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McClain v. Wells Fargo Bank, N.A.

United States District Court, D. Maryland

March 8, 2018

IRIS MCCLAIN, Plaintiff,
v.
WELLS FARGO BANK, N.A., WELLS FARGO HOME MORTGAGE, "WELLS FARGO, " TIM SLOAN, President & CEO of Wells Fargo Bank, N.A., J.P. MORGAN CHASE & CO., J.P. MORGAN CHASE BANK, N.A., JAMES DIMON, CEO of J.P. Morgan Chase &Co., THE BANK OF NEW YORK MELLON, GERALD HASSELL, Chairman & CEO of The Bank of New York Mellon, GOLDMAN SACHS MORTGAGE CO., GOLDMAN SACHS GROUP, INC., LLOYD BLANKFEIN, CEO & Chairman of Goldman Sachs Mortgage Co., KRISTINE D. BROWN, ESQ., GREGORY N. BRITTO, ESQ., ROBYN A. MCQUILLEN, ESQ., WILLIAM M. SAVAGE, ESQ., Managing Partner of Shapiro & Brown Alt, LLP, and LILA Z. STITELY, ESQ., Defendants.

          MEMORANDUM OPINION

          THEODORE D. CHUANG UNITED STATES DISTRICT JUDGE.

         Plaintiff Iris McClain, who is self-represented, has filed suit against 16 Defendants based on what she asserts is a history of fraudulent dealing related to her mortgage for a property located on Herrington Drive in Upper Marlboro, Maryland ("the Property"), to foreclosure actions on the Property, and to several bankruptcy actions. McClain sues Defendants Wells Fargo Bank, N.A. and Wells Fargo Home Mortgage; Timothy Sloan, the President and Chief Executive Officer of Wells Fargo Bank N.A.; J.P. Morgan Chase & Co.; J.P. Morgan Chase Bank, N.A.; James Dimon, the Chief Executive Officer of J.P. Morgan Chase and Co.; the Bank of New York Mellon; and Gerald Hassell, the Chairman and Chief Executive Officer of the Bank of New York Mellon (collectively, "the Wells Fargo Defendants") based on her grievances about a 2007 modification to her mortgage loan, the subsequent servicing of that loan, as well as allegations relating to their conduct during the pending foreclosure on the Property and during two of her bankruptcy cases. McClain sues the Goldman Sachs Group, Inc. and Lloyd Blankfein, Chief Executive Officer and Chairman of Goldman Sachs Mortgage Co. (collectively, "the Goldman Sachs Defendants"), and Goldman Sachs Mortgage Company ("GSMC"), on substantially the same basis. Lastly, McClain sues Kristine D. Brown, Esq.; Gregory N. Britto, Esq.; Robyn A. McQuillen, Esq.; William M. Savage, Esq.; and Lila Z. Stitely, Esq. (collectively, "the Attorney Defendants") for alleged fraud relating to the foreclosure and her multiple bankruptcy proceedings.

         McClain asserts 11 claims against various combinations of Defendants. Specifically, she asserts claims for (1) fraud; (2) conspiracy to commit fraud; (3) a violation of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601-1667f (2012); (4) unjust enrichment; (5) negligent infliction of emotional distress; (6) a violation of the Protection of Homeowners in Foreclosure Act ("PHIFA"), Md. Code Ann., Real Prop. §§ 7-301-7-325 (West 2012); the Maryland Mortgage Fraud Protection Act ("MMFPA") Md. Code Ann., Real Prop. §§ 7-401-7-409; and 12 C.F.R. § 1015.4(c) ("Regulation 0"); (7) a violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968 (2012); (8) a violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692-1692p; (9) bankruptcy fraud; (10) foreclosure fraud; and (11) a violation of "Advocate Rule 3.3(A)(1)." Am. Compl. at 60, ECF No. 45-1. The Wells Fargo Defendants, the Goldman Sachs Defendants, GSMC, and the Attorney Defendants have each filed separate Motions to Dismiss. At the close of the briefing on the Wells Fargo Defendants' Motion, McClain filed a Motion for Leave to File a Sur-Reply to the Wells Fargo Defendants' Reply. Having reviewed the Complaint and the briefs, the Court finds no hearing necessary. See D. Md. Local R. 105.6 (2016). For the reasons set forth below, the Motions to Dismiss are granted, the Motion for Leave to File a Sur-Reply is denied, and the case is dismissed.

         BACKGROUND

         McClain purchased the Property through a mortgage loan in 1997. The loan was subsequently securitized into a mortgage-backed security held first by J.P. Morgan Chase Bank and then by the Bank of New York Mellon ("BNYM"). Wells Fargo Bank, N.A. ("Wells Fargo") acts as the mortgage servicer on behalf of BNYM. In 2006, McClain fell behind on the mortgage. In January 2007, she contacted Wells Fargo to discuss options to bring her loan current, and in July 2007 she signed a loan modification agreement that changed her adjustable-rate mortgage to a fixed-rate mortgage. That loan modification, submitted by McClain as part of later bankruptcy proceedings, provides that McClain's mortgage loan will accrue interest "at a yearly rate of 7.000%." Am. Objection to Third Am. Proof of Claim, Ex. A, In re McClain, No. 09-22554 (Bankr. Md. 2009) (Dkt. No. 95-1).[1] According to McClain, what ensued after she signed the modification were a series of misrepresentations and mishandling of her payments on the part of Wells Fargo representatives.

         In March 2008, still behind on her mortgage, McClain attended a foreclosure prevention seminar hosted by Wells Fargo. At that event, she was told by a representative that she did not qualify for a second loan modification because, based on her 2007 modification, her interest rate had already been converted from an adjustable rate to a fixed rate. Later that same day, McClain reviewed her 2007 loan modification and, in her estimation, found no language converting her mortgage to a fixed rate.

         McClain argues that her loan modification agreement was part of a fraudulent scheme devised by Wells Fargo, on advice from Goldman Sachs, to profit from distressed homeowners. She asserts that as a result of this loan modification, she has had to pay several thousands of dollars in fees that she would not otherwise have had to pay, and also has been locked into a fixed interest rate of 7 percent, which is higher than the rate she had prior to the modification and higher than what average mortgage rates have been in subsequent years, thus requiring her to pay more in interest on her mortgage than she would have had she not agreed to the loan modification.

         In 2009, McClain filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the District of Maryland ("the bankruptcy court"). In re McClain, No. 09-22554 (Bankr. Md. 2009). As part of that proceeding, she contested Wells Fargo's claim against the bankruptcy estate for the balance of her mortgage loan, asserting, as she does in this case, that Wells Fargo misinformed her about the terms of her loan modification and misapplied her payments. Am. Objection to Third Am. Proof of Claim, In re McClain, No. 09-22554 (Bankr. Md. 2009) (Dkt. No. 95). McClain, who was represented by counsel in those bankruptcy proceedings, later withdrew her objection with prejudice. Consent Order Resolving Objection to Proof of Claim, In re McClain, No. 09-22554 (Bankr. Md. 2009) (Dkt. No. 117). McClain also alleges that as part of that 2009 bankruptcy process, attorneys working on behalf of Wells Fargo promised her a new loan modification, but that the offered modification never materialized and was then denied. That bankruptcy case was closed in 2012.

         According to McClain, "[p]erhaps late 2012, " the law firm employing the Attorney Defendants, at the behest of Wells Fargo, engaged in improper debt collection practices relating to her past due mortgage loan. Am Compl. ¶ 210. In November 2013, foreclosure proceedings were initiated against the Property in the Circuit Court for Prince George's County, Maryland. BSBSC v. McClain, No. CAEF13-33714 (Cir. Ct. Prince George's Co. 2013). That proceeding is ongoing but is presently stayed based on a later bankruptcy petition filed by McClain.

         According to McClain, on February 18, 2014, she received correspondence from a Wells Fargo representative in response to a complaint from McClain. The letter assured her that her mortgage loan was being accurately billed according to the terms of the adjustable rate note, which McClain took as confirmation that her loan modification was not supposed to have changed the interest rate from an adjustable rate to a fixed rate. McClain also asserts that in May 2015, as part of bankruptcy proceedings, she received a marked-up copy of her 2007 loan modification agreement with various margin notes revealing that Wells Fargo and Goldman Sachs "keep 2 sets of books." Am. Compl. ¶ 30.

         In March 2015, McClain, proceeding pro se, filed a Chapter 13 bankruptcy petition ("the 2015 bankruptcy case"). In re McClain II, No. 15-13657 (Bankr. Md. 2015). In June 2016, the bankruptcy court denied confirmation of McClain's Chapter 13 plan without leave to amend, and in September 2016, her petition was dismissed and the case closed. Days later, McClain, initially represented by counsel and then later proceeding pro se, filed another Chapter 13 bankruptcy petition ("the 2016 bankruptcy case"). In re McClain III, No. 16-22179 (Bankr. Md. 2016). On October 31, 2017, BNYM filed an Objection to Confirmation of Plan in that case in which it asserted that McClain owed over $170, 000 on her mortgage loan, although she had scheduled the debt for only $80, 000. That Objection was signed by attorney Robyn McQuillen of Shapiro & Brown, LLP, on behalf of herself and co-counsel Kristine Brown, William Savage, Lila Stitely, and James R. Meizanis.

         On May 11, 2017, as part of the 2016 bankruptcy case, McClain filed a motion requesting that the bankruptcy court disallow that Objection as to her mortgage loan. In that Motion to Disallow, she alleged that BNYM's statements about the terms of her modified loan and the amounts due were incorrect.[2] The following day, she filed a Motion for Sanctions, asking the bankruptcy court to prosecute Defendants McQuillen and Brown, as well as her own attorney, for misconduct in both the 2015 and 2016 bankruptcy cases, which she asserted had prevented her from receiving bankruptcy protection. The bankruptcy court denied both motions. The 2016 bankruptcy case was dismissed on October 30, 2017. McClain has appealed that dismissal, focusing on her contention that BNYM's Objection should have been dismissed. See McClain v. The Bank of New York Mellon etal, TDC-17-3397 (D. Md. 2017).

         In February 2017, McClain filed the present suit in the Circuit Court for Prince George's County. After Defendants removed the case to this Court, McClain amended her Complaint. Among other relief, she seeks money damages; asks the Court to enjoin the pending foreclosure proceedings and any debt collection actions, declare the 2007 loan modification void, and cancel the debt on that loan other than the principal balance; and requests that the Court award her the attorney's fees and expenses she paid in the 2015 and 2016 bankruptcy cases. All Defendants seek dismissal of McClain's Amended Complaint.

         DISCUSSION

         I. ...


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