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Ayres v. Ocwen Loan Servicing, LLC

United States District Court, D. Maryland, Northern Division

August 27, 2014

ANGELA AYRES, et al., Plaintiffs,
v.
OCWEN LOAN SERVICING, LLC, et al., Defendants.

MEMORANDUM OPINION

WILLIAM D. QUARLES, Jr., District Judge.

Angela Ayres and Stephan Ayres ("the Plaintiffs") pro se sued Ocwen Loan Servicing, LLC ("Ocwen") and others[1] ("the Defendants") for claims related to mortgage fraud. Pending are nine motions.[2] No hearing is necessary. See Local Rule 105.6. For the following reasons, the Defendants' motion to dismiss will be granted, and the Plaintiffs' complaint will be dismissed without prejudice. The Defendants' motion to dismiss the motion for injunctive relief will be granted. All other motions will be denied.

I. Background[3]

On March 18, 1991, the Plaintiffs bought a property at 6600 Halleck Street ("the Property") with a loan of $72, 660 from Market Street Mortgage secured by a Deed of Trust. See ECF No. 1 ¶ 13. The loan was assigned to Dominion Bankshares Mortgage and then First Union. Id. ¶ 14. In 1993, the Plaintiffs defaulted on their mortgage, and Stephan Ayres filed for bankruptcy. Id. ¶ 15. In June 1996, Stephan Ayres completed the bankruptcy plan, and the bankruptcy case was discharged. Id. ¶ 16. After the bankruptcy discharge, the Plaintiffs paid their mortgage and all the arrears through the bankruptcy. Id. ¶ 18. In May 1998, First Union returned a mortgage payment stating that the Plaintiffs owed $13, 972. Id. ¶ 17. The Plaintiffs were not in default. Id. ¶ 18. First Union proceeded with a foreclosure. Id. ¶ 20. In November 1998, the Plaintiffs' loan was accepted into the United States Department of Housing and Urban Development ("HUD") assignment program. Id.

In April 1999, the loan was transferred to Clayton National Inc. for servicing. ECF No. 1 ¶ 21. In November 2000, the loan was transferred to Litton for servicing. Id. On December 1, 2000, the loan was assigned from HUD to Salomon Brothers Realty Corp. Id. ¶ 23. In October 2001, Litton solicited Plaintiffs to participate in a Fresh Start Program which would have added $24, 532.42 of accrued interest to the Plaintiffs' loan. Id. ¶ 24. Litton "[f]alsely claim[ed] Plaintiffs would still be a participant in the HUD Assignment Program, when in fact HUD had ended it's [sic] assignment program" and HUD had sold the loan to Salomon Brothers. Id.

On several occasions, the Plaintiffs disputed charges and Litton's claims that there was a defaulted balance, arrearage and accrued interest. Id. ¶ 24. Litton refused to correct the account. Id. In 2007, Litton offered the Plaintiffs an unsolicited loan modification claiming $23, 395 in unpaid fees and increasing the principle amount owed to $85, 031 with an undisclosed balloon payment. Id. ¶ 25. Litton also offered to sell the Plaintiffs' home for a fee of $1500. Id.

In July 2009, the Plaintiffs defaulted on their mortgage. ECF No. 1 ¶ 26. Angela Ayres requested a modification under the Home Affordable Modification Program ("HAMP"). Id. ¶ 27. She was improperly denied the HAMP modification, "even though she [met] the eligibility criteria per HAMP guidelines." Id. Angela Ayres filed a complaint with her congressperson and retained an attorney. Id. ¶ 28. In July 2011, Litton offered a trial period plan. Id. In October 2011, Litton approved and offered an "in house modification, " rather than the requested HAMP. Id. ¶ 29. The Plaintiffs did not accept this modification because it added $33, 000 to the loan balance. Id. ¶ 30.

By January 2010, the Plaintiffs had paid all previously missed mortgage payments. ECF No. 1 ¶ 32. In November 2011, Litton transferred the servicing of the loan to Ocwen. Id. ¶ 33. A billing statement from Ocwen contained "the same inaccurate amounts as Litton." Id. ¶ 34. The Plaintiffs sent a letter requesting that Ocwen correct the account and conduct an audit. Id. Ocwen refused to correct the account. Id. ¶ 35. In January 2012, Angela Ayres requested a HAMP loan modification from Ocwen. Id. ¶ 36. Ocwen denied the request for HAMP modification and offered an "in house modification" using the same amounts as Litton. Id. ¶ 38. The Plaintiffs did not accept the modification "because it would have obligated the Plaintiffs to pay monies they did not owe." Id. In January 2012, the Plaintiffs filed a complaint with the Maryland Division of Financial Regulations. Id. ¶ 39. In response, Ocwen claimed that the account was 49 months delinquent and that it was past due for the December 1, 1996 forbearance payment. Id. However, the Plaintiffs were not under a forbearance agreement[4] and the loan had never been 49 months delinquent. Id.

The Plaintiffs' attorney sent several letters identifying misapplied payments and overcharges. ECF No. 1 ¶ 39. Ocwen did not correct the account. Id. In July 2012, the Plaintiffs sent Ocwen documentation that they had paid property taxes, and requesting that their escrow account be corrected to reflect this payment. Id. ¶ 40. However, Ocwen continued to escrow for property taxes that had been paid. Id. In January 2013, the Plaintiffs sent Ocwen a letter requesting a refund for the overcharges to their escrow account of over $4, 000. Id. ¶ 41. Ocwen refunded $2, 600, "falsely claiming there was a prior escrow deficit owed." Id. Ocwen repeatedly called the Plaintiffs' home after they had been notified that the Plaintiffs were represented by counsel. Id. ¶ 42. Ocwen also sent default letters even though the Plaintiffs were not in default. Id.

On June 6, 2013, the Plaintiffs pro se sued the Defendants for claims related to mortgage fraud. ECF No. 1. The Defendants moved to dismiss for insufficient service. ECF Nos. 6, 8, 17. On September 5, 2013, the Court granted the motions to dismiss and denied several other motions brought by the Plaintiffs. ECF No. 24. On September 17, 2013, the Plaintiffs filed an affidavit of service for the Defendants. ECF No. 27. On September 27, 2013, the Defendants moved to dismiss the complaint for failure to state a claim. ECF No. 28. On October 15, 2013, the Plaintiffs moved to strike the motion to dismiss. ECF No. 31. The Plaintiffs opposed this motion. ECF No. 32. On October 15, 2013, the Plaintiffs filed a cross motion for summary judgment and a motion for injunctive relief. ECF Nos. 33, 34. On October 28, 2013, the Defendants moved to strike the motion for injunctive relief. ECF No. 35. On November 1, 2013, the Defendants replied to the Plaintiffs' opposition to the motion to dismiss, and opposed the Plaintiffs' motion to strike and motion for summary judgment. ECF Nos. 36, 40, 41.

On November 4, 2013, the Plaintiffs moved to strike the Defendants' motion to strike. ECF No. 43. On November 18, 2013, the Plaintiffs replied to the oppositions to their pending motions. ECF Nos. 45, 46. On November 27, 2013, the Defendants moved to strike some of the Plaintiffs' filings.[5] ECF No. 48. On December 2, 2013, the Plaintiffs moved to strike some of the Defendants' filings.[6] ECF Nos. 50, 51.

II. Analysis

A. Legal Standard

Under Fed.R.Civ.P. 12(b)(6), an action may be dismissed for failure to state a claim upon which relief can be granted. Rule 12(b)(6) tests the legal sufficiency of a complaint, but 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).

The Court bears in mind that Rule 8(a)(2) requires only a "short and plain statement of the claim showing that the pleader is entitled to relief." Migdal v. Rowe Price-Fleming Int'l Inc., 248 F.3d 321, 325-26 (4th Cir. 2001). Although Rule 8's notice-pleading requirements are "not onerous, " the plaintiff must allege facts that support each element of the claim advanced. Bass v. E.I. Dupont de Nemours & Co., 324 F.3d 761, 764-65 (4th Cir. 2003). These facts must be sufficient to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

This requires that the plaintiff do more than "plead[] facts that are merely consistent with a defendant's liability'"; the facts pled must "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) ( quoting Twombly, 550 U.S. at 557). The complaint must not only allege but also "show" that the plaintiff is entitled to relief. Id. at 679 (internal quotation marks omitted). "Whe[n] the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not shown-that the pleader is entitled to relief." Id. (internal quotation marks and alteration omitted).

B. The Defendants' Motion to Dismiss

The Defendants seek to dismiss all the Plaintiffs' claims. See ECF No. 28-1 at 1. When construed liberally, the complaint asserts the following claims: (1) breach of contract; (2) breach of fiduciary duty; (3) breach of the covenant of good faith and fair dealing; (4) fraud; (5) negligence; (6) usury; (7) unjust enrichment; (8) willful misfeasance; (9) violation of the Truth-in-Lending Act ("TILA");[7] (10) violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"); (11) violation of the Fair Debt and Collection Practices Act ("FDCPA"); (12) violation of the Maryland Mortgage Fraud Presentation Act ("MFPA"); (13) violation of the Maryland Consumer Protection Act ("MCPA");[8] (14) rescission; and (15) emotional distress. See ECF No. 1 at 8-20; ECF No. 32 at 1.

1. Count I

In Count I of the complaint, the Plaintiffs include allegations of breach of contract, breach of fiduciary duty, and breach of the covenant of good faith and fair dealing. See ECF No. 1 at 8-9.

a. Breach of Contract

Although the complaint generally refers to "the Defendants", in their opposition the Plaintiffs appear to limit their breach of contract claim to Litton and Ocwen. See ECF No. 32 at 3. The Plaintiffs argue that Litton and Ocwen violated the terms of the Pooling and Servicing Agreement ("PSA") and the Deed of Trust. See ECF No. 23 at 3-4.

To survive a motion to dismiss, "a complaint for breach of contract must allege facts showing a contractual obligation owed by the defendant to the plaintiff and a breach of that obligation." See Swedish Civil Aviation Admin. v. Project Mgmt. Enter., Inc., 190 F.Supp.2d 785, 791 (D. Md. 2002) ( citing Cont'l Masonry Co., Inc. v. Verdel Constr. Co., Inc., 279 Md. 476, 480 (Md. 1977)).

Here, the Plaintiffs have not alleged that Litton and Ocwen owe them a contractual obligation. The Plaintiffs allege that Litton and Ocwen are loan servicers. See ECF No. 1 ¶¶ 6, 7. The Plaintiffs do not allege that Litton and Ocwen are signatories or parties to either the Deed of Trust or the PSA, which the Plaintiffs allege they breached. The Plaintiffs do not allege that the Deed of Trust or PSA was assigned to either mortgage servicer; instead, the complaint states that the Deed of Trust was assigned to Salomon Brothers Realty Corporation. See ECF No. 1 ¶ 23; ECF No. 1, Ex. 9. Documents attached to the complaint state that the "servicing rights" were transferred to Litton, and then to Ocwen. ...


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