Steven Aubertin v. Fairbanks Capital

2005 DNH 021

• Court: District Court, D. New Hampshire
• Decided: February 11, 2005
• Docket: CV-04-358-PB
• Status: Published

Opinion

Steven Aubertin v . Fairbanks Capital CV-04-358-PB 2/11/05

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Steven Aubertin

v. Civil N o . 04-358-PB Opinion N o . 2005 DNH 021 Fairbanks Capital Corp. and U.S. Bank, N.A.

MEMORANDUM AND ORDER

This case arises from Steven Aubertin’s prepayment of a note

that at all relevant times was owned by U.S. Bank. The note

included an addendum that required Aubertin to pay a penalty if

he prepaid the note. The addendum also provided that “no

prepayment penalty will be assessed . . . if the prepayment is

concurrent with the sale of the property securing the note.”

Aubertin contracted to sell the property that served as

security for the note in the spring of 2004. Shortly thereafter,

he requested a payoff statement from Fairbanks Capital

Corporation, the entity that U.S. Bank had retained to service

the loan. The payoff statement included a prepayment penalty of $4,153.26. When Aubertin’s counsel later contacted Fairbanks to

complain, he was told that Aubertin could recover the penalty

after the note was paid off if he could prove that he had prepaid

the loan in connection with the sale of the secured property.

Aubertin paid the penalty under protest.

Aubertin subsequently filed a three-count complaint against

Fairbanks and U.S. Bank. Count I claims that defendants violated

the Cranston-Gonzales Act, 12 U.S.C. § 2605. Count II charges

defendants with breach of contract. Count III claims that

defendants violated New Hampshire’s Consumer Protection Act, N.H.

Rev. Stat. Ann. § 358-A. Defendants have moved to dismiss Counts

II and III for failure to state a claim.

I. BREACH OF CONTRACT CLAIM

Defendants invoke the “voluntary payment doctrine” in

arguing that Aubertin’s breach of contract claim must be

dismissed. Under this doctrine, a plaintiff may not recover

money that he voluntarily paid in response to an illegal demand

“unless he can show fraud, coercion, or mistake of fact.”

Randazzo v . Harris Bank Palatine, N.A., 262 F.3d 663, 666 (7th

Cir. 2001).

-2- The New Hampshire Supreme Court has determined that the

“voluntary payment doctrine” does not bar a breach of contract

claim i f : (1) the plaintiff was coerced into making the

challenged payment; (2) the defendant created the coercive

circumstances; (3) the defendant’s coercive acts were improper;

and (4) the plaintiff had no way to avoid the threatened injury

other than to make the payment. See Cheshire Oil C o . v .

Springfield Realty Corp., 118 N.H. 2 3 2 , 236-38 (1978). Aubertin

relies on this exception in opposing defendants’ motion to

dismiss.

The complaint asserts that Aubertin paid the prepayment

penalty under protest because defendants would not otherwise

supply the discharge that he needed to complete the sale of his

residence. It further alleges that defendants acted unlawfully

in demanding that Aubertin pay the penalty. These allegations

are sufficient to support a claim that Aubertin was acting under

duress. Under such circumstances, the “voluntary payment

doctrine” would not apply. I thus decline to dismiss Aubertin’s

contract claim.

-3- II. CONSUMER PROTECTION ACT CLAIM

The Consumer Protection Act does not cover “trade or

commerce that is subject to the jurisdiction of the bank

commissioner . . . or federal banking or securities regulators

who possess the authority to regulate unfair or deceptive trade

practices.” N.H. Rev. Stat. Ann. § 358-A:3. Defendants invoke

this exception in arguing that Aubertin’s Consumer Protection Act

claim should be dismissed. I address this argument as it applies

to each defendant, in turn.

A. Fairbanks

Aubertin has sued Fairbanks in its capacity as a mortgage

loan servicing company. When it acts in this capacity, Fairbanks

is subject to the jurisdiction of the New Hampshire Bank

Commissioner pursuant to N.H. Rev. Stat. Ann. § 397-B (“Chapter

397-B”). Chapter 397-B requires companies that engage in the

business of servicing first mortgage loans secured by real

property located in the state to register with the Commissioner.

See N.H. Rev. Stat. Ann. § 397-B:4. The chapter also obligates

registered companies to abide by all applicable state and federal

laws, including the Consumer Protection Act. See N.H. Rev. Stat.

-4- Ann. § 397-B:2. Any company that fails to abide by state and

federal law faces the prospect of administrative fines, N.H. Rev.

Stat. Ann. § 397-B:6, and the revocation of its registration,

N.H. Rev. Stat. Ann. § 397-B:3.

Chapter 397-B is a comprehensive regulatory scheme that

empowers the Commissioner to protect consumers from the same

types of fraudulent, unfair and deceptive practices that are

targeted by the Consumer Protection Act. Therefore, Fairbanks is

correct in claiming that the transactions on which Aubertin’s

claim against it are based are exempt from coverage under the

Consumer Protection Act.

B. U.S. Bank

U.S. Bank is a national bank that is subject to the

jurisdiction of the Office of the Comptroller of the Currency

(“OCC”). See 12 U.S.C. § 1 et seq. The OCC’s power to regulate

national banks is comprehensive. See Sinclair v . Hawke, 314 F.3d

934, 940-41 (8th Cir. 2003). Moreover, as the OCC explained in a

recent advisory letter:

Unfair and deceptive acts or practices are unlawful under federal and state law. Section 5 of the Federal Trade Commission Act (FTC A c t ) , 15 U.S.C. § 45 (a)(1), prohibits “unfair or deceptive acts or practices in or

-5- affecting commerce.” Under Section 8 of the Federal Deposit Insurance Act, 12 U.S.C. § 1818, the OCC may take appropriate enforcement action against national banks and their subsidiaries for violations of any law or regulation, which necessarily includes Section 5 of the FTC Act.

OCC Advisory Letter 2002-3 at 3 (March 2 2 , 2002). Thus, the OCC

plainly has the authority to protect consumers from the same

kinds of fraudulent, deceptive, and unfair practices that are

targeted by the Consumer Protection Act. Accordingly, because

Aubertin’s claim against U.S. Bank is based on conduct that is

subject to the jurisdiction of a federal banking regulator, it is

exempt from suit for a violation of the Consumer Protection Act.

III. CONCLUSION

For the reasons set forth in this Memorandum and Order, I

deny defendants’ motion to dismiss Count II and grant their

motion to dismiss Count III.

SO ORDERED.

/s/Paul Barbadoro Paul Barbadoro United States District Judge

February 1 1 , 2005

-6- cc: Cathleen Combs, Esq. Michael DiCola, Esq. Douglas Doskocil, Esq. Laurence Getman, Esq. Thomas Hefferon, Esq. Andrew R. Louis, Esq. Andrew R. Schulman, Esq. Joseph Yenouskas, Esq.

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