Green et al v. Wells Fargo Bank, N.A.
Filing
33
MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 2/27/13. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
SHIRLEY M. GREEN, et al.
:
v.
:
Civil Action No. DKC 12-1040
:
WELLS FARGO BANK, N.A.
:
MEMORANDUM OPINION
Presently
consumer
pending
lending
action
and
is
ready
a
Defendant Wells Fargo Bank, N.A.
for
motion
resolution
to
dismiss
(ECF No. 25).
in
filed
this
by
The issues are
fully briefed and the court now rules pursuant to Local Rule
105.6, no hearing being deemed necessary.
For the reasons that
follow, Defendant’s motion will be granted.
I.
Background
A.
Factual Background
The following facts are drawn from the amended complaint
and exhibits attached thereto.
Plaintiffs
Shirley
M.
Green,
(ECF No. 24).
Ralph
E.
On May 31, 2006,
Green,
and
Antoinette
Green took out a mortgage of just under $1 million from Southern
Trust Mortgage, LLC, to finance their purchase of a home in
Upper Marlboro, Maryland.
The servicing rights to the loan were
later assigned to Defendant Wells Fargo Bank, N.A.
In or around October 2010, the Greens experienced financial
difficulties and fell behind on their mortgage payments.
In
late March or early April 2011, they contacted Wells Fargo to
inquire about a loan modification.
In response, Defendant sent
a letter dated April 8, 2011, which opened with the statement,
“[a]t Wells Fargo Home Mortgage, our goal is to ensure that you
have every opportunity to retain your home.”
2).1
(ECF No. 24-4, at
Defendant advised the Greens, “[i]n order to process your
request
for
Loan
Modification,
the
following
information
is
needed . . . for each specified borrower[:] . . . Proof of
Income
(paystub,
SSI,
child
support).”
(Id.).
The
letter
further stated:
If ALL of this information or a request for
an extension is not received within ten (10)
days from the date of this letter, we will
consider this request cancelled.
Please
note any collection and foreclosure action
will continue uninterrupted until approval.
Therefore, a timely response is essential.
(Id. (emphasis in original)).
The
Greens
failed
to
respond
promptly
to
Defendant’s
request for information, and, on May 16, 2011, a foreclosure
action
was
commenced
against
them
Prince George’s County, Maryland.
1
in
the
Circuit
Court
for
(ECF No. 24-10; see also ECF
References to page numbers in the exhibits attached to the
amended complaint are to those assigned by the court’s internal
electronic case filing system.
2
No. 23-2).2
Approximately one week later, Ralph and Shirley
Green submitted a number of documents to Wells Fargo, including
paystubs,
a
lease
showing
their
receipt
of
monthly
rent
in
connection with an unspecified property, various tax documents,
and documents related to a second mortgage on their home.
This
submission was accompanied by a cover letter in which the Greens
provided detail of the circumstances leading to their default
and asked Wells Fargo “to consider working with [them] to modify
[their] loan before it goes into foreclosure.”
(ECF No. 24-3,
at 1 (emphasis removed)).
In mid-June 2011, the Greens received a letter from a Wells
Fargo
“Home
Preservation
Specialist,”
Mike
Leiferman,
who
introduced himself as “part of the special team that’s dedicated
to
helping
assistance.”
[them]
with
[their]
request
for
mortgage
payment
(ECF No. 24-5, at 2; see also ECF No. 24-7, at 3).
Mr. Leiferman advised that he would be the Greens’ “primary
contact, to help [them] every step of the way,” and would work
2
Plaintiffs attach to the amended complaint the affidavit
of the substitute trustee, which was filed along with a copy of
the underlying deed of trust in the foreclosure action.
(ECF
No. 24-10).
Defendant attaches to its initial motion to
dismiss, which was subsequently renewed, a docket report from
the foreclosure proceeding. (ECF No. 23-2). A federal district
court may take judicial notice of documents from state court
proceedings and other matters of public record in conjunction
with a Rule 12(b)(6) motion without converting it to a motion
for summary judgment.
See Philips v. Pitt County Memorial
Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (citing Papasan v.
Allain, 478 U.S. 265, 268 n. 1 (1986)).
3
“closely with [a] team of specialists to determine what options
might be right for [them].”
(Id.).
The letter reminded the
Greens that Wells Fargo had recently asked them to “forward []
certain documents” necessary for a determination as to their
“eligibility for payment assistance,” and requested that they
promptly
already.
submit
(Id.).
this
information
if
they
had
not
done
so
Mr. Leiferman asked Plaintiffs to “keep in
mind that the sooner [they responded], the sooner [Wells Fargo
could]
determine
[]
eligibility
for
payment
assistance,”
and
stated that he would be “in touch . . . to discuss what happens
next” after the requested information had been “receive[d] and
review[ed].”
(Id.).
On or about June 23, the Greens had a “conversation” with
Mr. Leiferman during which he apparently clarified the documents
that were necessary to process the loan modification request.
(ECF No. 24-6, at 2).
On June 29, “[a]s requested” during that
conversation, Plaintiffs submitted “pay stubs for April and May
[2011] for Ralph and Shirley Green[;] personal bank statement[s]
for March, April, [and] May[;] [IRS] Form 4506[T;] [and a] May
bank statement for Bank of America.”
(Id.).
On November 4, 2011, the Greens received a letter from Mr.
Leiferman “responding to [their] request for mortgage assistance
and the options that may be available to help [them].”
24-7, at 2).
(ECF No.
The letter advised that Wells Fargo had “carefully
4
reviewed the information” provided and “explored a number of
mortgage assistance options,” but concluded that the Greens did
“not meet the requirements of the program” because Wells Fargo
had “not been able to reach [them] to discuss [their] situation,
and
without
input
from
[them],
[it
[them] for a loan modification.”
was]
(Id.).
not
able
to
review
Defendant stated that
it would “continue to work” with the Greens “to help [them]
avoid
a
foreclosure
sale,”
but
cautioned
that
“if
[their]
mortgage ha[d] been referred to foreclosure, that process moves
forward at the same time.”
(Id. at 3).
Plaintiffs responded by
letter dated December 1, stating, “[a]fter months of patiently
waiting for a loan modification, we are devastated over the
decision
[not
solution.”
11/4/11,”
to]
offer
us
a
reasonable
(ECF No. 24-8, at 2).
they
asserted,
“we
mortgage
assistance
“Contrary to the letter dated
have
provided
every
document
requested over and over again . . . [and] initiated calls on
numerous
occasions
characterizing
for
the
prior
updates
statement
reached as “absurd.”
(Id.).
process
extreme
has
caused
and
statuses
that
they
of
our
could
loan,”
not
be
Plaintiffs further stated, “[t]his
stress
which
has
affected
our
health,” recalling that they were “told by Michael Leiferman,
the Home Preservation Specialist[,] on numerous occasions, not
to worry[,] that things would [work out,] and that everything
was
fine[,]
that
[the]
loan
was
5
in
underwriting.”
(Id.).
According to the Greens, Mr. Leiferman also told them that “all
documents that were needed had been received.”
(Id.).
By letter dated December 14, 2011, Wells Fargo requested
that Plaintiffs “[c]all . . . immediately so [it could] respond
to [their] request for mortgage payment assistance.”
24-9, at 2).
(ECF No.
The letter thanked Plaintiffs for “sending . . .
documentation supporting [their] request,” advising that Wells
Fargo was “here to help,” but that it was “critical” that they
make
contact
available.”
“immediately
(Id.).
to
determine
what
options
may
be
Because Plaintiffs were “in the foreclosure
process,” Defendant cautioned that they had “limited time to
receive assistance before a foreclosure sale [was] scheduled.”
(Id.).
Wells Fargo asserted that it would continue to “work
with” the Greens “to help prevent foreclosure,” but that if it
did not “receive all required documents before the scheduled
foreclosure
(Id.).
sale,
Defendant
[it]
asked
may
not
be
Plaintiffs
able
to
to
stop
“gather
the
the
sale.”
following
information and have it ready when [they] call[:] . . . Monthly
gross
income
(before
taxes)
for
each
borrower[,]
[a]ny
additional household income[,] [c]urrent monthly expenses (have
a list of all expenses, including any taxes and insurance for
your home paid separately from your mortgage payment)[,] and
[the] [r]eason for [their] financial hardship.”
6
(Id.).
B.
Procedural History
Ralph
and
Shirley
Green
commenced
this
action
in
the
Circuit Court for Prince George’s County on February 1, 2012,
alleging
violations
of
the
Maryland
Consumer
Protection
Act,
common law fraud, promissory estoppel, negligence, and negligent
misrepresentation,
and
seeking
compensatory
damages
of
$1
million, punitive damages of $3 million, specific performance of
the alleged promise “to process their documentation and make a
decision
on
their
eligibility
for
payment
interest, attorneys’ fees, and costs.
assistance,”
plus
(ECF No. 2 ¶ 51(a)).
Defendant timely removed to this court on April 4, 2012, and,
shortly thereafter, filed a motion to dismiss for failure to
state
a
necessary
party
Antoinette Green, a co-borrower under the deed of trust.
(ECF
No. 23).
claim
and
failure
to
as
a
On May 7, the Greens amended their complaint, adding
(ECF No. 24).3
Antoinette Green as a plaintiff.
On
join
May
25,
Defendant
renewed
its
motion
to
dismiss,
adopting the arguments advanced in support of its prior motion
and briefly addressing the new allegation raised by Plaintiffs
in their amended pleading.
(ECF No. 25).
3
Plaintiffs filed
In addition to adding Antoinette Green as a plaintiff, the
amended complaint alleged another misrepresentation by Defendant
– namely, that “its ‘Final Loss Mitigation Affidavit’ filed in
the foreclosure in the Circuit Court for Prince George’s County
[falsely] represents that the Greens failed to submit the second
page of their 2009 tax returns.” (ECF No. 24-1 ¶ 31.1).
7
opposition papers on June 11 (ECF No. 27), and Defendant replied
on June 28 (ECF No. 28).4
II.
Standard of Review
The purpose of a motion to dismiss under Rule 12(b)(6) is
to test the sufficiency of the complaint.
Charlottesville,
464
F.3d
480,
483
(4th
Presley v. City of
Cir.
2006).
A
plaintiff’s complaint need only satisfy the standard of Rule
8(a), which requires a “short and plain statement of the claim
showing that the pleader is entitled to relief.”
8(a)(2).
Fed.R.Civ.P.
“Rule 8(a)(2) still requires a ‘showing,’ rather than
a blanket assertion, of entitlement to relief.”
v. Twombly, 550 U.S. 544, 555 n. 3 (2007).
Bell Atl. Corp.
That showing must
consist of more than “a formulaic recitation of the elements of
a cause of action” or “naked assertion[s] devoid of further
factual enhancement.”
Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (internal citations omitted).
At this stage, all well-pleaded allegations in a complaint
must be considered as true, Albright v. Oliver, 510 U.S. 266,
268 (1994), and all factual allegations must be construed 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
4
Defendant later filed two sets of papers advising of
supplemental authority (ECF Nos. 29, 31) and Plaintiff filed a
response to the first (ECF No. 30).
8
(4th Cir. 1993)).
In evaluating the complaint, unsupported legal
allegations
not
need
be
accepted.
Revene
Comm’rs, 882 F.2d 870, 873 (4th Cir. 1989).
v.
Charles
Cnty.
Legal conclusions
couched as factual allegations are insufficient, Iqbal, 556 U.S.
at 678, as are 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
Francis
Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009).
v.
“[W]here the
well-pleaded facts do not permit the court 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.’”
8(a)(2)).
Iqbal,
556
U.S.
at
679
(quoting
Fed.R.Civ.P.
Thus, “[d]etermining whether a complaint states a
plausible claim for relief will . . . be a context-specific task
that
requires
the
reviewing
experience and common sense.”
Plaintiffs’
claims
court
to
draw
on
its
judicial
Id.
alleging
fraud
and
violation
of
the
Maryland Consumer Protection Act are subject to the heightened
pleading standard of Federal Rule of Civil Procedure 9(b).
See
Harrison, 176 F.3d at 783–84; Dwoskin v. Bank of America, N.A.,
850 F.Supp.2d 557, 569 (D.Md. 2012).
“in
alleging
particularity
mistake.
a
fraud
the
or
mistake,
circumstances
Rule 9(b) provides that,
a
party
constituting
must
the
state
fraud
with
or
Malice, intent, knowledge, and other conditions of a
9
person’s
mind
may
be
alleged
generally.”
Such
allegations
typically “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’l Mortg., Inc., 197 F.Supp.2d 298,
313–14
(D.Md.
Greenfeld,
2000)
564
(quoting
F.Supp.
273,
Windsor
280
Associates,
(D.Md.
1983)).
Inc.
In
v.
cases
involving concealment or omissions of material facts, however,
meeting Rule 9(b)’s particularity requirement will likely take a
different form.
See Shaw v. Brown & Williamson Tobacco Corp.,
973 F.Supp. 539, 552 (D.Md. 1997) (recognizing that an omission
likely “cannot be described in terms of the time, place, and
contents of the misrepresentation or the identity of the person
making
the
misrepresentation”
(internal
quotations
omitted)).
The purposes of Rule 9(b) are to provide the defendant with
sufficient notice of the basis for the plaintiff’s claim; to
protect
the
defendant
against
frivolous
suits;
to
eliminate
fraud actions where all of the facts are learned only after
discovery; and to safeguard the defendant’s reputation.
See
Harrison, 176 F.3d at 784.
III. Analysis
The thrust of the amended complaint is that Wells Fargo,
through a series of communications, intentionally led Plaintiffs
to
believe
that
their
loan
modification
10
request
was
being
considered when, in fact, it never intended to process their
application or to modify their loan.
According to Plaintiffs,
the purpose of this scheme was to lead them “into a false state
of comfort . . . and thereby reduce the chance that [they] would
assert
foreclosure
defenses
–
because
Wells
Fargo
knew
foreclosure objections would frustrate its pursuit of revenue
through collection of late fees and penalties at a foreclosure
sale.”
(ECF No. 24 ¶ 29.9).
The complaint recites that “[t]he
Greens relied on the promise [that Defendant would process their
modification
Fargo
and
request],
taking
time
to
their
out
detriment,
of
their
by
lives
[Defendant’s] request[s] for documentation.”
trusting
to
comply
Wells
with
(Id. at ¶ 3).
“As
a direct and proximate result of Wells Fargo’s conduct, the
Greens[’] credit scores were lowered” and they “suffered from
severe
mental
anguish,
which
manifested
physically
through
vomiting, headaches, sleep loss, and other physical symptoms.”
(Id. at ¶¶ 30, 31).
Plaintiffs
Protection
Act,
misrepresentation
loss
mitigation
false
debt.”
assert
violations
common
based
on
.
.
law
the
Maryland
Consumer
and
negligent
fraud,
Defendant’s
.
(Id. at ¶¶ 2, 5).
“promise
which
analysis,”
representation
of
contend
in
they
the
collection
to
engage
in
constitutes
“a
of
a
consumer
In support of their promissory
estoppel claim, Plaintiffs assert that “[b]y making a promise on
11
which
the
Greens
relied
to
their
detriment,
equity
requires
specific enforcement” – namely, that Wells Fargo “process their
documentation
payment
and
make
assistance
a
decision
pursuant
to
on
[its]
their
internal
eligibility
for
procedures
and
guidelines, and, if eligible, to provide payment assistance in
accordance with said procedures and guidelines[.]”
6, 51(a)).
(Id. at ¶¶
They further allege that “by losing or overlooking
documentation,
repeatedly,
in
connection
with
a
modification application, Wells Fargo was negligent.”
loan
(Id. at ¶
7).
Defendant argues that the amended complaint is subject to
dismissal
negligence
for
two
and
reasons.
negligent
First,
it
misrepresentation
contends
claims
that
must
because it did not owe the Greens a duty of care.
Defendant
argues
that
Plaintiffs
“cannot
point
to
the
fail
Second,
a
false
representation of a present or past material fact, which they
justifiably relied upon, to cause them damages.”
(ECF No. 23-1,
at 16).
A.
As
Negligence and Negligent Misrepresentation
Defendant
observes,
Plaintiffs’
counsel
has
recently
filed negligence and negligent misrepresentation claims in this
district in a number of cases very similar to this one, and
courts considering such claims have generally found them subject
to dismissal because the defendants did not owe a tort duty to
12
the plaintiffs.
negligent
It contends that Plaintiffs’ negligence and
misrepresentation
claims
must
be
dismissed
for
the
same reason.
As
Bank,
Judge
N.A.,
Russell
Civ.
No.
explained
in
GLR-11-2733,
Spaulding
2012
WL
v.
Wells
3025116,
(D.Md. July 23, 2012):
Counts
II
(negligence)
and
IV
(negligent misrepresentation) of Plaintiffs’
Complaint must fail because Wells Fargo did
not owe Plaintiffs a tort duty. In Maryland,
causes of action based on negligence or
negligent
misrepresentation
require
the
plaintiff to prove a duty owed to them.
Jacques v. First Nat’l Bank of Maryland, 307
Md. 527, 515 A.2d 756, 758 (Md. 1986).
Plaintiffs
cannot,
therefore,
allege
actionable
claims
of
negligence
and
negligent misrepresentation without first
demonstrating Wells Fargo owed them a duty
in tort. Id. (“Absent a duty of care there
can
be
no
liability
in
negligence.”)
(citations omitted);
Parker v. Columbia
Bank, 91 Md.App. 346, 604 A.2d 521, 531
(Md.Ct.Spec.App. 1992) (“In order to state a
cause of action as to . . . negligent
misrepresentation, [and] negligence . . .
the [plaintiffs] must demonstrate a duty
owed
to
them
by
[the
defendants].”)
(citations omitted).
It is well established in Maryland that
the
relationship
between
the
bank
and
borrower is contractual, not fiduciary, in
nature. Yousef v. Trustbank Sav., F.S.B., 81
Md.App.
527,
568
A.2d
1134,
1138
(Md.Ct.Spec.App.
1990).
Moreover,
“[t]he
mere negligent breach of a contract, absent
a
duty
or
obligation
imposed
by
law
independent of that arising out of the
contract itself, is not enough to sustain an
action sounding in tort.” Jacques, 515 A.2d
13
at
Fargo
*4-5
at 759. In cases involving economic loss,
the imposition of tort liability requires
“an intimate nexus between the parties” that
is satisfied by “contractual privity or its
equivalent.” Id. at 759–60. Absent special
circumstances, the court is reluctant to
“transform
an
ordinary
contractual
relationship between a bank and its customer
into a fiduciary relationship or to impose
any duties on the bank not found in the loan
agreement.”
Parker,
604
A.2d
at
532
(citations omitted).
See also Goss v. Bank of America, N.A., --- F.Supp.2d ----, 2013
WL 105326, at *5 (D.Md. Jan. 8, 2013); Farasat v. Wells Fargo
Bank, N.A., --- F.Supp.2d ----, 2012 WL 6649592, at *7-8 (D.Md.
Dec. 19, 2012); Legore v. One West Bank, FSB, --- F.Supp.2d ---, 2012 WL 4903087, at *4-5 (D.Md. Oct. 15, 2012); Matthews v.
Wells Fargo Bank, N.A., Civ. No. MJG-12-1024, 2012 WL 3903453,
at *1 (D.Md. Sept. 6, 2012) (“adopt[ing], mutatis mutandis, the
decision of Judge Russell in Spaulding as its decision and []
follow[ing] its rationale”); but see Neal v. Residential Credit
Solutions, Inc., Civ. No. JKB-11-3707, 2013 WL 428675, at *5-6
(D.Md. Feb. 1, 2013) (denying motion for summary judgment as to
negligent misrepresentation claim upon finding that a “duty of
care” to “provide truthful information to Plaintiffs to maintain
their
mortgage
in
good
standing”
14
arose
from
the
“existing
contractual
relationship
.
.
.
based
upon
[the]
original
mortgage”).5
In opposing Defendant’s motion to dismiss, Plaintiffs argue
that a sufficient nexus is presented here by virtue of their
existing contractual relationship with Wells Fargo (i.e., the
underlying
mortgage)
unsophisticated
and
borrowers
their
in
particular
financial
vulnerability
distress.
They
as
rely
primarily on Jacques, 307 Md. at 542, where the Court of Appeals
of Maryland found that a bank “owed a tort duty in connection
with a loan application because the plaintiffs risked losing
5
Unlike the instant case, these cases all involved
modification requests under the Home Affordable Modification
Program (“HAMP”). In response to Defendant’s filing of a notice
of supplemental authority advising of the Spaulding decision
(ECF No. 29), Plaintiffs argued that because “[t]he thrust of
Judge Russell’s ruling was the absence of a private right of
action under [HAMP,] . . . [the] opinion is inapposite.”
(ECF
No. 30 ¶ 2). Plaintiffs are mistaken. In fact, Judge Russell
noted – as courts in this district repeatedly have – that
although there is no private right of action under HAMP, “the
enforcement of a standing [Trial Period Plan (“TPP”)] Agreement
may give rise to a private right of action because the agreement
establishes privity of contract between the parties,” and then
“address[ed] each of [the] [p]laintiffs’ counts.”
Spaulding,
2012 WL 3025116, at *3.
Notably, the case principally relied
upon by Plaintiffs in opposing Defendant’s motion to dismiss,
Allen v. CitiMortgage, Inc., Civ. No. CCB-10-2740, 2011 WL
3425665 (D.Md. Aug. 4, 2011), is also a HAMP case.
In their
opposition papers, Plaintiffs argue that this is of no real
consequence because Judge Blake “analyzed the plaintiffs’
claims, not as attempts to assert a private right of action
under HAMP, but rather [as] allegations of well recognized,
viable tort, contract and statutory claims[.]”
(ECF No. 27-1,
at 1 n. 1).
There is no discernible basis for distinguishing
the reasoning of Allen from that of Spaulding.
15
their
$10,000
deposit.”
(ECF
No.
27-1,
at
6).
Plaintiffs
contend that they “risked losing not simply $10,000, but their
entire home”; thus, “[t]he argument for the imposition of a tort
duty . . . is clearly stronger than the argument that did lead
to the imposition of a tort duty in Jacques.”
Plaintiffs’
plaintiffs
contract
to
in
reading
of
that
case
purchase
a
Jacques
entered
home
that
is
into
was
(Id.).
short-sighted.
a
The
residential
contingent
sales
upon
them
obtaining outside financing and required that they forfeit a
$10,000 deposit if such financing was not obtained.
They found
a bank that agreed to process their loan application, but the
bank ultimately determined that they qualified for an amount
considerably
plaintiffs
less
than
protested
needed
this
to
complete
the
determination
to
sale.
no
The
avail.
Thereafter, they applied for a loan from another lender, but
during the time their initial application was being processed
interest rates skyrocketed, making the loan for which they were
subsequently
expensive.
approved
by
the
second
bank
significantly
more
Thus, the plaintiffs in Jacques faced the Hobson’s
choice of either accepting the first bank’s financing offer –
which, they contended, was low due to negligence in processing
their application – or forfeiting their $10,000 deposit.
Under these circumstances, the Court of Appeals found that
the bank owed the plaintiffs a duty of care.
16
The court based
its decision, first, upon finding that the bank made “at least
two express promises to the Jacques.”
Jacques, 307 Md. at 537.
“It agreed first to process their loan application and second to
‘lock in’ the interest rate . . . for a period of ninety days.”
Id.
Upon further finding that these promises were supported by
consideration – namely, the Jacques’ payment of an application
fee and the potential business advantage to the bank – the court
turned to “the final consideration of whether a concomitant tort
duty should be recognized under these circumstances.”
540.
Id. at
The court noted that the case presented “extraordinary
financing
provisions”
that
“left
the
Jacques
particularly
vulnerable and dependent upon the Bank’s exercise of due care.”
Id.
Observing that “the Bank had knowledge that the Jacques
would be legally obligated to either proceed to settlement with
the loan determined by the Bank or forfeit their deposit of
$10,000.00 and lose any benefit of their bargain,” the court
found that the bank “undertook a significant responsibility” in
agreeing
to
process
the
loan
application.
Id.
at
540-41.
Considering also the “public nature” of the bank and that the
“banking business is affected with the public interest,” the
court held that “[t]he recognition of a tort duty of reasonable
care”
was
“consistent
with
the
policy
of
this
State”
and
“reasonable in light of the nature of the banking industry and
its relation to the public welfare.”
17
Id. at 543.
In
so
ruling,
however,
the
court
emphasized
the
extraordinary circumstances presented:
The
case
before
us
is
factually
distinguishable
from
those
in
which
a
prospective
customer
simply
submits
an
application for a loan, or for insurance,
and thereafter claims that the unilateral
act of submitting the application gives rise
to a duty on the part of the recipient to
act upon it without delay. The courts have
generally held in those instances that the
bank or insurance company has not undertaken
to process the application, and therefore
has no duty to do promptly that which it has
no duty to do at all.
Id. at 538-39.
Plaintiffs contend that, like the plaintiffs in Jacques,
they had a contractual relationship with Defendant; that they
were particularly vulnerable; and that they risked the loss of
their home if Defendant did not process their request for loan
modification
in
relationship
a
cited
by
reasonable
manner.
Plaintiffs,
however,
The
is
the
contractual
underlying
mortgage, and there are no allegations of negligence arising
from that contract.
Rather, Plaintiffs’ allegations relate to
Defendant’s negligent processing, or failure to process, their
request for loan modification, which was an entirely different
transaction.
See Neal, 2013 WL 428675, at *6 (“Although it is
true the Neals had contractual privity with RCS by virtue of
their original mortgage, that does not govern whether RCS owed
the
Neals
a
duty
of
care
in
18
the
processing
of
their
loan
modification application.”).6
was
based
upon
the
court
In Jacques, the alleged negligence
finding
a
valid
and
contract with respect to the loan application.
are not presented here.
enforceable
The same facts
Moreover, in Jacques, the bank knew at
the time it agreed to process the plaintiffs’ application that
the
Jacques
would
likely
be
obligated
either
proposed amount or forfeit their deposit.
to
accept
the
Here, Plaintiffs’
home was in foreclosure at the time they submitted documents in
support of their modification request.
Thus, Plaintiffs were
threatened with the loss of their home prior to any alleged
negligence by Defendant; in Jacques, the plaintiffs were placed
at risk because of the bank’s negligence.
true
that
foreclosure
Plaintiffs
action,
were
that
vulnerable
vulnerability
While it is likely
due
to
related
the
pending
to
factors
independent of their request for loan modification.
6
In Neal, 2013 WL 428675, at *5, the court denied summary
judgment as to the plaintiffs’ negligent misrepresentation claim
upon finding that, based upon the existing mortgage, the
defendant “had a duty to provide truthful information to
Plaintiffs to maintain their mortgage in good standing; thus, it
was inconsistent with that duty to advise Plaintiffs to miss
mortgage payments to be eligible for loan modification.”
The
negligence claim, however, was based on an alleged duty of care
with regard to a loan modification application.
Based on
Jacques, the court found that no such duty existed.
Here,
Plaintiffs point to the underlying mortgage as evidence that the
parties are in contractual privity, but they do not identify any
specific duty owed pursuant that contract.
To the contrary,
their negligence and negligent misrepresentation claims both
arise in connection with their loan modification request.
19
In
sum,
the
communications
cited
by
Plaintiffs
did
not
create an enforceable contract with Defendant, nor was there
otherwise a nexus between the parties sufficient to impose a
tort duty on Wells Fargo.
Spaulding,
2012
WL
See Goss, 2013 WL 105326, at *5;
3025116,
at
*6.
Because
Plaintiffs’
negligence and negligent misrepresentation claims are dependent
on the existence of a duty, see Parker, 91 Md.App. at 367 (“In
order
to
state
a
cause
of
action
[for]
.
.
.
negligent
misrepresentation [and] negligence . . . the [plaintiffs] must
demonstrate a duty owed to them by [the defendant]”), these
claims
cannot
be
sustained.
Accordingly,
they
will
be
dismissed.
B.
The Maryland Consumer
Promissory Estoppel
Plaintiffs
further
assert
Protection
claims
Act,
under
Fraud,
the
and
Maryland
Consumer Protection Act (“MCPA”), Md. Code Ann., Com. Law §§ 13101 et seq., for common law fraud, and for promissory estoppel.7
7
The
MCPA
proscribes
enumerated
“deceptive
trade
practices,” including “[f]alse . . . or misleading oral or
written statement[s]” and any “[v]iolation of a provision of . .
. Title 14, Subtitle 2 of this article, the Maryland Consumer
Debt Collection Act [“MCDCA”][.]”
Md. Code Ann., Com. Law §§
13-301(1) and (14)(iii).
In addition to alleging violations
based on false or misleading statements, Plaintiffs allege that
Defendants’ conduct constituted violations of the MCPA vis-à-vis
the MCDCA.
The MCDCA “prohibits debt collectors from utilizing
threatening or underhanded methods in collecting or attempting
to collect a delinquent debt.”
Bradshaw v. Hilco Receivables,
20
In order to prevail on any of these claims, they must show that
they reasonably relied to their detriment on some promise or
misrepresentation
made
by
Wells
Fargo.
See
Goss,
2013
WL
105326, at *3 (“To state a claim under the MCPA, ‘the consumer
must have suffered an identifiable loss, measured by the amount
the consumer spent or lost as a result of his or her reliance on
the
sellers’
misrepresentation’”)
(quoting
Lloyd
v.
General
Motors Corp., 397 Md. 108, 143 (2007)); Hoffman v. Stamper, 385
Md. 1, 28 (2005) (“To prove an action for civil fraud based on
affirmative misrepresentation, the plaintiff must show that . .
. [he or she] relied on the misrepresentation and had the right
to rely on it, and . . . suffered compensable injury as a
result”); Pavel Enters., Inc. v. A.S. Johnson Co., Inc., 342 Md.
143,
166
(1996)
(to
establish
liability
for
detrimental
reliance, the preferred nomenclature for claims of promissory
estoppel in Maryland, the plaintiff must show, inter alia, a
“clear and definite promise” by the promisor that “induce[d]
LLC, 765 F.Supp.2d 719, 731-32 (D.Md. 2011) (citing Md. Code
Ann., Com. Law § 14-202).
More specifically, it proscribes
certain conduct in the collection of a debt, such as the use or
threat of force or criminal prosecution, disclosure or threat of
disclosure to third parties, communication at unusual hours or
with unreasonable frequency, use of abusive language, claiming
or threatening to enforce non-existent rights, or use of
communications giving the appearance of judicial or governmental
authority.
Plaintiffs have not alleged any such conduct by
Wells Fargo, nor does the MCDCA otherwise appear to have any
application.
21
actual and reasonable action or forbearance by the promisee” and
“cause[d]
a
detriment
which
can
only
that
it
be
avoided
by
the
enforcement of the promise.”).8
Wells
Fargo
contends
made
no
material
misrepresentations or clear and definite promises to Plaintiffs
8
Citing the text of the MCPA, Plaintiffs assert they are
not required “to allege justifiable reliance,” and that “a
plaintiff need only allege a ‘[f]alse . . . or misleading oral
or written statement . . . which has the capacity . . . of
deceiving or misleading consumers[.]’” (ECF No. 27-1 (quoting
Com. Law § 13-301(1)).
The mere existence of a violation,
however, does not necessarily lead to private relief, and
Plaintiffs ignore the “clear distinction between the elements
necessary to maintain a public enforcement proceeding versus a
private enforcement proceeding.”
CitaraManis v. Hallowell, 328
Md. 142, 152 (1992).
A party who files a complaint with the
Attorney General need not establish reliance leading to actual
injury.
See Lloyd, 397 Md. at 142.
On the other hand, a
private party who brings a suit must establish that he or she
has “suffered an identifiable loss, measured by the amount the
consumer spent or lost as a result of his or her reliance on the
sellers’ misrepresentation.”
Id. at 143.
Thus, Plaintiffs
“must establish actual injury or loss, despite the language in §
13-302 [i.e., that “[a]ny practice prohibited by this title is a
violation . . . whether or not any consumer in fact has been
misled, deceived, or damaged as a result of that practice.”]”
Morris v. Osmose Wood Preserving, 340 Md. 519, 538 n. 10 (1995);
see also Bank of America v. Jill P. Mitchell Living Trust, 822
F.Supp.2d 505, 532 (D.Md. 2011) (“Consumers must prove that they
relied on the misrepresentation in question to prevail on a
damages action under the MCPA” and “[a] consumer relies on a
misrepresentation
when
the
misrepresentation
substantially
induces the consumer’s choice.”); Farwell v. Story, Civ. No. DKC
10-1274, 2010 WL 4963008, at *8-9 (D.Md. Dec. 1, 2010)
(dismissing MCPA claim where plaintiff failed to allege
reliance); Willis v. Countrywide Home Loans Servicing, Civ. No.
CCB 09-1455, 2009 WL 5206475 (D.Md. Dec. 23, 2009) (dismissing
MCPA claim where plaintiff failed to allege that “Countrywide’s
misinformation regarding loan modification programs caused
[plaintiff] to suffer any specific harm, apart from the debt
that he already owed”)).
22
in connection with their loan modification request, and that
even
assuming
reasonably
their
it
relied
did,
on
detriment.
Plaintiffs
such
In
cannot
show
that
or
promises
misrepresentations
arguing
otherwise,
Plaintiffs
they
to
maintain
that, in reliance on Defendant’s representations, they “did not
challenge foreclosure proceedings from the date they were filed,
May 16, 2011, until March 2, 2012.”
(ECF No. 27-1, at 14).
They further point to the amended complaint, which recites that
they
“justifiably
relied
to
their
detriment
on
the
false
representations by defendant, by taking time out of their lives
to submit and re-submit documentation[.]”
(Id.).
In support of their argument, Plaintiffs rely heavily on
Allen v. CitiMortgage, No. CCB-10-2740, 2011 WL 3425665 (D.Md.
Aug. 4, 2011).
they
had
been
That case involved plaintiffs who alleged that
approved
for
a
TPP
under
HAMP;
began
making
payments in accordance with the TPP; subsequently received a
number of confusing and contradictory communications from the
servicer, advising them, inter alia, not to remit payments; and,
as a result of their reliance, they were terminated from the
loan modification program and received negative credit reports.
Under those circumstances, the court found a plausible claim for
promissory estoppel:
The plaintiffs allege that CitiMortgage made
a clear and definite promise that “if they
made
their
temporary
loan
modification
23
payments [and] met the criteria for a HAMP
modification, then they would receive a
permanent
HAMP
modification,
and
that
Defendant would not report Plaintiffs as
delinquent
as
long
as
they
were
in
compliance
with
making
the
agreed-upon
payments.” The Allens also allege that they
detrimentally
relied
on
CitiMortgage’s
promises by relinquishing other remedies to
save their home, such as restructuring their
debt under the bankruptcy code, and by
devoting their resources to making the lower
monthly payments under the TPP Agreement. If
they had known that they would not qualify
for a permanent loan modification or that
CitiMortgage would report them as delinquent
to credit reporting agencies for making
lower monthly payments under the TPP, the
plaintiffs allege they would have pursued
other options, including possibly selling
their home.
Allen, 2011 WL 3425665, at *8 (internal citation omitted).
court
motion
also
found
because
that
the
an
MCPA
claim
plaintiffs
survived
“alleged
that
the
The
dismissal
CitiMortgage’s
misleading letters led to the following damages: damage to Mrs.
Allen’s credit score, emotional damages, and forgone alternative
remedies to save their home.”
Id. at *10.
Thus, the court
determined, the plaintiffs “stated sufficiently an actual injury
or loss as a result of a prohibited practice under the MCPA.”
Id.
Unlike the plaintiffs in Allen, the instant plaintiffs have
not made a sufficient showing of damages resulting from their
reliance on Defendant’s promises or misrepresentations.
they
argue
in
their
motion
24
papers
that
While
Defendant’s
misrepresentations caused them to forego unspecified action in
the foreclosure proceeding from May 16, 2011 – the date the
foreclosure action was filed – until March 2, 2012 – the date
they filed a motion to stay – no such allegation appears in the
amended complaint.
Defendant’s
Rather, their pleading merely recites that
misrepresentations
“could
cause
a
reasonable
consumer to . . . be [led] into a false state of comfort and
thereby not assert foreclosure objections[.]”
37.4 (emphasis in original)).
(ECF No. 24 ¶
A footnote in the same paragraph
of the complaint suggests that Plaintiffs relied on the language
of Md. Code Ann., Com. Law § 13-302, which provides that “[a]ny
practice prohibited by this title is a violation . . . whether
or
not
any
consumer
in
fact
has
been
damaged as a result of that practice.”
misled,
deceived,
(Id. at 15 n. 3).
or
As
noted, however, a private party bringing an action under the
MCPA must show that he or she has “suffered an identifiable
loss, measured by the amount the consumer spent or lost as a
result of his or her reliance on the [] misrepresentation.”
Lloyd,
397
necessary
Md.
to
at
143.
establish
So,
too,
liability
for
is
reasonable
fraud
and
reliance
promissory
estoppel.
While Plaintiffs assert that they were lulled into a “false
state of comfort” by Defendant’s representations, they do not
allege,
as
did
the
plaintiffs
25
in
Allen,
that
Defendant
specifically directed them to do, or to refrain from doing,
anything
that
adversely
affected
the
state
of
affairs
existed prior to the alleged misrepresentations.
that
Indeed, the
written communications from Defendant during this time period
made clear that “any collection and foreclosure action” would
“continue uninterrupted until approval” of a loan modification.
(ECF No. 24-4, at 2; see also ECF No. 24-7, at 3 (“understand
that if your mortgage has been referred to foreclosure, that
process moves forward at the same time [as efforts to avoid a
foreclosure
sale]”);
ECF
No.
24-9,
at
2
(“Because
you
are
currently in the foreclosure process, you have limited time to
receive
assistance
before
a
foreclosure
sale
is
scheduled”).
Despite these warnings, Plaintiffs suggest that they refrained
from raising objections in the foreclosure proceeding.
extent
that
“promise”
they
to
did
process
so
in
their
reliance
loan
on
Defendant’s
modification
To the
alleged
request,
that
reliance was not reasonable.
Plaintiffs further assert that “taking time out of their
lives
to
submit
and
re-submit
documentation”
constitutes
detrimental reliance (ECF No. 27-1, at 14), but they do not
allege that this resulted in compensable loss, such as lost
wages due to time away from work, and, as Defendant observes,
much of this time would have been necessary “even if their loan
was ultimately modified” (ECF No. 23-1, at 13).
26
Moreover, the
complaint recites that “[a]s a direct and proximate result of
Wells Fargo’s conduct, the Greens[’] credit scores were lowered,
because Wells Fargo reported the mortgage negatively to consumer
reporting agencies, constituting economic damages.”
¶ 30).
have
(ECF No. 24
Their claim in this regard is that if Defendant would
processed
their
application
properly,
Plaintiffs
“would
have been issued a loan modification, causing Wells Fargo to
report the mortgage positively.”
alleged
“lowered”
credit
scores
(Id.).
In other words, the
resulted
from
the
fact
that
Plaintiffs were not making the required payments under their
existing mortgage; they were not caused by any misrepresentation
made by Wells Fargo.
Plaintiffs also allege that they suffered
“mental anguish,” manifested by physical symptoms, and a number
of
courts
have
found
such
liability under the MCPA.
allegations
sufficient
to
support
See Piotrowski v. Wells Fargo, Civ.
No. DKC 11-3758, 2013 WL 247549, at *12 (D.Md. Jan. 22, 2013);
Marchese v. JPMorgan Chase Bank, --- F.Supp.2d ----, 2013 WL
136427, at *12 (D.Md. Jan. 8, 2013); Allen, 2011 WL 3425665, at
*10.
Under
the
facts
presented
in
the
amended
complaint,
however, the absence of any clear reliance by Plaintiffs on
Defendant’s
misrepresentations
makes
the
causal
connection
between any misconduct and these symptoms too tenuous.9
9
In Piotrowski, 2013 WL 247549, at *1-2, by contrast, the
plaintiff applied for a loan modification promptly after default
27
Because Plaintiffs have failed to show that they relied on
Defendant’s alleged misrepresentations to their detriment, their
claims under the MCPA, for common law fraud, and for promissory
estoppel will be dismissed.
and the servicer approved a “Special Forbearance Agreement” that
allowed the plaintiff to pay a reduced mortgage payment while
the application was being processed.
In reliance on that
agreement, the plaintiff made the reduced payments in advance of
the due date, but was later informed that his loan was “in
default for failure to make payments due.”
After curing the
default, the plaintiff submitted another loan modification
application, and was forced to pay “late fees” arising “as a
result of the Special Forbearance Agreement.” Id. at *3. When,
despite his diligent efforts, no decision was made on his loan
modification application, the plaintiff filed suit, alleging
that:
[A]s a result of Wells Fargo’s alleged
“direct and indirect actions,” including
“through the improper threat of an imminent
foreclosure action against the Property” and
“the assessment of unfair and deceptive late
fees and costs to his accounts,” he has (1)
suffered damage to his credit; (2) incurred
legal fees and expenses; (3) lost time from
work in attempting to resolve the dispute
without
litigation;
and
(4)
suffered
emotional damages “manifested by severe
insomnia,
sleeplessness,
worry,
and
an[x]iety.”
Id.
Under those facts, the emotional distress and other damages
were plausibly related to the plaintiff’s reliance on Wells
Fargo processing the application for loan modification, as
foreclosure was imminent due largely to Wells Fargo’s alleged
misconduct. Here, Plaintiffs waited months after their initial
default to contact Wells Fargo regarding a modification; they
failed to respond in a timely manner to Wells Fargo’s request
for documentation; and they did not submit their documentation
until after the foreclosure action had already commenced.
28
Although Plaintiffs have not requested leave to amend in
the event that the motion to dismiss were granted, courts are to
grant
leave
“freely
Fed.R.Civ.P. 15(a).
.
.
.
when
justice
so
requires.”
Leave to amend should be denied, however,
where “the amendment would be prejudicial to the opposing party,
there has been bad faith on the part of the moving party, or the
amendment would be futile.”
HCMF Corp. v. Allen, 238 F.3d 273,
276 (2001) (quoting Johnson v. Oroweat Foods Co., 785 F.2d 503,
509 (4th Cir. 1986)).
“An amendment is futile when the proposed
amendment is clearly insufficient on its face, or if the amended
claim would still fail to survive a motion to dismiss pursuant
to Fed.R.Civ.P. 12(b)(6).”
El-Amin v. Blom, Civ. No. CCB-11-
3424, 2012 WL 2604213, at *11 (D.Md. July 5, 2012).
Based
on
the
facts
presented,
Plaintiffs
will
not
be
permitted to amend their complaint with respect to their claims
of
negligence,
estoppel.
negligent
misrepresentation,
or
promissory
The absence of a cognizable tort duty owed by Wells
Fargo renders any claim based in negligence futile.
Moreover,
the state court docket reflects that a hearing on Plaintiffs’
exceptions to the foreclosure sale is currently scheduled for
March 21, 2013.
Insofar as Plaintiffs seek specific performance
in connection with their promissory estoppel claim, the circuit
court
is
warranted,
best
and
situated
the
to
decision
determine
on
29
whether
Plaintiffs’
such
relief
exceptions
is
could
potentially
estoppel
render
claim.10
moot
Leave
any
amendment
will
be
of
their
granted,
promissory
however,
as
to
Plaintiffs’ MCPA claim based on false or misleading oral or
written statements, as well as its claim for common law fraud.
Taken as a whole, the cited communications by Wells Fargo may be
viewed as having “the capacity . . . of deceiving or misleading
consumers,”
Md.
Code
Ann.,
Com.
Law
§
13-301(1),
and
if
Plaintiffs can show that they suffered damages as a result of
their
reasonable
reliance
on
the
alleged
misrepresentations,
they could assert plausible claims for relief.
Accordingly,
10
In Bates v. Cohn, 417 Md. 309, 327 (2010), the Court of
Appeals of Maryland clarified that, “after a foreclosure sale
‘the debtor’s later filing of exceptions . . . may challenge
only procedural irregularities at the sale or . . . the
statement of indebtedness.’”
(Quoting Greenbriar Condo. v.
Brooks, 387 Md. 683, 688 (2005)). However, the court expressly
left open the question of:
[W]hether a homeowner/borrower may assert
under [Md. Rule] 14-305, as a post-sale
exception, claims that a foreclosure sale
was the product of the lender affirmatively
and purposefully misleading the borrower in
default that ultimately unsuccessful presale loss mitigation or loan modification
efforts would likely be successful (or
protracting strategically the denial of
those efforts) and therefore dissuading the
borrower from seeking to assert pre-sale
defenses in a timely manner.
Bates, 417 Md. at 328.
Insofar as Plaintiffs seek to avoid
ratification of the foreclosure sale, as opposed to an award of
monetary damages resulting from the alleged misrepresentations,
principles of comity militate strongly in favor of their
argument being addressed in state court.
30
they will be permitted fourteen days in which to file an amended
complaint raising these specific claims.
IV.
Conclusion
For the foregoing reasons, Defendant’s motion to dismiss
will be granted without prejudice to Plaintiffs’ right to file
an amended complaint asserting specified claims within fourteen
days.
A separate order will follow.
_________/s/________________
DEBORAH K. CHASANOW
United States District Judge
31
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?