Cox v. Mortgage Elec. Registration Sys. Inc.

• Court: U.S. District Court — District of Minnesota
• Writing for the Court: ORDER
• Citation: Cox v. Mortgage Elec. Registration Sys. Inc., 794 F.Supp.2d 1060 (D. Minn. 2011)
• Decision Date: 30 June 2011
• Docket Number: Civil No. 10–4626 (DSD/SER).
• Parties: Gary COX and Jill Cox, Plaintiffs,v.MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., and Aurora Loan Services, Inc., Defendants.

794 F.Supp.2d 1060

Gary COX and Jill Cox, Plaintiffs,

v.MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., and Aurora Loan Services, Inc., Defendants.

Civil No. 10–4626 (DSD/SER).

United States District Court, D. Minnesota.

June 30, 2011.

Christopher P. Parrington, Esq., Patrick D. Boyle, Esq., Ryan P. Myers, Esq. and Skjold Parrington, PA, Minneapolis, MN, for Plaintiffs.Christina M. Weber, Esq., Eric D. Cook, Esq. and Wilford, Geske & Cook, PA, Woodbury, MN, for Defendants.

ORDER

DAVID S. DOTY, District Judge.

This matter is before the court upon the motion to dismiss ¹ by defendants Mortgage Electronic Registration Systems, Inc. (MERS) and Aurora Loan Services, LLC. (Aurora) and the motion for a preliminary injunction ² by plaintiffs Gary E. Cox and Jill D. Cox.³ Based on a review of the file, record and proceedings herein, and for the following reasons, the court grants defendants' motion.

BACKGROUND

This foreclosure dispute arises out of a January 16, 2004, promissory note and mortgage from plaintiffs to nonparty Universal Mortgage Corporation. V. Compl. ¶ 6. Thereafter, Aurora acquired the loan and became the servicer of the note. MERS is the nominal mortgagee. Id. In February 2009, plaintiffs called Aurora to request a loan modification due to financial hardship. Id. ¶ 10. At that time, plaintiffs were current with their mortgage payments. Id. ¶ 12. Aurora informed plaintiffs that they could apply for a home loan modification. Id. ¶ 13. Plaintiffs submitted an application and provided documentation requested by Aurora over the following months. Id. ¶ ¶ 14, 16.

In September 2009, Aurora notified plaintiffs that they “potentially qualified for a modification” and would be placed on a “Trial Period Plan” during which time they should pay $2,779.38 per month. Id. ¶ 17. On October 1, 2009, and for the next three months, plaintiffs made trial payments in the requisite amount. Id. ¶ 18. On December 28, 2009, plaintiffs contacted Terry Martin, an Aurora employee, who instructed them to discontinue modified payments because they had demonstrated their ability to make payments pursuant to the modification and should wait to receive notice of their modification approval. Id. ¶ 19. Plaintiffs thereafter discontinued payment and “awaited word that their modification had been approved.” Id. ¶ 20. On February 4, 2010, Aurora mailed a letter to plaintiffs informing them that it was unable to offer them a “Home Affordable Modification” because the net present value (NPV) calculation did not support modification. Id. ¶ 21; id. Ex. A. The letter stated that “[i]f, within 30 days of receiving this information you provide us with evidence that any of these input values are inaccurate ... we will conduct a new NPV calculation,” but “[a]s of the date of this letter, your request for a Home Affordable Modification is considered closed.” Id. Ex. A. The letter further stated:

You should be aware that any pending foreclosure action may be immediately resumed from the date of this letter.... If you do not bring your loan current immediately, any foreclosure action will resume. If you can bring your loan current ... please contact Aurora.... PLEASE ACT NOW TO SAVE YOUR HOME!

Id. The letter also stated: “Depending upon your situation, you might be eligible for other alternatives to foreclosure.” Id.

On March 8, 2010, Aurora mailed a letter to plaintiffs, informing them that (1) they “may not be eligible for the Home Affordable Mortgage Program (HAMP) because of Negative NPV;” (2) at the direction of the Treasury Department, their modification request had been placed on a “30 day review period” during which time they should continue to make monthly payments in the amount of the trial period plan payments; (3) at the end of the 30–day period, they would receive additional written communication regarding the status of their modification; and (4) if they were deemed ineligible at the end of the review period, Aurora would work with them to explore other available options. Id. Ex. B. As of March 19, 2010, plaintiffs owed over $30,000 in late payments. See ECF No. 1–1, at 23. On March 24, 2010, non-party Wilford & Geske, P.A., sent plaintiffs a Notice of Mortgage Foreclosure Sale. See V. Compl. Ex. C. On October 4, 2010, the property was sold in a sheriff's sale.

On November 4, 2010, plaintiffs filed this action in state court, alleging claims of accounting, breach of mortgage duty, breach of duty of good faith and fair dealing, fraud and negligent misrepresentation and seeking injunctive relief to stay the foreclosure proceedings. On November 8, 2010, a state-court judge granted plaintiffs' ex parte motion for a temporary injunction. See Boyle Aff. Ex. A. Plaintiffs did not file an affidavit of service and defendants did not appear. Id. The state court judge set the matter for hearing on November 23, 2010. On November 16, 2010, defendants removed this action, and moved to dismiss on November 23, 2010. Id. On March 4, 2011, plaintiffs moved for a preliminary injunction. The court now considers the motions.

DISCUSSION

I. Standard of Review

To survive a motion to dismiss for failure to state a claim, “ ‘a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.’ ” Braden v. Wal–Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir.2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009)). “A claim has facial plausibility when the plaintiff [has pleaded] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Although a complaint need not contain detailed factual allegations, it must raise a right to relief above the speculative level. See Twombly, 550 U.S. at 555, 127 S.Ct. 1955. “[L]abels and conclusions or a formulaic recitation of the elements of a cause of action are not sufficient to state a claim.” Iqbal, 129 S.Ct. at 1949 (citation and internal quotation marks omitted).

The court does not consider matters outside the pleadings in deciding a motion to dismiss under Rule 12(b)(6). See Fed.R.Civ.P. 12(d). The court may consider materials “that are part of the public record,” Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir.1999), and matters “necessarily embraced by the pleadings and exhibits attached to the complaint.” Mattes v. ABC Plastics, Inc., 323 F.3d 695, 698 n. 4 (8th Cir.2003).

II. Loan Modification

The United States Department of the Treasury created the Home Affordable Mortgage Program (HAMP) in response to a directive in the Emergency Economic Stabilization Act of 2008 (EESA), 12 U.S.C. §§ 5201–5261. HAMP gives financial incentives to encourage mortgage servicers to modify mortgages. See Williams v. Timothy F. Geithner, No. 09–1959, 2009 WL 3757380, at *2 (D.Minn. Nov. 9, 2009). HAMP imposes several obligations on servicers who choose to participate. Id. at *2–3. Congress vested discretion in the Secretary of Treasury to implement EESA, and HAMP vests considerable discretion in participating servicers. Such discretion precludes an individual homeowner from reasonably claiming that he is entitled to a modification or a reply to a modification request. Id. at *6–7.

As an initial matter, all of plaintiffs' claims implicate HAMP because they all derive from plaintiffs' request for a loan modification, defendants' conduct associated with the request and the ultimate denial of the request. Despite avoiding direct references to HAMP in the verified complaint, the facts pleaded in support of plaintiffs' claims are entirely based on the loan modification request under HAMP. There is no private right of action under HAMP. See McInroy v. BAC Home Loan Servicing, LP, No. Civ. 10–4342, 2011 WL 1770947, at *3 (D.Minn. May 9, 2011). Therefore, dismissal is warranted on this basis alone.

III. Plaintiffs' ClaimsA. Accounting

In count I, plaintiffs allege a claim of “Accounting” and seek an order “requiring a detailed accounting of Defendant's activities related to Plaintiff's request for a forbearance or loan modification.” V. Compl. ¶ 34. Plaintiffs claim that defendants failed to comply with “certain responsibilities with respect to processing Plaintiff's repeated requests for loan modification.” Id. ¶ 30.

Plaintiffs cite only Vernon J. Rockler & Co., Inc. v. Glickman, Isenberg, Lurie & Co., 273 N.W.2d 647 (Minn.1978) in support of this claim. That case involves accountant malpractice, not the equitable remedy of accounting. An accounting is an extraordinary equitable remedy. Border State Bank, N.A. v. AgCountry Farm Credit Servs., 535 F.3d 779, 784 (8th Cir.2008). In the present case, plaintiffs seek “the entire contents of Plaintiff's loan file from Defendant's custody,” including:

a. Any and all records of Plaintiff's attempts to contact Defendants to discuss the status of the Mortgage with Defendants;

b. Any and all records of payment on the Mortgage received by Defendant;

c. Any and all correspondence remitted by Defendant to Plaintiff; and

d. Any and all correspondence remitted by Plaintiff to Defendant.

V. Compl. ¶¶ 32, 34. Plaintiffs' claim for accounting amounts to standard discovery requests, governed by the Federal Rules of Civil Procedure. In short, an adequate remedy at law is available, and dismissal is warranted. Moreover, this request for equitable relief is premised on defendants liability in counts II–V. Because those claims warrant dismissal, the claim for accounting also fails.

B. Breach of Mortgagee Duty

In count II, plaintiffs allege a breach of mortgagee duty pursuant to Minnesota Statutes § 580.11. This statute, which relates to foreclosure by advertisement, states that “the mortgagee, the mortgagee's assignee, or the legal representative of either or both, may fairly and in good faith purchase...