Farasat v. Wells Fargo Bank, N.A.

• Decision Date: 19 December 2012
• Docket Number: Civil No. WDQ–12–1276.
• Citation: 913 F.Supp.2d 197
• Parties: Shahed FARASAT, Plaintiff, v. WELLS FARGO BANK, N.A., Defendant.
• Court: U.S. District Court — District of Maryland

913 F.Supp.2d 197

Shahed FARASAT, Plaintiff,

v.WELLS FARGO BANK, N.A., Defendant.

Civil No. WDQ–12–1276.

United States District Court,

D. Maryland,

Northern Division.

Dec. 19, 2012.

Jason A. Ostendorf, Law Office of Jason Ostendorf LLC, Baltimore, MD, for Plaintiff.

Virginia Wood Barnhart, Sarah E. Meyer, Treanor Pope and Hughes PA, Towson, MD, for Defendant.

MEMORANDUM OPINION

WILLIAM D. QUARLES, JR., District Judge.

Shahed Farasat sued Wells Fargo Bank, N.A. (“Wells Fargo”) for fraud and contract claims. Pending is Wells Fargo's motion to dismiss for failure to state a claim. For the following reasons, Wells Fargo's motion will be granted.

I. Background ¹

Farasat owns and resides at 110 Hawthorne Avenue in Baltimore, Maryland. ² ECF No. 1 ¶ 14. To purchase the property,Farasat obtained a mortgage, under which Wells Fargo ³ was assigned servicing rights. Id. ¶ 16.

In December 2008, Farasat contacted Wells Fargo about his mortgage and was told that he needed to miss payments to be eligible for repayment assistance. ⁴Id. ¶¶ 18, 56.1. In March 2009, Farasat lost his job. Id. ¶ 17. The same month, he again contacted Wells Fargo, and was told that he needed to miss payments to be eligible for assistance under the Home Affordable Modification Program (“HAMP”).⁵Id. ¶¶ 18, 56.2.

In April 2009, Farasat fell behind on his mortgage payments. Id. ¶ 17. On September 15, 2009, foreclosure proceedings began in the Circuit Court for Baltimore County, Maryland. See ECF Nos. 1–6, 5–4 at 2. In April 2010, ⁶ Wells Fargo “promised” that if Farasat submitted an application, Wells Fargo would process it under HAMP. Id. ¶ 19.

On May 1, 2010, Farasat submitted a HAMP application to Wells Fargo. Id. ¶ 22. In the following months, Wells Fargo requested additional documentation, “promising” that it would continue to process the application. Id. ¶ 25.

On September 30, 2010, Farasat submitted another HAMP application. Id. ¶ 27; see ECF No. 1–10 (application).⁷ Farasat's hardship letter states that he sought “modification of the loan on 110 Hawthorne Avenue, which is home to my mother and I ( sic ).” ECF No. 1–10 at 6.

Farasat included in the application his lease with Karen Merkle. Id. at 21–24. The lease purported to rent 110 Hawthorne Avenue to Merkle starting on October 1, 2010. Id. at 21. The paragraph entitled “Additions and/or Exceptions” listed “1/2 Basement and Attic space as needed.” Id. at 24. Neither “Additions” nor “Exceptions” is circled or struck through. Cf. id. The lease also provided that all notices to Farasat were to be served at “110 Hawthorne Ave.” Id. The lease had no provision for continued occupancy by Farasat.

On October 25, 2010, Wells Fargo denied modification under HAMP, stating Farasat “d[id] not live in the property as [his] primary residence.” ECF No. 1–12 at 2.

On November 9, 2010, Wells Fargo directed the substitute trustees to sell the home at a foreclosure sale. ECF No. 1 ¶ 36. On December 29, 2010, after retaining counsel, Farasat filed exceptions to the sale. Id. ¶ 37; ECF No. 1–14. On March 16, 2011, Farasat counterclaimed against Wells Fargo alleging grounds substantially similar to this case. See ECF No. 5–3. On June 23, 2011, the substitute trustees moved to withdraw the report of sale and dismiss the case without prejudice. ECF Nos. 1 ¶ 38, 1–13. The circuit court granted the motion and closed the case.⁸See ECF No. 5–4.

On May 11, 2012, Farasat sued Wells Fargo in this Court, alleging that Wells Fargo never intended to modify his mortgage and was simply seeking late fees and penalties. See ECF No. 1 ¶¶ 5–6. Farasat seeks specific performance and damages on the grounds of: (1) violations of the Maryland Consumer Protection Act,⁹ (2) fraud, (3) promissory estoppel, (4) negligence, (5) negligent misrepresentation, and (6) breach of implied-in-fact contract. Id. ¶¶ 51–93.

On June 8, 2012, Wells Fargo moved to dismiss, arguing that the pending state court action required dismissal, and Farasat failed to state a claim. ECF No. 5. On June 25, 2012, Farasat opposed the motion, ECF No. 7, and on July 11, 2012, Wells Fargo replied, ECF No. 8.¹⁰

II. Analysis

A. Legal Standards

1. Failure to State a Claim

Under Fed.R.Civ.P. 12(b)(6), an action may be dismissed for failure to state a claim upon which relief can be granted. Rule 12(b)(6) tests the legal sufficiency of a complaint, but does not “resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir.2006).

The Court bears in mind that Rule 8(a)(2) requires only a “short and plain statement of the claim showing that the pleader is entitled to relief.” Migdal v. Rowe Price–Fleming Int'l Inc., 248 F.3d 321, 325–26 (4th Cir.2001). Although Rule 8's notice-pleading requirements are “not onerous,” the plaintiff must allege facts that support each element of the claim advanced. Bass v. E.I. Dupont de Nemours & Co., 324 F.3d 761, 764–65 (4th Cir.2003). These facts must be sufficient to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

This requires that the plaintiff do more than “plead[ ] facts that are ‘merely consistent with a defendant's liability’ ”; the facts pled must “allow[ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ( quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). The complaint must not only allege but also “show” that the plaintiff is entitled to relief. Id. at 679, 129 S.Ct. 1937 (internal quotation marks omitted). “Whe[n] 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 shown—that the pleader is entitled to relief.” Id. (internal quotation marks and alteration omitted).

2. Particularity Requirement for Fraud Allegations

Fed.R.Civ.P. 9(b) requires that “the circumstances constituting fraud be stated with particularity.” The rule “does not require the elucidation of every detail of the alleged fraud, but does require more than a bare assertion that such a cause of action exists.” Mylan Labs., Inc. v. Akzo, N.V., 770 F.Supp. 1053, 1074 (D.Md.1991). To satisfy the rule, a plaintiff must “identify with some precision the date, place, and time of active misrepresentations or the circumstances of active concealments, specifying which Defendant ... is ... supposedly responsible for those statements or omissions.” Johnson v. Wheeler, 492 F.Supp.2d 492, 509 (D.Md.2007).

The Court “should hesitate to dismiss a complaint under Rule 9(b) if [it] is satisfied (1) that the defendant has been made aware of the particular circumstances for which [it] will have to prepare a defense at trial, and (2) that [the] plaintiff has substantial prediscovery evidence of those facts.” Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir.1999).

B. Pending State Court Action

Wells Fargo argues that this case should be dismissed because there is an action with “virtually identical allegations of fact and asserted claims” pending in state court. ECF No. 5–2 at 4–5. Farasat asserts that Wells Fargo was not a party to the suit in which he brought the counterclaim, and the counterclaim itself was “likely dismissed by operation of law.” ECF No. 7–1 at 22. Wells Fargo responds that Farasat's factual assertions about the state case are incorrect. ECF No. 8 at 2–3.

Farasat is factually incorrect; Wells Fargo was involved in the state case. Wells Fargo Home Mortgage, Inc., acknowledged by Farasat as Wells Fargo's predecessor by merger, see ECF No. 1 ¶ 11, is named in Farasat's counterclaim. See, e.g., ECF No. 5–3 at 2. Farasat's challenge to the pendency of the state court action appears to have merit. The circuit court's docket sheet shows the case as “Closed/Active” and there have been no filings or rulings since July 5, 2011, when the substitute trustees' motion to dismiss the case without prejudice was granted. See ECF No. 5–4 at 9. The counterclaim was closed the same day. Id. at 8.

Wells Fargo's argument fails, notwithstanding the status of the circuit court case. Wells Fargo relies upon Hyman v. City of Gastonia, 466 F.3d 284 (4th Cir.2006) for the principle that this Court must dismiss this case because there is a pending state court action. ECF No. 5–2 at 2. Wells Fargo's characterization of Hyman is incorrect.

In Hyman the district court originally dismissed the case for insufficient service of process. Hyman, 466 F.3d at 286. The plaintiff appealed the dismissal to the Fourth Circuit. Id. While the appeal was pending, the plaintiff filed a second action against the same defendant in the same district court. Id. The court dismissed the second case under North Carolina law, which permits abatement as an affirmative defense if “a substantially identical, earlier-filed action is pending on appeal.” Id.

Rather than address the propriety of the dismissal, the Fourth Circuit's analysis in Hyman concerned its own lack of jurisdiction under the obscure 28 U.S.C. § 2105.¹¹See Hyman, 466 F.3d at 287–89. Concluding that it lacked jurisdiction, the Fourth Circuit was unable to review the district court's ruling. Id. at 291.Hyman provides no support for Wells Fargo's position.

Contrary to Wells Fargo's position, and decided 14 days after Hyman,Great American Insurance Co. v. Gross, 468 F.3d 199 (4th Cir.2006) held that, absent exceptional circumstances, “the pendency of an action in state court is no bar to proceedings in federal court concerning the same matter.” Id. at 206. In deciding whether to abstain in favor of the state-court litigation, the Court considers six factors:

(1) whether the subject matter of the litigation involves property where the first court may assume in rem jurisdiction to the exclusion of others; (2) whether the...