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Gaydos v. Bank of America, N.A.

United States District Court, D. Massachusetts

January 30, 2019

MICHAEL GAYDOS, Plaintiff,
v.
BANK OF AMERICA, N.A., as successor by merger to LASALLE BANK NA as trustee for WAMU MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2007-OA1 TRUST and SELECT PORTFOLIO SERVICING, INC., Defendants.

          MEMORANDUM AND ORDER

          ALLISON D. BURROUGHS U.S. DISTRICT JUDGE

         Plaintiff Michael Gaydos brings claims against Bank of America, N.A. (“BANA”) as trustee to his mortgage creditor and his mortgage servicer Select Portfolio Servicing, Inc. (“SPS”) (together, “Defendants”)[1] for violations of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605(e), the Massachusetts and Federal Fair Debt Collection Practices Acts (together, the “FDCPAs”), Mass. Gen. Laws ch. 93 § 49; 15 U.S.C. §§ 1692 et seq., rescission under the Truth in Lending Act (“TILA”), 15 U.S.C. § 1635, and breach of contract. Plaintiff initially brought his claims against BANA in an adversary proceeding commenced during the pendency of his Chapter 11 bankruptcy. The claims were, however, abandoned by the bankruptcy trustee after the case was converted to a Chapter 7 bankruptcy. On March 13, 2017, this Court granted Plaintiff's motion for a withdrawal of the reference to the bankruptcy court so that he could proceed in the district court. [ECF No. 6]. On June 8, 2017, Plaintiff filed an Amended Complaint in this Court against BANA, which the Court dismissed with leave to amend on January 16, 2018. [ECF Nos. 10, 17]. On February 21, 2018, Plaintiff filed his Second Amended Complaint (“SAC”), adding SPS as a Defendant. [ECF No. 20]. Defendants now move to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). [ECF No. 23]. For the reasons explained herein, the motion to dismiss is GRANTED with prejudice.

         I. BACKGROUND

         The following facts are drawn from the SAC, the well-pleaded allegations of which are taken as true for purposes of evaluating Defendant's motion to dismiss. See Ruivo v. Wells Fargo Bank, N.A., 766 F.3d 87, 90 (1st Cir. 2014). Certain details are also culled from documents whose authenticity are not disputed by the parties, from official public records, and from documents sufficiently referred to in the SAC. See Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993).

         On December 6, 2006, Plaintiff executed a promissory note in the principal amount of $1, 214, 000 and granted a mortgage on a residential property in Westwood, Massachusetts to Washington Mutual Bank, FA (“WaMu”). SAC ¶¶ 9-10; [ECF Nos. 15-1, 15-2]. During the 2008 financial crisis, WaMu was placed into receivership with the Federal Deposit Insurance Corporation (“FDIC”), and most of WaMu's assets were sold to JPMorgan Chase Bank, National Association (“Chase”). Chase assigned the mortgage to BANA as trustee for the Trust on September 23, 2010 and recorded the assignment with the Norfolk County Registry of Deeds. [ECF No. 15-3 at 2] (Chase “assigns without recourse in any event said mortgage and the note and claim secured thereby . . . .”). Chase also endorsed the note to BANA as trustee for the Trust. [ECF No. 15-1 at 7].[2] U.S. Bank National Association later succeeded BANA as trustee for the Trust. See [ECF No. 15-4]; In re Gaydos, No. 15-11405 (Bankr. D. Mass. Jan. 29, 2016), ECF No. 22-1 (affidavit recorded in Plymouth County Registry of Deeds on May 3, 2012, acknowledging that U.S. Bank succeeded BANA as trustee for the Trust).

         Plaintiff worked as a wholesale mortgage loan representative prior to the financial crisis, but lost his job in May 2007 and began to struggle financially. SAC ¶¶ 13, 15. He claims that he “repeatedly attempted to find some way of negotiating with the mortgagee or its servicing agent, ” but was “frustrated at every turn in trying to find out who [was] the lawful owner” of the mortgage and note. SAC ¶ 16. The responses he received were “vague, at best, but mostly unresponsive.” SAC ¶ 16. Plaintiff has not, however, identified any specific communications in which he sought to identify the owner of the mortgage prior to receiving a notice of default from BANA. See SAC ¶ 17.

         On September 28, 2010, BANA sent Plaintiff a notice of default, which did not inform Plaintiff of his “right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration and sale, ” as required by the Mortgage. SAC ¶¶ 17, 29. After receiving the notice of default, Plaintiff sent numerous written inquiries and “repeatedly communicated his desire to rescind the loan pursuant to the Truth in Lending Act.” SAC ¶¶ 17, 22. More specifically, Plaintiff sent three Qualified Written Requests (“QWR”), see 12 U.S.C. § 2605(e)(1)(B), to SPS and at least one letter that claimed to be a QWR to Chase, and asserts that Defendants sent inadequate responses to each.[3]SAC ¶ 17. Some of the responses had copies of the promissory note, but Plaintiff noticed inconsistencies. For example, he received a copy of the promissory note in 2012 that had an endorsement, but that endorsement did not appear on a copy of the note he received in 2013. SAC ¶¶ 18, 19. On March 16, 2015, he received a “Notice of Intent to Foreclose Mortgage and Pursue Deficiency After Foreclosure of Mortgage.” SAC ¶ 23.

         On April 12, 2015, Plaintiff filed a voluntary chapter 11 bankruptcy petition. In re Gaydos, No. 15-11405, ECF No. 1. On June 12, 2015, SPS notified Plaintiff that the foreclosure sale had been cancelled, SAC ¶ 17, but in January 2016, U.S. Bank, as trustee for the Trust, sought relief from the automatic stay in order to foreclose, asserting that Plaintiff had defaulted on all payments due since April 1, 2010. In re Gaydos, No. 15-11405, ECF No. 22 at 1-3. Plaintiff then brought an adversary proceeding, which became the instant action after the Court granted Plaintiffs motion to withdraw the reference to the bankruptcy court. [ECF No. 6].

         II. MOTION TO DISMISS STANDARD

         On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must accept as true all well-pleaded facts, analyze those facts in the light most hospitable to the plaintiffs theory, and draw all reasonable inferences from those facts in favor of the plaintiff. United States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 383 (1st Cir. 2011). The facts alleged must be sufficient to “state a claim to relief that is plausible on its face.” A.G. ex rel. Maddox v. Elsevier, Inc., 732 F.3d 77, 80 (1st Cir. 2013) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The plausibility standard invites a two-step analysis. Id. “At the first step, 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)). “At the second step, the court must determine whether the remaining factual content allows ‘a reasonable inference that the defendant is liable for the misconduct alleged.'” Id. (citations omitted). “[T]he combined allegations, taken as true, must state a plausible, not a merely conceivable, case for relief.” Sepúlveda-Villarini v. Dep't of Educ. of P.R., 628 F.3d 25, 29 (1st Cir. 2010).

         III. DISCUSSION

         The Court previously dismissed Plaintiff's First Amended Complaint, [ECF No. 17], and will rely here on the reasoning explained in that order without restating it in full, except to the extent Plaintiff has amended his claims. In addition to now bringing all four of his claims against SPS, Plaintiff has supplemented his claims against BANA with three new theories: (1) that BANA violated the FDCPAs by attempting to collect Plaintiff's mortgage debt when it did not possess the promissory note, (2) that Plaintiff's rescission attempts were effective under TILA because WaMu “was not the actual lender, but was merely a ‘front' for another, undisclosed lender, ” and (3) that BANA breached the mortgage contract because its default notice did not comply with a provision in the mortgage requiring the lender to notify Plaintiff of his “right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration and sale.” SAC ¶¶ 35, 36, 39, 29.[4] The Court will address each of Plaintiff's four claims in turn.

         A. RESPA

         RESPA “requires the servicer of a federally-related mortgage loan to respond to certain borrower inquiries” that qualify as QWRs. O'Connor v. Nantucket Bank, 992 F.Supp.2d 24, 34 (D. Mass. 2014) (citing 12 U.S.C. § 2605). A QWR is a written correspondence that “(i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and (ii) includes a statement of the reasons for the belief of the borrower . . . that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.” 12 U.S.C. § 2605(e)(1)(B). RESPA defines a servicer as “the person responsible for servicing of a loan (including the person who makes or holds a loan if such person also services the loan).” 12 U.S.C. § 2605(i)(2). A servicer that receives a QWR must acknowledge receipt of the QWR within five days “excluding legal public holidays, Saturdays, and Sundays” and respond to the QWR “with a written explanation or clarification” within thirty days “excluding legal public holidays, Saturdays, and Sundays.” 12 U.S.C. § 2605(e). The servicer's response must inform the borrower of any ...


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