Moore v. Mortgage Electronic Registration Systems

Moore v . Mortgage Electronic Registration S y s t e m s , CV-10-241-JL 1/27/12
                        UNITED STATES DISTRICT COURT
                         DISTRICT OF NEW HAMPSHIRE



Angela Jo Moore and M . Porter
Moore

      v.                                      Civil N o . 10-cv-241-JL
                                              Opinion N o . 

Mortgage Electronic Registration
Systems, Inc., et a l .


                                MEMORANDUM ORDER

      Plaintiffs Angela Jo Moore and M . Porter Moore, proceeding

pro s e , have brought a 17-count complaint against a number of

entities involved in the origination, servicing, and eventual

foreclosure of their mortgage loan. The Moores allege a variety

of malfeasance by the defendants, including misleading plaintiffs

about the terms of their loan, failing to respond to their

requests for information regarding their loan, and proceeding

with foreclosure despite ongoing negotiations to modify the loan.

The defendants have all filed motions to dismiss, arguing that

plaintiffs’ third amended complaint fails to state a claim upon

which relief can be granted.            See Fed. R. Civ. P. 12(b)(6).

      This court has diversity jurisdiction over this matter

between the Moores, who are New Hampshire citizens, and

defendants, various out-of-state corporations, under 

 since the amount in controversy exceeds $75,000. The

court also has jurisdiction under 

 (federal
question) and 1367 (supplemental jurisdiction) by virtue of the

Moores’ claims under various federal statutes.

    After hearing oral argument, the court grants the motions in

part and denies them in part. As explained in more detail below:

•   Count 1 , a claim for “agency/respondeat superior,” is
    dismissed because those doctrines are not causes of action
    for which recovery can be granted, but bases for holding a
    defendant vicariously liable for another’s conduct.

•   Counts 2 and 3 , claims against defendant WMC Mortgage Corp.
    for violation of the Truth in Lending Act and its
    implementing regulation, Regulation Z , are dismissed because
    the Moores did not file suit against WMC within the
    statute’s limitations period. Plaintiffs’ remaining state-law claims against WMC, including their claim for
    “origination fraud” in Count 8 , are likewise dismissed under
    the applicable statute of limitations.

•   Count 4 , a claim against defendant Ocwen Loan Servicing, LLC
    under the Real Estate Settlement Procedures Act, is not
    dismissed. Contrary to Ocwen’s argument, the Moores have
    sufficiently pleaded that they suffered actual damages--in
    the form of emotional distress--as a result of its statutory
    violation.

•   Count 5 , which makes claims against Ocwen and its co-defendant Harmon Law Offices under the Fair Debt Collection
    Practices Act, is not dismissed. Though Harmon argues that
    it was not engaged in “debt collection” subject to that
    statute, Harmon’s own representations in its letters to the
    Moores suggest otherwise.

•   Count 6, a claim for violations of the New Hampshire Unfair,
    Deceptive or Unreasonable Collection Practices Act, is
    dismissed as to Harmon because the Moores have not pleaded
    facts stating a plausible claim for relief under that
    statute.

•   Count 7 , a claim for breach of the covenant of good faith
    and fair dealing, is dismissed because the Moores have not
    pleaded facts showing the existence of a contract between
    them and certain of defendants--which is a necessary element


                                2
of such a claim--and because they have not plausibly alleged
that the remaining defendants (with whom the Moores did have
a contractual relationship) committed any such breach.

Count 8 , a claim for fraud, is dismissed as to Harmon
because the Moores have not pleaded their claim against it
with sufficient specificity. Count 8 is also dismissed
insofar as it claims fraud in the assignment of the Moores’
mortgage because they did not rely on the alleged fraud.
The Moores’ claim for “modification fraud” against Ocwen and
its co-defendant Saxon Mortgage Services, Inc., however, is
pleaded with the particularity required by Federal Rule of
Civil Procedure 9 and may proceed.

Count 9, a claim for fraud in the inducement against Saxon
and Ocwen, is dismissed because the Moores do not allege
that they entered into any transaction as a result of the
claimed fraud by either of these parties.

Counts 1 0 , 1 2 , and 1 3 , claims against all defendants for
negligence, breach of assumed duty, and breach of fiduciary
duty, respectively, are dismissed because the allegations
set forth in the complaint do not support the conclusion
that any of the defendants owed the Moores a duty of any
kind (apart from, as to certain defendants, contractual
ones).

Count 1 1 , a claim for intentional and negligent
misrepresentation against all defendants, is dismissed as to
Harmon and its co-defendants Mortgage Electronic
Registration Systems, Inc., Deutsche Bank National Trust
Company, Morgan Stanley ABS Capital I Holding Corp., and
Morgan Stanley ABS Capital I Inc. Trust 2007-HE5. The
claims against those defendants are not pleaded with the
particularity required of fraud claims by Federal Rule of
Civil Procedure 9. The Moores’ claim against Saxon and
Ocwen for intentional and negligent misrepresentation are,
however, sufficiently pleaded and may proceed.

Count 1 4 , a claim for civil conspiracy against all
defendants, is dismissed. The Moores’ complaint does not
contain allegations sufficient to establish the existence of
an agreement among defendants to engage in a common course
of conduct. See Bell Atlantic Corp. v . Twombly, 

 (2007).



                            3
      Count 1 5 , which makes claims for negligent and intentional
      infliction of emotional distress against all defendants, is
      dismissed. In the absence of a duty from the defendants to
      the Moores, they cannot recover for negligent infliction of
      emotional distress. Nor do defendants’ alleged actions
      constitute the type of “extreme and outrageous conduct”
      necessary to recover for intentional infliction of emotional
      distress.

      Count 1 6 , a claim for promissory estoppel against Ocwen, is
      dismissed as the Moores have not pleaded any facts
      indicating that they relied to their detriment on Ocwen’s
      alleged promise to hold off foreclosing for three months.

      Finally, Count 1 7 , a claim for “avoidance of note” against
      “all defendants claiming to own the note and mortgage,” is
      not dismissed. Though defendants argue that under New
      Hampshire law, they need not possess the Moores’ promissory
      note in order to foreclose on the associated mortgage,
      possession of the note is a necessary prerequisite of a
      claim to enforce i t , which is what the Moores seek to avoid
      through this count.


I.   Applicable legal standard

      To survive a motion to dismiss under Rule 12(b)(6), the

plaintiff’s complaint must make factual allegations sufficient to

“state a claim to relief that is plausible on its face.”

Ashcroft v . Iqbal, 129 S . C t . 1937, 1949 (2009) (quoting Bell

Atl. Corp. v . Twombly, 

 4 4 , 570 (2007)).   In ruling on

such a motion, the court must accept as true all well-pleaded

facts set forth in the complaint and must draw all reasonable

inferences in the plaintiff’s favor. See, e.g., Martino v .

Forward Air, Inc., 

 , 2 (1st Cir. 2010).      The court “may

consider not only the complaint but also “facts extractable from



                                  4
documentation annexed to or incorporated by reference in the

complaint and matters susceptible to judicial notice.”       Rederford

v . U.S. Airways, Inc., 

 0 , 35 (1st Cir. 2009).   With the

facts so construed, “questions of law [are] ripe for resolution

at the pleadings stage.”   Simmons v . Galvin, 

 4 , 30 (1st

Cir. 2009).   The following background summary is consistent with

that approach.



II.   Background

      A.   Origination of the Moores’ loan

      In late 2006, a mortgage broker employed by First Guaranty

Mortgage contacted plaintiff Angela Jo Moore about refinancing

the mortgage on the Sandwich, New Hampshire home she shares with

her husband, plaintiff M . Porter Moore. The broker, Joseph

Celone, told the Moores that if they refinanced through First

Guaranty’s “Credit Rebuilding Program,” they could lower their

monthly mortgage payments, which were $2,200 at the time.      With

Celone’s help, Mrs. Moore applied and was approved for an

adjustable rate loan in the amount of $452,000 from defendant WMC

Mortgage Corporation.   Though M r . Moore’s name appeared on the

deed to the property, he was not a co-borrower on the loan.

      Celone told the Moores that theirs was a “special” loan from

a brand-new Fannie Mae program designed specifically for the


                                 5
self-employed.       He told them that, while they could expect their

mortgage payments for the first three months to be slightly

higher than their previous payments, Fannie Mae would

automatically send them paperwork-–which First Guaranty would

fill out and submit for no charge-–to enroll in the “special”

program.       According to Celone, once the Moores’ loan was

enrolled, their monthly mortgage payments would drop. Prior to

closing, neither Celone nor WMC provided the Moores with certain

documents required by federal law, including an ARM disclosure

and Good Faith Estimate.

        Closing on the Moores’ refinancing was scheduled to take

place at their home on December 1 8 , 2006 at 6:00 p.m., but the

woman who performed the closing did not arrive until about 10:00

p.m.1       The closing was rushed, as the woman was concerned about

the deteriorating condition of the roads due to the weather and

claimed that her husband was waiting for her in the car. She did

not provide the Moores with a copy of the closing documents, but

said she would either mail them or drop them off in the next

several days.       Despite this assurance, the Moores never received

copies of the closing documents, including a Notice of Right to

Cancel.



        1
      The third amended complaint does not identify this person
any more specifically.

                                     6
     After closing, the Moores discovered that the terms of

their loan were not what they had been led to believe.   Compared

to their previous monthly payment of $2,200, which covered

principal, interest, taxes, and insurance, their new monthly

payment was $3,400 and covered only principal and interest.    When

the Moores did not receive any paperwork from Fannie Mae to

enroll in the “special program” Celone had told them about, they

contacted First Guaranty.   A representative from First Guaranty

advised the Moores that Celone had been terminated due to his

“questionable business practices,” and attempted to persuade the

Moores to again refinance their loan-–an offer they declined.

Contrary to what Celone had told them, the Moores’ loan was never

enrolled in any Fannie Mae program, “special” or otherwise.


    B.   Modification efforts and servicing

    In June 2008, the Moores contacted their loan servicer,

defendant Saxon Mortgage Services, Inc., to seek a modification

because, under the terms of their adjustable rate loan, their

payments were increasing.   These efforts were unsuccessful, and

in October 2008 the Moores stopped making their loan payments.

In April 2009, Saxon entered into a contract with the federal

government, under which it agreed to modify loans under the

government’s Home Affordable Modification Program (“HAMP”).    The

following month, Saxon sent a letter to Mrs. Moore informing her

                                7
that her loan was in default and that foreclosure proceedings had

been initiated.   The letter also told Mrs. Moore that Saxon

wanted to “help keep [her] in [her] home” and instructed her to

call to discuss her options.

     Mrs. Moore contacted Saxon, which encouraged her to contact

a different company, Titanium Solutions, to pursue a loan

modification.   When Mrs. Moore contacted Titanium, it informed

her that it did not modify “jumbo loans” and referred her back to

Saxon.2   Mrs. Moore then contacted Saxon again, which also

informed her that it did not modify jumbo loans, and in fact, did

not even typically service jumbo loans. Saxon told Mrs. Moore

that in order to modify her loan, she would need to seek out a

third-party company that would modify jumbo loans. The Moores

requested that Saxon supply them with certain paperwork so they

could evaluate their situation, but Saxon failed to do s o ,

claiming on different occasions that it did not have the

documents on its premises, that its call centers did not deal

with paperwork, and that the Moores needed to request the

documents in writing.




     2
      A “jumbo loan,” also known as a non-conforming loan, “is a
loan that exceeds Fannie Mae’s and Freddie Mac’s loan limits.”
U.S. Department of Housing & Urban Development, Glossary,
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/
sfh/buying/glossary (last visited Jan. 2 3 , 2012).

                                 8
     In July 2009, the Moores received two letters from defendant

Harmon Law Offices informing them that Saxon had retained Harmon

to foreclose on their mortgage on behalf of defendant Mortgage

Electronic Registration Systems (“MERS”).   MERS, as nominee for

WMC, was the mortgagee of record for the Moores’ mortgage.     One

of the letters informed the Moores that the loan had been

accelerated so that the entire outstanding balance (at that time,

$493,555.36) was due immediately.    The Moores contacted Harmon to

verify the debt, but received no response, and thereafter heard

nothing further from Saxon or Harmon regarding the announced

foreclosure.

     In November 2009, the servicing of the Moores’ loan was

transferred from Saxon to Ocwen Loan Servicing, LLC. Later that

month, Ocwen sent the Moores a letter titled “Alternatives to

Foreclosure.”   The letter claimed that the process to review the

Moores’ loan for modification would take up to 30 days once Ocwen

had received all necessary information.   On December 7 , 2009, the

Moores sent a notarized letter to Ocwen asking it to verify the

debt and to provide copies of all documents related to their

loan.   In February 2010, Harmon responded to the Moores’ letter,

but without providing any of the documents requested.   The Moores

sent Ocwen a second letter on March 2 3 , 2010, via certified mail.




                                 9
Though Ocwen signed for the letter, it never acknowledged receipt

of or otherwise responded to i t .

     Around the same time the Moores sent their first letter in

December 2009, Ocwen began calling their home, often multiple

times per day, in an effort to collect past due mortgage

payments.    These calls continued for months. Ocwen, like Saxon,

had entered into a contract with the federal government to modify

loans under HAMP. During the calls, Ocwen encouraged the Moores

to apply for a loan modification and told the Moores that they

would send a modification application and other related

documents.   The Moores never received the promised documents.


     C.     Foreclosure proceedings and removal

     In late January 2010, Ocwen sent the Moores a Reinstatement

Quote informing them that the total amount due by April 1 , 2010

to reinstate their loan was $79,151.46. Not long thereafter, on

February 2 0 , 2010, Harmon sent M r . and Mrs. Moore each a separate

Notice of Mortgage Foreclosure Sale. The Notices informed the

Moores that a foreclosure sale of their property would take place

on March 1 8 , 2010, on behalf of defendant Deutsche Bank National

Trust Company, as Trustee for the registered holders of Morgan

Stanley ABS Capital I Inc. Trust 2007-HE5 Mortgage Pass-Through

Certificates, Series 2007-HE5. MERS had assigned the Moores’




                                 10
mortgage to Deutsche Bank on February 1 8 , 2010, in an assignment

reciting an effective date of November 1 6 , 2009.3

     The Moores continued to pursue a modification from Ocwen.

On March 1 6 , 2010-–two days before the scheduled foreclosure

sale--a “Home Retention Consultant” from Ocwen e-mailed the

Moores paperwork to apply for a modification.    Ocwen instructed

the Moores that the completed paperwork would need to be returned

the following day.   It refused to reschedule the sale.

     On March 1 7 , 2010, the Moores filed suit against Ocwen,

MERS, Deutsche Bank, and Morgan Stanley ABS Capital I , Inc. in

Carroll County Superior Court, seeking, among other things, ex

parte emergency injunctive relief to prevent the foreclosure

sale.    The Superior Court provisionally granted an injunction

pending a hearing on the merits. As a result, the scheduled

foreclosure sale did not take place.4   Following the hearing, on

March 2 5 , 2010, the court denied the Moores’ request for

preliminary injunctive relief, finding, based upon an offer of

     3
      The assignment, which was filed with the Carroll County
registry of deeds on February 1 8 , 2010, was signed by Juan Pardo
as Vice President of MERS. The Moores allege that Pardo is not
an employee of MERS, but of Ocwen, though they do not allege that
Pardo lacked authority from MERS to assign the mortgage.
     4
      The complaint alleges that on the date of the scheduled
sale, an auctioneer arrived at the Moores’ property and informed
them that the foreclosure sale had been rescheduled for April 2 0 ,
2010. But no foreclosure sale has actually taken place, and the
Moores confirmed at oral argument that they continue to occupy
the property.

                                 11
proof from Deutsche Bank and Ocwen (who were represented by

Harmon at the hearing), that the Moores had not submitted all

necessary paperwork to pursue a modification of their loan.

       The Moores subsequently sent Ocwen all paperwork necessary

to apply for a modification, and on May 1 7 , 2010, filed a new

suit against Ocwen, MERS, and Saxon seeking to enjoin the

foreclosure. This action included claims under the New Hampshire

Consumer Protection Act, 

-A, the New

Hampshire Unfair, Deceptive or Unreasonable Collection Practices

Act, 

-C, and for common law fraud and

negligence. Ocwen, MERS, and Saxon removed the case to this

court, see 

(a), invoking the court’s diversity

jurisdiction, see 

. After removal, the Moores amended

their complaint several times to add new defendants and counts,

culminating in the third amended complaint now before the court.



III.    Analysis

       A.   Preclusive effect of prior state court action

       Before turning to defendants’ arguments challenging the

sufficiency of specific counts of the complaint, the court

addresses a defense certain defendants have raised to this action

in its entirety.    Ocwen, MERS, and Deutsche Bank argue that the

outcome of the first state court action, in which the Moores were


                                 12
denied preliminary injunctive relief, precludes them from

litigating their claims here under the doctrine of res judicata.

Their theory is that even though the Superior Court’s ruling did

no more than deny preliminary relief, “it is effectively a final

order where a foreclosure is pending and was treated that way by

the Court and the parties.”     This argument is without merit.

     “New Hampshire law determines the preclusive effect this

court must give to judgments issued by the courts of that state.”

Estate of Sullivan v . Pepsi-Cola Metro. Bottling Co., Inc., 

 1 4 , at 4-5.   Under New Hampshire law, “[t]he doctrine of res

judicata prevents parties from relitigating matters actually

litigated and matters that could have been litigated in the first

action.”    Gray v . Kelly, 

 6 0 , 164 (2010) (emphasis

omitted).    As the parties asserting the defense of res judicata,

Ocwen, MERS, and Deutsche Bank bear the burden of proof as to the

applicability of that defense. Strobel v . Strobel, 

 (1983).    They must demonstrate the following three

elements:    “(1) the parties are the same or in privity with one

another; (2) the same cause of action was before the court in

both instances; and (3) the first action ended with a final

judgment on the merits.”     Gray, 

. In this case,

the third element--a final judgment on the merits--is absent.




                                   13
     The Superior Court’s denial of preliminary injunctive relief

did not constitute a final judgment on the merits. In New

Hampshire, as elsewhere, “preliminary injunctions serve only to

preserve the status quo until a trial on the merits is held.”

N.H. Dep’t of Envtl. Servs. v . Mottolo, 

 7 , 61 (2007).

For that reason, the New Hampshire Supreme Court has held that

“it is generally inappropriate for a trial court at the

preliminary-injunction state to give a final judgment on the

merits.”   

     Contrary to the argument made by Ocwen, MERS, and Deutsche

Bank, there is no reason to believe the Superior Court departed

from that general rule here. In fact, the court’s order

expressly recognized that it did not dispose of the case:    the

court stated that the Moores had not “shown a likelihood that

they will prevail on the merits of the case,” not that the Moores

did not or could not prevail. The determination made by the

state court was merely that, in seeking a preliminary injunction,

the Moores had not presented sufficient evidence to support the

grant of injunctive relief. That determination does not bar the

Moores from pursuing their claims against Ocwen, MERS, and

Deutsche Bank here. See Veale v . Town of Marlborough, N o . 92-

355-SD, 

, *3 (D.N.H. April 1 1 , 1994) (“[A] decision

on a preliminary injunction does not amount to a final judgment



                                 14
on the merits, and issues litigated in a preliminary injunction

action are not res judicata and do not form a basis for

collateral estoppel.”).

    Moreover, the record before the court does not indicate what

happened in the first state-court action after the state court

denied the Moores’ request for preliminary injunctive relief.

Deutsche Bank claims, without citation to any documents before

the court, that the Superior Court “closed its file after no

further filings were received and the appeal period expired.”

But Deutsche Bank does not explain how “closing the file” is

equivalent to dismissal with prejudice, entry of judgment, or

some other act amounting to a final adjudication on the merits.

Because Ocwen, MERS, and Deutsche Bank have not carried their

burden of proof, their motion to dismiss the claims against them

as barred by res judicata is denied.


    B.   Count 1 - Agency/Respondeat Superior

    Count 1 of the Moores’ complaint makes a claim for “Agency/

Respondeat Superior” against WMC, MERS, Deutsche Bank, Morgan

Stanley ABS Capital I Holding Corp., and Morgan Stanley ABS

Capital I Inc. Trust 2007-HE5 (the court will refer to the latter

two collectively as “the Morgan Stanley defendants”).   The

complaint maintains that Ocwen, Saxon, and Harmon were agents of




                               15
these other defendants, so that they are liable for the wrongful

conduct of Ocwen, Saxon, and Harmon.

     Deutsche Bank argues, correctly, that agency and respondeat

superior are not independent causes of action, but doctrines

holding a principal vicariously liable for the unlawful conduct

of its agent. See Dent v . Exeter Hosp., Inc., 

 8 7 , 792-

93 (2007) (describing agency); Porter v . City of Manchester, 

 (2007) (describing respondeat superior).

Therefore, to the extent the Moores are attempting to assert an

independent cause of action under either doctrine, they may not

do so and that cause of action is dismissed.    The court will,

however, consider the doctrines and their supporting factual

allegations in considering whether the complaint states claims

against WMC, MERS, Deutsche Bank, and the Morgan Stanley

defendants liable for the allegedly wrongful conduct of Ocwen,

Saxon, or Harmon.


     C.   Counts 2 and 3 - Truth in Lending Act and the Moores’
          state-law claims against WMC

     In Counts 2 and 3 of their complaint, the Moores make claims

against WMC, the originator of their refinanced loan, for

violations of the Truth in Lending Act (“TILA”), 

et seq., and its implementing regulation, Regulation Z , 12 C.F.R.

Part 226. The Moores allege that WMC failed to provide them with


                                 16
the disclosures mandated by TILA and Regulation Z at or prior to

closing.   In addition, the Moores have brought various state-law

claims against WMC.5   WMC argues that all of the claims against

it are barred by the applicable statutes of limitations:       TILA’s

one-year statute of limitations, see 

(e), in the

case of the Moores’ federal law claims; and New Hampshire’s

general three-year statute of limitations in the case of their

state-law claims, see 

, I .      The court

agrees.

     TILA’s limitations provision (which is also applicable to

claims under Regulation Z , see Nool v . HomeQ Servicing, 

, 1051 n.1 (E.D. Cal. 2009)) states that an action

for damages must be brought “within one year from the date of the

occurrence of the violation.”6    

(e).    Where, as

here, the plaintiff’s claim is based upon insufficient or

nonexistent disclosures, the limitations period begins running on

     5
      These claims include agency/respondeat superior (Count 1 ) ,
breach of the implied covenant of good faith and fair dealing
(Count 7 ) , origination fraud (Count 8 ) , negligence (Count 1 0 ) ,
intentional and negligent misrepresentation (Count 1 1 ) , breach of
assumed duty (Count 1 2 ) , breach of fiduciary duty (Count 1 3 ) ,
civil conspiracy (Count 1 4 ) , and negligent and intentional
infliction of emotional distress (Count 1 5 ) .
     6
      TILA also contains a three-year statute of limitations for
a claim seeking rescission of the loan. 

(f).
Here, the only relief the Moores seek for the alleged TILA
violations in Counts 2 and 3 are damages and attorneys’ fees and
costs, see Third Am. Compl. (document n o . 47) at 2 0 , ¶ 8 6 , so the
limitations period for rescission claims is not at issue.

                                  17
the date the disclosures should have been made. Rodrigues v .

Members Mortg. Co., Inc., 

 0 2 , 210 (D. Mass.

2004); see also Corcoran v . Saxon Mortg. Servs., Inc., N o . 09-

11468-NMG, 

, *3 (D. Mass. May 2 4 , 2010).    Applying

this rule, the limitations period on the Moores’ TILA and

Regulation Z claims began running on December 1 8 , 2006, the date

of the loan’s closing.    The Moores did not even file this suit,

however, until May 1 7 , 2010, and did not make any claims against

WMC until November 1 , 2010-–nearly four years later.

     Some district courts within this circuit have held that

TILA’s statute of limitations may be subject to equitable

tolling, such that the running of the limitations period can be

suspended in some instances. See, e.g., Corcoran, 

 at * 3 ; Darling v . W . Thrift & Loan, 

 (D. M e . 2009).   Assuming, without deciding, that this

doctrine applies to claims under TILA, it cannot save the Moores’

claims.   “[E]quitable tolling of a federal statute of limitations

is appropriate only when the circumstances that cause a plaintiff

to miss a filing deadline are out of his hands.”    Salois v . Dime

Sav. Bank of N.Y., FSB, 

 0 , 25 (1st Cir. 1997).     Such

circumstances include the defendant preventing the plaintiff from

asserting his rights in some way, Corcoran, 

 at

* 3 , or the plaintiff’s inability to discover “information



                                  18
essential to the suit” despite reasonable diligence, Darling, 

.

     While the Moores allege that the applicable limitations

periods should be tolled because “[t]he deceptive nature” of

WMC’s actions was “latent and self-concealing,” such that it

could not, through the exercise of reasonable care, be

discovered, Third Am. Compl. (document n o . 47) at 1 7 , ¶ 7 0 , this

is belied by other allegations in the complaint. In particular,

the complaint reveals that the Moores knew no later than three

months after closing, when the promised Fannie Mae paperwork did

not arrive and the amount of their monthly mortgage payments did

not drop, that something was amiss and that they had not received

what they thought they had bargained for. 

 at 8 , ¶ 3 1 .     Thus,

the limitations period on the Moores’ TILA claims against WMC

began running, at the absolute latest, in March 20077-–some three

and a half years before they first asserted them.      Counts 2 and 3

are therefore dismissed as time-barred.


     7
      This view is extremely charitable to the Moores, given the
court of appeals’ holding in Salois. There, the court held that
because the loan documents contained all the information
necessary for the plaintiffs to discover that they had been
misled about the terms of their loan, and because “one who signs
a writing that is designed to serve as a legal document is
presumed to know its contents,” the “plaintiffs were on notice of
their claims when they signed their loan documents.” 128 F.3d at
26 & n.10. In evaluating the Moores’ claims, this court has
assumed, dubitante, that the loan documents themselves did not
place the Moores on notice of their claims.

                                  19
     The Moores’ state-law claims against WMC are likewise time-

barred.   Again, all of WMC’s alleged misconduct was consummated

by the date of closing, and the Moores knew or reasonably should

have known of that misconduct no later than March 2007.     Under

New Hampshire law, a claim “may be brought only within 3 years of

the act or omission complained of” or “within 3 years of the time

the plaintiff discovers, or in the exercise of reasonable

diligence should have discovered, the injury and its causal

relationship to the act or omission complained of.”    

, I .   The limitations period on the Moores’

state-law claims against WMC therefore expired, at the latest, in

March 2010. Because the Moores did not assert their claims

against WMC until November 1 , 2010, those claims are barred by

the statute of limitations, and are dismissed.


     D.   Count 4 - Real Estate Settlement Procedures Act

     Count 4 of the complaint, brought against Ocwen only, makes

a claim for violations of the Real Estate Settlement Procedures

Act (“RESPA”), 

 et seq.    The Moores allege that

their December 7 , 2009 and March 2 3 , 2010 letters to Ocwen

constituted qualified written requests (“QWRs”) under 

(e)(1)(B), so that, by failing to acknowledge their receipt

within 20 days or to respond within 60 days, Ocwen violated RESPA

and is liable to them for actual and statutory damages. Ocwen

                                 20
argues that the court should dismiss this claim because the

Moores have not pleaded facts supporting an award of either

actual or statutory damages. This argument fails, however,

because the Moores allege that, as a result of Ocwen’s conduct,

they suffered emotional distress, which qualifies as “actual

damages” under RESPA.

     In relevant part, RESPA requires the servicer of a

federally-related mortgage loan to respond to a borrower’s QWR by

acknowledging receipt within 20 business days, 

§ 2605(e)(1)(A), and to provide certain information to the

borrower within 60 business days, id. § 2605(e)(2).   If the

servicer fails to fulfill these obligations, it may be held

liable for “any actual damages to the borrower as a result of the

failure,” o r , “in the case of a pattern or practice of

noncompliance,” statutory damages. Id. § 2605(f)(1).

     Ocwen does not argue that the Moores’ letters were not QWRs

as defined by the statute, or that it responded to the Moores as

required.   Instead, as noted, Ocwen argues that it may not be

held liable under § 2605(f)(1) because the Moores have pleaded

neither actual damages from its alleged noncompliance nor a

“pattern or practice of noncompliance” that would entitle them to

statutory damages. Ocwen is half right: its failure to respond

to the Moores’ two letters does not make out a pattern or



                                21
practice of noncompliance with RESPA.    See Selby v . Bank of Am.,

Inc., N o . 09-cv-2079-BTM, 

, *5 (S.D. Cal. March 1 4 ,

2011) (holding that two instances of failing to respond to a QWR

did not constitute a pattern or practice of RESPA noncompliance);

Espinoza v . Recontrust Co., N.A., N o . 09-cv-1687-IEG, 

, *4 (S.D. Cal. July 1 3 , 2010) (same); McLean v . GMAC

Mortg. Corp., 

 (S.D. Fla. 2009) (same);

In re Maxwell, 

 0 1 , 123 (Bkrtcy. D. Mass. 2002) (same).

The Moores have pleaded no other facts establishing the existence

of such a pattern or practice, and thus cannot recover statutory

damages.

     The Moores have, however, stated a plausible claim for

actual damages under § 2605(f)(1)(A).    “In order to plead ‘actual

damages’ sufficiently, the plaintiff must allege specific damages

and identify how the purported RESPA violations caused those

damages.”   Okoye v . Bank of N.Y. Mellon, N o . 10-cv-11563-DPW,

, *17 (D. Mass. July 2 8 , 2011) (citing cases).

While the Moores do not allege that they suffered any pecuniary

damages resulting from Ocwen’s alleged RESPA violations, they do

allege that, as a result of Ocwen’s entire course of conduct (and

that of other defendants), they have suffered “severe mental




                                 22
anguish” and “emotional distress.”        Third Amended Complaint

(document n o . 47) at ¶ 173. 8

     RESPA permits recovery for “any actual damages to the

borrower.”   

(f)(1) (emphasis added).      Because

RESPA is a consumer protection statute, the court construes this

language “liberally in favor of consumers,” as required by the

court of appeals, see Barnes v . Fleet Nat’l Bank, N.A., 

 (1st Cir. 2004), and concludes that “actual damages”

include damages for emotional distress (provided, of course, that

there is a causal relationship between that distress and the

alleged RESPA violation, something that Ocwen has not contested

in its motion to dismiss).        At least two courts of appeals have

reached the same conclusion.       See Catalan v . GMAC Mortg. Corp.,

 (7th Cir. 2011) (“[E]motional distress damages

are available as actual damages under RESPA, at least as a matter

of law.”); McLean v . GMAC Mortg. Corp., 

 6 7 , 471



     8
      Although this allegation appears in a separate count of the
complaint, because the Moores are pro se the court reads their
complaint “with an extra degree of solicitude.” Hecking v .
Barger, 

 3 2 , at 4 . The allegation specifically ties the
Moores’ emotional distress to Ocwen’s alleged conduct--which
includes its failure to respond to their letters--and to ignore
it simply because it does not appear in the RESPA count itself
would elevate form over substance. Indeed, in their objections
to the motions to dismiss the Moores maintain that their
emotional distress stemmed in part from Ocwen’s RESPA violations.
See, e.g., Pls.’ Objection to Morgan Stanley Mot. to Dismiss
(document n o . 72) at 7-8, ¶ 2 4 .

                                     23
(11th Cir. 2010) (“[P]laintiffs . . . may recover for non-

pecuniary damages, such as emotional distress and pain and

suffering, under RESPA.”).

     The court acknowledges that some courts have reached a

different conclusion.   See Ramanujam v . Reunion Mortg., Inc., N o .

09-cv-3030-JF, 

, *5 (N.D. Cal. Feb. 3 , 2011); In re

Tomasevic, 

 8 2 , 687 (M.D. Fla. 2002); Katz v . Dime Sav.

Bank, FSB, 

 5 0 , 255-56 (W.D.N.Y. 1997).   That

result, however, is at odds with both RESPA’s plain language,

allowing for recovery of “any actual damages,” see, e.g., Ali v .

Fed. Bureau of Prisons, 

 1 4 , 218-20 (2008) (noting that

the use of “any” suggests “a broad meaning”), and with its status

as a consumer protection statute, see Barnes, 

.

Interpreting RESPA to permit recovery for emotional distress,

moreover, is in accord with decisions from the courts of this

circuit interpreting the term “actual damages” as it appears in

other remedial statutes. See, e.g., Fleet Mortg. Group, Inc. v .

Kaneb, 

 (1st Cir. 1999) (concluding that

“emotional damages qualify as ‘actual damages’” under automatic

stay provision of Bankruptcy Code); Sweetland v . Stevens & James,

Inc., 

 0 0 , 303-04 (D. M e . 2008) (interpreting

term “actual damage” in Fair Debt Collection Practices Act to




                                  24
encompass emotional damages).    Ocwen’s motion to dismiss this

count is therefore denied.


    E.      Counts 5 and 6 - Fair Debt Collection Practices Act
            and New Hampshire Unfair, Deceptive or Unreasonable
            Collection Practices Act

    In Counts 5 and 6 of their complaint, the Moores seek to

recover from Ocwen and Harmon for alleged violations of the Fair

Debt Collection Practices Act (“FDCPA”), 

 et

seq., and its state-law analog, the New Hampshire Unfair,

Deceptive or Unreasonable Collection Practices Act (“UDUCPA”),

-C. Both statutes prohibit a broad

range of conduct by debt collectors. Under the FDCPA, for

example, a “debt collector may not use any false, deceptive, or

misleading representation or means in connection with the

collection of any debt,” 15 U.S.C. § 1692e, and “may not use

unfair or unconscionable means to collect or attempt to collect

any debt,” id. § 1692f. The UDUCPA similarly prohibits debt

collectors from “collect[ing] or attempt[ing] to collect a debt

in an unfair, deceptive or unreasonable manner as defined in this

chapter.”    

-C:2.   Both statutes

supplement these general prohibitions with more specific

prohibitions. See generally 15 U.S.C. §§ 1692b-1692j; 

-C:3. An aggrieved plaintiff may recover actual



                                 25
or statutory damages under both statutes. 15 U.S.C. § 1692k(a);

-C:4.

    Ocwen has not argued that these claims should be dismissed

for any reason other than res judicata, which, as discussed in

Part III.A supra, is unavailing.       Harmon, on the other hand,

argues that both claims should be dismissed because it was not

engaged in the collection of a debt during its interactions with

the Moores, a necessary prerequisite to their recovery.      Harmon

also argues that the UDUCPA claim should be dismissed because the

Moores have failed to plead adequate facts in support of that

claim.   While Harmon’s first argument fails because the complaint

and supporting documents support a plausible inference that

Harmon was engaged in debt collection, its second argument

succeeds because the Moores have not pleaded facts sufficient to

show that Harmon engaged in any conduct that violated the UDUCPA.

Thus, while the Moores’ claim against Harmon under the FDCPA may

proceed, their UDUCPA claim against Harmon is dismissed.

          1.   Debt collection

    To recover under either the FDCPA or the UDUCPA, the Moores

must show that: “(1) they have been the object of collection

activity arising from a consumer debt; (2) the defendant

attempting to collect the debt qualifies as a ‘debt collector’

under the Act; and (3) the defendant has engaged in a prohibited



                                  26
act or has failed to perform a requirement imposed by the [Act].”

Beadle v . Haughey, 

, at 7 ; see also, e.g., Gilroy v .

Ameriquest Mortg. Co., 

 3 2 , 134-37 (D.N.H. 2009).

Harmon argues that the first of these elements is missing because

it was not engaged in collection activity, but, in prosecuting a

foreclosure against the Moores, “instead was enforcing its

client’s security interest.”

     This argument is contrary to Harmon’s own communications

with the Moores. In its initial letter on July 2 7 , 2009, Harmon

informed them that their note had been accelerated “and the

entire balance [of $493,555.36] is due and payable forthwith and

without further notice.”9   That letter further informed the

Moores that they could reinstate the loan by paying enough to

bring the loan current, that they could call Harmon or visit its

website to order a reinstatement or payoff, and that they had the

right to dispute the validity of the debt. From these statements

alone it is evident that the purpose of Harmon’s letter was not

only to enforce a security interest, but also to attempt to

collect the underlying loan debt.




     9
      The court may consider this letter, which is expressly
referenced in the complaint and forms part of the basis for the
Moores’ claims, without converting the motion to dismiss into a
motion for summary judgment. Giragosian v . Ryan, 

 9 , 65
(1st Cir. 2008).

                                 27
     Even more damaging to Harmon’s argument, though, are the

letter’s repeated references to Harmon’s “efforts (through

litigation or otherwise) to collect the debt,” which obliterate

the distinction Harmon now attempts to draw between collecting a

debt and enforcing a security instrument. Moreover, in bold,

capital letters below the signature block, the letter states:

“PLEASE BE ADVISED THAT THIS OFFICE IS ATTEMPTING TO COLLECT A

DEBT AND THAT ANY INFORMATION OBTAINED WILL BE USED FOR THAT

PURPOSE.”   For Harmon now to argue that it was not engaged in

debt collection i s , to put it charitably, unsupportable.   Cf.

Pettway v . Harmon Law Offices, P.C., N o . 03-cv-10932-RGS, 

, *5 & n.10 (D. Mass. Sept. 2 7 , 2005) (citing the selfsame

debt collection language as grounds for concluding that Harmon

was engaged in collection activity); In re Maxwell, 

 0 1 ,

119 (Bkrtcy. D. Mass. 2002) (rejecting defendant’s argument that

it was not a debt collector because it sent plaintiff letters “in

which it represented to her that it was acting as a debt

collector under the FDCPA”). 10

     At the very least, then, Harmon’s actions in relation to the

July 27 letter constituted collection activity subject to the



     10
      Given the dearth of case law on the UDUCPA, these FDCPA
cases are also useful in interpreting the UDUCPA “because [the
FDCPA] contains provisions similar to the [UDUCPA].” Gilroy, 

.

                                  28
FDCPA and the UDUCPA.   It is not clear from the complaint whether

Harmon’s other communications with the Moores were intended to

encourage the Moores to pay their loan debt or were solely a part

of the foreclosure process. But even assuming that Harmon is

correct that foreclosure does not constitute collection

activity,11 the July 27 letter--which also informed the Moores

that Harmon had been retained to foreclose on their mortgage--

supports a plausible inference that Harmon’s foreclosure

activities were at least intermingled (if not coextensive) with

its more mainstream collection activities. Without further

factual development, the Court is not able to conclude as a

matter of law that Harmon’s foreclosure-related activities were

not subject to the FDCPA and the UDUCPA.    See Pettway, 

 at *5 (“[A] defendant law firm whose foreclosure


     11
      There is some support for Harmon’s position, see, e.g.,
Beadle, 

 (McAuliffe, J.) (concluding that
attorneys who conducted foreclosure proceedings were not subject
to FDCPA); see also Speleos v . BAC Home Loans Servicing, L P , N o .
10-cv-11503-NMG, 

 (D. Mass. Oct. 1 4 , 2011)
(same), but the case law is not uniform on this point. One court
of appeals has held that the FDCPA may apply to efforts to recoup
a debt through foreclosure, expressing concern that to hold
otherwise “would create an enormous loophole in the Act
immunizing any debt from coverage if that debt happened to be
secured by a real property interest and foreclosure proceedings
were used to collect the debt.” Wilson v . Draper & Goldberg,
P.L.L.C., 

 (4th Cir. 2006); c f . also Piper v .
Portnoff Law Assocs., Ltd., 

 2 7 , 235 (3d Cir. 2005)
(“[T]he text of the FDCPA evidences a Congressional intent to
extend the protection of the Act to consumer defendants in suits
brought to enforce liens.”).

                                 29
activities are beyond reproach might nonetheless be liable under

the FDCPA for related but less salubrious efforts to squeeze a

debtor into coughing up the underlying debt.”).      Neither claim

can be dismissed on this basis.

            2.   UDUCPA violation

     Harmon also argues that, even if it was engaged in

collection activity, the Moores have not adequately pleaded a

UDUCPA violation.   (It has not made a similar argument as to

their FDCPA claim.) As just discussed, the UDUCPA bars a debt

collector from “collect[ing] or attempt[ing] to collect a debt in

an unfair, deceptive or unreasonable manner as defined in this

chapter.”   

-C:2.   The Moores allege

that Harmon violated this command in that it (a) “made materially

false representations as to the status of foreclosure proceedings

when [it] initially claimed to represent Saxon”; (b) “knew or

should have known that the lack of chain of title would prevent

[it] from foreclosing on the property; and (c) “willfully

withheld the truth from the Plaintiffs in connection with the

status, collection status, and foreclosure status of their loan.”

Third Am. Compl. (document n o . 47) at ¶¶ 106-07.   But even

assuming that any of these acts, if proven, could support

recovery under the UDUCPA, the Moores have failed to allege facts

to support them.



                                    30
     First, the Moores’ blanket allegation that Harmon made

materially false representations as to the status of foreclosure

when it represented Saxon is unsupported by any facts pleaded in

the complaint. As alleged in the complaint, Harmon’s only

communications with the Moores while it represented Saxon were

two letters sent in July 2009, and the only representation Harmon

made in those letters regarding foreclosure was that it had been

retained by Saxon to foreclose on the Moores’ mortgage.     The

Moores have not alleged that this statement was false, and the

remaining allegations in the complaint provide no basis for

plausibly concluding that it was. Without factual support, the

Moores’ allegation, which tracks the statutory language, is

simply a “formulaic recitation of the elements of a cause of

action” that cannot serve as the basis for the UDUCPA claim.

Bell Atl. Corp. v . Twombly, 

 4 4 , 555 (2007).

     Second, the Moores’ allegation that Harmon “knew or should

have known” that there was not a chain of title that would allow

it to foreclose on the mortgage is similarly unsupported by any

factual allegations. In its July 2009 letters, Harmon informed

the Moores that it had been retained to foreclose on a mortgage

held by MERS-–which at that time was the mortgagee of record.

When Harmon next contacted the Moores regarding foreclosure, on

February 2 0 , 2010, it purported to represent Deutsche Bank--MERS’



                                 31
successor as mortgagee by virtue of an assignment filed with the

registry of deeds two days before. While the Moores raise

questions about the validity of that assignment in their

complaint, they allege no facts suggesting that Harmon should

have doubted its ability to foreclose on behalf of Deutsche Bank,

the mortgagee of record.   The Moores have not pleaded facts to

nudge this theory “across the line from conceivable to

plausible,” Twombly, 

 7 0 , and it cannot support their

UDUCPA claim, either.

     Third, the Moores’ claim that Harmon “willfully withheld the

truth” regarding “the status, collection status, and foreclosure

status” of their loan is likewise unsupported by any factual

allegations.   The court must confess some confusion as to what

“truth” Harmon supposedly withheld.   Nowhere in the complaint do

the Moores plead any facts suggesting that Harmon did not

candidly communicate with them regarding the collection of their

debt or foreclosure on their mortgage. As with the Moores’ other

theories under the UDUCPA, in the absence of factual support this

allegation does not state a plausible claim to relief.    Because

the Moores have not pleaded any factual basis for holding Harmon

liable under the UDUCPA, Harmon’s motion to dismiss is granted as

to Count 6.




                                 32
     F.    Count 7 - Covenant of Good Faith and Fair Dealing

     Count 7 of the complaint makes a claim against all

defendants for an alleged breach of the implied covenant of good

faith and fair dealing.    “In every agreement, there is an implied

covenant that the parties will act in good faith and fairly with

one another.”   Birch Broad., Inc. v . Capitol Broad. Corp., Inc.,

 9 2 , 198 (2010).   Under New Hampshire law, this duty can

be subdivided “into three general categories: (1) contract

formation; (2) termination of at-will employment agreements; and

(3) limitation of discretion in contractual performance.”      

Here, the Moores appear to be asserting a claim based upon the

third category.   “While the third category is comparatively

narrow, its broader function is to prohibit behavior inconsistent

with the parties’ agreed-upon common purpose and justified

expectations as well as with common standards of decency,

fairness and reasonableness.”      

     The defendants have moved to dismiss this claim.      Those

defendants who did not contract with the Moores argue that the

Moores may not recover for a breach of the implied covenant from

them, while those defendants who did contract with the Moores

argue that the Moores have pleaded no facts establishing any

behavior that breaches the covenant. The court will address




                                   33
these arguments, both of which are correct and require dismissal

of this claim as to all defendants, in turn.

          1.    Lack of contractual relationship

     A necessary prerequisite to a claim for breach of the

implied covenant of good faith and fair dealing is a contract

between the parties. “New Hampshire law has not recognized a

claim for breach of the implied covenant of good faith and fair

dealing outside of the contractual context.”     J&M Lumber and

Constr. Co., Inc. v . Smyjunas, 

 1 4 , 724 (2011).   Of the

eight defendants in this case, the Moores have not pleaded the

existence of a contract with three: Saxon, Ocwen, or Harmon.12

Although Saxon and Ocwen allegedly serviced the Moores’ mortgage

on behalf of its holders, they were not themselves parties to the

mortgage (or any of the other loan documents) and cannot be held

liable for breach of any implied covenant included in that

contract. See Vega v . Amer. Home Mortg. Servicing, Inc., N o . CV-

10-02087, 

, *3 (D. Ariz. June 2 0 , 2011)

(dismissing claim for breach of implied covenant against loan

servicer because servicer was not party to mortgage); Lomboy v .

SCME Mortg. Brokers, N o . C-09-1160 S C , 

, *5 (N.D.


     12
      Deutsche Bank and one of the Morgan Stanley defendants,
Morgan Stanley ABS Capital I Holding Corp., also argue that the
Moores did not allege a contract with either of them. The
complaint alleges, however, that at various relevant times both
defendants owned or purported to own the Moores’ mortgage.

                                 34
Cal. May 2 6 , 2009) (same).     In the absence of a contractual

relationship, the Moores’ claim against these defendants for

breach of the implied covenant must be dismissed.

     The Moores seek to avoid this result as to Saxon and Ocwen

by arguing that they breached the implied covenant inherent in

their HAMP Servicer Participation Agreements (“SPAs”) with the

federal government. In order to recover for a breach of the

implied covenants inherent in the SPAs, to which they are not

parties, the Moores must demonstrate that they are the intended

third-party beneficiaries of those agreements. See Numerica Sav.

Bank, F.S.B. v . Mountain Lodge Inn, Corp., 

(1991).   They cannot do s o .

     The court looks to federal law in considering whether a

plaintiff is an intended third-party beneficiary of a contract to

which the United States is a party.      Speleos v . BAC Home Loans

Servicing, L P , 

 0 4 , 307 (D. Mass. 2010).   As our

court of appeals has explained:

     [T]he crux in third-party beneficiary analysis is the
     intent of the parties. Because third-party beneficiary
     status constitutes an exception to the general rule
     that a contract does not grant enforceable rights to
     nonsignatories, a person aspiring to such status must
     show with special clarity that the contracting parties
     intended to confer a benefit on him.

McCarthy v . Azure, 

 5 1 , 362 (1st Cir. 1994) (citations

and alterations omitted).      Moreover, federal courts in this



                                    35
circuit have applied a presumption that parties who benefit from

a government contract are incidental, rather than intended,

beneficiaries, and “may not enforce the contract absent a clear

intent to the contrary.”   Teixeira v . Fed. Nat’l Mortg. Ass’n,

N o . 10-11640-GAO, 

, *2 (D. Mass. July 1 8 , 2011);

see also In re Bank of Am. Home Affordable Modification Program

(HAMP) Contract Litig., N o . 10-md-2193-RWZ, 

, *3

(D. Mass. July 6, 2011); Nash v . GMAC Mortg., LLC, N o . 10-cv-493,

, *7 & n.9 (D.R.I. May 1 8 , 2011).   Here, the SPAs

do not contain any provisions evincing a “clear intent” that

borrowers may enforce them, and in fact contain provisions

supporting the contrary conclusion.13   Indeed, § 11E of each SPA

provides that it “shall inure to the benefit of and be binding

upon the parties to the Agreement and their permitted

successors-in-interest,” as opposed to any other party.     A number

of courts have found this language incompatible with an intent to

bestow enforceable rights upon nonparties. See Teixeira, 

 at *2 (noting that this language “appears to limit who

can enforce the contract's terms”); In re Bank of America, 2011


     13
      Again, because the SPAs are expressly referenced in the
complaint and form part of the basis for the Moores’ claims, the
court may consider them in ruling on this motion to dismiss. See
supra n.6. Both SPAs are also posted for public review at the
Treasury Department’s website: Saxon’s SPA is available at
http://tinyurl.com/SaxonSPA (last visited Jan. 2 3 , 2012); Ocwen’s
at http://tinyurl.com/OcwenSPA (last visited Jan. 2 3 , 2012).

                                 

 at *3 (noting that this language does not “suggest[]

any intent, let alone a ‘clear intent,’” to benefit borrowers and

in fact “compel[s] the opposite conclusion”); Alpino v . JPMorgan

Chase Bank, Nat’l Ass’n, N o . 10-cv–12040–PBS, 

, *4

(D. Mass. Apr. 2 1 , 2011) (identifying this as “clear language

limiting the class of actors who can enforce [the SPA’s] terms”).

     The conclusion that the parties to the SPAs did not intend

third parties to be able to enforce them finds additional support

in § 7 of each contract, which provides a means of resolving any

disputes that may arise under the SPAs-–but between “Fannie Mae

and Servicer” (i.e., Saxon or Ocwen) only.      See Allen v .

CitiMortgage, Inc., N o . CCB-10-2740, 

, *7 (D. Md.

Aug. 4 , 2011) (relying in part on this language in determining

that borrowers may not enforce S P A ) .   That same section allows

legal action only after the parties have taken “all reasonable

steps to resolve disputes internally.”      Permitting third-party

suits to enforce the implied covenant inherent in the SPAs would

lead to the incongruous result that the actual parties to the

SPAs would be required to attempt to resolve disputes out of

court before filing suit, whereas third parties like the Moores

would face no such obstacle.

     The Moores do not point to any other provision of the SPAs,

or allege any other facts, plausibly suggesting that they are



                                   37
among the intended third-party beneficiaries of those agreements.

Accordingly, the Moores have failed to state a claim for breach

of the covenant of good faith and fair dealing under those

agreements.14   Count 7 is dismissed as to Saxon, Ocwen, and

Harmon.

          2.    Breach of the covenant

     The remaining defendants, who are alleged to be current or

former holders of the Moores’ mortgage, argue that the Moores

have failed to plead facts plausibly suggesting that any of them

breached the implied covenant inherent in the mortgage. As noted

previously, the Moores premise their claim upon the third variant

of the implied covenant: “limitation of discretion in

contractual performance.”   Birch Broad., 

.

Because the Moores have pleaded the existence of a contract

between themselves and the remaining defendants, whether they

have sufficiently alleged a breach turns on three key questions:

(1) “whether the agreement allows or confers discretion on the

defendant to deprive the plaintiff of a substantial portion of

the benefit of the agreement”; (2) “whether the defendant

exercised its discretion reasonably”; and (3) “whether the



     14
        In so holding, the court joins the overwhelming majority
of courts to have considered whether borrowers are the intended
third-party beneficiaries of SPAs. See Alpino, 

at * 3 ; Speleos, 

.

                                 38
defendant’s abuse of discretion caused the damage complained of.”

Scott v . First Am. Title Ins. Co., 

 0 7 , at 14 (citing

Ahrendt v . Granite Bank, 

 0 8 , 312-13 (1999)).

     Answering these questions in the present case is complicated

by the fact that the Moores’ complaint and memoranda do not

identify any particular grant of discretion in the mortgage that

they believe was exercised unreasonably.    The court notes,

however, that the mortgage does confer some discretion on the

mortgagee as to acceleration and foreclosure, providing that the

“lender at its option may require immediate payment in full of

all sums secured by this Security Instrument without further

demand and may invoke the STATUTORY POWER OF SALE and any other

remedies permitted by Applicable Law.”    Even assuming this is the

grant of discretion upon which the Moores wish to premise this

claim, neither the complaint nor the Moores’ memoranda articulate

how that discretion was exercised unreasonably, so as to

frustrate the parties’ agreed-upon common purpose, justified

expectations, or common standards of decency.     As the New

Hampshire Supreme Court has observed, “parties generally are

bound by the terms of an agreement freely and openly entered

into,” and the implied covenant does not preclude a contracting

party from insisting on enforcement of the contract by its terms,

even when enforcement “might operate harshly or inequitably.”



                                 39
Olbres v . Hampton Co-op. Bank, 

 2 7 , 233 (1997).

Therefore, the mere fact that some or all of the defendants

exercised their contractual right to foreclose on the Moores

after they defaulted on their mortgage payments does not amount

to a breach of the implied covenant. See, e.g., Davenport v .

Litton Loan Servicing, L P , 

 6 2 , 884 (N.D. Cal.

2010) (“As a general matter, a court should not conclude that a

foreclosure conducted in accordance with the terms of a deed of

trust constitutes a breach of the implied covenant of good faith

and fair dealing.”); c f . Olbres, 142 N.H. at 233 (ruling that

lender did not breach implied covenant in note by exercising its

right to set off debt against borrower’s deposit account).

     The Moores also suggest that the defendants breached the

covenant of good faith and fair dealing by refusing to modify the

mortgage, or to engage in good-faith negotiations regarding

modification.   Courts have generally concluded, however, that the

covenant of good faith and fair dealing in a loan agreement

cannot be used to require the lender to modify or restructure the

loan.   See, e.g., FAMM Steel, Inc. v . Sovereign Bank, 

 3 , 100-01 (1st Cir. 2009) (applying Massachusetts l a w ) ; Rosemont

Gardens Funeral Chapel-Cemetary, Inc. v . Trustmark Nat’l Bank,

 0 1 , 810-11 (S.D. Miss. 2004) (collecting cases).

These decisions are consistent with New Hampshire law that the



                                  40
applied covenant cannot be used to rewrite a contract to avoid

harsh results. See Olbres, 142 N.H. at 233. The court sees no

reason to believe that the New Hampshire Supreme Court would

nevertheless allow the implied covenant to be used to require the

parties here to rewrite their contract.

     Because the Moores have failed to state a claim for breach

of the implied covenant of good faith and fair dealing by any of

the alleged holders of their mortgage, Count 7 is dismissed as to

those defendants as well.


     G.   Count 8 - Fraud

     In Count 8 of their complaint, brought against Saxon, Ocwen,

MERS, Harmon, and WMC, the Moores make claims for three different

variants of common-law fraud:   “origination fraud” by WMC; “loan

modification” fraud by Saxon and Ocwen; and “assignments of

mortgage” fraud by MERS and Ocwen. Before proceeding to the

specifics of each theory, the court notes that although Harmon is

identified as a defendant under the general heading for Count 8 ,

there are no allegations as to any fraudulent conduct by Harmon

within Count 8 .   As already discussed in Part III.E.2 supra, the

Moores’ claims of fraudulent conduct by Harmon elsewhere in the

complaint are unsupported by any factual allegations. Count 8 is

therefore dismissed as to Harmon. In addition, as discussed in

Part III.C supra, the Moores’ claim for “origination fraud” by

                                 41
WMC is barred by the applicable statute of limitations, so the

court need not decide whether the complaint nevertheless states

such a claim.

          1.    “Loan modification” fraud

     The Moores’ claims of “loan modification” fraud against

Saxon and Ocwen assert that: both defendants said that they were

considering the Moores for a loan modification; these statements

were false; and Saxon and Ocwen knew or should have known that

they were false. In reliance on these statements, the Moores

say, they wasted their time, resources, and finances in pursuit

of a modification.   Saxon and Ocwen argue that the Moores have

failed to plead fraud in accordance with the heightened standard

of Federal Rule of Civil Procedure 9 ( b ) .

     Rule 9(b) provides that “[i]n alleging fraud or mistake, a

party must state with particularity the circumstances

constituting fraud or mistake.”     “This means that a complaint

rooted in fraud must specify the who, what, where, and when of

the allegedly false or fraudulent representations.”     Clearview

Software v . Ware, N o . 07-cv-405-JL, 

, *1 (D.N.H.

July 1 5 , 2009) (citing cases).   Saxon and Ocwen argue that,

despite this requirement, the Moores have not identified:     “(i)

which defendants made [the] representations and specifically the

person that made such representations, (ii) specifically when



                                   42
such representations were made, (iii) how such representations

were false, and (iv) how the Moores relied upon them to their

detriment.”    But the Moores do specify the dates of the alleged

misstatements, as well as which defendant made them, and the

remaining deficiencies do not require dismissal of this claim.

     The Moores allege that on May 2 6 , 2009, Saxon sent them a

letter stating that its goal was to “help keep [them] in [their]

home” and encouraging them to contact a “Home Preservation

Specialist.”   Third Am. Compl. (document n o . 47) ¶ 3 7 . They

further allege that Ocwen sent them a similar letter on November

2 0 , 2009, which also informed them that the review process for a

modification would take “up to” 30 days.    

 ¶ 4 6 .   These

allegations are sufficiently specific as to who made the false

statements and when-–under the circumstances, it is not necessary

for the Moores to identify the particular employee of each

defendant who allegedly signed or authorized the letters. See

Gilmore v . Sw. Bell Mobile Sys., L.L.C., 

 1 2 , 224

(N.D. Ill. 2001) (“Where there is a single corporate defendant

and the misrepresentations are sent in mass mailings that do not

themselves identify the author of the document, it is not

required that the allegations identify the specific person or

persons at the corporate defendant who authored the document or

were responsible for the document’s contents.”); Vista C o . v .



                                 43
Columbia Pictures Indus., Inc., 

 (S.D.N.Y.

1989) (“Plaintiffs are not required to recite the precise

statement which the specific individual in the defendant

corporation made on a particular date.”).

     The other allegations in the complaint make clear that the

Moores claim these statements were false in that neither Saxon

nor Ocwen intended to consider them for a modification in good

faith, and that the Moores detrimentally relied on these

statements by spending time, money, and effort on ultimately

unsuccessful loan modification discussions. In any event, Rule

9(b)’s heightened pleading requirement “extends only to the

particulars of the allegedly misleading statement itself.    The

other elements of fraud . . . may be averred in general terms.”

Rodi v . S . New England Sch. of Law, 

 , 15 (1st Cir.

2004).   The Moores’ claim against Saxon and Ocwen for fraud in

the loan modification process may therefore proceed.

          2.   “Assignments of mortgage” fraud

     The Moores’ claim for “assignments of mortgage” fraud

against Ocwen and MERS rests on the notion that the assignment of

their mortgage from MERS to Deutsche Bank was fraudulent because

the individual who signed the assignment on behalf of MERS, Juan

Pardo, was not an employee of MERS at all, but of Ocwen.     Ocwen

and MERS argue that, even if Pardo did falsely state in the



                                 44
assignment that he was a MERS employee, this misstatement did not

cause any harm to the Moores that can be recovered under a fraud

theory.   The court agrees.

     Under New Hampshire law, a plaintiff can recover in fraud

only for “pecuniary loss caused to [it] by [its] justifiable

reliance upon the misrepresentation.”   Gray v . First NH Banks,

 (1994) (quoting Restatement (Second) of Torts §

525 (1976)).   The Moores do not claim to have relied upon Pardo’s

alleged misrepresentation that he worked for MERS.   Instead, they

seem to suggest that it was Deutsche Bank who relied on that

statement, by accepting the assignment-–and that, had this not

occurred, Deutsche Bank never would have attempted to foreclose

on their mortgage. But a plaintiff does not state a claim for

fraud against the maker of a fraudulent statement when that

statement was relied upon solely by others, even if that reliance

forms a link in a chain of events that ends up causing harm to

the plaintiff.   See, e.g., Restatement (Second) of Torts § 537

cmt. a (1977).   The Moores’ theory of “assignment fraud,” then,

fails to state a claim against Ocwen or MERS,15 and is dismissed.




     15
      The apparent absurdity of the Moores’ attempt to sue MERS
for an allegedly fraudulent transfer of its own interest in the
mortgage has not escaped the court’s attention. The parties did
not address this issue in their memoranda, though, so the court
does not address it here

                                45
     H.   Counts 9 and 11 - Fraud in the inducement and
          Intentional and negligent misrepresentation

     Count 9 of the Moores’ complaint seeks to recover from Saxon

and Ocwen for fraud in the inducement, while Count 11 makes

claims against all defendants for intentional and negligent

misrepresentation.   These claims are also subject to the

heightened pleading standards of Federal Rule of Civil Procedure

9(b).   As noted in Part III.G.1 supra, to satisfy this standard

the Moores “must specify the who, what, where, and when of the

allegedly false or fraudulent representations.”   Clearview

Software, 

 at * 1 .

     Except with respect to their allegations against Saxon and

Ocwen, the complaint’s allegations of misrepresentations by the

defendants are not pleaded with sufficient specificity.     Indeed,

the Moores do not identify any particular false statements by any

of these other defendants. Accordingly, the Moores’

misrepresentation claims against those defendants in Count 11

must be dismissed.   Their claims against Saxon and Ocwen in Count

11 may proceed, though.   As discussed in Part III.G.1 supra, the

Moores’ allegations of misrepresentations by these two defendants

are pleaded with sufficient specificity.

     The Moores’ claims for fraud in the inducement against Saxon

and Ocwen, however, must be dismissed.   A cause of action for

fraud in the inducement lies where one party has “procur[ed]

                                 46
. . . a contract or conveyance by means of fraud or negligent

misrepresentation.”    Van Der Stok v . Van Voorhees, 

 (2005).   But the Moores do not allege that either Saxon or

Ocwen induced them to enter into a contract or conveyance through

fraud.    Instead, they premise this claim on the same conduct that

underlies their claims against Saxon and Ocwen for “loan

modification fraud” in Count 8 and intentional and negligent

misrepresentation in Count 1 1 , i.e., those defendants’

representations regarding the modification status of their loan.

While those allegations state claims for fraud and intentional

and negligent misrepresentation against Saxon and Ocwen, they

fail to state a claim for fraud in the inducement. Count 9 is

therefore dismissed.


     I.    Counts 10, 12, and 13 - Duty-based claims

     Counts 1 0 , 1 2 , and 13 of the complaint each make claims

that, to succeed, require the existence of some duty from the

defendants to the Moores. Count 10 makes a straightforward

negligence claim; Count 1 2 , a claim for breach of assumed duty;

and Count 1 3 , a claim for breach of fiduciary duty.16   In their

motions to dismiss, the defendants each argue that they had no


     16
      Claims for negligence-–like claims for breach of an
assumed duty or a fiduciary duty-–“rest primarily upon a
violation of some duty owed by the offender to the injured
party.” Ahrendt v . Granite Bank, 

 0 8 , 314 (1999).

                                 47
duty to the Moores, and that in the absence of a duty, the claims

against them in these counts must be dismissed.     While the Moores

counter that each of the defendants owed them a generalized “duty

to act with reasonable care,” the allegations of the complaint do

not plausibly establish the existence of any such duty.      These

counts must accordingly be dismissed.

     Citing a bankruptcy case applying Massachusetts law,

defendants argue that “a lender owes no general duty of care to a

borrower.”   See, e.g., Deutsche Bank Mot. to Dismiss (document

n o . 71) at 10 (citing In re Fordham, 

 3 2 , 646 (Bankr. D.

Mass. 1991)).   The court does not adopt the defendants’ position

wholesale. Even if this is an accurate statement of

Massachusetts law, it does not necessarily reflect the law of New

Hampshire. It is true that, under New Hampshire law, the

relationship between a lender and borrower is contractual in

nature, Ahrendt v . Granite Bank, 

 0 8 , 311 (1999), and

that the existence of such a contractual relationship typically

prohibits recovery in tort, see Wyle v . Lees, 

, 

, *2 (N.H. Sept. 2 0 , 2011).   But New Hampshire law also

recognizes that a contracting party may be “owed an independent

duty of care outside the terms of the contract.”     

 at * 3 .

Thus, the New Hampshire Supreme Court has concluded that a lender

owes a borrower a duty not to disburse its loan funds without



                                 48
authorization, Lash v . Cheshire Cnty. Sav. Bank, Inc., 

 (1984), and that a mortgagee, in its role as seller

at a foreclosure sale, owes a duty to the mortgagor “to obtain a

fair and reasonable price under the circumstances.”   Murphy v .

Fin. Dev. Corp., 

 (1985).

     Where the existence of such a duty is claimed, though,

“[t]he burden is on the borrower, seeking to impose liability, to

prove the lender’s voluntary assumption of activities beyond

those traditionally associated with the normal role of a money

lender.”   Seymour v . N.H. Sav. Bank, 

 (1989).

As to the mortgagees, note-holders, and their loan servicers

named as defendants here–-MERS, Saxon, Ocwen, Deutsche Bank, and

the Morgan Stanley Defendants-–the Moores have not alleged facts

demonstrating that any of them did s o . Rather, the acts alleged

in the complaint relate entirely to those defendants’ attempts to

collect the Moores’ mortgage debt and to recoup their investment

through foreclosure, both of which fall squarely within the

normal role of a lender. Though the Moores assert that Ocwen and

Saxon undertook additional duties when they entered into their

HAMP SPAs with the federal government, this argument runs afoul

of at least two principles of contract law:   first, that third

parties may not enforce a contract absent a clear intent to the

contrary, see Part III.F.1 supra, and second, that harmed parties



                                49
may not pursue tort claims for contractual breaches, see Wyle,

 at *2-3. The Moores may not, therefore, premise

a negligence claim upon an alleged breach of the HAMP SPAs.

     The Moores’ claims against Harmon, which pursued the

foreclosure against the Moores on behalf of the other defendants,

also fail for lack of an alleged, apparent, or implied duty.      The

New Hampshire Supreme Court has expressly “decline[d] to impose

on an attorney a duty of care to a non-client whose interests are

adverse to those of a client.”     MacMillan v . Scheffy, 

 (2001).   In so holding, the court noted that “the

existence of a duty of the attorney to another person would

interfere with the undivided loyalty which the attorney owes his

client and would detract from achieving the most advantageous

position for his client.”    

     Accordingly, because the complaint does not support the

existence of a duty owed by any of the defendants to the Moores

outside the terms of their contracts,17 Counts 1 0 , 1 2 , and 13 are

dismissed.


     17
      It is worth noting here that New Hampshire does not permit
an action for negligence to be premised upon the violation of a
duty imposed by statute unless a similar duty existed at common
law. Stillwater Condo. Ass’n v . Town of Salem, 

(1995). The Moores have not argued that their negligence claims
are premised on alleged RESPA, FDCPA, or UDUCPA violations, so
the court need not address whether the duties imposed by those
statutes existed at common law so as to permit a negligence claim
against any of the defendants.

                                   50
     J.    Count 14 - Civil conspiracy

     Count 14 of the Moores’ complaint makes a claim against all

defendants for civil conspiracy.      New Hampshire courts define

civil conspiracy as “a combination of two or more persons by

concerted action to accomplish an unlawful purpose, or to

accomplish some purpose not in itself unlawful by unlawful

means.”   Jay Edwards, Inc. v . Baker, 

 1 , 47 (1987)

(quoting 15A C.J.S. Conspiracy § 1 ( 1 ) , at 596 (1967)).   The

elements of a cause of action for civil conspiracy are “(1) two

or more persons (including corporations); (2) an object to be

accomplished (i.e. an unlawful object to be achieved by lawful or

unlawful means or a lawful object to be achieved by unlawful

means); (3) an agreement on the object or course of action; (4)

one or more unlawful overt acts; and (5) damages as the proximate

result thereof.”   Id.   The Moores have failed to state such a

claim because they have not adequately alleged the existence of

an agreement between or among any of the defendants.

     The Moores never squarely allege that the defendants agreed

to undertake any joint course of action. At most, they ask the

court to infer that the defendants agreed to foreclose on their

mortgage from the fact that the defendants all allegedly

undertook wrongful acts in connection with the origination,

servicing, and foreclosure of the Moores’ mortgage. This is akin


                                 51
to the situation the Supreme Court confronted in Bell Atl. Corp.

v . Twombly, 

 (2007).    There, the Court explained:

     [S]tating such a claim [for conspiracy] requires a
     complaint with enough factual matter (taken as true) to
     suggest that an agreement was made. Asking for
     plausible grounds to infer an agreement does not impose
     a probability requirement at the pleading stage; it
     simply calls for enough fact to raise a reasonable
     expectation that discovery will reveal evidence of
     illegal agreement. . . . [A]n allegation of parallel
     conduct and a bare assertion of conspiracy will not
     suffice. Without more, parallel conduct does not
     suggest conspiracy, and a conclusory allegation of
     agreement at some unidentified point does not supply
     facts adequate to show illegality. Hence, when
     allegations of parallel conduct are set out in order to
     make a [conspiracy] claim, they must be placed in a
     context that raises a suggestion of a preceding
     agreement, not merely parallel conduct that could just
     as well be independent action.

.   Thus, the mere fact that the defendants all took

actions directed at the Moores’ mortgage does not permit the

court to infer an agreement on an object to be accomplished or

course of action. Because the Moores have alleged no “plausible

grounds to infer an agreement,” Count 14 must be dismissed.


     K.   Count 15 - Negligent & intentional infliction of
          emotional distress

     In Count 1 5 , the Moores make claims for negligent and

intentional infliction of emotional distress against all

defendants.   Among other things, the defendants argue that these

claims must be dismissed because damages for emotional distress

are not available in contract actions. See Crowley v . Global

                                52
Realty, Inc., 

 1 4 , 817 (1984) (“[R]ecovery of damages

for mental suffering and emotional distress is not generally

permitted in actions arising out of breach of contract.”).     This

argument is not persuasive because, as the Moores point out, the

conduct alleged in this case is not limited to contractual

violations, but includes tortious behavior and violations of

several consumer protection statutes. The claims must

nonetheless be dismissed for other reasons. Because negligent

infliction of emotional distress (NIED) and intentional

infliction of emotional distress (IIED) are two separate claims

with different elements, the court addresses them separately.

           1.   Negligent infliction of emotional distress

     “The elements of a claim for negligent infliction of

emotional distress include: (1) causal negligence of the

defendant; (2) foreseeability; and (3) serious mental and

emotional harm accompanied by objective physical symptoms.”

Tessier v . Rockefeller, 

 2 4 , 

 (N.H.

Sept. 1 5 , 2011).   As already discussed above, see Part III.I

supra, the Moores have not stated a claim for negligence against

the defendants, and therefore cannot maintain a claim for NIED,

either.   Indeed, as this court recently observed, “a claim for

NIED, like any other negligence claim, demands the existence of a




                                  53
duty from the defendant to the plaintiff.”       BK v . N.H. Dep’t of

Health & Human Servs., -- F. Supp. 2d --, 

 5 7 , 29-30.

           2.   Intentional infliction of emotional distress

      “In order to make out a claim for intentional infliction of

emotional distress, a plaintiff must allege that a defendant by

extreme and outrageous conduct, intentionally or recklessly

caused severe emotional distress to another.”       Tessier, 

 (quotations and alterations omitted).       This is a

“formidable standard.”    Franchi v . New Hampton Sch., 

 5 2 , 267 (D.N.H. 2009).   “[I]t is not enough that a person has

acted with an intent which is tortious or even criminal, or that

he has intended to inflict emotional distress, or even that his

conduct has been characterized by malice.”       Tessier, 

 at * 1 1 . Instead, the defendant’s conduct must be “so

outrageous in character, and so extreme in degree, as to go

beyond all possible bounds of decency, and to be regarded as

atrocious, and utterly intolerable in a civilized community.”

      The defendants argue that the conduct the Moores allege does

not meet this high standard, and the court agrees.        Essentially,

the Moores allege the following.        Both Saxon and Ocwen, after

entering contracts with the federal government to modify mortgage

loans, told the Moores--who had already defaulted on their



                                   54
mortgage--that they were committed to helping them remain in

their home. Despite these representations, and in possible

breach of their contracts with the federal government, Saxon and

Ocwen made either weak or nonexistent efforts toward helping the

Moores obtain a loan modification.    Ocwen promised to send the

Moores modification application documents but never did s o .   At

different times, both Saxon and Ocwen retained Harmon to

institute foreclosure proceedings or to collect the Moores’

outstanding mortgage debt on behalf of the entity or entities

that held the Moores’ mortgage and note. Both Ocwen and Harmon

ignored or refused to respond to the Moores’ letters, including

requests for debt verification under the FDCPA and a qualified

written request under RESPA.   And, after Ocwen told the Moores

that it would not foreclose for three months, it scheduled a

foreclosure sale on behalf of Deutsche Bank just a month later.

     While, as described elsewhere in this order, some of this

conduct may have been unlawful, the court cannot say that any of

defendants’ alleged actions, whether viewed individually or in

conjunction with one another, “go beyond all possible bounds of

decency,” or are “atrocious and utterly intolerable in a

civilized community.”   C f . Alpino v . JPMorgan Chase Bank, Nat’l

Ass’n, N o . 10–0679, 

, *8 (D. Mass. April 2 1 , 2011)

(dismissing claim for IIED where, “[a]t most, the defendant



                                 55
failed to consider the plaintiff for a mortgage modification

under HAMP and then failed to operate an open and fair

foreclosure sale”); Davenport v . Litton Loan Servicing, L P , 

 6 2 , 884 (N.D. Cal. 2010) (dismissing claim for IIED

where servicer allegedly refused to negotiate refinance with

plaintiff, did not comply with statutory requirements for

foreclosure, and did not consider plaintiff for alternatives to

foreclosure).   This is not meant to minimize the consequences of

the defendants’ alleged actions: the court recognizes that “home

foreclosure is a terrible event and likely to be fraught with

unique emotions and angst.”    Davenport, 

.

But the defendants’ actions cannot, as a matter of law, be called

“utterly intolerable in a civilized community.”    The Moores’

claim for IIED is dismissed.


     L.   Count 16 - Promissory Estoppel

     Count 16 of the Moores’ complaint makes a claim for

promissory estoppel against Ocwen. Under the theory of

promissory estoppel, “a promise reasonably understood as intended

to induce action is enforceable by one who relies on it to his

detriment or to the benefit of the promisor.”    Panto v . Moore

Bus. Forms, Inc., 

 3 0 , 738 (1988) (citing Restatement

(Second) of Contracts § 90 (1981)).   The Moores allege that

Ocwen’s January 2010 “Reinstatement Quote,” which informed them

                                 56
that the “total amount due to reinstate” as of April 1 , 2010 was

$79,151.46, constituted a promise “that no action would be taken

towards foreclosure” prior to April 1 , 2010. Third Am. Compl.

(document n o . 47) at ¶ 178. According to the Moores, Ocwen then

breached this promise on February 2 0 , 2010, when it sent them two

Notices of Foreclosure Sale informing them that a sale had been

scheduled for March 1 8 , 2010. Ocwen argues that this claim must

be dismissed because, among other things, the Moores have not

alleged that they detrimentally relied upon the reinstatement

quote.    The court agrees.

     The Moores have not alleged any facts suggesting that,

insofar as the Reinstatement Quote was a promise to hold off on

foreclosing, they relied on this promise to their detriment or to

Ocwen’s benefit. There are simply no allegations in the

complaint that in the short time between when Ocwen made the

promise (in January 2010) and when it allegedly broke it (in

February 2010), the Moores did or forewent anything in reliance

on the Quote, detrimental to them, beneficial to Ocwen, or

otherwise. The Moores have not stated a claim for promissory

estoppel.    Count 16 is dismissed.


     M.     Count 17 - Avoidance of note

     Finally, Count 17 of the complaint makes a claim for

“avoidance of note” against “all defendants claiming to own the

                                 57
note [and] mortgage.”   In support of this claim, the Moores

allege that the defendants “have been unable or unwilling to

provide the Plaintiffs with evidence that they hold the original

of the Note or Mortgage,” that “[a]ctual possession of the

original of the note is a necessary legal prerequisite to

enforcement of the Note,” and that “[i]n the absence of an

ability to show that [they possess] the original of the Note”

none of the defendants “has a right to enforce the same.”      Third

Am. Compl. (document n o . 47) at ¶¶ 184-86. While New Hampshire

courts have not recognized a cause of action for “avoidance of

note”18 and a federal court sitting in diversity should not

“create new doctrines expanding state law,” Bartlett v . Mut.

Pharm. Co., Inc., 

 6 4 , at 1 6 , the court interprets this

cause of action as seeking a declaratory judgment that the

defendants may not enforce the note against the Moores.19     The

     18
      In the only publicly available opinions that so much as
mention this cause of action-–in New Hampshire or elsewhere-–the
courts never reached the question of whether such a cause of
action exists because the plaintiff conceded that his claim for
avoidance of the note could not survive the defendants’ motion to
dismiss. See Dillon v . Select Portfolio Servicing, 

 5 ,
83 (1st Cir. 2011); Dillon v . Select Portfolio Servicing, 

, at 2 0 . The court observes that in typical legal usage,
“avoidance” refers to the power of a bankruptcy trustee under the
Bankruptcy Code to undo “some prebankruptcy transfers of the
debtor’s property and most postbankruptcy transfers of estate
property.” 1 David G. Epstein et a l . , Bankruptcy § 6-1, at 498
(1992).
     19
      The court here reads the Moores’ complaint with an extra
degree of solicitude. See supra n.8.

                                  58
only parties that have moved to dismiss this claim (and the only

parties who appear to “claim to own the note and mortgage”) are

Deutsche Bank and the Morgan Stanley defendants. They argue that

under New Hampshire law, they need not possess the Note in order

to foreclose on the mortgage.

      Even if this argument is correct (and the court need not and

does not reach that issue at this time), it is beside the point.

On its face, Count 17 does not assert that defendants may not

enforce the mortgage by foreclosing, but that they may not

enforce the note-–e.g., by attempting to collect the amount due

under i t . Under New Hampshire law, possession of a negotiable

instrument such as the note is (with limited exceptions not

invoked here) a prerequisite to its enforcement. See 

-A:3-301. As the Moores have sufficiently

alleged that the defendants do not possess the note, and it is

enforcement of the note which the Moores seek to avoid, the

motions to dismiss Count 17 are denied.


IV.   Conclusion

      For the reasons set forth above, WMC’s motion to dismiss20

is GRANTED.        The remaining defendants’ motions to dismiss21 are



      20
           Document n o . 8 0 .
      21
           Documents nos. 5 2 , 5 3 , 5 4 , 6 0 , 7 0 , and 7 1 .

                                           59
each GRANTED in part and DENIED in part. Counts 1 , 2 , 3 , 7 , 9,

1 0 , 1 2 , 1 3 , 1 4 , 1 5 , and 16 of the Third Amended Complaint are

dismissed in their entirety.      Count 6 of the Third Amended

Complaint is dismissed as to Harmon only; Count 8 as to WMC,

MERS, and Harmon only; and Count 11 as to WMC, MERS, Harmon,

Deutsche Bank, and the Morgan Stanley Defendants only.           The

motions are denied as to all other counts.

      Accordingly, counts 4 and 6 may proceed against Ocwen; count

5 against Ocwen and Harmon; counts 8 and 11 against Saxon and

Ocwen; and count 17 against Deutsche Bank and the Morgan Stanley

defendants.



      SO ORDERED.



                                   j/seph N. Laplante
                                  Jo nited States District Judge

Dated:   January 2 7 , 2012

cc:   Angela Jo Moore (pro se)
      M . Porter Moore (pro se)
      Joshua D. Shakun, Esq.
      Brian S . Grossman, Esq.
      Peter G. Callaghan, Esq.
      Edmund J. Boutin, Esq.
      David A . Scheffel, Esq.
      Eric Epstein, Esq.




                                    60