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Dainty v. Wells Fargo Bank, N.A.

United States District Court, D. Maryland

February 23, 2017

GLADSTONE A. DAINTY, Plaintiff,
v.
WELLS FARGO BANK, N.A., Defendant.

          MEMORANDUM OPINION

          THEODORE D. CHUANG UNITED STATES DISTRICT JUDGE.

         Gladstone A. Dainty has filed this action against Wells Fargo Bank, N.A. ("Wells Fargo") alleging violations of the Maryland Consumer Protection Act ("MCPA"), Md. Code Ann., Com. Law §§ 13-101 to -501 (West 2013), and state common law claims of detrimental reliance and negligence. Dainty also seeks declaratory and injunctive relief. Pending before the Court is Wells Fargo's Motion to Dismiss. For the reasons set forth below, the Motion is granted.

         BACKGROUND

         On March 31, 2006, Dainty entered into a $999, 999 mortgage loan relating to a property in Upper Marlboro, Maryland. Dainty began experiencing financial difficulties, and foreclosure proceeding were initiated on September 25, 2012 in the Circuit Court for Prince George's County, Maryland ("the Circuit Court").

         In July 2013, Dainty filed for bankruptcy in the United States Bankruptcy Court for the District of Maryland, and the foreclosure action was stayed. Dainty submitted a proposed Chapter 11 Plan of Reorganization, which the bankruptcy court confirmed on July 7, 2015. The Chapter 11 Plan provided that Wells Fargo's claim to the property at issue "shall be satisfied in full by the surrender of the collateral for that claim as of the effective date of the plan" and that confirmation of the plan would lift the stay in the foreclosure proceedings, allowing Wells Fargo "to foreclose on the property and take such steps as may be necessary to recover possession thereof." Joint Record ("J.R.") 70, ECF No. 16. Any unsecured deficiency claim would be barred unless Wells Fargo asserted it within 90 days of the date of the Chapter 11 Plan's confirmation. No such claim was asserted.

         While the foreclosure proceedings continued, in February 2016, Wells Fargo sent Dainty correspondence inviting him to apply for a loan modification under the Home Affordable Modification Program ("HAMP"). HAMP aims to reduce foreclosures by encouraging lenders to refinance or otherwise modify mortgages. See Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769, 112-1A (4th Cir. 2013). To qualify for a HAMP loan modification, a borrower must "meet certain threshold requirements, " including having an unpaid principal balance that is below a specified amount. Id. at 773 (quoting Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 556 (7th Cir. 2012)). If the mortgage servicer determines that a borrower is eligible for a loan modification, the servicer implements a Trial Period Plan under new repayment terms. Id. These repayment terms become permanent after the trial period ends if the borrower has complied with the plan's terms and conditions. Id.

         Wells Fargo's February 2, 2016 letter to Dainty stated:

We want you to know there is a program available that may help you. If you qualify under the federal government's Home Affordable Modification Program and comply with the terms of the Home Affordable Modification Program Trial Period Plan, we will modify your mortgage loan and you can avoid foreclosure.

J.R. 108. After providing guidance on materials to be submitted as part of an application, Wells Fargo stated, "Once we receive all of your documentation and verify your information, we will determine whether you qualify for a Home Affordable Modification of your loan." J.R. 112. The letter further stated, "If you do not qualify, I will want to discuss other options with you that may help you keep your home or ease your transition to another home." J.R. 113. Wells Fargo also stated:

If your mortgage has been referred to foreclosure, as part of the foreclosure process, you may receive notices from a third-party attorney delivered by mail, or see steps being taken to proceed with a foreclosure sale of your home. During the HAMP Trial period, a foreclosure sale will not be held as long as you comply with the terms of the trial period and make all your payments on time.

J.R. 112. On February 18, 2016, Dainty submitted a HAMP application. Wells Fargo denied Dainty's application on March 2, 2016, explaining that he did not qualify for HAMP because the unpaid principal balance on his loan exceeded the program limit. Wells Fargo did not discuss other loss mitigation options with Dainty.

         Dainty filed a motion to stay and dismiss the foreclosure proceedings on June 16, 2016. As reflected in the docket, the Circuit Court denied Dainty's motion because it did "not state a valid defense or present [a] meritorious argument, " the request was "not timely filed/not excused for good cause, " and the motion failed "to state [a] factual and legal basis" for relief. J.R. 24. The foreclosure action is pending on appeal. See Docket, Dore v. Dainty, No. CAE12-31118 (Cir. Ct. filed Sept. 25, 2012), http://casesearch.courts.state.md.us/casesearch/.

         On or about June 16, 2016, Dainty filed this lawsuit in the Circuit Court. Dainty pleads in his Complaint that he detrimentally relied upon Wells Fargo's February 2, 2016 letter by taking the time to complete and submit a HAMP application and failing to take "defensive action" in the foreclosure proceeding. Compl. ¶ 17. He alleges that this reliance led to mental anguish, which manifested itself "in the form of sleep loss and other physical symptoms." Id. ΒΆ 19. Dainty seeks monetary damages, attorney's fees, a declaratory judgment, and an "injunction prohibiting Defendant from further pursuing foreclosure, and requiring Defendant to honor its ...


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