Kozaryn v. Ocwen Loan Servicing, LLC et al

Filing 15

Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER "In accordance with the foregoing, defendants motion to dismiss Count I of the Complaint (Docket No. 7 ) is ALLOWED and Count I of the Complaint is hereby DISMISSED." (Duong, Diep)

United States District Court
District of Massachusetts
________________________________
)
ROSE T. KOZARYN,
)
Plaintiff,
)
)
v.
)
Civil Action No.
)
10-11510-NMG
OCWEN LOAN SERVICING, LLC, and
)
HSBC BANK USA, N.A., as Trustee )
for Ace Securities Corp. Home
)
Equity Loan Trust and for the
)
Registered Holders of Ace
)
Securities Corp. Home Equity
)
Loan Trust, Series 2007-HE4,
)
Asset-Backed Pass-Through
)
Certificates,
)
Defendants.
)
________________________________ )

MEMORANDUM & ORDER
GORTON, J.
Plaintiff Rose T. Kozaryn (“Kozaryn”) brings suit against
defendants Ocwen Loan Servicing, LLC (“Ocwen”) and HSBC Bank USA,
N.A. (“HSBC”), in its capacity as Trustee for Ace Securities
Corp. Home Equity Loan Trust and for the registered holders of
Ace Securities Corp. Home Equity Loan Trust, Series 2007-HE4,
Asset-Backed Pass-Through Certificates, for violations of 1) the
Massachusetts Consumer Protection Act, Mass. Gen. Laws ch. 93A
(“Chapter 93A”) (Count I) and 2) the federal Truth in Lending Act
(“TILA”), 15 U.S.C. § 1641(f)(2) (Count II).

Pending before the

Court is defendants’ motion to dismiss Count I of the Complaint.

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I.

Factual Background
In 2007, Kozaryn refinanced a mortgage on her residence in

North Falmouth, Massachusetts (“the Property”).

She negotiated a

loan from DB Home Lending, Inc. (“DB”) in the amount of $317,250
which was secured by a mortgage in favor of Mortgage Electronic
Registration Systems, Inc. (“MERS”).

Ocwen is the servicer of

the loan.
In late 2009, after plaintiff began having difficulty making
mortgage payments, she initiated efforts to obtain a loan
modification.

On October 19, 2009, plaintiff requested the

identity of the owner of the mortgage on the Property but
defendants failed to respond.
On May 19, 2010, plaintiff submitted to Ocwen a completed
loan modification application with all required documentation,
including the Request for Modification and Affidavit form, income
documentation, bank statements, tax returns and a signed IRS
4506T form.

Plaintiff sent the application via fax and received

a fax confirmation of delivery.

On June 1, 2010, Ocwen responded

with a loan modification denial letter which stated “We are
unable to offer you a Modification because Your financial details
are missing.”
Plaintiff alleges that: 1) she is eligible for a loan
modification under the federal Home Affordable Modification
Program (“HAMP”), 2) Ocwen is obligated to follow HAMP

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guidelines, including evaluating a homeowner’s loan modification
application within 30 days of receipt, because it has a mortgageservicing contract with the United States Department of Treasury
and 3) Ocwen’s failure to evaluate her completed application for
HAMP constitutes an unfair and deceptive practice in violation of
Chapter 93A.

Ocwen failed to respond to plaintiff’s Chapter 93A

demand letter.
Plaintiff also contends that both HSBC and Ocwen, as the
agent of HSBC, violated TILA by failing to provide the identity
of the owner of the mortgage, despite her repeated requests.
II.

Procedural History
In September, 2010, plaintiff filed the Complaint against

defendants alleging, with respect to Ocwen, a violation of
Chapter 93A (Count I) and, with respect to both defendants, a
violation of TILA (Count II).

Plaintiff seeks: 1) an order

requiring Ocwen to evaluate plaintiff for foreclosure
alternatives, including loan modification under HAMP and 2)
damages, costs and attorney’s fees for the violations of Chapter
93A and TILA.
Defendants responded to the Complaint by filing an Answer
with respect to Count II and a motion to dismiss with respect to
Count I, which plaintiff opposed.

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III. Analysis
A.

Legal Standard

In order to survive a motion to dismiss for failure to state
a claim under Fed. R. Civ. P. 12(b)(6), a complaint must contain
factual allegations sufficient “to raise a right to relief above
the speculative level.”
544, 555 (2007).

Bell Atl. Corp. v. Twombly, 550 U.S.

In considering the merits of a motion to

dismiss, the Court may look only to the facts alleged in the
pleadings, documents attached as exhibits or incorporated by
reference in the complaint and matters of which judicial notice
can be taken.

Nollet v. Justices of the Trial Court of Mass., 83

F. Supp. 2d 204, 208 (D. Mass. 2000), aff’d, 248 F.3d 1127 (1st
Cir. 2000).

Furthermore, the Court must accept all factual

allegations in the complaint as true and draw all reasonable
inferences in the plaintiff’s favor.
Inc., 199 F.3d 68, 69 (1st Cir. 2000).

Langadinos v. Am. Airlines,
If the facts in the

complaint are sufficient to state a cause of action, a motion to
dismiss the complaint must be denied.

See Nollet, 83 F. Supp. 2d

at 208.
Although a court must accept as true all of the factual
allegations contained in a complaint, that doctrine is not
applicable to legal conclusions.
1937, 1949 (2009).

Ashcroft v. Iqbal, 129 S. Ct.

Threadbare recitals of the legal elements,

supported by mere conclusory statements, do not suffice to state
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a cause of action.

Id.

Accordingly, a complaint does not state

a claim for relief where the well-pled facts fail to warrant an
inference of any more than the mere possibility of misconduct.
Id. at 1950.
B.

Application

Defendants move to dismiss Count I on the ground that HAMP
itself does not provide a private cause of action and thus
plaintiff cannot bring a claim under Chapter 93A that is premised
on a violation of HAMP.
Chapter 93A prohibits “unfair or deceptive acts or practices
in the conduct of any trade or commerce.”
93A, § 2.

Mass. Gen. Laws ch.

An individual has a private right of action under § 9

of that chapter.

To prevail on a Chapter 93A claim, the

plaintiff:
must prove that a person who is engaged in trade or business
committed an unfair or deceptive trade practice and that the
[plaintiff] suffered a loss of money or property as a
result.
Morris v. BAC Home Loans Servicing, L.P., 2011 WL 1226974, *3 (D.
Mass. April 4, 2011) (citations omitted).

To prove a Chapter 93A

claim, “it is neither necessary nor sufficient that a particular
act or practice violate common or statutory law.”

Mass. Eye &

Ear Infirmary v. QLT Phototherapeutics, Inc., 552 F.3d 47, 66
(1st Cir. 2009) (citations omitted).
A violation of HAMP that is unfair or deceptive in and of
itself could, therefore, create a viable claim under Chapter 93A
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even though HAMP does not provide a private cause of action.
E.g., Morris, 2011 WL 1226974 at *3 (citing Bosque v. Wells Fargo
Bank, N.A., 2011 WL 304725, *7-8 (D. Mass. Jan. 26, 2011) and
Speleos v. BAC Home Loans Servicing, L.P., 2010 WL 5174510, *6
(D. Mass. Dec. 14, 2010)); see Ordning v. BAC Home Loans
Servicing, L.P., 2011 WL 99016, *7 (D. Mass. Jan. 10, 2011)
(finding no private cause of action under HAMP and listing cases
to same effect).

For such a claim to proceed, however, not only

must the violation itself be unfair or deceptive but recovery
under Chapter 93A must also be compatible with the objectives and
enforcement mechanisms of the underlying statute.
WL 99016 at *4.

Ordning, 2011

Recovery under Chapter 93A has been found to be

compatible with the objectives and enforcement mechanisms of
HAMP.

See Morris, 2011 WL 1226974 at *5 (analyzing

compatibility); Blackwood v. Wells Fargo Bank, N.A., 2011 WL
1561024, *4 (D. Mass. April 22, 2011) (same).
With respect to the elements of Chapter 93A that must be
proved, other sessions of this Court have relied on this
session’s decision in Speleos v. BAC Home Loans Servicing, L.P.
to support the conclusion that a violation of HAMP that is itself
deceptive could create a viable claim under Chapter 93A.

In

Speleos, however, this Court attempted to reiterate a wellestablished principle regarding negligence per se which is
distinct from the claim under Chapter 93A presented here.

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This

Court declines to adopt the expansive reading of Chapter 93A
embraced by other sessions in this District because even if an
unfair or deceptive violation of HAMP is actionable under Chapter
93A, such a conclusion is inapplicable here.
The issue in this case is whether the alleged violation of
HAMP is unfair and deceptive in and of itself.

Plaintiff alleges

that, despite the completed loan modification application and
supporting financial documentation she provided, Ocwen failed to
evaluate her application and instead sent her a loan modification
denial letter stating that her “financial details” were missing.
Even if defendant’s actions constituted a violation of HAMP,
and it is unclear whether they did, plaintiff must plead (and
later prove) not only that the HAMP guidelines were violated but
also that Ocwen’s actions were unfair or deceptive.
2011 WL 1226974 at *6.

See Morris,

Indeed, “not every technical violation of

HAMP should expose a servicer to Chapter 93A liability.”
*7.

Id. at

Plaintiff alleges that Ocwen failed to evaluate her HAMP

application despite the fact that Ocwen sent her a loan
modification denial letter in response.

Without further factual

detail demonstrating unfairness, as opposed to clerical error or
mere negligence, her claim for a violation of Chapter 93A cannot
be sustained.

See id.; Brown v. Bank of America Corp., 2011 WL

1311278, *3 (D. Mass. March 31, 2011) (citing Baena v. KPMG LLP,
453 F.3d 1, 3 (1st Cir. 2006)).

The Court will, therefore, allow

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defendants’ motion to dismiss Count I.
ORDER
In accordance with the foregoing, defendants’ motion to
dismiss Count I of the Complaint (Docket No. 7) is ALLOWED and
Count I of the Complaint is hereby DISMISSED.

So ordered.
/s/ Nathaniel M. Gorton
Nathaniel M. Gorton
United States District Judge
Dated May 17, 2011

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