Danh et al v. Federal National Mortgage Assoc.

Filing 44

MEMORANDUM. Signed by Judge James K. Bredar on 1/13/14. (mps, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

JIMMY DANH
LOUNG THY LI,

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Plaintiffs/Counterclaim Defendants
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v.

CIVIL No. 1:13-cv-01636--JKB
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FEDERAL NATIONAL
MORTGAGE ASSOCIATION,

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Defendant/Counterclaim Plaintiff.

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MEMORANDUM
Jimmy Danh and Loung Thi Ly (“Plaintiffs”) brought this suit against the Federal
National Mortgage Association (“Defendant”) alleging a violation of the Maryland Consumer
Debt Collection Act (“MCDCA”) and the Maryland Consumer Protection Act (“MCPA”) and
seeking declaratory judgment. Defendant brought a counter-claim alleging breach of contract
and seeking money damages and a declaratory judgment. On September 19, 2013, this Court
denied Plaintiffs’ motion to dismiss Defendant’s counter-claims and granted Defendant’s motion
for partial summary judgment.

(ECF No. 26.)

Now pending before the Court are (1)

Defendant’s motion for attorneys’ fees and expenses (ECF No. 29) and (2) Defendant’s motion
for summary judgment. (ECF No. 32.) The issues have been briefed and no hearing is required.
Local Rule 105.6. For the reasons set forth below, Defendant’s motion for attorney’s fees will
be GRANTED and Defendant’s motion for summary judgment will be GRANTED.

I.

BACKGROUND

Plaintiffs are owners of real property located at 7518 Gilley Terrace, Rosedale, MD.
(ECF No. 2 ¶ 1.) On April 2, 2008, Plaintiffs obtained a loan (the “Loan”) for $390,150 from
CitiMortgage, Inc. (“CitiMortgage”). (ECF No. 2 ¶ 1; ECF No. 8 ¶ 10.) The Loan is evidenced
by a note (the “Note”) and secured by a deed of trust (the “Deed of Trust”), both executed on
April 2. (ECF No. 8 ¶¶ 10, 11.) Shortly after execution of the Note, Defendant acquired
CitiMortgage’s interest in the Loan, although CitiMortgage continued to service it for Defendant.
(ECF No. 8 ¶ 10.)
Plaintiffs entered into a Loan Modification Agreement (“LMA”) with CitiMortgage on
August 8, 2010. (Id. ¶12.) The LMA states that as of September 1, 2010, the unpaid principle of
the Loan, including capitalized interest, was $401,691.78 and calls for sixty monthly payments at
an interest rate of 4.25%, commencing on October 1, 2010, and three hundred monthly payments
at an interest rate of 4.5%, commencing on October 1, 2015. (ECF No. 13-3.)
On May 23, 2011, Plaintiffs filed an action (the “Prior Action”) against Defendant in the
Circuit Court for Baltimore County, Maryland (“Circuit Court”), alleging that Defendant had
breached the LMA by “refusing to accept payments due under it and alleging additional amounts
are owed it.” (ECF No. 8 ¶ 17; No. 2 ¶ 2; No. 13-4 ¶ 19.) Defendant filed a counterclaim
alleging that Plaintiffs’ loan had not been modified pursuant to the LMA because Plaintiffs had
failed to return the LMA duly signed and notarized to CitiMortgage within the allotted time.
(ECF No. 2-2 ¶¶ 16-17.) Defendant further alleged that Plaintiffs had failed to make their
required payments under the Note. (Id. ¶ 21.) Defendant therefore sought judgment for the full
amount due under the note, namely “$470,112.24 plus interest at 7.375% from November 26,
2012.” (Id. at 5.) In the alternative, Defendant alleged that Plaintiffs had failed to make

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payments due under the LMA and sought judgment for the full amount due under the LMA,
namely $401,691.78 plus interest at 4.25% from September 1, 2010.” (Id. at 7.)
The case was tried before a jury. (ECF No. 2 ¶ 5.) On November 30, 2012, the jury
found that (1) Plaintiffs entered into the LMA with CitiMortgage, (2) Defendant breached the
LMA, (3) Plaintiffs did not breach the LMA or the Note, and (4) Defendant did not violate the
MCDA or the Maryland Mortgage Fraud Protection Act. (ECF No. 14-8; ECF No. 8 ¶ 21; ECF
No. 2 ¶ 5.) The jury also awarded Plaintiffs $150,000 for Defendant’s breach of contract. (ECF
No. 14-8 ¶ 3.) The judgment against Defendant was subsequently reduced to $10,000 by the
Circuit Court. (ECF No. 15-8.) No timely appeal of this judgment was filed by either party.
(ECF No. 2 ¶ 7.)
With regard to the present action, Plaintiffs filed their complaint in the Circuit Court on
May 3, 2013. (ECF Nos. 2, 2-2.) Plaintiffs seek declaratory judgment that the Deed of Trust “is
of no further force or effect,” as well as monetary damages in excess of $75,000 for Defendant’s
violation of the MCDCA. (ECF No. 2 at 4.)
On June 5, Defendant filed a notice of removal to this Court. (ECF No. 1.) Defendant
alleges that this Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332. ((d. ¶ 8.)
In support of its claim of federal jurisdiction, Defendant further alleges that the amount in
controversy exceeds $75,000 and that there is complete diversity of citizenship among the
parties, as the Plaintiffs are citizens of Maryland and the Defendant is a District of Columbia
corporation, pursuant to 12 U.S.C. § 1717(a)(2)(B). (Id. ¶¶ 5-8.)
Defendant alleges that Plaintiffs have made no payments on the Loan since judgment was
entered in the Prior Action on November 30, 2012. (ECF No. 8 ¶ 22.) Defendant filed counterclaims on June 7 seeking a declaratory judgment that the Note, as modified by the LMA, is a

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valid and binding contract, of which Plaintiffs are in default. (ECF No. 8 at 6.) Defendant also
seeks damages for breach of contract based on the monthly payments due under the LMA that
Plaintiffs have failed to pay since November 30, 2012. (Id. at 7.)
On September 18, 2013, this Court found that (1) the Note, as modified by the LMA, is a
valid and binding contract, (2) the Deed of Trust is a valid and binding security instrument
securing repayment of the Note, as modified by the LMA, and (3) Plaintiffs are liable to
Defendant for breach of contract for failing to make the required payments under the Note, as
modified by the LMA, accruing subsequent to November 30, 2012. (ECF No. 27.) Further, the
Court granted summary judgment in favor of Defendant on all counts of Plaintiffs’ complaint.
(Id.)
Defendant now asks the Court to grant its motion for summary judgment (ECF No. 32)
and enter judgment in its favor against Plaintiffs, jointly and severally, in the amount of
$33,726.12, plus court costs, post judgment interest, and attorneys’ fees and expenses.
Defendant has also filed a motion for attorney’s fees and expenses.

(ECF No. 29.)

On

December 20, 2013, pursuant to the Court’s scheduling order (ECF No. 30), Defendant filed its
memorandum in support of its motion for attorneys’ fees (ECF No. 41).1 Although Plaintiffs
filed a response to Defendant’s motion for attorney’s fees and expenses on November 20 (ECF
No. 33), they have filed no response to Defendant’s memorandum in support of the motion (ECF
No. 41), in which Defendant justifies its request for $27,402.20 in attorneys’ fees and expenses.
II.

LEGAL STANDARD

A party seeking summary judgment must show “that there is no genuine dispute as to any
material fact” and that he is “entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). If a
party carries this burden, then the court will award summary judgment unless the opposing party
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Defendant filed a corrected version of the memorandum on December 24, 2013. (ECF No. 43.)

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can identify specific facts, beyond the allegations or denials in the pleadings that show a genuine
issue for trial. FED. R. CIV. P. 56(e)(2). To carry these respective burdens, each party must
support its assertions by citing specific evidence from the record. FED. R. CIV. P. 56(c)(1)(A).
The court will assess the merits of the motion, and any responses, viewing all facts and
reasonable inferences in the light most favorable to the opposing party. Scott v. Harris, 550 U.S.
372, 378 (2007); Iko v. Shreve, 535 F.3d 225, 230 (4th Cir. 2008).

III.

ANALYSIS
a. Defendant’s Motion for Summary Judgment

In its September 18 ruling, this Court found Plaintiffs liable to Defendant for breach of
contract for failing to make the required payments under the Note, as modified by the LMA,
accruing subsequent to November 30, 2012. On this basis, Defendant seeks judgment in the
amount of $33,726.12, representing twelve missed payments and the resulting late charges.
(ECF No. 32-1 at 1.)
In their opposition to Defendant’s motion for summary judgment, Plaintiffs do not
contest Defendant’s proof of damages however. (ECF No. 35.) Rather, Plaintiffs assert that the
LMA is not enforceable. (Id.) In support of this proposition, Plaintiffs advance two arguments.
First, they argue that in the course of the Prior Action, the Circuit Court for Baltimore County
ruled the LMA to be unenforceable. (Id.) Second, they argue that the relevant contractual
provisions were merged into the judgment entered by the Circuit Court in the Prior Action. (Id.)
The Court has already addressed both of these issues. (ECF No. 28.) First, with regard
to the enforceability of the LMA, in the Prior Action, the jury found, by a preponderance of the
evidence, (1) that Plaintiffs entered into the LMA with CitiMortgage and (2) that Defendant
breached the LMA. (ECF No. 15-7 at ¶¶ 1-2, see also ECF No. 35-1 at 14.) Based on these two
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findings, the jury awarded Plaintiffs $150,000 for Defendant’s breach of the LMA. (ECF No.
15-7 at ¶ 3, see also ECF No. 35-1 at 14.)2 Despite this, Plaintiffs assert that the LMA is not a
“valid and enforceable agreement.”
In order to support their contention, Plaintiffs point to the fact that the Circuit Court
granted Defendant’s motion for summary judgment as to the first count of Plaintiffs’ complaint
and dismissed the count. (ECF No. 25-1 at 14.) In this count, Plaintiffs had sought a declaratory
judgment that the LMA was a valid and enforceable credit agreement. (ECF No. 15-5.) The
parties have not provided this Court with any materials that would allow it to fully explain the
basis for the Circuit Court’s dismissal of the count. However, whatever the Circuit Court’s
reasoning, the fact remains that, contrary to Plaintiffs’ assertion, after dismissing Count I, the
Circuit Court did submit the question of the LMA’s validity and enforceability to the jury. As
set out above, the jury’s finding that (1) Plaintiffs entered into the LMA and that (2) Defendants
breached the agreement was the basis for the damages awarded to Plaintiffs by the Circuit Court.
Second, with regard to the rule of merger, as this Court explained in its prior
memorandum, the Circuit Court’s judgment in the Prior Action, which concerned payments due
under the Note, as modified by the LMA, up until May 1, 2010, in no way prevents Defendant
from seeking judgment with regard to payments due since judgment was entered in the Prior
Action. (ECF No. 27 at 6-9.)
Therefore, the Court reaffirms it holding that the Note, as modified by the LMA, is a
valid and binding contract. Given that Plaintiffs contest neither (1) Defendant’s allegation that
they have failed to make payments due under the Note since November, 2012 nor (2)
Defendant’s proof of damages, the Court grants Defendant’s motion for summary judgment and
awards Defendant judgment in the amount of $33,726.12. This amount represents the total
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The court subsequently reduced the amount of damages to $10,000. (ECF No. 15-8.)

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amount of missed payments and late fees from December 1, 2012 to November 11, 2013. (ECF
No. 38 at 2.) Further, as the prevailing party, Defendant, is awarded costs, pursuant to Rule
54(d)(1) of the Federal Rules of Civil Procedure, and post-judgment interest at the rate of 0.13%,
pursuant to 28 U.S.C. § 1961.
b. Defendant’s Motion for Attorney’s Fees and Expenses
Defendant has moved for attorney’s fees and expenses on the basis of section 14 of the
Deed of Trust and section 5(d) of the LMA. In Maryland, a prevailing party may recover
attorney’s fees where they are agreed upon by the parties to a contract. Hess Construction Co. v.
Board of Education of Prince George’s County, 669 A.2d 1352 (Md. 1996). Here, Section 14 of
the Deed of Trust provides, in relevant part, that “[l]ender may charge [b]orrower fees for
services performed in connection with [b]orrower’s default, for the purpose of protecting
[l]ender’s interest in the [p]roperty and rights under this [s]ecurity [i]nstrument, including . . .
attorney’s fees.” (ECF No. 14-4 at 11.) Section 5(d) of the LMA provides that “[a]ll costs and
expenses incurred by [l]ender in connection with the [a]greement, including . . . attorney’s fees,
shall be paid by the [b]orrower.” (ECF No. 14-5 at 3.)
Plaintiffs oppose the award of attorney’s fees on the basis that “Defendant’s claim to
attorney fees based on a contract provision was extinguished by the final judgment entered by
the Baltimore County City Court” in the Prior Action. (ECF No. 33.) As the Court has
explained, the Circuit Court’s judgment in the Prior Action, which concerned payments due
under the Note, as modified by the LMA, up until May 1, 2010, in no way prevents Defendant
from seeking judgment with regard to payments due since judgment was entered in the Prior
Action. (ECF No. 27 at 6-9.) By the same logic, the judgment does not extinguish Defendant’s
right to seek attorney’s fees under the Note, as modified by the LMA.

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Having reviewed Defendant’s undisputed memorandum in support for its motion for
attorney’s fees and expenses (ECF No. 43), the Court finds the amount of $27,402.20 to be a
reasonable fee. Therefore, the Court awards Defendant its attorneys’ fees and expenses incurred
in this action in the amount of $27,402.20.

IV.

CONCLUSION

Accordingly, an order shall issue (1) GRANTING Defendant’s motion for attorney’s fees
and expenses (ECF No. 29) and awarding Defendant its attorneys’ fees and expenses in the
amount of $27,402.20; and (2) GRANTING Defendant’s motion for summary judgment (ECF
No. 29) and awarding Defendant judgment in the amount of $33,726.12, plus court costs and
post judgment interest at the rate of 0.13%.

Dated this 13th day of January, 2014.
BY THE COURT:

/s/
James K. Bredar
United States District Judge

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