United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO
RICHARD G. STEARNS UNITED STATES DISTRICT JUDGE
Kathryn O'Brien brought this lawsuit in Essex Superior
Court against Select Portfolio Servicing, Inc. (SPS), and
Deutsche Bank National Trust Company. O'Brien alleges that
defendants' efforts to enforce the mortgage on her
property are predatory because they knew at the inception of
the loan that she would never be able to repay it. The
Amended Complaint sets out two claims: unfair and deceptive
practices in violation of Mass. Gen. Laws ch. 93A (Count I),
and unfair debt collection practices in violation of ch. 93,
§ 49. Defendants removed the case to the federal
district court on diversity grounds and now move to dismiss
both Counts of the Amended Complaint for failure to state a
claim. For the reasons to be explained,
defendants' motion to dismiss will be allowed.
facts, viewed in the light most favorable to O'Brien as
the nonmoving party, are as follows. On January 10, 2002,
O'Brien purchased a residence at 101-103 High Road in
Newbury, Massachusetts. On March 4, 2005, she refinanced the
home with an $825, 000 loan from WaMu. She alleges numerous
irregularities in the formation of the mortgage contract.
According to the Amended Complaint, the mortgage broker,
George Manemanus, never requested financial documentation,
falsified O'Brien's income on the mortgage
application, and charged her an exorbitant $560 processing
fee and $8, 250 “Yield Spread
Premium.” Am. Compl. ¶¶ 19-20, 26-27. As a
result, she was unable to make her mortgage payments
“from the outset, ” even before the interest rate
ballooned. Id. ¶ 24.
defaulted on the mortgage in September of 2008. Around that
same time, WaMu failed, and the Federal Deposit Insurance
Corporation (FDIC) was appointed as the receiver.
O'Brien's mortgage was subsequently transferred by
the FDIC to JPMorgan Chase Bank and then assigned, on
February 24, 2009, to Deutsche Bank.
August of 2010, O'Brien filed for Chapter 13 bankruptcy
protection to avoid a pending foreclosure sale. That action
was dismissed because she did not make or could not afford
the plan payments. In November of 2017, she filed again for
bankruptcy protection, but the case was similarly dismissed.
O'Brien remains in default.
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), quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). Two basic principles guide the court's analysis.
“First, the tenet that a court must accept as true all
of the allegations contained in a complaint is inapplicable
to legal conclusions.” Iqbal, 556 U.S. at 678.
“Second, only a complaint that states a plausible claim
for relief survives a motion to dismiss.” Id.
at 679. A claim is facially plausible if its factual content
“allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Id. at 678. “If the factual allegations in the
complaint are too meager, vague, or conclusory to remove the
possibility of relief from the realm of mere conjecture, the
complaint is open to dismissal.” S.E.C. v.
Tambone, 597 F.3d 436, 442 (1st Cir. 2010).
alleges in Count I that defendants “committed unfair
and deceptive practices by enforcing a mortgage” that
was unlawful from its inception. Am. Compl. ¶ 54;
see Frappier v. Countrywide Home Loans, Inc., 645
F.3d 51, 56 (1st Cir. 2011) (“Chapter 93A prohibits
‘the origination of a home mortgage loan that the
lender should recognize at the outset the borrower is not
likely to be able to repay.'”), quoting Com. v.
Fremont Inv. & Loan, 452 Mass. 733, 749 (2008).
first contend that O'Brien's origination claims are
jurisdictionally barred because they arose out of her
original mortgage with the failed WaMu. Thus, defendants
argue that her only avenue of relief, which she did not
pursue, was under the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (FIRREA). See
Demelo, 727 F.3d at 122 (“Since the
plaintiffs' consumer protection claims arise out of and
relate exclusively to pre-receivership acts or omissions of
the failed financial institution . . ., the plaintiffs'
eschewal of the claims-processing regime renders those claims
nugatory.”). O'Brien responds by arguing that
FIRREA does not preclude her from “rais[ing] defensive
origination-related claims for equitable
relief.” Opp'n (Dkt # 17) at 6 (emphasis added). I
FIRREA exhaustion requirement applies to claims against the
bank and not to claims by the bank against those indebted to
it.” Bolduc v. Beal Bank, SSB, 167 F.3d 667,
671 (1st Cir. 1999). A debtor like O'Brien can therefore
“await an attempt by the receiver to collect and then
assert any available defenses.” Id. Because
O'Brien's Chapter 93A claims are in the nature of
equitable defenses, they are not precluded by
FIRREA. See Id. at 671-672 (concluding
that “FIRREA poses no bar” to plaintiffs'
“action to enjoin the foreclosure, ” which
“is merely an effort to assert the defense preemptively
and not to recover money or property from the bank”);
Proal v. JPMorgan Chase Bank, N.A., 641 Fed.Appx. 9,
11 n.2 (1st Cir. 2016) (remanding “to determine which
of [plaintiff's] equitable claims remain in force and
what sort of relief, if any, she may now seek under
Massachusetts law in light of the fact that the challenged
foreclosure has already occurred”).
next maintain that O'Brien's Chapter 93A claim is
time-barred because the statute of limitations ran on March
4, 2009, four years after the loan closed and over nine years
before O'Brien initiated this lawsuit. See Da Silva
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.”). In response, O'Brien argues that
“defendant's ongoing attempts to collect a
debt” have had the effect of tolling the statute of
limitations, thus preserving her action under Chapter 93A.
Opp'n (Dkt # 17) at 11. Specifically, O'Brien
contends that Chapter 93A, which provides a private right of
action to those “who [have] been injured by another
person's use or employment of any [unfair or
deceptive] method, act or practice, ” Mass. Gen. Laws
Ann. ch. 93A, § 9 (emphasis added), reaches
defendants' use of the predatory loan as a
vehicle for collecting payment. See Black's Law
Dictionary (10th ed. 2014) (defining “use” as
“[t]he application or employment of something”);
State v. Custom Pools, 150 Vt. 533, 536 (1988)
(interpreting “use” in Vermont's analogous
consumer protection act as “‘[t]o make use of, to
convert to one's service, to avail one's self of, to
employ'”), quoting Black's Law Dictionary (5th
tolling argument, while creative, fails for the following
reasons. The essence of O'Brien's Chapter 93A claim
is that the loan was predatory because it was unaffordable
from the outset. In other words, O'Brien has
known since March 4, 2005, when she closed on the mortgage,
that she could not afford the monthly payments. See
Latson v. Plaza Home Mortg., Inc., 708 F.3d 324, 327
(1st Cir. 2013) (“Here the interest terms and the
implications of their burdens were apparent when the Latsons
signed and got their money, a conclusion underscored by the
Massachusetts rule that the terms of written agreements are
binding whether or not their signatories actually read
them.”). Nonetheless, she did not challenge the loan as
predatory until the filing of this lawsuit on September 13,
2018, over thirteen years after taking the loan. See
Azevedo, 167 F.Supp.3d at 170 (“Plaintiff's
Chapter 93A predatory lending claim based on the Mortgage
agreement executed June 10, 2005 must be dismissed as
time-barred.”). The failure to pursue the claim was not
for want of attention to the mortgage. During the thirteen
years that followed the origination of the mortgage,
O'Brien had defaulted, pursued a loan modification, filed
twice for bankruptcy protection, and hired an attorney in
August of 2009 to, among other things, file an adversary
complaint against Deutsche Bank (on September 7, 2011).
O'Brien's Chapter 93A claim (Count I) is, therefore,
barred by the four-year statute of limitations. See In re
Sheedy, 801 F.3d 12, 21 (1st Cir. 2015) (“[A]ny
claim under Chapter 93A is time-barred because Sheedy's
four-year limitations period began when she entered into the
loan in 2004.”); cf. Tyler v. Michaels
Stores, Inc., 464 Mass. 492, 503 (2013) (“[T]he
violation of the legal right that has created the unfair or
deceptive act or practice must cause the consumer some kind
of separate, identifiable harm arising from the violation
to Count II, O'Brien alleges that defendants attempted to
collect her mortgage “in an unfair, deceptive, and
unreasonable manner, ” in violation of Mass. Gen. Laws
ch. 93, § 49. Am. Compl. ¶ 61. However, as
defendants point out, § 49 does not provide a private
right of action. See O'Connor v. Nantucket Bank,
992 F.Supp.2d 24, 33 (D. Mass. 2014) (“Plaintiffs fail
to assert any right to relief under the Massachusetts debt
collection statute as § 49 itself provides no private
right of action.”); Kassner v. Chase Home Fin.,
LLC, 2012 WL 260392, at *9 (D. Mass. 2012)
(“Plaintiff brings related ‘debt collection'
claims under Mass. Gen. L. c. 93, § 49 . ...