Haley v. Corcoran, Civil No. WDQ-09-1338.

• Decision Date: 02 October 2009
• Docket Number: Civil No. WDQ-09-1338.
• Citation: 659 F.Supp.2d 714
• Parties: Peggy HALEY and James Haley, Plaintiffs, v. Jack CORCORAN, et al., Defendants.
• Court: U.S. District Court — District of Maryland

659 F.Supp.2d 714

Peggy HALEY and James Haley, Plaintiffs, v. Jack CORCORAN, et al., Defendants.

Civil No. WDQ-09-1338.

United States District Court, D. Maryland, Northern Division.

October 2, 2009.

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Franklyn Joseph Fragomene, Kathleen Susan Skullney, Legal Aid Bureau Inc., Baltimore, MD, for Plaintiffs.

Martin Harold Schreiber, II, Law Office of Martin H. Schreiber II LLC, Ira L. Oring, Brandi Lynn Phillips, Fedder and Garten Professional Association, Baltimore, MD, for Defendants.

MEMORANDUM OPINION

WILLIAM D. QUARLES, JR., District Judge.

Peggy and James Haley sued Jack Corcoran, Michael Mattice, Charles Head, Alliance Title ("Alliance"), Option One Mortgage ("Option One"), First American Title Co. ("First American"), and others, for claims that arise from an alleged foreclosure rescue fraud. Pending are Option One and First American's motions to dismiss for failure to state a claim upon which relief can be granted. For the following reasons, the motions will be granted.

I. Background

The complaint alleges a foreclosure rescue fraud.¹ James and Peggy Haley, husband and wife, bought a house in 1986 for $89,500.² Compl. ¶ 2, 13. In 2005, the Haleys fell behind on their mortgage payments, and a foreclosure action was commenced in the Circuit Court for Carroll County. Id. ¶ 14. Shortly thereafter, Charles Head contacted the Haleys for Fundingforeclosure.com, and offered to help them stop the foreclosure and repair their credit. Id. Head explained that Fundingforeclosure.com would arrange the sale of the house to a person who would allow the Haleys to continue to live in the house and remain on its deed. Id. ¶ 17. During the year following the sale, the Haleys would lease the house from Nations Property Management. Id. Then, Head explained, the Haleys could repurchase the house with a loan that Head guaranteed would be extended. Id. Relying on these representations, the Haleys agreed to the transactions. Id. ¶ 20.

The August 8, 2005 settlement was conducted by a notary public; the buyer, whom the Haleys later learned was Michael Mattice, was not present. Id. ¶ 21. The Haleys signed a deed in blank, which did not state the purchase price, and a lease requiring $2000 monthly payments to Nations Property Management. Id. ¶¶ 29, 30. Alliance prepared the settlement documents and was the settlement agent. Id. ¶¶ 6, 22. Alliance also was title agent for First American, the title insurer. Id. ¶¶ 6, 10. The Haleys were not given copies of the settlement documents. Id. ¶¶ 25, 28.

The Haleys were not informed of the purchase price of the house or shown a "HUD-1" settlement statement. Id. ¶ 23. A deed to the house, stating a $400,000 purchase price, was later recorded. Id. ¶ 31. The Haleys did not receive proceeds from the settlement. Id. ¶ 27. Thereafter, the Haleys' mortgage obligations were satisfied, and the pending foreclosure was dismissed for lack of prosecution. Id. ¶ 26.

The Haleys paid rent to Nations Property Management until November 2006; then Mattice informed them that he had bought the house with a loan from Option One secured by two mortgages. Id. ¶¶ 33, 35, 37. The Haleys then began making payments to Option One. Id. ¶ 33. Around this time, the Haleys also discovered that they were not on the deed with Mattice. Id.

On June 6, 2007, Option One filed a foreclosure action against Mattice in the Circuit Court for Carroll County for nonpayment. Id. ¶ 41. On June 26, 2007, the Haleys filed an emergency motion to stop the foreclosure, which the Circuit Court granted three days later. Id. ¶ 42.

On February 2, 2008, the Haleys filed suit in the Circuit Court for Carroll County. Paper No. 2. On April 2, 2009, Option One bought the house at a foreclosure auction for $250,250. Compl. ¶ 42. On May 21, 2009, Haleys' suit was removed to this Court on the basis of diversity. Paper No. 1. On June 9, 2009, First American filed a motion to dismiss under Federal Rules of Civil Procedure 12(b)(6) and 9(b). Paper No. 10. Option One moved to dismiss on the same grounds on July 15, 2009. Paper No. 18.

II. Analysis

Option One has moved to dismiss the Haleys' claims for quiet title, equitable mortgage, negligent misrepresentation, and unjust enrichment under Rule 12(b)(6), and the claims for intentional misrepresentation and violation of the Maryland Consumer Protection Act³ ("MCPA") under Rules 12(b)(6) and 9(b).

First American has moved to dismiss the Haleys' claims for negligent misrepresentation, unjust enrichment and civil conspiracy under Rule 12(b)(6), and the claims for intentional misrepresentation and violation of the MCPA under Rules 12(b)(6) and 9(b).

A. Standard of Review

1. Rule 12(b)(6)

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 Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

To present a facially plausible complaint, a plaintiff must do more than "plead[] facts that are `merely consistent with a defendant's liability'"; the facts as pleaded must "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). The complaint must not only allege but also "show" the plaintiff is entitled to relief. Id. at 1950 (citing Fed.R.Civ.P. 8(a)(2)). "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 omitted).

The Court "should view the complaint in a light most favorable to the plaintiff," and "accept as true all well-pleaded allegations," Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993), but the Court is "not bound to accept as true a legal conclusion couched as a factual allegation," Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986), or "allegations that are mere[] conclus[ions] unwarranted deductions of fact, or unreasonable inferences," Veney v. Wyche, 293 F.3d 726, 730 (4th Cir.2002).

2. Rule 9(b)

When a plaintiff alleges fraud or when "the gravamen of the claim is fraud even though the theory supporting the claim is not technically termed fraud," Adams v. NVR Homes, Inc., 193 F.R.D. 243, 250 (D.Md.2000), Rule 9(b) requires that "the circumstances constituting fraud be stated with particularity." Fed. R.Civ.P. 9(b). The circumstances required to be pled with particularity are "the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby." Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir.1999).

When a complaint alleges fraud against multiple defendants, Rule 9(b) requires that the plaintiff identify each defendant's participation in the alleged fraud. Adams, 193 F.R.D. at 250. This principle extends to allegations of fraud on the basis of an agency relationship: "[C]onclusory assertions that one defendant controlled another, or that some defendants are guilty because of their association with others, do not inform each defendant of its role in the fraud and do not satisfy Rule 9(b)." Kolbeck v. LIT America, Inc., 923 F.Supp. 557, 569 (S.D.N.Y.1996); see also Adams, 193 F.R.D. at 250. Further, when a plaintiff "seeks to hold a defendant vicariously liable for the acts of its agents, it must allege the factual predicate for the agency relationship with particularity." Adams, 193 F.R.D. at 250.

B. Option One's Motion

1. Quiet Title

The Haleys seek to quiet title to the house through a declaratory judgment that they are the sole owners of—and the defendants have no interest in—the house. Option One moves to dismiss the Haleys' quiet title claim on the ground that it is prohibited by § 14-108(a) of the Real Property Article of the Maryland Code.

Section 14-108 allows a person in "actual peaceable possession of property" to sue for quiet title "when his title to the property is denied or disputed, or when any other person claims, of record or otherwise to own the property ... or to hold any lien encumbrance on it." Md.Code Ann., Real Prop. § 14-108 (LexisNexis 2009). However, a quiet title claim may be brought only "if an action at law or proceeding in equity is not pending to enforce or test the validity of the title, lien, encumbrance, or other adverse claim." Id.; see also Keefauver v. Richardson, 233 Md. 545, 197 A.2d 438 (1964) (dismissing quiet title suit when previously-filed action to foreclose rights of redemption in the property was still pending).

Option One argues that because the foreclosure action against Mattice is still pending in the Circuit Court for Carroll County, the Haleys cannot sue for quiet title here. In foreclosure proceedings, a mortgagee seeks to "enforce" a lien on the property. Here, although the Property was sold at auction on April 2, 2009, the foreclosure is still pending in Carroll County; the Haleys have filed...