Galvin, et al. v. EMC Mortgage Corporation, et al.

2013 DNH 053

• Court: District Court, D. New Hampshire
• Decided: April 2, 2013
• Docket: CV-12-320-JL
• Status: Published

Opinion

Galvin, et a l . v . EMC Mortgage Corporation, et a l . CV-12-320-JL 4/2/13

UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

Mark B . Galvin and Jenny Galvin

v. Civil N o . 12-cv-320-JL Opinion N o . 2013 DNH 053 EMC Mortgage Corporation et a l .

MEMORANDUM ORDER

In 2005, plaintiff Mark Galvin took out a $2.9 million

mortgage loan. Four years later, he defaulted. Galvin alleges

that although he entered a repayment plan with loan servicer EMC

Mortgage Corporation in order to cure this default, EMC began

foreclosure proceedings not long after.

Galvin and his wife have now brought a 15-count complaint

against EMC and several other entities involved in the servicing

and foreclosure of the loan. The Galvins allege a variety of

malfeasance, including failing to properly apply their payments

and proceeding with foreclosure despite ongoing negotiations to

modify the loan. This court has diversity jurisdiction over this

matter between the Galvins, who are New Hampshire citizens, and

defendants, various out-of-state entities, under 28 U.S.C. § 1332

(diversity) because the amount in controversy exceeds $75,000.

The court also has jurisdiction under 28 U.S.C. § 1331 (federal

question) and 1367 (supplemental jurisdiction) by dint of the Galvins’ claim under the Truth in Lending Act, 15 U.S.C. § 1601

et seq.

The defendants have moved to dismiss the complaint, arguing

that the Galvins have not stated a claim upon which relief can be

granted. See Fed. R. Civ. P. 12(b)(6). After hearing oral

argument, the court grants the motion as to all but one of the

Galvins’ claims–-that for breach of the implied covenant of good

faith and fair dealing in Count 6. Before explaining the reasons

for doing s o , however, a brief detour is necessary.

In their opposition memoranda, the Galvins coyly suggest

that, should the court dismiss certain counts of their complaint,

they will seek leave to amend in order to plead new allegations

in support of those counts.1 They referred to several of those

unpleaded allegations at oral argument, where they also advanced

a number of legal arguments and theories of recovery that were

similarly absent from both their complaint and memoranda. This

type of conduct betrays a lack of respect for opposing counsel

1 The Galvins are reminded that such contingent statements do “not constitute a motion to amend a complaint.” Gray v . Evercore Restructuring L.L.C., 544 F.3d 3 2 0 , 327 (1st Cir. 2008); see also Fisher v . Kadant, Inc., 589 F.3d 505, 509-10 (1st Cir. 2009). If they wish to amend their complaint, they must either obtain the defendants’ written consent or file a motion for leave to do so under Federal Rule of Civil Procedure 15(a)(2). The court takes no position on whether such a motion would be granted, or whether the amendments to which the Galvins allude state a claim for relief.

2 and the court, who have expended significant resources attempting

to litigate and resolve the present motion, due in no small part

to the numerous (and largely meritless, as will be discussed in

due course) theories actually included in the Galvins’ complaint.

The defendants and the court should not be “required to shoot at

a moving target,” Gierbolini-Rosa v . Banco Popular de Puerto

Rico, 121 F.3d 695 (1st Cir. 1997) (table), but that is what the

Galvins have invited the court to do by relying upon facts and

theories not identified in their complaint or memoranda. That

invitation is declined. Any facts or theories not pleaded in the

complaint, and arguments absent from the Galvins’ memoranda, are

disregarded in the remainder of this order. See Order of Feb.

1 2 , 2013 (“No new arguments or claims outside the briefs and

pleadings will be entertained.”); see also Iverson v . City of

Boston, 452 F.3d 9 4 , 103 (1st Cir. 2006) (under “raise-or-waive

rule,” represented parties must “incorporate all relevant

arguments in the papers that directly address a pending motion”

or waive them); In re Tyco Int’l, Ltd. Multidistrict Litig., 2004

DNH 0 4 7 , 3-4 (court cannot take into account facts or allegations

found outside complaint when ruling on motion to dismiss).

At oral argument, the Galvins also withdrew over half the

counts pleaded in their complaint, disclaiming any intent to

pursue Counts 1 , 3-5, 7-8, 1 0 , and 12-13. While the court

3 appreciates the Galvins’ attempt to narrow the issues truly in

dispute, it would have been more beneficial (and respectful) to

both the court and opposing counsel for the Galvins to make this

intent clear in their opposition memoranda, so as to avoid

unnecessary expenditures of time and effort. Because the

parties’ arguments regarding those counts have been fully briefed

and considered by the court, this order examines each of those

counts, notwithstanding the Galvins’ withdrawal of them.

Turning now to the merits of the action:

• Counts 1 and 1 5 , which are premised upon EMC’s alleged breach of the repayment plan agreement, are dismissed because the repayment plan does not contain the promises that the Galvins say were breached.

• Count 2 , which advances a variety of theories as to why the defendants lack “standing” to foreclose, is dismissed, as none of these theories states a plausible claim for relief.

• Counts 3-5, which sound in negligence, are dismissed because the allegations set forth in the complaint do not plausibly support the conclusion that the defendants owed the Galvins a duty outside the terms of their contracts.

• Count 6, which seeks to recover for an alleged breach of the implied covenant of good faith and fair dealing, is not dismissed because the Galvins have alleged facts that, if proven, could entitle them to relief on that claim.

• Count 7 , which rests on the premise that the Galvins are intended third-party beneficiaries of a contract between EMC and the federal government, is dismissed because that premise is incorrect as a matter of law.

• Counts 8 and 1 0 , which seek to recover from EMC for fraud in the inducement and negligent misrepresentation, are dismissed because the Galvins have not pleaded those claims

4 with the specificity required by Federal Rule of Civil Procedure 9 ( b ) .

Counts 9 and 1 1 , which are premised upon supposedly false statements made in an assignment of the Galvins’ mortgage, are dismissed because the Galvins have identified no such statements on the face of the assignment.

Counts 12 and 1 3 , both of which are titled “avoidance of mortgage,” are dismissed because the theories pleaded in those counts do not entitle the Galvins to relief.

• Finally, Count 1 4 , a claim against EMC for violation of the Truth in Lending Act, is dismissed because it is barred by the applicable statute of limitations.

I. Applicable legal standard

To survive a motion to dismiss under Rule 12(b)(6), a

complaint must make factual allegations sufficient to “state a

claim to relief that is plausible on its face.” Ashcroft v .

Iqbal, 129 S . C t . 1937, 1949 (2009) (quoting Bell Atl. Corp. v .

Twombly, 550 U.S. 5 4 4 , 570 (2007)). In ruling on such a motion,

the court must accept as true all well-pleaded facts set forth in

the complaint and must draw 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 3 0 , 35 (1st Cir. 2009). With the facts so

5 construed, “questions of law [are] ripe for resolution at the

pleadings stage.” Simmons v . Galvin, 575 F.3d 2 4 , 30 (1st Cir.

2009). The following background summary is consistent with that

approach.

II. Background

In 2005, Mark Galvin executed a promissory note in the

amount of $2,900,000, payable to Metrocities Mortgage, LLC. The

note was secured by a mortgage on property in Rye, New Hampshire,

belonging to Galvin and his wife. Both Galvins executed the

mortgage, which identifies Mortgage Electronic Registration

Systems, Inc. (“MERS”), as the mortgagee in its capacity “as

nominee for [Metrocities and its] successors and assigns.”

Mortg. (document n o . 10-2) at 2 . The mortgage was subsequently

recorded in the Rockingham County Registry of Deeds.2

In 2009, Galvin failed to make the loan payments due for the

months of June, July, and August, leaving him over $40,000 in

2 As the recorded mortgage (Book 4537, Page 1719) is a matter of public record, this court may take note of it without converting defendants’ Rule 12 motion into a Rule 56 motion for summary judgment. See Greene v . Rhode Island, 398 F.3d 4 5 , 48-49 (1st Cir. 2005). And, as just mentioned, this court may also consider “facts extractable from documentation annexed to or incorporated by reference in the complaint.” Rederford, 589 F.3d at 3 5 . The mortgage is both attached to and referenced in the Galvins’ complaint. All other documents cited or quoted in this order are also either attached to the complaint, referred to therein, or both.

6 arrears. To cure this default, Galvin entered into a written

repayment agreement with his loan servicer, EMC. The agreement,

which Galvin executed on September 2 7 , 2009, called for him to

make six monthly payments of $9,900, with the last of the

payments due in February 2010. Although the repayment agreement

makes no mention whatsoever of modification, refinancing, or

foreclosure, the Galvins allege that “Mr. Galvin understood

[that] successful satisfaction of his obligations under the

[agreement] would result in a permanent loan modification or

refinancing, and stop foreclosure proceedings.” Compl. ¶ 36

(emphasis in original).

The Galvins allege that they made all six payments required

by the repayment agreement, and that EMC failed to credit their

account for those payments. The Galvins concede, however, that

they did not make the regular monthly payments due under their

Note during this same time.3 On March 1 , 2010, EMC sent them an

acceleration warning, asserting that M r . Galvin had “failed to

pay the required monthly installments commencing with the payment

3 The complaint is silent as to whether the Galvins made these payments, but their counsel acknowledged at oral argument that they had not. Because this fact is undisputed, the court takes notice of it for purposes of the present order. See Stoll v . Principi, 449 F.3d 263, 264 (1st Cir. 2006) (when reviewing motion to dismiss, court may, “for the sake of completeness,” supplement facts gleaned from the complaint with “undisputed facts”); McCloskey v . Mueller, 446 F.3d 2 6 2 , 264 (1st Cir. 2006) (similar).

7 due” for October 2009, leaving him over $80,000 in arrears.

Acceleration Warning (document n o . 10-3) at 2 .

Upon receiving this notice, M r . Galvin immediately called

EMC, which told him that he could apply for a loan modification

through the federal government’s Home Affordable Modification

Program, or “HAMP.” Following EMC’s instructions, M r . Galvin

submitted application materials to EMC. Over the next several

months, EMC repeatedly told him that it was working to help him

avoid foreclosure, and M r . Galvin believed that “all collection

efforts, including foreclosure, would be suspended” while his

modification application was pending. Compl. ¶ 4 4 .

Notwithstanding M r . Galvin’s belief, in late April 2010,

Harmon Law Offices informed the Galvins that EMC had retained it

to foreclose on their mortgage. Over the next several months,

the foreclosure and modification processes proceeded on parallel

tracks. EMC sent the Galvins a series of letters confirming that

it was reviewing their modification application, while Harmon

scheduled a foreclosure sale for the middle of June 2010. At

around the same time (and presumably in anticipation of the

foreclosure), MERS assigned the Galvins’ mortgage to The Bank of

New York Mellon (“Mellon”), in its capacity as trustee for a

8 securitized mortgage trust.4 Harmon ultimately cancelled that

sale at EMC’s direction while EMC continued to review M r .

Galvin’s application materials. This was not before some damage

had already been done, the Galvins allege, as they had listed

their property for sale but the public notices of foreclosure

sale had impaired their ability to sell to “prospective buyers

[who] were willing to wait to see if they could purchase the

property at a lower price at an auction.” Compl. ¶ 8 5 .

According to the complaint, the application process was also

frustrating for the Galvins. EMC repeatedly asked the Galvins to

send it information they had already submitted. It also asked

them to submit information that did not exist: on one occasion,

it requested a divorce decree (although the Galvins were not

divorced) and on another, requested a profit and loss statement

for M r . Galvin’s self-employment (although M r . Galvin was not

self-employed). Although the Galvins believed they had submitted

everything EMC required, in October 2010, EMC notified them that

their application for a HAMP modification was denied for failure

to provide requested documents. In the same letter, EMC informed

the Galvins that they might be eligible for other programs. The

Galvins took no further action, and heard nothing from EMC until

4 On May 2 0 , 2010, the assignment was recorded in the Rockingham County Registry of Deeds at Book 5112, Page 0754.

9 March 2011, when it sent a letter informing them that the

servicing of their loan would be transferred from EMC to JPMorgan

Chase Bank, N.A., which would “use the ‘brand name’ EMC Mortgage

when servicing the loan.” Compl. ¶ 7 4 .

In June 2012, Harmon, acting on Mellon’s behalf, sent the

Galvins a Notice of Mortgage Foreclosure Sale informing them that

it had scheduled a foreclosure sale for August 1 , 2012. That

prompted the Galvins to file this action in Rockingham County

Superior Court on July 2 3 , 2012, seeking to enjoin the sale. See

N.H. Rev. Stat. Ann. § 479:25, I I . In addition to the facts just

related, the Galvins’ complaint alleges that beginning in April

2009, EMC “began making unexplained and questionable debits and

accountings to the loan.” Compl. ¶ 9 1 . The defendants removed

the action to this court. See 28 U.S.C. § 1441.

III. Analysis

A. Counts 1 and 15 - Breach of contract and promissory estoppel

The first and last counts of the Galvins’ complaint–-for

breach of contract and promissory estoppel, respectively--both

seek to recover for EMC’s alleged breach of the promises it

allegedly made in the September 2 7 , 2009 repayment agreement.

Specifically, the Galvins claim that EMC violated that agreement

by (1) “commencing a foreclosure of the Galvins’ home immediately

10 after the Galvins satisfied their end of the deal” and (2)

“failing to act in good faith to modify the terms of the Note.”

Compl. ¶¶ 100-01, 189. Defendants argue that both counts must be

dismissed because the repayment agreement “does not promise that

EMC will not seek to foreclose following the [repayment] period

and it says nothing about modifying the terms of the Note.”

Memo. in Supp. of Mot. to Dismiss (document n o . 10-1) at 6-7; see

also id. at 25-26.

The defendants are correct. When interpreting a written

agreement, the court “give[s] the language used by the parties

its reasonable meaning, considering the circumstances and the

context in which the agreement was negotiated, and reading the

document as a whole.” Birch Broad., Inc. v . Capitol Broad.

Corp., Inc., 161 N.H. 1 9 2 , 196 (2010). An agreement will be

given “the meaning intended by the parties when they wrote it,”

but in the absence of any ambiguity, “the parties’ intent will be

determined from the plain meaning of the language used in the

contract.” Id. The court cannot “rewrite the parties’ contract

and insert a provision which the parties had never intended to be

a part of the contract,” Lowell v . U.S. Sav. Bank of Amer., 132

N.H. 719, 726 (1990); nor does “[p]romissory estoppel . . .

permit circumvention of carefully designed rules of contract law

11 in the name of equity,” Rockwood v . SKF USA Inc., 758 F. Supp. 2d

4 4 , 59 (D.N.H. 2010) (internal quotations omitted).

The plain, unambiguous language of the parties’ repayment

agreement does not contain any promise by EMC regarding loan

modification. On its face, the agreement addresses only one

exceedingly narrow subject: curing M r . Galvin’s delinquency. At

the very outset, it recites that “[t]his agreement is entered

into between [EMC] and [Mr. Galvin] for the delinquent amount

due.” Repayment Agreement, Compl. Ex. E at 1 (emphasis added).

It notes that M r . Galvin had failed to make the payments due for

June, July, and August of 2009, for a total past due amount of

$41,945.79. It then sets out a schedule whereby M r . Galvin is to

make six payments of $9,900.00 each (for a total of $59,400.00)

to cure this delinquency.

There is not the faintest suggestion that if M r . Galvin

makes all six payments, EMC will modify the terms of his Note.

Nor does the complaint plead any facts from which one can infer

that the parties intended such a term to be a part of the

agreement,5 and as just mentioned, this court has no license to

5 At oral argument, the Galvins suggested that ¶ 36 of their complaint demonstrated such an intent. That paragraph, however, merely alleges that “Mr. Galvin understood successful satisfaction of his obligations under the [agreement] would result in a permanent loan modification or refinancing.” Compl. ¶ 3 6 . It does not support the conclusion that both parties to the agreement had such an understanding.

12 insert provisions to which the parties did not agree into a

contract. Lowell, 132 N.H. at 726. EMC did not break any

promise set forth in the agreement by “failing . . . to modify

the terms of the Note.”

Nor does the agreement provide that EMC will relinquish its

right to foreclose if M r . Galvin makes all six payments. The

agreement is admittedly ambiguous as to whether, upon repayment,

EMC could foreclose as a result of M r . Galvin’s failure to make

his June-August 2009 mortgage payments; it is simply silent on

this point. But even if this ambiguity is construed in the

Galvins’ favor, at best the agreement promises that EMC will not

seek to foreclose based upon that particular default. It does

The Galvins also cited ¶ 187 of the complaint at oral argument in support of their promissory estoppel claim. That paragraph contains a bare assertion, unadorned by any meaningful factual content, that “EMC induced M r . Galvin to honor his part of the [agreement], namely, make the requirement [sic] payments under the repayment plan by promising M r . Galvin he either would be given a refinance or modification of his Note, and, most importantly, that no foreclosure proceedings would take place.” Compl. ¶ 187. To the extent this paragraph does not refer to the terms of the agreement itself (which, as just discussed, unambiguously do not contain such a promise), it does not make out a claim for promissory estoppel. Such a claim arises under New Hampshire law only “when one party has knowingly made representations upon which the other reasonably has relied to his detriment,” Appeal of Cloutier Lumber Co., 121 N.H. 4 2 0 , 422 (1981), and the fulfillment of preexisting contractual obligations “cannot amount to detrimental reliance,” Res-Care, Inc. v . Omega Healthcare Investors, Inc., 187 F. Supp. 2d 7 1 4 , 719 (W.D. Ky. 2001); see also, e.g., Eclipse Med., Inc. v . Am. Hydro-Surgical Instruments, Inc., 262 F. Supp. 2d 1334, 1351-52 (S.D. Fla. 1999).

13 not, by any stretch of reason or language, promise that EMC will

forego foreclosing if M r . Galvin defaults again–-as he did when

he failed to make his regular monthly mortgage payments beginning

in October 2009. See Mortg. (document n o . 10-2) at 4-5, ¶ 1 ; see

also supra n.3 & accompanying text. EMC did not break any

promise set forth in the agreement by commencing foreclosure in

response to this second default.

Because the repayment agreement contains neither of the

promises upon which the Galvins premise Counts 1 and 1 5 , those

counts are dismissed.

B. Count 2 - Lack of standing

Count 2 of the complaint, captioned “Lack Of Standing,”

advances a smorgasbord of theories as to why the defendants have

no “standing” to foreclose on the Galvins’ mortgage. The Galvins

say that defendants cannot foreclose because:

• defendants did not comply with paragraph 22 of the mortgage, which requires the mortgagee to provide the mortgagor with notice of a default and 30 days to cure that default prior to commencing foreclosure;

• the note and mortgage were “bifurcated,” thereby rendering the mortgage “void,” Compl. ¶ 109;

• in assigning the Galvins’ mortgage and/or note, defendants did not comply with the agreement creating the securitized trust that purportedly owns their loan; and

• the individual who signed the assignment of mortgage from MERS to Mellon had a “conflict of interest,” id. ¶ 120.

14 Defendants argue that none of these theories entitles the Galvins

to relief. As discussed below, they are correct. Count 2 is

therefore dismissed.

1. Compliance with the mortgage

Paragraph 22 of the Galvins’ mortgage, which is titled

“Acceleration; Remedies,” requires the mortgagee to “give notice”

to the Galvins “prior to acceleration following [their] breach of

any covenant or agreement” in the mortgage. Mortg. (document n o .

10-2) at 1 3 . The provision further requires that the notice

inform the Galvins of the actions they must take to cure their

breach and of the date by which those actions must be taken. See

id. And, “[i]f the default is not cured on or before the date

specified in the notice,” it permits the mortgagee “at its option

[to] require immediate payment in full of all sums secured by

this Security Instrument without further demand and [to] invoke

the STATUTORY POWER OF SALE and any other remedies permitted by

Applicable Law.” Id. (capitalization in original).

The Galvins claim that defendants did not provide them with

the requisite notice prior to commencing foreclosure proceedings

in 2012. At the same time, however, they acknowledge that in

March 2010, EMC sent them a notice of intent to foreclose, and do

not question that this communication complied in every respect

with ¶ 2 2 . Instead, the Galvins interpret ¶ 22 to require the

15 mortgagee to give notice before each “attempt to foreclose.”

Pls.’ Memo. in Supp. of O b j . to Mot. to Dismiss (document n o . 13)

at 4 . The March 2010 notice, they say, satisfied ¶ 22's notice

requirement with respect to defendants’ June 2010 “attempt to

foreclose,” which defendants abandoned while they engaged in

modification negotiations with M r . Galvin. But before defendants

could “attempt to foreclose” again in 2012, the Galvins say, ¶ 22

required a new notice.

The Galvins do not identify any specific language in the

text of ¶ 22 to support this interpretation. Indeed, their

position is affirmatively at odds with ¶ 2 2 . By its terms, that

provision requires the mortgagee to give notice only once–-

“following Borrower’s breach of any covenant or agreement in this

Security Instrument.” Mortg. (document n o . 10-2) at 1 3 . If,

following that breach, the mortgagor fails to cure its default as

specified in the notice, the provision expressly states that the

mortgagee may “at its option . . . require immediate payment in

full of all sums secured by this Security Instrument without

further demand” or pursue other remedies, including foreclosure.

Id. (emphasis added).

The Galvins do not contend that M r . Galvin cured his default

at any point after the March 2010 notice. Defendants were

therefore entitled to commence foreclosure in 2012, even after

16 having abandoned a prior foreclosure attempt, “without further

demand”–-i.e., without sending a further notice. See Wells Fargo

Fin. Kan., Inc. v . Temmel, 251 P.3d 1 1 2 , 2011 WL 1877829, *2-3

(Kan. C t . App. 2011) (where mortgagee sent notice before initial

foreclosure attempt and mortgagor did not cure default, similar

mortgage provision did not require mortgagee to resend notice

before commencing foreclosure a second time); c f . also New S .

Fed. Sav. Bank v . Pugh, N o . E2009-02150-COA-R3-CV, 2010 WL

4865606, *5-6 (Tenn. C t . App. Nov. 2 9 , 2010) (acceleration notice

sent pursuant to substantially similar mortgage provision did not

become “stale and ineffective” because more than one year elapsed

before mortgagee commenced foreclosure). Plaintiffs have not

stated a claim for relief based upon defendants’ alleged

noncompliance with the notice provision of the mortgage.

2. “Bifurcation” of the note and mortgage

The Galvins also assert, in support of Count 2 , that “[a]

deep and growing body of case law holds that separation, or

‘bifurcation,’ of a promissory note from a mortgage renders the

mortgage void.” Compl. ¶ 109 (citing Zecevic v . U.S. Bank Nat’l

Ass’n, N o . 10-E-196, slip o p . at 5 (N.H. Super. C t . Jan. 2 0 ,

2011)). If any such body of case law exists, it is more aptly

characterized as shallow and stagnant. Despite this bold

assertion in the Galvins’ complaint, their memorandum of law does

17 not cite a single case supporting their “bifurcation” theory.

Neither the Zecevic case cited in the complaint, nor any other

New Hampshire case of which this court is aware, has endorsed i t .

And all of the extrajurisdictional authority this court located

(without plaintiffs’ assistance) expressly rejects i t . See,

e.g., Culhane v . Aurora Loan Servs., 708 F.3d 282 (1st Cir. 2013)

(“The law contemplates distinctions between the legal interest in

a mortgage and the beneficial interest in the underlying debt.

These are distinct interests, and they may be held by different

parties.”); Pehl v . Countrywide Bank, N.A., N o . 12-MISC-465911,

2013 WL 324278, *3-4 (Mass. Land C t . Jan. 2 9 , 2013) (“The

splitting of a mortgage and note . . . does not invalidate or

otherwise void the mortgage.”); Greene v . Indymac Bank, FSB, N o .

12-cv-347, 2012 WL 5414097, *2 (S.D. Miss. Nov. 6, 2012)

(“bifurcation” theory “finds no support in [the] law and has been

repeatedly discredited”); Morgan v . Ocwen Loan Servicing, LLC,

795 F. Supp.2d 1370, 1375 (N.D. G a . 2011) (“Separation of the

note and security deed . . . does not render either instrument

void.”). In the absence of contrary authority, the court cannot

accord relief to the Galvins on the basis of this theory.

Buried in the Galvins’ “bifurcation” theory is the kernel of

a more promising (but still unsuccessful) argument. In advancing

this theory, the Galvins allege that although Mellon holds the

18 mortgage, it is not in possession of the note, Compl. ¶¶ 2 6 , 1 1 1 ,

and argue that possession of the note is necessary for Mellon to

foreclose, id. ¶ 104. A series of recent cases from the New

Hampshire Superior Court has lent credence to this argument,

holding that a foreclosing entity must acquire ownership of the

note before commencing foreclosure proceedings. See, e.g.,

Deutsche Bank Nat’l Trust C o . v . Monchgesang, N o . 09-C-0200, slip

op. at 7-8 (N.H. Super. C t . March 2 7 , 2012); Newitt v . Wells

Fargo Bank, N.A., N o . 213-2011-CV-00173, slip o p . at 3 (N.H.

Super. C t . July 1 4 , 2011); Zecevic, slip o p . at 5-6. These cases

are all based on venerable New Hampshire law “that a mortgage of

real estate is a mere incident to the debt for the security of

which the mortgage is given; that a transfer of the debt, ipso

facto, transfers the mortgage;” and that “[a]n assignment of the

mortgage without the debt passes nothing.” Whittemore v . Gibbs,

24 N.H. 484 (1852). Because ownership of the mortgage “follows”

ownership of the note in this manner, these recent Superior Court

cases have reasoned, a party does not acquire a mortgage–-and

with it the right to foreclose–-until it has acquired the note.

As Judge Delker of the Superior Court recently explained,

however, “the intention of the parties to the transaction can

override the common law principle that the debt and mortgage are

inseparable.” Dow v . Bank of N.Y. Mellon Trust Co., N o . 218-

19 2011-CV-1297, slip o p . at 14-16 (N.H. Super. C t . Feb. 7 , 2012)

(citing Page v . Pierce, 26 N.H. 3 1 7 , 324 (1853); Smith v . Moore,

11 N.H. 5 5 , 62 (1840)); see also Page, 26 N.H. at 324 (mortgage

will follow the debt “in the absence of an agreement, express or

implied, to the contrary”). Thus, the court must consider “the

intention of the parties . . . when the original debt and

mortgage were formed” to determine whether a mortgage is

alienable from the associated promissory note. Dow, slip o p . at

15.

Here, the parties plainly intended that the mortgage would

not follow the note. The Galvins’ note and mortgage were held by

different entities from the very beginning: the note by

Metrocities and the mortgage by MERS as nominee. In signing the

mortgage, the Galvins acknowledged that MERS was “a separate

corporation” from Metrocities. Mortg. at 1 (document n o . 7 at

39). They nonetheless agreed, in no uncertain terms, to

“mortgage, grant and convey [the subject property] to MERS . . .

and to the successors and assigns of MERS with mortgage

covenants, and with power of sale.” Mortg. (document n o . 7 ) at

4 0 ; see also id. at 41 (agreeing that MERS could “exercise any or

all of [the interests granted by the Galvins], including, but not

limited t o , the right to foreclose and sell the property”).

20 Virtually identical circumstances--a disunity of the note

and mortgage at the outset of the transaction and an express

agreement by the borrower that the named mortgagee or its

successors could foreclose–-confronted Judge Delker in Dow.

Given these circumstances, he concluded that the parties had not

intended for the mortgage and concomitant right to foreclose to

pass with the note, and held that the foreclosing entity in that

case–-which had demonstrated that it held the mortgage by

assignment (as Mellon does here), but not the note–-could proceed

with foreclosure. Dow, slip o p . at 17-18; see also Powers v .

Aurora Loan Servs., N o . 213-2010-CV-00181 (N.H. Super. C t . Feb.

1 4 , 2011) (similar). The Galvins have advanced no persuasive

argument as to why the same result should not obtain here.6 The

court therefore concludes that Mellon’s alleged lack of

possession of the underlying promissory note does not entitle the

Galvins to relief.

6 At oral argument, the Galvins directed the court’s attention to ¶ 20 of the mortgage, which provides that “[t]he Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower.” Mortg. (document n o . 10-2) at 1 1 , ¶ 2 0 . This, they say, shows that the mortgage and note could not be transferred separately (an argument also alluded to in their memoranda). The Court of Appeals rejected this argument as “jejune” in a footnote in its Culhane opinion, noting that “this language is permissive and by no means prohibits the separation of the two instruments,” particularly given the fact that the note and mortgage there were, as here, “separated upon their inception.” 708 F.3d at 292 n.6.

21 3. Compliance with the trust agreement

Although the Galvins contend that Mellon does not hold their

note, they also argue that even if the note had been assigned to

Mellon, this was done “in violation of the November 1 , 2005 SAMI

II Trust Agreement,” the agreement that created the securitized

trust for which Mellon served as trustee. Compl. ¶ 113. To the

extent such a violation exists, it does not entitle the Galvins

to relief. “As this court has previously explained, a borrower

lacks standing to challenge the transfer of a note on grounds

that would merely render the transfer voidable (as opposed to

void),” and “alleged noncompliance with a [trust agreement] is

precisely such a matter.” Calef v . Citibank, N.A., 2013 DNH 023,

11 n . 4 (citing LeDoux v . JP Morgan Chase, N.A., 2012 DNH 1 9 4 ,

13-15; Butler v . Deutsche Bank Trust C o . Americas, N o . 12-cv-

10337, 2012 WL 3518560, *7 (D. Mass. Aug. 1 4 , 2012)).

4. “Conflict of interest”

The Galvins also allege that the individual who executed the

assignment of mortgage from MERS to Mellon, Beth Cottrell, was an

employee of JPMorgan Chase and/or EMC. As noted in Section I I ,

supra, that assignment was made to Mellon in its role as trustee

for a securitized mortgage trust. Because JPMorgan Chase

preceded Mellon as trustee of that very same trust, the Galvins

assert, “Ms. Cottrell may have worked both on behalf of the

22 assignor (MERS) and assignee ([the trust]).” Compl. ¶ 119.

This, they say, means that “Ms. Cottrell had a conflict of

interest.” Id. ¶ 120. This argument is wholly without merit.

As an initial matter, where Mellon had already succeeded

JPMorgan Chase as trustee at the time the assignment was made,

one cannot plausibly claim that M s . Cottrell was acting on behalf

of both MERS and the trust at that time. It requires no small

amount of logical contortion to weave a “conflict of interest”

from these facts. Even assuming, however, that some conflict

arose from M s . Cottrell’s employment by the former trustee of the

trust, that is not an infirmity the Galvins can assert to prevent

defendants from foreclosing. “New Hampshire law recognizes the

general rule that a debtor cannot interpose defects or objections

[to an assignment] which merely render the assignment voidable at

the election of the assignor or those standing in his shoes.”

Drouin v . Am. Home Mortg. Servicing, Inc., 2012 DNH 089, 7

(quoting Woodstock Soapstone, Co., Inc. v . Carleton, 133 N.H.

809, 817 (1991)). And it has long been recognized that a

conflict of the nature alleged here–-i.e., the signatory’s

employment by both the assignor and assignee–-at most makes an

assignment voidable by the assignor. See, e.g., Irving Bank-

Columbia Trust C o . v . Stoddard, 292 F. 815, 819 (1st Cir. 1923);

cf. also Culhane, 708 F.3d at 294 (rejecting as “little more than

23 wishful thinking” the argument that signatory’s status as agent

of both assignor and assignee affected legitimacy of assignment).

Plaintiffs have not stated a claim for relief based upon M s .

Cottrell’s supposed “conflict of interest.”

C. Counts 3-5 - Negligence

Counts 3-5 of the Galvins’ complaint sound in negligence. They

allege that EMC, Mellon, and MERS each owed the Galvins a duty of

some kind–-EMC “to act with reasonable care in administering the

loan,” Compl. ¶ 122; Mellon “to act with reasonable care in

retaining contractors and agents to administer the loan,” id. ¶

125; and MERS “to act with reasonable care in claiming or

asserting rights and powers over the Mortgage,” id. ¶ 128–-and

that they breached those duties. The defendants, citing this

court’s decision in Moore v . Mortgage Electronic Registration

Systems, Inc., 848 F. Supp. 2d 107 (D.N.H. 2012), argue that the

Galvins cannot maintain a negligence claim because the only

duties the defendants owed to the Galvins were those defined by

the Galvins’ contracts. The court agrees, and these counts are

dismissed.

As explained in Moore, “under New Hampshire law, the

relationship between a lender and borrower is contractual in

nature,” which “typically prohibits recovery in tort” under the

economic loss doctrine. Id. at 133 (citing Wyle v . Lees, 162

24 N.H. 406 (2011); Ahrendt v . Granite Bank, 144 N.H. 308 (1999)).

Although there are cases in which “a contracting party may be

owed an independent duty of care outside the terms of the

contract,” id. (quoting Wyle, 162 N.H. at 4 1 0 ) , “the burden is on

the borrower, seeking to impose liability, to prove the lender’s

voluntary assumption of activities beyond those traditionally

associated with the normal role of a money lender,” id. (quoting

Seymour v . N.H. Sav. Bank, 131 N.H. 753, 759 (1989)).

The Galvins have not met that burden. Rather, as in Moore,

the alleged duties they invoke concern the administration of the

loan and the assertion of “rights and powers” over the mortgage,

both of which “fall squarely within the normal role of a lender.”

Id. Indeed, the Galvins have not even attempted to explain how

the defendants voluntarily assumed any “activities beyond those

traditionally associated with” that role.

They instead argue that because the relief they seek is

equitable, the economic loss doctrine cannot apply. This

argument is premised upon an apparent misunderstanding of the

doctrine. As described by the New Hampshire Supreme Court, the

doctrine “preclude[s] contracting parties from pursuing tort

recovery for purely economic or commercial losses associated with

the contract relationship.” Wyle, 162 N.H. at 410. Thus,

applicability of the doctrine turns not on the nature of the

25 relief sought, but on the nature of the harm alleged. If the

plaintiff seeks to premise a tort claim on economic or commercial

loss, the doctrine applies without regard to whether the

plaintiff seeks an award of damages to remedy a past loss or an

injunction to prevent future loss. See, e.g., Schaefer v .

IndyMac Mortg. Servs., 2012 DNH 185, 6-9 (plaintiff’s tort claims

barred by economic loss doctrine although plaintiff sought

injunctive and other equitable relief, “not damages”). Because

the Galvins’ negligence claims seek redress for economic harms

arising in the context of a contractual relationship, the

doctrine applies here.

Nor does this case fall within any exception to the

doctrine. The Galvins suggest that their relationship with the

defendants is a “special relationship” falling within the so-

called “professional negligence” exception described by the New

Hampshire Supreme Court in Plourde Sand & Gravel v . JGI Eastern,

Inc., 154 N.H. 7 9 1 , 796-99 (2007). But the New Hampshire Supreme

Court specifically noted in Plourde Sand & Gravel that this

exception is “narrow . . . and properly so,” and that it had

previously “declined to extend the special relationship

principle” beyond a few very specific factual scenarios–-none of

which involved lenders and borrowers. Id. at 796-97. Federal

courts sitting in diversity jurisdiction “have no license to

26 expand [state] law beyond its present limits,” Douglas v . York

Cnty., 433 F.3d 143, 153 (1st Cir. 2005), and this court will not

do so here (particularly where the state court of last resort has

repeatedly declined to do so itself). 7

Because the defendants owed the Galvins no duty outside the

terms of their contracts, Counts 3-5 are dismissed.

D. Count 6 - Breach of the implied covenant of good faith and fair dealing

Count 6 of the Galvins’ complaint purports to state a claim

for breach of the implied covenant of good faith and fair dealing

7 Even if the court were inclined to entertain the Galvins’ invitation to expand the reach of the “professional negligence” exception, it would not do so in this case. The Galvins have not ventured to explain how their relationship with the defendants is more akin to the types of relationships the New Hampshire Supreme Court has found subject to the exception than to the vast majority of contractual relationships that are not subject to i t . Simply citing Plourde Sand & Gravel–-which is essentially all the Galvins have done here--is thin gruel upon which to urge this court to recognize a novel principle of state common law. As a further aside, to the extent the Galvins argue that their claims are subject to the “negligent misrepresentation” exception set forth in Wyle, 162 N.H. at 410-12, the court cannot agree. As articulated in that case, that exception applies where “one party has deliberately made material false representations of past or present fact, has intentionally failed to disclose a material past or present fact, or has negligently given false information with knowledge that the other party would act in reliance on that information in a business transaction with a third party.” Id. at 411 (citing United Int’l Holdings, Inc. v . Wharf (Holdings) Ltd., 210 F.3d 1207, 1226-27 (10th Cir. 2000)). No such allegation appears in any of the negligence counts o r , for that matter, anywhere else in the complaint. C f . also Part III.F, infra.

27 against EMC and Mellon. Because the allegations of the complaint

arguably make out such a breach, this claim is not dismissed.8

“In every agreement, there is an implied covenant that the

parties will act in good faith and fairly with one another.”

Birch Broad., Inc. v . Capitol Broad. Corp., Inc., 161 N.H. 1 9 2 ,

198 (2010). This covenant is subdivided “into three general

categories: (1) contract formation; (2) termination of at-will

employment agreements; and (3) limitation of discretion in

contractual performance.” Id. The Galvins’ claim appears to be

based upon the third category. “While the third category is

comparatively narrow, its broader function is to prohibit

behavior inconsistent with the parties' agreed-upon common

purpose and justified expectations as well as with common

standards of decency, fairness and reasonableness.” Id.

In support of their claim, the Galvins have alleged that EMC

“disavowed” the September 2 7 , 2009 repayment agreement, “[f]ailed

to Credit the Galvins’ account for payments made pursuant to

[that] agreement,” and “[r]an the Galvins through months of

8 Although both EMC and Mellon are named as defendants in this count, the allegations contained within Count 6 are directed entirely at EMC. At oral argument, the Galvins asserted that Mellon, as the purported mortgagee or noteholder, could be held liable for the conduct of EMC, its servicer and agent. While this theory was inelegantly developed in the complaint and in the Galvins’ memoranda, the court–-which remains skeptical--will permit Count 6 to proceed against Mellon for the time being.

28 meaningless submissions while allowing their account to fall

further into default.”9 Compl. ¶ 135. The complaint alleges

precious few facts to support the averment that EMC “disavowed”

the repayment agreement, and the court is skeptical whether the

final allegation supports a claim for breach of the covenant. At

a minimum, though, accepting as true the Galvins’ allegation that

EMC did not credit their account for the payments they made under

that agreement, that would certainly be “behavior inconsistent

with the parties’ agreed-upon common purpose and justified

expectations” in entering the agreement.

As defendants point out, there may be some tension between

this allegation and the Galvins’ allegation, in paragraph 40 of

their complaint, that “EMC’s own records showed the Galvins made

$59,400 in payments” under the repayment agreement. But, viewing

those allegations in the light most favorable to the Galvins, it

is plausible that EMC recorded its receipt of the Galvins’

payments, but did not apply those payments to the unpaid balance

of the Galvins’ loan. Because this conduct, if proven, arguably

violates the implied covenant of good faith and fair dealing,

Count 6 will not be dismissed.

9 The Galvins also suggest that EMC did not “act in good faith and deal fairly with the Galvins under the HAMP agreement [it] made with the Federal Government.” Compl. ¶ 136. As discussed in the following section, the Galvins may not premise their claims upon any alleged violation of that agreement.

29 E. Count 7 - Breach of contract - third party beneficiary

Count 7 of the Galvins’ complaint purports to state a claim

against EMC for breaching its Servicer Participation Agreement

(“SPA”), in which EMC contracted with the federal government to

participate in HAMP. The Galvins allege that “the purpose for

the [SPA] was to provide debt relief to homeowners like the

Galvins,” such that they are the intended third-party

beneficiaries of the SPA. Compl. ¶ 141. Whatever the SPA’s

purpose, the Galvins are mistaken as to their status as third-

party beneficiaries of that agreement. This claim must,

therefore, be dismissed.

No extensive analysis is necessary. In Moore, supra, this

court had occasion to examine the language of two substantially

similar SPAs. Noting that “federal courts in this circuit have

applied a presumption that parties who benefit from a government

contract are incidental, rather than intended, beneficiaries, and

may not enforce the contract absent a clear intent to the

contrary,” the court found the SPAs lacking any evidence of such

an intent. 848 F. Supp. 2d at 128. In fact, the court noted,

certain provisions of the SPAs--§§ 11E and 7--“support[ed] the

contrary conclusion.” Id. The court accordingly concluded that

the plaintiff borrowers in that case could not maintain a claim

for breach of the SPA--a conclusion that, the court observed, was

30 in accord with the views of “the overwhelming majority of courts

to have considered whether borrowers are the intended third-party

beneficiaries of SPAs.” Id. at 128-29 & n.14.

The same result obtains here. EMC’s SPA contains the same

two sections upon which this court’s analysis in Moore rested,

and the Galvins have neither explained how those sections are

consistent with their claimed third-party beneficiary status nor

pointed to any other sections of the SPA that would confer such

status.10 The Galvins do note that one of the “whereas” clauses

of the SPA states that the agreement’s “primary purpose” is “the

modification of first lien mortgage loan obligations and the

provision of loan modification and foreclosure prevention

services relating thereto.” As another judge of this court has

pointed out, however, the fact that the parties may have entered

the SPA “with the intent of aiding home-loan borrowers does not

itself demonstrate the parties’ intent to secure an enforceable

right for non-parties . . . [a] court cannot infer intent to

confer third-party beneficiary status on a plaintiff from the

mere fact that the contracting parties had the beneficiary in

10 Again, because the SPA is expressly referenced in the complaint and forms part of the basis for the Galvins’ claims, the court may consider it in ruling on this motion to dismiss. See supra n.2. The SPA is also posted for public review at the Treasury Department’s website. See http://tinyurl.com/EMCSPA (last visited Mar. 2 8 , 2012).

31 mind when creating the contract.” Cabacoff v . Wells Fargo Bank,

N.A., 2012 DNH 1 8 8 , 12-13 (Barbadoro, J . ) . Count 7 is dismissed.

F. Counts 8 & 10 - Fraud in the inducement and negligent misrepresentation against EMC

Counts 8 and 10 of the Galvins’ complaint, for fraud in the

inducement and negligent misrepresentation, respectively, are

brought against EMC. Those counts stem primarily from EMC’s

alleged “statements that the Galvins would be eligible for a loan

modification,” Compl. ¶¶ 1 4 7 , 166, which, the Galvins claim, led

them to enter the September 2 7 , 2009 repayment agreement and

otherwise harmed them. To a lesser degree, the counts also rely

on allegedly false statements by EMC “that its services were

consumer-friendly and capable of providing debt relief to the

Galvins.” Id. ¶ 168. Neither count entitles the Galvins to

relief.

Both counts suffer from the same deficiency. Both are

subject to Federal Rule 9(b)’s heightened pleading standard. See

N . Amer. Catholic Educ. Programming Found., Inc. v . Cardinale,

567 F.3d 8 , 1 3 , 15 (1st Cir. 2009). That rule, which states that

“[i]n alleging fraud or mistake, a party must state with

particularity the circumstances constituting fraud or mistake,”

Fed. R. Civ. P. 9 ( b ) , “means that a complaint rooted in fraud

must specify the who, what, where, and when of the allegedly

32 false or fraudulent representations.” Moore, 848 F. Supp. 2d at

130. Nowhere in the complaint, however, do the Galvins identify

who told them, or when and where they were told, that:

• They “would be eligible for a loan modification.” The only allegations in the complaint regarding EMC’s representations about a possible loan modification are that EMC told M r . Galvin that (1) “he could apply for” or “might be eligible for” a loan modification, Compl. ¶¶ 4 2 , 64 (emphasis added); and (2) he was in the process of being reviewed for a loan modification, id. ¶¶ 4 9 , 59-63. It goes without saying that neither of these statements amounts to a representation that the loan would be modified, as the Galvins suggest.

• EMC’s “services were consumer-friendly and capable of providing debt relief to the Galvins.” Again, while the complaint alleges that EMC told the Galvins that it “was working with” them “to help them avoid foreclosure,” id. ¶ 45 (an allegation that is itself unaccompanied by any further detail), this hardly qualifies as a statement that this process would be “consumer-friendly” or “capable of providing debt relief.”

The complaint also fails to identify what false or

misleading statements EMC made “concerning the Galvins’ payments

and whether the foreclosure had been stopped.” While EMC told

Mr. Galvin that he had failed to make his “required monthly

installments commencing with the payment due” on October 1 , 2009,

Acceleration Warning (document n o . 10-3) at 2 ; see also Compl. ¶

3 9 , M r . Galvin did not, in fact, make those payments. See supra

n.3 & accompanying text. Similarly, while the complaint alleges

that EMC told the Galvins that it would stop the foreclosure sale

scheduled for June 2010, Compl. ¶¶ 5 2 , 5 5 , it also alleges that

EMC did, in fact, stop that sale, id. ¶ 5 8 . A party cannot be

33 held liable for fraud or negligent misrepresentation for speaking

the truth, c f . Akwa Vista, LLC v . NRT, Inc., 160 N.H. 5 9 4 , 601

(2010) (elements of negligent misrepresentation); Snierson v .

Scruton, 145 N.H. 7 3 , 77 (2000) (elements of fraud), and to the

extent EMC made any other, false statements regarding the

Galvins’ payments or stopping foreclosure, those allegations are

pleaded nowhere in the complaint. Counts 8 and 10 are dismissed.

G. Counts 9 & 11 - Fraud and negligent misrepresentation arising from the assignment

Counts 9 and 11 of the complaint, for fraud and negligent

misrepresentation, respectively, are premised upon the theory

that “the Assignment of Mortgage [from MERS to Mellon] contained

materially false statements.” Compl. ¶ 162; see also id. ¶ 171.

Both counts fail. An essential element of these claims is a

false statement, see Akwa Vista, 160 N.H. at 601; Snierson, 145

N.H. at 7 7 , yet the Galvins have failed to identify any such

statement in the assignment. They suggest that the assignment

misrepresented MERS’s “status, power and authority with respect

to” the Galvins’ mortgage. Id. ¶ 171. All the assignment says

regarding MERS’s relationship to the Galvins’ mortgage, however,

is that MERS is the “holder of a mortgage from Mark B . Galvin and

Jenny Galvin,” Assignment of Mortg. (document n o . 7 ) at 45–-which

it was. Counts 9 and 11 are dismissed.

34 H. Counts 12-13 - “Avoidance of Mortgage”

Counts 12 and 13 of the complaint are each titled “avoidance

of mortgage.” Precisely what cause of action the Galvins mean to

assert is unclear; as this court has observed, “in typical legal

usage, ‘avoidance’ refers to the power of a bankruptcy trustee

under the Bankruptcy Code to undo ‘some prebankruptcy transfers

of the debtor’s property and most postbankruptcy transfers of

estate property.’” Moore, 848 F. Supp. 2d at 137 n.18 (quoting 1

David G. Epstein et a l . , Bankruptcy § 6-1, at 498 (1992)). As

this is not a bankruptcy case, this power would appear to have

little applicability here. It may be the case that the Galvins’

purpose in bringing these claims is to seek a declaration that

the mortgage is void or unenforceable against them. Whatever

their intent–-and they have not clarified it in their memoranda--

it is clear that neither count states a plausible claim to

Count 12 rests solely on the proposition that “[b]ifurcating

the Mortgage from the Note rendered the Mortgage unenforceable.”

Compl. ¶ 176. As already discussed in Part III.B.2 supra, this

proposition has no merit. This count is therefore dismissed.

Count 13 suggests that because Mrs. Galvin signed the

mortgage, but did not sign the promissory note, she “never

35 received consideration in exchange for granting an interest in

the Galvin’s [sic] home to MERS, and whatever interest she

purportedly granted in the Mortgage should be avoided and

declared void and of no effect.” Compl. ¶ 179. This theory is

equally meritless. New Hampshire common law permitted a wife “to

mortgage her estate to secure the payment of her husband’s

debts,” as Mrs. Galvin did here. Adams v . Adams, 80 N.H. 8 0 , 85

(1921) (quoting Parsons v . McLane, 64 N.H. 4 7 8 , 479 (1888)). In

such cases, it was the extension of credit to the husband that

served as consideration for the wife’s promise. C f . New Eng.

Merchants Nat’l Bank v . Lost Valley Corp., 119 N.H. 2 5 4 , 257

(1979) (extension of credit to third parties was sufficient

consideration for defendant’s agreement to guaranty the loan).

Although the New Hampshire General Court divested wives of this

capacity in 1876, see Adams, 80 N.H. at 8 5 , it has long since

repealed that act, see N.H. Rev. Stat. Ann. § 460:2, thus

restoring the common-law rule. See Duquette v . Warden, 154 N.H.

737, 742 (2007) (“The repeal of a statute which abrogates the

common law operates to reinstate the common-law rule, unless it

appears that the legislature did not intend such

reinstatement.”).11 Thus, Mrs. Galvin’s failure to sign the

11 The Galvins have identified, and the court has found, no indication that the General Court did not intend its repeal to reinstate the common-law rule.

36 underlying promissory note does not render the mortgage void.

See In re Winter, Bkrtcy. N o . 07-10836, Adv. N o . 09-1078, 2010 WL

750368, *2 (Bkrtcy. D.N.H. Feb. 3 , 2010). Count 13 is dismissed.

I. Count 14 - Truth in Lending Act

Finally, Count 14 of the Galvins’ complaint claims that

Mellon violated 15 U.S.C. § 1641(g)(1), a provision of the Truth

in Lending Act (“TILA”), by failing to notify them of its

acquisition of their mortgage within 30 days of MERS’s May 5 ,

2010 assignment of that mortgage to it. 12 Mellon argues that

this claim is barred by TILA’s one-year statute of limitations.

The court agrees.

TILA’s limitations provision requires that an action for

damages be brought “within one year from the date of the

occurrence of the violation.” 15 U.S.C. § 1640(e). “Where, as

here, the plaintiff’s claim is based upon insufficient or

nonexistent disclosures, the limitations period begins running on

the date the disclosures should have been made.” Moore, 848 F.

Supp. 2d at 120-21 (citing Rodrigues v . Members Mortg. Co., Inc.,

323 F. Supp. 2d 2 0 2 , 210 (D. Mass. 2004)). Applying this rule,

12 In pertinent part, § 1641(g)(1) requires that, “not later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer

37 the Galvins’ TILA claim would have accrued on June 4 , 2010--

thirty days after the May 5 assignment. See Squires v . BAC Home

Loans Servicing, L P , N o . 11-cv-413, 2011 WL 5966948, *2 (S.D.

Ala. Nov. 2 9 , 2011). The Galvins did not file this action,

however, until July 2 3 , 2012–-over two years later.

The Galvins argue that the limitations period should be

equitably tolled because, in light of Mellon’s failure to comply

with the statute, they had no way of discovering the assignment

had occurred within the limitations period. This court will once

again assume, without deciding, that equitable tolling applies to

TILA claims. See Moore, 848 F. Supp. 2d at 121 (noting that

“[s]ome district courts within this circuit have held that TILA's

statute of limitations may be subject to equitable tolling” but

declining to rule on the issue). As the court noted in Moore,

“equitable tolling of a federal statute of limitations is

appropriate only when the circumstances that cause a plaintiff to

miss a filing deadline are out of his hands,” such as “the

defendant preventing the plaintiff from asserting his rights in

some way, or the plaintiff’s inability to discover information

essential to the suit despite reasonable diligence.” Id.

(internal quotations and citations omitted).

No such circumstances operate to save the Galvins’ TILA

claim in this case. The Galvins themselves allege in their

38 complaint that the assignment in question was recorded in the

registry of deeds on May 2 0 , 2010. In other words, from that

date forward, Mellon made no secret of its possession of the

Galvins’ mortgage; the assignment was a matter of public record

that the Galvins easily could have discovered had they desired.

Thus, any tolling of the limitations period necessarily ended as

of that date. C f . Minneweather v . Wells Fargo Bank, N.A., N o .

12-cv-13391, 2012 WL 5844682, *5 (E.D. Mich. Nov. 1 9 , 2012)

(equitable tolling of § 1641(g)(1) claim inappropriate where

there was no evidence that defendant attempted to conceal

transfer). Because the Galvins did not file their TILA claim

until well over two years later, Count 14 is dismissed as time-

barred.13

13 While the time bar provides sufficient cause to dismiss the Galvins’ TILA claim, the court perceives two other potential problems with their claim. First, several courts have held that a plaintiff must allege actual damages in order to state a claim under § 1641(g)(1). See, e.g., Ramirez v . Kings Mortg. Servs., Inc., N o . 12-cv-1109, 2012 WL 5464359, *12 (E.D. Cal. Nov. 8 , 2012); but see Brown v . CitiMortgage, Inc., 817 F. Supp. 2d 1328 (S.D. Ala. 2011) (rejecting this view). The Galvins have not alleged that they suffered any damages from Mellon’s alleged TILA violation. Second, and more fundamentally, the statute’s plain language appears to require notification only when ownership of a debt is transferred, not when ownership of a mortgage or other security interest in a loan is transferred. See 15 U.S.C. § 1641(g)(1) (requiring action by “the creditor that is the new owner or assignee of the debt” (emphasis added)); see also Connell v . CitiMortgage, Inc., N o . 11-cv-443, 2012 WL 5511087, *6 (S.D. Ala. Nov. 1 3 , 2012) (“According to the statute . . . the ‘mortgage loan’ is the credit transaction itself (i.e., the Note), not the instrument securing that credit transaction (i.e.,

39 IV. Conclusion

For the reasons set forth above, the defendants’ motion to

dismiss14 is GRANTED in part and DENIED in part. Counts 1-5 and

7-15 are dismissed. With the (potentially) meritorious thus

separated from the meretricious, count 6 may proceed against EMC

Mortgage Corporation and Bank of New York Mellon. All other

defendants will be terminated from the case.

SO ORDERED.

Joseph N. Laplante United States District Judge

Dated: April 2 , 2013

cc: Jamie Ranney, Esq. Paul J. Alfano, Esq. Peter G. Callaghan, Esq.

the Mortgage).”). As to this latter point, the Galvins claim in their opposition memorandum that they also were not notified of the transfer of their note (a claim they repeated at oral argument), but no such allegation appears in the complaint. At present, the court need not take a conclusive position on either of these issues, and simply notes their existence for posterity. 14 Document n o . 1 0 .