Schaefer v. IndyMac Mortgage Services
2013 U.S. App. LEXIS 20143
| 1st Cir. | 2013Background
- Schaefer refinanced his home in 2007 and agreed to a mortgage that allowed the lender to accelerate and foreclose on default, with a contractual right for Schaefer to reinstate by paying arrears, fees, and costs.
- IndyMac/OneWest serviced and later assigned/retained servicing; Schaefer defaulted, received a January 19, 2012 arrears letter, and later a January 30 acceleration/foreclosure letter from Harmon (OneWest’s counsel) that did not disclose a specific reinstatement amount but said he could request one.
- Schaefer requested reinstatement amounts twice via Harmon’s website but received only automated responses; he submitted a loan-modification application and relied on a Milian letter from OneWest promising a point-of-contact and assistance.
- Miscommunications about which fax number to use for supplemental documents occurred; OneWest requested additional info and Schaefer eventually re-sent materials, but the foreclosure sale proceeded on March 12 and Fannie Mae purchased the property.
- Schaefer sued in state court asserting negligence and negligent misrepresentation (seeking injunction, nullification of the sale, reinstatement/modification opportunity, and damages); defendants removed, moved to dismiss under Rule 12(b)(6), and the district court dismissed based on the economic loss doctrine.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether tort claims are barred by the economic loss doctrine | Schaefer: defendants assumed extra-contractual duties (provide reinstatement amount; process modification before foreclosure) permitting tort recovery | Defendants: harms are purely economic and contract-governed; economic loss doctrine bars tort recovery | Held: economic loss doctrine applies and bars Schaefer’s tort claims |
| Whether a voluntarily assumed duty (Restatement §323/§324A) allows recovery for economic loss | Schaefer: New Hampshire recognizes exception for voluntarily assumed duties extrinsic to contract, so tort liability is permitted | Defendants: any assumed duties are either contractual or would contradict contract terms; tort is improper vehicle | Held: even if NH might recognize assumed-duty exception, here duties are contractual or contradict mortgage terms, so barred |
| Whether alleged duty to process loan-modification before foreclosure can be enforced in tort | Schaefer: OneWest’s communications created such a duty restricting foreclosure | Defendants: mortgage expressly allowed acceleration/foreclosure; imposing tort duty would rewrite contract | Held: duty would contradict contract rights; courts will not impose such tort duty |
| Whether negligent misrepresentation claim survives under NH law's exception | Schaefer: Milian letter misled him re: assistance and fax number, supporting negligent misrepresentation | Defendants: representations concern performance of the mortgage contract and thus fall within economic loss bar | Held: Wyle limits negligent-misrepresentation exception to pre-contract or separate-transaction statements; these were contract-performance communications and are barred |
Key Cases Cited
- Plourde Sand & Gravel Co. v. JGI E., Inc., 917 A.2d 1250 (N.H. 2007) (articulates New Hampshire application of the economic loss doctrine and recognized exceptions)
- Wyle v. Lees, 33 A.3d 1187 (N.H. 2011) (limits negligent-misrepresentation exception to pre-contract or separate-transaction statements)
- Brunelle v. Nashua Building & Loan Ass’n, 64 A.2d 315 (N.H. 1949) (tort liability for a gratuitous, extra-contractual undertaking regarding title)
- Seymour v. New Hampshire Sav. Bank, 561 A.2d 1053 (N.H. 1989) (discusses lender’s tort duties and voluntary undertakings in the lending context)
- Mass. Ret. Sys. v. CVS Caremark Corp., 716 F.3d 229 (1st Cir. 2013) (standard of review: accept complaint allegations as true on motion to dismiss)