Sovereign Bank v. Sturgis
2012 U.S. Dist. LEXIS 38860
D. Mass.2012Background
- Sovereign Bank sues to collect deficiencies after foreclosures on Flintlock Loan, Flintlock HELOC, and Scootsam Loan secured by Nantucket properties.
- Sturgises answered with fifteen counterclaims alleging unlawful servicing and foreclosure conduct.
- Foreclosures occurred on 24 Flintlock Rd and 5 Amelia Dr; remaining balances: Scootsam $747,723.57, Flintlock $273,553.07, Flintlock HELOC $128,300.61 plus interest and fees.
- Sovereign seeks dismissal of counterclaims; Sturgises seek dismissal or amendments to raise various statutory and common-law claims.
- Court treats several procedural/merits questions, allowing limited amendments but granting some dismissals and addressing HOLA preemption and Massachusetts law integration.
- Pleadings and related documents indicate disputes over notices, accounting, and the characterization of preemption and applicable law under HOLA and MCCCDA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Complaint adequately alleges compliance with MA foreclosure statutes | Sovereign alleges foreclosure was conducted properly; §9(c) suffices for conditions precedent. | Sturgises contend §17B, §14, and §27 must be pled as conditions precedent or elements. | Count challenged for §17B/§14/§27 not dismissed; leave to amend §17B alleged compliance granted. |
| Whether there is personal liability for the Scootsam loan | Plaintiff notes personal liability is in the note itself. | Sturgises claim lack of explicit personal guaranty separate from mortgage/note. | Denied; court finds personal liability pleaded in note and attached documents. |
| Whether HOLA preempts state-law claims against Sovereign | Sovereign asserts state claims are preempted where they concern lending activities. | Sturgises argue some state-law claims fall outside preemption; some preempted, some not. | Preemption applied selectively; Counts Three, Nine, Twelve, Fourteen partly preserved pending summary judgment; others preempted as to specific subsections. |
| Whether MCCCDA claims are preempted by HOLA (and related TILA issues) | MCCCDA preemption argued under 12 C.F.R. 560.2(b); TILA exemption discussed. | MCCCDA not applicable where TILA preemption exists; statute preempts disclosures. | MCCCDA preempted; TILA effects and limitations acknowledged; Counts One(b)-(g) dismissed; Count Thirteen dismissed. |
| Whether RESPA and related disclosures support a viable claim | Sturgises allege RESPA violation for qualified written request responses. | Sovereign argues requests not all servicing-related; discovery needed to determine compliance. | Count Five is denied for dismissal at this stage; further discovery required to resolve servicing-related requests. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard for pleading required)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading must state grounds showing entitlement to relief)
- Berner v. Delahanty, 129 F.3d 20 (1st Cir. 1997) (conditions precedent pleading standards vary by context)
- FAMM Steel, Inc. v. Sovereign Bank, 571 F.3d 93 (1st Cir. 2009) (fraud pleading standards and reliance required)
- U.S. Bank Nat. Ass’n v. Ibanez, 458 Mass. 637 (Mass. 2011) (foreclosure process and statutory compliance under MA law)
- Framingham Sav. Bank v. Turk, 40 Mass.App.Ct. 384, 664 N.E.2d 472 (Mass. App. Ct. 1996) (statutory notice requirements and foreclosure procedures)
- Dixon v. Wells Fargo Bank, N.A., 798 F.Supp.2d 336 (D. Mass. 2011) (contract claims against federally chartered banks and preemption nuance)
- McAnaney v. Astoria Financial Corp., 665 F.Supp.2d 132 (E.D.N.Y. 2009) (contract claims not preempted if incidental to lending)
- HILLS v. OTS (OTS opinions), various OTS opinion letters cited in text (N/A) (OTS preemption framework for state laws vs. lending)