Cenatiempo v. Bank of Am., N.A.

• Decision Date: 26 November 2019
• Docket Number: SC 20150
• Citation: 219 A.3d 767,333 Conn. 769
• Court: Connecticut Supreme Court
• Parties: Carmine CENATIEMPO et al. v. BANK OF AMERICA, N.A.

333 Conn. 769

219 A.3d 767

Carmine CENATIEMPO et al.

v.BANK OF AMERICA, N.A.

SC 20150

Supreme Court of Connecticut.

Argued November 9, 2018

Officially released November 26, 2019

Jeffrey Gentes, with whom, on the brief, was David Lavery, for the appellants (plaintiffs).

Pierre-Yves Kolakowski, Greenwich, with whom was Zachary Bennett Grendi, New York, for the appellee (defendant).

Robinson, C.J., and Palmer, McDonald, D'Auria, Mullins, Kahn and Ecker, Js.

McDONALD, J.

This appeal requires us to determine whether allegations that a residential loan servicer engaged in systematic misrepresentations, delays and evasiveness over several years of postdefault loan modification negotiations with the mortgagors can suffice to state a claim for a violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., and a claim for negligence. The plaintiffs, mortgagors Sandra Cenatiempo and Carmine Cenatiempo, appeal from the judgment of the trial court, which granted the motion of the defendant loan servicer, Bank of America, N.A.,¹ to strike the plaintiffs' complaint. The plaintiffs' principal contention is that their allegations were legally sufficient to support their CUTPA and negligence claims because the defendant's pattern of misconduct violated clearly defined standards and policies reflected in Connecticut, federal, and national statutory and regulatory requirements² aimed at preventing foreclosure that were binding on the defendant and that this conduct caused them substantial financial and emotional injury. We agree with the plaintiffs that the alleged facts could support a claim under CUTPA. We disagree with the plaintiffs, however, that the alleged facts would support a claim of negligence. Accordingly, we reverse the judgment of the trial court insofar as it struck the CUTPA claim.

I

The plaintiffs' thirty-nine page complaint includes 179 paragraphs of allegations relating to the defendant's conduct, spanning approximately five years. Because much of the alleged conduct repeats throughout this time period, we recite the plaintiffs' factual allegations in a summary fashion and provide specific allegations where necessary as part of our analysis. We construe those facts in the manner most favorable to sustaining the legal sufficiency of the complaint. See, e.g., Bohan v. Last , 236 Conn. 670, 674, 674 A.2d 839 (1996).

In April, 2003, Carmine Cenatiempo executed a promissory note in exchange for a loan in the original principal amount of $550,000 secured by a mortgage, given by both plaintiffs, on property located in Weston. The plaintiffs began experiencing financial hardship in 2008 and, subsequently, were declared in default on their mortgage by the defendant. In October, 2009, the defendant, as the servicer³ of the loan, instituted a foreclosure action. The next two and one-half years were marked by the plaintiffs' repeated attempts to obtain a loan modification from the defendant under a federal program, discussed in part II of this opinion, known as HAMP—Home Affordable Modification Program. In response to the plaintiffs' efforts, the defendant failed to timely review completed applications, repeatedly requested updated and new financial information, erroneously denied applications based on purported failures to provide that requested documentation, erroneously denied applications based on investor restrictions that did not apply, and engaged in flawed evaluations of the applications. Concurrent with this pattern of conduct, the defendant failed to engage productively in the approximately eighteen mediation sessions conducted pursuant to the state's foreclosure mediation program.

The defendant's treatment of one such application is emblematic of the way it handled many of the plaintiffs' applications. In response to an April 17, 2010 letter from the defendant soliciting the plaintiffs for a HAMP modification, the plaintiffs submitted a modification application. Two weeks later, the defendant notified the plaintiffs that it did not have all of the documents it needed to review the application but did not explain what was missing. Rather, it listed all of the documents required for a HAMP application and gave the plaintiffs thirty days to respond. The plaintiffs sent additional documents, and the defendant confirmed receipt in August, 2010, and noted that its review could take forty-five days. Rather than undertaking its review, however, the defendant again requested additional documentation, which the plaintiffs provided. Thereafter, at the mediation session held for the purpose of discussing if the plaintiffs qualified for the HAMP modification in light of the submissions, the defendant for the first time claimed that the investor actually holding the loan did not allow modifications. At the plaintiffs' request, the defendant asked the investor about the purported restriction, and the investor indicated that no such restriction existed. Nevertheless, the defendant refused to substantively review the modification application, again returning to the familiar request for a new application. The plaintiffs submitted numerous applications during this period with similar results. Then, in February, 2012, the defendant withdrew the foreclosure action without explanation or apparent reason.

Despite withdrawing the action, the defendant remained unresponsive to the plaintiffs' continued efforts to obtain a loan modification. The defendant provided evasive or opaque answers to the plaintiffs' inquiries about the status of their modification applications, failed to return the plaintiffs' repeated phone calls or to follow up with the plaintiffs as promised. Moreover, when the plaintiffs were able to speak with the designated representatives, they provided inconsistent information concerning the plaintiffs' eligibility for a "settlement" and denied their applications without explanation.

In October, 2012, the defendant instituted a second foreclosure action. Following the plaintiffs' election to once again participate in the state's mediation program, the parties engaged in mediation. For the next three years, including while the parties were purportedly engaged in mediation, the defendant continued to mishandle the loan modification process in a fashion similarly characterized by delay, repeated requests for documents previously provided, opaque denials, and a general evasiveness and nonresponsiveness.

In 2015, the defendant finally provided the plaintiffs with a trial period modification plan under HAMP, which became a permanent loan modification when that period was successfully completed. The terms of the permanent modification, however, increased the principal owed by including the defendant's attorney's fees for mediation sessions, default fees, fees for commencing the second foreclosure action, and accrued interest in excess of what the plaintiffs would have paid if their initial loan modification application had been timely and properly evaluated.

Over the course of this five year odyssey leading to the permanent loan modification, the plaintiffs submitted at least nine separate workout applications. Several applications never resulted in decisions by the defendant, and some applications were pending before the defendant for hundreds of days—specifically, 263 days, 110 days, and 333 days. During the review process of one application, the defendant ignored thirteen of the plaintiffs' phone calls. Two applications were denied based on erroneous claims of investor restrictions, and one was also denied based on an incorrect net present value calculation for the property.⁴ These two applications were pending before the defendant for a combined 352 days. Two other applications were denied based on a feigned lack of documentation after thirty-seven and sixteen days. While one application was pending, the plaintiffs provided updated documentation seven times, and the defendant refused to speak with the plaintiffs' counsel and discouraged participation in mediation.

In June, 2016, the plaintiffs commenced the present action against the defendant, alleging, in count one, violations of CUTPA and, in count two, negligence. In count one, the plaintiffs alleged that the defendant committed unfair or deceptive acts in the conduct of trade or commerce by failing to exercise reasonable diligence in reviewing and processing the plaintiffs' loan modification applications, repeatedly requesting duplicative, unnecessary updates to documentation, causing an undue delay of at least four years in offering the plaintiffs a trial and permanent loan modification, repeatedly changing the personnel responsible for communicating with the plaintiffs, repeatedly sending the plaintiffs vague, confusing and contradictory letters, misrepresenting the applicability of investor restrictions, misrepresenting its ability to proceed with conducting a foreclosure sale, misrepresenting the status of the plaintiffs' loan modification applications, and discouraging the plaintiffs from participating in foreclosure mediation. The plaintiffs alleged that this conduct offended the public policy reflected in HAMP, the federal Real Estate Settlement Procedures Act of 1974 (RESPA); see 12 U.S.C. § 2601 et seq. (2012) ; a 2011 federal consent order; see In re Bank of America, N.A., Charlotte, NC , Enforcement Action No. 2011-48, Docket No. AA-EC-11-12, 2011 WL 6941540 (OCC April 13, 2011) (consent order between federal Office of the Comptroller of the Currency and Bank of America, N.A., Charlotte, NC); a national mortgage settlement to which the defendant was a party; United States v. Bank of America Corp. , United States District Court, Docket No. 1:12-cv-00361 (RMC), 2012 WL 1440437 (D.D.C. April 4, 2012) ; and this state's foreclosure mediation statutes. See General Statutes §§ 49-31k through 49-31o . The plaintiffs further alleged that the defendant's conduct caused them substantial injury because it led to a considerably...