Baker v. Bank of N.Y. Mellon (In re Baker)

• Decision Date: 27 September 2012
• Docket Number: No. 09-12997 t13,Adv. No. 11-1131,09-12997 t13
• Parties: In re: HOWARD G. BAKER and FANNIE M. BAKER, Debtors. HOWARD G. BAKER and FANNIE M. BAKER, Plaintiffs, v. THE BANK OF NEW YORK MELLON AS TRUSTEE, and VANDERBILT MORTGAGE AND FINANCE, INC., Defendants.
• Court: U.S. Bankruptcy Court — District of New Mexico

In re: HOWARD G. BAKER and FANNIE M. BAKER, Debtors.HOWARD G. BAKER and FANNIE M. BAKER, Plaintiffs,

v. THE BANK OF NEW YORK MELLON AS TRUSTEE,and VANDERBILT MORTGAGE AND FINANCE, INC., Defendants.

No. 09-12997 t13

Adv. No. 11-1131

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF NEW MEXICO

Entered on docket: September 27, 2012

MEMORANDUM OPINION ON DEFENDANTS'

MOTION FOR JUDGMENT ON THE PLEADINGS

This matter is before the Court on defendants' Motion for Judgment on the Pleadings, filed November 3, 2011 (the "Motion"), the plaintiffs' response thereto, filed January 2, 2012 (the "Response"), and the defendants' reply in support of the Motion, filed January 11, 2012 (the "Reply").

This is a core matter, and the Court may enter a final order. The Court received and reviewed briefs of the parties in support of their positions. The Court has considered the matter and has made an independent inquiry into applicable case law. Being sufficiently advised, theCourt hereby issues the following Memorandum Opinion. For the reasons set forth below, the Motion is denied.

PROCEDURAL HISTORY

Plaintiffs filed this Chapter 13 case on July 10, 2009, and filed this adversary proceeding on August 16, 2011. The pending case is the third bankruptcy case filed by the plaintiffs. Plaintiffs filed their first case, a Chapter 7 case, on April 4, 2005, and obtained a discharge on August 1, 2005. Plaintiffs then filed a Chapter 13 case on August 22, 2005, which was dismissed February 10, 2009.

PLAINTIFFS' ALLEGATIONS

In the adversary proceeding, plaintiffs seek money damages for alleged wrongs committed by defendants in connection with a mortgage on plaintiffs' mobile home and real property. For the purposes of ruling on the Motion only,¹ the Court assumes that the following (somewhat paraphrased) allegations in the plaintiffs' complaint are true:

1. On or about October 27, 1997, plaintiffs executed and delivered an $85,748.61 promissory note, at a 9% fixed rate of interest, to Oakwood Acceptance Corporation ("Oakwood").

2. As collateral for the note, plaintiffs executed a mortgage in favor of Oakwood on their real property and a 1998 Golden West mobile home.

3. The note and mortgage were assigned to defendant Bank of New York Mellon, as trustee, with defendant Vanderbilt Mortgage and Finance, Inc. ("VMF") as the servicer.

4. The note calls for monthly payments of $689.95. Plaintiffs made all payments as required.

5. On or about April 13, 2004, Oakwood notified plaintiffs in writing that the servicing of the loan had been transferred to VMF. Oakwood's letter also advised plaintiffs that VMF would provide them with a payment coupon book. The plaintiffs never received this coupon book.

6. On or about May 24, 2004, plaintiffs sent check #6050, in the amount of $720, to VMF in payment of the May 2004 installment due. VMF refused to accept the payment.

7. Thereafter the plaintiffs attempted to make payments to VMF by other means. The plaintiffs sent the May payment and additional payments, after being instructed to do so, by certified mail. For unknown reasons, these payments were also returned to the plaintiffs.

8. In August 2004, VMF filed a foreclosure action. VMF ultimately obtained a summary judgment against the plaintiffs and a foreclosure sale was set for August 23, 2005.

9. After the foreclosure was initiated, the plaintiffs filed the bankruptcy cases outlined above to save their home and to dispute the "arrearage" of the debt owed to VMF.

10. VMF has been ordered several times to provide a payment history to the plaintiffs, by both a state district court and this Court.

11. After numerous requests, some sort of itemized statement was provided to the plaintiffs on or about October 28, 2008 by defendants' counsel. Another transactional history was produced by VMF on June 29, 2009.

12. Neither of these loan histories dated back to the inception of the loan.

13. It was only after these loan histories were produced in 2008 and 2009 that the plaintiffs finally learned that the entire problem was a result of inaccurate information regarding the loan status provided to VMF by Oakwood upon transfer of the loan servicing.

14. VMF failed to investigate and properly correct the error.

15. As a result, the plaintiffs have expended an enormous amount of money, time, effort and mental anguish in their fight to maintain and keep their primary residence.

Based on the allegations, plaintiffs asserted claims against the defendants for breach of contract, including breach of the implied covenant of good faith and fair dealing; violation of New Mexico's Unfair Trade Practices Act; and intentional infliction of emotional distress.

THE MOTION AND THE RESPONSE

By the Motion, defendants seek to dismiss plaintiffs' claims pursuant to Fed.R.Civ.P. 12(c), arguing that the claims are barred by applicable statutes of limitation. Motion, p. 3. For example, plaintiffs' first claim is for breach of contract. Arguably, the first alleged breaches occurred in May, 2004. Under New Mexico's six year statute of limitations for claims based on written contracts, the statute could have run in May, 2010. The statutes for the other two claims could have run even sooner.

Plaintiffs respond to the Motion with three arguments. First, they assert that the applicable statute of limitations was tolled by 11 U.S.C. §108(a) until July 10, 2011 (i.e. two years after the petition date). They also assert that the "gap" between July 10, 2009 and the complaint filing date of August 16, 2012 was explicitly or tacitly agreed to by defendant, so the complaint was timely. Response, p. 1.

Second, plaintiffs argue that the applicable limitations periods were extended by the doctrine of equitable tolling. Response, pp. 1-3.

Finally, plaintiffs argue that the defendants are incorrect about when the limitations period began to run, and that the alleged wrongful conduct triggering the claims occurred much later than May, 2004, perhaps as late as October 28, 2008. Response, p. 4.

RULE 12(c) STANDARDS

The Motion is brought under Bankruptcy Rule 7012 and Fed.R.Civ.P. 12(c). Rule 12(c) provides: "After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings."

Rule 12(c) is designed to provide a means of disposing of cases when the material facts are not in dispute. See Kruzitis v. Okuma Mach. Tool, Inc., 40 F.3d 52, 54 (3rd Cir. 1994) ("Under Rule 12(c), we will not grant judgment on the pleadings unless the movant clearlyestablishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law.") (internal quotation marks omitted); Park Univ. Enterprises, Inc. v. Am. Cas. Co. of Reading, Pa., 442 F.3d 1239, 1244 (10th Cir. 2006) (a "[j]udgment on the pleadings should not be granted 'unless the moving party has clearly established that no material issue of fact remains to be resolved and the party is entitled to judgment as a matter of law.'"); Ramirez v. Wal-Mart Stores, Inc., 192 F.R.D. 303, 304 (D.N.M. 2000) ("Any party may move for judgment on the pleadings if no material facts are in dispute and the dispute can be resolved on both the pleadings and any facts of which the Court can take judicial notice."). See generally Selman v. Delta Airlines, 2008 WL 6022017, at *7 (D.N.M. 2008) (thorough discussion of general Rule 12(c) principles).

The same standards that govern a motion to dismiss under Rule 12(b)(6) also govern a motion for judgment on the pleadings under Rule 12(c). See Atl. Richfield Co. v. Farm Credit Bank, 226 F.3d 1138, 1160 (10th Cir. 2000). "The nature of a Rule 12(b)(6) motion tests the sufficiency of the allegations within the four corners of the complaint after taking those allegations as true." Mobley v. McCormick, 40 F.3d 337, 340 (10th Cir. 1994). The sufficiency of a complaint is a question of law, and when considering and addressing a Rule 12(b)(6) motion, a court must accept as true all well-pleaded factual allegations in the complaint, view those allegations in the light most favorable to the non-moving party, and draw all reasonable inferences in the plaintiff's favor. See Moore v. Guthrie, 438 F.3d 1036, 1039 (10th Cir. 2006); Hous. Auth. of Kaw Tribe v. City of Ponca City, 952 F.2d 1183, 1187 (10th Cir. 1991), cert denied, 504 U.S. 912 (1992)

Courts ruling on Rule 12(c) motions should "accept all facts pleaded by the non-moving party as true and grant all reasonable inferences from the pleadings in favor of the same." ParkUniv. Enterprises, Inc., 442 F.3d at 1244. The court must view the facts presented in the pleadings, and draw the inferences therefrom, in the light most favorable to the nonmoving party. Ramirez, 192 F.R.D. at 304. All of the nonmoving parties' allegations are deemed to be true, and all of the movants' contrary assertions are taken to be false. Nat'l Metro. Bank v. United States, 323 U.S. 454, 456-57, 65 S. Ct. 354, 89 L. Ed. 383 (1945); Ramirez v. Dep't of Corr., 222 F.3d 1238, 1240 (10th Cir. 2000); Freeman v. Dep't of Corr., 949 F.2d 360, 361 (10th Cir. 1991).

If the basis for a defendant's Rule 12(c) motion is that the claim is precluded by an applicable statute of limitations, but there are material disputed facts that could undermine the statute of limitations defense, the motion should be denied. See Accardi v. United States, 356 F. Supp. 218, 222 (S.D.N.Y. 1973) (Rule 12(c) motion denied because there were fact issues concerning statute of limitations defense); Tamayo v. Hamer, 256 F.R.D. 175 (N.D. Ill. 2009) (same); Southwestern Bell Telephone Co. v. Iverson, 2012 WL 652040 (N.D. Tex. 2012) (same).

DISCUSSION

1. Plaintiffs' §108(a) Argument. There are unresolved fact issues regarding defendants' statute of limitations defense and plaintiffs' assertion that 11 U.S.C. §108(a) tolled some or all of the limitations periods, making the claims timely. Section 108(a) provides:

If applicable nonbankruptcy law, an order entered in a nonbankruptcy proceeding, or an agreement

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