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Altenburg v. Caliber Home Loans, Inc.

United States District Court, D. Maryland

June 26, 2017

JEFFREY A. ALTENBURG, et al., Plaintiffs,
CALIBER HOME LOANS, INC., et al., Defendants.



         Plaintiffs Jeffrey Altenburg (“Altenburg”) and Judy Wood (“Wood”) (collectively, “plaintiffs”) have filed this putative class action against defendants Caliber Home Loans, Inc. (“Caliber”) and U.S. Bank, N.A., solely in its capacity as Trustee for LSF9 Master Participation Trust (“LSF9”) (collectively, “defendants”), alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq., the Maryland Consumer Debt Collection Act (“MCDCA”), Md. Code Ann., Com. Law § 14-201, et seq., and the Maryland Consumer Protection Act (“MCPA”), Md. Code Ann., Com. Law § 13-101, et seq., based on Caliber's filing of foreclosure actions against plaintiffs' properties on behalf of LSF9, which was not licensed as a consumer debt collector under the Maryland Collection Agency Licensing Act (“MCALA”), Md. Code Ann., Bus. Reg. § 7-301. (ECF No. 8 at ¶¶ 2-5.)

         Now pending before this Court is defendants' Motion to Dismiss or, in the Alternative, to Stay Proceedings and Certify Questions to the Maryland Court of Appeals (“Defendants' Motion”) (ECF No. 18). The parties' submissions have been reviewed, and no hearing is necessary.[1] See Local Rule 105.6 (D. Md. 2016). For the reasons stated below, Defendants' Motion (ECF No. 18) is GRANTED IN PART and DENIED IN PART. Specifically, Defendants' Motion is GRANTED as to plaintiff Wood, whose claims are time barred. Defendants' Motion is also GRANTED as to Count I of plaintiffs' Amended Complaint (Declaratory Relief), which is DISMISSED. Defendants' Motion is DENIED as to plaintiff Altenburg's FDCPA claim against Caliber (Count II) and state law claims against LSF9 and Caliber (Count III). It is also DENIED as to the certification of questions to the Maryland Court of Appeals.


         Plaintiff Jeffrey A. Altenburg is a resident of the State of Maryland and an owner of the real property commonly known as 11810 Triadelphia Rd., Ellicott City, MD 21042 (“the Altenburg Property”). (ECF No. 8 at ¶ 6.) Plaintiff Judy Wood, f/k/a Judy Blachowicz, formerly owned the real property known as 20 Talister Court in Baltimore County, Maryland (the “Wood Property”), which was previously her home and property before a foreclosure sale which occurred on December 31, 2014. (Id. at ¶ 7.)

         Defendant LSF9 is a Delaware statutory trust owned by Loan Star Funds, a global private equity firm, and managed by Hudson Advisors, L.P., an asset management firm headquartered in Dallas, Texas. (ECF No. 8 at ¶ 8.) U.S. Bank, N.A., serves as trustee for the LSF9 trust. (Id.) Plaintiffs allege that “[a]s a regular part of its business, LSF9 acquires defaulted debts, ” including the debts of plaintiffs Altenburg and Wood, and is, thus, a “consumer debt purchaser.” (Id.) Plaintiffs further allege that “LSF9 has delegated and assigned all duties related to [plaintiffs' loans] to Caliber, ” including “the retention of attorneys/substitute trustees and other collection agencies to initiate foreclosures and assert proceedings against Maryland residents.” (Id. at ¶ 9.) Through these activities, plaintiffs assert, LSF9 and Caliber extract interest payments from consumers through short-term forbearance loans and, when debtors are unable to make payments on these loans, take title to the collateral properties through foreclosure actions. (Id. at ¶ 16.)

         On or about March 30, 2007, plaintiff Altenburg refinanced the Altenburg Property with Bank of America, N.A. (the “Altenburg Loan”). (ECF No. 8 at ¶ 18.) Altenburg subsequently defaulted on that loan on October 2, 2011. (Id. at ¶ 20.) While the Altenburg Loan was in default, LSF9 took ownership and Caliber acquired all servicing rights to the loan. (Id. at ¶¶ 21-22.) Through their agent, the law firm of McCabe, Weisberg, and Conway, LLC, LSF9 and Caliber began foreclosure proceedings against the Altenburg Property in the Circuit Court for Howard County, Maryland on March 9, 2016. (Id. at ¶ 25.) Altenburg then moved to dismiss the foreclosure action on the basis that LSF9 was not licensed as a Maryland collection agency and, thus, had no right to attempt to collect on the underlying debt. (Id. at ¶ 26.) The Circuit Court conducted two hearings and then granted Altenburg's motion to dismiss on August 30, 2016. (Id. at ¶ 27.)

         On or about December 23, 2005, plaintiff Wood refinanced the Wood Property, her home and property, with National City Bank of Indiana's AccuBanc Mortgage (the “Wood Loan”). (ECF No. 8 at ¶ 29.) Before January 1, 2014, Wood defaulted on that loan. (Id. at ¶ 30.) While the Wood Loan was in default, LSF9 took ownership and Caliber acquired all servicing rights to the loan. (Id. at ¶¶ 32, 34.) Through their agent, Alba Law Group, P.A., LSF9 and Caliber began foreclosure proceedings against the Altenburg Property in the Circuit Court for Baltimore County, Maryland and conducted a foreclosure sale of the Wood Property on December 31, 2014. (Id. at ¶ 36.) Subsequently, on September 14, 2015, SIMM Associates, Inc., a collection agency retained by defendant Caliber, demanded payment of $13, 620.21 based on the Wood Loan. (Id. at ¶ 37.) Wood disputed SIMM's demand. (Id.) On or about January 28, 2016, Caliber sent an IRS Form 1099 related to the Wood Loan to Wood and to the Internal Revenue Service. (Id. at ¶ 39.)

         Plaintiffs allege that defendants violated the FDCPA, MCDCA, and MCPA by filing the respective foreclosure actions without LSF9 being properly licensed under Maryland law. Plaintiffs' claims thus rest on the licensing requirements of the Maryland Collection Agency Licensing Act, Md. Code Ann., Bus. Reg. § 7-301, which requires a collection agency to be licensed in order to collect or attempt to collect on consumer debts in Maryland. (Id.)

         While Defendants' Motion was pending, plaintiffs filed several motions calling this Court's attention to a series of cases pending and/or recently decided in Maryland state courts. (ECF Nos. 21, 28, and 29.) Furthermore, in response to this Court's inquiry regarding several authorities cited in their briefs, the parties filed a Joint Notice Concerning the Appellate Status of Cases Cited in the Parties' Motions and Papers (the “Appellate Notice”). (ECF No. 32.) On April 17, 2017, plaintiffs provided an appropriate update to the Appellate Notice (ECF No. 35), notifying this Court that the Maryland Court of Special Appeals had issued its opinion in the consolidated appeals of Blackstone,, v. Sharma, and Shanahan,, v. Marvastian, Blackstone v. Sharma, Nos. 1524, 1525, Sept. Term 2015, 2017 WL 2438485 (Md. Ct. Spec. App. June 6, 2017).[2]

         Finally, on April 26, 2017, this Court corresponded with the parties regarding the pendency of Henson, v. Santander Consumer USA, Inc., No. 16-349, before the United States Supreme Court. This case, the parties agreed, was pertinent to the pending matter; accordingly, the parties agreed that this Court should await the Supreme Court's resolution of that appeal before ruling on Defendants' Motion. The Supreme Court issued its unanimous opinion on June 12, 2017, affirming the decision of the United States Court of Appeals for the Fourth Circuit, 817 F.3d 131 (4th Cir. Mar. 23, 2016), which, in turn, affirmed the decision of this Court, No. RDB-12-3519, 2014 WL 1806915 (D. Md. May 6, 2014). Henson v. Santander Consumer USA Inc., __S.Ct.___, 2017 WL 2507342 (U.S. June 12, 2017). The parties requested an opportunity to submit additional briefing based on the Supreme Court's decision in Henson. (ECF No. 36.) This request was granted, and the parties submitted their supplemental briefs on June 23, 2017.[3] (ECF Nos. 37, 38.)


         I. Motion to Dismiss Pursuant to Rule 12(b)(6)

         Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes the dismissal of a complaint if it fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). The purpose of Rule 12(b)(6) 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); see also Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 165-66 (4th Cir. 2016). The sufficiency of a complaint is assessed by reference to the pleading requirements of Rule 8(a)(2), which provides that 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).

         To survive a motion under Fed.R.Civ.P. 12(b)(6), a complaint must contain facts sufficient to “state a claim to relief that is plausible on its face.” Bell Atl., Corp. v. Twombly, 550 U.S. 544, 570 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009). Under the plausibility standard, a complaint must contain “more than labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555; see Painter's Mill Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir. 2013).

         In reviewing a Rule 12(b)(6) motion, 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 omitted); see Houck v. Substitute Tr. Servs., Inc., 791 F.3d 473, 484 (4th Cir. 2015); Semenova v. Maryland Transit Admin., 845 F.3d 564, 567 (4th Cir. 2017). While a court must accept as true all the factual allegations contained in the complaint, legal conclusions drawn from those facts are not afforded such deference. Iqbal, 556 U.S. at 678 (“[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice” to plead a claim); see A Society Without a Name v. Virginia, 655 F.3d 342, 346 (4th. Cir. 2011).

         Under limited exceptions, a court may consider documents beyond the complaint without converting the motion to dismiss to one for summary judgment. Goldfarb v. Mayor & City Council of Baltimore, 791 F.3d 500, 508 (4th Cir. 2015). A court may properly consider documents that are “explicitly incorporated into the complaint by reference and those attached to the complaint as exhibits . . . .” Goines, 822 F.3d at 166 (citations omitted); see U.S. ex rel. Oberg, 745 F.3d at 136 (quoting Philips v. Pitt Cty Memorial Hosp., 572 F.3d 176, 180 (4th Cir. 2009)); Anand v. Ocwen Loan Servicing, LLC, 754 F.3d 195, 198 (4th Cir. 2014); Am. Chiropractic Ass'n v. Trigon Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004), cert. denied, 543 U.S. 979 (2004); Phillips v. LCI Int'l Inc., 190 F.3d 609, 618 (4th Cir. 1999).

         A court may also “consider a document submitted by the movant that was not attached to or expressly incorporated in a complaint, so long as the document was integral to the complaint and there is no dispute about the document's authenticity.” Goines, 822 F.3d at 166 (citations omitted). To be “integral, ” a document must be one “that by its ‘very existence, and not the mere information it contains, gives rise to the legal rights asserted.'” Chesapeake Bay Found., Inc. v. Severstal Sparrows Point, LLC, 794 F.Supp.2d 602, 611 (D. Md. 2011) (citation omitted) (emphasis in original).

         II. Motion to Certify Questions to the Maryland Court of Appeals

         “The decision whether to certify a question of state law to that state's highest court ‘rests in the sound discretion of the federal court.'” Marshall v. Selective Way Ins. Co., RDB-13-1101, 2015 WL 1186442, at *2 (D. Md. Mar. 13, 2015) (quoting Marshall v. James B. Nutter & Co., RDB-10-3596, 2013 WL 3353475, at *7 (D. Md. July 2, 2013) aff'd, 758 F.3d 537 (4th Cir. 2014)). See also Lehman Bros. v. Schein, 416 U.S. 386, 391, 94 S.Ct. 1741, 40 L.Ed.2d 215 (1974); Boyster v. Comm'r of Internal Revenue Serv., 668 F.2d 1382 (4th Cir. 1981)); Hafford v. Equity One, Inc., 2008 WL 906015, at *4 (D. Md. Mar. 31, 2008). In exercising this discretion, federal courts may decline to certify a question where the federal court can reach a “reasoned and principled conclusion.” Hafford, 2008 WL 906015, at *4. When a federal court can reach a reasoned and principled conclusion, the “federal court should decide the case before it rather than staying and prolonging the proceedings.” Arrington v. Coleen, Inc., 2001 WL 34117735, at *5 (D. Md. Mar. 29, 2001).


         I. Plaintiffs' Affirmative Arguments in Opposition to Defendants' Motion

         A. Collateral Estoppel Does Not Bar Defendants' Arguments and Theories

         Plaintiffs assert that defendants are collaterally estopped from raising in this case arguments previously raised in Altenburg's foreclosure case in the Circuit Court ...

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