United States District Court, D. Maryland, Southern Division
BARBARA A. GIBBS, et al, Plaintiffs,
BANK OF AMERICA, N.A., et al, Defendants.
J. HAZEL United States District Judge.
removal action stems from pro se Plaintiffs Barbara
A. Gibbs and Melvin E. Gibbs' claims against Defendants
Bank of America, N.A. ("Bank of America"),
Nationstar Mortgage ("Nationstar"); Urban
Settlement Services, d/b/a Urban Lending Solutions
("Urban"); Jeffrey Nadel, Esq.; Atlantic Law Group,
LLC ("Atlantic Law Group"); Montgomery Village
Foundation, Inc. ("Montgomery Village Foundation");
Maryland Attorney General Brian E. Frosh; South Carolina
State Judge Cynthia Graham Howe and South Carolina Attorney
General Alan McCroy Wilson (hereinafter, the "South
Carolina Defendants") and four unnamed defendants
("DOES 6-10"), regarding Plaintiffs'
unsuccessful attempts to receive loan modifications on their
mortgages. Dispositive motions are pending before the Court
on behalf of all of the named defendants in this case:
Defendant Frosh's Motion to Dismiss, ECF No. 10;
Defendants Bank of America and Nationstar's Motion to
Dismiss, ECF No. 13; Defendant Nadel's Motion to Dismiss,
ECF No. 17; Montgomery Village Foundation's Motion to
Dismiss, ECF No. 25; Defendant Urban's Motion to Dismiss,
ECF No. 31; the South Carolina Defendants' Motion to
Dismiss, ECF No. 57; and Defendant Atlantic Law Group's
Motion to Dismiss, ECF No. 66. Plaintiffs have filed a myriad
of motions which the Court will also consider at this time:
Plaintiffs' Motion for Summary Judgment, ECF No. 39;
Plaintiffs' Motion for Clerk's Entry of Default as to
Defendant Atlantic Law Group, ECF No. 48; Plaintiffs'
Motion for Sanctions Against All Defendants, ECF Nos. 53, 70
and 74; Plaintiffs' Motion for Leave to File a Second
Amended Complaint, ECF No. 60; Plaintiffs' Motion for
Clerk's Entry of Default as to unspecified Defendants,
ECF No. 65; and Plaintiffs' Motion for Clerk's Entry
of Default as to Bank of America, Nationstar, Nadel, Atlantic
Law Group, the South Carolina Defendants and the Attorney
General of Maryland, ECF No. 71. A hearing is unnecessary.
Loc. R. 105.6 (D. Md. 2016). For the reasons stated below,
the Court will grant all of Defendants' pending motions
to dismiss and deny Plaintiffs' motions.
2005 and 2006, Plaintiffs purchased two homes, one in
Florence, South Carolina and one in Gaithersburg, Maryland.
ECF No. 2 ¶ 50. Plaintiffs state that they
"financed the building of their South Carolina home with
a one year construction loan[, ] purchased with a 30-year
fixed rate mortgage from [Bank of America.]."
Id. Plaintiffs further state that the South Carolina
home was their primary residence until 2011, when they moved
to Maryland so that Mr. Gibbs could receive cancer treatment
at Johns Hopkins Hospital in Baltimore, Maryland.
Id. ¶¶ 50, 59. They proffer no additional
facts regarding the existence of a mortgage for their
Maryland home. However, the judge in a prior, almost
identical case that Plaintiffs brought in the District of
Colorado stated that "it is clear that both of
the Plaintiffs' mortgages were with [Bank of
America]." See Gibbs-Squires v. Urban Settlement
Servs., No. 14-CV-00488-MSK-CBS, 2015 WL 196217, at *9
n.12 (D. Colo. Jan. 14, 2015), aff'd, 623
F.App'x 917 (10th Cir. 2015) (emphasis in the original)
(hereinafter, "the Colorado
in May of 2008, Plaintiffs sought loan modifications from
Bank of America. ECF No. 2 ¶ 53. Bank of America
initially approved Plaintiffs' request for loan
modifications, conditioned upon their payment of $30, 000 in
closing costs. Id. Plaintiffs declined the loan
modifications because any savings from a reduction in their
monthly mortgage payments would be erased by the new
requirement to pay closing costs. Id. Plaintiffs
continued, unsuccessfully, to request alternative loan
modifications from Bank of America until 2012. Id.
¶¶ 55-70. At that point, they were informed by Bank
of America that their mortgages had been sold to Nationstar.
Id. ¶ 70. Although Plaintiffs state that they
"made all of their mortgage payments in full and on
time, " id. ¶ 50, this contention is
contradicted by their filings in the Colorado
Action, where they stated that "[i]n or about
November 2009, after being totally frustrated with [Bank of
America], Mr. Gibbs returned to South Carolina; we stopped
paying the mortgage and have not paid the mortgage in five
(5) years." Colorado Action, 2015 WL 196217, at
complain about their treatment by Bank of America employees
while they sought loan modifications, stating that they were
repeatedly misled about their qualifications for a federal
program known as the Home Affordable Modification Program
("HAMP"), which aims to provide mortgage
modifications to eligible borrowers facing foreclosure, and
were often told to resubmit documents that they had already
submitted. Id. ¶¶ 5-6,
50-73. These allegations are repeated, almost
word for word, from the allegations in Plaintiffs'
Colorado Action complaint, which focused on
Plaintiffs' request for a loan modification regarding the
South Carolina property. Compare ECF No. 1
¶¶ 50-73, with Colorado Action, 2015 WL
196217, at Dkt. No. 1 ¶¶ 109-131.
allegations serve as the basis for what Plaintiffs describe
as a violation of the Racketeer Influenced and Corrupt
Organizations ("RICO") Act, 18 U.S.C. §
1962(c), in which Bank of America, Nationstar, Urban and
other known and unknown defendants, conspired to defeat the
purpose of the HAMP program by misleading and deceiving
borrowers. ECF No. 2 ¶¶ 2, 5-6, 9-13; see also
Id. ¶¶ 77-98. According to Plaintiffs, Bank of
America and its coconspirators "serially strung out,
delayed and otherwise hindered the modification processes
that it agreed to facilitate, " resulting in otherwise
qualified homeowners becoming unable to participate in the
program. Id. ¶¶ 4-5. Plaintiffs allege
that Bank of America directed Nationstar and Urban to acquire
mortgages of HAMP applicants and foreclose on their homes.
Id. ¶¶ 7, 25-46. They further assert that
Bank of America, Nationstar, Urban, and their other
co-conspirators, fraudulently claimed that key documents
relating to HAMP modifications were never received and lied
to homeowners who were in the process of applying for HAMP
modifications. Id. ¶ 9.
also allege that Bank of America directed Defendants Nadel,
Atlantic Law Group and Montgomery Village Foundation, to file
frivolous lawsuits against them, with the goal of
"stealing" their homes. Id. ¶
They further allege that the Maryland Attorney General
entered into a consent agreement with Bank of America,
agreeing to turn a "Blind Eye to [Bank of America's]
continued conspiracy and racketeering in defrauding
HAMP" in return for receiving money from the bank.
Id. ¶ 24. Finally, Plaintiffs claim that
Defendants have "paid bribes to South Carolina
government employees to institute and maintain their illegal
foreclosure practices." Id. ¶ 107.
with their RICO claim, Plaintiffs bring seven additional
claims against the Defendants, who they often refer to
generally as "Defendants" or the "HAMP-less
gang." Id. ¶ 23. First, they allege state
law claims of breach of contract, unjust enrichment,
conspiracy and violations of the Maryland Consumer Protection
Act ("MCPA"), Md. Code Ann., Com. Law §
13-101, et seq. Id. ¶¶ 49-73,
99-109. Plaintiffs also allege violations of three
federal civil rights statutes, 42 U.S.C. §§ 1983,
1985 and 1986, claiming that Defendants' "illegal
actions were instituted against Plaintiffs based on their
RACE: BLACK." Id. ¶ 108.
March 26, 2015, Nadel, on behalf of Nationstar, instituted
foreclosure proceedings against Plaintiffs regarding the
Maryland property. See Nadel Action, Case No.
402900V, at Dkt. No. 1. On June 2, 2015, Plaintiffs
filed a counter-claim in that case, id., at Dkt.
No.12, which was separated from the foreclosure case and
became the initial complaint in a new case. See Gibbs v.
Bank of America, N.A., Case No. 405624V (Mont. Co. Cir.
Ct. 2015), Dkt. No 1 (hereinafter, the "Gibbs
Action"). On August 12, 2016, Defendants Bank of
America and Nationstar removed the Gibbs Action to
this Court. ECF No. 1.
removal, each of the named Defendants filed a motion to
dismiss, arguing that Plaintiffs' claims were barred on
multiple grounds including res judicata, lack of
subject matter jurisdiction, improper venue, lack of personal
jurisdiction, and failure to state a claim upon which relief
may be granted. See ECF Nos. 10, 13, 17, 25, 31, 57,
and 66. Plaintiffs responded to Defendants' motions via
two omnibus Responses in Opposition, along with separate
Responses to the South Carolina Defendants and Defendant
Atlantic Law Group's motions, purporting to address the
arguments of the Defendants, but instead mainly reiterating
the conclusory allegations from their Amended Complaint.
See ECF Nos. 20, 38, 62 and 69. Plaintiffs have also
filed their own motions, including a Motion for Summary
Judgment on all claims, ECF No. 39; Motion for Clerk's
Entry of Default as to Defendant Atlantic Law Group, ECF No.
48; Motion for Sanctions Against All Defendants, ECF Nos. 53,
70 and 74; Motion for Leave to File a Second Amended
Complaint, ECF No. 60; Motion for Clerk's Entry of
Default as to unspecified Defendants, ECF No. 65; and Motion
for Clerk's Entry of Default as to All Defendants, ECF
STANDARD OF REVIEW
survive a motion to dismiss invoking Fed.R.Civ.P. 12(b)(6),
"a complaint must contain sufficient factual matter,
accepted as true, to 'state a claim to relief that is
plausible on its face.'" Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). "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. "Threadbare recitals of
the elements of a cause of action, supported by mere
conclusory statements, do not suffice." Id.
(citing Twombly, 550 U.S. at 555) ("a
Plaintiffs' obligation to provide the 'grounds'
of his 'entitle[ment] to relief requires more than labels
and conclusions, and a formulaic recitation of a cause of
action's elements will not do.").
Civ. P. 12(b)(6)'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." Presley v. City of
Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006)
(citation and internal quotation marks omitted). When
deciding a motion to dismiss under Rule 12(b)(6), a court
"must accept as true all of the factual allegations
contained in the complaint, " and must "draw all
reasonable inferences [from those facts] in favor of the
plaintiff." E.I. du Pont de Nemours & Co. v.
Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011)
(citations and internal quotation marks omitted). The Court
need not, however, accept unsupported legal allegations,
see Revene v. Charles County Comm 'rs, 882 F.2d
870, 873 (4th Cir. 1989), legal conclusions couched as
factual allegations, Papasan v. Allain, 478 U.S.
265, 286 (1986), or conclusory factual allegations devoid of
any reference to actual events. United Black Firefighters
of Norfolk v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979).
Amended 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 Amended
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
to Federal Rule of Evidence 201, a court at any stage of the
proceedings may "judicially notice a fact that is not
subject to reasonable dispute, " provided that the fact
"can be accurately and readily determined from sources
whose accuracy cannot reasonably be questioned."
Fed.R.Evid. 201(b)(2). These facts may be properly considered
by the court without converting a motion to dismiss into a
motion for summary judgment, as long as the facts are
construed in the light most favorable to the plaintiff.
Zak v. Chelsea Therapeutics Int'l Ltd.,
780 F.3d 597, 607 (4th Cir. 2015). Specifically, when as
here, Defendants have raised the defense of res
judicata, "a court may judicially notice facts from
a prior judicial proceeding." Ashe v. PNC Fin.
Servs. Grp., Inc., 165 F.Supp.3d 357, 360 (D. Md. 2015)
(quoting Brooks v. Arthur, 626 F.3d 194, 199 n.6
(4th Cir. 2010)). The consideration of the affirmative
defense of res judicata is appropriate at the motion
to dismiss stage where "it clearly appears on the face
of the complaint... and the res judicata defense raises no
disputed issue of fact" Andrews v. Daw, 201
F.3d 521, 524 n.1 (4th Cir. 2000).
Bank of America, Urban and Nationstar argue that all of
Plaintiffs' claims against them should be barred by the
doctrine of res judicata because the District Court
of Colorado rejected the same allegations two years ago in
the Colorado Action. See Colorado Action,
2015 WL 196217. While taking the time to file eight motions
in this case, including motions for sanctions, default and
summary judgment, Plaintiffs never mention the existence of
the prior litigation and do not address Defendants'
arguments regarding res judicata.
judicata, also known as claim preclusion, bars a party from
relitigating a claim that was decided or could have been
decided in an original suit." Mbongo v. JP Morgan
Chase Bank, N.A., No. CIV. PWG-14-1620, 2014 WL 3845443,
at *3 (D. Md. Aug. 4, 2014), affd, 589 F.App'x
188 (4th Cir. 2015) (quoting Laurel Sand & Gravel Co.
v. Wilson, 519 F.3d 156, 161 (4th Cir. 2008)). "For
res judicata to prevent a party from raising a claim, three
elements must be present: '(1)a judgment on the merits in
a prior suit resolving (2) claims by the same parties or
their privies, and (3) a subsequent suit based on the same
cause of action."' Ohio Valley Envtl Coal v.
Aracoma Coal Co., 556 F.3d 177, 210 (4th Cir. 2009)
(quoting Miff v. Joy Mfg. Co., 914 F.2d 39, 42 (4th
Cir. 1990)). "Even claims that were not raised in the
original suit may be precluded if they arose from the same
transaction or occurrence as those raised in the first suit
and were available to the plaintiff at the time of the first
suit." Id. at 210-11.
instance, the relevant prior proceedings occurred in federal
court. Thus, Fourth Circuit precedent regarding res
judicata applies, as "[i]t has been held in
non-diversity cases since Erie v. Tompkins, that the
federal courts will apply their own rule of res
judicata." Heiser v. Woodruff, 327 U.S. 726,
733 (1946); see also Andrews, 201 F.3d at 524
("Because [plaintiff] brought his first suit against
[defendant] in federal court, federal rules of res judicata
apply."). This is true even when, as is the case here,
the prior litigation included both state and federal claims.
See Mbongo, 2014 WL 3845443, at *3 (D. Md. Aug. 4,
2014) (quoting Shoup v. Bell & Howell Co., 872
F.2d 1178, 1179 (4th Cir. 1989) (internal citations omitted)
("[F]ederal, not state, law determines the preclusive
effect of a prior federal judgment, " including actions
where "a federal court sits in diversity or has some
other basis of jurisdiction.").
deciding the appropriate law to apply, the Court finds it
useful to first address the second element ofres
judicata, by identifying the claims and parties involved
in the prior litigation, before determining what issues were
decided on the merits. In the Colorado Action, the
same plaintiffs, Mr. and Mrs. Gibbs, brought claims against
three of the same defendants that appear in this litigation,
Bank of America, Urban and Nationstar. There, as here,
plaintiffs alleged that the defendants conspired to defeat
the purpose of the HAMP program by misleading and deceiving
borrowers in violation of RICO. As is relevant to these
proceedings, plaintiffs also alleged state law claims of
breach of contract and unjust enrichment regarding their
South Carolina property, and violations of several federal
civil rights statutes including 42 USC §§ 1983,
1985 and 1986. As the same parties present in the instant
suit brought claims against the same defendants in the prior
suit, the second element ofres judicata, requiring
"claims by the same parties or their privies, "
Ohio Valley Envtl. Coal, 556 F.3d at 210, is
the Court must determine whether the first element of res
judicata, "a judgment on the merits in a prior
suit, " has been met. Id. While ultimately
dismissing all claims against all defendants, the court in
the Colorado Action did not reach the merits on
every claim, instead dismissing some on jurisdictional
grounds. With respect to the RICO claim, it held that
plaintiffs failed to establish the alleged predicate acts of
mail or wire fraud, and also failed to allege a RICO injury.
Colorado Action, 2015 WL 196217, at *6.
Specifically, the court opined that as plaintiffs had no
right to a HAMP modification, they did not show that
"[Bank of America's] actions deprived someone of
money or property" and thus, "failed to assert
colorable contentions of mail or wire fraud, " as
required to support their RICO claim. Id. (emphasis
in the original). Additionally, the court held that
plaintiffs did not demonstrate that they had suffered a RICO
injury, because "they do not allege facts that show that
they meet the [HAMP] program's eligibility criteria (much
less demonstrate what, if any, modification they would have
been entitled to had their application been processed
promptly and correctly.)" Id. Because the court
ruled that plaintiffs had failed to state a RICO claim, that
decision operates as a judgment on the merits in a prior
litigation. Id. (dismissing RICO claim "against
Plaintiffs used RICO as a jurisdictional hook to bring
non-Colorado defendants, such as Nationstar and Bank of
America, within the jurisdiction of the District Court of
Colorado,  the court found it lacked personal
jurisdiction over Nationstar once the RICO claim had been
dismissed. Id. at *6-7. However, "dismissal for
jurisdictional defects has no res judicata effect."
Hosteller v. United States, 97 F.Supp.2d 691, 695
(E.D. Va. 2000) (citing Williams v. United States,
50 F.3d 299, 304 (4th Cir.1995)). Thus, while additional
claims were leveled against Nationstar in the Colorado
Action, the Court can only give res judicata
effect in this litigation to the RICO claims against
Nationstar because that was the sole claim adjudicated on the
the court, finding that it did have personal jurisdiction
over Bank of America, and Urban, a Colorado resident, reached
the merits as to the remainder of the claims against those
two defendants. See Colorado Action, 2015 WL 196217,
at *8-l 1. Thus, the first element of res judicata,
"a judgment on the merits in a prior suit, "
Ohio Valley Envtl. Coal, 556 F.3d at 210, is
satisfied for all the prior claims brought against Bank of
America and Urban, but only for the RICO claim brought
establish the third and final element of res
judicata, the Court must determine whether the present
litigation constitutes "a subsequent suit based on the
same cause of action." Id. The Fourth Circuit
employs a "transactional approach" in determining
whether or not there is "an identity of claims between
the first and second suit" meaning that "res
judicata will bar a newly articulated claim if it is based on
the same underlying transaction involved in the first suit
and could have been brought in the earlier action."
Providence Hall Assocs. Ltd. P'ship v. Wells Fargo
Bank, N.A., 816 F.3d 273, 282 (4th Cir. 2016) (internal
citations and quotations omitted).
RICO claim that Plaintiffs bring in this case is virtually
identical to the RICO claim they asserted in the prior
litigation, even inserting almost the exact same language
from their Colorado Action complaint into their
Amended Complaint in this litigation. Compare ECF
No. 1 ¶¶ 50-73, with Colorado Action, 2015
WL 196217, at Dkt. No. 1 ¶¶ 109-131. However, it is
unclear to the Court, and the parties have not addressed,
whether Plaintiffs' attempts to modify their South
Carolina loan are part of same transaction as any attempts to
modify their Maryland loan. Thus, the Court finds that
Plaintiffs' RICO claims against Bank of America,
Nationstar and Urban regarding the South ...