United States District Court, D. Maryland
Richard D. Bennett United States District Judge
William Robinson (“Mr. Robinson”) and Tracie
Lyers (“Ms. Lyers”) (collectively, the
“Named Plaintiffs” or “Plaintiffs”),
on their individual behalf and behalf of three putative
classes of similarly situated persons, bring this class
action lawsuit against Defendants Fay Servicing, LLC
(“Fay”), Servis One, Inc. d/b/a BSI Financial
Services (“BSI”), and Wilmington Savings Fund
Society, FSB, d/b/a Christiana Trust, as Trustee for Ventures
Trust 2013-I-H-R (“Ventures Trust”)
(collectively, the “Defendants”). Plaintiffs
allege that Ventures Trust has unlawfully profited from
collection activities related to the Plaintiffs’
defaulted mortgage loans by failing to obtain the license
required under the Maryland Collection Agency Licensing Act
(“MCALA”), Md. Code Ann., Bus. Reg. § 7-101,
et seq. and the Maryland Mortgage Lender Law
(“MMLL”), Md. Code Ann., Fin. Inst. §
11-501, et seq. Additionally, Plaintiffs allege that
BSI and Ventures Trust’s standard
modification/forbearance agreements improperly capitalized
inspection fees claimed due from Plaintiffs in violation of
Com. Law § 12-121(b).
pending before this Court is Defendants’ Motion to
Dismiss Plaintiffs’ Amended Class Action Complaint for
Failure to State a Claim and for Lack of Subject Matter
Jurisdiction. (ECF No. 8). The Court has reviewed the
parties’ submissions and no hearing is necessary.
See Local Rule 105.6 (D. Md. 2018). For the reasons
stated herein, Defendants’ Motion to Dismiss (ECF No.
8) is GRANTED. Plaintiffs’ claims are DISMISSED WITH
allege that Defendants unjustly enriched themselves by
engaging in mortgage debt collection practices which violated
Maryland law. Defendants operate within the mortgage
industry’s secondary market, which springs from
mortgage lenders’ desire to offload the mortgages that
they originate. (Am. Compl. ¶ 21.) In recent years,
hedge funds and private equity funds have acquired thousands
of defaulted consumer, mortgage loans. (Id.) The
funds rely on collection agencies to extract profit from the
mortgage loans they have acquired. (Id.)
Ventures Trust is a Delaware statutory trust established for
the primary purpose of acquiring defaulted mortgage debts
owed by consumers in Maryland. (Id. at ¶ 15.)
It is not licensed as a Maryland collection agency or
mortgage lender. (Id. at ¶ 5.) The trust
acquires the loans for amounts well below that which is
claimed to be owed on the debt. (Id.) Defendant BSI
allegedly served as Ventures Trust’s “debt
collector” and “mortgage servicer” between
2013 and 2017. (Id. at ¶ 16.) BSI in turn
retained attorneys, substitute trustees, and other collection
agencies to initiate foreclosures and other proceedings
against Maryland homeowners. (Id.) Since 2017,
Defendant Fay has allegedly donned the mantle of “debt
collector” and “mortgage servicer” for
Ventures Trust. (Id. at ¶ 17.)
Plaintiffs’ mortgage loan debts are among those which
Ventures Trust obtained, and which BSI and Fay attempted to
about June 2004, Mr. Robinson refinanced his home with the
now-defunct BankUnited FSB. (Id. at ¶ 22.)
Following a reduction in household income, his loan entered
default. (Id. at ¶ 23.) On December 14, 2014,
Ventures Trust acquired by assignment all right, title, and
interest to the loan. (Id. at ¶ 25.) On or
about January 2, 2015, BSI allegedly became the mortgage
servicer for Mr. Robinson’s loan. (Id. at
¶ 24.) Neither Ventures Trust nor BSI informed Mr.
Robinson that Ventures Trust was not licensed as a Maryland
collection agency or mortgage lender. (Id. at ¶
28.) Nevertheless, acting “on behalf of Ventures Trust,
” BSI collected from Mr. Robinson sums claimed due for
interest, fees, and costs. (Id. at ¶ 32.) Also
“on behalf of Ventures Trust, ” BSI entered into
a modification agreement with Mr. Robinson which capitalized
sums claimed due by BSI, including interest, fees, and costs.
(Id. at ¶ 33.) Among these were property
inspection fees originally imposed by BankUnited, FSB.
(Id.) On February 9, 2017, Fay assumed BSI’s
debt collection activities. (Id. at ¶ 34.) Fay
also demanded interests, fees, and costs associated with the
defaulted mortgage loan. (Id. at ¶ 35.) As of
the date of the Amended Complaint, the mortgage debt remains
outstanding. (Id. at ¶ 40.)
allegations with respect to Ms. Lyers’ mortgage loan
are substantially the same. On October 24, 2005, Ms. Lyers
refinanced her home with Bank of America, NA. (Id.
at ¶ 41.) Between December 2009 and September 2010, Bank
of America charged Lyers with property inspection fees.
(Id. at ¶ 43.) On January 1, 2011, Ms.
Lyers’ loan entered default. (Id. at ¶
42.) On January 1, 2014, BSI acquired the mortgage servicing
rights to the loan. (Id. at ¶ 44.) On January
30, 2014, Ms. Lyers’ loan was transferred to Ventures
Trust. (Id. at ¶¶ 41, 45.) Ventures Trust
never disclosed to Ms. Lyers that it was not licensed as a
Maryland collection agency or mortgage lender. (Id.
at ¶ 48.) BSI, “on behalf of ventures trust,
” nevertheless modified the Lyers Loan and capitalized
the sums claimed due, including interest, fees, and costs.
(Id. at ¶ 53.) Among these were the inspection
fees imposed by Bank of America, NA. (Id.) On
February 10, 2017, Fay became the mortgage servicer for the
loan and resumed collection efforts. (Id. at ¶
54.) Ms. Lyers’ loan is not satisfied. (Id. at
30, 2018, Plaintiffs commenced this class action in the
Circuit Court for Montgomery County, Maryland. On August 31,
2018, Defendants removed the case to this Court, asserting
that jurisdiction was proper under the Class Action Fairness
Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d).
(Notice of Removal, ECF No. 1.) Plaintiffs have not
challenged this basis for removal. In their Original
Complaint, Plaintiffs brought five Counts and alleged that
Defendant Ventures Trust was required to obtain a license
under the Maryland Collection Agency Licensing Act
August 8, 2018, the Maryland Court of Appeals determined that
“foreign statutory trusts are outside of the scope of
the collection agency industry regulated and licensed under
MCALA.” Blackstone v. Sharma, 461 Md. 87,
147, 191 A.3d 1188 (2018). Subsequently, on September 14,
2018, Plaintiffs filed an Amended Complaint (ECF No. 5)
which, despite the Court of Appeal’s ruling, continued
to assert MCALA as a basis for holding Ventures Trust liable.
Defendants moved to dismiss on September 28, 2018. (ECF No.
8.) On October 3, 2018, the Maryland Court of Appeals denied
reconsideration of the Blackstone appeal. Subsequent
to that decision, on October 18, 2018, this Court issued a
Letter Order memorializing the result of a telephone
conference with the parties in this case and two related
cases, Altenburg v. Caliber Home Loans, Inc., et
al., RDB-16-3374 (the “Altenburg
Action”) and Suazo, et al. v. U.S. Bank Trust, NA,
et al., RDB-18-1451 (the “Suazo
Action”). The Letter Order dismissed with prejudice
Plaintiffs’ declaratory judgment claim (Count I) and
held that Plaintiffs’ remaining claims (Counts II-V)
were “barred so far as they allege violations of the
Maryland Collection Agency Licensing Act . . . but remain as
to a theory under the Maryland Mortgage Lender Law.”
(Letter Order, ECF No. 13.) On September 25, 2019, this Court
dismissed the Suazo Action, which advanced claims
almost identical to those presented here, holding in relevant
part that foreign statutory trusts are not required to be
licensed under the Maryland Mortgage Lender Law.
pending are the following claims: a common law claim for
unjust enrichment by all Named Plaintiffs on behalf of the
BSI class against Ventures Trust and BSI (Count II); a common
law claim for unjust enrichment by Named Plaintiffs on behalf
of the Fay Class against Fay and Ventures Trust (Count III);
an inspection fee claim under Com. Law §
12-121(a)(1)(II) by the Named Plaintiffs and the Inspection
Fee Class against all Defendants (Count IV); and alleged
violations of the Maryland Consumer Debt Collection Act
(“MCDCA”), Com. Law § 14-201, et
seq. asserted by the Named Plaintiffs on behalf of the
BSI Class and the Fay Class against all Defendants (Count V).
Rule 8(a)(2) of the Federal Rules of Civil Procedure, 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). Rule 12(b)(6) of the
Federal Rules of Civil Procedure authorizes the dismissal of
a complaint if it fails to state a claim upon which relief
can be granted. The purpose of Rule 12(b)(6) 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.” Presley v. City of
Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006).
Supreme Court’s opinions in Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007), and Ashcroft v.
Iqbal, 556 U.S. 662 (2009), “require that
complaints in civil actions be alleged with greater
specificity than previously was required.” Walters
v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citation
omitted). In Twombly, the Supreme Court articulated
“[t]wo working principles” that courts must
employ when ruling on Rule 12(b)(6) motions to dismiss.
Iqbal, 556 U.S. at 678. First, while a Court must
accept as true all the factual allegations contained in the
complaint, legal conclusions drawn from those facts are not
afforded such deference. Id. (stating that
“[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
suffice” to plead a claim). Second, a Complaint must be
dismissed if it does not allege a “plausible”
claim for relief. Id. at 678-79 (“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 allege.”).
Plaintiffs Fail to State a Claim under Counts II, III, and
allegations in Counts II, III, and V are premised on a faulty
legal theory. Plaintiffs allege that Ventures Trust must
either register as a debt collector under the Maryland
Collection Agency Licensing Law (“MCALA”) or as a
mortgage lender under the Maryland Mortgage Lender Law
(“MMLL”). Plaintiffs allege that Defendants may
be held liable for unjust enrichment and violations of the
Maryland Consumer Debt Collection Act because Ventures Trust
profited from mortgage loans with the assistance of BSI and
Fay. These legal theories are foreclosed by the Maryland
Court of Appeals, the plain language of the MMLL, and a
recent opinion of this Court. The Maryland Court of Appeals
has conclusively held that foreign statutory trusts, and in
particular Ventures Trust, is not required to obtain a
license under MCALA. Blackstone v. Sharma, 461 Md.
87, 147, 191 A.3d 1188 (2018). Contrary to the
Plaintiffs’ assertions, Blackstone did not
hold that Ventures Trust must therefore obtain a license
under the MMLL. As this Court has recently held, foreign
statutory trusts like Ventures Trust are not “mortgage
lenders” as that term is defined in the MMLL and are
therefore not required to obtain a license. See Suazo v.
U.S. Bank Trust, NA, RDB-18-1451, 2019 WL 4673450 (D.
Md. Sept. 25, 2019). As Plaintiffs’ claims under Counts
II, III, and V rise and fall on this legal theory, Counts II,
III, and V are DISMISSED WITH PREJUDICE.
Ventures Trust is not Required to Obtain a License under the
Maryland Collection Agency Licensing Act.
Letter Order (ECF No. 13), this Court determined that
Plaintiffs’ claims are barred in so far as they allege
violations of the Maryland Collection Agency Licensing Act.
Any such allegation is futile in light of the Maryland Court
of Appeal’s decision in Blackstone. In that
case, the Maryland Court of Appeals held that “foreign
statutory trusts are outside of the scope of the collection
agency industry regulated and licensed under MCALA.”
Blackstone, 461 Md. at 147, 191 A.3d 1188.
Accordingly, Plaintiffs may not pursue any claims on the
theory that Ventures Trust was required to obtain an MCALA
Ventures Trust is not Required to Obtain a License under the
Maryland Mortgage Lender Law.
alternative theory for liability under Counts II, III, and V
also fail. Foreign statutory trusts like Ventures Trust are
not “mortgage lenders” and need not obtain a
license under the MMLL. This Court has recently addressed
this issue in a prior Memorandum Opinion entered in a related
case. See Suazo, 2019 WL 4673450, at *4-9. This
Court hereby adopts the reasoning presented in its prior