UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Jason S. Dionne and Denise C. Dionne
v. Civil No. 15-cv-056-LM Opinion No. 2015 DNH 125 Federal National Mortgage Association and JPMorgan Chase Bank, N.A.
O R D E R
This mortgage foreclosure dispute was removed to this court
from the Hillsborough County Superior Court by the defendants,
Federal National Mortgage Association (“FNMA”) and JPMorgan
Chase Bank, N.A. (individually “Chase,” and collectively with
FNMA, the “Defendants”). Previously, the Defendants moved to
dismiss the case for failure to state a claim pursuant to
Federal Rule of Civil Procedure 12(b)(6). In an order dated
April 23, 2015, this court denied the Defendants’ motion to
dismiss without prejudice, and granted plaintiffs Jason and
Denise Dionne an opportunity to file an amended complaint. The
Defendants subsequently filed a motion for reconsideration of
the April 23 order, contending that the court had erred in
granting the Dionnes leave to amend their complaint. The
Defendants urge the court not to consider an amended complaint,
and instead to rule on the motion to dismiss.
1 For reasons that will be explained below, the Defendants’
motion for reconsideration is GRANTED. Although the Dionnes did
file an amended complaint, the court will disregard the amended
version, and will instead treat the initial complaint as the
operative pleading for purposes of the motion to dismiss.
Unfortunately for the Defendants, today’s victory will
likely ring hollow. While they have prevailed on the court to
reconsider its April 23 order and to rule on the motion to
dismiss, for the reasons that follow, the court concludes that
the Defendants’ motion to dismiss should be DENIED.
Background1
The Dionne family has lived at the subject property,
located in Pelham, New Hampshire, since 1976. Verified Petition
¶ 12. Pursuant to a 2006 loan agreement, the Defendants held a
mortgage on the property at the time that these events occurred.2
On August 12, 2014, Ms. Dionne received a letter from Chase
indicating that a foreclosure sale of the property had been
1 The facts are summarized from the Dionnes’ Verified Petition for Ex-Parte Order Voiding Foreclosure Ab Initio or Alternatively to Enjoin Recordation of Foreclosure Deed and/or for Leave of Court to File Lis Pendens (“Verified Petition”) (doc. no. 1-1), and the exhibits attached thereto. See Trans- Spec Truck Serv. v. Caterpillar, Inc., 524 F.3d 315, 321 (1st Cir. 2008).
2 The mortgage was apparently held by several other lenders before it was assigned to FNMA.
2 “rescheduled” for October 1, 2014.3 Id. ¶ 15; see also Ex. 1 to
Verified Petition. Immediately thereafter, the Dionnes applied
for a loan modification, and Chase acknowledged receipt of the
application by letter dated August 27, 2014. Id. ¶ 16; see also
Ex. 2 to Verified Petition. For reasons that are unclear, the
October 1 foreclosure sale did not take place. Id. ¶ 17.
In October and November of 2014, the Dionnes submitted all
of the paperwork that Chase requested in connection with the
loan modification, but were repeatedly told that Chase had not
received certain materials. Id. ¶¶ 18-21; see also Exs. 3, 4 to
Verified Petition. On November 18, 2014, before a decision was
reached on the loan modification, the Dionnes received a letter
indicating that the Defendants had authorized another
foreclosure sale. Id. ¶¶ 22-23; see also Ex. 5 to Verified
Petition. The Dionnes contacted Chase, and were assured that no
sale would occur during the pendency of the application. Id. ¶
23.
Several weeks later, on December 11, 2014, the Dionnes
received another letter indicating that a foreclosure sale had
been scheduled for January 12, 2015. Id. ¶ 24; see also Ex. 6
to Verified Petition. The Dionnes contacted Chase on January
3The record suggests that the foreclosure sale was originally scheduled in 2012, but was cancelled when members of the Dionne family filed for bankruptcy. 3 10, 2015, and were again assured that the loan modification
application was being considered and that a foreclosure sale
would not occur until that process was complete. Id. ¶ 25.
Nevertheless, the foreclosure sale took place as scheduled on
January 12, and the property was apparently sold to a third
party. Id. ¶ 26; see also Ex. 7 to Verified Petition.
The Dionnes filed the Verified Petition in the Hillsborough
County Superior Court shortly after the foreclosure sale. The
Dionnes allege that they had relied to their detriment on
Chase’s promises that the Defendants would not foreclose during
the pendency of the loan modification application, and they
allege that the Defendants violated federal consumer protection
law by foreclosing on the property during that pendency period.
After the Superior Court granted an ex parte preliminary
injunction barring the recording of the foreclosure deed, the
Defendants removed the proceedings to this court, and now move
to dismiss the Verified Petition.
In their objection to the motion to dismiss, the Dionnes
state:
Defendants’ argument for dismissal is premature inasmuch as no complaint is presently before the court. Plaintiffs’ pleading in issue was filed in state court as an ex parte preliminary injunction seeking temporary relief pending [a] hearing on the merits of the ex parte hearing. Said pleading was not accompanied by a separate complaint at the time, but its filing was contingent on the outcome of the hearing on the merits of the ex parte hearing. . . .
4 Plaintiffs hereby move that their ex parte motion be further allowed pending the filing of a complaint to preserve the status quo until the court issues a decision on the merits of the action.
See Pls.’ Objection to Defs.’ Mot. to Dismiss (doc. no. 6) ¶¶ 1-
2. Though it was not overtly phrased as such, the court
construed this language as a request by the Dionnes for leave to
amend the Verified Petition. By order dated April 23, 2015, the
court denied the Defendants’ motion to dismiss without
prejudice, and granted the Dionnes leave to amend the Verified
Petition. The Dionnes did so, but not before the Defendants
filed a motion to reconsider the April 23 order.4
Discussion
I. Motion for Reconsideration
A. Legal Standard
“[M]otions for reconsideration are appropriate only in a
limited number of circumstances: if the moving party presents
newly discovered evidence, if there has been an intervening
change in the law, or if the movant can demonstrate that the
original decision was based on a manifest error of law or was
clearly unjust.” U.S. v. Allen, 573 F.3d 42, 53 (1st Cir.
2009); see also LR 7.2(d) (motions for reconsideration must
4 Very recently, the Defendants filed a motion to dismiss the amended complaint (doc. no. 15). 5 “demonstrate that the order was based on a manifest error of
fact or law”).
B. Application
Upon further reflection, the court believes that it was an
error of law to afford the Dionnes leave to amend the Verified
Petition. As an initial matter, the court’s construction of the
above-quoted language from the Dionnes’ objection to the motion
to dismiss as a request for leave to amend the Verified Petition
was highly generous because the Dionnes did not clearly ask for
such relief. At best, the request for leave to amend was stated
in imprecise and oblique terms. Construing this language as a
request for leave to amend was itself an error of law. See
Boone v. William W. Backus Hosp., 864 A.2d 1, 10 (Conn. 2005)
(“The interpretation of pleadings is always a question of law
for the court.”) (citations omitted) (internal quotation marks
omitted).
What is more, as the Defendants point out in their motion
for reconsideration, this court’s local rules unequivocally
require that a motion to amend be set forth in a separate
pleading, rather than bunched in with an objection to a pending
motion. Local Rule 7.1(a)(1) states as follows:
All motions must contain the word “motion” in the title. Filers shall not combine multiple motions seeking separate and distinct relief into a single filing. Separate motions must be filed. Objections
6 to pending motions and affirmative motions for relief shall not be combined in one filing.
In objecting to the motion for reconsideration, on this
issue, the Dionnes note only that the local rules permit the
court to “excuse a failure to comply with any local rule
whenever justice so requires.” LR 1.3(b). The Dionnes,
however, provide no explanation for their failure to file a
separate motion to amend, if indeed that was their aim. This is
not an instance where an unrepresented litigant understandably
fails to comply with procedural minutiae. See, e.g., Erikson v.
Pardus, 551 U.S. 89, 94 (2007) (per curiam) (noting that certain
pro se pleadings should be construed liberally). Rather, the
Dionnes are represented by counsel and are expected to comply
with the basic rules governing civil practice in this court.
Consequently, they cannot meet the threshold required by Local
Rule 1.3(b) to excuse their noncompliance. In sum, this court
committed an error of law by disregarding the plain mandates of
Local Rule 7.1(a)(1).
The court’s error of law had serious implications for the
Defendants. Perhaps because the request for leave was not
clearly stated, or perhaps because the Dionnes did not request
such relief in a separate motion to amend, the Defendants
understandably did not object. As such, the court granted
significant relief to the Dionnes without the Defendants’
7 opportunity to weigh in, effectively mooting a fully-briefed
dispositive motion.
The court finds that its April 23 decision to grant the
Dionnes leave to amend the Verified Petition was based on an
error of law.5 Therefore, the Defendants’ motion for
reconsideration is GRANTED. The court will disregard the
amended Verified Petition and will assess the motion to dismiss
on the basis of the original version.
II. Motion to Dismiss
Under Federal Rule of Civil Procedure 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) (citations omitted) (internal quotation marks
omitted). A claim is facially plausible “when the plaintiff
pleads factual content that allows the court to draw the
5In addition to noting the Dionnes’ failure to comply with Local Rule 7.1(a)(1), the motion for reconsideration identified several other grounds on which the court should reconsider its April 23 order. Because the court finds the non-compliance with the local rules to be an adequate basis on which to grant the motion for reconsideration, the court need not assess these other issues. 8 reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). Analyzing plausibility is a “context-specific task” in
which the court relies on its “judicial experience and common
sense.” Id. at 679. In assessing a motion to dismiss under
Rule 12(b)(6), the court considers the allegations in the
complaint, as well as exhibits attached to, or referenced in,
the complaint. Trans-Spec Truck Serv., 524 F.3d at 321.
The Defendants seek dismissal on several grounds. First,
they contend that this action is untimely because, under New
Hampshire law, a challenge to the validity of a foreclosure is
barred unless the action is commenced before the foreclosure
sale takes place. Second, the Defendants contend that they are
entitled to dismissal because, contrary to allegations in the
Verified Petition, their actions did not violate federal
consumer protection law.6
6 The Defendants also seek to dismiss on grounds that the Dionnes may not rely on the covenant of good faith and fair dealing to force a lender to modify the terms of a loan. See, e.g., Moore v. Mortg. Elec. Registration Sys., Inc., 848 F. Supp. 2d 107, 130 (D.N.H. 2012). The court does not reach this issue because the Dionnes do not invoke the covenant of good faith and fair dealing. 9 i. Timeliness of the Dionnes’ Petition
Under New Hampshire law, a mortgagor who seeks to challenge
the validity of a planned foreclosure sale must initiate legal
proceedings before the foreclosure sale occurs. N.H. Rev. Stat.
Ann. § 479:25(II); see also Nardone v. Deutsche Bank Nat’l Trust
Co., No. 13-cv-390-SM, 2014 WL 1343280, at *4 (D.N.H. Apr. 4,
2014); Neenan v. CitiMortgage, Inc., No. 13-cv-435-JD, 2013 WL
6195579, at *2 (D.N.H. Nov. 26, 2013). Because the Dionnes did
not file this suit until after the January 12, 2015 foreclosure
sale had occurred, the Defendants argue that the case must be
dismissed as untimely.
This argument is entirely unpersuasive. The Dionnes have
alleged that, on two separate occasions, they were assured by
Chase personnel that a foreclosure sale would not occur so long
as their application for a loan modification remained pending.
Indeed, the Verified Petition includes a specific allegation
that the Dionnes “relied to their detriment [on] the statement
by Chase that a foreclosure would not occur pending the review.”
Verified Petition ¶ 24. Construing these allegations in favor
of the Dionnes, as the court must, Foley, 772 F.3d at 71, the
Verified Petition plausibly suggests that the Dionnes opted not
to take legal action because they reasonably relied on Chase’s
promises that the foreclosure sale would not go forward.
10 ii. Violation of Federal Consumer Protection Law
The Verified Petition alleges that the Defendants violated
Regulation X of the Real Estate Settlement Procedures Act
(“RESPA”), 12 C.F.R. § 1024.41, by conducting the foreclosure
sale prior to acting on the Dionnes’ loan modification
application. In relevant part, RESPA provides that “[i]f a
servicer receives a complete loss mitigation application more
than 37 days before a foreclosure sale, then, within 30 days of
receiving a borrower’s complete loss mitigation application, a
servicer shall [e]valuate the borrower for all loss mitigation
options available to the borrower; and [p]rovide the borrower
with a notice in writing stating the servicer’s determination
. . . .”7 12 C.F.R. § 1024.41(c). RESPA further provides that
“[i]f a borrower submits a complete loss mitigation application
after a servicer has made the first notice or filing required by
applicable law for any . . . foreclosure process but more than
37 days before a foreclosure sale, a servicer shall not . . .
conduct a foreclosure sale . . . .” Id. at § 1024.41(g).
The Defendants advance two arguments suggesting that they
are entitled to dismissal of the RESPA allegations. First, the
7 The Verified Petition refers to a “loan modification application,” while RESPA refers to a “loss mitigation application.” This order uses the terms interchangeably. 11 Defendants contend that the Dionnes never submitted a complete
loss mitigation application. This argument is unavailing.
RESPA provides that “[a] complete loss mitigation
application means an application in connection with which a
servicer has received all the information that the servicer
requires from a borrower in evaluating applications for the loss
mitigation options available to the borrower.” Id. at §
1024.41(b)(1). The Verified Petition plainly alleges that the
Dionnes provided all of the information that Chase requested,
often providing documents multiple times as Chase could not
locate items that had previously been submitted. Verified
Petition ¶¶ 18-21. What is more, the Dionnes have alleged that
they were assured on at least two occasions that their loan
modification application was complete and under review. Id. ¶¶
21, 25. These allegations are adequate to support a claim that
the Dionnes submitted a complete loss mitigation application.
Second, the Defendants contend that the timing of events
precludes relief under RESPA. RESPA restricts a lender’s right
to conduct a foreclosure sale where the borrower, after
receiving a “first notice or filing required by applicable law
for any . . . foreclosure process,” submits a complete loss
mitigation application at least 37 days before a foreclosure
sale. 12 C.F.R. § 1024.41(g). To briefly summarize, Chase sent
a letter dated August 12, 2014, indicating that a foreclosure
12 sale would occur on October 1, 2014. The Dionnes allege that
they submitted their complete loss mitigation application on
August 27, 2014. After the October 1 sale did not occur, the
Dionnes received a second letter noticing a foreclosure sale.
This letter was dated December 11, 2014, and indicated that the
sale would occur on January 12, 2015. The Dionnes allege that
they never received a response from Chase as to whether their
loss mitigation application had been accepted or rejected, but
that the foreclosure sale took place as scheduled on January 12,
2015.
The Defendants contend that the notices of foreclosure that
the Dionnes received in August and December of 2014 were not the
“first” such notices, because a foreclosure process had
apparently been commenced in 2012 before members of the Dionne
family filed for bankruptcy. Indeed, the August 2014
foreclosure notice indicated that a foreclosure sale had been
“rescheduled” to occur on October 1, 2014. See Ex. 1 to
Verified Petition.
At this early stage of the litigation, the record is far
from complete. Though the Defendants allude to the 2012
commencement of a foreclosure process, they have not included
copies of any notices or other documents that would constitute
“first” filings for purposes of RESPA. What is more, the August
12, 2014 letter that Chase sent to the Dionnes indicated that
13 the foreclosure sale had been “rescheduled,” but it was
otherwise a standard form letter and provided no additional
information. In sum, absent evidence to the contrary, the
Dionnes have pled facts reasonably suggesting that the August 12
letter constituted the “first” notice or filing.
Separately, the Defendants contend that the Dionnes’ loss
mitigation application was not submitted at least 37 days prior
to the foreclosure sale, as RESPA requires. See 12 C.F.R. §
1024.41(g). To support this argument, the Defendants note that
the August 12 letter noticed a foreclosure sale which was to
occur on October 1, 2014. Therefore, when the Dionnes submitted
their application on August 27, 2014, they did so just 35 days
before the date of the scheduled sale.
Section 1024.41(g) obliges the borrower to submit the loss
mitigation application “more than 37 days before a foreclosure
sale . . . .” The Defendants would have the court identify
October 1 as the date of the foreclosure sale for purposes of
calculating the timeliness of the application, even though it is
undisputed that the sale did not actually occur until January
12, 2015. The Defendants do not cite authority supporting this
contention, and it strikes the court as contrary to the plain
wording of Section 1024.41(g). The Dionnes have pled facts
sufficient to suggest that their application was submitted on
14 August 27, 2014, which was far greater than 37 days prior to the
actual foreclosure sale date of January 12, 2015.
In sum, the Verified Petition plausibly alleges that the
Dionnes timely submitted a complete loss mitigation application,
and that the Defendants subsequently violated RESPA by
conducting a foreclosure sale prior to acting on the
application. Thus, the Defendants are not entitled to dismissal
of the Dionnes’ RESPA allegations.
Conclusion
For the foregoing reasons, the clerk of the court is
directed to do the following:
(1) GRANT the Defendants’ motion for reconsideration (doc. no. 12).
(2) DENY the Defendants’ motion to dismiss (doc. no. 5).
(3) STRIKE the Dionnes’ amended complaint (doc. no. 14) from the record, or clearly note that the only operative pleading is the Verified Petition (doc. no. 1-1).
(4) TERMINATE AS MOOT the Defendants’ motion to dismiss the amended complaint (doc. no. 15).
SO ORDERED.
__________________________ Landya McCafferty United States District Judge
June 16, 2015 cc: David E. Buckley, Esq. Nathan Reed Fennessy, Esq.