Filed: April 10, 2015
Opinion by: Richard D. Bennett
Holdings: The Court denied Defendant Loan Servicer’s motion to dismiss Plaintiff’s claims for violations of three statutes: 1) the Fair Debt Collection Practices Act (“FDCPA”); 2) the Maryland Consumer Debt Collection Act (“MCDCA”); 3) and the Maryland Consumer Protection Act (“MCPA”).
While Defendant Loan Servicer’s communication to collect Plaintiff’s non-existent mortgage debt was time barred under the FDCPA, the Defendant’s more recent false representation regarding the non-existent debt was not time barred. The Court held Plaintiff sufficiently pled that Defendant Loan Servicer possessed the requisite knowledge to violate the MCDCA. The Court also held Defendant Loan Servicer’s alleged false reporting of delinquencies plausibly harmed Plaintiff’s credit score and caused him stress and anxiety. Further, the Court held that Plaintiff sufficiently pled a violation of the MCPA.
Facts: Plaintiff defaulted on a loan from Defendant Bank to purchase property (the “Loan”). To avoid foreclosure, Plaintiff agreed to a Deed in Lieu of Foreclosure transaction (“DIL”) conveying the property to Defendant Bank. Plaintiff fulfilled all of the requisite steps to complete the DIL. Shortly thereafter, however, Defendant Bank sent Plaintiff a letter stating his loan would be serviced by Defendant Loan Servicer and Defendant Bank sent Plaintiff another letter stating it was unable to offer Plaintiff a DIL.
Then, Defendant Loan Servicer sent Plaintiff a letter stating it had taken over loan servicing for Plaintiff’s property and sent Plaintiff a monthly payment notice demanding $55,190.29 for the current payment, past due payment, and late charges/fees. In response, Plaintiff sent a letter to Defendant Loan Servicer stating that he successfully completed a DIL with Defendant Bank and requested that it cease and desist making debt collection phone calls to him. Defendant Loan Servicer nevertheless continued to demand payment. Plaintiff’s credit reports showed the DIL terminated the Loan, but that Plaintiff had a deficiency with Defendant Loan Servicer.
Defendant Loan Servicer filed a Motion to Dismiss in response to Plaintiff’s claims under the FDCPA, MCDCA, and MCPA.
Analysis: FDCPA: The FDCPA requires that a plaintiff bring a claim within one year from the date on which a violation occurs (15 U.S.C.A. 1692k(d)). Defendant Loan Servicer’s communication to collect Plaintiff’s non-existent debt occurred more than one year before suit was filed. However, Defendant Loan Servicer’s false delinquency report to the credit bureaus and Plaintiff’s accessing of his credit reports occurred within one year before filing suit. Thus, the Court determined that Plaintiff’s FDCPA claim was not barred by the FDCPA’s one-year statute of limitations.
MCDCA: Liability arises under Md. Code Ann., Com. Law § 14-202(8) when a defendant acted “with actual knowledge or reckless disregard as to the falsity of the information . . .” Plaintiff’s allegation that he provided the DIL and other documentation to Defendant Loan Servicer was sufficient to plead that Defendant had “actual knowledge.” Plaintiff alleged he sent a message to Defendant Loan Servicer indicating the Loan had been satisfied with title transferring by the DIL, that it failed to investigate Plaintiff’s response, and it failed to consider information readily available in Plaintiff’s credit history. The Court ruled that this was sufficient to plead Defendant Loan Servicer acted with “reckless disregard.” The Court further stated that, although Plaintiff bears the burden to prove Defendant Loan Servicer’s actions proximately caused his damages, it is plausible its action caused the harm to Plaintiff’s credit score as well as stress and anxiety.
MCPA: The Court determined that because Plaintiff sufficiently alleged a violation of the MCDCA and a violation of the MCDCA is a per se violation of the MCPA, Plaintiff sufficiently pled a violation of the MCPA.
The full opinion is available in PDF.