Farwell v. Challenge Financial Investors Corporation et al
Filing
51
MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 12/1/10. (sat, Chambers)
Farwell v. Challenge Financial Investors Corporation et al
Doc. 51
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND LINDA E. FARWELL v. LEON STORY, et al. : : : : : MEMORANDUM OPINION Presently pending and ready for resolution in this mortgage lending case are several motions: (1) a motion to dismiss (ECF Civil Action No. DKC 10-1274
No. 25) filed by Defendant Jon Lane (doing business as Bridge Street Appraisals); (2) a motion to dismiss (ECF No. 28) filed by Defendant Leon Story; (3) a motion to dismiss or, in the alternative, for summary judgment (ECF No. 29) filed by
Defendant PNC Mortgage; (4) a motion for leave to amend the complaint (ECF No. 35) filed by Plaintiff Linda Farwell; and (5) a motion to strike (ECF No. 41) filed by Defendant PNC Mortgage. The issues have been fully briefed and the court now rules
pursuant to Local Rule 105.6, no hearing being deemed necessary. For the reasons that follow, the court will grant in part and deny in part PNC Mortgage's motion to dismiss. (ECF No. 29).
The motions to dismiss filed by Defendants Jon Lane and Leon Story (ECF Nos. 25, 28) will be granted. Farwell's current
motion for leave to amend (ECF No. 35) will be denied and PNC
Dockets.Justia.com
Mortgage's motion to strike (ECF No. 41) will be denied as moot, but Farwell will be permitted to file a proper motion for leave to amend within 21 days. I. Background A. 1. Factual Background1 Farwell's Initial Relationship with Story Linda Farwell owns a home in Darnestown,
Plaintiff Maryland.
(ECF No. 2 ¶ 7).
Sometime in 2004, Farwell contacted
Defendant Leon Story, a mortgage broker, and began negotiating with him to refinance an existing mortgage on that home. 8). (Id. ¶
According to Farwell, she and Story soon became more than
just a professional acquaintances indeed, Story would call Plaintiff "frequently." (Id. ¶ 11). Among other things, Story
would tell Farwell about potential investments that he claimed could earn profits for Farwell. had already profited from such (Id. ¶ 8). investments Story claimed he and could show
Farwell how to do so as well.
(Id.).
The complaint indicates that Story also made several big promises Farwell's convinced interests."
1
about house her
Farwell's would
home.
Story be
"promise[d]" $1,000,000 in her
that and "best
eventually it
worth be
that
refinancing
would
(Id. ¶¶ 8, 11, 14).
Farwell alleges that, in
The facts herein are taken from Farwell's complaint. (ECF No. 2). 2
reality, Story was preying on her "vulnerable status" as an unemployed "older person" and sufferer of multiple sclerosis. (Id. ¶¶ 1, 10, 15).2 Over a period of a few years, Farwell worked with Story in refinancing her home several times. sometime in 2005. (Id.). Farwell first refinanced
Then, on January 11, 2007, Story
again acted as a broker for Farwell when she refinanced her home a second time, this time with GMAC Mortgage. 2. The Bridge Street Appraisal (Id. ¶¶ 7-8).3
In anticipation of the January 2007 refinance, Story hired Defendant Bridge Street Appraisals ("Bridge Street") to conduct an appraisal of Farwell's house. allegedly acting under (Id. ¶ 16). from Bridge Street, appraised
instructions
Story,
Farwell's home on December 11, 2006 at $755,000. Farwell appraisal. notes several deficiencies in the
(Id.). Bridge Street
For one, the appraiser did not view the interior of
Farwell's home, where he would have discovered "non-functioning garage doors, plumbing problems, leaks, a failing boiler and and
neutralizing
tank,
ceiling
outdated
appliances
In support, Farwell cites notes from Story that read, "Duty of care ability to repay no income bedridden MS" and "Appraiser did what told to do. $750K." (ECF No. 2 ¶ 15). The January 2007 mortgage carried a principal amount of $566,250, which amounted to a monthly payment of just over $3,244. (ECF No. 2 ¶ 7). 3
3
2
damaged floors." that the roof
(Id. ¶ 17). was roughly 30
Bridge Street did not observe years old and needed to be
replaced.
(Id. ¶ 18).
It also falsely reported that the house
had new windows, a new porch, and new ceiling fans, when in truth the windows and porch were original and no fans were
installed.
(Id. ¶ 19).
In addition, there were several issues one home had an additional while another had an
with the comparable homes used: bathroom not listed on the
appraisal,
additional unlisted half-bathroom and contained 428 more square feet than listed. (Id. ¶¶ 20-22). A third comparable "home"
was actually a commercial building in a different town that was built ten years after Farwell's house. 3. The April 2007 Refinance (Id. ¶ 23).
On April 11, 2007, just a few months after her refinance with GMAC Mortgage, Farwell again refinanced her house, this time with National City Mortgage ("National City"). Story allegedly promised Farwell that the new (Id. ¶ 25). with
mortgage
National City was to be "an interest-only loan for the life of the loan." (Id. ¶ 12). He told her that the new mortgage would (Id. ¶ 13). And Story
cancel her "Private Mortgage Insurance."
assured Farwell that "he would be able to lower her monthly mortgage payments in the immediate future after [she] refinanced her GMAC mortgage loan through National [City]." (Id. ¶ 12).
4
In
Farwell's
view,
the
closing
documents
for
this
transaction were "contradictory and confusing."
(Id. ¶ 26).
For example, many of the documents provided different monthly payments. Payment While the Amortization Schedule and the Interest Only Note Addendum listed the initial payment as
Period
$3,676.69,4 the Note listed a monthly payment of $4,215.85. ¶¶ 27, 29, 31). payments at
(Id.
A Payment Breakdown listed the initial monthly but the Truth in Lending Disclosure
$4,453.86,
Statement5 provided for a payment schedule of (1) $4,018.96 for the first 120 months, (2) $5,034.41 for the next 38 months, (3) $4,927.45 for the next 201 months, and (4) $4,924.07 for the final month of Loan the loan. (Id. ¶¶ 32, a 37). monthly The Uniform of
Residential $4,100.01.
Application
listed
payment
(Id. ¶ 39).
The closing documents also provided For instance, the Deed of Trust lists
different loan amounts.
debt to National City of $641,750 and the Note provides the same figure as the principal amount. (Id. ¶¶ 29, 31). The
Settlement Statement, Request for Title Commitment, Special Loan
The Interest Only Payment Period Note Addendum stated that the payment would be $3,676.69 for the first 120 months and $4,927.45 for each month thereafter. (ECF No. 2 ¶ 30). Farwell says she received the Truth in Lending disclosures mandated by 12 C.F.R. § 226.18 "by telefax on the day of the loan's consummation, April 11, 2007." (ECF No. 2 ¶ 93). 5
5
4
Instructions,
and
Uniform
Residential
Loan
Application
also The the
listed $641,750 as the loan amount. Truth in Lending Disclosure
(Id. ¶¶ 32-34, 39). however, listed
Statement,
amount financed as $631,922.30. In addition, the closing
(Id. ¶ 36). documents for the April 11
refinance allegedly reflect that National City was aware that Farwell was unemployed. The Borrower Personal Information
sheet, for example, did not list a work number for Farwell. (Id. ¶ 28). Similarly, the Uniform Residential Loan Application (Id. ¶ 41). provide Farwell states that supporting
did not list any employment. she was not required to
"traditional
documentation to demonstrate income, employment, and assets." (Id. ¶ 107). 4. Farwell's Default and Subsequent Events
The April 2007 refinance did not go well for Farwell the loan "was delinquent almost from the beginning." As a result, Farwell and National City6 had (Id. ¶ 112). a number of
communications concerning her mortgage, much of which Farwell attached to her complaint. 2009, for instance, In two letters dated February 24, City "referenced a conversation
National
The complaint states that PNC Financial Services acquired National City Corporation on December 31, 2008. (ECF No. 2 ¶ 43). Later apparently around late 2009 "PNC began rebranding National City Mortgage as `PNC Mortgage'." (Id. ¶ 56). 6
6
[Farwell] had with a National Loan Counselor regarding mortgage relief options" to and requested certain income and for expense mortgage
information relief.
determine
Farwell's
eligibility
(Id. ¶¶ 44-45).
Another letter dated March 21, 2009
indicated that National City "was considering [Farwell] for a loan modification," and asked for additional information. ¶ 46). (Id.
National City sent yet another request for the same type (Id. ¶ 48).7
of information on May 4, 2009.
On May 15, 2009, National City denied Farwell's "hardship assistance request" because she had a "deficit income." 49). (Id. ¶
Two weeks later, in a letter dated May 28, National City Farwell that it had referred her loan to its
informed
foreclosure department.
(Id. ¶ 50).
A letter dated the next
day stated that "National [City] had referred [Farwell]'s loan to National [City]'s attorney `who has been instructed to
proceed with foreclosure.'"
(Id. ¶ 51).
On June 19, 2009, Farwell met with Paul Leibold of National City to discuss the possibility of a loan modification. 52). (Id. ¶
Leibold then asked for a "hold" to be placed on National
City's foreclosure process; that hold was put in place on June 22, 2009. (Id. ¶¶ 53-54). At some time thereafter, Farwell
Farwell also signed a document on May 1, 2009 allowing Story to check the status of her loan modification request. (Id. ¶ 47). 7
7
apparently filed an application for modification under the Home Affordable Modification Program ("HAMP").8 To give National City
time to consider this application, Farwell signed a Non-Curing Forbearance Agreement on August 21, 2009, under which National City "agreed to forebear its conduct of a foreclosure sale until after November 30, 2009 in exchange for three monthly payments from [Farwell] of $1,247.75." three-month forbearance (Id. ¶ 55). neared As the end of the however,
period
completion,
National City informed Farwell that its "loan modification group had been too busy to review [her] documentation." (Id. ¶ 57).
As a result, Farwell and National City signed a second NonCuring Forbearance Agreement on November 24, 2009, under which National City agreed to forbear for another three months (to February 28, 2010) for the same payment as before. (Id. ¶ 57).
After hearing nothing from National City (which had since changed its name to PNC Mortgage ("PNC")), Farwell contacted PNC Mortgage employee Michael Schick. (Id. ¶ 58). (Id.). Schick offered But when Farwell
Farwell a "trial" HAMP modification.
received the HAMP documentation, she realized that "the payments
According to Farwell, she received different information about whether her loan was even eligible for HAMP. Various employees of PNC told Farwell that (1) "her loan was securitized, and that the owners of the securitized loan refused to participate in HAMP;" (2) "the her loan was securitized, and the owners of her securitized loan are participating in HAMP;" and (3) "her loan is not securitized." (ECF No. 2 ¶ 64). 8
8
were larger than then HAMP-mandated 31% of Farwell's monthly income." (Id. ¶ 59). Farwell contacted PNC's HAMP advocacy
line, who informed her that the payments had been based on an income of over $8,000 a month. (Id. ¶¶ 60-61).
Farwell believed the payment calculation was an "electronic or clerical error." problem, Solomon she (Id. ¶ 62). her In an effort to correct the Jerry Solomon. to (Id.). PNC on
contacted
attorney,
contacted
Schick
and
submitted
documents
Farwell's behalf, in an effort to confirm Farwell's income and "conform" the payment to "HAMP's payment formula." (Id.).
Despite Solomon's efforts, Farwell was unable to correct the issue with her HAMP payment calculation. Cara McConnell,
another PNC employee, told Farwell on March 18, 2010 that she did not know how to correct the error. (Id. ¶ 65).
Nevertheless, McConnell suggested that Farwell's "only way to proceed" reapply. was to withdraw her initial HAMP application and
(Id. ¶ 65).
On March 22, 2010, Farwell received a
letter from PNC Collections indicating that she had withdrawn from the HAMP program. (Id. ¶ 66). When Farwell contacted PNC
the same day, a PNC employee informed her that her file had been
9
sent to PNC Collections.
(Id. ¶ 67).
Farwell was told she
could no longer speak with McConnell. B. Procedural Background
(Id.).9
Farwell originally filed a complaint in the Circuit Court for Montgomery County on April 9, 2010, which PNC removed to this court on May 20, 2010. (ECF No. 1, at 1).10 In that
complaint, Farwell alleges that PNC, as successor-in-interest to National City, violated the Truth in Lending Act ("TILA"), the Maryland Consumer Protection Act ("MCPA"), and the Fair Debt Collection Practices Act ("FDCPA"). (ECF No. 2, at 12-21).
Farwell also asserts a breach of contract claim against PNC. (Id. at 21-22). claims against Moreover, Farwell asserts three fraud-based Story, Bridge Street, and Challenge Financial
Investors Corporation ("Challenge").11
(Id. at 21-28).
Story, Bridge Street, and PNC all filed motions to dismiss in June 2010. (ECF Nos. 25, 28, 29). Challenge, however, was
never served and Farwell failed to respond to the court's show cause order as to why service was not effected.
9
(ECF No. 47).
Around the same time, on March 3, 2010, PNC Bank closed Farwell's Points VISA account because of "[s]erious delinquency and public record or collection filed at the bureau." (ECF No. 2 ¶ 63).
10
PNC.
At the time of removal, Farwell had not yet served (ECF No. 1, at 2).
Challenge was allegedly Story's employer during most of the relevant events. 10
11
Consequently, the court dismissed Challenge from the case on November 17, 2010. Farwell (ECF No. 48). Defendants' motions to dismiss, albeit
opposed
somewhat equivocally. drop four of the
(ECF Nos. 35 & 36). counts from the
Farwell proposes to current complaint -
seven
including the FDCPA claim, the breach of contract claim, and two of the three fraud claims and substitute four new claims Farwell
"based upon the same facts."
(ECF No. 36, at 13).
opposes dismissal of the TILA and MCPA claims, but does not address the third fraud claim for "common law tortious
conspiracy to defraud."
(ECF No. 36, at 9-13).
Both Bridge
Street and PNC replied in opposition to the proposed amendment. (ECF Nos. 40, 43). request for leave PNC reiterated its opposition to Farwell's to amend by filing a motion to strike
Farwell's motion for leave to amend. II. Motion to Dismiss A. Standard of Review
(ECF No. 41).
Defendants have all moved to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The purpose of a motion
to dismiss pursuant to Rule 12(b)(6) is to test the sufficiency of the plaintiff's complaint. See Edwards v. City of Goldsboro, Except in certain specified
178 F.3d 231, 243 (4th Cir. 1999).
cases, a plaintiff's complaint need only satisfy the "simplified pleading standard" of Rule 8(a), Swierkiewicz v. Sorema N.A., 11
534 U.S. 506, 513 (2002), which requires a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Nevertheless, "Rule 8(a)(2)
still requires a `showing,' rather than a blanket assertion, of entitlement to relief." 544, 555 n.3 (2007). Bell Atl. Corp. v. Twombly, 550 U.S.
That showing must consist of more than "a
formulaic recitation of the elements of a cause of action" or "naked Ashcroft assertion[s] v. Iqbal, devoid 129 of further 1937, factual 1949 enhancement." (internal
S.Ct.
(2009)
citations omitted). The court must consider all well-pled allegations in a
complaint as true, Albright v. Oliver, 510 U.S. 266, 268 (1994), and must construe all factual allegations in the light most favorable to the plaintiff. See Harrison v. Westinghouse
Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999) (citing Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993)). The court need not, however, accept unsupported legal
allegations, Revene v. Charles Cnty. Comm'rs, 882 F.2d 870, 873 (4th Cir. 1989), legal conclusions couched as factual
allegations, Iqbal, 129 S.Ct. at 1950, or conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979). See also 2009). Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir.
"[W]here the well-pleaded facts do not permit the court 12
to
infer
more
than
the
mere
possibility
of
misconduct,
the
complaint has alleged, but it has not `show[n] . . . that the pleader is entitled to relief.'" Iqbal, 129 S.Ct. at 1950
(quoting Fed.R.Civ.P. 8(a)(2)).
Thus, "[d]etermining whether a
complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." B. At Analysis the outset, many of Farwell's claims may be easily Id.
dispensed with given her concession that the claims are "overstated." (ECF No. 36, at 12). Farwell wishes to "withdraw" her
claims against PNC for breach of contract and violation of the FDCPA (counts three and four), her claim against Story for
common law fraud and unjust enrichment (count five), and her claim against Bridge Street for the same (count six). 35, at 2; 26, at 13). (ECF Nos.
The court will accede to Farwell's Given that Farwell's
request and dismiss those four counts.
complaint now lacks any tort claim, she cannot proceed on her claim for civil conspiracy (count seven) either. Compass Mktg., Inc., 391 Md. 117, 128-29 See Mackey v. ("[C]ivil
(2006)
conspiracy is not capable of independently sustaining an award of damages in the absence of other tortious injury to the
plaintiff.").
Consequently, two counts remain.
The court will
address each in turn. 13
1.
Truth in Lending Act Claims the complaint alleges that PNC's predecessor,
First,
National City, violated TILA in several ways.
TILA was enacted
by Congress to "assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit." Koons Buick Pontiac GMC, Inc. v. Nigh, 543 U.S. TILA attempts to to disclose annual Id.
50, 54 (2004) (quoting 15 U.S.C. 1601(a)). accomplish information percentage this about rates purpose things of by requiring as and
lenders
such
"finance borrowers'
charges, rights."
interest,
Because the statute is meant to favor consumers, "the provisions of TILA must be `absolutely complied with and strictly
enforced.'"
Am. Mortg. Network, Inc. v. Shelton, 486 F.3d 815,
819 n.4 (4th Cir. 2007) (quoting Mars v. Spartanburg Chrysler Plymouth, Inc., 713 F.2d 65, 67 (4th Cir. 1983)). not, the lender may be subject to "such If they are as money
penalties
damages, attorney's fees and rescission." F.3d 278, 280 (3d Cir. 2008).
In re Sterten, 546
One of the material disclosures a lender must make is the "amount financed," which is "defined to be the `amount of credit of which the consumer has actual use.'" 434 F.3d 275, 280 (4th Cir. 2006) Gibson v. LTD, Inc., (quoting 15 U.S.C. §
1638(a)(2)(A)).
Many of the TILA violations Farwell alleges in 14
this case rest on the same fundamental complaint that National City provided different and allegedly contradictory loan and
payment amounts in the mortgage closing documents.
(See, e.g.,
ECF No. 2 ¶¶ 71, 87 (National City purportedly failed to provide "a meaningful disclosure of credit terms . . . [because it] supplied credit terms that showed two different loan amounts and five different payment amounts"); "the loan id. amount ¶ 75 and (National monthly "two City
misleadingly amounts");
disclosed ¶ 84
payment
id.
(National
City
provided
different
finance amounts"); id. ¶ 89 (National City failed to provide "clear and conspicuous" disclosures because they were
"contradictory")). upon a
PNC contends Farwell's allegations all rest of the "amount financed" disclosure.
misunderstanding
According to PNC, TILA requires only that lenders accurately calculate statutory the "amount financed" it does based on a above-mentioned the "amount
definition;
not
require
that
financed" (or the payment schedule) in the TILA disclosure be in perfect congruence with the loan amounts found in all the other closing documents. (ECF No. 29-1, at 5-6).
In her complaint, Farwell does not raise any suggestion that the disclosures were insufficient or otherwise factually inaccurate. became Rather, she relies solely upon the notion that they when read next to other loan documents
misleading
containing "contradictory terms." 15
The United States Court of
Appeals
for
the
Fourth
Circuit
has
already
considered
and
rejected a similar argument.
In Smith v. Anderson, 801 F.2d
661, 663 (4th Cir. 1986), a borrower alleged that "the creditor created unnecessary confusion by stating different interest
rates and principal amounts on the note and in the truth-inlending statement." In affirming the district court's entry of
summary judgment for the lender, the Fourth Circuit agreed with the position taken by PNC in the present case: The perceived inconsistency arises, however, from the lender's compliance with the truthin-lending requirements. "APR" and "amount financed" are terms of art, defined by federal regulations, and explained in the disclosure statement itself. "Amount financed" is derived by making certain adjustments to the principal loan amount, most notably the subtraction of any prepaid finance charge. There is therefore no inconsistency in the fact that this "amount financed" differs from the principal amount of the loan, and the difference is clearly explained in the disclosure. . . . Rather than being a deliberate attempt to deceive, therefore, [the lender]'s disclosures in the truth-in-lending statement served to supplement the information provided in the note in the uniform manner required by federal law, and to convey to the borrowers in understandable terms the true extent of their obligations. Id. at 663-64 (citations and footnotes omitted). in Smith, there is no suggestion that the Here, just as inconsistencies As
resulted from anything other than definitional differences.
such, all claims relating to National City's (and thus PNC's)
16
disclosure of contradictory principal and payment terms must be dismissed. As Farwell notes (ECF No. 2 ¶ 92), TILA and its
implementing regulations (Regulation Z) require certain mortgage lenders to provide good faith estimates of certain disclosures (a) no later than three business days after the lender receives a written mortgage application and (b) at least seven business days before "consummation of the transaction." 226.19(a). Farwell maintains that she did See 12 C.F.R. § not receive the
required disclosures until April 11, 2007, the day the loan was closed. (Id. ¶ 93). PNC has now provided the court with three
disclosure statements, which it says it provided on March 17, March 23, and March 26 of 2007. disclosures would be timely. At the motion to dismiss stage, Farwell's factual (ECF No. 29-1, at 6). Such
allegation that she did not receive the required disclosures until the day of closing is enough.12 Although PNC's extrinsic
documents might strongly support its position, it is generally the case that "extrinsic evidence should not be considered at
Such is the case even though one of the disclosures was signed. "Although the signed acknowledgement may be useful evidence concerning whether the required disclosures were made, it creates no more than a rebuttable presumption that the proper notice was given." DeCosta v. U.S. Bancorp, No. DKC 10-0301, 2010 WL 3824224, at *4 (D.Md. Sept. 27, 2010) (citing 15 U.S.C. § 1635(c)). 17
12
the
12(b)(6)
stage."
Am.
Chiropractic
Ass'n
v.
Trigon
Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004). consider an extrinsic document if "it was
A court may to and
integral
explicitly relied on in the complaint and [if] the plaintiffs do not challenge its authenticity," but Farwell did not rely upon the documents provided. Id. (quoting Phillips v. LCI Int'l Moreover, the court
Inc., 190 F.3d 609, 618 (4th Cir. 1999)).
declines PNC's footnote request to treat its motion as one for summary judgment, as the case is still at a very early point and no discovery has taken place. dismiss Farwell's claims Consequently, the court will not PNC's alleged failure to
concerning
provide timely TILA disclosures. In addition, Farwell introduced a new and somewhat vague allegation in her opposition that PNC improperly failed to "make allowance" in the disclosed amount financed of a "Broker Fee" paid to National City. (ECF No. 36, at 10). "These factual
allegations are not properly considered, as a memorandum of law opposing a motion to dismiss is not the proper means to
supplement the complaint."
Nat'l Labor Coll. v. Hillier Grp.
Architecture New Jersey, Inc., No. DKC 09-1954, 2010 WL 3609534, at *7 (D.Md. Sept. 14, 2010). them, the allegations would Even if the court could consider simply be too indistinct and
conjectural to allow them to proceed.
(See, e.g., ECF No. 36,
at 10 ("One is left wondering what [the charge for a Broker Fee] 18
actually represents.")).
"Factual allegations must be enough to Twombly,
raise a right to relief above the speculative level." 550 U.S. at 555. 2. Maryland Consumer Protection Act Claims
Farwell also argues that PNC violated the MCPA (through its predecessor, National City) when it refinanced her mortgage on April 11 without adequately verifying her income or employment. (ECF No. 2 ¶¶ 105-12). As a result, PNC purportedly approved a
loan to Farwell "that she could never afford, should have never received, and was exceedingly risky." (Id. ¶ 114). PNC
suggests that Farwell's claim fails because (1) Maryland law did not impose any duty on PNC to advise her as to the
appropriateness of the refinance; (2) PNC did not intend to induce (or actually induce) Farwell to enter the loan; and (3) Farwell has not alleged that she reasonably relied on any
inducement from PNC. "The [MCPA], codified at Maryland Code . . . §§ 13-101 et seq. of the Commercial for v. Law the Gen. Article was intended of 397 to provide in 140
minimum
standards Lloyd
protection Motors Corp.,
consumers Md. 108,
[Maryland]." (2007).
The Maryland Legislature passed the Act "in response to
mounting concern over the increase of deceptive trade practices" and because it felt that "existing federal and State laws [were] inadequate, poorly coordinated 19 and not widely known or
adequately enforced." 519, 536-37 (Md. 1995). be liberally
Morris v. Osmose Wood Preserving, 340 Md. Much like TILA, the MCPA is intended to in order to achieve its consumer
construed
protection objectives.
See State v. Cottman Transmissions Sys.,
Inc., 86 Md.App. 714, 743 (1991). Citing the text of the MCPA, Farwell argues that she need not prove reliance to establish a violation of the Act. (ECF
No.36, at 11-12 (citing Md. Code Ann., Com. Law § 13-302 ("Any practice prohibited by [the MCPA] is a violation of [the MCPA], whether or not the consumer in fact has been misled, deceived, or damaged as a result of that practice."))). The mere
existence of a violation, however, does not necessarily lead to private relief, and Farwell ignores the "clear distinction
between the elements necessary to maintain a public enforcement proceeding versus a private enforcement proceeding." A party who
CitaraManis v. Hallowell, 328 Md. 142, 152 (1992).
files a complaint with the Attorney General need not establish reliance leading to actual injury.13 Lloyd, 397 Md. at 142. On
the other hand, a private party who brings her own suit must establish that she has "suffered an identifiable loss, measured
Even when a consumer decides to pursue public enforcement, "the Division must determine that the consumer relied upon the misrepresentation" before it can order a violator to pay restitution to that particular consumer. Consumer Prot. Div. v. Morgan, 387 Md. 125, 164 (2005). 20
13
by the amount the consumer spent or lost as a result of his or her reliance on the sellers' misrepresentation." Id. at 143.
Thus, Farwell must establish injury and reliance "despite the language in [Section] 13-302." Morris, 340 Md. at 634 n.10.
Farwell's claims under the MCPA rest on PNC's failure to verify her income and employment. Even if such a failure is
actionable under the MCPA, Farwell has not alleged that she relied on PNC's failure to verify to her detriment. Absent an
allegation of reliance, it cannot simply be assumed here, where there is at least some possibility that Farwell was a "complicit or willing purchaser" who wished to keep her home at all costs. Cf. Consumer Prot. in Div. v. Morgan, mortgage 387 Md. 125, were 167 (2005) of to of
(explaining, various purchase price").
case that
where an
lenders
accused desire
abuses, a home
"individual outweighed
consumer's the
might
have
consideration
As such, Farwell's MCPA claims found in count II of
the complaint must be dismissed.14 III. Motion for Leave to Amend A. Standard of Review
Farwell requested leave to amend on August 5, 2010, well after Defendants' filed their Rule 12(b)(6) motions. Federal
Because the lack of any alleged reliance justifies dismissal of Farwell's MCPA claim, the court need not discuss PNC's remaining arguments. 21
14
Rule of Civil Procedure 15(a) provides that, after 21 days have passed from the filing of a responsive pleading or Rule 12(b) motion, "a party may amend its pleading only with the opposing party's written consent or the court's leave. freely give leave when justice so requires." The court should Leave should be
granted "[i]n the absence of . . . undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of amendment." U.S. 178, 182 (1962). The Local on Rules of this who court seek also to impose amend. certain Those Foman v. Davis, 371
requirements
plaintiffs
leave
requirements, found in Local Rule 103.6, are worth quoting in full: a. Original of Proposed Amendment to Accompany Motion Whenever a party files a motion requesting leave to file an amended pleading, the original of the proposed amended pleading shall accompany the motion. If the motion is granted, an additional copy of the amended pleading need not be filed. The amended pleading shall be deemed to have been served, for the purpose of determining the time for response under Fed. R. Civ. P. 15(a), on the date that the Court grants leave for its filing.
22
b.
Exhibits to Amended Pleadings Unless otherwise ordered by the Court, only newly added exhibits are to be attached to an amended pleading. However, if the amended pleading adds a new party, counsel shall serve all exhibits referred to in the amended pleading upon the new party. Identification of Amendments Unless otherwise ordered by the Court, the party filing an amended pleading shall file and serve (1) a clean copy of the amended pleading and (2) a copy of the amended pleading in which stricken material has been lined through or enclosed in brackets and new material has been underlined or set forth in bold-faced type. Requested Consent of Other Counsel Before filing a motion requesting leave to file an amended pleading, counsel shall attempt to obtain the consent of other counsel. Counsel shall state in the motion whether the consent of other counsel has been obtained.
c.
d.
B.
Analysis
Farwell's present motion for leave to amend must be denied. The motion does not comply to with any of the Local has Rule not
requirements
applicable
such
motions.
Farwell
provided a copy of the proposed amended complaint, has not filed a "red-lined" version of the complaint, and counsel has not indicated whether he sought the consent of opposing counsel. These deficiencies were not rectified even after counsel for Bridge Street wrote Farwell's counsel and outlined the
requirements of the Local Rules. 23
(ECF No. 43-1, at 1).
Compliance with the Local Rules is not optional.
The rules
pertaining to amendments, for instance, help ensure that the court has available all the information it needs to determine whether leave can be appropriately granted. "[t]hose rules have the force of law." 130 S.Ct. 705, 710 (2010) And, of course,
Hollingsworth v. Perry, marks and citations
(quotation
omitted); Fed.R.Civ.P. 83(a)(1). wary of ignoring them.
As such, counsel should be
Because Farwell's motion for leave to amend does not comply with the Local Rules, it cannot be granted. The motion will be
denied without prejudice to Farwell's right to file a motion for leave to amend within 21 days that complies with Local Rule 103.6. Although Bridge Street and PNC suggest that even this
step is unnecessary because any amendment would be futile, the court cannot conclude on the papers before it that "the proposed amendment is clearly insufficient or frivolous on its face." Johnson v. Oroweat Foods Co., 785 F.2d 503, 510 (4th Cir. 1986). This is primarily so because it is not yet entirely clear what the proposed amendment will include.15 IV. Conclusion For the foregoing reasons, the court will grant in part and deny in part PNC Mortgage's motion to dismiss. (ECF No. 29).
15
moot.
PNC's motion to strike (ECF No. 41) will be denied as 24
The motions to dismiss filed by Defendants Jon Lane and Leon Story (ECF Nos. 25, 28) will be granted. Farwell's current
motion for leave to amend (ECF No. 35) will be denied and PNC Mortgage's motion to strike (ECF No. 41) will be denied as moot, but Farwell will be permitted to file a proper motion for leave to amend within 21 days. A separate order will follow.
/s/ DEBORAH K. CHASANOW United States District Judge
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