United States District Court, D. Maryland
MICHAEL M. BROOKS, JR., et al., Plaintiffs,
CAMA SELF DIRECTED IRA, LLC, et al., Defendants.
K. BREDAR CHIEF JUDGE.
and Stasia Brooks (“Plaintiffs”) filed suit
against multiple defendants alleging violations of the Fair
Debt Collection Practices Act (FDCPA) and state law stemming
from attempts to collect payments on a home equity loan and
to foreclose on their residence. Plaintiffs seek
compensatory, statutory, and declaratory relief. Defendants
Gerald O'Brien, the substitute trustee who initiated
foreclosure, and John Hanrahan, O'Brien's lawyer in
the state foreclosure action (collectively, the
“Foreclosure Defendants”), filed a motion to
dismiss. (Mot. Dismiss, ECF No. 5.) Defendants Cama Plan
SDIRA FBO R1551124-02, the purported noteholder (“Cama
15”), SN Servicing Corporation, the loan servicer
(“SN Servicing”), Cama Self Directed IRA, LLC
(“Cama”), and Cama Plan SDIRA FBO R090930-01
(“Cama 09”) (collectively, the “Cama
Defendants”) filed a separate motion for judgment on
the pleadings. (Mot. J. Pleadings, ECF No. 18.) Both motions
are fully briefed. No. hearing is required. See
Local Rule 105.6 (D. Md. 2018). For the reasons set forth
below, both motions will be granted in part and denied in
plaintiffs in this case are Michael M. Brooks, Jr., and
Stasia V. Brooks. In 2005, Ms. Brooks executed an Equity
Reserve Agreement with a $189, 420.00 line of credit with
National City Bank for “personal, family and/or
household purposes.” (Compl. ¶¶ 11-12, ECF
No. 1; see also Note at 1, Compl. Exh. 1, ECF No.
1-7.) The Note was secured by a lien on the
Brookses' home in Lutherville-Timonium, Maryland. (Compl.
¶ 13; Deed of Trust, Compl. Exh. 2, ECF No. 1-8
(executed by both Mr. and Ms. Brooks).)
2009, the Brookses experienced financial troubles, and they
concede that they defaulted on the National City loan in July
2009. (Compl. ¶¶ 14-15.) In December 2009, National
City sent a bill showing a total balance of $187, 078.47 and
stating, “[y]our account will be charged off unless
payment is received immediately.” (Id.
¶¶ 16, 20; National City Final Bill at 1-2, Compl.
Exh. 3, ECF No. 1-9.) Plaintiffs made no further payments and
received no further bills from National City. (Compl. ¶
17.) Plaintiffs argue that, by charging off the debt and
ceasing to send billing statements, National City waived the
right to charge additional interest or fees on the debt.
(Id. ¶¶ 16-19.)
time after 2009, National City merged with PNC Bank.
(Id. ¶ 19.) As successor in interest to the
loan, PNC attempted to collect in February 2013, sending Ms.
Brooks a letter demanding payment on a total balance of $187,
135.68-an amount equal to the balance stated on the final
National City bill, plus a late fee of $57.21. (Id.
¶ 27; compare PNC Bank Letter at 1, Compl. Exh.
4, ECF No. 1-10, with National City Final Bill at
1.) Plaintiffs, believing they did not have a loan with PNC
Bank, made no payment and received no further communication
from PNC Bank. (Compl. ¶ 28.) (Neither National City nor
PNC Bank is a party to this case.)
debt was subsequently transferred multiple times. On December
8, 2015, the Deed of Trust was assigned to Cama 09.
(Id. ¶ 48; see also Record of
Assignment at 1, Compl. Exh. 6, ECF No. 1-12.) On December 3,
2015, five days before the assignment to Cama 09, Cama 09
purported to assign the Deed to Cama 15. (Compl. ¶ 48;
Record of Assignment at 2.) The assignment to Cama 15 was
notarized two days before the date on which it was signed.
(Compl. ¶ 48; Record of Assignment at 2.) According to
Plaintiffs, these inconsistencies render the assignment
defective, and, thus, “Cama 15 does not own the
Note.” (Compl. ¶ 48.)
2016, Plaintiffs hired a broker to refinance a separate
property and discovered that the National City loan, which
they believed had been consolidated during a 2011
modification process, had not been consolidated and that a
separate lien continued to exist on their home. (Id.
¶¶ 21, 29-35.) Shortly after being contacted by
Plaintiffs' broker, SN Servicing began sending bills to
Ms. Brooks. (Id. ¶¶ 36-37; see
also SN Servicing Bills, Compl. Exh. 5, ECF No. 1-11.)
From July 2016 to March 2018, Ms. Brooks received bills from
SN Servicing seeking between $59, 199.19 and $82,
245.76 in outstanding amounts, which included
claims for unpaid interest dating back to July 2009.
(See SN Servicing Bills at 1, 19.) The bills named
Cama 15 as a sending entity. (See, e.g.,
id. at 1; see also Compl. ¶ 41.)
Plaintiffs allege that the interest and late fees charged on
the bills are “obvious falsehood[s], ” because
the Cama Defendants had no right to collect interest and fees
waived by National City. (Compl. ¶ 45.) Plaintiffs also
contend that the Note and Deed of Trust became unenforceable
in 2012 under a three-year statute of limitations and that SN
Servicing had “constructive knowledge” of that
fact. (Id. ¶¶ 22-26, 38.) Further, they
argue that SN Servicing and Cama 15 had no right to collect
on the debt because of the defects in assignment
(id. ¶ 48) and because Cama, Cama 09, and Cama
15 were not licensed under Maryland debt collection laws
(id. ¶¶ 42-44).
October 2016, Cama 15 appointed Gerald O'Brien as
substitute trustee on the Deed of Trust. (Deed of
Appointment, Compl. Exh. 6 at 3-4.) According to Plaintiffs,
the appointment was a “legal nullity” because of
defects in the assignment to Cama 15. (Compl. ¶¶
September 2017, O'Brien docketed a foreclosure in the
Circuit Court in Baltimore County, with Hanrahan as his
lawyer. (Id. ¶ 46; see also
Foreclosure Docket at 1, Mot. Dismiss Exh. D, ECF No.
5-6.) Plaintiffs did not receive notice of the
foreclosure until early 2018. (Compl. ¶ 47.) Plaintiffs
argue that Defendants had no right to foreclose because of
the lack of licenses (id. ¶¶ 51-52), the
assignment defects (id. ¶ 52), and the statute
of limitations (id. ¶ 53).
also allege that the affidavit of default filed in
conjunction with the foreclosure is “replete with
deliberate misstatements, misrepresentations and
omissions” about the amounts owed and the legal status
of the debt. (Id. ¶ 54.) Plaintiffs contest the
claims for $182, 727.00 in unpaid principle, for $99, 488.59
in unpaid interest, for $5, 035.00 in late fees, and for $3,
040.00 in legal fees. (Id.; see also
Affidavit of Default at 2, Compl. Exh. 7, ECF No. 1-13.) They
also contend that the amount to cure, $53, 659.09, is
“random to the point of recklessness, ” and that,
because of a superior lien, foreclosure is “not based
on business judgment.” (Compl. ¶¶ 54-55.)
allege that they incurred over $10, 000 in attorney's
fees and suffered “emotional distress and mental
anguish” as a result of Defendants' violations.
(Id. ¶¶ 56-58.)
Complaint puts forward five counts: Count I seeks a
declaratory judgment that the Note and Deed of Trust are
“unenforceable, and of no legal force or effect”
(id. ¶ 59); Count II claims violations of the
Fair Debt Collection Practices Act (FDCPA) (id.
¶ 60); and Counts III through V claim violations of
Maryland law (id. ¶¶ 61-63).
the Court are the Foreclosure Defendants' motion to
dismiss under Rule 12(b)(6) and the Cama Defendants'
motion for judgment on the pleadings under Rule 12(c). The
same standard governs motions under both rules. See
Walker v. Kelly, 589 F.3d 127, 139 (4th Cir. 2009);
Green v. Sw. Credit Sys., L.P., 220 F.Supp. 623, 624
(D. Md. 2016).
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
Atlantic 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.” Iqbal, 556 U.S. at 678. An inference
of the mere possibility of misconduct is not sufficient to
support a plausible claim. Id. at 679. Courts must
“accept the well-pled allegations of the complaint as
true, . . . constru[ing] the facts and reasonable inferences
derived therefrom in the light most favorable to the
plaintiff.” Ibarra v. United States, 120 F.3d
472, 474 (4th Cir. 1997). Nevertheless, “[f]actual
allegations must be enough to raise a right to relief above
the speculative level.” Twombly, 550 U.S. at
555. “A pleading that offers ‘labels and
conclusions' or . . . ‘naked assertion[s]'
devoid of ‘further factual enhancement'” will
not suffice. Iqbal, 556 U.S. at 678 (alteration in
original) (citation omitted) (quoting Twombly, 550
U.S. at 555, 557). Courts need not accept legal conclusions
couched as factual allegations. Twombly, 550 U.S. at
Sufficiency of Factual Allegations
turning to the specific counts alleged, the Court will first
address the basic sufficiency of the factual allegations with
respect to Cama and Cama 09.
are few allegations specific to these Defendants. Cama is
alleged to be a Pennsylvania LLC, and Cama 09 an
“unknown legal entity.” (Compl. ¶¶
5-6.) Both are alleged to be “collectors” under
relevant statutes. (Id.) Cama 09 is also alleged to
have made a defective assignment of the Deed to Cama 15.
(Id. ¶ 48.) All other allegations lump these
Defendants together, as acting collectively with others.
Plaintiffs allege that the Cama Defendants collectively
“caused demands for payment” to be sent
(id. ¶ 44), that the foreclosure was “a
collaborative effort on the part of [all] Defendants, jointly
and severally” (id. ¶ 46), that all
Defendants “had at least constructive knowledge”
of legal defects in the foreclosure (id. ¶ 52),
and that they knowingly omitted material facts from the
foreclosure (id. ¶ 53). These allegations are
insufficient to create an inference that Cama or Cama 09
would be legally responsible for any of the alleged
violations. According to the Complaint, Cama 15 is the entity
holding itself out as the noteholder and on whose behalf the
foreclosure suit was initiated. (Id. ¶¶
41, 49.) The billing statements name only Cama 15 and SN
Servicing. (E.g., SN Servicing Bills at 1.)
Plaintiffs allege no specific action taken by Cama or Cama 09
with respect to either the bills or the foreclosure, and
there are no allegations about the legal relationship of
either Defendant to Cama 15 or SN Servicing. Without such
facts, the Court cannot plausibly infer that Cama or Cama 09
would be legally responsible, even if statutory violations
occurred. The allegation about Cama 09's role in the
purportedly defective assignment does not give rise to a
plausible claim, either. If Plaintiffs' argument is
correct, Cama 09 might be the true noteholder, but that fact
alone would not make it responsible for Cama 15's
attempts to collect. Because Plaintiffs failed to allege
facts about Cama or Cama 09 that “raise the right to
relief above a speculative level, ” Twombly,
550 U.S. at 555, all claims against these Defendants will be
Court will next address the allegations against the remaining
Cama Defendants (Cama 15 and SN Servicing) and against the
Foreclosure Defendants, taking each count in turn.
Declaratory Judgment (Count I)
first count, Plaintiffs seek a declaration that the
“Note and Deed of Trust are unenforceable, and of no
legal force or effect.” (Compl. at 12.) The
Anti-Injunction Act (AIA) does not permit this Court to issue
such a declaration, even if Plaintiffs were to succeed on
their other federal or state claims.
limits the power of federal courts to enjoin or stay state
court proceedings. 28 U.S.C. § 2283. In a 2015 case,
Judge Grimm succinctly explained why the AIA similarly bars
declaratory judgments in cases where plaintiffs challenge a
foreclosure under the FDCPA:
“[W]here the Anti-Injunction Act bars an injunction[, ]
it ‘also bars the issuance of a declaratory judgment
that would have the same effect as an injunction.'”
Lovett v. Deutsche Bank Nat'l Trust Co., No.
12-1816-MBS-SVH, 2013 WL 841679, at *6 (D.S.C. Feb. 12, 2013)
(quoting Denny's, Inc. v. Cake, 364 F.3d 521,
528 (4th Cir. 2004) . . . . This is because
“‘even if a declaratory judgment is not used as a
basis for actually issuing an injunction, declaratory relief
alone has virtually the same practical impact as a formal
injunction would.'” Id. (quoting
Samuels v. Mackell, 401 U.S. 66, 73 (1971)). For
example, if a plaintiff requests “a declaration that
the [plaintiff's] mortgage and note are unenforceable,
” the request “preempts the foreclosure and has
‘the same effect' as [a] request for an injunction
to prevent foreclosure; both ‘result in precisely the
same interference with and disruption of state proceedings
that the long-standing policy limiting injunctions was
designed to avoid.'” Id. (quoting
Samuels, 401 U.S. at 72).
Tucker v. Specialized Loan Servicing, LLC, 83
F.Supp.3d 635, 641 (D. Md. 2015).
remedy sought by Plaintiffs in Count I-a declaration that the
Note and Deed of Trust are “unenforceable” and
“of no legal force or effect” (Compl. at
12)-would have “the same effect” as a request for
an injunction to stay the foreclosure. Samuels, 401
U.S. at 72; see also Jones v. Specialty Lending
Grp., Civ. No. RWT-17-1577, 2017 WL 6997840, at *1 (D.
Md. June 12, 2017) (holding that the AIA bars injunctive
relief to prevent foreclosure); Hayes v. JP Morgan Chase
Bank, No. 13-1884-JFA, 2014 WL 4198897, at *5 (D.S.C.
Aug. 20, 2014) (“Plaintiff's request to declare the
mortgage and note unenforceable runs afoul of the
[AIA].”). Thus, the Court cannot consider the claim for
declaratory judgment. Count I will be dismissed.
Fair Debt Collection Practice Act ...