Sims et al v. New Penn Financial LLC

Filing 106

OPINION AND ORDER: The Court GRANTS Shellpoint's motion for summary judgment 73 and DIRECTS the Clerk to enter judgment in favor of Shellpoint on the Simses' remaining claims under the ECOA. Signed by Magistrate Judge Michael G Gotsch, Sr on 3/28/2018. (Copy mailed to pro se party)(jss)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
MARIO L. SIMS, et al.,
Plaintiffs,
v.
NEW PENN FINANCIAL LLC d/b/a
SHELLPOINT MORTGAGE
SERVICING,

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CAUSE NO. 3:15-cv-263-MGG

Defendant.
OPINION AND ORDER
Through this case, Plaintiffs, Mario and Tiffiny Sims (“the Simses”), proceeding
pro se, allege violations of the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691
et seq., against Defendant, New Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing
(“Shellpoint”). 1 The undersigned retains jurisdiction over this case based on the parties’
consent and 28 U.S.C. § 636(c). [DE 40].
The Simses’ ECOA claim arises from the fallout following a mortgage default. The
Simses, who are both African-American, entered a land sale contract with John Tiffany in
the fall of 2008 to purchase a home. While under contract with the Simses, Tiffany
remained obligated under a mortgage loan governed by the terms of an Adjustable Rate
Note. After the Simses moved into the home and made payments to Tiffany under the
terms of the land sale contract, Tiffany stopped making his mortgage payments around
May 2009 leading to foreclosure and bankruptcy proceedings. The Simses began efforts to
assume Tiffany’s mortgage but never succeeded. In this action, the Simses allege that

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Counts 1–8 of Plaintiffs’ Third Amended Complaint were dismissed with prejudice by this Court on
November 8, 2016. [DE 34]. Only Count 9 regarding violation of the ECOA remains before the Court.

Shellpoint, the company that serviced Tiffany’s loan beginning in March 2014, 2 violated
the ECOA by discriminating against them in the assumption process based on their race.
Specifically, the Simses allege that Shellpoint delayed for four years in providing them
with the necessary assumption paperwork; discouraged their assumption application by
requiring them to produce the same information multiple times; and treated them
differently than non-minority applicants by requiring them to reinstate Tiffany’s delinquent
loan, allegedly contrary to the terms of Tiffany’s promissory note and Shellpoint’s
assumption policy.
After the discovery period closed, Shellpoint timely filed the instant motion for
summary judgment on November 30, 2017. Now ripe, Shellpoint’s motion for summary
judgment hinges partially on whether the Simses’ assumption efforts even trigger the
ECOA. Should the ECOA apply, the critical question becomes whether the Simses have
presented evidence of discriminatory intent sufficient to create a triable issue of fact.
Before reaching the merits of the Simses’ claim, however, the Court must address
Shellpoint’s challenge to the admissibility of evidence attached to the Simses’ response
brief.
I.

ADMISSIBILITY OF THE SIMSES’ EXHIBITS
Before considering the merits of Shellpoint’s motion for summary judgment, the

Court must address Shellpoint’s allegations 3 that the Simses’ exhibits 1, 2, 3, 6, 7, and 9,

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The Bank of New York Mellon f/k/a The Bank of New York as Trustee for Certificateholders of the
CWABS, Inc., Asset-Backed Certificates, Series 2005-BC5 owned Tiffany’s loan when Shellpoint took over
service from Resurgent Mortgage Servicing in March 2014. [DE 73-1 at 2, ¶ 1].
3
Shellpoint challenged the authenticity and admissibility of the Simses’ exhibits in its original reply brief
[DE 86] related to the instant motion for summary judgment. Due to the excessive length of the Simses’
original response brief [DE 85], the Court afforded them time to file an amended response, which they did on
March 9, 2018 [DE 102]. The Court also afforded the Simses time to cure any defects in their original
exhibits in light of Shellpoint’s evidentiary challenges. [DE 93]. Accordingly, the Simses filed a
supplemental evidentiary brief regarding Shellpoint’s claims of inadmissibility on March 9, 2018. [DE 101].

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attached to their original response brief, were not authenticated by affidavit or otherwise
and therefore should not be considered in determining whether a genuine dispute of
material fact exists to overcome the instant motion for summary judgment. [DE 86 at 5].
Alternatively, Shellpoint asks the Court to strike the Simses’ exhibits 1, 2, 3, 6, 7, and 9 for
lack of proper authentication citing Fed. R. Civ. P. 56(e). [Id. at 5, n.10].
As allowed by the Court, the Simses filed a Declaration along with its
supplementary evidentiary brief on March 9, 2018. [DE 101 at 6–7]. In their Declaration,
the Simses describe their personal knowledge of the challenged exhibits; report that the
challenged exhibits were all included in their Verified Third Amended Complaint; and
explain that they testified under oath about all the challenged exhibits at their depositions.
[Id. at 6]. Moreover, the Simses indicate that the authors of the exhibits are all included on
their witness list and can testify at trial as to the authenticity of the exhibits. [Id. at 7].
In so doing, the Simses have overcome some of Shellpoint’s authentication
challenges. First, the Simses’ have now provided the equivalent of an affidavit—in the
form of their Declaration and their Verified Third Amended Complaint—reflecting their
alleged personal knowledge of all the exhibits. See Fed. R. Civ. P. 56(c)(1)(A) (identifying
affidavits or declarations as one type evidence that can be used to support an assertion of a
genuine dispute of material fact); Ford v. Wilson, 90 F.3d 245, 246 (7th Cir. 1996)
(explaining that a verified complaint is the equivalent of an affidavit for summary judgment
purposes because it “contains factual allegations that if included in an affidavit or
deposition would be considered evidence, and not merely assertions.”

Shellpoint then filed a second reply on March 19, 2018, responding to both the Simses’ amended response
and their supplemental evidentiary brief. [DE 104].

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Second, the Simses have demonstrated that they are prepared to authenticate the
exhibits and establish their admissibility at trial. Under Fed. R. Civ. P. 56(c)(2), Shellpoint
may object to the Simses’ exhibits based on an argument that they “cannot be presented in
a form that would be admissible in evidence.” “In other words, the Court must determine
whether the material can be presented in a form that would be admissible at trial, not
whether the material is admissible in its present form.” Rodgers v. Gary Cmty. Sch. Corp.,
167 F. Supp. 3d 940, 947–48 (N.D. Ind. 2016) (quoting Stevens v. Interactive Fin.
Advisors, Inc., No. 11 C 2223, 2015 WL 791384, at *2 (N.D. Ill. Feb. 24, 2015)).
Moreover, “the Federal Rules of Civil Procedure allow parties to oppose summary
judgment with materials that would be inadmissible at trial so long as facts therein could
later be presented in an admissible form.” Olson v. Morgan, 750 F.3d 708, 714 (7th Cir.
2014) (emphasis in original).
Here, the Simses are not only prepared to testify at trial as to their own personal
knowledge of the facts included in the challenged exhibits, but are also prepared to solicit
testimony about the exhibits from their authors, who have already been included on the
Simses’ witness list. With such testimony, the Simses could overcome any authentication
issues. See Fed. R. Evid. 901(b)(1). Indeed, “Rule 901 requires only a prima facie
showing of genuineness and leaves it to the jury to decide the true authenticity and
probative value of the evidence.” United States v. Harvey, 117 F.3d 1044, 1049 (7th Cir.
1997). Similarly, the testimony of witnesses with personal knowledge of the exhibits could
overcome any alleged hearsay issues. Accordingly, the Sims should be given the
opportunity present their evidence in an admissible form at trial, especially with regard to
their exhibits 1, 2, 3, 6, and 7. See Rodgers, 167 F. Supp. 3d at 947.

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Yet in its second reply, Shellpoint further challenges the Simses’ exhibits 8 and 9 as
inadmissible. Exhibits 8 and 9 are exhibits and discovery responses from proceedings in
other courts related to the Tiffany loan that Shellpoint argues must be certified under Fed.
R. Civ. 902(4) in order to be authenticated. Once again, however, nothing precludes the
Simses from providing such certification at trial. Accordingly, exhibits 8 and 9 should not
be stricken.
Lastly, “[m]otions to strike are heavily disfavored, and usually only granted in
circumstances where the contested evidence causes prejudice to the moving party.”
Rodgers, 167 F. Supp. 3d at 948. Nothing in the record suggests that Shellpoint will be
prejudiced by inclusion of all of the Simses’ exhibits as part of the Court’s summary
judgment analysis.
Therefore, the Simses may oppose Shellpoint’s motion for summary judgment with
the support of all their exhibits, even if ultimately determined to be inadmissible, because
they have either been authenticated through the Simses’ Declaration and Verified Third
Amended Complaint or can be presented at trial in an admissible form. Shellpoint’s
request to strike the Simses’ exhibits 1, 2, 3, 6, 7, and 9 is denied.
II.

RELEVANT BACKGROUND
The following facts are primarily not in dispute. Where the facts are in dispute, this

Court has determined that the disputes are either not material or has chosen to address such
disputes in the Court’s substantive analysis of the issues.
As noted above, the Simses entered a land contract with John Tiffany for a home
upon which Tiffany held a mortgage loan serviced originally by Resurgent Mortgage
Servicing (“Resurgent”). Under the terms of Tiffany’s Adjustable Rate Note on the

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mortgage loan, the lender retained the option to “require immediate payment in full of all
sums secured by this Security Instrument” in the event that any part or all of the property
were sold or transferred without the Lender’s prior written consent. [DE 73-1 at 9].
However, the Lender would be prohibited from exercise of this option if:
(a) Borrower causes to be submitted to Lender information required by
Lender to evaluate the intended transferee as if a new loan were being made
to the transferee; and (b) Lender reasonably determines that Lender’s
security will not be impaired by the loan assumption and that the risk of a
breach of any covenant or agreement in this Security Instrument is
acceptable to the Lender.
[Id. at 9]. Tiffany’s Note included additional terms related to any assumption of the loan.
Specifically, the Note stated that the “Lender may charge a reasonable fee as a condition to
Lender’s consent to the loan assumption” and that “Lender also may require the transferee
to sign an assumption agreement that is acceptable to Lender and that obligates the
transferee to keep all the promises and agreements made in the Note and in this Security
Instrument.” [Id. at 9].
When Tiffany’s default on the mortgage loan led to a foreclosure action that could
have resulted in the Simses’ eviction from the property, the Simses sent a letter entitled
“RULE 408 Settlement Letter” to Resurgent’s attorney, David Bengs, and Tiffany’s
attorney, Peter Agostino, on January 28, 2010. [See DE 102 at 31]. In that letter, the
Simses proposed resolving their counter and cross claims in Tiffany’s foreclosure action by
“assuming Mr. Tiffany’s obligation with the bank . . . .” 4 [Id.]. In an email dated February
22, 2010, Attorney Bengs responded to the Simses stating that “[t]he language in [Mr.
Tiffany’s] Note does not preclude an assumption,” but recommended that the Simses

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The Simses also proposed an alternative resolution whereby the bank would agree to accept a promissory
note from them with specific terms laid out in the letter. [DE 102 at 31]. This alternative solution is not
relevant to the instant action and therefore is not discussed further.

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“complete a standard purchase from Mr. Tiffany and pay [Resurgent’s] lien.” [Id. at 33].
Mr. Bengs also noted that an assumption “would have to be initiated Mr. Tiffany” to be
approved. [Id.]. On March 17, 2010, Tiffany’s attorney, Mr. Agostino, sent a brief twosentence letter to Mr. Sims and Attorney Bengs formally reporting Mr. Tiffany’s approval
of the Simses’ efforts to initiate an assumption of his loan and asking Mr. Bengs advise
what paperwork would be needed to proceed with the assumption application. [Id. at 35].
After Mr. Agostino sent his letter to Mr. Bengs, the Simses met Mr. Bengs face-toface for the first time at hearings in 2010 related to the foreclosure proceedings. Among
the subsequent events were a settlement agreement between Tiffany and the Simses and the
2012 execution of a Quit Claim Deed for the property at issue to the Simses. However, the
Simses never received the assumption paperwork requested in Mr. Agostino’s March 2010
letter. On May 31, 2013, an in rem judgment was issued against Tiffany foreclosing his
mortgage and ordering sale of the property. [DE 73-1 at 41–42].
In March 2014, Shellpoint succeeded Resurgent at the servicer of Tiffany’s
mortgage loan. Shellpoint appears to have become aware of the Simses’ interest in
applying to assume Tiffany’s mortgage loan shortly thereafter upon requests from the
Simses to postpone the foreclosure sale that had been scheduled. In response, Shellpoint’s
Escalations Department sent Mr. Sims a letter on December 10, 2014 (“the December 2014
Letter”), “confirm[ing] that Shellpoint [had] made contact with the mortgagor and [was
beginning] the process of a mortgage assumption.” [Id. at 45]. The December 2014 Letter
also included a list of all the documentation that Shellpoint required from the Simses as
part of the assumption process. [Id.]. The Simses submitted 75 documents in response.
[DE 29 at 5, ¶ 16].

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On January 6, 2015, the Simses filed their first complaint regarding Shellpoint with
the Consumer Financial Protection Bureau (“CFPB”) seeking postponement of the
foreclosure sale pending resolution of the assumption application. Shellpoint sent Mr.
Sims a second letter dated January 30, 2015 (“The January 2015 Letter”), confirming that
the foreclosure sale had been postponed to allow the Simses time to submit the
documentation requested in the December 2014 Letter. [DE 73-1 at 48]. On March 6,
2015, Shellpoint sent Mr. Sims a third letter (“the March 2015 Letter”) explicitly
responding to the Simses’ first CFPB complaint. The March 2015 Letter explicitly stated
that “Shellpoint require[d] a signed, dated letter from John Tiffany authorizing [the Simses]
to obtain details regarding the mortgage obligation” consistent with a phone call between
Mr. Sims and Shellpoint’s loss mitigation representatives on March 5, 2015, regarding the
need for this documentation. [Id. at 51].
The March 2015 Letter also confirmed that Shellpoint would evaluate the Simses’
eligibility for the assumption, but outlined specific documentation that had yet to be
received and advised that “approval [would] also be contingent upon [the Simses’] ability
to reinstate the loan.” [Id.]. In conclusion, the Letter stated:
At this time, Shellpoint’s foreclosure proceedings remain on hold.
However, we respectfully request that you send the required documentation
to Shellpoint’s Loss Mitigation Department . . . . Upon the receipt of all of
the required documentation, Shellpoint will evaluate your eligibility for an
assumption and notify you of the outcome.
If Shellpoint does not receive all of the requested documentation within
thirty (30) days of the date of this response, it may resume servicing the loan
pursuant to the original agreement and applicable law. This may include the
scheduling and subsequent completion of a foreclosure sale if warranted.
[Id. at 52]. Afterward, the Simses re-submitted the same 75 pages of documents for what
appears to have been the third time. Yet, the Simses never brought Tiffany’s loan current.
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In June 2015, based on the Simses’ allegedly incomplete assumption application,
Shellpoint scheduled a foreclosure sale for July 23, 2015.
Upon receipt of the notice of the foreclosure sale, Mr. Sims contacted Shellpoint by
telephone and again submitted the 75 documents to a Shellpoint employee, K’tia Cox, as
directed. Mr. Sims testified under oath at his deposition that Ms. Cox was AfricanAmerican and that during a phone call, she said to him: “These people, you know how
they treat us.” [DE 102 at 90, 136:7–8].
On June 9, 2015, the Simses filed a second CFPB complaint against Shellpoint
asking that funds they paid Mr. Tiffany as part of their land sale contract be credited to the
mortgage’s remaining balance; that the foreclosure sale be cancelled; and that they be
permitted to assume Tiffany’s mortgage. [See DE 73-1 at 54]. The Simses continued their
assumption efforts by resending the same 75 documents again and by making multiple
phone calls to individuals at Shellpoint, who evidently had authority to address his
concerns but never responded to his voicemails. Other Shellpoint employees told Mr. Sims
they were not authorized to discuss the assumption with him.
On June 24, 2015, Shellpoint responded to the second CFPB complaint with
another letter (“the June 2015 Letter”) to the Simses (1) informing them that “Shellpoint
does not allow third party assumptions on loans reflecting a delinquent status;” (2)
reiterating the gaps in the their documentation as set forth in the March 2015 Letter; (3)
stating that Shellpoint could only allow them to assume the mortgage if they reinstated the
loan; and (4) explaining that Shellpoint could not credit Tiffany’s loan as requested because
it had not authorized the land sale contract.” [Id.]. The Simses submitted nothing further
to Shellpoint and initiated this action by filing a complaint the next day, June 25, 2015.

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II.

ANALYSIS
A.

Summary Judgment Standard

Summary judgment is appropriate when the “pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine issue as to any
material fact and the movant is entitled to a judgment as a matter of law.” Fed. R. Civ. P.
56(c); Celotex Corp. v. Catrett, 477 U.S. 317 (1986). A genuine issue of material fact
exists when “the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “Only
disputes over facts that might affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment.” Id. To determine whether a genuine
issue of material fact exists, the court must review the record, construing all facts in the
light most favorable to the nonmoving party and drawing all reasonable inferences in that
party’s favor. Heft v. Moore, 351 F.3d 278, 282 (7th Cir. 2003).
To overcome a motion for summary judgment, the nonmoving party cannot rest on
the mere allegations or denials contained in its pleadings. Rather, the nonmoving party
must present sufficient evidence to show the existence of each element of its case on which
it will bear the burden at trial. Celotex, 477 U.S. at 322–23; Robin v. Espo Eng’g Corp.,
200 F.3d 1081, 1088 (7th Cir. 2000). Where a factual record taken as a whole could not
lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for
trial. Fed. R. Civ. P. 56(e); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986). In other words, “[s]ummary judgment is not a dress rehearsal or practice
run; it is the put up or shut up moment in a lawsuit, when a party must show what evidence

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it has that would convince a trier of fact to accept its version of the events.” Hammel v.
Eau Galle Cheese Factory, 407 F.3d 852, 859 (7th Cir. 2005) (quotations omitted).
B.

Plaintiffs’ ECOA Claim

The ECOA prohibits a creditor from “discriminat[ing] against any applicant, with
respect to any aspect of a credit transaction . . . on the basis of race . . . .” 15 U.S.C.
§ 1691(a)(1). To succeed on an ECOA claim, plaintiffs must establish that they were
“applicants,” as defined by the Act, and that the creditor treated them less favorably
because of their race. Estate of Davis v. Wells Fargo Bank, 633 F.3d 529, 538 (7th Cir.
2011). The ECOA defines the term “applicant” as “any person who applies to a creditor
directly for an extension, renewal, or continuation of credit, or applies to a creditor
indirectly by use of an existing credit plan for an amount exceeding a previously
established credit limit.” 15 U.S.C. § 1691a(b). Prohibited conduct by lenders under the
ECOA includes
- Fail[ure] to provide information or services or provide different
information or services regarding any aspect of the lending process,
including credit availability, application procedures, or lending standards;
- Discourag[ing] or selectively encourage[ing] applicants with respect to
inquiries about or applications for credit;
- Refus[ing] to extend credit or use different standards in determining
whether to extend credit;
. . .; or
- Treat[ing] a borrower differently in servicing a loan or invoking default
remedies . . . .
Policy Statement on Discrimination in Lending, 59 FR 18,266, 18,268 (Apr. 15, 1994).
The ECOA also requires creditors, among other things, to “notify the applicant of its action
on the application” within thirty days “after receipt of a completed application for credit.”
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15 U.S.C. § 1691(d)(1). Moreover, the ECOA requires creditors to provide applicants
against whom an adverse action is taken with a statement of specific reasons for the
adverse action. 15 U.S.C. § 1691(d)(2)–(3).
1.

Applicability of the ECOA
a.

The Simses’ Status as ECOA “Applicants”

Shellpoint argues that it is entitled to judgement as a matter of law because the
Simses’ did not qualify as “applicants” under the ECOA. Shellpoint contends that they
were not applicants because they failed to timely submit all the required materials to
complete their assumption application. Furthermore, Shellpoint contends that even if they
had completed the application, the Simses were not seeking any additional credit or an
extension of credit. Instead, Shellpoint argues that the terms of Tiffany’s mortgage loan
would have remained the same if the assumption had been approved.
The Simses, on the other hand, argue that they were indeed “applicants” under the
ECOA citing to multiple dictionaries defining the verb “apply” to mean “to make a formal
request” and Estate of Davis v. Wells Fargo Bank in support. [DE 102 at 16–17]. In Estate
of Davis, the court held that the plaintiff qualified as an “applicant” under the ECOA based
on the fact that the defendant lender had offered the plaintiff a loan modification that would
have extended her credit beyond the scope of her existing mortgage loan in the face of
potential foreclosure. 633 F.3d at 538. In other words, the terms of the plaintiff’s original
loan would have been changed by the modification she sought. As such, the court found
the plaintiff’s situation consistent with the definition of an ECOA “applicant” in 12 C.F.R.
§ 202.2(e), which states that an applicant is “any person who requests or who has received

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an extension of credit from a creditor, and includes any person who is or may become
contractually liable regarding an extension of credit.”
Despite the Simses’ hopes, Estate of Davis does not confirm their status as
“applicants” in this case. Unlike the Simses, the Estate of Davis plaintiff already held a
mortgage loan and was seeking a modification of the terms of her own mortgage. The
Simses were simply seeking to assume Tiffany’s loan under the same terms he agreed to
when the loan was originated. As such, the Simses have not shown how their requested
assumption would have extended credit beyond the terms of Tiffany’s loan.
From the other side, Shellpoint relies upon this Court’s decision in Crawford v.
Countrywide Home Loan, Inc. to support its argument that the Simses were not
“applicants.” No. 3:09CV247-PPS-CAN, 2010 WL 3273715 (N.D. Ind. Aug. 16, 2010),
vacated on other grounds, 647 F.3d 642 (7th Cir. 2011). In Crawford, the plaintiffs raised
many claims, including an ECOA claim, against their lender after facing a foreclosure
judgment related to their mortgage loan. Id. at *2–*3. In addressing the Crawford
plaintiffs’ claim, the Court stated that the “ECOA applies to the early stages of loan
origination, prohibiting lenders from discriminating against [specific categories of people]
when considering the creditworthiness of loan applicants.” Id. at *7. In Crawford,
however, the facts had nothing to do with loan origination or the original closing of the
mortgage loan. Id. Therefore, the Court held that there was no viable ECOA claim. Id.
Crawford is no more helpful that Estate of Davis in determining whether the Simses
qualified as “applicants” under the ECOA. Like the plaintiff in Estate of Davis, the
Crawford plaintiffs already held a mortgage loan with the defendant lender. Additionally,
this Court in Crawford plaintiffs was forced to decide the plaintiffs’ ECOA claim without

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any allegations or theory applying law to the facts. Id. at *6. As such, the Court’s ECOA
analysis in Crawford was necessarily limited and provides very little from which the Court
can now analogize to the Simses’ assumption application.
Looking beyond Crawford and Estate of Davis, this Court’s own research has
revealed no authority discussing the applicability of the ECOA to assumption applications.
Even without such authority, this much is clear. The Simses were not seeking additional
credit from Shellpoint as the plaintiff in Estate of Davis was. And like the plaintiffs in
Crawford, the Simses’ assumption application had nothing to do with the origination or
original closing of the Tiffany loan. As a result, it appears that the Simses probably were
not “applicants” under the ECOA.
b.

The Simses’ Incomplete Assumption Application

Shellpoint also argues that it could not have violated the ECOA’s notice and
statement-of-reasons requirements found in 15 U.S.C. § 1691(d). Specifically, Shellpoint
contends that it would have only been subject to the requirements if the Simses had
completed their assumption application. An application under the ECOA is “an oral or
written request for an extension of credit that is made in accordance with procedures used
by a creditor for the type of credit requested.” 12 C.F.R. § 202.2(f). And an application for
an extension of credit is not “complete” until the “creditor has received all the information
it regularly obtains and considers in evaluating applications.” Riggs Nat’l Bank of
Washington, D.C. v. Webster, 832 F. Supp. 147, 150 (D. Md. 1993) (citing 12 C.F.R. §
202.2(f); High v. McLean Fin. Corp., 659 F. Supp. 1561, 1564 (D.D.C. 1987)).
To show that the Sims did not timely complete their application, Shellpoint cites to
the affidavit of Caroline Trinkley, an authorized representative of Shellpoint “familiar with

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the manner in which the business records, maintained by Shellpoint for the purpose of
servicing consumer mortgage loans, are compiled, maintained, and retrieved.” [DE 73-1 at
2]. Ms. Trinkley submitted some of Shellpoint’s business records related to the Simses’
assumption application, including the December 2014, January 2015, March 2015, and
June 2015 Letters, with her affidavit and concluded that “[b]ased on [her] review of [all of]
the business records held by Shellpoint, the Simses never provided to Shellpoint a complete
package of documents that Shellpoint requested and that was necessary to be considered for
a loan assumption.” [Id. at 4].
To rebut Ms. Trinkley’s affidavit and the accompanying business records, the
Simses’ have merely repeated multiple times that they did submit all the necessary
paperwork on multiple occasions. They present no evidence of exactly what they
submitted, however. With no such evidence in the record, the Court cannot discern
whether the Simses provided Shellpoint with the documents requested in both the
December 2014 and March 2015 Letters. Without specific dates of when the Simses
submitted the documents they did submit, the Court similarly cannot discern whether the
Simses met the 30-day deadline established by Shellpoint in the March 2015 Letter.
Nevertheless, Shellpoint still indicated its willingness to consider a completed assumption
application, including all the outstanding documentation and reinstatement of the loan, in
its June 2015 Letter after the 30-day deadline had passed.
Indeed, Shellpoint as the creditor in this case was entitled to determine the
procedures for securing approval for an assumption—as long as those procedures did not
discriminate on the basis of prohibited factors, including race, of course. See Riggs Nat’l
Bank of Washington, D.C., 832 F. Supp. at 150. Shellpoint informed the Simses of what

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was required and what was missing multiple times. As Ms. Trinkley stated, the Simses
failed to submit everything needed to complete the application. The Simses have not
produced any evidence to support their conclusion that the 75 documents they provided
multiple times included all the required documentation.
Moreover, the Simses admit they never reinstated the loan. Instead, the Simses rely
upon their oft repeated conclusion that reinstatement of Tiffany’s loan was not required for
assumption under the terms of Tiffany’s Note. In support, the Simses quote the assumption
provision of Tiffany’s Note, which states: “Lender also may require the transferee to sign
an assumption agreement that is acceptable to Lender and that obligates the transferee to
keep all the promises and agreements made in the Note and in this Security Instrument.”
[DE 102 at 9 (quoting DE 73-1 at 9)]. While it is true the Note does not explicitly require
reinstatement of the loan before an assumption, the Note does in fact leave open the
possibility of a reinstatement requirement by giving the Lender discretion to craft an
assumption agreement it finds acceptable. As a result, the Simses have also failed to
produce evidence that could support a finding that their application was complete without
reinstatement.
Accordingly, the Simses unsubstantiated conclusion that their application was
complete does not establish a genuine dispute of material fact about the completeness of
their assumption. As such, the notice and statement-of-reasons requirements of the ECOA
were likely not triggered by the Simses’ incomplete assumption application.
And to the extent that the ECOA might be triggered, the real question is whether the
Simses have submitted sufficient evidence of discrimination in the assumption process to
survive summary judgment. See Moran Foods, Inc. v. Mid-Atl. Mkt. Dev. Co. LLC, 476

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F.3d 436, 441 (7th Cir. 2007); see also Estate of Davis, 633 F.3d at 538 (refusing to
remand for a faulty finding that an ECOA plaintiff did not qualify as an “applicant”
because the plaintiff had not met her burden to bring forth evidence of discrimination). If
the Simses have failed to present a factual record that could not lead a reasonable jury to
find in their favor, no genuine dispute of material fact exists to overcome summary
judgment. See Matsushita Elec. Indus. Co., 475 U.S. at 587. In other words, the Simses
status as “applicants” or the completed status of their assumption application are of no
consequence without evidence of discriminatory intent in violation of the ECOA. Latimore
v. Citibank Fed. Sav. Bank, 151 F.3d 712 (7th Cir. 1998). Therefore, the Court now turns
its attention to the issue of discriminatory intent.
2.

Discriminatory Intent

Courts have applied the standards of employment discrimination when determining
whether a credit applicant has proven discrimination under the ECOA. See, e.g., A.B. & S.
Auto Serv., Inc. v. S. Shore Bank of Chicago, 962 F. Supp. 1056, 1060 (N.D. Ill. 1997); see
also Saldana v. Citibank, Fed. Sav. Bank, No. 93 C 4164, 1996 WL 332451, at *2 (N.D. Ill.
June 13, 1996); Charlotte E. Thomas, Defending a Free Standing Equal Credit Opportunity
Act Claim, 114 Banking Law Journal 108, 109 (1997). For instance, plaintiffs have been
expected to prove discrimination with direct evidence of discrimination, disparate impact
analysis, or disparate treatment analysis embodied in a modification of the burden shifting
framework in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). See A.B. & S.
Auto Serv., Inc., 962 F. Supp. at 1060.

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Based on these standards, the Simses have argued that Shellpoint violated the
ECOA under both the disparate impact and disparate treatment analyses. The Simses
attempt to support the discrimination claim based upon the facts that
(1) they did not receive the assumption paperwork they requested in 2010
until Shellpoint’s December 2014 Letter;
(2) they did not know about Shellpoint’s reinstatement requirement until,
presumably, the March 2015 Letter;
(3) they interpreted Tiffany’s Note not to require reinstatement of the loan;
(4) they had to submit Tiffany’s authorization to initiate the assumption
process multiple times despite Mr. Agostino’s March 2010 Letter to
Attorney Bengs;
(5) they submitted 75 documents responsive to Shellpoint’s documentation
requests multiple times from approximately December 2014 until June
2015;
(6) their phone calls to Shellpoint’s in the first half of 2015 were not
returned or were met with refusal to discuss the assumption; and
(7) in a phone conversation in June 2015, Ms. Cox made the following brief
statement to Mr. Sims: “These people, you know how they treat us.”
a.

Disparate Impact

Under the disparate impact theory, a plaintiff must demonstrate that a defendant’s
race-neutral policy, procedure, or practice disproportionately impacts a protected class. See
e.g., id. at 1060–61 (citing Saldana, 1996 WL 332451, at *2); accord Simms v. First
Gibraltar Bank, et al., 83 F.3d 1546, 1555 (5th Cir. 1996), cert. denied sub nom, Simms v.
First Madison Bank, FSB, 519 U.S. 1041 (1996). Plain and simple, the Simses have not
identified a race-neutral Shellpoint policy that has a greater impact on members of a
protected class. The Simses ask the Court to interpret Shellpoint’s assumption policy in
this way. However, both Tiffany’s Note and the Subservicing Agreement governing

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Shellpoint’s assumption practices [DE 73-1 at 58–59] give Shellpoint consideration
discretion in establishing parameters for assumptions. With such discretion, it is
reasonable for Shellpoint to include a reinstatement requirement into their assumption
process. In fact, such a reinstatement requirement would protect assumption applicants like
the Simses from being expected to pay the loan in full immediately upon assumption.
After all, by assuming a mortgage loan, assumption borrowers would be agreeing to all the
original terms of the loan, which reasonably allows a demand for payment in full upon
default. If the delinquent loan were not cured before the assumption, they would face such
a demand and would not get the benefit of paying the loan over time.
Additionally, the Simses have presented no evidence comparing Shellpoint’s
treatment of members of protected classes in the assumption process to its treatment of
non-minority applicants. Had they presented a statistical comparison of assumption
applicants showing “significantly different” treatment of protected assumption applicants
as compared to the general pool of applicants, the Simses probably would have established
a prima facie case of disparate impact that could overcome summary judgment. However,
the Simses merely reported how they were treated. The Court assumes that their reference
to a California state court case is an attempt to show that one other person, a Hispanic,
allegedly endured the same delays from Shellpoint as they did. [DE 102 at 16]. However,
the Simses do not develop the case or even report its outcome leaving the Court unable to
discern if the case is in any way worthy of consideration here. Other than that, the Simses
did not present evidence of how any other applicant of any class was treated by Shellpoint
in the assumption process. Without such evidence, no reasonably jury could find in favor
of the Simses on a disparate impact theory.

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b.

Disparate Treatment

The Simses arguments under a disparate treatment theory also fall flat. Under the
disparate treatment theory, plaintiffs must establish discriminatory intent through the
conventional methods of direct or circumstantial evidence. See Hughes v. Inland Bank &
Trust, Case No. 15 C 5006, 2017 WL 3263475, at * 2 (N.D. Ill. Aug. 1, 2017). Disparate
treatment cases of many types have often been decided using the burden-shifting
framework established in the employment discrimination case of McDonnell Douglas
Corp. v. Green cited above. However, the Seventh Circuit offered direction regarding the
application of the McDonnell Douglas burden-shifting framework to claims of disparate
treatment in credit discrimination cases. Latimore, 151 F.3d at 714.
In Latimore, the court held that blindly applying the McDonnell Douglas burden
shifting framework in credit discrimination cases “would display insensitivity to the
thinking behind the standard. The court explained that “the burden of producing evidence
of each element of the plaintiff’s claim is on the plaintiff.” Id. Therefore, the burden of
production cannot shift to the defendant without reason. Id. Similarly, the Seventh Circuit
subsequently clarified that in any discrimination case, all evidence—direct or
circumstantial—must be evaluated as a whole. Ortiz v. Werner Enters., Inc. 834 F.3d 760,
766 (7th Cir. 2016).
Thus, the McDonnell Douglas burden-shifting framework only applies to disparate
treatment claims under the ECOA when the plaintiffs support their claim of discriminatory
intent with “some ground for suspecting that the defendant has indeed violated [their]
rights.” Latimore, 151 F.3d at 714. Reasonable grounds for such suspicion include
competitive situations, comparable to those typically faced by plaintiffs in employment

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discrimination cases, such as situations where the minority borrower receives less favorable
treatment than non-minority borrowers in a similar situation. See id. Persuasive
circumstantial evidence such as “suspicious timing, ambiguous statements, suspect
behavior toward those in the protected group, or reasons for acting that are not worthy of
belief,” can also establish sufficient suspicion of discrimination to warrant burden shifting.
Hughes, 2017 WL 3263475, at *2.
Here, the evidence presented by the Simses does not establish any ground for
suspecting their rights have been violated. First, the Simses have produced no evidence of
a competitive situation where minority borrowers were treated differently by Shellpoint.
Second, the circumstantial evidence the Simses rely upon does breed suspicion of
discrimination.
What the Simses call a 4-year delay in delivery of the assumption paperwork cannot
be attributed to Shellpoint. Shellpoint was not servicing Tiffany’s loan before March 2014.
In addition, the Simses have not produced persuasive evidence to show that Attorney
Bengs’s knowledge of their request for assumption paperwork in early 2010, when he
represented Resurgent and before he came to represent Shellpoint, can be imputed to
Shellpoint. Moreover, evidence of imputation is not likely to exist given the constraints of
attorney-client privilege and rules of professional conduct requiring lawyers to keep all
aspects of their relationships with clients confidential. As a side note, the record before the
Court is blank as to the Simses’ actions related to the assumption from March 2010 until
December 2014 leaving a gaping hole suggesting the possibility that the Simses’ had
indeed abandoned their interest in the assumption.

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The Simses’ allegation that Shellpoint added the reinstatement requirement after
they started the assumption process is also unsupported. As already discussed, the
reinstatement requirement was reasonable even if it was not explicitly included in the terms
of Tiffany’s Note of the Subservicing Agreement. Admittedly, the Simses’ interpretation
of the Note as prohibiting a reinstatement requirement arguably diverges from Shellpoint’s
interpretation. However, the Simses are not a party to the Note or the Agreement.
Therefore, the Simses’ ability to interpret the intent of the parties to those contracts is
limited at best and is quite unpersuasive especially because Shellpoint is a party to both
contracts and therefore has better insight into the intent of the parties.
As to the multiple submissions of Tiffany’s authorization, the Simses once again
erroneously ascribe knowledge held by Resurgent in 2010 through Mr. Bengs to Shellpoint
despite its lack of involvement with Tiffany’s loan until March 2014. Nevertheless, the
Simses may have a case for poor customer service by Shellpoint as it appears that the
Simses may have been required to submit the same information, including Tiffany’s
authorization, to it multiple times. Poor customer service alone does not support an ECOA
discrimination claim especially when the Simses have not incorporated the 75 documents
they submitted multiple times. Without the documents or some other written presentation
matching the documents submitted to the Shellpoint’s list of required documents, no court
or jury can determine if the apparently poor customer service could be a cover for
discriminatory behavior.
Similarly, the Simses’ challenges in trying to discuss the assumption with
Shellpoint by phone alone might reveal poor customer service but not suspicion of
discrimination. Even Ms. Cox’s brief statement of “These people, you know how they

22

treat us” is not enough evidence to show discriminatory conduct by Shellpoint. The
Court assumes that Ms. Cox would appear at trial to testify and that any hearsay concerns
arising from Mr. Sims’s use of her out of court statement to prove the matter asserted
would be overcome. However, there is no evidence before the Court now as to the basis
for her statement. As a result, at this “put-up or shut-up” moment in this litigation, the
Court cannot discern from the statement alone what conduct by her employer she finds
questionable or if the statement merely reflects her own personal biases.
In the end, all the Simses have presented to support their claims of disparate
treatment are unsubstantiated allegations of race discrimination. They attempt to outline
suspicious timing by reporting that Attorney Bengs learned that they were AfricanAmerican after their exchange of communications about the assumption in 2010. Again,
events in 2010 are immaterial to the outcome of any claims against Shellpoint. Ms. Cox’s
statement is ambiguous, but could have been clarified had the Simses’ chosen to depose her
or if they had attempted to discuss it with Shellpoint through written or oral discovery.
Shellpoint’s conduct, as reported in the record, does not demonstrate suspect behavior
toward those in any protected group. Shellpoint gave the Simses multiple opportunities to
complete their assumption application. They delayed the foreclosure sale to given them
time to do so. When the application deadline they reported in the March 2015 letter passed
without the Simses having completed their application, Shellpoint’s obligation to them was
over. Nevertheless, in June 2015, they still expressed willingness to consider a completed
application. As a result, Shellpoint’s explanation of their conduct is completely worthy of
belief given the dearth of evidence from the Simses. Accordingly, the Simses have failed
to establish any genuine disputes of material fact.

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III.

CONCLUSION
In summary, the Court first declines Shellpoint’s request to ignore or strike the

Simses’ exhibits 1, 2, 3, 6, 7, 8, and 9 in light of the Simses’ Declaration and Verified
Third Amended Complaint as well as their ability to authenticate the evidence in the
exhibits at trial. As to the merits of the Simses’ claim, the Court finds that the ECOA
likely was not triggered because the Simses likely do not qualify as “applicants” under the
Act and they did not complete their assumption application such that Shellpoint had no
notice or statement-of-reasons obligations under the Act.
Regardless, the Simses have failed to produce evidence of discriminatory intent, a
necessary element in any ECOA discrimination claim under either a disparate impact or a
disparate treatment analysis. Instead, the Simses have relied upon unsubstantiated
allegations do not establish any genuine dispute of material fact. Therefore, Shellpoint is
entitled to judgment as a matter of law. Accordingly, the Court GRANTS Shellpoint’s
motion for summary judgment. [DE 73] and DIRECTS the Clerk to enter judgment in
favor of Shellpoint on the Simses’ remaining claim under the ECOA.
SO ORDERED.
Dated this 28th day of March, 2018.
s/Michael G. Gotsch, Sr.
Michael G. Gotsch, Sr.
United States Magistrate Judge

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