Bennett v. PHH Mortgage et al

Filing 12

MEMORANDUM DECISION and ORDER granting 9 Motion to Dismiss. Signed by Judge Ted Stewart on 7/14/2014. (blh)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
KENNETH F. BENNETT, an individual,
MEMORANDUM DECISION AND
ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS

Plaintiff,
v.
PHH MORTGAGE CORPORATION, a
New Jersey corporation, and ERA
MORTGAGE, a dba of PHH Mortgage
Corporation,

Case No. 2:14-CV-316 TS
District Judge Ted Stewart

Defendants.

This matter is before the Court on Defendants’ Motion to Dismiss. Plaintiff has failed to
respond to the Motion and the time for doing so has now passed. For the reasons discussed
below, the Court will grant Defendants’ Motion.
I. BACKGROUND
Plaintiff executed a deed of trust in favor of Defendant ERA Mortgage (“ERA”) on
March 14, 2007, securing a loan in the amount of $281,700.00. Plaintiff fell behind on his loan
payments and applied for a loan modification.
Plaintiff and ERA entered into a loan modification agreement on May 25, 2011 (the
“May 2011 modification”). Under the May 2011 modification, $60,903.27 of the principal was
deferred, leaving an interest bearing principal of $229,885.00. Plaintiff was charged an interest
rate of 5.000% with payments to begin on May 1, 2011. The agreement stated that Plaintiff
understands and agrees that “[a]ll the rights and remedies, stipulations, and conditions contained

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in the Security Instrument relating to default in the making of payments under the Security
Instrument shall also apply to default in the making of the modified payments hereunder.”1
On May 26, 2011, Plaintiff was informed via email that he would be required to make
payments for both May and June in the amount of $1,327.95. Plaintiff alleges that he made all
required payments. However, the documentation he provided does not reflect sufficient payment
for either May or June 2011.2 As a result of this nonpayment, Plaintiff was in default.
On September 2, 2011, Defendant PHH Mortgage (“PHH”) sent Plaintiff a Notice of
Intention to Foreclose, notifying Plaintiff that he was in default for the May 2011 payment. On
September 23, 2011, PHH sent Plaintiff a Notice of Intention to Foreclose based on the June
2011 payment. A similar letter was sent on May 21, 2012, based on the February 2012 payment.
Rather than proceeding with foreclosure, PHH presented Plaintiff a new modification
agreement in October 2012. The new agreement offered to “suspend collections and or
foreclosure” if Plaintiff made payments of $1,289.40 by November 1, 2012, December 1, 2012,
and January 1, 2013.3 However, the letter warned: “If each payment is not received by PHH
Mortgage on the date in which it is due, you will no longer be eligible for a loan modification
and your loan will not be modified.”4

1

Docket No. 2-1 Ex. 1, at Ex. A.

2

Plaintiff has provided copies of cancelled checks from April 22, 2011, May 23, 2011, and July
4, 2011. The April payment was not in the amount required under the May 2011 loan
modification agreement. It is unclear whether the May 23, 2011 check, which was in the correct
amount, was applied to Plaintiff’s May or June obligation. Regardless, Plaintiff did not provide
sufficient payments under the modification agreement for one of those months.
3

Docket No. 2-1 Ex. 1, at Ex. G.

4

Id.

2

Plaintiff contends that he made all of the required payments under the proposed
modification. However, Plaintiff’s cancelled checks show that, at least as to the November 2012
payment, PHH did not receive the payment by November 1, 2012, as required by the agreement.
Plaintiff was provided a new loan modification agreement in January 2013 (the “January
2013 modification”). Plaintiff signed the January 2013 modification agreement, but Defendants
did not. On January 14, 2014, PHH sent a Notice of Intention to Foreclose.
Plaintiff was provided yet another modification agreement on March 6, 2013 (the “March
2013 modification”). Plaintiff did not sign the March 2013 modification agreement. Thereafter,
Plaintiff stopped making any payments on his loan.
II. MOTION TO DISMISS STANDARD
In considering a motion to dismiss for failure to state a claim upon which relief can be
granted under Rule 12(b)(6), all well-pleaded factual allegations, as distinguished from
conclusory allegations, are accepted as true and viewed in the light most favorable to Plaintiff as
the nonmoving party.5 Plaintiff must provide “enough facts to state a claim to relief that is
plausible on its face,”6 which requires “more than an unadorned, the-defendant-unlawfully
harmed-me accusation.”7 “A pleading that offers ‘labels and conclusions’ or ‘a formulaic
recitation of the elements of a cause of action will not do.’ Nor does a complaint suffice if it
tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’”8

5

GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir. 1997).

6

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007).

7

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

8

Id. (quoting Twombly, 550 U.S. at 557) (alteration in original).

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“The court’s function on a Rule 12(b)(6) motion is not to weigh potential evidence that
the parties might present at trial, but to assess whether the plaintiff’s complaint alone is legally
sufficient to state a claim for which relief may be granted.”9 As the Court in Iqbal stated,
only a complaint that states a plausible claim for relief survives a motion to
dismiss. Determining whether a complaint states a plausible claim for relief will
. . . be a context-specific task that requires the reviewing court to draw on its
judicial experience and common sense. But where the well-pleaded facts do not
permit the court to infer more than the mere possibility of misconduct, the
complaint has alleged—but it has not shown—that the pleader is entitled to
relief.10
When evaluating a motion to dismiss, the Court considers “not only the complaint, but
also the attached exhibits and documents incorporated into the complaint by reference.”11 “[I]f
there is any dispute between the allegations in the complaint and the attached exhibits, the
exhibits control.”12
III. DISCUSSION
Plaintiff asserts the following causes of action: (1) specific performance, (2) injunction,
(3) breach of contract, (4) breach of the implied covenant of good faith and fair dealing, (5)
failure to comply with modification requirements under state and federal law, and (6) intentional
infliction of emotional distress. Each cause of action will be discussed in turn.
9

Miller v. Glanz, 948 F.2d 1562, 1565 (10th Cir. 1991).

10

Iqbal, 556 U.S. at 679 (internal quotation marks and citations omitted).

11

Commonwealth Prop. Advocates, LLC v. Mortg. Elec. Registration Sys., Inc., 680 F.3d 1194,
1201 (10th Cir. 2011).
12

Wood v. Houghton Mifflin Harcourt Publ’g Co., 569 F. Supp. 2d 1135, 1139 (D. Colo. 2008)
(citing Olpin v. Ideal Nat’l Ins. Co., 419 F.2d 1250, 1255 (10th Cir. 1969)); see also 5A Charles
Alan Wright & Arthur R. Miller, Federal Practice and Procedure, § 1327 (3d ed. 2004) (“[W]hen
a disparity exists between the written instrument annexed to the pleadings and the allegations in
the pleadings, the terms of the written instrument will control, particularly when it is the
instrument being relied upon by the party who made it an exhibit.”).

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Plaintiff seeks specific performance of the January 2013 modification. The documents
provided by Plaintiff show that, while Defendants sent Plaintiff the proposed modification,
Defendants did not sign or record the modification. “Specific performance is an equitable
remedy which ‘cannot be required unless all terms of the agreement are clear. The court cannot
compel the performance of a contract which the parties did not mutually agree upon.’”13 As
Defendants did not agree to the January 2013 modification, Plaintiff’s request for specific
performance must be denied.
Further, “in order to claim specific performance, a party must either perform or tender
performance, in accordance with the covenants in his contract.”14 Plaintiff made only one of the
payments required under the January 2013 modification agreement and stopped paying
completely after March 1, 2013. As Plaintiff failed to make the loan payments required under
the modification, he is not entitled to specific performance and this claim must be dismissed.
Plaintiff next seeks an injunction. “[I]njunctions are forms of relief, not independent
causes of action.”15 Further, injunctive relief requires, among other things, that Plaintiff show a
likelihood of success on the merits.16 As will be discussed, Plaintiff’s claims fail. Therefore, he
cannot show entitlement to injunctive relief.
Plaintiff’s third and fourth causes of action are for breach of contract and breach of the
covenant of good faith and fair dealing. Plaintiff first asserts that Defendants breached the May
13

1-800 Contacts, Inc. v. Weigner, 127 P.3d 1241, 1243 (Utah Ct. App. 2005) (quoting Pitcher
v. Lauritzen, 423 P.3d 491, 493 (Utah 1967)).
14

Fischer v. Johnson, 525 P.2d 45, 47 n.3 (Utah 1974).

15

Capener v. Napolitano, No. 2:11-CV-601 DN, 2012 WL 1952199, at *2 (D. Utah May 30,
2012).

16

RoDa Drilling Co. v. Siegal, 552 F.3d 1203, 1208 (10th Cir. 2009).

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2011 modification. “The elements of a prima facie case for breach of contract are (1) a contract,
(2) performance by the party seeking recovery, (3) breach of the contract by the other party, and
(4) damages.”17 Plaintiff fails on the second element. As set forth above, Plaintiff did not
perform under the May 2011 modification as he did not submit proper payment for either May or
June.
“As a general rule, every contract is subject to an implied covenant of good faith.”18
Under the covenant, there is “an implied duty that contracting parties refrain from actions that
will intentionally destroy or injure the other party’s right to receive the fruits of the contract.”19
Plaintiff asserts that “Defendants have not negotiated the mortgage modification in good
faith.”20 This is a conclusory statement that need not be accepted by the Court. Plaintiff appears
to base his claim for a breach of the implied covenant of good faith and fair dealing on the May
2011 modification. Plaintiff asserts that he consistently made payments in accordance with this
agreement. However, as discussed, this is not the case. Plaintiff alleges that “Defendants
intentionally delayed each loan modification process in order to proceed to foreclosure.”21
Again, this statement is not support by factual averments and, indeed, the records provided by
Plaintiff demonstrate just the opposite. Defendants repeatedly offered Plaintiff the opportunity
to receive a loan modification. Plaintiff, however, failed to comply with the requirements of the

17

Bair v. Axiom Design, L.L.C., 20 P.3d 388, 391 (Utah 2001).

18

Brown v. Moore, 973 P.2d 950, 954 (Utah 1998) (citation and internal quotation marks
omitted).
19

Young Living Essential Oils, LC v. Marin, 266 P.3d 814, 816 (Utah 2011) (citation and
internal quotation marks omitted).

20

Docket No. 2-1 ¶ 75.

21

Id. ¶ 79.

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respective agreements and eventually failed to make any payments on the loan. Therefore, this
claim fails.
Plaintiff next asserts a claim for failure to comply with modification requirements under
state and federal law. Plaintiff, however, fails to identify which laws Defendants allegedly
violated or how Defendants did so. Without more, this claim fails.
Plaintiff’s final claim is for intentional infliction of emotional distress. In order to state a
claim for intentional infliction of emotional distress, Plaintiff must allege that Defendants
intentionally engaged in some conduct toward the plaintiff, (a) with the purpose
of inflicting emotional distress, or, (b) where any reasonable person would have
known that such would result; and [their] actions are of such a nature as to be
considered outrageous and intolerable in that they offend against the generally
accepted standards of decency and morality.22
Plaintiff’s allegations fall well short of what is required under Utah law to demonstrate
intentional infliction of emotional distress. Therefore, this claim must be dismissed.
IV. CONCLUSION
It is therefore
ORDERED that Defendants’ Motion to Dismiss (Docket No. 9) is GRANTED. The
Clerk of the Court is directed to close this case forthwith.
DATED this 14th day of July, 2014.
BY THE COURT:

Ted Stewart
United States District Judge
22

Anderson Dev. Co. v. Tobias, 116 P.3d 323, 338 (Utah 2005) (internal quotation marks
omitted).

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