Upon the foregoing papers, defendant Wells Fargo, N.A. (Wells Fargo) moves for an order dismissing the amended complaint, pursuant to CPLR 3211 (a) (1) and (7). Plaintiffs Yehoshua Gahfi and Hadar Gahfi (the Gahfi plaintiffs or the Gahfis) separately move for an order, pursuant to CPLR 3025 (b), for leave to file a second amended complaint.

The Gahfis financed their home at 886 Eastern Parkway in Brooklyn with a note and mortgage in the principal amount of $350,000 from Wells Fargo in September 2003. The Gahfis admittedly defaulted on their mortgage payments beginning in September 2008,^[FN3] and Wells Fargo thereafter commenced the 2009 Foreclosure Action against the Gahfis.

The parties engaged in settlement negotiations, pursuant to CPLR 3408, for nearly two years commencing in December 2009, during which the Gahfis submitted modification applications to Wells Fargo in an effort to obtain a permanent HAMP modification.

In April 2010, Wells Fargo offered the Gahfis the HAMP Trial Plan, under which the Gahfis made three monthly trial payments of $2,168.24 from May 2010 through July 2010. The HAMP Trial Plan — which was never executed by Wells Fargo — specifically provides that (1) "[t]his Plan will not take effect unless and until both I and the Lender sign it and Lender provides me with a copy of this Plan with the Lender's signature" and (2) "[u]pon execution of a Modification Agreement by the Lender and me, this Plan shall terminate and the Loan Documents, as modified by the Modification Agreement, shall govern . . ."

Although the Gahfis made the three monthly payments under the HAMP Trial Plan, Wells Fargo subsequently refused to offer the Gahfis a permanent HAMP loan modification. The court referee who presided over the CPLR 3408 conferences in the 2009 Foreclosure Action reported that Wells Fargo's failure to issue a permanent HAMP modification at the conclusion of the three-month HAMP Trial Period was justified because there were several outstanding liens on the Gahfis' home:

"The parties acknowledged that all of the trial period payments were timely made. However, a permanent modification did not follow because a review of the title report revealed that there were several liens on the property. As specified in section (2)(G) of the parties' trial period agreement and in accordance with the Making Homes Affordable ("MHA") Handbook (V 3.2) (6/1/2001), Chp. II, § 1.2, plaintiff was not obligated to make any modification of the original loan document unless the modified instrument retained first lien priority."

The court referee reported that Wells Fargo subsequently "confirmed clear title and represented to the court [on April 8, 2011] that a permanent modification was expected within two (2) weeks [and] that the financial package was complete and no additional documents were being requested in order to conduct the review for a permanent HAMP loan modification" (emphasis added).

Wells Fargo ultimately refused to issue a final HAMP modification to the Gahfis on the grounds that the HAMP review "was conducted at the referee's request using outdated and insufficient financial information . . ." Wells Fargo further claimed that "a permanent modification was denied in accordance with [HAMP] guidelines because the original mortgage payment was already less than 31% of [the Gahfis] gross income." [*3]

On or about October 3, 2011, the court referee referred the 2009 Foreclosure Action to the Judicial Referral Foreclosure Part (JRFP) for a hearing, pursuant to CPLR 3408 (f), regarding Wells Fargo's alleged failure to engage in good faith settlement negotiations.The JRFP court dismissed the 2009 Foreclosure Action, and Wells Fargo's alleged bad faith in failing to issue a final HAMP Modification was never adjudicated, because Wells Fargo failed to appear for the bad faith hearing that was scheduled to take place on May 14, 2012.

The Gahfis commenced this action against Wells Fargo on December 18, 2012, asserting various claims based on Wells Fargo's failure to issue a final HAMP modification. Plaintiffs' amended complaint alleges that "[d]espite Plaintiffs full performance of all material terms of the [HAMP Trial Plan], defendant Wells Fargo, in bad faith, failed to honor its obligations . . ." and had "no intention of making the modifications permanent."^[FN4] Therefore, plaintiffs' current action against Wells Fargo and the hearing scheduled in the 2009 Foreclosure Action are predicated upon the same alleged misconduct.

Plaintiffs asserted six causes of action in their amended complaint for: (1) breach of contract based on Wells Fargo's alleged failure "to honor the terms of the [HAMP Trial Plan]"; (2) fraudulent/negligent misrepresentation based on allegations that Wells Fargo "intentionally", "recklessly" and "negligently" represented that it would "honor the terms of" and "permanently modify" the Gahfi's mortgage upon completion of the [HAMP Trial Plan]; (3) fraudulent inducement based on the allegation that "Wells Fargo's intentional misstatements of fact induced the Plaintiffs into entering into the [HAMP Trial Plan]"; (4) violation of New York General Business Law (GBL) §349 (the Deceptive Practices Act); (5) quiet title based on the allegation that Wells Fargo "strategically took advantage of the judicial system by purposefully permitting the [2009 Foreclosure Action] to be dismissed"; and (6) breach of fiduciary duty based on the allegation that "Wells Fargo as lender, and Plaintiffs as borrowers, are so closely related as to be in a special relationship."

The amended complaint generally alleges, under the six foregoing causes of action, that the Gahfis "were damaged in an amount which exceeds the jurisdictional limits" and requests monetary damages "in an amount to be determined at trial." In addition, the amended complaint makes conclusory demands for equitable and declaratory relief, to wit, that: (1) "the mortgage be deemed satisfied, expunged, extinguished, and/or otherwise removed as an encumbrance to the Property"; (2) Wells Fargo "be enjoined from initiating a second foreclosure action"; and (3) Wells Fargo "be forever barred from asserting any estate, right, title or interest of any nature in or to the Property adverse to Plaintiffs."

Wells Fargo's 3211 Motion To Dismiss

Wells Fargo moves to dismiss plaintiffs' amended complaint pursuant to CPLR 3211 (a) (1) and (7) on the grounds that a defense is founded upon documentary evidence and the amended complaint fails to state a cause of action.

Wells Fargo contends that plaintiffs' breach of contract claim (First Cause of Action) should be dismissed because the HAMP Trial Plan provides it with a complete defense, since "the face of the [HAMP Trial Plan] rebuts any allegation that Plaintiffs were promised a permanent loan modification." Wells Fargo relies on the HAMP Trial Plan provision that states that it "will not take effect unless and until" the HAMP Trial Plan is fully executed. Wells Fargo argues that plaintiffs (1) "do not allege that a signed contract exists"; (2) "fail to attach a fully executed contract to the Complaint" and (3) "concede" that Wells Fargo failed to execute the HAMP Trial Plan. Wells Fargo contends that "failure to allege the existence of a signed contract is a reason alone to reject [the] breach of contract claim."

Wells Fargo further argues that the HAMP Trial Plan does not constitute an enforceable permanent modification of the underlying loan agreement, as a matter of law, relying on cases from [*4]New York and other jurisdictions. Wells Fargo seeks dismissal on the grounds that "[p]laintiffs fail utterly to allege that Wells Fargo did anything other than that which it was expressly permitted to do under the [HAMP Trial Plan]."

Wells Fargo also contends that plaintiffs' claims for fraudulent misrepresentation (Second Cause of Action) and fraudulent inducement (Third Cause of Action) should be dismissed because the elements of those fraud claims were not pled with particularity, as required by CPLR 3016 (b), and are "duplicative of the breach of contract claim." Wells Fargo argues that there can be no fraud since it "fully disclosed the information purportedly misrepresented to [p]laintiffs [in the HAMP Trial Plan]" and notes that there is no allegation to "explain how [the Gahfis] were injured by Wells Fargo" (emphasis in original).

Wells Fargo challenges the sufficiency of plaintiffs' pleading regarding the alleged violation of GBL § 349, the Deceptive Practices Act (Fourth Cause of Action), on the grounds that the amended complaint fails to allege that Wells Fargo's alleged misconduct (i.e., the failure to finalize the Gahfi's HAMP Trial Plan) affected consumers at large.

Wells Fargo also contends that the quiet title claim (Fifth Cause of Action) is subject to dismissal because "[p]laintiffs acknowledge in the Complaint that [they] are the owners of the Property and the mortgagors and that Wells Fargo is the mortgagee which holds a mortgage encumbering the Property." According to Wells Fargo, "[t]here is no dispute regarding the role of the parties and their interest in the Property . . ." to support such a claim.Finally, Wells Fargo argues that plaintiffs' cause of action for breach of fiduciary duty (Fifth Cause of Action) is deficient, as a matter of law, because "it is well-settled that a creditor owes no fiduciary duty to a debtor."

Plaintiffs' Motion To Amend

Plaintiffs separately move for an order, pursuant to CPLR 3025 (b), for leave to file a second amended complaint (1) including "additional factual allegations in support of all causes of action"; (2) "[c]orrecting a clerical error in the Amended Complaint's third cause of action . . . in order to separately plead the cause of action with GBL 349 allegations"; and (3) "[a]dding class action allegations."

Plaintiffs argue that "[t]his is a straightforward motion for leave to amend the complaint, and should be freely granted." Plaintiffs contend that "[d]efendant cannot argue that any of the proposed amendments are palpably insufficient or devoid of merit" because the amendments "merely support causes of action alleged in the original complaint . . ." Significantly, plaintiffs argue that Wells Fargo's pending motion to dismiss the complaint "would be mooted by the Court's granting this Motion for leave to amend."

A defendant's dismissal motion under CPLR 3211 (a) (7) requires determining whether the plaintiff has stated a cause of action, but, "[i]f the court considers evidentiary material, the criterion then becomes whether the proponent of the pleading has a cause of action'" (Sokol v Leader, 74 AD3d 1180, 1181-82 [2010] [emphasis added], quoting Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). Dismissal results only if the movant demonstrates conclusively that the plaintiff has no cause of action, or that "a material fact as claimed by the pleader to be one is not a fact at all" (Sokol, 74 AD3d at 1182, quoting Guggenheimer, 43 NY2d at 275; see also Lawrence v Graubard Miller, 11 NY3d 588, 595 [2008]). A court considering a dismissal motion on the basis of failing [*5]to state a claim generally must accept the facts alleged in the complaint as true and make any possible favorable inferences for the plaintiff (Sokol, 74 AD3d at 1181), even when such allegations are "upon information and belief" (see Roldan v Allstate Ins. Co., 149 AD2d 20, 40 [1989]).

The Appellate Division, Second Department has explicitly held that a HAMP trial is "not an agreement for the binding obligations of the parties going forward" because it is "merely a trial arrangement" (Wells Fargo Bank, N.A. v Meyers, 108 AD3d 9, 21 [2013]; see also JP Morgan Chase Bank, Nat. Ass'n v Ilardo, 36 Misc 3d 359, 374-375 [Sup Ct Suffolk County 2012] [holding that loan servicer did not breach contract by failing to offer mortgagors a final HAMP modification after they made payments under a HAMP trial).

In Meyers, the Second Department reversed an order directing Wells Fargo to issue a final HAMP loan modification as a remedy for the bank's failure to negotiate a settlement in good faith under CPLR 3408 (f). While acknowledging the parties' statutory obligation to engage in good faith settlement negotiations, the Second Department explicitly held that "the parties cannot be forced to reach an agreement, CPLR 3408 does not purport to require them to, and the courts may not endeavor to force an agreement upon the parties" (Meyers, 108 AD3d at 20). Accordingly, the Second Department's holding in Meyers, precludes plaintiffs' claims against Wells Fargo in the amended complaint.

Tellingly, plaintiff Hadar Gahfi's affidavit in opposition to Wells Fargo's dismissal motion explains that she and her husband commenced this action after dismissal of the 2009 Foreclosure Action because Wells Fargo "destroyed our credit and financial standing, caused us significant heartache and headache, and left us in limbo . . ." Plaintiffs contend that they have been injured without a final HAMP modification because "accruing interest ate away at [plaintiffs'] equity, and their options to escape their predicament shrank and disappeared."

Essentially, plaintiffs' representations confirm that this action was initiated because the Gahfis are displeased with the outcome of the 2009 Foreclosure action. In addition to unspecified pecuniary damages, Plaintiffs also seek equitable relief, including (1) "release" of the mortgage payments made into court during the 2009 Foreclosure Action; (2) an injunction enjoining Wells Fargo from "initiating a second foreclosure action;" and (3) the imposition of a final HAMP modification that comports with the HAMP Trial Plan.

Thus, rather than seek the "status quo" before the 2009 Foreclosure Action was dismissed, plaintiffs seek equitable relief from the consequences of their own admitted payment default.Importantly, Plaintiffs have failed to identify any legally cognizable damages that they sustained as a result of Wells Fargo's failure and refusal to issue a final HAMP modification. While plaintiffs are apparently frustrated that they have been left in "limbo" after dismissal of the 2009 Foreclosure Action, and claim to have suffered "heartache and headache" during the HAMP modification process, plaintiffs' distress alone is not legally compensable.

Plaintiffs' contention that they were damaged by Wells Fargo's failure to finalize the HAMP Trial Period because "accruing interest ate away at [their] equity" is legally untenable. The accrual [*6]of interest under plaintiff's original mortgage are not recoverable damages. The Appellate Division, Second Department has explicitly recognized that "[p]ayment in accordance with contractual terms, in and of itself, does not constitute an injustice" (Key Intern. Mfg. Inc. v Stillman, 103 AD2d 475, 478 [1984]). Similarly, the consequences of nonpayment in accordance with contract terms (i.e., accrual of mortgage interest) does not constitute pecuniary damage to sustain a claim that is otherwise not legally actionable. Accordingly, Wells Fargo's motion to dismiss the amended complaint is granted.

Wells Fargo's dismissal motion was not "mooted" by plaintiff's motion to file a second amended complaint, as plaintiffs contend, because plaintiffs admit that their proposed amendments "merely support causes of action alleged in the original complaint . . ." Applying plaintiffs' reasoning, denial of plaintiffs' motion for leave to serve a second amended complaint that "merely supports" the legally deficient claims previously asserted in the amended complaint is plainly warranted here.

CPLR 3025 (b) provides that leave to amend a pleading "shall be freely given upon such terms as may be just." Leave shall be withheld, however, when the proposed amendment would cause prejudice or surprise to the opposing party or is insufficient or devoid of merit (Seidman v Industrial Recycling Props., Inc., 83 AD3d 1040, 1040-1041 [2011] [emphasis added]). Nevertheless, "a court should not examine the merits or legal sufficiency of the proposed amendment unless it is palpably insufficient or patently devoid of merit on its face" (Giunta's Meat Farms, Inc. v Pina Cosntr. Corp., 80 AD3d 558, 559 [2011]; Rosicki, Rosicki & Assoc., P.C. v Cochems, 59 AD3d 512, 514 [2009]). Accordingly, it is

ORDERED that defendant Wells Fargo's motion to dismiss the amended complaint is granted; and it is further

ORDERED that plaintiffs' motion for leave to serve and file the second amended complaint is denied.

This constitutes the decision, judgment and order of the court.

E N T E R,

J. S. C.