Source: http://md.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20190702_0000886.DMD.htm/qx
Timestamp: 2020-02-26 11:35:36
Document Index: 638125795

Matched Legal Cases: ['§ 1692', '§1692', '§3', '§3', '§1', '§1692']

Before the Court is Defendants BWW Law Group, LLC, Rushmore Loan Management, and U.S. Bank National Association's Motion to Dismiss Second Amended Complaint or, in the alternative, for Summary Judgment (“Defendants' Motion”)(ECF No. 49). The Court has reviewed Defendants' Motion and the memoranda related thereto. No. hearing is deemed necessary. Local Rule 105.6 (D. Md.). For the reasons set forth below, the Court GRANTS IN PART AND DENIES IN PART Defendants' Motion.
A Court may grant summary judgment, “when the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Felty v. Graves-Humphreys, 818 F.2d 1126, 1128 (4th Cir. 1987).
The Court must view facts and all reasonable inferences in favor of the nonmoving party in order to ascertain whether a genuine issue of material fact exists. Pulliam Inv. Co. v. Cameo Properties, Inc., 810 F.2d 1282, 1286 (4th Cir. 1987); Ross v. Communications Satellite Corp., 759 F.2d 355, 364 (4th Cir. 1985).
However, the mere existence of some disputed facts does not automatically foreclose summary judgment. Thompson Everett, Inc. v. National Cable Advertising L.P., 57 F.3d 1317, 1322 (4th Cir. 1995). “Factual disputes that are irrelevant or unnecessary will not be counted.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Rather, the disputed facts must be “material to an issue necessary for the proper resolution of the case, ” and “the quality and quantity of evidence offered to create a question of fact must be adequate to support a jury verdict.” Thompson, 57 F.3d at 1323.
The burden of demonstrating that no genuine issue of fact exists and that one is entitled to judgment as a matter of law is on the moving party. Barwick v. Celotex Corp., 736 F.2d 946, 958 (4th Cir. 1984). The ultimate question is whether a reasonable fact finder could return a verdict for the non-movant or whether the movant, at trial, would be entitled to judgment as a matter of law. See, Celotex, 477 U.S. at 327; Shealy v. Winston, 929 F.2d 1009, 1012 (4th Cir. 1991).
III. The Court Will Not Convert the Motion to Dismiss into a Motion for Summary Judgment.
The Court is of the view that it is premature to consider Defendants' alternative pleading seeking summary judgment. Converting a motion to dismiss into a motion for summary judgment is not appropriate where a party has not had the opportunity to conduct reasonable discovery. Gay v. Wall, 761 F.2d 175, 178 (4th Cir. 1985). Typically, summary judgment should be denied “where the nonmoving party has not had the opportunity to discover information that is essential to his opposition.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n.5 (1986).
Despite this black letter law, the non-moving party has an affirmative obligation to overcome the motion couched in the alternative: there must be a representation of the need to obtain discovery. A Rule 56 affidavit should be filed when facts are unavailable to the non-moving party. This affidavit should articulate the areas where reasonable discovery is likely to bear fruitful information that may defeat the motion for summary judgment. Fed.R.Civ.P. 56(d) (“If a nonmovant shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition” then the court may defer or deny the motion, allow discovery, or make any other appropriate order.”) Harrods Ltd. v. Sixty Internet Doman Names, 302 F.3d 214 (4th Cir. 2002).
Plaintiffs have followed the letter of the law here. Plaintiffs have provided the necessary affidavit in support of their need to obtain discovery which they reasonably contend is in the exclusive control of Defendants. Decl. of Counsel in Supp. of Pls.' Mot. to Allow Time for Disc. Under Rule 56(d). ECF No. 52-1. Upon reviewing this submission, the Court is persuaded that this supporting affidavit is not mere boilerplate, but substantively addresses a laundry list of areas for needed discovery. Accordingly, the Court will not consider Defendants' Motion for summary judgment, nor consider materials outside of the Second Amended Complaint (“SAC”).
IV. Plaintiffs' Fair Debt Collection Protection Act Claims.
Defendants challenge Plaintiffs' Fair Debt Collection Act (“FDCPA”) claims on several levels. The FDCPA can be found at 15 U.S.C. § 1692 et. seq. (1997).
A. The Cure Amount and the Ability to Foreclose.
[o]n October 18, 2018, Rushmore sent Plaintiff a Notice of Intent to Foreclose, which overstated the cure amount as $135, 402.75 . . . . The claimed cure amount was nearly $12, 000 more than the amount claimed due in the August mortgage statement. Because the monthly payment was only $2, 521.11 and only two months had elapsed before Rushmore claimed the amount increased by $12, 000, Rushmore knew the amount stated in the Notice of Intent was patently false.
SAC ¶ 56. Furthermore, Plaintiffs assert that “Rushmore violated §1692e(2), (5)&(10) by misrepresenting and/or falsely representing in the Notice of Intent from October 2018 that U.S. Bank, Rushmore or BWW the cure amount and misrepresenting that they could foreclose on Plaintiff's Property.” SAC ¶ 61.
Defendants argue that these statements are not sufficient to make a plausible claim that the cure amount reflected in the Notice of Intent to Foreclose (“NOI”) was false. Defendants state that Plaintiffs have failed to plead specific facts to show that the stated amount is false.
Regarding the cure amount, the Court at this stage of the proceedings is not inclined to consider Defendants offer of additional facts beyond the four corners of the SAC. As stated by Plaintiffs, a two-month failure to make monthly payments of less than $2600 per month, should not equate to a nearly $12, 000 bonus. Plaintiffs' claim is plausible and satisfies the dictates of Fed.R.Civ.P. 8.
B. Plaintiffs Do Not Have to Satisfy the Heightened Pleading Requirement of Fed.R.Civ.P. 9(b).
Defendants suggest that Plaintiffs must satisfy the higher burden set by Fed.R.Civ.P. 9(b). The Court respectfully disagrees. While there are decisions in different federal courts which support the views of both parties, the Court finds most persuasive the reasoning of Neild v. Wolpoff & Abramson, LLP, 453 F.Supp.2d 918 (E.D. Va. 2006). In Neild, the court noted that the issue appeared to be one of first impression in the Fourth Circuit. Even within the Fourth Circuit there have been federal courts that look to whether the gravamen of the offense is fraud and requiring more specific pleading even if the claim is not technically labeled as such. Id. at 923. Yet, when looking to Virginia's common law fraud claims, which are very akin to those in Maryland, the court noted several meaningful distinctions from an FDCPA claim. These distinctions under the FDCPA include: 1) no need to prove reliance on a false representation; 2) no need to show actual damages; and, 3) no need to show scienter. Id. Similarly, this Court ruled long ago that “the FDCPA is a strict liability statute.” Spencer v Hendersen-Webb, Inc., 81 F.Supp.2d 582, 590 (D. Md. 1999). Accordingly, the “gravamen” of a FDCPA claim is not fraud, and Plaintiffs are not required to satisfy Fed.R.Civ.P. 9(b). Here it appears that there was more than a doubling of potential amounts due. The Court is persuaded that Plaintiffs have satisfied the pleading requirements of Fed.R.Civ.P. 8.
C. Default and the Holder of the Note.
Defendants additionally seek dismissal claiming the SAC is defective when asserting that Rushmore lacked authority to enforce the loan through foreclosure while at the same time acknowledging in paragraph 18 that the mortgage loan had been declared in default. Plaintiffs contend in paragraph 18 that Nationstar declared the default, and here argue that this was no acknowledgement of default, merely Nationstar's declaration. Furthermore, Plaintiffs make clear that the reason Defendants lacked authority to foreclose is because Rushmore was not the holder of the Note. SAC ¶ 59. To this argument, Defendants remain silent in their reply briefing.
A person obligated on a promissory note is known as the “maker” of the note. Under Maryland law, the maker must pay the obligation to “a person entitled to enforce the instrument or to an indorser who paid the instrument . . . .” Md. Code Ann., Com. Law, §3-412 (LexisNexis 2013 Repl. Vol.). Generally, a promissory note may be enforced by the “holder” of the note or a nonholder who has the rights of a holder or a person entitled to enforce the note under special circumstances recognized by statute. Md. Code Ann., Com. Law, §3-301 (LexisNexis 2013 Repl. Vol.). Accordingly, a “holder” is the person in possession of a note that is payable to bearer or to an identified person that is a person in possession. Md. Code Ann., Com. Law, §1-201(b)(21)(i) (LexisNexis 2013 Repl. Vol.). “Thus, the person in possession of a note, either specially indorsed to that person or indorsed in blank, is a holder entitled generally to enforce that note.” Deutsche Bank Nat. Trust Co. v. Brock, 430 Md. 714, 729-30 (2013).
Plaintiffs correctly observe that the existence of default is not dispositive. The additional concern is the proper entity to receive payment. Plaintiffs contend that Rushmore is not a proper holder of the note. In fact, Plaintiffs contend that none of the defendants are proper holders and demand proof of such. Furthermore, mere possession of the note is not sufficient to be a holder entitled to payment. A holder entitled to payment must also have a note that is properly endorsed. Anderson v. Burson, 424 Md. 232, 247 (2011). Plaintiffs have sufficiently alleged a violation of this prong of the FDCPA.
D. The Amount of Interest Due.
Defendants challenge Plaintiffs' pleading regarding the prong of the FDCPA which prohibits an attempt to collect by misrepresentation any interest that is claimed due. Plaintiffs' pleading states that “Rushmore violated §1692e(2), (10) and f(1) by misrepresenting and/or falsely representing the amount of interest that could be assessed on the loan.” SAC ¶ 62. Defendants attack this averment by noting that Plaintiffs do “not plead facts establishing what the correct interest rate is, what the interest rate charged by Rushmore was, and why Rushmore's interest rate was incorrect. Without these facts, Plaintiffs' claim is conclusory and not viable.” Defendants' Motion 4. As stated earlier, the criticisms raised by Defendants might be more persuasive if Plaintiffs were obligated to satisfy the heightened pleading requirements of Fed.R.Civ.P. 9(b). Since this claim is governed by Fed.R.Civ.P. 8, the Court is satisfied that Plaintiffs have pled sufficient facts to place Defendants on fair notice of the claim.
E. Awareness of Plaintiffs Being Represented by Counsel.
Plaintiffs allege that Rushmore violated the FDCPA by
sending debt communications - June and July 2018 letters, August 2018 mortgage statement, and October 2018 Notice of Intent - directly to Plaintiff after June 5, 2018, at which time Plaintiffs' counsel entered an appearance in Plaintiffs' lawsuit against Rushmore and the defendants, and the Defendant [Rushmore] became aware that ...