Holland v. Select Portfolio Servicing, Inc.

299 F.Supp.3d 271

Gwendolyn HOLLAND, Plaintiff,

v.SELECT PORTFOLIO SERVICING, INC. and Carrington Mortgage Services, LLC, Defendants.

CIVIL ACTION NO. 17–11212–JGD

United States District Court, D. Massachusetts.

Signed March 14, 2018

Mark Ellis O'Brien, Leominster, MA, for Plaintiff.

Carl E. Fumarola, Kevin P. Polansky, Nelson Mullins Riley & Scarborough LLP, John T. Precobb, Flynn Law Group, Boston, MA, for Defendants.

MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS' MOTIONS TO DISMISS

Judith Gail Dein, United States Magistrate Judge

March 14, 2018

I. INTRODUCTION

The plaintiff, Gwendolyn Holland, has brought this action against Select Portfolio Servicing, Inc. ("SPS"), a servicer of her mortgage and attorney-in-fact for MetLife Home Loans, a division of MetLife Bank, N.A. ("MetLife"), and Carrington Mortgage Services, LLC ("Carrington"), the subsequent servicer and holder of her mortgage. The Complaint, as amended, purports to state a claim of fraud (Count I) and violation of Mass. Gen. Laws ch. 93A (Count II). It is the plaintiff's contention that the purported assignment of the servicing rights from SPS to Carrington, and transfer of the ownership of her mortgage loan from MetLife (by SPS as attorney-in-fact) to Carrington, were void, and that JPMorgan Chase Bank, N.A. ("JP Morgan") is the actual holder of her mortgage loan. Ms. Holland's mortgage payments are current, and she is seeking to have all payments returned to her so that they can be made to the correct entity. No other entity has challenged SPS's and Carrington's involvement with Ms. Holland's mortgage loan, and JPMorgan has expressly denied still having any interest in the mortgage loan.¹

This matter is before the court on the defendants' motions to dismiss brought pursuant to Fed. R. Civ. P. 8, 9(b) and 12(b)(6). For the reasons detailed herein, the Complaint fails to satisfy the pleading requirements for fraud, and otherwise fails to state a claim upon which relief can be granted. Therefore, SPS's motion (Docket No. 4) and Carrington's motion (Docket No. 15) are ALLOWED.

II. STATEMENT OF FACTS

The facts are derived from Ms. Holland's Complaint ("Compl.") (Docket No. 5–1)² as well as "information found in the mortgage itself, public records, documents incorporated into the complaint by reference, and other matters susceptible to judicial notice." Wilson v. HSBC Mortg. Servs., Inc., 744 F.3d 1, 4 (1st Cir. 2014) (citation omitted).³

The Original Mortgage

On December 17, 2009, Ms. Holland executed a promissory note to Drew Mortgage Associates, Inc. (the "Note") (Carr. Ex. A). The Note was secured by a mortgage of the same date to Mortgage Electronic Registration Systems ("MERS") as nominee for Drew Mortgage Associates, Inc., its successors and assigns, on Ms. Holland's home in Marlborough, Massachusetts (the "Mortgage") (Carr. Ex. B). The Mortgage was recorded with the Middlesex County (South) Registry of Deeds at Book 54034, page 564 on December 22, 2009. (Carr. Ex. B).

The 2010 Assignment to MetLife

On July 27, 2010, MERS assigned the Mortgage to MetLife (the "2010 Assignment") (Compl. ¶ 4; Carr. Ex. C). The 2010 Assignment was recorded with the Middlesex County (South) Registry of Deeds at Book 55116, page 341 on August 5, 2010. (Compl. ¶ 7; Carr. Ex. C). Prior to that time, on May 7, 2010, Ms. Holland had received a letter from MetLife notifying her that MetLife had purchased her mortgage on May 3, 2010 from Government National Mortgage Association. (Compl. ¶ 5).

The Challenged 2015 Assignment to Carrington

According to her Complaint, on November 2, 2012, "MetLife announced an agreement to sell MetLife Bank, N.A.'s $70 billion mortgage servicing portfolio to J.P. Morgan Chase Bank, N.A." (Compl. ¶ 8). On May 1, 2013, Ms. Holland received a letter from JPMorgan notifying her that her mortgage had "been sold or otherwise transferred or assigned" to it, and that SPS was the new servicer. (Compl. ¶¶ 9–10). This assignment was never recorded, and forms the basis of Ms. Holland's Complaint. According to Ms. Holland, SPS, MetLife, and over 100 other companies use the same address in Salt Lake City, Utah. (Compl. ¶¶ 12–15).

On or about August 11, 2015, Carrington notified Ms. Holland that the servicing rights for her mortgage were being transferred from SPS to Carrington, effective August 1, 2015. (Compl. ¶ 20; Carr. Ex. D).⁴ On October 29, 2015, MetLife assigned Ms. Holland's Mortgage to Carrington (the "2015 Assignment"). (Compl. ¶ 16; Carr. Ex. E). The 2015 Assignment correctly identifies the original mortgagor (Gwendolyn G. Holland), the original mortgagee (MERS as nominee for Drew Mortgage Associates, Inc., its successors and assigns), the date of the original mortgage (December 17, 2009) and the recording information for the original mortgage (Book No. 54034, at Page No. 564). (Carr. Ex. E). The 2015 Assignment was executed before a Notary Public, and indicates that it was signed by Michelle Sandoval, Document Control Officer, on behalf of MetLife by SPS as its attorney in fact pursuant to its power of attorney being recorded therewith. (Id. ). The 2015 Assignment was recorded on November 20, 2015 with the Middlesex County (South) Registry of Deeds at Book 66409, page 383. (Id. ). The limited power of attorney granted by MetLife to SPS, dated June 3, 2013, was recorded at Book 66409, page 359. (SPS Ex. E; Compl. ¶ 11). The power of attorney was also executed before a Notary Public, and was signed by Angela Cavener, Limited Vice President of MetLife Bank, NA, a/k/a MetLife Home Loans, a Division of MetLife Bank, N.A. (SPS Ex. E).

The Complaint

The crux of Ms. Holland's Complaint is that since "MetLife had already sold its mortgage portfolio to J.P. Morgan on or about 2 November 2012, and had exited the mortgage business[,]" "MetLife could not have assigned to Carrington what it didn't have on 29 October 2015." (Compl. ¶¶ 17, 19). In her Complaint (Docket No. 5–1) Ms. Holland purports to state a claim for fraudulent misrepresentation. Specifically, she has alleged that "[i]n the case at hand, the Defendants did in fact make false representations of material fact designed to induce the Plaintiff to make mortgage payments to an entity not entitled to receive them." (Docket 5–1 at page 5 of 6). In her Amendment to Complaint (Docket No. 5–6), Ms. Holland purports to state a claim for violation of Mass. Gen. Laws ch. 93A. She has alleged as follows:

6. The actions of Defendant SPS were unfair and deceptive because SPS as Attorney-in-fact for MetLife orchestrated an Assignment of mortgage to Carrington that was factually impossible because MetLife had earlier assigned the subject mortgage to a different mortgagee.

7. The actions of Defendant Carrington were unfair and deceptive because through the exercise of due diligence, Carrington either would have known or should have known that the Assignment was a factual impossibility.

(Docket No. 5–6 at page 4 of 4).

Additional facts will be provided below as appropriate.

III. ANALYSIS

A. Sufficiency of Allegations of Fraud and 93A Claims

"Under Massachusetts law, fraud requires that the defendant made a knowingly false statement concerning a material matter that was intended to, and did in fact, induce the plaintiff's reliance and, through that reliance, created an injury." Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 357 (1st Cir. 2013). Pursuant to Fed. R. Civ. P. 9(b), in alleging fraud "a party must state with particularity the circumstances constituting fraud or mistake." This includes "specifics about the time, place, and content of the alleged false representations." Juarez v. Select Portfolio Serv., Inc., 708 F.3d 269, 279–80 (1st Cir. 2013) (quotations and citations omitted). Conclusory allegations and references to "plans and schemes" are not sufficient. Hayduk v. Lanna, 775 F.2d 441, 444 (1st Cir. 1985). Moreover, "courts have uniformly held inadequate a complaint's general averment of the defendant's ‘knowledge’ of material falsity, unless the complaint also sets forth specific facts that make it reasonable to believe that defendant knew that a statement was materially false or misleading." N. Am. Catholic Educ. Programming Found., Inc. v. Cardinale, 567 F.3d 8, 13 (1st Cir. 2009) (quotations and citations omitted).

In the instant case, the Complaint fails to meet any of these requirements and must be dismissed. Ms. Holland contends only that it was impossible for the 2015 Assignment to be viable because of the prior assignment to JPMorgan, and therefore the defendants are liable for fraud. She does not allege any facts from which the court can conclude that SPS or Carrington made knowingly false statements. Nor does she identify what statements she relied on, how she relied on them, or that she suffered any injury. There is no assertion that she even saw the 2015 Assignment before this litigation, and there is no assertion that she has been injured, especially since her mortgage payments have been appropriately credited to her mortgage debt. The conclusory allegation that the "Defendants did in fact make false representations of material fact designed to induce the Plaintiff to make mortgage payments to an entity not entitled to receive them" is insufficient to state a claim for fraud. (See Docket 5–1 at page 5 of 6). See Clark v. Mortg. Elec. Reg. Sys., Inc., 7 F.Supp.3d 169, 181–82 (D.R.I. 2014) (general averments that a "mortgage is void due to fraud" and there were "deceptive practices regarding the false filing of documents" are insufficient to satisfy the pleading requirements for fraud).

For the same reasons, Ms. Holland's claim that the defendants engaged in unfair and deceptive practices must be dismissed. While a claim of misrepresentation may, in certain circumstances, support a finding of a violation of Mass. Gen. Laws ch. 93A, here the plaintiff has failed to properly assert a misrepresentation claim. Compare Nota Const. Corp. v. Keyes Assoc., Inc., 45 Mass. App. Ct. 15, 21, 694 N.E.2d 401,...