Azevedo v U.S. Bank, N.A.

Filing 15

Judge Allison D. Burroughs: ENDORSED MEMORANDUM AND ORDER entered For the reasons set forth in the Court's accompanying Memorandum and Order, Defendants' Motion to Dismiss [ECF No. 5] is hereby ALLOWED, and Plaintiff's Complaint is hereby DISMISSED in its entirety. (Montes, Mariliz)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
EDMILSON AZEVEDO
Plaintiff,
v.
U.S. BANK N.A., AS TRUSTEE FOR THE
SECURED ASSET SECURITIES
CORPORATION MORTGAGE PASSTHROUGH CERTIFICATES, SERIES 2005AR1; CITIGROUP, INC.; and WELLS FARGO
BANK, N.A. D/B/A AMERICA’S
SERVICING COMPANY
Defendants.

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Civil Action No. 15-cv-11758-ADB

MEMORANDUM AND ORDER
BURROUGHS, D.J.
Currently before the Court is Defendants U.S. Bank N.A. (“U.S. Bank”) and Wells Fargo
Bank, N.A. (“Wells Fargo”)’s Motion to Dismiss [ECF No. 5] Plaintiff Edmilson Azevedo’s
Complaint. [ECF No. 1 (“Compl.”)]. Plaintiff filed an Opposition to the Motion to Dismiss on
July 29, 2015. [ECF No. 10.] The Court held a hearing on Defendants’ Motion to Dismiss on
November 17, 2015. For the reasons set forth in this Memorandum and Order, Defendants’ 1
Motion to Dismiss is ALLOWED.

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Plaintiff also named Citigroup, Inc. (“Citigroup”) as a Defendant in this action, but Plaintiff has
failed to file any return of service with respect to Citigroup, and it thus appears that Citigroup
was not served with process. Accordingly, all claims against Citigroup will be dismissed for
failure to effect service within the time limits established under Fed. R. Civ. P. 4(m). In any
event, it is not clear what claims, if any, Plaintiff intended to assert against Citigroup. Citigroup
is not mentioned in the substantive facts of the Complaint, apart from Plaintiff’s allegation that
Argent Mortgage Company, the original mortgage lender, was later acquired by Citigroup.
[Compl. ¶ 16.] For the purposes of this Memorandum, “Defendants” refers to moving parties
U.S. Bank and Wells Fargo.

I.

Facts Alleged in Complaint
Plaintiff alleges the following facts in his Complaint, which the Court accepts as true for

the purposes of this Motion. Plaintiff purchased his home at 35 Davis Street in Marlborough,
Massachusetts (the “Property”) on June 10, 2005. Compl. ¶¶ 4, 8–9. Plaintiff financed the
$362,900.00 purchase with a mortgage loan (the “Mortgage loan”) from Argent Mortgage
Company, LLC (“Argent”). Id. at ¶¶ 10–12.
When the Mortgage loan originated, Plaintiff earned roughly $4,000 per month from his
job as a construction supervisor. Id. at ¶ 17. His monthly mortgage payments at that time, when
the interest rate was at its contractual minimum, were $2,900—or 72% of his monthly income.
Id. at ¶¶ 13-14, 20–21.
Plaintiff signed the Mortgage agreement on June 10, 2005. [ECF No. 6-1 (“Mortgage”)].2
He alleges that on the same day, Argent purportedly (but ineffectively) assigned the Mortgage to
U.S. Bank. [Compl. ¶¶ 22–24]. Plaintiff maintains that the assignment was defective because
although the sale document was notarized on June 10, an Argent agent did not appear before the
notary until June 15, 2005. Id. at ¶¶ 23–24.
Plaintiff eventually fell behind on his mortgage payments. Id. at ¶ 25. After entering into
a temporary forbearance plan in 2008 and making the associated payments, Plaintiff was offered
a permanent loan modification in 2010. Id. at ¶ 33. Plaintiff expected that the loan modification
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A copy of Plaintiff’s Mortgage is attached as Exhibit A to Defendants’ Memorandum in
Support of its Motion to Dismiss [ECF No. 6]. Although the Court is generally limited, on a
Motion to Dismiss, to the four corners of the Complaint, there are “exceptions 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.” Watterson
v. Page, 987 F.2d 1, 3 (1st Cir. 1993). Where, as here, the Mortgage is central to Plaintiff’s
claims, and expressly referenced in the Complaint, it is appropriate to consider this document on
a motion to dismiss. Venture Associates Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th
Cir. 1993) (“Documents that a defendant attaches to a motion to dismiss are considered part of
the pleadings if they are referred to in the plaintiff's complaint and are central to her claim.”).
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would have been offered earlier—in late 2009 or early 2010. See id. at ¶¶ 30–33. Further,
although Plaintiff alleges that Defendants ultimately offered him a loan modification, see id. at
¶¶ 33, 41, Plaintiff alleges that the modified payments were still unaffordable, as they consumed
approximately half of Plaintiff’s income 3 and put the property underwater. Id. at ¶ 33.
II.

Additional Facts Alleged in Plaintiff’s Opposition to Motion to Dismiss 4
Despite the affordability problems Plaintiff identified with the loan as modified, Plaintiff

contends that he accepted the proposed loan modification on October 22, 2010. [ECF No. 10, pp.
2–3.] The loan as modified became even more unaffordable when the interest rate increased at
some unspecified point in 2011. In 2014, Plaintiff recommenced loan modification negotiations
with Defendants, but to no avail. Id. Under threat of foreclosure, Plaintiff filed for bankruptcy
protection on May 5, 2014. 5 Id.
III.

Legal Standard
On a motion to dismiss, the Court “must assume the truth of all well-plead facts and give

plaintiff the benefit of all reasonable inferences therefrom.” Ruiz v. Bally Total Fitness Holding
Corp., 496 F.3d 1, 5 (1st Cir. 2007). The complaint must “set forth factual allegations, either
direct or inferential, respecting each material element necessary to sustain recovery under some

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The exact proportion is unclear. Compare Compl. ¶ 34 (“[P]ayments consumed nearly half of
his income.”) with Compl. ¶ 41 (“[S]uch modified loan consumed more than half of Mr.
Azevedo’s income.”).
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As these facts are not alleged in the Complaint, the Court considers them only for the purpose
of determining that it would be futile to allow Plaintiff leave to amend his Complaint.
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Although it appears that Plaintiff has filed for Chapter 13 bankruptcy protection, [ECF No. 10,
Ex. A], he is not necessarily deprived of standing to bring this claim as a separate action. See
Wilson v. Dollar Gen. Corp., 717 F. 3d 337, 343 (4th Cir. 2013) (“All of the five circuit courts to
have considered the question have concluded that Chapter 13 debtors have standing to bring
causes of action in their own name on behalf of the estate.”). As neither party has raised the
issue, the Court will assume, for purposes of this Motion, that Plaintiff has standing.
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actionable legal theory.” Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir. 1988).
Dismissal is appropriate if plaintiff’s well-pleaded facts do not possess enough heft to show that
plaintiff is entitled to relief. Ruiz Rivera v. Pfizer Pharm., LLC, 521 F.3d 76, 84 (1st Cir. 2008).
Although most motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6)
are “premised on a plaintiff’s putative failure to state an actionable claim,” such a motion may
also be premised on the “inevitable success of an affirmative defense.” Nisselson v. Lernout, 469
F.3d 143, 150 (1st Cir. 2006). “As a general rule, a properly raised affirmative defense can be
adjudicated on a motion to dismiss so long as (i) the facts establishing the defenses are definitely
ascertainable from the complaint and the other allowable sources of information, and (ii) those
facts suffice to establish the affirmative defense with certitude.” Rodi v. S. New Engl. Sch. of
Law, 389 F.3d 5, 12 (1st Cir. 2004). That a plaintiff’s allegations are barred by the applicable
statute of limitations is one such affirmative defense.
IV.

Analysis
A. Count One: “Violation of M.G.L. c. 93A by Predatory Lending”
1. Original Mortgage Loan
Plaintiff’s Chapter 93A claim for predatory lending arising from the original Mortgage

loan fails for two independent reasons. First, Defendants are not liable under Chapter 93A for
Argent’s conduct merely by virtue of their status as assignees of the Mortgage and successors in
interest to Argent. See Serra v. Quantum Servicing Corp., 747 F.3d 37, 41 (1st Cir. 2014);
Drakopoulos v. U.S. Bank Nat’l Ass’n, 465 Mass. 775, 1095 n.16 (2013) (“Where an assignee
played no part in the unfair or deceptive acts of an assignor, principles of assignee liability
ordinarily will not render the assignee liable for affirmative damages for those acts.”); In re Mae,
460 B.R. 1, 4 (Bankr. D. Mass. 2011) (“Liability under G.L. c. 93A may not be predicated solely

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on the fact that defendant is the assignee of another whose conduct violated that statute.”).
Further, Plaintiff does not allege any facts suggesting that Defendants were in any way involved
in the alleged acts of predatory lending with respect to the original mortgage loan. Therefore,
Count I fails as a matter of law, insofar as Plaintiff alleges that Defendants are liable for the
allegedly unfair or deceptive practices of the original mortgage lender.
Further, Plaintiff’s 93A claim with respect to the original Mortgage loan is time-barred.
There is a four-year limitations period for claims arising under Chapter 93A, see Mass. Gen.
Laws c. 260, § 5A, and the cause of action “accrues ‘when the plaintiff knew or should have
known of appreciable harm resulting from the defendant’s [actions].’” Maldonado v. AMS
Servicing LLC, Nos. 11–40044–FDS, 11–40219–FDS, 2012 WL 220249, at *5 (D. Mass Jan.
24, 2012) (quoting Schwartz v. Travelers Indem. Co., 50 Mass. App. Ct. 672, 678 (2001)
(alteration in original)). Generally, “[a] violation involving an issuance of a loan begins to accrue
from the moment the parties entered into the loan.” Da Silva v. U.S. Bank, N.A., 885 F. Supp. 2d
500, 504 (D. Mass. 2012); Amorello v. Wells Fargo Bank, N.A., No. 14–10200–DHH, 2014 WL
5368852, at *4 (D. Mass Oct. 22, 2014). Here, Plaintiff learned of the terms of the loan when he
entered into the Mortgage agreement on June 10, 2005. He filed this action on May 1, 2015,
which is almost six years after the limitations period expired. Thus, Plaintiff’s Chapter 93A
predatory lending claim based on the Mortgage agreement executed June 10, 2005 must be
dismissed as time-barred.
2. 2010 Modification
Assuming, for purposes of this Motion to Dismiss, that Plaintiff also accepted the
Defendants’ offer of a modified loan in October 2010, any Chapter 93A claim based on that
alleged loan modification is also time-barred. Based on the facts alleged in the Complaint, no

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unlawful conduct occurred within the limitations period. The latest date mentioned with regard to
Count I is 2010—more than four years before this suit was filed.
In his Opposition, Plaintiff seeks to avoid the statute of limitations by arguing that he did
not realize the harm caused by the terms of the loan agreements until sometime in 2011, when
his payments became unaffordable based on an interest rate increase. These allegations seek to
invoke the “discovery rule” exception to the limitations bar. The discovery rule “delays accrual
beyond the time of injury if the plaintiff does not know and could not reasonably know that he or
she may have been harmed by the conduct of another.” Maldonado, 2012 WL 220249, at *5
(citing Prescott v. Morton Intern., Inc., 769 F. Supp. 404, 408 (D. Mass. 1990) (internal
quotations omitted)). The exception, however, is narrow, as it applies only to harms that are
“inherently unknowable.” Id. (quoting Saenger Org., Inc. v. Nationwide Ins. Licensing Assoc.,
Inc., 119 F.3d 55, 65 (1st Cir. 1997)).
Here, Plaintiff fails to allege any facts suggesting that the unfair and deceptive qualities
of the loan were “inherently unknowable.” Indeed, the loan’s variable rate, which Plaintiff
alleges is what made the loan predatory, was present in Plaintiff’s original mortgage. [See ECF
No. 6-1]. Because Plaintiff has alleged no facts to support application of the discovery rule, his
93A claim is also time-barred with respect to the purported 2010 modification. See Maldonado,
2012 WL 220249, at *5. Thus, the Court ALLOWS Defendant’s Motion to Dismiss Count I of
the Complaint.
B. Count Two: “Violation of M.G.L. c. 93A by Wrongfully Collecting a Debt Without
Right”
In Count Two, Plaintiff alleges a separate violation of Chapter 93A claiming that
Defendants have wrongfully collected his Mortgage payments, because the June 10, 2005

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Mortgage assignment to U.S. Bank was defective. This claim fails on its merits, because the
Complaint alleges no facts plausibly suggesting that the assignment was invalid.
Plaintiff alleges that the assignment to U.S. Bank was notarized on June 10, 2005, but
that a representative of Argent, the seller, did not appear before the notary until five days later.
[Compl. ¶¶ 22-24; see also ECF No. 6-2 (“Assignment”)]. Plaintiff argues that this discrepancy
renders the Assignment and the Mortgage agreement void.
The Court disagrees. Even assuming, arguendo, that the notarization was defective, there
is no indication that this alleged defect would render the underlying Assignment void. Under
Massachusetts law, notarization is required in order for a deed to be recorded. See Mass. Gen.
Laws c. 183, § 29. Assignments do not, however, necessarily need to be notarized or recorded, to
be valid. The assignment of a mortgage is simply “a conveyance of an interest in land that
requires a writing signed by the grantor.” U.S. Bank Nat. Ass'n v. Ibanez, 458 Mass. 637, 649
(2011) (citing Mass. Gen. Laws c. 183, § 3)). Other than the requirement of a writing, there are
no magic words or strict formalities to be observed in such an assignment. See Mass. Gen. Laws
c. 183, § 28 (“In an assignment of a mortgage of real estate the word ‘assign’ shall be a sufficient
word to transfer the mortgage . . . .”). An unrecorded assignment is valid, even if recording is the
better practice. See Ibanez, 458 Mass. at 651 (“We do not suggest that an assignment must be in
recordable form at the time of the notice of sale or the subsequent foreclosure sale, although
recording is likely the better practice.”) Thus, Plaintiff’s claim fails as a matter of law, and the
Court ALLOWS Defendant’s Motion to Dismiss as to Count II of the Complaint.
C. Count Three: “Breach of the Duty of Good Faith”
Plaintiff alleges that Defendants breached the covenant of good faith when they offered
him a loan modification that he could not afford and which would have put the property

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“significantly under water.” In their Motion to Dismiss, Defendants argue that because the
Mortgage agreement made no provision for any loan modification, affordable or otherwise,
Plaintiff’s claim is not cognizable. The Court agrees with Defendants that because Defendants
were under no obligation to provide a loan modification under the terms of the Mortgage
agreement, see ECF No. 6-1, pp. 2-24, Plaintiff’s claim for breach of the duty of good faith and
fair dealing must be dismissed.
In Massachusetts, “‘[e]very contract implies good faith and fair dealing between the
parties to it.’” T.W. Nickerson, Inc. v. Fleet Nat’l Bank, 456 Mass. 562, 569–70 (2010) (quoting
Anthony’s Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 471 (1991)). The covenant of good
faith and fair dealing requires that “neither party shall do anything that will have the effect of
destroying or injuring the right of the other party to the fruits of the contract.” Id. at 570 (citation
and internal quotation marks omitted); see also Young v. Wells Fargo Bank, N.A., 717 F.3d 224,
237–38 (1st Cir. 2013). The duty of good faith, however, “is shaped by the nature of the
contractual relationship from which the implied covenant derives.” Ayash v. Dana–Farber
Cancer Inst., 443 Mass. 367, 385 (2005). “The scope of the covenant is only as broad as the
contract that governs the particular relationship.” Id. Thus, the duty of good faith and fair dealing
does not “create rights and duties not otherwise provided for in the existing contractual
relationship.” Id. (internal citation and quotation marks omitted). “The essential inquiry is
whether the challenged conduct conformed to the parties’ reasonable understanding of
performance obligations, as reflected in the overall spirit of the bargain, not whether the
defendant abided by the letter of the contract in the course of performance.” Speakman v.
Allmerica Fin. Life Ins., 367 F. Supp. 2d 122, 132 (D. Mass. 2005).

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Here, Plaintiff alleges that Defendants offered him a loan modification in bad faith
because the modification was not affordable, but he has not alleged that the Mortgage agreement
contained any provision requiring Defendants to offer a modification, affordable or otherwise. It
is “an error to extend the implied covenant to encompass a duty to modify (or consider
modifying) the loan prior to foreclosure, where no such obligation exists in the mortgage.”
MacKenzie v. Flagstar Bank, FSB, 738 F.3d 486, 493 (1st Cir. 2013); see also Fed. Nat. Mortg.
Assoc. v. Tong, 60 Mass. App. Ct. 1105 (2003) (unpublished) (“The covenant of good faith and
fair dealing . . . cannot be read so broadly as to include an implied term . . . obligating the Bank
to renegotiate the note on terms more favorable to the [borrowers] even if [the borrowers’]
inability to perform their obligation derived from sympathetic circumstances.”); Speleos v. BAC
Home Loans Servicing, L.P., 755 F. Supp. 2d 304, 312 (D. Mass. 2010).
Notably, Plaintiff does not allege that Defendants foreclosed upon the property while a
loan modification application was still pending. Cf. Orozco v. GMAC Mortg., LLC, No. 11–
11135–FDS, 2012 WL 4581092, at *5–*6 (D. Mass. 2012). Nor does Plaintiff allege that
Defendants reneged on a promise to modify the loan after he complied with a series of
prerequisites. Cf. Nickerson-Reti v. Bank of America, N.A., No. 13–12316–FDS, 2014 WL
2945198, at *9-*10 (D. Mass. June 26, 2014); Conte v. Bank of Am., N.A., 52 F. Supp. 3d 265,
269-70 (D. Mass. 2014). At best, Plaintiff alleges that Defendants should have offered him a loan
modification more quickly. But where Defendants’ delay was not protracted, and they did,
eventually, offer Plaintiff a loan modification, their conduct does not rise to the level of a breach
of the duty of good faith and fair dealing. See Young, 717 F.3d at 239. In other words, Plaintiff
has failed to allege conduct arising from a “desire to gain an unfair advantage” or that “had the

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effect of injuring [his] rights to the fruits of the contract.” Young, 717 F.3d at 238. Accordingly,
Count III must be dismissed.
IV.

Conclusion
For the foregoing reasons, Defendants’ Motion to Dismiss the Complaint [ECF No. 6,] is

ALLOWED, and Plaintiff’s Complaint is hereby DISMISSED in its entirety.
SO ORDERED.
Dated: March 9, 2016
/s/ Allison D. Burroughs
ALLISON D. BURROUGHS
DISTRICT JUDGE

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