Palladino v. Carrington Mortgage Services, LLC

UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Patricia A. Palladino,
Plaintiff
v. 	Case No. 23-cv-0261-SM
Opinion No. 2023 DNH 091
Carrington Mortgage Services, LLC,
Defendant
O R D E R
Pro se plaintiff Patricia Palladino originally brought this
suit in the New Hampshire Superior Court, seeking to enjoin the
planned foreclosure sale of her home. 	After the state court
granted her temporary injunctive relief, defendant, Carrington
Mortgage Services, removed the proceeding to this court.
Pending before the court are defendant’s Motion to Dismiss and
its Emergency Motion to Dissolve Injunction. 	Also pending is
plaintiff’s Motion for Preliminary Injunction.
For the reasons given, defendant’s motions are denied.
Plaintiff’s motion for injunctive relief will be treated as
including a request for a temporary restraining order and, as
such, it is granted. 	The court will conduct a hearing on
Wednesday, August 16, at 10:00 AM to hear argument and take
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evidence on plaintiff’s request for preliminary and permanent
injunctive relief. 	See Fed. R. Civ. P. 65(a)(2).
Background
Accepting the complaint’s factual allegations as true – as
the court must at this juncture – the relevant background is as
follows.1 	In or around 2014, Bank of America sold plaintiff’s
promissory note and the mortgage deed to plaintiff’s home
securing that note to Carrington Mortgage Services (“CMS”).
During that process, however, the amount held in escrow on
plaintiff’s account was not correctly reported. 	Neither Bank of
America nor CMS was able/willing to correct that meaningful
error and it eventually led to CMS determining, incorrectly,
that the loan was in default. 	According to plaintiff, this was
because when she made her regular loan payments, CMS directed a
portion of each payment to the escrow account. 	That, in turn,
meant that each payment she made was seen by CMS as less than
the amount she was contractually obligated to make. 	Eventually,
plaintiff says, she was forced to file for chapter 13 bankruptcy
protection. 	She says she “settled with a loan modification and
1 	Given plaintiff’s pro se status, the court has drawn the
relevant facts from her original state court petition to enjoin
foreclosure (document no. 1-1), as well as her objection to
defendant’s motion to dismiss (document no. 14), and her
supplement to that objection (document no. 16).
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the bankruptcy was dismissed.” 	Objection to Motion to Dismiss
(document no. 14) at 3.
In 2021, plaintiff says that she and her husband applied to
a different lender to refinance the CMS mortgage loan, but CMS’s
errors in handling their account – including CMS’s improper
failure to report plaintiff’s timely loan payments to the three
major credit reporting bureaus - thwarted those efforts.
The rates were low and our equity was high and our
payment history was good (I can supply copies of my
bank statements showing all our payments). 	The
mortgage company that we applied to denied us because
our mortgage did not show on any of the 3 major credit
bureaus, Trans Union, Equifax or Experian. 	We then
tried to refinance with CMS and they themselves would
not refinance our mortgage because they themselves did
not report our mortgage to the 3 major credit bureaus.
CMS stated that we needed to “reaffirm” our mortgage
from the bankruptcy in 2019. 	Reaffirmation is for
chapter 7 not 13 and our bankruptcy was dismissed, so
no reaffirmation was needed. 	We had to jump through
hoops with CMS. 	They said they would refinance us (I
have this statement in an email from CMS
representative Lorena West, I can provide a copy of
this) if we could get “nontraditional” credit applied
to our credit reports (when asked what is
nontraditional credit, we were told for example
utilities, auto insurance, etc.). 	Instead of CMS just
simply posting all of our payments [to the credit
reporting agencies], we had to go through an arduous
process.
We contacted all 3 bureaus to find out how to do this.
All three said that they do not put “nontraditional”
credit on reports. 	Then CMS stated to get a years’
worth of payment history from nontraditional entities
to prove our credit worthiness. 	We got T-Mobile,
State Farm and Comcast payment statements to them. 	We
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then sent letters and copies of our bank statements
with our mortgage payments highlighted and circled to
TransUnion, Experian and Equifax (cc’d CMS) asking
them to update our reports with the mortgage payments.
Trans Union replied stating that they couldn’t update
our report because CMS was not even on our report to
update.
During this time we were made to believe we were being
refinanced if we did all this work, so we held our
payments thinking we would be signing papers. 	Once
again we were forced to apply for a modification
because we fell behind due to all this back and forth
and stalling from CMS. 	On April 25, 2022 we were
notified by mail that we were eligible for a loan
modification and to begin our Trial Payment Plan
6/1/2022. 	First payment of $2256.70 due on June 1,
2022, second payment of $2256.70 due on 7/1/2022, and
third payment of $2256.70 due 8/1/2022. 	We paid as
agreed. 	. . . . We were told we would hear something
before our last payment of the 3-payment series. 	We
never received any confirmation of denial letters from
CMS. 	We called in to CMS and were told that a packet
was mailed. 	We NEVER received this packet. 	I clearly
made the CMS representative aware of this.
Id. at 3-4. 	Plaintiff says she and her husband made all
required payments of $2,256.70 to CMS under the loan
modification trial payment plan – six in total, from May through
October of 2022. 	When she called CMS to make her November
payment, however, she was told that CMS would not accept the
payment because she had failed to return to CMS a signed copy of
the loan agreement, so CMS had sent the matter to its
foreclosure department. 	CMS has rescheduled the foreclosure
sale of plaintiff’s home to Monday, August 7, 2023.
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According to CMS, it sent plaintiff a loan modification
agreement in late September, 2022. 	In the accompanying cover
letter, CMS claims to have informed plaintiff that she had to
sign and return that agreement on or before November 10, 2022.
It says plaintiff failed to do so. 	Plaintiff, on the other
hand, vehemently denies ever receiving that loan modification
agreement. 	And, given her assertion that she made regular
payments during (and beyond) the “trial period” as instructed by
CMS, it does seem odd to suggest that plaintiff would simply
neglect to return the completed loan modification agreement if
she had actually received it. 	After all, she pursued the loan
modification to save her home and made the requisite initial
payments.
Discussion
I. 	Defendant’s Motion to Dismiss.
Plainly, plaintiff’s receipt of the final loan modification
agreement for signature and return is one of several genuinely
disputed material facts. 	But, accepting plaintiff’s factual
allegations as true, CMS erred in declaring plaintiff’s note in
default and it erred in commencing foreclosure proceedings.
Plaintiff’s complaint and subsequent filings – again, if
credited as true - paint a decidedly unflattering picture of
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CMS. 	At a minimum, those documents raise questions about
whether, during the course of its dealings with Palladino, CMS
honored its common law obligations of good faith and fair
dealing implied in every New Hampshire contract. 	CMS’s conduct
may also implicate potential claims under various federal
consumer protection statutes such as the Real Estate Settlement
Procedures Act, Regulation X, and the Truth in Lending Act, as
well as a common law claim for breach of contract.
Moreover, if CMS’s alleged failure to report plaintiff’s
payments to the credit reporting bureaus – whether intentional
or merely negligent – caused plaintiff to miss an opportunity to
refinance her promissory note at a more favorable rate, that
could certainly be problematic for CMS. 	Finally, it likely goes
without saying that if a lender were shown to have ignored,
delayed, thwarted, or otherwise failed to honor its commitment
to enter a loan modification agreement with a borrower, such
conduct might warrant an award of fees or other sanction if the
record reveals that such practices forced plaintiff to file suit
simply to obtain relief that should have been afforded in due
course. 	See generally Harkeem v. Adams, 117 N.H. 687, 691
(1977).
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At this juncture, the court concludes that plaintiff’s
complaint adequately alleges the essential elements of viable
causes of action. 	Consequently, defendant’s motion to dismiss
must, necessarily, be denied.2
II. 	Plaintiff’s Motion for Preliminary Injunction.
CMS has rescheduled a foreclosure sale of plaintiff’s home
to take place in less than one week. 	Plaintiff seeks to enjoin
that foreclosure – relief the court will treat as including a
request for a temporary restraining order. 	CMS has received
notice of plaintiff’s request and filed a written objection
(document no. 22), which has been fully considered. 	CMS has
not, however, requested a hearing on the matter, nor has it
given any indication that it wishes to present any other
relevant evidence. 	See generally Fed. R. Civ. P. 65(b).
Assuming the truth of plaintiff’s claims, CMS refused to
accept plaintiff’s timely mortgage payment in November of 2022,
improperly deemed her loan to be in default, and wrongfully
2 	Defendant notes that similar litigation between the parties
was recently dismissed by the state court. 	It does not,
however, explain the legal significance of that dismissal. 	It
is possible that issues arising under the Rooker-Feldman
doctrine, and/or the res judicata or collateral estoppel
doctrines are present in this case. 	But, as noted, defendant
has yet to present any such argument.
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scheduled the impending foreclosure sale of her home. 	On the
basis of those assertions, as well as the other allegations set
forth in the complaint, the court concludes that plaintiff will
suffer immediate and irreparable injury if the scheduled
foreclosure is not postponed. 	Moreover, assuming the truth of
plaintiff’s allegations, she has established a likelihood that
she will succeed on the merits of one or more of her claims
against CMS, the harm to her if she is denied the requested
relief exceeds the harm to CMS, and the public interest will not
be adversely affected if the court grants the requested relief.
Accordingly, the plaintiff is entitled to a temporary
restraining order and CMS, its agents, and its employees are
enjoined from proceeding with the foreclosure sale scheduled for
August 7, 2023, pending further order of the court.
Conclusion
Liberally interpreting Palladino’s pro se complaint and
related filings, the court concludes that it adequately alleges
the essential elements of viable claims. 	Defendant’s motion to
dismiss (document no. 8) is, therefore, denied. 	Defendant’s
Emergency Motion to Clarify (document no. 18) is denied as moot.
Plaintiff’s Motion to Consolidate this case with a related state
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court action (document no. 20) is also denied as moot (the state
court dismissed that case on July 20, 2023).
As discussed above, plaintiff’s motion for Preliminary
Injunction (document no. 19) is construed as a motion for a
temporary restraining order and as such, it is granted, subject
to the terms outlined above. 	The Clerk of Court shall schedule
a hearing on plaintiff’s request for a preliminary and permanent
injunction for 10:00 AM, Wednesday, August 16, 2023. 	See Fed.
R. Civ. P. 65(a)(2). 	At that hearing, pro se plaintiff should
be prepared to try her case and present all testimonial and
documentary evidence supportive of her claims.
SO ORDERED.
____________________________
Steven J. McAuliffe
United States District Judge
August 2, 2023
cc: 	Patricia A. Palladino, pro se
Counsel of Record
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