Frappier v. Countrywide Home Loans, Inc.

• Decision Date: 30 April 2014
• Docket Number: No. 13–1774.,13–1774.
• Parties: Mark FRAPPIER, Plaintiff, Appellant, v. COUNTRYWIDE HOME LOANS, INC., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

750 F.3d 91

Mark FRAPPIER, Plaintiff, Appellant,

v.COUNTRYWIDE HOME LOANS, INC., Defendant, Appellee.

No. 13–1774.

United States Court of Appeals, First Circuit.

April 30, 2014.

Valeriano Diviacchi, for Appellant.

Chad W. Higgins, with whom Brian M. LaMacchia, B. Aiden Flanagan, and Goodwin Proctor LLP were on brief, for Appellee.

Before HOWARD, STAHL and LIPEZ, Circuit Judges.

STAHL, Circuit Judge.

On May 11, 2009, Plaintiff Mark Frappier filed a five-count complaint in the Superior Court of Suffolk County, Massachusetts, alleging various state-law claims related to a mortgage refinancing. Defendant Countrywide Home Loans, Inc. (“Countrywide”) removed the case to federal court on diversity grounds. The district court resolved certain claims as a matter of law in Countrywide's favor and held a bench trial on the remaining claims. After the trial, the district court entered judgment in favor of Countrywide. This appeal followed. For the reasons stated below, we affirm all of the district court's rulings.

I. Background

The facts of this case are set forth in detail in the district court's opinion. Frappier v. Countrywide Home Loans, Inc., No. 09–cv–11006, 2013 WL 1308602, at *4–15 (D.Mass. Mar. 31, 2013). We briefly reiterate them here only as necessary to provide context for the issues on appeal.

Frappier resides in Southwick, Massachusetts. In June 1999, he and his wife purchased his mother's house (“the Property”) with a mortgage from Countrywide. In the years that followed, Frappier took out multiple mortgages to finance home improvements, initially with his wife and later in his own name after the couple divorced. Frappier remarried and took out an additional mortgage with his second wife. When that marriage ended in March 2006, the divorce agreement required Frappier to either sell the Property by July 21, 2006, or refinance the mortgage in his own name by August 20, 2006. Frappier was unable to sell the Property, and he failed to refinance by the August 20 deadline.

To cure his breach of the divorce agreement, Frappier applied for a loan from Countrywide on September 19, 2006. The loan for which he applied was a “stated income loan,” otherwise known as the “Fast and Easy” loan program. Under the terms of this loan program, applicants would be approved if one had a credit score at or above 680, verified employment, and a loan-to-property value of less than eighty percent. Documentation of assets and income was not required, but applicants had to personally verify under criminal penalty that the information they provided was accurate. The loan officer testified that Frappier stated his monthly income as $5563, but Frappier claims he reported a lower income figure.

Countrywide, following its normal underwriting process, determined that Frappier had met the requirements for the Fast and Easy loan program. At the closing, Frappier signed the application, which listed his income as $5563 a month, and swore under criminal penalty that the information in the application was accurate. He also executed a Borrower's Certification, which certified that he had provided accurate information regarding his income and assets. Countrywide issued the loan in October 2006 (“October 2006 Loan”).

On November 17, 2006, three weeks after the closing of the October 2006 Loan, Frappier applied to Countrywide for a home equity loan in the amount of $38,500.¹ Countrywide approved this loan as well, and it closed on December 13, 2006 (“December 2006 Loan”).

Thereafter, Frappier made the scheduled payments on the October 2006 Loan for fifteen months.² In 2008, he changed jobs, but his new employer let him go. Around the same time, Frappier faced unusually high expenses for home heating bills and repairs to his truck. He also suffered from an illness that hospitalized him for a day and kept him out of work for some time. That winter, Frappier attempted again to sell the Property, but he was not successful. Because he was unable to make payments on his loan, Countrywide foreclosed on the Property.

II. Procedural History

Frappier filed a complaint in Suffolk Superior Court on May 11, 2009, alleging claims of unjust enrichment (Count I), recission/equitable relief (Count II), breach of the implied covenant of good faith and fair dealing (Count III), unfair and deceptive acts in violation of Massachusetts General Laws chapter 93A (Count IV), and negligence (Count V). All of the claims arise from Frappier's contention that Countrywide used improper tactics to draw him into loan agreements that the mortgagor knew he would be unable to satisfy.

After removing the case to federal court, Countrywide moved for summary judgment on all counts. Frappier opposed the motion and filed a cross-motion for summary judgment. Frappier argued at this stage that the court should consider both the October 2006 Loan and the December 2006 Loan together as the basis for his claims, although the complaint made no mention of the December 2006 Loan. The district court granted Countrywide's motion on all counts.

On appeal, the First Circuit reversed in part. With respect to the December 2006 Loan, the court held that:

Countrywide argues ... that the attack on the December loan is an independent claim for a different transaction essentially forfeited because Frappier did not mention the December second home mortgage or any facts pertaining to it in his complaint. This is correct and a new transaction cannot be asserted for the first time at summary judgment. However, the district court might on remand allow an amendment to the complaint.

Frappier v. Countrywide Home Loans, Inc., 645 F.3d 51, 58 (1st Cir.2011). Despite allowing for the possibility of an amendment to the complaint, the First Circuit nevertheless held that certain claims failed as a matter of law, affirming the dismissal of the negligence and rescission/equitable relief claims in their entirety and the covenant claim as it related to the December 2006 Loan. It vacated the dismissal of the covenant claim as it related to the October 2006 Loan, however, and it vacated the dismissal of the unjust enrichment and 93A claims in their entirety.

On remand, Frappier filed a motion to amend the complaint, seeking to include allegations about the December 2006 Loan. The court denied the motion on December 12, 2011. On March 16, 2012, Countrywide filed a motion for judgment on the pleadings with respect to the breach of good faith and fair dealing claim (Count III) and to strike Frappier's jury demand. The district court granted the motion in both respects. On April 23 and 24, 2012, the court held a bench trial on the remaining claims: unjust enrichment (Count I) and violations of chapter 93A (Count IV). It entered judgment in favor of Countrywide on both counts. After the trial, Frappier filed a motion under Federal Rule of Civil Procedure 52 for amended or additional findings of fact, or, in the alternative, for a new trial under Rule 59. The court denied that motion and Frappier appealed.

III. Analysis

On appeal, Frappier challenges the denial of his motion to amend, his request for a jury trial, and his post-trial motion for amended factual findings or a new trial. He also challenges the district court's judgment on the pleadings resolving Count III in Countrywide's favor. After careful consideration, we find no grounds for reversing any of the district court's decisions.

A. Denial of Motion to Amend

On October 27, 2011, Frappier moved to amend his complaint to include allegations related to the December 2006 Loan. The district court denied the motion on the grounds of undue delay and undue prejudice. We review a denial of a motion to amend for abuse of discretion. Watson v. Deaconess Waltham Hosp., 298 F.3d 102, 109 (1st Cir.2002).

The district court did not err, much less abuse its discretion, in this instance. As the district court noted, the proposed amendment came over two years after the initial complaint was filed and a year after the district court ruled on the summary judgment motions. Nothing prevented Frappier from pursuing this amendment earlier. As the borrower, Frappier certainly had sufficient information about the December 2006 Loan to allege claims relatedto that transaction at the outset of litigation, and he very likely could have amended his complaint, had he wished to do so, prior to summary judgment.

The district court correctly decided that the timing of the amendment constituted undue delay. “[P]rotracted delay, with its attendant burdens on the opponent and the court, is itself a sufficient reason for the court to withhold permission to amend.” Steir v. Girl Scouts of the USA, 383 F.3d 7, 12 (1st Cir.2004). The district court was also correct that the amendment would unfairly prejudice Countrywide, given the likelihood that the amendment would require additional discovery. See id. (“Particularly disfavored are motions to amend whose timing prejudices the opposing party by requiring a re-opening of discovery....”) (internal quotation mark omitted). Thus, we affirm the denial of the motion to amend.³

B. Judgment on the Pleadings

“The standard of review of a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) is the same as that for a motion to dismiss under Rule 12(b)(6).” Marrero–Gutierrez v. Molina, 491 F.3d 1, 5 (1st Cir.2007). We “review de novo a district court's decision to allow a motion to dismiss, taking as true the well-pleaded facts in the complaint and drawing all reasonable inferences in favor of the plaintiff.” Id.

Countrywide moved for judgment on the pleadings on Count III, arguing that allegations of bad-faith conduct occurring prior to the formation of a contract do not state a claim for breach of the implied covenant of good faith and fair dealing. See AccuSoft Corp. v. Palo, 237 F.3d 31, 45 (1st Cir.2001) (“[T]he prohibition contained in the covenant applies only to conduct during the performance of the contract, not to...