Nickerson v. TD Bank

STATE OF i\tlAINE BUSINESS AND CONSUMER COURT CUNIBERLAND, ss Location: Portland Docket No.: BCD-CV-14-64 I NICKERSON et al., ) ) Plaintiffs, ) ) v. ) ) ORDER ON DEFENDANT'S MOTION TD BANK, N.A., ) TO DISMISS ) Defendant. )

1. INTRODUCTION·

Before the Court is Defendant TD BANK, N.A. 's ("TD Bank") Motion to Dismiss Plaintiffs' Complaint under Rule 12(b)(6) of the Mnine Rules of Civil Procedure. Defendant makes two arguments in support of its motion. First, it argues that 33 M.R.S. § 551 ("Section 551 ") is pre-empted by federal law and regulations, specifically the National Bank Act ("NBA") 12 U. S.C. §3 8 et seq., as weU as regulations promulgated by the Office of the Comptroller of the Currency ("OCC"). The motion also argues that tile allegations in the Compl11int contain insufficient specificity regarding when and/or if TD Bank received the recorded mortgage release from the registry of deeds, and "merely alleges threadb11re conclusions with a fonnulaic recitation of the elements" of the statute allegedly violated. The Court will address the arguments separately.

ll. ANALYSIS

The Law Court has held that fedeml preemption may occur in several wnys:

Preemption occurs when Congress, in enacting a federal statute, expresses n clear intent to preempt state law, when there is an outright or ach1al conflict between federal and state law, where compliance with both

federal and state law is in ef1'ect physically impossible, where there is implicit in federAl law a barrier to state regulation, where Congress has legislated comprehensively, thus occupying an entire field of regulation and leaving no room for the State to supplement federal law, or where the state law stnnds as (Ill obstacle to the accomplishment 11nd execution of the full objectives of Congress.

Me. Yankee Atomic Power Co. v. lv/e. Pub. Urils. Comm 'n, 581 A.2d 799, 802-03 (Me. 1990) (citing Cent. Me. Power Co. 11. Tow11 of Lebanon, 571 A.2d 1189 (Me. 1990)). In relation to the NBA, the U.S. Supreme Court has held:

States are permitted to regulate the activities of national banks where doing so does not prevent or signifienntly interfere with the national bank's or the nationnl bank's regulator's exercise of its powers. But when state preseiptions signiticRnlly impair the exercise of authority, enumerated or incidental under the NBA, the State's regulations must give way.

Watters v. Waclwvia Bank, N.A., 550 U.S. I, 13 (2007) (citing Bamell Bank of Marion Cmy. N.A. v. Nelson, 517 U.S. 25, 32-34 (1996).

The NBA enables national banks to engage in mortgage lending, subject to OCC regulations, and tile Defendant relies upon a specific regtJlation that provides that the national banks may make real estate loans without regard to state law limitations concerning, among other things, the "processing, otigination, seJVicing, sale or purchase of, or investment or participation in, mortgages .... " 12 C.F.R. § 34.4(a)(10).

Defend<~nt makes two arguments nbout preemption. First, it clnims that Section 551 is expressly preempted by the NBA, and that it creates conflict preemption with federal law and regulations As to express preemption, Defendant argues that requiring national banks to comply with Section 551 's requirements regarding the filing (at the registry) and the mailing (to the lender) of the mortgage relense constitute "processing" and "servicing" of mortgftges. Plaintiffs argu~ that Section 551 is not preempted because

it only has force of law after the lending relationship between mortgagor ftnclmortgngce has ended. As Plaintiffs put it, "no mortgage exists anymore." (Pl.'s Opp. Mot. 4.)

Plaintiff.'> nlso direct the Court to two federal cases: Zink. v. First Niagra Bank, N.A., 18 F. Supp. 3d 363, 366 (W.D.N.Y. 2014), and Adler ex rei. v. Bank of Am., N.A., 2014 WL 3887224, at *4 (S.D.N.Y. JL1Iy 17, 2014) which fo\tnd no preemption of state laws which imposed penalties on mortgagees who failed to present a certificate of discharge for recording within a certain period of time. Defendant argues that Plaintiffs misread these cases, nnd that they ilre inapposite to this case. Defendant points to language in these decisions thnt indicates the decisions turned on the finding thnt the state laws were not preempted becilusc they fell within the "Savings Clause" provision for state laws "concerning the acquisition and transfer of real property." Zink, 18 F.Supp.Jd at 3 70; Adler, 2014 WL 3 887224, at *4.

The Court disagrees with the Defendnnt's reading of these cnses. The cases address what it means to "process" and "service" a mortgage under I2 C.F.R. § 34.4(a)(!O). While recognizing the limited legal authority on tllis issue, Zink squarely held that because executing a release does not occur during the lifetime of a loan, it cannot constitute processing or servicing a loan "because there is no longer a loan" to service or process. link, 18 F. Supp. Jd at 370 (citing, Munoz v. Fin. Fi'eedom Senior Funding C017J. 573 F. Supp.2d 1275, 1280 (C.D. Cal 2008). While Zink does address the Savings Clause in 12 C.F.R. § 34.4(b), it did so in context of the conflict preemption analysis. Both Zink and Adler stand for the proposition ~dvocilted here by Plaintiffs, namely that there is no express preemption because state regulation of when a moztgage discharge ll1l1St be ftled does not constitute "servicing" or "processing mortgages."

With respect to the conflict preemption argument made by Defendant, the ColJrt 11nds this argument unpersuasive. Defendnnt hils failed to ariiculate how requiring the Defendant to comply with Section 55! would prevent or significantly limit the Bank's exercise of its powers under the NBA, or has more than an "incidental effect" on Defendnnt's lending practices. See Pinchol v. Charter One Bank, F.S.B., 792 N.E. 2d 1105, 1116(2003).

The Court concludes that Section 551 is not preempted by the NBA either lmder express or conflict preemption.

B. Failure to PI end Suffici~nt Factunl Predicate

Tlte Defendaut makes the same argll!nent as that made by defendmlts in three other related matters: Jonathan A. Quebbeman v. Bank of America. BCD-CV-15-0 I; Alec

t Sahi11a and Emma L. Sabina "· Wells Fargo. BCD-CV -14-26; and Alec T. Sabina cmd Emma L. .Sabina v. JP Morgan Chase. BCD-CV-14-61. On April 6, 2015, the Court

denied motions to dismiss in BCD-CV-1 S-0 1 and BCD-CV-14-26, and denied on April 13, 2015, the motion to dismiss in BCD-CV- !4-61. For the reasons stated in those orders the Court wi!J likewise deny the motion to dismiss in this case. Plaintiffs here, as in the other cases, have alleged facts incorporated into the langllage of a statute such that reference to the facts does simply recite the statutory language. There is case law suggesting this is enough even under the federal pleading standard, which is genenllly understood to be stricter than Maine's pleading standard. White v. G.C. SerFs. LP, 2012 WL 4747156, at *2 (D. Nev. Oct. 2, 2012). However, in order to ensure thnt the defendants in these cases have fair notice as to how they allegedly violated Section 551, the Court will require Plaintiffs in this case as well to provide more specificity as,to any *5 facts that it has in their possession as to whether the Registty of Deeds retumed the original mortgage release to TD Bnnk, and if so when; and to provide more specificity as to illly facts that it has in its possession as to when TD Dnnk mailed the original mortgage release, or when (or if) Plnintiffs ever received it.

ill. CONCLUSION

THE ENTRY WILL BE: Defendant's Motion to Dismiss is DENIED. Plaintiffs have 14 days from the date of this Order to provide further specificity as described in the preceding pnragraph.

This Order may be noted on the docket by reference pursuant to Rule 79(a) of the Maine Rules of Civil Procedure.

DATE M. 1\>lichneln Murphy, Justi lY. BUSINESS AND CONSUN • COURT

f·nterect on th Cop; eDocket: ~ ~:t' /~ es sent via Mail --{.LL~ __ etectronicatt - y~

Arlene W. Nickerson and Stanley M. Nickerson, on behalf of themselves and all others similarly situated v. TD Bank, N.A.

BCD-CV-2014-64

Arlene W. Nickerson and Stanley M. Nickerson, on behalf of themselves and all others similarly situated Plaintiff

Counsel: Peter Van Hemel, Esq. Meredith Eilers, Esq. Michael Bosse, Esq. Daniel Mitchell, Esq. 100 Middle Street PO Box 9729 Portland, ME 04104-5029

TD Bank, N.A. Defendant

Counsel: Emmy Monahan, Esq. 88 Hammond Street, Suite 500 Bangor, ME 04401 and Lauren Thomas, Esq. 4 77 Congress Street, 5th Floor Portland, ME 04101