Bradbury v. Deutsche Bank Nat'l Tr. Co.
| Decision Date | 10 April 2020 |
| Docket Number | C.A. No. 18-690WES |
| Parties | RAYMOND C. BRADBURY and HEATHER A. BRADBURY, Plaintiffs, v. DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee for GSAMP TRUST 2005-WMC1, and OCWEN LOAN SERVICING LLC, Defendants. |
| Court | U.S. District Court — District of Rhode Island |
Now pending before the Court is the motion to dismiss the complaint of Plaintiffs Raymond C. Bradbury and Heather A. Bradbury ("the Bradburys") filed by Defendants Deutsche Bank National Trust Company ("DB") and Ocwen Loan Servicing LLC ("Ocwen"). Based on Fed. R. Civ. P. 12(b)(6), Defendants argue that the Bradburys' claim - grounded in R.I. Gen. Laws § 34-27-3.2, which requires that some mortgagees must send a notice of mediation before foreclosing - fails because the mediation requirement is not applicable to the mortgage in issue, and that the remaining allegations fail to state a plausible claim for relief. Pursuant to Fed. R. Civ. P. 12(b)(1), Defendants also seek dismissal of claims that are now moot or lack any injury-in-fact because the Court does not have jurisdiction to entertain them.
Since June 9, 2005, the Bradburys have owned and resided at 61 Lafayette Street, West Warwick, Rhode Island. On that date, they entered into a mortgage based on a loan secured by their residence. ECF No. 1 ¶¶ 1-2 ( ) & ECF No. 1-1 ( ) ("Mortgage"). The "Lender" referenced in the Mortgage was WMC Mortgage Corporation ("WMC"), while Mortgage Electronic Registration Systems, Inc. ("MERS"), is named as the mortgagee, "acting solely as a nominee for Lender and Lender's successors and assigns." Ex. A at 2. The Mortgage is now owned by DB; during the relevant period, Ocwen was the loan servicer. See Compl. ¶¶ 9-10.
The Mortgage contains Paragraph 22, which addresses acceleration and remedies. Id. ¶ 17. Paragraph 22 references Rhode Island's Statutory Power of Sale pursuant to R.I. Gen. Laws § 34-11-22 ("Statutory Power of Sale").1 In relevant part, it states:
If the default is not cured on or before the date specified in the notice, Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the STATUTORY POWER OF SALE.
Compl. ¶ 17. The "Transfer of Rights in the Property" section of the Mortgage contains the sentence that sets out the "grant" to MERS as nominee for the Lender and the Lender's successors and assigns, but this sentence does not mention the Statutory Power of Sale, although it does secure the performance of all covenants and agreements under the Mortgage, including those in Paragraph 22. Id. ¶ 7. According to the complaint, a "standard Fannie Mae/Freddie Mac Uniform Instrument" form applicable to Rhode Island differs from the Mortgage in that it references the Statutory Power of Sale in two places, both in the "grant" sentence in the "Transfer of Rights in the Property" section and in Paragraph 22.2 Id. ¶ 5 & ECF No. 1-2 ("Ex. B"). Therefore, the complaint alleges that the "statutory power of sale was not granted in the mortgage." Compl. ¶ 19.
The complaint is silent regarding when and how the Bradburys found themselves in default of the Mortgage, nor does it mention that, from June 20, 2012 (the filing date of the petition), through December 6, 2017, when the final Order issued, they were in a Chapter 13 bankruptcy pending in the District of Rhode Island. In re Raymond C. Bradbury and Heather A. Bradbury, BK No. 12-12104 ("Chapter 13 Bankruptcy"). Skipping these facts, the pleading alleges that the Bradburys got a Notice of Default from Ocwen on April 30, 2018, which states that the "entire total amount past due, plus any amount(s) becoming due in the interim, must be received on or before 06/06/2018." Compl. Ex. D at 3 ("Notice of Default") (emphasis supplied). The Bradburys allege that this language is inconsistent with Paragraph 22, which requires that the notice of default must specify the "date . . . by which the default must be cured." Compl. ¶¶ 22-24.
Following the Notice of Default, on November 7, 2018, the Bradburys got a Notice of Intention to Foreclose on or after December 31, 2018. Compl. Ex. C. The Bradburys allege that they did not receive the Notice of Mediation required by R.I. Gen. Laws § 34-27-3.2(d) prior to this initiation by DB of the nonjudicial foreclosure process. Compl. ¶ 29. The pleading does not mention that, pursuant to R.I. Gen. Laws § 34-27-3.2(o)(2), the notice of mediation requirement is applicable only to mortgages with a "date of default" after May 16, 2013. See also R.I. Gen. Laws § 34-27-3.2(c)(1) (). The complaint contains no facts to support the proposition that R.I. Gen. Laws § 34-27-3.2 is applicable to the Mortgage and it mentions this deficiency (no Notice of Mediation) in passing as a reason why the then-pending foreclosure was improper; it does not assert any injury caused by the lack of a Notice of Mediation. Compl. ¶ 29.
With the foreclosure sale imminent, the Bradburys filed their complaint on December 21, 2018. Count I alleges that DB breached the Mortgage, inter alia,3 by scheduling a nonjudicial foreclosure sale for a Mortgage that does not properly invoke the Statutory Power of Sale by sending a Notice of Default that omits the date by which the default could be cured, and by failing to send the Bradburys a pre-foreclosure Notice of Mediation. Count II seeks to enjoin both Defendants from proceeding with the nonjudicial foreclosure. Count III is brought pursuant to the Truth in Lending Act ("TILA"), 15 U.S.C. § 1638, based on DB's failure to send the Bradburys monthly statements since April 19, 2018, as required by 12 C.F.R. § 1026.41. Count IV invokes the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692; it charges Ocwen with the conduct related to sending the wrongful Notice of Foreclosure and alleges that Ocwen contacted the Bradburys by phone a total of five times in April and May 2018 despite its awareness that they had engaged an attorney, as well as that these calls were made to compel payments under the false threat of foreclosure that was not legally permitted. Compl. ¶¶ 78-81.
The complaint was accompanied by a motion for preliminary injunction. ECF No. 2. The parties' many filings in connection with the motion to enjoin the then-pending foreclosure introduced additional facts that fill in holes in the complaint. Defendants filed the undisputed public record from the applicable land evidence file establishing the assignment of the Mortgage by MERS (acting as nominee for WMC) to DB and pointed out that the Bradburys were repeatedly advised of the availability of financial counseling services in various Notices sentprior to the scheduled foreclosure in 2018. ECF No. 5-1 at 2. Defendants also represented to the Court that "Ocwen's records identify a default date of September 1, 2012"; accordingly, pursuant to R.I. Gen. Laws § 34-27-3.2(o) (), they argued that the Notice of Mediation prerequisite to foreclosure is not applicable to the Bradburys' Mortgage. ECF No. 5 at 9. In response, Heather Bradbury filed an affidavit averring that the Bradburys' "last mortgage payment" was made on April 1, 2014; they supported this averment with an unauthenticated and unexplained "Payment History" that their attorney received from Ocwen. ECF No. 7 ¶ 4. Defendants countered with the undisputed public record of the Bradburys' Chapter 13 Bankruptcy, which confirms that the uncured date of default is September 1, 2012. ECF Nos. 12-1 to 12-5.
On February 26, 2019, the parties advised the District Court that the pending foreclosure had been canceled, thereby mooting the motion for preliminary injunction. Text Order of Feb. 26, 2019.
The next event relevant to the pending motion to dismiss occurred on June 19, 2019. On that day, on behalf of DB, the new loan servicer for the Mortgage sent a Notice of Mediation to each of the Bradburys. ECF No. 15-2 ("Notices of Mediation"). Consistent with the default date reflected in the Bankruptcy Court public record, these Notices each recite: "Date of Default: September 1, 2012." Id. at 2, 9. Approximately one week later, Defendants filed the pending motion to dismiss. In addition to arguing that the complaint fails to state a claim pursuant to Fed. R. Civ. P. 12(b)(6), it also relies on mootness based on the Notices of Mediation sent on June 19, 2019.
After the motion to dismiss was referred to me for report and recommendation, I held a hearing on January 10, 2020. At the hearing, the Bradburys acknowledged having received theJune 19, 2019, Notices of Mediation but announced that these Notices were legal nullities to which the Bradburys had not bothered to respond because Rhode Island's mortgage coordinator had taken the position that R.I. Gen. Laws § 34-27-3.2 is not applicable in light of the default date (September 1, 2012), which is reflected on the face of the Notices.4 Mindful of this development, the Court allowed Defendants additional time to supplement the argument regarding the Notice of Mediation requirement, including to determine whether to send a new Notice of Mediation with a revised default date or to rest on the default date that appears in the Bankruptcy Court public record. With a complaint that is silent on the date of default and an affidavit with a date of default that appears to be based on nothing more than an unauthenticated and unexplained Ocwen document, the Court directed the Bradburys to respond and allowed them additional time to do so, urging them particularly to address the uncured default date established by the Bankruptcy Court public record.
Defendants timely filed their supplemental memorandum on January 31, 2020. The date set for the Bradburys' filing (March 2, 2020) came and...
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