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Perroncello v. Wilmington Trust National Association

United States District Court, D. Massachusetts

February 16, 2018




         Plaintiff Joseph Perroncello seeks to recover damages flowing from what he contends was an unnecessarily protracted (and ultimately unsuccessful) mortgage loan mitigation assistance application process. Discovery having been concluded, defendants Wilmington Trust National Association and Specialized Loan Servicing, LLC (SLS)[1] move for summary judgment on all counts. For the reasons to be stated, defendants' motion will be ALLOWED.

         In 2007, Perroncello and his then-wife took out a $3, 000, 000 mortgage secured by their primary residence at 198 Beacon Street, Boston. The couple defaulted on the mortgage in 2010. They remained in default until the end of 2016. Wilmington Trust and SLS came into the picture in 2012 as the successor owner and servicer of the mortgage. In February of 2015, the couple divorced. The final Divorce Decree required Perroncello to pay off the outstanding mortgage by August 1, 2015, and deed his interest in the property to his ex-wife.

         Perroncello did not pay off the loan by the August 1, 2015 deadline. Thereafter, Perroncello and his former wife participated in court-ordered mediation over his failure to comply with the Divorce Decree. The mediator permitted Perroncello to seek loss mitigation assistance from SLS. (Although there is no copy of the Divorce Decree in the record, Perroncello maintains that the Decree required the mediator to give him permission.) After an inquiry by Perroncello in early 2016, SLS in a letter dated January 26, 2016, listed the documents necessary to complete a Request for Mortgage Assistance (RMA). Over the ensuing months, SLS sent a series communications to Perroncello, stating that while SLS had received some documents, others were still required to complete the RMA.

         On May 31, 2016, SLS informed Perroncello that an additional letter of explanation had to be submitted no later than June 30, 2016. That same day, SLS noticed a foreclosure sale on the property for June 29, 2016. On June 26, 2016, Perroncello made a payment of some $1, 728, 000, thereby reinstating the mortgage. Perroncello continued making monthly payments until December of 2016, when he discharged the mortgage with a lump sum payment.

         Perroncello brought this lawsuit in November of 2016. In the Amended Complaint (filed in December of 2016), he alleges that going forward from March of 2016, SLS misrepresented on several occasions that his RMA was complete and being processed. He also alleges that SLS requested duplicative and superfluous documents to perfect the RMA, and that SLS engaged in impermissible “dual tracking.” See Brickett v. HSBC Bank USA, N.A., 607 Fed.Appx. 5 (1st Cir. 2015) (“Dual tracking is a practice wherein a mortgagee financial institution engages in loan modification negotiations with mortgagors while at the same time moving forward with foreclosure.”).[2] Perroncello asserts four claims: violation of the Massachusetts Consumer Protection Statute, Mass. Gen. Laws ch. 93A (Count I); breach of the duty of good faith (Count II); fraud (Count III);[3] and negligent misrepresentation (Count IV).

         Under Fed. Rule Civ. P. 56(a), “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” As a threshold matter, the court agrees with defendants that they owed no duty to Perroncello - whether of good faith as asserted in the Amended Complaint, or of good faith and fair dealing as recast in Perroncello's opposition - to provide mortgage mitigation assistance. “Absent a provision in the mortgage that specifically requires the mortgagee to negotiate a loan modification prior to conducting a foreclosure sale, a lender has no duty to do so” as a part of the mortgagee's duty of good faith in exercising the power of sale in a mortgage. Brickett v. HSBC Bank USA, N.A., 52 F.Supp.3d 308, 312 (D. Mass. 2014), aff'd, 607 Fed.Appx. 5 (1st Cir. 2015). In the same vein, the “implied covenant [of good faith and fair dealing] may not be invoked to create rights and duties not otherwise provided for in the existing contractual relationship.” Ayash v. Dana-Farber Cancer Inst., 443 Mass. 367, 385 (2005) (internal quotation marks omitted). Perroncello has not identified any undertaking by defendants in the mortgage contract to offer or provide mitigation assistance.

         Defendants contend that with respect to his remaining claims, Perroncello has failed to establish loss causation. See Morris v. BAC Home Loans Servicing, L.P., 775 F.Supp.2d 255, 259 (D. Mass. 2011) (“To prevail on a Chapter 93A claim, the plaintiff must prove that a person who is engaged in trade or business committed an unfair or deceptive trade practice and that the [plaintiff] suffered a loss of money or property as a result.” (internal quotation marks omitted, emphasis supplied)); Massachusetts Sch. of Law at Andover, Inc. v. Am. Bar Ass'n, 142 F.3d 26, 41 (1st Cir. 1998) (“The elements of [negligent misrepresentation] are that the defendant falsely represented a past or existing material fact without any reasonable basis for thinking it to be true; that he intended to euchre the plaintiff into relying on the representation; that the plaintiff, unaware of the representation's falsity, justifiably relied on it; and that the plaintiff suffered harm due to his reliance.” (emphasis added)).

         In the first instance, defendants contend that Perroncello did not incur any damages because the foreclosure on the property never took place. See Wenegieme v. Bayview Loan Servicing, 2015 WL 2151822, at *2 (S.D.N.Y. May 7, 2015) (“dual tracking” claim not ripe because foreclosure had not occurred). Further, defendants did not dictate a complete discharge of the mortgage - that obligation arose from Perroncello's Divorce Decree. See Pl.'s Suppl. Answer to SLS's First Set of Interrogs. (Pl.'s Ex. A, Dkt # 28-1 at 2) (“The Separation Agreement provided that I pay off the SLS mortgage . . . by August 1, 2015.”); Perroncello Dep. Tr. (Defs.' Ex. C, Dkt # 20-3) at 175 (“Q: At some point, did the mediator require you to reinstate the mortgage? A: Yes. Q. And did he specifically require you to do that prior to the foreclosure sale? A. Yes.”); id. at 181 (“Q. And why did you end up paying it off in December 2016? Was that something that the mediator ordered you to do? A. Yes.”); id. at 188-189 (“Q. So you end up paying off this loan in December 2016? Correct? A. Yes. Q. And the - and I think you testified that was pursuant to the mediator's order. Correct? A. Yes.”). Finally, Perroncello concedes that given the size of the mortgage and the substantial equity in the property, he was never eligible for any mitigation relief. Opp'n at 3. Thus, he suffered no harm from any imperfection in the mitigation assistance application process.

         In an attempt to sidestep the fact that by repaying the loan and redeeming the title to the property, he obtained precisely the benefit he had bargained for in his mortgage contract, Perroncello maintains that he suffered harm because SLS did not give him “accurate information regarding the lack of loss mitigation options available to him.” Opp'n at 14. According to Perroncello, based on valuation information in SLS's possession as early as 2014, SLS should have told him that he did not qualify for loss mitigation assistance rather than string him along for several months in a bootless effort to complete an RMA.

As a result of not knowing that SLS would make no options available to him, Perroncello did not avail himself of the opportunity to pay the loan off far earlier than 2016. More specifically, interest at $15, 819.70 continued to accrue every month, together with the carrying costs of the property which were approximately $8000/month in real estate taxes and $2000/month in insurance.


         In essence, Perroncello's argument is one of estoppel, that SLS's failure to inform him of his ineligibility for mitigation assistance should be conversely construed as a representation of his eligibility, a representation on which he relied to his detriment.

Circumstances that may give rise to an estoppel are (1) a representation intended to induce reliance on the part of a person to whom the representation is made; (2) an act or omission by that person in reasonable reliance on the representation; ...

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