Bishay et al v. Bank Of America
Filing
47
Judge Denise J. Casper: ORDER entered. MEMORANDUM AND ORDER - The Court ALLOWS Defendants motion to dismiss, D. 20, DENIES Plaintiffs motion to strike, D. 26, and DENIES as moot Plaintiffs motion to bifurcate, D. 41. (Hourihan, Lisa)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
__________________________________________
)
)
MARY COSTELLO (BISHAY) and
)
BAHIG BISHAY,
)
)
Plaintiffs,
)
)
v.
)
Civil Action No. 13-cv-11424-DJC
)
BANK OF AMERICA, N.A. (f/k/a FLEET
)
NATIONAL BANK) and MERRILL LYNCH )
CREDIT CORP.,
)
)
Defendants.
)
)
__________________________________________)
MEMORANDUM AND ORDER
CASPER, J.
I.
January 27, 2014
Introduction
Plaintiffs Mary Costello Bishay (“Costello”) and Bahig Bishay (“Bishay”) (collectively
“Plaintiffs”) have filed this lawsuit against Bank of America, N.A. (formerly known as Fleet
National Bank) (“BANA”) and Merrill Lynch Credit Corp. (“Merrill”) (collectively
“Defendants”) seeking a declaratory judgment, injunctive relief and compensatory damages for
violations of Mass. Gen. L. c. 93A, breach of the implied covenant of good faith and fair dealing,
malicious prosecution and intentional and negligent misrepresentation.
D. 2-1 at 8-18.
Defendants have moved to dismiss. D. 20. For the reasons stated below, the Court ALLOWS
the motion.
1
II.
Standard of Review
In considering a motion to dismiss for failure to state a claim upon which relief can be
granted pursuant to Fed. R. Civ. P. 12(b)(6), the Court will dismiss a complaint or a claim that
fails to plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 570 (2007). To state a plausible claim, a complaint need not contain
detailed factual allegations, but it must recite facts sufficient to at least “raise a right to relief
above the speculative level . . . on the assumption that all the allegations in the complaint are true
(even if doubtful in fact).”
Id. at 555.
“In determining whether a complaint crosses the
plausibility threshold, ‘the reviewing court [must] draw on its judicial experience and common
sense.’” García-Catalán v. United States, 734 F.3d 100, 103 (1st Cir. 2013) (quoting Ashcroft v.
Iqbal, 556 U.S. 662, 679 (2009)). “This context-specific inquiry does not demand ‘a high degree
of factual specificity.’ Even so, the complaint ‘must contain more than a rote recital of the
elements of a cause of action.’” García-Catalán, 734 F.3d at 103 (internal citations omitted). In
considering a motion to dismiss, the Court may generally consider only the facts pled in the
complaint, though exceptions exist for, inter alia, “matters susceptible to judicial notice.”
Berkowitz v. Berkowitz, No. 11-10483-DJC, 2012 WL 769726, at *4 (D. Mass. Mar. 9, 2012)
(quoting Jorge v. Rumsfeld, 404 F.3d 556, 559 (1st Cir. 2005)).
III.
Factual Background
Plaintiffs reside in Nantucket, Massachusetts in a property (the “Property”) that they have
owned for nearly thirty years. Compl., D. 2-1 ¶¶ 1, 4. In 2004, Sovereign Bank loaned Costello
$650,000 secured by a mortgage on the Property. Id. ¶ 5. In 2005, Merrill Lynch1 loaned
1
The complaint refers to Fleet National Bank, BANA and Merrill collectively as “BOA,”
Bank of America, but the complaint and exhibits elsewhere indicate that that the 2005 financing
was actually provided by Merrill. Compl. ¶ 1, Exh. C.
2
Costello $250,000, as evidenced by a Home Equity Line of Credit agreement (“HELOC”) which
was also secured by a mortgage on the Property. Id. ¶ 6. As alleged, prior to accepting funds
from BANA, Costello explained to BANA that the Plaintiffs planned to repay the loan from
funds that Bishay (Costello’s husband) expected to recover in a civil action Bishay had brought
against Brighton Avenue Associates (“BAA”) in Suffolk Superior Court. Id. ¶ 9. As a result of
this lawsuit, BAA eventually paid Bishay $2,245,000.00 in 2007 and 2008. Id. ¶ 11.
In 2001, approximately four years before Costello entered into the HELOC, Bishay had
been joined in a receivership action pending in Essex Superior Court, in which Fleet National
Bank (“Fleet”) had intervened in 2003 to resolve a $30,000 dispute. Id. ¶ 12. Bishay alleges that
his involvement in the receivership proceeding precluded him from accessing the $2,245,000.00
in funds that he had recovered from BAA. Id. ¶ 13. Bishay further alleges that Fleet (which later
merged with BANA in or about 2004)2 “fueled” the receivership proceeding, which continued
until September 19, 2012. Id. ¶ 12, Exh. O.
In 2007, Costello stopped making payments on the mortgage. Id. at Exh. T. Merrill
conducted a foreclosure in 2010. Id.
BANA agreed to purchase Merrill in 2008, but Merrill
was not merged into BANA until 2013.3 Plaintiffs continue to occupy the Property and a
separate eviction action is currently pending in state court. Compl. ¶¶ 1 (citing Merrill Lynch v.
Costello and Bishay, No. 1288-SU-000029 (Mass. Super. 2013)), 4, 18.
2
The Court takes judicial notice of the fact that BANA merged with Fleet in 2004. Bank
of America Corp., Annual Report (Form 10-K) at 1 (Mar. 1, 2005) and that BANA agreed to
merge with Merrill Lynch in 2008 and completed that merger in 2013. Bank of America Corp.,
Quarterly Report (Form 10-Q) at 9 (Oct. 30, 2013) and Quarterly Report (Form 10-Q) at 4 (Nov.
6, 2013).
3
See footnote 2, supra.
3
IV.
Procedural History
Plaintiffs commenced this action in Nantucket Superior Court on May 13, 2013. D. 2-1
at 18. Defendants removed the case to this Court on June 13, 2013. D. 2. Defendants moved to
dismiss the complaint on July 11, 2013. D. 20. Plaintiffs moved for a preliminary injunction on
August 1, 2013, D. 27, a motion that the Court has previously denied. D. 36. The Court heard
the parties on the motion to dismiss on December 18, 2013 and took this matter under
advisement. D. 46.
V.
Discussion
A.
Plaintiff’s
Dismissed
Claim
for
Declaratory
Judgment
(Count
I)
is
Count I of the complaint seeks a declaratory judgment to determine whether the entity
that initiated foreclosure proceedings against Costello (i.e., Merrill) is the same as the entity that
“fuel[ed] a receivership action” in which Bishay had become entangled (i.e., Fleet). Compl. ¶¶
12, 23. The gravamen of this claim is Plaintiffs’ allegation that Fleet prevented Bishay from
repaying Costello’s home equity loan from Merrill because a related entity (all eventually
merged into BANA) restricted Bishay’s ability to access certain funds. Id. ¶ 12.
Defendants argue that this count does not seek declaratory relief at all, because it does not
request that the court declare the legal rights of the party. D. 21 at 3-4. The Declaratory
Judgment Act allows courts to “declare the rights and other legal relations of any interested party
seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. §
2201(a). On the one hand, Defendants are correct that the Court would not be declaring the
rights of Plaintiffs by finding facts and thereby “declaring” BANA’s corporate structure. D. 21
at 4. However, the Court draws all inferences from the complaint in the Plaintiffs’ favor at this
stage of the litigation, as it must. See Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d 1, 12 (1st
4
Cir. 2011). The reasonable inference can be drawn that what these pro se Plaintiffs are in fact
seeking is a determination of their rights against BANA where two predecessor entities took
inconsistent positions against them which is at the crux of their substantive claims against the
Defendants. See Ayala Serrano v. Lebron Gonzalez, 909 F.2d 8, 15 (1st Cir. 1990) (noting that
“pro se pleadings are to be liberally construed, in favor of the pro se party”). That having been
said, given that dismissal is warranted for Plaintiffs’ substantive claims against BANA, as
discussed below, the Court dismisses this count for declaratory judgment as well. Tyler v.
Michaels Stores, Inc., 840 F. Supp. 2d 438, 452 (D. Mass. 2012) (noting that “dismissal of the
underlying claims requires dismissal of the claim for declaratory relief as well”) (internal
citations omitted); Edlow v. RBW, LLC, No. 09-12133-RGS, 2010 WL 2034772, at *9 (D.
Mass. May 21, 2010) (dismissing claim for declaratory judgment as moot after dismissing
substantive claims), aff’d, 688 F.3d 26 (1st Cir. 2012).
B.
Plaintiffs Have Not Pled a Plausible Claim for Breach of the Implied
Covenant
of
Good
Faith
and
Fair
Dealing
(Count
III)
Defendants argue that Plaintiffs have not met their pleading burden as to their claim for
breach of the implied covenant of good faith and fair dealing because they fail to allege plausibly
that BANA was a party to any contract giving rise to such covenant.
Assuming all the
allegations in the complaint to be true, as the Court must at this juncture, Plaintiffs allege that
BANA violated the implied covenant of good faith and fair dealing by, as a successor to Merrill
and Fleet, seeking to collect a debt from Bishay in an earlier receivership proceeding, unrelated
to Costello’s indebtedness, but thereby making it impossible for Plaintiffs to repay Costello’s
HELOC at issue in this case. Compl. ¶¶ 12-13, 32.
Defendants argue, among other things, that
“Plaintiffs’ novel attempt to invoke the implied covenant would retroactively create an obligation
5
on BANA to abandon its separate interest in recovering through the Receivership a lawful
judgment unrelated to the HELOC [secured by a mortgage by Costello].” D. 21 at 7.
The implied covenant of good faith and fair dealing is present in every contract governed
by Massachusetts law. Anthony’s Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 471 (1991).
The implied covenant makes unlawful conduct by one party to a contract that prevents another
party from receiving the fruits of the contract. Id. at 471-72. The “purpose of the covenant is to
guarantee that the parties remain faithful to the intended and agreed expectations of the parties in
their performances.” Uno Rest., Inc. v. Bos. Kenmore Reality Corp., 441 Mass. 376, 385 (2004).
Even assuming as true, Plaintiffs’ allegation that BANA assumed Fleet’s status as
creditor in the receivership proceedings against Bishay and assumed Merrill’s status as
mortgagee in the HELOC loan involving Costello (the declaratory relief that Plaintiffs claim in
Count I), Plaintiffs have failed to allege the contractual relationship with BANA that gives rise to
the claim that such conduct–namely, seeking to collect an unrelated debt in an unrelated matter
from an individual, Bishay, who was not a party to the HELOC loan–arises. Although the Court
is aware that, at this stage of pleading, the Court need determine only whether Plaintiffs’ claims
are “plausible on [their] face,” García-Catalán, 734 F.3d at 103 (quoting Iqbal, 556 U.S. at 678),
the Court cannot conclude that this standard is met here where the contractual relationship from
which the implied covenant alleged to have been breached has not been alleged in the complaint.
To the extent that Plaintiffs are contending that their factual allegations give rise to a claim for
breach of the implied covenant arising from Costello’s HELOC, now owned by BANA,
“[a]rguing that BANA would have to give up its legal claim in the Receivership against [Bishay]
in order to preserve its right under the separate HELOC agreement with Costello cannot form the
basis for a cognizable claim for relief.” D. 21 at 8. That is, assuming all of the allegations to be
6
true, Plaintiffs assert a novel legal claim for which they cite no legal support. D. 25 at 8-9. This
is particularly true where, even as alleged, Bishay became indebted to Fleet long before Costello
incurred her debt on the HELOC; BANA became the successor to Fleet’s status in the unrelated
receivership action after Fleet had intervened there; and BANA became the successor to
Merrill’s interest in Costello’s debt on the HELOC after the receivership action was underway.
Compl. ¶ 12; see footnote 2, supra. Plaintiffs claim for breach of the implied covenant of good
faith and fair dealing therefore fails and Count III is DISMISSED.
C.
Plaintiffs Have Not Met the Pleading Requirements for Mass. Gen. L. c. 93A
(Count II)
Count II alleges unfair or deceptive conduct in violation of Mass. Gen. L. c. 93A.
Compl. ¶¶ 26-29. Defendants make two arguments in support of their motion to dismiss this
claim.
First, they argue that Plaintiffs have not identified any conduct falling within the
“penumbra of some . . . concept of unfairness.” D. 21 at 4 (quoting Jasty v. Wright Med. Tech.,
Inc., 528 F.3d 28, 37 (1st Cir. 2008)). Second, Defendants argue that the complaint does not
meet the pleading requirements of the statute. D. 21 at 6.
Addressing the second argument first, “[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.” Mass. Gen. L. c. 93A, § 9(3). This “statutory notice requirement
is not merely a procedural nicety, but, rather, ‘a prerequisite to suit.’” Rodi v. S. New Eng. Sch.
of Law, 389 F.3d 5, 19 (1st Cir. 2004) (quoting Entrialgo v. Twin City Dodge, Inc., 368 Mass.
812, 813 (1975)). The purpose of the demand letter is “to encourage negotiation and settlement”
and to “control . . . the amount of damages.” McKenna v. Wells Fargo Bank, N.A., 693 F.3d
7
207, 218 (1st Cir. 2012) (internal quotation marks and citations omitted). A demand letter under
93A must make clear that the claim arises under that statute, either through:
(1) any express reference to c. 93A; (2) any express reference to the consumer
protection act; (3) any assertion that the rights of the claimants as consumers have
been violated; (4) any assertion that the defendant has acted in an unfair or
deceptive manner (G.L. c. 93A, § 2[a]); (5) any reference that the claimants
anticipate a settlement offer within thirty days (to the contrary, the letter demands
action within one week, a response which c. 93A, § 9[3], does not require); or (6)
any assertion that the claimant will pursue multiple damages and legal expenses,
should relief be denied.
Cassano v. Gogos, 20 Mass. App. Ct. 348, 350 (1985) (opining that “to qualify as a written
demand under c. 93A, a letter must, in addition to defining the injury suffered and the relief
sought, mention at least one of the six factors we have enumerated (or contain some other signal
which will alert a reasonably perceptive recipient”)).
In their opposition to the motion to dismiss, Plaintiffs identify an April 24, 2013 letter to
BANA’s Chief Executive Officer Brian Moynihan as the demand letter which satisfies this
jurisdictional predicate to suit. D. 25 at 8. Plaintiffs have attached this letter to their complaint,
D. 15 at 50-52, and the Court may consider in resolution of the motion. Watterson v. Page, 987
F.2d 1, 3 (1st Cir. 1993). The letter contains no express reference to c. 93A, no express reference
to the consumer protection act, no assertion that BANA violated Plaintiffs’ rights as the
consumers of BANA, no reference to “unfair” or “deceptive” acts or practices, no reference that
the claimants expected a settlement within thirty days and no assertion that the Plaintiffs will
assert legal expenses or multiple damages. D. 15 at 50-52.
Certainly there could be an argument that the Plaintiffs’ letter describes intentional
conduct of the sort that might potentially run afoul of c. 93A. However, as “the purpose of the
statutory written demand is to encourage settlements, that objective is not brought closer by
keeping the nature of the action concealed. Chapter 93A and its vocabulary,–unfair or deceptive,
8
multiple damages, recovery of legal fees–have begun to acquire a certain secondary meaning in
the commercial world in this State.” Cassano, 20 Mass. App. Ct. at 351. Accordingly BANA
was “without warning that the claimant intended to invoke the heavy artillery of c. 93A.”
Passatempo v. McMenimen, 461 Mass. 279, 300 (2012) (affirming trial court’s dismissal of c.
93A claim where demand letter neither mentioned defendant’s name nor identified nor described
any unfair or deceptive practice) (quoting Cassano, 20 Mass. App. Ct. at 351); see Reichenbach
v. Fin. Research Ctr, Inc., No. 1652, 2006 Mass. App. Div. 10, 2006 WL 279025, at *2 (2006)
(dismissing appeal of trial court’s decision that demand letter failed to make sufficient reference
to c. 93A); Eisenberg v. Gouthro, No. 94-02446, 1995 WL 1146849, at *2 (Mass. Super. Nov.
16, 1995) (dismissing claim on same grounds). Plaintiffs’ failure to reference language with the
requisite nexus to c. 93A alone warrants dismissal of Count II.
However, even if Plaintiffs had fulfilled the demand letter prerequisite, they have still
failed to allege a plausible 93A claim. At base, their 93A claim arises from the same set of
allegations as the breach of implied covenant of good faith and fair dealing claim. That is, where
each of BANA’s predecessors, Fleet and Merrill, had pre-existing claims to unrelated debts from
Bishay and Costello, respectively, that it rose to the level of unfair and deceptive acts and
practices for BANA to succeed to Fleet’s interest in the receivership action against Bishay,
thereby making it impossible for Costello to repay her debt to Merrill on the HELOC. For the
reasons stated above in regard to the claim for breach of implied covenant of good faith and fair
dealing, dismissal of the c. 93A claim is also warranted on the grounds that, even accepting
Plaintiffs’ factual allegations as true, they do not state a legally cognizable claim and Plaintiffs
cite no legal support for their contention that the pursuit by BANA’s predecessors, Fleet and
9
Merrill, or by BANA as their successors in pursuit of separate, unrelated claims in unrelated
litigation constitutes unfair and deceptive acts in violation of c. 93A.
D.
Counts
Denied
IV
and
V
Seek
Relief
that
the
Court
Has
Previously
Counts IV and V seek a temporary restraining order and preliminary injunction. Compl.
¶¶ 34-43. These counts seek types of relief and are not independent causes of action. In any
event, the Court has addressed Plaintiffs’ motion for preliminary relief and denied it. D. 36.
Accordingly, these counts are DISMISSED.4
E.
Plaintiffs Have Not Pled the Elements of a Malicious Prosecution Claim
(Count VI)
Defendants have asked the Court to dismiss Count VI because Plaintiffs have not pled the
elements of this claim. “To prevail on a claim for malicious prosecution, a plaintiff must
establish that he was damaged because the defendant commenced the original action [1] without
probable cause and [2] with malice, and [3] that the original action terminated in his favor.”
Chervin v. Travelers Ins. Co., 448 Mass. 95, 103 (2006).
Read liberally, Plaintiffs allege that BANA’s involvement in the receivership proceeding
and its commencement of the eviction action were malicious. Compl. ¶¶ 45-47. Nevertheless,
Plaintiffs have not pled the third of these elements. First, the Plaintiffs have not pled that the
4
Plaintiffs have moved to strike Defendants’ motion to dismiss, D. 26, alleging that
Defendants failed to include Plaintiffs’ motion for a temporary restraining order and preliminary
injunction in its state court record. The Court, however, considered Plaintiffs’ renewed motion
for preliminary relief, D. 27. Accordingly, Plaintiffs have not been prejudiced by any failure by
Defendants to include Plaintiffs’ motions in their filing of the state court record. In addition,
Plaintiffs assert that Defendants failed to properly serve their motion to dismiss. D. 26 at 2.
Defendants have indicated that they served Plaintiffs by mail. D. 30 at 2. In any event, Plaintiffs
were given access to the CM/ECF system on July 23, 2013. D. 24. Plaintiffs have since
responded to the motion to dismiss. D. 25. Accordingly, even if Defendants failed to serve
Plaintiffs, Plaintiffs have not been prejudiced. Accordingly, the Court DENIES the motion to
strike, D. 26.
10
eviction action has even terminated, never mind in their favor. As of the date of the complaint
and plaintiffs’ motion for a preliminary injunction, the eviction action was ongoing, as evidenced
by Plaintiffs’ request to enjoin it. Id. ¶¶ 34-43; D. 27. As for the receivership action, Plaintiffs
appear to plead that an appeal of the disposition of the receivership action is currently pending.
Id. ¶ 21. Accordingly, Plaintiffs cannot demonstrate the third element of malicious prosecution
as to either the eviction action or the receivership action.
In addition, Plaintiffs have not pled that BANA lacked probable cause in commencing
either action. In the context of a civil action, “probable cause” means “a reasonable belief in the
possibility that the claim may be held valid.” Hubbard v. Beatty & Hyde, Inc., 343 Mass. 258,
261 (1961). With respect to the eviction action, Plaintiffs concede in their pleading that Costello
defaulted on her HELOC loan. Compl. ¶ 28. As to the receivership action, Plaintiffs appear to
acknowledge that BANA joined BAA in a receivership action to recover a lawful judgment. Id.
¶ 12. Plaintiffs have, therefore, failed to plead facts plausibly alleging that BANA lacked a
reasonable belief in their respective legal positions in either legal proceeding.
Plaintiffs’
malicious prosecution claim must therefore be DISMISSED.
F.
Plaintiffs Have Not Pled the Elements of Either a Fraudulent or Negligent
Misrepresentation Claim (Counts VII and VIII)
Defendants argue that Plaintiffs cannot state claims for either fraudulent or negligent
misrepresentation.
D. 21 at 11.
To plead a claim for fraudulent misrepresentation under
Massachusetts law, a plaintiff must plead that “the defendant made a [1] false representation of
[2] material fact with [3] knowledge of its falsity [4] for the purpose of inducing the plaintiff to
act thereon, and that [5] the plaintiff reasonably relied upon the representation as true and acted
upon it to his damage.” Taylor v. Am. Chemistry Council, 576 F.3d 16, 31 (1st Cir. 2009)
(quoting Russell v. Cooley Dickinson Hosp., Inc., 437 Mass. 443, 458 (2002)) (internal quotation
11
marks omitted). To assert a claim for negligent misrepresentation in Massachusetts, a plaintiff
must allege that the defendant:
(1) in the course of his 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) (quoting Gossels v. Fleet Nat’l Bank,
453 Mass. 366, 902 (2009)) (internal quotation marks omitted). Accordingly, both claims
require a showing that Plaintiffs relied on Defendants’ representations: as to the negligent
misrepresentation claim, that the Plaintiffs justifiably relied upon the allegedly false information;
and as to the fraudulent misrepresentation claim, that the Defendants induced Plaintiffs to act and
Plaintiffs reasonably relied upon the information supplied by Defendants as true to their
detriment.
Even assuming arguendo that BANA misrepresented its corporate structure to Plaintiffs,
Plaintiffs’ misrepresentation claims have not plausibly alleged that they justifiably relied on
same or did so reasonably to their detriment.
Plaintiffs have identified no action they could
have or would have taken had they known BANA’s “true” corporate structure. Similarly, they
have identified no action that they would not have taken had they known same. Plaintiffs have,
therefore, failed to plead reliance. Plaintiffs’ misrepresentation claim is therefore DISMISSED.
12
VI.
Conclusion
For the above reasons, the Court ALLOWS Defendants’ motion to dismiss, D. 20,
DENIES Plaintiffs’ motion to strike, D. 26, and DENIES as moot Plaintiffs’ motion to bifurcate,
D. 41.5
So Ordered.
/s/ Denise J. Casper
United States District Judge
5
Even if the Court did not deny the motion to bifurcate as moot, this motion appears to
be based upon Plaintiffs’ confusion of subject matter jurisdiction and the court’s authority to
enjoin a state court proceeding, which this Court addressed earlier in its ruling on Plaintiffs’
motion for preliminary injunction and their motion to reconsider the denial of that motion. D.
36, 40.
13
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?