Tracey M. Jaffri v. JP Morgan Chase Bank, N.A.
2015 Ind. App. LEXIS 91
| Ind. Ct. App. | 2015Background
- Jaffri obtained a mortgage on a Hendricks County home; she later defaulted after job loss and disability.
- She applied multiple times for a HAMP modification; she alleges Chase mishandled and failed to process her HAMP applications.
- Chase filed foreclosure in June 2010; Jaffri answered and asserted counterclaims (initially breach of contract and good faith; later amended to negligence, breach of fiduciary duty, constructive fraud, and IIED).
- Chase and Jaffri later agreed to a non-HAMP loan modification; Jaffri alleges its terms were worse than a HAMP modification would have been.
- Chase dismissed the foreclosure in May 2014; it moved to dismiss Jaffri’s counterclaims under T.R. 12(B)(6); the trial court granted dismissal without prejudice.
- Jaffri appealed; the court reviewed whether her amended counterclaims stated actionable claims separate from contractual remedies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether negligence claim based on alleged mishandling of HAMP and loan servicing states a claim | Jaffri: Chase owed a duty to service loan and process HAMP applications with reasonable care; damages include pecuniary loss and emotional distress | Chase: Dispute is contractual; negligence claim merely repackages breach of contract and fails to plead an independent tort | Court: Dismissed — negligence based on contract duties not actionable; emotional-distress damages unavailable absent independent tort or required elements for negligent infliction of emotional distress |
| Whether breach of fiduciary duty / constructive fraud pled from lender-borrower relationship states a claim | Jaffri: Chase’s conduct in negotiations and processing created special duties and deceptive omissions | Chase: No special fiduciary relationship existed; duties arose from contract only, not fiduciary obligations | Court: Dismissed — no special circumstances alleged to convert lender-borrower relationship into fiduciary; constructive fraud not established |
| Whether intentional infliction of emotional distress (IIED) is stated by alleged intentional mishandling of HAMP | Jaffri: Chase’s intentional mishandling caused severe emotional distress | Chase: Conduct, at worst, is negligent or poor servicing, not extreme and outrageous | Court: Dismissed — allegations (even if true) fall short of the extreme/outrageous standard required for IIED |
| Whether HAMP violations give rise to a private cause of action against the servicer | Jaffri: Chase’s failure to dedicate resources and comply with HAMP harmed her | Chase: HAMP is a federal program administered by Treasury and does not create a private right of action against servicers absent contract | Court: Noted precedent rejects private causes of action for alleged HAMP noncompliance (unless a contract under HAMP exists); dismissal affirmed |
Key Cases Cited
- Babes Showclub, Jaba, Inc. v. Lair, 918 N.E.2d 308 (Ind. 2009) (standard and de novo review for T.R. 12(B)(6) motions)
- Yost v. Wabash College, 3 N.E.3d 509 (Ind. 2014) (duty is required element in negligence; whether duty exists is a question of law)
- Greg Allen Const. Co. v. Estelle, 798 N.E.2d 171 (Ind. 2003) (tort law should not displace contractual allocation of risks; limits on converting contract breaches into tort claims)
- Morgan Asset Holding Corp. v. CoBank, ACB, 736 N.E.2d 1268 (Ind. Ct. App. 2000) (contractual relationships do not alone create fiduciary duties)
- Tucker v. Roman Catholic Diocese of Lafayette-in-Indiana, 837 N.E.2d 596 (Ind. Ct. App. 2005) (emotional distress damages not recoverable for breach of contract; elements for negligent infliction defined)
- Curry v. Whitaker, 943 N.E.2d 354 (Ind. Ct. App. 2011) (IIED elements and the rigorous standard for extreme and outrageous conduct)
- Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769 (4th Cir. 2013) (HAMP participation does not create independent duty or private right of action to borrowers)
- Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012) (claims viable only where an express contract under HAMP existed; no extra-contractual duty to manage loans to HAMP standards)