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Braan v. Wells Fargo Home Mortgage, Inc.

United States District Court, D. Maryland

August 3, 2017

WELLS FARGO HOME MORTGAGE, INC., by its successor by merger, WELLS FARGO BANK, N.A., Defendant.



         Pending in this consumer lending case is a motion to dismiss for failure to state a claim filed by Wells Fargo Home Mortgage, Inc., (“Wells Fargo” or “Defendant”) as successor by merger to Wells Fargo Bank, N.A. (ECF No. 11). Plaintiff Barry D. Braan, Sr. (“Plaintiff”) filed his opposition and moved for leave to amend his Complaint (ECF No. 15). The issues are fully briefed, and the Court now rules pursuant to Local Rule 105.6 because no hearing is necessary. For the following reasons, the Defendant's motion to dismiss is granted in part and denied in part, and Plaintiff's motion to amend is denied.

         I. BACKGROUND[1]

         Defendant Wells Fargo approved Plaintiff for a military veteran home loan (“VA Loan”) in December 2012. Compl., ECF No. 2 at 2. On September 23, 2013, Plaintiff signed a purchase agreement (“the Agreement”) to buy the home located at 10520 Beechwood Drive in Waldorf, Maryland (“the Property”) from the United States Department of Housing and Urban Development (“HUD”) for $161, 000. Id. at 3. The Property was being sold as-is. Id. at 4.

         Plaintiff hoped to take advantage of a program offered by the Maryland Department of Housing and Community Development (“Department of Housing”) through which eligible veterans could receive $10, 000 in down payment assistance. Id. at 2. HUD did not approve the Agreement until the day this program was set to expire-September 30, 2013. See id. at 3; see also Agreement, ECF No. 11-3 at 2.

         Although Defendant told Plaintiff that the application for assistance was submitted on September 27, 2013, Plaintiff's application was not received by the Department of Housing until October 1, 2013, the day after the assistance program expired. Compl., ECF No. 2 at 3. Defendant informed Plaintiff on October 2, 2013 that his application was denied and then offered Plaintiff a 2.00% interest rate on his home loan with the knowledge that Plaintiff would not be receiving the $10, 000 in program funds. Id. at 3-4. This 2.00% offer was reiterated on October 9, 2013 via a Commitment Letter, contingent on Plaintiff making certain itemized repairs required by Wells Fargo prior to closing. See Commitment Letter, ECF No. 11-6 at 2; see also Compl,, ECF No. 2 at 4. Plaintiff was also required to secure additional repairs as part of his obtaining the VA Loan. Compl., ECF No. 2 at 4. Plaintiff used $10, 000 of his own money to complete the required repairs on a home he did not yet own. Id. at 4-5.

         On October 18, 2013, Defendant withdrew the 2.00% interest rate offered in the Commitment Letter and told Plaintiff it had applied to HUD on his behalf for $5, 000 in closing assistance through another program. Compl., ECF No. 2 at 4. Although Defendant represented that it submitted this application to HUD on October 19, 2013, the application was not submitted until November 5, 2013. Plaintiff ultimately received $5, 000 to put toward his down payment and closing costs. Compl., ECF No. 2 at 3-4.

         Leading up to closing, Plaintiff was under “extreme pressure” to “vacate [his] current residence.” Compl., ECF No. 2 at 6. On November 11, 2013, Defendant requested from HUD an extension on the closing date to allow re-disclosure of a new interest rate to Plaintiff “due to the expiration of the closing cost assistance program that was initially going to be used.” ECF No. 11-7 at 2. At the time of the extension request, Defendant had been aware of the “expiration of the closing cost assistance program” for over a month, and Plaintiff had already undertaken the required repairs on the Property. See ECF No. 11-2 at 5 (“[T]he Maryland Homefront Program expired on the date HUD signed the Purchase Agreement and [Plaintiff] was notified of the expiration of that program by Wells Fargo on October 2, 2013.”). HUD approved the extension, and closing was set for November 26, 2013-twelve days after the Agreement's initial expiration.

         By November 15, 2013, the required repairs were complete. See ECF No. 11-9. At closing eleven days later, Defendant for the first time disclosed the new interest rate of 4.25%, more than doubling the initial offered interest rate of 2.00%. Compl., ECF No. 2 at 5. Having made $10, 000 in repairs and vacated his prior residence, Plaintiff avers he was left without recourse: he had to close on the Property, sign the mortgage note, and move in. Plaintiff then made timely monthly payments until he paid off the loan in July 2016. See ECF No. 11-8.

         Based on Defendant's late disclosure of the new, much higher interest rate, Plaintiff filed this action pro se on November 23, 2016 in the Circuit Court of Maryland for Charles County, Compl., ECF No. 2, and the action was properly removed to this court on February 10, 2017. ECF No. 1. Liberally construed, the Complaint asserts claims for breach of contract and violations of the Maryland Consumer Protection Act, Md. Code Ann., Com. Law §§ 13-301 et seq. (“MCPA”), the Maryland Mortgage Fraud Protection Act, Md. Code Ann., Real Prop. § 7- 401 et seq. (“MMFPA”), and the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq. (“TILA”). Plaintiff avers that Defendant deliberately enticed Plaintiff with an initially low interest rate only to keep Plaintiff on the hook until the day of closing when Defendant then doubled the interest rate. Plaintiff also alleges that Defendant breached the loan agreement when it withdrew the 2.00% interest rate. ECF No. 2 at 4.[2] On February 16, 2017, Defendant filed a motion to dismiss under Fed.R.Civ.P. 12(b)(6), arguing that Plaintiff's claims are barred by the statute of limitations and, alternatively, by the voluntary payment doctrine. Defendant also argues that Plaintiff has failed to state cognizable claims for relief. ECF No. 11. In response, Plaintiff seeks leave to amend his Complaint. ECF No. 15. The Court will first address Defendant's motion.


         When ruling on a motion under Rule 12(b)(6), the court must “accept the well-pled allegations of the complaint as true, ” and “construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff.” Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). The purpose of a motion to dismiss under Rule 12(b)(6) is to test the sufficiency of the complaint. Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006) (citation and internal quotation marks omitted). Because Plaintiff is proceeding pro se, his Complaint is to be construed liberally, see Haines v. Kerner, 404 U.S. 519, 520 (1972), but liberal construction does not absolve Plaintiff from pleading plausible claims. See Holsey v. Collins, 90 F.R.D. 122, 128 (D. Md. 1981) (citing Inmates v. Owens, 561 F.2d 560, 562-63 (4th Cir. 1977)). To survive a motion to dismiss, a complaint's factual allegations “must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). “The mere recital of elements of a cause of action, supported only by conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6).” Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

         The Complaint includes several claims that sound in fraud, implicating the heightened pleading standard under Fed.R.Civ.P. 9(b). See Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769, 781 (4th Cir. 2013) (stating that an MCPA claim that “sounds in fraud, is subject to the heightened pleading standards of Federal Rule of Civil Procedure 9(b)”). Rule 9(b) states: “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.” Under the rule, a plaintiff alleging claims that sound in fraud “‘must, at a minimum, describe the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.'” Bourgeois v. Live Nation Entm't, Inc., 3 F.Supp.3d 423, 435 (D. Md. 2014) (quoting United States ex rel. Owens v. First Kuwaiti Gen'l Trading & Contracting Co., 612 F.3d 724, 731 (4th Cir. 2010)).

         III. ANALYSIS

         A. Statute of Limitations

         Defendant first argues that Plaintiff's breach of contract and statutory claims are time-barred because the underlying conduct occurred more than three years prior to the November 23, 2016 filing of this case. See ECF No. 11-2 at 10-12. Defendant is partially correct. Breach of contract claims are subject to a three-year statute of limitations measured from the date of accrual. In a breach of contract action, the accrual date is ordinarily the date the contract was breached. Hariri v. Dahne, 412 Md. 674, 688 n.8 (2010).

         Plaintiff acknowledges that limitations on his contract claim began to run on October 18, 2013, when Defendant reneged on its initial interest rate of 2.00%. See Kumar v. Dhanda, 198 Md.App. 337, 345 (2011) (purported breach of contract accrued when all elements of cause of action existed), aff'd sub nom. Shailendra Kumar, P.A. v. Dhanda, 426 Md. 185 (2012). Because Plaintiff ...

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