Sharma et al v. OneWest Bank, FSB, No. 8:2011cv00834 - Document 23 (D. Md. 2011)

Court Description: MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 10/28/11. (sat, Chambers)

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND : PITAMBER D. SHARMA, et al. : v. : Civil Action No. DKC 11-0834 : ONEWEST BANK, FSB : MEMORANDUM OPINION Presently pending and ready for review in this diversity action is the ( OneWest ) motion to (ECF No. 20). filed dismiss by Defendant Plaintiffs first OneWest Bank, FSB amended complaint. The issues have been fully briefed, and the court now rules, no hearing deemed necessary. Local Rule 105.6. For the following reasons, the motion to dismiss will be granted in part and denied in part. I. Background Plaintiffs allege amended complaint. Sharma, his together Maryland.1 1 son following facts in their first On November 4, 2005, Plaintiffs Pitamber D. Hari purchased To the a buy Sharma, house the and his ( the property, daughter property ) in Plaintiffs Asha Sharma, Beltsville, took out a The first amended complaint also states that Plaintiffs bought the property on December 27, 2005. (ECF No. 19 ¶ 18). The exact purchase date of the property is not relevant to the issues presented in the pending motion. $232,000.00 loan with Financial Mortgage, Inc. ( FMI ), which loan was secured by a Purchase Money Deed of Trust ( the deed of trust ) against the property.2 OneWest is the successor-in- interest to FMI. In October 2008, Plaintiffs started experiencing financial difficulties and fell behind in making their monthly payments to their lenders. Plaintiffs OneWest. (ECF No. unsuccessfully 19 ¶ sought 11). a loan In December modification 2008, with Roughly eight months later, in August 2009, OneWest made an oral and unilateral declaration that the property was a Property Deemed Vacant and proceeded to install a lock box on the property, thereby retaining exclusive, complete control and possession of it. out of the property (Id. ¶ 13).3 ever since. Plaintiffs have been locked Pitamber Sharma has taken shelter at a Hindu temple in Adelphi, Maryland, Hari Sharma has moved to northern Virginia, and Asha Sharma has moved to India. On February 7, 2011, Plaintiffs filed a complaint against IndyMac Financial Service Corp. ( IndyMac ) in the Circuit Court for Prince George s County, Maryland. 2 After service, IndyMac Plaintiffs also took out a $58,000.00 loan, serviced by non-party Specialized Loan Servicing. 3 which is On two separate occasions, September 29, 2009, and August 13, 2010, OneWest attempted to foreclose on the property, but OneWest dismissed the proceedings each time. 2 timely removed citizenship. to this court (ECF No. 1). on the basis of diversity of Because IndyMac is a division of OneWest and is not capable of being separately sued, the parties stipulated to a name change on behalf of Defendant to OneWest. (ECF No. 11). 2011. Plaintiffs later amended the complaint on May 10, This first amended complaint contains seven counts : (1) quiet title and possession; (2) breach of contract; (3) breach of fiduciary duty; (4) conversion of intangibles; (5) declaratory judgment; (6) unjust enrichment; and (7) damages. (ECF No. 19). On dismiss May 26, 2011, Plaintiffs OneWest first filed amended the pending complaint. motion (ECF Plaintiffs filed opposition papers on June 13, 2011. 21). II. OneWest replied on June 30, 2011. No. to 20). (ECF No. (ECF No. 22). Standard of Review The purpose of a motion to dismiss pursuant 12(b)(6) is to test the sufficiency of the complaint. to Rule Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006). A plaintiff s complaint need only satisfy the standard of Rule 8(a), which requires a short and plain statement of the claim showing that the pleader is entitled to relief. Fed.R.Civ.P. 8(a)(2). requires Nevertheless, Rule 8(a)(2) still a showing, rather than a blanket assertion, of entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 n.3 3 (2007). That showing must consist of more than a formulaic recitation of the elements of a cause of action or assertion[s] devoid of further factual enhancement. v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (internal naked Ashcroft citations omitted). At this stage, the court must consider all well-pleaded allegations in a complaint as true, Albright v. Oliver, 510 U.S. 266, 268 (1994), and must construe all factual allegations in the light most favorable to the plaintiff, see Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999) (citing Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993)). In evaluating the complaint, the court need not accept unsupported legal allegations. Revene v. Charles Cnty. Comm rs, 882 F.2d 870, 873 (4th Cir. 1989). Nor must it agree allegations, with legal conclusions couched as factual Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009), or conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979); see also Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009). [W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged, but it has not show[n] . . . that the pleader is entitled to relief. (quoting Fed.R.Civ.P. 8(a)(2)). Iqbal, 129 S.Ct. at 1950 Thus, [d]etermining whether a 4 complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. Id. III. Analysis A. In Count One: the first Quiet Title and Possession count of the first amended complaint, Plaintiffs allege that OneWest s locking out of Plaintiffs from the property constitutes a cloud on [Plaintiffs ] title and right to control, possess and use the [property]. (ECF No. 19 ¶ 23). In Maryland, [a] quiet title action is a suit in which a plaintiff seeks a decree that some allegedly adverse interest in his property is actually defective, invalid or ineffective prior to and at the time suit is brought either because the lien was invalidly created, or has become invalid or has been satisfied. Kasdon v. G. W. Zierden Landscaping, Inc., 541 F.Supp. 991, 995 (D.Md. 1982). The purpose of an action to quiet title is to protect the owner of legal title from being disturbed in his possession . . . . Porter v. Schaffer, 126 Md.App. 237, 260 (1999) (internal quotations omitted). The burden is on the plaintiff to establish both possession and legal title by clear proof. Id. (citing Stewart v. May, 111 Md. 162, 173 (1909)). Possession may be actual or constructive. Wash. Mut. Bank v. Homan, 186 Md.App. 372, 405 (2009); see also Md. Code Ann., Real 5 Prop. § 14-108(a) (permitting quiet title suits by [a]ny person in actual peaceable possession of property, or, if the property is vacant and unoccupied, in constructive and peaceable possession of it ). Here, Plaintiffs fail to state a claim to quiet title on two fronts. establish First, that they they fail have facts be it August would actual or In fact, they allege just the they have been locked out of the property 2009 and have therefore been control, use, and possession of the property. 21). that The basis of their quiet title claim is that they lack possession: since allege possession, constructive, of the property. opposite. to deprived [of] (ECF No. 19 ¶ Without possession, Plaintiffs cannot maintain a quiet title cause of action. See Md. Code Ann., Real Prop. § 14- 108(a). Second, Plaintiffs fail to allege facts that suggest that they have legal title to the property. Plaintiffs dispute the validity of the deed of trust. do not By virtue of the deed of trust, however, Plaintiffs transferred legal title to the trustee. Fagnani title, v. Fisher, 371, See Porter, 126 Md.App. at 260; see also Parillon v. Fremont Inv. L 09 3352, 6 2010 WL a (2011). claim. No. bring 383 legal Loan, cannot Md. Without & Plaintiffs 418 quiet 1328425, title at *2 (D.Md. Mar. 25, 2010) (dismissing a quiet title claim of a plaintiff who had executed a deed of trust). Count One could also be construed as a cause of action under section 14-108.1 of the Real Property Article of the Maryland Code for a possessory action, also known as an action for ejectment. OneWest admits as much in its reply. (ECF No. 22, at 3). Although Plaintiffs do not cite section 14-108.1 anywhere the in first amended complaint, this failure pleading does not automatically foreclose the claim. of Jones v. Koons Auto., Inc., 752 F.Supp.2d 670, 683 (D.Md. 2010) ( [T]he failure in a complaint to cite a statute, or to cite the correct one, in no way affects the merits of a claim. Factual allegations alone are what matters. ). Here, the first amended complaint Plaintiffs provides enough notice bring an action for ejectment. that added). to First, the title itself of the first count is QUIET TITLE AND POSSESSION. (emphasis intended Moreover, the (ECF No. 19, at 5) first Plaintiffs rights to possession throughout. count references (Id. ¶¶ 20-23). Finally, the relief sought in the first count clearly requests an order directing OneWest to remove the lock from [the property] (id. at 6), which is the type of relief contemplated 7 by section 14-108.1. Count One will thus be analyzed as an action for possession.4 In general, [u]nless the plaintiff in ejectment shows a legal title and a right to possession, . . . he cannot recover in ejectment under the settled law of this state. Porter, 126 Md.App. at 271; accord Janoske v. Friend, 261 Md. 358, 363-64 (1971). section Regarding the first requirement, having legal title, 14-108.1 provides an exception: Encumbrance of property by a mortgage or deed of trust to secure a debt does not prevent an action under this section by the owner of the property. Md. Code Ann., Real Prop. § 14-108.1(b)(2). Thus, the fact that Plaintiffs executed the deed of trust, thereby transferring legal title to the trustee, does not defeat their action for ejectment as it does their quiet title claim. Plaintiffs ability to maintain a possessory therefore pivots on their right to possession. assert that they continue to 4 be the title action Here, Plaintiffs owner of [the This inference is particularly appropriate given the relationship between a quiet title action and an action for possession. The two causes of action are opposite sides of the same coin, turning on which party has possession of the property at issue. Wathen v. Brown, 48 Md.App. 655, 658 (1981); see also Porter, 126 Md.App. at 273 ( Historically, quiet title was an equitable remedy, whereas ejectment was a remedy at law. . . . The fundamental difference between the two was the question of possession. . . . Thus, when an owner was not in possession, a [quiet title claim] would not lie, because the owner could resort to the legal remedy of ejectment. (internal citations omitted)). 8 property]. there is (ECF No. 19 ¶ 19). no dispute as to Moreover, OneWest concedes that whether the equitable title owners of the Property. Plaintiffs are the (ECF No. 20, at 4). The parties agree that Plaintiffs have stated a claim for the right to possession of the property. Plaintiffs have satisfied the second requirement for bringing an action for ejectment. Accordingly, Count One will be dismissed as to Plaintiffs cause of action for quiet title, but not as to their ejectment claim. B. Count Two: Breach of Contract In Count Two of the first amended complaint, Plaintiffs allege that their lockout by OneWest constituted a material breach of several provisions of the deed of trust, including Sections 6, 7, 9, 12, 20, and 25. (ECF No. 19 ¶¶ 26-27).5 Plaintiffs also contend that OneWest failed to provide proper notice regarding OneWest s entry into the property to change the locks. (Id. ¶ 27). 5 Plaintiffs also refer vaguely to alleged violations by OneWest of Maryland Foreclosure, Maryland Real Property, and Maryland Residential Mortgage laws. (Id. ¶ 27). It is unclear how these references to bodies of state law apply to Plaintiffs breach of contract claim. To the extent Plaintiffs meant to state independent claims pursuant to any of these laws, they fail to provide adequate notice to OneWest, even under the liberal notice pleading standard of the Federal Rules. Any intended cause of action on these bases will therefore be dismissed. 9 Under Maryland law, to establish breach of contract, a plaintiff must prove that the defendant owed the plaintiff a contractual obligation and breached that obligation. Md. 638, 658 (2010). that the defendant materially RRC Ne., LLC v. BAA Md., Inc., 413 In this case, two of the provisions of the deed of trust identified by Plaintiffs dictate the outcome of the pending motion. right to possession Section 25 grants Plaintiffs a general of the property: possession of the Property until notice default pursuant to of Instrument. Borrower Lender Section (ECF No. 19-1, at 17).6 has 22 of shall have given Borrower this Security Section 9 governs when OneWest may change the locks on the property: If . . . Borrower has abandoned the Property, then Lender may do and pay for whatever is reasonable or appropriate to protect Lender s interest in the Property and rights under this Security Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing the Property. . . . Securing the Property includes, but is not limited to, entering the Property to make repairs, change locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or 6 [C]ourts may consider a document that a defendant attaches to its motion to dismiss if the document was integral to and explicitly relied on in the complaint and if the plaintiffs do not challenge its authenticity. CACI Int l, Inc. v. St. Paul Fire & Marine Ins. Co., 566 F.3d 150, 154 (4th Cir. 2009) (internal quotations omitted) (quoting Am. Chiropractic Ass n v. Trigon Healthcare, Inc., 367 F.3d 212, 214 (4th Cir. 2004)). 10 dangerous conditions, turned on or off. and have utilities (Id. at 13). As to Plaintiffs argument regarding inadequate notice, it is undisputed that Plaintiffs do not have possession of the property and that OneWest does. Under Section 25, OneWest was required to give proper notice before taking over possession. OneWest contends that it did give notice that the property was a Property Deemed Vacant. (ECF No. 20, at 5). As alleged, however, OneWest s notice might have been inadequate because it was given orally, and Section 15 of the deed of trust appears to require that all notice be provided in writing. at 15). (ECF No. 19-1, Thus, Plaintiffs have stated a claim for breach of the deed of trust. OneWest argues that it is not in breach because it changed the locks on the property pursuant to Section 9, and, unlike other provisions in the deed of trust, Section 9 does not carry a notice requirement. that Plaintiffs (ECF No. 20, at 6). abandoned the property in OneWest contends August permitting it to change the locks on the property. 2009, thus Plaintiffs, of course, disagree. Clouding matters here is the fact that the deed of trust does not include a definition of abandonment. In such instances, courts must ascribe to undefined contract terms their 11 ordinary meaning. Metro. Life Ins. Co. v. Promenade Towers Mut. Hous. Corp., 84 Md.App. 702, 718 (1990). defines abandonment as follows: Black s Law Dictionary The relinquishing of or departing from a homestead, etc., with the present, definite, and permanent to of never returning or Black s Law Dictionary (9th ed. 2009). possession. way, intention abandon real property, one regaining Put another party must have voluntarily surrendered his or her property interest with an intent to property. terminate his or her ownership interest in the Beesley v. Hanish, 70 Md.App. 482, 497 (1987); see also Tuzeer v. Yim, LLC, No. 816, Sept. Term, 2010, 2011 WL 4537172, at *15 (Md.Ct.Spec.App. Oct. 3, 2011) ( Generally, a finding of abandonment requires the concurrence of two factors, (a) an intention to abandon and (b) some overt act, or some failure to act, which carries the implication that the owner does not claim or retain any interest in the subject matter. (quoting Dorman (1947)). On v. its Mayor own, & an City Council, extended 187 period of Md. 678, non-use, 684 is insufficient to establish an intent to abandon the right to the property. Beesley, 70 Md.App. at 497. Whether Plaintiffs abandoned the property, thus permitting OneWest to change the locks without notice, is not evident based 12 on the complaint.7 At most, OneWest again points to the fact that it notified Plaintiffs that it considered the property a Property Deemed Vacant. It is not OneWest s actions that determine whether Plaintiffs abandoned the property, however, it is Plaintiffs actions and intent that matter. Notably, OneWest does not contend that its notice to Plaintiffs carried with it some ultimatum or imposed some duty to respond. On its own, Plaintiffs non-use of the property does not give rise to an inference of abandonment. See Beesley, 70 Md.App. at 497. In fact, if anything, the first amended complaint suggests just the opposite: only eight months prior to the lockout, Plaintiffs had sought loan modifications with OneWest on the property, and, though unsuccessful, Plaintiffs allege that the loan modification has remained in progress. (emphasis added). This fact 7 bolsters the (ECF No. 19 ¶ 12) conclusion that Plaintiffs attempt to combat OneWest s argument that they abandoned the property by asserting that during the months from June to August 2009, they commenced efforts to modify the loan and started to prepare the property to rent. (ECF No. 21, at 3). They assert that they have never abandoned the Property and/or [their] belongings in the Property. (Id.). In support of these new factual allegations, Plaintiffs attach an affidavit to their opposition. It is axiomatic, however, that facts contained in an opposition to a motion to dismiss but not within the complaint itself cannot be considered. See Zachair, Ltd. v. Driggs, 965 F.Supp. 741, 748 n.4 (D.Md. 1997). As none of these facts appear anywhere in the complaint, they can offer no support for Plaintiffs argument against dismissal. Nonetheless, for the reasons discussed in this opinion, Count Two will not be dismissed. 13 Plaintiffs did not intend to abandon the property. If Plaintiffs did not abandon the property, then OneWest had no right to change the locks on it under Section 9 of the deed of trust. Plaintiffs contract claim. have therefore stated a plausible See Iqbal, 129 S.Ct. at 1950. breach of OneWest s motion to dismiss Count Two will be denied. C. In Count Three: the third Breach of Fiduciary Duty count of the first amended complaint, Plaintiffs allege that OneWest breached its fiduciary duty to them pursuant to the deed of trust. (ECF No. 19 ¶ 30). [A]lthough the breach of a fiduciary duty may give rise to one or more causes of action, in tort or in contract, Maryland does not recognize fiduciary duty. a separate tort action for breach of Int l Bhd. of Teamsters v. Willis Corroon Corp., 369 Md. 724, 727 n.1 (2002) (citing Kann v. Kann, 344 Md. 689, 713 (1997)). Here, the substance of Plaintiffs breach of fiduciary duty claim is indistinguishable from their claim for breach of contract. Even if an independent cause of action could be sustained, however, no fiduciary duty exists between the parties. First, in Maryland, the relationship of a bank to its customer in a loan transaction is ordinarily a contractual relationship between debtor and creditor, and is not fiduciary in nature. Yousef v. Trustbank Sav., F.S.B., 81 Md.App. 527, 14 536 (1990) (internal citations omitted). trust does not establish any Second, the deed of contracted-for fiduciary duty. Third, none of the various statutes mentioned by Plaintiffs in Count Three confer such a duty. (See ECF No. 19 ¶ 30 (Maryland Protection of [Homeowners] in Foreclosure Act); id. ¶ 33 (Home Affordable [Modification] Program)). Accordingly, this count will be dismissed. D. In Count Four: Count Four Conversion of Intangibles of the complaint, Plaintiffs allege that OneWest has converted their intangible rights to use, possess, and collect rent monies. (ECF No. 19 ¶ 39). Under Maryland law, a conversion is any distinct act of ownership or dominion exerted by one person over the personal property of another in denial of his right or inconsistent with it. Allied Inv. Corp. v. (internal quotations omitted). Jasen, 354 Md. 547, 560 (1999) Although the original common law rule required the plaintiff s property to be tangible to state a claim for conversion, [t]hat rule has been modified over time and certain intangible property interests may now be recovered through a conversion claim. Id. The Court of Appeals of Maryland, however, has limited the expansion of the rule to include only intangible incorporated into a certificate, and has property transferable refused to 15 rights that document, cover are such completely merged as a or stock intangible rights. Id. at 562. intangible rights, a Thus, to state a claim for conversion of complaint must . . . contain facts alleging that tangible documents evidencing those [intangible] interests . . . were transferred improperly to [the defendant]. Id. (emphasis added). Here, Plaintiffs fail to allege that any tangible documents have been converted by OneWest. Indeed, the document at issue the deed of trust was attached to the first amended complaint by Plaintiffs. (See ECF No. 19-1). As Maryland has decided not to safeguard via the tort of conversion the sorts of purely intangible rights asserted by Plaintiffs, this count must be dismissed. E. Count Five: Count judgment, Five but is it Declaratory Judgment styled actually as a contains injunctive, and compensatory relief. request for elements declaratory of declaratory, First, Plaintiffs seek a declaratory judgment that Plaintiffs have absolute ownership, possession and the (ECF No. 19 ¶ 43). right of disposition of [the property]. Plaintiffs also seek to have the lock removed from the property, and they seek damages. (Id.). To the extent Plaintiffs seek injunctive and compensatory relief, the possessory action and breach of contract claim described in Counts One and Two of the first provide for such potential relief. 16 amended complaint already To the extent Plaintiffs pursue declaratory relief, their claim is again foreclosed by the resolution of Counts One and Two. Plaintiffs seek a declaration that Plaintiffs have absolute ownership, possession and the right of disposition of [the property]. (ECF No. 19, at 14). These issues are adequately - and directly - addressed in the first two counts. When declaratory relief would be duplicative of claims already alleged, dismissal Mktg./Balt., Inc. is v. warranted. Varilease F.Supp.2d 505, 528 (D.Md. 2004). Tech. Harte-Hanks Fin. Grp., Direct Inc., 299 Accordingly, the court will grant the motion to dismiss as to Count Five. F. Count Six: Unjust Enrichment In the sixth count, Plaintiffs claim that OneWest has been unjustly enriched by taking possession of the property. (ECF No. 19 ¶¶ 44-48). A claim of unjust enrichment ordinarily cannot be brought where the subject matter of the claim is governed by an express contract between the parties. Janusz v. Gilliam, 404 Md. 524, 567 (2008); accord FLF, Inc. v. World Publ ns, Inc., 999 F.Supp. 640, 642 (D.Md. Plaintiffs 1998). rights and Here, duties the deed vis-à-vis of trust OneWest defines and the property, and neither party disputes the existence or validity of the deed of trust itself. Accordingly, an unjust enrichment claim will not lie here and Count Six will be dismissed. 17 G. Count Seven: Damages Finally, Plaintiffs fail to state a claim in Count Seven. They seek a variety of damages, all of which appear to be consequential in nature stemming from OneWest s alleged breach of the deed of trust. (See ECF No. 19 ¶¶ 52-53). Consequential damages suffered as a result of a contract breach are generally defined as [s]uch damage, loss or injury as does not flow directly and immediately from the act of the party, but only from some of the consequences or results of such act. Trimed, Inc. v. Sherwood Med. Co., 977 F.2d 885, 893 n.7 (4th Cir. 1992) (internal quotations omitted). Unlike Count Two, however, where Plaintiffs assert the breach of specific contractual provisions, Plaintiffs in Count Seven merely specify additional damages being sought for those breaches, but do not allege a separate breach. damages To the extent the count asserts only consequential rather than any legally Plaintiffs fail to state a claim. cognizable cause of action, See Agwumezie v. Allstate Ins. Co., No. Civ.A. DKC 2002-0493, 2002 WL 32361936, at *3 (D.Md. Aug. 8, 2002).8 Accordingly, the motion to dismiss will be granted as to this count. 8 Plaintiffs also allege that [a]s a direct result of One West s failure to pay utility bills, [the property] may have suffered frozen pipes and other damages. (ECF No. 19 ¶ 51). This appears to be a rather inartful attempt to state a negligence claim. To the extent this is the case, Count Seven 18 IV. Conclusion For the foregoing reasons, the motion to dismiss first amended complaint filed by Defendant OneWest will be granted in part and denied in part. A separate order will follow. /s/ DEBORAH K. CHASANOW United States District Judge must still suggesting Indeed, as excuses it be dismissed. Plaintiffs do not set forth any facts that OneWest had a duty to pay the utility bills. OneWest points out, the deed of trust specifically from taking such action. (See ECF No. 19-1, at 13). 19

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