Hannigan et al v. Bank of America, N.A.

Filing 72

Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER: "For the foregoing reasons, defendants' motion to dismiss (Docket No. 36 ) is, with respect to Counts I and V, ALLOWED, and is, with respect to Counts II, III and IV, DENIED. So ordered."(Moore, Kellyann)

United States District Court
District of Massachusetts
)
)
)
)
Plaintiffs,
)
)
v.
)
)
BANK OF AMERICA, N.A. and WELLS )
FARGO BANK, N.A., as Trustee for )
the Certificateholders of Banc
)
of America Mortgage Securities, )
Inc., Mortgage Pass-Through
)
Certificates, Series 2004-7
)
)
Defendants.
)
)
JOSEPH HANNIGAN and LINDA
HANNIGAN,

Civil Action No.
13-11088-NMG

MEMORANDUM & ORDER
GORTON, J.
This case involves the repeated efforts over the course of
several years by plaintiffs Joseph and Linda Hannigan
(“plaintiffs”) to obtain a loan modification under the Home
Affordable Modification Program (“HAMP”) from the loan servicer,
Bank of America, N.A. (“Bank of America”), and the trustee of
the note, Wells Fargo Bank, N.A. (“Wells Fargo”) (collectively,
“defendants”).
Having been repeatedly stymied in their loan modification
applications, plaintiffs filed suit for breach of contract,
negligent misrepresentation, promissory estoppel and unfair

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trade practices under M.G.L. c. 93A.

Pending before the Court

is defendants’ motion to dismiss plaintiffs’ amended complaint.
I.

Factual Background and Procedural History
A.

Facts

The Court recites the facts as alleged in plaintiffs’
amended complaint of January 7, 2014.
In May, 2004, plaintiffs refinanced an existing mortgage by
obtaining a loan of $638,400 (“the loan”) secured by a mortgage
(“the mortgage”) on residential property in Kingston,
Massachusetts.

In July, 2004, the mortgage was securitized into

a trust pursuant to a “Pooling and Servicing Agreement.”

Under

that agreement, Bank of America serviced the loan and Wells
Fargo became the trustee.
In 2009, the plaintiffs stopped making payments and
submitted an application for a loan modification.

In June of

that year, Bank of America offered plaintiffs a modification,
according to which they were required (1) to submit monthly
payments of $3,502 starting on September 1, 2009 and (2) to make
a one-time, upfront payment of $7,000 within seven days.

The

loan’s new principal balance was to be $614,572.
Plaintiffs were unable to make the $7,000 payment and
sought alternate arrangements to fulfill that obligation.

They

were told by a Bank of America representative that the $7,000
payment could be made over the following three months under a
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forbearance agreement and that they would remain eligible for
the modification.

Bank of America admits that it allowed

plaintiffs to make reduced payments for three months based on
the forbearance agreement but disputes that that agreement
waived the requirement to make the $7,000 payment.

It is

undisputed, however, that plaintiffs made three reduced monthly
payments and that Bank of America did not modify the loan.
In November, 2009, Bank of America sent plaintiffs a notice
of foreclosure but, the following month, sent them a second loan
modification offer, according to which they were to make monthly
payments of $3,907 and the new principal balance of the loan was
to be $621,864.

Plaintiffs rejected that offer, believing it to

be a mistake.
In April, 2010, Bank of America invited plaintiffs to apply
for another modification.

After receiving plaintiffs’

application, in September, 2010 Bank of America requested
additional documentation.

The following month, Bank of America

sent plaintiff a letter acknowledging receipt of their
application but subsequently denied it.

The stated ground was

that
the lender(s) on your junior lien mortgage(s)... did
not agree to keep its lien in a junior position to our
modified lien.

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From November, 2010 to March, 2011, plaintiffs submitted
additional documentation to Bank of America but the bank
responded that they were ineligible for a loan modification.
In May and June, 2012, plaintiffs, after retaining counsel,
applied again for a modification.
denied.

Those applications were

Plaintiffs then submitted four subsequent modification

applications between September, 2012 and November, 2013, all of
which were denied by Bank of America because they were
incomplete or because the actual holder of the note, Wells
Fargo, had not given it “contractual authority to modify
[plaintiffs’] loan.”
Plaintiffs claim that defendants’ actions have caused them
severe financial harm, including “huge” mortgage arrearages and
significant damage to their credit.

They also note that

defendants’ actions have “caused the imminent loss of their
family home to an unnecessary foreclosure,” though the record is
unclear as to the current status of plaintiffs’ residence.
B.

Procedural History

In December, 2012, plaintiffs sent Bank of America a demand
letter under M.G.L. c. 93A.

Bank of America did not respond to

that letter with a reasonable offer of settlement.
Plaintiffs filed a complaint against Bank of America in the
Massachusetts Superior Court for Plymouth County in March, 2013,
which defendants removed to this Court in May, 2013.
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The

complaint includes four counts against Bank of America: breach
of contract (Count I), negligent misrepresentation (Count II),
promissory estoppel (Count III) and unfair or deceptive trade
practices under Chapter 93A (Count IV).
The Court held a scheduling conference in December, 2013,
after which plaintiffs moved for leave to file an amended
complaint to add a claim under Chapter 93A against Wells Fargo.
The Court allowed that motion and plaintiffs filed the amended
complaint in January, 2014.
Plaintiffs submitted a second demand letter under Chapter
93A in December, 2013, in response to which Bank of America
again failed to make a reasonable offer of settlement.
In late January, 2014, both defendants moved to dismiss the
case for failure to state a claim upon which relief can be
granted.
II.

Defendants’ Motion to Dismiss
The crux of plaintiffs’ complaint is that Bank of America

engaged in a “pattern and practice of stringing [them] along.”
According to their complaint, despite repeatedly offering loan
modifications and even confirming new loan provisions, Bank of
America ultimately denied plaintiffs’ numerous applications for
loan modification.

Moreover, defendants purportedly did so

after constantly shifting their rationale for their denials and
refusing to follow the procedures required by HAMP.
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Defendants respond that they simply followed their own
explicit procedures with which plaintiffs did not comply and
therefore no loan modification was warranted and no new contract
was formed.
A.

Legal Standard

To survive a 12(b)(6) motion to dismiss, a pleading must
contain a claim to relief that is “plausible,” not just a “sheer
possibility that a defendant has acted unlawfully.”

Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at
570).

A district court assesses a complaint’s sufficiency in

two steps. Manning v. Boston Medical Ctr. Corp., 725 F.3d 34, 43
(1st Cir. 2013).

First, a court ignores conclusory allegations

mirroring legal standards. Id.

Second, it accepts the remaining

factual allegations as true and draws all reasonable inferences
in the plaintiff’s favor, thereafter deciding if the plaintiff
would be entitled to relief. Id.

A court may also consider

documents attached to or incorporated in the complaint and other
undisputed documents. Wilborn v. Walsh, 584 F. Supp. 2d 384, 386
(D. Mass. 2008).
B.

Application
1.

Breach of Contract against Bank of America (Count I)

To succeed on a breach of contract action, plaintiff must
prove (1) an offer, (2) an acceptance, (3) consideration, (4)
breach and (5) damages. Canney v. New England Tel. & Tel. Co.,
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228 N.E.2d 723, 728 (Mass. 1967).

Consideration requires

imposing a legal detriment on the promisee and legal benefit on
the promisor. Ekchian v. Thermo Power Corp., N. 00-P-1826, 2002
WL 31856404, at *3 n.8 (Mass. App. Ct. 2002).
Here, the Court finds that plaintiffs cannot plausibly
allege the existence of any valid breaches of contract by Bank
of America.

Plaintiffs’ primary complaint is that Bank of

America repeatedly promised that they would be eligible to
receive a loan modification under HAMP.

The Court is

unconvinced, even assuming the veracity of the allegations in
the complaint, that those “promises” created any enforceable
contracts under Massachusetts law because plaintiffs did not
appropriately accept any of Bank of America’s offers.
The June, 2009 “agreement” that plaintiffs reiterate in
their complaint is actually a loan modification offer from Bank
of America that includes an explicit condition precedent, namely
the payment of $7,000 to be made within seven days.

Although

the language might not be clear, unfortunately for plaintiffs,
the law is.
Accordingly, the Court will allow defendants’ motion to
dismiss Count I.

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2.

Negligent Misrepresentation against Bank of
America (Count II)

To prevail on a claim of negligent misrepresentation,
plaintiffs must establish that defendants
(1) in the course of [their] business, (2) supplied
false information for the guidance of others (3) in
their business transactions, (4) causing and resulting
in pecuniary loss to those others (5) by their
justifiable reliance on the information, and that he
(6) failed to exercise reasonable care or competence
in obtaining or communicating the information.
Braunstein v. McCabe, 571 F.3d 108, 126 (1st Cir. 2009 (citation
omitted).
The alleged misrepresentation in this case is that
plaintiffs did not need to make the $7,000 up-front payment in
order to be eligible for the June, 2009 loan modification.
Here, plaintiffs’ complaint clearly alleges that the alleged
misrepresentation (1) occurred during a business transaction,
(2) was false, (3) guided plaintiffs in their business
transactions, and induced their reliance on the promise
allegedly made to them by a Bank of America representative who
failed to exercise reasonable care.
Bank of America responds that plaintiffs did not suffer any
pecuniary harm because they only made the payments that they
otherwise were contractually obligated to make.

In other words,

Bank of America contends that plaintiffs have not alleged that
they lost “money (or items money could acquire).” Kiluk v.

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Select Portfolio Servicing, Inc., 2011 WL 8844639, at *5 (D.
Mass. Dec. 19, 2011).
In this case, however, plaintiffs allege a variety of
pecuniary damages.

Those damages are, admittedly, indirect but

they are damages nonetheless, including money spent in ways in
which plaintiffs would not have otherwise spent it had they
known they would not obtain a loan modification. See id. (noting
that “the pecuniary loss requirement might be met if the
plaintiff ... suffered other harms – such as incurring increased
fees, losing opportunities to pursue refinancing, or forgoing
other opportunities to avoid foreclosure”).

Indeed, plaintiffs

explicitly claim that they “forewent other options to save their
home.”

Accordingly, plaintiffs’ complaint, taken as true at

this juncture in the litigation, plausibly alleges a claim of
negligent misrepresentation and the Court will deny defendants’
motion to dismiss Count II.
3.

Promissory Estoppel against Bank of America
(Count III)

Promissory estoppel is generally asserted as an
“alternative theory of recovery for a contract that is not
supported by consideration.” Nickerson-Reti v. Bank of America,
N.A., 2014 WL 2945198, at *10 (D. Mass. June 26, 2014).

To

prevail on their claim of promissory estoppel, plaintiffs must
establish that Bank of America made an unambiguous promise to

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modify the mortgage and that they reasonably relied upon that
promise. See R.I. Hosp. Trust Nat’l Bank v. Varadian, 647 N.E.2d
1174, 1179 (Mass. 1995).
Where a promise is less than explicit, Massachusetts courts
have
applied the doctrine of promissory estoppel [where]
there has been a pattern of conduct by one side which
had dangled the other side on a string.
Dixon v. Wells Fargo Bank, N.A., 798 F. Supp. 2d 336, 344 (D.
Mass. 2011) (citation omitted).
Here, plaintiffs have alleged that a Bank of America
representative made them a promise and that they reasonably
relied on that promise.

Specifically, plaintiffs claim that

they were told that they need not make a $7,000 payment in order
to secure a loan modification.

While that fact is disputed by

Bank of America, at this juncture the Court accepts that
allegation as true.

Indeed, the Court notes that the First

Circuit has cited with approval a district court’s denial of a
motion to dismiss a claim of negligent misrepresentation in a
mortgage modification lawsuit where plaintiffs
alleged both a specific promise and a legal detriment
that ... was a direct consequence of their reliance on
[that] promise.
MacKenzie v. Flagstar Bank, FSB, 738 F.3d 486, 497 (1st Cir.
2013) (citing Dixon, 798 F. Supp. 2d at 343).

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Accordingly, the Court will deny defendants’ motion to
dismiss Count III.
4.

Unfair or Deceptive Trade Practices under Ch. 93A
against Bank of America (Count IV)
a.

Legal Standard

Chapter 93A protects consumers from unfair competition and
unfair or deceptive acts or practices. M.G.L. c. 93A, § 11.
Plaintiffs must also prove they suffered a tangible loss as a
result of the unfair or deceptive conduct. Arthur D. Little,
Inc. v. Dooyang Corp., 147 F.3d 47, 56 (1st Cir. 1998).1
To determine whether a particular practice is unfair,
courts examine
Whether the practice ... is within at least the
penumbra of some common-law, statutory or other
established concept of unfairness; (2) whether it is
immoral, unethical, oppressive, or unscrupulous; [and]
(3)
whether
it
causes
substantial
injury
to
consumers....
Mass. Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 552
F.3d 47, 69 (1st Cir. 2009).

As Massachusetts lawyers know

well, the lodestone of Chapter 93A claims is whether the
defendant’s actions “would raise an eyebrow of someone inured to
the rough and tumble of the world of commerce.” Levings v.
Forbes & Wallace, Inc., 8 Mass. App. Ct. 498, 504 (1979).

1

Because of its previous finding with respect to pecuniary loss
in Count II, the Court also finds that plaintiffs have
sufficiently alleged a loss in Count IV.
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Although claims under Chapter 93A are often included in
addition to other statutory and common law violations,
“[v]iolation of a statutory regime is not a necessary basis” for
them to proceed. Morris v. BAC Home Loans Servicing, L.P., 775
F. Supp. 2d 255, 259 (D. Mass. 2011); see also Mass. Eye & Ear
Infirmary, 552 F.3d at 66 (“To prove [a Chapter 93A] claim, it
is neither necessary nor sufficient that a particular act or
practice violate common or statutory law.”).
Courts have held that “violations of HAMP can provide the
basis for recovery under Chapter 93A.” Morris, 775 F. Supp. 2d
at 262.

Of course, “not every technical violation of HAMP

should expose a servicer to Chapter 93A liability,” id. at 263,
only those situations where the defendant’s actions were unfair
or deceptive. Id. (noting that it would be sufficient at the
motion-to-dismiss stage to allege that a mortgage servicer
“unfairly disregarded and mishandled plaintiffs’ HAMP
application”).
Moreover, a Chapter 93A claim can survive even after a
plaintiff’s breach of contract and negligence claims have been
dismissed. NASCO, Inc. v. Public Storage, Inc., 127 F.3d 148,
152 (1st Cir. 1997) (“A party is not exonerated from chapter 93A
liability because there has been no breach of contract.”) But
see Madan v. Royal Indemnity Co., 26 Mass. App. Ct. 756 (1989).
Of course, as this Court has held previously, a Chapter 93A
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claim cannot survive if “it is based entirely on [a] discredited
claim,” Guillaume v. Wells Fargo Home Mortg. Corp., 2014 WL
2434650, at *4 (D. Mass. May 30, 2014) (emphasis added), but it
may if the conduct in the dismissed claim comprised only part of
the allegedly unfair conduct.
b.

Application

Here, the Court finds that plaintiffs have alleged a
plausible violation of Chapter 93A.

While plaintiffs’ claims

are not paragons of detail, they are more than “conclusory.”
The complaint alleges that plaintiffs applied numerous times for
a modification under HAMP and that Bank of America repeatedly
required that they re-submit information that they had
previously provided.
Defendants downplay the allegations by noting that “[n]one
of these alleged acts amounts to a Chapter 93A violation” but
the relevant conduct is the entirety of defendants’ actions, not
each action viewed in isolation.

Courts, however,

have found that when defendants misrepresented to
plaintiffs the status of their HAMP application, their
rights under HAMP, or their eligibility for a
permanent
loan
modification,
these
acts
were
sufficiently unfair or deceptive to impose [Chapter]
93A liability.”
Stagikas v. Saxon Mortg. Serv., Inc., 2013 WL 5373275, at *4 (D.
Mass. Sept. 24, 2013).

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While the facts in this case are hotly disputed, the Court
must accept the non-conclusory allegations contained in the
complaint.

Accepted as true at the present juncture,

plaintiffs’ allegations that they were unfairly strung along
over the course of several years is sufficient to raise a
plausible claim that defendants “unfairly disregarded and
mishandled [their] HAMP application[s].” See Morris, 775 F.
Supp. 2d at 262.

In other words, if true, defendants’ treatment

would certainly cause one knowledgeable of the mortgage
modification arena to raise an eyebrow. See Mass. Sch. of Law at
Andover, Inc., 142 F.3d at 41-42.

Accordingly, the Court will

deny defendants’ motion to dismiss Count IV.
5.

Unfair or Deceptive Trade Practices under Ch. 93A
against Wells Fargo (Count V)

Plaintiffs’ final claim is that Wells Fargo, despite only
serving as the trustee (functionally, the owner of the note),
engaged in unfair or deceptive trade practices under Chapter
93A.

Defendants counter that Wells Fargo had no contact with

plaintiffs and therefore cannot be held liable under Chapter
93A.
Here, it is unclear precisely what, if anything, Wells
Fargo did to plaintiffs, let alone actions that were unfair or
deceptive.

The most damning action noted in the complaint is

simply that Bank of America “acted under Wells Fargo’s direction

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and control.”

Indeed, the complaint later explicitly states

that, upon being contacted by plaintiffs, Wells Fargo granted
plaintiffs “a release of the subordinate lien.”

In that

instance, plaintiffs got what they asked for.
Defendants correctly note that “a party may not be held
liable under G.L. c. 93A for conduct that it did not commit.”
Powell v. Ocwen Loan Servicing, LLC, No. 2010-2069, 2012 WL
345665, at *4 (Mass. Super. Ct. Jan. 4, 2012).

Here, even after

accepting the non-conclusory allegations against Wells Fargo as
true, it did not commit any acts plausibly characterized as
unfair or deceptive.

Accordingly, the Court will allow

defendants’ motion to dismiss Count V.
ORDER
For the foregoing reasons, defendants’ motion to dismiss
(Docket No. 36) is, with respect to Counts I and V, ALLOWED, and
is, with respect to Counts II, III and IV, DENIED.
So ordered.
/s/ Nathaniel M. Gorton_____
Nathaniel M. Gorton
United States District Judge
Dated September 24, 2014

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