United States District Court, D. Connecticut
RULING RE: MOTION TO DISMISS (DOC. NO. 47)
C. HALL JANET C. HALL UNITED STATES DISTRICT JUDGE
plaintiff, Teresa Martino, filed the Amended Complaint on
November 6, 2017. See Amended Complaint (“Am.
Compl.”) (Doc. No. 30). In it, Martino brings three
claims against the defendant Seterus, Inc.
(“Seterus”) for breach of contract, negligence,
and violation of the Connecticut Unfair Trade Practices Act
(“CUTPA”). See id. Seterus filed a
Motion to Dismiss the Amended Complaint on January 15, 2018.
See Motion to Dismiss (“Mot. to
Dismiss”) (Doc. No. 47).
reasons set forth below, the Motion to Dismiss is
GRANTED IN PART AND DENIED IN PART.
Amended Complaint alleges the following facts. Teresa Martino
entered into a mortgage agreement with Bank of America, Inc.
(“Bank of America”) regarding the loan on her
home, which was purchased in 2000. See Am. Compl. at
¶¶ 8-9. In 2014, Martino began facing financial
hardship and fell behind on her mortgage payments. See
id. at ¶ 10. In February 2015, Martino applied for
a loan modification with Bank of America. See id. at
¶ 12. Martino alleges that she completed the Trial
Period Plan and followed Bank of America's instructions
in order to finalize her loan modification (“June 2015
Agreement”), but Bank of America claimed that it never
received the signed June 2015 Agreement. See id.
at ¶¶ 12-23. In October 2015, Bank of America told
Martino it would not honor the June 2015 Agreement. See
id. at ¶ 26. At Bank of America's instruction,
Martino submitted a new application for loan modification.
See id. at ¶ 27.
November 2015, Bank of America notified Martino that her loan
would be transferred to Seterus for servicing on December 1,
2015. See id. at ¶ 29. In December 2015, Bank
of America sent Martino a letter acknowledging that she had
submitted all necessary documents to be considered for a
modification. See id. at ¶ 30. However, Bank of
America did not inform Seterus of the history and status of
Martino's loan or of her completed application for loan
modification when it transferred the loan to Seterus. See
id. at ¶ 31. Martino communicated this information
to Seterus and alleges that Seterus “either did not
receive documentation of Ms. Martino's loan history and
failed to follow up with Bank of America to obtain it, or it
refused to review and acknowledge the documentation it
received.” See id. at ¶ 32.
refused to acknowledge the June 2015 Agreement or
Martino's reapplication for a loan modification submitted
to Bank of America. See id. at ¶ 33. Martino
reapplied for loan modification assistance with Seterus and
completed the Trial Period Plan in February 2016. See
id. at ¶¶ 34-35. Seterus offered Martino a
permanent Loan Modification Agreement in May 2016, with
monthly payments of $1, 367.08. See id. at ¶
36. Martino was unhappy with the terms of the modification
and spent several months negotiating for a shorter repayment
period. See id. She alleges that Seterus
representatives repeatedly assured her that she would have
the option to modify her loan according to her desired terms,
but Seterus ultimately refused to offer such a modification.
See id. During the negotiations, Martino made at
least one payment on the mortgage on June 27, 2016. See
id. at ¶ 38. When Seterus refused to offer her
desired terms, Martino signed and returned the Loan
Modification Agreement (“August 2016 Agreement”)
in August 2016. See id. at ¶¶ 37-39.
Seterus refused to accept the signed August 2016 Agreement
and sent Martino a fresh copy of the Loan Modification
Agreement (“October 2016 Agreement”) to be signed
and returned by October 19, 2016. See id. at ¶
September 2016, Seterus placed Martino on another Trial
Period Plan (“September Trial Plan”). See
id. at ¶ 41. When Martino asked Seterus how much
she should pay, a Seterus representative told her to pay $1,
349.75, as detailed in the September Trial Plan. See
id. at ¶ 42. Martino made that payment under the
September Trial Plan on October 3, 2016. See id. The
October 2016 Agreement was signed by Martino on October 17,
2016, and by Seterus on October 20, 2016. See Id. at
alleges that Seterus did not honor the executed October 2016
Agreement, however, and continued to require Martino to make
payments under the September Trial Plan amount. See
id. at ¶ 46. Martino made two more payments under
the September Trial Plan and completed the plan in December
2016. See id. at ¶ 47. Seterus, however,
refused to offer Martino a modification after completion of
the September Trial Plan because her loan had already been
modified by the October 2016 Agreement. See id. at
¶ 48. In January 2017, Seterus began refusing
Martino's mortgage payments and demanding back payments.
See id. at ¶ 49. On March 1, 2017, Seterus
initiated a foreclosure action against Martino. See
id. at ¶ 50.
Amended Complaint contains six counts. Counts One, Two, and
Three against defendant Bank of America were dismissed with
prejudice on February 9, 2018. See Stipulation of
Dismissal (Doc. No. 57). Thus, Seterus is the only remaining
defendant in the case. Count Four alleges that Seterus
breached the October 2016 Agreement. Count Five alleges that
Seterus negligently breached its duty of care “to
evaluate and process homeowners' loan modification
applications in a timely and accurate manner.” See
id. at ¶¶ 90-95. Count Six alleges that
Seterus violated CUTPA by engaging in a number of unfair and
deceptive acts. See id. at ¶¶ 96-111.
Rule of Civil Procedure 8(a) requires a complaint to plead
“a short and plain statement of the claim showing that
the pleader is entitled to relief.” Fed.R.Civ.P. 8(a).
Under Rule 12(b)(6), to survive a motion to dismiss for
failure to state a claim, that plain statement must allege
facts sufficient to state a plausible claim for relief.
See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557
(2007). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). While this plausibility
standard does not require probability, it is not satisfied by
“a sheer possibility that a defendant has acted
unlawfully” or by facts that are “merely
consistent with a defendant's liability.”
Id. (internal quotation marks omitted).
deciding a motion to dismiss under Rule 12(b)(6), the court
must accept all material factual allegations in the complaint
as true and draw all reasonable inferences in favor of the
plaintiff. See Hemi Grp., LLC v. City of New York,
559 U.S. 1, 5 (2010); Jaghory v. N.Y. State Dep't
Educ., 131 F.3d 326, 329 (2d Cir. 1997). However, the
court is not required to accept as true a “legal
conclusion couched as a factual allegation.”
Papasan v. Allain, 478 U.S. 265, 286 (1986). In
those instances, “[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. The court may consider “only the facts alleged
in the pleadings, documents attached as exhibits or
incorporated by reference in the pleadings and matters of
which judicial notice may be taken.” Samuels v. Air
Trans. Local 504, 992 F.2d 12, 15 (2d Cir. 1993)).
argues first that the court should abstain from deciding the
case under the Colorado River doctrine because of a
pending foreclosure action against Martino in state court.
See Memorandum in Support of Motion to Dismiss
(“Mem. in Supp.”) (Doc. No. 47-1) at 8-10.
Seterus then argues that, if the court declines to abstain,
it should dismiss Counts Four, Five, and Six for failure to
state a claim upon which relief can be granted, pursuant to
Rule 12(b)(6). See id. at 10-19.
Colorado River Abstention
argues that the court should abstain from deciding this case
because there is a pending foreclosure action in state court
(the “State Action”). See Mem. in Supp.
at 8-10; Fannie Mae v. Martino, NNH-CV17-6068631-S
(Conn. Super. Ct.). Seterus argues that the State Action and
the case before this court are parallel and that the
Colorado River abstention factors weigh in favor of
abstention. See Mem. in Supp. at 8-10. Martino
argues that the factors weigh against abstention, emphasizing
that her rights cannot be adequately protected in state
court. See Memorandum in Opposition to Motion to
Dismiss (“Mem. in Opp.”) (Doc. No. 53) at 7-12.
from the exercise of federal jurisdiction is the exception,
not the rule.” Colorado River Water Conservation
Dist. v. United States, 424 U.S. 800, 813 (1976).
“Generally, as between state and federal courts, the
rule is that ‘the pendency of an action in the state
court is no bar to proceedings concerning the same matter in
the Federal court having jurisdiction . . . .'”
Id. at 817 (citation omitted). This is because of
the “virtually unflagging obligation of the federal
courts to exercise the jurisdiction given to them.”
Id. Colorado River, however, permits “an
extraordinary and narrow exception” when there are
contemporaneous parallel proceedings in state court and
abstention would serve “wise judicial administration,
giving regard to conservation of judicial resources and
comprehensive disposition of litigation.” Id.
order for abstention under Colorado River to be
justified, courts must first determine that the concurrent
proceedings in state and federal court are parallel. See
Dittmer v. Cty. of Suffolk, 146 F.3d 113, 117-18 (2d
Cir. 1998). “Suits are parallel when substantially the
same parties are contemporaneously litigating substantially
the same issue in another forum.” Id. at 118
(quoting Day v. Union Mines Inc., 862 F.2d 652, 655
(7th Cir. 1988)). If the proceedings are parallel, the court
must then weigh six factors:
(1) the assumption of jurisdiction by either court over any
res or property;
(2) the inconvenience of the federal forum;
(3) the avoidance of piecemeal litigation;
(4) the order in which jurisdiction was obtained;
(5) whether state or federal law supplies the rule of
(6) whether the state court proceeding will adequately
protect the rights of the party seeking to invoke federal
Vill. of Westfield v. Welch's, 170 F.3d 116, 121
(2d Cir. 1999). “The weight to be given any one factor
may vary greatly from case to case, depending on the
particular setting of the case.” Moses H. Cone
Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16
(1983). However, the balance is “heavily weighted in
favor of the exercise of jurisdiction.” Id.
Therefore, courts should abstain under the Colorado
River doctrine “only in the exceptional
circumstances where the order to the parties to repair to the
state court would clearly serve an important countervailing
interest.” Colorado River, 424 U.S. at 813.
case, both parties' Memoranda focus on the analysis of
the six Colorado River factors, but do not address
whether the state foreclosure action and the case before this
court are parallel. However, the court must first address the
threshold issue of whether the cases are parallel. See
Dittmer, 146 F.3d at 118 (“[A] finding that the
concurrent proceedings are ‘parallel' is a
necessary prerequisite to abstention under Colorado
River.”); Mazuma Holding Corp. v. Bethke,
1 F.Supp.3d 6, 20 (E.D.N.Y. 2014) (“If a court finds
that the federal and state cases are not parallel,
‘Colorado River abstention does not apply,
whether or not issues of state law must be decided by the
federal court.'” (citation omitted)).
stated above, “[s]uits are parallel when substantially
the same parties are contemporaneously litigating
substantially the same issues in another forum.”
Dittmer, 146 F.3d at 118. “In determining
whether two actions are parallel for purposes of Colorado
River abstention, ‘a court may consider whether
the actions involve the same (i) parties, (ii) subject
matter, and (iii) relief requested.'” Gov't
Employees Ins. Co. v. Leica Supply, Inc., No. 11-CV-3781
(KAM) (VVP), 2014 WL 1311544, at *4 (E.D.N.Y. Mar. 28, 2014)
(citation omitted)); see National Union Fire Ins. Co. of
Pittsburgh, PA v. Karp, 108 F.3d 17, 22 (2d Cir. 1997)
(“Federal and state proceedings are
‘concurrent' or ‘parallel' for purposes
of abstention when the two proceedings are essentially the
same; that is, there is an identity of parties, and the
issues and relief sought are the same.”).
courts in this Circuit have interpreted the Second
Circuit's guidance in Dittmer and National
Union Fire Insurance to not require “complete
identity” or “perfect symmetry” of parties
and issues, however. See, e.g., Server v. Nation
Star Mortg., LLC, No. 3:16-CV-1582 (VLB), 2017 WL
3097493, at *3 (D. Conn. July 20, 2017); Gudge v. 109
Rest. Corp., 118 F.Supp.3d 543, 547 (E.D.N.Y. 2015).
“[T]he parallel litigation requirement is satisfied
when the main issue in the case is the subject of already
pending litigation.” Server, 2017 WL 3097493,
at *3 (citation omitted). Nonetheless, “resolution of
the state action must dispose of all claims presented in the
federal case.” DDR Constr. Servs., Inc. v. Siemens
Indus., Inc., 770 F.Supp.2d 627, 644 (S.D.N.Y. 2011).
“When ‘the nature of the claims' in question
differs, cases are not parallel despite ‘the fact that
both actions arise out of a similar set of
circumstances.'” Id. at 645.
case, the parties in the State Action and in the case before
this court are not identical, but they are substantially the
same. Although Fannie Mae is a party in the State Action but
not in this case, and Seterus is a party in this case but not
in the State Action, Seterus is the servicer for the mortgage
on behalf of Fannie Mae, the mortgagor. See
Transcript, May 1, 2018 (“5/1/18 Tr.”) (Doc. No.
88) at 4. The court concludes that Fannie Mae and Seterus
share an identity of interests for the purpose of issues
related to Martino's mortgage and foreclosure and
therefore are substantially the same party. See Sitgraves
v. Fed. Home Loan Mortg. Corp., 265 F.Supp.3d 411, 413
(S.D.N.Y. 2017) (“Although [the plaintiff] argues the
actions are not parallel because Freddie Mac is a party here
but not in the State Action, she cannot contest that BANA is
substantially the same as Freddie Mac.”); Austin v.
Everbank, No. 16-CV-00058-KG-LF, 2016 WL 9777221, at *6
n.3 (D.N.M. Sept. 30, 2016) (“In this federal action,
Intervenor Fannie Mae is a party in privity of contract with
Defendant Everbank through the fee simple interest Fannie Mae
acquired in the foreclosure sale of the subject
plaintiff's Memorandum in Opposition to the Motion to
Dismiss contains no argument that Fannie Mae and Seterus are
not substantially the same party. See Mem. in Opp.
at 7-12. At a hearing on the Motion to Dismiss, Martino
advanced for the first time the argument that Fannie Mae may
try to avoid liability for Seterus's misconduct, such as
by arguing that Seterus acted outside the scope of its
agency. See 5/1/18 Tr. at 26-27. Martino's
representation to the court was equivocal at best, merely
hypothesizing as to what Fannie Mae may possibly argue.
See id. (stating that “[w]e think it is
possible in the foreclosure case Fannie Mae
might try to avoid liability for the misconduct on
the part of Seterus” (emphasis added)). Martino did not
articulate any basis for believing that Fannie Mae would
actually make such an argument or have grounds to do so.
See id. (arguing to the contrary that “we
think that legal strategy ultimately would not be successful
for them”). The court considers it telling that counsel
for Martino, rather than clearly stating that Seterus and
Fannie Mae are not substantially the same party, was merely
able to state that “we're not certain they are the
same for purposes of the foreclosure action.” See
id. Without more, Martino's brief and
unsubstantiated statements at the hearing are insufficient to
persuade the court that Fannie Mae and Seterus have divergent
interests such that they are not substantially the same party
for purposes of the mortgage and foreclosure.
more difficult question here is whether the issues and relief
are substantially the same. The Complaint in the State Action
seeks foreclosure of Martino's property for default on
the mortgage. See Fannie Mae v. Martino, Complaint.
In her state court Answer, Martino does not raise any special
defenses or counterclaims. See Fannie Mae v.
Martino, Answer (“State Action Answer”)
(Doc. No. 102.00). Prior to issuing this Ruling, the court
gave Martino an opportunity to move to amend her Answer in
the State Action to add as counterclaims the Counts before
this court. See Order (Doc. No. 76). However,
Martino represented that she elected not to move to amend her
Answer. See Response to Order (Doc. No. 80). Thus,
as the cases currently stand, the State Action does not
address the same issues and relief as this case because the
relief at issue in the State Action is only foreclosure (or
defense against foreclosure), while the relief at issue in
this case includes damages for breach of contract,
negligence, and violation of CUTPA. Cf. Gov't
Employees Ins., 2014 WL 1311544, at *4.
number of other Circuits have held that whether the state and
federal proceedings are parallel is determined by comparing
“the issues in the federal action to the issues
actually raised in the state action, not those that might
have been raised.” Baskin v. Bath Twp. Bd. of
Zoning Appeals, 15 F.3d 569, 572 (6th Cir. 1994);
see also Kelly v. Maxum Specialty Ins. Grp., 868
F.3d 274, 285 (3d Cir. 2017); Fru-Con Const. Corp. v.
Controlled Air, Inc., 574 F.3d 527, 535 (8th Cir. 2009);
Fox v. Maulding, 16 F.3d 1079, 1081 (10th Cir.
1994); Crawley v. Hamilton Cty. Comm'rs, 744
F.2d 28, 31 (6th Cir. 1984) (“While it may be true . .
. that [the state action] could be modified so as to make it
identical to the current federal claim, that is not the issue
here. The issue is whether [the state action], as it
currently exists, is a parallel, state-court
proceeding.”). A few district courts in this Circuit
have followed these other Circuits. See Dalzell Mgmt. Co.
v. Bardonia Plaza, LLC, 923 F.Supp.2d 590, 598-99
(S.D.N.Y. 2013); State Farm Mut. Auto. Ins. Co. v.
Schepp, 616 F.Supp.2d 340, 347-48 (E.D.N.Y. 2008). Under
this approach, it is evident that this case and the State
Action would not be parallel proceedings and therefore that
abstention under Colorado River would not be
the court is hesitant to follow this approach and end the
analysis there because no Second Circuit case has adopted
such an approach with approval. Rather, language in
Telesco v. Telesco appears to indicate that the
Second Circuit, in determining whether proceedings are
parallel, is willing to consider whether the state proceeding
could be amended or modified to include the omitted claims
raised before the federal court. See Telesco v. Telesco
Fuel & Masons' Materials, Inc., 765 F.2d 356,
362-63 (2d Cir. 1985). In Telesco, the
plaintiff's federal complaint raised a new legal theory
based on the existence of a de facto partnership between the
parties and a new affirmative claim for reinstatement.
See id. at 362. The Second Circuit nonetheless held
that the proceedings were parallel because, “in its
essential elements the same cause of action, regardless of
theory or pleadings, ...