Simmons v. Wells Fargo Bank, N.A.
Filing
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///ORDER granting 5 Motion to Dismiss for Failure to State a Claim. Count I is dismissed with prejudice; count II is dismissed without prejudice to Simmons's right to refile. So Ordered by Judge Landya B. McCafferty.(gla)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Daniel Simmons
v.
Civil No. 14-cv-333-LM
Opinion No. 2015 DNH 156
Wells Fargo Bank, N.A.
O R D E R
In a case that has been removed from the New Hampshire
Superior Court, Daniel Simmons, proceeding pro se, seeks to
enjoin Wells Fargo Bank, N.A. (“Wells Fargo”) from selling his
home at a foreclosure sale and also seeks damages.
Simmons
claims that he is entitled to relief because Wells Fargo
breached the implied covenant of good faith and fair dealing by
starting to foreclose on his mortgage (Count I), and violated
federal mortgage-servicing regulations promulgated under the
Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. §§
2601-2617 (Count II).
Before the court is Wells Fargo’s motion
to dismiss for failure to state a claim upon which relief can be
granted.
responded.
See Fed. R. Civ. P. 12(b)(6).
Simmons has not
For the reasons that follow, Wells Fargo’s motion to
dismiss is granted.
I.
The Legal Standard
Under Rule 12(b)(6), the court must accept the factual
allegations in the complaint as true, construe reasonable
inferences in the plaintiff’s favor, and “determine whether the
factual allegations in the plaintiff’s complaint set forth a
plausible claim upon which relief may be granted.”
Foley v.
Wells Fargo Bank, N.A., 772 F.3d 63, 71 (1st Cir. 2014)
(citation omitted).
A claim is facially plausible “when the
plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.”
(2009).
Ashcroft v. Iqbal, 556 U.S. 662, 678
Analyzing plausibility is “a context-specific task” in
which the court relies on its “judicial experience and common
sense.”
Id. at 679.
Because Simmons is proceeding pro se, the court is obliged
to construe his complaint liberally.
See Erikson v. Pardus, 551
U.S. 89, 94 (2007) (per curiam) (internal citations omitted) (“a
pro se complaint, however inartfully pleaded, must be held to
less stringent standards than formal pleadings drafted by
lawyers”).
However, “pro se status does not insulate a party
from complying with procedural and substantive law.
Even under
a liberal construction, the complaint must adequately allege the
elements of a claim with the requisite supporting facts.”
Chiras v. Associated Credit Servs., Inc., 12-10871-TSH, 2012 WL
2
3025093, at *1 n.1 (D. Mass. July 23, 2012) (quoting Ahmed v.
Rosenblatt, 118 F.3d 886, 890 (1st Cir. 1997) (internal citation
and quotation marks omitted)).
II.
Background
The facts in this section are drawn from “the complaint,
the documents attached to the complaint, and relevant public
records.”
See Foley, 772 F.3d at 68 (citing Watterson v. Page,
987 F.2d 1, 3 (1st Cir. 1993)).
In 2005, Simmons and his wife, who is not a party to this
action, received a loan from American Home Mortgage (“AHM”) and
executed a promissory note in favor of AHM.
To secure repayment
of the loan, the Simmonses gave a mortgage to Mortgage
Electronic Registration Systems, Inc. (“MERS”).
That mortgage
provides, in relevant part:
9. Grounds for Acceleration of Debt.
(a) Default. Lender may, except as limited by
regulations issued by the Secretary, in the case of
payment defaults, require immediate payment in full of
all sums secured by this Security Instrument if:
(i) Borrower defaults by failing to pay in full
any monthly payment required by this Security
Instrument prior to or on the due date of the
next monthly payment
. . . .
18. Foreclosure Procedure. If Lender requires
immediate payment in full under paragraph 9, Lender
may invoke the STATUTORY POWER OF SALE and any other
remedies permitted by applicable law.
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Addendum to Mot. to Dismiss (doc. no. 6) 8, 11 of 13 (emphasis
omitted).
At some point, MERS assigned the mortgage to Wells
Fargo.
In November of 2013, Simmons missed a mortgage payment.
He
entered into a “payment consolidation” plan with Wells Fargo in
December 2013.
Simmons failed to make the first payment
required by that plan, due in February of 2014, because he was
not informed of the payment due date.
In April 2014, Simmons
submitted a completed “loss mitigation package” to Wells Fargo.
On June 11, 2014, Wells Fargo referred the mortgage to Harmon
Law Office for foreclosure.
Thereafter, Wells Fargo sent Simmons a foreclosure notice.
Simmons then filed an “Ex Parte Complaint to Enjoin Foreclosure
Sale” in the Merrimack County Superior Court.
In his state-
court complaint, Simmons sought to enjoin a foreclosure sale
that had been scheduled for July 11, 2014, and also asked for
damages and legal fees.
Simmons claimed that by initiating
foreclosure proceedings, Wells Fargo: (1) breached the implied
covenant of good faith and fair dealing; and (2) violated a
RESPA regulation that, under certain circumstances, prohibits a
mortgagee from initiating a foreclosure after a mortgagor has
submitted a loss mitigation application.
The state court enjoined the foreclosure sale and scheduled
a hearing.
The parties continued that injunction by agreement.
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Wells Fargo then removed the matter to this court and now moves
to dismiss Simmons’s complaint.
Simmons has filed no response.
III. Discussion
Wells Fargo argues that both of Simmons’s claims should be
dismissed because neither states a claim upon which relief can
be granted.
The court begins with the RESPA claim Simmons
asserts in Count II and then turns to Count I, Simmons’s claim
that Wells Fargo breached the implied covenant of good faith and
fair dealing.
A.
RESPA
The factual basis for Simmons’s RESPA claim is Wells
Fargo’s initiation of foreclosure proceedings.
The legal basis
is a bit difficult to discern because Simmons cites two
different provisions of the RESPA regulations in his complaint.
Those provisions appear in the section pertaining to loss
mitigation procedures, 12 C.F.R. § 1024.41.
That regulation, in
turn, is enforceable pursuant to 12 U.S.C. § 2605(f), see 12
C.F.R. § 1024.41(a), which allows individual borrowers such as
Simmons to sue for damages and costs.
The first provision Simmons cites in his complaint, 12
C.F.R. § 1024.41(f), describes the circumstances under which a
mortgage loan servicer may initiate the foreclosure process when
a borrower has submitted a loss mitigation application before
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the servicer has made the first notice necessary to initiate
foreclosure.
The second provision Simmons cites in his
complaint, § 1024.41(g), describes the circumstances under which
a servicer may foreclose on a mortgage when a borrower has
submitted a loss mitigation application after the servicer has
made the first notice necessary to initiate foreclosure.
Here,
Simmons alleges that: (1) he “submitted [a] complete loss
mitigation package to [Wells Fargo] in April 2014,” Notice of
Removal, Ex. 1 (doc. no. 1-1), at 6 of 8; (2) Wells Fargo
referred his mortgage for foreclosure in June; and (3) he
received a notice of foreclosure sometime thereafter.
Thus,
Simmons has necessarily made a § 1024.41(f) claim, not a §
1024.41(g) claim.
Wells Fargo argues that Count II should be dismissed
because: (1) Simmons has failed to adequately plead a RESPA
violation; and (2) even if he had adequately pled a RESPA
violation, his complaint seeks injunctive relief, which is not
available under RESPA.
In its first argument, Wells Fargo
contends that Simmons has failed to state a claim because his
complaint does not allege sufficient facts to establish a
violation of 12 C.F.R. § 1024.41(g).
But, as the court has
already explained, Simmons’s RESPA claim is based upon §
1024.41(f).
Thus, Wells Fargo’s first argument is unavailing.
Accordingly, the court turns to Wells Fargo’s second argument,
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i.e., that Simmons’s complaint must be dismissed because he
seeks injunctive relief, which is unavailable under RESPA.
12 C.F.R. § 1024.41(a) states that “[a] borrower may
enforce the provisions of [§ 1024.41] pursuant to section 6(f)
of RESPA (12 U.S.C. 2605(f)).”
That statute expressly provides
that an individual may recover “actual damages,” 12 U.S.C. §
2605(f)(1)(A), and “the costs of the action, together with any
attorneys fees incurred in connection with such action,” 12
U.S.C. § 2605(f)(3).1
Failure to allege actual damages justifies
dismissal of a claim asserting a violation of 12 C.F.R. §
1024.41(f).
See Hogan v. Visio Fin. Servs., Inc., No. 15-10923,
2015 WL 3916084, at *3 (E.D. Mich. June 25, 2015); cf. Minson v.
CitiMortgage, Inc., Civ. Action No. DKC 12-2233, 2013 WL
2383658, at *5 (D. Md. May 29, 2013) (dismissing RESPA claim
under 12 U.S.C. § 2605(e) because plaintiff failed to allege any
pecuniary loss that was attributable to the asserted RESPA
violation).
In support of its argument for dismissal, Wells Fargo
quotes the following portion of Simmons’s complaint:
The final orders I want the Court to issue are: Issue
a temporary injunction against the defendant and their
agents and assigns to remain in effect until the
Simmons mentions the availability of damages in addition
to actual damages in the event that a mortgage servicer engages
in a pattern or practice of noncompliance with RESPA, but he
makes no allegations that Wells Fargo is liable for engaging in
any such pattern or practice.
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defendant completes the review of the loss mitigation
application pursuant to 12 C.F.R. 1024, and supplies
the plaintiff with proper written notices and
explanations of the findings regarding the loss
mitigation application per 12 C.F.R. 1024, as well as
any applicable appeal available thereunder.
Notice of Removal, Ex. A (doc. no. 1-1), at 7 of 8.
While the
court agrees with defendant that “it is undisputed that
[Simmons] seeks to use his RESPA claim as a basis to enjoin
Wells Fargo’s foreclosure,” Def.’s Mem. of Law (doc. no. 5-1) 7,
the court cannot agree that injunctive relief is all that
Simmons seeks.
Elsewhere in his complaint, Simmons says:
8.(g) Some of the plaintiff’s damages stem from
frustration and distress caused by the defendant’s
noncompliance. The plaintiff has supplied the
defendant with every document that they requested and
has re-submitted documents already supplied to the
defendant multiple times. . . .
8.(h) The plaintiff has suffered nominal damages which
are not insignificant by dealing with the frustrating
process controlled by the defendant. He has spent
hours and hours submitting documents and faxing and
copying and he will lose the value of all of that time
and the money spent making copies and sending
documents over and over again to the defendant if the
defendant is allowed to [foreclose] prior to
completing the loss mitigation process.
Notice of Removal, Ex. A (doc. no. 1-1), at 6-7 of 8.
Construing the complaint in the plaintiff’s favor, as the court
must, it is clear that Simmons has at least attempted to assert
a claim for both emotional distress and nominal damages.
Courts are split as to whether emotional distress damages
are available as actual damages under 12 U.S.C. § 2605(f)(1)(A).
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See Wenegieme v. Bayview Loan Servicing, No. 14 Civ. 9137(RWS),
2015 WL 2151822, at *2 n.3 (S.D.N.Y. May 7, 2015) (ruling that
emotional stress does not qualify as actual damages for claim
based upon alleged violation of 12 C.F.R. § 1024.41(f)); Moore
v. Mortg. Elec. Registration Sys., Inc., 848 F. Supp. 2d 107,
122-23 (D.N.H. 2012) (noting a split of authority and ruling
that language of 12 U.S.C. § 2605(f)(1)(A) encompasses emotional
distress damages).
And, it is far from clear that nominal
damages qualify as actual damages for the purpose of stating a
claim made by an individual under 12 U.S.C. § 2605(f)(1), absent
allegations of a pattern or practice of noncompliance.
See 12
U.S.C. § 2605(f)(1)(B) (allowing for “additional damages, as the
court may allow” of up to $2,000 when the defendant engages in a
pattern or practice of noncompliance); Carter v. Countrywide
Home Loans, Inc., No. 3:07CV651, 2008 WL 4167931, at *9 (E.D.
Va. Sept. 3, 2008) (characterizing pattern and practice damages
as nominal damages).
Even assuming, however, that the damages Simmons claims are
cognizable as actual damages under RESPA, his claim fails for
another reason: it is not yet ripe.
See City of Fall River,
Mass. v. F.E.R.C., 507 F.3d 1, 6 (1st Cir. 2007) (explaining
that courts may consider the question of ripeness sua sponte).
In Wenegieme, the plaintiffs asserted a claim that the
defendants were liable to them for violating 12 C.F.R. §
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1024.41(f), the same provision on which Simmons relies for his
cause of action in Count II.
See 2015 WL 2151822, at *2.
Judge
Sweet dismissed that claim on grounds that a § 1024.41(f) claim
does not become ripe until the plaintiff has lost his or her
property to foreclosure.
See id.
Judge Sweet’s ruling, in
turn, is consistent with the contingent nature of Simmons’s
claim that “he will lose the value of all of that time and the
money spent making copies and sending documents over and over
again to the defendant if the defendant is allowed to
[foreclose] prior to completing the loss mitigation process.”
Notice of Removal, Ex. A (doc. no. 1-1), at 7 of 8.
Because
Simmons’s RESPA claim is not yet ripe, Count II is dismissed
without prejudice to Simmons re-filing it in the event he loses
his property.
B.
See 2015 WL 2151822, at *2.
Implied Covenant of Good Faith and Fair Dealing
Simmons’s remaining claim is that Wells Fargo breached the
implied covenant of good faith and fair dealing by unreasonably
exercising its contractual discretion to initiate the
foreclosure process after he defaulted on his mortgage.
In New
Hampshire, “every agreement [includes] an implied covenant that
the parties will act in good faith and fairly with one another.”
Birch Broad., Inc. v. Capitol Broad. Corp., 161 N.H. 192, 198
(2010) (citing Livingston v. 18 Mile Point Drive, Ltd., 158 N.H.
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619, 624 (2009)).
The New Hampshire Supreme Court has observed
that:
there is not merely one rule of implied good-faith
duty, but a series of doctrines, each of which serves
a different function. The various implied good-faith
obligations fall into three general categories: (1)
contract formation; (2) termination of at-will
employment agreements; and (3) limitation of
discretion in contractual performance.
Id. (citations omitted).
Simmons contends that this case falls
within the third category.
That category functions to “prohibit
behavior inconsistent with the parties’ agreed-upon common
purpose and justified expectations as well as with common
standards of decency, fairness and reasonableness.”
Id.
(internal quotation marks omitted).
Here, the mortgage expressly provides that, in the event
Simmons defaults on the mortgage, Wells Fargo may exercise the
statutory power of sale.
6) 8, 11 of 13.
Addendum to Mot. to Dismiss (doc. no.
Thus, Wells Fargo’s exercise of that right is
consistent with the parties’ “agreed-upon common purpose and
justified expectations . . . .”
Id.
As such, it cannot serve
as the basis for a claim for breach of the implied covenant of
good faith and fair dealing.
See Rouleau v. U.S. Bank, No. 14-
cv-568-JL, 2015 WL 1757104, at *3 (D.N.H. Apr. 17, 2015) (“a
party does not breach the duty of good faith and fair dealing
simply by invoking a specific, limited right that is expressly
granted by an enforceable contract”); see also Moore, 848 F.
11
Supp. 2d at 129 (“the mere fact that some or all of the
defendants exercised their contractual right to foreclose on the
Moores after they defaulted on their mortgage payments does not
amount to a breach of the implied covenant”) (citations
omitted).
Accordingly, Count I does not state a claim on which
relief can be granted.
IV.
Conclusion
For the reasons detailed above, Wells Fargo’s motion to
dismiss, document no. 5, is granted.
Count I is dismissed with
prejudice; count II is dismissed without prejudice to Simmons’s
right to refile as described above.
SO ORDERED.
__________________________
Landya McCafferty
United States District Judge
August 11, 2015
cc:
Daniel D. Simmons, Esq.
Michael R. Stanley, Esq.
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