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Galgana v. Wells Fargo Bank, N.A.

United States District Court, D. Massachusetts

March 29, 2018

WELLS FARGO BANK, N.A., Defendant.


          WOLF, D.J.


         This case was filed on March 23, 2017, by plaintiff-mortgagor Thomas C. Galgana against defendant-mortgagee Wells Fargo Bank, N.A. ("Wells Fargo") relating to the anticipated non-judicial foreclosure of plaintiff's home. Galgana's original complaint contains three Counts.[1] First, Galgana alleges that Wells Fargo violated M.G.L. c. 93A §2 ("Chapter 93A") by engaging in predatory lending when he refinanced his mortgage in 2004. More specifically, he alleges that the lender fraudulently inflated his income to qualify him for an adjustable-rate mortgage ("ARM") loan with predatory terms that it knew or should have known he could not afford (Count I) . In addition, Galgana asserts claims of promissory estoppel and misrepresentation based on statements that Wells Fargo allegedly made in connection with his 2009 ARM loan modification (Count III). Finally, Galgana requests declaratory relief declaring his mortgage loan unenforceable and/or reforming the terms (Count II).

         Wells Fargo has moved to dismiss the complaint (the "Motion to Dismiss"). Galgana has filed a motion to amend the complaint (the "Motion to Amend"). For the reasons explained below, the Motion to Dismiss is being allowed because Galgana's claims are time-barred. The Motion to Amend is being denied because it is futile.


         Galgana sued Wells Fargo in Massachusetts Superior Court on March 23, 2017. Wells Fargo removed the case on May 19, 2017, and subsequently filed the Motion to Dismiss. Galgana sought and received an extension of time to respond to the Motion to Dismiss. Instead of opposing the Motion, Galgana moved to amend the complaint. The court denied the motion to amend without prejudice because it did not include a supporting memorandum as required by Rule 7.1(b)(1) of the Local Rules of the United States District Court for the District of Massachusetts. The court then ordered Galgana to file either an opposition to the Motion to Dismiss or a renewed motion to amend the complaint accompanied by a memorandum of law. Plaintiff filed a renewed Motion to Amend with a supporting memorandum. The proposed amended complaint contains the same three substantive counts as the original complaint. Wells Fargo opposes the renewed Motion to Amend, arguing that the amendment is futile because it does not cure the deficiencies in the original complaint.


         Wells Fargo moves to dismiss all counts in Galgana's original complaint for failure to state a claim upon which relief can be granted. See Fed.R.Civ.P. 12(b)(6). A complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Allegations of fraud, however, must be pled with particularity. See id. at 687 (citing Fed.R.Civ.P. 9(b)).

         "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678. This pleading standard does not require "detailed factual allegations, " but requires "more than labels and conclusions." Twombly, 550 U.S. at 55. Therefore, in deciding a motion to dismiss, the court may disregard "bald assertions, unsupportable conclusions, and opprobrious epithets." In re Citigroup, Inc., 535 F.3d 45, 52 (1st Cir. 2008). It must, however, accept well-pleaded allegations as true and draw all reasonable inferences in plaintiff's favor. See Penalbert-Roia v. Fortuno-Burset, 631 F.3d 592, 594-95 (1st Cir. 2011). Moreover, the court may consider "documents that are part of or incorporated in the complaint." Rivera v. Centro Medico de Turabo, Inc., 575 F.3d 10, 15 (1st Cir. 2009).

         Therefore, the court takes the well-pleaded allegations in Galgana's complaint as true and has considered the exhibits attached to the complaint.

         A. Chapter 93A and Recoupment Claims

         Count I of the complaint asserts a claim for Chapter 93A violations, which he characterizes as a claim of recoupment in defense to the anticipated non-judicial foreclosure on his home.

         Chapter 93A prohibits "unfair or deceptive acts and practices in the conduct of any trade or practice, " including predatory lending schemes. M.G.L. c. 93A §2. Under Massachusetts law, "a lender may be liable under G.L. c. 93A for the origination of a home mortgage loan that the lender should recognize at the outset that the borrower is not likely to be able to repay." Drakopoulos v. U.S. Bank Nat'l Ass'n, 991 N.E.2d 1086, 1094 (Mass. 2013) (quotations omitted). Such claims must be brought within four years of when "the cause of action accrues." M.G.L. c. 93A §5A. Galgana filed this action until March 23, 2017. Therefore, any claim for which the statute of limitations expired before March 23, 2013 is time-barred.

         Galgana alleges that Wells Fargo violated Chapter 93A by providing him, in December 2004, with an ARM loan that he could not afford, and that Wells Fargo knew or should have known, based on his tax returns, that he could not afford it.[2] Galgana also alleges that the mortgage broker fraudulently inflated Galgana's income and property value on the loan application to qualify him for the loan, and that Galgana was not aware of the fraud at the time. On December 6, 2004, Galgana signed the ARM loan, which had interest rates and monthly payments that increased over time and allowed for negative amortization (the "2004 loan"). See Compl. Ex. B (Docket No. 20 at 51) (Adjustable Rate Mortgage Note, or "the Note"); ...

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