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Gozzo v. Wells Fargo Bank, NA

United States District Court, D. Massachusetts

March 21, 2017




         Plaintiff Gregory Gozzo has filed a First Amended Complaint. Doc. No. 22. Subsequently, he has voluntarily dismissed two defendants named therein, Altisource and H&R Block. Doc. Nos. 53, 73. Defendants Option One Mortgage Co. and Sand Canyon Corp. have moved for judgment on the pleadings. In response, Gozzo has voluntarily dismissed against Option One. Doc. No. 74. In both the First Amended Complaint, Doc. No. 22-3 at 3, and the Motion for Judgment on the Pleadings, Doc. No. 60 at 1 n.1, the parties represent that Option One and Sand Canyon are the same company. Therefore, the Court interprets Plaintiff's Motion for Voluntary Dismissal as to Option One as a voluntary dismissal of Sand Canyon as well. Sand Canyon is voluntarily DISMISSED. Accordingly, the Motion for Judgment on the Pleadings, Doc. No. 59, is DENIED AS MOOT. Defendant Wells Fargo has moved to dismiss, Doc. No. 25, Gozzo opposed, Doc. No. 38, and Wells Fargo replied, Doc. No. 45. Defendant Ocwen Loan Servicing has moved to dismiss, Doc. No. 49, advancing similar grounds to Wells Fargo and Plaintiff opposes, Doc. No. 75, relying upon its opposition to Wells Fargo's motion.


         On July 15, 2005, Option One issued a loan to Gozzo for $389, 500.00. Doc. No. 22-3 at 4. Gozzo signed a Note payable to Option One. Id. As security for the Note, Gozzo granted a mortgage encumbering the property located at 46 Arcadia Street in Revere, MA. Id. The mortgage was an adjustable rate mortgage with an initial annual interest rate of 7.29%. Id. Every six months, the Note holder would calculate the new rate as 6.39% over the then-prevailing London Interbank Offer Rate (LIBOR). Id. The contract provided a minimum rate of 7.29% and a maximum rate of 13.29%. Id.

         Wells Fargo is the current holder of the Note and Mortgage. Id. at 5. On November 9, 2015, Gozzo was sent a notice of delinquency by Korde & Associates stating “our intention on November 30, 2015 at 2:00pm to foreclose by sale under power of sale for breach of conditions, and by entry.” Id. Gozzo was sent another delinquency notice from Ocwen Loan Servicing on November 17, 2015, which stated that Gozzo was “2999 days delinquent on [his] mortgage loan, ” that he “first became delinquent on 09/02/07” and that he “must pay” $324, 727.88 to be current on his payments. Id. at 5-6.

         Ocwen sent a “Pre-Foreclosure Referral Letter” dated November 27, 2015, which stated that “Your mortgage payments are past due, which puts you in default of your loan agreement and the property may be referred to foreclosure after 14 days from the date of this letter.” Id. at 6 (emphasis omitted). The letter stated that the total due was $321, 636.12: $286, 005.18 in principal and interest, $18, 363.00 in escrow, $1, 693.03 in late charges, and $15, 574.91 in fees and expenses. Id.

         A foreclosure sale was held on November 30, 2015, and Wells Fargo bought the property. Id. On January 7, 2016, Gozzo received a letter from Korde & Associates addressed to “Occupant or Tenant” and “advised that a foreclosure sale was held 11/30/2015 regarding a mortgage given by Gregory Gozzo to Option One Mortgage Corporation. The purchaser at the foreclosure sale was Wells Fargo Bank, N.A. as Trustee for Option One Mortgage Loan Trust 2005-4, Asset-Backed Certificates, Series 2005-4.” Id. at 6-7.

         In early April 2016, Gozzo received a notice to quit from Orlans/Moran stating that Wells Fargo was the current owner of the property “pursuant to a foreclosure deed recorded . . . on January 26, 2016 . . . as the result of a foreclosure sale that was held at the Property on November 30, 2015 pursuant to Mass. Gen. Laws c-244 §14.” Id. at 7. The notice stated that Wells Fargo “hereby terminates your occupancy of the Property” and instructed Gozzo “to vacate, remove all personal belongings from and surrender possession of the Property . . . within seventy two (72) hours after service on you of this notice” or Wells Fargo “will proceed with a court action to evict you.” Id.


         When considering a motion to dismiss, the Court “must take the allegations in the complaint as true and must make all reasonable inferences in favor of the plaintiffs.” Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993). Dismissal for failure to state a claim is appropriate when the pleadings set forth “factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory.” Berner v. Delhanty, 129 F.3d 20, 25 (1st Cir. 1997) (quoting Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir. 1988)).

         To the extent that Gozzo asserts claims arising out of the initial contract and the conduct surrounding it, those claims are time barred. Gozzo's first cause of action for an unconscionable contract is subject to a six-year statute of limitations. Mass. Gen. Laws ch. 260, § 2. The contract was signed in 2005 and the statute of limitations expired in 2011 and the Court does not find Gozzo's argument that the claim did not accrue until later persuasive considering that the terms of the contract were clearly set out when it was signed. See DaSilva v. U.S. Bank, N.A., 885 F.Supp.2d 500, 504 (D. Mass. 2012) (“A violation involving an issuance of a loan begins to accrue from the moment the parties entered into the loan.” (citing Maldonado v. AMS Servicing LLC, Civ. A. Nos. 11-40044-FDS, 11-40219-FDS, 2012 WL 220249, at *5 (D. Mass. Jan. 24, 2012))) Thus, the Motions to Dismiss are ALLOWED as to Gozzo's claim for unconscionable contract (claim one). As to Gozzo's other claims, to the extent they are based on the original contract the claims are time barred. See Mass. Gen. Laws ch. 260, § 2A (three-year statute of limitations for tort claims); Mass. Gen. Laws ch. 260, § 5A (four-year statute of limitations for section 93A claims). Below, the Court considers the claims only as to the more recent conduct related to the 2015 foreclosure.

         As to Gozzo's negligence claims (claims three and eight), both Wells Fargo and Ocwen assert that they owed Gozzo no duty of care. “[I]t is axiomatic that duty is a necessary ingredient of an action for negligence.” Young v. Wells Fargo Bank, N.A., 717 F.3d 224, 239 (1st Cir. 2013). Under Massachusetts law, “a lender owes no general duty of care to a borrower.” Corcoran v. Saxon Mortg. Servs., Inc., Civ. A. No. 09-11468-NMG, 2010 WL 2106179, at *4 (D. Mass. May 24, 2010). Additionally, “[i]t is well established that a lender owes no duty of care to a borrower when the institution's involvement in the transaction does not exceed the scope of its conventional role as a mere lender of money.” Huerta v. Ocwen Loan Servicing, Inc., No. C 09-05822(HRL), 2010 WL 728223, at *4 (N.D. Cal. Mar. 1, 2010) (quotation marks omitted). Gozzo points the Court to no authority suggesting that either Wells Fargo or Ocwen owed him a duty of care and the Court is unaware of any such authority. Gozzo responds to the argument by merely quoting from the complaint that “the Defendants owed Plaintiff a duty not to proceed with a mortgage arrangement that was highly likely to result in default in the event of any significant hike in the adjustable rate and monthly payment.” Doc. No. 22-3 at 12. That is insufficient and devoid of any legal justification suggesting the duty of care existed.[1] Thus, the Motions to Dismiss are ALLOWED as to claims three (negligence) and eight (negligent infliction of emotional distress).

         Gozzo asserts a claim for negligent misrepresentation based on the November 27, 2015 letter. To show negligent misrepresentation, Gozzo must show that Defendants “(1) in the course of [its] business, (2) supplied false information for the guidance of others (3) in their business transactions, (4) causing and resulting in pecuniary loss to those others (5) by their justifiable reliance on the information, and that he (6) failed to exercise reasonable care or competence in obtaining or communicating the information.” Gossels v. Fleet Nat. Bank, 902 N.E.2d 370, 377 (Mass. 2009). At no point in his complaint does Gozzo assert that he justifiably relied on the fourteen-day window that the letter provided. Thus, the Motions to Dismiss claim four are ALLOWED.

         Gozzo claims unjust enrichment against both Ocwen and Wells Fargo. Gozzo alleges that the transfer “constitutes unjust enrichment by virtue of the acquisition of title to real property of significant monetary value to the detriment of plaintiff's own financial circumstance.” Doc. No. 22-3 at 13. Under Massachusetts law, “[o]rdinarily, a claim of unjust enrichment will not lie ‘where there is a valid contract that defines the obligations of the parties.'” Metro. Life Ins. Co. v. Cotter, 984 N.E.2d 835, 849 (Mass. 2013) (quoting Bos. Med. Ctr. Corp. v. Sec'y of the Exec. Office of Health & Human Servs., 974 N.E.2d 1114, 1132 (Mass. 2012)). As the relationship between Gozzo and Wells Fargo is defined by the contract, Wells Fargo's Motion to Dismiss the claim for unjust enrichment is ALLOWED. As to Ocwen, Gozzo has failed to present facts allowing the inference that Ocwen was unjustly enriched to Gozzo's detriment. Wells Fargo held the Note and Mortgage and was the buyer at the ...

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