Greer v. Trinity Fin. Servs.

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RANDOLPH M. GREER, Plaintiff, v. TRINITY FINANCIAL SERVICES, LLC, Defendant.

CIVIL No. 20-00972-JMC

United States District Court, D. Maryland

June 14, 2022

MEMORANDUM OPINION

J Mark Coulson, United States Magistrate Judge.

Plaintiff Randolph Greer brings this debt collection action against his mortgage servicer, Defendant Trinity Financial Services, LLC (“Defendant” or “Trinity”), for alleged violations of the Fair Debt Collection Practices Act 15 U.S.C. §1692 et seq. (“FDCPA”) and related state law claims. (ECF No. 48). Presently before the Court is Defendant's Motion for Partial Summary Judgment (ECF No. 77) which seeks summary judgment on Plaintiff's federal law claim, and corresponding dismissal of the state law claims for lack of jurisdiction. The Court has reviewed the briefings (ECF Nos. 77, 78, 79, 81, 82) and deems no hearing is necessary. See Loc. R. 105.6 (D. Md 2021). For the reasons set forth below, Defendant's Motion for Partial Summary Judgment is GRANTED, and Plaintiff's remaining state law claims are DISMISSED for lack of jurisdiction.

I. BACKGROUND

Plaintiff obtained title of real property located in Baltimore, Maryland, on June 3, 1993. (ECF No. 48, Ex. 2). The deed for this property was recorded in the Circuit Court for Baltimore City. Id. On May 2, 2007, Plaintiff obtained an equity-line mortgage loan on his property in the amount of $148, 000 and executed a deed of trust in favor of PNC Bank, National Association (“PNC”) on June 9, 2007, which was recorded shortly thereafter in the Circuit Court for Baltimore City. (ECF No. 79, Ex. 3). In the agreement between Plaintiff and PNC, provision 36 expressly allowed PNC to assign its rights under the agreement at any time without Plaintiff's consent. (ECF No. 79, Ex. 3 at 6). The agreement stated that the person to whom PNC assigned the agreement would be entitled to all of the rights under the agreement. Id.

At some point between 2007 and 2018, PNC assigned its rights and interests in the loan to U.S. Mortgage Resolution, LLC (“US Mortgage”), as evidenced by an undated allonge to the original loan documents. (ECF No. 79, Ex. 3 at 7). U.S. Mortgage sold its ownership interests to Trinity on July 30, 2018, which was memorialized in a loan purchase agreement (“Purchase Contract”). (ECF No. 79, Ex. 1). On October 2, 2018, PNC assigned its deed of trust to U.S. Mortgage, and subsequently filed that assignment in the Circuit Court for Baltimore City on October 23, 2018. (ECF No. 48, Ex. 4).

A “Notice of Sale of Ownership of Mortgage Loan”, addressed to Plaintiff and dated May 28, 2019, explained that Trinity was the new creditor of Plaintiff's loan as of July 30, 2018. (ECF No. 79, Ex. 2). Land Home Financial Services serviced the loan on Trinity's behalf until August 31, 2019. (ECF No. 77, Ex. 3 at 5). On that same date, Trinity became both the servicer and holder (owner) of the loan. Id.

Plaintiff was in default of his loan and received an “Acceleration Warning” letter dated October 9, 2019, from Brock & Scott PLLC advising Plaintiff that Brock & Scott had received a foreclosure referral from Trinity. (ECF No. 48, Ex. 5). That letter stated that Plaintiff could cure the default by paying the past due amount to Trinity. Id. In another letter with that same date, Brock & Scott informed Plaintiff of the total amount due to Trinity. (ECF No. 48, Ex. 6).

On January 21, 2020, PNC executed a “Corrective Assignment of Deed of Trust” (“Lost Note”) assigning interest in the deed to U.S. Mortgage. (ECF No. 48, Ex. 11). Subsequently, on April 21, 2020, U.S. Mortgage assigned its rights in the deed to Trinity. (ECF No. 48, Ex. 12).

Plaintiff brought suit against Trinity in this Court on April 15, 2020, and has since amended his Complaint. (ECF Nos. 1, 48). Plaintiff's Amended Complaint alleges Trinity violated the FDCPA and related state statutes. (ECF No. 48). Plaintiff asserts that, through sending the October 9, 2019, letters, Trinity attempted to collect a debt that it was not legally permitted to collect because Trinity did not possess the assignment of the deed of trust for the loan. (ECF No. 48). This Court holds subject-matter jurisdiction over Plaintiff's federal law claim, and supplemental jurisdiction over the related state law claims. 28 U.S.C. §§ 1331, 1367.

Defendant filed the instant Motion for Partial Summary Judgment (ECF No. 77) seeking summary judgment as to Plaintiff's federal law claim, and dismissal of Plaintiff's state law claims for lack of jurisdiction. Defendant argues that it is not subject to the provisions of the FDCPA for attempting to collect a debt that it owned. (ECF No. 77). Trinity's main argument is that it owned Plaintiff's loan at the date of execution of the loan purchase agreement with U.S. Mortgage. Id. Importantly, Trinity argues that it did not need to have possession of the assignment of deed of trust, or a lost note affidavit in place of the deed, to exercise its ownership right in accelerating Plaintiff's loan. (ECF Nos. 77, 79). Plaintiff argues that because Defendant did not have physical possession of the “Lost Note” at the time the letters of acceleration and foreclosure were sent, Defendant was not the lawful owner of the loan and therefore violated various laws. (ECF No. 78).

As explained more fully below, the Court concludes that possession of the note was not required for Defendant to exercise its ownership rights in the loan. As such, Trinity's ownership rights became effective on the date of the loan purchase agreement with U.S. Mortgage. Because of this, at the time Plaintiff received letters from Brock & Scott, Trinity was the owner of the loan, and is therefore not subject to the provisions of the FDCPA. Accordingly, Defendant is granted summary judgment as to the federal law claim. Additionally, this Court declines to continue to exercise supplemental jurisdiction over the state law claims given the judgment against Plaintiff in the anchoring federal law claim. Consequently, the remainder of Plaintiff's Amended Complaint is dismissed for lack of jurisdiction. Ultimately, and for the reasons explained more fully below, Defendant's Motion for Partial Summary Judgment is GRANTED.

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 56(a) requires the Court to “grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” A dispute as to a material fact “is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” J.E. Dunn Const. Co. v. S.R.P. Dev. Ltd. P'ship, 115 F.Supp.3d 593, 600 (D. Md. 2015) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A nonmoving party “opposing a properly supported motion for summary judgment ‘may not rest upon the mere allegations or denials of [his] pleadings,' but rather must ‘set forth specific facts showing that there is a genuine issue for trial.'” Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003) (quoting Fed.R.Civ.P. 56(e)).

The Court is “required to view the facts and draw reasonable inferences in the light most favorable to” the nonmoving party. Iko v. Shreve, 535 F.3d 225, 230 (4th Cir. 2008) (citing Scott v. Harris, 550 U.S. 372, 377 (2007)). However, the Court must also “abide by the ‘affirmative obligation of the trial judge to prevent factually unsupported claims and defenses from proceeding to trial.'” Heckman v. Ryder Truck Rental, Inc., 962 F.Supp.2d 792, 799-800 (D. Md. 2013) (quoting Drewitt v. Pratt, 999 F.2d 774, 778-79 (4th Cir. 1993)). Consequently, a party cannot create a genuine dispute of material fact through mere speculation or compilation of inferences. See Deans v. CSX Transp., Inc., 152 F.3d 326, 330-31 (4th Cir. 1998).

III. ANALYSIS

a. Debt Collector under the FDCPA

The FDCPA aims “to eliminate abusive debt collection practices by debt collectors” through various regulations that set forth the appropriate means by which a debt collector may collect debt. 15 U.S.C. § 1692. The statutory scheme also enumerates those acts which are expressly prohibited. Id. In determining whether the FDCPA has been violated, the following elements must be proven: “(1) [a] [plaintiff] has been the object of collection activity arising from consumer debt, (2) the defendant is a debt collector as defined by the FDCPA, and (3) the defendant has engaged in an act or omission prohibited by the FDCPA.” Webber v. Maryland, 2017 WL 86015, at *4 (D. Md. Jan. 10, 2017).

Here, the central argument and threshold determination in assessing a potential FDCPA violation is whether Trinity is properly categorized as a “debt collector” under the statute. Henson v. Santander Consumer USA, Inc., 817 F.3d 131, 140 (4th Cir. 2016), aff'd, 137 S.Ct. 1718, 198 L.Ed.2d 177 (2017) (“when a plaintiff claims that a defendant violated § 1692e (prohibiting a ‘debt collector' from using ‘any false, deceptive, or misleading misrepresentation or means in connection with the collection of any debt'), he must prove that the defendant was acting as a debt collector, as defined by § 1692a(6), when it engaged in misrepresentations in connection with the collection of debt from the plaintiff”).

The FDCPA “defines a debt collector as (1) a person whose principal purpose is to collect debts; (2) a person who regularly collects debts owed to another; or (3) a person who collects its own debts, using a name other than its own as if it were a debt collector.” Id. (explaining 15 U.S.C. § 1692a(6)). Importantly, and by definition, a creditor is not a debt collector. Henson, 817 F.3d at 136. “The material distinction between a debt collector and a creditor ... is therefore whether a ...