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Aghazu v. Severn Savings Bank, FSB

United States District Court, D. Maryland

April 18, 2018

SEVERN SAVINGS BANK, FSB, et al., Defendants.



         In May, 2015, Chineme Aghazu (Aghazu) sued Severn Savings Bank, FSB (Severn), FCI Lender Services, Inc. (FCI), and Pontus SB Trust (Pontus)[1], alleging violations of the Truth-in-Lending Act (TILA), 15 U.S.C. § 1601, et seq., the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692, et seq., the Maryland Consumer Debt Collections Act (MCDCA), Md. Code Ann., Com. Law, § 14-201, et seq., and the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601, et seq.

         On October 31, 2017, following a lengthy and convoluted litigation path, Aghazu filed the present Motion for Partial Summary Judgment as to Liability Only and for Summary Judgment on Defendants' Counterclaim. ECF No. 73. Defendants FCI and Pontus responded by filing a joint Motion for Summary Judgment on liability. ECF No. 74. For the following reasons, Aghazu's Motion (ECF No. 73) is GRANTED IN PART and DENIED IN PART, and Defendants' Motion (ECF No. 74) is DENIED.

         I. FACTS

         The facts are more fully set out in the Court's March 2, 2016 Opinion. For purposes of the pending Motions, the relevant facts are as follows.

         In October 2003, Aghazu obtained a mortgage Loan (“Loan”) from Severn in the amount of $265, 000.00. Compl. ¶ 8, ECF No. 1. The Loan was evidenced by a Note (“Note 1”) secured by a Deed of Trust encumbering Aghazu's home at 7704 Northern Avenue, Glenn Dale, MD 20769 (the “Property”). Compl., Exs. 1, 2, ECF No. 1-1. Aghazu and Severn subsequently agreed to modify the Loan on two occasions: first, on February 11, 2008 (increasing the Loan amount to $340, 000.00); later, on August 28, 2008 (increasing the Loan amount to $380, 000.00). Compl. ¶¶ 11-12; Compl. Exs. 3, 4, ECF No. 1-1. In addition to increasing the amount of the Loan in August 2008, the parties executed a second Note (“Note 2”), which was a modified version of Note 1. Compl. Exs. 4, 5, ECF No. 1-1.

         On August 21, 2009, Aghazu filed for Chapter 7 bankruptcy in this Court. Ch. 7 No. 09-25607 (D. Md. Aug. 21, 2009). On October 14, 2009, during the course of the Chapter 7 proceeding, with leave of the Court, she filed an adversary proceeding against Severn, alleging violations of the TILA and wrongful foreclosure. Ch. 7 No. 09-25607, Adv. No. 09-719 (D. Md. Oct. 14, 2009). In January 2010, in order to resolve their dispute, the parties executed a Mutual Release and Settlement Agreement and agreed to a Consent Order Resolving [the] Motion to Dismiss [the] Complaint and Dismissing [the] Adversary Proceeding (“Consent Order”). Id.; Compl. Ex. 8, ECF No. 1-1.

         Pursuant to the Consent Order, Aghazu was permitted to remain in the Property until January 1, 2011 without having to make any mortgage payments. Compl. Ex. 8 ¶ 2. After that time, she was allowed to remain in the Property, provided that she make interest-only payments at the rate of $1, 583.33 per month, and provided further that she aggressively market the Property for sale by December 31, 2011. Id. If Aghazu failed to close under a contract of sale before December 31, 2011, the Consent Order entitled Severn to exercise all the rights it possessed under the original Loan documents, including Note 2. Id. At the same time, under the terms of the Consent Order, each party was absolved of all “claims arising from the Lawsuit or the Borrower's procurement of the Loan.” Id. ¶ 5. The Consent Order stated that “[t]his Release shall unconditionally remain in effect even if Borrower fails to close under a contract of sale for the purchase of the Property on or before December 31, 2011, and alternatively, this release shall not bar Lender from exercising all of its rights afforded to it under the Loan Documents should Borrower fail to comply with the terms of this Agreement or should closing under a contract not be consummated on or before December 31, 2011, for the purchase of the Property.” Id. Pursuant to the Consent Order, both Aghazu and Severn were deemed responsible for and left to pay their own legal fees, expenses, and costs. Id. ¶ 7.

         Aghazu never did sell the Property following the bankruptcy proceeding, and she apparently continues to occupy the Property as of the present date. See Compl. ¶ 19; Pl.'s Line to File Exhibits, Aff. Chineme Aghazu (“Aghazu Aff.”) ¶ 1, ECF No. 20-1. Beginning January 1, 2011, however, she duly paid and has continued to pay $1, 583.33 each month toward her mortgage. These payments correspond to the reduced rate interest-only payment she was obliged to pay after January 1, 2011 under the terms of the Consent Order. Compl. Ex. 8 ¶ 5.

         On December 31, 2013, Severn sold Aghazu's Loan to Pontus. Compl. Ex. 10; see also Severn's Reply, Ex. 1, ECF No. 7-1. That same day, Severn notified Aghazu that it had sold her Loan to Pontus and further advised that, effective February 1, 2014, servicing of the Loan would be transferred to FCI. Compl. Ex. 10, ECF No. 1-1.

         On February 19, 2014, Aghazu sent a payoff request to FCI. Compl. Ex. 11, ECF No. 1-1. On that same day, FCI sent her a payoff statement containing the word “DRAFT” in large letters across the paper, indicating that the amount due under the Loan was $394, 669.00. Compl. Ex. 12 at 0188, ECF No. 1-1. The statement included $11, 571.70 in “unpaid charges” itemized as “negative escrow balance” and interest. Id. On February 25, 2014, FCI sent another payoff statement to Aghazu, this time without the word “DRAFT, ” and this time informing Aghazu that the total amount due under the Loan was $407, 513.49. Compl. Ex. 13, ECF No. 1-1. The February 25, 2014 payoff statement included a line item for “Unpaid Charges” in the amount of $25, 988.36. Id. A subsequent payment statement sent to Aghazu in October 2014 included a roughly similar figure - $26, 860.64 - designated as “Fees” due. Compl. Ex. 15 at 0026.

         On September 29, 2014, Pontus sent Aghazu a Notice of Intent to Foreclose her Property. Pl.'s Motion for Summary Judgment (“Pl.'s MSJ”), Ex. 9, ECF 73-10. The Notice yet again cited unpaid fees and costs, this time totaling $26, 697.53, payment of which, per Pontus, would be required in order to cure Aghazu's supposed default. Id. Similarly, a November 2014 “Demand Loan Payoff” statement from FCI provided that Aghazu owed “Unpaid Charges”, this time totaling $26, 988.30-consisting of $12, 016.93 due for a negative escrow balance, and $14, 971.37 due for attorney fees. Pl.'s MSJ, Ex. 6, ECF 73-7.

         Around this time, which is to say beginning in December 2013 and continuing until March 2014, Aghazu says she was attempting to refinance her mortgage with an entity known as Mortgage One Solutions (“Mortgage One”). Aghazu Aff. ¶¶ 4, 14, 16, 17. In the process, she says, she requested payoff figures first from Severn and then from FCI in order to facilitate the transaction. See Id. Aghazu claims, however, that due to the fact that the payoff figures she eventually received from FCI erroneously showed that she owed approximately $25, 000 in unpaid fees and costs, Mortgage One declined to refinance her Loan. Pl.'s Line to File Exhibits, Ex. J, ECF No. 20-11. In other words, these additional “fees” and “costs” which Aghazu claims were improper, caused her to lose an opportunity to refinance. Compl. Exs. 12, 13; Pl.'s Line to File Exhibits, Ex. J.


         On May 27, 2015, Aghazu filed her original Complaint in this Court, alleging that Severn and FCI had failed to provide her with accurate payoff information, in violation of Regulation Z of the TILA, 12 C.F.R. § 1026.36(c)(3) (Count I); that FCI had made a false representation in connection with the collection of her mortgage debt in violation of the FDCPA, 15 U.S.C. § 1692e(2)(A) (Count II); that FCI had engaged in unfair debt collection practices in violation of the FDCPA, 15 U.S.C. 1692f(1) (Count III); that both FCI and Pontus had engaged in unlawful debt collection in violation of the MCDCA (Count IV); and that FCI and Severn had failed to give her adequate notice of a loan servicing transfer in violation of RESPA, 12 U.S.C. § 2605(c) (Count V).

         Severn, FCI, and Pontus moved to dismiss all counts of the original Complaint, arguing pursuant to Federal Rule of Civil Procedure 12(b)(6) that Aghazu had failed to state a claim upon which relief might be granted.

         On March 1, 2016, the Court issued a Memorandum Opinion and Order dismissing with prejudice Aghazu's TILA and FDCPA claims (Counts I, II, and III) as barred by applicable statutes of limitations, but dismissing without prejudice her MCDCA and RESPA claims (Counts IV and V) for failure to state a claim.[2] On April 1, 2016, Aghazu filed an Amended Complaint, this time alleging violation of the MCDCA[3] by both FCI and Pontus and violation of RESPA against FCI.

         On May 20, 2016, the remaining Defendants, FCI and Pontus, filed a Motion to Dismiss the Amended Complaint for failure to state a claim. The Court, however, felt it was appropriate to consider certain legal issues before it could evaluate the Motion to Dismiss. Accordingly, on September 6, 2016, the Court held a one-day Bench Trial to address the limited issue of where the approximately $25, 000 in fees and costs allegedly owed by Aghazu came from, and the effect, if any, that this claimed amount might have had on Aghazu's efforts to refinance with Mortgage One.

         At the Bench Trial, and in its September 7, 2016 Order issued the next day, the Court made two key findings. First, it determined, as a matter of law, that the attorneys' fees and costs Defendants claimed Aghazu owed in fact represented either attorneys' fees and costs incurred by Severn during Aghazu's bankruptcy proceedings and that other fees and costs had been incurred in preparation for a threatened foreclosure in 2011 that had never actually been initiated. The Court held that, in light of the provision of the Consent Order following the bankruptcy proceeding that made each party responsible for their own legal fees, expenses, and costs, any attorneys' fees or costs Defendants or their predecessor in interest (i.e. Severn) may have incurred during the bankruptcy proceedings were fully disposed of by the Consent Order and were not properly collectible by Defendants. The Court also determined that Aghazu could not be held responsible for fees and costs associated with a foreclosure that was never initiated. In sum, the Court held as a matter of law that Aghazu was liable for none of ...

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