Miller v. Pacific Shore Funding, No. 02-CV-569.
| Decision Date | 17 May 2002 |
| Docket Number | No. 02-CV-569. |
| Parties | David MILLER, et al., Plaintiffs, v. PACIFIC SHORE FUNDING, et al., Defendants. |
| Court | U.S. District Court — District of Maryland |
Fred Thompson, Daniel O. Myers, Kevin Oufnac, A. Hoyt Rowell, III, Ness Motley PA, Mt. Pleasant, SC, Joseph Christopher Garland, Law Offices of Joseph C. Garland, Towson, MD, Edwin David Hoskins, The Law Offices of E. David Hoskins LLC, Baltimore, MD, for plaintiffs.
Leah Schmulewitz Getlan, Cynthia G. Swann, Weiner, Brodsky, Sidman, Kider PC, Washington, DC, Philip M. Andrews, Kramon and Graham, Gerard J. Gaeng, Rosenberg, Proutt Funk and Greenberg LLP, Lee Scott Kaminetz, Craig L. McCullough, Rosenberg, Proutt Funk and Greenberg, LLP, Baltimore, MD, James W. Bentz, Roy W. Arnold, Thomas L. Allen, John M. McIntyre, Reed Smith LLP, Pittsburgh, PA, Russel J. Pope, Pope and Hughes PA, Towson, MD, John Henry Lewin, Jr., Venable Baetjer and Howard LLP, Baltimore, MD, Denise Esposito, Thomas Julian Page, Daniel H. Squire, Wilmer, Cutler and Pickering, Daniel Joseph Tobin, Kirkpatrick and Lockhart LLP, Washington, DC, for defendants.
This matter comes before the Court on motions to dismiss for lack of subject-matter jurisdiction and for failure to state a claim upon which relief can be granted, filed by the defendants Amaximis Lending, L.P. ("Amaximis"), GMAC-Residential Funding Corp. ("Residential"), Homeq Servicing Corp. (f/k/a TMS Mortgage, Inc.) ("Homeq"), Banc One Financial Services, Inc. ("Banc One"), MBNA America (Delaware), N.A. ("MBNA"), Household Finance Corp. ("Household"), and Bankers Trust Co. of California, N.A. ("Bankers Trust"). Also before the Court is a motion to dismiss for failure to state a claim upon which relief can be granted filed by the defendant Pacific Shore Funding ("Pacific"). All of the defendants are non-Maryland entities. The Plaintiffs, David and Rosalie Miller ("the Millers") and Chima Gilbert-Iheme ("Mr.Gilbert-Iheme"), all citizens of Maryland, are seeking relief for themselves (and others similarly situated) for violations of Maryland law governing the making of secondary mortgage loans. The issues have been fully briefed by the parties, and no oral hearing is necessary. Local Rule 105.6 (D.Md.).
The Millers and Mr. Gilbert-Iheme filed this putative class action in the Circuit Court for Baltimore City on January 16, 2002. The case was timely removed to this Court on February 21, 2002. The plaintiffs assert three counts against the eight defendants: Count I — violations of the Maryland Secondary Mortgage Loan Law ("SMLL"), Md.Code Ann., Com.Law II §§ 12-401 through -415 (1975, 2000 Repl.Vol & Supp.2001); Count II — violations of the Maryland Consumer Protection Act ("CPA"), Id. §§ 13-101 through — 501; and Count III — the formation and performance of "illegal contracts." As remedy for the third count, they seek a declaratory judgment that their loan agreements are void or voidable as contracts against the public policy of Maryland.
The gravamen of their claims is that Pacific charged and collected excessive or unauthorized fees in conjunction with loans that were secured by junior mortgages on their residences. They have sued the other seven defendants solely as subsequent purchasers, assignees, or holders of these loans — or of secondary mortgage loans that Pacific made to others as yet unidentified.
Putative class representatives David and Rosalie Miller allege that Pacific made a loan to them on February 2, 2000, which was secured by a secondary mortgage on their residence. The principal amount of the loan was $35,000, with a term of twenty years, an interest rate of 13.750%, and an effective annual interest rate of 15.764%. At closing, the Millers allege they were charged the following fees: (1) a loan origination fee of $2,450; (2) a funding fee of $195; (3) a processing fee of $295; (4) an express mail fee of $15; (5) a signing fee of $150; (6) a sub-escrow fee of $350; (7) prepaid interest of $303.14; (8) a title exam fee of $150; (9) recording fees of $25; and (10) a flood certification fee of $18.1 Sometime thereafter, Residential took an assignment of the loan.
Putative class representative Chima Gilbert-Iheme alleges that Pacific made a loan to him on October 13, 1998, which was secured by a secondary mortgage on his residence. The principal amount of the loan was $48,000, with a term of twenty years, an interest rate of 12.500%, and an effective annual interest rate of 14.277%. At closing, Mr. Gilbert-Iheme alleges he was charged the following fees: (1) an appraisal fee of $75; (2) a credit report fee of $6; (3) a funding fee of $175; (4) a processing fee of $275; (5) a messenger/state tax fee of $415; (6) a document signing fee of $125; (7) a sub-escrow fee of $200; (8) prepaid interest of $328.80; (9) a title exam fee of $150; (10) a document preparation fee of $25; (11) a flood certification fee of $17; and (12) recording fees of $220. The pleadings do not disclose whether Mr. Gilbert-Iheme was also charged a separate "loan origination" fee. Sometime thereafter, MBNA and Household took assignments of the loan.
In connection with their loans, the plaintiffs also allege: that Pacific made false and misleading oral and written statements that had the capacity, tendency, or effect of deceiving or misleading Maryland consumers; and that Pacific knowingly concealed, suppressed, or failed to state material facts.
Under Federal Rule of Civil Procedure 12(b)(6), dismissal of a complaint for failure to state a claim is not appropriate "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). When ruling on a motion to dismiss under Rule 12(b)(6), a court must accept the allegations contained in the complaint as true. See DeBouche v. Trani, 191 F.3d 499, 505 (4th Cir.1999) (citing Conley, 355 U.S. at 47-48, 78 S.Ct. 99). The court, however, 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). Otherwise, "Rule 12(b)(6) would serve no function, for its purpose is to provide a defendant with a mechanism for testing the legal sufficiency of the complaint." Dist. 28, United Mine Workers of Am., Inc. v. Wellmore Coal Corp., 609 F.2d 1083, 1086 (4th Cir.1979); see also Randall v. United States, 30 F.3d 518, 522 (4th Cir.1994) ().
When it appears on the face of the complaint that the limitation period has run, a defendant may properly assert a limitations defense through a Rule 12(b)(6) motion to dismiss. United States v. Westvaco Corp., 144 F.Supp.2d 439, 441-42 (D.Md.2001); see also 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1357, at 348-54 (2d ed.1990). In this action based on federal diversity jurisdiction, the Court applies the Maryland statute of limitations, Hartnett v. Schering Corp., 806 F.Supp. 1231, 1233-34 (D.Md.1992), aff'd 2 F.3d 90 (4th Cir. 1993), as well as Maryland law construing it, Wade v. Danek Med., Inc., 182 F.3d 281, 289 (4th Cir.1999).
Under Maryland law, "[a] civil action shall be filed within three years from the date it accrues unless another provision of the Code provides" otherwise. Md. Code Ann., Cts. & Jud.Proc. § 5-101 (1974, 1998 Repl.Vol.). Mr. Gilbert-Iheme asserts three causes of action against Pacific: violation of the SMLL, violation of the CPA, and "illegal contract." The Code does not provide a different period of time within which any of these actions must be commenced. Thus all of Mr. Gilbert-Iheme's claims are subject to the general three-year statute of limitations. See Williams v. Standard Fed. Sav. & Loan Ass'n, 76 Md.App. 452, 456-64, 545 A.2d 708 (1988) (); Greene Tree Home Owners Ass'n v. Greene Tree Assocs., 358 Md. 453, 480, 749 A.2d 806 (2000) ().
The question of accrual is left to judicial determination, which "may be based solely on law, solely on fact, or on a combination of law and fact, and is reached after careful consideration of the purpose of the statute [of limitations] and the facts to which it is applied."2 Frederick Rd. Ltd. P'ship v. Brown & Sturm, 360 Md. 76, 95, 756 A.2d 963 (2000). If there is no genuine issue of material fact regarding the accrual of a cause of action, a court may determine the date of accrual as a matter of law. O'Hara v. Kovens, 305 Md. 280, 300, 503 A.2d 1313 (1986); Edwards v Demedis, 118 Md.App. 541, 553, 703 A.2d 240 (1997). Statutes of limitations, moreover, are to be strictly construed; implied and equitable exceptions are frowned upon. See Walko Corp. v. Burger Chef Sys., Inc., 281 Md. 207, 211, 378 A.2d 1100 (1977); McMahan v. Dorchester Fertilizer Co., 184 Md. 155, 160, 40 A.2d 313 (1944) ().
Nevertheless, "[r]ecognizing the unfairness inherent in charging a plaintiff with slumbering on his rights where it was not reasonably possible to have obtained notice of the nature and cause of an injury," the Maryland Court of Appeals has adopted the "discovery rule" to determine the...
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