129 F. Supp. 3d 249
D. Maryland2015Background
- Stephan and Angela Ayres bought a Maryland home in 1991; the promissory note (the Ayres Note) listed Stephan as the borrower; Angela alleges she never agreed to be liable.
- Stephan completed a Chapter 13 bankruptcy in 1996; later servicers (First Union, HUD/Clayton, Litton) produced inconsistent account histories and asserted large ‘‘arrearage’’ charges; Litton allegedly identified Angela as a borrower despite a lost-note affidavit stating Stephan only was a borrower.
- Litton transferred servicing to Ocwen in November 2011; Ocwen sent default and escrow notices and allegedly continued to assert Angela was an obligor, made inaccurate escrow/escrow-account filings, and provided inadequate responses to Qualified Written Requests (QWRs).
- Plaintiffs (initially pro se) sued in 2013 and filed an amended complaint in 2014 asserting claims under Maryland consumer statutes, the Maryland Mortgage Fraud Protection Act, MFPA, RESPA, FDCPA, negligence, defamation, and tortious interference; Salomon Brothers (a trust alleged to have owned the loan) moved to quash service and to dismiss; Ocwen moved to dismiss; Angela moved for summary judgment on her obligor status.
- The court concluded the trust (Salomon Brothers) was not a proper party and service on the trust was improper; it allowed certain amendments but dismissed or limited several claims on pleading, statute-of-limitations, and other grounds; summary judgment for Angela was denied due to factual ambiguity in a HUD Forbearance Agreement that listed both spouses as mortgagors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Service on Salomon Brothers (trust) | Plaintiffs served the trust via Maryland SDAT because trust owned the loan; service sufficient | Salomon: trust not required to have Maryland resident agent; trust not suable entity—must sue trustee | Service quashed; Salomon Brothers (trust) not a proper party; motion granted |
| Judicial estoppel re: Angela's obligor status | Angela now alleges she never agreed to be liable; amended complaint pleads this | Ocwen: Plaintiffs previously alleged Angela was a borrower; should be estopped | No judicial estoppel—elements satisfied except bad faith; plaintiffs not shown to have acted in bad faith |
| RESPA (failure to respond to QWRs) | Plaintiffs sent multiple QWRs about servicing/escrow and got only cursory acknowledgment | Ocwen: letters challenged loan validity (not servicing) so not QWRs; plaintiffs lack actual damages | RESPA claim survives at pleading stage for statutory damages (pattern or practice); actual damages allegations are conclusory and dismissed |
| FDCPA (whether Ocwen is a debt collector) | Plaintiffs: Ocwen treated loan as in default and sent collection notices after acquiring servicing | Ocwen: servicer exemption applies for loans not in default at acquisition | Court: pleadings allege Ocwen believed loan in default when acquired and served as collector—FDCPA claim survives |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for Rule 8 pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleaded facts must allow reasonable inference of liability)
- Armco, Inc. v. Penrod-Stauffer Bldg. Sys., Inc., 733 F.2d 1087 (4th Cir. 1984) (service rules must be followed despite actual notice)
- O'Meara v. Waters, 464 F. Supp. 2d 474 (D. Md. 2006) (plaintiff bears burden to establish validity of service)
- Zinkand v. Brown, 478 F.3d 634 (4th Cir. 2007) (elements of judicial estoppel; bad faith requirement)
- Lowery v. Stovall, 92 F.3d 219 (4th Cir. 1996) (judicial estoppel requires prior inconsistent position accepted by court)
- White v. Lundeberg Md. Seamanship Sch., Inc., 57 F.R.D. 128 (D. Md. 1972) (Maryland rule: trust generally lacks capacity to be sued; trustee must be sued)