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Julius v. Wells Fargo Bank, N.A.

United States District Court, D. New Hampshire

April 28, 2017

Karen Julius
Wells Fargo Bank, N.A. Opinion No. 2017 DNH 084


          Joseph N. Laplander United States District Judge

         The plaintiff in this mortgage-related action challenges the defendant's foreclosure on the mortgage on her home in Derry, New Hampshire. Plaintiff Karen Julius brought a complaint against Wells Fargo Bank, N.A., the lender and mortgagee, in Rockingham County Superior Court, after Wells Fargo initiated foreclosure proceedings a mere two days after the death of her husband, the only obligor under the mortgage note. Wells Fargo removed the action to this court, see 28 U.S.C. § 1441, which has subject-matter jurisdiction under 28 U.S.C. §§ 1331 (federal question) and 1332 (diversity).

         By her First Amended Complaint, Julius raises several state-law claims, asserts violations of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601 et seq., and challenges the defendant's standing to foreclose.[1] Wells Fargo moves to dismiss the First Amended Complaint, arguing that it fails to state a claim upon which relief can be granted, see Fed. R. Civ. P. 12(b)(6), and citing -- in that process -- a plethora of cases in which nearly identical claims brought by plaintiff’s counsel have been repeatedly dismissed by courts in this District. 2 See, e.g., Mader v. Wells Fargo Bank, N.A., 2017 DNH 011 (McCafferty, J.); Gasparik v. Fed. Nat’l Mortg. Ass’n, 2016 DNH 215 (Johnstone, M.J.); Riggieri v. Caliber Home Loans, Inc., 2016 DNH 128 (McCafferty, J.); Bowser v. MTGLQ Inv’rs, LP, 2015 DNH 149 (McCafferty, J.); LaCourse v. Ocwen Loan Servicing, LLC, 2015 DNH 077 (McCafferty, J.). After hearing oral argument and concluding that Julius’s claims are foreclosed on much the same grounds, the court grants Wells Fargo’s motion.

         I. Applicable legal standard

         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). The court "need not, however, credit bald assertions, subjective characterizations, optimistic predictions, or problematic suppositions, " and "[e]mpirically unverifiable conclusions, not logically compelled, or at least supported, by the stated facts, deserve no deference." Sea Shore Corp. v. Sullivan, 158 F.3d 51, 54 (1st Cir. 1998) (internal quotations omitted).

         II. Background

         The following factual summary adopts the approach described above. Karen Julius and her late husband, Tabert Julius, purchased their home in Derry in 2005.[3] Both Mr. and Mrs. Julius signed the mortgage agreement, [4] but only Mr. Julius signed the note.[5] The Juliuses remained current on their mortgage payments for approximately ten years, until Mr. Julius, who suffered from cancer, became unable to work in late 2015.

         Around that time, the Juliuses sought relief from Wells Fargo, which provided them with some forbearance by admitting them into its home preservation program. Wells Fargo did not, at that time, inform the Juliuses that they would be removed from the program should Mr. Julius pass away. The Juliuses continued to make reduced payments, even after the plaintiff left her job to care for her husband full-time. She informed Wells Fargo of these hardships in March 2016 through a letter to their home preservation program specialist.

         Mr. Julius passed away in 2016. Two days later, Wells Fargo informed the plaintiff that she would be removed from the home preservation program, and that her home would be placed in foreclosure proceedings. Though she requested additional time to find employment and set her affairs in order, she was removed from the home preservation program. Wells Fargo also "removed her from receiving statements and loan details online, " preventing her from keeping track of her loan or payments.[6] At oral argument, the parties confirmed that the defendant never initiated foreclosure proceedings or issued a foreclosure notice.

         III. Analysis

         The plaintiff has brought five claims against Wells Fargo arising from this series of events: (1) breach of the covenant of good faith and fair dealing; (2) negligent misrepresentation, (3) intentional infliction of emotional distress; (4) violations of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601 et seq.; and (5) a challenge to the defendant's standing to foreclose on the mortgage.

         The court is not unsympathetic to the plaintiff's position. It may have behooved Wells Fargo to offer her an opportunity to set her affairs in order after her recent loss and to make arrangements allowing her to pay off the mortgage loan, even though she was not originally a party to the note. While that may have been a considerate practice on Wells Fargo's part, it is not a course Wells Fargo was legally obligated to take.

         As the court discusses with respect to each of the plaintiff's claims, courts in this District have repeatedly dismissed the same claims brought by the plaintiff's counsel, explaining in detail the reasons why those claims do not lie. Because this ground has been so thoroughly trodden, and is by now so undoubtedly familiar to plaintiff's counsel, the court does not retread it in detail here. For the reasons discussed below, all of the plaintiff's claims must be dismissed.

         A. The covenant of good faith and fair dealing (Count 1)

         The plaintiff first contends that Wells Fargo violated the implied covenant of good faith and fair dealing. "In every agreement, there is an implied covenant that the parties will act in good faith and fairly with each other." Birch Broad, Inc. v. Capitol Broad. Corp., Inc., 161 N.H. 192 (2010). Julius invokes the third category of the breach of that covenant recognized in New Hampshire: limitation of discretion in contractual performance. See Id. at 198. Whether a plaintiff has sufficiently alleged a breach of that particular duty

turns on three key questions: (1) whether the agreement allows or confers discretion on the defendant to deprive the plaintiff of a substantial portion of the benefit of the agreement; (2) whether the defendant exercised its discretion reasonably; and (3) whether the defendant's abuse of discretion caused the damage complained of.

Moore v. Mortg. Elec. Reg. Sys., Inc., 848 F.Supp. 2D 107, 129 (D.N.H. 2012). As with many such claims brought before this court, the plaintiff's fails at the first inquiry.

         "[T]he duty of good faith and fair dealing ordinarily does not come into play in disputes" where "the underlying contract plainly spells out both the rights and duties of the parties and the consequences that will follow from a breach of a specified right." Milford-Bennington R. Co., Inc. v. Pan Am Rys., Inc., 2011 DNH 2 0 6, 11 (Barbadoro, J.) (internal quotations and citations omitted). "[P]arties generally are bound by the terms of an agreement freely and openly entered into, ' and the implied covenant does not preclude a contracting party from insisting on enforcement of the contract by its terms, even when enforcement 'might operate harshly or inequitably.'" Moore, 848 F.Supp. 2d at 129 (quoting Olbres v. Hampton Co-op. Bank, 142 N.H. 227, 233 (1997)). That is the case here.

         The plaintiff does not dispute that the note obligated her husband to pay back the amount of the loan secured by the mortgage.[7] Nor does she dispute that the account was in default. The mortgage contract -- which both Mr. and Mrs. Julius signed -- spells out the lender's remedy in the event that Mr. Julius defaulted.[8] The plaintiff argues, in essence, that by allowing the Juliuses to enter the home protection program and by communicating with the plaintiff while her husband was ill, Wells Fargo created an expectation that it would continue to forebear and to communicate with her, despite the fact that she was a third-party to the note, after his passing.[9] The clear terms of the agreement preclude such a claim.

         The mortgage agreement, to which the plaintiff was a party, provides that forbearance by Wells Fargo "shall not be a waiver of or preclude the exercise of any right or remedy, " including acceleration or statutory power of sale.[10] While the defendant may, under these provisions, possess some discretion in deciding whether or not to proceed with the foreclosure, the provisions in question are "not so lacking in clarity as to provide the fodder for a successful claim for breach of the implied duty of good faith and fair dealing." Dove v. Bank of New York Mellon, 2016 DNH 041, 13-14 (where note and mortgage provide lender with discretion to accelerate loan and pursue remedies including statutory power of sale upon default, borrower could not ...

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