HENRY J. BOROFF, Bankruptcy Judge.
Before the Court is a motion filed by defendant Wells Fargo Bank, NA ("Wells Fargo") to dismiss the adversary complaint brought by plaintiff Carmen M. Bailey (the "Debtor"). Through this adversary proceeding, the Debtor seeks to invalidate Wells Fargo's prepetition foreclosure sale of the Debtor's residence on the grounds that Wells Fargo was not the holder of the mortgage at the time of its foreclosure. For the reasons set forth below, including that Wells Fargo's request for dismissal is grounded largely in documents extraneous to the complaint, the Court is able to dismiss some, but not all of the counts of the Debtor's complaint.
In 1992, the Debtor obtained a $104,000 mortgage loan (the "Mortgage") from Shawmut Mortgage Company ("Shawmut") to purchase her residence in Hudson, Massachusetts (the "Property").
On November 23, 2009, the Debtor filed an adversary proceeding against Wells Fargo, seeking, inter alia, a declaratory judgment that the Foreclosure was invalid because Wells Fargo was and is not the true holder of the note and Mortgage.
In her five-count complaint (the "Complaint"), the Debtor seeks: a declaratory judgment that the Foreclosure was invalid (Count I); damages for "Breach of Implied Covenant of Good Faith and Fair Dealing" (Count II); damages for "Infliction of Emotional Distress" (Count III); damages for Wells Fargo's "Unjust Enrichment" (Count IV); and damages for Wells Fargo's purported violations of the Massachusetts consumer protection statute, Mass. Gen. Laws ch. 93A ("Chapter 93A") (Count V).
The central theme of the Debtor's Complaint is the invalidity of the Foreclosure based on Wells Fargo's failure to demonstrate that it was the holder of the Mortgage at the time of the Foreclosure. According to the Debtor, the only recorded documents indexed under the Debtor's name at the registry of deeds (the "Registry") are the Mortgage to Shawmut and an assignment of the Mortgage from Washington Mutual Bank ("Washington Mutual") to Wells Fargo (the "Assignment"). This gap in the chain of record title—the lack of evidence on record showing a transfer of the Mortgage from Shawmut to Washington Mutual—invalidates the Foreclosure under the Debtor's reading of the Land Court's decision in U.S. Bank National Ass'n v. Ibanez, Nos. 08 Misc. 384283(KCL), 08 Misc. 386755(KCL), 2009 WL 3297551 (Mass.Land Ct. Oct. 14, 2009) ("Ibanez II"),
In its Motion to Dismiss, Wells Fargo says the Mortgage was validly transferred from Shawmut to Washington Mutual through a series of off-record mergers and name changes, and attached several exhibits to the Motion to Dismiss in support of this contention. Although these documents are not recorded at the Registry, Wells Fargo argues that recording is not required under Massachusetts law. Contrary to the Debtor's reading of Ibanez II, Wells Fargo says the court in the Ibanez cases, see supra note 5, did not hold that record title must be "perfect" in order to conduct a valid foreclosure sale. Rather, Wells Fargo reads the Ibanez decisions simply as holding that a purported mortgage-holder must actually hold the mortgage at the time notice of the Foreclosure is published, but may wait to record the documents evidencing its holder status until after the foreclosure sale is completed. Because, according to Wells Fargo, the exhibits attached to the Motion to Dismiss demonstrate an unbroken chain of title from Shawmut to Wells Fargo, the Foreclosure
But the Debtor additionally argues that even these off-record documents do not establish that Wells Fargo was actually the holder of the Mortgage at the time of the Foreclosure. Indeed, the Debtor maintains that additional off-record documents "demonstrate that the[ ] asserted events did not all actually take place." Pl.'s Reply Mem. Opp. to Def.'s M. to Dismiss, at 3, May 4, 2010, ECF No. 41. The Debtor says that, at the very least, Wells Fargo has not shown how title to the Mortgage passed between certain entities connected to a limited partnership, and further notes that an anomalous assignment from Fleet Mortgage Corp. to Fleet Mortgage Corp., signed and notarized on different dates, is not explained. Therefore, according to the Debtor, Wells Fargo's Motion to Dismiss should be denied in favor of further developing the evidentiary record.
As a second ground for invalidating the Foreclosure, the Debtor says that Wells Fargo failed to provide the Debtor with the statutorily-required notice of the Foreclosure. In its Motion to Dismiss, however, Wells Fargo argues that it did provide the appropriate notice, and has attached copies of Notices of Sale with certified mail stamps to demonstrate that the appropriate notices were sent to the Debtor by both first class and certified mail. Wells Fargo says this is all that was required under Massachusetts law—the foreclosing party need only prove that the appropriate notice was sent; proof of actual receipt is not required.
In response, the Debtor does not challenge Wells Fargo's contention that the notice was sent via certified mail, but says instead that the postal carrier left the notice of certified mail at a seldom-used entrance to her home. According to the Debtor, several days after the Foreclosure had been conducted, she found the notice of certified mail among the leaves near the entrance. Because she did not receive the notices prior to the Foreclosure, the Debtor says the Foreclosure sale should be declared void.
In addition to the request for Declaratory Judgment, the Debtor seeks damages under various legal theories, each of which depend, in part, on a finding that Wells Fargo was not the holder of the Mortgage at the time of the Foreclosure. In Count II, the Debtor says that Wells Fargo "acted carelessly and recklessly in preserving the custody of important [documents]," Compl. ¶ 39, Nov. 23, 2009, ECF No. 1, and "ma[de] false and erroneous assertions of assignment and corporate succession on the record title," Compl. ¶ 39, and thus impaired the value of the Property and caused the Debtor monetary harm. These actions, the Debtor says, constitute a breach of the implied covenant of good faith and fair dealing for which the Debtor is entitled to damages.
In Count III, the Debtor claims that Wells Fargo's actions were "extreme and outrageous, and beyond the bounds of decency in a civilized society," Compl. ¶ 44, which Wells Fargo "knew or should have known ... were likely to cause extreme emotional distress to the [Debtor]." Compl. ¶ 44. Thus, the Debtor maintains, Wells Fargo is also liable for the tort of "Infliction of Emotional Distress." In Count IV, the Debtor contends that Wells Fargo was unjustly enriched when it took mortgage payments from the Debtor without properly holding the Mortgage. And finally, in Count V, the Debtor says that all these actions constitute violations of Chapter 93A. Wells Fargo does not directly refute any of these contentions, relying instead on its assertion that it is and was
In considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), made applicable to this proceeding by Federal Rule of Bankruptcy Procedure 7012, "a court must take the allegations in the complaint as true and must make all reasonable inferences in favor of the plaintiffs," Watterson v. Page, 987 F.2d 1, 3 (1st Cir.1993), to determine whether the plaintiff has alleged "sufficient facts to show that he has a plausible entitlement to relief." Sanchez v. Pereira-Castillo, 590 F.3d 31, 41 (1st Cir.2009) (citing Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009)). Furthermore, the court "is generally limited to considering `facts and documents that are part of or incorporated into the complaint.'" Giragosian v. Ryan, 547 F.3d 59, 65 (1st Cir.2008) (quoting Trans-Spec Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315, 321 (1st Cir.2008)); see also Watterson, 987 F.2d at 3.
A court may also consider a limited universe of materials not included in or attached to the complaint, such as "`documents incorporated by reference in [the complaint], matters of public record, and other matters susceptible to judicial notice.'" Giragosian, 547 F.3d at 65 (quoting Banco Santander de P.R. v. Lopez-Stubbe (In re Colonial Mortg. Bankers Corp.), 324 F.3d 12, 20 (1st Cir.2003)). In some circumstances, the court can also consider "documents the authenticity of which are not disputed by the parties." Watterson, 987 F.2d at 3.
However, if none of these narrow exceptions applies, and the court relies on materials extraneous to the complaint, "it must convert a motion to dismiss into a motion for summary judgment." Giragosian, 547 F.3d at 65. Conversion to summary judgment, however, requires that the court give the parties a "reasonable opportunity to present all material made pertinent to such a motion." Clorox Co. P.R. v. Proctor & Gamble Commercial Co., 228 F.3d 24, 31 (1st Cir.2000) (quoting Fed.R.Civ.P. 12(b)). Although in some instances the First Circuit Court of Appeals has held that the propriety of conversion is guided by a "functional" analysis and has upheld summary judgment rulings where the parties received no formal notice of conversion, such "sub silentio conversion into a motion for summary judgment" is not a practice that receives the First Circuit's general endorsement. Rivera v. Centro Medico de Turabo, Inc., 575 F.3d 10, 16 (1st Cir.2009). Of course, the court can decline to consider any materials not included in or attached to the complaint and decide the motion to dismiss without converting the motion to one for summary judgment. See Garita Hotel Ltd. P'ship v. Ponce Fed. Bank, F.S.B., 958 F.2d 15, 18 (1st Cir.1992).
Here, Wells Fargo's Motion to Dismiss is wholly predicated on exhibits extrinsic to the Complaint.
The Court also declines to consider the exhibits within the context of the Motion to Dismiss. While matters of public record may be considered on a motion to dismiss, and while the Debtor has not directly challenged the authenticity of the documents attached to Wells Fargo's Motion to Dismiss, the Debtor argues both that additional documents are necessary to prove Wells Fargo's holder status and that the documents provided, especially the anomalous assignment from Fleet Mortgage Corp. to itself, show that Wells Fargo's narrative of relevant events is incomplete. Because the Debtor raises these challenges, the Court believes "the wiser course is to defer consideration of a summary disposition until the parties have placed before the Court a complete [record]" in order to avoid "invit[ing] a procedural challenge." Knowlton v. Shaw, 708 F.Supp.2d 69, 74 (D.Me.2010). Under the circumstances, the better course is to await a ruling after trial or on a summary judgment motion. Knowlton, 708 F.Supp.2d at 74, 76.
Although the Court has just intimated its intention to deny the Motion to Dismiss as to Count I for declaratory relief, the Court finds it necessary to briefly narrow those issues remaining for summary judgment or trial. Absent the materials attached to the Motion to Dismiss, the Complaint and accompanying exhibits are sufficient to state a claim for declaratory relief on the grounds that Wells Fargo was not the holder of the Mortgage at the time of the Foreclosure. Accepting the Debtor's asserted facts as true, there is a gap in the succession of title to the Mortgage from Shawmut to Wells Fargo's assignor, Washington Mutual. However, the Court agrees with Wells Fargo that the Debtor's reading of the Ibanez cases goes too far. The Debtor interprets the Ibanez II holding as requiring a "pristine" title record in order to validly conduct a foreclosure proceeding. But the Land Court made clear in Ibanez I that the foreclosures invalidated in that case were invalidated because the foreclosing lenders were not the actual holders of the mortgages until some time after publication of the foreclosure notices and completion of the foreclosure sales. Ibanez I, 2009 WL 795201, *8. Where the assignment to the foreclosing lender was executed prior to
But the Debtor does not argue only that the record was incomplete, but also that Wells Fargo was not actually the holder of the Mortgage at the time of the Foreclosure. That is the issue which the Court must determine in Count I, and the Debtor has adequately pled sufficient facts to demonstrate that Wells Fargo was not the holder of the Mortgage at the time of the Foreclosure. Therefore, the Court must deny the Motion to Dismiss as to Count I.
Because the Court has declined to consider the materials attached to the Motion to Dismiss, Wells Fargo's offer of documentation to demonstrate that notice of the Foreclosure was sent to the Debtor cannot be considered here. Thus, Wells Fargo's proof must await further consideration on summary judgment or at trial.
As the Massachusetts Court of Appeals has recently explained, the implied covenant of good faith and fair dealing is a contractual concept—it is a duty implied by law upon contracting parties preventing either party from "`do[ing] anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract....'" Targus Grp. Int'l, Inc. v. Sherman, 76 Mass.App.Ct. 421, 922 N.E.2d 841, 853 (2010) (quoting Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 583 N.E.2d 806, 820 (1991); Druker v. Roland Wm. Jutras Assocs., Inc., 370 Mass. 383, 348 N.E.2d 763, 765 (1976)).
Because the underlying premise of the Debtor's Complaint is that Wells Fargo was not the holder of the underlying Mortgage contract, this claim tangles the Debtor in a logical paradox. If Wells Fargo was not the holder of the Mortgage, as the Debtor argues, then there is no contract upon which to base the Debtor's claim that Wells Fargo breached the contractual covenant of good faith and fair dealing. And if Wells Fargo was the holder of the Mortgage at the time of the Foreclosure, then the Debtor's central claim fails and there is no wrongdoing upon which to base a claim for breach of good faith and fair dealing.
Even if the Court were to ignore the absence of an underlying contract, and even assuming Wells Fargo was not the holder of the Mortgage at the time of the Foreclosure, the Debtor fails to allege facts from which the Court could find "more than a simple breach."
The Complaint does not clarify whether the Debtor's infliction of emotional distress claim is one for intentional or negligent infliction of emotional distress, and the Court addresses each. To sustain a claim for intentional infliction of emotional distress under Massachusetts law, a plaintiff must establish "(1) that the actor intended to inflict emotional distress or that he knew or should have known that emotional distress was the likely result of his conduct; (2) that the conduct was extreme and outrageous, was beyond all possible bounds of decency and was utterly intolerable in a civilized community; (3) that the actions of the defendant were the cause of the plaintiff's distress; and (4) that the emotional distress sustained by the plaintiff was severe and of a nature that no reasonable man could be expected to endure it." Agis v. Howard Johnson Co., 371 Mass. 140, 355 N.E.2d 315, 318-19 (1976) (citations omitted).
Here, any claim for intentional infliction of emotional distress fails, as a matter of law, because even if Wells Fargo conducted the Foreclosure absent actual authority to do so, and even if the Debtor did suffer "extreme emotional distress," the facts pled in the Complaint simply cannot support a finding that Wells Fargo's conduct was intentional. At most, Wells Fargo acted negligently if it conducted the Foreclosure without adequate evidence of its status as holder of the Mortgage. And negligence alone will not support a claim for intentional infliction of emotional distress. Tetrault v. Mahoney, Hawkes & Goldings, 425 Mass. 456, 681 N.E.2d 1189, 1197 (1997).
Nor does the Complaint adequately state a claim for negligent infliction of emotional distress. "[I]n order to recover for negligently inflicted emotional distress [under Massachusetts law, the plaintiff] must prove the following: (1) negligence; (2) emotional distress; (3) causation; (4) physical harm manifested by objective symptomatology; and (5) that a reasonable person would have suffered emotional distress under the circumstances of the case." Payton v. Abbott Labs, 386 Mass. 540, 437 N.E.2d 171, 181 (1982) (emphasis supplied). The Debtor has not alleged any physical harm, and has therefore failed to plead a sufficient claim for relief for negligent infliction of emotional distress. Accordingly, Count III must be dismissed.
A claim for unjust enrichment is grounded in the principle that "[a] person who has been unjustly enriched at the expense of another is required to make restitution to the other." Nat'l Shawmut Bank of Boston v. Fidelity Mut. Life Ins. Co., 318 Mass. 142, 61 N.E.2d 18, 20 (1945) (quoting Restatement: Restitution, § 1) (emphasis supplied); "[a] common instance in which restitution is ordered is where money is paid under a mistake of fact,
The Debtor's unjust enrichment claim fails because the Debtor is not the party aggrieved under an unjust enrichment analysis even if Wells Fargo was not the holder of the Mortgage when the Debtor made mortgage payments to Wells Fargo. If another entity was actually the mortgagee at the time the Debtor made the payments to Wells Fargo, then that entity may have a claim for unjust enrichment. But the Debtor was obligated, under the note and Mortgage, to make her mortgage payments to someone, and would be unjustly enriched herself if those payments were returned. Accordingly, Count IV must be dismissed.
The Debtor fails to raise any facts or provide legal support for her contention that Wells Fargo's actions constituted unfair and deceptive acts or practices within the meaning of Chapter 93A § 2. Nor has she presented any facts in support of the allegation that Wells Fargo acted willfully or knowingly within the meaning of that statute. Therefore, Count V must be dismissed.
Because the Debtor has adequately pled a claim for declaratory relief, the Motion to Dismiss will be denied as to Count I. The Complaint fails, however, to adequately plead facts in support of the remaining Counts, and the Motion to Dismiss will be granted as to Counts II-V. An order in conformity with this memorandum shall issue forthwith.
