Louis et al v. Bank of America, N.A. et al

Filing 31

Judge Mark L. Wolf: ORDER entered granting in part and denying in part 14 Motion for Judgment on the Pleadings; adopting in part and remanding in part the Report and Recommendation 29 . (Bono, Christine)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

CAROLE LOUIS and

MARIE MACDALA LOUIS,

Plaintiffs,

V.

C.A. No. 16-10859-MLW

BANK OF AMERICA, N.A.,
SPECIALIZED LOAN SERVICING LLC,
and BANK OF NEW YORK MELLON,
Defendants.

MEMORANDUM AND ORDER

WOLF, D.J.
In

an

Magistrate

March 30, 2017
October

Judge

21,

2016

Report

recommended

that

and

Recommendation,

defendants'

motion

the

for

judgment on the pleadings be denied as to plaintiff's claim for
quiet title (Count I), and allowed as to plaintiffs' claims for
inaccurate credit reporting in violation of the Fair Credit

Reporting Act ("FCRA") (Count II), defamation (Count III), and
invasion of privacy (Count IV).

The Magistrate Judge also

recommended that plaintiff Marie Macdala Louis ("Marie Louis )
be dismissed for lack of standing.

The defendants. Bank of New

York Mellon ("BNY Mellon") and Specialized Loan Servicing LLC

("SLS"), filed an objection concerning Count I to the Report and
Recommendation

objection.

and

submitted

new

evidence

concerning

that

Plaintiffs Carole and Marie Louis made no objection

to the Report and Recommendation.

The court has reviewed ^ novo the issues to which a proper

objection has been made.

See Fed. R. Civ. P. 72(b)(3).

For the

reasons explained below, the court is adopting the Report and
Recommendation in part as to Counts II, III, and IV, remanding

the Report and Recommendation in part to the Magistrate Judge as
to Count I, and dismissing plaintiff Marie Louis for lack of
standing.

The parties have not made any objection to the Report and
Recommendation regarding Counts II, Illf and IV, and the issue
of Marie Louis' Article III standing.

need not review these issues ^ novo.

The court, therefore,

Waiver of ^ novo review

by failing to file proper objections does not entitle a party to
"some lesser standard" of review. Thomas v. Arn, 474 U.S. 140,

149-50 (1985); see also Costa v. Hall, No. 00-12213-MLW, 2010 WL

5018159, at *17 (D.Mass. Dec. 2, 2010) ("Absent objections, the

court may adopt the report and recommendation of the magistrate

judge.").

However, review by the court in such circumstances is

not prohibited, and some level of oversight, even if not ^
novo, is encouraged. See Henderson v. Carlson, 812 F.2d 874, 878
(3rd

Cir.

1987).

The court has reviewed the

Report and

Recommendation and finds it to be thorough and persuasive as to

Counts II, III, and IV, and the matter of Marie Louis' standing.
It is, therefore, being adopted with regard to those Counts.

As

to

rescission

Count
of

defendants

I,

the

failed

plaintiffs

2015

to

argue

foreclosure

provide

the

for

quiet

under

the

plaintiffs

a

title

theory

notice

and
that

of

the

foreclosure sale, which is required under Mass. Gen. Laws c. 244

§14.

The

Magistrate

Judge

recommended

that

the

motion

for

judgment on the pleadings be denied as to Count I because the
defendants did not present sufficient evidence to prove that

they met the notice requirements of §14.
that

the

mortgagee

registered mail.

must provide

Section 14 requires

notice to the

mortgagor

by

The defendants, in their answer, provided only

a compilation of notices with certified article numbers stamped
on them.

See Ex. A to Answer {Docket No. 10-1).

The Magistrate

Judge found that such evidence is insufficient to prove notice
was sent.

In their objection to the Report and Recommendation,

defendants

submitted

additional

evidence,

including

certified

mail receipts and returned envelopes of the notices they sent,
which

are

the

type

of

evidence

suggested would be sufficient.
In

view

of

the

that

the

Magistrate

Judge

See R&R at 6-7.

additional

evidence

presented

by

the

defendants, the court finds that it is appropriate to have the

Magistrate Judge reconsider Count I. See 28 U.S.C. §636(b)(l).
Ordinarily, evidence not attached to a
considered.

Complaint should not be

However, on a motion for judgment on the pleadings,

the court may consider "'documents the authenticity of which are

not

disputed

by

the

parties;

.

.

.

documents

central

to

plaintiffs' claim; [and] documents sufficiently referred to in
the complaint.'"
2007}

(quoting

Curran v. Cousins, 509 F.3d 36, 44 {1st Cir.
Watterson

v.

Page,

987

F.2d

1, 3 (1st Cir.

1993)); see also Beddall v. State St. Bank & Trust Co., 137 F.3d
12,

17

(1st

Cir.

1998)

("[T]he

court

need

not

accept

a

complaint's 'bald assertions' ... [and the] inquiry into the
viability of [plaintiff's] allegations should not be hamstrung

simply because the plaintiff fails to append to the complaint
the

very

document

allegations rest.").

upon

which

by

her

own

admission

the

The evidence submitted for the first time

to this court may or may not be within this exception. The

Complaint alleges not that notice was never received by the

plaintiffs but that it was "never sent to [them]."
Therefore, the

Compl. 518.

Complaint's factual allegations appear to be

expressly linked to the returned envelopes and certified mail
receipts submitted by the defendants.
17.

See Beddall, 137 F.3d at

The court does not know if their authenticity is disputed.

The defendants had the opportunity to present this evidence

to the Magistrate Judge and did not do so.

Usually, the

"[p]arties must take before the magistrate, not only their best
shot but all of their shots."

Borden v. Sec'y of Health & Human

Servs., 836 F.2d 4, 6 (1st Cir. 1987) (internal quotations
omitted).

The

reviewing

court
4

may

consider

evidence

and

arguments not presented to the Magistrate Judge only "in the
most compelling circumstances."

efficiency.

Id.

The rule promotes judicial

It also serves the interest of fairness by assuring

that a matter will not be decided based on evidence or arguments

that an opposing party has not had the opportunity to address.
In this case, because new evidence was presented to this

court in the objections to the Report and Recommendation, rather
than to the Magistrate Judge in connection with a motion for
reconsideration,

plaintiffs

have

not

had

an

opportunity

to

dispute their authenticity, contend that they should not be
considered on the pending motion, or argue the implications of
them.

However, if the new evidence is considered it may justify

judgment for defendants in Count I.

Therefore, the court

concludes that it is most appropriate to deny the motion for

judgment on

Count I without prejudice to the issue being

reconsidered by the Magistrate Judge, to whom this question is
being referred for a second Report and Recommendation.
In view of the foregoing, it is hereby ORDERED that:

1.

The attached Report and Recommendation (Docket No. 29)

is ADOPTED in part and REMANDED in part, as described in this
Memorandum and Order, pursuant to 28 U.S.C. §636(b)(l).
2.

Defendant's

Motion

for

Judgment

on

the

Pleadings

(Docket No. 14) concerning Counts II, III, and IV is ALLOWED.

3.

(Docket

Defendant's

No.

14) on

REMANDED to the

Motion

Count

Magistrate

I

for

is

Judgment

DENIED

on

without

Judge for further

the

Pleadings

prejudice,

and

proceedings and

another Report and Recommendation.
4.

Plaintiff

Marie

Louis

is

DISMISSED

for

lack

of

standing.

rUDG^

UNITED STATES DISTRICT JUDG'

Case l:16-cv-10859-MLW Document29 Filed 10/21/16 Page lot 12

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

CAROLE LOUIS and

MARIE MACDALA LOUIS,
Plaintiffs,

CIVIL ACTION NO. 16-I0859-MLW

BANK OF AMERICA,N.A.,
SPECIALIZED LOAN SERVICING,LLC,and
BANK OF NEW YORK MELLON,
Defendants.

REPORT AND RECOMMENDATION ON

DEFENDANTS BANK OF NEW YORK MELLON
AND SPECIALIZED LOAN SERVICING,LLC'S
MOTION FOR.lUDGMENT ON THE PLEADINGS (#14).

KELLEY,U.S.M.J.
I. Introduction.

Plaintiffs Carole Louis and Marie Macdala Louis filed an action in the Superior Court of

the Commonwealth of Massachusetts,Plymouth County against Bank of America, N.A.

(BANA),Specialized Loan Servicing, LLC(SLS), and Bank of New York Mellon(BNY

Mellon)to quiet title. Count I, for inaccurate credit reporting in violation ofthe Fair Credit

Reporting Act(FCRA),Count II, defamation. Count III, and invasion of privacy. Count IV.^
(##1,1-1.)BANA removed the matter to this court.(#1.) On August 9,2016,BANA was

'Counts III and IV are common law negligence claims purportedly brought under the FCRA.(#1-1
49.)

38,

Case l:16-cv-10859-MLW Document 29 Filed 10/21/16 Page 2 of 12

dismissed from the case. {See #21 Joint Stipulation of Dismissal with Prejudice.) Thereafter,

remaining defendants, SLS and BNY Mellon,filed a motion to dismiss(#14); plaintiffs

responded in opposition (#25); and defendants filed a reply (#28). At this juncture the motion to
dismiss stands ready for decision.
II. The Facts.

The facts as set forth in the complaint are as follows. On November 13, 2006, plaintiffs

purchased the property at 56 Clarence Street in Brockton, Massachusetts(the Property).(#1-1 T|
7.) Plaintiff Carole Louis granted a mortgage to Mortgage Electronic Registration Systems Inc.

(MERS),as nominee for American Wholesale Lenders Network(AWLN).Id.\(#10 H 7.) BANA,
through its predecessor Countrywide, serviced the loan from 2007 to 2012.(#1-1 KH 8,16.)SLS
took over as the servicer of the loan in 2012 and remained as such until the debt was released via
foreclosure in 2015.Id. at

16,24. BNY Mellon was the mortgagee on the Property from

October 20,2011 through the 2015 foreclosure. Id. at

15,20.

Around 2007, plaintiff Carole Louis,the sole mortgagor for the Property, defaulted on the

loan.^ /c/. 18. According to plaintiff, in May 2009,the Property was sold via short sale^ to a bona
fide third-party purchaser. Id. ^^9,10. At the time of sale, the outstanding balance on the

mortgage was $320,000.00, which was to be offset by the $200,000.00 sale price, leaving a

^ Defendants contest plaintiff Marie Macdala Louis' standing on the grounds that she lacks any

connection to the mortgage.(#15 at 2.) Plaintiffs fail to respond to this challenge.{See #25.)Notably,

plaintiffs' opposition is interspersed with references to "the plaintiff'throughout the document.Id. Lack
of allegations sufficient to establish plaintiff Macdala Louis' Article III standing in the complaint,
coupled with plaintiffs' failure to respond to defendants' challenge, requires dismissal of plaintiff
Macdala Louis. See Lujan v. Defs. of Wildlife, 504 U.S. 555,561 (1992)("The party invoking federal
jurisdiction bears the burden of establishing theQ elements[of Article III standing]."). Therefore the
court will only address issues that pertain to plaintiff Carole Louis.

^ "In a short sale, the lender agrees to allow the borrower to sell the home for less than what he owes on
the mortgage." Foley v. Wells Fargo Bank, N.A., 111 F.3d 63,69 n. 3(1st Cir. 2014).

Case l:16-cv-10859-MLW Document 29 Filed 10/21/16 Page 3 of 12

deficiency of$120,000.00. Id. K 10. BANA,as the then servicer ofthe loan, failed to record the
short sale deed and continued to represent to the Commonwealth, credit bureaus, and the federal

government that plaintiff was the mortgagor,even though the mortgage had allegedly been

satisfied with the discount sale price from the 2009 short sale."^'^

^ 11. BANA also allegedly

failed to report the forgivable deficiency to the Internal Revenue Service (IRS). Id. H 14.

BANA's failures caused plaintiffs credit to decrease dramatically and resulted in her inability to
obtain desired employment.Id. ^12.

On October 20,2011,the mortgage was assigned by MERS,as nominee for AWLN,to

BNY Mellon. M at ^ 15. Around 2012,BANA transferred its loan servicing duties to SLS.Id. at

H 16. SLS reported to various credit bureaus that plaintiff was in a state offoreclosure^ on the
mortgage from the time it took over as servicer through the 2015 foreclosure. Id.

42, 52. In

like manner to her allegations against BANA,plaintiff asserts that SLS's actions harmed her
credit and resulted in her inability to obtain desired employment.Id. H 44.

On January 21,2015,BNY Mellon filed a foreclosure action against plaintiff in the
Massachusetts Land Court. Id. at ^ 17. On October 8,2015, SLS and BNY Mellon jointly

foreclosed on the Property. Id. at H 20. On November 24,2015, SLS filed a Form 1099-C
^ It is perplexing that plaintiff alleges the Property was sold and the mortgage discharged in 2009, yet
later in the complaint alleges defendants failed properly to notice plaintiff prior to foreclosing on the

Property in 2015. Compare #1-1 Vi % 10'

#1-1 HI 17-20. The latter allegation requires that she still

have been the mortgagor on the loan secured by the Property. Although plaintiff proceeds under both
theories, the court is unable to square this factual contradiction. When confronted with this inconsistency,

plaintiff retreats from her position that the house was sold in 2009.(#25 at 4.)In the alternative, she states
that evidence supports a showing that"the short sale was well on its way to being completed and that the
Plaintiff, Ms. Louise [sic], moved ... on the premise that a short sale had been conducted."Id.
^ There is no reference to any contract between plaintiff and the then mortgagee, AWLN,agreeing to
release plaintifffrom the mortgage in exchange for the short sale ofthe Property.{See #1-1.)

^ From all that can be gleaned from plaintiffs papers, it appears she uses the terms "default" and
"foreclosure" interchangeably. Notably, the first alleged action by defendants implementing any
foreclosure proceeding did not occur until January 21,2015.(#1-1 ^ 17.)

Case l:16-cv-10859-MLW Document 29 Filed 10/21/16 Page 4 of 12

(Cancellation of Debt) with the IRS indicating that plaintiff had, defacto, earned income of
$319,311.00 from the foreclosure sale. Id. at ^ 22. This resulted in plaintiffs being obligated to
pay taxes on this amount. Id. at ^ 23.

At some point after the October 8,2015 foreclosure, SLS reported the foreclosure to a
credit bureau,^ which allegedly hindered plaintiffs ability to obtain a mortgage to purchase a

new home and prevented her from obtaining employment as a nursing assistant. Id. at H 24.
III. Standard of Review.

Rule 12(c) ofthe Federal Rules of Civil Procedure provides that a party may move for

judgment on the pleadings after the pleadings have closed. Fed. R. Civ. P. 12."A motion for
Judgment on the pleadings is treated much like a Rule 12(b)(6) motion to dismiss." PerezAcevedo v. Rivero-Cubano, 520 F.3d 26, 29(1st Cir. 2008)(citing Curran v. Cousins,509 F.3d

36^ 43-44(1st Cir. 2007)). Motions for dismissal and judgment on the pleadings are governed by
the same standard. 4MVR, LLC v. Hill, No. 12-cv-10674,2015 WL 3884054,at *6(D. Mass.

June 24,2015)."A Rule 12(c) motion nonetheless differs from a Rule 12(b)(6) motion because it
implicates the pleadings as a whole." Santiago v. Bloise, 741 F. Supp. 2d 357,360(D. Mass.

2010)(citation and internal quotation mark omitted). Facts in the answer, however,"are taken as

true only where and to the extent that they have not been denied or do not conflict with those of
the complaint." Id. (citation omitted).

To survive a Rule 12(c) motion,"a complaint must contain factual allegations that raise

a right to relief above the speculative level, on the assumption that all the allegations in the

complaint are true....'" Perez-Acevedo, 520 F.3d at 29(quoting Bell Atlantic Corp. v. Twombly,
550 U.S. 544,555 (2007)). The court must consider the well-pleaded facts "in the light most
^ In the complaint, plaintiffsometimes refers to multiple credit bureaus, while at other times she refers to
a single credit bureau.

Case l:16-cv-10859-MLW Document 29 Filed 10/21/16 Page 5 of 12

favorable to the non-moving party" and "draw[] all reasonable inferences in its favor." Gray v.
Evercore Restructuring LLC.,544 F.3d 320,324(1st Cir. 2008)(citing Curran,509 F.3d at
43).

Subject to certain narrow exceptions and absent a conversion ofthe Rule 12(c) motion to

a summary judgment motion under the procedure set forth in Rule 12(d), the court's review is
confined to the complaint and the answer. Exceptions exist that allow consideration of"facts

susceptible to judicial notice." R.G. Financial Corp. v. Vergara-Nunez,446 F.3d 178, 182(1st

Cir. 2006)(discussing Rule 12(c) motion). In evaluating a Rule 12(c) motion, a court may also
"consider documents the authenticity of which are not disputed by the parties" as well as

"documents central to the plaintiffs claim" and "documents sufficiently referred to in the

complaint." Curran, 509 F.3d at 44;see also Trans-Spec Truck Service, Inc. v. Caterpillar Inc.,
524 F.3d 315, 321-322(1st Cir. 2008); Watterson v. Page,987 F.2d 1, 3(1st Cir. 1993). When
the documents submitted are part ofthe public record, the court may consider them without

converting the motion to dismiss into a motion for summary judgment. See In re Stone &
Webster, 253 F. Supp. 2d 102, 128 & n.l 1 (D. Mass. 2003).
IV. Discussion.

A. Violation of Mass. Gen. Laws c. 244 § 14.

In Count I, plaintiff seeks to quiet title and rescission ofthe October 8,2015 foreclosure

ofthe Property under the theory that defendants failed to comport with Mass. Gen. Laws c. 244 §
14.(#1-1 at 111125-28.)

A mortgage holder who forecloses by power ofsale must comply with the
notice requirements set forth in MGL ch. 244,§ 14.'Advance notice ofthe
foreclosure sale must be provided to the mortgagor by registered mail and other

interested parties by publication in a newspaper published or generally circulating
in the town where the mortgaged property lies.' Culhane [v. Aurora Loan Services

Case l:16-cv-10859-MLW Document 29 Filed 10/21/16 Page 6 of 12

ofNebraska], 826 F.Supp.2d [352J 362[(D. Mass. 2011)]; Mass. Gen. Laws ch.
244, § 14.

In re Bailey, 468 B.R. 464,472(Bankr. D. Mass. 2012). Plaintiff takes issue with defendants'

mailing of notice. {See #1-1 at

18,19,26-28.) While "[t]he law in Massachusetts is clear; the

requirement that the notice be mailed to the owner ofthe relevant property is satisfied by mailing
and nonreceipt is irrelevant[,]" plaintiff asserts that defendants did not send notice to the

Property or to the address at which plaintiff resided during the relevant period - an address of
which defendants were aware.^ Bailey,468 B.R. at 472-73;(#1-1 H 18 ("This notice was never
sent")(emphasis omitted); #25 at 2-3.)

In an effort to rebuff plaintiffs allegation of deficient notice, defendants direct the court
to Exhibit A of their answer as evidence that multiple notices were sent to multiple addresses,

including the Property.(#15 at 11.) Exhibit A,however, which consists of a compilation of
foreclosure notices with "certified article numbers" printed on them, does not illustrate that

defendants satisfied § 14.{See #10-1.)Plaintiff notes that when the certified article numbers are

inputted into the United States Postal Service(USPS)tracking system,the results show that the
notices were not delivered to the Property or plaintiffs then address in Winthrop, Massachusetts.

(#25 at 3.) Independent review of USPS records demonstrates that the letters in question were
delivered to addresses in Newton Highlands and Shrewsbury, Massachusetts.^ Without any

showing that notice offoreclosure was sent to plaintiff or the Property, i.e., the actual envelope
with plaintiffs address or an affidavit in support, defendants' documents are unpersuasive.
® Plaintiff proffers Exhibit B of her opposition as evidence that defendants were on notice of her Winthrop
address. Exhibit B is a mortgage statement from SLS to plaintiff with her Winthrop address as the mailing
address. {See #25-2 at 2.)

'
While the documents in issue contain the proper addresses for plaintiff and the Property, there is nothing

to show that they were in fact mailed to those locations. {See #10-1.) Defendants do not explain how these
documents demonstrate that notice was sent to an appropriate location. {See #15.)

Case l:16-cv-10859-MLW Document 29 Filed 10/21/16 Page 7 of 12

Compare #10-1, with Lindsey v. First Horizon Home Loans, No-11-10408-FDS,2012 WL
689745, at *3(D. Mass. Mar. 1,2012)(defendants submitted a copy ofthe postmarked envelope

(#12-6 at 4)evidencing the appropriate address), and Branch Ave Capital, LLC v. U.S. Bank Nat.
Ass'n,No. 12-40140-TSH,2013 WL 5242121, at *3(D. Mass. Sept. 16,2013)(defendants

provided an affidavit ofsender along with documents containing certified article numbers), and
In re Goulet, No. 13-41812-MSH,2015 WL 269269, at *2(Bankr. D. Mass. Jan. 21, 2015)

(same). Thus, Count I should not be dismissed at this stage.
B. Violations of the FCRA - Counts 11. Ill, and IV.

Plaintiffs remaining claims assert violations ofthe FCRA,§ 1681s-2(b).(See #1-1 at

29-50.) All three counts are premised on defendants'^® alleged failure to report properly the 2009

short sale, which resulted in plaintiffs remaining in a state ofdefault thereafter.'' Id. There are
several flaws in plaintiffs argument, each of which proves fatal to her claims.
1. Failure to State a Claim.

The parameters ofthe FCRA's private right of action are an insuperable obstacle for
plaintiff:

Under § 1681s-2,furnishers may not provide inaccurate information to
consumer reporting agencies, 15 U.S.C. § 1681s—2(a)(1), and also have specific
duties in the event of a dispute over furnished information, id. § 1681s-2(b). Only
the second ofthese duties is subject to a private cause of action.

Section 1681s-2(a) prohibits any person from 'furnishpng] any
information relating to a consumer to any consumer reporting agency ifthe person

The remaining counts allege wrongdoing on behalf of defendant SLS and dismissed defendant BANA.
While the court's analysis is confined to SLS's actions in these counts, for the sake of consistency and
because defendants jointly filed the instant motion, the court will continue to address the moving party as
defendants.

" Count II alleges defendants violated FRCA by failing to report the 2009 short sale and falsely reporting
plaintiff in active foreclosure status thereafter; Count III alleges defendants' actions set out in Count II
defamed plaintiff; and Count IV alleges defendants' actions set out in Count II were an invasion of
plaintiffs privacy.(#1-1 at^^ 30,37,48.)

Case l:16-cv-10859-MLW Document 29 Filed 10/21/16 Page 8 of 12

knows or has reasonable cause to believe that the information is inaccurate.' Id. §

1681s-2(a)(l)(A). Congress expressly limited furnishers' liability under § 1681s2(a) by prohibiting private suits for violations ofthat portion ofthe statute. Id. §
1681s-2(c)(l).

Section 1681s-2(b), the provision at issue in this case, outlines a
furnisher's duties when a consumer disputes the completeness or accuracy of
information in their credit report. Under the FCRA,consumers generally notify

CRAs of such disputes. See id. § 1681i(a)(l). Although a consumer may dispute
credit information directly to a furnisher,[]the consumer has no private right of
action ifthe furnisher does not reasonably investigate the consumer's claim after
direct notification.

Chiang v. Verizon New England Inc., 595 F.3d 26,35 (1st Cir. 2010)(emphasis added).
Despite plaintiffs assertion that her FCRA claims are governed by § 1681s-2(b), they

fall squarely within the confines of§ 1681s-2(a): Defendant SLS is a furnisher'^ and
plaintiff alleges a failure to report properly her credit information. The complaint does
not allege that plaintiff notified defendant SLS or a consumer reporting agency(CRA)of
the supposed inaccuracies in the information concerning her mortgage and default status,

as required by § 1681s-2(b). See Chiang, 595 F.3d at 35-38(discussing a plaintiffs
burden bringing a claim under § 1681s-2(b)); Hernandez v. Wells Fargo Bank, N.A., No.
13-CV-13047-ADB,2015 WL 4480839, at *3(D. Mass. July 22,2015)("[Ijnaccurate

reporting by a furnisher does not, by itself, give rise to a private cause of action....
Furthermore, while a consumer may dispute credit information either directly with a

furnisher or with a CRA,a private cause of action exists only for failure to properly

investigate a dispute reported to a CRA.")(internal citation omitted)); Islam v. Option

One Mortg. Corp.,432 F. Supp. 2d 181,185(D. Mass. 2006)("These private rights of

Any person with relevant data about a consumer's financial activity may voluntarily provide it to a
CRA, but "[t]he most common ... furnishers of information are credit card issuers, auto dealers,

department and grocery stores, lenders, utilities, insurers, collection agencies, and government agencies.
Chiang, 595 F.3d at 35 (quoting H.R. Rep. 108-263, at 24(2003)).

Case l:16-cv-10859-MLW Document 29 Filed 10/21/16 Page 9 of 12

action, however, are limited to violations of Subsection(b)(post-notice duties) and are

explicitly precluded from use in enforcing Subsection(a)(general duties).").

As the complaint does not allege that plaintiff disputed the inaccuracies

concerning her credit, Counts II, III, and IV must fail as Congress has provided no such
private right of action.
2. Preemption.

Defendants argue that Counts III and IV,the common law negligence claims, are

preempted under the FCRA.(#15 at 15-18.)Two sections ofthe FCRA concern preemption of
state law claims: § 1681h(e) and § 1681t(b)(l)(F). Section 1681h(e), which was included in the

original Act, preempts state law claims, including defamation and invasion of privacy, against
furnishers except as to false information furnished with malice or willful intent to injure the

consumer. See § 1681h(e); Vazquez-Gctrcia v. Trans Union De Puerto Rico,222 F. Supp. 2d
150, 159-160(D.P.R. 2002). Section 1681t(b)(l)(F), a product ofthe Consumer Credit Reporting
Reform Act of 1996, creates an absolute bar to all state law claims, save for those specifically

enumerated in § 1681t(b)(l)(F).*^ Courts in this circuit have tried to decipher Congress' intent in

promulgating an amendment that appears to make § 1681h(e)superfluous. See, e.g., Islam,432
F. Supp. 2d at 189-194(addressing the various ways in which courts have squared the two
competing sections and concluding the preferred method is to apply § 1681t(b)to statutory
causes of action and § 1681h(e)to common law causes of action); Vazquez-Garcia, 222 F. Supp.

2d 150, 159-164(taking solace in a District of Kansas case in which the court bifurcated the

applicability of the sections at the point when the furnisher was notified ofthe consumer's

The only portion of Massachusetts law exempted by § 1681t(b)(l)(F) is § 54A(a)of Mass. Gen. Laws
c. 93.5ee§ 1681t(b)(l)(F)(i).

Case l:16-cv-10859-MLW Document 29 Filed 10/21/16 Page 10 of 12

dispute, so that § 1681h(e) applies before notice and § 1681t(b)(l)(F) applies after). To date, the
First Circuit has provided no guidance on the issue.

Understanding the unsettled state ofFCRA preemption in this circuit, there is no
need to muddy the waters further. Plaintifffails to allege any malice or willful intent to

injure on the part of defendants. Thus,even ifthe more lenient standard of § 1681h(e) is

applied, plaintiffs common law claims are preempted. Counts III and IV should be
dismissed.

3. Non-Release of Debt.

As noted above plaintiffs complaint contains factual inconsistencies as to whether the

Property was sold at the 2009 short sale. Defendants assert the sale is a falsehood contradicted
by the relevant Registry of Deed's records(#15-1).(See #15 at 10.) Review ofthe records in

question shows no deed was recorded in 2009 nor was any sale. {See #15-1.) Moreover,there is
no recording by a bona fide third-party purchaser in 2009, despite the non-extinguishment ofthe
mortgage. Id. While defendants' position may hold water at the summary judgment stage, here,

plaintiff sufficiently alleges that the Property was sold in 2009,therefore the court will assume as
much.{See #1-1 HI 9-11.) However,sale ofthe property alone cannot salvage plaintiffs FCRA
claims.

Plaintiffs remaining claims depend on two events: the sale ofthe Property in 2009 and

the subsequent release of her obligations under the mortgage as a result ofthe sale. Noticeably
absent from the complaint is any mention ofan agreement with AWLN,the then mortgagee,

agreeing to release plaintiff in exchange for the short sale proceeds. Rather, plaintiff makes the
conclusory assertion that"the mortgage had been satisfied with the ... payofffrom the 2009
short-sale."(#1-1 at H 11 ■) Despite her characterization of the sale in question as a "short sale,"

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plaintiff has alleged no facts to show that she was entitled to release from the mortgage, thereby

making defendants' reporting ofcontinued default improper. Thus, plaintiffs allegations are
facially deficient and fail to make out violations under the FCRA.
3. Defendants' Reliance on Public Records.

Plaintiff alleges that defendant SLS and dismissed defendant SANA incorrectly reported
her as in default based on their failure to report the short sale. However, at the time ofthe short

sale, 2009, SLS was not the servicer of plaintiffs mortgage.(#1-1 at K 16("In or around 2012,

[BANA]service-transferred the loan to SLS

").) SLS's potential liability is bookended on

one side by the 2012 transfer from BANA. Thus, SLS had no involvement in the alleged 2009
short sale, and any reporting done by SLS must have comported with the records that existed

during 2012-2015 period. Plaintiff does not contest that she was in default prior to the short sale.
Without any record ofthe short sale or any release by the mortgagee evidenced in the Registry of
Deeds, SLS,upon taking over as servicer of the loan, was justified in reporting plaintiffs
continuing state of default.
V. Conclusion.

For all ofthe reasons stated, I RECOMMEND that Defendants Bank of New York

Mellon and Specialized Loan Servicing, LLC's Motion for Judgment on the Pleadings(#14)be
DENIED as to Count 1 and ALLOWED as to Counts 11, 111, and IV.
Vl. Review bv District Court Judge.

The parties are hereby advised that any party who objects to this recommendation must

file specific written objections with the Clerk ofthis Court within 14 days ofthe party s receipt
ofthis Report and Recommendation. The objections must specifically identify the portion ofthe
recommendation to which objections are made and state the basis for such objections. The

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parties are further advised that the United States Court of Appeals for this Circuit has repeatedly
indicated that failure to comply with Rule 72(b), Fed. R. Civ. P., shall preclude further appellate

review. See Keating v. Secretary ofHealth & Hitman Servs., 848 F.2d 271 (1st Cir. 1988);
United States v. Emiliano Valencia-Copete^ 792 F.2d 4(1st Cir. 1986); Scott v. Schweiker^ 702

F.2d 13, 14(1st Cir. 1983); United States v. Vega,678 F.2d 376, 378-379(1st Cir. 1982); Park
Motor Mart, Inc. v. Ford Motor Co.,616 F.2d 603(1st Cir. 1980); see also Thomas v. Arn,474
U.S. 140(1985).
/s / M.Page Kellev

M.Page Kelley

October 21,2016

United States Magistrate Judge

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