Nicholas v. Green Tree Servicing, LLC

173 F.Supp.3d 250

Penny Nicholas, Plaintiff,

v.Green Tree Servicing, LLC, Defendant.

Civil Action No. TDC-15-1279

United States District Court, D. Maryland.

Signed March 25, 2016

Shikha Parikh, Paradigm Law PLC, Fairfax, VA, for Plaintiff.

Brian L. Moffet, Miles & Stockbridge, P.C., Baltimore, MD, for Defendant.

MEMORANDUM OPINION

THEODORE D. CHUANG, United States District Judge

Plaintiff Penny Nicholas has filed suit alleging violations of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601 et seq. (2012), and the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq. (2012) by Defendant Green Tree Servicing, LLC (“Green Tree”). Pending before the Court is Green Tree's Motion to Dismiss. The Motion is fully briefed and ripe for disposition. No hearing is necessary to resolve the issues. See D. Md. Local R. 105.6. For the reasons set forth below, the Motion is DENIED WITHOUT PREJUDICE.

BACKGROUND

The following facts are presented in the light most favorable to Nicholas, the nonmoving party. On November 30, 2007, Nicholas refinanced the mortgage on her residence at 15940 Alameda Drive in Bowie, Maryland (the “Property”). She executed a promissory note, secured by a deed of trust on the Property, for $403,750 in favor of Mortgage Network, Inc.¹ At some point, Bank of America became the servicer of Nicholas's loan. On June 11, 2013, Bank of America assigned the Deed of Trust to Green Tree, which then took over as her mortgage servicer. Nicholas claims that she did not receive notice of this change in servicers.

On August 20, 2014, a foreclosure action was initiated against Nicholas in the Circuit Court for Prince George's County, Maryland. During a mediation session, Nicholas and Green Tree informally agreed that Nicholas would submit a loan modification application to Green Tree by December 12, 2014. Nicholas submitted a complete application on December 12. Green Tree did not confirm receipt of the application package. Instead, it scheduled a foreclosure sale for January 29, 2015. Green Tree then refused to provide Nicholas with information about the status of her loan modification application. According to Nicholas, Green Tree's inaction left her with “no choice but to file [for] bankruptcy to stop the foreclosure sale of her home.” Compl. ¶ 26.

On January 26, 2015, Nicholas, through counsel, filed a petition for Chapter 7 bankruptcy in the United States Bankruptcy Court for the District of Maryland.² As required by 11 U.S.C. § 521(a)(1), Nicholas submitted a Schedule of Personal Property with the Petition. In the category of “[o]ther contingent and unliquidated claims of every nature,” Nicholas listed a “[c]laim against Bank of America for violations of RESPA.” Mot. Dismiss Ex. 3, Bankr. Petition at 7. She estimated the value of the claim to be $50,000, though she stated that she had not yet received an attorney's opinion of the claim. The Petition did not identify any other legal claims. It did, however, name Green Tree as a secured creditor with a first mortgage on the Property.

On February 25, 2015, Green Tree filed a Motion for Relief from the Automatic Stay in the bankruptcy case so that it could foreclose on the Property. On April 3, 2015, counsel for Nicholas in this case, Shikha Parikh, sent a letter to the Trustee of Nicholas's bankruptcy estate. Parikh, who did not represent Nicholas in the bankruptcy proceeding, wrote, “Ms. Nicholas has retained my services to pursue claims against her lender, Green Tree Servicing, LLC, for its violations of Federal and Maryland law related to mortgage servicing.” Pl.'s Opp'n to Mot. Dismiss (“Opp'n”) Ex. A, Parikh Letter. “I need to speak with you regarding the possibility of monetary damages,” Parikh continued, although she noted that the lawsuit's primary goal would be to secure a loan modification, rather than damages. Id. Parikh urged the Trustee to respond quickly because Green Tree had moved to lift the automatic stay and Parikh wanted to file suit before a foreclosure sale was scheduled. The record does not indicate whether Parikh and the Trustee had any further contact.

On April 17, 2015, the bankruptcy court granted Green Tree's motion and lifted the automatic stay. On April 21, 2015, the Trustee submitted a Report of No Distribution, indicating that the estate contained no property available for distribution to creditors. On May 6, 2015, the bankruptcy court issued an order discharging Nicholas. On May 12, 2015, the bankruptcy case was closed.

On May 4, 2015, Nicholas filed her Complaint in this Court. On June 16, 2015, Green Tree filed its Motion to Dismiss. On August 19, 2015, Nicholas filed an Opposition to the Motion. On September 8, 2015, Green Tree submitted a Reply to Nicholas's Opposition.

DISCUSSION

In the Complaint, Nicholas alleges that Green Tree violated RESPA by (1) failing to provide her with notice of the transfer of servicing from Bank of America to Green Tree; and (2) pursuing a foreclosure sale even though she had submitted a complete loss mitigation package more than 37 days before the foreclosure sale date. She also alleges that Green Tree failed to comply with the FDCPA by using abusive, deceptive, or unfair debt collection practices. 15 U.S.C. § 1692(a). In its Motion, Green Tree argues that Nicholas lacks standing to bring this action because her claims were never scheduled in the bankruptcy proceeding and therefore belong to the bankruptcy estate.

I. Legal Standard

Green Tree's standing argument challenges the Court's subject matter jurisdiction. See Taubman Realty Group Ltd. P'ship v. Mineta , 320 F.3d 475, 480–81 (4th Cir.2003) (analyzing a claim of lack of standing as a challenge to subject matter jurisdiction); Borlo v. Navy Fed. Credit Union , 458 B.R. 228, 230–31 (D.Md.2011) (analyzing a claim of lack of standing based on failure to schedule claims in a bankruptcy petition under Federal of Civil Procedure 12(b)(1)).

It is the plaintiff's burden to show that subject matter jurisdiction exists. Evans v. B.F. Perkins Co., Div. of Standex Int'l Corp. , 166 F.3d 642, 647 (4th Cir.1999). Federal Rule of Civil Procedure 12(b)(1) allows a defendant to move for dismissal when it believes that the plaintiff has failed to make that showing. When a defendant asserts that the plaintiff has failed to allege facts sufficient to establish subject matter jurisdiction, the allegations in the complaint are assumed to be true under the same standard as in a Rule 12(b)(6) motion, and “the motion must be denied if the complaint alleges sufficient facts to invoke subject matter jurisdiction.” Kerns v. United States , 585 F.3d 187, 192 (4th Cir.2009). When a defendant asserts that facts outside of the complaint deprive the court of jurisdiction, the Court “may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Velasco v. Gov't of Indonesia , 370 F.3d 392, 398 (4th Cir.2004) ; Kerns , 585 F.3d at 192. The court should grant a Rule 12(b)(1) motion based on a factual challenge to subject matter jurisdiction “only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law.” Evans , 166 F.3d at 647 (quoting Richmond, Fredericksburg & Potomac R. Co. v. United States , 945 F.2d 765, 768 (4th Cir.1991) ).

II. Standing

Filing a petition for Chapter 7 bankruptcy creates an estate comprised of the debtor's property, including “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. § 541(a)(1) (2012). “Such property interests include non-bankruptcy causes of action that arose out of events occurring prior to the filing of the bankruptcy petition.” Wilson v. Dollar Gen. Corp. , 717 F.3d 337, 342 (4th Cir.2013). “The bankruptcy trustee, as representative of the estate, has exclusive authority to use, sell, or lease estate property.” Miller v. Pac. Shore Funding , 287 B.R. 47, 50 (D.Md.2002) (citing 11 U.S.C. §§ 323(a), 363(b)(1) ). Therefore, if a cause of action accrued before the debtor filed for bankruptcy, “the trustee alone has standing to bring that claim.” Nat'l American Ins. Co. v. Ruppert Landscaping Co. , 187 F.3d 439, 441 (4th Cir.1999) ; Wilson , 717 F.3d at 342.

A debtor regains standing to bring claims that accrued pre-petition if those claims are abandoned. Nat'l American Ins. Co. , 187 F.3d at 441 ; Miller , 287 B.R. at 50–51. Property belonging to the bankruptcy estate can be abandoned in three ways: (1) by the trustee after notice and hearing; (2) by court order after notice and hearing; or (3) by operation of law if property listed on the debtor's schedules of property has not been administered when the bankruptcy case closes. 11 U.S.C. § 554. Debtors must disclose legal claims on a Schedule of Personal Property filed with the bankruptcy court. See id. § 521(a)(1)(B)(i). If the debtor's schedule does not disclose a cause of action that accrued pre-petition, that cause of action remains the property of the estate after the bankruptcy case is closed. Chartschlaa v. Nationwide Mut. Ins. Co. , 538 F.3d 116, 122 (2d Cir.2008) ; Stanley v. Sherwin – Williams Co. , 156 B.R. 25, 26–27 (W.D.Va.1993). The debtor lacks standing to bring an unscheduled, and thus never abandoned, pre-petition claim even if the debtor was not aware of a legal basis for bringing that claim at the time the bankruptcy petition was filed. Miller , 287 B.R. at 51.

Nicholas does not dispute that the claims asserted in this action accrued before she filed for bankruptcy. Therefore, if these claims were not abandoned, she lacks standing to assert them. Green Tree argues that Nicholas's bankruptcy petition did not schedule any claims against Green Tree. Nicholas contends that she did schedule the claims in this lawsuit; her schedule just misidentified the defendant as Bank of America. The Court must decide whether, by scheduling a RESPA claim against Bank of America, Nicholas scheduled the...