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Sparrow v. Bank of America, N.A.

United States District Court, D. Maryland

September 4, 2014

GAIL B. SPARROW, et al.,
BANK OF AMERICA, N.A., et al.,


J. FREDERICK MOTZ, District Judge.

Plaintiffs Gail and Vincent Sparrow ("the Sparrows") seek relief from defendants Bank of America, N.A. ("BANA"), Nationstar Mortgage, LLC ("Nationstar") and the Fisher Law Group, PLLC ("Fisher") for alleged violations of the Real Estate Settlement Procedures Act ("RESPA), Racketeer Influenced and Corrupt Organizations Act ("RICO"), Section 1981 of the Civil Rights Act, breach of contract, intentional infliction of emotional distress, and fraud. The Sparrows also seek injunctive relief and an accounting. The defendants now move to dismiss. The parties have fully briefed the issues and no oral argument is necessary. See Local Rule 105.6. For the reasons set forth below, the motions will be granted.


The defendants do not dispute the Sparrows' basic account of what transpired and all reasonable inferences are drawn in the Sparrows' favor.

In December of 2003, the Sparrows purchased the property at 328 Talbott Avenue in Laurel, Maryland, which they refinanced in 2005 with a loan totaling $312, 800.00. Countrywide Home Loans, Inc. ("Countrywide") originated and refinanced the Sparrows' loan before Countrywide was acquired by BANA. Starting in 2012, however, the Sparrows allege that BANA and Nationstar-BANA's successor-misapplied mortgage payments, failed to respond to the Sparrows' communications and, through Fisher, wrongfully initiated foreclosure proceedings on the property. Three of the Sparrows' letters-the first two involving BANA, the last involving Nationstar-have particular relevance for their claims, since the Sparrows allege that these correspondances constitute valid "qualified written requests" under RESPA.

Specifically, in a letter to BANA on August 13, 2012-identified as a "qualified written request under § 6 of the "Real Estate Settlement Procedures Act"-the Sparrows requested that BANA: (1) respond to two previous letters and acknowledge the "receipt of executed loan documents"; (2) correct the Sparrows' account in some unspecified way (or provide a reason for not doing so); and (3) apply payments pursuant to the instructions in a previous letter. (ECF No. 22-1 at 2-3). According to the Sparrows, although the bank responded in November 2012, its response did not adequately explain the Bank's "position" with respect to the Sparrows' previous inquiries, or provide the Sparrows with a "full explanation of [their] duties and rights under the loan." (ECF No. 22-2 at 2). In a subsequent letter on February 20, 2013, the Sparrows expressed these concerns, before additionally contesting the amount held in escrow for Prince George County real estate taxes, requesting a reduction in the principal of the loan, and indicating that a $4800 check should be applied to the Sparrows' mortgage payments through September. Id. at 2-3.

After BANA notified the Sparrows of its intent to transfer the servicing of their loan to Nationstar, the Sparrows renewed their correspondance on April 20, 2013 in order to dispute BANA's assessment of (1) the date of the Sparrows' next required payment and (2) the bank's application of the Sparrows' previous payments. (ECF No. 22-3 at 2-3). As with their August 2012 letter, the Sparrows identified their April 20 correspondance as a QWR. Id. BANA did not respond, but transferred the loan to Nationstar on May 1, 2013. On July 16, Nationstar informed the Sparrows that they were in default. (ECF No. 22-4). On July 22, 2013, the Sparrows contested this statement of default, reiterated their concerns regarding their mortgage loan's principal and affiliated taxes, and enclosed two checks totaling six thousand dollars to cover the payments due for July and August of 2013. (ECF No. 22-5 at 2-4).

Nationstar responded on August 8, 2013. Acknowledging receipt of the Sparrow's July 22 letter and enclosed checks, it confirmed that the account was current and that no amount was due until the September payment. (ECF No. 22-6 at 2). The letter also noted that, contrary to the Sparrows' previous assertions, (1) Nationstar had not reported to the credit bureaus any "negative indicators in connection to default, " and (2) the Sparrows did not have a past due amount of $24, 395.38. Id. Although the letter rebutted the Sparrows' charges regarding the proper amount of the Price George County real estate tax, Nationstar requested further information from the Sparrows in order to supplement its ongoing investigation into the account. Id. On August 31, 2013, Nationstar informed the Sparrows of the amount remaining on the loan.

Meanwhile, the Sparrows allege that on August 31, 2013, they mailed a $6000 check to Nationstar to be applied to their monthly mortgage payments through November 2013. Although Nationstar informed the Sparrows that it had not received the check, the Sparrows did not re-submit the payment due for September 2013. As a result, on October 18, Nationstar informed the Sparrows that their loan was in default and could be cured until December 2, 2013. The Sparrows allege that they contacted Nationstar through telephone and email to dispute the status of their payments and that Nationstar agreed to investigate those claims. Around December 4, 2013, however, Nationstar referred the Sparrows' loan for foreclosure. Although the Sparrows contend that they mailed Nationstar a $6000 check to cure the default at that point, they allege that Nationstar, through the Fisher Law Group, filed a foreclosure action anyway.

Because they maintain that BANA, Nationstar and the Fisher Law Group-alternately and in combination-improperly responded to the Sparrows' communications regarding the status of their mortage, misapplied payments, and wrongfully initiated a foreclosure action against them, the Sparrows filed suit in this court on February 10, 2014, seeking injunctive relief and an accounting in addition to damages under RESPA, RICO, § 1981 of the Civil Rights Act, and the common law for breach of contract, intentional infliction of emotion distress, and fraud. Plaintiffs filed an amended complaint on April 16, 2014.[1] Defendant Fisher moved to dismiss on April 4, 2014; defendants BANA and Nationstar then followed suit, and moved to dismiss on April 30, 2014.

In order to support their opposition to defendants' motions and their third request for judicial notice, the Sparrows additionally moved for permission to file electronic media media on May 30, 2014.


The purpose of Rule 12(b)(6) is to test the sufficiency of the plaintiffs' complaint. Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006) (internal quotation marks and alterations omitted) (quoting Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999)). When ruling on such a motion, the court must "accept the well-pled allegations of the complaint as true" and "construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff." Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). At the same time, "[e]ven though the requirements for pleading a proper complaint are substantially aimed at assuring that the defendant be given adequate notice of the nature of a claim being made against him, they also provide criteria for defining issues for trial and for early disposition of inappropriate complaints." Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009).

As a result, "[t]he mere recital of elements of a cause of action, supported only by conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6)." Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Instead, to withstand a motion to dismiss, the factual allegations of a complaint "must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations and alterations omitted). In setting forth the "grounds of [their] entitlement to relief, " plaintiffs therefore must offer more than "labels and conclusions" or "naked assertion[s] devoid of further factual enhancement." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks and alterations omitted) (quoting Twombly, 550 U.S. at 555, 557)). It is not enough that the well-pled facts create "the mere possibility of misconduct"-a complaint must instead "state a claim to relief that is plausible on its face, " so as to permit the court to draw "the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678, 679 (internal quotation marks and alterations omitted). "Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. (internal quotations and alterations omitted). In those instances, "the complaint has alleged-but [] has not shown-that the pleader is entitled to relief, " and dismissal under 12(b)(6) is appropriate. Id. at 679 (internal quotations and alternations omitted) (citing Fed. Rule. Civ. Proc. 8(a)(2)).


I. The Sparrow's 12 U.S.C. § 2605 RESPA claim against BANA and Nationstar

Because they argue that BANA and Nationstar failed to timely respond to their three qualified written requests ("QWR") and neglected to sufficiently investigate or address the substantive issues raised by those QWRs, the Sparrows allege that BANA and Nationstar violated 12 U.S.C. § 2605 ("RESPA"). According to the defendants, however, the Sparrows have failed to state a RESPA claim for three reasons: (1) the Sparrows' letters are not QWRs; (2) Nationstar's response to the Sparrows' July 2013 letter complied with its obligations under RESPA; and (3) the Sparrows have failed to allege actual damages. With respect to defendants' latter two arguments, I agree.

With RESPA, Congress created a consumer protection statute that requires lenders who either transfer or assume the servicing of a federally related mortgage loan to acknowledge and respond to a borrower's requests for certain types of information. 12 U.S.C. § 2605; see generally, e.g., DeVary v. Countrywide Home Loans, Inc., 701 F.Supp.2d 1096 (D. Minn. 2010). Specifically, although servicers need not respond to general inquiries about a loan-or address a borrower's objections to the loan's terms-RESPA does obligate a servicer to respond to "qualified written requests" regarding the loan's "servicing." See id. A QWR is a written correspondence that provides: (1) sufficient information for the servicer to identify the name and account of the borrower, and (2) either a statement of the reasons that the borrower believes the account is in error or (3) sufficient detail regarding the other information sought by the borrower with respect to the loan's servicing. 12 U.S.C. § 2605(e)(1)(B). "Servicing, " meanwhile, involves: (1) ...

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