Diamond v. U.S. Bank, N.A.
| Decision Date | 11 May 2020 |
| Docket Number | Civil Action No. TDC-19-1458 |
| Parties | JEFFREY DIAMOND and GEORGIA DIAMOND, Plaintiffs, v. U.S. BANK, N.A., STELLAR INVESTMENTS TRUST, FEDERAL HOUSING FINANCE AGENCY, OCWEN LOAN SERVICING, LLC and McCABE, WEISBURG & CONWAY, LLC, Defendants. |
| Court | U.S. District Court — District of Maryland |
Plaintiffs Jeffrey Diamond and Georgia Diamond (collectively, "the Diamonds") have filed this civil action against Defendants U.S. Bank, N.A. ("U.S. Bank"), Stellar Investments Trust ("Stellar"), the Federal Housing Finance Agency ("FHFA"), Ocwen Loan Servicing, LLC ("Ocwen"), and McCabe, Weisburg & Conway, LLC ("McCabe"), in which they assert multiple federal and state law claims relating to the foreclosure sale of their home. Pending before the Court are four separate Motions to Dismiss filed by U.S. Bank and Ocwen; the FHFA; Stellar; and McCabe. Upon review of the submitted materials, the Court finds that no hearing is necessary. See D. Md. Local R. 105.6. For the reasons set forth below, the Motions will be GRANTED.
On October 25, 2001, the Diamonds purchased a home at 18 Stapleford Hall Court in Potomac, Maryland ("the Residence") for $800,000. On October 19, 2005, as part of the process of securing a loan for $1.5 million, the Diamonds executed a Deed of Trust granting a security interest in the Residence to the lender, First Savings Mortgage Corporation. That loan was then securitized and came into the possession of Defendant U.S. Bank.
On January 1, 2011, the Diamonds defaulted on their loan. Several years later, on March 28, 2016, Ocwen—as the loan's servicer—initiated a foreclosure proceeding against the Residence ("the Foreclosure Action"). In the Foreclosure Action, several McCabe attorneys were named as the foreclosing substitute trustees.
On June 13, 2018, U.S. Bank, acting as Trustee for Residential Mortgage Securities 1, Inc., Mortgage Pass Through Certificates, Series 2007-S6 ("U.S. Bank"), purchased the Residence in a public auction for $1,675,000. The Circuit Court for Montgomery County, Maryland ("the Circuit Court") entered an initial Order of Ratification of Sale on December 11, 2018. On January 7, 2019, U.S. Bank obtained a Trustees' Deed to the Residence. Then, on March 12, 2019, the Circuit Court entered a Final Order of Ratification of the foreclosure sale. On April 3, 2019, the Circuit Court issued an order awarding possession of the Residence to U.S. Bank.
Previously, however, on March 28, 2019, U.S. Bank sold the Residence to Stellar for $1,444,000. Stellar then brought an action against the Diamonds in the District Court of Maryland for Montgomery County seeking possession of the Residence. After a trial at which the Diamonds appeared, the court granted judgment and possession to Stellar on July 3, 2019. However, the court stayed the judgment and set an appeal bond of $130,000. Before posting the bond, however, the Diamonds removed that case to the United States District Court for the District of Maryland. The court (Hazel, J.) then remanded the case to the state court for lack of jurisdiction. Stellar Investments Tr. v. Diamond, No. GJH-19-1982, 2019 WL 5190693, at *1-2 (D. Md. Oct. 15, 2019).
On May 17, 2019, during their litigation with Stellar, the Diamonds filed the present action in this Court. The Complaint asserts claims under both federal and state law. Under federal law,they assert (1) a violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692-1692p (2018); (2) a claim against the FHFA under Monell v. Department of Social Services of the City of New York, 436 U.S. 658 (1978); and (3) a claim against the FHFA for constructive trust, which they characterize as a violation of the rights to equal protection and due process under the Fourteenth Amendment to the United States Constitution. Under state law, they assert claims for (1) a violation of the Maryland Consumer Debt Collection Act ("MCDCA"), Md. Code Ann., Com. Law §§ 14-201 to 14-204 (LexisNexis 2013); and common law claims of (2) ejectment; (3) quiet title; (4) equity of redemption; (5) slander of title; (6) breach of fiduciary covenant; (7) breach of contract; (8) breach of warranty; and (9) equitable relief. In an Amended Complaint filed on October 9, 2019, the Diamonds added to the existing causes of action a claim under United States Securities and Exchange Commission ("SEC") Rule 10b-5, 17 C.F.R. § 240.10b-5 (2019).
In their Motions under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), Defendants argue that this Court lacks subject matter jurisdiction under the Rooker-Feldman doctrine and that all of the Diamonds' claims are barred by res judicata or collateral estoppel based on the proceedings in Maryland state court. In addition, they assert various arguments why, on the merits, all of the Diamonds' counts fail to state a claim. The Diamonds have not responded to any of the Motions.
Defendants' argument based on the Rooker-Feldman doctrine seeks dismissal for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). It is the plaintiff's burden to show that subject matter jurisdiction exists. Evans v. B.F. Perkins Co., Div. of Standex Int'l Corp., 166 F.3d 642, 647 (4th Cir. 1999). Rule 12(b)(1) allows a defendant to move fordismissal when it believes that the plaintiff has failed to make that showing. When a defendant asserts that the plaintiff has failed to allege facts sufficient to establish subject matter jurisdiction, the allegations in the complaint are assumed to be true under the same standard as in a Rule 12(b)(6) motion, and "the motion must be denied if the complaint alleges sufficient facts to invoke subject matter jurisdiction." Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009). When a defendant asserts that facts outside of the complaint deprive the court of jurisdiction, the Court "may consider evidence outside the pleadings without converting the proceeding to one for summary judgment." Velasco v. Gov't of Indonesia, 370 F.3d 392, 398 (4th Cir. 2004); Kerns, 585 F.3d at 192. The court should grant a Rule 12(b)(1) motion based on a factual challenge to subject matter jurisdiction "only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law." Evans, 166 F.3d at 647 (quoting Richmond, Fredericksburg & Potomac R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991)).
Defendants' remaining arguments seek dismissal under Rule 12(b)(6) for failure to state a claim. To defeat a motion to dismiss under Rule 12(b)(6), the complaint must allege enough facts to state a plausible claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim is plausible when the facts pleaded allow "the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Legal conclusions or conclusory statements do not suffice. Id. The Court must examine the complaint as a whole, consider the factual allegations in the complaint as true, and construe the factual allegations in the light most favorable to the plaintiff. Albright v. Oliver, 510 U.S. 266, 268 (1994); Lambeth v. Bd. of Comm'rs of Davidson Cty., 407 F.3d 266, 268 (4th Cir. 2005).
Although the Court may consider documents beyond the pleadings in deciding a motion to dismiss under Rule 12(b)(1), Velasco, 370 F.3d at 398, typically, when deciding a motion todismiss under Rule 12(b)(6), the Court considers only the complaint and any attached documents "integral to the complaint." Sec'y of State for Defence v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007). The Court will consider the exhibits the Diamonds have attached to their Complaint, which consist of various documents relating to their mortgage and the Foreclosure Action. Courts are also permitted to consider documents attached to a motion to dismiss "when the document is integral to and explicitly relied on in the complaint, and when the plaintiffs do not challenge the document's authenticity." Zak v. Chelsea Therapeutics Int'l, Ltd., 780 F.3d 597, 606-07 (4th Cir. 2015) (quoting Am. Chiropractic Ass'n v. Trigon Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004)). Here, Defendants have attached various documents to their Motions that relate to both the Diamonds' mortgage and the Foreclosure Action. Where these documents are also integral to the Diamonds' claims and their authenticity has not been challenged, the Court may consider them as well. Moreover, the documents relating to the Foreclosure Action will also be considered as subject to judicial notice, as "courts may consider 'relevant facts obtained from the public record,' so long as these facts are construed in the light most favorable to the plaintiff along with the well-pleaded allegations of the complaint." Clatterbuck v. City of Charlottesville, 708 F.3d 549, 557 (4th Cir. 2013) (quoting B.H. Papasan v. Allain, 578 U.S. 265, 283 (1986)); see also Zak, 780 F.3d at 607 .
Because this Court's subject matter jurisdiction over this case derives from the federal claims asserted in the Complaint and the claims against the FHFA, the Court addresses those claims first.
In Count Five of the Complaint, the Diamonds allege a violation of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p. Defendants argue that the FDCPA claim should be dismissed under the Rooker-Feldman doctrine, res judicata and collateral estoppel, and for failure to state a claim.
Defendants argue that this Court lacks jurisdiction over the Diamonds' FDCPA...
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