Richards v. NewRez, LLC

Decision Date04 March 2022
Docket NumberCivil Action ELH-20-1282
PartiesMANDA RICHARDS, On behalf of herself individually and similarly situated persons Plaintiff, v. NEW REZ, LLC d/b/a SHELLPOINT MORTGAGE SERVICING Defendant.
CourtU.S. District Court — District of Maryland

Ellen L. Hollander United States District Judge

In this putative class action, plaintiff Manda Richards lodges claims against defendant NewRez, LLC (NewRez), d/b/a Shellpoint Mortgage Servicing (Shellpoint) alleging deceptive and unlawful mortgage service practices. Richards initially brought suit in the Circuit Court for Anne Arundel County. ECF 2. Richards, joined by Matthew Maldonado subsequently filed an Amended Complaint in that court. ECF 3. Thereafter, defendant removed the case to federal court (ECF 1), asserting subject matter jurisdiction under the Class Action Fairness Act of 2005, 28 U.S.C. § 1337; diversity jurisdiction, pursuant to 28 U.S.C. § 1332; and federal question jurisdiction, pursuant to 28 U.S.C. § 1331.

The Amended Complaint (ECF 3) included three counts: violation of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601 et seq. (Count I); violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq. (Count II); as well as various claims for violations of the Maryland Consumer Debt Collection Act (“MCDCA”), Md. Code (2013 Repl. Vol., 2021 Supp.) §§ 14-204 et seq. of the Commercial Law Article (“C.L.”), and the Maryland Consumer Protection Act (“MCPA”), C.L. §§ 13-301 et seq. (Count III). Counts I and II were brought on behalf of Richards and Maldonado, in their individual capacities, as well as on behalf of a putative class. Count III was asserted solely by Richards.

Shellpoint moved to dismiss the Amended Complaint, pursuant to Fed.R.Civ.P. 12(b)(1), 12(b)(2), and 12(b)(6). ECF 13. Relevant here, Shellpoint claimed that the Court lacked personal jurisdiction over Shellpoint as to Maldonado's claims as well as those brought by the out-of-state class members. Id. at 11-15. In addition, defendant claimed that plaintiffs lacked standing to pursue the claims alleged in Counts I and II. Id. at 25-29. Further the motion posited that, to the extent Count II was predicated on Shellpoint's failure to send periodic statements to Richards, it was subject to dismissal. Id. at 18-25. And, defendant sought dismissal of plaintiff's State law claims in Count III on the ground that plaintiff failed to allege the requisite elements of a MCDCA claim. Id. at 31-34. Shellpoint also asked the Court to strike plaintiffs' proposed class definitions. Id. at 30-31.

By Memorandum Opinion (ECF 20) and Order (ECF 21) of March 18, 2021, I granted Shellpoint's motion in part and denied it in part. In particular, I dismissed Maldonado from the suit. ECF 20 at 27-31. I also determined that Count II was subject to dismissal to the extent that it relied on Shellpoint's alleged failure to send periodic statements. Id. at 49-53. And, I dismissed plaintiffs' class allegations, without prejudice and with leave to amend. Id. at 53-57. But, I denied Shellpoint's motion to the extent that defendant claimed Richards and the putative class members lacked standing to bring claims under RESPA and FDCPA. Id. at 34-39. And, I concluded that Shellpoint's contentions with respect to Richards's State law claims were also without merit. Id. at 57-62.

Richards has again amended her complaint. ECF 24 (the “Second Amended Complaint” or “SAC”). The SAC asserts the same three causes of action set forth in the Amended Complaint, except that Count II does not include a claim based on Shellpoint's purported failure to provide periodic statements to Richards. See ECF 24 at 1 n.2. Richards also alleges several additional facts and proposes new class definitions.

In particular, Count I is styled as a claim brought by plaintiff in her individual capacity and on behalf the “Untimely Hello Letter Class.” The class is defined as follows, id. ⁋68(a):

Those persons who are residents in the states which are within the jurisdiction of the United States Courts of Appeals for the Third, Fourth, Sixth, Seventh, Eleventh, and District of Columbia Circuits for whom: (i) Shellpoint provided a 12 U.S.C.A § 2605(c) notice in the three years preceding the filing of this action; and (ii) In relation to their personal, residential mortgage loan.

And, concerning Count II, plaintiff brings a claim on behalf of herself and the “Untimely Notice Class.” That class is defined in ⁋ 68(b):

Those persons who are residents in the states which are within the jurisdiction of the United States Courts of Appeals for the Third, Fourth, Sixth, Seventh, Eleventh, and District of Columbia Circuits for whom: (i) Shellpoint acquired the servicing and collection rights on their personal, residential mortgage loans no longer than one year before May 4, 2020 on behalf of another; (ii) When it believed the mortgage loan to be in default or otherwise delinquent for 30 or more consecutive days at the time Shellpoint began servicing or collecting upon it; (iii) It provided 12 U.S.C.A. § 2605(c) notice substantially similar to the one provided to the Named Plaintiff; and (iii) [sic] It attempted or did collect alleged fees incurred before the servicing transfer to Shellpoint.

Shellpoint has moved to dismiss the SAC, pursuant to Fed.R.Civ.P. 12(b)(2) and 12(b)(6). ECF 25. The motion is supported by a memorandum (ECF 25-1) (collectively, the “Motion”), as well as three exhibits. See ECF 25-3; ECF 25-4; ECF 25-5.

Richards opposes the Motion (ECF 26, the “Opposition”) and has submitted three exhibits. See ECF 26-1; ECF 27-1; ECF 27-2.[1] Defendant has replied. ECF 28. And, Richards has directed the Court's attention to supplemental authority decided after the completion of the briefing on the Motion. ECF 29; ECF 30; ECF 33; ECF 36. In addition, Shellpoint has filed a notice of supplemental authority (ECF 31), to which Richards has responded. ECF 32.

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.

I. Factual Background[2]

Shellpoint is a Delaware limited liability company that, according to plaintiff, is both a mortgage servicer and a debt collector. ECF 24, ⁋⁋ 3, 4, 15(b)-(c). It is wholly owned by another limited liability company, Shellpoint Partners, LLC, which, in turn is wholly owned by NRM Acquisition, LLC and NRM Acquisition II, LLC. Id. ⁋ 15. Both NRM Acquisition entities are wholly owned by New Residential Mortgage, LLC. Id. New Residential Mortgage, LLC is wholly owned by a publicly-traded corporation, New Residential Investment Corporation (“NRZ”). Id.

Richards is a borrower with respect to a mortgage loan for real property located in Bethesda, Maryland (the “Property”). Id. ⁋ 14. Richards acquired the Property on or about August 31, 2005, for the sum of $169, 500.00. Id. ⁋ 28. To accomplish the purchase, Richards borrowed $159, 030.00 from American Home Mortgage Acceptance, Inc. (the “Richards Loan”). Id.; see ECF 25-3 (“Deed of Trust”). According to plaintiff, this loan qualified at origination as a “federally related mortgage.” ECF 24, ⁋ 28.

On April 4, 2014, the Richards Loan was sold to Wilmington Savings Fund Society, FSB, as trustee for the PrimeStar-H Fund I Trust (“Primestar”). Id. ⁋ 29. Statebridge Company LLC was the loan servicer. Id. When Primestar owned the Richards Loan, “it agreed to the Primestar Settlement, ” which was approved in July 2016. ECF 24, ⁋ 30.[3] Pursuant to this settlement, Primestar “agreed that it was not entitled to attempt to collect from Richards any in personam deficiency sums related to the Richard's [sic] loan and it was limited to in rem relief only (when permitted to do so under Maryland law).” Id.

Thereafter, on October 26, 2016, Primestar sold the Richards Loan to Wilmington Savings Fund Society, FSB as trustee for the Brougham Fund I Trust (“Brougham”). Id. ⁋ 31. From October 13, 2016, to about November 1, 2019, Servis One, Inc. d/b/a BSI Financial Services (“BSI”) acted as the mortgage servicer on behalf of Primestar and then Brougham. Id. ⁋ 33.

In the interim, on October 8, 2019, Brougham sold the Richards Loan to Morgan Stanley Mortgage Capital Holdings LLC (Morgan Stanley). Id. ⁋ 31. Richards claims she was never notified of Morgan Stanley's acquisition of her loan. Id. Rather, she learned of it “from a review of Maryland land records in February 2020 and later in correspondence to her dated March 22, 2021.” Id.

BSI entered into a stipulation and Consent Order with the Consumer Financial Protection Bureau (“CFPB”) on May 15, 2019, related to BSI's mortgage servicing and transfer practices. Id.25(a). The CFPB concluded that “BSI had routinely transferred to subsequent servicers mortgage loan data information that was incomplete . . . .” Id.

Then, on November 1, 2019, Shellpoint acquired from BSI the mortgage servicing rights (“MSR”) to the Richards Loan, along with “certain putative class member loans.” Id. ⁋ 25; see also ECF 24, ⁋ 33. When the Richards Loan was transferred to defendant, “Shellpoint believed that the Richards Loan was in default . . . .” Id. ⁋ 39.

According to plaintiff, Shellpoint had “knowledge that its predecessor servicer-i.e. [BSI] ha[d] been subject to regulatory and private enforcement actions in which it has been disclosed that BSI's mismanagement of mortgage loans it services . . . has been subjected to multiple erroneous errors.” ECF 24, ⁋ 25; see Id. ⁋⁋ 33-34. In particular, plaintiff points out that in Graham v. Servis One, Inc., No. 2:18-cv-4377 (E.D. Pa.), it was “disclosed that a coding error in BSI's electronic systems related to certain borrowers including Richards, caused...

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