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Markey v. Ditech Financial LLC

United States District Court, D. Connecticut

September 22, 2016

JANICE B. MARKEY, Plaintiff,
v.
DITECH FINANCIAL LLC and FEDERAL NATIONAL MORTGAGE ASSOCIATION, Defendants.

          RULING AND ORDER

          MICHAEL P. SHEA, UNITED STATES DISTRICT JUDGE

         Plaintiff Janice B. Markey brings this action against Defendants Ditech Financial LLC (“Ditech”) and Federal National Mortgage Association (“Fannie Mae”) for breach of contract (Count One), breach of the implied covenant of good faith and fair dealing (Count Two), and promissory estoppel (Count Three)-all in connection with Defendants' foreclosure of her home. (Complaint, ECF No. 1.) She also seeks an injunction to stay the eviction proceedings pending against her. (ECF No. 2.) The Defendants responded with a motion to dismiss the complaint and opposition to Markey's motion for injunctive relief. (ECF No. 21.) As described more fully below, the Motion to Dismiss is GRANTED in part and DENIED and part. Counts One and Two are barred by the statute of frauds, but Count Three plausibly states a claim for relief. The motion for temporary restraining order and/or preliminary injunction is DENIED because the injunction that Markey seeks is barred by the Anti-Injunction Act, 28 U.S.C. § 2283.

         I. Factual and Procedural Background

         The complaint pleads the following facts. Markey is a Connecticut resident who obtained a home mortgage loan dated July 24, 2003. (Compl. ¶ 7.) The mortgage and note were assigned to various entities, and finally to Ditech (formerly known as Green Tree Servicing LLC), [1] a servicer for Fannie Mae. (Id. ¶ 8; ECF No. 19.) Markey defaulted on her loan, and Ditech commenced a foreclosure action. (Compl. ¶ 9.)

         Either before or after that (the dates are unclear), Ditech proposed a Trial Payment Plan[2](“TPP”) agreement to undergo a mortgage modification process as dictated by the federal Home Affordable Modification Program (“HAMP”) and the National Mortgage Settlement (“NMS”). (Id. ¶¶ 5, 13.) The complaint describes HAMP as a federal government program that “incentivizes participating servicers to enter into agreements with struggling homeowners in order to make the monthly payments more affordable” and the NMS as “requiring] mortgage services [sic][3] to comply with extensive guidelines including… timely processing modification applications.” (Id. at 5.) The TPP agreement “was in the form of written and oral communications that included expressed terms requiring the Plaintiff to provide certain information after which time the Defendants would complete a formal offer proposing a permanent loan modification.” (Id. ¶ 5.) Markey has provided no further details about the contents of the alleged written communications.

         According to Markey, she submitted the required documents, answered all questions, and received oral confirmation that the documents had been received and reviewed. (Id. ¶¶ 13-14.) Ditech then told her “that her mortgage would be modified and that the pending foreclosure proceeding would be terminated.” (Id. ¶ 13.) Markey relied on this statement and did nothing to defend herself in the foreclosure action. (Id. ¶¶ 14, 56.) But instead of moving forward on a modification proposal, Ditech delayed processing, did not offer a permanent modification of the loan, and continued to pursue foreclosure. (Id. ¶¶ 9, 14, 16, 18.)

         Ditech ultimately obtained a strict foreclosure judgment in Connecticut Superior Court on September 8, 2014, with title vesting in Ditech on January 17, 2015. (ECF Nos. 21-4, 21-5; Green Tree Servicing LLC v. Janice B. Markey, No. DBD-CV14-6014390-S.) Fannie Mae then filed a summary process action in Connecticut Superior Court seeking Markey's eviction, and obtained judgment of immediate possession after default on October 29, 2015. Federal National Mortgage Association v. Janice B. Markey, No. DBD-CV15-6018306-S. On October 30, 2015, Markey filed a motion to open the judgment of default for failure to appear and the judgment for immediate possession, which remains pending. Id.

         Markey filed this action on November 20, 2015, along with a motion for temporary restraining order and/or preliminary injunction seeking a stay of the summary process action. (ECF Nos. 1, 2.) On January 20, 2016, Defendants filed a consolidated motion to dismiss the complaint and opposition to the motion for preliminary injunction. (ECF No. 21.)

         II. Standard of Review

         In evaluating whether a plaintiff has stated a claim for relief, the Court must “accept as true all factual allegations in the complaint and draw all reasonable inferences” in the plaintiff's favor. Cruz v. Gomez, 202 F.3d 593, 596 (2d Cir. 2000). Courts will not accept as true conclusory allegations and may only allow the case to proceed if the complaint pleads “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009) (citing Twombly, 550 U.S. at 554- 55). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief 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 (internal citations and quotations omitted).

         III. Discussion

         A. Motion to Dismiss

         i. Breach of Contract (Count One)

         Defendants argue that Markey's breach of contract claim must be dismissed because any alleged contract is unenforceable under the statute of frauds (among other reasons). “The elements of a breach of contract claim are the formation of an agreement, performance by one party, breach of the agreement by the other party, and damages.” Meyers v. Livingston, Adler, Pulda, Meiklejohn and Kelly, P.C., 311 Conn. 282, 298, (2014) (internal citation omitted). The Connecticut statute of frauds states, in relevant part, “[n]o civil action may be maintained in the following cases unless the agreement, or a memorandum of the agreement, is made in writing and signed by the party, or the agent of the party, to be charged:... (4) upon any agreement for the sale of real property or any interest in or concerning real property... or (6) upon any agreement for a loan in an amount which exceeds fifty thousand dollars.” Conn. Gen. Stat. § 52-550(a). In Connecticut, the statute of frauds “applies to purported oral modifications to existing mortgage agreements.” Halkiotis v. WMC Mortgage Corp., 144 F.Supp.3d 341, 355 (D. Conn. 2015). It also ...


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