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Harrington v. Federal National Mortgage Association

United States District Court, D. Massachusetts

June 27, 2016



          MARIANNE B. BOWLER United States Magistrate Judge.

         Pending before this court is a motion for summary judgment filed by defendants Federal National Mortgage Association (“Fannie Mae”) and Ditech Financial LLC, formerly known as Green Tree Servicing, LLC (“Green Tree”) (collectively “defendants”) pursuant to Fed.R.Civ.P. 56 (“Rule 56”). (Docket Entry # 58). Plaintiff Heather Harrington (“plaintiff”) opposes the motion. (Docket Entry # 62). After conducting a hearing on March 3, 2016, this court took the motion under advisement. (Docket Entry # 58).


         The parties’ dispute arises out of a settlement agreement regarding a note and a mortgage on a property belonging to plaintiff. When plaintiff first filed an eight count complaint (“original complaint”) on May 12, 2014 (Docket Entry # 1-3), defendants and Orlans filed motions to dismiss (Docket Entry ## 6 & 13). In response, plaintiff filed a motion to amend the original complaint. (Docket Entry # 12). Plaintiff subsequently filed a second motion to amend (Docket Entry # 26) and this court deemed the aforementioned motions moot. (Docket Entry # 31).

         On May 21, 2015, this court allowed in part and denied in part plaintiff’s second motion to amend. (Docket Entry # 37, p. 40). In light of that Order, on June 9, 2015, plaintiff filed an amended complaint that set out two claims, one for of breach of contract based on the settlement agreement (Count I) and the other for breach of implied covenant of good faith and fair dealing (Count II). (Docket Entry # 40). The Order limited the breach of contract claim to a claim that defendants allegedly breached the settlement agreement based on the “failure to issue corrections to the credit reporting agencies as required by the settlement agreement.” (Docket Entry # 37, pp. 21-22). Defendants move for summary judgment on both claims. (Docket Entry # 58). Plaintiff opposes the motion and contends that genuine issues of material fact preclude summary judgment. (Docket Entry # 62, p. 1).


         Summary judgment is designed “‘to pierce the boilerplate of the pleadings and assay the parties’ proof in order to determine whether trial is actually required.’” Tobin v. Federal Express Corp., 775 F.3d 448, 450 (1st Cir. 2014) (quoting Wynne v. Tufts University School of Medicine, 976 F.2d 791, 794 (1st Cir. 1992)). It is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). It is inappropriate “if the record is sufficiently open-ended to permit a rational factfinder to resolve a material factual dispute in favor of either side.” Pierce v. Cotuit Fire District, 741 F.3d 295, 301 (1st Cir. 2014).

         “Genuine issues of fact are those that a factfinder could resolve in favor of the nonmovant, while material facts are those whose ‘existence or nonexistence has the potential to change the outcome of the suit.’” Green Mountain Realty Corp. v. Leonard, 750 F.3d 30, 38 (1st Cir. 2014) (quoting Tropigas de Puerto Rico, Inc. v. Certain Underwriters at Lloyd’s of London, 637 F.3d 53, 56 (1st Cir. 2011)). The evidence is viewed “in the light most favorable to the non-moving party" and "all reasonable inferences" are drawn in his favor. Ahmed v. Johnson, 752 F.3d 490, 495 (1st Cir. 2014) . In reviewing a summary judgment motion, a court may examine "all of the record materials on file, " Geshke v. Crocs, Inc., 740 F.3d 74, 77 (1stCir. 2014), "including depositions, documents, electronically stored information, affidavits or declarations ... or other material." Fed.R.Civ.P. 56(c)(1); see Ahmed v. Johnson, 7 52 F.3d at 495. "Unsupported allegations and speculation, " however, "do not demonstrate either entitlement to summary judgment or the existence of a genuine issue of material fact sufficient to defeat summary judgment." Rivera-Colon v. Mills, 635 F.3d 9, 12 (1st Cir. 2011); see Serra v. Quantum Servicing, Corp., 747 F.3d 37, 40 (1st Cir. 2014) ("allegations of a merely speculative or conclusory nature are rightly disregarded") .

         Defendants filed a LR. 56.1 statement of undisputed facts. Uncontroverted statements of fact in the LR. 56.1 statement comprise part of the summary judgment record.[1] See Cochran v. Quest Software, Inc., 328 F.3d 1, 12 (1st Cir. 2003) (the plaintiff's failure to contest date in LR. 56.1 statement of material facts caused date to be admitted on summary judgment); Stonkus v. City of Brockton School Department, 322 F.3d 97, 102 (1st Cir. 2003) (citing LR. 56.1 and deeming admitted undisputed material facts that the plaintiff failed to controvert). Adhering to this framework, the record sets out the following facts.


         On July 13, 2006, GMAC Mortgage Services, LLC (“GMAC”) agreed to a Mortgage Selling and Servicing Contract (the “Servicing Contract”) with the Federal National Mortgage Association (“Fannie Mae”). (Docket Entry # 60, ¶ 8) (Docket Entry # 60-3). The terms of the Servicing Contract permitted GMAC as a lender to sell and service mortgages on behalf of Fannie Mae. (Docket Entry # 60-3). The Servicing Contract also provided the terms of such servicing. (Docket Entry # 60-3). Loan servicers such as GMAC “are required to service the loans in accordance with a set of guidelines for the management and servicing of Fannie Mae loans, called the Fannie Mae Single Family Servicing Guide.” (Docket Entry # 60, ¶ 4). The relevant guide depicts servicers, such as GMAC, “as independent contractors and not as agents, assignees, or representatives of Fannie Mae.” (Docket Entry # 60-1, p.3). Fannie Mae allowed GMAC to establish its own policies in connection with servicing mortgages, including giving GMAC discretion to enter into agreements in connection with mortgage servicing on behalf of Fannie Mae. (Docket Entry # 60-1, p.7).

         On December 1, 2006, plaintiff signed a note in the principal amount of $264, 000 ("the note" or "the loan") payable to Infinity Mortgage Company, Inc. ("Infinity") and a mortgage ("the mortgage") granting Infinity a security interest in the property located at 40 Lyman Drive in Milton, Massachusetts ("the property"). (Docket Entry # 58-1, ¶ 1) (Docket Entry # 62, p. 6, ¶ 1).[2] Immediately after origination, the note was assigned to GMAC Bank, which came to be known as Ally Bank ("Ally"), and the mortgage was assigned to Mortgage Electronic Registration Systems, Inc. ("MERS"). (Docket Entry # 58-1, ¶ 2) (Docket Entry # 62, p. 7, ¶ 2).

         On or about January 1, 2007, Fannie Mae purchased the note from Ally. (Docket Entry # 60, ¶ 2). Fannie Mae does not service the loans that it owns. (Docket Entry # 58-1, ¶ 4) (Docket Entry # 62, p. 7, ¶ 4, In. 1) (Docket Entry # 60, ¶ 3) . On January 1, 2007, GMAC Mortgage, LLC ("GMAC") began servicing the loan on behalf of Fannie Mae. (Docket Entry # 59, ¶ 2).[3]Fannie Mae's loan servicers establish their own policies and written procedures for conducting their loan servicing operations. (Docket Entry # 58-1, ¶ 5) (Docket Entry # 62, p. 7, ¶ 5). Fannie Mae does not provide the servicers with facilities, buildings, equipment, printers, office furniture or fax machines. (Docket Entry # 60, ¶ 5). Fannie Mae does not pay the servicers' employees or control how the servicers pay their employees. (Docket Entry # 58-1, ¶ 7) (Docket Entry # 62, p. 7, ¶ 7) (Docket Entry # 60, ¶ 6) .

         In December 2008, plaintiff was laid off from her employment. (Docket Entry # 58-1, ¶ 11) (Docket Entry # 62, p. 8, ¶ 11) . Subsequently, she failed to make the required mortgage payments and defaulted under the terms of the note. (Docket Entry # 58-1, ¶ 11) (Docket Entry # 62, p. 8, ¶ 11) . GMAC reported that the account was past due between February 2009 and January 2013 to two credit reporting agencies. (Docket Entry # 58-1, ¶¶ 13, 14) (Docket Entry # 62, p. 8, ¶¶ 13, 14) . On November 12, 2009, MERS, which held the mortgage, assigned the mortgage to GMAC.[4] (Docket Entry # 61-9, p. 2) .

         On March 30, 2010, plaintiff filed a complaint in Massachusetts Superior Court (Norfolk County) (“the Superior Court Action”) against inter alia defendant Orlans Moran PLLC (“Orlans”), Fannie Mae and GMAC for violations in the origination and servicing of the loan. (Docket Entry # 58-1, 15) (Docket Entry # 62, p. 8, 15). On October 9, 2012, GMAC and plaintiff signed the settlement agreement in which GMAC, which serviced the mortgage, agreed to a trial period plan (“the TPP”) attached to the settlement agreement. (Docket Entry # 58- 1, 19) (Docket Entry # 61-13, p. 7) (Docket Entry # 62, p. 12, 47) (Docket Entry # 65-1, 47). Plaintiff, in turn, agreed under the settlement “that if she does not timely comply with all terms of the Trial Plan, [GMAC] is under no obligation to provide a permanent loan modification.” (Docket Entry # 61-13, ¶ C(1)). The relevant portion of the settlement agreement reads as follows:

1. Loan Modification. [GMAC] agrees to the Trial Period Plan attached as Exhibit A to this Agreement (the “Trial Plan”), the terms of which are expressly incorporated herein. Borrower expressly acknowledges that the final terms of a permanent loan modification cannot be determined until after the conditions precedent set forth in the Trial Plan are satisfied by Borrower. Borrower agrees that if she does not timely comply with all terms of the Trial Plan, [GMAC] is under no obligation to provide a permanent loan modification.

(Docket Entry # 61-13, ¶ C(1)).

         The first paragraph of the settlement agreement identifies the parties to the agreement, namely, “GMAC Mortgage, LLC [(‘GMAC’)] and Heather Harrington [(‘plaintiff)’].” (Docket Entry # 61-13, p. 1). The settlement agreement had a choice of law clause dictating the application of Massachusetts law. (Docket Entry # 61-13, p. 5).

         Under the settlement agreement, GMAC also agreed to issue corrections about payment status to credit reporting agencies within 30 days of the filing of the stipulation. (Docket Entry # 58-1, ¶ 20) (Docket Entry # 61-13, p. 3). The relevant portion of the settlement agreement reads as follows:

3. Credit Reporting. Within thirty (30) days of the date of the filing of the Stipulation, [GMAC] will issue corrections or amendments to the credit reporting agencies . . . to correct or supplement information about payment status provided to consumer reporting agencies, requesting that such agency(ies) remove references on the Borrower’s consumer reports to any arrearages and to any late payments on the Loan for the period of December 1, 2006 through the Effective Date [October 9, 2012], provided however that Borrower acknowledges that all credit reporting agencies are separate entities from [GMAC] and that once these steps have been taken by [GMAC], [GMAC] cannot and will not be held responsible for the actions or omissions of the credit reporting agencies. Accordingly, Borrower acknowledges that [GMAC] cannot guarantee, warrant, or take responsibility for the performance of any credit reporting agency in changing, deleting, or making entries in relation to any derogatory credit information. Borrower warrants, declares, and covenants that she understands the limitations on [GMAC] in this regard and that any error on the part of any credit reporting agency shall not constitute a breach of this Agreement by [GMAC], nor ...

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