UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

Jennean Mason and Estate of David C. Mason

v. Civil No. 14-cv-77-JL Opinion No.

Wells Fargo Bank, N.A.

MEMORANDUM ORDER

In recent years, this court has seen an influx of cases in

which defaulted mortgagors assert various theories of relief in

an attempt to stave off foreclosure. This action to enjoin a

foreclosure presents a variation on that theme. The plaintiffs,

Jennean Mason and the estate of her late husband, allege that the

defendant, Wells Fargo Bank, N.A., is attempting to foreclose on

a mortgage on their property even though it “has not produced”

the promissory note which that mortgage secures. The plaintiffs

further assert that foreclosure would deprive Mason of her

homestead right, in violation of

,

and argue that Wells should be estopped from foreclosing because

it promised them “that they could engage in loss mitigation to

avoid foreclosure.” This court has jurisdiction over this matter

pursuant to

(diversity), because Mason and the

estate are New Hampshire citizens, Wells is a citizen of South

Dakota, and the amount in controversy exceeds $75,000. Wells has moved to dismiss the complaint in part,1 see Fed.

R. Civ. P. 12(b)(6), arguing that Mason has no homestead right in

the property, that the allegations that it does not hold the Note

are too speculative to state a claim to relief, and that the

plaintiffs cannot premise a claim to enjoin foreclosure upon

Wells’ alleged promise. After careful consideration, the court

grants the motion for precisely those reasons.

I. Applicable legal standard

To survive a motion to dismiss under Rule 12(b)(6), the

plaintiff’s complaint must allege facts sufficient to “state a

claim to relief that is plausible on its face.” Ashcroft v.

Iqbal,

(2009) (quoting Bell Atl. Corp. v.

Twombly,

(2007)). In ruling on such a motion,

the court must accept as true all well-pleaded facts set forth in

the complaint and must draw all reasonable inferences in the

plaintiff’s favor. See, e.g., Martino v. Forward Air, Inc.,

(1st Cir. 2010). The court “may consider not only the

complaint but also facts extractable from documentation annexed

to or incorporated by reference in the complaint and matters

susceptible to judicial notice.” Rederford v. U.S. Airways,

Inc.,

(1st Cir. 2009). With the facts so

1 Wells has not moved to dismiss the plaintiffs’ claims for fraudulent and negligent misrepresentation, so the court does not address those claims here. construed, “questions of law [are] ripe for resolution at the

pleadings stage.” Simmons v. Galvin,

(1st Cir.

2009). The following background summary adopts that approach.

II. Background

On March 17, 2006, David Mason and Jennean Oehme executed a

warranty deed conveying property they jointly owned in Windham,

New Hampshire to Mason alone. Later that day, Mason executed a

promissory note in the amount of $288,750, payable to World

Savings Bank, FSB. The note was secured by a mortgage, also in

World Savings Bank’s favor, on the Windham property. In

executing the mortgage, Mason agreed to “waive all rights and

benefits of homestead exemption in the Property.” Mortg.

(document no. 4-2) ¶ 34. The warranty deed and mortgage were

recorded together in the Rockingham County Registry of Deeds a

week later. After Mason had executed the mortgage, on March 17,

2006, he also executed a second warranty deed conveying the

property back to Oehme and himself, as tenants in common; that

deed was also recorded in Registry of Deeds, albeit roughly a

month after the first.

Mason and Oehme later married, and she took his last name.

Mr. Mason passed away in 2012, and Mrs. Mason continued to reside

at the Windham property and to make payments on the mortgage. In

May 2013, however, she became unemployed and was unable to make

further payments. She immediately contacted Wells–-which, the complaint alleges, “claims to be the successor by merger to

Wachovia Mortgage, FSB, which was formerly known as World Savings

Bank, FSB”–-to “inquire about loss mitigation options.” Wells

allegedly promised the plaintiffs “that they could engage in loss

mitigation to avoid foreclosure,” and “started the process of

working on an unemployment modification.” Although Wells made

numerous requests of Mrs. Mason in connection with this process,

and at one point informed Mrs. Mason that she “had successfully

completed the unemployment modification process,” the parties’

“loss mitigation” efforts ultimately went nowhere.

Despite Mrs. Mason’s repeated entreaties to various Wells

representatives, Wells scheduled a foreclosure sale for January

2014. That prompted the plaintiffs to file the present action in

Rockingham County Superior Court, which granted the plaintiffs’

motion to preliminarily enjoin the foreclosure. Wells then

removed the action to this court, see

, and filed

the motion at bar. In accordance with the Superior Court’s

injunction, which remains in effect following removal, see

§ 1450, no foreclosure sale has taken place.

III. Analysis

As mentioned at the outset, Wells moves to dismiss three of

the plaintiffs’ five claims: (1) a claim that foreclosure would

wrongfully deprive Mrs. Mason of her homestead right in the

subject property; (2) a claim for wrongful foreclosure premised on the allegation that Wells has not produced the note; and (3) a

claim for promissory estoppel premised on Wells’ alleged promise

that the plaintiffs “could engage in loss mitigation to avoid

foreclosure.” The court addresses these claims in turn, and

concludes that none has merit.

A. Denial of homestead right

Under

, “[e]very person is

entitled to $100,000 worth of his or her homestead, or of his or

her interest therein, as a homestead.” This homestead right “is

exempt from attachment during its continuance from levy or sale

on execution, and from liability to be encumbered or taken for

the payment of debts.”

. In arguing

that Wells may not foreclose because to do so would deny Mrs.

Mason her homestead right in the subject property, the plaintiffs

rely upon this exemption. The exemption, however, is not

absolute; as Wells points out, under

, III, “mortgages which are made a charge thereon

according to law” are not subject to it. That provision is fatal

to the plaintiffs’ claim, because, as noted in Part II, supra,

the mortgage contains an explicit waiver of the homestead right.

In an effort to overcome section 480:4, III, the plaintiffs

cite venerable case law for the proposition that a husband cannot

waive his wife’s homestead interest by executing a mortgage to

which she is not also a party. See Smith v. Hall,

(1892); Norris v. Moulton,

(1857). That rule has

been codified in

-a, which provides

that “[n]o deed shall convey or encumber the homestead right

. . . unless it is executed by the owner and wife or husband, if

any, with the formalities required for the conveyance of land.”

The plaintiffs contend that this principle bars Wells from

foreclosing because Mrs. Mason did not herself execute the

mortgage and associated promissory note. The fundamental problem

with this argument is that, as the New Hampshire Supreme Court

recently explained, a wife cannot invoke § 480:5-a to exempt her

homestead right from her husband’s mortgage when “the mortgage

deed was executed before the [wife] acquired her homestead right

in the property.” Walbridge v. Estate of Beaudoin,

(2012).

That happened here. Although Mrs. Mason had an ownership

interest in the property at one time prior to the execution of

the mortgage (when she was not yet married, and still known by

her maiden name), she later conveyed that interest to Mr. Mason

by way of warranty deed. It was only after this conveyance had

occurred that Mr. Mason mortgaged the property.2 Mrs. Mason’s

2 Although they gloss over this fact in their opposition to Wells’ motion to dismiss, the plaintiffs concede in their motion to certify certain questions to the New Hampshire Supreme Court that Mrs. Mason deeded her property interest to her late husband before he executed the mortgage, and that she did not reacquire an interest in the property until after he had done so. See Memo. in Supp. of Mot. to Certify (document no. 8-1) at 2. conveyance to her husband extinguished any homestead right she

may have had in the property, because ownership is “essential to

the assertion of” a homestead right.3 Beland v. Goss,

(1895). Although Mrs. Mason later reacquired an interest in

the property by way of a second warranty deed from Mr. Mason, he

had already executed the mortgage by that time, so she took the

property subject to it. See Cadle Co. v. Bourgeois,

(2003) (a mortgage survives the transfer of property).

Under Walbridge, she cannot invoke her homestead right as a

defense to enforcement of the mortgage. Her claim for denial of

the homestead right is accordingly dismissed.

B. Wrongful foreclosure

The plaintiffs’ claim for wrongful foreclosure is premised

on the theory that, “[i]n New Hampshire, the burden is on the

foreclosing party to prove that it has the authority to enforce

3 The plaintiffs resist this conclusion. They assert that even after conveying ownership to Mr. Mason, Mrs. Mason continued to occupy the property, and argue that, for her homestead right in the property to be extinguished, she needed to both convey ownership of the property and cease occupying it. The plaintiffs misapprehend New Hampshire law. Both ownership and occupancy are necessary for invocation of the homestead right; neither one is, by itself, sufficient. See, e.g., Walbridge,

(homestead right not created by ownership of property and intent to occupy it in the future; only ownership together with actual occupation will suffice). That ownership is as equally (if not more) essential to the maintenance of a homestead right as occupancy is obvious from the nature of the right itself: because property that one does not own is not subject to attachment, it would make no sense to exempt that property from attachment for a non-owner’s debts. the Note.” Compl. ¶ 46. The plaintiffs allege that Wells “has

not produced the original Note for inspection,” and assert that

“until it does, it cannot show that it has the power and

authority to foreclose.” Id.; see also id. ¶ 40. Wells does not

challenge the proposition that, in order to foreclose on a

mortgage, the party must hold the note which that mortgage

secures, so the court assumes, without deciding, that New

Hampshire law requires possession of the note. The court will

also assume that a claim for wrongful foreclosure can lie where

the foreclosure sale has yet to take place. But cf. Worrall v.

Fed. Nat’l Mortg. Ass’n,

(“[A] necessary

element of a wrongful foreclosure claim . . . is that a

foreclosure sale must have occurred.”). Even indulging those

assumptions, the plaintiffs have not stated a plausible

entitlement to relief.

As Wells correctly argues, a plaintiff cannot mount a

challenge to a defendant’s authority to foreclose “simply by

raising the possibility that the defendant lack[s] possession of

the note secured by the mortgage they have tried to foreclose,”

because the pleading standard set forth in Federal Rule of Civil

Procedure 8(a) requires “more than a sheer possibility that a

defendant has acted unlawfully.” Pro Mod Realty, LLC v. U.S.

Bank Nat’l Ass’n,

(quoting Ashcroft v. Iqbal,

(2009)); see also Worrall,

(dismissing wrongful foreclosure claim premised on allegation

that defendant had “not shown that it holds the original Note”;

“speculation is insufficient to cast doubt on [defendant’s]

authority to enforce the note”). Rather, to successfully state a

claim challenging a defendant’s standing to foreclose (assuming,

again, that possession of the note is a necessary prerequisite to

foreclosure), a plaintiff must affirmatively allege–-after “an

inquiry reasonable under the circumstances,” Fed. R. Civ. P.

11(b), and under threat of sanction for misrepresentation, see

id. 11(c)--that the defendant lacks possession of the note. Pro

Mod Realty,

.

The plaintiffs have not done so. Their lukewarm allegation

that Wells “has not produced the original Note” does not fit the

bill. See Worrall,

. It does not follow from

Wells’ alleged non-production of the note that the note is not in

Wells’ possession. So the plaintiffs have failed to raise more

than “a sheer possibility” that Wells does not possess the note.4

Because the plaintiffs have not plausibly alleged that Wells

lacks possession of the promissory note associated with the

4 As the defendants have also noted, the complaint expressly alleges that Wells Fargo “claims to be the successor by merger to” World Savings Bank, the original holder of the note. The plaintiffs do not question that claim in either their complaint or their memorandum in opposition to Wells Fargo’s motion. In light of this allegation, it is implausible to infer that Wells Fargo is not, in fact, the present holder of the note. mortgage on which it is attempting to foreclose, their claim for

wrongful foreclosure is dismissed.

C. Promissory estoppel

Under the New Hampshire doctrine of promissory estoppel, “a

promise reasonably understood as intended to induce action is

enforceable by one who relies on it to his detriment or to the

benefit of the promisor.” Panto v. Moore Bus. Forms, Inc.,

(1988) (citing Restatement (Second) of Contracts §

90 (1981)). Promissory estoppel thus protects only “reasonable

reliance” on the part of the promisor. Marbucco Corp. v. City of

Manchester,

(1993); see also Rockwood v. SKF

USA Inc.,

(D.N.H. 2010), aff’d,

(1st Cir. 2012). In support of their promissory estoppel claim,

the plaintiffs allege that Wells promised that they “could engage

in loss mitigation to avoid foreclosure.” They further allege

that Wells instructed Mrs. Mason to apply for an unemployment

modification, and later told her that she needed to assume the

loan in order to qualify for a modification. They assert that

despite these communications, Wells referred the mortgage to

foreclosure.

As Wells points out, notably absent from these allegations

is any hint that Wells promised the plaintiffs that its loss

mitigation options would successfully stave off foreclosure. To

the contrary, Wells’ representations to Mrs. Mason that she would need to apply for a modification suggest that success in avoiding

foreclosure was not guaranteed. The plaintiffs’ expectation that

engaging in loss mitigation would prevent foreclosure, then, was

unreasonable, as were any actions they took in reliance upon that

expectation. See Worrall,

(the defendant’s

statement that the plaintiffs “could engage in loss mitigation to

avoid foreclosure, if it were construed to be a promise, did not

promise that the [plaintiffs’] efforts toward loss mitigation

would be successful in avoiding foreclosure,” so the plaintiffs

“could not reasonably expect [the mortgagee] not to foreclose”

based upon that alleged promise); cf. Pro Mod Realty,

(“a promise to ‘consider’ taking a specified course of

action in response to the promisee’s request does not commit the

promisor to that course of action, nor justify any expectation

that the promisor will, in fact, take that course of action”).

Attempting to salvage their promissory estoppel claim, the

plaintiffs point to allegations that Wells (1) at one point told

Mrs. Mason that she had “successfully completed the unemployment

modification process and that the loan was in good standing,” and

(2) at a later date, told her that “she was on a ‘short-term’

program.” The “reasonable inference from those representations,”

the plaintiffs allege, is that Wells “would not foreclose.”

The plaintiffs also allege, however, that the representative

of Wells who allegedly told Mrs. Mason that she was on a “short- term program” also told her, at the same time, that he “did not

understand the notes” on the file and, furthermore, that he could

not explain what a “short-term program” was. The plaintiffs

could not have reasonably relied on that person’s representation

that Mrs. Mason “was on a ‘short-term’ program”–-whatever that

might be–-as a promise that Wells would not foreclose. While

Wells’ alleged statements that Mrs. Mason “had successfully

completed the unemployment modification process and that the loan

was in good standing” may have provided a more substantial basis

for the plaintiffs to believe that Wells would not proceed with a

foreclosure, the complaint also alleges that, about two weeks

after those statements, Wells disavowed them and told Mrs. Mason

that the loan was still “under review for short-term assistance.”

The plaintiffs do not allege that, during this two-week period,

they took any actions to their detriment in reliance upon the

expectation that Wells would not foreclose on the mortgage. So,

even if it would have been reasonable to infer from these various

statements that Wells would not foreclose, the plaintiffs have

not alleged any detrimental reliance and, therefore, not made out

a claim for promissory estoppel. See Pro Mod Realty,

(citing MacKenzie v. Flagstar Bank, FSB,

(1st Cir. 2013)). That claim is dismissed. IV. Conclusion

For the reasons set forth above, Wells Fargo’s partial

motion to dismiss5 is GRANTED. Because the issues presented by

this motion did not involve any novel issues of New Hampshire law

requiring interpretation by the New Hampshire Supreme Court, the

plaintiffs’ motion to certify questions to that court6 is DENIED.

SO ORDERED.

Joseph N. Laplante United States District Judge

Dated: June 17, 2014

cc: Stephen T. Martin, Esq. Michael R. Stanley, Esq.

5 Document no. 4. 6 Document no. 8.