White et al v. JP Morgan Chase Bank, National Association

Filing 21

MEMORANDUM OPINION. Signed by Judge George Levi Russell, III on 6/17/13. (hmls, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
BLAINE A. WHITE, et ux.,

:

Plaintiffs,

:

v.

:
Civil Action No. GLR-12-3591

JPMORGAN CHASE BANK, N.A.,

:

Defendant.

:
:
MEMORANDUM OPINION

Plaintiffs Blaine A. White and Virylnn D. Atkinson-White
(collectively,

“Plaintiffs”)

commenced

this

action

against

Defendant JPMorgan Chase Bank, N.A. (“Chase”) alleging various
causes

of

action

modify

Plaintiffs’

Modification

that

stem

from

Chase’s

mortgage

loan

under

Program

(“HAMP”).

alleged
the

Currently

failure

Home

to

Affordable

pending

before

the

Court are Chase’s Motion to Dismiss the Complaint (ECF No. 6),
Chase’s Motion to Dismiss the Amended Complaint (ECF No. 12),
Chase’s

Motion

for

Rule

11

Sanctions

(ECF

No.

18),

and

Plaintiffs’ Motion for Leave to File Second Amended Complaint
(ECF No. 20).

The Court, having reviewed the pleadings and

supporting documents, finds no hearing necessary.

See Local

Rule 105.6 (D.Md. 2011).

For reasons outlined in detail below,

the

moot

Court

Complaint,

will

deny

grant

as

Chase’s

Chase’s

Motion

to

Motion

to

Dismiss

Dismiss
the

the

Amended

Complaint, grant in part and deny in part Chase’s Motion for
Rule 11 Sanctions, and grant Plaintiffs’ Motion for Leave to
File Second Amended Complaint.
I.

BACKGROUND1

In December 2006, Plaintiffs executed a mortgage loan of
$253,300 (the “Loan”) to purchase a home in Baltimore, Maryland.
Chase currently services the Loan.

On or about March 21, 2009,

Mrs. White contacted Chase via telephone and spoke with a loss
mitigation representative named Bobbi.

During that call, Mrs.

White provided Bobbi with the couple’s gross and net monthly
household income.

According to Plaintiffs, Bobbi informed Mrs.

White that the couple qualified for a loan modification.
On

May

6,

2009,

Chase

mailed

Plaintiffs

an

participate in the HAMP Trial Period Plan (“TPP”).2

offer

to

Under the

TPP, Plaintiffs were required to make three monthly payments of

1

Unless otherwise noted, the following facts are taken from
the Amended Complaint and are viewed in a light most favorable
to Plaintiffs.
See Erickson v. Pardus, 551 U.S. 89, 94 (2007)
(citations omitted).
2
Congress created the HAMP, which is part of the Emergency
Economic Stabilization Act of 2008, codified at 12 U.S.C. §§
5201 et seq. (2012), to incentivize lenders to modify the
mortgage of homeowners at risk of losing their homes.
See
Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769, 772 (4th Cir.
2013).
One of the threshold requirements to qualify for the
HAMP program is that the applicant’s mortgage payments be more
than 31% of their income.
See id. at 773 (citation omitted).
The actual loan modification process consists of two stages:
(1) the payment of a reduced monthly loan payment under the TPP;
and (2) the offer of a permanent loan modification once all
program requirements are met. See id. (citation omitted).
2

$1,395 beginning in June 2009.

The TPP letter provides, in

relevant part, “[the TPP] is the first step.

Once we are able

to confirm your income and eligibility for the program, we will
finalize

your

modified

loan

terms

send

you

a

loan

(Am. Compl. Ex. C, at 5,3 ECF

modification agreement . . . .”
No. 11-4).

and

Moreover, the actual TPP Agreement reads:

I understand that the Plan is not a modification of
the Loan Documents and that the Loan Documents will
not be modified unless and until (i) I meet all of
the conditions required for modification, (ii) I
receive a fully executed copy of a Modification
Agreement, and (iii) the Modification Effective
Date has passed.
I further understand and agree
that the Lender will not be obligated or bound to
make any modification of the Loan Documents if I
fail to meet any one of the requirements under this
Plan.
(Am. Compl. Ex. D, at 4, ECF No. 11-5).

Soon thereafter, on May

29,

temporary

2009,

coupons.

Chase

sent

Plaintiffs

four

TPP

payment

Although only three payments were required under the

TPP Agreement, Chase sent Plaintiffs a fourth coupon for the
purpose of making an additional payment during the month between
the third TPP payment and final loan modification.
After accepting the TPP Agreement and making three timely
TPP payments for June, July, and August 2009, Plaintiffs had not
heard

from

modification.

Chase

regarding

finalization

of

loan

As a result, Plaintiffs continued to make monthly

reduced TPP payments of $1,395 for over two years.
3

their

During that

All page numbers refer to the pagination on ECF.
3

time,

Plaintiffs

modification

inquired

on

three

about

the

occasions

and

“decision would be made any day.”

status
Chase

of

their

informed

loan

them

a

(Am. Compl. ¶ 36).

On March 3, 2011, Chase denied Plaintiffs’ request for a
permanent

loan

modification

because

their

“monthly

housing

expense . . . [was] less than or equal to 31% of [their] gross
monthly income.”
12-5).

(Def.’s Mot. to Dismiss Ex. D, at 2, ECF No.

Approximately

four

months

later,

Chase

provided

Plaintiffs with a new TPP offer, dated July 15, 2011, with a
payment amount of $2,274.49.

Plaintiffs rejected the new offer

and continued to submit reduced payments in the original amount
of $1,395 until Chase returned their November 2011 payment and
demanded that Plaintiffs repay the full amount in arrears.
On

December

6,

2012,

Plaintiffs

filed

a

five-count

Complaint in this Court alleging: (1) breach of contract; (2)
promissory estoppel; and violations of (3) the Maryland Consumer
Debt Collection Act (“MCDCA”), Md. Code Ann., Com. Law §§ 14-201
et seq. (West 2013); (4) the Maryland Consumer Protection Act
(“MCPA”),

Id.

§§

13-101

et

seq.

(West

2013);

and

(5)

the

Maryland Mortgage Fraud Protection Act (“MMFPA”), Md. Code Ann.,
Real Prop. §§ 7-401 et seq. (West 2013).

(See ECF No. 1).

January 29, 2013, Chase filed its first Motion to Dismiss.
No. 6).

On
(ECF

In response, Plaintiffs filed an Amended Complaint,

4

alleging the same causes of action, on March 15, 2013.4

(ECF No.

11).

Chase filed its second Motion to Dismiss on March 29,

2013.

(ECF No. 12).

On April 22, 2013, Chase filed a Motion

for Rule 11 Sanctions to which Plaintiffs responded by filing a
Motion for Leave to File Second Amended Complaint on May 10,
2013.

(See ECF Nos. 18 & 20).
II.

A.

DISCUSSION

Standard of Review
Chase

moves

to

dismiss

Plaintiffs’

Amended

Complaint

pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure
to state a claim upon which relief can be granted.
purpose

of

Rule

12(b)(6)

is

to

test

the

“[T]he

sufficiency

of

a

complaint and not to resolve contests surrounding the facts, the
merits of a claim, or the applicability of defenses.” Presley v.
City

of

Charlottesville,

(alterations
Edwards

v.

and
City

internal
of

464

F.3d

480,

quotation

Goldsboro,

178

483

marks
F.3d

(4th

Cir.

omitted)

231,

243

2006)

(quoting
(4th

Cir.

1999)).
When ruling on such a motion, the court must “accept the
well-pled allegations of the complaint as true,” and “construe
4

Although the filing of an amended complaint does not
automatically render the pending motion to dismiss moot, see
Smith v. Maryland, No. RDB-11-2007, 2012 WL 3596098, at *4
(D.Md. Aug. 20, 2012), Chase filed a second motion to dismiss in
response to Plaintiffs’ Amended Complaint. As a result, Chase’s
Motion to Dismiss the original Complaint (ECF No. 6) is DENIED
as moot.
5

the facts and reasonable inferences derived therefrom in the
light most favorable to the plaintiff.”
F.3d 472, 474 (4th Cir. 1997).
for

pleading

a

proper

Ibarra v. U.S., 120

“Even though the requirements

complaint

are

substantially

aimed

at

assuring that the defendant be given adequate notice of the
nature of a claim being made against him, they also provide
criteria for defining issues for trial and for early disposition
of inappropriate complaints.”

Francis v. Giacomelli, 588 F.3d

186, 192 (4th Cir. 2009).
To survive a motion to dismiss, the factual allegations of
a complaint “must be enough to raise a right to relief above the
speculative

level,

.

allegations

in

complaint

fact).”

the

.

.

on

the
are

assumption

true

(even

that
if

all

doubtful

the
in

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)

(alterations

and

internal

citations

omitted).

Thus,

the

plaintiff’s obligation is to set forth sufficiently the “grounds
of his entitlement to relief,” offering more than “labels and
conclusions.”
omitted).

Id.

(internal quotation marks and alterations

“[W]here the well-pleaded facts do not permit the

court to infer more than the mere possibility of misconduct, the
complaint

has

alleged

—

but

it

pleader is entitled to relief.’”

has

not

‘show[n]’—‘that

Ashcroft v. Iqbal, 556 U.S.

662, 679 (2009) (quoting Fed.R.Civ.P. 8(a)(2)).

6

the

B.

Analysis
1.

Motion to Dismiss Amended Complaint

The

crux

Agreement

of

Plaintiffs’

constituted

an

allegations

enforceable

is

that

contract,

the

which

TPP
Chase

breached by failing to finalize their loan modification after
they made timely TPP payments under the Agreement.
dismissed

such

breach

of

contract

actions,

Courts have

however,

when

“compliance with the TPP [does] not guarantee a permanent loan
modification.”

Allen v. CitiMortgage, Inc., No. CCB-10-2740,

2011 WL 3425665, at *5 (D.Md. Aug. 4, 2011).

As a result, for

reasons outlined in specific detail below, Plaintiffs’ Amended
Complaint will be dismissed in its entirety.
a.

Breach of Contract (Count I)

The Court will grant Chase’s Motion to Dismiss Plaintiffs’
breach of contract claim because the TPP Agreement does not
constitute an enforceable contract.
In Maryland, “the formation of a contract requires mutual
assent

(offer

and

acceptance),

an

terms, and sufficient consideration.”

agreement

definite

in

its

Spaulding v. Wells Fargo

Bank, N.A., 714 F.3d 769, 777 (4th Cir. 2013).

Plaintiffs in

breach of contract actions “must prove that the defendant owed
the plaintiff a contractual obligation and that the defendant
breached that obligation.”

Taylor v. NationsBank, N.A., 776
7

A.2d 645, 651 (Md. 2001) (citation omitted); see also Md. Code
Ann.,

Com.

Law

§

22-701(a)

(West

2013)

(breach

of

contract

“occurs if a party without legal excuse fails to perform an
obligation in a timely manner,” among other things).
Plaintiffs fail to allege the existence of a contractual
agreement.

The

Amended

Agreement

constituted

an

Complaint
offer,

provides

which

that

Plaintiffs

the

accepted

TPP
by

signing the Agreement and making the necessary TPP payments.
According

to

Plaintiffs,

Chase

breached

this

contractual

relationship by failing to finalize the loan modification.

The

TPP Agreement clearly states all necessary conditions which must
be satisfied to bind Chase to a permanent loan modification.
Again, the Agreement reads:
I understand that the Plan is not a modification of
the Loan Documents and that the Loan Documents will
not be modified unless and until (i) I meet all of
the conditions required for modification, (ii) I
receive a fully executed copy of a Modification
Agreement, and (iii) the Modification Effective
Date has passed.
I further understand and agree
that the Lender will not be obligated or bound to
make any modification of the Loan Documents if I
fail to meet any one of the requirements under this
Plan.
(Am. Compl. Ex. D, at 4) (emphasis added).
This language contradicts Plaintiffs’ averments that timely
payment of the reduced TPP amounts was the sole action necessary
to contractually bind Chase to finalize their loan modification.
Finalization

of

Plaintiffs’

loan
8

modification

was

clearly

conditional.
alleging

In

Chase’s

fact,
loss

Plaintiffs

mitigation

acknowledge

department

as

much
them

informed

by
on

three occasions “that a decision would be made any day regarding
the finalization of the modification.”

(Am. Compl. ¶ 36).

Even

the cover letter attached to the TPP Agreement states that the
TPP

“is

the

first

step”

and

that

finalization

of

the

loan

modification is contingent upon Chase “[confirming Plaintiffs’]
income and eligibility for the program.”
5).

Furthermore,

Chase’s

denial

(Am. Compl. Ex. C, at

letter

clearly

states

Plaintiffs failed to meet a condition required for modification,
namely a housing expense that was less than or equal to 31% of
Plaintiffs’ gross monthly income.
Ex. D, at 2).

(See Def.’s Mot. to Dismiss

Neither the Amended Complaint nor its exhibits

sufficiently allege that Chase was contractually obligated to
automatically

finalize

Plaintiffs’

loan

modification

at

the

conclusion of the three-month TPP payment period.
As a result, Plaintiffs’ breach of contract claim must be
dismissed for failure to state a claim upon which relief can be
granted.
b.

Promissory Estoppel (Count II)

The Court will grant Chase’s Motion to Dismiss Plaintiffs’
promissory

estoppel

claim

because

it

suffers

defects as their breach of contract claim.

9

from

the

same

Under Maryland law, a plaintiff must allege four elements
under a promissory estoppel theory:
(1) a clear and definite promise; (2) where the
promisor has a reasonable expectation that the
offer will induce action or forbearance on the
part of the promisee; (3) which does induce
actual and reasonable action or forbearance by
the promisee; and (4) causes a detriment which
can only be avoided by the enforcement of the
promise.5
Pavel Enters. v. A.S. Johnson Co., 674 A.2d 521, 532 (Md. 1996).
A statement that leaves a number of important terms up in the
air is not a “clear and definite promise.”

McKenzie v. Comcast

Cable Commc’ns, 393 F.Supp.2d 362, 373 (D.Md. 2005).
Plaintiffs allege Chase stated “that Mr. and Mrs. White
would

be

able

to

lower

their

monthly

mortgage

payments

permanently if they made the three payments for the Modification
and otherwise complied with Chase’s request under HAMP.”
Compl.

¶

“included

62).
a

clear

According
and

to

definite

Plaintiffs,

these

promise

a

of

statements

permanent

modification if the Modification payments were made.”

5

(Am.

loan

(Id. ¶

Chase, citing Ver Brycke v. Ver Brycke, 843 A.2d 758, 772
n.9 (Md. 2004), initially avers that Plaintiffs’ promissory
estoppel claim does not lie because an express written contract
between the parties relates to the same matter.
(See Def.’s
Mot. to Dismiss at 12-13).
The Court will not address this
argument, however, because Plaintiffs fail to sufficiently
allege the existence of an express written contract between the
parties.
As a result, the Court will dispose of Plaintiffs’
promissory estoppel claim on Chase’s alternative argument that
Plaintiffs failed to satisfy the elements of a prima facie
promissory estoppel claim.
10

63).
a

Chase avers that Plaintiffs’ allegations are no more than

conclusory

recitation

of

the

promissory

estoppel

elements.

The Court agrees.
Plaintiffs’ promissory estoppel claim also fails, however,
because they failed to satisfy the first element.

As previously

stated, the plain language of the TPP Agreement provides that
finalization of Plaintiffs’ loan modification was conditional.
Therefore,

the

plain

language

of

the

Agreement

belies

Plaintiffs’ allegations that Chase made a clear and definite
promise to permanently modify the loan if they made the TPP
payments.
As a result, Plaintiffs’ promissory estoppel claim must be
dismissed.
c.

Violation of the MCDCA (Count III)

The Court will grant Chase’s Motion to Dismiss Plaintiffs’
MCDCA claim because Chase had a right to pursue foreclosure
proceedings when Plaintiffs defaulted on their mortgage loan.
The

MCDCA

prohibits

debt

collectors

from

claiming,

attempting, or threatening to “enforce a right with knowledge
that the right does not exist,” among other things.
Ann.,

Com.

violated

Law

this

§

14-202(8).

section

of

Plaintiffs

the

MCDCA

by

allege

Md. Code
that

“threatening

Chase
and

proceeding an intent to foreclose based upon practices described
above” with “knowledge they are not entitled to do so under
11

Maryland foreclosure law and procedures.”

(Am. Compl. ¶¶ 71 &

74).
As

a

preliminary

matter,

Plaintiffs’

allegations

are

conclusory and void of the factual underpinnings necessary to
state a plausible claim.

Moreover, Plaintiffs concede in the

Amended Complaint that they were three mortgage payments behind
in May 2009.

(Am. Compl. ¶ 27).

This concession, coupled with

the plain language of the TPP Agreement clearly stating that
foreclosure

proceedings

will

resume

if

the

Agreement

is

terminated (see Am. Compl. Ex. D, at 3), illustrate Chase’s
right to foreclose.
Plaintiffs’ MCDCA claim will, therefore, be dismissed for
failure to state a claim upon which relief can be granted.
d.

Violation of the MCPA and MMFPA (Counts IV and V)

The Court will grant Chase’s Motion to Dismiss Plaintiffs’
MCPA and MMFPA claims because they are not alleged with the
requisite particularity.
MCPA and MMFPA violations both rest on whether the lender
made fraudulent misrepresentations.

See Md. Code Ann., Com. Law

§ 13-301 & Id., Real Prop. § 7-401-02.

Because both claims

sound in fraud, they are “subject to the heightened pleading
standards

of

requires

a

Federal
plaintiff

Rule
to

of

Civil

plead

circumstances constituting fraud.’”
12

Procedure

‘with

9(b),

particularity

which
the

Spaulding, 714 F.3d at 781

(quoting Fed.R.Civ.P. 9(b)).

Such pleadings include “the time,

place, and contents of the false representations, as well as the
identity of the person making the misrepresentation and what he
obtained thereby.”

Id. (citation and internal quotation marks

omitted).
Plaintiffs fail to meet the heightened pleading requirement
in their Amended Complaint.

To the extent Plaintiffs rely upon

their

TPP

construction

of

the

fraudulent

misrepresentations,

considered

by

Moreover,

Mrs.

representative

the

Court

White’s
in

Agreement
those

for

reasons

loss

identifying

allegations

telephone

Chase’s

in

are

articulated

conversation

the
not

above.
a

department

mitigation

with

is

insufficient because of the plain language of the TPP Agreement.
Finally, the allegations in the MCPA and MMFPA sections of the
Amended Complaint do no more than recite the elements of a cause
of action under these statutes in contravention of Rule 9(b)’s
pleading requirements.
Accordingly,

Plaintiffs’

MCPA

and

MMFPA

claims

must

be

Rule

11

dismissed.
2.
On

Motion for Rule 11 Sanctions
April

Sanctions

22,

seeking

2013,
redress

Chase
for

filed

a

various

Motion

for

averments

Plaintiffs

allegedly retained and added to their Amended Complaint, and for
its reasonable attorneys’ fees incurred in preparing the Motion.
13

Local Rule 105.8(b) does not require a response to a Rule 11
motion unless it is ordered by the Court.

Although not ordered,

Plaintiffs responded to Chase’s Motion by filing the pending
Motion for Leave to File Second Amended Complaint on May 10,
2013.
The decision to impose Rule 11 sanctions is within the
sound discretion of the district court.

Ost-West-Handel Bruno

Bischoff GmbH v. Project Asia Line, Inc., 160 F.3d 170, 177 (4th
Cir. 1998).

Under Federal Rule of Civil Procedure 11(b)(3), an

attorney must certify to the court “that to the best of the
person’s

knowledge,

information,

and

belief,

formed

after

an

inquiry reasonable under the circumstances . . . the factual
contentions have evidentiary support.”

Fed.R.Civ.P. 11(b)(3).

Generally, “Rule 11(b)(3) authorizes sanctions for filings that
contain ‘allegations based on information which minimal factual
inquiry

would

disprove,’

or

when

position is unsupported by fact.”

an

attorney

knows

that

a

W. Md. Wireless Connection v.

Zini, 601 F.Supp.2d 634, 647 (D.Md. 2009) (citations omitted).
Chase avers that its initial Motion to Dismiss and attached
denial letter (see ECF No. 6) placed Plaintiffs on notice that
they did not meet the threshold requirement for participation in
HAMP because of their income.

According to Chase, Plaintiffs’

Amended Complaint, filed notwithstanding this notice, includes
untrue

and

misleading

averments
14

in

paragraphs

three,

twenty-

eight, and forty-one regarding their ability to meet all HAMP
criteria.

Chase

also

argues

that

Plaintiffs

improperly

qualified factual averments in paragraphs twenty-six, thirtyfive, thirty-six, and thirty-nine of the Amended Complaint with
the

phrase

“on

information

and

belief”

when

each

of

the

averments are within the personal knowledge of the Plaintiffs.
The Second Amended Complaint Plaintiffs seek leave to file
corrects the violations cited in Chase’s Motion.

Plaintiffs

failed to file their Motion to Amend, however, prior to the
expiration of the twenty-one day safe harbor period which would
have allowed Plaintiffs to amend the improper averments without
being subject to Rule 11 sanctions.
Despite

the

late

filing,

See Fed.R.Civ.P. 11(c)(2).

Plaintiffs’

proposed

amendments

illustrate a willingness to address the violations.

Moreover,

the Court is convinced that Plaintiffs’ allegations regarding
their HAMP eligibility constitute a grave misunderstanding of
their rights under the TPP Agreement, not an attempt to mislead
the Court.
grant

in

Sanctions.

As a result, the Court, in its discretion, will

part

and

deny

in

part

Chase’s

Motion

for

Rule

11

The Court will grant Chase’s request to strike all

averments identified in the Motion.

Plaintiffs’ Motion to File

a Second Amended Complaint will be granted for the sole purpose

15

of remedying those violations.6
fees will be denied.

Chase’s request for attorneys’

Plaintiffs are forewarned, however, to

refrain from engaging in such violative conduct in the future.
III. CONCLUSION
For the aforementioned reasons, Chase’s Motion to Dismiss
the Complaint (ECF No. 6) is DENIED AS MOOT; Chase’s Motion to
Dismiss the Amended Complaint (ECF No. 12) is GRANTED; Chase’s
Motion for Sanctions (ECF No. 18) is GRANTED IN PART and DENIED
IN PART; and Plaintiffs’ Motion for Leave to File Second Amended
Complaint (ECF No. 20) is GRANTED.

A separate Order follows.

Entered this 17th day of June, 2013

_________/s/________________
George L. Russell, III
United States District Judge

6

The Second Amended Complaint is also DISMISSED for the
reasons articulated in this opinion.
16