Regan et al v. Beneficial Massachusetts Inc.

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UNITED STATES BANKRUPTCY COURT
FOR THE
DISTRICT OF MASSACHUSETTS

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In re
JULIE A. REGAN, Chapter 13
Debtor Case No. 07-12786-JNF

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JULIE REGAN AND WILL REGAN,

Plaintiffs
Vv. Adv. P. No. 07-1308
BENEFICIAL MASSACHUSETTS, INC.

Defendant

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MEMORANDUM
I. INTRODUCTION

The matter before the Court is “Defendant Beneficial Massachusetts, Inc.’s Motion
for Summary Judgment” with respect to all counts of the seven-count Verified Complaint
filed by Julie A. Regan (the “Debtor”) and her non-debtor spouse, Will Regan
(“Regan”)(collectively, the “Regans”). The Regans filed an Objection. The Court heard the
Motion filed by Beneficial Massachusetts, Inc. (“Beneficial”) and the Objection filed by the
Regans on July 16, 2008 and took the matter under advisement.

Beneficial included in its Memorandum a Statement of Undisputed Material Facts
in compliance with MLBR 7056-1, which incorporates LR 56.1 of the United States District
Court for the District of Massachusetts. The Regans failed to comply with MLBR 7056-1.
They did not submit a concise statement of the material facts of record which they contend

1

AUTHENTICATED
U.S. GOVERNMENT
INFORMATION

GPO

2
give rise to genuine issues of material fact with page references to affidavits, depositions,
and other documentation. 	Instead, they submitted an Affirmation in which they
responded, virtually sentence by sentence, to the facts and arguments set forth in
Beneficial’s Memorandum, adding facts in response to arguments, jumbling factual
assertions, and failing to set forth a complete and cogent chronology of the material facts
from their point of view supported with references to relevant documentary evidence,
particularly evidence of the alleged payments they made which were not credited to their
loan account with Beneficial. Although LR 56.1 would permit the Court to disregard the
Regans’ submission, the Court has endeavored to “find” the facts they contend create
grounds for denial of summary judgment.
The issue presented by Beneficial’s Motion for Summary Judgment is whether the
Regans sustained their burden of establishing genuine issues of fact with respect to the
seven counts set forth in their Verified Complaint.
II. BACKGROUND
A. The Debtor’s Chapter 13 Case
The Debtor filed a voluntary Chapter 13 petition on May 4, 2007. On Schedule A-
Real Property, she listed an ownership interest in property located at 10 Unicorn Circle,
Amesbury, Massachusetts (the “Amesbury property”) with a value of $285,000, subject to
a secured claim in the sum of $320,627.95. She did not disclose whether she was the sole
owner or a joint owner of the property. On Schedule D-Creditors Holding Secured Claims,
she listed “Beneficial HFC” with a claim in the sum of $320,627.95, and, on Schedule E-
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The counts are misnumbered in the Complaint; the Debtor omitted a Count V.1
3
Creditors Holding Unsecured Priority Claims, she listed the Town of Amesbury with a
claim in the sum of $6,400 for outstanding real estate taxes. On Schedule H-Codebtors, the
Debtor did not list her non-debtor spouse as a co-debtor.
In the Debtor’s Chapter 13 case, Beneficial filed a proof of claim to which the Debtor
objected, as well as an objection to confirmation of her Chapter 13 plan. 	Both of those
contested matters have been consolidated with the instant adversary proceeding. In its
proof of claim, Beneficial asserted that it was owed $342,786.93, including an arrearage of
$43,182.69.
On July 24, 2007, the Regans filed a Verified Complaint in the Debtor’s Chapter 13
case. 	Based upon the allegations set forth in their Verified Complaint, the Regans
formulated seven counts as follows: Count I - Accounting; Count II - Fair Debt Collection1
Practices; Count III - Violation of Attorney General’s Regulations; Count IV - Breach of
Contract; Count VI [sic] - Infliction of Emotional Distress; Count VII - Violation of Servicer
Act; and Count VIII - Violation of the Automatic Stay; Breach of Contract. Specifically,
through Count VIII, the Regans sought damages for Beneficial’s conduct in Regan’s
Chapter 13 case, discussed below, in allegedly adding fees and charges to their mortgage
loan which were not authorized by the contract or applicable law in breach of contract and
in violation of the automatic stay.
B. Will Regan’s Chapter 13 Case
Regan, using the name William J. Regan, filed a voluntary Chapter 13 petition on
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Regan checked “none” with respect to “Other contingent and unliquidated2
claims of every nature, including tax refunds, counterclaims of the debtor, and rights to
setoff claims.”
4
February 9, 2006 (Case No. 06-10262-JNF). As will be discussed below, the Court takes
judicial notice that he also filed a voluntary Chapter 7 case on July 31, 2007 (Case No. 07-
14742-JNF), approximately two months after the Debtor filed her Chapter 13 case.
In his Chapter 13 case, Regan listed the Amesbury property on Schedule A with a
value of $400,000. He attached a quitclaim deed to Schedule A reflecting that he and the
Debtor took title to the Amesbury property on February 21, 1992 as tenants by the entirety,
although he did not list his spouse as a co-debtor on Schedule H. Regan also did not list
any claims against Beneficial on Schedule B-Personal Property, 	although he did list a2
“401(k) Retirement” account with a value of $7,756.78.
Beneficial filed a “Motion for Relief from Automatic Stay and for Relief from Co-
Debtor Stay” in Regan’s Chapter 13 case on August 30, 2006, as well as an objection to
confirmation of his Chapter 13 plan. In its Motion for Relief from the Automatic Stay,
Beneficial set forth a post-petition arrearage in the sum of $5,786.89, exclusive of attorneys’
fees, costs and expenses, for the period between June and August 2006. In a response to
the Motion for Relief from the Automatic Stay, Regan denied that averment, but he
admitted he was trying to obtain funds to become current with his payments. Regan also
filed an objection to Beneficial’s proof of claim on the ground that Beneficial failed to
provide documentation in support of fees in the amount of $17,530.01, in addition to
arrears set forth in the sum of $15,482.41, which he did not contest. 	Beneficial filed an
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Regan checked “none” with respect to “Other contingent and unliquidated3
claims of every nature, including tax refunds, counterclaims of the debtor, and rights to
setoff claims.”
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amended proof of claim on February 28, 2007, setting forth an arrearage of $17,530.01,
$15,792.01 of which it attributed to real estate taxes it paid to the Town of Amesbury.
After numerous continuances, the Court, on March 2, 2007, ordered Regan to cure
all post-petition arrears by May 30, 2007 and to file an amended Chapter 13 plan by April
2, 2007. Although Regan obtained an extension of time within which to file an amended
plan, he failed to do so, and his case was dismissed on April 24, 2007. The Debtor filed her
Chapter 13 petition ten days later.
C. Will Regan’s Chapter 7 Case
As noted above, Regan filed a Chapter 7 case on July 31, 2007, approximately three
months after the Debtor filed her Chapter 13 case, and a week after the commencement of
this adversary proceeding. 	Regan listed the Amesbury property on Schedule A with a
value of $320,678, subject to a secured claim held by Beneficial in the sum of $275,908, the
reverse of what the Debtor listed on Schedule A. 	He did not list any claims against
Beneficial on Schedule B-Personal Property, although he did list a “401(k) Retirement”3
account with a value of $7,756.78. The Chapter 7 trustee appointed to administer Regan’s
Chapter 7 case filed a Report of No Distribution on October 28, 2007, and Regan received
a discharge on November 29, 2007. His Chapter 7 case is closed.
D. Facts
From the Regans’ Verified Complaint and Affirmation, as well as the Statement of
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The payment figure set forth in the note included a life insurance premium of4
$134.37. When that figure is subtracted from the monthly payment, the result is
$2,238.51. The Regans appear not to have paid the life insurance premium. The note
provided that beginning on the 13 	month and continuing annually thereafter forth
twelve years, the interest rate could be reduced by one-quarter of one percent if there
were no late payments in the preceding twelve months. It also contained a prepayment
penalty. The note did not memorialize a conventional 30-year mortgage loan.
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Undisputed Material Facts incorporated in Beneficial’s Memorandum, the Court finds the
following the facts. On April 22, 2003, the Regans entered into a “Loan Repayment and
Security Agreement” (the “note”) with Beneficial, which, in their view was “a conventional
30-year mortgage loan” with a principal of $284,543.96, an interest rate of 8.75%, and
monthly payments of $2,372.88. 	In 2003, after the execution of the note and mortgage, the4
Debtor lost her job at Verizon which paid approximately $85,000 per year. Although she
obtained other employment as a teacher, her salary has not been commensurate with what
she earned at Verizon.
In June of 2005, the Town of Amesbury advised the Regans, in writing, that it
intended to foreclose a tax lien on the Amesbury property. According to the Regans, the
amount of the lien was $15,892.01. Beneficial paid the taxes, resulting in dismissal of the
tax foreclosure proceeding.
The Regans began seeking refinancing in order to reimburse Beneficial for its
payment of the real estate taxes. In September of 2005, Beneficial notified the Regans that
it would commence foreclosure proceedings unless they paid it $5,000 before the end of the
month. 	According to the Regans, they paid Beneficial $5,000 on September 30, 2005.
Additionally, the Regans began discussions with Beneficial about “how to pay the
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The reference to “the remaining balance” is unclear as it could be construed as5
a reference to the amount of additional indebtedness resulting from Beneficial’s
payment of the outstanding real estate taxes or the entire loan balance.
The Regans’ reference to payment of the sum of $18,423.53 is inconsistent with a6
later claim in their Affirmation that Beneficial failed to account for five payments
totaling $17,392.55. The Regans did not specifically state that they paid this sum in
addition to their regular monthly payment or that this sum was paid to satisfy the
additional debt arising from payment of the tax lien. The $18,423.53 sum is less than
what was required for their regular monthly mortgage payments ($2,372.88 x 6 =
$18,983.04), but it could have satisfied the amount due for payment of the tax lien.
Regan apparently did not liquidate his 401k account as he listed it as an asset on7
Schedule B in his Chapter 7 case.
7
remaining balance.” 	They alleged that a Beneficial employee indicated that they would5
be required to pay $1,457.08 per month, in addition to their regular monthly mortgage
payment, to satisfy the additional indebtedness arising form Beneficial’s payment of the
Regans’ real estate taxes. According to the Regans, “[d]uring the negotiations, Beneficial
made representations that once the plaintiffs were caught up, Beneficial would refinance
the mortgage.”
The Regans, in their Verified Complaint, further alleged that, beginning in May of
2005 and continuing through October of 2005, they paid Beneficial the sum of $18,423.53, 6
payments which required them to “liquidate their 401k accounts and employ every
possible resource available,” including filing Chapter 13 petitions and seeking financial7
assistance from friends and relatives.
In October of 2005, the Regans signed a forbearance agreement with Beneficial.
Although they indicated that it was attached as an exhibit to their Verified Complaint, it
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was not. The Agreement, however, was attached as an exhibit to Beneficial’s Motion for
Summary Judgment. Set forth on the letterhead of the law firm of Shechtman Halperin
Savage LLP (“SHS”), the agreement provided the following:
The loan is currently in arrears for a total amount of $17,485.01 (the
“Arrearage”). This figure is comprised of monthly mortgage payments due
and owing in the amount of $4,286.86; tax payment advanced to the Town of
Amesbury in the amount of $15,892.01 and legal fees and expenses due and
owing in the amount of $1,593.00.
On September 30, 2005, you delivered to your local Beneficial branch, cash
in the amount of $5,000.00, which has been applied to the Arrearage by
Beneficial in its sole discretion.
***
If you fail to make any payments when due or fulfill any obligation under
the Loan Documents or this Agreement, Beneficial will be free to resume
foreclosure proceedings without further prior notice. . . .
In consideration of Beneficial’s agreement as set forth herein and for other
valuable consideration, the receipt of which is acknowledged by you, you
hereby agree to release Beneficial, its parents, subsidiaries, predecessors,
affiliates, officers, directors, shareholders, attorneys and agents from any and
all claims and defenses arising out of or related to your loan. 	You have
further acknowledged 	that Beneficial’s willingness to enter 	into this
Agreement shall not operate as a waiver of any right, remedy, power or
privilege that may be available to Beneficial in the future under the terms of
your loan Documents or under applicable law.
Although the Regans did not believe they could make the payments required under the
agreement, they executed it anyway, and, in so doing, admitted to an arrearage of
$17,485.01 and released Beneficial of claims arising out of their loan. In their Affirmation,
they stated:
. . . [T]he plaintiffs made it clear to Beneficial (Julie Galton) that they could
not sustain these payments for any extended period of time. Julie Galton
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advised Julie Regan that if the plaintiffs could make some payments under
the forbearance agreement then Beneficial would refinance them into a lower
mortgage. Julie Galton advised the Regan’s [sic] that she could not disclose
what the refinance would look like b/c [sic] she was prohibited under law.
When executing the agreement Julie Regan advised SHS (Brian Hachey) that
the dollar figures in the agreement were incorrect and as a result we needed
SHS to reissue a new letter. SHA [sic] instructed the plaintiffs to sign the
document anyways [sic]. 	Julie Regan also expressed a concern about the
terms of the agreement and made it clear to SHS that JG said this would be
a short term situation . . . .
The Regans alleged that, pursuant to the agreement, they made a payment for October and
a mortgage payment only for November. 	They stated in their Affirmation that they
contacted Julie Galton to apprise her of the situation, and she suggested that Regan contact
his mother to have the overdue payment put on her credit card, a proposal rejected by the
Regans.
The Regans also alleged that about the same time as they executed the forbearance
agreement, an entity by the name of Manhattan Financial informed them that “refinancing
was a possibility.” A month later, however, a representative of Manhattan Financial told
them that their credit report showed that they had made no mortgage payments in five
months. In response, the Regans contacted Beneficial in an attempt to correct the credit
report and obtain a payment history because, in their view, they had made payments
which had not been credited to their loan account. The Regans asserted that the following
five payments that Manhattan Financial “referenced as not showing up on our credit
report” were in dispute.
Date 	Amount 	Balance
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1-31-05 	$1,200.00 	$278,835.35
5-16-05 	$2,238.51 	$278,835.35
6-29-05 	$2,238.51 	$278,835.35
8-30-05 	$6,715.53 	$278,835.35
9-7-05 	$5,000.00 	$278,835.35
According to the Regans, Beneficial did not respond to their request for a payment
history. 	In their Affirmation, the Regans stated that “[o]n 11/22 Will Regan called the
Beneficial branch office requesting the payment history and payoff figure for our account.
He was told by Beneficial that the information would take 3-5 business days to provide. We
requested that the information be released directly to our agent Manhattan Financial
Services.” The Regans also stated that in December of 2005 Manhattan Financial received
a payoff figure but not a payment history. According to the Regans,
[P]laintiffs made repeated requests via the 1-800 number and through fax
requests. The plaintiff [sic] also called Julie Galton as well and their phone
calls went unreturned. W. Regan was directed to submit a request in writing
and fax the request over.
At her deposition, the Debtor was shown an exhibit, namely a fax cover sheet sent by
Regan to Beneficial in which he stated: “Please provide pay off figure and payment history
to Att Maryanne @ Manhattan Financial. . . .” The fax cover sheet contained the notation
“2 	Request.” 	The cover sheet was undated, and the Debtor could not testify at hernd
deposition when it was transmitted to Beneficial.
Because the Regans could not obtain a payment history, they engaged Attorney Jon
Kurland who wrote to Julie Galton at Household Finance Company on January 9, 2006.
The Regans attached the letter he wrote to their Affirmation, stating that they “thought [it
was] to be a 93 demand letter.” The letter provided:
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Be advised that I have been consulted and retained by the above-named
individuals regarding numerous requests for a payment history for the
above-referenced account over the past six (6) weeks. Demand is made for
you to produce the payment history for this loan within seven (7) business
days.
AUTHORIZATION
We, William Regan and Julie Regan authorize you to forward to our
attorney, Jon H. Kurland this account information as well as any additional
information he may request in the future. A facsimile copy of our signatures
shall be considered valid and no repercussions shall inure for responding to
a photocopied of facsimile transmission containing our signatures herein
[sic].
The refusal to provide this information for six (6) weeks after numerous
requests from my clients and Mary Ann Hoyland, their representative, is
unconscionable. This is particularly so inasmuch as it appears as though you
have failed to credit my clients with some substantial payments. My clients
are unable to ascertain the true state of their account without 	that
information. Moreover, if you have failed to credit their account, this
information is necessary to provide you with the information that you would
need to correct their account. My clients have been acting in good faith by
paying $9,000.00 in September in response to your representations regarding
the status of their account. Since then it appears as though you are reluctant
to respond to my clients’ inquiries and concerns. In the event that you fail
to contact the undersigned or fail to produce the requested information, I
shall take all measures necessary to protect and preserve my clients’ rights.
I trust that you understand our position in this matter.
On January 13, 2006, the Regans received a registered letter from Beneficial
informing them of its intention to foreclose its mortgage. The next day, a sheriff served the
foreclosure complaint on the Regans’ 15 year old son. According to the Regans, they wrote
to the law firm of SHS “contesting the foreclosure activity and also complaining about
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Beneficial attached a copy of the letter dated January 17, 2006 to the Debtor’s8
deposition. In the letter, they stated that they were contesting the foreclosure for two
reasons, one of which was Beneficial’s failure to provide a payment history.
As noted above, the Regans, in their Affirmation, listed five payments, totaling9
$17,392.55, that allegedly did not show up on their credit report.
The Regans erroneously alleged the date was March 10, 2006.10
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Beneficial’s failure to respond to their information requests.” 8
On January 18, 2006, Julie Galton, at “HFC/Beneficial” faxed Attorney Kurland a
“payment history” which, according to the Regans, “neither attorney Kurland nor the
plaintiffs initially could understand and was not responsive to their requests.” SHS, in a
letter to Attorney Kurland dated February 4, 2006, also acknowledged the Regans’ request
for a loan history and sent a copy of the payment history provided by its client to Attorney
Kurland, advising him that it would not respond directly to the Regans’ letter in which
they contested the foreclosure activity because they had retained him to represent them.
After deciphering the loan history, the Regans alleged that they “discovered that
payments in the amount of $16,192 had never been credited to their account, whether to
principal or interest.” According to the Regans, neither SHS nor Beneficial returned their9
telephone calls after mid-January 2006. Regan filed his Chapter 13 on February 9, 2006, 10
approximately two weeks after SHS communicated with Attorney Kurland. The Regans
also alleged that Regan filed a First Amended Chapter 13 plan setting forth a prepetition
arrearage amount of $17,530.01 and a post-petition arrearage of $5,476 which was caused
by a temporary interruption in Regan’s commission income. The Regans noted, as set forth
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The Court has no explanation for the $48.31 discrepancy between that figure11
and the amount set froth in the Regans’ Verified Complaint ($15,892.01).
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above, that Beneficial filed both a proof of claim in Regan’s Chapter 13 case asserting a
secured claim in the sum of $320,627.95 and an objection to confirmation setting forth a
prepetition arrearage of $33,021.42.
Ten days after Regan’s Chapter 13 case was dismissed, the Debtor filed her Chapter
13 case. The Regans emphasized the disparity between the amounts set forth in the proofs
of claim filed in Regan’s Chapter 13 case ($320,627.95) and the Debtor’s Chapter 13 case
($342,786.93).
Beneficial produced a payment history, as of June 4, 2007, which was shown to the
Debtor at her deposition and attached to the deposition transcript which it submitted in
support of the Motion for Summary Judgment. 	The payment of the real estate taxes
appears on that document in the sum of $15,940.32. 	According to Beneficial, neither the11
Debtor nor Regan could identify any specific payment that had not been credited to their
loan account during their depositions. Additionally, according to Beneficial, they could
not identify a single charge or fee that was improper under the contract or applicable law.
The payment history sent to Attorney Kurland in January of 2006 reflected all five
payments which the Regans alleged did not appear on their credit report. With respect to
the payments made in June and August of 2005, the letter “v” follows a cursory description
of the transaction. 	The payment history showing loan payments through June 4, 2007,
attached as Exhibit 9 to the Debtor’s deposition transcript, reflected credit for all but the
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two payments made in June and August of 2005 which were followed by the letter “v.”
The Debtor testified at her deposition that she kept a time line of “when we made
payments and under what circumstances,” as well as some receipts. The Regans did not
attach the time line to their Affirmation, and they did not attach a copy of a single canceled
check or receipt establishing that they, in fact, made the $2,238.51 payment on June 29, 2005
or the $6,715.53 payment on August 30, 2005 in good funds. Indeed, although the Debtor’s
deposition took place on March 24, 2008 and although the Regans, at that time, had both
the payment history provided to Attorney Kurland, as well as the June 4, 2007 payment
history produced by Beneficial at the Debtor’s deposition, they did nothing between then
and the June 30, 2008 deadline for filing a response to Beneficial’s Motion for Summary
Judgment, to establish what payments they made in good funds that do not appear on the
June 4, 2007 payment history. To repeat, the Regans did not produce a single copy of a
certified check, bank check, cancelled check, personal check or other form of payment or
receipt showing that they made the June 29, 2005 payment in the sum of $2,238.51, the
August 30, 2005 payment in the sum of $6,715.53, or any other payment, which they
maintain was not been credited to their account.
III. DISCUSSION
A. Regan’s Status as a Co-Plaintiff and Count VIII
The Court sua sponte dismisses Regan as a co-plaintiff in the proceeding for failing
to list his contingent, unliquidated claim against Beneficial in his Chapter 7 bankruptcy
case, a case which was not disclosed in the Verified Complaint or Memorandum in Support
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of Plaintiffs’ Objection to Defendant’s Motion for Summary Judgment. As a consequence,
Regan is estopped from asserting claims against Beneficial, and Beneficial is entitled to
judgment against Regan as a matter of law on all counts of the Verified Complaint.
Regan did not disclose any claims against Beneficial on Schedule B in either Case
No. 06-10262-JNF or Case No. 07-14742-JNF, which he filed on July 31, 2007, approximately
one week after he and the Debtor commenced the instant adversary proceeding against
Beneficial. 	As noted above, Regan obtained a discharge on December 3, 2007 after the
trustee filed a Report of No Distribution.
In Sullivan v. Decision One Mortgage (In re Sullivan), 346 B.R. 4 (Bankr. D. Mass.
2006), this Court considered a factual scenario analogous to the one present in this
proceeding. Indeed, counsel to the Regans in this adversary proceeding was counsel to the
debtor in Sullivan and was provided a copy of the Court’s decision in that case which was
issued on July 21, 2006 almost one year before Regan filed his Chapter 7 petition. 	In
Sullivan, this Court stated:
This Court is empowered to take judicial notice of its own records, see Xytest
Corp. v. Mitchell (In re Mitchell), 255 B.R. 97, 104 (Bankr. D. Mass.
2000)(citing In re Nail, 195 B.R. 922, 924 n. 3 (Bankr. N.D.Ala. 1996); In re
Bestway Products, Inc., 151 B.R. 530, 540 (Bankr. E.D. Cal. 1993), aff’d, 165
B.R. 339 (9th Cir. BAP 1994)), and has done so. In reviewing the Debtor’s
prior Chapter 7 case, the Court has determined that the Debtor failed to list
causes of action against the Lenders on Schedule B.
In Payless Wholesale Distributors, Inc. v. Alberto Culver (P.R.), Inc., 989 F.2d
570 (1st Cir.1993), cert. denied , 510 U.S. 931, 114 S.Ct. 344, 126 L.Ed.2d 309
(1993), the Plaintiff/Chapter 11 debtor failed to list causes of action against
Alberto Culver (P.R.), Inc. and others both in its schedules and in its
disclosure statement. After exiting bankruptcy, it sued Alberto Culver and
others for substantial monetary damages. The United States Court of
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Appeals for the First Circuit expressed its outrage at Payless’s conduct and
dismissed its suit against the defendants. The court stated:
The basic principle of bankruptcy is to obtain a discharge from
one’s creditors in return for all one’s assets, except those
exempt, as a result of which creditors release their own claims
and the bankrupt can start fresh. Assuming there is validity in
Payless’s present suit, it has a better plan. Conceal your claims;
get rid of your creditors on the cheap, and start over with a
bundle of rights. This is a palpable fraud that the court will not
tolerate, even passively. See, e.g., In re H.R.P. Auto Center, Inc.,
130 B.R. 247, 253-54 (Bankr. N.D. Ohio 1991) (collecting cases).
Payless, having obtained judicial relief on the representation
that no claims existed, can not now resurrect them and obtain
relief on the opposite basis. This may not be strictly equitable
estoppel, as the court observed. Indeed, defendants may have
a windfall. However, it is an unacceptable abuse of judicial
proceedings.
989 F.2d at 571. See also Jeffrey v. Desmond, 70 F.3d 183 (1st Cir.1995); Leary
v. Miller (In re Leary), 241 B.R. 266, 272-73 (Bankr. D. Mass.1999).
Sullivan, 346 B.R. at 31-32. Because Regan obtained a discharge based upon his disclosure
on Schedule B that he had no claims against Beneficial in his Chapter 7 case, the Court
finds, based upon the decisions in Payless and Sullivan, that he is judicially estopped from
asserting claims against Beneficial in this proceeding. Accordingly, the Court shall enter
an order dismissing him as a co-plaintiff in this proceeding and entering judgment in favor
of Beneficial on all counts of the Complaint. Moreover, the Court shall enter judgment in
favor of Beneficial 	and against the Debtor on Count VIII as she failed to establish her
standing to seek relief for a stay violation in Regan’s Chapter 13 case and to demonstrate
that she was injured by any such stay violation in view of the objection she filed, in her
own Chapter 13 case, to the proof of claim filed by Beneficial.
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B. Standard for Summary Judgment
This Court set out the standard for summary judgment in Sullivan, referencing
Desmond v. Varrasso (In re Varrasso), 37 F.3d 760 (1st Cir. 1994).
“It is apodictic that summary judgment should be bestowed only when no
genuine issue of material fact exists and the movant has successfully
demonstrated an entitlement to judgment as a matter of law. See Fed.R.Civ.P.
56(c). As to issues on which the movant, at trial, would be obliged to carry
the burden of proof, he initially must proffer materials of evidentiary or
quasi-evidentiary quality-say, affidavits or depositions-that support his
position. See Lopez v. Corporacion Azucarera de Puerto Rico, 938 F.2d 1510,
1517 (1st Cir. 1991); Bias v. Advantage Int’l, Inc., 905 F.2d 1558, 1560-61
(D.C.Cir.), cert. denied, 498 U.S. 958, 111 S.C[t]. 387, 112 L.Ed.2d 397 (1990); cf.
Mendez v. Banco Popular de Puerto Rico, 900 F.2d 4, 7 (1st Cir. 1990) (“The
mere fact that plaintiff failed to file a timely opposition does not mean that
defendant’s Rule 56 motion should be granted”). When the summary
judgment record is complete, all reasonable inferences from the facts must
be drawn in the manner most favorable to the nonmovant. See, e.g., Morris
v. Government Dev. Bank, 27 F.3d 746, 748 (1st Cir. 1994); Garside, 895 F.2d
at 48; Greenburg v. Puerto Rico Maritime Shipping Auth., 835 F.2d 932, 934
(1st 	Cir. 	1987). 	This 	means, 	of 	course, 	that 	summary 	judgment 	is
inappropriate if inferences are necessary for the judgment and those
inferences are not mandated by the record. See Blanchard v. Peerless Ins. Co.,
958 F.2d 483, 488 (1st Cir. 1992) (warning that summary judgment is
precluded “unless no reasonable trier of fact could draw any other inference
from 	the ‘totality 	of the 	circumstances’ 	revealed by the undisputed
evidence”).”
Sullivan, 346 B.R. at 18 (quoting Desmond v. Varrasso, 37 F.3d at 763 (footnote omitted)).
In Desmond v. Varrasso, in a footnote, the First Circuit cautioned: “As to issues on which
the nonmovant [the Debtor in this case] has the burden of proof, the movant need do no
more than aver ‘an absence of evidence to support the nonmoving party’s case.’ The
burden of production then shifts to the nonmovant, who, to avoid summary judgment,
must establish the existence of at least one question of fact that is both ‘genuine’ and
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Section 8:06(1) provides:12
(1) It is an unfair or deceptive act or practice for a mortgage broker or
lender to make any representation or statement of fact if the
representation or statement is false or misleading or has the tendency or
capacity to be misleading, or if the mortgage broker or lender does not
have sufficient information upon which a reasonable belief in the truth of
the representation or statement could be based. Such claims or
representations include, but are not limited to the availability, terms,
conditions, or charges, incident to the mortgage transaction and the
possibility of refinancing. In addition, other such claims and
representations by the broker may include the amount of the brokerage
18
‘material.’” Desmond v. Varrasso, 37 F.3d at 763 n. 1. (citations omitted).
C. Counts II and III
In Count II, the Debtor alleged that Beneficial, as a creditor and a debt collector
within the meaning of 940 Mass. Code Regs. 7.03, made “false and/or misleading
representations as to the amount owed to it, in the papers filed in this court,” and those
misrepresentations “constitute an unfair and/or deceptive act or practice within the
meaning of the regulation.” 	The Regans did not specify the “papers” to which they
referred, although the Court presumes the Regans were referring to the proof of claim filed
by Beneficial which set forth a prepetition arrearage of $43,182.69 and a total claim of
$342,786.93.
In Count III, the Regans referenced 940 Mass. Code Regs. 8.06(1), complaining that
Beneficial made false and misleading representations as to the availability of refinancing
if they succeeded in curing mortgage arrears, when it never intended to refinance the
transaction and “wrongfully deceived the plaintiffs into acting based on the false
representations.” 	The Regans did not indicate what specific actions they took in reliance12
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fee, the services which will be provided or performed for the brokerage
fee, the borrower's right to cancel any agreement with the mortgage
broker, the borrower's right to a refund of the brokerage fee, and the
identity of the mortgage lender that will provide the mortgage loan or
commitment.
940 Mass. Code Regs. 8:06(1).
19
on the representations.
As noted, the Regans referenced Massachusetts regulations in Counts II and III in
seeking damages for unfair and deceptive acts or practices. 	Section 2(a) of the
Massachusetts Consumer Protection Act, Mass. Gen. Laws ch. 93A, §§ 1 - 11, makes
unlawful unfair or deceptive acts or practices in the conduct of any trade or commerce. Id.
at § 2(a). Section 2(c) of the Consumer Protection Act , authorizes the Attorney General to
adopt regulations for the purposes of interpreting the general prohibition against unfair
and deceptive acts or practices. Id. at § 2(c).
Massachusetts law regulates the collection of consumer debts in three major
ways. First, creditors of consumers, and their attorneys and assignees, are
subject to a general debt collection statute which prohibits the collection of
a debt in an unfair, deceptive or unreasonable manner; in addition, the
statute prohibits several specified collection activities.
Second, creditors and their attorneys and employees, are also subject to
detailed regulations of numerous collection activities found in the Attorney
General’s debt collection regulations issued under the authority of the
Consumer Protection Act.
Third, collection agencies are subject to a nearly identical set of regulations
issued by the Commissioner of Banks pursuant to statutory authority.
***
The chief remedy available to a consumer debtor who is injured or adversely
affected by a debt collector’s violation of any of these statutes or regulations
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governing collection activities is a private action under the Consumer
Protection Act. The general debt collection statute explicitly states that a
failure to comply with its provisions shall constitute an unfair or deceptive
act or practice under the Consumer Protection Act. The administrative debt
collection regulations are laws intended to provide consumers with protection, and
therefore any violation of their provisions also constitutes an unfair or deceptive act
or practice under the Consumer Protection Act. . . .
See generally Howard J. Alperin and Roland F. Chase, Action under Consumer Protection Act,
36 Mass. Prac. § 20:120 (2007-2008)(emphasis supplied).
Thus, the Regans’ claims for unfair debt collection practices and false and
misleading representations about the availability of refinancing fall within the ambit of the
Consumer Protection Act. A prerequisite for relief under the Consumer Protection Act,
however, is a written demand for relief mailed or delivered at least 30 days prior to the
filing of an action. See Mass. Gen. Laws ch. 93A, § 9(3). See also Slaney v. Westwood Auto,
Inc., 366 Mass. 688, 704-05 (1975). The Regans failed to satisfy Chapter 93A’s requirement
of a demand letter for purposes of Counts II and III.
Attorney Kurland’s letter contained no reference whatsoever to ch. 93A or to the
alleged promise of refinancing. In his letter, he made a demand on Beneficial’s servicer,
Household Finance Company, “to produce the payment history for this loan within seven
(7) business days.” He stated that its refusal to produce the information for six weeks was
unconscionable, and he expressed his intention to “take all measures necessary to protect
and preserve my clients’ rights.” As was the case in Cassano v. Gogos, 20 Mass. App. Ct.
348 (1985), “[n]othing . . . characterize[d] the claim as one under the consumer protection
statute,” Id. at 350, and neither the injury to the Regans nor the amount of monetary loss
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21
was stated with specificity. In Cassano, the court stated:
There is missing from the letter relied upon: (1) any express reference to c.
93A; (2) any express reference to the consumer protection act; (3) any
assertion that the rights of the claimants as consumers have been violated; (4)
any assertion that the defendant has acted in an unfair or deceptive manner
(G.L. c. 93A, § 2[ a ] ); (5) any reference that the claimants anticipate a
settlement offer within thirty days (to the contrary, the letter demands action
within one week, a response which c. 93A, § 9[3], does not require); or (6) any
assertion that the claimant will pursue multiple damages and legal expenses,
should relief be denied. We are of opinion that in order to qualify as a
written demand under c. 93A, a letter must, in addition to defining the injury
suffered and the relief sought, mention at least one of the six factors we have
enumerated (or contain some other signal which will alert a reasonably
perceptive recipient). Otherwise, the potential defendant is without warning
that the claimant intends to invoke the heavy artillery of c. 93A, i.e., multiple
damages and the imposition of counsel fees.
Id. at 651 (emphasis supplied). 	In Spring v. Geriatric Auth. of Holyoke, 394 Mass. 274
(1985), the court stated that it was “essential that the complainant define the injury suffered
and the relief demanded in a manner that provides the prospective defendant with ‘an
opportunity to review the facts and the law involved to see if the requested relief should
be granted or denied’ and enables him to make ‘a reasonable tender of settlement.’” Id. at
288.
Although Attorney Kurland stated that “it appears as though you have failed to
credit my clients with some substantial payments,” he subsequently qualified his language
by observing that “if you have failed to credit their account . . . ” (emphasis supplied), an
apparent recognition that the Regans may not have made all required payments, were in
arrears, and had breached the forbearance agreement. 	Attorney Kurland’s lack of
specificity with respect to the injury suffered, coupled with the lack of any reference to ch.
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93A, to the Regans as consumers, to a settlement offer, or to multiple damages and
attorneys’ fees warrants the conclusion that the January 9, 2006 letter failed to satisfy the
requirements of Mass. Gen. Laws ch. 93A, § 9(3). The letter was in the nature of a qualified
written request for purposes of the Real Estate Settlement Procedures Act, (“RESPA”), 12
U.S.C. §§ 2601-2617; it was not a ch. 93A demand letter.
In Count III, the Regans asserted that even if the regulation they cite is inapplicable
they were wrongfully deceived into action based upon Beneficial’s false and misleading
representations about the availability of refinancing. It is well-settled, however, that such
a representation about future events is not actionable. See Saxon Theatre Corp. of Boston
v. Sage, 347 Mass. 662, 667 (1964).
D. Count VII
Through Count VII, the Regans alleged that Beneficial violated the provisions of §
2605(e) of RESPA. That section provides:
(e) Duty of loan servicer to respond to borrower inquiries
(1) Notice of receipt of inquiry
(A) In general
If any servicer of a federally related mortgage
loan receives a qualified written request from the
borrower (or an agent of the borrower) for
information relating to the servicing of such
loan, 	the 	servicer 	shall 	provide 	a 	written
response 	acknowledging 	receipt 	of 	the
correspondence within 20 days (excluding legal
public holidays, Saturdays, and Sundays) unless
the action requested is taken within such period.
(B) Qualified written request
For purposes of this subsection, a qualified
written 	request 	shall 	be 	a 	written
correspondence, other than notice on a payment
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23
coupon or other payment medium supplied by
the servicer, that--
(i) includes, or otherwise enables
the servicer to identify, the name
and account of the borrower; and
(ii) includes a statement of the
reasons 	for 	the 	belief 	of 	the
borrower, to the extent applicable,
that the account is in error or
provides sufficient detail to the
s e r v i c e r 	r e g a r d i n g 	o t h e r
information 	sought 	by 	the
borrower.
(2) Action with respect to inquiry
Not later than 60 days (excluding legal public holidays,
Saturdays, and Sundays) after the receipt from any borrower
of any qualified written request under paragraph (1) and, if
applicable, before taking any action with respect to the inquiry
of the borrower, the servicer shall--
(A) make appropriate corrections in the account
of the borrower, including the crediting of any
late charges or penalties, and transmit to the
borrower 	a 	written 	notification 	of 	such
correction (which shall include the name and
telephone number of a representative of the
servicer 	who 	can 	provide 	assistance 	to 	the
borrower);
(B) after conducting an investigation, provide the
borrower 	with 	a 	written 	explanation 	or
clarification that includes–
(i) 	to 	the 	extent 	applicable, 	a
statement of the reasons for which
the servicer believes the account of
the 	borrower 	is 	correct 	as
determined by the servicer; and
(ii) 	the 	name 	and 	telephone
number of an individual employed
by, or the office or department of,
the 	servicer 	who 	can 	provide
assistance to the borrower; or
(C) after conducting an investigation, provide
the borrower with a written explanation or
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24
clarification that includes–
(i) information requested by the
borrower or an explanation of why
the 	information 	requested 	is
unavailable or cannot be obtained
by the servicer; and
(ii) 	the 	name 	and 	telephone
number of an individual employed
by, or the office or department of,
the 	servicer 	who 	can 	provide
assistance to the borrower.
(3) Protection of credit rating
During the 60-day period beginning on the date of the
servicer’s receipt from any borrower of a qualified written
request 	relating 	to 	a 	dispute 	regarding 	the 	borrower’s
payments, a servicer may not provide information regarding
any overdue payment, owed by such borrower and relating to
such period or qualified written request, to any consumer
reporting agency (as such term is defined under section 1681a
of Title 15).
12 U.S.C. § 2605(e). 	Specifically, the Regans asserted that “inquiries they made, both
individually and through attorney Kurland were Qualified Written Requests” and that
Beneficial did not acknowledge “the request” within the time provided by the statute. The
Regans, however, failed to submit copies of any qualified written requests other than
Attorney Kurland’s letter, although Beneficial submitted an undated fax cover sheet from
Regan containing a request for a payment history. Because that request was undated, it is
impossible to compute the 20 or 60-day period within which Beneficial was required to
respond to it. Thus, the only qualified written request that exists is Attorney Kurland’s
January 9, 2006 letter. The Regans admitted in their Verified Complaint that “on January
18, 2006, Beneficial [sic] faxed to attorney Kurland a ‘loan history,’ although neither they
nor Attorney Kurland were initially able to decipher it.” 	Although the Regans and
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25
Attorney Kurland may have been unsatisfied with the payment history, Attorney Kurland
did not follow up with a request for additional information, although he reserved his right
to do so in his letter, and Regan filed his Chapter 13 petition about three weeks after receipt
of the original payment history, effectively putting any refinancing transaction in abeyance.
Because Beneficial responded within the statutory time period to Attorney Kurland’s letter,
the Court finds that it is entitled to summary judgment on Count VII.
E. Count VI
Through Count VI, the Regans demanded damages for infliction of emotional
distress, stating that “the stress and anxiety caused the plaintiffs to lose sleep, to have
feelings of insecurity, frustration, hopelessness and anger, and to feel demoralized and
fearful of losing their home without justification, even though they have done everything
they could to resolve the problem.”
Beneficial moved for summary judgment on Count VI, noting that the Regans failed
to identify whether the infliction of emotional distress was intentional or negligent, and
stating that the Regans failed to allege physical injury. In addition to the absence of any
evidence of severe emotional distress, Beneficial also argued that the Regans offered no
testimony or evidence establishing a causal connection linking their distress with
Beneficial’s conduct.
In response, the Regans argued that Beneficial’s inaction in supplying them with a
payment history compromised them “both financially and emotionally.” They added that
they were forced into bankruptcies to protect their home until a full accounting of their
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To recover for intentional infliction of emotional distress as an independent13
claim, the plaintiff must show the following:
(1) that the actor intended to inflict emotional distress or that he knew or
should have known that emotional distress was the likely result of his
conduct; . . . (2) that the conduct was ‘extreme and outrageous’ . . .; (3) that
the actions of the defendant were the cause of the plaintiff's distress; . . .
and (4) that the emotional distress sustained by the plaintiff was ‘severe’ .
. . .” 385 Mass. at 96 (citing Agis v. Howard Johnson Co., 371 Mass. 144-45
(1976)). If each of these elements is proven, the plaintiff can recover for
purely emotional suffering unaccompanied by physical injury. Id.
“[A] plaintiff in order to recover for negligently inflicted emotional distress14
must prove the following: (1) negligence; (2) emotional distress; (3) causation; (4)
physical harm manifested by objective syptomatology; and (5) that a reasonable person
26
payments was made available, that they experienced stress when their son was served with
papers by the sheriff, that the Debtor had to “hawk” her engagement ring, and that
“[p]laintiff [sic] has had to forego required dental care (as oral cancer survivor) because it
is currently cost prohibitive,” and that their car was repossessed.
Because the Court has determined that Beneficial is entitled to summary judgment
with respect to Counts II, III, and VII, the Regans are not entitled to actual damages for
emotional distress as a component of any statutory violation. See Hart v. GMAC Mortgage
Company (In re Hart), 246 B.R. 709, 732 (Bankr. D. Mass. 2000)(citing Smith v. Law Offices
of Mitchell N. Kay, 124 B.R. 182, 185 (Bankr. D. Del. 1991)). Thus, the Regans were required
to establish entitlement to damages for intentional emotional distress under the standard
set forth by the court in Simon v. Solomon, 385 Mass. 91 (1982), 	or for negligent infliction13
of emotional distress under the standard set forth in Payton v. Abbot Labs, 386 Mass. 540
(1982).14
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would have suffered emotional distress under the circumstances of the case.” 386 Mass.
at 557. In Peyton Labs, the court required the objective symptomatology to be
substantiated by expert medical testimony, and to be reasonably foreseeable. Id. at 556-
57. It also stated that emotional distress is reasonably foreseeable when there is a causal
relationship between the physical injuries suffered and the emotional distress alleged.
Id. at 556.
27
Applying the standard articulated by the court in Simon, the Regans produced no
evidence whatsoever in response to Beneficial’s Motion for Summary Judgment to create
a genuine issue of material fact with respect to a claim for intentional infliction of emotional
distress. 	The Regans did not point to any allegation in their Verified Complaint or
elsewhere that Beneficial intended (or knew or should have known that it would cause)
emotional distress, that its conduct was “extreme and outrageous,” or that their emotional
distress was severe. 	Additionally, the Regans failed to establish a causal connection
between Beneficial’s failure to produce a payment history and their emotional distress.
Although Beneficial may not have promptly produced a payment history in response to
telephonic requests, it did enter into a forbearance agreement with the Regans. The Court
can infer that the stress experienced by the Regans was as much a result of their reduced
income from the Debtor’s loss of a lucrative job than any conduct on the part of Beneficial.
Beneficial did not initiate foreclosure proceedings against the Regans for six months
following its payment of their delinquent real estate taxes, and it responded promptly,
although not in a particularly helpful or comprehensible manner, to Attorney Kurland’s
letter. 	Moreover, the Regans failed to produce any evidence that Manhattan Financial
would have granted them a mortgage loan if it had obtained a timely payment history.
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The Regans’ payment history produced by Beneficial during the Debtor’s deposition
showed significant gaps in payment of their monthly mortgage obligation. In particular,
the Regans did not make payments in September and October of 2003; March and May of
2004; August and September of 2004; and February through April of 2005. In the June 4,
2007 loan history, only two payments out of the five that the Regans asserted that they had
made, and which did not appear on the credit report obtained by Manhattan Financial,
were missing. The Regans produced no evidence to show that those two payments were
made with good funds. 	In view of the Regans’ loan history, Beneficial’s conduct in
instituting foreclosure proceedings cannot be said to have been intended to cause them
emotional distress given the magnitude and duration of their payment defaults, including
their continuing failure to pay real estate taxes.
With respect to a claim for negligent infliction of emotional distress, the Debtor
similarly failed to establish the causal connection between the alleged failure to produce
a loan history and the emotional distress suffered. Without evidence in the form of an
affidavit from a representative of Manhattan Financial that it was prepared to enter into
a refinancing transaction with the Regans, but for their failure to timely produce a payment
history, regardless of what that payment history actually revealed, Beneficial is entitled to
summary judgment on Count VI.
F. Count IV
The Regans demanded damages for breach of the implied covenant of good faith
and fair dealing implied in every contract because of Beneficial’s “refusing to provide
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29
information concerning the plaintiffs’ account unless they made payments, thereby
depriving the plaintiffs of a fair and full opportunity to resolve the problem without
litigation.”
The covenant of good faith and fair dealing is implied in every contract. See Uno
Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376, 385 (2004). 	The
Massachusetts Supreme Judicial Court observed the following in Uno Restaurants:
The covenant is preserved so long as neither party injures the rights of
another to reap the benefits prescribed by the terms of the contract. The duty
of good faith and fair dealing concerns the manner of performance.
The covenant may not, however, be invoked to create rights and duties not
otherwise provided for in the existing contractual relationship, as the
purpose of the covenant is to guarantee that the parties remain faithful to the
intended and agreed expectations of the parties in their performance. . . .
Id. (citations omitted, footnote omitted).
The Regans failed to submit evidence of how they were damaged by Beneficial’s
delay in providing a payment history, particularly in view of its response to Attorney
Kurland’s qualified written request. The evidence, as opposed to the argument, established
that Regan requested a payoff figure and a loan history on November 22, 2005, that
Beneficial faxed a loan history, albeit an almost indecipherable one, to Attorney Kurland
on January 18, 2005 in response to Attorney Kurland’s letter of January 9, 2006, and that
Regan filed a Chapter 13 petition on February 9, 2006. The Regans submitted no evidence
that they were not in substantial arrears in the payment of their mortgage at the time they
requested the payment history. The Regans produced no evidence whatsoever to support
their assertions that they, in fact, made payments in good funds that were not credited to
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30
their loan account. Their feelings and beliefs that they may have made more payments
than Beneficial credited to their account are insufficient to rebut the payment history
produced by Beneficial that shows a history of late and missed payments. Moreover, the
Regans produced no evidence that, if they had obtained a payment history, they could
have qualified for refinancing that would have enabled them to avoid bankruptcy or a
foreclosure proceeding. As noted above, they did not submit an affidavit from a
representative of Manhattan Financial. Their assertion that they “conceivably could have
either refinanced or found a way to pay what was actually owed” is speculative,
unsubstantiated, and wrong. Regan had the opportunity to address the couple’s financial
troubles during the 16 months he was in Chapter 13 and was unable to obtain confirmation
of a plan or avoid post-petition defaults. It is unclear to this Court what type of relief the
Regans wanted from Beneficial short of deferral of all payments required under the note
and mortgage as the production of a payment history, in and of itself, was not going to
generate income, secure refinancing, or save the couple’s house from foreclosure. In sum,
the Court finds that the Regans failed to produce evidence sufficient to create a genuine
issue of material fact as to the breach of the covenant of good faith and fair dealing.
G. Count I
The Regans demanded an accounting in Count I. In its Memorandum, Beneficial
maintained that Count I is moot. The Regans contended that the June 4, 2007 accounting
cannot be reconciled with the proof of claim filed in the Debtor’s case. The Court agrees.
The Court shall enter an order denying summary judgment on Count I.
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IV. CONCLUSION
The Court is not unsympathetic to the Regans’ position as set forth in their
Affirmation. Job loss and health issues, such as the ones disclosed by the Regans, plague
many Americans and force them to seek shelter under the Bankruptcy Code. The Regans,
however, in responding to Beneficial’s Motion for Summary Judgment, were required to
do more than articulate grievances. They were required to come forward with evidence
to establish the existence of genuine and material issues of fact. They failed to meet that
burden. 	See Desmond v. Varrasso, 37 F.3d at 763 n.1. While Beneficial could have
responded to the Regans’ telephone calls and letters with better customer service, it did not
trample or ignore their legally protected rights so as to warrant denial of the Motion for
Summary Judgment.
In accordance with the foregoing, the Court shall enter summary judgment in favor
of Beneficial and against the Regans on Counts II, III, IV, VI, VII, and VIII. 	The Court
enters judgment in favor of Beneficial and against Regan on Count I. The Court denies
summary judgment on Count I as to the Debtor.
By the Court
Joan N. Feeney
Dated: September 22, 2008 	United States Bankruptcy Judge
cc: David G. Baker, Esq., Michael T. Eramo, Esq., Jeffrey Patterson, Esq., Carolyn
Bankowski, Esq., John Aquino, Esq.
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