Gikas v. JPMorgan Chase Bank, N.A., et al

Filing 34

///ORDER granting 23 Motion for Summary Judgment. Plaintiff's orally renewed motion to amend the complaint to add a claim against Fannie Mae is DENIED. The clerk shall enter judgment accordingly and close the case. So Ordered by Chief Judge Joseph N. Laplante.(jb)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Haralambos Gikas
v.

Civil No. 11-cv-573-JL
Opinion No. 2013 DNH 057

JPMorgan Chase Bank, N.A., et al.
MEMORANDUM ORDER
Plaintiff Haralambos Gikas filed this action against the
servicer of his mortgage loan, JPMorgan Chase Bank, N.A., and the
original mortgagee, Mortgage Electronic Registration Systems,
Inc. (“MERS”), seeking relief for (1) their failure to provide
him with a permanent loan modification, and (2) their allegedly
wrongful conduct during the foreclosure of his mortgage.

This

court has jurisdiction over this matter pursuant to 28 U.S.C.
§ 1332(a)(1) (diversity), because Gikas is a New Hampshire
citizen, Chase and MERS are out-of-state entities, and the amount
in controversy exceeds $75,000.
The defendants have moved for summary judgment, see Fed. R.
Civ. P. 56, arguing that the undisputed material facts establish
that Gikas was not entitled to a modification as a matter of law
and that they did not participate in the foreclosure.
hearing oral argument, the court grants the motion.

After
As explained

in more detail below, the defendants are entitled to summary
judgment on Gikas’s modification-related claims because Gikas did

not provide the information that, he acknowledged, was a
prerequisite to his eligibility for a modification.

The

defendants are also entitled to summary judgment on Gikas’s
claims contesting the events surrounding the foreclosure,
including the provision of statutory notice under N.H. Rev. Stat.
Ann. § 479:25, because it was Federal National Mortgage
Association–-not Chase or MERS–-that conducted the foreclosure,
and thus owed the statutory and common-law duties that Gikas
claims were breached.
I.

Applicable legal standard
Summary judgment is appropriate where “the movant shows that

there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
P. 56(a).

Fed. R. Civ.

A dispute is “genuine” if it could reasonably be

resolved in either party’s favor at trial.

See Estrada v. Rhode

Island, 594 F.3d 56, 62 (1st Cir. 2010) (citing Meuser v. Fed.
Express Corp., 564 F.3d 507, 515 (1st Cir. 2009)).

A fact is

“material” if it could sway the outcome under applicable law.
Id. (citing Vineberg v. Bissonnette, 548 F.3d 50, 56 (1st Cir.
2008)).

In analyzing a summary judgment motion, the court “views

all facts and draws all reasonable inferences in the light most

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favorable to the non-moving party.”

Id.

The following facts are

set forth accordingly.
II.

Background
On November 26, 2002, plaintiff Haralambos Gikas purchased

property at 10 Maplecrest in Newmarket, New Hampshire.

Although

the record does not reflect the purchase price,1 Gikas testified
that he made an initial down payment that, when combined with
closing costs, totaled around $113,000.

Less than a week later,

on December 2, 2002, Gikas executed a promissory note in the
amount of $165,000 in favor of SIB Mortgage Corporation.

The

note was secured by a mortgage on the Newmarket property; the
named mortgagee was defendant Mortgage Electronic Registration
Systems, Inc., or “MERS,” acting “as a nominee for [SIB] and
[its] successors and assigns.”
At some point, SIB indorsed Gikas’s note in blank, and
defendant JPMorgan Chase Bank, N.A. began servicing his loan on
behalf of the noteholder.

The precise timeline of these events

is unclear, but Chase was servicing the loan at least by
September 2008, when it sent Gikas a notice of default informing

1

In his memorandum, Gikas represents that the purchase price
was $265,000; though the court has no reason to doubt this
representation, Gikas has identified no evidence substantiating
it. In any event, the purchase price is immaterial to the issues
before the court.
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him that, if he did not submit a payment of $1,923.75 within 30
days, foreclosure action would begin.

Over the next nine months,

Chase sent Gikas a series of similar notices, but did not
foreclose as threatened.

By June 2009, Gikas was nearly $5,000

in arrears, and on June 13, Chase informed him that if he did not
submit a payment of $4,892.49 within 32 days, it would accelerate
the maturity of the loan and commence foreclosure.

Gikas did not

make this payment.
Again, however, Chase did not foreclose.

Instead, in

November 2009, it sent Gikas a letter informing him of his
potential eligibility for a loan modification under the federal
government’s Home Affordable Modification Program, or “HAMP.”
The letter enclosed a customized “Trial Period Plan” (“TPP”), and
went on to explain that if Gikas returned an executed TPP and
otherwise met the HAMP eligibility requirements, he could qualify
for a modification.

Among other things, the letter explained,

Gikas would need to submit documents–-which were identified in
the letter-–verifying his income, and to make a series of reduced
mortgage payments.

Once he had done so, and Chase had confirmed

his eligibility for a modification under HAMP, Chase would then
“finalize [his] modified loan terms and send [him] a loan
modification agreement.”
23-8) at 5.

Letter of Nov. 20, 2009 (document no.

Similarly, the TPP itself explained that if Gikas
4

did “not provide all information and documentation required by
[Chase], the [note and mortgage] will not be modified and this
Plan will terminate.”

Id. at 9, ¶ 2(F).

Gikas signed the TPP and returned it to Chase along with a
HAMP “Hardship Affidavit,” which certified that he would “provide
all requested documents” and, like the TPP, acknowledged that if
he did “not provide all of the required documentation, [Chase]
may cancel the [modification] and may pursue foreclosure.”
Hardship Aff. (document no. 23-9) at 2.

Gikas did not, however,

provide the income documentation identified in the cover letter,
prompting Chase to send him a letter in January 2010 requesting
that information again, and warning him that his modification
might be denied if he did not provide it within fifteen days.
Gikas claims he did not receive this letter, and thus did not
submit documents in response.

A month later, Chase sent him a

substantially similar letter; again, though, Gikas claims he did
not receive it, and thus did not respond.

Although Gikas made

the payments required under the TPP, in August 2010, Chase sent
him a letter stating that it could not offer him a modification
under HAMP “because you did not provide us with the documents we
requested.”

Notice of Expiration (document no. 23-12) at 1.

The following month, MERS, as nominee for SIB, assigned the
mortgage to Federal National Mortgage Association, better known
5

as “Fannie Mae”.

That same day, Fannie Mae, through counsel,

sent Gikas a Notice of Foreclosure Sale informing him that it had
scheduled a sale of the Newmarket property for September 29,
2010.2

Gikas claims he did not receive the notice, which

contained language informing him of his right to petition the
Superior Court to enjoin the sale.
479:25, II.

See N.H. Rev. Stat. Ann. §

He therefore did not file such a petition, and the

sale went forward as scheduled.

The high bidder at auction was a

third party, Maureen Staples, who purchased the property for
$165,670.
Gikas filed this action against Chase, MERS, and SIB in
Rockingham County Superior Court on November 7, 2011.
MERS removed the action to this court.

Chase and

See 28 U.S.C. § 1441.

Following removal, Gikas amended his complaint to assert six
counts against those two defendants.3

On the defendants’ motion,

2

On three consecutive weeks leading up to the sale, Fannie
Mae also published notice of the sale in the Manchester Union
Leader, which, foreclosure counsel attests, is “a newspaper of
statewide circulation and general circulation within” Newmarket.
Lamper Aff. (document no. 23-17) at 2, ¶ 6. Gikas’s objection
claims that the Union Leader “is not generally read in the Town
of Newmarket,” Memo. in Supp. of Obj. (document no. 26-1) at 6-7
& n.1, but cites only inapposite deposition testimony in support
of this assertion (which the court finds somewhat dubious). But
even if a genuine dispute were to exist as to this fact, it is
immaterial to the court’s resolution of defendants’ motion.
3

SIB was also named as a defendant in the caption of the
amended complaint, but this appears to have been a holdover from
6

this court dismissed Count 3, a claim under the New Hampshire
Consumer Protection Act, N.H. Rev. Stat. Ann. § 358-A.
of June 6, 2012.

See Order

In due course, the defendants filed the present

motion, seeking summary judgment on the remaining five counts.
III.

Analysis
A.

Modification-related claims (Counts 1-2)

Counts 1 and 2 of the amended complaint seek recovery for
the defendants’ failure to provide Gikas with a permanent loan
modification.

Count 1 alleges that the defendants, “[b]y failing

to offer [Gikas] permanent HAMP modifications [sic],” breached
the TPP, or, in the alternative, broke a promise upon which Gikas
reasonably relied.

Am. Compl. (document no. 16) ¶¶ 49-50.

Count

2 similarly alleges that the defendants breached the implied
covenant of good faith and fair dealing by “failing to offer a
permanent modification.”4

Id. ¶ 53.

The defendants argue that

the initial complaint, as none of the counts of the amended
complaint are directed at SIB, and Gikas has voluntarily
dismissed his claims against SIB. See Notice of Voluntary
Dismissal (document no. 12).
4

Count 2 also alleges that the defendants breached the
covenant by “foreclosing upon [Gikas’s] home when he had no
actual notice and could not oppose the foreclosure before sale
was made to a third person, and in allowing sale of the home at
an unreasonably and unconscionably low sales price.” Am. Compl.
(document no. 16) ¶ 53. These theories do not entitle Gikas to
relief for the reasons set forth in the following section.
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they are entitled to summary judgment on this claim, pointing out
that Gikas failed to provide the documents Chase had requested,
which, as the TPP and Hardship Affidavit that he signed both
unambiguously stated, entitled Chase to terminate the TPP.

The

court agrees.
As an initial matter, the court observes that the law does
not impose any generalized duty on lenders or servicers to modify
or restructure a loan.

See, e.g., Ruivo v. Wells Fargo Bank,

N.A., 2012 DNH 191, 12 (noting that the New Hampshire Supreme
Court “has never held that a bank has a tort duty to entertain a
borrower’s application to modify a lawful loan agreement” and
declining to recognize such a duty); L’Esperance v. HSBC Consumer
Lending, Inc., 2012 DNH 104, 54 (refusing to recognize “the novel
proposition that a loan servicer has an enforceable tort duty to
modify loans”); cf. also Moore v. Mortg. Elec. Registration Sys.,
Inc., 848 F. Supp. 2d 107, 129-30 (D.N.H. 2012) (“[T]he covenant
of good faith and fair dealing in a loan agreement cannot be used
to require the lender to modify or restructure the loan.”).

If

either of the defendants had any obligation to modify Gikas’s
loan, then, that obligation necessarily arose from the terms of
the TPP (which contain the only arguable promise of a

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modification in the record that might support Counts 1 and 2).5
As the defendants have pointed out, though, those terms
unambiguously required them to provide Gikas with a permanent
modification only if he met several preconditions, one of which
was to provide certain documents at Chase’s request.

See Part

II, supra.
Gikas acknowledges that he failed to provide Chase with the
documents it requested.

He argues, however, that because he did

not receive Chase’s January and February 2010 letters asking him
to submit documentation of his income, the defendants could not
deny him a permanent modification for failing to do so.

But, as

discussed in Part II, supra, the cover letter Chase sent to Gikas
along with the TPP specifically listed a number of documents that
he would need to return along with the signed TPP.

See Letter of

Nov. 20, 2009 (document no. 23-8) at 3 (stating that “[t]o accept
this offer, and see if you qualify for a Home Affordable
Modification, send the items below to CHASE HOME FINANCE, LLC, no
later than DECEMBER 20, 2009” and providing a checklist of
documents).

Among those documents were a “[c]opy of the two most

recent pay stubs” (if Gikas was a salaried employee) or a “[c]opy

5

This is consistent with the discussion between the court
and counsel at the preliminary pretrial conference in this case.
See Order of Apr. 3, 2012 (“The breach of contract claim . . .
will be limited to the HAMP Trial Period Plan-based claim.”).
9

of the most recent quarterly or year-to-date profit/loss
statement” (if Gikas was self-employed), id.--the very same
documents referenced in Chase’s January and February 2010
letters.
It is undisputed that Gikas received the cover letter, as
evidenced by his submission of a signed TPP to Chase, and that he
nonetheless failed to submit the documents as directed.

That he

claims not to have received Chase’s later requests for the same
documents is immaterial.

Gikas has identified no language in the

TPP nor principle of law that required Chase to make multiple
requests for omitted documents.

Because Gikas did not fulfill

the preconditions to a modification under the terms of the TPP,
the defendants were not obligated to provide him with one.

See

Marquez v. Wells Fargo Bank, N.A., No. 12-cv-11725-RGS, 2013 WL
98533, *2-3 (D. Mass. Jan. 8, 2013) (dismissing TPP-based claims
where borrowers acknowledged that they failed to provide income
documentation).

Summary judgment is granted to the defendants on

Counts 1 and 2.
B.

Foreclosure-related claims (Counts 4-6)

Counts 4 through 6 of Gikas’s amended complaint all seek
recovery for the events surrounding the foreclosure of Gikas’s
mortgage.

Counts 4 and 5 allege that the defendants breached

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fiduciary duties owed to Gikas and violated N.H. Rev. Stat. Ann.
§ 479:25, the statute governing foreclosure by power of sale, by
“foreclos[ing] without [Gikas] having actual notice” and selling
the property “at an unconscionably low and unreasonable price.”
Am. Compl. (document no. 16) ¶ 62; see also id. ¶ 66.

Count 6

alleges that the defendants did not possess Gikas’s promissory
note, leaving them “with no standing to exercise foreclosure
under the mortgage.”

Id. ¶ 69.

The problem common to all three counts, as defendants point
out, is that Chase and MERS did not conduct the foreclosure;
Fannie Mae did.

In light of this undisputed fact, it is

difficult to see how Gikas can possibly recover from those
defendants for the alleged wrongs visited upon him during the
foreclosure.

He nonetheless argues that Chase may be held liable

for those wrongs because “it continued to service the loan at the
time of the foreclosure proceedings and events leading up to the
foreclosure sale,” Memo. in Supp. of Obj. (document no. 26-1) at
17, and that MERS may be held liable because it was the original
mortgagee and assigned the mortgage to Fannie Mae “apparently for
the sole purpose of foreclosing,” id. at 18.
These arguments are unavailing.

Under New Hampshire law, it

is the “mortgagee executing a power of sale,” not the servicer or
original mortgagee, which must observe “the statutory procedural
11

requirements” and “protect the interests of the mortgagor through
the exercise of good faith and due diligence” in the foreclosure
process.

Murphy v. Fin. Dev. Corp., 126 N.H. 536, 540 (1985);

see also N.H. Rev. Stat. Ann. § 479:25.

If those requirements

were not met, that was Fannie Mae’s doing, not the defendants’.
Gikas has identified no doctrine under which Fannie Mae’s
liability for that shortcoming can be imputed to Chase (its
agent) or MERS (its predecessor), nor is the court aware of any.
And it should (but, unfortunately, apparently cannot) go without
saying that whether or not Chase and MERS had standing to conduct
the foreclosure is entirely irrelevant to the validity of the
sale when they did not, in fact, conduct the foreclosure.

Cf.,

e.g., Crews v. Fannie Mae, No. 2:11-cv-11656, 2012 WL 642067, *4
(E.D. Mich. Feb. 8, 2012) (“Because Wells Fargo is the [entity]
that initiated the foreclosure, only Wells Fargo’s standing is
relevant.”).

Summary judgment is granted to defendants on Counts

4 through 6.
IV.

Conclusion
For the reasons set forth above, the defendants’ motion for

summary judgment6 is GRANTED.

The clerk shall enter judgment

accordingly and close the case.

6

Document no. 23.
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At oral argument, plaintiff orally renewed his motion to
amend the complaint to add a claim against Fannie Mae, which the
court previously denied.

See Order of Feb. 27, 2013.

For the

reasons set forth in its prior order, that motion is DENIED.
SO ORDERED.

Joseph N. Laplante
United States District Judge
Dated:
cc:

April 10, 2013

Shenanne Ruth Tucker, Esq.
Joseph Patrick Kennedy, Esq.

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