United States District Court, D. Rhode Island
J. MCCONNELL, JR. UNITED STATES DISTRICT JUDGE
the Court is Defendants' joint Motion to Dismiss
Plaintiff Troy Lebeau's Second Amended Complaint under
Federal Rule of Civil Procedure Rule 12(b)(6) for failure to
state a claim. ECF No. 31. After reviewing the submitted
materials and considering the established caselaw on mortgage
litigation in Rhode Island, the Court GRANTS the motion.
Lebeau bought the house in North Smithfield, Rhode Island in
July 2006. He granted a $300, 000.00 mortgage to New Century
Mortgage Corporation. ECF No. 31-2 at 6-26.He executed a note
in favor of New Century secured by the mortgage. Id.
at 28-31. New Century endorsed the note in blank.
Id. at 31. Wells Fargo Bank, N.A. AttorneyirrFact
foi1 New Century executed an assignment of mortgage,
assigning the mortgage to U.S. Bank National Association, as
Trustee for Asset-Backed Pass-Through Certificates, Series
2006-NC2. Id. at 33. Mr. Lebeau defaulted on the
mortgage loan by failing to make timely monthly payments.
Mr. Lebeau filed a Chapter 7 bankruptcy petition, electing to
surrender the property. The Bankruptcy Court issued a Chapter
7 discharge and closed the case shortly thereafter. Wells
Fargo as servicer for the trustee U.S. Bank sent a notice of
right to cure to Mr. Lebeau, advising that the loan was in
default. Mr. Lebeau did not cure the default and Wells Fargo
scheduled a foreclosure sale but, because of an incomplete
trust name listed in the assignment, Wells Fargo
cancelled that sale, and a corrective assignment was latter
executed, identifying the complete trust name and U.S. Bank
later, Mr. Lebeau filed a lawsuit in state court to challenge
the rescinded foreclosure. That court granted defendants1
motion for summary judgment, finding that U.S. Bank held Mr.
Lebeau's mortgage and note and could enforce its terms as
such. ECF No. 46-2 at 4-5. In its order, however, the court
mistakenly stated that Accredited Home Lenders, Inc. endorsed
the note in blank by even though AHL was never alleged to be
involved in Mr. Lebeau's loan. Id. at 4. In
fact, the papers attached to the state court record showed an
endorsement in blank by New Century, the original lender.
Lebeau then filed the present action. Defendants Wells Fargo
and U.S. Bank have moved to dismiss twice; both times, Mr.
Lebeau moved to amend the complaint and the Court granted the
motions. The Second Amended Complaint ("Complaint")
is now the operative Complaint (ECF No. 30) and Defendants
have again moved to dismiss it.
reviewing a motion to dismiss filed under Rule 12(b)(6) of
the Federal Rules of Civil Procedure, the court accepts as
true the well-pleaded factual allegations of the complaint
and draws all reasonable inferences in favor of the
plaintiff. See Cook v. Gates, 528 F.3d 42, 48 (1st
Cir. 2008); McCloskely v. Mueller, 446 F.3d 262, 266
(1st Cir. 2006). To withstand "a motion to dismiss, a
complaint must allege 'a plausible entitlement to
relief."' ACA Fin. Guar. Corp. v. Aclvest,
Inc., 512 F.3d 46, 58 (1st Cir. 2008) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544 (2007)); see
also Ashcroft v. Iqbal 556 U.S. 662, 678-87 (2009).
"[A] plaintiff. . . is . . . required to set forth
factual allegations, either direct or inferential, respecting
each material element necessary to sustain recovery under
some actionable legal theory." Gooley v. Mobile Oil
Corp., 851 F.2d 513, 515 (1st Cir. 1988).
the "tenet that a court must accept as true all of the
allegations contained in a complaint is inapplicable to legal
conclusions. Threadbare recitals of the elements of a cause
of action, supported by mere conclusory statements, do not
suffice." Iqbal, 556 U.S. at 678 (citing
Twombly 550 U.S. at 555). A complaint "requires
more than labels and conclusions, and a formulaic recitation
of the elements of a cause of action will not do."
Twombly, 550 U.S. at 555 (citing Papasan v.
Attain, 478 U.S. 265, 286 (1986)).
these mortgage foreclosure cases tend to be document heavy,
the Complaint incorporates many documents into the complaint
and both sides rely on documents outside the four corners of
the complaint. "Under First Circuit precedent, when
'a complaint's factual allegations are expressly
linked to and admittedly dependent upon a document (the
authenticity of which is not challenged),' then the court
can review it upon a motion to dismiss." Diva's
Inc. v. City of Bangor, 411 F.3d 30, 38 (1st Cir. 2005)
(alteration in original) (quoting Alternative Energy Inc.
v. St. Paul Fire & Marine Ins. Co., 267
F.3d 30, 34 (1st Cir. 2001)). So, the Court will consider
both incorporated and appended documents.
Count I-Violation of the Real Estate Settlement and
Procedures Act (RESPA)
Count I, Mr. LeBeau asserts that 12 C.F.R. § 1024,
specifically Regulation X, prohibits a servicer from
conducting a foreclosure sale during a loss mitigation
application review received at least 37 days before a
scheduled sale-he alleges this is dual tracking. In response,
Wells Fargo argues that this claim should be dismissed
because merely noticing a foreclosure sale does not violate
the regulation, a submitted loss mitigation application must
be complete, not just facially complete, and the noticed
foreclosure sale did not go forward.
case, Mr. Lebeau alleges that he received a May 12, 2017
foreclosure sale notice informing him of a July 6, 2017 sale.
He then submitted a facially complete loss mitigation
application on May 18, 2017. EOF No. 30 at ¶ 18. Wells
Fargo received it on May 22, 2017. Id. This is 57
clays before the purported sale date. Id. at ¶
32. According to Regulation X, Wells Fargo had to review this
package because it received it more than 37 days before the
sale. Id. at ¶ 33. He alleges that he never
heard from Wells Fargo that it needed any additional
documents but does not allege that he ever submitted anything
more to complete his application. Id. at ¶ 17,
The problem with this timeline is that Wells Fargo noticed
the foreclosure six days before Mr. Lebeau started the loss
mitigation process by submitting a facially complete loss
mitigation package. Wells Fargo cannot be accused of dual
tracking when it noticed the foreclosure sale before ever
receiving airy ...