Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

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

United States District Court, D. New Hampshire

October 25, 2016

William M. and Catherine M. Fannon
v.
U.S. Bank, N.A. as Trustee of MASTR Asset Backed Securities Trust 2006-NCI, Mortgage Pass-Through Certificates, Series 2006-NC1 No. 2016 DNH 188

          ORDER

          Joseph DiClerico, Jr. United States District Judge.

         William and Catherine Fannon move for reconsideration of the court's order that granted in part and denied in part U.S. Bank's motion to dismiss. In support, they argue that the court erred in dismissing their claim for breach of the implied duty of good faith and fair dealing. U.S. Bank objects.

         Standard of Review

         To succeed on a motion for reconsideration of an interlocutory order, the moving party must show “that the order was based on a manifest error of fact or law.” LR 7.2(d). Reconsideration is an extraordinary remedy that is used only sparingly. U.S. ex rel. Ge v. Takeda Pharm. Co. Ltd., 737 F.3d 116, 127 (1st Cir. 2013).

         Discussion

         The court granted the motion to dismiss the Fannons' claim of breach of the implied duty of good faith and fair dealing on the ground that the implied duty cannot be used to require a lender to modify or restructure a loan. The Fannons contend that the court erred in dismissing the claim because they do not allege that U.S. Bank was required to modify their loan. Instead, they assert that U.S. Bank failed to reasonably exercise its discretion in performing a trial modification plan and processing their subsequent application for loan modification.

         Under New Hampshire law, the third category of obligations of the implied duty of good faith and fair dealing applies to discretion in contract performance. Centronics Corp. v. Genicom Corp., 132 N.H. 133, 139 (1989). The third category has three elements. Moore v. Mortg. Elec. Reg. Sys., Inc., 848 F.Supp. 2d 107, 129 (D.N.H. 2012). To state a claim, a plaintiff must allege that an “agreement allows or confers discretion on the defendant to deprive the plaintiff of a substantial portion of the benefit of the agreement, ” that the defendant failed to exercise its discretion reasonably, and that the defendant's actions caused the plaintiff harm. Id.

         The Fannons argue that U.S. Bank, through its servicing agent, entered into a trial loan modification plan with them and breached the implied duty in that agreement by failing to accept a late payment. They also argue briefly that U.S. Bank breached the implied duty by impeding their efforts to apply for a loan modification in 2015.

         A. Trial Period Plan

         The Fannons rely on a “Trial Period Plan” offered in a letter dated August 27, 2013, from America's Servicing Company (“ASC”). To the extent the letter is an enforceable agreement that includes the implied covenant, the Fannons have not shown that the plan conferred the discretion on ASC that they allege.[1]

         The letter explicitly required payments to be made on October 1, November 1, and December 1 of 2013. The Fannons admit that they did not make the December payment by December 1, because, they allege, ASC lost part of their December payment that was submitted in two money orders. They further allege that ASC would not allow them to cure the problem with another payment during December, and, as a result, the Fannons were not considered for a permanent loan modification.

         In support of their claim, the Fannons argue that ASC had discretion to accept payments at any time during December. They rely, generally, on page two of the letter. The Fannons do not identify the specific language that granted ASC such discretion.[2] The only language on page two of the letter that addresses time for payments is the following:

After all trial period payments are timely made and you have submitted all the required documents, your mortgage may be permanently modified. . . . If each payment is not received by America's Servicing Company in the month in which it is due, this offer will end and your loan will not be modified under the terms described in this offer.

         If that is the statement that the Fannons are relying on to confer discretion on ASC to accept late payments, it will not bear that burden. The last sentence does not say, as the Fannons may have hoped, that ASC has discretion to accept payments anytime in December. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.