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Whyte v. Wells Fargo Home Mortgage

United States District Court, D. Maryland

January 10, 2019

DAVID WHYTE, Plaintiff,
v.
WELLS FARGO HOME MORTGAGE, Defendant.

          MEMORANDUM OPINION

          A. David Copperthite, United States Magistrate Judge.

         Defendant, Wells Fargo Home Mortgage ("'Defendant"), moves this Court to dismiss the Complaint of David Whyte ("Plaintiff'), for violation of the Maryland Mortgage Fraud Protection Act ("MMFPA") (Count I), Breach of Contract (Count II), and Negligence (Count III) (the "Motion to Dismiss") (ECF No. 6). After considering the Motion to Dismiss and the responses thereto (ECF Nos. 10, 16), the Court finds that no hearing is necessary. See Loc.R. 105.6 (D.Md. 2018). For the reasons stated herein, the Court GRANTS Defendant's Motion to Dismiss.

         Factual Background

         When reviewing a motion to dismiss, this Court accepts as true the facts alleged in the challenged complaint. See Aziz v. Alcolac, Inc., 658 F.3d 388. 390 (4th Cir. 2011). On or about February 25, 2014, Plaintiff refinanced a home mortgage for his primary residence with Wells Fargo. ECF No. 1-1 at 6, ¶ 3. In return for receiving a mortgage rate of 3.625%, Plaintiff was required to enroll in the Wells Fargo Preferred Payment Plan and open a checking account to allow automatic withdrawal of the monthly payment due on his mortgage. Id. ¶¶ 4-8. Initially the monthly payment was $4, 505 per month and Plaintiff deposited $4, 510.00 per month to cover the withdrawal. Id. ¶ 9.

         Sometime prior to June 2017, Wells Fargo adjusted the escrow amount required for the mortgage payment which resulted in a new monthly payment of $4, 595.39. Id. ¶ 10. The increase in the monthly amount due resulted in a shortfall of $85.39, and no withdrawal occurred. Id. ¶¶ 11-12. Wells Fargo did not auto-draft any payments on Plaintiffs mortgage from June 2017 through December 2017. Id. ¶¶ 12-13. Plaintiff states he never received any notice of the nonpayment until a foreclosure action was instituted by Wells Fargo on December 4, 2017. Id. ¶¶ 15-17. Plaintiff then contacted Defendant and was permitted to pay all outstanding arrears and Defendant dismissed the foreclosure action. Id. ¶¶ 18-19. Plaintiff alleges that Defendant reported Plaintiffs mortgage late to credit bureaus as well as the foreclosure action. Id. ¶ 20.

         Procedural Background

         The original complaint was filed in the Circuit Court for Howard County, and removed by Defendant on November 13, 2018 (ECF No. 1). The parties consented to a Magistrate Judge for all proceedings, and the case was referred to me on December 19, 2018 (ECF No. 11). The Motion to Dismiss and Responses were filed accordingly (ECF Nos. 6. 10, 16). This matter is now fully briefed and the Court has reviewed Defendant's Motion to Dismiss, as well as the responses thereto. For the following reasons, Defendant's Motion to Dismiss is GRANTED.

         Standard of Review

         Standard for Motion to Dismiss for Failure to State a Claim

         The 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 (4th Cir. 1999)). A complaint must contain "sufficient factual matter, accepted as true, to '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)). Facial plausibility exists "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. An inference of a mere possibility of misconduct is not sufficient to support a plausible claim. Id. at 679. As stated in Twombly, "[f]actual allegations must be enough to raise a right to relief above the speculative level." 550 U.S. at 555. "A pleading that offers 'labels and conclusions* or 'a formulaic recitation of the elements of a cause of action will not do." Nor does a complaint suffice if it tenders "naked assertions' devoid of 'further factual enhancement/" Iqbal, 556 U.S. at 678 (internal citations omitted). Although when considering a motion to dismiss a court must accept as true all factual allegations in the complaint, this principle does not apply to legal conclusions couched as factual allegations. Twombly, 550 U.S. at 555.

         Discussion

         Plaintiff argues that Defendant violated the MMFPA by engaging in mortgage fraud because it knowingly failed to disclose to Whyte that if there was ever a shortfall in his Wells Fargo Account, the auto-draft would be terminated and Wells Fargo would not auto-draft any future payments even if there were sufficient funds to pay the mortgage due that month. ECF No. 10 at 5-7. In like terms. Plaintiff alleges Defendant committed a breach of contract because it agreed to auto-draft payments if there were sufficient funds to make a monthly mortgage payment and did not provide that if a payment is missed the auto-draft would be canceled. See Id. at 7-9. In Count III. Plaintiff alleges that Wells Fargo was negligent because Wells Fargo owed a duty to Plaintiff to properly manage his preferred payment plan and breached that duty by failing to auto-draft funds. ECF No. 1-1 at 12, ¶¶ 31-34.

         Violation of MMFPA (Count I)

         More simply stated, what Plaintiff is alleging factually is that he did not have sufficient funds to pay June 2017, but by the next month since he deposited $4, 505 in June and $4, 505 in July, he had a total of $9, 010 in his account, so Defendant, under the Preferred Payment Plan, had sufficient funds to withdraw either June's payment (late) in July or July's payment in July, since his monthly amount was increased to $4, 595.39. Plaintiff further alleges in his complaint that although he may have missed one month (June), the excess $4, 505 he ...


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