Smith et al v. Ocwen Mortgage Servicing LLC
Filing
23
MEMORANDUM OPINION. Signed by Judge George Levi Russell, III on 11/16/2016. (krs, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
STEVEN J. SMITH, et al.,
:
Plaintiffs,
:
v.
:
OCWEN LOAN SERVICING, LLC,
:
Defendant.
Civil Action No. GLR-16-487
:
MEMORANDUM OPINION
THIS
MATTER
arises
out
of
Plaintiffs
Steven
and
Malisa
Smith’s unsuccessful attempt to modify their mortgage refinance
through
Defendant
loan’s servicer.
Ocwen
Loan
Servicing,
LLC
(“Ocwen”),
the
The Smiths allege Ocwen violated federal and
state law when it failed to comply with mandatory procedures and
made misrepresentations regarding the Smiths’ application for a
loan
modification.
Currently
pending
before
Ocwen’s Motion to Dismiss (ECF No. 11).
briefed and ripe for disposition.
Local Rule 105.6 (D.Md. 2016).
the
Court
is
The Motion is fully
No hearing is necessary.
See
For the reasons outlined below,
the Court will grant the Motion.
I.
A.
BACKGROUND
Factual Background
1.
On
Loan Modification Attempts
March
30,
2007,
the
Smiths
borrowed
$329,000
from
American Home Mortgage as part of a refinance transaction (the
“Loan”).
was
(Compl. ¶ 60, ECF No. 2).
secured
located
at
by
929
“Property”).
a
deed
of
Creek
trust
Park
on
Road,
(Id. ¶ 59, 60).
became the Loan’s servicer.
The Smiths’ promissory note
the
residential
Bel
Air,
property
Maryland
(the
At some unspecified time, Ocwen
(See id. ¶ 10).
The Smiths assert that they applied to modify their loan
sometime after April 24, 2014, yet they do not specify the exact
date on which they submitted their application to Ocwen.
62).
the
(Id. ¶
Regardless, on May 28, 2014, Ocwen acknowledged receipt of
Smiths’
application
and
indicated
that
it
ordered
a
valuation report to assess the Smiths’ eligibility for various
loss mitigation options.
(Id.).
In a letter dated June 3, 2014, Ocwen stated that after
evaluating the Loan “for all loss mitigation options available,
including, but not limited to, the Home Affordable Modification
Program (‘HAMP’),” Ocwen was unable to offer any relief to the
Smiths. (Id.).
The letter explained that the financial records
the Smiths provided indicated that they had the ability to pay
their mortgage using income, cash reserves, or other assets.
(Id.).
Several weeks later, in a letter dated June 27, 2014, the
Smiths appealed Ocwen’s denial.
(Id. ¶ 63).
Ocwen responded by
letter dated July 3, 2014, explaining that at the time of the
initial review, the Smiths’ loan was not yet in default and they
2
did
not
qualify
for
a
proprietary
loan
modification
program
“because guidelines established by the investor of [the] loan,
Deutsche Bank National Trust Company, state that [the] loan must
be in default, or foreseeable default in order to be eligible
for
a
loan
modification
under
any
program.”
(Id.).
Ocwen
further stated that due to the incongruity between the expenses
considered
during
the
Smiths’
modification
review
and
the
expenses in the Smiths’ HAMP Financial Form, Ocwen would use the
“corrected
expense
calculation”
to
reevaluate
the
Loan
and
determine whether the Loan was eligible for Ocwen’s alternative
modification program.
the
Smiths
within
that
the
(Id. ¶ 66).
Ocwen
next
would
fourteen
Ocwen concluded by informing
make
days.
a
decision
(Id.).
But
contacted the Smiths to communicate a decision.
The
parties
then
exchanged
on
eligibility
Ocwen
never
(Id.).
another
series
correspondences in July, August, and September 2014.
of
On July
29, Ocwen contacted the Smiths to notify them that they were
fifty-eight days delinquent on their mortgage.
(Id. ¶ 67).
On
August 13, the Smiths sent an email to Ocwen, explaining that
they had just recently received the July 3 letter and once again
appealed Ocwen’s denial of a loan modification.
(Id. ¶ 68).
In
their email, the Smiths “provided numerical proof that [Ocwen’s]
calculations
establishing
any
basis
for
incorrect figures and flawed accounting.”
3
denial
(Id.).
involved
The Smiths
also disputed that they were two months late on their mortgage.
(Id.).
On August 14,
Ocwen responded
to the Smiths’
August 13
email, stating that based on the Smiths’ request, Ocwen would
send
the
Smiths
the
“HAMP
Letter” (“HAMP Letter”).
HAMP Letter.
another
(Id.).
letter,
Escalated
Case
(Id. ¶ 69).
Dispute
Resolution
But Ocwen never sent the
Then, on September 10, 2014, Ocwen issued
stating,
“We
are
unable
to
offer
you
a
proprietary modification because: You failed to make the initial
trial payment within the required timeframe.”
Smiths
were
“baffled”
because
they
did
(Id. ¶ 70).
not
think
The
they
entered into a loan modification arrangement with Ocwen.1
had
(Id.)
On September 27, the Smiths responded to the September 10
letter
with
application.
a
final
(Id.
¶
request
71).
that
The
Ocwen
Smiths
reconsider
urged
Ocwen
to
their
“use
correct and generally-accepted mathematical principles” and “to
refer to [Consumer Financial Protection Bureau] guidelines and
act accordingly thereto.” (Id.).
Then,
another
at
loan
some
unspecified
modification
time,
application.
the
Smiths
(Id.
¶
sent
72).
Ocwen
Ocwen
responded on February 18, 2015 with a letter that was nearly
1
Ocwen offers what it contends is a June 18, 2014 letter
from Ocwen to the Smiths. (ECF No. 11-8). The letter outlines
the terms of a loan modification Ocwen offered to the Smiths.
(Id.).
The Smiths, however, dispute the authenticity of this
letter.
4
identical to Ocwen’s May 28, 2014 letter in response to the
Smiths’ initial loan modification application.
(Id.).
Ocwen
also sent an April 24, 2015 correspondence stating, “We sent you
an earlier letter outlining assistance options . . . .
Since
that
[your
time
a
foreclosure
action
has
been
initiated
on
property]. But even though the foreclosure process has begun,
you may still have foreclosure prevention alternatives available
– BUT YOU SHOULD ACT QUICKLY!”
(Id. ¶ 73).
The Smiths allege
that Ocwen’s February 18, 2015 letter was “some kind of generic
form letter that did not deal specifically with [the Smiths’]
situation.”
2.
(Id.).
Debt Collection and Validation Communications
On May 5, 2015, the law firm McCabe, Weisberg & Conway, LLC
(the “Firm”) wrote the Smiths to advise that Ocwen retained the
Firm in connection with the Smiths’ debt.
(Id. ¶ 74).2
The
Firm’s letter stated that the Firm was attempting to collect a
debt and that the debt was $454,961.52 -- an amount the Smiths
allege is “unverified and unsubstantiated.”
(Id.).
Shortly
thereafter, on May 8, 2015, the Firm sent the Smiths a “Notice
of Intent to Foreclose,” stating that the Smiths’ loan went into
default on June 2, 2014 and the total amount required to cure
2
The Smiths appear to incorrectly allege the Firm’s letter
was dated May 5, 2014.
(Compare Compl. ¶ 74 with ECF No. 1113).
5
(Id. ¶ 75).3
the default was $36,832.62.
On June 4, 2015 the Smiths requested that the Firm validate
and verify their debt and provide proof of ownership of the
promissory
responded
note
on
underlying
June
30,
the
2015
loan.
with
(Id.
a
¶
77).
Ocwen
“Reinstatement
Quote”
reflecting that the total amount due to reinstate the loan was
$39,483.08.
17,
2015,
(Id. ¶ 76).
Ocwen
Less than three weeks later, on July
notified
the
Smiths
proceedings were on hold. (Id. ¶ 78).
that
the
foreclosure
Then, on July 20, 2015,
the Firm again contacted the Smiths, this time advising that it
had verified the debt and providing a copy of the assignment of
mortgage evidencing a transfer to Ocwen.
(Id. ¶¶ 79, 94).
On August 12, 2015, the Smiths responded to the Firm’s July
20
letter
INSUFFICIENT
with
a
correspondence
VALIDATION/VERIFICATION
captioned
OF
DEBT,”
“NOTICE
in
OF
which
the
Smiths asserted that neither the Firm nor Ocwen had properly
validated or verified the debt.
(Id. ¶ 80).
The Smiths allege
Ocwen did not properly verify the Smiths’ debt because the “loan
transaction
amateurishly
history
report”
assembled”
and
Ocwen
it
prepared
“did
chronologically reflect ledger values.”
not
was
“hastily
accurately
(Id.).
or
and
even
On September 1,
2015, Ocwen responded with a letter stating, “The Validation of
3
The Smiths appear to incorrectly allege the Notice of
Intent to Foreclose was dated May 8, 2014. (Compare Compl. ¶ 75
with ECF No. 11-14).
6
Debt remains unchanged and a copy of the closing documentation
is enclosed.”
(Id. ¶ 81).
The Smiths do not allege whether the
Firm ever finalized a foreclosure.
B.
Procedural Background
On January 11, 2016, the Smiths commenced this action in
the
Circuit
Court
for
Harford
County,
Maryland.
(Compl.).
Ocwen removed the case to this Court on February 22, 2016.
No.
1).
The
Smiths
assert
Ocwen
violated
the
(ECF
following
regulations and statutes: (1) 12 C.F.R. § 1024.41, a federal
regulation
under
the
Real
Estate
Settlement
Procedures
Act
(“RESPA”), 12 U.S.C. §§ 2601, et seq. (Count I); (2) the Fair
Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692, et
seq. (Count II); (3) the Consumer Financial Protection Act of
2010 (“CFPA”), 12 U.S.C. §§ 5481, 5564 (Count III);4 and (4) the
Maryland Consumer Protection Act (“MCPA”), Md. Code Ann., Com.
Law §§ 13-301 et seq. (West 2016) (Count IV).
124).
(Compl. ¶¶ 96–
The Smiths seek injunctive relief, monetary damages, and
attorneys’ fees and costs.
4
There is no private cause of action under CFPA.
See 12
U.S.C. § 5564(a) (“If any person violates a federal consumer
law, the [Consumer Financial Protection Bureau] may . . .
commence a civil action against such a person.”); see also
Kalisz v. Am. Express Centurion Bank, No. 1:15-CV-01578, 2016 WL
1367169, at *2 (E.D.Va. Apr. 5, 2016) (“Any violation of the
CFPA may not be litigated by Plaintiff because they cannot be
enforced by a private individual.”). Thus, Count III fails as a
matter of law, and the Court will grant Ocwen’s Motion as to
this Count.
7
Ocwen moved to dismiss on March 25, 2016.
(ECF No. 11).
The Smiths responded in opposition on May 19, 2016 (ECF No. 18),
and Ocwen replied on June 6, 2016 (ECF No. 19).
II.
A.
DISCUSSION
Standards of Review
1.
Rule 12(b)(1)
Ocwen argues the
Smiths do not have standing to pursue
Count I because there is no independent cause of action for a
purported violation of 12 C.F.R. § 1024.41.
for
lack
Procedure
of
standing
12(b)(1),
are
governed
which
by
pertains
Motions to dismiss
Federal
to
Rule
of
subject
Civil
matter
jurisdiction.
See CGM, LLC v. BellSouth Telecommc’ns, Inc., 664
F.3d
(4th
46,
52
Cir.
2011).
A
defendant
challenging
a
complaint under Rule 12(b)(1) may advance a “facial challenge,
asserting that the allegations in the complaint are insufficient
to
establish
subject
matter
jurisdiction,
or
a
factual
challenge, asserting ‘that the jurisdictional allegations of the
complaint [are] not true.’”
Hasley v. Ward Mfg., LLC, No. RDB-
13-1607, 2014 WL 3368050, at *1 (D.Md. July 8, 2014) (alteration
in original) (quoting Kerns v. United States, 585 F.3d 187, 192
(4th Cir. 2009)).
Here, because Ocwen raises a facial challenge, the Court
will afford the Smiths “the same procedural protection as [they]
would receive under a Rule 12(b)(6) consideration.”
8
Kerns, 585
F.3d at 192 (quoting Adams v. Bain, 697 F.2d 1213, 1219 (4th
Cir. 1982)).
Complaint
As such, the Court will take the facts in Smiths’
as
true
and
deny
Ocwen’s
Rule
12(b)(1)
Motion to Dismiss if the Complaint alleges sufficient facts to
invoke subject matter jurisdiction for Count I.
2.
Id.
Rule 12(b)(6)5
Ocwen also moves to dismiss under Rule 12(b)(6), arguing
the Smiths’ Complaint fails to state a claim upon which relief
may be granted.
“The purpose of a Rule 12(b)(6) motion is to
test the sufficiency of a complaint,” not to “resolve contests
surrounding
the
facts,
the
applicability of defenses.”
merits
of
a
claim,
or
the
Edwards v. City of Goldsboro, 178
F.3d 231, 243–44 (4th Cir. 1999) (quoting Republican Party v.
Martin, 980 F.2d 943, 952 (4th Cir. 1992)).
A complaint fails
to state a claim if it does not contain “a short and plain
statement of the claim showing that the pleader is entitled to
relief,” Fed.R.Civ.P. 8(a)(2), or does not “state a claim to
relief that is plausible on its face,” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)).
5
In their opposition brief, the Smiths request a discovery
period of ninety days.
(Pls.’ Opp’n Mot. Dismiss [“Opp’n”] at
2, ECF No. 18).
Because the Court will not convert Ocwen’s
motion into one for summary judgment, the Court will deny this
request without prejudice.
9
A claim is facially plausible “when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference
that
alleged.”
the
defendant
is
liable
for
the
Id. (citing Twombly, 550 U.S. at 556).
misconduct
“Threadbare
recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.”
550 U.S. at 555).
forecast
evidence
Id. (citing Twombly,
Though the plaintiff is not required to
to
prove
allege
the
elements
sufficient
facts
of
the
claim,
to
establish
the
complaint
must
each
element.
Goss v. Bank of Am., N.A., 917 F.Supp.2d 445, 449
(D.Md. 2013) (quoting Walters v. McMahen, 684 F.3d 435, 439 (4th
Cir. 2012)), aff’d sub nom. Goss v. Bank of Am., NA, 546 F.App’x
165 (4th Cir. 2013).
In considering a Rule 12(b)(6) motion, a 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
Cty.,
407
F.3d
266,
268
(4th
Cir.
Rhodes, 416 U.S. 232, 236 (1974)).
2005)
(citing
Scheuer
v.
But, the court need not
accept unsupported or conclusory factual allegations devoid of
any reference to actual events, United Black Firefighters v.
Hirst,
couched
604 F.2d 844, 847 (4th Cir. 1979),
as
factual
allegations,
10
Iqbal,
556
legal conclusions
U.S.
at
678,
or
“allegations that are merely conclusory, unwarranted deductions
of fact[,] or unreasonable inferences,” Veney v. Wyche, 293 F.3d
726, 730 (4th Cir. 2002).
Generally, “a court may not consider extrinsic evidence at
the 12(b)(6) stage.”
Chesapeake Bay Found., Inc. v. Severstal
Sparrows Point, LLC, 794 F.Supp.2d 602, 611 (D.Md. 2011).
however,
“a
defendant
attaches
a
document
to
its
motion
If,
to
dismiss, ‘a court may consider it in determining whether to
dismiss
relied
the
on
challenge
complaint
in
its
the
if
it
was
integral
to
complaint
and
if
plaintiffs
authenticity.’”
Id.
the
(quoting
and
Am.
explicitly
do
not
Chiropractic
Ass’n, Inc. v. Trigon Healthcare Inc., 367 F.3d 212, 234 (4th
Cir.
2004)).
When
the
“bare
allegations
of
the
complaint”
conflict with exhibits or other properly considered documents,
“the exhibits or documents prevail.”
RaceRedi Motorsports, LLC
v. Dart Mach., Ltd., 640 F.Supp.2d 660, 664 (D.Md. 2009).6
6
In their opposition brief, the Smiths offer a blanket
dispute of the authenticity of all of Ocwen’s exhibits,
highlighting that Ocwen does not support any of them with an
affidavit.
(Opp’n at 1).
Paradoxically, however, the Smiths
refer to and explicitly quote from many of the same exhibits
that they contend are not authentic.
And, what is more, they
only specifically challenge the authenticity of one of Ocwen’s
exhibits: the promissory note (ECF No. 11-2). In Rupli v. Ocwen
Loan Servicing, LLC, No. DKC 16-0181, 2016 WL 4141013, at *1
(D.Md. Aug. 4, 2016), a case with allegations markedly similar
to this case and the same counsel, the plaintiff also generally
disputed the authenticity of all documents Ocwen attached to its
Rule 12(b)(6) motion to dismiss. This Court concluded it would
consider all the documents for which plaintiff generally
11
3.
Rule 9(b)
Allegations of fraud, which the Smiths assert in Count IV,
are subject to the heightened pleading standard of Rule 9(b).
Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783–
784
(4th
Cir.
1999).
Under
Rule
9(b),
“the
circumstances
constituting fraud” must be stated “with particularity.”
The
“circumstances constituting fraud” include the “time, place and
contents of the false representation, as well as the identity of
the person making the misrepresentation and what was obtained
thereby.”
Superior Bank, F.S.B. v. Tandem Nat. Mortgage, Inc.,
197 F.Supp.2d 298, 313–14 (D.Md. 2000) (quoting Windsor Assocs.
v.
Greenfeld,
conditions,
564
such
as
alleged generally.
fail
to
12(b)(6).
comply
F.Supp.
273,
malice,
280
intent,
(D.Md.
and
Fed.R.Civ.P. 9(b).
with
Rule
9(b)
warrant
1983)).
knowledge,
Mental
may
be
Fraud allegations that
dismissal
under
Rule
Harrison, 176 F.3d at 783 n.5.
disputed authenticity, as long as they were integral to the
plaintiff’s claims.
Id. at *1 n.2. Here, the Court will also
consider all of Ocwen’s exhibits for which the Smiths generally
dispute authenticity, but only if they are (1) integral to the
Complaint, (2) explicitly relied on in the Complaint, and (3)
directly quoted in the Complaint.
12
B.
Analysis
1.
RESPA Regulation: 12 C.F.R. § 1024.41 (Count I)
a.
Lack of Standing
Ocwen first argues the Smiths lack standing to pursue Count
I because they do not have a legal right to enforce HAMP and its
guidelines.
Ocwen asserts that HAMP is a federal program, not
federal law.
provides
Ocwen overlooks, however, that 12 C.F.R. § 1024.41
that
a
borrower
may
enforce
that
section 6(f) of RESPA, 12 U.S.C. § 2605(f).
regulation
under
As best the Court
can discern from the Complaint,7 the Smiths are not seeking to
enforce HAMP guidelines; rather, the Smiths ground Count I in
RESPA regulations.
Because these regulations provide a private
right of action, the Court concludes the Smiths have standing to
pursue Count I.
Thus, the Court will deny Ocwen’s Motion to the
extent they move under Rule 12(b)(1).
b.
Failure to State a Claim
The Court will grant Ocwen’s Rule 12(b)(6) Motion as to
Count
I
for
two
reasons.
First,
by
failing
to
respond
to
Ocwen’s arguments in favor of dismissing Count I or argue why
the allegations in their Complaint state a claim, the Smiths
have abandoned Count I.
Second, even assuming the Smiths have
7
The Court echoes Judge Chasanow’s observation in Rupli
that the Smiths’ Complaint, which is strikingly similar to the
complaint in Rupli, is “not a model of clarity.”
2016 WL
4141013, at *6.
13
not
abandoned
Count
I,
they
fail
to
plausibly
allege
Ocwen
violated 12 C.F.R. § 1024.41.
The Smiths allege Ocwen violated 12 C.F.R. § 1024.41 for
three reasons: (1) within five days after receiving the Smiths’
application for loan modification, Ocwen did not acknowledge its
receipt or state whether the application was complete; (2) Ocwen
did not evaluate the Smiths’ application for all available lossmitigation options and provide notice of such options within
thirty days of receiving their application; and (3) Ocwen did
not provide the Smiths with specific reasons for denial of their
application.
Curiously, the Smiths do not address any of these
allegations in their opposition brief.
In fact, the section of
the Smiths’ opposition brief addressing alleged violations of 12
C.F.R.
§
Complaint.8
1024.41
appears
entirely
disconnected
from
their
The Smiths neither respond to Ocwen’s arguments in
favor of dismissing Count I nor advance their own arguments for
why the allegations in their Complaint succeed in stating a
claim.
Accordingly, the Smiths have abandoned Count I, which
8
The Smiths argue Ocwen violated 12 C.F.R. § 1024.41 by
failing to notify the Smiths they had a right to appeal the
initial denial of a modification plan and failing to afford the
Smiths fourteen days from the date of Ocwen’s loan modification
offer to accept or reject the offer. (Opp’n at 4–5). The Court
will not consider these arguments because the Smiths are bound
by the allegations in their Complaint and cannot amend their
Complaint through their opposition brief. See Zachair, Ltd. v.
Driggs, 965 F.Supp. 741, 748 n.4 (D.Md. 1997) aff’d, 141 F.3d
1162 (4th Cir. 1998).
14
provides a basis for dismissing it.
See Ferdinand-Davenport v.
Children’s
Guild,
772,
(dismissing
discriminatory
742
F.Supp.2d
discharge
777
claim
(D.Md.
because
2010)
plaintiff
failed to respond to defendant’s argument that claim should be
dismissed).
Moreover, even assuming the Smiths have not abandoned Count
I, the Smiths fail to state a claim upon which relief may be
granted.
Under
12 C.F.R. § 1024.41(b)(2)(i), if a servicer
receives a loss mitigation application forty-five days or more
before a foreclosure sale, the servicer must, within five days
of receiving the application, notify the borrower in writing and
state whether the application is complete.
The Smiths allege
Ocwen failed to acknowledge receipt of the Smiths’ application
within
five
days,
but
the
Smiths
submitted their application.
do
not
allege
when
they
The Smiths merely state that on
May 28, 2014, Ocwen responded to the Smiths’ “recently-submitted
loan modification agreement.”
submission,
the
Court
(Compl. ¶ 62).
cannot
reasonably
Without a date of
infer
that
Ocwen
violated the five-day deadline.
The Smiths’ remaining allegations fail to state a claim
because they utterly belie exhibits from which the Smiths quote
in
their
Complaint.
Ocwen
presents
a
May
23,
2014
letter
addressed to the Smiths in which Ocwen acknowledged receipt of
the
Smiths’
application
and
stated
15
their
“application
[was]
complete.”
(ECF No. 11-4 at 4).
In a letter dated June 3, 2014
-- just six days after the Smiths allege Ocwen acknowledged
receiving the Smiths’ application -- Ocwen indicated that after
evaluating
the
Smiths
“for
all
loss
mitigation
options
available, including, but not limited to, the Home Affordable
Modification Program (‘HAMP’),” Ocwen was unable to offer any
loan
modifications.
explained
that
the
(Compl.
reason
¶
for
63).
the
The
denial
letter
was
further
that
Ocwen’s
calculations showed that the Smiths were still able to pay the
current mortgage using “income, cash reserves or other assets.”
(Id.).
The May 23 and June 3, 2014 letters trump the Smiths’
directly contradictory allegations that Ocwen (1) did not inform
the Smiths whether there application was complete, (2) did not
evaluate
the
Smiths’
application
for
all
available
loss-
mitigation options and provide notice of such options within
thirty
days
of
receiving
the
application,
and
(3)
did
not
provide the Smiths with specific reasons for denial of their
application.
See RaceRedi Motorsports, 640 F.Supp.2d at 664.
Accordingly, because the Smiths abandon their 12 C.F.R. §
1024.41 claim and their allegations fail to state a claim that
Ocwen violated this regulation, the Court will grant Ocwen’s
Motion as to Count I.
16
2.
FDCPA (Count II)
The Court will grant Ocwen’s Motion as to Count II because
the Smiths do not plausibly allege Ocwen is a debt collector
under the FDCPA.
The Smiths contend Ocwen violated the FDCPA because Ocwen
failed to validate the Smiths’ debt and misidentified the owner
of the Loan.
abusive
and
(Compl. ¶ 106).
deceptive
debt
The FDCPA protects consumers from
collection
practices.
See
United
States v. Nat’l Fin. Servs. Inc., 98 F.3d 131, 135 (4th Cir.
1996).
To
prevail
on
their
FDCPA
claim,
the
Smiths
must
plausibly allege that: “(1) [they] ha[ve] been the object of
collection activity arising from consumer debt, (2) [Ocwen] is a
debt collector as defined by the FDCPA, and (3) [Ocwen] has
engaged in an act or omission prohibited by the FDCPA.”
Stewart
v. Bierman, 859 F.Supp.2d 754, 759 (D.Md. 2012) (quoting Dikun
v. Streich, 369 F.Supp.2d 781, 784-85 (E.D.Va. 2005)), aff’d sub
nom. Lembach v. Bierman, 528 Fed.Appx. 297 (4th Cir. 2013).
A
“debt
collector”
is
“any
person
who
uses
any
instrumentality of interstate commerce . . . in any business the
principal purpose of which is the collection of any debts, or
who
regularly
collects
or
attempts
to
collect,
directly
or
indirectly, debts owed or due or asserted to be owed or due
another.”
15 U.S.C. § 1692a(6).
More importantly for this
case, the term “debt collector” does not include “any person
17
collecting or attempting to collect any debt owed or due or
asserted to be owed or due another to the extent such activity .
. . concerns a debt which was not in default at the time it was
obtained by such person.”
added).
15 U.S.C. § 1692a(6)(F) (emphasis
Additionally, when there is evidence a loan servicer
discussed loan modification with a borrower, the loan servicer
is not a debt collector.
See Rupli v. Ocwen Loan Servicing,
LLC, No. DKC 16-0181, 2016 WL 4141013, at *7 (D.Md. Aug. 4,
2016); Combs v. Bank of Am., N.A., No. GJH-14-3372, 2015 WL
5008754, at *5 (D.Md. Aug. 20, 2015).9
Here, the allegations in the Smiths’ Complaint coupled with
exhibits
that
are
integral
to,
explicitly
relied
on,
and
directly quoted in the Smiths’ Complaint show that Ocwen was
servicing the Loan before the Smiths defaulted.
9
The Smiths
Recently, in McCray v. Fed. Home Loan Mortg. Corp., No.
15-1444, 2016 WL 5864509 (4th Cir. Oct. 7, 2016), the United
States Court of Appeals for the Fourth Circuit further clarified
what activities constitute debt collection under the FDCPA. The
Fourth Circuit confirmed that to be a debt collector, an
individual or entity needs only to have acted “‘in connection
with the collection of any debt’ or in an ‘attempt to collect
any debt.’” Id. at *4 (quoting Powell v. Palisades Acquisition
XVI, LLC, 782 F.3d 119, 124 (4th Cir. 2014)).
The Court does
not read McCray as overruling Rupli and Combs because the facts
in McCray are utterly different from the facts in those cases.
McCray dealt with substitute trustees pursuing foreclosure
against a borrower. Rupli and Combs -- like this case -- dealt
with a mortgage servicer that discussed loss mitigation options
with a borrower.
And, even if the Fourth Circuit intended
McCray to overrule Rupli and Combs, McCray does nothing to alter
15 U.S.C. § 1692a(6)(F), which provides that an entity is not a
debt collector when it obtains a loan before the loan is in
default.
18
allege that Ocwen was servicing the Loan at least as early as
April 24, 2014, when Ocwen received a mortgage payment from the
Smiths.
(Compl. ¶ 62).
defaulted
on
their
The Smiths do not assert when they
mortgage.
But,
in
Ocwen’s
July
3,
2014
letter to the Smiths, Ocwen advised that the Smiths were not in
default on their mortgage as of May 29, 2014.
(ECF No. 11-7).
And, the Firm’s May 8, 2015 Notice of Intent to Foreclose stated
the Loan “went into default June 2, 2014.”
No. 11-14 at 6).
(Compl. ¶ 75); (ECF
This means Ocwen was servicing the Loan over a
month before Ocwen defaulted.
Moreover, the Smiths allege that
Ocwen and the Smiths discussed loan modification on numerous
occasions over the course of several months.
(See, e.g., Compl.
¶¶ 62, 63, 66, 69, 70, 72).
Thus,
the
Court
concludes
the
Smiths
do
not
allege Ocwen is a debt collector under the FDCPA.
plausibly
The Court,
therefore, will grant Ocwen’s Motion as to Count II.
3.
MCPA (Count IV)
The Court will grant Ocwen’s Motion as to Count IV because
the Smiths abandon their MCPA claim and their MCPA allegations
directly contradict a June 3, 2014 letter in which Ocwen agreed
to provide the Smiths a short-sale.
The
borrowers
Smiths
a
allege
variety
modifications,
of
Ocwen
loss
forbearance
represented
mitigation
plans,
agreements,
19
that
and
it
such
offers
as
loan
short-sale
agreements.
(Compl. ¶ 119).
According to the Smiths, Ocwen
violated the MCPA when it offered these loss mitigation plans
without the intent to actually provide them.
(Id. ¶ 120).
Under the MCPA, “a person may not engage in any unfair or
deceptive trade practice” related to the extension of consumer
credit or the collection of consumer debts.
Law (“CL”) § 13–303 (West 2016).
MCPA
most
pertinent
to
the
Md. Code Ann., Com.
The specific provision of the
Smiths’
MCPA
claim
prohibits
advertisement of consumer services without intent to sell or
otherwise provide them.
See CL § 13-301(5).
To sufficiently
state an MCPA claim, “a plaintiff must adequately plead that (1)
the defendant engaged in an unfair or deceptive practice or
misrepresentation,
(2)
the
plaintiff
relied
upon
the
representation, and (3) doing so caused the plaintiff actual
injury.”
Turner v. J.P. Morgan Chase, N.A., TDC-14-0576, 2015
WL 5021390, at *4 (D.Md. Aug. 21, 2015) (citing Currie v. Wells
Fargo Bank, N.A., 950 F.Supp.2d 788, 796 (D.Md. 2013)).
Claims
for unfair or deceptive trade practices under the MCPA sound in
fraud
and
must
be
pleaded
with
particularity.
Haley
v.
Corcoran, 659 F.Supp.2d 714, 724 n.10 (D.Md. 2009).
Ocwen
reliance
argues
or
the
damages
Smiths
do
elements
the
not
of
Smiths
an
MCPA
not
allege
claim.
respond
In
to
the
their
opposition
brief,
arguments.
In fact, they totally abandon the MCPA claim they
20
do
sufficiently
Ocwen’s
attempt to allege in their Complaint by arguing Ocwen violated
the MCPA for five entirely different reasons.10
What is more, in
the June 3, 2014 letter from Ocwen to the Smiths -- an exhibit
from which the Smiths directly quote in their Complaint -- Ocwen
agreed to provide the Smiths an option to short-sell their home.
(See ECF No. 11-5).
Accordingly, because the Smiths abandon
their MCPA claim and their MCPA allegations directly contradict
Ocwen’s June 3, 2014 letter, the Court will grant Ocwen’s Motion
as to Count IV.
III. CONCLUSION
For the foregoing reasons, the Court will GRANT Ocwen’s
Motion to Dismiss (ECF No. 11).
A separate order follows.
Entered this 16th day of November, 2016
/s/
____________________________
George L. Russell, III
United States District Judge
10
In their opposition brief, the Smiths contend Ocwen
violated the MCPA when it: (1) sent the Smiths an “assignment
that proves the subject loan cannot be in the claimed trust;”
(2) failed to disclose that the Smiths had a right to appeal the
HAMP Trial Period Plan (“TPP”) that Ocwen offered; (3) failed to
review the Smith appeal of the TPP offer; (4) failed to afford
the Smiths fourteen days to accept or reject the TPP offer; and
(5) provided the Smiths a transaction history for the Loan that
showed a beginning balance of over $446,000 when the loan
principal was $329,600.
(Opp’n at 18).
The Court highlights
that the Smiths acknowledgment that Ocwen provided them a HAMP
TPP flies in the face of their own allegation that Ocwen offered
loss mitigation programs without intent to actually provide
them.
21
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