United States District Court, D. New Hampshire
case that has been removed from the Strafford County Superior
Court, Mary Hersey McCarthy has sued WPB Partners, LLC
(“WPB”) in eight counts. Her claims arise from
the manner in which WPB conducted a foreclosure sale of a
property that she had mortgaged to secure the repayment of a
loan. Before the court is defendant’s motion to dismiss
five of plaintiff’s eight claims. Plaintiff objects.
The court heard oral argument on defendant’s motion on
July 8, 2016. For the reasons that follow, defendant’s
motion to dismiss is granted.
The Legal Standard
Rule 12(b)(6) of the Federal Rules of Civil Procedure, the
court must accept the factual allegations in the complaint as
true, construe reasonable inferences in the plaintiff’s
favor, and “determine whether the factual allegations
in the plaintiff’s complaint set forth a plausible
claim upon which relief may be granted.” Foley v.
Wells Fargo Bank, N.A., 772 F.3d 63, 71 (1st
Cir. 2014) (citation omitted). A claim is facially plausible
“when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). Analyzing plausibility
is “a context-specific task” in which the court
relies on its “judicial experience and common
sense.” Id. at 679.
facts recited in this section are drawn from
plaintiff’s complaint or from court documents
incorporated by reference therein. See Foley, 772
F.3d at 71-72 (citing Watterson v. Page, 987 F.2d 1,
3 (1st Cir. 1993)).
December 21, 2006, McCarthy received a loan of $350, 000 from
Investment Realty Funding, Inc. (“IRF”). In a
promissory note, McCarthy agreed to repay the loan in 36
months, at an interest rate of 16.5 percent. The note also
provides: (1) “The Borrower represents to the Lender
that the proceeds of this Note will not be used for personal,
family, or household purposes, ” doc. no. 9-1, at 5 of
15; and (2) “THIS PROMISSORY NOTE IS FOR BUSINESS
PURPOSES ONLY, ” Id. at 6 of 15.
defaulted on her obligation to repay the loan. In response,
WPB, which had acquired the note and the mortgage, initiated
foreclosure proceedings. McCarthy sued WPB in state court to
enjoin the foreclosure sale. WPB asserted a counterclaim for
breach of contract, based upon McCarthy’s failure to
make the payments required by the promissory note. WPB
removed the case to this court, where it was assigned to
Judge McAuliffe and docketed as 11-cv-207-SM. As McCarthy and
WPB were litigating 11-cv-207-SM, McCarthy declared
bankruptcy, and WPB’s counterclaim was stayed for about
11-cv-207-SM was reopened,  Judge McAuliffe dismissed most of
McCarthy’s claims and granted WPB summary judgment on
the one claim that he had not dismissed. In addition to
granting WPB summary judgment on McCarthy’s claim,
Judge McAuliffe also granted WPB summary judgment on its
counterclaim for breach of contract and awarded $433,
433.03 in liquidated damages.
motion for summary judgment, WPB asserted that “[t]he
amount due and payable under the Promissory Note including
principal and accrued interest is currently $558, 048.49 as
of July 31, 2012 with interest accruing at the per diem rate
of $186.99.” Hersey, doc. no. 53-1, at 5. Judge
McAuliffe characterized the amount of liquidated damages he
awarded this way:
During the pretrial conference held on February 7, 2014, the
court disclosed its intention to grant [WPB’s] motions
for summary judgment. Following a discussion with respect to
the existence of any material dispute related to calculating
the liquidated damages amount, the parties agreed that the
amount of $443, 443.03, as of September 6, 2011 (a date
contemporaneous with the filing of the bankruptcy petition)
would be appropriate. That amount represents a calculation
decidedly in [McCarthy’s] favor, and an amount based in
substantial part on [McCarthy’s] own expert’s
opinion. By agreeing to entry of judgment in that amount,
less than it reasonably could expect, [WPB] pragmatically
recognized that the property’s value is substantially
less than the judgment amount, and no useful purpose would be
served by the expenditure of additional time and resources to
arrive at a higher, more accurate, but unimportant figure.
doc. no. 64, at 4-5.
WPB moved the Bankruptcy Court for “relief from the
automatic stay of 11 U.S.C. § 362(d)(1) and (2) [in
order] to proceed against the [mortgaged] Property.”
Hersey, doc. no. 77-2, at 2 of 9. In her complaint in this
case, McCarthy makes the following allegations concerning the
hearing the Bankruptcy Court held on WPB’s motion:
20. . . . [WBP] argued that its secured claim at the time of
the November 20, 2014 hearing totaled approximately $672,
079.24, including principal, interest, attorney’s fees,
and costs, with a continuing per diem increase of $183.30.
21. [WPB] failed to represent to the Bankruptcy Court that
its judgment in [11-cv-207-SM] on the Plaintiff’s debt
under the promissory note was limited to $433, 433.03.
23. The Bankruptcy Court made no mention in its Order of the
. . . judgment amount [in 11-cv-207-SM] of $433, 433.03.
no. 1-1, at 4 of 14.
order on WPB’s motion, Judge Deasy described
WPB’s secured claim this way:
WPB’s managing member testified as to the amount of the
secured claim that WPB has against the Property. On the day
of the hearing, November 20, 2014, the claim totaled $672,
079.24, including principal, interest, attorney’s fees,
and costs. The per diem increase on this claim is $183.30,
which amounts to about $5, 500 a month ($180.30 * 30 days =
$5, 499). The Debtor presented no evidence to the contrary.
The Court, accordingly, accepts WPB’s accounting of its
secured claim for the purpose of the Motion.
doc. no. 77-2, at 4 of 9 (emphasis added). There is nothing
in the record before this court to suggest that WPB’s
managing member disclosed to the Bankruptcy Court the amount
of the judgment WPB won in 11-cv-207-SM. But, at the same
time, Judge Deasy’s statement that McCarthy offered no
evidence to counter the testimony introduced by WBP suggests
that despite having had the opportunity to do so, McCarthy
did not inform the Bankruptcy Court of the amount of
WPB’s judgment against her.
hearing in the Bankruptcy Court, WPB’s appraiser valued
the mortgaged property at $535, 000. McCarthy’s
appraiser valued it at $900, 000. Judge Deasy pegged the fair
market value of the property at $705, 000.
into account both the amount of WPB’s secured claim
($672, 079.24) and the value of the mortgaged property ($705,
000), Judge Deasy determined that “[a]s of the [date of
the] hearing, WPB had an equity cushion of slightly less than
5%.” Hersey, doc. no. 77-2, at 9 of 9. On that basis,
he found that WPB had “proven that it lack[ed] adequate
protection with regard to its secured claim.”
Id. Accordingly, he granted WPB’s motion for
relief from the stay and authorized WPB to “pursue its
remedies against the Property.” Id. WPB
conducted a foreclosure sale in March of 2015. WPB was the
high bidder, and it purchased the property for $500, 000.
of 2015, WPB filed a motion in 11-cv-207-SM asking Judge
McAuliffe to grant a post-judgment attachment on
McCarthy’s real and personal property, in order to
protect its ability to collect the difference between the
$500, 000 it received at the foreclosure sale and the amount
it claimed it was then owed by McCarthy, $757,
486.79. Judge McAuliffe denied WPB’s motion,
noting that the motion itself “suggest[ed] that the
foreclosure sale resulted in a monetary recovery that
exceeded the judgment amount.” Hersey, doc. no. 91.
Judge McAuliffe also noted that $433, 433.03 was “the
amount [WPB’s] counsel specifically agreed to accept as
the judgment amount in lieu of proving up damages at the time
summary judgment was entered, ” and stated that it was
“far too late for counsel or defendant to reconsider
that reasonable choice.” Id.
action followed. In it, McCarthy asserts claims for breach of
contract (Count I); breach of the duty of due diligence
(Count II); breach of the duty of good faith (Count III);
violation of the New Hampshire Unfair, Deceptive, or
Unreasonable Collection Practices Act (“UDUCPA”),
N.H. Rev. Stat. Ann. (“RSA”) ch. 358-C (Count
IV); violation of the New Hampshire Consumer Protection Act
(“CPA”), RSA ch. 358-A (Count V); violation of
the federal Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C. § 1692 et seq. (Count
VI); negligent misrepresentation (Count VII); and enhanced
compensatory damages (Count VIII).
moves to dismiss Counts IV through VII for failure to state a
claim upon which relief may be granted, and moves to dismiss
Count VIII on grounds that enhanced compensatory damages is
not a cause of action. The parties have agreed to the
dismissal of Count VIII. In the discussion below, the court
considers each of the claims that McCarthy asserts in Counts
VI through VII.
Count IV: RSA 358-C
Count IV, McCarthy asserts that WPB violated RSA 358-C:3,
VII, by failing to tell the Bankruptcy Court the amount of
its judgment against her and by telling the Bankruptcy Court
that she owed it $672, 079.24, rather than the $433, 433.03
that Judge McAuliffe had awarded in 11-cv-207-SM. She further
asserts that WPB violated RSA 358-C:3, VIII, by improperly
representing “to the Bankruptcy Court that its secured
claim against [her] was subject to increase for ongoing
attorney’s fees, despite the claim in fact being
limited to the discrete amount of $443, 443.03.” Doc.
no. 1-1, at 9 of 14. Defendant moves to dismiss
Count IV, arguing that: (1) plaintiff has not adequately
alleged that it, WPB, is a debt collector, as that term is
defined in the ...