United States District Court, D. Massachusetts
GERARD M. PENNEY, et al., Plaintiffs
DEUTSCHE BANK NATIONAL TRUST COMPANY, et al., Defendants
MEMORANDUM AND ORDER
ALLISON D. BURROUGHS, U.S. DISTRICT JUDGE
Gerard and Donna Penney (individually, “Gerard”
and “Donna, ” and collectively,
“Plaintiffs”) filed suit against Deutsche Bank
National Trust Company (the “Bank”), in its
capacity as the trustee for the certificate holders of a
mortgage-backed securities trust that holds the mortgage to
the Plaintiffs' home located at 34 Anchor Drive,
Sandwich, Massachusetts (the “Property”), and
Ocwen Loan Servicing, LLC (“Ocwen”), the servicer
of the loan for the Plaintiff's home (collectively, the
“Defendants”). This suit arises out of the
threatened foreclosure of the Property.
pending before this Court is the Defendants' Motion to
Dismiss for failure to state a claim [ECF No. 26], the
Defendants' Motion to Strike Gerard's affidavit and
exhibits attached to Plaintiffs' opposition to the motion
to dismiss [ECF No. 33], and the Plaintiffs' request for
a preliminary injunction, made in the Amended Complaint [ECF
No. 21 at ¶ 83(i)]. For the reasons discussed below, the
Court GRANTS in part and DENIES in part the
Defendants' motion to strike and Defendants' motion
to dismiss, and DENIES the Plaintiffs' request
for a preliminary injunction.
FACTUAL AND PROCEDURAL BACKGROUND
following facts are taken from Plaintiffs' Amended
Complaint [ECF No. 21 (hereinafter, the
“Complaint”)] and supplemented by materials
incorporated into the Complaint. See Rodi v. S. New
England Sch. of L., 389 F.3d 5, 12 (1st Cir. 2004). The
Plaintiffs are a married couple living in Sandwich,
Massachusetts. Complaint at ¶¶ 1-2. On or about
April 7, 1997, Donna and Gerard received the Property as
grantees by a quitclaim deed and took title as tenants by the
entirety. Id. at ¶ 5. On or about August 27,
2003, a Durable Power of Attorney was recorded in the
Barnstable County Registry of Deeds, appointing Gerard as
Donna's attorney-in-fact. Id. at ¶ 6. On or
about July 25, 2005, Gerard executed an “Adjustable
Rate Note, ” (the “Note”) with a
“Balloon Note Addendum” (the
“Addendum”) with H&R Block Mortgage
Corporation as the lender. Id. at ¶ 8. This
Note was for a 30-year, $405, 000 loan, which would reach
maturity in August 2035. Id.; [ECF No. 27-1 at 2].
Gerard simultaneously executed a Mortgage on the Property as
security for the Note. Complaint at ¶ 12. It is not apparent
from the pleadings why Gerard obtained this loan.
signed the Mortgage on behalf of Donna, including an
annotation that the execution on her behalf was pursuant to a
Power of Attorney dated March 20, 2003. Id. at
¶¶ 12- 15; see also [ECF No. 27-2 at 11].
Donna did not personally sign either the Note or the
Mortgage, and was not involved in the application process for
the loan. Id. at ¶¶ 14, 15. Plaintiffs
allege that Gerard was told he had to sign Donna's name
on the Mortgage to receive the loan. Id. at ¶
15. The Plaintiffs further allege that there was no Power of
Attorney dated March 20, 2003, but state that a Durable Power
of Attorney was recorded on August 27, 2003. Complaint at
¶¶ 6- 7. On or about October 6, 2006, Gerard
executed a “Declaration of Homestead” for the
Property in his sole capacity and recorded it in the
Barnstable County Registry of Deeds. Id. at ¶
2011, Donna was declared disabled. Id. at
¶¶ 6, 12. That same year, Gerard faced financial
difficulties and fell behind on the mortgage payments.
Id. at ¶ 17. The servicer on the loan, which
the Court infers to be Ocwen, informed Gerard that he needed
to apply for a loan modification under “the settlement
relating to the Massachusetts Attorney General and that his
loan would be included in the settlement.” Id.
at ¶ 18. Gerard applied for a loan modification.
Id. The Bank commenced foreclosure proceedings on
October 16, 2012, and scheduled a foreclosure sale for
November 14, 2012. Id. at ¶ 19. It is not clear
what happened on that foreclosure sale date, although there
is no indication that the Plaintiffs were foreclosed upon or
lost their home. On September 3, 2013, Ocwen offered Gerard a
loan modification. Id. at ¶ 20. Gerard
responded that he could not make the loan payments under the
offered modification because the monthly payment amount would
equal his entire monthly income. Id. Ocwen agreed to
reconsider the loan modification if Gerard submitted an
updated income statement. Id. at ¶ 21. Gerard
submitted the required paperwork. Id. On August 14,
2014, Ocwen wrote to Gerard that he had been denied a
modification of his loan for failing to submit documentation
in a timely manner. Id. at ¶ 22. The Plaintiffs
allege that Ocwen represented to Gerard that he would be
approved for a loan modification. Id. at ¶ 26.
On February 12, 2016, the Bank's attorneys wrote to the
Plaintiffs informing them that it intended to put the
Property up for auction on March 9, 2016 at 2:00 PM. [ECF No.
13 at 20]. It is not clear what happened on that date,
although it appears from the most recently amended complaint,
filed on June 16, 2016, that the Plaintiffs had not been
foreclosed on as of that date.
March 2, 2016, Gerard and Donna filed suit in the Barnstable
County Superior Court in Massachusetts against the Bank. [ECF
No. 13 at 18]. They simultaneously filed a motion for a
temporary restraining order and preliminary injunction to
stop the imminent foreclosure of the Property. [ECF Nos. 1-3
at 5, 13 at 15, 20]. The hearing in state court on the motion
for a temporary restraining order or preliminary injunction
was scheduled for March 8, 2016. [ECF No. 13 at 13-14]. On
March 8, 2016, the Bank removed the case from state court to
this Court. Id. at 24. Plaintiffs filed an amended
complaint on June 16, 2016. [ECF No. 21]. This Complaint
includes a request for a temporary restraining order or
preliminary injunction. Id. at ¶ 83(i). On July
18, 2016, the Defendants filed a motion to dismiss all counts
in the Complaint for failure to state a claim [ECF No. 26],
which the Plaintiffs opposed [ECF No. 31]. In support of
their opposition to the motion to dismiss, the Plaintiffs
also filed an affidavit from Gerard and copies of
mortgage-related documents. [ECF Nos. 32, 32-1, 32-2]. On
August 10, 2016, the Defendants filed a motion to strike the
affidavit and mortgage-related documents [ECF No. 33], which
the Plaintiffs opposed [ECF No. 37].
their Complaint, the Plaintiffs allege the following causes
of action: Declaratory Judgment on numerous grounds (Count
I); breach of contract (Count II); breach of the implied
covenant of good faith and fair dealing (Count III);
negligent and intentional infliction of emotional distress
(Count IV); violation of federal and state debt collection
practice laws (Count V); common law recoupment (Count VI);
and recoupment and adjustment of the loan for the Property
pursuant to Massachusetts General Laws chapter 140D (Count
VII). [ECF No. 21]. The Defendants' motion to dismiss
seeks dismissal of all seven counts. [ECF No. 26].
evaluate a complaint in the context of a motion to dismiss
under Federal Rule of Civil Procedure 12(b)(6) (“Rule
12(b)(6)”), the Court first “disregard[s]
statements in the complaint that merely offer ‘legal
conclusion[s] couched as . . . fact[ ]' or
‘threadbare recitals of the elements of a cause of
action.'” Rodriguez-Ramos v.
Hernandez-Gregorat, 685 F.3d 34, 40 (1st Cir. 2012)
(quoting Ocasio-Hernandez v. Fortuno-Burset, 640
F.3d 1, 12 (1st Cir. 2011)). Then, all “remaining,
non-conclusory allegations are entitled to a presumption of
truth, and we draw all reasonable inferences therefrom in the
pleader's favor.” Id. The
“make-or-break standard” in evaluating the
complaint “is that the combined allegations, taken as
true, must state a plausible, not a merely conceivable, case
for relief.” Id. (quoting
Sepulveda-Villarini v. Dep't of Educ. of P.R.,
628 F.3d 25, 29 (1st Cir. 2010)).
deciding a Rule 12(b)(6) motion, a court is ordinarily
limited to “the allegations contained within the four
corners of the plaintiff's complaint.” Young v.
Lepone, 305 F.3d 1, 10- 11 (1st Cir. 2002). A court may,
however, consider documents “outside of the pleadings
where they are undisputed, central to plaintiffs' claims,
and sufficiently referred to in the complaint or incorporated
into the movant's pleadings.” Gilmore, 535
F.3d at 52; see also Young, 305 F.3d at 11.
“When, as now, a complaint's factual allegations
are expressly linked to-and admittedly dependent upon-a
document (the authenticity of which is not challenged), that
document effectively merges into the pleadings and the trial
court can review it in deciding a motion to dismiss under
Rule 12(b)(6).” Beddall v. State St. Bank and Trust
Co., 137 F.3d 12, 17 (1st Cir. 1998); see also
Claudio-de León v. Sistema Universitario Ana G.
Méndez, 775 F.3d 41, 46 (1st Cir. 2014);
Carrero-Ojeda v. Autoridad De Energía
Eléctrica, 755 F.3d 711, 716-17 (1st Cir. 2014).
The Mortgage, Note, and Addendum are central to the
Plaintiffs' claims and referred to in the Complaint.
There is no dispute as to the authenticity of the copies of
the Mortgage, Note, and Addendum attached to the
Defendants' motion to dismiss. Therefore, the Court may
refer to the Mortgage, Note, and Addendum when ruling on the
Defendants' motion to dismiss.
The Defendants' Motion to Strike
Defendants moved to strike [ECF No. 33] the affidavit written
by Gerard and accompanying exhibits pertaining to the
mortgage of the Property that were filed with the
Plaintiffs' opposition to the motion to dismiss [ECF Nos.
32, 32-1, 32-2]. The Defendants argue that the affidavit
amends the Complaint without complying with Federal Rule of
Civil Procedure 15(a) (“Rule 15(a)”). In
opposition to the motion to strike, the Plaintiffs argue that
the motion should be summarily dismissed for failure to
comply with the local rules and that the affidavit should not
be dismissed because it only clarifies the pleadings.
the Court may use certain documents to supplement the factual
allegations of the complaint on a motion to dismiss, see
Butler v. Balolia, 736 F.3d 609, 611 (1st Cir. 2013),
Gerard's affidavit does not fall within this narrow
category of documents. See U.S. Bank Nat'l Ass'n
v. James, No. 09-89-P-S, 2009 WL 2448578, at *3-4 (D.
Me. Aug. 9, 2009) (striking affidavit attached to opposition
to motion to dismiss because it was not a document the court
could review at that stage of the case). Rather, Gerard's
affidavit touches on many of the allegations from the
Complaint and effectively functions as an amendment to the
Complaint. Rule 15(a) lays out the procedure a party must
follow to amend a complaint before trial. It states that
“a party may amend its pleading only with the opposing
party's written consent or the court's leave.”
Fed.R.Civ.P. 15(a)(2). Plaintiffs have obtained neither the
opposing party's written consent nor this Court's
leave. Accordingly, the Defendants' motion to strike is
granted as to the affidavit.
Court will not, however, strike Exhibit B attached to the
affidavit. Exhibit B contains documents relating to the
Mortgage that were already filed by the Defendants as
exhibits to their motion to dismiss. Compare [ECF
Nos. 27-1, 27-2] with [ECF Nos. 32-2]. Exhibit A
will be struck because it was not referred to in the
Complaint and is not susceptible to judicial notice.
Accordingly, the Defendants' motion to strike is denied
as it pertains to Exhibit B, but granted as to Exhibit A.
Count II (Breach of Contract)
argue two theories of breach of contract: first, that the
Defendants breached the contract memorialized by the Note and
Addendum, and second, that they also breached agreements made
during the loan modification negotiations. Complaint at
¶¶ 42-44. Specifically, Plaintiffs allege that
“the addendum and the Note taken together did create a
right for Gerard Penney to pay the loan in full on the
maturity date, or in the alternative for the twelve months
preceding the maturity date and the actions of the Bank and
its agent's breached this right.” Id. at
¶ 43. The Plaintiffs also argue that Ocwen breached
agreements it reached with Gerard during the loan
modification process. Id. at ¶ 44. The
Defendants assert that the Plaintiffs do not properly allege
the existence of a contract that allows them to default and
remain in default until maturity or one that entitles them to
a loan modification. [ECF No. 27 at 7-8].
do not dispute that Massachusetts law governs the
construction of the contracts in this case. See Wilson v.
HSBC Mortg. Servs., 744 F.3d 1, 5 (1st Cir. 2014)
(applying Massachusetts law when parties did not dispute that
“Massachusetts law applies to all substantive issues in
th[e] case”); [ECF No. 27-2 at 5]. “In order to
state a viable breach of contract claim under Massachusetts
law, plaintiffs must prove that  a valid, binding contract
existed,  the defendant breached the terms of the
contract, and  the plaintiffs sustained damages as a
result of the breach.” Brooks v. AIG SunAmerica
Life Assur. Co., 480 F.3d 579, 586 (1st Cir. 2007);
see also Bulwer v. Mount Auburn Hosp., 46 N.E.3d 24,
39 (Mass. 2016).
may examine a contract's terms at the motion to dismiss
stage to determine if the plain terms of the contract
contradict a plaintiff's allegations. See Young v.
Wells Fargo Bank, N.A., 717 F.3d 224, 232 (1st Cir.
2013) (examining contract's plain terms to determine that
plaintiff failed to state a breach of contract claim based on
the particular theory advanced); see also Clark
v. Janssen Pharms., Inc., 606 F. App'x 592, 594 (1st
Cir. 2015) (affirming district court's dismissal of a
contract suit pursuant to Rule 12(b)(6) when the plain terms
of the contract undermined the plaintiff's cause of
action); Amerifirst Bank v. TJX Cos. Inc. (In re TJX Cos.
Retail Sec. Breach Litig.), 564 F.3d 489, 499-500 (1st
Cir. 2009) (same); Henning v. Wachovia Mortg., FSB,
969 F.Supp.2d 135, 147 (D. Mass. 2013) (reasoning that
“[w]hen such documents [mortgage and note] contradict
allegations in the complaint, the documents trump the
allegations, ” and dismissing breach of contract claim
where allegation was “flatly contradicted by the terms
of the mortgage and note”); Suthers v. Amgen,
Inc., 441 F.Supp.2d 478, 484 (S.D.N.Y. 2006).
The breach of contract claim based on ...