Edwards v. Aurora Loan Services, LLC
2011 U.S. Dist. LEXIS 62462
| D.D.C. | 2011Background
- Plaintiffs are four homeowners alleging they were eligible for HAMP modifications but did not receive them as of November 9, 2009.
- HAMP is Treasury/FHFA program under the Making Home Affordable Plan; servicers must follow HAMP Guidelines and SPAs with investors.
- Aurora Loan Services was the loan servicer for all plaintiffs and allegedly mishandled documents and provided misinformation, hindering modifications.
- Loans may be investor-owned and governed by PSAs; modifications can be restricted by investor agreements and HAMP does not obligate modification in every case.
- HAMP process includes Waterfall criteria, NPV test, possible 90-day trial modification, and required suspension of foreclosures while HAMP consideration occurs.
- Court dismisses all claims on Rule 12(b)(1)/(6) grounds; Rule 56(f) relief denied; discovery stayed moot in light of dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to enforce the SPA as third-party beneficiary | Edwards argues beneficiaries intended | SPA does not show explicit third-party benefit | Plaintiffs lack standing; breach claim dismissed |
| Duty of good faith and fair dealing under the SPA | Aurora breached implied covenant | No party to SPA owed duties to non-parties | No duty owed; claim dismissed |
| Constitutional due process protection for HAMP modifications | HAMP creates property interest in modification | No protected entitlement; discretion vests with Treasury/Aurora/investors | No protected property interest; due process claim dismissed |
| Discovery and Rule 56(f) relief pending Treasury summary judgment | Discovery necessary to oppose summary judgment | No basis for stay; case dismissed on merits | Rule 56(f) motion denied; discovery stay moot in light of dismissal |
Key Cases Cited
- Beckett v. Air Line Pilots Ass'n, 995 F.2d 280 (D.C. Cir. 1993) (third-party beneficiary intent required to sue on government contract)
- County of Santa Clara v. Astra USA Inc., 588 F.3d 1237 (9th Cir. 2009) (clear intent required to rebut incidental beneficiary presumption)
- Castle Rock v. Gonzales, 545 U.S. 748 (U.S. 2005) (entitlements hinge on statutory/regulated rights, not unilateral discretion)
- Washington Legal Clinic for the Homeless v. Barry, 107 F.3d 32 (D.C. Cir. 1997) (procedures alone do not create constitutionally protected entitlement)
- Germ an Alliance Ins. Co. v. Home Water Supply Co., 226 U.S. 220 (U.S. 1912) (public contracts generally incidental beneficiaries absent clear intent)
- Crow Creek Sioux Tribe v. Brownlee, 331 F.3d 912 (D.C. Cir. 2003) (standing prerequisite to injunctive relief)
- Roth, Board of Regents of State Colleges v., 408 U.S. 564 (U.S. 1972) (property interests require legitimate entitlement)
- Klamath Water Users Protective Ass'n v. Patterson, 204 F.3d 1206 (9th Cir. 2000) (beneficiary rights depend on clear contractual intent)