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Napolitano v. Green Tree Servicing LLC

United States District Court, D. Maine

February 4, 2016

THOMAS T. NAPOLITANO, et al., Plaintiffs,
GREEN TREE SERVICING, LLC, et al., Defendants.



Thomas and Lisa Napolitano claim that Green Tree Servicing, LLC committed a number of violations of law when, although they were current on their modified loan, it treated them as delinquent, broke into their South Portland, Maine home, changed the door locks, winterized the home, dismantled a basement sump pump and allowed a previously dry basement to flood, and caused a persistent mold problem. Green Tree Servicing, LLC has moved to dismiss the Napolitanos’ Complaint, claiming that they have failed to state claims upon which relief can be granted. The Court disagrees and denies Green Tree’s motion.


A. Procedural History

On April 9, 2015, Thomas T. and Lisa M. Napolitano (Napolitanos or Plaintiffs) filed suit in Cumberland County Superior Court for the state of Maine against Green Tree Servicing, LLC (Green Tree) and Safeguard Properties, LLC (Safeguard), asserting a series of alleged violations of law arising out of the servicing of their residential mortgage. Notice of Removal Attach. 1 Compl. (ECF No. 1) (Compl.); State Ct. Record Attach. 1 State Ct. Docket Record (ECF No. 7). On May 1, 2015, Green Tree filed a Notice of Removal in this Court based on subject matter jurisdiction. Notice of Removal (ECF No. 1). On May 5, 2015, before the state court records were submitted to this Court, Safeguard answered the Complaint. State Ct. Record Attach. 9 Answer and Additional Defenses (ECF No. 7). On May 11, 2015, Green Tree moved to dismiss the Complaint on the ground that it failed to state a claim upon which relief could be granted. Def. Green Tree Servicing LLC’s Mot. to Dismiss (ECF No. 8) (Def.’s Mot.). On June 8, 2015, the Napolitanos filed their opposition to the motion. Pls.’ Opp’n to Green Tree Servicing, LLC’s Mot. to Dismiss (ECF No. 11) (Pls.’ Opp’n). Green Tree did not file a reply.

B. The Complaint[1]

The Napolitanos state that this case arises out of a “mortgage transaction secured by the Plaintiffs’ former residence, located at 195 School Street, South Portland, Cumberland County, Maine.” Compl. ¶ 4. They allege that Green Tree is a mortgage servicer and Safeguard was Green Tree’s contract agent and that the case involves “deceptive and unfair property management and asset preservation practices.” Id. ¶ 5. The Plaintiffs acknowledge that they were delinquent on a mortgage loan obligation secured by the 195 School Street residence. Id. ¶ 6. They say that Bank of America, N.A. (BOA) was their mortgage lender, but upon their default BOA assigned its right to foreclose the mortgage and otherwise collect on the debt to Green Tree, BOA’s servicing agent. Id. ¶ 7. The Plaintiffs allege that no foreclosure proceeding was instituted in a Maine court. Id. The Plaintiffs say that they were “able to rescue their home from foreclosure by modifying the terms of their mortgage loan.” Id. ¶ 8.

The Plaintiffs claim that they “ultimately entered into a ‘Fannie Mae Loan Modification’ that they signed on September 29, 2013 with [BOA], although the rights to service the Plaintiffs’ mortgage remained with Green Tree as of the date of this Complaint, as evidence [sic] by an Assignment of Mortgage dated August 19, 2013 and recorded in the Cumberland County Registry [o]f Deeds at Book 31370, Page 990.” Id. ¶ 9. They allege that “[i]n accordance with the Modification Agreement and in accordance with negotiations concluded prior to that Agreement, the Plaintiffs were required to comply with a trial period modification, which they successfully completed in August, 2013.” Id. ¶ 10. The Plaintiffs say they were “granted permanent loan modification status in October 2013 although [BOA], through its nominee, the Mortgage Electronic Registration Systems, Inc., signed the Modification Agreement on March 18, 2014.” Id. ¶ 11. They maintain that “[s]ince the time . . . they were offered and agreed to a permanent loan modification to the present, the Plaintiffs complied with all material[] terms and conditions of their loan obligations, ” specifically including paying “all mortgage loan installments when due, . . . taxes when due and kept their home adequately insured.” Id. ¶¶ 12-13.

Regardless of their compliance with the modification terms, the Plaintiffs allege that Green Tree “continued to treat the Plaintiffs as they were delinquent on their loan obligations by sending notices of default, contacting the Plaintiffs to determine their intentions in connection with the claimed ‘delinquency’ and offering the prospects of accepting a deed in lieu of foreclosure for their South Portland home” and that Green Tree’s “efforts have continued through June and July, 2014.” Id. ¶ 14. The Plaintiffs believe that Green Tree and Safeguard “consider the Plaintiffs to be delinquent in their mortgage loan obligations as of the date of this Complaint, although no foreclosure action has yet to be instituted.” Id. ¶ 15.

The Plaintiffs assert that Safeguard entered into various contracts with Green Tree to provide property inspection and preservation services for properties whose owners were delinquent or had defaulted on their mortgages. Id. ¶ 16. However, they claim that “Safeguard’s involvement with residential property begins only if a homeowner become[s] delinquent or defaults on a mortgage” and Safeguard then becomes “responsible for performing property management and preservation services on the home.” Id. ¶¶ 17-18. When Safeguard becomes involved, it “instructs [one] of its subcontractors to inspect the property to determine its occupancy status” and once Safeguard deems the property vacant, it then “instructs its subcontractors to secure the property by boarding up the doorway, turning off the water and winterizing the home, and placing lockboxes or padlocks on the doors.” Id. ¶¶ 19-20. The Plaintiffs say that “[e]ven though [they] complied with their modified loan obligations, Green Tree deployed Safeguard’s services acting as though it were a legally-appointed receiver of the Plaintiffs’ home.” Id. ¶ 23.

In October, 2013, Plaintiffs say they relocated to Massachusetts for better job prospects but continued to own their South Portland home. Id. ¶ 21. They say they listed their home for sale with a local realtor and employed a caretaker to look after their home. Id. They also say that the realtor routinely inspected the home. Id. From October, 2013 onward, the Plaintiffs say that they snowplowed their driveway, continued to pay property taxes, and performed home improvements to enhance its marketability. Id. They maintain “in no uncertain terms” that they “did not abandon their South Portland home.” Id. ¶ 22.

In December 2013, the pipes in the South Portland home froze, causing major damage. Id. ¶ 24. While the Plaintiffs were repairing the damage to their home, Green Tree, they say, “broke into the Plaintiffs’ home, changed the door locks, ‘winterized’ the home, dismantled a basement sump pump and allowed a previously dry basement to flood.” Id. They allege that neither “Green Tree nor Safeguard relied on any legal process such as a receivership or injunction as a precursor to taking such drastic measures.” Id. ¶ 27. Instead, the Plaintiffs say, Green Tree and Safeguard “resorted to unauthorized self-help.” Id. ¶ 28.

The Plaintiffs say that the “water damaged caused by Green Tree and Safeguard’s conduct has resulted in a mold problem in the home.” Id. ¶ 24. The Plaintiffs state that they were “forced to discard their dishwasher and washing machine as a result of Green Tree’s and Safeguard’s unauthorized break-in.” Id. ¶ 25. They say their home is now “basically a mess, preventing Plaintiffs’ broker from selling the home and jeopardizing the Plaintiffs’ financial equity position in their home.” Id. ¶ 26.

In March, 2014, the Plaintiffs through counsel “corresponded with the President of Green Tree and the General Counsel of Safeguard, demanding an end to this conduct and threatening a claim for punitive damages if the conduct continued, ” stating that the conduct was “a violation of the Maine Unfair Trade Practices Act.” Id. ¶ 29. They say the correspondence “was ignored.” Id. ¶ 30.

In sum, the Plaintiffs maintain that Safeguard and Green Tree have jointly and severally, “violated the Plaintiffs’ privacy interests, [have] trespassed on their property, [have] converted their assets, have prevented the sale and marketing of their South Portland home, have violated their statutory rights as consumers, and have intentionally caused the Plaintiffs emotional distress.” Id. ¶ 35.

C. The Theories of Action Against Green Tree

The Napolitanos’ Complaint consists of seven counts against Green Tree: (1) Illegal, Fraudulent and Unconscionable Conduct/Maine Unfair Trade Practices Act (MUTPA), (2) Trespass, (3) Conversion, (4) Breach of Contract, (5) Intentional Infliction of Emotional Distress (IIED), (6) Negligent Infliction of Emotional Distress (NIED), and (7) Fair Debt Collection Practices Act (FDCPA). Id. 1-10.


A. Green Tree’s Motion

Green Tree contends that none of the Plaintiffs’ counts states a claim upon which relief can be granted and that their Complaint against Green Tree must be dismissed in its entirety. Def.’s Mot. at 2.

1. Count Two: Trespass

Turning first to the trespass claim, Green Tree argues that the Plaintiffs may not as a matter of law maintain a trespass claim against it because they “consented to and authorized Green Tree to enter and secure the Property.” Id. at 4. It points to section 9 of the Mortgage which it maintains “authorizes Green Tree to enter, secure and repair the Property without notice to the Napolitanos upon either a default of the Mortgage or an abandonment of the Property.” Id. at 5. They say that the Plaintiffs “concede that they both vacated the Property and defaulted under the terms of their Mortgage, ” and that “[t]hese concessions are sufficient as a matter of law to bar . . . the trespass claim.” Id.

2. Counts Five and Six: Intentional and Negligent Infliction of Emotional Distress

Regarding the intentional and negligent infliction of emotional distress claims, Green Tree says that the claims fail because (1) the Plaintiffs failed to allege any facts showing that Green Tree acted with specific intent to cause emotional distress, (2) that Green Tree was exercising a contractual right in entering the home, (3) that a mortgagor has no legal right to claim emotional distress from the initiation of a foreclosure, and (4) that the ...

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