AZIMIRAD v. HSBC MORTGAGE Corp.

• Decision Date: 12 April 2011
• Docket Number: Civil Action No. DKC 10-2853
• Parties: ARDALAN AZIMIRAD v. HSBC MORTGAGE CORPORATION
• Court: U.S. District Court — District of Maryland

ARDALAN AZIMIRAD

v.HSBC MORTGAGE CORPORATION

Civil Action No. DKC 10-2853

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

Dated: April 12, 2011

MEMORANDUM OPINION

Presently pending and ready for resolution in this mortgage lending action are two motions: a motion to dismiss (ECF No. 12) filed by Defendant HSBC Mortgage Corporation ("HSBC") and a motion for summary judgment (ECF No. 17) filed by Plaintiff Ardalan Azimirad. The issues are fully briefed and the court now rules, no hearing being deemed necessary. See Local Rule 105.6. For the reasons that follow, HSBC's motion will be granted in part and denied in part, while Azimirad's motion will be denied.

I. Background

A. Factual Background

According to the complaint, Azimirad borrowed $297,000 in a mortgage loan with HSBC on February 5, 2007. (ECF No. 2 ¶¶ 910). In May 2009, purportedly because of Azimirad's "economic status," HSBC began the process of modifying his loan. (Id. ¶ 11). Following several weeks of negotiation, HSBC "approved" a modification of the Loan on July 10, 2009 by sending an initial term sheet to Azimirad for his review. (Id. ¶¶ 12-13). A few weeks later, on August 1, 2009, Azimirad received additional loan modification documents, but they contained information that Azimirad felt was inaccurate. (Id. ¶ 15). Thus, for the next two months Azimirad "diligently, if not daily" sought correction of those documents from HSBC. (Id. ¶ 15). HSBC finally acceded, returning an accurate set of documents ("Loan Modification Agreement") to Azimirad on October 9, 2009. (Id. ¶ 16). Azimirad promptly executed the Loan Modification Agreement and returned it to HSBC on October 19, 2009, along with a check for the first payment due under the agreement. (Id. ¶ 17). By the time of the modification, the unpaid balance on the loan had risen to over $308,000. (Id. ¶ 18).

Azimirad alleges that HSBC failed to comply with its end of the Loan Modification Agreement. Instead, it accepted his first payment and placed it in a "holding account," purportedly "due to certain negotiations with a note holder." ( Id. ¶ 19). After Azimirad learned in October 2009 that HSBC was not applying his payments to his loan, HSBC explained that the noteholder, CitiGroup Financial Corp. ("Citi"), had rescinded the Loan Modification Agreement. ( Id. ¶¶ 20-23). Azimirad states that, from October 2009 until May 2010, he was told to "hold off on payments" while HBSC negotiated the rescission with Citi. ( Id. ¶ 23).¹ In lieu of making payments to HSBC, Azimirad placed "good-faith payments" in an escrow account. ( Id. ¶ 26).

Azimirad alleges that, on July 6, 2010, he received a letter informing him that his note had been sold to HSBC. ( Id. ¶ 27). He then attempted to determine whether his Loan Modification Agreement was still valid, but he received a variety of answers from HSBC; one representative told him that HSBC planned to honor the Agreement, while another told him that the Agreement would not be honored and the loan would need to be modified on different terms. ( Id. ¶¶ 28-30). By letter dated August 9, 2010, counsel for HSBC informed Azimirad that his loan had been "referred [to counsel] . . . for legal action based upon a default under the terms of the loan agreement." ( Id. at 31).

Azimirad states that he has "invested considerable time and money relying on the representation[s] of Defendant," and has suffered a "considerably diminished" credit score because of HSBC. (Id. ¶¶ 36, 43).

B. Procedural Background

On August 25, 2010, Azimirad filed a five-count complaint in the Circuit Court for Montgomery County; the complaint requests specific performance and a declaratory judgment while asserting claims of breach of contract, intentional misrepresentation, and promissory estoppel. (ECF No. 2). After HSBC was served on September 14, 2010, it removed the action to this court on October 14. (ECF No. 11 ¶¶ 1, 3). Then, on November 12, 2010, HSBC moved to dismiss counts one through four of the complaint. (ECF No. 12). Azimirad opposed on December 12, 2010, while simultaneously moving for summary judgment on all counts. (ECF No. 17). HSBC opposed the motion for summary judgment on February 23, 2011; in doing so, it argued that "judgment as a matter of law should be granted in favor of HSBC on all counts of [Azimirad]'s complaint." (ECF No. 22). Azimirad replied on March 11, 2011. (ECF No. 23).

II. Motion to Dismiss

A. Standard of Review

HSBC originally moved to dismiss the first four counts of the complaint pursuant to Rule 12(b)(6). (ECF No. 5). The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the sufficiency of the complaint. Presley v. City of Charlottesville, 464 F.3d 480, 483 (4^th Cir. 2006). At this stage, the court must consider all well-pleaded allegations in a complaint as true, Albright v. Oliver, 510 U.S. 266, 268 (1994), and must construe all factual allegations in the light most favorable to the plaintiff. See Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4^th Cir. 1999) (citing Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4^th Cir. 1993)).

In evaluating the complaint, the court need not accept unsupported legal allegations. Revene v. Charles County Comm'rs, 882 F.2d 870, 873 (4^th Cir. 1989). Nor must it agree with legal conclusions couched as factual allegations, Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009), or conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4^th Cir. 1979). See also Francis v. Giacomelli, 588 F.3d 186, 193 (4^th Cir. 2009). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged, but it has not 'show[n] . . . that the pleader is entitled to relief.'" Iqbal, 129 S.Ct. at 1950 (quoting Fed.R.Civ.P. 8(a)(2)).

In addition to the complaint itself, a court may consider "any documents that are attached to it." CACA Int'l, Inc. v. St. Paul Fire & Marine Ins. Co., 566 F.3d 150, 154 (4^th Cir. 2009). Indeed, Federal Rule of Civil Procedure 10(c) expressly provides that a written instrument attached as an exhibit to the complaint "is a part of the pleading for all purposes." "[I]n the event of conflict between the bare allegations of the complaint and any exhibit attached pursuant to [Rule 10(c)], the exhibit prevails." Fayetteville Investors v. Commercial Builders, Inc., 936 F.2d 1462, 1465 (4^th Cir. 1991).

B. Analysis

HSBC first argues that counts one, two, and three of the complaint should be dismissed, as the Loan Modification Agreement - which was attached to the complaint as Exhibit 2 -does not bear a signature from HSBC. HSBC reasons that the absence of its signature means there is not a binding contract. Azimirad maintains, however, that there were other indications of the parties' intent to be bound by the Loan Modification Agreement, such that the absence of HSBC's signature is not fatal.

Generally speaking, "a signature is not required in order to bring a contract into existence, nor is a signature always necessary to the execution of a written contract." Porter v. Gen. Boiler Casing Co., Inc. , 284 Md. 402, 410 (1979); see also Tow v. Miners Mem'l Hosp. Ass'n, 305 F.2d 73, 75 (4^th Cir. 1962) ("If a person has accepted a written agreement and has acted upon it he is bound by it, although he may not have set his hand to the document."). "There is an exception to this rule, however, when the terms of the contract make the parties' signatures a condition precedent to the formation of the contract." All State Home Mortg., Inc. v. Daniel, 187 Md.App. 166, 181 (2009).² Even when there is no signature requirement in the explicit terms of the contract, other evidence might be used to establish that such signatures were meant to be a condition precedent. Id. (citing Pradhan v. Maisel, 26 Md.App. 671, 67778 (1975)).

HSBC argues that its signature was a condition precedent to the Loan Modification Agreement. Notably absent from the contract is any explicit statement that HSBC signature's was in fact such a condition. Compare All State, 187 Md.App. at 183 (finding signatures were condition precedent where contract stated that "[t]his agreement is effective and binding . . . when both parties sign it"); see also Chiricella v. Erwin, 270 Md. 178, 182 (1973) (describing words and phrases indicating express condition precedent). Nevertheless, HSBC maintains that the condition can be inferred from other aspects of the contract. For one, it says, the Loan Modification Agreement contained a line for HSBC to sign as "Lender." Courts, however, have seemed generally unwilling to infer a condition precedent from a signature line alone. See, e.g., Shovel Transfer & Storage, Inc. v. Pa. Liquor Control Bd. , 559 Pa. 56, 66 (1999) ("[T]he mere presence of signature lines does not determine whether the parties intended to be bound only upon the execution of the document by all the signatories."); Allen v. Ford Motor Credit Co., 8 F.Supp.2d 702, 705 (N.D.Ohio 1998) (noting signature spaces are generally insufficient to establish condition precedent); In re Marriage of Hasso, 229 Cal.App.3d 1174, 1181 (1991) (finding attorney approval was not condition precedent to enforcement of settlement agreement, despite presence of signature line for attorney); Ampex Credit Corp. v. Bateman, 554 F.2d 750, 752 (5^th Cir. 1977) (stating that blank signature lines do not conclusively establish condition precedent); see also 17A Am.Jur.2d Contracts § 175 (2010 supp.) ("Signature spaces in a form contract do not in and of themselves require that signatures of the parties are a condition precedent to the agreement's enforceability.").

Similarly, HSBC points to the "Lender/Mortgagee Acknowledgment" as further evidence that its signature was a condition precedent. That acknowledgment provided a space for an officer of HSBC to: . . . certify . . . that he/sh...