Paul and Barbara Miller v. Bank of America Home Loan Servicing, L.P.

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0169-13T2
PAUL and BARBARA MILLER,
APPROVED FOR PUBLICATION
Plaintiffs-Appellants,
March 5, 2015
v. APPELLATE DIVISION
BANK OF AMERICA HOME LOAN
SERVICING, L.P.,1
Defendant-Respondent.
_______________________________
Argued December 1, 2014 - Decided March 5, 2015
Before Judges Lihotz, Espinosa and St. John.
On appeal from the Superior Court of New
Jersey, Law Division, Union County, Docket
No. L-1930-11.
Joseph A. Chang argued the cause for
appellant (Joseph A. Chang & Associates,
LLC, attorneys; Mr. Chang, of counsel and on
the briefs; Jeffrey Zajac, on the briefs).
Aaron M. Bender argued the cause for
respondent (Reed Smith LLP, attorneys; Mr.
Bender, of counsel and on the brief).
The opinion of the court was delivered by
LIHOTZ, P.J.A.D.
1
Bank of America, N.A. is a successor by merger of named
defendant Bank of America Home Loan Servicing, L.P.
When defendant Bank of America Home Loan Servicing, L.P.
declined to modify the loan obligation of plaintiffs Paul and
Barbara Miller under the federal Home Affordable Modification
Program (HAMP) and referred the account for commencement of
foreclosure, plaintiffs filed this action, alleging breach of
contract, violation of the New Jersey Consumer Fraud Act (CFA),
N.J.S.A. 56:8-1 to -195, promissory estoppel, and breach of the
covenant of good faith and fair dealing. Following discovery,
defendant moved for summary judgment. Upon review, the Law
Division judge concluded there was no private cause of action
under HAMP and dismissed plaintiffs' complaint with prejudice.
Plaintiffs' subsequent motion for reconsideration was denied.
On appeal, plaintiffs challenge the summary judgment
dismissal and denial of reconsideration as erroneous, arguing
HAMP does not preclude pursuit of valid state law claims arising
from the parties' agreement. Plaintiffs also assert the record
presented disputed facts requiring jury review. They ask us to
vacate summary judgment and reinstate their complaint.
Subsequent to entry of the summary judgment order, this
court considered a similar matter. See Arias v. Elite Mortg.
Grp., Inc., ___ N.J. Super. ___ (2015). Following our review of
the legal issue presented, we, like the panel in Arias, conclude
HAMP's preclusion of private causes of action would not prevent
2 A-0169-13T2
a borrower from pursuing state law claims arising from the
breach of an underlying temporary contractual arrangement
pending the lender's review under the HAMP guidelines. Id. at
9. Analyzing the record, we affirm the order granting summary
judgment because no material factual dispute was presented and
the evidence of record failed to support plaintiffs' alleged
claims.
I.
We recite the facts taken from the summary judgment record,
as viewed in the light most favorable to plaintiffs, the non-
moving parties. Davis v. Brickman Landscaping, Ltd., 219 N.J.
395, 405-06 (2014).
On September 1, 2006, plaintiffs refinanced their
residential mortgage debt, obtaining a $540,000 adjustable rate
loan from Old Merchants Mortgage, Inc., d/b/a OMMB. When the
loan payment increased, plaintiffs stopped making payments.
In 2009, the loan servicer, Countrywide Home Loan
Servicing, L.P. (Countrywide), informed plaintiffs they could
apply for consideration of a loan modification agreement under
HAMP, a program created by the Emergency Economic Stabilization
Act, 12 U.S.C.A. §§ 5201-5261 (2008). The federal statute
created the Troubled Asset Relief Program (TARP), which
authorized the Secretary of Treasury to "implement a plan that
3 A-0169-13T2
seeks to maximize assistance for homeowners and . . . encourage
the servicers of the underlying mortgages . . . to take
advantage of . . . available programs to minimize foreclosures."
12 U.S.C.A. § 5219(a)(1). "Pursuant to this authority, in
February 2009[,] the Secretary set aside up to $50 billion of
TARP funds to induce lenders to refinance mortgages with more
favorable interest rates and thereby allow homeowners to avoid
foreclosure." Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547,
556 (7th Cir. 2012).2 The monies were earmarked for HAMP, which
was designed to aid qualified homeowners facing foreclosure.
Arias, supra, ___ N.J. Super. at ___ (slip op. at 3-4) (citing
Wigod, supra, 673 F.3d at 556-57).
Under HAMP, mortgage loan servicers enter into an agreement
with the Secretary of Treasury to perform loan modification and
foreclosure prevention services in exchange for financial
incentives. Wigod, supra, 673 F.3d at 556. See also Arias,
supra, ___ N.J. Super. at ___ n.3 (slip op. at 4 n.3).
Borrowers facing mortgage loan default apply for consideration
of a loan modification to reduce their monthly mortgage payment
and retain possession of their realty. Young v. Wells Fargo
Bank, N.A., 717 F.3d 224, 229 (1st Cir. 2013); Wigod, supra, 673
2
See also Home Affordable Modification Program: Overview,
https://www.hmpadmin.com/portal/programs/hamp.jsp (last visited
February 9, 2015).
4 A-0169-13T2
F.3d at 556. The loan servicer evaluates the borrower's
application, as defined by guidelines and procedures issued by
the Department of Treasury. See id. at 556-57. Pending review
of eligibility, a Trial Period Plan (TPP) is struck between the
borrower and lender. Id. at 557. "If the borrower complies
with the TPP's terms, including making required monthly
payments, providing the necessary supporting documentation, and
maintaining eligibility, the guidelines state that the servicer
should offer the borrower a permanent loan modification."
Young, supra, 717 F.3d at 229.
In April 2009, Countrywide sent plaintiffs a TPP, drawn
under HAMP. The document's title included the phrase: "Step One
of a Two-Step Documentation Process." Further, the document
explained: "If I am in compliance with this [TPP] and my
representations in Section 1 continue to be true in all material
respects, then the Lender will provide me with a Home Affordable
Modification Agreement" to amend and supplement the mortgage
securing the underlying note.
The three-page, plainly drawn TPP, required plaintiffs to
verify their income, submit an affidavit explaining the reasons
underlying their mortgage loan default, and file other requested
documentation for consideration of their eligibility for a loan
modification agreement. Pending Countywide's review, plaintiffs
5 A-0169-13T2
were to remit three payments of $3,508.17, due on May 1, June 1,
and July 1, 2009. The TPP explained "[t]he Trial Period Payment
is an estimate of the payments that will be required under the
modified loan terms, which will be finalized in accordance" with
the subsequent modification agreement. Plaintiffs acknowledged
"TIME IS OF THE ESSENCE under this Plan" and, further,
represented:
I understand that the [TPP] is not a
modification of the Loan Documents and that
the Loan Documents will not be modified
unless and until . . . I meet all of the
conditions required for modification . . . .
I further understand and agree that the
Lender will not be obligated or bound to
make any modification of the Loan Documents
if I fail to meet any one of the
requirements under this [TPP].
If the trial period payments were not remitted as required
by the TPP, or if the financial representations made were no
longer accurate, plaintiffs were advised "the Loan Documents
will not be modified and this [TPP] will terminate." On the
other hand, if the TPP terms were fulfilled, Countrywide would
calculate "the final amounts of unpaid interest and any other
delinquent amounts . . . to be added to [the] loan balance" and
determine a "new payment amount" under the modified agreement.
The TPP would end and the modification agreement would "govern
the terms between the Lender and [plaintiffs] for the remaining
term of the loan." During the trial period, Countrywide agreed
6 A-0169-13T2
to suspend foreclosure proceedings, without prejudice to or
waiver of its rights.
After executing the TPP, plaintiffs maintain they timely
made the first two payments to Countrywide, then sent the third
payment to defendant, in accordance with written instructions
received after defendant acquired Countrywide.3 Defendant's
records show plaintiffs' three TPP payments were received on May
14, June 18, and August 18, 2009.
In September, plaintiffs contacted defendant to determine
the status of the loan modification and were advised to continue
making payments while underwriters were "working on it."
Plaintiffs remitted additional payments, totaling $42,096.4
Plaintiffs continued to seek information regarding the status of
a loan modification agreement. Ultimately, defendant advised
them they did not qualify for modification "because [they] did
not make all of the required [TPP] payments by the end of the
trial period." More specifically, the payment due July 1 was
not received in July, but posted on August 18, 2009. Defendant
3
The correspondence referred to by plaintiffs was not provided
in the record on appeal.
4
Defendant recorded payments received from plaintiffs of
$3508 (or at times $3508.17) paid from May 2009 to October 2011.
In some months during this period, plaintiffs did not remit a
payment.
7 A-0169-13T2
filed a notice of intent to foreclosure and plaintiffs filed
this complaint.
Following discovery, defendant moved for summary judgment,
which plaintiffs opposed.5 In a letter opinion, the Law Division
judge examined "whether there is a private cause of action under
HAMP permitting plaintiff[s] to allege breach of contract,
violation of the CFA, promissory estoppel, and violation of the
covenant of good faith and fair dealing." Answering the
question in the negative, the judge dismissed the claims finding
no evidence showing how plaintiffs' assertions were
"sufficiently independent of HAMP as to be cognizable." This
appeal ensued.
II.
Appellate review of a trial court's summary judgment
determination is well-settled.
In our de novo review of a trial court's
grant or denial of a request for summary
judgment, we employ the same standards used
by the motion judge under Rule 4:46-2(c).
Brickman Landscaping, supra, [219] N.J. [at
406]. First, we determine whether the
moving party has demonstrated there were no
genuine disputes as to material facts, and
then we decide whether the motion judge's
application of the law was correct. Atl.
Mut. Ins. Co. v. Hillside Bottling Co., 387
5
Defendant additionally filed a motion to strike plaintiffs'
expert, which was rendered moot by the grant of summary
judgment.
8 A-0169-13T2
N.J. Super. 224, 230-31 (App. Div.), certif.
denied, 189 N.J. 104 (2006). In so doing,
we view the evidence in the light most
favorable to the non-moving party. Brill v.
Guardian Life Ins. Co. of Am., 142 N.J. 520,
523 (1995). Factual disputes that are
merely "'immaterial or of an insubstantial
nature'" do not preclude the entry of
summary judgment. Ibid. (quoting Judson v.
Peoples Bank & Trust Co., 17 N.J. 67, 75
(1954)). Also, we accord no deference to
the motion judge's conclusions on issues of
law. Estate of Hanges v. Metro. Prop. &
Cas. Ins. Co., 202 N.J. 369, 382-83 (2010).
[Manhattan Trailer Park Homeowners Ass'n v.
Manhattan Trailer Court & Trailer Sales,
Inc., 438 N.J. Super. 185, 193 (App. Div.
2014).]
Plaintiffs argue the judge erroneously concluded their
action was filed under HAMP, when in fact it presented state law
challenges based on defendant's conduct and breach of the TPP.
Plaintiffs do not dispute the legal principle that borrowers
have no private cause of action under HAMP. See Wigod, supra,
673 F.3d at 559 n.4; Nelson v. Bank of Am., N.A., 446 Fed. Appx.
158, 159 (11th Cir. 2011) (citing and agreeing with various
district courts "that nothing express or implied in HAMP gives
borrowers a private right of action"); Speleos v. BAC Home Loans
Servicing, L.P., 755 F. Supp. 2d 304, 308 (D. Mass. 2010)
("Neither the HAMP Guidelines nor the Servicer Agreement states
any intent to give borrowers a right to enforce a servicer's
obligations under the HAMP Guidelines."); In re O'Biso, 462 B.R.
9 A-0169-13T2
147, 150 (Bankr. D.N.J. 2011) ("[T]here can be no private cause
of action (i.e., a breach of contract claim) under HAMP.");
Arias, supra, ___ N.J. Super. at ___ (slip op. at 4)
(recognizing no private cause of action under HAMP). Rather,
plaintiffs maintain they have a right to assert state
contractual and other causes of action regarding the failure to
comply with terms of the TPP.
Prior unreported opinions by the United States District
Court for the District of New Jersey have discussed HAMP's bar
of a private cause of action as precluding suits alleging a
state contract law theory of liability.6
More recent reported opinions from federal courts of
appeals have held there is no preemption from filing common law
claims related to a contractual agreement arising under a HAMP
transaction. In Wigod, the Seventh Circuit concluded "HAMP and
its enabling statute do not contain a federal right of action,
but neither do they preempt otherwise viable state-law claims."
Wigod, supra, 673 F.3d at 555, 576. Also, in Young, the First
6
See, e.g., Stolba v. Wells Fargo & Co., No. 10-cv-
6014(WJM)(MF), 2011 U.S. Dist. LEXIS 87355, at *8 (D.N.J. Aug.
8, 2011) (stating "[s]everal courts have already flatly rejected
[a] state contract law theory of liability" for purported
breaches under a TPP). In Stolba, the court rejected the
plaintiff's complaint because "the plain language of the
relevant TPP documents makes clear that satisfying the TPP
conditions for permanent modification does not guarantee that
[the] plaintiff would receive such modification." Id. at *8-9.
10 A-0169-13T2
Circuit noted "'[t]he standard-form TPP represents to borrowers
that they will obtain a permanent modification at the end of the
trial period if they comply with the terms of the agreement.'"
Young, supra, 717 F.3d at 229 (quoting Markle v. HSBC Mortg.
Corp. (USA), 844 F. Supp. 2d 172, 177 (D. Mass. 2011)). The
court of appeals accepted the premise that a reasonable person
would read the TPP as an offer to provide a permanent
modification if all conditions were met. Young, supra, 717 F.3d
at 234 (citing Wigod, supra, 673 F.3d 562).
Recently, this court undertook review of these issues,
addressing the summary judgment dismissal of a complaint filed
by the aggrieved plaintiffs determined not qualified for a
modification agreement under HAMP following participation in a
TPP. Arias, supra, ___ N.J. Super. at ___ (slip op. at 2-3).
The panel adopted the view a TPP was
"a unilateral offer," pursuant to which the
bank promised to give plaintiffs a loan
modification, if and only if plaintiffs
complied fully and timely with their
obligations under the TPP, including making
all payments timely and providing
documentation establishing that the
financial representations they made to the
bank in applying for the TPP were accurate
when made and continued to be accurate.
[Id. at ___ (slip op. at 9-10) (quoting
Wigod, supra, 673 F.3d at 562). See also
Young, supra, 717 F.3d at 234.]
11 A-0169-13T2
Nevertheless, the panel found the plaintiffs had not fulfilled
their obligations under the TPP, requiring defendant's
entitlement to judgment be affirmed. Arias, supra, ___ N.J.
Super. at ___ (slip op. at 10-12).
We agree with our Appellate Division colleagues and adopt
the methodology outlined in Arias. We accept the holding and
conclude HAMP's preclusion of a private right of action does not
preempt pursuit of valid state law claims arising between the
parties to a TPP. Although a borrower may not sue when a lender
denies a loan modification because the borrower failed to meet
HAMP's guidelines, which include the lender's evaluation of the
borrower's financial stability, id. at ___ (slip op. at 9)
(citing Wigod, supra, 673 F.3d at 562; Young, supra, 717 F.3d at
234), we hold borrowers should not be denied the opportunity to
assert claims alleging a lender failed to comply with its stated
obligations under the TPP. Consequently, when the issuance of a
loan modification agreement is explicitly made contingent upon
the evaluation and satisfaction of all proscribed conditions
precedent within a TPP, including the evaluation and timely
satisfaction of all financial disclosures and obligations, the
declination of a lender to present a loan modification agreement
may be actionable. See id. at ___ (slip op. at 4). In this
12 A-0169-13T2
regard, the specific terms of the TPP govern the parties'
agreement.7
Having determined plaintiffs have the right to pursue valid
state law claims, we next examine the record to review
plaintiffs' contentions in this matter, arguing the evidence
presented material factual disputes regarding performance under
the TPP, obviating the entry of summary judgment. Specifically,
plaintiffs challenge the reliance on and reliability of
defendant's records listing the dates and amounts of all
payments received on the loan, including TPP payments received
on May 14, June 18 and August 18, 2009. Plaintiffs insist their
oral statements rejecting the accuracy of defendant's documents
and evincing all payments were remitted on or before the first
day of the requisite month, require a jury determination of
their TPP performance. We disagree.
Although referencing the existence of various documents
supporting their assertions, plaintiffs produced none of them,
instead choosing to merely dispute the accuracy of defendant's
7
Our holding does not suggest the temporary payment under
any TPP will necessarily become the adjusted rate in a
modification agreement. The TPP here explicitly noted
compliance does not mean the loan modification terms will be the
same as those in the TPP. Accordingly, when the lender
determines the actual loan modification amount, that amount may,
depending on the specific facts and circumstances, differ from
the sums calculated as payments temporary payments under the
TPP.
13 A-0169-13T2
records and maintaining payments were made on time. A close
examination of the summary judgment record, however, reflects
plaintiffs have not presented proof of timely payment.
For example, in his deposition, Paul Miller insisted the
TPP payments were to be made in June, July and August 2009, and
the specific date for payment was the eighteenth of the month.
He testified to sending all checks via certified mail and
suggested he signed a loan modification agreement. He did not,
however, retain a copy of the loan modification agreement or his
cancelled checks and never presented any of the certified mail
receipts. Barbara Miller's deposition confirmed payments were
sent by certified mail, but on the fifth of the month. She also
produced neither mail receipts nor cancelled checks.
Plaintiffs' self-serving assertions, unsupported by
documentary proof in their dominion and control, "[are]
insufficient to create a genuine issue of material fact."
Heyert v. Taddese, 431 N.J. Super. 388, 414 (App. Div. 2013).
See also Globe Motor Co. v. Igdalev, 436 N.J. Super. 594, 603
(App. Div. 2014). "The very object of the summary judgment
procedure . . . is to separate real issues from issues about
which there is no serious dispute." Shelcusky v. Garjulio, 172
N.J. 185, 200-01 (2002). In light of the written payment record
produced by defendant, plaintiffs' bald assertions of inaccuracy
14 A-0169-13T2
are insufficient to defeat summary judgment. Their claims of
timeliness and compliance with the TPP, absent production of
written verification, assert a factual dispute which is merely
"illusory." Globe Motor, supra, 436 N.J. Super. at 603.
Because many allegations in plaintiffs' complaint are
bottomed on their asserted compliance with the TPP, the lack of
evidential support does not overcome defendant's proofs to the
contrary. Accordingly, plaintiffs have not stated a plausible
claim for breach of contract, breach of the covenant of good
faith and fair dealing, or promissory estoppel. Summary
judgment was properly granted on these issues.
Lastly, plaintiffs assert a violation of the CFA.
Plaintiffs maintain defendant "negligently and/or fraudulently
handled [their] loan modification application by accepting
[thirteen] months of payments under the [TPP]" and then denied
the request to modify the loan. We conclude these claims are
unfounded.
Under the CFA, a plaintiff who establishes: "(1) an
unlawful practice, (2) an 'ascertainable loss,' and (3) 'a
causal relationship between the unlawful conduct and the
ascertainable loss,' is entitled to legal and/or equitable
relief, treble damages, and reasonable attorneys' fees, N.J.S.A.
56:8-19." Gonzalez v. Wilshire Credit Corp., 207 N.J. 557, 576
15 A-0169-13T2
(2011) (citation and internal quotation marks omitted). In this
regard, unlawful conduct occurs by proof of knowing omissions,
affirmative acts, or violations of regulations filed under the
CFA. Cox v. Sears Roebuck & Co., 138 N.J. 2, 17 (1994).
N.J.S.A. 56:8-2 provides:
The act, use or employment by any person of
any unconscionable commercial practice,
deception, fraud, false pretense, false
promise, misrepresentation, or the knowing,
concealment, suppression, or omission of any
material fact with intent that others rely
upon such concealment, suppression or
omission, in connection with the sale or
advertisement of any . . . real estate . . .
is declared to be an unlawful practice
. . . .
Further, CFA claims require compliance with Rule 4:5-8(a).
Hoffman v. Hampshire Labs, Inc., 405 N.J. Super. 105, 112 (App.
Div. 2009). Rule 4:5-8(a) provides that "[i]n all allegations
of misrepresentation, fraud, mistake, breach of trust, willful
default or undue influence, particulars of the wrong, with dates
and items if necessary, shall be stated insofar as practicable."
Accordingly, to establish an act of omission a plaintiff "must
show that a defendant [] knowingly [] concealed a material fact
[] with the intention that plaintiff rely upon the concealment."
Judge v. Blackfin Yacht Corp., 357 N.J. Super. 418, 425 (App.
Div.), certif. denied, 176 N.J. 428 (2003). The act must be
"'misleading and stand outside the norm of reasonable business
16 A-0169-13T2
practice in that it will victimize the average consumer. . . .'"
N.J. Citizen Action v. Schering-Plough Corp., 367 N.J. Super. 8,
13 (App. Div.) (alteration in original) (quoting Turf Lawnmower
Repair, Inc. v. Bergen Record Corp., 139 N.J. 392, 416 (1995),
cert. denied, 516 U.S. 1066, 116 S. Ct. 752, 133 L. Ed. 2d 700
(1996)) (internal quotation marks omitted), certif. denied, 178
N.J. 249 (2003).
Plaintiffs' complaint contains conclusory allegations which
parrot the language of the CFA. Further, their deposition
testimony offers mere generalizations devoid of specified
factual support. At best, we glean plaintiffs' CFA claim to
suggest defendant engaged in elusive tactics and ultimately
failed to fulfill its promise of delivering a permanent
modification of their mortgage loan, after accepting the TPP
payments and subsequent payments pending file review. However,
the record contains no proof defendant promised to extend a loan
modification agreement. Under the terms of the TPP, a loan
modification was tied to the fulfillment of specific conditions,
including the timely remittance of trial payments.
Specifically, the TPP stated:
I understand that the [TPP] is not a
modification of the Loan Documents and that
the Loan Documents will not be modified
unless and until (i) I meet all of the
conditions required for modification, (ii) I
receive a fully executed copy of a
17 A-0169-13T2
Modification Agreement, and (iii) the
Modification Effective Date has passed. I
further understand and agree that the Lender
will not be obligated or bound to make any
modification of the Loan Documents if I fail
to meet any one of the requirements under
this [TPP].
Defendant's evidence demonstrated the denial of the requested
loan modification resulted because plaintiffs did not meet these
criteria.
Plaintiffs' CFA claim fails because they fail to identify
defendant's unlawful conduct, which they claim encompassed an
unconscionable practice or violation of law; detail material
misrepresentations they reasonably relied upon resulting in
damages; or proffer facts demonstrating a business practice to
materially conceal information that ultimately induced them to
act.
Following our review of the record, we conclude plaintiffs'
unsupported assertions did not create a material dispute
requiring determination by the factfinder. See Sickels v. Cabot
Corp., 379 N.J. Super. 100, 106 (App. Div.) (stating "a court
must dismiss [a] complaint if it has failed to articulate a
legal basis entitling plaintiff to relief"), certif. denied, 185
N.J. 297 (2005). The evidence of record fails to sustain the
claims alleged, warranting summary judgment for defendant.
18 A-0169-13T2
Any additional issues raised on appeal not specifically
addressed were found to lack sufficient merit to warrant
discussion in our opinion. R. 2:11-3(e)(1)(E).
Affirmed.
19 A-0169-13T2