Watson v Bank of America

Filing 18

MEMORANDUM OPINION. Signed by Judge Peter J. Messitte on 3/25/2015. (kns, Deputy Clerk)(c/m 3/31/15)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

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ANTHONY T. WATSON,
Plainti ff,
v.
BANK OF AMERICA,

ENIDlEO
,RECEIVED

MAR 302015
AT aREENaElT
ClEN<U.S.OlITRICTCOURT
DlSTlIICT OF MA'MANo

OEPUlY

Civil No. PJM 14-1335

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N.A.

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Defendant.

MEMORANDUM

OPINION

Anthony T. Watson, pro !ie, has brought this action against Bank of America, N.A.,
("BANA") as successor by merger to BAC Home Loans Servicing L.P. (formerly known as
Countrywide Home Loans Servicing L.P.).
Although the Complaint contains no numbered counts, its gravamen seems to challenge
the validity of Watson's residential mortgage and his obligations under it. He has also added
various statutory and common law claims.
BANA has filed a Motion to Dismiss (Paper No.8).

For the reasons stated below,

BANA's Motion to Dismiss is GRANTED, and the Complaint is DISMISSED.
I.

The Complaint is largcly incoherent and devoid of material factual allegations. Despite
these deficiencies, the Court has been able to glean certain basic facts trom the filings submitted
in connection with BANA's Motion to Dismiss.'
Watson entered into a mortgage agreement with the original lender, American Brokers
Conduit. on May 16,2007, with respect to a property located at 9424 Michael Drive, Clinton,

I The Court considers these facts only to establish a background;
these filings are not construed to be "well-pleaded
allegations" by Plaintiff for the purposes of a Motion to Dismiss pursuant 10 Federal Rule of Civil Procedure
l2(b)(6).

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~

MD 20735. Compl. at

J

I. The accompanying promissory note was in the amount of $252,000.

!d. at 30. American Brokers Conduit sold the note to Countrywide (now BANA). Id. at 10. The
property is currently valucd at approximately

$219,200. BANA has proposed that Watson

execute a modified note in the amount 01'$337,649, id. at 30, which Watson has declined to do.
Following Watson's extensive default on the existing note, BANA attempted to foreclose
on Watson's property. On or about December 30, 2011, Watson liIed for Chapter 7 Bankruptcy,
listing the mortgage loan at issue as secured debt owed to BANA. See Compl. at 20, 31. BANA
participatcd in the Bankruptcy proceeding, and the Bankruptcy Court granted BANA's Motion
for Relief From Automatic Stay, allowing BAN A to continue with its foreclosure proceedings.
See Order Granting Motion, In re

WaISlJll,

No. 11-35141 (Bankr. D. Md. March 21, 2012).

Watson ultimately received a discharge. See Compl. at 8,21; see also Order Discharging Debtor,
In re Watson, No. 11-35141 (Bankr. D. Md. Apr. 10,2012).

Watson's discharge does not,

however, affect the status of BANA's underlying lien on his rcal property.

See In re Hamlell,

322 F.3d 342, 347 (4th Cir. 2003).
In this procecding,

Watson attempts to challenge the validity of his mortgage.

He

suggests that he cancelled the mortgage within an allowable 72-hour period, on May 19, 2007.
Compl. at 14. He also alleges that the notarization on the deed of trust is invalid, id. at 12, that it
was not recorded properly. id. at 15. and that his signature on the recorded deed and the loan note
are forgeries, id. at 13, 16. Watson suggests that BANA's use of these documents constituted
both fraud and injurious falsehood when they were filed with the State of Maryland and in the
Circuit Court for Prince George's County.

Id. at II.

Furthermore, Watson suggests that the

assignment of his mortgage to BANA (then Countrywide) is likewise invalid.

As to this last

claim, he alleges that, because the promissory note was endorsed '"without recourse," it is invalid

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under thc Maryland Commercial

Code.

Id. at 17.

Second, he claims that the Mortgagc

Elcctronic Registration System C'MERS") lacked the authority to assign the Deed of Trust. See
Compl. at 35-36.
Watson has alleged other causes of action with varying levels of specificity.
that BANA violated the Real Estate Settlement Procedures Act ("RESPA"),

He alleges

12 U.S.C.

S

260 I,

el. seq., bccause it "sent paper work to the Plaintiff that was outdated with false statements and
information; [BANA] did not make any references in those documents as to the requirements by
RESPA; the Defendant failed to comply." Id. at 10. He also alleges that BANA violated the Fair
Housing Act. 42 U.S.c.

S 3601,

el. seq.

Most importantly, Watson asks to bc absolved of any obligations under the mortgage, so
that he may "cnjoy the freedom and comforts of his home and be free of any attached claims to
his resident property by [BANA] or by any creditor."

Id. at 38. That is, he wants to have his

house free and clear of a mortgage, plus he sceks $10 million in damages, with intcrest and costs.
BANA argues that all of Watson's claims should bc dismisscd pursuant to Rules 8(a),
9(b), and l2(b)(6) of the Federal Rules of Civil Procedure becausc the Complaint fails as a
matter of law. Additionally, it argues that many of the claims arc barred by res jl/dicala, and that
Watson lacks standing to assert others.

To the extent Watson's

Complaint contains any

colorable claims, BAN A argues, they are not sufficiently plcd to warrant relief. The Court, with
slight rcframing of BAN A's arguments, agrecs.
II.

Fcderal Rule of Civil Procedure 8(a) prescribes "liberal pleading standards," rcquiring
only that a plaintiff submit a "short and plain statemcnt of the claim showing that [he] is cntitled
to rclicf." Erickson v. Pardl/s, 551 U.S. 89, 94 (2007) (citing Fed. R. Civ. P. 8(a)(2)).

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If

pleadings allege fraud or mistake, "a party must state with particularity the circumstances
constituting fraud or mistake." Fed. R. Civ. P. 9(b). Under the heightened pleading standard of
Rule 9(b), "[t]hese circumstances are 'the time, place, and contents of the false representations,
as well as the identity of thc person making the misrepresentation
thcrcby'"
1'.

Weidman

1'.

and what he obtained

Exxon Mobil Corp., 776 F.3d 214. 219 (4th Cir. 2015) (quoting Harrison

Weslin~hollse Savannah River Co., 176 FJd 776. 784 (4th Cir. 1999)).
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a plaintiff

Inust plead facts sutlicient to "state a claim to relief that is plausible on its face." Bell All. Corp.
I'.

Twombly. 550 U.S. 544, 570 (2007). This standard requires "more than a sheer possibility that

a defendant has acted unlawfully." Ashcroft

1'.

I"bal, 556 U.S. 662, 678 (2009).

Although a

court will accept factual allegations as true. "[t]hreadbare recitals of the elements of a cause of
action. supported by mere conclusory statements do not suffice." Id.
While federal courts must liberally construe a pro se litigant's claims, this requirement
"docs not transform the court into an advocate." Vniled Slales
Cir. 2012); see also Brown

1'.

1'.

Wilson, 699 F.3d 789, 797 (4th

He. Dep'l o(Corr., 612 F.3d 720, 722 (4th Cir. 2010) (observing

the Fourth Circuit considers liberal construction of a complaint is particularly warranted where a
pro se litigant alleges civil rights violations).

The Fourth Circuit has noted that "[w]hile pro se

complaints may 'represent the work of an untutored hand requiring special judicial solicitude,' a
district court is not required to recognize 'obscure or extravagant claims defying the most
concerted efforts to unravel them .... Weller v. Dep'l o( Soc. Sen's .. 901 F.2d 387, 391 (4th Cir.
1990) (quoting l3ealldell v. Cily of Iiamplon, 775 F.2d 1274, 1277 (4th Cir.1985), cerl. denied,
475 U.S. 1088 (1986)).
III.

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The Court addresses Watson's various allegations.
A. Challenges to the Valid iI)' of the Mortgage are Barred by Judicial Estoppel
The Court need not evaluate the plausibility of Watson's allegations challenging the
validity of his mortgage under Rule 12(b)(6). These challenges are barred by judicial estoppel
since Watson did not raise these claims in his Chapter 7 bankruptcy proceeding.'

See Chapter 7

Voluntary Petition. In re Walson, No. 11.35141 (Sankr. D. Md. Dec. 30, 2011).
"./udicial estoppel is a principle developed to prevent a party from taking a position in a
judicial proceeding that is inconsistent with a stance previously taken in court."

Zinkand v.

Bro\l'n. 478 F.3d 634, 638 (4th Cir.2007). "As an equitable doctrine, judicial estoppel is invoked
in the discretion of the district court and with the recognition that each application must be
decided upon its own specific facts and circumstances."

King v. Herberl.!. Thomas Mem. Ho.\p.,

159 F.3d 192. 196 (4th Cir. 1998). For judicial estoppel to apply: "( 1) the party to be estopped
must be advancing an assertion that is inconsistent with a position taken during previous
litigation: (2) the position must be one of fact instead of law; (3) the prior position must have
been accepted by the court in thc first proceeding: and (4) the party to be estopped must have
acted intentionally, not inadvertently."

Id

In a bankruptcy proceeding. a debtor has a continuing affirmative obligation to disclose
all property of the estate.

11 U.S.c.

S

541 (a). This property includes any possible causes of

action the debtor may have. See In re Bogdan, 414 F.3d 507, 512 (4th Cir. 2005).

If a debtor

fails to disclose a claim to the bankruptcy court. he may be judicially estopped from pursuing
that claim.

See 1/1re Coaslal Plains. Inc.. 179 F.3d 197, 207-08 (5th Cir. 1999).

Watson's

failure to disclose to the bankruptcy court his claims regarding the validity of SANA's mortgage

SANA argues that these claims are barred by res judicata.
estoppel is the applicable doctrine.

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Though the end result is essentially

the same, judicial

constituted a factual representation

that no such claim existed-a

representation

that was

accepted by the bankruptcy court when it discharged his debts and closed the case, and one that
is inconsistent with his current position. Thus, the first three prongs of the judicial estoppel test
are satisfied.
As to the fourth prong. '"[i]n cases involving bankruptcy, courts have developed a fairly
consistent standard. in the absence of direct evidence of intent. for inferring whether a debtor
acted intentionally or inadvertently in omitting a potential claim from a bankruptcy petition."
Cala/iore v. Werner Enters., Inc., 418 F, Supp. 2d 795, 798 (0, Md, 2006),
debtor's failure to satisfy [his] statutory duty to disclose is 'inadvertent'

Specifically, "a

only when, in general,

the debtor lacks knowledge of the undisclosed claims or has no motive for its concealment."
(quoting Kamont v. West, 258 F, Supp. 2d 495, 500 (S.D. Miss. 2003)),
claim would have added assets to the bankruptcy estate.

Id.

'"If his undisclosed

, , he will usually be deemed to have

had a motive to conceal those claims," leI.; see also Hamilton v. State Farm Fire & Cas. Co., 270
F.3d 778. 785 (9th Cir. 2001) ('"Judicial estoppcl will be imposed when the debtor has
knowledge of enough facts to know that a potential cause of action exists during the pendency of
the bankruptcy. but fails to amend his schedules or disclosure statements to identify the cause of
action as a contingent asset."),
The fourth prong is clearly established.

Watson had knowledge of the claims he now

alleges. As but one example, he now claims that the mortgage is invalid because he rescinded it
within an allowable 72-hour in May 2007,
regarding the mortgage's

Yet he never raised this argument, nor any others

validity, for the years that he remained in the 9424 Michael Drive

home and received mortgage statements.

Moreover, the claims, if successful. would add $10

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million in assets to the estate.

Accordingly, Watson had a motive to conceal these claims to

prevent that money from being disbursed to his creditors.
Because all the clements are satisfied, the Court concludes that any and all challenges to
the validity of the mortgage are barred by judicial estoppel.
Even if the Court were to consider the merits of Watson's allegations, they arc not, as
required, plausible under Rule 12(b)(6), nor do any of his fraud allegations satisfy the heightened
pleading requirements of Rule 9(b). These claims are therefore dismissed.

n,

Watson Laeks Standing to Challenge the Mortgage Assignment

Similarly, the Court need not evaluate Watson's challenge to the assignment of his
mortgage to BAN A since he lacks standing to challenge the assignment.
Generally speaking, an obligor under a contract, including a mortgagor contract, lacks
standing to challenge the assignment of the underlying obligation by the obligee to a third-party.
See Qllallieballm v. Bank of America, N.A., 2015 WL 1085707, at *4 (D. Md. Mar. 10,2015)
("What the lender chooses to do with [a mortgage]-whether
financial institution-is

to keep it or sell it to another

a decision [the mortgagor] has no standing to challenge.')

Although

Watson is a party to the underlying mortgage, the assignment of that mortgage to BANA is a
separate contract to which he is neither a party nor an intended beneficiary.

Watson's duties

under the mortgage remain the same, and he has no interest in the assignment.

He therefore

lacks standing to challenge the validity of the assignment. These claims arc also dismissed.
C. RESPA Claim

Watson alleges that, on three separate occasions, SANA promised to respond to his
questions regarding the mortgage at issue and failed to do so. See Compl. at 10,25.

Given the

Complaint's lack of detail, the Court assumes Watson is referring to the RESPA requirement that

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loan scrvicers must acknowledge receipt of a borrower inquiry within five days in writing, and
provide a written response to the borrower's qualified written request ("QWR") within thirty
days. See 12 U.S.C.

9 26053

But Watson has failed to provide any details that would enable the

Court to evaluate the content of any such inquiries, including information as to whether any
QWRs were actually submitted to BANA, and ultimately whether BANA failed to perform its
duty under RESPA. Indeed, Watson tacitly acknowledges that he did not submit an inquiry that
met the QWR standard, notwithstanding

which BANA actually responded in a manner that

complies with RESP A requirements. See Com pI. at 25. ("[BANA] promised a review as required
by RESPA in responding to [Watson's]
Attorney to answer [Watson's]

Complaint. [BANAl did provide the services of an

concerns but rescinded on that offer without notice before

[Watson] had a chance to put together a propcr qucstionnairc ....

[BANA] did not call it a

response as required by RESPA but stated that they believed that it had answered [Watson']
concerns. ").
Consequcntly,

the RESP A claim must be dismisscd.

(reasoning a "complaint

See Twombly, 550 U.S. at 557

[does not] suffice if it tenders naked assertion[s] devoid of further

factual enhanccmcnt.").
D. Modifications

under !lAMP

Watson allegcs that he "is in a trial modification with [BANAl, but there is a problem ...
I3ANA has recently rcsponded to the Plaintiff that this is [BANA's] modification and if the
To trigger the loan servicer's RESPA duty to respond. the borrower inquiry must satisfy the standard for a QWR.
Under RESPA. a QWR

3

shall be a written correspondence.
other than notice all a payment coupon or other
medium supplied by the servicer, that--(i) includes. or otherwise enables the servicer to
the name and account of the borrower; and (ii) includes a statement of the reasons for the
the borrower, to the extent applicable. that the account is in error or provides sufficient
the servicer regarding other information sought by the borrower.
12 U.S.C. ~ 2605(e).

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payment
identify,
belief of
detail to

Plaintiff does not like it, do not sign for it" Compl. at 25. In its Motion to Dismiss, BANA
understands this allegation to assert a cause of action arising under the Home Affordable
Modification Program ("HAMP"), and argues that HAMP does not create a private right of
action for individual borrowers to enforce its guidelines against lenders. See Sheard v. Bank oj
America. NA .. No. I'JM 11-3082,2012 WL 3025119, at *3 (D. Md. July 23, 2012).
BANA's

argument,

more appropriately

enrered in/a any agreement lindeI' HAM? : ..

framed, is, "[w}here a homeowner has no/
plaintiffs have no claim or cause of action to

enforce HAMP guidelines on behalf of the federal government or as a third-party beneficiary of
an SPA between the federal government and the mortgage servicer." Bowers v. Bank oj Am.,
N.A., 905 F. Supp. 2d 697, 701 (D. Md. 2012) (emphasis added): see also Goss

1'.

Bank of Am ..

NA., 917 F. Supp. 2d 445, 449 (D. Md.) (same).
Under HAMP, the federal government provides incentives to loan servicers to work with
struggling mortgagors to modify existing loans. In doing so, "prospective borrowers enter into a
standardized contract, called a Trial Period Plan ('TPP'), with lenders/servicers such as [BANAl
for a three-month trial modification of the borrower's existing note and mortgage." Ramos v.
Bank o/AIII .. NA., No. CIVA

DKC 11-3022,2012

WL 1999867, at *1 (D. Md. June 4, 2012).

The terms of '"the TPP promises that if the borrower complies with the terms of the agreement
and the borrower's representations continue to be true in all material respects, then the borrower
will receive a permanent modification on the same terms." Id. It is when the homeowner enters
into a TPP under HAM I' that the homeowner may be able to create legally enforceable contract
rights. Goss, 917 F. Supp. 2d at 449.
However, Watson"s allegations, even construed liberally and viewed in a light most
favorable to him, indicate that while there might have been discussion of a TPP with BANA, no

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agreement was signed and enforceable. See Compl. at 25, 33 (indicating that "[BANA] has sent
the Plaintiff terms for a permanent modification ....
Predatory Lending.").

This is a fraudulent modification and it is

The absence of any agreement means, quite simply, that Watson has no

private right of action under HAMP and his allegations regarding loan modification do not
"plausibly give rise to an entitlemerll to relief' and must be dismissed. Iqbal, 556 U.S. at 664.
E. Fair Housing Act
Finally, Watson alleges that BANA violated the Fair Housing Act ("FHA") by engaging
In steering or targeting in mortgage lending and imposing discriminatory

terms on him. See

Com pI. at 2-3, 8-9. To successfully allege discrimination in connection with a loan application,
a complaint must state that "( I) the plainti!f is a member of a protected class, (2) the plaintiff
applied for and was qualified for a loan, (3) the loan was rejected despite the plaintiffs
qualifications,

and (4) the defendants

continued

to approve

loans

for applicants

with

qualifications similar to those of the plaintiff." Frison v. Ryan Homes, No. CIV.A. AW-04-350,
2004 WL 3327904, at *5 (D. Md. Oct. 29, 2004).
Most of Watson's FHA allegations speak generally about the problems of predatory
lending. See Compl. 8-9. To the extent he provides more specific allegations, those relate only
to the original lender, American Brokers Conduit. Id. at 9. Watson fails to establish how BANA
might in any way be responsible under the FHA for the actions of the original lender.'

He has

failed to plead facts sufficient to support a plausible claim for relief. See Bell Atl. Corp. v.
TlI'ombley, 550 U.S. 544, 570 (2007)

, This is not to say that Watson has alleged a plausible claim under the FHA against American Brokers Conduit,
only that he has completely failed to make allegations under the FHA against BANA.

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IV.
For the foregoing

reasons, the Defendant's

Motion to Dismiss (Paper No.8)

GRANTED. The Complaint is DISMISSED.

A separate Order will ISSUE.

/s/
P _TER.1. MESSITTE
UN 'I' ~I 'TATES DISTRICT JUDGE
Mareh 25,2015

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IS