Alexander v. Fay Servicing, LLC

2018 DNH 100

• Court: District Court, D. New Hampshire
• Decided: May 15, 2018
• Docket: 18-cv-252-JD
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Connie Alexander

v. Civil No. 18-cv-252-JD Opinion No. 2018 DNH 100 Fay Servicing, LLC

O R D E R

Connie Alexander, proceeding pro se, brought suit in state

court to enjoin the foreclosure sale of her home by Fay

Servicing, LLC. Fay Servicing removed the case to this court,

and now moves to dismiss the complaint. Alexander did not file

a response.

Standard of Review

In considering a motion to dismiss, the court accepts all

well-pleaded facts as true, disregarding mere legal conclusions,

and resolves reasonable inferences in the plaintiff’s favor.

Galvin v. U.S. Bank, N.A., 852 F.3d 146, 155 (1st Cir. 2017).

Taken in that light, to avoid dismissal, the complaint must

state sufficient facts to support a plausible claim for relief.

In re Curran, 855 F.3d 19, 25 (1st Cir. 2017). The plausibility

standard is satisfied if the factual allegations in the

complaint “are sufficient to support the reasonable inference that the defendant is liable.” In re Fidelity ERISA Float

Litig., 829 F.3d 55, 59 (1st Cir. 2016) (internal quotation

marks omitted). The complaint need not include “a high degree

of factual specificity” but “must contain more than a rote

recital of the elements of a cause of action.” Carcia-Catalan

v. United States, 734 F.3d 100, 103 (1st Cir. 2013) (internal

quotation marks omitted).

Background

Alexander provided few facts in her pro se complaint. She

filed an emergency motion to stay the foreclosure sale of her

property, which also provided little information. In support of

its objection to Alexander’s emergency motion, Fay Servicing

argued that because of Alexander’s bankruptcy discharge it could

not seek payment of the debt.1 The court denied Alexander’s

emergency motion to stay the foreclosure sale.

Alexander moved for reconsideration, stating only, “Pls

Review Evidence attached.” She submitted copies of three

letters from Fay Servicing, which document Alexander’s efforts

to be approved for reinstatement and modification of her loan

after her bankruptcy discharge. She also submitted a list of

1 Fay Servicing provided a copy of a form, Schedule D, “Creditors Who Have Claims Secured by Property,” that Alexander filed in her Chapter 7 bankruptcy proceeding and a copy of her bankruptcy discharge.

2 “Fay Servicing Contact Phone Calls” and her own statement to

support her motion. The motion for reconsideration was denied.

The documents that have been submitted by Alexander and Fay

Servicing are considered for purposes of the motion to dismiss.

The background facts are those provided in the order denying the

emergency motion with additional facts from the documents

submitted by Alexander in support of her motion for

reconsideration and documents submitted by Fay Servicing.

In 2004, Alexander borrowed $124,720.00 to buy property on

Vista Ridge Drive in Londonderry, New Hampshire. Her loan was

secured by a mortgage on the property. In 2016, Alexander’s

note and mortgage were assigned to Wilmington Savings Fund

Society, FSB, dba Christiana Trust, as trustee for BCAT 2015-

14BTT. Fay Servicing is the servicer for the mortgage and note.

Alexander defaulted on her mortgage payments, and Fay Servicing

started foreclosure proceedings.

Alexander contacted Fay Servicing to apply for a

modification of her mortgage. When the terms were presented,

she realized that she could not make the payments that were

required. She later attempted to apply for a second

modification, while the foreclosure proceedings were in

progress, without success.

3 On February 28, 2017, Alexander filed for bankruptcy

protection under Chapter 7. In re Alexander, 17-10251-JMD

(Bankr. D.N.H. Feb. 28, 2017). Alexander listed Wilmington

Savings Bank as a creditor and stated that the property at Vista

Ridge Drive secured Wilmington Savings Bank’s claim. The

bankruptcy court granted Alexander a discharge on May 31, 2017.

Doc. 6-2. The bankruptcy case was closed on June 9, 2017, and

Alexander received a discharge.

The letters that Alexander appended to her motion for

reconsideration show that she continued to contact Fay Servicing

after receiving the bankruptcy discharge to apply for

modification of her loan and mortgage. The letters show several

failed attempts at loan modification. On March 21, 2018, Fay

Servicing sent Alexander a letter that explained the history of

her loan and informed her that the foreclosure sale would not be

postponed.

In response, Alexander filed a complaint in state court to

enjoin the foreclosure sale. The complaint is a state court

form that Alexander completed, which directs her to provide

certain information. She described her efforts to keep current

on her mortgage as follows: “Attached: Was not informed that I

had 37 days to submit BA - when I submitted I reached out to Fay

numerous times via voicemail & Email – no contact, no phone

4 calls back — no emails returned - - I did not learn foreclosure

was still pending until I spoke to a manager on Monday – see

attached for better description.”2 To describe why she was

asking the court to enjoin the foreclosure sale, Alexander

wrote: “Attached – I have a strong buyer for the home – but was

not given proper notice to allow them to purch – Either I would

like to modify (as I have what is needed) or I will sell the

property. Do not want a foreclosure on my credit report.” She

further stated that she was not informed about “time frames” for

sending in her applications for modification of the loan and

asks the court to order Fay Servicing to grant her a “work-out,

modification, or give me the opportunity to sell the home.”

The state court granted an ex parte injunction to stop the

foreclosure sale and scheduled a hearing. Fay Servicing removed

the case to this court on March 28, 2018. The foreclosure sale

of Alexander’s property was scheduled for Monday, April 16.

Neither party has informed the court as to whether the

foreclosure sale occurred.

Discussion

Alexander does not clearly state a claim in the complaint.

Fay Servicing moves to dismiss the complaint on the ground that

2 Nothing was attached to the complaint.

5 Alexander fails to state a claim because she did not allege that

she was granted a discharge in bankruptcy.3

A bankruptcy discharge order “operates as an injunction

against the commencement or continuation of any action . . . to

collect, recover, or offset any such debt as a personal

liability of the debtor.” 11 U.S.C. § 524(a)(2); Bates v.

CitiMortgage, Inc., 844 F.3d 300, 304 (1st Cir. 2016). Although

the debtor’s personal liability for the debt is extinguished by

the discharge, “the mortgage holder still retains a ‘right to

payment’ in the form of its right to the proceeds from the sale

of the debtor’s property.” Johnson v. Home State Bank, 501 U.S.

78, 84 (1991). For that reason, although the debtor is released

from personal liability for the debt, the discharge “does not

prohibit a secured creditor from enforcing a valid prepetition

mortgage lien.” Best v. Nationstar Mortg. LLC, 540 B.R. 1, 9

(B.A.P. 1st Cir. 2015). Further, a debtor may request and agree

to reinstate or reaffirm the loan, with a payment plan, in order

to avoid foreclosure. See Williams v. Rushmore Loan Mgmt.

3 Although Fay Servicing represents that it could not discuss a modification of Alexander’s loan and mortgage without violating the injunction imposed by the discharge, the interactions between Fay Servicing and Alexander after the discharge show that it did consider modification.

6 Servs., LLC, 2018 WL 1582515, at *10 (D. Conn. Mar. 31, 2018);

see also 11 U.S.C. § 524(j).

While Fay Servicing is correct that Alexander received a

bankruptcy discharge, which extinguished her personal liability

for the debt, that was not the end of the story. After the

discharge was entered, Alexander contacted Fay Servicing and was

granted opportunities to repay the debt in order to avoid

foreclosure. Those attempts, however, were unsuccessful, which

is the basis for Alexander’s complaint.

Alexander’s reference to thirty-seven days appears to

derive from Fay Servicing’s notice to her that because she had

not completed the borrower’s assistance form more than thirty-

seven days before the scheduled foreclosure sale, the

foreclosure would proceed. That rule is taken from Regulation X

of the Real Estate Settlement Procedures Act, 12 C.F.R. §

1024.41(g), which provides that if a servicer receives a

“complete loss mitigation application more than 37 days before a

foreclosure sale”, the service must comply with certain

procedures before conducting a foreclosure sale. Based on the

information in the letters, Alexander’s application had not even

been submitted, much less completed, less than two weeks before

the scheduled foreclosure.

7 Alexander cites no requirement that a servicer must notify

a borrower of the requirements imposed by Regulation X. She

also does not allege any violation of Regulation X. Further,

Alexander cites no contractual or statutory obligation for Fay

Servicing to grant her a loan modification. See Flores v.

OneWest Bank, F.S.B., 886 F.3d 160, 166-67 (1st Cir. 2018).

Because Alexander did not respond to the motion to dismiss, she

has provided no clarification or support for her claims.

Conclusion

For the foregoing reasons, the defendant’s motion to

dismiss (document no. 11) is granted.

The clerk of court shall enter judgment accordingly and

close the case.

SO ORDERED.

__________________________ Joseph A. DiClerico, Jr. United States District Judge

May 15, 2018

cc: Connie Alexander, pro se Richard C. Demerle, Esq.