                                                                    Feb 13 2015, 9:22 am




ATTORNEY FOR APPELLANT                                     ATTORNEYS FOR APPELLEE
Gregory W. Black                                           David J. Jurkiewicz
Gregory W. Black, P.C.                                     Nathan T. Danielsom
Plainfield, Indiana                                        Bose McKinney & Evans, LLP
                                                           Indianapolis, Indiana




                                            IN THE
    COURT OF APPEALS OF INDIANA

Tracey M. Jaffri,                                         February 13, 2015

Appellant-(Defendant/Counterclaim                         Court of Appeals Cause No.
                                                          32A01-1405-MF-236
Plaintiff Below),
                                                          Appeal from the Hendricks Superior
                                                          Court
        v.                                                Cause No. 32D02-1006-MF-102

                                                          The Honorable David H. Coleman,
JPMorgan Chase Bank, N.A.,                                Judge
Appellee-(Plaintiff/Counterclaim
Defendant Below).



Barnes, Judge.




Court of Appeals of Indiana | Opinion 32A01-1405-MF-236 | February 13, 2015                Page 1 of 11
                                                 Case Summary
[1]   Tracey Jaffri appeals the trial court’s dismissal of her counterclaims against JP

      Morgan Chase Bank, N.A. (“Chase”), filed in response to Chase’s mortgage

      foreclosure action. We affirm.


                                                          Issue
[2]   The restated issue before us is whether the trial court properly dismissed Jaffri’s

      counterclaims alleging Chase had acted improperly in failing to modify her

      mortgage after she went into default.1


                                                         Facts
[3]   The facts as alleged by Jaffri are that in 2006, she purchased a home in

      Hendricks County through a mortgage and promissory note that eventually

      came into Chase’s possession. After losing her job and subsequently becoming

      disabled in 2009, Jaffri fell behind on her mortgage payments. Jaffri and Chase

      then entered into discussions regarding possible modification of her mortgage

      terms under the federal government’s Home Affordable Modification Program

      (“HAMP”), which was established in 2009 to help those in default on their

      mortgage to avoid foreclosure. Those discussions were not successful, despite




      1
       Because of our resolution of this issue, we need not address Jaffri’s claim that the trial court improperly
      denied her request for a jury trial.

      Court of Appeals of Indiana | Opinion 32A01-1405-MF-236 | February 13, 2015                         Page 2 of 11
      Jaffri’s contention that she was eligible for a HAMP modification and that she

      made multiple applications to participate in the program.


[4]   On June 18, 2010, Chase filed a complaint to foreclose Jaffri’s mortgage. On

      January 19, 2011, Jaffri filed an answer and two counterclaims, for breach of

      contract and breach of good faith and fair dealing. On December 5, 2013, Jaffri

      amended her counterclaims to allege negligence, breach of fiduciary duty,

      constructive fraud, and intentional infliction of emotional distress against

      Chase. Specifically, Jaffri alleged that Chase had failed to properly respond to

      and process her multiple HAMP requests, causing her emotional distress.


[5]   At some point, Chase and Jaffri did enter into a modification of her mortgage

      terms, though it was not accomplished through HAMP, and Jaffri began

      repaying her mortgage under that modification.2 On May 13, 2014, Chase’s

      foreclosure complaint was dismissed upon its own motion. Jaffri elected to

      proceed with her counterclaims, however.


[6]   Chase moved to dismiss Jaffri’s counterclaims. The trial court granted Chase’s

      motion to dismiss as to all four of Jaffri’s counterclaims, without prejudice.

      Rather than attempt to amend her counterclaims, Jaffri has now appealed.




      2
       Jaffri alleges that the terms of the modification were less favorable to her than a HAMP modification would
      have been, and also were less favorable than the original mortgage and promissory note.

      Court of Appeals of Indiana | Opinion 32A01-1405-MF-236 | February 13, 2015                     Page 3 of 11
                                                    Analysis
[7]   Chase obtained dismissal of Jaffri’s counterclaims via Indiana Trial Rule

      12(B)(6), failure to state a claim upon which relief could be granted. “A motion

      to dismiss for failure to state a claim tests the legal sufficiency of the claim, not

      the facts supporting it.” Babes Showclub, Jaba, Inc. v. Lair, 918 N.E.2d 308, 310

      (Ind. 2009). We review a trial court’s granting or denial of a motion based on

      Trial Rule 12(B)(6) de novo. Id. “When reviewing a motion to dismiss, we

      view the pleadings in the light most favorable to the nonmoving party, with

      every reasonable inference construed in the nonmovant’s favor.” Id. We will

      not affirm dismissal of a complaint for failure to state a claim upon which relief

      can be granted unless it is clear on the face of the complaint that the

      complaining party is not entitled to relief. Id. Conversely, “[w]e will affirm a

      successful T.R. 12(B)(6) motion when a complaint states a set of facts, which,

      even if true, would not support the relief requested in that complaint.” Morgan

      Asset Holding Corp. v. CoBank, ACB, 736 N.E.2d 1268, 1271 (Ind. Ct. App. 2000).


                                                 A. Negligence

[8]   We first address dismissal of Jaffri’s counterclaim against Chase sounding

      purely in ordinary negligence. To establish a negligence claim, a plaintiff must

      allege and prove: “‘(1) a duty owed to the plaintiff by the defendant, (2) a

      breach of the duty, and (3) an injury proximately caused by the breach of

      duty.’” Yost v. Wabash College, 3 N.E.3d 509, 515 (Ind. 2014). (quoting Pfenning

      v. Lineman, 947 N.E.2d 392, 398 (Ind. 2011). A defendant cannot be found



      Court of Appeals of Indiana | Opinion 32A01-1405-MF-236 | February 13, 2015   Page 4 of 11
       negligent where there is no duty to the plaintiff. Id. “Whether a duty exists is

       generally a question of law for the court.” Id.


[9]    Jaffri’s negligence counterclaim specifically alleges, “[Chase] owed Ms. Jaffri a

       duty to service her mortgage loan with reasonable care and to address her

       HAMP modification applications with reasonable care.” App. p. 50. This

       allegation seems to assert that Chase should be held liable in negligence for

       failing to perform its contractual duties in a reasonable manner. Jaffri also

       seems to claim entitlement to two different kinds of damages: pecuniary

       damages related to obtaining a loan modification that was less favorable than

       the terms available through a HAMP modification, and emotional distress

       damages related to the strain caused by Chase’s dilatory conduct.


[10]   To the extent Jaffri is claiming pecuniary harm caused by Chase’s conduct, we

       note that the relationship between Jaffri and Chase is based on contract. Our

       supreme court has held, “[w]hen the parties have, by contract, arranged their

       respective risks of loss, . . . the tort law should not interfere.” Greg Allen Const.

       Co. v. Estelle, 798 N.E.2d 171, 175 (Ind. 2003). In other words, “[t]he rule of

       law is that a party to a contract or its agent may be liable in tort to the other

       party for damages from negligence that would be actionable if there were no

       contract, but not otherwise.” Id. Unless there is evidence of an independent

       tort that would have existed if there was no contract between the parties, they

       “should not be permitted to expand that breach of contract into a tort claim

       against either the principal or its agents by claiming negligence as the basis of

       the breach.” Id. at 173. In essence, that is what Jaffri has done here: attempted

       Court of Appeals of Indiana | Opinion 32A01-1405-MF-236 | February 13, 2015   Page 5 of 11
       to claim that Chase negligently breached its contract with her. That is not an

       actionable claim. See also Comfax Corp. v. North American Van Lines, Inc., 587

       N.E.2d 118, 123-24 (Ind. Ct. App. 1992) (declining to recognize a new claim in

       Indiana for tortious breach of contract).


[11]   With respect to Jaffri’s claim to damages for emotional distress, it is well-settled

       that emotional distress damages are not recoverable for breach of contract.

       Tucker v. Roman Catholic Diocese of Lafayette-In-Indiana, 837 N.E.2d 596, 601

       (Ind. Ct. App. 2005). As for any suggested claim of negligent infliction of

       emotional distress by Jaffri, her complaint fails to state the necessary elements

       of such a claim: that she sustained emotional trauma as the result of a direct

       physical impact or by witnessing or coming up the scene of the death or severe

       injury of a loved one. See id. at 602. Jaffri’s negligence counterclaim fails to

       state any basis upon which she could have been granted relief under that theory,

       and the trial court properly dismissed it.


                          B. Breach of Fiduciary Duty/Constructive Fraud

[12]   Next, we jointly address Jaffri’s counterclaims for breach of fiduciary duty and

       constructive fraud. “A claim for breach of fiduciary duty requires proof of three

       elements: (1) the existence of a fiduciary relationship; (2) a breach of the duty

       owed by the fiduciary to the beneficiary; and (3) harm to the beneficiary.”

       Farmers Elevator Co. of Oakville v. Hamilton, 926 N.E.2d 68, 79 (Ind. Ct. App.

       2010). The elements of constructive fraud are:

               “(i) a duty owing by the party to be charged to the complaining party
               due to their relationship; (ii) violation of that duty by the making of
       Court of Appeals of Indiana | Opinion 32A01-1405-MF-236 | February 13, 2015       Page 6 of 11
               deceptive material representations of past or existing facts or
               remaining silent when a duty to speak exists; (iii) reliance thereon by
               the complaining party; (iv) injury to the complaining party as a
               proximate result thereof; and (v) the gaining of an advantage by the
               party to be charged at the expense of the complaining party.”
       Yeager v. McManama, 874 N.E.2d 629, 641 (Ind. Ct. App. 2007) (quoting Rice v.

       Strunk, 670 N.E.2d 1280, 1284 (Ind. 1996)).


[13]   This court has directly held that in breach of fiduciary duty and constructive

       fraud cases, “the parties cannot rely on a contractual relationship to create a

       duty. Contractual agreements do not give rise to a fiduciary relationship

       creating a duty.” Morgan Asset Holding Corp. v. CoBank, ACB, 736 N.E.2d 1268,

       1273 (Ind. Ct. App. 2000). More specifically, “the mere existence of a

       relationship between parties of bank and customer or depositor does not create

       a special relationship of trust and confidence.” Wilson v. Lincoln Fed. Sav. Bank,

       790 N.E.2d 1042, 1046 (Ind. Ct. App. 2003). Additionally, “mortgages do not

       transform a traditional debtor-creditor relationship into a fiduciary relationship

       absent an intent by the parties to do so. Absent special circumstances, a lender

       does not owe a fiduciary duty to a borrower.” Id. at 1047; see also Huntington

       Mortgage Co. v. DeBrota, 703 N.E.2d 160, 167-68 (Ind. Ct. App. 1998) (holding

       mortgage company had no duty to disclose information regarding private

       mortgage insurance cancellation to borrowers and, therefore, could not be liable

       to borrowers on claims of breach of fiduciary duty and fraudulent

       concealment).


[14]   Here, Jaffri has failed to allege that there was anything “special” about her

       relationship with Chase that imposed a fiduciary duty upon it with respect to
       Court of Appeals of Indiana | Opinion 32A01-1405-MF-236 | February 13, 2015       Page 7 of 11
       negotiating a modification of the mortgage. Although Chase undoubtedly was

       the more sophisticated party in this scenario, that fact alone has never been held

       to be enough to form the basis of a breach of fiduciary duty or constructive

       fraud with regard to a bank or mortgage company’s handling of a debt. See id.

       Jaffri failed to state any basis upon which she could have been granted relief

       under a claim of breach of fiduciary duty or constructive fraud, and the trial

       court properly dismissed those counterclaims.


                            C. Intentional Infliction of Emotional Distress

[15]   Finally, we address Jaffri’s counterclaim for intentional infliction of emotional

       distress (“IIED”). Unlike the other three counterclaims Jaffri filed, a plaintiff

       filing an IIED claim need not allege that the defendant owed the plaintiff a

       duty. Rather, the elements of IIED require proof that the defendant: (1)

       engaged in extreme and outrageous conduct (2) which intentionally or

       recklessly (3) caused (4) severe emotional distress to another. Curry v. Whitaker,

       943 N.E.2d 354, 361 (Ind. Ct. App. 2011). “The requirements to prove this tort

       are ‘rigorous.’” Id. (quoting Cullison v. Medley, 570 N.E.2d 27, 31 (Ind. 1991)).


[16]   The requirements to establish a claim of IIED have been described as follows:

               “The cases thus far decided have found liability only where the
               defendant’s conduct has been extreme and outrageous. It has not been
               enough that the defendant has acted with an intent which is tortious or
               even criminal, or that he has intended to inflict emotional distress, or
               even that his conduct has been characterized by ‘malice,’ or a degree of
               aggravation which would entitle the plaintiff to punitive damages for
               another tort. Liability has been found only where the conduct has
               been so outrageous in character, and so extreme in degree, as to go


       Court of Appeals of Indiana | Opinion 32A01-1405-MF-236 | February 13, 2015   Page 8 of 11
               beyond all possible bounds of decency, and to be regarded as
               atrocious, and utterly intolerable in a civilized community. Generally,
               the case is one in which the recitation of the facts to an average
               member of the community would arouse his resentment against the
               actor, and lead him to exclaim, ‘Outrageous!’”
       Bradley v. Hall, 720 N.E.2d 747, 752-53 (Ind. Ct. App. 1999) (quoting

       RESTATEMENT (SECOND) OF TORTS § 46, cmt.). Whether “extreme and

       outrageous” conduct has occurred depends, in part, upon prevailing cultural

       norms and values. Id. If a complaint fails to contain sufficient factual

       allegations that the defendant intended to emotionally harm the plaintiff, the

       complaint may be dismissed for failure to state a claim upon which relief can be

       granted. See Tucker, 837 N.E.2d at 603.


[17]   Even if everything occurred that Jaffri alleges—that Chase intentionally

       mishandled her HAMP applications and thereby caused her emotional

       distress—such facts would not establish an IIED claim. The unfortunate fact is

       that losing one’s job and then facing foreclosure is stressful no matter the

       circumstances. Before HAMP was enacted, Jaffri’s options for remaining in her

       home would have been even more limited than with the program in place. We

       are hard-pressed to say that any mishandling of this new program—even if

       intentional—constitutes the type of beyond-the-pale, “outrageous” conduct that

       may be covered by an IIED claim. As such, the trial court properly dismissed

       Jaffri’s IIED counterclaim for failure to state a claim upon which relief could be

       granted.


[18]   We conclude by noting that one of Jaffri’s main contentions is, “[Chase] . . .

       intentionally did not dedicate the resources to HAMP modifications that were
       Court of Appeals of Indiana | Opinion 32A01-1405-MF-236 | February 13, 2015   Page 9 of 11
necessary to properly comply with the federal program.” App. p. 48. If there

was a violation of federal law with respect to Chase’s handling of Jaffri’s

HAMP requests, that is a matter better addressed by the U.S. Treasury

Department as the administrator of that program. We cannot perceive that by

enacting HAMP, the federal government intended for persons rejected for

HAMP assistance to have a private cause of action against the mortgage lender

or servicer, unless a contract actually was entered into under HAMP. A

number of cases have been decided to that effect. See, e.g., Spaulding v. Wells

Fargo Bank, N.A., 714 F.3d 769 (4th Cir. 2013) (holding that mortgage

company’s agreement to participate in HAMP did not establish duty owed to

mortgagee seeking mortgage modification and affirming dismissal of complaint

against mortgage company that failed to offer HAMP modification for breach

of implied contract, negligence, negligent misrepresentation, fraud, and

violation of state consumer protection laws); Wigod v. Wells Fargo Bank, N.A.,

673 F.3d 547 (7th Cir. 2012) (holding that although mortgagee had viable

claims against mortgage company that had entered into a temporary HAMP

contract with the mortgagee but then failed to abide by that contract, mortgage

company had no duty apart from contract to hire responsible and competent

personnel to manage mortgagee’s home loan); Markle v. HSBC Mortgage Corp.,

844 F. Supp. 172, 184-85 (D. Mass. 2011) (holding that bank’s participation in

HAMP did not establish a duty of care owed to mortgagee seeking

modification); Clay v. First Horizon Home Loan Corp., 392 S.W.3d 72 (Tenn. Ct.

App. 2012) (holding HAMP guidelines did not provide borrowers denied

modification with a private right of action for alleged failure to comply with
Court of Appeals of Indiana | Opinion 32A01-1405-MF-236 | February 13, 2015   Page 10 of 11
       guidelines) (quoting Marks v. Bank of America, N.A., 03: 10-CV08039PHXJAT,

       2010 WL 2572988 (D. Ariz. June 22, 2010)). Jaffri’s counterclaims are

       contrary to a wealth of authority refusing to allow mortgagees to file private

       rights of action against a bank that allegedly failed to comply with HAMP.


                                                  Conclusion
[19]   None of Jaffri’s counterclaims against Chase stated any actionable claim, and

       the trial court properly granted Chase’s motion to dismiss all of them. We

       affirm.


[20]   Affirmed.




       Friedlander, J., and Pyle, J., concur.




       Court of Appeals of Indiana | Opinion 32A01-1405-MF-236 | February 13, 2015   Page 11 of 11
