Lehane v Wachovia Mortgage FSB

2013 DNH 114

• Court: District Court, D. New Hampshire
• Decided: August 30, 2013
• Docket: CV-12-179-PB
• Status: Published

Opinion

Lehane v Wachovia Mortgage FSB CV-12-179-PB 8/30/13 UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

Edward and Marilyn Lehane

v. Case N o . 12-cv-179-PB Opinion N o . 2013 DNH 114 Wachovia Mortgage, FSB, et a l .

MEMORANDUM AND ORDER

Edward and Marilyn Lehane seek to enjoin Wachovia Bank from

foreclosing on property they jointly own in Westmoreland, New

Hampshire. The Lehanes’ claim that they are entitled to enjoin

the foreclosure because Wachovia obtained the mortgage that is

the subject of the foreclosure through fraud that occurred in

January 2008. In a prior order, I determined that the Lehanes’

damage claims stemming from the alleged fraud are barred by the

statute of limitations. Lehane v . Wachovia Mortgage, FSB, N o .

12-cv-179-PB, 2013 WL 1637166, at *3-4 (D.N.H. Apr. 1 6 , 2013).

Wachovia has filed a motion to dismiss arguing that the Lehanes’

claim for injunctive relief is also time-barred. It

alternatively argues that the injunctive relief claim is

preempted by the Homeowners Loan Act (“HOLA”). I reject both

arguments. Wachovia invokes the “concurrent remedy rule” in arguing

that the Lehanes cannot base their claim to enjoin the

foreclosure on the 2008 alleged fraud because their fraud claim

for damages arising from the same conduct is barred by the

statute of limitations. Under this rule, “equity will withhold

its relief in such a case where the applicable statute of

limitations would bar the concurrent legal remedy.” Cope v .

Anderson, 331 U.S. 4 6 1 , 464 (1947). Although this argument has

surface appeal, I ultimately find it unpersuasive. Wachovia has

failed to cite any case in which a New Hampshire court has

applied the state’s general statue of limitations to an action

to enjoin foreclosure. Nor has it cited any case anywhere in

the United States in which a court has applied the concurrent

remedy rule to bar a claim to enjoin a foreclosure. More

importantly, I question whether it would be appropriate to bar a

mortgagor from challenging a foreclosure simply because it has

let a comparable claim for damages lapse. Here, the Lehanes

acted promptly to enjoin the foreclosure and they obviously

could not have sued to stop the foreclosure during the

limitation period because there was at that time no pending

foreclosure proceeding to enjoin. Under such circumstances, it

2 would be inconsistent with basic principles of equity to bar the

Lehanes from proceeding with their effort to enjoin the

foreclosure.

Equally troubling is the fact that Wachovia’s proposed use

of the concurrent remedy rule would make the Lehanes’ right to

challenge the foreclosure dependent upon the method that

Wachovia used to accomplish the foreclosure. Under New

Hampshire law, a mortgagee with a power of sale may either

petition the court for a judgment of foreclosure, see N.H. Rev.

Stat. Ann. §§ 479:22, 2 4 , or proceed without judicial

authorization by complying with the power of sale statute, N.H.

Rev. Stat. Ann. § 479:25. See generally, 17 Charles Szypszak

New Hampshire Practice, Real Estate, §§ 4.06-07 (1st ed. 2003).

If a mortgagee elects to petition the court for relief, the

mortgagor plainly could assert fraud as an affirmative defense

to the foreclosure action even if a claim for damages arising

from the fraud was time-barred. See, e.g., Beach v . Ocwen Fed.

Bank, 523 U.S. 4 1 0 , 415 (1998) (recognizing general rule that a

statute of limitations does not bar an affirmative defense). I

see no reason why the New Hampshire legislature would allow a

mortgagor to assert a time-barred fraud claim as an affirmative

3 defense against a judicial foreclosure action but not allow an

identically situated mortgagor to seek relief based on the same

facts simply because the mortgagee has elected to proceed

without the benefit of a foreclosure judgment. Accordingly, I

reject Wachovia’s claim that the Lehanes’ argument for equitable

relief is barred by the concurrent remedy rule. 1

Wachovia alternatively argues that the Lehanes’ injunctive

relief claim is preempted by HOLA. This argument does not

require extensive analysis. In Wigod v . Wells Fargo Bank, N.A.,

673 F.3d 5 4 7 , 576-81 (7th Cir. 2012), the Seventh Circuit

explained in detail why claims such as the Lehanes’ claim for

injunctive relief are not preempted by HOLA. I find the court’s

reasoning persuasive and entirely applicable to the claim at

issue here. Accordingly, I decline to dismiss the injunctive

relief claim based on Wachovia’s contention that the claim is

1 Wachovia also argues that the power of sale statute does not authorize a mortgagor to resist a foreclosure under any circumstances by challenging the validity of the mortgage. Wachovia has failed to cite any case in which a New Hampshire court has applied the statute as it suggests and I find no support in the statutory text for such a restrictive reading of the power of sale statute. Foreclosure is an equitable form of relief and I have no doubt that a mortgagor’s right to challenge a foreclosure extends to situations in which the mortgage at issue was induced by fraud.

4 preempted by HOLA.

Wachovia’s second motion to dismiss (Doc. N o . 24) is

denied.

SO ORDERED.

/s/Paul Barbadoro Paul Barbadoro United States District Judge

August 3 0 , 2013

cc: Joseph S . Hoppock, Esq. Brian I . Michaelis, Esq. David M . Bizar, Esq.