Opinion
23-CV-1780 (JPC) (KHP)
06-28-2024
CANDACE BOCCI, Plaintiff, v. NATIONSTAR MORTGAGE LLC d/b/a MR. COOPER et al.; DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR BCAP TRUST LLC 2007-AA3 MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2007-AA3, Defendants.
REPORT AND RECOMMENDATION ON MOTION TO DISMISS
KATHARINE H. PARKER, United States Magistrate Judge
TO: THE HONORABLE JOHN P. CRONAN, UNITED STATES DISTRICT JUDGE FROM: KATHARINE H. PARKER, UNITED STATES MAGISTRATE JUDGE.
Before the Court for a Report and Recommendation is Defendants' Motion to Dismiss (the “Motion”). The Defendants - Nationstar Mortgage LLC d/b/a Mr. Cooper (“Nationstar”) and Deutsche Bank National Trust Company, as Trustee for BCAP Trust LLC 2007-AA3 Mortgage Pass-Through Certificates Series 2007-AA3 (“DBNTC”) (collectively, the “Defendants”) - have moved pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”) to dismiss Plaintiff's First Amended Complaint (the “Complaint” or “FAC”) located at ECF No. 14 for failure to state a claim. For the reasons stated below, I respectfully recommend that the Motion be GRANTED in part and DENIED in part.
The facts herein are taken from the Complaint and exhibits attached thereto. They are assumed to be true for purposes of this Motion.
1. Facts Alleged in the Complaint
On March 22, 2007, Plaintiff closed on the purchase of a condominium unit located in Manhattan. (FAC at ¶ 9.) In connection with such transaction, Plaintiff executed a mortgage in the amount of $760,000, (the “Mortgage”) with Countrywide Bank, the original lender. (Id.) Plaintiff alleges that pursuant to the terms of the Mortgage, Plaintiff was only responsible for making payments on the interest for the first ten years (that is, between 2007 and 2017), after which she would pay interest and principal for the remainder of the loan term. (Id. at ¶ 13.) The terms of the loan meant that Plaintiff's monthly mortgage payment was set to increase at year ten and, indeed, it did increase from $2,137.50 to $4,605.00 beginning on March 22, 2017. (Id.)
Plaintiff alleges that she called Nationstar on October 30, 2017 to inquire about temporary loan modification options, given the increased monthly payment, and because Plaintiff had recently lost her job. (Id. at ¶¶ 14-15.) Plaintiff was in communication with Nationstar for the next several months concerning a potential loan modification and received conflicting answers from Nationstar representatives regarding whether delinquency was a prerequisite for loan modification eligibility. (Id. at ¶¶ 15-17, 23-24.)
In December of 2017, Plaintiff submitted a loan modification application to Nationstar. (Id. at ¶¶ 30-32.) On January 22, 2018, Plaintiff received a letter from Nationstar dated January 12, 2018 (the “Forbearance Letter”) stating that Plaintiff had qualified for the unemployment program and was therefore being granted a temporary forbearance. This would allow her to pay a lower monthly payment of $909.44 for six months, beginning on February 1, 2018 (the “Temporary Forbearance Plan”). (Id. at ¶ 34.) The letter stated that “as a result of making reduced payments, you will become delinquent on your mortgage” but clarified that “[w]e will not refer your loan to foreclosure or proceed to foreclosure sale during this Forbearance Plan, provided you are complying with the terms of the Forbearance Plan.” (Id. at Exhibit (“Ex.”) 9.) The Forbearance Letter also noted that “as a result of making reduced payments, you will become delinquent on your mortgage. The estimated amount of accrued but unpaid balance that will be due at the end of the Forbearance Plan is $26,781.51.” (Id.)
On February 1, 2018, Plaintiff made her first payment under the Temporary Forbearance Plan. (Id. at ¶ 35.) The following day, Nationstar confirmed receipt of Plaintiff's payment via letter, which stated the funds had been placed in an “unapplied funds account” since the amount paid was insufficient to be applied as a full payment. (Id. at Ex. 10.)
In late February 2018, Plaintiff began receiving demand letters and collection calls from Nationstar regarding the Mortgage. (Id. at ¶ 38.) Plaintiff alleges that typically when she received collection calls, the Nationstar representative would first state they didn't know of a forbearance plan and then several minutes later would locate a forbearance plan record in the system. (Id.) Plaintiff also alleges that on February 19, 2018, she received a letter from Nationstar dated February 15, 2018, which stated that Nationstar needed additional time to review Plaintiff's application for a loan modification due to third party involvement. (Id. at ¶ 37.) Since Nationstar already informed Plaintiff she had qualified for temporary forbearance and had accepted Plaintiff's first payment under the Temporary Forbearance Plan, she assumed the letter was sent in error. (Id.)
Plaintiff made her second and third payments under the Temporary Forbearance Plan on March 2, 2018 and March 30, 2018, respectively. (Id. at ¶¶ 39, 41.) After both payments, Plaintiff received a letter stating the funds paid had been placed in an unapplied funds account. (Id. at ¶¶ 40, 42.)
On April 5, 2018, Plaintiff called Nationstar concerning demand letters and notices of default she had recently received, despite making the Temporary Forbearance Plan payments. (Id. at ¶ 43.) The Nationstar representative informed Plaintiff that the system was showing Plaintiff's loan modification application as still under review, but then a few minutes later the representative located the Temporary Forbearance Plan and told Plaintiff the system reflected Nationstar had received a payment in January 2018, but none since then. (Id.) The Nationstar representative instructed Plaintiff to email proof of the payments made in February through April to a particular email address, which Plaintiff did. (Id. at ¶¶ 43, 45.)
On April 18, 2018, Plaintiff received a collection call from a Nationstar representative who informed Plaintiff that once Plaintiff made her final payment under the Temporary Forbearance Plan in July of 2018, Nationstar would automatically “roll” Plaintiff into a permanent loan modification with a new interest rate and term. (Id. at ¶ 47.)
On May 1, 2018, Plaintiff made her fourth payment under the Temporary Forbearance Plan. (Id. at ¶ 48.) On May 14, 2018, Plaintiff received a letter from Nationstar, dated April 16, 2018, stating that the “trial period plan” had been approved in error because Nationstar's underwriter approved it without first getting investor approval, as required under the terms of the loan (the “Error Letter”). (Id. at Ex. 15.) The Error Letter further stated that a denial letter should have been sent to Plaintiff, but was never sent, and that to correct the error, Nationstar had submitted Plaintiff's account to the investor to review for a standard loan modification. (Id.)
The Court notes that the Error Letter, while purporting to talk about a “trial” or temporary plan, also confusingly states that Plaintiff “was approved for the Standard Modification Program on January 11, 2018 by error.”
On May 30, 2018, Plaintiff was in communication with DBNTC, and a DBNTC representative informed Plaintiff that Nationstar was the responsible party making all decisions on Plaintiff's loan, rather than DBNTC. (Id. at ¶ 52.) That same day Plaintiff received a collection call from Nationstar informing Plaintiff that her May 1 payment had been returned because her temporary forbearance application was denied. (Id. at ¶ 51.) Plaintiff wrote a letter to Nationstar's General Counsel, seeking clarification on why Plaintiff's payments were not being put towards her account. (Id. at ¶ 56.) In that letter, Plaintiff asked Nationstar to advise Plaintiff on what she would need to do for her payments to be accepted. (Id. at Ex. 17.)
On June 1, Plaintiff made her fifth payment under the Temporary Forbearance Plan. (Id. at ¶ 57.) On June 15, 2018, Plaintiff checked her bank record and discovered that Nationstar had credited back her May 1, 2018 and June 1, 2018 payments (i.e., not accepted them). (Id. at ¶ 59.) On June 20, 2018, Plaintiff spoke with a Nationstar representative who told her that Plaintiff would be receiving a loan modification agreement from Nationstar in July 2018, after she completed the Temporary Forbearance Plan. (Id. at ¶ 61.)
On July 14, 2018, Plaintiff received a letter from Nationstar dated July 6, 2018, stating that her Temporary Forbearance Plan payments would not be accepted, and the only amount that would be accepted was a “full reinstatement” of the loan. (Id. at ¶ 62, Ex. 19.) This letter further stated that Plaintiff's loan modification request submitted to the investor was denied in error on June 4, 2018, but that Nationstar had “reopened” the case and was evaluating the account for modification assistance to correct the error. (Id. at Ex. 19)
In mid-July 2018, Plaintiff hired an attorney, Scott Lanin, to assist her with handling her loan modification with Nationstar. (Id. at ¶ 64.) On July 20, 2018, Mr. Lanin sent Nationstar a Qualified Written Request (“QWR”) containing several information requests related to Plaintiff's loan modification application, the handling of such application, and details of Plaintiff's Mortgage. (Id. at Ex. 20.)
On July 31, 2018, Shapiro, DiCaro & Barak, LLC (“Shapiro”), counsel for Nationstar, filed with the New York City Department of Finance the recording of mortgage assignment from the original lender to DBNTC. (Id. at ¶ 68.) Plaintiff alleges that such filing demonstrates the investor approval requirement cited by Nationstar as the reason for denying her forbearance was, in actuality, not a requirement because Plaintiff's mortgage had not yet been assigned to DBNTC. (Id.)
Plaintiff's Complaint is silent as to whether she has made any mortgage payments since July 2018, but it appears that she did not make further payments toward her Mortgage because, as discussed below, foreclosure proceedings were initiated and she concedes in her Opposition to the Motion that she did not make any payments after July 2018.
On August 3, 2018, Mr. Lanin received a response from Nationstar to its first QWR, in which Nationstar provided several documents including the original promissory note, transaction history, billing statements, and the July 2018 mortgage assignment to DBNTC. (Id. at ¶ 70.) Plaintiff alleges Nationstar did not provide responses to the majority of her requests. (Id.) Mr. Lanin sent Nationstar a second QWR on August 20, 2018, identifying each request to which Nationstar had not sufficiently responded. (Id. at ¶ 71.) Plaintiff received Nationstar's response to the second QWR on August 29, 2018, in which Nationstar enclosed the same documents it had previously provided to Plaintiff. (Id. at ¶ 73.) That response also noted that Nationstar was still awaiting a decision from the investor as to Plaintiff's loan modification application, and therefore foreclosure was on hold. (Id. at ¶ 76.) Plaintiff alleges that Nationstar's delay in reaching a decision on her loan modification application caused her stress, as she was accruing interest and fees, and such stress caused her to contract shingles in September of 2018. (Id. at ¶ 79.)
On September 14, 2018 and October 16, 2018, Mr. Lanin sent Nationstar a third and fourth QWR, stating Nationstar failed to provide responses to most of Plaintiff's information requests, and identifying the requests that required further responses. (Id. at ¶¶ 84, 86.)
On November 14, 2018, both Plaintiff and her counsel received emails from Nationstar stating that correspondence was available from Nationstar via Nationstar's online system. (Id. at ¶¶ 89, 92.) Neither Plaintiff nor Mr. Lanin were able to login to Nationstar's online system and neither received responses when they contacted Nationstar for login assistance. (Id. at ¶¶ 89-93, 96.)
On December 12, 2018, DBNTC commenced foreclosure proceedings against Plaintiff in New York state court (the “First Foreclosure Action”). (Id. at ¶ 94.) Although not yet aware of the First Foreclosure Action because she had not yet been served, Plaintiff alleges that in late December she attempted to communicate with the Nationstar representative who had been identified as the point of contact for her account both via phone calls and emails, but received no response. (Id. at ¶¶ 95-96.)
On January 25, 2019, Plaintiff received an email from a DBNTC representative responding to a prior inquiry from Plaintiff in which Plaintiff asked about the investor requirement cited by Nationstar. (Id. at ¶ 99.) DBNTC responded stating that “the Governing Agreements for this transaction do not give certificateholders any consent rights with respect to individual loan modifications.” (Id.) Plaintiff understood such statement to confirm that investor approval of forbearance plans or loan modifications was not required under the terms of the Mortgage. (Id. at ¶ 100.)
Plaintiff alleges that she did not learn of the First Foreclosure Action until February 6, 2019, when she found the foreclosure complaint at her father's home where he had been served. (Id. at ¶ 104.) Plaintiff was never served at her residence. (Id.) Plaintiff filed her foreclosure answer on February 17, 2019, which discussed Plaintiff's contention that the investor requirement cited by Nationstar did not actually exist. (Id. at ¶¶ 107, 110.)
Plaintiff alleges that beginning in February 2019, she began to experience various symptoms as a result of the stress of the dispute with Nationstar including abdominal pain, digestive issues and anxiety. (Id. at ¶ 112.)
On March 5, 2019, Plaintiff sent a letter to Nationstar stating it had denied Plaintiff's Temporary Forbearance Plan in error because the investor approval requirement Nationstar had cited in the Error Letter was not in fact a requirement. (Id. at ¶ 114.) Plaintiff alleges she never received a response to that letter. (Id. at ¶ 116.)
On May 2, 2019, Plaintiff sent a fifth QWR to Nationstar, which included new requests. (Id. at ¶ 120.) On May 31, 2019, Plaintiff obtained a copy of her credit report, which included negative information reported by Nationstar. (Id. at ¶ 123.) Shortly thereafter, Plaintiff sent letters to all three credit reporting agencies notifying them that Plaintiff was disputing the information on her credit report related to her default. (Id.)
Plaintiff alleges that in June 2019, she learned from a realtor that her property was listed as “in foreclosure” on real estate databases in New York City. (Id. at ¶ 132.) In July 2019, she visited the real estate website Zillow which provided her with an estimated valuation of her property that was 50% lower than a valuation provided by Nationstar in November 2018, before the First Foreclosure Action was initiated. (Id. at ¶¶ 133-34.)
In August 2019, Plaintiff hired an attorney, Patrick Binakis, to represent her in connection with the First Foreclosure Action. (Id. at ¶ 138.)
On October 26, 2019, Plaintiff received a credit alert regarding negative information reported by Nationstar on her credit report. (Id. at ¶ 143.)
On November 14, 2019, DBNTC filed documents in connection with the First Foreclosure Action including a denial letter from Nationstar, dated October 10, 2018, denying Plaintiff's application for a loan modification. (Id. at ¶¶ 145-46.) Neither Plaintiff nor Mr. Lanin ever received that letter. (Id. at Ex. 49.)
At some point in 2019, Plaintiff sought to refinance her mortgage with TD Bank. But, on December 9, 2019, Plaintiff received a letter from TD Bank informing her that it could not approve her application for mortgage refinancing due to negative information on her credit report. (Id. at ¶ 155.) Plaintiff alleges that the only negative information on her credit report was that reported by Defendants. (Id.)
On March 4, 2020, Mr. Binakis submitted a loss mitigation application on behalf of Plaintiff to counsel for Nationstar. (Id. at ¶ 160.) The loss mitigation application reflected Plaintiff's monthly income of $12,750. (Id.) After requesting further information from Plaintiff on multiple occasions, Nationstar's counsel confirmed Plaintiff's loss mitigation application was complete on June 22, 2020. (Id. at ¶ 167.)
Loss mitigation is an umbrella term for foreclosure alternatives. Loan modification is one type of loss mitigation. See What is a mortgage loan modification?, Consumer Financial Protection Bureau (Sept. 4, 2020), https://www.consumerfinance.gov/ask-cfpb/what-is-a-mortgage-loan-modification-en-269/.
On June 23, 2020 Plaintiff began physical therapy to relieve constant pain she was experiencing as a result of the stress from potential foreclosure. (Id. at ¶ 168.) Plaintiff alleges she received regular treatments two to three times per week from June through August 2020. (Id.)
In August, October and November 2020, Mr. Binakis contacted Nationstar's counsel asking for updates concerning Plaintiff's loss mitigation application but did not receive a response. (Id. at ¶¶ 170-71, 175.) On November 13, 2020, Mr. Binakis sent a sixth QWR to Nationstar and its counsel containing information requests related to the Mortgage. (Id. at ¶ 176.) Mr. Binakis never received a response to the sixth QWR. (Id. at ¶ 177.)
On December 15, 2020, Plaintiff received a letter from Bank of America that it was closing her credit card that she had for over two decades due to negative information on her credit report. (Id. at ¶ 178.) Plaintiff alleges the only negative information on her credit report was that reported by Nationstar. (Id.)
On January 28, 2021, Mr. Binakis sent Nationstar and its counsel a seventh QWR, noting that Nationstar never responded to the sixth QWR. (Id. at ¶ 184.) On February 1, 2021, Mr. Binakis again contacted Nationstar's counsel to inquire on the status of Plaintiff's loss mitigation application. (Id. at ¶ 185.) Nationstar's counsel responded on February 5, 2021, stating that Nationstar had issued a letter on August 1, 2020 to Mr. Lanin denying the loss mitigation application (the “8/1/2020 Denial Letter”). (Id. at ¶ 186.) But, that same day, Plaintiff contacted Mr. Lanin who represented he never received the 8/1/2020 Denial Letter. (Id. at ¶ 187.)
On March 5, 2021, Plaintiff again contacted the three credit reporting agencies, submitting a 100-word statement to be included in her credit report disputing Nationstar's reporting of the First Foreclosure Action. (Id. at ¶ 197.)
On March 29, 2021, Plaintiff received Nationstar's response to the seventh QWR, which enclosed letters from 2018 and 2019 that neither Plaintiff nor her attorneys had previously received. (Id. at ¶ 200.) Plaintiff alleges that in one of the enclosed letters, dated June 7, 2019, Nationstar stated that it referred Plaintiff's account to foreclosure in June 2018, despite the fact that Plaintiff was being considered for a loan modification at that time. (Id. at ¶ 212.) Plaintiff alleges that Nationstar's response to Plaintiff's QWR failed to respond to most of Plaintiff's information requests. (Id. at ¶ 213.)
On June 28, 2021, Mr. Binakis sent Nationstar an eighth QWR containing information requests from Plaintiff's prior QWRs and noting where Nationstar had failed to respond or not adequately responded. (Id. at ¶ 219.) Neither Plaintiff nor Mr. Binakis received a response to the eighth QWR. (Id. at ¶ 222.)
On October 5, 2021, Plaintiff began psychiatric treatment due to the extreme stress she experienced from the First Foreclosure Action and the reporting of such action on her credit report. (Id. at ¶ 225.) Plaintiff alleges that her credit score decreased from 829 to 653, solely because of the negative reporting by Nationstar. (Id. at ¶ 217.)
On August 22, 2022, DBNTC filed a motion to discontinue the First Foreclosure Action because the notice Defendants served on Plaintiff prior to the commencement of foreclosure did not comply with N.Y. Real Prop. Acts. Law § 1304. (Id. at ¶ 231; Motion, Ex. J.) On September 15, 2022, DBNTC's motion for discontinuance was granted. (Id. at ¶ 234.) On September 26, 2023, DBNTC commenced another foreclosure action against Plaintiff entitled Deutsche Bank National Trust Company, as trustee v. Candace L. Bocci, et al, in the Supreme Court of the State of New York, County of New York, Index No. 159458/2023 (the “Second Foreclosure Action”).
N.Y. Real Prop. Acts. Law § 1304 requires a lender or loan servicer initiating a foreclosure action against a borrower to provide the borrower with a notice at least 90 days before the commencement of the proceeding, and the notice must contain certain information. See N.Y. Real Prop. Acts. Law § 1304.
2. Procedural History
Plaintiff initiated this action on February 28, 2023. (ECF No. 1.) On April 13, 2023, Plaintiff filed the Amended Complaint, which is the operative complaint (“Complaint”). (ECF No. 14.) In it she invokes the following federal statutes: the Real Estate Settlement Procedures Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Consumer Financial Protection Act, the Federal Debt Collection Practices Act and the Coronavirus Aid, Relief, and Economic Security Act. She also asserts violations of the following state statutes and causes of action: breach of contract, New York General Business Law § 349 and 350, New York Banking Law 12-D § 419 and § 9-x, New York Real Property Law § 254-b, malicious prosecution, fraud, defamation, intentional infliction of emotional distress, negligent infliction of emotional distress, and negligence. Plaintiff alleges that the Court has both federal question jurisdiction and diversity jurisdiction over this matter because she is a New York resident and Nationstar is a Delaware corporation with its principal office located in Texas and DBNTC is a Delaware corporation with its principal office located in California. (FAC at ¶ 6.) Plaintiff also alleges over $75,000 in damages. (Id. at 79.)
Plaintiff alleges that on November 22, 2022, she mailed DBNTC a “Notice of Grievance,” which is a condition precedent to commencement of the instant action, pursuant to Plaintiff's Mortgage. (FAC at ¶ 235.)
On December 15, 2023, Defendants filed the instant Motion and supporting papers. (ECF No. 47.) Plaintiff opposed the Motion on March 12, 2024, (the “Opposition”) (ECF No. 50) and Defendants replied on April 3, 2024 (the “Reply”). (ECF No. 53.)
LEGAL STANDARD
For a complaint to survive a Rule 12(b)(6) motion to dismiss, the complaint must contain “sufficient factual matter . . . to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is considered plausible on its face “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. While detailed factual allegations are not required, the complaint must contain more than mere “labels and conclusions or formulaic recitation of the elements of a cause of action[].” Id. (internal citations omitted.) In assessing a motion to dismiss, the Court must “accept[] all factual allegations as true, but giv[e] no effect to legal conclusions couched as factual allegations.” Stadnick v. Lima, 861 F.3d 31, 35 (2d Cir. 2017) (internal quotations omitted) (citing Starr v. Sony BMG Music Entm't, 592 F.3d 314, 321 (2d Cir. 2010)).
These same standards apply to motions to dismiss complaints filed by pro se plaintiffs. Jenkins v. N.Y.C. Dep'tof Educ., 2011 WL 5451711, at *3 (S.D.N.Y. Nov. 9, 2011). However, the court must construe a pro se plaintiff's complaint liberally and interpret it as raising the strongest arguments it suggests. See Hill v. Curcione, 657 F.3d 116, 122 (2d Cir. 2011) (citation omitted).
When evaluating a motion to dismiss, a court may consider “any written instrument attached to the complaint as an exhibit, any statements or documents incorporated by reference in the complaint, documents that are ‘integral' to the complaint even if they are not incorporated by reference, and matters of which judicial notice may be taken.” See Donoghue v. Gad, No. 21 CIV. 7182 (KPF), 2022 WL 3156181, at *2 (S.D.N.Y. Aug. 8, 2022).
A district court may dismiss an action sua sponte for failure to state a claim so long as the plaintiff is given notice of the grounds for dismissal and an opportunity to be heard.” Grant v. County of Erie, 542 Fed.Appx. 21, 24 (2d Cir. 2013) (citation omitted); see also Komatsu v. NTT Data, Inc., 2016 WL 2889064, at *5 (S.D.N.Y. May 17, 2016), aff'd, 730 Fed.Appx. 98 (2d Cir. 2018) (sua sponte dismissing certain of pro se plaintiff's claims). A Magistrate Judge's Report and Recommendation recommending that a claim be dismissed constitutes the requisite notice and opportunity to be heard to allow a district court to dismiss a claim sua sponte. E.A. Sween Co., Inc. v. A & M Deli Express Inc., 787 Fed.Appx. 780, 782 (2d Cir. 2019).
Pursuant to Federal Rule of Civil Procedure 15(a)(2), a court “should freely give leave [to amend a complaint] when justice so requires.” Dismissal with prejudice is proper only where the deficiencies with the complaint are incurable. See Cuoco v. Moritsugu, 222 F.3d 99, 112 (2d Cir. 2000) (affirming dismissal of complaint because “[t]he problem with [Plaintiff's] causes of action is substantive; better pleading will not cure it.”) Where the Plaintiff is proceeding pro se, ‘[d]istrict courts should generally not dismiss a pro se complaint without granting the plaintiff leave to amend” unless amendment “would be futile.” Ashmore v. Prus, 510 Fed.Appx. 47, 49 (2d Cir. 2013). It is “within the sound discretion of the district court to grant or deny leave to amend.” Kim v. Kimm, 884 F.3d 98, 105 (2d Cir. 2018).
DISCUSSION
A. Federal Claims
The Complaint, which is extremely lengthy and somewhat rambling, can be construed to allege violations of the following federal statutes: the Real Estate Settlement Procedures Act (“RESPA”) 12 U.S.C. 2601 et seq., the Fair Credit Reporting Act (“FCRA”) 15 U.S.C. § 1681 et seq., the Truth in Lending Act (“TILA”) 15 U.S.C. § 1601 et seq., and the Consumer Financial Protection Act (“CFPA”) 12 U.S.C. § 5481 et seq. I address each claim in turn below. Plaintiff also included claims in the Complaint under the Federal Debt Collection Practices Act (“FDCPA”) 15 U.S.C. § 1692 et seq. and the Coronavirus Aid, Relief, and Economic Security Act (the “CARES” Act) 15 U.S.C. § 9001 et seq., but she concedes in her Opposition to the Motion that her FDCPA claims fails and that the CARES Act does not provide a private right of action. (Opposition at 19, 26.) Thus, the FDCPA and CARES Act claims should be dismissed, and I do not address them further below.
1. RESPA Claims
Plaintiff alleges violations of two provisions of RESPA -- 12 U.S.C. § 2605(e)(1)-(2) (concerning QWRs) and 12 U.S.C. § 2605(e)(3) (concerning provision of information to credit reporting agencies) - and violations of RESPA's implementing regulations, 12 C.F.R. § 1024.3536 (concerning error resolution and request for information procedures) and 12 C.F.R. § 1024.41 (concerning loss mitigation procedures). Defendants argue that Plaintiff fails to state a claim for violation of Section 2605(e)(1-2) (and implicitly its implementing regulations for this provision). Defendants also argue that all of Plaintiff's RESPA claims are time barred.
Plaintiff suggests that Nationstar should have discontinued the First Foreclosure Action sooner and violated RESPA somehow by not doing so. (FAC at ¶ 392.) However, RESPA does not have any provision requiring the discontinuance of a foreclosure action and thus I do not construe this to be a RESPA claim.
i. 2605(e)(1)-(2) Claims and Its Implementing Regulations
RESPA is a consumer-protection statute that imposes various duties on loan servicers. As relevant here, it contains a provision that addresses QWRs from consumers. A QWR is a “correspondence that identifies a borrower's account and ‘includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.'” Roth v. CitiMortgage Inc., 756 F.3d 178, 181 (2d Cir. 2014) (quoting 12 U.S.C. § 2605(e)(1)(B)(ii)). When a servicer receives a QWR from a borrower, it is required to respond within 30 days, and, among other things, provide the information requested by the borrower, conduct an investigation and correct errors. 12 U.S.C. § 2605(e)(2). Plaintiff alleges that she or her representative sent eight QWR letters between July 2018 and January 2021 to the address Nationstar designated as its address for receiving QWRs. (FAC at ¶¶ 219, 243.) She alleges that Nationstar either did not respond adequately or did not respond at all to the QWRs. (Id. at ¶¶ 246, 257.)
A QWR that asserts an error relating to the servicing of a mortgage loan is referred to as a notice of error (“NOE”). 12 C.F.R. § 1024.35(a). The Court refers to all of Plaintiff's letters as QWRs herein for ease of reference even if some could be characterized as an NOE.
To state a claim under RESPA, a plaintiff must allege that the defendant failed to comply with specific RESPA provisions and identify damages that she sustained as a result of the defendant's alleged RESPA violations. See Ramirez v. Wells Fargo Bank, N.A., No. 1:19-CV-05074 (CBA), 2021 WL 9564023, at *10 (E.D.N.Y. Mar. 24, 2021); Gorbaty v. Wells Fargo Bank, N.A., No. 10-CV-3291 NGG SMG, 2014 WL 4742509, at *5 (E.D.N.Y. Sept. 23, 2014) (holding plaintiff failed to state a RESPA 2605 claim because he did not identify damages he sustained as a result of the alleged 2605 violations). Courts commonly dismiss RESPA complaints at the pleading stage for failing to “allege injury and resulting damages that are proximately caused by the loan servicer's failure to adhere to its obligations under § 2605[.]” Gorbaty, 2014 WL 4742509, at *5 (emphasis added). Here, Plaintiff fails to allege that the majority of her asserted damages were proximately caused by Defendant's failure to properly respond to her QWRs, including her inability to procure consulting engagements, reduction in her credit score, inability to obtain credit, including to borrow money against her home equity or refinance her mortgage, physical and emotional stress, and legal fees and costs associated with “QWR efforts.” Thus, to the extent she seeks relief for these alleged harms, it is not available through Section 2605(e)(1-2) of RESPA and its implementing regulations (12 C.F.R. § 1024.35-36) as pleaded. See, e.g., Roth, 2013 WL 5205775, at *8 (dismissing RESPA claims at pleading stage; allegations of emotional distress did not constitute actional damages); Kilgore v. Ocwen Loan Servicing, LLC, 89 F.Supp.3d 526, 539 (E.D.N.Y. 2015) (dismissing RESPA claims at pleading stage; allegations of financial loss and emotional distress did not constitute actual damages); Gorbaty, 2014 WL 4742509, at *6 (citing Lai v. Am. Home Servicing, Inc., 680 F.Supp.2d 1218 (E.D. Cal. 2010)) (costs associated with preparing and sending QWRs and initiating a lawsuit regarding a failure to respond to QWRs are not damages proximately caused by or recoverable under RESPA); Roth, 2013 WL 5205775, at *8 n.6 (same).
The only damage alleged by Plaintiff to have been proximately caused by Defendants not responding to her QWRs is the cost associated with defending against the First Foreclosure Action. (FAC at ¶ 264.) However, to survive a motion to dismiss, a plaintiff must explain how the alleged damage was proximately caused by the defendant's failure to respond to the QWR. Gorbaty, 2014 WL 4742509, at *5. Plaintiff does not provide such an explanation. Her allegations regarding the costs and fees she incurred in the First Foreclosure Action are conclusory - she does not connect the dots as to why they were caused by Nationstar not adequately responding to her QWRs. Nor can the Court discern the connection, as it is plain from the Complaint that Plaintiff's legal fees and costs associated with the First Foreclosure Action flow from Nationstar's reporting Plaintiff in default and DBNTC in turn initiating the First Foreclosure Action, not Nationstar's inadequate responses to Plaintiff's QWRs. Therefore, these damages are also insufficient to state a plausible claim for violations of Section 2605(e)(1-2). Kilgore, 89 F.Supp.3d at *539 (“the complaint must contain factual allegation[s] suggesting that any damages [plaintiff] suffered were proximately caused by [defendant's] violations of § 2605, and conclusory allegations to that effect will not suffice.”) (internal quotations and citations omitted). The only two cases on which Plaintiff relies are distinguishable because they involved damages that were caused by the defendant's failure to comply with Section 2605(e)(1-2). See Kapsis v. Am. Home Mortg. Servicing Inc., 923 F.Supp.2d 430, 448 (E.D.N.Y. 2013) (finding actual damages where plaintiff alleged with specificity that loan servicer had misapplied his loan payments and did not correct them as required by QWR process); Midouin v. Downey Sav. & Loan Ass'n, F.A., 834 F.Supp.2d 95, 111-12 (E.D.N.Y. 2011) (finding actual damages where plaintiff alleged loss of retirement savings and income due to failure to make corrections identified in QWR).
In sum, Plaintiff's failure to adequately allege actual damages proximately caused by Nationstar's failure to respond to her QWRs is fatal to her claims under RESPA Section 2605(e)(1-2) and its implementing regulation 12 C.F.R. § 1024.35-36. Accordingly, these claims should be dismissed. See Rosendale v. Mr. Cooper Grp. Inc., No. 19-CV-9263 (NSR), 2021 WL 4066821, at *13 (S.D.N.Y. Sept. 7, 2021) (“Courts in this circuit have held that the plain language of Section 2605 indicates that an allegation of actual damages is necessary to state a claim for liability.”) (internal quotations and citations omitted) (collecting cases); Evans v. Select Portfolio Servicing, Inc., No. 18-CV-5985-PKC-SMG, 2020 WL 5848619, at *14 n.14 (E.D.N.Y. Sept. 30, 2020) (“Although RESPA permits recovery of both actual and statutory damages, proof of actual damages is mandatory to recover on a § 2605(e) violation, and a § 2605(e) claim cannot stand on statutory damages alone.”) (internal quotations and citations omitted).
While Defendants argue Plaintiff failed to state a claim, they do not specifically assert Plaintiff failed to plausibly allege damages. Nevertheless, the instant Report and Recommendation constitutes the requisite notice and opportunity to be heard on the issue of damages to allow a district court to dismiss the claim sua sponte. See E.A. Sween Co., Inc., 787 Fed.Appx. at 782.
Defendants allege that many of Plaintiff's RESPA Section 2605 claims are time-barred. They are correct. The statute of limitations for claims brought pursuant to Section 2605 is three years. 12 U.S.C. § 2614. Plaintiff filed her initial complaint on February 28, 2023, meaning any conduct that occurred before February 28, 2020 would be time barred. The only QWRs Plaintiff sent or requiring a response within the statute of limitations are her sixth QWR dated November 13, 2020, seventh QWR dated January 28, 2021, and eighth QWR dated June 28, 2021. Thus, claims concerning the five earlier QWRs are time-barred absent tolling.
Plaintiff argues generally that the statutes of limitations for all her federal claims were tolled by Governor Andrew Cuomo's March 20, 2020 Executive Order (the “Executive Order”), which tolled statutes of limitations for state law claims for 228 days due to COVID. N.Y. Exec. Order No. 202.67 (Oct. 4, 2020). However, the Executive Order applied to state law claims, not federal law claims. See Romero v. Manhattan & Bronx Surface Transit Operating Auth., No. 21-CV-4951 (LJL), 2022 WL 624451, at *5-6 (S.D.N.Y. Mar. 2, 2022). Thus, it did not toll the statute of limitations on her RESPA claims (or any other of her federal claims). Plaintiff also argues that because she asserted her RESPA claims in the First Foreclosure Action, the statute of limitations for filing them in this Court was tolled, citing Artis v. D.C., 583 U.S. 71 (2018). Artis is inapposite because it concerned a federal tolling statute, 28 U.S.C. § 1367(d), which provides that the “period of limitations for” refiling in state court a state claim dismissed along with related federal claims by a federal district court exercising supplemental jurisdiction, “shall be tolled while the claim is pending [in federal court] and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period.” Artis, 583 U.S. at 74. In Artis, the Supreme Court interpreted this law to suspend the statute of limitations clock on the state law claims while a federal case is pending and provide 30 days after dismissal in federal court to refile in state court. Id. at 92. The federal statute at issue in Artis is inapplicable here. Thus, there is no basis for finding that the statute of limitations on Plaintiff's RESPA claims, or other federal claims, was tolled by Plaintiff raising such claims in the First Foreclosure Action. Even construing the Complaint liberally, there is no other basis for equitable tolling of Plaintiff's federal claims brought in this action. Accordingly, all of Plaintiff's claims under RESPA Section 2605(e)(1-2) and its implementing regulations pertaining to the QWRs filed before February 28, 2020 must be dismissed for the additional reason that they are time-barred.
However, the Court notes there is a New York State law, N.Y. C.P.L.R. 205, which states that "[w]here the defendant has served an answer and the action is terminated in any manner, and a new action upon the same transaction or occurrence or series of transactions or occurrences is commenced by the plaintiff or his successor in interest, the assertion of any cause of action or defense by the defendant in the new action shall be timely if it was timely asserted in the prior action." Pursuant to this statute, Plaintiff may be able to bring the counterclaims she raised in the First Foreclosure Action in the Second Foreclosure Action provided they were timely asserted in the First Foreclosure Action.
Finally, Defendants assert that Plaintiff fails to state a claim pursuant to 12 U.S.C. § 2605(e)(1)-(2) and its implementing regulations (12 C.F.R. § 1024.35-36) because Nationstar properly responded to each QWR, and that to the extent it did not respond to certain QWRs, it was not obligated to do so because such requests related to non-covered items such as the decision not to offer Plaintiff a loan modification. However, I do not address this argument because Plaintiff's claims under RESPA fail for one or both of the reasons discussed above.
Accordingly, I respectfully recommend that Defendants' motion to dismiss Plaintiff's claims under 2605(e)(1)-(2) (and its implementing regulations, 12 C.F.R. § 1024.35-36) be granted for failure to plausibly plead a claim and, with respect to claims concerning QWRs predating February 28, 2020, for the additional reason that they are time-barred. Because it is conceivable that Plaintiff could replead and specify damages proximately caused by the three most recent QWRs, I recommend those aspects of her claims that would be timely be dismissed without prejudice.
ii. 12 U.S.C. § 2605(e)(3) Claims
12 U.S.C. § 2605(e)(3) prohibits loan servicers from providing information regarding an overdue payment owed by a borrower to a credit reporting agency in the 60-day period following the loan servicer's receipt of a QWR “relating to a dispute regarding the borrower's payment[.]” To state a claim under § 2605(e)(3), a plaintiff must allege that “(i) she sent defendant a notice of error regarding overdue payments; (ii) defendant submitted information regarding plaintiff's overdue payments to a credit reporting agency; and (iii) defendant submitted such information within 60 days after defendant received plaintiff's notice of error.” Jackson v. Caliber Home Loans, No. 18-CV-4282 (NG)(CLP), 2019 WL 3426240, at *6 (E.D.N.Y. July 30, 2019). Plaintiff alleges that Defendants reported her as delinquent to credit reporting agencies within 60 days of receiving a QWR in which she disputed “Nationstar's Deception.” (FAC at ¶ 263.) She does not specify which QWR(s) she is referring to. Plaintiff does, however, allege damages for her 12 U.S.C. § 2605(e)(3) claim, including a substantial reduction of her credit score, her inability to obtain new credit cards, and losing a longstanding credit card (FAC at ¶ 264.). See Gorbaty, 2014 WL 4742509, at *8 (“Denial of credit resulting from a violation of § 2605(e)(3) has been recognized to support a claim for actual damages under RESPA.”).
Because of the three-year statute of limitations discussed above, Plaintiff's claim is time-barred to the extent it relates to conduct and QWRs predating February 28, 2020. The sixth and seventh QWRs, dated November 13, 2020 and January 28, 2021 respectively, (which are attached to the complaint and thus can be considered on this motion), do not reference Plaintiff's dispute regarding Nationstar ceasing to accept her forbearance payments but rather request loan origination documents, payment history, and other documents regarding Defendants' rights to service or collect on the Mortgage. Thus, the only QWR within the statute of limitations for which this claim could possibly pertain is the June 2021 QWR, which does address Plaintiff's dispute with Nationstar. (See FAC at Ex. 64 (“you made an error in ceasing to accept Ms. Bocci's forbearance payments, falsely denying her modification and creating a fake default on her account . . .”). Thus, the claim is timely as to the most recent QWR. Defendants make no other argument for dismissal of this claim. Accordingly, I respectfully recommend that Defendant's motion to dismiss be denied as to the 12 U.S.C. § 2605(e)(3) claim regarding the eighth QWR, but granted with prejudice as to all other QWRs because they are untimely.
iii. 12 C.F.R. § 1024.41 Claims
12 C.F.R. § 1024.41 imposes certain duties on loan servicers with respect to the processing of loss mitigation applications from borrowers. A borrower may enforce violations of 12 C.F.R. § 1024.41 pursuant to 12 U.S.C. § 2605, which sets a three-year statute of limitations. Ramirez, 2021 WL 9564023, at *6.
Plaintiff alleges three violations of 12 C.F.R. § 1024.41. First, she says Nationstar's October 8, 2018 letter concerning Plaintiff's loan modification application did not comply with the requirements of 12 C.F.R. § 1024.41(c) including because it was not sent within 30 days and it did not provide a specific reason for the denial of Plaintiff's loan modification application. Second, she says Nationstar failed to send her an acknowledgement of her complete loss mitigation application in May of 2020 within five days of receiving such application as required by 12 C.F.R. § 1024.41(c)(3). Third, she says DBNTC initiated the First Foreclosure Action during the pre-closure review period in violation of 12 C.F.R. § 1024.41(f). (FAC at ¶¶ 272, 284, 285.)
As discussed above, claims related to conduct that occurred before February 28, 2020 are untimely. The only aspect of this claim that occurred within the statute of limitations period is the alleged failure to send an acknowledgment of the loss mitigation application within five days of receiving it. Defendants assert in the Reply that Plaintiff has no viable claim under 12 C.F.R. § 1024.41 because that regulation does not create a right for a borrower to enforce the terms of an agreement between a servicer and the owner/assignee of a mortgage loan. This argument should not be considered because it was raised for the first time in reply. Further, it is unpersuasive in any event because Plaintiff's allegations under 12 C.F.R. § 1024.41 do not relate to the terms of an agreement but instead plead specific violations of the regulation. The statute permits suits for violations of its provisions. 12 C.F.R. § 1024.41(a) (“A borrower may enforce the provisions of this section pursuant to section 6(f) of RESPA (12 U.S.C. 2605(f).”).
The Court notes that Plaintiff plausibly alleges damages flowing from such violation. (See, e.g., FAC at ¶ 287 “Nationstar's failure to comply with RESPA substantially delayed the loss mitigation process and caused me to refrain from being considered for other loss mitigation options.”)
Accordingly, I recommend that the motion to dismiss be granted with prejudice as to Plaintiff's untimely claims that DBNTC initiated the First Foreclosure Action during the preclosure review period and that Nationstar's October 8, 2018 letter concerning Plaintiff's loan modification application did not comply with the requirements of 12 C.F.R. § 1024.41(c), but denied as to the claim for failure to send an acknowledgment of the loss mitigation application.
2. FCRA Claims
Plaintiff alleges that Defendants violated the FCRA when they engaged in false negative credit reporting and knew the information they were reporting concerning Plaintiff's default on her Mortgage was false. (FAC at ¶ 444.). This allegation can be construed as an alleged violation of 15 U.S.C. § 1681s-2(a) or 15 U.S.C. § 1681s-2(b).
15 U.S.C. § 1681s-2(a) prohibits knowingly reporting inaccurate information to consumer reporting agencies, failing to correct inaccurate information, and failing to investigate a dispute raised directly to the furnisher by the consumer. Defendants argue any claim Plaintiff purports to bring under this provision of FCRA should be dismissed because there is no private right of action for such a claim. Defendants are correct. The statue is explicit that subsection (a) “shall be enforced exclusively ... by the Federal agencies and officials and the State officials identified in section 1681s of this title.” 15 U.S.C. § 1681s-2(d). See Longman v. Wachovia Bank, N.A., 702 F.3d 148, 151 (2d Cir. 2012) (“[T]he statute plainly restricts enforcement of that provision to federal and state authorities ... Thus, the district court correctly concluded, as many other courts have held, that there is no private cause of action for violations of § 1681s-2(a).”); see also Nguyen v. Ridgewood Sav. Bank, 66 F.Supp.3d 299, 304 (E.D.N.Y. 2014) (same).
Accordingly, I respectfully recommend that Defendants' motion to dismiss be granted as to Plaintiff's claims under 15 U.S.C. § 1681s-2(a) with prejudice.
To state a claim for a violation of 15 U.S.C. § 1681s-2(b), “a consumer must show that (1) a furnisher received notice of a credit dispute from a [credit reporting agency] (as opposed to from the consumer alone) and (2) the furnisher negligently or willfully failed to conduct a reasonable investigation.” Lewis v. Navy, No. 21-CV-9131 (LTS), 2022 WL 329195, at *2 (S.D.N.Y. Feb. 2, 2022) (citing Jackling v. HSBC Bank USA, N.A., No. 15-CV-6148 (FPG), 2019 WL 162743, at *4 (W.D.N.Y. Jan. 10, 2019). Critically, a plaintiff must allege that defendants “received notice from a consumer reporting agency stating that Plaintiff disputed the accuracy of the reported information.” Nguyen, 66 F.Supp. at 306 (dismissing plaintiff's 1681s-2(b) claim because plaintiff failed to plausibly allege the loan servicer received notice of the plaintiff's dispute from a consumer reporting agency); Sprague v. Salisbury Bank & Tr. Co., 969 F.3d 95, 99 (2d Cir. 2020) (“The statute is clear that the notice triggering these duties must come from a [consumer reporting agency], not the consumer”).
Defendants argue Plaintiff's claim under this provision of FCRA fails because she does not allege that the credit reporting agencies advised Defendants that Plaintiff was disputing her credit report. They are correct. Plaintiff nowhere alleges that Defendants received notice from a consumer reporting agency that Plaintiff disputed the accuracy of information reported.
Plaintiff asserts in the Opposition that she “disputed Defendants' false info furnished to the credit bureaus with those bureaus and per bureaus' response the furnisher Nationstar ‘verified'' the false information[.]” It is unclear what Plaintiff means by “per bureaus response,” but regardless, she still does not allege that Nationstar received notice of Plaintiff's dispute from a credit reporting agency, which is required under 15 U.S.C. § 1681s-2(b). See Sprague, 969 F.3d at 99. Plaintiff also cites Castro v. NewRez LLC, 2023 WL 3391536 (E.D.N.Y. Jan. 12, 2023), report and recommendation rejected, No. 22-CV-6340(JS)(JMW), 2023 WL 2986827 (E.D.N.Y. Apr. 18, 2023), but that case involved the issue of standing. Here, Defendants have not asserted Plaintiff lacked standing to bring a FCRA claim.
Defendants also assert that Plaintiff's FCRA claim is subject to the statute's two-year statute of limitations. Pursuant to 15 U.S. Code § 1681p, Section 1681s-2(b) claims must be brought by “the earlier of - (1) 2 years after the date of discovery by the plaintiff of the violation that is the basis for such liability; or (2) 5 years after the date on which the violation that is the basis for such liability occurs.” It is not clear from Plaintiff's allegations in the Complaint when the alleged 15 U.S.C. § 1681s-2(b) violations took place.
Accordingly, I respectfully recommend that the motion to dismiss be granted as to Plaintiff's claims under 15 U.S.C. § 1681s-2(b). However, this claim should be dismissed without prejudice as it is possible Plaintiff could replead with facts sufficient to state a plausible claim. To the extent Plaintiff is permitted to replead, her amended allegations should concern conduct that occurred within the statute of limitations.
3. TILA Claims
TILA requires lenders to provide an array of disclosures to borrowers concerning things like finance charges, annual percentage rates of interest, the borrower's rights, and notice of a mortgage transfer or assignment. See Gorbaty; 2014 WL 4742509, at *11; Rosendale, 2021 WL 4066821, at *14.
Plaintiff alleges Defendants violated TILA by erroneously terminating the Temporary Forbearance Plan, delaying and thwarting Plaintiff's loan modification attempts, moving forward with foreclosure while simultaneously considering her for loan modification, and persisting in such activities. (See e.g., FAC at ¶¶ 316, 334.)
Defendants assert that Plaintiff's TILA claims fail because Plaintiff does not identify how the purported conduct implicates TILA. “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.'” Ashcroft, 556 U.S. at 678. Here, Plaintiff does not plead factual allegations specific to TILA that would permit the Court to infer that Defendants are liable under the statute. Plaintiff simply asserts that Defendants are in violation of TILA or engaged in “deception[.]” Such conclusory statements fail to state a claim under TILA. See Estes v. Toyota Fin. Serv., No. 14-CV-1300 JFB SIL, 2015 WL 3830350, at *6 (E.D.N.Y. June 22, 2015) (dismissing TILA claim because plaintiff's conclusory allegation that defendant failed to provide her with sufficient disclosure did not state a plausible claim under the TILA); see also Ashcroft, 556 U.S. at 679 (observing that the Court is “not bound to accept as true a legal conclusion couched as a factual allegation.”) (internal citation omitted).
Defendants also argue that Plaintiff's TILA claims are barred by the statute of limitations. Claims for damages pursuant to TILA must be brought within one year of the alleged violation. See 15 U.S.C. § 1640(e); Mckinnie v. Sallie Mae Bank, No. 21-CV-5246 (JS)(ARL), 2023 WL 2771722, at *3 (E.D.N.Y. Mar. 31, 2023) (“Claims pursuant to TILA carry a one-year statute of limitations.”). Thus, Plaintiff's TILA claims must relate to conduct that occurred since February 28, 2022. Plaintiff does not specify dates when the alleged TILA violations occurred. For example, she asserts in the Opposition that Defendants provided her with incorrect payoff statements but does not specify when Defendants did so. She merely suggests violations are ongoing. This does not provide sufficient information to determine whether there is or could be a timely TILA claim.
Accordingly, I respectfully recommend that Defendants' motion to dismiss Plaintiff's TILA claims be granted for failure to state a claim. Because it is conceivable that Plaintiff might be able to add facts that plausibly state a timely claim under TILA, I recommend the TILA claims be dismissed without prejudice.
4. CFPA Claims
The CFPA prohibits “unfair, deceptive, or abusive act[s] and practice[s.]” 12 U.S.C. § 5531(a). Plaintiff alleges Defendants violated the CFPA by moving forward with the First Foreclosure Action while simultaneously working with her to avoid foreclosure through consideration of a loan modification application (otherwise known as “dual tracking”). (See, e.g., FAC at ¶¶ 258, 281, 315.)
Defendants argue Plaintiff's CFPA claim fails because the statute does not provide a private right of action for individual consumers. This is correct. See Zubair v. Bank of Am., No. 20-CV-1308 (LLS), 2020 WL 4431571, at *3 (S.D.N.Y. July 29, 2020) (the CFPA “does not provide a private right of action for its enforcement by a consumer through a lawsuit.”) Thus, I respectfully recommend that Defendants' motion be granted with prejudice as to this claim.
B. State Claims
I construe the Complaint to allege the following state law violations and causes of action: breach of contract, New York General Business Law §349 and § 350, New York Banking Law 12-D § 419 and § 9-x, New York Real Property Law § 254-b, fraud, defamation, intentional infliction of emotional distress (“IIED”), negligent infliction of emotional distress (“NIED”), and negligence. I address these claims below. Plaintiff also asserted a claim for malicious prosecution, but she concedes in her Opposition that she fails to state a malicious prosecution claim and thus it should be dismissed. Accordingly, I do not address it below.
1. Breach of Contract Claims
Plaintiff alleges that Defendants breached the Temporary Forbearance Plan - a contract - by refusing to accept her reduced mortgage payment in May and June 2018, referring her for foreclosure in June 2018, refusing to offer her a standard loan modification, and failing to verify her information before initiating foreclosure. (FAC at ¶ 320.) Defendants argue that Plaintiff's claim for breach of contract fails because the Forbearance Letter alerting Plaintiff that she was being granted a temporary forbearance was facially not a trial modification agreement or an offer for a permanent loan modification. Defendants also argue that even if the Forbearance Letter constituted a contract, Nationstar's only obligation under such contract was to forbear from commencing a foreclosure action before July 1, 2018.
The statute of limitations for breach of contract claims in New York State is six years and therefor Plaintiff's claims are timely. See WCA Holdings III, LLC v. Panasonic Avionics Corp., No. 1:20-CV-07472-GHW, 2023 WL 8434776, at *8 (S.D.N.Y. Dec. 5, 2023)(citing N.Y. C.P.L.R. § 213(2)).
Under New York law, the elements of a breach of contract claim are, (1) the existence of a contract, (2) the plaintiff's performance under the contract, (3) the defendant's breach of the contract, and (4) resulting damages. 34-06 73, LLC v. Seneca Ins. Co., 39 N.Y.3d 44, 52 (N.Y. 2022). When pleading a breach of contract claim, the complaint must “set forth the terms of the agreement upon which liability is predicated, either by express reference or by attaching a copy of the documents comprising the agreement.” See Fillmore E. BS Fin. Subsidiary LLC v. Capmark Bank, No. 11 Civ. 4491, 2013 WL 1294519, at *13 (S.D.N.Y. Mar. 30, 2013), aff'd, 2014 WL 67665 (2d Cir. Jan. 9, 2014) (internal quotation marks and citation omitted). Further, a modification of a mortgage term is governed by the Statute of Frauds and “must be in writing to be enforceable.” Miller v. HSBC Bank U.S.A., N.A., No. 13 CIV. 7500, 2015 WL 585589, at *3 (S.D.N.Y. Feb. 11, 2015) (citing Pappas v. Resolution Trust Corp., 255 A.D.2d 887, 889 (4th Dep't 1998)).
i. Temporary Forbearance
Plaintiff alleges that the Forbearance Letter constituted a contract, that she performed under said contract by making payments, and that Nationstar breached the contract by ceasing to accept Plaintiff's payments and referring her for foreclosure in June 2018. (FAC at ¶ 212, 320.) The Forbearance Letter, which Plaintiff attaches as an exhibit to the Complaint, stated that it was “grant[ing] a temporary Forbearance Plan” to Plaintiff under which, beginning February 1, 2018, she could begin making a reduced monthly payment for a period of six months. (FAC at Ex. 9.) Plaintiff accepted the offer and made initial payments under the Temporary Forbearance Plan, which were accepted by Nationstar. The breach alleged is Nationstar's failure to accept all six-months of payments under the plan and Nationstar referring Plaintiff for foreclosure, leading to damages. Plaintiff asserts damages she suffered including “having to expend tens of thousands of dollars (and mounting) on legal fees and related expenses defending the wrongful foreclosure resulting from breach” and “prolonged delinquency of my loan and related additional interest payments and fees charged to me, resulting in interest to accrue and reinstatement figure to substantially increase[.]” (Id. at ¶ 335.) Plaintiff also alleges damage to her credit rating. (Id. at ¶ 322.)
Defendants assert that the Forbearance Letter facially was not a trial modification agreement because it explicitly stated it was not “a modification of the loan documents” and that the lender was “not obligated or bound to make any modification of the Loan Documents or provide any other alternative resolution of [plaintiff's] default under the Loan Documents.” (Id. at Ex. 9.)
Plaintiff plausibly alleges the existence of offer and acceptance and that the Forbearance Letter constituted a contract. The Forbearance Letter stated, “[i]f you fail to make the first temporarily reduced payment by 2/1/2018 and each subsequent payment in the month which it is due until 08/01/2018 (“Expiration Date”), this offer will be revoked and we may refer your mortgage to foreclosure.” (Id.) (emphasis added). This language suggests that Plaintiff's 2/1/2018 payment under the Temporary Forbearance Plan would constitute acceptance of Nationstar's offer to accept reduced mortgage payments from Plaintiff for a period of six months. Thus, there is a plausible offer and acceptance (i.e., a contract).
Defendants next argue that even if the Forbearance Letter constituted a contract, Nationstar's only obligation under such contract was to forbear from commencing a foreclosure action before July 1, 2018. However, this argument is not persuasive.
Plaintiff plausibly alleges that Defendants breached the Forbearance Letter in two ways. First, the Forbearance Letter stated in bold, “[w]e will not refer your loan to foreclosure or proceed to foreclosure sale during this Forbearance Plan, provided you are complying with the terms of the Forbearance Plan[.]” (Id. at Ex. 9.) Plaintiff asserts Nationstar admitted in a letter dated June 7, 2019 that Nationstar referred her for foreclosure in June 2018, which would have been before the Temporary Forbearance Plan was set to end in July 2018. (Id. at ¶ 212.) Indeed, the June 7, 2019 letter from Nationstar explained that Plaintiff lost access to Nationstar's online portal for making mortgage payments “as of June 2018, when the account was referred to foreclosure.” (Id. at Ex. 62.) Because Plaintiff did comply with the terms of the Forbearance Plan by making her monthly payments, Plaintiff plausibly alleges Nationstar breached the Forbearance Letter by referring her for foreclosure during the pendency of the Temporary Forbearance Plan. Second, Plaintiff alleges Nationstar breached the Forbearance Letter by refusing to accept her May and June 2018 payments under the Temporary Forbearance Plan, thereby forcing her into default. (Id. at ¶¶ 323, 328.) (“[B]y wrongfully ceasing to accept my payments based on a condition that does not exist, thereby rendering it impossible for me to maintain current payments and avoid a default status that is a basis for foreclosure.”). Defendants make no argument as to why ceasing to accept such payments would not constitute breach of the Forbearance Letter.
In sum, Plaintiff plausibly alleges all elements of a breach of contract claim: by making the payment on 2/1/2018, Plaintiff accepted Nationstar's offer, that she continued to perform pursuant to the Forbearance Letter until Defendants ceased accepting her payments and referred her for foreclosure, and thereby breached the agreement. (FAC at ¶¶ 212, 323.) Plaintiff also alleges she suffered damages in the form of interest payments and fees, as well as legal fees for the First Foreclosure Action. It is unclear from Plaintiff's allegations whether the interest and fees Plaintiff was charged after Nationstar ceased accepting her payments would be greater than any interest and fees that would have accrued had Nationstar accepted those payments. It is also unclear whether the damage to Plaintiff's credit rating occurred as a result of Nationstar referring her for foreclosure in June 2018, as opposed to subsequent reporting. Nevertheless, Plaintiff's allegations of damages are enough to survive the motion to dismiss stage because it is plausible that Defendants' alleged breaches caused the pleaded damages. See Comfort Inn Oceanside v. Hertz Corp., No. 11 Civ. 1534 (JG) (JMA), 2011 WL 5238658, at *8 (E.D.N.Y. Nov. 1, 2011) (holding that plaintiff plausibly alleged damages where plaintiff provided “at least some indication” of how defendant's alleged breach resulted in damages).
Since Plaintiff has pled all the elements of a breach of contract claim, I respectfully recommend that Defendants' motion to dismiss Plaintiff's breach of contract claim with regard to alleged breach of the Forbearance Letter be denied.
ii. Standard Modification
Although Plaintiff plausibly alleges that the Forbearance Letter is a contract, the letter does not state that Nationstar would grant Plaintiff a standard loan modification. To the contrary, the Forbearance Letter specifically states that at least 60 days prior to the end of the forbearance plan, Nationstar “will provide information on alternatives that may be available to [Plaintiff] at the end of the Forbearance Plan term . . . such as a loan modification.” (FAC at Ex. 9.) Such language suggests that while a loan modification may be offered to Plaintiff, Nationstar was not under an obligation to provide one. The Forbearance Letter further states that “[y]ou agree that the Forbearance Plan is not a forgiveness of payments on your Loan or a modification of the Loan Documents.” (Id.) Thus, the Forbearance Letter was clear that it did not constitute a standard loan modification, nor did it guarantee Plaintiff would later be granted such modification. Indeed, Plaintiff herself concedes this in her Opposition. (Opposition at 17) (“While the forbearance is not a permanent loan modification . . .”). The Court also notes that New York courts have held there is “no requirement that a foreclosing [mortgagee] modify its mortgage loan prior to or after a default in payment.” Miller, 2015 WL 585589, at *3 (citing US Bank N.A. v. Orellana, 975 N.Y.S.2d 370, at *3 (N.Y. Sup. Ct. 2013) (internal quotations omitted). Thus, Plaintiff fails to plausibly allege a breach of contract because there was no offer or acceptance of a loan modification and no promise to grant her a loan modification in the future.
Plaintiff's reliance on Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 560 (7th Cir. 2012) does not militate a different result because that case is distinguishable on its facts. In that case, unlike here, the temporary loan modification agreement (the trial period agreement) explicitly stated plaintiff would be offered a permanent loan modification if two conditions were satisfied. Id. Thus, there was an offer that was accepted. Wigod also involved the Home Affordable Mortgage Program which required loan servicers to offer borrowers a permanent loan modification if the borrower complied with the trial period agreement. Id. at 557. Such a requirement does not exist in the present dispute.
Similarly, Plaintiff's allegations that on two occasions Nationstar representatives informed her over the phone that the Mortgage would be rolled into a permanent loan modification does not change the result. (FAC at ¶¶ 47, 61.) Such oral representations are insufficient to create a contract or otherwise modify Plaintiff's Mortgage because under New York law, “a modification of a mortgage term . . . is governed by the Statute of Frauds and must be in writing to be enforceable.” Miller, 2015 WL 585589, at *3 (internal quotations omitted); N.Y. Gen. Oblig. Law § 5-703(1). Plaintiff asserts in her Opposition that the admission exception to the Statute of Frauds applies because she is “confident that through testimony of Nationstar employees under oath during discovery this admission will be obtained.” Plaintiff appears to be referring to the judicial admission exception to the Statute of Frauds, which states that even if there is no written contract, a contract is nonetheless enforceable “if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made.” N.Y. U.C.C. Law § 2-201(3)(b); see Niedernhofer v. Wittels, No. 17-CV-4451 (NSR), 2018 WL 3650137, at *3 (S.D.N.Y. July 31, 2018). Here, Defendants have not admitted in their Motion or otherwise in court that a contract involving a standard loan modification exists. Plaintiff's confidence that she will be able to elicit testimony admitting the existence of such contract in the future is speculative and insufficient to invoke the judicial admission exception to the Statute of Frauds.
Finally, Plaintiff argues that Nationstar made a promise to grant her a permanent loan modification in writing in the Error Letter dated April 16, 2018. (FAC at Ex. 15.) The Error Letter states that “[Nationstar's] records indicate that account was approved for the Standard Modification Program on January 11, 2018 by error. After further review, we confirmed that our underwriter at time of review approved you for a trial period plan without getting approval from the investor, which is a [sic] required for your loan.” (Id.) But this letter is not a written offer to grant Plaintiff a loan modification, and Plaintiff does not plead she received one. Further, despite the Error Letter's use of the term “Standard Modification Program,” it explains that she was erroneously approved for a “trial period plan” (i.e., the Temporary Forbearance Plan). Thus, this letter does not establish a contract or breach of contract and therefore, Plaintiff has not plausibly pleaded a claim for breach of contract with respect to the alleged failure to offer her a standard loan modification. See Yanes v. Ocwen Loan Servicing, LLC, No. 13-CV-2343 JS ARL, 2015 WL 631962, at *2-3 (E.D.N.Y. Feb. 12, 2015) (dismissing breach of contract claim where plaintiff failed to identify the terms of any contract that defendant had allegedly breached).
Accordingly, I respectfully recommend that Plaintiff's breach of contract claim concerning the permanent loan modification be dismissed. Because it is conceivable there might be a written document dated on or around January 11, 2018 offering a loan modification, I recommend the claim be dismissed without prejudice.
iii. Failure to Verify Information
Plaintiff vaguely alleges that DBNTC breached its contractual obligations under “the note and mortgage” by “not verifying Nationstar's information about [her] before commencing foreclosure, by commencing a wrongful foreclosure and by filing baseless lis pendens as part of the foreclosure action.” (FAC at ¶¶ 349-50.) Since DBNTC filed the First Foreclosure Action in December of 2018, and breach of contract claims in New York have a six-year statute of limitations, Plaintiff's claim would be timely. See N.Y. C.P.L.R. § 213(2). Defendants do not move to dismiss this claim or otherwise address it. Thus, I respectfully recommend that this claim remain in the action.
2. New York General Business Law
Plaintiff asserts violations of both New York General Business Law (“GBL”) § 349 (“Section 349”) and § 350 (“Section 350”). I address each in turn.
i. Section 349
Section 349 of the GBL prohibits all “[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state.” N.Y. Gen. Bus. Law § 349(a). Plaintiff asserts Defendants violated Section 349 by erroneously terminating the Temporary Forbearance Plan, delaying and thwarting Plaintiff's loan modification attempts, dual tracking foreclosure and considering her for loan modification, reporting false negative information about her to credit reporting agencies and others, and persisting in such activities. (FAC at ¶ 316, 444.)
Defendants argue that Plaintiff fails to state a claim under Section 349 because Plaintiff does not allege that Defendants engaged in consumer-oriented conduct. A plaintiff bringing a Section 349 claim must allege “first, that the challenged act or practice was consumer-oriented; second, that it was misleading in a material way; and third, that the plaintiff suffered injury as a result of the deceptive act.” Rosendale, 2021 WL 4066821, at *19 (internal citations omitted). When evaluating whether a particular action should be characterized as consumer-oriented, courts consider whether the action “(1) affected a broad swath of consumers, (2) consisted of standard practices that necessarily affect numerous consumers, or (3) is unique to the parties.” Id. “[W]hat matters is whether the defendant's allegedly deceptive act or practice is directed to the consuming public and the marketplace. In other words, GBL § 349 is focused on the seller's deception and its subsequent impact on consumer decision-making[.]” Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc., 37 N.Y.3d 169, 177, 171 N.E.3d 1192, 1198 (N.Y. 2021). To satisfy the requirement of consumer-oriented activity in the real estate context, “courts have generally required that a plaintiff allege that the defendant affirmatively and publicly sought transactions with consumers.” Hayrioglu v. Granite Cap. Funding, LLC, 794 F.Supp.2d 405, 410 (E.D.N.Y. 2011). The Court of Appeals of New York explained in Plavin v. Group Health Incorporated that it has found conduct to be consumer-oriented for the purposes of Section 349 where the deceptive statements at issue are contained in standard documents distributed to a group of consumers or in an “extensive marketing scheme” that had a “broader impact on consumers at large.” 35 N.Y.3d 1, 10 (N.Y. 2020). The Court also noted it has declined to find conduct is consumer-oriented when the plaintiff alleges “a private contract dispute over policy coverage and the processing of a claim which is unique to the[ ] parties, not conduct which affects the consuming public at large[.]” Id. at 11.
All of Plaintiff's allegations are specific to the handling of her mortgage and her subsequent attempts to obtain forbearance and loan modifications. They do not impact a wide swath of consumers. Plaintiff attempts to show consumer-oriented conduct by alleging Nationstar “has a record of unlawful pattern and practices in mortgage servicing in general” and that regulators such as the Consumer Financial Protection Bureau and New York State's Department of Financial Services “have recognized Nationstar's widespread behavior violating numerous statutes.” (FAC at ¶ 294.) She also references reports that relate to a settlement with the Consumer Financial Protection Bureau and Nationstar being fined for violations of New York State Banking Law, as well as a proposed stipulated judgment filed by the Consumer Financial Protection Bureau in which DBNTC allegedly engaged in unfair acts and practices in violation of the CFPA. (Id. at ¶¶ 295-97.) However, these allegations are vague and do not speak to specific practices that impacted both Plaintiff and consumers at large. Thus, they are insufficient to plausibly state a claim under the statute.
Plaintiff cites three cases in support of her proposition that she sufficiently alleges Defendants' conduct was consumer-oriented, but all are distinguishable. See Pandit v. Saxon Mortg. Servs., Inc., No. 11-CV-3935 JS GRB, 2012 WL 4174888, *6 (E.D.N.Y. Sept. 17, 2012) (finding allegations that defendant “routinely” asked homeowners to resubmit financial information on pretextual grounds, misled homeowners over the phone and ignored completed loan modifications were sufficient to plead consumer-oriented conduct; whereas in this case Plaintiff only vaguely alleges Defendants have a record of “unlawful pattern and practices in mortgage servicing in general” and “violat[ed] numerous statutes”) (FAC at ¶ 294.); M & T Mortg. Corp. v. White, 736 F.Supp.2d 538, 571-73 (E.D.N.Y. 2010) (finding allegations that defendants had represented themselves to plaintiffs as a “one-stop shop,” steered plaintiffs towards attorneys who were in on the scheme and induced plaintiffs to enter onerous mortgages was sufficiently consumer-oriented; unlike here where there are no such allegations); Kapsis v. Am. Home Mortg. Servicing Inc., 923 F.Supp.2d 430 (E.D.N.Y. 2013) (class action lawsuit where the court held plaintiffs had adequately alleged a consumer-oriented activity because they alleged particular deceptive acts and practices directed at a class comprised of tens-of-thousands of individuals.) Thus, Plaintiff's claim under Section 349 should be dismissed for failure to state a claim. See Singh v. City of New York, 217 N.E.3d 1, at *7 (N.Y. 2023) (affirming lower court's dismissal of Section 349 claim because conduct alleged was not consumer-oriented).
Defendants also assert that many of Plaintiff's claims under Section 349 fall outside of the three-year statute of limitations. The statute of limitations on a Section 349 claim accrues “when the plaintiff has been injured by a deceptive act or practice that is in violation of section 349.” Loiodice v. BMW of N. Am., LLC, 4 N.Y.S.3d 102, 104 (N.Y.App.Div. 2015). Most of Plaintiff's allegations are time barred because they concern conduct that occurred in 2018 and early 2019, such as initiating foreclosure and failing to withdraw the foreclosure in February 2019. The only allegations Plaintiff makes invoking Section 349 that plausibly fall within the statute of limitations are that Defendants violated Section 349 by (1) “persisting” in reporting allegedly false negative information “for years” to third parties (FAC at ¶ 444), (2) “denying my loan modification late and not sending me the denial notice so my appeal was thwarted” (FAC at ¶ 316), and (3) delaying and thwarting loan modification attempts (FAC at ¶ 316). But, even if timely, these allegations do not concern consumer-oriented conduct, as noted above.
Plaintiff references the Executive Order, which tolled statutes of limitations for state law claims for 228 days. N.Y. Exec. Order No. 202.67 (Oct. 4, 2020). But Plaintiff's allegations concerning conduct that occurred in 2018 or February 2019 would still be time barred even accounting for the extra 228 days afforded to her by the Executive Order.
Several of Plaintiff's allegations regarding these violations are duplicative, so the Court consolidates such allegations for brevity. E.g.: “delaying and altogether thwarting my loan modification attempts” and “thwarting my ability to modify loan[.]” (FAC at ¶ 316.)
Therefore, I respectfully recommend that Defendants' motion to dismiss Plaintiff's Section 349 claim be granted for failure to state a claim. However, because it is conceivable she might be able to plead consumer-oriented conduct within the statute of limitations period, I recommend dismissal without prejudice.
ii. Section 350
Section 350 of the GBL prohibits “[f]alse advertising in the conduct of any business, trade or commerce or in the furnishing of any service” in New York State. N.Y. Gen. Bus. Law § 350. The statute defines false advertising as “advertising, including labeling, of a commodity, or of the kind, character, terms or conditions of any employment opportunity if such advertising is misleading in a material respect.” Id. § 350-a. Plaintiff alleges that Defendants violated Section 350 by refusing to discontinue the First Foreclosure Action despite knowing they lacked standing to do so, and reporting false negative information about Plaintiff to third parties when they knew such information was false. (FAC at ¶¶ 392, 444.) Defendants argue Plaintiff fails to state a claim for violations of Section 350 because Plaintiff does not allege any false advertising by Defendants. Defendants are correct.
Plaintiff does not allege any facts suggesting that Defendants published advertisements or engaged in conduct related to advertisements. Instead, Plaintiff simply makes the conclusory assertion that Defendants engaged in false advertising, which the Court is not required to accept as true. See Ashcroft, 556 U.S. at 678. (“A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.'”)
Because Plaintiff fails to state a claim for false advertising, I respectfully recommend that Defendant's motion to dismiss Plaintiff's Section 350 claim be granted. Although I am skeptical that Plaintiff has a basis for asserting a Section 350 claim, this claim should be dismissed without prejudice in light of Plaintiff's pro se status.
The statute of limitations for Section 350 claims is three years. See Owolabi v. Bank of Am., NA, No. 18-CV-3991 (AJN), 2019 WL 463849, at *2 (S.D.N.Y. Feb. 6, 2019) (citing N.Y. C.P.L.R § 214(2)). However, Plaintiff's allegations were not pled with enough specificity regarding timing to discern whether her claims are time barred.
3. New York Banking Law
i. 12-D § 419
Plaintiff alleges Defendants violated NY Banking Law 12-D § 419. However, as Defendants correctly point out, that provision was repealed in 1939. See N.Y. Banking Law § 419 (McKinney); Colfin Metro Funding LLC v. Rojas, No. 703458/2013, 2014 WL 4063600, at *6 (N.Y. Sup. Ct. July 28, 2014) (“[T]o the extent defendant Rojas alleges a violation of Banking Law § 419, that statute was repealed in 1939.”). Therefore, I respectfully recommend that Plaintiff's NY Banking Law 12-D § 419 claims be dismissed with prejudice.
In the Opposition, Plaintiff cites to a bill in the New York State legislature that would provide a private right of action for individuals who have been injured by violations of the banking law. However, that bill has not become law and therefore does not assist her. (See S. 564A, 2023-2024 Leg. (N.Y. 2024).)
ii. § 9-x
New York Banking Law § 9-x (“Section 9-x”) was enacted in June 2020 to provide forbearance relief to borrowers impacted by the COVID-19 pandemic and places restrictions on a loan servicer's ability to commence a foreclosure action during the covered period, which the statute defines as beginning on March 7, 2020. Plaintiff alleges that Nationstar violated Section 9-x by not providing her with “forbearance relief.” Defendants assert that Section 9-x does not apply to borrowers such as Plaintiff who defaulted before March 7, 2020. They are correct. Indeed, Plaintiff herself cites a case in which a New York State court concluded Section 9-x “does not apply to mortgages which were already in foreclosure when the law was enacted.” Wells Fargo Bank, N.A. v. Kelsey, No. 2018-50490, 2021 WL 1080836, at *2 (N.Y. Sup. Ct. Mar. 16, 2021); see also Money Source, Inc. v. Mevs, 129 N.Y.S.3d 643, 647 (N.Y. Sup. Ct. 2020)(“[t]here is little doubt that the new statute is designed to only address mortgages affected by the COVID-19 pandemic and should not apply to borrowers who defaulted before the start date of March 7, 2020”). The language of Section 9-x itself also supports a reading that it was not intended to apply to individuals who were already facing foreclosure before the COVID-19 pandemic: “adherence with this section shall be a condition precedent to commencing a foreclosure action stemming from missed payments which would have otherwise been subject to this section.” N.Y. Banking Law § 9-x(4) (emphasis added).
Despite acknowledging Wells Fargo Bank, which does not support Plaintiff's claim, Plaintiff maintains that she should be eligible for Section 9-x's relief because the First Foreclosure Action was commenced wrongfully. (FAC at ¶ 312.) However, Plaintiff cites no authority that would support such a proposition. She also argues in her Opposition that her forbearance was still “open/active” during COVID, and therefore she should have been eligible for relief under Section 9-x. However, the term of Plaintiff's Temporary Forbearance Plan ended in July 2018, which precedes the date of Section 9-x's enactment. Therefore, Plaintiff has failed to plausibly allege that she is eligible for relief under Section 9-x.
Accordingly, I respectfully recommend that Defendants' motion to dismiss Plaintiff's Section 9-x claims be granted with prejudice.
4. New York Real Property Law § 254-b
N.Y. Real Prop. Law § 254-b (“Section 254-b”) provides that a late fee charged on a payment due under a mortgage for a property that meets certain requirements cannot exceed 2% of the installment due. N.Y. Real Prop. Law § 254-b. Plaintiff alleges in the Complaint that Defendants violated Section 254-b by assessing late charges against her. (FAC at ¶ 387.) Defendants assert that Plaintiff does not allege Defendants charged her more than 2% of the installment due. Defendants are correct. Nowhere in the Complaint does Plaintiff allege the late fees Defendants charged her exceeded the statutory limit. Instead, Plaintiff simply makes the conclusory assertion that Defendants violated Section 254-b. (FAC at ¶ 387.) Plaintiff cites to her foreclosure answer, which makes the same conclusory assertion, without including any facts regarding the late fees. Therefore, Plaintiff fails to plausibly state a claim under Section 254-b. Ashcroft, 556 U.S. at 678 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”). Accordingly, I respectfully recommend that Defendants' motion to dismiss Plaintiff's claim under Section 254-b be granted, but without prejudice in light of her pro se status.
5. Fraud
Under New York law, the elements of a cause of action for fraud are “a misrepresentation or a material omission of fact which was false and known to be false by [the] defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury.” Pasternack v. Lab'y Corp. of Am. Holdings, 27 N.Y.3d 817, 827 (N.Y. 2016) (internal citations omitted). Federal Rule of Civil Procedure 9(b) creates a heightened pleading standard for plaintiffs alleging fraud. To meet the heightened pleading standard, a plaintiff must, “(1) detail the statements (or omissions) that the plaintiff contends are fraudulent, (2) identify the speaker, (3) state where and when the statements (or omissions) were made, and (4) explain why the statements (or omissions) are fraudulent.” Anhui Konka Green Lighting Co. v. Green Logic LED Elec. Supply, Inc., No. 18 CIV. 12255 (PAE), 2019 WL 6498094, at *4 (S.D.N.Y. Dec. 3, 2019).
Plaintiff alleges that Defendants engaged in fraud when they made misrepresentations regarding the termination of the Temporary Forbearance and the subsequent default. (FAC at ¶ 407.) Defendants argue that Plaintiff's fraud claim should be dismissed because Plaintiff fails to allege that she reasonably relied on any false representations of Defendants and that Nationstar did not misrepresent that Plaintiff defaulted on her Mortgage - she did default. Defendants are correct that Plaintiff fails to state a plausible claim for fraud.
The only material misrepresentation identified in the Complaint is that “[t]he Nationstar Deception fabrication of my forbearance default based on a reason that does not exist and the wrongful foreclosure.” (FAC at ¶ 407(a).) The Court construes this to be referring to the statement that investor approval was needed before a temporary forbearance or loan modification could be approved, which Plaintiff argues was false. Even assuming the investor approval requirement statement was false, Plaintiff fails to allege that she relied on that misrepresentation. Plaintiff seems to be asserting that third parties, such as DBNTC, relied on Nationstar's allegedly false reporting of Plaintiff's default. However, such an allegation cannot form the basis of a claim here because “fraud claims may not be premised on false statements on which a third party relied.” Fed. Treasury Enter. Sojuzplodoimport v. Spirits Int'l N.V., 400 Fed.Appx. 611, 613 (2d Cir. 2010); see also Pasternack, 27 N.Y.3d at 829 (“a fraud claim requires the plaintiff to have relied upon a misrepresentation by a defendant to his or her detriment . . . We, therefore, decline to extend the reliance element of fraud to include a claim based on the reliance of a third party, rather than the plaintiff.”); SRM Glob. Master Fund Ltd. P'ship v. Bear Stearns Companies L.L.C., 829 F.3d 173, 178 (2d Cir. 2016) (holding that plaintiff's fraud claims were properly dismissed because plaintiff failed to allege it acted in reliance on the defendants' misrepresentations). Thus, Plaintiff fails to state a claim of fraud.
Although not entirely clear from the pleading, to the extent Plaintiff alleges DBNTC made a material misrepresentation that it had standing to bring a foreclosure action, such claim would fail for the same reason. Plaintiff has not alleged that she relied on any statement from DBNTC that it had standing to bring a foreclosure action. Instead, Plaintiff alleges that she was aware DBNTC lacked standing.
Accordingly, I respectfully recommend that Defendants' motion to dismiss Plaintiff's fraud claim be granted, but without prejudice in light of her pro se status.
I do not address Defendants' other arguments justifying dismissal of Plaintiff's fraud claim because the Court believes the lack of allegations concerning reliance is sufficient on its own.
6. Defamation
Plaintiff alleges Defendants defamed her by providing knowingly false negative information “about [her] in writing to third party information providers including credit bureaus, county records, and possibly others yet unknown to [her].” (FAC at ¶ 447.) Defendants argue that Plaintiff's defamation claim should be dismissed because it is preempted by the FCRA.
Section 1681s-2 of the FCRA imposes specific duties on furnishers of information to consumer reporting agencies, including that “[a] person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.” 15 U.S.C. § 1681s-2(a)(1)(A). Plaintiff's allegation that Defendants provided false negative information about her to credit reporting agencies concerns conduct regulated by 15 U.S.C. § 1681s-2.
The FCRA provides in relevant part:
No requirement or prohibition may be imposed under the laws of any State
(1) with respect to any subject matter regulated under- ...
(F) section 1681s-2 of this title, relating to the responsibilities of persons who furnish information to consumer reporting agencies....15 U.S.C. § 1681t(b)(1)(F). The Second Circuit has interpreted this to bar state law defamation actions based on information reported to consumer reporting agencies. See Macpherson v. JPMorgan Chase Bank, N.A., 665 F.3d 45 (2d Cir. 2011) (holding that plaintiff's claim that Defendant bank defamed him by providing false information to Equifax was preempted by the FCRA). Thus, Plaintiff's defamation claim is preempted to the extent it pertains to reports to consumer reporting agencies.
However, to the extent Plaintiff alleges Defendants reported information about her to “county records, and possibly others,” such claim would not be preempted by the FCRA. It nevertheless still fails to state a claim for defamation. To state a claim for defamation under New York Law, a plaintiff must allege “(a) a false statement that tends to expose a person to public contempt, hatred, ridicule, aversion, or disgrace, (b) published without privilege or authorization to a third party, (c) amounting to fault as judged by, at a minimum, a negligence standard, and (d) either causing special harm or constituting defamation per se[.]” Bowen v. Van Bramer, 168 N.Y.S.3d 107, 109 (App. Div. 2022). The complaint must “set forth the particular words allegedly constituting defamation, and it must also allege the time, place, and manner of the false statement and specify to whom it was made.” Arvanitakis v. Lester, 145 A.D.3d 650, 651 (App. Div. 2016). Plaintiff alleges in the Complaint that Defendants defamed her by “(1) willfully making written statements about me they knew were false to third party credit reporting agencies, (2) willfully making written statements about me they knew were false to county property databases in filing lis pendens of a foreclosure they knew was wrongful, and (3) giving, or causing to be given, inaccurate credit reporting about me to others as yet unknown to me[.]” (FAC at ¶ 455.) Plaintiff's allegations lack the specificity required to state a claim for defamation. For example, Plaintiff provides no details as to the time, place or manner in which the allegedly false statements were made to “county records or others[.]” In an analogous case, where a plaintiff only alleged “that defendant reported to various credit agencies that plaintiff was delinquent in his payments” but did not provide any further information as to the content of the alleged statements, or the “time, place, or manner in which defendant made the alleged statements,” the court held that the plaintiff had failed to state a claim. Ahmed v. Bank of Am., No. 09-CV-2550 DLI RLM, 2010 WL 3824168, at *4 (E.D.N.Y. Sept. 24, 2010). Similarly here, Plaintiff alleges that Defendants reported false negative information about Plaintiff to various entities, but does not detail the specific content of the allegedly defamatory statements, when such statements were made, or specifically to whom the statements were made. Therefore, Plaintiff fails to state a claim for defamation.
While Defendants do not argue Plaintiff failed to state a claim for defamation, the instant Report and Recommendation constitutes the requisite notice and opportunity to be heard on this issue to allow a district court to dismiss the claim sua sponte. See E.A. Sween Co., Inc., 787 Fed.Appx. at 782.
Accordingly, I respectfully recommend that Defendant's motion to dismiss Plaintiff's defamation claim be granted. I recommend that her defamation claim concerning Defendants reporting information to credit agencies be dismissed with prejudice since such claim is preempted. See In re Citigroup Inc. Sec. Litig., 987 F.Supp.2d 377 (S.D.N.Y. 2013) (dismissing state law claims with prejudice because they were preempted by federal law). However, since Plaintiff's remaining defamation claims are not preempted, I recommend they be dismissed without prejudice in light of Plaintiff's pro se status.
7. IIED
Plaintiff alleges that Defendants are liable for intentional infliction of emotional distress because they engaged in extreme and outrageous conduct by “continu[ing] with their known deception and abusive conduct . . .that they carried on with it for years after I informed them with evidence in February 2019 of Nationstar's Deception and resulting wrongful foreclosure.” (FAC at ¶ 459.) To state a claim for IIED in New York, a plaintiff must allege “(i) extreme and outrageous conduct; (ii) intent to cause, or disregard of a substantial probability of causing, severe emotional distress; (iii) a causal connection between the conduct and injury; and (iv) severe emotional distress.” Howell v. N.Y. Post Co., 612 N.E.2d 699, 702 (N.Y. 1993). Defendants argue Plaintiff fails to state a claim for IIED because Plaintiff fails to plausibly allege extreme and outrageous conduct. The Court of Appeals of New York has observed “the requirements [of an IIED claim] . . . are rigorous, and difficult to satisfy,” and that, “of the intentional infliction of emotional distress claims considered by this Court, every one has failed because the alleged conduct was not sufficiently outrageous” Chanko v. Am. Broad. Companies Inc., 27 N.Y.3d 46, 57, 49 N.E.3d 1171, 1179 (N.Y. 2016) (citing Howell, 612 N.E.2d at 703). “Debt collection or foreclosure-even when initiated improperly-will typically support an IIED claim only if accompanied by other loathsome conduct,'” which, in the debt collection context, means “the aggressive pursuit of the debt using techniques that are ‘intended or likely to cause physical illness.'” Calizaire v. Mortg. Elec. Registration Sys., Inc., No. 14CV1542CBASMG, 2017 WL 895741, at *8 (E.D.N.Y. Mar. 6, 2017), aff'd, 763 Fed.Appx. 124 (2d Cir. 2019) (internal citations omitted). Other than allegedly lying about Plaintiff's default and proceeding with the First Foreclosure Action, Plaintiff does not allege other “loathsome conduct.” Thus, she fails to state a plausible claim. Indeed, courts in this Circuit have dismissed IIED claims based on facts similar to or more severe than present here. See, e.g., Oparaji v. ABN AMRO Mortg. Grp., Inc., No. 19-CV-01650 (MKB), 2020 WL 9816011, at *12 (E.D.N.Y. Sept. 18, 2020) (“Plaintiff's allegations that Defendants were withholding her monthly payments, called her late at night, initiated foreclosure proceedings, misrepresented her monthly payment amounts, failed to remove negative credit information from her credit report, and forged the 2004 mortgage and note do not constitute conduct [sufficient to support an IIED claim].”); Calizaire, 2017 WL 895741, at *8 (“Calizaire's complaint, in essence, is that Deutsch Bank has knowingly initiated foreclosure proceedings without the right to do so. This does not constitute the ‘outrageous conduct' necessary to support an IIED claim.”); Cardoso v. Wells Fargo Bank, N.A., No. 21-CV-8189 (KMK), 2022 WL 4368109, at *8 (S.D.N.Y. Sept. 20, 2022) (holding plaintiffs failed to allege sufficiently outrageous conduct where they alleged defendants used faulty software to determine plaintiffs' ineligibility for a loan modification, which led to foreclosure on plaintiffs' mortgage.).
Because Plaintiff's allegations fail to rise to the level of “extreme and outrageous conduct,” I respectfully recommend that Defendants' motion to dismiss Plaintiff's IIED claim be granted, but without prejudice in light of her pro se status.
The statute of limitations for an IIED claim is one year from the date of the alleged injury. Callahan v. Image Bank, 184 F.Supp.2d 362 (S.D.N.Y. 2002). However, Plaintiff's allegations were not pled with enough specificity regarding timing to discern whether her claims are time barred.
8. NIED
Plaintiff alleges Defendants engaged in negligent infliction of emotional distress by “perpetrating these actions and practices in commencing a foreclosure they knew was wrongful and the stress from which would take a serious toll on my emotional wellbeing, and continuing with the malicious wrongful foreclosure and false negative reporting about me to third parties[.]” (FAC at ¶ 465.) To plead a NIED claim under New York law, a plaintiff must plead “(1) a breach of a duty owed to the plaintiff; (2) emotional harm; (3) a direct causal connection between the breach and the emotional harm; and (4) circumstances providing some guarantee of genuineness of the harm.” Francis v. Kings Park Manor, Inc., 992 F.3d 67, 81 (2d Cir. 2021) (citing Ornstein v. N.Y.C. Health & Hosps. Corp., 10 N.Y.3d 1, 6, (N.Y. 2008)). The fourth element generally requires a recognized type of negligence “such as the mishandling of a corpse or the transmission of false information that a parent or child had died.” Taggart v. Costabile, 14 N.Y.S.3d 388, 396 (N.Y.App.Div. 2015). If a recognized type of negligence is not present, the fourth element requires “that the breach of the duty owed directly to the injured party must have at least endangered the plaintiff's physical safety or caused the plaintiff to fear for his or her own physical safety.” Id. (internal citations omitted).
Defendants assert that Plaintiff fails to state a claim for NIED because she fails to plausibly allege the fourth element. They are correct. The allegations in the Complaint do not approach the severity of mishandling a corpse or providing false information regarding a parent or child's death. Nor does Plaintiff allege that Defendants endangered her physical safety or caused her to fear for her physical safety-she only alleges that she suffered physical ailments resulting from the emotional distress she experienced as a result of the dispute. Thus, she does not plausibly state a claim. See Cardoso, 2022 WL 4368109, at *7 (holding that although defendant's refusal to modify and foreclosure of plaintiffs' mortgage loan caused plaintiffs emotional distress, none of defendant's alleged conduct came close to ‘the mishandling of a corpse,' ‘the transmission of false information that a parent or child had died,' ‘endanger[ing] [Plaintiffs'] safety,' or ‘caus[ing] [Plaintiffs] to fear for [their] physical safety.'”); Pirrelli v. OCWEN Loan Servicing, LLC, 12 N.Y.S.3d 110, 114 (App. Div. 2015) (holding plaintiffs had failed to state a claim for NIED against mortgage lender because they did not allege that their physical safety was endangered or that they were caused to fear for their physical safety).
Plaintiff cites to Tanasi v. CitiMortgage, Inc., 257 F.Supp.3d 232 (D. Conn. 2017), to support her claim. However, that case is inapposite because it concerns Connecticut law, which has a different standard for NIED than New York. Compare Tanasi, 257 F.Supp. at 273, with Francis, 992 F.3d at 81.
Accordingly, Plaintiff fails to state a claim for NIED. I respectfully recommend that Defendants' motion to dismiss Plaintiff's NIED claim be granted, but without prejudice in light of Plaintiff's pro se status.
The statute of limitations for NIED claims is three years. See Kramer v. Meridian Cap. Grp., LLC, 162 N.Y.S.3d 400, 404 (N.Y.App.Div. 2022). While it is clear that the commencement of the foreclosure proceeding falls outside the limitations period, Plaintiff's other language is vague with regard to timing (e.g. “false negative reporting about me to third parties[.]”). Therefore, it is unclear whether any conduct falls within the statute of limitations period.
9. Negligence
Plaintiff alleges Defendants were willfully negligent when they continued to pursue foreclosure and represent that Plaintiff was in default, even after Plaintiff shared evidence demonstrating otherwise. (FAC at ¶ 360.) The elements of a negligence claim under New York law are “(1) a duty owed by the defendant to the plaintiff, (2) a breach thereof, and (3) injury proximately resulting therefrom.” See Pasternack, 27 N.Y.3d at 825. Defendants assert Plaintiff's negligence claim should be dismissed because Defendants did not owe a duty of care to Plaintiff.
“It is well settled under New York law that a lender is not in a fiduciary relationship with a borrower, and thus a lender does not owe a borrower any special duties . . . Similarly, a mortgage servicer owes no duty of care to a borrower.” Calizaire, 2017 WL 895741, at *5. Nevertheless, Plaintiff argues that Defendants owed her a duty based on the Forbearance Letter she received in January of 2018. This argument is unavailing. “Where the only duty owed to the plaintiff arises from a valid contract, a negligence claim does not lie.” Abraham v. Am. Home Mortgage Servicing, Inc., 947 F.Supp.2d 222, 236 (E.D.N.Y. 2013) (quoting Banco Indus. de Venezuela, C.A. v. CDW Direct, L.L.C., 888 F.Supp.2d 508, 512 (S.D.N.Y. 2012)). Thus, to the extent the Forbearance Letter is a contract it does not give rise to a fiduciary relationship.
Plaintiff also argues that Nationstar owed her a duty pursuant to N.Y. Comp. Codes R. & Regs. tit. 3, § 419. Plaintiff quotes from N.Y. Comp. Codes R. & Regs. tit. 3, § 419.10, which references several duties, such as the duty of a loan servicer to “[s]afeguard and account for any money handled for the borrower” and “act with reasonable skill, care, and diligence.” However, this argument is unavailing because as discussed above, New York courts have made clear that neither lenders nor mortgage servicers owe a duty of care to borrowers for the purposes of a negligence action. See Calizaire, 2017 WL 895741, at *5.
Accordingly, Plaintiff has failed to plausibly allege that Defendants owed her a duty of care, which is fatal to her negligence claim. Accordingly, I respectfully recommend that Defendants' motion to dismiss Plaintiff's negligence claim be granted, but without prejudice in light of her pro se status.
The statute of limitations for negligence claims is three years from the date of injury. See Vaccaro v. Bank of Am., N.A., No. 13-CV-2484 (KMK), 2016 WL 4926201, at *6 n.12 (S.D.N.Y. Sept. 15, 2016) (citing N.Y. C.P.L.R. § 214(5)). However, Plaintiff's allegations were not pled with enough specificity regarding timing to discern whether her claims are time barred.
CONCLUSION
For the reasons set forth above, I respectfully recommend that Defendants' motion to dismiss be DENIED as to Plaintiff's: 12 U.S.C. § 2605(e)(3) claim regarding the eighth QWR, her 12 C.F.R. § 1024.41(c) claim for failure to send an acknowledgement of the loss mitigation application, and her breach of contract claims regarding the alleged breach of the Forbearance Letter and failure to verify information.
I recommend that the motion be GRANTED as to all other claims. Those claims that are barred by the statute of limitations,- preemption, or that otherwise are not legally cognizable because the statute does not recognize a private cause of action or was repealed should be dismissed with prejudice. These include: Plaintiff's claims under RESPA and its implementing regulations involving conduct before February 28, 2020, her FCRA claim under 15 U.S.C. § 1681s-2(a), her CFPA claims, her NY Banking Law 12-D § 419 claim, her New York Banking Law § 9-x claim; and her defamation claim concerning reporting information to credit agencies.Similarly, because Plaintiff concedes her CARES Act, FDCPA and malicious prosecution claims are not legally cognizable, I respectfully recommend that such claims be dismissed with prejudice. The remaining claims should be dismissed without prejudice. These include Plaintiff's timely RESPA claims under 12 U.S.C. § 2605(e)(1)-(2) and its implementing regulations; her FCRA claim under 15 U.S.C. § 1681s-2(b); her TILA claims; her breach of contract claim concerning the permanent loan modification; her N.Y. Gen. Bus. Law § 349 and § 350 claims; her N.Y. Real Prop. Law § 254-b claim; her fraud claims; her defamation claims concerning reporting information to county records and other entities; her intentional infliction of emotional distress claim; her negligent infliction of emotional distress claim, and her negligence claim.
My recommendations regarding statutes of limitations are meant to apply only to this action, meaning that they cannot be refiled in this Court. I do not address timeliness with regard to claims that may be reasserted in the Second Foreclosure Action, which are potentially subject to tolling under N.Y. C.P.L.R. 205.
NOTICE
Plaintiff shall have seventeen days and Defendants shall have fourteen days from service of this Report and Recommendation to file writen objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d) (adding three additional days only when service is made under Fed.R.Civ.P. 5(b)(2)(C)(mail), (D) (leaving with the clerk), or (F) (other means consented to by the parties)). A party may respond to another party's objections after being served with a copy. Fed. R. Civ. P.72(b)(2).
Plaintiff shall have seventeen days to serve and file any response. Defendant shall have fourteen days to serve and file any response. Any objections and any responses to such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable John P. Cronan at the United States Courthouse, 500 Pearl St., New York, New York 10007, and served on the other parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Cronan. The failure to file timely objections shall result in a waiver of those objections for purposes of appeal. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).