Not for Publication in West's Federal Reporter
United States Court of Appeals
For the First Circuit
No. 17-1699
KAREN M. SHEA,
Plaintiff, Appellant,
v.
DITECH FINANCIAL LLC; WILMINGTON SAVINGS FUND SOCIETY, FSB,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]
Before
Howard, Chief Judge,
Lipez and Barron, Circuit Judges.
Moss M. Sidell and Sidell Law Offices, P.C. on brief for
appellant.
Richard E. Briansky, Benjamin M. Greene, and McCarter &
English LLP on brief for appellees.
May 4, 2020
Per Curiam. In this diversity action, appellant Karen
M. Shea appeals the dismissal of her claims for breach of contract
and violation of Massachusetts consumer protection law against two
mortgage companies.1 We affirm.
I. Background
In 2006, Shea and her former husband refinanced the
mortgage on their home in Scituate, Massachusetts, with a $400,000
loan from Mt. Washington Cooperative Bank. The new mortgage and
its accompanying note were first assigned to the Mortgage
Electronic Registration System and later to BAC Home Loans
Servicing, LP, a subsidiary of Bank of America. Shea obtained
full title to the property in her divorce.
After Shea fell behind on her loan payments, BAC offered
to temporarily delay foreclosing on the property if Shea made
reduced payments under the Fannie Mae HomeSaver Forbearance
Program. In July 2009, Shea and BAC signed an agreement in which
Shea promised to make six monthly payments of $1,661.31 -- half
her monthly obligation under the mortgage and note -- and BAC
promised to "suspend any scheduled foreclosure sale" during that
period.
The forbearance agreement included a term stating that
it was "not a forgiveness of payments on [the] Loan or a
1
Shea filed a five-count complaint, but she appeals dismissal
of only the contract and consumer-protection counts.
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modification of the Loan Documents." More specifically, the
Agreement provided that "all terms and provisions of the Loan
Documents remain in full force and effect; nothing in this
Agreement shall be understood or construed to be a satisfaction or
release in whole or in part of the obligations contained in the
Loan Documents."
Shea alleges in her complaint that she made the specified
payments and that, at the end of the six-month period, she "was
instructed by BAC to continue the payments under the program."
She continued to pay the reduced amount through July 20, 2010.
Nonetheless, on May 14, 2010, BAC sent a Notice of Intention to
Foreclose, giving Shea thirty days to cure her default under the
mortgage. However, BAC did not pursue foreclosure at that time,
and in 2014 it transferred the mortgage and note to Ditech
Financial LLC.2 The document effecting the assignment to Ditech
does not mention the forbearance agreement, and it states that the
assignee is "subject only to the terms and conditions of the above-
described Mortgage." Shea alleges that she "applied for multiple
loan modifications in the ensuing years," but was denied them each
time.
In September 2015, Shea sent a demand letter to Ditech,
requesting relief under the Massachusetts consumer protection
2 At that time, Ditech was known as Green Tree Servicing LLC.
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statute familiarly known as Chapter 93A. See Mass. Gen. Laws ch.
93A. She alleged, inter alia, that BAC had failed to comply with
Massachusetts statutory foreclosure requirements and that neither
BAC nor Ditech "has ever accounted for" the payments made under
the forbearance agreement. In response, Ditech denied any
violation of Chapter 93A and detailed when Shea's payments, other
than the final one in July 2010, had been applied to her
outstanding loan balance by BAC.
In April 2016, Shea filed a state-court complaint that
included the breach-of-contract and Chapter 93A claims at issue in
this appeal. After Ditech removed the case to federal court, it
assigned Shea's mortgage to the Wilmington Savings Fund Society,
FSB. Shea then filed an amended complaint against both Ditech and
Wilmington. Shea did not name BAC in either complaint.
The district court granted Ditech's and Wilmington’s
motion to dismiss the complaint, finding, as relevant to our
review, that the two companies could not have breached the
forbearance agreement because they were not parties to it, and
that Shea's Chapter 93A claim was time-barred. This appeal
followed.3
3
Although not pertinent to the appeal, we note that, in
September 2016, the district court denied Shea's motion for a
preliminary injunction seeking to bar the foreclosure sale of the
property. See Memorandum and Order, No. 1:16-cv-11488-NMG, Dkt.
21 (D. Mass. Sept. 22, 2016). The record does not indicate whether
such a sale took place.
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II. Discussion
We review de novo a district court's dismissal for
failure to state a claim under Rule 12(b)(6). Lorenzana v. S. Am.
Rests. Corp., 799 F.3d 31, 33 (1st Cir. 2015). A complaint must
be dismissed if it does not state a claim to relief that is
"plausible on its face" even when the alleged facts are taken in
the light most favorable to the nonmoving party. Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 570 (2007). Review on appeal is
restricted to the facts contained in the complaint, "matters fairly
incorporated within it[,] and matters susceptible to judicial
notice." Zenon v. Guzman, 924 F.3d 611, 616 (1st Cir. 2019)
(quoting In re Colonial Mortg. Bankers Corp., 324 F.3d 12, 15 (1st
Cir. 2003)).
Where federal jurisdiction is based on diversity of
citizenship, we apply the substantive law of the forum state, here
Massachusetts, see Calandro v. Sedgwick Claims Mgmt. Servs., Inc.,
919 F.3d 26, 34 (1st Cir. 2019), which is also stipulated as the
governing law in the forbearance agreement. Shea claims that BAC
breached the agreement by initiating foreclosure proceedings
against her, and that Ditech and Wilmington inherited liability
for this breach when they received the assigned mortgage from their
predecessor-in-interest. However, "[a]s a general matter,
contracts do not bind nonparties." City of Revere v. Bos./Logan
Airport Assocs., LLC, 416 F. Supp. 2d 200, 208 (D. Mass. 2005)
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(citing EEOC v. Waffle House, Inc., 534 U.S. 279, 294 (2002)).
Thus, to prevail on her breach-of-contract claim, Shea would need
to prove, as a threshold matter, that Ditech and Wilmington may be
treated as parties to the forbearance agreement.
No facts alleged in the complaint plausibly establish
that either Ditech or Wilmington agreed to step into BAC's shoes
with respect to the agreement. Indeed, as noted above, the BAC
mortgage assignment expressly states that the assignee, i.e.,
Ditech, is "subject only to the terms and conditions of the above-
described Mortgage," and the forbearance agreement expressly
states that the terms of the original loan remained in effect.
Hence, because the defendants were not parties to the forbearance
agreement, Shea cannot succeed with a claim that they breached it.
Nor can Shea maintain her claim that defendants
committed unfair and deceptive business practices. A plaintiff
must bring Chapter 93A claims within four years of when she "knew
or should have known of appreciable harm resulting from" an alleged
violation. Int'l Mobiles Corp. v. Corroon & Black/Fairfield &
Ellis, Inc., 560 N.E.2d 122, 126 (Mass. App. Ct. 1990); see also
Mingde Hong v. Northland Ins. Co., 313 F. Supp. 3d 364, 365 (D.
Mass. 2018). On appeal, Shea effectively concedes that the conduct
underlying her Chapter 93A claim occurred beyond the limitations
period. She argues only that she is entitled to extra time under
the discovery rule because Chapter 93A is a "very technical
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statute," and she was not aware of the claim until she engaged
counsel. Under Massachusetts law, however, "accrual under the
discovery rule is not delayed until a plaintiff learns that [s]he
was legally harmed." Harrington v. Costello, 7 N.E.3d 449, 457
(Mass. 2014). Accordingly, Shea's Chapter 93A claim was properly
dismissed.
One additional matter remains. Ditech and Wilmington
ask that we sanction Shea for bringing a frivolous appeal, or,
alternatively, that we declare the appeal frivolous to pave the
way for them to file a motion for sanctions. We decline their
request. "[A]n appeal can be weak, indeed almost hopeless, without
being frivolous . . . ." Lallemand v. Univ. of R.I., 9 F.3d 214,
217-18 (1st Cir. 1993). We conclude that this is such a case.
For the foregoing reasons, we affirm the dismissal of
Shea's complaint and deny Ditech's and Wilmington's request for
sanctions.
So ordered.
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