United States District Court, D. Maryland, Southern Division
W. Grimm, United States District Judge.
Adrienne Tucker and Maurice Holmes claim that they entered
into a valid mortgage loan modification agreement, but the
loan servicers refused to accept their monthly payments under
the modified agreement, applying them instead to an earlier
version of the loan. Plaintiffs stopped making payments and,
as a result, found themselves facing foreclosure on their
home. They filed suit in the Circuit Court for
Prince George's County against, inter alios,
their current loan servicer, Defendant Specialized Loan
Servicing, LLC (“SLS”); their previous loan
servicer, Defendant Saxon Mortgage Services, Inc.
(“Saxon”); and the owner of their current loan,
Defendant FV-I, Inc., in trust for Morgan Stanley Capital
Holdings LLC (“FVI”). ECF No. 2. FVI and SLS
removed to this Court on the basis of diversity of
citizenship. ECF No. 1. Following two amendments to the
complaint, as well as my ruling on Defendants' motions to
dismiss, five counts remain. As to Defendants SLS and FVI
only, Plaintiffs allege breach of contract and violations of
the Maryland Consumer Debt Collection Act, Md. Code Ann.,
Com. Law §§ 14-201 et seq.
(“MCDCA”), and the Maryland Consumer Protection
Act, Md. Code Ann., Com. Law §§ 13-101 et
seq. (“MCPA”). They also allege that all
three remaining Defendants are liable for defamation and
injurious falsehood. Feb. 3, 2015 Mem. Op. & Order, ECF
Nos. 40 & 41; Second Am. Compl., ECF No. 42.
pending is Defendants' Motion for Summary Judgment on
liability. ECF No. 94.Because the undisputed evidence establishes
that Plaintiffs refused to make payments to bring their loan
current, summary judgment in Defendants SLS and FVI's
favor is appropriate on the breach of contract claim. Given
that it also shows that Defendants had the right to foreclose
on Plaintiffs' Property, Defendants SLS and FVI also are
entitled to judgment as a matter of law on Plaintiffs'
MCDCA and MCPA claims. And, because Plaintiffs cannot show
that the information allegedly reported was false for
purposes of a defamation or injurious falsehood claim, those
claims are preempted by federal law and I will grant summary
judgment in favor of all Defendants on those claims.
Tucker executed a $601, 000.00 promissory note
(“Original Note”) on November 22, 2005 as part of
a loan agreement. Jt. Stmt. ¶ 2, ECF No. 94-3. The
Original Note set Tucker's initial monthly payments at
$3, 443.23. Orig. Note § 3(B), 4(A), Jt. Rec. 336-37.
She and her husband, Maurice Holmes, executed a Purchase
Money Deed of Trust (“Deed of Trust”) the same
day. Jt. Stmt. ¶ 4. Plaintiffs used the funds they
received from the loan to purchase 13901 Edsall Street, Upper
Marlboro, Maryland (the “Property”) and build a
home there. Id. ¶¶ 1, 3. They are the
record owners of the Property. Id. ¶ 1.
Deed of Trust created a lien against the Property to ensure
repayment of the Original Note. Id. ¶ 5. It
Borrower covenants and agrees that Borrower's obligations
and liability shall be joint and several. However, any
Borrower who co-signs the Security Instrument [i.e., Deed of
Trust] but does not execute the Note (a
“co-signer”): (a) is co-signing this Security
Instrument only to mortgage, grant and convey the
cosigner's interest in the Property under the terms of
this Security Instrument; (b) is not personally obligated to
pay the sums secured by this Security Instrument; and (c)
agrees that Lender and any other Borrower can agree to
extend, modify, forbear or make any accommodations with
regard to the terms of this Security Instrument or the Note
without the co-signers consent.
Id. ¶ 6 (quoting Deed of Tr. § 13, Jt.
Rec. 550). Because Holmes signed the Deed of Trust but not
the Original Note, he qualifies as a “co-signer”
under it and, in signing the Deed of Trust, “agree[d]
that Lender and any other Borrower [i.e., Tucker] can agree
to extend, modify, forbear or make any accommodations with
regard to the terms of this [Deed of Trust] or the Notice
without the co-signers [sic] consent.” Id. The
Deed of Trust also provides:
Lender may return any payment or partial payment if the
payment or partial payments are insufficient to bring the
Loan current. Lender may accept any payment or partial
payment insufficient to bring the Loan current, without
waiver of any rights hereunder or prejudice to its rights to
refuse such payment or partial payments in the future, but
Lender is not obligated to apply such payments at the time
such payments are accepted. . . . Lender may hold such
unapplied funds until Borrower makes payment to bring the
Loan current. If Borrower does not do so within a reasonable
period of time, Lender shall either apply such funds or
return them to Borrower.
Deed of Tr. § 1, Jt. Rec. 544.
and the original lender entered into and recorded a Loan
Modification Agreement in 2006 (“2006 Modification
Agreement), agreeing to a new monthly mortgage payment of $3,
380.63. Jt. Stmt. ¶¶ 7, 8, 10. The 2006
Modification Agreement defined Tucker and Holmes as the
Borrowers, “amend[ed] and supplement[ed]” the
Original Note and Deed of Trust, and provided:
Nothing in this Agreement shall be understood or construed to
be a satisfaction, release or novation in whole or in part of
the Note and Security Instrument [i.e., Deed of Trust].
Except as otherwise specifically provided in this Agreement,
the Note and Security Instrument will remain unchanged, and
the Borrower(s) and Lender will be bound by, and comply with,
all of the terms and provisions thereof, as amended by this
Id. at 1 & ¶ 11 (quoting 2006 Loan
Modification Agr., Jt. Rec. 3). The unpaid principal balance
remained $601, 000.00. Id. ¶ 1. Together, the
Original Note and Deed of Trust, as modified by the 2006
Modification Agreement, comprise the “Loan
“[a]t some point prior to 2009, Ms. Tucker began having
difficulty making the monthly mortgage payments, ” she
applied to GMAC Mortgage (“GMAC”),  which serviced
the loan at the time, for a loan modification. Id.
¶¶ 13, 14. “GMAC offered Ms. Tucker a trial
loan modification under the Home Affordable Modification
Program, ” and after she successfully made “trial
payments on November 1, 2009, December 1, 2009 and January 1,
2010, ” it offered her a permanent modification
agreement in January 2010 (“January 2010 GMAC
Modification Agreement” or “GMAC
Agreement”). Id. ¶¶ 15-16. She
signed it on January 23, 2010, and a “Limited Signing
Officer” Dated: behalf of GMAC on February 1, 2010.
Id. ¶¶ 18, 19.
GMAC Agreement identified Tucker as the Borrower. Jan. 2010
GMAC Modif. Agr. 1, Jt. Rec. 6. In Section 1, Tucker
represented that she was “experiencing financial
hardship” causing her to be “in default under the
Loan Documents” (i.e., the Original Note and the Deed
of Trust, as amended by the 2006 Modification Agreement) and
unable “to make the monthly mortgage payments”;
that she “live[d] in the Property as [her] principal
residence”; that the Property's ownership had not
changed; that she had “provided documentation for all
income that [she] receive[d]”; that she would obtain
credit counseling if required by the Lender; and that she
would or already had made “all payments under a Trial
Period Plan or Loan Workout Plan, ” and she certified
under penalty of perjury that all of the documents and
information she had provided were true and correct. Jan. 2010
GMAC Modif. Agr. § 1, Jt. Rec. 6-7. The January 2010
GMAC Modification Agreement provided that, if these
“representations . . . continue[d] to be true in all
material respects, ” then the GMAC Agreement would,
“as set forth in Section 3, amend and supplement (1)
the Mortgage on the Property, and (2) the Note secured by the
Mortgage.” Id. at 1.
stated that “TIME IS OF THE ESSENCE, ” and
“[i]f prior to the Modification Effective Date as set
forth in Section 3 the Lender determine[d] that
[Tucker's] representations in Section 1 [were] no longer
true and correct, the Loan Documents [would] not be modified
and th[e] Agreement [would] terminate.” Id.
§ 2(A)-(B). Additionally, “the Loan Documents
[would] not be modified unless and until (i) [Tucker]
receive[d] from the Lender a copy of this Agreement signed by
the Lender, and (ii) the Modification Effective Date (as
defined in Section 3) ha[d] occurred.” Id.
§ 2(C), Jt. Rec. 7. The GMAC Agreement also provided
that “the Lender [would] not be obligated or bound to
make any modification of the Loan Documents if [Tucker]
fail[ed] to meet any one of the requirements under th[e]
Agreement.” Id. Section 3 provided that, if
Tucker's Section 1 representations “continue[d] to
be true in all material respects and all preconditions to the
modification set forth in Section 2 ha[d] been met”
(i.e., that the Section 1 representations remained true and
Tucker received a copy of the GMAC Agreement signed by the
lender), then “the Loan Documents [would] automatically
become modified on 02/01/2010 (‘The Modification
Effective Date') and all unpaid late charges that remain
unpaid [would] be waived.” Id. § 3.
payments of $2, 297.82 (to adjust annually after the first
year) under the January 2010 GMAC Modification Agreement were
due beginning on February 1, 2010. Id. § 3(C).
The new principal balance was $504, 176.89. Id.
§ 3(B). As part of the GMAC Agreement, Tucker agreed
“[t]hat all persons who signed the Loan Documents or
their authorized representative(s) have signed this
Agreement, unless a borrower or co-borrower is deceased or
the Lender has waived this requirement in writing.”
Id. § 4(A).
received the signed January 2010 GMAC Modification Agreement
on January 28, 2010, July 21, 2010 GMAC Ltr. to Div. of Fin.
Reg., Jt. Rec. 28; signed it on February 1, 2010, Jt. Stmt.
¶ 18; and then returned it to Turner, Holmes Dep.
178:10-13, Jt. Rec. 219. Viewing these facts in the light
most favorable to Plaintiffs, a reasonable jury could find
that the January 2010 GMAC Modification Agreement went into
effect on February 1, 2010.
GMAC “attempt[ed] to record the modification, ”
however, “the documents were rejected as the recorded
Deed of Trust also listed Maurice D. Holmes.” July 21,
2010 GMAC Ltr. to Div. of Fin. Reg., Jt. Rec. 28.
“Because the loan modification documents are required
to be recorded, ” GMAC sent Plaintiffs a new
modification agreement with the same terms on March 18, 2010
and asked them both to sign and return it by March 26, 2010.
Id.; Jt. Stmt. ¶¶ 20, 21. Plaintiffs
signed it late, on April 8, 2010; GMAC did not receive it
until April 20, 2010; and the modification was denied and the
proposal marked “VOID.” Void Modif. Agr., Jt.
Rec. 12-15; July 21, 2010 GMAC Ltr. to Div. of Fin. Reg., Jt.
Rec. 28. Then, in April 2010, GMAC sent Tucker yet another
modification agreement, identifying only Tucker as the
Borrower, but Plaintiffs did not return a signed copy before
the May 1, 2010 deadline. Interest Only Step Rate Loan Modif.
Agr., Jt. Rec. 18; July 21, 2010 GMAC Ltr. to Div. of Fin.
Reg., Jt. Rec. 28; Sept. 27, 2010 GMAC Ltr. to Div. of Fin.
Reg., Jt. Rec. 31.
Financial Transactions history on Tucker's account shows
that the principal balance from March 9, 2009 through April
9, 2010 remained $601, 000.00. Jt. Rec. 34-40. It also shows
that GMAC received payments of $2, 297.82 on February 5,
2010; $2, 298.00 on March 8, 2010; $2, 298.00 on April 12,
2010; and $2, 295.29 on May 11, 2010. Jt. Rec. 35-36; see
also Tucker Dep. 50:14 - 51:10, Jt. Rec. 113 (testifying
that Plaintiffs made four payments between February and May
2010); Holmes Dep. 70:22 - 72:15, Jt. Rec. 192 (same). The
majority of the funds appear as “unapplied”
funds, which “mean[s] funds that were received from the
Plaintiffs that were insufficient to bring the loan current,
and which were placed into a suspense account.” Ward
Aff. ¶ 7, Jt. Rec. 65; see also Tucker Dep.
50:3-13, Jt. Rec. 113 (a payment noted as
“unapplied” means “they are not accepting
October 5 and November 13, 2009 and April 9 and June 7, 2010,
GMAC applied $3, 380.63 (the amount due monthly under the
2006 Modification Agreement) from Plaintiffs' account to
the interest. Jt. Rec. 34, 36. According to Defendants,
“[o]n June 7, 2010, GMAC applied a portion of the
‘unapplied' funds to the $3, 380.63 payment that
had been due on February 1, 2009.” Defs.' Mem. 2.
In correspondence with Lucy Cardwell, an Assistant Attorney
General in the Consumer Protection Division of the Maryland
Office of the Attorney General, SLS explained that “the
payments that were made by Ms. Tucker were applied to the
account and advanced the contractual due date to March 2009
in accordance to the terms of the original Note because the
modification was never finalized.” Jan. 2, 2015 email
from Rachel Crampton, SLS Legal Dep't, to Cardwell, Jt.
Rec. 45. In other words, SLS believed that GMAC applied the
payment to the Original Note and Deed of Trust, but not to
the 2006 Modification Agreement or the January 2010 GMAC
Modification Agreement, even though the amount applied was
that due under the 2006 Modification Agreement. Although
Defendants acknowledge that “[th]e GMAC payment history
accurately reflects the payment history for the Subject Loan,
” Defs.' Mem. 3, they do not discuss the April 9,
2010 payment. In a June 8, 2010 letter to Tucker, GMAC
informed her that her “request for a loan modification
. . . ha[d] been denied” because the “[e]xecuted
agreement [was] not returned.” June 8, 2010 Ltr. from
GMAC to Tucker, Jt. Rec. 24-25. The letter referred in the
singular to Tucker's “request for a loan
modification, ” but it did not specify which request
had been denied. Id. Thus, a reasonable jury could
find that the January 2010 GMAC Modification Agreement
remained in effect.
loan was assigned to Defendant Saxon for servicing on May 27,
2010. Jt. Stmt. ¶ 22. Holmes spoke with Saxon in July
2010, when Plaintiffs were “prepared to make the July
2010 payment for $2, 298, ” and learned that Saxon was
“just trying to accept the payments from the original
note.” Holmes Dep. 180-81, Jt. Rec. 219-20. Plaintiffs
did not remit any payments to Saxon ...