Dill v. American Home Mortgage Servicing, Inc.
935 F. Supp. 2d 299
D. Mass.2013Background
- Plaintiffs Dill and Marsters sue AHMSI and Deutsche Bank over a mortgage loan modification in the HAMP program.
- Deutsche Bank claims to hold the note/mortgage as Trustee; AHMSI is the loan servicer.
- On July 22, 2009, AHMSI signed a HAMP Servicer Participation Agreement with Fannie Mae incorporating HAMP guidelines.
- Plaintiffs applied for a HAMP modification after payment difficulties in 2010; they received a December 30, 2010 letter promising modification if eligible and compliant.
- AHMSI instructed Plaintiffs not to make payments during modification review, contributing to default; AHMSI later deemed them ineligible for modification in July 2011.
- Foreclosure proceedings were initiated by Deutsche Bank around the same time; Plaintiffs sent a Chapter 93A demand letter in September 2011; the complaint asserts five counts against AHMSI and seeks relief under contract, duties, negligence, promissory estoppel, and Chapter 93A.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to enforce the SPA | Plaintiffs claim as intended beneficiaries or beneficiaries of the SPA. | Plaintiffs are not parties or intended beneficiaries of the SPA. | Count I dismissed for lack of standing/intended beneficiary status. |
| Implied covenant of good faith and fair dealing | There is a contractual relationship through the mortgage/SPA giving rise to implied duties. | AHMSI is not a party to the mortgage or the SPA as a beneficiary. | Count II dismissed due to lack of contractual relationship with AHMSI. |
| Negligence vs negligent misrepresentation | Plaintiffs plead negligence related to modification handling; may state negligent misrepresentation. | Economic loss doctrine bars ordinary negligence absent injury; misrepresentation may survive. | Count III (ordinary negligence) dismissed; Count III survives as negligent misrepresentation. |
| Promissory estoppel viability | AHMSI promised modification upon eligibility and compliance; enforceable promise. | Promises are too indefinite to create binding obligation. | Count IV denied as to promissory estoppel? (claims upheld; court allowed proceeding on promissory estoppel). |
| Mass. Gen. Laws ch. 93A claims (Fremont and HAMP-related) | Fremont structural unfairness and HAMP-related deception support 93A liability. | Fremont does not apply to servicer; HAMP-related claims are technical/clerical at best. | Count V Fremont claim dismissed; 93A HAMP-related claims survive. |
Key Cases Cited
- Fremont Investment & Loan Co. v. Massachusetts, 452 Mass. 733 (Mass. 2008) (structural unfairness under 93A; Fremont analysis not applicable to servicer here)
- Maride v. HSBC Mortg. Corp. (USA), 844 F. Supp. 2d 172 (D. Mass. 2011) (brokered mortgage claims; 93A considerations in mortgage context)
- Bosque v. Wells Fargo Bank, 762 F. Supp. 2d 342 (D. Mass. 2011) (93A/foreclosure-related claims; procedural/posture relevance)
- FMR Corp. v. Boston Edison Co., 415 Mass. 393 (Mass. 1993) (corporate conduct; standard for implied covenants and fair dealing)
- Carroll v. Xerox Corp., 294 F.3d 231 (1st Cir. 2002) (contractual duties; interpretation of implied covenants)