United States District Court, D. New Hampshire
William M. and Catherine M. Fannon
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
DiClerico, Jr. United States District Judge.
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
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).
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
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.
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.
Trial Period Plan
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.
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
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. 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.
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. ...