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Agomuoh v. The PNC Financial Services Group Inc.

United States District Court, D. Maryland, Southern Division

February 16, 2017

EMMANUEL AGOMUOH, et al., Plaintiffs,
v.
THE PNC FINANCIAL SERVICES GROUP, et al., Defendants.

          MEMORANDUM OPINION

          George J. Hazel United States District Judge

         Plaintiffs Emmanuel Agomuoh and Nene Ross bring (his pro se action against Defendants the PNC Financial Services Group ('"PNC"), the Federal Home Loan Mortgage Corporation ("Freddie Mac"), and the Alba Law Group. P.A. (collectively. "Defendants") for state law claims of negligence, fraudulent concealment, civil conspiracy, and violations of the Real Estate Settlement Procedures Act. 12 U.S.C. § 2601 etseq. ("RESPA"). the Maryland Consumer Debt Collection Act. Md. Code Com. Law § 14-201 et seq. ("MCDCA"). the Maryland Consumer Protection Act. Md. Code Com. Law § 13-301 et seq. ("MCPA"). and the Fair Debt Collection Practices Act. 15 U.S.C. § 1692 el seq. ("FDCPA"). Presently pending before the Court is Defendants" Motion to Dismiss. ECF No. 6. No hearing is necessary. See Loc. R. 105.6. For the following reasons. Defendants" Motion to Dismiss is granted.

         I. BACKGROUND

         On April 30. 2007. Plaintiff Nene Ross executed a promissory note (the "Note"), thereby obtaining a home mortgage loan (the "Loan"') for $700, 000 to purchase the property located at 5601 Lake Spring Court. Bowie. Maryland 20720 (the -Property"). ECF No. 1 ¶ 3; ECF No. 1-5 at 7.[1] In the Note. Ross promised to pay $700, 000 plus interest in return for the Loan. ECF No. 1-5 at 7 ¶ 1.[2] The Loan was payable to "FNMC .[3] a division of National City Bank." as Lender. Id. Ross and Plaintiff Emmanuel Agomuoh also executed a Deed of Trust with the Lender to secure payment of the Note. ECF No. 1 ¶ 3; ECF No. 1-5 at 14. The Deed of Trust obligated Plaintiffs, as borrowers, to "pay when due the principal of. and interest on. the debt evidenced by the Note and any prepayment and late charges under the Note." ECF No. 1 -5 at 16 ¶ 1. The Deed of Trust further provided that upon default by Plaintiffs, failure to cure the default "may result in acceleration of the sums secured by this Security Instrument and sale of the Property." Id. at 26 ¶ 22.

         Plaintiffs learned in 2009 that "PNC Mortgage, a division of PNC Bank. N.A. purportedly merged with National City Mortgage and would be receiving Plaintiffs' monthly payments as the new servicer." ECF No. 1 ¶ 9. Plaintiffs contend that PNC's acquisition of their Loan was effectuated by two indorsements - the first by a "Loan Administrator for FNMC named Paula Noble." which was allegedly blank and later voided (the "Paula Noble indorsement") and the second by ""Belenda Luke' as "Document Control Specialist' for National City Bank." which was also blank (the "Belenda Luke indorsement"). Id. ¶¶ 4-6. In 2011. Plaintiffs were experiencing financial difficulties and sought a modification of their Loan from PNC Mortgage. Id. ¶ 10. Plaintiffs were approved for the Home Affordable Modification Program (HAMP) and signed an agreement to that effect on May 17 and 19, 2011 (the "HAMP Agreement"*), modifying their Loan. ECF No. 1 ¶ 10; ECF No. 1-6 at 2. One clause of the HAMP Agreement stated that:

In cases where the loan has been registered with MERS [Mortgage Electronic Registration Systems. Inc.] who has only legal title to the interests granted by the borrower in the mortgage and who is acting solely as nominee for Lender and Lender's successors and assigns. MERS has the right: to exercise any or all of those interests, including but not limited to, the right to foreclose and sell the Property: and to take any action required of Lender including, but not limited to. releasing and cancelling the mortgage loan.

ECF No. 1-6 at 6 ¶ L. Thus, based upon this clause. Plaintiffs claim they agreed to grant MERS. and apparently only MERS. the right to foreclose and sell. ECF No. 1 ¶ 21. Plaintiffs allege, however, that PNC Bank recorded an "Appointment of Substitute Trustees"[4] to hold the Deed of Trust in November 2013. Id. ¶ 23. Additionally, in September 2014. Plaintiffs learned that "their loan had been purchased, guaranteed, and/or securitized by Freddie Mac." ECF No. 1 ¶ 13. Plaintiffs claim that "PNC Mortgage was never the lender in connection with Plaintiffs loan transaction and merely became the successor servicer to loans sold to and likely securitized by Freddie Mac." Id. ¶ 16.

         From October 2014 to June 2015, Plaintiffs attempted to obtain a second loan modification after "experiencing later financial difficulties." ECF No. 1 ¶ 25. In June 2015. PNC sent Plaintiffs a letter "indicating that certain loss mitigation options were not available, but that they were eligible for a short sale option.[5] Id. ¶ 27. Plaintiffs sought the assistance of Boston Community Capital ("BCC"). a nonprofit organization, to engage in the short-sale negotiations with PNC. Id. ¶ 28. While the parties were negotiating the short-sale. PNC scheduled a foreclosure sale of Plaintiffs' home. Id. ¶ 30. Plaintiffs' BCC representative admonished PNC that such an action was prohibited as "dual-tracking, "" a situation in which a mortgage servicer is reviewing loss mitigation requests, but simultaneously pursues foreclosure. Id. ¶ 30. Despite the "warning." however. PNC refused to stop the foreclosure sale and directed Alba Law Group, PA, to schedule and conduct a foreclosure sale. Id. ¶ 31.

         Plaintiffs contend that PNC falsely stated that Plaintiffs were not eligible for any more loan modification requests. Id. ¶ 33. Plaintiffs further assert that PNC made false representations that it was not the owner or assignee of the Loan, and thus PNC's programs and standards should not have applied to Plaintiffs" loan modification requests. Id. ¶ 36. Plaintiffs allege that while "Freddie Mac expressly states on its website that borrowers are eligible for at least two different types of loan modifications, " PNC did not consider Plaintiffs for either of these kinds of programs. Id. ¶ 43. Plaintiffs contend that they only received one loan modification, and homeowners are denied loan modifications only "if they have received three or more modifications." Id. ¶ 44.

         Plaintiffs further argue that because only loans owned by Freddie Mac, Fannie Mae, or other government-sponsored entities are eligible for HAMP loan modification, that Plaintiffs' Loan must have been owned by one of these entities and not by PNC. Id. ¶ 37. Plaintiffs allege that PNC cannot prove transfer of Plaintiffs" Note from the original lender. FNMC/National City Bank, to PNC, because the "chain of endorsements.'' or checks, were blank or fraudulent. Id. ¶¶ 38-40, 4-8. Therefore. Plaintiffs claim that "PNC owns no debt secured by Plaintiffs' property."' Id. ¶ 41. Plaintiffs contend that Alba Law Group, through its Substitute Trustees, also aided and abetted PNC in PNC's fraudulent representations that it was the holder of the Note. Id. ¶¶ 45-46. Plaintiffs allege that Alba negligently failed to examine the original instruments to determine whether PNC was in fact the holder of the Note. Id. ¶ 46.

         Plaintiffs filed a Chapter 13 bankruptcy petition on January 23. 2015. ECF No. 1 ¶ 49. In that proceeding. PNC filed a "Proof of Claim"[6] on August 2015. Id. The Proof of Claim was filed by Alba on behalf of PNC Bank. Id. ¶ 50. Plaintiffs allege that this was an additional fraudulent representation by Alba, as PNC was not the owner of the Note. Id. Finally, Plaintiffs allege that Freddie Mac cannot prove it actually owns Plaintiffs" or other promissory Notes, so it directs its Mortgage Servicers to foreclose on Freddie Mac's behalf. Id. at 23. Hence, Plaintiffs argue. Freddie Mac is also responsible for PNC foreclosing on their home when PNC did not in fact hold Plaintiffs' Note. Id. at 24.

         Plaintiffs filed the instant Complaint in this Court on June 16, 2016. ECF No. 1. Plaintiffs allege: i) Negligent acceleration against PNC and Alba, ii) Negligence - false proof claim against Alba and PNC, iii) Fraudulent concealment against PNC. Alba, and Freddie Mac, iv) Violations of RESPA against PNC. v) Negligence based upon violations of RESPA. vi) Civil conspiracy against Alba, PNC. and Freddie Mac, vii) Violation of the Maryland Consumer Debt Collection Act against PNC and Alba, viii) Maryland Consumer Protection Act against PNC and Freddie Mac. and ix) Violation of the Fair Debt Collection Practices Act against Alba. Defendants filed their Motion to Dismiss on August 29, 2016. ECF No. 6. Plaintiffs filed their Response on September 19. 2016. ECF No. 10. Defendants filed their Reply on October 6. 2016. ECF No. 11.

         II. STANDARD OF REVIEW

         "It is well established that before a federal court can decide the merits of a claim, the claim must invoke the jurisdiction of the court." Miller v. Brown, 462 F.3d 312, 316 (4th Cir. 2006). Federal Rule of Civil Procedure 12(b)(1) governs motions to dismiss for lack of subject matter jurisdiction. See Khoury v. Meserve, 268 F.Supp.2d 600. 606 (D. Md. 2003). aff'd. 85 F.App'x 960 (4th Cir. 2004). Once a challenge is made to subject matter jurisdiction. Plaintiffs bear the burden of proving that subject matter jurisdiction exists. See Evans v. B.F. Perkins Co., a Div. of Standex Int'l Corp., 166 F.3d 642. 647 (4th Cir. 1999); see also Ferdinand-Davenport v. Children 's Guild, 742 F.Supp.2d 772. 777 (D. Md. 2010).

         The Court should grant a Rule 12(b)(1) motion "only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law." Evans, 166 F.3d at 647. In ruling on a motion to dismiss under Rule 12(b)(1). the Court "should regard the pleadings as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment." Ferdinand-Davenport. 742 F.Supp.2d at 777 (quoting Evans. 166 F.3d at 647); see also Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765. 768 (4th Cir. 1991).

         Defendants may also "test the adequacy of a complaint by way of a motion to dismiss under Rule 12(b)(6)." Maheu v. Bank of Am., N.A., No. 12-CV-508. 2012 WL 1744536. at *4 (D. Md. May 14. 2012) (citing German v. Fox, 267 F.App'x 231. 233 (4th Cir. 2008)). To overcome a Rule 12(b)(6) motion, a complaint must allege enough facts to state a plausible claim for relief. Ashcroft v. Iqbal, 556 U.S. 662. 678 (2009). A claim is plausible when "the plaintiff pleads factual content that allows the Court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. In evaluating the sufficiency of the Plaintiffs* claims, the Court accepts factual allegations in the Complaint as true and construes the tactual allegations in the light most favorable to the plaintiff. Albright v. Oliver, 510 U.S. 266. 268 (1994); Lambeth v. Bd. of Comm'rs of Davidson Cty., 407 F.3d 266, 268 (4th Cir. 2005). Complaints filed by pro se plaintiffs, as here, are "to be liberally construed" and "must be held to less stringent standards than formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89. 94 (2007). However, the Complaint must contain more than "legal conclusions, elements of a cause of action, and bare assertions devoid of further factual enhancement." Nemet Chevrolet, Ltd v. Consumeraffairs.com. Inc., 591 F.3d 250. 255 (4th Cir. 2009).

         Further, in claims "alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). Rule 9(b) requires "that a plaintiff alleging fraud must make particular allegations of the time, place, speaker, and contents of the allegedly false acts or statements." Adams v. NVR Homes. Inc., 193 F.R.D. 243. 249-50 (D. Md. 2000); U.S. ex rel. Wilson v. Kellogg Brown & Root. Inc., 525 F.3d 370. 379 (4th Cir. 2008) (describing the "who. what. when, where, and how of the fraud claim"). "Even where a plaintiff is proceeding pro se. the particularity requirements of Rule 9(b) apply." Coulibay v. J. P. Morgan Chase Bank, N.A., No. DKC 10-3517. 2011 WL 3476994. at *19 n.23 (D.Md. Aug. 8. 2011).

         III. ANALYSIS

         A. Abstention

         Defendants first argue that the Court should decline to exercise jurisdiction over Plaintiffs* claims based upon the Younger and Colorado River abstention doctrines. ECF No. 6-2 at 15-18. Plaintiffs object, arguing that this implores the Court to "ignore the obligation ... to take jurisdiction of federal claims" and "seeks the unconstitutional deprivation of Plaintiffs* right to seek money damages." ECF No. 10 at 6-27. Under Younger abstention, named after the seminal case of Younger v. Harris, 401 U.S. 37 (1971), a federal court must abstain from interfering if there is: "(1) an ongoing state judicial proceeding, instituted prior to any substantial progress in the federal proceeding; that (2) implicates important, substantial, or vital state interests; and (3) provides an adequate opportunity for the plaintiff to raise the federal constitutional claim advanced in the federal lawsuit." Laurel Sand & Gravel, Inc. v. Wilson, 519 F.3d 156, 165 (4th Cir. 2008); see also Middlesex Cty. Ethics Comm. v. Garden State Bar Ass'n., 457 U.S. 423, 432 (1982) (describing these three factors which are sometimes called the "Middlesex conditions").

         Defendants assert that "when faced with related state court foreclosure proceedings, this and other federal courts have abstained in the federal action." ECF No. 6-2 at 16 (citing Tucker v. Specialized Loan Servicing, LLC. 83 F.Supp.3d 635. 643-44 (D. Md. 2015) (declining to issue declaratory judgment on Younger grounds); Fiallo v. PNC Bank, N.A., No. PWG-14-1857. 2014 WL 6983690. at *2-3 (D. Md. Dec. 9. 2014) (discussing Younger doctrine as alternative grounds for dismissal); Graves v. One West Bank. FSB. No. DKC-13-3343, 2014 WL 994366. at *2 (D.Md. Mar. 13. 2014); Cunningham v. JP Morgan Chase Bank, 537 Fed.Appx. 44. 45 (3d Cir. 2013); Doscher v. Menifee Cir. Ct., 75 F.App'x. 996. 997 (6th Cir. 2003)). These cases are ultimately unhelpful to Defendants' case, however, as explained below.

         First, the case of Younger itself dealt with an ongoing state criminal prosecution. See Younger, 401 U.S. 37. Since Younger, the Supreme Court "has extended Younger abstention to particular state civil proceedings that are akin to criminal prosecutions." Sprint Commc 'n., Inc. v. Jacobs. 134 S.Ct. 584, 588 (2013). However, as recent Supreme Court jurisprudence has also made clear, "[c]ircumstances fitting within the Younger doctrine ... are "exceptional"; they include . . .'state criminal prosecutions, " "civil enforcement proceedings, " and 'civil proceedings involving certain orders that are uniquely in furtherance of the state courts" ability to perform their judicial functions.''' Sprint, 134 S.Ct. at 588 (2013) (citing New Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 491 U.S. 350 (1989)). The Supreme Court further opined:

Divorced from their quasi-criminal context, the three Middlesex conditions [supra] would extend Younger to virtually all parallel state and federal proceedings, at least where a party could identify a plausibly important state interest. That result is irreconcilable with our dominant instruction that, even in the presence of parallel state proceedings, abstention from the exercise of federal jurisdiction is the "exception, not the rule." Sprint, 134 S.Ct. at 588 (2013). The Court in Tucker v. Specialized Loan Servicing LLC. 83 F.Supp.3d 635 (D. Md. 2015), a similar mortgage loan case, noted that "[h]ere, the ongoing state court proceeding certainly is neither a criminal proceeding nor akin to one; if anything it mirrors contract litigation." Tucker, 83 F.Supp.3d at 646. Similarly here, no facts demonstrate that the Maryland state foreclosure proceeding is akin to a quasi-criminal proceeding. See Brumfiel v. U.S. Bank, N.A., No 14-2453-WJM. 2014 WL 7005253 (D. Colo. Dec. 11. 2014) (finding that state foreclosure proceeding did not fall into first two categories of proceedings noted in Sprint, and that it was unclear whether it fell into the third); Lech v. Third Fed. Say. & Loan Ass 'n of Cleveland. No. 13-518. 2013 WL 6843062. at * 1-2 (S.D. Ohio Dec. 27. 2013) (finding that state-court action was a "garden variety foreclosure case" and did not fall into any of the three categories).

         Second, whether abstention is proper is informed by the type of relief sought. See Johnson v. City of Chesapeake. Virginia. 205 F.3d 1333. at *1 (4th Cir. 2000). The Supreme Court has prescribed that while federal courts are empowered to dismiss or remand cases based on abstention principles where equitable relief is sought, as injunctive or declaratory relief, federal courts generally may not do so in a common-law action for damages. See Quackenbush v. Allstate Ins. Co.. 517 U.S. 706. 719-21 (1996) (noting that "we have applied abstention principles to actions 'at law" only to permit a federal court to enter a stay order that postpones adjudication of the dispute, not to dismiss the federal suit altogether.") (emphasis in original). Rather, "[w]here the plaintiff seeks damages, federal courts may not dismiss an action, but can stay proceedings to await conclusion of the state action." 1-77 Properties. LLC v. Fairfield Cty., 288 F.App'x 108. 110 (4th Cir. 2008).

         Defendants" cited cases are thus inapposite because they are either pre-Sprint and/or cases in which the Plaintiff sought injunctive relief. In Tucker, for example, the Court noted that "Plaintiffs" declaratory judgment action may interfere with the state court's attempt to effect these orders."" Tucker, 83 F.Supp.3d at 647. In Cunningham, the plaintiff asked the Court to "enjoin the foreclosure action."" Cunningham. 537 F. App"x 44. Similarly in Doscher. plaintiff had "asked the district court to block the sale of his house."" Doscher. 75 F.App'x at 996 (6th Cir. 2003) In Graves, plaintiff, who had initially sought injunctive relief, was moving for reconsideration and to submit an amended complaint. Graves v. One W. Bank, FSB. No. CIV.A. DKC 13-3343, 2014 WL 994366. at *1 (D. Md. Mar. 13. 2014). Plaintiffs here are exclusively seeking damages, ECF No. 1 at 40. hence, dismissal is not appropriate. And. "because it is not clear that an order of foreclosure presents the 'exceptional circumstances' necessary to 'justify a federal court's refusal to decide a case in deference to the States* under Younger.'' the ...


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