United States District Court, D. Maryland, Northern Division
WILLIAM D. QUARLES, Jr., District Judge.
Jorge Cabeza and Rosa V. Cabeza ("the Plaintiffs") sued Richey Law & Associates d/b/a Richey Real Estate Law Firm and Mia Richey a/k/a Michele Susan Rheintgen ("the Defendants") for violations of the Maryland Credit Services Business Act ("MCSBA") and the Maryland Consumer Protection Act ("MCPA"). Pending are the Plaintiffs' motion for default, the Defendants' motion to dismiss for failure to state a claim or, in the alternative, summary judgment, the Plaintiffs' motion for partial summary judgment, and the Defendants' motion to dismiss for lack of subject matter jurisdiction. No hearing is necessary. See Local Rule 105.6 (D. Md. 2011). For the following reasons, the Plaintiffs' motion for entry of default will be denied, the Defendants' motion to dismiss for lack of subject matter jurisdiction will be denied, the Defendants' motion for summary judgment will be denied, and the Plaintiffs' motion for partial summary judgment will be granted in part and denied in part.
The Plaintiffs have a mortgage on their property located at 11834 White Pine Drive, Hagerstown, Maryland. ECF No. 1 ¶¶ 3, 20. The current servicer for the loan is Wells Fargo Bank, NA. Id. ¶ 20. On July 1, 2012, the Plaintiffs defaulted on the loan. Id. ¶ 20.
Richey is an attorney admitted in California and president of the Richey Real Estate Law Firm. Id. ¶ 4-5. Richey Real Estate Law Firm "is an unincorporated name utilized by Richey and Richey Law Associates to do business with homeowners like the Plaintiffs seeking assistance to modify their mortgage loans which are in default." Id. ¶ 5. The Defendants are not licensed in Maryland. Id. In July 2012, the Richey Law Firm contacted the Plaintiffs by mail "stating that they could offer loan modification assistance and had Spanish speaking representatives to help borrowers like the [Plaintiffs]." On July 18, 2012, Sofia Solis, an employee of the Richey Law Firm, contacted the Plaintiffs offering them assistance in seeking a mortgage modification with the Plaintiffs' mortgage servicer. Id. ¶ 22. The Plaintiffs accepted the offer of assistance. Id.
Solis provided the Plaintiffs with a disclosure statement. Id. ¶ 24. The statement also requested three payments from the Plaintiffs totaling $2, 300. See id. The Plaintiffs also signed forms prepared by the Resource Legal Group which required the $2, 300 be paid before Richey Law Firm provided any services. Id. ¶ 25. Relying on "the representations and promises" of the Defendants, the Plaintiffs made payments to the Defendants on July 23, August 12, and September 10, 2012. Id. ¶ 27. There was no fully signed and executed contract between the Plaintiffs and the Defendants, and the Defendants "[did] not have any surety or other insurance." ECF No. 11-1 at 5.
Between August and September, 2012, Solis contacted Wells Fargo nine times. ECF No. 1 ¶ 28. Solis told Wells Fargo that the Plaintiffs should only be considered for a modification under the Home Affordable Modification Program ("HAMP"). Wells Fargo was concerned that the Plaintiffs did not meet HAMP's hardship criteria. See id. at ¶¶ 31-33. The Defendants "failed to identify the [Plaintiffs'] authentic hardship to Wells Fargo" and never informed the Plaintiffs that there were any concerns regarding their qualified hardship. See id. at ¶¶ 31-33.
On September 20, 2012, Solis told the Plaintiffs that they should wait six months and then reapply for a modification. Id. ¶ 29. Solis told the Plaintiffs "that there was nothing she could do to stop multiple collection calls from Wells Fargo...." Id. On September 28, 2013, Solis made the Defendants' last contact with Wells Fargo. See id. at ¶¶ 34.
In January 2013, the Plaintiffs were contacted by "Alex, " an employee of the Defendants who would be the Plaintiffs' new representative. Id. ¶ 30. On January 28 and March 1, 2013, Alex requested information from the Plaintiffs so that he could continue the process of getting them a loan modification. See id. The Plaintiffs provided the information. Id. Alex never contacted Wells Fargo while representing the Plaintiffs. Id. ¶ 30.
On April 9, 2013, Wells Fargo began a foreclosure action against the Plaintiffs. Id. ¶ 36. Waiting for the Defendants to obtain a modification and the stress of foreclosure caused the Plaintiffs "a significant amount of emotional distress." ECF No. 19-1 at 4 (affidavit of Rosa V. Cabeza). Ms. Cabeza suffered from "frustration, sleeping problems, headaches and numbness, [a] twitching eye, and other physical [symptoms]." Id. Mr. Cabeza experienced "anger, fear... frustration, sleeping problems, and other physical [symptoms]." ECF No. 19-2 at 2-3 (affidavit of Jorge Cabeza).
"Shortly after the Foreclosure Action, the [Plaintiffs], having grown frustrated with the lack of communications from [the Defendants]" retained the services of Maryland Housing Counselor, Donna Rose. ECF No. 1 ¶ 37. On April 25, 2013, Rose contacted Wells Fargo about the Plaintiffs' loss mitigation options. Id. Wells Fargo provided the Plaintiffs with a non-HAMP modification. Id. ¶ 39. Because of the delay in obtaining a modification, the Plaintiffs incurred $1, 750.00 in foreclosure costs and fees added to their mortgage account. See ECF No. 19-1 at 3.
On June 10, 2013, Richey called the Plaintiffs and told them "that she would be taking over the purported services formerly provided by  Solis at  Richey's direction." ECF No. 1 ¶ 35. The Plaintiffs informed Richey that they had already obtained a modification. Id. On December 4, 2013, Richey sent a letter to the Plaintiffs' lawyer so that he could "understand the facts before proceeding further with the lawsuit." ECF No. 11-8 at 2. In the letter, Richey admitted that "[her] firm  assist[ed] [the Plaintiffs] with a loan modification, " the firm accepted fees from the Plaintiffs, Solis and Alex were paralegals with the firm,  and the Defendants were in the business of offering assistance with loan modifications. ECF No. 11-8 at 2-3.
On November 21, 2013, the Plaintiffs sued the Defendants for violations of the MCSBA and MCPA. ECF No. 1. On November 30, 2013, Richey was served. ECF No. 5. On December 3, 2013, Richey Law & Associates was served through the State of Maryland Department of Assessments and Taxation. ECF No. 8. On December 23, 2013, Richey attempted to file a motion to dismiss or, in the alternative, summary judgment. ECF No. 6. The Court returned the motion to Richey because it did not comply with Local Rule 102. Id. Richey filed the same motion on January 6, 2014, and it was returned to her again. ECF No. 7. On January 10, 2014, the Plaintiffs moved for entry of default. ECF No. 9. On January 17, 2014, Richey's motion was entered on the docket without the signature of an attorney admitted here because she represented that she would be proceeding pro se. See ECF No. 10 at 1. On January 30, 2014, the Plaintiffs opposed the motion and made a cross motion for summary judgment. ECF No. 11.
On January 31, 2014, Seann P. Malloy, Esquire entered an appearance for all Defendants,  opposed the Plaintiffs' motion for entry of default,  and filed a motion to dismiss for lack of subject matter jurisdiction. On February 18, 2014, the Defendants responded to the Plaintiffs' cross motion for summary judgment,  and the Plaintiffs opposed the Defendants' motion to dismiss for lack of subject matter jurisdiction. On March 3, 2014, the Plaintiffs filed their reply for their motion for summary judgment. ECF No. 20. On March 7, 2014, the Defendants filed a reply for their motion to dismiss for lack of subject matter jurisdiction. ECF No. 21.
A. Legal Standards
1. Subject Matter Jurisdiction
Federal district courts have "only the jurisdiction authorized them by the United States Constitution and by federal statute." See United States ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 347 (4th Cir.2009) ( citing Bowles v. Russell, 551 U.S. 205, 212 (2007)). Generally, our subject matter jurisdiction in civil suits is limited to those in which: (1) there is complete diversity of citizenship between the parties; and/or (2) a federal question has been raised. See 28 U.S.C. §§ 1331 (federal question) & 1332 (diversity); see also Rayner v. Smirl, 873 F.2d 60, 63 (4th Cir.1989) (in the absence of diversity jurisdiction, a federal district court may only exercise subject matter jurisdiction if it has been presented with a properly plead federal question).
The plaintiff bears the burden of proving subject matter jurisdiction. Piney Run Pres. Ass'n v. Cnty. Comm'rs of Carroll Cnty., 523 F.3d 453, 459 (4th Cir. 2008). A motion under Federal Rule of Civil Procedure 12(b)(1) should be granted "only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law." Richmond, Fredericksburg & Potomac R. Co. v. United States, 945 F.2d 765, 768 (4th Cir.1991). If the plaintiff fails to allege any set of facts upon which the court may base jurisdiction, the motion must be granted. See Jadhav, 555 F.3d at 347.
2. Entry of Default
Under Federal Rule of Civil Procedure 55(b)(2), a court may enter a default judgment against a properly served defendant who fails to defend or otherwise appear. In reviewing a motion for default judgment, the plaintiff's well-pled factual allegations are accepted as true as to liability. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780-81 (4th Cir. 2001).
Entry of a default judgment is left to the court's discretion, and the Fourth Circuit has a "strong policy" that "cases be decided on the merits." Dow v. Jones, 232 F.Supp.2d 491, 494-95 (D. Md. 2002) ( citing United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993)). However, "default judgment is available when the adversary process has been halted because of an essentially unresponsive party.'" Disney Enters., Inc. v. Delane, 446 F.Supp.2d 402, 405 (D. Md. 2006) ( quoting SEC v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005) (internal quotations omitted)).
3. Summary Judgment
The Court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In considering the motion, the judge's function is "not... to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). A dispute about a material ...