Harry, Jr. v. Countrywide Home Loans., Inc.
902 F.3d 16
1st Cir.2018Background
- In 2005 Thomas and Gretchen Harry refinanced their Mashpee, MA home with a $245,350 loan from Countrywide; they defaulted in 2009.
- In 2016 the Harrys sued to void the loan documents and stop a foreclosure sale, asserting numerous federal and state claims (RICO, FDCPA, RESPA, TILA, Chapter 93A, slander of title, licensing violations, and fraud/concealment).
- Defendants included Countrywide (now Bank of America), BAC/BofA affiliates, The Bank of New York Mellon (trustee), Ditech/Green Tree (servicer), and MERS.
- The district court dismissed the amended complaint under Fed. R. Civ. P. 12(b)(6) and denied injunctive relief; the Harrys appealed.
- The Harrys principally argued many claims were not time-barred because the mortgage/note were void ab initio due to Countrywide lacking a Massachusetts lending license, and alternatively sought tolling for fraudulent concealment/equitable tolling.
Issues
| Issue | Harrys' Argument | Defendants' Argument | Held |
|---|---|---|---|
| Whether federal and state claims were time-barred | Limitations do not run because the mortgage/note are void ab initio for lack of Massachusetts lending license | Statutes of limitations apply; plaintiffs filed long after applicable limitations periods | Court affirmed dismissal: claims are time-barred (RICO, FDCPA, RESPA, TILA, Chapter 93A, slander of title) |
| Whether a lack of Massachusetts lending license renders documents void ab initio | Countrywide’s lack of license makes mortgage/note void like a forgery, so limitations never run | No authority supports that proposition; statutes do not treat documents as void for this reason | Court rejected the void-ab-initio theory for lack of supporting authority |
| Whether fraudulent concealment or equitable tolling saves claims | Plaintiffs say fraud concealed claims and tolls limitations | Defendants say plaintiffs were not diligent; plaintiffs had counsel years earlier and delayed filing | Court held plaintiffs failed to show due diligence; tolling not warranted |
| Whether the mortgage foreclosure right was extinguished under MA obsolete mortgage statute (G.L. c.260 §33) | Harrys: acceleration by servicer triggered the five-year bar to foreclose | Defendants: acceleration does not affect the mortgage foreclosure limitation | Court held §33 and relevant precedent do not support that acceleration shortens the foreclosure period; claim rejected |
| Whether MA licensing statutes (c.255E/255F) create private cause of action | Harrys: licensing violations void loan and give rise to private claims | Defendants: statutes do not create an explicit private right; plaintiffs offer no basis to infer one | Court declined to infer a private cause of action and treated argument as waived |
| Whether district court abused discretion by denying entries of default | Harrys: defendants failed to defend; default should be entered | Defendants: they properly defended; defaults not warranted | Court found no abuse of discretion in denying default motions |
Key Cases Cited
- Lares Grp., II v. Tobin, 221 F.3d 41 (1st Cir.) (RICO limitations period and timeliness principle)
- Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143 (U.S. Supreme Court) (RICO background/standards)
- In re Sheedy, 801 F.3d 12 (1st Cir.) (TILA rescission limitations interpretation)
- Harrington v. Costello, 7 N.E.3d 449 (Mass.) (statute of limitations for slander of title)
- Protective Life Ins. Co. v. Sullivan, 682 N.E.2d 624 (Mass.) (equitable tolling/fraudulent concealment and due diligence)
- Gonzalez v. United States, 284 F.3d 281 (1st Cir.) (fraudulent concealment tolling standard)
- Maloy v. Ballori-Lage, 744 F.3d 250 (1st Cir.) (standard of de novo appellate review on dismissal)
- Zannino v. Zannino, 895 F.2d 1 (1st Cir.) (appellate waiver and issue-preservation principles)