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Riggieri v. Caliber Home Loans, Inc.

United States District Court, D. New Hampshire

August 3, 2016

John Riggieri
v.
Caliber Home Loans, Inc. et al. Opinion No. 2016 DNH 128

          ORDER

          Landya McCafferty United States District Judge

         In a case that was removed from the New Hampshire Superior Court, Cheshire County, John Riggieri brings suit against Caliber Home Loans, Inc. (“Caliber”), Ocwen Loan Servicing, LLC (“Ocwen”), and U.S. Bank Trust, N.A. (“U.S. Bank”), alleging that defendants made misrepresentations in connection with a proposed loan modification offer. Riggieri also alleges that defendants generally acted in bad faith, and that their conduct resulted in a foreclosure auction at which his home was sold below market value.

         Defendants move to dismiss under Federal Rule of Civil Procedure 12(b)(6), contending that the complaint fails to state a claim. Riggieri objects. For the reasons that follow, defendants’ motions to dismiss are granted.

         Standard of Review

         Under Rule 12(b)(6), 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).

         Background[1]

         In 2002, John Riggieri purchased a plot of land in Marlborough, New Hampshire (the “property”). On November 30, 2006, Riggieri and his then-wife, Nancy Gaunya, executed a promissory note in favor of Countrywide Home Loans, Inc. (“Countrywide”) in the amount of $604, 000 to finance the construction of a home on the property (the “note”). See doc. no. 21-2. That same day, Riggieri and Gaunya granted a mortgage on the property to Countrywide to secure the loan, with Mortgage Electronic Registration Systems, Inc. (“MERS”) as the mortgagee in its capacity as nominee for Countrywide. See doc. no. 21-3. Both the note and the mortgage list the address of the property as “38 Shaker Farm Road, Marlborough, New Hampshire 03455.” At some point prior to November 23, 2015, the mortgage was assigned to U.S. Bank.[2]

         On June 9, 2009, Riggieri, Gaunya, and Countrywide entered into a “Modification of Note and Security Instrument, ” which amended certain of the note’s terms (the “modified note”). See doc. no. 21-4. The modified note also lists the property’s address as “38 Shaker Farm Road, Marlborough, New Hampshire 03455.”

         Riggieri alleges that in September 2009 “there was a discrepancy in [his] escrow account.” Doc. no. 17 at ¶ 18. As a result of the discrepancy, Harmon Law Offices began foreclosure proceedings on the property in November 2011. Riggieri alleges that he entered into a loan modification agreement and the foreclosure did not occur.

         In August 2012, Bank of America, which had been the loan servicer, transferred servicing responsibilities to Ocwen. On September 14, 2012, Ocwen mailed Gaunya a letter, noting that she was approved to enter a new modification program which would reduce her principal balance and monthly mortgage payment (the “Ocwen letter”).[3] The letter informed Gaunya that if she completed a trial period, she would reduce her monthly payment from $4, 400.26 per month to $1, 510.16 per month, reduce her total loan balance from $722, 277.17 to $173, 047.68, and reduce her interest rate from 5.375% to 2%. The letter also informed Gaunya that she could accept the offer by making her first trial period plan payment by October 1, 2012. The letter was addressed to Gaunya at “38 Shaker Farm Road S, Marlborough, NH 03455.”[4]

         Riggieri alleges that he did not become aware of the Ocwen letter until early 2013, well after the deadline for acceptance.[5]Riggieri alleges that the letter was “unbelievable” and that, once he became aware of it, he “assumed that it was junk mail or not a legitimate offer, and did not act upon it.” Doc. no. 17 at ¶¶ 29-30.

         In February 2014, Ocwen began foreclosure proceedings on the property. Riggieri alleges that the foreclosure proceedings ended after he requested that Ocwen produce the original promissory note, and it could not.

         In June 2015, Ocwen transferred servicing responsibilities on the loan to Caliber. Upon receiving notice of the transfer, Riggieri requested that Caliber honor the offer made in the Ocwen letter. Caliber refused to adjust the loan amount or Riggieri’s interest rate. Shortly thereafter, Caliber mailed a notice of foreclosure to Riggieri and published a notice of foreclosure in the Manchester Union Leader. Riggieri alleges that at the time the foreclosure notice was mailed, he was traveling on a 27-day trip. Riggieri alleges that he had the post office put his mail on hold while he was traveling, from October 29 through November 23, 2015 and, therefore, did not receive notice of the foreclosure sale, which took place on the day he returned from the trip.[6]

         Both the mailed notice and the notice published in the Manchester Union Leader listed the property’s address as “38 Shaker Farm Road, Marlborough, NH 03455, ” the same address that is listed in the mortgage, the note, and the modified note. Riggieri alleges that the property’s actual address is “38 Shaker Farm Road South, Marlborough, NH 03455, ” which was the address listed in the Ocwen letter. Riggieri also alleges that the auctioneer at the foreclosure sale “admitted that all parties were unable to find the property initially, ” which Riggieri believes was caused by the incorrect address being listed in the notice. Doc. no. 17 at ¶ 48.

         U.S. Bank, which held the mortgage at the time of the foreclosure, purchased the property at the foreclosure sale. According to the foreclosure deed, U.S. Bank purchased the property for $379, 677.01. See doc. no. 32-3 at 1. The foreclosure deed lists the property’s address as “38 Shaker Farm Road, Marlborough, NH 03455.” Id. Riggieri alleges that at the time he filed this lawsuit, shortly after the foreclosure sale, he was 2300 days, more than six years, late on his mortgage payments.

         Riggieri filed this lawsuit in state court on December 21, 2015. Defendants removed the case to this court on January 20, 2016, and moved to dismiss the complaint. Riggieri subsequently amended the complaint, and defendants move to dismiss the amended complaint. Riggieri objects.

         Discussion

         Riggieri asserts five claims: (i) negligent misrepresentation; (ii) breach of the covenant of good faith and fair dealing; (iii) unjust enrichment; (iv) negligent infliction of emotional distress; and (v) “standing.” Riggieri does not specify against which defendant he brings each claim, although he appears to allege that Caliber and U.S. Bank should be held liable for any of Ocwen’s unlawful activity because they are “successors in interest” to Ocwen. Defendants move to dismiss all claims.[7]

         I. Negligent Misrepresentation

         Riggieri alleges that Ocwen is liable for negligent misrepresentation because the Ocwen letter was “unbelievable” and offered “an extremely short timeline for acceptance.” Doc. no. 17 at ¶ 60. Riggieri alleges that Caliber is liable for negligent misrepresentation because it “negligently failed to properly describe the property in the notice of foreclosure.” Id. at ¶ 67. Riggieri also alleges that “Defendants have added erroneous costs and fees to the Plaintiff’s loan . . . leading him down the path to foreclosure.” Id. at ¶¶ 74-75. Defendants contend that Riggieri does not allege any misrepresentation and, to the extent he does, his claim is barred by the economic loss doctrine.

         Under New Hampshire common law, the elements of a claim for negligent misrepresentation “are a negligent misrepresentation of a material fact by the defendant and justifiable reliance by the plaintiff.” Wyle v. Lees, 162 N.H. 406, 413 (2011) (citing Snierson v. Scruton, 145 N.H. 73, 78 (2000)). Moreover, “[i]t is the duty of one who volunteers information to another not having equal knowledge, with the intention that he will act upon it, to exercise reasonable care to verify the truth of his statements before making them.”[8] Id.

         A. Ocwen Letter

         Riggieri’s complaint does not allege facts sufficient to support a claim for negligent misrepresentation based on the Ocwen letter. Other than vague and conclusory allegations that the letter was “misleading” or “worded . . . to avoid responses from consumers, ” doc. no. 17 at ¶¶ 62-63, Riggieri does not allege any facts to show a misrepresentation in the letter. To the contrary, Riggieri appears to allege that the offer contained in the letter was legitimate, because Ocwen was forced to offer a reduction on the loan as a result of its settlement with the Department of Justice.

         Even if Riggieri had alleged a misrepresentation based on wording in the letter, the complaint fails to allege any justifiable reliance on such a representation. Indeed, Riggieri alleges that he did not discover the letter until several months after the deadline for responding had passed.[9] He has not alleged any facts to support a plausible theory that he relied to his detriment on an alleged misrepresentation in that letter.

         In addition, even if Riggieri’s allegations were sufficient to support a negligent misrepresentation claim, the claim would nonetheless be barred by the economic loss doctrine. Under New Hampshire law, the contractual relationship between a lender and borrower typically precludes recovery in tort. Moore v. Mortg. Elec. Registration Sys., Inc., 848 F.Supp.2d 107, 133 (D.N.H. 2012) (citing Wyle, 162 N.H. at 409-10). This principle, known as the “economic loss doctrine, ” operates on the theory that “[i]f a contracting party is permitted to sue in tort when a transaction does not work out as expected, that party is in effect rewriting the agreement to obtain a benefit that was not part of the bargain.” Plourde Sand & Gravel Co. v. JGI E., Inc., 154 N.H. 791, 794 (2007). Thus, where a borrower claims the existence of a duty outside the contractual relationship, he has the burden of proving that the lender voluntarily engaged in “activities beyond those traditionally associated with the normal role of a money lender.” Moore, 848 F.Supp.2d at 133 (quoting Seymour v. N.H. Sav. Bank, 131 N.H. 753, 759 (1989)). “This burden extends to claims against mortgagees as well as loan servicers.” Bowser v. MTGLQ Inv’rs, LP, No. 15-cv-154-LM, 2015 WL 4771337, at *2 (D.N.H. Aug. 11, 2015) (citing cases).

         “There is no question that New Hampshire recognizes an exception to the economic loss doctrine for certain negligent misrepresentation claims.” Schaefer v. IndyMac Mortg. Servs., 731 F.3d 98, 108 (1st Cir. 2013). A narrow exception exists for professionals “who are in the business of supplying information, ” such as accountants, appraisers, and investment brokers. Id. (discussing Plourde, 154 N.H. at 759).[10]

         The facts alleged in the complaint show that the economic loss doctrine applies to Riggieri’s negligent misrepresentation claim based on the Ocwen letter. Riggieri does not allege that Ocwen voluntarily engaged in activities beyond those traditionally associated with the normal role of a money lender. See Moore, 848 F.Supp.2d at 133. The Ocwen letter contains an offer from a loan servicer on behalf of a lender to modify the terms of the loan. Tort claims based on misrepresentations made in connection with a loan modification offer are barred by the economic loss doctrine because they “are related to defendants’ attempts to collect the [borrower’s] mortgage debt.” Dionne v. Fed. Nat’l Mortg. Assoc., No. 15-cv-56-LM, 2016 WL 3264344, at *13 (D.N.H. June 14, 2016); see also Schaefer, 731 F.3d at 107.[11]

         Although Riggieri asserts that Ocwen is in “the business of supplying information”[12] and, therefore, an exception to the economic loss doctrine exists, he alleges no facts to support such a claim. The First Circuit has made clear that negligent misrepresentation claims such as Riggieri’s which are asserted against loan services are plainly barred by the economic loss doctrine, and do not fall within that exception. See Schaefer, 731 F.3d at 108-09 (holding that the district court correctly held that plaintiff’s negligent misrepresentation claim against a loan servicer arising out of an alleged misrepresentation in a loan modification offer letter was barred by the economic loss doctrine); see also Bowser, 2015 WL 4771337, at *2 (applying economic loss doctrine to bar negligence claim against loan servicer).

         Therefore, even if Riggieri had plausibly alleged a claim for negligent misrepresentation based on the Ocwen letter, which he has ...


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