Costley v. County Wide Home Loan et al

Filing 131

MEMORANDUM OPINION. Signed by Judge Ellen L. Hollander on 11/20/2017. (krs, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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NATHANIEL M. COSTLEY, SR. ET AL.
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v.
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BANK OF AMERICA, N.A. ET AL.
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Civil No. 13-cv-02488-ELH

MEMORANDUM OPINION
Plaintiffs Nathaniel M. Costley, Sr. (“Mr. Costley”)1 and the Estate of Mary Jane Costley
(“The Estate”) instituted suit against defendants Bank of America, N.A., Individually and as
Successor By Merger to BAC Home Loans Servicing, LP F/K/A Countrywide Home Loans
Servicing, LP (“BANA”); Nationstar Mortgage, LLC (“Nationstar”); and Green Tree Servicing,
LLC (“Green Tree”), predecessor to Dietech Financial, LLC (“Ditech”). See ECF 1.2 The
Second Amended Complaint is the operative pleading. ECF 79.3 Plaintiffs seek damages based
on claims of fraud, conversion, breach of contract, violation of the Truth In Lending Act
(“TILA”), 15 U.S.C. § 1601, et seq., and violation of the Fair Debt Collections Practices Act
(“FDCPA”), 15 U.S.C. § 1692, et seq. Jurisdiction is founded on diversity of citizenship. ECF
79, ¶ 6.

1

The Complaint does not contain a comma in the spelling of Mr. Costley’s name.
However, I shall use the spelling that appears elsewhere in the record.
2
3

On October 19, 2017, this case was reassigned from Judge Motz to me. See Docket.

Plaintiffs were self-represented when the suit was filed. However, Judge Motz
appointed pro bono counsel for plaintiffs. See ECF 23. The Court expresses its sincere gratitude
to pro bono counsel for his efforts.

BANA and Nationstar are the remaining defendants.4 They have jointly moved for
summary judgment (ECF 119), supported by a memorandum of law (ECF 119-1) (collectively,
the “Motion”) and numerous exhibits. Plaintiffs oppose the Motion (ECF 126) and have
submitted exhibits. Defendants BANA and Nationstar have replied. ECF 128.
The parties have fully briefed the issues, and no oral argument is necessary. See Local
Rules 105.6. For the reasons set forth below, I shall grant defendants’ motion.
I.

BACKGROUND

Mr. Costley resides in Westminster, Maryland. ECF 119-18 at 8. He is the grandson of
the late Mary Jane Costley (“Ms. Costley”). ECF 79, ¶ 9; ECF 119-1 at 1. Until Ms. Costley’s
death in 2009, she was the record owner of property located at 63 Charles Street in Westminster,
Maryland (the “Property”). ECF 79, ¶ 22; ECF 119-1 at 3; ECF 119-1 at 5. Prior to her death,
Ms. Costley entered into two loans with respect to this Property. These loans form the basis of
the parties’ dispute.
On September 29, 2006, Ms. Costley refinanced the existing mortgage on her property,
taking out a loan (the “First Loan”) from Ocwen Loan Servicing, LLC. ECF 79, ¶ 11; ECF 119-1
at 3. She executed a promissory note (ECF 119-2) and a deed of trust (ECF 119-3) in the amount
of $88,935.00 in connection with the First Loan. Defendants were not involved in the origination
of the First Loan. It was assigned to defendant BANA on December 30, 2011, (ECF 6-8), and
was then assigned to Nationstar on January 4, 2013. ECF 6-11.
On September 21, 2007, Ms. Costley obtained a second mortgage on her property, taking
out a loan (the “Second Loan”) from Countrywide Bank, FSB, predecessor to BANA. ECF 79, ¶
16; ECF 119-1 at 4. She executed a promissory note (ECF 119-6) and a deed of trust (ECF 1194

Upon review of the docket, I note that in May 2017, Judge Motz granted the motion for
summary judgment (ECF 118) filed by Ditech. See ECF 129 (Memorandum); ECF 130 (Order).
2

7) in the amount of $74,000.00 in connection with the Second Loan. BANA transferred the
Second Loan to Ditech in March 2011. ECF 79, ¶ 36; ECF 119-1 at 5.
Ms. Costley became ill in August 2009, at which point she asked Mr. Costley to assist her
with her finances. ECF 79, ¶ 18; ECF 119-1 at 5. Prior to that time, Mr. Costley had no
knowledge of his grandmother’s financial affairs, including the two loans. ECF 79, ¶ 19; ECF
119-1 at 5.
Ms. Costley died in December 2009. ECF 79, ¶ 22; ECF 119-1 at 5. At that point,
BANA was servicing both loans. ECF 79, ¶ 21; ECF 119-1 at 5. Notably, Ms. Costley had not
kept current with payments on the loans prior to her death. ECF 79, ¶¶ 20, 26; ECF 119-1 at 5.
BANA informed Mr. Costley that the value of the Property was less than the amount owed on
the two loans. ECF 79, ¶¶ 26, 28; ECF 119-1 at 6. Nevertheless, Mr. Costley voluntarily moved
into the Property in February 2010 (ECF 79, ¶ 30; ECF 119-1 at 5), and The Estate deeded the
Property to him on May 4, 2010. ECF 6-7.
In November 2009, shortly after Mr. Costley was made aware of his grandmother’s
financial situation and shortly before her death, Mr. Costley began an attempt to modify both
loans. ECF 79, ¶ 21; ECF 119-1 at 6. This attempt continued in the months after the death of
Ms. Costley. ECF 79, ¶ 25; ECF 119-1 at 6. Mr. Costley claims that at some point during those
conversations BANA orally promised to modify or refinance the loans if he complied with
certain conditions, and so he proceeded to comply with those conditions. ECF 79, ¶¶ 28-30; ECF
119-1 at 6. Mr. Costley’s own affidavit (ECF 126-3) is the only evidence that such an oral
agreement existed or that he complied with the terms of that agreement. Id. at 6.
In January 2011, Mr. Costley submitted a Home Affordable Modification Program
(“HAMP”) Loan Modification Agreement to BANA. ECF 119-16. BANA refused to sign the

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agreement, however. ECF 47-7. Instead, it offered to allow Mr. Costley to personally assume
the loans and then reapply for loan modifications himself after assuming personal liability. ECF
119-1 at 6; ECF 119-18 at 15, 18-19. Mr. Costley refused to assume the loans. Id.
Mr. Costley claims that, after BANA refused to sign the HAMP Loan Modification
Agreement, he began to look more closely at the underlying loan documents. ECF 119-18 at 3233.

At that point, he says, he became suspicious about the legitimacy of the loans. Id.

Specifically, he claims that he found an unsigned settlement sheet regarding the Second Loan,
(ECF 119-18 at 14), realized that Ms. Costley was supposed to have received $30,744.82
pursuant to a Settlement Statement regarding the First Loan, (ECF 79, ¶¶ 67-68), and realized
that Ms. Costley was supposed to have received $72,479.30 pursuant to a Settlement Statement
regarding the Second Loan. ECF 79, ¶¶ 69-71. The record reflects that Ms. Costley made many
payments on both loans (ECF 119-5; ECF 119-9), and includes the settlement statements for
both loans. ECF 119-4; ECF 119-8. The only evidence in the record that Ms. Costley did not
receive the payments she was supposed to have obtained pursuant to these settlement statements
is Mr. Costley’s own speculative assertions. ECF 119-18 at 22; ECF 126-3, ¶ 11.
In March 2011, after the Second Loan was transferred to Ditech, Mr. Costley claims that
he began receiving daily harassing phone calls, telling him to pay the money owed on the two
loans. ECF 126-4, ¶ 10. He claims that these calls continued until June 2013. ECF 126-4, ¶ 16.
On August 6, 2013, Mr. Costley was named the Personal Representative of Ms. Costley’s
Estate. ECF 126-4, ¶ 19. On August 26, 2013, faced with foreclosure and removal from the
Property (ECF 119-1 at 7; ECF 126-4, ¶ 17), Mr. Costley filed the initial Complaint in this case,
without counsel. ECF 1. After multiple amendments to the Complaint and discovery, the
defendants filed motions for summary judgment. ECF 118; ECF 119. As noted, this court

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entered summary judgment for Ditech on May 9, 2017. ECF 130. Defendants BANA and
Nationstar’s joint motion for summary judgment is pending.
II.

Standard Of Review

Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment is
appropriate only “if the movant shows that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” See Celotex Corp. v. Catrett, 477 U.S.
317, 322–24 (1986); see also Iraq Middle Mkt. Dev. Found. v. Harmoosh, 848 F.3d 235, 238
(4th Cir. 2017) (“A court can grant summary judgment only if, viewing the evidence in the light
most favorable to the non-moving party, the case presents no genuine issues of material fact and
the moving party demonstrates entitlement to judgment as a matter of law.”). The non-moving
party must demonstrate that there are disputes of material fact so as to preclude the award of
summary judgment as a matter of law. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp.,
475 U.S. 574, 585–86 (1986).
The Supreme Court has clarified that not every factual dispute will defeat the motion.
“By its very terms, this standard provides that the mere existence of some alleged factual dispute
between the parties will not defeat an otherwise properly supported motion for summary
judgment; the requirement is that there be no genuine issue of material fact.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986) (emphasis in original). A fact is “material” if
it “might affect the outcome of the suit under the governing law.” Id. at 248. There is a genuine
issue as to material fact “if the evidence is such that a reasonable jury could return a verdict for
the nonmoving party.” Id.; see Raynor v. Pugh, 817 F.3d 123, 130 (4th Cir. 2016).
“A party opposing a properly supported motion for summary judgment ‘may not rest
upon the mere allegations or denials of [its] pleadings,’ but rather must ‘set forth specific facts

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showing that there is a genuine issue for trial.’” Bouchat v. Baltimore Ravens Football Club,
Inc., 346 F.3d 514, 522 (4th Cir. 2003) (quoting former Fed. R. Civ. P. 56(e)), cert. denied, 514
U.S. 1042 (2004); see also Celotex, 477 U.S. at 322–24. In resolving a summary judgment
motion, a court must view all of the facts, including reasonable inferences to be drawn from
them, in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. Ltd., 475
U.S. at 587; accord Roland v. United States Citizenship & Immigration Servs., 850 F.3d 625, 628
(4th Cir. 2017); FDIC v. Cashion, 720 F.3d 169, 173 (4th Cir. 2013).
The judge's “function” in reviewing a motion for summary judgment is not “to weigh the
evidence and determine the truth of the matter but to determine whether there is a genuine issue
for trial.” Anderson, 477 U.S. at 249; accord Guessous v. Fairview Prop. Inv., LLC, 828 F.3d
208, 216 (4th Cir 2016). Thus, in considering a summary judgment motion, the court may not
make credibility determinations. Jacobs v. N.C. Administrative Office of the Courts, 780 F.3d
562, 569 (4th Cir. 2015); Mercantile Peninsula Bank v. French, 499 F.3d 345, 352 (4th Cir.
2007). Moreover, in the face of conflicting evidence, such as competing affidavits or deposition
testimony, summary judgment ordinarily is not appropriate, because it is the function of the
factfinder to resolve factual disputes, including matters of witness credibility. See Black &
Decker Corp. v. United States, 436 F.3d 431, 442 (4th Cir. 2006); Dennis v. Columbia Colleton
Med. Ctr., Inc., 290 F.3d 639, 644–45 (4th Cir. 2002).
However, to defeat summary judgment, conflicting evidence must give rise to
a genuine dispute of material fact. Anderson, 477 U.S. at 247–48. If “the evidence is such that a
reasonable jury could return a verdict for the nonmoving party,” then a dispute of material fact
precludes summary judgment. Id. at 248; see Sharif v. United Airlines, Inc., 841 F.3d 199, 204
(4th Cir. 2016). Conversely, summary judgment is appropriate if the evidence “is so one-sided

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that one party must prevail as a matter of law.” Anderson, 477 U.S. at 252. And, “the mere
existence of a scintilla of evidence in support of the [movant's] position will be insufficient; there
must be evidence on which the jury could reasonably find for the [movant].” Id.
III. Discussion
A.

Count 1 – Predatory Lending Under the Truth in Lending Act
Count 1 is lodged only against BANA. ECF 79 at 9. Plaintiffs allege in Count I that

BANA violated 15 U.S.C § 1639(h), a provision of TILA, when it extended loans to Ms. Costley
that it knew, based upon her income, she would never be able to pay off. Id., ¶¶ 57-63. Mr.
Costley lacks standing to bring this TILA claim and The Estate is time barred from bringing it.
Therefore, defendants are entitled to summary judgment with respect to Count I.
Mr. Costley has no standing to bring this TILA claim. Under 15 U.S.C. §1640(a), “any
creditor who fails to comply with any requirement imposed under this part . . . with respect to
any person is liable to such person . . . .” (emphasis added). Other district courts have correctly
interpreted this provision to mean that “TILA confers a statutory ‘right of action only on a
borrower in a suit against a borrower’s creditor.’” Mortensen v. Home Loan Center, Inc., 2009
WL 113483, at *2 (D. Ariz. Jan. 16, 2009) (quoting Talley v. Deutsche Bank Trust Co., 2008 WL
4606302, at *2 (D.N.J. Oct. 15, 2008)). It is undisputed that Mr. Costley was not the borrower in
regard to either loan. ECF 119-2; ECF 119-6. Plaintiffs seemingly acknowledge this, as in their
Opposition they have not argued that Mr. Costley has standing. Instead, they point out that The
Estate has standing because Ms. Costley was the borrower. ECF 126-2 at 2.
Although plaintiffs are correct that The Estate has standing to bring the TILA claim, it is
time barred from doing so. According to 15 U.S.C. § 1640(e), “any action to enforce a violation
of section 1639 . . . of this title may be brought in any United States district court, or in any other

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court of competent jurisdiction, before the end of the 3-year period beginning on the date of the
occurrence of the violation.” The loans in question originated on September 29, 2006 and
September 21, 2007. ECF 119-2; ECF 119-6. Therefore, the three-year statute of limitations
expired in 2010, at the latest, well before The Estate filed this lawsuit in August 2013.
Because Mr. Costley lacks standing to bring this TILA claim and because The Estate is
time barred from bringing it, I shall grant summary judgment to BANA with respect to Count I.
B.

Count II - Fraud
Count II is lodged only against BANA. ECF 79 at 9. Plaintiffs allege in Count II that

BANA made false representations to Ms. Costley, including representations that she would
receive disbursements of funds pursuant to the settlements of both loans and a representation that
she qualified for the Second Loan when she in fact did not. ECF 79, ¶¶ 64-77. Plaintiffs are
time barred from bringing this claim.
In Maryland, a three-year statute of limitations generally applies to civil claims. See Md.
Code, § 5-101 of the Courts and Judicial Proceedings Article (“C.J.”).

The alleged

misrepresentations occurred in 2006 and 2007 (ECF 79, ¶¶ 62-63), but plaintiffs did not file their
initial complaint until August 2013. ECF 1.
Plaintiffs argue that their claim is not time-barred because the three-year statute of
limitations did not begin to run until February 2012, when Mr. Costley uncovered an unsigned
Settlement Statement regarding the Second Loan, at which point plaintiffs were for the first time
on notice that they had been defrauded. ECF 126-2 at 4. Even if Mr. Costley uncovered such a
statement on that day, this argument fails. Indeed, Ms. Costley was on inquiry notice—if not
express notice—of any fraud when representations allegedly made to her were not met.

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The discovery doctrine, from which plaintiffs seek cover, is long established in
Maryland. It provides:
Before an action can accrue . . . a plaintiff must have notice of the nature and
cause of his or her injury. There are two types of notice: actual and constructive.
Actual notice is either express or implied . . . Implied notice, also known as
inquiry notice, is notice implied from knowledge of the circumstances which
ought to have put a person of ordinary prudence on inquiry (thus, charging the
individual) with notice of all facts which such an investigation would in all
probability have disclosed if it had been properly pursued.
Windesheim v. Larocca, 443 Md. 312, 327, 116 A.3d 954, 962 (2015) (internal citations and
quotations omitted). See also, e.g., Frederick Road Ltd. P’ship v. Brown & Sturm, 360 Md. 76,
95-96, 756 A.2d 963, 973 (2000); Poffenberger v . Risser, 290 Md. 631, 636, 431 A.2d 677, 680
(1981).
If Ms. Costley relied on representations made in 2006 and 2007 that she was to receive
disbursements of funds, a person of ordinary prudence in her position would have investigated
whether she had received those funds in one form or another. Therefore, she was on inquiry
notice of any failure to comply with those representations from the moment such failure
occurred. Moreover, Pamela Allen, the Administrator of The Estate, had a duty to account for the
assets in The Estate upon Ms. Costley’s death. See Md. Code, Estates & Trust Article, §§ 7-201
et seq. Therefore, plaintiffs were on notice of any fraud regarding the origination of the loans
well before August 2010. Accordingly, the three-year statute of limitations ran well before
plaintiffs filed this lawsuit in August 2013. Because this claim is time barred, BANA is entitled
to summary judgment with respect to Count II.
C.

Count III – Fraud
Count III is lodged only against BANA. ECF 79 at 11. Plaintiffs allege in Count III that

BANA made false representations to Mr. Costley between November 2009 and January 2010

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when it suggested to him that if he engaged in certain conduct it would modify or refinance the
loans. ECF 79, ¶¶ 78-86. Mr. Costley has standing to bring this claim and this claim is not time
barred. However, plaintiffs abandoned this clam by failing to address defendants’ arguments for
summary judgment in their Opposition. See Williams v. Silver Spring Volunteer Fire Dep’t., 86
F. Supp. 3d 389, 419 (D. Md. 2015); Ferdinand-Davenport v. Children's Guild, 742 F. Supp. 2d
772, 777 (D. Md. 2010); Mentch v. Eastern Sav. Bank, FSB, 949 F. Supp. 1236, 1247 (D. Md.
1997).
Specifically, plaintiffs fail to counter defendants’ argument that “the undisputed facts
demonstrate that BANA made no false representations to Mr. Costley,” and that “the undisputed
evidence shows only that Mr. Costley attempted to gain a loan modification and that his request
was denied.” ECF 119-1 at 27. Beyond Mr. Costley’s bald assertion, there is no evidence of a
promise by BANA, and no legal basis to conclude that the alleged promise is legally
enforceable.5
In any event, in In re Lisier, PM-10-693, 2010 WL 4941475 (Bankr. D. Md. Nov. 24,
2010), the court pointed to “the legion of other courts that have found no private right of action
under HAMP.” Id. at *2.
I shall grant summary judgment to BANA with respect to Count III.
D.

Count IV – Civil Theft/Conversion
Count IV is lodged only against BANA. ECF 79 at 12. Plaintiffs allege in Count IV that

BANA committed civil theft or conversion of Ms. Costley’s funds by failing either to (1)
distribute directly to her the sum of $30,774.82 that she was allegedly owed in connection with
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Contrary to BANA’s assertions (ECF 119-1 at 16-17), the claim is not time barred.
BANA points out that the claim arose no later than February 2011. Id. at 17. Given that suit was
filed in Augsut 2013, BANA’s limitations argument lacks merit.
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the First Loan or (2) apply that amount to the Second Loan to reduce the balance of the First
Loan. ECF 79, ¶¶ 87-92. Defendants are entitled to summary judgment with respect to Count
IV for precisely the same reason they are entitled to summary judgment with respect to Count II:
their claim is time barred.
As noted, under C.J. § 5-101 there is a three-year statute of limitations for civil claims in
Maryland, including conversion. See Advance Dental Care, Inc. v. Suntrust Bank, 906 F. Supp.
2d 442 (D. Md. 2012). Although Ms. Costley was on inquiry notice of any conversion of funds
from the time it allegedly occurred in 2007, plaintiffs did not file the initial Complaint until
August 2013. ECF 1.
Plaintiffs argue that Ms. Costley was not on notice of the conversion when it occurred
because she was unsure whether the proceeds from the Second Loan were to be applied to pay
down or pay off the First Loan. ECF 126-2 at 4. As the signatory to these loans, Ms. Costley
had every opportunity to inquire further in order to resolve any confusion about what form her
payment was going to take. Moreover, the Administrator of The Estate had a duty to account for
the assets in The Estate upon Ms. Costley’s death. For these reasons, plaintiffs were on notice of
any civil theft or conversion of funds owed to Ms. Costley well before August 2010. Therefore,
the three-year statute of limitations expired before plaintiffs filed this lawsuit in August 2013.
I shall grant summary judgment to BANA with respect to Count IV.
E.

Count V – Violation of the Fair Debt Collection Practices Act
Count V is lodged against all defendants. ECF 79 at 13. Plaintiffs allege in Count V that

defendants violated the FDCPA when Mr. Costley began receiving harassing telephone calls,
multiple times a day, beginning in March 2011 and continuing through June 2013, pressuring
him to pay off both loans. ECF 79, ¶¶ 93-96.

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The claim is time-barred. Under the Fair Debt Collection Practices Act a one-year
limitations period applies for commencing a claim. See 15 U.S.C. § 1692k(d). “The limitations
period for FDPCA claims commences from the date of the first violation, and subsequent
violations of the same type do not restart the limitations period.” Bey v. Shapiro Brown & Alt,
LLP, 997 F. Supp. 2d 310, 316 (D. Md. 2014). See also McGhee v. JP Morgan Chase Bank,
N.A., No. DKC-12-3072, 2013 WL 4495797, at *7 n. 10 (D. Md. Aug. 20, 2013); Alston v.
Cavalry Portfolio Servs., LLC, No. AW-12-3589, 2013 WL 665036, at *3 (D. Md. Feb. 22,
2013); Fontell v. Hassett, 870 F. Supp. 2d 394, 404 (D. Md. 2012); Martin v. Sessoms & Rogers,
P.A., No. 5:09-CV-480-D, 2010 WL 3200015, at *3-4 (E.D.N.C. Aug. 12, 2010).
Plaintiffs allege that the harassing telephone calls began “in March 2011” (ECF 79, ¶ 94),
which means the one-year statute of limitations ran before plaintiffs filed this lawsuit in August
2013. Accordingly, I shall grant defendants summary judgment to defendants with respect to
Count V.
F.

Count VI – Breach of Contract
Count VI is directed to BANA and Nationstar. ECF 79 at 14. Plaintiffs allege in Count

VI that BANA and Nationstar breached an oral contract with Mr. Costley when they failed to
modify or refinance loans after promising to do so if Mr. Costley engaged in certain conduct.
ECF 79, ¶¶ 97-115. Defendants are entitled to summary judgment with respect to this claim
because plaintiffs have created no dispute as to the existence of a contract.
The three elements required to prove the existence of a contract under Maryland law are
“mutual assent (offer and acceptance), an agreement definite in its terms, and sufficient
consideration.” Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769, 778 (4th Cir. 2013). See also
CTI/DC, Inc. v. Selective Ins. Co. of Am., 392 F.3d 114, 123 (4th Cir. 2004). Putting to one side

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issues regarding mutual assent and consideration, it is clear that plaintiffs have not created a
genuine dispute as to whether defendants and Mr. Costley entered into “an agreement definite in
its terms.”
When asked at his deposition to identify the terms of the contract, Mr. Costley
acknowledged that he was never provided any terms in writing and claimed that he was told over
the phone that defendants would “work it out.” ECF 119-18 at 20-21. Defendants may have
made oral representations to Mr. Costley suggesting a course of conduct he should pursue if he
wished to improve his chances of one day obtaining modification of the loans. However, the
record makes clear that there was no agreement between the parties sufficiently “definite in its
terms” to be considered a contract.
Because plaintiffs have not offered evidence that there was, in fact, a contract, their claim
for breach of contract necessarily fails. Accordingly, I shall grant summary judgment to
defendants with respect to Count VI.
IV.

Conclusion

For the foregoing reasons, I shall grant defendants’ motion for summary judgment. An
Order follows.

November 20, 2017
Date

/s/
Ellen L. Hollander
United States District Judge

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