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Yanes v. Ocwen Loan Servicing, LLC

United States District Court, E.D. New York

February 12, 2015

PEDRO YANES, Plaintiff,

Michael E. Herskowitz, Esq., Law Office of Michael E. Herskowitz, Brooklyn, NY, Michael Andrew Lehrman, Esq., The Hoffman Law Group, P.A., Brooklyn, NY, for Plaintiff.

Brian M. Forbes, Esq., David S. Versfelt, Esq., Robert Bruce Allensworth, Esq., Robert W. Sparkes, Esq., K&L Gates LLP, Boston, MA, for Defendant.


JOANNA SEYBERT, District Judge.

This dispute concerning mortgage loan modifications was commenced on April 17, 2013 by fifty-four named plaintiffs against thirteen defendants. Various parties were dismissed voluntarily and on April 14, 2014, the Court severed and dismissed the claims of all but the first named plaintiff, Pedro Yanes ("Yanes"), finding that each plaintiff's dispute arose out of a separate transaction. See Yanes v. Ocwen Loan Servicing, LLC, No. 13-CV-2343, 2014 WL 1428013, at *3 (E.D.N.Y. Apr. 14, 2014). Yanes was given leave to replead and he filed a Second Amended Complaint (Second Am. Compl. ("SAC"), Docket Entry 85.) Defendant Ocwen Loan Servicing, LLC ("Ocwen") now moves to dismiss the Second Amended Complaint. (Docket Entry 86.) For the following reasons, Ocwen's motion to dismiss is GRANTED.


Yanes took out a mortgage on his home, which is currently serviced by Ocwen. (SAC ¶ 5.) Yanes requested a mortgage loan modification from Ocwen because he was experiencing financial problems. (SAC ¶ 8.) He claims, however, that Ocwen engaged in certain "illegal" practices with respect to his loan modification. Specifically, Yanes claims Ocwen: (1) "ma[de] the loan application process as onerous and complicated as possible, " (2) delayed the application process, and (3) eventually offered "such disadvantageous [loan modification] terms that they rendered performance impossible." (SAC ¶¶ 16-20.) Yanes claims that under the federal Home Affordable Modification Program ("HAMP"), Ocwen was obligated to modify qualified loans "to reduce the burden to homeowners." (SAC ¶ 7.)

After requesting a loan modification, Ocwen required Yanes to submit a "loan modification package" and represented that "following the submission and review of [the] completed modification package, " Yanes would receive terms for a "trial modification." (SAC ¶ 12.) Yanes understood that if he successfully made monthly payments under the terms of the trial loan modification, he would be given a permanent mortgage modification. (SAC ¶ 12.) By submitting the documents Ocwen requested in the loan modification package, Yanes alleges that he "accepted Defendant's offer" thereby forming a contract. (SAC ¶ 13.)

According to the Complaint, Ocwen delayed the application process and made it onerous by "providing conflicting information... regarding what was required" and making Yanes re-submit documents he already sent to Ocwen. (SAC ¶ 16.) Yanes alleges that after he overcame these obstacles, Ocwen provided him with loan modification terms, but the terms "failed to lower [his] monthly payment in any meaningful way" and "did not extend the life of the loan, while burdening him with substantial arrears and penalties." (SAC ¶¶ 20-21.) Unable to make his mortgage payments, Yanes defaulted. (SAC ¶ 22.)

Yanes alleges that Ocwen operated a "fraudulent loan modification program" and merely "purport[ed] to offer the possibility of a loan modification agreement" while actually keeping the loans it serviced in default. (SAC ¶ 38.) Specifically, based on the above facts, Yanes brings claims against Ocwen for breach of contract, breach of the covenant of good faith and fair dealing, promissory estoppel, fraudulent concealment, unjust enrichment, for violations of New York General Business Law § 349, and violations of the Real Estate Settlement Procedures Act ("RESPA"). (SAC ¶¶ 46-101.) Ocwen moves to dismiss all of Yanes' claims. (Docket Entries 86-87.)


I. Legal Standard

In deciding a Rule 12(b)(6) motion to dismiss, the Court applies a "plausibility standard, " which is guided by "[t]wo working principles." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); accord Harris v. Mills, 572 F.3d 66, 71-72 (2d Cir. 2009). First, although the Court must accept all allegations as true, this "tenet" is "inapplicable to legal conclusions;" thus, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678; accord Harris, 572 F.3d at 72. Second, only complaints that state a "plausible claim for relief" can survive a Rule 12(b)(6) motion to dismiss. Iqbal, 556 U.S. at 679. Determining whether a complaint does so is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id.; accord Harris, 572 F.3d at 72.

Furthermore, in deciding a motion to dismiss, the Court is confined to "the allegations contained within the four corners of [the] complaint." Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 71 (2d Cir. 1998). However, this has been interpreted broadly to include any document attached to the complaint, any statements or documents incorporated in the complaint by reference, any document on which the complaint heavily relies, and anything of which judicial notice may be taken. See Chambers v. Time ...

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