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Heaney v. Quicken Loans, Inc.

United States District Court, D. Maryland

September 16, 2014



J. FREDERICK MOTZ, District Judge.

Plaintiffs Alan and Lurlene Heaney ("the Heaneys") seek relief from defendants Quicken Loans, Inc. ("Quicken"), Bank of America, N.A. ("BANA"), Mortgage Electronic Registration Systems, Inc. ("MERS"), and Safeguard Properties ("Safeguard") for alleged lack of standing, violations of the Truth in Lending Act ("TILA"), Home Ownership and Equity Protection Act ("HOEPA"), Real Estate Settlement Procedures Act ("RESPA), rescission, negligence, and breach of contract. In response to defendants' motions to dismiss, the Heaneys now move for leave to amend their complaint. 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 motion to amend is denied and BANA/MERS' and Quicken's motions to dismiss are granted.[1]


The parties do not dispute the core facts of the case and all reasonable inferences are drawn in the Heaneys' favor.

On September 10, 2008, the Heaneys executed a promissory note ("Note") in favor of Quicken Loans in the amount of $298, 890.00. The loan related to the Heaneys' real property at 1536 East Clement Street, Baltimore, Maryland 21230. In order to secure the loan against the property, the Heaneys also executed a Deed of Trust in favor of MERS, which was designated as Quicken's nominee. The Deed of Trust permits the lender to initiate foreclosure proceedings on the property in the event of the borrower's default. On April 13, 2013, MERS assigned its interest in the Deed of Trust to BANA, which became the servicer of the Heaneys' loan.

Unable to meet their payment obligations, the Heaneys allegedly requested a loan modification in June or July of 2012; this request was denied. Although the Heaneys then sought to sell their property, they allege that pervasive mold and water damage in the property's basement derailed prospective buyers. According to the Heaneys, the mold developed in the spring of 2013 after BANA hired Safeguard to winterize the house. Unable to avail themselves of either a loan modification or sale, the Heaneys subsequently defaulted on their loan payments. As a result, BANA notified the Heaneys of its intent to foreclose on the property on August 2, 2013. Despite this warning, there is no current foreclosure action pending with respect to the Heaneys' property.

In the meantime, in October 2013, the Heaneys submitted a qualified written request ("QWR") to BANA, which, the Heaneys allege, requested information regarding the identity of the current owner or holder of the Note. In a response letter dated October 16, 2013, BANA observed that, although certain aspects of the Heaneys' correspondence constituted a valid QWR, the bank declined to address the requests that did not trigger an obligation under RESPA.

Because they allege that MERS' assignment of the Deed of Trust to BANA, unaccompanied by any transference of the Note, created an imperfect securitization and imperfect chain of title rendering the Note and Deed of Trust invalid, the Heaneys filed a complaint in the Circuit Court of Baltimore City on February 5, 2014, ostensibly seeking to derail a future foreclosure action involving their property. In their form complaint, the Heaneys asserted eleven claims against the various defendants, seeking both compensatory and punitive damages for: lack of standing to foreclose, fraud in the concealment, fraud in the inducement, intentional infliction of emotional distress, slander of title, quiet title, declaratory relief, violation of TILA and HOEPA, violation of RESPA, rescission and negligence. On April 1, 2014, BANA and MERS removed the action to this court. BANA, MERS, and Quicken then filed respective motions to dismiss.[2] In response, the Heaneys moved to amend their complaint on June 24, 2014, seeking to (1) eliminate several counts from the original complaint, and (2) introduce a claim for breach of contract against BANA and Safeguard. BANA, MERS and Quicken oppose the motion.


Under Federal Rule of Civil Procedure 15(a)(2), leave to amend "shall be freely given when justice so requires." Foman v. Davis, 371 U.S. 178, 182 (1962) (quoting Fed. Rule. Civ. Proc. 15(a)(2)). As a result, the court should deny leave to amend only "where it would be prejudicial, there has been bad faith, or the amendment would be futile." Nourison Rug Corp. v. Parvizian, 535 F.3d 295, 298 (4th Cir. 2008). A review for futility, however, "is not equivalent to an evaluation of the underlying merits of the case." Next Generation Grp. v. Sylvan Learning Ctrs., LLC., CCB-11-0986, 2012 WL 37397, at *3 (D.Md. Jan. 5, 2012). Instead, an amendment is futile when it "is clearly insufficient or frivolous on its face, or if the amended claim would still fail to survive a motion to dismiss pursuant to Fed. R.Civ.P. 12(b)(6)." Johnson v. Oroweat Foods, Co., 785 F.2d 503, 510 (4th Cir. 1986); El-Amin v. Blom, No. CCB-11-3424, 2012 WL 2604213, at *11 (D.Md. July 5, 2012) (internal citations and quotation marks omitted).

"[T]he purpose of Rule 12(b)(6) is to test the sufficiency of a complaint and not to 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) (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). "Even 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).

To survive a motion to dismiss, the factual allegations of a complaint "must be enough to raise a right to relief above the speculative level, ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations and alterations omitted). Thus, the plaintiff's obligation is to set forth sufficiently the "grounds of his entitlement to relief, " offering more than "labels and conclusions." Id. (internal quotation marks and alterations omitted). "[W]here 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 show[n]'-that the pleader is entitled to relief.'" Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (quoting Fed.R.Civ.P. 8(a)(2)).


In their proposed amended complaint, the Heaneys allege (1) lack of standing to foreclose as to BANA, MERS and Quicken; (2) violations of TILA, HOEPA and RESPA as to Quicken; (3) a claim for rescission; and (4) negligence and breach of contract as to BANA and Safeguard. BANA, MERS and Quicken oppose the plaintiffs' motion for leave to amend on the ground that the Heaneys' prospective amendments are futile. Among other things, the defendants argue that (1) the Heaneys' "lack of standing to foreclose" claim is misplaced because the defendants are not seeking affirmative relief; (2) the securitization of the Note did not separate it from the Deed of Trust or result in an imperfect chain of title; (3) the Heaneys have not alleged the requisite facts to state a claim under TILA, ...

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