United States District Court, D. Maryland
JAMES E. CLARKE, et al.
CALVERN M. DUNN, et al.
DEBORAH K. CHASANOW, District Judge.
Presently pending and ready for resolution in this foreclosure case are three motions to dismiss the counterclaim/third-party complaint filed by: Plaintiffs/Counter-Defendants James Clarke, Renee Dyson, and Shannon Menapace ("Substitute Trustees") (ECF No. 26); Third-Party Defendants Nationstar and Mortgage Electronic System ("MERS") (ECF No. 30); and Third-Party Defendant First Home Mortgage Corporation ("First Home") (ECF No. 38). The issues have been briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, First Home's motion to dismiss will be granted; the Substitute Trustees' motion to dismiss will be granted in part and denied in part; and Nationstar and MERS's motion to dismiss will be granted in part and denied in part.
On May 2, 2005, Defendants/Counter-Plaintiffs Carlvern M. Dunn and Paula N. Graham-Dunn ("the Dunns") executed a promissory note in favor of First Home in the amount of $468, 000.00 ("the Note") and a deed of trust ("DOT") on real property located at 11941 Saint Francis Way, Bowie, Maryland. The DOT was executed in favor of MERS "solely as nominee for Lender and Lender's successors and assigns, " meaning MERS was given authority to transfer the mortgage on behalf of First Home and any subsequent lenders. (ECF No. 2-1, at 3). First Home sold the Note to Lehman Brothers Bank, which then sold the Note to Lehman Brothers Holdings. According to later filings, the Note and DOT were purportedly sold/assigned to Associated Bank, N.A., and subsequent to these transfers, Nationstar (formerly Aurora Loan Services) began servicing the Dunns' loan.
On April 11, 2013, Nationstar executed a Deed of Appointment of Substitute Trustees, naming James E. Clarke, Renee Dyson, and Shannon Menapace as substitute trustees of the DOT. (ECF No. 2-3). On July 22, 2013, Substitute Trustees brought a foreclosure action against the Dunns in the Circuit Court for Prince George's County. Among the filings in the foreclosure docket was an Affidavit of Note Ownership (ECF No. 2-2, at 2), filed by the Substitute Trustees on July 12, 2013, certifying that "Associated Bank, N.A. is the owner of the debt instrument and has authorized Nationstar Mortgage, LLC to be the holder of the Note[.]" (ECF No. 18 ¶ 29; No. 18-10).
On August 12, 2013, the Dunns, proceeding pro se, removed the foreclosure action to this court pursuant to 28 U.S.C. § 1441, asserting diversity of citizenship jurisdiction under 28 U.S.C. § 1332. (ECF No. 1). The Substitute Trustees are citizens of Virginia, and the Dunns are citizens of Maryland.
On September 26, 2013, the Dunns filed a counterclaim against "Counter-Defendants" the Substitute Trustees, First Home, Nationstar, and MERS. (ECF No. 18). The counterclaim contains four causes of action. First, the Dunns request a declaratory judgment pursuant to 28 U.S.C. § 2202 as to all Counter-Defendants stating that none of them have any right or interest in the Note, the DOT, or the Bowie property that authorizes them to collect mortgage payments or enforce the terms of the Note or the DOT. Second, the Dunns assert a claim of unjust enrichment against Nationstar. Third, they make a claim alleging violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, against Nationstar and the Substitute Trustees. Fourth, they assert a claim for an accounting against First Home, Nationstar, and the Substitute Trustees.
Although Nationstar purported to be the Dunns' loan servicer as early as 2009, the Dunns contend that MERS never properly assigned, transferred, or granted the DOT to Nationstar. The Dunns' allegation is based on the fact that Nationstar informed them that it was servicing the loan on behalf of Associated Bank, the owner of the loan, but Associated Bank later disclaimed ownership. The Dunns further allege that Nationstar knew that the assignment of the loan was improper, and attempted to cover up this fact by having Ms. Stacy Sandoz, a purported Vice President of MERS, execute the alleged Corporate Assignment of Deed of Trust on or around January 12, 2012, in order to foreclose of the Dunns' mortgage.
On November 25, 2013, the Substitute Trustees moved to dismiss. (ECF No. 26). Nationstar and MERS filed a motion to dismiss on December 6, 2013. (ECF No. 30). First Home filed a motion to dismiss on December 23, 2013. (ECF No. 38). In accordance with Roseboro v. Garrison, 528 F.2d 309, 310 (4th Cir. 1975), the clerk of court mailed letters to the Dunns on the same day as each filing, notifying them that a dispositive motion had been filed and that they were entitled to file opposition material or risk entry of judgment against them. (ECF Nos. 27, 31, 41, and 42). The Dunns opposed each motion. (ECF Nos. 32, 36, and 43). Only First Home filed a reply. (ECF No. 44).
II. Standard of Review
The Substitute Trustees, Nationstar and MERS, and First Home, filed three separate motions to dismiss (ECF Nos. 26, 30, and 38). The purpose of a motion to dismiss under Rule 12(b)(6) is to test the sufficiency of the complaint. Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006). A complaint need only satisfy the standard of Rule 8(a), which requires a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). "Rule 8(a)(2) still requires a showing, ' rather than a blanket assertion, of entitlement to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 n.3 (2007). That showing must consist of more than "a formulaic recitation of the elements of a cause of action" or "naked assertion[s] devoid of further factual enhancement." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted).
At this stage, all well-pleaded allegations in a complaint must be considered as true, Albright v. Oliver, 510 U.S. 266, 268 (1994), and all factual allegations must be construed in the light most favorable to the plaintiff. See Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999) ( citing Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993)). In evaluating the complaint, unsupported legal allegations need not be accepted. Revene v. Charles Cnty. Comm'rs, 882 F.2d 870, 873 (4th Cir. 1989). Legal conclusions couched as factual allegations are insufficient, Iqbal, 556 U.S. at 678, as are conclusory factual allegations devoid of any reference to actual events. United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979).
Finally, while courts generally should hold pro se pleadings "to less stringent standards than formal pleadings drafted by lawyers, " they may nevertheless dismiss complaints that lack a cognizable legal theory or that fail to allege sufficient facts under a cognizable legal theory. Haines v. Kerner, 404 U.S. 519, 520 (1972); Turner v. Kight, 192 F.Supp.2d 391, 398 (D.Md. 2002), aff'd, 121 F.App'x. 9 (4th Cir. 2005).
A. Fair Debt Collection Practices Act
The Dunns allege that Nationstar and the Substitute Trustees violated the FDCPA, (ECF No. 18, at 14-16), which protects consumers from "abusive and deceptive debt collection practices by debt collectors." Akalwadi v. Risk Mgmt. Alts., Inc., 336 F.Supp.2d 492, 500 (D.Md. 2004). They contend that Nationstar is a debt collector under the FDCPA and has violated the FDCPA by using fraudulent representations and unlawful actions in its attempt to collect on the Dunns' debt obligation. The Dunns allege that the Substitute Trustees attempted to collect on their debt by foreclosing on their Property using false pretenses.
The FDCPA "forbids the use of any false, deceptive, or misleading representation or means in debt collection and provides a non-exhaustive list of prohibited conduct." United States v. Nat'l Fin. Servs., Inc., 98 F.3d 131, 135 (4th Cir. 1996). The Dunns allege that both Nationstar and the Substitute Trustees violated 15 U.S.C. § 1692e, which states that:
[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.... [T]he following ...