Flores v. OneWest Bank, F.S.B.
172 F. Supp. 3d 391
D. Mass.2016Background
- Plaintiffs Pedro Flores, Esther Yanes‑Alvarez (spouses), and Rosa Yanes (mother) owned 77 School Street, Everett, MA; they refinanced repeatedly and took a 2007 loan from Dynamic Capital secured by a mortgage recorded with MERS.
- Plaintiffs defaulted after income/job losses and medical expenses beginning in 2008; they stopped making mortgage payments and sought loss mitigation in April 2012.
- A loan modification application was denied and a foreclosure sale occurred on May 15, 2012; OneWest purchased the property and later conveyed it to Fannie Mae, the current owner.
- Plaintiffs raised multiple challenges in state eviction, bankruptcy, and this federal action alleging wrongful foreclosure, breach of good faith, violations of various Massachusetts statutes and consumer protections, unjust enrichment, and quiet title.
- The district court reviewed the amended complaint under the Rule 12(b)(6) plausibility standard and dismissed all counts as either time‑barred, not legally cognizable, or deficient as pleadings/remedies inappropriate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of implied covenant of good faith (refuse to delay foreclosure / consider modification) | Defendants breached duty by rejecting modification and proceeding with foreclosure without full consideration | No contract obligation required defendants to suspend foreclosure or fully consider modification; plaintiffs were in default | Dismissed — no contractual basis for such a duty; plausibly deficient |
| Wrongful foreclosure / tort claims (Mass. Gen. Laws ch. 244 §35A; §15A claims; mortgage ¶22) | Foreclosure and sale procedures were invalid; they lacked notice and statutory compliance | Foreclosure occurred May 15, 2012; tort claims governed by 3‑year statute of limitations; suit filed after limitations period | Dismissed as time‑barred |
| Consumer protection claims re: 2007 loan execution (Mass. Gen. Laws ch. 183 §28C; ch. 93A) | Mortgage execution defective (notarization, identity, acknowledgement phrasing) | Claims accrued at loan issuance; 4‑year limitations applies and has run | Dismissed as time‑barred |
| Quiet title / equitable relief and unjust enrichment | Mortgage improperly executed; sale produced surplus — entitlement to surplus/quiet title | Mortgagor had only equitable title while debt unpaid; quiet title not available for mortgagor in arrears; unjust enrichment not independent where contract governs and statutory remedy exists | Dismissed — quiet title inappropriate while mortgage outstanding; unjust enrichment unavailable given contractual/statutory remedies |
| Federal claim under FTCA §5 (unfair/deceptive mailing) | Defendants sent misleading communications about payments and amounts owed | Section 5 of FTCA does not create a private right of action | Dismissed — no private cause of action under FTCA §5 |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard; legal conclusions not entitled to presumption of truth)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard)
- Young v. Wells Fargo Bank, N.A., 717 F.3d 224 (scope of implied covenant of good faith tied to contract)
- MacKenzie v. Flagstar Bank, FSB, 738 F.3d 486 (no duty to halt foreclosure in face of borrower default)
- U.S. Bank Nat’l Ass’n v. Ibanez, 458 Mass. 637 (mortgagee holds legal title; mortgagor retains equitable title)