Ditech Holding Corporation
19-10412-jlg
Bankr. S.D.N.Y.Jul 26, 2024Background
- Jessica J. Anderson executed a mortgage note in 2002 secured by property in Arvada, Colorado, and completed several loan modifications with various servicers (GMAC, Green Tree, and Ditech) over the years.
- After Ditech denied her 2017 loss mitigation/loan modification application, Anderson filed for chapter 13 bankruptcy and subsequently a $19,100.11 unsecured claim in Ditech’s 2019 bankruptcy, alleging damages from improper denial of loan modification.
- The Consumer Claims Trustee objected to Anderson’s claim, arguing it failed to state a legal basis for liability against Ditech.
- The Sufficiency Hearing, governed by a Rule 12(b)(6)-type standard, was held; no representative for Anderson’s estate appeared, and the court decided based on submitted papers.
- The court considered whether Anderson’s allegations could support claims for breach of good faith/fair dealing under Colorado law or for violation of the Real Estate Settlement Procedures Act (RESPA).
- The court determined Ditech’s actions complied with both the mortgage agreement and RESPA requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of Implied Covenant (Good Faith/Fair Dealing) | Ditech mishandled the loss mitigation process, stalled, withheld info, and gave conflicting instructions, depriving her of a modification. | The mortgage gives no contractual right/modification, merely review; Ditech had no duty to modify and followed process. | No contractual basis for expecting modification; claim fails. |
| Violation of RESPA | Ditech failed to process her loss mitigation application properly and gave inadequate or misleading denials. | Ditech followed RESPA: reviewed application, sent required notices, and stated specific reasons for denial. | Ditech complied with RESPA regulation; claim fails. |
| Sufficiency of Pleading Under Rule 8 & 12(b)(6) | Facts and chronology give ample notice and plausibility for relief. | Bare allegations, no concrete facts showing plausible entitlement to relief. | Facts do not state plausible legal claim; claim dismissed. |
| Damages for "Rejection Damages" | Costs incurred battling Ditech’s actions warrant recovery. | No legal basis for these costs where no underlying claim survives. | No entitlement to relief since no underlying liability. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Rule 12(b)(6) requires a claim to be plausible, not just conceivable)
- Ashcroft v. Iqbal, 556 U.S. 662 (Rich factual detail required to survive motion to dismiss)
- Erickson v. Pardus, 551 U.S. 89 (Pro se filings are to be liberally construed)
- Miller v. Bank of New York Mellon, 379 P.3d 342 (No implied right to loan modification when not in mortgage)
- City of Golden v. Parker, 138 P.3d 285 (Good faith and fair dealing attaches to contract only if it involves a discretionary term)