Ruivo v. Wells Fargo Bank, N.A. , 766 F.3d 87 ( 2014 )

United States Court of Appeals
For the First Circuit
No. 13-1222
LINDA M. RUIVO,
Plaintiff, Appellant,
v.
WELLS FARGO BANK, N.A., a/k/a WACHOVIA MORTGAGE, DIVISION OF
WELLS FARGO BANK, N.A., f/k/a WACHOVIA MORTGAGE,
FSB, f/k/a WORLD SAVINGS BANK, FSB,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Paul J. Barbadoro, U.S. District Judge]
Before
Howard, Stahl and Lipez
Circuit Judges.
David H. Bownes, with whom Law Office of David H. Bownes, P.C.
was on brief, for appellant.
David M. Bizar, with whom Kiran A. Seldon and Seyfarth Shaw
LLP were on brief, for appellee.
September 8, 2014
LIPEZ, Circuit Judge. Linda Ruivo appeals the district
court's dismissal of counts one and five of her First Amended
Complaint. Ruivo argues that count one, captioned "N.H.R.S.A. 397-
A:2(VI)," adequately pleaded a state common law claim of fraud, and
that count five sufficiently pleaded, consistent with its caption,
a promissory estoppel claim. Agreeing with the district court that
both claims were inadequately pleaded, we affirm the district
court's dismissal.
I.
In reviewing the grant of a motion to dismiss, we recount
the facts as alleged in the operative complaint. Grajales v. P.R.
Ports Auth., 682 F.3d 40, 43 (1st Cir. 2012). Here the pertinent
complaint is the First Amended Complaint.
In July of 2007, Ruivo's property, consisting of a
primary residence and cottage in Moultonborough, New Hampshire, was
subject to a $500,000 mortgage. In the fall of 2007, Ruivo had
begun to consider refinancing her mortgage. To that end, during
the late winter and early spring of 2008, she discussed refinancing
with Wachovia Mortgage, FSB, a predecessor in interest to
defendant-appellee Wells Fargo Bank, N.A. (hereinafter "Wells
Fargo") and Scott Farah, a mortgage broker at Financial Resources
Mortgage, Inc.1 Based on those discussions, she believed that
1
In her complaint, Ruivo refers to both Scott Farah and his
firm, Financial Resources Mortgage, Inc., as "agents" of Wells
Fargo.
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refinancing her property on more favorable terms was possible, but
that she needed to make some improvements to her property to
increase its appraised value. Hence, before refinancing, she began
to make improvements on her property, drawing on various lines of
credit. Ruivo then applied to Wachovia for a thirty-year fixed
interest rate mortgage with cash out. In June of 2008, Farah
informed her that she had been approved for a loan.
At the July 11, 20082 closing for the refinancing,
without prior notice, the terms of the refinancing were unfavorably
changed to an interest-only loan with an interest rate increasing
every six months. Farah, who was present as the Mortgage Advisor
at the closing for the refinancing, advised Ruivo that there were
no other options but to sign. Faced with the large debt from her
property improvements, Ruivo moved forward with the refinancing.
Farah nonetheless assured Ruivo that further refinancing at a later
date was "a realistic option." In subsequent discussions, he
"continued to assure her more favorable terms would be
forthcoming." She represents that at that time she had no reason
to distrust Farah.
In November of 2009, after the demise of Financial
Resources Mortgage, Inc., Ruivo realized she would be unable to
2
In her complaint, Ruivo also refers to the closing date as
June 11, 2008. We treat that reference as a typographical error as
her timeline is consistent with a July closing date, and she uses
the July date in her brief on appeal.
-3-
refinance her mortgage through conventional sources. Finding it
difficult to maintain her mortgage payments, she explored the
possibility of a loan modification pursuant to the American
Recovery and Reinvestment Act of 2009. On the advice of Joseph
Lamour, a loan modification consultant affiliated with Wells Fargo,
she applied for three different loan modifications. Ruivo was
informed verbally in February of 2011 that a loan modification
pursuant to the Home Affordable Modification Program ("HAMP") had
been approved.3 However, shortly after this notice of approval,
Lamour informed Ruivo by telephone that the modification ultimately
had been denied because the mortgage had a negative net present
value caused by the extraction of too much equity from the
property.
II.
Ruivo subsequently brought suit against Wells Fargo,
alleging, inter alia, a violation of N.H. Rev. Stat. Ann. § 397-
A:2(VI) in count one of her complaint and a promissory estoppel
claim in count five. Wells Fargo moved to dismiss the complaint
under Federal Rule of Civil Procedure 12(b)(6).
In response to the motion, the district court found that
Ruivo claimed in count one that Wells Fargo was liable under a New
3
HAMP is a "a federal initiative that incentivizes lenders
and loan servicers to offer loan modifications to eligible
homeowners." Young v. Wells Fargo Bank, N.A., 717 F.3d 224, 228
(1st Cir. 2013).
-4-
Hampshire statute that authorized the New Hampshire Banking
Department to regulate mortgage bankers and mortgage brokers, but
did not expressly authorize enforcement actions by private parties.
See N.H. Rev. Stat. Ann. § 397-A:2(VI). Citing New Hampshire
precedent, the court concluded that Ruivo was not entitled to
invoke that statute unless she could demonstrate that the
legislature intended to authorize a private party's suit by
implication. The court then dismissed the claim, concluding that
Ruivo had failed to present a credible argument to support a
private right of action under the statute. In a footnote, the
court further stated, "I also reject Ruivo's eleventh-hour attempt
to convert her statutory claim into a common law fraud claim. A
litigant may not amend a complaint in an objection to a motion to
dismiss." Ruivo v. Wells Fargo Bank, N.A., No. 11-cv-466-PB, 2012
WL 5845452, at *2 n.4 (D.N.H. Nov. 19, 2012).
With respect to count five of Ruivo's complaint, the
district court explained that under the law of promissory estoppel,
"'a promise reasonably understood as intended to induce action is
enforceable by one who relies on it to his detriment or to the
benefit of the promisor.'" Id. at *5 (quoting Panto v. Moore Bus.
Forms, Inc., 547 A.2d 260, 266 (N.H. 1988) (Souter, J.)). The
court then dismissed the claim, finding that Ruivo "fail[ed] to
plausibly allege a claim either that she relied on the promise to
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her detriment or that Wells Fargo benefitted in some way from
making the promise." Id.
III.
We review de novo the grant of a motion to dismiss under
Rule 12(b)(6). Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 7
(1st Cir. 2011). We examine whether the operative complaint states
a claim for which relief can be granted, construing the
well-pleaded facts in the light most favorable to the plaintiff,
id., accepting their truth and drawing all reasonable inferences in
plaintiff's favor, Grajales, 682 F.3d at 44.
In resolving a motion to dismiss, we "must separate the
complaint's factual allegations (which must be accepted as true)
from its conclusory legal allegations (which need not be
credited)." A.G. ex rel. Maddox v. Elsevier, Inc., 732 F.3d 77, 80
(1st Cir. 2013) (internal quotation marks omitted). We then
"determine whether the remaining factual content allows a
reasonable inference that the defendant is liable for the
misconduct alleged." Id. (internal quotation marks omitted).
This is not to say, however, that legal allegations serve
no purpose and go unscrutinized. Under Federal Rule of Civil
Procedure 8(a)(2), the plaintiff has a "'responsibility for
identifying the nature of her claim.'" Thomas v. Rhode Island, 542
F.3d 944, 949 (1st Cir. 2008) (quoting Calvi v. Knox Cnty., 470
F.3d 422, 430 (1st Cir. 2006)). On appeal of a dismissal ruling
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that a legal claim was unpleaded, we review de novo whether "the
generality of the complaint's language did not afford defendants
[advance] notice with respect to the [nature of that particular
legal] claim." Thomas, 542 F.3d at 949.
A. Fraud
On appeal, Ruivo concedes that she cannot claim a private
right of action under N.H. Rev. Stat. Ann. § 397-A:2(VI). Instead,
she insists, as she did at oral argument before the district court,
that she has stated a claim for common law fraud.4 Wells Fargo
argues that there is no reference to any such fraud claim in the
complaint, and therefore Ruivo is not entitled to pursue it.
The relevant allegations of the complaint fall under the
section with the heading: "COUNT I N.H.R.S.A. 397-A:2(VI)." The
allegations following that heading describe the actions of Wells
Fargo and its agents that Ruivo felt violated the statute. Among
other things, Ruivo alleged that "[t]he defendants' agents . . .
employed a device[,] scheme and artifice to deceive and defraud the
plaintiff into entering into and agreeing to the Closing
documents," and further alleged that "it was not until November of
4
Ruivo also specifically disclaims construing her objection
to the motion to dismiss as an attempt to amend her complaint to
add a common law claim. Ruivo insists that the common law claim
was part of her complaint from the beginning. Thus, she does not
challenge as an error of law the district court's statement that
"[a] litigant may not amend a complaint in an objection to a motion
to dismiss," Ruivo, 2012 WL 5845452, at *2 n.4, and we need not
examine the procedural and discretionary limitations on amending a
complaint in response to a motion to dismiss.
-7-
2009 . . . that the plaintiff first understood that [defendants'
agents] had been engaging in a pattern of fraud and deceit. . . ."
(Emphasis added). Those two fleeting uses of the words "defraud"
and "fraud" simply borrow from the statutory language, which makes
it unlawful for any mortgagee "[t]o employ any device, scheme, or
artifice to defraud." N.H. Rev. Stat. Ann. § 397-A:2(VI). The
complaint contains no other references to fraud and sets forth no
separate count of common law fraud.
Although "'[a] complaint need not point to the
appropriate statute or law in order to raise a claim for relief
under Rule 8,'" Morales-Vallellanes v. Potter, 339 F.3d 9, 14 (1st
Cir. 2003) (quoting Tolle v. Carroll Touch, Inc., 977 F.2d 1129,
1134 (7th Cir. 1992)), its "substance and structure" must give the
defendants notice of the nature of the claim against them,
Cortés-Rivera v. Department of Corrections & Rehabilitation, 626
F.3d 21, 28-29 (1st Cir. 2010). The court, and the defendants, are
entitled to rely on the plain language and the structure of the
complaint in determining what claims are present there. See id. at
28. To be sure, a plaintiff need not divide her complaint into
specifically labeled subsections, one for each count. However,
when, as here, a plaintiff chooses to do just that, her claims are
confined by the "internal logic present in . . . the complaint."
Id.
-8-
In light of the explicit invocation of a statutory claim
in the relevant heading of the complaint, and her use of language
in the complaint essentially tracking the statute invoked, there is
nothing in the complaint that would provide Wells Fargo with
adequate notice of a potential common law fraud claim. All
indications pointed to a statutory claim only. See Thomas, 542
F.3d at 949 (affirming a dismissal because "[t]he vague references
in the complaint to acts of the defendants that 'are illegal' and
'without lawful authority' were insufficient to apprise defendants
that the appellants were asserting a more particular claim that
there was a lack of probable cause for the arrests"); see also
Cortés-Rivera, 626 F.3d at 28-29 (affirming the dismissal of a
claim that the plaintiff pleaded in the complaint in state law
terms and then attempted to reframe in federal law terms in the
face of a motion for summary judgment). Here, as in those cases,
the plaintiff is not entitled to pursue "every legal theory that a
court may some day find lurking in the penumbra of the record."
Rodriguez v. Doral Mortg. Corp., 57 F.3d 1168, 1172 (1st Cir.
1995). Accordingly, the district court properly dismissed any
state law fraud claim that Ruivo belatedly attempted to advance.
B. Promissory Estoppel
In contrast to her alleged fraud claim, Ruivo
specifically enumerated a promissory estoppel claim as "Count V" in
her complaint. Under New Hampshire's doctrine of promissory
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estoppel, "a promise reasonably understood as intended to induce
action is enforceable by one who relies upon it to his detriment or
to the benefit of the promisor." Panto, 547 A.2d at 266 (citing
Restatement (Second) of Contracts § 90 (1981)); see also Rockwood
v. SKF USA Inc., 687 F.3d 1, 9 (1st Cir. 2012) ("The New Hampshire
Supreme Court has adopted the definition of promissory estoppel
from Section 90 of the Restatement (Second) of Contracts.").
In New Hampshire, "the promissory estoppel doctrine does
not simply allow the enforcement of promises 'as justice
requires.'" Rockwood v. SKF USA Inc., 758 F. Supp. 2d 44, 56
(D.N.H. 2010). "There are other limitations on its reach," such as
protecting only "'reasonable reliance' on the part of the
promis[ee]" to her detriment. Id. at 56-57 (quoting Marbucco
Corp. v. City of Manchester, 632 A.2d 522, 524 (N.H. 1993). Thus,
in order to survive a motion to dismiss, a plaintiff must plead
facts that could plausibly support a finding that she reasonably
relied on a promise of the defendant to her detriment.
Here, Ruivo bases her claim on the alleged promise of
Wells Fargo to "consider her mortgage modification request in good
faith and fair dealing."5 The complaint goes on to allege that she
"relied on the defendants' representation by submitting her
application, request[ing] documentation and subsequent information
5
We note that her promissory estoppel claim is not based on
the events leading up to and including Ruivo's refinancing. Her
focus is on the subsequent attempts to modify her refinanced loan.
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relating to the appraisal"6 and, as to detriment, that she "risks
losing her home and suffered additional fees and charges on her
accounts and/or foreclosure/collection activity against her home."
The district court ruled that "she fails to plausibly
allege a claim either that she relied on the promise to her
detriment or that Wells Fargo benefitted in some way from making
the promise." Ruivo, 2012 WL 5845452, at *5 (emphasis added).7 We
agree with the deficiency of her allegations on reasonable
detrimental reliance. First, her complaint indicates that she was
having trouble making her mortgage payments due to "economic
difficulties." Only then did she need a loan modification. There
is nothing to indicate that she stopped paying her mortgage or
sought a loan modification because she was promised fair
consideration of her application. Indeed, apparently recognizing
this shortcoming, Ruivo belatedly attempts to allege, for the first
time on appeal, that "she stopped paying her mortgage" in reliance
on Wells Fargo's promise to fairly consider her loan modification
application. The complaint, however, contains no such allegation.
Second, even if Ruivo adequately pleaded that she acted
in reliance on Wells Fargo's promise to consider her loan
6
An appraisal was required to establish the value of Ruivo's
home for the purpose of any potential loan modification. Ruivo
commissioned a second appraisal when she was not happy with the one
commissioned by Wells Fargo.
7
Ruivo does not cite "benefit of the promisor" in pursuing
her promissory estoppel claim.
-11-
modification application, she failed to adequately plead how that
reliance was to her detriment. The alleged promise at issue was
only to "consider her mortgage modification request." (Emphasis
added). Hence, Wells Fargo could have considered and denied her
request without breaking its promise. Such a result would leave
Ruivo in the same predicament she now faces. The "risk[] [of]
losing her home" came from Ruivo's apparent inability to pay her
mortgage, not any actions taken in reliance on Wells Fargo's
promise. As the district court aptly put it, "[i]t is not
sufficient to allege, as she has done, only that she has been
harmed by losing out on the benefit of a renegotiated loan."
Ruivo, 2012 WL 5845452, at *5. Accordingly, the district court
correctly dismissed her promissory estoppel claim.8
Affirmed.
8
Because we conclude that Ruivo failed to adequately plead
reasonable detrimental reliance, we need not reach the more
complicated question of whether a claim for promissory estoppel can
ever be based on a mortgagee's alleged promise to consider a
mortgagor for a loan modification under HAMP.
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