United States District Court, D. Maryland
DEVRON A. REED, et al. Plaintiffs,
BANK OF AMERICA HOME LOANS, et al., Defendants.
J. MESSITTE UNITED STATES DISTRICT JUDGE.
Devron A. Reed and Marja L. Reed (“the
Reeds”) have sued Defendants Bank of America Home
Loans and Bank of America, N.A. (hereinafter collectively
“BANA”). They allege violations of the Fair Debt
Collection Practices Act (FDCPA), 15 U.S.C. § 1692,
et seq., the Real Estate Settlement Procedures Act
(RESPA), 12 U.S.C. § 2601, et seq., the
Maryland Consumer Protection Act (MCPA), Md. Code Ann., Com.
Law § 13-101, et seq., as well as common law
breach of contract and fraud. BANA has filed a Motion to
Dismiss the First Amended Complaint (ECF No. 28), which the
Reeds oppose. The parties’ submissions have been
reviewed, and the Court finds that no hearing is necessary.
For the following reasons, BANA’s Motion to Dismiss the
First Amended Complaint (ECF No. 28) is GRANTED IN PART and
DENIED IN PART.
November 29, 2007, the Reeds obtained a loan for $380, 000.00
from First Meridian Mortgage, wherein Mortgage Electronic
Registration Systems, Inc. (MERS) was designated as nominee
for the Lender (the “Loan”). The Loan was secured
by a Deed of Trust relating to property located at 15005
Leeland Road, Upper Marlboro, Maryland 20774. Defs.’
Mot. Dismiss First Amended Complaint (Defs.’ Mot.
Dismiss FAC), Ex. A, ECF No. 28-1.
point in 2008, the Reeds experienced a major accounting
problem with their original loan servicer, which they say was
related to their escrow account. Am. Compl. ¶ 2. The
problem, they aver, was never resolved. Id.
September 22, 2011, MERS assigned all interest in the Deed of
Trust to BANA. Defs.’ Mot. Dismiss FAC, Ex. B, ECF No.
28-2. According to the Reeds, the accounting problem they
experienced with their original loan survived the transfer.
Am. Compl. ¶ 3. Supposedly due to this accounting
problem, the Reeds began to receive notices of intent to
foreclose from BANA. Id. In an effort to resolve the
problems they were experiencing with the Loan, the Reeds
applied for a loan modification, and BANA approved them for a
permanent loan modification in August 2012. Id.
¶ 4. In compliance with the initial terms of the
modification, the Reeds returned two signed copies of the
modification agreement to BANA by August 21, 2012 and sent
certified funds in the amount of $2, 111.48 to BANA before
September 1, 2012. Id. ¶ 5.
August 24, 2012, at about the time of the loan modification
approval, the Reeds also received a letter from BANA
informing them that their mortgage payment was delinquent.
Id. ¶ 7. The letter stated, “We recently
received your payment in the amount of $2, 437.72. This was
less than the total amount needed to bring your loan up to
date. . . . The total amount due after we applied your
payment is $34, 297.32.” Id. Shortly
thereafter, on September 3, 2012, the Reeds received a letter
from the Federal Home Loan Mortgage Corporation, or Freddie
Mac, stating that BANA had sent notice that the Reeds’
“mortgage payment has recently been delinquent.”
Id. ¶ 9. Since their Loan had just been
modified, these letters made no sense to the Reeds.
Id. ¶ 10. The Reeds called BANA to try to
resolve the error. Id. They spoke to several BANA
representatives, including David Everline on September 3,
2012 at 5:25 p.m., and Monique Whitley on September 4, 2012,
at 1:15 p.m., attempting to fix the problem. Id.
the Reeds’ efforts, the error was not resolved. On
March 28, 2013, the Reeds received yet another letter from
BANA advising them that they “were not approved for,
and offered, a Freddie Mac Modification Trial Period
Plan.” Id. ¶ 10. The letter also stated
that the Loan was “no longer eligible” for loan
modification because, after being offered a Trial Period Plan
for modification, the Reeds had supposedly informed BANA that
they did “not wish to accept the offer.”
Id. Several months later, on September 5, 2013, the
Reeds received twelve envelopes by certified mail containing
twelve notices of intent to foreclose on the Property.
Id. ¶ 12. When they called BANA to inquire
about the foreclosure notices and to advise the lender that a
valid loan modification was in place, they were told that
there was no record of a loan modification with respect to
the Property. Id.
September 5, 2013 and September 20, 2013, the Reeds called
BANA approximately fifteen times in an attempt to resolve the
issue, begging the managers to reinstate the modification,
but to no avail. On September 25, 2013, they received another
letter from BANA, stating: “We have reviewed your
escalation of our decision that your loan is not eligible for
a loan modification. While we realize this decision comes at
a difficult time in your life, we regret to inform you that
your loan modification escalation has been denied.”
Id. ¶ 11.
September 1, 2012 to September 1, 2013, the Reeds made all
payments required under the terms of the modified Loan.
Id. ¶ 6.
then the Reeds have made no payments toward the Loan. Even
so, no foreclosure action has ever been filed.
basis of the above facts, the Reeds allege that BANA has:
engaged in oppressive and abusive conduct in connection with
their Loan, in violation of the FDCPA, 15 U.S.C. §
1692(d) (Count I); employed unfair and unconscionable means
to collect on their Loan in violation of the FDCPA, 15 U.S.C.
§ 1692(f) (Count II); used unfair or deceptive trade
practices in violation of the MCPA, Md. Code Ann., Com. Law
§ 13-301 (Counts III and IV); committed
fraud (Count VII); breached the loan
modification agreement with the Reeds and breached the
implied covenant of good faith and fair dealing (Count V);
and failed to provide the Reeds with certain information when
rejecting their loan modification application in violation of
Regulation X, 12 C.F.R. § 1024.41(d),  one of the
implementing regulations of RESPA (Count VI).
damages, the Reeds allege that they have been harmed because
BANA has initiated foreclosure proceedings. See Am.
Compl. ¶¶ 13-15. This allegation, as will be
addressed in Part III.A, infra, is patently at odds
with facts in the public record. Of more substance, the Reeds
also claim that Plaintiff Marja Reed’s application for
a personal loan was recently rejected when she made
application to another bank. Id. ¶ 16. She was
purportedly told the reason for the rejection was that her
BANA loan was in default and delinquent by four months.
Id. Finally, the Reeds say that they have
experienced stress and worry over losing their home, which
has taken a toll on the emotional, mental, and physical
health of the family. Id. ¶ 17.
has moved to dismiss all counts, arguing pursuant to Federal
Rule of Civil Procedure 12(b)(6) that the Reeds have failed
to state a claim upon which relief may be granted.
STANDARDS OF LAW
Rule of Civil Procedure 8(a) prescribes “liberal
pleading standards, ” requiring only that a plaintiff
submit a “short and plain statement of the claim
showing that [he or she] is entitled to relief.”
Erickson v. Pardus, 551 U.S. 89, 93-94 (2007)
(citing Fed.R.Civ.P. 8(a)(2)). If pleadings allege fraud or
mistake, “a party must state with particularity the
circumstances constituting fraud or mistake.”
Fed.R.Civ.P. 9(b). Under the heightened pleading standard of
Rule 9(b), “[t]hese circumstances are ‘the time,
place, and contents of the false representations, as well as
the identity of the person making the misrepresentation and
what he obtained thereby.’” Weidman v. Exxon
Mobil Corp., 776 F.3d 214, 219 (4th Cir. 2015) (quoting
Harrison v. Westinghouse Savannah River Co., 176
F.3d 776, 784 (4th Cir. 1999)).
survive a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), a plaintiff must plead facts sufficient
to “state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S.
554, 570 (2007). This standard requires “more than a
sheer possibility that a defendant has acted
unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). Although a court will accept factual allegations
as true, “[t]hreadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do
not suffice.” Id.
district court has the discretion to grant a motion to
dismiss with or without prejudice. Hinks v. Bd. of Educ.
of Harford Cnty., CIV.A. WDQ-09-1672, 2010 WL 5087598,
at *2 (D. Md. Dec. 7, 2010). Dismissal with prejudice is
proper if there is no set of facts the plaintiff could
present to support his or her claim. Id. (citing
Cozzarelli v. Inspire Pharm., Inc., 549 F.3d 618,
630 (4th Cir. 2008)).
preliminary matter, the Court considers whether and to what
extent there may be cognizable damages in this action. While
these issues have not been raised or emphasized by any party
at this stage, they obviously will have a bearing on the
future course of this proceeding.
Reeds suggest throughout the Amended Complaint that they have
suffered because of BANA’s alleged initiation of a
foreclosure suit with respect to the Property. Am. Compl.
¶¶ 14, 15, 32, 49, 56. They say that they have been
traumatized by seeing their home listed for sale on the
Internet and by observing persons outside their house taking
photographs of the Property. Id. ¶¶ 15,
56. These claims, however, appear to be entirely without
foundation. The Court can find no record whatsoever of a
foreclosure action related to the Property. As such, it will
not entertain a claim for any damages arising out of
a nonexistent foreclosure action, to the extent that they are
raised in the Amended Complaint.
Reeds also claim mental and emotional damages stemming from
BANA’s alleged refusal to recognize the existence of a
valid modification agreement and as a result of repeated
notifications of intent to foreclose. Am. Compl. ¶¶
14, 17, 32, 40. These claims may be viable under the
FDCPA and MCPA. Dorris v. Accounts
Receivable Mgmt., Inc., No. CIV.A. GLR-11-3453, 2013 WL
1209629, at *7 (D. Md. Mar. 22, 2013) (“Actual damages
under the FDCPA include damages for emotional
distress.”); Barry v. EMC Mortgage Corp., No.
CIV.A. DKC 10-3120, 2012 WL 3595153, at *8 (D. Md. Aug. 17,
2012) (noting that emotional damages constitute an actual
injury or loss compensable under the MCPA). Such harms,
however, would generally not be recoverable,
however, under RESPA,  nor would they be in connection with state
law claims for breach of contract and fraud. Aghazu v.
Severn Sav. Bank, No. PJM 15-1529, 2016 WL 808823, at
*10 (D. Md. Mar. 2, 2016) (noting that damages under RESPA
are usually limited to “pecuniary or economic damages
that flow directly” from violation of the Act);
Richter v. N. Am. Van Lines, Inc., 110 F.Supp.2d
406, 413 (D. Md. 2000) (citing Restatement (Second) of
Contracts, § 353 (1981)) (“The general rule is
that emotional disturbance is not a damage recognized for
breach of contract.”); Hoffman v. Stamper, 867
A.2d 276, 298 (Md. 2005) (holding that a plaintiff in a fraud
action seeking noneconomic damages for emotional injury must
show some objectively ascertainable consequential physical
the Reeds assert that Plaintiff Marja Reed was denied a
personal bank loan as a result of BANA’s actions. Am.
Compl. ¶ 16. With respect to some Counts, the Reeds also
appear to allege that they should be able to recover what
they term collection costs and late fees. Id.
¶¶ 38, 42. While, as a general proposition,
pecuniary or economic damages may be cognizable with respect
to the causes of action alleged in the Amended Complaint, the
Court observes that the Reeds’ allegations of economic
harm are fairly nebulous at this stage. Indeed, the Court
poses this question to all parties: Even if BANA has engaged
in unlawful conduct vis-à-vis the Reeds, what
actual economic harm have the Reeds suffered, given
that they still apparently occupy the Property? As this case
goes forward, the Reeds will have to demonstrate their
entitlement to recover pecuniary damages with much greater
precision during discovery.
Court now addresses BANA’s arguments to dismiss each of
the Reeds’ claims.
Fair Debt Collection Practices Act Claims (Counts I and
Count I, the Reeds claim that BANA violated the FDCPA, 15
U.S.C. § 1692d, by: (i) falsely advising them that they
would qualify for a loan modification and that this
modification would prevent foreclosure; and (ii) accepting
payments from the Reeds under the guise that these payments
were being applied pursuant to the modification agreement.
Am. Compl. ¶ 25. In Count II, the Reeds allege that BANA
violated the FDCPA, 15 U.S.C. § 1692f by (i) sending
twelve notices of foreclosure; (ii) advising the Reeds that
there was no record of a loan modification agreement; (iii)
forcing the Reeds to repeatedly contact BANA with respect to
the loan modification agreement; and (iv) failing to complete
the loan modification in a timely fashion. Am. Compl. ¶
30. In response to these allegations, BANA contends that
Counts I and II fail to state a claim because BANA is not a
“debt collector” under the FDCPA. Defs.’
Mot. Dismiss FAC 5-6, ECF No. 28. BANA argues, instead, that
it is a “creditor, ” and thus exempt from
liability under the FDCPA. Id.
stage at least, the Court declines to dismiss the
Reeds’ FDCPA claims on this ground.
general, the FDCPA prohibits abusive, deceptive, or unfair
debt collection practices. See 15 U.S.C. §
1692. Fifteen U.S.C. § 1692d bars a debt collector from
engaging in any conduct “to harass, oppress, or abuse
any person in connection with the collection of a
debt.” Fifteen U.S.C. § 1692f provides that a
“debt collector may not use unfair or unconscionable
means to collect or attempt to collect any debt.” A
consumer with debt may bring a private action to enforce
these provisions under 15 U.S.C. § 1692k. To state a
claim under the FDCPA, the consumer must allege that: (1) the
defendant is a “debt collector” under the FDCPA,
(2) the consumer is the “object of a collection
activity arising from consumer debt, ” and (3) the
defendant engaged in a “debt collection activity”
prohibited by the FDCPA. Ademiluyi v. PennyMac Mortg.
Inv. Trust Holdings I, LLC, 929 F.Supp.2d 502, 524 (D.
Md. 2013) (quoting Stewart v. Bierman, 859 F.Supp.2d
754, 759 (D. Md. 2012)) (internal quotations omitted).
respect to the first prong, the FDCPA defines a “debt
collector, ” in part, as a person who “regularly
collects or attempts to collect, directly or indirectly,
debts owed or due or asserted to be owed or due
another.” 15 U.S.C. § 1692a(6). A “creditor,
” on the other hand, is “any person who offers or
extends credit creating a debt or to whom a debt is owed,
” 15 U.S.C. § 1692a(4). Debt collector and
creditor are “mutually exclusive” categories
under the FDCPA, Schlosser v. Fairbanks ...