Viera v. Bayview Loan Servicing, LLC et al

Filing 19

MEMORANDUM AND ORDER granting 8 Motion to Dismiss in toto. So Ordered by Chief Judge William E. Smith on 10/12/2018. (Jackson, Ryan)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
)
)
Plaintiff,
)
)
v.
)
)
BANK OF NEW YORK MELLON,
)
as Trustee for the Certificate
)
Holders of CWALT, Inc.,
)
Alternative Loan Trust 2005-86CB
)
Mortgage Pass-Through Certificates,)
Series 2005-86B; and BAYVIEW LOAN )
SERVICING, LLC,
)
)
Defendants.
)
___________________________________)
JAMES VIERA,

C.A. No. 17-0523-WES-PAS

MEMORANDUM AND ORDER
WILLIAM E. SMITH, Chief Judge.
Before the Court is Defendants’ Motion to Dismiss and
Dissolve that entered on November 13, 2017 (“Defendants’ Motion”)
(ECF No. 8), pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal
Rules of Civil Procedure. After carefully reviewing the written
submissions of the parties, the Court grants Defendants’ Motion in
toto.
I.

Background
This

Defendants

dispute

arises

commenced

out

against

of

foreclosure

Plaintiff

in

proceedings

the

fall

of

that
2017.

Plaintiff executed a mortgage agreement for his home in December of
2005; Defendant Bank of New York Mellon (“BNYM”) is the current
1

mortgagee and assignee of the Note associated with that mortgage;
Defendant Bayview Loan Servicing, LLC (“Bayview”) is the current
loan servicer. In 2010, Plaintiff filed for bankruptcy and stopped
making regular payments on the mortgage loan. (Compl. Ex. B at 1,
ECF No. 1-4.)
Seven years later, on August 3, 2017, Defendant Bayview sent
Plaintiff a letter entitled “Notice of Default and Intent to
Accelerate” indicating that his mortgage loan was in default and
that the loan would be accelerated on September 7, 2017 if he failed
to pay the total amount due of $148,858.78. (See id.)

Plaintiff

does not claim to have cured the default or to have made any effort
to cure the default after receiving that notice.
After Plaintiff failed to cure his default by September 7,
2017, Bayview invoked its statutory power of sale and scheduled a
foreclosure sale of the property to take place on November 13.
Mot. for TRO ¶ 6, ECF No. 2.)

(See

On November 12, Plaintiff filed a

Complaint and an Emergency Motion for a Temporary Restraining Order
to enjoin the scheduled foreclosure sale. (Compl. ECF No. 1; Mot.
for TRO, ECF No. 2.) That motion was granted by text order following
a telephonic hearing on November 13, at which all parties were
represented.
On April 24, 2018, Defendants moved to dissolve the TRO and to
dismiss Plaintiff’s Complaint pursuant to Rules 4(m), 12(b)(1), and
12(b)(6) of the Federal Rules of Civil Procedure.
2

II.

Discussion
A.

Motion to Dismiss Plaintiff’s Complaint

The Complaint states five counts: (1) breach of contract; (2)
violation

of

the

covenant

of

good

faith

and

fair

dealing;

(3) injunctive relief; (4) violation of the Rhode Island Fair Debt
Collection Practices Act, R.I. Gen. Laws § 19-14.9-1 et seq.,
(“RIFDCPA”); and (5) violation of the Truth in Lending Act, 15
U.S.C. § 1601 et seq. (“TILA”).1
In essence, Plaintiff claims that Defendants did not have
authority to invoke their statutory power of sale because they never
sent him a notice of default or a notice of acceleration, both of
which Plaintiff contends were required by paragraph 22 of the
mortgage

agreement.

Plaintiff

alternatively

contends

that

the

notice of default he received on August 3, 2017 was substantively
deficient.

On

these

bases,

Plaintiff

claims

that

Defendants

breached the terms of the mortgage agreement as well as the covenant
of good faith and fair dealing, and contends that this breach of
contract entitles him to injunctive relief permanently enjoining a
foreclosure sale of his home. (Compl. ¶¶ 48, 55, 64, ECF No. 1.)
Plaintiff also alleges that Bayview’s attempt to foreclose on
the property violated RIFDCPA because Bayview “falsely stated the
amount claimed to be due in past due interest and charges, in every

Although the Complaint mistakenly includes two Count IV’s,
this order will refer to Plaintiff’s TILA claim as “Count V” for
clarity.
1

3

statement” sent to Plaintiff. (Id. at ¶ 71(c).) Lastly, Plaintiff
claims that both Defendants violated TILA when they failed to send
Plaintiff monthly mortgage statements and charged his mortgage loan
account

for

costs

and

fees

associated

with

their

foreclosure

attempts. (Id. at ¶ 93, 95.)
i.

Dismissal for Failure to
Accordance with Rule 4(m)

Effect

Service

in

As a threshold matter, Plaintiff failed to properly serve
Defendant Bank of New York under Rule 4 of the Federal Rules of
Civil Procedure and, as such, the Court cannot exercise personal
jurisdiction over that Defendant.

Accordingly, the Court dismisses

without prejudice all of Plaintiff’s claims as they pertain to Bank
of New York. See Fed. R. Civ. P. 4(m). Plaintiff’s claims on the
merits brought against both Defendants, however, survive only as to
Bayview.2
ii.
The

crux

Count I – Breach of Contract
of

Plaintiff’s

breach-of-contract

claim

is

that

paragraph 22 of the mortgage agreement required Defendants to send
Plaintiff a default notice as well as a notice of acceleration prior
to

commencing

foreclosure

proceedings.

Plaintiff

alleges

that

Defendants never sent him either notice and, therefore, did not
satisfy the conditions necessary to invoke their statutory power of

That said, the Court notes that its analysis and conclusions
would have applied equally to Bank of New York, had Plaintiff
properly effected service upon it.
2

4

sale. (Compl. ¶¶ 7, 12, ECF No. 1.) Plaintiff alternatively contends
that the notice he received on August 3, 2017 did not constitute a
default notice as required under the mortgage agreement because it
“did not state a specific amount due” to cure default. (Id. at ¶
15.) Plaintiff’s interpretation of the contract is flawed.
First,

paragraph

22

did

not

require

Defendants

to

send

Plaintiff a notice of acceleration in addition to the notice of
default that he received on August 3, 2017.

paragraph 22 provides

that “Lender shall give notice to Borrower prior to acceleration”
and identifies the specific list of information that the notice
must include. (Id. at 11.) It then states:
If the default is not cured on or before the
date specified in the notice, Lender at its
option may require immediate payment in full of
all sums secured by this Security Instrument
without further demand and may invoke the
STATUTORY POWER OF SALE and any other remedies
permitted by Applicable Law.
(Id. (emphasis added).)

The emphasized language suggests that no

secondary notice of acceleration is required before Defendants could
properly accelerate the loan and commence foreclosure proceedings,
because

such

additional

notice

would

effectively

be

“further

demand.”
Second, the notice of default sent on August 3, 2017 complied
with all of the substantive requirements set forth in paragraph 22,
including the requirement to state the specific amount due to cure

5

default.3 The August 3 letter stated that “[t]his letter is formal
notice . . . that you are in default . . . . [T]he total amount
required to cure the default is $148,858.78 . . . . The default
above can be cured by payment of the total amount . . . by
09/07/2017.”

(Compl. Ex. B at 2, ECF No. 1-4.) Despite Plaintiff’s

contention to the contrary, the notice of default clearly stated
the “specific amount due” to cure default. (See Compl. ¶ 15.)
Additionally, the notice of default complied with all of the other
substantive requirements set forth in paragraph 22.
In ruling on a motion to dismiss, the Court must “accept as
true all well-pleaded facts in the complaint and draw all reasonable
inferences in favor of the plaintiff[].”

Gargano v. Liberty Int'l

Underwriters, 572 F.3d 45, 48 (1st Cir. 2009). A motion to dismiss
will be granted “only if, when viewed in this manner, the pleading
shows no set of facts which could entitle plaintiff to relief.”
Gooley v. Mobil Oil Corp., 851 F.2d 513, 514 (1st Cir. 1988).
Taking all of the facts alleged in the light most favorable to
Plaintiff, it is clear that he has not stated a viable breach-ofcontract claim. paragraph 22 entitled Plaintiff to receive a default

In reaching its decision, the Court properly reviewed the
mortgage agreement and the notice of default, both of which were
attached to the Complaint and are incorporated by reference therein.
See Jorge v. Rumsfeld, 404 F.3d 556, 559 (1st Cir. 2005)(holding
that, in ruling on a motion to dismiss, the court may “augment those
facts [in the Complaint] with facts extractable from documentation
annexed to or incorporated by reference in the complaint and matters
susceptible to judicial notice.”).
3

6

notice that included specific information outlined in paragraph 22,
which he received. Additionally, that paragraph plainly does not
require

Defendants

acceleration.”

to

send

Plaintiff

a

separate

“notice

of

As such, Plaintiff’s claim is dismissed pursuant to

Rule 12(b)(6).
i.

Count II – Breach of the Covenant of Good Faith
and Fair Dealing

Plaintiff’s claim for breach of the covenant of good faith and
fair dealing cannot stand in the absence of a viable breach of an
underlying contract. See McNulty v. Chip, 116 A.3d 173, 185 (R.I.
2015) (“[A] claim for breach of the implied covenant of good faith
and fair dealing does not create an independent cause of action
separate and apart from a claim for breach of contract.”). Because
Plaintiff’s breach-of-contract claim fails, the Court dismisses
Plaintiff’s claim for a breach of the covenant of good faith and
fair dealing pursuant to Rule 12(b)(6).
ii.
Plaintiff

Count III – Injunctive Relief
requests

both

a

preliminary

and

a

permanent

injunction to enjoin Defendants from foreclosing on his home.
Presumably, the preliminary injunction related to the foreclosure
proceedings that were scheduled for November 13, 2017.

Plaintiff

successfully obtained a TRO enjoining that foreclosure sale and
there is no further relief the Court can grant as to that claim.
Accordingly, Plaintiff’s claim for preliminary injunctive relief is
7

dismissed as moot. See Chafin v. Chafin, 568 U.S. 165, 172 (2013)
(“[A] case becomes moot only when it is impossible for a court to
grant any effectual relief whatever to the prevailing party.”)
(quotations omitted).
Plaintiff’s claim for permanent injunctive relief is likewise
dismissed

because,

as

discussed

throughout

this

Memorandum,

Plaintiff will not succeed on the merits of his claims. See Largess
v. Supreme Judicial Court for State of Massachusetts, 373 F.3d 219,
224 (1st Cir. 2004) (stating that the standard for granting a
permanent injunction is “virtually identical [to the standard for
granting preliminary] injunctive relief, except that the movant
must show actual success on the merits of the claim, rather than a
mere likelihood of such success.”) (quotations omitted).
iii.

Count IV – Violations of the Rhode Island Fair
Debt Collection Practices Act

Count IV asserts the RIFDCPA claim against Bayview only,
alleging that the monthly mortgage statements sent to Plaintiff
were inaccurate because his mortgage loan account was “charged
improper fees and costs relating to foreclosure attempts on his
property.” (Compl. ¶ 93.) Defendants argue that Count IV should be
dismissed because the alleged violations of RIFDCPA either fall
outside

of

the

applicable

statute

of

limitations

or

fail

to

articulate a concrete and particularized injury as required to
establish standing.

8

RIFDCPA’s statute of limitations provides that “[a]n action to
enforce any liability created by the provisions of this article may
be brought in any court of competent jurisdiction within one year
from the date on which the violation occurs.” R.I. Gen. Laws § 1914.9-13(5) (emphasis added).

Because Plaintiff filed his Complaint

on November 12, 2017, he may only bring a RIFDCPA action for
violations that occurred within one year of that date — i.e.,
violations that occurred on or after November 12, 2016.
The only charge Plaintiff points to that falls within the
statute of limitations is a $300.00 charge allegedly incurred on
November 15, 2016 for “legal fees for foreclosures without a default
letter sent pursuant to the terms of the mortgage and without ever
having sent an acceleration letter.” (Compl. ¶ 96.)

The RIFDCPA

claim as it relates to the November 15 fees must likewise be
dismissed in accordance with Spokeo, Inc. v. Robins, 136 S.Ct. 1540,
1549 (2016), because Plaintiff has alleged only a “bare procedural
violation” and therefore has failed to allege an injury that is
sufficiently concrete to confer Article III standing.
In Spokeo, the plaintiff claimed that the defendant violated
the Fair Credit Reporting Act, 15 U.S.C. § 1681 (“FCRA”), by
creating an online profile about him which contained inaccurate
personal information. Id. at 1544. The Supreme Court observed that,
while the injury that the plaintiff had alleged was sufficiently
“particularized” (i.e., personal to that plaintiff) he had failed
9

to establish that the injury was “concrete.”

Id. at 1548-49. The

Court explained that “[a] ‘concrete’ injury must be ‘de facto’;
that is, it must actually exist. When we have used the adjective
‘concrete,’ we have meant to convey the usual meaning of the term—
‘real,’ and not ‘abstract.’” Id. at 1548 (citations omitted).

The

Supreme Court held that “not all inaccuracies cause harm or present
any material risk of harm” and, therefore, a complaint based upon
only a technical violation of a statutory right, without any
explanation of how the violation actually harmed the plaintiff,
failed to establish standing. Id. at 1548, 1550.
Like the plaintiff in Spokeo, here, Plaintiff has not explained
how the inclusion of the allegedly improper fees and expenses
charged to his account on November 15, 2016 caused him actual harm.
There is no allegation in the Complaint that Plaintiff ever paid
any of the allegedly improper charges and Plaintiff has not stated
whether the November 15, 2016 charge currently appears on his
mortgage loan account, or why the appearance of that charge would
be wrongful.

Moreover, Plaintiff seeks damages only for the costs

he has incurred in prosecuting the RIFDCPA claim and attorney’s
fees. While these damages would be recoverable if Plaintiff had
successfully established a RIFDCPA violation, see R.I. Gen. Laws
§ 19-14.9-13(2)(d), they are not a substitute for the injury-infact requirement developed in Spokeo. See Pemental v. Bank of New
York Mellon for Holders of Certificates , First Horizon Mortg. Pass10

Through Certificates Series FHAMS 2004-AA5, No. CV 16-483S, 2017 WL
3279015 (D.R.I. May 10, 2017), report and recommendation adopted
sub nom. Pemental v. Bank of New York Mellon, No. CV 16-483 S, 2017
WL 3278872 *8 (D.R.I. Aug. 1, 2017) (finding that attorneys’ fees
and costs incurred in asserting a TILA action were not a substitute
for the injury-in-fact requirement because “apart from pro se
claims, every TILA complaint requires the expenditure of attorneys’
fees” and to hold otherwise would allow a claim for attorneys’ fees
to “subsume the injury-in-fact requirement.”).
As

Plaintiff

has

failed

to

allege

an

injury

that

is

sufficiently concrete to confer standing, his RIFDCPA claims are
dismissed pursuant to Rule 12(b)(1).
iv.

Count V – Violations of the Truth in Lending Act

Plaintiff alleges that Defendants violated TILA by (1) failing
to send him required monthly mortgage statements and (2) by charging
improper fees to his mortgage loan account for property inspections
and foreclosure costs. The Court addresses each alleged violation
in turn.
1.

Failure to Send Monthly Mortgage Statements

Defendants contend that they were not required to send monthly
mortgage

statements

to

Plaintiff

because

Plaintiff’s

personal

liability on the underlying mortgage loan was discharged in an
October 2010 bankruptcy proceeding pursuant 11 U.S.C. § 727 and
Defendant BNYM’s predecessor in interest, Shamrock Corporation, was
11

named as a creditor in that proceeding.4 (See Mem. in Supp. of
Defs.’ Mot. to Dismiss 12, ECF No. 8-1.) Alternatively, Defendants
argue that, even if they had a duty to send Plaintiff monthly
statements, Plaintiff has pleaded only a technical violation of
TILA

and

has

failed

to

allege

a

concrete

injury

caused

by

Defendants’ purported failure to send statements. (Id.)
Plaintiff does not contest that his personal liability on the
mortgage

was

discharged

in

bankruptcy,

but

contends

that

an

amendment to Regulation Z “changed the legal landscape” and imposed
a duty upon Defendants to send Plaintiff monthly statements, despite
his bankruptcy discharge. However, the amendment on which Plaintiff
hangs his hat went into effect on April 29, 2018 – i.e., five months
after Plaintiff filed his Complaint. As such, that amendment is not
germane to this case.
12

C.F.R.

§

1026.41,

titled

“Periodic

statements

for

residential mortgage loans,” discusses the formal and substantive
requirements applicable to the monthly statements that mortgage

The Court considers the filings in Plaintiff’s bankruptcy
proceeding to be matters of public record and, as such, the Court
may consider those documents in ruling on the instant motion without
converting it into a motion for summary judgment. See Alt. Energy,
Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir.
2001)(“Ordinarily, a court may not consider any documents that are
outside of the complaint, or not expressly incorporated therein,
unless the motion is converted into one for summary judgment. There
is, however, a narrow exception for documents the authenticity of
which are not disputed by the parties; for official public records;
for documents central to plaintiffs' claim; or for documents
sufficiently referred to in the complaint.”) (quotations omitted).
4

12

lenders are required to send to borrowers. However, subsection
(e)(5) provides that a lender is not required to send periodic
statements if the loan was discharged in bankruptcy and one of four
conditions is met. See 12 C.F.R. § 1026.41(e)(5)(i)(B)(1)-(4).
While

Defendants

have

established

that

Plaintiff’s

personal

liability was discharged in bankruptcy, they have not submitted any
evidence that Plaintiff meets any of the other four conditions.
Accordingly, Defendants were not exempt from the duty to send
Plaintiff periodic statements and they allegedly violated TILA by
not sending those statements.
However, Plaintiff has not alleged how Defendants’ failure to
send monthly mortgage statements has caused him any injury other
than attorneys’ fees and the costs of prosecuting his TILA claim.
As with his RIFDCPA claim, these damages would be recoverable if
the alleged TILA violation had caused actual harm, “they are not a
substitute for the injury-in-fact required by Spokeo.” Pementel, at
*8. See Spokeo, 136 S.Ct. at 1550; see also Davidson v. PNC Bank,
N.A., CAUSE No. 1:16-cv-569-WTL-MPB, 2016 WL 7179371, *2-4 (S.D.
Ind. Dec. 9, 2016) (dismissing TILA claim despite potentially
inaccurate mortgage payoff statement because no actual injury in
light of prior letter with accurate information).

13

2.
Plaintiff

Charge
of
Improper
Fees
Plaintiff’s Mortgage Account
also

alleges

that

Defendants

and

Expenses

violated

TILA

to
by

charging improper fees and expenses to his mortgage loan account.
Pointing to the same fees and expenses he identified in Count IV,
Plaintiff
damages:

claims

these

improper

charges

caused

the

following

(1) costs for prosecuting the claim; (2) attorneys’ fees;

and (3) an increased cost for “any possible loan modification.”
(Compl. ¶ 101(c).)
None of these damages allege an injury sufficient to confer
standing.

TILA,

limitations.

like

RIFDCPA,

imposes

a

one-year

statute

of

See 15 U.S.C.A. § 1640(e) (“any action under this

section may be brought in any United States district court, or in
any other court of competent jurisdiction, within one year from the
date of the occurrence of the violation . . . .”).

As such, only

the alleged $300.00 charge from November 15, 2016 survives the
statute of limitations.
Plaintiff has alleged that the November 15 charge will “raise
the cost of any possible loan modification.” (Compl. ¶ 101(c).)
Arguably, this sufficiently alleges a concrete injury. However,
even if this injury is sufficiently concrete, it is nonetheless too
speculative to ultimately confer standing. See Lujan v. Defenders
of Wildlife, 504 U.S. 555, 560 (1992) (holding that, to establish
that he has standing, a plaintiff must demonstrate “an injury in
fact . . . [that is] actual or imminent, not conjectural or
14

hypothetical”) (citations and quotations omitted); see also Reddy
v. Foster, 845 F.3d 493, 500 (1st Cir. 2017) (holding that “a future
injury

is

too

speculative

for

Article

III

purposes

[if]

no

prosecution is even close to impending”) (quotations omitted).
Although the Complaint twice references Plaintiff’s attempt to
start

the

loan

modification

process

(see

Compl.

¶¶

32,

97),

Plaintiff has not alleged that his loan modification process is
“imminent” nor has he alleged how or why the presence of the
fees/expenses would increase his future loan modification costs.
Moreover, Plaintiff himself characterizes the prospect of his loan
modification as only “possible,” not “probable,” and certainly not
“imminent” as required to confer standing. (Id. at ¶ 101(c).)

As

such, Plaintiff’s TILA claim does not allege a sufficiently imminent
injury-in-fact and is therefore dismissed for lack of standing
pursuant to Rule 12(b)(1).
A.

Motion to Dissolve the TRO

Plaintiff filed his motion for TRO on Sunday, November 12,
2017, hoping to stop a foreclosure sale that was scheduled to take
place the following afternoon. The hearing on that motion took place
on Monday morning, mere hours before the foreclosure sale was
scheduled to occur. (See Tr. of TRO Hr’g 13, ECF No. 12.) After
acknowledging that its “review of the material [was] very cursory,”
given the extremely short amount of time it had to review those
materials, the Court granted the TRO based on its understanding
15

that paragraph 19 of the mortgage agreement entitled Plaintiff to
receive a “notice of acceleration” in addition to the Default
notice, which Plaintiff admitted to receiving on August 3, 2017.
(Id.)
Having had an opportunity to more closely review the mortgage
agreement, the Court finds that its earlier reasoning was flawed
and that the TRO must be dissolved. paragraph 19 is not the correct
source for assessing what notice was required under the mortgage
agreement prior to initiating a foreclosure because that paragraph
merely outlines a borrower’s right to reinstate after foreclosure
proceedings have already commenced. (See Compl. Ex. A at 11, ECF
No. 1-3.) Rather, as discussed in Section II.A.i supra, paragraph
22 lays out the notice reuirements necessary to commence foreclosure
proceedings and plainly does not require Defendants to send a
separate “notice of acceleration.”
Temporary restraining orders, “through lapse of time, become
preliminary injunctions.” Prof'l Plan Examiners of N.J., Inc. v.
Lefante, 750 F.2d 282, 288 (3d Cir. 1984) (citing Maine v. Fri, 486
F.2d 713, 715 (1st Cir. 1973)). As such, in order to defeat a motion
to dissolve the TRO, the party who obtained the TRO must prove the
same elements he would be required to prove in order to obtain a
preliminary injunction, namely: “(1) a likelihood of success on the
merits, (2) a likelihood of irreparable harm absent interim relief,
(3) a balance of equities in the plaintiff's favor, and (4) service
16

of the public interest.” Arborjet, Inc. v. Rainbow Treecare Sci.
Advancements, Inc., 794 F.3d 168, 171 (1st Cir. 2015).
As discussed throughout this Memorandum,

Plaintiff

cannot

succeed on the merits. Accordingly, Plaintiff is not entitled to
injunctive relief and the TRO must be dissolved.
III. Conclusion
For all of the above-stated reasons, all of Plaintiff’s claims
against Defendant Bank of New York are dismissed without prejudice
and Defendant Bayview’s Motion to Dismiss and Dissolve (ECF No. 8)
is GRANTED.
IT IS SO ORDERED.

William E. Smith
Chief Judge
Date: October 12, 2018

17