Wheatley et al v. Cohn et al

Filing 29

MEMORANDUM OPINION. Signed by Judge George Levi Russell, III on 5/30/14. (c/m)(hmls, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
ELMIRA WHEATLEY, et al.,

:

Plaintiffs,

:

v.

:

EDWARD S. COHN, et al.,

:

Defendants.

Civil Action No. GLR-13-3850

:
MEMORANDUM OPINION

Pending

before

the

Court

are

Defendants

Edward

S.

Cohn,

Stephen N. Goldberg, Richard E. Solomon, Richard J. Rogers and
Randall J. Rolls’s (“Substitute Trustees”) Motion to Dismiss (ECF
No. 11); Defendant St. Fin CORP’s ("Star Financial”) Motion to
Dismiss (ECF No. 14); Defendants Flagstar Bank, FSB (“Flagstar”),
and

Mortgage

Electronic

Registration

Systems,

Inc.’s

(“MERS”)

Motion to Dismiss (ECF No. 20); and Plaintiffs Brett and Elmira
Wheatley’s

(the

“Wheatleys)

Objection (ECF No. 24).

Motion

for

Leave

to

File

Belated

The Motions are ripe for disposition.

The Court has reviewed the motion papers submitted by the parties
and finds no hearing is necessary.
2011).

See Local Rule 105.6 (D.Md.

For the reasons outlined below, the Wheatleys’ Motion for

Leave to File Belated Objection will be denied and the Defendants’
Motions to Dismiss will be granted.
The

Wheatleys

Defendants.

allege

seven

causes

of

action

against

Five counts, Wrongful Foreclosure (Count I), Unjust

Enrichment (Count II), Fraudulent Misrepresentation (Count III),

untitled

Count

Supervision

IV

(collectively
VII)

(Count

“Fraud
fraud

allege

Counts”),
on

the

and

basis

Negligent
of

forged

documents allegedly used by the Substitute Trustees to establish
standing in the Foreclosure Proceeding.

Count V alleges Violations

of the Fair Debt Collections Practices Act (“FDCPA”), 15 U.S.C. §
1692

(2012),

on

the

basis

of

the

Defendants

alleged

misrepresentation of the character and legal status of the debt and
unfair and deceptive means and attempts to collect the debt.

Count

VI alleges violations of the Real Estate Settlement Procedures Act
(“RESPA”), 12 U.S.C. § 2601, et seq. (2012), alleging that the
Defendants
transfers

failed
of

to

the

timely

inform

mortgage.

The

them

of

Wheatleys

any
also

assignments
seek

an

or

Order

enjoining, or, in the alternative, setting aside any foreclosure
sale of the Property, granting declaratory relief finding the Deed
of

Trust

punitive

null
damages

foreclosure

and

because

proceedings

fraudulent . . . .”
The

void,

Substitute

and
“the

by

awarding

actual,

documents

the

that

Defendants

statutory,

were

were

used

and

in

invalid[

the
and]

(Compl. at 4, ECF No. 2).
Trustees

filed

their

Motion

to

Dismiss

on

December 27, 2013, Star Financial filed its Motion to Dismiss on
January 21, 2014, and Flagstar and MERS collectively filed their
Motion to Dismiss on January 27, 2014.

As a courtesy to the

Wheatleys, the Clerk’s office issued a Rule 12/56 Letter after each
Motion

to

respond.

Dismiss

was

Nevertheless,

filed,
the

advising

Wheatleys
2

them
failed

of
to

their

duty

respond.

to
On

February 21, 2014, Flagstar and MERS collectively filed a Reply in
support of their Motion to Dismiss noting the Wheatleys failure to
respond and requesting an order granting their Motion.
23).

(ECF No.

Fourteen days later, on March 7, 2014, the Wheatleys filed a

Motion

for

Leave

to

File

Belated

Objection

together

with

an

Objection to Flagstar and MERS’s Motions to Dismiss.
I. BACKGROUND
The Wheatleys executed a Promissory Note and Deed of Trust
with Star Financial on December 22, 2011, to purchase real property
at

2810

Seasons

Way,

Annapolis,

Maryland

20783(“the

Property”).

The Note provided that Star Financial could transfer the Note, and
that

anyone

who

obtained

the

Note

by

transfer

was

receive payments under the Note as the Note Holder.

entitled

(Flagstar and

MERS’s Mot. to Dismiss Ex. A [“Promissory Note”], ECF No. 20-2).
copy

of

the

Note

evidences

endorsements

by

Star

to

Financial

A
and

Flagstar, making the Note payable to Flagstar as the Note Holder.
(Id.).

The Deed of Trust recognizes Star Financial as the original

lender but also identifies MERS “as nominee for Lender and Lender’s
successors and assigns.”

(Compl. Ex. A, at 1, ECF No. 2-2).

On October 3, 2012, the Substitute Trustees initiated state
foreclosure proceedings against the Property in the Circuit Court
for

Anne

Arundel

County,

Maryland.

As

reflected

in

the

state

foreclosure docket attached to the Substitute Trustees’ Motion, a
foreclosure sale took place on May 28, 2013, and the state issued a
final order ratifying the sale on October 10, 2013 (“Ratification
3

Order”).

On September 12, 2013, the Wheatleys filed the instant

Complaint, in the Circuit Court for Anne Arundel County, Maryland.
On December 20, 2013, Flagstar and MERS removed the action to this
Court on the basis of federal question jurisdiction, 28 U.S.C. §
1331 (2012), because the Complaint alleges violations the FDCPA and
RESPA.

By the instant motions, Defendants seek dismissal of all

claims against them pursuant to Federal Rule of Civil Procedure
12(b)(6).
II. DISCUSSION
A. Motion for Leave to File Belated Objection
As a preliminary matter, the Wheatleys failed to file a timely
response to the instant motions and seek leave to file a belated
opposition only to Flagstar and MERS’s Motion to Dismiss.

The

Wheatleys assert that they did not receive notice of the Motion to
Dismiss or the Court’s Rule 12/56 letters, and only became aware of
their duty to reply upon receipt of Flagstar and MERS’s Reply.
Notably, Flagstar and MERS’s Motion to Dismiss was served on the
Wheatleys
Court’s

by

Rule

Maryland.

mail
12/56

at

a

mailing

Letter

was

address

mailed

to

in

Florida,

while

the

a

mailing

address

in

In any event, the Wheatleys ultimately received a copy

of Flagstar and MERS’s Reply which was served on them by mail at
the same Florida address at which the Motion to Dismiss was served.
Further, the docket does not reflect that the Wheatleys ever filed
a notice of change of address, as required by the Local Rules of
this Court.

See Local Rule 102.1(b)(iii) (D.Md. 2011) (“Self4

represented litigants must file with the Clerk in every case which
they have pending a statement of their current address where caserelated papers may be served. This obligation is continuing . . .
.”).
While Federal Rule of Civil Procedure 6(b)(1)(B) gives the
Court discretion to grant a reprieve to out-of-time filings that
were delayed by “excusable neglect,” the circumstances here do not
warrant an extension.

Any delay in the Wheatleys receipt of the

Motion to Dismiss was due to their failure to comply with the
requirement to keep the Court apprised of their current address.
The fact that the Wheatleys are self-represented does not excuse
their non-compliance because the rule is specifically directed to
self-represented litigants.
Charlotte,
(W.D.N.C.

No.
Aug.

See Dancy v. Univ. of N. Carolina at

3:08-CV-166-RJC-DCK,
3,

2009)

(“Although

2009
pro

se

WL

2424039,

litigants

at

are

*2

given

liberal treatment by courts, even pro se litigants are expected to
comply with time requirements and other procedural rules ‘without
which

effective

judicial

administration

would

be

impossible.’”

(quoting Ballard v. Carlson, 882 F.2d 93, 96 (4th Cir. 1989))).
Accordingly,

the

Wheatleys

Motion

for

Leave

to

File

Belated

Objection will be denied, and the Defendants’ Motions to Dismiss
will be considered unopposed.

Even though the Defendants’ Motions

to Dismiss are unopposed, the Court must review the motion papers
to ensure that dismissal is proper.

Stevenson v. City of Seat

Pleasant, Md., 743 F.3d 411, 416 n.3 (4th Cir. 2014).
5

B. Motions to Dismiss

1.

Standard of Review

To survive a Rule 12(b)(6) motion, the complaint must allege
facts that, when accepted as true, “state a claim to relief that is
plausible on its face.”
(2009)

(quoting

Bell

Ashcroft v. Iqbal, 556 U.S. 662, 678

Atl.

Corp.

v.

Twombly,

(2007)) (internal quotation marks omitted).

550

U.S.

544,

570

A claim is plausible

on its face when “the plaintiff pleads factual content that allows
the Court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.”
at 556).

Id. (citing Twombly, 550 U.S.

Legal conclusions or conclusory statements do not suffice

and are not entitled to the assumption of truth.
Twombly, 550 U.S. at 555).

Id. (citing

Thus, the Court “must determine whether

it is plausible that the factual allegations in the complaint are
enough to raise a right to relief above the speculative level.”
Monroe v. City of Charlottesville, 579 F.3d 380, 386 (4th Cir.
2009) (quoting Andrew v. Clark, 561 F.3d 261, 266 (4th Cir. 2009))
(internal quotation marks omitted).
In determining whether to dismiss, the Court must examine the
complaint

as

a

whole,

consider

the

factual

allegations

in

the

complaint as true, and construe the factual allegations in the
light most favorable to the plaintiff.

Albright v. Oliver, 510

U.S. 266, 268 (1994); Lambeth v. Bd. of Comm’rs of Davidson Cnty.,
407

F.3d

266,

268

(4th

Cir.

2005).
6

The

Court,

however,

may

consider documents integral to, or specifically referenced by, the
complaint
judgment.

without

the

motions

into

ones

for

summary

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S.

308, 322 (2007).
when

converting

ruling

on

It may also consider public real estate records
a

motion

to

dismiss.

Terry

v.

Mortg.

Elec.

Registration Sys., Inc., No. 8:13–cv–00773–AW, 2013 WL 1832376, at
*2 n.1 (D.Md. Apr. 30, 2013).
Pro se pleadings are liberally construed and held to a less
stringent standard than pleadings drafted by lawyers.

Erickson v.

Pardus, 551 U.S. 89, 94 (2007) (quoting Estelle v. Gamble, 429 U.S.
97, 106 (1976)); accord Brown v. N.C. Dep’t of Corr., 612 F.3d 720,
722 (4th Cir. 2010).

Pro se complaints are entitled to special

care to determine whether any possible set of facts would entitle
the plaintiff to relief.

Hughes v. Rowe, 449 U.S. 5, 9–10 (1980).

But even a pro se complaint must be dismissed if it does not allege
“a plausible claim for relief.”

Forquer v. Schlee, No. RDB-12-969,

2012 WL 6087491, at *3 (D.Md. Dec. 4, 2012) (citation and internal
quotation marks omitted).
the

work

of

an

“While pro se complaints may represent

untutored

hand

requiring

special

judicial

solicitude, a district court is not required to recognize obscure
or extravagant claims defying the most concerted efforts to unravel
them.”

Weller v. Dep’t of Soc. Servs. for the City of Balt., 901

F.2d 387, 391 (4th Cir. 1990) (quoting Beaudett v. City of Hampton,
775 F.2d 1274, 1277 (4th Cir. 1985)) (internal quotation marks
omitted).
7

2. Analysis
a.
Based
foreclosure

Res Judicata and Collateral Estoppel
upon

the

proceeding

Wheatleys’
against

participation
the

in

Property

the

state

(“Foreclosure

Proceeding”) and upon the Ratification Order, Defendants assert the
instant claims alleging wrongful foreclosure of the property based
upon lack of standing by the Substitute Trustees are barred by res
judicata and collateral estoppel.

Under Maryland law, a lawsuit is

barred by res judicata when: (1) the two actions involve either the
same parties or persons in privity with those parties; (2) the
claim presented is either identical to, or is such that it could
have been resolved, in the earlier dispute; and (3) there was a
prior final adjudication on the merits.

McCreary v. Benificial

Mortg. Co. of Md., No. AW-11-CV-01674, 2011 WL 4985437 (D.Md. Oct.
18,

2011).

Distinct

collateral estoppel.

from

res

judicata

is

the

doctrine

of

When an issue of law or fact has already been

determined by a valid and final judgment, collateral estoppel bars
a party from relitigating the issue in a subsequent action between
the same parties.

Cosby v. Dep’t of Human Res., 42 A.3d 596, 602

(Md. 2012) (quoting Murray Int’l Freight Corp. v. Graham, 555 A.2d
502, 504 (Md. 1989)).

A lawsuit is barred by collateral estoppel

when: (1) the issue decided in the prior action is identical with
the one presented in the action in question; (2) there was a final
judgment on the merits; (3) the two actions involve either the same
parties or persons in privity with those parties; and (4) the party
8

against whom the plea is asserted was given a fair opportunity to
be heard on the issue.

Id. (citing Colandrea v. Wilde Lake Cmty.

Ass’n, Inc., 761 A.2d 899, 909 (Md. 2000)).
First, the parties in the Foreclosure Proceeding included the
Substitute

Trustees,

nominee, MERS.

who

acted

on

behalf

of

Flagstar

and

its

Second, “the law is firmly established in Maryland

that the final ratification of the sale of property in foreclosure
proceedings is res judicata as to the validity of such sale, except
in case of fraud or illegality, and hence its regularity cannot be
attacked in collateral proceedings.”

Ed Jacobsen, Jr., Inc. v.

Barrick, 250 A.2d 646, 648 (Md. 1969) (quoting

Bachrach v. Wash.

United Co-op., 29 A.2d 822, 825 (Md. 1943)) (internal quotation
marks omitted).1
As reflected in the state foreclosure docket, the Wheatleys
actively participated in the Foreclosure Proceeding.
17,

2012,

the

Wheatleys

filed

a

Motion

to

Stay

On December

and/or

Dismiss

Foreclosure Proceeding demanding that the Substitute Trustees prove
legal standing.

(See Flagstar and MERS’s Mot. to Dismiss Ex. E,

ECF No. 20-6); (see also Flagstar and MERS’s Mot. to Dismiss Ex. D
[“State Foreclosure Docket”], at 5, ECF No. 20-5).
summarily denied on January 24, 2013.
6).

The Motion was

(State Foreclosure Docket at

On May 6, 2013, the Wheatleys filed an Amended Motion for an

1
Under Maryland Rule 2-535(b) upon a “motion of any party
filed at any time, the court may exercise revisory power and
control over the judgment in case of fraud, mistake, or
irregularity.” MD.R. 2-535(b).

9

Emergency Temporary Restraining Order (“TRO”) and Order to Show
Cause why a Preliminary Injunction Should not Issue.

(See State

Foreclosure Docket at 7).

In their motion for injunctive relief,

the

that

Wheatleys

again

argue

the

Substitute

standing to foreclose on the Property.
Mot. Dismiss Ex. 4, ECF No. 11-4).
on May 28, 2013.
2013,

the

(Id.).

Amended

The

Trustees

lacked

(See Substitute Trustees’

The foreclosure sale took place

(State Foreclosure Docket at 7), and on June 4,
Motion

Circuit

for

Court

an

for

Emergency
Anne

Ratification Order on October 10, 2013.

TRO

Arundel

was

found

County

(Id. at 9).

Moot.

issued

the

The Wheatleys

have not appealed or otherwise moved to set aside the Ratification
Order.
Thus, to the extent the Wheatleys are seeking to overturn the
foreclosure or to escape from its effect, those claims are barred
by res judicata as to the Substitute Trustees, Flagstar, and MERS.
To the extent the Wheatleys rely on the Substitute Trustees’s lack
of standing to establish their fraud and other lender liability
claims,

those

claims

are

also

barred

against

the

Substitute

Trustees, Flagstar, and MERS by collateral estoppel because the
Anne

Arundel

County

Circuit

Court’s

decision

regarded as conclusive in the instant case.

on

that

issue

is

See Fairfax Sav.,

F.S.B. v. Kris Jen Ltd. P’ship, 655 A.2d 1265, 1271 (Md. 1995)
(clarifying that a Plaintiff can seek damages for lender liability
claims but be barred from averring or proving an element of the
claim already resolved in a prior action).
10

Even assuming the Fraud Counts are not barred by res judicata
and collateral estoppel, a final order will not be vacated under
Maryland Rule 2-535(b) by the use of intrinsic fraud.
Rosenberg,

940

A.2d

1109,

1119

(Md.Ct.Spec.App.

Jones v.

2008)

(“To

establish fraud under Rule 2–535(b), a movant must show extrinsic
fraud,

not

intrinsic

fraud.”).

“Fraud

is

extrinsic

when

it

actually prevents an adversarial trial but is intrinsic when it is
employed during the course of the hearing which provides the forum
for the truth to appear, albeit, the truth was distorted by the
complained of fraud.” Id. (quoting Manigan v. Burson, 862 A.2d
1037,

1041

omitted).

(Md.Ct.Spec.App.

2004)))

(internal

quotation

marks

Here, the Wheatleys allege fraud on the basis of forged

documents, which is intrinsic to the case itself.
Further,

Star

Financial

was

neither

involved

in

the

Foreclosure Proceeding nor is in privity with those parties; and
thus, cannot establish the affirmative defense of res judicata.
Because,

however,

the

Fraud

Counts

allege

that

the

parties

proceeded to foreclosure without proper standing and Star Financial
was neither a party to the Foreclosure Case nor the entity secured
by the Deed of Trust, the Wheatleys fail to state a plausible claim
upon

which

relief

can

be

granted

against

Star

Financial.

Accordingly, the Wheatleys’ Fraud Counts will be dismissed as to
all Defendants with prejudice.

11

b. FDCPA and RESPA Violations
The Wheatleys’ claims regarding violations of the FDCPA and
RESPA must be dismissed as currently pled.
their

FDCPA

and

RESPA

claims

against

all

The Wheatleys bring
Defendants.

They

specifically allege the Defendants violated §§ 1692e(2), 1692e(5),
1692e(7),

1692e(8),

representing

the

and

1692f(1)

character

and

of

legal

the

FDCPA

status

of

by
their

falsely
debt,

threatening to take an action on their debt that cannot legally be
taken, falsely representing that they committed conduct in order to
disgrace them, falsely communicating information which was known or
which should have been known to be false, including the failure to
communicate that the debt was disputed, and attempting to collect
an amount on their debt not authorized by an agreement.
To state a claim under the FDCPA, plaintiffs must sufficiently
allege (1) they were the object of a collection activity arising
from a consumer debt, (2) the defendant is a debt collector as
defined by the FDCPA, and (3) the defendant engaged in an act or
omission prohibited by the FDCPA.

Dikun v. Streich, 369 F.Supp.2d

781, 784–85 (E.D.Va. 2005) (citing Fuller v. Becker & Poliakoff,
192 F.Supp.2d 1361, 1366 (M.D.Fla. 2002)).

Here, the Wheatleys

failed to allege any facts to establish the first two elements of
their claim, and their allegations concerning the third element are
conclusory and void of any factual underpinnings.

For example,

absent from, yet necessary to, each of their allegations are what
false representations were made and to whom; the when, where, and
12

how

these

false

threatened;

and

representations
to

whom

were

information

made;

was

what

falsely

action

was

communicated.

Accordingly, the Court will dismiss the Wheatleys’ claim under the
FDCPA without prejudice.
The Wheatleys specifically allege the Defendants violated §
2605(b)

of

RESPA

by

failing

to

notify

them

in

writing

of

the

transfer of the servicing of the loan.

To state a claim under §

2605(b),

allege

plaintiffs

must

sufficiently

“facts

regarding

whether a defendant was a loan servicer, when the alleged transfer
took place, what entities were involved in the transfer, and what
specific damages plaintiff suffered due to the lack of notice.”
Grant v. Shapiro & Burson, LLP, 871 F.Supp.2d 462, 471 (D.Md. 2012)
(citing Teaupa v. U.S. Nat'l Bank, N.A., 836 F.Supp.2d 1083, 1097–
99

(D.Haw.

2011).

The

Wheatleys

allegations to support their claim.

provide

no

such

factual

Accordingly, the Court will

also dismiss the Wheatleys’ claim under RESPA without prejudice.
c. Negligent Supervision
Count VI (negligent supervision) of the Complaint must fail
because the Defendants did not owe the Wheatleys a duty of care.
See Jacques v. First Nat. Bank of Md., 515 A.2d 756, 758 (Md. 1986)
(“Absent a duty of care there can be no liability in negligence.”
(quoting Ashburn v. Anne Arundel Cnty., 510 A.2d 1078 (Md. 1986))).
Under Maryland law, a bank is not under a fiduciary duty to its
borrowers and does not have any greater duty of care than that
which is specified in the loan agreement.
13

Yousef v. Trustbank

Sav., F.S.B., 568 A.2d 1134, 1138 (Md.Ct.Spec.App. 1990).

The

Wheatleys allege Defendants owe them a duty of care to supervise
the actions of their employees and agents in the processing of loan
documents.

Assuming the Wheatleys’ allegations are legally and

factually true, they failed to identify a duty arising from the
mortgage

contract

Defendants.

that

Accordingly,

was
the

negligently
Court

will

breached
dismiss

by

any

the

of

the

Wheatleys’

claim for negligent supervision without prejudice.
III. CONCLUSION
For the reasons given above, Defendants’ Motions to Dismiss
(ECF Nos. 11, 14 & 20), are GRANTED.

Counts I through IV of the

Complaint are DISMISSED with prejudice and Counts V through VII
of the Complaint are DISMISSED without prejudice.

The Wheatleys

Motion for Leave to File Belated Objection (ECF No. 24) is DENIED.
A separate Order will follow.
Entered this 30th day of May, 2014

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

14