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Martin v. U.S. Bank, N.A.

United States District Court, D. New Hampshire

April 17, 2015

Martin and Lisa, Rouleau,
v.
US Bank, N.A., JP Morgan Chase Bank, N.A., and Nationstar Mortgage, LLC Opinion No. 2015 DNH 084

MEMORANDUM ORDER

JOSEPH N. LAPLANTE, District Judge.

This case involves the applicability of the implied duty of good faith and fair dealing to a residential mortgage, as well as vicarious liability under the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq. ("RESPA"). Martin and Lisa Rouleau, having fallen behind on their mortgage payments, sought a mortgage loan modification from JP Morgan Chase Bank, N.A., which both owned and serviced the loan. Before JP Morgan took any action on the Rouleaus' modification application, it assigned their loan to U.S. Bank, N.A. Nationstar Mortgage, LLC began servicing the loan on U.S. Bank's behalf. The Rouleaus' efforts to discuss the application with Nationstar were met with silence until, abruptly-and without the Rouleaus having received a decision on their application-US Bank moved to foreclose the mortgage. The Rouleaus filed this action against JP Morgan, U.S. Bank, and Nationstar, alleging that U.S. Bank had breached the duty of good faith and fair dealing inherent in the mortgage, and that all three defendants had violated the loss mitigation regulations promulgated by the Consumer Financial Protection Bureau pursuant to RESPA. By dint of the Rouleaus' RESPA claim, this court has jurisdiction over this matter under 28 U.S.C. §§ 1331 (federal question) and 1367 (supplemental jurisdiction).

US Bank has moved to dismiss the complaint.[1] See Fed.R.Civ.P. 12(b)(6). It argues that New Hampshire law does not recognize a mortgagee's refusal to consider, or even acknowledge, a loan modification application as a basis for a claim for breach of the duty of good faith and fair dealing. Nor may it be held liable under RESPA, it argues, because the regulations allegedly breached govern the conduct of "servicers" only-which it is not -and it cannot be held vicariously liable for Nationstar's conduct. As fully explained below, the court agrees with U.S. Bank as to the first claim, but disagrees as to the second, and thus grants the motion in part and denies it in part.

I. Applicable legal standard

To survive a motion to dismiss under Rule 12(b)(6), the plaintiff's complaint must allege facts sufficient to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In ruling on such a motion, the court must accept as true all well-pleaded facts set forth in the complaint and must draw all reasonable inferences in the plaintiff's favor. See, e.g., Martino v. Forward Air, Inc., 609 F.3d 1, 2 (1st Cir. 2010). The court "may consider not only the complaint but also facts extractable from documentation annexed to or incorporated by reference in the complaint and matters susceptible to judicial notice." Rederford v. U.S. Airways, Inc., 589 F.3d 30, 35 (1st Cir. 2009). With the facts so construed, "questions of law [are] ripe for resolution at the pleadings stage." Simmons v. Galvin, 575 F.3d 24, 30 (1st Cir. 2009). The following background summary adopts that approach.

II. Background

In December 2004, the Rouleaus executed a promissory note in the amount of $259, 000, secured by a mortgage on their residence at 34 Pease Lane in Rollinsford, New Hampshire. The named lender and mortgagee was Chase Manhattan Mortgage Corporation. The mortgage specified that, in the event of the Rouleaus' default and their failure to cure that default, Chase Manhattan "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."

Until 2011, the Rouleaus successfully made their payments on the loan. In July of that year, however, Mrs. Rouleau experienced a sudden onset of illness that required her to leave her job. This blow to the Rouleaus' household finances caused them to fall behind on their mortgage payments. After unsuccessfully attempting to remedy their default, the Rouleaus contacted JP Morgan Chase Bank, NA-which, as the successor to Chase Manhattan, both owned and serviced their mortgage-to seek a loan modification.

The Rouleaus submitted an application for a modification to JP Morgan in February 2014. In May, a JP Morgan employee sent a letter to Mrs. Rouleau confirming receipt of the application, and informing her that JP Morgan would "contact you by June 12, 2014, to let you know the option(s) for which you're eligible and next steps...." Having heard nothing from JP Morgan by that date, Mr. Rouleau called JP Morgan and was informed by a JP Morgan representative that the application was complete and that no further information was required.

On June 30, 2014, JP Morgan assigned the Rouleaus' mortgage to U.S. Bank, N.A., and Nationstar Mortgage, LLC began servicing the loan on U.S. Bank's behalf the following day. Not long thereafter, Nationstar wrote to Mrs. Rouleau, informing her that "[i]f you are in the process of applying for or providing information related to a workout (including modifications) with [JP Morgan], we anticipate that your information will soon be transferred to Nationstar Mortgage, but please feel free to contact us to verify we have what we need to move forward." Mr. Rouleau attempted to call Nationstar to inquire about the status of the modification application twice in August 2014, but each time, he was put on hold for over an hour, and eventually hung up without having spoken to a Nationstar representative. Following guidance he received in a letter form Nationstar, Mr. Rouleau then opened an online account with Nationstar in order to improve communication regarding the modification application.

The Rouleaus heard nothing from either U.S. Bank or Nationstar until November 2014, when U.S. Bank's counsel sent them a notice informing them that it had scheduled a foreclosure sale of the mortgaged property for the following month. Roughly one week before the sale was scheduled to take place, the Rouleaus filed this action in Strafford County Superior Court seeking injunctive relief under N.H. Rev. Stat. Ann. § 479:25; the Superior Court issued a temporary restraining order enjoining the foreclosure later that day. At about the same time, the Rouleaus submitted a revised modification application to Nationstar. A month later, after U.S. Bank removed the case to this court, Nationstar informed the Rouleaus that it had approved them for a trial modification.

III. Analysis

As mentioned at the outset, the Rouleaus assert two claims against U.S. Bank: a claim alleging that it has breached the duty of good faith and fair dealing inherent in the mortgage, and a claim that it is liable for Nationstar's alleged violations of the regulations implementing RESPA. U.S. Bank has moved to dismiss both claims. Although the court agrees with U.S. Bank that the Rouleaus' complaint fails to state a claim that it has ...


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