Lomp et al v. U.S. Mortgage Finance Corp. et al
Filing
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MEMORANDUM. Signed by Judge William M Nickerson on 12/11/13. (apls, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JUDITH LOMP et al.
v.
U.S. MORTGAGE
FINANCE CORP. et al.
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Civil Action No. WMN-13-1099
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MEMORANDUM
Presently pending before the Court is a Motion to Dismiss,
filed by Defendants Bank of New York Mellon, Trustee for
Certificateholders of the CWABS, Inc. Asset-Backed Certificate
Series 2007-7, and Bank of America, N.A.
briefed and is ripe for review.
The Motion is fully
For the reasons stated herein,
the Court determines that no hearing is necessary, Local Rule
105.6, and the Motion to Dismiss will be granted.
I.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Judith Lomp is the owner of improved residential
real property located in Ellicott City, Maryland (“the Subject
Property”).
On March 13, 2007, Lomp executed a promissory note
in the principal amount of $308,000 to her lender, U.S. Mortgage
Finance Corp. (“U.S. Mortgage”).
The promissory note (the
1
“Note”) was secured by a deed of trust, signed by Lomp that same
day, in favor of U.S. Mortgage (the “Deed of Trust”).1
Although the loan originated with U.S. Mortgage, it appears
that it was subsequently sold and securitized.
The Note
contains multiple special indorsements: an undated, cancelled
indorsement from U.S. Mortgage to Countrywide Bank, FSB; an
undated indorsement without recourse from U.S. Mortgage to
Countrywide Bank, N.A.; an undated indorsement without recourse
from Countrywide Bank FSB fka Countrywide Bank, N.A. to
Countrywide Home Loans, Inc.; and an undated indorsement without
recourse from Countrywide Home Loans, Inc. to “The Bank of New
York Mellon fka The Bank of New York, as Trustee for the
certificateholders, CWABS, Inc., asset-backed certificates,
series 2007-7 TE.”
Additionally, the Deed of Trust was
apparently assigned at least twice: once on October 14, 2011 by
MERS as nominee for U.S. Mortgage to the Bank of New York Mellon
fka the Bank of New York as Trustee; and on June 8, 2012, again
from MERS to The Bank of New York Mellon fka the Bank of New
York as Trustee.
Although it is not evident from the Complaint
what role Defendant Bank of America plays with respect to the
Note, it appears that, pursuant to a Pooling and Servicing
1
Although the Deed of Trust was not attached to Plaintiffs’
Complaint, the Court may consider it on the motion to dismiss
because (1) it is a matter of public record, and (2) it is
integral to the Plaintiffs’ Complaint. Philips v. Pitt County
Memorial Hosp., 572 F.3d 176, 180 (4th Cir. 2009).
2
Agreement,2 Bank of America, N.A., as successor by merger to BAC
Home Loans Servicing LP, formerly known as Countrywide Home
Loans Servicing, may be the servicer for the loan.
See Compl.
Ex. C at 28; Mot. to Dismiss at 1 n.1.
Lomp has subsequently fallen behind on her mortgage
payments.
Two foreclosure actions were previously initiated in
the District Court for Howard County, Maryland.
The first,
which was filed on February 27, 2008, was dismissed by the court
without prejudice for lack of prosecution3 on May 27, 2009.
The
second, which was filed on June 25, 2010, was dismissed
voluntarily without prejudice by the substitute trustees (the
plaintiffs in that action), on August 4, 2011.
Since that date,
Lomp has made no payments on her mortgage and no further actions
have been taken to foreclose the Subject Property by Defendants.
2
The Pooling and Servicing agreement generally establishes the
two entities – a trustee and a servicer – that are responsible
for maintaining the trust into which a mortgage is bundled and
sold during the securitization process. See generally Anderson
v. Burson, 35 A.3d 452, 455 (Md. 2011) (citing Christopher L.
Peterson, Foreclosure, Subprime Mortgage Lending, and the
Mortgage Electronic Registration System, 78 U. Cin. L. Rev.
1359, 1367 (2010)). Here, the trust is the Certificateholders
of the CWABS, Inc. Asset-Backed Certificate Series 2007-7, for
which Bank of New York Mellon is the Trustee.
3
According to Defendants, the case was ultimately dismissed for
lack of prosecution because, the day prior to the foreclosure
sale of the Subject Property, Lomp filed for bankruptcy
protection and, accordingly, the foreclosure sale was cancelled.
Mot. to Dismiss at 3.
3
Lomp apparently entered, on November 18, 2012, into a
Contract for Sale of the Subject Property (“the Contract”) to
Plaintiff Linda Ford.4
By the terms of the Contract, Ford agreed
to purchase the Subject Property from Lomp for $50,000, “due to
the deteriorated condition of the Subject Property
improvements.”
The Contract contained an addendum, by which
Ford, as the buyer, agreed to finance the present quiet title
litigation, and appeared to make settlement contingent on the
outcome of this litigation.
See Compl. Ex. A at 2, 11.
Plaintiffs filed the present suit, styled as a “Complaint
to Quiet Title,” in the Circuit Court for Howard County, against
Defendants U.S. Mortgage; Bank of New York, Trustee for the
Certificateholders of the CWABS, Inc. Asset-Backed Certificate
Series 2007-7 (“Bank of New York Mellon”); Bank of America,
N.A., as successor in interest to Countrywide Home Loans, Inc.
(“Bank of America”);5 and Specialized Loan Servicing, LLC.
The
Complaint seeks an order stating that the Note and Deed of Trust
4
At the time the Motion to Dismiss was filed, the Contract
submitted into the record was not signed by Lomp. Plaintiffs
have subsequently filed a Motion to Substitute Exhibit, ECF No.
18, seeking to substitute into the record a copy of the Contract
executed by both Lomp and Ford. No objection having been filed
by the Defendants, the Motion will be granted.
5
Bank of America asserts that it is incorrectly identified by
the Complaint as captioned, as it is not the successor to
Countrywide Home Loans, Inc. Instead, it claims that the
correct party is “Bank of America, N.A., successor by merger to
BAC Home Loans Servicing, LP f/k/a Countrywide Home Loans
Servicing, LP.”
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“are incapable of enforcement and that any lien created by these
documents is extinguished.”
Compl. ¶ 8.
In support, the
Complaint asserts that, because Defendants have already
initiated two foreclosure actions, which were dismissed,
Maryland Rule 2-506 prohibits the filing of an additional
foreclosure suit.
Additionally, the Complaint asserts various
defects in the Note and Assignment documents.
Specifically,
Plaintiffs assert that (1) the Note contains an insufficient
number of indorsements to negotiate the Note to Bank of New York
Mellon; (2) the Note contains undated indorsements; (3) the
applicable Pooling and Service Agreement had a cut-off date of
April 1, 2007, prior to the indorsement allegedly assigning the
Note into the Trust; (4) two assignments of the Deed of Trust
are fraudulent; and (5) the mortgage assignments violate the $25
Billion Mortgage Settlement Agreement with the Justice
Department, to which Bank of America was a party.
After removing the case to federal court, Defendants Bank
of New York Mellon and Bank of America filed the present Motion
to Dismiss.6
In support of their motion, Defendants argue
primarily that (1) Plaintiff’s Complaint fails to meet minimum
pleading standards under Fed. R. Civ. P. 8(a) and 12(b)(6); (2)
6
Defendant U.S. Mortgage has not filed a responsive pleading.
It is unclear from the record whether it has been served at this
time. Defendant Specialized Loan Servicing, LLC was voluntarily
dismissed by the Plaintiffs after filing a motion to dismiss.
See ECF Nos. 13, 17. That motion is now moot.
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Maryland Rule 2-506 does not apply; (3) Bank of America is the
holder of the Note and owner of the Deed of Trust and thus has
standing to foreclose; (4) Plaintiffs cannot maintain a quiet
title claim; and (5) Plaintiffs are not entitled to a
declaratory judgment because no actual controversy exists.
II.
LEGAL STANDARD
A motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) tests the legal sufficiency of a complaint.
City of Goldsboro, 178 F.3d 232, 243 (4th Cir. 1999).
Edwards v.
To
survive a 12(b)(6) challenge, a complaint need only present
enough factual content to render its claims “plausible on
[their] face” and enable the court to “draw the reasonable
inference that the defendant is liable for the misconduct
alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Although a complaint need not contain detailed factual
allegations, “a plaintiff’s obligation to provide the grounds of
his entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.”
550 U.S. 544, 555 (2007).
Bell Atlantic Corp. v. Twombly,
Rather, “[f]actual allegations must
be enough to raise a right to relief above the speculative
level.”
Id.
“[T]he court ‘need not accept the [plaintiff’s]
legal conclusions drawn from the facts,’ nor need it ‘accept as
true unwarranted inferences, unreasonable conclusions, or
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arguments.’”
Philips, 572 F.3d at 180 (quoting Wahi v.
Charleston Area Med. Ctr., Inc., 562 F.3d 599, 616 n.26 (4th
Cir. 2009) (quoting Kloth v. Microsoft Corp., 444 F.3d 312, 319
(4th Cir. 2006))) (alterations in original).
III. ANALYSIS
Defendants first allege that the Complaint should be
dismissed because it fails to meet minimum pleading standards
under Federal Rules of Civil Procedure 8(a) and 12(b)(6).
Pursuant to Federal Rule of Civil Procedure 8(a), a pleading
must contain “a short and plain statement of the claim showing
that the pleader is entitled to relief” and “a demand for the
relief sought.”
The allegations in the Complaint must “give the
defendant fair notice of what the . . . claim is and the grounds
upon which it rests.”
Twombly, 550 U.S. at 555.
Because
Plaintiffs “fail to enumerate any causes of action or place []
Defendants on notice of what claims they are asserting . . .[,
and] fail to articulate which defendant they are referring to,”
Defendants assert that the Complaint does not meet the pleading
standards of Rules 8(a) and 12(b)(6).
Mot. to Dismiss at 7.
The Court agrees with Defendants that the Complaint is
unclear, fails to set out explicit causes of action, and fails
to specify the claims asserted against each Defendant.7
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In the
Unlike the plaintiffs in many similar cases, Plaintiffs are
represented by counsel and therefore do not benefit from more
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interest of completeness and judicial efficiency, however, the
Court will consider whether, to the extent discernible from the
allegations in Plaintiffs’ Complaint, the causes of action
asserted state a claim upon which relief can be granted.
Based
on the Court’s reading of the Complaint, it appears to assert,
at best, causes of action for quiet title and declaratory
judgment.
A. Quiet Title
Plaintiffs appear to assert a quiet title claim, as their
Complaint is entitled as a “Complaint to Quiet Title.”
The
purpose of an action to quiet title is to “protect the owner of
legal title ‘from being disturbed in his possession and from
being harassed by suits in regard to his title by persons
setting up unjust and illegal pretensions.’”
Wathen v. Brown,
429 A.2d 292, 294 (Md. Ct. Spec. App. 1981) (quoting Textor v.
Shipley, 26 A. 1019, 1019 (Md. 1893)).
To succeed in a quiet
title action, the plaintiff must establish that he, she, or it
has both “possession and legal title by ‘clear proof.’”
Flores
v. Deutsche Bank Nat’l Trust Co., Civ. No. DKC 10-0217, 2010 WL
2719849, at *7 (D. Md. July 7, 2010) (quoting Stewart v. May, 73
A. 460, 463-64 (Md. 1909)).
liberal rules of pleading construction.
v. Pardus, 551 U.S. 89, 94 (2007).
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See generally Erickson
In order for Plaintiffs to state a claim for quiet title,
therefore, Plaintiffs’ Complaint must allege both possession and
legal title to the Subject Property.
failed to allege the first.
Notably, Plaintiffs have
As Defendants note, neither
Plaintiff lists, on the Complaint, her address as that of the
Subject Property, nor otherwise allege that they currently
possess, either actually or constructively, the Subject
Property.
With regard to legal title to the Subject Property,
Plaintiff Lomp admits that she took out a loan, signed a
promissory note, signed a deed of trust secured by the Subject
Property, and is in default on that debt.
She admits that the
debt has not to this date been extinguished.
See generally
Darnestown Valley-WHM Ltd. P’ship v. McDonald’s Corp, 650 A.2d
1365, 1369 (Md. Ct. Spec. App. 1994) (noting that a mortgage
“technically conveys legal title to the property to the
mortgagee”).
Plaintiffs argue, however, that as a result of
various defects with the Note, Deed of Trust, Pooling and
Servicing Agreement, and a national mortgage settlement, any
adverse claim to the Subject Property is invalid or ineffective
and should be legally extinguished.
Specifically, Plaintiffs
appear to challenge, although they do not say so expressly in
the Complaint, the validity of the final two indorsements on the
Note, and therefore presumably also the rights of Bank of New
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York Mellon to enforce the Note.
Plaintiffs seek an inquiry,
pursuant to the Court of Appeals of Maryland’s recent decision
in Anderson v. Burson, 35 A.3d 452 (Md. 2011), that would
require Defendants to prove each and every transfer of the Note
in order to establish their enforcement rights.
63.
See id. at 462-
Even assuming that Plaintiffs’ allegations are sufficient
to present a claim to legal title and challenge Bank of New York
Mellon’s purported holder status such that relief can be
granted,8 because Plaintiffs have failed to meet the first
requirement of a quiet title action by failing to allege that
they are in actual or constructive possession of the Subject
Property, Plaintiffs cannot maintain an action to quiet title.
A. Declaratory Judgment
To the extent that Plaintiffs’ Complaint may be construed
as anything other than a quiet title action,9 it appears that
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It is unclear from the Complaint on what grounds Plaintiffs
ultimately seek relief. Plaintiffs point to a variety of
alleged defects in the relevant instruments, but do not actually
allege how these defects invalidate Defendants’ interest in the
Subject Property.
9
Plaintiffs’ Complaint could potentially be seen, in part, as
seeking an injunction preventing Defendants’ from filing an
additional foreclosure action, based on Plaintiffs’ assertion
that Maryland Rule 2-506 bars a subsequent foreclosure
proceeding. Even assuming that Maryland Rule 2-506 could be
construed to bar an additional foreclosure action, Plaintiffs do
not presently have standing to seek an injunction. See
generally Chalk v. PNC Bank, N.A., No. CCB-11-3052, 2012 WL
2915289, at *3 (D. Md. July 16, 2012) (citing Friends of the
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Plaintiffs may also be asserting an action for declaratory
judgment.
As noted above, Plaintiffs seek ultimately “an order
that the Note and Deed of Trust are incapable of enforcement and
that any lien created by these documents is extinguished.”
Compl. ¶ 8.
Defendants contend that Plaintiffs cannot bring a
declaratory judgment because no actual controversy presently
exists.
See Mot. to Dismiss at 16-17.
Specifically, Defendants
note that a declaratory judgment is an improper vehicle through
which to resolve “theoretical issues” with regard to Lomp’s
loan.
Id. (citing Hamilton, 277 Md. at 340 (“[D]eclaratory
judgment process is not available to decide purely theoretical
questions or questions that may never arise, or questions which
have become moot, or merely abstract questions.”)).
Defendants have previously filed two actions to foreclose
on the Subject Property.
When Plaintiffs filed their Complaint
in this suit, however, there was no existing effort to enforce
the Note or Deed of Trust through foreclosure.
It therefore
appears that Plaintiffs seek, in essence, “an advisory opinion
as to whether any future attempt at . . . foreclosure would be
valid under Maryland law.
declaratory judgment.”
That is not the purpose of a
Chalk, 2012 WL 2915289, at *3; see also
Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167,
180 (2000)).
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Coffman v. Breeze Corps, 323 U.S. 316, 324 (1945) (“The
declaratory judgment procedure . . . may not be made the medium
for securing an advisory opinion in a controversy which has not
arisen.”).
Generally, the Court will not, in a declaratory
judgment proceeding, “decide future rights in anticipation of an
event which may never happen, but will [instead] wait until the
event actually takes place, unless special circumstances appear
which warrant an immediate decision.”
A.2d 449, 454 (Md. 1953).
Tanner v. McKeldin, 97
Plaintiffs have not pointed the Court
toward any special circumstances warranting such immediate
attention.
Thus, no justiciable controversy exists, and a
declaratory judgment is not appropriate at this time.
Accordingly, Plaintiffs’ Complaint must be dismissed in its
entirety.10
Thus, the Court need not consider Plaintiffs’
contentions regarding the validity of the Note’s indorsements,
the assignments of the Deed of Trust, the Pooling and Servicing
Agreement, and the National Bank Settlement.
To the extent that
Plaintiffs’ Complaint asserts any additional causes of action,
it will be dismissed as insufficiently pled under Federal Rules
of Civil Procedure 8(a) and 12(b)(6).
IV.
CONCLUSION
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Although U.S. Mortgage either remains to be served or has
failed to file a responsive pleading, this action is nonetheless
dismissed in its entirety, as the Complaint fails to state a
claim with respect to any Defendant.
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For the foregoing reasons, Defendants’ Motion to Dismiss
will be granted.
A separate order will issue.
______________/s/__________________
William M. Nickerson
Senior United States District Judge
DATED: December 11, 2013
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