Price v. 21st Mortg. Corp.
| Decision Date | 23 February 2023 |
| Docket Number | Civil Action ELH-21-3017 |
| Parties | DEBORAH PRICE AND WILLIAM PRICE, on their own behalf and on behalf of all others similarly situated, Plaintiffs, v. 21ST MORTGAGE CORPORATION, Defendant. |
| Court | U.S. District Court — District of Maryland |
In a “First Amended Class Action Complaint” (ECF 20,” Amended Complaint”), plaintiffs Deborah Price and William Price (the “Prices”) filed suit on their own behalf and for a putative class against defendant 21st Mortgage Corporation.[1] They allege inter alia, violations of Maryland's Credit Grantor Closed End Credit Provisions (“CLEC”) Md. Code , §§ 12-1001 et seq. of the Commercial Law Article (“C.L.”). In particular, plaintiffs complain about various fees in connection with a loan they obtained from defendant, pursuant to a Retail Installment Sale Contract (“RISC”). Id. ¶¶ 4-13. The fees include “Origination Points,” “Late Fees,” and “Insurance Premiums.” Id. ¶¶ 5-7.
In the Amended Complaint, plaintiffs assert six causes of action Declaratory and Injunctive Relief under Maryland law, Md Code , § 3-406 of the Courts and Judicial Proceedings Article (“C.J.”) (Count One); Violation of CLEC, C.L. § 12-1005(a)(2)(ii), related to defendant's charge and collection of the Origination Fee (Count Two); Violation of CLEC, C.L. § 12-1005(d)(1), related to defendant's charge and collection of insurance premiums (Count Three); Violation of CLEC, C.L. § 12-1008, related to defendant's charge and collection of late fees (Count Four); Breach of Contract, related to defendant's charge and collection of the late fees (Count Five); and Breach of Contract, related to defendant's charge and collection of insurance premiums (Count Six). See ECF 20, ¶¶ 75-136.
Defendant moved to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). ECF 23.[2] The motion is supported by a memorandum (ECF 23-1) (collectively, the “Motion to Dismiss”), as well as several exhibits. ECF 23-2 to ECF 23-5. Plaintiffs oppose the Motion to Dismiss (ECF 25, the “Opposition”), supported by exhibits. ECF 25-1 to ECF 25-4. Defendant replied (ECF 33, the “Reply”), and submitted another exhibit. ECF 33-1.
Thereafter, defendant filed a “Motion for Leave to Provide Additional Authority in Support of 21st Mortgage's Motion to Dismiss.” ECF 42 (“Motion for Leave”). By Order of December 6, 2022, the Court granted the Motion for Leave but indicated that, by December 20, 2022, ECF 43. Plaintiffs subsequently filed a “Motion to Rescind the Order Granting Motion For Leave ....” ECF 44 (“Motion to Rescind”). They also filed a “Motion to Strike
Defendant's Motion for Leave ....” ECF 45 (“Motion to Strike”). Defendant responded. ECF 46.
No hearing is necessary to resolve the motions. See Local Rule 105.6. I will deny the Motion to Rescind and the Motion to Strike. And, for the reasons that follow, I shall grant the Motion to Dismiss in part and deny it in part.
On February 3, 2017, plaintiffs purchased a 2016 “manufactured home” (i.e., the “Vehicle”) and financed that purchase with a loan (the “Loan”) from defendant in the sum of $71,455. ECF 20, ¶¶ 19, 21, 24. The Loan for the mobile home was memorialized in a RISC. Id. ¶¶ 21, 41, 42; see ECF 23-2. The RISC “elects to be governed by CLEC.” ECF 20, ¶ 22.
At the inception of the Loan, defendant charged plaintiffs an “Origination Fee” of $2,638.84. Id. ¶ 25. In a Pre-Approval Notice, defendant disclosed the Origination Fee as a “prepaid finance charge.” ECF 23-3 (“Pre-Approval Notice”); see also ECF 20, ¶ 26. At the inception of the Loan, and afterwards, defendant also collected Insurance Premiums from plaintiffs. ECF 1, ¶¶ 27, 28. And, according to plaintiffs, they were improperly assessed a Late Fee in October 2018. Id. ¶¶ 41-47. They also complain as to the assessment of other Late Fees. Id. ¶ 50.
The RISC states that plaintiffs are “required to insure the Manufactured Home against physical damage,” and have “the right to choose the entity through which the property insurance is obtained.” ECF 23-2 at 5. Plaintiffs purchased property insurance from 21st Insurance, which is a tradename for defendant doing business in Maryland as a licensed insurance producer. ECF 23-2 at 3. According to plaintiffs, “21st Mortgage acted as the insurance agent for the sale of insurance policies with effective dates starting on February 3, 2017, February 3, 2018, and October 27, 2019.” ECF 20, ¶ 29. Further, plaintiffs assert that for each policy, “21st Mortgage retained thirty-five percent (35%) of the Insurance Premiums paid by the Prices.” ECF 20, ¶ 38. Plaintiffs' insurance policy shows that they paid their first insurance premium to American Bankers Insurance Company of Florida (“ABI”), in the sum of $924.00. See ECF 23-4 (the “Insurance Policy”).[4]
The RISC required plaintiffs to make payments on the Loan “[m]onthly, beginning 3/15/2017,” with subsequent payments “due on the same day of each month after that.” ECF 232 at 2; see ECF 20, ¶ 39. In effect, the RISC provided for a 15 day “grace period” to avoid a Late Fee. ECF 20, ¶ 46.
Plaintiffs received the Vehicle on February 3, 2017. Id. ¶ 41. In a “Delivery Certification” dated February 3, 2017 (ECF 23-5), plaintiffs agreed to change the payment due date under the RISC, in that they “commit[ed] to pay the first payment on [March 1, 2017].” In particular, the Delivery Certification states: “Borrower hereby confirms that the first payment date is: March 1, 2017.” Id. at 2.
The RISC also allows defendant to charge a late fee “[i]f a payment is more than 15 days late.” ECF 23-2 at 3; see ECF 20, ¶ 40. On October 17, 2018, defendant “charged the first Late Fee to the Prices ....” ECF 20, ¶ 43. However, plaintiffs allege that the “scheduled monthly payment to 21st Mortgage was not due under the CLEC RISC until October 15, 2018.” Id. ¶ 45. And, they claim that they submitted their “monthly payment to 21st Mortgage on October 24, 2018,” i.e., within the grace period. Id. ¶ 44. Additionally, plaintiffs allege that defendant “repeatedly charged and/or collected late fees prior to the time allowed in the Named Plaintiffs' RISC.” Id. ¶ 118.[5]
On November 5, 2020, in the District Court of Maryland for Harford County, defendant filed an “action in Replevin” against plaintiffs for immediate possession of the manufactured home. ECF 20, ¶ 52. At the show cause hearing, the judge made a “factual finding,” stating that ECF 25-4 (“Replevin Hearing Transcript”) at 42; see ECF 20, ¶ 54.
This suit followed. ECF 6 (“Complaint”). As noted, defendant timely removed the suit to this Court on November 24, 2021. ECF 1.
Defendant moved to dismiss on March 3, 2022, pursuant to Fed.R.Civ.P. 12(b)(6). ECF 23. However, the parties subsequently submitted a joint request to stay the case and to refer it to a magistrate judge for a settlement conference. ECF 26. By Order of April 12, 2022, I granted the stay (ECF 28), and referred the matter to a magistrate judge for a settlement conference. ECF 29. Despite the stay, and at about the time the Court granted the stay, defendant filed its Reply. ECF 33. The stay was lifted on December 1, 2022, because settlement discussions were unsuccessful. ECF 41.
On December 6, 2022, defendant filed a Motion for Leave to file additional authority in support of its Motion to Dismiss. ECF 42. That day, I granted the Motion for Leave, but indicated that plaintiffs could move to rescind the Order as improvidently granted. ECF 43. The plaintiffs so moved. ECF 44. In conjunction with their Motion to Rescind, plaintiffs filed a Motion to Strike defendant's Motion for Leave. ECF 45.
Additional facts are included, infra.
After the defendant filed its Motion to Dismiss, defendant claims to have “located additional authority that further supports dismissal of the ‘commissions on insurance' claims asserted in Counts One, Three, and Six” of the Amended Complaint.” ECF 42 at 3. In particular, defendant submitted for the Court's consideration a 1942 Delaware opinion, State v. Bankers Fin. Corp., 26 A.2d 220 (Del. 1942). ECF 42-2. According to defendant, the “Delaware court expressly rejected Plaintiffs' ‘commission on insurance' theory of liability.” ECF 42 at 3. Defendant also asserted, id.: “Plaintiffs will not be prejudiced by the Court's granting this Motion [for Leave] as (i) Plaintiff [sic] has been aware of this additional authority since November 10, 2022; (ii) 21st Mortgage does not oppose a written response from Plaintiffs addressing this additional authority; and (iii) the briefing on the Motion to Dismiss is within the page limits set forth in L.R. 105.3.” Id.
As noted, the Court granted the Motion for Leave with the proviso that, “by Dec. 20, 2022, plaintiffs may move to Rescind this Order as improvidently granted.” ECF 43. On December 19, 2022, plaintiffs filed a Motion to Rescind (ECF 44) in conjunction with a Motion to Strike defendant's Motion for Leave. ECF 45. In their Motion to Strike, plaintiffs argue that “the additional authority provided by 21st Mortgage is not supplemental authority, but rather an eighty-year-old opinion that was readily available to 21st Mortgage well prior to the conclusion of briefing on the motion to dismiss.” Id. at 2. In sum, plaintiffs contend that defendant's “Motion for Leave is an improper surreply.” Id.
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