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Smallwood v. Nationstar Mortgage, LLC

United States District Court, D. Maryland

February 1, 2019

MICHAEL SMALLWOOD, et al., Plaintiffs,
NATIONSTAR MORTGAGE, LLC, et al., Defendants.



         Pro Se Plaintiffs Michael and Melanie Smallwood (“the Smallwoods”) have sued NationStar Mortgage, LLC (“Nationstar”), Wilmington Trust, National Association (“Wilmington Trust”)[1], Bank of America N.A. and LaSalle Bank, N.A. (collectively the “Bank Defendants”), Diane Rosenberg and her firm Rosenberg & Associates, L.L.C. (collectively the “Rosenberg Defendants”).[2] The Smallwoods allege various wrongs, including fraud and misrepresentation, relating to a foreclosure proceeding in the Circuit Court for Prince George's County with respect to their residence located in Brandywine, Maryland (“Brandywine Property”).

         Defendants have filed Motions to Dismiss, (ECF Nos. 22, 24, 29). The matter has been fully briefed, and no hearing is necessary. See D. Md. Loc. R. 105(6). For the reasons that follow, Defendants' Motions to Dismiss (ECF Nos. 22, 24, 29) are GRANTED.


         In September 2005, the Smallwoods took out a mortgage loan from First Franklin Bank in connection with the purchase of the Brandywine Property. ECF No. 1 ¶ 16. A Promissory Note (“the Note”) executed by the Smallwoods was transferred a number of times to multiple entities, in the last instance to Wilmington Trust. ECF No. 24-4; ECF No. 1 ¶ 16. Nationstar was Wilmington Trust's loan servicer. ECF No. 24-1 at p. 5. In 2012, the Smallwoods defaulted on their repayment obligations, as a result of which Nationstar initiated foreclosure proceedings against the Brandywine Property in the Circuit for Prince George's County, Maryland. See BSBSC v. Smallwood, No. CAEF15-25056 (Prince George's County Cir. Ct.). Between 2012 and 2016 (before the present suit was filed), the Smallwoods filed multiple counter-claims and motions in the Circuit Court for Prince George's County in attempts to block the foreclosure. They also filed an appeal to the Maryland Court of Special Appeals, with the effect of further delaying the foreclosure. On January 2, 2019, the Court of Special Appeals affirmed the Circuit Court in an unpublished opinion.

         A public records search of Prince George's County Mapping reveals that Wilmington Trust is now the owner of the property. See (search for: 8113 Elora Lane). Even so, as a result of their persistent litigation, it may be that the Smallwoods remain occupants of the property. It is unknown whether they have been making any rental or other payments on the property.

         In yet another attempt to invalidate or forestall the foreclosure proceeding, the Smallwoods filed a lawsuit against the Bank Defendants on January 15, 2016 in the United States District Court for the District of Columbia, most of whom they had sued in the Prince George's County foreclosure proceedings. That case was transferred to this Court on June 19, 2018 and docketed as Smallwood, et al. v. NationStar Mortgage, et al., and is the case presently before the Court. ECF Nos. 1, 18, 19. The Complaint asserts four causes of action: (1) Injunctive Relief and Cancellation of Instruments, (2) Violation of the Truth in Lending Act (“TILA”), (3) Breach of Fiduciary Duty, and (4) Common Law Fraud. Id. at 34-58. In support of those claims, the Complaint, which fails to distinguish which Defendants supposedly have done what, states in general that the Defendants falsely claimed to have powers of attorney, conspired to fraudulently assign the deed to the Brandywine Property, and failed to prove ownership of the Note. Id. at 34-40. Further, Defendants allegedly violated 15 U.S.C. § 1641 because Nationstar assigned the deed without a valid power of attorney and failed to give the Smallwoods notice of the assignment via mail. Id. at 40-47. Moreover, Defendants allegedly breached fiduciary duties owed the Smallwoods because First Franklin Bank did not thoroughly advise them about the possible repercussions of entering into the loan agreement. Id. at 48-50. Defendants supposedly further misrepresented themselves as lenders as opposed to loan servicers, as a result of which, the Smallwoods argued, the foreclosure proceeding is invalid. Id. at 50-58. The Smallwoods' core argument is that Defendants did not have the legal authority to assign the interest in the Brandywine Property, citing the alleged deficiencies with the chain of title and securitization of the mortgage. Id. at 34-58.

         Defendants responded to the Complaint by filing motions to dismiss, one of which argued that venue in the federal court in the District of Columbia was improper. ECF Nos. 5, 6, 7. On August 22, 2016, Judge Emmet G. Sullivan stayed the case to resolve the issue of venue, see ECF No. 17 at 4, then on May 29, 2018, issued an order transferring the case to this Court. ECF No. 18. The case was transferred on June 19, 2018 and, as indicated, is the case presently before the undersigned. Id.; ECF No. 19.

         Following Judge Sullivan's stay and independently of this action, the Smallwoods filed a separate Complaint in this Court on December 28, 2016 against the same group of Defendants plus others, which was assigned to Judge Xinis. See Smallwood v. NationStar Mortgage, LLC, No. PX-16-4008 2018 U.S. Dist. LEXIS 209854 *1 (D. Md. May 1, 2018). In the case before Judge Xinis, the Smallwoods raised issues of fact and law indistinguishable from those alleged in the case that would later be transferred to the undersigned. Id. In her case, Judge Xinis dismissed all claims with prejudice and closed the case on May 1, 2018. Id.

         After Judge Xinis decided her case, by August 1, 2018, Defendants in the case presently at hand renewed their motions asking this Court to dismiss the present case on the basis of res judicata.


         To survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), “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) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility 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. “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).

         Accepting the facts alleged in the Complaint as true, when reviewing a motion to dismiss a court “may consider documents attached to the complaint, as well as documents attached to the motion to dismiss, if they are integral to the complaint and their authenticity is not disputed.” Sposato v. First Mariner Bank, No. CCB-12-1569, 2013 WL 1308582, at *2 (D. Md. Mar. 28, 2013). Courts may take judicial notice of state court documents pursuant to Fed.R.Evid. 201. When a defendant asserts that facts outside of the complaint deprive a court of jurisdiction, the court “may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Velasco v. Gov't of Indonesia, 370 F.3d 392, 398 (4th Cir. 2004). Specifically, in considering a res judicata defense at the motion to dismiss stage, a court may take judicial notice of prior judicial proceedings when the res judicata defense raises no disputed issues of fact. See Andrews v. Daw, 201 F.3d 521, 524 n.1 (4th Cir. 2000).

         III. ...

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