Not for Publication in West's Federal Reporter United States Court of Appeals For the First Circuit

No. 17-1699

KAREN M. SHEA,

Plaintiff, Appellant,

v.

DITECH FINANCIAL LLC; WILMINGTON SAVINGS FUND SOCIETY, FSB,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Nathaniel M. Gorton, U.S. District Judge]

Before

Howard, Chief Judge, Lipez and Barron, Circuit Judges.

Moss M. Sidell and Sidell Law Offices, P.C. on brief for appellant. Richard E. Briansky, Benjamin M. Greene, and McCarter & English LLP on brief for appellees.

May 4, 2020 Per Curiam. In this diversity action, appellant Karen

M. Shea appeals the dismissal of her claims for breach of contract

and violation of Massachusetts consumer protection law against two

mortgage companies.1 We affirm.

I. Background

In 2006, Shea and her former husband refinanced the

mortgage on their home in Scituate, Massachusetts, with a $400,000

loan from Mt. Washington Cooperative Bank. The new mortgage and

its accompanying note were first assigned to the Mortgage

Electronic Registration System and later to BAC Home Loans

Servicing, LP, a subsidiary of Bank of America. Shea obtained

full title to the property in her divorce.

After Shea fell behind on her loan payments, BAC offered

to temporarily delay foreclosing on the property if Shea made

reduced payments under the Fannie Mae HomeSaver Forbearance

Program. In July 2009, Shea and BAC signed an agreement in which

Shea promised to make six monthly payments of $1,661.31 -- half

her monthly obligation under the mortgage and note -- and BAC

promised to "suspend any scheduled foreclosure sale" during that

period.

The forbearance agreement included a term stating that

it was "not a forgiveness of payments on [the] Loan or a

1 Shea filed a five-count complaint, but she appeals dismissal of only the contract and consumer-protection counts.

- 2 - modification of the Loan Documents." More specifically, the

Agreement provided that "all terms and provisions of the Loan

Documents remain in full force and effect; nothing in this

Agreement shall be understood or construed to be a satisfaction or

release in whole or in part of the obligations contained in the

Loan Documents."

Shea alleges in her complaint that she made the specified

payments and that, at the end of the six-month period, she "was

instructed by BAC to continue the payments under the program."

She continued to pay the reduced amount through July 20, 2010.

Nonetheless, on May 14, 2010, BAC sent a Notice of Intention to

Foreclose, giving Shea thirty days to cure her default under the

mortgage. However, BAC did not pursue foreclosure at that time,

and in 2014 it transferred the mortgage and note to Ditech

Financial LLC.2 The document effecting the assignment to Ditech

does not mention the forbearance agreement, and it states that the

assignee is "subject only to the terms and conditions of the above-

described Mortgage." Shea alleges that she "applied for multiple

loan modifications in the ensuing years," but was denied them each

time.

In September 2015, Shea sent a demand letter to Ditech,

requesting relief under the Massachusetts consumer protection

2 At that time, Ditech was known as Green Tree Servicing LLC.

- 3 - statute familiarly known as Chapter 93A. See Mass. Gen. Laws ch.

93A. She alleged, inter alia, that BAC had failed to comply with

Massachusetts statutory foreclosure requirements and that neither

BAC nor Ditech "has ever accounted for" the payments made under

the forbearance agreement. In response, Ditech denied any

violation of Chapter 93A and detailed when Shea's payments, other

than the final one in July 2010, had been applied to her

outstanding loan balance by BAC.

In April 2016, Shea filed a state-court complaint that

included the breach-of-contract and Chapter 93A claims at issue in

this appeal. After Ditech removed the case to federal court, it

assigned Shea's mortgage to the Wilmington Savings Fund Society,

FSB. Shea then filed an amended complaint against both Ditech and

Wilmington. Shea did not name BAC in either complaint.

The district court granted Ditech's and Wilmington’s

motion to dismiss the complaint, finding, as relevant to our

review, that the two companies could not have breached the

forbearance agreement because they were not parties to it, and

that Shea's Chapter 93A claim was time-barred. This appeal

followed.3

3 Although not pertinent to the appeal, we note that, in September 2016, the district court denied Shea's motion for a preliminary injunction seeking to bar the foreclosure sale of the property. See Memorandum and Order, No. 1:16-cv-11488-NMG, Dkt. 21 (D. Mass. Sept. 22, 2016). The record does not indicate whether such a sale took place.

- 4 - II. Discussion

We review de novo a district court's dismissal for

failure to state a claim under Rule 12(b)(6). Lorenzana v. S. Am.

Rests. Corp.,

(1st Cir. 2015). A complaint must

be dismissed if it does not state a claim to relief that is

"plausible on its face" even when the alleged facts are taken in

the light most favorable to the nonmoving party. Bell Atl. Corp.

v. Twombly,

(2007). Review on appeal is

restricted to the facts contained in the complaint, "matters fairly

incorporated within it[,] and matters susceptible to judicial

notice." Zenon v. Guzman,

(1st Cir. 2019)

(quoting In re Colonial Mortg. Bankers Corp.,

(1st

Cir. 2003)).

Where federal jurisdiction is based on diversity of

citizenship, we apply the substantive law of the forum state, here

Massachusetts, see Calandro v. Sedgwick Claims Mgmt. Servs., Inc.,

(1st Cir. 2019), which is also stipulated as the

governing law in the forbearance agreement. Shea claims that BAC

breached the agreement by initiating foreclosure proceedings

against her, and that Ditech and Wilmington inherited liability

for this breach when they received the assigned mortgage from their

predecessor-in-interest. However, "[a]s a general matter,

contracts do not bind nonparties." City of Revere v. Bos./Logan

Airport Assocs., LLC,

(D. Mass. 2005)

- 5 - (citing EEOC v. Waffle House, Inc.,

(2002)).

Thus, to prevail on her breach-of-contract claim, Shea would need

to prove, as a threshold matter, that Ditech and Wilmington may be

treated as parties to the forbearance agreement.

No facts alleged in the complaint plausibly establish

that either Ditech or Wilmington agreed to step into BAC's shoes

with respect to the agreement. Indeed, as noted above, the BAC

mortgage assignment expressly states that the assignee, i.e.,

Ditech, is "subject only to the terms and conditions of the above-

described Mortgage," and the forbearance agreement expressly

states that the terms of the original loan remained in effect.

Hence, because the defendants were not parties to the forbearance

agreement, Shea cannot succeed with a claim that they breached it.

Nor can Shea maintain her claim that defendants

committed unfair and deceptive business practices. A plaintiff

must bring Chapter 93A claims within four years of when she "knew

or should have known of appreciable harm resulting from" an alleged

violation. Int'l Mobiles Corp. v. Corroon & Black/Fairfield &

Ellis, Inc.,

(Mass. App. Ct. 1990); see also

Mingde Hong v. Northland Ins. Co.,

(D.

Mass. 2018). On appeal, Shea effectively concedes that the conduct

underlying her Chapter 93A claim occurred beyond the limitations

period. She argues only that she is entitled to extra time under

the discovery rule because Chapter 93A is a "very technical

- 6 - statute," and she was not aware of the claim until she engaged

counsel. Under Massachusetts law, however, "accrual under the

discovery rule is not delayed until a plaintiff learns that [s]he

was legally harmed." Harrington v. Costello,

(Mass. 2014). Accordingly, Shea's Chapter 93A claim was properly

dismissed.

One additional matter remains. Ditech and Wilmington

ask that we sanction Shea for bringing a frivolous appeal, or,

alternatively, that we declare the appeal frivolous to pave the

way for them to file a motion for sanctions. We decline their

request. "[A]n appeal can be weak, indeed almost hopeless, without

being frivolous . . . ." Lallemand v. Univ. of R.I.,

(1st Cir. 1993). We conclude that this is such a case.

For the foregoing reasons, we affirm the dismissal of

Shea's complaint and deny Ditech's and Wilmington's request for

sanctions.

So ordered.

- 7 -