Amorello et al v. America's Servicing Company

Filing 26

Magistrate Judge David H. Hennessy: ORDER entered finding as moot 18 Motion to Dismiss for Failure to State a Claim; granting 22 Motion to Dismiss for Failure to State a Claim. (Belpedio, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

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NANCY AMORELLO,
PETER AMORELLO,
Plaintiffs,

v.
Wells Fargo Bank, N.A.,
Defendant.

CIVIL ACTION
NO. 14-10200-DHH

ORDER
October 21, 2014
Hennessy, M.J.

On March 3, 2014, Defendant Wells Fargo Bank, N.A. (“Wells Fargo”) filed a Motion to
Dismiss Plaintiffs Nancy Amorello and Peter Amorello’s Complaint. (Docket #18). Plaintiffs
then filed an Amended Complaint on March 17, 2014. (Docket #20). On March 25, 2014, Wells
Fargo filed a Motion to Dismiss the Amended Complaint. (Docket #22). Plaintiffs filed an
opposition to the Motion to Dismiss the Amended Complaint on April 7, 2014. (Docket #24).
These matters are now ripe for adjudication. For the reasons that follow, Wells Fargo’s Motion
to Dismiss (Docket #18) is DENIED AS MOOT and Wells Fargo’s Motion to Dismiss the
Amended Complaint (Docket #22) is ALLOWED.
I.

BACKGROUND
On October 12, 2005 or October 14, 2005, the Plaintiffs granted a mortgage to New

Century Mortgage Corporation (“New Century”) secured by property located in Sutton,
Massachusetts. (Docket #20 at ¶¶ 4, 6). On October 12, 2005, Peter Amorello executed an

adjustable rate note in favor of New Century agreeing to pay the sum of $315,000. (Id. at ¶ 7).
The Note was for thirty years with an initial interest rate of 8.7 percent. (Id. at p. 25).
On March 13, 2007, the Commonwealth of Massachusetts issued a cease and desist order
directing New Century to immediately cease engaging in mortgage lending and brokerage
activities within the Commonwealth.

(Id. at ¶ 8).

On October 4, 2007, the California

Department of Corporations issued an order revoking the residential mortgage lender and
residential mortgage loan service license of New Century. (Id. at ¶ 9). Under the terms of this
order, New Century had sixty days within which to transfer its existing service accounts and
complete any loans for which it had commitments. (Id. at ¶¶ 9-10, pp. 29-30). On December 28,
2007, New Century transferred the Plaintiffs’ mortgage to Wells Fargo via a written assignment
of mortgage. (Id. at ¶ 11, p. 31). On February 21, 2012, New Century executed a corporate
assignment of mortgage to Wells Fargo. (Id. at ¶ 12, p. 32).
Plaintiffs filed suit in Worcester Superior Court on November 4, 2013. (Docket #1 at 1;
Docket #1-1 at 3-5). On January 27, 2014, Wells Fargo removed the action to this Court.
(Docket #1). Plaintiffs’ Amended Complaint contains three counts. In Count I, Plaintiffs seek
damages, asserting that the terms of the mortgage constitute predatory lending. (Docket #20 at
¶¶ 13-19). In Count II, Plaintiffs assert that New Century’s transfer of their mortgage to Wells
Fargo violated the California Department of Corporations order of October 4, 2007, and thus the
mortgage should be declared null and void. (Id. at ¶¶ 20-22). In Count III, Plaintiffs request a
declaratory judgment that the mortgage is null and void. (Id. at ¶¶ 23-24).
II.

STANDARD
Rule 8 of the Federal Rules of Civil Procedure provides, in relevant part, that “[a]

pleading that states a claim for relief must contain . . . a short and plain statement of the claim

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showing that the pleader is entitled to relief[.]” Fed. R. Civ. P. 8(a)(2). The statement must
“give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it
rests.” Phelps v. Local 0222, No. 09-11218-JLT, 2010 U.S. Dist. LEXIS 88007, at *13 (D.
Mass. Aug. 20, 2010) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002)). In
addition, the pleadings must afford the defendants “a meaningful opportunity to mount a
defense.”

Diaz-Rivera v. Rivera-Rodriguez, 377 F.3d 119, 123 (1st Cir. 2004) (quotation

omitted).
On a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the court “must assume the truth
of all well-plead[ed] facts and give the plaintiff the benefit of all reasonable inferences
therefrom.” Ruiz v. Bally Total Fitness Holding Corp., 496 F.3d 1, 5 (1st Cir. 2007). To survive
a motion to dismiss, a plaintiff must “state a claim that is plausible on its face.” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 570 (2007). That is, “[f]actual allegations must be enough to raise a
right to relief above the speculative level . . . on the assumption that all the allegations in the
complaint are true (even if doubtful in fact).” Id. at 555 (internal citations omitted). “The
plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer
possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Twombly, 550 U.S. at 556).

Despite this generous standard, “Rule 12(b)(6) is not

entirely a toothless tiger . . . [t]he threshold for stating a claim may be low, but it is real.”
Dartmouth Rev. v. Dartmouth Coll., 889 F.2d 13, 16 (1st Cir. 1989) (quotation omitted). The
complaint must therefore “set forth factual allegations, either direct or inferential, respecting
each material element necessary to sustain recovery under some actionable legal theory.”
Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir. 1988); see also DM Research, Inc. v.

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Coll. Of Am. Pathologists, 170 F.3d 53, 55 (1st Cir. 1999) (explaining that the complaint must
“allege a factual predicate concrete enough to warrant further proceedings”).
Although the complaint need not provide “detailed factual allegations,” Twombly, 550
U.S. at 555, it must “amplify a claim with some factual allegations . . . to render the claim
plausible,” Iqbal v. Hasty, 490 F.3d 143, 157–58 (2d Cir. 2007). Thus, the complaint must
provide “the grounds upon which [the plaintiff’s] claim rests through factual allegations
sufficient ‘to raise a right to relief above the speculative level.’” ATSI Commc’ns v. Shaar
Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (quoting Twombly, 550 U.S. at 555). “A pleading
that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action
will not do.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). Dismissal is
appropriate if a plaintiff’s well-pleaded facts do not “possess enough heft to show that [the]
plaintiff is entitled to relief.” Ruiz Rivera v. Pfizer Pharms., LLC, 521 F.3d 76, 84 (1st Cir.
2008) (quotations and original alterations omitted).
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
sometimes 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 Eng. Sch. of Law, 389 F.3d 5, 12 (1st Cir. 2004).

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III.

ANALYSIS

A.

Count I
In Count I of their Complaint, entitled “Predatory Lending,” Plaintiffs allege that their

mortgage, which was for more than 97 percent of the value of their home, adjusted a little after
two years from the date of signing with the introductory loan rate being at least 3 percent lower
than the first adjusted rate. (Id. at ¶¶ 15, 17). Plaintiffs state that, following the first loan
adjustment, the total of their debt payments each month was greater than 50 percent of their
combined income. (Id. at ¶ 16). Plaintiffs claim that they are entitled to damages from Wells
Fargo. (Id. at ¶¶ 13-19). It appears that Plaintiffs could raise one of two claims in this Count; a
violation of the Massachusetts Predatory Home Loans Practices Act, Mass. Gen. Laws ch. 183C,
§§ 1 et seq., or a violation of Massachusetts General Laws chapter 93A. In either case, Count I
is time-barred.
The Massachusetts Predatory Home Loans Practices Act prohibits a lender from making
a high-cost home mortgage loan1 unless the lender reasonably believes at the time the loan is
executed that the borrower “will be able to make the scheduled payments to repay the home loan
based upon a consideration of the [borrower’s] current and expected income, current and
expected obligations, employment status, and other financial resources other than the borrower’s
equity in the dwelling which secures repayment of the loan.” Mass. Gen. Laws ch. 183C, § 4. A
borrower is presumed to be able to make the scheduled payments if the borrower’s debt-toincome ratio, calculated based on the fully indexed rate associated with an adjustable rate
mortgage, does not exceed 50 percent of the borrower’s verified monthly gross income. Id.;
Commonwealth v. Fremont Inv. & Loan, 452 Mass. 733, 748 (2008). A violation of the

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“High-cost home mortgage loan” is a term of art defined in section 2 of Massachusetts General Laws chapter
183C.

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Predatory Home Loans Practices Act constitutes a violation of Massachusetts General Laws
chapter 93A. Mass. Gen. Laws ch. 183C, § 18(a).
A borrower may bring an original action for violation of the Predatory Home Loans
Practices Act within five years of the closing of a high-cost home mortgage loan. Mass. Gen.
Laws. ch. 183C, § 15(b)(1). Plaintiffs allege that the mortgage was executed on either October
12, 2005 or October 14, 2005. (Docket #20 at ¶ 6). Plaintiffs filed suit on November 4, 2013,
more than eight years after they executed the mortgage. (Docket #1 at 1). Plaintiffs assert that
the Predatory Home Loans Practices Act is not time-barred as Plaintiffs continue to suffer
ongoing harm as a result of predatory lending which continues on to this day; however, Plaintiffs
cite to no authority, nor does this Court find any, allowing Plaintiffs to bring an original action
under this Act once the statute of limitations has run. Moreover, the Court is confident that the
Massachusetts legislature recognized the possibility that borrowers could face ongoing harm
from predatory loan practices, lasting more than five years, when it chose this limitations period.
Hence, Plaintiffs’ claim under the Predatory Home Loans Practices Act is time-barred. See
Mass. Gen. Laws ch. 183C, § 15(b)(1); Da Silva v. U.S. Bank, N.A., 885 F. Supp. 2d 500, 504
(D. Mass. 2012) (holding that plaintiff’s claim of violation of Mass. Gen. Laws ch. 183C was
time-barred as plaintiff brought suit more than five years after the date of closing).
To the extent that Plaintiffs base any part of their claim in Count I on Massachusetts
General Laws chapter 93A, that claim is time-barred as well. Claims brought under chapter 93A
are subject to a four-year statute of limitations. Mass. Gen. Laws ch. 260, § 5A. The four year
statute of limitations expired in October of 2009 and, therefore, any claim under chapter 93A is
untimely. See Da Silva, 885 F. Supp. 2d at 504.

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Therefore, Count I of the Amended Complaint is dismissed for failure to state a claim
upon which relief can be granted.2
B.

Count II
In Count II of their Amended Complaint, Plaintiffs assert that New Century violated the

California Department of Corporations order of October 4, 2007 when it transferred the
Plaintiffs’ mortgage to Wells Fargo. (Docket #20 at ¶¶ 21). Plaintiffs assert that the mortgage
should be declared null and void under the Full Faith and Credit Clause of the Constitution. (Id.
at ¶ 22). Plaintiffs also seek damages under Count II. (Id.).
The California Department of Corporations order of October 4, 2007 required New
Century to New Century to transfer its existing service accounts, including Plaintiffs’ account,
within sixty days. New Century did not transfer Plaintiffs’ mortgage to Wells Fargo until
December 28, 2006, approximately eighty-five days after the California Department of
Corporations’ order. However, Plaintiffs have failed to allege any harm suffered as a result of
the transfer taking place eighty-five days after the California Department of Corporations’ order
as opposed to sixty days. Moreover, Plaintiffs cite no case law, nor could the Court find any,
holding that failure to transfer the mortgage within the requisite time period would result in the
mortgage being declared null and void.
Therefore, Count II of the Amended Complaint is dismissed for failure to state a claim
upon which relief can be granted.

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Because the Court finds that Plaintiffs’ claims in Count I are time-barred, it does not address Wells Fargo’s
remaining arguments as to why Plaintiffs fail to state a cause of action in Count I.

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C.

Count III
In Count III, Plaintiffs seek a declaratory judgment that their mortgage is null and void

due to Wells Fargo’s ongoing predatory lending. For the same reasons that Count I is dismissed,
Count III is also dismissed.
IV.

CONCLUSION
For the foregoing reasons, Wells Fargo’s Motion to Dismiss (Docket #18) is DENIED

AS MOOT and Wells Fargo’s Motion to Dismiss the Amended Complaint (Docket #22) is
ALLOWED.

/S/ David H. Hennessy
David H. Hennessy
UNITED STATES MAGISTRATE JUDGE

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