Hersey v. WPB Partners

2013 DNH 102

• Court: District Court, D. New Hampshire
• Decided: July 24, 2013
• Docket: 11-CV-207-SM
• Status: Published

Opinion

Hersey v . WPB Partners 11-CV-207-SM 7/24/13 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Mary Hersey, Plaintiff

v. Case N o . 11-cv-207-SM Opinion N o . 2013 DNH 102 WPB Partners, LLC, Defendant

O R D E R

Defendant’s Motion to Dismiss (document n o . 42) is granted

with respect to Counts I , I I I , and IV of the amended complaint,

and denied as to Count I I .

Count I

Plaintiff, Mary Hersey, alleges that WPB Partners (“WPB”)

violated Chapter 255E of the Massachusetts General Laws when it

financed her “existing debt and . . . projects on . . . property”

located in Carroll County, New Hampshire. Am. Compt., doc. n o .

1 9 , at 2 . See Mass. Gen. Laws ch. 255E. That Massachusetts

statute regulates and provides for the licensing of mortgage

lenders and brokers. By its terms, it applies only to persons

“act[ing] as a mortgage broker or mortgage lender[] with respect

to residential property.” The statute defines “residential

property” as “real property located in the commonwealth.” Id. at

§ 1. Because the amended complaint alleges that the property securing plaintiff’s loan is located in New Hampshire, and,

therefore, is not “located in the commonwealth,” the

Massachusetts statute does not apply in this case. Count I i s ,

therefore, dismissed.

Count II

Plaintiff alleges that WPB charged an effective interest

rate exceeding the maximum allowed under Massachusetts’ usury

statute. See Mass. Gen. Laws ch. 2 7 1 , § 4 9 . That statute

prohibits lenders from charging “interest and expenses the

aggregate of which exceeds an amount greater than twenty percent

per annum upon the sum loaned . . . .” Id. at § 49(a). That

restriction “shall not apply,” however, “to any person who

notifies the attorney general of his intent” to charge a higher

rate. Id. In support of her usury claim, plaintiff alleges that

she was “charged interest at a rate of 16.5%-19.5% not only on

amounts disbursed to [her] but also on amounts that [defendant]

failed to disburse . . . thus charging Petitioner excess [sic] of

the statutory limit.” Am. Cmpt., doc. n o . 1 9 , at 9. The

complaint alleges that $80,000 was not disbursed. Id. at 4 .

WPB argues that Count II should be dismissed because

plaintiff has not alleged that she was charged in excess of 2 0 % ,

and further, has not alleged that defendant’s predecessor did not

2 register its intent to charge rates exceeding 20% with the

attorney general. Both arguments are rejected. Plaintiff’s

factual allegation gives rise to an adequate inference that she

was charged in excess of a 20% interest rate. In addition, the

fact of registration is an affirmative defense under the statute,

and not an element that plaintiff must plead. See In re

Loucheschi, LLC, 471 B.R. 7 7 7 , 782 (Bankr. D. Mass. 2012)

(“Having determined that the 2006 loan is usurious, the burden

shifts to LBM to assert a defense including” that he has

“regist[ered] with the attorney general”). See also Cannarozzi

v . Fiumara, 371 F.3d 1 , (1st Cir. 2004) (stating in dictum that

registration “is an absolute defense.”). 1 The court finds,

therefore, that plaintiff’s Count II states a claim for violation

of the Massachusetts usury statute.

Count III

Plaintiff brings Count III under New Hampshire Revised

Statutes Annotated (“RSA”) 397-A and the Real Estate Settlement

Procedures Act (“RESPA”), 12 U.S.C. § 2601, et seq. WPB argues

1 WPB has submitted registration papers in support of its motion to dismiss, and plaintiff has pointed to language in the papers indicating, perhaps, that they contain material misrepresentations that would render the registration invalid. WPB has not asked the court to enter summary judgment on Count I I , and the court will not convert the motion to dismiss into a motion for summary judgment. See Fed. R. Civ. P. 12(d). The evidence of registration, and the arguments about that evidence, are, therefore, irrelevant to the present analysis.

3 that the amended complaint fails to state a claim under either

statute. The court agrees.

In her response to WPB’s motion, plaintiff concedes that RSA

397-A:2, which regulates mortgage bankers and brokers, “does not

provide for a private right of action, as recently noted by this

Honorable Court in Ruivo v . Wells Fargo Bank, N.A.,” 2012 WL

5845452, at *2 (D.N.H. Nov. 1 9 , 2012) (Barbadoro, J . ) .

Plaintiff, therefore, offers her “assent to withdraw” the claim.

P l . Br., doc. n o . 4 4 , at 1 5 . Plaintiff’s RSA 397-A:2 claim is

dismissed with prejudice.

S o , too, is plaintiff’s claim under RESPA. Although

plaintiff includes a reference to RESPA in the caption to Count

III, she does not specify which provision of RESPA she believes

WPB violated, nor does she allege facts to support a RESPA claim.

For instance, she does not allege that WPB did not appropriately

respond to a qualified written request for information, see 12

U.S.C. § 2605(e); that WPB engaged in an illegal referral or fee-

splitting arrangement, see 12 U.S.C. § 2607; or that WPB required

plaintiff to purchase title insurance from a particular title

company. See 12 U.S.C. § 2608.

4 Count IV

Plaintiff alleges that WPB breached the parties’ loan

agreement. WPB moves to dismiss Count IV on the ground, among

others, that the claim is barred by New Hampshire’s three-year

statute of limitations, RSA 508:4(I). It i s .

Plaintiff says the “original” breach occurred on December

2 1 , 2006, and uses that date as the starting point in the

limitations calculus. She argues that Massachusetts’ six-year

statute of limitations applies, see Mass. Gen. Laws 260 § 2 .

Accordingly, she says, “any complaint brought prior to December

2 1 , 2012, would have been timely brought.” P l . Br., doc. n o . 4 4 ,

at 1 8 . She notes that she filed the present suit on October 4 ,

2010, and amended her complaint on April 4 , 2011, adding the

breach of contract claim.

Plaintiff posits that the Massachusetts statute of

limitations applies because the parties agreed in their contract

to resolve their disputes under Massachusetts law. That argument

misses the mark. I f , in a diversity suit, “a choice of law must

be made, for example, because a contractual choice-of-law clause

is at issue . . . , the district court applies the law that would

be applied under the conflict of laws rules of the forum state.”

Servicios Comerciales Andinos, S.A. v . General Elec. Del Caribe,

5 Inc., 145 F.3d 463, 479 (1st Cir. 1998). The forum state here is

New Hampshire, and under its conflict of laws rules a contract’s

choice-of-law provision “governs what substantive law will apply,

but it does not control which state’s law applies to procedural

issues.” Lago & Sons Dairy, Inc. v . H.P. Hood, Inc., 1994 WL

484306, at *10 (D.N.H. Sept. 6, 1994) (citing Keeton v . Hustler

Magazine, Inc., 131 N.H. 6, 13-14 (1988)). Under New Hampshire

law, “‘a statute of limitations is a matter of procedure and as

such the law of the forum applies.’” Id. (quoting Gordon v .

Gordon, 118 N.H. 356, 360 (1978)).

Accordingly, because New Hampshire’s three-year statute of

limitations applies to plaintiff’s breach of contract claim, her

claim must have been filed before December 2 1 , 2009. It was not.

Count IV is dismissed, albeit without prejudice.

Conclusion

Defendant’s motion to dismiss, doc. n o . 4 2 , is granted in

part and denied in part. Counts I and III are dismissed with

prejudice, and Count IV is dismissed without prejudice.

6 SO ORDERED.

^L^"-^^^-^^^^"^

Steven J . McAuliffe Jnited States District Judge

July 2 4 , 2013

cc: Raymond J. DiLucci, Esq. Richard K. McPartlin, Esq. Edmond J. Ford, Esq.