Baer et al v. GMAC Mortgage, LLC et al

Filing 22

MEMORANDUM OPINION. Signed by Judge George Levi Russell, III on 11/5/13. (dass, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAY P. BAER, et al.,

:

Plaintiffs,

:

v.

:

GMAC MORTGAGE, LLC, et al.,

:

Defendants.

Civil Action No. GLR-13-2374

:
MEMORANDUM OPINION

THIS MATTER arises under common law negligence and fraud
principles for an alleged unlawful removal of two homeowners
from their residence and the alleged diminution of the value of
their home that occurred while it was vacant.
the Court

is

Pending before

Defendants’, GMAC Mortgage, LLC and

Ocwen Loan

Servicing, LLC (collectively, “Defendants”),1 Motion to Dismiss
Counts

II

and

Attorneys’ Fees.

III

and

to

(ECF No. 9).

Strike

Plaintiffs’

Demands

for

The Court, having reviewed the

pleadings and supporting documents, finds no hearing necessary.
See Local Rule 105.9 (D.Md. 2011).

For the reasons outlined

below, Defendants’ Motion will be granted in part and denied in
part.
1

On October 17, 2013, Defendant GMAC Mortgage, LLC filed a
Notice of Bankruptcy and Effect of Automatic Stay.
(ECF No.
16).
After conferring with counsel on October 22, 2013, the
Court stayed the matter as to GMAC Mortgage, LLC and the parties
agreed to proceed with Ocwen Loan Servicing, LLC as the sole
defendant. (See ECF No. 18). Notwithstanding this development,
the Court will continue to refer to the Defendants collectively
throughout this Opinion.

BACKGROUND2

I.

Plaintiffs Jay P. Baer and Karen L. Baer (the “Baers”) own
a home located in Westminster, Maryland that is subject to a
mortgage serviced by Defendants.
on

their

mortgage

and,

in

In 2008, the Baers defaulted

April

2009,

Defendants

allegedly

instructed the Baers to vacate the premises and proceeded to
change

the

locks

on

their

home.

According

to

the

Baers,

Defendants informed them that they could not remain in the home
“despite the fact that [the Baers] still owned the home, and
foreclosure or other legal proceedings had not been initiated.”
(Compl. ¶ 9, ECF No. 2).

At the time of departure, the Baers’

home was allegedly in near perfect condition and in a state of
good repair.

The Baers had to lease another residence due to

Defendants’ actions.
Over

three

years

later,

in

October

2012,

Defendants

permitted the Baers to re-enter their home after informing them
that

they

modification.

may

be
Upon

eligible,
re-entry,

and/or
the

Baers

apply,

for

discovered

a

loan

the

home

suffered severe damage due to the Defendants’ alleged neglect,
which included negligently allowing “squatters” to occupy the
home and contribute to the damage.

2

As a result of Defendants’

Unless otherwise noted, the following facts are taken from
the Complaint and are viewed in a light most favorable to the
Plaintiffs.
See Erickson v. Pardus, 551 U.S. 89, 94 (2007)
(citations omitted).
2

actions, the Baers have incurred, and will continue to incur,
costly repairs and renovations to remedy the damage.
On

July

1,

2013,

the

Baers

filed

suit

against

the

Defendants in the Circuit Court for Carroll County, Maryland.
The

three-count

Complaint

alleges

negligence,

misrepresentation, and negligent misrepresentation.

fraudulent
In addition

to compensatory damages, the Baers seek reasonable attorneys’
fees and punitive damages in the amount of $250,000 for Count
II.

On August 14, 2013, Defendants removed the case to this

Court.

(ECF No. 1).

Defendants filed the pending Motion to

Dismiss on August 21, 2013.
II.
A.

DISCUSSION

Motion to Dismiss
1. Standard of Review
Defendants

move

to

dismiss

Counts

II

and

III

of

the

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

To survive a Rule 12(b)(6) motion to dismiss, a

plaintiff must plead plausible, not merely conceivable, facts in
support of his claim.

Hall v. St. Mary’s Seminary & Univ., 608

F.Supp.2d 679, 684 (D.Md. 2009); see also Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007).

The complaint must include

“sufficient factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face.’”
3

Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009) (citations omitted).

When considering

a motion to dismiss pursuant to Rule 12(b)(6), the Court must
“accept the well-pled allegations of the complaint as true” and
“construe the facts and reasonable inferences derived therefrom
in the light most favorable to the plaintiff.”
States, 120 F.3d 472, 474 (4th Cir. 1997).

Ibarra v. United

In reviewing a Rule

12(b)(6) motion, the court may take judicial notice of matters
of public record.

Hall v. Virginia, 385 F.3d 421, 424 n.3 (4th

Cir. 2004).
2. Analysis
The Court will grant Defendants’ Motion to Dismiss Count II
because the Baers fail to plead an element of their fraudulent
misrepresentation claim, but will deny the Motion as to Count
III because the Baers have pled a plausible claim for negligent
misrepresentation.
As a preliminary matter, the two counts at issue in this
Motion involve an alleged misrepresentation, be it fraudulent or
negligent, regarding the Baers’ need to vacate their home in
April

2009.

whether
time

Defendants

foreclosure

they

argument,

were

proceedings

required

Defendants

primarily

to

focus

were

a

the

actually

vacate.

provided

on

state

In

question

pending

support

court

at

of
the

of

their

docket

sheet

indicating that the substitute trustees instituted foreclosure
proceedings against the Baers on July 15, 2008.
4

(See Defs.’

Mot. to Dismiss Ex. 1, Tab C, at 49, 51,3 ECF No. 9-2).

Although

this document belies the Baers’ allegations regarding the lack
of foreclosure proceedings at the time they vacated their home,
it

does

not

automatically

warrant

dismissal.

The

pivotal

inquiry is whether the alleged misrepresentation regarding the
need for the Baers to vacate their home is inextricably linked
to the existence of the foreclosure proceedings.

The Court

finds that it is not.
In

their

Complaint,

the

Baers

allege

that

when

the

Defendants informed them that they had to vacate the premises,
they “were told by the Defendants that they did not have the
option

of

remaining

in

the

home,

despite

the

fact

that

the

Plaintiffs still owned the home, and foreclosure or other legal
proceedings had not been initiated.”
II

and

III,

the

Baers

make

it

(Compl. ¶ 9).
clear

that

In Counts

the

alleged

misrepresentation was that they had to vacate the home, not that
foreclosure proceedings had been initiated.

(Compl. ¶¶ 18, 25).

Furthermore, the question of whether Defendants’ instruction to
vacate

was

a

misrepresentation

still

remains

regardless

of

whether foreclosure proceedings were indeed initiated as it is
not axiomatic that the initiation of a foreclosure proceeding
immediately

compels

an

owner

to

vacate

his

or

her

home.

Therefore, the existence of the foreclosure proceeding at the
3

All citations to the record reflect CM ECF pagination.
5

time the Baers vacated their home is not dispositive to this
Motion.
a.

Fraudulent Misrepresentation (Count II)

The Court will grant Defendants’ Motion to Dismiss Count II
because the Baers fail to allege a plausible intent to deceive
under Rule 8 of the Federal Rules of Civil Procedure.
To
Baers

successfully
must

show

allege

that

fraudulent

(1)

the

misrepresentation,

defendants

made

a

the

false

representation to the plaintiffs; (2) its falsity was either
known to the defendants or that the representation was made with
reckless indifference to its truth; (3) the misrepresentation
was made for the purpose of defrauding the plaintiffs; (4) the
plaintiffs relied on the misrepresentation and had the right to
rely on it; and (5) the plaintiffs suffered compensable injury
resulting from the misrepresentation.
A.2d 660, 668 (Md. 1994).
to

allege

Complaint.
their

the

fraudulent

Defendants
are

Defendants argue that the Baers fail

element,

intent

to

deceive,

in

their

Defendants also argue that the Baers fail to plead

particularity,

intent

third

Nails v. S&R, Inc., 639

aver

misrepresentation

as

required

that

conclusory,

the
and

by

Baers’
that

claim

Rule

with

9(b).

allegations
they

the

fail

requisite

Specifically,
regarding
to

their

“identify

who

supposedly made the misleading statement(s) or what Defendants

6

purportedly obtained by defrauding Plaintiffs.”
Dismiss 5).

(Defs.’ Mot. to

The Court agrees.

Defendants correctly note that the Baers’ fraud claim is
subject to the heightened pleading standard of Rule 9(b), which
requires

them

to

“state

with

particularity

constituting fraud or mistake.”

the

circumstances

Under this standard, the Baers

must plead facts regarding “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.”

Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784
(4th Cir. 1999) (citation omitted).

Rule 9(b), however, permits

the Baers to plead Defendants’ intent generally as long as the
underlying facts meet the ordinary plausibility standard.

See

Fed.R.Civ.P. 9(b); Mayfield v. Nat’l Assoc. for Stock Car Auto
Racing, Inc., 674 F.3d 369, 377-78 (4th Cir. 2012).

As to

Defendants’ intent to deceive, the Baers fail to meet even the
ordinary plausibility standard inherent in Rule 8.
solely

allege

that

“Defendants’

The Baers

misrepresentation

was

intentional and made with the intent to deceive the Plaintiffs.”
(Compl. ¶ 19). These allegations are conclusory and insufficient
under Twombly and Iqbal.
As a result, Defendants’ Motion to Dismiss Count II will be
granted.

7

b.

Negligent Misrepresentation (Count III)

The Court will deny Defendants’ Motion to Dismiss Count III
because striking the Baers’ allegations regarding the initiation
of foreclosure proceedings has little bearing on the sufficiency
of the allegation.
To

successfully

plead

negligent

misrepresentation

in

Maryland a plaintiff must show five elements: (1) the defendant,
owing a duty of care to the plaintiff, negligently asserted a
false statement; (2) the defendant intended that his statement
would be acted upon by the plaintiff; (3) the defendant had
knowledge

that

the

plaintiff

would

probably

rely

on

the

statement, which, if erroneous, would cause loss or injury; (4)
the

plaintiff,

statement;

and

justifiably,
(5)

the

took

action

plaintiff

in

suffered

caused by the defendant’s negligence.

reliance

damage

on

the

proximately

Spaulding v. Wells Fargo

Bank, N.A., 714 F.3d 769, 781 (citing Golstein v. Miles, 859
A.2d

313,

332

(Md.Ct.Spec.App.

2004)

(internal

alterations

omitted)).
Defendants argue that Count III should be dismissed because
it

is

premised

upon

the

Baers’

assertions

that

foreclosure

proceedings had not been initiated at the time of the alleged
misrepresentation.
judicially

According

estopped

acknowledged

the

from

to

making

existence

of

this

the
8

Defendants,

the

allegation

foreclosure

Baers

because

are
they

proceedings

in

previous

proceedings.

As

noted

above,

however,

the

alleged

misrepresentation is not solely premised upon the pendency of
the

foreclosure

compelled

the

proceedings

proceedings,
Baers

aside,

to

the

but

vacate
Baers

upon
their

have

the

statement

home.4

adequately

that

Foreclosure
alleged

that

Defendants negligently misrepresented their need to vacate the
home.
Defendants also argue that disregarding the Baers’ claims
regarding the foreclosure proceedings “renders the allegations
in

Count

III

(Negligent

Misrepresentation)

substantially

same as those made in Count I (Negligence).”
Dismiss 9).

The Court disagrees.

the

(Defs.’ Mot. to

Count III is premised upon

the alleged misrepresentation that induced the Baers to vacate
their home and rent a residence elsewhere.

(Compl. ¶¶ 24-30).

The primary focus of Count III is Defendants’ alleged statements
to the Baers regarding their need to vacate the home.

See

Village of Cross Keys, Inc. v. U.S. Gypsum Co., 556 A.2d 1126,
1132

(Md.

1989)

(noting

that

negligent

misrepresentation

involves loss that is caused by the breach of a “duty to use due
care in obtaining and communicating information upon which that
party may reasonably be expected to rely in the conduct of his

4

Paragraph
twenty-six
specifically
states:
“[t]he
Defendants knew or should have known that the Plaintiffs were
not required to vacate their home, when foreclosure or other
legal proceedings had not yet been initiated.” (Compl. ¶ 26).
9

economic affairs . . . .” (quoting United States v. Neustadt,
366 U.S. 696, 706 (1961)).

Conversely, Count I is premised upon

the negligence the Defendants exhibited by allegedly allowing
the Baers’ home to fall into disrepair.

(See Compl. ¶¶ 12-16).

The focus of Count I is Defendants’ alleged negligent conduct.
See Cross Keys, 556 A.2d at 1132 (noting “where the plaintiff
would have a cause of action based on the underlying negligence
independent

of

the

misrepresentation,

that

cause

of

action

survives and is not merged into the later misrepresentation”).
Accordingly, Defendants’ Motion to Dismiss Count III will
be denied.
B.

Motion to Strike
Defendants

also

move

to

strike

the

Baers’

demand

for

attorneys’ fees pursuant to Rule 12(f), which enables a court to
strike from a pleading “any redundant, immaterial, impertinent,
or scandalous matter.”5
Defendants

This Motion will be granted.

correctly

note

that

Maryland

follows

the

“American rule,” which requires each party to bear its own costs
regardless

of

the

outcome.

This

rule

is

subject

to

four

exceptions: (1) the parties to a contract have an agreement that
allows

recovery;

(2)

there

is

5

a

statute

that

allows

the

The Court notes that the proper request may have been for
Defendants
to
seek
dismissal
of
the
attorneys’
fees.
Nonetheless, the Court will address the issue under a Motion to
Strike.
10

imposition

of

such

fees;

(3)

a

defendant’s

wrongful

conduct

forces a plaintiff into litigation with a third party; or (4) a
plaintiff

is

forced

to

defend

against

malicious

prosecution.

Thomas v. Gladstone, 874 A.2d 434, 437 (Md. 2005).

None of the

aforementioned exceptions apply to this case.
As

a

result,

Defendants’

Motion

to

Strike

Plaintiffs’

Demands for Attorneys’ Fees will be granted.
III. CONCLUSION
For the foregoing reasons, Defendants’ Motion to Dismiss
Counts

II

and

III,

and

to

Strike

Plaintiffs’

Demands

for

Attorneys’ Fees is GRANTED IN PART and DENIED IN PART.
Court
Strike

GRANTS

Defendants’

Plaintiffs’

Defendants’

Motion

Motion

Demands
to

for

Dismiss

to

Dismiss

Attorneys’
Count

III.

Count
Fees,
A

II
but

separate

follows.

Entered 5th day of November, 2013

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

11

The

and

to

DENIES
Order