Lansburg et al v. Federal Home Loan Mortgage Corporation et al

Filing 152

ORDER granting in part and denying in part 120 Defendants' motion for summary judgment. It is granted as to plaintiffs' claim for damages based on the loss of the Property, the loss of foster care income, and moving and temporary housin g costs. It is otherwise denied. IT IS FURTHER ORDERED denying 136 Plaintiffs' cross-motion for summary judgment and denying 141 Defendants' motion to strike and request for sanctions and denying 149 Plaintiffs' request for sanctions. Signed by Judge H Russel Holland on 10/17/17.(LSP)

WO

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA

JEANETTE K. LANSBURG and
LARRY J. ENCINAS,

)
)
)
Plaintiffs, )
)
vs.
)
)
FEDERAL HOME LOAN MORTGAGE
)
CORPORATION, et al.,
)
)
Defendants.
)
_______________________________________)

No. 2:11-cv-1529-HRH

ORDER
Cross-Motions for Summary Judgment
Defendants move for summary judgment.1 This motion is opposed and plaintiffs
cross-move for summary judgment.2 Plaintiffs’ cross-motion is opposed, and defendants
move to strike facts asserted in plaintiffs’ response to defendants’ motion for summary
judgment.3 Defendants also request that sanctions be imposed against plaintiffs for filing a
sham declaration.4 Defendants’ motion to strike and request for sanctions is opposed and

1

Docket No. 120.

2

Docket Nos. 135 and 136.

3

Docket No. 141.

4

Docket No. 141.
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plaintiffs request that sanctions be imposed against defendants.5 Oral argument was
requested and has been heard.
Facts
Plaintiffs are Jeanette K. Lansburg and Larry J. Encinas. Defendants are the Federal
Home Loan Mortgage Corporation and Saxon Mortgage Services, Inc.
On February 1, 2007, plaintiffs executed a Deed of Trust6 in favor of Taylor Bean and
Whitaker Mortgage Corporation (“Taylor Bean”) which encumbered the real property located
at 14394 West Shaw Butte Drive, Surprise, Arizona (“the Property”). The Deed of Trust
contained a power of sale provision in the event of a default under the Deed of Trust.7
In March 2008, plaintiffs entered into a loan modification with Taylor Bean in order
to prevent a foreclosure. This loan modification did not limit the default remedies available
under Section 22 of the Deed of Trust.
Several months after this first loan modification, plaintiffs again began experiencing
financial difficulties and in February or March of 2009, plaintiffs sought a second loan

5

Docket No. 149.

6

Exhibit A, Declaration of Saxon in Support of Defendants’ Motion for Summary
Judgment, Docket No. 123. Defendants also requested that the court take judicial notice of
the Deed of Trust as well as several other documents. See Docket No. 121. The court need
not take judicial notice of any of the documents attached as exhibits to Docket No. 121
because these documents are either submitted elsewhere as exhibits or the court did not rely
on them in reaching its decision on the instant motions.
7

Deed of Trust at 10-11, § 22, Exhibit A, Saxon Declaration, Docket No. 123.
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modification from Taylor Bean. It is this second loan modification attempt that is at issue
in the instant motions for summary judgment.
On May 6, 2009, Taylor Bean advised plaintiffs that they might qualify for a loan
modification under the Home Affordable Modification Program (“HAMP”).8 HAMP was
started in 2009 “to incentivize banks to refinance mortgages of distressed homeowners so
they could stay in their homes.” Corvello v. Wells Fargo Bank, NA, 728 F.3d 878, 880 (9th
Cir. 2013). To start the HAMP loan modification process, “borrowers supply information
about their finances and their inability to pay their current mortgage to the servicer, and the
servicer ... evaluate[s] whether the borrowers qualify for a loan modification.” Id. Plaintiffs
supplied this initial information to Taylor Bean sometime in May 2009.
“For borrowers who appear eligible to participate in HAMP, the servicer then prepares
a” Trial Period Plan (“TPP”). Id. “The TPP requires borrowers to submit documentation to
confirm the accuracy of their initial financial representations, and to make trial payments of
the modified amount to the servicer.” Id. at 880–81. On June 2, 2009, plaintiffs were
advised that they were eligible for HAMP and they were provided a TPP to sign.9 Plaintiffs
were advised to sign the TPP and send two signed copies of the TPP plus their first trial
period payment of $1739.70 to Sparta Special Servicing no later than June 12, 2009.10

8

Exhibit 7 at 1, Declaration of Michael S. DeFine [etc.], Docket No. 131.

9

Exhibit C at 2, Saxon Declaration, Docket No. 123.

10

Id.
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The TPP provided that “[i]f I am in compliance with this Trial Period Plan [“TPP”]
and my representations in Section 1[11] continue to be true in all material respects, then the
Lender will provide me with a Home Affordable Modification Agreement....”12 The TPP
provided that “[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.”13 The TPP
required plaintiffs to make three trial payments of $1739.70.14 The TPP provided that the
payments were due on June 12, 2009; July 1, 2009; and August 1, 2009.15 Lansburg
handwrote a note on the TPP, asking if the July and August payments could “be paid by the
8th of the month?”16 Lansburg testified that she never received anything in writing
confirming that plaintiffs could make the July and August payments on the 8th of the month
but that she did receive verbal confirmation.17

11

Section 1 of the TPP requires the borrower to certify that he or she can no longer
afford his or her mortgage payments, that the borrower lives in the property, that the
borrower will provide documentation of income, and that the borrower will obtain credit
counseling, if requested to do so. Home Affordable Modification Trial Period Plan at 1,
Exhibit D, Saxon Declaration, Docket No. 123.
12

Id. at 1.

13

Id.

14

Id. at 2.

15

Id.

16

Id.

17

October 8, 2012 Deposition of Jeanette K. Lansburg at 117:16-20, Exhibit 3,
Declaration of Tim Pomeroy [etc.], Docket No. 122.
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The TPP further provided that
[i]f prior to the Modification Effective Date, (i) the Lender does
not provide me a fully executed copy of this Plan and the
Modification Agreement; (ii) I have not made the Trial Period
payments required under Section 2 of this Plan; or (iii) the
Lender determines that my representations in Section 1 are no
longer true and correct, the Loan Documents will not be
modified and this Plan will terminate. In this event, the Lender
will have all of the rights and remedies provided by the Loan
Documents, and any payment I make under this Plan shall be
applied to amounts I owe under the Loan Documents and will
not be refunded to me[.18]
The TPP provided that the Modification Effective Date was “the first day of the month
following the month in which the last Trial Period Payment is due....”19 It is undisputed that
the Modification Effective Date for plaintiffs’ TPP was September 1, 2009.
Plaintiffs signed the TPP on June 10, 2009 and sent it, along with their first trial
period payment, to Sparta Special Servicing. Plaintiffs’ check (check number 1109) for their
first trial period payment was made out to Sparta Special Servicing, had plaintiffs’ Taylor
Bean loan number in the memo line, and was endorsed by Taylor Bean.20 This check cleared
plaintiffs’ checking account on June 18, 2009.21 Plaintiffs’ check (check number 1112) for
their second trial period payment was dated July 7, 2009, was made out to Sparta Special

18

Home Affordable Modification Trial Period Plan at 2, Exhibit D, Saxon Declaration,
Docket No. 123.
19

Id.

20

Exhibit 1, Supplemental Declaration of Michael S. DeFine [etc.], Docket No. 150.

21

Id.; Exhibit 1 at Lans000731, Pomeroy Declaration, Docket No. 122.
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Servicing, had plaintiffs’ Taylor Bean loan number in the memo line, and was endorsed by
Taylor Bean.22 This check cleared plaintiffs’ checking account on July 16, 2009.23
On July 7, 2009, plaintiffs filed for Chapter 7 bankruptcy protection.24
On August 6, 2009, Lansburg emailed Taylor Bean to advise that she was getting paid
the next day (August 7) and would be overnighting plaintiffs’ third trial period payment.25
Lansburg testified that she had no evidence that she overnighted the third trial period
payment the next day, that she did not “think [she] kept those receipts.”26
Lansburg wrote check number 1118 on what appears to be August 8, 2009, for
$1740.27 Check number 1118 was made out to Sparta Special Servicing and had “Aug Pmt”
in the memo line.28 Plaintiffs’ Taylor Bean loan number was written above the “Aug Pmt”
notation, but was crossed out.29 Above the crossed-out Taylor Bean loan number, plaintiffs’

22

Exhibit 2, DeFine Supplemental Declaration, Docket No. 150.

23

Id.

24

Case No. 2:09-bk-15624-CGC. Plaintiffs were granted a Chapter 7 discharge on
October 28, 2009. Docket No. 41 in Case No. 2:09-bk-15624-CGC.
25

Email from Jeanette Lansburg to Michelle Christian, Exhibit F at 1, Saxon
Declaration, Docket No. 123.
26

April 12, 2017 Deposition of Jeanette K. Lansburg at 94:9-12, Exhibit 5, Pomeroy
Declaration, Docket No. 122.
27

Exhibit 3, Supplemental DeFine Declaration, Docket No. 150.

28

Id.

29

Id.
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Saxon loan number was written.30 Check number 1118 did not clear plaintiffs’ checking
account until September 14, 2009.31 Check number 1118 was endorsed by Saxon.32
On August 19, 2009, a “welcome letter” was mailed to plaintiffs advising them that
Saxon was taking over the servicing of their loan.33 The letter advised that Saxon would start
accepting payments on August 11, 2009.34 The letter further advised that “[t]here may be an
initial posting delay due to the servicing transfer, but it will not negatively impact your
payment record.”35 “Any funds sent to Taylor Bean during the time period that servicing was
being released would have been placed in suspense and forwarded to Saxon.”36
On August 19, 2009, Lansburg hand wrote some notes on a copy of her August 6,
2009 email. The notes indicated that plaintiffs’ loan payments should now be sent to Saxon
at a Fort Worth, Texas address and that plaintiffs’ loan number was now 2000558478.37

30

Id.

31

Id.

32

Id.

33

Exhibit G at 1, Saxon Declaration, Docket No. 123.

34

Id.

35

Id.

36

Saxon Declaration at 4, ¶ 17, Docket No. 123.

37

Email from Lansburg to Christian, Exhibit F, Saxon Declaration, Docket No. 123.
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On September 4, 2009, Lansburg called Saxon and “said she had just completed her
3rd pmt of her HAMP trial, but the check hasn’t cleared yet.”38 The Saxon representative
advised Lansburg that “we are in the process of having those checks endorsed so that’s
probably the reason.”39 Lansburg advised the Saxon representative that “she is mailing her
adjusted pmt today” and the representative gave Lansburg “the correct address.”40 In her
notes about this phone call, Lansburg indicated that she spoke to Courtney Brown who told
her to mail her payments to an Irving, Texas address and told her that Brown “will notify the
dept & let them know we made our 3rd & final trial pmt.”41
On September 9, 2009, Lansburg called Saxon and advised that “she’s completed all
3 pmts of her HAMP trial, but one still hasn’t been cashed.”42 The Saxon representative
advised that she “would revw w/ my mgr, the HAMP mgr and our attys and c/b this
afternoon.”43 On September 9, 2009, another Saxon representative noted that “Borrower is
in active TM that was transferred to Saxon, waiting on additional guidance from Legal on

38

Saxon Servicing Notes at Lansburg000719, Exhibit E, Saxon Declaration, Docket
No. 123.
39

Id.

40

Id.

41

Exhibit F at 1, Saxon Declaration, Docket No. 123.

42

Saxon Servicing Notes at Lansburg000718, Exhibit E, Saxon Declaration, Docket
No. 123.
43

Id.
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how to move forward with the conversion into ... modification. BX is about to be done and
FC hold has been requested to ensure we are able to act on this loan. 3rd payment is in the
mail, per [client].”44
On September 29, 2009, a Saxon representative noted that “$2770.44 was sent over
when file was acquired[.] There is one payment of $1739.70 included which is the TM
payment. 3 by 3 was completed, one payment was returned.”45 Another Saxon representative noted on September 29, 2009, that “there is enough money left in suspense for 3rd pmt
to satisfy the 3 trial mod adv CJ3 of this. Cust will need to continue to make TM pmt while
we complete spec project.”46
On October 15, 2009, Saxon sent a letter to plaintiffs advising them that “Saxon is
working to complete the Home Affordable Modification Program you began several months
ago with Taylor, Bean....”47 Saxon advised that it was “in the process of completing the
necessary review of [the] loan” and that plaintiffs should “continue to make the agreed upon
trial period payment until we notify you otherwise.”48

44

Id.

45

Id. at Lansburg000715.

46

Id.

47

Exhibit I at 1, Saxon Declaration, Docket No. 123.

48

Id.
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On November 17, 2009, Lansburg sent a loan payment to Saxon in the form of a
cashier’s check.49 Lansburg advised Saxon that she
wrote checks for September and October. Since we are going
through bankruptcy, and you have not cashed our checks, I have
withdrawn the money from our account. I did not want that
amount of money sitting in our checking account while going
through bankruptcy. I am afraid the bankruptcy court will take
it. Before putting [the] September and October payment
through, please contact me and I will replace those checks with
a cashier’s check.[50]
Plaintiffs made another payment of $1740 in December 200951 and two payments of $1740
each in February 2010.52
On January 27, 2010, a Saxon representative spoke with Lansburg about
missing HMP docs. Needed updated paystubs 4506-T and
explanation of the profit on her 08 tax return. Sd that she was
a real estate agent on the side but hasn’t done anything in over
6 months. Also sd that they rec. a monthly check from the State
because they take in foster children. Currently they have 5
children they are watching but are about to go back to 3 which
is why the checks might be higher for now. She needs us to just
hold the checks.[53]

49

Exhibit J, Saxon Declaration, Docket No. 123.

50

Id.

51

Exhibit H at Lans000797, Saxon Declaration, Docket No. 123.

52

Id. at Lans000796. Plaintiffs also made a payment of $1740 in April 2010. Id.

53

Saxon Servicing Notes, Exhibit E at Lansburg000705-06, Saxon Declaration, Docket
No. 123.
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Lansburg faxed “the 4506T Form, current paystubs, W2 for 2009, and Letter of Explanation”
to Saxon’s Loan Modification department on February 8, 2010.54
On February 11, 2010, the beneficial interest in plaintiffs’ Deed of Trust was assigned
to defendant Federal Home Loan Mortgage Corporation.55 Saxon remained the servicer on
plaintiffs’ loan.
On February 24, 2010, Saxon sent plaintiffs a letter requesting additional documents
so it could complete its review of whether plaintiffs would qualify for a permanent HAMP
agreement.56 Plaintiffs were advised that they had until March 31, 2010 to submit the
additional documentation.57
On February 26, 2010, Saxon sent plaintiffs a letter advising that Saxon was “unable
to provide you with a Home Affordable Modification Program agreement....”58 Saxon
indicated that plaintiffs were being denied a loan modification under HAMP because they
“did not make all of the required Trial Period Plan payments by the end of the trial period.”59

54

Exhibit 22 at 1, DeFine Declaration, Docket No. 131.

55

Exhibit K at 1, Saxon Declaration, Docket No. 123.

56

Exhibit 21 at 1, DeFine Declaration, Docket No. 131.

57

Id. at 2.

58

Exhibit L at 1, Saxon Declaration, Docket No. 123.

59

Id.
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On March 3, 2010, Lansburg called Saxon “in response to [a] letter she received
requesting missing documents that she faxed on 2/18/10[.]”60 The Saxon representative
noted that it “appears the mod may have been denied due to failure to make trial mod
payments.”61 The Saxon representative “sent email to TF3 and KM5 requesting a call back
to [client] re: loan mod status.”62 On March 5, 2010, TF3 noted that “removed in error, all
payments made. Sent email. Request to unlock tricalc.”63 And, on March 8, 2010, TF3 noted
“Tricalc: Mod. Sent to UW.”64
On March 5, 2010, Lansburg faxed additional financial documentation to Saxon’s
Loan Modification department.65
On May 7, 2010, Lansburg called Saxon in response to a breach letter she had
received.66 A Saxon representative told Lansburg
that per our system she has been deemed not eligible for the
HAMP modification. Advised I would look into and call back.
Upon further research found that [client] was behind in pay60

Saxon Servicing Notes, Exhibit E at Lansburg000705, Saxon Declaration, Docket
No. 123.
61

Id.

62

Id. at Lansburg000704.

63

Id.

64

Id.

65

Exhibit 23, DeFine Declaration, Docket No. 131.

66

Saxon Servicing Notes, Exhibit at Lansburg000701, Saxon Declaration, Docket No.

123.
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ments. She has claimed that she made all payments and that
some payments had not cleared. She said she was going through
bankruptcy and that she could not keep funds in her account as
the trustee could liquidate it.[67]
Lansburg noted that she was told that they “were pulled from H[A]MP program. Notes in
system just say ‘No Recommendation.’”68 Lansburg further noted that she was told that
“once denied, can’t get back into H[A]MP.”69
On May 26, 2010, Lansburg emailed Chaunda Jackson, a Saxon employee, to
follow[] up on our loan. You were sending a request to extend
foreclosure to 7/12 pending investigation for the H[A]MP
program. We started the H[A]MP program with TB & W and
it was transferred to Saxon last year when we made our 3[rd]
and final trial payment. Saxon took us out of the H[A]MP
program because they said we are behind on our payments and
we are not.[70]
Jackson forwarded the email to Dre Guilford because plaintiffs’ loan was part of his
managed portfolio.71 Lansburg emailed Guilford again on June 14, 2010, after she
discovered that the Property had been sold that afternoon at a trustee sale.72

67

Id.

68

Exhibit 2 at 1, Pomeroy Declaration, Docket No. 122.

69

Id.

70

Exhibit 25 at 2, DeFine Declaration, Docket No. 131.

71

Id. at 1.

72

Id.
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On June 14, 2010, the Federal Home Loan Mortgage Corporation bought the Property
at the trustee sale for $240,000.73 At the time of the foreclosure sale, plaintiffs owed
$482,178.96.74
On June 17, 2010, Lansburg requested that Saxon provide copies of the trial contract,
copies of all payments made, and any documents showing that plaintiffs were notified of the
June 14, 2010 trustee sale.75 Plaintiffs received a packet of documents from Saxon but it
contained “the information on a Saxon customer out of California.”76 Lansburg avers that
she “contacted Saxon in August 2010 advising them of their error and since that time, Saxon
has not produced any [of the] documents I requested....”77
Although the Property had already been foreclosed on, on September 3, 2010, Saxon
sent plaintiffs a letter advising that they had been denied a permanent HAMP loan
modification because they “did not make all of the required Trial Period Plan payments by
the end of the trial period.”78 The letter advised plaintiffs that they had 30 days in which to
contact Saxon “to discuss the reason for non-approval for a HAMP modification or to discuss

73

Exhibit M, Saxon Declaration, Docket No. 123.

74

Id.

75

Exhibit 26 at 1, DeFine Declaration, Docket No. 131.

76

Declaration of Jeanette K. Lansburg at 6, ¶ 45, Docket No. 132.

77

Id. ¶ 46.

78

Exhibit 24 at 1, DeFine Declaration, Docket No. 131.
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alternative loss mitigation options that may be available to you.”79 The letter also advised
that “you will not lose your home during this 30-day period....”80 Lansburg avers that she and
her husband “were not aware we were denied a loan modification until we receiv[ed]” this
letter.81
In September 2010, defendants gave plaintiffs written notice to vacate and in October
2010 filed a forcible detainer action in state court. Plaintiffs remained living in the Property
during the state court proceedings and finally moved out of the Property in June 2013.
Plaintiffs’ only remaining claim is a claim for breach of contract. Plaintiffs allege that
they had a “written TPP contract” with defendants and that defendants “breached the terms
of the TPP by failing to comply with their duties which included either offering a loan
modification on the 91st day after the TPP was executed or denying such modification.”82
The parties’ cross-motions on plaintiffs’ breach of contract claim are now ready for
disposition as is defendants’ motion to strike certain factual assertions in plaintiffs’ response
to defendants’ motion for summary judgment and the parties’ requests for sanctions.83

79

Id.

80

Id.

81

Lansburg Declaration at 6, ¶ 41, Docket No. 132.

82

Plaintiffs’ Second Amended Complaint at 9-10, ¶¶ 57, 67, Docket No. 86.

83

Defendants requested sanctions in connection with their motion to strike; plaintiffs
requested sanctions in their response to defendants’ motion to strike.
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Discussion
Summary judgment is appropriate when there are no genuine issues of material fact
and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The
initial burden is on the moving party to show that there is an absence of genuine issues of
material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If the moving party meets
its initial burden, then the non-moving party must set forth specific facts showing that there
is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).
In deciding a motion for summary judgment, the court views the evidence of the non-movant
in the light most favorable to that party, and all justifiable inferences are also to be drawn in
its favor. Id. at 255. “[T]he court’s ultimate inquiry is to determine whether the ‘specific
facts’ set forth by the nonmoving party, coupled with undisputed background or contextual
facts, are such that a rational or reasonable jury might return a verdict in its favor based on
that evidence.” T.W. Elec. Service, Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626,
631 (9th Cir. 1987).
“In an action on a contract plaintiff has the burden of proof to show, 1) a contract, 2)
a breach, and 3) damages.” Thunderbird Metallurgical, Inc. v. Arizona Testing Labs., 423
P.2d 124, 126 (Ariz. Ct. App. 1967)). In order to satisfy the Statute of Frauds, a contract
“must state the terms and conditions of all the promises constituting the contract.” Broadway
Realty & Trust, Inc. v. Gould, 665 P.2d 580, 581 (Ariz. Ct. App. 1983) (citation omitted).

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“For an enforceable contract to exist, there must be an offer, acceptance, and consideration.”
Tabler v. Industrial Com’n of Ariz., 47 P.3d 1156, 1158 (Ariz. Ct. App. 2002).
Defendants first argue that plaintiffs’ breach of contract claim fails because no
contract between defendants and plaintiffs existed. Defendants argue that the TPP itself was
not a contract and that because a loan modification agreement was never executed, there was
no contract to breach. Defendants argue that the TPP itself cannot be the contract that was
allegedly breached because the Lender never signed the TPP.84 The TPP expressly provides
that “[t]his Plan will not take effect unless and until both I and the Lender sign it and the
Lender provides me with a copy of this Plan with the Lender’s signature.”85 Moreover,
defendants argue that it is undisputed that neither Taylor Bean nor Saxon ever agreed to
change the date of the July and August payments from the first of the month to the eighth of
the month. Thus, defendants argue that at best plaintiffs made a counter-offer, which Taylor
Bean never accepted.
However, as plaintiffs are quick to point out, in Corvello, the Ninth Circuit “held that
‘.. a TPP Agreement offered pursuant to HAMP is a contract, and a party to that contract may
sue for breach if the lender violates a term contained within the four corners of the TPP.’”
Meixner v. Wells Fargo Bank, N.A., 101 F. Supp. 3d 938, 947 (E.D. Cal. 2015) (quoting
Lazo v. Caliber Home Loans, Inc., No. 1:13–CV–2015 AWI JLT, 2015 WL 590663, at *5

84

Exhibit D at LANS000482, Saxon Declaration, Docket No. 123.

85

Id. at LANS000480.
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(E.D. Cal. Feb. 12, 2015)). Under Corvello, a borrower has a valid claim for breach of the
TPP agreement if the borrower has “fulfilled all of [his] obligations under the TPP, and the
loan servicer has failed to offer a permanent modification[.]” Corvello, 728 F.3d at 884.
If plaintiffs timely made all three TPP payments, then it was a breach of the parties’
agreement for defendants not to “send a signed Modification Agreement offering to modify
the loan....” Id. at 833.
Plaintiffs were required to make three TPP payments prior to the Modification
Effective Date, which was September 1, 2009. There is no dispute that plaintiffs made their
first and second TPP payments prior to September 1, 2009.86 As to whether plaintiffs made
their third payment prior to September 1, 2009, the material facts are in dispute. There is
evidence that suggests that plaintiffs did not make this payment until sometime in September
2009, such as Saxon’s declaration that Saxon never received “[p]laintiffs[’] third TPP
payment from Taylor Bean”87and the September 4 servicing note in which the Saxon
representative noted that Lansburg “said she just completed her 3rd pmt of her HAMP trial”
and that “she is mailing her adjusted pmt today....”88 There is also Lansburg’s hand-written

86

Defendants argue that plaintiffs’ second payment was late, which it may have been
if it were due on July 1, 2009, but there is no dispute that the second payment was made prior
to September 1, 2009.
87

Saxon Declaration at 4, ¶¶ 17-18, Docket No. 123.

88

Saxon Servicing Notes at Lansburg000719, Exhibit E, Saxon Declaration, Docket
No. 123.
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notes about the September 4, 2009 phone call which indicate that the Saxon representative
“will notify the dept & let them know we made our 3rd & final trial pmt.”89
But there is also evidence that suggests that plaintiffs’ third payment was sent in
August 2009, such as the fact that check number 1118 appears to have been dated August 8,
2009 and was made out to Sparta Special Servicing. While it is undisputed that check
number 1118 did not clear plaintiffs’ bank until September 14, 2009, that could have been
a result of the change in servicer in August. Lansburg’s bank statement for the period of
August 11, 2009 through September 10, 2009 provides further evidence that check number
1118 was written in August 2009. That bank statement shows that check number 1117
cleared on August 19, 2009 and that check number 1119 cleared on August 31, 2009.90 A
logic inference to draw from this is that Lansburg issued check number 1118 in August and
that processing of the check was delayed due to the change in servicer to Saxon.
There is also the matter of Lansburg’s declaration filed in connection with the crossmotions for summary judgment in which she avers that she issued the third payment (check
number 1118) on August 8, 2009.91 Defendants, however, move to strike this averment
because they argue that it contradicts Lansburg’s deposition testimony. The court may strike
“‘sham’ testimony upon making a finding of fact that” the testimony “‘flatly contradict[s]

89

Exhibit F at 1, Saxon Declaration, Docket No. 123.

90

Exhibit 1 at LANS000748, Pomeroy Declaration, Docket No. 122.

91

Lansburg Declaration at 5, ¶ 31, Docket No. 132.
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earlier testimony in an attempt to create an issue of fact and avoid summary judgment.’”
Karpenski v. American General Life Companies, LLC, 999 F. Supp. 2d 1218, 1224 (W.D.
Wash. 2014) (quoting Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262 (9th Cir. 1991)).
Defendants argue that Lansburg’s averment in paragraph 31 of her declaration that she “sent
check 1118 in the amount of $1740.00 that I issued to my servicer on August 8, 2009"92
directly contradicts her deposition testimony.
At her October 8, 2012 deposition, Lansburg testified as follows:
Q.

Then there’s a notation here to Courtney Brown and a date,
September 4, 2009. Do you see that?

A.

I do.

Q.

And then below that, can you read into [the] record what you
wrote?

A.

“Mail payment to this address. She will notify the department
and let them know we made our third and final trial
payment.”[93]

At her April 12, 2017 deposition, Lansburg testified as follows when asked about a
September 9, 2009, Saxon servicing note:
Q:

It says, “Continued ... modification. Bankruptcy is about
to be done and foreclosure hold has been requested to
ensure we are able to act on this loan. Third payment in
the mail, per CVI,” which I’ll represent is customer. Do
you know if you called in about that time frame?

92

Id.

93

October 8, 2012 Lansburg Deposition at 128:4-13, Exhibit 3, Pomeroy Declaration,
Docket No. 122.
-20-

A:

Possibly.

Q:

And so that third payment would have been the one that
you had issued about four days earlier. Does that sound
right?

A.

It sounds correct.

Q:

So that check that cleared on the [14th], that probably
would have been your third check, the third payment?

A.

Correct.[94]

Defendants argue that Lansburg testified twice that she sent the third TPP payment on or
around September 5, 2009, and thus her averment that she sent it on August 8, 2009, directly
contradicts this testimony.
Similarly, defendants move to strike Lansburg’s averment in paragraph 33 of her
declaration that defendants sent the August 19, 2009 letter about the change in servicer from
Sparta to Saxon, “approximately 11 days after I sent our final payment to Taylor Bean &
Whitaker....”95 Defendants argue that this averment contradicts Lansburg’s deposition
testimony that she sent plaintiffs’ third TPP payment in September 2009.
Lansburg’s prior testimony does not contradict her averments in paragraphs 31 and
33. Lansburg never definitively testified that she sent the third TPP payment in September
2009. Rather, she testified that she probably sent it then. Her deposition testimony leaves

94

April 12, 2017 Lansburg Deposition at 102:7-22, Exhibit 5, Pomeroy Declaration,
Docket No. 122.
95

Lansburg Declaration at 5, ¶ 33, Docket No. 132.
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open the possibility that she sent the third payment in August 2009, a possibility that is
supported by evidence in the form of the copy of check number 1118, which is dated 8/8/09
and made out to Sparta Special Servicing.96
At oral argument, defense counsel made much of the fact that on check number 1118,
the Taylor Bean loan number was crossed out and the Saxon loan number was written on the
check instead. He suggested that this indicated that Lansburg sent the check to Saxon after
she spoke to the Saxon representative on September 4, 2009. But, there is evidence in the
record that indicates that Lansburg spoke to a Saxon representative on August 19 and was
provided the Saxon loan number at that time.97 While this evidence seems to contradict
Lansburg’s averment that she sent the check on August 8, 2009, it also indicates that
Lansburg knew the Saxon loan number prior to the September 4, 2009 call. The fact that the
Saxon loan number was written on check number 1118 is not conclusive evidence that this
check was not sent to Saxon until September 2009.
Finally, in terms of evidence that suggests that the third payment was sent in August
2009, there are the March 5 and March 8, 2010 Saxon servicing notes. The March 5 note
read: “removed in error, all payments made. Sent email. Request to unlock tricalc.”98 The

96

Exhibit 3, Supplemental DeFine Declaration, Docket No. 150.

97

Exhibit F at 1, Saxon Declaration, Docket No. 123.

98

Saxon Servicing Notes at Lansburg000704, Exhibit E, Saxon Declaration, Docket
No. 123.
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March 8 note read: “Tricalc: Mod. Sent to UW.”99 These notes suggest that at some point
Saxon realized that plaintiffs had made all three of their TPP payments and that a loan
modification was drafted and sent to underwriting.100 Defendants contend that this may not
be a reasonable inference to draw from these notes given that Saxon had sent a HAMP denial
letter in February 2010. But given that in March 2010, Saxon was requesting further
documentation from plaintiffs, it is not at all clear that Saxon was treating plaintiffs’ loan
modification as being denied as of the date of the February 2010 letter. The March 2010
servicing notes are further evidence that the facts surrounding when plaintiffs made their
third TPP payment are in dispute. A reasonable jury viewing the facts in the light most
favorable to plaintiffs could conclude that plaintiffs’ third TPP payment was sent in August
2009 while a reasonable jury viewing the facts in the light most favorable to defendants could
conclude plaintiffs’ third TPP payment was not sent until September 2009.
But even if the facts are in dispute as to whether plaintiffs timely made their third TPP
payment, which they are, defendants argue that they are still entitled to summary judgment
on plaintiffs’ breach of contract claim because they did not breach the contract. Defendants
argue that the evidence shows that they reviewed plaintiffs’ application for a loan
modification and after review, then denied plaintiffs’ application and advised plaintiffs of
such on February 26, 2010. As set out above, on February 26, 2010, Saxon sent plaintiffs
99

Id.

100

Plaintiffs have requested that defendants produce this draft modification, but,
according to plaintiffs, it has never been produced.
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a letter advising that Saxon was “unable to provide you with a Home Affordable Modification Program agreement” because plaintiffs “did not make all of the required Trial Period
Plan payments by the end of the trial period.”101
Although plaintiffs argue that the HAMP regulations require that on the 91st day, the
servicer or lender is required to either offer a loan modification or deny the modification in
writing, plaintiffs have never cited to any specific HAMP regulation containing this
requirement. Plaintiffs also dispute that they ever received the February 2010 letter.
Lansburg avers that plaintiffs “were not aware we were denied a loan modification until we
received the formal letter stating such in September 2010.”102 Defendants move to strike this
averment because it contradicts Lansburg’s prior testimony. At her April 2017 deposition,
Lansburg was asked about some hand-written notes she made in May 2010. She was asked:
“so at least as of May 7, you knew you were pulled from HAMP and you couldn’t get back
into the program; is that fair?”103 Lansburg replied: “That’s semi-fair, I guess. I mean it
couldn’t be pulled from the trustee’s sale is the way I understood it.”104
Lansburg’s averment does not necessarily contradict her deposition testimony. But
even if this averment were stricken, Lansburg never testified that plaintiffs actually received

101

Exhibit L at 1, Saxon Declaration, Docket No. 123.

102

Lansburg Declaration at 6, ¶ 41, Docket No. 132.

103

April 12, 2017 Lansburg Deposition at 142:20-22, Exhibit 5, Pomeroy Declaration,
Docket No. 122.
104

Id. at 142:23-24.
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the February 2010 letter and the issue here is not whether plaintiffs knew that they had been
denied a loan modification prior to foreclosure; the issue is whether defendants complied
with the terms of the TPP agreement. The TPP agreement contemplates that the lender will
provide the borrower with a loan modification if the borrower has provided the requested
financial information and made the three trial period payments prior to the Modification
Effective Date, which here was September 1, 2009. The TPP agreement provides that time
is of the essence,105 so it may have been a breach of the TPP agreement for defendants to wait
until February 2010 to advise plaintiffs that they were being denied a loan modification for
the alleged failure to make all their TPP payments by September 1, 2009. A reasonable jury
viewing the facts in the light most favorable to plaintiffs could conclude that defendants
breached the TPP agreement by not promptly informing plaintiffs that they had been denied
a loan modification.
But even if there were a contract and even if they breached that contract, defendants
argue that plaintiffs’ breach of contract claim still fails because plaintiffs have suffered no
contract damages. “[D]amages for breach of contract are those damages which arise
naturally from the breach itself or which may reasonably be supposed to have been within
the contemplation of the parties at the time they entered the contract.” All American School
Supply Co. v. Slavens, 609 P.2d 46, 48 (Ariz. 1980). “Consequential damages are
recoverable only where they arise naturally from the breach of a contract and where they

105

Exhibit D at Lans000481, Saxon Declaration, Docket No. 123.
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were in the contemplation of the parties” at the time the contract in question was executed.
Miscione v. Bishop, 636 P.2d 149, 152 (Ariz. Ct. App. 1981).
Plaintiffs’ damages allegations are in paragraphs 54 and 55 of the Second Amended
Complaint. In paragraph 54, plaintiffs allege that
as a result of defendants[’] conduct, [they] have lost their home,
lost their monthly income as foster parents, lost the monthly TPP
payments paid and were forced to incur debts in being forcibly
removed from their home by the constable, including incurring
attorney fees and costs in defending against a forcible detainer,
moving costs and expenses in setting up temporary housing for
themselves.[106]
In paragraph 55, plaintiffs allege that “Lansburg suffered numerous medical bills from stress
directly related to the [d]efendants failure’ to comply with the TPP.”107 Defendants argue
that none of these are recoverable as contract damages in this case.
loss of the Property. Damages for breach of a contract to loan money “include loss
of equity if the breach of the loan agreement caused the borrower to lose ownership of its
assets.” United Calif. Bank v. Prudential Ins. Co. of Amer., 681 P.2d 390, 448 (Ariz. Ct.
App. 1983). At the time plaintiffs lost ownership of the Property, plaintiffs had no equity in
the Property. It is undisputed that on June 14, 2010, the date of the trustee sale, plaintiffs

106

Plaintiffs’ Second Amended Complaint at 8, ¶ 54, Docket No. 86.

107

Id. at ¶ 55. At oral argument, plaintiffs’ counsel suggested that plaintiffs were
seeking damages for now having a foreclosure on their credit report. Plaintiffs did not plead
such damages and cannot add damages via oral argument.
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owed $482,178.96 and that the Property sold for $240,000.108 Plaintiffs cannot prove any
damages related to the loss of the Property. Plaintiffs’ suggestion that it was possible that
at some point in the future that they would have some equity in the Property is nothing more
than speculation and damages cannot be based on speculation See Alaska Rent-A-Car, Inc.
v. Avis Budget Group, Inc., 738 F.3d 960, 970 (9th Cir. 2013) (“damages” must “be capable
of measurement based upon reliable factors without undue speculation”).
loss of income as foster parents. Plaintiffs became foster parents in 2009 and they
contend that they lost their income as foster parents when they had to move out of the
Property. The payments plaintiffs received for being foster parents were not “income.”
“[F]oster care maintenance payments cover the costs of ‘food, clothing, shelter, daily
supervision, school supplies, a child’s personal incidentals, liability insurance with respect
to a child, and reasonable travel to the child’s home for visitation.’” Berg-Thaemert v.
Thaemert, Case No. 1 CA-CV 06-0767, 2007 WL 5462303, at *3 (Ariz. Ct. App. Oct. 23,
2007) (quoting 42 U.S.C.A. § 675(4)(A)). “These payments ‘do not include reimbursement
in the nature of salary for the exercise by the foster family of ordinary parental duties.’” Id.
(quoting U.S. Dep’t of Health and Human Services, Child Welfare Policy Manual § 8.3B(1)
(2007)). Plaintiffs cannot recover the loss of the payments for their foster children as breach
of contract damages.

108

Exhibit M at 1, Saxon Declaration, Docket No. 123.
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loss of TPP payments. Plaintiffs claim that the loss of the loan payments that they
made from June 2009 through June 2010 are direct contract damages. “Generally speaking,
a commitment to perform a preexisting contractual obligation has no value.” Auerbach v.
Great Western Bank, 74 Cal. App. 4th 1172, 1185 (Cal. Ct. App. 1999). The TPP agreement
expressly provided that “any payment [the borrower] make[s] under this Plan shall be applied
to the amounts [the borrower] owe[s] under the Loan Documents and shall be not be
refunded to” the borrower.109
While the TPP payments plaintiffs made are not recoverable as breach of contract
damages, the loan payments plaintiffs made in November 2009, February 2010, and April
2010 are recoverable.

If plaintiffs’ loan modification had been promptly denied in

September 2009 due to untimely TPP payments, plaintiffs presumably would have stopped
making any payments because a foreclosure would have been imminent. Any additional loan
payments were a result of defendants’ alleged breach of the TPP agreement.
eviction costs. Plaintiffs claim that they incurred $11,308 in attorney’s fees in
connection with their eviction from the Property. These costs were reasonably foreseeable
at the time of the HAMP modification. If plaintiffs were wrongfully denied a loan
modification, as they may have been, then it was reasonably foreseeable that plaintiffs would
resist eviction. Plaintiffs may recover their eviction costs if they prevail on their breach of
contract claim.

109

Exhibit D at LANS000481, Saxon Declaration, Docket No. 123.
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moving and temporary housing costs. Defendants argue that these are not damages
that were contemplated when plaintiffs executed the TPP agreement. Defendants argue that
plaintiffs had ample notice regarding the possible loss of the Property and had ample time
to find alternative housing. Lansburg has consistently testified that plaintiffs never looked
into alternative housing.110
Plaintiffs made no argument in response either in their briefing or at oral argument.111
This claim for damages is treated as abandoned. See Sanchez v. Maricopa County, Case No.
CV 07–1244–PHX–JAT, 2008 WL 4057002, *7 (D. Ariz. Aug.27, 2008) (“If a non-moving
party only partially responds to a motion for summary judgment, then the party abandons the
claims that it does not address in its opposition to the motion”).
medical bills. Lansburg contends that the stress she suffered due to the loss of her
home and the loss of her foster children contributed to two strokes that she had in 2014 and
2015. Plaintiffs seek to recover the medical bills associated with treatment Lansburg
received related to this stress.
Defendants argue that plaintiffs have failed to show that Lansburg’s stress and health
issues were foreseeable at the time that they executed the TPP agreement. Defendants also
argue that Lansburg cannot prove that her health conditions were caused by defendants’

110

April 12, 2017 Lansburg Deposition at 148:17-149:4; 163:20-164:9, Exhibit 5,
Pomeroy Declaration, Docket No. 122.
111

Defense counsel mentioned the moving and temporary housing damages in his
argument; plaintiffs’ counsel did not.
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alleged breach of contract. Defendants argue that the evidence shows that plaintiffs had a
number of stressful events happening in their lives around the time they executed the TPP
agreement, including that they had filed for bankruptcy. Defendants also point out that the
nurse practitioner who was treating plaintiff, Ms. Frasca, stated that she could not opine that
stress caused Lansburg’s strokes because “she had other contributing factors which resulted
in her” hypertension which caused the strokes.112
In response, Lansburg avers that “the stress I underwent due to the loss of my home
and my foster children contributed to my health issues and I suffered two strokes during this
time for which I had to undergo medical treatment.”113 Defendants move to strike this
averment because it contradicts Lansburg’s deposition testimony. At her May 9, 2017
deposition, Lansburg was asked: “What do you think Ms. Frasca meant when she said she
could not differentiate because [you] had other contributing factors?”114 Lansburg answered:
She said that there’s lots of factors that could cause it, and so
nobody could put it in writing.... There’s nobody that could say,
yes, it did cause it, or no, it didn’t cause it....[115]

112

May 9, 2017 Deposition of Jeanette Kim Lansburg at 77:2-5, Exhibit 6, Pomeroy
Declaration, Docket No. 122.
113

Lansburg Declaration at 7, ¶ 56, Docket No. 132.

114

May 9, 2017 Lansburg Deposition at 77:11-13, Exhibit 6, Pomeroy Declaration,
Docket No. 122.
115

Id. at 77:14-17.
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Lansburg’s averment does not contradict her deposition testimony. If defendants’
breached the TPP agreement, it was foreseeable that Lansburg would suffer some stress.
Plaintiffs have offered very little in the way of proof that Lansburg’s medical issues were
caused by this stress. But, Lansburg’s declaration is sufficient to defeat defendants’ motion
for summary judgment as to plaintiffs’ damages related to Lansburg’s medical expenses.
Finally, the court takes up the issue of sanctions. Defendants seek sanctions because
Lansburg’s declaration was a “sham” declaration. Rule 56(h), Federal Rules of Civil
Procedure, provides in relevant part:
If satisfied that an affidavit or declaration under this rule is
submitted in bad faith or solely for delay, the court--after notice
and a reasonable time to respond--may order the submitting
party to pay the other party the reasonable expenses, including
attorney’s fees, it incurred as a result.
Defendants argue that there can be no question that Lansburg’s declaration was offered for
no other purpose than to attempt to create a triable issue of material fact and that Lansburg
and her attorney had to know that it contradicted her prior deposition testimony. Thus,
defendants seek $5,625 in attorney’s fees, which they contend are the attorney’s fees they
have incurred in filing their reply to their motion for summary judgment and their response
to plaintiffs’ cross-motion.116

116

See Declaration of Tim Pomeroy [etc.] at 2, ¶¶ 2-3, Docket No. 139.
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As discussed above, Lansburg’s declaration did not necessarily contradict her
deposition testimony. Her declaration was not a sham; and defendants are not entitled to
sanctions on this basis.
Buried in their reply to defendants’ motion to strike, plaintiffs seek sanctions against
defendants for raising frivolous defenses. This request is denied. Defendants’ defenses and
arguments in this case have not been frivolous.
Conclusion
Defendants’ motion for summary judgment117 is denied in part and granted in part.
It is granted as to plaintiffs’ claim for damages based on the loss of the Property, the loss of
foster care income, and moving and temporary housing costs. It is otherwise denied.
Plaintiffs’ cross-motion for summary judgment118 is denied.
Defendants’ motion to strike and request for sanctions119 is denied.
Plaintiffs’ request for sanctions120 is denied.
DATED at Phoenix, Arizona, this 17th day of October, 2017.
/s/ H. Russel Holland
United States District Judge

117

Docket No. 120.

118

Docket No. 136.

119

Docket No. 141.

120

Docket No. 149.
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