United States District Court, D. Maryland, Southern Division
Charles B. Day United States Magistrate Judge.
the Court is Defendants BWW Law Group, LLC, Rushmore Loan
Management, and U.S. Bank National Association's Motion
to Dismiss Second Amended Complaint or, in the alternative,
for Summary Judgment (“Defendants'
Motion”)(ECF No. 49). The Court has reviewed
Defendants' Motion and the memoranda related thereto. No.
hearing is deemed necessary. Local Rule 105.6 (D. Md.). For
the reasons set forth below, the Court GRANTS IN PART AND
DENIES IN PART Defendants' Motion.
Motion to Dismiss Standard of Review
Rule of Civil Procedure 12(b)(6) provides for “the
dismissal of a complaint if it fails to state a claim upon
which relief can be granted.” Velencia v.
Drezhlo, No. RDB-12-237, 2012 WL 6562764, at *4 (D. Md.
Dec. 13, 2012). This rule's purpose “is to test the
sufficiency of a complaint and not to resolve contests
surrounding the facts, the merits of a claim, or the
applicability of defenses.” Id. (quoting
Presley v. City of Charlottesville, 464 F.3d 480,
483 (4thCir. 2006)). In doing so, the Court must
keep in mind the requirements of Fed.R.Civ.P. 8, Bell
Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and
Ashcroft v. Iqbal, 556 U.S. 662 (2009), when
considering a motion to dismiss pursuant to Rule 12(b)(6).
Specifically, a complaint must contain “a short and
plain statement of the claim showing that the pleader is
entitled to relief, ” Fed.R.Civ.P. 8(a)(2), and must
state “a plausible claim for relief, ” as
“[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
suffice, ” Iqbal, 556 U.S. at 678-79. See
Velencia, 2012 WL 6562764, at *4 (discussing standard
from Iqbal and Twombly).
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.” Iqbal, 556 U.S. at 678. At this
stage of the proceedings, the Court must accept the well pled
facts alleged in complaint as true. See Aziz v.
Alcolac, 658 F.3d 388, 390 (4th Cir. 2011).
Motion for Summary Judgment Standard of
may grant summary judgment, “when the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477
U.S. 317, 322-23 (1986); Felty v. Graves-Humphreys,
818 F.2d 1126, 1128 (4th Cir. 1987).
Court must view facts and all reasonable inferences in favor
of the nonmoving party in order to ascertain whether a
genuine issue of material fact exists. Pulliam Inv. Co.
v. Cameo Properties, Inc., 810 F.2d 1282, 1286 (4th Cir.
1987); Ross v. Communications Satellite Corp., 759
F.2d 355, 364 (4th Cir. 1985).
the mere existence of some disputed facts does not
automatically foreclose summary judgment. Thompson
Everett, Inc. v. National Cable Advertising L.P., 57
F.3d 1317, 1322 (4th Cir. 1995). “Factual disputes that
are irrelevant or unnecessary will not be counted.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). Rather, the disputed facts must be “material to
an issue necessary for the proper resolution of the case,
” and “the quality and quantity of evidence
offered to create a question of fact must be adequate to
support a jury verdict.” Thompson, 57 F.3d at
burden of demonstrating that no genuine issue of fact exists
and that one is entitled to judgment as a matter of law is on
the moving party. Barwick v. Celotex Corp., 736 F.2d
946, 958 (4th Cir. 1984). The ultimate question is whether a
reasonable fact finder could return a verdict for the
non-movant or whether the movant, at trial, would be entitled
to judgment as a matter of law. See,
Celotex, 477 U.S. at 327; Shealy v.
Winston, 929 F.2d 1009, 1012 (4th Cir. 1991).
The Court Will Not Convert the Motion to Dismiss into a
Motion for Summary Judgment.
Court is of the view that it is premature to consider
Defendants' alternative pleading seeking summary
judgment. Converting a motion to dismiss into a motion for
summary judgment is not appropriate where a party has not had
the opportunity to conduct reasonable discovery. Gay v.
Wall, 761 F.2d 175, 178 (4th Cir. 1985).
Typically, summary judgment should be denied “where the
nonmoving party has not had the opportunity to discover
information that is essential to his opposition.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250
this black letter law, the non-moving party has an
affirmative obligation to overcome the motion couched in the
alternative: there must be a representation of the need to
obtain discovery. A Rule 56 affidavit should be filed when
facts are unavailable to the non-moving party. This affidavit
should articulate the areas where reasonable discovery is
likely to bear fruitful information that may defeat the
motion for summary judgment. Fed.R.Civ.P. 56(d) (“If a
nonmovant shows by affidavit or declaration that, for
specified reasons, it cannot present facts essential to
justify its opposition” then the court may defer or
deny the motion, allow discovery, or make any other
appropriate order.”) Harrods Ltd. v. Sixty Internet
Doman Names, 302 F.3d 214 (4th Cir. 2002).
have followed the letter of the law here. Plaintiffs have
provided the necessary affidavit in support of their need to
obtain discovery which they reasonably contend is in the
exclusive control of Defendants. Decl. of Counsel in Supp. of
Pls.' Mot. to Allow Time for Disc. Under Rule 56(d). ECF
No. 52-1. Upon reviewing this submission, the Court is
persuaded that this supporting affidavit is not mere
boilerplate, but substantively addresses a laundry list of
areas for needed discovery. Accordingly, the Court will not
consider Defendants' Motion for summary judgment, nor
consider materials outside of the Second Amended Complaint
Plaintiffs' Fair Debt Collection Protection Act
challenge Plaintiffs' Fair Debt Collection Act
(“FDCPA”) claims on several levels. The FDCPA can
be found at 15 U.S.C. § 1692 et. seq. (1997).
The Cure Amount and the Ability to
[o]n October 18, 2018, Rushmore sent Plaintiff a Notice of
Intent to Foreclose, which overstated the cure amount as
$135, 402.75 . . . . The claimed cure amount was nearly $12,
000 more than the amount claimed due in the August mortgage
statement. Because the monthly payment was only $2, 521.11
and only two months had elapsed before Rushmore claimed the
amount increased by $12, 000, Rushmore knew the amount stated
in the Notice of Intent was patently false.
SAC ¶ 56. Furthermore, Plaintiffs assert that
“Rushmore violated §1692e(2), (5)&(10) by
misrepresenting and/or falsely representing in the Notice of
Intent from October 2018 that U.S. Bank, Rushmore or BWW the
cure amount and misrepresenting that they could foreclose on
Plaintiff's Property.” SAC ¶ 61.
argue that these statements are not sufficient to make a
plausible claim that the cure amount reflected in the Notice
of Intent to Foreclose (“NOI”) was false.
Defendants state that Plaintiffs have failed to plead
specific facts to show that the stated amount is false.
the cure amount, the Court at this stage of the proceedings
is not inclined to consider Defendants offer of additional
facts beyond the four corners of the SAC. As stated by
Plaintiffs, a two-month failure to make monthly payments of
less than $2600 per month, should not equate to a nearly $12,
000 bonus. Plaintiffs' claim is plausible and satisfies
the dictates of Fed.R.Civ.P. 8.
Plaintiffs Do Not Have to Satisfy the Heightened Pleading
Requirement of Fed.R.Civ.P. 9(b).
suggest that Plaintiffs must satisfy the higher burden set by
Fed.R.Civ.P. 9(b). The Court respectfully disagrees. While
there are decisions in different federal courts which support
the views of both parties, the Court finds most persuasive
the reasoning of Neild v. Wolpoff &
Abramson, LLP, 453 F.Supp.2d 918 (E.D. Va. 2006). In
Neild, the court noted that the issue appeared to be
one of first impression in the Fourth Circuit. Even within
the Fourth Circuit there have been federal courts that look
to whether the gravamen of the offense is fraud and requiring
more specific pleading even if the claim is not technically
labeled as such. Id. at 923. Yet, when looking to
Virginia's common law fraud claims, which are very akin
to those in Maryland, the court noted several meaningful
distinctions from an FDCPA claim. These distinctions under
the FDCPA include: 1) no need to prove reliance on a false
representation; 2) no need to show actual damages; and, 3) no
need to show scienter. Id. Similarly, this Court
ruled long ago that “the FDCPA is a strict liability
statute.” Spencer v Hendersen-Webb, Inc., 81
F.Supp.2d 582, 590 (D. Md. 1999). Accordingly, the
“gravamen” of a FDCPA claim is not fraud, and
Plaintiffs are not required to satisfy Fed.R.Civ.P. 9(b).
Here it appears that there was more than a doubling of
potential amounts due. The Court is persuaded that Plaintiffs
have satisfied the pleading requirements of Fed.R.Civ.P. 8.
Default and the Holder of the Note.
additionally seek dismissal claiming the SAC is defective
when asserting that Rushmore lacked authority to enforce the
loan through foreclosure while at the same time acknowledging
in paragraph 18 that the mortgage loan had been declared in
default. Plaintiffs contend in paragraph 18 that Nationstar
declared the default, and here argue that this was no
acknowledgement of default, merely Nationstar's
declaration. Furthermore, Plaintiffs make clear that the
reason Defendants lacked authority to foreclose is because
Rushmore was not the holder of the Note. SAC ¶ 59. To
this argument, Defendants remain silent in their reply
person obligated on a promissory note is known as the
“maker” of the note. Under Maryland law, the
maker must pay the obligation to “a person entitled to
enforce the instrument or to an indorser who paid the
instrument . . . .” Md. Code Ann., Com. Law,
§3-412 (LexisNexis 2013 Repl. Vol.). Generally, a
promissory note may be enforced by the “holder”
of the note or a nonholder who has the rights of a holder or
a person entitled to enforce the note under special
circumstances recognized by statute. Md. Code Ann., Com. Law,
§3-301 (LexisNexis 2013 Repl. Vol.). Accordingly, a
“holder” is the person in possession of a note
that is payable to bearer or to an identified person that is
a person in possession. Md. Code Ann., Com. Law,
§1-201(b)(21)(i) (LexisNexis 2013 Repl. Vol.).
“Thus, the person in possession of a note, either
specially indorsed to that person or indorsed in blank, is a
holder entitled generally to enforce that note.”
Deutsche Bank Nat. Trust Co. v. Brock, 430 Md. 714,
correctly observe that the existence of default is not
dispositive. The additional concern is the proper entity to
receive payment. Plaintiffs contend that Rushmore is not a
proper holder of the note. In fact, Plaintiffs contend that
none of the defendants are proper holders and demand proof of
such. Furthermore, mere possession of the note is not
sufficient to be a holder entitled to payment. A holder
entitled to payment must also have a note that is properly
endorsed. Anderson v. Burson, 424 Md. 232, 247
(2011). Plaintiffs have sufficiently alleged a violation of
this prong of the FDCPA.
The Amount of Interest Due.
challenge Plaintiffs' pleading regarding the prong of the
FDCPA which prohibits an attempt to collect by
misrepresentation any interest that is claimed due.
Plaintiffs' pleading states that “Rushmore violated
§1692e(2), (10) and f(1) by misrepresenting and/or
falsely representing the amount of interest that could be
assessed on the loan.” SAC ¶ 62. Defendants attack
this averment by noting that Plaintiffs do “not plead
facts establishing what the correct interest rate is, what
the interest rate charged by Rushmore was, and why
Rushmore's interest rate was incorrect. Without these
facts, Plaintiffs' claim is conclusory and not
viable.” Defendants' Motion 4. As stated earlier,
the criticisms raised by Defendants might be more persuasive
if Plaintiffs were obligated to satisfy the heightened
pleading requirements of Fed.R.Civ.P. 9(b). Since this claim
is governed by Fed.R.Civ.P. 8, the Court is satisfied that
Plaintiffs have pled sufficient facts to place Defendants on
fair notice of the claim.
Awareness of Plaintiffs Being Represented by
allege that Rushmore violated the FDCPA by
sending debt communications - June and July 2018 letters,
August 2018 mortgage statement, and October 2018 Notice of
Intent - directly to Plaintiff after June 5, 2018, at which
time Plaintiffs' counsel entered an appearance in
Plaintiffs' lawsuit against Rushmore and the defendants,
and the Defendant [Rushmore] became aware that ...