Wiseman v. First Mariner Bank, Civil Action No. ELH-12-2423

CourtUnited States District Courts. 4th Circuit. United States District Court (Maryland)
Writing for the CourtEllen Lipton Hollander
PartiesRUTH WISEMAN, Plaintiff, v. FIRST MARINER BANK, et al., Defendants.
Docket NumberCivil Action No. ELH-12-2423
Decision Date23 September 2013

RUTH WISEMAN, Plaintiff,
FIRST MARINER BANK, et al., Defendants.

Civil Action No. ELH-12-2423


Date: September 23, 2013


This case arises from a reverse mortgage transaction. Ruth Wiseman, plaintiff, and her late husband, John H. Wiseman, Sr., entered into a reverse mortgage for their home in Severna Park, Maryland (the "Residence") in 2009.1 At that time, the Wisemans were both elderly and living on a fixed income, and Mr. Wiseman was in declining health. See Amended Complaint Id. ¶¶ 22-23, 28. Defendant First Mariner Bank ("First Mariner") was the lender for the reverse mortgage, and defendant Charles J. Pastore, a loan originator and broker, acted as First Mariner's agent; he recommended the reverse mortgage transaction to the Wisemans and arranged for it. Id. ¶¶ 26-27 (ECF 33). The reverse mortgage was serviced by defendant MetLife Home Loans, LLC ("MetLife").

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Before the Wisemans entered into the reverse mortgage, they owned the Residence jointly, as tenants by the entireties. Id. ¶ 21. On the basis of Mr. Pastore's alleged advice and recommendation, Ms. Wiseman conveyed her interest in the Residence to Mr. Wiseman in conjunction with the reverse mortgage transaction, reserving to herself "a remainder interest to title by means of a life estate deed." Id. ¶ 32.

Mr. Wiseman passed away on or about December 13, 2011. Id. ¶ 39. Within one month, MetLife began contacting Ms. Wiseman, stating that the loan secured by the reverse mortgage was in default and that Ms. Wiseman was required to satisfy immediately the full balance due on the loan or be dispossessed of her home. Id. ¶ 40. MetLife sent notices of default and other communications to Ms. Wiseman asserting this position, and sent agents to "photograph, trespass upon, and attempt to gain access to, the Wiseman Residence." Id. ¶ 41. Despite Ms. Wiseman's attempts to "inform" MetLife that, under the terms of the reverse mortgage transaction, the loan was not in default so long as she was alive, id. ¶ 42, MetLife persisted in its "efforts to declare default and remove Ruth Wiseman from her home." Id. ¶ 43.

Accordingly, Ms. Wiseman initiated suit, asserting causes of action under federal and Maryland state law. In addition to First Mariner, Mr. Pastore, and MetLife, she has sued Resource Real Estate Services, LLC ("Resource"), the company that conducted the settlement of the reverse mortgage transaction, and has named as "interested parties" the Estate of John H. Wiseman (the "Estate") and Shaun Donovan, in his capacity as Secretary of Housing and Urban Development ("HUD").2

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Ms. Wiseman's complaint includes eleven counts. Count 1 asserts a cause of action for "Predatory Lending" against First Mariner, Pastore, and Resource. Count 2 charges negligent misrepresentation, also against First Mariner, Pastore, and Resource. Count 3 alleges that First Mariner and Pastore violated the Maryland Consumer Protection Act ("CPA"), Md. Code (2005 Repl. Vol., 2012 Supp.), §§ 13-101 et seq. of the Commercial Law Article ("C.L.").

Count 4 is captioned "Breach of Contract - Reformation" and names First Mariner, Pastore, and Resource as defendants; it seeks rescission or reformation of the life estate deed and reformation of the note and deed of trust securing the reverse mortgage, on the basis of "mutual mistake," because the parties allegedly intended that the Wisemans would both be able to reside in the Residence until death. Count 5, captioned "Intentional Misrepresentation - Rescission," also seeks rescission or reformation of the life estate deed and reformation of the note and deed of trust, on the basis of intentional misrepresentation by First Mariner, Pastore, and Resource. Count 6 asserts the tort of intentional misrepresentation by concealment (also known as fraudulent concealment) against First Mariner, Pastore, and Resource. Count 7 is captioned "Breach of Contract - Reformation," the same caption as Count 4; unlike Count 4, however, Count 7 is asserted against all defendants, and seeks rescission or reformation of the life estate deed and reformation of the note and deed of trust, on the basis that the documents do not comply with the federal Home Equity Conversion Mortgage statute ("HECM"), 12 U.S.C.

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§ 1715z-20, a provision of the National Housing Act ("NHA"), codified as amended at 12 U.S.C. §§ 1701 et seq. Count 8 asserts negligence against First Mariner, Pastore, and Resource.

Count 9 asserts claims against MetLife and Resource under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq., and the Maryland Consumer Debt Collection Act ("MCDCA"), C.L. §§ 14-201 et seq. Count 10, captioned "Statutory Violations Generally," asserts against all defendants violations of the HECM statute and its implementing regulations, see 24 C.F.R. part 206; the Maryland Reverse Mortgage Loans Act ("Reverse Mortgage Act"), C.L. §§ 12-1201 et seq.; and 15 U.S.C. § 1648, which is a provision of the federal Truth In Lending Act ("TILA"), codified as amended at 15 U.S.C. §§ 1601 et seq., governing reverse mortgages. Finally, Count 11 asserts that Resource is liable as an aider and abettor of First Mariner and Pastore.

To summarize with respect to each defendant: Resource is named as defendant in all counts except Count 3, which asserts claims under the CPA; First Mariner and Pastore are named as defendants in all counts except Count 9, which asserts claims under the FDCPA and MCDCA, and Count 11, which asserts an aiding and abetting theory of liability against Resource; and MetLife is a defendant only as to Count 7 (breach of contract), Count 9 (FDCPA & MCDCA), and Count 10 ("Statutory Violations Generally").

Two motions are now pending for decision. Resource has filed a motion to dismiss for failure to state a claim upon which relief can be granted, pursuant to Fed. R. Civ. P. 12(b)(6) ("Resource Motion") (ECF 36). After filing an answer to the complaint, see ECF 35, First Mariner and Pastore (collectively, "Mariner Defendants") filed a motion for judgment on the

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pleadings, pursuant to Fed. R. Civ. P. 12(c) ("Mariner Motion") (ECF 40).3 Both motions have been fully briefed,4 and no hearing is necessary to resolve them. See Local Rule 105.6. For the reasons that follow, both motions will be granted in part and denied in part.

Factual Background 5

As noted, the Wisemans owned the Residence as tenants by the entireties, a form of joint ownership under Maryland law that is available only to married couples, by which a couple holds title to real estate as a couple, rather than as individuals. See generally Bruce v. Dyer, 309 Md. 421, 426-31, 524 A.2d 777, 780-82 (1987). One feature of a tenancy by the entireties is that both spouses have the right of survivorship: when one spouse dies, the surviving spouse becomes vested with sole title to the property by operation of law. See, e.g., Hutson v. Hutson, 168 Md. 182, 188, 177 A.2d 177, 179 (1935) (describing right of survivorship as "'[t]he most important incident of tenancy by the entireties'") (quoting TIFFANY ON REAL PROPERTY).

In June 2009, when the reverse mortgage transaction took place, Mr. Wiseman was 78 years of age and Ms. Wiseman was 75. Amended Complaint ¶ 22. Mr. Wiseman was suffering from lung cancer and kidney failure; as a consequence of these ailments, he used a walker or other device for mobility. Id. ¶ 28. The Wisemans were retired and living on a fixed income.

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Id. ¶ 23. They desired to find a financially feasible way to live in their Residence "for the remainder of their days." Id. ¶ 24.

At some point in 2009, the Wisemans contacted First Mariner and Mr. Pastore. Id. ¶ 26. According to plaintiff, Pastore "was acting as a mortgage broker and originating loans for and otherwise promoting and selling . . . reverse mortgage[s] for First Mariner . . . as [First Mariner's] agent." Id. Mr. Pastore met with the Wisemans in their home to discuss the prospect of a reverse mortgage and to obtain an application from the Wisemans. Id. ¶ 27. When Pastore met with the Wisemans he learned their ages and that Mr. Wiseman was in poor health. Id. ¶ 28. Plaintiff also alleged that Mr. Wiseman's poor health would have been "readily apparent" to Mr. Pastore. Id.

Pastore advised the Wisemans that "reverse mortgages were part of a program initiated by Congress and regulated by HUD designed particularly with the needs and circumstances of senior citizens in mind," and that they were "good candidates for the program." Id. ¶ 29. He also represented to the Wisemans that, by obtaining a reverse mortgage, they "could pay-off their exiting deed of trust note/mortgage with the proceeds of the new loan, but would not have to make any future payments of mortgage installments," because the reverse mortgage loan "would be repaid by sale of the property after they had both passed away or decided to sell or not to reside in their home any longer." Id. And, Pastore advised the Wisemans that, if they participated in First Mariner's reverse mortgage program, "then as long as they lived they would each be able to stay in their home." Id. ¶ 30. The Wisemans submitted an application to Pastore. Id. ¶ 31.

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Subsequently, Mr. Pastore "recommended a [reverse mortgage] to the...

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