United States District Court, D. Maryland
L. Russell, III United States District Judge
MATTER is before the Court on Defendant Flagstar Bank,
FSB's (“Flagstar”) Motion to Dismiss (ECF No.
11). This case arises out of Plaintiffs Bruce and Anne
Barr's (the “Barrs”) attempts to modify their
mortgage loan, which is serviced by Flagstar. The Motion is
ripe for disposition, and no hearing is necessary.
See Local Rule 105.6 (D.Md. 2016). For the reasons
outlined below, the Court will grant the Motion.
The Loan and Foreclosure Action
Barrs are the owners of a property located at 416 Chesapeake
Avenue, Stevensville, Maryland (the “Property”),
which they purchased in March 2005. (Am. Compl. ¶ 29,
ECF No. 8). On June 26, 2007, the Barrs refinanced the
mortgage (the “Loan”) on the Property with
Residential Mortgage Solutions, Inc. for $413, 000.00, at
which time Flagstar became the loan's servicer.
(Id. ¶ 30).
Barrs fell behind on their mortgage during the economic down
turn of 2008. (Id. ¶¶ 31-33). In April
2009, in an attempt to keep the Property, Mr. Barr filed for
bankruptcy. (Id. ¶ 34). A few months later, in
June 2009, Flagstar sent the Barrs a letter demanding they
vacate the Property by July 2009. (Id. ¶ 35).
The Barrs vacated the Property, moving to Texas to live with
family. (Id.). The Barrs ultimately returned to
Maryland in November 2009, although they lived with relatives
and not at the Property. (Id. ¶ 36).
March 2010, the Barrs received a letter from Flagstar
regarding a possible modification for the Loan. (Id.
¶ 37). On the advice of a Flagstar representative, the
Barrs moved back into the Property in March 2010 and made it
their primary residence. (Id. ¶ 38). The Barrs
then submitted a loan modification application.
(Id.). Nevertheless, in May 2010, the Barrs received
a letter from Flagstar notifying them of a scheduled
foreclosure sale on the Property on June 15, 2010.
(Id. ¶ 40). The Barrs then learned that
Flagstar had denied their requested loan modification because
the Property was not the Barrs' primary residence.
(Id.). The Property was sold, but, in July 2010, the
Circuit Court for Queen Anne's County, Maryland vacated
the sale. (Id. ¶ 41). The Circuit Court further
ruled that the Barrs should be eligible for a Home Affordable
Modification Program (“HAMP”) loan modification.
October 2010, the Barrs submitted to Flagstar the HAMP loan
modification paperwork. (Id.). Flagstar denied the
Barrs' loan modification in December 2010. (Id.
¶ 42). The Barrs again went to the Circuit Court, and
the court ordered the Barrs and Flagstar to “resolve
the loan modification issue.” (Id. ¶ 43).
Trial Period Plans and Loan Modification
order to keep the Property, the Barrs entered into three
Trial Period Plan (“TPP”) agreements with
Flagstar, with the first TPP agreement beginning in August
2011. (Id. ¶¶ 44, 47, 56). The terms of
the TPP agreements stipulated that the Barrs' loan would
be permanently modified if the Barrs made three required
monthly payments and complied with all other conditions.
(Id. ¶¶ 44, 47, 56).
about March 26, 2015, the Barrs entered into their third TPP
agreement (the “Third TPP Agreement”) with
Flagstar, under which the Barrs were obligated to make three
monthly payments of $2, 499.74, with the first payment due on
May 1, 2015. (Id. ¶ 56). The Barrs made the
required payments. (Id. ¶ 58).
13, 2015, Flagstar sent the Barrs “a package containing
two letters and a Loan Modification Agreement” (the
“Original LMA”). (Id. ¶ 59). The
first letter stated that the Barrs' “Modification
Payment Amount” under the Original LMA was $2, 508.73
and explained how to accept the offered loan modification
(the “First How to Accept Letter”). (Id.
¶ 60). The second letter explained that the Modification
Payment Amount “included modified principal and
interest payment[s] and escrow payments including taxes and
insurance.” (Id. ¶ 61). The Barrs
rejected the Original LMA. (See id. ¶¶ 62-
September 18, 2015, Flagstar sent the Barrs a Revised Loan
Modification Agreement (the “Revised LMA”).
(Id. ¶ 64). The cover letter accompanying the
Revised LMA stated that the Modification Payment Amount was
$2, 041.43 and explained how to accept the loan modification
offer (the “Second How to Accept Letter”).
(Id. ¶ 65). The Second How to Accept Letter
instructed the Barrs to return two signed and notarized
copies of the Revised LMA along with $2, 041.43 to accept the
offer. (Id.). The Second How to Accept Letter also
stated that the Revised LMA would not be effective until both
the Barrs and Flagstar signed it. (Def.'s Mot. Dismiss
[“Def.'s Mot.”] Ex. E [“2d How to
Accept Letter”] at FLAG0057, ECF No.
11-6). On September 28, 2015, the Barrs returned
executed copies of the Revised LMA and the required payment.
(Am. Compl. ¶ 67). On October 7, 2015, a Flagstar
representative signed the Revised LMA. (Def.'s Mot. Ex. F
[“Executed LMA”], ECF No. 11-7). Almost a year
later, on August 24, 2016, Flagstar returned a fully executed
copy of the Revised LMA to the Barrs. (Am. Compl. ¶ 85).
September 2015 through January 2016, the Barrs made monthly
payments of $2, 041.43. (Id. ¶¶ 69, 76).
During the same period of time, Flagstar sent the Barrs
mortgage statements which stated that the required monthly
payment was $2, 833.45, that the Barrs' payments of $2,
041.43 were only partial payments, and that Flagstar had not
applied these payments to the Barrs' account.
(Id. ¶ 69).
December 17, 2015, Flagstar sent the Barrs a corrected
modification agreement (the “Corrected LMA”),
which provided that the modified monthly payments would be
$2, 501.43. (Id. ¶¶ 71-72). The Barrs
rejected the Corrected LMA, considering the Revised LMA the
binding contract between them and Flagstar. (Id.
¶ 74). On January 19, 2016, Flagstar sent the Barrs a
mortgage statement reflecting that $234, 009.39 was past due,
the interest rate on the loan was 6.875%, the payment due
date was August 1, 2009, and added a $118.31 late fee.
(Id. ¶ 75). The statement also explained that
the Barrs previous payments were partial payments, which were
unapplied to their balance, and threatened foreclosure.
(Id.). After receiving this mortgage statement, the
Barrs tendered $2, 041.43 as payment. (Id. ¶
76). Flagstar refused the payment. (Id.).
Qualified Written Requests
December 15, 2015, the Barrs sent to Flagstar the first of
two letters, which they allege are Qualified Written Requests
(“QWRs”) under the Real Estate Settlement
Procedures Act (“RESPA”). (Id. ¶
70). The December 15, 2015 letter (the “December 2015
Letter”) requested a long list of documents related to
the Loan's ownership and requested that their account be
“reconciled” because “recent mortgage
account statements do not accurately reflect payments [the
Barrs] continued to remit pursuant to [their] loan
modification agreement.” (Def.'s Mot. Ex. I
[“Dec. 15, 2015 Letter”], ECF No. 11-10).
Flagstar responded to the Barrs' December 2015 Letter on
February 2, 2016. (Am. Compl. ¶ 77; Def.'s Mot. Ex.
K [“1st Resp.”], ECF No. 11-12). In its response,
Flagstar stated that the Barrs' monthly payment amount
was $2, 682.61, the unpaid principal balance on the Loan was
$413, 000.00, and the interest rate was 6.875%. (Am. Compl.
¶ 77; 1st Resp. at FLAG00172). Flagstar also noted that
the Barrs were required to return the executed Corrected LMA
and closing funds by November 6, 2015. (Am. Compl. ¶ 77;
First Resp. at FLAG00175).
March 1, 2016, the Barrs sent Flagstar a second letter and
“Notice of Error, ” this time through counsel
(the “March 2016 Letter”) (collectively, with the
December 2015 Letter, the “Letters”). (Am. Compl.
¶ 79; Def.'s Mot. Ex. L [“Mar. 1, 2016
Letter”], ECF No. 11-13). The March 2016 Letter stated
that there were errors in a January 19, 2016 account
statement and requested several documents. (Am. Compl. ¶
79; Mar. 1, 2016 Letter). On April 1, 2016, Flagstar
responded to the March 2016 Letter with over 200 pages of
documents. (Def.'s Mot. Ex. N [“2d Resp.”],
ECF No. 11-15).
The Barrs Sue Flagstar
October 26, 2016, the Barrs commenced suit against Flagstar.
(ECF No. 1). On January 20, 2017, Flagstar filed its first
Motion to Dismiss. (ECF No. 5). In response, on February 23,
2017, the Barrs filed an Amended Complaint, alleging the
following counts: Fraud (Count I); violations of the Maryland
Consumer Protection Act (“MCPA”), Md. Code Ann.,
Com. Law [“CL”] §§ 13-301(1), (3), (4)
(West 2018) (Count II); violations of the Maryland Mortgage
Fraud Protection Act (“MMFPA”), Md. Code Ann.,
Real Prop. [“RP”] § 7-402 (West 2018) (Count
III); violations of RESPA, 12 U.S.C. § 2605(e) (2018)
(Count IV); violations of the Maryland Consumer Debt
Collection Act (“MCDCA”), CL §§
14-202(8) (West 2018) (Count V); Breach of Contract (Count
VI); and violation of the Truth in Lending Act
(“TILA”), 15 U.S.C. § 1601 (2018) and
Regulation Z, 12 C.F.R. § 1026 (2018) (Count VII). (ECF
No. 8). Ms. Barr also brings a single count against Flagstar
for the violation of the Fair Credit Reporting Act
(“FCRA”), 15 U.S.C. § 1681a(d) (2018) (Count
VIII). The Barrs seek compensatory damages, statutory
damages, punitive damages, and attorneys' fees and costs.
(Am. Compl. ¶¶ 109, 117, 128, 135, 142, 152, 159).
On March 23, 2017, Flagstar filed its Motion to Dismiss. (ECF
No. 11). On April 28, 2017, the Barrs filed a Response. (ECF
No. 17). Flagstar filed a Reply on May 13, 2017. (ECF No.
Standard of Review
purpose of a Rule 12(b)(6) motion is to test the sufficiency
of a complaint, ” not to “resolve contests
surrounding the facts, the merits of a claim, or the
applicability of defenses.” King v.
Rubenstein, 825 F.3d 206, 214 (4th Cir. 2016) (quoting
Edwards v. City of Goldsboro, 178 F.3d 231, 243-44
(4th Cir. 1999)). A complaint fails to state a claim if it
does not contain “a short and plain statement of the
claim showing that the pleader is entitled to relief, ”
Fed.R.Civ.P. 8(a)(2), or does not “state a claim to
relief that is plausible on its face, ” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is
facially plausible “when the plaintiff pleads factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Id. (citing Twombly, 550
U.S. at 556). “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). Though the plaintiff is not required to
forecast evidence to prove the elements of the claim, the
complaint must allege sufficient facts to establish each
element. Goss v. Bank of Am., N.A., 917
F.Supp.2d 445, 449 (D.Md. 2013) (quoting Walters v.
McMahen, 684 F.3d 435, 439 (4th Cir. 2012)),
aff'd sub nom., Goss v. Bank of Am.,
NA, 546 F.App'x 165 (4th Cir. 2013).
considering a Rule 12(b)(6) motion, a court must examine the
complaint as a whole, consider the factual allegations in the
complaint as true, and construe the factual allegations in
the light most favorable to the plaintiff. Albright v.
Oliver, 510 U.S. 266, 268 (1994); Lambeth v. Bd. of
Comm'rs of Davidson Cty., 407 F.3d 266, 268 (4th
Cir. 2005) (citing Scheuer v. Rhodes, 416 U.S. 232,
236 (1974)). But, the court need not accept unsupported or
conclusory factual allegations devoid of any reference to
actual events, United Black Firefighters v. Hirst,
604 F.2d 844, 847 (4th Cir. 1979), or legal conclusions
couched as factual allegations, Iqbal, 556 U.S. at
of the Barrs' claims implicate the heightened pleading
standard under Rule 9(b). Rule 9(b) requires a party alleging
fraud to “state with particularity the circumstances
constituting fraud.” Fed.R.Civ.P. 9(b). This
particularity standard requires the plaintiff to
“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.”
Galante v. Ocwen Loan Servicing LLC, No.
ELH-13-1939, 2014 WL 3616354, at *9 (D.Md. July 18, 2014)
(quoting United States ex rel. Owens v. First Kuwaiti
Gen. Trading & Contracting Co., 612 F.3d 724, 731
(4th Cir. 2010)).
Relevant Materials and Allegations
reaching the merits of Flagstar's Motion, the Court must
determine which extra-pleading materials the Court can
consider in assessing it and address the Barrs' attempts
to amend their Amended Complaint through their Opposition.
Documents Attached to Flagstar's Motion
bottom, the Court concludes that it can consider the Revised
LMA, the Second How to Accept Letter, the Barrs' December
2015 and March 2016 Letters, and Flagstar's responses to
the Letters because they were integral to and explicitly
relied on in drafting the Amended Complaint.
“a court may not consider extrinsic evidence at the
12(b)(6) stage.” Chesapeake Bay Found., Inc. v.
Severstal Sparrows Point, LLC, 794 F.Supp.2d 602, 611
(D.Md. 2011). If, however, “a defendant attaches a
document to its motion to dismiss, ‘a court may
consider it in determining whether to dismiss the complaint
[if] it was integral to and explicitly relied on in the
complaint and [if] the plaintiffs do not challenge its
authenticity.'” Id. (alterations in
original) (quoting Am. Chiropractic Ass'n, Inc. v.
Trigon Healthcare Inc., 367 F.3d 212, 234 (4th Cir.
2004)). An integral document is a one that by its “very
existence, and not the mere information it contains, gives
rise to the legal rights asserted.” Walker v.
S.W.I.F.T. SCRL, 517 F.Supp.2d 801, 806 (E.D.Va. 2007).
In the event that any properly considered extra-pleading
materials conflict with the “bare allegations of the
complaint, ” the extra-pleading materials
“prevail.” Fare Deals Ltd. v. World Choice
Travel.com, Inc., 180 F.Supp.2d 678, 683 (D.Md. 2001)
(citing Fayetteville Inv'rs v. Commercial Builders,
Inc., 936 F.2d 1462, 1465 (4th Cir. 1991)).
context of fraud claims, courts' concern over examining
documents outside of the complaint-lack of notice to the
plaintiff-is mitigated where the plaintiff has “actual
notice” and has “relied upon” the documents
“in framing the complaint.” Trigon, 367
F.3d at 234 (quoting In re Burlington Coat Factory Sec.
Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)). This rule
is meant to prevent a plaintiff from maintaining a fraud
claim by “extracting an isolated statement from a
document and placing it in the complaint, even though in the
full context of the document it would be clear that the
statement is not fraudulent.” Id. (quoting
In re Burlington Coat Factory Sec. Litig., 114 F.3d
case, Flagstar attached several documents as exhibits to its
Motion, including the Revised LMA, the Second How to Accept
Letter, the Barrs' December 2015 and March 2016 Letters,
and Flagstar's responses to the Letters. The Barrs do not
dispute the authenticity of any of these documents. In fact,
the Barrs cite to them in their Opposition. All that remains,
then, is for the Court to determine whether they were
integral to and explicitly relied on in drafting the Amended
Complaint. And, for claims that sound in fraud, whether the
Barrs had actual notice of a document's contents. The
Court considers the documents in turn.
because the Revised LMA is the contract upon which the Barrs
base their breach of contract claim and the Barrs detail
several of its terms in the Amended Complaint, the Court
concludes that it can consider the Revised LMA. See
Chesapeake Bay, 794 F.Supp.2d at 611; Walker,
517 F.Supp.2d at 806.
the Barrs' common law fraud claim, and MCPA and MMFPA
claims, which are also claims that sound in fraud, are based
on a statement contained in the Second How to Accept
Letter-the Modification Payment Amount. As a result, it is an
integral document. See Chesapeake Bay, 794 F.Supp.2d
at 611; Walker, 517 F.Supp.2d at 806. In addition,
the Barrs quote from the Second How to Accept Letter in the
Amended Complaint. Therefore, they have actual notice of its
contents and explicitly relied on it in drafting the Amended
Complaint. See Trigon, 367 F.3d at 234 (quoting