Harney et al v. Select Portfolio Servicing, Inc.

Filing 80

ORDER AND REASONS granting 49 Motion for Summary Judgment; IT IS FURTHER ORDERED that all of Plaintiffs' claims against SPS are hereby DISMISSED WITH PREJUDICE. IT IS FURTHER ORDERED that Plaintiffs' Motion for Appeal/Review of Magistrate Judge's Order (Rec. Doc. 70) is hereby DENIED. Signed by Judge Carl Barbier on 3/7/2018. (cg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ELISABETH HARNEY, ET AL.

CIVIL ACTION

VERSUS

NO: 16-1998

SELECT PORTFOLIO SERVICING,
INC.

SECTION: “J”(3)

ORDER
Before the Court is a Motion for Summary Judgment (Rec. Doc.
49)

filed

by

Defendant,

Select

Portfolio

Servicing,

Inc.

Plaintiffs, Elisabeth Harney and Noel Harney, filed an opposition
thereto (Rec. Doc. 68), and Defendant filed a reply (Rec. Doc.
76). Having considered the motion and legal memoranda, the record,
and the applicable law, the Court finds that the motion should be
GRANTED.
FACTS AND PROCEDURAL BACKGROUND
Plaintiffs,
“Plaintiffs”),

Elisabeth

are

the

and

owners

Noel
of

Harney

property

(collectively,

(the

“Property”),

subject to a mortgage serviced by Select Portfolio Servicing, Inc.
(“SPS”). 1

The Property sustained damage as a result of Hurricane

Isaac on August 28, 2012.

Plaintiffs filed insurance claims for

the damage, and eventually settled the claims, resulting in the
insurance proceeds at issue in this matter.

Between September

2012 and August 2014, seven insurance checks totaling $108,744.74

1

SPS became the servicer of the mortgage on August 16, 2012.

1

were issued to Plaintiffs for repairs, each naming SPS as payee.
The checks were forwarded to SPS and SPS deposited the funds in a
restricted escrow account. 2
Plaintiffs executed a Private Repairs Affidavit on December
20, 2012, whereby Plaintiffs elected to repair the damages to the
Property themselves.

Pursuant to SPS’ policies for monitoring

private repair claims, SPS disbursed $10,000 of the insurance
proceeds to Plaintiffs on January 31, 2013, for Plaintiffs to begin
their repairs.

On February 20, 2013, Plaintiffs called SPS to

request an inspection of repairs so another disbursement could be
made.

SPS’ vendor, Safeguard Properties (“Safeguard”), performed

an inspection on February 28, 2013, and concluded that Plaintiffs
had completed 25% of the repairs.

However, after further review

of the photographs, Safeguard reduced the completion percentage to
9%.

Plaintiffs’ property was never inspected again and Plaintiffs

never

received

an

additional

disbursement

of

the

insurance

proceeds.
Plaintiffs’

attorney

sent

four

letters

to

SPS

in

2013

requesting the release of the remaining insurance proceeds so that
Plaintiffs could continue repairing the Property.

Plaintiffs

allege that SPS did not respond to any of the letters.

Plaintiffs

also sent two Qualified Written Requests (“QWRs”), as defined by

2

From that account, SPS paid over $30,000 in attorney’s fees and costs
incurred by Plaintiffs.

2

12 U.S.C. § 2605(e), to SPS requesting, inter alia, an accounting
of the retained insurance proceeds.

Plaintiffs assert that SPS

did not respond to the QWRs. By letter dated January 6, 2014,
Plaintiffs sent notice to SPS that the Property was uninhabitable
and requested that all correspondence regarding the Property be
sent to Plaintiffs’ counsel.
Plaintiffs fell behind on their mortgage loan in 2013, and on
March 24, 2015, SPS sent a letter to Plaintiffs stating that SPS
would apply the remaining insurance proceeds to the balance of the
mortgage if Plaintiffs did not respond.

The letter was returned,

marked “Return to Sender Vacant Unable to Forward.”

SPS applied

the remaining insurance proceeds in the amount of $59,104.38 to
Plaintiffs’ mortgage on May 5, 2015. Jefferson Parish subsequently
condemned the Property and the Property was demolished on September
27, 2016.
On
alleging

March
a

9,

cause

2016,
of

Plaintiffs

action

under

filed
the

the

Real

instant

Estate

lawsuit

Settlement

Procedures Act (“RESPA”), and state law causes of action for breach
of contract, conversion, and unjust enrichment.

SPS filed the

instant Motion for Summary Judgment (Rec. Doc. 49) on January 25,
2018. Plaintiffs oppose the motion (Rec. Doc. 68) and SPS filed
reply (Rec. Doc. 77).

SPS’ motion is now before the Court on the

briefs and without oral argument.

3

PARTIES’ ARGUMENTS
Plaintiffs’ complaint alleges four separate causes of action.
First, Plaintiffs allege that SPS violated RESPA by not responding
to

Plaintiffs’

QWRs

within

the

time

required

under

the

Act.

Second, Plaintiffs contend that SPS breached the mortgage contract
by retaining the insurance proceeds intended for the repair of the
Property.

Plaintiffs contend that this breach resulted in the

total

of

loss

the

Property

and

mortgage

investment.

Third,

Plaintiffs allege that SPS is liable in tort for conversion due to
SPS’ withholding of the insurance proceeds.

Lastly, Plaintiffs

seek recovery under an alternative theory of unjust enrichment.
SPS argues that it is entitled to summary judgment on all
four of Plaintiffs’ claims.

First, SPS argues that it had no duty

to respond to Plaintiffs’ QWRS because Plaintiffs sent the QWRs to
the wrong address.

Second, SPS contends that Plaintiffs cannot

recover for breach of contract because it had the authority to
withhold
agreement.

the

insurance

proceeds

pursuant

to

the

mortgage

Next, SPS contends that Plaintiffs’ conversion claim

is prescribed.

Finally, SPS alleges that Plaintiffs have failed

to establish all of the elements required to recover under a theory
of unjust enrichment.
The bulk of Plaintiffs’ opposition advances arguments and
causes of action not contained in the complaint and not at issue
in the instant motion for summary judgment.
4

For example, whereas

Plaintiffs’ complaint alleges that SPS violated RESPA by not
responding to Plaintiffs’ QWRs, Plaintiffs now allege that SPS
violated RESPA by maintaining an excessive balance in Plaintiffs’
escrow account.

In addition, Plaintiffs currently allege four new

grounds for breach of contract.

Specifically, Plaintiffs allege

that SPS breached the mortgage agreement by: (1) applying the
insurance

proceeds

to

the

mortgage

loan,

(2)

violating

the

“Notices” provision of the mortgage by sending correspondence to
the

Property

rather

than

to

Plaintiffs’

attorney,

(3)

over-

depositing funds in the escrow account, and (4) violating its own
policies and procedures regarding private repairs.

Plaintiffs

also attempt to change the basis of their cause of action for
conversion.

Plaintiffs now assert that SPS committed the tort of

conversion, not by withholding Plaintiffs’ monies, but rather, by
applying the insurance proceeds to Plaintiffs’ mortgage balance.
The Court addresses the arguments raised in Plaintiffs’ opposition
and SPS’ motion in turn.
LEGAL STANDARD
I.

Motion to Amend Pleadings

Ordinarily, Rule 15(a) of the Federal Rules of Civil Procedure
governs the amendment of pleadings.

Where a court's permission

for leave to amend is required because the amendment is not a
matter of course, leave should be “freely given when justice so
requires.” See S & W Enters., L.L.C. v. SouthTrust Bank of Alabama,
5

NA, 315 F.3d 533, 535 (5th Cir. 2003) (quoting Fed.R.Civ.P. 15(a)).
This is a lenient standard, but it does not apply if an amendment
would

require

the

modification

of

a

previously

entered scheduling order. Filgueira v. U.S. Bank Nat. Ass'n, 734
F.3d 420, 422 (5th Cir. 2013) (citing id.).
governs

the

amendment

of

Instead, Rule 16(b)
pleadings

a scheduling order's deadline to amend has expired.”

“after

Id. (quoting

Fahim v. Marriott Hotel Servs., Inc., 551 F.3d 344, 348 (5th Cir.
2008).

Under Rule 16(b)(4), “[a] schedule may be modified only

for good cause and with the judge's consent.” Fed. R. Civ. P.
16(b)(4).

A court is to consider the following factors when

determining whether good cause exists: “(1) the explanation for
the failure to timely move for leave to amend; (2) the importance
of

the

amendment;

(3)

potential

prejudice

in

allowing

the

amendment; and (4) the availability of a continuance to cure such
prejudice.” Filgueira, 734 F.3d at 422.

Ultimately, Rule 16(b)

requires a party “to show that the deadlines cannot reasonably be
met despite the diligence of the party needing the extension.” S
& W Enters., LLC, 315 F.3d at 535.
II.

Summary Judgment

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
that the movant is entitled to judgment as a matter of law.”
6

Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed. R.
Civ. P. 56); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th
Cir. 1994). When assessing whether a dispute as to any material
fact exists, a court considers “all of the evidence in the record
but refrains from making credibility determinations or weighing
the evidence.” Delta & Pine Land Co. v. Nationwide Agribusiness
Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008). All reasonable
inferences are drawn in favor of the nonmoving party, but a party
cannot defeat summary judgment with conclusory allegations or
unsubstantiated assertions. Little, 37 F.3d at 1075. A court
ultimately must be satisfied that “a reasonable jury could not
return a verdict for the nonmoving party.” Delta, 530 F.3d at 399.
If the dispositive issue is one on which the moving party
will bear the burden of proof at trial, the moving party “must
come forward with evidence which would ‘entitle it to a directed
verdict if the evidence went uncontroverted at trial.’” Int’l
Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1264-65 (5th Cir.
1991). The nonmoving party can then defeat the motion by either
countering with sufficient evidence of its own, or “showing that
the moving party’s evidence is so sheer that it may not persuade
the reasonable fact-finder to return a verdict in favor of the
moving party.” Id. at 1265.
If the dispositive issue is one on which the nonmoving party
will bear the burden of proof at trial, the moving party may
7

satisfy its burden by merely pointing out that the evidence in the
record is insufficient with respect to an essential element of the
nonmoving party’s claim. See Celotex, 477 U.S. at 325. The burden
then shifts to the nonmoving party, who must, by submitting or
referring to evidence, set out specific facts showing that a
genuine issue exists. See id. at 324. The nonmovant may not rest
upon the pleadings, but must identify specific facts that establish
a genuine issue for trial. See, e.g., id. at 325; Little, 37 F.3d
at 1075.
DISCUSSION
I.

Plaintiffs’ Motion for Leave to File an Amended Complaint

The Court construes the new arguments raised in Plaintiffs’
opposition as a motion for leave to file an amended complaint. 3

3

Plaintiffs filed a Motion for Leave to File an Amended Complaint on January
12, 2018 (Rec. Doc. 42). Magistrate Judge Knowles issued an order denying the
motion on January 29, 2018 (Rec. Doc. 52). For the most part, the allegations
contained in Plaintiffs’ opposition mirror the causes of action asserted in
Plaintiffs’ Motion for Leave to File an Amended Complaint (Rec. Doc. 42).
However, unlike the opposition, Plaintiffs’ Motion for Leave to File an Amended
Complaint asserts the following causes of action: (1) violations of the Truth
in Lending Act (“TILA”), (2) fraud, (3) breach of fiduciary duty, and (4) breach
of the duty of good faith and fair dealing.
On February 12, 2018, Plaintiffs filed a Motion to Review the Magistrate Judge’s
Decision (Rec. Doc. 70). This motion is currently set for submission on March
14, 2018. The motion alleges that Magistrate Judge Knowles erred in denying
Plaintiffs’ motion because he failed to address the four Rule 16(b) factors.
Plaintiffs assert that Magistrate Judge Knowles erred by simply relying on the
language in the scheduling order, i.e.,“[a]mendments to pleadings, third-party
actions, cross-claims, and counter-claims shall NOT be filed.” (Rec. Doc. 27).
The scheduling order provides that “all pre-trial motions . . . shall be filed
and served in sufficient time to permit hearing thereon no later than February
14, 2018.” Because Plaintiffs’ Motion to Review the Magistrate Judge’s Decision
is set for submission on March 14, 2018, it was filed in violation of the
scheduling order. The Court’s order, however, addresses the causes of action

8

See Ganther v. Ingle, 75 F.3d 207, 211–12 (5th Cir. 1996); Vernell
v. United States Postal Serv., 819 F.2d 108, 110 (5th Cir. 1987);
Sherman v. Hallbauer, 455 F.2d 1236, 1242 (5th Cir.
Accordingly,

because

the

scheduling

order 4

1972).

provides

that

“[a]mendments to pleadings, third-party actions, cross-claims, and
counter-claims shall NOT be filed,” the Court analyzes Plaintiffs’
motion for leave under Rule 16(b).
a. The Explanation for the Failure to Timely Move for Leave
to Amend
Plaintiffs assert that they had no means of obtaining the
information required to put forth these new allegations prior to
conducting

discovery.

Because

discovery

proceedings

came

to

fruition after the deadline for amendments had passed, Plaintiffs
argue that they could not have timely amended their complaint.
Essentially, Plaintiffs claim that they had no knowledge of
any of the activity in their account from 2012 until 2017 because
SPS

intentionally

address.
sent

sent

all

correspondence

to

a

known

vacant

Plaintiffs claim that on January 6, 2014, Plaintiffs

notice

to

SPS

that

the

Property

was

uninhabitable

and

requested that all mail be sent to Plaintiffs’ counsel. SPS admits

contained in Plaintiffs’ opposition and the new causes of action that Plaintiffs
seek leave to assert in their amended complaint.
4

Two scheduling orders have been issued in this case. The original scheduling
order, issued on July 13, 2016, was vacated on June 9, 2017, pursuant to a Joint
Motion to Continue Trial and Pre-trial Conference (Rec. Doc. 23). The Court
issued the current scheduling order on July 14, 2017.

9

that it received this letter. However, between January 2014 and
July

2015,

SPS

sent

approximately

sixty

documents

uninhabited Property and none to Plaintiffs’ counsel. 5
argue

that

they

had

no

way

to

know

that

correspondence to the uninhabited Property.

SPS

to

the

Plaintiffs

was

sending

Plaintiffs contend

that if SPS had complied with Plaintiffs’ requests, Plaintiffs
would

have

scheduling

known
order

of

SPS’

barring

activities
the

long

amendment

before

current

pleadings.

to

the

Thus,

Plaintiffs assert because they received no communications from
SPS, they were completely in the dark regarding the servicing of
their loan prior to the recent discovery proceedings.
Plaintiffs argue that at the time they filed their original
complaint, they had no documents—other than a single welcome
letter—regarding
explanation,

their

however,

SPS
as

loan.

to

why

Plaintiffs
they

did

not

provide
receive

no
any

correspondence between August 2012, when SPS started servicing the
loan, and January 2014, when Plaintiffs requested a different
address for receiving correspondence.
fact

that

Plaintiffs

correspondence

from

allege
SPS

that

for

Moreover, in light of the

they

over

failed

four

to

years,

receive

any

Plaintiffs’

explanation is void of any discussion regarding any attempt to

5

Whether SPS was obligated to comply with Plaintiffs’ letter is contested by
SPS.
Plaintiffs attempt to assert a new cause of action for breach of the
contract for SPS’ failure to send correspondence to the substitute notice
address. For the purposes of this prong, the Court only considers Plaintiffs’
explanation for the failure to timely move for leave to amend.

10

collect mail delivered to the vacant property. Rule 16(b) requires
a party “to show that the deadlines cannot reasonably be met
despite the diligence of the party needing the extension.” S & W
Enters., LLC, 315 F.3d at 535.

Plaintiffs could have easily

obviated this issue by designating a forwarding address for mail
sent to the vacant property.

Accordingly, the Court finds that

this factor weighs against granting leave to amend.
b. The Importance of the Amendment
Plaintiffs attempt to assert new and amended causes of action
against SPS for: (1) fraud, (2) violations of RESPA, (3) breach of
contract, (4) breach of the duty of good faith and fair dealing,
(5) breach of fiduciary duty, (6) violations of the Truth in
Lending Act (“TILA”), (7) conversion, and (8) unjust enrichment.
Plaintiffs contend that they will not be made whole unless they
are permitted to bring allegations regarding these damages and
activities of SPS.

Plaintiffs’ allegations of fraud, breach of

fiduciary duty, breach of the duty of good faith and fair dealing,
and violations of TILA are entirely new claims.

Because these

claims, if proven, carry penalties and statutory multipliers not
otherwise provided in Plaintiffs’ original causes of action, the
Court finds that this factor weighs in favor of granting leave to
amend.

11

c. Potential Prejudice in Allowing the Amendment and the
Availability of a Continuance to Cure Such Prejudice
With

regard

to

the

third

and

fourth

factors,

the

Court

determines that SPS would be prejudiced if the amendment is allowed
at this late date.

This case has been pending since March 3, 2016,

and, to this point, discovery and trial preparation have proceeded
on the basis of the allegations found within Plaintiffs’ complaint.
The newly-alleged causes of action, and the substantive changes to
Plaintiffs’

original

causes

of

action,

additional research and discovery.

will

likely

require

Because the deadlines for

discovery and dispositive motions have passed, the Court would
need to extend these pre-trial deadlines.

The delay associated

with such an extension would result in additional expense to SPS,
See S & W Enterp., 315 F.3d at 537; See Parish v. Frazier, 195
F.3d 761, 763–64 (5th Cir. 1999), and the prejudice from the
additional expense could not be cured by a continuance.

Ross v.

Houston Hous. Auth., No. 09-2361, 2010 WL 1726908, at *3 (S.D.
Tex.

2010)

(“The

prejudicial

expense

related

to

conducting

additional, repetitious discovery cannot be cured by extending the
current deadlines.”); see also Smith v. BCE Inc., 225 Fed. Appx.
212, 217 (5th Cir. 2007) (defendant would be prejudiced by proposed
amended complaint, which contained new theory of recovery, five
months after deadline to amend and two weeks before dispositive
motions deadline).

12

“[T]o the extent the prejudice related to the expiration of
the

discovery

reopening

period

discovery

and

motions

and

allowing

deadline

could

supplemental

be

cured

briefing

by
on

dispositive motions, the Court has ‘broad discretion to preserve
the integrity and purpose of the pretrial order.’” Ross v. Houston
Hous. Auth., No. 09-2361, 2010 WL 1726908, at *3 (quoting S & W
Enters., 315

F.3d

at

535

(citations

omitted)).

Although

a

continuance could possibly cure some of the prejudice to SPS, such
a remedy would delay resolution of the case and add to SPS’
expenses.

See Garza v. Allstate Texas Lloyd's Co., 284 F. Appx

110, 113 (5th Cir. 2008).

Further, “a continuance would not . .

. serve to enforce local rules or court imposed scheduling orders.”
See id.

After two years of pending litigation, and a previous

continuance, the Court concludes that allowing the amendment now
would unnecessarily disrupt the Court’s docket.

The Court in this

case exercises its discretion to preserve the integrity of the
current deadlines and, therefore, declines to grant a continuance.
See Reliance Ins. Co. v. Louisiana Land and Exploration Co., 110
F.3d 253, 258 (5th Cir. 1997) (“District judges have the power to
control their dockets by refusing to give ineffective litigants a
second chance to develop their case.”).

Accordingly, the third

and fourth factors weigh against granting leave to amend.

13

Because Plaintiffs have failed to demonstrate due diligence or
good cause for leave to amend, the Court now turns to address SPS’
motion

with

respect

to

the

claims

originally

asserted

in

Plaintiffs’ complaint.
II.

Summary Judgment
a. RESPA

The Court first addresses Plaintiffs’ claim under RESPA.

The

facts material to this claim are not in dispute. Plaintiffs allege
that SPS violated RESPA requirements by failing to respond to the
two QWRs Plaintiffs mailed to SPS on November 12, 2013, and
December 30, 2013.

SPS argues that it had no duty to respond to

these QWRs because Plaintiffs failed to send their correspondence
to the appropriate address.
“RESPA is a consumer protection statute that imposes a duty
on servicers of mortgage loans to acknowledge and respond to
inquiries from borrowers.” Bivens v. Bank of America, N.A., 868
F.3d 915, 918 (11th Cir. 2017).
written

correspondence

that

“When a borrower submits a QWR—

includes

the

borrower’s

name

and

account and sufficient detail about the information sought—the
servicer must provide ‘a written response acknowledging receipt of
the correspondence’ and take certain other responsive actions
within

specified

time

periods.” 6

6

Id.

(quoting

12

U.S.C.

§

See, e.g., 12 U.S.C. § 2605(e)(1)(A) (“If any servicer of a federally related
mortgage loan receives a qualified written request from the borrower (or an
agent of the borrower) for information relating to the servicing of such loan,

14

2605(e)(1)(A), (e)(1)(B), (e)(2)).

To assist servicers with the

task

timely

of

providing

consumers

with

information,

RESPA’s

implementing regulations allow servicers to establish a designated
address for QWRs.

See Roth v. CitiMortgage Inc., 756 F.3d 178,

182 (2d Cir. 2014).
provides, “By notice

Specifically, 24 C.F.R. § 3500.21(e)(1)
. . . included in the Notice of Transfer .

. . a servicer may establish a separate and exclusive office and
address

for

requests.”

the

receipt

and

handling

24 C.F.R. § 3500.21(e)(1).

of

qualified

written

If a servicer designates

a particular address for receiving QWRs, a borrower must mail his
or her QWR to that address to trigger the servicer’s duty to
respond.

See Roth, 756 F.3d at 182 (“[F]ailure to send the

requests to the designated address does not trigger the servicer’s
duties under RESPA.”) (alterations omitted); see also Berneike v.
CitiMortgage, Inc., 708 F.3d 1141, 1149 (10th Cir. 2017) (“Receipt
at the designated address is necessary to trigger RESPA duties.”);
Steele v. Green Tree Servicing, LLC, No. 09-0603, 2010 WL 3565415,
at *3 (N.D. Tex. 2010) (“[T]he court holds that Green Tree never
received a qualified written request because the [plaintiffs]’s
letters were not sent to the exclusive address that Green Tree
specified.”).

the servicer shall provide a written response acknowledging receipt of the
correspondence within 5 days (excluding legal public holidays, Saturdays, and
Sundays) unless the action requested is taken within such period.)

15

Plaintiffs concede that they received a “Notice of Transfer”
letter from SPS.

The letter reads: “All written requests must be

sent to the address listed below for Disputes/Inquires, as this is
our exclusive address for processing these matters.

If you send

your request or dispute to any other address, it may not be
processed in accordance with our Customer Service Timelines.”
(Rec. Doc. 49-16 at 1).

The letter also provides three separate

mailing addresses for “Disputes/Inquiries,” “Payment Remittance,”
and “General Correspondence,” and designates the mailing address
for “Disputes/Inquiries” as “P.O. Box 65227, Salt Lake City, Utah
84165.”

Id.

The Court finds that SPS clearly established “P.O. Box 65227,
Salt Lake City, Utah 84165”as the exclusive mailing address for
QWRs. Bivens, 868 F.3d at 917-21 (finding that SPS had designated
an exclusive address for receiving QWRs based on the same language
contained in SPS’ Notice of Transfer). The Plaintiffs’ QWRs,
however, were not sent to this address.

The record reflects that

Plaintiffs mailed two letters, captioned “R.E.S.P.A. Qualified
Written Request[s],” to “P.O. Box 70369, Pasadena, CA 91117” rather
than to SPS’ exclusive QWR address.

(Rec. Doc. 68-12 at 1, 5).

Because a reasonable trier of fact could only find that SPS
established an exclusive location at which it would accept QWRs,
and that Plaintiffs never sent a proper request to that address,
SPS had no duty to respond to Plaintiffs’ letters.
16

Bivens, 868

F.3d at 917-21 (concluding that SPS had no duty to respond where
the plaintiff failed to mail his QWR to SPS’ designated QWR
address— P.O. Box 65227, Salt Lake City, Utah 84165). SPS’ motion
for summary judgment is therefore granted as to the RESPA claim.
b. Breach of Contract
Plaintiffs argue that SPS breached the mortgage agreement by
retaining the insurance proceeds intended for the repair of the
Property. SPS contends that the mortgage agreement grants it the
authority to disburse the insurance proceeds periodically and in
accordance with repair progress.

Further, SPS contends that it

did not breach the mortgage agreement because Plaintiffs failed to
meet

the

completion

disbursement.

percentage

required

for

an

additional

SPS argues that Plaintiffs agreed to pay for the

cost of the repair upfront and, under SPS’ policy for monitoring
private repair claims, Plaintiffs were required to achieve 50%
completion before SPS would make a second disbursement.
contends

that

it

rightfully

withheld

the

insurance

Thus, SPS
proceeds

because Plaintiffs failed to meet the required 50% completion
threshold.
Notably,

Plaintiffs’

opposition

fails

to

address

SPS’

argument regarding its authority to withhold insurance proceeds
under

the

mortgage

agreement.

Instead,

Plaintiffs

allege

a

violation of SPS’ own internal policies and procedures as the basis
of their breach of contract claim.
17

Plaintiffs assert that SPS

breached the mortgage agreement because it failed to make a second
disbursement
revealed

of

that

insurance

Plaintiff

proceeds

had

although

completed

25%

the
of

inspection

the

repairs.

Plaintiffs contend that, due to SPS’ intentionally opaque policy
regarding when and how insurance proceeds are to be disbursed, an
issue

of

material

fact

exists

regarding

whether

SPS’

policy

requires it to release a second disbursement at 25% or 50% repair
completion.
In

Dabney

v.

Countrywide

Home

Loans,

Inc.,

the

court

considered whether a mortgage lender was required to disburse all
insurance proceeds to a borrower once repairs were deemed feasible.
428 Fed. Appx. 474, 476 (5th Cir. 2011) (per curiam).

The contract

authorized the lender to “disburse proceeds for the repairs and
restoration . . . in a series of progress payments as the work is
completed.” Id. The contract also granted the lender the authority
to “withhold the insurance proceeds until [the lender] had been
afforded an opportunity to inspect
has been completed.”

Id.

. . . to ensure that the work

Reasoning that the lender’s inspection

revealed that the plaintiff had only completed fifteen percent of
the repairs, even though thirty-three percent of the funds had
been disbursed, the court concluded that the lender was “fully
justified in refusing to disburse additional proceeds.”

18

Id.

The Court reaches the same decision here.

The mortgage

agreement at issue in Dabney and the one presently before the Court
contain the same broad grant of authority to the lender regarding
the disbursement of insurance proceeds.

Specifically, Plaintiffs’

mortgage agreement provides:
“Unless Lender and Borrower otherwise agree in writing,
any insurance proceeds, whether or not the underlying
insurance was required by Lender, shall be applied to
restoration or repair of the Property, if the
restoration or repair is economically feasible and
Lender’s security is not lessened. During such repair
and restoration period, Lender shall have the right to
hold such insurance proceeds until Lender has had an
opportunity to inspect such Property to ensure the work
has been completed to Lender’s satisfaction, provided
that such inspection shall be undertaken promptly.
Lender may disburse proceeds for the repairs and
restoration in a single payment or in a series of
progress payments as the work is completed.”
(Rec. Doc. 49-2 at 8) (emphasis added).

Like the agreement in

Dabney, the mortgage agreement clearly grants SPS the authority to
withhold insurance proceeds subject to its satisfaction of the
performed repairs.

Such a practice has been upheld in this

circuit. See Dabney, 428 Fed. Appx. at 476; see also Suffern v.
Countrywide Home Loans, Inc., 06-0358, 2006 WL 1999204, *2-3 (E.D.
La.

2006)

(dismissing

plaintiff’s

breach

of

contract

claim

alleging a delay in distributing insurance proceeds where the
mortgage company made a pre-inspection disbursement of $15,000 and
a second/final disbursement three-weeks later of $137,488 after
the inspection revealed that 85% of the necessary repairs had been

19

completed).
the

SPS’ authority to retain the insurance proceeds under

mortgage

agreement

is

further

buttressed

by

voluntary election to fund their own repairs.

Plaintiffs’

Prior to any

disbursement of insurance proceeds by SPS, Plaintiffs signed a
Private Repairs Affidavit whereby Plaintiffs agreed to pay for all
repair materials upfront.

The Affidavit contains the following

language:
We hereby guarantee that if we are permitted to perform
the repairs ourselves for the property noted, we would
be responsible for payment in full for all materials we
may need in relation to the restoration . . . All repairs
will be completed in a workmanlike manner and we will
accept the results of any inspections conducted by
Select Portfolio Servicing, Inc.
(Rec. Doc. 49-7 at 1) (emphasis added). Although Plaintiffs agreed
to “be responsible for payment in full for all materials [they]
may need in relation to the restoration,” it is undisputed that
Plaintiffs never used any of their personal funds to repair the
Property.

The only repairs made to the Property were repairs

funded by SPS’ initial $10,000 disbursement.

Once the initial

disbursement was depleted, Plaintiffs made numerous attempts to
request a second disbursement from SPS.

For example, Plaintiffs’

letter to SPS dated March 27, 2013, provides:
“The Harney’s are in need of the funds currently in your
possession to make the repairs to their home . . . The
damages far exceed the amount of money they have received
from the insurance company thus far. . . It is my
understanding that [SPS] released a small amount to the
Harney’s to get started on repairs. However, the amount

20

is not enough to make any repairs other than the gutting
of the property, which has been done.”
(See Rec. Doc. 68-10 at 1).

7

In an attempt to avoid their

obligations, Plaintiffs sent letters to SPS containing estimates
of the expected cost of repairs instead of actually paying for any
repair materials themselves.

Seemingly, from Plaintiffs’ point of

view, Plaintiffs had no duty to repair the Property until SPS
disbursed additional insurance proceeds.

This position, however,

is in direct contravention of the express language of the mortgage
agreement and Private Repair Affidavit.

Plaintiffs cannot agree

to self-fund the repairs and thereafter request that SPS make an
additional

disbursement

of

the

insurance

Plaintiffs to continue making repairs.

proceeds

to

enable

SPS was not obligated to

make any additional disbursements to Plaintiffs in the absence of
Plaintiffs engaging in any self-funded repair.
failed

to

direct

the

Court

to

any

controlling

authority which would lead it to find otherwise.

Plaintiffs have
or

persuasive

Accordingly,

the Court concludes that SPS is entitled to summary judgment on
Plaintiffs’ breach of contract claim. 8

7 “Please also refer to my letters of June 4, 2013 and March 27, 2013 requesting
that [SPS] release additional monies it is holding in escrow so that the Harney’s
can begin making repairs to their property.” (Rec. Doc. 68-10 at 60) (emphasis
added).
8 The Court finds that any alleged factual dispute regarding the completion
percentage required for an additional disbursement is of no moment. SPS contends
that its policies regarding the monitoring of private repair claims provide
that 50% completion is required for a second disbursement. (Rec. Doc. 49-4 at
2). Plaintiffs contend that SPS’ corporate representative, Diane Weinberger,
testified during SPS’ 30(b)(6) deposition that a second disbursement should be
made after 25% of repairs were completed. The only inspection performed on

21

c. Conversion
Next,
conversion

SPS

moves

claim.

for

summary

Plaintiffs’

judgment

complaint

on

alleges

Plaintiffs’
that

SPS

“committed and continues to commit the delict of conversion upon
Plaintiffs

by

withholding

rightfully theirs.”

from

Plaintiffs’

possession,

monies

SPS argues that this claim is prescribed

because Plaintiffs brought the conversion claim more than a year
after they knew or should have known of SPS’ alleged tortious
conduct.
The tort of conversion is committed when one wrongfully does
any act of dominion over the property of another in denial of or
inconsistent with the owner's rights. See Dual Drilling Co. v.
Mills Equip. Inv., Inc., 98-343 (La. 1998), 721 So. 2d 853, 857;
see also Security Home Mortgage Corp. v. Bogues, 519 So. 2d 307
(La. App. 2d Cir. 1988).

Any wrongful exercise or assumption of

authority over another's goods, depriving him of the possession,
permanently or for an indefinite time, is a conversion. See Quealy
v. Paine, Webber Jackson & Curtis, Inc., 475 So. 2d 756 (La.1985);
see also Hampton v. Hibernia Nat. Bank, 598 So. 2d 502, 504 (La.
App. 2d Cir. 1992).

Plaintiffs’ Property revealed that 9% of the repairs had been completed. (Rec.
Doc. 49-10 at 1).
Plaintiffs agreed in the Private Repairs Affidavit that
they would “accept the results of any inspections conducted by Select Portfolio
Servicing, Inc.” (Rec. Doc. 49-7 at 1). Accordingly, whether SPS’ corporate
representative correctly stated the required completion percentage for a second
disbursement in her deposition is of no moment. Plaintiffs achieved neither
50% nor 25% completion.

22

“Delictual actions are subject to a liberative prescription
of one year. This prescription commences to run from the day injury
or

damage

is

Prescription

sustained.”

commences

La.

when

Civ.

a

Code

plaintiff

Ann.

art.

obtains

3492.

actual

or

constructive knowledge of facts indicating to a reasonable person
that he or she is the victim of a tort.

Campo v. Correa, 2001-

2707, pp. 11-12 (La. 6/21/02), 828 So. 2d 502, 510 (citation
omitted).
condition

“An
when

injured
he

party

possesses

has

constructive notice of

information

sufficient

to

his

incite

curiosity, excite attention or put a reasonable person on guard to
call for inquiry.” Martinez Mgmt., Inc. v. Caston, 39,500, p. 5
(La. App. 2 Cir. 4/13/05), 900 So. 2d 301, 305 (citing Boyd v.
B.B.C. Brown Boveri, Inc., 26,889, p. 8 (La. App. 2 Cir. 5/10/95),
656

So.

2d

683).

pleading prescription bears

“Ordinarily,
the

burden

of

the

proving

party
that

the

plaintiff's claims have prescribed.” Terrebonne Parish School Bd.
v. Mobil Oil Corp., 310 F.3d 870, 877 (5th Cir. 2002);

Quality

Gas Products, Inc. v. Bank One Corp., 03–1859, p. 4 (La. App. 1st
Cir. 6/25/04), 885 So. 2d 1179, 1181.

However, once it is shown

that more than a year has elapsed between the time of the tortious
conduct and the filing of a tort suit, the burden shifts to the
plaintiff

to

prove

either

exception to prescription.

suspension,

interruption,

or

some

See In re Moses, 2000-2643, p. 6 (La.

23

2001), 788 So. 2d 1173, 1177; see also Matias v. Taylors Int'l
Servs., Inc., No. 09-3256, 2010 WL 3984581, at *3 (E.D. La. 2010).
Plaintiffs initiated the instant lawsuit on March 9, 2016. As
discussed supra, between March 27, 2013, and October 9, 2013,
Plaintiffs sent four letters to SPS requesting that it release the
additional insurance proceeds that it held in escrow. (Rec. Docs.
68-10 at 1, 12, 60, 66).

Such evidence demonstrates that no

genuine issue of material facts exists with respect to whether
Plaintiffs knew or should have known that SPS was withholding their
insurance proceeds.

See Hampton, 598 So. 2d at 505 (concluding

that the plaintiff’s claims were prescribed where plaintiff had
sent several letters requesting that his bank requesting that his
money be returned to his checking account).
Moreover, although Plaintiffs’ complaint alleges that the
conversion was continuous in nature, and thus, not prescribed,
Plaintiffs expressly abandoned this argument and have failed to
offer any summary judgment evidence in support of this assertion. 9
Because a party cannot defeat summary judgment with conclusory
allegations or unsubstantiated assertions, Little, 37 F.3d at
1075, the Court finds that Plaintiffs have failed to meet their
burden of establishing an exception to prescription. Accordingly,

9

“Plaintiffs need not rely on the continuing tort doctrine to stave off
prescription.” (Rec. Doc. 68 at 26).

24

the

Court

concludes

that

the

La.

Civ.

Code

Ann.

art.

3492

liberative prescription has run on SPS’ conversion claim.
d. Unjust Enrichment
Lastly, Plaintiffs allege, as an alternative theory, that SPS
was

unjustly

enriched

by

its

collection

Plaintiffs’ insurance proceeds.

and

retention

of

SPS contends that Plaintiffs

cannot succeed on their unjust enrichment claim because Plaintiffs
have another remedy at law.
The Louisiana Supreme Court has stated that in order to prove
unjust

enrichment,

impoverishment;

(3)

there
a

must

be:

connection

(1)

an

between

enrichment;
the

(2)

enrichment

an
and

resulting impoverishment; (4) an absence of justification or cause
for the enrichment and the impoverishment; and (5) no other remedy
a law available to the plaintiff.

See Insulation Techs., Inc. v.

Indus. Labor & Equip. Servs., Inc., 2013-0194, p. 6 (La. App. 4
Cir. 8/14/13), 122 So. 3d 1146, 1150 (citing Baker v. Maclay
Properties Co., 94–1529, pp. 18–19 (La. 1/17/95), 648 So. 2d 888,
897).

The Louisiana legislature has codified unjust enrichment in

La. Civ. Code art. 2298, which provides: “[a] person who has been
enriched without cause at the expense of another person is bound
to compensate that person.”

La. Civ. Code art. 2298.

The article

further provides that “[t]he remedy declared here is subsidiary
and shall not be available if the law provides another remedy for
the impoverishment.” Id.

“The unjust enrichment remedy is only
25

applicable to fill a gap in the law where no express remedy is
provided.” Walters v. MedSouth Record Mgmt., LLC, 2010-0353 (La.
6/4/10), 38 So. 3d 243, 244.
Plaintiffs’ unjust enrichment claim cannot succeed because
Plaintiffs cannot establish an absence of another remedy at law
available to them.

As discussed supra, Plaintiffs’ complaint

alleges damages for breach of the mortgage contract as well as a
delictual
Louisiana

action
law

for
that

conversion.
“[t]he

It

remedy

is

well-settled

under

of unjust enrichment is

subsidiary in nature, and shall not be available if the law
provides another remedy.” Walters, 38 So. 3d at 244 (internal
citations omitted).
action

for

breach

Because Plaintiffs have alleged causes of
of

contract

and

in

tort,

Plaintiff

cannot

establish the fifth element, a lack of another remedy at law.

Id.

(“Having pled a delictual action, we find plaintiff is precluded
from seeking to recover under unjust enrichment.”); Insulation
Techs., Inc., 122 So. 3d at 1151 (“The existence of a contractual
remedy precludes a plaintiff from maintaining a cause of action in
unjust

enrichment

for

the

same

damages.”);

Wilkins

v.

Hogan

Drilling Co., 471 So. 2d 863, 867 (La. App. 2d Cir. 1985) (stating
that one cannot recover under unjust enrichment when there is an
agreed contract between the parties.”).

Furthermore, the Court’s

grant of summary judgment with regard to Plaintiffs’ RESPA, breach
of contract, and conversion claims has no impact on Plaintiffs’
26

claim for unjust enrichment. Dugas v. Thompson, 2011-0178 (La.
App. 4 Cir. 6/29/11), 71 So. 3d 1059, 1061 (“[T]he mere fact that
a plaintiff does not successfully pursue another available remedy
does not give the plaintiff the right to recover under the theory
of unjust enrichment.”).
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that SPS’ Motion for Summary Judgment
(Rec. Doc. 49) is GRANTED.
IT IS FURTHER ORDERED that all of Plaintiffs’ claims against
SPS are hereby DISMISSED WITH PREJUDICE.
IT

IS

FURTHER

ORDERED

that

Plaintiffs’

Motion

for

Appeal/Review of Magistrate Judge’s Order (Rec. Doc. 70) is hereby
DENIED.
New Orleans, Louisiana, this 7th day of March, 2018.

________________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

27