Tag Archives: motion to dismiss

Maryland Court Denies Claim Alleging Violations of Federal and State Consumer Laws

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The court in deciding Bolden v. McCabe, Weisberg & Conway, LLC, 2013 U.S. Dist., 182057 (D. Md. 2013) granted defendant’s motion to dismiss and denied plaintiff’s motion for summary judgment.

Plaintiff in bringing this action alleged violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq., the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., the Maryland Consumer Debt Collection Act (“MCDCA”), Md. Code Ann., Com. Law, § 14-201 et seq., and the Maryland Consumer Protection Act (“MCPA”), Md. Code Ann., Com. Law § 13-101 et seq.

After considering the plaintiff’s arguments, the court found that the sparse factual allegations in the complaint could not sustain the claims, as such the court granted defendant’s motion to dismiss and plaintiff’s motion for summary judgment was denied.

Minnesota Court Rejects Tweaked Version of Show-Me-the-Note Claim

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The court in deciding Mutua v. Deutsche Bank Nat’l Trust Co., 2013 Minn. Dist. 65 (Minn. Dist. Ct. 2013) found that since the defendant had a valid legal title to plaintiffs’ mortgage. Plaintiffs had failed to state a claim against either defendant and their respective motions to dismiss are granted.

This Court reasoned that there was a valid assignment of plaintiffs’ mortgages to defendant which gave defendant legal title to the mortgages and allowed Defendant to foreclose on plaintiffs’ properties.

The court noted that both the Minnesota Supreme Court and the United States Court of Appeals for the Eighth Circuit had rejected the legal theory, which has become known as “show-me-the-note,” advanced by plaintiffs.

In the present action, the court noted that plaintiffs merely tweaked this legal theory and argued that based on the language of the plaintiffs’ mortgage and note, an entity different from defendant Deutsche Bank National Trust Company had the legal right to foreclose on plaintiffs’ homes. This argument was rejected.

Washington Court Dismisses Fair Debt Collection Practices Act and Washington Deed of Trust Act Violation Claims

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The court in deciding Dietz v. Quality Loan Serv. Corp., 2014 U.S. Dist. (W.D. Wash. Jan. 3, 2014) granted Wells Fargo and MERS’ motion to dismiss.

This action involved is a post-sale wrongful foreclosure case. Plaintiff Timothy Dietz alleged causes of action for violation of the Fair Debt Collection Practices Act (FDCPA)(Counts I and IV) and violation of the Washington Deed of Trust Act (DTA)(Counts II and III).

The court in deciding this case noted that Dietz’s first and fourth causes of action were for violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692g(b) and 1692e(5) respectively. These causes of action did not mention MERS  and there was no allegation in the complaint that MERS engaged in any activities that could be construed as a “debt collection.” As such, this court dismissed the FDCPA causes of action against MERS.

Similarly, the court found that Dietz had not alleged facts that gave rise to a violation of the debt validation notice requirements. Dietz’s claim that that Wells Fargo violated 15 U.S.C. § 1641(g) by failing to notify him within 30 days after it purchased the Loan. Wells Fargo purchased the Loan in 2008 and the assignment was recorded in 2011. The court found that under either date, the claim was barred by FDCPA‘s one year statute of limitations, 15 U.S.C. § 1640(e), as this lawsuit was not filed until 2013.

Tennessee Court Dismisses TILA, RICO, and RESPA Claims

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The Tennessee court in deciding Mhoon v. United States Bank Home Mortg., 2013 U.S. Dist. (W.D. Tenn., 2013) dismissed the complaint of the plaintiff pursuant to 28 U.S.C. § 1915(e)(2)(B)(ii).

Plaintiff [Mhoon] filed a complaint against defendant U.S. Bank. This case was an action to prohibit a non-judicial foreclosure of real property. The complaint alleged that U.S. Bank was engaged in efforts to illegally foreclosure on Mhoon’s home. The complaint also alleged that U.S. Bank acted with gross negligence and violated its duty of good faith.

In addition, the complaint alleged breach of contract because U.S. Bank failed to send any and all acceleration, default, and foreclosure notices to Mhoon in the manner required by the deed of trust.

The complaint further alleged U.S. Bank violated Truth in Lending Act (“TILA”); violated Real Estate Settlement Procedures Act (“RESPA”) by failing to provide a good faith estimate; violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”) statute and engaged in fraud; and lacked standing to initiate foreclosure proceedings on the Property.

The court ultimately held (1) plaintiff has not sufficiently plead a breach of contract claim; (2) plaintiff’s claims for gross negligence and violation of the duty of good faith fail as a matter of law; (3) plaintiff’s allegations based on violations of the TILA and the RESPA were barred by the applicable statute of limitations and failed to state a claim because U.S. Bank was not the originating lender; and (4) plaintiff’s claims for fraud violations of the RICO, and lack of standing all failed as a matter of law.

For those reasons, this court dismissed the plaintiff’s complaint pursuant to 28 U.S.C. § 1915(e)(2)(B)(ii).

Ohio Court Dismisses Claims Asserting that MERS Could Not Act as Nominee

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The court in deciding Cline v. Mortg. Elec. Registration Sys., 2013-Ohio-5706 (Ohio Ct. App., Franklin County 2013) overruled appellant’s seven assignments of error, thus this court upheld the judgment of the lower court.

The lower court granted MERS’ motion after concluding that, because appellant voluntarily signed the mortgage and agreed to the existing lien, the mortgage could not constitute a cloud on appellant’s title subject to R.C. 5303.01. On appeal, appellant argued the original loan was originated by CBSK, a company no longer in business; therefore, any agreement between CBSK and MERS that MERS would act as nominee for CBSK is void.

In appellant’s view, because the agreement between CBSK and MERS was void, the note and mortgage were no longer in effect and constituted a cloud upon her title. Appellant argued that, unlike Unger, which concerned mortgage assignments, this matter was different as it concerns the underlying mortgage itself.

Upon review, this court found that the appellant’s complaint failed to state a claim upon which relief can be granted, and, thus, the trial court did not err in dismissing appellant’s complaint pursuant to Civ.R. 12(B)(6). Accordingly, all of the appellant’s claims were overruled.

Washington Court Upholds Dismissal of RESPA Claims

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The court in deciding Bhatti v. Guild Mortg. Co., 2013 U.S. App. 25659 (9th Cir. Wash. 2013) ultimately upheld the lower court’s decision by dismissing the plaintiff’s RESPA claims.

Plaintiffs Nusrat Bhatti and Erfan Semuel filed a complaint in Washington state court against Guild Mortgage Co. and MERS for quiet title, declaratory judgment, and violations of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601.

Defendants filed a Fed. R. Civ. P. 12(b)(6) motion to dismiss. The lower court granted defendants’ motion to dismiss. Plaintiffs appealed, after considering the plaintiff’s appeal, this court affirmed the lower court.

This court held that the lower court did not abuse its discretion in ruling on defendants’ 12(b)(6) motion. This court also found that defendants did not violate the DTA’s requirement that a deed of trust’s beneficiary hold the note when it appoints a successor trustee

Accordingly, the lower court’s judgment was affirmed.

 

Reiss on Fannie/Freddie Suits

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Bloomberg BNA quoted me in No Basis for Discovery by GSE Investors, Treasury Department, FHFA Memos Say. It reads

[Reproduced with permission from BNA’s Banking Report, 102 BBR 417, 3/11/14. Copyright  2014 by The Bureau
of National Affairs, Inc. (800-372-1033) https://www.bna.com]

The Treasury Department and the Federal Housing Finance Agency March 4 said a federal judge should deny a motion for discovery in lawsuits by Fannie Mae and Freddie Mac investors, citing an agreed-upon schedule and saying the motion would do nothing to address legal questions at the core of the case (Fairholme Funds v. Federal Housing Finance Agency, D.D.C., No. 13-cv-01053, 3/4/14).

In its memo filed in the U.S. District Court for the District of Columbia, Treasury said Fairholme’s Feb. 12 motion for discovery (31 DER EE-6, 2/14/14) would be “improper” under a November scheduling order, and urged the court to dismiss the Fairholme suit and related cases.

“These cases should proceed on the agreed briefing schedule, which already provided ample time to the plaintiffs to file their substantive briefs, and the Court, upon review of a completed set of briefing with respect to the defendants’ dispositive motions, should dismiss these cases,” Treasury said March 4.

In its March 4 filing, the FHFA memo said “no discovery is necessary to assess the purely legal arguments” before the court, adding the Housing and Economic Recovery Act of 2008 (HERA) bars second-guessing of the FHFA’s actions as conservator of Fannie Mae and Freddie Mac.

Litigation Ongoing

The suit is one of several in at least two district courts and the U.S. Court of Federal Claims that challenge Treasury and FHFA action in August 2012 that restructured contracts governing preferred stock issued by the two government-sponsored enterprises.

Fairholme and other investors say the August 2012 amendment amounted to an expropriation of their assets and have variously sought damages and compensation in response.

The government has sought to dismiss the Fairholme case and others, but in its Feb. 12 motion, Fairholme said the government’s motion to dismiss was too expansive and raised questions that require access to government documents, e-mails and other materials.

Arrowood Indemnity Co., the plaintiff in a related case in the district court and a separate case in the Claims Court, Feb. 20 sought to link its own bid for discovery to Fairholme’s (36 DER EE-8, 2/24/14).

Fairholme has already prevailed on its discovery motion in the Claims Court. In a Feb. 26 order, Judge Margaret M. Sweeney granted Fairholme’s motion for a continuance to pursue discovery in that case.

March Reply Scheduled

In the district court, Fairholme is scheduled to respond to the government’s March 4 memos by mid-March.

“We are reviewing the opposition briefs filed by the defendants just yesterday, and we will respond to them in our reply brief, due on March 14,” a spokesman for Fairholme told Bloomberg BNA March 5.

High Stakes Seen

Professor David Reiss of Brooklyn Law School in New York March 5 said discovery usually occurs after motions to dismiss have been decided.

In this case, he said, “the stakes are so high and the quality of lawyering so high that there is litigation over the scheduling order itself.”

“This is a hard-fought battle and the issues are incredibly complex,” Reiss told Bloomberg BNA. “Each side characterizes their arguments as relatively straightforward, but I think the judge will have a hard time parsing out the issues, because there are different statutory regimes, policy issues and the like that must be rationalized with each other. I think this is just the beginning of a long slog,” he said.