Benson v. Metro. Life Ins. Co.

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TAMMY BENSON, Plaintiff, v. METROPOLITAN LIFE INSURANCE COMPANY, SELECT PORTFOLIO SERVICING, INC., Defendants.

No. 4:23-CV-40177-MRG

United States District Court, D. Massachusetts

September 18, 2024

MEMORANDUM & ORDER

Margaret R. Guzman, United States District Judge.

I. Introduction

This case arises out a mortgage dispute. Plaintiff-borrower Tammy Benson (“Benson” or “Plaintiff”) proceeding pro se, has sued Defendant-mortgage holder Metropolitan Life Insurance Company (“Metropolitan”) and Defendant-mortgage servicer Select Portfolio Servicing, Inc. (“Select Portfolio”) (collectively, the “Defendants”).

The Court has, as it must, liberally construed the Complaint [ECF No. 1] and has determined that, in essence, Benson has advanced five legal claims against the Defendants.^[1] These include:

(1) a challenge to the legitimacy of certain mortgage-related interest and fees; (2) a chain of title claim; (3) a Truth in Lending Act (“TILA”)^[2] claim; (4) a loss mitigation-based claim; and (5) a fraud-based claim.

The Defendants jointly move to dismiss [ECF No. 17] for failure to state a claim under Fed.R.Civ.P. 12(b)(6). For the following reasons, the Defendants' motion to dismiss [ECF No. 17] is GRANTED.

II. Jurisdiction and Applicable Substantive Law

Although none of the parties briefed the issue of jurisdiction, the Court has independently determined^[3] that it has subject matter jurisdiction under 28 U.S.C. § 1331 relative to Plaintiff's TILA claim and that it has supplemental jurisdiction under 28 U.S.C. § 1367 relative to Plaintiff's other claims.^[4] The TILA claim is governed by federal law. See, e.g., Thompson v. HSBC Bank, USA, N.A., 850 F.Supp.2d 269, 274 (D.D.C. 2012) (“[plaintiff's] third claim, brought under the TILA, is governed by federal law”). Massachusetts law supplies the substantive rules of decision for the lion's share^[5] of Plaintiff's other claims. Philibotte v. Nisource Corp. Servs. Co., 793 F.3d 159, 165 (1st Cir. 2015) (“[i]n ‘exercising supplemental jurisdiction over a state law claim,' we apply ‘state substantive law' as that law has been applied by the state's highest court” (citation omitted)).

III. Legal Standards

To survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). At the pleading stage, a plaintiff need not demonstrate that she is likely to prevail, but “her claim must suggest ‘more than a sheer possibility that a defendant has acted unlawfully'” Garcia-Catalan v. United States, 734 F.3d 100, 102-03 (1st Cir. 2013) (citation omitted). With respect to all claims of fraud, plaintiffs are required to “state with particularity the circumstances” that constitute the alleged fraud. See Fed.R.Civ.P. 9(b).

When deciding a 12(b)(6) motion to dismiss, a court must “accept the truth of all well-pleaded facts and draw all reasonable inferences therefrom in the pleader's favor.” Grajales v. P.R. Ports Auth., 682 F.3d 40, 44 (1st Cir. 2012) . In determining whether a complaint has crossed the plausibility threshold, courts conduct a two-part, context-specific inquiry. First, the court must separate “‘the complaint's factual allegations (which must be accepted as true) from its conclusory legal allegations (which need not be credited)'” Garcia-Catalan, 734 F.3d at 103 (citation omitted). Second, the court must determine whether the factual allegations are sufficient to support “‘the reasonable inference that the defendant is liable for the misconduct alleged'” Id. (citation omitted). Conducting this inquiry requires a court to draw on its “judicial experience and common sense.” Iqbal, 556 U.S. at 679.

When, as here, the plaintiff is proceeding pro se, the Court must construe her allegations liberally. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam) . Indeed, a pro se complaint, “however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers..." Id. (citation omitted). That said, pro se litigants “still must comply with procedural and substantive law” and “[d]ismissal of a pro se complaint is appropriate when the complaint fails to state an actionable claim.” Harihar v. United States Bank Nat'l Ass'n, No. 15-cv-11880-ADB, 2017 U.S. Dist. LEXIS 50596, at *14 (D. Mass. Mar. 31, 2017) (citations omitted).

IV. Factual Background

Unless otherwise noted, the following facts are taken from Plaintiff's Complaint [ECF No. 1] and the Court accepts them as true for the purposes of resolving Defendants' motion.^[6]

A. The Mortgage and the Mortgaged Property

In 1996, Benson and her now ex-husband^[7] purchased 51 Breakneck Road in Sturbridge, Massachusetts (the “Mortgaged Property”), which in turn became Benson's family home. [ECF No. 1-1 at 1]. On or about August 18, 2004, Benson and Riopel obtained a $232,200.00 mortgage loan from Wilmington Finance (“Wilmington”), a division of AIG Federal Savings Bank. [ECF No. 19-1 at 1-2] . This is evidenced by a copy of a mortgage (the “Mortgage”)^[8] that was granted in favor of Wilmington, encumbering the Mortgaged Property, that was recorded with the Worcester County Registry of Deeds (the “Registry”) on August 23, 2004, in Book 34428, Page 332. [Id.]

Notably, Paragraph 20 of the Mortgage explicitly authorized transfer of both the mortgage note and loan's servicing obligations, providing, in part:

20. Sale of Note; Change of Loan Servicer; Notice of Grievance. The Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower. A sale might result in a change in the entity (known as the “Loan Servicer”) that collects Periodic Payments due under the Note and this Security Instruments and performs other mortgage loan servicing obligations under the Note, this Security Instrument, and Applicable Law.

There also might be one or more changes of the Loan Servicer unrelated to a sale of the Note. If there is a change of the Loan Servicer, Borrower will be given written notice of the change which will state the name and address of the new Loan Servicer, the address to which payments should be made and any other information RESPA requires in connection with a notice of transfer of servicing...

[Id. at 12-13] (emphasis added)].

B. Metropolitan Takes Ownership of Benson's Mortgage and Select Portfolio Becomes the Servicer

On March 21, 2014, Metropolitan became the owner of the mortgage note. [ECF No. 1-1 at 1; ECF No. 1-2]. Metropolitan notified Benson of this fact by way of a “Notice of Assignment, Sale or Transfer of Mortgage Loan” letter dated April 18, 2014. [ECF No. 1-2]. That letter informed Benson of at least three critical facts:

1. First, it told her that Metropolitan was the “new owner” of her mortgage loan. [Id. at 1].

2. Second, it notified her that “[t]his assignment, sale or transfer does not change the terms of your loan or your contractual obligations as described in your loan documents...” [Id. at 1. (emphasis added)].

3. Third, the letter also stated that, “[t]he transfer of the lien associated with your mortgage loan has not been recorded, but may in the future be recorded in the public records of the local county recorder's office for the county where your property is located.” [Id. (emphasis added)].

On May 15, 2019, Metropolitan became the Mortgage's record owner. [ECF No. 1-1 at 1-2 ECF No. 19-9] . In accordance with their above-quoted reservation regarding recording, Metropolitan did indeed later record title with the Registry on July 14, 2020. [ECF No. 19-9].

Benson was also notified at least as early as April 11, 2014, that her loan servicer was changing as a result of the Mortgage's change-in-ownership. [ECF No. 1-4]. Whereas her previous servicer had been a firm named Caliber Home Loans, Inc., Caliber sent her a letter explaining that her new servicer would be Select Portfolio. [Id.] Caliber's letter made clear that the change in servicers did “not affect any term or condition” of the Mortgage instruments other than the terms directly related to the servicing of her loan. [Id. at 1]. This letter concluded by informing her that Select Portfolio would start accepting payment from her on May 1, 2014. [Id.] Although none of the parties has provided a copy of Select Portfolio's first correspondence to Benson on or about May 2014, Plaintiff alleges [ECF No. 1-1 at 1-2] and Defendants agree [ECF No. 18 at 3] that Select Portfolio began acting as the successor servicer on or about May 1, 2014. As discussed below, however, what is contested is whether Select Portfolio had the legal authority to act as the loan servicer beginning on or about that date.

C. Chain of Assignments

Defendants have explained -- and Plaintiff has not challenged - that the Mortgage's chain of recorded assignments are as follows:

• From Wilmington to CIT Group/Consumer Finance, Inc., via an assignment recorded with the Registry on June 24, 2005, in Book 36631, Page 250. [ECF No. 18 at9].

• From CIT Group/Consumer Finance, Inc. to U.S. Bank Trust National Association, as Trustee for Bermuda Investments 2011-1 Trust, via an assignment recorded with the Registry on January 6, 2012, in Book 48376, Page 59. [Id.]

• From U.S. Bank Trust National Association, as Trustee for Bermuda Investments 2011-1 Trust to Metropolitan via a Corporate Assignment of Mortgage recorded with the Registry on July 14, 2020, in Book 62794, Page 142. [Id. ]

D. Select Portfolio Offers Benson At Least Three Repayment Plans; Later Initiates Foreclosure Proceedings

Although it is not clear from the parties' filings exactly when Benson stopped making...