UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Jason S. Dionne, et al.

v. Civil No. 15-cv-056-LM Opinion No.

Federal National Mortgage Association and JPMorgan Chase Bank, N.A.

O R D E R

Plaintiffs originally filed this mortgage foreclosure

dispute in the New Hampshire Superior Court, Hillsborough

County, Southern District. Defendants Federal National Mortgage

Association (“Fannie Mae”) and JPMorgan Chase Bank, N.A.

(“Chase”) removed the lawsuit to this court and now move to

dismiss it. Plaintiffs object.

The Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), the court

must accept the factual allegations in the complaint as true,

construe reasonable inferences in the plaintiff’s favor, and

“determine whether the factual allegations in the plaintiff’s

complaint set forth a plausible claim upon which relief may be

granted.” Foley v. Wells Fargo Bank, N.A.,

(1st

Cir. 2014) (citations and internal quotation marks omitted). A

claim is facially plausible “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,

(2009). Analyzing

plausibility is “a context-specific task” in which the court

relies on its “judicial experience and common sense.”

.

Background1

Denise Dionne has lived at her home at 40 Tallant Road in

Pelham, New Hampshire (the “property”) since 1977. In 2005,

Denise added her son, Jason Dionne, to the property’s deed. In

2006, Denise, Jason, and Jason’s wife, Kathy Dionne

(collectively, the “Dionnes”), took out a loan, which was

secured by a mortgage on the property. The mortgage states that

Mortgage Electronic Registration Systems, Inc. (“MERS”) is the

mortgagee as nominee for the lender, Domestic Bank.

MERS assigned the mortgage and note to Washington Mutual

Bank (“Mutual Bank”) in 2008. Chase obtained the mortgage and

note when it acquired Mutual Bank later in 2008. In 2010, Chase

assigned the mortgage to Fannie Mae. Chase also acted as the

loan servicer at all times relevant to this case. The Dionnes

allege that they were in default on their obligations under the

The facts are summarized from the Dionnes’ amended 1

complaint (doc. no. 21), and the exhibits attached thereto. See Trans-Spec Truck Serv. v. Caterpillar, Inc.,

(1st Cir. 2008).

2 note when Mutual Bank and Chase obtained the loan, and when

Chase began servicing the loan.

In 2010, the Dionnes’ loan was modified after they fell

behind on their loan payments. Sometime after the 2010 loan

modification, the Dionnes again fell behind on their modified

loan payment obligations.

In August 2014, Chase sent the Dionnes2 a letter informing

them that “the foreclosure sale date has been rescheduled” for

October 1, 2014.3 Doc. no. 21-2 at 1. Chase did not serve or

deliver the letter via registered or certified mail. The letter

did not inform the Dionnes of their right to petition the New

Hampshire Superior Court to enjoin the sale.

After receiving the letter informing them of the

rescheduled foreclosure date, the Dionnes completed a loss

mitigation application (which they downloaded from Chase’s

website) seeking a modification of their loan. Kathy faxed the

application to Chase on August 25, 2014.4

2 The various communications from Chase are addressed to either Denise or both Denise and Jason. For simplicity, the court will refer to the recipients of the communications as “the Dionnes.”

3 The amended complaint does not contain any allegations that the Dionnes had been notified of a foreclosure sale prior to August 2014.

4 Denise authorized Kathy to communicate with Chase on her behalf. Doc. no. 21 at ¶ 36.

3 Chase acknowledged receiving the Dionnes’ application in a

letter dated August 27, 2014. See doc. no. 21-3. The letter

requested additional documents and stated that Chase would make

a determination of eligibility within 30 days of receiving the

additional documents. Kathy contacted Chase and determined that

the missing documents were pay stubs and a proof of benefits

statement. Soon thereafter, Kathy sent the additional documents

to Chase.

On October 2, 2014, Chase sent the Dionnes a “Notice of

Intent to Foreclose,” which stated that Chase may accelerate the

loan and commence foreclosure proceedings if they failed to cure

the default.5 See doc. no. 21-4. On October 3, 2014, Chase sent

the Dionnes a second letter acknowledging receipt of their loss

mitigation application. See doc. no. 21-5. Like the August 27

letter, the October 3 letter stated that the application was

incomplete. The Dionnes allege, however, that “the letter

further includes a ‘document status’ which stated that nothing

was needed from the Dionnes at that time.” Doc. no. 21 at ¶ 39.

On October 7, 2014, the Dionnes received two letters from

Chase. The first, like the October 3 letter, stated that the

Dionnes’ loss mitigation application was incomplete. See doc.

no. 21-6. The Dionnes allege that the first letter again

5 It is unclear as to why the foreclosure sale did not take place as scheduled on October 1, 2014.

4 indicated in the “document status” section that nothing was

needed from them. The letter stated that Chase needed to

receive a completed application by November 6, 2014, and that it

would contact the Dionnes within 30 days of receiving the

missing documents.

In the second October 7, 2014 letter, Chase again stated

that the loss mitigation application was incomplete. See doc.

no. 21-7. The “document status” section of the second letter

stated that pay stubs and a benefits statement or letter were

received, but that both were incomplete or not legible. Id. at

5. The letter requested another copy of those documents. The

letter also listed the November 6, 2014 deadline, and stated

that Chase would contact the Dionnes within 30 days of receiving

the missing documents.

Kathy called Chase shortly after receiving the October 7

letters. Chase informed her that she needed to provide

statements showing she received “SSDI deposits” into her account

and a printout for deposits and purchases made with her food

stamp card. Kathy faxed those documents to Chase on October 17,

2014. The Dionnes allege that as of that date (October 17),

their loss mitigation application was complete.

Chase, however, sent the Dionnes two additional letters

stating that their loss mitigation application was incomplete.

Chase sent such letters on October 18 and 21, 2014. See doc.

5 nos. 21-9 and 21-10. Both letters stated that pay stubs and a

benefits statement or letter were received, but that both were

incomplete or not legible. Both letters listed the November 6,

2014 deadline, and stated that Chase would contact the Dionnes

within 30 days of receiving the missing documents. Frustrated

that Chase kept claiming that the documents were illegible,

Kathy faxed the documents to herself and confirmed that the

faxed copies of the documents were legible.

Kathy contacted Chase regarding the supposedly illegible

documents. Chase told Kathy to send pay stubs for the

August/September period, so that it could make a determination

on the Dionnes’ application as of the time it was originally

submitted.

On November 5, 2014, the Dionnes sent Chase paper copies

via overnight mail of the August/September pay stubs Chase had

requested. In a letter dated November 8, 2014, Chase again

notified the Dionnes that their application was not complete.

See doc. no. 21-12. The letter stated that Chase had not

received a completed application by the November 6, 2014

deadline, but that it may still be able to review the Dionnes’

request for assistance if they were to send Chase the missing

information immediately. Despite stating that the request was

incomplete, the “document status” section of the letter listed

several required documents, and stated for each that “[t]here is

6 nothing needed from you at this time for this document.” Doc.

no. 21-12 at 4-5.

On November 18, 2014, Harmon Law Office (“Harmon”) sent a

letter to the Dionnes on behalf of Chase and Fannie Mae. Harmon

notified the Dionnes that their loan “had been accelerated and

failure to reinstate would result in foreclosure.” Doc. no. 21

at ¶ 55. The letter further stated that “this office is

attempting to collect a debt and that any information obtained

will be used for that purpose.” Id. The letter did not notify

the Dionnes of their right to petition the court to enjoin the

foreclosure.

On November 19, 2014, Chase sent the Dionnes another letter

stating that their loss mitigation application was incomplete.

See doc. no. 21-15. As with the November 8 letter, the November

19 letter stated that Chase had not received a completed

application by the November 6, 2014 deadline, but that it may

still be able to review the Dionnes’ request for assistance if

they were to send Chase the missing information immediately.

Unlike the November 8 letter, however, the “document status”

section of the November 19 letter listed the pay stubs as

incomplete or not legible, and requested that the Dionnes send

Chase another copy. See id. at 8.

In a letter dated November 23, 2014, Chase notified the

Dionnes that a foreclosure sale had been rescheduled for January

7 12, 2015. See doc. no. 21-17. Chase did not serve or deliver

the letter via registered or certified mail. The letter did not

inform the Dionnes of their right to petition the court to

enjoin the foreclosure sale.6

On December 11, 2014, Harmon delivered a foreclosure notice

to the Dionnes on behalf of Chase and Fannie Mae. See doc. no.

21-18. The notice informed the Dionnes that a foreclosure sale

was scheduled for January 12, 2015, at 1:00 p.m., and that they

had the right to petition the court to enjoin the foreclosure

sale. This notice was the first time the Dionnes were notified

of their right to petition the court to enjoin the foreclosure

sale.

On January 7, 2015, Kathy called Chase and spoke with Kathy

Goulden (“Goulden”), a Chase representative. Goulden told Kathy

that Chase had not made a decision on the loss mitigation

application, that she could not “confirm all options to avoid

foreclosure had been exhausted,” and that she would request that

the foreclosure sale be stopped. Doc. no. 21 at ¶ 66. Goulden

also asked Kathy to send her copies of the August/September pay

6 The amended complaint alleges that Chase sent two letters, dated November 23 and November 24, 2014, rescheduling the foreclosure sale and states that both are attached to the amended complaint as exhibit 17. However, the Dionnes attached to the amended complaint only an incomplete copy of the November 23 letter, and did not attach a copy of the November 24 letter. See doc. no. 21-17.

8 stubs, the same documents Kathy had sent to Chase via overnight

mail on November 5, 2014.

On January 9, 2015, Kathy spoke with a Chase

representative, who informed her that the August/September pay

stubs, as well other documents included with the Dionnes’ loss

mitigation application, were “stale” because they were over 90

days old. That same day, Kathy faxed another completed loss

mitigation application to Chase. See doc. no. 21-19.

On January 10, 2015, Kathy spoke with a Chase

representative who informed her that the Dionnes’ loss

mitigation application was complete. The Dionnes also received

a letter from Chase dated that same day, which stated that Chase

had not received a completed application by the November 6, 2014

deadline, but that it may still be able to review the Dionnes’

request for assistance if they were to send Chase the missing

information immediately. See doc. no. 21-20. Despite stating

that the request was incomplete, the “document status” section

of the letter listed several required documents, and stated for

each that “[t]here is nothing needed from you at this time for

this document.” Id. at 4-5.

The Dionnes do not allege that they heard anything further

from Chase about Goulden’s statement that she would make a

request to stop the foreclosure. In a letter from Chase dated

June 10, 2015 (doc. no. 21-20 at 1) Chase wrote in bold letters:

9 Your request for mortgage assistance doesn’t stop the foreclosure process or sale. Do not ignore any notices.

Despite being aware that “they could submit a petition on

their own with the court to stop the foreclosure because Chase

had not provided them with an answer on the loss mitigation

application,” (doc. no. 21 at ¶ 73), the Dionnes did not file a

petition to enjoin the foreclosure sale scheduled for January

12, 2015. On January 12, an auctioneer appeared at the property

to conduct the foreclosure sale. Kathy called Chase, Fannie

Mae, and Harmon, but each told Kathy that they could not stop

the foreclosure sale. The foreclosure sale took place as

scheduled, and Fannie Mae purchased the property at the sale.

Discussion

Denise and Jason Dionne filed this action in state court

seeking an order voiding the foreclosure. Defendants removed

the action to this court and filed a motion to dismiss (doc. no.

5). In an order dated June 16, 2015, the court denied

defendants’ motion. The Dionnes then amended their complaint

(doc. no. 21), adding Kathy as a plaintiff and asserting eight

counts against defendants: three against both Chase and Fannie

Mae (Counts II, IV, and VII); three against only Chase (Counts

I, III, and V); and two against only Fannie Mae (Counts VI and

VIII). Defendants move to dismiss the amended complaint in its

10 entirety (doc. no. 23). The Dionnes object (doc. no. 24). The

court addresses each count separately below.

I. Count I: Real Estate Settlement Procedures Act

In Count I of their amended complaint, the Dionnes allege

that Chase violated Regulation X of the Real Estate Settlement

and Procedures Act (“RESPA”),

, by (1)

conducting a foreclosure sale prior to acting on their complete

loss mitigation application and (2) failing to act with

reasonable diligence by repeatedly asking them for documents

that they had already submitted to Chase.7

A. Conducting the Foreclosure

In relevant part, RESPA provides that

[i]f a servicer receives a complete loss mitigation application more than 37 days before a foreclosure sale, then, within 30 days of receiving a borrower’s complete loss mitigation application, a servicer shall: (i) [e]valuate the borrower for all loss mitigation options available to the borrower; and (ii) [p]rovide the borrower with a notice in writing stating the servicer’s determination . . . .

(c). RESPA further provides that “[i]f a

borrower submits a complete loss mitigation application after a

servicer has made the first notice or filing required by

7 The amended complaint alleges five separate violations of RESPA, which fall into the two categories of conduct listed above.

11 applicable law for any . . . foreclosure process but more than

37 days before a foreclosure sale, a servicer shall not . . .

conduct a foreclosure sale . . . .”

§ 1024.41(g).

Defendants advance two arguments in support of dismissing

the Dionnes’ RESPA claim based on the foreclosure sale. First,

they argue that the Dionnes did not submit a complete loss

mitigation application more than 37 days before the foreclosure

sale. This argument is unavailing.

RESPA provides that “[a] complete loss mitigation

application means an application in connection with which a

servicer has received all the information that the servicer

requires from a borrower in evaluating applications for the loss

mitigation options available to the borrower.” § 1024.41(b)(1).

The Dionnes allege that they provided all of the information

that Chase requested, often providing documents multiple times

as Chase could not locate items they had previously submitted.

The Dionnes also allege that the application was complete on or

before October 17, 2014, more than the required 37 days before

the scheduled foreclosure. Doc. no. 21 at ¶ 44. These

allegations are sufficient to support a claim that the Dionnes

submitted a complete loss mitigation application more than 37

days prior to the foreclosure sale.

Defendants’ second argument is that the timing of events

precludes relief as to a RESPA claim based on the foreclosure

12 sale. They assert that the notices of foreclosure the Dionnes

received in August and December of 2014 were not the “first”

such notices. In support, defendants attach as an exhibit to

their motion to dismiss a notice of foreclosure from Harmon to

Denise dated May 2, 2012. See doc. no. 23-6. Defendants argue

that this notice precludes any relief under RESPA for a claim

arising out of the foreclosure sale.

Even if the court could consider the May 2, 2012 notice for

purposes of the motion to dismiss, that notice is not

dispositive of the Dionnes’ RESPA claim based on the

foreclosure. The Dionnes pled violations of

(f)(2) and § 1024.41(g) in the alternative. Section

1024.41(f)(2) prohibits a loan servicer from foreclosing under

certain circumstances if the borrower submits a complete loss

mitigation application before the servicer has made “the first

notice or filing required by applicable law” for a non-judicial

foreclosure. Section 1024.41(g) prohibits a servicer from

foreclosing under certain circumstances if a borrower has

submitted a complete loss mitigation application after “the

servicer has made the first notice of filing required by law.”

Thus, even if defendants had shown that the 2012 notice was the

first foreclosure notice, which would preclude relief under

13 § 1024.41(f)(2), that would not be dispositive of the Dionnes’

claim based on defendants’ alleged violation of § 1024.41(g).8

The amended complaint plausibly alleges that the Dionnes

timely submitted a complete loss mitigation application, and

that Chase violated RESPA by conducting a foreclosure sale prior

to acting on the application. Therefore, defendants are not

entitled to dismissal of the Dionnes’ RESPA claim based on the

foreclosure.

B. Reasonable Diligence

Although defendants urge dismissal of Count I in its

entirety, they do not address the Dionnes’ RESPA claim based on

Chase’s failure to exercise reasonable diligence. RESPA

provides that a “servicer shall exercise reasonable diligence in

obtaining documents and information to complete a loss

mitigation application.”

(b)(1). The

Dionnes allege that Chase violated this regulation by repeatedly

requesting documents they had already submitted multiple times,

and by requesting documents even when it had previously told the

8 To the extent defendants intended to argue that the 2012 notice is also dispositive of the Dionnes’ claim based on § 1024.41(g), that argument is not sufficiently developed. Defendants cite no legal authority to support the contention that if a lender issues a second foreclosure notice prior to receiving a loss mitigation application, a borrower is precluded from asserting his rights under § 1024.41(g).

14 Dionnes that it did not need anything further from them.

Further, Chase claimed certain faxed documents were illegible,

but the Dionnes verified that faxed copies of those documents

were legible. These allegations set forth a plausible claim

that Chase did not exercise reasonable diligence in obtaining

documents and information to complete the Dionnes’ loss

mitigation application.

Accordingly, defendants’ motion to dismiss is denied as to

Count I.

II. Count II: Equal Credit Opportunity Act (“ECOA”)

In Count II, the Dionnes allege two violations of the ECOA,

. They allege that Chase and Fannie Mae failed

to notify the Dionnes of action on their loss mitigation

application within thirty days of receiving the application in

violation of § 1691(d)(1). They also allege that Chase and

Fannie Mae failed to provide written notification denying their

loss mitigation application as required by § 1691(d)(2).

Defendants move to dismiss the ECOA claim arguing first that the

Dionnes failed to allege an “adverse action” as required to

state a claim under § 1691(d), and second, that the Dionnes

cannot state an ECOA claim because defendants satisfied their

ECOA obligations by notifying the Dionnes that their application

was incomplete.

15 A. Section 1691(d)(1)

Defendants first contend that the conduct complained of in

the amended complaint, denying the Dionnes’ loss mitigation

application after they were in default of their loan, is not an

“adverse action” under § 1691(d)(1). The court agrees that this

conduct does not meet the definition of an “adverse action.”

The ECOA specifically excludes from the definition of an adverse

action the “refusal to extend additional credit under an

existing credit arrangement where the applicant is delinquent or

otherwise in default, or where such additional credit would

exceed a previously established credit limit.” § 1691(d)(6).

The lack of an adverse action, however, does not entitle

defendants to dismissal of the Dionnes’ § 1691(d)(1) claim.

Section 1691(d)(1) provides as follows:

(d) Reason for adverse action; procedure applicable; “adverse action” defined

(1) Within thirty days (or such longer reasonable time as specified in regulations of the Bureau for any class of credit transaction) after receipt of a completed application for credit, a creditor shall notify the applicant of its action on the application.

(d)(1). The plain language of § 1691(d)(1) does

not require an adverse action; rather, it requires a creditor to

notify the applicant within 30 days of “its action” on “a

16 completed application for credit . . . .”9 “Under Section 1691,

an ‘adverse action’ triggers a creditor’s obligation to provide

a statement of reasons [under § 1691(d)(2)], not its obligation

to provide a determination within thirty days [under §

1691(d)(1)], which is triggered by the completion of the

application for credit.” Green v. Cent. Mortg. Co., No. 3:14-

CV-04281-LB,

(N.D. Cal. Dec. 1, 2015)

(quoting MacDonald v. Wells Fargo Bank, N.A., No. 14–cv–04970–

HSG,

, at *3 (N.D. Cal. Apr. 24, 2015)).

Here, the Dionnes allege that Chase failed to notify them

of action taken on their completed loss mitigation application

within 30 days of Chase’s receipt of it. These allegations are

sufficient to survive defendants’ motion to dismiss the §

1691(d)(1) claim.

Defendants next argue that even if the ECOA required them

to “take action” on the Dionnes’ application within 30 days,

they complied with that deadline by notifying the Dionnes that

their application was incomplete. This argument misses the

mark. The notification required under § 1691(d)(1) concerns

notice of action taken on a completed application.

9 In addition to taking “adverse action” on a completed application, a creditor could also approve or offer a counteroffer to the application. See

(a)(1)(i).

17 The Dionnes concede that Chase notified them that their

application was incomplete at various times in August and

October 2014. They allege, however, that they supplied the

requested information and that on October 17, 2014, their loss

mitigation application was complete. Doc. no. 21 at ¶ 44. They

also allege that as of January 12, 2015, when defendants

foreclosed on their home, defendants had not notified them of

any action defendants had taken on their completed loss

mitigation application. Id. at ¶¶ 63, 76-77. These facts are

sufficient to state a claim that defendants violated §

1691(d)(1).10

B. Section 1691(d)(2)

Section 1691(d)(2) provides:

(d) Reason for adverse action; procedure applicable; “adverse action” defined

. . . .

10The regulations implementing § 1691(d) contain a separate section entitled “Incomplete Applications” that deals with notice regarding incomplete applications. See

(c). That regulation further supports the viability of the Dionnes’ § 1691(d)(1) claim. It states that “[i]f the applicant supplies the requested information within the designated time period,” the creditor “shall take action on the application” and provide notice of such action within 30 days.

(c)(2).

18 (2) Each applicant against whom adverse action is taken shall be entitled to a statement of reasons for such action from the creditor . . . .

§ 1691(d)(2).

As discussed above, the ECOA specifically excludes from the

definition of an “adverse action” the refusal to grant a loss

mitigation application to a borrower who, like the Dionnes, is

in default. See § 1691(d)(6). Because denying a loss

mitigation application to a borrower who is in default is not an

“adverse action” under the ECOA, the Dionnes cannot assert a

claim under § 1691(d)(2).

Accordingly, defendants’ motion is granted to the extent it

seeks dismissal of the Dionnes’ ECOA claim based on a violation

of § 1691(d)(2). The motion is denied to the extent it seeks

dismissal of the claim based on § 1691(d)(1).

III. Count III: Fair Debt Collection Practices Act (“FDCPA”)

In Count III, the Dionnes allege that Chase violated the

FDCPA,

et. seq., by threatening to foreclose,

and then foreclosing, on the property when Chase did not have a

right to possess the property. See 15 U.S.C. § 1692f(6)(A). To

state a claim under the FDCPA, plaintiffs must allege that:

(1) they have been the object of collection activity arising from a consumer debt; (2) the defendant attempting to collect the debt qualifies as a “debt collector” under the Act; and (3) the defendant has engaged in a prohibited act or has failed to perform a requirement imposed by the FDCPA.

19 LaCourse v. Ocwen Loan Servicing, LLC, No. 14-cv-013-LM,

, at *9 (D.N.H. Apr. 7, 2015) (citing Moore v. Mortg.

Elec. Registration Sys., Inc.,

(D.N.H.

2012)). Defendants move to dismiss the Dionnes’ FDCPA claim,

arguing that the Dionnes have failed to allege facts that

satisfy any of the three elements of an FDCPA claim.

A. Collection Activity

Defendants argue that the Dionnes have not sufficiently

alleged the first element because Chase was not engaged in

collection activity, but was instead prosecuting a foreclosure

against the Dionnes. Defendants correctly note that the

majority of courts that have addressed the issue have held that

foreclosing on a mortgage is not debt collection activity for

purposes of the FDCPA. See, e.g., Beadle v. Haughey, No. Civ.

04-272-SM,

, at *3 (D.N.H. Feb. 9, 2005).

However, “the case law is not uniform on this point.” Moore,

n.11 (collecting cases).

In addition, the Dionnes’ FDCPA claim is based on

§ 1692f(6)(A), which prohibits “[t]aking or threatening to take

any nonjudicial action to effect dispossession or disablement of

property if there is no present right to possession of the

property . . . .” Courts uniformly recognize that even if

foreclosing on a mortgage is not debt collection activity as a

20 general matter for purposes of the FDCPA, it is debt collection

activity for purposes of § 1692f(6). See Beadle,

, at *3 (noting that “foreclosure has been held to be debt

collection” in certain circumstances, such as in claims brought

pursuant to § 1692f(6)); see also Brown v. SunTrust Bank, No.

2:14-CV-0014-RWS-JSA,

, at *16 (N.D. Ga. Sept.

30, 2014) (“[T]he actions taken by STB in this case in

foreclosing on the Property would generally not be considered

‘debt collection activity’ under the FDCPA, except for a claim

brought under § 1692f(6).”); Jara v. Aurora Loan Servs., LLC,

No. C 11-00419 LB,

, at *5 (N.D. Cal. Dec. 14,

2011) (“[W]hile a non-judicial foreclosure action generally does

not constitute a ‘debt collection activity’ under the FDCPA, an

exception to this rule exist[s] for claims under 15 U.S.C. §

1692f(6).”) (internal quotation marks and citation omitted).

Therefore, the amended complaint adequately alleges that Chase

was engaged in debt collection activity for purposes of §

1692f(6).

B. Debt Collector

Defendants argue that Chase is not a “debt collector” under

the FDCPA because the Dionnes were not in default on their loan

when Chase was assigned the loan or took over as the loan

servicer. See, e.g., Crepeau v. JP Morgan Chase Bank, N.A., No.

21 11-cv-125-JL,

, at *5 (D.N.H. Dec. 5, 2011)

(“term ‘debt collector’ does not include consumer’s creditors, a

mortgage servicing company, or an assignee of a debt, as long as

the debt was not in default at the time it was assigned”)

(internal quotation marks and citation omitted). The Dionnes’

amended complaint, however, alleges that their “loan was in

default at the time . . . Chase obtained the loan, and/or when

Chase took on the servicing of the [] loan.” Doc. no. 21 at ¶

12. These allegations are sufficient at this stage to allege

that Chase was a debt collector under the FDCPA.

C. Prohibited Act

Finally, defendants argue that the Dionnes have failed to

allege that Chase engaged in a prohibited act under the FDCPA.

The FDCPA prohibits a debt collector from “[t]aking or

threatening to take any nonjudicial action to effect

dispossession or disablement of property if there is no present

right to possession of the property claimed as collateral

through an enforceable security interest.” 15 U.S.C. § 1692f

(6)(A). As explained above, the Dionnes have stated a plausible

claim that RESPA prohibited Chase from foreclosing on the

property before notifying them of action taken on their loss

mitigation application. At this stage of the litigation, this

allegation is sufficient to satisfy the “prohibited act” element

22 of the FDCPA.11 As such, the Dionnes have alleged a viable claim

against Chase for violating § 1692f(6).

Accordingly, defendants’ motion to dismiss is denied as to

Count III.

IV. Count IV: Unfair Deceptive, or Unreasonable Collection Practices Act (“UDUCPA”)

In Count IV, the Dionnes allege that Chase and Fannie Mae

violated New Hampshire’s UDUCPA, N.H. Rev. Stat. Ann. (“RSA”)

§ 358-C, by threatening to foreclose on the property when they

did not have a right to possess the property.

The UDUCPA “is the ‘state-law analog’ to the federal

FDCPA.” LaCourse,

, at *12 (internal quotation

marks and citation omitted). Similar to a claim under the

FDCPA, in order to recover under the UDUCPA, a plaintiff must

show that 1) the plaintiff has “been the object of collection

activity arising from a consumer debt”; 2) the defendant is a

debt collector as defined by the UDUCPA; and 3) “the defendant

has engaged in a prohibited act or has failed to perform a

Defendants do not address whether the RESPA violations 11

the Dionnes allege are sufficient to deprive them of a “right to possession of the property” under § 1692f(6)(A). The court assumes without deciding that the alleged RESPA violations are sufficient to show that defendants had no right to possess the property. To the extent defendants contend otherwise, they may raise that argument in a properly supported motion for summary judgment.

23 requirement imposed by the” UDUCPA. Pruden v. CitiMortgage,

Inc., No. 12–cv–452–LM,

, at *8 (D.N.H. May 23,

2014) (internal quotation marks and citations omitted). “Given

the dearth of case law on the UDUCPA, FDCPA cases are useful in

interpreting the UDUCPA because the FDCPA contains provisions

similar to the UDUCPA.” LaCourse,

, at *12

(internal citations, quotation marks, and alteration omitted).

Defendants argue that the amended complaint fails to allege a

plausible UDUCPA claim against them because the Dionnes do not

sufficiently allege that defendants are debt collectors or that

they engaged in a prohibited act.

With respect to the “debt collector” element, the Dionnes

base their claim on actions taken by Harmon as agent for Fannie

Mae and Chase. Relying on case law interpreting the FDCPA,

defendants argue that the UDUCPA does not allow for vicarious

liability of a principal for actions of an agent. However,

[w]hen courts have ruled that creditors are not vicariously liable under the FDCPA for the conduct of their debt collectors, they typically base those rulings on an understanding that the FDCPA limits liability to debt collectors. But, the FDCPA and the UDUCPA define the term “debt collector” differently, and the UDUCPA definition is substantially broader.

Doucette v. GE Capital Retail Bank, No. 14-cv-012-LM,

, at *3 (D.N.H. Sept. 15, 2014) (internal citations

omitted). Under the UDUCPA, a debt collector is “[a]ny person

who by any direct or indirect action, conduct or practice

24 enforces or attempts to enforce an obligation that is owed or

due, or alleged to be owed or due, by a consumer as a result of

a consumer credit transaction.” RSA 358–C:1, VIII(a) (emphasis

added). “As a result, a creditor that is not a debt collector

for purposes of the FDCPA could qualify as a debt collector

under the UDUCPA . . . .” Doucette,

, at *3.

Thus, even if Fannie Mae and Chase are not themselves debt

collectors under the FDCPA, they may be vicariously liable for

Harmon’s actions on their behalf under the UDUCPA.

Defendants next argue that the Dionnes have not alleged

that defendants engaged in a prohibited act under the UDUCPA.

The Dionnes’ UDUCPA claim is based on RSA 358-C:3, III, which

prohibits a debt collector from “[t]hreaten[ing] to take any

unlawful action or action which the debt collector in the

regular course of business does not take.” The Dionnes allege

that Harmon threatened to bring a foreclosure action on behalf

of Fannie Mae and Chase for failure to pay an amount due,

despite Fannie Mae’s and Chase’s lack of authority to

foreclose.12 See doc. nos. 21-14 and 21-18. Construing all

12As discussed above, the Dionnes have alleged sufficient facts to state a plausible claim that RESPA prohibited Chase and Fannie Mae from foreclosing on their property. See supra Part I. Although the Dionnes bring their RESPA claim against only Chase, they allege that Chase acted as an agent of Fannie Mae. Doc. no. 21 at ¶ 6. Therefore, the Dionnes have alleged that Fannie Mae did not have a lawful right to foreclose on the property for purposes of the UDUCPA.

25 reasonable inferences in the Dionnes’ favor, defendants

threatened to foreclose on the property despite not having a

lawful right to do so. These allegations are sufficient to

satisfy the third element of the UDUCPA. Therefore, the Dionnes

have plausibly alleged a claim against Chase and Fannie Mae

under the UDUCPA.

Accordingly, defendants’ motion to dismiss is denied as to

Count IV.

V. Count V: Consumer Protection Act

In Count V, the Dionnes allege that Fannie Mae violated the

New Hampshire Consumer Protection Act (“CPA”), RSA 358-A, by

engaging in unfair conduct during the course of the Dionnes’

efforts to complete their loss mitigation application and in

Fannie Mae’s efforts to foreclose on the property. Defendants

argue that they are entitled to dismissal of the Dionnes’ CPA

claim because Fannie Mae is exempt from liability under the CPA.

Section 358–A:3, I provides that “[t]rade or commerce that

is subject to the jurisdiction of . . . federal banking or

securities regulators who possess the authority to regulate

unfair or deceptive trade practices” is exempt from the

provisions of the CPA. “[F]or regulation to fall within the

purview of RSA 358–A:3, I, it ha[s] to be comprehensive and

ha[s] to protect consumers from the same fraud and unfair

26 practices as the CPA.” Rainville v. Lakes Region Water Co.,

(2012) (citing Averill v. Cox,

, 332-

33 (2000)). “The burden of proving exemptions from the

provisions of [the CPA] by reason of paragraph[ ] I . . . of

this section shall be upon the person claiming the exemption.”

RSA 358–A:3, V.

Defendants argue that Fannie Mae is subject to the

jurisdiction of the Federal Housing Finance Agency (“FHFA”), and

that the regulations codified under

,

grant the FHFA the authority to regulate unfair or deceptive

trade practices. The Dionnes agree that Fannie Mae is regulated

by the FHFA, but they contend that the FHFA does not have the

authority to regulate the type of conduct subject to the CPA.

12 C.F.R. 1200.1(a), titled “Scope and authority,”

describes the FHFA as follows:

FHFA is responsible for the supervision and regulation of the Federal National Mortgage Corporation (Fannie Mae). . . . FHFA is charged with ensuring that the regulated entities: Operate in a safe and sound manner, including maintaining adequate capital and internal controls; foster liquid, efficient, competitive, and resilient national housing finance markets; comply with the Safety and Soundness Act and their respective authorizing statutes, and rules, regulations and orders issued under the Safety and Soundness Act and the authorizing statutes; and carry out their respective statutory missions through activities and operations that are authorized and consistent with the Safety and Soundness Act, their respective authorizing statutes, and the public interest.

27 Other than a reference to carrying out its oversight authority

in “the public interest,” this regulation does not contain any

reference to the FHFA’s authority to protect consumers from its

regulated entities’ deceptive or unfair practices. Further, the

regulations as a whole, see

, contain no

grant of power “to protect consumers from the same fraud and

unfair practices as the CPA.” Rainville,

.

Defendants point to

as an example of a

regulation that grants the FHFA the authority to regulate Fannie

Mae for unfair or deceptive practices. That regulation requires

each regulated entity to report to FHFA upon discovery that it has purchased or sold a fraudulent loan or financial instrument, or suspects a possible fraud relating to the purchase or sale of any loan or financial instrument. In addition, each regulated entity must establish and maintain internal controls, policies, procedures, and operational training to discover such transactions.

As the Dionnes correctly point out, this regulation

authorizes the FHFA to monitor fraudulent transactions entered

into by Fannie Mae. It does not authorize the FHFA to protect

consumers from deception, fraud, and unfair trade practices

committed by Fannie Mae. Defendants cite no case law supporting

their argument that the FHFA’s regulatory authority exempts them

from the Dionnes’ CPA claim, and the court has been unable to

locate any. Defendants have failed to carry their burden to

28 show that the exemption set forth in RSA 358-A:3, I, applies to

this case.

Accordingly, defendants’ motion to dismiss Count V is denied.

VI. Count VI: Breach of the Implied Covenant of Good Faith and Fair Dealing

In Count VI, the Dionnes allege that Fannie Mae violated

the implied covenant of good faith and fair dealing in the

mortgage agreement because of its mishandling of and failure to

consider their loss mitigation application and the foreclosure

sale that followed. Defendants move to dismiss the Dionnes’

claim, arguing that failure to consider a loss mitigation

application before foreclosing on a property does not violate

the covenant of good faith and fair dealing in the mortgage

agreement.

In New Hampshire, every agreement includes “an implied

covenant that the parties will act in good faith and fairly with

one another.” Birch Broad., Inc. v. Capitol Broad. Corp.,

(2010) (citing Livingston v. 18 Mile Point Drive,

Ltd.,

(2009)). The New Hampshire Supreme

Court has observed that:

[T]here is not merely one rule of implied good-faith duty, but a series of doctrines, each of which serves a different function. The various implied good-faith obligations fall into three general categories: (1) contract formation; (2) termination of at-will employment agreements; and (3) limitation of discretion in contractual performance.

29

(citations omitted). Like many similarly situated

plaintiffs, the Dionnes understand their claim to fall within

the third category of cases described in Birch, which involves

limits on the discretion a party may exercise when performing

its contractual obligations. See Rouleau v. U.S. Bank, N.A.,

No. 14–cv–568–JL,

, at *3 (D.N.H. Apr. 17, 2015);

see also Moore,

. The function of that

category “is to prohibit behavior inconsistent with the parties’

agreed-upon common purpose and justified expectations as well as

‘with common standards of decency, fairness and reasonable-

ness.’” Birch,

(quoting Livingston,

).

Here, the mortgage expressly provides that, in the event

the Dionnes default on the mortgage, the lender may exercise the

statutory power of sale. Doc. no. 21-1 at ¶ 22. Thus, Fannie

Mae’s exercise of that right is consistent with the parties’

“agreed-upon common purpose and justified expectations . . . .”

Birch,

. As such, Fannie Mae’s foreclosure in

accordance with the terms of the mortgage cannot serve as the

basis for a claim for breach of the implied covenant of good

faith and fair dealing. See Rouleau,

, at *5;

see also Moore,

.

30 In addition, to the extent the Dionnes base their claim on

Fannie Mae’s failure, through Chase, to properly consider or

handle the Dionnes’ loss mitigation application, that claim is

without merit. “[T]he covenant of good faith and fair dealing

in a loan agreement cannot be used to require the lender to

modify or restructure the loan.” Moore,

;

see also Douglas v. U.S. Bank Nat’l Assoc., No. 13-cv-101-LM,

, at *5 (D.N.H. May 6, 2013) (implied covenant of

good faith and fair dealing does not require lender to consider

or grant a loan modification application).

Accordingly, Count VI is dismissed.

VII. Count VII: “Fraud-Misrepresentation”

In Count VII, the Dionnes allege that Chase and Fannie Mae

made fraudulent statements when (1) they repeatedly informed the

Dionnes that their loss mitigation application was incomplete;

and (2) Goulden told Kathy that she would request that the

foreclosure sale be canceled. Defendants move to dismiss Count

VII arguing, among other things, that the Dionnes’ fraud claim

is barred by the economic loss doctrine.

“The economic loss doctrine is a judicially-created

remedies principle that operates generally to preclude

contracting parties from pursuing tort recovery for purely

economic or commercial losses associated with the contract

31 relationship.” Wyle v. Lees,

(2011) (internal

quotation marks and citation omitted). “[T]he rule precludes a

harmed contracting party from recovering in tort unless he is

owed an independent duty of care outside the terms of the

contract.”

In other words, “representations made during

the course of the contract’s performance and related to the

subject matter of the contract . . . are so bound up in ‘the

performance of the contract’ as to be barred by the economic

loss doctrine.” Schaefer v. Indymac Mortg. Servs.,

(1st Cir. 2013).

Where the existence of such an additional duty is claimed, “[t]he burden is on the borrower seeking to impose liability, to prove the lender’s voluntary assumption of activities beyond those traditionally associated with the normal role of a money lender.”

Schaefer v. IndyMac Mortg. Servs., No. 12-cv-159-JD,

, at *3 (D.N.H. Oct. 16, 2012) (quoting Seymour v. N.H.

Sav. Bank,

(1989)) aff’d,

(1st

Cir. 2013).

In Schaefer, the plaintiff alleged that OneWest Bank was

liable to him for negligent and intentional misrepresentation

because it provided him with conflicting information about which

fax number to use to send OneWest information required to

complete a loan modification application. The court held that

the economic loss doctrine barred the plaintiff’s claims because

he

32 [f]ail[ed] to allege facts suggesting OneWest’s “voluntary assumption of activities beyond those traditionally associated with the normal role of a money lender.” Seymour,

. . . . Representations made in a letter concerning Schaefer’s application for a loan modification “relate entirely to the defendants’ attempts to collect Schaefer’s mortgage debt . . . which falls squarely within the normal role of a lender.”

Schaefer,

, at *4 (alterations omitted) (citing

Moore,

; L’Esperance v. HSBC Consumer

Lending, Inc., No. 11-cv-555-LM,

, at *15–16

(D.N.H. June 12, 2012)).

Like the plaintiff in Schaefer, the Dionnes allege that

defendants made misrepresentations in connection with the

Dionnes’ efforts to obtain a loan modification and prevent a

foreclosure sale. The first alleged group of misrepresentations

(i.e., defendants’ repeated statements that the Dionnes’ loss

mitigation application was incomplete) are related to

defendants’ attempts to collect the Dionnes’ mortgage debt. See

Schaefer,

, at *4. Therefore, the economic loss

doctrine bars the Dionnes’ fraud claim based on those alleged

misrepresentations.

The remaining alleged misrepresentation (i.e., Goulden’s

statement that she would request that the foreclosure sale be

canceled) “concern[s] the process by which the lenders would

decide whether to exercise their contractual right to foreclose

on the mortgage,” and, like the complaint in Schaefer, the

33 amended complaint here “alleges that the lenders misrepresented

the circumstances under which they would agree to forego that

contractual right.” Schaefer,

. Such a claim

focuses on the performance of the contract and is therefore

barred by the economic loss doctrine.

Accordingly, Count VII is dismissed.

VIII. Count VIII: Violation of RSA 479:25

In Count VIII, the Dionnes allege that Fannie Mae (through

Chase and Harmon) failed to comply with RSA 479:25 when it sent

them foreclosure notices on August 12, 2014, November 23, 2014,

November 24, 2014, and December 11, 2014.13 The Dionnes allege

that none of the notices was served on them or sent by

registered or certified mail. They additionally allege that,

except for the December 11 notice, the notices failed to advise

them of their right to petition the court to enjoin the

foreclosure sale as required by RSA 479:25, II. Defendants

argue that Count VIII should be dismissed because the claim is

untimely, as the Dionnes failed to file a petition to enjoin the

foreclosure prior to the foreclosure sale, and because the

13As discussed above, although the amended complaint references notices of foreclosure on both November 23 and November 24, 2014, it attaches as an exhibit only the November 23 notice.

34 Dionnes did not suffer any damages as a result of Fannie Mae’s

failure to comply with RSA 479:25.

Under RSA 479:25, a mortgagor seeking to challenge the

validity of a planned foreclosure sale must initiate legal

proceedings before the foreclosure sale occurs. The statute

provides: “Failure to institute [a petition to enjoin the

foreclosure] . . . prior to sale shall thereafter bar any action

or right of action of the mortgagor based on the validity of the

foreclosure.” RSA 479:25, II(c); see also Nardone v. Deutsche

Bank Nat’l Trust Co., No. 13-cv-390-SM,

, at *4

(D.N.H. Apr. 4, 2014). This provision bars actions “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.” Murphy v. Fin. Dev. Corp.,

(1985).

Here, the Dionnes allegedly received several notices which

did not comply with RSA 479:25, beginning in August 2014. The

Dionnes also allege that they knew they could file an action to

enjoin the foreclosure sale. See doc. no. 21 at ¶ 73. Although

they concede that they failed to do so, they argue that their

failure is excused by Chase’s conduct and communications

preceding the sale that led them to believe that the sale would

not take place. Specifically, the Dionnes allege that they

believed that Fannie Mae would cancel the foreclosure sale based

on a statement by a Chase representative (Goulden) to Kathy five

35 days before the foreclosure that she “would request the

foreclosure sale be stopped.” They also allege that during the

days immediately preceding the scheduled foreclosure, Chase once

again solicited a loss mitigation application and, on the eve of

the scheduled foreclosure, communicated to them that the

application was complete. The Dionnes assert that, based on

Chase’s conduct, they reasonably believed that the foreclosure

sale would not occur on January 12.

To defeat the motion to dismiss, the Dionnes rely on the

court’s previous order denying defendants’ motion to dismiss the

Dionnes’ original complaint. See doc. no. 16. In so doing, the

Dionnes ignore three significant differences between the

original complaint and the amended complaint.

First, in the original complaint, the Dionnes alleged that

Chase repeatedly told them that there would be no foreclosure

while a loss mitigation application was pending. Construed

favorably, this allegation was sufficient to support a claim

that Chase misled the Dionnes into believing the foreclosure

would not occur. The Dionnes removed this allegation from the

amended complaint. The amended complaint alleges merely that a

Chase employee told them she would request that the foreclosure

sale be stopped. That new allegation, even construed favorably

to the plaintiffs, is materially different than the allegation

of affirmative misstatements by Chase in the original complaint.

36 Second, the Dionnes attached as an exhibit to the amended

complaint a January 10, 2015 letter from Chase in which Chase

wrote in bold letters: “Your request for mortgage assistance

doesn’t stop the foreclosure process or sale. Do not ignore any

notices.” Doc. no. 21-20 at 1. The Dionnes did not attach this

document to the original complaint.

Third, the amended complaint contains the following

statement (which was not in the original complaint) about the

Dionne’s pre-foreclosure awareness of their right to file a

petition to enjoin: “[T]he Dionnes believed that they could

submit a petition on their own with the Court to stop the sale

because Chase had not provided them with an answer on the loss

mitigation application.” Doc. no. 21 at ¶ 73. Therefore, the

amended complaint asserts that the Dionnes knew they could, but

chose not to, bring a petition to enjoin the foreclosure prior

to the sale.

Unlike the allegations in the original complaint, the

amended complaint does not allege facts sufficient to excuse the

Dionnes’ pre-foreclosure failure to comply with their duty under

RSA 479:25(11)(c) to file a petition to enjoin. Goulden’s

statement to the Dionnes that she would “request” a cancellation

is insufficient to negate the Dionne’s statutory duty to file a

timely petition — particularly in light of the following factual

assertions in the amended complaint: (a) that Chase separately

37 urged the Dionnes in writing not to construe their pending loss

mitigation application as stopping the foreclosure, doc. no. 21-

20 at 1; and (b) the Dionnes understood pre-foreclosure that

they could file a petition to enjoin the foreclosure “because

Chase had not provided them with an answer on the loss

mitigation application,” doc. no. 21 at ¶ 73.

In sum, the amended complaint, construed favorably to the

Dionnes, does not plausibly allege that they were unaware of the

factual basis on which to file a petition to enjoin the

foreclosure. To the contrary, the amended complaint contains

assertions that, prior to the foreclosure, the Dionnes were

aware of their right to file a petition to enjoin and the

factual and legal foundation for such a petition, but elected

not to file it based on their mistaken belief that the

foreclosure sale would not occur. Under these circumstances,

the Dionnes assumed the risk that they would lose the right to

challenge the foreclosure. Thus, RSA 479:25(II)(c) bars their

post-foreclosure attempt to void the foreclosure.14

Accordingly, Count VIII is dismissed.

14Because the Dionnes’ claim based on RSA 479:25 is barred by their failure to file a petition to enjoin the foreclosure prior to the sale, the court does not address defendants’ remaining argument as to that claim.

38 Conclusion

For the foregoing reasons, defendants’ motion to dismiss

(doc. no. 23) is granted as to Counts VI, VII, and VIII. The

motion is denied as to Counts I, III, IV, and V. The motion is

granted in part and denied in part as to Count II as provided in

this order.

The court notes that the Dionnes have filed two motions to

compel (doc. nos. 29 & 30). The court has reviewed both

motions. Several of the discovery requests identified in the

motions appear to seek information that is either irrelevant or

relevant only to the claim for fraud, which is no longer a part

of this case. Therefore, the motions to compel (doc. nos. 29 &

30) are denied without prejudice. The Dionnes may refile

motions to compel in light of this order, bearing in mind that

material related to Counts VI, VII, and VIII is no longer

relevant to this case.

SO ORDERED.

__________________________ Landya McCafferty United States District Judge

June 14, 2016

cc: David E. Buckley, Esq. Gary Goldberg, Esq. Andrea Bopp Stark, Esq. Nathan Reed Fennessy, Esq.

39