Hersey v. WPB Partners, LLC

Filing 47

///ORDER granting in part and denying in part 42 defendant's Motion to Dismiss. So Ordered by Judge Steven J. McAuliffe.(lat)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Mary Hersey,
Plaintiff
v.

Case No. 11-cv-207-SM
Opinion No. 2013 DNH 102

WPB Partners, LLC,
Defendant
O R D E R
Defendant’s Motion to Dismiss (document no. 42) is granted
with respect to Counts I, III, and IV of the amended complaint,
and denied as to Count II.

Count I
Plaintiff, Mary Hersey, alleges that WPB Partners (“WPB”)
violated Chapter 255E of the Massachusetts General Laws when it
financed her “existing debt and . . . projects on . . . property”
located in Carroll County, New Hampshire.
19, at 2.

See Mass. Gen. Laws ch. 255E.

Am. Compt., doc. no.
That Massachusetts

statute regulates and provides for the licensing of mortgage
lenders and brokers.

By its terms, it applies only to persons

“act[ing] as a mortgage broker or mortgage lender[] with respect
to residential property.”

The statute defines “residential

property” as “real property located in the commonwealth.”
§ 1.

Id. at

Because the amended complaint alleges that the property

securing plaintiff’s loan is located in New Hampshire, and,
therefore, is not “located in the commonwealth,” the
Massachusetts statute does not apply in this case.

Count I is,

therefore, dismissed.

Count II
Plaintiff alleges that WPB charged an effective interest
rate exceeding the maximum allowed under Massachusetts’ usury
statute.

See Mass. Gen. Laws ch. 271, § 49.

That statute

prohibits lenders from charging “interest and expenses the
aggregate of which exceeds an amount greater than twenty percent
per annum upon the sum loaned . . . .”

Id. at § 49(a).

That

restriction “shall not apply,” however, “to any person who
notifies the attorney general of his intent” to charge a higher
rate.

Id.

In support of her usury claim, plaintiff alleges that

she was “charged interest at a rate of 16.5%-19.5% not only on
amounts disbursed to [her] but also on amounts that [defendant]
failed to disburse . . . thus charging Petitioner excess [sic] of
the statutory limit.”

Am. Cmpt., doc. no. 19, at 9.

complaint alleges that $80,000 was not disbursed.

The

Id. at 4.

WPB argues that Count II should be dismissed because
plaintiff has not alleged that she was charged in excess of 20%,
and further, has not alleged that defendant’s predecessor did not

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register its intent to charge rates exceeding 20% with the
attorney general.

Both arguments are rejected.

Plaintiff’s

factual allegation gives rise to an adequate inference that she
was charged in excess of a 20% interest rate.

In addition, the

fact of registration is an affirmative defense under the statute,
and not an element that plaintiff must plead.

See In re

Loucheschi, LLC, 471 B.R. 777, 782 (Bankr. D. Mass. 2012)
(“Having determined that the 2006 loan is usurious, the burden
shifts to LBM to assert a defense including” that he has
“regist[ered] with the attorney general”).

See also Cannarozzi

v. Fiumara, 371 F.3d 1, (1st Cir. 2004) (stating in dictum that
registration “is an absolute defense.”).1

The court finds,

therefore, that plaintiff’s Count II states a claim for violation
of the Massachusetts usury statute.

Count III
Plaintiff brings Count III under New Hampshire Revised
Statutes Annotated (“RSA”) 397-A and the Real Estate Settlement
Procedures Act (“RESPA”), 12 U.S.C. § 2601, et seq.

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WPB argues

WPB has submitted registration papers in support of its
motion to dismiss, and plaintiff has pointed to language in the
papers indicating, perhaps, that they contain material
misrepresentations that would render the registration invalid.
WPB has not asked the court to enter summary judgment on Count
II, and the court will not convert the motion to dismiss into a
motion for summary judgment. See Fed. R. Civ. P. 12(d). The
evidence of registration, and the arguments about that evidence,
are, therefore, irrelevant to the present analysis.
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that the amended complaint fails to state a claim under either
statute.

The court agrees.

In her response to WPB’s motion, plaintiff concedes that RSA
397-A:2, which regulates mortgage bankers and brokers, “does not
provide for a private right of action, as recently noted by this
Honorable Court in Ruivo v. Wells Fargo Bank, N.A.,” 2012 WL
5845452, at *2 (D.N.H. Nov. 19, 2012) (Barbadoro, J.).
Plaintiff, therefore, offers her “assent to withdraw” the claim.
Pl. Br., doc. no. 44, at 15.

Plaintiff’s RSA 397-A:2 claim is

dismissed with prejudice.

So, too, is plaintiff’s claim under RESPA.

Although

plaintiff includes a reference to RESPA in the caption to Count
III, she does not specify which provision of RESPA she believes
WPB violated, nor does she allege facts to support a RESPA claim.
For instance, she does not allege that WPB did not appropriately
respond to a qualified written request for information, see 12
U.S.C. § 2605(e); that WPB engaged in an illegal referral or feesplitting arrangement, see 12 U.S.C. § 2607; or that WPB required
plaintiff to purchase title insurance from a particular title
company.

See 12 U.S.C. § 2608.

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Count IV
Plaintiff alleges that WPB breached the parties’ loan
agreement.

WPB moves to dismiss Count IV on the ground, among

others, that the claim is barred by New Hampshire’s three-year
statute of limitations, RSA 508:4(I).

It is.

Plaintiff says the “original” breach occurred on December
21, 2006, and uses that date as the starting point in the
limitations calculus.

She argues that Massachusetts’ six-year

statute of limitations applies, see Mass. Gen. Laws 260 § 2.
Accordingly, she says, “any complaint brought prior to December
21, 2012, would have been timely brought.”
at 18.

Pl. Br., doc. no. 44,

She notes that she filed the present suit on October 4,

2010, and amended her complaint on April 4, 2011, adding the
breach of contract claim.

Plaintiff posits that the Massachusetts statute of
limitations applies because the parties agreed in their contract
to resolve their disputes under Massachusetts law.
misses the mark.

That argument

If, in a diversity suit, “a choice of law must

be made, for example, because a contractual choice-of-law clause
is at issue . . ., the district court applies the law that would
be applied under the conflict of laws rules of the forum state.”
Servicios Comerciales Andinos, S.A. v. General Elec. Del Caribe,

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Inc., 145 F.3d 463, 479 (1st Cir. 1998).

The forum state here is

New Hampshire, and under its conflict of laws rules a contract’s
choice-of-law provision “governs what substantive law will apply,
but it does not control which state’s law applies to procedural
issues.”

Lago & Sons Dairy, Inc. v. H.P. Hood, Inc., 1994 WL

484306, at *10 (D.N.H. Sept. 6, 1994) (citing Keeton v. Hustler
Magazine, Inc., 131 N.H. 6, 13-14 (1988)).

Under New Hampshire

law, “‘a statute of limitations is a matter of procedure and as
such the law of the forum applies.’”

Id. (quoting Gordon v.

Gordon, 118 N.H. 356, 360 (1978)).

Accordingly, because New Hampshire’s three-year statute of
limitations applies to plaintiff’s breach of contract claim, her
claim must have been filed before December 21, 2009.

It was not.

Count IV is dismissed, albeit without prejudice.

Conclusion
Defendant’s motion to dismiss, doc. no. 42, is granted in
part and denied in part.

Counts I and III are dismissed with

prejudice, and Count IV is dismissed without prejudice.

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SO ORDERED.

____________________________
Steven J. McAuliffe
United States District Judge
July 24, 2013
cc:

Raymond J. DiLucci, Esq.
Richard K. McPartlin, Esq.
Edmond J. Ford, Esq.

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