Hannigan v. Bank of Am., N.A.
| Decision Date | 24 September 2014 |
| Docket Number | Civil Action No. 13–11088–NMG. |
| Citation | 48 F.Supp.3d 135 |
| Parties | Joseph HANNIGAN and Linda Hannigan, Plaintiffs, v. BANK OF AMERICA, N.A. and Wells Fargo Bank, N.A., as Trustee for the Certificateholders of Banc of America Mortgage Securities, Inc., Mortgage Pass–Through Certificates, Series 2004–7, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Josef C. Culik, Culik Law PC, Woburn, MA, for Plaintiffs.
Elizabeth Timkovich, Winston and Strawn LLP, Charlotte, NC, Jameson J. Watts, Jameson J. Watts, Winston & Strawn LLP, Houston, TX, Stephen C. Reilly, Ryan M. Cunningham, Ryan M. Cunningham, Stephen C. Reilly, Sally & Fitch LLP, Boston, MA, for Defendants.
This case involves the repeated efforts over the course of several years by plaintiffs Joseph and Linda Hannigan (“plaintiffs”) to obtain a loan modification under the Home Affordable Modification Program (“HAMP”) from the loan servicer, Bank of America, N.A. (“Bank of America”), and the trustee of the note, Wells Fargo Bank, N.A. (“Wells Fargo”) (collectively, “defendants”).
Having been repeatedly stymied in their loan modification applications, plaintiffs filed suit for breach of contract, negligent misrepresentation, promissory estoppel and unfair trade practices under M.G.L. c. 93A. Pending before the Court is defendants' motion to dismiss plaintiffs' amended complaint.
The Court recites the facts as alleged in plaintiffs' amended complaint of January 7, 2014.
In May, 2004, plaintiffs refinanced an existing mortgage by obtaining a loan of $638,400 (“the loan”) secured by a mortgage (“the mortgage”) on residential property in Kingston, Massachusetts. In July, 2004, the mortgage was securitized into a trust pursuant to a “Pooling and Servicing Agreement.” Under that agreement, Bank of America serviced the loan and Wells Fargo became the trustee.
In 2009, the plaintiffs stopped making payments and submitted an application for a loan modification. In June of that year, Bank of America offered plaintiffs a modification, according to which they were required (1) to submit monthly payments of $3,502 starting on September 1, 2009 and (2) to make a one-time, upfront payment of $7,000 within seven days. The loan's new principal balance was to be $614,572.
Plaintiffs were unable to make the $7,000 payment and sought alternate arrangements to fulfill that obligation. They were told by a Bank of America representative that the $7,000 payment could be made over the following three months under a forbearance agreement and that they would remain eligible for the modification. Bank of America admits that it allowed plaintiffs to make reduced payments for three months based on the forbearance agreement but disputes that that agreement waived the requirement to make the $7,000 payment. It is undisputed, however, that plaintiffs made three reduced monthly payments and that Bank of America did not modify the loan.
In November, 2009, Bank of America sent plaintiffs a notice of foreclosure but, the following month, sent them a second loan modification offer, according to which they were to make monthly payments of $3,907 and the new principal balance of the loan was to be $621,864. Plaintiffs rejected that offer, believing it to be a mistake.
In April, 2010, Bank of America invited plaintiffs to apply for another modification.
From November, 2010 to March, 2011, plaintiffs submitted additional documentation to Bank of America but the bank responded that they were ineligible for a loan modification.
In May and June, 2012, plaintiffs, after retaining counsel, applied again for a modification. Those applications were denied. Plaintiffs then submitted four subsequent modification applications between September, 2012 and November, 2013, all of which were denied by Bank of America because they were incomplete or because the actual holder of the note, Wells Fargo, had not given it “contractual authority to modify [plaintiffs'] loan.”
Plaintiffs claim that defendants' actions have caused them severe financial harm, including “huge” mortgage arrearages and significant damage to their credit. They also note that defendants' actions have “caused the imminent loss of their family home to an unnecessary foreclosure,” though the record is unclear as to the current status of plaintiffs' residence.
In December, 2012, plaintiffs sent Bank of America a demand letter under M.G.L. c. 93A. Bank of America did not respond to that letter with a reasonable offer of settlement.
Plaintiffs filed a complaint against Bank of America in the Massachusetts Superior Court for Plymouth County in March, 2013, which defendants removed to this Court in May, 2013. The complaint includes four counts against Bank of America: breach of contract (Count I), negligent misrepresentation (Count II), promissory estoppel (Count III) and unfair or deceptive trade practices under Chapter 93A (Count IV).
The Court held a scheduling conference in December, 2013, after which plaintiffs moved for leave to file an amended complaint to add a claim under Chapter 93A against Wells Fargo. The Court allowed that motion and plaintiffs filed the amended complaint in January, 2014.
Plaintiffs submitted a second demand letter under Chapter 93A in December, 2013, in response to which Bank of America again failed to make a reasonable offer of settlement.
In late January, 2014, both defendants moved to dismiss the case for failure to state a claim upon which relief can be granted.
The crux of plaintiffs' complaint is that Bank of America engaged in a “pattern and practice of stringing [them] along.” According to their complaint, despite repeatedly offering loan modifications and even confirming new loan provisions, Bank of America ultimately denied plaintiffs' numerous applications for loan modification. Moreover, defendants purportedly did so after constantly shifting their rationale for their denials and refusing to follow the procedures required by HAMP.
Defendants respond that they simply followed their own explicit procedures with which plaintiffs did not comply and therefore no loan modification was warranted and no new contract was formed.
To survive a 12(b)(6) motion to dismiss, a pleading must contain a claim to relief that is “plausible,” not just a “sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A district court assesses a complaint's sufficiency in two steps. Manning v. Boston Medical Ctr. Corp., 725 F.3d 34, 43 (1st Cir.2013). First, a court ignores conclusory allegations mirroring legal standards. Id. Second, it accepts the remaining factual allegations as true and draws all reasonable inferences in the plaintiff's favor, thereafter deciding if the plaintiff would be entitled to relief. Id. A court may also consider documents attached to or incorporated in the complaint and other undisputed documents. Wilborn v. Walsh, 584 F.Supp.2d 384, 386 (D.Mass.2008).
To succeed on a breach of contract action, plaintiff must prove (1) an offer, (2) an acceptance, (3) consideration, (4) breach and (5) damages. Canney v. New England Tel. & Tel. Co., 353 Mass. 158, 228 N.E.2d 723, 728 (1967). Consideration requires imposing a legal detriment on the promisee and legal benefit on the promisor. Ekchian v. Thermo Power Corp., N. 00–P–1826, 56 Mass.App.Ct. 1116, 2002 WL 31856404, at *3 n. 8 (Mass.App.Ct.2002).
Here, the Court finds that plaintiffs cannot plausibly allege the existence of any valid breaches of contract by Bank of America. Plaintiffs' primary complaint is that Bank of America repeatedly promised that they would be eligible to receive a loan modification under HAMP. The Court is unconvinced, even assuming the veracity of the allegations in the complaint, that those “promises” created any enforceable contracts under Massachusetts law because plaintiffs did not appropriately accept any of Bank of America's offers.
The June, 2009 “agreement” that plaintiffs reiterate in their complaint is actually a loan modification offer from Bank of America that includes an explicit condition precedent, namely the payment of $7,000 to be made within seven days. Although the language might not be clear, unfortunately for plaintiffs, the law is.
Accordingly, the Court will allow defendants' motion to dismiss Count I.
Braunstein v. McCabe, 571 F.3d 108, 126 (1st Cir.2009) (citation omitted).
The alleged misrepresentation in this case is that plaintiffs did not need to make the $7,000 up-front payment in order to be eligible for the June, 2009 loan modification. Here, plaintiffs' complaint clearly alleges that the alleged misrepresentation (1) occurred during a business transaction, (2) was false, (3) guided plaintiffs in their business transactions,...
To continue reading
Request your trial