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Healy v. BWW Law Group, LLC

United States District Court, D. Maryland, Southern Division

January 23, 2017

PATRICK HEALY and ELLEN C. HEALY Plaintiffs,
v.
BWW LAW GROUP, LLC and SUNTRUST MORTGAGE, INC., Defendants.

          MEMORANDUM OPINION

          Paul W. Grimm United States District Judge

         On four separate occasions over the past decade, Plaintiffs Patrick and Ellen Healy (“the Healys”) fell behind on mortgage payments for their property at 7552 Pepperell Drive, Bethesda, Maryland (“the Property”). Each time, the Healys' lender, Defendant SunTrust Mortgage, Inc. (“SunTrust”) initiated foreclosure proceedings, which the Healys halted by making payments to bring their loan current. The Healys filed suit against SunTrust and its law firm, Defendant BWW Law Group, LLC (“BWW”) alleging violations of the Maryland Consumer Protection Act (“MCPA”), Md. Code Ann. Com. Law §§ 13-101 to -501; Maryland Consumer Debt Collection Act (“MCDCA”), Md. Code Ann. Com. Law §§ 14-201 to -204; and the Federal Racketeer Influence Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-68. ECF No. 1. Specifically, the Healys claim they are entitled to damages because Defendants initiated two of the four foreclosure proceedings by filing robo-signed documents (i.e. foreclosure documents signed without personal knowledge of the contents) and because BWW misquoted the amount necessary for the Healys to bring their loan current in 2014. Am. Compl., ECF No. 18. Defendants have moved to dismiss, ECF Nos. 19, 20, and the parties have fully briefed the motions, BWW Mem., ECF No. 19-1; SunTrust Mem., ECF No. 20; Pls.' Opp'n, ECF No. 23; BWW Reply, ECF No. 25; SunTrust Reply, ECF No. 26. No hearing is necessary. Loc. R. 105.6 (D. Md.). Fourth Circuit authority bars recovery under the MCPA and MCDCA for robo-signature-initiated foreclosure proceedings on valid, collectible debt, and the Healys' Amended Complaint fails to state a RICO claim, but they have stated a MCPA claim related to the 2014 overcharge. Accordingly, I will grant BWW's Motion to Dismiss, and I will grant SunTrust's Motion in part and deny it in part.

         Background

         In December 2006, the Healys obtained an $842, 000 promissory note from SunTrust secured by a Deed of Trust on their Property. Am. Compl. ¶ 7. In 2008, the Healys began falling behind on their mortgage payments. Id. ¶ 9. That year, SunTrust's counsel, BWW, initiated a foreclosure suit against the Healys, which SunTrust dismissed in May 2009 after the Healys remitted $66, 000 to bring the loan current. Id. ¶¶ 10-12. Shortly thereafter, the Healys became delinquent on their loan again, and BWW filed a second foreclosure suit against the borrowers on SunTrust's behalf in December 2009. Id. ¶ 14. The Healys once again remitted a payment to bring the loan current, prompting SunTrust to dismiss the case. Id. ¶¶ 35-36. The cost of bringing the loan current a second time caused the Healys to file for bankruptcy in the U.S. Bankruptcy Court for the District of Maryland during the pendency of the foreclosure suit. Id. ¶¶ 15, 37-38.

         In 2012, the Maryland Attorney Grievance Commission suspended BWW attorney Jacob Geesing for instructing non-attorneys to sign his name to foreclosure documents and notaries to notarize them, conduct known colloquially as robo-signing. Id. ¶¶ 16-20. The Maryland Secretary of State also removed BWW notaries for following Geesing's directives. Id. ¶ 21. On December 30, 2012, the Healys applied to and participated in the federal government's Independent Foreclosure Review program, id. ¶ 27, which among other things, “sought relief for victims of robo-signing” and culminated in a commitment from lenders under investigation, including SunTrust, to discontinue robo-signing practices and to compensate injured borrowers, ” id. ¶ 29. Based on their participation in the program, the Healys received a small payment from SunTrust. Id. at 32.

         By December 2013, the Healys again fell behind on mortgage payments, prompting BWW to file a third foreclosure suit on SunTrust's behalf in the following year. Id. ¶¶ 41-42. This time, the Healys questioned the validity of signatures on the 2014 foreclosure filings and retained a handwriting expert, who allegedly concluded that both the second and third foreclosure filings contained signature discrepancies. Id. ¶¶ 43-45. Notwithstanding their concerns, the Healys inquired how much they would need to pay in order to bring the loan current again. Id. ¶ 49. BWW initially quoted an amount of $246, 733.25, but when the Healys attempted to pay SunTrust, BWW in informed the borrowers that the actual payoff amount was $248, 833.25. Id. ¶¶ 50-52. After the Healys paid the requested amount, thereby avoiding the foreclosure sale, BWW informed them that its revised estimate had in fact been too high and that SunTrust owed them a refund of an unspecified amount, which they allegedly never received. Id. ¶¶ 53-55.

         In 2015, after the Healys again fell behind in their mortgage payments, a different law firm initiated a fourth foreclosure suit on SunTrust's behalf against the Healys, which the lender dismissed after the borrowers brought the mortgage current once again. Id. ¶¶ 63-64, 67-68; Ltr. from Brock & Scott, PLLC to Residents at 7552 Pepperell Drive, Bethesda, MD 20817, Am. Compl. Ex. 19, ECF No. 18-19.

         Standard of Review

         Federal Rule of Civil Procedure 12(b)(6) provides for “the dismissal of a complaint if it fails to state a claim upon which relief can be granted.” Velencia v. Drezhlo, No. RDB-12-237, 2012 WL 6562764, at *4 (D. Md. Dec. 13, 2012). This rule's purpose “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.” Id. (quoting Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006)). To that end, the Court bears in mind the requirements of Fed.R.Civ.P. 8, Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), when considering a motion to dismiss pursuant to Rule 12(b)(6). Specifically, a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), and must state “a plausible claim for relief, ” as “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice, ” Iqbal, 556 U.S. at 678-79. See Velencia, 2012 WL 6562764, at *4 (discussing standard from Iqbal and Twombly). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

         Rule 9(b) states that “in alleging a fraud or mistake, a party must state with particularity the circumstances constituting the fraud or mistake.” Fed.R.Civ.P. 9(b). Such allegations [of fraud] typically “include the ‘time, place and contents of the false representation, as well as the identity of the person making the misrepresentation and what [was] obtained thereby.' ” Piotrowski v. Wells Fargo Bank, N.A., No. DKC-11-3758, 2013 WL 247549, at *5 (D. Md. Jan. 22, 2013) (quoting Superior Bank, F.S.B. v. Tandem Nat'l Mortg., Inc., 197 F.Supp.2d 298, 313-14 (D. Md. 2000)). All of the Healys' claims are rooted in fraud allegations, so heightened pleading standards apply. See Haley v. Corcoran, 659 F.Supp.2d 714, 724 & n.10 (D. Md. 2009) (applying Fed.R.Civ.P. 9(b) to MCPA claim); Murray v. Bierman, Geesing, Ward & Wood, LLC, No. RWT-11-1623, 2012 WL 4480679, at *4 (D. Md. Sept. 27, 2012) (noting applicability of Fed.R.Civ.P. 9(b) to MCDCA claim); Kimberlin v. Hunton & Williams LLP, No. GJH-15-723, 2016 WL 1270982, at *7 (D. Md. Mar. 29, 2016) (applying Fed.R.Civ.P. 9(b) to RICO claim based on mail or wire fraud).

         Discussion

         MCPA and MCDCA Claims

         1. Statute of Limitations

         As an initial matter, SunTrust and BWW argue that the Healys' MCDCA and MCPA claims (Counts I and II) relating to the 2009 foreclosure suit are time-barred. SunTrust Mem. 6-8; BWW Mem. 9-10. “Claims under the MCPA and MCDCA are subject to a three-year statute of limitations.” Ayres v. Ocwen Loan Servicing LLC, 129 F.Supp.3d 249, 272 (D. Md. 2015) (citing Md. Code Ann. Cts. & Jud. Proc. 5-101). And claims under each statute accrue “when the claimant in fact knew or reasonably should have known of the wrong.” Id. (quoting Walton v. Wells Fargo Bank, N.A., No. AW13-428, 2013 WL 3177888, at *6 (D. Md. June 21, 3013)). As the Healys filed their Complaint on December 1, 2015, any facts that they knew or reasonably should have known prior to December 1, 2012 cannot form the foundation of their allegations. The Healys claim they did not know about the alleged robo-signing until 2014, when their retained handwriting expert noted signature discrepancies in the filings for the second and third foreclosure suits. Pls.' Opp'n 9. Plainly, this cannot be. As both Defendants ...


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