Opinion
13-P-196
05-04-2015
MICHELLE CONLEY v. SOVEREIGN BANK.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiff, Michelle Conley, appeals from the dismissal of her amended complaint pursuant to Mass.R.Civ.P. 12(c), 365 Mass. 754 (1974). We consider the dismissal in two parts. First, we consider the dismissal of all of the indirect claims against Sovereign Bank (Sovereign), which, in the main, are pleaded under agency/respondeat superior theories, coupled with fraud claims. These indirect claims are based on the actions of Attorney Steven Strojny, a mortgage broker who also acted as the settlement agent at the closing. We affirm the judgment of dismissal on all these claims. Second, we consider the dismissal of the separate negligence claim which was pleaded directly against Sovereign in count XVI. We vacate the dismissal of count XVI of the amended complaint against Sovereign.
The following facts are taken from the plaintiff's amended complaint. In 2008, the plaintiff contacted Strojny about financing a home purchase; Strojny was an attorney and principal of LoanQuest, a mortgage company (and related companies, see note 1, supra). Strojny allegedly made many false statements to the plaintiff regarding the financing, causing her to believe she could afford the property.
Strojny filed for bankruptcy, and the claims against him were discharged. At the time of the motion for judgment on the pleadings, other claims against the Strojny affiliates (Loan Quest Mortgage, and Steven Strojny Real Estate Company) were also dismissed. Sovereign is the only remaining defendant.
When the plaintiff initially objected to the terms of the loan disclosed to her prior to closing, Strojny fraudulently assured her that a new loan with a lower rate was imminent and that he would make the first few payments himself if new financing terms were not available at the time of closing. In his closing settlement agent role, Strojny, according to the amended complaint allegations, took deposits for which he failed to account, and, at the closing, failed to disburse the required amounts as reflected on the HUD form.
The plaintiff made no payments on the loan. Sovereign began foreclosure proceedings. The plaintiff filed an application seeking a loan modification, but no modification was granted by Sovereign.
First, with respect to the indirect agency theories which seek to hold the bank responsible for Strojny's actions, Sovereign submits that its liability is limited by G. L. c. 93, § 70, to title defects and that, in any event, Sovereign cannot be held liable indirectly on agency principles for Strojny's misrepresentations. See Sandman v. Quincy Mut. Fire Ins. Co., 81 Mass. App. Ct. 188, 193-195 (2012). We agree that the dismissal of all counts seeking to hold Sovereign vicariously liable for Strojny's actions was proper. See generally Flomenbaum v. Commonwealth, 451 Mass. 740, 742 (2008); Welch v. Sudbury Youth Soccer Assoc., 453 Mass. 352, 353-354 (2009). Accordingly, we affirm the dismissal of all of these counts of the amended complaint.
We turn now to count XVI which is a negligence count pleaded directly against Sovereign. Specifically, count XVI of the amended complaint alleges Sovereign negligently approved the loan, and Sovereign negligently failed to properly review the plaintiff's loan application which, on its face, shows the plaintiff's financial inability to repay the loan. The motion judge, in dismissing the complaint, was not persuaded that Sovereign was negligent, and that, had Sovereign fully reviewed the loan application for which Sovereign was granting the mortgage, Sovereign would have seen that plaintiff's loan was "doomed to fail." The judge criticized this negligence count as "woefully insufficient."
The plaintiff has appealed from the order of the motion judge, entered on remand after this appeal was filed, approving the statement that "Plaintiff's counsel stated at the hearing that his client's claims against the bank are for negligence and agency." The plaintiff claims that the judge erred in limiting her claims against Sovereign to the two legal theories of negligence and agency on the basis of her counsel's representation to that effect at a July 24, 2012, hearing. Although there is no available transcript of the hearing, the judge confirmed that limitation on the theories of proof being pursued by the plaintiff. In addition, the plaintiff seems (albeit again not clearly) to contend that Sovereign's efforts to determine whether a transcript existed and to stay the appeal pending efforts to obtain the transcript were outside the time limits of Mass.R.A.P. 8(c), as amended, 378 Mass. 932 (1979). In any event, not only do these challenges fail, but the underlying appellate issue is without merit. We have concluded, as discussed above, that it is only the single count XVI of the amended complaint which is grounded in negligence, that withstands the motion to dismiss on the pleadings. Put another way, even if the motion judge erred by limiting the claims to agency and negligence on the basis of counsel's representations at the hearing, the negligence-based count XVI is the sole count that survives.
We disagree. The amended complaint in count XVI alleges that the plaintiff's loan application submitted to Sovereign showed that a substantial amount of her income came from Social Security benefits for her child, and these payments were to terminate when the child turned eighteen. Count XVI further alleges that these Social Security payments should not have been included in her total annual income. In addition, this particular count alleged that, even if the Social Security benefits were to be included in her income, the plaintiff's income was still too low to meet the loan payments to Sovereign. Thus, according to count XVI, the facts alleged regarding an insufficiently low income to support the loan were patent on the financing application loan documents. In sum, the count alleges that, if a proper review of the application had been conducted by Sovereign, the loan could not reasonably have been financially justified and Sovereign was negligent in not so reviewing the application.
In its brief Sovereign argues that the economic loss doctrine precludes any possible recovery by the plaintiff for any negligence on the part of Sovereign. It does not appear that this issue was raised below, and we decline to consider it for the first time on appeal. See, e.g., USF Ins. Co. v. Langlois, 86 Mass. App. Ct. 44, 47 (2014).
Turning to specific numbers, count XVI contains detailed allegations that the loan application showed $900 in monthly income (for the child's Social Security benefits) which should have been excluded. In addition, count XVI alleges that, even were that $900 in Social Security income to be included, these child support payments would terminate within the loan repayment time frame. The total monthly income from all sources was $2,020, from which the plaintiff would bear monthly mortgage payments of $1,538.93.
It is the face of the complaint which is controlling when considering a motion pursuant to rule 12(c). Here, we conclude the complaint contained sufficient factual allegations "to raise a right to relief above the speculative level . . . [based] on the assumption that all the allegations in the complaint are true." Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), quoting from Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-556 (2007).
We note that a motion judge (who was not the same judge who entered the rule 12[c] dismissal on the pleadings) had previously denied Sovereign's rule 12(b)(6) motion to dismiss the complaint, ruling that it stated a "plausible theory of relief against" Sovereign.
Insofar as the judgment dismisses count XVI of the plaintiff's amended complaint, it is vacated, and that count is remanded for further proceedings consistent with this memorandum and order. In all remaining respects the judgment is affirmed. The order allowing the motion for statement of the evidence (see note 2, supra) is affirmed.
So ordered.
By the Court (Berry, Kafker & Hanlon, JJ.),
The panelists are listed in order of seniority.
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Clerk Entered: May 4, 2015.