Hackett et al v. Bayview Loan Servicing, LLC et al

Filing 22

MEMORANDUM OPINION. Signed by Judge Paula Xinis on 12/27/2018. (km4s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
RICHARD HACKETT, et al.,
Plaintiffs,
v.

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*
*

Civil Action No. 18-cv-01286-PX

BAYVIEW LOAN SERVICING, LLC, et al., *
Defendants.

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***
MEMORANDUM OPINION

Currently pending is Defendants’ motion to dismiss this case after removal to this Court.
ECF Nos. 16, 1. The motion is fully briefed, and no hearing is necessary. See Loc. R. 105.6.
For the reasons that follow, the Court grants in part Defendants’ motion and dismisses the Truth
in Lending Act claims. The Court declines to exercise supplemental jurisdiction over the
remaining state law claims and, in its inherent authority, remands this case to the Circuit Court
for Montgomery County, Maryland. The remainder of Defendants’ motion to dismiss is denied
as moot.
I.

Background

Plaintiffs Richard and Megan Hackett (collectively, “the Hacketts”) filed a class action
suit in the Circuit Court for Montgomery County, Maryland, stemming from alleged improper
procedures undertaken by Defendant Bayview Loan Servicing, LLC (“Bayview”) as a loan
servicer and Defendant The Bank of New York Mellon, as Trustee for the Certificate Holders of
the CWALT, Inc., Alternative Loan Trust 2006-OA19 (“the Bank”). Id. ¶ 24. The Complaint
avers that Bayview, as an agent for the Bank, improperly assessed property preservation or
inspection charges on loans that it serviced and improperly denied the Hacketts’ loan
modification application. Id. ¶¶ 7, 27, 39. As a result, the Hacketts filed suit individually and on

behalf of three subclasses of debtors, asserting violations of the Truth in Lending Act (“TILA”),
15 U.S.C. § 1601, et seq.; the Maryland Consumer Debt Collection Practices Act, Md. Code,
Com. Law, § 14-201, et seq.; the Maryland Consumer Protection Act, Md. Code, Com. Law,
§ 14-201, et seq.; the Maryland usury statute, Md. Code, Com. Law § 12-121(a)(1)(ii); the
Maryland Mortgage Fraud Protection Act, Md. Code, Real Prop. § 7-401 et seq.; and the
common law doctrine of unjust enrichment. The Complaint also seeks declaratory and injunctive
relief. Id. ¶¶ 69–121.
On May 2, 2018, Defendants removed the case to this Court, asserting federal question
and diversity jurisdiction. ECF No. 1. Defendants then moved to dismiss for failure to state a
claim upon which relief can be granted. ECF No. 16. In response, the Hacketts concede
dismissal of the TILA claims and argue that remand rather than dismissal is appropriate on the
remaining state law claims. ECF No. 19 at 6.
II.

Standard of Review

In ruling on a motion to dismiss brought pursuant to Rule 12(b)(6) of the Federal Rules of
Civil Procedure, the well-pleaded allegations are accepted as true and viewed most favorably to
the party pursuing the allegations. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
“Factual allegations must be enough to raise a right to relief above a speculative level.” Id.
“‘[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. at 557).
“[C]onclusory 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).

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III.

Dismissal of TILA Claims

In responding to Defendants’ motion to dismiss, the Hacketts concede dismissal of the
TILA claims in light of this Court’s recent dismissal of “nearly identical” claims. ECF No. 19 at
16; see also Kemp v. Seterus, Inc., No. 18-472, 2018 WL 3159070, at *4–6 (D. Md. June 27,
2018). The Hacketts are correct that dismissal of the TILA claims is warranted for the same
reasons articulated in Kemp.
The purpose of TILA is to “facilitate the ‘informed used of credit.’” Watkins v. SunTrust
Mortg., Inc., 663 F.3d 232, 234 (4th Cir. 2011) (quoting 15 U.S.C. § 1601(a)). TILA mandates
that “[a] creditor or servicer of a home loan shall send an accurate payoff balance within a
reasonable time, but in no case more than 7 business days, after the receipt of a written request
for such balance from or on behalf of the borrower.” 15 U.S.C. § 1639g. Although the statute
reaches both creditors and servicers, TILA “imposes civil liability only on creditors and, only in
limited circumstances, assignees of creditors.” Kemp, 2018 WL 3159070, at *3 (citing 15 U.S.C.
§§ 1640(a), 1641(a)); see also Strickland-Lucas v. Citibank, N.A., 256 F. Supp. 3d 616, 626 (D.
Md. 2017) (“[T]he only parties who can be liable for TILA violations are the original creditor
and assignees of that creditor.”) (quoting Chow v. Aegis Mortg. Corp., 286 F. Supp. 2d 956, 959
(N.D. Ill. 2003) (internal quotation marks and citations omitted).
A creditor is defined as one “who both (1) regularly extends, whether in connection with
loans, sales of property or services, or otherwise, consumer credit which is payable by agreement
in more than four installments or for which the payment of a finance charge is or may be
required, and (2) is the person to whom the debt arising from the consumer credit transaction is
initially payable on the face of the evidence of indebtedness or, if there is no such evidence of
indebtedness, by agreement.” 15 U.S.C. § 1602(g). An assignee of a creditor may be liable

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“only if the violation for which the action or proceeding is brought is apparent on the face of the
disclosure statement . . . .” 15 U.S.C. § 1641(a).
In Kemp, the plaintiff brought TILA claims on behalf of herself and a putative class
against a loan servicer and an assignee creditor arising from the assessment of property
inspection fees. 2018 WL 3159070, at *1. This Court held that the TILA claims against the loan
servicer “are clearly dismissible” because the loan servicer was neither a creditor nor assignee of
a creditor. Id. at *4. The Court then found that Fannie Mae, as an assignee creditor, was not
liable under TILA because the alleged inaccuracy forming the basis of the TILA violation (the
assessment of inspection fees) was not apparent on the face of the disclosure statement. Id. at *5.
The Court further considered whether Fannie Mae became an original creditor under TILA when
the property inspection fees were assessed, and concluded that such fees were “not new credit
transactions that could impose liability on Fannie Mae.” Id. at *6. The Court so ruled because
such fees had been included in the original deed of trust to which the plaintiff and original
creditor agreed. Id.
Similar to Kemp, the claims against Bayview fail because Bayview, as loan servicer, is
neither a creditor nor assignee creditor. See Mosley v. OneWest Bank, No. RDB-11-00698, 2011
WL 5005193, at *4 (D. Md. Oct. 19, 2011) (holding that plaintiff failed to state a TILA claim
against loan servicer). Likewise, the claims fail against the Bank as an assignee creditor. As in
Kemp, the alleged inaccuracies in the payoff statements are not apparent on the face of the
disclosure statement because the “disclosure statement is a document provided before the
extension of credit that sets out the terms of the loan.” Kemp, 2018 WL 3159070, at *5 (quoting
Evanto v. Fed. Nat’l Mortg. Ass’n, 814 F.3d 1295, 1297 (11th Cir. 2016)) (internal quotation
marks omitted) (emphasis added in Kemp). Accordingly, assessment of such fees could not

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render the disclosure statement facially inaccurate. Cf. 15 U.S.C. § 1634 (“If information
disclosed in accordance with this part is subsequently rendered inaccurate as the result of any act,
occurrence, or agreement subsequent to the delivery of the required disclosures, the inaccuracy
resulting therefrom does not constitute a violation of this part.”). Assignee liability against the
Bank under TILA cannot attach. See 15 U.S.C. § 1641(a).
Further, the property inspection fees, when assessed, did not require new TILA
disclosures because the fees had been part of the original agreement between the Hacketts and
the original lenders. ECF No. 16-3 ¶ 14 (“Lender may charge Borrower fees for services
performed in connection with Borrower’s default, for the purpose of protecting Lender’s interest
in the Property and rights under this Security Instrument, including, but not limited
to . . . property inspection and valuation fees.”) (emphasis added). Although, in theory,
additional fees not contemplated by previous agreement may require new disclosures, see Begala
v. PNC Bank, Ohio, Nat’l Ass’n, 163 F.3d 948, 951 n.1 (6th Cir. 1998), fees contemplated in the
original agreement are not “new” credit transactions that trigger new disclosures. See Kemp,
2018 WL 3159070, at *6. Defendants’ motion to dismiss is granted as to the TILA claims.1
IV.

Remaining State Law Claims

As to the remaining state law claims, the Hacketts argue that remand is warranted. ECF
No. 19 at 17 n.11. Defendants disagree, contending that the Court maintains diversity
jurisdiction over the state law claims. ECF No. 20 at 5.2 The Court finds that diversity
jurisdiction is lacking and exercises its inherent authority to remand the case.
1

The Court notes that the Hacketts, as representatives of putative classes, may voluntarily dismiss claims
so long as the class members are not prejudiced and dismissal does not advance the representatives’ individual
interests over those of the class. In re Microsoft Corp. Antitrust Litig., 332 F. Supp. 2d 890, 895 (D. Md. 2004); see
also Shelton v. Pargo, Inc., 582 F.2d 1298, 1306 (4th Cir. 1978). Because the Court finds dismissal of the TILA
claim is warranted on the merits, the Court finds no prejudice inures to the putative class in its representatives
acceding to dismissal.
2

Defendants do not assert jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 1332(d).

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This Court, as one of limited jurisdiction, may hear only civil cases that implicate a
federal question or are brought pursuant to the Court’s diversity jurisdiction. Exxon Mobile
Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005). Diversity jurisdiction is proper where
the amount in controversy exceeds $75,000 and no plaintiff is a citizen of the same state as any
defendant. 28 U.S.C. § 1332(a); Johnson v. Am. Towers, LLC, 781 F.3d 693, 704 (2015). Where
diversity jurisdiction is proper, a defendant may remove the case to federal court pursuant to 28
U.S.C. § 1441. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987); Mulcahey v. Columbia
Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994).
Because removal “raises significant federalism concerns, [courts] must strictly construe
removal jurisdiction.” Mulcahey, 29 F.3d at 151; see also Cohn v. Charles, 857 F. Supp. 2d 544,
547 (D. Md. 2012) (“Doubts about the propriety of removal are to be resolved in favor of
remanding the case to state court.”). The defendant, as the removing party, bears the burden of
“demonstrating the court’s jurisdiction over the matter.” See Md. Stadium Auth. v. Ellerbe
Becket, Inc., 407 F.3d 255, 260 (4th Cir. 2005); Strawn v. AT&T Mobility, LLC, 530 F.3d 293,
296 (4th Cir. 2008). Where “the complaint does not allege a specific amount in damages,” the
defendant must prove the amount in controversy by a preponderance of the evidence. Ritterstein
v. IAP Worldwide Servs., Inc., No. RDB-18-2377, 2018 WL 4914199, at *1 n.2 (D. Md. Oct. 10,
2018).
The parties do not dispute that complete diversity of citizenship exists. See ECF No. 1
¶¶ 7–10. However, the Hacketts contend that the amount in controversy does not exceed
$75,000, rendering removal improper on diversity grounds. ECF No. 19 at 2 n.2. The
Complaint alleges $63,500 in damages for the Hacketts individually. ECF No. 2 ¶ 135(a). The
Complaint also alleges damages “in excess of $75,000” for the class claims, as well as $500 for

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each violation of Maryland’s usury statute and either $1,000,000 or 1% of Defendants’ unknown
net worth for violations of TILA. Id. ¶¶ 79(b), 88(b), 98(b), 109(b), 121(b)–(c).3 The Complaint
does not specify the number of putative class members, nor does it seek precise damages in
excess of $75,000 as to any one class member.
Defendants contend that the amount in controversy is satisfied because the Complaint
generally avers damages of an “amount in excess of $75,000” as to the class claims. ECF No. 1
¶ 13. But “[t]he requisite amount in controversy cannot be met by aggregating the separate
claims of individual class plaintiffs.” Gilman v. Wheat, First Sec., Inc., 896 F. Supp. 507, 509
(D. Md. 1995) (citing Snyder v. Harris, 394 U.S. 332, 336 (1969)).4 This means that the Court
cannot add the expected recovery of each class member to reach collectively an amount in
controversy exceeding $75,000. Rather, for the amount in controversy to be satisfied, some
evidence must demonstrate an individual class plaintiff’s expected damages would be in excess
of $75,000. Gilman, 896 F. Supp. at 509.
The parties confine their jurisdictional dispute to the allegations in the Complaint. The
Hacketts expressly limit the amount in controversy to $63,500 on their individual claims, a sum
decidedly not in excess of $75,000. Further, although the Hacketts would be entitled, in theory,
to additional damages based on membership in the putative class, the Court has no way of
determining the Hacketts pro rata share of the recoverable class claims. See Grayson v. Freedom
Mortgage Corp., No. GJH-18-1375, 2018 WL 6505513, at *2 (D. Md. Dec. 11, 2018) (“Because
Defendant has offered no evidence as to the size of the putative class, the Court would have to
Pursuant to Maryland Rule 2-305(b), “a demand for a money judgment that exceeds $75,000 shall not
specify the amount sought, but shall include a general statement that the amount sought exceeds $75,000.” Md. R.
2-305(b).
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As an exception to this general rule, the claims of individual class plaintiffs may be aggregated where the
members have a “‘common and undivided interest’ in the claim.” Mattingly v. Hughes Elecs. Corp., 107 F. Supp.
2d 694, 696 (D. Md. 2000) (quoting Zahn v. Int’l Paper Co., 414 U.S. 291, 294 (1973)). Defendants do not assert
that the putative class members have a common and undivided interest in the claims here.

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speculate as to the pro rata determination of the class claims.”); see also Covert v. Auto. Credit
Corp., 968 F. Supp. 2d 746, 751–52 (D. Md. 2013) (“Defendant does not establish any specific
amount that it believes Plaintiff may recover on behalf of himself, and its general allegation that
this amount exceeds $75,000 is speculative at best.”). Because Defendants have failed to
demonstrate that any individual class member, let alone the Hacketts, seeks to recover an amount
exceeding $75,000, diversity jurisdiction is lacking.
As a result, this Court retains only supplemental jurisdiction over the remaining state law
claims, which it declines to exercise. See 28 U.S.C. § 1367(c) (a district court “may decline to
exercise supplemental jurisdiction over a claim . . . [if] the district court has dismissed all claims
over which it has original jurisdiction.”). In so declining, the Court may, in its discretion, either
dismiss the claims or remand the case to state court. See Hinson v. Norwest Fin. S.C., Inc., 239
F.3d 611, 617 (4th Cir. 2001) (“We conclude that a district court has discretion to remand to state
court a removed case involving pendent claims upon a proper determination that retaining
jurisdiction over the case would be inappropriate.”) (quoting Carnegie-Mellon Univ. v. Cohill,
484 U.S. 343, 357 (1988)) (internal quotation marks omitted).
In deciding whether to dismiss or remand, the Court must “consider ‘principles of
economy, convenience, fairness, and comity’ and whether the efforts of a party in seeking
remand amount to a ‘manipulative tactic.’” Oliver v. Campbell McCormick, Inc., No. CCB-161057, 2016 WL 3878492, at *2 (D. Md. July 18, 2016) (quoting Hinson, 239 F.3d at 617); see
also Burch v. N.C. Dep’t of Pub. Safety, 158 F. Supp. 3d 449, 465 (E.D.N.C. 2016). Efficiency
and continuity of the case tilt in favor of remand over dismissal, particularly where removal has
now delayed the case for the better part of a year. Furthermore, the Court does not find that the
Hacketts have sought dismissal of the TILA claims to manipulate jurisdiction; rather dismissal is

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warranted on the merits and in light of recent persuasive authority. Remand in this context is
appropriate. The Court remands the case to the Circuit Court for Montgomery County,
Maryland, and denies as moot Defendants’ motion to dismiss as to the non-TILA claims.
A separate Order follows.

December 27, 2018______________
Date

___/S/________________________
Paula Xinis
United States District Judge

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