Martin et al v. Wells Fargo Bank, N.A. et al

Filing 11

///ORDER granting without prejudice 6 Motion to Dismiss for Failure to State a Claim. Motion is granted without prejudice to file an amended complaint setting forth facts sufficient to state plausible claims against Wells Fargo. Failure to file an amended complaint will result in the dismissal of claims against Wells Fargo with prejudice. Amended Complaint due February 18, 2016. SO ORDERED. So Ordered by Judge Landya B. McCafferty.(gla)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Michael Martin
and Julie Martin
v.

Civil No. 15-cv-447-LM
Opinion No. 2016 DNH 016

Wells Fargo Bank, N.A.
and North American Savings
Bank, FSB
O R D E R
In a case that has been removed from the New Hampshire
Superior Court, Michael and Julie Martin, proceeding pro se,
seek to enjoin Wells Fargo Bank, N.A. (“Wells Fargo”) from
selling their home at a foreclosure sale.

The Martins also seek

damages from Wells Fargo and North American Savings Bank, FSB
(“NASB”), alleging claims that arose from the defendants’
conduct in handling the Martins’ promissory note and mortgage
and in attempting to foreclose on their home.

Before the court

is Wells Fargo’s motion to dismiss for failure to state a claim
upon which relief can be granted.1
The Martins object.

See Fed. R. Civ. P. 12(b)(6).

For the reasons that follow, Wells Fargo’s

motion to dismiss is granted.

NASB has not filed a response to the complaint or
otherwise appeared in this action.
1

Standard of Review
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 the Martins are proceeding pro se, the court is
obliged to construe their 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
2

facts.”

Chiras v. Associated Credit Servs., Inc., 12-10871-TSH,

2012 WL 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)).
Where, as here, written instruments are provided as
exhibits to a pleading, the exhibits are “part of the pleading
for all purposes.”2

Fed. R. Civ. P. 10(c); see also Trans-Spec

Truck Serv. v. Caterpillar, Inc., 524 F.3d 315, 321 (1st Cir.
2008).

When “a written instrument contradicts allegations in

the complaint to which it is attached, the exhibit trumps the
allegations.”

Clorox Co. P.R. v. Proctor & Gamble Commercial

Co., 228 F.3d 24, 32 (1st Cir. 2000) (internal quotation marks
and citation omitted).
With its motion to dismiss, Wells Fargo submitted a copy of
the assignment of the Martins’ mortgage.
Dismiss (doc. no. 6-2).

See Ex. A to Mot. to

When the moving party presents matters

outside the pleadings to support a motion to dismiss, the court
must either exclude those matters or convert the motion to one
for summary judgment.

Fed. R. Civ. P. 12(d).

An exception to

Rule 12(d) exists “for documents the authenticity of which [is]
not disputed by the parties; for official public records; for

The Martins attached as exhibits to their complaint the
promissory note and the mortgage.
2

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documents central to the plaintiffs’ claim; or for documents
sufficiently referred to in the complaint.”

Rivera v. Centro

Medico de Turabo, Inc., 575 F.3d 10, 15 (1st Cir. 2009)
(internal quotation marks and citation omitted).

Because the

mortgage assignment is central to certain of the Martins’ claims
against Wells Fargo, the court may consider it without
converting the motion to one for summary judgment.
Background
On November 25, 2009, Michael Martin executed a promissory
note in favor of NASB, in exchange for a loan of $217,979.

That

same date, Michael and Julie Martin granted a mortgage to NASB
to secure the loan.

The mortgage encumbered the Martins’ home

at 79 Ford Farm Road in Milton, New Hampshire.
The mortgage states that Mortgage Electronic Registration
Systems, Inc. (“MERS”) is the mortgagee as nominee for the
lender, NASB.

On November 2, 2012, MERS, acting as nominee for

NASB, assigned the mortgage to Wells Fargo.
At some point in 2015, Wells Fargo notified the Martins
that they were in default and that it was instituting
foreclosure proceedings.

Before the scheduled date of the

foreclosure auction, the Martins brought this action.
The Martins allege that NASB misrepresented itself to the
Martins prior to Michael Martin’s execution of the promissory
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note, and that NASB took other unlawful actions to induce the
Martins to enter into the mortgage.

The Martins also allege

that sometime in December 2009, NASB sold its interest in the
note and attempted to sell its interest in the mortgage to an
entity other than Wells Fargo, which, they allege, is unlawful.
They further allege that Wells Fargo lacks standing to foreclose
on their home.
Discussion
The Martins assert six claims: Fraud in the Concealment
(Count I); Unconscionable Contracts (Count II); Breach of
Fiduciary Duty (Count III); Intentional Infliction of Emotional
Distress (Count IV); Declaratory Relief (Count V); and Wrongful
Foreclosure (Count VI).
Wells Fargo moves to dismiss all of the claims brought
against it.

It argues that Counts I – III do not allege any

wrongful conduct by Wells Fargo and are barred by the statute of
limitations.

It asserts that Counts IV – VI are premised on the

erroneous allegation that Wells Fargo does not have standing to
foreclose.

Wells Fargo contends that the mortgage, note, and

mortgage assignment show that it does have the authority to
foreclose.

It also argues that the Martins cannot bring a claim

for wrongful foreclosure because it has not foreclosed on the
Martins’ home.
5

The Martins did not respond to Wells Fargo’s arguments in
their objection.

Rather, in their objection, they contend that

they have standing to pursue their claims.3

They also argue that

the motion to dismiss should be denied because discovery has not
yet begun.
I.

Claims Not Alleged Against Wells Fargo
Wells Fargo argues that the Martins’ claims for fraud in

the concealment, unconscionable contracts, and breach of
fiduciary duty are based on allegations that they were induced
to enter into the mortgage and that Michael was induced to
execute the promissory note, based on NASB’s unlawful conduct.
As such, Wells Fargo contends, the complaint does not allege
that it was involved with the Martins’ mortgage or note at their
inception and, therefore, Counts I – III do not allege any
wrongful conduct by Wells Fargo.

It also argues that because

the claims arise out of the execution of the note and mortgage
in 2009, the claims are barred by the statute of limitations.
A.

Count I: Fraud in the Concealment

The Martins allege in Count I that NASB concealed several
facts from them to induce them to enter into the note and

Wells Fargo does not challenge the Martins’ standing to
pursue their claims.
3

6

mortgage.

The alleged concealed facts include that NASB is not

a depository bank and that certain “Securitization Agreements”
existed which altered the nature of the loan.
The underlying loan documents show that Wells Fargo was not
a party to the note or mortgage at the time they were executed.
The complaint does not allege that Wells Fargo had any
involvement with the loan and/or mortgage at the time they were
executed, and it does not identify any facts that Wells Fargo
concealed.

See Compl. ¶¶ 12-22.

Therefore, the complaint does

not allege sufficient facts to make out a claim of fraud in the
concealment against Wells Fargo.
B.

Count II: Unconscionable Contracts

The Martins allege in Count II that they were at a special
disadvantage when entering into the mortgage agreement with
NASB.

They allege that NASB used its advantage to make the

Martins believe that they needed to meet certain industry
standard underwriting requirements in order to qualify for a
loan, made them believe that they had to give a “preliminary
signature” on the mortgage to lock in an interest rate, and that
NASB failed to clarify certain terms of the mortgage.
None of the allegations underlying Count II is directed
against Wells Fargo.

See id. ¶¶ 23-30.

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Therefore, the

complaint does not state a claim for unconscionable contracts
against Wells Fargo.
C.

Count III: Breach of Fiduciary Duty

The Martins allege in Count III that NASB breached its
fiduciary duty to them by failing to disclose to them that it
was not a legitimate creditor, that it only had a “personal
property interest over the real property collateral,” id. ¶ 35,
and by failing to comply with certain covenants in the mortgage
agreement.
None of the allegations in Count III is directed against
Wells Fargo.

See id. ¶¶ 31-37.

Therefore, the complaint does

not state a claim for breach of fiduciary duty against Wells
Fargo.
Accordingly, the complaint fails to state a claim for
relief against Wells Fargo for fraud in the concealment,
unconscionable contracts, or breach of fiduciary duty.

Those

claims are dismissed as to Wells Fargo.4
II.

Claims Arising Out Of Wells Fargo’s Authority To Foreclose
Wells Fargo argues that the Martins’ remaining claims are

based on the allegation that Wells Fargo does not have standing

Because the complaint fails to state a claim for relief
against Wells Fargo as to Counts I – III, the court does not
address Wells Fargo’s statute of limitations argument.
4

8

to foreclose.

It asserts that the mortgage assignment shows it

currently holds the mortgage and argues that, based on the
language of the mortgage, it has the authority to foreclose
regardless of whether it holds the note.

It also asserts that

the documents attached to the Martins’ complaint show that Wells
Fargo does hold the note.

Wells Fargo argues that, therefore,

it has the legal authority to foreclose, and that the complaint
does not allege any facts to support its conclusory assertion to
the contrary.
The mortgage states that MERS is acting “solely as a
nominee for Lender . . . and Lender’s successors and assigns.”
Mortg. (doc. no. 1-1) at 14.

The mortgage expressly grants MERS

(solely as nominee for Lender and Lender’s successors and
assigns) the power of sale and “the right to foreclose and sell
the Property; and to take any action required of Lender.”
at 15.

Id.

Thus, “[t]he [mortgage] agreement plainly authorizes

MERS to act on the Lender’s behalf, albeit in a limited way,
thus evidencing the existence of an agency relationship.”
Bergeron v. N.Y. Cmty. Bank, 121 A.3d 821, 826 (2015).
The mortgage assignment, which was recorded on November 12,
2012, states that MERS, as nominee for NASB, its successors and
assigns, conveys the mortgage to Wells Fargo.

See doc. no. 6-2.

The Martins have not argued that MERS lacked the authority to
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assign the mortgage under the terms of the mortgage document.
See Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 354-56 (1st
Cir. 2013) (discussing MERS’s function and assignment
authority).
Thus, the mortgage authorizes MERS and its assignees to act
on behalf of the noteholder, and MERS assigned the mortgage to
Wells Fargo.

Therefore, regardless of whether Wells Fargo holds

the note, the plain language of the mortgage gives it “the
authority, as agent of the noteholder, to exercise the power of
sale.”

Bergeron, 121 A.3d at 827 (noting that if the language

of the mortgage establishes an agency relationship between the
assignee of MERS and the holder of the note, the assignee of
MERS has the authority to foreclose regardless of whether that
entity holds the note at the time of the foreclosure).
In addition, the underlying documents show that Wells Fargo
does hold the note.

A “promissory note is a negotiable

instrument subject to the provisions of Article 3 of the Uniform
Commercial Code” (“UCC”).

Galvin v. EMC Mortg. Corp., 27 F.

Supp. 3d 224, 233 (D.N.H. 2014) (internal quotation marks and
citation omitted).
may enforce it.

Under the UCC, the holder of an instrument

See N.H. Rev. Stat. Ann. (“RSA”) § 382-A:3-301.

“A holder is a person who is in possession of an instrument
drawn, issued, or indorsed to him or to his order.”
10

LeDoux v.

JP Morgan Chase, N.A., No. 12-cv-260-JL, 2012 WL 5874314, at *5
(D.N.H. Nov. 20, 2012) (internal quotation marks and citation
omitted).
As alleged in the complaint and shown in the note, at the
outset of the loan, NASB held the note.
at 10-13.

See Note (doc. no. 1-1)

An allonge is affixed to the note.

The allonge

refers to the loan number, the loan amount, the Martins’
property, and Michael Martin as the borrower.

See id. at 13.

It also states: “Pay to the order of Wells Fargo Bank, N.A.
Without Recourse North American Savings Bank, F.S.B.”

Id.

Thus, the allonge serves to indorse the note to Wells Fargo,
making it the holder.

See Galvin, 27 F. Supp. 3d at 233; see

also RSA §§ 382-A:-204(a), 382-A:3-205(a).5
The Martins do not raise any challenges to the allonge’s
validity.

Therefore, the allonge demonstrates that the note was

indorsed to Wells Fargo, making Wells Fargo the holder of the
note.
A.

Count IV: Intentional Infliction of Emotional Distress

The Martins allege in Count IV that Wells Fargo
intentionally caused them emotional distress by initiating
The allonge is undated. However, “New Hampshire law does
not require an indorsement to be dated.” Galvin, 27 F. Supp. 3d
at 234.
5

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foreclosure proceedings despite having “no legal, equitable, or
actual beneficial interest whatsoever in the Property.”
¶ 42.

Compl.

As discussed above, the mortgage, note, and assignment of

the mortgage demonstrate that Wells Fargo has the legal
authority to initiate foreclosure proceedings.

Therefore, the

Martins fail to allege sufficient facts to state a plausible
claim for relief for intentional infliction of emotional
distress.6
B.

Count V: Declaratory Relief

The Martins seek to quiet title and ask for a declaratory
judgment from the court stating that defendants “have no
interest estate, right, title or interest” in their property.
Compl. ¶ 53.

A successful petition to quiet title “quiets title

as against the world with respect to the land at issue.”
v. Coco, 154 N.H. 353, 357 (2006); see RSA § 498:5-a.

Porter

Because

of this, “[u]nder New Hampshire law, the party seeking to quiet

The Martins also include an allegation that they “did not
default in the manner stated in the Notice of Default.” Compl.
¶ 47. The Martins do not provide any facts to support that
allegation. The only document included in the record that bears
on the manner of the Martins’ default is Exhibit D to their
motion to enjoin the foreclosure, a letter to Michael from Wells
Fargo Home Mortgage, dated August 9, 2015, that states the “loan
is 11 payments past due, with a total amount due of $20,553.09.”
Doc. no. 3-4 at 11. To the extent the Martins intended to
allege that they did not default on their loan, they have failed
to allege sufficient facts to state a plausible claim for
relief.
6

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title bears the burden of establishing his good title to the
property against the interests of all others.”

Fadili v.

Deutsche Bank Nat’l Trust Co., 772 F.3d 951, 954 (1st Cir. 2014)
(citing Porter, 154 N.H. at 357).
The Martins have not pled facts that would allow the court
to draw a reasonable inference that they are entitled to relief.
As discussed above, the mortgage, note, and mortgage assignment
show that Wells Fargo has a valid interest in the property.
Therefore, the Martins’ claim for declaratory relief must be
dismissed.
C.

Count VI: Wrongful Foreclosure

The Martins allege in Count VI that Wells Fargo does not
properly hold the note or mortgage and, therefore, have engaged
in a wrongful foreclosure.
“[A] necessary element of a wrongful foreclosure claim, as
the claim suggests, is that a foreclosure sale must have
occurred.”

Worrall v. Fed. Nat’l Mortg. Ass’n, No. 13-cv-330-

JD, 2013 WL 6095119, at *3 (D.N.H. Nov. 20, 2013).

The Martins

do not allege that a foreclosure sale has occurred and, as the
court observed in its November 3, 2015 order (doc. no. 4), the
foreclosure sale has been postponed indefinitely.

Therefore,

the complaint does not state a claim for wrongful foreclosure.

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In sum, the complaint fails to allege sufficient facts to
state any plausible claims for relief against Wells Fargo.

The

court, therefore, grants Wells Fargo’s motion without prejudice
to the Martins’ ability to file a complaint that states
sufficient claims against Wells Fargo.
Conclusion
For the foregoing reasons, Wells Fargo’s motion to dismiss
(doc. no. 6) is granted without prejudice to the Martins’
ability to file an amended complaint setting forth facts
sufficient to state plausible claims against Wells Fargo.

See,

e.g., Rodi v. S. New Eng. Sch. of Law, 389 F.3d 5, 20 (1st Cir.
2004).

The Martins have until February 18, 2016, to file an

amended complaint.

Failure to file an amended complaint within

this time frame will result in the dismissal of the Martins’
claims against Wells Fargo with prejudice.
SO ORDERED.

__________________________
Landya McCafferty
United States District Judge

January 19, 2016
cc:

Michael C. Martin, pro se
Julie A. Martin, pro se
David D. Christensen, Esq.
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