Howes v. SN Servicing Corporation

CourtDistrict Court, D. Maryland
DecidedJuly 13, 2023
Docket1:20-cv-00670
StatusUnknown

This text of Howes v. SN Servicing Corporation (Howes v. SN Servicing Corporation) is published on Counsel Stack Legal Research, covering District Court, D. Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Howes v. SN Servicing Corporation, (D. Md. 2023).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

JEFFREY V. HOWES, et. al.,

v. Civil No. CCB-20-670

SN SERVICING CORP., et. al.

MEMORANDUM After over a decade of litigating the pending foreclosure of their home up and down the state and federal courts, Jeffrey and Tonya Howes have now filed a third amended complaint in this court seeking a declaratory judgment that would nullify the foreclosure action against them in Maryland state court and requesting monetary and other relief for various consumer protection claims they levy against the defendants. The defendants filed three sets of motions to dismiss, each of which is fully briefed and none of which requires a hearing to resolve. See Local Rule 105.6. As explained below, issuing the Howeses’ requested declaratory judgment would be tantamount to enjoining a state court proceeding, and the court must therefore dismiss the claim for declaratory judgment for lack of jurisdiction. The remaining consumer protection claims either depend upon factual developments in the foreclosure proceeding, are too conclusory to proceed, or fail to provide a short and plain statement of a claim. Accordingly, the motions to dismiss will be granted in part and stayed in part. BACKGROUND Jeffrey and Tonya Howes have been locked in a dispute with their lenders and debt servicers over the status of their home mortgage loan for over a decade. The dispute stems from a $696,130 construction loan the Howeses executed in 2001, secured by a mortgage on their residence. Third Am. Compl. ¶ 10, ECF 77 (“TAC”). The loan agreement allowed the lender to assess late fees, reasonable attorneys’ fees, and other costs. See TAC Ex. D, ECF 77-4. After completing construction on their home in 2003, the Howeses modified and converted the loan to a standard residential mortgage note with a principal balance of $650,000. TAC ¶ 11. Over the

twenty years since, ownership interests in the note have ping-ponged between investors: it has purportedly been held at various times by Wells Fargo, U.S. Bank, Wilmington Savings Fund Society, American Mortgage Investment Partners, and others. See TAC ¶¶ 2-7, 12. These investors, and their loan servicers, have been in litigation with the Howeses over payments on the loan for what has now been more than half its lifespan. The litigation began in 2010 when the ostensible note holder at the time, Wells Fargo, filed the first foreclosure action against the Howeses. TAC ¶ 18. Wells Fargo ultimately withdrew the first suit before filing a second one in 2012. TAC ¶¶ 19, 25. In response to the second foreclosure action, the Howeses filed a voluntary petition for bankruptcy to prevent a foreclosure sale and subsequently initiated an adversary proceeding to

dispute claims in the bankruptcy case. See Howes v. Wells Fargo Bank, N.A., ELH-14-2814, 2015 WL 5836924, at *9 (D. Md. Sept. 30, 2015). The U.S. Bankruptcy Court dismissed the adversary action as “frivolous” and the Howeses appealed to the District Court for the District of Maryland. See id. at *11-15. Judge Hollander affirmed in a ninety-nine-page opinion and the Howeses again appealed, this time to the Fourth Circuit. See Howes v. Wells Fargo Bank, N.A., 676 F. App’x 207 (4th Cir. 2017). The Fourth Circuit also affirmed insofar as the lower court order dismissed the Howeses’ fraud claim and request for sanctions, but remanded the remaining claims for further proceedings to account for the factual development, revealed at oral argument, that the Howeses’ original mortgage note, previously believed lost, “had in fact been discovered and was currently being held by US Bank as trustee for a third-party real estate investment trust.” Id. Consistent with this mandate, Judge Hollander remanded the case to the U.S. Bankruptcy Court. Order, Howes v. Wells Fargo Bank, ELH-14-2814 (D. Md. Mar. 16, 2017), ECF 45. The Howeses’ responded by voluntarily dismissing the adversary proceeding and making a reinstatement payment, however,

forestalling the contemplated proceedings and closing the bankruptcy case. See Notice of Dismissal, Howes v. Wells Fargo Bank, RAG-13-510 (Bankr. Md. May 15, 2017), ECF 104; Paperless Entry, Howes v. Wells Fargo Bank, RAG-12-30614 (Bankr. Md. Sept. 8, 2017); TAC ¶¶ 40-41. After another year of payment disputes following the dismissal of the second foreclosure proceeding, American Mortgage Investment Partners, the new purported loan beneficiary, filed a third foreclosure action against the Howeses. See TAC ¶ 70. The Howeses filed a 138-page motion to stay and dismiss the foreclosure suit in response, see TAC Ex. B, ECF 77-2, and then brought a separate complaint in the Circuit Court for Howard County seeking declaratory, injunctive, and monetary relief on related claims, see Notice of Removal Ex. 1, ECF 1-2. The defendants removed

that follow-on suit to this court, see Notice of Removal, ECF 1, and the foreclosure action was stayed with the Howeses ordered to deposit monthly payments into the circuit court registry, see Order, Driscoll v. Howes, C-13-cv-18-805 (Md. Cir. Ct. Howard Cnty. July 3, 2019).1 Upon arriving in this court in March 2020, the Howeses filed a 135-page first amended complaint containing 470 paragraphs and sixty-nine exhibits and naming at least seven defendants: (1) Wells Fargo Bank, N.A.; (2) U.S. Bank, N.A.; (3) SN Servicing Corporation; (4) American Mortgage Investment Partners Management, LLC; (5) FCI Lender Services, Inc.; (6) Wilmington

1 The court takes judicial notice of the Maryland Judiciary Case Search website. See Tucker v. Specialized Loan Servicing, LLC, 83 F. Supp. 3d 635, 639 n.1 (D. Md. 2015). Savings Fund, FSB; and (7) Samuel I. White P.C. See First Am. Compl., ECF 8. The defendants moved to dismiss the amended complaint for failure to state a claim or for a more definite statement. See ECFs 20-22. After considering these motions, the court issued its first opinion in this case, a March 2021 Memorandum and Order. See Mem., ECF 36; Order, ECF

37. The order granted Wells Fargo’s motion to dismiss in full and granted in part and denied in part the remaining defendants’ motions to dismiss. See id. As to the surviving claims, however, the court ordered the plaintiffs to file an amended complaint providing a more definite statement of the case. See id. In doing so, the court instructed the plaintiffs to promptly file a second amended complaint limited to thirty-five pages. See Mem. at 18, ECF 36. Rather than immediately file the new complaint, however, the plaintiffs moved for reconsideration. ECF 38. The court denied the motion but granted the plaintiffs an extension of time to file a second amended complaint, ECF 45, which the plaintiffs ultimately filed in December 2021, ECF 50. The complaint levelled five claims at the various remaining defendants. The defendants moved to dismiss the second amended complaint for failure to state a claim, ECF 53,

and to strike various portions of it as irrelevant and unnecessarily scandalous, ECF 51. In April 2022, with the motion to dismiss and motion to strike fully briefed, the plaintiffs filed a second motion for reconsideration of the court’s initial opinion, ECF 69, this time asking the court to partially reconsider its initial decision in light of the Maryland Supreme Court’s decision in Chavis v. Blibaum & Associates, P.A., 264 A.3d 1254 (Md. 2021).2 The court recognized that Chavis did in fact represent a change in the controlling law governing the Howeses’ Maryland Consumer Debt Collection Act (“MCDCA”) and Maryland Consumer

2 At the time, what is now the Maryland Supreme Court was referred to as the Maryland Court of Appeals.

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Howes v. SN Servicing Corporation, Counsel Stack Legal Research, https://law.counselstack.com/opinion/howes-v-sn-servicing-corporation-mdd-2023.