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Wolsh v. Ditech Financial, LLC

United States District Court, D. Massachusetts

June 5, 2018




         Plaintiff Stephen Wolsh asserts claims for negligent misrepresentation and breach of the covenant of good faith and fair dealing against his current mortgage loan servicer, Defendant Ditech Financial LLC f/k/a/ Green Tree Servicing. [ECF No. 16] (“Amended Complaint”). Currently pending before the Court is Defendant's motion to dismiss for failure to state a claim. [ECF No. 20]. For the following reasons, the motion is GRANTED and the Amended Complaint is DISMISSED without prejudice. Plaintiff may file a second amended complaint within 21 days if he can cure the deficiencies discussed herein.

         I. BACKGROUND

         In evaluating Defendant's motion to dismiss, the Court accepts the well-pleaded allegations as true. See Ruivo v. Wells Fargo Bank, 766 F.3d 87, 90 (1st Cir. 2014). Plaintiff has attached several documents to the Complaint, which the Court may consider as part of the pleadings. See Giragosian v. Ryan, 547 F.3d 59, 65 (1st Cir. 2008); Trans-Spec Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315, 321 (1st Cir. 2008). The Court may also look to documents that are central to Plaintiffs claim or documents that are sufficiently referred to in the Amended Complaint. See Watterson v. Page, 987 F.2d 1, 3-4 (1st Cir. 1993).

         In April 2008, Plaintiff obtained a loan of $417, 000 from GMAC Mortgage, LLC (“GMAC”), with Mortgage Electronic Registration Systems, Inc. (“MERS”) serving as GMAC's nominee. The loan was secured by a mortgage on Plaintiffs property in West Dennis, Massachusetts.[1] Am. Compl. ¶¶ 4, 10-11; [ECF No. 20-1 at 2-3]. Plaintiff remained current on his mortgage payments until 2012 when, due to the impact of the nationwide financial crisis and Plaintiffs health issues, Plaintiff contacted GMAC regarding his need for a loan modification.[2]Am. Compl. ¶¶ 13-16. A GMAC representative told Plaintiff that his loan would need to be in default for three months to be eligible for a loan modification; Plaintiff then purposefully defaulted on his mortgage payments. Id ¶¶ 16-18. After falling at least three months behind, Plaintiff contacted GMAC again but was informed that GMAC was unable to accept his payments due to his default, and he never received a loan modification from GMAC. Id ¶¶ 19-23.

         In June 2016, after Defendant succeeded GMAC as Plaintiffs mortgage loan servicer, Defendant offered Plaintiff a trial period plan (“TPP”) as an initial step toward obtaining a permanent loan modification. Id ¶¶ 23-25. The TPP included an estimation of the terms of a permanent loan modification offer, including a new loan balance of $541, 774.63 (unpaid principal balance of $401, 103.16 plus principal forbearance of $140, 671.47, and monthly principal and interest payments of $1, 214.64). [ECF No. 20-1 at 38]. To qualify for a permanent loan modification, and in accordance with the TPP, Plaintiff made three trial payments of $1, 839.45 in August, September, and October 2016. Id ¶ 26; [ECF No. 20-1 at 33]. Plaintiff allegedly made these payments in reliance on Defendant's statements to him that if he did not agree to a permanent loan modification for any reason, the trial payments would be returned to him. Id ¶ 27. Defendant never returned the TPP payments. Id ¶ 28.

         In October 2017, Defendant received an offer for a permanent loan modification but found the terms to be unacceptable; the principal amount due under the permanent loan modification was $555, 000 and exceeded the appraisal value of the property of $359, 000. Id ¶¶ 29-30. Plaintiff declined to accept the offer after Defendant refused to reduce the principal amount owed. Id ¶¶ 31-35. On November 10, 2016, before declining the modification offer, Plaintiff confirmed with an employee of Defendant that his three TPP payments would be returned and that he could immediately apply for a deed in lieu of foreclosure. Id ¶ 36. To do so, Defendant informed Plaintiff that he had to reapply for a loan modification and indicate in his application that he was requesting a deed in lieu of foreclosure. Id ¶ 38. Plaintiff applied for a deed in lieu of foreclosure and supplied the necessary documentation but his application was denied due to property title issues relating to a “senior mortgage with an improper discharge.” Id. ¶¶ 39-44. Defendant at this point had resumed foreclosure proceedings and attempted to foreclose by public auction on April 25, 2017. Id ¶ 46. The police were called, however, and the auction was cancelled. Id


         To evaluate a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), the Court must “accept as true all well-pleaded facts alleged in the complaint and draw all reasonable inferences therefrom in the pleader's favor.” A.G. ex rel. Maddox v. Elsevier, Inc., 732 F.3d 77, 80 (1st Cir. 2013) (quoting Santiago v. P.R., 655 F.3d 61, 72 (1st Cir. 2011)). The complaint must set forth “a short and plain statement of the claim showing that the pleader is entitled to relief, ” and should “contain ‘enough facts to state a claim to relief that is plausible on its face.'” Maddox, 732 F.3d at 80 (quoting Fed.R.Civ.P. 8(a)(2) and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “To cross the plausibility threshold a claim does not need to be probable, but it must give rise to more than a mere possibility of liability.” Grajales v. P.R. Ports Auth., 682 F.3d 40, 44-45 (1st Cir. 2012) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “A determination of plausibility is ‘a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'” Id. at 44 (quoting Iqbal, 556 U.S. at 679) (internal quotation marks omitted). “[T]he complaint should be read as a whole, not parsed piece by piece to determine whether each allegation, in isolation, is plausible.” Hernandez-Cuevas v. Taylor, 723 F.3d 91, 103 (1st Cir. 2013) (quoting Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d 1, 14 (1st Cir. 2011)) (internal quotation marks omitted). “The plausibility standard invites a two-step pavane.” Maddox, 732 F.3d at 80. First, the Court “must separate the complaint's factual allegations (which must be accepted as true) from its conclusory legal allegations (which need not be credited).” Id. (quoting Morales-Cruz v. Univ. of P.R., 676 F.3d 220, 224 (1st Cir. 2012)). Secondly, the Court “must determine whether the remaining factual content allows a ‘reasonable inference that the defendant is liable for the misconduct alleged.'” Id. (quoting Morales-Cruz, 676 F.3d at 224).


         A. Negligent Misrepresentation

         To prevail on a claim for negligent misrepresentation, Plaintiff must establish that:

the defendant (1) in the course of his 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.

Brown v. Bank of Am., Nat'l, Ass'n, CIV.A. No. 13-13256-PBS, 2015 WL 13685917, at *12 (D. Mass. Sept. 3, 2015) (quoting Braunstein v. McCabe, 571 F.3d ...

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