39 F. Supp. 3d 689
D. Maryland2014Background
- Plaintiffs Eurkert and Senta Boardley (African‑American) obtained a mortgage/line of credit from Household (HSBC subsidiary) in June 2007 after being told they could refinance or have payments reduced within months; they later entered several informal "deferment" arrangements and paid roughly $62,000.
- Plaintiffs allege defendants failed to credit payments/escrow, misrepresented class settlement eligibility, refused promised payment reductions, and later threatened foreclosure.
- Plaintiffs filed a multi‑count complaint asserting federal statutory and state common‑law claims; defendants moved to dismiss and plaintiffs sought leave to file a Second Amended Complaint.
- Court treated the motion to amend under Rule 15 and evaluated claims under Rule 12(b)(6), applying Twombly/Iqbal pleading standards and Rule 9(b) for fraud.
- Court dismissed most federal statutory and common‑law counts as inadequately pleaded or time‑barred, granted leave to amend only the Maryland Consumer Protection Act (MCPA) claim, and allowed the breach‑of‑settlement agreement claim to proceed; all other counts were dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Motion for leave to amend / futility | Amendments clarify deficiencies and cure pleading defects for certain claims (esp. MCPA, RESPA) | Amendments are futile because proposed allegations still fail to state claims | Grant in part: leave to amend MCPA only; other proposed RESPA/TILA amendments denied as futile |
| RESPA (12 U.S.C. §2605 / §2609 / §2605(k)) | Servicer failed to respond properly to QWRs and failed to provide escrow statements; §2609 and §2605(k) violations | §2609 has no private cause of action; servicer complied with §2605(e)(2) alternatives; §2605(k) effective only after Jan 2014 | Dismiss §2609 claims (no private right); §2605(e) claim dismissed—plaintiffs’ April 2012 letter was a QWR but servicer provided §2605(e)(2)(B) explanation; §2605(k) claims not actionable for pre‑effective‑date conduct and timing defeats claim |
| TILA and Regulation Z (payoff/escrow statements) | Failure to provide escrow/account statements violates TILA and Reg Z | Claims are time‑barred or plaintiffs never requested payoff/balance as required | Dismissed: TILA claim inadequately pleaded and, as to payments not credited, time‑barred under 1‑year statute |
| Maryland Consumer Protection Act (MCPA) | Defendants made deceptive/misleading statements that induced plaintiffs to accept costlier loan and deprived them of relief; recent misrepresentations (post‑2009) cure timeliness | No identifiable loss or actionable misrepresentation; some statements were mere mistakes | Leave to amend MCPA granted: court finds plaintiffs state a plausible MCPA claim based on post‑2009 misrepresentations and alleged losses (approx. $62,000) |
| Civil‑rights/ECOA/FHA discrimination claims | Discretionary Pricing Policy had disparate impact and charged minorities worse terms | Plaintiffs released discrimination claims via the class settlement and/or fail to plead qualification and comparative treatment | Dismissed: plaintiffs’ allegations are conclusory; do not plead required elements (qualifications, comparator or causal nexus) and fail under McDonnell Douglas framework |
| Negligence / negligent supervision / fraudulent concealment | Defendants breached duties by misrepresentations and failing to supervise; plaintiffs reasonably relied | Bank‑borrower relationship is ordinarily contractual, not fiduciary; plaintiffs plead no special circumstances creating fiduciary duty | Dismissed: plaintiffs failed to allege a legally cognizable duty or special circumstances to impose fiduciary duties; claims fail as pleaded |
| Breach of Settlement Agreement | Plaintiffs are settlement class members and defendants breached foreclosure‑mitigation obligations (FAP) through June 30, 2011 | Plaintiffs were not seriously delinquent before the FAP termination or released claims by settlement | Survives dismissal: pleaded arrearages and alleged failure to notify/include plaintiffs in FAP are sufficient to state breach of contract claim |
Key Cases Cited
- Foman v. Davis, 371 U.S. 178 (1962) (leave to amend should be freely granted absent prejudice, bad faith, or futility)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must state a plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard and rejection of threadbare recitals)
- McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) (burden‑shifting framework for disparate treatment claims)
- Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769 (4th Cir. 2013) (applying Rule 9(b) and pleading standards in mortgage litigation)
- Berneike v. CitiMortgage, Inc., 708 F.3d 1141 (10th Cir. 2013) (Dodd‑Frank/RESPA amendments effective dates and related timing issues)
- Mount Vernon Props., LLC v. Branch Banking & Trust Co., 907 A.2d 373 (Md. Ct. Spec. App. 2006) (implied covenant of good faith and fair dealing not an independent cause of action)