Fannon et al v. US Bank, National Association, Trustee

Filing 40

ORDER denying 36 Motion for Reconsideration of 34 Order on Motion to Dismiss for Failure to State a Claim. So Ordered by Judge Joseph A. DiClerico, Jr.(gla)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

William M. and Catherine M. Fannon
v.

Civil No. 16-cv-141-JD
Opinion No. 2016 DNH 188

U.S. Bank, N.A. as Trustee
of MASTR Asset Backed Securities Trust
2006-NCI, Mortgage Pass-Through Certificates,
Series 2006-NC1

O R D E R
William and Catherine Fannon move for reconsideration of
the court’s order that granted in part and denied in part U.S.
Bank’s motion to dismiss.

In support, they argue that the court

erred in dismissing their claim for breach of the implied duty
of good faith and fair dealing.

U.S. Bank objects.

Standard of Review
To succeed on a motion for reconsideration of an
interlocutory order, the moving party must show “that the order
was based on a manifest error of fact or law.”

LR 7.2(d).

Reconsideration is an extraordinary remedy that is used only
sparingly.

U.S. ex rel. Ge v. Takeda Pharm. Co. Ltd., 737 F.3d

116, 127 (1st Cir. 2013).

Discussion
The court granted the motion to dismiss the Fannons’ claim
of breach of the implied duty of good faith and fair dealing on
the ground that the implied duty cannot be used to require a
lender to modify or restructure a loan.

The Fannons contend

that the court erred in dismissing the claim because they do not
allege that U.S. Bank was required to modify their loan.
Instead, they assert that U.S. Bank failed to reasonably
exercise its discretion in performing a trial modification plan
and processing their subsequent application for loan
modification.
Under New Hampshire law, the third category of obligations
of the implied duty of good faith and fair dealing applies to
discretion in contract performance.
Corp., 132 N.H. 133, 139 (1989).
elements.

Centronics Corp. v. Genicom

The third category has three

Moore v. Mortg. Elec. Reg. Sys., Inc., 848 F. Supp.

2d 107, 129 (D.N.H. 2012).

To state a claim, a plaintiff must

allege that an “agreement allows or confers discretion on the
defendant to deprive the plaintiff of a substantial portion of
the benefit of the agreement,” that the defendant failed to
exercise its discretion reasonably, and that the defendant’s
actions caused the plaintiff harm.

Id.

The Fannons argue that U.S. Bank, through its servicing
agent, entered into a trial loan modification plan with them and
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breached the implied duty in that agreement by failing to accept
a late payment.

They also argue briefly that U.S. Bank breached

the implied duty by impeding their efforts to apply for a loan
modification in 2015.
A.

Trial Period Plan
The Fannons rely on a “Trial Period Plan” offered in a

letter dated August 27, 2013, from America’s Servicing Company
(“ASC”).

To the extent the letter is an enforceable agreement

that includes the implied covenant, the Fannons have not shown
that the plan conferred the discretion on ASC that they allege.1
The letter explicitly required payments to be made on
October 1, November 1, and December 1 of 2013.

The Fannons

admit that they did not make the December payment by December 1,
because, they allege, ASC lost part of their December payment
that was submitted in two money orders.

They further allege

that ASC would not allow them to cure the problem with another
payment during December, and, as a result, the Fannons were not
considered for a permanent loan modification.
In support of their claim, the Fannons argue that ASC had
discretion to accept payments at any time during December.
rely, generally, on page two of the letter.

They

The Fannons do not

The letter was from ASC, not U.S. Bank. Apparently, ASC was
acting as U.S. Bank agent by servicing the loan on its behalf.
1

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identify the specific language that granted ASC such discretion.2
The only language on page two of the letter that addresses time
for payments is the following:
After all trial period payments are timely made and
you have submitted all the required documents, your
mortgage may be permanently modified. . . . If each
payment is not received by America’s Servicing Company
in the month in which it is due, this offer will end
and your loan will not be modified under the terms
described in this offer.
If that is the statement that the Fannons are relying on to
confer discretion on ASC to accept late payments, it will not
bear that burden.

The last sentence does not say, as the

Fannons may have hoped, that ASC has discretion to accept
payments anytime in December.

Instead, that sentence requires

payments to be made on the date due in each month.
The payment schedule is clearly stated in the letter.

The

reference to the month in which the payment is due does not
alter the payment schedule or give ASC discretion to alter the
schedule.

The Fannons did not comply with the schedule, for

In their objection to the motion to dismiss, the Fannons
cited generally to “Ex. O,” which is the five-page letter from
ASC that the Fannons contend is a the “Trial Period Plan.” In
support of their motion for reconsideration, the Fannons cite
page two of the letter. As the Fannons are represented by
counsel, the court has no obligation to delve through the cited
exhibit and speculate as to what language might support their
claim. For that reason, the Fannons’ motion is not properly
supported and would not succeed even if they intended to rely on
a different statement in the Plan.
2

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whatever reason, and the letter does not provide ASC discretion
to change the established schedule.
The Fannons have not shown that the letter conferred
category three discretion on ASC or that ASC acted unreasonably
even if it had such discretion.
B.

2015 Modification Application
The Fannons also argue that U.S. Bank breached the implied

duty of good faith and fair dealing by denying their loan
modification application in 2015 and frustrating their attempts
to appeal that decision.

They do not explain what agreement

included the implied covenant that they are invoking.
As the court explained in the order dismissing the claim,
the implied covenant cannot be invoked to require a lender to
modify or restructure a loan.

Riggieri v. Caliber Home Loans,

Inc., 2016 WL 4133513, at *6-*7 (D.N.H. Aug. 3, 2016) (citing
cases).

Similarly, the implied covenant does not apply to

require a lender to consider an application for loan
modification.

Dionne v. Fed. Nat’l Mortg. Assoc., 2016 WL

3264344, at *11-*12 (D.N.H. June 14, 2016).
Therefore, the Fannons provide no grounds for
reconsideration of the order dismissing their claim for breach
of the implied covenant of good faith and fair dealing.

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Conclusion
For the foregoing reasons, the plaintiff’s motion for
reconsideration (doc. no. 36) is denied.
SO ORDERED.

__________________________
Joseph DiClerico, Jr.
United States District Judge
October 25, 2016
cc:

David D. Christensen, Esq.
Stephen T. Martin, Esq.
Michael R. Stanley, Esq.

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