Wheeling v. Selene Finance, LP

Whitney Wheeling, et al. v. Selene Finance LP, et al. No. 2128, September Term 2017 Opinion by Kehoe, J. REAL PROPERTY – SELF HELP – THREATENING TO TAKE POSSESSION OF PROPERTY Real Property § 7-113(b)(2)(ii) permits a party to use non-judicial self-help to gain possession of residential real property if, and only if, the party is (1) a party claiming the right possession, as that term is defined in the statute; (2) reasonably believes the resident has abandoned or surrendered possession of the property; (3) has a basis for that reasonable belief based on a reasonable inquiry into the occupancy status of the property; (4) provides notice to the resident(s) of the property as provided in subsection (c) of the statute; and (5) receives no responsive communication to that notice within 15 days after the later of posting or mailing the notice as required by subsection (c) of the statute. Subsection (d) of Real Prop. § 7-113 provides a cause of action for violations of subsection (b), and allows a resident to recover (i) possession of the property, if no other person then resides in the property; (ii) actual damages; and (iii) reasonable attorney’s fees and costs. The remedies of subsection (d) are available to a resident only when the party seeking possession locks a protected person out of the property, intentionally terminates or diminishes utility, water and sewer and similar services to the property, or takes any other action which deprives a protected resident of actual possession of the property. “Any other action” could include posting an abandonment notice without first conducting the “reasonable inquiry” required by subsections (b) and (c) of § 7-113 if, as a result of abandonment notice, a protected person vacates the property. The operative complaint in this case alleged that defendants Selene Finance and Gina Gargeu did not conduct a reasonable inquiry into the occupancy status of the properties of the plaintiffs, Eric and Whitney Wheeling, and Joanne Rodriguez, before posting an abandonment notice.

Further, Selene Finance was not a “party claiming the right of possession” as to the Wheelings because it had not initiated foreclosure proceedings against the Wheelings’ property. However, neither the Wheelings nor Rodriguez were actually deprived of their property nor did the complaint allege that Selene Finance and Gargeu locked them out, terminated or diminished utility, water and sewer and similar services, or took any other action which deprived them of actual possession. The statutory cause of action of § 7-113(d) does not extend to them. MARYLAND CONSUMER PROTECTION ACT – PLEADING DAMAGES The Maryland Consumer Protection Act (“MCPA”) (codified in Commercial Law § 13-101 et seq.) prohibits unfair, abusive, and deceptive trade practices in the collection of consumer debts.

Com. Law § 13-303. The general rule for pleading damages, pursuant to Md. Rule 2-203(b) provides that “[e]ach averment of a pleading shall be simple, concise, and direct. No technical forms of pleadings are required.

A pleading shall contain only such statements of fact as may be necessary to show the pleader’s entitlement to relief or ground of defense.” However, the MCPA contains a heightened pleading requirement for claims made under that statute, in that damages for emotional distress must be accompanied by observable physical manifestations. See Sager v. Housing Commission of Anne Arundel County, 855 F. Supp. 2d 524 , 548–49 (D. Md. 2012). In their amended complaint, appellants alleged that they suffered “emotional damages and losses with physical manifestations such as fear (of losing their home), anxiety (with the threat of eviction through no fault of their own), [and] anger.” Additionally, appellants alleged that they “incurred legal fees to know her rights as a former owner of the property based on Selene’s and Gargeu’s deceptive eviction threats[.]” While these allegations may have satisfied the general pleading requirement of Md. Rule 2-203(b), they did sufficiently plead any observable physical manifestations of their emotional distress. The operative complaint did not allege that appellants manifested any observable physical manifestations of the emotional distress caused by Selene.

Rather, the allegations regarding emotional distress amount to nothing more than assertions that Selene’s actions upset them. The MPCA requires more in order for a complaint to survive a motion to dismiss for failure to state a cause of action. 2 Circuit Court for Baltimore City Case No. 24-C-17-000996 REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 2128 September Term, 2017 ____________________________________ WHITNEY WHEELING, ET AL. v. SELENE FINANCE LP, ET AL. ____________________________________ Kehoe, Berger, Reed, JJ. ____________________________________ Opinion by Kehoe, J. ____________________________________ Filed: May 29, 2020 Pursuant to Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic. Suzanne Johnson 2020-10-23 14:36-04:00 Suzanne C. Johnson, Clerk In 2013, the General Assembly enacted Md. Code, § 7-113 of the Real Property Article to restrict the use of self-help in certain kinds of residential evictions. Eric Wheeling, Whitney Wheeling, and Joanne Rodriguez filed suit in the Circuit Court for Baltimore City against Selene Finance LP and Gina Gargeu (doing business as Century 21 Downtown), alleging that they had violated § 7-113 in their efforts to obtain possession of two residential properties.

The Wheelings and Rodriguez also asserted that Selene’s actions violated the Maryland Consumer Protection Act (the “MCPA”), codified at Md. Code, § 13-101, et seq., of the Commercial Law Article. Selene and Gargeu filed motions to dismiss appellants’ amended complaint on the basis that it failed to state a cause of action. The circuit court granted both motions. Appellants noted this timely appeal and raise three issues, which we have rephrased: 1.

Did the circuit court err in ruling that appellants failed to plead a claim pursuant to the statutory cause of action established by Real Prop. § 7-113? 2. Did the circuit court err in ruling that appellants failed to plead a claim under the MCPA? 3. Did the circuit court err in ruling that appellants failed to adequately plead that they suffered actual injuries as a result of Selene’s and Gargeu’s actions? Although we see things a bit differently than did the circuit court, we will affirm its judgment.

The amended complaint alleges facts which, if proven, establish that Selene and Gargeu violated § 7-113. However, the cause of action established by the statute extends only to cases in which a defendant has locked the plaintiff out of the property, intentionally terminates or diminishes utility, water and sewer and similar services to the property, or takes any other action which deprives a resident of actual possession of the property. The amended complaint does not assert that any of these things happened in this case. Assuming for purposes of analysis that Selene’s actions violated the MCPA, the amended complaint fails to allege damages with the specificity required for private causes of action under that statute.

Background The Wheeling Claim Donna Poole owns a residential property in Anne Arundel County. At the time the events discussed herein took place, Eric and Whitney Wheeling, along with their children, were tenants on the property. We will refer to this property as the “Wheeling property.” Prior to the Wheelings’ tenancy, Poole purchased the property through a mortgage loan with CitiMortgage, Inc. When Poole defaulted on that loan in 2013, the loan was acquired by Christiana Trust, as trustee for Normandy Mortgage Loan Trust Series 2013-9. Selene Finance LP is a mortgage lender and servicer licensed to operate in Maryland.

Selene acted as Normandy Mortgage’s servicer for Poole’s mortgage. On May 15, 2015, Selene posted a notice on the Wheeling property in accordance with Real Prop. § 7-113(c). The notice stated: IMPORTANT NOTICE ABOUT EVICTION A PERSON WHO CLAIMS THE RIGHT TO POSSESS THIS PROPERTY BELIEVES THAT THIS PROPERTY IS ABANDONED. IF YOU ARE CURRENTLY RESIDING IN THE PROPERTY, YOU MUST IMMEDIATELY CONTACT: 2 Selene Finance NAME 9990 Richmond Avenue, Suite 400 S. Houston, TX 77042 ADDRESS (877) 768-3759 TELEPHONE 5/15/15 DATE OF THIS NOTICE IF YOU DO NOT CONTACT THE PERSON LISTED ABOVE WITHIN 15 DAYS AFTER THE DATE OF THIS NOTICE, THE PERSON CLAIMING POSSESSION MAY CONSIDER THE PROPERTY ABANDONED AND SEEK TO SECURE THE PROEPRTY, INCLUDING CHANGING THE LOCKS WITHOUT A COURT ORDER.

We will refer to this document as an “abandonment notice.” The amended complaint alleged that, after Mr. Wheeling read the abandonment notice, he telephoned Selene on May 19, 2015. A representative of Selene told him that foreclosure proceedings had been initiated against the property, that Selene understood the property was abandoned because it was not owner-occupied, and that the Wheelings had to vacate the property by June 1, 2015, or else Selene would change the locks. However, the representative refused to provide any details of the alleged foreclosure proceedings to Mr. Wheeling because he was not the owner of the property. Additionally, the amended complaint alleged that neither Selene nor Normandy Mortgage had initiated foreclosure proceedings against Poole when the abandonment notice was posted and, indeed, never did so.

According to the amended complaint, at the time that the abandonment notice was posted, Poole was negotiating with Selene for a short sale of the property and had been informed by Selene that her property was not subject to a foreclosure. 3 The amended complaint also alleged that, as a result of both the abandonment notice and the statements made by Selene’s representative, the Wheelings suffered emotional distress and incurred attorney’s fees by contacting an attorney to seek legal advice about their rights as tenants. The amended complaint did not allege that the Wheelings vacated the home as a result of Selene’s actions, nor did it allege that Selene took any steps other than posting the abandonment notice to force or induce them to move. The Rodriguez Claim The second property at issue in this appeal is located in Baltimore City and was owned by Joanne Rodriguez during the relevant period (the “Rodriguez property”). Rodriguez purchased the property in 2008 through a mortgage backed by a federal housing program.

After she was unable to make timely payments, the loan went into default and was eventually transferred to Sunset Mortgage Loan Trust, Series 2014-1. Selene, acting on behalf of Sunset Mortgage, filed a foreclosure action against the Rodriguez property. Sunset Mortgage was the successful bidder at the foreclosure auction and acquired the property for $42,000. The sale was ratified in September 2016.

In February 2017, Selene contracted with Century 21 Downtown, a real estate brokerage company operated by Gina Gargeu. Acting as Selene’s agent, Gargeu scheduled a sheriff’s eviction for the Rodriguez property on March 28, 2017. On February 10, the sheriff posted a notice on the property informing the occupants that they would be evicted pursuant to a court order on March 28, 2017. 4 A little less than two weeks later, on February 22, Gargeu posted an abandonment notice on the Rodriguez property that was identical to the notice posted on the Wheeling property, but for differences in names, addresses, and other incidental information. The amended complaint alleged that Rodriguez learned about the abandonment notice through her neighbor, Dermot Delude-Dix.

After seeing the abandonment notice, Delude-Dix called Gargeu and told her that Rodriguez still occupied the property. Rodriguez also alleged that she consulted an attorney to learn about her rights. Despite the scheduled eviction date and the abandonment notice, Rodriguez was never evicted from the property. The amended complaint did not allege that Rodriguez vacated the home as a result of Selene’s and Gargeu’s actions, or that Selene or Gargeu took any steps other than posting the abandonment notice to force or induce them to move.

The amended complaint alleged that Rodriguez, like the Wheelings, suffered emotional distress and incurred legal fees as a result of the posting of the abandonment notice. The Current Action On March 1, 2017, appellants filed a joint complaint in the Circuit Court for Baltimore City on behalf of themselves and a proposed class of persons similarly situated. On May 30, 2017, they filed an amended complaint. The amended complaint asserted two claims against Selene and Gargeu.

First, the complaint alleged that Selene and Gargeu violated Real Prop. § 7-113(b) by making threats of eviction without first making a reasonable inquiry as to whether the properties were, in fact, abandoned. Second, the complaint alleged that Selene and Gargeu violated the MCPA by threatening to take possession of their properties by way of the abandonment notices. Appellants asked the court to certify their 5 claims as a class action, to grant declaratory and injunctive relief, and to award them monetary damages and attorneys’ fees.1 Gargeu and Selene filed motions to dismiss the amended complaint for failure to state a cause of action. On August 8, 2017, the circuit court held a hearing on the motions to dismiss.

Selene and Gargeu argued that: (1) they were not liable under Real Prop. § 7-113 because the abandonment notices did not constitute a “threat” as defined in that statute; (2) the MCPA did not apply in this case because (a) the appellants are not “consumers” as defined in the MCPA, and (b) posting an abandonment notice on a residence is not a collection activity within the provisions of the MCPA; (3) Selene, as a licensed mortgage lender, was exempt from the provisions of the MCPA; and (4) appellants did not sufficiently plead damages in their complaint and could not show any accompanying physical manifestations of that distress. Appellants responded that § 7-113 requires a party who posts an abandonment notice to first make a reasonable inquiry as to the occupancy status of the property, and that Selene and Gargeu failed to do this before posting the abandonment notices. Appellants pointed out that the amended complaint alleged that both properties were inhabited at the time the 1 Appellants also filed a motion for partial summary judgment, requesting that the court find that “the threats of eviction on behalf of an unlicensed collection agency is not permitted under Maryland law.” A hearing on that motion was held on July 19, 2017. At the conclusion of the hearing, the motions court held the case sub curia to reserve on ruling until after the hearing on the motions to dismiss.

The motions were rendered moot when the circuit court granted the motions to dismiss the amended complaint. 6 abandonment notices were posted. For example, Rodriguez appeared at the foreclosure proceedings concerning her property, and so, as a result, Selene was on notice that the property was, in fact, occupied. The alleged failures by Selene and Gargeu to conduct reasonable inquiries, appellants argued, caused damages, and the case should go to the trier of fact to resolve these issues. Moreover, appellants asserted that Selene did not have a basis for posting the abandonment notice to the Wheeling property under Real Prop. § 7- 113 because it did not qualify as a “party claiming possession” as defined in subsection (a) of that statute.

Appellants also elaborated on their claim for damages for emotional distress. They asserted that the MCPA allows for non-economic damages, and their counsel told the court that: [W]e’ve pled physical manifestations, what’s required under Maryland law is reasonable objectifiable information. And we’ve provided multiple characteristics of the physical manifestation. At this stage, that’s all that’s sufficient for notice pleading for actual damages.

We’ve also pled that each Plaintiff’s incurred expense to make legal inquiries as to what their rights were. I mean that’s an economic damage. . . . But in any event, we’ve pled proper damages. On December 4, 2017, the circuit court granted both motions to dismiss without leave to amend.

The court concluded that the abandonment notices posted by Selene and Gargeu conformed with the provisions of Real Prop. § 7-113. As to Selene, the court concluded that the amended complaint failed to allege sufficient facts which state a claim upon which relief can be granted because appellants were not evicted or otherwise deprived of their property, and so did not suffer an objectively identifiable actual injury. As to Gargeu, the 7 court concluded the MCPA did not apply to her because Com. Law § 13-104 exempts real estate brokers from the provisions of the MCPA.2 This timely appeal followed.

Analysis Under Md. Rule 2-322(b)(2), the court may dismiss a complaint if it fails “to state a claim upon which relief can be granted.” A motion to dismiss is properly granted if the factual allegations in a complaint, if proven, would not provide a legally sufficient basis for the cause of action asserted in the complaint. Md. Rule 2-322(b)(2). “Dismissal is proper only if the alleged facts and permissible inferences, so viewed, would, if proven, 2 The court’s ruling as to the MCPA’s application to Gargeu was superfluous. The MCPA claim in the amended complaint explicitly stated that it applied only to Selene. In their brief submitted to this Court, appellants’ MCPA arguments are again directed only at Selene.

For reasons that aren’t clear from the record, the circuit court nonetheless stated in its order dismissing appellants’ MCPA claims that the MCPA does not apply to Gargeu by virtue of her profession as a real estate broker. See Com. Law § 13-104(1) (“This title does not apply to . . . [t]he professional services of a real estate broker, associate real estate broker, or real estate salesperson . . . .”). To the extent that appellants do assert an MCPA claim against Gargeu, the court’s ruling has not been challenged on appeal.

With that said, the circuit court’s application of the categorial exemption to real estate brokers from the MCPA without further analysis may be problematic under the facts alleged in the amended complaint. See Andrews & Lawrence Professional Services, LLC v. Mills, 467 Md. 126, 156 (2020) (In deciding whether Com. Law § 13-104(1)’s exemption to “lawyers” applied to the activities of the law firm at issue in the case, the Court distinguished between services that require a professional license, which are exempt, from those that were performed by the law firm but may also “be performed by any collection agency,” which are not.) For the purposes of our analysis, we need not address whether a license as a real estate broker or associate broker is required to post an abandonment notice. 8 nonetheless fail to afford relief to the plaintiff.” Allied Investment Corp. v. Jasen, 354 Md. 547, 555 (1999) (cleaned up). When reviewing a motion to dismiss a complaint for failure to state a cause of action, we “assume the truth of all well-pleaded facts and allegations in the complaint, as well as all inferences that can reasonably be drawn from them.” O’Brien & Gere Engineers, Inc. v. City of Salisbury, 447 Md. 394, 404 (2016) (internal quotation marks omitted).

Further, we view all well-pleaded facts and the inferences from those facts in a light most favorable to the plaintiff. Davis v. Frostburg Facility Operations, LLC, 457 Md. 275, 284 (2018). 1. The Real Prop. § 7-113 Claims A. The Statute Appellants assert that Selene and Gargeu violated the provisions of Real Prop. § 7-113 and that the cause of action established in subsection (d) of the statute provides them with a remedy. We agree, but only in part.

As we will explain, the allegations in the amended complaint, if proven, show that Selene and Gargeu violated § 7-113. But the scope of the statutory remedy is not as broad as appellants contend. Our analysis starts with the statute. Section 7-113 states, in pertinent part (emphasis added): (a)(1) In this section the following words have the meanings indicated.

(2) “Party claiming the right to possession” means a person or successor to any person who: (i) Does not have actual possession of a residential property; and (ii) Has or claims to have a legal right to possession of the residential property: 1. By the terms of a contract or foreclosure sale; 9 * * * (3)(i) “Protected resident” means an owner or former owner in actual possession of residential property. (ii) “Protected resident” includes a grantee, tenant, subtenant, or other person in actual possession by, through, or under an owner or former owner of residential property. * * * (5) “Threaten to take possession” means using words or actions intended to convince a reasonable person that a party claiming the right to possession intends to take imminent possession of residential property in violation of this section. * * * (b)(1) Except as provided in paragraph (2) of this subsection, a party claiming the right to possession may not take possession or threaten to take possession of residential property from a protected resident by: (i) Locking the resident out of the residential property; (ii) Engaging in willful diminution of services to the protected resident; or (iii) Taking any other action that deprives the protected resident of actual possession. (2)(i) Except as provided in subparagraph (ii) of this paragraph, a party claiming the right to possession may take possession of residential property from a protected resident only in accordance with a writ of possession issued by a court and executed by a sheriff or constable.

(ii) A party claiming the right to possession of residential property may use nonjudicial self-help to take possession of the property, if the party: 1. Reasonably believes the protected resident has abandoned or surrendered possession of the property based on a reasonable inquiry into the occupancy status of the property; 2. Provides notice as provided in subsection (c) of this section; and 3. Receives no responsive communication to that notice within 15 days after the later of posting or mailing the notice as required by subsection (c) of this section.

(c)(1) If a party claiming the right to possession of residential property reasonably believes, based on a reasonable inquiry into the occupancy status of the property, that all protected residents have abandoned or surrendered possession of the residential property, the party claiming the right to 10 possession may post on the front door of the residential property and mail by first-class mail addressed to “all occupants” at the address of the residential property a written notice in substantially the following form: “IMPORTANT NOTICE ABOUT EVICTION A person who claims the right to possess this property believes that this property is abandoned. If you are currently residing in the property, you must immediately contact: ______________________________ Name ______________________________ Address ______________________________ Telephone ______________________________ Date of this notice If you do not contact the person listed above within 15 days after the date of this notice, the person claiming possession may consider the property abandoned and seek to secure the property, including changing the locks without a court order.”. * * * (d)(1) If in any proceeding the court finds that a party claiming the right to possession violated subsection (b) of this section, the protected resident may recover: (i) Possession of the property, if no other person then resides in the property; (ii) Actual damages; and (iii) Reasonable attorney’s fees and costs. (2) The remedies set forth in this subsection are not exclusive. (e) This section does not apply if the parties are governed by Title 8, Subtitle 2, or Title 8A of this article.[3] Real Prop. § 7-113 was enacted by 2013 Maryland Laws Ch. 514, § 1 (S.B. 642, eff. 3 Title 8, Subtitle 2 of the Real Property Article pertains to residential leases.

Title 8A is concerned with leases in mobile home parks. 11 June 1, 2013).4 The legislative history indicates that the statute was a direct response to the holding of the Court of Appeals in Nickens v. Mount Vernon Realty Group, 429 Md. 53 (2012). See Fiscal and Policy Note for S.B. 642 (2013 Session). The property at issue in Nickens was sold in a foreclosure sale. 429 Md. at 59 . The purchaser hired Mount Vernon to act as the property manager for the property.

Id. In that capacity, Mount Vernon told Nickens, who was living on the property, that it intended to enter the property and remove his possessions unless he moved out. Id. Nickens did not vacate, and, while he was away, Mount Vernon 4 The title to Chapter 514 states that the statute was enacted: for the purpose of prohibiting a party claiming the right to possession from taking possession or threatening to take possession of residential property from a certain protected resident in a certain manner[, and] prohibiting a landlord from taking possession or threatening to take possession of a dwelling unit from a tenant or tenant holding over in a certain manner . . . .

Although uncodified, “the title of an act is relevant to ascertainment of its intent and purpose[.]” Yonga v. State, 221 Md. App. 45, 63 (2015), aff’d, 446 Md. 183 (2016), superseded by statute as noted in State v. Smith, 244 Md. App. 354 , 376 n.5 (2020) (quoting MTA v Baltimore County Revenue Auth., 267 Md. 687 , 695–96 (1973). The Maryland Constitution requires that every law enacted by the General Assembly include a descriptive title. Maryland Constitution Art. III, § 29. Among the functions of a title are advising the legislature and the public of the subject matter and the purpose of the proposed legislation.

Dan Friedman, The Maryland State Constitution A Reference Guide 106–10 (2006) (citing, among other cases, Originz v. James, 309 Md. 381, 398 (1987) and Allied Am. Mutual Fire Ins. Co. v. Commissioner of Motor Vehicles, 219 Md. 607 , 614–15 (1959)). See also Commissioners of Carroll County v. Stephans, 286 Md. 384, 395 (1979), abrogated on other grounds by Maryland Overpak Corp. v. Mayor and City Council of Baltimore, 395 Md. 16 (2006) (The purpose of Article III § 29 “is to inform the members of the General Assembly and the public of the nature of the proposed legislation.”) 12 entered the property, changed the locks, disposed of Nickens’s possessions, and posted a “No Trespassing” sign.

Id. at 59–60. The Court of Appeals affirmed Mount Vernon’s use of the common-law remedy of self-help and held that doing so was reasonable in light of the circumstances. Id. at 62. Tracing the origins of the self-help remedy and its development in Maryland, the Court reasoned that “even if no notice was given, we hold that notice is not required in order to exercise peaceable self-help” because doing so “is entirely compatible with a desire to avoid a confrontation possibly leading to violence.” Id. at 72–73.

In response to the Court’s holding in Nickens, the General Assembly passed § 7-113 which significantly limited the scope of self-help in situations involving residential properties. Under § 7-113, the general rule is that “possession may only be taken from a protected resident in accordance with a writ of possession issued by a court and executed by a sheriff or constable . . . .” Fiscal and Policy Note for S.B. 642 (2013 Session). However, the statute contains an exception: a party seeking possession of a property that appears to be abandoned may do so after reasonable inquiry and posting the prescribed notice. B. The Parties’ Contentions Against this backdrop, appellants present two arguments as to why the circuit court erred in dismissing their claim under Real Prop. § 7-113.

Their arguments begin with the 13 premise that both the Wheelings and Rodriguez are “protected residents” for the purposes of § 7-113. Selene and Gargeu did not assert to the contrary.5 Appellants claim that Selene does not qualify as a “party claiming possession” as that term is defined in § 7-113(a)(2) as to the Wheeling property because neither Selene nor Normandy Mortgage filed a foreclosure action, obtained a court order granting possession, or had a contractual right to possess the property. For that reason, Selene had no right to utilize the self-help provisions of § 7-113 to take possession of the Wheeling property. Moreover, appellants argue that Selene and Gargeu violated Real Prop. § 7-113(b) by posting the abandonment notices without first conducting reasonable inquiries as to whether either property was occupied.

According to appellants’ reading of the statute, conducting a reasonable inquiry into the occupancy status of a residential property is a prerequisite to posting an abandonment notice, and the failure of a party claiming the right of possession to do so gives rise to a cause of action under subsection (d). Appellants point to factual allegations in their complaint showing that no reasonable inquiry was conducted, such