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Lee v. BAC Home Loans Servicing, LP

United States District Court, D. Massachusetts

September 30, 2014

HEEWON LEE, Plaintiff,
v.
BAC HOME LOANS SERVICING, LP, A SUBSIDIARY OF BANK OF AMERICA, N.A., Defendant.

OPINION AND ORDER

GEORGE A. O'TOOLE, Jr., District Judge.

The plaintiff, Heewon Lee, proceeding pro se, brought a variety of state and federal claims against Bank of America, N.A. ("BANA") arising from the modification of his home loan under the Home Affordable Modification Program ("HAMP").[1] BANA filed an earlier motion to dismiss for failure to state a claim, and the Court granted BANA's motion with respect to all but two claims, a claim for breach of the implied covenant of good faith and fair dealing and violations of Massachusetts General Laws Chapter 93A. The defendant now moves for summary judgment of the remaining claims pursuant to Rule 56 of the Federal Rules of Civil Procedure.

I. Factual Background

The following facts appear from the record to be undisputed:

On October 24, 2007, Lee obtained a loan from BANA secured by a mortgage on Lee's condominium. By April 2009, Lee had fallen two months behind on his mortgage payments. That May, Lee sent a HAMP application to BANA and a second application to his mortgage insurance company, Genworth. On June 15, 2009, Genworth informed Lee that his application had been pre-qualified and forwarded it to BANA. In a letter dated August 21, 2009, Harmon Law Offices, P.C. ("Harmon") informed Lee that it had been retained by BANA to foreclose on his mortgage. In a letter dated August 26, 2009, BANA notified Lee that his HAMP application contained incomplete information.

In September and December 2009, Lee submitted two additional HAMP applications to BANA. In January 2009, Lee received notification from BANA that his request for a modification had been denied. In July 2010, Lee submitted a fifth application for HAMP to BANA. By a letter dated October 21, 2010, Lee was informed that he was approved to enter a Trial Payment Plan ("TPP"). Pursuant to that plan, Lee made the required three monthly payments, submitting his final payment in December 2010. By a letter dated December 10, 2010, Lee was informed that he may be eligible for HAMP. Similarly, a letter dated December 3, 2010 informed Lee that his loan was past due and that he might qualify for a particular form of relief.

About two months later, on February 18, 2011, BANA offered Lee a permanent HAMP loan modification. Under the modification, Lee's monthly mortgage payments were reduced from $1, 201.53 to $1, 195.68, a reduction of $5.85 per month. Lee was also informed that $30, 238.90 in arrearages had been added to his principal loan balance. Lee did not accept the modification.

II. Standard of Review

Summary judgment is appropriate "after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986). The moving party bears the burden of showing the basis for its motion and identifying where there exists a lack of any genuine issue of material fact. Id . at 323. A dispute is "genuine" only if a reasonable jury could find for the nonmoving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248 (1986). In considering a motion for summary judgment, the Court must "view the record in the light most favorable to the nonmovant, drawing reasonable inferences in his favor." Noonan v. Staples, Inc. , 556 F.3d 20, 25 (1st Cir. 2009).

III. Discussion

A. Violation of the Implied Covenant of Good Faith and Fair Dealing

Under Massachusetts law, the implied covenant of good faith and fair dealing applies to every contract. FAMM Steel, Inc. v. Sovereign Bank , 571 F.3d 93, 100 (1st Cir. 2009). The covenant ensures that the parties do not take actions "that will have the effect of destroying or injuring the right of the other party to the fruits of the contract.'" Young v. Wells Fargo Bank, N.A. , 717 F.3d 224, 237-38 (1st Cir. 2013) (quoting T.W. Nickerson, Inc. v. Fleet Nat'l Bank , 924 N.E.2d 696, 704 (Mass. 2010)). The covenant does not create new terms, rights, or duties not otherwise supplied in the contract. FAMM Steel, Inc., 717 F.3d at 100. Rather, "[t]he scope of the covenant is only as broad as the contract that governs the particular relationship." Ayash v. Dana-Farber Cancer Inst. , 822 N.E.2d 667, 684 (Mass. 2005). To prevail on a claim that the defendant breached the covenant, the plaintiff must show that the defendant "acted with an improper purpose" or otherwise "deprived [the plaintiff] of the contract's fruits." Young , 717 F.3d at 238-39.

The only actual contractual relationship between Lee and BANA arose from the loan and mortgage. Put simply, the implied covenant required BANA to avoid depriving Lee of benefits accorded to him from that contractual relationship. In practical terms, that might mean that BANA was bound to refrain from interfering with Lee's performance of his payment obligations. Lee offers no evidence of any such interference with the terms of the existing contractual relationship.

Lee received an offer for a permanent modification agreement under HAMP. He rejected this offer, alleging that, after a drawn out and convoluted process, the accumulated arrearage essentially deprived him of any benefits of the modification. No implied covenant arose with respect to a potential contract that never came into existence. In particular, Lee was never guaranteed that the modified loan would not include his past due payments or would otherwise provide payment terms to his liking. See MacKenzie v. Flagstar Bank, FSB , 738 F.3d 486, 493 ...


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