UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

Farion N. Brown and Donna Brown

v. Civil No. 15-cv-467-JL Opinion No.

Wells Fargo Home Mortgage A/K/A Wells Fargo Bank, N.A., and Federal National Mortgage Association

MEMORANDUM ORDER

This case involves a mortgage-holder’s obligations to a

mortgagor under the Real Estate Settlement Procedures Act

(“RESPA”),

et seq. and the Equal Credit

Opportunity Act (“ECOA”),

et seq., when the

mortgagor has a loan modification request pending before

foreclosure proceedings commence. Farion and Donna Brown,

having fallen behind in their mortgage payments, made such a

request to Wells Fargo Home Mortgage, which serviced their

mortgage loan on behalf of its owner, Federal National Mortgage

Association (“FNMA”). The Browns’ efforts to discuss the

application with Wells Fargo were met with alternating silence

and requests for further information, which the Browns

diligently provided. After the communication continued for

several months, Wells Fargo ultimately concluded that it did not have time to consider the modification application and

subsequently foreclosed.

The Browns filed this action against Wells Fargo and FNMA,

alleging that Wells Fargo violated RESPA by foreclosing during

pendency of a modification request and violated the ECOA by

failing to notify the Browns of any decision on that request

before the foreclosure sale. The Browns also bring claims under

New Hampshire’s Unfair, Deceptive, or Unreasonable Collection

Practices Act (“UDUCPA”),

-C:3, and

the duty of good faith and fair dealing. By dint of the Browns’

claims under RESPA and the ECOA, the court has subject-matter

jurisdiction over this matter under

(federal

question) and 1367 (supplemental jurisdiction).

The defendants have moved to dismiss all claims. See Fed.

R. Civ. P. 12(b)(6). They argue, first, that N.H. Rev. Stat.

Ann § 479:25, II precludes any claims challenging the validity

of the mortgage because the foreclosure sale has already taken

place. They also challenge the sufficiency of the Browns’

claims for relief under RESPA; contend that no adverse action

notification was due to the Browns under the ECOA because the

Browns had defaulted; argue that the defendants’ actions in

foreclosing the mortgage do not amount to “debt collection”

under the UDUCPA; and contend that the provisions of the

mortgage agreement allowing the defendants to foreclose in the

2 event of default preclude a claim under the duty of good faith

and fair dealing.

After hearing oral argument, and as discussed fully below,

the court grants the defendants’ motion to dismiss the Browns’

claims under the UDUCPA and the duty of good faith and fair

dealing, and the Browns’ claims for injunctive relief under

RESPA and the ECOA, but denies it as to the Browns’ RESPA and

ECOA claims for damages.

Applicable legal standard

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

plaintiff must state a claim to relief by pleading “factual

content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.”

Martinez v. Petrenko,

(1st Cir. 2015) (quoting

Ashcroft v. Iqbal,

(2009)). In ruling on such

a motion, the court accepts as true all well-pleaded facts set

forth in the complaint and draws 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.

3 Airways, Inc.,

(1st Cir. 2009) (internal

quotations omitted).

Background

The following factual summary adopts the approach described

above. The Browns purchased their home in 1999, subject to a

mortgage, which they refinanced in 2004. The Browns remained

current on their mortgage payments until 2014, when medical

expenses and periodic unemployment set them back. In April of

2015, the Browns were three to four months in arrears on their

mortgage payments. In May of that year, Wells Fargo provided

the name of a “dedicated home preservation specialist” to the

Browns.

The Browns telephoned Wells Fargo on June 29, 2015,

requesting that they be considered for a six-month forbearance

in light of Mr. Brown’s unemployment. Though Wells Fargo told

the Browns that a manager would contact them, no manager did.

Having received no response, the Browns again telephoned Wells

Fargo on July 17, 2015. Again, Wells Fargo failed to

acknowledge the Browns’ request. Instead, ten days later, on

July 27, 2015, Wells Fargo commenced foreclosure proceedings.

The Browns again contacted Wells Fargo on July 29 and August 7.

During each of those two calls, a representative informed them

that Wells Fargo required additional information. The Browns

4 faxed the requested information to Wells Fargo on July 30 and

August 13, respectively. On August 19, 2015, despite the

Browns’ many contacts with Wells Fargo, the bank informed the

Browns that “we have not heard from you,” and that there was

insufficient time to review their loss mitigation application

before the scheduled August 26, 2015 foreclosure. According to

the complaint, Wells Fargo never notified the Browns of any

decision on their application.

Despite a request from the Brown’s attorney to delay the

foreclosure in light of the outstanding mitigation application

and the applicable regulations, Wells Fargo foreclosed and sold

the Browns’ home. On October 2, 2015, the Browns received a

notice of eviction. They filed suit in Hillsborough County

Superior Court shortly thereafter. The defendants removed the

case to this court.

Analysis

As mentioned at the outset, the Browns’ complaint recites

four causes of action: (1) a violation of regulations

promulgated under RESPA; (2) a violation of regulations

promulgated under the ECOA; (3) a violation of New Hampshire’s

UDUCPA; and (4) a violation of the duty of good faith and fair

dealing. The Browns seek damages as well as injunctive relief

in the form, effectively, of a rescission of the foreclosure

5 sale. The defendants move to dismiss all counts under Federal

Rule of Civil Procedure 12(b)(6) and also contend that N.H. Rev.

Stat. Ann § 479:25, II precludes the plaintiffs from challenging

the validity of the foreclosure sale after that sale took place.

The court agrees with the defendants that the Browns have

failed to state claims that the defendants have violated the

UDUCPA or the duty of good faith and fair dealing. The court

further agrees with the defendants that N.H. Rev. Stat. Ann

§ 479:25, II precludes the Browns from challenging the validity

of the foreclosure, to the extent that they do so. However, the

Browns have -- if only just barely -- alleged facts that,

construed in their favor, “allow[] the court to draw the

reasonable inference that the defendant is liable” for

violations of RESPA and the ECOA. Martinez v. Petrenko,

. Accordingly, their claims for damages under those

statutes remain.

A. Timeliness of the Browns’ suit

The defendants contend that N.H. Rev. Stat. Ann

§ 479:25, II bars the Browns from challenging the validity of

the foreclosure after the sale took place. It provides:

Notice of the [foreclosure] sale as served on or mailed to the mortgagor shall include the following language:

“You are hereby notified that you have a right to petition the superior court for the county in which the mortgaged premises are situated, with service upon 6 the mortgagee, and upon such bond as the court may require, to enjoin the scheduled foreclosure sale.”

Failure to institute such petition and complete service upon the foreclosing party, or his agent, conducting the sale prior to sale shall thereafter bar any action or right of action of the mortgagor based on the validity of the foreclosure.

N.H. Rev. Stat. Ann § 479:25, II. “Under this section, a

mortgagor, ‘to preserve a challenge to the validity of the

foreclosure sale,’ must file an action to enjoin the foreclosure

prior to the sale.” Calef v. Citibank, N.A.,

(quoting Gordonville Corp. N.V. v. LR1–A Ltd. P’ship,

(2004)). A mortgagor who fails to do so “may not

challenge the foreclosure’s validity ‘based on facts which the

mortgagor knew or should have known soon enough to reasonably

permit the filing of a petition prior to the sale.’”

(quoting Murphy v. Fin. Dev. Corp.,

(1985)).

Because the Browns did not petition to enjoin the foreclosure

sale before it occurred,1 to the extent that any of their claims

1 The Browns argue that no one could have known whether Wells Fargo would actually go forward with the foreclosure until the moment it took place. See Plaintiffs’ Amended Opp. (document no. 13) at 9. While this may be true in an epistemological sense, Wells Fargo did initiate foreclosure proceedings and notified the Browns of its intention to foreclose a month before the foreclosure took place. Accordingly the Browns, who were represented by counsel that communicated with Wells Fargo before the foreclosure, had ample opportunity to seek an injunction against the foreclosure in light of their pending modification request. See Dionne v. Fed. Nat. Mortgage Ass'n,

(post-foreclosure challenge to foreclosure’s validity 7 challenge the foreclosure’s validity and that they seek to have

the sale undone, the Browns are barred from doing so.2

B. Real Estate Settlement Procedures Act (Count 1)

The Browns allege that Wells Fargo violated Regulation X,

, promulgated under RESPA,

et

seq., by commencing foreclosure proceedings and conducting the

foreclosure sale prior to acting on the Browns’ request for a

loan modification. Wells Fargo does not challenge the factual

sufficiency of the claim itself, but rather moves to dismiss

this count on the grounds that (1) the equitable relief that the

Browns seek -- setting aside the foreclosure sale -- is

unavailable under RESPA, and (2) the Browns have not alleged

actual harm resulting from Wells Fargo’s alleged RESPA

violations.

As to equitable relief, Wells Fargo is correct. A

violation of the loss mitigation-related provisions of

untimely under N.H. Rev. Stat. Ann § 479:25 where plaintiffs were notified of right to seek injunction). 2 Attempting to avoid this result, the Browns argue (and stressed at length at oral argument) that the limitation on ex post facto challenges to foreclosure validity under RSA 479:25 is inconsistent with, and therefore preempted by, federal law -- in particular, by the Dodd-Frank Wall Street Reform and Consumer Protection Act,

et seq., and rules promulgated by the Consumer Finance Protection Bureau under its auspices. See Amended Surreply (document no. 19) at 5 n.7. As the Browns offer, and the court could find, no authority supporting this proposition, the court rejects it.

8 Regulation X may be enforced “pursuant to section 6(f) of

RESPA.”

. RESPA permits recovery only for

“any actual damages to the borrower” and a plaintiff’s costs and

fees incurred in a successful action.

(f)(1)-

(3). It does not provide for equitable relief. See Mullinax v.

Radian Guar. Inc.,

(M.D.N.C. 2002).

Accordingly, the Browns are unable to obtain the equitable

relief they request -- invalidation of the foreclosure sale --

under RESPA.

Wells Fargo’s challenge to the sufficiency of the Browns’

damages allegations does not fare so well. Though not

particularly clear, detailed, or precise, the Browns have

alleged facts which, taken in the light most favorable to them,

recite at least some damages, including emotional distress

damages. The Browns further allege a causal relationship

between those damages and Wells Fargo’s alleged RESPA violation.

See Moore v. Mortgage Elec. Registration Sys., Inc.,

(D.N.H. 2012) (emotional distress damages

amount to “actual damages” under RESPA where plaintiffs allege

that they result from the RESPA violation). Accordingly, the

court grants Wells Fargo’s motion to dismiss this count in part,

denying it as to the Browns’ claim for damages under RESPA.

9 C. Equal Credit Opportunity Act (Count 2)

The Browns claim that Wells Fargo violated regulations

promulgated under the Equal Credit Opportunity Act by failing to

provide notice of adverse action taken on the Browns’

application for loan modification. Wells Fargo argues, in

effect, that its compliance with the regulation prevents the

Browns’ recovery on this count. Taken in the light most

favorable to the Browns, the allegations in the complaint

suffice to make out a claim that Wells Fargo failed to comply

with that regulation.

“Originally enacted in 1974 . . . the ECOA was amended in

1976 to require creditors to furnish written notice of the

specific reasons for adverse action taken against a consumer.”

Fischl v. Gen. Motors Acceptance Corp.,

(5th

Cir. 1983) (citing

(d)(2) and (3)). It

provides that “[w]ithin thirty days . . . after receipt of a

completed application for credit, a creditor shall notify the

applicant of its action on the application,”

(d)(1), whatever that action may be. If that action is an

“adverse action,” the borrower is “entitled to a statement of

reasons for such action from the creditor.”

§ 1691(d)(2).

The EOCA defines an “adverse action” as “a denial or revocation

of credit, a change in the terms of an existing credit

arrangement, or a refusal to grant credit in substantially the

10 same amount or on substantially the terms requested,” but

explicitly excludes from that category “a refusal to extend

additional credit under an existing credit arrangement where the

applicant is delinquent or otherwise in default . . . .” Id.

§ 1691(d)(6).

If an application is incomplete and “[i]f additional

information is needed from an applicant,” Regulation B

promulgated under the ECOA requires the creditor, also within 30

days of receiving the application, to “send a written notice to

the applicant specifying the information needed, designating a

reasonable period of time for the applicant to provide the

information, and informing the applicant that failure to provide

the information requested will result in no further

consideration being given to the application.”

(c)(2). The creditor, “[a]t its option . . . may inform

the applicant orally of the need for additional information,”

though if “the application remains incomplete the creditor shall

send” the written notice of incompleteness described above.

§ 1002.9(c)(3).

The Browns contend that Wells Fargo violated Regulation B

by failing to provide (a) written notice that their application

was incomplete or (b) any notice of Wells Fargo’s action taken

on that application. According to the complaint, Mr. Brown made

what was arguably an oral application for loan modification on

11 June 29, 2015.3 It was only when Mr. Brown called Wells Fargo

again on July 29, 2015, barely within that 30-day window, that

Wells Fargo told him that it needed additional information from

him. At oral argument, the Browns conceded that this

notification satisfied the 30-day requirement of

(c).

After submitting the requested information, Mr. Brown

called again on August 7, and was again told to submit

additional information. The Browns submitted all requested

materials by August 13. The Browns allege that Wells Fargo

never notified them, in writing, that their application remained

incomplete or of any action -- adverse or otherwise -- taken on

their application.

Wells Fargo asserts that, instead of informing the Browns

that their application remained incomplete after August 13, it

simply denied the Browns’ forbearance application on August 19.

See Reply (document no. 15) at 5. Because the Browns were

delinquent, Wells Fargo argues, it need not have informed them

of this adverse action. See

(d)(6). But that

section of the ECOA only absolves creditors of giving a

“statement of reasons” for that adverse action; it does not

3 The defendants do not challenge this characterization of the July 29, 2015 phone call, at least for purposes of this motion.

12 absolve Wells Fargo of its duty to “notify the applicant of its

action on the application.”

(d)(1). Here, the

Browns allege that they did not receive any notification that

their loss mitigation request had been denied. Compl. (document

no. 1) ¶ 65. Instead, they allege, Wells Fargo notified them

only that it had “not heard from” them -- despite Mr. Brown’s

several contacts -- and did not have enough time to review the

application. See id. ¶ 46. Wells Fargo then foreclosed.

Accordingly, the court concludes that the Browns have pled

facts sufficient to state a claim that Wells Fargo violated

Regulation B by failing to notify the Browns about the action,

if any, it took in response to their loan modification request,

and denies the defendants’ motion to dismiss this claim.

D. New Hampshire’s UDUCPA (Count 3)

As their third count, the Browns claim that Wells Fargo and

FNMA violated New Hampshire’s UDUCPA, which bars a debt

collector from “collect[ing] or attempt[ing] to collect a debt

in an unfair, deceptive or unreasonable manner as defined in

this chapter.”

-C:2. The Browns

allege that the defendants violated the UDUCPA when they took an

“action which [a] debt collector in the regular course of

business does not take,”

§ 358-C:3, III, by conducting a

foreclosure sale in violation of RESPA and ECOA. The Browns,

13 however, cite that section of the UDUCPA inaccurately.

Section 358-C:3, III prohibits debt collectors from

“[t]hreaten[ing] to take any unlawful action or action which the

debt collector in the regular course of business does not take.”

Id. (emphasis added). The Browns have pled no facts tending to

suggest that the defendants threatened to take any such action.

At best, the Browns allege that the defendants threatened to

foreclose the mortgage -- an action often taken in the regular

course of business after a mortgagor has defaulted on the

mortgage loan. Nor have the Browns alleged that the defendants

undertook any other activity among those prohibited by the

UDUCPA. See

-C:3. The Browns’ UDUCPA

claim must, therefore, be dismissed.4

To the extent that the Browns seek leave to amend their

UDUCPA claim, see Plaintiffs' Amended Opp. (document no. 13) at

13, that request is not properly before the court. It violates

4 The defendants argue that the Browns’ claim fails because the complaint is devoid of facts supporting an allegation that defendants were “debt collectors” and were “collect[ing] or attempting to collect a debt,” as the statute requires, when they foreclosed the Brown’s mortgage. See

-C:2. This court has been and remains “agnostic as to whether a foreclosure itself constitutes debt collection activity for purposes of the FDCPA” and UDUCPA. LeDoux v. JP Morgan Chase, N.A.,

, 22 n.9; Moore v. Mortgage Elec. Registration Sys., Inc.,

, 126 & n.11 (D.N.H. 2012). And it need not profess belief here, as the Browns have not alleged a UDUCPA violation by the defendants for the reasons discussed above.

14 Local Rule 7.1(a)(1), which provides that “[o]bjections to

pending motions and affirmative motions for relief shall not be

combined into one filing,” and must, accordingly, be denied.5

E. The duty of good faith and fair dealing (Count 4)

Finally, the Browns claimed that Wells Fargo violated the

duty of good faith and fair dealing when it refused to stall its

foreclosure to allow the Browns to file for bankruptcy

protection. At oral argument, the Browns agreed to dismiss this

claim voluntarily. Even if they had not, it would not survive

Wells Fargo’s motion.

Under New Hampshire law, “‘the duty of good faith and fair

dealing ordinarily does not come into play in disputes’ where

‘the underlying contract plainly spells out both the rights and

duties of the parties and the consequences that will follow from

a breach of a specified right.’” Rouleau v. US Bank, N.A.,

(quoting Milford–Bennington R. Co., Inc. v. Pan Am

Rys., Inc.,

). Wells Fargo contends, and the

Browns do not dispute, that the mortgage in this case spells out

Wells Fargo’s right to foreclose upon default. The Browns admit

that they were in default, and had been for approximately four

5 Plaintiffs' request for leave to amend to supplement their RESPA claim, see Plaintiffs' Amended Opp. (document no. 13) at 11 n.8, would meet the same fate were it not rendered moot by the court declining to dismiss that claim.

15 months, when they sought the loan modification. Compl. ¶¶ 32,

35. Wells Fargo’s invocation of its right to foreclose in those

circumstances does not engender a breach of the duty of good

faith and fair dealing. Rouleau,

.

Accordingly, Count 4 is dismissed.

Conclusion

For the reasons set forth above, defendants’ motion to

dismiss the complaint6 is GRANTED-IN-PART and DENIED-IN-PART.

The motion is denied as to plaintiffs’ first and second counts

for damages and granted as to plaintiffs’ third count and

plaintiffs’ claim for injunctive relief. Those claims are,

accordingly, dismissed. The plaintiffs’ fourth count,

voluntarily withdrawn at oral argument, is also dismissed.

Absent any objection from the defendants, the plaintiffs’

remaining motions to extend various filing deadlines7 and,

further, to amend their surreply8 after even those extended

filing deadlines, are also GRANTED.9

6 Document no. 6. 7 Document nos. 8 and 11. 8 Document no. 18. 9 Although the court has considered plaintiffs’ supplemental filings in connection with this motion, plaintiffs’ counsel should not assume that tardy supplementations, based only on additional research that should have been completed before the filing deadline, will necessarily be accepted in the future.

16 SO ORDERED.

____________________________ Joseph N. Laplante United States District Judge Dated: June 20, 2016

cc: William C. Sheridan, Esq. Michael R. Stanley, Esq.

17