Akar v. Fed. Nat'l Mortg. Ass'n

843 F.Supp.2d 154

Sabah AKAR, Sawusan I. Akar, T.F., a minor child by her mother and next Friend Sawusan I. Akar, N.F., a minor child by her mother and next friend, Sawusan I. Akar, Plaintiffs,

v.FEDERAL NATIONAL MORTGAGE ASSOCIATION a/k/a Fannie Mae, Wells Fargo Bank, N.A., Harmon Law Offices, P.C., Northeast Abstract Services, Inc. and Hammond Residential Real Estate, LLC, Defendants.

Civil Action No. 10–10539–NMG.

United States District Court, D. Massachusetts.

Feb. 9, 2012.

Peter T. Clark, Law Offices of Peter T. Clark, P.C., Mansfield, MA, for Plaintiffs.

Patrick T. Clendenen, Morgan T. Nickerson, Nelson Mullins Riley & Scarborough, LLP, Christopher P. Maffucci, Casner & Edwards, LLP, Boston, MA, Christine A. Murphy, Marcus, Errico, Emmer & Brooks, P.C., Braintree, MA, Nathalie K. Salomon, Harmon Law Offices, P.C., Needham, MA, for Defendants.

ORDER

NATHANIEL M. GORTON, District Judge.

In accordance with Docket No. [54] the Report and Recommendations re [51] Report and Recommendations are adopted.

REPORT AND RECOMMENDATION ON THE MOTION OF HARMON LAW OFFICES, P.C. AND NORTHEAST ABSTRACT COMPANY, INC. TO DISMISS

DEIN, United States Magistrate Judge.

I. INTRODUCTION

The plaintiffs, Sabah Akar (“Akar”), her daughter Sawusan I. Akar, and two of Sawusan Akar's minor children, through their mother and next friend, have brought this action to set aside the foreclosure sale of Akar's home on February 10, 2009, to enjoin the present owner from evicting them or charging them for use of the home, and to obtain damages for injuries suffered in connection with the foreclosure. The plaintiffs allege that the foreclosure was carried out by defendant Wells Fargo Bank, N.A. (“Wells Fargo”), with assistance from its counsel, defendant Harmon Law Offices, P.C. (“Harmon”), and Harmon's affiliate, defendant Northeast Abstract Services, Inc. (“Northeast Abstract”).¹ The plaintiffs also allege that following the foreclosure, ownership of the property was transferred to defendant Federal National Mortgage Association a/k/a Fannie Mae or FNMA (“Fannie Mae”), which retained defendant Hammond Residential Real Estate, LLC (“Hammond”) to act as its property manager and marketing agent.

At the heart of the plaintiffs' claims are their allegations that the foreclosure sale was unlawful because Wells Fargo was not the holder of the mortgage at the time it initiated the foreclosure proceedings, and their allegations that Wells Fargo failed to honor its repeated promises not to foreclose while Akar's application for a loan modification remained pending. By their Second Amended Verified Complaint, the plaintiffs have asserted thirteen causes of action, which include the following claims against Harmon and Northeast Abstract: claims of wrongful foreclosure (Counts III, IV and VII), intentional infliction of emotional distress (Count XI), and unfair and deceptive trade practices in violation of Mass. Gen. Laws ch. 93A (Count XII); and claims against Harmon only for violation of the Fair Debt Collection Practices Act (Count II), and civil trespass (Count X).

The matter is presently before the court on “Defendants, Harmon Law Offices, P.C.'s and North East Abstract Company Inc.'s Motion [to] Dismiss Under Fed.R.Civ.P. 12(b)(6)” (Docket No. 44), by which Harmon and Northeast Abstract are seeking the dismissal of all of the claims asserted against them for failure to state a claim upon which relief can be granted.² Although the plaintiffs have not submitted a written opposition to the motion, they opposed the motion and presented their arguments orally at a hearing before this court on September 28, 2011. After consideration of the defendants' written submission and the parties' oral arguments, and for all of the reasons described below, this court recommends to the District Judge to whom this case is assigned that the defendants' motion to dismiss be ALLOWED IN PART and DENIED IN PART. Specifically, this court recommends that the motion be denied with respect to Count II, in which the plaintiffs have asserted a claim against Harmon under the Fair Debt Collection Practices Act, but that the motion otherwise be allowed.

II. STATEMENT OF FACTS

When ruling on a motion to dismiss brought under Fed.R.Civ.P. 12(b)(6), the court must accept as true all well-pleaded facts, and give the plaintiff the benefit of all reasonable inferences. See Cooperman v. Individual, Inc., 171 F.3d 43, 46 (1st Cir.1999). “Ordinarily, a court may not consider any documents that are outside of the complaint, or not expressly incorporated therein, unless the motion is converted into one for summary judgment.” Alt. Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir.2001). “There is, however, a narrow exception ‘for documents the authenticity of which are not disputed by the parties; for official public records; for documents central to plaintiffs' claim; or for documents sufficiently referred to in the complaint.’ ” Id. (quoting Watterson v. Page, 987 F.2d 1, 3 (1st Cir.1993)).³ Applying this standard to the instant case, the facts relevant to the motion to dismiss are as follows.

Akar's Purchase of the Property

Akar is a single woman over the age of 60 who has little knowledge of the English language. (Compl. ¶ 1).⁴ In August 2006, she purchased a home in Stoughton, Massachusetts (the “Property”), where she has continued to reside along with her daughter, son-in-law, and five minor grandchildren. ( Id. ¶¶ 1–2, 42). In connection with the purchase of the Property, Akar obtained a loan from Pride Mortgage, LLP (“Pride”). ( Id. ¶ 42). The principal amount of the loan was $300,000, and it had a fixed interest rate of 7.75%. ( Id.). The loan was evidenced by a note and secured by a mortgage, which was signed by Akar. (See Compl., Ex. 2). According to the plaintiffs, Pride never verified Akar's employment or income, and failed to determine whether she could afford the Property. ( Id.¶ 42). Allegedly, the monthly mortgage payment, including taxes and insurance, was over $3,400. ( Id.).

The mortgage identified Akar as the “Borrower,” Pride as the “Lender,” and Mortgage Electronic Registration Systems, Inc. (“MERS”),⁵ “a separate corporation ... acting solely as a nominee for Lender and Lender's successors and assigns” as the mortgagee. (Compl., Ex. 2 at p. 1). The mortgage also provided in relevant part that in the event of a default that is not cured within a specified time, the “Lender, at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the STATUTORY POWER OF SALE and any other remedies permitted by Applicable Law.” (Compl., Ex. 2 ¶ 22). The foreclosure giving rise to the plaintiffs' claims in this action occurred after Akar defaulted on her $300,000 loan and Wells Fargo invoked the statutory power of sale under the mortgage agreement.

The plaintiffs allege that Akar entered into a second mortgage loan with Pride, which consisted of an $80,000 equity line with a fixed interest rate of 12%, and a balloon payment of $69,000 that was never disclosed by the lender. ( Id. ¶¶ 43–44). Although the foreclosure at issue in this case does not concern the second mortgage, the plaintiffs claim that Pride never warned Akar about the true costs of the Property. ( Id. ¶ 43). According to the plaintiffs, the two mortgages together had a loan to value ratio of 95%, and they did not qualify for private mortgage insurance that would have protected the lender. ( Id.). However, the plaintiffs have not alleged that any of the defendants named in this action were involved with the origination of the loans or had any relationship with Pride.

Circumstances Leading up to Foreclosure of the Property

The plaintiffs allege that in the fall of 2006, shortly after Akar purchased the Property, Akar was involved in an automobile accident that rendered her unable to work. ( Id. ¶ 65). Akar did not receive disability insurance, and had no other source of income. ( Id.). The plaintiffs claim that on about January 12, 2007, Akar received a notice stating that Ohio Savings Bank had transferred the servicing of her loan to Wells Fargo Home Mortgage. ( Id. ¶ 45). The notice did not indicate whether ownership of the loan had been transferred at that time as well. ( Id.).

On about April 22, 2008, Harmon allegedly sent a letter to Akar in which it informed her that it had been retained by Wells Fargo to foreclose on the Property, and that Wells Fargo was accelerating her loan. ( Id. ¶ 46). Harmon is a Massachusetts Professional Corporation that is engaged in the practice of law, and it was acting as counsel to Wells Fargo when it sent the April 22 letter to Akar. ( See id. ¶ 19). The plaintiffs claim that at the time of the letter, both Harmon and Wells Fargo knew or should have known that there had been no valid assignment of the mortgage to Wells Fargo. ( Id. ¶ 46). Nevertheless, on about April 23, 2008, Harmon, acting on behalf of Wells Fargo, filed a Complaint to Foreclose Mortgage in the Massachusetts Land Court Department of the Trial Court for purposes of foreclosing on the Property. ⁶ ( See id. ¶¶ 3A, 47; Def. Ex. A).⁷

The Land Court complaint was filed pursuant to the Servicemembers Civil Relief Act, and it provided that Wells Fargo was “the assignee and holder of a mortgage with the statutory power of sale given by Sabah Akar to [MERS] dated August 25, 2006[.]” (Compl., Ex. 3). However, the complaint contained no specific reference to an assignment of the mortgage to Wells Fargo. (Compl. ¶ 47 and Ex. 3 thereto). The plaintiffs allege that at the time the complaint was filed with the Land Court, the defendants knew or should have known that there had been no valid assignment of the mortgage to Wells Fargo. (Compl. ¶¶ 49, 62). They also allege that because there had been no valid assignment, the documents filed with the Land Court were “false and deceiving.” ( See id. ¶ 3A).

The plaintiffs...