United States District Court, D. Massachusetts
MEMORANDUM OF DECISION AND ORDER ON DEFENDANT'S
MOTION TO DISMISS AND ON PLAINTIFF'S MOTION FOR
Gail Dein, United States Magistrate Judge
case arises out of the efforts of the plaintiff, Mehdi
Hosseini (“Hosseini”), to avoid the foreclosure
of his home by obtaining a mortgage loan modification from
the defendant, Capital One, N.A. (“Capital One”).
Hosseini contends that on May 15, 2015, the parties entered
into an oral contract under which Capital One agreed that as
long as the plaintiff made three monthly trial period
payments on a timely basis, it would provide him with a loan
modification under which the outstanding amount of debt would
not exceed $1.1 million. He further contends that the
defendant breached the agreement by refusing to modify his
mortgage loan unless he agreed to pay a principal amount of
over $2 million. By his Second Amended Verified Complaint,
Hosseini has asserted claims against Capital One for breach
of contract (Count I) and for fraud (Count II), and is
seeking, among other things, specific performance of the
alleged oral agreement and a permanent injunction precluding
Capital One from foreclosing on his property without further
order of the court.
matter is presently before the court on “Capital One,
N.A.'s Motion to Dismiss Plaintiff's Second Amended
Verified Complaint” (Docket No. 22), by which Capital
One is seeking the dismissal of the complaint on the grounds
that it fails to state a claim pursuant to Fed.R.Civ.P.
12(b)(6), and that Hosseini has failed to plead fraud under
the heightened pleading standard of Fed.R.Civ.P. 9(b). The
matter is also before the court on the “Plaintiff's
Motion for Preliminary Injunction” (Docket No. 1-6),
pursuant to which the plaintiff is seeking an order
preliminarily enjoining the defendant and anyone acting on
its behalf “from foreclosing, transferring, conveying,
assigning, pledging, alienating, hypothecating, encumbering,
mortgaging, selling, or in any way diminishing or divesting
Plaintiff of the real property located at 225 County Road,
Lakeville, Massachusetts.” As described below, this
court finds that Hosseini has failed to state a claim with
respect to either Count of his complaint, and thus cannot
show that he is likely to prevail on the merits of one or
more of his claims for purposes of his motion for a
preliminary injunction. Accordingly, and for all the reasons
detailed herein, the defendant's motion to dismiss is
ALLOWED, and the plaintiff's motion for a preliminary
injunction is DENIED.
STATEMENT OF FACTS
ruling on a motion to dismiss, the court must accept as true
all well-pleaded facts, and give the plaintiffs the benefit
of all reasonable inferences. See Cooperman v.
Individual, Inc., 171 F.3d 43, 46 (1st Cir. 1999).
“Ordinarily, a court may not consider any documents
that are outside of the complaint, or not expressly
incorporated therein, unless the motion is converted into one
for summary judgment.” Alt. Energy, Inc. v. St.
Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir.
2001). “There is, however, a narrow exception
‘for documents the authenticity of which are not
disputed by the parties; for official public records; for
documents central to plaintiffs' claim; or for documents
sufficiently referred to in the complaint.'”
Id. (quoting Watterson v. Page, 987 F.2d 1,
3 (1st Cir. 1993)). Applying these standards to the instant
case, the relevant facts are as follows.
plaintiff, Hosseini, is an individual who resides in
Massachusetts. (Comp. (Docket No. 19) ¶ 2). He is also
the former owner of Cross Roads R.V. and Camping
(“Cross Roads”), an entity that was in the
business of selling new and used recreational vehicles.
(Id. ¶ 2). In 2004, Hosseini and his wife, Kim
Woodbury (“Woodbury”), purchased a home in
Lakeville, Massachusetts (the “Property”).
(Id. ¶¶ 2, 4). ING Bank FSB
(“ING”) was the holder of the mortgage on the
Property. (Id. ¶ 3). On April 22, 2008,
Hosseini and his wife refinanced the Property through ING.
(Id. ¶ 5). Allegedly, the Property had an
appraised value of $2.4 million at the time of the
defendant, Capital One, is a mortgage loan company that
maintains its corporate offices in MacLean, Virginia.
(Id. ¶ 3). On April 25, 2008, Capital One
became the holder of the plaintiff's mortgage as a result
of a merger with and/or assignment from ING. (Id.).
In this action, Hosseini is attempting to enjoin Capital One
from foreclosing on the Property, and compel Capital One to
abide by the terms of an alleged oral agreement to reduce the
principal amount due on his mortgage by over $925, 000 in
connection with the modification of his mortgage loan.
plaintiff claims that Cross Roads, and much of the industry
in which it operated, suffered near collapse following the
financial crisis that hit the country in September 2008.
(Id. ¶ 6). As a result, Hosseini allegedly
experienced a drastic reduction in income. (Id.). In
2010, Cross Roads and Woodbury filed for bankruptcy
protection. (Id.). The following year, Hosseini also
filed for bankruptcy protection under Chapter 7 of the United
States Bankruptcy Code. (See id.; Def. Exs. D-E). In
his bankruptcy petition, Hosseini listed the current value of
the Property as $699, 850, and the amount of the
“[s]ecured” debt owed to Capital One on the
mortgage as $2, 052, 841.01. (Compl. ¶ 7; Def. Ex. A at
Attachment 1). On October 24, 2011, the Bankruptcy Court
issued a notice to the plaintiff's creditors in which it
informed them in relevant part as follows:
There does not appear to be any property available to the
trustee to pay creditors. You therefore should not file a
proof of claim at this time. If it later appears that
assets are available to pay creditors, you will be sent
another notice telling you that you may file a proof of
claim, and telling you the deadline for filing your proof of
(Def. Ex. E at 2 (emphasis in original)). It is undisputed
that Capital One did not file a proof of claim in the
bankruptcy action. (Compl. ¶ 7). On August 6, 2012, the
Bankruptcy Court discharged the plaintiff's unsecured
debt. (Def. Ex. A at Attachment 2). However, Capital One, as
a secured creditor, retained its rights in the Property,
including its right to pursue foreclosure. See In re
Best, 540 B.R. 1, 9 (1st Cir. BAP 2015)
(“Fundamentally, a discharge merely releases a debtor
from personal liability on the discharged debt; when a
creditor holds a mortgage lien or other interest to secure
the debt, the creditor's rights in collateral, such as
foreclosure rights, survive or pass through the
bankruptcy” (quotations and citation omitted)).
Efforts to Obtain a Loan Modification
about March 31, 2014, Hosseini and his wife received a letter
from Harmon Law Offices, P.C. (“Harmon”)
notifying them that Harmon had been retained by the defendant
to foreclose on the Property. (Compl. ¶ 9; Def. Ex. A at
Attachment 3). Therein, Harmon informed the plaintiff that he
had defaulted on his mortgage loan, and that
[u]nder the terms of the note and mortgage, there is
outstanding through the date of this letter $1, 670, 000.00
in principal and $152, 161.92 in interest and other charges
for a total of $1, 822, 161.92. Furthermore, attorney's
fees and costs and other charges will continue to accrue
pursuant to the terms of the loan documents.
(Def. Ex. A at Attachment 3). Harmon specifically
acknowledged that Hosseini had been discharged in a Chapter 7
bankruptcy and was not personally liable for the amount of
the outstanding mortgage debt. (Id.). Nevertheless,
it stated that Capital One still had the right to foreclose
on the Property if the default was not cured. (Id.).
response to the threat of foreclosure, Hosseini and Woodbury
attempted to work with the defendant in order to find a
solution that would enable them to remain in their home, and
by December 2014, the plaintiff allegedly had begun the
extensive process of applying for a loan modification.
(See Compl. ¶¶ 10, 11). According to
Hosseini, that process lasted until May 2015, and required
him to provide a significant amount of information to Capital
One, including appraisals of the Property, insurance records,
credit reports, financial statements and other financial
documents. (Id. ¶ 11). Furthermore, as part of
its review of Hosseini's eligibility for a loan
modification, Capital One arranged for a new appraisal of the
Property, which was completed on April 1, 2015. (Id.
¶ 12). As of the date of the appraisal, the Property was
valued at $1.1 million. (Def. Ex. A at Attachment 6).
1, 2015, Capital One sent Hosseini and his wife a letter
notifying them that they had been approved for two different
workout options, a Repayment Agreement and a Capital One
Modification Agreement. (Compl. ¶ 13; Def. Ex. F). It
further instructed them to review the enclosed information
describing the terms and conditions of each option, sign the
letter next to one of the workout options “indicating
your acceptance[, ]” and return a copy of the signed
agreement to Capital One by May 18, 2015. (Def. Ex. F at 1).
Attached to the letter under the heading, “Capital One
Modification Program Approval Information” were several
pages of information regarding the loan modification option.
(Id. at 7-9). On the first page, Capital One stated,
“[y]ou're approved to enter into a trial period
plan under the Capital One Modification Program. This is the
first step toward qualifying for more affordable mortgage
payments.” (Id. at 7). It then explained that
Hosseini would need to make three separate payments of $4,
554.10 by June 1, 2015, July 1, 2015 and August 1, 2015
respectively. (Id.). Moreover, Capital One stated
that the existing loan requirements would remain in effect
throughout the trial period, and that the mortgage loan would
not be modified if the trial period plan (“TPP”)
payments were untimely or the plaintiff failed to fulfill any
other terms of the TPP. (Id.).
remaining pages contained additional information regarding
the TPP and the Capital One Modification Program.
(Id. at 8-9). Of particular significance, the
defendant informed the plaintiff that his loan would not be
modified until he made all of his TPP payments on time and
both parties executed a modification agreement. (Id.
at 8). It also informed him that it would not engage in
foreclosure activities during the trial period, but that
foreclosure activities “may be resumed if you fail[ ]
to comply with the terms of the plan or don't qualify for
a permanent modification.” (Id. at 9).
Furthermore, Capital One emphasized the fact that the
existing loan documents would remain in effect throughout the
trial period. (Id.). Specifically, under the topic,
“Additional Trial Period Plan Information and Legal
Notices, ” Capital One emphasized as follows:
Your current loan documents remain in effect; however, you
may make the trial period payment instead of the payment
required under your loan documents:
• You agree that all terms and provisions of your
current mortgage note and mortgage security instrument remain
in full force and effect and you will comply with those
terms. You also agree that nothing in the Trial Period Plan
shall be understood or construed to be a satisfaction or