Mudge v. Bank of America

2014 DNH 089

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

John J. Mudge, Jr. and Lisa S. Mudge

v. Civil No. 13-cv-421-JD Opinion No. 2014 DNH 089 Bank of America, N.A. and TD Bank, N.A.

O R D E R

John and Lisa Mudge brought claims against Bank of America

and TD Bank that arose from the defendants’ actions related to

the Mudges’ mortgage and the attempted foreclosure on their

home. Summary judgment has been entered in favor of Bank of

America and TD Bank on all of the Mudges’ claims. Bank of

America filed a motion for sanctions and an award of costs

against the Mudges, arising from the Mudges’ unsuccessful motion

to strike two affidavits submitted by Bank of America in support

of its motion for summary judgment. The Mudges move “to alter

or amend” the summary judgment order, entered on March 25, 2015.

I. Motion for Sanctions and an Award of Costs

Bank of America contends that it is entitled to an award of

its attorneys’ fees incurred in responding to the Mudges’ motion

to strike. In support, Bank of America cites the history of immaterial allegations and arguments the Mudges have raised in

this case, particularly with respect to the Mudges’ insistence

that the location of the note was material to their claims when

the court had previously ruled otherwise. Bank of America

candidly acknowledges that no statute or rule authorizes the

relief it seeks and asks the court to exercise its inherent

powers to sanction the Mudges. The Mudges object to the motion,

arguing that their motion to strike was justified.

Although the general rule is that each party pays its own

attorneys’ fees, federal courts have the inherent power to award

attorneys’ fees when a party brings an action in bad faith and

to sanction willful disobedience of a court order and actions

taken in bad faith, vexatiously, wantonly, or for oppressive

reasons. Marx v. Gen. Revenue Corp., 133 S. Ct. 1166, 1175

(2013) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 45-46

(1991)). A sanction imposed under the court’s inherent powers,

therefore, must be based on a finding of bad faith conduct by

the party to be sanctioned. Chambers, 501 U.S. at 50. “A

district court exercising this power must describe the bad faith

conduct with sufficient specificity, accompanied by a detailed

explanation of the reasons justifying the award.” F.A.C., Inc.

v. Cooperative de Seguros de Vida de P.R., 563 F.3d 1, 6 (1st

Cir. 2009).

2 The circumstances surrounding the Mudges’ motion to strike

do not rise to the level of bad faith conduct. Instead, it

appears, for the most part, that the Mudges’ counsel

misunderstood the respective discovery burdens of the parties

and the requirements for subpoenaing a non-party for a

deposition. Therefore, grounds are lacking to impose sanctions

under an exercise of the court’s inherent power.

II. Motion to Alter or Amend Judgment

The Mudges move, pursuant to Federal Rule of Civil

Procedure 59(e), to alter or amend the summary judgment order

issued on March 25, 2015, that granted Bank of America’s motion

for summary judgment on the remaining claims of breach of

contract and breach of the implied covenant of good faith and

fair dealing. They argue that there is “ample evidence” to

establish a genuine dispute as whether Bank of America breached

the contract with them and breached the implied covenant of good

faith and fair dealing. The Mudges also contend that Bank of

America was the holder of the note at times other than the one

month period in 2011. Bank of America objects to the motion on

the grounds that it is procedurally and substantively deficient.

A. Hearing

In their requests for relief, the Mudges ask the court to

“[s]chedule a hearing on these matters.” “Except as otherwise

3 provided the court shall decide motions without oral argument.

The court may allow oral argument after consideration of a

written statement by a party outlining the reasons why oral

argument may provide assistance to the court.” LR 7.1(d).

The Mudges did not provide any statement in the motion,

memorandum, or otherwise to support their request for a hearing.

The court finds no reason to schedule a hearing on the motion.

B. Timeliness of the Motion

Rule 59(e) provides that “[a] motion to alter or amend

judgment must be filed no later than 28 days after the entry of

judgment.” Judgment has not been entered in this case. The

March 25, 2015, order is an interlocutory order, granting Bank

of America’s motion for summary judgment. Therefore, Rule 59(e)

does not apply.

If the motion were construed as a motion for

reconsideration of the summary judgment order issued on March

25, it was not timely filed. “Motions to reconsider an

interlocutory order of the court, meaning a motion other than

one governed by Fed. R. Civ. P. 59 or 60, shall demonstrate that

the order was based on a manifest error of fact or law and shall

be filed within fourteen (14) days from the date of the order

unless the party seeking reconsideration shows cause for not

filing within that time.” LR 7.2(d). The Mudges’ motion was

4 filed on April 16, 2015, twenty-two days after the March 25,

2015, order issued. The Mudges do not address LR 7.2(d) and do

not show cause for a late filing.

Ordinarily, the procedural missteps would preclude

consideration of the Mudges’ motion. For purposes of

reconsideration in this context, however, prematurity and

tardiness are not jurisdictional. The court anticipates that if

the motion were denied as untimely filed, the Mudges would

simply refile the motion after judgment is entered in this case.

Therefore, the court will consider the motion under the Rule

59(e) standard, as a motion for reconsideration, to preserve

resources and avoid duplicative filings.1

C. Motion for Reconsideration

“Rule 59(e) relief is granted sparingly, and only when the

original judgment evidenced a manifest error of law, if there is

newly discovered evidence, or in certain other narrow

situations.” Biltcliffe v. CitiMortgage, Inc., 772 F.3d 925,

930 (1st Cir. 2014) (internal quotation marks omitted). “A

motion for reconsideration is not the venue to undo procedural

snafus or permit a party to advance arguments it should have

developed prior to judgment, . . . nor is it a mechanism to

The court also notes that the Mudges did not notify the 1

court, within the time allowed, of an intent to file a reply. LR 7.1(e).

5 regurgitate old arguments previously considered and rejected.”

Id. (internal quotation marks and citations omitted).

1. Background

The Mudges brought suit in state court, alleging claims of

breach of contract, negligent misrepresentation, violation of

RSA chapter 358, and breach of the implied covenant of good

faith and fair dealing against Bank of America. They also

alleged claims against TD Bank. The defendants removed the case

to this court. The claim under RSA chapter 358 was dismissed

before removal. The claims against TD Bank were dismissed

shortly after removal. The Mudges have been represented by

counsel throughout this case.

The Mudges moved for summary judgment on their claims

against Bank of America, and Bank of America also moved for

summary judgment. On August 27, 2014, the court denied the

Mudges’ motion for summary judgment and granted Bank of

America’s motion for summary judgment on all claims. Judgment

was entered on September 4, 2014.

With respect to the Mudges’ breach of contract and breach

of the implied covenant of good faith and fair dealing claims,

the court held that Bank of America could be liable only during

the period between September 21 and October 19, 2011, when it

held the mortgage for the Mudges’ property, which was the

6 contract at issue. In their complaint, the Mudges alleged that

Bank of America breached the mortgage agreement, during that

period, by refusing to accept the Mudges’ partial mortgage

payment and by sending a foreclosure notice. The court held

that the Mudges had not shown breaches of the mortgage agreement

because they had failed to cite any language in the mortgage

agreement that was breached by Bank of America’s actions.

The Mudges argued that Bank of America breached the implied

covenant of good faith and fair dealing by the same actions that

they thought breached the mortgage agreement: refusing their

mortgage payment and issuing a foreclosure notice in September

of 2011. They also suggested that Bank of America breached the

implied covenant by not engaging in good faith negotiations to

modify their mortgage. The court held that those actions and

omissions did not breach the implied covenant because the terms

of the mortgage agreement could not be modified by the implied

covenant.

The court also granted summary judgment on the negligent

misrepresentation claim. The court held that the Mudges had not

shown that the cited representations were false or that Bank of

America guaranteed they were entitled to a loan modification.

The court also held that the Mudges failed to show their

7 reasonable reliance on Bank of America’s alleged misrepresenta-

tions or that their reliance caused any injury.

On October 2, 2014, the Mudges moved for reconsideration,

pursuant to Rule 59(e). They argued, among other things, with

respect to summary judgment on the breach of contract and breach

of implied covenant of good faith and fair dealing claims, that

newly discovered evidence, a mortgage discharge, undermined the

grounds for the judgment. The mortgage discharge showed Bank of

America was the holder of the mortgage in August of 2014 when

the discharge was recorded. The Mudges also challenged the

courts factual statement about payments made on their mortgage,

asserted that their damages were not rendered moot by selling

their home, and argued that summary judgment was improper

because Bank of America had not identified who held the note or

misrepresented the location of the note.

The court rejected all of the grounds raised by the Mudges

in the motion for reconsideration except the issue raised by the

mortgage discharge with respect to summary judgment on the

breach of contract and breach of the implied covenant claims.

As to those claims, the court held that the mortgage discharge,

recorded in August of 2014, raised a material factual dispute

about the period during which Bank of America was the holder of

the mortgage. For that reason, the court granted the motion for

8 reconsideration on the breach of contract and breach of the

implied covenant claims. The court also reopened discovery as

to those claims and set a deadline for motions for summary

judgment on the claims.

The Mudges sent a notice of Rule 30(b)(6) depositions to

Bank of America while the motions for summary judgment were

pending. When the order granting summary judgment on the breach

of contract and breach of the implied covenant claims was

vacated, Bank of America moved to quash the deposition notice.

The court granted the motion to quash because the deposition

notice was too general to meet the requirements of Rule 30(b)(6)

and sought information that was not relevant to their claims.

The Mudges were cautioned that sanctions could be imposed for

additional discovery requests that did not meet the requirements

of Rules 26 and 30(b)(6).

Bank of America filed a motion for summary judgment on the

remaining claims of breach of contract and breach of the implied

covenant within the deadline provided by the court. Just before

the deadline for their objection to the motion, the Mudges filed

a motion to extend the new discovery deadlines to March 2, 2015.

The Mudges also filed an objection to the motion for summary

judgment.

9 On January 20, 2015, the court granted the Mudges’ motion

to extend time to March 2, 2015, for limited discovery on the

remaining issues in the case. The court also set a deadline,

March 16, 2015, for the Mudges to file an amended objection to

the motion for summary.

On March 3, 2015, the Mudges moved to strike two affidavits

that Bank of America submitted in support of its motion for

summary judgment, arguing that Bank of America failed to comply

with their discovery requests. The Mudges did not file an

amended objection to the motion for summary judgment. The court

denied the motion to strike because the undisputed record showed

that counsel for the Mudges did not properly subpoena the third-

party witnesses, who authored the affidavits, and the Mudges’

other arguments were without merit.

The court granted Bank of America’s summary judgment motion

on the breach of contract and breach of the implied covenant

claims. Based on affidavits, Bank of America demonstrated that

the mortgage discharge recorded in August of 2014 mistakenly

showed Bank of America as the holder of the mortgage at the time

of the recording. Bank of America also demonstrated that

Federal National Mortgage Association was the holder of the

mortgage when the discharge was filed.

10 The Mudges provided no competent evidence to dispute Bank

of America’s showing. The court rejected the Mudges’ new

theory, raised for the first time in opposition to the motion

for summary judgment, that Bank of America breached the mortgage

agreement by failing to provide notice when the loan servicer

changed. The Mudges also failed to provide evidence to support

their breached of implied covenant of good faith and fair

dealing claim.

2. Discussion

The Mudges argue in support of their current motion for

reconsideration that they properly pleaded claims for breach of

contract and breach of the implied covenant of good faith and

fair dealing, that they included allegations in the complaint

that Bank of America did not communicate or provide crucial

information during the period it was the holder of the mortgage,

and that they alleged other misconduct by Bank of America. The

Mudges also assert, based on John Mudge’s affidavit, that in

October of 2011, they made requests for “payoffs, breakdowns,

and documents that were never answered.” The Mudges further

assert that the August 2014 discharge shows that Bank of America

was the “holder of the note” at that time and that discovery

abuses prevented them from obtaining additional information.

11 The Mudges have not presented grounds to reconsider the

order granting Bank of America’s motion for summary judgment.

To the extent the Mudges are arguing that summary judgment was

improperly granted because of allegations made in their

complaint, they are mistaken. To counter Bank of America’s

properly supported motion for summary judgment, the Mudges were

obligated to provide facts supported by appropriate citations to

record evidence. Fed. R. Civ. P. 56(c)(1); LR 56.1. They did

not do that.

To the extent the Mudges are attempting to introduce new

evidence through an undated and unsigned affidavit purporting to

be made by John Mudge, that effort does not provide proper

support for a motion for reconsideration. In addition, as in

the Mudges’ motion for summary judgment and objections to Bank

of America’s motions for summary judgment, the Mudges still have

not shown that any of the alleged actions or omissions would

constitute a breach of contract or breach of the implied

The court granted months of extra time for the Mudges to

investigate the issue of the August 2014 discharge. The record

demonstrates that they were unable to properly subpoena

witnesses for depositions and failed to propound appropriate

12 interrogatories to address that matter. The Mudges also were

unable to substantiate any discovery abuses by Bank of America.

None of the issues the Mudges raise in support of the

motion for reconsideration has merit. Therefore, they have not

shown that the order granting Bank of America’s motion for

summary judgment is based on a manifest error of law or should

be reconsidered for any other appropriate reason.

Conclusion

For the foregoing reasons, the defendant’s motion for

sanctions (document no. 100) is denied, and the plaintiffs’

motion for reconsideration (document no. 102) is also denied.

The clerk of court shall enter judgment and close the case.

SO ORDERED.

__________________________ Joseph DiClerico, Jr. United States District Judge

April 29, 2015

cc: Edmond J. Ford, Esq. Peter G. McGrath, Esq. Richard K. McPartlin, Esq. William Philpot, Jr., Esq.