Cumia et al v. PHH Mortgage Corporation et al
Filing
60
MEMORANDUM & ORDER granting in part and denying in part 33 Motion to Dismiss for Failure to State a Claim; granting 33 Motion to Sever; granting 52 Motion to Amend/Correct/Supplement. For the foregoing reasons, PHH's motion to sever i s GRANTED and McMahon's claims are DISMISSED WITHOUT PREJUDICE to commencing a separate action. Moreover, PHH's motion to supplement is GRANTED. Finally, PHH's motion to dismiss is GRANTED IN PART and DENIED IN PART. It is DENIED as t o standing, but otherwise GRANTED. Arroyo's claims for breach of the covenant of good faith and fair dealing, violation of TILA, and violation of RESPA Sections 2603, 2604, and 2607 are DISMISSED WITH PREJUDICE. Arroyo's additional claims are DISMISSED WITHOUT PREJUDICE and with leave to replead. So Ordered by Judge Joanna Seybert on 5/19/2014. C/ECF (Valle, Christine)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------X
NANCY ARROYO and PATRICIA MCMAHON,
Plaintiffs,
-against-
MEMORANDUM & ORDER
13-CV-2335(JS)(AKT)
PHH MORTGAGE CORPORATION,
Defendant.
---------------------------------------X
APPEARANCES
For Plaintiffs:
Michael E. Herskowitz, Esq.
Michael Andrew Lehrman, Esq.
Carmel Maseng, Esq.
The Hoffman Law Group, P.A.
1999 Flatbush Avenue, Suite 201
Brooklyn, NY 11234
For Defendant:
Nathaniel I. Kolodny, Esq.
Stillman Friedman & Shechtman, P.C.
425 Park Avenue, 26th Floor
New York, NY 10022
SEYBERT, District Judge:
Currently pending before the Court are: (1) defendant
PHH
Mortgage
Corporation’s
(“PHH”)
motion
to
sever
and
to
dismiss the Amended Complaint (Docket Entry 33), and (2) PHH’s
motion to supplement its motion to sever and dismiss (Docket
Entry 52).
and
to
For the following reasons, PHH’s motions to sever
supplement
are
GRANTED
and
GRANTED IN PART and DENIED IN PART.
its
motion
to
dismiss
is
BACKGROUND1
This action was initially commenced on April 17, 2013
by plaintiffs Jennifer Cumia (“Cumia”), Nancy Arroyo (“Arroyo”),
Patricia McMahon (“McMahon,” and together with Cumia and Arroyo,
“Plaintiffs”),
JPMorgan
and
Chase
John
Bank,
Roes
1-100
against
defendants
PHH;
N.A.;
and
Popular
Community
Bank
(collectively “Defendants”).
On September 23, 2013, Plaintiffs
filed an Amended Complaint which names each of the Plaintiffs
and Defendants.
the
parties
(See Docket Entry 27.)
have
voluntarily
Since then, however,
dismissed
all
but
Arroyo
McMahon as plaintiffs, and PHH as a defendant.2
and
(See Docket
Entries 32, 40.)
Plaintiffs are homeowners who assert that Defendants
committed various “illegal” acts in the creation and servicing
of
their
home
mortgage
loans.
(See
generally
Am.
Compl.)
Plaintiffs allege that, during the origination of their loans,
Defendants offered terms that Plaintiffs would not have accepted
had it not been for Defendants’ misrepresentations.
¶¶
29-30.)
Moreover,
Defendants
did
not
require
(Am. Compl.
sufficient
The following facts are drawn from the Amended Complaint and
the documents incorporated therein and are--to the extent
appropriate--presumed to be true for the purposes of this
Memorandum and Order.
1
Although there have been voluntary dismissals against some
parties, the Amended Complaint refers to “Plaintiffs” and
“Defendants.” Therefore, the Court will use those terms as they
were used in the Amended Complaint.
2
2
financial
documentation,
and
ultimately
unsuitable to Plaintiffs’ incomes.
Ultimately,
Plaintiffs
provided
mortgages
(Am. Compl. ¶¶ 31, 33.)
defaulted
on
their
mortgage
payments and requested loan modifications through Defendants.
(Am.
Compl.
¶¶
2-3.)
Defendants
provided
Plaintiffs
with
application materials for a modification.
(Am. Compl. ¶ 4.)
They
completion
represented
to
Plaintiffs
that
after
of
the
materials, Plaintiffs would be provided terms to make payments
under a “trial modification.”
(Am. Compl. ¶ 5.)
If Plaintiffs
made those payments, there would be a permanent modification.
(Am. Compl. ¶ 5.)
Plaintiffs allege that they accepted Defendant’s loan
modification
contract.
offers
(Am.
and
Compl.
began
¶
7.)
performance,
thus
Specifically,
forming
the
a
Amended
Complaint asserts that “Plaintiffs either provided all of the
requested documentation in support of their loan modification
application to Defendants, and otherwise met all the conditions
precedent pursuant to a trial modification offer, or attempted
to do so in good faith, but faced substantial interference from
Defendants.”
(Am. Compl. ¶ 8.)
For example, Arroyo submitted
documentation to PHH in support of her application, but was
informed that her application was incomplete.
Arroyo submitted
the materials again, but PHH again denied her application as
incomplete.
(Am. Compl. ¶ 10.)
According to Plaintiffs, these
3
“missing
document
instituted
by
requests”
Defendants
were
to
in
actuality
“overly
compliance with modification terms.”
a
burden
policy
Plaintiffs’
(Am. Compl. ¶ 11.)
In addition, Plaintiffs allege that they were denied
trial
modifications
status.
on
baseless
(Am. Compl. ¶ 12.)
claims
regarding
financial
In April 2013, for example, PHH
denied Arroyo a loan modification on the grounds of insufficient
income.
(Am. Compl. ¶ 12.)
“In cases where trial modification
was not given, Defendants either gave no explanation for the
denial, or alleged that Plaintiffs did not provide the necessary
documentation for processing or review, as was the case with
Plaintiff Nancy Arroyo.”
that
Defendants
had
(Am. Compl. ¶ 13.)
a
financial
Plaintiffs allege
incentive
to
encourage
foreclosure or short sale, rather than loan modification.
(Am.
Compl. ¶¶ 14-16.)
Furthermore,
Program
(“HAMP”)
under
lenders
the
must
Home
Affordable
conduct
a
Net
Modification
Present
Value
(“NPV”) calculation of the property as modified and unmodified.
(Am. Compl. ¶ 19.)
“When a modification has an NPV equal to, or
greater than, the amount likely to be obtained from sale in
foreclosure,
lenders
must
offer
a
modification.
However,
Defendants’ CDS/CDO [“Credit Debt Swap” and “Collateralized Debt
Obligations”] create a financial offset beyond the amount that
could reasonably be obtained through sale in foreclosure.”
4
(Am.
Compl.
¶
19.)
Thus,
Defendants
have
“created
an
alarming
conflict of interest as part of their loss-sharing agreements in
the securitization of mortgages, incentivizing them to negotiate
with
the
Plaintiffs
Moreover,
Defendants
in
do
bad
faith.”
not
set
(Am.
specific
Compl.
¶
standards
determining who will be granted loan modifications.
16.)
for
(Am. Compl.
¶ 21.)
Plaintiffs assert the following causes of action: (1)
Count One: Breach of Contract; (2) Count Two: Breach of the
Implied
Covenant
Three:
Fraudulent
Demanding
and
of
Good
Faith
Concealment;
Collecting
and
Fair
(4)
Count
Monthly
Note
Dealing;
Four:
Payments
(3)
Fraud
under
Count
for
False
Pretenses; (5) Count Five: Violations of Section 349 of the New
York General Business Law (“GBL”); (6) Count Six: Violations of
the Federal Truth in Lending Act (“TILA”); (7) Count Seven:
Fraud in the Inducement; and (8) Count Eight: Violations of the
Real Estate Settlement Procedures Act (“RESPA”).
DISCUSSION
PHH now moves to sever Plaintiffs Arroyo and McMahon
and to dismiss the Amended Complaint.
The Court will first
address the issue of severance before turning to PHH’s motion to
dismiss.
5
I. Severance
A. Federal Rule of Civil Procedure 20
1. Legal Standard
Rule
20(a)(1)
permits
the
joinder
of
multiple
plaintiffs in an action if: “(A) they assert any right to relief
jointly, severally, or in the alternative with respect to or
arising out of the same transaction, occurrence, or series of
transactions or occurrences; and (B) any question of law or fact
common to all plaintiffs will arise in the action.”
P. 20(a)(1).
FED. R. CIV.
These elements are preconditions and both must be
met for joinder to be proper.
Deskovic v. City of Peekskill,
673 F. Supp. 2d 154, 159 (S.D.N.Y. 2009) (“As is clear from the
plain language of [the Rule], both criteria must be met for
joinder to be proper.”).
While “[t]he requirements of Fed. R.
Civ. P. 20(a) are to be interpreted liberally to enable the
court to promote judicial economy by permitting all reasonably
related claims for relief by or against different parties to be
tried in a single proceeding, the requirements of the rule still
must be met and constrain the Court’s discretion.”
Kalie v.
Bank of Am. Corp., --- F.R.D. ----, 2013 WL 4044951, at *3
(S.D.N.Y.
Aug.
9,
2013)
(alteration
quotation marks and citation omitted).
in
original)
(internal
“If a court concludes
that [parties] have been improperly joined under Rule 20, it has
6
broad discretion under Rule 21 to sever [those] parties . . .
from the action.”
Id.
In determining whether claims arise out of the same
“transaction” or “occurrence” under Rule 20(a), “courts are to
look
to
the
logical
relationship
between
the
claims
and
determine ‘whether the essential facts of the various claims are
so logically connected that considerations of judicial economy
and fairness dictate that all the issues be resolved in one
lawsuit.’”
12,
22
Id. (quoting United States v. Aquavella, 615 F.2d
(2d
Cir.
demonstrating
1979)).
that
Plaintiffs
joinder
is
proper
bear
the
under
burden
Rule
of
20(a).
Deskovic, 673 F. Supp. 2d at 159.
2. Application
Here,
PHH
asserts
that
Arroyo’s
and
McMahon’s
respective claims do not arise out of the same transaction or
occurrence.
(See PHH’s Br., Docket Entry 34, at 4-7.)
and
raise
McMahon
several
arguments
in
opposition,
Arroyo
primarily
asserting that PHH has cited cases involving only mortgage loan
origination,
not
mortgage
loan
modification
and
that
because
only PHH now remains as a defendant, “Plaintiffs’ relationship
with PHH is not contested.”3
(Pl.’s Opp. Br., Docket Entry 44,
at 4.)
Despite Arroyo and McMahon’s argument, the Amended Complaint
clearly relates to modification and origination. Their attempt
3
7
Arroyo
unavailing.4
In
and
McMahon’s
fact,
after
arguments
Arroyo
and
in
opposition
McMahon
filed
are
their
opposition, but before the instant Memorandum and Order, the
undersigned issued an Order severing the plaintiffs in an action
involving claims regarding mortgage loan modification and the
same Plaintiffs’ counsel.
See generally D’Angelis v. Bank of
Am., N.A., No. 13-CV-5472, 2014 WL 202567 (E.D.N.Y. Jan. 16,
2014).
There, as here, the Court notes that it is well-settled
that separate loan transactions are separate “transactions or
occurrences”
and
generally
are
not
sufficiently
related
to
constitute a “series of transactions or occurrences” within the
meaning of Rule 20(a)(1).
See id. at *2 (collecting cases).
Moreover, even claims asserted by separate plaintiffs against a
common defendant do not arise out of the same “transaction” or
“occurrence.”
See id. at *2 (quoting Kalie, 2013 WL 4044951, at
*4).
The Court takes this opportunity to note that several
courts across this District have ordered severance in similar
actions--and rejected similar arguments in opposition--involving
to suggest otherwise is belied by the clear language of the
Amended Complaint. (See Am. Compl. ¶¶ 29-43.)
The Court notes that, even though PHH is the only remaining
defendant, PHH’s relationship with each of the remaining
plaintiffs is not as apparent as the opposition brief suggests.
For example, the Amended Complaint asserts allegations against
“Defendants.”
4
8
Plaintiffs’ counsel.
CV-2350,
2014
WL
See, e.g., Martin v. Bank of Am., No. 13-
977653
(E.D.N.Y.
Mar.
12,
2014);
Green
v.
Citimortgage, Inc., No. 13-CV-2341, 2013 WL 6712482 (E.D.N.Y.
Dec. 18, 2013)5; Traina v. HSBC Mortg. Servs., Inc., No. 13-CV2336, 2013 WL 6576856 (E.D.N.Y. Dec. 12, 2013).
the
claims
of
McMahon
are
SEVERED
pursuant
Accordingly,
to
Rule
20
and
DISMISSED WITHOUT PREJUDICE to commencing a separate action.
B. Federal Rule of Civil Procedure 21
Finally,
even
if
Arroyo
and
McMahon
satisfied
Rule
20(a), the Court would reach the same result in exercising its
discretion
under
Procedure.
Rule
Rule
21
21
of
the
provides,
in
Federal
relevant
Rules
of
that
part,
Civil
“[o]n
motion or on its own, the court may at any time, on just terms,
add or drop a party . . . [and] sever any claim against any
party.”
FED. R. CIV. P. 21.
In deciding whether to sever a claim under Rule 21,
courts generally consider, in addition to the preconditions set
forth in Rule 20(a), “[1] whether settlement of the claims or
judicial
would
be
economy
avoided
would
if
be
facilitated;
severance
were
[2] whether
granted;
and
prejudice
[3] whether
PHH’s motion to supplement (Docket Entry 52) advises the Court
of the recent opinion in Green. While PHH styles its submission
as a “motion,” a motion is unnecessary. In any event, it is
unopposed, and the case is one that the Court would have
reviewed in conducting its own research. Accordingly, the
motion to supplement is GRANTED.
5
9
different witnesses and documentary proof are required for the
separate claims.”
Crown Cork & Seal Co., Inc. Master Retirement
Trust v. Credit Suisse First Boston Corp., 288 F.R.D. 331, 333
(S.D.N.Y.
2013)
(quoting
Erausquin
v.
Notz,
Stucki
Mgmt.
(Bermuda) Ltd., 806 F. Supp. 2d 712, 720 (S.D.N.Y. 2011)).
“A
court should consider whether severance will ‘serve the ends of
justice
and
further
litigation.’”
the
prompt
and
efficient
disposition
of
Crown Cork, 288 F.R.D. at 332 (quoting T.S.I. 27,
Inc. v. Berman Enters., Inc., 115 F.R.D. 252, 254 (S.D.N.Y.
1987)); see also In re Ski Train Fire in Kaprun, Austria, on
November 11, 2004, 224 F.R.D. 543, 546 (S.D.N.Y. 2004).
Here,
Arroyo
and
McMahon’s
individual
require distinct witnesses and documentary proof.
claims
will
Kalie, 2013
WL 4044951, at *6 (finding that judicial economy was not served
by
joining
claims
mortgage-related
implicate
personnel”).
be
distinct
because
loans,
“each
locations,
plaintiff’s
dates
and
Furthermore, settlement of the claims is likely to
facilitated
transactions
claims
if
are
5437060, at *4.
the
claims
litigated
relating
separately.
to
separate
See
Adams,
mortgage
2013
WL
In addition, “[a] joint trial could lead to
confusion of the jury and thereby prejudice defendants.”
Kalie,
2013 WL 4044951, at * 6 (internal citation and quotation marks
omitted).
Thus, for these reasons, the Court also finds that
10
the
Rule
21
factors
require
severance
of
McMahon’s
claims,
leaving only those of Arroyo.
II. Dismissal
PHH also moves for dismissal of the Amended Complaint
in its entirety, arguing that Arroyo lacks standing, Arroyo has
failed to state a claim, and/or that the claims are barred by
the applicable statute of limitations.6
The Court will first
address the applicable legal standards of review before turning
to PHH’s arguments.
A. Legal Standards
1. Rule 12(b)(1)
Although
specifically,
PHH’s
PHH
does
argument
not
mention
regarding
Rule
standing
question of subject matter jurisdiction.
12(b)(1)
raises
a
“A case is properly
dismissed for lack of subject matter jurisdiction under Rule
12(b)(1)
when
constitutional
the
power
district
to
court
adjudicate
lacks
it.”
States, 201 F.3d 110, 113 (2d Cir. 2000).
the
statutory
Makarova
v.
or
United
In resolving a motion
to dismiss for lack of subject matter jurisdiction, the Court
may consider affidavits and other materials beyond the pleadings
to
resolve
jurisdictional
questions.
See
Morrison
v.
Nat’l
As the Court has severed McMahon’s claims, and given that the
Amended
Complaint
alleges
very
little
as
to
McMahon
specifically, the Court will only consider PHH’s argument as to
dismissal of Arroyo’s claims.
6
11
Australia Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008).
The
Court must accept as true the factual allegations contained in
the Complaint, but it will not draw argumentative inferences in
favor of Plaintiffs because subject matter jurisdiction must be
shown affirmatively.
See id.; Atlanta Mut. Ins. Co. v. Balfour
Maclaine Int’l Ltd., 968 F.2d 196, 198 (2d Cir. 1992); Shipping
Fin. Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998).
2. Rule 12(b)(6)
The
remainder
of
pursuant to Rule 12(b)(6).
PHH’s
motion
addresses
dismissal
In deciding Rule 12(b)(6) motions to
dismiss, the Court applies a “plausibility standard,” which is
guided by “[t]wo working principles.”
Ashcroft v. Iqbal, 556
U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009); accord
Harris v. Mills, 572 F.3d 66, 71-72 (2d Cir. 2009).
First,
although the Court must accept all allegations as true, this
“tenet”
is
“inapplicable
to
legal
conclusions;”
thus,
“[t]hreadbare recitals of the elements of a cause of action,
supported
by
mere
conclusory
statements,
do
not
Iqbal, 556 U.S. at 678; accord Harris, 572 F.3d at 72.
suffice.”
Second,
only complaints that state a “plausible claim for relief” can
survive a Rule 12(b)(6) motion to dismiss.
679.
Iqbal, 556 U.S. at
Determining whether a complaint does so is “a context-
specific task that requires the reviewing court to draw on its
12
judicial experience and common sense.”
Id.; accord Harris, 572
F.3d at 72.
Furthermore,
in
deciding
a
motion
to
dismiss,
the
Court is confined to “the allegations contained within the four
corners of [the] complaint.”
Shield,
152
interpreted
Complaint,
Complaint
F.3d
67,
broadly
any
by
71
to
(2d
Cir.
include
statements
reference,
Pani v. Empire Blue Cross Blue
or
any
any
1998).
This
document
attached
to
the
incorporated
in
the
documents
document
on
which
the
has
been
Complaint
heavily relies, and anything of which judicial notice may be
taken.
See Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53
(2d Cir. 2002) (citations omitted); Kramer v. Time Warner, Inc.,
937 F.2d 767, 773 (2d Cir. 1991).
B. Standing and Sufficiency
PHH asserts that Arroyo lacks standing because, inter
alia, the Amended Complaint is a generalized pleading and “[a]ll
Plaintiffs
make
notwithstanding
parties.”
this
a
all
claims
total
absence
(PHH’s Br. at 8.)
action
and
that
the
against
of
all
relationship
Defendants
between
the
Given the voluntary dismissals in
Court
has
ordered
severance
of
McMahon’s claims from those of Arroyo, the Court finds that
Arroyo has standing.
Moreover, the Amended Complaint includes
various examples specific to Arroyo.
13
Under Article III of the United States Constitution,
federal courts are confined “to adjudicating actual ‘cases’ and
‘controversies.’”
Allen v. Wright, 468 U.S. 737, 750, 104 S.
Ct. 3315, 3324, 82 L. Ed. 2d 556 (1984); see also U.S. CONST.,
art. III, § 2.
“This limitation is effectuated through the
requirement of standing.”
Cooper v. U.S. Postal Serv., 577 F.3d
479, 489 (2d Cir. 2009) (citing Valley Forge Christian Coll. v.
Ams. United for Separation of Church & State, Inc., 454 U.S.
464, 471-72, 102 S. Ct. 752, 758, 70 L. Ed. 2d 700 (1982)); see
also United States v. Grundhoefer, 916 F.2d 788, 791 (2d Cir.
1990).
There are three requirements to establish Article III
standing:
“(1) the plaintiff must have suffered an injury-in-
fact; (2) there must be a causal connection between the injury
and the conduct at issue; and (3) the injury must be likely to
be redressed by a favorable decision.”
see
also
Allen,
468
U.S.
at
751
Cooper, 577 F.3d at 489;
(“A
plaintiff
must
allege
personal injury fairly traceable to the defendant’s allegedly
unlawful conduct and likely to be redressed by the requested
relief.”); Lujan v. Defenders of Wildlife, 504 U.S. 555, 560,
112 S. Ct. 2130, 2136, 119 L. Ed. 2d 351 (1992).
“To qualify as a constitutionally sufficient injuryin-fact,
the
asserted
injury
must
be
‘concrete
and
particularized’ as well as ‘actual or imminent, not conjectural
or hypothetical.’”
Baur v. Veneman, 352 F.3d 625, 632 (2d Cir.
14
2003) (quoting Lujan, 504 U.S. at 560); cf. Amnesty Int’l U.S.A.
v. Clapper, 667 F.3d 163, 171 (2d Cir. 2011) (“The critical
inquiry
for
standing
is
whether
the
plaintiffs
are
simply
citizens with an abstract claim that some action was unlawful,
or whether they, in some particular respect not shared by every
person who dislikes the action, are injured by that action.”).
Injury is “concrete and particularized” if it “affect[s] the
plaintiff in a personal and individual way,” Lujan, 504 U.S. at
560 n.1; accord Baur, 352 F.3d at 632, and injury is “actual or
imminent” if the plaintiff “has sustained or is immediately in
danger of sustaining some direct injury,” City of Los Angeles v.
Lyons, 461 U.S. 95, 102, 103 S. Ct. 1660, 75 L. Ed. 2d 675
(1983) (internal quotation marks and citation omitted).
PHH’s standing argument is based, in part, on the fact
that
the
Amended
defendants.
The
Complaint
Court
names
agrees
that
multiple
there
plaintiffs
are
allegations specifically pertaining to McMahon.
virtually
and
no
Her claims have
been severed, however, and the Court will not consider whether
she has standing.
As to Arroyo, there is enough in the Amended Complaint
to
find
standing.
The
Amended
Complaint
alleges
her
relationship to PHH and alleges that PHH currently services her
mortgage.
(Am.
Compl.
¶
47.)
Moreover,
it
also
includes
various examples of Arroyo’s experiences with PHH and how she
15
claims that PHH committed the alleged violations.
Am. Compl. ¶¶ 10, 12-13.)
assertion
that
the
(See, e.g.,
Although the Court agrees with PHH’s
Amended
Complaint
is
lacking
in
some
respects, these issues can--and will--be addressed on a motion
to dismiss.
general
See Lujan, 504 U.S. at 561 (“At the pleading stage,
factual
allegations
of
injury
resulting
from
the
defendant’s conduct may suffice, for on a motion to dismiss we
‘presum[e] that general allegations embrace those specific facts
that
are
necessary
to
support
the
claim.’”
(alteration
in
original) (quoting Lujan v. Nat’l Wildlife Fed., 497 U.S. 871,
889, 110 S. Ct. 3177, 3189, 111 L. Ed. 2d 695 (1990))); accord
Butler v. Suffolk Cnty., 289 F.R.D. 80, 90-91 (E.D.N.Y. 2013).
Accordingly,
PHH’s
motion
to
dismiss
for
lack
of
standing is DENIED.
C. Breach of Contract
PHH
moves
for
dismissal
of
the
breach
of
contract
claim, asserting that Arroyo does not allege the existence of a
contract and that the Amended Complaint fails to identify the
contract and contractual provisions breached.
Specifically, PHH
claims that the Amended Complaint acknowledges that Arroyo did
not have a loan modification agreement with PHH, and therefore
there was no contract.
maintain
conditions
a
breach
precedent
Plaintiff, however, asserts that she can
of
contract
for
a
claim
temporary
16
because
she
modification
satisfied
agreement,
thereby legally creating a contract.
(Pl.’s Opp. Br. at 14.)
The Court finds Arroyo’s argument unavailing.
The
law,
which
pleading
provides
requirements
that
governed
by
plaintiff
“a
are
bringing
a
New
York
breach
of
contract claim must allege ‘(1) the existence of a contract, (2)
performance by the party seeking recovery, (3) non-performance
by
the
other
breach.’”
party,
and
(4)
damages
attributable
to
the
Abraham v. Am. Home Mortg. Serv., Inc., 947 F. Supp.
2d 222, 235 (E.D.N.Y. 2013) (quoting Schlessinger v. Valspar
Corp., 817 F. Supp. 2d 100, 105 (E.D.N.Y. 2011)); see Mendez v.
Bank of Am. Home Loans Serv., LP, 840 F. Supp. 2d 639, 647
(E.D.N.Y. 2012).
pleading
The federal law, though, provides for the
requirements.
Particularly,
Federal
Mendez,
Rule
of
840
Civil
pleading of conditions precedent.
F.
Supp.
Procedure
9
2d
at
647.
governs
the
That Rule provides that “it
suffices to allege generally that all conditions precedent have
occurred or been performed.
But when denying that a condition
precedent has occurred or been performed, a party must do so
with particularity.”
FED. R. CIV. P. 9(c).
Here, Arroyo alleges that she inquired about mortgage
assistance
and
modification
and
“modification application package.”
that
PHH
provided
(Am. Compl. ¶¶ 3-4.)
a
She
further avers that the package required that she submit certain
documentation and that PHH “represented” that, upon submission
17
and review of a completed modification package, she “would be
given terms to make payments as part of a trial modification.”
(Am.
Compl.
necessary
¶
5.)
According
documentation
to
and
Arroyo,
she
completed
submitted
the
application package, only to be denied by PHH.
the
modification
For example, in
April 2013, Arroyo submitted documentation to PHH in support of
her application, but PHH informed her that particular documents
were still missing.
documents.
(Am. Compl. ¶ 10.)
(Am. Compl. ¶ 10.)
Arroyo resubmitted the
Also in April 2010, PHH denied
Arroyo any loan modification citing insufficient income.
Compl. ¶ 12.)
had
Again in July 2013, despite the fact that Arroyo
resubmitted
the
purported
missing
documentation,
informed Arroyo that documents remained missing.
¶ 10.)
and
otherwise
satisfied
modification application package.
such
PHH
(Am. Compl.
Thus, Arroyo alleges that she submitted all necessary
materials
to
(Am.
satisfaction
as
having
the
requirements
of
the
The Amended Complaint refers
fulfilled
precedent,” thereby forming a contract.
the
“conditions
(See, e.g., Am. Compl.
¶¶ 7-8.)
PHH maintains, in essence, that there was no contract
formation between it and Arroyo.
The Court agrees.
As PHH
correctly points out, the Amended Complaint acknowledges that
Arroyo was not accepted to a loan modification program.
(See
Am. Compl. ¶ 10 (“Plaintiff Arroyo was then removed from the
18
modification
program
for
what
Defendant
called
modification package.”); PHH’s Br. at 11-12.)
seeks
relief
for
breach
(Am. Compl. ¶ 64.)
was
formed,
Arroyo
of
the
loan
an
incomplete
Notably, Arroyo
modification
agreement.
In support of her assertion that a contract
cites
to
three
cases,
which
she
argues
“affirm[ ] that meeting the conditions precedent for a temporary
modification
agreement
creates
binding
contracts
(Pl.’s Opp. Br. at 14 (emphasis added).)
.
.
.
.”
Here, though, there
was no temporary modification agreement.
In two of the cases to which Arroyo cites--Wigod v.
Wells
Fargo
Bank,
N.A.,
673
F.3d
547
(7th
Cir.
2012)
and
Corvello v. Wells Fargo Bank, NA, 728 F.3d 878 (9th Cir. 2013)-the defendant sent the plaintiffs a trial period plan agreement
(“TPP Agreement”), which specified the terms of the trial period
and provided that, if certain conditions were met, the defendant
would offer a permanent loan modification.
Also relevant is
Mendez v. Bank of America Home Loans Servicing, LP, in which the
defendant provided the plaintiff with a home loan modification
offer
which
would
reduce
the
plaintiff’s
monthly
mortgage
payments from $2,794.50 per month to $984.94 per month plus
taxes and insurance.
provided
that
“To
840 F. Supp. 2d at 643.
Accept
the
Enclosed
The offer letter
Modification,”
the
plaintiff would need to provide certain documentation and comply
with other conditions precedent.
19
Id.
The plaintiff complied
with those conditions precedent, and Judge Arthur D. Spatt held
that the plaintiff’s claim for breach of the loan modification
contract withstood the defendant’s motion to dismiss.
Id. at
660-61.
In this case, though, Arroyo seems to allege that she
was merely at the application stage, seeking the terms of a
temporary modification agreement.
In fact, she makes clear that
PHH never did provide her with any such terms.
¶ 59
(“Defendants
often
would
not
provide
(See Am. Compl.
trial
modification
terms to Plaintiffs, citing Plaintiffs’ alleged shortcomings in
the
modification
criteria.”).)
for
and
process,
or
failure
to
meet
financial
As Corvello sets out, “the process of applying
receiving
a
permanent
modification”
includes
several
steps, the first step of which is that a borrower provide a
servicer with information.
728 F.3d at 880 (citing Treasury
Supplemental Directive 09-01).
whether
the
borrowers
“[T]he servicer must evaluate
qualify
for
a
loan
modification”
and,
“[f]or borrowers who appear eligible to participate in HAMP, the
servicer then prepares a TPP.”
Id.
The TPP then requires
additional documents and payments in accordance with the plan.
Id. at 880-81.
It is at that point that the servicer must
either
the
confirm
borrower’s
eligibility
for
permanent
modification or alert the borrower that she does not qualify for
permanent modification.
Id. at 881.
20
In short, Arroyo’s cited
precedent
addresses
permanent
modification--or
ineligibility
for
instances
in
at
permanent
which
least
the
servicer
prompt
promised
notification
modification--if
the
of
conditions
precedent of the TPP were met.
Such a scenario is not what Arroyo has presented in
her
Amended
documents
as
Complaint.
a
To
“condition
mischaracterization.
characterize
precedent”
Moreover,
the
the
is
terms
somewhat
of
arrangement, if any, are insufficiently pled.
alleges
that
“Defendants
represented
to
provision
the
of
of
a
contractual
At best, Arroyo
Plaintiffs
that,
following the submission and review of a completed modification
package, Plaintiffs would be given terms to make payments as
part of a trial modification.”
(Am. Compl. ¶ 5.)
Whether this
was a definite promise or a mere possibility is unclear.
See
Sholiay v. Fed. Nat’l Mortg. Ass’n, No. 13-CV-0958, 2013 WL
5569988, at *3 (E.D. Cal. Oct. 9, 2013) (holding that there was
no
contract
for
a
loan
modification
because
a
letter
from
defendant to plaintiff stated that if the plaintiff qualified,
he may be offered a TPP).
Furthermore, as best the Court can
make out from the vague allegations, Arroyo and PHH appear to
have been involved in communications akin to negotiations.
See,
e.g., Calhoun v. CitiMortgage, Inc., No. 13-CV-8042, 2014 WL
274122, at *3 (N.D. Ill. Jan. 24, 2014) (distinguishing Wigod
because, although the plaintiff stated that he entered into a
21
trial
payment
plan,
a
forbearance
agreement,
and
a
loan
modification agreement with CitiMortgage, “it [wa]s unclear to
the court whether there was any agreement at all regarding 1633
E.91st
based
on
the
documents
[plaintiff]
attached
to
his
complaint”).
As Arroyo has not sufficiently pled the contractual
provisions purportedly breached by PHH, PHH’s motion to dismiss
is GRANTED in this regard, and Arroyo’s breach of contract claim
is DISMISSED WITHOUT PREJUDICE.
235
(“Having
failed
to
See Abraham, 947 F. Supp. 2d at
adequately
plead
the
terms
of
any
contract or contracts, [Plaintiff’s] breach of contract claim
fails as a matter of law.”).
D. Breach of the Covenant of Good Faith and Fair Dealing
PHH further moves for dismissal of Arroyo’s claim for
breach of the covenant of good faith and fair dealing because,
inter alia, Arroyo does not allege the existence of a valid
contract upon which such a claim could be based and, even if she
did, it would be duplicative of a breach of contract claim.
The
Court agrees.
Arroyo
must
first
allege
the
existence
of
a
valid
contract in order to maintain her claim, which she has not done.
See Kapsis v. Am. Home Mortg. Serv., Inc., 923 F. Supp. 2d 430,
452 (E.D.N.Y. 2013).
Moreover, assuming, arguendo, that Arroyo
could state a claim for breach of contract, her claim for breach
22
of
the
covenant
duplicative.
of
good
fair
dealing
is
wholly
See id. at 452 n.7; Mendez, 840 F. Supp. 2d at
652 (collecting cases).
of
and
It is well-settled that such a duplicative claim
cannot stand.
breach
faith
contract
Arroyo’s attempts to distinguish her
claim
and
her
claim
for
breach
of
the
covenant of good faith and fair dealing are not persuasive.
(See Pl.’s Opp. Br. at 18-19.)
abundantly
clear
that
her
And the Amended Complaint makes
claim
fully
allegations of a breach of contract.
overlaps
with
any
(See Am. Compl. ¶ 69
(“Defendants breached the implied covenant of good faith and
fair dealing contained in their loan modification agreements.”);
id. ¶ 70(a) (“Defendants further breached the implied covenant
of good faith and fair dealing by . . . Failing to make a good
faith effort to fulfill Defendants’ contractual obligations . .
.”).)
Accordingly, PHH’s motion to dismiss in this regard is
GRANTED, and Arroyo’s claim for breach of the covenant of good
faith and fair dealing is DISMISSED WITH PREJUDICE.
E. Fraud-Based Claims
PHH
claim
for
demanding
additionally
fraudulent
and
seeks
concealment,
collecting
monthly
dismissal
of
fourth
claim
note
Arroyo’s
payments
for
third
fraud
under
in
false
pretenses, and seventh claim for fraud in the inducement because
Arroyo has not pled these claims with the requisite specificity.
The Court agrees.
23
Federal Rule of Civil Procedure 9(b) requires that a
party
alleging
fraud
“must
state
with
particularity
FED. R. CIV. P.
circumstances constituting fraud or mistake.”
9(b).
the
If there are multiple defendants potentially implicated
in the fraud, “the complaint should inform each defendant of the
nature of his alleged participation in the fraud.”
DiVittorio
v. Equidyne Extractive Indus., Inc., 822 F.2d 1242, 1247 (2d
Cir. 1987).
The elements of common law fraud under New York law
are: “(1) the defendant made a material false representation,
(2) the defendant intended to defraud the plaintiff thereby, (3)
the plaintiff reasonably relied upon the representation, and (4)
the plaintiff suffered damage as a result of such reliance.”
Banque
Bank,
Arabe
57
et
F.3d
Internationale
146,
153
D’Investissement
(2d
Cir.
1995).
v.
“A
Md.
Nat’l
fraudulent
concealment claim shares these same elements with the additional
requirement that a plaintiff must show that the defendant had a
duty to disclose the material information.”
Woods v. Maytag
Co., 807 F. Supp. 2d 112, 119 (E.D.N.Y. 2011).
the
particularity
requirement
the
“[p]laintiff
must:
(1)
for
alleged
specify
the
To comply with
misrepresentations,
alleged
fraudulent
statements; (2) identify the speaker; (3) state where, when and
to
whom
the
statements
were
made;
24
and
(4)
explain
why
the
statements were fraudulent.”
Waldman v. New Chapter, Inc., 714
F. Supp. 2d 398, 402 (E.D.N.Y. 2010).
Arroyo’s fraud-based claims fail for several reasons.
First,
the
Amended
Complaint
“Defendants” generally.
lodges
allegations
This is insufficient.
against
See DeSilva v.
N. Shore-Long Island Jewish Health Sys., Inc., 770 F. Supp. 2d
497, 526-27 (E.D.N.Y. 2011) (allegations regarding fraud in the
inducement
did
not
satisfy
Rule
9(b)
because
they
lumped
defendants together); Alnwick v. European Micro Holdings Inc.,
281 F. Supp. 2d 629, 640 (E.D.N.Y. 2003) (same).
That all
Defendants but PHH have been voluntarily dismissed since the
filing
of
the
Amended
Complaint
does
not
rectify
the
generalities of Arroyo’s allegations given the required level of
specificity.
Second,
the
Amended
Complaint
references
various
promises or representations, but without much context and only
in very general terms.
See Arista Tech., Inc. v. Arthur D.
Little Enters., Inc., 125 F. Supp. 2d 641, 647 (E.D.N.Y. 2000)
(“[W]ithout
more
information,
a
defendant
reading
these
assertions would be aware only of vague allegations of unstated
misrepresentations, assurances, and efforts.”).
Moreover, while
the Amended Complaint includes some time frames, the Court is
left to guess as to when certain other events occurred.
See
DeSilva, 770 F. Supp. 2d at 526 (“[P]laintiffs’ vague allegation
25
that the alleged misstatements were made ‘repeatedly’ over the
course of ten years is not sufficient under Rule 9(b) to state a
claim
for
mail
fraud.”);
Alnwick,
281
F.
Supp.
2d
at
640
(“[V]ague window of time is insufficient to satisfy the pleading
standards
of
concealment
rule
claim
9(b).”)
asserts
For
that
example,
“Defendants
the
used
fraudulent
fraud
and
artifice to lure Plaintiffs into defaulting on their mortgages
by promising future opportunities for loan modifications when
they
had
no
modifications.”
intention
(Am.
Compl.
of
¶
providing
73.)
It
such
is
not
permanent
clear
what
“artifice” the Amended Complaint is alleging nor when, exactly,
this fraud allegedly occurred.
Accordingly, PHH’s motion to dismiss Arroyo’s fraudbased claims is GRANTED, and such claims are DISMISSED WITHOUT
PREJUDICE.7
F. GBL § 349
PHH also moves for dismissal of Arroyo’s claim for
violation of New York’s GBL § 349 because Arroyo’s claim is
time-barred and because she has otherwise failed to state a
claim.
The Court partially agrees.
PHH also argues that Arroyo’s
independently fails because PHH
duty. While this may very well
level of specificity, the Court
Arroyo’s claim.
7
fraudulent concealment claim
did not owe Arroyo a fiduciary
be true, without the requisite
will not determine the merits of
26
Section 349 of the GBL prohibits “[d]eceptive acts or
practices in the conduct of any business, trade or commerce or
N.Y. GEN. BUS. LAW § 349(a).
in the furnishing of any service.”
“To
state
a
demonstrate
claim
that
under
(1)
the
Section
349,
defendant’s
‘a
plaintiff
deceptive
acts
must
were
directed at consumers, (2) the acts are misleading in a material
way,
and
(3)
the
plaintiff
has
been
injured
as
a
result.’”
Kapsis, 923 F. Supp. 2d at 449 (quoting Maurizio v. Goldsmith,
230 F.3d 518, 521 (2d Cir. 2000)).
Claims under this section are subject to a three-year
statute of limitations.
To the extent Arroyo’s claim relates to
loan origination, which occurred in 2009 (see Kolodny, Docket
Entry 33-1, Decl. Ex. 12), her claim is time-barred, and Arroyo
implicitly concedes as much.
See Knox v. Countrywide Bank, ---
F. Supp. 2d ----, 2014 WL 946635, at *7 (E.D.N.Y. Mar. 12, 2014)
(stating a three-year statute of limitations); (Pl.’s Opp. Br.
at
23
(arguing
that
Arroyo’s
GBL
claims
relate
only
to
modification efforts)).
Arroyo, however, also alleges that PHH violated the
GBL “by misrepresenting a material fact to Plaintiffs by failing
to state that their mortgages would be assigned or insured and
bundled in such a way that there would be no bank having an
interest in working with the Plaintiffs in the event they needed
a
forbearance
or
modification
27
agreement
despite
Plaintiffs’
qualifications.”
arguments
in
(Am.
response,
Compl.
arguing
¶
108.)
PHH
particularly
raises
that
several
Arroyo
has
failed to allege consumer-oriented conduct and that she does not
sufficiently allege that the acts were misleading in a material
way.
Although the Amended Complaint lacks some detail, the
Court finds that Arroyo has sufficiently alleged the first two
elements of her GBL claim.
Specifically,
consumer-oriented
conduct
is
“conduct
that potentially affects similarly situated consumers.”
Kapsis,
923 F. Supp. 2d at 449 (internal quotation marks and citation
omitted).
estate
“To satisfy this requirement in the context of a real
transaction,
courts
have
generally
required
that
a
plaintiff allege that the defendant affirmatively and publicly
sought
transactions
with
consumers.”
Hayrioglu
v.
Granite
Capital Funding, LLC, 794 F. Supp. 2d 405, 410 (E.D.N.Y. 2011)
(collecting
cases).
Moreover,
“[p]rivate
contract
disputes,
unique to the parties, for example, [do] not fall within the
ambit of [Section 349].”
Id. at 410 (quoting Oswego Laborers’
Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d
20, 25, 647 N.E.2d 741, 744, 623 N.Y.S.2d 529, 532 (N.Y. 1995)
(alterations in original)).
Here, though, Arroyo alleges that
PHH had a loan modification program that was a ruse and that PHH
essentially had a policy of not stating the insurance structure
and alleged lack of incentive to modify.
28
Although inartfully
pled, the Amended Complaint also references that PHH marketed
that modification would be a viable option for homeowners.
(Am.
Compl. ¶ 26.)
Moreover,
the
Amended
Complaint
at
least
plausibly
alleges that such misrepresentation was material.
Whether a
misrepresentation
determined
is
materially
misleading
according to the reasonable consumer standard.
F. Supp. 2d at 340.
is
See Karakus, 941
The Amended Complaint sufficiently alleges
that a reasonable consumer would be misled into believing that
modification
is
a
viable
option,
when
in
fact--according
to
Arroyo--PHH had no intention of pursuing such.
Arroyo’s claim is deficient, however, in that it fails
to allege the third element of a claim pursuant to Section 349,
namely injury caused by the material misrepresentation.
The
Amended Complaint conclusorily alleges that “[t]he unfair and
deceptive trade acts and practices of Defendants have directly,
foreseeably,
Plaintiffs
and
and
proximately
consumers
at
caused
damages
large.”
(Am.
and
injury
Compl.
¶
to
112.)
Arroyo’s GBL claim does not expound upon this allegation, and
PHH is left to guess where or how exactly, based on the 142
paragraphs of the Amended Complaint, Arroyo intends to allege
injury.
Alleging
causation,
and
how
caused the alleged injury, is essential.
29
the
alleged
acts
have
Abraham, 947 F. Supp.
2d at 234-35.
Arroyo’s claim fails, though, as she has not even
alleged what the injury was.8
Accordingly,
PHH’s
motion
to
dismiss
Arroyo’s
GBL
claim is GRANTED, and such claim is DISMISSED WITHOUT PREJUDICE.
G. TILA Claim
PHH also moves to dismiss Arroyo’s TILA claim as timebarred.
The Court agrees.
Arroyo alleges that:
Defendants fraudulently induced Plaintiffs
to enter into unduly burdensome mortgage
loans by misrepresenting or withholding
material information. In particular:
A.
Required
insufficient
financial
documentation,
or
disregarded
critical
aspects of Plaintiffs’ loan applications, to
adequately determine a borrower’s income and
financial capability to make all payments
through the life of a loan, when approving
Plaintiffs for a mortgage.
B. Encouraged exaggerated incomes by
certain
Plaintiffs
because
Defendants’
underwriting guidelines permitted them to
lend more money, allowing Defendants to
garner more interest than would otherwise
have been possible.
In her opposition, Arroyo asserts that the injuries were lost
opportunities in considering “alternatives to foreclosure or
stripped equity in the form of payments”. (Pl.’s Opp. Br. at
23.) Arroyo cannot amend her complaint through her opposition
briefs, and she has shown an ability to adequately allege
damages or injury in other parts of the Amended Complaint. See
Fadem v. Ford Motor Co., 352 F. Supp. 2d 501, 516 (S.D.N.Y.
2005) (“It is longstanding precedent in this circuit that
parties cannot amend their pleadings through issues raised
solely in their briefs.”). (See, e.g., Am. Compl. ¶ 66.)
8
30
C. Failed to disclose escrow charges
for taxes and insurance from Plaintiffs’
disclosed monthly mortgage payment to make
the payment seem more affordable.
D.
Offered
mortgage
loans
that
Plaintiffs could not afford to service, but
were nonetheless made, because Defendants
adequately collateralized such loans, which
amounts to improper asset-based lending.
E.
Inappropriately
made
assurances
regarding not only the stability of the
housing market, and grossly exaggerated
expected
growth
in
housing
prices.
Plaintiffs were induced to accept loan terms
because there would always be an option to
sell their homes at a profit, or else
refinance it with more favorable terms.
(Am. Compl. ¶ 129.)
TILA has a one-year statute of limitations.
§ 1640(e); see Knox, 2014 WL 946635, at *8.
15 U.S.C.
Accordingly, PHH
appropriately argues that Arroyo’s TILA claim is time-barred.
In response, Arroyo asserts that her claim should be tolled
until
the
time
of
discovery.
(Pl.’s
Opp.
Br.
at
23-24.)
However, courts have made abundantly clear that the statute of
limitations runs from the time of the occurrence, not the time
of discovery.
See McAnaney v. Astoria Fin. Corp., No. 04-CV-
1101, 2007 WL 2702348, at *6 (E.D.N.Y. Sept. 12, 2007) (noting
that it is “well-settled” that the discovery rule does not apply
in closed-end transactions such as mortgages); Johnson v. Scala,
No. 05-CV-5529, 2007 WL 2852758, at *3 (S.D.N.Y. Oct. 1, 2007)
(“Case law supports the notion that the statute of limitations
31
for TILA claims does not start running upon the discovery of the
non-disclosure,
but,
rather,
upon
the
funding
of
the
loan.”
(collecting cases)).
Moreover, the Court notes that equitable tolling is
potentially available to toll the statute of limitations for
TILA claims.
See, e.g., Grimes v. Fremont General Corp., 785 F.
Supp. 2d 269, 286-87 (S.D.N.Y. 2011).
asserted
equitable
argument.
613
tolling
and
Arroyo, however, has not
has
therefore
abandoned
this
See McDonald v. City of N.Y., 786 F. Supp. 2d 588,
(E.D.N.Y.
2011).
Moreover,
“‘[e]quitable
tolling
is
available in rare and exceptional circumstances, where the court
finds that extraordinary circumstances prevented the party from
timely performing a required act, and that the party acted with
reasonable diligence throughout the period he sought to toll.’”
Grimes, 785 F. Supp. 2d at 286 (quoting Williams v. Aries Fin.,
LLC, No. 09-CV-1816, 2009 WL 3851675, at *6 (E.D.N.Y. Nov. 18,
2009)).
The
Amended
Complaint
is
wholly
devoid
allegations regarding diligence on Arroyo’s part.
fraudulent
conduct
must
go
beyond
the
of
any
Moreover, the
nondisclosure
itself.
Id.; see also Gorbaty v. Wells Fargo Bank, N.A., Nos. 10-CV3291, 10-CV-3354, 2012 WL 1372260, at *8 (E.D.N.Y. Apr. 18,
2012) (collecting cases).
32
Accordingly, Arroyo’s TILA claim is time-barred, PHH’s
motion to dismiss is GRANTED in this regard, and her TILA claim
is DISMISSED WITH PREJUDICE.
H. RESPA Claim
Finally,
PHH
moves
for
dismissal
of
Arroyo’s
RESPA
claim, arguing that this claim is also time-barred and that
Arroyo otherwise fails to appropriately state a claim.
The
Court agrees that dismissal is appropriate.
There are three private causes of action under RESPA-actions pursuant to Sections 2605, 2607, and 2608.
U.S.C. ¶¶ 2605, 2607, 2608.)
The Amended Complaint references
Sections 2603, 2604, and 2607.
Complaint
references
To the extent that the Amended
Sections
2603
and
properly state a private cause of action.
140.)
(See 12
2604,
Arroyo
cannot
(See Am. Compl. ¶
To the extent that the Amended Complaint raises a claim
pursuant to 2607, which prohibits kickbacks and unearned fees,
that section is subject to a one-year statute of limitations.
See Grimes, 785 F. Supp. 2d at 289.
Like Arroyo’s alleged TILA
claim, the statute of limitations begins running from the date
of occurrence.
See id.
Moreover, although subject to potential
equitable tolling, Arroyo has not argued for such nor shown that
tolling is appropriate.
See id.
Therefore, her claim pursuant
to Section 2607 is DISMISSED WITH PREJUDICE.
33
In
Complaint
addition,
makes
opposition
no
argues
despite
the
to
reference
that
PHH
fact
Section
has
that
the
Amended
2605,
misconstrued
Arroyo’s
the
Amended
Complaint to assert a claim pursuant to Section 2607 and that
Arroyo has clearly stated a claim pursuant to Section 2605.
(See Pl.’s Opp. Br. at 24.)
debtor
may
servicer
of
servicing.’”
submit
its
a
QWR
loan
“Under Section 2605 of RESPA, a
[qualified
for
written
‘information
request]
relating
to
to
the
[
]
Kapsis, 923 F. Supp. 2d at 444 (quoting 12 U.S.C.
§ 2605(e)(1)(A)) (second alteration in original).
“To survive a
motion to dismiss, a plaintiff bringing a Section 2605 claim
must, in addition to showing defendant’s failure to comply with
the provisions of Section 2605, identify damages that he or she
sustained as a result of defendant’s alleged violation(s).”
Id.
Here, Arroyo’s RESPA claim makes no reference to Section 2605,
any particular QWRs, nor the alleged damages.
Arroyo asserts
that she has “stated specifics concerning [her] QWR submissions
as
well
as
the
nature
of
Defendant’s
suspected
including accounting and ownership issues.”
24.)
and
violations,
(Pl.’s Opp. Br. at
The Court, however, will not scour the Amended Complaint
attempt
to
piece
Arroyo’s
claim
together
for
her.
See
Chylinski v. Bank of Am., 630 F. Supp. 2d 218, 224 (D. Conn.
2009) (“The court will not, however, further scour the letter
for facts that could support [plaintiff’s] sex discrimination
34
claims.
To do so would be unfair to the defendant, which is
entitled to fair notice of the grounds on which [plaintiff’s]
claim rests so that it can defend itself against [plaintiff’s]
claim.”).
Accordingly, PHH’s motion to dismiss Arroyo’s RESPA
claim is GRANTED.
Her claim pursuant to Sections 2603, 2604,
and 2607 are DISMISSED WITH PREJUDICE and any additional claims
under RESPA are DISMISSED WITHOUT PREJUDICE.
III.
Amendment
Although Arroyo has not specifically moved to amend
her complaint again, courts should grant leave to amend “when
justice so requires.”
FED. R. CIV. P. 15(a)(2).
Leave to amend
should be granted unless there is evidence of undue delay, bad
faith, undue prejudice to the non-movant, or futility.
See
Milanese v. Rust–Oleum Corp., 244 F.3d 104, 110 (2d Cir. 2001).
To determine whether an amended claim is futile, courts analyze
whether
the
proposed
pleading
would
withstand
a
motion
dismiss under Federal Rule of Civil Procedure 12(b)(6).
to
See
Dougherty v. Town of N. Hempstead Bd. of Zoning Appeal, 282 F.3d
83, 88 (2d Cir. 2002).
The Court finds that, as to Arroyo’s claims that have
been dismissed without prejudice, she should be given one final
opportunity to assert her claims.
35
These claims were primarily
dismissed due to insufficient pleadings which could potentially
be rectified through amendment.
CONCLUSION
For the foregoing reasons, PHH’s motion to sever is
GRANTED and McMahon’s claims are DISMISSED WITHOUT PREJUDICE to
commencing a separate action.
If McMahon wishes to do so, she
must commence a separate action within thirty (30) days of the
date of this Memorandum and Order.
Additionally, the statute(s)
of limitations for any of her claims is tolled for a period of
thirty (30) days from the date of this Memorandum and Order.9
Moreover, PHH’s motion to supplement is GRANTED.
[BOTTOM OF PAGE INTENTIONALLY LEFT BLANK]
Such tolling, however, will not affect any of her claims that
were barred by the statute of limitations when this action was
originally commenced.
9
36
Finally, PHH’s motion to dismiss is GRANTED IN PART
and DENIED IN PART.
GRANTED.
It is DENIED as to standing, but otherwise
Arroyo’s claims for breach of the covenant of good
faith and fair dealing, violation of TILA, and violation of
RESPA
Sections
PREJUDICE.
2603,
Arroyo’s
2604,
and
additional
2607
claims
PREJUDICE and with leave to replead.
are
are
DISMISSED
DISMISSED
WITH
WITHOUT
If she chooses to do so,
she must file a Second Amended Complaint within thirty (30) days
of the date of this Memorandum and Order.
If she does not
timely do so, her claims will be dismissed with prejudice and
the case will be closed.
SO ORDERED.
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated:
May
19 , 2014
Central Islip, NY
37
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