Schaefer v. Indymac Mortg. Servs.

• Decision Date: 02 October 2013
• Docket Number: No. 12–2388.,12–2388.
• Parties: Mark E. SCHAEFER, Plaintiff, Appellant, v. INDYMAC MORTGAGE SERVICES, One West Bank, FSB, Federal National Mortgage Association, and Harmon Law Offices, P.C., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

731 F.3d 98

Mark E. SCHAEFER, Plaintiff, Appellant,

v.INDYMAC MORTGAGE SERVICES, One West Bank, FSB, Federal National Mortgage Association, and Harmon Law Offices, P.C., Defendants, Appellees.

No. 12–2388.

United States Court of Appeals, First Circuit.

Oct. 2, 2013.

Walter L. Maroney for appellant.

Thomas R. Lavallee, with whom Harmon Law Offices, P.C., was on brief, for appellees.

Before TORRUELLA, DYK,^* and KAYATTA, Circuit Judges.

DYK, Circuit Judge.

Plaintiff Mark E. Schaefer appeals from the decision of the United States District Court for the District of New Hampshire dismissing his suit against defendants IndyMac Mortgage Services; OneWest Bank, FSB; the Federal National Mortgage Association (“Fannie Mae”); and Harmon Law Offices, P.C. (“Harmon”). Schaefer's complaint sought an injunction barring his impending eviction; an order nullifying the March 2012 foreclosure sale of his home and requiring the defendants to allow him to modify or reinstate his mortgage; and monetary damages.

The district court found that Schaefer's claims were barred by the economic loss doctrine, and dismissed his complaint for failure to state a claim. See Schaefer v. IndyMac Mortg. Servs., No. 12–cv–159, 2012 WL 4929094, at *3–*6 (D.N.H. Oct. 16, 2012), reconsideration denied,2012 WL 6113973 (D.N.H. Dec. 10, 2012). We affirm.

I.

A.

The following facts, which are alleged in Schaefer's complaint, are accepted as true for purposes of the motion to dismiss. See Mass. Ret. Sys. v. CVS Caremark Corp., 716 F.3d 229, 231, 237 (1st Cir.2013).

In November 2007, Schaefer refinanced his home mortgage, and entered into a refinancing loan and mortgage agreement with IndyMac Bank, FSB. Under the terms of the loan and mortgage agreement, Schaefer was required to make regular monthly payments, and IndyMac Bank was allowed to accelerate the principal and to foreclose on the mortgage in the event that Schaefer fell behind on his payments.¹ The mortgage agreement also gave Schaefer the right to reinstate the mortgage before foreclosure upon payment of past due amounts, penalties, interest, and fees. In this litigation, Schaefer alleges that IndyMac or its successors subsequently undertook two additional duties beyond the scope of the contract that restricted their right to foreclose: (1) a duty to provide him with a reinstatement amount in the event that he fell into arrears, and (2) a duty to process an application for loan modification before foreclosure.

At some time after November 2007, IndyMac Bank assigned the mortgage to its corporate parent, OneWest Bank. The mortgage was serviced by IndyMac Mortgage Services, which, like IndyMac Bank, is now a subsidiary of OneWest Bank. We refer to all three entities—IndyMac Bank, IndyMac Mortgage Services, and OneWest Bank—as “OneWest.”

Schaefer defaulted on the loan in 2009, after which OneWest agreed to modify the loan.

In late 2011, Schaefer again fell behind on his mortgage payments. On January 19, 2012, Schaefer received a letter from OneWest (“the January 19 letter”) informing him that his loan account was “6 [p]ayments [p]ast [d]ue.” See Schaefer Br. addendum 27. The letter specified a “[t]otal [a]mount [d]ue” of $12,519.25, and indicated that after February 16, a “[f]ee [a]ssessment” would be added, bringing the total to $12,572.46. Id. The letter did not refer to either amount as a “reinstatement amount,” and did not include specific line items for “further accruing interest, costs, attorney's fees,” or other items that Schaefer alleges are “typically included as additions to an arrearage to establish an actual reinstatement amount.” Id. at 6–7. Around the same time, Schaefer downloaded from OneWest's website a “comprehensive mortgage modification application.” Id. at 6.

On January 30, Schaefer received a letter from Harmon, counsel to OneWest, informing him that Harmon had been “instructed to bring a foreclosure” because Schaefer was “in breach of the conditions of the loan documents.” See id. at 21. This letter stated that the loan was “hereby accelerated,” with “the entire balance” of $246,992.57 “due and payable forthwith and without further notice.” Id. The letter also informed Schaefer that “[e]ven though the note has been accelerated, [he] may still have the right to reinstate the loan.” Id. The letter did not include a reinstatement amount, but directed Schaefer to the firm's website or telephone number in order “to request a reinstatement [amount].” Id.

Schaefer requested a reinstatement amount from Harmon's website on February 6 and again on February 16. On each occasion, he received the following (seemingly automated) notice:

Your request has been received. We will forward the reinstatement ... information to you when it is obtained from your lender or servicer or the lender or servicer will send this information to you directly.

....

Unless there is an imminent sale, please wait 5 business days before following up with us on reinstatements.... You may follow up by contacting us at....

We will get back to you within 24 hours with a status of your pending request.

Id. at 24, 25. Schaefer alleges that neither Harmon nor OneWest ever contacted him with a reinstatement amount; Schaefer did not attempt to follow up on his requests for a reinstatement amount by contacting OneWest.

On February 14, Schaefer received a foreclosure notice from Harmon, informing him that a foreclosure sale would occur on March 12.²

Two days later, Schaefer faxed OneWest a completed application for a loan modification. He telephoned OneWest three days thereafter, and was told by a OneWest representative to resend part of his application, which he promptly did.

On February 23, a OneWest representative contacted Schaefer and asked for additional information regarding Schaefer's partner, Kathryn Russell, whom Schaefer had listed as a future contributor to his mortgage payments. Schaefer was instructed to fax Russell's financial information to (866) 235–2366 (“the '235 fax number”).

At about the same time that the OneWest representative instructed Schaefer to send Russell's information to the '235 fax number, Schaefer received a letter from a “customer contact manager” at OneWest named Elizabeth Milian (“the Milian letter”). Id. at 32. The Milian letter stated that Milian and her “team,” which included “loan modification underwriters,” would “be [Schaefer's] point of contact throughout this process,” and that “either [Milian], or a representative from [her] team, [would] be available to answer any questions [he] may have while [his] loan [was] being reviewed.” Id. The letter provided Milian's contact information, including a fax number: (866) 435–7643 (“the '435 fax number”). Id. The letter closed by expressing Milian's intent to “provide timely and accurate communication between [Schaefer] and [OneWest],” and by indicating that once he had submitted a “completed application,” Milian's team would “initiate the review of [his] loan.” Id.

On February 28, Schaefer faxed Russell's financial information to OneWest. Acting in reliance on the Milian letter, he sent the information to the '435 fax number, rather than to the '235 fax number previously provided by the OneWest representative. Several days later, Schaefer received a telephone call from a representative inquiring about the submission of the financial information. Schaefer explained that he had faxed the materials to the '435 number, and was told by the representative to disregard the Milian letter and resend the materials to the '235 number. He did so on March 9. Schaefer heard nothing further from OneWest.

The foreclosure sale took place, as scheduled, on March 12. On March 15, Fannie Mae notified Schaefer that it had purchased his house at the foreclosure sale,³ and eleven days later Harmon served him with an eviction notice.

B.

In early April 2012, Schaefer filed suit against OneWest, Fannie Mae (the current mortgage holder), and Harmon (OneWest's counsel) in New Hampshire state court. In his verified complaint, Schaefer alleged the facts recited above, and asserted two causes of action: negligence, arising from the defendants' failure to provide him a reinstatement amount and alleged mishandling of his modification application, and negligent misrepresentation, arising from the allegedly misleading Milian letter.⁴ As relief, Schaefer sought an injunction against the pending eviction, an order nullifying the foreclosure sale and requiring the defendants to allow him to modify or reinstate his mortgage, and compensatory damages for “the loss of his home of 28 years and any and all equity therein.” Id. at 11–13, 18. In other words, Schaefer's central claim was that OneWest and Fannie Mae could not exercise their right to foreclose under the mortgage contract.

The defendants removed the case to the United States District Court for the District of New Hampshire on the basis of diversity of citizenship. See28 U.S.C. §§ 1332, 1441. The defendants filed motions to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, arguing both that Schaefer's tort claims were barred by the economic loss doctrine and that the claims failed because the defendants had not breached any duties owed to Schaefer.

The district court granted the defendants' motions to dismiss. The court first rejected Schaefer's argument that the economic loss doctrine does not apply to claims seeking injunctive relief, holding that because the harm alleged in the complaint “is economic,” consisting of “the loss of his property and the equity he held in the property,” the doctrine applies without regard to the form of relief sought. Schaefer, 2012 WL 4929094, at *3 & n. 5. The court went on to find that none of the tort claims fell within any exception to the economic loss doctrine recognized by the New Hampshire courts. Id. at *4–5. The court dismissed the negligence claim, holding that “Schaefer [had not] alleged facts or developed an argument sufficient to establish...