Hebbeler v. First Mariner Bank
| Decision Date | 10 August 2018 |
| Docket Number | Civil Action No. ELH-17-3641 |
| Parties | ARTHUR F. HEBBELER et al., Plaintiffs, v. FIRST MARINER BANK, Defendant. |
| Court | U.S. District Court — District of Maryland |
Plaintiffs Arthur and Deborah Hebbeler have sued their mortgage lender, First Mariner Bank ("FMB" or the "Bank"), alleging, inter alia, breach of contract, fraud, and violations of state and federal laws in connection with a foreclosure proceeding on their home. ECF 2 (Complaint).1 The Complaint contains nine counts against FMB: Violations of the Maryland Consumer Protection Act ("MCPA"), Md. Code , §§ 13-101 et seq. of the Commercial Law Article ("C.L.") (Count I); Detrimenal [sic] Reliance (Count II); Breach of Contract (Count III); Negligence (Count IV); Unjust Enrichment (Count V); Violations of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601 et seq. (Count VI); Fraud (Count VII); Declaratory Judgment (Count VIII); and Injunctive Relief (Count IX). See ECF 2.
Pending before the Court is FMB's motion to dismiss the Complaint, pursuant to Fed. R. Civ. P. 12(b)(6). ECF 13. The motion is supported by a memorandum of law (ECF 13-1)(collectively, "Motion") and several exhibits. Plaintiffs oppose the Motion (ECF 14, "Opposition"), and submitted several additional exhibits. The Bank replied. ECF 17 ("Reply").
No hearing is necessary to resolve the Motion. See Local Rule 105.6. For the reasons that follow, I shall grant the Motion in part and deny it in part.
Plaintiffs allege that they obtained a mortgage from defendant in July 2002, secured by their home on Hilton Avenue in Catonsville, Maryland (the "Property"). ECF 2, ¶¶ 6-7; see ECF 19. In May 2015, plaintiffs and defendant entered into a Forbearance Agreement. ECF 2, ¶ 9; see ECF 19 ("Forbearance Agreement" or "Agreement"). According to the Forbearance Agreement, plaintiffs defaulted on their mortgage in 2012, and as of April 23, 2015, they were in arrears of $101,931.66. ECF 2, ¶ 9; ECF 19 at 2-3.
The Forbearance Agreement provided that FMB would forbear from foreclosing on the Property so long as plaintiffs complied with the terms of the Agreement. ECF 19 at 9. Among those terms was a payment schedule, which stated that plaintiffs were to pay $68,000 immediately; an additional $20,284.78 by May 29, 2015; and a further sum of $13,646.88 by August 1, 2015. ECF 2, ¶ 10; ECF 19 at 4. The Complaint alleges that these payment deadlines were merely "guidelines, and not material terms of the Agreement." ECF 2, ¶ 10. However, the Forbearance Agreement itself states that the "breach" of "any of the provisions of th[e] Agreement" shall be considered an "Event of Default," allowing FMB to "exercise any and all of its default rights and remedies . . . including . . . foreclosing on the Property." ECF 19 at 5-6. The Agreement also specifies that the "failure of [plaintiffs] to comply with . . . any of theprovisions of the Loan Documents" would constitute another "Event of Default." Id. at 5. The "Loan Documents," attached to the Motion by the Bank, specify that plaintiffs were required to make monthly payments of $2,936.71 on their mortgage. See ECF 13-8 ("Note") at 1; see also ECF 2, ¶ 23.
According to plaintiffs, "FMB's records suggest that from May 7, 2015 through August 15, 2015, [plaintiffs] paid a total of $97,984.78 under the Forbearance Agreement." ECF 2, ¶ 11. This would imply that plaintiffs were $3,946.88 short of the amount due under the Agreement. But, plaintiffs contend that "FMB failed to apply two crucial payments," totaling $4,300.00, which plaintiffs "hand delivered" to the Bank on May 8, 2015, and June 22, 2015. Id. ¶¶ 11-12. Plaintiffs maintain that the Bank failed to deposit their checks, and thus the payments were not applied under the Agreement. Id. ¶ 12. According to plaintiffs, had these payments been applied, they would have exceeded the payment amount due under the Forbearance Agreement. Id. ¶¶ 12-13, 18.
In the ensuing year, plaintiffs allege that they repeatedly contacted FMB to ask that the payments be applied to their account, and consistently maintained that defendant's accounting was incorrect. Id. ¶ 15. Plaintiffs further allege that "FMB's accounting was at times off by at least $25,000." Id. ¶ 16.
For example, on August 9, 2016, Mr. Hebbeler wrote to the Bank, asserting that FMB had failed to provide accurate accounting statements, and asking defendant "to come to a middle ground" by allowing plaintiffs to refinance the mortgage at a lower interest rate, applying all legal fees associated with plaintiffs' prior default towards the mortgage balance, and amending FMB's reporting to the credit bureaus to show plaintiffs in good standing for the prior three months. ECF 19-6 (). Felipe A. Rojas,FMB's representative, responded, stating: ECF 19-7 (). However, plaintiffs "refused to stipulate to the erroneous accounting." ECF 2, ¶ 20.
According to plaintiffs, their letters of inquiry to FMB constituted "qualified written requests" ("QWRs") under RESPA. ECF 2, ¶ 15. And, the Bank never responded, or responded inadequately, in violation of RESPA. Id.
On September 11, 2017, defendant allegedly commenced a foreclosure action against plaintiffs in the Circuit Court for Baltimore County. Id. ¶¶ 8, 22; ECF 19-8 (Notice of Intent to Foreclose). The Notice of Intent to Foreclose, dated February 2, 2017, stated that plaintiffs had defaulted on their mortgage on May 1, 2014, and that the most recent loan payment had been received on March 18, 2016. ECF 19-8 at 3. According to the Notice of Intent to Foreclose, the total amount required to cure the default as of February 2, 2017, was $76,415.60. Id.
Plaintiffs insist that "FMB clearly failed to apply funds paid by the homeowners toward the mortgage in the amount of at least one full year's worth of mortgage payments - $35,240.52." ECF 2, ¶ 25. As a result, plaintiffs allege that FMB "fraudulently embezzled over $35,240.52 in funds paid by the homeowners," which "shows that FMB never intended to keep its promises under the Forbearance Agreement." Id. ¶ 27. Further, plaintiffs allege that "FMB acted with actual malice." Id. ¶ 29. Consequently, plaintiffs maintain that they "have incurred economic damages in the form of damage to their credit ratings, and also in the amount of the funds fraudulently embezzled by FMB." Id. ¶ 30. And, plaintiffs further allege noneconomic damages in the form of mental anguish. Id. They seek compensatory and punitive damages. ECF 2 at 18.
Although this case involves principles of both state and federal law, neither party has addressed the matter of choice of law. The law of the forum state, Maryland, guides the Court's choice-of-law analysis. See Baker v. Antwerpen Motorcars Ltd., 807 F. Supp. 2d 386, 389 n.13 (D. Md. 2011) ().
In a contract claim, Maryland courts follow the rule of lex loci contractus, applying the substantive law of the state where the contract was formed, unless there is a choice-of-law provision in the contract. Am. Motorists Ins. Co. v. ARTRA Group, Inc., 338 Md. 560, 573, 659 A.2d 1295, 1301 (1995). Both the Forbearance Agreement (ECF 19) and the underlying loan documents (ECF 13-2) appear to have been executed in Maryland. And, the Property is located in Maryland. Accordingly, I will apply Maryland law in addressing plaintiffs' contract claims.
For tort claims, Maryland applies the principle of lex loci delicti, i.e., the law of the "place of the alleged harm." Proctor v. Washington Metropolitan Area Transit Auth., 412 Md. 691, 726, 990 A.2d 1048, 1068 (2010). Given the Property's location, the alleged harm would have occurred in Maryland. Accordingly, I will look to Maryland law with respect to the analysis of plaintiffs' claims sounding in tort.
In sum, except with respect to the issues of federal law that control plaintiff's RESPA claim, I will apply Maryland law.
A defendant may test the legal sufficiency of a complaint by way of a motion to dismiss under Rule 12(b)(6). In re Birmingham, 846 F.3d 88, 92 (4th Cir. 2017); Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 165-66 (4th Cir. 2016); McBurney v. Cuccinelli, 616 F.3d 393, 408 (4th Cir. 2010), aff'd sub nom. McBurney v. Young, 569 U.S. 221 (2013); Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). A Rule 12(b)(6) motion constitutes an assertion by a defendant that, even if the facts alleged by a plaintiff are true, the complaint fails as a matter of law "to state a claim upon which relief can be granted."
Whether a complaint states a claim for relief is assessed by reference to the pleading requirements of Fed. R. Civ. P. 8(a)(2). That rule provides that a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." The purpose of the rule is to provide the defendant with "fair notice" of the claims and the "grounds" for entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007).
To survive a motion under Fed. R. Civ. P. 12(b)(6), a complaint must contain facts sufficient to "state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570; see Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009) ; see also Willner v. Dimon, 849 F.3d 93, 112 ...
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