Carter v. Bank of America, N.A. , 845 F. Supp. 2d 140 ( 2012 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
DERICK CARTER,
Plaintiff,
Civil Case No. 11-620 (RJL)
V.
BANK OF AMERICA, N.A., et al.,
FILED
FEB 2 7 2012
Defendants.
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MEMGRANDUM OPINI<)N wills m lhe'§!;'§&§‘i §?'é'§'.l.'?§l’,¥a
(February §§ 2012) [Dkr. # 5, 101
P1aintiff Derick Carter brings this action against Bank of America, N.A. ("Bank of
America") and BAC Home Loan Servicing, L.P. ("BAC") (collectively, "defendants"),
seeking damages for breach of contract.l Before the Court is defendants’ Motion to
Dismiss and plaintiffs Motion for Leave to File Amended Complaint. Upon
consideration of the parties’ pleadings, relevant law, and the entire record herein, the
defendants’ Motion to Dismiss is GRANTED, and plaintiffs Motion for Leave to File
Amended Complaint is DENIED as moot.
BACKGROUND
ln 2001, plaintiff executed a Deed of Trust (the "Deed of Trust") for a loan from
Bank of America to purchase residential and investment property (the "mortgage").
1 In Count II of his complaint, plaintiff alleged a breach of duty of good faith and fair
dealing, but withdrew this claim in his Opposition to Defendants’ Motion to Dismiss.
Compl. ‘M 36-48; Pl.’s Opp’n to Defs.’ Mot. to Dismiss at 7. This Court, therefore, need
not and will not address the parties’ arguments related to this issue.
Compl. ll 7. The Deed of Trust provides that "[e]xtension of the time for payment or
modification of amortization of the sums secured by this Security Instrument granted by
Lender to Borrower . . . shall not operate to release the liability of Borrower" and "[a]ny
forbearance by Lender in exercising any right or remedy including, without limitation,
Lender’s acceptance of payments . . . in amounts less than the amount then due, shall not
be a waiver of or preclude the exercise of any right or remedy." Defs.’ Ex. A, Deed of
Trust, at cl. 12.2 In the event of default, defendants had the right to require immediate
payment or invoke the power of sale. Ia’. at cl. 22. Plaintiff twice refinanced the
mortgage. Compl. \H[ 9, l2. In November 2002, plaintiff executed a separate deed of
trust for a line of credit from CommonWeaIth One Federal Credit Union (the "home
equity loan") (together, with the mortgage, the "loans"), which he later ref`inanced.
Compl. 11 8, l0.
Plaintiff sought to modify the terms of both his mortgage and his home equity loan
with defendants. On November 25, 2009, defendants sent plaintiff a letter proposing
terms modifying the mortgage. Compl. $l 15. The letter directed plaintiff to (l) carefully
review all documents; (2) sign, date and notarize the Loan Modif`ication Agreement;
(3) remit the first payment due; (4) sign and date the Modif`ication Bankruptcy Disclosure
Rider; and (5) return all documents and first payment by December 14, 2009. Defs.’
Ex. B, November 25, 2009 Modif`ication Letter (the "Mortgage Modif`ication Letter"),
at 2. For the modification to become binding and effective, the signatures of both
2 Plaintiff did not label the exhibits attached to his complaint; therefore, for purposes of
clarity, the Court will refer to the exhibits defendants attached to their motion to dismiss.
plaintiff and BAC were required. Ia’. at l. Plaintiff signed the Loan Modification
Agreement and returned it to BAC, along with the required funds, by overnight mail on
December ll, 2009.3 Compl. ll 16. Defendants cashed the check accompanying the
Loan Modification Agreement, but plaintiff never received a copy of the agreement
signed by BAC. Compl. llll 17, 21. On December l7, 2009, defendants sent plaintiff a
letter proposing a temporary reduction in the terms of his home equity loan. Compl. ‘ll 18.
Plaintiff was directed to sign and return the letter within ten days and make three
consecutive monthly trial payments. Defs.’ Ex. C, December 17, 2009 Home Equity
Loan Modification Letter (the "Home Equity Loan Modification Letter"), at l-Z. After
the three-month trial period, Bank of America would "f`inalize the modification terins."
Id. at l. Plaintiff "immediately signed . . . and retumed" the letter. Compl. ll 19.
Thereafter, plaintiff made "regular timely payments" but never received "returned
copies" of the Home Equity Loan Modification Letter. Compl. ll 2 l.
ln the summer of 2010, defendants informed plaintiff that neither modification had
been accepted and they were accelerating his loans due to missing payments.
Compl. ll 22. Specifically, defendants informed plaintiff that he "had never been given a
permanent loan modification on either loan," his modification was denied, and Bank of
America "made a ‘processing error’ and his permanent loan modifications had not been
funded." Ia’.
3 In his proposed Amended Complaint, plaintiff additionally alleges that he carefully read
the documents and signed and dated the Modification Bankruptcy Disclosure Rider. Am.
Compl. ll l7.
On January 31, 2011, plaintiff filed this lawsuit against defendants in Superior
Court for the District of Columbia. Defendants removed the action to this Court on
March 25, 2011. For defendants alleged breach of contract, plaintiff seeks numerous
forms of relief, including a declaratory judgment affirming the loan modifications as
valid and binding contracts, specific performance of the loan modifications, "financial
79 ¢¢
damages, emotional damages," an "injunction" preventing defendants from harming
plaintiff, removal of negative credit history, a reduction in plaintiff s indebtedness, and
an award of costs and attorneys’ fees. Compl. llll A-I.
STANDARD OF REVIEW
Defendants move to dismiss this action pursuant to Fed. R. Civ. P. l2(b)(6).
"Whi1e a complaint attacked by a Rule l2(b)(6) motion to dismiss does not need detailed
factual allegations, a plaintiffs obligation to provide the grounds of his entitle[ment] to
relief requires more than labels and conclusions, and a forinulaic recitation of the
elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007) (citations and quotation marks omitted) (alteration in original). The "complaint
must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face."’ Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citation omitted).
"[T]he court need not accept inferences drawn by plaintiff[] if such inferences are
unsupported by the facts set out in the complaint." Kowal v. MCI Commc ’ns Corp., 16
F.3d l271, 1276 (D.C. Cir. 1994). The court may, however, consider "any documents
either attached to or incorporated in the complaint and matters of which [the court] may
take judicial notice." EEOC v. St. Francz`s Xavier Parochial Sch., 117 F.3d 621, 624
(D.C. Cir. 1997).
ANALYSIS
Defendants argue that plaintiff has failed to allege the existence of a contract or
damages, and cannot rely on quasi-contractual forms of relief. Defs.’ Mot. to Dismiss at
5-9. Plaintiff, in tum, argues that the loan modifications were valid, binding contracts
and seeks to amend his complaint to add claims for promissory estoppel and injunctive
relief. Pl.’s Opp’n to Defs.’ Mot. to Dismiss ("Pl.’s Opp’n") at 2-9. However, even
assuming the facts alleged in plaintiffs proposed amended complaint, plaintiff, for the
following reasons, fails to state a claim upon which relief can be granted.
I. Breach of Contract
To state a claim for breach of contract, plaintiff must allege "(l) a valid contract
between the parties; (2) an obligation or duty arising out of the contract; (3) a breach of
that duty; and (4) damages caused by breach." Ihebereme v. Capz`tal One, N.A., 730 F.
Supp. 2d 40, 47 (D.D.C. 2010) (quoting Tsz`ntolas Really C0. v. Mendez, 984 A.2d 181,
187 (D.C. 2009)). Under District of Columbia law, a valid and enforceable contract
exists where there is "both (l) agreement as to all material terms, and (2) intention of the
parties to be bound." Kramer Ass0cs., Inc. v. Ikam, Ltd., 888 A.2d 247, 251 (D.C. 2005)
(quoting Georgetown Entm ’t Corp. v. District of Columbz'a, 496 A.2d 587, 590 (D.C.
1985)) (alteration in original). Although mutual agreement "is most clearly evidenced by
the terms of a signed written agreement . . . such a signed writing is not essential to the
formation of the contract. The parties’ acts at the time of the making of the contract are
also indicative of a meeting of the minds." Kramer Assocs., Inc., 888 A.2d at 252(quoting Davis v. Winfz`ela', 664 A.2d 836, 838 (D.C. 1995)) (internal quotation marks
omitted). "In the absence of a valid agreement, a breach of contract claim cannot be
sustained." Cambrz'dge Holdz`ngs Grp., Inc. v. Fed. Ins. C0., 357 F. Supp. 2d 89, 94
(D.D.C. 2004) (citation omitted), appeal dismissed, 489 F.3d 1356 (D.C. Cir. 2007).
Accepting plaintiffs allegations as true, plaintiff has failed to allege the existence
of a contract to permanently modify the loans. Even assuming that, as alleged in his
proposed Amended Complaint, plaintiff performed all the prerequisites outlined in the
Mortgage Modification Letter, no contract to modify the mortgage was formed because
defendants never executed the Loan Modification Agreement-a requirement for the
contract’s formation. Defs.’ Ex. B at 1. Contrary to plaintiff s allegations that the
Mortgage Modification Letter demonstrates defendants’ intent to be bound, Pl.’s Opp’n
at 3-4, the letter is clear that no contract will be formed unless and until defendants sign
the Loan Modification Agreement. Defs.’ Ex. B at 1. Plaintiff admits that he never
received signed copies of the agreement. Compl. ll 22.
Nevertheless, plaintiff argues that he accepted an offer to modify the mortgage
when he followed the letter’s directions. Compl. llll l6, 20; Pl.’s Opp’n at 3-5. However,
"[a]n offer is a manifestation of intent to be bound without further action on the part of
the offeror." RDP Techs., Inc. v. Cambl' AS, 800 F. Supp. 2d 127, 141 (D.D.C. 2011)
(citing 1836 SSt. Tenants Ass ’n v. Estate ofB. Battle, 965 A.2d 832, 839 (D.C. 2009)).
The letter was not an offer, but a proposal requiring plaintiff to take certain steps. Once
plaintiff completed those steps, no "further action" by plaintiff was required, and
therefore, plaintiff extended an offer to defendants. Ia’. Defendants then had the ability
to accept by signing the Loan Modification Agreement. Although a signature is not
always essential to a contract’s formation, here, because defendants’ signature was a
required element of contract forination, their election not to sign the Loan Modification
Agreement demonstrates their lack of intent to be bound and confirms that there was no
meeting of the minds. Kramer Ass0cs., Inc., 888 A.2d at 252.
Similarly, plaintiff has failed to allege the formation of a contract to permanently
modify the Home Equity Loan. At best, the parties formed a contract for a temporary
modification of the loan’s terms. By signing and returning the Home Equity Loan
Modification Letter, plaintiff merely agreed to make three "trial payments" over a three-
month period, not to permanently change the loan’s terms.4 Defs.’ Ex. C at l-2. Plaintiff
argues that the letter demonstrates defendants’ intent to be bound. Pl.’s Opp’n at 3-4. lt
does, but only for a trial period. The letter indicates that the modification would not be
finalized until plaintiff successfully completed the three-month trial period. Defs.’ Ex. C
at l. At the end of the trial period, and only if plaintiff paid all three monthly trial
payments, defendants would "finalize the modification terms." ld.
Construing the complaint in the light most favorable to the plaintiff, the Court
4 Defendants emphasize that the Home Equity Loan Modification Letter attached to the
complaint was not signed. Yet, this is of no import. In his complaint, plaintiff alleges
that he signed the letter, Compl. ll 19, and this Court accepts the allegations as true for
purposes of a motion to dismiss.
interprets plaintiffs allegation that he made "regular timely monthly payments," Compl.
ll 20, to mean that plaintiff successfully completed the trial period. Defendants, however,
did not finalize the modification thereafter, and "denied [plaintiff] a permanent loan
modification." Compl. ll 22. Accordingly, plaintiffs allegations demonstrate, at most,
that the parties entered into a contract for a temporary modification of the home equity
loan, and that defendants then denied the permanent modification.
Plaintiff additionally alleges that defendants assented to the loan modifications and
intended to be bound when they accepted his loan payments. Compl. ll‘ll l7, 31.
However, the Deed of Trust specifically states that defendants’ acceptance of payments
"in amounts less than the amount then due" does not waive defendants’ right to accelerate
or foreclose on the mortgage, Defs.’ Ex. A at cls. 12 & 22, and the Home Equity Loan
Modification Letter explicitly required monthly payments, Defs.’ Ex. C at l. Therefore,
by accepting plaintiffs payments, the defendants were acting in accordance with the
terms of the Deed of Trust and the Home Equity Loan Modification Letter, not
demonstrating intent to be bound. Plaintiff even admits that defendants told him the
modifications were denied. Compl. ll 22. Because defendants did not sign the Loan
Modification Agreement, did not finalize the home equity loan modification, and
demonstrated no intent to be bound, no contracts were formed to permanently modify the
loans.5
5 Because plaintiff has failed to state a claim upon which relief can be granted, plaintiffs
request for injunctive relief is denied.
II. Equitable Relief
Unfortunately for the plaintiff, it would not be appropriate in this case to allow
him to amend his complaint to include a promissory estoppel claim. Plaintiff freely
admits that he "made no claim for promissory estoppel" when he filed his complaint.
Pl.’s Opp’n at 6. In his Opposition to Defendants’ Motion to Dismiss, however, he
suddenly seeks to amend his complaint and plead it in the alternative. Id. A claim based
on promissory estoppel "presuppose[s] that an express, enforceable contract is absent."
Plesha v. Ferguson, 725 F. Supp. 2d 106, 112 (D.D.C. 2010). Therefore, where "an
express contract that governs the parties’ conduct" exists, "courts generally prohibit
litigants from asserting these claims." Id. Here, the mortgage and home equity loan
deeds of trust are express contracts that govern the parties’ relationship. Therefore, to the
extent that plaintiff sought relief under the theory of promissory estoppel in his
complaint, that claim is dismissed.
CONCLUSION
F or all of the foregoing reasons, the Court GRANTS the defendants’ Motion To
Dismiss and DENIES plaintiffs Motion for Leave to File Amended Complaint as moot.
This action is dismissed in its entirety. An Order consistent with this decision
accompanies this Memorandum Opinion.
clifiaii/
RICHARD J. L ON
United States District Judge