Seidel v. Wells Fargo Bank, N.A.

• Decision Date: 03 July 2012
• Docket Number: CIVIL ACTION NO. 12-10766-RWZ
• Parties: BRAD J. SEIDEL v. WELLS FARGO BANK, N.A.
• Court: U.S. District Court — District of Massachusetts

BRAD J. SEIDEL

v.WELLS FARGO BANK, N.A.

CIVIL ACTION NO. 12-10766-RWZ

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

Dated: July 3, 2012

MEMORANDUM OF DECISION

ZOBEL, D.J.

Plaintiff Brad J. Seidel claims against defendant Wells Fargo Bank ("Wells Fargo") in six counts. He asserts that Wells Fargo, in moving forward with a foreclosure proceeding while he was being considered for a loan modification under the Home Affordable Modification Program ("HAMP"),¹ breached certain "HAMP guidelines" of which plaintiff was a third-party beneficiary (Count I) as well as the covenant of good faith and fair dealing (Count III). He also claims negligence (Count II). Plaintiff further asserts that the verbal assurances by defendant's representative concerning the foreclosure created an agreement that was breached when defendant foreclosed (Count IV), amounted to promissory estoppel (Count V), and constituted negligentmaterial misrepresentations (Count VI). Currently before me are plaintiff's motion for injunctive relief (Docket # 8) and defendant's partial motion to dismiss (Docket # 12).

I. Background

In October 2003, plaintiff secured a $333,000 mortgage from defendant on a residential property in Waltham, Massachusetts. Sometime in 2009, plaintiff defaulted, and defendant began foreclosure proceedings. Shortly thereafter, plaintiff requested a loan modification pursuant to HAMP. Defendants initiated a "workout review," but no modification was offered. In June 2010, plaintiff again requested a loan modification and defendant began a second "workout review" the following month. However, in August plaintiff was informed that his request for a modification was not approved because the loan securing the property was insured by a private mortgage company that refused to issue any modifications under HAMP. In March 2011, defendant resumed foreclosure proceedings. Soon thereafter, plaintiff, for a third time, requested a loan modification. On this occasion a representative of defendant identified only as "Liz" told plaintiff that he appeared eligible for a HAMP modification but that she would "have to run the numbers" to confirm his eligibility. She also informed plaintiff that the foreclosure which had been set for April 2011 would not take place and that no foreclosure date would be set while his application for a loan modification under HAMP remained pending.

Plaintiff faxed certain requested documents to the representative and attempted to submit files online through a secure website but was unable to do so because of a technical problem. The representative left several voice mail messages for plaintiffinforming him that she had not received the paperwork necessary to review plaintiff's modification request. Plaintiff alleges he then submitted the paperwork again by mail. During the month of April plaintiff and the representative exchanged a series of voice mail messages but never spoke directly, and plaintiff was never given confirmation that defendant had received the paperwork necessary to conduct its HAMP review. In May 2011, the defendant held a foreclosure sale and purchased the property for the then-outstanding balance of the mortgage and initiated eviction proceedings in the Middlesex District Court.

II. Analysis

A. Plaintiff's Motion for Injunctive Relief

Plaintiff seeks to enjoin defendant from (I) evicting him; (ii) charging him with use and occupancy fees; and (iii) selling the subject property. Defendant contends both that Younger abstention, Younger v. Harris, 401 U.S. 37, 44-45 (1971), and the Anti-Injunction Act, 28 U.S.C. § 2283, militate against this court's interference with the ongoing state court eviction proceeding. "Younger v. Harris [ ] and its progeny espouse a strong federal policy against federal-court interference with pending state judicial proceedings absent extraordinary circumstances." Middlesex County Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 431(1982). Evictions are complex proceedings governed extensively by state law that implicate important interests of the state and its citizenry -- namely, how and under what circumstances an individual can be legally removed from his or her residence. Federal courts have routinely held that the Younger doctrine bars them from enjoining state-court eviction proceedings. Boyer v. Scott BrosInv. Corp., No. 4:11CV1173 HEA, 2011 WL 3847412 at *7 (E.D. Mo. Aug. 27, 2011); Clark v. Bloomberg, No. 10-CV-1263 (JG), 2010 WL 1438803, at *2 (E.D.N.Y. 2010); O'Neil v. Hernandez, No. 08 Civ. 1689 (KMW), 2008 WL 2963634, at *1 (S.D.N.Y. Aug. 1, 2008); Chamberlain v. 625 Orleans, LP, No. 1:11-CV-140, 2011 WL 1627080, at *3 (E.D. Tex. April 18, 2011); Virostek v. Indy Mac Mortg. Services, No. 11-cv-00030-WYD-MEH, 2011 WL 6937185, at *6 (D. Colo. Sept. 6, 2011); Newell v. Rolling Hills Apartments, 134 F. Supp.2d 1026, 1036 (N.D. Iowa 2001).

Plaintiff claims that this court's refraining from enjoining the state court eviction under Younger would place him "in a catch-22 resulting in a right without a remedy." However, his claims regarding possession and title to the property may be raised in the state eviction proceeding. Bank of New York v. Bailey, 460 Mass. 327 (2011) ("[c]hallenging a plaintiff's entitlement to possession has long been considered a valid defense to a summary process action for eviction where the property was purchased at a foreclosure sale ...").

The Anti-Injunction Act provides that "[a] court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments." 28 U.S.C. § 2283. The Act has been held to apply to state-court eviction proceedings. Sierra v. City of New York, 528 F.Supp.2d 465, 468 (S.D.N.Y. 2010); Allen v. N.Y. City Hous. Auth., No. 10-CV-168, 2010 WL 1644956, at *3 (S.D.N.Y. Apr. 20, 2010); Boross v. Liberty Life Ins. Co., No. 4:10-cv-144, 2011 WL 2945819 (S.D. Ga. July 21, 2011); Bradley v. Fed. Nat'l Mortgage Ass'n, No.1:11-CV-3242-TWT-CCH, 2011 WL 5320746 (N.D. Ga. Sept. 28, 2011); Wideman v. Bank of Am., N.A., 3:11-CV-145 CAR, 2011 WL 6749829 (M.D. Ga. Dec. 23, 2011). Plaintiff, with considerable imagination but little authority, suggests that "the injunctive relief being sought [ ] is incident to his substantive claims which, based upon its decision to remove the action [defendant] has asked this Court to now adjudicate. As such they are 'necessary in aid of the federal court's jurisdiction or to protect or effectuate its judgment.'" This argument is circular and would effectively prevent application of the Anti-Injunction Act in any action removed to federal court when plaintiff seeks to enjoin a related state proceeding. Plaintiff does assert two exceptions to the Anti-Injunction Act: (1) the "necessary in aid of its jurisdiction clause;" and (2) the "necessary ... to protect or effectuate its judgments" clause (also known as the "relitigation clause"). 28 U.S.C. § 2283. Neither of these exceptions are applicable here.

First, the "narrow" relitigation exception "is designed to implement well-recognized concepts of claim and issue preclusion... [and] authorizes an injunction to prevent state litigation of a claim or issue that previously was presented to and decided by the federal court." Smith v. Bayer Corp., 131 S. Ct. 2368, 2375, 180 L. Ed. 2d 341 (2011) (internal citations an quotations omitted); De Cosme v. Sea Containers, Ltd., 874 F.2d 66, 68 (1st Cir. 1989) ("... an essential prerequisite for applying the relitigation exception is that the claims or issues which the federal injunction insulates from litigation in state proceedings actually have been decided by the federal court.")(internal citations an quotations omitted). Plaintiff has not alleged that his claims have been previously litigated and decided.

Second, the "where necessary in aid of its jurisdiction" exception typically applies either to situations where a federal court obtains in rem jurisdiction prior to a state-court suit or in cases where a state-court proceeding would interfere with ongoing oversight of a case. Garcia v. Bauza-Salas, 862 F.2d 905, 909 (1st Cir. 1988). Here, the eviction proceeding was filed before removal and there is no risk of interference with ongoing oversight by this court.

Plaintiff's request for a preliminary injunction is denied.

B. Defendant's Motion to Dismiss

Defendant moves to dismiss Counts I, II, III (the HAMP claims) and IV (breach of oral agreement) for failure to state a claim.

1. The HAMP Claims

Plaintiff's first three counts are premised on defendant's failure to abide by certain HAMP guidelines.

Plaintiff contends that under Erie R. Co. v. Tompkins, 304 U.S. 64, 70 (1938), this court is bound by the holding in Parker v. Bank of America, NA, No. 11-1838, 2011 WL 6413615 (Mass. Sup. Ct. Dec. 16, 2011). In Parker the court found that a mortgagor could bring a claim for violations of the HAMP guidelines as a third-party beneficiary despite acknowledging that "every court in the District of Massachusetts (and as far as I know, elsewhere) to consider the issue has rejected [this theory]." However, HAMP is a federal program and as such interpretation of the HAMP contractis controlled by federal law. See Speleos v. BAC Home Loans Servicing, L.P., 755 F. Supp. 2d 304, 307 (D. Mass. 2010).

The prevailing view in this district and others is that defaulted mortgagors are not entitled to sue for HAMP violations as third-party beneficiaries under an agreement between the bank and the government absent a clear indication in the contract to the contrary. McBride v. Am. Home Mortg. Servicing Inc., No. 11-10998-RWZ, 2012 WL 931247 (D. Mass. Mar. 19, 2012); Speleos v. BAC Home Loans Servicing, L.P., 755 F.Supp. 2d 304, 307 (D. Mass. 2010); Zendejas v. GMAC Wholesale Mortg. Corp., No. 1:10-cv-00184 OWW GSA, 2010 WL 2490975, at *3 (E.D. Cal. June 16, 2010); Duff v....