Stumm v. BAC Home Loans Servicing, LP
914 F. Supp. 2d 1009
D. Minnesota2012Background
- Stumms borrowed from BAC in 2006 to purchase a home secured by a mortgage; default occurred in 2009.
- Stumms sought HAMP modification; BAC informed them about HAMP options and postponed a sheriff’s sale after prequalification.
- Stumms’ second HAMP application was pending in early 2011; sale scheduled for May 5, 2011.
- On April 28, 2011, Stumms allegedly spoke with a BAC rep who promised a postponement of the sale, which did not occur.
- Stumms asserted breach of contract, fraud, negligent misrepresentation, breach of statutory duties, and promissory estoppel in Minnesota state court; case removed to federal court and amended complaints followed; Bank of America moved to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraud: whether the amended complaint pleads with particularity. | Stummms allege unnamed BAC rep promised postponement. | Complaint lacks who, when, where, how; no detrimental reliance pleaded. | Fraud claim dismissed for lack of particularity and detrimental reliance. |
| Negligent misrepresentation: pleading adequacy. | Same misrepresentation as fraud claims. | Requires same Rule 9(b) particularity and detrimental reliance. | Negligent-misrepresentation claim dismissed for failure of detrimental reliance. |
| Promissory estoppel: viability given MCAS and pleading standards. | Promissory estoppel based on postponement promise survives if pleaded. | MCAS requires written promise; equitable estoppel cannot override writing requirement; no plausible detriment. | Promissory-estoppel claim dismissed as barred by MCAS and not plausibly overcome. |
| Equitable estoppel and MCAS interaction sufficiency. | Equitable estoppel should circumvent MCAS. | MCAS acts as statute of frauds; equitable estoppel may apply but not here. | Equitable estoppel not enough to overcome MCAS; claim dismissed. |
Key Cases Cited
- Hoyt Properties, Inc. v. Production Resource Group, LLC, 736 N.W.2d 313 (Minn. 2007) (fraud elements and reliance standards; Rule 9(b) standards referenced)
- Brisbin v. Aurora Loan Services, LLC, 679 F.3d 748 (8th Cir. 2012) (MCAS writing requirement for postponement promises)
- BankCherokee v. Insignia Dev., LLC, 779 N.W.2d 896 (Minn. Ct. App. 2010) (promises to forebear must be in writing under MCAS)
- Braden v. Wal-Mart Stores, Inc., 588 F.3d 585 (8th Cir. 2009) (affirmative defense can support Rule 12(b)(6) dismissal when apparent on face of complaint)
- Independent Trust Corp. v. Stewart Info. Services Corp., 665 F.3d 930 (7th Cir. 2012) (pleading to survive may be required when affirmative defense apparent)
- South Cherry St., LLC v. Hennessee Grp. LLC, 573 F.3d 98 (2d Cir. 2009) (statute-of-frauds dismissal doctrines in pleading)
- GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381 (10th Cir. 1997) (statute-of-frauds and pleading standards relevance)