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Monks v. Astoria Bank

United States District Court, D. Massachusetts

June 5, 2017

THOMAS E. MONKS, Plaintiff,



         This is an action for wrongful foreclosure. In 2004, plaintiff Thomas Monks purchased his home by taking out a mortgage loan. Nine years later, he defaulted on the loan payments, after which the defendant mortgagee, Astoria Bank, initiated foreclosure proceedings. The complaint alleges that Astoria provided Monks with an opportunity to apply for a loan modification and assured him that it would not conduct a foreclosure sale during the evaluation period. It further alleges that despite those assurances, Astoria foreclosed on the home in September 2016. The complaint alleges three counts under Massachusetts law for negligent misrepresentation, deceit, and a violation of Mass. Gen. Laws ch. 93 A.

         Defendant has moved to dismiss the complaint. For the following reasons, the motion will be denied.

         I. Background

         Unless otherwise noted, the facts are set forth as alleged in the complaint. In order to provide context, the Court has also taken judicial notice of various filings in the bankruptcy court.[1]

         Thomas Monks and his family live in a house located at 34 Perley Street in Lynn, Massachusetts ("the property"). (Am. Compl. ¶ 6). Astoria Bank, formerly known as Astoria Federal Savings and Loan Association, is a federal savings association.[2]

         On April 1, 2004, Monks borrowed $184, 000 from Astoria Federal Mortgage Corporation to buy the property. (Id. ¶ 8). At the time of the loan, Astoria Federal Mortgage Corporation was a subsidiary of Astoria Federal Savings and Loan Association. (See Patel Deck Ex. D). The loan was secured by a mortgage on the property. (Am. Compl. Ex. 9). The mortgage was subsequently assigned to Astoria Federal Savings and Loan Association. (Id. ¶¶ 9-11).

         Monks has held the same job as an inspector at a machine shop for 42 years. (Id. ¶ 6). According to the complaint, around January 2013, he went through a period of financial hardship due to a loss of overtime work and an illness his wife suffered that prevented her from working. (Id. ¶ 12). As a result, he fell behind on his mortgage loan payments. (Id.).

         The complaint alleges that Monks attempted to modify his mortgage loan on multiple occasions. (Id. at 14). It alleges that he applied for modifications in 2014, 2015, and 2016, but that Astoria ignored some of his financial documents and denied those applications. (Id.).

         On April 9, 2010, Monks filed a Chapter 13 bankruptcy petition in the United States Bankruptcy Court for the District of Massachusetts. (In re Thomas E. Monks, D. Mass. Bankr. 10-13809, Docket No. 1). During the course of the bankruptcy proceedings, Monks's attorney filed multiple loan-modification applications on his behalf. (Am. Compl. ¶ 15). Those applications were denied, although the reason for the denial is allegedly unclear. (Id.). On December 23, 2014, the court granted Monks's motion to convert the bankruptcy to a Chapter 7 proceeding. (In re Thomas E. Monks, D. Mass. Bankr. 10-13809, Docket No. 92). Shortly thereafter, he filed a notice of intention stating that he intended to reaffirm the debt in order to retain the property, although he did not subsequently file a reaffirmation agreement. (Id. Docket No. 102). On January 30, 2015, the Chapter 7 trustee filed a report of no distribution, stating that there was no property available for distribution beyond that exempted by law, and further stating, "Assets Abandoned (without deducting any secured claims): $ 198, 390.23." (Id. at Docket Entry on January 30, 2015). That amount is the same as the amount of the secured claim on the property that Monks listed on the Chapter 13 bankruptcy petition. (Id. Docket No. 1 at 7). Finally, on April 2, 2015, Monks was granted a discharge. (Id. Docket No. 118).

         At some point, Monks received a notice that Astoria had scheduled a foreclosure sale for August 29, 2016. (Am. Compl. ¶ 16). In response to that notice, he contacted the Office of the Attorney General of Massachusetts, which, in turn, requested that Astoria postpone the sale and review the matter for a possible loan modification. (Id. ¶ 17). According to the complaint, Astoria agreed to postpone the sale and consider Monks for a modification. (Id. ¶ 18).

         On August 29, 2016, Astoria sent Monks a letter and loan modification application. (Id. ¶ 20). The letter stated that "[o]ptions [m]ay [b]e [a]vailable" that would allow him to stay in his home or leave while avoiding foreclosure, including, among other things, modification of the loan terms. (Id. Ex. 8). The first step, it stated, was to "provid[e] information and documentation" using the instructions provided on the attached checklist. (Id.). It went on to say:

Once we have received and evaluated your information, we will contact you regarding your options and next steps.
No foreclosure sale will be conducted and you will not lose your home during the evaluation period (or any longer period required for us to review supplemental material you may provide in response to this notice).

(Id.). In the following section, it stated that "if a complete [application] is not received at least 38 calendar days before any scheduled foreclosure sale we may not be able to conduct a full review of your mortgage loan file." (Id.). Among other things, the document checklist requested that Monks submit three recent personal-bank statements. (Malik Deck Ex. I).

         The complaint alleges that on September 16, 2016, Monks returned a 67-page application package to Astoria by certified mail. (Am. Compl. ¶ 21). As a part of that package, he provided bank statements for the period from July 23-August 18, 2016, and June 22-July 22, 2016, but did not provide a third bank statement. (Malik Deck Ex. I). Astoria received the package on September 22, 2016, and mailed Monks confirmation of its receipt the following day. (Am. Compl. ¶¶ 22-23; Id. Ex. 10). The confirmation stated,

If we received your application package more than 37 calendar days before a scheduled foreclosure sale we will review your application, and determine if it is complete. You will be provided with an acknowledgement containing our assessment of completion shortly. If your application is complete, or is incomplete but completed within the time frame stated in the acknowledgment we will evaluate you for all available loss mitigation options.

(Id.). The letter did not indicate whether the bank considered the loan application to be complete, nor did Monks ever receive an acknowledgement as to Astoria's assessment of completion. (Id.)

         According to the complaint, despite having received the loan-modification application on September 22, Astoria foreclosed on the property on September 28, 2016. (Id. ¶ 24). The foreclosure took place 30 days after Astoria initially sent the application. (Id.). Monks was notified that the property had sold back to Astoria for the alleged amount of the debt of $221, 063.83, ...

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