Maddox v. Wells Fargo Bank, NA

Filing 15

MEMORANDUM AND ORDER GRANTING 12 Motion to Dismiss. Signed by Judge Marvin J. Garbis on 7/2/2015. (hmls, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
PAMELA MADDOX

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Plaintiff
vs.

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WELLS FARGO BANK, NA

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CIVIL ACTION NO. MJG-15-1032

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Defendant
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MEMORANDUM AND ORDER RE: DISMISSAL
The Court has before it Defendant Wells Fargo Bank, N.A.'s
Motion to Dismiss the Complaint or in the Alternative Motion for
Judgment on the Pleadings [Document 12] and the materials
submitted relating thereto.

The Court finds a hearing

unnecessary.

I.

BACKGROUND1
On August 24, 2005, Plaintiff Pamela Maddox, f/k/a Pamela

Nelson ("Maddox"), signed a promissory note refinancing her home
at 2586 Carrington Way in Frederick, Maryland for $313,600.00
1

In general, the "facts" herein are as alleged by Plaintiff
and are not necessarily agreed upon by Defendant. However, the
Court has relied upon the Deed of Trust and Corporate Assignment
of Deed of Trust pertinent to the claims in the instant case.
See Simmons v. Bank of Am., N.A., No. CIV. PJM 13-0733, 2014 WL
509386, at *1 n.1 (D. Md. Feb. 6, 2014) ("The facts alleged by
Plaintiff are taken as true for the purposes of this Motion [to
Dismiss] only. Because the Deed of Trust is a public record,
this Court may consider it without converting the Motion into a
motion for summary judgment.").

through Union Federal Bank of Indianapolis.
2-4.

[Document 12-2] at

The Deed of Trust securing the refinance loan also is

dated August 24, 2005 and signed by Maddox.

The Deed of Trust

names Maddox as the Borrower, Union Federal Bank of Indianapolis
as the Lender, and Mortgage Electronic Registration Systems,
Inc. ("MERS"), "[a]cting solely as a nominee for Lender and
Lender's successors and assigns," as the Beneficiary.
On May 19, 2014, MERS "sold or otherwise transferred" the
Deed of Trust to Defendant Wells Fargo Bank, N.A. ("Wells
Fargo").
loan.

Compl. ¶ 2.

Maddox subsequently defaulted on the

She discovered the assignment of the Deed of Trust to

Defendant in the course of the foreclosure action.
On March 6, 2015, Maddox brought a Complaint against Wells
Fargo in the District Court for Frederick County, Maryland for
violation of the Truth in Lending Act, 15 U.S.C. § 1601 et seq.
Wells Fargo timely removed to this Court.
By the instant motion, Wells Fargo Bank seeks dismissal of
the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of
Civil Procedure2 12(b)(6), or alternatively, judgment on the
pleadings under Rule 12(c).

2

All "Rule" references herein are to the Federal Rules of
Civil Procedure.
2

II.

DISMISSAL STANDARD
A motion to dismiss filed pursuant to Rule 12(b)(6) tests

the legal sufficiency of a complaint.

A complaint need only

contain "'a short and plain statement of the claim showing that
the pleader is entitled to relief,' in order to 'give the
defendant fair notice of what the . . . claim is and the grounds
upon which it rests.'"

Bell Atl. Corp. v. Twombly, 550 U.S.

544, 555 (2007) (alteration in original) (citations omitted).
When evaluating a 12(b)(6) motion to dismiss, a plaintiff's
well-pleaded allegations are accepted as true and the complaint
is viewed in the light most favorable to the plaintiff.
However, conclusory statements or "a formulaic recitation of the
elements of a cause of action will not [suffice]."

Id.

A

complaint must allege sufficient facts "to cross 'the line
between possibility and plausibility of entitlement to relief.'"
Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009)
(quoting Twombly, 550 U.S. at 557).
Inquiry into whether a complaint states a plausible claim
is "'a context-specific task that requires the reviewing court
to draw on its judicial experience and common sense.'"

Id.

(quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)).

Thus, if

"the well-pleaded facts [contained within a complaint] do not
permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged – but it has not 'show[n]'

3

– 'that the pleader is entitled to relief.'"3

Id. (alteration in

original)).

III. DISCUSSION
Maddox contends that Wells Fargo violated 15 U.S.C. §
1641(g), which states that when a mortgage loan is sold or
assigned to a third party, the new creditor owner or assignee of
the debt must provide the borrower with written notice.
Wells Fargo contends that it is entitled to dismissal
because: (1) "the transfer or assignment of a deed of trust
alone fails to implicate any liability under 15 U.S.C. §

3

Rule 12(c) states that "[a]fter the pleadings are closed-but early enough not to delay trial—a party may move for
judgment on the pleadings." "A 12(c) motion for judgment on the
pleadings is reviewed under the Rule 12(b)(6) motion to dismiss
standard." Cuthie v. Fleet Reserve Ass'n, 743 F. Supp. 2d 486,
493 (D. Md. 2010). The Court will proceed to construe Wells
Fargo's motion as if it were brought under only Rule 12(b)(6)
because a Rule 12(c) motion would be premature at this time.
See Guthrie v. Nw. Mut. Life Ins. Co., No. DKC 09-2342, 2010 WL
3260001, at *4 (D. Md. Aug. 18, 2010) ("'[A] motion for judgment
on the pleadings is plainly inappropriate here, because the
pleadings have not been closed by answers from all defendants.'"
(alteration in original) (citation omitted)); see also
Scottsdale Ins. Co. v. Doe, No. 7:13-CV-00342, 2014 WL 3778510,
at *3 (W.D. Va. July 30, 2014) ("[T]he pleadings are not closed
because defendant Manges has not filed an answer to Scottsdale's
complaint and no party has requested that default judgment be
entered against him. Therefore, a remedy under Rule 12(c) is not
available."); Nationwide Children's Hosp., Inc. v. D.W. Dickey &
Son, Inc. Employee Health & Welfare Plan, No. 2:08-CV-1140, 2009
WL 5247486, at *1 (S.D. Ohio Dec. 31, 2009) ("[T]he pleadings
are not closed until all defendants have filed an answer, even
when one defendant has filed a motion to dismiss instead of
answering.").
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1641(g);" and (2) even if § 1641(g) did apply, "Wells Fargo is
the servicer of [Maddox]'s mortgage and is shielded from
liability pursuant to the safe-harbor provision in § 1641(f)."
[Document 12-1] at 2.
In her Response to the instant motion, Maddox states that
she "expects that [Wells Fargo] will argue that the [§ 1641(g)]
notice provisions only apply to the sale of transfer of the
actual debt (i.e., the Note)," but that "such a holding would
gut and render meaningless the purpose of [§ 1641(g)]."
[Document 13] at 5-6.
At least two other Judges of this Court have considered –
and rejected – similar arguments from plaintiffs in Truth in
Lending Act cases.4

See Barr v. Flagstar Bank, F.S.B., No.

CIV.A. RDB-13-2654, 2014 WL 4660799, at *2 (D. Md. Sept. 17,
2014) ("[A]n assignment of only the deed of trust does not
trigger the § 1641(g) disclosure requirement . . . ."); Terry v.
Mortgage Elec. Registration Sys., Inc., No. 8:13-CV-00773-AW,
2013 WL 1832376, at *3 (D. Md. Apr. 30, 2013) ("The conclusion
that a nominal beneficiary's assignment of its beneficial
interest in a deed of trust to the holder of underlying debt
fails to implicate section 1641(g) is consistent with the
decisions of other district courts.").

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The Court agrees with

Counsel for Maddox represented the plaintiffs in both of
those cases.
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the determinations reached by the other Judges of this Court –
and other federal trial courts across the county, see Terry,
2013 WL 1832376, at *3 (citing cases) – and concludes that MERS'
assignment of the Deed of Trust alone to Wells Fargo does not
trigger the notice requirements of 15 U.S.C. § 1641(g).
Title 15 U.S.C. § 1641(g)(1) states, in pertinent part:
not later than 30 days after the date on
which a mortgage loan is sold or otherwise
transferred or assigned to a third party,
the creditor that is the new owner or
assignee of the debt shall notify the
borrower in writing of such transfer . . . .
A "mortgage loan" is defined as "any consumer credit transaction
that is secured by the principal dwelling of a consumer."

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U.S.C. § 1641(g)(2).
Thus, two separate actions are required to create a
mortgage loan.

As Judge Bennett of this Court stated in Barr v.

Flagstar Bank, F.S.B., "[t]he first action is the creation of
the debt through a 'consumer credit action,' while a separate
action—the creation of the security instrument—is necessary to
turn the debt into a mortgage loan.

2014 WL 4660799, at *3.

Put more simply, in the first action, the borrower creates a
debt by executing a promissory note – "'obligation to pay
borrowed money'" – and in the second action, the borrower
secures the debt with a deed of trust, which "'creates a lien

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against the property as security for that obligation.'"

Id. at

*1 n.1 (citation omitted).
The federal regulations implementing § 1641(g) provide that
a person is covered by § 1641(g) if the person "becomes the
owner of an existing mortgage loan by acquiring legal title to
the debt obligation, whether through a purchase, assignment or
other transfer." 12 C.F.R. § 1026.39(a)(1).

Accordingly, "a

creditor is not the 'new owner . . . of the debt' under section
1641(g) unless the creditor acquires legal title to, or
otherwise assumes, the debt underlying the mortgage."

Terry,

2013 WL 1832376, at *2 (alteration in original).
An assignment of a deed of trust may trigger § 1641(g) if
the assignment deed assigns both the underlying debt and the
deed of trust. Flemister v. Citibank, N.A., No. CV 12-5368 CAS
JCGX, 2012 WL 6675273, at *5 (C.D. Cal. Dec. 20, 2012) ("[T]he
'Corporation Assignment of Deed of Trust' contains language that
'assigns' plaintiffs' note and 'the money due and to become due
thereon with interest' to Citibank.

Therefore, even if Citibank

is not subject to liability as the 'owner' of the debt, it still
is a 'creditor' within the meaning of the statute because it is
the 'assignee' of the debt." (emphasis added) (internal citation
omitted)).
Here, however, the Deed of Trust states that MERS is the
nominee of Lender Union Federal Bank of Indianapolis and "the

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beneficiary under th[e] Security Instrument [Deed of Trust]."
[Document 12-2] at 3.

A "beneficial interest" is "'[a] right or

expectancy in something . . . as opposed to legal title to that
thing."' Terry, 2013 WL 1832376, at *2 (alterations in original)
(quoting Black's Law Dictionary 885 (9th ed. 2009)).

MERS did

not acquire legal title to the underlying debt obligation in the
Deed of Trust.

Moreover, MERS assigned only its "interest under

the Deed of Trust" to Wells Fargo.

See [Document 13] at 10-11.

Therefore, MERS was not required under § 1641(g) to provide
notice to Maddox of the assignment of the deed of trust.5

IV.

CONCLUSION
For the foregoing reasons:
1.

Defendant Wells Fargo Bank’s Motion to Dismiss is
GRANTED.

2.

Judge shall be issued by separate Order.

SO ORDERED, on Thursday, July 02, 2015.

/s/__________
Marvin J. Garbis
United States District Judge

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"Since an assignment of only the deed of trust does not
trigger the § 1641(g) disclosure requirement, this Court will
not reach the question of whether the 'safe harbor' provided by
§ 1641(f) would apply." Barr v. Flagstar Bank, F.S.B., No.
CIV.A. RDB-13-2654, 2014 WL 4660799, at *2 (D. Md. Sept. 17,
2014).
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