Linn v. Option One Mortg.

1

MICHELLE LINN, Plaintiff, v. OPTION ONE MORTGAGE, CUSTOM FINANCIAL MORTGAGE CORP., SELECT PORTFOLIO SERVICING, U.S. BANK NATIONAL AS TRUSTEE, SUCCESSOR IN INTEREST TO WACHOVIA BANK, N.A. AS TRUSTEE FOR CHASE FUND LOAN ACQUISITION TRUST, MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 200-OPT1, Defendants.

Civil Action No. 1:22-cv-11535-IT

United States District Court, D. Massachusetts

January 17, 2024

MEMORANDUM & ORDER

INDIRA TALWANI, UNITED STATES DISTRICT JUDGE

This dispute involves a mortgage and a pending home foreclosure. Plaintiff Michelle Linn, the homeowner, brought suit against Defendants, the mortgage originator and its successors-in-interest and their servicer, challenging the circumstances surrounding the initial mortgage, the terms of the initial mortgage, the loan modification processes, and the pending foreclosure. Notice of Removal, Ex. A (“Compl.”) [Doc. No. 1-1]. Pending before the court is the Motion for Judgment on the Pleadings [Doc. No. 19] filed by Defendants Select Portfolio Servicing Inc. (“SPS”), and U.S. Bank, National Association as Trustee, successor in interest to Wachovia Bank, N.A., as Trustee for Chase Funding Loan Acquisition Trust Mortgage Loan Asset-Backed Certificates, Series 2004-OPT1 (the “Trust”).^[1] For the following reasons, Defendants' Motion is GRANTED.

I. Background as Set forth in the Verified Complaint and Undisputed Documents

On April 30, 2004, Plaintiff and her husband executed a mortgage on their home through Defendant Option One Mortgage for a principal sum of $216,000.00. Compl. ¶ 2 [Doc. No. 1-1]; Notice of Removal, Ex. B (“Mortgage”) [Doc. No. 1-2]. That same day, Plaintiff and her husband executed an Adjustable Rate Note (the “Note”). State Ct. R. 87 (“Adjustable Rate Note”) [Doc. No. 5]. The Note provided, in part, that “[Plaintiff] and any other person who has obligations under this Note waive the rights of presentment and notice of dishonor.” Id. at ¶ 10. The initial mortgage was most recently assigned to U.S. Bank National Association as Trustee.^[2]Compl. ¶ 13 [Doc. No. 1-1]. SPS became the mortgage servicer as of February 12, 2013.^[3] Id.

On October 11, 2013, Plaintiff and her husband entered into a Loan Modification Agreement with JP Morgan Chase Bank N.A. that reflected a new principal balance on the Note of $259,672.32. Seeley Decl. ¶ 4(b), Ex. B [ECF 21-2].

In 2014, after multiple unsuccessful further loan modification applications, Plaintiff and her husband defaulted on the mortgage and filed for bankruptcy protection to prevent foreclosure. Compl. ¶ 16 [Doc. No. 1-1]. Plaintiff alleges that between January 2016 and July 2022, she sent loan modification paperwork to SPS on more than thirty occasions. Id. at ¶ 11.

On November 21, 2018,^[4] Defendants recorded an Affidavit Pursuant to M.G.L. ch. 244, §§ 35B, 35C (“35B/35C Affidavit”) attesting to Defendants' ownership of the Note and Mortgage and their compliance with M.G.L. 35B's requirements. Id. at ¶ 44; Seeley Decl., Ex. E (Affidavit Pursuant to M.G.L. ch. 244) [Doc. 21-5].

At some point, Defendants noticed a foreclosure auction for September 6, 2022. Compl. ¶ 19 [Doc. No. 1-1].

II. Procedural Background

Plaintiff brought suit to enjoin the foreclosure sale in August 2022 in Massachusetts Superior Court, Plymouth County. Plaintiff's Complaint asserts four counts. First, Plaintiff alleges that Defendants' conduct in issuing the mortgage violated M.G.L. ch. 93A, § 2; the initial mortgage loan violated M.G.L. ch. 183, §§ 28C, 64, ch. 183C, § 2, and ch. 140D, § 1; and the initial mortgage loan is unenforceable due to the unconscionability doctrine, based on alleged violations of Code of Massachusetts Regulations, including 940 CMR 8.05 & 8.06(3) (Count I). Id. at ¶¶ 24-37. Second, Plaintiff alleges that Defendants' foreclosure of Plaintiffs property violates M.G.L. ch. 244, §§ 35A-35C and that Defendants' 35B/35C Affidavit that SPS abided by M.G.L. ch. 244, § 35B is false or deficient (Count II). Id. at ¶¶ 38-54. Third, Plaintiff alleges that Defendants failed to present the Note, pursuant to M.G.L. ch. 106, § 3-501, and thereby failed to act in good faith, pursuant to M.G.L. § 1-201(b)(20) (Count III). Id. at ¶¶ 55-57. And, finally, Plaintiff alleges that Defendants breached the implied covenant of good faith and fair dealing with regard to the mortgage (Count IV). Id. at ¶¶ 58-62.

On September 1, 2022, the Superior Court allowed Plaintiff's requested Preliminary Injunction and enjoined the sale. State Ct. R. 5 [Doc. No. 5].

Defendants removed the matter to this court on September 20, 2022, Notice of Removal [Doc. No. 1], and filed their Answer [Doc. No. 10] on November 7, 2022.

Now before the court is Defendants' Motion for Judgment on the Pleadings [Doc. No. 19]. Defendants argue the complaint fails to satisfy the pleading requirements of Fed.R.Civ.P. 8, that the four counts fail to assert a viable claim for which relief can be granted, and that some of the counts are time-barred.

III. Standard of Review

“After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). Where “a motion for judgment on the pleadings ‘is employed as a vehicle to test the plausibility of a complaint, it must be evaluated as if it were a motion to dismiss.'” Shay v. Walters, 702 F.3d 76, 82 (1st Cir. 2012).

Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a pleading for relief to “contain a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 8(d)(1) requires each allegation in a pleading be “simple, concise, and direct.” “The purpose of a clear and succinct pleading is to give a defendant fair notice of the claim and its basis as well as to provide an opportunity for a cogent answer and defense.” Belanger v. BNY Mellon Asset Mgmt., LLC, 307 F.R.D. 55, 57 (D. Mass. 2015) (citing Ruiz Rivera v. Pfizer Pharm., LLC, 521 F.3d 76, 84 (1st Cir. 2008)).

In evaluating a motion to dismiss for failure to state a claim, the court assumes “the truth of all well-pleaded facts” and draws “all reasonable inferences in the plaintiff's favor.” Nisselson v. Lernout, 469 F.3d 143, 150 (1st Cir. 2006). However, while a court must credit “well-pleaded facts, . . . ‘bald assertions [and] unsupportable conclusions,'” need not be credited. See LaChapelle v. Berkshire Life Ins. Co., 142 F.3d 507, 508 (1st Cir. 1998) (quoting Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir. 1996)).

To survive dismissal, a complaint must contain sufficient factual material to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations . . . [f]actual allegations must be enough to raise a right to relief above the speculative level[.]” Id. at 555 (internal citations omitted). “A claim has facial plausibility 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).

“While most Rule 12(b)(6) motions are premised on a plaintiff's putative failure to state an actionable claim, such a motion may sometimes be premised on the inevitable success of an affirmative defense.” Nisselson, 469 F.3d at 150. A court may allow a Rule 12(b)(6) motion based on an affirmative defense if “(i) the facts establishing the defense are definitively ascertainable from the complaint and the other allowable sources of information, and (ii) those facts suffice to establish the affirmative defense with certitude.” Id. (quoting Rodi v. S. New England Sch. of L., 389 F.3d 5, 12 (1st Cir. 2004)).

IV. Discussion

A. Plaintiff's Unfair and Deceptive Practices, Predatory Loan, and Unconscionability Claims (Count One)

1. Unfair and Deceptive Practices Under M.G.L. ch. 93A, § 2

“[Massachusetts] General Laws c[hapter] 93A seeks to provide a more equitable balance in the relationship of consumers to persons conducting business activities and prohibits unfair or deceptive acts or practices in the conduct of any trade or commerce.” Laramie v. Philip Morris USA Inc., 488 Mass. 399, 408, 173 N.E.3d 731 (2021). To state a claim under chapter 93A, § 9, “a plaintiff must allege facts sufficient to establish four elements: first, that the defendant has committed an unfair or deceptive act or practice; second, that the unfair or deceptive act or practice occurred ‘in the conduct of any trade or commerce'; third, that the plaintiff suffered an injury; and fourth, that the defendant's unfair or deceptive conduct was a cause of the injury.” Rafferty v. Merck & Co., 479 Mass. 141, 161, 92 N.E.3d 1205 (2018) (quoting M.G.L. ch. 93A, § 2(a)).

“The limitations period for chapter 93A actions is four years from injury.” Latson v. Plaza Home Mortg., Inc., 708 F.3d 324, 326 (1^st Cir. 2013). “A cause of action accrues when the plaintiff can file suit and obtain relief.” O'Brien v. Deutsche Bank Nat'l Tr. Co., 948 F.3d 31, 35 (1^st Cir. 2020) (quoting Quality Cleaning Prods. R.C., Inc. v. SCA Tissue N. Am., LLC, 794 F.3d 200, 203 (1^st Cir. 2015)). The Massachusetts discovery rule tolls the statute of limitations until such time that “a plaintiff discovers, or any earlier date when she should reasonably have discovered, that she has been harmed or may have been harmed by the defendant's conduct.” Epstein v. C.R. Bard, Inc., 460 F.3d 183, 187 (1^st Cir. 2006) (quoting Bowen v. Eli Lilly & Co., 408 Mass. 204, 205, 557 N.E.2d 739 (1990)).

Plaintiff contends that the terms of her initial mortgage were unfair and deceptive. Compl. ¶ 24 [Doc. No. 1-1]. Further Plain...