Shea v. Ditech Financial LLC
Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER denying 12 Emergency MOTION for Preliminary Injunction filed by Karen M Shea.(Lima, Christine)
United States District Court
District of Massachusetts
KAREN M. SHEA,
DITECH FINANCIAL LLC and
WILMINGTON SAVNINGS FUND
SOCIETY, FSB, DBA CHRISTIANA
Civil Action No.
MEMORANDUM & ORDER
Plaintiff Karen M. Shea (“Shea”) brought this action
against Ditech Financial LLC (“Ditech”), a former assignee of a
mortgage granting a security interest in Shea’s residence, and
Wilmington Savings Fund Society, FSB DBA Christina Trust
(“Wilmington”), the current assignee of that mortgage.
before the Court is plaintiff’s motion for a preliminary
injunction to restrain defendants from conducting a scheduled
foreclosure sale on the residence.
For the reasons that follow,
the motion for a preliminary injunction will be denied.
Background and Procedural History
In October, 1996, Shea and then-husband Patrick Shea took
title to property located at 145 Jericho Road, Scituate,
Massachusetts (“the Property”).
In March, 2006, Plaintiff and
her husband refinanced their mortgage with a $400,000 loan from
Mt. Washington Cooperative Bank.
The mortgage was assigned to
the Mortgage Electronic Registration System (“MERS”) the same
In December, 2008, MERS reassigned the mortgage to
Countrywide Home Loans Servicing LP (“Countrywide”).
Countrywide was later succeeded by BAC Home Loans Servicing, LP
In 2009, Shea began experiencing difficulty making payments
on the loan and contacted BAC but was told that she would not be
offered assistance until she was at least two months in arrears
on her payments.
Shea later fell behind in her payments and BAC
commenced foreclosure proceedings.
On July 19, 2009 BAC entered
into a Forbearance Agreement with Shea under the Fannie Mae
Under the terms of the Forbearance
Agreement, Shea was required to make monthly payments in the
amount of $1,661.31, exactly half of her prescribed monthly
payment, for six months commencing on July 19, 2009 and ending
on January 1, 2010.
According to Shea, she made each of the payments required
under the Forbearance Agreement on time.
At the end of the six-
month agreement period, she claims, she was instructed by BAC to
continue making monthly payments in the amount agreed to under
the Forbearance Agreement.
Although Shea purportedly continued
to make payments, on May 14, 2010, BAC sent Shea a Notice of
Intention to Foreclose which gave her 30 days to cure an alleged
default of nearly $80,000.
Shea continued to make payments
through July 20, 2010, but thereafter BAC stopped accepting her
She has made no further mortgage payments since then.
Shea and her husband conveyed a deed for the Property to
Shea on December 15, 2010 pursuant to a divorce agreement.
February 3, 2014 Countrywide assigned the mortgage to Green Tree
Servicing, LLC (“Green Tree”), which changed its name to Ditech
Financial LLC in August, 2015.
On April 28, 2016 plaintiff commenced this action by filing
a complaint in the Massachusetts Superior Court for Plymouth
Defendant removed the action to federal court on July
18, 2016 and, one week later, filed a motion to dismiss the
complaint which is currently pending.
On July 27, 2016 Ditech
sent Shea a Notice of Mortgagee’s Sale of Real Estate stating
that the Property would be sold at foreclosure auction on August
Two days later, Ditech assigned Shea’s mortgage to
On August 11, 2016, after receiving the Notice of
Mortgagee’s Sale of Real Estate, plaintiff filed the motion for
a preliminary injunction which is currently before the Court.
The Court allowed plaintiff’s motion to amend her complaint to
add Wilmington as a party on August 17, 2016.
That same day, the Court held a hearing on the motion for a
preliminary injunction after which it announced that it would
hold the motion in abeyance until September 21, 2016.
instructed Wilmington to postpone the foreclosure sale until
after that date and to use the intervening time to attempt to
resolve the dispute.
Because the parties have failed to do so,
the Court will proceed to decide the motion on the merits.
Plaintiff’s Motion for a Preliminary Injunction
Plaintiff moves the Court for a preliminary injunction
restraining Wilmington from conducting a mortgage foreclosure
sale and from otherwise enforcing the Power of Sale contained in
the mortgage agreement.
In order to obtain a preliminary injunction, the moving
party must establish 1) a reasonable likelihood of success on
the merits, 2) the potential for irreparable harm if the
injunction is withheld, 3) a favorable balance of hardships and
4) the effect on the public interest. Jean v. Mass. State
Police, 492 F.3d 24, 26-27 (1st Cir. 2007).
Out of these
factors, the likelihood of success on the merits “normally
weighs heaviest in the decisional scales.” Coquico, Inc. v.
Rodriguez-Miranda, 562 F.3d 62, 66 (1st Cir. 2009).
The Court may accept as true “well-pleaded allegations [in
the complaint] and uncontroverted affidavits.” Rohm & Haas Elec.
Materials, LLC v. Elec. Circuits, 759 F. Supp. 2d 110, 114, n.2
(D. Mass. 2010) (quoting Elrod v. Burns, 427 U.S. 347, 350, n.1
The Court may also rely on otherwise inadmissible
evidence, including hearsay, in deciding a motion for
preliminary injunction. See Asseo v. Pan American Grain Co.,
Inc., 805 F.2d 23, 26 (1st Cir. 1986).
Ultimately, the issuance
of preliminary injunctive relief is “an extraordinary and
drastic remedy that is never awarded as of right.” Peoples Fed.
Sav. Bank v. People’s United Bank, 672 F.3d 1, 8-9 (1st Cir.
2012) (quoting Voice of the Arab World, Inc. v. MDTV Med. News
Now, Inc., 645 F.3d 26, 32 (1st Cir. 2011)).
1. Likelihood of Success
Plaintiff’s complaint alleges five counts based on
different causes of action, and plaintiff does not specify upon
which grounds she moves for a preliminary injunction.
Counts III and IV allege that Ditech and Wilmington inflicted
emotional distress on Shea and Count V alleges a breach of
M.G.L. ch. 93A based on Ditech’s failure to provide a sufficient
response to a demand letter, none of those counts could serve as
a basis for an injunction restraining Wilmington from proceeding
with the foreclosure.
Consequently, the Court’s analysis will
focus on Counts I and II.
a. Count I
In Count I Shea alleges that BAC breached Section A of the
Forbearance Agreement by commencing foreclosure on the Property
on May 14, 2010 despite the fact that plaintiff had continued to
submit timely payments pursuant to her agreement with BAC to
extend the Forbearance Agreement.
Section A of the Forbearance
Agreement states, in relevant part:
Foreclosure Activity. The Servicer will suspend any
scheduled foreclosure sale, provided I continue to
meet the obligations under this Agreement. If this
Agreement terminates, however, then any pending
foreclosure action will not be dismissed and may be
immediately resumed from the point at which it was
Accordingly, if the Forbearance Agreement had been
extended, BAC did not have the right to proceed with foreclosure
as long as Shea continued to make timely payments.
that because Wilmington is the assignee of all rights from its
predecessor-in-interest, BAC, it is liable for BAC’s breach of
the Forbearance Agreement.
In response, Wilmington asserts that
it is not bound by the Forbearance Agreement because it is not a
party to that agreement. See City of Revere v. Boston/Logan
Airport Associates, LLC, 416 F. Supp. 2d 200, 208 (D. Mass.
Defendant further rejoins that the agreement does not
contain any specific language manifesting an intent to bind
successors in interest or assignees of the parties and, even if
it did, BAC did not have the legal authority to bind its
assignees to a contract to which they were not parties.
Milwaukee Center for Independence, Inc. v. Milwaukee Health
Care, LLC, No. 15-c-1479, 2016 WL 3212087, at *3 (E.D. Wis. June
Moreover, defendant avers, Wilmington did not
expressly or impliedly assume the Forbearance Agreement and
therefore cannot be bound by it. City of Revere, 416 F. Supp. 2d
at 208 (citing John Wiley & Sons, Inc. v. Livingston, 376 U.S.
543, 550 (1964)).
Wilmington notes that the Forbearance
Agreement was never recorded so that it had neither constructive
nor actual notice of its existence.
Plaintiff responds that Wilmington became liable to
plaintiff for the breach of the Forbearance Agreement when it
was assigned the mortgage.
Shea notes that the assignment
document specifies that the assignment is subject to the terms
and conditions of the mortgage and that there is no language in
the mortgage limiting the liability of a successor-in-interest.
Accordingly, Shea argues, Wilmington expressly assumed BAC’s
obligations related to the mortgage.
Plaintiff’s argument appears to be based upon the
assumption that the Forbearance Agreement amended the mortgage
agreement between Shea and BAC such that Wilmington’s assumption
of the mortgage was subject to the terms of the Forbearance
Agreement as well as those of the mortgage itself.
however, Section D of the Forbearance Agreement states:
No Modification. I understand that the Agreement is
not a forgiveness of payments on my Loan or a
modification of the Loan Documents. I further
understand and agree that the Servicer is not
obligated or bound to make any modification of the
Loan Documents or provide any other alternative
resolution of my default under the Loan Documents.
The “Loan Documents” are defined as the mortgage and note.
The terms of the Forbearance Agreement, therefore, contradict
Shea’s implicit argument that the agreement was incorporated
into the mortgage.
Accordingly, while BAC may be liable to Shea
for its breach of the Forbearance Agreement, Wilmington has not
assumed that liability.
b. Count II
Count II alleges that BAC breached the requirements of
M.G.L. ch. 244 § 35A by providing plaintiff only 30 days to cure
her default in its Notice of Intent to Foreclose dated May 14,
2010, rather than the 90 days required by the statute.
claim is not dependent upon the Forbearance Agreement and
therefore BAC’s liability would have been assumed by Wilmington
when it was assigned the mortgage.
Wilmington notes, however, that BAC never actually
foreclosed on the mortgage, thereby obviating the effect of the
Shea has, therefore, had ample time to cure
her default since BAC’s original notice of its intent to
Furthermore, Wilmington contends that Ditech
complied with all statutory notice requirements when it
scheduled the impending foreclosure sale.
Accordingly, Shea has
also failed to demonstrate a reasonable likelihood of success on
the merits of this claim.
2. Other Factors
Although the other prerequisites for injunctive relief
favor the plaintiff, they do not overcome her unlikelihood of
Shea certainly may be subject to irreparable harm if
her house is foreclosed upon, especially given that she is the
primary caretaker for her disabled sister who suffers from
Cerebral Palsy and also resides at the Property.
the balance of hardships tips in her favor because she will be
subject to greater hardship upon the denial of a preliminary
injunction than defendants would be upon its allowance.
Nevertheless, plaintiff is not entitled to injunctive
relief because “[l]ikelihood of success on the merits is the
critical factor in the analysis.” Sankey v. Aurora Loan Servs.,
LLC, 757 F. Supp. 2d 57, 59 (D. Mass. 2010). See also Tuxworth
v. Froehlke, 449 F.2d 763, 764 (1st Cir. 1971)(“No preliminary
injunction should be granted in any case unless there appears to
be a reasonable possibility of success on the merits.”); Weaver
v. Henderson, 984 F.2d 11, 12 (1st Cir. 1993)(“In the ordinary
course, plaintiffs who are unable to convince the trial court
that they will probably succeed on the merits will not obtain
interim injunctive relief.”).
Accordingly, the Court will deny
plaintiff’s motion for injunctive relief.
In accordance with the foregoing, plaintiff’s motion for a
preliminary injunction (Docket No. 12) is DENIED.
/s/ Nathaniel M. Gorton ____
Nathaniel M. Gorton
United States District Judge
Dated September 22, 2016
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