Hebbeler v. First Mariner Bank, Civil Action No. ELH-17-3641

CourtUnited States District Courts. 4th Circuit. United States District Court (Maryland)
Writing for the CourtEllen L. Hollander United States District Judge
PartiesARTHUR HEBBELER, et al., Plaintiffs, v. FIRST MARINER BANK, Defendant.
Decision Date02 March 2020
Docket NumberCivil Action No. ELH-17-3641

ARTHUR HEBBELER, et al., Plaintiffs,

Civil Action No. ELH-17-3641


March 2, 2020


This case is rooted in a foreclosure action filed in a Maryland court in 2017, concerning the home of plaintiffs Arthur and Deborah Hebbeler. Plaintiffs 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 law. ECF 2 (Complaint).1 A supplement to the Complaint is docketed at ECF 19.

The Complaint contains nine counts, as follows: "Violations of the Maryland Consumer Protection Act" ("MCPA"), Md. Code (2013 Repl. Vol., 2017 Supp.), §§ 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.

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By Memorandum Opinion (ECF 20) and Order (ECF 21) of October 10, 2018, the Court dismissed Counts I, VII, VIII, and IX.

On May 17, 2019, FMB filed a combined First Amended Answer, along with eighteen affirmative defenses, Counterclaims and a Cross Claim against the U.S. Small Business Administration ("SBA"). See ECF 42. As to the Hebbelers, the Bank alleges Fraud (Count I); tortious interference with economic relationships (Count II); breach of contract (Count III); and unjust enrichment (Count IV). ECF 42. And, as to plaintiffs and the SBA, it seeks a declaratory judgment (Count V). Id. The Bank does not appear to have requested summons as to the SBA. Thus, the SBA has never been served.

Three motions are pending. The Hebbelers have moved to dismiss or, alternatively, for summary judgment as to FMB's Counterclaims and Cross Claim. ECF 43. The motion is supported by a memorandum of law (ECF 43-1) (collectively, the "Hebbeler Motion") and several exhibits. ECF 43-2 to ECF 43-9. The Hebbelers have also moved for summary judgment with respect to several of FMB's affirmative defenses. ECF 46 (the "Hebbeler Defenses Motion"). The Bank has filed a consolidated opposition to the Hebbeler Motion and cross motion for summary judgment with respect to the entire Complaint as well as Counts II and III of the Bank's Counterclaims (ECF 56). It is supported by a memorandum of law (ECF 56-1) (collectively, the "FMB Motion") and multiple exhibits. ECF 56-2 to ECF 56-28. Plaintiffs have filed a combined opposition to the FMB Motion and a reply to the Hebbeler Motion. ECF 57 (the "Hebbeler Opposition"). FMB has replied to the Hebbeler Opposition. ECF 58 (the "FMB Reply").

No hearing is necessary to resolve the motions. See Local Rule 105.6. For the reasons that follow, I shall grant the FMB Motion as to the Complaint. I shall also grant the Hebbeler Motion as to Counts I, III, IV, and V of the Counterclaims, but I shall deny the Hebbeler Motion as to

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Count II. I shall deny the FMB Motion as to Counts II and III of the Counterclaims. I shall also deny the Hebbeler Defenses Motion, as moot.

As to the SBA, Fed. R. Civ. P. 4(m) requires a plaintiff to serve a defendant "within 90 days after the complaint is filed." If a defendant is not served within that time, "the court ... must dismiss the action without prejudice against that defendant or order that service be made within a specified time." Id. The Cross Claim was filed on May 17, 2019. Because the SBA has not been served, I shall dismiss the suit as against the SBA.

I. Factual and Procedural Background

The Hebbelers obtained a mortgage of $420,000 from FMB in July 2002, secured by their home on Hilton Avenue in Catonsville, Maryland (the "Property"). ECF 56-17 at 1, 5. The mortgage note specified that plaintiffs were required to make monthly mortgage payments of $2,936.71. ECF 56-24 at 1. The deed was recorded on February 19, 2003. ECF 56-17 at 1.

The Hebbelers defaulted on their mortgage on March 6, 2012. ECF 56-5 at 1, ¶ R.4. On January 30, 2013, FMB filed a foreclosure action against the Hebbelers in the Circuit Court for Baltimore County. ECF 56-4, ¶ 5; ECF 56-18 at 2; see Hartman v. Hebbeler, No. 03C13001068 (Balt. Co. Cir. Ct. filed Jan. 30, 2013). According to Felipe Rojas, who was then Vice President and Collections Manager of FMB, the Hebbelers had an indebtedness of $427,311.32. ECF 56-4, ¶¶ 2, 5. However, the foreclosure action was dismissed on April 8, 2014. ECF 56-4, ¶ 5; ECF 56-18 at 3.

On July 29, 2014, FMB filed another foreclosure action against the Hebbelers. ECF 56-4, ¶ 6; ECF 56-19 at 1; see Hartman v. Hebbeler, No. 03C14008113 (Balt. Co. Cir. Ct. filed July 29, 2014). At that point, the Hebbelers allegedly owed $419,853.10. ECF 56-4, ¶ 6. On October 30, 2014, the parties engaged in mediation, but no agreement was reached. ECF 56-19 at 2. The

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Circuit Court for Baltimore County issued an order on November 7, 2014, permitting the secured party to schedule the foreclosure sale. Id. at 3. The sale was scheduled for May 13, 2015. ECF 56-5 at 1, ¶ R.10. However, in lieu of the sale, the parties entered into a Forbearance Agreement in May 2015. ECF 56-5 ("Forbearance Agreement" or "Agreement"). The second foreclosure action was dismissed, without prejudice, on July 27, 2016. ECF 56-4, ¶ 9; ECF 56-19 at 3.

According to the Forbearance Agreement, the amount then due under the loan agreements totaled $449,347.31. ECF 56-5 at 2, Section 4. Moreover, plaintiffs were in arrears totaling $101,931.66. Id., Section 5.

The Forbearance Agreement provided that the Bank would forbear from foreclosing on the Property so long as plaintiffs complied with its terms. Id. at 1, ¶ R.11. Notably, FMB agreed to "forbear from the exercise of its default rights and remedies. . . until the occurrence of an Event of Default." Id. at 3, Section 6. The Forbearance Agreement also included a payment schedule, by which plaintiffs were to pay $68,000 immediately; an additional $20,284.78 by May 29, 2015; and $13,646.88 by August 1, 2015. Id. at 3, Section 7. Therefore, under the Agreement, the Hebbelers were to pay a total of $101,931.66 by August 1, 2015.

The Forbearance Agreement provides 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 56-5 at 4-5, Sections 11, 12. The Agreement also specifies that the "failure of [plaintiffs] to comply with . . . any of the provisions of the Loan Documents" would constitute another "Event of Default." Id. at 4, Section 11. Further, FMB agreed to "cancel the currently scheduled Foreclosure Sale upon receipt of the First Forbearance Installment Payment" and agreed "not [to] reschedule any

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foreclosure sale, provided no Event of Default subsequently occurs. . . ." ECF 56-5 at 3, Section 6.

FMB's records reflect that the Hebbelers paid $67,000 on May 14, 2015; $7,200 on May 28, 2015; $1,800 on June 16, 2015; and, $21, 984.78 on August 15, 2015, i.e., after the August 1, 2015 deadline. ECF 56-20 at 5. Therefore, they paid a total of $97,984.78, but were, according to the Bank, $3,946.88 short of the amount to which they had agreed under the Agreement. However, the Hebbelers contend that in May and June of 2015, they delivered two additional checks to the Bank, Check No. 1448 and Check No. 1483, one for $1,800 and one for $2,500, totaling $4,300. ECF 56-6 at 3; see ECF 56-20 at 2. They insist that the Bank failed to apply these checks to their debt obligation. See ECF 56-20 at 2. Thus, they claim that they paid a total of $102,284.78.

Notably, for more than a year after the alleged submission of the two checks, the Hebbelers did not realize the Bank had not cashed the checks, nor did they alert the Bank of their alleged payments. ECF 56-1 at 11; see ECF 56-20 at 2. Plaintiffs assert, ECF 2, ¶ 23:

[T]he parties entered into the Forbearance Agreement on May 11, 2015, and, at that time, the arrears totaled $101,931.66. . . Even without Check Nos. 1448 and 1483, by FMB's own admission, the homeowners had paid at least $97,984.78 since May 11, 2015. . . Given that the amount of the homeowners' monthly mortgage payments was $2,936.71 under the Note, the amount paid (as reflected by FMB's records) after May 11, 2015 totaled the entire arrears minus one-and-a-half monthly payments. Thus, FMB's records should have noted the mortgage paid at least through March 1, 2015.

For its part, the Bank contends that it did not receive the two disputed checks. ECF 56-1 at 11; ECF 56-4, ¶ 17. And, the Bank contends that the Hebbelers stopped making mortgage payments altogether after March 18, 2016. ECF 56-4, ¶ 19.

Mr. Hebbeler sent numerous emails to the Bank between August 2015 and August 2016. ECF 19-3; ECF 56-4, ¶¶ 9-15, 26, 30, 31, 32. In an email of August 4, 2015, Mr. Hebbeler said

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he was "looking for an accurate statement, as the ones prepared 21 May, 21 June, and 21 July (roughly) were not even close to correct." ECF 19-3 at 2. The following day, Mr. Hebbeler emailed Rojas, stating that four checks were in the mail: "One for the balance past due from the Forbearance (mortgage part), and three to cover July, August, and Sept monthly payments." Id. at 3. In an email of August 18, 2015, Mr. Hebbeler wrote to Rojas to confirm that the checks had been received. Id. at 5. Rojas responded the same day, stating that he would look into it. Id. at 4. By email of August 24, 2015, Mr. Hebbeler complained to Rojas that the September statement was not correct, "even accounting for the late processing of our checks sent 8/3." Id. at 7. And, by email of September 22, 2015, Mr. Hebbeler asserted: "The statement is wrong, AGAIN! This is now six months that it has...

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