Barr v. Flagstar Bank, FSB, 303 F. Supp. 3d 400

Background

Bruce and Anne Barr refinanced their Stevensville, MD home in 2007; Flagstar serviced the loan. After payment difficulties and bankruptcy in 2009, the Barrs sought loan modifications and entered multiple Trial Period Plans (TPPs).
In Sept. 2015 the parties executed a Revised Loan Modification Agreement (Revised LMA) accompanied by a "Second How to Accept" letter stating a Modification Payment Amount of $2,041.43; the Barrs returned signed copies and paid $2,041.43 monthly.
Flagstar later sent mortgage statements treating those payments as partial and indicating a larger required monthly payment and past-due balance; Flagstar also sent a Corrected LMA proposing a different monthly amount, which the Barrs rejected.
The Barrs submitted two letters (Dec. 15, 2015 and Mar. 1, 2016) characterized as RESPA Qualified Written Requests (QWRs); Flagstar responded, producing records.
The Barrs sued alleging fraud, MCPA, MMFPA, RESPA, MCDCA, breach of contract, TILA and FCRA violations. Flagstar moved to dismiss; the court considered the Revised LMA, the Second How to Accept letter, the Barrs’ letters, and Flagstar’s responses as integral to the pleading.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Flagstar breached the Revised LMA by treating $2,041.43 as partial payments	Barrs: $2,041.43 was the Modification Payment Amount and should have been applied as full payment	Flagstar: Revised LMA and acceptance conditions show escrow remains due and Flagstar had no duty to accept $2,041.43 as full payment	Dismissed as to this theory — Revised LMA unambiguously required escrow payments in addition to $2,041.43
Whether Flagstar made actionable fraud/misrepresentations about the Modification Payment Amount including escrow	Barrs: prior communications led them to believe $2,041.43 included escrow; they relied and were harmed	Flagstar: the Revised LMA contradicts that claim; no false representation of material fact	Fraud claim based on inclusion of escrow dismissed; separate fraud theory re: conditions of acceptance survives (not addressed by defendant)
Whether Barrs’ letters constituted RESPA QWRs and whether Flagstar violated RESPA in responding	Barrs: letters were QWRs; Flagstar failed to correct errors and provide requested information	Flagstar: Dec. 2015 letter sought non-servicing documents and lacked detail; March 2016 letter sought servicing info but Flagstar properly responded with documents	RESPA claim dismissed: Dec. 2015 not a QWR; March 2016 was a QWR but Flagstar adequately responded
Whether MCDCA claim (illegal debt collection) stated a claim	Barrs: Flagstar sought amounts not owed under the Revised LMA and threatened foreclosure	Flagstar: Barrs dispute amount due but underlying debt validity is not challenged; no knowledge of invalid debt alleged	MCDCA claim dismissed — mere dispute over amount owed insufficient; no pleading of Flagstar's knowledge that debt was invalid

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for complaints)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleadings must state a plausible claim)
King v. Rubenstein, 825 F.3d 206 (4th Cir. 2016) (Rule 12(b)(6) tests sufficiency of complaint)
Am. Chiropractic Ass'n, Inc. v. Trigon Healthcare Inc., 367 F.3d 212 (4th Cir. 2004) (when court may consider documents outside complaint)
Koons Ford of Balt., Inc. v. Lobach, 919 A.2d 722 (Md. 2007) (signer is presumed to have read and is bound by contract terms)
Chesapeake Bay Found., Inc. v. Severstal Sparrows Point, LLC, 794 F. Supp. 2d 602 (D. Md. 2011) (integral-document rule for Rule 12(b)(6) consideration)
Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769 (4th Cir. 2013) (MCPA claims sounding in fraud subject to Rule 9(b))