Adle-Watts v. Roundpoint Mortg. Servicing Corp.

• Decision Date: 13 July 2016
• Docket Number: Civil No. CCB-16-400
• Parties: PAMELA M. ADLE-WATTS v. ROUNDPOINT MORTGAGE SERVICING CORPORATION
• Court: U.S. District Court — District of Maryland

PAMELA M. ADLE-WATTS v. ROUNDPOINT MORTGAGE SERVICING CORPORATION

Civil No. CCB-16-400

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

July 13, 2016

MEMORANDUM

Pamela M. Adle-Watts has sued RoundPoint Mortgage Servicing Corporation ("RoundPoint") and Gregory Funding, LLC ("Gregory Funding") for allegedly servicing her mortgage without entitlement, or, in the alternative, for failing to apply her mortgage payments to prevent acceleration of her loan. Now pending are the defendants' motions to dismiss. No oral argument is necessary. See Local Rule 105.6 (D. Md. 2016). For the reasons that follow, the defendants' motions to dismiss will be granted.

BACKGROUND

On August 18, 1999, Adle-Watts obtained a mortgage loan from Headlands Mortgage Company ("Headlands") for property in Harford County, Maryland. (Compl. ¶ 6, ECF No. 2.) The mortgage was secured by a deed of trust ("deed") recorded in the Harford County land records, which listed Adle-Watts as borrower and Headlands as beneficiary and lender. (Id.; id. Ex. 1, Deed of Trust 1, ECF No. 2-1.) According to her complaint, on September 3, 1999, before assigning any mortgage servicing or other rights to any entity, Headlands assigned the deed and the corresponding mortgage note ("promissory note" or "note") to Bank One Pasadena. (Compl. ¶ 8.1; id. Ex. 3, 1999 Assignment, ECF No. 2-3.) On November 30, 2005, Greenpoint Mortgage Funding, Inc. ("Greenpoint"), successor-by-merger to Headlands, purportedly assigned the deed and note to Copperfield Investments, LLC ("Copperfield"). (Compl. ¶ 8.2; id. Ex. 4, 2005 Assignment, ECF No. 2-4.) On February 9, 2011, Copperfield purportedly assigned the deed to RoundPoint. (Compl. ¶ 8.3; id. Ex. 5, 2011 Assignment, ECF No. 2-5.) RoundPoint was the mortgage servicer until April 20, 2015, at which point the loan servicing rights were transferred to Gregory Funding. (Compl. ¶ 7; id. Ex. 2, 2015 Transfer, ECF No. 2-2.) Adle-Watts alleges that, because Bank One Pasadena remained the note holder after Headlands assigned it the mortgage in 1999, all subsequent assignments and transfers are invalid. (Compl. ¶¶ 8, 8.2, 8.3.)

In light of this alleged break in the chain of title, the plaintiff filed this suit on November 23, 2015, against RoundPoint and Gregory Funding (collectively, "the defendants") in Circuit Court for Harford County, arguing that the defendants never acquired any servicing rights, or became note holders or secured parties. (Id. ¶ 9.) She argues that the defendants were unjustly enriched by her mortgage payments (Count I), and violated the Maryland Consumer Protection Act ("MCPA") by making misrepresentations in their communications with her (Count II), given that they were aware or should have been aware of the break in the chain of title. (Id. ¶¶ 9, 10, 11, 16-19, 20-30.) Adle-Watts argues in the alternative that, to the extent either defendant is a proper mortgage servicer, it wrongfully failed to accept her mortgage payments and apply them to her mortgage balance. (Id. ¶ 12.) Specifically, the plaintiff alleges that, in its December 29, 2014, notice of default and intent to accelerate ("notice"), RoundPoint promised that it would apply her $2,293.13 payment toward her mortgage balance to prevent acceleration of the loan. (Id. ¶¶ 12.1, 12.2; id. Ex. 6, Notice of Default, ECF No. 2-6.) Instead, RoundPoint rejected the payment on February 24, 2015. (Compl. ¶ 12.3; id. Ex. 9, 2015 RoundPoint Letter, ECF No. 2-9.) And according to Adle-Watts, RoundPoint and Gregory Funding have continued to improperly and without justification reject her payment attempts, and have prepared to forecloseon her property. (Compl. ¶¶ 12.4, 12.5.) Adle-Watts has alleged an MCPA violation (Count II), detrimental reliance (Count III), breach of contract (Count IV), and negligence (Count V) as claims under this alternative theory of liability. (Id. ¶¶ 20-30, 31-38, 39-44, 45-51.) Adle-Watts also has included two additional causes of action, labeled as claims for a declaratory judgment (Count VI) and injunctive relief (Count VII). (Id. ¶¶ 52-56, 57-64.)

On February 12, 2016, the defendants removed the case to federal court, invoking this court's diversity jurisdiction. (Notice of Removal, ECF No. 1.) RoundPoint filed a motion to dismiss for failure to state a claim on March 11, 2016, (RoundPoint Mot. Dismiss, ECF No. 9), and Gregory Funding followed suit on March 18, 2016, (Gregory Mot. Dismiss, ECF No. 10). Gregory Funding incorporated by reference RoundPoint's motion to dismiss, in addition to articulating new arguments. (Gregory Mot. Dismiss at 1.) Adle-Watts filed responses in opposition to both motions, (Resp. Opp'n RoundPoint, ECF No. 13; Resp. Opp'n Gregory, ECF No. 14), and RoundPoint replied, (RoundPoint Reply, ECF No. 16).

STANDARD OF REVIEW

When ruling on a motion under Rule 12(b)(6), the court must "accept the well-pled allegations of the complaint as true," and "construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff." Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). "Even though the requirements for pleading a proper complaint are substantially aimed at assuring that the defendant be given adequate notice of the nature of a claim being made against him, they also provide criteria for defining issues for trial and for early disposition of inappropriate complaints." Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). "The mere recital of elements of a cause of action, supported only by conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6)." Walters v. McMahen, 684 F.3d435, 439 (4th Cir. 2012) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). To survive a motion to dismiss, the factual allegations of a complaint "must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). "To satisfy this standard, a plaintiff need not 'forecast' evidence sufficient to prove the elements of the claim. However, the complaint must allege sufficient facts to establish those elements." Walters, 684 F.3d at 439 (citation omitted). "Thus, while a plaintiff does not need to demonstrate in a complaint that the right to relief is 'probable,' the complaint must advance the plaintiff's claim 'across the line from conceivable to plausible.'" Id. (quoting Twombly, 550 U.S. at 570).

In considering a Rule 12(b)(6) motion, the court does not always have to limit its review to the pleadings. It also can take judicial notice of public records, including statutes, and can "consider documents incorporated into the complaint by reference, as well as those attached to the motion to dismiss, so long as they are integral to the complaint and authentic." United States ex rel. Oberg v. Pa. Higher Educ. Assistance Agency, 745 F.3d 131, 136 (4th Cir. 2014) (citations and internal quotation marks omitted). Here, the exhibits provided by the parties are integral to the complaint.

ANALYSIS

1. Claims Related to the Alleged Break in the Chain of Title

Adle-Watts brings an unjust enrichment claim and two claims under the MCPA related to the alleged break in the chain of title. The court will grant the defendants' motions to dismiss on these claims.

a. Unjust Enrichment¹

Adle-Watts's claim that the defendants were unjustly enriched is based on her argument that the defendants are not entitled to enforce the terms of the note or deed. Under Maryland law, "[t]he deed of trust cannot be transferred like a mortgage; rather, the corresponding note may be transferred, and carries with it the security provided by the deed of trust." Anderson v. Burson, 35 A.3d 452, 460 (Md. 2011) (citing Le Brun v. Prosise, 79 A.2d 543, 548 (Md. 1951)). The record does not demonstrate which entity is in possession of the promissory note.²

The court, ultimately, does not need to determine the validity of the assignments at issue. Because Adle-Watts was not a party to or beneficiary of the assignment from Greenpoint to Copperfield, or the subsequent transfers, she lacks standing to challenge the validity of the assignments.³ See Wolf v. Fed. Nat'l Mortg. Ass'n, 830 F. Supp. 2d 153, 161 (W.D. Va. 2011), aff'd, 512 F. App'x 336, at *342 (4th Cir. Feb. 28, 2013) ("[The plaintiff] still has the obligation under the note to make payments. In fact, the only thing the assignment affects is to whom [she]makes the payments. Thus, she has no interest in the assignment [and] she has no standing to challenge it."); see also Henry v. Aurora Loan Servs., LLC, 2016 WL 1248672, at *3 (D. Md. March 25, 2016).⁴ The lack of standing makes sense because, "[r]egardless of whether the Note and Deed of Trust were properly assigned, [the borrower is] still required to make timely payments on his mortgage." Bank of New York Mellon Trust Co. N.A. v. Henderson, 107 F. Supp. 3d 41, 45 (D.D.C. 2015), appeal filed, No. 15-5186 (D.C. Cir. June 30, 2015).

Here, the deed requires Adle-Watts to make monthly payments on her mortgage. (See Deed of Trust 1.) It states that "[t]he Note or a partial interest in the Note (together with this Security Instrument) may be sold one or more times without prior notice to Borrower. A sale may result in a change in the entity (known as the 'Loan Servicer') that collects monthly payments due under the Note and this Security Instrument." (Id. § 19.) With regard to Gregory Funding in particular, the deed provides that loan servicing rights may be transferred "unrelated to a sale of the Note," as long as the borrower is notified in writing. (Id.) Adle-Watts appears to allege that RoundPoint transferred only the servicing rights, not the deed or note, to Gregory Funding, (Compl. ¶ 7), and she does not contend that she was not notified of the change, (see 2015 Transfer). Accordingly, because she was not a...