FOGG et al v. OCWEN LOAN SERVICING LLC
Filing
27
MEMORANDUM OF DECISION AND ORDER granting in part and denying in part 16 Motion to Amend Complaint. By MAGISTRATE JUDGE JOHN H. RICH III. (jgw)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
STANLEY FOGG and HELEN FOGG,
Plaintiffs
v.
OCWEN LOAN SERVICING, LLC,
Defendant
)
)
)
)
)
)
)
)
)
No. 2:14-cv-454-GZS
MEMORANDUM DECISION AND ORDER ON MOTION TO AMEND
Plaintiffs Stanley and Helen Fogg (“the Foggs”) seek to amend their complaint to set forth
additional facts, add two parties, Bank of New York Mellon (“Mellon Bank”) and Bank of
America, N.A. (“Bank of America”), and add claims for (i) violation of the Maine Consumer
Credit Code, 9-A M.R.S.A. §§ 9-403(F)-(G), against all defendants, (ii) violation of the Maine
Unfair Trade Practices Act (“UTPA”), 5 M.R.S.A. § 205-A et seq., against defendants Ocwen
Loan Servicing, LLC (“Ocwen”) and Mellon Bank, (iii) negligence, against all defendants, and
(iv) intentional and/or negligent infliction of emotional distress, against all defendants. See
generally Plaintiffs’ Motion To Amend Complaint (“Motion”) (ECF No. 16); [Proposed] First
Amended Complaint (“Proposed Complaint”), Exh. 1 (ECF No. 16-1) thereto.
Ocwen does not object to amending the complaint to add the Foggs’ proposed supplemental
facts and the exhibits referenced therein, but argues that the Motion should otherwise be denied on
the basis that three of the four proposed new claims – those seeking redress for UTPA violations,
negligence, and intentional/negligent infliction of emotional distress – are futile. See Opposition
of Defendant Ocwen Loan Servicing, LLC to Plaintiffs’ Motion To Amend and Request for
Hearing (“Opposition”) (ECF No. 17). It also challenges the addition of new parties. See id. at 11
2. I granted Ocwen’s request for a hearing, see ECF Nos. 18, 21, which was held on March 27,
2015.1 With the benefit of that hearing, I grant the Motion insofar as it seeks to add new facts, two
new parties, and a Maine Consumer Credit Code claim against all defendants, and otherwise deny
it. I also direct the plaintiffs to file on the docket, no later than April 15, 2015, an amended
complaint consistent herewith.2
I. Applicable Legal Standards
Pursuant to Federal Rule of Civil Procedure 15(a)(2), “[t]he court should freely give leave
[to amend a pleading] when justice so requires.” Fed. R. Civ. P. 15(a)(2). Leave to amend should
be granted in the absence of reasons “such as undue delay, bad faith or dilatory motive on the part
of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment,
etc. . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962).
The First Circuit has explained:
A motion to amend a complaint will be treated differently depending on its timing
and the context in which it is filed. . . . As a case progresses, and the issues are
joined, the burden on a plaintiff seeking to amend a complaint becomes more
exacting. Scheduling orders, for example, typically establish a cut-off date for
amendments (as was apparently the case here). Once a scheduling order is in place,
the liberal default rule is replaced by the more demanding “good cause” standard
of Fed. R. Civ. P. 16(b). This standard focuses on the diligence (or lack thereof) of
At the hearing, on the strength of the Foggs’ counsel’s representation that the only actionable conduct alleged in the
Proposed Complaint is conduct postdating the parties’ negotiation of a consent judgment in state court on or about
August 6, 2013, Ocwen’s counsel withdrew a further “procedural objection” that had been set forth at pages 2 to 4 of
the Opposition under the heading, “There Are No New Facts and No Previously Unknown Parties.” See Opposition
at 2-4. In addition, during the hearing, I denied an oral motion by the Foggs to further amend the complaint, without
prejudice to their filing a new written motion to amend.
2
On April 7, 2015, the plaintiffs’ counsel contacted the Clerk’s Office by email to advise that the parties had
discovered that they made a mutual mistake with respect to certain allegations in the operative complaint that the
defendant had admitted. She noted that she had referenced at least one of the incorrect facts in the Motion, the
proposed amended complaint, and at oral argument. She stated that she wished to call this to my attention as soon as
possible because the Motion was still pending, and to seek my recommendation for correcting the pleadings. Because
the asserted errors are not outcome-determinative and there has not, as yet, been any formal correction, I perceive no
need to alter this decision. The plaintiffs are directed to incorporate any needed corrections in the amended complaint
that I have ordered be filed by April 15, 2015. The defendant will have the opportunity to respond by way of its
answer to that amended complaint.
1
2
the moving party more than it does on any prejudice to the party-opponent. Where
the motion to amend is filed after the opposing party has timely moved for summary
judgment, a plaintiff is required to show “substantial and convincing evidence” to
justify a belated attempt to amend a complaint.
Steir v. Girl Scouts of the USA, 383 F.3d 7, 11-12 (1st Cir. 2004) (citations, internal quotation
marks, and footnotes omitted).
The Foggs filed the Motion on January 26, 2015, see Motion at 1, prior to the parties’
February 20, 2015, deadline to amend pleadings and join parties, see Scheduling Order (ECF No.
9) at 2. Therefore, the liberal default rule applies.
II. Discussion
A. Futility
1. Applicable Legal Standards
An amendment is futile when “the complaint, as amended, would fail to state a claim upon
which relief could be granted.” Glassman v. Computervision Corp., 90 F.3d 617, 623 (1st Cir.
1996). “In assessing futility, the district court must apply the standard which applies to motions
to dismiss under [Federal Rule of Civil Procedure] 12(b)(6).” Adorno v. Crowley Towing & Trans.
Co., 443 F.3d 122, 126 (1st Cir. 2006).
The Supreme Court has stated:
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 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 Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations and internal punctuation
omitted). This standard requires the pleading of “only enough facts to state a claim to relief that is
F
plausible on its face.” Id. at 570. “A claim has facial plausibility when the plaintiff pleads factual
3
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
In ruling on a motion to dismiss under Rule 12(b)(6), a court assumes the truth of all of the
well-pleaded facts in the complaint and draws all reasonable inferences in favor of the plaintiff.
Román-Oliveras v. Puerto Rico Elec. Power Auth., 655 F.3d 43, 45 (1st Cir. 2011).
2. Factual Background
In relevant part, the Foggs allege:
In December 2007, following Helen Fogg’s serious illness and layoff from her job, the
Foggs fell behind on home loan payments that they had been making since they had obtained a
home loan in October 1998 from Countrywide Home Loans, Inc. (“Countrywide”). See Proposed
Complaint ¶¶ 20-21, 24. Bank of America was, at all relevant times, the Master Servicer of the
Foggs’ loan, see id. ¶ 6, and Mellon Bank was, at all relevant times, the trustee of a trust that
obtained their loan and accompanying mortgage, see id. ¶¶ 7, 23.
In February 2008, Stanley Fogg suffered a life-threatening illness that left him hospitalized
for almost two months. See id. ¶ 25. At about this time, Helen Fogg tried to work with
Countrywide to obtain a loan modification but was provided conflicting information about the
amount that the Foggs needed to send in to be eligible. See id. ¶ 26. In mid-2008, the servicing
of the Foggs’ loan was transferred to Litton Loan Servicing (“Litton”). See id. ¶ 27. The Foggs
sent two mortgage payments in 2008, but Litton declined to accept further payment in September
2008, informing them that their loan had been referred for foreclosure. See id. ¶ 29. Mellon Bank
instituted a foreclosure action in December 2008. See id. ¶ 30.
Commencing in January 2009, the Foggs engaged in what proved to be fruitless
negotiations with Litton to obtain a then newly-available Making Home Affordable loan
4
modification. See id. ¶¶ 32-42. In January 2010, in reliance on a statement by Kim Johnson of
Litton that, if they did not pay $25,000, their house would be sold that month, the Foggs moved
out of their home into a rental property. See id. ¶¶ 43, 45. They incurred moving costs and
provided a deposit and rent payment for the rental property. See id. ¶ 46. Shortly afterwards,
Mellon Bank moved for summary judgment in the foreclosure action, but the court denied its
motion and dismissed the action. See id. ¶ 47.
In February 2011, Mellon Bank filed a new foreclosure action. See id. ¶ 48. In May 2011,
the Foggs attended a mediation during which they believed that they had agreed with Litton to a
“deed in lieu of foreclosure” or “DIL,” under which any deficiency in the loan would be waived
and the foreclosure ended. See id. ¶ 51. During the mediation, they learned for the first time that
Johnson had been wrong, and that their house could not have been sold without a judgment. See
id. ¶ 52. However, by then, it would have caused them further financial hardship to move back
into their house because they had moved all of their belongings and were tied to a lease. See id.
¶ 53.
Ocwen acquired Litton in June 2011 and began servicing the Foggs’ loan in about
September 2011. See id. ¶¶ 54-55. The DIL never came to fruition, and the foreclosure continued
on the docket. See id. ¶ 56. In October 2011, the Foggs attended a hearing during which the court
extended their deadline to file a motion for summary judgment by 60 days. See id. ¶ 57. The
Foggs, who attended pro se, did not fully understand the process, and they did not file a summary
judgment motion. See id. ¶¶ 57-58. Following a February 12, 2013, pretrial hearing in the
foreclosure action, the Foggs obtained counsel. See id. ¶¶ 59-60. The Foggs’ counsel delivered a
demand letter pursuant to the UTPA to counsel for Mellon Bank, Litton, and Ocwen seeking either
5
a DIL or a consent to judgment with a waiver of deficiency and compensation to the Foggs for
Litton’s and Ocwen’s unfair and deceptive conduct in mismanaging their loan. See id. ¶ 61.
Following a series of negotiations, see id. ¶¶ 63-69, the parties consented to a judgment of
foreclosure and sale that provided, “no execution shall issue against either Defendant for any
deficiency balance[,]” id. ¶¶ 70-71. The court entered the judgment on August 8, 2013. See id.
¶ 70. The Foggs waived the 90-day redemption period provided by statute. See id. ¶ 72. The
Foggs paid more than $4,000 for legal representation in the foreclosure action, specifically to
negotiate a final resolution and consent judgment that would waive a significant potential
deficiency. See id. ¶ 74. They believed that everything was finally over and that they would no
longer have the mortgage debt hanging over their heads. See id. ¶ 73.
However, commencing in November 2013, Ocwen began to bill the Foggs for past-due
loan payments, interest, and/or costs of insurance placed on the Foggs’ former home. See id. ¶¶ 75103. These dunning notices have continued not only in the face of the court’s August 8, 2013,
judgment but also despite the Foggs’ counsel’s intervention on their behalf, Countrywide’s
recordation, on June 6, 2014, of a discharge of the Foggs’ mortgage, the sale of their former home
at auction on June 13, 2014, and the Foggs’ filing of the instant suit on October 28, 2014. See id.
¶¶ 82-103. Ocwen continues to send these notices directly to the Foggs despite the fact that they
are represented by counsel. See id. ¶ 103.
“Helen Fogg has suffered increased anxiety, irritability, depression, headaches, aches and
pains, and desperation as a result of Ocwen’s ongoing conduct[,]” and “Stanley Fogg has
perseverated on Ocwen’s conduct and has experienced increased irritability, depression, inability
to enjoy his family and friends, and a lack of desire to be social or even leave the house.” Id. ¶ 106.
The Foggs “feel violated and intimidated[,]” have experienced “increased tension in their
6
relationship[,]” and “fear that Ocwen is never going to stop harassing them until they pay the
money Ocwen claims they owe, which they could never afford.” Id.
3. Proposed UTPA Claim
The UTPA provides a cause of action to “[a]ny person who purchases or leases goods,
services or property, real or personal, primarily for personal, family or household purposes and
thereby suffers any loss of money or property, real or personal,” as a result of a prohibited act. 5
M.R.S.A. § 213(1).
For purposes of their UTPA claim, the Foggs allege that the conduct of Ocwen and Mellon
Bank in agreeing to a judgment that satisfied their outstanding debt and then pursuing attempts for
17 months thereafter to collect on the debt was unfair and deceptive. See Proposed Complaint
¶ 127. They assert that Ocwen’s conduct “was likely to and did cause the Foggs substantial harm
in that Ocwen is now seeking over $140,000 from the Foggs on the loan[,]” and “the Foggs
incurred over $4,000 in legal representation to finally arrive at the consent judgment which they
thought would fully satisfy the debt and avoid exactly what Ocwen has continued to do: collect on
the debt.” Id. ¶¶ 134-35.
Ocwen argues that the claim is futile because the Foggs “do not allege a loss of money or
property, substantial or otherwise.” Opposition at 5. The Foggs counter that they allege such a
loss in legal fees incurred in obtaining the consent judgment that Ocwen disregarded, and that
Ocwen’s allegations that they owe more than $100,000 constitute a substantial harm. See Reply
at 3.
Yet, as Ocwen indicates, see Opposition at 5, this court has previously rejected an argument
that the expense of retaining a lawyer to prevent or dispute allegedly unfair trade practices
constitutes a loss of money or property for purposes of the UTPA, see Poulin v. Thomas Agency,
7
746 F. Supp.2d 200, 205-06 (D. Me. 2010) (for purposes of the UTPA, monies spent by plaintiffs
to retain a lawyer to prevent collection efforts, defend against claims, and/or file suit “are expenses
that may be recoverable as attorneys fees – not actual damages”). The Foggs’ argument that
Ocwen’s insistence that they owe more than $100,000 constitutes a loss of money or property
likewise falls flat. As this court noted in Poulin, “The Law Court . . . has made clear that merely
speculative harms are not substantial enough to merit a violation of the UTPA.” Id. at 206 (citation
and internal quotation marks omitted) (holding that plaintiff’s speculation that he might have
incurred higher finance charges on a student loan as a result of defendant’s conduct did not
demonstrate a loss of money or property for purposes of the UTPA).3
The proposed UTPA claim against Ocwen and Mellon Bank, accordingly, is futile.
4. Proposed Negligence Claims
Ocwen next challenges the Foggs’ proposed addition of claims against all of the
defendants for negligence and negligent infliction of emotional distress, arguing that the Foggs fail
to establish that any of the defendants owed them a duty of care. See Opposition at 5-6.
“[T]he general rule in Maine is that without more, a mortgagee-mortgagor relationship
does not create a duty of care between a bank and a customer.” Hamilton v. Federal Home Loan
Mortg. Corp., No. 2:13-cv-00414-JAW, 2015 WL 144562, at *17 (D. Me. Jan. 12, 2015) (internal
quotation marks omitted).
In Camden Nat’l Bank v. Crest Constr., Inc., 2008 ME 113, 952 A.2d 213, one of the cases
cited by the Foggs, see Reply at 4, the Law Court vacated a judgment in favor of a mortgagor on
her counterclaims against the bank for negligence and breach of fiduciary duty, holding that the
At oral argument, the Foggs’ counsel sought to distinguish Poulin on the basis that the Foggs incurred some legal
fees prior to the occurrence of the actionable misconduct alleged in the complaint – specifically, in negotiating the
consent judgment. I perceive no material distinction. As in Poulin, those costs were incurred “to prevent collection
efforts[.]” Poulin, 746 F. Supp.2d at 206 (citation and internal quotation marks omitted).
3
8
bank owed her no duty of care and that the facts did not support a confidential or fiduciary
relationship between the two, see Camden, 952 A.2d at 216-18, ¶¶ 10-20. The Law Court noted,
“The salient elements of a confidential relation are the actual placing of trust and confidence in
fact by one party in another and a great disparity of position and influence between the parties to
the relation.” Id. at 217, ¶ 13 (citation and internal quotation marks omitted). It elaborated:
To demonstrate the necessary disparity of position and influence in such a bankborrower relationship, a party must demonstrate diminished emotional or physical
capacity or . . . the letting down of all guards and bars. . . . . Confidential relations
can, and do, exist between such people. On the other hand, an allegation of one
party’s inexperience or trust will not by itself warrant an adjudication of a
confidential relation without a statement of the facts indicating the actual placing
of confidence and trust, and the abuse of the relation.
Id. (citation and internal quotation marks omitted).
The Foggs argue, as a threshold matter, that it is “essential” to adopt a due care standard
pertaining to loan servicers/debt collectors, failing which “Ocwen and other servicers will continue
to service . . . loans with impunity in a way that profits them and harms innumerable homeowners.”
Reply at 4-5. They argue that, once homeowners like themselves fall behind on payments, they
become wholly dependent on the discretion and actions of loan servicers, including their provision
of information on eligibility for loss mitigation options, leaving them vulnerable. See id. at 5.
In any event, the Foggs assert, they trusted and depended upon Ocwen to abide by the
judgment entered by the court on August 8, 2013, to which the parties had agreed. See id. at 5-6.
They assert that there is a great disparity of influence between Ocwen and themselves, that they
relied on Ocwen’s offer to enter into the consent judgment as a tool to mitigate their harm, thus
creating a special relationship, and that Ocwen breached its duty of care toward them by repeatedly
attempting to collect on a debt that it had represented would be satisfied through the consent
judgment. See id. at 6.
9
I decline to hold that there is a special relationship, as a matter of law, between loan
servicers and borrowers/mortgagors. The Foggs cite no caselaw indicating that the Law Court has
adopted such a stance or would be likely to do so. Indeed, the caselaw cited by both sides suggests
the opposite, with the Law Court having refused to recognize any intrinsic special relationship
between mortgagors and mortgagees or banks and bank customers. See, e.g., Hamilton, 2015 WL
144562, at *17; Camden, 952 A.2d at 216-17, ¶¶ 11-15.4
Nor, even accepting the truth of the well-pleaded allegations of the Proposed Complaint
and drawing reasonable inferences in the Foggs’ favor, do they allege facts that, if proven, would
make out the existence of a special relationship between themselves and Ocwen or, for that matter,
Mellon Bank or Bank of America. As Ocwen points out, see Opposition at 7, the complained-of
conduct took place in connection with a consent judgment in a foreclosure action between
adversary parties, each of whom had counsel. Indeed, the Foggs allege that their counsel initially
demanded not only the waiver of any deficiency judgment but also compensation to the Foggs,
and that they paid more than $4,000 for legal representation in the foreclosure action, “specifically
to negotiate a final resolution and consent judgment that would waive a significant potential
deficiency.” Proposed Complaint ¶¶ 61, 74.
At oral argument, the Foggs’ counsel pointed to the ongoing relationship between the
Foggs and Ocwen commencing in 2011 when the Foggs, proceeding pro se, unsuccessfully tried
to negotiate loss mitigation solutions with Ocwen. She asserted that the Foggs were completely
dependent on Ocwen to obtain a DIL or, ultimately, the consent judgment that they did secure and
4
My research indicates that “the majority of cases that have addressed the issue of whether a financial institution
owes a duty to a borrower when engaging in the loan modification process have resulted in a holding that such activity
generally does not exceed the traditional scope of a money lender, thus resulting in the lack of a duty of care owed by
the lender.” Becker v. Wells Fargo Bank NA, Inc., No. 2:10-cv-2799-TLN-KJN PS, 2014 WL 3891933, at *19 (E.D.
Cal. Aug. 7, 2014).
10
that, when Ocwen initially began dunning the Foggs following the judgment, they were again
unrepresented for a period of time. See id. ¶¶ 75-79. Nonetheless, as Ocwen’s counsel rejoined,
the crux of the Foggs’ complaint, as clarified by their counsel at oral argument, is that Ocwen
betrayed their trust when, contrary to its representations during the negotiation of the consent
judgment, it reactivated and repeatedly carried out collection efforts following the entry of
judgment. As Ocwen’s counsel argued, this is fatal to the Foggs’ negligence claims: during the
critical time period of the negotiation of the consent judgment, the Foggs were in an adversarial
relationship with Ocwen, and each side was represented by counsel.
The Foggs cannot, on these facts, demonstrate the requisite “diminished emotional or
physical capacity or . . . the letting down of all guards and bars” that the Law Court has stated is
necessary in a bank-borrower relationship for the imposition of a duty of care. Camden, 952 A.2d
at 217, ¶ 13.5
5
Caselaw cited by the Foggs, see Motion at [2]-[3]; Reply at 4-7, does not persuade me otherwise. As noted above,
in Camden, the Law Court held that the bank owed no duty of care to a mortgagor. See Camden, 952 A.2d at 216-18,
¶¶ 10-20. The other cited cases are materially distinguishable. In Morrow v. Bank of Am., N.A., 2014 MT 117, 324
P.3d 1167, the plaintiffs were not advised by any other parties when they allegedly relied on the defendant bank’s
advice, including advice that it would be in their best interests to deliberately miss a payment and default on their loan.
See Morrow, 324 P.2d at 1177-78, ¶ 37. Similarly, in Darling v. Western Thrift & Loan, 600 F. Supp.2d 189 (D. Me.
2009), a bank representative repeatedly reassured the plaintiffs, who were unrepresented, that their concerns regarding
the actual terms of the loan he purported to obtain for them were unfounded, for example, referring to the final loan
documents as “just legal stuff.” Darling, 600 F. Supp.2d at 206-07 (internal quotation marks omitted). In Dragomir
v. Spring Harbor Hosp., 2009 ME 51, 970 A.2d 310, the Law Court held that a plaintiff’s claim that a psychiatric
hospital owed him a duty of care survived a motion to dismiss when he alleged that he was unable to protect himself
from abuse by a hospital employee while receiving treatment for schizophrenia. See Dragomir, 970 A.2d at 316, ¶ 21.
In Harris v. Soley, 2000 ME 150, 756 A.2d 499, the Law Court upheld an award of punitive damages against a landlord
whose tenants “had to endure the presence of insect and rodent infestations, dead animals, snow falling into the
apartment, and a total lack of response from their landlord after repeated complaints.” Harris, 756 A.2d at 509, ¶ 32.
The Law Court did not consider whether the landlord owed a duty of care to his tenants, having affirmed the trial
court’s imposition of an adverse judgment on liability as a discovery sanction. See id. at 506, ¶ 18. The Foggs also
cite an unpublished order in Green Tree Servicing, LLC v. Bowen, Docket No. AUSBSC RE-15-01 (Me. Sup. Ct. Dec.
12, 2014), a copy of which they have supplied, see ECF No. 20, for the proposition that the court granted a motion by
defendants to assert claims for UTPA violations, negligence, and intentional/negligent infliction of emotional distress
based on servicer mismanagement of the loss mitigation process, see Reply at 4. However, this is not apparent from
the face of the order, which merely states that it permits the filing of the defendants’ first amended answer, affirmative
defenses, and counterclaims. See ECF No. 20. In any event, the court does not explain its reasoning. See id.
11
The proposed negligence claims against all of the defendants, accordingly, are futile.
5. Proposed Intentional Infliction of Emotional Distress Claim
Ocwen finally challenges the Foggs’ bid to add a claim for intentional infliction of
emotional distress (“IIED”) against all of the defendants. See Opposition at 6. To make out a
claim of IIED, a plaintiff must demonstrate that:
(1) the defendant intentionally or recklessly inflicted severe emotional distress or
was certain or substantially certain that such distress would result from his
conduct;
(2) the conduct was so extreme and outrageous as to exceed all possible bounds of
decency and must be regarded as atrocious, and utterly intolerable in a civilized
community;
(3) the conduct of the defendant caused the plaintiff’s emotional distress; and
(4) the emotional distress suffered by the plaintiff was so severe that no reasonable
man could be expected to endure it.
Beaulieu v. Bank of Am., N.A., No. 1:14-cv-00023-GZS, 2014 WL 4843809, at *7-*8 (D. Me.
Sept. 29, 2014) (citation and internal quotation marks omitted).
Ocwen argues that the Foggs cannot possibly demonstrate that the defendants’ conduct was
“so extreme and outrageous as to exceed all possible bounds of decency” given that Ocwen merely
sent monthly statements and other routine mortgage communications following the entry of a
judgment stating that “[n]o execution shall issue against either Defendants on any deficiency
balance.” Opposition at 6 (internal quotation marks omitted). Ocwen points out that the Foggs do
not allege, in either the existing or proposed complaint, that any defendant caused the entry of a
deficiency judgment, let alone executed on it. See id.
The Foggs counter that the amounts allegedly due were satisfied through the judgment and
sale of the property and that, in any event, the judgment stripped Ocwen of the ability to enforce
and collect on any alleged deficiency, as a result of which its attempts to collect on the alleged
12
debt violated the Maine and federal Fair Debt Collection Practices Act. See Reply at 5 n.6. They
argue that Ocwen’s repeated misconduct in attempting to try to collect on a satisfied debt after the
issuance of the consent judgment – continuing even after the expiration of the redemption period,
the issuance of demand letters to stop, and the filing of the instant suit – constitutes conduct that
is “so extreme and outrageous as to exceed all possible bounds of decency, and [must] be regarded
as atrocious and utterly intolerable in our civilized society.” Id. at 8 (citation and internal quotation
marks omitted).
“It is up to the courts to determine whether a charge of IIED meets all of the criteria,
including whether the alleged acts were sufficiently extreme and outrageous, but where reasonable
people may differ, it is for the jury, subject to the control of the Court, to determine whether, in a
particular case, the conduct has been sufficiently extreme and outrageous to result in liability.”
Hinkley v. Baker, 122 F. Supp.2d 57, 61 (D. Me. 2000) (citation and internal punctuation omitted).
I conclude that the claim is, indeed, futile. In reaching that conclusion, I have focused, as
did counsel at oral argument, on whether this case aligns more closely with Beaulieu, a case that I
called to the parties’ attention prior to oral argument, see ECF No. 23, or Hamilton, the case most
closely on point of several cited by the Foggs, see Reply at 7-8.
In Beaulieu, Judge Singal granted a defendant bank’s motion to dismiss an IIED claim by
a plaintiff borrower-mortgagor, see Beaulieu, 2014 WL 4843809, at *8, while, in Hamilton, Judge
Woodcock held that a borrower’s “long litany of allegations against” a lender sufficed to withstand
the attempt to dismiss his IIED claim, see Hamilton, 2015 WL 144562, at *16.
The plaintiff in Beaulieu, a disabled veteran, alleged that after he defaulted on his home
loan, the bank failed to provide a mandatory notice to the Department of Veterans Affairs (“VA”)
that would have triggered foreclosure-avoidance counseling, instead initiating a foreclosure action
13
against him. See Beaulieu, 2014 WL 4843809, at *3. The plaintiff alleged that, absent the benefit
of the required counseling, he believed that the service of the summons and complaint obliged him
to vacate his residence immediately and that the bank would then secure and maintain the property.
See id. He alleged that he did, in fact, immediately vacate the premises, but that the bank did not
secure or maintain it. See id. As a result, he alleged, the residence was rendered valueless when
the pipes froze, it flooded, and it was left open to the vagaries of Maine weather for more than four
years. See id. He asserted that he suffered increased stress and distress, exacerbating his
preexisting post-traumatic stress disorder. See id.
Judge Singal stated:
The Court accepts Plaintiff’s allegations regarding his understandable emotional
distress. However, the Court cannot conclude that Plaintiff’s allegations are
sufficient to satisfy the necessary second element for an IIED claim.
Here, Plaintiff alleges that after he defaulted on his payments, [the bank] proceeded
to file a foreclosure action without first giving required notice to the VA. This
conduct does not rise to the level of being “so extreme and outrageous as to exceed
all possible bounds of decency.” In reaching this conclusion the Court accepts
Plaintiff’s characterization of [the bank’s] failure as “wrongful and illegal” and
readily acknowledges that [its] failure led to the dismissal of the underlying
foreclosure action. However, this failed attempt at foreclosure cannot be
reasonably characterized as atrocious and utterly intolerable conduct sufficient to
state an IIED claim.
Id. at *8 (citations omitted) (footnote omitted).6
In Hamilton, the “litany” that Judge Woodcock deemed sufficient to withstand the
dismissal of the IIED claim included allegations that the lender not only sent the borrower a default
6
The plaintiff in Beaulieu also alleged that (i) he eventually obtained counsel, who sent defense counsel a letter
affirming his representation of the plaintiff in all collection activities on the note and mortgage and advising that any
direct communication with the plaintiff would cause new and more serious trauma, and (ii) the bank nonetheless sent
collection documents directly to the plaintiff and phoned him on Christmas Eve in an attempt to collect on the note.
See Beaulieu, 2014 WL 4843809, at *3-*4. However, as the Foggs’ counsel observed at oral argument, these
allegations do not appear to have been pled as a basis for the IIED claim, see First Amended Complaint (ECF No. 7),
Beaulieu, ¶¶ 82-87, and Judge Singal did not discuss them in considering whether the plaintiff stated a claim for IIED,
see Beaulieu, 2014 WL 4843809, at *8.
14
notice in which every listed debt and fee was incorrect but also changed locks on his second home,
barred entry until payment arrangements were made, allowed its agents to enter his home without
permission, and posted a variety of notices on his property indicating that foreclosure proceedings
were in process. See Hamilton, 2015 WL 144562, at *3.
At oral argument, with the aid of a chart that she supplied comparing the IIED claims in
this case with those in Beaulieu, the Foggs’ counsel contended that, whereas Beaulieu concerned
one incident, her clients alleged repeated incidents of misconduct, namely, that Ocwen sent them
12 debt collection demands from November 1, 2013, through January 4, 2015, and inaccurately
reported to credit agencies that they had a debt with a balance due of more than $140,000. She
emphasized that the collection demands persisted not only after the entry of the consent judgment
but also after the recording of the discharge of the Foggs’ mortgage, after the Foggs engaged
counsel, who sent two cease and desist letters, and after the filing of the instant complaint. She
added that, whereas the plaintiff in Beaulieu alleged only emotional harm (increased stress and
emotional distress, an increase in nightmares, and substantially more severe, painful, and harmful
PTSD), her clients alleged not only emotional harm (including shock, frustration, distress, and
anxiety) but also a decline in physical and emotional health (including shortness of breath, pain,
soreness, headaches, lack of sleep, irritability, and depression) and strain on their relationship.
She argued that, by contrast, this case aligns closely with Hamilton, in which, in the portion
of the underlying recommended decision addressing the borrower’s claim of IIED, Magistrate
Judge Nivison stated:
Not insignificantly, Plaintiff’s claim of intentional infliction of emotional distress
. . . incorporates all of the allegations of the complaint. Plaintiff’s claim, therefore,
includes a claim that Defendants made representations with the knowledge that they
were false or in reckless disregard of whether they were true or false (i.e., with
malice). If true, this would be conduct so extreme and outrageous as to exceed all
15
possible bounds of decency, and be regarded as atrocious and utterly intolerable in
our civilized society.
Hamilton, 2014 WL 7508808, at *7 (D. Me. July 30, 2014) (rec. dec., aff’d in part, overruled in
part, Jan. 12, 2015) (citation, internal quotation marks, and footnote omitted). She asserted that
here, as in Hamilton, Ocwen repeatedly made representations with the knowledge that they were
false or with reckless disregard of their truth or falsity, continuing to dun the Foggs in violation of
the terms of the consent judgment even after the instant suit was filed.
Ocwen’s counsel rejoined that this case is more like Beaulieu than Hamilton, distinguishing
Hamilton on the basis that Ocwen is not alleged to have had direct contact with the Foggs or their
property, which they had long since vacated, and arguing that the fact that multiple statements
were sent does not transform the sending of notices into extreme, outrageous, and atrocious
conduct.
I find this case closer to Beaulieu than Hamilton. While the claim of IIED in Beaulieu was
predicated on one allegedly illegal and wrongful incident, it was different in kind from the multiple
incidents alleged here. The single incident at issue in Beaulieu – the bank’s failure to provide a
mandatory notice of foreclosure to the VA – allegedly triggered a chain of events that led to the
plaintiff’s abrupt departure from his home, the ruination of his home’s value, and the severe
exacerbation of his preexisting PTSD. Even taking into account the Foggs’ allegations that they
have suffered severe consequences, including emotional distress, a decline in health, and
relationship difficulties, the predicate of their IIED claim is that Ocwen wrongfully and illegally
continued to send dunning notices, as well as filing a false report with credit agencies. The fact
that they received a dozen dunning notices does not, in my view, render Ocwen’s conduct extreme,
outrageous, atrocious, and utterly intolerable in a civilized society, see Beaulieu, 2014 WL
4843809, at *8, versus the conduct of the lender in Beaulieu.
16
In addition, the conduct at issue here is materially distinguishable from that at issue in
Hamilton. In affirming Magistrate Judge Nivison’s recommendation to deny the lender’s motion
to dismiss the borrower’s IIED claim, Judge Woodcock made clear that he viewed the borrower’s
“long litany of allegations against” the lender sufficient to withstand dismissal of his IIED claim.
See Hamilton, 2015 WL 144562, at *16. In this case, unlike in Hamilton, there are no allegations
that Ocwen set foot on the Foggs’ property, posted any notices thereon, or even telephoned the
Foggs. Compare id. at *3.
In sum, the conduct alleged by the Foggs, like that alleged by the plaintiff in Beaulieu,
cannot reasonably be viewed as “so extreme and outrageous as to exceed all possible bounds of
decency[,]” “atrocious,” and “utterly intolerable in a civilized community[.]” Beaulieu, 2014 WL
4843809, at *8 (citation and internal quotation marks omitted).
The Foggs’ IIED claim, accordingly, is futile.7
7
Other caselaw cited by the Foggs, see Reply at 7-8, does not persuade me otherwise. Two of those cases concern
conduct of a wholly different nature than that at issue here: the defendant’s alleged participation in the robbery of a
pizza delivery person, during which the delivery person was assaulted, suffering serious injury to her face, see Curtis
v. Porter, 2001 ME 158, ¶ 2, 784 A.2d 18, 20, and a landlord’s “total lack of response” to tenants’ complaints of
conditions that included insect and rodent infestations, dead animals, and snow falling into the apartment, see Harris,
756 A.2d at 509, ¶ 32. The case of Colford v. Chubb Life Ins., 687 A.2d 609 (Me. 1996), which is cited by Ocwen as
well as the Foggs, see Opposition at 6, does not help them. There, the Law Court upheld the trial court’s set-aside of
a jury verdict in the plaintiff’s favor on his IIED claim against a disability insurer, reasoning that, although the plaintiff
“presented evidence of a cumulative number of acts and circumstances that adversely affected him in a substantial
way,” he had failed to demonstrate, inter alia, that the acts taken in the course of denying his disability claim were so
extreme and outrageous as to exceed all possible bounds of decency and be regarded as atrocious and utterly
intolerable in a civilized society. Chubb, 687 A.2d at 617. As the Foggs point out, see Reply at 7, in U.S. Bank, N.A.
v. Sawyer, 2014 ME 81, 95 A.3d 608, the Law Court recognized that home-loan borrowers went through “significant
emotional upheaval” as a result of “failed promises by the Bank” in efforts to negotiate an alternative to mortgage
foreclosure, see Sawyer, 2014 ME 81, ¶ 16, 95 A.3d at 612. However, Sawyer did not concern the viability of an IIED
claim but, rather, the appropriateness of the imposition of the sanction of dismissal with prejudice of a foreclosure
action on account of the defendant bank’s failure to cooperate and participate meaningfully in the foreclosure
mediation process. See id. at 612, ¶ 17. The Foggs finally cite what appears to be an unpublished case, Distasio v.
Residential Mortg. Servs., et al., Docket No. BCD-WB-CV-09-06 §X (December 2009), see Reply at 7, but neglect
to provide a full citation that includes reference to the issuing court or to supply a copy of the case.
17
B. Addition of New Parties
In passing, Ocwen argues that the Foggs fail to explain why the addition of the new parties
is necessary to “ensure complete relief and finality.” Opposition at 1-2; see also id. at 3. To the
extent that Ocwen means to argue that the addition of those parties is futile, I find that it is not.
The Foggs allege that Bank of America, at all relevant times, was the Master Servicer of the Foggs’
loan and that Mellon Bank, at all relevant times, was the trustee of the trust that obtained their loan
and accompanying mortgage. See Proposed Complaint ¶¶ 6-8, 23. They further assert that, at all
relevant times, Bank of America was acting under the authority of, and as agent for, Mellon Bank,
and Ocwen was acting as the subservicer and agent for Bank of America and Mellon Bank. See
id. ¶¶ 12-13. On these facts, they assert a plausible claim that Bank of America and Mellon Bank
may be liable for Ocwen’s conduct. See Motion at [5]-[6]; Jones v. Federated Fin. Reserve Corp.,
144 F.3d 961, 965 (6th Cir. 1998) (principal may be vicariously liable for agent’s tortious conduct,
including credit reporting violations, under various theories); In re Hart, 246 B.R. 709, 736 (Bankr.
D. Mass. 2000) (owner of residential note and mortgage found vicariously liable for servicing
agent’s alleged violation of Massachusetts Consumer Protection Act); Dupuis v. Federal Home
Loan Mortg. Corp., 879 F. Supp. 139, 144 (D. Mass. 1995) (as a matter of Maine and federal
common law, an owner of a residential note and mortgage who is an “undisclosed principal” is
liable for the failures and excesses of a loan servicer who is its “general agent”).
III. Conclusion
For the foregoing reasons, the Motion is GRANTED with respect to the Foggs’ bid to add
additional factual allegations, add Mellon Bank and Bank of America as defendants, and add a
claim against all defendants for violation of the Maine Consumer Credit Code, and otherwise
18
DENIED. The Foggs shall file, no later than April 15, 2015, an amended complaint on the docket
that is consistent herewith.
NOTICE
In accordance with Federal Rule of Civil Procedure 72(a), a party may serve and file
an objection to this order within fourteen (14) days after being served with a copy thereof.
Failure to file a timely objection shall constitute a waiver of the right to review by the
district court and to any further appeal of this order.
Dated this 8th day of April, 2015.
/s/ John H. Rich III
John H. Rich III
United States Magistrate Judge
19
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?