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Hackett v. Bayview Loan Servicing, LLC

United States District Court, D. Maryland

December 27, 2018

RICHARD HACKETT, et al., Plaintiffs,
v.
BAYVIEW LOAN SERVICING, LLC, et al., Defendants.

          MEMORANDUM OPINION

          Paula Xinis United States District Judge.

         Currently pending is Defendants' motion to dismiss this case after removal to this Court. ECF Nos. 16, 1. The motion is fully briefed, and no hearing is necessary. See Loc. R. 105.6. For the reasons that follow, the Court grants in part Defendants' motion and dismisses the Truth in Lending Act claims. The Court declines to exercise supplemental jurisdiction over the remaining state law claims and, in its inherent authority, remands this case to the Circuit Court for Montgomery County, Maryland. The remainder of Defendants' motion to dismiss is denied as moot.

         I. Background

         Plaintiffs Richard and Megan Hackett (collectively, “the Hacketts”) filed a class action suit in the Circuit Court for Montgomery County, Maryland, stemming from alleged improper procedures undertaken by Defendant Bayview Loan Servicing, LLC (“Bayview”) as a loan servicer and Defendant The Bank of New York Mellon, as Trustee for the Certificate Holders of the CWALT, Inc., Alternative Loan Trust 2006-OA19 (“the Bank”). Id. ¶ 24. The Complaint avers that Bayview, as an agent for the Bank, improperly assessed property preservation or inspection charges on loans that it serviced and improperly denied the Hacketts' loan modification application. Id. ¶¶ 7, 27, 39. As a result, the Hacketts filed suit individually and on behalf of three subclasses of debtors, asserting violations of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601, et seq.; the Maryland Consumer Debt Collection Practices Act, Md. Code, Com. Law, § 14-201, et seq.; the Maryland Consumer Protection Act, Md. Code, Com. Law, § 14-201, et seq.; the Maryland usury statute, Md. Code, Com. Law § 12-121(a)(1)(ii); the Maryland Mortgage Fraud Protection Act, Md. Code, Real Prop. § 7-401 et seq.; and the common law doctrine of unjust enrichment. The Complaint also seeks declaratory and injunctive relief. Id. ¶¶ 69-121.

         On May 2, 2018, Defendants removed the case to this Court, asserting federal question and diversity jurisdiction. ECF No. 1. Defendants then moved to dismiss for failure to state a claim upon which relief can be granted. ECF No. 16. In response, the Hacketts concede dismissal of the TILA claims and argue that remand rather than dismissal is appropriate on the remaining state law claims. ECF No. 19 at 6.

         II. Standard of Review

         In ruling on a motion to dismiss brought pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the well-pleaded allegations are accepted as true and viewed most favorably to the party pursuing the allegations. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “Factual allegations must be enough to raise a right to relief above a speculative level.” Id. “‘[N]aked assertions' of wrongdoing necessitate some ‘factual enhancement' within the complaint to cross ‘the line between possibility and plausibility of entitlement to relief.'” Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (quoting Twombly, 550 U.S. at 557). “[C]onclusory statements or ‘a formulaic recitation of the elements of a cause of action will not [suffice].'” EEOC v. Performance Food Grp., Inc., 16 F.Supp.3d 584, 588 (D. Md. 2014) (quoting Twombly, 550 U.S. at 555).

         III. Dismissal of TILA Claims

         In responding to Defendants' motion to dismiss, the Hacketts concede dismissal of the TILA claims in light of this Court's recent dismissal of “nearly identical” claims. ECF No. 19 at 16; see also Kemp v. Seterus, Inc., No. 18-472, 2018 WL 3159070, at *4-6 (D. Md. June 27, 2018). The Hacketts are correct that dismissal of the TILA claims is warranted for the same reasons articulated in Kemp.

         The purpose of TILA is to “facilitate the ‘informed used of credit.'” Watkins v. SunTrust Mortg., Inc., 663 F.3d 232, 234 (4th Cir. 2011) (quoting 15 U.S.C. § 1601(a)). TILA mandates that “[a] creditor or servicer of a home loan shall send an accurate payoff balance within a reasonable time, but in no case more than 7 business days, after the receipt of a written request for such balance from or on behalf of the borrower.” 15 U.S.C. § 1639g. Although the statute reaches both creditors and servicers, TILA “imposes civil liability only on creditors and, only in limited circumstances, assignees of creditors.” Kemp, 2018 WL 3159070, at *3 (citing 15 U.S.C. §§ 1640(a), 1641(a)); see also Strickland-Lucas v. Citibank, N.A., 256 F.Supp.3d 616, 626 (D. Md. 2017) (“[T]he only parties who can be liable for TILA violations are the original creditor and assignees of that creditor.”) (quoting Chow v. Aegis Mortg. Corp., 286 F.Supp.2d 956, 959 (N.D. Ill. 2003) (internal quotation marks and citations omitted).

         A creditor is defined as one “who both (1) regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement.” 15 U.S.C. § 1602(g). An assignee of a creditor may be liable “only if the violation for which the action or proceeding is brought is apparent on the face of the disclosure statement . . . .” 15 U.S.C. § 1641(a).

         In Kemp, the plaintiff brought TILA claims on behalf of herself and a putative class against a loan servicer and an assignee creditor arising from the assessment of property inspection fees. 2018 WL 3159070, at *1. This Court held that the TILA claims against the loan servicer “are clearly dismissible” because the loan servicer was neither a creditor nor assignee of a creditor. Id. at *4. The Court then found that Fannie Mae, as an assignee creditor, was not liable under TILA because the alleged inaccuracy forming the basis of the TILA violation (the assessment of inspection fees) was not apparent on the face of the disclosure statement. Id. at *5. The Court further considered whether Fannie Mae became an original creditor under TILA when the property inspection fees were assessed, and concluded that such fees were “not new credit transactions that could impose liability on Fannie Mae.” Id. at *6. The Court so ruled because such fees had been included in the original deed of trust to which the plaintiff and original creditor agreed. Id.

         Similar to Kemp, the claims against Bayview fail because Bayview, as loan servicer, is neither a creditor nor assignee creditor. See Mosley v. OneWest Bank, No. RDB-11-00698, 2011 WL 5005193, at *4 (D. Md. Oct. 19, 2011) (holding that plaintiff failed to state a TILA claim against loan servicer). Likewise, the claims fail against the Bank as an assignee creditor. As in Kemp, the alleged inaccuracies in the payoff statements are not apparent on the face of the disclosure statement because the “disclosure statement is a document provided before the extension of credit that sets out the terms of the loan.” Kemp, 2018 WL 3159070, at *5 (quoting Evanto v. Fed. Nat'l Mortg. Ass'n, 814 F.3d 1295, 1297 (11th Cir. 2016)) (internal quotation marks omitted) (emphasis added in Kemp). Accordingly, assessment of such fees could not render the disclosure statement facially inaccurate. Cf. 15 U.S.C. § 1634 (“If information disclosed in accordance with this part is subsequently rendered inaccurate as the result of any act, occurrence, or agreement subsequent to the delivery of the required disclosures, the inaccuracy resulting therefrom does not constitute a violation of this part.”). Assignee liability against the Bank under TILA cannot attach. See 15 U.S.C. § 1641(a).

         Further, the property inspection fees, when assessed, did not require new TILA disclosures because the fees had been part of the original agreement between the Hacketts and the original lenders. ECF No. 16-3 ¶ 14 (“Lender may charge Borrower fees for services performed in connection with Borrower's default, for the purpose of protecting Lender's interest in the Property and rights under this Security Instrument, including, but not limited to . . . property inspection and valuation fees.”) (emphasis added). Although, in theory, additional fees not contemplated by previous agreement may require new disclosures, see Begala v. PNC Bank, Ohio, Nat'l Ass'n, 163 F.3d 948, 951 n.1 (6th Cir. 1998), fees contemplated in the ...


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