Mortgage Guaranty Insurance Company v. Whitaker et al
MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 2/9/2018. (heps, Deputy Clerk)
IN THE UNITED STATES DISTlHCT COURT
FOR TilE ()JSTRICT OF MARYLAND'
Zilla FEB -g A \0:
MORTGAGE GUARANTY INSURANCE,
Case No.: G.III-17-22-tJ
,IOHN WIHTAKER, et a/.,
PlaintilT Mortgage Guaranty Insurance Company ("MGIC') brings suit against .John and
Margit Whitaker ("Defendants") to recover losses f()lIowing its paymcnt on a claim stemming
Irom Defendants' denlllit on their mortgage. ECI' No. 12. No hearing is necessary. Loc. R. 105.6
(D. Md. 2016).
For the 1()lIowing reasons. Defendants' Motion to Dismiss is granted.
On February 15. 2008. Defendants borrowed moncy from Weichert Financial Services
("Weichert") I(Jrthe purchase of a propcrty located at 18 North Luzerne Avenue in Baltimore.
Maryland and executed a Note and Dced of Trust secured by the property. ECF No 2 ~ 5: ECF
NO.2-I. MGIC. a mortgage insurance company. insured Weichert. and its successors or assigns.
against financial losses should Dcfendants dcfault on the Note. ECF No. ~ 11. Dcfendants failed
to pay thc installment paymcnts due on the Note. and the Circuit Court I(Jr Baltimore City
entercd an order ratifying the foreclosure sale on .July 17.2012. Ie/. ~~16. : see aiso Rosel1herg. et
Whitaker, et ai.. Casc No. 24012000110
(dockct atlachcd as ECF No. 14-1). Alier
Unless stated otherwise. the Hlcts are taken from the Complaint and assumed to be true.
applying all crcdits of the sale to Defendants' total debt. the Court Auditor lor Baltimore City
determined a deliciency due on the Note in the amount 01'$141.691.37. and the court issued an
order ratifying the COlll1Auditor's report on November 28. 2012. See ECF No. 2
No. 2-2. Following ratitication of the deliciency. Dovenmuehle Mortgage. Inc.. Weichert's
successor in interest. tiled an insurance claim with MGIC. who then paid the claim in the amount
of $88.272.50 to Federal f10me Loan Mortgage Corporation. ECF NO.2 '112.
As a result of Defendants' default on the Note and MGICs payment of the insurance
claim. MGIC alleges that it became subrogated as to Weiehert's claim for the deficiency due on
the Note. See ECF No. 2 ~ 13. MGIC hrought suit against Defendants for hreach of contract on
June 26. 2017 in the Circuit Court for Montgomery County. and Defendants removed the action
to this Court on August 8. 2017 on the hasis of diversity of citizenship under 28 U.S.c. ~ 1332.
Defendants now move to dismiss the Complaint pursuant to Federal Rules of Civil Procedure
12(b)( I) and 12(h)( 6). arguing that MG IC lacks standing to enforce the Note and Deed of Trust
and that even if MGIC has standing. it may not enforce the Note through a breach of contract
action. See ECF No. 12.
A. Motion to Dismiss I'ursuant
to Rule 12(11)(1)
Because standing is an clement of suhject maller jurisdiction. a defendant's motion to
dismiss tor lack of standing should he analyzed under Rule 12(h)( I). See "'ellllles \'. Lord
Ballimore Employee Reliremel7l IlIcome Aecol/l7I I'ltm. 823 F. Supp. 2d 360, 362 (D, Md. 20 II)
(citing While Taill'ark. Ille. \'. SImI/he. 413 F.3d 45 I. 459 (4th Cir. 2005)). When sueh a motion
has heen liled. the plaintiff bears the burden of proving that jurisdiction exists. Williams
Ulliled Slales. 50 F.3d 299, 304 (4th Cir. 1995), The court should grant the motion onlv "if the
facts are not in disputc and the moving party is entitlcd to prcvail as a
mattcr of law:' Richmond. Fredericksh/llX & Potomac R. Co.
United States. 945 F.2d 765.
768 (4th Cir. 1991). In making this determination.
thc court "is to regard thc pleadings
cvidencc on the issue. and may consider evidence
outsidc the pleadings
to one for summary judgmcnt:'
claim is one of breach of contract. alleging that it has suffered an
"injury in fact" as a result of Defendants'
failure to pay Weichert the installment
on the Note. See ECF No. 14 at 5 (citing Mcinnes. 823 F. Supp. 2d at 362).2 Defendants
dispute that they owcd a contractual
argue that MGIC
docs not have standing to bring suit against it because MGIC is not in privity of contract with
by Weichert as a third-party
both parties agree that the doctrine of subrogation.
to the Note. ECl' No. 12 at 3.
if properly estahlished.
MGIC to "step into the shoes" of Weichert to pursue Weichert's
hreach of contract action. See
ECF No. 14 at 8 (citing Fireman's Fund Ins. Co. \'. Colll'l 1m. Co.. 519 A.2d 202. 204 (Mel.
is .. [tJhe substition
of one person in place of another with reference
lawful claim. demand or right. so that he who is suhstituted
relation to the deht or claim. and its rights. remedies.
to the rights of the other in
Plan. Inc. 747 A.2d 677. 682 (Md. 2000). The subrogee is thcn ordinarily entitlcd to all the
of the creditor and associated
mcans the creditor could cmploy to recover payment.
v. Phila. Cas. Co .. 84 A. 476 (Md. 1912).
hoth legal and conventional
does not require a contractual
Legal. or cquitablc.
between a creditor and a subrogee
Pin cites to documcnts filed on the Court°s electronic filing system (Cr\'1/ECF) refer to the page numbers generated
may be applied where there is "( I) the existence of a debt or obligation f()r which a party. other
than the subrogee. is primarily liable, which (2) the subrogec. who is neithcr a voluntcer nor an
intermeddler. pays or discharges in ordcr to protect his own rights and intcrcst. .. Sec. IllS. Co. (!/'
Nell' IIm'en-The Connecticutlnt/em.
Co. \'. Mangan. 242 A.2d 482. 485-86 (Md. 19(8). In
contrast. conventional subrogation requircs "an agrcement. cxprcss or implied. betwecn a debtor
and a third party or bctween a creditor and a third party that. upon paymcnt of thc dcbt. the third
party will be entitled to all the rights and securities of that dcbtor or crcditor:' Poteet \'. SallieI'.
766 A.2d 150. 160 (Md. 200 I). Defendants claim that MUIC has no right of subrogation. legal or
convcntional. and there!()re does not have standing. MGIC claims that it has a right oflegal
MGIC relics on Bachmann \'. Glazer & Glazer. Inc.. 559 A.2d 365 (Md. 1988) to asscrt
that it may pursue its claim against Dcfendants under the theory of legal subrogation. ECl' No.
14 at 8. In Bachmann. a tenant in a commercial building entered into a sales agrccment with
Glazer. Per the sales agreement. Glazer would become the assignee under the building's leasc in
the cvent that the tenant defaulted on the sales agreement. Prior to the sales agreement with
Glazer. the tenant had executed an agreement with Bachmann who guaranteed the rcntal
payments owcd from the tenant. or any assignee of the tenant's interest in the lease. to the
landlord of the building. i\tter the tenant dcfaulted on its sales agrcement with Glazer. Glazer
became the assignee under the Icase. Glazer thcn entercd into an agrccment with thc landlord.
whereby Glazer agrced to pay thc tcnant's outstanding rcnt balancc and. in rcturn. thc landlord
would assign to Glazcr its claim against the tenant and Bachmann for thc past due rcnt. See
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