UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE
Karen Julius
v. Civil No. 16-cv-516-JL Opinion No. 2017 DNH 084 Wells Fargo Bank, N.A.
MEMORANDUM ORDER
The plaintiff in this mortgage-related action challenges
the defendant’s foreclosure on the mortgage on her home in
Derry, New Hampshire. Plaintiff Karen Julius brought a
complaint against Wells Fargo Bank, N.A., the lender and
mortgagee, in Rockingham County Superior Court, after Wells
Fargo initiated foreclosure proceedings a mere two days after
the death of her husband, the only obligor under the mortgage
note. Wells Fargo removed the action to this court, see
28 U.S.C. § 1441, which has subject-matter jurisdiction under 28
U.S.C. §§ 1331 (federal question) and 1332 (diversity).
By her First Amended Complaint, Julius raises several
state-law claims, asserts violations of the Real Estate
Settlement Procedures Act (RESPA), 12 U.S.C. § 2601 et seq., and
challenges the defendant’s standing to foreclose.1 Wells Fargo
1 Julius amended her complaint as a matter of course, see Fed. R. Civ. P. 15(a)(1), withdrawing her claims for negligence, moves to dismiss the First Amended Complaint, arguing that it
fails to state a claim upon which relief can be granted, see
Fed. R. Civ. P. 12(b)(6), and citing -- in that process -- a
plethora of cases in which nearly identical claims brought by
plaintiff’s counsel have been repeatedly dismissed by courts in
this District.2 See, e.g., Mader v. Wells Fargo Bank, N.A., 2017
DNH 011 (McCafferty, J.); Gasparik v. Fed. Nat’l Mortg. Ass’n,
2016 DNH 215 (Johnstone, M.J.); Riggieri v. Caliber Home Loans,
Inc., 2016 DNH 128 (McCafferty, J.); Bowser v. MTGLQ Inv’rs, LP,
2015 DNH 149 (McCafferty, J.); LaCourse v. Ocwen Loan Servicing,
LLC, 2015 DNH 077 (McCafferty, J.). After hearing oral argument
and concluding that Julius’s claims are foreclosed on much the
same grounds, the court grants Wells Fargo’s motion.
Applicable legal standard
The plaintiff must state a claim to relief by pleading
“factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Martinez v. Petrenko, 792 F.3d 173, 179 (1st Cir.
negligent infliction of emotional distress, and violations of N.H. Rev. Stat. Ann. § 358-A, and adding her RESPA claim. 2 To the extent that claims in these cases were dismissed because they were barred as a matter of law, plaintiff’s counsel has not sought review of that law, or the court’s application of it, on appeal.
2 2015) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). In
ruling on such a motion, the court accepts as true all well-
pleaded facts set forth in the complaint and draws all
reasonable inferences in the plaintiff’s favor. See, e.g.,
Martino v. Forward Air, Inc., 609 F.3d 1, 2 (1st Cir. 2010).
The court “may consider not only the complaint but also facts
extractable from documentation annexed to or incorporated by
reference in the complaint and matters susceptible to judicial
notice.” Rederford v. U.S. Airways, Inc., 589 F.3d 30, 35 (1st
Cir. 2009) (internal quotations omitted). The court “need not,
however, credit bald assertions, subjective characterizations,
optimistic predictions, or problematic suppositions,” and
“[e]mpirically unverifiable conclusions, not logically
compelled, or at least supported, by the stated facts, deserve
no deference.” Sea Shore Corp. v. Sullivan, 158 F.3d 51, 54
(1st Cir. 1998) (internal quotations omitted).
Background
The following factual summary adopts the approach described
above. Karen Julius and her late husband, Tabert Julius,
purchased their home in Derry in 2005.3 Both Mr. and Mrs. Julius
3 First Amended Compl. (doc. no. 12) ¶ 6. While the plaintiff alleges that they purchased the home in 2005, the mortgage note
3 signed the mortgage agreement,4 but only Mr. Julius signed the
note.5 The Juliuses remained current on their mortgage payments
for approximately ten years, until Mr. Julius, who suffered from
cancer, became unable to work in late 2015.
Around that time, the Juliuses sought relief from Wells
Fargo, which provided them with some forbearance by admitting
them into its home preservation program. Wells Fargo did not,
at that time, inform the Juliuses that they would be removed
from the program should Mr. Julius pass away. The Juliuses
continued to make reduced payments, even after the plaintiff
left her job to care for her husband full-time. She informed
Wells Fargo of these hardships in March 2016 through a letter to
their home preservation program specialist.
Mr. Julius passed away in 2016. Two days later, Wells
Fargo informed the plaintiff that she would be removed from the
home preservation program, and that her home would be placed in
bears the date of August 23, 2006. Mot. to Dismiss Ex. A (doc. no. 13-2) at 1. 4 Mot. to Dismiss Ex. B (doc. no. 13-3) at 17. 5 Mot. to Dismiss Ex. A (doc. no. 13-2) at 3. The court may consider these documents without converting defendant’s motion to dismiss under Rule 12(b)(6) into one for summary judgment because the mortgage agreement and note are integral to Julius’s complaint seeking relief from foreclosure. Alternative Energy, Inc. v. St. Paul Fire and Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001).
4 foreclosure proceedings. Though she requested additional time
to find employment and set her affairs in order, she was removed
from the home preservation program. Wells Fargo also “removed
her from receiving statements and loan details online,”
preventing her from keeping track of her loan or payments.6 At
oral argument, the parties confirmed that the defendant never
initiated foreclosure proceedings or issued a foreclosure
notice.
Analysis
The plaintiff has brought five claims against Wells Fargo
arising from this series of events: (1) breach of the covenant
of good faith and fair dealing; (2) negligent misrepresentation,
(3) intentional infliction of emotional distress; (4) violations
of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C.
§ 2601 et seq.; and (5) a challenge to the defendant’s standing
to foreclose on the mortgage.
The court is not unsympathetic to the plaintiff’s position.
It may have behooved Wells Fargo to offer her an opportunity to
set her affairs in order after her recent loss and to make
arrangements allowing her to pay off the mortgage loan, even
though she was not originally a party to the note. While that
6 First Amended Compl. (doc. no. 12) ¶ 24.
5 may have been a considerate practice on Wells Fargo’s part, it
is not a course Wells Fargo was legally obligated to take.
As the court discusses with respect to each of the
plaintiff’s claims, courts in this District have repeatedly
dismissed the same claims brought by the plaintiff’s counsel,
explaining in detail the reasons why those claims do not lie.
Because this ground has been so thoroughly trodden, and is by
now so undoubtedly familiar to plaintiff’s counsel, the court
does not retread it in detail here. For the reasons discussed
below, all of the plaintiff’s claims must be dismissed.
A. The covenant of good faith and fair dealing (Count 1)
The plaintiff first contends that Wells Fargo violated the
implied covenant of good faith and fair dealing. “In every
agreement, there is an implied covenant that the parties will
act in good faith and fairly with each other.” Birch Broad,
Inc. v. Capitol Broad. Corp., Inc., 161 N.H. 192 (2010). Julius
invokes the third category of the breach of that covenant
recognized in New Hampshire: limitation of discretion in
contractual performance. See id. at 198. Whether a plaintiff
has sufficiently alleged a breach of that particular duty
turns on three key questions: (1) whether the agreement allows or confers discretion on the defendant to deprive the plaintiff of a substantial portion of the benefit of the agreement; (2) whether the defendant exercised its discretion reasonably; and
6 (3) whether the defendant’s abuse of discretion caused the damage complained of.
Moore v. Mortg. Elec. Reg. Sys., Inc., 848 F. Supp. 2d 107, 129
(D.N.H. 2012). As with many such claims brought before this
court, the plaintiff’s fails at the first inquiry.
“[T]he duty of good faith and fair dealing ordinarily does
not come into play in disputes” where “the underlying contract
plainly spells out both the rights and duties of the parties and
the consequences that will follow from a breach of a specified
right.” Milford-Bennington R. Co., Inc. v. Pan Am Rys., Inc.,
2011 DNH 206, 11 (Barbadoro, J.) (internal quotations and
citations omitted). “[P]arties generally are bound by the terms
of an agreement freely and openly entered into,’ and the implied
covenant does not preclude a contracting party from insisting on
enforcement of the contract by its terms, even when enforcement
‘might operate harshly or inequitably.’” Moore, 848 F. Supp. 2d
at 129 (quoting Olbres v. Hampton Co-op. Bank, 142 N.H. 227, 233
(1997)). That is the case here.
The plaintiff does not dispute that the note obligated her
husband to pay back the amount of the loan secured by the
mortgage.7 Nor does she dispute that the account was in default.
7 Because only Mr. Julius signed the note, only he was obligated to repay the amount of the loan secured by the mortgage.
7 The mortgage contract -- which both Mr. and Mrs. Julius signed
-- spells out the lender’s remedy in the event that Mr. Julius
defaulted.8 The plaintiff argues, in essence, that by allowing
the Juliuses to enter the home protection program and by
communicating with the plaintiff while her husband was ill,
Wells Fargo created an expectation that it would continue to
forebear and to communicate with her, despite the fact that she
was a third-party to the note, after his passing.9 The clear
terms of the agreement preclude such a claim.
The mortgage agreement, to which the plaintiff was a party,
provides that forbearance by Wells Fargo “shall not be a waiver
of or preclude the exercise of any right or remedy,” including
acceleration or statutory power of sale.10 While the defendant
may, under these provisions, possess some discretion in deciding
whether or not to proceed with the foreclosure, the provisions
in question are “not so lacking in clarity as to provide the
fodder for a successful claim for breach of the implied duty of
good faith and fair dealing.” Dove v. Bank of New York Mellon,
2016 DNH 041, 13-14 (where note and mortgage provide lender with
8 Mot. to Dismiss Ex. B (doc. no. 13-3) ¶ 22. 9 See First Amended Compl. (doc. no. 12) ¶¶ 39-44; Obj. to Mot. to Dismiss (doc. no. 14) at 2-3. 10 Id. ¶ 12.
8 discretion to accelerate loan and pursue remedies including
statutory power of sale upon default, borrower could not
maintain a breach of implied covenant claim). The unfortunate
circumstances that led to this action do not dictate a different
result.11 Accordingly, the court dismisses Count 1.12
B. Negligent misrepresentation (Count 2)
Julius next brings a claim for negligent misrepresentation
on the defendant’s part. This claim, too, must be dismissed.
The elements of a negligent misrepresentation claim are “a
negligent misrepresentation of a material fact by the defendant
and justifiable reliance by the plaintiff.” Wyle v. Lees, 162
N.H. 406, 413 (2011). At the outset, the court is skeptical
that the plaintiff has alleged either of these elements. The
plaintiff has not alleged any specific misrepresentations by the
defendant, asserting only generally that Wells Fargo “has made
inconsistent and inaccurate representations regarding the
mortgage at issue, misleading the Plaintiff on several
11Even were there a breach, the plaintiff conceded at oral argument that she would be unable to demonstrate that she was damaged thereby. 12Other courts in this District have dismissed similar claims brought by plaintiff’s counsel on at least five occasions. See Mader, 2017 DNH 11, 9-12; Gasparik, 2016 DNH 215, 11-13; Riggieri, 2016 DNH 128, 24; Bowser, 2015 DNH 149, 13-15; LaCourse, 2015 DNH 77, 14-18.
9 occasions.”13 As to reliance, at oral argument, plaintiff’s
counsel conceded that the complaint does not indicate how or
whether the plaintiff relied or would have relied on any of the
potential misrepresentations alleged in the complaint.
Even if the plaintiff has pleaded misrepresentations on the
part of the defendant, she is barred from recovering in tort
under the economic loss doctrine. The economic loss doctrine
“precludes a harmed contracting party from recovering in tort
unless [she] is owed an independent duty of care outside the
terms of the contract.” Wyle, 162 N.H. at 410. As Judge
McCafferty has explained on several occasions, “the economic
loss doctrine bars negligent misrepresentation claims in a
traditional borrower-lender contractual relationship.” Mader,
2017 DNH 11, 8 (citing Schaefer v. Indymac Mortg. Servs., 731
F.3d 98, 108 (1st Cir. 2013)); see also Riggieri, 2016 DNH 128,
10-13; Bowser, 2015 DNH 149, 5-6. New Hampshire recognizes two
exceptions to this bar in the negligent misrepresentation
context. Neither applies to the plaintiff’s claim, as the
plaintiff conceded at oral argument.
The first exception arises when the alleged negligent
misrepresentation induced a contracting party to enter into the
13 First Amended Compl. (doc. no 12) 56.
10 contract. Wyle, 162 N.H. at 411-12. Here, the plaintiff has
not alleged that any false representations from Wells Fargo
induced her, or her husband, to enter into the mortgage
agreement. Nor does she allege that she entered into some
subsequent agreement with Wells Fargo based on some later
misrepresentation. At best, she alleges that Wells Fargo’s
failures to inform her that the Juliuses’ participation in the
home preservation program may end, and Wells Fargo may exercise
its contractual rights, after the signatory to the note passed
away, “were material to the transaction.”14 Even if this failure
to speak amounts to a misrepresentation, the plaintiff does not
allege reliance on Wells Fargo’s allegedly culpable silence.
That is, she does not allege that she would not have
participated in the home preservation program if Wells Fargo had
provided this information. Indeed, the plaintiff does not argue
that, under the circumstances, she or her husband would have
rejected any offer of forbearance on the defendant’s part that
allowed them to stay in their home. Absent any reliance, her
claim does not fall under this exception. See Plourde Sand &
Gravel, 154 N.H. at 801.
14First Amended Compl. (doc. no. 12) ¶ 59-60. She does not, however, indicate just which transaction they were material to.
11 The second exception applies in limited circumstances where
“a negligent misrepresentation [is] made by a defendant who is
in the business of supplying information.” Wyle, 162 N.H. at
410. The First Circuit Court of Appeals “read[s] Wyle as
holding that [this] exception reaches only those representations
. . . that relate to a transaction other than the one that
constitutes the subject of the contract; representations made
during the course of the contract’s performance and related to
the subject matter of the contract, by contrast, are so bound up
in ‘the performance of the contract’ as to be barred by the
economic loss doctrine.” Schaefer, 731 F.3d at 109 (citing
Wyle, 162 N.H. at 410-13)). To the extent that the plaintiff
contends that the defendant is “in the business of supplying
information,”15 such that this exception replies, the Court of
Appeals’ interpretation of Wyle forecloses recovery based on the
alleged misrepresentations that she recites, all of which were
made during performance of, and related to the subject-matter
of, the mortgage agreement. See Mader, 2017 DNH 11, 8;
Gasparik, 2016 DNH 215, 10-11.
At oral argument, the plaintiff suggested that the economic
loss doctrine does not bar her claim under a third exception
15 See First Amended Compl. (doc. no. 12) ¶¶ 54-55.
12 because the defendant owed her “an independent duty of care
outside the terms of the contract.” Wyle, 162 N.H. at 410. To
the extent that New Hampshire law recognizes such an exception,
it would not apply here, where all of the communications as
between the parties recited in the complaint concerned the
subject-matter of the contract and the parties’ conduct in
accordance with its terms.
Because it is barred by the economic loss doctrine, and not
subject to any exception, the court dismisses Count 2 of the
plaintiff’s complaint.
C. Standing (Count 3)
Julius’s third count addresses, but does not challenge,
Wells Fargo’s standing to foreclose on the property. She
contends that “[i]f no properly executed promissory note can be
produced by the Defendant,” or “[i]f no strict compliance with
RSA 479:25 can be shown, . . . the Plaintiff would challenge the
Defendant’s legal standing to foreclose.”16 She purportedly does
so in order to preserve her right to challenge the note’s
validity or Wells Fargo’s compliance with N.H. Rev. Stat. Ann.
§ 479:25, which provides that failure to institute a petition to
enjoin the a scheduled foreclosure sale “shall thereafter bar
16 First Amended Compl. (doc. no. 12) ¶¶ 65-66.
13 any action or right of action of the mortgagor based on the
validity of the foreclosure.” Id.
The plaintiff does not allege that the defendant cannot
produce a valid note or that the defendant failed to comply with
New Hampshire law. No facts recited in the complaint support
the supposition that the note may not be valid or that the
defendant failed to so comply. The defendant has produced a
copy of the note,17 the validity of which the plaintiff does not
challenge in her objection to the instant motion. Indeed -- the
plaintiff does not object at all to the dismissal of this count,
and withdrew it at oral argument.
Plaintiff’s counsel is on notice that such hypothetical
claims do not pass Rule 12(b)(6) muster. See Mader, 2017 DNH
11, 15; Riggieri, 2016 DNH 128, 27; Gasparik, 2016 DNH 215, 18-
19; LaCourse, 2015 DNH 77, 7 n.6. He was aware of this before
filing the plaintiff’s First Amended Complaint. See Riggieri,
2016 DNH 128, 27; Gasparik, 2016 DNH 215, 18-19; LaCourse, 2015
DNH 77, 7 n.6 (citing the court’s sua sponte dismissal of an
identical “claim” when granting plaintiffs’ motion to amend the
complaint). The court therefore dismisses this claim, and
presumes that Attorney Mathews will perform the “inquiry
17 See Mot. to Dismiss Ex. A (doc. no. 13-2).
14 reasonable under the circumstances” contemplated by Federal Rule
of Civil Procedure 11(b) before bringing such a claim in the
future -- including but not limited to determining whether there
exists a good-faith basis to challenge the note’s validity and
the defendant’s compliance with N.H. Rev. Stat. Ann. § 479:25.
D. Intentional infliction of emotional distress (Count 4)
The plaintiff next brings a claim for intentional
infliction of emotional distress.18 “In order to make out a
claim for intentional infliction of emotional distress, a
plaintiff must allege that a defendant ‘by extreme and
outrageous conduct, intentionally or recklessly cause[d] severe
emotional distress to another.’” Tessier v. Rockefeller, 162
N.H. 324, 341 (2011) (quoting Morancy v. Morancy, 134 N.H. 493,
496 (1991)). Liability for intentional infliction of emotional
distress “has been found only where the conduct has been so
outrageous in character, and so extreme in degree, as to go
beyond all possible bounds of decency, and to be regarded as
18The plaintiff originally claimed negligent infliction of emotional distress as well. See Compl. (doc. no. 1-1) ¶¶ 77-82. Perhaps in light of several decisions dismissing such claims as foreclosed in the absence of a viable negligence claim, plaintiff’s counsel struck it, alongside the plaintiff’s negligence claim, from the First Amended Complaint. See Mader, 2017 DNH 11, 12-13; Gasparik, 2016 DNH 215, 11; Riggieri, 2016 DNH 128, 26-27; Bowser, 2015 DNH 149, 9-10; LaCourse, 2015 DNH 77, 33-34.
15 atrocious, and utterly intolerable in a civilized community.”
Mikell v. Sch. Admin. Unit No. 33, 158 N.H. 723, 729 (2009).
As courts in this District have repeatedly observed, “[t]he
ordinary activities of a bank foreclosing on a mortgage do not
generally meet the ‘extreme and outrageous’ standard.” Bradley
v. Wells Fargo Bank, N.A., 2014 DNH 41, 12 (Barbadoro, J.); see
also Mottram v. Wells Fargo Bank, N.A., 2016 DNH 46, 12-13
(Barbadoro, J.) (repeated foreclosure notices sent to disabled
borrower amount to “the kinds of ordinary foreclosure-related
activities that, in most cases, cannot give rise to a viable
intentional infliction of emotional distress claim.”); Moore v.
Mortg. Elec. Registration Sys., Inc., 848 F. Supp. 2d 107, 136
(D.N.H. 2012) (Laplante, J.) (potentially unlawful mortgage
modification and foreclosure misconduct do not support claim for
intentional infliction of emotional distress).
The complaint does not support such a claim. The plaintiff
alleges that the defendant contacted her two days after her
husband’s death and informed her “that she was being removed
from the home preservation program and that the home would be
placed back in to [sic] foreclosure.”19 She does not allege
that, at the time of that communication, the defendant knew that
19 First Amended Compl. (doc. no. 12) ¶¶ 18-19.
16 her husband had died a mere two days prior. In fact, she
appears to allege that she informed defendant of this fact
during that same telephone call, in the process of seeking
“additional time to find employment before she was removed from
the home preservation program.”20 Even taking these allegations
in the light most favorable to the plaintiff, the complaint
fails to state a claim for intentional infliction of emotional
distress in the absence of any allegation that the defendant
knew of the plaintiff’s husband’s death or that the plaintiff
was, in fact, removed from the program and her home placed into
foreclosure proceedings.
This leaves only the allegation that the defendant told the
plaintiff that her home would be placed into foreclosure. As to
that, the court cannot say that the actions of a party to a
contract exercising its rights under that contract, “go beyond
all possible bounds of decency” or are “atrocious, and utterly
intolerable in a civilized community.” Mikell, 158 N.H. at 729.
The court recognizes that the threat of home foreclosure,
especially under these circumstances, “is a terrible event and
likely to be fraught with unique emotions and angst,” but as in
Moore, “the defendants’ actions cannot, as a matter of law, be
20 Id. ¶ 20.
17 called ‘utterly intolerable in a civilized community.’” Moore,
848 F. Supp. 2d at 136. The plaintiff’s intentional infliction
of emotional distress claim is, therefore, dismissed.
E. RESPA (Count 5)
Finally, the court turns to the plaintiff’s RESPA claim.
RESPA prohibits “[a] servicer of a federally related mortgage”
from “fail[ing] to take timely action to respond to a borrower’s
requests to correct errors relating to allocation of payments,
final balances for purposes of paying off the loan, or avoiding
foreclosure . . . .” 12 U.S.C. § 2605(k)(1)(C). Plaintiff
alleges that Wells Fargo violated this subsection because, while
she “has done everything within her power to avoid foreclosure”
in that she has “requested and re-requested a forebearance to
avoid foreclosure,” those “requests have been unreasonably
denied.”21
As Magistrate Judge Johnstone has observed in the face of
almost identical allegations, § 2605(k)(1)(C) “does not make it
unlawful to fail to respond to any requests to avoid
foreclosure, but, as relevant here, to ‘requests to correct
errors relating to[,]’ among other things, ‘avoiding
foreclosure.’” Gasparik, 2016 DNH 215, at 18; see also Mader,
21 First Amended Compl. (doc. no. 12) ¶¶ 78-80.
18 2017 DNH 11, at 13. That is, while a servicer is obligated by
§ 2605(k)(1)(C) to respond to requests to correct errors
relating to avoiding foreclosure, § 2605(k)(1)(C) does not
impose an obligation on servicers to respond favorably to all
requests to avoid foreclosure, as plaintiff would have it do.
As in both Gasparik and Mader, the plaintiff here “has nowhere
asserted that she made a request to correct an error relating to
avoiding foreclosure, let alone that [the defendant] failed to
respond to such a request.” Gasparik, 2016 DNH 215, at 18;
Mader, 2017 DNH 11, at 13. Acknowledging this, the plaintiff
withdrew this claim at oral argument. The court, accordingly,
dismisses the plaintiff’s RESPA claim.
Conclusion
The plaintiff’s complaint fails to state any claim for
relief.22 The defendant’s motion to dismiss the complaint23 is
22The plaintiff also included a litany of “equitable considerations” which, in her original complaint, she counted as one of her claims. First Amended Compl. (doc. no. 12) ¶¶ 28-34; Compl. (doc. no. 1-1) ¶¶ 29-36. Though, as discussed above, the court is not unsympathetic to the hardships that the plaintiff has suffered, and understands the difficulties caused by her husband’s illness and passing, these allegations do not amount to a claim for relief. To the extent plaintiff intended to assert them as such, that count is dismissed. See McNutt, 2017 DNH 67, 6 (declining to construe “equitable considerations” count as a specific claim in equity and dismissing it). 23 Document no. 13.
19 therefore GRANTED. The clerk shall enter judgment accordingly
and close the case.
SO ORDERED.
Joseph N. Laplante United States District Judge
Dated: April 28, 2017
cc: Keith A. Mathews, Esq. Joseph Patrick Kennedy, Esq.