitute trustees, represented by Fisher, instituted foreclosure proceedings in the Circuit Court for Prince George's County against plaintiffs. As noted, the Foreclosure Action is styled Fisher v. Ward, Case No. CAE13-09860. According to the circuit court's online docket, the Foreclosure Action remains open as the foreclosure sale awaits ratification.
A few months later, on June 6, 2013, plaintiffs filed suit this against BB&T and Fisher. They explain that they were "tired of the run around and misdirection" and were "convinced that they had been victims of fraud and misrepresentations concerning who actually had the right to enforce a debt obligation against them." Am. Comp. ¶ 26; see ECF 2.
The record contains several documents that plaintiffs allege are inconsistent with each other or otherwise suspect. For example, BB&T sent a letter to plaintiffs on July 30, 2012, informing them that BB&T was the servicer for the Federal National Mortgage Association ("Fannie Mae"), which was the owner of the loan. Am. Compl. ¶ 23; see ECF 14-2, BB&T Letter, Ex. B to Am. Comp. However, plaintiffs maintain that BB&T later "submit[ted] documentation to this Court stating that the note was indorsed over to Defendant BB&T from Southern Trust when according to their own previous letter to the Plaintiffs the [Note] should have been indorsed over to FANNIE MAE, the true owner...." Am. Comp. ¶ 23; see Note, ECF 17-2 at 4. Moreover, plaintiffs question the authenticity of the indorsement of the Note to BB&T, pointing out that the stamp which purports to effectuate the indorsement appears on a blank page that contains no reference to the actual Note. Am. Comp. ¶ 25; see Note, ECF 17-2 at 4.
Plaintiffs also point out potential inconsistencies in a document purporting to be an Assignment of the Deed of Trust from Southern Trust to BB&T on March 28, 2012. See Assignment of Deed of Trust, Ex. D to Am. Comp., ECF 14-4. According to the document, Mortgage Electronic Registration Systems, Inc. ("MERS"), as nominee for Southern Trust, assigned the Note and the Deed of Trust to BB&T. Id. An individual named Chilton Morris signed the document on behalf of MERS. Id. However, according to plaintiffs, Morris "never worked for MERS and has always worked in the collections department for Defendant BB&T." Am. Comp. ¶ 24. In support of this allegation, plaintiffs attach a print-out of Morris's LinkedIn profile, on which Morris lists BB&T, not MERS, as his employer. See ECF 14-4 at 4-5.
The Wards also take issue with a letter they received from Southern Trust on September 10, 2012. In the letter, Southern Trust states that it sold the original loan more than 25 months prior, meaning that the sale occurred during or before 2010. See Ex. F to Am. Comp., ECF 14-6. However, BB&T stated in its first motion to dismiss that on March 28, 2012, "Southern sold and assigned all rights, title, and interests in Plaintiffs' mortgage loan to BB&T, " and the documentation BB&T submitted in support of that claim also indicates that the assignment occurred on March 28, 2012. See ECF 8-1 at 4; Assignment of Deed of Trust, ECF 14-4.
Additional facts will be included in the Discussion.
Standard of Review
A motion to dismiss pursuant to Rule 12(b)(6) constitutes an assertion by a defendant that, even if the facts alleged by the plaintiff are true, the complaint fails as a matter of law "to state a claim upon which relief can be granted." Whether a complaint states a claim for relief is assessed by reference to the pleading requirements of Fed.R.Civ.P. 8(a)(2). It provides that a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." The purpose of the rule is to provide the defendant with "fair notice" of the claim and the "grounds" for entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 n.3 (2007); see Ashcroft v. Iqbal, 556 U.S. 662 (2009).
A plaintiff need not include "detailed factual allegations" in order to satisfy Rule 8(a)(2). Twombly, 550 U.S. at 555. But, the rule demands more than bald accusations or mere speculation. Id.; see Painter's Mill Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir. 2013). To satisfy the minimal requirements of Rule 8(a)(2), the complaint must set forth "enough factual matter (taken as true) to suggest" a cognizable cause of action, "even if... [the] actual proof of those facts is improbable and... recovery is very remote and unlikely." Twombly, 550 U.S. at 556. In other words, the complaint must contain facts sufficient to "state a claim to relief that is plausible on its face." Id. at 570; see Iqbal, 556 U.S. at 684; Simmons v. United Mortg. and Loan Inv., LLC, 634 F.3d 754, 768 (4th Cir. 2011).
In reviewing such a motion, a court "must accept as true all of the factual allegations contained in the complaint, '" and must "draw all reasonable inferences [from those facts] in favor of the plaintiff.'" E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011) (citations omitted); see Kendall v. Balcerzak, 650 F.3d 515, 522 (4th Cir.), cert. denied, ___ U.S. ___ , 132 S.Ct. 402 (2011); Monroe v. City of Charlottesville, 579 F.3d 380, 385-86 (4th Cir. 2009), cert. denied, 559 U.S. 991 (2010). However, a complaint that provides no more than "labels and conclusions, " or "a formulaic recitation of the elements of a cause of action, " is insufficient. Twombly, 550 U.S. at 555. Moreover, the court is not required to accept legal conclusions drawn from the facts. See Papasan v. Allain, 478 U.S. 265, 286 (1986); Monroe, 579 F.3d at 385-86.
A Rule 12(b)(6) motion will be granted if the "well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct." Iqbal, 556 U.S. at 679 (citation omitted). "A court decides whether [the pleading] standard is met by separating the legal conclusions from the factual allegations, assuming the truth of only the factual allegations, and then determining whether those allegations allow the court to reasonably infer" that the plaintiff is entitled to the legal remedy he or she seeks. A Society Without A Name v. Virginia, 655 F.3d 342, 346 (4th Cir. 2011), cert. denied, ___ U.S. ___ , 132 S.Ct. 1960 (2012). "Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.'" Hartmann v. Calif. Dept. of Corr. & Rehab., 707 F.3d 1114, 1122 (9th Cir. 2013) (citation omitted); accord Commonwealth Prop. Advocates, LLC v. Mortg. Elec. Reg. Sys., Inc., 680 F.3d 1194, 1201-02 (10th Cir. 2011) ("When reviewing a 12(b)(6) ...