Saade v. PennyMac Loan Services, LLC et al
Judge Indira Talwani: For the reasons set forth in the attached MEMORANDUM AND ORDER, thecourt ADOPTS the Magistrate Judges Report and Recommendation 98 . PennyMacDefendants Motion to Dismiss 59 , Citi Defendants Motion to Dismiss 74 , and Jennifer Kirkwoods Motion to Dismiss 82 are GRANTED. (MacDonald, Gail)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
PENNYMAC LOAN SERVICES, LLC,
PENNYMAC MORTGAGE INVESTMENT
TRUST HOLDINGS I, LLC, PNMAC
MORTGAGE CO. LLC, DEUTSCHE
BANK AS TRUSTEE OF PENNYMAC
LOAN TRUST 2011-NPL1, MORTGAGE
SYSTEMS, INC., CHRISTIANA TRUST,
WILMINGTON SAVINGS FUND SOCIETY,
FSB, SPECIALIZED LOAN SERVICING, LLC,
CITIMORTGAGE, INC., CITIBANK N.A., and
MORTGAGE LENDERS NETWORK, INC.,
CIVIL ACTION NO. 15-CV-12275-IT
MEMORANDUM AND ORDER
October 17, 2016
Pro Se Plaintiff Jacques Saade’s Second Amended Complaint (“Complaint”) [#56], alleges
thirteen causes of action stemming from his attempt to refinance his home mortgage loan. The
PennyMac Defendants,1 Citi Defendants,2 and Jennifer Kirkwood (“Kirkwood”) have moved to
dismiss the complaint in its entirety. Mot. Dismiss [## 59, 74, 82]. A Magistrate Judge issued a
The “PennyMac Defendants” refers to PennyMac Loan Services, LLC, PennyMac Mortgage
Investment Holding I, LLC, PNMAC Mortgage Co. LLC, Deutsche Bank as Trustee of PennyMac
Loan Trust 2011-NPL 1, Mortgage Electronic Registration Systems, Inc., Christiana Trust,
Wilmington Savings Fund Society, and Specialized Loan Servicing, LLC.
The “Citi Defendants” refers to CitiMortgage, Inc. and CitiBank, N.A.
Report and Recommendation [#98] recommending that the motions to dismiss be granted. Plaintiff
timely filed objections to the Magistrate Judge’s report. Verified Obj. (“Obj.”) [#106]. After
considering Plaintiff’s objections and reviewing the objected to portions of the Report and
Recommendation [#98] de novo, the court finds that Plaintiff’s objections are without merit.
Accordingly the court ADOPTS the Report and Recommendation [#98] and provides the following
discussion as to several of the objections raised by Plaintiff.
1. Plaintiff’s Objection to the Magistrate Judge’s Finding that Count I Failed to State a
The Magistrate Judge’s Report and Recommendation found that Plaintiff failed to adequately
allege facts to support his negligent and intentional misrepresentation claim under Count 1.
Plaintiff’s Objection argues that Citi Defendants breached Mass. Gen. Laws ch. 93A by falsely
assuring him that if he submitted modified monthly payments his home loan would be refinanced.
Obj. 5 [#106] (“Plaintiff was instructed and induced to believe that the requisite for refinancing was
to make several modified monthly payments, and that making these modified monthly payments will
finalize the refinancing after three month[s] of compliance making these payments pursuant to the
refinancing agreement, Id. Par. 172. Plaintiff complied with Citi’s instruction and made the modified
monthly payments pursuant to the agreement.”). Plaintiff avers that he sent modified refinance “trial
period” payments pursuant to a refinance agreement, and that Citi Defendants’ failure to comply
with the agreed upon terms of the refinancing plan constitute an unfair and deceptive trade practice.
The Objection states,
In this instant matter [for] more than a year defendants kept misrepresenting that
plaintiff did not provide requested documents for the refinancing review when plaintiff
submitted same on countless occasions. In addition, plaintiff was told in person at Hynes
Auditorium that he was approved for refinancing, this was another misrepresentation
when two days later he was notified by defendant SLS that he was in default and that
SLS was pursuing foreclosure proceeding against the plaintiff when he had made more
than a year of the agreed upon modified monthly payments- as turned out  no such
refinancing approval. In short these are allegations well pled that demonstrated the
defendants’ unfair conducts and breach of parties agreements that entitled the plaintiff to
relief under ch. 93A.
Obj. 13-14 [#106].
Reading Plaintiff’s allegations liberally, Plaintiff suggests that Count I raises a chapter 93A
claim against Citi Defendants for violating the Home Affordable Modification Program (“HAMP”).
Under HAMP, home loan servicers assess eligibility for a loan modification using a set of guidelines
promulgated by the Treasury Department, and if the borrower meets those criteria, “the guidelines
direct the servicer to offer that individual a Trial Period Plan (‘TPP’)” as a precursor to obtaining a
permanent modification.” Young v. Wells Fargo Bank, N.A., 717 F.3d 224, 228 (1st Cir. 2013)
(quoting Markle v. HSBC Mortg. Corp. (USA), 844 F.Supp.2d 172, 177 (D.Mass.2011)). If the
borrower makes the required monthly payments, provides the necessary documentation, and
maintains eligibility, the guidelines state that the servicer should offer the borrower a permanent loan
modification. Id. at 229. Courts have found that a violation of HAMP that is itself unfair or deceptive
can create liability under Chapter 93A. Newell v. America’s Serv. Co., 2013 WL 4805060, * (D.
Mass. Sept. 9, 2013) (“In evaluating Chapter 93A claims premised on violations of the HAMP
guidelines, sessions of this court have routinely held that a viable Chapter 93A claim will lie only if
the activity would be independently actionable under 93A as unfair or deceptive.”); Speleos v. BAC
Home Loans Serv., L.P., 824, F. Supp. 2d 226, 234 (D.Mass. 2011) (“A violation of HAMP that is
unfair or deceptive in and of itself can, therefore, create a viable claim under Chapter 93A.”). The
Trial Period Plan contemplated by HAMP are uniform, four page agreements, executed by servicers
and borrowers. Stagikas v. Saxon Mortg. Services, Inc., 795 F.Supp.2d 129, 133 (D. Mass. 2011);
Durmic v. J.P. Morgan Chase Bank, NA, 2010 WL 4825632, *3 (D. Mass. Nov. 24, 2010) (“The
TPP is a Fannie Mae/Freddie Mac ‘Uniform Instrument’ that has the appearances of a contract.’”).
Plaintiff’s attempt to fit his allegations into this framework fails. Plaintiff’s pleadings do not
allege that the parties executed a written Trial Period Plan or other written agreement related to the
modified monthly payments. An oral agreement made by Citi Defendants and Plaintiff concerning
modified monthly payments is not enforceable. Under Mass. Gen. Laws ch. 259 § 1, any agreement
concerning a mortgage, including a modification of the loan terms, must be in writing. See French v.
Chase Bank, N.A., 2012 WL 273724, *2 (D. Mass. Jan. 31, 2012). Plaintiff’s allegations that he
relied on Defendants’ statements and submitted modified payments so that his loan would be
modified is insufficient under Chapter 93A to state a cause of action. There must also be some
allegation that the parties executed a written contract concerning the modified payments. Finding no
such allegation in any of Plaintiffs’ pleadings, the court agrees with the Report and Recommendation
[#98], and finds that Plaintiff’s claims under Count 1 shall be dismissed.
2. Plaintiff’s Objection to the Magistrate Judge’s Finding that Count V Failed to State a
The Magistrate Judge’s Report and Recommendation recommended dismissing Plaintiff’s
Fair Credit Reporting Act claim against Specialized Loan Servicing, LLC (“SLS”) because Plaintiff
failed to specify the section of the Fair Credit Reporting Act that was violated, and because he failed
to allege facts showing how the Act was violated. R&R 18 [#98]. In his Objection, Plaintiff argues
that SLS did not have a lawful right to report Plaintiff to credit reporting agencies, and that the
information SLS provided regarding Plaintiff was inaccurate in violation of 15 U.S.C. § 1681s2(a)(1)(A) and § 1681s-2(a)(1)(B). Obj. 27 [#106]. Plaintiff’s claim is barred, however, because
furnishers’ liability for reporting inaccurate credit information was expressly limited by Congress in
the Fair Credit Reporting Act. 15 U.S.C. § 1681s-2(c)(1); Chiang v. Verizon New England, Inc., 595
F.3d 26, 35 (1st Cir. 2010) (noting that Congress expressly limited furnishers’ liability by
prohibiting private suits and that consumers have no private right of action if the furnisher does not
reasonably investigate a consumer’s claim despite direct notification from the consumer); Cunha v.
LVNV Funding, LLC, 2015 WL 5737134, *3 (D. Mass. Sept. 30, 2015) (“Section 1681s-2 does not
provide a private right of action to consumers who dispute credit information directly with a
furnisher of information.”). While Plaintiff argues that he disputed SLS’ furnishing of inaccurate
credit information, there is no private right of action even if SLS did not follow up on Plaintiff’s
Plaintiff’s argument that he seeks to recover under Mass. Gen. Laws ch. 93A for SLS’s
alleged violation of the Fair Credit Reporting Act is also unavailing. The Fair Credit Reporting Act
specifically preempts state law. “No requirement or prohibition may be imposed under the laws of
any State . . . with respect to any subject matter regulated under 1681s-2.” 15 U.S.C.
§ 1681t(b)(1)(F). Thus, to the extent that Plaintiff seeks to allege a chapter 93A claim based on a
violation of the Fair Credit Reporting Act, this claim is pre-empted. Cunha, 2015 WL 5737134 at *5
(“To the extent [plaintiff’s] Chapter 93A claim is premised on an unfair credit reporting, failure to
correct credit information, or failure to investigate a disputed debt, it is pre-empted by the FRCA.”);
Catanzaro v. Experian Info. Sol., Inc., 671 F. Supp. 2d 256, 262 (D. Mass. 2009) (“[B]ecause the
Court will not sanction the use of Chapter 93A as a end run around state and federal statutory
schemes, it finds that plaintiff’s Chapter 93A claims are preempted.”). Accordingly, the Court agrees
with the recommendation that Plaintiff’s claims under Count V shall be dismissed.
3. Plaintiff’s Objection to the Magistrate Judge’s Finding that Count X Failed to State a
Plaintiff also objects to the Magistrate Judge’s recommendation that Plaintiff’s claim that
Kirkwood violated the federal and state fair debt collection practices acts be dismissed. The
Magistrate Judge found the allegations under Count X failed to state a claim, and found that
Kirkwood’s actions were protected under Massachusetts state law by the litigation privilege. The
Plaintiff argues in his Objection that the litigation privilege cannot shield lawyers from the
Massachusetts Fair Debt Collection Practices Act nor the federal Fair Debt Collection Practices Act,
and that the facts alleged demonstrate that Kirkwood willfully disregarded the collection laws and
threatened Plaintiff. Obj. 32 [#106]. The court finds, however, that Plaintiff’s allegations fail to state
a cause of action against Kirkwood, and shall be dismissed.
Per the complaint, Plaintiff sent a demand letter to PennyMac Defendants putting them on
notice of Plaintiff’s claim that they allegedly violated the fair debt collection statutes and informing
them that they did not have any lawful interest in his property. Compl. ¶ 253 [#56]. Kirkwood, as
PennyMac’s attorney, sent Plaintiff a letter in response to his demand. Compl. ¶ 254, Ex. 13 [# 56,
56-4]. The portion of the letter cited by Plaintiff as a violation of the fair debt collection statutes
Furthermore, I would suggest that any litigation commenced in relation to these claims
would constitute a frivolous action in violation of Massachusetts law, as well as a
violation of Rule 11 of the Massachusetts Rules of Civil Procedure and Chapter 231
§ 59H of the Massachusetts General Laws. If you proceed with any claims, BMPC and
PennyMac will vigorously defend such action and in the event you are unsuccessful,
BMPC and Penny Mac will seek an award of their fees and costs for defending such
Compl. Ex. 13 [#56-4].
While both the federal and Massachusetts fair debt collection practices acts impose strict
liability on debt collectors, the letter sent by Kirkwood is not a violation of either statute. Mass. Gen.
Laws. ch. 93A, § 49 deems the following to be unfair, deceptive, or unreasonable consumer debt
collection practices: (a) the creditor communicates, threatens to communicate, or implies the fact of
such debt to a person other than the person who might reasonably be expected to be liable for the
debt except with the written permission of the debtor; (2) the creditor communicates directly with
the alleged debtor after notification from an attorney representing such debtor that all further
communications concerning the debt should be addressed to the attorney; (3) the creditor
communicates with the debtor in such a manner as to harass or embarrass the debtor, such as by
unreasonable hours or frequency of communication, threats of violence, use of offensive language,
or by false threats of action; or (4) the creditor communicates with the debtor through the use of
forms or instruments that simulate judicial process. Mass. Gen. Laws Ch. 93 §49. The letter sent by
Kirkwood does not violate any of these prohibitions.
Likewise, the letter does not violate the federal Fair Debt Collection Practices Act, which
prohibits the false, deceptive, or misleading representation or means in connection with the
collection of any debt, the threatening to take action that cannot legally be taken or that is not
intended to be taken, or the use of unfair or unconscionable means to collect or attempt to collect any
debt. 15 U.S.C. § 1692e(5); § 1692f(6)(A). Kirkwood’s statement that her clients will vigorously
defend themselves does not violate any of the prohibitions listed under the federal statute.
Furthermore, the letter was sent in response to Plaintiff’s Mass. Gen. Laws ch. 93A demand
letter. Mass. Gen. Laws ch. 93A requires a plaintiff to send a demand letter so that a respondent can
tender a settlement offer before suit may be filed. Mass. Gen. Laws. ch. 93A, § 9(3); Thorpe v. Mut.
of Omaha Ins. Co., 984 F.2d 541, 544 (1st Cir. 1993) (one reason for the demand letter requirement
is “to encourage negotiation and settlement.”). Kirkwood’s letter, which offered to “consider your
eligibility for a loan modification or other loss mitigation that may be available, in an attempt to help
avoid foreclosure on the  referenced property,” Compl. Ex. 13 [#56-4], meets this goal of
encouraging negotiation and settlement. To impose liability on an attorney for sending a letter in
response to a Chapter 93A demand would vitiate the very purpose of demand requirement. For the
foregoing reasons, Count X shall be dismissed.
4. Plaintiff’s Objection to the Magistrate Judge’s Finding that Count XI Failed to State a
Plaintiff objects to the Magistrate Judge’s finding that he did not allege any promise made by
any of the defendants that induced reliance and thus he failed to state a claim under the doctrine of
promissory estoppel. According to Plaintiff, his complaint alleged that: (1) Defendants promised that
modified payments would finalize his refinancing request; (2) Defendants stated that they would
consider Plaintiff’s payoff and refinancing proposal, and (3) Citi Defendants’ representative at the
Hynes Convention Center promised that the refinancing was approved. Obj. 33-34 [#106]. The
complaint, however, does not set forth the promises Plaintiff articulates in his Objection. Instead, the
complaint alleges that the refinancing process was convoluted, and that Plaintiff had to resubmit
duplicate information repeatedly. Indeed, even the Objection notes that Defendants never finalized
the refinancing, and that despite receiving a payoff offer, Citi Defendants failed to finalize the
payoff. Compl. ¶¶ 263-265 [#56].
Even if Plaintiffs’ revision of the allegations in the Complaint are accepted, the court finds
that Plaintiff fails to state a claim for promissory estoppel. An element of promissory estoppel is that
the party relying on the alleged promise has to demonstrate that reliance was reasonable. Coll v. PB
Diagnostic Systems, Inc., 50 F.3d 1115, 1124 (1st Cir. 1995) (“An element of promissory estoppel is
that party invoking it must have reasonably relied on the alleged promise to his detriment.”)
(emphasis original). Plaintiff consistently alleged elsewhere in the complaint that the refinancing
process was convoluted and that Defendants gave Plaintiff contradictory information. In such a
situation, reliance on the purported promises of Defendants was not reasonable. Trifiro v. New York
Life Ins. Co., 845 F.3d 30, 33-34 (1st Cir. 1988) (“The conflicting content of [the defendant’s] oral
statement with [his] written statement . . . should have placed [the plaintiff] on notice that he should
not rely on either statement.”). Given the uncertain status of his home loan modification, it was not
reasonable for Plaintiff to rely on Defendants’ promises, therefore Plaintiff’s claim under Count XI
shall be dismissed.
Having reviewed all of Plaintiff’s objections to the Magistrate Judge’s Report and
Recommendation [#98], the court finds Plaintiff’s remaining objections to be without merit. The
court therefore ADOPTS the Magistrate Judge’s Report and Recommendation [#98]. PennyMac
Defendants’ Motion to Dismiss [#59], Citi Defendants’ Motion to Dismiss [#74] and Jennifer
Kirkwood’s Motion to Dismiss [#82] are GRANTED.
IT IS SO ORDERED.
Date: October 17, 2016
/s/ Indira Talwani
United States District Court
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