UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
John Riggieri
v. Civil No. 16-cv-20-LM Opinion No. 2016 DNH 128 Caliber Home Loans, Inc. et al.
O R D E R
In a case that was removed from the New Hampshire Superior
Court, Cheshire County, John Riggieri brings suit against
Caliber Home Loans, Inc. (“Caliber”), Ocwen Loan Servicing, LLC
(“Ocwen”), and U.S. Bank Trust, N.A. (“U.S. Bank”), alleging
that defendants made misrepresentations in connection with a
proposed loan modification offer. Riggieri also alleges that
defendants generally acted in bad faith, and that their conduct
resulted in a foreclosure auction at which his home was sold
below market value.
Defendants move to dismiss under Federal Rule of Civil
Procedure 12(b)(6), contending that the complaint fails to state
a claim. Riggieri objects. For the reasons that follow,
defendants’ motions to dismiss are granted.
Standard of Review
Under Rule 12(b)(6), the court must accept the factual
allegations in the complaint as true, construe reasonable inferences in the plaintiff’s favor, and “determine whether the
factual allegations in the plaintiff’s complaint set forth a
plausible claim upon which relief may be granted.” Foley v.
Wells Fargo Bank, N.A., 772 F.3d 63, 71 (1st Cir. 2014)
(citation omitted). A claim is facially plausible “when the
plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009).
Background1
In 2002, John Riggieri purchased a plot of land in
Marlborough, New Hampshire (the “property”). On November 30,
2006, Riggieri and his then-wife, Nancy Gaunya, executed a
promissory note in favor of Countrywide Home Loans, Inc.
(“Countrywide”) in the amount of $604,000 to finance the
construction of a home on the property (the “note”). See doc.
no. 21-2. That same day, Riggieri and Gaunya granted a mortgage
on the property to Countrywide to secure the loan, with Mortgage
1 The facts are summarized from the Riggieri’s amended complaint (doc. no. 17) and a copy of Riggieri’s promissory notes, mortgage, and foreclosure deed, which were attached as exhibits to various filings in this case. See Rivera v. Centro Medico de Turabo, Inc., 575 F.3d 10, 15 (1st Cir. 2009) (noting that a court may consider documents sufficiently referred to in the complaint on a motion to dismiss without converting the motion to one for summary judgment).
2 Electronic Registration Systems, Inc. (“MERS”) as the mortgagee
in its capacity as nominee for Countrywide. See doc. no. 21-3.
Both the note and the mortgage list the address of the property
as “38 Shaker Farm Road, Marlborough, New Hampshire 03455.” At
some point prior to November 23, 2015, the mortgage was assigned
to U.S. Bank.2
On June 9, 2009, Riggieri, Gaunya, and Countrywide entered
into a “Modification of Note and Security Instrument,” which
amended certain of the note’s terms (the “modified note”). See
doc. no. 21-4. The modified note also lists the property’s
address as “38 Shaker Farm Road, Marlborough, New Hampshire
03455.”
Riggieri alleges that in September 2009 “there was a
discrepancy in [his] escrow account.” Doc. no. 17 at ¶ 18. As
a result of the discrepancy, Harmon Law Offices began
foreclosure proceedings on the property in November 2011.
Riggieri alleges that he entered into a loan modification
agreement and the foreclosure did not occur.
2 The foreclosure deed states that U.S. Bank held the mortgage as of the date of the foreclosure. Caliber and U.S. Bank represent in their motion to dismiss that MERS assigned the mortgage to BAC Home Loans Servicing, LP, which assigned the mortgage to U.S. Bank in August 2015. Because Riggieri does not dispute that U.S. Bank validly held the mortgage at the time of the foreclosure, the exact record of assignment of the mortgage is immaterial to the court’s analysis.
3 In August 2012, Bank of America, which had been the loan
servicer, transferred servicing responsibilities to Ocwen. On
September 14, 2012, Ocwen mailed Gaunya a letter, noting that
she was approved to enter a new modification program which would
reduce her principal balance and monthly mortgage payment (the
“Ocwen letter”).3 The letter informed Gaunya that if she
completed a trial period, she would reduce her monthly payment
from $4,400.26 per month to $1,510.16 per month, reduce her
total loan balance from $722,277.17 to $173,047.68, and reduce
her interest rate from 5.375% to 2%. The letter also informed
Gaunya that she could accept the offer by making her first trial
period plan payment by October 1, 2012. The letter was
addressed to Gaunya at “38 Shaker Farm Road S, Marlborough, NH
03455.”4
Riggieri alleges that he did not become aware of the Ocwen
letter until early 2013, well after the deadline for acceptance.5
Riggieri alleges that the letter was “unbelievable” and that,
once he became aware of it, he “assumed that it was junk mail or
3 Riggieri alleges that “Ocwen was forced in a settlement with the Department of Justice to write down [the] loan” significantly. Doc. no. 17 at ¶ 22.
4 It is unclear why the letter was addressed to Gaunya only.
5 Riggieri does not allege when Gaunya received the letter or why he did not become aware of the letter until early 2013.
4 not a legitimate offer, and did not act upon it.” Doc. no. 17
at ¶¶ 29-30.
In February 2014, Ocwen began foreclosure proceedings on
the property. Riggieri alleges that the foreclosure proceedings
ended after he requested that Ocwen produce the original
promissory note, and it could not.
In June 2015, Ocwen transferred servicing responsibilities
on the loan to Caliber. Upon receiving notice of the transfer,
Riggieri requested that Caliber honor the offer made in the
Ocwen letter. Caliber refused to adjust the loan amount or
Riggieri’s interest rate. Shortly thereafter, Caliber mailed a
notice of foreclosure to Riggieri and published a notice of
foreclosure in the Manchester Union Leader. Riggieri alleges
that at the time the foreclosure notice was mailed, he was
traveling on a 27-day trip. Riggieri alleges that he had the
post office put his mail on hold while he was traveling, from
October 29 through November 23, 2015 and, therefore, did not
receive notice of the foreclosure sale, which took place on the
day he returned from the trip.6
6 In accordance with RSA 479:26, U.S. Bank’s attorney included with the foreclosure deed an affidavit setting forth the circumstances to show that the power of sale was duly executed. See doc. no. 32-3 at 3-4. In the affidavit, U.S. Bank’s counsel provides that a copy of the notice of foreclosure was sent to Gaunya and Riggieri by certified mail on October 23, 2015. Therefore, Riggieri should have received the foreclosure notice prior to his 27-day trip. For purposes of this order,
5 Both the mailed notice and the notice published in the
Manchester Union Leader listed the property’s address as “38
Shaker Farm Road, Marlborough, NH 03455,” the same address that
is listed in the mortgage, the note, and the modified note.
Riggieri alleges that the property’s actual address is “38
Shaker Farm Road South, Marlborough, NH 03455,” which was the
address listed in the Ocwen letter. Riggieri also alleges that
the auctioneer at the foreclosure sale “admitted that all
parties were unable to find the property initially,” which
Riggieri believes was caused by the incorrect address being
listed in the notice. Doc. no. 17 at ¶ 48.
U.S. Bank, which held the mortgage at the time of the
foreclosure, purchased the property at the foreclosure sale.
According to the foreclosure deed, U.S. Bank purchased the
property for $379,677.01. See doc. no. 32-3 at 1. The
foreclosure deed lists the property’s address as “38 Shaker Farm
Road, Marlborough, NH 03455.” Id. Riggieri alleges that at the
time he filed this lawsuit, shortly after the foreclosure sale,
he was 2300 days, more than six years, late on his mortgage
payments.
Riggieri filed this lawsuit in state court on December 21,
2015. Defendants removed the case to this court on January 20,
the court assumes that the foreclosure notice arrived sometime after October 29, and was held by the post office.
6 2016, and moved to dismiss the complaint. Riggieri subsequently
amended the complaint, and defendants move to dismiss the
amended complaint. Riggieri objects.
Discussion
Riggieri asserts five claims: (i) negligent misrepresenta-
tion; (ii) breach of the covenant of good faith and fair
dealing; (iii) unjust enrichment; (iv) negligent infliction of
emotional distress; and (v) “standing.” Riggieri does not
specify against which defendant he brings each claim, although
he appears to allege that Caliber and U.S. Bank should be held
liable for any of Ocwen’s unlawful activity because they are
“successors in interest” to Ocwen. Defendants move to dismiss
all claims.7
I. Negligent Misrepresentation
Riggieri alleges that Ocwen is liable for negligent
misrepresentation because the Ocwen letter was “unbelievable”
and offered “an extremely short timeline for acceptance.” Doc.
no. 17 at ¶ 60. Riggieri alleges that Caliber is liable for
negligent misrepresentation because it “negligently failed to
properly describe the property in the notice of foreclosure.”
Id. at ¶ 67. Riggieri also alleges that “Defendants have added
7 Caliber and U.S. Bank filed a motion to dismiss (doc. no. 20). Ocwen filed a separate motion to dismiss (doc. no. 21).
7 erroneous costs and fees to the Plaintiff’s loan . . . leading
him down the path to foreclosure.” Id. at ¶¶ 74-75. Defendants
contend that Riggieri does not allege any misrepresentation and,
to the extent he does, his claim is barred by the economic loss
doctrine.
Under New Hampshire common law, the elements of a claim for
negligent misrepresentation “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) (citing
Snierson v. Scruton, 145 N.H. 73, 78 (2000)). Moreover, “[i]t
is the duty of one who volunteers information to another not
having equal knowledge, with the intention that he will act upon
it, to exercise reasonable care to verify the truth of his
statements before making them.”8 Id.
A. Ocwen Letter
Riggieri’s complaint does not allege facts sufficient to
support a claim for negligent misrepresentation based on the
Ocwen letter. Other than vague and conclusory allegations that
8 Riggieri devotes one section in each of his objections to defendants’ motions to dismiss to arguing that his claim for negligence was sufficiently alleged. Although Riggieri alleged a claim for negligence in his original complaint, he does not allege a claim for negligence in his amended complaint, and defendants did not address a claim for negligence in their motions to dismiss. Therefore, there is no negligence claim in the case.
8 the letter was “misleading” or “worded . . . to avoid responses
from consumers,” doc. no. 17 at ¶¶ 62-63, Riggieri does not
allege any facts to show a misrepresentation in the letter. To
the contrary, Riggieri appears to allege that the offer
contained in the letter was legitimate, because Ocwen was forced
to offer a reduction on the loan as a result of its settlement
with the Department of Justice.
Even if Riggieri had alleged a misrepresentation based on
wording in the letter, the complaint fails to allege any
justifiable reliance on such a representation. Indeed, Riggieri
alleges that he did not discover the letter until several months
after the deadline for responding had passed.9 He has not
alleged any facts to support a plausible theory that he relied
to his detriment on an alleged misrepresentation in that letter.
9 Riggieri’s original complaint alleged that he received the letter shortly after it was mailed. Ocwen asserts that Riggieri’s contradictory allegation in his amended complaint that he did not receive the letter until 2013 is an attempt to avoid dismissal based on the statute of limitations, an argument Ocwen pressed in its motion to dismiss the original complaint. Ocwen urges the court to disregard the allegation in the amended complaint that Riggieri did not become aware of the letter until 2013 on that basis. The court declines to do so. See, e.g., Bernadotte v. N.Y. Hosp. Med. Ctr. of Queens, No. 13-cv- 965(MKB), 2014 WL 808013, at *5 (E.D.N.Y. Feb. 28, 2014) (“While there may be a rare occasion to disregard the contradictory and manipulated allegations of an amended pleading . . . the more usual and benevolent option is to accept the superseded pleadings . . . .” (internal quotation marks and citation omitted)).
9 In addition, even if Riggieri’s allegations were sufficient
to support a negligent misrepresentation claim, the claim would
nonetheless be barred by the economic loss doctrine. Under New
Hampshire law, the contractual relationship between a lender and
borrower typically precludes recovery in tort. Moore v. Mortg.
Elec. Registration Sys., Inc., 848 F. Supp. 2d 107, 133 (D.N.H.
2012) (citing Wyle, 162 N.H. at 409–10). This principle, known
as the “economic loss doctrine,” operates on the theory that
“[i]f a contracting party is permitted to sue in tort when a
transaction does not work out as expected, that party is in
effect rewriting the agreement to obtain a benefit that was not
part of the bargain.” Plourde Sand & Gravel Co. v. JGI E.,
Inc., 154 N.H. 791, 794 (2007). Thus, where a borrower claims
the existence of a duty outside the contractual relationship, he
has the burden of proving that the lender voluntarily engaged in
“activities beyond those traditionally associated with the
normal role of a money lender.” Moore, 848 F. Supp. 2d at 133
(quoting Seymour v. N.H. Sav. Bank, 131 N.H. 753, 759 (1989)).
“This burden extends to claims against mortgagees as well as
loan servicers.” Bowser v. MTGLQ Inv’rs, LP, No. 15-cv-154-LM,
2015 WL 4771337, at *2 (D.N.H. Aug. 11, 2015) (citing cases).
“There is no question that New Hampshire recognizes an
exception to the economic loss doctrine for certain negligent
10 misrepresentation claims.” Schaefer v. IndyMac Mortg. Servs.,
731 F.3d 98, 108 (1st Cir. 2013). A narrow exception exists for
professionals “who are in the business of supplying
information,” such as accountants, appraisers, and investment
brokers. Id. (discussing Plourde, 154 N.H. at 759).10
The facts alleged in the complaint show that the economic
loss doctrine applies to Riggieri’s negligent misrepresentation
claim based on the Ocwen letter. Riggieri does not allege that
Ocwen voluntarily engaged in activities beyond those
traditionally associated with the normal role of a money lender.
See Moore, 848 F. Supp. 2d at 133. The Ocwen letter contains an
offer from a loan servicer on behalf of a lender to modify the
terms of the loan. Tort claims based on misrepresentations made
in connection with a loan modification offer are barred by the
economic loss doctrine because they “are related to defendants’
attempts to collect the [borrower’s] mortgage debt.” Dionne v.
10 The New Hampshire Supreme Court has also recognized an exception in a case where a homeowner made misrepresentations in an effort to sell his home. See Schaefer, 731 F.3d at 108 (discussing Wyle, 162 N.H. at 409–10). In the latter instance, the New Hampshire Supreme Court was careful to limit the exception only to those misrepresentations made prior to the formation of the contract and in an effort to induce a person to enter into the contract. See id. Riggieri does not assert that this exception applies to his claim.
11 Fed. Nat’l Mortg. Assoc., No. 15-cv-56-LM, 2016 WL 3264344, at
*13 (D.N.H. June 14, 2016); see also Schaefer, 731 F.3d at 107.11
Although Riggieri asserts that Ocwen is in “the business of
supplying information”12 and, therefore, an exception to the
economic loss doctrine exists, he alleges no facts to support
such a claim. The First Circuit has made clear that negligent
misrepresentation claims such as Riggieri’s which are asserted
against loan services are plainly barred by the economic loss
doctrine, and do not fall within that exception. See Schaefer,
731 F.3d at 108-09 (holding that the district court correctly
held that plaintiff’s negligent misrepresentation claim against
a loan servicer arising out of an alleged misrepresentation in a
loan modification offer letter was barred by the economic loss
doctrine); see also Bowser, 2015 WL 4771337, at *2 (applying
11Riggieri argues briefly that the case law regarding the applicability of the economic loss doctrine to claims arising out of misrepresentations in a loan modification offer does not apply because Ocwen was forced to offer the loan modification due to a settlement with the Department of Justice. Riggieri does not explain why that fact, even if true, changes the application of the economic loss doctrine to his claim.
12Although Riggieri filed separate objections to the two motions to dismiss, he generally refers to “the defendants” throughout both objections. While Riggieri more specifically addressed his argument concerning the exception for defendants who are in the business of supplying information in his objection to Caliber and U.S. Bank’s objection, the court interprets Riggieri’s argument on that point to pertain to Ocwen as well.
12 economic loss doctrine to bar negligence claim against loan
servicer).
Therefore, even if Riggieri had plausibly alleged a claim
for negligent misrepresentation based on the Ocwen letter, which
he has not, the economic loss doctrine bars that claim.
B. Other Misrepresentations
Riggieri alleges that Caliber misrepresented the property’s
address in the notice of foreclosure, and that it improperly
added fees and costs to Riggieri’s loan. Neither allegation is
sufficient to plead a claim for negligent misrepresentation.
Even assuming the truth of the allegation that Caliber
misrepresented the property’s address on the notice of
foreclosure,13 that act does not give rise to a claim for
negligent misrepresentation on Riggieri’s behalf. An essential
element of a claim for negligent representation is justifiable
reliance by the plaintiff. Riggieri alleges that he did not
receive notice of the foreclosure until after the sale occurred.
He does not allege that he relied on the allegedly mistaken
address in the notice of foreclosure in any way. Therefore, he
cannot base a claim for negligent misrepresentation on the
13As mentioned above, the address listed in the notice of foreclosure matched the address listed in the mortgage, the note, the modified note, and the foreclosure deed.
13 allegedly inaccurate address contained in the notice of
foreclosure.
Riggieri’s allegation concerning added fees is also
insufficient to survive a motion to dismiss. Riggieri does not
explain how the late fees could be considered a
misrepresentation. Moreover, Riggieri alleges that he “was
behind on his mortgage payments for 2300 days.” Doc. no. 17 at
¶ 95. Pursuant to the terms of the mortgage, the lender was
entitled to charge Riggieri additional fees and costs. See doc.
no. 21-3 at ¶¶ 1, 14. Further, Riggieri never paid any of the
fees and costs and, therefore, he has not alleged that he
suffered any injury from the misrepresentation.
Accordingly, Riggieri’s claim for negligent
misrepresentation is dismissed.
II. Good Faith and Fair Dealing
Riggieri alleges that Ocwen violated the implied covenant
of good faith and fair dealing in the mortgage agreement by
sending him the allegedly misleading Ocwen letter. Riggieri
also alleges that “defendants” breached the implied covenant in
various ways, including by (i) keeping Riggieri “uninformed and
off track with his loan,” (ii) “moving to foreclose without
. . . proper notice,” (iii) “auctioning the . . . Property for
substantially less than the property is worth,” (iv) “failing to
14 properly describe the property” in the foreclosure notices
published in the Manchester Union Leader, (v) “add[ing]
interest, late payments, and other fees” to Riggieri’s loan, and
(vi) accelerating Riggieri’s loan and foreclosing on the
property arbitrarily and without proper explanation. Doc. no.
17 at ¶ 85; see id. at ¶ 97. None of Riggieri’s allegations is
sufficient to state a plausible claim for relief for violation
of the implied covenant of good faith and fair dealing.
Under New Hampshire law, the implied covenant of good faith
and fair dealing applies in three different contractual
contexts: contract formation, termination of at-will contracts,
and discretion in contract performance. Centronics Corp. v.
Genicom Corp., 132 N.H. 133, 139 (1989). Riggieri invokes the
third category that limits discretion in contractual
performance. “[W]hether a plaintiff has sufficiently alleged a
breach of this duty turns in part on ‘whether [an] agreement
allows or confers discretion on the defendant to deprive the
plaintiff of a substantial portion of the benefit of the
agreement.’” Todd v. Aggregate Indus. - Ne. Region, Inc., No.
14-cv-393-JL, 2015 WL 6473434, at *11 (D.N.H. Oct. 27, 2015)
(quoting Rouleau v. U.S. Bank, N.A., No. 14-cv-568-JL, 2015 WL
1757104, at *3 (D.N.H. Apr. 17, 2015)). Such “contractual
discretion can be exercised in a way that violates the duty of
good faith and fair dealing only if a promise is subject to such
15 a degree of discretion that its practical benefit could
seemingly be withheld.” Milford–Bennington R.R. Co., Inc. v.
Pan Am Rys., Inc., No. 10-cv-264-PB, 2011 WL 6300923, at *4
(D.N.H. Dec. 16, 2011) (internal quotation marks, alterations,
and citation omitted).
Riggieri argues that the Ocwen letter was misleading and
that Ocwen failed to follow up with him after he did not respond
in a timely manner, to ensure that he took advantage of the loan
modification offer. Riggieri contends that these actions
constitute a breach of the implied covenant of good faith and
fair dealing in the mortgage agreement.
As discussed above, Riggieri has not adequately alleged
that the Ocwen letter was misleading in any way. Regardless,
“[c]ourts have generally concluded . . . that the covenant of
good faith and fair dealing in a loan agreement cannot be used
to require the lender to modify or restructure the loan.”
Moore, 848 F. Supp. 2d at 130; see also Gikas v. JPMorgan Chase
Bank, N.A., No. 11-cv-573-JL, 2013 WL 1457042, at *3-4 (D.N.H.
Apr. 10, 2013); Ruivo v. Wells Fargo Bank, N.A., No. 11–cv–466–
PB, 2012 WL 5845452, at *3 (D.N.H. Nov. 19, 2012). This is so
because “[p]arties are bound by the agreements they enter into
and the court will not use the implied covenant of good faith
16 and fair dealing to force a party to rewrite a contract so as to
avoid a harsh or inequitable result.” Ruivo, 2012 WL 5845452 at
*4 (citing, among other cases, Moore, 848 F. Supp. 2d at 130;
Olbres v. Hampton Co-op. Bank, 142 N.H. 227, 233 (1997)).
Therefore, to the extent Riggieri attempts to base his
breach of the implied covenant of good faith and fair dealing
claim on the Ocwen letter or Ocwen’s failure to offer him a loan
modification in general, that claim is dismissed.
B. Keeping Riggieri “Off Track” on His Loan
Riggieri alleges that defendants kept him “uninformed and
off track with his loan.” Doc. no. 17 at ¶ 85(a). Riggieri
does not explain how any defendant withheld information from him
or got him “off track” with his loan. These bare allegations
are insufficient to state a plausible breach of the implied
covenant of good faith and fair dealing by any defendant.
C. Lack of Notice to Riggieri
Riggieri alleges that defendants breached the implied
covenant of good faith and fair dealing because he did not
receive actual notice of the foreclosure prior to the sale.
Riggieri alleges, however, that he did not receive notice prior
to the foreclosure because he had taken a 27-day trip and asked
17 the post office to hold his mail during that time.14 In other
words, even if defendants’ failure to give Riggieri prior actual
notice of the foreclosure could be a breach of the covenant,
Riggieri’s failure to receive the written notice was his own
fault.
Further, Riggieri does not explain how his lack of receipt
of prior notice of the foreclosure sale could give rise to a
claim for breach of the implied covenant of good faith and fair
dealing. The mortgage states that the manner in which the
lender must provide the borrower with notice of a foreclosure is
“prescribed by Applicable Law.” Doc. no. 20-3 at ¶ 22. New
Hampshire law “requires that the foreclosing party send notice
to the mortgagor’s last known address by registered or certified
mail at least twenty-five days before the sale.” Bradley v.
Wells Fargo Bank, N.A., No. 12-cv-127-PB, 2014 WL 815333, at *3
(D.N.H. Mar. 3, 2014) on reconsideration in part, No. 12-cv-127-
PB, 2014 WL 2106495 (D.N.H. May 20, 2014) (citing RSA § 479:25).
“It does not, however, require that the mortgagor receive actual
notice.” Id.
14Although not specifically alleged, the complaint implies that Riggieri was away on his trip when Caliber mailed the notice of foreclosure. As mentioned above, the affidavit attached to the foreclosure deed states that the foreclosure notice was sent to Riggieri and Gaunya by certified mail on October 23, 2015, six days prior to Riggieri’s trip.
18 Therefore, Riggieri’s alleged lack of actual notice does
not give rise to a claim for breach of the implied covenant of
good faith and fair dealing.
D. Auctioning Off the Property for Less than it is Worth
Riggieri alleges that the property was auctioned off “for
substantially less than the property is worth.” Doc. no. 17 at ¶
85(c). Although not specifically alleged in the complaint, the
foreclosure deed, which was attached to another motion filed by
Caliber and U.S. Bank, shows that U.S. Bank purchased the
property for $379,677.01. See doc. no. 32-3 at 1.
Riggieri offers no support for his theory that the implied
covenant of good faith and fair dealing in a mortgage agreement
requires a certain sale price at a foreclosure auction. Outside
of the mortgage agreement, a mortgagee has a common law duty to
make a reasonable effort to obtain a fair price.15 Riggieri does
not allege a claim based on violation of that duty.
15New Hampshire law imposes a duty on a mortgagee to “exert every reasonable effort to obtain a fair and reasonable price under the circumstances.” Murphy v. Fin. Dev. Corp., 126 N.H. 536, 541 (1985) (internal quotation marks and citation omitted). This duty, however, is based on New Hampshire common law, which demands that “in the context of a foreclosure sale, the mortgagee owes the mortgagor a fiduciary duty of good faith and due diligence.” Bascom Const., Inc. v. City Bank and Trust, 137 N.H. 472, 475 (1993) (citing Murphy, 126 N.H. at 541); see also People’s United Bank v. Mountain Home Developers of Sunapee, LLC, 858 F. Supp. 2d 162, 167 (D.N.H. 2012).
19 In addition, Riggieri fails to provide factual allegations
to support any claim that the sales price was too low. His
complaint, therefore, is insufficient to allege bad faith. See
People’s United Bank, 858 F. Supp. 2d at 168-70 (noting that
conclusory allegations of a property being auctioned off in a
foreclosure sale at below value without alleging the proper
value of a property are insufficient to show bad faith).
Therefore, the complaint does not state a claim for breach
of the implied covenant of good faith and fair dealing based on
the purchase price at the foreclosure sale.
E. Inaccurate Address in Foreclosure Notice
Riggieri alleges that Caliber inaccurately listed the
property’s address in the notice of foreclosure published in the
Manchester Union Leader.16 He alleges that the published notice
listed the property’s address as “38 Shaker Farm Road,” when the
property’s actual address is “38 Shaker Farm Road South.”
Riggieri asserts that the address in the published notice of
foreclosure was inaccurate, which he alleges violates the
16Caliber asserts in its motion to dismiss that, as a loan servicer, it did not have a contract with Riggieri and, therefore, cannot be held liable for breach of the implied covenant of good faith and fair dealing in any agreement. However, it appears that Riggieri is attempting to impose liability upon U.S. Bank, which held the mortgage at the time of the foreclosure, through Caliber’s actions as U.S. Bank’s agent.
20 implied covenant of good faith and fair dealing in the
mortgage.17
Riggieri alleges that Caliber “negligently failed to
properly describe the property in the notice of foreclosure.”
Doc. no. 17 at ¶ 67. As discussed above, the duty of good faith
and fair dealing applies when a party unreasonably exercises
discretion granted to it in an agreement. Riggieri does not
identify the portion of the mortgage agreement that confers
discretion upon the mortgagor with respect to properly
advertising or providing accurate notice of the foreclosure
sale. See, e.g., Mudge v. Bank of America, N.A., No. 13-cv-421-
JD, 2013 WL 6095561, at *3 (D.N.H. Nov. 20, 2013) (collecting
cases dismissing good faith and fair dealing claims for failing
to identify grants of discretion in mortgage agreements that
were exercised unreasonably). Therefore, Riggieri does not
allege a plausible claim for breach of the implied covenant of
good faith and fair dealing based on the address in the
foreclosure notice.18
17As discussed above, the published notice of foreclosure uses the same address (“30 Shaker Farm Road”) as that listed in the mortgage, the note, the modified note, and the foreclosure deed.
18Further, even if Riggieri had properly asserted a claim based on the allegedly incorrect address in the notice of foreclosure, he fails to allege any injury as a result of that conduct. Although Riggieri alleges that potential purchasers and the auctioneer himself “initially” had some “confusion”
21 F. Fees
Riggieri alleges that defendants have “continued to add
interest, late payments, and other fees to [his] loan,” doc. no.
17 at ¶ 85(e), in violation of the implied covenant of good
faith and fair dealing. The terms of the mortgage provide that
failure of the borrowers to make their required monthly mortgage
payments permits the lender to collect late fees and interest.
Riggieri alleges that he was more than six years late on his
mortgage payments, and does not allege that defendants added any
fees prior to his default. Therefore, based on the allegations
in the complaint and the express terms of the mortgage
agreement, defendants were entitled to charge Riggieri fees and
interest after he was in default.
Accordingly, Riggieri’s allegations based on fees and
interest are insufficient to state a claim for breach of the
implied covenant of good faith and fair dealing in the mortgage
agreement.
G. Foreclosing Without Proper Explanation
covenant of good faith and fair dealing “[b]y failing to
about the location of the property, he does not allege that potential purchasers failed to attend the auction based on the allegedly incorrect address.
22 accelerate or start foreclosure proceedings for such an extended
period . . . .” Doc. no. 17 at ¶ 97. Riggieri admits he was in
default for more than six years and lays blame on defendants for
waiting so long to foreclose. Nothing in the terms of the
mortgage requires the mortgagee to foreclose immediately upon
the mortgagor’s default. Moreover, it is difficult to see how
the mortgagee’s forbearance in exercise of its right to
foreclose in this case could constitute a breach of the duty of
good faith and fair dealing. See Brown v. Wells Fargo Home
Mortg., No. 15-cv-467-JL, 2016 WL 3440591, at *6 (D.N.H. June
20, 2016); see also Rouleau, 2015 WL 1757104, at *5 (“a party
does not breach the duty of good faith and fair dealing simply
by invoking a specific, limited right that is expressly granted
by an enforceable contract” (internal quotation marks and
citation omitted)); Moore, 848 F. Supp. 2d at 129 (“the mere
fact that some or all of the defendants exercised their
contractual right to foreclose on the Moores after they
defaulted on their mortgage payments does not amount to a breach
of the implied covenant”) (citations omitted). And Riggieri has
not alleged any facts to support such a claim. Therefore,
Riggieri’s claim for breach of the implied covenant of good
faith and fair dealing based on defendants’ delay in foreclosing
is dismissed.
23 In sum, none of Riggieri’s allegations is sufficient to
state a plausible claim for relief against any defendant for
breach of the implied covenant of good faith and fair dealing in
the mortgage agreement. Accordingly, Riggieri’s claim based on
the implied covenant is dismissed.
III. Unjust Enrichment
Riggieri alleges that U.S. Bank “has been unjustly enriched
by [the] reduced purchase price as they purchased a home for way
less than the home is worth” after providing improper notice of
the foreclosure. Doc. no. 17 at ¶ 104.
“The doctrine of unjust enrichment is that one shall not be
allowed to profit or enrich himself at the expense of another
contrary to equity.” Cohen v. Frank Developers, Inc., 118 N.H.
512, 518 (1978) (internal quotation marks and citation omitted);
see also Pella Windows & Doors, Inc. v. Faraci, 133 N.H. 585,
586 (1990). To be entitled to restitution for unjust
enrichment, a plaintiff must show that the defendant received “a
benefit which would be unconscionable for him to retain.” Clapp
v. Goffstown Sch. Dist., 159 N.H. 206, 210 (2009) (internal
quotation marks omitted); see also R. Zoppo Co., Inc. v. City of
Manchester, 122 N.H. 1109, 1113 (1982). In addition, unjust
enrichment is an equitable remedy that is not available if the
24 parties’ relationship is controlled by a contract. Turner v.
Shared Towers VA, LLC, 167 N.H. 196, 202 (2014).
In the context of a foreclosure sale, a claim for unjust
enrichment may be viable, despite the mortgage agreement, if the
defendant obtained title to the property based on impropriety or
misconduct in the foreclosure proceeding. See, e.g., Coleman v.
Financial, No. 16-cv-11124, 2016 WL 3522556, at *5 (E.D. Mich.
June 24, 2016). As is explained above, to the extent Riggieri
contends that the address on the foreclosure notice and his own
failure to pick up his mail would constitute misconduct that
invalidates U.S. Bank’s title to the property, he has not
alleged sufficient facts to support those theories. In the
absence of malfeasance, the mortgage agreement precludes an
unjust enrichment claim. See Smith v. Litton Loan Servicing,
517 F. App’x 395, 398 (6th Cir. 2013) (a lender’s invocation of
its “foreclosure remedy when a borrower stops making payments on
a loan secured by a mortgage . . . can produce lamentable
situations, but these situations are anticipated by mortgage
agreements and are not the sort of inequity that unjust
enrichment is meant to address”).
In addition, even if the claim were not precluded by the
mortgage agreement, to the extent Riggieri relies on the value
of the property as a basis for unjust enrichment, he does not
allege facts to show that U.S. Bank received an unconscionable
25 benefit. Through the original loan, on November 30, 2006,
Riggieri and Gaunya received $604,000. By September 2012, the
amount due on the loan was $609,000. When the property was sold
at the foreclosure sale, Riggieri had not made mortgage payments
for more than six years. The property was sold to U.S. Bank for
$379,677.01.
Riggieri does not allege that the sale price is less than
the fair market value of the property, much less that the fair
market value exceeds the amount due on the mortgage. He also
does not allege that U.S. Bank is seeking to recover any
deficiency from him. See, e.g., Restatement (Third) of Property
(Mortgages), § 8.4 (1997). Further, he does not allege what, if
any, equity he held in the property. The amount of the sale
price does not show that U.S. Bank obtained a benefit that would
be unconscionable to retain.19
IV. Negligent Infliction of Emotional Distress
Riggieri alleges that “Defendants have made various
negligent misrepresentations to the Plaintiff,” doc. no. 17 at
“When opposing a Rule 12(b)(6) motion, a plaintiff cannot 19
expect a trial court to do his homework for him. Rather, the plaintiff has an affirmative responsibility to put his best foot forward in an effort to present some legal theory that will support his claim.” Carter’s of New Bedford, Inc. v. Nike, Inc., 790 F.3d 289, 292 n.2 (1st Cir. 2015) (internal citation and quotation marks omitted).
26 ¶ 109, which led to physical injuries, such as loss of appetite,
upset stomach, sleeplessness, and severe mental anguish.
To make out a negligent infliction of emotional distress
claim, the plaintiff must show: “(1) causal negligence of the
defendant; (2) foreseeability; and (3) serious mental and
emotional harm accompanied by objective physical symptoms.”
Tessier v. Rockefeller, 162 N.H. 324, 342 (2011) (internal
quotation marks and citation omitted); see also Mottram v. Wells
Fargo Bank, N.A., No. 15-cv-470-PB, 2016 WL 917905, at *4
(D.N.H. Mar. 8, 2016). As discussed above, Riggieri has not
alleged that any defendant made any misrepresentations,
negligent or otherwise, to him. Therefore, he has not alleged a
claim for negligent infliction of emotional distress based on a
negligent misrepresentation.
V. Standing
Riggieri alleges that the “Defendant” did not have standing
to foreclose on the property because Ocwen could not produce the
original note when Riggieri requested it. Although New
Hampshire law does not recognize a cause of action of
“standing,” it appears that Riggieri is attempting to allege a
claim for wrongful foreclosure based on the fact that Ocwen did
27 not produce the original note when he requested it, in 2014,
long before the foreclosure sale in November 2015.20
U.S. Bank held the mortgage at the time of the foreclosure.
Under the terms of the mortgage agreement, U.S. Bank had “the
authority, as agent of the noteholder, to exercise the power of
sale.” Bergeron v. N.Y. Cmty. Bank, 168 N.H. 63, 71 (2015)
(noting that if the language of the mortgage establishes an
agency relationship between the assignee of MERS and the holder
of the note, the assignee of MERS has the authority to foreclose
regardless of whether that entity holds the note at the time of
the foreclosure). Therefore, U.S. Bank was authorized to
foreclose on the property regardless of whether it held the
note.
Accordingly, defendants are entitled to dismissal of
Riggieri’s complaint.
Conclusion
For the foregoing reasons, defendants’ motions to dismiss
(doc. nos. 20 and 21) are granted.
20Although Riggieri appears to base his claim on Ocwen’s alleged inability to produce the original note in 2014, he does not appear to seek to hold Ocwen liable for his “standing” claim. See Gikas, 2013 WL 1457042, at *4-5 (plaintiff cannot hold previous loan servicer liable for any wrongful conduct by current servicer or note holder).
28 While the motions to dismiss were pending, Caliber and U.S.
Bank filed a motion seeking a declaration that the inadvertent
recording of the foreclosure deed is void, pending the outcome
of this litigation (doc. no. 32). In light of this order, which
disposes of this litigation, the motion (doc. no. 32) is
terminated as moot.
The clerk of court is directed to enter judgment
accordingly and close the case.
SO ORDERED.
__________________________ Landya McCafferty United States District Judge
August 3, 2016
cc: Joseph A. Farside, Jr., Esq. Nathan Reed Fennessy, Esq. Keith A. Mathews, Esq. Thomas J. O’Neill, Esq.