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