Dyer v. Capital One, N.A.

United States District Court

District of Massachusetts

)

Michael W. Dyer, et al., )

)

Plaintiffs, )

)

v. ) Civil Action No.

) 18-11284-NMG

Capital One, N.A., et al., )

)

Defendants. )

)

MEMORANDUM & ORDER

GORTON, J.

Plaintiffs Michael W. Dyer and Nancy A. Dyer (collectively,

“plaintiffs” or “the Dyers”) allege that the failure of

defendant Capital One, N.A. (“Capital One” or “defendant”) to

validate their mortgage loan balance led to several violations

of state and federal law. Pending before the Court is

defendant’s motion for judgment on the pleadings even though its

pleading is entitled a “motion to dismiss.”

III. Background

A. Factual Background

Plaintiffs allege that on March 6, 1990, they purchased

real estate located at 5 Presbrey Place, Natick, Massachusetts

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which they occupied as their primary residence. Defendant was

the lender and servicer of the mortgage on the property for a

period of time relevant to this case before eventually assigning

the servicing of the loan to Rushmore Loan Management Services,

LLC (“Rushmore”) and the mortgage itself to Wilmington Savings

Fund Society, FSB (“Wilmington”).

The Dyers claim that Capital One failed to respond to their

numerous attempts to ascertain the status of their loan when

defendant was the lender and servicer of the mortgage. On or

about June 16, 2015, plaintiffs sent a “Qualified Written

Request” (“QWR”) to defendant requesting, among other things, a

complete payment history. They allege that defendant failed to

respond to the QWR. On November 10, 2015, the Dyers sent a

demand letter to Capital One pursuant to Mass. Gen. L. c. 93A

(“Chapter 93A”) alleging various violations thereof, including

that the bank had failed to comply with the QWR. Plaintiffs

assert that defendant did not adequately respond to the demand

letter.

On September 5, 2017, plaintiffs sent written notice

requesting validation of their debt but defendant purportedly

did not respond. In addition to the letters plaintiffs sent to

defendant, they also contend that they sent hundreds of faxes

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and had over 1,000 points of contact with the bank over a period

of years in an effort to clarify the status of their loan.

At the time plaintiffs filed suit, they allege that

Wilmington, the assignee of the mortgage, had begun foreclosure

proceedings on their property in Natick.

B. Procedural Background

The Dyers filed their complaint in this Court on June 19,

2018, alleging ten counts against Capital One, Rushmore and

Wilmington: breach of contract and of the covenant of good faith

and fair dealing (Count I); violations of Mass. Gen. L. c. 244,

§§ 35B and 35C (Count II); violation of Chapter 93A (Count III);

declaratory judgment for an accounting (Count IV); slander of

title (Count V); promissory estoppel (Count VI); violations of

the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 (Count

VII); violations of the Real Estate Settlement Procedures Act

(“RESPA”), 12 U.S.C. § 2605 (Count VIII); failure to credit

payments in a timely and appropriate fashion in violation of 12

C.F.R. § 1026.36(c)(1)(i) (Count IX); and violations of the Fair

Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 (Count

X).

Plaintiffs initiated settlement discussions with Rushmore

and Wilmington that led to a stipulation of dismissal entered on

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December 7, 2018. Capital One, the only remaining defendant,

moved for judgment on the pleadings (mis-described as a motion

to dismiss) pursuant to Fed. R. Civ. P. 12(c).

IV. Motion for Judgment on the Pleadings

A. Legal Standard

Although a Rule 12(c) motion for judgment on the pleadings

considers the factual allegations in both the complaint and the

answer, it is governed by the same standard as a Rule 12(b)(6)

motion to dismiss. See Perez-Acevedo v. Rivero-Cubano, 520 F.3d

26, 29 (1st Cir. 2008). To survive such a motion, the subject

pleading must contain sufficient factual matter to state a claim

for relief that is actionable as a matter of law and “plausible

on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

For a claim to be facially plausible, the pleadings must

show “more than a sheer possibility that a defendant has acted

unlawfully.” Id. A plaintiff cannot merely restate

the defendant’s potential liability and the court is not

“bound to accept as true a legal conclusion couched as a factual

allegation.” Id.

In considering the merits of such a motion, the Court must

accept all factual allegations in the complaint as true and draw

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all reasonable inferences in the plaintiff’s favor. R.G. Fin.

Corp. v. Vergara-Nunez, 446 F.3d 178, 182 (1st Cir. 2006). The

Court may also consider other documents if 1) the parties do not

dispute their authenticity, 2) they are “central to the

plaintiffs’ claim” or 3) they are “sufficiently referred to in

the complaint.” Curran v. Cousins, 509 F.3d 36, 44 (1st Cir.

2007) (quoting Watterson v. Page, 987 F.2d 1, 3 (1st Cir.

1993)).

B. Application

1. Breach of the Implied Covenant of Good Faith and

Fair Dealing

Defendant moves to dismiss Count I on the ground that

plaintiffs have not alleged any specific rights that defendant

purportedly breached or that defendant acted in bad faith.

Every contract contains an implied covenant of good faith

and fair dealing which is preserved unless a party injures the

right of another to reap the benefits under the terms of the

contract. Foregger v. Residential Credit Solutions, Inc., 2013

U.S. Dist. LEXIS 87546, at *16 (D. Mass. 2013). The covenant

cannot be invoked to “create rights and duties not otherwise

provided for in the existing contractual relationship.” Uno

Rests., Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376, 385

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(2004). There is a presumption that all parties act in good

faith and the plaintiff has the burden of proving lack of good

faith. T.W. Nickerson, Inc. v. Fleet Nat'l Bank, 456 Mass. 562,

570, 574 (2010). Lack of good faith “carries an implication of

a dishonest purpose, conscious doing of wrong, or breach of duty

through motive of self-interest or ill will.” Young v. Wells

Fargo Bank, N.A., 717 F.3d 224, 238 (1st Cir. 2013) (quoting

Hartford Accident & Indem. Co. v. Millis Roofing & Sheet Metal,

Inc., 11 Mass. App. Ct. 998, 418 N.E.2d 645, 647 (Mass. App. Ct.

1981). Although evidence of a party acting unreasonably under

the totality of the circumstances may indicate a lack of good

faith, the essential inquiry is

whether the alleged conduct was motivated by a desire to

gain an unfair advantage, or otherwise had the effect of

injuring the other party's rights to the fruits of the

contract.

Id.

The Dyers allege that Capital One, as their loan servicer,

gave them an opportunity to dispute the amount of the debt owed

but failed to respond to their efforts to do so. Although

defendant’s lack of communication is perplexing, plaintiffs have

not alleged that the bank was motivated by a dishonest purpose

or that plaintiffs were unable to enjoy the benefit of their

contractual bargain. See id. at 239 (affirming the dismissal of

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plaintiff’s implied covenant claim complaint because it

“fail[ed] to plead that defendants’ behavior was motivated by a

desire to gain an unfair advantage or had the effect of injuring

her ability to obtain the contract’s fruits”). Furthermore, the

Dyers do not describe the content of the alleged communications

with Capital One in enough detail for the Court to infer a lack

of good faith on the part of defendant for its failure to

respond. Accordingly, plaintiffs have not adequately stated a

claim of breach of the implied covenant of good faith and fair

dealing.

2. Violation of Chapter 93A

Defendant asserts that plaintiffs’ claim that it violated

Chapter 93A should be dismissed because it is wholly conclusory.

To prevail on a claim alleging a violation of Chapter 93A,

a plaintiff

must prove that a person who is engaged in trade or

business committed an unfair or deceptive trade practice

and that the [plaintiff] suffered a loss of money or

property as a result.

Morris v. BAC Home Loans Servicing, L.P., 775 F. Supp. 2d 255,

259 (D. Mass. 2011) (citation omitted).

The allegations in plaintiffs’ complaint alone are

insufficient to state a plausible claim under Chapter 93A

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because they contend only that defendant failed adequately to

respond to their 93A demand letter, which is not actionable. See

Da Silva v. U.S. Bank, N.A., 885 F. Supp. 2d 500, 506 (D. Mass.

2012) (“[A] failure to respond to a demand letter does not in

and of itself constitute a valid claim under Chapter 93A.”).

Although the Court may properly consider plaintiffs’ 93A letter,

as well as the allegations set forth therein because it is

central to the plaintiffs’ claim under Chapter 93A and was

sufficiently referred to in the complaint, see Cousins, 5509

F.3d at 44, the letter does not provide facts sufficient to

state a plausible claim that defendant engaged in unfair and

deceptive business practices. In their 93A letter, the Dyers

contend that Capital One has not “correctly accounted for and

applied” mortgage payments or responded to plaintiffs’

inquiries. Without allegations demonstrating unfairness or

deception, as opposed to clerical error or mere lack of care,

plaintiffs’ claim for a violation of Chapter 93A cannot be

sustained. See Brown v. Bank of Am. Corp., 2011 U.S. Dist. LEXIS

36235, at *8-9 (D. Mass. 2011); Morris, 775 F. Supp. 2d at 263.

3. Declaratory Judgment

Defendant contends that plaintiffs’ request for a

declaratory judgment that they are entitled to an accounting of

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their debt should be dismissed because they are not so entitled

as a matter of law and the claim is therefore improper under the

Declaratory Judgment Act (“DJA”), 28 U.S.C. § 2201.

The Dyers seek a declaratory judgment pursuant to Mass.

Gen. L. c. 231A and the DJA. They cite Fed. R. Civ. P. 57 as

entitling them to an

explanation, accounting, and validation of the debt . . .

prior to foreclosing on their home.

To the extent that plaintiffs bring their claim under the DJA,

this Court is without jurisdiction. A court may issue a

declaratory judgment pursuant to the DJA only where there is an

actual case or controversy within the meaning of Article III of

the U.S. Constitution. Ferreira v. Dubois, 963 F. Supp. 1244,

1261 (D. Mass. 1996). A declaratory judgment is unattainable

where the judgment sought, if granted, would have no practical

effect on the parties. Id. at 1262. Here, Capital One is no

longer the mortgagee and cannot foreclose on the Dyers’

residence. Therefore, the declaratory judgment sought by

plaintiffs is inapt and the Court is without jurisdiction to

provide the requested relief under the DJA.

Plaintiffs’ claim fares no better under state law because

the Dyers are not entitled to an accounting. Under

Massachusetts law, an equitable accounting is available “only if

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there exists a fiduciary or trust relationship between the

parties.” Chedd-Angier Production Co. v. Omni Publications

International, Ltd., 756 F.2d 930, 937 (1st Cir. 1985). The

mere existence of a relationship between a mortgage servicer and

borrower, without more, “does not give rise to a fiduciary duty

to the latter.” Rellstab v. Ditech Fin. LLC, 396 F. Supp. 3d

215, 218 (D. Mass. 2019) (quoting Shaw v. BAC Home Loans

Servicing, LP, 2013 U.S. Dist. LEXIS 28863, 2013 WL 789195, at

*4 (D. Mass. 2013)). Accordingly, plaintiffs are not entitled

to an accounting.

4. Slander of Title

Capital One moves to dismiss Count V on the ground that the

Dyers have not alleged the required elements of slander of

title. To properly assert such a claim, a plaintiff must show

that “(1) the defendant made a false statement, (2) which was

published with malice, and (3) caused injury to the plaintiff.”

Rice v. Santander Bank, N.A., 196 F. Supp. 3d 146, 156 (D. Mass.

2016) (citation omitted). The loss sustained by the plaintiff

must be pecuniary. Id. at 157.

Plaintiffs contend that an affidavit filed by defendant in

the Middlesex South Registry of Deeds caused them to sustain

damages, namely that they “risked losing their fee simple title

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to the subject property.” The mere risk that one may lose an

interest in real property without any actual loss of such

property cannot be valued in terms of money and is therefore

insufficient to show pecuniary damages. See Feighery v. York

Hosp., 38 F. Supp. 2d 142, 148 (D. Me. 1999) (“Pecuniary damages

are ‘such as can be estimated in and compensated by money.’”

(citation omitted)). Because plaintiffs have not demonstrated

they have suffered a pecuniary loss, they have failed to state a

claim for slander of title.

5. Promissory Estoppel

Capital One submits that the Dyers’ promissory estoppel

claim should be dismissed because they failed to allege that

they relied to their detriment on the alleged promises made by

defendant.

Under Massachusetts law, to state a claim for promissory

estoppel “a plaintiff must allege that (1) a promisor makes a

promise which he should reasonably expect to induce action or

forbearance of a definite and substantial character on the part

of the promisee, (2) the promise does induce such action or

forbearance, and (3) injustice can be avoided only by

enforcement of the promise.” Mackenzie v. Flagstar Bank, FSB,

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738 F.3d 486, 496 (1st Cir. 2013). To succeed on an estoppel

theory, a plaintiff must demonstrate that that he/she has been

induced by the conduct of another to do something different

from what otherwise would have been done and that harm has

resulted.

Lumbermens Mut. Casualty Co. v. Offices Unlimited, 419 Mass.

462, 468 (1995).

Plaintiffs contend that defendant invited them to inquire

about and dispute the validity of their debt and that they

detrimentally relied on defendant’s representations. They have

not alleged, however, any facts that would allow an inference

that their decision to dispute the validity of their debt harmed

them in any way. The only harm plausibly alleged in the

complaint is the fact that Wilmington commenced foreclosure

proceedings against them but the Dyers do not allege that

foreclosure would have been avoided if they had not been induced

to rely on the representations of the bank. See Mackenzie, 738

F.3d at 496 (upholding the dismissal of a promissory estoppel

claim where “there is no reason for [the Court] to believe the

[plaintiffs] would have successfully avoided foreclosure, or

been better off in any way, but for their reliance” on the

defendant’s promise). For that reason, plaintiffs have failed

adequately to plead the elements of a promissory estoppel claim.

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6. RESPA Violations

Capital One contends that the Dyers have failed to

demonstrate either actual or statutory damages resulting from

defendant’s alleged failure to respond to their inquiries.

To state a claim under RESPA pursuant to 12 U.S.C. § 2605,

a plaintiff must show

(1) that the servicer failed to comply with the statute's

[qualified written request] rules; and (2) that the

plaintiff incurred actual damages as a consequence of the

servicer's failure.

Okoye v. Bank of New York Mellon, No. 10-cv-11563, 2011 U.S.

Dist. LEXIS 82769, 2011 WL 3269686, at *17 (D. Mass. 2011)

(brackets in original). As an alternative to the second

requirement, a plaintiff may plead statutory damages, which

requires a "showing of a pattern or practice of noncompliance by

the servicer." Afridi v. Residential Credit Sols., Inc., 189 F.

Supp. 3d 193, 200 (D. Mass. 2016).

First, the Dyers have not alleged facts showing actual

damages resulting from Capital One’s alleged failure to respond

to their requests for validation of their loan. They assert

that they sent requests to the bank on June 16, 2015, and

September 5, 2017. Furthermore, in their opposition to

defendant’s motion for judgment on the pleadings, the Dyers

contend that they sent defendant 477 faxes between February 23,

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2015, and June 3, 2017 as evidence that they suffered actual

damages. There is nothing in the complaint, however, to suggest

that the costs associated with the faxes sent to defendant were

incurred as a consequence of defendant’s failure to respond.

The Dyers had begun sending faxes to Capital One well before

sending the QWR in June, 2015, and do not contend that any faxes

were sent after they sent the second request.

Furthermore, plaintiffs have insufficiently pled a pattern

or practice of noncompliance with RESPA because they have not

alleged any facts regarding noncompliance outside the context of

their own correspondence. See Toone v. Wells Fargo Bank, N.A.,

716 F.3d 516, 523 (10th Cir. 2013) (affirming dismissal of RESPA

claim because allegation of a pattern or practice based on the

plaintiffs' own requests was conclusory); Copeland v. Lehman

Bros. Bank, 2011 U.S. Dist. LEXIS 123, at *12-13 (S.D. Cal.

2011) (dismissing a RESPA claim because the plaintiffs did not

identify any experience other than their own that demonstrate a

pattern or practice of noncompliance).

7. Violation of the Code of Federal Regulations

Under 12 C.F.R. § 1026.36(c)(1)(i), loan servicers are

required to credit a consumer’s periodic payment to the

consumer’s loan account as of the date of receipt. See Spaulding

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v. Citifinancial Servicing, LLC, 2018 U.S. Dist. LEXIS 58760, at

*13-14 (D. Mass. 2018).

Capital One contends that the Dyers’ claim under

§ 1026.36(c)(1) must fail for a lack of factual support. In the

complaint, plaintiffs allege that defendant violated the subject

regulation when it failed, timely and appropriately, to credit

their loan payments. Plaintiffs repeat that allegation in their

Chapter 93A letter but provide no factual support regarding the

amount or dates of the alleged payments. Plaintiffs, instead,

rely on conclusory statements couched as factual allegations

that this Court is not obliged to accept as true when deciding a

motion to dismiss. See Iqbal, 556 U.S. at 678. Accordingly,

plaintiffs have not stated a plausible claim under §

1026.36(c)(1).

8. Remaining Claims

In the Dyers’ opposition to the motion for judgment on the

pleadings (Docket No. 26), they stipulate to the dismissal of

their remaining claims, which include violations of Mass. Gen.

L. c. 244, §§ 35B and 35C (Count II); violations of the Fair

Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 (Count VII); and

violations of the Fair Debt Collection Practices Act (“FDCPA”),

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15 U.S.C. § 1692 (Count X). Consequently, plaintiffs’ claims

under those counts will be dismissed without discussion.

ORDER

For the foregoing reasons, the motion of defendant Capital

One for judgment on the pleadings (Docket No. 24) is ALLOWED.

So ordered.

/s/ Nathaniel M. Gorton

Nathaniel M. Gorton

United States District Judge

Dated October 22, 2020

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