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Brown v. Wells Fargo Home Mortgage

United States District Court, D. New Hampshire

June 20, 2016

Farion N. Brown and Donna Brown
v.
Wells Fargo Home Mortgage A/K/A Wells Fargo Bank, N.A., and Federal National Mortgage Association Opinion No. 2016 DNH 102

          MEMORANDUM ORDER

          Joseph N. Laplante United States District Judge.

         This case involves a mortgage-holder's obligations to a mortgagor under the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601 et seq. and the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691 et seq., when the mortgagor has a loan modification request pending before foreclosure proceedings commence. Farion and Donna Brown, having fallen behind in their mortgage payments, made such a request to Wells Fargo Home Mortgage, which serviced their mortgage loan on behalf of its owner, Federal National Mortgage Association ("FNMA"). The Browns' efforts to discuss the application with Wells Fargo were met with alternating silence and requests for further information, which the Browns diligently provided. After the communication continued for several months, Wells Fargo ultimately concluded that it did not have time to consider the modification application and subsequently foreclosed.

         The Browns filed this action against Wells Fargo and FNMA, alleging that Wells Fargo violated RESPA by foreclosing during pendency of a modification request and violated the ECOA by failing to notify the Browns of any decision on that request before the foreclosure sale. The Browns also bring claims under New Hampshire's Unfair, Deceptive, or Unreasonable Collection Practices Act ("UDUCPA"), N.H. Rev. Stat. Ann. § 358-C:3, and the duty of good faith and fair dealing. By dint of the Browns' claims under RESPA and the ECOA, the court has subject-matter jurisdiction over this matter under 28 U.S.C. §§ 1331 (federal question) and 1367 (supplemental jurisdiction).

         The defendants have moved to dismiss all claims. See Fed. R. Civ. P. 12(b)(6). They argue, first, that N.H. Rev. Stat. Ann § 479:25, II precludes any claims challenging the validity of the mortgage because the foreclosure sale has already taken place. They also challenge the sufficiency of the Browns' claims for relief under RESPA; contend that no adverse action notification was due to the Browns under the ECOA because the Browns had defaulted; argue that the defendants' actions in foreclosing the mortgage do not amount to "debt collection" under the UDUCPA; and contend that the provisions of the mortgage agreement allowing the defendants to foreclose in the event of default preclude a claim under the duty of good faith and fair dealing.

         After hearing oral argument, and as discussed fully below, the court grants the defendants' motion to dismiss the Browns' claims under the UDUCPA and the duty of good faith and fair dealing, and the Browns' claims for injunctive relief under RESPA and the ECOA, but denies it as to the Browns' RESPA and ECOA claims for damages.

         I. Applicable legal standard

         To survive a motion to dismiss under Rule 12(b)(6), the plaintiff must state a claim to relief by pleading "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Martinez v. Petrenko, 792 F.3d 173, 179 (1st Cir. 2015) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). In ruling on such a motion, the court accepts as true all well-pleaded facts set forth in the complaint and draws 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) (internal quotations omitted).

         II, Background

         The following factual summary adopts the approach described above. The Browns purchased their home in 1999, subject to a mortgage, which they refinanced in 2004. The Browns remained current on their mortgage payments until 2014, when medical expenses and periodic unemployment set them back. In April of 2015, the Browns were three to four months in arrears on their mortgage payments. In May of that year, Wells Fargo provided the name of a "dedicated home preservation specialist" to the Browns.

         The Browns telephoned Wells Fargo on June 29, 2015, requesting that they be considered for a six-month forbearance in light of Mr. Brown's unemployment. Though Wells Fargo told the Browns that a manager would contact them, no manager did. Having received no response, the Browns again telephoned Wells Fargo on July 17, 2015. Again, Wells Fargo failed to acknowledge the Browns' request. Instead, ten days later, on July 27, 2015, Wells Fargo commenced foreclosure proceedings. The Browns again contacted Wells Fargo on July 29 and August 7. During each of those two calls, a representative informed them that Wells Fargo required additional information. The Browns faxed the requested information to Wells Fargo on July 30 and August 13, respectively. On August 19, 2015, despite the Browns' many contacts with Wells Fargo, the bank informed the Browns that "we have not heard from you, " and that there was insufficient time to review their loss mitigation application before the scheduled August 26, 2015 foreclosure. According to the complaint, Wells Fargo never notified the Browns of any decision on their application.

         Despite a request from the Brown's attorney to delay the foreclosure in light of the outstanding mitigation application and the applicable regulations, Wells Fargo foreclosed and sold the Browns' home. On October 2, 2015, the Browns received a notice of eviction. They filed suit in Hillsborough County Superior Court shortly thereafter. The defendants removed the case to this court.

         III. Analysis

         As mentioned at the outset, the Browns' complaint recites four causes of action: (1) a violation of regulations promulgated under RESPA; (2) a violation of regulations promulgated under the ECOA; (3) a violation of New Hampshire's UDUCPA; and (4) a violation of the duty of good faith and fair dealing. The Browns seek damages as well as injunctive relief in the form, effectively, of a rescission of the foreclosure sale. The defendants move to dismiss all counts under Federal Rule of Civil Procedure 12(b)(6) and also contend that N.H. Rev. Stat. Ann § 479:25, II precludes the plaintiffs from challenging the validity of the foreclosure sale after that sale took place.

         The court agrees with the defendants that the Browns have failed to state claims that the defendants have violated the UDUCPA or the duty of good faith and fair dealing. The court further agrees with the defendants that N.H. Rev. Stat. Ann § 479:25, II precludes the Browns from challenging the validity of the foreclosure, to the extent that they do so. However, the Browns have -- if only just barely -- alleged facts that, construed in their favor, "allow[] the court to draw the reasonable inference that the defendant is liable" for violations of RESPA and the ECOA. Martinez v. Petrenko, 792 F.3d at 179. Accordingly, their claims for damages under those statutes remain.

         A. Timeliness of the Browns' suit

         The defendants contend that N.H. Rev. Stat. Ann§ 479:25, II bars the Browns from challenging the validity of the foreclosure after ...


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