Parks v. BAC Home Loan Servicing, LP

MEMORANDUM OPINION JOHN A. GIBNEY, JR., District Judge. This matter is before the Court on the motions to dismiss (Dk. Nos. 3 and 6) filed by the defendants, BAC Home Loan Servicing, LP (“BAC”) and Professional Foreclosure Corporation of Virginia (“PFC”). The plaintiff, Lisa Parks, seeks damages and an injunction against the foreclosure sale of her home on three bases: a violation of the Home Affordable Modification Program (“HAMP”), 1 breach of contract, and breach of implied duty of good faith and fair dealing. The defendants have moved to dismiss on the grounds that Parks has no private right to assert a claim under HAMP, and that no enforceable contract exists. The plaintiff has failed to respond to the motions to dismiss. 2 The Court will dispense with oral argument because the facts and legal contentions are adequately presented in the materials presently before the Court, and argument would not aid in the decisional process. For the reasons stated herein, the Court grants the motions to dismiss. *715 I. Legal Standard In considering a Rule 26(b)(6) motion to dismiss, a court must accept all allegations in the complaint as true and must draw all reasonable inferences in favor of the plaintiff. See Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir.1999). To survive a motion to dismiss, a complaint must contain sufficient factual matter which, accepted as true, “state[s] a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). The plaintiff must demonstrate more than “a sheer possibility that a defendant has acted unlawfully.” Id. It requires the plaintiff to articulate facts that, when accepted as true, “show” that the plaintiff has stated a claim entitling him to relief, that is, the “plausibility of ‘entitlement to relief.’ ” Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir.2009) (quoting Iqbal, 129 S.Ct. at 1949; Twombly, 550 U.S. at 557, 127 S.Ct. 1955). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 129 S.Ct. at 1949. II. Background In October, 2005, the plaintiff, Lisa Pentland Parks (“Parks”) used her property and home to secure a loan with BAC. (Complaint ¶¶ 1-2.) After losing her job in 2010, Parks contacted BAC to discuss potential options if she fell behind on her mortgage. (Compl. ¶¶ 5-7.) BAC mailed her a modification application package in accordance with HAMP, which the plaintiff completed and returned. (Compl. ¶¶ 9-10.) Thereafter, BAC informed Parks that her loan would be modified if she was eligible for HAMP. (Compl. ¶ 25.) Over the next five months, she delivered all required paperwork and fees. (Compl. ¶ 16.) In April, 2011, however, BAC informed Parks that her loan modification was denied because her income was too high. (Compl. ¶ 17.) Since July 22, 2011, the plaintiffs home has been in foreclosure and is in danger of being sold at auction. (Compl. ¶ 23.) Parks initiated the current action to prevent the foreclosure sale of her home and recover damages for fees associated with the foreclosure proceedings. PFC is BAC’s foreclosure agent. (See Compl. ¶¶ 47-8.) III. Discussion BAC argues that Parks cannot bring a claim under HAMP, or alternatively, that the loan modification application and subsequent correspondence do not constitute a contract. PFC contends that the plaintiff has failed to state a claim for relief because PFC has never been a party to any agreement with Parks. The Court agrees that Parks has not stated a claim upon which relief can be granted. Plaintiffs have typically taken three routes to assert entitlement to a permanent HAMP modification: claiming a private right to sue under HAMP, claiming breach of contract as a third-party beneficiary to a contract between a lender and Fannie Mae (the entity which administers HAMP), and claiming breach of contract based on a loan modification application. See Bourdelais v. J.P. Morgan Chase, No. 3:10-cv-670, 2011 WL 1306311 at *3, 2011 U.S. Dist. LEXIS 35507 at *9 (E.D.Va. Apr. 1, 2011). Courts have uniformly rejected these claims. As to the first theory, this Court has held that “[p]laintiffs do not have a private right of action to enforce applicable HAMP regulations.” Pennington v. PNC, No. 2:10-cv-361, 2010 U.S. Dist. LEXIS 143157 at *11 (E.D.Va. August 11, 2010). This Court has also held that borrowers are merely incidental, not third-party, beneficiaries to HAMP contracts. Id. at *14. Further *716 more, plaintiffs may only pursue a breach of contract claim based on the loan modification application if that cause of action is independent from HAMP. Bourdelais, 2011 WL 1306811 at *3-4, 2011 U.S. Dist. LEXIS 35507 at *12 (emphasis added). In Sherman v. Litton Loan Servicing, this Court held that an application for a HAMP modification is not a contract, unless the borrower can show that the application is more than a “mere offer to consider the application.” See Sherman v. Litton Loan Servicing, 796 F.Supp.2d 753, 763 (E.D.Va. 2011). In this case, the plaintiffs legal theories either track the paradigmatic HAMP claims or dress them up in slightly different terms. Either way, the claims fail. First, the plaintiff relies on some sort of federal tort arising from HAMP. Specifically, the plaintiff argues that BAC’s failure to comply with HAMP requirements constitutes “negligence per se,” entitling her to relief. (Comply 43.) This claim is, in a different shade of clothing, nothing more than the rebuffed theory that HAMP creates a cause of action. Moreover, whatever losses the plaintiff has sustained arise as a consequence of her loan contract with BAC. “[LJosses suffered as a result of the breach of a duty assumed only by agreement, rather than a duty imposed by law, remain the sole province of the law of contracts.” Kaltman v. All Am. Pest Control, Inc., 281 Va. 483, 493, 706 S.E.2d 864 (2011). 3 In short, Parks’ negligence claim against BAC lacks any degree of plausibility. Parks also asserts a breach of contract claim based on the loan modification application she sent to BAC. The application is clearly not independent from HAMP, as the Complaint states the defendant only agreed to modify the loan if “Plaintiff was found eligible for the HAMP program.” (Compl. ¶ 26.); see Bourdelais, 2011 WL 1306311 at *4, 2011 U.S. Dist. LEXIS 35507 at *13. Parks cannot pursue a HAMP claim because she does not have a private right of action and is not a third-party beneficiary to BAC’s HAMP contract with Fannie Mae. See Pennington, 2010 U.S. Dist. LEXIS 143157 at *11. As such, the plaintiffs breach of contract claim fails as a matter of law. Assuming arguendo, that her breach of contract claim was independent from HAMP, it nevertheless fails because the conditional application was not a contract. See Sherman, 796 F.Supp.2d at 763. As in Sherman, BAC’s offer was merely to consider the plaintiffs application for a loan modification, not a definite offer to modify the plaintiffs mortgage. Id. at 762. Since no contract was created, breach was impossible as a matter of law. The Court, therefore, must dismiss the plaintiffs breach of contract claim against BAC. Id. at 763. The Court will also dismiss Park’s implied duty of good faith and fair dealing claim as it is merely another attempt to recast the HAMP claim. See Bourdelais, 2011 WL 1306311 at *4, 2011 U.S. Dist. LEXIS 35507 at *13. As to PFC, the plaintiffs allegations are simply legal conclusions amounting to a claim that PFC violated the alleged agreement between BAC and Parks. According to the Complaint, PFC “followed] through with foreclosure proceedings without first receiving certification from the note-holder.” (Compl. ¶¶ 47-48.) No additional facts are given in support. At no point does the Complaint state that PFC was part of the agreement between BAC and the plaintiff. Essentially, PFC’s motion to *717 dismiss must be granted because the Complaint fails to allege “sufficient factual matter, accepted as true, to ‘state a claim plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1957, 167 L.Ed.2d 929 (2007)). As such, the Court will dismiss the plaintiffs breach of contract claim against PFC. IV. Conclusion For the reasons stated herein, the Court hereby GRANTS the defendants’ motions to dismiss. The case is dismissed. An appropriate Order shall issue. Let the Clerk send a copy of this Memorandum Opinion to all counsel of record. ORDER THIS MATTER is before the Court on the motions to dismiss (Dk. Nos. 3 and 6) filed by the defendants, BAC Home Loan Servicing, LP (“BAC”) and Professional Foreclosure Corporation of Virginia (“PFC”). For the reasons stated in the accompanying Memorandum Opinion, the Court hereby GRANTS the motions. Furthermore, BAC removed this case to this Court on August 18, 2011. On August 23, 2011, PFC moved to dismiss the complaint. on August 25, 2011, BAC moved to dismiss the complaint. The motions to dismiss state valid reasons to dismiss the complaint. The plaintiff failed to respond to either motion. Plaintiffs counsel has failed to respond to motions to dismiss in a number of other cases. Accordingly, within ten (10) days from the entry of this Order, plaintiffs counsel is DIRECTED to SHOW CAUSE, in writing, for this failure to respond to the motions to dismiss. It is so ORDERED. Footnotes [1] HAMP is a program created by the U.S. Department of the Treasury in 2009 to address the growing number of foreclosures in the United States. HAMP aims to prevent avoidable home foreclosures by encouraging loan servicers to reduce the required monthly mortgage payments for struggling homeowners. For a more detailed description and history of the program, see Rathore v. Bank of America, N.A., No. 3:11-cv-136, 2011 WL 2077538, 2011 U.S. Dist. LEXIS 55619 (E.D.Va. May 24, 2011). [2] This failure to respond is one reflection of a disturbing trend. Plaintiff’s counsel in this case has filed a number of similar suits in this Court. Typically, the defendant(s) have moved to dismiss the cases, and in at least 16, plaintiff’s counsel has simply failed to respond to the motion(s) to dismiss. See Winn v. Chase Mortgage Services, No. 2:11-cv-99, 2010 U.S. Dist. LEXIS 143041 (E.D.Va. Oct. 29, 2010); Horan v. J.P. Morgan Chase Bank, N.A., No. 2:10-cv-551 (E.D.Va. filed Nov. 5, 2010); Summers v. Ocwen Loan Servicing, L.L.C., No. 2:10-cv-565 (E.D.Va. filed Nov. 18, 2010); Branch v. Ocwen Loan Servicing, L.L.C., No. 2:10-cv-597 (E.D.Va. filed Dec. 6, 2010); Lipscomb v. PHH Mortgage Corp., No. 3:11-cv-206 (E.D.Va. filed Apr. 1, 2011); Brown v. Wells Fargo Bank, N.A., No. 2:11-cv-309 (E.D.Va. filed June 1, 2011); Haywood v. Flagstar Bank, F.S.B., No. 3:11-cv-400 (E.D. Va. filed June 22, 2011); Crouch v. Bank of America, N.A., No. 2:11-cv-433 (E.D.Va. filed Aug. 4, 2011); Kenny v. Bank of America, N.A., No. 4:11-cv-120 (E.D.Va. filed Aug. 4, 2011); Ellis v. Wells Fargo Bank, N.A., No. 2:11-cv-151, 2011 WL 3439218, 2011 U.S. Dist. LEXIS 86587 (E.D.Va. Aug. 5, 2011); Mosley v. Wells Fargo Bank, N.A., 802 F.Supp.2d 695 (E.D.Va.2011); Wilson v. Wells Fargo Bank, N.A., No. 2:11-cv-241, 2011 WL 3439234, 2011 U.S. Dist. LEXIS 86606 (E.D.Va. Aug. 5, 2011); Jones v. Bank of America, N.A., No. 2:11-cv-443 (E.D.Va. filed Aug. 10, 2011); Hinton v. Wells Fargo Bank, N.A., No. 2:11-cv-240, 2011 U.S. Dist. LEXIS 92560 (E.D.Va. Aug. 17, 2011); McInnis v. BAC Home Loan Servicing, L.P., No. 2:11-cv-468 (E.D.Va. filed Aug. 18, 2011); Correll v. Bank of America, N.A., No. 2:11-cv-477 (E.D.Va. filed Aug. 25, 2011). By Order entered today, the Court has directed plaintiff's counsel to file an explanation for its failure to respond to the motions to dismiss. [3] To the extent that the plaintiff seeks to assert some sort of negligence claim arising from state law, it fails for the same reason.