United States District Court, D. Rhode Island
EVERETT W. STAMATAKOS, Plaintiff,
WELLS FARGO BANK, NATIONAL ASSOCIATION; and U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET INVESTMENTS LOAN TRUST 2006-3, Defendants.
MEMORANDUM AND ORDER
William E. Smith Chief Judge.
the Court is Magistrate Judge Patricia A. Sullivan's
Report and Recommendation (“R&R”) (ECF No.
35) recommending that the Motion To Dismiss (ECF No. 21)
filed by Defendants Wells Fargo Bank, National Association
and U.S. Bank National Association, as Trustee for Structured
Asset Investments Loan Trust 2006-3 (collectively,
“Defendants”) be granted as to Counts III and IV
of Plaintiff's Complaint (ECF No. 1-4) but denied as to
Counts I and II. Defendants timely objected to the R&R
(ECF No. 42) (“Objection”). After careful review
of the R&R and the relevant papers,  the Court accepts
the R&R and adopts its recommendations and reasoning.
See 28 U.S.C. § 636(b)(1).
Defendants challenge Magistrate Judge Sullivan's Count I
recommendation and suggest that Plaintiff fails to plausibly
allege entitlement to a permanent loan modification.
(Defs.' Obj. to R. & R. 2-3, ECF No. 42.) Defendants
posit that, because the complaint “expressly
acknowledges” that making the three trial payments was
only “part” of the contract, and because
Plaintiff does not allege what those other
“parts” were, it must be that Plaintiff has not
satisfied his other contractual obligations. Defendants made
this same argument before Magistrate Judge Sullivan, who
appropriately rejected it. (See R. & R. 6
(“The argument turns the analysis proper at the
12(b)(6) phase on its head; in considering a motion under
Fed.R.Civ.P. 12(b)(6), the Court must draw all reasonable
inferences in favor of the claimant, not the
movant.”). Defendant's argument is no more
persuasive now than it was before. And the Court agrees that
it is not appropriate for a motion to dismiss. “[T]he
most that defendants' arguments have done is inject a
degree of ambiguity into the contract. They fall far short of
showing that the only reasonable interpretation of [it]
supports their position.” Young v. Wells Fargo
Bank, N.A., 717 F.3d 224, 235 (1st Cir. 2013). At this
motion-to-dismiss stage, the Court may not upend the
applicable standard and pile inference upon inference against
Plaintiff, particularly when that Plaintiff is pro se.
See Foley v. Wells Fargo Bank, N.A., 772 F.3d 63,
75-76 (1st Cir. 2014) (“And we construe pro se
complaints . . . liberally.”) (citing Erickson v.
Pardus, 551 U.S. 89, 94 (2007)). Instead, the Court must
resolve ambiguities in favor of Plaintiff. See Lass v.
Bank of America, N.A., 695 F.3d 129, 137 (1st Cir. 2012)
(reversing district court's rejection of
plaintiff-homeowner's proposed interpretation of
ambiguous mortgage and reinstating her breach-of-contract
suggestion that Plaintiff fails to state a claim for breach
of the implied covenant of good faith and fair dealing is
similarly unavailing. On this score, Defendants argue that
Magistrate Judge Sullivan “conflated the standards for
breach of contract, and for breach of the covenant of good
faith and fair dealing” by suggesting that she
recommended that because Plaintiff pleaded a
breach-of-contract claim, he necessarily pleaded a breach of
the implied covenant of good faith and dealing. (Defs.'
Obj. to R. & R. 5.) Defendants mischaracterize Magistrate
Judge Sullivan's analysis. And the case they suggest
Magistrate Judge Sullivan overlooked, Miller v. Wells
Fargo Bank, N.A., 160 A.3d 975 (R.I. 2017), is
inapposite. There, the Rhode Island Supreme Court's
holding that plaintiff's claim for breach of the implied
covenant of good faith and fair dealing did not pass muster
hinged on it adopting the trial justice's factual finding
that there was no “contractual obligation on behalf of
the lender to either modify the mortgage loan or exercise
discretion in evaluating a potential modification . . .
.” Miller, 160 A.3d at 980-81. Here, at this
early stage of the case, the Court cannot draw such an
inference in Defendants' favor. And, in any event, based
on Magistrate Judge Sullivan's reasoning, Defendants'
concern for conflation between the two standards is
unfounded. Rather than hold that Plaintiff necessarily
pleaded a plausible claim for breach of good faith and fair
dealing because Plaintiff pleaded a plausible
breach-of-contract claim, Magistrate Judge Sullivan focused
on Plaintiff's “described conduct, ” which
she concluded amounted to a viable arbitrary and unreasonable
claim in light of Defendants' plausible contractual
obligations. (See R. & R. 7.) Plaintiff's
Count I claim survives Defendants' motion to dismiss.
Defendant's attack on Magistrate Judge Sullivan's
Count II recommendation is no more compelling. (Defs.'
Obj. 6-8.) Defendants suggest Magistrate Judge Sullivan's
treatment of the promissory-estoppel claim was inappropriate
because “[g]iven Plaintiff's ongoing payment
obligations, the Complaint fails to plausibly allege that by
making the three trial period payments Plaintiff changed his
position or did anything that he would not have done in the
absence of the alleged promise” and “also fails
to allege Plaintiff suffered harm from making the trial
period payments.” (Id. at 7-8.) Once again,
Defendants' averment is premature at the
motion-to-dismiss stage and requires the Court to draw
inferences adverse to Plaintiff, which it is not willing to
do at this juncture. For the reasons outlined by Magistrate
Judge Sullivan, the Court is satisfied that Plaintiff alleges
a plausible claim for detrimental reliance sufficient to
clear Defendants' motion to dismiss.
the R&R (ECF No. 35) is ACCEPTED. Defendants' Motion
To Dismiss (ECF No. 21) is GRANTED as to Counts III and IV
and DENIED as to Counts I and II.
PATRICIA A. SULLIVAN, United States Magistrate Judge.
matter is before the Court on the motion to dismiss (ECF No.
21) filed by Defendants Wells Fargo, National Association,
(“Wells Fargo”) and U.S. Bank National
Association, as Trustee for Structured Asset Investments Loan
Trust 2006-3 (“U.S. Bank”), seeking the dismissal
of Plaintiff's Complaint (ECF No. 1-4) in its entirety.
Plaintiff, represented by counsel, filed his four-count
complaint in Rhode Island Superior Court to challenge the
foreclosure of his home, located at 322 Branch Avenue,
Providence, Rhode Island. Defendants removed the litigation
to this Court based on diversity jurisdiction pursuant to 28
U.S.C. § 1332. Shortly after removal, Plaintiff's
counsel moved to withdraw (ECF No. 4), which motion was
granted by this Court on March 20, 2017. With leave of the
Court, Plaintiff now proceeds pro se. Consequently,
the Court has afforded Plaintiff's subsequent filings the
measure of leniency that is appropriate under applicable law.
Erickson v. Pardus, 551 U.S. 89, 94 (2007).
bought the property at 322 Branch Avenue in January 2006,
executing a mortgage and note to First Horizon Home Loan
Corporation (“First Horizon”) for $210, 000. ECF
No. 1-4 ¶¶ 1, 8; ECF No. 21-2. Soon after, First
Horizon assigned the mortgage to Defendant U.S. Bank. ECF No.
21-3. At the time of the assignment, Defendant Wells Fargo,
operating as “America's Servicing Company” or
“ASC” (collectively “Wells Fargo”),
took over the servicing of the loan. With their opposition,
Defendants have submitted copies of the versions of the
mortgage and assignment filed in the land records; as
clarified during a phone conference with the Court held in
connection with this motion, Plaintiff does not challenge the
authenticity of these documents. However, Plaintiff does
challenge the validity of the assignment alleging that it was
not executed by an officer of the assignor with the necessary
authority. ECF No. 1-4 ¶¶ 36-37.
around August 21, 2009, according to Plaintiff, he and Wells
Fargo entered into a verbal contract, subsequently confirmed
in writing,  pursuant to which he claims that Wells
Fargo agreed to permanently modify the terms of the mortgage
if he complied with certain requirements during a trial
period. ECF No. 1-4 ¶ 12; see Young v. Wells Fargo,
N.A., 717 F.3d 224, 229 (1st Cir. 2013) (U.S. Treasury
Department guidelines direct loan servicers to offer
permanent loan modifications to borrowers who comply with
terms set forth during trial period). On his part, Plaintiff
promised to make three monthly payments to Wells Fargo.
Id. ¶ 12. Plaintiff alleges that he fulfilled
his end of the bargain, while Defendants “breached the
agreement with Plaintiff by failing and refusing to
permanently modify the Stamatakos mortgage.”
Id. ¶ 13. Instead of complying, Defendants
turned the matter over to Harmon Law Offices, P.C., which
proceeded to sell the house at a foreclosure sale, first to
an individual buyer in 2011 who failed to follow through with
the purchase, and then to U.S. Bank on April 19, 2012.
See id. ¶¶ 14-15. Plaintiff alleges that
the foreclosure deed is void because the person who executed
it lacked the proper power of attorney; he challenges the
viability of the related power of attorney based on its
failure specifically to identify the mortgage loan to be
foreclosed. Id. ¶ 34. Since the foreclosure
sale, Plaintiff has been fighting his eviction in the
Superior Court and now in this Court. See ECF Nos. 10,
16, 32; R.I. Superior Court No. PD-2017-1431.
Count I, Plaintiff alleges that he was, and remains, ready,
willing and able to perform under the modification agreement
and that Defendants' breach of that agreement resulted in
the foreclosure sale. He alleges that this breach also
constitutes a breach of the implied covenant of good faith
and fair dealing inherent in every contract. In his
alternative Count for promissory estoppel, Plaintiff alleges
that he detrimentally relied on Defendants' false
promises to permanently modify his loan, resulting in the
foreclosure of his home. In a third Count, Plaintiff alleges
that Defendants' breach was a violation of Rhode
Island's deceptive trade practices act, R.I. Gen. Laws
§ 6-13.1-1, et. seq. (“DTPA”). And
in a fourth Count, Plaintiff alleges that the foreclosure
deed is void and seeks a judgment to quiet title declaring
him to be the lawful owner of the property.
reasons that follow, I recommend that Defendants' motion
be granted in part, dismissing Plaintiff's Counts
alleging deceptive trade practices and seeking to quiet the
title, and denied in part, preserving the two Counts alleging
breach of contract and promissory estoppel for future