954 F. Supp. 2d 870
E.D. Mo.2013Background
- Putative class action against Nationstar for failure to permanently modify a mortgage under HAMP; counts include breach of contract, promissory estoppel, breach of implied covenant of good faith and fair dealing, and MMPA claim.
- Court granted Nationstar’s Rule 12(b)(6) motion to dismiss for failure to state a claim, with prejudice.
- Court takes judicial notice of HAMP Guidelines and related materials attached to Nationstar’s motion; documents are incorporated by reference.
- Plaintiff applied for HAMP modification in 2009; entered a Trial Period Plan (TPP) in 2009; made timely TPP payments through January 2010; was later denied for a permanent modification.
- TPP expressly states it is not a modification and that modification would require a separate, fully executed Modification Agreement if conditions are met; court finds no enforceable contract because essential terms are undefined and consideration is lacking.
- Court finds HAMP does not provide a private right of action; claims framed as preemption/engaging HAMP do not state Missouri-law claims; all individual claims (and thus class claims) are dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HAMP provides a private cause of action. | Plaintiff asserts rights under HAMP via TPP/Guidelines. | HAMP does not create a private right of action; state-law claims cannot arise from HAMP. | HAMP provides no private action; claims dismissed. |
| Whether the TPP constitutes a valid contract entitling modification. | TPP created a contract promising permanent modification. | TPP is not a contract; modification terms are undefined and conditional. | TPP not a binding contract; no enforceable obligation to modify. |
| Whether promissory estoppel supports recovery given the TPP. | Defendant promised permanent modification upon compliance. | No definite promise; reliance unreasonable. | Promissory estoppel fails; no definite promise. |
| Whether Missouri covenant of good faith and fair dealing supports relief. | Covenant breached via mishandling of modification process. | Covenant arises from contract; no contract existed. | Fails as there was no enforceable contract. |
| Whether MMPA claim survives given exemptions. | MMPA applies to servicing and modification actions. | Defendant exempt as licensed financial institution; MMPA claim barred. | MMPA claim dismissed (exemption) and, even if not, fails on merits. |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (heightened pleading standards to plausibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading must plead plausible claims, not mere conclusions)
- Cox v. Mortgage Electronic Registration Systems, Inc., 685 F.3d 663 (8th Cir. 2012) (uses de novo review for state-law claims, discusses HAMP preemption context)
- Morrison v. Back Yard Burgers, Inc., 91 F.3d 1184 (8th Cir. 1996) (limited preemption discussion regarding non-existent private right of action)
- Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012) (non-binding outside Eighth Circuit; discussed preemption context)
- Bohnhoff v. Wells Fargo Bank, N.A., 853 F. Supp. 2d 849 (D. Minn. 2012) (courts treat HAMP/preemption and state claims on merits when appropriate)
- CitiMortgage v. Crawford, 934 F. Supp. 2d 942 (S.D. Oh. 2013) (NPV-based HAMP eligibility and modification considerations)