Monks v. Astoria Bank, 1:16-cv-12084

Background

Monks borrowed $184,000 in 2004; mortgage later assigned to Astoria Bank. He defaulted after financial hardship and multiple loan-modification attempts (2014–2016).
Astoria scheduled a foreclosure sale for August 29, 2016; at the Attorney General's request it agreed to postpone and mailed Monks a loan-modification packet on August 29 promising: “No foreclosure sale will be conducted and you will not lose your home during the evaluation period.”
Monks returned a 67‑page application by certified mail; Astoria received it on September 22, 2016 and acknowledged receipt but did not state whether the application was complete.
Astoria foreclosed on the property on September 28, 2016 (six days after receipt), and the property reportedly sold back to Astoria for the debt amount.
Monks sued in federal court (filed Oct. 18, 2016; amended Jan. 18, 2017) asserting deceit, negligent misrepresentation, and Mass. Gen. Laws ch. 93A claims; Astoria moved to dismiss arguing HOLA preemption, failure to plead fraud with particularity, and lack of standing.
The court denied the motion to dismiss, finding the complaint plausibly alleged a false representation, reasonable detrimental reliance, and that the state-law claims were not preempted by HOLA at the pleading stage.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
HOLA preemption	Monks: state tort claims (deceit/negligent misrep/Ch.93A) are permitted under savings clause; they only incidentally affect lending	Astoria: HOLA/12 C.F.R. §560 preempts state claims because they regulate lending practices and notice/processing	Court: Denied preemption on these pleadings; fraud-based tort claims fall within §560.2(c) savings clause and are not preempted here
Deceit (false representation)	Monks: August 29 letter falsely promised no foreclosure during “evaluation period”; he timely submitted application and relied on it	Astoria: Evaluation period never began because application was incomplete; therefore statement was not false
Court: At pleading stage Monks plausibly alleged the representation was false (evaluation period could have begun on receipt of a reasonably complete application); claim survives
Reasonableness & detrimental reliance	Monks: he forewent alternatives (short sale, deed-in-lieu, bankruptcy) in reliance on the no-foreclosure assurance	Astoria: reliance was unreasonable given bankruptcy discharge and long default	Court: Reasonableness is factual; allegations suffice to plausibly plead reasonable, detrimental reliance
Negligent misrepresentation	Monks: bank supplied false information causing pecuniary loss and failed to exercise reasonable care	Astoria: (argued generally insufficient)	Court: Claim is sufficiently pleaded given overlap with deceit claim; denied dismissal
Chapter 93A claim	Monks: deceit/negligent misrep constitute unfair/deceptive practices under Ch.93A	Astoria: (argued dismissal/preemption)	Court: Ch.93A claim survives for same reasons as deceit and negligent misrep

Key Cases Cited

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleadings)
Cummings v. HPG Int'l, Inc., 244 F.3d 16 (1st Cir. 2001) (elements and intent standard for deceit in Massachusetts)
In re Ocwen Loan Servicing, LLC Mortg. Servicing Litig., 491 F.3d 638 (7th Cir.) (fraud claims not preempted by HOLA savings clause)
McCauley v. Home Loan Inv. Bank, F.S.B., 710 F.3d 551 (4th Cir.) (fraud claims preserved from HOLA preemption)
Molosky v. Washington Mut., Inc., 664 F.3d 109 (6th Cir.) (UDAP laws only incidentally affect lending; preserved)
First Marblehead Corp. v. House, 473 F.3d 1 (1st Cir.) (elements for negligent misrepresentation)
Kraft Power Corp. v. Merrill, 464 Mass. 145 (Mass. 2013) (characterization of Ch.93A claims)
Starr v. Fordham, 420 Mass. 178 (Mass. 1995) (intent and misrepresentation principles)
Sheffer v. Rudnick, 291 Mass. 205 (Mass. 1935) (reasonableness of reliance typically for jury)