O'Connor v. Nantucket Bank, of Sovereign Bank, N.A.

• Court: United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
• Citation: 992 F.Supp.2d 24
• Docket Number: Civil No. 13–11350–PBS.
• Parties: John J. O'CONNOR and Katherine P. O'Connor, Plaintiffs, v. NANTUCKET BANK, A Division of Sovereign Bank, N.A., Stephen P. Hayes, and Hayes & Hayes, Attorneys at Law, PC, Defendants.
• Decision Date: 16 January 2014

992 F.Supp.2d 24

John J. O'CONNOR and Katherine P. O'Connor, Plaintiffs,
v.
NANTUCKET BANK, A Division of Sovereign Bank, N.A., Stephen P. Hayes, and Hayes & Hayes, Attorneys at Law, PC, Defendants.

Civil No. 13–11350–PBS.

United States District Court,
D. Massachusetts.

Jan. 16, 2014.

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James T. Ranney, Jamie Ranney, PC, Nantucket, MA, for Plaintiffs.

Mary Ellen Manganelli, Bulkley Richardson & Gelinas, Boston, MA, for Defendants.

MEMORANDUM AND ORDER
SARIS, Chief Judge.
I. INTRODUCTION

Plaintiffs John J. O'Connor and Katherine P. O'Connor have filed suit against Nantucket Bank, a division of Sovereign Bank, N.A.,¹ and its counsel, Stephen P. Hayes and Hayes & Hayes, PC. for violations of the Fair Debt Collection Practices Act (“FDCPA”) under 15 U.S.C. § 1692, et. seq., the Massachusetts debt collection statute at Gen. Laws ch. 93, § 49 and corresponding regulations (Count One); Massachusetts Gen. Laws ch. 93A (Count Two); and the Real Estate Settlement Procedures Act (“RESPA”) under 12 U.S.C. § 2601 (Count Three). Plaintiffs allege that these violations occurred as a result of Defendants' demands for “use and occupancy” payments following a non-judicial foreclosure of the O'Connors' home in Nantucket, MA and their failure to respond to Plaintiffs' request for loan-servicing information.

II. STANDARD OF REVIEW

To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). The court “must take the allegations in the complaint as true and must make all reasonable inferences in favor of the plaintiffs.” Watterson v. Page, 987 F.2d 1, 3 (1st Cir.1993). This highly deferential standard of review “does not mean, however, that a court must (or should) accept every allegation made by the complainant, no matter how conclusory or generalized.” United States v. AVX Corp., 962 F.2d 108, 115 (1st Cir.1992). Dismissal for failure to state a claim is appropriate when the pleadings fail to set forth “factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory.” Berner v. Delahanty, 129 F.3d 20, 25 (1st Cir.1997) (quoting Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir.1988) (internal quotation marks omitted)).

The “tenet that a court must accept as true all of the allegations contained in a

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complaint is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. “The Court's assessment of the pleadings is ‘context-specific,’ requiring ‘the reviewing court to draw on its judicial experience and common sense.’ ” Maldonado v. Fontanes, 568 F.3d 263, 269 (1st Cir.2009) (quoting Iqbal, 556 U.S. at 663–64, 129 S.Ct. 1937).

This case largely revolves around the content of various letters not attached to the complaint. Rather, Defendants submitted them in connection with the motion to dismiss.² Ordinarily, a court may not consider any documents that are outside of the complaint, or not expressly incorporated therein, unless the motion is converted into one for summary judgment. Watterson, 987 F.2d at 3. However, there is a narrow exception “for documents the authenticity of which are not disputed by the parties; for official public records; for documents central to plaintiffs' claim; or for documents sufficiently referred to in the complaint.” Id. When the complaint relies upon a document whose authenticity is not challenged, such a document “merges into the pleadings” and the court may properly consider it under a Rule 12(b)(6) motion to dismiss. Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 17 (1st Cir.1998); see Alternative Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33–34 (1st Cir.2001) (affirming a dismissal of a suit based on an interpretation of a settlement agreement that was “not appended to or expressly incorporated in [the] complaint” because alleged liability under the complaint depended “directly” upon whether the “claims [were] interpreted to have been released under the ... Settlement Agreement” and authenticity of the agreement was not challenged).

Because the authenticity of these letters has not been disputed, the letters were extensively referred to in the complaint, and Plaintiff has not objected, the court will consider the letters.

III. FACTUAL BACKGROUND

The following facts, culled from the complaint and letters, are assumed to be true for the purpose of this motion to dismiss.

On July 6, 2007, John and Katherine O'Connor received a residential loan from Nantucket Bank, a division of Sovereign Bank, N.A., to purchase their home in Nantucket, Massachusetts. Compl. ¶ 7. On June 20, 2011, the law firm Cohn & Dussi, LLC, made a demand for a debt allegedly due to Nantucket Bank under the loan on the property. Compl. ¶ 11. By a letter dated June 27, 2011, the O'Connors' attorney Jamie Ranney informed Cohn & Dussi that the O'Connors disputed the debt, asked for debt validation, and requested that Cohn & Dussi not contact the O'Connors directly. Compl. ¶ 12. By a letter dated July 1, 2011, Cohn & Dussi replied, stating that “other counsel” was

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handling the matter. Compl. ¶ 13. The “other counsel” referenced in Cohn & Dussi's letter was Attorney Stephen P. Hayes of the law firm Hayes & Hayes, P.C. Compl. ¶ 14. Attorney Hayes is a shareholder of Hayes & Hayes. Compl. ¶ 4.

On October 7, 2011, Attorney Ranney sent Nantucket Bank a “Qualified Written Request” (“QWR”) under the Real Estate Settlement Procedures Act (“RESPA”). The request was 21 pages long and stated in its introduction: “This letter is being sent to complain about the accounting and servicing of this mortgage and our client(s)' need for understanding and clarification of various sale, transfer, funding source, legal and beneficial ownership, charges, credits, debits, transactions, reversals, actions, payments, analyses and records related to the servicing of this account from its origination to the present date.” Mot. to Dismiss, Tanner–Butler Decl., Ex. 1. The letter goes on to request copies of 30 various types of documents (for example, the twelfth requested document was “Any and all ‘Release of Interest’ agreement(s) between the nominal lender at the loan closing and any party or parties who could claim an interest in the loan closing or documents pertaining thereto and any GSE or other party.”) Id. at 6–8. Further, the letter includes ten additional categories of specifically requested information; each category contains multiple enumerated questions. Id. at 8–18. In total, these ten categories contain approximately 140 additional questions. Id.

A Nantucket Bank letter to Attorney Ranney dated November 1, 2011, stated: “On October 12, 2011 we received your correspondence dated October 7, 2011 ... We are currently conducting an investigation into your request and will provide you with a response within the allowable time frame.” Mot. to Dismiss, Tanner–Butler Decl., Ex. 2. By letter dated December 27, 2011, Nantucket Bank responded again with a cover letter stating, “To the extent that your letter identifies what you believe to be an error in your account or seeks specific information concerning the servicing of your loan, this response treats your letter, or those portions of your letter, as a qualified written request under RESPA.” Mot. to Dismiss, Tanner–Butler Decl., Ex. 3. The letter enclosed four documents, including: a copy of the note and mortgage the O'Connors signed, the O'Connors' loan history, a copy of the loan modification documents executed by the O'Connors on or about November 3, 2010, and a copy of an appraisal for the property dated September 5, 2011. Id. The letter also stated, “To the extent that your letter requests information that is overly broad, vague, onerous and/or burdensome, we have not provided a response to such items, as we consider these requests to be improper requests and outside of the scope of what is intended to be covered under a qualified written request. If you provide us with a more narrow and specific request, we will consider your request and respond accordingly.” Id.

On April 9, 2012, Nantucket Bank conducted a non-judicial foreclosure sale of the home. Compl. ¶ 32. On April 13, 2012, Attorney Hayes sent the O'Connors a “notice to vacate” demanding that they vacate the property within 30 days. Compl. ¶ 33–36; Mot. to Dismiss, Decl. Stephen P. Hayes, Ex. 4. The notice to vacate stated that the O'Connors “are liable for use and occupation at $200 per day from May 1, 2012.” Id. The notice also included a “Notice of Important Rights” under the FDCPA. Id. The Notice of Important Rights states that “Hayes & Hayes, Attorneys at Law, P.C. is acting as a debt collector, pursuant to the federal [FDCPA].” Id.

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On May 17, 2012, Attorney Ranney sent a letter to Attorney Hayes and Hayes & Hayes challenging the legality of the foreclosure action underlying the notice to vacate. Compl. ¶ 55; Mot. to Dismiss, Decl. Stephen P. Hayes, Ex. 5. The letter states that “both you personally and your firm may consider this letter a ‘thirty day demand letter’ pursuant to G.L. c. 93A (the Consumer Protection Act).” Mot. to Dismiss, Decl. Stephen P. Hayes, Ex. 5. The letter states that the April 13 notice to vacate, by including a demand for use and occupancy fees, was “a debt collection letter and subject to regulation under the FDCPA and its state analog, G.L. c. 93, s. 49 and the regulations thereto.” Id. at 1. Attorney Ranney's May 17 letter asserts that “the total demand hereunder is $46,500.00, plus attorney's...