Best v. Newrez LLC, Case No.: GJH-19-2331

• Court: United States District Courts. 4th Circuit. United States District Court (Maryland)
• Writing for the Court: GEORGE J. HAZEL United States District Judge
• Parties: DAWUD J. BEST, individually and on behalf of others similarly situated, Plaintiff, v. NEWREZ LLC, et al., Defendants.
• Docket Number: Case No.: GJH-19-2331
• Decision Date: 11 September 2020

DAWUD J. BEST, individually and on behalf of
others similarly situated, Plaintiff,
v.
NEWREZ LLC, et al., Defendants.

Case No.: GJH-19-2331

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND Southern Division

September 11, 2020

MEMORANDUM OPINION

Plaintiff Dawud J. Best filed this action on August 14, 2019 against Newrez LLC, which does business as Shellpoint Mortgage Servicing ("Shellpoint"), Federal National Mortgage Association ("Fannie Mae"), and Brock & Scott, PLLC ("B&S"), seeking damages for conduct surrounding the servicing of his residential mortgage loan. Plaintiff alleges violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., the Maryland Consumer Debt Collection Act ("MCDCA"), Md. Code Ann., Com. Law § 14-201 et seq., the Maryland Consumer Protection Act ("MCPA"), Md. Code Ann., Com. Law § 13-101 et seq., the Maryland Mortgage Fraud Protection Act ("MMFPA"), Md. Code Ann., Real Prop. § 7-401 et seq., the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601 et seq., and the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq.

Plaintiff has filed a Complaint, ECF No. 1, a First Amended Complaint, ECF No. 19, a Corrected First Amended Complaint ("CFAC"), ECF No. 20, and a Motion for Leave to File a Second Amended Complaint, ECF No. 30, accompanied by a proposed Second Amended

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Complaint, ECF No. 30-3. B&S has moved to dismiss each version of the Complaint, ECF Nos. 12, 24, 33, while Shellpoint and Fannie Mae have together moved to dismiss the Complaint and the CFAC, ECF Nos. 14, 22, and have opposed the Motion for Leave, ECF No. 34. No hearing is necessary. See Loc. Rule 105.6. (D. Md.). For the following reasons, Shellpoint and Fannie Mae's motion to dismiss the CFAC will be granted in part and denied in part, Plaintiff's motion for leave will be granted in part and denied in part, and B&S and Fannie Mae will be dismissed from this action.

I. BACKGROUND

Plaintiff has been engaged in litigation concerning his residential mortgage debt for nearly a decade. On March 30, 2020, the Court issued an opinion granting in part and denying in part the defendants' motion for summary judgment in Plaintiff's case against B&S, Fannie Mae, and other entities in which Plaintiff raised claims similar to those in this action. Best v. Fed. Nat'l Mortg. Ass'n, No. GJH-17-314, 2020 WL 1503676 (D. Md. Mar. 30, 2020). The Court's opinion in that case, which is referred to below as Best III, recounted Plaintiff's lengthy history of both state and federal court litigation related to his property. Because that history provides context for the claims at issue in this case, the Court relates its key elements here, incorporating some allegations from the CFAC as necessary.

A. Litigation History

Plaintiff is the owner of real property located at 5800 Carlyle Street, Cheverly, Maryland. ECF No. 20 ¶ 8. Plaintiff's purchase of the property was financed with a promissory note ("Note") secured by a Deed of Trust. Id. ¶ 9. According to the CFAC, at some point after Plaintiff initiated the loan, Capital One, N.A. ("Capital One") informed Plaintiff that it had acquired the Note and was the servicer for the loan's owner, Defendant Fannie Mae. Id. ¶ 10.

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On October 23, 2012, substitute trustees appointed by Capital One initiated proceedings to foreclose on the loan in the Circuit Court for Prince George's County. See Best v. Driscoll, No. 0959, Sept. Term, 2013, 2015 WL 5933669, at *1 (Md. App. June 18, 2015). On February 21, 2013, Plaintiff moved to stay and dismiss the foreclosure, asserting that Capital One was not the holder of his Note and therefore could not appoint substitute trustees, among other claims. Id. at *2-*3. At a hearing on May 3, 2013, the Circuit Court found that a document the defendants introduced was the original Note bearing Plaintiff's signature, that it was in Capital One's possession, and that the trustees and Capital One had standing to foreclose. Id. at *5. The court thus denied Plaintiff's stay motion and ruled that the foreclosure sale could proceed. Id. at *6. The court also dismissed as untimely counterclaims that Plaintiff had filed alleging breach of contract and violations of the MCDCA and MCPA. Id.¹ The Maryland Court of Special Appeals found that the counterclaims were timely but affirmed the dismissal on June 28, 2015. Id. at *11.

Following his loss in the Circuit Court for Prince George's County, Plaintiff filed two lawsuits in this Court against Capital One and law firm Samuel I. White, P.C. ("SIWPC"), attorneys from which were the substitute trustees Capital One had appointed. In the first action, filed on August 12, 2013, Plaintiff alleged that both defendants violated RESPA by failing to act on requests he had sent with respect to his account and that SIWPC violated the MCDCA by unlawfully threatening foreclosure. See Best v. Samuel I. White, P.C., No. WDQ-13-2348, 2014 WL 2575771, at *1 (D. Md. June 6, 2014). The Court granted the defendants' motion to dismiss after holding that Plaintiff's inquiries did not trigger duties under RESPA and declining to exercise supplemental jurisdiction over the remaining state law claim. Id. at *2-*3.

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In the second action, filed on October 24, 2013, Plaintiff alleged that SIWPC and Capital One violated the FDCPA and the MCDCA by misrepresenting their ability to foreclose within a certain time period. See Best v. Samuel I. White, P.C., No. WDQ-13-3164, 2014 WL 2002448, at *1 (May 14, 2014). The Court granted the defendants' motion to dismiss, concluding that the communications Plaintiff raised had complied with Maryland law. Id. at *2.

On March 8, 2016, attorneys with Defendant B&S, who had been appointed as substitute trustees to replace the SIWPC trustees, filed a foreclosure action in the Circuit Court for Prince George's County, Maryland. BSPLLC v. Best, No. CAEF16-07406 (Prince George's Cty. Cir. Ct.).² On October 21, 2016, Plaintiff filed a Motion to Stay and/or Dismiss and Request for Discovery, asserting that he was not in default on his loan and that Capital One was not the holder of his Note and therefore lacked authority to appoint substitute trustees. The Circuit Court denied the motion by Order on November 22, 2016.

On November 29, 2016, Plaintiff filed a Chapter 7 bankruptcy petition in the U.S. Bankruptcy Court for the District of Maryland. Voluntary Petition, In re Dawud Best, No. 16-25664 (Bankr. D. Md. Nov. 29, 2016) ("First Bankruptcy Case"), ECF No. 1. On February 2, 2017, Plaintiff initiated the Best III action in this Court, naming Fannie Mae, Capital One, and B&S for alleged violations of several federal and Maryland statutes over the preceding years. On March 8, 2017, the Bankruptcy Court issued an Order of Discharge in the First Bankruptcy case, granting a discharge under 11 U.S.C. § 727. First Bankruptcy Case (Mar. 8, 2017), ECF No. 45. The Bankruptcy Court then issued a Final Decree closing the case. First Bankruptcy Case (Mar. 8, 2017), ECF No. 46. On December 21, 2017, this Court granted Plaintiff's Motion for Leave to file a Second Amended Complaint in Best III. Best III, ECF Nos. 31, 32.

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On August 9, 2018, Plaintiff filed a second Chapter 7 bankruptcy petition. Voluntary Petition, In re Dawud Best, No. 18-20533 (Bankr. D. Md. Aug. 9, 2018) ("Second Bankruptcy Case"), ECF No. 1. On October 4, 2018, however, the Bankruptcy Court dismissed the case for failure to file required documents. Second Bankruptcy Case, ECF No. 32. On December 31, 2018, Plaintiff filed an Emergency Motion For A Temporary Restraining Order and/or Request for Preliminary Injunction in the foreclosure action in the Circuit Court for Prince George's County. The Motion was denied on January 3, 2019.³ The same day, Plaintiff filed a third Chapter 7 petition, Voluntary Petition, In re Dawud Best, No. 19-10100 (Bankr. D. Md. Jan. 3, 2019) ("Third Bankruptcy Case"), ECF No. 1, but that case was also dismissed for failure to file documents the court ordered Plaintiff to submit, Third Bankruptcy Case, ECF No. 16. Plaintiff filed his Complaint in this action on August 14, 2019. ECF No 1.

Summary judgment briefing in Best III was completed in October 2019, and the Court issued its opinion on March 30, 2020, granting summary judgment for the defendants on the majority of Plaintiff's claims and dismissing Fannie Mae, but denying summary judgment as to some aspects of Plaintiff's claims under the FDCPA against B&S and as to Plaintiff's claim under the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691 et seq., against Capital One. Best III, 2020 WL 1503676, at *25. The Court found Plaintiff had demonstrated a genuine dispute of material fact as to whether B&S had fully complied with the FDCPA in foreclosure-related correspondence with Plaintiff and that Plaintiff had adequately demonstrated emotional harms to proceed with his claims under the statute. Id. at *11, *13, *16, 17. The Court also found a genuine dispute regarding whether Capital One breached ECOA's implementing regulations by failing to respond to certain inquiries from Plaintiff. Id. at *21-*22.

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B. Facts Alleged in the CFAC

After making general allegations about Plaintiff's loan and the February 2016 correspondence that was at issue in Best III, the CFAC picks up chronologically where the facts in Best III left off and introduces the new Defendant "NEWREZ, formerly known as New Penn Financial, LLC, and doing business under the name Shellpoint Mortgage Servicing." ECF No. 20 ¶¶ 5, 8-12.⁴ Plaintiff first alleges that he submitted a complete loss mitigation application for his loan to Capital One in November 2017. Id. ¶ 13. Next, in June 2018, Plaintiff alleges that Shellpoint "claimed to have acquired the servicing of Plaintiff's loan," at which time the loan was treated as being in default. Id. ¶ 14.

However, Shellpoint's initial communication to Plaintiff failed to disclose the identity of the original...