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Mbongo v. Specialized Loan Servicing LLC

United States District Court, D. Maryland

June 24, 2016

FLAUBERT MBONGO, et al., Plaintiff



         Pro se Plaintiffs Flaubert Mbongo and Charlotte J. Dikongue (hereinafter “Plaintiffs”) have sued Specialized Loan Servicing, LLC (“SLS”), alleging violations of the Home Equity Protection Act (HOEPA), 15 U.S.C. § 1639; the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. §§ 2601, et seq.; the Truth-in-Lending Act (TILA), 15 U.S.C. § 1601, et seq.; the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681, et seq.; and the Maryland Consumer Protection Act (MCPA), [1] Md. Code Ann., Com. Law § 13-101, et seq. Plaintiffs add Counts for common law fraud, [2] breach of fiduciary duty, unjust enrichment, and civil conspiracy. SLS has moved to dismiss all of Plaintiffs’ claims. For the reasons that follow, SLS’s Motion to Dismiss for Failure to State a Claim (ECF No. 11) is GRANTED, and Plaintiffs’ Complaint (ECF No. 1) is DISMISSED WITH PREJUDICE.


         Plaintiffs, Maryland residents, reside in their home located at 14423 Bradshaw Drive, Silver Spring, Maryland (the “Property”). Compl. ¶ 1, ECF No. 2.

         In the fall of 2006, they applied for a mortgage loan (the “Loan”) with First Residential Mortgage Service Corporation (“First Residential Mortgage”). Id. ¶ 17. They say that, in connection with their Loan application, they expressly advised First Residential Mortgage that they wanted a loan program with payments “in accordance with their financial abilities.” Id. According to Plaintiffs, First Residential Mortgage “lead [them] to believe” that they were being placed into a loan owned by the Federal National Mortgage Association (“Fannie Mae”). Id. ¶ 18.

         At some point in time (unspecified in the Complaint), Plaintiffs discovered that their Loan was never owned by Fannie Mae. Id. ¶ 19. They allege that their original lender, First Residential Mortgage, employed a “bait and switch” tactic “for the express purpose of being able to reap significant commissions” and to be able to “acquire a high variable interest rate loan.” Id. Plaintiffs also say that this lender intended to sell the Loan “in parsed fashion”[4] to various third parties for profit, resulting in “certain foreclosure.” Id. Plaintiffs allege that First Residential Mortgage should have disclosed this information to them prior to closing on the Loan. Id. ¶ 20.

         According to Plaintiffs, the “end result of the false and misleading misrepresentations and material omissions” of First Residential Mortgage was that they were placed into a transaction “without prior disclosure of negative amortization, ” and into a loan program which was “predetermined for default.” Id. ¶ 21. Plaintiffs allege that First Residential Mortgage knew “Plaintiffs could not ultimately afford” to pay the terms of their mortgage Loan. Id.

         Plaintiffs further assert that, as a direct and proximate result of the actions of SLS’s “predecessor” First Residential Mortgage, Plaintiffs were subject to a pre-manufactured default which will ultimately result in foreclosure proceedings.[5] Id. ¶ 25. Plaintiffs say these actions became manifest when other “predecessors” of SLS refused to modify their mortgage under the Home Affordable Modification Program (HAMP), even though Plaintiffs made good faith attempts to accomplish a modification. Id. ¶ 26. Plaintiffs also contend that there “was a conspiracy by [SLS] and its predecessors to construct a premanufactured theft of property and fraud.” Id. ¶ 27.

         On the basis of these allegations, Plaintiffs allege that SLS, the current servicer of the Loan violated: the HOEPA, 15 U.S.C. § 1639(h) (Count I); the RESPA, 12 U.S.C. §§ 2601, et seq. (Count II); the TILA, 15 U.S.C. § 1605, and its implementing regulation, 12 C.F.R. § 226.4 (Regulation Z) (Count III); the FCRA, 15 U.S.C. §§ 1681s-2(b), 1681o, and 1681n(a)(2) (Count IV); the MCPA, Md. Code Ann., Com. Law §§ 13-101, 13-303(3), and 13-303(4) (Count V); fraud (Count VI); breach of fiduciary duty (Count VII); unjust enrichment (Count VIII); and civil conspiracy (Count IX).

         Plaintiffs originally filed their Complaint in the Circuit Court for Montgomery County, which SLS removed to this Court toward the end of September 2015. Id. SLS now moves to dismiss the Complaint in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that Plaintiffs have failed to state a claim upon which relief may be granted because all their claims are time-barred. Def.’s Mot. Dismiss, ECF No. 11. In the alternative, SLS asserts that, even if timely, Plaintiffs’ claims must be dismissed because they do not plausibly allege any cognizable wrongs committed by SLS. Id.


         Federal 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] is entitled to relief.” Erickson v. Pardus, 551 U.S. 89, 93 (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)).

         To 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. 544, 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. Indeed, the court need not accept legal conclusions couched as factual allegations or “unwarranted inferences, unreasonable conclusions, or arguments.” E. Shore Markets, Inc. v. J.D. Associates Ltd. P’ship, 213 F.3d 175, 180 (4th Cir. 2000). In the end, the complaint must contain factual allegations sufficient to apprise a defendant of “what the . . . claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555 (internal quotations and citations omitted).

         While federal courts are obliged to liberally construe a pro se litigant’s claims in applying the above analysis, this requirement “does not transform the court into an advocate.” United States v. Wilson, 699 F.3d 789, 797 (4th Cir. 2012) (internal quotations and citations omitted). The Fourth Circuit has noted that “[w]hile pro se complaints may ‘represent the work of an untutored hand requiring special judicial solicitude, ’ a district court is not required to recognize ‘obscure or extravagant claims defying the most concerted efforts to unravel them.’” Weller v. Dep’t of Soc. Servs., 901 F.2d 387, 391 (4th Cir. 1990) (quoting Beaudett v. City of Hampton, 775 F.2d 1274, 1277 (4th Cir. 1985), cert. denied, 475 U.S. 1088 (1986)).


         A. Statutes of Limitations

         SLS asserts that all of Plaintiffs’ claims should be dismissed because they are barred by the respective statutes of limitations for each cause of action. Def.’s Mem. Supp. Mot. Dismiss (“Def.’s Mem.”) 3-4.

         The Court agrees with SLS.

         Plaintiffs’ claims under the HOEPA, RESPA, TILA, FCRA, MCPA, common law fraud, breach of fiduciary duty, unjust enrichment, and civil conspiracy all have statutes of limitations ranging between one and five years. See, e.g., Gilbert v. Residential Funding, LLC, 678 F.3d 271, 278 (4th Cir. 2012) (noting that claims seeking damages under the TILA and HOEPA have a one-year statute of limitations period and claims seeking rescission have a three-year statute of limitations period) (citing 15 U.S.C. §§ 1635, 1640); Siple v. First Franklin Financial Corp., CIV. A. RDB-14-2841, 2015 WL 2374414, at *10 (“Claims brought pursuant to the FCRA, however, are subject to a statute of limitations measured ‘not later than the earlier of . . . two years after the date of discovery by the plaintiff of the violation that is the basis for such liability; . . . or five years after the date on which the violation that is the basis for such liability occurs.’”) (quoting 15 U.S.C. § 1681p); Pitts v. Mozilo, No. GJH-15-451, 2015 WL 4770941, at *3 (D. Md. Aug. 11, 2015) (“A RESPA claim brought by a private litigant must be brought within either one or three years from the date of the occurrence of the violation, depending on the type of violation.”) (citing 12 U.S.C. § 2614); Willis v. Bank of Am. Corp., No. CIV.A. ELH-13-02615, 2014 WL 3829520, at *10 (D. Md. Aug. 1, 2014) (“Under Maryland law, ‘[a] civil action shall be filed within three years from the date it accrues unless another provision of the Code provides’ otherwise.”) (quoting Md. Code Ann., Cts. & Jud. Proc. § 5-101)).

         The gravamen of Plaintiffs’ claims is that their original lender - First Residential Mortgage - failed to disclose certain facts about the nature of the Loan (i.e., that it was negatively amortized), which Plaintiffs say subjected them to “premanufactured” default. See Compl. ¶¶ 19-21. The purported acts and omissions at issue in the Complaint thus occurred in 2006, at the time of the Loan’s origination. But the longest of the limitations periods noted above - five years under the FCRA - expired in 2011. Plaintiffs filed their Complaint in the Circuit Court for Montgomery County on August 24, 2015, see ECF No. 1, well beyond the end of the last of the limitations periods for their claims.

         Plaintiffs attempt to rescue their Complaint by saying they did not become aware of their injuries until the summer of 2015. As such, they say that the discovery rule makes their claims timely. Pls.’ Opp’n Mot. Dismiss (“Pls.’ Opp’n”) 9-11. They also argue that the terms of their Loan were fraudulently concealed, and that the doctrine of equitable tolling should be applied. Id.

         The Court disagrees.

         “Under the discovery rule, a plaintiff’s cause of action accrues” for purposes of calculating the expiration of the statute of limitations “when the plaintiff knows or reasonably should have known of the wrong.” Willis, 2014 WL 3829520, at *10 (internal citations and quotations omitted) (emphasis added). Assuming arguendo that the discovery rule applies to all of the claims raised by Plaintiffs, [6] the Court finds it utterly implausible that they had no reason to know about the allegedly unlawful terms of their Loan (i.e., the fact that it was negatively amortized) prior to attempting to refinance in 2015. Plaintiffs entered into the Loan with First Residential Mortgage in 2006. The fact that they may not have understood the consequences of their Loan’s payment structure does not mean that they could not have made an investigation with respect to its terms with reasonable diligence. See Doe v. Archdiocese of Washington, 689 A.2d 634, ...

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