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Viera v. Bank of New York Mellon

United States District Court, D. Rhode Island

October 12, 2018

JAMES VIERA, Plaintiff,
v.
BANK OF NEW YORK MELLON, as Trustee for the Certificate Holders of CWALT, Inc., Alternative Loan Trust 2005-86CB Mortgage Pass-Through Certificates, Series 2005-86B; and BAYVIEW LOAN SERVICING, LLC, Defendants.

          MEMORANDUM AND ORDER

          WILLIAM E. SMITH, CHIEF JUDGE

         Before the Court is Defendants' Motion to Dismiss and Dissolve that entered on November 13, 2017 (“Defendants' Motion”) (ECF No. 8), pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. After carefully reviewing the written submissions of the parties, the Court grants Defendants' Motion in toto.

         I. Background

         This dispute arises out of foreclosure proceedings that Defendants commenced against Plaintiff in the fall of 2017. Plaintiff executed a mortgage agreement for his home in December of 2005; Defendant Bank of New York Mellon (“BNYM”) is the current mortgagee and assignee of the Note associated with that mortgage; Defendant Bayview Loan Servicing, LLC (“Bayview”) is the current loan servicer. In 2010, Plaintiff filed for bankruptcy and stopped making regular payments on the mortgage loan. (Compl. Ex. B at 1, ECF No. 1-4.)

         Seven years later, on August 3, 2017, Defendant Bayview sent Plaintiff a letter entitled “Notice of Default and Intent to Accelerate” indicating that his mortgage loan was in default and that the loan would be accelerated on September 7, 2017 if he failed to pay the total amount due of $148, 858.78. (See id.) Plaintiff does not claim to have cured the default or to have made any effort to cure the default after receiving that notice.

         After Plaintiff failed to cure his default by September 7, 2017, Bayview invoked its statutory power of sale and scheduled a foreclosure sale of the property to take place on November 13. (See Mot. for TRO ¶ 6, ECF No. 2.) On November 12, Plaintiff filed a Complaint and an Emergency Motion for a Temporary Restraining Order to enjoin the scheduled foreclosure sale. (Compl. ECF No. 1; Mot. for TRO, ECF No. 2.) That motion was granted by text order following a telephonic hearing on November 13, at which all parties were represented.

         On April 24, 2018, Defendants moved to dissolve the TRO and to dismiss Plaintiff's Complaint pursuant to Rules 4(m), 12(b)(1), and 12(b)(6) of the Federal Rules of Civil Procedure.

         II. Discussion

         A. Motion to Dismiss Plaintiff's Complaint The Complaint states five counts: (1) breach of contract; (2) violation of the covenant of good faith and fair dealing; (3) injunctive relief; (4) violation of the Rhode Island Fair Debt Collection Practices Act, R.I. Gen. Laws § 19-14.9-1 et seq., (“RIFDCPA”); and (5) violation of the Truth in Lending Act, 15 U.S.C. § 1601 et seq. (“TILA”).[1]

         In essence, Plaintiff claims that Defendants did not have authority to invoke their statutory power of sale because they never sent him a notice of default or a notice of acceleration, both of which Plaintiff contends were required by paragraph 22 of the mortgage agreement. Plaintiff alternatively contends that the notice of default he received on August 3, 2017 was substantively deficient. On these bases, Plaintiff claims that Defendants breached the terms of the mortgage agreement as well as the covenant of good faith and fair dealing, and contends that this breach of contract entitles him to injunctive relief permanently enjoining a foreclosure sale of his home. (Compl. ¶¶ 48, 55, 64, ECF No. 1.)

         Plaintiff also alleges that Bayview's attempt to foreclose on the property violated RIFDCPA because Bayview “falsely stated the amount claimed to be due in past due interest and charges, in every statement” sent to Plaintiff. (Id. at ¶ 71(c).) Lastly, Plaintiff claims that both Defendants violated TILA when they failed to send Plaintiff monthly mortgage statements and charged his mortgage loan account for costs and fees associated with their foreclosure attempts. (Id. at ¶ 93, 95.)

         i. Dismissal for Failure to Effect Service in Accordance with Rule 4(m)

         As a threshold matter, Plaintiff failed to properly serve Defendant Bank of New York under Rule 4 of the Federal Rules of Civil Procedure and, as such, the Court cannot exercise personal jurisdiction over that Defendant. Accordingly, the Court dismisses without prejudice all of Plaintiff's claims as they pertain to Bank of New York. See Fed.R.Civ.P. 4(m). Plaintiff's claims on the merits brought against both Defendants, however, survive only as to Bayview.[2]

         ii. Count I - Breach of Contract

         The crux of Plaintiff's breach-of-contract claim is that paragraph 22 of the mortgage agreement required Defendants to send Plaintiff a default notice as well as a notice of acceleration prior to commencing foreclosure proceedings. Plaintiff alleges that Defendants never sent him either notice and, therefore, did not satisfy the conditions necessary to invoke their statutory power of sale. (Compl. ¶¶ 7, 12, ECF No. 1.) Plaintiff alternatively contends that the notice he received on August 3, 2017 did not constitute a default notice as required under the mortgage agreement because it “did not state a specific amount due” to cure default. (Id. at ¶ 15.) Plaintiff's interpretation of the contract is flawed.

         First, paragraph 22 did not require Defendants to send Plaintiff a notice of acceleration in addition to the notice of default that he received on August 3, 2017. paragraph 22 provides that “Lender shall give notice to Borrower prior to acceleration” and identifies the specific list of information that the notice must include. (Id. at 11.) It then states:

If the default is not cured on or before the date specified in the notice, Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the STATUTORY POWER ...

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