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Aghazu v. Severn Savings Bank, FSB

United States District Court, D. Maryland

March 16, 2017

SEVERN SAVINGS BANK, FSB, et al., Defendants.



         Pro se Plaintiff Chineme Aghazu (Aghazu) has sued Severn Savings Bank, FSB (Severn), FCI Lender Services, Inc. (FCI), and Pontus SB Trust (Pontus).[1] In her original Complaint (ECF No. 1), Aghazu alleged violations of the Truth-in-Lending Act (TILA), 15 U.S.C. § 1601, et seq., the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692, et seq., the Maryland Consumer Debt Collections Act (MCDCA), Md. Code Ann., Com. Law, § 14-201, et seq., and the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601, et seq.

         Following an initial round of Motions to Dismiss (ECF Nos. 5, 10, 18), followed by a hearing in open court, the Court issued a Memorandum Opinion and Order dated March 1, 2016 (ECF Nos. 24, 25), granting Severn's Motion to Dismiss and Supplemental Motion to Dismiss (ECF Nos. 5, 18) and granting in part and denying in part FCI and Pontus' Motion to Dismiss (ECF No. 10). In so doing, the Court dismissed with prejudice Aghazu's TILA and FDCPA claims (Counts I, II, and III) and dismissed without prejudice her MCDCA and RESPA claims (Counts IV and V), [2] granting her leave to amend those counts. Aghazu did file an Amended Complaint (ECF No. 29), and thereafter FCI and Pontus (collectively, “Defendants”) filed a joint Motion to Dismiss (ECF No. 35).

         On September 6, 2016, the Court held a one-day Bench Trial to address a limited set of issues that it believed it needed to resolve before it could rule on Defendants' Motion to Dismiss.[3] The next day the Court ruled, as a matter of law, that Aghazu was not liable for the approximately $14, 000 in attorneys' fees and costs claimed by Severn or Defendants that had been discharged in the Consent Order following Aghazu's bankruptcy proceedings or for fees and costs purportedly incurred in connection with a foreclosure proceeding that was never filed. ECF No. 56. The Court further determined that Aghazu was not personally liable to Severn or Defendants in the amount of $12, 572.97 for the Fiscal Year 2010 property taxes paid to Prince George's County by Severn on her behalf, such that she should not have been assessed the amount of the unpaid taxes in her current mortgage account.[4]

         Aghazu filed an Opposition to Defendants' Motion to Dismiss Amended Complaint (ECF No. 60) to which Defendants did not reply.

         For the following reasons, Defendants' Motion to Dismiss Amended Complaint (ECF No. 35) is GRANTED IN PART and DENIED IN PART.


         A. The Mortgage Loan from Severn

         In October 2003, Aghazu obtained a mortgage Loan (“Loan”) from Severn in the amount of $265, 000.00. Compl. ¶ 8, ECF No. 1. The Loan was evidenced by a Note (“Note 1”) secured by a Deed of Trust encumbering Aghazu's home at 7704 Northern Avenue, Glenn Dale, MD 20769 (the “Property”). Compl., Exs. 1, 2, ECF No. 1-1. Aghazu and Severn subsequently agreed to modify the Loan on two occasions: first, on February 11, 2008 (increasing the Loan amount to $340, 000.00); later, on August 28, 2008 (increasing the Loan amount to $380, 000.00). Compl. ¶¶ 11-12; Compl. Exs. 3, 4, ECF No. 1-1. In addition to increasing the amount of the Loan in August 2008, the parties executed a second Note (“Note 2”), which was a modified version of Note 1.[6] Compl. Exs. 4, 5, ECF No. 1-1. Under the terms of Note 2, Aghazu was obligated to amortize the $380, 000.00 mortgage loan at 7.0% interest per annum, with monthly payments in the amount of $2, 528.15. Compl. Ex. 5.

         B. Fiscal Year 2010 Taxes and Insurance

         Apart from the foregoing, in 2009, Severn paid $12, 572.97 to Prince George's County to cover the yearly property taxes on Aghazu's Property. Severn also paid $1, 075.23 for insurance. Both of these charges were debited against Aghazu's current mortgage account which, at the time had a positive balance of $2, 122.29, leaving a balance purportedly owed by her of $11, 525.91.[7]

         C. The Bankruptcy Proceedings

         On August 21, 2009, Aghazu filed for Chapter 7 bankruptcy in this Court. Ch. 7 Case No. 09-25607 (D. Md. Aug. 21, 2009). On October 14, 2009, during the course of the Chapter 7 proceeding, with leave of the Court, she filed an adversary proceeding against Severn, alleging violations of the TILA and wrongful foreclosure. Ch. 7 Case No. 09-25607, Adv. No. 09-719 (D. Md. Oct. 14, 2009). In response, Severn contended that Aghazu was in default under the Loan and that the balance she owed thereunder was $439, 935.00, which included outstanding principal, accrued interest, unpaid escrow amounts, late fees, attorney's fees, and costs. Ch. 7 Case No. 09-25607, Adv. No. 09-719, ECF No. 11.

         In January 2010, in order to resolve their dispute, the parties executed a Mutual Release and Settlement Agreement and entered a Consent Order Resolving [the] Motion to Dismiss [the] Complaint and Dismissing [the] Adversary Proceeding (“Consent Order”). Id.; Compl. Ex. 8, ECF No. 1-1. Pursuant to the Consent Order, Aghazu was permitted to remain in the Property until January 1, 2011 without having to make any mortgage payments. Compl. Ex. 8 ¶ 2. After that time, she was allowed to remain in the Property, provided that she make interest-only payments at the reduced rate of $1, 583.33 per month, and provided further that she aggressively market the Property for sale by December 31, 2011. Id. If Aghazu failed to close under a contract of sale before December 31, 2011, the Consent Order entitled Severn to exercise all the rights it had under the original Loan documents, including Note 2. Id. At the same time, under the terms of the Consent Order, each party was absolved of all “claims arising from the Lawsuit or the Borrower's procurement of the Loan.” Id. ¶ 5. The Consent Order stated that “[t]his Release shall unconditionally remain in effect even if Borrower fails to close under a contract of sale for the purchase of the Property on or before December 31, 2011, and alternatively, this release shall not bar Lender from exercising all of its rights afforded to it under the Loan Documents should Borrower fail to comply with the terms of this Agreement or should closing under a contract not be consummated on or before December 31, 2011, for the purchase of the Property.” Id. Pursuant to the Consent Order, both Aghazu and Severn were deemed responsible for and left to pay their own legal fees, expenses, and costs. Id. ¶ 7.

         D. Aghazu's Post-Bankruptcy Occupancy of the Property and Loan Payments

         Aghazu never did sell the Property following the bankruptcy proceeding.[8] See Compl. ¶ 19; Pl.'s Line to File Exhibits, Aff. Chineme Aghazu (“Aghazu Aff.”) ¶ 1, ECF No. 20-1. Beginning January 1, 2011, however, she duly paid and has continued to pay $1, 583.33 each month toward her mortgage. She characterizes these payments as “new principal and interest payment[s].” See Compl. ¶ 18. It is clear, however, that the $1, 583.33 Aghazu has been paying corresponds to the reduced rate interest-only payment she was obliged to pay after January 1, 2011 under the terms of the Consent Order. Compl. Ex. 8 ¶ 5. While the extent to which Severn may have attempted to enforce its full rights under Note 2 after December 31, 2011 is unclear, on at least one occasion, in August 2013, Severn did send Aghazu a Notice of Intent to Foreclose, informing her that she was in default under the Consent Order. Pl.'s Line to File Exhibits, Ex. D, ECF No. 20-5.

         E. Severn's Sale of the Loan to Pontus SB Trust and Transfer of Servicing to FCI

         On December 31, 2013, Severn sold Aghazu's Loan to Pontus. Compl. Ex. 10; see also Severn's Reply, Ex. 1, ECF No. 7-1. On that same day, Severn notified Aghazu that it had sold her Loan to Pontus and further advised that, effective February 1, 2014, servicing of the Loan would be transferred to FCI. Compl. Ex. 10, ECF No. 1-1. Aghazu avers that she sent Severn a letter on January 6, 2014, asking for the payoff amount of her loan “as of January 2013” (presumably she intended January 2014) Compl. Ex. 9, ECF No. 1-1, but that Severn never responded to this request. Compl. ¶ 23.

         The Loan's new servicer, FCI, claims that on February 3, 2014 it sent Aghazu a Borrower Welcome Letter, advising her that the amount due under the Loan was $394, 996.20. Compl. Ex. 15 at 0058, ECF No. 1-1. Aghazu alleges that she did not receive this letter in February 2014, asserting that she only obtained a copy of it in response to a November 7, 2014 Qualified Written Request (QWR) she sent to FCI. See Aghazu Aff. ¶ 15.

         F. Fees Charged to Aghazu and Her Attempt to Refinance

         On February 19, 2014, Aghazu sent a payoff request to FCI. Compl. Ex. 11, ECF No. 1-1. On that same day, FCI sent her a payoff statement containing the word “DRAFT” in large letters across the paper, indicating that the amount due under the Loan was $394, 669.00.[9] Compl. Ex. 12 at 0188, ECF No. 1-1. The statement included $11, 571.70 in “unpaid charges” itemized as “negative escrow balance” and interest. Id. On February 25, 2014, FCI sent another payoff statement to Aghazu, this time without the word “DRAFT, ” and this time informing Aghazu that the total amount due under the Loan was $407, 513.49. Compl. Ex. 13, ECF No. 1-1. The February 25, 2014 payoff statement included a line item for “Unpaid Charges” in the amount of $25, 988.36. Id. A subsequent payment statement sent to Aghazu in October 2014 included a roughly similar figure - $26, 860.64 - designated as “Fees” due. Compl. Ex. 15 at 0026. Aghazu asserts that these “Unpaid Charges” or “Fees” represented attorney's fees, property taxes, and other items that had been waived under the terms of the Consent Order.[10] And, indeed, on March 24, 2014, Aghazu received a letter from Severn stating that “[f]rom October 2008 through December 2009, Severn had incurred attorney fees associated with foreclosure filings, bankruptcy filings, and negotiation, drafting and execution of the December 15, 2009 Mutual Release and Settlement Agreement.” Id.[11] The letter also stated that the amount Aghazu owed for the “negative escrow of $11, 525.91 [was] a result of [her] failure to pay real estate taxes on the property securing the loan for [2009 to 2010], totaling $12, 572.97.” Plf.s' Ex. 6 at Bench Trial.

         Around this time, which is to say beginning in December 2013 and continuing until March 2014, Aghazu says she was attempting to refinance her mortgage with an entity known as Mortgage One Solutions (“Mortgage One”). Aghazu Aff. ¶¶ 4, 14, 16, 17. In the process, she says, she requested payoff figures first from Severn and then from FCI in order to facilitate the transaction. See Id. Aghazu claims, however, that due to the fact that the payoff figures she eventually received from FCI erroneously showed that she owed approximately $25, 000 in unpaid fees and costs, Mortgage One declined to refinance her Loan. Pl.'s Line to File Exhibits, Ex. J, ECF No. 20-11. In other words, these additional “fees” and “costs” which Aghazu claims were improper, caused her to lose her opportunity to refinance. Compl. Exs. 12, 13; Pl.'s Line to File Exhibits, Ex. J. In fact, at the September 6, 2016 Bench Trial, Aghazu called former Mortgage One Loan Officer Harold White as a witness, who testified that Aghazu's loan had been approved pending receipt of payoff figures from Defendants, but that after Mortgage One received the payoff figures including the allegedly unpaid fees and costs, her loan was denied because the loan-to-value ratio had changed. White's testimony to this effect is further recounted in the text accompanying Note 18, infra.

         Aghazu asserts that she attempted to correct Defendants' alleged error regarding the fees and costs in February and March 2014, after having been informed by Mortgage One that the additional “fees” might in fact be an error stemming from the transfer of the Loan from Severn to Pontus, with FCI as servicer, but she was unable to convince Defendants that they were indeed mistaken. See Pl.'s Line to File Exhibits, Ex. J.

         On September 29, 2014, Pontus sent Aghazu a Notice of Intent to Foreclose her Property. Pl.'s Line to File Exhibits, Ex. I, ECF No. 20-10. The Notice yet again cited the unpaid fees and costs, this time totaling $26, 697.53, payment of which Pontus indicated would be required in order to cure Aghazu's supposed default. Id.

         G. Aghazu's Original Complaint, Defendants' Motions to Dismiss, and the Court's March 1, 2016, Memorandum Opinion and Order

         On May 27, 2015, Aghazu filed her original Complaint in this Court, alleging that Severn and FCI had failed to provide her with accurate payoff information, in violation of Regulation Z of the TILA, 12 C.F.R. § 1026.36(c)(3) (Count I)[12]; that FCI had made a false representation in connection with the collection of her mortgage debt in violation of the FDCPA, 15 U.S.C. § 1692e(2)(A) (Count II); that FCI had engaged in unfair debt collection practices in violation of the FDCPA, 15 U.S.C. 1692f(1) (Count III)[13]; that both FCI and Pontus had engaged in unlawful debt collection in violation of the MCDCA (Count IV); and that FCI and Severn had failed to give her adequate notice of a loan servicing transfer in violation of RESPA, 12 U.S.C. § 2605(c) (Count V).[14]

         Severn, FCI, and Pontus moved to dismiss all counts of the original Complaint, arguing pursuant to Federal Rule of Civil Procedure 12(b)(6) that Aghazu had failed to state a claim upon which relief might be granted.

         On March 1, 2016, the Court issued a Memorandum Opinion and Order dismissing with prejudice Aghazu's TILA and FDCPA claims (Counts I, II, and III) because they were barred by applicable statutes of limitations but dismissing without prejudice her MCDCA and RESPA claims (Counts IV and V) for failure to state a claim. As to the dismissals without prejudice, the Court granted Aghazu leave to re-plead her ...

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