Austin v. Lakeview Loan Servicing, LLC
| Decision Date | 10 December 2020 |
| Docket Number | Civil Action No. RDB-20-1296 |
| Parties | KIMBERLY AUSTIN, Plaintiff, v. LAKEVIEW LOAN SERVICING, LLC, and LOANCARE, LLC Defendants. |
| Court | U.S. District Court — District of Maryland |
Plaintiff Kimberly Austin ("Plaintiff" or "Austin") brings this putative class action against Defendants Lakeview Loan Servicing, LLC ("Lakeview") and LoanCare, LLC ("LoanCare"), alleging two violations of the Maryland Consumer Debt Collection Act ("MCDCA"), Md. Code Ann., Com. Law § 14-201, et seq.; a violation of the Maryland Consumer Protection Act ("MCPA"), Md. Code Ann., Com. Law § 13-301(14)(iii); breach of contract; and unjust enrichment. (See ECF No. 1.)1 Specifically, Austin claims that the Defendants violated state law and breached the uniform terms of borrowers' mortgages by charging and collecting processing fees when borrowers made their monthly mortgage payments by phone or online. (Id. ¶ 4.) Presently pending is the Defendant LoanCare's Motion to Dismiss for Failure to State a Claim (ECF No. 15). The parties' submissions have been reviewed and no hearing is necessary. See Local Rule 105.6 (D. Md. 2014). For thereasons stated herein, the Defendant LoanCare'ss Motion to Dismiss (ECF No. 15) is GRANTED and all claims against LoanCare are DISMISSED WITH PREJUDICE.
This Court accepts as true the facts alleged in the Plaintiff's Complaint (ECF No. 1). Plaintiff Kimberly Austin is a Maryland resident. (ECF No. 1 ¶ 15.) On or around October 7, 2016, Plaintiff obtained a mortgage loan from First Home Mortgage Company, a lender approved by the Federal Housing Administration ("FHA"), and secured the loan with her home in Abingdon, Maryland. (Id. ¶¶ 55, 64.) This loan was also insured by the FHA. (Id. ¶ 64.) All FHA-insured mortgages contain uniform covenants. (Id. ¶ 36.) For example, FHA-insured loans provide that "Lender may collect fees and charges authorized by the Secretary [of Housing and Urban Development]." (Id. ¶ 37; Ex. A ¶ 13, ECF No. 1-1.) Austin's Mortgage Agreement also provided that "Lender may not charge fees that are expressly prohibited by this Security Instrument or by Applicable Law." (Ex. A ¶ 13, ECF No. 1-1.) "Applicable Law" is defined as "all controlling applicable federal, state and local statutes, regulations, ordinances and administrative rules and orders (that have the effect of law) as well as all applicable final, non-appealable judicial opinions." (Id. p. 2, ¶ J.) The Agreement also states that the mortgage "shall be governed by Federal Law and the law of the jurisdiction in which the Property is located." (Id. ¶ 15.) Finally, it also provides that "[t]he covenants and agreements of this Security Instrument shall bind . . . and benefit the successor and assigns of Lender." (Id. ¶ 12.)
At some point, Defendant Lakeview acquired the servicing rights to the Plaintiff's loan. (ECF No. 1 ¶ 58.) Defendant Lakeview is a Delaware limited liability company and an FHA-approved loan servicer. (Id. ¶¶ 9, 16.) A mortgage servicer is a company that handles the day-to-day administrative tasks of a mortgage loan, including receiving payments, sending monthly statements, and managing escrow accounts. (Id. ¶ 45.) Defendant LoanCare is Virginia limited liability company and an FHA-approved mortgage loan "subservicer" that performs servicing-related functions with regard to the mortgages serviced by Lakeview. (Id. ¶¶ 3, 17.) LoanCare subserviced the Plaintiff's mortgage loan. (Id. ¶ 3.) Therefore, the Plaintiff made her monthly mortgage payments to LoanCare. (Id. ¶¶ 3, 48.) Austin alleges that she made timely mortgage payments and was never in default under the terms of the Mortgage Agreement. (Id. ¶ 57.)
When the Plaintiff made her monthly payments, she had options with respect to her payment method. The Plaintiff could make her payments by mail, or she could opt to pay by telephone, an automated telephone payment system, or online. (Id. ¶ 4.) However, if she chose one of these latter three methods, the Defendants would charge her a processing fee, here referred to as "Pay-to-Pay Fees." (Id.) When borrowers with loans serviced and/or subserviced by the Defendants made their monthly mortgage payments by phone their Pay-to-Pay Fee was as much as $15.00. (Id. ¶ 5.) If they made payment through the automated telephone payment system it was as much as $12.00. (Id.) The online Pay-to-Pay Fee was as much as $10.00. (Id.) The Plaintiff states that she makes her loan payments online, and that each time she does, the Defendants charge her a Pay-to-Pay Fee of $5.00. (Id. ¶ 15.) This amount was allegedly collected by LoanCare at Lakeview's direction, and such profits were shared by both Defendants. (Id. ¶ 48.)
The Plaintiff alleges that this practice of collecting Pay-to-Pay Fees was in violation of the Maryland Consumer Debt Collect Act ("MCDCA") (Count I) and the Maryland ConsumerProtection Act, Md. Code Ann., Com. Law § 13-301(14)(iii) (Count II); represents a breach of the terms of the Mortgage Agreement (Count III); and that the Defendants were unjustly enriched through these transactions (Count IV). She brings this suit under Fed. R. Civ. Pro 23 on behalf of:
All persons (1) with a residential mortgage loan securing a property in Maryland, (2) serviced or subserviced by Lakeview, LoanCare, or both, (3) and who paid a fee to Defendants for making a loan payment by telephone, [Interactive Voice Response], at an ATM, or the internet, during the applicable statutes of limitations through the date a class is certified.
(ECF No. 1 ¶ 77.) Defendant LoanCare has filed a Motion to Dismiss for Failure to State a Claim (ECF No. 15) seeking dismissal of all claims against it.2
A court may dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6); In re Birmingham, 846 F.3d 88, 92 (4th Cir. 2017); Goines v. Valley Cmt'y Servs. Bd., 822 F.3d 159, 165-66 (4th Cir. 2016). A properly pled complaint must provide "[a] short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands "more than labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citations omitted). "Factual allegations must be enough to rise above the speculative level." Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to "state a claim to relief that is plausible on its face." Iqbal, 556 U.S. at 678 (citation omitted); see also Paradise Wire & Cable Defined BenefitPension Plan v. Weil, 918 F.3d 312, 317 (4th Cir. 2019); Willner v. Dimon, 849 F.3d 93, 112 (4th Cir. 2017).
In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, the court must accept as true all well-pled factual allegations in the complaint, Iqbal, 556 U.S. at 678-79, and must "draw all reasonable inferences [from those facts] in favor of the plaintiff," E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011); see Semenova v. Md. Transit Admin., 845 F.3d 564, 567 (4th Cir. 2017); Houck v. Substitute Tr. Servs., Inc., 791 F.3d 473, 484 (4th Cir. 2015); Kendall v. Balcerzak, 650 F.3d 515, 522 (4th Cir. 2011), cert. denied, 565 U.S. 943 (2011). However, legal conclusions are not entitled to the assumption of truth. Iqbal, 556 U.S. at 678-79; Papasan v. Allain, 478 U.S. 265, 286 (1986); Glassman v. Arlington Cty., 628 F.3d 140, 146 (4th Cir. 2010). Mere recitals of the elements of a cause of action, supported only by conclusory statements do not suffice. Iqbal, 556 U.S. at 678. Second, the court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff's complaint alleges facts that allow the court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 678. Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has "alleged—but not shown—that the pleader is entitled to relief." Id. When allegations in a complaint have not crossed the line from conceivable to plausible, the plaintiff's claim must be dismissed. Twombly, 550 U.S. at 570.
Count I of the Plaintiff's Complaint alleges that the Defendant violated two sections of the Maryland Consumer Debt Collection Act ("MCDCA"), Md. Code Ann., Com. Law §§ 14-202(8) and 14-202(11). (ECF No. 1 ¶¶ 92-95.) Section 14-202(8) prohibits "collectors" from claiming, attempting, or threatening to enforce a right with knowledge that the right does not exist. See Md. Code Ann., Com. Law § 14-202(8). Section 14-202(11) also makes it illegal to violate §§ 804-812 of the federal Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq. See Md. Code Ann., Com. Law at § 14-202(11). The Plaintiff fails to state a claim under either of these sections.
First, the Plaintiff has failed to allege that LoanCare was engaging in debt collection. To assert a claim under § 14-202, "plaintiffs must first show that defendants were engaging in an 'attempt to collect a debt.'" Seghetti v. Flagstar Bank, FSB, No. ELH-16-519, 2016 WL 3753143, at *2 (D. Md. July 13, 2016) (citing Covert v. LVNV Funding, LLC, No. DKC-13-0698, 2013 WL 6490318, at *8 (D. Md. Dec. 9, 2013), aff'd on other grounds, 779 F.3d 242 (4th Cir. 2015)). In this case the Defendant LoanCare is a mortgage loan subservicer. (ECF No. 1 ¶ 3.) The MCDCA may apply to loan servicers and subservicers in some contexts. See ...
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