Mendez v. Bank of America Home Loans Servicing, LP
2012 U.S. Dist. LEXIS 4595
| E.D.N.Y | 2012Background
- Mendez sues BAC (Bank of America Home Loans Servicing, LP) for breach of loan modification contract, breach of implied covenant of good faith and fair dealing, promissory estoppel, breach of original mortgage contract, and GBL § 349 violations.
- Countrywide initially serviced the loan; by 2009 BAC took over and allegedly failed to honor the Countrywide modification.
- Countrywide offered a Step Rate loan modification with conditions, including income verification and document submission by a deadline.
- Mendez allegedly signed, notarized, and returned the modification documents, provided requested income docs, and began paying per the modification, but BAC did not consummate the modification.
- BAC demanded additional paperwork; multiple modification applications were processed over about a year with alleged delays and mismanagement.
- Plaintiff alleges alleged default-related fees were charged at unlawfully high rates, citing FTC action against Countrywide/BAC and a 2010 Consent Judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether breach of loan modification contract is pled | Mendez fully performed; Countrywide accepted and granted modification. | Modification required conditions precedent; no contract formed if income verification failed. | Plaintiff sufficiently pled formation and performance; contract claim survives at this stage. |
| Whether the implied covenant claim is duplicative of breach of contract | BAC failed to safeguard/process documents, breaching good faith. | Duplicative of contract claim; no separate duty when contract exists. | Claim dismissed as duplicative, with analysis on formation and performance distinctions. |
| Whether promissory estoppel can survive given potential contract governing modification | There was a clear promise of modification; reliance and injury. | Existence of contract precludes quasi-contract claims; reliance unclear. | Promissory estoppel claim survives at this stage; not barred by contract arguments. |
| Whether the claim for breach of the original mortgage contract is viable | Fees charged for default-related services exceeded what the mortgage contract permits. | Plaintiff’s contract is not the same form; actual mortgage did not restrict such fees. | Dismissed; no plausible term in the actual contract prohibiting the asserted fees. |
| Whether GBL § 349 claim is viable and whether to permit amendment | Defendant’s fees are deceptive in light of posted schedules and consent order. | Disclosures and consent order do not prove material deception; contract terms control. | GBL § 349 claim dismissed without prejudice; leave to amend permitted within 30 days. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard in pleadings; factual allegations required)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility pleading standard for Rule 12(b)(6))
- Johnson v. Nextel Commc’ns, Inc., 660 F.3d 131 (2d Cir. 2011) (contract/claims pleading with Rule 9 and 8 constraints)
- Serdarevic v. Centex Homes, LLC, 760 F. Supp. 2d 322 (S.D.N.Y. 2010) (duality of contract/quasi-contract claims; redundancy)
- Bris v. Amcan Holdings, Inc., 70 A.D.3d 423 (1st Dep’t 2010) (implied covenant duplicative when arising from same facts)