Kemp v. Seterus, Inc., Civil No. PJM 18-472

• Decision Date: 27 June 2018
• Docket Number: Civil No. PJM 18-472
• Citation: 348 F.Supp.3d 443
• Parties: Donna KEMP, on Behalf of Herself and on Behalf of Three Classes of Similarly Situated Persons, Plaintiffs, v. SETERUS, INC., et al., Defendants.
• Court: U.S. District Court — District of Maryland

348 F.Supp.3d 443

Donna KEMP, on Behalf of Herself and on Behalf of Three Classes of Similarly Situated Persons, Plaintiffs,

v.SETERUS, INC., et al., Defendants.

Civil No. PJM 18-472

United States District Court, D. Maryland.

Signed June 27, 2018

Phillip R. Robinson, Consumer Law Center LLC, Silver Spring, MD, Scott C. Borison, Legg Law Firm LLP, San Mateo, CA, for Plaintiffs.

Marc A. Marinaccio, Hogan Lovells US LLP, Baltimore, MD, for Defendants.

MEMORANDUM OPINION

PETER J. MESSITTE, UNITED STATES DISTRICT JUDGE

Putative Class Plaintiff Donna Kemp has sued the servicer of her home mortgage loan, Seterus, Inc., and the owner of the loan, Federal National Mortgage Association (Fannie Mae), alleging violations of various Maryland state lender laws as well as the federal Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq. Defendants have jointly filed a Motion to Dismiss the Second Amended Complaint. ECF No. 24. For the reasons that follow, Defendants' Motion to Dismiss is GRANTED and the case is REMANDED to state court for all further proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

This action centers around Seterus' servicing of Kemp's mortgage loan and allegedly improper property inspection fees that it charged her following her default on the loan.

A. Kemp's Mortgage Loan and Subsequent Default

In April 2007, Kemp obtained a home mortgage loan from Countrywide Home Loans, Inc., secured by a deed of trust on real property located in Glen Burnie, Maryland (the Property). Hr'g Tr. at 4:3-7; ECF No. 24-4. Although the exact date has not been provided, at some point after the origination of the loan, it was assigned to Fannie Mae, the current owner. Hr'g Tr. at 5-6.

In 2017, Kemp fell behind on her mortgage payments. ECF No. 17 ¶ 19. On April 10, 2017, Seterus, Kemp's loan servicer, declared the loan to be in default and stated that if Kemp did not "cure the default on or before May 15, 2017, it may result in acceleration of the sums secured by the mortgage and may result in the sale of the premises." Id. ¶ 21. On July 14, 2017, Kemp purportedly wrote to Seterus requesting information about the status of the loan, notifying it that she had not been receiving her monthly periodic statements. Id. ¶ 22.

Seterus responded to Kemp's request for information on July 24, 2017. In its correspondence, Seterus disclosed to Kemp, apparently for the first time, that it had charged her loan account with certain property inspection fees from August 26, 2016, through July 24, 2017. Id. ¶ 24. Kemp again wrote Seterus on September 6, 2017, requesting information about the property inspection fees as well as an accounting as to the total due on the loan. Kemp alleges that Seterus received this second request on September 21, 2017. Id. ¶ 25.

On September 25, 2017, in response to her request for a payoff total on her loan, Seterus informed Kemp that she owed $180.00 in property inspection fees that she was required to pay in connection with any loan payoff. The next day, Seterus responded to Kemp's second inquiry asking about the property inspection fees, stating:

[T]he authority to charge fees such as property inspection fees or legal fees is contained in the Deed of trust.... Enclosed is a copy of the Deed of Trust for your reference. Due to the continued contractual delinquency of the loan, Seterus exercised its right under the terms of the signed Deed of Trust to protect the loan owner's interest in the property. Property inspections are ordered when a loan is more than 45 days contractually delinquent, and every 30 days if the contractual delinquency continues. These were drive-by inspections to see if the property was occupied in good repair. The fee for this service was billed to Seterus by an outside contractor and then assessed to the loan. As of the date of this loan, Seterus has assessed the loan [twelve] property inspection fees [at $15.00 per inspection] totaling $180.00. These fees are considered valid.

Id. ¶ 26.

Kemp alleges that the assessment of these property inspections fees on the loan violated Maryland law, specifically Md. Com. § 12-121(a)(1)(ii), which prohibits "lenders" from imposing such fees.

B. Kemp's Trial Plan and Loan Modification

In addition to the referenced correspondence regarding her loan, Kemp alleges that in a letter dated July 20, 2017, Seterus offered her a "Trial Period Plan" (TPP) in order to obtain a Fannie Mae loan modification. The plan required Kemp to make three trial payments to Seterus, on behalf of Fannie Mae, on or before September 1, October 1, and November 1, 2017. Kemp claims she accepted the TPP offer and made all the trial period payments. Id. ¶ 31-33.

On November 8, 2017, Seterus, on behalf of Fannie Mae, offered Kemp a Final Loan Modification Agreement. Id. ¶ 33. The offer stated that "unpaid interest, real estate taxes, insurance premiums, and certain assessments" would be added to the mortgage balance Kemp owed. ECF No. 26-5 at 3. Kemp subsequently agreed to the proposed Final Loan Modification Agreement, which she claims capitalized the property inspection fees claimed due by Seterus. ECF No. 17 ¶ 36.

Since the loan modification, Kemp states that she has continued to make her modified mortgage payments and that her loan remains in effect. Id. ¶ 37. At no time did Seterus or Fannie Mae provide Kemp with new TILA disclosures.

C. The Present Litigation

Based on these allegations Kemp brings six causes of action on behalf of herself and on behalf of three putative classes of situated persons. These claims all stem from the alleged improper property inspection fees added to her loan and include: 1) declaratory and injunctive relief related to Kemp's and the State Law Class members' mortgage accounts against both Defendants; 2) unjust enrichment on behalf of Kemp and the State Law Class against Seterus; 3) Maryland Consumer Debt Collection Practices Act (MCDCA) and Maryland Consumer Protection Act (MCPA) claims on behalf of Kemp and the State Law Class Members against Seterus; 4) Md. Com. Law § 12-121(a)(1)(ii) claim on behalf of Kemp and Usury Class members against both Defendants; 5) Maryland Mortgage Fraud Protection Act (MMFPA) claim on behalf of State Law Class members and Kemp against Seterus; and 6) TILA violations—the one and only federal claim—on behalf of the TILA Class members and Kemp against all Defendants, or in the alternative, only against Fannie Mae. ECF No. 17.

Kemp originally filed this suit in Montgomery County Circuit Court on December 19, 2017, and amended her Complaint in that court on January 26, 2018.

On February 15, 2018, based on federal question jurisdiction, Defendants removed the case to this Court, accompanied by a Motion to Dismiss the First Amended Complaint. Kemp responded to the Motion to Dismiss but, without seeking leave from the Court, also filed a Second Amended Complaint on March 15, 2018.

The Court, however, denied Defendants' Motion to Strike the Second Amended Complaint, granted Kemp leave to amend, and accepted the Second Amended Complaint she had filed.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 8(a) prescribes "liberal pleading standards," requiring only that a plaintiff submit a "short and plain statement of the claim showing that [he or she] is entitled to relief." Erickson v. Pardus , 551 U.S. 89, 93-94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (citing Fed. R. Civ. P. 8(a)(2) ). To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a plaintiff must plead facts 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 standard requires "more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Although a court accepts factual allegations as true, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Indeed, the court need not accept legal conclusions couched as factual allegations or "unwarranted inferences, unreasonable conclusions, or arguments." E. Shore Markets, Inc. v. J.D. Associates Ltd. P'ship , 213 F.3d 175, 180 (4th Cir. 2000).

III. ANALYSIS

Because the only claim arising under the original jurisdiction of the Court is Count VI, the Court addresses the Motion to Dismiss Kemp's TILA claims front and center.

A. Count VI: TILA Claims

In Count VI of the Second Amended Complaint, Kemp alleges three TILA violations. First, she alleges a violation of 15 U.S.C. § 1639g based on the purported payoff statement Seterus provided in September 2017, which she claims was inaccurate because it included the unlawful property inspection charges. Second, she alleges a violation of 12 C.F.R. § 1026.36(c), the corresponding regulation that implements 15 U.S.C. § 1639g, based on the same September 2017 payoff statement. Third, she alleges a separate violation under 12 C.F.R. § 226.18 based on Defendants' alleged failure to provide new TILA disclosures when they added these property inspection fees to the principal amount owed by her on the loan. Hr'g Tr. at 13:19-14:12.

Title 15 Section 1639g of the U.S. Code provides: "A creditor or servicer of a home loan shall send an accurate payoff balance within a reasonable time, but in no case more than 7 business days, after the receipt of a written request for such balance." The corresponding regulation that implements the statute, 12 C.F.R. § 1026.36(c)(3), similarly requires that a "creditor, assignee, or servicer" provide an accurate payoff balance. Finally, 12 C.F.R. § 226.18 requires that a creditor make certain disclosures for each new credit transaction.

TILA, however, imposes civil liability only on creditors and, only in limited circumstances, assignees of creditors. 15 U.S.C. §§ 1640(a), 1641(a). A "creditor" is defined by TILA to refer only to a person who both: "(1) regularly extends, whether in connection with loans,...