Stokes v. JPMorgan Chase Bank, NA, Civil No. JFM 8: 11-cv-02620

• Decision Date: 16 February 2012
• Docket Number: Civil No. JFM 8: 11-cv-02620
• Parties: Ardrina Stokes, Plaintiff., v. JPMorgan Chase Bank, NA, et al., Defendants.
• Court: U.S. District Court — District of Maryland

Ardrina Stokes, Plaintiff.,

v.JPMorgan Chase Bank, NA, et al., Defendants.

Civil No. JFM 8: 11-cv-02620

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

Dated: February 16, 2012

MEMORANDUM

Plaintiff, Ardrina Stokes ("Stokes" or "plaintiff"), filed a complaint in this court on September 14, 2011 against defendants JPMorgan Chase Bank, N.A. ("JPMorgan"); SouthStar Funding, LLC ("SouthStar"); Kirk K. Smith ("Smith"); Ocwen Financial Corporation ("Ocwen"); Barclays, PLC ("Barclays"); and Universal American Mortgage Company, LLC ("Universal"), (collectively, "defendants"). Stokes seeks an undisclosed amount of actual, compensatory, and punitive damages, as well as statutory damages resulting from defendants' allegedly discriminatory subprime lending practices. In her three-count complaint, Stokes alleges defendants violated (1) the Fair Housing Act ("FHA"), 42 U.S.C. §§ 3601 et seq.; (2) the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. §§ 1691 et seq.; and (3) § 1982 of the Civil Rights Act ("§ 1982"), 42 U.S.C. § 1982. Now pending before the court are (1) Smith's motion to dismiss for, inter alia, lack of personal jurisdiction (ECF No. 16), (2) non-party Barclay's Bank LC aka Barclay's Bank PLC ("Barclay's Bank") motion to quash service (ECF No. 31), and (3) JPMorgan, Ocwen, and Universal's motions to dismiss for failure to state a claim. (ECF Nos. 12, 13, 14). All issues have been fully briefed and no oral argument is necessary. See Local Rule 105.6. For the reasons that follow, all motions are granted and all claims against defendants are dismissed.

BACKGROUND

Over the course of several years, Stokes, a resident of Prince George's County, Maryland, obtained subprime loans¹ from Encore Credit Corporation ("Encore"), SouthStar, Fremont Investment & Loan ("Fremont"), BNC Mortgage, Inc. ("BNC"), and Universal. (Compl. ¶¶ 7-16.) Stokes's claims stem from those loans. She alleges defendant lenders utilized discriminatory policies, practices, and procedures to sell subprime loans in disproportionate numbers to minority borrowers to reap heightened financial rewards from buyers in the secondary mortgage market. (Compl. ¶ 2.) More important to her specifically, Stokes avers that because of her race, defendants "steered" her into purchasing a subprime loan without evaluating her credit, financials, and other relevant qualifications. (Compl. ¶¶ 1-2.) As a result, Stokes brings this action against defendants JPMorgan, SouthStar, Smith (a former principal of now defunct SouthStar), Ocwen, Barclays, and Universal for violations of the ECOA, FHA, and § 1982.² (Compl. ¶ 3.)

Stokes describes a nearly identical interaction with each financial institution. She alleges that during the application phase, representatives of the institution asked her race and noted onher loan application that she is African American. (Compl. ¶¶ 45, 61, 70, 84, 95, 106.) Furthermore, Stokes contends that none of the defendants considered her for anything but a subprime loan, (Compl. ¶¶ 44, 60, 69, 83, 94, 105), and never assessed her ability to repay the loan. (Compl. ¶¶ 54, 65, 78, 89, 111.) According to Stokes, none of the defendants verified her income or took further action to evaluate her creditworthiness by looking at financial documents including her tax returns, W-2s, payroll receipts, bank statements, and retirement account records. (Compl. ¶¶ 51, 64, 75, 88, 99, 110.) Instead, she contends, defendants each asked "targeted questions to obtain the right information to secure loan approval" and then "steered" her into purchasing the loans. (Compl. ¶¶ 48, 55-56, 63, 66-67,72, 79-80, 87, 90-91, 98, 101-02, 109, 112-13.) By allegedly targeting her because of her race, and pushing her to accept subprime mortgages without regard to objective criteria such as credit scores and income, Stokes avers defendants unlawfully discriminated against her in violation of the FHA, ECOA, and § 1982. (Compl. ¶¶ 114-15.)

Now pending are separate motions to dismiss filed by JPMorgan (ECF No. 12), Ocwen (ECF No. 13), Universal (ECF No. 15), Smith (ECF No. 16), and a motion to quash by non-party Barclay's Bank. (ECF No. 31.)

ANALYSIS

The defendants have each filed motions to dismiss. Pursuant to Federal Rule of Civil Procedure 12(b)(2), defendant Smith seeks to have the claims against him dismissed for lack of personal jurisdiction. Pursuant to Federal Rules of Civil Procedure 12(b)(4), Barclay's Bank moves to quash service. Lastly, defendants JPMorgan, Ocwen, and Universal move to have their claims dismissed pursuant to Federal Rules of Civil Procedure 12(b)(6). I will discuss each in turn.

a. Smith's Motion to Dismiss for Lack of Personal Jurisdiction

Two conditions must be met for a district court to assert personal jurisdiction over a nonresident defendant: "(1) the exercise of jurisdiction must be authorized under the state's long-arm statute; and (2) the exercise of jurisdiction must comport with the due process requirements of the Fourteenth Amendment." Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir. 2003) (citing Christian Sci. Bd. of Dirs. of the First Church of Christ v. Nolan, 259 F.3d 209, 215 (4th Cir. 2001)). "With regard to the first requirement, [the district court] must accept as binding the interpretation of Maryland's long-arm statute rendered by the Maryland Court of Appeals." Id. (citing Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 61 (4th Cir. 1993)). Maryland courts have held that the statutory inquiry merges with the constitutional inquiry. Id. (citing Stover v. O'Connell Assocs., Inc., 84 F.3d 132, 135 (4th Cir. 1996)); see Kortobi v. Kass, 978 A.2d 247, 256 (Md. 2009) ("The purview of the long arm statute is coextensive with the limits of personal jurisdiction set by the due process clause of the Federal Constitution. . . . As a result, our statutory inquiry merges with our constitutional examination.") (internal quotation marks and citations omitted). The Maryland Court of Appeals has clarified, however, that even though they are coextensive, assessing personal jurisdiction still requires the two-step inquiry—statutory and constitutional. See Mackey v. Compass Mktg., Inc., 892 A.2d 479, 493 n.6 (noting that "coextensive" does not mean "that it is now permissible to simply dispense with analysis under the long-arm statute"). Thus, determining personal jurisdiction over a non-resident requires first, assessing whether Maryland's long-arm statutes permits service on the non-resident defendant, and second, whether such service satisfies constitutional due process requirements. See Holfield v. Power Chem. Co., 382 F. Supp. 388, 390 (D. Md. 1974).

The Maryland long-arm statute provides:

(b) A court may exercise personal jurisdiction over a person, who directly or by an agent:

(1) Transacts any business or performs any character of work or service in the State;

(2) Contracts to supply goods, food, services, or manufactured products in the State;

(3) Causes tortious injury in the State by an act or omission in the State;

(4) Causes tortious injury in the State or outside of the State by an act or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from goods, food, services, or manufactured products used or consumed in the State;

(5) Has an interest in, uses, or possesses real property in the State; or

(6) Contracts to insure or act as surety for, or on, any person, property, risk, contract, obligation, or agreement located, executed, or to be performed within the State at the time the contract is made, unless the parties otherwise provide in writing.

Md. Code Ann. Cts. & Jud. Proc. § 6-103(b). If the nonresident defendant's connection with the State of Maryland comes within the reach of the long-arm statute, the court must then consider whether its exercise of jurisdiction is constitutionally permissible. In order to pass constitutional muster under the Due Process Clause, there must be sufficient "minimum contacts" between the defendant and Maryland such that the exercise of personal jurisdiction in Maryland "does not offend 'traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citing Milliken v. Meyer, 311 U.S. 457, 463 (1940)); see also Hanson v. Denckla, 357 U.S. 235, 253 (1958) ("[I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefit and protection of its laws.")). In its assessment, the court should focus on "the relationship among the defendant, the forum, and the litigation," Shaffer v.Heitner, 433 U.S. 186, 204 (1977), to determine whether the defendant "should reasonably anticipate being haled into court" in Maryland. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).

Personal jurisdiction can be specific or general, depending upon the connection between the defendant and the State of Maryland. See Miserandino v. Resort Props., Inc., 691 A.2d 208, 211 (Md. 1995). A court exercises specific jurisdiction over the defendant when the cause of action arises out of or is related to the defendant's contacts with the forum state. See Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 (1984). A court exercises general jurisdiction over the defendant when the defendant's contacts with the state are not also the basis for the suit, but the defendant's contacts with the state are "continuous, systematic, and fairly extensive." Id.; see Cole-Tuve, Inc. v. Am. Mach. Tools Corp., 342 F. Supp. 2d 362, 366 (D. Md. 2004).

The plaintiff bears the burden of proving grounds for personal jurisdiction by a preponderance of the evidence. Carefirst, 334 F.3d 390, 396 (citing Mylan, 2 F.3d at 59-60). But when a court decides a pretrial personal jurisdiction motion without...