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Schaefer v. Indymac Mortgage Services

United States Court of Appeals, First Circuit

October 2, 2013

Mark E. SCHAEFER, Plaintiff, Appellant,
INDYMAC MORTGAGE SERVICES, One West Bank, FSB, Federal National Mortgage Association, and Harmon Law Offices, P.C., Defendants, Appellees.

Page 99

[Copyrighted Material Omitted]

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Walter L. Maroney for appellant.

Thomas R. Lavallee, with whom Harmon Law Offices, P.C., was on brief, for appellees.

Before TORRUELLA, DYK,[*] and KAYATTA, Circuit Judges.

DYK, Circuit Judge.

Plaintiff Mark E. Schaefer appeals from the decision of the United States District Court for the District of New Hampshire dismissing his suit against defendants IndyMac Mortgage Services; OneWest Bank, FSB; the Federal National Mortgage Association (" Fannie Mae" ); and Harmon Law Offices, P.C. (" Harmon" ). Schaefer's complaint sought an injunction barring his impending eviction; an order nullifying the March 2012 foreclosure sale of his home and requiring the defendants to allow him to modify or reinstate his mortgage; and monetary damages.

The district court found that Schaefer's claims were barred by the economic loss doctrine, and dismissed his complaint for failure to state a claim. See Schaefer v. IndyMac Mortg. Servs., No. 12-cv-159, 2012 WL 4929094, at *3-*6 (D.N.H. Oct. 16, 2012), reconsideration denied, 2012 WL 6113973 (D.N.H. Dec. 10, 2012). We affirm.



The following facts, which are alleged in Schaefer's complaint, are accepted as true for purposes of the motion to dismiss. See Mass. Ret. Sys. v. CVS Caremark Corp., 716 F.3d 229, 231, 237 (1st Cir.2013).

In November 2007, Schaefer refinanced his home mortgage, and entered into a refinancing loan and mortgage agreement with IndyMac Bank, FSB. Under the terms of the loan and mortgage agreement, Schaefer was required to make regular monthly payments, and IndyMac Bank was allowed to accelerate the principal and to foreclose on the mortgage in the event that Schaefer fell behind on his payments.[1] The mortgage agreement also gave Schaefer the right to reinstate the mortgage before foreclosure upon payment of past due amounts, penalties, interest, and fees. In this litigation, Schaefer alleges that IndyMac or its successors subsequently undertook two additional duties beyond the scope of the contract that restricted their right to foreclose: (1) a duty to provide him with a reinstatement amount in the event that he fell into arrears, and (2) a duty to process an application for loan modification before foreclosure.

At some time after November 2007, IndyMac Bank assigned the mortgage to its corporate parent, OneWest Bank. The mortgage was serviced by IndyMac Mortgage Services, which, like IndyMac Bank, is now a subsidiary of OneWest Bank. We refer to all three entities— IndyMac Bank, IndyMac Mortgage Services, and OneWest Bank— as " OneWest."

Schaefer defaulted on the loan in 2009, after which OneWest agreed to modify the loan.

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In late 2011, Schaefer again fell behind on his mortgage payments. On January 19, 2012, Schaefer received a letter from OneWest (" the January 19 letter" ) informing him that his loan account was " 6 [p]ayments [p]ast [d]ue." See Schaefer Br. addendum 27. The letter specified a " [t]otal [a]mount [d]ue" of $12,519.25, and indicated that after February 16, a " [f]ee [a]ssessment" would be added, bringing the total to $12,572.46. Id. The letter did not refer to either amount as a " reinstatement amount," and did not include specific line items for " further accruing interest, costs, attorney's fees," or other items that Schaefer alleges are " typically included as additions to an arrearage to establish an actual reinstatement amount." Id. at 6-7. Around the same time, Schaefer downloaded from OneWest's website a " comprehensive mortgage modification application." Id. at 6.

On January 30, Schaefer received a letter from Harmon, counsel to OneWest, informing him that Harmon had been " instructed to bring a foreclosure" because Schaefer was " in breach of the conditions of the loan documents." See id. at 21. This letter stated that the loan was " hereby accelerated," with " the entire balance" of $246,992.57 " due and payable forthwith and without further notice." Id. The letter also informed Schaefer that " [e]ven though the note has been accelerated, [he] may still have the right to reinstate the loan." Id. The letter did not include a reinstatement amount, but directed Schaefer to the firm's website or telephone number in order " to request a reinstatement [amount]." Id.

Schaefer requested a reinstatement amount from Harmon's website on February 6 and again on February 16. On each occasion, he received the following (seemingly automated) notice:

Your request has been received. We will forward the reinstatement ... information to you when it is obtained from your lender or servicer or the lender or servicer will send this information to you directly.
Unless there is an imminent sale, please wait 5 business days before following up with us on reinstatements.... You may ...

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