O'Steen et al v. Wells Fargo Bank, N.A. et al
Filing
101
ORDER granting in part and denying in part 83 Motion for summary judgment; granting in part and denying in part 87 Motion for summary judgment. It is hereby ORDERED that the Defendants' Motions for Summary Judgment (Docs. 83, 87) are G RANTED IN PART AND DENIED IN PART. Judgment in favor of Wells Fargo as to Counts I and III shall be entered, and judgment in favor of Rushmore as to Count II shall be entered. The Defendants' Motions for Summary Judgment are DENIED in all other respects. Signed by Judge Gregory A. Presnell on 9/25/2017. (MAF)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
JULIE O’STEEN and CHRISTOPHER
O’STEEN,
Plaintiffs,
v.
Case No: 6:17-cv-849-Orl-31KRS
WELLS FARGO BANK, N.A., WELLS
FARGO HOME MORTGAGE, INC. and
RUSHMORE LOAN MANAGEMENT
SERVICES, LLC,
Defendants.
ORDER
This matter comes before the Court, without a hearing, on the Motion for Summary
Judgment (Doc. 83) filed by the Defendant, Rushmore Loan Management Services, LLC
(“Rushmore”); the Motion for Summary Judgment (Doc. 87) filed by the Defendants, Wells Fargo
Bank, N.A.(“Wells Fargo”) and Wells Fargo Home Mortgage, Inc. (“WFHM”); the Plaintiffs’
Response in Opposition (Doc. 96); Rushmore's Reply thereto (Doc. 99); and Wells Fargo and
WFHM’s Reply thereto (Doc. 100).
I. Background
A. Summary of the Facts
On April 5, 2005, Julie O’Steen executed a Note in the amount of $82,400 with Wells
Fargo Home Mortgage, Inc. (“WFHM”), secured by a mortgage which was contemporaneously
executed by both Julie O’Steen and her spouse, Christopher O’Steen. Penno Decl., Doc. 84-1
at 1.1 On December 3, 2012, following the Plaintiffs’ default on the mortgage, Wells Fargo
initiated a foreclosure action. Mortgage Foreclosure Complaint, Doc. 85-2 at 2-4. Also in
December of 2012, the Plaintiffs sent Wells Fargo a loss mitigation application in which they
asked for loan forbearance due to unemployment. Wells Fargo Mot. at 3-4. Wells Fargo offered
the Plaintiffs a six-month forbearance in January of 2013. On January 9, 2014, the state court
entered a final summary judgment in favor of Wells Fargo and against the Plaintiffs. See Final
Summary Judgment of Mortgage Foreclosure, Doc. 85-3 at 2-6. Between the months of January
and September, 2014, the sale of the property was rescheduled three different times; eventually,
the state court entered an order on September 30, 2014, scheduling the sale on January 7, 2015.
See Order Rescheduling Foreclosure Sale, Doc. 85-6 at 2-3.
On October 23, 2014, Wells Fargo sent Julie O’Steen2 a Trial Period Plan (“TPP”) Notice,
explaining that it had approved her for a trial payment plan that required her to make three
monthly payments of $1,042.19. TPP Notice, Doc. 84-1 at 28. The Notice provided that Julie
O’Steen “may eligible for a modification,” and that the TPP was “the first step toward qualifying
for more affordable mortgage payments.” Id. The TPP Notice instructed that, in order “[t]o accept
this offer,” she should either call Wells Fargo at the number listed or send in her “Trial Period
payment” rather than her “normal mortgage payment” within fifteen days of the date on the letter.
Id. The Notice indicated that the TPP could extend beyond three months, and that the mortgage
could only be modified after Wells Fargo determined that all Trial Period payments were timely
On May 8, 2004, WFHM “was acquired by and merged into Wells Fargo.” Penno Decl.,
Doc. 84-1 at 1. Because the evidence that Wells Fargo acquired WFHM is undisputed, the Court
hereinafter refers to the two collectively as “Wells Fargo,” even though the language in the letters
refers to “Wells Fargo Home Mortgage.”
1
Although the evidence shows that both Julie and Christopher O’Steen were obligors on
the Mortgage, Wells Fargo’s letters were addressed to Julie O’Steen individually.
2
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made and that she “submitted all the required documents, including title clearance requirements.”
Id. Additionally, the Notice stated that no foreclosure sale would be held during the TPP, so long
as she complied with its terms. Id. at 29.
Eight days later, Wells Fargo sent Julie O’Steen a letter providing that it was “unable to
complete the final modification of [her] loan until the title issue(s)” on the property were resolved.
Letter of October 31, 2014, Doc. 84-1 at 40. Included with the letter were a list of required
documents for her to send to Wells Fargo within thirty business days and an attached title report,
which listed various judgments in addition to mortgages and which read “NO TITLE ISSUES” on
one of its pages. Id. at 40-49. The Plaintiffs made the December 1, 2014; January 1, 2015; and
February 1, 2015 payments under the Trial Period Plan. O’Steen Decl., Doc. 95-1 at 3.3
Shortly after the Plaintiffs’ February TPP payment, Wells Fargo sent Julie O’Steen a
second letter explaining that it needed additional documents in order to complete modification of
the loan. Letter of February 3, 2015, Doc. 84-1 at 53-55. The following month, Wells Fargo sent
Julie O’Steen a third letter stating that, in order to proceed with loan modification, she would need
to “provide documented proof that the title issue(s) has been resolved,” within ten business days of
her receipt of the letter, or Wells Fargo would deny the loan modification request. Letter of
March 23, 2015, Doc. 84-1 at 72.
Thirty-nine days later, Wells Fargo sent Julie O’Steen a final letter providing that, due to
title issues, she did not meet the requirements for the loan modification program. Letter of
May 1, 2015, Doc. 84-1 at 75. The final letter also stated that she had the right to submit a request
to dispute the decision, if she believed it was “incorrect.” Id. Also on May 1, 2015, Christopher
3
In December of 2014, the Plaintiffs successfully moved to cancel the foreclosure sale
that had been scheduled for January 5, 2015.
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O’Steen filed a bankruptcy petition in order “to obtain a judicial declaration that judgments against
him would not affect title.” Pl.’s Resp. at 14. On May 29, 2015, the Plaintiffs faxed Wells Fargo a
Dispute Request Form in order to dispute Wells Fargo’s decision. Pl.’s Resp. at 3. Dispute
Request Form, Doc. 95-2 at 1. According to the Plaintiffs, they continued to make the Trial Period
Plan payments through February 2016, although Wells Fargo apparently rejected the January and
February 2016 payments. Pl.’s Resp. at 3.
Rushmore apparently became the loan servicer for the mortgage on April 5, 2016.
Rushmore sent letters soliciting loss mitigation information on July 11, 2016; August 13, 2016;
September 17, 2016; October 20, 2016; and December 1, 2016. Rushmore Mot. at 4. On May 23,
2016, Wells Fargo moved to reset the foreclosure sale. Mot. to Reset Foreclosure Sale, Doc. 81-6
at 2-3. The property was sold to a third party at a foreclosure auction on March 1, 2017. See
Homeowner’s Obj. to Sale, Doc. 81-8 at 2. The Plaintiffs’ objection to the sale was denied. Order
Denying Obj. of Sale, Doc. 81-9 at 2.
B. Procedural History
On October 24, 2016, the Plaintiffs filed their Original Complaint (Doc. 1) in the Tampa
Division of the United States District Court for the Middle District of Florida. The Original
Complaint was dismissed with leave to amend on December 27, 2016. Doc. 21. On January
17, 2017, the Plaintiffs filed an Amended Complaint (Doc. 24), which was dismissed in part with
leave to amend. Doc. 42. On March 15, 2017, the Plaintiffs filed their Second Amended
Complaint (Doc. 43), alleging six counts: Count I alleges breach of contract by Wells Fargo;
Count II alleges breach of contract by Rushmore; Count III alleges violation of Regulation X, 12
C.F.R. § 1024.41(d) by Wells Fargo; Count IV alleges violation of Regulation X, 12 C.F.R.
§ 1024.41(g) by Wells Fargo; Count V alleges violation of Regulation X, 12 C.F.R. § 1024.41(g)
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by Rushmore; and Count VI seeks declaratory relief against Rushmore. On May 12, 2017, this
case was transferred from the Tampa Division to the Orlando Division. Doc. 72. On June 21,
2017, both Rushmore and Wells Fargo filed their Motions for Summary Judgment (Docs. 83, 87).
On July 25, 2017, the Plaintiffs filed their Response (Doc. 96), and thereafter Rushmore and Wells
Fargo filed Replies (Docs. 99, 100).
II. Standard of Review
A party is entitled to summary judgment when the party can show that there is no genuine
issue as to any material fact and that movant is entitled to judgment as a matter of law. Fed. R.
Civ. P. 56. Which facts are material depends on the substantive law applicable to the case.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party bears the burden of
showing that no genuine issue of material fact exists. Clark v. Coats & Clark, Inc., 929 F.2d 604,
608 (11th Cir. 1991).
When a party moving for summary judgment points out an absence of evidence on a
dispositive issue for which the nonmoving party bears the burden of proof at trial, the nonmoving
party must “go beyond the pleadings and by [his] own affidavits, or by the depositions, answers to
interrogatories, and admissions on file, designate specific facts showing that there is a genuine
issue for trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 324-25 (1986) (internal quotations and
citation omitted). Thereafter, summary judgment is mandated against the nonmoving party who
fails to make a showing sufficient to establish a genuine issue of fact for trial. Id. at 322, 324-25.
The party opposing a motion for summary judgment must rely on more than conclusory
statements or allegations unsupported by facts. Evers v. Gen. Motors Corp., 770 F.2d 984, 986
(11th Cir. 1985) (“conclusory allegations without specific supporting facts have no probative
value”).
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III. Breach of Contract: Counts I and II
A. Legal Standard
Under Florida law, to prevail on a breach of contract claim, plaintiff must establish “(1) the
existence of a contract; (2) a material breach of that contract; and (3) damages resulting from the
breach.” Merle Wood & Assocs., Inc. v. Trinity Yachts, LLC, 857 F. Supp. 2d 1294, 1301 (S.D.
Fla. 2012) (quoting Vega v. T–Mobile USA, Inc., 564 F.3d 1256, 1272 (11th Cir. 2009)). A
contract is not enforceable unless “‘there has actually been a meeting of the minds of the parties
upon definite terms and conditions which include the essential elements of a valid contract.’ ”
Leopold v. Kimball Hill Homes Fla., Inc., 842 So.2d 133, 136 (Fla. 2d DCA 2003) (quoting
Mehler v. Huston, 57 So. 2d 836, 837 (Fla. 1952)). To prove the existence of a contract, a plaintiff
must show: (1) offer; (2) acceptance; (3) consideration; and (4) sufficient specification of the
essential terms. Vega v. T–Mobile USA, Inc., 564 F.3d 1256, 1272 (11th Cir. 2009) (citing St. Joe
Corp. v. McIver, 875 So.2d 375, 381 (Fla. 2004); see also W.R. Townsend Contracting, Inc. v.
Jensen Civil Constr., Inc., 728 So.2d 297, 302 (Fla. 1st DCA 1999). “An essential, or material,
term is ‘[a] contractual provision dealing with a significant issue such as subject matter, price,
payment, quantity, quality, duration, or the work to be done.’” United States Doe v. Health First,
Inc., 2017 WL 1929700, at *4 (M.D. Fla. 2017) (quoting Material Term, BLACK’S LAW
DICTIONARY (9th ed. 2009)).
B. Analysis
The Plaintiffs allege that the TPP Notice “constituted a valid offer” and that they “accepted
it by making trial period payments.” Pl.’s Resp. at 7. They argue that the higher TPP payments4
4
Wells Fargo maintains that there was no consideration for the alleged contract because
“the [l]oan already required Plaintiffs to make monthly payments that were greater than those
required by the Trial Period Plan.” Wells Fargo Mot. at 10. The Fixed Rate Note, however, shows
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and the obligations to provide additional documentation and subrogation agreements, to pay off
judgments and liens, to pay escrow, and to certify the accuracy of the financial information they
provided constituted valid consideration. Id. at 8-9.
The Plaintiffs argue not only that the TPP was a contract, but that the failure to provide
permanent loan modification was a breach of its terms. However, any permanent loan
modification was far from guaranteed. The TPP Notice clearly contemplated the possibility that
Julie O’Steen might not even be eligible for a loan modification, allowing only that Julie O’Steen
“may be eligible for a modification.” TPP Notice, Doc. 84-1 at 28. It further cautioned that the
“mortgage may only be modified after we determine all your trial period payments were made on
time and you submitted all the required documents, including any title clearance requirements.” Id.
Giving no definite end point for the TPP, it instructs Julie O’Steen to “continue making your trial
period payments . . . until your home preservation specialist advises that you may move forward
with a final modification or that you are no longer eligible for a modification.” Id. There could be
no modification until a loan modification agreement was signed by both parties. Id. at 33.
Fatally, the TPP Notice is devoid of any reference to what the terms of any potential loan
modification agreement might be. There is no concrete information as to when the loan
modification would actually occur, or what the payments, escrow, principal balance, and interest
rate would be under the modified loan agreement. The Plaintiffs argue that the “new loan amount”
could easily be calculated by multiplying the TPP payment by 480 months. Pl.’s Resp. at 9.
However, the 480-month term mentioned in the Notice did not refer to the TPP, but to a yet to be
determined permanent loan modification.
a payment smaller than the one required under the TPP. Compare Fixed Rate Note, Doc. 84-1 at 5
with TPP Notice, Doc. 84-1 at 28. Wells Fargo does not state the total amount of the monthly
payment to which it refers.
-7-
The terms of any potential loan modification were indefinite and uncertain and, thus, they
could not possibly be enforced. See Senter v. JPMorgan Chase Bank, N.A., 810 F. Supp. 2d 1339,
1351 (S.D. Fla. 2011) (“Since the TPP Agreements are indefinite and uncertain as to material
terms of the permanent loan modifications, such agreements represent, at best, unenforceable
agreements to agree that do not rise to the level of a valid contract.”). Without sufficient
specification of the essential terms, there can be no contract. Consequently, the Plaintiffs cannot
survive summary judgment on their breach of contract claims. Wells Fargo’s Motion is
GRANTED as to Count I and Rushmore’s Motion is GRANTED as to Count II.
IV. RESPA and Regulation X: Counts III, IV, and V
A. Legal Standard
“RESPA is a consumer protection statute that regulates the real estate settlement process.”
Hardy v. Regions Mortg., Inc., 449 F.3d 1357, 1359 (11th Cir. 2006). “RESPA prescribes certain
actions to be followed by entities or persons responsible for servicing federally related loans,
including responding to borrower inquiries.” McLean v. GMAC Morg., Corp., 398 Fed. App’x
467, 471 (11th Cir. 2010); see 12 U.S.C. § 2605. On January 10, 2014, new regulations
implementing RESPA were promulgated by the Consumer Financial Protection Bureau pursuant
to the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd–Frank”).
PL 111-203, July 21, 2010, 124 Stat. 1376 (2010); 12 C.F.R. § 1024. This new regulation,
Regulation X, sets out the duties that arise for loan servicers upon their receipt of loss mitigation
applications. Section 1024.41 regulates the particular loss mitigation procedures at issue here.
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Specifically, the Plaintiffs allege violations of § 1024.41(d) and (g).5 Section 1024.41(d)
requires a servicer denying a borrower’s complete mitigation loss application6 for loan
modification to provide the borrower with a notice stating the specific reasons for the servicer’s
decision. Section 1024.41(g) prohibits foreclosure under certain circumstances after a borrower
submits a complete loss mitigation application to a servicer.
B. Analysis
1. Count III: Violation of § 1024.41(d)
The Plaintiffs assert that Wells Fargo violated § 1024.41(d) because it “fail[ed] to give
notice of actual reasons for denial of the loan modification.” Pl.’s Resp. at 17. Wells Fargo argues
that its obligations under Subsection (d) “were not triggered,” because loan modification was not a
loss mitigation option “available to [the Plaintiffs].” Wells Fargo Mot. at 16. This argument does
not hold water. Wells Fargo’s own letter to Julie O’Steen warned that “failure to return the
requested documents within the stated timeframe may result in your modification being denied.”
Letter of Oct. 31, 2014, Doc. 84-1 at 40. If § 1024.41(d) truly permitted the interpretation Wells
Fargo proposes, its goals would be severely compromised. Either a borrower qualifies for loan
modification, or she does not. Servicers cannot avoid liability under the regulation by simply
stating that a loss mitigation option is “unavailable” instead of denying the loss mitigation
application for that particular option.
5
Although it might be possible for other subsections, such as § 1024.41(h), to apply here,
the Court does not address potential violations of any other subsection, because the Plaintiffs only
pled violations of § 1024.41(d) and (g).
6
Notwithstanding the fact that Wells Fargo continued to ask for information from the
Plaintiffs in connection with their loss mitigation application, Wells Fargo concedes that the
Plaintiffs submitted a complete loss mitigation application to Wells Fargo in October of 2014. See
Wells Fargo Mot. at 4.
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Importantly, although Wells Fargo’s denial of the loan modification did trigger duties
under § 1024.41(d), Wells Fargo fulfilled those duties. In its final letter, Wells Fargo specifically
stated that Julie O’Steen did not meet the requirements of the loan modification program because
of title issues with the subject property. Letter of May 1, 2015, Doc. 84-1 at 75. Wells Fargo had
also sent the Plaintiffs three previous letters, as detailed above, explaining that title issues were
preventing them from modifying the Plaintiffs’ loan. Further, it appears from the Plaintiffs’
Response that they knew exactly why their loan modification was denied, because Christopher
O’Steen took “the extreme step of filing a bankruptcy petition . . . to obtain a judicial declaration
that judgments . . . would not affect title [of the property].” Pl.’s Resp. at 14. The Plaintiffs’
disagreement with the specific reason provided by Wells Fargo is irrelevant. The evidence
conclusively shows that Wells Fargo did state the specific reason for its determination in its final
letter, the Plaintiffs were well aware of that reason, and accordingly, it is clear that Wells Fargo
did not violate § 1024.41(d). Wells Fargo’s Motion is GRANTED as to Count III.
2. Counts IV and V: Violation of § 1024.41(g)
The Plaintiffs allege that Wells Fargo and, potentially, Rushmore, as its successor servicer,
violated § 1024.41(g) “by proceeding to a foreclosure sale when a pending loss mitigation
application was not yet resolved.” Pl.’s Resp. at 20, 24. Wells Fargo argues that its actions were
permissible under the Subsection (g), which prohibits a servicer from “mov[ing] for foreclosure
judgment or order of sale, or conduct[ing] a foreclosure sale,” subject to certain exceptions.7
The prohibition does not apply if : “(1) The servicer has sent the borrower a notice . . .
that the borrower is not eligible for any loss mitigation option and the appeal process . . . is not
applicable, the borrower has not requested an appeal within the applicable time period for
requesting an appeal, or the borrower's appeal has been denied; (2) The borrower rejects all loss
mitigation options offered by the servicer; or (3) The borrower fails to perform under an
agreement on a loss mitigation option.” § 1024.41(g).
7
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Wells Fargo Mot. at 19-20; § 1024.41(g). Wells Fargo maintains that it did not violate the
regulation by moving for an order of sale, because an order had already been entered prior to its
receipt of the Plaintiffs’ complete loss mitigation application. Additionally, Wells Fargo points out
that the foreclosure sale was not conducted until March 1, 2017, which was a year after Wells
Fargo stopped servicing the Plaintiffs’ loan, and nearly two years after Wells Fargo denied the
Plaintiff’s loan modification application. Rushmore argues that it is not liable under Subsection (g)
because the Plaintiffs never submitted a loss mitigation application to Rushmore, and asserts that
there was no pending loss mitigation application when it began servicing the loan. Rushmore Mot.
at 9-11.
In order to ascertain whether Wells Fargo or Rushmore’s actions violated § 1024.41(g), it
is necessary to determine whether (1) either of the Defendants moved for an order of sale, or
conducted a foreclosure sale, and (2) either of the Defendants did so while an appeal by the
Plaintiffs was pending. It is unclear what roles Rushmore and Wells Fargo played with respect to
the ultimate foreclosure sale. It appears that Rushmore was the Plaintiffs’ loan servicer during the
time leading up to foreclosure. Still, Wells Fargo moved to reset the foreclosure sale on May 23,
2016, after it alleges it was no longer servicing the Plaintiffs’ loan.8 The evidence is also
inconclusive as to whether the Plaintiffs “appealed” the loan modification denial for purposes of
Subsection (g), and, if they did, whether Wells Fargo or Rushmore denied that appeal. While the
Plaintiffs faxed Wells Fargo a Dispute Request Form, there is some question as to whether this
constituted an appeal. A review of the Dispute Request Form reveals that rather than actually
disputing Wells Fargo’s basis for the decision—that the Plaintiffs had failed to submit the required
8
The Plaintiffs contend that making this motion constituted moving for an order of sale
within the meaning of Subsection (g).
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documentation—the Plaintiffs were asking Wells Fargo to allow the TPP “to continue until
Chapter 7 bankruptcy is complete and judgments are discharged and released.” See Dispute
Request Form, Doc. 95-2 at 1.
Thus, genuine disputes of material facts persist as to whether Wells Fargo or Rushmore
violated Subsection (g) by pursuing the foreclosure sale without first resolving any pending
appeal. Accordingly, Wells Fargo’s Motion is DENIED as to Count IV and Rushmore’s Motion is
DENIED as to Count V.
V. Declaratory Relief: Count VI
In Count VI, Plaintiffs seek equitable relief in the form of a declaratory judgment against
Rushmore under 28 U.S.C. § 2201. The Plaintiffs allege that they are in doubt of the rights and
responsibilities of the parties with respect to the trial payment plan, permanent loan modification,
the foreclosure sale of the subject property, and § 1024.41(g). Rushmore moves for summary
judgment on Count VI on the basis of what is essentially a mootness argument, arguing that no
uncertainty remains as to the rights and responsibilities of Rushmore and the Plaintiffs. However,
since Rushmore has not prevailed on the § 1024.41(g) RESPA claim, this count is not technically
moot. Rushmore’s Motion is therefore DENIED as to Count VI. Nevertheless, the Court is
doubtful that declaratory relief will be appropriate in resolving this case.9
VI. Conclusion
In consideration of the foregoing, it is hereby
ORDERED that the Defendants’ Motions for Summary Judgment (Docs. 83, 87) are
GRANTED IN PART AND DENIED IN PART. Judgment in favor of Wells Fargo as to Counts
9
A declaratory judgment is an equitable remedy within the Court’s discretion. Resolution
of the RESPA claim should resolve any legal issue such that a declaratory judgment will be
unnecessary.
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I and III shall be entered, and judgment in favor of Rushmore as to Count II shall be entered. The
Defendants’ Motions for Summary Judgment are DENIED in all other respects.
DONE and ORDERED in Chambers, Orlando, Florida on September 25, 2017.
Copies furnished to:
Counsel of Record
Unrepresented Party
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