Sykes v. RBS Citizens, N.A., et al
Filing
37
ORDER granting 26 Motion for Leave to File Amended Complaint; granting 34 Motion for Leave to File Reply to Opposition; granting 35 Motion for Leave to File Reply to Opposition; terminating as moot 8 Motion to Dismis s for Failure to State a Claim; terminating as moot 15 Motion to Dismiss for Failure to State a Claim. Sykes shall file his replies on or before March 11, 2014, and shall file the amended complaint as allowed in this order on or before March 28, 2014. So Ordered by Judge Joseph A. DiClerico, Jr.(gla)
UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEW HAMPSHIRE
Lewis B. Sykes, Jr.
v.
Civil No. 1:13-cv-334-JD
Opinion No. 2014 DNH 045
RBS Citizens, N.A. et al.
O R D E R
Lewis B. Sykes, Jr. brought suit in state court against RBS
Citizens, N.A.(“RBS”); CCO Mortgage Corporation (“CCO”); Federal
National Mortgage Association (“FNMA”); Bank of America, N.A.
(“Bank of America”); Bank of New York Mellon (“BNYM”); and
Citibank, N.A. (“Citibank”), alleging claims arising from the
defendants’ involvement in the foreclosure of his home.
Bank of
America removed the case to this court, and the defendants, other
than Citibank, moved to dismiss the complaint.
In response, Sykes moved for leave to amend his complaint to
add factual allegations and to add claims for violation of the
Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq.,1 fraud,
breach of the implied covenant of good faith and fair dealing,
and conversion.
RBS, CCO, and FNMA (collectively, “mortgage
defendants”) filed an objection, and Bank of America and BNYM
(collectively, “bank defendants”) filed a separate objection.2
1
Sykes’s proposed TILA claim is based on the defendants’
alleged violation of 15 U.S.C. § 1641, which was added to TILA in
2009. See Helping Families Save Their Homes Act of 2009, Pub.L.
No. 111-22 § 404, 123 Stat. 1632, 1658.
2
Default was entered against Citibank on January 6, 2014.
Both objections argue that granting Sykes leave to amend the
complaint would be futile.3
Sykes moved for leave to file replies.
filed an objection.
The bank defendants
Sykes’s motions for leave to file replies
(document nos. 34 & 35) are granted,4 and the replies have been
considered in deciding the motion for leave to amend.5
3
Although this is the first time Sykes has sought to amend
his complaint, the motion for leave to amend was filed more than
twenty-one days after the defendants filed their motions to
dismiss the original complaint. Therefore, Sykes was not
entitled to amend the complaint as a matter of course under
Federal Rule of Civil Procedure 15(a)(1), and he was required to
obtain the defendants’ consent or the court’s leave to file an
amended complaint under Rule 15(a)(2).
4
In their objection, the bank defendants request permission
to file a surreply if the court grants Sykes’s motion for leave
to file a reply. “[L]eave to file a surreply will only be
granted under extraordinary circumstances.” LR 7.1(e)(3). Such
extraordinary circumstances are not present here. Therefore, the
bank defendants are not permitted to file a surreply.
5
Sykes argues in his reply to the mortgage defendants’
objection that the objection, which was filed on January 31,
2014, should not be considered because it was filed more than
fourteen days after Sykes filed his motion for leave to file an
amended complaint on January 14, 2014. See LR 7.1(b). Sykes’s
argument fails to factor in the additional three days allowed
under Federal Rule of Civil Procedure 6(d) (providing for three
additional days after a period would otherwise expire when
service is effectuated, as here, by Federal Rule of Civil
Procedure 5(b)(2)(E)). Even if the mortgage defendants’
objection were untimely, the court would consider the objection
in the interests of justice. See LR 1.3(b) (“The court may
excuse a failure to comply with any local rule whenever justice
so requires.”).
2
Standard of Review
Under Federal Rule of Civil Procedure 15(a)(2), “[t]he court
should freely give leave [to amend the complaint] when justice so
requires.”
The liberal standard under Rule 15(a)(2) does not
mean that all requests to amend will be granted.
Manning v.
Boston Med. Ctr. Corp., 725 F.3d 34, 61 (1st Cir. 2013).
Instead, “a district court may deny leave to amend when the
request is characterized by undue delay, bad faith, futility, or
the absence of due diligence on the movant’s part.”
Nikitine v.
Wilmington Tr. Co., 715 F.3d 388, 390 (1st Cir. 2013).
A proposed amendment to a complaint is futile if, as
amended, “the complaint still fails to state a claim.”
Abraham
v. Woods Hole Oceanographic Inst., 553 F.3d 114, 117 (1st Cir.
2009).
Therefore, review for futility is identical to review
under Federal Rule of Civil Procedure 12(b)(6).
Edlow v. RBW,
LLC, 688 F.3d 26, 40 (1st Cir. 2012).
For purposes of a motion to dismiss, the court “separate[s]
the factual allegations from the conclusory statements in order
to analyze whether the former, if taken as true, set forth a
plausible, not merely conceivable, case for relief.”
Juarez v.
Select Portfolio Servicing, Inc., 708 F.3d 269, 276 (1st Cir.
2013) (internal quotation marks omitted).
“If the facts alleged
in [the complaint] allow the court to draw the reasonable
inference that the defendants are liable for the misconduct
alleged, the claim has facial plausibility.”
quotation marks omitted).
3
Id. (internal
Background
On August 31, 2005, Lewis Sykes and his mother, Dorothy W.
Sykes, entered into a loan with CCO for $225,000.
The loan was
secured by a mortgage on Lewis and Dorothy’s home at 1047
Banfield Road in Portsmouth, New Hampshire.
At some point
thereafter, Lewis entered into a loan with Bank of America, which
was secured by a second mortgage on the home.
In November and December of 2008, Lewis Sykes received
mortgage bills with a $400 charge in addition to his required
monthly mortgage payment.
Sykes sent CCO several letters over
the next few months to ask why he was charged an additional $400,
but he did not receive an explanation.
Sykes alleges that
because CCO failed to explain the additional $400 charge, he
stopped making his monthly mortgage payments.6
He also alleges
that he did not receive a monthly billing statement after
December of 2008.
CCO eventually responded to Sykes’s inquiries via letter on
January 6, 2009,5 but the letter either did not address or did
not resolve to Sykes’s satisfaction the nature of the $400
charge.
Sykes alleges that CCO “never explained nor resolved the
6
Although the proposed amended complaint (“amended
complaint”) does not specify when Sykes stopped making his
monthly mortgage payments, Sykes alleges that he was twenty-one
days late on his payment as of December 8, 2008. See Pr. Am.
Compl. (“Compl.”) ¶ 92.
5
Sykes alleges that the letter was dated January 6, 2008,
but he suggests that the incorrect year was a typographical
error.
4
issue of the additional $400 charge.”
Compl. ¶ 22.
Sykes “made
multiple requests for information about his mortgage” over the
next several months after receiving CCO’s letter, but did not
receive any response.
Id. ¶ 42.
Although Sykes was unaware of it at the time, CCO assigned
the mortgage to FNMA on July 30, 2009.
Despite this assignment,
Sykes claims that he received two documents after that date which
led him to believe that CCO still held the mortgage.
The first
was an annual escrow account disclosure statement from CCO dated
September 23, 2009.
The second was a letter dated September 28,
2009, from RBS offering to modify Sykes’s loan and informing him
that a foreclosure sale would be conducted on October 2, 2009.6
Sykes interpreted the second letter to represent that CCO was the
owner of the mortgage.7
On October 2, 2009, Sykes, while mowing the lawn at his
home, noticed several people and cars parked at the end of the
driveway.
Sykes approached the group and learned that his home
was being sold at a foreclosure auction that day.
BNYM purchased
Sykes’s home at the auction but, as discussed below, Sykes was
led to believe that Bank of America, and not BNYM, purchased the
6
Sykes alleges that he did not receive the letter until
after October 2, 2009.
7
The letter stated: “I have spoken with a Senior Associate
from CCO Mortgage and I have been informed that we are proceeding
with foreclosure accordingly. A sale date has been set for
October 2, 2009 at 3pm. If you would like to be considered for a
loan modification please complete the attached financial borrower
statement.” Compl. ¶ 43.
5
home.
Sykes alleges that he “learned by observing the auction
that CCO [] was the seller” of the property at the auction, but
that the foreclosure deed lists FNMA as the seller.
Compl. ¶ 50;
see id. ¶ 54.
In October of 2009, Robert Kelley, a real estate broker
working on behalf of Bank of America, delivered a “cash for keys”
written proposal to Sykes.
Compl. ¶ 58.
The proposal stated
that “BAC Home Loans Servicing, LP, a subsidiary of Bank of
America, N.A. acquired [Sykes’s home] through foreclosure sale
and subsequent Trustee’s Deed.”
Id.
Sykes rejected the proposal
because it required him to move out of the home by a certain date
and he did not believe he would be able to move out in time.
Sykes contacted Bank of America several times after that date to
try to repurchase or rent the home, but Bank of America did not
respond.
On November 2, 2009, one or more of the defendants left an
undated eviction notice on Sykes’s front door.
The eviction
notice listed the evicting entity as “Bank NY Mellon f/k/a The
Bank of New York, As Trustee for CWHEQ Revolving Home Equity Loan
Trust, Series 2007-C of 10561 Telegraph Road, Glen Allen, VA
23059.”
Compl. ¶ 61.
Sykes alleges that the address on the
eviction notice is the address of CCO Mortgage.
Sykes asked
Kelley why the eviction notice listed BNYM, and not Bank of
America, as the owner of the property, and Kelley explained that
it was a clerical error.
6
In late November of 2009, Kelley caused the utilities at the
home to be shut off.
The lack of heat in the home caused the
pipes to freeze and burst, damaging the home and Sykes’s
property.
Sykes vacated the home on November 25, 2009.
BNYM instituted a possessory action in Portsmouth District
Court in December of 2009 (“possessory action”).
Sykes was not
aware of the possessory action until April of 2011 because notice
of the action was left on the door of the home he had vacated in
November.
The district court issued a landlord-tenant writ to
BNYM in December of 2009 and a writ of possession to Citibank on
January 22, 2010.
The home was sold to a third party on May 27,
2010.
On April 25, 2011, after Sykes had filed a complaint against
Bank of America with the Office of the Comptroller of the
Currency, Sykes received from Bank of America notices of default,
acceleration, and foreclosure; the foreclosure deed; the
landlord-tenant writ; and the writ of possession.
The notice of
default was dated December 8, 2008, a date on which CCO held the
mortgage.
Sykes alleges that until he received these notices, he
did not know the reasons for the foreclosure and had not been
informed of his rights provided in the notice of default.
Sykes alleges that after his eviction, he was unable “to
find housing which could accommodate his equipment and tools
necessary to continue his employment . . . .”
Compl. ¶ 105.
also alleges that the foreclosure and eviction negatively
impacted his mental health, and that he was diagnosed with
7
He
depression, anxiety, and post traumatic stress disorder in the
summer of 2010.
Sykes alleges that because of his mental health
issues, “he did not and could not assert his legal rights and
bring legal action against responsible parties, many of whom were
still unknown,” until now.
Id. ¶ 109.
Discussion
In the original complaint, Sykes alleged claims for breach
of contract (Count I); wrongful foreclosure (Count II); wrongful
eviction (Count III); violation of the Real Estate Settlement
Procedures Act, 12 U.S.C. § 2601 et seq., (“RESPA”) (Count IV);
and civil conspiracy (Count V).
The mortgage defendants and the
bank defendants moved to dismiss the original complaint.
Sykes seeks to amend his complaint to add claims for
violation of TILA, 15 U.S.C. § 1641 (Count V)8; fraud (Count
VII); breach of the implied covenant of good faith and fair
dealing (Count VIII); and conversion (Count IX).
Sykes contends
that granting him leave to amend the complaint will not prejudice
the defendants or result in any delay because discovery has not
yet commenced.
I.
Mortgage Defendants
The mortgage defendants object to Sykes’s motion for leave
to amend, arguing that all the claims in the amended complaint
8
In the amended complaint, Sykes’s civil conspiracy claim is
Count VI.
8
should be dismissed and, therefore, amendment would be futile.
In support, the mortgage defendants argue that Sykes’s claims for
wrongful eviction, fraud, and conversion are alleged against the
bank defendants and/or Citibank only.
They also contend that
Sykes’s claims for breach of contract, wrongful foreclosure,
civil conspiracy, and breach of the implied covenant of good
faith and fair dealing fail because Sykes does not allege facts
to support those claims.
They further argue that all the claims
alleged against them are time-barred under the statutes of
limitations applicable to each claim.
In his reply to the mortgage defendants’ objection, Sykes
argues that he has sufficiently alleged claims for breach of
contract, wrongful foreclosure, civil conspiracy, and breach of
the implied covenant of good faith and fair dealing against the
mortgage defendants.
He also contends that none of his claims
against the mortgage defendants is time-barred because he did not
become aware of their wrongful conduct until shortly before he
filed suit.
He further contends that even if his claims would
otherwise be time-barred, the statutes of limitations should be
tolled because (i) the mortgage defendants fraudulently concealed
information necessary for Sykes to bring his claim and (ii) he
was mentally incompetent due to the shock of losing his home.
A.
Claims Not Alleged Against Mortgage Defendants
The mortgage defendants contend that the amended complaint
does not allege their involvement in the claims for wrongful
9
eviction (Count III), fraud (Count VII), or conversion (Count
IX).
Sykes’s reply to the mortgage defendants’ objection did not
address the arguments concerning those claims.
Sykes’s claims for wrongful eviction and conversion allege
wrongful conduct by the bank defendants and Citibank.
¶¶ 135-146 & 210-215.
See Compl.
The claim for fraud alleges wrongful
conduct by Bank of America.
Id. ¶¶ 195-204.
None of these
claims is directed against the mortgage defendants.
Therefore,
the amended complaint does not state claims for wrongful
eviction, fraud, or conversion against the mortgage defendants.
B.
Merits
The mortgage defendants argue that the amended complaint
fails to state claims for breach of contract (Count I), wrongful
foreclosure (Count II), civil conspiracy (Count VI), and breach
of the implied covenant of good faith and fair dealing (Count
VIII) against them.9
Sykes contends in his reply that he has
sufficiently pled these claims.
9
The mortgage defendants also briefly argue that Sykes’s
RESPA claim is “vague as pled.” To the extent the mortgage
defendants intended to argue that Sykes’s RESPA claim against
them is futile on the grounds of vagueness, that argument was not
sufficiently developed to be addressed. See Higgins v. New
Balance Athletic Shoes, Inc., 194 F.3d 252, 260 (1st Cir. 1999);
United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990).
10
1.
Breach of Contract
Sykes alleges that the mortgage defendants breached the
mortgage agreement “by not providing [him] with the notice of
default, notice of acceleration and notice of foreclosure sale”
prior to foreclosing on his home as required by paragraph twentytwo of the mortgage agreement.
Compl. ¶ 113.
The mortgage
defendants contend that they provided Sykes with the notice of
default on December 8, 2008, the notice of acceleration on July
6, 2009, and the notice of foreclosure sale on September 2, 2009.
They attach each letter as an exhibit to their objection.
They
also attach as an exhibit a letter from Harmon Law Offices
(“Harmon”) dated October 2, 2009, referencing a conversation
between Harmon and Sykes and stating that “copies of the original
notice of sale letters send [sic] certified mail” were enclosed.
Sykes maintains in his reply that he did not receive the notices
in accordance with the provisions in the mortgage agreement, and
contends that the mortgage defendants did not include certified
mail return receipts in the exhibits to show that they sent the
notices on the days they were dated.
Assuming without deciding that the court could consider the
documents attached to the mortgage defendants’ objection,10 the
10
“[E]xtrinsic material is, generally, not properly
considered on a motion to amend. As with a motion to dismiss
under Fed. R. Civ. P. 12(b)(6), in making futility
determinations, the court must limit itself to the allegations in
the complaint, as well as to any documents attached to the
complaint as exhibits or incorporated by reference.” Max Impact,
LLC v. Sherwood Group, Inc., 2012 WL 3831535, at *4 (S.D.N.Y.
Aug. 16, 2012) (internal citations omitted); see also Rivera v.
Centro Medico de Turabo, Inc., 575 F.3d 10, 15 (1st Cir. 2009).
11
amended complaint states a breach of contract claim against the
mortgage defendants for purposes of a futility analysis.
Sykes
alleges that he received a notice of default dated December 8,
2008, and that he received a notice of acceleration and a notice
of foreclosure.
He alleges, however, that he did not receive
these notices until April of 2011, well after the foreclosure
auction.
Although the notices may have been in compliance with
paragraph twenty-two of the mortgage agreement had they been sent
on the dates listed on the notices, the court cannot determine
for purposes of a futility analysis whether the notices were sent
or received on those dates.
Therefore, even if the court could
consider the documents attached to the mortgage defendants’
objection, those documents do not, by themselves, establish that
the mortgage defendants complied with the mortgage agreement for
purposes of a futility analysis.
Accordingly, the amended
complaint states a claim for breach of contract against the
mortgage defendants.
2.
Wrongful Foreclosure
Sykes’s amended complaint alleges two bases for his wrongful
foreclosure claim.
The first, titled “Deficient Notice,” is that
the mortgage defendants failed to provide Sykes with adequate
notice in advance of the foreclosure auction under RSA 479:25.
The second, titled “Invalid Assignment,” is that the assignment
of the mortgage from CCO to FNMA was invalid, and FNMA “cannot
show that it possessed legal title to the mortgage [or] whether
12
it held the note or established that it serviced the loan at the
time of the foreclosure.”
a.
Compl. ¶ 133.
Deficient notice
RSA 479:25 provides that a mortgagee who plans to proceed
with a foreclosure sale must serve a copy of the notice of such
sale upon the mortgagor at least twenty-five days before the
sale.
See RSA 479:25,II.
The amended complaint alleges that the
mortgage defendants failed to provide him with the required
notice.
The mortgage defendants do not address the merits of Sykes’s
deficient notice allegations in their objection.
To the extent
the mortgage defendants intended to rely on the date of the
notice of foreclosure attached as an exhibit to their objection
to defeat the wrongful foreclosure claim, that argument is
unavailing for the reasons discussed in the previous section.
Therefore, the amended complaint states a wrongful foreclosure
claim based on deficient notice against the mortgage defendants.
b.
Invalid assignment
The mortgage defendants argue that Sykes has not alleged any
facts to support his belief that the assignment of the mortgage
to FNMA is invalid.
They also argue that Sykes lacks standing to
challenge the assignment, and that they do not need to hold the
note in order to foreclose.
In addition, they contend that their
alleged failure to provide Sykes with notice of the assignment
does not render the foreclosure wrongful.
13
In response, Sykes argues that he does have standing to
challenge the validity of the assignment of the mortgage.
He
also argues that the mortgage defendants’ failure to inform him
of the assignment renders the assignment “ineffective”.
The New Hampshire Supreme Court has recognized a claim for
wrongful foreclosure, brought after the foreclosure sale, where
the foreclosing mortgagee did not exercise due diligence in
conducting the mortgage sale and, as a result, did not get a fair
price for the property.
Murphy v. Fin. Dev. Corp., 126 N.H. 536,
541-45 (1985); see also DeLellis v. Burke, 134 N.H. 607, 612-13
(1991).
The court is not aware of any New Hampshire case that
recognizes a claim for wrongful foreclosure based on a theory of
invalid assignment.
Even if Sykes’s wrongful foreclosure claim based on an
invalid assignment is considered on the merits of that theory,
and even assuming without deciding that Sykes has standing to
assert such a claim, he has still failed to state a viable claim
because he does not allege any facts to support his theory that
the assignment was invalid.
Therefore, the amended complaint
does not state a claim for wrongful foreclosure based on invalid
assignment against the mortgage defendants.
3.
Civil Conspiracy
Sykes alleges in the amended complaint that the mortgage
defendants made several misrepresentations concerning the holder
of the mortgage and that they did not provide him with
information necessary to keep his home.
14
The mortgage defendants
argue that Sykes has not alleged that they had a common plan to
perpetrate fraud on Sykes or wrongly foreclose on his home.11
New Hampshire courts define civil conspiracy as “‘a
combination of two or more persons by concerted action to
accomplish an unlawful purpose, or to accomplish some purpose not
in itself unlawful by unlawful means.’”
Jay Edwards, Inc. v.
Baker, 130 N.H. 41, 47 (1987) (quoting 15A C.J.S. Conspiracy §
1(1), at 596 (1967)).
The elements of a cause of action for
civil conspiracy are “(1) two or more persons (including
corporations); (2) an object to be accomplished (i.e. an unlawful
object to be achieved by lawful or unlawful means or a lawful
object to be achieved by unlawful means); (3) an agreement on the
object or course of action; (4) one or more unlawful overt acts;
and (5) damages as the proximate result thereof.”
Jay Edwards,
130 N.H. at 47 (emphasis omitted).
Sykes’s civil conspiracy theory against the mortgage
defendants is based on allegations that they agreed to hide from
Sykes that FNMA had been assigned the mortgage on July 30, 2009.
Sykes alleges that the mortgage defendants conspired to hide from
him the true owner of the mortgage in order to prevent him from
dealing with FNMA and avoiding the foreclosure.
Even if the mortgage defendants had agreed to hide the
assignment of the mortgage as Sykes alleges, Sykes has not pled
11
The amended complaint divides the civil conspiracy claim
into two sets of allegations: the “Pre-Auction Civil Conspiracy”
and the “Post-Auction Civil Conspiracy.” The civil conspiracy
claim against the mortgage defendants is alleged in the “PreAuction Civil Conspiracy” section. See Compl. ¶¶ 168-179.
15
facts necessary to state a claim for conspiracy because he has
failed to allege “damages as a proximate result” of the alleged
agreement.
Sykes alleges that he stopped making his mortgage
payments in November of 2008.
Sykes does not allege that he took
any steps to resolve the issues with his mortgage or to modify
his mortgage between July 30, 2009, the date on which FNMA was
assigned the mortgage, and October 2, 2009, the date of the
foreclosure sale.
In other words, even assuming that the
mortgage defendants conspired to make Sykes believe that CCO,
rather than FNMA, still held the mortgage after July 30, 2009,
Sykes has not alleged that the foreclosure or eviction were
caused by his mistaken belief that CCO, and not FNMA, held the
mortgage after that date.
See Ingress v. Merrimack Mortg. Co.,
Inc., 2012 WL 405499, at *5 (D.N.H. Feb. 8, 2012) (“Ingress’s
allegations do not show how, even if defendants had conspired to
deceive her about the date Wells Fargo became Trustee, such a
deception has proximately caused her to suffer damages . . . .
The foreclosure of the Wilton property was not caused by any
conspiracy to post-date assignment documents, but by Ingress’s
failure to repay her mortgage.”).
Accordingly, the amended complaint does not state a civil
conspiracy claim against the mortgage defendants.
4.
Implied Covenant of Good Faith and Fair Dealing
In the amended complaint, Sykes alleges that the mortgage
defendants “violated the implied covenant of good faith and fair
dealing by unreasonably failing to provide notices to the
16
Plaintiff about his mortgage loan, to respond to Plaintiff’s
requests for information, to fix errors in his mortgage bills,
and by offering loan modification for the first time in a letter
that did not reach Plaintiff until after the foreclosure
auction.”
Compl. ¶ 208.
The mortgage defendants argue that they
provided Sykes with the notices of default, acceleration, and
foreclosure that are attached to their objection and, therefore,
did not breach the covenant.
“In every agreement, there is an implied covenant that the
parties will act in good faith and fairly with one another.”
Birch Broad. Inc. v. Capitol Broad. Corp., Inc., 161 N.H. 192,
198 (2010).
As discussed above, the mortgage defendants’
arguments concerning the notices are not sufficient to show that
they complied with the provisions of the mortgage agreement.
The
mortgage defendants make no other arguments as to the sufficiency
of Sykes’s claim for breach of the implied covenant of good faith
and fair dealing against them.
Therefore, the amended complaint
states such a claim.
Accordingly, the amended complaint states claims against the
mortgage defendants for breach of contract (Count I), wrongful
foreclosure based on deficient notice (Count II), and breach of
the implied covenant of good faith and fair dealing (Count VIII).
It does not state a claim against the mortgage defendants for
wrongful foreclosure based on invalid assignment or for civil
conspiracy (Count VI).
17
C.
Statutes of Limitations
The mortgage defendants argue that Sykes’s claims for breach
of contract (Count I) and breach of the implied covenant of good
faith and fair dealing (Count VIII) against them are time-barred
under RSA 508:4.12
They also argue that Sykes’s claim for
wrongful foreclosure (Count II) is time-barred under RSA 479:25.
They further contend that Sykes’s RESPA claim (Count IV) is timebarred under RESPA’s limitations period contained in 12 U.S.C. §
2614, and that Sykes’s TILA claim (Count V) is time-barred under
§ 1640(e).
In his reply to the mortgage defendants’ objection, Sykes
appears to concede that if the relevant date for purposes of the
statutes of limitations for his various claims was the date of
the mortgage defendants’ wrongful conduct, his claims would be
time-barred.
He argues, however, that he did not discover and
should not have discovered the mortgage defendants’ wrongful
conduct until April of 2011 and, therefore, none of his claims is
time-barred.
He further argues that the limitations periods
should be tolled because (i) the mortgage defendants
“fraudulently concealed” facts essential to his causes of action
and (ii) he was incapacitated from the “shock from suddenly and
inexplicably losing his home, income and family.”
12
The mortgage defendants also argue that Sykes’s civil
conspiracy claim against them is time-barred under RSA 508:4.
Because the court has already determined that the amended
complaint does not state a claim against the mortgage defendants
for civil conspiracy, it will not address the statute of
limitations argument for that claim.
18
1.
Claims Subject to RSA 508:4
Under New Hampshire law, a personal action, other than for
libel or slander, “may be brought only within 3 years of the act
or omission complained of” or “within 3 years of the time the
plaintiff discovers, or in the exercise of reasonable diligence
should have discovered, the injury and its causal relationship to
the act or omission complained of.”
a.
RSA 508:4,I.
Breach of contract
Sykes alleges that the defendants breached the mortgage
agreement by not providing him with the notice of default, notice
of acceleration and notice of foreclosure sale as required under
the mortgage agreement.
The mortgage defendants argue that the
latest Sykes could have discovered the alleged breach was on
October 2, 2009, the date of the foreclosure auction for which he
was present.
The mortgage defendants contend that Sykes’s breach
of contract claim against them became time-barred on October 3,
2012, more than six months before he brought suit.
“In a contract action, the relevant ‘act or omission’ is a
party’s alleged breach; thus, the statute of limitations begins
to run when the alleged breach occurs, or when the plaintiff knew
or reasonably should have known that a breach occurred.”
Berthiaume v. Ticor Ins. Servs., Inc., 2010 WL 3238318, at *2
(D.N.H. Aug. 13, 2010) (citing Coyle v. Battles, 147 N.H. 98, 100
(2001) & A & B Lumber Co., LLC v. Vrusho, 151 N.H. 754 (2005)).
“Thus, the discovery rule exception does not apply unless the
plaintiff did not discover, and could not reasonably have
19
discovered, either the alleged injury or its causal connection to
the alleged negligent act.”
Perez v. Pike Indus., Inc., 153 N.H.
158, 160 (2005).
Sykes alleges that he was aware of the foreclosure auction
on October 2, 2009, because he spoke to the auctioneer who
informed him that the house was being sold and observed the
auction.
See Compl. ¶¶ 47-50.
Therefore, Sykes knew or should
have known by that date that the mortgage defendants had not
provided him with the notices of default, acceleration, and
foreclosure that were required by the mortgage agreement prior to
the auction.
Sykes contends in his reply that although he was aware of
the foreclosure auction on October 2, 2009, the relevant month
for purposes of the statute of limitations is April of 2011, when
he actually received the notices required under the mortgage
agreement.
Even assuming that Sykes received the notices for the
first time in April of 2011, however, that does not change the
fact that Sykes knew or should have known about the alleged
breach of the mortgage agreement on October 2, 2009, the date of
the foreclosure auction.
In other words, because Sykes learned
of the foreclosure on October 2, 2009, he should have known that
he did not receive the notices required under paragraph twentytwo of the mortgage agreement by that date.
Accordingly, the
limitations period for Sykes’s breach of contract claim against
the mortgage defendants expired in October of 2012, several
months before he filed this lawsuit.
20
b.
Implied covenant of good faith and fair dealing
Sykes alleges that the mortgage defendants breached the
implied covenant of good faith and fair dealing by failing to
provide him with the required notice, failing to respond to his
inquiries, and failing to offer loan modification until after the
foreclosure sale.
The mortgage defendants argue that all of the
alleged conduct underlying Sykes’s claim occurred more than three
years before he asserted the claim and, therefore, the claim is
time-barred.
The facts that Sykes alleges in support of his breach of the
implied covenant of good faith and fair dealing claim occurred on
or prior to the foreclosure auction, which took place on October
2, 2009.
Accordingly, the limitations period for Sykes’s breach
of the implied covenant of good faith and fair dealing claim
against the mortgage defendants expired in October of 2012 before
he brought this lawsuit.
2.
Wrongful Foreclosure
Sykes alleges that the mortgage defendants wrongfully
foreclosed on his home by failing to provide him with notice of
the foreclosure auction.13
The mortgage defendants argue that
the foreclosure auction occurred on October 2, 2009, and,
therefore, Sykes’s wrongful foreclosure claim is time-barred.
13
As discussed above, Sykes also alleged a claim for
wrongful foreclosure based on ineffective assignment. The court
has already determined that the amended complaint fails to
sufficiently allege that claim.
21
RSA 479:25 provides: “No claim challenging the form of
notice, manner of giving notice, or the conduct of the
foreclosure sale shall be brought by the mortgagor of any record
lienholder after one year and one day from the date of the
recording of the foreclosure deed for such sale.”
479:25,II-a.
See RSA
Sykes alleges the foreclosure sale took place on
October 2, 2009, and that he was aware of the sale on that date.
The foreclosure deed was recorded in the Rockingham County
Registry of Deeds on October 14, 2009.14
Therefore, the latest
Sykes could have brought his claim for wrongful foreclosure under
RSA 479:25 was October 15, 2010.
Accordingly, the limitation
period for Sykes’s wrongful foreclosure clam against the mortgage
defendants expired before Sykes filed this lawsuit.
3.
RESPA
Sykes alleges that the mortgage defendants violated RESPA by
failing to acknowledge receipt of, or otherwise respond to,
Sykes’s inquiries concerning the additional $400 charge in
November and December of 2008, and January of 2009, each of which
he alleges were a qualified written request (“QWR”) under the
14
The foreclosure deed is a public record. See Kirtz v.
Wells Fargo Bank N.A., 2012 WL 5989705, at *5 n.1 (D. Mass. Nov.
29, 2012). Therefore, the court may consider the foreclosure
deed when ruling on the motion for leave to amend. See Rivera,
575 F.3d at 15 (when considering whether a complaint states a
claim upon which relief can be granted, a court may consider
“documents the authenticity of which [is] not disputed by the
parties; . . . official public records; . . . documents central
to plaintiffs’ claim; or . . . documents sufficiently referred to
in the complaint.”) (internal quotation marks omitted).
22
statute.
See 12 U.S.C. § 2605(e).
The mortgage defendants
contend that even assuming that Sykes alleged a claim for
violation of RESPA, the claim is time-barred under RESPA’s three
year statute of limitations.
A QWR is a written correspondence from a borrower to the
servicer of a “federally related mortgage loan” that either seeks
information regarding the servicing of the loan or requests a
correction to the account and provides reasons for the borrower’s
belief that the account is in error.
§ 2605(e)(1).
During the
period relevant to Sykes’s claim, RESPA required the servicer of
a federally-related mortgage loan to acknowledge receipt of a
borrower’s QWR within twenty business days, see § 2605(e)(1)(A),
and to either correct the borrower’s account or provide the
borrower with a “written explanation or clarification” within
sixty business days after receipt of the request, § 2605(e)(2).15
RESPA also requires any action pursuant to § 2605 to be brought
“within 3 years . . . from the date of the occurrence of the
violation . . . .”
12 U.S.C. § 2614.
Sykes alleges that he sent his final QWR in January of 2009.
The latest date that the mortgage defendants could have violated
RESPA based on Sykes’s allegations, sixty business days after
they received that QWR, would have been sometime in March or
15
In July of 2010, after the events in this case, Congress
amended RESPA to shorten the time period under § 2605(e)(1)(A)
from twenty days to five days, and to shorten the time period
under § 2605(e)(2) from sixty days to thirty days. See DoddFrank Wall Street Reform and Consumer Protection Act, Pub. L. No.
111-203, § 1463(c) (2010) (Effective January 21, 2013. See id. §
1400(c)).
23
April of 2009.
To be timely, Sykes would have had to bring his
RESPA claim no later than March or April of 2012.
Accordingly,
the limitation period applicable to Sykes’s RESPA claim against
the mortgage defendants expired prior to the date he filed this
lawsuit.
4.
TILA
Sykes alleges that the mortgage defendants violated TILA by
failing to notify him when CCO assigned the mortgage to FNMA.
The mortgage defendants contend that the claim is barred by
TILA’s one year statute of limitations.
TILA provides that “no later than 30 days after the date on
which a mortgage loan is sold or otherwise transferred or
assigned to a third party, the creditor that is the new owner or
assignee of the debt shall notify the borrower in writing of such
transfer.”
§ 1641(g).
TILA also requires any action pursuant to
§ 1641 to be brought “within one year from the date of the
occurrence of the violation.”
15 U.S.C. § 1640(e).
“Where . . .
the plaintiff’s claim is based upon insufficient or nonexistent
disclosures, the limitations period begins running on the date
the disclosures should have been made.”
Galvin v. EMC Mortg.
Corp., 2013 WL 1386614, at *15 (D.N.H. Apr. 4, 2013).
Sykes alleges that CCO assigned the mortgage to FNMA in July
of 2009.
Therefore, Sykes’s TILA claim accrued in August of 2009
24
and became time-barred after August of 2010, several years prior
to this lawsuit.16
5.
Tolling
Sykes argues that even if his claims would otherwise be
time-barred, the statutes of limitations should be tolled because
(i) the mortgage defendants fraudulently concealed facts
essential to his causes of action and (ii) he was mentally
incompetent due to the shock of losing his home and the resulting
impact on his life and family.
a.
Fraudulent concealment
In New Hampshire, “‘[t]he fraudulent concealment rule
states that when facts essential to the cause of action are
fraudulently concealed, the statute of limitations is tolled
until the plaintiff has discovered such facts or could have done
so in the exercise of reasonable diligence.’”
Beane v. Dana S.
Beane & Co., P.C., 160 N.H. 708, 714 (2010) (quoting Bricker v.
Putnam, 128 N.H. 162, 165 (1986)).
Fraudulent concealment
“requires something affirmative in nature designed or intended to
prevent, and which does prevent, the discovery of facts giving
rise to a cause of action-some actual artifice to prevent
knowledge of the facts or some representation intended to exclude
16
Sykes argues in his reply that he could not have
discovered until 2011 that FNMA was the assignee of the mortgage
and the foreclosing entity. Even if the relevant date were April
of 2011, Sykes’s TILA claim would be time-barred under the
statute’s one year limitation period.
25
suspicion and prevent inquiry.”
Lamprey v. Britton Const., Inc.,
163 N.H. 252, 259-60 (2012) (internal quotation marks and
citation omitted).
The standard for fraudulent concealment for
federal claims in the First Circuit is nearly identical.
See,
e.g., Rakes v. United States, 442 F.3d 7, 26 (1st Cir. 2006)
(“The rule governing fraudulent concealment is that ‘the
defendant raising the limitations defense must have engaged in
fraud or deliberate concealment of material facts relating to his
wrongdoing and the plaintiff must have failed to discover these
facts within the normal limitations period despite his exercise
of due diligence.’”) (quoting Torres Ramirez v. Bermudez Garcia,
898 F.2d 224, 229 (1st Cir. 1990)).
Sykes argues in his reply to the mortgage defendants’
objection that the mortgage defendants “fraudulently concealed
the information necessary for [him] to bring his legal claims and
committed fraud.”
He alleges that “[a]s a result of the
fraudulent concealment, [he] did not discover the facts essential
to the causes of action until April of 2011.”
Compl. ¶ 103.
Sykes’s allegations do not support tolling the applicable
statutes of limitations on the basis of fraudulent concealment.
As discussed above, regardless of whether the mortgage defendants
attempted to conceal facts from Sykes, he became aware or should
have become aware of the facts essential to his causes of action
against the mortgage defendants in 2009.
Sykes was aware of the
foreclosure, and, therefore, should have been aware that he did
not receive notice of the foreclosure or the other required
notices on October 2, 2009.
Therefore, fraudulent concealment
26
does not toll his claims for breach of contract, wrongful
foreclosure, or breach of the implied covenant of good faith and
fair dealing against the mortgage defendants.
In addition, Sykes was aware or should have been aware that
CCO failed to timely respond to his QWRs under RESPA in March or
April of 2009, and that FNMA was assigned the mortgage by August
of 2009.17
Therefore, fraudulent concealment does not toll
Sykes’s RESPA or TILA claim.
In other words, regardless of whether the mortgage
defendants attempted to conceal certain facts from Sykes, he knew
or should have known of the facts essential to his causes of
action against the mortgage defendants in 2009.
Accordingly,
Sykes’s fraudulent concealment arguments are without merit.
b.
Mental incompetence
Sykes alleges that as a result of the defendants’ wrongful
conduct, he suffered depression, anxiety, and post traumatic
stress disorder.
He contends that after losing his home he was
unable to assert his legal rights until recently and, therefore,
the limitations periods applicable to his claims should be
equitably tolled.
17
Alternatively, even if Sykes is correct and the
appropriate date of accrual for his TILA claim is April of 2011,
his claim became time-barred after April of 2012.
27
i.
State law claims
RSA 508:8 provides that “[a]n infant or mentally
incompetent person may bring a personal action within 2 years
after such disability is removed.”18
Sykes alleges in his
amended complaint that the foreclosure and eviction “had a severe
impact on [his] family relationship and on [his] mental health.”
Compl. ¶ 106.
Sykes also alleges that he sought medical help for
his mental health issues in 2010, and argues that he was mentally
incompetent for purposes of RSA 508:8.
Sykes implies in his
reply that he regained competence less than two years prior to
filing this lawsuit and, therefore, he complied with the
limitations period of RSA 508:8.
The mortgage defendants did not address Sykes’s allegations
of mental incompetence.
It is not clear from Sykes’s description
of his mental state whether he meets the definition of “mentally
incompetent person” under RSA 508:8.
The court cannot determine,
for purposes of a futility analysis, whether the limitations
periods applicable to Sykes’s state law claims should be tolled
because of his mental condition.
Cf. Patrisso v. Sch. Admin.
Unit No. 59, 2010 WL 56023, at *2 (D.N.H. Jan. 5, 2010)
18
Although Sykes labels his argument as to his mental
incompetence as “equitable tolling,” RSA 508:8, and not the
doctrine of equitable tolling, governs the statute of limitations
for New Hampshire state law claims when a plaintiff is mentally
incompetent. See Portsmouth Country Club v. Town of Greenland,
152 N.H. 617, 624 (2005) (“The doctrine of equitable tolling is
applicable only where the prospective plaintiff did not have, and
could not have had with due diligence, the information essential
to bringing suit.”); see also Kierstead v. State Farm Fire & Cas.
Co., 160 N.H. 681, 688 (2010).
28
(“Although a statute of limitations issue may sometimes be
resolved through a Rule 12(b)(6) motion, a court can grant a
motion to dismiss on limitations grounds only when the pleader’s
allegations leave no doubt that an asserted claim is timebarred.”) (internal quotation marks and citations omitted); see
also Centro Medico del Turabo, Inc. v. Feliciano de Melecio, 406
F.3d 1, 6 (1st Cir. 2005).
Accordingly, the court cannot resolve
the issue of whether Sykes’s state law claims against the
mortgage defendants are time-barred in the context of a futility
analysis.
ii.
Federal claims
“[T]he equitable tolling doctrine . . . ‘provides that in
exceptional circumstances, a statute of limitations may be
extended for equitable reasons not acknowledged in the statute
creating the limitations period.’”
Bead v. Holder, 703 F.3d 591,
594 (1st Cir. 2013) (quoting Nascimento v. Mukasey, 549 F.3d 12,
18 (1st Cir. 2008)).
The First Circuit “‘appl[ies] equitable
tolling on a case-by-case basis, avoiding mechanical rules and
favoring flexibility.’”
Holmes v. Spencer, 685 F.3d 51, 62 (1st
Cir. 2012) (quoting Ortega Candelaria v. Orthobiologics LLC, 661
F.3d 675, 680 (1st Cir. 2011)).19
19
Although the First Circuit has not addressed whether
equitable tolling applies to RESPA or TILA claims, the majority
of jurisdictions considering the issue have held that it does.
See, e.g., Gunn v. First Am. Fin. Corp., --- Fed. Appx. ---, 2013
WL 6068478, at *2 (3d Cir. Nov. 19, 2013) (“equitable tolling
applies to RESPA claims”); Ramadan v. Chase Manhattan Corp., 156
F.3d 499, 505 (3d Cir. 1998) (TILA’s statute of limitations “is
29
Under certain circumstances, “mental illness can equitably
toll a federal statute of limitations.”
Riva v. Ficco, 615 F.3d
35, 40 (1st Cir. 2010) (tolling the statute of limitations in the
Antiterrorism and Effective Death Penalty Act of 1996 because of
petitioner’s mental illness); see also Nunnally v. MacCausland,
996 F.2d 1, 6-7 (1st Cir. 1993) (same for the Civil Service
Reform Act).
In the First Circuit, for equitable tolling on the
basis of mental incompetence to apply, a plaintiff must be unable
to pursue his legal rights or communicate with counsel because of
his mental incompetence.
See Riva, 615 F.3d at 40 (the question
for equitable tolling is whether the plaintiff “suffered from a
mental illness or impairment that so severely impaired his
ability either effectively to pursue legal relief to his own
behoof or, if represented, effectively to assist and communicate
with counsel”); Calderon-Garnier v. Rodriguez, 578 F.3d 33, 39
n.3 (1st Cir. 2009) (the appropriate question is “whether
plaintiff’s mental condition rendered her incapable of rationally
cooperating with any counsel, and/or pursuing her claim on her
own during the limitations period”) (internal quotation marks and
citation omitted); Nunnally, 996 F.2d at 6-7 (same); MelendezArroyo v. Cutler-Hammer de P.R. Co., Inc., 273 F.3d 30, 37 (1st
Cir. 2001) (mental incapacity must be “so severe that [plaintiff]
was unable to engage in rational thought and deliberate decision
not jurisdictional and is therefore subject to equitable
tolling”); see also Galvin, 2013 WL 1386614, at *15 (“The court
will once again assume, without deciding, that equitable tolling
applies to TILA claims.”).
30
making sufficient to pursue [his] claim alone or through
counsel”) (internal quotation marks and citation omitted).
As with Sykes’s state law claims, the court cannot determine
in this context whether tolling the limitations period for
Sykes’s federal claims based on Sykes’s alleged mental
incompetence is warranted.
See In re Comty. Bank of N. Va., 622
F.3d 275, 301-02 (3d Cir. 2010) (“[B]ecause the question whether
a particular party is eligible for equitable tolling generally
requires consideration of evidence beyond the pleadings, such
tolling is not generally amenable to resolution on a Rule
12(b)(6) motion.”).
Therefore, the court cannot resolve the
issue of whether Sykes’s RESPA or TILA claim is time-barred in
the context of a futility analysis.
6.
Summary of Statutes of Limitations Arguments
Accordingly, the court cannot determine in this context
whether the applicable statutes of limitations for Sykes’s claims
for breach of contract, breach of the implied covenant of good
faith and fair dealing, wrongful foreclosure, RESPA, or TILA
should be tolled because of Sykes’s alleged mental incompetence.
Whether Sykes has any evidentiary support for his contention that
he was mentally incompetent is a separate issue, one that is
better addressed in a motion for summary judgment.20
20
Sykes has the burden of providing evidence of “‘a
particularized description of how [his] condition adversely
affected [his] capacity to function generally or in relationship
to the pursuit of [his] rights.’” Rios v. Mazzuca, 78 Fed. Appx.
742, 744 (2d Cir. 2005) (quoting Boos v. Runyon, 201 F.3d 178,
31
D.
Summary of Claims Against Mortgage Defendants
Accordingly, Sykes’s amended complaint does not state claims
against the mortgage defendants for wrongful eviction (Count
III), civil conspiracy (Count VI), fraud (Count VII), or
conversion (Count IX).
Sykes’s claims against the mortgage
defendants for breach of contract (Count I), violation of RESPA
(count IV), violation of TILA (Count V), and breach of the
implied covenant of good faith and fair dealing (Count VIII) are
allowed.
Sykes’s wrongful foreclosure claim (Count II) against
the mortgage defendants is allowed to the extent it is based on
allegations of deficient notice.
The amended complaint does not
state a claim for wrongful foreclosure against the mortgage
defendants based on an invalid assignment of the mortgage.
II.
Bank Defendants’ Motion
The bank defendants object to Sykes’s motion for leave to
amend, arguing that amendment would be futile.
In support, they
argue that Sykes’s proposed claims for breach of contract,
wrongful foreclosure, violation of RESPA, violation of TILA, and
breach of the implied covenant of good faith and fair dealing are
alleged against the mortgage defendants only.
They further argue
that Sykes has not alleged facts to support his claims for fraud
185 (2d Cir. 2000)); see also Furbush v. McKittrick, 149 N.H.
426, 430 (2003) (“[T]he plaintiff has the burden of proving that
an exception applies to toll the statute of limitations such that
his . . . claim would be timely filed.”).
32
or civil conspiracy against them, and that his claims for
wrongful eviction and conversion are time-barred.
In his reply, Sykes argues that he has sufficiently alleged
claims for fraud and civil conspiracy against the bank
defendants.
He also argues that none of his claims is time-
barred.
A.
Claims Not Alleged Against Bank Defendants
The bank defendants argue that Sykes’s claims for breach of
contract (Count I), wrongful foreclosure (Count II), violation of
RESPA (Count IV), violation of TILA (Count V), and breach of the
implied covenant of good faith and fair dealing (Count VIII) are
all directed against the mortgage defendants only.
Sykes’s reply
to the bank defendants’ objection did not address the arguments
concerning those claims.
Sykes’s claims for breach of contract, wrongful foreclosure,
violation of RESPA, violation of TILA, and breach of the implied
covenant of good faith and fair dealing allege wrongful conduct
by the mortgage defendants.
165, 205-209.
See id. ¶¶ 110-119, 120-134, 147-
None of these claims is directed against the bank
defendants and, accordingly, the amended complaint does not state
any of these claims against the bank defendants.
B.
Merits
The claims asserted against the bank defendants are for
fraud and civil conspiracy.
The bank defendants argue that
Sykes’s amended complaint does not allege facts sufficient to
33
state a claim for fraud.
They also argue that because Sykes has
not alleged a claim for fraud, he has not alleged a claim for
civil conspiracy against them.
Sykes contends in his reply that
he has adequately pled both claims.
1.
Fraud
Sykes’s amended complaint alleges that Kelley, on behalf of
Bank of America, intentionally misrepresented that Bank of
America, and not BNYM, purchased his house at the foreclosure
auction, and did so “with the intent to force [Sykes] to vacate
his home.”
Compl. ¶ 201.
Sykes also alleges that he
“detrimentally relied on those statements in that he
unsuccessfully tried to rent or repurchase the home[] from Bank
of America who, unbeknownst to [Sykes], was not the property
owner.”
Id. ¶ 202.
The bank defendants argue that Sykes has not alleged
detrimental reliance.
They also argue Bank of America serviced
the loan and was the appropriate entity to negotiate with Sykes.
In his reply, Sykes contends that BNYM, and not Bank of
America, was the entity with which Sykes had to negotiate.
He
also contends that Kelley’s “cash-for-keys” proposal set forth a
move out date that was earlier than the date on the eviction
notice he received from BNYM.
Sykes attaches the proposal and
the eviction notice as exhibits to his reply.
To prove fraud based on a misrepresentation, a plaintiff
must show that the defendant knowingly made a false
representation, intending the plaintiff to rely on it, and that
34
the plaintiff was injured by his justifiable reliance on the
misrepresentation.
(2011).
Tessier v. Rockefeller, 162 N.H. 324, 332
Thus, to recover for fraud, a plaintiff must “reasonably
rely [on a misrepresentation] to his detriment.”
Snow v. Am.
Morgan Horse Ass’n, Inc., 141 N.H. 467, 468 (1996).
Circumstances that support claims of fraud must be alleged with
particularity.
See Fed. R. Civ. P. 9(b).
Sykes alleges that he relied on Bank of America’s
misrepresentation to his detriment because he tried to rent or
repurchase his home from Bank of America, rather than BNYM.
But
he does not allege that he had the right to rent or repurchase
his home after the foreclosure sale, and he does not allege any
facts to suggest that BNYM would have allowed him to do so.
does he make any such arguments in his reply.
Nor
In other words,
even if Bank of America made a material misrepresentation
concerning ownership of Sykes’s house after the foreclosure
auction, and even if Sykes relied on that misrepresentation, he
has not alleged particular facts to show that he was injured
because of that reliance.21
21
Sykes argues that the eviction notice from BNYM, which he
attached as an exhibit to his reply, gave him until December 2,
2009, to vacate his home, which was later than the date provided
in Kelley’s “cash-for-keys” proposal. Even if the court could
consider the eviction notice for purposes of Sykes’s leave to
amend, it would not change the court’s analysis. Sykes did not
allege in the amended complaint that Bank of America committed
fraud by shutting off the utilities in the home prior to the date
listed in the eviction notice. In any event, Sykes does not
explain the relevance of the date on the eviction notice as it
pertains to Kelley’s proposal.
35
In his reply, Sykes contends that he learned in 2012 that
Kelley, in connection with a Real Estate Commission proceeding,
produced a different version of the “cash-for-keys” proposal than
he had given Sykes.
The revised version, which Sykes attached as
an exhibit to his reply, had a later proposed move-out date.
Sykes argues that if he had received the revised version, he
would have accepted the proposal and his property would not have
been destroyed because Kelley would not have turned off the
utilities in the home.
Even if the court could consider the
exhibits in this context, Sykes does not allege these facts in
the amended complaint.
Therefore, the court does not consider
that argument as to the sufficiency of Sykes’s fraud claim.
Accordingly, the amended complaint does not state a claim
for fraud against the bank defendants.22
2.
Civil Conspiracy
Sykes alleges that Bank of America engaged in a civil
conspiracy to commit fraud as demonstrated by its
misrepresentations that it owned Sykes’s home after the
foreclosure auction.
Sykes alleges that BNYM and Citibank
engaged in a conspiracy by initiating the possessory action
without giving Sykes notice, and by causing the Portsmouth
District Court to issue the landlord-tenant writ to BNYM and the
writ of possession to Citibank.
22
Because the amended complaint does not state a claim for
fraud against the bank defendants, the court does not address the
bank defendants’ contention that Bank of America was the servicer
of the loan and had the power to negotiate with Sykes.
36
The bank defendants argue that because Sykes’s fraud claim
fails, so too does his civil conspiracy claim which is based on
the same allegations.
Sykes’s civil conspiracy claim against
BNYM and Citibank, however, is not based on the same allegations
as his fraud claim.
Sykes alleges that BNYM and Citibank agreed
to initiate the possessory action and to hide from Sykes that the
action was proceeding in order to conceal from him his legal
rights.
Those allegations are different than those that were
made in support of Sykes’s fraud claim.
The bank defendants do
not make any argument concerning the sufficiency of Sykes’s
allegations as to the possessory action.
Accordingly, the
amended complaint states a civil conspiracy claim against BNYM
and Citibank.
Sykes does not, however, state a civil conspiracy claim
against Bank of America.
Sykes alleges that Bank of America
misrepresented the owner of the mortgage after the foreclosure
sale, but does not allege that Bank of America agreed with
another entity to mislead Sykes.
Jay Edwards 130 N.H. at 47
(civil conspiracy requires “a combination of two or more persons
by concerted action”) (internal quotation marks and citation
omitted).
Therefore, the amended complaint does not state a
civil conspiracy claim against Bank of America.23
Accordingly, the amended complaint does not state a claim
for fraud (Count VII) against the bank defendants or a claim for
23
Sykes’s civil conspiracy claim against Bank of America
fails for the additional reason that, as with his claim for fraud
against Bank of America, he does not allege “damages as a
proximate result thereof.” Jay Edwards, 130 N.H. at 47.
37
civil conspiracy (Count VI) against Bank of America.
The amended
complaint states a claim for civil conspiracy against BNYM and
Citibank.
C.
Statute of Limitations
The bank defendants argue that Sykes’s proposed claims for
wrongful eviction (Count III) and conversion (Count IX) against
them are time-barred under RSA 508:4.
In his reply to the bank
defendants’ objection, Sykes argues that the claims are not timebarred because he did not discover the facts essential to his
causes of action until April of 2011 and that, even if his claims
would otherwise be time-barred, the limitations periods should be
tolled because of the bank defendants’ fraudulent concealment and
Sykes’s mental incompetence.
1.
Wrongful Eviction
Sykes alleges that he became a tenant at sufferance after
the foreclosure auction, and that landlords are prohibited from
using “self help” to evict tenants at sufferance.
Sykes argues
that when Kelley shut off of the utilities in the house, he was
constructively evicted and that as a result of the eviction he
did not receive notice of the possessory action.
The bank
defendants argue that Sykes’s claim for wrongful eviction is
time-barred under 508:4 because he was evicted more than three
years prior to bringing this suit.24
24
The court is not aware of any New Hampshire cases
addressing whether a claim for wrongful eviction is subject to
38
Sykes alleges that the defendants “taped an undated eviction
notice to [his] home[] door” on November 2, 2009.
Compl. ¶ 61.
He further alleges that Kelley shut off the utilities in the home
in November and that he “vacated the home[] on November 25,
2009.”
Id. ¶ 67; see id. ¶ 64.
Therefore, Sykes alleges that he
was evicted no later than November 25, 2009.
See id. ¶¶ 135-140.
To be timely under RSA 508:4, a claim for wrongful eviction
would have to have been filed by, at latest, November 25, 2012.25
Accordingly, because Sykes did not file this lawsuit until May of
2013, the claim is time-barred under the statute.
2.
Conversion
Sykes alleges that the bank defendants and Citibank
prevented him from retrieving his personal property from the home
and destroyed the property.
He alleges that their action
“constituted conversion because it was intentional exercise over
[his] property in a way which interfered with [his] right to
control of said property.”
Compl. ¶ 214.
The bank defendants
argue that Sykes’s property was allegedly destroyed in November
of 2009, more than three years prior to bringing this lawsuit.
RSA 508:4’s three year limitations period. Because Sykes does
not argue that RSA 508:4 is inapplicable to a claim for wrongful
eviction, the court will assume that the limitations period in
the statute applies to that claim.
25
Sykes also alleges that BNYM and Citibank “deprived [him]
of the opportunity to challenge the wrongful eviction because he
was never notified of the suit in Portsmouth District Court.”
Compl. ¶¶ 144, 145. These allegations do not change Sykes’s
alleged eviction date of November 25, 2009.
39
Sykes alleges that his property was destroyed in November of
2009.
To be timely under RSA 508:4, Sykes’s claim for conversion
would have to have been filed by, at latest, November of 2012.
Accordingly, because Sykes did not file this lawsuit until May of
2013, the claim is time-barred under the statute.
3.
Tolling
Sykes argues that even if his claims would otherwise be
time-barred, the statute of limitations should be tolled because
(i) the bank defendants fraudulently concealed facts essential to
his causes of action and (ii) he was mentally incompetent due to
the shock of losing his home and the resulting impact on his life
and family.
As with Sykes’s claims against the mortgage defendants, his
allegations against the bank defendants do not support tolling
the statute of limitations on the basis of fraudulent
concealment.
Regardless of whether the bank defendants attempted
to conceal certain facts from Sykes, he knew or should have known
of the facts essential to his causes of action for wrongful
eviction and conversion in 2009, when he vacated the home and his
property was destroyed.
Accordingly, Sykes’s fraudulent
concealment arguments are without merit.
For the reasons stated above, however, the court cannot
determine, for purposes of a futility analysis, whether the
limitations periods applicable to Sykes’s claims for wrongful
eviction and conversion should be tolled because of his mental
condition.
Accordingly, the court cannot resolve the issue of
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whether Sykes’s claims for wrongful eviction and conversion
against the bank defendants are time-barred in the context of a
futility analysis.
D.
Summary
Accordingly, the amended complaint does not state a claim
against the bank defendants for breach of contract (Count I),
wrongful foreclosure (Count II), violation of RESPA (Count IV),
violation of TILA (Count V), fraud (Count VII), or breach of the
implied covenant of good faith and fair dealing (Count VIII).
Sykes’s claims for wrongful eviction (Count III) and conversion
(Count IX) are allowed.
Sykes’s civil conspiracy claim (Count
VI) against BNYM and Citibank is allowed.
The amended complaint
does not state a claim for civil conspiracy against Bank of
America.
Conclusion
For the foregoing reasons, Sykes’s motion for leave to file
an amended complaint (document no. 26) is granted.
Sykes’s
motions for leave to file replies to the defendants’ objections
(document nos. 34 & 35) are granted.
The defendants’ motions to
dismiss the original complaint (document nos. 8 & 15) are
terminated as moot.
Sykes shall file his replies on or before March 11, 2014,
and shall file the amended complaint as allowed in this order on
or before March 28, 2014.
The following claims are allowed:
breach of contract (Count I) against the mortgage defendants;
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wrongful foreclosure (Count II) based on deficient notice against
the mortgage defendants; wrongful eviction (Count III) against
the bank defendants; RESPA (Count IV) against the mortgage
defendants; TILA (Count V) against the mortgage defendants; civil
conspiracy (Count VI) against BNYM and Citibank; breach of the
implied covenant of good faith and fair dealing (Count VIII)
against the mortgage defendants; and conversion (Count IX)
against the bank defendants and Citibank.
SO ORDERED.
____________________________
Joseph A. DiClerico, Jr.
United States District Judge
March 4, 2014
cc:
Gary M. Burt, Esq.
Kristina Cerniauskaite, Esq.
Terry L. Harman, Esq.
Andrea Lasker, Esq.
Thomas J. Pappas, Esq.
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