United States District Court, D. Maine
RICHARD E. HAMILTON, JR., Plaintiff,
FEDERAL HOME LOAN MORTGAGE CORPORATION D/B/A FREDDIE MAC, et al., Defendants.
ORDER AFFIRMING IN PART AND OVERRULING IN PART THE RECOMMENDED DECISION ON DEFENDANTS' MOTION TO DISMISS
JOHN A. WOODCOCK, Jr., District Judge.
After various creditors attempted to foreclose on his mortgage, Richard E. Hamilton, Jr. brought a seventeen-count civil action against them, including Bank of America Defendants, who have been connected to his now-defaulted home loan and efforts at collection and foreclosure. The Bank of America (BOA) Defendants brought a motion to dismiss the Complaint and the Magistrate Judge issued a thoughtful recommended decision in which he recommended the Court dismiss some, but not all of Mr. Hamilton's counts. Both Mr. Hamilton and the BOA Defendants object. In general, the Court concludes that the Magistrate Judge was correct and affirms his Recommended Decision; however, the Court also concludes that by establishing an escrow account, BOA assumed fiduciary duties over that account sufficient to prevent dismissal of counts related to BOA's alleged mishandling of that account.
I. LEGAL STANDARD
When evaluating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted, a court must determine "whether, construing the well-pleaded facts of the complaint in the light most favorable to the plaintiffs, the complaint states a claim for which relief can be granted." Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 7 (1st Cir. 2011). A court need not assume the truth of conclusory allegations, and the complaint must state at least a "plausible claim for relief." Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). However, "[n]on-conclusory factual allegations in the complaint must... be treated as true, even if seemingly incredible." Ocasio-Hernández, 640 F.3d at 12. A court may not "attempt to forecast a plaintiff's likelihood of success on the merits." Id. at 13. Furthermore, courts should be "solicitous of the obstacles that pro se litigants face, and... endeavor, within reasonable limits, to guard against the loss of pro se claims due to technical defects." Dutil v. Murphy, 550 F.3d 154, 158-59 (1st Cir. 2008). In deciding a Rule 12(b)(6) motion, a court may consider any documents attached to the complaint as well as any other documents "integral to or explicitly relied upon in the complaint, even though not attached to the complaint.'" Trans-Spec Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315, 321 (1st Cir. 2008) (quoting Clorox Co. P.R. v. Proctor & Gamble Commercial Co., 228 F.3d 24, 32 (1st Cir. 2000)).
A. Facts Alleged in the Complaint
1. The Parties
Richard E. Hamilton, Jr. (REH, Jr.) is a resident of Merritt Island, Florida and New Gloucester, Maine. Aff. of Paula Lee-Chambers Attach. 18 Compl. ¶ 1 (ECF No. 40) ( Compl. ). Bank of America Corporation d/b/a Bank of America, N.A. (BOA) is a national association bank with headquarters in Charlotte, North Carolina. Id. ¶ 4. It is REH, Jr.'s understanding that Bank of America, N.A. is part of and/or owned by Bank of America. Id. Bank of America Corporation d/b/a BAC Home Loans Servicing, LP is a mortgage servicing company with headquarters in Calabasa, California. Id. ¶ 5. It is REH, Jr.'s understanding that BAC Home Loans Servicing, LP is part of and/or owned by Bank of America. Id.
2. The Purchase and Sale
On May 19, 2000, REH, Jr., then 28 years old, signed a contract to purchase a mobile home and land in New Gloucester, Maine for $99, 000.00. Id. ¶¶ 12, 16. REH, Jr. financed the purchase through a loan from BOA. Id. ¶¶ 13-15. On July 21, 2000, as part of the transaction, REH, Jr. granted a mortgage on the property to BOA. Id. ¶ 15. REH, Jr. alleges that he received numerous unsigned documents related to the loan at the closing. Id. He also alleges that he "[r]equested an owner's policy of title insurance which has not been received, " id. ¶ 15(B), though the unsigned Settlement Statement showed a fee paid for owner's coverage. Id. ¶ 15(I). Furthermore, he claims that BOA and its agents "withheld vital information from [him] prior to the purchase of the property and prior to and during the closing." Id. ¶ 16(B).
In July 2005, REH, Jr. moved to Florida. Id. ¶ 47(C). However, he "has maintained a residence in both Maine and Florida, " id. ¶ 47(D), and has not abandoned his property in Maine. Id. ¶ 47(E). On a routine basis, REH, Sr. would perform yard maintenance, repairs, snow removal, and security checks at the New Gloucester property. Id. ¶ 27. They have maintained the property in good order. Id. ¶ 47(F).
3. Mr. Hamilton, Jr.'s Private Mortgage Insurance
The mortgage contract-REH, Jr.'s copy of which was unsigned-called for a monthly payment of $61.13 for private mortgage insurance (PMI) premiums. Id. ¶ 32(A). At the closing, no one told REH, Jr. that his PMI could be terminated. Id. ¶ 32(B). Between 2000 and 2010, REH, Jr. never received a notice from BOA that his PMI could be terminated and cancelled, nor any telephone number that he could call to inquire about this topic; however, he did receive such notices and telephone number(s) in 2011 and 2012. Id. ¶ 32(C), (D), (G). Between January 2004 and September 2013, the PMI premium changed from $61.13 to $15.68. See id. ¶ 32(I)-(K).
4. Toxic Waste and Mr. Hamilton, Jr.'s Default
An automobile junkyard abuts REH, Jr.'s property in New Gloucester. Id. ¶ 18. A portion of this junkyard encroached onto REH, Jr.'s property by approximately twenty-five feet. Id. ¶ 19(F). REH, Jr. alleges that BOA, the surveyor, and the appraiser hired by BOA knew of this encroachment before the closing but concealed this fact from REH, Jr. Id. ¶¶ 20(E), (F), 23-24. Toxic waste from the automobile junkyard has leaked onto REH, Jr.'s property, causing damage to the land. Id. ¶ 20. REH, Jr. cannot rent out his property because of the hazardous waste problem. Id. ¶ 47(H). In addition, the presence of toxic waste scuttled a sale of the land that would have closed on October 1, 2007. Id. ¶¶ 20-22, 25-26. Thereafter, REH, Jr. ceased making any payments on the mortgage. Id. ¶ 17.
5. Mr. Hamilton, Jr.'s Document Requests to BOA
Between October 2007 and May 2013, REH, Jr. requested numerous documents related to his mortgage loan from BOA, but none has been provided. Id. ¶ 28.
6. Events Leading to the Commencement of Foreclosure Proceedings
Beginning on March 12, 2008, and continuing through May 28, 2013, REH, Sr., while routinely checking the property, discovered that a company called "Safeguard Properties" (Safeguard) changed the locks on the New Gloucester mobile home and he was unable to enter the property. Id. ¶ 27. Safeguard left a notice on the front door that stated: "If you are interested in buying or renting this property." Id. ¶ 27(A)(1).
On March 12, 2008, REH, Jr. contacted the State Police who telephoned BOA. Id. ¶ 27(A)(2). A representative from BOA confirmed that BOA had "ordered the locks changed, " and "[n]o entry in to the residence will be allowed until payment arrangements have been made." Id. On May 6, 2008, a neighbor called REH, Jr. to inform him that "[m]y wife saw people at your house; that these people stated that they were from the bank; that the bank had foreclosed on the house; and then they entered the house." Id. ¶ 27(B). On November 18, 2009, REH, Sr. discovered an agent of BOA inside the property; REH, Sr. had the agent removed by the State Police. Id. ¶ 27(C). Between March 12, 2008 and May 20, 2013, REH, Sr. also found a variety of notices posted on the property indicating that foreclosure proceedings were in progress and that unauthorized persons were prohibited from entering the premises. Id. ¶ 27(A)-(I). Between September 5, 2007 and December 17, 2012, BOA sent REH, Jr. eight letters threatening foreclosure. Id. ¶ 36(A)-(D). These included letters from BOA's lawyers on March 4, 2010 and August 22, 2011. Id. ¶ 36(B), (C).
On March 11, 2010, REH, Jr. received a "Notice Of Default" from Attorney Brent A. York (Attorney York), dated March 4, 2010. Id. ¶ 37. The March 4, 2010 letter was inaccurate and erroneous because the property address, the total due, the thirty-three payments, the late fees, the property inspections, the other fees, and the attorney's fees, were all incorrect. Id. ¶ 37(A). On March 16, 2010, REH, Jr. replied by letter to Attorney York with a proposed settlement offer. Id. ¶ 37(B). Attorney York did not respond to this letter. Id. REH, Jr. sent another letter to Attorney York on May 28, 2010, indicating that there were errors in the notice of default and requesting "the status of foreclosure regarding me and my property." Id. ¶ 37(C). Attorney York did not reply to this letter either. Id.
Over a year later, on September 8, 2011, REH, Jr. received a letter from Attorney York, dated August 22, 2011. Id. ¶ 37(D). Attorney York's letter recited an incorrect amount of debt but did state:
If you notify us in writing within 30 days of receipt of this notice that the debt is disputed, we will obtain verification of the debt or a copy of a judgment and mail it to you.
Id. On October 3, 2011, REH, Jr. wrote back to Attorney York disputing the debt, but Attorney York did not respond. Id. ¶ 37(E).
7. BOA Forecloses by Complaint and Its Complaint is Dismissed
On September 6, 2011, BOA filed a foreclosure complaint in the Maine District Court in Portland, Maine, Docket No. PORDC-RE-2011-269. Id. ¶ 38. REH, Jr. was served with the Complaint on July 16, 2012. Id. ¶ 38(C). On July 25, 2012, the court dismissed BOA's Complaint without prejudice. Id. ¶ 38(D). Attorney York, who represented BOA, moved to retain the foreclosure complaint on the docket, but the court denied his motion. Id. ¶ 38(F). On September 22, 2011, a foreclosure document was filed in the Cumberland County Registry of Deeds in the names of REH, Jr. and REH, Sr. and the foreclosure document is still in effect. Id. ¶ 38(H)-(I).
8. Statements from BOA: 2012-13
From December 14, 2012 to June 28, 2013, REH, Jr. received eight statements from BOA, each of which contained incorrect amounts for principal; seven contained incorrect amounts for escrow, five contained incorrect amounts for late charges, and three contained incorrect amounts for interest. Id. ¶ 39(A)-(I). From July 21, 2000 through October 31, 2012, BOA electronically sent REH, Jr. monthly statements, each of which was similarly incorrect as to principal, interest, and escrow. Id.
9. BOA Unresponsiveness: 2013
Despite numerous requests for account information from June 28, 2013 to August 15, 2013, BOA and others have failed to provide REH, Jr. with information and documents pertaining to the PMI policy. Id. ¶ 42(A)-(G).
10. National Mortgage Settlement: BOA
On March 12, 2012, the United States and forty-nine states, including Maine, filed suit in federal court against BOA and others, alleging that BOA and others had engaged in misconduct related to their origination and servicing of single family residential mortgages. Id. ¶ 45. BOA signed a consent judgment with the United States and with the state of Maine with an effective date of February 8, 2012, allowing any private individual to pursue any and all claims against BOA for unlawful activity and violation of state and federal laws. Id. ¶ 45(B)-(C). REH, Jr. claims that BOA has violated the terms of the consent judgment. Id. ¶ 45(D).
11. Ownership of Richard E. Hamilton, Jr.'s Mortgage
REH, Jr. asserts that it remains unclear who actually owns his residential mortgage. Id. ¶ 46. At various times, BOA, attorneys, filed documents, and others have asserted that the owner is: (1) BOA, (2) Nationstar Mortgage, LLC, and (3) the Federal Home Loan Mortgage Corporation. Id. ¶ 46(A)-(G).
12. Miscellaneous Allegations
REH, Jr. alleges that BOA told him that the town of New Gloucester needed to sign off before the closing so that the Town could make sure that the land and residence were properly completed. Id. ¶ 47(A). He says that the Town never signed off. Id.
REH, Jr. also alleges that from 2000 through 2007, BOA did not pay the correct interest to him on his escrow account. Id. ¶ 47(B).
Despite maintaining the property in good working order, REH, Jr. alleges that he is unable to sell or rent his property at 18 Krystle Lane, New Gloucester because of the hazardous waste problem, which is a preexisting problem. Id. ¶ 47(F)-(H).
B. Counts Against BOA
1. Breach of Contract
In Count One, REH, Jr. alleges that BOA breached its contract with him: (1) to make a residential mortgage loan with reasonable terms and fair conditions, in accordance with federal and state laws and to provide full disclosure; (2) to properly, adequately, and reasonably supervise its agents and its activities, reports and documents; (3) to require that the land be in good condition, that the new mobile home be fully set up, and to obtain the approval of the town of New Gloucester; (4) to perform the closing in accordance with certain reasonable standards as required by accepted practices and laws; (5) to perform the appraisal in accordance with certain reasonable standards as required by accepted practices and laws; (6) to perform the land survey in accordance with certain reasonable standards as required by accepted practices and laws; (7) to perform insurance services, title insurance services, and private mortgage insurance services, with certain reasonable standards as required by accepted practices and laws; (8) to provide full disclosure before, during and after the closing; (9) to honor its duty to REH, Jr. and to protect his interests; and (10) to perform its assigned tasks in a reasonable and responsible manner. Id. ¶ 59(A)-(J).
More specifically, REH, Jr. alleges that BOA and its affiliates breached its contract by failing (1) to make sure that the pad and the new mobile home were up to code; (2) to provide signed copies of the closing documents; (3) to provide an owner's policy of title insurance; (4) to treat REH, Jr. in a fair and honest manner as he was in an inferior position because of his lack of acumen in real estate transactions; (5) to check out the abutting junkyard property and the junkyard property's fence and its encroachment on REH, Jr.'s property; (6) to check for hazardous material on REH, Jr.'s property; (7) to make sure that its appraiser treated REH, Jr.'s property as a complex residential property and appraise the property in accordance with accepted practices and laws; (8) to make sure that its surveyor/inspector found all correct dimensions and property lines and surveyed/inspected REH, Jr.'s property with accepted practices and laws; (9) to avoid making unlawful entries onto REH, Jr.'s property; (10) to avoid misrepresenting matters involving the property to the state police and to REH, Jr.'s neighbors, and to avoid posting signs on his property; (11) to answer REH, Jr.'s requests for documents and letters; (12) to make certain the Form 1098 mortgage interest statements were true and accurate; (13) to notify REH, Jr. annually that the private mortgage insurance could be terminated or cancelled; (14) not to report false information to three credit reporting agencies; (15) not to threaten REH, Jr. with foreclosure without foreclosing; (16) not to issue a notice of default letter that was false, inaccurate and untimely; (17) not to file a foreclosure action and then failing to pursue the foreclosure; (18) not to mail letters and other documents with incorrect information; (19) to inform REH, Jr. who the true owner of his mortgage was; (20) to maintain adequate records; (21) to pay the correct interest on REH, Jr.'s escrow account; (22) to advise REH, Jr. that the junkyard fence and the junkyard itself were preexisting conditions; (23) to abide by Maine and federal law; (24) to abide by the consent judgment; and (25) not to file a false document in the Cumberland County Registry of Deeds transferring REH, Jr.'s mortgage to Nationstar Mortgage. Id. ¶ 60(A)-(LL); see also id. ¶¶ 61-68 (discussing similar allegations against BAC Home Loans Servicing, LP).
REH, Jr.'s second count sounds in negligence. Id. ¶¶ 104-16. He says that BOA breached its duty to him by making false representations and concealing information by omission. Id. ¶ 110. He claims that BOA acted with malice and ill will toward him or acted in a manner almost certain to injure him so that malice is implied. Id. ¶¶ 111-12. He demands compensatory and punitive damages. Id. ¶ 116.
3. Negligent Misrepresentation
REH, Jr.'s third count alleges that BOA made false representations of material facts to him before the closing. Id. ¶¶ 117-27. The allegedly false representations generally track the allegations in the breach of contract count. Id. ¶ 118(A)-(N). He says that he justifiably relied upon BOA's negligent misrepresentations, that the misrepresentations caused him damage, and he demands compensatory and punitive damages. Id. ¶¶ 124-27.
4. Intentional Misrepresentation
REH, Jr.'s fourth count substantially repeats Count Three, except he alleges that BOA's false representations or omissions were done with knowledge they were false or in reckless disregard of whether they were true or false. Id. ¶¶ 128-38. He demands compensatory and punitive damages. Id. ¶ 138.
5. Fraud (Concealment)
REH, Jr.'s fifth count alleges that BOA committed fraud. Id. ¶¶ 139-47. REH, Jr. alleges that BOA "concealed and continues to conceal from REH, Jr. material information by failing to provide REH, Jr. with signed copies of the closing documents; an owner's policy of title insurance; the appraisal; the land/survey inspection report; answers to requests for documents; answers to complaint letters; truthful and accurate annual 1098 mortgage interest statements; annual notices regarding PMI termination and cancellation; who is the true owner of the mortgage loan; truthful and accurate statements; truthful and accurate statements of accounts; and PMI information." Id. ¶ 140. He states that the concealed information was material, that BOA actively concealed it, and that the concealment caused him damage. Id. ¶¶ 141, 143, 146. He seeks compensatory and punitive damages. Id. ¶ 147.
6. Unfair Trade Practices Act
REH, Jr.'s sixth count is a Maine Unfair Trade Practices Act (MUTPA or UTPA) claim under 5 M.R.S. §§ 206-14. Id. ¶¶ 148-52. REH, Jr. alleges that BOA and others engaged in a "pattern of unfair or deceptive acts... committed in the conduct of their trade or commerce." Id. ¶ 150. Claiming that he was damaged by such ...