Carter v. Bank of Am., N.A.

• Decision Date: 08 August 2012
• Docket Number: Civil Action No. 11–01584(BAH).
• Citation: 888 F.Supp.2d 1
• Court: U.S. District Court — District of Columbia
• Parties: Judith CARTER, Plaintiff, v. BANK OF AMERICA, N.A., et al., Defendants.

888 F.Supp.2d 1

Judith CARTER, Plaintiff,

v.BANK OF AMERICA, N.A., et al., Defendants.

Civil Action No. 11–01584(BAH).

United States District Court,

District of Columbia.

Aug. 8, 2012.

Christine Axsmith, Washington, DC, for Plaintiff, Defendants.

Anand V. Ramana, Jessica D. Fegan, McGuireWoods LLP, Washington, DC, James Philip Head, Williams Mullen, McLean, VA, J.P. McGuire Boyd, Robert D. Perrow, Williams Mullen, Richmond, VA, for Defendants.

MEMORANDUM OPINION

BERYL A. HOWELL, District Judge.

The plaintiff, Judith Carter, brought this lawsuit in the D.C. Superior Court against Bank of America, N.A. (“Bank of America” or “BOA”), Freedom Mortgage Corporation (“Freedom Mortgage”), the Mortgage Electronic Registration Systems, Inc. (“MERS”), and the attorney for Bank of America (identified as John Doe) (collectively, “the defendants”) ¹, alleging multiple grievances related to a 2004 mortgage refinancing, the subsequent denial of the plaintiff's application for a loan modification, and alleged foreclosure proceedings on the plaintiff's home. Specifically, the plaintiff's Amended Complaint (“Am. Compl.”), ECF No. 17, includes twenty-one causes of action, including, inter alia, for violations of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601, et seq., the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605(b)(2)(A), the Racketeer Influenced and Corrupt Organizations Act (“RICO”), as well as for common law fraud, gross negligence, unfair and deceptive business practices, unconscionability, unjust enrichment, predatory lending, and wrongful foreclosure.

Pending before the Court are motions to dismiss from defendant Freedom Mortgage, ECF No. 18, and defendants Bank of America and MERS, ECF No. 20. For the reasons explained below, the Court will grant both motions to dismiss.

I. BACKGROUNDA. FACTUAL ALLEGATIONS

The plaintiff's 56–page Amended Complaint, with 316 numbered paragraphs, is purportedly focused on an action “[arising] out of Defendants' fraudulent sale of a mortgage to Plaintiff Judith Carter, the fraudulent foreclosure of that mortgage, [and] the fraudulent denial of a [Home Affordable Modification Program (HAMP) ] agreement.” Am. Compl. ¶ 1. “The essence of this lawsuit,” the Amended Complaint explains, “is that the profit center of the mortgage bond business for Bank of America drove the granting of this mortgage in violation of state and federal law.” Id. ¶ 2.² Unfortunately for the plaintiff, the Amended Complaint seems to be more focused on providing a colorful narrative of the mortgage crisis ³ than articulating plausible, or even comprehensible, factual allegations directly relevant to the plaintiff's claims. To the extent that the Court can decipher the factual allegations specifically relevant ⁴ to the plaintiff's claims from the rambling and internally inconsistent Amended Complaint, it views them in the light most favorable to the plaintiff, as it must at this stage of the proceedings. See Aktieselskabet AF 21. November 2001 v. Fame Jeans, 525 F.3d 8, 15 (D.C.Cir.2008) (quoting Kassem v. Wash. Hosp. Ctr., 513 F.3d 251, 253 (D.C.Cir.2008)); see also Atherton v. D.C. Office of the Mayor, 567 F.3d 672, 681 (D.C.Cir.2009).

The plaintiff's claims arise from a 2004 home loan refinancing transaction for a property the plaintiff owned at 445 17th Street SE, Washington, D.C. 20003, the plaintiff's subsequent efforts to qualify for a loan modification, and foreclosure proceedings that may or not have been initiated on the plaintiff's property. Id. ¶¶ 36–37, 43.

1. Mortgage Issued to the Plaintiff

On August 16, 2004, the plaintiff closed on a $318,500 ⁵ refinance mortgage for her home at 445 17th Street SE with Freedom Mortgage. Id. ¶ 76; Mem. in Supp. of Defs. Bank of America and MERS Mot. to Dismiss Pl.'s Am. Compl., ECF No. 20 (“Defs. BOA & MERS' Mem.”), Ex. A, at 1. Out of this loan amount, it appears from the loan settlement statement that $228,466 was disbursed to pay in full an existing loan, while $80,042 appears to have been disbursed to the borrower. SeeDefs. BOA & MERS' Mem., Ex. B. The loan appears to have been a thirty-year loan with a fixed annual rate of 6%. ⁶ Am. Compl. ¶ 38; see also Defs. BOA & MERS' Mem., Ex. A, at 1. The plaintiff alleges that the thirty-year mortgage was “subject to no equity build up in the first ten years” and “had very little principle reduction in the first 15 years.” Am. Compl. ¶ 53.

The plaintiff makes a variety of allegations about the allegedly fraudulent manner in which the loan was issued. First, the plaintiff states that the loan was awarded based solely upon credit scores and a “Stated Income,” which was “a fiction created by the Lender's agent.” Id. ¶ 66. Second, the plaintiff alleges that Freedom Mortgage conducted no independent income verification, nor was any effort made to determine the plaintiff's ability to repay the loan. Id. ¶¶ 64, 69.⁷ Third, the plaintiff notes that she paid $8,758.75 in “discount points” to obtain the 6% rate, in addition to a $3,185 origination fee, both of which she says were “high by industry standards.” Id. ¶ 40. Fourth, the plaintiff states that the loan had a “74.81% Debt–to–Income ratio, which is beyond underwriting standards and is a predatory loan.” Id. ¶ 42. Fifth, the plaintiff states that, because of these fees, and the size and structure of the loan, the plaintiff lost equity in her home. Id. ¶¶ 139, 253. Sixth, the plaintiff alleges that she was “never notified about [a] higher rate to qualify. The loan was approved based on the pre-sale of the loan, and the appraised value of the collateral, rather than the Plaintiff's ability to repay the loan.” Id. ¶ 51. Finally, the plaintiff states that “[t]his loan was not approved in the Plaintiff's best interest.” Id. ¶ 39. The plaintiff elaborates that she “should not have been approved on this type of loan product at 68.87% LTV. It was a ‘toxic’ loan from its creation,” id. ¶ 50, and was more than the plaintiff “could ever afford to repay.” Id. ¶ 52.⁸

At some point between the issuance of the loan in 2004 and the filing of the instant lawsuit in 2011, the plaintiff went into default on the loan. Id. ¶ 99. Before the plaintiff went into default, however, loan servicing rights had been transferred from Freedom Mortgage to Bank of America. Id. ¶ 78.⁹

2. Plaintiff Denied Loan Modification

According to the plaintiff, she “applied for a loan modification and there was an offer and acceptance on it.” Id. ¶ 43. The plaintiff alleges that she began making payments under this modification on March 26, 2010. Id. The plaintiff alleges that Bank of America representatives “assured [her] that she was enrolled in the HAMP program and would not have her home foreclosed on.” Id. ¶ 44.¹⁰ The plaintiff also states, however, that “Bank of America continued to send letters to [her] during this time threatening to foreclose on her home despite her enrollment in the HAMP program.” Id. ¶ 45. At some point, the plaintiff alleges that she “was informed that her modification was postponed or cancelled.” Id. ¶ 46.

The plaintiff believes that the loan modification was ultimately denied because defendant Bank of America “did not have possession of the note and/or could not locate the note.” Id. ¶ 49. Allegedly, defendant MERS “lost the underlying note to [the plaintiff's] mortgage,” and due to this lack of documentation, Bank of America would have been legally unable to modify the loan terms. Id. ¶¶ 49, 148. Thus, the plaintiff claims that “the factors required to be considered for a loan modification were ignored to cover Bank of America's loss of possession of the note.” Id. ¶ 49.

3. Alleged Foreclosure of Plaintiff's Home

Since the plaintiff was in default, the plaintiff alleges that Bank of America initiated foreclosure proceedings on the plaintiff's property. Id. ¶ 47 (citing to “Exhibit A,” which was not included with this filing).¹¹ The plaintiff alleges in her Amended Complaint that she received and relied on conflicting or false information from Bank of America, which prevented her from taking action to “save her home.” Id. ¶¶ 135–37. Thus, the plaintiff claims to have subsequently “lost her property at foreclosure,” id. ¶ 147, and to have been evicted due to the “non-judicial foreclosure sale,” id. ¶¶ 117, 118.

By contrast, defendants Bank of America and MERS ask this Court to “take judicial notice of the fact that no document has been recorded with the District of Columbia Recorder of Deeds instituting foreclosure proceedings against the Property, which is a fact ‘not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to resources whose accuracy cannot reasonably be questioned.’ ” Defs. BOA & MERS' Mem. at 12 n. 10 (citing Fed.R.Evid. 201(b)).

Indeed, in her opposition to the motions to dismiss, the plaintiff concedes that there has not yet been a foreclosure of the plaintiff's home. See Plaintiff Judith Carter Objection to Motions to Dismiss by Freedom Mortgage, Bank of America and MERS (“Pl.'s Opp'n”), ECF No. 26, at 9 (“This matter is ripe for adjudication. JUDITH CARTER has a claim prior to the foreclosure on her home because of the non-judicial foreclosure law in the District of Columbia. She need not wait until for [sic] the physical loss of that home and her possessions to stop BANK OF AMERICA and MERS' conduct to protect her assets.”).¹²

B. PROCEDURAL HISTORY

The plaintiff filed a 21–count Complaint in the Superior Court of the District of Columbia. See Def.'s Notice of Removal, ECF No. 1, at 2. Defendant Bank of America subsequently removed the case to this Court pursuant to 28 U.S.C. § 1441 because the Complaint stated four federal claims.¹³Id. ¶¶ 17–19.

Once the case was in federal court, the defendants all moved to dismiss the plaintiff's Complaint. The plaintiff subsequently filed an Amended Complaint. ECF...