Markey v. Green Tree Servicing, LLC et al

Filing 31

ORDER. The Motion 21 to Dismiss is GRANTED as to Counts One and Two and DENIED as to Count Three. The Motion 2 for Temporary Restraining Order and/or Preliminary Injunction is DENIED. Markey may choose, if she wishes, to re-plead her brea ch of contract and breach of the covenant of good faith and fair dealing claims in an amended complaint that addresses the defects discussed herein, consistent with Fed. R. Civ. P. 11. Otherwise, she may simply proceed on the alternative promissory e stoppel claim. Markey is granted leave to file any amended complaint within 21 days of this ruling; if no amended complaint is filed within that time, the case will continue as to the promissory estoppel claim only. Should Markey choose to amend her complaint and should Defendants then file a new motion to dismiss, Defendants may incorporate by reference any prior briefing. Signed by Judge Michael P. Shea on 9/22/16. (Tegeler, D.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
JANICE B. MARKEY,
Plaintiff,

No. 3:15-cv-1711 (MPS)

v.
DITECH FINANCIAL LLC and FEDERAL
NATIONAL MORTGAGE ASSOCIATION,
Defendants.

RULING AND ORDER
Plaintiff Janice B. Markey brings this action against Defendants Ditech Financial LLC
(“Ditech”) and Federal National Mortgage Association (“Fannie Mae”) for breach of contract
(Count One), breach of the implied covenant of good faith and fair dealing (Count Two), and
promissory estoppel (Count Three)—all in connection with Defendants’ foreclosure of her home.
(Complaint, ECF No. 1.) She also seeks an injunction to stay the eviction proceedings pending
against her. (ECF No. 2.) The Defendants responded with a motion to dismiss the complaint and
opposition to Markey’s motion for injunctive relief. (ECF No. 21.) As described more fully
below, the Motion to Dismiss is GRANTED in part and DENIED and part. Counts One and Two
are barred by the statute of frauds, but Count Three plausibly states a claim for relief. The motion
for temporary restraining order and/or preliminary injunction is DENIED because the injunction
that Markey seeks is barred by the Anti-Injunction Act, 28 U.S.C. § 2283.
I.

Factual and Procedural Background
The complaint pleads the following facts. Markey is a Connecticut resident who obtained

a home mortgage loan dated July 24, 2003. (Compl. ¶ 7.) The mortgage and note were assigned
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to various entities, and finally to Ditech (formerly known as Green Tree Servicing LLC),1 a
servicer for Fannie Mae. (Id. ¶ 8; ECF No. 19.) Markey defaulted on her loan, and Ditech
commenced a foreclosure action. (Compl. ¶ 9.)
Either before or after that (the dates are unclear), Ditech proposed a Trial Payment Plan2
(“TPP”) agreement to undergo a mortgage modification process as dictated by the federal Home
Affordable Modification Program (“HAMP”) and the National Mortgage Settlement (“NMS”).
(Id. ¶¶ 5, 13.) The complaint describes HAMP as a federal government program that
“incentivizes participating servicers to enter into agreements with struggling homeowners in
order to make the monthly payments more affordable” and the NMS as “requir[ing] mortgage
services [sic]3 to comply with extensive guidelines including… timely processing modification
applications.” (Id. at 5.) The TPP agreement “was in the form of written and oral
communications that included expressed terms requiring the Plaintiff to provide certain
information after which time the Defendants would complete a formal offer proposing a
permanent loan modification.” (Id. ¶ 5.) Markey has provided no further details about the
contents of the alleged written communications.
According to Markey, she submitted the required documents, answered all questions, and
received oral confirmation that the documents had been received and reviewed. (Id. ¶¶ 13-14.)
Ditech then told her “that her mortgage would be modified and that the pending foreclosure
proceeding would be terminated.” (Id. ¶ 13.) Markey relied on this statement and did nothing to
defend herself in the foreclosure action. (Id. ¶¶ 14, 56.) But instead of moving forward on a

1

For simplicity, I refer to the company as Ditech throughout this ruling.

2

This is sometimes also referred to as a “Trial Period Plan.” See, e.g., Compl. at 1.

3

I assume that the plaintiff meant “servicers” rather than “services.”
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modification proposal, Ditech delayed processing, did not offer a permanent modification of the
loan, and continued to pursue foreclosure. (Id. ¶¶ 9, 14, 16, 18.)
Ditech ultimately obtained a strict foreclosure judgment in Connecticut Superior Court on
September 8, 2014, with title vesting in Ditech on January 17, 2015. (ECF Nos. 21-4, 21-5;
Green Tree Servicing LLC v. Janice B. Markey, No. DBD-CV14-6014390-S.) Fannie Mae then
filed a summary process action in Connecticut Superior Court seeking Markey’s eviction, and
obtained judgment of immediate possession after default on October 29, 2015. Federal National
Mortgage Association v. Janice B. Markey, No. DBD-CV15-6018306-S. On October 30, 2015,
Markey filed a motion to open the judgment of default for failure to appear and the judgment for
immediate possession, which remains pending. Id.
Markey filed this action on November 20, 2015, along with a motion for temporary
restraining order and/or preliminary injunction seeking a stay of the summary process action.
(ECF Nos. 1, 2.) On January 20, 2016, Defendants filed a consolidated motion to dismiss the
complaint and opposition to the motion for preliminary injunction. (ECF No. 21.)
II.

Standard of Review
In evaluating whether a plaintiff has stated a claim for relief, the Court must “accept as

true all factual allegations in the complaint and draw all reasonable inferences” in the plaintiff's
favor. Cruz v. Gomez, 202 F.3d 593, 596 (2d Cir. 2000). Courts will not accept as true
conclusory allegations and may only allow the case to proceed if the complaint pleads “enough
facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009) (citing Twombly, 550 U.S. at 554–
55). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed
factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief

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requires more than labels and conclusions, and a formulaic recitation of the elements of a cause
of action will not do.” Twombly, 550 U.S. at 555 (internal citations and quotations omitted).
III.

Discussion
A. Motion to Dismiss
i.

Breach of Contract (Count One)
Defendants argue that Markey’s breach of contract claim must be dismissed because any

alleged contract is unenforceable under the statute of frauds (among other reasons). “The
elements of a breach of contract claim are the formation of an agreement, performance by one
party, breach of the agreement by the other party, and damages.” Meyers v. Livingston, Adler,
Pulda, Meiklejohn and Kelly, P.C., 311 Conn. 282, 298, (2014) (internal citation omitted). The
Connecticut statute of frauds states, in relevant part, “[n]o civil action may be maintained in the
following cases unless the agreement, or a memorandum of the agreement, is made in writing
and signed by the party, or the agent of the party, to be charged:... (4) upon any agreement for the
sale of real property or any interest in or concerning real property... or (6) upon any agreement
for a loan in an amount which exceeds fifty thousand dollars.” Conn. Gen. Stat. § 52–550(a). In
Connecticut, the statute of frauds “applies to purported oral modifications to existing mortgage
agreements.” Halkiotis v. WMC Mortgage Corp., 144 F. Supp. 3d 341, 355 (D. Conn. 2015). It
also applies to agreements to forbear from foreclosure. Sovereign Bank v. Licata, 116 Conn.
App. 483, 496–97 (2009) (“If the claim were based solely on the alleged failure of [the
Mortgagee] to live up to the terms of an oral forbearance agreement, it would be barred by the
statute of frauds.”).
At times, the complaint suggests that part of the alleged contract involved an oral
agreement to forbear from foreclosure. See Compl. ¶ 13 (“The Plaintiff forwarded the requested

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documents and received oral confirmation by the Defendants that her Documents were received
and reviewed and that her mortgage would be modified and that the pending foreclosure
proceeding would be terminated.”). To the extent that the complaint relies on such a contract
theory, it fails to state a claim upon which relief can be granted because the agreement was not in
writing as required by the statute of frauds.
The complaint also includes other allegations suggesting that the core of the alleged
contract was a Trial Period Plan agreement to participate in a mortgage modification process.4
Construing the complaint in favor of Markey, she alleges, albeit inconsistently, that she entered
into a TPP agreement with Defendants that was at least in part in writing. See Compl. ¶ 5 (“This
TPP Agreement [proposed by Ditech] was in the form of written and oral communications that
included expressed terms requiring the Plaintiff to provide certain information after which time
the Defendants would complete a formal offer proposing a permanent loan modification.”) Yet
nowhere does Markey allege that either of the Defendants signed the TPP, as required by the
statute of frauds. I therefore grant the motion to dismiss as to Count One.
ii.

Breach of the Implied Covenant of Good Faith and Fear Dealing (Count Two)
Because Markey has not plausibly alleged the existence of an enforceable contract, I must

also dismiss her claim of breach of the implied covenant of good faith and fair dealing. See
Maloney v. Connecticut Orthopedics, P.C., 47 F. Supp. 2d 244, 249 (D. Conn. 1999) (“To assert

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Defendants also suggest that Markey claims a breach contract based on a theory that she has
private right of action or standing as a third party beneficiary to enforce HAMP or the NMS.
However, Markey does not appear to make these claims. While her complaint references both
HAMP and the NMS, she argues that the programs should inform the court’s interpretation of the
alleged mortgage modification process agreement, as discussed infra, rather than provide a
private right of action. (ECF No. 30 at 4.)
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a claim based on the covenant of good faith and fair dealing, a contract must have been in
existence.”)
iii.

Promissory Estoppel (Count Three)
Defendants next contend that Markey’s promissory estoppel claim fails as a matter of law

because she does not allege a sufficiently clear and definite promise to grant a loan modification,
and the alleged agreement lacks key terms such as interest rate and payment amount.5 “A
fundamental element of promissory estoppel… is the existence of a clear and definite promise
which a promisor could reasonably have expected to induce reliance.” D'Ulisse-Cupo v. Bd. of
Directors of Notre Dame High Sch., 202 Conn. 206, 213 (1987).
Drawing all reasonable inferences in Markey’s favor, I find that she does allege a
sufficiently clear and definite promise that Defendants could reasonably have expected to induce
reliance. Specifically, she alleges that Defendants promised that they would timely complete the
process to propose a permanent loan modification if she provided certain information. See
Compl. ¶ 5; see also Compl. ¶ 18 (“The Defendants breached expressed and implied terms that
required them to extend the offers of a permanent modification within a reasonable period of

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Defendants did not raise a statute of frauds defense in connection with the promissory estoppel
claim. I therefore do not address it here, except to note that the applicability of statute of frauds
to promissory estoppel appears to be an undecided issue in Connecticut. See Glazer v. Dress
Barn, Inc., 274 Conn. 33, 89 n. 38 (2005) ("This court previously has not addressed whether
promises that otherwise would be subject to the requirements of the statute of frauds may be
enforced on promissory estoppel grounds in the absence of compliance with the statute of
frauds”). In a footnote, Defendants argue that Markey’s promissory estoppel claim also fails
because she cannot establish detrimental reliance. Specifically, Defendants assert that “[a]t the
time Markey applied for a loan modification, she had defaulted and judgment of strict
foreclosure had already entered.” (ECF No. 21 at 13.) I do not address that argument here,
because to do so would require me to go beyond the pleadings. Though Defendants included a
“Loan Modification Request” as Exhibit F (Id. at 4), it is not clear if this was Markey’s first or
only request, nor is it clear how the request corresponds with the allegations in the complaint.
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time following the Plaintiff’s performance as required under TPP Agreements.”). I am persuaded
by a similar Seventh Circuit case,6 in which the court reasoned that even though the TPP
agreement “did not specify the exact terms of the permanent loan modification, including the
interest rate, the principal balance, loan duration, and the total monthly payment,” it nevertheless
clearly required that the mortgagee “offer some sort of good-faith permanent modification to
[Plaintiff] consistent with HAMP guidelines.” Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547,
644, 645 (7th Cir. 2012) (emphasis in original); see also Corvello v. Wells Fargo Bank, NA, 728
F.3d 878, 883 (9th Cir. 2013) (“The more natural and fair interpretation of the TPP is that the
servicer must send a signed Modification Agreement offering to modify the loan once borrowers
meet their end of the bargain…. there could be no actual mortgage modification until all the
requirements were met, but the servicer could not unilaterally and without justification refuse to
send the offer.”); Bosque v. Wells Fargo Bank, N.A., 762 F. Supp. 2d 342, 352 (D. Mass. 2011)
(“the TPP contains all essential and material terms necessary to govern the trial period
repayments and the parties' related obligations.”).7
With regard to HAMP guidelines, the court in Wigod explained that these guidelines,
though not providing for a private right of action themselves, inform the interpretation of the
terms of the TPP. Wigod, 673 F.3d at 555 (“HAMP guidelines provided precisely [the] existing

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As a recent decision in this district noted, there is considerable disagreement among courts as to
whether TPP agreements are enforceable with regard to contracts: “[t]he Second Circuit has not
weighed in on the issue, but the First, Ninth, and Seventh Circuits have held that the TPP is an
enforceable contract.” Henderson v. Wells Fargo Bank, NA, No. 3:13-CV-378 (JBA), 2016 WL
324939, at *4 n. 5 (D. Conn. Jan. 27, 2016) (citing cases).
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Although the discussions of the TPP in these cases focused on whether the plaintiff had
adequately pled breach of contract claims, the finding that the TPP was sufficiently definite to
form the basis of a contractual claim also supports my conclusion that the plaintiff’s allegations
here are sufficiently definite to plead a claim of promissory estoppel.
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standard by which the ultimate terms of [Plaintiff’s] permanent modification were to be set” and
“HAMP guidelines unquestionably informed the reasonable expectations of the parties to
[Plaintiff’s] TPP Agreement.”) (internal quotation marks omitted).
Defendants’ motion to dismiss the promissory estoppel claim is therefore denied.
B. Motion for Temporary Restraining Order and/or Preliminary Injunction
Finally, Markey’s motion for temporary restraining order and/or preliminary injunction is
denied, because the proposed injunction of state-court eviction proceedings is barred by the AntiInjunction Act, 28 U.S.C. § 2283. The Anti–Injunction Act provides that a district court “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.” Id. Markey has not demonstrated that any of these limited exceptions apply to her
case. Furthermore, “[c]ourts in this Circuit have repeatedly held that the Anti–Injunction Act
bars a federal court from enjoining state-court eviction proceedings.” Allen v. New York City
Hous. Auth., No. 10 CIV. 168 CM DCF, 2010 WL 1644956, at *3 (S.D.N.Y. Apr. 20, 2010)
(citing cases). “[P]rinciples of equity, comity, and federalism… must restrain a federal court
when asked to enjoin a state court proceeding,” Mitchum v. Foster, 407 U.S. 225, 243 (1972).
IV.

Conclusion
For the foregoing reasons, the Motion to Dismiss (ECF No. 21) is GRANTED as to

Counts One and Two and DENIED as to Count Three. The Motion for Temporary Restraining
Order and/or Preliminary Injunction (ECF No. 2) is DENIED.
Markey may choose, if she wishes, to re-plead her breach of contract and breach of the
covenant of good faith and fair dealing claims in an amended complaint that addresses the
defects discussed herein, consistent with Fed. R. Civ. P. 11. Otherwise, she may simply proceed

8

on the alternative promissory estoppel claim. Markey is granted leave to file any amended
complaint within 21 days of this ruling; if no amended complaint is filed within that time, the
case will continue as to the promissory estoppel claim only. Should Markey choose to amend her
complaint and should Defendants then file a new motion to dismiss, Defendants may incorporate
by reference any prior briefing.
SO ORDERED this 22nd day of September, 2016, at Hartford, Connecticut.

/s/
Michael P. Shea
United States District Judge

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