SOROKIN, District Judge.
Plaintiff Jonathan Foley ("Foley") brings four claims against Wells Fargo Bank, N.A. ("Wells Fargo" or "the bank"). Foley contends that Wells Fargo (1) failed to abide by the terms of a class action settlement agreement which required Wells Fargo to consider Foley for certain mortgage modification programs and (2) violated various Massachusetts state laws. Wells Fargo seeks to foreclose on Foley's home. Pending before the Court are three motions: Wells Fargo's Motion to Transfer this case to the Northern District of California, Doc. No. 80, Wells Fargo's Motion to Dismiss, Doc. No. 85, and Foley's Motion for a Preliminary Injunction, Doc. No. 64. The Court DENIES Wells Fargo's Motion to Transfer and DENIES IN PART and ALLOWS IN PART Wells Fargo's Motion to Dismiss. The Court ALLOWS Foley's Motion for a Preliminary Injunction and enjoins Wells Fargo from foreclosing on the residence at 61 Oceanside Drive, Unit 61, Hull, Massachusetts.
"To set the factual stage for this case, we rely on the allegations set forth in Foley's complaint, the documents attached to the complaint, and relevant public records." Foley v. Wells Fargo Bank, N.A., 772 F.3d 63, 67 (1st Cir.2014). The Court construes "the well-pleaded facts in the light most favorable to the plaintiffs ... accepting their truth and drawing all reasonable inferences in plaintiffs' favor." Medina-Velázquez v. Hernández-Gregorat, 767 F.3d 103, 108 (1st Cir.2014).
Foley purchased a home in Hull, Massachusetts in March 2005. Doc. No. 59 ¶ 3. To finance this purchase, Foley obtained a "Pick-a-Payment" loan — an adjustable-rate home mortgage loan. Id. ¶¶ 2, 5. Foley lost his job in October 2008. Id. ¶ 9. Foley continued to pay his mortgage, but called Wells Fargo in January 2009 to discuss fixing his interest rate and his unemployment status. Id. ¶¶ 9, 10. The bank's representative told Foley that if he converted his mortgage to the fixed rate option, his monthly mortgage payment would more than double due to the negative amortization of the loan. Id. ¶ 10. The bank's representative told Foley that in order for the bank to assist Foley, he would first need to obtain a job and income. Id.
Foley did ultimately obtain a job in January 2010. Id. ¶ 9. In October 2010, Foley's father filed for bankruptcy and Foley became the sole provider of financial and medical support for his divorced mother. Id. ¶ 12. At that time, Foley stopped paying his mortgage in full. Id. ¶ 9. Foley made several partial mortgage payments between October 2010 and April 2011. Id. ¶ 16. Foley continued to call the bank to request loan modifications, but the bank's representatives told him "that he was not qualified for any propriety [sic] loan modifications and that the only relief available was [] HAMP [the federal government's Home Affordable Mortgage Program]." Id. ¶¶ 15, 17. Foley requested to participate in HAMP, and the bank's representatives stated that a HAMP modification application would be sent to him. Id. ¶ 18.
At this same time, presumably unbeknownst to Foley, he was a member of a class action in the Northern District of California regarding Pick-a-Payment loans. The class representatives and the bank reached a settlement agreement, which the court approved in May 2011. Doc. No. 207. The parties agree that Foley is a member of Settlement Class B. Foley v. Wells Fargo Bank, N.A., 772 F.3d 63, 68 (1st Cir.2014). As a Settlement Class B member, Foley was entitled to have Wells Fargo consider him for a HAMP modification and, if he did not qualify or accept a HAMP modification, to have Wells Fargo consider him for a MAP2R modification. Id. As the First Circuit described,
Id. at 68-69.
Foley, still presumably unaware of the settlement, did not receive the HAMP modification application until November 2011 after numerous telephone inquiries to Wells Fargo. Doc. No. 59 ¶ 19. Foley filled out the application and returned it to the bank shortly thereafter. Id. In January 2012, Foley received a letter from the bank, stating that his application had not been received. Id. ¶ 20. Foley made numerous phone calls to the bank's Home Preservation Specialist ("HPS"), but she did not return his calls. Id. ¶¶ 20-21. Instead, Foley received letters from her regarding "short sale" or "deed-in-lieu of foreclosure" options.
Foley received two letters from Wells Fargo in February 2013; one letter rejected Foley from HAMP and the other informed Foley that Wells Fargo was unable to offer him a modification due to Foley's "excessive financial obligations," although the letter did not specify for which modifications Wells Fargo had considered Foley. Id. ¶ 29; id. at Ex. 6. Wells Fargo granted Foley an appeal, but sent Foley another Notice of Foreclosure. Id. ¶¶ 32-71. Foley continued to contact Wells Fargo; at one point, a bank representative told Foley that he "need[ed] to man up and move out." Id. ¶ 34. Foley reached out to the Massachusetts Attorney General's Office for assistance in April 2013. Id. ¶ 35. The Attorney General's representative connected Foley with a new HPS at Wells Fargo, and Foley received another HAMP application in late May 2013. Id. ¶¶ 36-44. In late June and early July 2013, Foley received a third and fourth denial letter from Wells Fargo, stating that he was again denied from HAMP and "a number of mortgage assistance options." Id. ¶ 45; id. at Ex. 10. The latter stated that Foley was denied due to "excessive financial obligations," although the letters did not explain which debts the bank considered, what rendered them "excessive," or which programs the bank considered. Id. ¶ 45; id. at Ex. 10. Although Foley's financial hardship conditions had changed since his previous modification request, Wells Fargo's rejections were identical. Id. ¶ 71.
"With the threat of foreclosure looming, Foley filed a pro se suit in Plymouth Superior Court in Massachusetts." Foley, 772 F.3d at 70. Foley's complaint alleged breach of contract (Count One), violation of Mass. Gen. Laws ch. 244, §§ 35A and 35B (Count Two), violation of Mass. Gen. Laws ch. 93A (Count Three), and breach of the covenant of good faith and fair dealing (Count Four). Doc. No. 9 at 3-21.
Foley, 772 F.3d at 70-71. The case was then reassigned to a different district judge. Doc. No. 27. The Court denied Foley's motion for a preliminary injunction, Doc. No. 32, and dismissed Foley's action in its entirety three weeks later, Doc. Nos. 33, 34.
The district court dismissed Foley's contract claims (Count One for breach of contract and count four for breach of the covenant of good faith and fair dealing), relying on a letter Wells Fargo submitted which evidenced that Wells Fargo had considered Foley for MAP2R. Doc. No. 34 at 8-9, 11-13. The Court dismissed Count Two for violation of Mass. Gen. Laws ch. 244, §§ 35A and 35B because it found that the Home Owners' Loan Act ("HOLA") preempted these state statutes. Id. at 9-11. The Court dismissed Count Three for violation of Mass. Gen. Laws ch. 93A because Foley failed to send Wells Fargo a demand letter, which is a jurisdictional prerequisite to suit. Id. at 11.
Foley quickly obtained counsel and filed an appeal with the First Circuit. Doc. Nos. 35, 36. Foley did not appeal the district court's dismissal of his chapter 93A claim. The First Circuit decided Foley's appeal in November 2014, Doc. No. 46,
Upon remand, the clerk reassigned the case to the undersigned. Doc. No. 55. Foley again filed for a preliminary injunction, seeking to enjoin Wells Fargo from foreclosing on his home. Doc. No. 64. Wells Fargo failed to submit an opposition to the preliminary injunction, despite the Court's allowance of a motion for an extension of time to file. Doc. No. 72. At the motion hearing, the Court issued a temporary restraining order, enjoining Wells Fargo from foreclosing Foley's home until the Court resolved his motion for a preliminary injunction. Doc. No. 73. At the motion hearing, Wells Fargo raised the issue of transfer for the first time in litigation, although at this point it had been over one and a half years since Foley first filed his action in Plymouth Superior Court in August 2013. Doc. No. 59 at 106-11.
Wells Fargo seeks to transfer the case pursuant to 28 U.S.C. § 1404(a), contending that the Northern District of California retained "exclusive jurisdiction" over disputes arising from the Pick-A-Payment class action settlement. Doc. No. 81 at 6-8. The proposed settlement agreement included exclusivity language: "The Parties agree that the Court shall retain exclusive and continuing jurisdiction over the Lawsuit, the Parties, Settlement Class Members, and the Settlement Administrator in order to interpret and enforce the terms, conditions, and obligations under this Agreement." Doc. No. 81-2 at 92 (emphasis added). However, the Court Order approving the settlement agreement omitted any reference to exclusive jurisdiction: "This Court [the Northern District of California] will retain continuing jurisdiction to interpret and enforce the settlement agreement." Doc. No. 81-1 at 5. Although the Northern District of California retained the ability to hear cases arising from the settlement, the Northern District of California did not purport to assert exclusive jurisdiction in its Order.
Private parties cannot divest a federal court of jurisdiction, Lum v. Carnival Cruise Lines, No. C-97-2241-VRW, 1998 WL 118188, at *1 (N.D.Cal. Feb. 27, 1998) ("The scope of the federal courts' powers are defined only by the Constitution, Congress or the courts themselves."), and Wells Fargo cited no opinion or order from the Northern District asserting exclusive jurisdiction over claims alleging violations of the settlement agreement (and the Court's own research has identified no such decisions). Moreover, class counsel in the Northern District of California took the position, in response to this Court's inquiry, that they "do[] not have the resources to represent every Class Member who wishes to pursue individual claims against Wells Fargo." Doc. No. 102 at 2 n. 1. In these circumstances, this Court has jurisdiction to hear Foley's claims and Wells Fargo has not met their burden of proof to transfer a case concerning real property located in this district to the Northern District of California. Therefore, Wells Fargo's Motion to Transfer is DENIED.
Having decided to retain this action, the Court now turns to Wells Fargo's partial
Foley's second count against Wells Fargo alleges violations of Mass. Gen. Laws ch. 244, §§ 35A and 35B. Judge Saylor found that these statutes were preempted by the federal Home Owners' Loan Act ("HOLA"). Doc. No. 33 at 10-11. Without reaching this issue, the First Circuit upheld dismissal on a different basis — that Foley failed to state a claim under either statute, because he failed to plead which of the statutes' many requirements he believed Wells Fargo violated. Foley, 772 F.3d at 78. Foley, now represented by counsel, amended his formerly pro se complaint to cure this deficiency. Doc. No. 59 ¶¶ 63-64. He has now adequately pled a claim under Mass. Gen. Laws ch. 244, §§ 35A and 35B. The Court now turns to the question of whether these statutes are preempted by HOLA.
Judge Saylor found that HOLA preempted Mass. Gen. Laws ch. 244, §§ 35A and 35B. Nothing in the First Circuit's opinion disturbs the reasoning that Judge Saylor articulated. Additionally, neither Foley's amendments to his complaint nor the papers submitted by the parties undermine Judge Saylor's analysis. I find Judge Saylor's reasoning persuasive and adopt and concur in Judge Saylor's conclusions.
Two further points require discussion. First, Foley argues that sections 35A and 35B are not the types of laws preempted by HOLA. Doc. No. 90 at 8-10. This is incorrect. As Foley alleges, section 35A imposes restrictions on acceleration of foreclosure proceedings and section 35B requires reasonable steps to avoid foreclosure, both of which are provisions regarding the "terms of credit" or "servicing" of loans, and are not fairly categorized as state laws "only incidentally affect[ing] the lending operations of Federal savings associations or are otherwise consistent with the purposes of paragraph (a) of this section." 12 C.F.R. § 560.2 (2015).
Second, Foley points out that the Dodd-Frank Wall Street Reform and Consumer Protection Act, provides that "[n]otwithstanding the authorities granted under [HOLA], this chapter does not occupy the field in any area of State law," 12 U.S.C. § 1465 (2012), thus "diminish[ing] the extent to which HOLA and its implementing regulations may preempt state law," Sovereign Bank v. Sturgis, 863 F.Supp.2d 75, 91 n. 9 (D.Mass.2012). Foley concedes Dodd-Frank has no retroactive application. Doc. No. 90 at 14; see also Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub.L. No. 111-203, § 4, 124 Stat. 1375, 1390 (2010) ("Except as otherwise specifically provided in this Act
Foley also brings a claim under Mass. Gen. Laws ch. 93A, § 9, Massachusetts' consumer protection statute. Although HOLA broadly preempted state lending regulations, HOLA did not preempt state laws that prescribe general legal duties applicable to all businesses. Dixon v. Wells Fargo Bank, N.A., 798 F.Supp.2d 336, 357-58 (D.Mass.2011) (finding that HOLA did not preempt plaintiffs' promissory estoppel claim). HOLA does not necessarily preempt "general deceptive practices statutes" such as chapter 93A. Sturgis, 863 F.Supp.2d at 97-98 (finding that HOLA preempted Mass. Gen. Laws ch. 244, §§ 35A, 35B but did not necessarily preempt chapter 93A). Although chapter 93A has some effect on lending, it is "not designed to regulate lending and do[es] not have a disproportionate or otherwise substantial effect on lending." Dixon, 798 F.Supp.2d at 358.
HOLA does not preempt chapter 93A claims "where the purported violation was based on breach of contract." Id. (citing Yeomalakis v. FDIC, 562 F.3d 56, 61 (1st Cir.2009)). Foley's chapter 93A claim centers on allegations of breach of the settlement. Therefore, HOLA does not preempt Foley's chapter 93A claim.
Wells Fargo also challenges Foley's chapter 93A claim on the basis that Foley has failed to "plead any facts to establish a bad faith breach, or attempted to plead a claim for breach of the implied covenant of good faith and fair dealing." Doc. No. 95 at 2. Although "a mere breach of contract is insufficient to sustain a chapter 93A claim," at least one other court has found a plaintiff stated a claim for unfair or deceptive practices where a bank "`disregarded' the agreement, refused to modify the loan, and instead initiated foreclosure proceedings." Stagikas v. Saxon Mortgage Servs., Inc., 795 F.Supp.2d 129, 137 (D.Mass. 2011). As a Class B plaintiff, Foley was entitled to have Wells Fargo consider him not only for a HAMP modification but also a MAP2R modification. Additionally, the settlement required Wells Fargo to abide by "certain `servicing commitments,' created, according to the agreement, `[i]n order to ensure that Borrowers are appropriately considered for a MAP2R Modification in a timely manner.' The agreement required, for instance, that Wells Fargo provide class members with clear, written explanations of modification denials, and in any foreclosure-related communications, a notification that the borrower was still being
Foley alleges that he submitted three applications for a modification under HAMP, and he received two letters notifying him that he had been rejected from HAMP and two letters notifying him that he had been rejected from any other modification options due to "excessive financial obligations." Although Foley's financial hardship conditions had changed, Wells Fargo rejected him from other modification options for an identical reason and did not explain which debts the bank considered or what rendered them "excessive." Wells Fargo also failed to describe which modification options Wells Fargo considered, and did not mention MAP2R.
During one of Foley's many phone calls with Wells Fargo, a bank representative told Foley that he was not considered for MAP2R; later, this representative told Foley that, as he had been rejected from other modification programs, he had also been rejected from MAP2R. Foley never received a clear, written explanation as to why Wells Fargo denied Foley a modification under MAP2R, as the settlement allegedly required. Therefore, Foley has pled facts that are sufficient to state a claim under chapter 93A.
Finally, although Wells Fargo argues that Foley failed to allege how Wells Fargo has harmed him, Foley has alleged that Wells Fargo sought to foreclose on Foley's home repeatedly. In fact, Wells Fargo currently opposes Foley's motion for a preliminary injunction enjoining Wells Fargo from foreclosing on Foley's home. Doc. No. 82. Mass. Gen. Laws ch. 93A, § 9(1) provides for injunctive relief. Although Foley has failed to plead what "damages" he might be entitled to, if any, Foley adequately alleged entitlement to injunctive relief under ch. 93A. For these reasons, the Court DENIES Wells Fargo's motion to dismiss Count Three of Foley's complaint.
Wells Fargo seeks to foreclose on the property at issue. Doc. Nos. 64, 82. Foley requests that the Court enjoin Wells Fargo from such a foreclosure. Doc. No. 64. First Circuit precedent guides the Court to "apply the federal preliminary injunction standard in a diversity case, at least where the parties have not suggested that state law supplies meaningfully different criteria."
As Wells Fargo noted in its Opposition, Judge Saylor denied Foley's pro se preliminary injunction motion. Now represented by counsel, Foley submitted the motion currently before the Court and attached an affidavit (which was not submitted by the pro se Plaintiff to Judge Saylor), wherein Foley calculated that he
It is clear that absent the injunction there is a significant risk of irreparable harm to Foley. Wells Fargo does not dispute that it seeks to imminently foreclose on the property, and, moreover, Wells Fargo does not dispute that foreclosure would constitute irreparable harm to Foley. Wells Fargo argues instead that the balance of hardships and the public interest favors Wells Fargo. On the contrary, the Court finds that the hardship that Wells Fargo alleges (paying Foley's "property taxes and insurance in order to maintain its mortgage lien and protect the value of its collateral," in addition to continuing to not receive payback on its debt, Doc. No. 82 at 2) "does not outweigh, or begin to approach, the type of harm [Foley] would suffer if the [foreclosure] proceeds." De Vico v. U.S. Bank, No. CV 12-08440 MMM FFMX, 2012 WL 10702854, at *6 (C.D.Cal. Oct. 29, 2012). Furthermore, as the Court found that Foley has established a likelihood of success on the merits, the Court finds that the public interest of enforcing class action settlements suggests that this factor favors Foley as well.
Although the balance of hardships favors Foley, this is only so where Foley begins to pay his mortgage again. Wells Fargo suggested that if the Court granted Foley's Motion for a Preliminary Injunction, the Court should require Foley to "pay the accruing monthly mortgage payments into the Court's registry as security against Wells Fargo suffering additional harm." Doc. No. 82 at 22. However, Wells Fargo did not state what amount per month Foley should pay. Foley suggested that the Court should require him to pay $1,377.86 per month (the amount Foley calculated as the mortgage payment for which he would have been eligible under MAP2R). Doc. Nos. 89 at 3, 64-2 at 2. Foley shall begin paying this amount on the first of each month effective Monday, July 1, 2015. If Wells Fargo disagrees with this amount, it must file with the Court, within fourteen days, the amount that it requests Foley pay to the Court's registry, accompanied with calculations similar to the calculations performed in Foley's affidavit, Doc. No. 64-2, at 2.
For the foregoing reasons, the Court ORDERS:
SO ORDERED.
