Nin v. Seterus, Inc. et al

Filing 62

Judge Allison D. Burroughs: ORDER entered The Court reviews the portions of the Report and Recommendations Seterus objected to de novo. Fed. R. Civ. P. 72(b). After this review, the 53 Report and Recommendations is hereby ADOPTED IN FULL. The 15 Motion for Judgment on the Pleadings is granted with respect to Count III and denied with respect to Counts I, II, and IV. (Montes, Mariliz)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CHERYL NIN,
Plaintiff,
v.
SETERUS, INC. and
BANK OF AMERICA, N.A.,
Defendants.

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Civil Action No. 15-cv-10237-ADB

MEMORANDUM AND ORDER
March 16, 2016
BURROUGHS, D.J.
On February 10, 2016, Magistrate Judge Cabell filed a Report and Recommendation (“R
& R”) with respect to Defendant Seterus, Inc.’s Motion for Judgment on the Pleadings
(“Seterus”). [ECF No. 53]. The R & R recommends that the motion be granted with respect to
Count III of the Complaint and denied with respect to Counts I, II, and IV. Seterus filed
objections to the R & R on February 24, 2016 [ECF No. 58], and the Plaintiff responded to
Seterus’ objections on March 9, 2016. [ECF No. 61]. The Court reviews the portions of the R &
R Seterus objected to de novo. Fed. R. Civ. P. 72(b). After this review, the R & R is hereby
ADOPTED IN FULL. The Motion for Judgment on the Pleadings is granted with respect to
Count III and denied with respect to Counts I, II, and IV.
Seterus, Inc. (“Seterus”) has raised two objections to the R & R. First, Seterus contends
that Count I, for breach of contract, and Count II, for breach of the covenant of good faith and
fair dealing, should be dismissed because Seterus was neither a party to nor an assignee of the
contract between Bank of America and the Plaintiff (the “TPP Contract”) that was allegedly

breached. On a motion for judgment on the pleadings, “the Court must ‘view the facts contained
in the pleadings in the light most favorable to the party opposing the motion . . . and draw all
reasonable inferences in [that party’s] favor.’” Kimmel & Silverman, P.C. v. Porro, 969 F. Supp.
2d 46, 49 (1st Cir. 2009) (quoting Curran v. Cousins, 509 F.3d 36, 43 (1st Cir. 2007)). Plaintiff
alleges that she originally entered into the TPP Contract with Bank of America and that Seterus
assumed responsibility for the TPP Contract when the servicing of her mortgage was transferred
from Bank of America to Seterus. [ECF No. 1, Ex. A (“Complt.”) ¶¶ 12-22].
Relying on In re Moultonborough Hotel Grp., LLC, 726 F.3d 1 (1st Cir. 2013), Seterus
argues that Bank of America’s transferring of its servicing rights to Seterus does not mean that it
also transferred its obligations under the TPP Contract to Seterus.1 Seterus is correct that in
Moultonborough, the First Circuit rejected an assignment argument similar to Plaintiff’s, finding
that the assignment of one contract did not impliedly include the assignment of another. Id. at 7.
Moultonborough, however, was decided on summary judgment, and only after the court first
reviewed the language of the contracts at issue. Id. (finding that “[n]o language in the
assignments purported to transfer such liabilities.”). Here, the Court evaluates Plaintiff’s claim
under the more forgiving Fed. R. Civ. P. 12(c) standard. Moreover, Seterus did not submit with
its motion the actual servicer transfer agreement. Accordingly, drawing all inferences in
Plaintiff’s favor, she has plausibly alleged that the TPP Contract, which Bank of America entered
into in its capacity as servicer, was assigned to Seterus via the servicer transfer agreement. On
summary judgment or at trial, Seterus may renew its argument that it is not a party to the TPP
Contract. At this stage, however, the Court finds that the Plaintiff has plausibly alleged that she

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 At this time, Seterus has not challenged whether there was a valid contract between Plaintiff
and Bank of America at the outset. [ECF No. 58 at 2, n.1].  

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has a valid contract with Seterus. As a result, the R & R is adopted with respect to Counts I and
II.
Seterus next argues that Count IV, alleging a violation of Mass. Gen. Laws ch. 93A
(“Chapter 93”), should be dismissed and that Magistrate Judge Cabell evaluated it under the
wrong legal standard. Chapter 93A prohibits all “unfair methods of competition and unfair or
deceptive acts or practices [made] in the conduct of any trade or commerce.” Mass. Gen. Laws.
ch. 93A, § 2. Section 9 of Chapter 93A provides a private right of action for consumers, and
Section 11 a private right of action for persons engaged in trade or commerce. Id. §§ 9, 11.
“While both Sections 9 and 11 require proof of an unfair or deceptive act, Section 9 claims are
judged under a ‘more forgiving consumer standard.’” Alves v. Daly, No. CIV.A. 12-10935MLW, 2015 WL 3960887, at *2 (D. Mass. June 29, 2015) (quoting Cummings v. HPG Intern.,
Inc., 244 F.3d 16, 26 (1st Cir. 2001)); see also Am. Paper Recycling Corp. v. IHC Corp., 775 F.
Supp. 2d 322, 332 (D. Mass. 2011) (“Businesses seeking relief under Section 11 are held to a
stricter standard than consumers in terms of what constitutes unfair or deceptive conduct.”)
(internal quotations omitted). Here, the Plaintiff has alleged a Section 9 violation. [Complt. ¶ 73].
Seterus, citing Baker v. Goldman, Sachs & Co., 771 F.3d 37 (1st Cir. 2014), argues that
the Plaintiff must plead maliciousness or “extreme or egregious negligence” in order to avoid
dismissal of her Chapter 93A claim. Id. at 51. Baker, however, concerned a Section 11 claim and
is factually distinct from the instant case. In determining the legal standard to apply, Magistrate
Judge Cabell correctly referenced mortgage modification cases under Section 9. Both before and
after Baker, numerous courts have found that a servicer’s deceptive, false or misleading
representations to a mortgagee, regarding either loan modification or HAMP rights, can
constitute unfair and deceptive conduct under Section 9. See, e.g., Sullivan v. Bank of New York

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Mellon Corp., 91 F. Supp. 3d 154, 174 (D. Mass. 2015) (“[A]lleged conduct on Defendants’ part
characterized by delay, evasiveness, and misrepresentation in processing Plaintiffs’ various loan
modification applications . . . plausibly supports a Chapter 93A claim.”); Hannigan v. Bank of
Am., N.A., 48 F. Supp. 3d 135, 143 (D. Mass. 2014) (“[P]laintiffs’ 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].”); Stagikas v.
Saxon Mortg. Servs., Inc., No. 10-40164-TSH, 2013 WL 5373275, at *4 (D. Mass. Sept. 24,
2013) (“Courts 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 c. 93A liability.”)
(internal quotations omitted). Consistent with this line of cases, the conduct alleged by Plaintiff
is sufficiently unfair and deceptive to comprise a Chapter 93A violation. Among other things,
Plaintiff alleges that Seterus demanded excessive payments on her monthly bills and provided
her with false and misleading information and assurances concerning her HAMP loan
modification. All told, from October 2010 to November 2013, Plaintiff received at least seven
separate letters from Seterus with different, and allegedly false, reasons for why she was
ineligible for loan modification. [Complt. ¶ 25]. At the same time, Plaintiff had conflicting
conversations with Seterus representatives who instructed her to continue making payments
under HAMP’s Trial Period Plan. [Complt. ¶ 27]. The Complaint therefore does not merely
allege non-compliance with HAMP, but also a pattern of misrepresentations and missteps that
plausibly rises to unfair and deceptive conduct under Section 9 of Chapter 93A. Accordingly, the
R & R is adopted with respect to Count IV.

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Having reviewed and rejected Seterus’ two objections to the R & R, the R & R is hereby
ADOPTED IN FULL. The Motion for Judgment on the Pleadings is granted with respect to
Count III, but denied with respect to Counts I, II, and IV.
So Ordered.
Dated: March 16, 2016
/s/ Allison D. Burroughs
ALLISON D. BURROUGHS
U.S. DISTRICT COURT JUDGE

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