850 F. Supp. 2d 557
D. Maryland2012Background
- Dwoskins allege Bank of America sold them a “No Fee” fixed-rate mortgage and promised no PMI; they later discovered Lender-Paid Mortgage Insurance (LPMI) was placed without their knowledge.
- LPMI was allegedly paid by the Bank post-closing to make the No Fee loan marketable, contrary to Bank marketing and disclosures.
- Dwoskins contend the Bank misrepresented no PMI/LPMI and hid LPMI costs, impairing their ability to refinance, including under HARP.
- Plaintiffs bring claims under the Homeowners Protection Act (HPA) and Maryland Consumer Protection Act (MCPA), plus fraud, negligent misrepresentation, and unjust enrichment, on behalf of themselves and a class.
- The Bank seeks dismissal under Rule 12(b)(6) and 9(b); the court addresses HPA disclosures, preemption, economic loss rule, pleading standards, and remedies, denying dismissal in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| HPA disclosures applicability to No Fee loans | Dwoskins contend HPA 4905(c) applies because LPMI was placed; Bank’s timing argument rejected. | Bank says §4905 applies only when LPMI is required as a loan condition at origination. | HPA disclosures plausibly required; denial of dismissal on this claim. |
| Preemption of fraud and MCPA claims by HPA | Federal preemption does not bar fraud/MCPA; claims relate to misrepresentation and general duties. | HPA express preemption (§4908(a)(1)) precludes state-law claims about PMI disclosures. | Fraud and MCPA claims not preempted; allowed to proceed. |
| Economic loss rule as bar to fraud/ misrepresentation | Fraudulent inducement claims are independent and precontractual; exception applies. | Economic loss rule should bar tort claims arising from contract. | Economic loss rule does not bar fraud/negligent misrepresentation in this context. |
| FRCP 9(b) pleading requirements for fraud and MCPA | Complaint identifies specific representations and misstatements with intent to deceive, satisfying particularity. | Allegations insufficiently precise in time, place, content, and actor. | Pleading satisfies FRCP 9(b) for fraud and MCPA claims. |
| Injunction as remedy and pleading viability | Request for injunctive relief is a remedy for the asserted claims. | Injunctive relief not a separate action; merits should be evaluated later. | Injunction claim viable at this stage; denied without prejudice to be revisited. |
Key Cases Cited
- Gourdine v. Crews, 405 Md. 722 (Md. 2008) (fraud elements and duty to furnish correct information; Maryland law cited for misrepresentation standards)
- Marvin Lumber & Cedar Co. v. PPG Indus., Inc., 223 F.3d 873 (8th Cir. 2000) (fraud exception to economic loss doctrine; precontractual inducement claim allowed)