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Nichols v. Bac Home Loans Servicing Lp

United States District Court, Second Circuit

October 18, 2013

PETER J. NICHOLS, Plaintiff,

PETER J. NICHOLS Scotia, NY, Plaintiff, Pro Se,

BRYAN, CAVE LLP SUZANNE M. BERGER, ESQ., N.A. SCOTT H. KAISER, ESQ., New York, New York. Attorney for Defendant Bank of America, N.A.

LOCKE LORD LLP JOSEPH N. FROEHLICH, ESQ., New York, New York, Attorney for Defendant Select Portfolio Servicing, Inc.


DAVID N. HURD, District Judge.


On February 28, 2013, plaintiff Peter J. Nichols ("plaintiff" or "Nichols"), proceeding pro se, commenced this action against BAC Home Loans Servicing LP d/b/a Bank of America NA ("Bank of America"), and Select Portfolio Servicing, Inc. ("SPS") (collectively "defendants"). He alleges that defendants' improper handling of his May 2009 mortgage payments resulted in a series of unwarranted penalties and fees, and that defendants' continued attempts to collect this "disputed" balance violates various consent judgments, the Fair Debt Collection Practices Act ("FDCPA"), and the Real Estate Settlement Procedures Act ("RESPA"). He further alleges fraud, breach of contract, defamation, slander, and libel. Plaintiff requests a court-ordered modification of his mortgage, a declaration that he was never in default, a refund of various payments he made toward resolving this dispute, and $557, 100 in damages.

Defendants moved individually to dismiss Nichols' complaint with prejudice pursuant to Federal Rule of Civil Procedure ("Rule ___") 12(b)(6). Plaintiff opposed, and defendants replied. The motion was taken on its submissions, without oral argument.


The following factual allegations drawn from the complaint, opposition papers, and exhibits[1] are assumed true for purposes of this motion. On February 15, 2007, Peter J. Nichols and his wife, Kristina L. Nichols, executed an adjustable rate mortgage in favor of Accredited Home Lenders, Inc. on their home located at 212 First Street, Scotia, NY, 12302, in the amount of $132, 000. Compl., Ex. D, ECF No. 1-1, 11-41 ("Mortgage Note"). Countrywide Home Loans ("Countrywide") serviced the mortgage until July 2008, when it was transferred to BAC Home Loans Servicing, Inc. ("BAC").

On September 1, 2008, Nichols defaulted on the mortgage. Compl. ¶ 2. He requested and was approved for a loan modification on February 26, 2009. Compl., Ex. B, ECF No. 1-1, 3-6 ("Modification Agreement"). On March 23, 2009, plaintiff executed an agreement[2] modifying the terms of the mortgage, which added the unpaid mortgage arrears to the principal balance and increased the total balance outstanding from $130, 819.71 to $139, 257.31. This agreement also modified plaintiff's monthly payment to $1, 199.51 beginning in May 2009, but provided that the monthly payment was subject to change because of his adjustable interest rate and escrow account. Id.

On May 6, 2009, and May 18, 2009, Nichols made payments of $1, 200 and $1, 199.51 under the newly modified mortgage.[3] Compl., Ex. C, ECF No. 1-1, 7-10 ("Account Statement"). On June 17, 2009, plaintiff received a call from a BAC representative named Andrew Jackson, who informed him that his mortgage was in default because he had not made his June payment. See Compl. ¶ 4. Despite plaintiff's insistence that he had executed a loan modification, Mr. Jackson apparently "demanded all the default payments[, ] late charges, and fees" and "would not accept a partial payment." Id . Plaintiff states that he orally "disputed the default" during this phone call. Id.

Several days later, Nichols received a mortgage statement from BAC indicating that his June payment had not been received and was past due. Compl., Ex. F, ECF No. 1-1, 44. This statement also indicated that his next payment, due July 1, was $1, 223.50. Id . Plaintiff never made this June payment, and has not made any payments since May 2009.[4]

In a letter dated July 3, 2009, Nichols received a "Notice of Intent to Accelerate" from BAC, indicating that his account was in default and that $2, 423.01 was due by August 7, 2009. Compl., Ex. G, ECF No. 1-1, 45. After multiple phone calls with BAC representatives were unsuccessful in correcting the payment error, plaintiff hired a financial consultant and a letter disputing the debt was sent to BAC by certified mail on August 25, 2009. Compl. ¶ 12. Eventually, plaintiff's financial consultant advised him to hire an attorney, and he retained William Codd, Esq. Compl. ¶ 28. BAC continued to send monthly statements and other notices indicating that plaintiff had not made the required payments on his mortgage. See, e.g., Compl. ¶¶ 30, 32. On June 1, 2011, BAC transferred the loan and servicing responsibilities to Bank of America. Compl. ¶ 1. Thereafter, on October 1, 2012, SPS assumed the loan servicing duties for plaintiff's mortgage.

In an October 9, 2012, "Validation of Debt Notice, " SPS informed Nichols that it had assumed responsibility for servicing his mortgage, that the current principal balance was $168, 561.66, and that he had thirty days to dispute the debt in writing. Compl., Ex. U, ECF No. 1-3, 11 ("Validation Notice"). In a letter dated October 21, 2012, plaintiff informed SPS that "as of June 17, 2009 the account has been in dispute without resolve." Compl. Ex. Y, ECF No. 1-3, 21-27 ("Dispute Letter"). SPS responded to this Dispute Letter and included a number of documents validating the debt and confirming that SPS had assumed responsibility for servicing the mortgage. Compl., Ex. Z, ECF No. 1-3, 29-55 ("Assignment Notice").

On February 28, 2013, Nichols filed this complaint. The core allegation of this 230-page filing is that BAC erroneously charged his May 6, 2009, payment to April 2009, leaving the June 2009 balance unpaid. Plaintiff's subsequent refusal to make any further payments on his mortgage pending the resolution of this alleged billing error has resulted in a host of penalties, fees, and interest, as well as the collection activities associated with such a delinquent debt. His various claims rest on his apparent assertion that he was entitled to have the May 2009, billing error corrected before he was obligated to make any further payments on his mortgage, and that the penalties, fees, and interest that have accrued are a result of improper practices and malicious intent on behalf of the mortgage lender and its servicers in violation of a number of federal and state laws.


A. Motion to Dismiss-Legal Standard

To survive a Rule 12(b)(6) motion to dismiss, the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555 (2007). Although a complaint need only contain "a short and plain statement of the claim showing that the pleader is entitled to relief" (FED. R. CIV. P. 8(A)(2)), more than mere conclusions are required. Indeed, "[w]hile legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Ashcroft v. Iqbal , 556 U.S. 662, 679 (2009). Dismissal is appropriate only where plaintiff has failed to provide some basis for the allegations that support the elements of his claims. See Twombly , 550 U.S. at 570 (requiring "only enough facts to state a claim to relief that is plausible on its face").

When considering a motion to dismiss, the complaint is to be construed liberally, all factual allegations are deemed to be true, and all reasonable inferences must be drawn in the plaintiff's favor. Chambers v. Time Warner, Inc. , 282 F.3d 147, 152 (2d Cir. 2002). These basic pleading requirements apply to pro se plaintiffs as well as plaintiffs represented by counsel, but "a pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers." Ahlers v. Rabinowitz , 684 F.3d 53, 60 (2d Cir. 2012) (quoting Erickson v. Pardus , 551 U.S. 89, 94 (2007)) (internal quotation marks omitted).

However, "all normal rules of pleading are not absolutely suspended" when a plaintiff is proceeding pro se. Jackson v. Onondaga Cnty. , 549 F.Supp.2d 204, 214 (N.D.N.Y. 2008) (McAvoy, S.J.) (internal quotation marks and footnote omitted). Even a pro se plaintiff must plead sufficient factual allegations suggesting an entitlement to relief. Simply put, Rule 8 "demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal , 556 U.S. at 678 (citations omitted).

B. Compliance with Rule 8

As a threshold matter, defendants argue that the entire complaint must be dismissed because it fails to satisfy the pleading requirements of Rule 8(a)(2) and 9(b). Specifically, Bank of America argues that Nichols' "rambling, forty-seven page [c]omplaint, with twenty-six exhibits" fails to "clearly state any claim" against it. SPS similarly argues that the "handful of allegations" made against it are "bare legal conclusions" that fail to state any claims or "allege any wrongdoing" that would support plaintiff's various claims.

As noted above, a complaint need only contain "a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(A)(2). Although no technical form is required, "[e]ach allegation must be simple, concise, and direct." Id . 8(d)(1). The primary purpose of Rule 8's pleading requirements is to provide defendants with "adequate notice." Wynder v. McMahon , 360 F.3d 73, 79 (2d Cir. 2004). Adequate notice is "that which will enable the adverse party to answer and prepare for trial, allow the application of res judicata, and identify the nature of the case so that it may be assigned the proper form of trial." Id . (citations and internal quotation marks omitted).

Defendants correctly state that the complaint is not a simple and concise document, and that it contains legal arguments and conclusions that are improper to include in a complaint. However, Nichols' forty-seven page complaint and its attached exhibits form an adequate basis for defendants to determine the various claims brought against them. Indeed, defendants have submitted detailed memoranda of law identifying each of plaintiff's causes of action and providing arguments in support of dismissal. Because plaintiff has sufficiently identified defendants' allegedly unlawful conduct and the parties have been afforded adequate notice of the claims against them, the complaint accomplishes the primary purpose of Rule 8's requirements.

C. Leave to Amend

In his opposition papers to SPS' motion to dismiss, Nichols requests leave to amend his pleading as it relates to his fraud claim, or alternatively that it be treated as "plead correctly." Defendants argue that any amendment would be futile.

Leave to amend should be freely given "when justice so requires." FED. R. CIV. P. 15(A)(2). Where a plaintiff is proceeding pro se, a district "court should not dismiss without granting leave to amend at least once when a liberal reading of the complaint gives any indication that a valid claim might be stated." Thompson v. Carter , 284 F.3d 411, 416 (2d Cir. 2002) (quoting Branum v. Clark , 927 F.2d 698, 705 (2d Cir. 1991)). However, an opportunity to amend is not required where the defects in a plaintiff's claims are substantive rather than merely formal, such that any amendment would be futile. See S.S. v. Whitesboro Cent. Sch. Dist., No. 11-CV-0036, 2012 WL 280754, at *7 n.7 (N.D.N.Y. Jan. 31, 2012) (Suddaby, J.) ("As the Second Circuit has explained, "[w]here it appears that granting leave to amend is unlikely to be productive, ... it is not an abuse of discretion to deny leave to amend.").

Nichols cites 18 U.S.C. §§ 1005 and 1031 in his complaint as authority in support of his claims made under the subheading "USC Chapter 47 - FRAUD, " but this chapter of the United States Code details criminal penalties for defrauding the federal government. It is a well-settled tenet of American jurisprudence that "a private citizen lacks a judicially cognizable interest in the prosecution or nonprosecution of another." Linda R.S. v. Richard D. , 410 U.S. 614, 619 (1973). These code sections cannot form the basis for civil liability.

In his opposition papers, Nichols attempts to remedy this defect by making a number of additional allegations under the subheading "[e]lements to maintain common law fraud." While these new allegations do nothing to clarify the factual underpinnings of any legally cognizable claim, plaintiff's original citation to a federal criminal fraud statute can be fairly construed as an error in form, not substance. In this circuit, "a pro se plaintiff's papers in response to a defendant's motion to dismiss for failure to state a claim may be considered as effectively amending the allegations of his complaint-to the extent those papers are consistent with the allegations in the complaint." Planck v. Schenectady Cnty., No. 12-CV-0336, 2012 WL 1977972, at *5 (N.D.N.Y. June 1, 2012) (Suddaby, J.) (footnote omitted).

Nichols' complaint alleges that SPS delivered fraudulent copies of the original mortgage documents as part of its Assignment Notice. See Compl. ¶ 125. The additional allegations made in plaintiff's opposition papers are an attempt to clarify this argument. For instance, plaintiff claims "all the initials appear in different places" and that the mortgage agreement attached to the Assignment Notice is a "forged mortgage document constituting fraud." See Pl.'s Mem. Opp'n SPS Mot. Dismiss, ECF No. 11, ¶ 4. Because these additional allegations can ...

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