MEMORANDUM OPINION ..
Angela Ayres and Stephan Ayres sued Ocwen Loan Servicing, LLC (“Ocwen”) and Salomon Brothers, Mortgage Securities VII (“Salomon Brothers”). Pending are Ocweris motion to dismiss, Angela Ayres’s motion for summary judgment,
I. Background
On March 18, 1991, the Plaintiffs bought a property at 6600 Halleck Street, District Heights, Maryland (“the Property”) with a loan of $72,660 from Market Street Mortgage secured by a Deed of Trust (“the Ayres Note”). See EOF No. 61 (hereinafter, “Am. Compl.”) at ¶ 20. The Plaintiffs allege that “Mr. Ayres was and remains the only obligor/borrower on the Ayres Note [and] Mrs. Ayres has never agreed to assume any liability on the Ayres Note.” Id. (emphasis in, original). “The Ayres Note set the interest rate at 9.5% ... and had a maturity date in April 2021. The fixed monthly principal and interest payment on the Ayres Note equaled $610.96 and payments were due on the first day of the month and would not be subject to a late fee if paid by a grace period of 15 days of each month,” Id. at ¶ 21.
On August 25, 1993, Mr. Ayres filed for bankruptcy under-Chapter 13 of the Bankruptcy Code,
' “Despite the fact that Mr! Ayres was current on the Ayres Note following the successful completion of his Chapter 13 Bankruptcy and' discharge, the mortgage servicer for the Ayres' Note, First Union, demanded sums not cbntractually due and owing on the Ayres Note.” Am. Compl. at ¶ 27. In May 1998, First Union returned a mortgage payment stating that the Plaintiffs owed $13,972. Id. “Mr. Ayres attempted to get First Union to accept his continued payments from May 1998 and thereafter but it refused to accept the payments and continued to demand sums that were not contractually due.” Id. at ¶ 28.
“[A] few months after failing to get First Union to correct its false records,” Mr. Ayres requested that the U.S, Department of Housing and Urban Development (“HUD”) “take over the Ayres Note and assign the Ayres Note to another servicer.” Am. Compl. at ¶ 29. “[T]he Ayres Note was accepted into HUD’s assignment program on November 9, 1998 and soon thereafter assigned to a new servicer Clayton National Inc. (“Clayton”) who acted oh behalf of HUD with respect to the loan.”
In December 2000, the loan was assigned from HUD to Salomon Brothers Realty Corp. and transferred to Litton Loan Servicing for servicing. Am. Compl. at ¶ 34, 36. “Litton began shortly thereafter claiming that Mrs. Ayres was a borrower on the Ayres Note when at no time did she agree to be obligated on the Ayres Note.” Id. at ¶ 39. “Mr. Ayres had given Litton ... permission to discuss his mortgage account with Mrs. Ayres but that consent was never-an agreement for her to have become obligated on the Ayres Note.” Id. “On August 17, 2001, Lela Derouen, Assistant Vice President of Litton ... affirmed before a Notary Public from the State of Texas named Elizabeth H. Willard in a ‘Lost Note Affidavit’ that ‘STEPHAN AYRES’ was the only borrower on the'Ayres Note....'” Id. at ¶35.
“As of. September 13, 2002,. Litton reported that Mr. & Mrs. Ayres owed no delinquent sums of money on the Ayres Note. Litton intended for Mr. & Mrs. Ayres to rely upon this statement.” Am. Compl. at ¶ 40. On May 15, 2003, however, Litton claimed that the Plaintiffs owed “in addition to the regular mortgage, payment the sum of $23,383.28 for ‘OTHER FEES DUE.’” Id. at ¶41. “Mrs. Ayres proceeded, on her husband’s behalf and with his authority, to communicate with Litton over and over for several years, in writing and orally, regarding the basis of Litton’s claim in May 2003 ... that $23,383.28 in. additional ‘OTHER FEES’ was owed on the Ayres Note.” Id. at ¶ 42.
Litton did not provide documentation' explaining the “other fees.”' Am. Compl. at ¶ 43. Instead, on November 26, 2001, Litton informed the Plaintiffs “an Arrearage Bond of $23,280.02 was added to the loan” because of the Plaintiff’s previous participation in HUD’s Fresh Start Program. Id. “Litton never provided Mr. & Mrs. Ayres with any audit or other infor
In June 2009, the Plaintiffs defaulted on the loan. Am. Compl. at ¶ 47. “However, by approximately Jánuary 2010 the payments were caught up and were current again.” Id. In April 2010 Litton reevaluated the Ayres Note; however, “it utilized the [ ] false financial records ... and'as a result ... the Wner of the [Ayres Noté] did not approve a modification.’” Id. at ¶48. Further, on June 23, 2011, Litton claimed that the Plaintiffs “had not timely returned certain financial information to it as part of its consideration of various loan modification applications.” Id. at ¶ 49. The Plaintiffs allege that they “had timely returned all required documents and Litton kept asking for the same documents over and over but Litton would only claim it did not receive the requested documents.” Id.
In November 2011, Litton transferred the servicing of the loan to Ocwen. Am. Compl. ¶ 53. On December 6, 2011, Ocwen sent the Plaintiffs a letter stating that “mortgage payments .are past due, which puts you in default on your loan agreement.” Id.
In January 2012, the Plaintiffs filed a complaint with the Maryland Division of Financial Regulations. Am. Compl. at ¶ 56. On March 15, 2012, the Plaintiffs sent Ocwen a Qualified Written Request (“QWR”). Id. at ¶ 58. Other than sending a “basic acknowledgment of receipt” to the Plaintiffs, Ocwen provided “no substantive information” in response to the QWR. Id.
On April 6, 2012, Ocwen informed the Maryland Commissioner of Financial Regulation that Mrs. Ayres was a borrower on the Ayres Note, “admitted that it and Litton had demanded false sums due related to the escrow for property taxes,” “represented that the payments made by the Ayres were applied to the account in a sequence contrary to the Ayres Note and associated Deed of Trust,” and “adopted the false accounting and prior false statements of its predecessors.” Am. Compl. at ¶ 59. Despite these representations, on April 10, 2012, Ocwen sent the plaintiffs a statement asserting that the Plaintiffs “would need to pay a monthly escrow payment of $262.37 for their annual tax
In July 2012, Ocwen provided the following facts to the Maryland Commissioner of Financial Regulation: Mrs. Ayres was a borrower on the Ayres Note, Mrs. Ayres had filed for Chapter 13 Bankruptcy along with Mr. Ayres, the loan “may have become current as of June 26, 1996,” and “Ocwen had assessed an incorrect sum due for the escrow account related to the Ayres Note and demanded sums not validly due for property taxes.” Am. Compl. at ¶¶ 62-63. On July 31, 2012, Ocwen sent the Plaintiffs a Notice of Default. Id. at ¶ 64. On September 28, 2012, “Ocwen attempted to induce Mr. & Mrs. Ayres to enter into a loan modification of the Ayres Note which would have obligated Mrs. Ayres on the Ayres Note and included the disputed sums it had previously admitted to Mr. & Mrs. Ayres that it could not directly prove were due.” Id. at ¶ 67. On October 3, 2014, the Plaintiffs discovered that Ocwen “was falsely reporting a trade line to Equifax related to Mrs. Ayres[,] claiming that she was a borrower/debtor on the Ayres Note and that she was allegedly past due....”
On June 6, 2013, the Plaintiffs pro se
On October 24, 2014, the Plaintiffs filed an amended complaint. ECF No. 61. In addition to providing additional facts as requested in the August 27, 2014 Opinion, the Amended Complaint included- claims that were not present in the original-complaint.
11. Analysis
A. Salomon Brothers’ Motion to Quash Service of Process and to Dismiss
1. Legal Standard
Under Fed.R.Civ.P. 12(b)(5), a defendant may move to dismiss for insufficient service of process. When service is contested, “the plaintiff bears the burden of establishing the validity of service” under Fed.R.Civ.P. 4. O’Meara v. Waters,
2. The Motion to Quash
Salomon Brothers is a trust registered with the SEC.
Under Federal Rule of Civil Procedure 4(e)(1), an entity “within a judicial district of the United States” may be “served in a judicial district of the United States by following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or .where service is made....” Here, the Plaintiffs attempted to serve Salomon Brothers in accordance with Maryland Rule 2-124(o) which states:-
Service may be made upon a corporation, limited partnership, limited liability partnership, limited liability company, or other entity required by statute of this State to have a resident agent by serving two copies of the. summons, complaint, and all other papers filed with it, together with the requisite fee, upon the State Department of Assessments and Taxation if (i) the entity has no resident agent; (ii) the resident agent is dead or is no longer at the address for service of process maintained with the State Department of Assessments and Taxation; or (in) two good faith attempts on separate days to serve the resident agent have failed.
(emphasis added).
Salomon Brothers asserts that service was insufficient because it is not required to have a registered agent in Maryland. ECF No. 78-1 at 2-3. The Plaintiffs argue that Salomon Brothers “has put forward no evidence that it does not need to have a resident agent in Maryland.” ECF No. 82 at 1. However, it is the Plaintiffs’ burden to establish that service is proper, not Salomon Brothers. See O’Meara,
Although Maryland does not have a statute explaining when a trust must have a registered agent, it does have statutes which delineate when a corporation does business in Maryland, thereby requiring a registered agent. Under Maryland Code, Corporations and Associations, § 7-104, a corporation does not “do[] intrastate, interstate, or foreign business in [Maryland]” if it “foreclos[es] mortgages and deeds of trust on property in this State; as a result of default under a mortgage or deed of trust, acquires] title to property in this State by foreclosure, deed in lieu of foreclosure, or otherwise; . hold[s], protects], rent[s], maintains], and operates] property in this State so acquired; and sell[s] or transferfs] the title to property in this State so acquired to any person....
The only “action” taken by Salomon Brothers in Maryland according to the Amended Complaint was being the owner of the Ayres Note. See ECF No. 82 at 1 (service was proper because Salomon Brothers “is admittedly the owner of the loan at issue in this case.-”). If such action was undertaken by a corporation, it would not constitute “doing business” in Maryland under § 7-104. The Plaintiffs have offered no argument or authority showing why a trust should be held to a different standard. Because the trust was not doing business in Maryland and was not required to have a registered agent under Maryland law, service under Maryland Rule 2-124(o) was improper.
Moreover, although Salomon Brothers had actual notice, quashing service and allowing the Plaintiffs to re-servé the Trust would be inappropriate in this ease because the Trust is not a valid party.
B. Ocwen’s Motions to Dismiss
1. Legal Standard
Under Fed.R.Civ.P. 12(b)(6), an action may be dismissed for failure to state a claim upon which relief can be granted. Rule 12(b)(6) tests the legal sufficiency of a complaint, but does not “resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Presley v. City of Charlottesville,
The Court bears in mind that Rule 8(a)(2) requires only a “short and plain statement of the claim showing that the pleader is entitled to relief.” Migdal v. Rowe Price-Fleming Int’l Inc.,
This requires that the plaintiff do more than “plead[ ] facts that are ‘merely consistent with a defendant’s liability'”; the facts pled must “allow[ ] the court to draw the reasonable inference. that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
If a plaintiff alleges a claim sounding in fraud, Rule 9(b) requires that “the circumstances constituting fraud be stated with particularity.” The rule “does not require the elucidation of every detail of the' alleged fraud, but does require more than a bare assertion that such a cause of action exists.” Kerby v. Mortg. Funding Corp.,
2. Judicial Estoppel
Ocwen assert that the Plaintiffs should be judicially estopped from arguing that Mrs. Ayres was not obligated under the Ayres Note because of the Plaintiffs’ representations in the original complaint. See ECF No. 77 at 7. The Plaintiffs assert that when they were pro se, they assumed that Ocwen’s alleged representations that Mrs. Ayres was obligated under the Note were true; after obtaining counsel, this belief changed. See ECF No. 69 at 13.
“Judicial estoppel is a principle developed to prevent a party from taking a position in a judicial proceeding that is inconsistent with a stance previously taken in court.” Zinkand v. Brown,
In the original complaint, the Plaintiffs’ alleged that Mrs. Ayres was a borrower under the Ayres Note with her husband. See, e.g., ECF No. 1 at ¶ 18. In contrast, the amended complaint alleges that Mrs. Ayres was never a borrower under the Note; in fact, this new fact is the basis for the Plaintiffs’ defamation claim. See, e.g., Am. Compl. at ¶¶ 132-34. Further, the Court accepted the allegations in the original complaint as true and relied on the Plaintiffs’ assertions in ruling on the previous motion to dismiss. See ECF No. 55 at 3-4. Therefore, the first two elements of judicial estoppel have been established.
Bad faith would exist in this case, if the Plaintiffs knew or believed that Mrs. Ayres was not obligated under the Note at the time they filed the "original complaint, and changed their position in filing the amended complaint in order to state claims that the Court had previously dismissed or establish new claims.
3. New Claims in the Amended Complaint
In dismissing the original complaint, the Court granted leave to amend “in accordance with [the] Memorandum Opinion.” ECF No. 55 at 24. The Court also gave the Plaintiffs permission to add a claim for injunctive relief.
Although the Court intended to grant only limited leave to amend, the language in the Memorandum Opinion was somewhat unclear. See ECF No. 55 at 25 (“As the claims in the complaint will be dismissed without prejudice, the Plaintiffs may amend their complaint to include a claim for injunctive relief.”). Further the Court’s Order merely stated, that the claims in the original complaint were dismissed without prejudice and did not .address the leave to amend. See ECF No. 56. Leave to amend should be freely given when justice requires. Fed.R.Civ.P. 15(a)(2). Accordingly, the Court will grant the Plaintiffs .leave to amend nunc pro tunc as long as the three new claims do not “unduly prejudice the opposing party; amount to futility, or reward the movant’s bad faith.” Steinburg v. Chesterfield Cnty. Planning Comm’n,
a. Violation of the Real Estate Settlement Procedures Act
The Plaintiffs allege that Ocwen violated the Real Estate Settlement Procedures Act (“RESPA”)
RESPA was enacted “to insure that consumers ... are provided with greater and more timely'information on the nature and costs of the settlement process and are protected from unnecessarily high settlement charges caused by certain abusive practices .... ” 12 U.S.C. § 2601. Therefore, RESPA requires a mortgage servicer to acknowledge' receipt of a borrower’s QWR within 5 days and respond within 30 days. See 12 U.S.C. § 2605(e)(1)-(2) (2011). Specifically, within 30 days after receipt of a QWR, .a servicer must conduct an investigation and “provide the borrower with a written explanation or clarification” that includes either: (1) “a statement of the reasons for which the servicer believes the account of the borrower is correct as. determined by the servicer[,] and the name and telephoné number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower;” or (2) “information requested by the borrower or an
RESPA defines a QWR as “a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that (i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and (ii) 'includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.” 12 U.S.C. § 2601(e)(1)(B). A “servicer” is “the person responsible for servicing of a loan (including the person who makes or holds a loan if such person also services the loan).” Id. § 2605(i)(2). “Servicing” is “receiving any scheduléd periodic payments from a borrower pursuant to the terms of any loan, including amounts for escrow accounts described in section 2609 of this title, and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the loan.” Id. § 2605(i)(3).
The Plaintiffs allege that they sent Ocwen four QWRs.
Courts have held that allegations and requests for documents that relate to the validity of the loan and do not attack the servicing of the loan are not QWRs under RE SPA. See Ward v. Sec. Atl. Mortg. Elec. Registration Sys., Inc.,
Ocwen also asserts that the RESPA claim- is futile because the Plaintiffs have not pled proper damages. EOF No. 66 at 15. Under the RESPA claim in the amended complaint, the Plaintiffs assert that Mr. Ayres suffered actual damages of $75,000 from Ocwen’s RE SPA violations, and Mrs. Ayres suffered $150,000. Am. Compl. at ¶ 115. The Plaintiffs do not identify how these damages flowed directly from Ocwen’s failure to respond to the QWRs. See id. Such conclusionary allegations are insufficient to establish actual damages under RESPA.
RESPA, however, also permits plaintiffs to claim statutory damages if a defendant has “a pattern or practice of noncompliance.” 12 U.S.C. § 2605(f). Here, the Plaintiffs have alleged that Ocwen continuously failed to respond to their QWRs, and that Ocwen has engaged in similar conduct in the past. See Am. Compl. at ¶ 115. These facts are sufficient to allege statutory damages under RES-PA. See Galante v. Ocwen Loan Servicing, LLC, ELH-13-1939,
Because the Plaintiffs have sufficiently stated a claim under RESPA, the amendment is not futile. Accordingly, the Court will grant leave to amend the complaint nunc pro tunc to add the RESPA claim.
b. Tortious Interference with . Economic Relationship
The Plaintiffs allege that Ocwen tortiously interfered in a contract between the Plaintiffs and Salomon Brothers by claiming an arrearage bond on the Plain
The tort of intentional interference with contractual or business relations is “well-established in Maryland.” Macklin v. Robert Logan Assocs.,
Here, although the Plaintiffs assert that the Court should apply the elements for the second manifestation of tortious interference,
To state a claim for tortious interference with a contract, a plaintiff must aljege “(1) existence of a contract between plaintiff and a third party; (2) defendant’s knowledge of that contract; (3) defendant’s intentional interference with that contract; (4) breach of that contract by the third party; and- (5) resulting damages to the plaintiff.” Fowler v. Printers II, Inc.,
Ocwen argues that the tortious interference claim is futile because there were not three parties involved. ECF No 66 at 16. It is a “well-established Maryland rule that, for the tort of wrongful interference with economic relations to lie, the defendant tortfeasor cannot be a party to the economic relationship with which the defendant has allegedly interfered.” Kaser v. Fin. Protection Marketing, Inc.,
However, the Plaintiffs did not allege that Salomon Brothers breached the contract in response to Ocwen’s interference. Therefore, the Plaintiffs have failed to allege a claim for tortious interference, and the proposed amendment is futile. See Fowler,
c. Defamation
The final new claim added by the Plaintiffs is for defamation. The Plaintiffs allege that “[o]n or about December 1, 2011 and thereafter, including throughout the last 12 months before the filing of this Amended Complaint, Ocwen made a series of false and misleading statements to Mr. & Mrs. Ayres, the credit reporting agencies, and others including Salomon Brothers that Mrs. Ayres was .past due on the Ayres Note or was otherwise delinquent or in default.” Am. Compl. at ¶ 132. Further, “Ocwen wrote and published these claims in correspondence and in written communications with various agencies who it knew would utilize the information.” Id. at ¶ 133.
“In order .to plead properly a defamation claim under Maryland law, a plaintiff must allege specific facts establishing four elements to the satisfaction of the factfinder: ‘(1) that the defendant made a defamatory statement to a third person, (2) that the statement was false, (3) that the defendant was legally at fault in making the, statement, and (4) that the plaintiff thereby suffered harm.’ ” Piscatelli v. Van Smith,
The Plaintiffs conclusionarily state that Ocwen made defamatory statements in the 12 months before the filing of the Amended Complaint.
Under Maryland law, the limitations period for a defamation action is one year. Md.Code Ann., Cts. & Jud. Proc. § 5-105; Gainsburg v. Steben & Co., 838
The amended complaint was filed on October 24, 2014. The last actions taken by Ocwen that were allegedly defamatory were the statements Ivonne Humphreys made to the Maryland Commissioner on July 10, 2012, and- the Ocwen’s statements to credit reporting agencies which the Plaintiffs discovered on October 3, 2014.
The Plaintiffs argue that the prior statements “relate back” to the original complaint, and, therefore, are not barred by the statute of limitations. ECF No. 69 at 28.
Under Federal Rule of Civil Procedure 15(c) an amendment to a pleading “relates back to the date of the original pleading when ... the amendment asserts a claim or defense that arose out of the conduct, transaction, or- occurrence set out — or attempted to be set out-in the original pleading.” “The purpose of Rule 15(c) is to provide the opportunity for a claim to be tried on its merits, rather than being dismissed on procedural technicalities, when the policy behind the statute of limitations has been addressed.” Tischler v. Baltimore Bancorp,
Here, even if the amended complaint and original complaint contained a factual nexus, Ocwen had no notice until the filing of the amended complaint that the Plaintiffs would assert that Mrs. Ayres was not a borrower under the Ayres Note and that any of the statements made by Ocwen to the contrary were defamation. See Bruce v. Smith,
Thus, to the extent that the defamation claim attempts to allege liability for statements made prior to October 24, 2013, those allegations are futile under the statute of limitations.
4. Count I: MCPA and MCDCA Violations
The Maryland Consumer Protection Act prohibits “unfair or deceptive trade practices.” See Md.Code Ann., Com. Law § 13-301. Section 13-408 of the MCPA provides a private cause of action. See Md.Code; Ann., Com. Law § 13-408. A private party bringing, a claim under § 13-408 of the MCPA must allege “(1) an unfair or deceptive practice or misrepresentation that is (2) relied upon, and (3) causes them actual injury.” Stewart v. Bierman,
The Plaintiffs allege that Ocwen violated the MCPA by demanding sums not due, asserting that Mrs. Ayres was obligated under the loan, and assessing improper fees. See Am. Compl. at 85-86. Because these allegations sound in fraud, Rule 9(b)’s heightened pleading standards apply. See Haley v. Corcoran,
Here, the Plaintiffs allege that they were not in default, and, but-for Ocwen’s fraudulent actions, they would pot have experienced the mental, physical, and emotional damages alleged. See, e.g., Am. Compl. at ¶¶ 4-5. These allegations are sufficient to survive a motion to dismiss.
In Count I, the Plaintiffs also allege that Ocwen violated the MCDCA by knowingly, “claiming] certain sums (i.e. invalid debts) due from Mrs. Ayres that it knew were not in fact due and owing.”
Ocwen attempts to add an element to the MCDCA claim which does not exist. In the section of Stovall quoted by Ocwen, the court was discussing the .MCDCA’s general purpose, it was not discussing the elements of a prima facie case. See
Finally, Ocwen argues that the Plaintiffs’ claims under Count I violate the statute of limitations and must be dismissed. ECF No. 66 at 19-21. Specifically, Ocwen asserts that “[a] close reading of [the] Plaintiffs’ claims demonstrates that they are premised on purportedly false statements made-more than three-years prior to the time the Plaintiffs filed their Complaint.” Id.
Claims under the MCPA and MCDCA are subject to a three-year statute of limitations. See Md.Code Ann., Cts. & Jud. Proc. § 5-501; see also Boardley v. Household Fin. Corp.,
As an initial matter, the Court must determine-whether the-alleged violations in Count I relate back to the original complaint. It is undisputed that the Plaintiffs’ MCPA- allegations that Ocwen demanded sums when-the Plaintiffs were not in default and- claimed improper fees relate back to the original complaint. The Plaintiffs only supplemented these claims by alleging' damages as required by the Court’s prior order. Because the original complaint was filed on June 3, 2013, any violations that accrued before June 3, 2010 are barred by the statute of limitations. Because Owen began servicing the Ayers Note on November 1, 2011,
The; Plaintiffs also allege that Ocwen violated the MCPA and MCDCA by asserting the Mrs. Ayres was obligated under the note. Am. Compl. ¶¶ 85-86, 92. Unlike the other MCPA allegations, these alleged violations do not rélate back to the original complaint for reasons explained previously.
Accordingly, the Plaintiffs may not recover damages for any MCPA violation regarding Ocwen’s demanding sums when the .Plaintiffs were not in default and claiming improper fees that occurred prior to June 3, 2010, or for any MCPA and MCDCA violations related to Mrs. Ayres obligor status that occurred prior to October 24, 2011.
5. Count II: MFPA Violations
The Maryland Mortgage Fraud Protection Act states that “[a] person, may not commit mortgage fraud.” Md.Code Ann., Real Prop. § 7-402. Mortgage fraud “means any action by a person made with the intent to defraud” that involves actions such as:
(1) Knowingly making any deliberate misstatement, misrepresentation, or omission during the mortgage lending process with the. intent that the misstatement, misrepresentation, or omission be relied on by a mortgage lender, borrower, or any other party to the mortgage lending process; (2) Knowingly creating or producing a document for use during the mortgage lending process that contains a deliberate misstatement, misrepresentation, or omission with the intent that the document containing the misstatement^ - misrepresentation, or omission be relied on by a mortgage lender, borrower, or any other party to the mortgage lending process.
Md.Code Ann., Real Prop. § 7-406(d). The statute defines “mortgage lending process” to include “[t]he solicitation, application, origination, negotiation, servicing, underwriting, signing, closing, and funding of a mortgage.” Md.Code Ann., Real Prop. § 7-401(e)(2). The MFPA provides a private, right of action “for damages incurred as a result of a violation of this subtitle.” Md.Code Ann., Real Prop. § 7-406(a)(1).
To state a claim for fraudulent misrepresentation, a plaintiff must allege:
(1) that the defendant made a false representation to the plaintiff; ,(2) that its falsity was either known to the defendant or that the representation was made with reckless indifference as to its truth;' (3) that the misrepresentation was made for the purpose of defrauding the plaintiff; (4) that the plaintiff relied on the misrepresentation and had the right to rely on it; and (5) that the plaintiff suffered compensable injury resulting from the misrepresentation.
Ademiluyi v. PennyMac Mortg. Inv. Trust Holdings I, LLC,
Throughout the amended complaint, the Plaintiffs continually state that Litton and Ocwen made statements on which they intended the Plaintiffs to rely. See, e.g., Am. Compl. at ¶¶ 3, 18, 26, 40. However, the Plaintiffs never allege that they actually relied on the misrepresentations or suffered damages based on that reliance.
6. Count III: Negligence
To state a claim for negligence under Maryland law, a plaintiff must allege that (1) the defendant had a duty to the plaintiff, (2) the defendant breached the duty, (3) the plaintiff suffered actual loss, and' (4) the loss was proximately caused by the breach. See Rosenblatt v. Exxon Co., U.S.A.,
The Court dismissed the negligence claim in the original complaint because “the Plaintiffs d[id] not allege any specific duty owed by the Defendants.” ECF No. 55 at 14. The Court recognized that “[c]ourts have consistently found that a mortgage servicer does not owe a tort duty to its loan customer;” Id. (citing Farasat v. Wells Fargo, Bank, N.A.,
In the amended complaint, the Plaintiffs attempt to revive their negligence claim by asserting that Ocwen owed them by a regulatory duty of good faith and fair dealing, a duty as “real estate professionals,” and a duty because of the “intimate nexus” between the parties. Am. Compl. at ¶¶ 15-17.
In asserting that there is an “intimate nexus” between the parties, the Plaintiffs cite Jacques v. First Nat’l Bank of Md.,
Here, although the Plaintiffs have asserted there is contractual privity between Ocwen and Mr. Ayres through the Ayres Note,
In support of their assertion that Ocwen owed a duty as a “real estate professional,” the Plaintiffs cite Hoffman v. Stamper,
Finally, the Plaintiffs allege that Ocwen owed them a regulatory duty under Md.Code Regs. 09.03.06.20. Am. Compl. at ¶ 16. The regulation cited by the Plaintiffs was promulgated by the Maryland Commissioner of Financial Regulation and states:-
Good Faith" and Fair Dealing. A licensee has a dnity of good faith and fair dealing in communications, transactions, and course of dealings with a borrower in connection with the advertisement, solicitation, making, servicing, purchase, or sale of any mortgage loan;'including, but not limited to ...
3. The duty when servicing mortgage loans to:
a. Promptly provide borrowers with an accurate accounting of the debt owed when borrowers request an accounting;
b. Make borrowers in default aware of loss mitigation options and services offered by .the licensee;
c. Provide trained personnel and telephone facilities sufficient to promptly answer and respond to "borrower inquiries regarding their mortgage loans; and
d. Pursue loss mitigation when possible.44
Under Maryland law, “the breach of a statutory duty may be considered some evidence of negligence.” Pahanish v. W. Trails, Inc.,
First, the plaintiff must be a member of the class of persons the statute was designed to protect. Second, the injury suffered must be of the-type the statute was designed to prevent. Third, the plaintiff must present legally sufficient evidence to demonstrate that the statutory violation was the proximate cause of the injury sustained.
Pahanish,
The Court need not decide if the regulation in this instance fulfills the first element of the test
At most, the regulation could be said to cover Ocwen’s failure to respond to the Plaintiffs QWRs as alleged in their RES-PA claim. However, the Plaintiffs do not claim these actions as a basis for negligence (the RESPA violation was Count IV), and, even if they did, the Plaintiffs have failed to plead legally sufficient allegations “to demonstrate that the statutory violation was the proximate cause of the injury sustained.”
Accordingly, the Plaintiffs’ negligence claim will be dismissed.
7. Count VI: Declaratory and Injunctive Relief
Because a number of the Plaintiffs’ claims remain, the Court will deny Ocwen’s motion to dismiss this count.
8. Count VIII: FDCPA Violations
By enacting the FDCPA, Congress sought to “eliminate abusive debt collection practices by debt collectors.” 15 U.S.C. § 1692(e). The FDCPA applies when a debt collector uses practices prohibited by the statute. Bradshaw v. Hilco Receivables, LLC,
To state a claim under the FDCPA, 'the plaintiff must allege that: (i) the defendant is a debt collector under the FDCPA, (2) the plaintiff is the object of a collection activity arising from consumer debt, and (3) the defendant engaged in a debt collection activity prohibited by the FDCPA. See Ademiluyi v. PennyMac Mortg. Inv. Trust Holdings I, LLC,
Mortgage servicing companies are exempt from the definition of “debt collectors” under the FDCPA only “to the extent that they take action to collect debts that were not in default at the time they acquired the debts.”
In this case, although the Plaintiffs allege that they were not actually in default at the time Ocwen began servicing the Ayres Note, they do allege that “Ocwen acquired the Ayres Note at a time when it believed the associated account was in default ... and has attempted and actually collected on the Ayres Note . Am. Compl. at ¶ 140. On December 6, 2011, just one month after Ocwen began servicing the account, it notified the Plaintiffs that payments were past due and the account was in default. Id. at ¶ 53. These allegations are sufficient to plead that Ocwen is a debt collector under the FDCPA.
Accordingly, the Court will deny Ocwen’s motion to dismiss the FDCPA claim.
C. Mrs. Ayres Motion for Summary Judgment
1. Facts Outside the Amended Complaint
Although the parties discuss the facts of this case in depth in- their filings, in many instances detailing what is in,the amended complaint, the only facts relevant to this
It is undisputed that when Mr. Ayres signed the Ayres Note, he was not married to Mrs. Ayres, and Mrs. Ayres does not appear on the Ayres Note as a borrower. See, e.g., ECF No. 70-2; ECF No. 70-3. After the Plaintiffs married, they used the Property as their family home and “Mrs. Ayres [ ] was given authority by Mr, Ayres to communicate with various mortgage servicers about the status of the loan from time to time on his behalf.” ECF No. 70-1 at 2.
On April 28, 2000, the Plaintiffs signed a Forbearance Plan with HUD. See ECF No. 66-1. The Forbearance Plan listed both Plaintiffs as “Mortgagors,” and stated that “[i]n return for [HUD] not foreclosing on my mortgage which is still in default under the original note, I agree to the following terms and conditions ...” Id. Under “Monthly Payments,” the Forbearance Agreement stated:
Beginning on 05-01-2000, and continuing through 04-30-2001, on the first day of each month I will submit to HUD a check or money order in the amount of $750.00. I also understand that this Payment plan will be reviewed on 02-28-2001, and a determination made as to whether or not it should be amended or continued in force, ....
Id. (emphasis added). The final section of the Forbearance Plan, titled “Original Note and Mortgage”-states:
I understand that all rights - and obligations 'of the original note and mortgage, except as changed by this Payment Plan/Forbearance Plan, remain in Tuli force and that, when this Payment Plah/Forbearance Plan expires, the monthly mortgage payments due under the note and mortgage will begin again, unless HUD agrees to renew, amend or extend the Payment Plan/Forbearance Plan,
Id.
Each plaintiff signed the Forbearance Plan, and under each name is the title “Mortgagor.” ECF No. 66-1. In an affidavit, Mrs. Ayres states that she “[n]ever obligate[d] [her]self” for a mortgage loan, and, when she signed the Forbearance Plan, she thought that she was only agreeing “to help make sure [Mr. Ayres] made payments required by that agreement through February 28, 2001.” ECF No. 70-4-at 3. -In contrast, Ocwen cites a variety of documents- and communications which were attached to the original complaint in which Mrs. Ayres represented that she was a mortgagor under the Forbearance Plan or acted as if she was a borrower.
2. Legal Standard
The Court “shall grant summary judgment. if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a
The Court must “view the evidence in the light most favorable to ... the nonmovant and draw all reasonable inferences in [her] favor,” Dennis v. Columbia Colleton Med. Ctr., Inc.,
3. The Forbearance Plan
“Maryland adheres to the principle of the objective interpretation of contracts.”
Courts must consider contracts “from the perspective of a reasonable person standing in the parties’ shoes at the time of the contract’s formation.” Ocean Petroleum Co. v. Yanek,
“[P]arties to a written contract are usually free to modify or terminate ... contracts] by separate agreement....” Comptroller of the Treasury v. Citicorp Int’l Commc’ns, Inc.,
As an initial matter, Mrs. Ayres argues that the Forbearance Agreement cannot act as a modification of the Ayres Note because it violates the Statute of Frauds. ECF No. 70-1 at 8-9. However, the Forbearance Agreement is in writing and signed by Mrs. Ayres,"so the requirements of the Statute of Frauds are met.
A reasonable person standing in the parties’ shoes at the time of the Forbearance Agreement’s formation,
The Forbearance Plan, however, is ambiguous regarding whether the Forbearance Plan (and Mrs. Ayres’s liability) extended beyond March 30, 2001. See ECF No. 66-1 (“[T]his Payment plan will be reviewed on 02-28-2001, and a determination made as to whether or not it should be amended or continued in force, ....”) (emphasis added). The Plan is also ambiguous regarding whether it was intended to permanently modify the original Ayres Note and add Mrs. Ayres as a borrower. Although Mrs. Ayres was listed ..on the Forbearance Plan as a “Mortgagor” and signed the document as a “Mortgagor,” there are no express terms within .the Plan addressing her status. These facts can be interpreted as either (1) an attempt to modify the original Ayres Note and add Mrs. Ayres as a. mortgagor because of her marriage to Mrs. Ayres or (2) a clerical error by HUD which resulted -in Mrs. Ayres being listed as a “mortgagor” on the top of the Forbearance Plan, but was never intended to alter the original Note beyond the new payments.
III. Conclusion
For the reasons stated above, Salomon Brothers’s motion will be granted, Ocwen’s motion to dismiss will be granted in part and denied in part, Mrs. Ayres’s motion will be denied, and Ocwen’s motion for limited discovery will be denied as moot.
Notes
. The motion for summary 'judgment was asserted only on behalf of Mrs. Ayres and not the Plaintiffs jointly.
. Because the Court will be addressing motions to dismiss and a motion for summary judgment, which have different standards, the facts in the Background section will be from the amended complaint. Additional facts from beyond the complaint will be provided before the summary judgment analysis.
On a motion to dismiss, the well-pled allegations in the complaint are accepted as true. Brockington v. Boykins,
. "Mrs. Ayres was not a party to Mr. Ayres’ bankruptcy case In re Ayres, Case No. 93-14732 (U.S. Bankruptcy Court for the District of Maryland). Nor has she ever sought bankruptcy protection in her own regard whatsoever.” Am. Compl. at ¶ 25.
. The Plaintiffs allege that “when the Ayres Notes was transferred to HUD, it incorrectly assumed the original balance on the Ayres Note was also the then current balance thereby not giving Mr. Ayres any credit for the more than $16,000 in payments that occurred prior to the servicing transfer to HUD which had included small portions towards the principal balance of the loan. In addition, First Union reported to Mr. Ayres before the transfer from it to Clayton that the principal balance was substantially and materially less than the original loan balance even though it was not giving credits for payments received.” Am.'Compl. at ¶ 32.
. The Plaintiffs allege that "Ocwen knew or should have known that Mrs. Ayres was not in default or. an obligor on the Ayres Note.” Am. Compl. at ¶ 53. "However, it never actually reviewed the Ayres Note before making this false claim and simply adopted without any investigation the false and misleading records of Litton and presumed based upon those records that the account related to the Ayres Note included invalid sums related to sums not contractually due and owing.” Id.
. Ocwen responded to one QWR on February 4, 2013: Am. Compl. at ¶ 70. The response, however, “did not respond to many of the details identified in the QWR inquiries then pending and simply ignored the facts presented by Mr. & Mrs. Ayres.” Id.
. The Plaintiffs also assert that they suffered additional damages, including "out of pocket costs, healthcare costs related to the emotional distressf,] ... legal fees,” and damage to their reputations Am. Compl. at ¶¶ 75-78.
. Plaintiffs are now represented by counsel. Counsel entered his appearance on October 24,2014. ECF No. 60.
. The Order accompanying the Memorandum Opinion did not address the leave to amend. See ECF No. 56. However, the Order incorporated the Memorandum Opinion. See id. ("For reasons discussed in the accompanying Memorandum Opinion....”),
. Construing the original complaint liberally because, of the Plaintiffs! pro se status, the Court concluded that the original complaint attempted to assert 15 claims: (1) breach of contract: (2) breach of fiduciaiy duty; (3) breach of the covenant of good faith and fair d’ealiiig; (4) fraud; (5) negligence; (6)- usury; (7) unjust enrichment; (8) willful misfeasance; (9) violation of the Truth-in-Lending Act ("TILA”); (10) violation of the DoddFrank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act”); (11) violation of the Fair Debt and Collection Practices Act (“FDCPA”); (12) violation of the Maryland Mortgage Fraud Presentation Act ("MFPA”); (13) violation of the Maryland Consumer Protection Act ("MCPA”); (14) rescission; and (15) emotional distress. See ECF No. 1 at 8-20; ECF No. 32 at 1.
. On January 20, 2015, the Plaintiffs opposed the motion. ECF No. 69. On February 9, 2015, Ocwen replied. ECF No. 77.
. On February 6, 2015, Ocwen opposed the motion. ECF No. 74. On February 24, 2015, Mrs. Ayres replied. ECF No. 81.
. On March 9, 2015, the Plaintiffs opposed the motion. ECF No. 82. On March 25, 2015, Salomon Brothers replied. ‘ ECF No. 84.
. On April 13, 2015, the Plaintiffs opposed the motion. ECF No. 86. On April 28, 2015, Ocwen replied. ECF No, 88.
. As of the date hereof, Salomon Brothers Mortgage Securities VII, Inc. (the "Registrant”) has caused to be filed with the Securities and Exchange Commission (the "Commission”) pursuant to the Commission’s Rule 424 a Prospectus Supplement to its Prospectus, dated August 23, '2001, in connection with the Registrant’s issuance of a series of certificates, entitled Mortgage Pass-Through Certificates, Series 2001-2 (the "Certificates”), to be issued pursuant to a pooling and servicing agreement, dated as of November 1, 2001,among the Registrant as depositor, Litton Loan Servicing LP as servicer, JPMorgan Chase Bank as trustee and Citibank, N.A. as trust administrator. The Certificates designated as the Series 2001-2 Certificates will represent in the aggregate the entire beneficial ownership interest in a trust fund (the "Trust Fund”) consisting primarily of a segregated pool (the "Mortgage Pool”) .of conventional, one-to four-family, first and second lien fixed-rate and adjustable-rate mortgage loans having original terms to maturity up to 30 years (the "Mortgage Loans”).
http://www.sec.gov/Archives/edgar/data/ 809877/000088237701500483/dl7812.txt (last visited Aug. 13, 2015).
. In White, the district court permitted the plaintiffs to sue a trust because “the composite totality of [the] factual background” established that the trust had conducted substantial business in the state under its trade name, misled others as to its status as a trust, and billed .entities under its corporate name. See White v.
. "The position at issue must be one of fact as opposed to one of law or legal theory.” Zinkand,
. The party against whom judicial estoppel is asserted must have acted “intentionally;” thus, it differs from the statute of limitations which is determined by what the party knew or should have reasonably investigated. See infra Part II.B.3.
. See ECF No. 55 at 25 ("[T]he Plaintiffs may amend their complaint to include a claim for injunctive relief.”).
. Rule 15(a)(2) permits amendments only with the opposing party’s written consent or leave of the court.
. 12 U.S.C. §§ 2601 et seq.
. On March 15, 2012, the Plaintiffs through prior counsel sent a letter to Ocwen about the arrearage bond assessed to the account. Am. Compl. at II58. On May 24, 2012, the Plaintiffs sent another correspondence which questioned “an incorrect escrow sum demanded by Ocwen and the fact that Ocwen was claiming past due invalid sums when in fact the Ayres Note was current. This inquiry also asked Ocwen to explain why it had not responded to the March 15, 2012 inquiry.” Id. at ¶ 61?"
On August 28, 2012, the Plaintiffs sent another inquiry, "addressfing] Ocwen and Litton’s continued overcharges to their escrow account; the proper posting of nearly $ 18,113 in payments made by Mr. Ayres subsequent to his bankruptcy discharge that he was not given credit for by First Union; and HUD’s .improper identification of the original loan balance on the Ayres Note as the sum due when it acquired the Ayres Note. In support of these facts, prior counsel provided Ocwen with detailed account and other records and documentation to support Mr. & Mrs. Ayres position and contentions.” Am. Compl. at ¶ 66. On January 8, 2013, the Plaintiffs sent another request which "included a copy of the prior request made on August 28, 2012 and requested that, Ocwen respond to the inquiry.” Id-.dX'i 68.
. See also Junod v. Dream House Mortg. Co., No. CV 11-7035-ODW,
. Elsewhere in the amended complaint, the Plaintiffs allege that they incurred healthcare costs, emotional and physical injury, and attorney’s fees based on Ocwen’s actions. Am. Compl. at ¶ 75-77. These, however, are not direct economic damages cognizable under RESPA. See Offiah,
. See ECF No. 69 at 24.
. “[W]here a contract between two parties exists, the circumstances in which a. third party has a right to interfere with the performance of that contract are more narrowly restricted.” Natural Design, Inc. v. Rouse Co., 302 Md. 47,
. Am. Compl. at ¶ 132.
. It appears that the Plaintiffs made their conclusionary allegation in order to rescue their prior claims from the statute of limitations. However, -a plaintiff "may not baldly allege a broad course of conduct over a lengthy period of time and iater sue on any act that occurred during that time period....” Gainsburg v. Steben & Co.,
. The amended complaint does not state when Ocwen made the statements or when the Plaintiffs discovered the credit reports. See Am. Compl. at ¶ 72 ("Upon information and belief, Ocwen has also pulled or acquired Mrs. Ayres’ credit when it knew she was not a mortgage services and it had no right to do so, This belief is based upon the fact as of the October 3, 2014 Ocwen was falsely reporting a trade line to Equifax related to Mrs. Ayres claiming that she was a borroWer/debtor on the Ayres Note and that she was allegedly past due when it actually knows she is not a borrower.”). However, on a motion to dismiss, the Court must grant all reasonable inferences to the Plaintiffs. Accordingly, for the purpose of this motion, the Court will assume that the Plaintiffs discovered Ocwen’s reports to the credit agency on October 3, 2014. "[T]he-truth of plaintiff’s representations[ ] or impeach[ing] [the] plaintiff's diligence in uncovering publication ... are not matters for a motion to dismiss.” Adler v. Am. Stand. Corp.,
. Ocwen also argues ‘that any statement made about Mrs. Ayres was true and, therefore, not'defamatory, ECF No. 66 at 18-19. Ocwen’s argument, however, depends on documents outside the amended complaint and is, therefore, inappropriate on a motion to dismiss. .
. See, e.g., ECF No. 69 at 13 (arguing that the Plaintiffs are only trying to advance a new legal theory based on prior core facts).
. See Gainsburg,
. The Plaintiffs filed the original complaint pro se and may not have known the legal consequence of Ocwen’s representations about Mrs. Ayres. "Knowledge of facts, ... not knowledge of their legal significance, starts the statute of limitations running.” Miller v. Pac. Shore Funding,
. Ocwen also argues .that Mrs. Ayres is a borrower under the loan, negating any MCPA claim. ECF No. 66 at 11. Ocwen’s argument depends on a document which was
. See Green,
. Notably, the Plaintiffs only assert MCDCA violations for Ocwen’s attempts to collect from Mrs. Ayres, not for their attempts to collect from the Plaintiffs, when the Plaintiffs allege that they were not in default. See Am. Compl. at ¶¶ 91-93.
. Compare Walton v. Network Solutions,
. 40 Am. Compl. at ¶¶ 53.
. The Plaintiffs recognize that the misrepresentations by Litton in the amended complaint are time barred and assert that these misrepresentations were only "offered as background for the subsequent statements and collection efforts undertaken by Ocwen ... well within the limitations period....” ECF No. 69 at 28. Accordingly, the Plaintiffs may not recover damages for Litton’s alleged violations made before June 3, 2010.
. See supra Part II.B.3.C.
. To satisfy Rule 9(b), a plaintiff must "identify with some precision the date, place, and time of active misrepresentations or the circumstances of active concealments, specifying which Defendant ... is supposedly responsible for-those statements or omissions.” Johnson,
. The Plaintiffs only state that ‘‘[a]s a result of Ocwen's knowingly deceptive and untrue communications and misstatements and omissions ..., [the] Plaintiffs have suffered economic and noneconomic damage.” ECF No. 103. They do not state whether those damages -flowed directly from their reliance on the misrepresentations or directly from Ocwen's actions without any reliance on the part of the Plaintiffs.
. The mortgage Deed of Trust does not create sufficient contractual privily to support a fiduciary relationship; a separate contract is required. See Green,
. 46 Md.Code Regs. 09.03.06.20, available at http://www.dsd.state.md.ús/comar/comarhtml/ 09/09.03.06.20.htm (last visited Aug. 12, 2015)'.
. “The requirement that the Injury suffered must be of the type the statute was designed to prevent’ has generally limited the application of this principle to the violation of statutes related to public safely or health related issues....” Estate of Saylor,
. Pahanish,
. See Webb v. Green Tree Servicing, LLC, No. ELH-11-2105,
. See also Allen v. Bank of Amer. Corp.,
. See Galante,
. In reviewing a motion for summary judgment, the nonmovant’s evidence "is to be believed, and all justifiable inferences are to be drawn in [its] favor.” Anderson v. Liberty Lobby, Inc.,
. Mrs. Ayres asserts that the Court cannot consider the evidence cited by Ocwen because it was attached to the original complaint. ECF No. 81 at 3-4. An amended complaint supersedes an original complaint. Pac. Bell Tel. Co.,
. Rule 56(a), which "carries forward the summary-judgment standard expressed in former subdivision (c),” changed “genuine ‘issue’ [to] genuine ‘dispute,’ ” and restored the word " ‘shall’ ... to express the direction to grant summary judgment.” Fed.R.Civ.P. 56 advisory committee’s note.
. "Maryland uses the lex loci contractus rule: 'the law of the jurisdiction where the contract was made controls its validity and construction.’ ” Rose v. New Day Fin.,
. “The interpretation of a contract, including the determination of whether a contract is ambiguous, is a question of law.” Clancy v. King,
. Similarly, Mrs. Ayres argues that the Forbearance Agreement cannot make her a borrower because it violates Md.Code Ann., Com. Law § 3-401(a). ECF No. 81 at 4. Section 3-401 states that ‘‘[a] person is not liable on an instrument unless" (i)’ the person signed the instrument, or (ii) the person is represented by an agent or representative who signed the instrument and the signature is binding on the represented person under § 3-402.” Here, although Mrs. Ayres did not sign the Ayres Note, she did sign the Forbearance Agreement, so she may be liable under that agreement.
. Ocean Petroleum Co.,
. Although Ocweri did not attach a Rule 56(f) affidavit requesting discovery to its response in opposition, it did move separately for discovery on whether Mrs. Ayres obligated herself under the Forbearance Plan, ECF No. 86. “When the nonhiOving party, through no fault of its own, has had little Or no opportunity to conduct discovery, and when fact-intensive issues, such as intent, are involved, courts have not always insisted on a Rule 56(f) affidavit if the nbnmoving party has adequately informed the district court that the motion is pre-mature and that more discovery is necessary,’’ Harrods Ltd. v. Sixty Internet Domain Names,
. Evans v. Techs. Applications & Serv. Co.,
. Because the Court is denying the motion for summary judgment, Ocwen’s motion for limited discovered will be denied as moot.