Markle v. HSBC Mortgage Corp. (USA)
2011 U.S. Dist. LEXIS 147349
| D. Mass. | 2011Background
- Plaintiffs Becky and Derek Markle allege HSBC violated HAMP/MSSC guidelines by foreclosing without evaluating eligibility for a permanent modification.
- Plaintiffs assert four claims: breach of contract (as third-party beneficiaries), breach of implied covenant of good faith, negligence, and Massachusetts Chapter 93A violation.
- Jurisdiction is based on diversity of citizenship, with HSBC moving to dismiss under Fed. R. Civ. P. 12(b)(6).
- The Emergency Economic Stabilization Act and the Making Home Affordable Program created HAMP, administered by Fannie Mae, to reduce foreclosures and encourage modifications.
- MSSC contracts with Fannie Mae require servicers to participate in HAMP and follow Selling and Servicing Guides, which state borrowers are not intended third-party beneficiaries.
- Plaintiffs’ foreclosure sale was scheduled for September 28, 2010, but later canceled; the complaint was filed in September 2010.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs can enforce MSSC as third-party beneficiaries | Markles are within a class intended to benefit from HAMP. | MSSC does not confer enforceable rights on nonparties. | No third-party beneficiary rights; claim dismissed. |
| Whether the implied covenant claim survives absent MSSC contract or intended beneficiary status | Implied covenant attaches via MSSC-related contract. | No contract or duty to plaintiffs under MSSC; covenant cannot attach. | Dismissed; no post-contract duty to plaintiffs. |
| Whether a common-law negligence claim exists for failure to evaluate HAMP eligibility | Section 201 of the Helping Families Save Their Homes Act creates a duty for servicers to evaluate for HAMP. | No private duty or tort liability exists for HAMP guidelines; Act provides safe harbor. | Dismissed; no recognized duty under state law to evaluate for HAMP. |
| Whether 93A claim is viable based on HAMP guideline violations | Failure to evaluate, deny, and withhold NPV data constitutes unfair/deceptive acts. | Nor misrepresentation nor harm established; mere noncompliance with guidelines is insufficient. | Dismissed; insufficient allegations of unfair or deceptive acts and no demonstrated harm. |
Key Cases Cited
- Speleos v. BAC Home Loans Serv., L.P., 755 F. Supp. 2d 304 (D. Mass. 2010) (supports conclusion that homeowners are not intended beneficiaries of MSSC and guides)
- Bosque v. Wells Fargo Bank, N.A., 762 F. Supp. 2d 342 (D. Mass. 2011) (denies private 93A damages for HAMP violations; treatment of HAMP compatibility)
- Astra USA, Inc. v. Santa Clara County, 131 S. Ct. 1342 (U.S. 2011) (federal-law approach; no private right of action under PPA-like provisions)
- Miree v. DeKalb County, 433 U.S. 25 (U.S. 1977) (federal common law in certain diversity cases involving federal interests)
- Price v. Pierce, 823 F.2d 1114 (7th Cir. 1987) (uniform federal interest in third-party beneficiary contracts involving federal programs)
- Public Serv. Co. of N.H. v. Hudson Light & Power Dep't, 938 F.2d 338 (1st Cir. 1991) (Restatement guidance on third-party beneficiaries and contract interpretation)