Frappier v. Countrywide Home Loans, Inc.
645 F.3d 51
1st Cir.2011Background
- Frappier, a borrower, refinanced multiple times beginning in 1996, extracting equity from his home in Southwick, MA.
- Divorce in 2006 forced refinance; he sought to remove ex-wife from the loan and attempted to sell.
- Countrywide loan originator Mamuszka prepared applications, with disputed representations about Frappier's income and occupation.
- October 2006 loan: $189,500, 6.875% fixed/adjustable; monthly payments around $1,500–$1,600.
- November–December 2006: additional $38,500 equity loan; included false income figure in application.
- Frappier defaulted in 2008; Countrywide foreclosed in 2009; suit filed in 2009 alleging 93A violations, unjust enrichment, etc.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the October 2006 loan violates Chapter 93A. | Frappier alleges Countrywide knowingly made a loan he could not repay. | No proof Countrywide knew or intended to cause default; equal terms to prior loan. | Triable issue; summary judgment inappropriate. |
| Whether unjust enrichment is viable. | Countrywide unjustly benefited from interest payments under a default-risk loan. | No unjust enrichment without evidence of Countrywide's knowledge of risk. | Remanded for resolution of elements. |
| Whether the covenant of good faith and fair dealing supports a claim related to the October 2006 loan (and related December loan). | Countrywide acted to secure or tolerate borrower’s false representations to profit. | No cognizable covenant claim; district court dismissed appropriately. | Remanded; December loan covenant claim dismissed. |
| Whether the negligence claim should survive. | Lender’s carelessness in extending credit constitutes a tort. | Lender-borrower relationship lacks fiduciary duty; mere negligence insufficient. | Dismissed. |
Key Cases Cited
- Commonwealth v. Fremont Inv. & Loan, 452 Mass. 733, 897 N.E.2d 548 (Mass. 2008) (origination of unaffordable loan may violate 93A)
- FAMM Steel, Inc. v. Sovereign Bank, 571 F.3d 93 (1st Cir. 2009) (common-law tort vs. 93A and reliance concepts)
- King v. Motor Mart Garage Co., 336 Mass. 422, 146 N.E.2d 365 (Mass. 1957) (signatory bound in some circumstances; fraud considerations)
- Stonkus v. City of Brockton School Dep't, 322 F.3d 97 (1st Cir. 2003) (opposition to summary judgment matters; admissions)
- Zimmerman v. Puccio, 613 F.3d 60 (1st Cir. 2010) (adoption of local rule implications for undisputed facts)
- Baena v. KPMG LLP, 453 F.3d 1 (1st Cir. 2006) (treatment of professional duties and fault in 93A context)
- Damon v. Sun Co., Inc., 87 F.3d 1467 (1st Cir. 1996) (common-law negligence limitations in 1st Cir.)