Flores v. OneWest Bank, F.S.B.
886 F.3d 160
1st Cir.2018Background
- In 2007 Flores and the Yanes refinanced their Everett, MA home; mortgage was secured with MERS as mortgagee.
- They defaulted in 2008; applied for a loan modification in April 2012 and were denied in May 2012; OneWest purchased the property at a statutory power-of-sale foreclosure in 2012.
- Plaintiffs filed suit in November 2015 asserting nine claims (they appeal dismissal of eight): three seeking to void the foreclosure, quiet title, breach of good faith/diligence, and several consumer-protection claims under Massachusetts law and an alleged FTC-based theory.
- District Court dismissed all claims as time-barred or otherwise deficient; plaintiffs appealed. Review is de novo for Rule 12(b)(6) dismissals.
- On appeal the First Circuit affirmed: it held the foreclosure was not void on the alleged statutory/mortgage-ground theories, plaintiffs lacked standing for quiet title, no contractual duty to consider modification existed, and consumer claims were untimely or otherwise unsupported.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether foreclosure sale is void for failure to comply with Mass. Gen. Laws ch. 244, § 15A (30-day notice) | § 15A violation renders sale void; if void, no limitations defense | Claim is tort-like and time-barred; or even if violation occurred, such noncompliance does not void sale under Massachusetts law | Sale is not void for § 15A noncompliance; dismissal affirmed (Court follows state intermediate precedent) |
| Whether foreclosure void for violation of ch. 244, § 35A (90-day cure) and mortgage paragraph 22 (notice/cure) | Violations of § 35A and paragraph 22 render sale void | Claims are time-barred and, on merits, § 35A violations do not void sale; Pinti (voiding similar mortgage-provision) is prospective only | Dismissed: § 35A does not void sale; Pinti's rule prospective, so pre‑Pinti sale cannot be voided |
| Quiet title: whether plaintiffs have standing to quiet title after foreclosure | Foreclosure void → plaintiffs retain legal and equitable title → standing | After foreclosure plaintiffs lack legal title and thus cannot meet quiet-title requirement | No standing; quiet-title dismissal affirmed |
| Breach of duty of good faith and reasonable diligence for failing to consider/ delay for loan modification | Defendants refused to delay foreclosure and consider modification | No contract or statutory duty required defendants to consider or grant modification | Dismissed for failure to identify contractual obligation imposing affirmative duty |
| Consumer protection claims (Mass. Gen. Laws ch. 183, § 28C and ch. 93A) alleging loan was unaffordable at origination | Loan was unfair/illegal from the start; alleged servicing unfairness in 2012 denial | Claims are time-barred under 4-year limitations; no authority that alleged origination irregularities tolled limitations; refusal to modify alone doesn’t violate Ch. 93A absent duty | Dismissed: limitations apply; plaintiffs failed to show tolling or a statutory/contractual duty to modify; 93A denial claim fails as a matter of law |
| Claim alleging violation of Federal Trade Commission Act | Plaintiffs contend count really alleged a Chapter 93A claim premised on FTC Act violation | FTC Act has no private right of action; even if read as 93A claim, plaintiffs’ demand letter did not mention FTC Act violations so procedurally deficient | Dismissed: no private FTC cause; 93A claim fails because demand letter omitted the asserted federal-law predicate |
Key Cases Cited
- Bevilacqua v. Rodriguez, 955 N.E.2d 884 (Mass. 2011) (discusses when foreclosure transactions may be void)
- Pinti v. Emigrant Mortg. Co., 33 N.E.3d 1213 (Mass. 2015) (held certain mortgage‑provision violations can void sales but gave ruling prospective effect)
- U.S. Bank Nat’l Ass’n v. Schumacher, 5 N.E.3d 882 (Mass. 2014) (held § 35A violations do not void a foreclosure sale)
- Ibanez v. U.S. Bank, 941 N.E.2d 40 (Mass. 2011) (addresses defects in foreclosure authority and consequences)
- Otero v. P.R. Indus. Comm’n, 441 F.3d 18 (1st Cir. 2006) (appellate standard: may affirm district court on any ground supported by record)