Bradley v. Wells Fargo Bank, N.A.
Filing
86
///ORDER granting in part and denying in part 77 Motion for Summary Judgment. So Ordered by Judge Paul J. Barbadoro.(jna) Modified on 3/3/2014 to add:///(mm).
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Jeffrey Bradley
v.
Civil No. 12-cv-127-PB
Opinion No. 2014 DNH 041
Wells Fargo Bank, N.A., et al.
MEMORANDUM AND ORDER
Jeffrey Bradley lost his home to foreclosure.
He
challenges the legality of the foreclosure proceedings and his
subsequent eviction.
I previously dismissed his claims against
the original mortgage lender, the initial assignee of the note
and mortgage, and one of the entities involved in servicing his
loan.
The remaining two defendants, Wells Fargo as Trustee for
a Pooling and Service Agreement (“PSA Trustee”), the foreclosing
mortgagee, and Ocwen Loan Servicing, LLC, the loan servicer at
the time of foreclosure, now move for partial summary judgment
against Bradley.
PSA Trustee also seeks summary judgment on its
counterclaim for a deficiency judgment.
I.
A.
BACKGROUND1
The Mortgage Loan
On November 5, 2004, Bradley obtained a loan of $143,500
1
The previous order granting dismissal provides a detailed
factual background. Bradley v. Wells Fargo Bank, N.A., 2013 DNH
173, 2-6 (Doc. No. 76). Here I focus on the facts most
pertinent to Bradley’s remaining claims.
from Ameriquest Mortgage Company secured by a mortgage on his
home in Epping, New Hampshire.
The note and mortgage provide
that a failure to make monthly payments on the loan constitutes
a default.
The mortgage includes an acceleration clause and the
right to invoke the statutory power of sale in the event of
default, with the lender “entitled to collect all expenses”
incurred in the sale, including fees for services performed in
connection with the default.
The note states that any notice
given to Bradley concerning the loan “will be given by
delivering it or by mailing it by first class mail to [Bradley]
at the [property secured by the loan] or at a different address
if [Bradley] give[s] the Note Holder a notice of [his] different
address.”
This provision applies unless a different form of
notice is required under applicable law.
B.
Doc. Nos. 77-3, 77-4.
Assignments
On November 12, 2004, Ameriquest assigned “all beneficial
interest” in the mortgage via a so-called “assignment in blank,”
with “[t]he critical lines that should contain the name and
address of the assignee . . . blank, but the notarization . . .
already completed.”
Doc. Nos. 78-1, 80-1.
The document was
notarized in Ameriquest’s home state of California.
At an
unknown later point, the assignment in blank was filled in with
Wells Fargo Bank, N.A. as Trustee (“Wells Fargo Trust”) as the
2
assignee.
Wells Fargo Trust subsequently recorded the
assignment in Rockingham County, New Hampshire on April 6, 2006.
On December 23, 2010, Wells Fargo Trust assigned the mortgage to
PSA Trustee.
16, 2011.
This second assignment was recorded on February
Doc. No. 77-6.
The “signatures” on this document are
in the form of initials, not full names.
C.
Performance, Foreclosure, and Post-foreclosure Proceedings
Bradley stopped making payments on his loan in the fall of
2005 because “the defendants refused to accept” his payments.
Doc. Nos. 79, 80-2.
On October 16, 2006, Bradley attempted to
refinance his loan, granting a release to his loan servicers and
the note and mortgage holder to provide any information about
his account to Complete Mortgage Company.
Bradley’s plans to
refinance were thwarted when HomEq, the company servicing his
loan, “either would not or could not give [Complete Mortgage]
the pay-off amount.”
Doc. No. 79.
In 2011, PSA Trustee accelerated Bradley’s loan obligations
and exercised its statutory power of sale.
Doc. No. 77-2.
A
foreclosure sale was initially scheduled for March 9, 2011, then
twice postponed, first to April 6 and then to April 27.
On
February 8, 2011, the bank sent Bradley a letter via certified
mail to his home address notifying him of the initial
foreclosure date.
Doc. Nos. 77-2, 83-5.
3
The letter included a
copy of the Notice of Sale and offered Bradley several methods
to request reinstatement or payoff of the loan.
Postponement
letters were also sent to Bradley at the same address on March 8
and April 5, 2011.
Doc. Nos. 77-2, 83-6.
Bradley never
actually received any of these letters and claims that he had no
prior notice of the sale.2
At the foreclosure sale, which occurred on April 27, 2011,
PSA Trustee – the foreclosing party - purchased Bradley’s home
for $175,000.
Doc. No. 83-7.
The foreclosure deed is dated May
18, 2011, but it was not recorded until July 20, 2011.
On May 1
and May 14, PSA Trustee and Ocwen, through hired agents, entered
the property, locked Bradley out of his home by placing a
padlock on his door, and destroyed his possessions, including
many irreplaceable items of sentimental value.
On October 14,
2011, Ocwen, acting on behalf of PSA Trustee, sold the property
to an unrelated third party for $95,099.00.
In 2006, Bradley’s
property was determined to have an appraised value of $285,000.
Doc. No. 79.
2
Bradley alleges that he was often absent from his home caring
for his elderly parents during the period in question. He was
also in the process of separating from his wife, who left the
home on or about May 1, 2011.
4
II.
STANDARD OF REVIEW
Summary judgment is appropriate when the record reveals “no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.”
56(a).
Fed. R. Civ. P.
An issue is considered genuine if the evidence allows a
reasonable jury to resolve the point in favor of the nonmoving
party, and a fact is considered material if it “is one ‘that
might affect the outcome of the suit under the governing law.’”
United States v. One Parcel of Real Prop. with Bldgs., 960 F.2d
200, 204 (1st Cir. 1992) (quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986)).
In ruling on a motion for
summary judgment, I examine the evidence in the light most
favorable to the nonmoving party.
Navarro v. Pfizer Corp., 261
F.3d 90, 94 (1st Cir. 2001).
The party moving for summary judgment bears the initial
burden of identifying the portions of the record it believes
demonstrate an absence of disputed material facts.
Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Celotex
In determining what
constitutes a material fact, “we safely can ignore ‘conclusory
allegations, improbable inferences, and unsupported
speculation.’”
Carroll v. Xerox Corp., 294 F.3d 231, 237 (1st
Cir. 2002) (quoting Medina–Munoz v. R.J. Reynolds Tobacco Co.,
896 F.2d 5, 8 (1st Cir. 1990)).
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III.
ANALYSIS
Bradley challenges the lawfulness of the foreclosure sale
and argues that PSA Trustee and Ocwen improperly evicted him
after the property was sold.
I resolve defendants’ challenges
to these claims and then turn to PSA Trustee’s counterclaim.
A.
Foreclosure Claims
Bradley bases his challenges to the foreclosure sale on two
distinct grounds.
First, he argues that PSA Trustee lacked the
power to foreclose because the assignments by which it acquired
the mortgage were invalid.
Second, he argues that he did not
receive sufficient notice of the foreclosure sale.
1.
The Assignments
Bradley contends that PSA Trustee never acquired the right
to foreclose because the mortgage assignments contain flaws that
make them unenforceable.
Defendants respond by arguing that
Bradley lacks standing to challenge either assignment because
the flaws he points to at most make an assignment voidable at
the election of a party to the assignment.
I agree with the
defendants.
A mortgagor may not challenge an assignment of the mortgage
to a third party based on alleged deficiencies that merely make
the assignment voidable at the election of a party to the
6
assignment.
Wilson v HSBC Mortg. Servs., Inc., No. 13-1298,
2014 WL 563457, at *5-6 (1st Cir. 2014) (Massachusetts law);
Galvin v. EMC Mortg. Corp., No. 12-cv-320-JL, 2013 WL 1386614,
at *9 (D.N.H. Apr. 4, 2013) (New Hampshire law).
In this case,
Bradley claims that the assignments are invalid because:
(1)
the first assignment does not provide enough information about
the trust that benefitted from the assignment; (2) the first
assignment was executed in blank and improperly notarized; (3)
the second assignment was signed by both parties with initials
rather than full names; and (4) the second assignment involved a
Pooling and Service Agreement that, by its own terms, could no
longer accept mortgages.
At most, these alleged deficiencies
make the assignments voidable rather than void.
See Woods v.
Wells Fargo Bank, N.A., 733 F.3d 349, 354 (1st Cir. 2013)
(“claims that merely assert procedural infirmities in the
assignment of a mortgage, such as a failure to abide by the
terms of a governing trust agreement, are barred for lack of
standing.”).
See also Calef v. Citibank, N.A., 2013 DNH 023, 11
n.4 (violations of a Pooling and Service Agreement render
assignment voidable).
Because Bradley was not a party to either
assignment, he lacks standing to challenge the foreclosure based
on any of the
alleged deficiencies.
7
2.
Notice
Bradley next argues that the foreclosure sale was improper
because the defendants failed to give him sufficient notice of
the foreclosure sale.
His principal claim is that the notice
was defective because he did not receive actual notice.
In the
alternative, he argues that the defendants did not give him
sufficient notice when the foreclosure sale was twice postponed,
even if actual notice is not required, because he was not
notified of the postponement by certified or registered mail.
New Hampshire provides strict procedural guidelines
regarding the timing and content of notice for a non-judicial
foreclosure sale.
The statute requires that the foreclosing
party send notice to the mortgagor’s last known address by
registered or certified mail at least twenty-five days before
the sale.
N.H. Rev. Stat. Ann. § 479:25.
It does not, however,
require that the mortgagor receive actual notice.
Dugan v.
Manchester Fed. Sav. & Loan Ass’n, 92 N.H. 44, 23 A.2d 873, 875
(1942) (“The statute does not provide that proof receipt of
notice sent by registered mail is a prerequisite to a right of
foreclosure.”).
PSA Trustee and Ocwen have submitted evidence that on
February 8, 2011, they sent a certified letter to Bradley’s home
notifying him of the proposed foreclosure sale.
8
Bradley does
not contend that he asked either defendant to send
correspondence to him at any other address, as he could have
done pursuant to his loan agreement.
Accordingly, defendants
fulfilled their statutory obligation to notify him of the
foreclosure sale even though Bradley never received actual
notice.
Bradley alternatively claims that defendants are not
entitled to summary judgment on the foreclosure claims because
they did not notify him by certified or registered mail when the
foreclosure sale was postponed.
In Armille v. Lovett, 100 N.H.
203, 206 (1956), the New Hampshire Supreme Court concluded that
when a properly noticed and advertised foreclosure sale is
postponed to a definite hour and day, “no new notice or
advertisement is required and it is sufficient if the date and
time of the postponed sale are either announced at the latest
proposed sale of which due notice has been given or stated in a
notice of adjournment posted on the premises to be foreclosed.”
Defendants have presented evidence that notices of postponement
were mailed to Bradley, but they do not claim that they sent the
notices by certified or registered mail, as is required when a
foreclosure sale is initially scheduled.
Nor do they contend
that they satisfied their duty to notify Bradley of the
postponements by announcing or posting the new dates and times
9
for the sale.
Accordingly, I deny defendants’ motion for
summary judgment with respect to Bradley’s foreclosure claims.
B.
Eviction Claims
Bradley presents several legal arguments to support his
contention that defendants are liable for damages resulting from
his eviction even if the foreclosure sale was properly
conducted.
Defendants do not challenge Bradley’s primary claim
that they are liable because they failed to comply with the
notice to quit process required by N.H. Rev. Stat. Ann.
§ 540:12.
See, e.g., Greelish v. Wood, 154 N.H. 521, 528 (2006)
(recognizing a cause of action for damages for a failure to
comply with the notice to quit process).
Accordingly, I only
consider Bradley’s alternative theories of liability.
1.
Trespass
Bradley argues that defendants are liable for trespass
because they had no right to enter his property following the
foreclosure sale until the “deed was recorded, and all other
necessary legal process consummated.”
Doc. No. 38.
I disagree.
Bradley bases his argument on N.H. Rev. Stat. Ann.
§ 479:26, which provides that a purchaser at a foreclosure sale
does not acquire title to the foreclosed premises until the
foreclosure deed is recorded.
The problem with this argument is
that it mistakenly assumes that title remains with the mortgagor
10
in foreclosure until it passes to the purchaser.
The New
Hampshire Supreme Court has determined, however, that a
mortgagor in foreclosure loses both equitable and legal title as
soon as the foreclosure sale is completed, regardless of when
the foreclosure deed is recorded.
382, 393 (1996).
Barrows v. Boles, 141 N.H.
Because Bradley lost title to the property
immediately after the foreclosure sale, he became a tenant at
sufferance, and New Hampshire law has long recognized that a
tenant at sufferance may not maintain a trespass claim against
his landlord.
89 (1881).
Greelish, 154 N.H. at 524; Weeks v. Sly, 61 N.H.
Thus, if Bradley has a claim, it must be based on
N.H. Rev. Stat. Ann. § 540:12 rather than the common law of
trespass.
2.
Conversion
Bradley claims that defendants committed the tort of
conversion by padlocking the door to his house and destroying
his “personal effects, household goods, and sentimental
possessions.”
Defendants offer no arguments in response, and I
thus deny their motion for summary judgment on this claim.
3.
Infliction of Emotional Distress
Bradley argues that defendants maliciously destroyed his
possessions, including irreplaceable items of sentimental value,
thereby “intentionally or recklessly caus[ing him] severe
11
emotional distress.”
A defendant is liable for intentional
infliction of emotional distress if he or she, “by extreme and
outrageous conduct, intentionally or recklessly cause[d] severe
emotional distress to another.”
Tessier v. Rockefeller, 162
N.H. 324, 341 (2011) (alteration in original) (quoting Morancy
v. Morancy, 134 N.H. 493, 496 (1991)).
The conduct must be “so
outrageous in character, and so extreme in degree, as to go
beyond all possible bounds of decency, and to be regarded as
atrocious, and utterly intolerable in a civilized community.”
Id. (quoting Mikell v. Sch. Admin. Unit No. 33, 158 N.H. 723,
729 (2009)).
Defendants contend that their alleged conduct was
not sufficiently extreme or outrageous as a matter of law.
The ordinary activities of a bank foreclosing on a mortgage
do not generally meet the “extreme and outrageous” standard.
See Beaudette v. Bank of Am., Inc., No. 11-cv-569-JD, 2012 WL
139223, at *2 (D.N.H. Jan. 18, 2012)(citing, among other cases,
Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1046
(9th Cir. 2011); Brown v. First Nationwide Mortg., 206 Fed.
Appx. 436, 443 (6th Cir. 2006)).
Bradley’s claim, however,
centers on a post-foreclosure self-help eviction and the
subsequent destruction of his possessions.
Courts have found
that changing a tenant at sufferance’s locks post-foreclosure
after “reasonably attempting to discern occupancy” is
12
insufficient to state a claim.
See, e.g., Vakili v. Wells Fargo
Home Mortg. Inc., No. CV-212-104, 2013 WL 3868170, at *6 (S.D.
Ga. July 24, 2013).
Moreover, this court has found a claim to
be insufficient where, after repeated warnings, the owner of a
camper locked out his or her tenants and destroyed some items
they left behind after the tenants failed to make payments
required by their contract.
31-32.
Foley v. Town of Lee, 2012 DNH 081,
Here, there is no evidence that defendants complied with
the statutory notice to quit process or otherwise made a
reasonable attempt to determine occupancy before they allegedly
locked Bradley out and destroyed all of his possessions,
including irreplaceable sentimental items.
Although I
acknowledge that the “extreme and outrageous” standard
establishes a high bar, I consider this to be a close case in
which a reasonable jury could potentially find PSA Trustee’s and
Ocwen’s alleged conduct to be extreme and outrageous.
Using
self-help to destroy someone’s possessions without prior actual
notice and despite the availability of legal alternatives could
be viewed as behavior utterly intolerable in a civilized
society.
I thus deny defendants’ motion for summary judgment on
the intentional infliction of emotional distress claim.
Bradley also attempts to state a claim for negligent
infliction of emotional distress.
13
To plead a viable claim on
this theory, Bradley must allege (1) causal negligence by PSA
Trustee and Ocwen; (2) foreseeability; and (3) serious mental
and emotional harm accompanied by objective physical symptoms.
See Tessier, 162 N.H. at 342.
Bradley has provided no evidence
of objective physical symptoms accompanying his alleged mental
and emotional distress.
I thus grant defendants’ motion for
summary judgment on Bradley’s negligent infliction of emotional
distress claim.3
4.
Consumer Protection Act
Bradley argues that defendants are liable under the New
Hampshire Consumer Protection Act (“CPA”) for failing to comply
with lawful eviction procedures under the state’s landlordtenant law.
See N.H. Rev. Stat. Ann. § 358-A:10.
3
New
Bradley also alleges that defendants’ failure to provide a
payoff amount when requested by a third party lender
“negligently interfered with the plaintiff’s prospective
contract with said lender.” As defendants’ correctly argue, New
Hampshire does not recognize a claim for negligent interference
with contract. Rand v. Town of Exeter, 2013 DNH 133, 28 n.8
(citing Ferrero v. Coutts, 134 N.H. 292, 295 (1991)).
Furthermore, the parties do not cite, and I am not aware of, any
authority recognizing a New Hampshire tort for negligent
interference with advantageous business relations. See id.
Bradley also alleges that defendants “intentionally and
improperly interfered with the contract.” Doc. No. 78-1. As
defendants note, however, New Hampshire’s three year statute of
limitations bars this claim. See N.H. Rev. Stat. Ann. §
508:4(I). The alleged failure to provide a payoff amount
occurred in 2006 or shortly thereafter – well over three years
prior to Bradley’s initiation of this suit.
14
Hampshire’s statutory scheme governing landlord-tenant
relationships expressly provides for damages pursuant to the
CPA.
Id. § 540-A.
Defendants argue, however, that section 540-
A is inapplicable on these facts and thus the CPA does not
apply.
Section 540-A:4(IX) of the New Hampshire Revised Statutes
states that “[a]ny landlord or tenant who violates [any
provision of] RSA 540-A . . . shall be subject to” the civil
remedies set forth in Section 358-A:10, the CPA’s private
enforcement provision.
The statute, however, applies only to
“landlords,” defined as “an owner, lessor or agent thereof who
rents or leases residential premises . . . to another person,”
and “tenants,” defined as “a person to whom a landlord rents or
leases residential premises.”
Evans v. J Four Realty, LLC, 164
N.H. 570, 572 (2013) (citing N.H. Rev. Stat. Ann. § 540-A:1).
In Evans, the New Hampshire Supreme Court held that section 540A only applies following “the termination of a conventional
leasehold relationship.”
Id. at 576 (citing Hill v.
Dombrowolski, 125 N.H. 572, 576 (1984) (holding that section
540-A “applies only to tenancies that have resulted from lease
or rental agreements”)).
Defendants have shown that no such
relationship existed between themselves and Bradley.
15
Bradley nevertheless claims that evicting him and
destroying his property violates the CPA, adding that “even if
the defendants are correct in [stating] that RSA 540A [sic] does
not apply, defendants were not entitled to use self help.”
Bradley has failed to explain his conclusory assertion that a
mortgagee can be liable under the CPA for a wrongful eviction
even though it is not subject to the CPA pursuant to section
540-A.
Accordingly, I grant defendant’s motion for summary
judgment on the CPA claim.
C.
The Counterclaim
PSA Trustee also seeks a deficiency judgment against
Bradley for his failure to pay the amount due on the loan.
No. 58.
Doc.
PSA Trustee argues that the foreclosure price was fair
and reasonable under the circumstances and that it therefore can
recover the difference between the proceeds from the foreclosure
sale and the balance due on the note, as well as accrued
interest and other damages and expenses.
PSA Trustee bases its request for a deficiency judgment on
an affidavit that purports to show that Bradley owed $258,223.60
when the foreclosure occurred.
Bradley challenges the affidavit
and, in addition, claims that he cannot be held liable for all
of the late charges and interest payments included in the
proposed deficiency judgment because PSA Trustee and its
16
predecessors unreasonably delayed the foreclosure sale in breach
of the duty of good faith and fair dealing.
I deny PSA
Trustee’s motion for summary judgment on the deficiency
counterclaim because I determine that material facts pertaining
to the motion remain in genuine dispute.
In denying the motion,
I take no position on Bradley’s good faith and fair dealing
argument.
IV.
CONCLUSION
For the reasons set forth above, I grant defendants’ motion
for summary judgment (Doc. No. 77) in part and deny it in part.
The only claims that remain are:
(1) Bradley’s claim that he
did not receive proper notice of the foreclosure sale (Count
IV); (2) Bradley’s claim that defendants failed to comply with
the notice to quit process specified in N.H. Rev. Stat. Ann. §
540:12 (Count I); (3) Bradley’s claim for conversion (Count
III); (4) Bradley’s claim for intentional infliction of
emotional distress (Count III); and (5) PSA Trustee’s
counterclaim for a deficiency judgment.
SO ORDERED.
/s/Paul Barbadoro
Paul Barbadoro
United States District Judge
March 3, 2014
17
cc:
Ruth A. Hall, Esq.
Terrie L. Harman, Esq.
Christopher J. Fischer, Esq.
William Philpot, Jr., Esq.
John S. McNicholas, Esq.
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