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Judith Carter v. Bank of America

August 8, 2012

JUDITH CARTER,
PLAINTIFF,
v.
BANK OF AMERICA, N.A., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Beryl A. Howell

MEMORANDUM OPINION

The plaintiff, Judith Carter, brought this lawsuit in the D.C. Superior Court against Bank of America, N.A. ("Bank of America" or "BOA"), Freedom Mortgage Corporation ("Freedom Mortgage"), the Mortgage Electronic Registration Systems, Inc. ("MERS"), and the attorney for Bank of America (identified as John Doe) (collectively, "the defendants") *fn1 , alleging multiple grievances related to a 2004 mortgage refinancing, the subsequent denial of the plaintiff's application for a loan modification, and alleged foreclosure proceedings on the plaintiff's home. Specifically, the plaintiff's Amended Complaint ("Am. Compl."), ECF No. 17, includes twenty-one causes of action, including, inter alia, for violations of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, et seq., the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2605(b)(2)(A), the Racketeer Influenced and Corrupt Organizations Act ("RICO"), as well as for common law fraud, gross negligence, unfair and deceptive business practices, unconscionability, unjust enrichment, predatory lending, and wrongful foreclosure.

Pending before the Court are motions to dismiss from defendant Freedom Mortgage, ECF No. 18, and defendants Bank of America and MERS, ECF No. 20. For the reasons explained below, the Court will grant both motions to dismiss.

I. BACKGROUND

A. FACTUAL ALLEGATIONS

The plaintiff's 56-page Amended Complaint, with 316 numbered paragraphs, is purportedly focused on an action "[arising] out of Defendants' fraudulent sale of a mortgage to Plaintiff Judith Carter, the fraudulent foreclosure of that mortgage, [and] the fraudulent denial of a [Home Affordable Modification Program (HAMP)] agreement." Am. Compl. ¶ 1. "The essence of this lawsuit," the Amended Complaint explains, "is that the profit center of the mortgage bond business for Bank of America drove the granting of this mortgage in violation of state and federal law." Id. ¶ 2.*fn2 Unfortunately for the plaintiff, the Amended Complaint seems to be more focused on providing a colorful narrative of the mortgage crisis*fn3 than articulating plausible, or even comprehensible, factual allegations directly relevant to the plaintiff's claims.

To the extent that the Court can decipher the factual allegations specifically relevant*fn4 to the plaintiff's claims from the rambling and internally inconsistent Amended Complaint, it views them in the light most favorable to the plaintiff, as it must at this stage of the proceedings. See Aktieselskabet AF 21. November 2001 v. Fame Jeans, 525 F.3d 8, 15 (D.C. Cir. 2008) (quoting Kassem v. Wash. Hosp. Ctr., 513 F.3d 251, 253 (D.C. Cir. 2008)); see also Atherton v. D.C. Office of the Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009).

The plaintiff's claims arise from a 2004 home loan refinancing transaction for a property the plaintiff owned at 445 17th Street SE, Washington, D.C. 20003, the plaintiff's subsequent efforts to qualify for a loan modification, and foreclosure proceedings that may or not have been initiated on the plaintiff's property. Id. ¶¶ 36-37, 43.

1. Mortgage Issued to the Plaintiff

On August 16, 2004, the plaintiff closed on a $318,500*fn5 refinance mortgage for her home at 445 17th Street SE with Freedom Mortgage. Id. ¶ 76; Mem. in Supp. of Defs. Bank of America and MERS Mot. to Dismiss Pl.'s Am. Compl., ECF No. 20 ("Defs. BOA & MERS' Mem."), Ex. A, at 1. Out of this loan amount, it appears from the loan settlement statement that $228,466 was disbursed to pay in full an existing loan, while $80,042 appears to have been disbursed to the borrower. See Defs. BOA & MERS' Mem., Ex. B. The loan appears to have been a thirty-year loan with a fixed annual rate of 6%.*fn6 Am. Compl. ¶ 38; see also Defs. BOA & MERS' Mem., Ex. A, at 1. The plaintiff alleges that the thirty-year mortgage was "subject to no equity build up in the first ten years" and "had very little principle reduction in the first 15 years." Am. Compl. ¶ 53.
The plaintiff makes a variety of allegations about the allegedly fraudulent manner in which the loan was issued. First, the plaintiff states that the loan was awarded based solely upon credit scores and a "Stated Income," which was "a fiction created by the Lender's agent." Id. ¶ 66. Second, the plaintiff alleges that Freedom Mortgage conducted no independent income verification, nor was any effort made to determine the plaintiff's ability to repay the loan. Id. ¶¶ 64, 69.*fn7 Third, the plaintiff notes that she paid $8,758.75 in "discount points" to obtain the 6% rate, in addition to a $3,185 origination fee, both of which she says were "high by industry standards." Id. ¶ 40. Fourth, the plaintiff states that the loan had a "74.81% Debt-to-Income ratio, which is beyond underwriting standards and is a predatory loan." Id. ¶ 42. Fifth, the plaintiff states that, because of these fees, and the size and structure of the loan, the plaintiff lost equity in her home. Id. ¶¶ 139, 253. Sixth, the plaintiff alleges that she was "never notified about [a] higher rate to qualify. The loan was approved based on the pre-sale of the loan, and the appraised value of the collateral, rather than the Plaintiff's ability to repay the loan." Id. ¶ 51. Finally, the plaintiff states that "[t]his loan was not approved in the Plaintiff's best interest." Id. ¶ 39. The plaintiff elaborates that she "should not have been approved on this type of loan product at 68.87% LTV. It was a 'toxic' loan from its creation," id. ¶ 50, and was more than the plaintiff "could ever afford to repay." Id. ¶ 52.*fn8

At some point between the issuance of the loan in 2004 and the filing of the instant lawsuit in 2011, the plaintiff went into default on the loan. Id. ¶ 99. Before the plaintiff went into default, however, loan servicing rights had been transferred from Freedom Mortgage to Bank of America. Id. ¶ 78.*fn9

2. Plaintiff Denied Loan Modification

According to the plaintiff, she "applied for a loan modification and there was an offer and acceptance on it." Id. ¶ 43. The plaintiff alleges that she began making payments under this modification on March 26, 2010. Id. The plaintiff alleges that Bank of America representatives "assured [her] that she was enrolled in the HAMP program and would not have her home foreclosed on." Id. ¶ 44.*fn10 The plaintiff also states, however, that "Bank of America continued to send letters to [her] during this time threatening to foreclose on her home despite her enrollment in the HAMP program." Id. ¶ 45. At some point, the plaintiff alleges that she "was informed that her modification was postponed or cancelled." Id. ¶ 46.

The plaintiff believes that the loan modification was ultimately denied because defendant Bank of America "did not have possession of the note and/or could not locate the note." Id. ¶ 49.

Allegedly, defendant MERS "lost the underlying note to [the plaintiff's] mortgage," and due to this lack of documentation, Bank of America would have been legally unable to modify the loan terms. Id. ¶¶ 49, 148. Thus, the plaintiff claims that "the factors required to be considered for a loan modification were ignored to cover Bank of America's loss of possession of the note." Id. ¶ 49.

3. Alleged Foreclosure of Plaintiff's Home

Since the plaintiff was in default, the plaintiff alleges that Bank of America initiated foreclosure proceedings on the plaintiff's property. Id. ¶ 47 (citing to "Exhibit A," which was not included with this filing).*fn11 The plaintiff alleges in her Amended Complaint that she received and relied on conflicting or false information from Bank of America, which prevented her from taking action to "save her home." Id. ¶¶ 135-37. Thus, the plaintiff claims to have subsequently "lost her property at foreclosure," id. ¶ 147, and to have been evicted due to the "non-judicial foreclosure sale," id. ¶¶ 117, 118.

By contrast, defendants Bank of America and MERS ask this Court to "take judicial notice of the fact that no document has been recorded with the District of Columbia Recorder of Deeds instituting foreclosure proceedings against the Property, which is a fact 'not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to resources whose accuracy cannot reasonably be questioned.'" Defs. BOA & MERS' Mem. at 12 n.10 (citing FED. R. EVID. 201(b)).

Indeed, in her opposition to the motions to dismiss, the plaintiff concedes that there has not yet been a foreclosure of the plaintiff's home. See Plaintiff Judith Carter Objection to Motions to Dismiss by Freedom Mortgage, Bank of America and MERS ("Pl.'s Opp'n"), ECF No. 26, at 9 ("This matter is ripe for adjudication. JUDITH CARTER has a claim prior to the foreclosure on her home because of the non-judicial foreclosure law in the District of Columbia. She need not wait until for [sic] the physical loss of that home and her possessions to stop BANK OF AMERICA and MERS' conduct to protect her assets.").*fn12

B. PROCEDURAL HISTORY

The plaintiff filed a 21-count Complaint in the Superior Court of the District of Columbia. See Def.'s Notice of Removal, ECF No. 1, at 2. Defendant Bank of America subsequently removed the case to this Court pursuant to 28 U.S.C. § 1441 because the Complaint stated four federal claims.*fn13 Id. ¶¶ 17-19.

Once the case was in federal court, the defendants all moved to dismiss the plaintiff's Complaint. The plaintiff subsequently filed an Amended Complaint. ECF No. 17.

Defendant Freedom Mortgage then moved to dismiss the Amended Complaint on the grounds that all claims against it are time-barred by applicable statutes of limitations, or, in the alternative, that the plaintiff has failed to state a claim upon which relief may be granted under Rule 12(b)(6). Def. Freedom Mortgage's Mem. in Supp. of Mot. to Dismiss Am. Compl., ECF No. 19 ("Def. Freedom Mortgage's Mem."), at 2. Defendants Bank of America and MERS jointly moved to dismiss the Amended Complaint on the grounds that it fails to satisfy the Rule 8 pleading requirements and fails to state a claim upon which relief can be granted under Rule 12(b)(6). Defs. BOA & MERS' Mem. at 2. The two pending motions to dismiss are now ripe for this Court's review.*fn14

II. STANDARD OF REVIEW

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a plaintiff need only plead "enough facts to state a claim to relief that is plausible on its face" and to "nudge[ ] [his or her] claims across the line from conceivable to plausible." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); FED. R. CIV. P. 12(b)(6). "[A] complaint [does not, however,] suffice if it tenders 'naked assertions' devoid of 'further factual enhancement.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557). Instead, the complaint must plead facts that are more than "merely consistent with" a defendant's liability; "the plaintiff [must plead] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.; Rudder v. Williams, 666 F.3d 790, 794 (D.C. Cir. 2012). The Court must "assume all the allegations in the complaint are true (even if doubtful in fact) . . . [and] must give the plaintiff the benefit of all reasonable inferences derived from the facts alleged." Aktieselskabet AF 21. November 2001, 525 F.3d at 17 (internal quotation marks and citations omitted).

III. DISCUSSION

As noted, there are two Motions to Dismiss before the Court. In the first Motion to Dismiss, Defendant Freedom Mortgage argues that the plaintiff's claims against it are all barred by applicable statutes of limitations. See Def. Freedom Mortgage's Mem. at 6-7. Freedom Mortgage argues that the plaintiff's claims against it accrued on August 16, 2004, the date the mortgage agreement was signed, and that no applicable statute of limitations is longer than three years.*fn15 Id. In addition, Freedom Mortgage argues that the plaintiff fails to state claims for which relief can be granted. Id. at 8. In their Motion to Dismiss, defendants Bank of America and MERS argue that plaintiff's claims fail to satisfy Rule 8 pleading requirements and fail to state a claim upon which relief can be granted. Defs. BOA & MERS' Mem. at 7. They also argue that all claims against MERS should be dismissed because "there is a complete absence of specific factual allegations as to MERS." Id. at 9. For the reasons explained below, even giving the plaintiff "the benefit of all reasonable inferences," Aktieselskabet AF 21. November 2001, 525 F.3d at 17, the Court finds that the plaintiff has not pled "enough facts to state a claim to relief that is plausible on its face," see Twombly, 550 U.S. at 570.

Under the Federal Rules of Civil Procedure, a plaintiff must meet "a minimal pleading standard to ensure that the adverse party is reasonably informed of the asserted causes of action such that he can file a responsive answer and prepare an adequate defense." McCarter v. Bank of New York, No. 11-2078, 2012 U.S. Dist. LEXIS 94059, at *5 (D.D.C. July 4, 2012) (citations omitted). "Plaintiff's [56]--page complaint, unfortunately, is an incoherent narrative containing numerous allegations that generalize and conclude as opposed to specify and support. Indeed, most of the allegations are so overbroad and inconsistent with one another that defendants could not possibly exact what factual allegations underlie those claims, much less respond in any intelligible manner." Id. at *6. The Court thus agrees with the defendants and finds that the plaintiff's Amended Complaint is so lacking in factual detail that it fails to state any claims upon which relief can be granted.*fn16 The Court will address the plaintiff's claims seriatim below.

A.First Cause of Action: Declaratory Relief, Against All Defendants

In its first cause of action for declaratory relief against all defendants, the plaintiff alleges that "[a]n actual controversy exists between Plaintiff and Defendants regarding Plaintiff's rights and duties, in that Plaintiff contends that Defendants did not have the right to initiate foreclosure proceedings on the Subject Property because Defendants' security interest in the Subject Property has been rendered void by operation of law, pursuant to this loan being a 'flip' and prohibited under federal and District of Columbia law." Am. Compl. ¶ 105. She also alleges that the loan was fraudulent. Id. ¶ 108. She seeks a finding by the Court that "the purported Power of Sale contained in the Loan is of no force and effect at this time, because Defendants [sic] actions in the processing, handling and attempted foreclosure of this loan has [sic] contained numerous violations of federal and District of Columbia laws designed to protect Borrowers, which has directly caused Plaintiff to be at an equitable disadvantage to Defendants." Id. ¶ 110.

In response, defendant Freedom Mortgage argues that it has had no involvement in any alleged foreclosure because servicing rights on the mortgage were transferred to Bank of America, see Def. Freedom Mortgage's Mem. at 8, while defendants Bank of America and MERS argue that "Plaintiff alleged no facts in the Complaint which could lead to the conclusion that the Property was sold at a foreclosure sale," Defs. BOA & MERS' Mem. at 12. In fact, Bank of America denies foreclosure proceedings have been initiated at all, stating that "BANA's records do not indicate that foreclosure proceedings have been instituted against the Property." Id. at 5 n.5. As noted, the plaintiff, in her Opposition to the defendants' Motions to Dismiss, seems to agree that, in fact, no foreclosure has taken place. See Pl.'s Opp'n at 9.

Thus, the Court finds that the plaintiff has failed to plead any facts that plausibly support this claim for declaratory relief against the defendants for initiating foreclosure proceedings. As to Freedom Mortgage, the Court agrees that the plaintiff has not alleged any facts pointing to involvement by Freedom Mortgage with foreclosure proceedings. As to Bank of America and MERS, the plaintiff has not provided any facts about when, how, or even whether foreclosure proceedings were initiated. Moreover, the plaintiff provides no citation to any federal or District of Columbia statutes allegedly violated by the defendants. To the extent that the claim is brought under District of Columbia foreclosure law, however, a cause of action accrues with the filing of a Notice of Foreclosure. See Murray v. Wells Fargo Home Mortg., 953 A.2d 308, 322 (D.C. 2008). Since the plaintiff has not pled facts sufficient to show either that she received a notice of foreclosure or that a foreclosure took place without proper notice, plaintiff has failed to state a claim upon which relief can be granted.

B. Second Cause of Action: Injunctive Relief, Against All Defendants

In her second cause of action, in which she seeks injunctive relief against all defendants, the plaintiff alleges that the "wrongful conduct of Defendants, unless restrained and enjoined by an order of the Court, will cause great and irreparable harm to Plaintiff." Am. Compl. ¶ 119. The plaintiff references the defendants' alleged failure to "prove [the] status of [the] holder of the [Promissory Note]" and the defendants' alleged lack of standing to pursue a foreclosure. Id. ¶¶ 113, 116. Although the plaintiff does not specify the type of injunctive relief sought, the Court construes the Amended Complaint as seeking an injunction against the "non-judicial foreclosure sale" repeatedly referenced in the Amended Complaint. See id. ¶¶ 113, 115, 117.

In response, defendant Freedom Mortgage repeats its argument that it has had no involvement with any alleged foreclosure because it no longer services the loan. See Def. Freedom Mortgage's Mem. at 8. Defendants Bank of America and MERS argue that the plaintiff has failed to meet the standard for preliminary injunctions and that the "[p]laintiff's theory -- that a lender must prove standing -- is contrary to the District of Columbia's status as a non-judicial foreclosure jurisdiction." Defs. BOA & MERS' Mem. at 13-14 (citing D.C. CODE §§ 42-815 to -818.2).

The Court agrees with the defendants that the plaintiff has stated no plausible claim for injunctive relief. The Court agrees that the plaintiff has alleged no involvement by Freedom Mortgage in the foreclosure. The Court also agrees that the plaintiff has failed to state a claim against Bank of America. First, "[t]he District of Columbia is a non-judicial foreclosure jurisdiction, which allows foreclosure pursuant to a 'power of sale provision contained in any deed of trust.'" Leake v. Prensky, 798 F. Supp. 2d 254, 256 (D.D.C. 2011) (quoting D.C. CODE ยง 42-815). In other words, in the District of Columbia, a party initiating foreclosure proceedings need not prove standing in a court if the mortgage instrument includes provisions for foreclosing on the property. See Diaby v. Bierman, 795 F. Supp. 2d 108, 112-13 (D.D.C. 2011). Second, the plaintiff has not stated a claim because she has provided no details about any potential foreclosure on the ...


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