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

• Decision Date: 28 September 2020
• Docket Number: C.A. No. 1:19-CV-00005-MSM-PAS
• Parties: DOLORES CEPEDA, Plaintiff, v. BANK OF AMERICA, N.A.; FAY SERVICING, LLC; and WILMINGTON TRUST NATIONAL ASSOCIATION SOLELY AS TRUSTEE FOR THE MFRA TRUST 2014-2, Defendants.
• Court: U.S. District Court — District of Rhode Island

DOLORES CEPEDA, Plaintiff, v. BANK OF AMERICA, N.A.; FAY SERVICING, LLC; and WILMINGTON TRUST NATIONAL

ASSOCIATION SOLELY AS TRUSTEE FOR THE MFRA TRUST 2014-2, Defendants.

C.A. No. 1:19-CV-00005-MSM-PAS

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND

September 28, 2020

MEMORANDUM AND ORDER

Mary S. McElroy, United States District Judge.

Before the Court are two dispositive motions in this action involving alleged breach of contract and statutory violations concerning the plaintiff, Dolores Cepeda's, mortgage. The defendant Bank of America, N.A. ("Bank of America") has filed a Motion to Dismiss under Fed R. Civ. P. 12(b)(6) on Ms. Cepeda's claim that it violated 12 C.F.R. § 1024.36(c) and 12 C.F.R. § 1024.36(d)(2)(i)(A) of the Real Estate Settlement Procedures Act (Regulation X). (ECF No. 31.) Additionally, the defendants Fay Servicing, LLC ("Fay") and Wilmington Trust National Association Solely as Trustee for the MFRA Trust 2014-2 ("Wilmington") have filed a Motion for Summary Judgment with respect to their alleged breach of contract, violation of various notice requirements under Rhode Island law, and violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, and the Truth in Lending Act, 15 U.S.C. § 1601. (ECF No. 50.)

For the following reasons, the Court GRANTS both Motions.

I. BACKGROUND

On December 22, 2006, Ms. Cepeda granted a mortgage to Bank of America, N.A. ("Bank of America") for a residential property at 177 Dexter Street, Providence, Rhode Island. (ECF No. 53-1.) At all relevant times, the defendants issued monthly mortgage statements to the plaintiff. (ECF No. 53-8.)

In or around August 2016, Ms. Cepeda defaulted on the mortgage. (ECF No. 53 ¶ 9.) On October 3, 2016, Bank of America sent the plaintiff a notice of mediation Conference. (ECF No. 53-2.) On January 4, 2017, the Mediation Coordinator issued a Certificate of Compliance with the Mediation Requirement, certifying that Bank of America provided the notice of mediation pursuant to R.I.G.L. § 34-27-3.2. (ECF No. 53-3.)

On September 14, 2017, Bank of America sent Ms. Cepeda a notice of intent to accelerate. (ECF No. 53-4.) On September 29, 2017, Bank of America assigned the mortgage to Wilmington. (ECF No. 53 ¶ 7.) Fay took over as the service of the mortgage on November 1, 2017. Id. ¶ 8.

On December 15, 2017, Fay sent Ms. Cepeda a second notice of intent to accelerate.¹ (ECF No. 53-5.) This second Notice stated, in relevant part:

This letter is formal notice by Fay Servicing, LLC, the Servicer of the above-referenced loan, on behalf of Wilmington Trust National Association not in its individual capacity but solely as trustee for MFRA Trust 2014-2, that you are in default under the terms of the documents creating and securing your Loan ... including the Note and Deed of Trust/Mortgage/Security Deed ("Security Instrument"), for failure to pay amounts due.

You have a right to cure your default. To cure the default, you must pay the full amount of the default on this loan by 01/19/2018 (or if said date falls on a Saturday, Sunday or legal holiday, then on the first business day thereafter). Failure to cure the default on or before this date may result in acceleration of the sums secured by the Security Instrument, foreclosure by judicial proceeding where applicable, and sale of the property.

As of the date of this notice, the total amount required to cure the default is $7,504.99....

You can cure this default by making a payment of $7,504.99 by 01/19/2018. Please note any additional monthly payments, late charges or other charges that may be due under the Note, Security Instrument and applicable law after the date of this notice must also be paid to bring your account current. ...

You have the right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense to acceleration and sale.

Id.

Ms. Cepeda does not dispute that Fay mailed, and the plaintiff received, this second Notice.

On September 27, 2018, Wilmington and Fay mailed Ms. Cepeda a notice of availability of mortgage counseling services pursuant to § 34-27-3.2. (ECF No. 53-6.) On November 15, 2018, Wilmington and Fay sent Ms. Cepeda a notice of foreclosure sale, identifying the sale date as January 7, 2019. (ECF No. 53-7.)

Ms. Cepeda filed suit against Bank of America, Fay, and Wilmington on January 3, 2019.

Against Fay and Wilmington, she has alleged the following claims:

• Failure to provide proper notice pursuant to Paragraph 22 of the mortgage (breach of contract)

• Failure to provide notice of foreclosure counseling pursuant to R.I.G.L. § 34-27-3.1

• Failure to provide notice of mediation pursuant to R.I.G.L. § 34-27-3.2

• Violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.

• Failure to provide monthly mortgage statements pursuant to the Truth in Lending Act, 15 U.S.C. § 1601 et seq.

Against Bank of America, Ms. Cepeda alleges that it violated 12 C.F.R. § 1024.36(c) and 12 C.F.R. § 1024.36(d)(2)(i)(A) when it failed to properly respond to notices of error she sent on October 29, 2018.

Additional facts specific to the motions at issue are included, as necessary, below.

II. DISCUSSION

A. Bank of America's Motion to Dismiss

On a motion to dismiss, the Court "must assume the truth of all well-plead[ed] facts and give plaintiff the benefit of all reasonable inferences therefrom." Ruiz v. Bally Total Fitness Holding Corp., 496 F.3d 1, 5 (1st Cir. 2007). To survive a motion to dismiss, the complaint must state a claim that is plausible on its face. Bell Atl.Corp. v. Twombly, 550 U.S. 544, 570 (2007). "The relevant question ... in assessing plausibility is not whether the complaint makes any particular factual allegations but, rather, whether 'the complaint warrant[s] dismissal because it failed in toto to render plaintiffs' entitlement to relief plausible." Rodriguez-Reyes v. Molina-Rodriguez, 711 F.3d 49, 55 (1st Cir. 2013) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 569 n.14 (2007)).

Ms. Cepeda alleges that Bank of America violated "12 C.F.R. § 1024.36(c) and 12 C.F.R. § 1024.36(d)(2)(i)(A) of Regulation X." (ECF No. 1 ¶ 137.) Section 1024.36(c) provides that within five days of receiving a request for information from a borrower, the servicer shall provide to the borrower a written response acknowledging receipt of the information request. Section 1024.36(d)(2)(i)(A) provides that "[n]ot later than 10 days ... after the servicer receives an information request for the identity of, and address or other relevant contact information for, the owner or assignees of a mortgage loan," the servicer must comply with 1024.36(d)(1) by providing the borrower with the requested information and contact information.

In support of her claim, Ms. Cepeda alleges that Bank of America failed to respond to her October 29, 2017, notice of errors, which she alleges is attached as Exhibit F to her Complaint. Ms. Cepeda further alleges that Bank of America's response is attached as Exhibit F-1 to the Complaint. However, there is no "Exhibit F" to the Complaint and the documents included as Exhibit F-1 are letters from Bank of America dated October 22, 2018 and November 2, 2018, responding to plaintiff's correspondence dated October 9, 2018 and October 29, 2018, not a notice of errorsdated October 29, 2017. This pattern continues throughout Ms. Cepeda's Complaint. Bank of America therefore argues that Ms. Cepeda cannot state a claim for relief in relation to a nonexistent October 29, 2017, notice of errors.

Ms. Cepeda responds that the references to October 29, 2017, in the Complaint is a typographical error and the actual date of the notice of errors (which was attached to the Complaint at Exhibits F,G,H,I,J,K and L) was October 29, 2018.² It is clear this was a clerical error in the Complaint's drafting and for purposes of this motion the Court will consider all references to October 29, 2017 to instead refer to the letter sent on that date in 2018.

The documents demonstrate that Bank of America complied with Regulation X. For instance, while Ms. Cepeda argues that Bank of America's November 2, 2018, response to the October 29, 2018, "Notice of Error 1" violated Regulation X by "failing to correct an error by which Defendant had failed to provide the contractual status of the mortgage loan when [Bank of America] transferred ownership of the mortgage loan," Bank of America previously had provided this information. On January 12, 2018, Bank of America responded to a prior qualified written request ("QWR") from Ms. Cepeda dated December 7, 2017, in which Bank of America informed her that the "servicing of the loan was transferred from Bank of America, N.A. to Fay Servicing on November 1, 2018" and that "at the time the account was transferred, the accountwas delinquent and due for the August 2017 through October 2017 installments...."³ The January 12, 2018, letter from Bank of America also included a copy of the "Loan Transaction History Statement."

Section 1024.36(f)(1)(i) of Regulation X provides that:

A servicer is not required to comply with the requirements of paragraphs (c) and (d) of this section if the servicer reasonably determines that any of the following apply:

...

(i) Duplicative Information. The information requested is substantially the same as information previously requested by the borrower for which the servicer has previously complied with its obligation to respond pursuant to paragraphs (c) and (d) of this section.

...

(iv) Overbroad or unduly burdensome information request. The information request is overbroad or unduly burdensome. An information request is overbroad if a borrower requests that the servicer provide an unreasonable volume of documents or information to a borrower. An information request is unduly burdensome if a diligent servicer could not respond to the information request without either exceeding the maximum time limit permitted by paragraph (d)(2) of this

...