Hynes et al v. The Bank of New York, Mellon et al

Filing 36

///ORDER granting 30 Motion for Summary Judgment. Clerk shall enter judgment and close the case. So Ordered by Chief Judge Landya B. McCafferty.(gla)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

Samuel Hynes and Lisa Hynes
v.

Civil No. 18-cv-528-LM
Opinion No. 2019 DNH 187

Bank of New York Mellon et al.
O R D E R
In a case that was removed from the New Hampshire Superior
Court, Rockingham County, Samuel and Lisa Hynes bring suit
against New Penn Financial, LLC d/b/a Shellpoint Mortgage
Servicing (“Shellpoint”) and the Bank of New York Mellon f/k/a
The Bank of New York, as Trustee for the Certificate Holders of
CWABS, Inc. Asset Backed Certificate Series 2007-13 (“Bank of
New York”), alleging claims arising out of defendants’ alleged
misrepresentations in connection with their mortgage agreement
and a loan modification agreement.

Plaintiffs also allege that

defendants acted in bad faith and without due diligence in
connection with the foreclosure sale of plaintiffs’ home, which
resulted in the home being sold at below fair market value.
Defendants move for summary judgment on all of plaintiffs’
claims.

Plaintiffs object in part.
STANDARD OF REVIEW

A movant is entitled to summary judgment if it “shows that
there is no genuine dispute as to any material fact and [that

it] is entitled to judgment as a matter of law.”
P. 56(a).

Fed. R. Civ.

In reviewing the record, the court construes all

facts and reasonable inferences in the light most favorable to
the nonmovant.

Kelley v. Corr. Med. Servs., Inc., 707 F.3d 108,

115 (1st Cir. 2013).

BACKGROUND1
In July 2007, plaintiffs executed a promissory note in
favor of Countrywide Home Loans, Inc. (“Countrywide”) in the
amount of $115,000 in connection with refinancing a loan.

That

same day, plaintiffs granted a mortgage on their home in
Londonderry, New Hampshire (the “property”) to Countrywide to
secure the loan, with Mortgage Electronic Registration Systems,
Inc. as the mortgagee in its capacity as nominee for
Countrywide.

The mortgage was eventually assigned to Bank of

New York, with Shellpoint acting as the loan servicer.
Plaintiffs defaulted on their obligations under the
mortgage and last made a mortgage payment in March 2017.

The facts in this section are taken from defendants’
statement of facts in their memorandum in support of their
motion for summary judgment, to the extent those facts are not
in dispute, see doc. no. 30-1 at 2-7, as well as from
plaintiffs’ amended complaint, to the extent those facts help to
clarify plaintiffs’ claims, see doc. no. 13.
1

2

On November 6, 2017, plaintiffs received a Notice of Foreclosure
for the property, which listed a sale date of December 27, 2017.
On December 7, 2017, plaintiffs retained the services of a
“loss mitigation specialist” named Douglas Mesquita to help
apply for mortgage assistance.

Mesquita assisted plaintiffs in

their efforts to obtain a loan modification agreement,
contacting Shellpoint several times and submitting paperwork on
plaintiffs’ behalf.
Shortly before the date of the scheduled foreclosure sale,
and after submitting a completed application for a loan
modification agreement on plaintiffs’ behalf to Shellpoint,
Mesquita spoke with a Shellpoint representative and requested
that the sale be postponed.

The representative explained

several times that she had submitted a request for the
foreclosure sale to be postponed but could not guarantee that it
would be postponed.
The foreclosure sale took place as scheduled on December
27, 2017.

There was “snow on the ground and a forecast high

well below freezing at 18 degrees.”2

Doc. no. 13 at ¶ 32.

Bank

The weather conditions are taken from allegations in
plaintiffs’ amended complaint. Although there is no evidence in
the record as to the conditions on December 27, defendants do
not dispute plaintiffs’ allegations on that point for purposes
of summary judgment.
2

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of New York purchased the property for $127,639.

This action

followed.

DISCUSSION
Plaintiffs assert six claims: two counts of breach of the
duty of good faith and due diligence arising out of the
foreclosure sale (Counts I and II); breach of the covenant of
good faith and fair dealing in the mortgage agreement (Count
III); negligent misrepresentation (Count IV); promissory or
equitable estoppel (Count V); and “standing” (Count VI).
Defendants move for summary judgment on all of plaintiffs’
claims.

I.

Counts III-VI
Counts III-VI arise out of plaintiffs’ allegations in their

amended complaint that Shellpoint represented to Mesquita that
the foreclosure sale would not take place as scheduled.

In

their summary judgment motion, defendants pointed to evidence in
the record, including plaintiffs’ and Mesquita’s deposition
testimony, as well as audio recordings of a phone call between
Mesquita and a Shellpoint representative, which shows that
Shellpoint never made such a representation.

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In their objection, plaintiffs acknowledge this evidence
and agree that defendants are entitled to judgment on Counts
III-VI.

Therefore, defendants’ motion is granted as to those

counts.

II.

Counts I and II
Plaintiffs bring two claims challenging defendants’ conduct

in selling plaintiffs’ property.

Count I alleges that

defendants violated their duty of good faith and due diligence
by conducting the foreclosure sale two days after Christmas on a
cold day with snow on the ground, which resulted in a sale price
far below market value.

Count II alleges that defendants

breached the duty of good faith and due diligence by proceeding
with the sale despite being in receipt of plaintiffs’ completed
loan modification agreement.
New Hampshire law imposes a duty on a mortgagee to “exert
every reasonable effort to obtain a fair and reasonable price
under the circumstances.”

Murphy v. Fin. Dev. Corp., 126 N.H.

536, 541 (1985) (internal quotation marks and citation omitted).
This duty is based on New Hampshire common law, which demands
that “in the context of a foreclosure sale, the mortgagee owes
the mortgagor a fiduciary duty of good faith and due diligence.”
Bascom Const., Inc. v. City Bank and Trust, 137 N.H. 472, 475

5

(1993) (citing Murphy, 126 N.H. at 541); see also People’s
United Bank v. Mountain Home Developers of Sunapee, LLC, 858 F.
Supp. 2d 162, 167 (D.N.H. 2012).
The duties of good faith and due diligence are separate and
distinct obligations.

See Murphy, 126 N.H. at 541.

In order to

establish that a mortgagee violated its obligation of good
faith, the plaintiff must show that the mortgagee intentionally
disregarded a duty or had a purpose to injure the plaintiff.
See id. at 541–42.

To establish that the mortgagee breached its

duty of due diligence, the plaintiff must show that a reasonable
lender would have adjourned the sale or taken other measures to
obtain a fair price.

See id. at 542.

Plaintiffs do not distinguish between the duty of good
faith and the duty of due diligence in their amended complaint
or objection.

Viewed generously, Count I alleges that Bank of

New York violated its duty of due diligence by conducting a
commercially unreasonable foreclosure sale, at which it obtained
an unreasonably low purchase price.

Count II alleges that Bank

of New York breached the duty of good faith by failing to
consider plaintiffs’ loan modification before proceeding with
the foreclosure sale and by purchasing the property itself at

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the sale.3

Therefore, the court analyzes plaintiffs’ claims

under that legal framework.

See, e.g., Carideo v. PennyMac Loan

Servs., LLC, No. 18-CV-911-SM, 2019 WL 635410, at *5 (D.N.H.
Feb. 14, 2019) (noting that although plaintiffs’ complaint
includes a claim for breach of the duty of good faith and due
diligence, it alleges only a breach of the duty of due
diligence).

A.

Count I

In determining whether a reasonable lender would have
adjourned a foreclosure sale or taken other measures to obtain a
fair price, the court must consider “the circumstances of each
case.”

Murphy, 126 N.H. at 541.

A fair price is “‘the price

obtainable on a fair sale reasonably adjourned rather than the
price obtainable when the season for selling was most
favorable.’”

Silver v. First Nat'l Bank, 108 N.H. 390, 392

Although plaintiffs appear to allege their claims in
Counts I and II against both defendants, the obligation to
conduct a foreclosure in good faith and with due diligence
“do[es] not extend to parties other than the foreclosing
mortgagee,” such as the loan servicer. Faiella v. Green Tree
Servicing LLC, No. 16-cv-088-JD, 2016 WL 3546232, at *4 (D.N.H.
June 23, 2016); Gikas v. JPMorgan Chase Bank, N.A., No. 11-cv573-JL, 2013 WL 1457042, at *5 (D.N.H. Apr. 10, 2013).
Therefore, to the extent plaintiffs intended to assert their
claims in Counts I and II against Shellpoint, defendants are
entitled to summary judgment on those claims.
3

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(1967) (quoting Wheeler v. Slocinski, 82 N.H. 211, 215 (1926)).
Further, a fair and reasonable price is not the equivalent of
“‘fair market value’ as in eminent domain cases nor is the
mortgagee bound to give credit for the highest possible amount
which might be obtained under different circumstances, as at an
owner’s sale.’”

Id. (quoting Reconstruction Fin. Corp. v.

Faulkner, 101 N.H. 352, 361 (1958)); see Ferguson v. Nat'l City
Mortg., No. 2011-0100, 2012 WL 6869638, at *1 (N.H. Feb. 27,
2012).
Here, plaintiffs allege that Bank of New York did not make
a reasonable effort to obtain a fair and reasonable price
because it scheduled the foreclosure sale two days after
Christmas and did not reschedule the sale despite it falling on
a cold day when there was snow on the ground.

Plaintiffs offer

no support, and the court is aware of none, for the proposition
that a mortgagee breaches the duty of due diligence by failing
to cancel a foreclosure sale because it is cold and there is
snow on the ground.

Cf. McCarthy v. WPB Partners, LLC, No. 16-

cv-081-LM, 2017 WL 4675742, at *5 (D.N.H. Oct. 16, 2017)
(holding that expert testimony concerning the effect of limited
road access to foreclosure sale because of unplowed road was
sufficient to create a genuine issue of material fact as to
whether defendant should have adjourned the sale).

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Nor is there

any support for the theory that a mortgagee breaches its duty of
due diligence by conducting a foreclosure sale during the last
week of December.

See id. (suggesting that a claim for breach

of the duty of due diligence based on “the undesirability of
marketing the property during the winter season” would not
survive summary judgment).

Thus, viewing these facts in the

light most favorable to plaintiffs, they do not support a claim
for breach of the duty of due diligence.
Plaintiffs also contend that the sales price of $127,639
was well below fair market value, and that the price itself
demonstrates that Bank of New York breached its duty of due
diligence.

“[A]lthough fair market value and fair price at a

foreclosure sale are different concepts the New Hampshire
Supreme Court has made it clear that evidence of fair market
value is a relevant factor in evaluating fair price at a
foreclosure sale.”

McCarthy, 2017 WL 4675742, at *5 (citing

cases).
Plaintiffs attach two exhibits to their amended complaint:
(1) a 2015 “Net Assessment” from the Town of Londonderry for the
property of $147,400, doc. no. 13-2; and (2) an October 22, 2018
printout from www.zillow.com which estimates the value of the
property at $187,456, doc. no. 13-3.

In their objection,

plaintiffs rely on these exhibits to support their contention

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that Bank of New York sold their property at a below-market
price.
Viewed in the light most favorable to plaintiffs, neither
of the exhibits attached to plaintiffs’ amended complaint
creates a genuine issue of material fact as to whether Bank of
New York breached its duty of due diligence in connection with
the foreclosure sale.

Plaintiffs offer no support for their

theory that an estimate from a real estate company’s website,
particularly one from approximately eight months after the
foreclosure sale, even if properly authenticated,4 should be
considered evidence of fair value.

Plaintiffs do not offer any

expert testimony or appraisal of the property to support the
estimate contained in the printout.

See, e.g., First NH Mortg.

Corp. v. Greene, 139 N.H. 321, 325 (1995) (trial court’s finding
of violation of due diligence was supported by its determination
that “purchase price was clearly inadequate,” which in turn was
“supported by the appraisal evidence admitted at trial”);
Silver, 108 N.H. at 392–393 (1967) (finding that appraisal

See, e.g., Williams v. Am. Honda Fin. Corp., No. 1:14-CV12859, 2016 WL 11507789, at *7 (D. Mass. Feb. 11, 2016)
(declining to consider at the summary judgment stage as evidence
of fair value a National Automobile Dealers Association printout
because the printout was not authenticated), vacated and rev’d
in part on other grounds, 907 F.3d 83 (1st Cir. 2018).
4

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valuation was evidence of what “the property would have brought
at a reasonably adjourned sale”).
Even assuming that the 2015 tax assessment of $147,400
represents a fair market value for the property on December 27,
2017,5 it is insufficient to create a genuine issue of material
fact as to whether Bank of New York complied with its duty of
due diligence.

The property was sold for more than 86% of the

price listed in the tax assessment.

New Hampshire courts have

consistently held that such price differentials do not support a
claim for breach of the duty of due diligence in connection with
a foreclosure sale.

See Premier Capital, LLC v. Skaltsis, 155

N.H. 110, 117 (2007) (affirming judgment of superior court that
foreclosure sale prices of 33% and 60% of the tax assessed value
of properties were “reasonable” and did not show a breach of the
duty of good faith and due diligence); Olbres, 142 N.H. at 234
(affirming trial court’s finding that foreclosure price that was
42% of pre-foreclosure appraisal did not violate duty of due
diligence); Peter v. Wells Fargo Home Mortgage, Inc., No. 01–C–
664, 2012 WL 9492844, at *1 (N.H. Super. July 30, 2012)
(granting defendants’ motion for summary judgment and holding

See Olbres v. Hampton Co-op. Bank, 142 N.H. 227, 234
(1997) (noting that real estate values fluctuate and “1991
appraisals are not conclusive of what constituted a fair price
at the 1994 foreclosure sale”).
5

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that foreclosure sale at 85% of market value did not show a
violation of the duty of due diligence); see also Resolution
Trust Corp. v. Carr, 13 F.3d 425, 430 (1st Cir. 1993) (applying
Massachusetts law) (noting that courts have granted dispositive
pretrial motions on foreclosure claims with foreclosure prices
as low as 39% of market value and that a price of 56% of market
value did not show a lack of due diligence).
In sum, viewing the evidence in the light most favorable to
plaintiffs, no reasonable factfinder could conclude that Bank of
New York breached the duty of due diligence in conducting the
foreclosure sale.

Therefore, the court grants defendants’

motion for summary judgment on Count I.

B.

Count II

Count II alleges that Bank of New York breached the duty of
good faith by proceeding with the foreclosure auction even
though plaintiffs had submitted a completed loan modification
application prior to the sale.

As defendants note in their

motion for summary judgment, “this court has time and again held
that lenders have no duty . . . to modify a loan or forbear from
foreclosure.”

Towle v. Ocwen Loan Servicing, LLC, No. 15-cv-

189-LM, 2015 WL 4506964, at *2 (D.N.H. July 23, 2015) (citing
cases); see also Brown v. Wells Fargo Home Mortg., No. 16-cv-

12

530-JL, 2017 WL 2178356, at *4 (D.N.H. May 17, 2017).
Therefore, Bank of New York did not breach its duty of good
faith by proceeding with the foreclosure sale despite plaintiffs
submitting a loan modification application prior to the sale.
Viewed generously, plaintiffs allege in Count II that Bank
of New York violated its duty of good faith by purchasing the
property itself.

To create a genuine issue of material fact on

their claim for violation of the duty of good faith, plaintiffs
must point to some evidence demonstrating that Bank of New York
conducted the foreclosure with an intent to injure or harm her.
See Wheeler, 82 N.H. at 214.

The allegations in the complaint

and the evidence in the record falls far short of that standard.
As the court noted in People’s United, the New Hampshire Supreme
Court in Murphy set a high threshold for the type of conduct
that qualifies as a violation of the duty of good faith:
In Murphy, the mortgagees: (1) provided minimal public
notice of the foreclosure sale, which had been
postponed from an earlier date, see id. at 543; (2)
purchased the property themselves at a sale with no
other bidders present, see id. at 539; (3) bought the
property for an amount equal to the amount owed by the
mortgagors, $27,000, see id.; (4) should have realized
that the mortgagors’ “equity in the property was at
least $19,000,” id. at 542; and (5) sold the property
for $38,000 two days after purchasing it for $27,000,
see id. at 539. Despite all that, the court ruled
that “[t]here [was] insufficient evidence in the
record to support the master’s finding that the
[mortgagees] acted in bad faith in failing to obtain a
fair price for the [mortgagors’] property.” Id. at
542.
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858 F. Supp. 2d at 169.

Here, nothing in the summary judgment

record rises to the level of harmful or injurious conduct that
the New Hampshire Supreme Court rejected in Murphy as a valid
basis for a violation of the duty of good faith, and certainly
not the fact that Bank of New York purchased the property.

See

McCarthy, 2017 WL 4675742, at *7 (granting defendant’s motion
for summary judgment on claim for breach of the duty of good
faith where mortgagee defendant purchased the property at the
foreclosure sale).
For these reasons, defendants are entitled to summary
judgment on plaintiffs’ claim for breach of the duty of good
faith.

CONCLUSION
For the foregoing reasons, defendants’ motion for summary
judgment (doc. no. 30) is granted.

The clerk of court shall

enter judgment accordingly and close the case.
SO ORDERED.

__________________________
Landya McCafferty
United States District Judge
November 4, 2019
cc:
Counsel of Record
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