Boardley v. Household Fin. Corp. III

39 F.Supp.3d 689

Eurkert BOARDLEY, et ux., Plaintiffs

v.HOUSEHOLD FINANCE CORPORATION III, et al., Defendants.

Case No. PWG–12–3009.

United States District Court, D. Maryland, Southern Division.

Signed Aug. 14, 2014.

Tyler King, Tyler Jay King Esq., Attorney At Law, Washington, DC, for Plaintiffs.

Christine Marie Debevec, Stradley Ronon Stevens and Young LLP, Philadelphia, PA, Zeenat Asra Iqbal, Stradley Ronon Stevens and Young LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION

PAUL W. GRIMM, District Judge.

Plaintiffs Eurkert Boardley and Senta Boardley, who believe that Defendants Household Finance Corp. III (“Household”) and HSBC Holdings Inc., plc (“HSBC”) lured them in through bait and switch tactics, entered into a loan agreement with Defendants with higher monthly payments than Plaintiffs believed they could afford, on the understanding that they soon could refinance for a lower monthly amount. After years of deferments, attempted refinancing, over $60,000 in payments made, and what Plaintiffs characterize as misrepresentations by Defendants, Plaintiffs found themselves facing foreclosure. In response, they brought this multicount action against Defendants, who now move to dismiss all counts. Plaintiffs oppose the motion and seek leave to file a Second Amended Complaint, eliminating one count and amending two of the remaining twelve.¹ Plaintiffs' Amended Complaint fails to state a claim on all but the count for breach of contract, but Plaintiffs' proposed Second Amended Complaint rectifies the pleading of Plaintiffs' Maryland Consumer Protection Act claim. Therefore, the breach of contract and consumer protection claims will proceed, while all other claims will be dismissed.

I. BACKGROUND²

Defendant HSBC, “a British multinational banking and financial services holding company,” is the parent company of Defendant Household, which operated a branch of HSBC in Mitchellville (“Mitchellville Branch”). Am. Compl. ¶¶ 5–6. After receiving “solicitations for a $6,000 line of credit from Defendants,” Plaintiffs, who are African–American, went to the Mitchellville Branch on June 18, 2007, where Household representative Candace Geter informed them that “they were not eligible for the $6,000 line of credit originally solicited, but instead were eligible for a $19,000 line of credit, which she claimed ... would be the same as the $6,000 line of credit,” because Plaintiffs could use “the additional $13,000 ... to pay the approximately $1,100 increase in their monthly mortgage payments over the initial six (6) month period.” Id. ¶¶ 8–11. When Plaintiffs “told Candace Geter that they could not afford to make the monthly payments past the initial six (6) month time period,” she and her supervisor “led the Boardleys to believe” that they could refinance in six months “to lower the monthly payment amount.” Id. ¶¶ 12–13. But, after six months, “Defendants did not give the Boardleys an opportunity to lower their payments,” id. ¶ 14, telling them instead that they could refinance in another six months and “refer[ing] Mr. Boardley to a pamphlet he had previously been unaware of that outlined certain time periods and options for refinancing,” id. ¶ 15.

Plaintiffs made their mortgage payments until August 2008, when they called Defendants because they “could [no] longer afford the monthly mortgage payment.” Am. Compl. ¶¶ 16–17. Defendants would not “lower the payments as promised,” but they “offered a deferment plan,” under which “the late payment could be deferred to the end of the loan if the Boardleys made two payments over sixty (60) days and agreed to a reduced monthly payment.” Id. ¶¶ 18–19. After refusing to put the deferment plan in writing, Defendants “claimed that the Boardley's second payment was late,” even though Plaintiffs had complied with the plan, and insisted that Plaintiffs “would have to attempt a second deferment.” Id. ¶¶ 19–21. Plaintiffs agreed to a second deferment plan, which also was not in writing, with the understanding that “their new regular monthly payment would be approximately $1,200 on a permanent basis.” Id. ¶¶ 22, 24.

Thereafter, Plaintiffs' new mortgage coupons and October 2009 escrow statement indicated that the monthly payment amount “was $1,512.68, which caused the Boardleys to believe their loan terms had been resolved.” Id. ¶¶ 24–25. Plaintiffs made their monthly payments until April 2010, at which time “Defendants, unilaterally and without notice, renounced the agreed upon payment of approximately $1,200 and demanded an immediate payment of $4,721.93.”Id. ¶ ¶ 25, 27. Additionally, “Defendants sent the Boardleys a ‘Breach of Contract’ letter stating the amount they owed was over $13,000.” Id. ¶ 28. Defendants also informed Plaintiffs by phone that “their monthly payments were actually $4,261.29 and that no payment had been received since December of 2009.” Id. ¶ 30. In response to a call from Defendants' collection representative in April 2010, Plaintiffs withdrew retirement funds, “incur[ing] additional taxes,” and paid Defendants $3,000, but Plaintiffs “continued to receive calls from the Defendants' collection department.” Id. ¶¶ 31, 32, 56. They claim that “Defendants' records indicated a debit of $847.24,” rather than a payment of $3,000. Id. ¶ 64.

Plaintiffs entered into another deferment plan in May, 2010, under which they agreed to pay $4,261 per month for three months so that they “would be eligible for a reduced monthly payment,” and they complied with the terms of the plan. Am. Compl. ¶ 33. Thereafter, “Defendants' representative ... told the Boardleys that they would be included in Defendants' ‘Fresh Start’ program, but [not] until July 31st.” Id. ¶ 34. Yet, when Plaintiffs called Defendants on August 5, 2010, Defendants' representative said that he could not give them information about the status of their deferment. Id. ¶ 35. Then, on December 24, 2010, Defendants' representative called Plaintiffs and informed them that “they owed over $60,000 and then laughed after he asked them whether they wanted to pay by cash or credit.” Id. ¶ 39. Plaintiffs made another payment of approximately $3,000 in February 2011 and “received a letter from Defendants acknowledging the Boardleys' efforts to make the loan current.” Id. ¶¶ 40–41. Plaintiffs made one last payment of $3,414.05 in May 2011, “but Defendants returned this payment without any explanation.” Id. ¶ 42. In total, Plaintiffs paid Defendants approximately $62,000. Id. ¶ 55.

According to Plaintiffs, “Defendants did not credit the account” to reflect either the payments Plaintiffs made from April 2009 through July 2010, or the “overpayments to the escrow account made by the Boardleys during the life of their loan.” Id. ¶¶ 65–67. Plaintiffs sent letters to Defendants in November and December 2010 “to dispute the escrow charges.” Id. ¶ 67. Mrs. Boardley requested the escrow account statement by phone on January 31, 2012, but “Defendants claimed they had received a cease and desist letter and claimed they could not speak with the Boardleys.” Id. ¶ 69; see Apr. 30, 2012 Ltr. to Pls., 2d Am. Compl. Ex. S, ECF No. 33–3. Plaintiffs sent another letter to Defendants on April 9, 2012. Apr. 9, 2012 Ltr. to Defs., 2d Am. Compl. Ex. D, ECF No. 33–2. Defendants responded by letter on April 30, 2012, in which they itemized the total amount due on the account; Defendants also enclosed the latest escrow analysis, which dated back to October 15, 2010. Apr. 30, 2012 Ltr. to Pls. 4.

Meanwhile, on November 25, 2009, Defendants entered into a class action settlement agreement (“Settlement Agreement” or “Agreement”) pertaining to alleged discriminatory practices. Id. ¶ 57; Sett. Agr., Am. Compl. Ex. 1, ECF No. 22–1; Sett. Agr., Defs.' Mot. Ex. 2, ECF No. 24–3. The class may have included Plaintiffs, although Plaintiffs did not learn of the class action lawsuit or Settlement Agreement until January 2010. Am. Compl. ¶¶ 26, 58. Plaintiffs claim that Defendants, through their representatives, in phone calls with Plaintiffs spanning almost two years, “falsely denied that the Boardleys were eligible as class members and also denied the existence of the Class Action Lawsuit and the settlement agreement.”Id. ¶¶ 61–62.

On July 19, 2012, Plaintiffs “received a notice of intent to foreclose on their Home.” Am. Compl. ¶ 53. Thereafter, Plaintiffs filed a thirteen-count complaint, ECF No. 1, which, after Household moved to dismiss for failure to state a claim, ECF No. 11, they supplanted with a twelve-count Amended Complaint, alleging federal statutory and state common law violations, Am. Compl. ¶ 2.

II. MOTION FOR LEAVE TO AMEND

Whether to grant a motion for leave to amend is within this Court's discretion. Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). Where, as here, the deadline for amendment has not passed when the plaintiff files a second motion for leave to amend, Rule 15(a)(2) provides the standard for whether to grant the motion. See id.; Fed.R.Civ.P. 15(a)(2). Pursuant to Rule 15(a)(2), “[t]he court should freely give leave [to amend] when justice so requires.” The Court only should deny leave to amend if amendment “would prejudice the opposing party, reward bad faith on the part of the moving party, or ... amount to futility.” MTB Servs., Inc. v. Tuckman–Barbee Constr. Co., No. RDB–12–2109, 2013 WL 1819944, at *3 (D.Md. Apr. 30, 2013) ; see Foman, 371 U.S. at 182, 83 S.Ct. 227 (stating that the court also may deny leave if the plaintiff has amended more than once already without curing the deficiencies in the complaint); Laber v. Harvey, 438 F.3d 404, 426 (4th Cir.2006). Otherwise, “[i]f the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief,” and the plaintiff moves to amend, the Court should grant the motion so that the plaintiff has the “opportunity to test his claim on the merits.” Foman, 371 U.S. at 182, 83 S.Ct. 227.

Determining whether amendment would be futile does not involve “ ‘an...