Kupperstein et al v. Bank of America, National Association et al

Filing 32

Judge George A. OToole, Jr: ORDER entered granting in part and denying in part 22 Motion to Dismiss. The motion is GRANTED as to Counts I-IV, VII, VIII, X, XI, XII, and XV, and those Counts are DISMISSED. The Motion is DENIED as to Counts V, VI, IX, XIII, and XIV. (Danieli, Chris)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 14-13766-GAO
ERIC S. KUPPSERSTEIN and LISA L. KUPPERSTEIN,
Plaintiffs,
v.
BANK OF AMERICA, NATIONAL ASSOCIATION, and OCWEN LOAN SERVICING, LLC,
Defendants.

ORDER
July 31, 2015
This action arises from a mortgage transaction between the plaintiffs, Eric and Lisa
Kupperstein, and defendants Bank of America, N.A., (“BANA”), which is the note holder, and
Ocwen Loan Servicing, which is the mortgage servicer. In their amended complaint, the plaintiffs
assert fifteen state and federal claims. The defendants have moved to dismiss the complaint.
A.

Counts I-IV – Rescission, Quiet Title, & Declaratory Judgment

Massachusetts General Laws Chapter 140D, Section 10(a) provides an obligor in a
“consumer credit transaction” with a right to rescind within three days following a transaction
where “a security interest, including any such interest arising by operation of law, is or will be
retained or acquired in any property.” The plaintiffs refinanced a mortgage loan on February 21,
2008; as to that transaction, their right to rescind expired four years later, in 2012. Id. § 10(f). In
February 2015, the plaintiffs and defendants, in resolving a dispute pending in the Massachusetts
Land Court, agreed to amend the property description in the mortgage. The plaintiffs claim that
the amendment gave them a renewed right to rescind. I disagree. The statutory right of rescission
arises only in a “consumer credit transaction.” Id. § 10(a); May v. SunTrust Mortg., Inc., 7 N.E.3d
1036, 1039 (Mass. 2014). An amendment to the property description that does not involve any

additional borrowing and does not alter the borrower’s credit terms or financial obligation is not a
“consumer credit transaction” within the meaning of the statute, because it does not involve any
new extension of “credit,” which the statute defines as “the right granted by a creditor to a debtor
to defer payment of debt or to incur debt and defer its payment.” M.G.L. ch. 140D, § 1.
The plaintiffs also claim that the Closing Instructions from the February 2008 refinancing
give them the benefit of a renewed rescission period following “any change” to the mortgage
documents. However, the plaintiffs cannot demonstrate that the Closing Instructions, which were
addressed to the lender’s closing agent, impose a contractual right enforceable by them against the
defendants. Accordingly, Counts I through IV, which all rest on the plaintiffs’ claimed right of
rescission, are subject to dismissal.
B.

Count V – Fair Debt Collection Practices Act (FDCPA)

This claim fails against BANA as BANA is not a debt collector for purposes of the FDCPA.
As the note holder of the plaintiffs’ mortgage, it only seeks payments due to itself. See O’Connor
v. Nantucket Bank, 992 F. Supp. 2d 24, 31-32 (D. Mass. 2014).
Ocwen does not dispute that it qualifies as a debt collector under the statute, and its conduct
arguably could be found to be false or misleading under 15 U.S.C. § 1692e. Ocwen’s letters to the
plaintiffs, which contained contradictory information regarding the mortgage status – coupled with
its unresponsiveness to the plaintiffs’ multiple requests for clarification – might confuse the
“hypothetical unsophisticated consumer.” Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d
98, 103 & n.4 (1st Cir. 2014). As a result, the FDCPA claim against Ocwen survives the motion
to dismiss, but only as to conduct that occurred after February 20, 2013. The FDCPA has a oneyear statute of limitations. See 15 U.S.C. § 1692k(d). The plaintiffs originally commenced this
action in the Massachusetts Superior Court on February 20, 2014.

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In Count V, the plaintiffs also cite 209 C.M.R. 18.00 and Mass. Gen. Laws ch. 93, § 49. Neither
provision authorizes a private right of action.
C.

Count VI – Massachusetts General Laws Chapter 93A

To prove violations of Chapter 93A, the plaintiffs must demonstrate “that the defendant
engaged in trade or business and committed an unfair or deceptive act, causing economic injury to
the plaintiff.” Brown v. Bank of Am., Nat’l Ass’n, 67 F. Supp. 3d 508, 514 (D. Mass. 2014). Unlike
the FDCPA, Chapter 93A has a four-year statute of limitations. McDermott v. Marcus, Errico,
Emmer & Brooks, P.C., 775 F.3d 109, 124 n.16 (1st Cir. 2014). This claim survives the motion
to dismiss since the plaintiffs allege “a pattern or course of conduct involving misrepresentations,
delay, and evasiveness.” Hanrahran v. Specialized Loan Servicing, LLC, 54 F. Supp. 3d 149, 155
(D. Mass. 2014). Similarly, the plaintiffs have sufficiently pled economic injury by alleging that
the defendants’ conduct caused damage to their credit and resulted in extra fees and costs. See
Brown, 67 F. Supp. 3d at 514; Hanrahran, 54 F. Supp. 3d at 156.
D.

Counts VII & VIII – Deceit, Fraud, Misrepresentation

These counts for fraud and deceit fail to satisfy the heightened pleading standard of Rule
9(b) of the Federal Rules of Civil Procedure. Because the plaintiffs’ conclusory allegations as to
the defendants’ knowledge of the falsity of certain statements do not “identify[] the basis for
inferring scienter,” N. Am. Catholic Educ. Programming Found., Inc. v. Cardinale, 567 F.3d 8, 13
(1st Cir. 2009), these claims are inadequately pled and therefore subject to dismissal.

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E.

Count IX – 12 U.S.C. § 2605

The defendants argue that Count IX should be dismissed because it does not re-allege the
conduct that provides the basis for the claim. As the plaintiffs provide a detailed account of the
underlying facts in Count V, this claim survives the motion to dismiss.
F.

Count X – Negligence

Under the economic loss doctrine, plaintiffs pleading negligence must allege personal injury
or property damage. Cocaran v. Saxon Mortg. Servs., No. 09-cv-11468-NMG, 2010 WL 2106179,
at *4 (D. Mass. May 24, 2010). The plaintiffs’ allegations of economic harm, including allegations
of damage to their credit score, do not satisfy this standard. See Gaul v. Aurora Loan Servs., No.
12-cv-10129-NMG, 2013 WL 1213065, at *8 & n.4 (D. Mass. Feb. 7, 2013). This claim is
dismissed.
G.

Counts XI & XII – Negligent Misrepresentation

The plaintiffs allege that BANA falsely represented that they had a three-day right of rescission
following any amendment to the mortgage and that BANA and Ocwen misrepresented the amount
of their loan in the 2012-2013 letters. To the extent the plaintiffs successfully plead that the
defendants supplied false information, they allege damages arising from the defendants’ wrongful
reporting of their mortgage status. The deficiency in this count is the absence of factual allegations
sufficient to plausibly allege justifiable reliance by them on any claimed negligent
misrepresentation and any loss resulting from that reliance. See Dill v. Am. Home Mortg.
Servicing, Inc., 935 F. Supp. 2d 299, 303-04 (D. Mass. 2013); see also Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
H.

Counts XIII & XIV – Breach of Contract, Covenant of Good Faith and Fair Dealing

As discussed above, the plaintiffs do not demonstrate the existence of a right of rescission
arising from a binding contract with BANA. However, this claim will survive the motion to dismiss
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insofar as the plaintiffs allege that BANA breached a contractual obligation to credit mortgage
payments. Because the covenant of good faith and fair dealing “as only as broad as the contract
that governs the particular relationship,” Ayash v. Dana-Farber Cancer Inst., 822 N.E.2d 667, 684
(Mass. 2005), that claim shall survive the motion to dismiss stage as well to a similar extent.
I.

Count XV – Massachusetts General Laws Chapter 93, Section 54A

This claim is preempted under the Fair Credit Reporting Act (“FCRA”), which provides
that “[n]o requirement or prohibition may be imposed under the laws of any State . . . relating to
the responsibilities of persons who furnish information to consumer reporting agencies.” 15 U.S.C.
§ 1681t(b)(1)(F). The FCRA preemption provision contains an exemption for § 54A(a) of the
Massachusetts Credit Reporting Act, id. § 1681t(b)(1)(F)(i), but contains no such exemption for
§54A(g), which provides the private right of action for violations of the statute. Judges of this
District have divided as to whether the FCRA allows for private actions under §54A, or whether
the FCRA only allows enforcement investigations and suits by the state Attorney General to
proceed without preemption. Compare Gibbs v. SLM Corp., 336 F. Supp. 2d 1, 13 (2004) (“Where,
as here, the FCRA does not exempt the state law provision expressly authorizing a private cause
of action, such private causes of action remain preempted.") and Islam v. Option One Mortg. Corp.,
432 F. Supp. 2d 181, 188-89 (D. Mass. 2006) (dismissing § 54A(g) counts where the “parties
agreed that the Attorney General indeed could enforce Chapter 54A”) with Catanzaro v. Experian
Info. Sols., Inc., 671 F. Supp. 2d 256, 261 (D. Mass. 2009) (finding that § 54A(g) was not
preempted where there was no indication that the Attorney General possessed “the requisite
authority to enforce § 54A”).

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I think it is plain that the Attorney General may take action, including civil suit, to enforce
§ 54A(a). See M.G.L. ch. 12, § 10; id. ch. 93, § 68; id. ch. 93A, § 4; see also Commonwealth v.
Mass. CRINC, 466 N.E.2d 792, 798 (Mass. 1984) (“[T]he Attorney General has a general statutory
mandate, in addition to any specific statutory mandate, to protect the public interest. . . . The
Attorney General is given specific power to enforce the Antitrust Act [and] the Consumer
Protection Act . . . .”); Lowell Gas Co. v. Att’y Gen., 385 N.E.2d 240, 249 (Mass. 1979); Dodd v.
Commercial Union Ins. Co., 365 N.E.2d 802, 897 (Mass. 1977). Accordingly, I agree with those
judges who have concluded that Congress exempted subsection (a) of §54A, but not subsection
(g). This count is dismissed.
J. Conclusion
For the foregoing reasons, the defendants’ Motion (dkt. no. 22) to Dismiss is GRANTED
as to Counts I-IV, VII, VIII, X, XI, XII, and XV, and those Counts are DISMISSED. The Motion
is DENIED as to Counts V, VI, IX, XIII, and XIV.
SO ORDERED.
/s/ George A. O’Toole, Jr.
United States District Judge

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