Wagner v. Fed. Home Loan Mortg. Corp.

494 F.Supp.3d 80

Deborah WAGNER, Plaintiff,

v.FEDERAL HOME LOAN MORTGAGE CORPORATION, Defendant.

CIVIL ACTION NO. 19-12301-WGY

United States District Court, D. Massachusetts.

Filed October 2, 2020

Michael S. Weinstein, Mark E. Avsec, Benesch, Friedlander, Coplan & Aronoff, Cleveland, OH, for Plaintiff.

Arthur M. Kaufman, Kaufman, Drozdowski & Grendell, Pepper Pike, OH, for Defendant.

MEMORANDUM AND ORDER

YOUNG, D.J.

I. INTRODUCTION

On November 19, 2018 Deborah Wagner ("Wagner") entered into a purchase and sales agreement and stipulation with Federal Home Loan Mortgage Corporation ("Freddie Mac") for the purchase of a residence located at 55 Montgomery Drive, Plymouth, MA (the "Property"). When Freddie Mac declined to go through with the transaction, Wagner sued in the Massachusetts Southeast Housing Court for specific performance, breach of contract, injunctive relief and unfair and deceptive business acts and practices. State Court Record ("State Record") 29, ECF No. 20.

The amended complaint does not plausibly state a claim upon which relief may be granted, and this Court therefore DENIES Wagner's motion for leave to file. See ECF No. 26.¹

A. Factual Background

Wagner has lived at the Property for over 20 years, and currently lives there with her teenage son. Pl.’s Proposed Doc. ("Am. Compl.") ¶ 1, ECF No. 1. On April 3, 2015 Freddie Mac obtained title to the Property through foreclosure on David Merola -- Wagner's ex-boyfriend. Id. ¶ 2; State Record 43.

Freddie Mac initiated a summary process action for possession and unpaid use and occupancy of the Property, winning summary judgment on November 3, 2016, in the Southeast Housing Court. Def.’s App. Ex. Special Mot. Dismiss, Ex. 1, Am. J., Federal Home Loan Mortg. Corp. v. Wagner ("Wagner I"), Summ. Proc. A. No. 16-SP00739 (S.E. Hous. Ct. Nov. 3, 2016), ECF No. 10-1. In November 2018, Wagner and Freddie Mac signed a stipulation in anticipation of Wagner's intent to purchase the Property. Aff. Deborah Wagner ("Aff. Wagner") ¶ 3, ECF No. 29; id., Ex. A, Stipulation of the Parties ("Stipulation"), ECF No. 29-1. The Stipulation set forth that Freddie Mac would provide Wagner with a new purchase and sales agreement and that the closing would occur within thirty days of both parties executing the purchase and sale agreement "subject to reasonable extension for good cause in the discretion of [Freddie Mac]." Stipulation 2; Aff. Wagner, Ex. B, Standard Purchase Sale Agreement ("P&S Agreement"), ECF No. 29-1.²

Wagner signed the P&S Agreement on November 19, 2018, but the document lacked Freddie Mac's signature. Aff. Wagner ¶¶ 6-7; P&S Agreement 7. Freddie Mac signed the P&S Agreement on January 18, 2019 using the earlier closing date of November 30, 2018. Am. Compl. ¶ 8. On February 15, 2019 -- the final business day of the thirty-day period -- Wagner secured a loan subject to an extension, but Freddie Mac refused to grant this extension, arguing lack of "good cause" under the terms of the Stipulation, which allowed Freddie Mac "the discretion" to find "good cause." Id. ¶¶ 10-12; Stipulation 4. Thereafter, Freddie Mac attempted to obtain an execution in the underlying summary process action. Id. ¶ 13. The execution was stayed upon the filing of this action. Id.

B. Procedural History

In February 2016 Freddie Mac brought the summary process action in Southeast Housing Court for possession of the Property. Wagner I 6. The Housing Court on November 3, 2016, granted summary judgment on Freddie Mac's possession claim. Id. at 1. The Housing Court issued an execution for possession of the Property on September 20, 2019 which was subject to a thirty-day stay to allow Wagner to file an action for specific performance. Def.’s App. Ex. Special Mot. Dismiss, Ex. C, Housing Court Docket 15, ECF No. 10-1; Am. Compl. ¶ 13.

On October 11, 2019, Wagner filed the present action in Housing Court, seeking to enforce specific performance of the contract to purchase the Property. Notice Removal, Wagner v. Federal Home Loan Mortg. Corp. ("Wagner II"), Action No. 19H83CV00306, ECF No. 1. On November 6, 2019, Freddie Mac removed the case to this Court. Notice Removal ("Notice Removal"), ECF No. 1. Freddie Mac also brought a special motion to dismiss under Massachusetts General Laws chapter 231, section 59H -- the so-called anti-SLAPP statute -- in response to Wagner's claims for breach of contract and unfair and deceptive business practices. ECF Nos. 7-8. The parties fully briefed the issues, and at a hearing on February 11, 2020 this Court granted the motion to dismiss without prejudice to Wagner moving for leave to file an amended complaint. ECF Nos. 19, 24, 25. Wagner now moves for leave to file an amended complaint, which Freddie Mac opposes. ECF Nos. 26, 27, 32.

The parties here dispute whether the complaint states a claim for breach of contract and violation of Chapter 93A. Pl.’s Mem. Supp. Mot. Leave File Am. Compl. ("Pl.’s Mem."), ECF No. 27; Def.’s Mem. Opp'n Pl.’s Mot. Leave File Am. Compl. ("Def.’s Opp'n"), ECF No. 32.

II. ANALYSIS

Freddie Mac contends that the proposed amended complaint fails to state a claim for breach of contract, since it does not allege that Wagner is ready, willing and able to purchase the Property nor that Freddie Mac breached a material term of either the P&S Agreement or the Stipulation. Def.’s Opp'n 3-8. Freddie Mac also argues that the complaint fails to state a claim for violation of chapter 93A since the claim exceeds the scope of the pre-litigation demand letter and fails to allege that Freddie Mac engaged in unfair or deceptive conduct or that Wagner suffered any damages. Id. at 8-14. Lastly, Freddie Mac seeks dismissal on the theory that the amended complaint is advanced in bad faith and is the result of Wagner's dilatory motives. Id. at 14-17.

This Court concludes that Freddie Mac is correct in its argument that Wagner has failed to state a claim for breach of contract or violation of chapter 93A. Since these conclusions decide the case, this Court does not reach the arguments regarding Wagner's motives.

A. Standard of Review

Federal Rule of Civil Procedure 15(a)(2) states that a party may amend a pleading "with the court's leave ... when justice so requires." Grounds for denying leave include "bad faith," "dilatory motive" or "futility of amendment." Kader v. Sarepta Therapeutics, Inc., 887 F.3d 48, 60-61 (1st Cir. 2018) (quoting ACA Fin. Guar. Corp. v. Advest, Inc., 512 F.3d 46, 55-56 (1st Cir. 2008) )

"An amended complaint is futile ‘if the pined-for amendment does not plead enough to make out a plausible claim for relief.’ "

President & Fellows of Harvard College v. Micron Tech., Inc., 230 F. Supp. 3d 46, 48 (D. Mass. 2017) (quoting HSBC Realty Credit Corp. (USA) v. O'Neill, 745 F.3d 564, 578 (1st Cir. 2014) ). The district court applies the same sufficiency standard when reviewing for futility as for a Federal Rule of Civil Procedure 12(b)(6) challenge. Tharp v. Acacia Communs., Inc., 321 F. Supp. 3d 206, 217-218 (D. Mass. 2018) (citing Glassman v. Computervision Corp., 90 F.3d 617, 623 (1st Cir. 1996) ). "In order for the Plaintiffs to survive a motion to dismiss, their complaint must contain sufficient factual matters, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Id. at 218 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). It is insufficient to engage in "a mere recital of the legal elements supported only by conclusory statements." Id. The plaintiff need not prove that he or she will prevail at trial, but at a minimum the complaint "must establish more than simply a possibility of entitlement to relief." Micron Tech., 230 F. Supp. 3d at 48.

B. Breach of Contract

Massachusetts law determines the elements of the parties’ claims because the case is properly before this Court based on diversity jurisdiction. Notice Removal ¶ 7; Edlow v. RBW, LLC, 688 F.3d 26, 31 (1st Cir. 2012).

To prevail on a breach of contract claim in Massachusetts a plaintiff must ‘demonstrate that there was an agreement between the parties; the agreement was supported by consideration; the plaintiff was ready, willing, and able to perform his or her part of the contract; the defendant committed a breach of the contract; and the plaintiff suffered harm as a result.’

Haven Real Estate Group, LLC v. Bell Atl. Mobile of Mass. Corp., 236 F. Supp. 3d 454, 462-63 (D. Mass. 2017) (Gorton, J.) (quoting Bulwer v. Mount Auburn Hosp., 473 Mass. 672, 690, 46 N.E.3d 24 (2016) ).

Freddie Mac contends that the complaint does not sufficiently alleges that Wagner was "ready, willing, and able to perform," nor that it engaged in a "breach of the contract." Haven Real Estate Group, 236 F. Supp. 3d 454 at 463 ; Def.’s Opp'n 3-8. In particular, Freddie Mac argues that the amended complaint contains only a formulaic recitation that Wagner is ready, willing, and able to perform, but she has not provided any "substantial and convincing evidence" of such assertion. Id. at 4. It further contends that Wagner is not now able to tender payment because, as the amended complaint states, she has not obtained approval for the transaction subsequent to February 2019. Id. at 5. Since Wagner's financial ability is an essential element of her breach of contract claim and because she does not have funds to consummate the transaction, Freddie Mac insists, her claim must fail. Id.

In order for a seller to be in default, the buyer must manifest that he [or she] is ‘ready, able, and willing to perform by setting a time and place for passing papers or making some other concrete offer of performance.’ ‘The weight of authority in this country is that the financial ability of a prospective buyer of property is a material issue in his action for damages against a repudiating defendant for breach of an agreement to sell that property for an established price.’

Pierce v. Clark, No. BACV2001-00496, 2005 WL 5087394, 2005 Mass. Super. LEXIS 142 at *21-22...