United States District Court, D. Massachusetts
TIMOTHY C. HARRY and KAREN C. HARRY, Plaintiffs,
AMERICAN BROKERS CONDUIT; APEX MORTGAGE SERVICES; FIDELITY NATIONAL FINANCIAL, INC.; FIDELITY NATIONAL TITLE COMPANY; FIDELITY NATIONAL TITLE GROUP, INC.; AMERICAN HOME MORTGAGE SERVICING, INC.; DEUTSCHE BANK NATIONAL TRUST COMPANY, as trustee for AMERICAN HOME MORTGAGE ASSETS TRUST 2007-2 MORTGAGE-BACKED PASS-THROUGH CERTIFICATES, SERIES 2007-2; HOMEWARD RESIDENTIAL, INC.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; and OCWEN LOAN SERVICING, LLC, Defendants.
MEMORANDUM AND ORDER ON DEFENDANTS' MOTIONS TO
DISMISS AND MOTION TO STRIKE
DENNIS SAYLOR IV UNITED STATES DISTRICT JUDGE.
a dispute arising out of a mortgage issued to plaintiffs in
2006. On December 21, 2006, plaintiffs took out a $450, 000
loan to refinance their existing mortgage and executed a new
mortgage on their property to secure payment of that loan.
Plaintiffs stopped making payments on the new mortgage in
2008. Several foreclosure attempts followed. Plaintiffs have
now filed suit, alleging in substance that the note and
mortgage are void because the lender, American Brokers
Conduit, was not an incorporated entity and was not licensed
to do business in any state at the time of the loan. The
complaint further alleges that all subsequent assignments of
the mortgage were void and all attempts to collect on the
note or to foreclose on the property were unauthorized.
do not dispute that they received the $450, 000 loan to
refinance their mortgage. They likewise do not dispute that
they continue to possess the property and have made no
mortgage payments for more than eight years.
not a typical situation in which homeowner plaintiffs are
seeking to forestall a mortgage foreclosure, contending that
there is some defect in the assignment of the mortgage or the
note. Instead, plaintiffs claim that the entire 2006 lending
transaction should be declared void. They seek “to have
the original note marked cancelled and returned to [them],
” “to have [the] mortgage . . . released in the
land records, ” and to recover compensatory and
punitive damages of more than $197 million. In other words,
plaintiffs want to undo the loan transaction-but they also
want to keep both the $450, 000 loan proceeds (which,
presumably, they used to discharge their prior mortgage) and
the property. Put simply, plaintiffs want to erase their
debt, keep the house (for free), and to be compensated
handsomely for their trouble.
have moved to dismiss the complaint for the failure to state
a claim upon which relief can be granted. There are multiple
problems with plaintiffs' claims, beginning with the fact
that the loan transaction occurred in 2006, and the
limitations period for almost all of their claims expired
some time ago. As to most of their claims, the only real
question is whether the limitations period should be tolled
for any reason. Because the complaint fails to allege any
plausible reason why those limitations periods should be
equitably tolled, the motions to dismiss, with one exception,
will be granted.
facts are set forth as described in the complaint.
Loan Application and Closing
prior to November 2006, plaintiffs Timothy and Karen Harry
were contacted by defendant APEX Mortgage Services, LLC, a
mortgage servicing company, about refinancing the mortgage on
their home in Mashpee, Massachusetts. (Am. Compl.
¶¶ 1, 5, 15). In late November 2006, plaintiffs
began the process of applying for a new loan. (Id.
¶ 15). APEX faxed to the plaintiffs a
“Borrower's Certification and Authorization
Certification” form dated December 2, 2006.
(Id.). That form required plaintiffs'
signatures, certifying that the information they provided in
their loan application was true and complete. (Id.).
The form also stated that APEX had the right to initiate a
full documentation review to verify the information
plaintiffs provided, and that it, and the mortgage guaranty
insurer (if any), might verify the information in the loan
application and in any other documentation provided in
connection with the loan. (Id.). The form also
required plaintiffs to authorize APEX to provide any
requested documents to any investor to whom APEX might sell
the mortgage. (Id.).
December 13, 2006, plaintiffs formally applied with APEX for
a refinancing loan. (Id. ¶ 17). The loan
application was prepared by APEX, not by plaintiffs
themselves, and was faxed to plaintiffs on December 13.
(Id. ¶ 18). According to the complaint, the
application indicated that it was for a loan amount of $445,
500 with an interest rate of 1.750% for 480 months (40
years). (Id.). The complaint alleges that APEX
falsified information on the application by, for example,
significantly overstating plaintiffs' monthly income and
referring to unspecified credit union accounts and life
insurance policies. (Id.). It also alleges that the
application was backdated to November 29, 2006, and that the
application was prepared by Pierre Haber, “a known
illegal robo-signer.” (Id. ¶ 22).
with the loan application, APEX also sent plaintiffs a Good
Faith Estimate (“GFE”) form and Truth in Lending
(“TIL”) disclosure statement, both dated November
20, 2006. (Id. ¶¶ 25, 30). The GFE stated
a loan number of 0611EM005801, a base loan amount of $445,
500, an interest rate of 1.750%, a term of 480 months (40
years), as well as a number of fees associated with the loan.
(Id. ¶ 25). According to the complaint, the
information provided in the TIL disclosure differed from that
in the GFE. (Id. ¶ 31). The TIL disclosure
stated a loan amount of $458, 089.49, an APR of 6.246%, and a
term of 30 years. (Id. ¶¶ 30, 52).
December 21, 2006, defendant Fidelity Title Company prepared
a HUD-1A settlement statement for plaintiffs' loan.
(Id. ¶ 36). The complaint alleges that Fidelity
Title Company does not exist. (Id. ¶¶ 8,
38). According to the complaint, the HUD-1A included a number
of differences from the GFE and TIL disclosure statement. The
HUD-1A allegedly stated that American Brokers Conduit was the
lender, provided a different loan number of 0001552524, and
stated a loan amount of $450, 000. (Id. ¶ 38).
The complaint alleges that American Brokers Conduit did not
legally exist as an entity in 2006 and has never been legally
incorporated in any state. (Id. ¶¶ 4, 37).
Accompanying the HUD-1A was a form prepared by Chicago Title
Insurance Company, apparently explaining the title insurance
policy that it was issuing to American Brokers Conduit for
the plaintiffs' mortgage. (Id. ¶ 42). The
insurance form stated a commitment date of November 20, 2006,
and a loan amount of $450, 000. (Id.).
loan closing took place on December 21, 2006. On that day,
the note was issued and a mortgage on plaintiffs'
property executed in order to secure payment of the note.
(Id. ¶¶ 49, 58, 61). The note issued to
plaintiffs stated an interest rate of 1.725%, but on January
1, 2007, the interest rate allegedly jumped to 10.083%.
(Id. ¶ 50). It appears that an adjustable rate
rider and a prepayment rider accompanied the note.
(Id. ¶ 65). The note also stated the loan was a
40-year loan in the amount of $450, 000. (Id.
mortgage stated a loan amount of $450, 000, payable to
Mortgage Electronic Registration System, Inc.
(“MERS”), as nominee for American Bankers
Conduit. (Id. ¶ 61). According to the
complaint, the MERS identification number listed on the
mortgage is associated with American Home Mortgage Holding,
Inc., and not with American Brokers Conduit. (Id.
¶ 63). The mortgage was recorded on February 7, 2007, in
the Barnstable Registry of Deeds by Fidelity Title Group.
(Id. ¶ 61). According to the complaint,
plaintiffs' signatures on the mortgage do not match their
signatures on the adjustable rate and prepayment riders, and
therefore their signatures were forged. (Id. ¶
began making payments on February 1, 2007. (Id.
¶ 56). The last payment they made was on October 1,
Assignments and Modification
1, 2009, MERS, as nominee for American Brokers Conduit,
assigned the mortgage, but not the underlying note, to
Deutsche Bank National Trust Company as Trustee for American
Home Mortgage Assets Trust 2007-02. (Id. ¶ 71).
The assignment was allegedly backdated, stating that it was
effective as of April 27, 2009. (Id. ¶ 73).
According to the complaint, that assignment was void because
American Brokers Conduit did not exist, and therefore could
not appoint MERS as its nominee, and therefore MERS had
nothing to assign. (Id. ¶ 75). The complaint
further alleges that the trust to which the mortgage was
transferred had “closed” in February 2007, and
therefore could not have accepted the assignment in 2009.
(Id.). The assignment was prepared and recorded by
DOCX, a subsidiary of Fidelity Financial. (Id.
¶ 76). The complaint alleges that six “illegal
robo-signers, ” all MERS employees, executed the
assignment. (Id. ¶ 78).
7, 2010, MERS again assigned the mortgage to Deutsche Bank as
Trustee for the same trust. (Id. ¶ 82).
According to the complaint, the second assignment provided a
new trust address, which was that of American Home Mortgage
Servicing, Inc. (“AHMSI”). Also according to the
complaint, the second assignment was intended to correct
defects in the first assignment. (Id. ¶ 85).
However, the complaint alleges that the second assignment was
also signed by “another known illegal
robo-signer.” (Id. ¶ 85). The complaint
alleges that all defendants knew or should have known that
the assignments were fraudulent and void. (Id.
15, 2012, plaintiffs received a letter from AHMSI informing
them of the availability of several payment options.
(Id. ¶ 129). That communication listed
plaintiffs' gross monthly income as $5, 063.78, as
compared to the gross monthly income of $14, 950.00 that was
stated on the loan application allegedly prepared by APEX.
(Id.). The complaint alleges that the inconsistency
confirms that APEX falsified information on the loan
application. (Id. ¶ 131). According to the
complaint, plaintiffs never agreed to a modification of their
payment obligations. (Id. ¶ 130).
stopped making payments on their mortgage after October 1,
2008. (Id. ¶ 88). They received multiple
notices regarding their mortgage from AHMSI from November 1,
2008, through June 5, 2012, when AHMSI changed its name to
Homeward Residential. (Id.). The complaint alleges that
AHMSI/Homeward Residential knew that the issuer of the
note-that is, American Brokers Conduit-was a non-existent
entity and that therefore the note was void, yet continued to
press for payment. (Id. ¶ 89-90). Ocwen
Financial Corporation purchased Homeward Residential on
October 3, 2012. (Id. ¶ 92). According to the
complaint, without inquiring into the facts surrounding the
plaintiffs' mortgage, Ocwen continued to harass them for
payment on the loan. (Id.).
September 28, 2009, Deutsche Bank filed a complaint in the
Superior Court of Massachusetts, Barnstable County, seeking
foreclosure on the property. (Id. ¶
A notice of mortgagee's sale of the property was
published on November 6, 2009. (Id. ¶ 95).
However, according to the complaint, nothing happened for
more than a year, until November 11, 2010, when Deutsche Bank
sent plaintiffs a notice of intention to foreclose and second
notice of mortgagee's sale of the property. (Id.
¶¶ 101-02). A sale by public auction was scheduled
for December 17, 2010, but was later cancelled. (Id.
Bank allegedly issued a third notice of foreclosure on July
14, 2011. (Id. ¶ 104). On September 1, 2011,
plaintiffs then received another notice of foreclosure sale
and notice of mortgagee's sale of the property, stating
that the property would be sold by public auction on October
7, 2011. (Id. ¶ 105). Again, no sale ever took
place. (Id. ¶ 106).
February 13, 2015, plaintiffs received a notice from Ocwen of
its intent to foreclose on the property on behalf of Deutsche
Bank. (Id. ¶ 115). On May 27, 2015,
plaintiffs' attorney sent Ocwen a dispute of the alleged
debt and requested that, from that point forward, Ocwen
communicate only with plaintiffs' attorney. (Id.
¶ 116). On June 10, 2015, Ocwen sent, directly to
plaintiffs, a notice of default stating an amount past due of
$223, 611.23 on loan number 7140304192. (Id. ¶
117). That notice also stated that Ocwen intended to
foreclose on the mortgage unless plaintiffs became current on
their payments. (Id.). Ocwen sent another notice to
the same effect, also directly to plaintiffs, on July 1,
2015. (Id. ¶ 118).
to the complaint, Ocwen mailed plaintiffs two letters on July
20, 2015. (Id. ¶¶ 119-20). The first
stated that Ocwen had received plaintiffs' correspondence
but needed more time to respond. (Id. ¶ 119).
The second stated that it had received plaintiffs'
request to communicate only through their attorney, but could
not authorize their attorney to receive information regarding
the loan because their signatures on the request did not
match their signatures on their loan documents. (Id.
¶ 120). Ocwen mailed another letter to plaintiffs on
September 4, 2015, stating that it had received
plaintiffs' request but was unable to provide a response.
(Id. ¶ 121). It is unclear from the complaint
whether that third letter was referring to plaintiffs'
letter disputing the debt or the letter requesting to
authorize their attorney to receive communications.
January 28, 2016, plaintiffs received another letter from
Ocwen threatening litigation and foreclosure. (Id.
¶ 122). Plaintiffs responded by disputing the debt.
(Id. ¶ 123).
not appear that a foreclosure of plaintiffs' property has
occurred, or that foreclosure proceedings are imminent.
Plaintiffs' Attempted Rescission and “Qualified
March 20, 2015, plaintiffs sent to all defendants a
rescission notice pursuant to the Truth in Lending Act
(“TILA”). The complaint alleges that, due to that
rescission notice, defendants were required to return to
plaintiffs any money they had paid towards the note.
(Id. ¶ 142).
30, 2015, plaintiffs sent a “Qualified Written Request
and Validation of Debt” letter to Ocwen. (Id.
¶ 132). In response, Ocwen sent plaintiffs two
packages of documents, one on September 11, 2015, and another
on September 30, 2015. (Id. ¶ 133). According
to the complaint, the documents sent were inadequate because
they failed to adequately document “the historical
evolution of the alleged debt.” (Id. ¶
filed the original complaint in this action on March 18,
2016, in Massachusetts state court. Defendants removed the
action to this Court on May 17, 2016. Plaintiffs filed an
amended complaint on June 22, 2016. The amended complaint
alleges (1) a violation of the Racketeer Influenced and
Corrupt Organizations Act (“RICO”), 18 U.S.C.
§ 1961 et seq., as to all defendants (Count
One); a claim that the statute of limitations to collect on
the note has expired (Count Two); a violation of Mass. Gen.
Laws ch. 93A as to all defendants (Count Three); violations
of the Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C. § 1692 et
seq., as to defendants AHMSI, Deutsche Bank, Ocwen, and
Homeward (Count Four); violations of the Real Estate
Settlement Procedures Act (“RESPA”), 12 U.S.C.
§ 2601, as to defendants APEX, American Brokers Conduit,
AHMSI, Fidelity Financial, Fidelity Title Company, and
Fidelity Title Group (Count Five); a violation of 18 U.S.C.
§ 1014, as to all defendants (Count Six); violations of
the Truth in Lending Act, 15 U.S.C. § 1601 et
seq., as to defendants APEX, American Brokers Conduit,
AHMSI, Fidelity Financial, Fidelity Title Company, and