Johnson v. Bank of America, N.A.
MEMORANDUM OPINION AND ORDER granting 14 Motion to Dismiss for Failure to State a Claim; denying as moot 18 MOTION/Request to Revoke (Vacate) ; denying as moot 24 MOTION (Request) for Clerk's Entry of Default for want of answer or other defense; denying 25 MOTION for Default Judgment; denying as moot 27 MOTION for Extension of Time ; granting in part and denying in part 28 Motion to Strike ; denying as moot 29 Motion for Leave to File; directing clerk to close this case. Signed by Judge Paula Xinis on 2/13/2018. (c/m 2/13/2018 aos, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
CYNTHIA M. JOHNSON,
Civil Action No. PX-17-898
BANK OF AMERICA, N.A.,
MEMORANDUM OPINION AND ORDER
On April 3, 2017, pro se Plaintiff Cynthia M. Johnson filed suit, asserting common law
claims for breach of contract and fraud against Defendant Bank of America, N.A. (“Bank of
America”) in connection with a pending foreclosure on Johnson’s home. Johnson requests full
payoff of all mortgages presently attached to the home and declaratory, compensatory, and
punitive relief in the amount of $20,000,500 from Defendant. ECF Nos. 2 & 5.
Pending before the court are seven motions. On April 10, 2017, Bank of America filed a
motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). ECF No. 14. The
remaining motions are responsive to a procedural irregularity that arose during the case in which
the Clerk’s Office of the Court misplaced Johnson’s response to Bank of America’s motion to
dismiss, resulting in delayed docketing for almost six months. See ECF Nos. 18, 24, 25, 27, 28
& 29. As a result of the delay and Bank of America’s representations regarding its not having
received Johnson’s response, Johnson requested that this Court impose various sanctions on
Bank of America, to include striking its Reply. ECF Nos. 25 & 28. For the foregoing reasons,
the motion to dismiss, ECF No. 14, is GRANTED. Plaintiff’s motion at ECF No. 28 is
GRANTED in part and DENIED in part, and Plaintiff’s motion at ECF No. 25 is DENIED. The
remaining motions, ECF Nos. 18, 24, 27, & 29, are DENIED as moot.
On April 30, 1999, Plaintiff Cynthia M. Johnson (“Johnson”) and her then-husband,
Reginald G. Johnson, obtained a loan for $167,000 (the “Loan”) from Nationsbanc Mortgage
Corporation,1 and executed a Note in that amount. ECF No. 2-1 at 168–75. The loan was
secured by a Deed of Trust in property located at 7414 Longbranch Drive, Hyattsville, Maryland
20784 (“Property”), and both Plaintiff and Reginald G. Johnson signed the Note and Deed of
Trust. Id. Johnson alleges that around March 13, 2012, Bank of America contacted Johnson
regarding a loan re-modification agreement, which Johnson signed and returned with a check for
$1,007.82. Bank of America applied those funds to Plaintiff’s existing mortgage. ECF No. 2 at
1. The loan re-modification agreement, attached to Johnson’s Complaint, reflects several
changes that Johnson made to the document, including striking through all references to
Reginald G. Johnson and excising most of paragraph three of the agreement. Paragraph three
“If all or any part of the Property or any interest in the Property is sold or transferred (or
if Borrower is not a natural person and a beneficial interest in Borrower is sold or
transferred) without Lender’s prior written consent, Lender may require immediate
payment in full of all sums secured by the Security Instrument.”
ECF No. 2-1 at 8–10.
Sometime thereafter, Bank of America informed Johnson that her re-modification request
was denied because the agreement lacked Reginald Johnson’s signature and because she had
Nationsbanc (now NationsBank) Mortgage Corporation is affiliated with Defendant Bank of America. See ECF
stricken through a substantive clause in the agreement. ECF No. 2 at 2. Nonetheless, over the
next two years Johnson continued to send monthly checks of $1,007.82, the amount set out in the
re-modification agreement. Id. Bank of America applied those payments to her existing
mortgage, and then, according to Johnson, “persistently harassed Plaintiff” through
communications related to the Loan. Some of these communications requested that Johnson
submit a valid loan re-modification agreement with proper signatures. Id.
Beginning in January 2015, Bank of America started returning Johnson’s monthly
payments as insufficient and commenced foreclosure proceedings on the Property. Id. The
parties pursued mediation unsuccessfully. Bank of America thereafter initiated a foreclosure
action on the Property in the Circuit Court for Prince George’s County. Id. at 2–4; see also
O’Sullivan v. Johnson, Case No. CAEF16-25734.
On December 12, 2016, Johnson filed a Complaint against Bank of America in the
Circuit Court for Prince George’s County, Maryland, alleging common law claims for breach of
contract and fraud based on the bank’s failure to honor the March 2012 loan re-modification and
subsequent attempts to enforce the Deed of Trust. ECF No. 2. On February 15, 2017, Johnson
filed an Amended Complaint, adding the registered agent for Bank of America. ECF No. 5.
Bank of America then removed the action to this Court on April 3, 2017, properly asserting
diversity jurisdiction, ECF No. 11, and filed a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6) on April 10, 2017, ECF No. 14.
On September 26, 2017, having received no response from Johnson to Defendant’s
motion to dismiss, the Court issued a Show Cause Order as to why Johnson’s Complaint should
not be dismissed with prejudice pursuant to 12(b)(6). ECF No. 16. Johnson then filed a lengthy
opposition to the motion to dismiss and a motion stylized as a “Request to Revoke (Vacate)
Court’s Order to Show Cause.” ECF Nos. 17 & 18. Johnson also provided the Court proof that
she had filed her response timely on April 27, 2017, and sent Bank of America a copy of the
response via first-class mail. See ECF No. 20. The Court confirmed with the Clerk that it had
erroneously failed to docket Johnson’s response and thereafter scheduled a recorded telephone
conference with the parties. On that recorded call, counsel for Bank of America represented that
while he or his secretary may have received Plaintiff’s filing, counsel was previously unaware
that Johnson had responded to Defendant’s Motion. ECF No. 22. The Court then allowed
Johnson to address in writing what, if any, relief she should be accorded in light of Bank of
America’s odd representation that it was not aware of Johnson’s timely response. ECF No. 23.
Johnson filed three motions: motions for clerk’s entry of default and default judgment against
Defendant, ECF Nos. 24 & 25, and a motion to strike defendant’s reply to her opposition to the
motion to dismiss, ECF No. 28.
Standard of Review
In ruling on a Rule 12(b)(6) motion to dismiss, a plaintiff’s well-pleaded allegations are
accepted as true and the complaint is viewed in the light most favorable to the plaintiff. Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007). “However, conclusory statements or a ‘formulaic
recitation of the elements of a cause of action will not [suffice].’ ” EEOC v. Performance Food
Grp., Inc., 16 F. Supp. 3d 584, 588 (D. Md. 2014) (quoting Twombly, 550 U.S. at 555). “Factual
allegations must be enough to raise a right to relief above a speculative level.” Twombly, 550
U.S. at 555. “ ‘[N]aked assertions’ of wrongdoing necessitate some ‘factual enhancement’
within the complaint to cross ‘the line between possibility and plausibility of entitlement to
relief.’ ” Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (quoting Twombly, 550 U.S.
Although pro se pleadings are construed liberally to allow for the development of a
potentially meritorious case, Hughes v. Rowe, 449 U.S. 5, 9 (1980), a court cannot ignore a clear
failure to allege facts setting forth a cognizable claim. See Weller v. Dep't of Soc. Servs., 901
F.2d 387, 391 (4th Cir. 1990) (“The ‘special judicial solicitude’ with which a district court
should view such pro se complaints does not transform the court into an advocate. Only those
questions which are squarely presented to a court may properly be addressed.”) (internal citation
omitted)). See also Bell v. Bank of Am., N.A., No. RDB-13-0478, 2013 WL 6528966, at *1 (D.
Md. Dec. 11, 2013) ( “Although a pro se plaintiff is general[ly] given more leeway than a party
represented by counsel . . . a district court is not obligated to ferret through a [c]omplaint that is
so confused, ambiguous, vague or otherwise unintelligible that its true substance, if any, is well
disguised.”). “A court considering a motion to dismiss can choose to begin by identifying
pleadings that, because they are not more than conclusions, are not entitled to the assumption of
truth.” Ashcroft v. Iqbal, 556 U.S. 662, 665 (2009).
The Complaint also includes a claim of fraud, implicating the heightened pleading
standard under Fed. R. Civ. P. 9(b). See Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769, 781
(4th Cir. 2013) (stating that an MCPA claim that “sounds in fraud, is subject to the heightened
pleading standards of Federal Rule of Civil Procedure 9(b)”). Rule 9(b) states: “In alleging fraud
or mistake, a party must state with particularity the circumstances constituting fraud or mistake.
Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.”
Under the rule, a plaintiff alleging claims that sound in fraud “ ‘must, at a minimum, describe the
time, place, and contents of the false representations, as well as the identity of the person making
the misrepresentation and what he obtained thereby.’ ” Bourgeois v. Live Nation Entm't, Inc., 3
F. Supp. 3d 423, 435 (D. Md. 2014) (quoting United States ex rel. Owens v. First Kuwaiti Gen'l
Trading & Contracting Co., 612 F.3d 724, 731 (4th Cir. 2010)).
The Court may consider documents attached to the complaint where incorporated and
authentic. See Fed. R. Civ. P. 10(c); see also Blankenship v. Manchin, 471 F.3d 523, 526 n. 1
(4th Cir. 2006). Here, the Court will consider the 2012 loan re-modification agreement, the Note
and Deed of Trust, and communications between Johnson and the Defendant regarding her
mortgage payments because these documents are authentic, attached to the Complaint, and
integral to Johnson’s claims. “When there exists a conflict between the complaint’s bare
allegations and an exhibit attached to the complaint, the exhibit prevails.” See Bartlett v.
Frederick County, 246 F. App’x 201, 205 (4th Cir. 2007) (citing Fayetteville Investors v.
Commercial Builders, Inc., 936 F.2d 1462, 1465 (4th Cir. 1991)).
a. Breach of Contract
In Maryland, breach of contract requires proof that the defendant owed the plaintiff a
contractual obligation and that the defendant breached that obligation. Nyhart v. PNC Bank,
N.A., No. PX-15-2241, 2016 WL 6996744, at *4 (D. Md. Nov. 30, 2016) (citing Taylor v.
NationsBank, N.A., 365 Md. 166, 175 (2001)). Here, the parties’ disagreement centers on
whether the 2012 loan re-modification is a valid and enforceable contract. See ECF Nos. 2 at 1–
2 & 14 at 6–8. Bank of America argues that the loan re-modification is not enforceable because
Johnson substantially modified its terms and the agreement was not signed by all parties to the
Note and Deed of Trust. ECF No. 14 at 6–7. Plaintiff, in turn, argues that Bank of America’s
depositing of her $1,007.82 check attached to the 2012 re-modification agreement and applying
it to her mortgage balance, as well as subsequent acceptance of payments in the identical
amount, rendered the loan re-modification contract valid and enforceable. ECF No. 2 at 2–4; see
also ECF No. 20 at 56.
The contract in question sought to amend a deed of trust concerning an interest in land
and is not capable of full performance within one year; accordingly, the statute of frauds applies.
See ECF No. 14 at 4–5; Md. Code. Ann., Cts & Jud. Proc. §5–901(3) and (2) Md. Code. Ann.,
Real Prop. §5-1041. Pursuant to this doctrine, a properly executed written contract is necessary
for the agreement to be enforceable. See Md. Code. Ann., Cts & Jud. Proc. §5–901(3) and (2)
Md. Code. Ann., Real Prop. §5-1041; see also Calomiris v. Woods, 353 Md. 425, 445 (1999);
Barry v. EMC Mortg. Corp., No. DKC-10-3120, 2012 WL 3595153, at *5–*6 (D. Md. Aug. 17,
2012). Contrary to Johnson’s assertion, the Complaint makes plain that no valid written contract
existed regarding the 2012 loan re-modification.
Under Maryland law, a validly executed written contract requires that an offer by one
party is unconditionally accepted by the other “before a binding agreement is born.”
International Waste Industries Corp. v. Cape Environmental Management, Inc., 988 F. Supp. 2d
542, 550 (D. Md. 2013) (quoting Lemlich v. Bd. of Trs. of Hartford Cty. Coll., 282 Md. 495, 502
(1978)). Where, as here “there is conditional acceptance or a counteroffer,” the parties have not
entered into a binding contract. Id.at 550–51 (quoting L & L Corp. v. Ammendale Normal Inst.,
248 Md. 380, 384 (1968)). Johnson did not accept the written 2012 loan re-modification
agreement as presented. Rather, she excised substantive portions, and in so doing,
communicated a counteroffer to Bank of America. See Post v. Gillespie, 219 Md. 378, 396
(1959) (“[T]he acceptance of the offer coupled with the modification of its terms could not and
did not constitute a final and complete expression of the agreement between the parties.”); see
also Montage Furniture Services, LLC v. Regency Furniture, Inc., 966 F. Supp. 2d 519, 524 (D.
Md. 2013). Additionally, Johnson does not dispute that Bank of America “informed Plaintiff
that her re-modification was denied because she had scratched through information on the
agreement,” and that Defendant repeatedly requested over the next two years that she submit a
validity executed re-modification agreement. ECF No. 2 at 2; ECF No. 20 at 5–6.
Instead, Johnson contends that Bank of America accepted her counteroffer by applying
the checks to her mortgage, which gave her the “right to rely on Bank of America to act honestly
with respect to the re-modified agreement.” ECF No. 20 at 9. “Acceptance may be manifested
by acts as well as by words,” Cochran v. Norkunas, 398 Md. 1, 23 (2007), and where a party’s
conduct is “sufficient to manifest acceptance to the terms of a written contract,” the party is
bound to that contract. Developers Surety & Indemnity Co. v. Belcher, No. SAG-16-1124, 2017
WL 896861, at *5 (quoting Porter v. Gen. Boiler Casing Co., Inc., 284 Md. 402, 410–411
(1979)). “[C]ommon to all manifestations of acceptance is a demonstration that the parties had
an actual meeting of the minds regarding contract formation.” Cochran, 398 Md. at 23.
Here, Bank of America’s purported acceptance of Johnson’s counteroffer is belied by the
factual allegations of her Complaint. Johnson incorporates into her Complaint correspondence
which plainly shows that Bank of America repeatedly informed her that it would not accept the
altered 2012 loan re-modification.2 See ECF Nos. 2 at 2 & 20 at 6. Further, under the existing
loan’s terms, Bank of America was permitted to accept amounts less than the “full periodic
payments” and apply them to any “Unapplied Funds” balance. See ECF No. 2 at 51, 168–75.
That is what Bank of America did here. Accordingly, even accepting all facts in the Complaint
Letters sent from Defendant to Johnson, and attached by Plaintiff to her Complaint and opposition to the motion to
dismiss, also plainly state that Bank of America “recently received your payment in the amount of $1,007.82 . . .
[a]ccording to the terms of your loan agreement, only full periodic payments will be applied to your loan when any
payments are due. We credited the $1,007.82 to the Unapplied Funds balance on your loan . . . [t]he total monthly
payment for your home loan is $1,462.78.” See, e.g. ECF No. 2-1 at 51. Many of the letters also state that “[b]y
accepting and applying an amount less than the amount owed, we have not waived any of our rights under the terms
of the loan documents. Future payments may be returned if the payments are less than the total amount owed.” See,
e.g. ECF No. 20-5 at 15.
as true, the 2012 loan re-modification did not constitute a valid, enforceable contract. Bank of
America cannot, as a matter of law, “breach” a contract that did not exist. Thus, Count I must be
Johnson’s fraud claim is likewise untenable. To assert fraud under Maryland law, a
plaintiff must establish that: (1) the defendant made a false representation; (2) the falsity of the
representation was either known to defendant or made with reckless indifference as to its truth;
(3) the misrepresentation was made for the purpose of defrauding plaintiff; (4) plaintiff relied on
the misrepresentation and had the right to rely on it; and (5) plaintiff suffered compensable injury
resulting from the misrepresentation. Moscarillo v. Prof’l Risk Mgmnt. Services, Inc., 398 Md.
529, 544 (2007).
Johnson principally contends that Bank of America’s urgings to enter into a valid loan
modification constitute fraud. ECF No. 2 at 4 (“Defendant, knowing it is breach of the
agreement, fraudulently continues to harass and bully Plaintiff to enter into another loan
modification via sending bogus letters through the U.S. mail and threatening foreclosure.”) See
also ECF No. 20 at 15. However, because the 2012 loan re-modification was not a valid
contract, any subsequent representations regarding possible re-negotiation and Bank of
America’s pursuit of foreclosure proceedings cannot be false. Supra; see also ECF No. 2 at 4.
Accordingly, Johnson’s fraud claim (Count II) must fail.
Johnson’s motions for relief
Johnson has also moved to strike Defendant’s reply, ECF No. 28, and for default judgment in
her favor, ECF No. 25. Johnson asserts that her requested relief is warranted because counsel for
Bank of America:
“[C]arelessly overlooked his responsibility to keep abreast of the status of this case or
Defendant’s counsel did in fact have knowledge that Plaintiff’s Opposition had been filed
and intended to stall the progress of the litigation. Defendant’s counsel is a
knowledgeable and skilled attorney with an administrative assistant, paralegal(s) and
backed by a reputable law firm. Consequently, there is no justifiable reason for
Defendant not filing a timely response to Plaintiff’s Opposition.”
ECF No. 26 at 3–4. Plaintiff also correctly notes that during the October, 24, 2017 telephone
conference, the Court asked Bank of America’s counsel if he had received Johnson’s response, to
which he initially replied “no” but then switched course, asserting that he likely received it but
did not read it. ECF No. 25 at 2. After Johnson’s motion for entry of default, Bank of America
elaborated somewhat, explaining that counsel’s administrative policy requires that “documents
received via mail in paper format be converted to PDF and circulated internally” and “[p]hysical
copies of documents are not typically circulated or reviewed.” ECF No. 26 at 3. Counsel further
confirmed that “a hard copy of Plaintiff’s Opposition was indeed received on May 1, 2017,” but
was not internally circulated because of a miscommunication between counsel and his
administrative assistant. Id. at 3–4.
Mindful that Johnson is proceeding pro se, the Court finds that Johnson’s motions are best
construed as requests for sanctions. Here, the Court believes striking Bank of America’s reply
properly addresses Bank of America’s deficiencies. The Court is indeed troubled by counsel’s
shifting responses, particularly in light of the outstanding show cause order. More precisely, if
counsel’s firm received the response but counsel had not yet read it, then the show cause order
should have prompted a diligent investigation to locate the response and inform the court
accordingly either in writing or during the status call. This counsel did not do. Only after the
Court pressed the matter during the status call counsel provide equivocal and, to some extent,
inconsistent responses. It seems in fairness that Bank of America should not be permitted to
reply under these curious circumstances. ECF No. 21. See Fed. R. Civ. P. 11(c)(4). It bears
noting, however, that the Court’s analysis on the legal sufficiency of the Complaint without the
benefit of Bank of America’s reply nonetheless remains unchanged.
Plaintiff also sought default judgment in her favor as a sanction for Bank of America’s
failure to timely indicate whether it had received her initial response. ECF No. 25. The Court
denies this requested sanction because it is disproportionately severe and unwarranted, especially
in light of the Court’s granting Bank of America’s motion to dismiss. The remaining motions at
ECF Nos. 18, 24, 25, 27 and 29 are denied as moot.
For the reasons stated in the foregoing Memorandum Opinion, it is this 13th day of
February, 2018, ORDERED by the United States District Court for the District of Maryland that:
1. Plaintiff CYNTHIA M. JOHNSON’s Motion to Strike Defendant’s Reply to Response
Motion to Dismiss, ECF No. 28, is GRANTED in part and DENIED as to the Motion
to Partially Strike Defendant’s Response in Opposition to Plaintiff’s Request for Entry
2. Plaintiff CYNTHIA M. JOHNSON’s Motion for Default Judgment, ECF No. 25. is
2. Defendant BANK OF AMERICA, N.A.’s Motion to Dismiss, ECF No. 14, is
GRANTED and Plaintiff CYNTHIA M. JOHNSON’s Complaint, ECF Nos. 2 & 5,
3. The motions at ECF Nos. 18, 24, 27 and 29 are DENIED as moot;
4. The Clerk shall transmit copies of this Memorandum Opinion and Order to the parties
and CLOSE this case.
United States District Judge
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