Shaffer v. Bank of New York Mellon et al
Filing
31
ORDER: Defendants Bank of New York Mellon and Shellpoint LLC's Motion to Dismiss the Second Amended Complaint (Doc. # 29 ) is DENIED. Signed by Judge Virginia M. Hernandez Covington on 7/19/2017. (DMD)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
LINDA L. SHAFFER,
Plaintiff,
v.
Case No. 8:17-cv-565-T-33AAS
BANK OF NEW YORK MELLON
and SHELLPOINT LLC,
Defendants.
______________________________/
ORDER
This
matter
comes
before
the
Court
pursuant
to
Defendants Bank of New York Mellon and Shellpoint LLC’s Motion
to Dismiss the Second Amended Complaint (Doc. # 29), filed on
July 3, 2017. Plaintiff Linda Shaffer filed a response on
July 14, 2017. (Doc. # 30). For the reasons that follow, the
Motion is denied.
I.
Background
Shaffer obtained a mortgage loan in June of 2006 to
purchase a new home. (Doc. # 28 at ¶ 7). That loan was sold
to Bank of New York Mellon later that year. (Id. at ¶ 8).
Then, on January 17, 2012, Bank of New York Mellon sued for
foreclosure because Shaffer had allegedly defaulted on her
loan payments. (Id. at ¶ 9).
1
Years
later,
on
September
Shaffer’s loan servicer
7,
2016,
Shellpoint
—
— “made an offer to Shaffer to
participate in a cooperative short sale program in which she
was
eligible
to
receive
up
to
$15,960.02
in
relocation
assistance.” (Id. at ¶ 10; Doc. # 28-1 at 2). “Shaffer
accepted the offer to participate in the cooperative short
sale program and
sent a letter”
and
“a
loss mitigation
application to Shellpoint” on September 14, 2016. (Doc. # 28
at ¶¶ 11-12; Doc. # 28-1 at 4-10). “The loss mitigation
application
required
Shaffer
to
report
if
she
was
in
bankruptcy or if she has received a discharge in bankruptcy”
and, as of September 14, 2016, “Shaffer was not in an active
bankruptcy, nor had she received a discharge.” (Doc. # 28 at
¶ 12).
On September 16, 2016, after “Shellpoint sent a letter
to Shaffer indicating that additional documents were needed,”
Shaffer
sent
“the
additional
documents
to
Shellpoint
to
complete the loss mitigation application.” (Id. at ¶¶ 13-14).
Then, on September 21, 2016, “Shaffer provided all of the
documents
required
to
accept
the
participation
in
the
cooperative short sale program.” (Id. at ¶ 15). “On October
7,
2016,
Shaffer
provided
additional
documents
per
a
conversation with Shellpoint representative Rosario Cardoza
2
to participate in the cooperative short sale program.” (Id.
at ¶ 16). Again, “[o]n October 12, 2016, Shaffer in response
to a conversation with Rosario Cardoza provided copies of two
documents that Shellpoint requested to complete the package
for participation in the cooperative short sale program.”
(Id. at ¶ 17).
Yet, on September 22, 2016, the foreclosure action was
set for trial on November 23, 2016. (Id. at ¶ 18). And, on
November 3, 2016, “Shellpoint sent a letter from Rosario
Cardoza to Shaffer that failed to indicate that she ha[d] a
complete loss mitigation package pending and requested that
if she was interested in loss mitigation she would need to
fill out an application.” (Id. at ¶ 19). At trial, Bank of
New York Mellon moved “to obtain a foreclosure judgment and
for sale of the home against Shaffer.” (Id. at ¶ 20). “The
foreclosure judgment was entered on November 23, 2016.” (Id.
at ¶ 21; Doc. # 28-1 at 12-16).
On March 8, 2017, Shaffer initiated this action. (Doc.
# 1). The Court dismissed the Complaint as a shotgun pleading
on May 2, 2017. (Doc. # 21). Shaffer then filed her Amended
Complaint. (Doc. # 24). Defendants filed their Motion to
Dismiss the Amended Complaint on May 24, 2017, (Doc. # 25),
3
which the Court granted as unopposed on June 8, 2017. (Doc.
# 27).
Shaffer filed her Second Amended Complaint on June 21,
2017, alleging: a violation of 12 C.F.R. § 1024.41(g) of
Regulation X, which implements the provisions of the Real
Estate Settlement Procedures Act (RESPA), 12 U.S.C. §§ 2601,
et seq., by Shellpoint (Count I); breach of contract implied
in fact by both Defendants (Count II); and breach of implied
covenant of good faith and fair dealing (Count III) by both
Defendants. (Doc. # 28). Defendants then filed the instant
Motion to Dismiss the Second Amended Complaint (Doc. # 29),
and Shaffer responded on July 14, 2017, (Doc. # 30). The
Motion is ripe for review.
II.
Legal Standard
On a motion to dismiss, this Court accepts as true all
the allegations in the complaint and construes them in the
light most favorable to the plaintiff. Jackson v. Bellsouth
Telecomms., 372 F.3d 1250, 1262 (11th Cir. 2004). Further,
this
Court
favors
the
plaintiff
with
all
reasonable
inferences from the allegations in the complaint. Stephens v.
Dep’t of Health & Human Servs., 901 F.2d 1571, 1573 (11th
Cir. 1990)(“On a motion to dismiss, the facts stated in [the]
4
complaint and all reasonable inferences therefrom are taken
as true.”). However,
[w]hile 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 requires
more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action
will not do. Factual allegations must be enough to
raise a right to relief above the speculative
level.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)(internal
citations omitted). Courts are not “bound to accept as true
a legal conclusion couched as a factual allegation.” Papasan
v. Allain, 478 U.S. 265, 286 (1986). Furthermore, “[t]he scope
of
review
must
be
limited
to
the
four
corners
of
the
complaint.” St. George v. Pinellas Cty., 285 F.3d 1334, 1337
(11th Cir. 2002).
III. Analysis
Defendants argue the Complaint should be dismissed with
prejudice for failure to state claims for any of the three
counts. The Court will address each count in turn.
A. Regulation X
The Second Amended Complaint alleges Shaffer completed
her
loss
mitigation
application
sent
to
Shellpoint
on
September 16, 2016. (Doc. # 28 at ¶ 14). The regulation under
5
which Shaffer brings her claim, 12 C.F.R. § 1024.41(g),
states:
If a borrower submits a complete loss mitigation
application after a servicer has made the first
notice or filing required by applicable law for any
judicial or non-judicial foreclosure process but
more than 37 days before a foreclosure sale, a
servicer shall not move for foreclosure judgment or
order of sale, or conduct a foreclosure sale,
unless
certain exceptions, which no party argues are applicable
here, are met. 12 C.F.R. § 1024.41(g). For purposes of the
regulation,
A complete loss mitigation application means an
application in connection with which a servicer has
received all the information that the servicer
requires from a borrower in evaluating applications
for the loss mitigation options available to the
borrower. A servicer shall exercise reasonable
diligence in obtaining documents and information to
complete a loss mitigation application.
12 C.F.R. § 1024.41(b)(1).
Shaffer’s initial application is attached as an exhibit
to the Second Amended Complaint. (Doc. # 28-1 at 7-10).
Shellpoint argues it is incomplete on its face and contains
false information. (Doc. # 29 at 6-7). Shellpoint asserts:
“Because Shellpoint had not ‘received all the information
that
[it]
require[d]
from
a
borrower
in
evaluating
applications’ for loss mitigation . . . by September 14, 2016
(or any later date), the regulation requiring it to pause the
6
foreclosure process did not apply.” (Id. at 8)(quoting 12
C.F.R. § 1024.41(b)(1)).
But,
in
acknowledges
the
that
Second
she
Amended
provided
documentation to Shellpoint
Complaint,
further
Shaffer
information
and
to complete the application.
(Doc. # 28 at ¶¶ 13-15). Shaffer does not elaborate on what
information and documents she provided Shellpoint, and has
not attached these documents as exhibits. Therefore, the
supposed flaws or misrepresentations Defendants point out in
the
initial
application
do
not
show
that
Shaffer
never
completed the application. And the Court will not look outside
the four corners of the Second Amended Complaint to evaluate
whether the supplemental information submitted by Shaffer
failed to complete the application, as Shellpoint alleges.
See St. George, 285 F.3d at 1337.
Because
Shaffer
inconsistencies
or
may
have
errors
in
clarified
her
the
September
apparent
14,
2016,
application more than 37 days before the foreclosure sale,
the Court cannot determine from the face of the Second Amended
Complaint
and
exhibits
that
Shaffer
never
completed
her
application before the 37-day deadline. Therefore, this claim
survives the motion to dismiss stage.
7
B.
Breach of Contract Implied in Fact
In Count II, Shaffer asserts a claim for breach of
contract implied in fact, rather than a claim for breach of
contract as she had asserted in her previous complaints. (Doc.
# 28 at 5). Although Shaffer changed her theory to breach of
contract
implied
in
fact,
Defendants
present
the
same
arguments for this claim that they raised for the traditional
breach of contract claim in their previous motion to dismiss
the Amended Complaint. (Doc. # 25 at 8-9; Doc. # 29 at 8-9).
As a result, Defendants have failed to address the differences
between breach of contract and breach of contract implied in
fact claims.
Under Florida law, an implied-in-fact contract “is one
form of an enforceable contract; it is based on a tacit
promise, one that is inferred in whole or in part from the
parties’ conduct, not solely from their words.” Commerce
P’ship 8098 Ltd. P’ship v. Equity Contracting Co., Inc., 695
So.2d 383, 385 (Fla. 4th DCA 1997); see also Sheppard v. M &
R Plumbing, Inc., 82 So. 3d 950, 952 n.2 (Fla. 1st DCA
2011)(“A contract implied in fact requires actual agreement
and
results
in
a
valid,
enforceable
contract.”).
“In
a
contract implied in fact, the assent of the parties is derived
from other circumstances, including their course of dealing
8
or usage of trade or course of performance.” Rabon v. Inn of
Lake
City,
Inc.,
693
So.
2d
1126,
1131
(Fla.
1st
DCA
1997)(citing Restatement (Second) of Contracts § 4, cmt. a
(1982)). Whether a contract is implied in fact is “inferred
from the facts and circumstances of the case.” Eskra v.
Provident Life & Accident Ins. Co., 125 F.3d 1406, 1413 (11th
Cir. 1997).
Still, “Florida courts use breach of contract analysis
to evaluate claims of breach of contract implied in fact and
breach of the covenant of good faith and fair dealing.”
Resnick v. AvMed, Inc., 693 F.3d 1317, 1325 (11th Cir. 2012).
“In order to properly plead a claim for breach of contract
under Florida law, a plaintiff must prove the existence of a
valid
contract,
a
breach
of
such
contract,
and
damages
resulting from such breach.” Senter v. JPMorgan Chase Bank,
N.A., 810 F. Supp. 2d 1339, 1345 (S.D. Fla. 2011). A plaintiff
must show the existence of a valid contract by alleging: “(1)
an offer; (2) acceptance of the offer; (3) consideration; and
(4) sufficient specification of the essential terms of the
agreement.” Id. Essentially, to state a claim for breach of
contract implied in fact, the elements of a traditional breach
of contract claim must be alleged, but the assent required to
form a valid contract may be inferred from the circumstances.
9
Defendants argue that this claim fails because Shaffer
“does not allege facts to establish a valid contract to sell
her property existed” and that the “exhibits attached to
[Shaffer’s]
complaint
show,
in
fact,
the
parties
never
reached an agreement on her short sale.” (Doc. # 29 at 8).
They also argue the letter sent by Shellpoint to Shaffer “did
not establish any agreement about a short sale or satisfy the
Statute of Frauds.” (Id. at 9).
The trouble with Defendants’ first argument is that they
only address this claim as a standard breach of contract
claim.
They
incorrectly
interpret
the
Second
Amended
Complaint as alleging Shellpoint’s offer letter and Shaffer’s
sending her loss mitigation application in response alone
created an express contract. But the theory of contracts
implied in fact, which the Second Amended Complaint invokes,
exists exactly for circumstances in which the conduct of the
parties reveals that a contract does exist, even if an express
contract has not been executed. See Baron v. Osman, 39 So.3d
449, 451 (Fla. 5th DCA 2010)(“A contract based on the parties’
words is characterized as express, whereas, a contract based
on the parties’ conduct is said to be implied in fact. . . .
While the law will not recognize an implied-in-fact contract
where an express contract exists, a contract may be inferred
10
where an express contract fails for lack of proof.”). As
Shaffer correctly notes in her response, “Defendants make no
arguments that Shaffer has not alleged fact[s] sufficient to
establish a contract implied in fact.” (Doc. # 30 at 4). Thus,
Defendants’ citation to cases dealing with traditional breach
of contract claims is unavailing.
Shaffer alleges in the Second Amended Complaint that
each party assented to enter a contract through its conduct.
After
“accept[ing]
the
offer
to
participate,”
Shaffer
communicated with a Shellpoint representative, sent further
requested documentations to Shellpoint, and “satisfied all
conditions
to
participate
in
the
cooperative
short
sale
program by obtaining a realtor, listing the property for sale,
and obtaining a purchase contract.” (Doc. # 28 at ¶¶ 15-17,
35-36). Shaffer also “took affirmative action to make [a]
motion to continue the trial in reliance on the participation
in the cooperative short sale program” and “waived defenses
in court as consideration for the contract.” (Id. at ¶¶ 3839). For its part, Shellpoint “took action to affirm each
party’s participation in the program to avoid a foreclosure
by ordering an appraisal of the property.” (Id. at ¶ 37).
Thus, Shaffer has alleged that the parties’ conduct after
Shellpoint sent its letter and Shaffer submitted her loss
11
mitigation
application
demonstrates
the
existence
of
a
contract implied in fact — a contention that Defendants fail
to address in their Motion.
Additionally,
Defendants
argue
“Shellpoint’s
letter
would not be enforceable under Florida’s Statute of Frauds
even if the letter had guaranteed approval of Ms. Shaffer’s
application” because “[t]he letter [] did not contain any
material terms” and “did not establish any agreement about a
short sale.” (Doc. # 29 at 9). “The statute of frauds is an
affirmative defense under Federal Rule of Civil Procedure
8(c).” Hewitt v. Mobile Research Tech., Inc., 285 F. App’x
694, 696 (11th Cir. 2008). Therefore, the breach of contract
implied in fact claim can only be dismissed for failure to
comply with the Statute of Frauds if it is clear on the face
of the Second Amended Complaint that the contract was never
reduced to a sufficient writing. See LeFrere v. Ouezada, 582
F.3d 1260, 1263 (11th Cir. 2009)(“If the complaint contains
a claim that is facially subject to an affirmative defense,
that claim may be dismissed under Rule 12(b)(6).”).
“Several writings may constitute a valid and binding
written contract when they evidence a complete meeting of the
minds of the parties and an agreement upon the terms and
conditions of the contract.” Waite Dev., Inc. v. City of
12
Milton, 866 So.2d 153, 155 (Fla. 1st DCA 2004); see also U.S.
Distribs., Inc. v. Block, No. 09-21635-CIV, 2009 WL 3295099,
at *5 (S.D. Fla. Oct. 13, 2009)(“[T]he e-mails, several of
which are signed by the Defendant and the Plaintiff’s alleged
agents,
attached
to
the
complaint
meet
the
writing
requirement of the statute of frauds. . . . Florida courts
are flexible as to what kinds of documents satisfy the writing
requirement,
and
Florida
law
provides
that
electronic
signatures ‘may be used to sign a writing and shall have the
same force and effect as a written signature.’” (quoting Fla.
Stat. § 668.004)).
Here,
Shaffer
alleges
that
there
were
multiple
communications between herself and Shellpoint following the
initial submission of her loss mitigation application. (Doc.
# 28 at ¶¶ 14-17). She mentions two “conversations” with
Shellpoint
representative
Rosario
Cardoza,
but
does
not
specify whether those conversations were written or oral.
(Id. at ¶¶ 16-17). And Shaffer was not obligated to attach
copies of all written communications between herself and
Shellpoint that could form the basis of a contract as exhibits
to her Second Amended Complaint. See LMP Ninth St. Real
Estate, LLC v. U.S. Bank Nat’l Ass’n, No. 8:16-cv-2463-T33AEP, 2016 WL 6947381, at *4 (M.D. Fla. Nov. 28, 2016)(“LMP
13
Ninth Street [was not] obligated to attach all writings
comprising
the
alleged
Therefore,
while
agreement
Shellpoint’s
to
letter
its
alone
Complaint.”).
may
not
have
created a binding contract satisfying the Statute of Frauds,
it is not clear on the face of the Second Amended Complaint
whether all the written communications between Shaffer and
Shellpoint constitute a valid contract that complies with the
Statute of Frauds. See Id. at *3 (“There is nothing on the
face of the Complaint to indicate that no other writings exist
regarding the alleged agreement to reduce the prepayment fee
or
that,
if
multiple
writings
exist,
they
would
be
insufficient to form a valid contract in the aggregate.”).
Defendants’ argument that the initial letter inviting Shaffer
to apply for a loan modification cannot satisfy the Statute
of Frauds does not preclude the possibility that further
writings were undertaken between the parties, which in the
aggregate created a contract that complies with the Statute
of Frauds.
Defendants have not argued that contracts implied in
fact, which are typically established through conduct other
than express writings, may never satisfy the Statute of
Frauds. And there are no allegations in the Second Amended
Complaint that facially foreclose the possibility that the
14
alleged contract satisfies the Statute of Frauds. Therefore,
Defendants have not carried the burden of establishing the
Statute of Frauds affirmative defense. See Sleit v. Ricoh
Corp., No. 8:07-cv-724-T-23TBM, 2008 WL 4826113, at *4 (M.D.
Fla. Nov. 4, 2008)(“The party alleging unenforceability due
to the statute of frauds has the burden of establishing this
defense.” (citing Spanziani v. Bancroft, 618 So.2d 744, 746
(Fla. 5th DCA 1993)). At this juncture, this claim survives.
C.
Breach of Implied Covenant of Good Faith and Fair
Dealing
In Count III, Shaffer asserts “Defendants breached the
implied covenant of good faith and fair dealing by pursuing
a foreclosure judgment and order of sale while the parties
had
agreed
to
avoid
foreclosure
by
participating
in
a
cooperative short sale program.” (Doc. # 28 at ¶ 52).
“Under Florida law, the implied covenant of good faith
and fair dealing is a part of every contract.” Burger King
Corp. v. Weaver, 169 F.3d 1310, 1315 (11th Cir. 1999). “[A]
proper pleading of breach of the covenant of good faith and
fair dealing necessarily requires the pleading of a valid
contract.” Senter, 810 F. Supp. 2d at 1362. “To state a claim
for breach of the implied covenant of good faith under Florida
law, a plaintiff must allege that ‘an express term of a
15
contract was violated.’” Hamilton v. Suntrust Mortg. Inc., 6
F. Supp. 3d 1300, 1310 (S.D. Fla. 2014)(quoting Medinis v.
Swan, 955 So.2d 595, 597 (Fla. 2d DCA 2007)).
Defendants argue that because “[n]o contract existed, []
no breach of the implied covenant of good faith and fair
dealing occurred.” (Doc. # 29 at 10). As discussed in the
previous section, Shaffer has plausibly pled the existence of
a contract implied in fact, based on the conduct of both
parties during the loss mitigation application process and
the
foreclosure
proceedings.
Therefore,
this
claim
also
survives.
Accordingly, it is now
ORDERED, ADJUDGED, and DECREED:
Defendants Bank of New York Mellon and Shellpoint LLC’s
Motion to Dismiss the Second Amended Complaint (Doc. # 29) is
DENIED.
DONE and ORDERED in Chambers in Tampa, Florida, this
19th day of July, 2017.
16
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