392 S.W.3d 72
Tenn. Ct. App.2012Background
- Clay sued First Horizon for wrongful foreclosure and alleged TARP/HAMP participation; he claimed First Horizon failed to properly consider him for a HAMP loan modification.
- The HAMP SPA governs the program; Clay asserted third-party beneficiary status, negligent implementation of HAMP, wrongful foreclosure, TCPA, and breach of good faith.
- Trial court granted some dismissals but denied others, and First Horizon appealed under Tenn. R. App. P. 9.
- Court analyzes whether there is a private right of action under HAMP/EESA; concludes no private right exists and federal law governs interpretation of HAMP contracts.
- Court reverses portion of trial court judgment denying dismissal on negligent implementation, third-party beneficiary, and wrongful foreclosure claims; remands with costs taxed to Clay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HAMP/EESA creates a private right of action | Clay asserts he is an intended third-party beneficiary with direct action rights | First Horizon contends no private right of action under HAMP/EESA | No private right of action exists under HAMP/EESA |
| Whether negligent implementation of HAMP states a claim | Clay claims First Horizon owed duty to evaluate for modification | HAMP imposes no duty on servicers to borrowers | Negligent implementation claim dismissed; no private right of action under HAMP |
| Whether wrongful foreclosure under HAMP stands | Foreclosure occurred while modification evaluation was pending | No basis to impair foreclosure under lack of private right | Wrongful foreclosure claim dismissed; no private right of action under HAMP |
| Whether Clay can be a third-party beneficiary of the SPA | SPA intended to benefit borrowers like Clay | Borrowers are not intended third-party beneficiaries of the SPA | Third-party beneficiary claim rejected; no private right of action |
Key Cases Cited
- Alexander v. Sandoval, 532 U.S. 275 (U.S. 2001) (private rights of action must be created by Congress to enforce federal law)
- Touche Ross & Co. v. Redington, 442 U.S. 560 (U.S. 1979) (remedies are those enacted by Congress; private action must be authorized)
- Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11 (U.S. 1979) (requirement of private remedy and private right of action analysis)
- Alexander v. Sandoval, 532 U.S. 275 (U.S. 2001) ((already listed above; included again for emphasis))
- Thomas v. JPMorgan Chase & Co., 811 F. Supp. 2d 781 (S.D.N.Y. 2011) (negligence claims about processing loan mods/foreclosures not imposing duty under HAMP)