O'Connor et al v. Nantucket Bank, A Division of Sovereign Bank, N.A. et al
Filing
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Chief Judge Patti B. Saris: AMENDED MEMORANDUM AND ORDER entered. "...ORDER: As to Count One, against Attorney Hayes and Hayes & Hayes, P.C., defendants' Motion to Dismiss is DENIED in relation to the post-foreclosure eviction action, and ALLOWED in relation to the April 13 letter. As to Sovereign Bank, the Motion to Dismiss is ALLOWED in its entirety as to Count One. As to Counts Two and Three, the Court ALLOWS the Motion to Dismiss for all defendants." (LaFlamme, Jennifer)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
JOHN J. O’CONNOR and
KATHERINE P. O’CONNOR,
Plaintiffs,
v.
NANTUCKET BANK, A DIVISION OF
SOVEREIGN BANK, N.A.,
STEPHEN P. HAYES, and
HAYES & HAYES, ATTORNEYS AT LAW, PC,
Defendants.
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)CIVIL NO. 13-11350-PBS
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MEMORANDUM AND ORDER
January 16, 2014
Saris, U.S.D.J.
I. INTRODUCTION
Plaintiffs John J. O’Connor and Katherine P. O’Connor have
filed suit against Nantucket Bank, a division of Sovereign Bank,
N.A.,1 and its counsel, Stephen P. Hayes and Hayes & Hayes, PC.
for violations of the Fair Debt Collection Practices Act
(“FDCPA”) under 15 U.S.C. § 1692, et. seq., the Massachusetts
debt collection statute at Gen. Laws ch. 93, § 49 and
corresponding regulations (Count One); Massachusetts Gen. Laws
1
On October 23, 2013, Nantucket Bank notified the Court
that as of October 17, 2013, Sovereign Bank officially changed
its name to Santander Bank, N.A. (Docket No. 27). For consistency
and simplicity’s sake, the Court refers to the parties as they
were originally named in the pleadings.
1
ch. 93A (Count Two); and the Real Estate Settlement Procedures
Act (“RESPA”) under 12 U.S.C. § 2601 (Count Three). Plaintiffs
allege that these violations occurred as a result of Defendants’
demands for “use and occupancy” payments following a non-judicial
foreclosure of the O’Connors’ home in Nantucket, MA and their
failure to respond to Plaintiffs’ request for loan-servicing
information.
II. STANDARD OF REVIEW
To survive a motion to dismiss under Rule 12(b)(6), a
complaint must contain sufficient factual matter, accepted as
true, to “state a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The court “must take
the allegations in the complaint as true and must make all
reasonable inferences in favor of the plaintiffs.” Watterson v.
Page, 987 F.2d 1, 3 (1st Cir. 1993). This highly deferential
standard of review “does not mean, however, that a court must (or
should) accept every allegation made by the complainant, no
matter how conclusory or generalized.” United States v. AVX
Corp., 962 F.2d 108, 115 (1st Cir. 1992). Dismissal for failure
to state a claim is appropriate when the pleadings fail to set
forth “factual allegations, either direct or inferential,
respecting each material element necessary to sustain recovery
under some actionable legal theory.” Berner v. Delahanty, 129
2
F.3d 20, 25 (1st Cir. 1997)(quoting Gooley v. Mobil Oil Corp.,
851 F.2d 513, 515 (1st Cir. 1988) (internal quotation marks
omitted)).
The “tenet that a court must accept as true all of the
allegations contained in a complaint is inapplicable to legal
conclusions.” Iqbal, 556 U.S. at 678. “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id. “The Court's assessment of the
pleadings is ‘context-specific,’ requiring ‘the reviewing court
to draw on its judicial experience and common sense.’” Maldonado
v. Fontanes, 568 F.3d 263, 269 (1st Cir. 2009)(quoting Iqbal, 556
U.S. at 663-64).
This case largely revolves around the content of various
letters not attached to the complaint. Rather, Defendants
submitted them in connection with the motion to dismiss.2
Ordinarily, a court may not consider any documents that are
2
Specifically, Defendants included the following in their
motion to dismiss: a copy of a letter dated October 7, 2011,
addressed to Nantucket Bank and signed by attorney Jamie Ranney,
a letter dated November 1, 2011, addressed to Jamie Ranney and
signed by Emily Hamilton, Vice President of Operations at
Nantucket and a letter dated December 27, 2011, addressed to
Jamie Ranney and signed by Emily Hamilton. These letters were
attached to a declaration of Zona V. Tanner-Butler, Market
Executive of Nantucket Bank, for the purpose of authenticating
the documents. Defendants also included a copy of the Notice to
Vacate dated April 13, 2012, addressed to the O’Connors and
signed by attorney Hayes as attorney for Sovereign Bank, N.A.,
and a copy of a letter dated May 17, 2012, addressed to attorney
Hayes and signed by Jamie Ranney. These letters were attached to
a declaration of Stephen Hayes.
3
outside of the complaint, or not expressly incorporated therein,
unless the motion is converted into one for summary judgment.
Watterson, 987 F.2d at 3. However, there is a narrow exception
“for documents the authenticity of which are not disputed by the
parties; for official public records; for documents central to
plaintiffs' claim; or for documents sufficiently referred to in
the complaint.” Id. When the complaint relies upon a document
whose authenticity is not challenged, such a document “merges
into the pleadings” and the court may properly consider it under
a Rule 12(b)(6) motion to dismiss. Beddall v. State St. Bank &
Trust Co., 137 F.3d 12, 17 (1st Cir. 1998); see Alternative
Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30,
33-34 (1st Cir. 2001) (affirming a dismissal of a suit based on
an interpretation of a settlement agreement that was “not
appended to or expressly incorporated in [the] complaint” because
alleged liability under the complaint depended “directly” upon
whether the “claims [were] interpreted to have been released
under the . . . Settlement Agreement” and authenticity of the
agreement was not challenged).
Because the authenticity of these letters has not been
disputed, the letters were extensively referred to in the
complaint, and Plaintiff has not objected, the court will
consider the letters.
4
III.
FACTUAL BACKGROUND
The following facts, culled from the complaint and letters,
are assumed to be true for the purpose of this motion to dismiss.
On July 6, 2007, John and Katherine O’Connor received a
residential loan from Nantucket Bank, a division of Sovereign
Bank, N.A., to purchase their home in Nantucket, Massachusetts.
Compl. ¶ 7. On June 20, 2011, the law firm Cohn & Dussi, LLC,
made a demand for a debt allegedly due to Nantucket Bank under
the loan on the property. Compl. ¶ 11. By a letter dated June 27,
2011, the O’Connors’ attorney Jamie Ranney informed Cohn & Dussi
that the O’Connors disputed the debt, asked for debt validation,
and requested that Cohn & Dussi not contact the O’Connors
directly. Compl. ¶ 12. By a letter dated July 1, 2011, Cohn &
Dussi replied, stating that “other counsel” was handling the
matter. Compl. ¶ 13. The “other counsel” referenced in Cohn &
Dussi’s letter was Attorney Stephen P. Hayes of the law firm
Hayes & Hayes, P.C. Compl. ¶ 14. Attorney Hayes is a shareholder
of Hayes & Hayes. Compl. ¶ 4.
On October 7, 2011, Attorney Ranney sent Nantucket Bank a
“Qualified Written Request” (“QWR”) under the Real Estate
Settlement Procedures Act (“RESPA”). The request was 21 pages
long and stated in its introduction: “This letter is being sent
to complain about the accounting and servicing of this mortgage
and our client(s)’ need for understanding and clarification of
5
various sale, transfer, funding source, legal and beneficial
ownership, charges, credits, debits, transactions, reversals,
actions, payments, analyses and records related to the servicing
of this account from its origination to the present date.” Mot.
to Dismiss, Tanner-Butler Decl., Ex. 1. The letter goes on to
request copies of 30 various types of documents (for example, the
twelfth requested document was “Any and all ‘Release of Interest’
agreement(s) between the nominal lender at the loan closing and
any party or parties who could claim an interest in the loan
closing or documents pertaining thereto and any GSE or other
party.”) Id. at 6-8. Further, the letter includes ten additional
categories of specifically requested information; each category
contains multiple enumerated questions. Id. at 8-18. In total,
these ten categories contain approximately 140 additional
questions. Id.
A Nantucket Bank letter to Attorney Ranney dated November 1,
2011, stated: “On October 12, 2011 we received your
correspondence dated October 7, 2011 . . . We are currently
conducting an investigation into your request and will provide
you with a response within the allowable time frame.” Mot. to
Dismiss, Tanner-Butler Decl., Ex. 2. By letter dated December 27,
2011, Nantucket Bank responded again with a cover letter stating,
“To the extent that your letter identifies what you believe to be
an error in your account or seeks specific information concerning
6
the servicing of your loan, this response treats your letter, or
those portions of your letter, as a qualified written request
under RESPA.” Mot. to Dismiss, Tanner-Butler Decl., Ex. 3. The
letter enclosed four documents, including: a copy of the note and
mortgage the O’Connors signed, the O’Connors’ loan history, a
copy of the loan modification documents executed by the O’Connors
on or about November 3, 2010, and a copy of an appraisal for the
property dated September 5, 2011. Id. The letter also stated, “To
the extent that your letter requests information that is overly
broad, vague, onerous and/or burdensome, we have not provided a
response to such items, as we consider these requests to be
improper requests and outside of the scope of what is intended to
be covered under a qualified written request. If you provide us
with a more narrow and specific request, we will consider your
request and respond accordingly.” Id.
On April 9, 2012, Nantucket Bank conducted a non-judicial
foreclosure sale of the home. Compl. ¶ 32. On April 13, 2012,
Attorney Hayes sent the O’Connors a “notice to vacate” demanding
that they vacate the property within 30 days. Compl. ¶ 33-36;
Mot. to Dismiss, Decl. Stephen P. Hayes, Ex. 4. The notice to
vacate stated that the O’Connors “are liable for use and
occupation at $200 per day from May 1, 2012.” Id. The notice also
included a “Notice of Important Rights” under the FDCPA. Id. The
Notice of Important Rights states that “Hayes & Hayes, Attorneys
7
at Law, P.C. is acting as a debt collector, pursuant to the
federal [FDCPA].” Id.
On May 17, 2012, Attorney Ranney sent a letter to Attorney
Hayes and Hayes & Hayes challenging the legality of the
foreclosure action underlying the notice to vacate. Compl. ¶ 55;
Mot. to Dismiss, Decl. Stephen P. Hayes, Ex. 5. The letter states
that “both you personally and your firm may consider this letter
a ‘thirty day demand letter’ pursuant to G.L. c. 93A (the
Consumer Protection Act).” Mot. to Dismiss, Decl. Stephen P.
Hayes, Ex. 5. The letter states that the April 13 notice to
vacate, by including a demand for use and occupancy fees, was “a
debt collection letter and subject to regulation under the FDCPA
and its state analog, G.L. c. 93, s.49 and the regulations
thereto.” Id. at 1. Attorney Ranney’s May 17 letter asserts that
“the total demand hereunder is $46,500.00, plus attorney’s feescurrently- in the amount of $1,000.00.” Id. By letter dated June
15, 2012, Attorney Hayes responded to the May 17, 2012, letter,
which stated that “(t)he demands contained in your letter are
rejected in full.” Pls.’ Opp., Ex. B at 2-3.
In the time between Attorney Ranney’s May 17 letter and
Attorney Hayes’ June 15 response, Sovereign Bank filed a summary
process eviction action in Nantucket District Court against the
O’Connors. Compl. ¶ 56. Filed on June 4, 2012, the eviction
action included a demand for $9,600 in use and occupancy fees.
8
Compl. ¶ 58. On June 5, 2013, the eviction case went to trial in
Nantucket District Court. The Judge ruled in favor of the
O’Connors on possession on the ground that Nantucket had failed
to introduce into evidence documents that were statutory
prerequisites to foreclosure. Trial Tr. at 166:3-167:7, Sovereign
Bank v. O’Connor, No. 1288-SU-0013, (Nantucket District Court
June 5, 2013).
On April 19, 2013, Plaintiffs filed the present complaint in
the Massachusetts Superior Court for Nantucket County. On June 6,
2013, Defendants removed this case to federal court. Defendants
now move to dismiss the complaint in its entirety. (Docket No.
8). The Court held a hearing on the motion to dismiss on
September 12, 2013.
IV. DISCUSSION
A.
Count One: Fair Debt Collection Statute
1.
April 13 Letter
Plaintiffs allege that all three defendants violated the
Fair Debt Collection Practices Act by demanding $200 per day in
use and occupancy payments in their April 13, 2012, letter. This
demand, Plaintiffs argue, was simply “made up” and was an
“outrageous” attempt to “intimidate the O’Connors into leaving
their home without going through the judicial eviction process.”
Pls.’ Opp. at 7-8; Compl. ¶ 50, 52. Defendants argue that the
9
FDCPA does not apply to demands for anticipated or future
payments as they do not constitute “debt” under the statute.
A viable claim for violation of the FDCPA requires that a
plaintiff establish three elements: “(1) that she was the object
of collection activity arising from consumer debt, (2) defendants
are debt collectors as defined by the FDCPA, and (3) defendants
engaged in an act or omission prohibited by the FDCPA.” Som v.
Daniels Law Offices, P.C., 573 F. Supp. 2d 349, 356 (D. Mass
2008). Under the FDCPA, a debt is defined as “any obligation or
alleged obligation of a consumer to pay money arising out of a
transaction in which the money, property, insurance, or services
which are the subject of the transaction are primarily for
personal, family, or household purposes, whether or not such
obligation has been reduced to judgment.” 15 U.S.C. § 1692(a)(5)
(2012). The First Circuit has held that, although “the FDCPA's
definition of debt is broad,” it “requires at least the existence
or alleged existence of an obligation to pay money” and “does not
broadly forbid practices in connection with all payments of
money.” Arruda v. Sears, Roebuck & Co., 310 F.3d 13, 23 (1st Cir.
2002). Merriam Webster defines debts as “an amount of money that
you owe.” Online Dictionary, accessed 31 Oct. 2013
; see also DEBT,
Black's Law Dictionary (9th ed. 2009) (defining debt as “a
specific sum of money due”).
10
The Notice to Vacate the O’Connors received was dated April
13, 2012, and made clear that the O’Connors would incur liability
for use and occupancy fees starting May 1, 2012. Therefore, at
the time they received the letter, the O’Connors had no existing
obligation to pay Sovereign Bank any such fees. See Udell v.
Kansas Counselors, Inc., 313 F. Supp. 2d 1135, 1140-41 (D. Kan.
2004) (“The plain language of the [FDCPA] reveals that it does
not prohibit communications regarding future debts. The statute
specifically refers to debt that the consumer has refused to pay.
In order for a consumer to refuse to pay a debt, he or she must
of course have been asked to pay the debt.”) (emphasis in
original); see also Baer v. Harmon Law Offices, P.C., No. 0830063-MAP, 2009 WL 102698, at *1-2 (D. Mass. Jan. 14, 2009)
(holding that a notice to quit’s reference to use and occupancy
payments did not “fall under the umbrella of the FDCPA” because
the notice “ma[de] no reference to any preexisting financial
obligation that Defendant sought to enforce” and “ma[de] it clear
that the reference was to potential future damages and not to a
preexisting debt,” noting that “Massachusetts law makes a sharp
distinction between damages for use and occupancy and rent.”).
Accordingly, because the O’Connors were under no obligation to
pay Sovereign Bank at the time they received the April 13 letter,
the Court finds that the reference to anticipated “use and
occupancy” liability does not implicate the FDCPA.
11
2. Eviction Action
The complaint also alleges that the subsequent court action
attempting to enforce Defendants’ demand for use and occupancy
payments was a violation of the FDCPA. Plaintiffs allege that
“defendants knowingly misstated the amounts allegedly due on the
summary process summons and complaint as a further effort to
coerce, intimidate and exert economic pressure on the O’Connors
to vacate the premises without judicial process and before any
trial.” Compl. ¶ 62. Under § 1693(e) of the FDCPA, “[a] debt
collector may not use any false, deceptive, or misleading
representation or means in connection with the collection of any
debt,” including “[t]he false representation of . . . the
character, amount, or legal status of any debt”. § 1692(e)(2)(A).
Further, “[a] debt collector may not engage in any conduct the
natural consequence of which is to harass, oppress, or abuse any
person in connection with the collection of a debt.” § 1692(d).
The restrictions of the FDCPA only apply to those defendants
who meet the definition of “debt collector.” Under the statute, a
debt collector is “any person who uses any instrumentality of
interstate commerce or the mails in any business the principal
purpose of which is the collection of debts, or who regularly
collects or attempts to collect, directly or indirectly, debts
owed or due or asserted to be owed or due another.” § 1692(a)(6).
In both the April 13 letter and the summary process eviction
12
action, Sovereign Bank sought payment of use and occupancy fees
asserted to be due to itself, not “owed or due to another.”
Sovereign Bank, therefore, cannot be subject to FDCPA liability
as a result of its conduct.
The same cannot be said for Attorney Hayes and Hayes &
Hayes, who filed the summary process action in order to obtain
payment of funds allegedly due to Sovereign Bank. The Supreme
Court has held that an attorney, who "regularly" through
litigation tries to collect consumer debts may be a "debt
collector" under the FDCPA. See Heintz v. Jenkins, 514 U.S. 291,
299 (1995) (involving a letter sent by a debt collector's
attorney to settle a debt collection suit, misrepresenting the
amount of the debt). Though Plaintiffs have not alleged any
specific facts in their Complaint establishing that Defendant
Hayes “regularly” engages in debt collection, Attorney Hayes
himself stated in correspondence with Plaintiffs that “Hayes &
Hayes, Attorneys at Law, P.C. is acting as a debt collector,
pursuant to the federal [FDCPA]” on behalf of Sovereign Bank.
Mot. To Dismiss, Decl. Stephen P. Hayes, Ex. 4. Because neither
party disputes the authenticity of the letter, this statement
suffices to establish Attorney Hayes and Hayes & Hayes as debt
collectors for the purposes of the FDCPA.
Where a Defendant is established as a debt collector and is
alleged to have engaged in an act or omission prohibited by the
13
FDCPA, all that remains is for the plaintiff to show “she was the
object of collection activity arising from consumer debt.” Som,
573 F. Supp. 2d at 356. Not all ordinary court-related documents
or lawsuits involving the collection of a debt implicate the
FDCPA. Heinz, 514 U.S. at 296. However, improper conduct by
attorneys during litigation can be an improper harassing tactic
under § 1692(d). See, e.g., Harrington v. CACV of Colorado, LLC,
508 F. Supp. 2d 128, 135 (D. Mass. 2007) (involving an improper
motion for default)(citing Argentieri v. Fisher Landscapes, Inc.,
15 F. Supp. 2d 55 (D. Mass. 1998)). Such conduct may also violate
§ 1693(e) if it involves misleading representations.
The Supreme Court in Heintz held that the FDCPA “applies to
the litigating activities of lawyers,” Heintz, 514 U.S. at 294.
Applying that broad proposition, several courts of appeals have
affirmed the applicability of the FDCPA to particular activities
and documents involved in litigation, including: written
discovery documents, see Sayyed v. Wolpoff & Abramson, 485 F.3d
226, 228, 230-32 (4th Cir. 2007); service of requests for
admission, see McCollough v. Johnson, Rodenburg & Lauinger LLP,
637 F.3d 939, 952 (9th Cir. 2011); and complaints served directly
upon consumers, see Donohue v. Quick Collect, Inc., 952 F.3d
1027, 1031-32 (9th Cir. 2010). Further, the act of litigating in
itself may in some instances form the basis of an FDCPA claim.
See LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1193 n. 15
14
(11th Cir. 2010) (“the initiation of legal proceedings by a
creditor can constitute a debt collection activity”) (citing
Heintz, 514 U.S. at 294); see also Sayyed, 485 F.3d at 230 (“The
statutory text makes clear that there is no blanket common law
litigation immunity from the requirements of the FDCPA.”) Thus,
while the FDCPA has “the apparent objective of preserving
creditors’ judicial remedies,” Heintz, 514 U.S. at 296, courts
balance that purpose against the need to protect consumers from
abusive and misleading debt collection practices, even when such
practices take the form of state court litigation.
District courts have reached varying conclusions on whether
eviction actions come within the scope of the FDCPA. Several have
held that, at least in some instances, an eviction action can
constitute collection activity sufficient to form the basis of an
FDCPA claim. See, e.g., Sanz v. Fernandez, 633 F. Supp. 2d 1356,
1363 (S.D. Fl. 2009) (holding that plaintiff stated a valid FDCPA
claim against non-lawyers who filed an eviction complaint against
tenant with a demand for attorneys fees and monetary damages);
see also Nelson v. American Power and Light, No. 2:08-cv-549,
2010 WL 3219498, at *7 (S.D. Ohio Aug. 12, 2010) (holding that
plaintiff stated a claim for relief under the FDCPA against
utility company who filed an eviction action, in landlord’s
leasing agent’s name, seeking past due electric bill payments).
Other courts have been more hesitant to bring eviction actions
15
within the ambit of the FDCPA: In Cook v. Hamrick, 278 F. Supp.
2d 1202 (D. Colo. 2003), the court expressed skepticism that a
lease between a landlord and tenant constituted a “consumer
transaction” under the FDCPA, and rejected the theory that a
claim for attorney’s fees in the subsequent eviction action was a
debt “arising out of” the lease. Id. at 1204. Meanwhile, in Bond
v. U.S. Bank Nat’l Assoc., No. 09-14541, 2010 WL 1265852, at *5
(E.D. Mich. Mar. 29, 2010), the court held that a summary
proceeding action against the plaintiff did not constitute debt
collection because the bank sought only possession, and no
monetary damages relating to the property. Id.
The law remains unsettled in this area, and courts’
decisions regarding the applicability of the FDCPA to eviction
actions have thus far been especially fact-sensitive. A synthesis
of the existing cases that address the question suggests that an
eviction action can implicate the FDCPA, particularly where the
eviction action includes some demand for payment tied to the
property at issue (e.g. a utility bill, or damages for unpaid
rent). Here, Defendant Hayes sought to collect $9,600 in use and
occupancy fees for Sovereign Bank by making an allegedly
outrageous demand for payment in the post-foreclosure eviction
complaint served upon Plaintiffs. Accordingly, Plaintiffs have
sufficiently alleged that Defendant Hayes and Hayes & Hayes
16
violated the FDCPA by filing the eviction action and misstating
the owed amount of use and occupancy fees in its demand.
As to Sovereign Bank, Count One is dismissed in its
entirety. As to Attorney Hayes and Hayes & Hayes, Count One is
dismissed with respect to the April 13 letter, but not with
respect to the demand for use and occupancy fees in the postforeclosure eviction litigation.
2.
Mass. Gen. Laws ch. 93, § 49
The state counterpart to the federal Fair Debt Collection
Practices Act, Mass. Gen. Laws ch. 93, § 49, titled “Debt
collection in an unfair, deceptive or unreasonable manner”,
provides generally that “[n]o one who is a creditor or an
attorney for a creditor, or an assignee of a creditor, of a
natural person present or residing in Massachusetts who has
incurred a debt primarily for personal, family or household
purposes shall collect or attempt to collect such debt in an
unfair, deceptive or unreasonable manner.” Mass. Gen. Laws ch.
93, § 49.3 Plaintiffs fail to assert any right to relief under
the Massachusetts debt collection statute as § 49 itself provides
no private right of action. Kassner v. Chase Home Fin., LLC,
CIV.A. 11-10643-RWZ, 2012 WL 260392, at *9 (D. Mass. Jan. 27,
2012) (noting that plaintiffs’ alleged violations of
3
Despite both parties’ repetitive citation to the
“Massachusetts Fair Debt Collection Practices Act”, there is no
statute with that name under Massachusetts law.
17
Massachusetts’ debt collection statute under Mass. Gen. Laws ch.
93, § 49 were only cognizable insofar as they served a basis for
derivative liability under Mass. Gen. Laws. Ch. 93A since the
Massachusetts debt collection statute “do[es] not provide private
rights of action”). Rather, Plaintiffs' claims under § 49 must be
dismissed except to the extent they form the basis for liability
under § 93A, discussed in Section C below.
B.
Count Three: RESPA Violation
Plaintiffs allege that Nantucket Bank violated the Real
Estate Settlement Procedure Act by failing to respond to their
October 7, 2011 letter, which was self-identified as a “qualified
written request.” In the letter, Plaintiffs’ requested, among
other things, that the bank provide copies of 30 documents and
that the bank respond to ten enumerated categories of questions,
which totaled around 140 specific requests for information.
Defendants argue that this claim should fail for two reasons.
First, Defendants assert that Plaintiffs October 7 letter did not
constitute a qualified written request (“QWR”)under RESPA.
Second, even if the letter did constitute a written request,
Defendants argue that their November 1, 2011, acknowledgment of
the letter and December 27, 2011, response constituted a
sufficient reply that satisfied RESPA’s requirements. Plaintiffs
dispute that Defendant’s response was adequate, arguing that it
was deficient in two respects: first, defendants failed to
18
specifically answer the approximately 140 enumerated questions
and second, defendants failed to provide a key for the Plaintiffs
to use to interpret their loan payment history information.
1.
RESPA Requirements
RESPA requires the servicer of a federally-related mortgage
loan to respond to certain borrower inquiries, which the statute
terms “qualified written requests.” 12 U.S.C. § 2605 (2012).
Under RESPA, a qualified written request: “shall be a written
correspondence, other than notice on a payment coupon or other
payment medium supplied by the servicer, that– (i) includes, or
otherwise enables the servicer to identify, the name and account
of the borrower; and (ii) includes a statement of the reasons for
the belief of the borrower, to the extent applicable, that the
account is in error or provides sufficient detail to the servicer
regarding other information sought by the borrower.” 12 U.S.C.
§ 2605(e)(1)(B). Under RESPA’s definitions, a servicer is “the
person responsible for servicing of a loan (including the person
who makes or holds a loan if such person also services the loan)”
and the term “servicing” means “any scheduled periodic payments
from a borrower pursuant to the terms of any loan, including
amounts for escrow accounts described in section 2609 of this
title, and making the payments of principal and interest and such
other payments with respect to the amounts received from the
19
borrower as may be required pursuant to the terms of the loan.”
§ 2605(i)(2)-(3).
If a borrower’s correspondence constitutes a QWR, certain
obligations attach to the servicer’s response. First, the
servicer must acknowledge receipt of the QWR within twenty
business days. § 2605(e)(1)(A).4 Next, the servicer must provide
a more complete response to the borrower within sixty business
days. § 2605(e)(2).
In its response, “the servicer shall–
(A) make appropriate corrections in the account of the
borrower, including the crediting of any late charges
or penalties, and transmit to the borrower a written
notification of such correction (which shall include
the name and telephone number of a representative of
the servicer who can provide assistance to the
borrower);
(B) after conducting an investigation, provide the
borrower with a written explanation or clarification
that includes– (i) to the extent applicable, a
statement of the reasons for which the servicer
believes the account of the borrower is correct as
determined by the servicer; and (ii) the name and
telephone number of an individual employed by, or the
office or department of, the servicer who can provide
assistance to the borrower; or
(C) after conducting an investigation, provide the
borrower with a written explanation or clarification
that includes--(i) information requested by the
borrower or an explanation of why the information
requested is unavailable or cannot be obtained by the
4
The Dodd-Frank Wall Street Reform and Consumer Protection
Act shortened the amount of time given to mortgage servicers to
respond to borrower inquiries. That change took effect on January
21, 2013. See Pub. L. No. 111-203 § 1463(c), 124 Stat. 1376
(2010).
20
servicer; and (ii) the name and telephone number of an
individual employed by, or the office or department
of, the servicer who can provide assistance to the
borrower.
12 U.S.C. § 2605(e)(2)
Failure to comply with RESPA requirements renders the
servicer “liable to the borrower for each such failure . . . [i]n
the case of any action by an individual, an amount equal to the
sum of– (A) any actual damages to the borrower as a result of the
failure; and (B) any additional damages, as the court may allow,
in the case of a pattern or practice of noncompliance with the
requirements of this section, in an amount not to exceed $2,000.”
§ 2605(f). To make out a claim under § 2605(e), a plaintiff must
allege sufficient facts to “show: (1) that the servicer failed to
comply with the statute's [qualified written request] rules; and
(2) that the plaintiff incurred ‘actual damages' as a consequence
of the servicer's failure.” Jones v. Bank of New York, CIV.A. 1211503-RWZ, 2013 WL 3728382, at *5 (D. Mass. July 12, 2013)
(citing Okoye v. Bank of New York Mellon, CIV. A. No.
10–11563–DPW, 2011 WL 3269686, at *17 (D.Mass. July 28, 2011)).
Further, “[t]o state a claim under RESPA, many courts have read §
2605 to require a showing of pecuniary damages.” Williams v.
Litton Loan Servicing, CA 10-11866-MLW, 2011 WL 3585528, at *4
(D. Mass. Aug. 15, 2011) (citing Durland v. Fieldstone Mortg.
Co., No. 10 CV 125 JLS, 2010 WL 3489324, at *3 (S.D.Cal. Sept.3,
2010)).
21
2.
Was the October 7, 2011 Letter a Qualified Written
Request?
Defendants argue that the October 7, 2011, letter was so
over-broad and burdensome that it failed to qualify as a QWR
under RESPA and that consequently, none of the Bank’s obligations
to respond were triggered upon its receipt. The O’Connors concede
that some of the requests in their letter “had no obvious
relevance to their loan” but argue that the letter still
constituted a QWR since “[m]ost of the requests . . . clearly
related to the ‘servicing’ of the O’Connors’ loan under their
mortgage with Nantucket Bank.” Pls.’ Opp. at 12-13.
Under RESPA, in order to constitute a Qualified Written
Request, a communication must “include[] a statement of the
reasons for the belief of the borrower, to the extent applicable,
that the account is in error or provides sufficient detail to the
servicer regarding other information sought by the borrower.” 12
U.S.C. § 2605(e)(1)(B). The Seventh and Ninth Circuits have
interpreted this scope of this provision liberally, stating that
a QWR does not require the use of “any ‘magic’ words” to
constitute a valid request and “an interpretation according to
which it did so implicitly would be inconsistent with Congress'
intent that the statute serve a broad remedial purpose. Instead,
under § 2605(e), a borrower's written inquiry requires a response
as long as it (1) reasonably identifies the borrower's name and
22
account, (2) either states the borrower's ‘reasons for the belief
... that the account is in error’ or ‘provides sufficient detail
to the servicer regarding other information sought by the
borrower,’ and (3) seeks ‘information relating to the servicing
of [the] loan.’ 12 U.S.C. § 2605(e)(1)(A)–(B). Medrano v.
Flagstar Bank, FSB, 704 F.3d 661, 666 (9th Cir. 2012) cert.
denied, 133 S. Ct. 2800 (U.S. 2013) (citing Catalan v. GMAC
Mortgage Corp., 629 F.3d 676, 687 (7th Cir. 2011) (noting that
“RESPA does not require any magic language before a servicer must
construe a written communication from a borrower as a qualified
written request and respond accordingly.”)).
The Ninth Circuit, however, made clear that: “the third of
those requirements—that the letter must request information
relating to servicing—ensures that the statutory duty to respond
does not arise with respect to all inquiries or complaints from
borrowers to servicers. . . . ‘Servicing,’ so defined [under
RESPA], does not include the transactions and circumstances
surrounding a loan's origination—facts that would be relevant to
a challenge to the validity of an underlying debt or the terms of
a loan agreement. Such events precede the servicer's role in
receiving the borrower's payments and making payments to the
borrower's creditors. Perhaps for that reason, Congress drafted
the statute so as not to include those matters.” Id. So, while a
the form of the request may be construed somewhat liberally, the
23
substance of that request must pertain specifically to servicing
in order to trigger an obligation to respond under RESPA.
That brings the Court to the question: to what extent does
an over-inclusive request for both servicer- and non-servicerrelated information constitute a QWR under RESPA? The caselaw on
this question is evolving. At least at the district level, many
courts have held that even overbroad requests may constitute a
valid QWR to the extent that they contain servicer-related
questions. See Kassner v. Chase Home Fin., LLC, CIV.A. 11-10643RWZ, 2012 WL 260392, at *6 (D. Mass. Jan. 27, 2012) (holding that
plaintiff had sufficiently alleged a “technical” RESPA violation
even though her QWR consisted of “a four-page single spaced
letter with 37 separate requests” where “most of the 37 requests
[we]re ostensibly not ‘servicer related’”); Sovereign Bank v.
Sturgis, 863 F. Supp. 2d 75, 104-05 (D. Mass. 2012) (noting that
while “a number of the requests that the [plaintiffs] made are
unrelated to servicing as defined by the statute ... [o]n the
other hand, a number of the requests fit precisely within the
ambit defined by the statute” and stating that “[w]hile [the
bank] was entitled to ignore the former category of requests, it
was obligated to respond to those relating to payments, fees, and
the like as described in RESPA.”). Even in Menashe v. Bank of New
York, which Defendants cite to stand for the opposite
proposition, the court held that, despite the fact that requests
24
were “[b]uried in the [plaintiff] letter's nineteen requests for
documents”, to the extent that “some requests that may plausibly
be construed as seeking information regarding servicing”, the
court “[could] not say at this time that Plaintiff's . . . letter
at least in part, [did] not qualify as a QWR.” 850 F. Supp. 2d
1120, 1131-32 (D. Haw. 2012).
Here, Plaintiffs’ blitzkrieg approach of lobbing 140
specific requests at the bank far exceeded those at issue in
either Kassner (37 requests) or Menashe (19 requests) and raises
concerns that counsel sent the grossly over-inclusive letter in
bad faith or for dilatory purposes. However, the court need not
address whether this is a bona fide QWR because the Bank filed an
appropriate response.
3.
The Bank’s December 27 Response under RESPA
Plaintiffs do not contest the timeliness of Defendants’
response to their request. The Bank acknowledged receipt of the
October 7 letter on November 1, 2011, and followed up on December
27, 2011, with a more comprehensive response within the statutory
time-frame under § 2605(e)(2). Rather, Plaintiffs contend that
the Bank’s December 27 response was deficient because it did not
specifically respond to the 30 requests for documents and
approximately 140 questions related to the loan, and Defendants
did not include a key to interpret Plaintiffs’ loan history.
25
In a similar case, Kassner, 2012 WL 260392, at *6, the court
found a violation of RESPA where plaintiffs sent their loan
servicer a mixed request for information and the Bank responded
with a copy of the executed note and several form statements.7
The Court found that, although many of the non-servicer related
questions did not merit a response, “plaintiff's request for a
copy of the loan's payment history clearly [did] relate to the
servicing of the loan” and the bank “did not include that history
in its May 7, 2010, response to the QWR.” Id. at *6-7. The court
went on to describe how the bank “also failed to provide the
contact information of an individual employed by the servicer who
[could] provide further assistance to plaintiff as required by
RESPA.” Id. Given these “technical” violations, the Court found
that the Plaintiffs’ had made out a viable claim under RESPA. Id.
This case is distinguishable from Kassner. Here, not only
did the Bank provide Plaintiffs’ loan history and a contact
person at the Bank, the Bank also included a copy of the Note and
Mortgage, copies of loan modification documents the plaintiffs
executed, and a recent appraisal of the Property. Further, the
Bank offered additional information if the Plaintiffs clarified
their request, stating explicitly in the cover letter: “If you
7
Specifically, the bank included: an ARM Mortgage Loan
Disclosure Statement, Notice of the Right to Cancel statements,
Truth in Lending Disclosure Statement and HUD 1-Settlement
Statement. Kassner, 2012 WL 260392, at *6.
26
provide us with a more narrow and specific request, we will
consider your request and respond accordingly.” Mot. Dismiss,
Tanner-Butler Decl. Ex. 3. It is true that the bank did not
provide a key to interpret the loan history, and it was not self
explanatory.
Nonetheless, Plaintiffs have not alleged that they
followed up with the bank after receiving the December 27 letter
to get a better explanation, nor have they asserted that they
made any good faith effort to narrow their request. In fact, at
oral argument this Court requested that Plaintiffs narrow down
for the court which specific questions they felt entitled them to
a response. Plaintiffs’ counsel has failed to do so.
Given the Bank’s response to an overly broad information
request, the Court finds that the Bank complied with its
requirements under RESPA. Therefore, the Court hereby dismisses
Count Three with prejudice.
C.
Count Two: Massachusetts General Law Chapter 93A
The O’Connors assert that defendants Nantucket Bank, Hayes &
Hayes, and Attorney Hayes, individually or collectively, violated
Massachusetts General Law Chapter 93A for allegedly engaging in
unlawful debt collection. Compl. ¶ 82-85. Chapter 93A protects
consumers from “unfair or deceptive acts or practices in the
conduct of any trade or commerce.” Mass. Gen. Laws ch. 93A, §
2(a). To succeed on a Chapter 93A claim, a plaintiff must plead
that the defendant’s conduct was unfair or deceptive and that the
27
defendant’s conduct occurred in trade or commerce. See Klairmont
v. Gainsboro Rest. Inc., 465 Mass. 165, 174 (2013) (“[A]
violation of a law or regulation . . . will be a violation of c.
93A, § 2(a) only if the conduct leading to the violation is both
unfair or deceptive and occurs in trade or commerce.”) (emphasis
added). Additionally, “as a special element” of a Chapter 93A
cause of action, the plaintiff’s complaint must allege that the
plaintiff sent a demand letter to the defendant.8 Entrialgo v.
Twin City Dodge, Inc., 368 Mass. 812, 812 (1975). Even where a
violation of another statute constitutes a per se violation of
Ch. 93A, the demand letter requirement must be met. See McKenna
v. Wells Fargo Bank, N.A., 693 F.3d 207, 218 (1st Cir. 2012)
(holding that under Massachusetts law, mortgagor's failure to
submit demand letter to mortgagee 30 days prior to filing action
precluded mortgagor's claims alleging mortgagee engaged in unfair
or deceptive acts or practices because even if mortgagee's acts
were per se unfair or deceptive acts or practices, “no such
exception for ‘per se’ violations is supported by Massachusetts
law.”).
8
Mass. Gen. Laws ch. 93A, § 9(3) provides that “[a]t least
thirty days prior to the filing of any such action, a written
demand for relief, identifying the claimant and reasonably
describing the unfair or deceptive act or practice relied upon
and the injury suffered, shall be mailed or delivered to any
prospective respondent.”
28
As to Nantucket Bank, the O’Connors pleaded both that the
bank engaged in unfair or deceptive conduct and that the bank
engaged in commerce. Compl. ¶ 9, 31, 52, 54. Plaintiffs failed,
however, to specifically allege that they sent a demand letter to
Nantucket Bank. See Epps v. Bank of America, N.A., No. 12-1282,
2013 WL 3120282, at *6-7 (Mass. Super. Ct. June 14, 2013)
(dismissing plaintiff’s Chapter 93A claim where both the
plaintiff’s complaint and provided demand letter failed to
indicate the plaintiff “sent any [] demand letter to [two of the
defendants] or that either of these defendants were otherwise put
on notice of a c. 93A action against them.”); cf. Kirtz v. Wells
Fargo Bank N.A., No. 12-10690-DJC, 2012 WL 5989705, at *11 (D.
Mass. Nov. 29, 2012) (granting plaintiff leave to amend her
complaint where the plaintiff “d[id] not specifically allege that
she sent the statutory notification” but rather alleged generally
that “she ha[d] performed all necessary conditions precedent to
th[e] action within the purvue of Mass. Gen. L. Ch. 93A.”). Given
that the O’Connors failed to allege that they provided Nantucket
Bank with the required demand letter, the Chapter 93A claim
against Nantucket Bank is dismissed.
As to the attorney defendants, Attorney Hayes and Hayes &
Hayes, Plaintiffs satisfied Chapter 93A’s demand letter
requirement. Compl. ¶ 52, 54. However, the O’Connors failed to
plead that either Hayes & Hayes or Attorney Hayes was engaged in
29
trade or commerce, a required element of a Chapter 93A claim. See
Klairmont, 465 Mass. at 174 (requiring Chapter 93A claims to
allege defendant’s conduct was unfair or deceptive and occurred
in trade or commerce); see also McDermott v. Marcus, Errico,
Emmer & Brooks, P.C., No. 09-10159-MBB, 2013 WL 4539071, at *5-7
(D. Mass. Aug. 26, 2013) (holding that a defendant-attorney was
not “liable under chapter 93A given the absence of the required
trade or commerce under section 2(a)”). Generally, “the proper
party to assert a [chapter] 93A claim against an attorney is a
client or someone acting on a client’s behalf.” Tetrault v.
Mahoney, Hawkes & Goldings, 425 Mass. 456, 462 (1997).
When a non-client asserts a chapter 93A claim against an
attorney, the attorney must have been acting in a business
context vis-a-vis plaintiffs. McDermott, 2013 WL 4539071, at *5.
See also Akar v. Federal National Mortgage Association, 843
F.Supp.2d 154, 170 (D.Mass. 2012) (holding that “Chapter 93A
claims can be brought against an attorney or a law firm, but only
when the attorney or law firm is acting in a business context
vis-a-vis the plaintiffs.”) (internal citations and quotations
omitted). Several courts have held that an attorney engaged in
litigation efforts to collect monies owed to his client is not
engaged in trade or commerce as delivered in Chapter 93A.
McDermott, 2013 WL 4539071 at *6 (finding that attorney who
represented a condominium association did not “inject itself into
30
the external marketplace in the course of its efforts to collect
monies owed to its client,” but rather was simply pursuing “a
private dispute between volunteer members of a condominium
association and a condominium owner who failed to pay assessments
and related charges.”). See also Akar, 843 F.Supp.2d at 171
(finding trade or commerce element had not been met when the
“only contact between the parties was on opposing sides of a
dispute involving the foreclosure of [Plaintiff]’s property by
[the law firm’s client]”). The complaint is devoid of any
allegation that Hayes & Hayes or Attorney Hayes engaged in trade
or commerce vis-a-vis plaintiff. Therefore, the Chapter 93A claim
against Hayes & Hayes and Attorney Hayes is also dismissed.
IV. ORDER
As to Count One, against Attorney Hayes and Hayes & Hayes,
P.C., defendants’ Motion to Dismiss is DENIED in relation to the
post-foreclosure eviction action, and ALLOWED in relation to the
April 13 letter. As to Sovereign Bank, the Motion to Dismiss is
ALLOWED in its entirety as to Count One. As to Counts Two and
Three, the Court ALLOWS the Motion to Dismiss for all defendants.
/s/ PATTI B. SARIS
PATTI B. SARIS
Chief United States District Judge
31
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