Simmons v. Wells Fargo

2015 DNH 156

• Court: District Court, D. New Hampshire
• Decided: August 11, 2015
• Docket: 14-cv-133-LM
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Daniel Simmons

v. Civil No. 14-cv-333-LM Opinion No. 2015 DNH 156 Wells Fargo Bank, N.A.

O R D E R

In a case that has been removed from the New Hampshire

Superior Court, Daniel Simmons, proceeding pro se, seeks to

enjoin Wells Fargo Bank, N.A. (“Wells Fargo”) from selling his

home at a foreclosure sale and also seeks damages. Simmons

claims that he is entitled to relief because Wells Fargo

breached the implied covenant of good faith and fair dealing by

starting to foreclose on his mortgage (Count I), and violated

federal mortgage-servicing regulations promulgated under the

Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. §§

2601-2617 (Count II). Before the court is Wells Fargo’s motion

to dismiss for failure to state a claim upon which relief can be

granted. See Fed. R. Civ. P. 12(b)(6). Simmons has not

responded. For the reasons that follow, Wells Fargo’s motion to

dismiss is granted. I. The Legal Standard

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). Analyzing plausibility is “a context-specific task” in

which the court relies on its “judicial experience and common

sense.” Id. at 679.

Because Simmons is proceeding pro se, the court is obliged

to construe his complaint liberally. See Erikson v. Pardus, 551

U.S. 89, 94 (2007) (per curiam) (internal citations omitted) (“a

pro se complaint, however inartfully pleaded, must be held to

less stringent standards than formal pleadings drafted by

lawyers”). However, “pro se status does not insulate a party

from complying with procedural and substantive law. Even under

a liberal construction, the complaint must adequately allege the

elements of a claim with the requisite supporting facts.”

Chiras v. Associated Credit Servs., Inc., 12-10871-TSH, 2012 WL

2 3025093, at *1 n.1 (D. Mass. July 23, 2012) (quoting Ahmed v.

Rosenblatt, 118 F.3d 886, 890 (1st Cir. 1997) (internal citation

and quotation marks omitted)).

II. Background

The facts in this section are drawn from “the complaint,

the documents attached to the complaint, and relevant public

records.” See Foley, 772 F.3d at 68 (citing Watterson v. Page,

987 F.2d 1, 3 (1st Cir. 1993)).

In 2005, Simmons and his wife, who is not a party to this

action, received a loan from American Home Mortgage (“AHM”) and

executed a promissory note in favor of AHM. To secure repayment

of the loan, the Simmonses gave a mortgage to Mortgage

Electronic Registration Systems, Inc. (“MERS”). That mortgage

provides, in relevant part:

9. Grounds for Acceleration of Debt. (a) Default. Lender may, except as limited by regulations issued by the Secretary, in the case of payment defaults, require immediate payment in full of all sums secured by this Security Instrument if: (i) Borrower defaults by failing to pay in full any monthly payment required by this Security Instrument prior to or on the due date of the next monthly payment

. . . .

18. Foreclosure Procedure. If Lender requires immediate payment in full under paragraph 9, Lender may invoke the STATUTORY POWER OF SALE and any other remedies permitted by applicable law.

3 Addendum to Mot. to Dismiss (doc. no. 6) 8, 11 of 13 (emphasis

omitted). At some point, MERS assigned the mortgage to Wells

Fargo.

In November of 2013, Simmons missed a mortgage payment. He

entered into a “payment consolidation” plan with Wells Fargo in

December 2013. Simmons failed to make the first payment

required by that plan, due in February of 2014, because he was

not informed of the payment due date. In April 2014, Simmons

submitted a completed “loss mitigation package” to Wells Fargo.

On June 11, 2014, Wells Fargo referred the mortgage to Harmon

Law Office for foreclosure.

Thereafter, Wells Fargo sent Simmons a foreclosure notice.

Simmons then filed an “Ex Parte Complaint to Enjoin Foreclosure

Sale” in the Merrimack County Superior Court. In his state-

court complaint, Simmons sought to enjoin a foreclosure sale

that had been scheduled for July 11, 2014, and also asked for

damages and legal fees. Simmons claimed that by initiating

foreclosure proceedings, Wells Fargo: (1) breached the implied

covenant of good faith and fair dealing; and (2) violated a

RESPA regulation that, under certain circumstances, prohibits a

mortgagee from initiating a foreclosure after a mortgagor has

submitted a loss mitigation application.

The state court enjoined the foreclosure sale and scheduled

a hearing. The parties continued that injunction by agreement.

4 Wells Fargo then removed the matter to this court and now moves

to dismiss Simmons’s complaint. Simmons has filed no response.

III. Discussion

Wells Fargo argues that both of Simmons’s claims should be

dismissed because neither states a claim upon which relief can

be granted. The court begins with the RESPA claim Simmons

asserts in Count II and then turns to Count I, Simmons’s claim

that Wells Fargo breached the implied covenant of good faith and

fair dealing.

A. RESPA

The factual basis for Simmons’s RESPA claim is Wells

Fargo’s initiation of foreclosure proceedings. The legal basis

is a bit difficult to discern because Simmons cites two

different provisions of the RESPA regulations in his complaint.

Those provisions appear in the section pertaining to loss

mitigation procedures, 12 C.F.R. § 1024.41. That regulation, in

turn, is enforceable pursuant to 12 U.S.C. § 2605(f), see 12

C.F.R. § 1024.41(a), which allows individual borrowers such as

Simmons to sue for damages and costs.

The first provision Simmons cites in his complaint, 12

C.F.R. § 1024.41(f), describes the circumstances under which a

mortgage loan servicer may initiate the foreclosure process when

a borrower has submitted a loss mitigation application before

5 the servicer has made the first notice necessary to initiate

foreclosure. The second provision Simmons cites in his

complaint, § 1024.41(g), describes the circumstances under which

a servicer may foreclose on a mortgage when a borrower has

submitted a loss mitigation application after the servicer has

made the first notice necessary to initiate foreclosure. Here,

Simmons alleges that: (1) he “submitted [a] complete loss

mitigation package to [Wells Fargo] in April 2014,” Notice of

Removal, Ex. 1 (doc. no. 1-1), at 6 of 8; (2) Wells Fargo

referred his mortgage for foreclosure in June; and (3) he

received a notice of foreclosure sometime thereafter. Thus,

Simmons has necessarily made a § 1024.41(f) claim, not a §

1024.41(g) claim.

Wells Fargo argues that Count II should be dismissed

because: (1) Simmons has failed to adequately plead a RESPA

violation; and (2) even if he had adequately pled a RESPA

violation, his complaint seeks injunctive relief, which is not

available under RESPA. In its first argument, Wells Fargo

contends that Simmons has failed to state a claim because his

complaint does not allege sufficient facts to establish a

violation of 12 C.F.R. § 1024.41(g). But, as the court has

already explained, Simmons’s RESPA claim is based upon §

1024.41(f). Thus, Wells Fargo’s first argument is unavailing.

Accordingly, the court turns to Wells Fargo’s second argument,

6 i.e., that Simmons’s complaint must be dismissed because he

seeks injunctive relief, which is unavailable under RESPA.

12 C.F.R. § 1024.41(a) states that “[a] borrower may

enforce the provisions of [§ 1024.41] pursuant to section 6(f)

of RESPA (12 U.S.C. 2605(f)).” That statute expressly provides

that an individual may recover “actual damages,” 12 U.S.C. §

2605(f)(1)(A), and “the costs of the action, together with any

attorneys fees incurred in connection with such action,” 12

U.S.C. § 2605(f)(3).1 Failure to allege actual damages justifies

dismissal of a claim asserting a violation of 12 C.F.R. §

1024.41(f). See Hogan v. Visio Fin. Servs., Inc., No. 15-10923,

2015 WL 3916084, at *3 (E.D. Mich. June 25, 2015); cf. Minson v.

CitiMortgage, Inc., Civ. Action No. DKC 12-2233, 2013 WL

2383658, at *5 (D. Md. May 29, 2013) (dismissing RESPA claim

under 12 U.S.C. § 2605(e) because plaintiff failed to allege any

pecuniary loss that was attributable to the asserted RESPA

violation).

In support of its argument for dismissal, Wells Fargo

quotes the following portion of Simmons’s complaint:

The final orders I want the Court to issue are: Issue a temporary injunction against the defendant and their agents and assigns to remain in effect until the

1 Simmons mentions the availability of damages in addition to actual damages in the event that a mortgage servicer engages in a pattern or practice of noncompliance with RESPA, but he makes no allegations that Wells Fargo is liable for engaging in any such pattern or practice.

7 defendant completes the review of the loss mitigation application pursuant to 12 C.F.R. 1024, and supplies the plaintiff with proper written notices and explanations of the findings regarding the loss mitigation application per 12 C.F.R. 1024, as well as any applicable appeal available thereunder.

Notice of Removal, Ex. A (doc. no. 1-1), at 7 of 8. While the

court agrees with defendant that “it is undisputed that

[Simmons] seeks to use his RESPA claim as a basis to enjoin

Wells Fargo’s foreclosure,” Def.’s Mem. of Law (doc. no. 5-1) 7,

the court cannot agree that injunctive relief is all that

Simmons seeks. Elsewhere in his complaint, Simmons says:

8.(g) Some of the plaintiff’s damages stem from frustration and distress caused by the defendant’s noncompliance. The plaintiff has supplied the defendant with every document that they requested and has re-submitted documents already supplied to the defendant multiple times. . . .

8.(h) The plaintiff has suffered nominal damages which are not insignificant by dealing with the frustrating process controlled by the defendant. He has spent hours and hours submitting documents and faxing and copying and he will lose the value of all of that time and the money spent making copies and sending documents over and over again to the defendant if the defendant is allowed to [foreclose] prior to completing the loss mitigation process.

Notice of Removal, Ex. A (doc. no. 1-1), at 6-7 of 8.

Construing the complaint in the plaintiff’s favor, as the court

must, it is clear that Simmons has at least attempted to assert

a claim for both emotional distress and nominal damages.

Courts are split as to whether emotional distress damages

are available as actual damages under 12 U.S.C. § 2605(f)(1)(A).

8 See Wenegieme v. Bayview Loan Servicing, No. 14 Civ. 9137(RWS),

2015 WL 2151822, at *2 n.3 (S.D.N.Y. May 7, 2015) (ruling that

emotional stress does not qualify as actual damages for claim

based upon alleged violation of 12 C.F.R. § 1024.41(f)); Moore

v. Mortg. Elec. Registration Sys., Inc., 848 F. Supp. 2d 107,

122-23 (D.N.H. 2012) (noting a split of authority and ruling

that language of 12 U.S.C. § 2605(f)(1)(A) encompasses emotional

distress damages). And, it is far from clear that nominal

damages qualify as actual damages for the purpose of stating a

claim made by an individual under 12 U.S.C. § 2605(f)(1), absent

allegations of a pattern or practice of noncompliance. See 12

U.S.C. § 2605(f)(1)(B) (allowing for “additional damages, as the

court may allow” of up to $2,000 when the defendant engages in a

pattern or practice of noncompliance); Carter v. Countrywide

Home Loans, Inc., No. 3:07CV651, 2008 WL 4167931, at *9 (E.D.

Va. Sept. 3, 2008) (characterizing pattern and practice damages

as nominal damages).

Even assuming, however, that the damages Simmons claims are

cognizable as actual damages under RESPA, his claim fails for

another reason: it is not yet ripe. See City of Fall River,

Mass. v. F.E.R.C., 507 F.3d 1, 6 (1st Cir. 2007) (explaining

that courts may consider the question of ripeness sua sponte).

In Wenegieme, the plaintiffs asserted a claim that the

defendants were liable to them for violating 12 C.F.R. §

9 1024.41(f), the same provision on which Simmons relies for his

cause of action in Count II. See 2015 WL 2151822, at *2. Judge

Sweet dismissed that claim on grounds that a § 1024.41(f) claim

does not become ripe until the plaintiff has lost his or her

property to foreclosure. See id. Judge Sweet’s ruling, in

turn, is consistent with the contingent nature of Simmons’s

claim that “he will lose the value of all of that time and the

money spent making copies and sending documents over and over

again to the defendant if the defendant is allowed to

[foreclose] prior to completing the loss mitigation process.”

Notice of Removal, Ex. A (doc. no. 1-1), at 7 of 8. Because

Simmons’s RESPA claim is not yet ripe, Count II is dismissed

without prejudice to Simmons re-filing it in the event he loses

his property. See 2015 WL 2151822, at *2.

B. Implied Covenant of Good Faith and Fair Dealing

Simmons’s remaining claim is that Wells Fargo breached the

implied covenant of good faith and fair dealing by unreasonably

exercising its contractual discretion to initiate the

foreclosure process after he defaulted on his mortgage. In New

Hampshire, “every agreement [includes] an implied covenant that

the parties will act in good faith and fairly with one another.”

Birch Broad., Inc. v. Capitol Broad. Corp., 161 N.H. 192, 198

(2010) (citing Livingston v. 18 Mile Point Drive, Ltd., 158 N.H.

10 619, 624 (2009)). The New Hampshire Supreme Court has observed

that:

there is not merely one rule of implied good-faith duty, but a series of doctrines, each of which serves a different function. The various implied good-faith obligations fall into three general categories: (1) contract formation; (2) termination of at-will employment agreements; and (3) limitation of discretion in contractual performance.

Id. (citations omitted). Simmons contends that this case falls

within the third category. That category functions to “prohibit

behavior inconsistent with the parties’ agreed-upon common

purpose and justified expectations as well as with common

standards of decency, fairness and reasonableness.” Id.

(internal quotation marks omitted).

Here, the mortgage expressly provides that, in the event

Simmons defaults on the mortgage, Wells Fargo may exercise the

statutory power of sale. Addendum to Mot. to Dismiss (doc. no.

6) 8, 11 of 13. Thus, Wells Fargo’s exercise of that right is

consistent with the parties’ “agreed-upon common purpose and

justified expectations . . . .” Id. As such, it cannot serve

as the basis for a claim for breach of the implied covenant of

good faith and fair dealing. See Rouleau v. U.S. Bank, No. 14-

cv-568-JL, 2015 WL 1757104, at *3 (D.N.H. Apr. 17, 2015) (“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”); see also Moore, 848 F.

11 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). Accordingly, Count I does not state a claim on which

relief can be granted.

IV. Conclusion

For the reasons detailed above, Wells Fargo’s motion to

dismiss, document no. 5, is granted. Count I is dismissed with

prejudice; count II is dismissed without prejudice to Simmons’s

right to refile as described above.

SO ORDERED.

__________________________ Landya McCafferty United States District Judge

August 11, 2015

cc: Daniel D. Simmons, Esq. Michael R. Stanley, Esq.