Lansdown v. Bayview Loan Servicing, LLC

Background

Melissa Lansdown and Ellis Greenberg signed a promissory note and deed of trust for real property in 2001. Greenberg later transferred his interest to Lansdown. Lansdown alleged that Bank of America told her she needed to fall behind on mortgage payments to qualify for a loan modification. After a notice of default was recorded, Lansdown sued Bank of America and Bayview in state court. The parties later signed a memorandum of understanding concerning a settlement. Bayview sent Lansdown a settlement agreement and a loan-modification agreement, which Lansdown signed. She made seven payments, but alleged that Bayview refused some payments and attempted to foreclose.

Bayview transferred servicing of the loan to Shellpoint in January 2020. Lansdown obtained a temporary restraining order and later a preliminary injunction preventing foreclosure. Bayview and Shellpoint attempted to foreclose in September 2020, but the foreclosure sale was cancelled.

In the operative Second Amended Complaint, Lansdown alleged intentional infliction of emotional distress against Bayview, Shellpoint, and Bank of America, and breach of contract against Bayview, Shellpoint, and Bank of America. New York Bank Mellon was originally included as a defendant, but Lansdown voluntarily dismissed it before this order; the court said the pending motion was moot as to that entity.

Legal standard

The defendants moved under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. The court accepts adequately pleaded factual allegations as true and asks whether they plausibly show that the plaintiff is entitled to relief. When dismissal may be cured by additional facts, the court generally allows amendment.

Bayview and Shellpoint’s motion

The court granted the motion to dismiss Lansdown’s intentional-infliction-of-emotional-distress claims. The court had previously found similar allegations too conclusory. In the Second Amended Complaint, Lansdown alleged that the defendants wrongfully started foreclosure proceedings, refused payments, and repeatedly rescheduled the sale. The court found that these allegations did not show that the defendants threatened, insulted, abused, or humiliated her, or that they intended or recklessly disregarded the risk of causing emotional distress.

The court granted Shellpoint’s motion to dismiss the breach-of-contract claim against it, but granted Lansdown leave to amend if she could allege facts showing that Shellpoint became the successor to contractual obligations. The complaint did not identify Shellpoint as a party to the relevant contracts or explain which obligations it allegedly assumed. Lansdown also did not respond to Shellpoint’s argument on that issue.

As to Bayview, the court found that Lansdown adequately pleaded a contract claim based on the deed of trust. The complaint alleged the existence of the deed, that Lansdown was not in default, specific provisions at issue, Bayview’s alleged efforts to foreclose and overcharge her, and claimed damages.

The court granted Bayview’s motion to dismiss the contract claim to the extent it was based on the settlement agreement or loan-modification agreement. The complaint and Lansdown’s opposition did not clearly identify those agreements as the basis for the claim or explain why Bayview was bound by them. The court granted leave to amend if Lansdown sought to clarify that she was pursuing such claims and could state their bases.

Bank of America’s motion

The court granted Bank of America’s motion to dismiss Lansdown’s emotional-distress claim because the allegations failed to satisfy the required elements, for the same reasons discussed regarding Bayview. The court therefore did not reach Bank of America’s additional arguments concerning the claim’s timing.

The court also granted Bank of America’s motion to dismiss the breach-of-contract claim. Regarding the memorandum of understanding, the court rejected Bank of America’s argument that the agreement was unenforceable merely because Bayview allegedly had not signed it. But the complaint did not identify what conduct by Bank of America breached the agreement or which obligation it violated. The court also found that the complaint’s boilerplate allegations did not plausibly establish an agency relationship between Bank of America and Bayview.

The court found that Lansdown had not sufficiently pleaded contract claims against Bank of America based on the settlement agreement or the loan-modification agreement. Bank of America was not shown to be a party to the loan-modification agreement, and Lansdown did not adequately respond to the arguments concerning the settlement agreement. The court also found that any claim based on the deed of trust failed to identify how Bank of America breached it.

The court granted Lansdown leave to amend the breach-of-contract claim against Bank of America if she had facts showing that Bank of America specifically breached the deed of trust, settlement agreement, or memorandum of understanding.

Disposition

The court granted in part and denied in part Bayview and Shellpoint’s motion to dismiss and granted Bank of America’s motion to dismiss. Leave to amend was granted only for the limited claims and factual allegations identified in the order: possible successor contractual obligations by Shellpoint; clarification of Bayview claims based on the loan-modification or settlement agreements; and facts showing that Bank of America specifically breached the deed of trust, settlement agreement, or memorandum of understanding. Leave to amend was otherwise denied. If Lansdown chose to amend, the court ordered her to file a Third Amended Complaint within 30 days.