BENNER v. WELLS FARGO BANK NA et al
ORDER ON THE PARTIES' CROSS-MOTIONS FOR SUMMARY JUDGMENT AND PLAINTIFF'S MOTION TO SUPPLEMENT THE FIRST AMENDED COMPLAINT - granting in part and denying in part 66 Motion for Summary Judgment; denying 70 Motion To Supplement ; denying 78 Motion for Summary Judgment. By JUDGE NANCY TORRESEN. (mnw)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
WELLS FARGO BANK, N.A., AS
TRUSTEE FOR THE CERTIFICATE
HOLDERS OF MASTR ASSETBACKED SECURITIES TRUST 2007NCW, MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 2007-NCW
) Docket No. 2:16-cv-00467-NT
ORDER ON THE PARTIES’ CROSS-MOTIONS FOR SUMMARY
JUDGMENT AND PLAINTIFF’S MOTION TO SUPPLEMENT THE FIRST
In this action, Plaintiff April Benner (“Ms. Benner”) asserts claims against
Defendants Specialized Loan Servicing, LLC (“SLS”) and Wells Fargo Bank, N.A., in
its capacity as Trustee for the Certificate Holders of the MASTR Asset-Backed
Securities Trust 2007-NCW, Mortgage Pass-Through Certificates, Series 2007-NCW
(“Wells Fargo”), arising out of the Defendants’ purported mishandling of her
mortgage loan modification applications.1 Ms. Benner alleges that the Defendants’
conduct violated the Real Estate Settlement Procedures Act (“RESPA”), the Maine
Unfair Trade Practices Act (“UTPA”), and the Maine Consumer Credit Code
Ms. Benner also asserted claims against Select Portfolio Loan Servicing, Inc., but she has since
settled those claims and now proceeds solely against SLS and Wells Fargo. Def.’s Mot. 1 n.1 (ECF No.
(“MCCC”). Before me are the parties’ cross-motions for summary judgment (ECF
Nos. 66, 78) and Ms. Benner’s motion to supplement her First Amended Complaint
(ECF No. 70) (“Pl.’s MTS”). For the reasons set out below I GRANT IN PART and
DENY IN PART the Defendants’ motion for summary judgment, and I DENY Ms.
Benner’s motion for summary judgment and Ms. Benner’s motion to supplement.
On February 22, 2007, Ms. Benner and her now ex-husband Robie Benner
(“Mr. Benner”) executed a promissory note with a principal balance of $204,000
payable to New Century Mortgage Corporation. SMF ¶ 1. The note was secured by a
mortgage on real property located at 683 Main Street, Bowdoin, Maine (the
“Property”). SMF ¶ 2. Ms. Benner and Mr. Benner were legally divorced via a
Judgment for Divorce dated September 24, 2012. SMF ¶ 12. Mr. Benner transferred
his interest in the Property to Ms. Benner at the time of their divorce. Ex. 44 (ECF
During all times relevant here, Wells Fargo has served as the mortgagee of
record on behalf of the promissory note-holders, the Certificate Holders of the MASTR
Asset-Backed Securities Trust 2007-NCW, Mortgage Pass-Through Certificates,
Series 2007-NCW. SMF ¶¶ 3, 4, 211. Wells Fargo acts as mortgagee in its capacity as
trustee. SMF ¶¶ 3-4. Since June 1, 2015, SLS has serviced Ms. Benner’s mortgage
loan as the sole servicer on behalf of Wells Fargo. SMF ¶¶ 5, 6, 7.
Servicing and Loss Mitigation History
Ms. Benner and Mr. Benner defaulted on their mortgage loan in April 2011
and remained in default thereafter. SMF ¶ 11; see SMF ¶ 13. On May 13, 2014, Wells
Fargo filed a foreclosure action against Ms. Benner and her ex-husband in state court.
SMF ¶ 22. The parties entered into Maine’s Foreclosure Diversion Program, and the
foreclosure action was put on hold. SMF ¶ 23.
In August 2014, Ms. Benner submitted a loan modification application to
Select Portfolio Servicing, Inc. (“SPS”), which had been the servicer for Ms. Benner’s
loan since December 1, 2012. SMF ¶¶ 8, 25. Between January 2015 and May 2015,
SPS solicited and Ms. Benner provided additional information and documents in
support of her application for the loan modification. SMF ¶¶ 30, 32. During that time,
SPS twice indicated to Ms. Benner that it had received a complete application and
that it would review her loan for a potential modification. SMF ¶¶ 26, 31. On both
occasions, SPS then determined that Ms. Benner was eligible only for a proprietary
Bank of America modification. SMF ¶¶ 27, 28, 31.2 Because that modification was
less favorable than modifications available under the Home Affordable Modification
Program (“HAMP”), SPS did not offer Ms. Benner the proprietary modification and
instead continued to review her application to see if she could qualify for a better
modification. SMF ¶¶ 29, 31.
SLS avers that SPS serviced Ms. Benner’s loan as a sub-servicer for Bank of America, which
in turn acted as master servicer for the MASTR Asset-Backed Securities Trust 2007-NCW, Mortgage
Pass-Through Certificates, Series 2007-NCW. SMF ¶ 9. Ms. Benner contests these facts, but not the
fact that SPS offered her a proprietary Bank of America modification.
Throughout this time, Wells Fargo, SPS, Ms. Benner, and Mr. Benner
remained engaged in foreclosure mediation. SMF ¶ 34. Ms. Benner was represented
in the mediation free of charge by a loan modification advocate named Jason Thomas
(“Mr. Thomas”). SMF ¶ 35. In May 2015, she also retained an attorney, Andrea Bopp
Stark (“Ms. Stark”). SMF ¶ 36. On May 29, 2015, SPS deemed Ms. Benner’s
application complete for a third time. SMF ¶ 33.
Servicing Transfer to SLS
Effective June 1, 2015, SPS transferred servicing of Ms. Benner’s loan to SLS
as part of a larger servicing transfer of 2,450 loans. SMF ¶¶ 37, 39. It is SLS’s practice
to send transferor servicers a set of Servicing Transfer Instructions ahead of any
servicing transfer. See SMF ¶ 38; Ex. 28 at 18 (ECF No. 60-7). The instructions ask
the transferor to provide SLS with all documents associated with the transferred
loans and to inform SLS if any of the transferred loans had a pending loan
modification application. SMF ¶ 38; Ex. C at 19-21 (ECF No. 64-3). The instructions
also ask the transferor to certify that it has sent SLS a complete servicing file for all
transferred loans, including borrower-submitted loss mitigation documents. See SOF
¶ 38; Ex. 9 at 2 (ECF No. 57-8). SPS signed the required certification on May 29, 2015.
SMF ¶ 39.3
On or “slightly before” June 1, 2015, SPS sent a spreadsheet to SLS that
contained information for all 2,450 of the service-transferred loans. SMF ¶ 45; Ward
Ms. Benner contends that while SPS signed the certification form, which is included as an
appendix to the Servicing Transfer Instructions, the Defendants have not shown that the full
instructions were sent to SPS.
Depo. Tr. at 36:7-20 (ECF No. 61). The spreadsheet included the following series of
entries related to Ms. Benner’s loan:
Ex. 8 (ECF No. 57-7). The spreadsheet indicates that Ms. Benner was reviewed for
but denied multiple HAMP and other modifications. SMF ¶ 46. The spreadsheet also
shows that SPS was “Processing” a workout for Ms. Benner for a product called a
“BAC Trial Mod.” SMF ¶ 46.
As part of a series of “document dumps” (mass transfers of files) on June 3,
2015, June 28, 2015, and July 8, 2015, SLS received from SPS certain documents that
Ms. Benner had submitted to SPS in support of her loan modification application. See
SMF ¶¶ 43, 48. However, SLS did not receive what it considered a complete loan
modification application from Ms. Benner. See SMF ¶ 41; Ex. 28 at 7 (ECF No. 60-7).
Specifically, SLS did not receive a Request for Mortgage Assistance (“RMA”) from
each person who could contribute to repaying Ms. Benner’s loan. SMF ¶ 44. SLS did
not contact SPS to request any additional documents for Ms. Benner. SMF ¶ 165.
June 8, 2015 Mediation Session
Before the servicing transfer, the parties to Ms. Benner’s foreclosure action
had scheduled a mediation session for June 8, 2015. SMF ¶ 54. On June 2, 2015, Ms.
Benner’s loss mitigation counselor, Mr. Thomas, informed her attorney, Ms. Stark,
that SPS had transferred servicing to SLS and that he did not expect SLS to attend
the June 8th session or to have any information on the loan until mid-June 2015.
SMF ¶ 55. Mr. Thomas suggested that Ms. Benner should nevertheless attend the
mediation in order to make a case for mediation non-compliance against SPS and
Wells Fargo. SMF ¶ 56.
Ms. Benner did attend the mediation session, missing half a day of work and
travelling to West Bath, Maine in order to do so. SMF ¶ 160. SLS did not appear at
the mediation session. SMF ¶ 161. The mediator contacted SLS by phone during the
mediation. SMF ¶ 161. Finding that neither SPS nor SLS was prepared to
meaningfully participate in the mediation session, the mediator entered a report of
non-compliance against Wells Fargo. SMF ¶ 162.
Ms. Benner’s First Purported Qualified Written Request
On June 18, 2015, Ms. Benner, through Ms. Stark, sent a letter to SLS. SMF
¶ 142. The letter purported to notify SLS of errors SPS had committed in handling
Ms. Benner’s loss mitigation applications. SMF ¶ 143. The letter also requested “an
immediate determination and explanation for any denial of all loss mitigation options
including modifications under the DOJ, HAMP, and any in-house programs on Ms.
Benner’s loan,” and requested certain documents related to Ms. Benner’s loan history.
SMF ¶ 143; Ex. 24 at 2-4 (ECF No. 60-3).
SLS received the letter on June 23, 2015 and acknowledged receipt on June 26,
2015. SMF ¶¶ 145, 146. By letter dated June 30, 2015 and mailed to Ms. Stark, SLS
responded more fully and provided documents including a copy of Ms. Benner’s
promissory note, a copy of the deed of trust, a welcome letter, payment history and
transaction codes, and the previous servicer’s payment history. SMF ¶ 147.
Ms. Benner’s Loss Mitigation Applications to SLS
Application Transferred from SPS
On June 20, 2015, SLS sent a letter to Ms. Benner and Mr. Benner that
informed them they were delinquent on their loan and that asked them to contact
SLS to discuss possible loss mitigation options. SMF ¶ 63.
On June 29, 2015, SLS sent a letter to Ms. Benner care of Ms. Stark. SMF ¶ 64.
The letter stated that on June 28, 2015, the date of SPS’s second file transfer to SLS,
SLS had received nine documents that could support a loan modification application
for Ms. Benner. SMF ¶ 65. The letter also listed several additional documents that
SLS believed it needed in order to review Ms. Benner for a modification. SMF ¶ 65.
Specifically, the letter asked Ms. Benner to submit an RMA form, Dodd-Frank
Certification, and Hardship Verification from all “financial contributors” on the loan
by July 29, 2015. SMF ¶ 66. The letter contained descriptions of the requested forms,
and directed Ms. Benner or her attorney to contact SLS if they had any questions.
SMF ¶ 67. The letter did not define the term “financial contributor.” SMF ¶ 171.
On July 15, 2015, SLS sent a letter to Ms. Stark to inform her that SLS still
needed the documents requested in its June 29th letter. SMF ¶ 68.
On August 5, 2015, SLS informed Ms. Benner and Mr. Benner that it was
unable to review them for modification options because they had not provided all
requested documents. SMF ¶ 72.
August 20, 2015 Application
On August 6, 2015, SLS sent Ms. Benner a HAMP solicitation letter asking her
for a new loss mitigation application. SMF ¶ 181. Mr. Thomas prepared a loss
mitigation application for Ms. Benner, and, on August 20, 2015, Ms. Stark submitted
the application to SLS. SMF ¶¶ 79, 182.
That afternoon, SLS informed Doonan, Graves & Longoria (“Doonan
Graves”), Wells Fargo’s counsel in the foreclosure suit, that it had reviewed the
documents that Ms. Benner’s counsel had provided earlier that day. SMF ¶ 82; see
SMF ¶ 73. SLS noted that it had follow-up legal questions and that it would need
additional information and documents from Ms. Benner. SMF ¶ 82. Doonan Graves
then emailed Mr. Thomas and Ms. Stark to describe what information SLS still
needed and why, which included (i) two months proof of receipt for all rental income
along with either bank statements marking each deposit of rent or cancelled checks;
(ii) a mortgage statement for a rental property; (iii) signed and dated tax returns or
a 4506-T form from Ms. Benner’s grandmother Edith Rossignol (“Ms. Rossignol”);
and (iv) a corrected letter of explanation regarding the discrepancy between Ms.
Benner’s stated gross wages and her paystubs. Ex. 18 at 8-9 (ECF No. 59-7); see also
SMF ¶ 83. The email also requested “a copy of the court entered divorce decree . . .
[o]r something from the court indicating that no appeal had been taken and therefore
the decree provided is final.” Ex. 18 at 9.
On August 24, 2015, SLS wrote to Ms. Stark, requesting the following
documents by September 23, 2015:
From Mr. Benner, one of the following: (i) “4506T and Unemployment
Benefits – Proof of Receipt,” (ii) “4506T and Unemployment Benefits,” (iii)
“Tax Returns/Tax Transcripts and Unemployment Benefits – Proof of
Receipt,” or (iv) “Unemployment Benefits and Tax Returns/Tax
From Ms. Benner, one of the following: (i) “Mortgage Statement” or (ii)
“Mortgage Statement and Rental Income – Proof of Receipt.”
From Ms. Rossignol, a “Contributor Credit Authorization” and one of the
following: (i) “Mortgage Statement and Tax Returns/Tax Transcripts,” or
(ii) “Rental Income/Lease Agreement and Mortgage Statement and Rental
Income – Proof of Receipt.”
See Ex. 17 at 31 (ECF No. 59-6); SMF ¶ 84.
On September 10, 2015, SLS sent another letter to Ms. Benner, care of Ms.
Stark, which noted that SLS had not received the information requested in its August
24th letter and which gave Ms. Benner until September 25, 2015, to submit those
documents. SMF ¶ 88. On the same day, Doonan Graves emailed Mr. Thomas and
Ms. Stark to explain that SLS still needed certain documents “to complete the
underwriting review,” including (i) a “signed/dated complete Contributor Credit
Authorization;” (ii) a “Mortgage Statement for non‐subject property to show current
and escrow account verification;” (iii) a “judge executed Divorce Decree with Property
award clause;” and (iv) “2 more consecutive weekly paystubs for the borrower
[because] (paystubs received were not consecutive and did not cover a FULL 30
days).” Ex. 19 at 39 (ECF No. 59-8); see also SMF ¶ 89. Ms. Stark instructed Ms.
Benner to submit these documents to SLS “ASAP.” SMF ¶ 90.
On September 23, 2015, Mr. Thomas emailed several documents to Doonan
Graves on Ms. Benner’s behalf. SMF ¶ 98. These included (i) a letter explaining Ms.
Benner’s income sources; (ii) a contributor credit authorization form for Ms.
Rossignol; (iii) paystubs from Ms. Benner’s new job and from her time at L.L. Bean;
(iv) two months of bank statements; (v) a 4506-T form for Ms. Rossignol; (vi) four
rental receipts; (vii) a mortgage statement for Ms. Benner’s rental property; and (viii)
her judgment for divorce and quitclaim deed. SMF ¶ 190.
On September 29, 2015, SLS sent a letter to Ms. Stark that requested the same
documents listed in SLS’s letters of August 24 and September 10, 2015, as well as an
RMA for all financial contributors, to be provided by October 14, 2015. SMF ¶ 99.
In early October of 2015, Bendett & McHugh replaced Doonan Graves as Wells
Fargo’s foreclosure counsel in Ms. Benner’s action. SMF ¶ 101. On October 16, 2015,
Bendett & McHugh emailed Ms. Benner’s counsel to inform her that:
[T]he following docs are needed to proceed with loss mitigation review:
-Please indicate on the submitted Bank statements the SSI income in
August and September, so that we can understand which income
corresponds to which source.
-Please provide a LOE as to (1) why the SSI amounts vary, and (2) please
state that income is deposited for Edith into April's account (just so it is
-Please provide proof of residency for Edith since her bank statements
show a PO box (ie: third party documentation will be needed such as
driver license/utility bill).
Ex. 12 at 2 (ECF No. 59-1); see SMF ¶¶ 101-02.
Just three days later, on October 19, 2015, SLS sent another letter to Ms.
Stark, which stated that SLS was unable to review Ms. Benner and Mr. Benner for a
modification because SLS had not received required documents. SMF ¶ 100. SLS has
testified that it issued the October 19, 2015, denial letter because Ms. Benner had not
submitted the requested August and September 2015 bank statements flagging her
social security income, evidence that Ms. Rossignol’s rental income was deposited into
Ms. Benner’s bank account, or the requested RMAs from financial contributors. SMF
¶ 192 (citing Ward Depo. Tr. at 118:2-123:10).
On October 20, 2015, SLS sent Ms. Benner a new HAMP solicitation letter.
SMF ¶ 198. On October 21, 2015, Mr. Thomas emailed Ms. Stark with “the three
documents requested by [Bendett & McHugh].” SMF ¶ 104; Ex. 18 at 75. Ms. Stark
suggested several changes to bring those documents in line with Bendett & McHugh’s
requests. SMF ¶ 105. The parties do not dispute that Ms. Benner submitted
additional documents October 23, 2015, but neither party has presented evidence of
whether those documents incorporated Ms. Stark’s suggestions. SMF ¶¶ 105-06.
On October 26, 2015, SLS sent a letter to Ms. Stark to inform her that SLS was
still missing RMAs from all financial contributors to the loan and a contributor credit
authorization from Ms. Rossignol. SMF ¶ 106. SLS asked Ms. Benner to provide those
documents by November 25, 2015. SMF ¶ 107.
On November 2, 2015, Bendett & McHugh emailed Mr. Thomas and Ms. Stark
that SLS needed paystubs from Ms. Benner’s former employer, L.L. Bean, for the full
month of August 2015. SMF ¶ 109. On November 5, 2015, Mr. Thomas emailed
Bendett & McHugh to explain that Ms. Benner did not work for L.L. Bean at the end
of August 2015, and therefore had no L.L. Bean paystubs for August 14, 2015 or
August 21, 2015. SMF ¶ 111.4 Bendett & McHugh responded by email the same day
to ask whether Ms. Benner had any additional paystubs from L.L. Bean, as SLS was
trying to utilize an exception for non-consecutive paystubs but needed to have a full
30 days of paystubs from some time period in order to do so. SMF ¶ 112. On November
6, 2015, Ms. Stark responded to Bendett & McHugh by email, telling them that SLS
already had Ms. Benner’s paystubs from June 12 through August 26, 2015 and
reattaching those paystubs as reference. SMF ¶ 113. On November 11, 2015, SLS
sent an additional letter to Ms. Stark, which stated that SLS was still missing an
RMA from all financial contributors, and asked her to submit that document by
November 26, 2015. SMF ¶ 108.
As of November 20, 2015, SLS deemed Ms. Benner’s application complete. SMF
¶ 114. At that time, SLS still had not received an RMA, Dodd Frank, or Hardship
Letter from a “financial contributor” other than Ms. Benner. SMF ¶ 180. SLS’s
corporate representative has testified that SLS “ultimately made an underwriting
decision and granted an exception” to its requirement for an RMA from a financial
contributor. Ward Depo. Tr. 79:1-14.
By letter dated November 24, 2015, SLS informed Ms. Benner that she
qualified for a HAMP Tier 1 Modification. SMF ¶ 117. Ms. Benner rejected the
November 24th HAMP offer on the advice of SLS’s counsel, who told her that doing
Ms. Benner had previously explained in a March 19, 2015 letter to SPS that she worked “on
call” seasonally for L.L. Bean. SMF ¶ 199.
so could allow her to qualify for a proprietary modification that would provide a
reduction to her principal balance. SMF ¶¶ 119, 120, 124, 200. On January 11, 2016
SLS offered Ms. Benner the more favorable modification contingent on her making
certain trial period payments. SMF ¶ 202. Ms. Benner completed the trial payments
and was offered a permanent modification on June 13, 2016, which she accepted. SMF
¶ 203. The final Loan Modification Agreement reduced Ms. Benner’s unpaid principal
loan balance by over $100,000. SMF ¶ 129. The modification also waived all interest
and other fees that had accumulated on the loan since Ms. Benner and Mr. Benner’s
April 2011 default. SMF ¶ 131. As a result of the modification, the loan became a
performing, current loan and Wells Fargo dismissed the foreclosure action as of June
27, 2016. SMF ¶ 140, 204.
Ms. Benner’s Second Purported Qualified Written Request
On August 4, 2016, Ms. Stark sent SLS a letter in which she claimed that after
the permanent modification was implemented in May 2016, some of her payments
had been marked as partial and put in suspense. SMF ¶ 148. The letter also requested
a complete life-of-loan history from the date of origination forward, and a full
accounting and itemization of the amounts capitalized into the $ 185,000 modified
unpaid principal balance of the loan modification. Ex. 24 at 15.
SLS received the letter on August 12, 2016 and acknowledged receipt on
August 15, 2016. SMF ¶¶ 149-50. On September 9, 2016, SLS provided a more
fulsome response, informing Ms. Benner that there was an escrow shortage on the
loan and enclosing the latest escrow analysis for her review. SMF ¶ 151. SLS’s
response also included copies of Ms. Benner’s “payment history and transaction
codes.” Ex. 24 at 23-31.
Ms. Benner’s Purported Damages
Ms. Benner has testified that she suffered emotionally as a result of SLS’s
alleged delay in processing her loss mitigation application and as a result of SLS’s
allegedly needless document requests. SMF ¶ 207; Benner Decl. ¶ 24 (ECF No. 74).
Ms. Benner has also testified that the fear of losing her home caused her stress from
the time of her default in 2011 until she received the permanent modification. SMF
¶ 158. As reflected in Ms. Benner’s medical records, Ms. Benner did not see a doctor
or a therapist and was not prescribed any medication in response to the distress she
attributes to SLS’s conduct. SMF ¶¶ 153-157.
Ms. Benner paid Ms. Stark $6,255.75 for representation during the foreclosure
process and incurred additional unpaid fees for that same representation. SMF ¶ 205.
Ms. Benner also paid travel costs to go to and from her housing counselor’s office to
drop off documents SLS had requested, and missed work to attend the June 8, 2015
mediation and to travel to deliver documents. SMF ¶ 206.
Ms. Benner initially filed this action against the Defendants in state court on
August 24, 2016. Notice of Removal 1 (ECF No. 1). On September 14, 2016, the
Defendants removed the action to this Court. Notice of Removal 1. Ms. Benner filed
a First Amended Complaint on October 13, 2016 (ECF No. 13), which the Defendants
Answered. (ECF No. 14).
On June 19, 2017, I held a Local Rule 56(h) conference with the parties during
which I set a summary judgment briefing schedule. Local Rule 56(h) Pre-Filing
Conference Report and Order 3 (ECF No. 56). Proceeding in line with that schedule,
the Defendants filed a motion for summary judgment on July 14, 2017. Defs.’ Mot. for
Summary Judgment (ECF No. 66) (“Defs.’ Mot.”). Four days later, Ms. Benner filed
a motion to supplement the First Amended Complaint. Pl.’s MTS. Through her
motion, Ms. Benner seeks to add allegations to the First Amended Complaint that
purportedly describe “events that have transpired since the date of filing the First
Amended Complaint.” Pl.’s MTS 1. Specifically, Ms. Benner seeks to allege that on
July 5, 2017, SLS’s automatic payment system erroneously deducted $402.78 more
from her account than was due for her monthly loan payment. Pl.’s MTS 3.
CROSS-MOTIONS FOR SUMMARY JUDGMENT
The Defendants have moved for summary judgment on all remaining counts
in the First Amended Complaint. Ms. Benner has moved for summary judgment on
all counts on all issues except damages.
Summary judgment is appropriate when there is no genuine dispute of
material fact and the moving party is entitled to judgment as a matter of law. Fed.
R. Civ. P. 56(a). A dispute is genuine where a reasonable jury could resolve the point
in favor of either party. Chung v. StudentCity.com, Inc., 854 F.3d 97, 101 (1st Cir.
2017). A fact is material where it could influence the outcome of the litigation. Id.
On a motion for summary judgment, courts must construe the record in the
light most favorable to the non-movant and resolve all reasonable inferences in the
non-movant’s favor. Burns v. Johnson, 829 F.3d 1, 8 (1st Cir. 2016). Cross-motions
for summary judgment proceed under the same standards applicable to standalone
summary judgment motions, but each motion is addressed separately. Fadili v.
Deutsche Bank Nat’l Tr. Co., 772 F.3d 951, 953 (1st Cir. 2014).
Real Estate Settlement Procedures Act Claims
Background: RESPA and Regulation X
Count II of Ms. Benner’s First Amended Complaint asserts that the
Defendants violated RESPA and its implementing regulations. “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) (citing 12 U.S.C. §
2601(a)). The Consumer Financial Protection Bureau (“CFPB”) has promulgated a
set of rules under RESPA known as “Regulation X,” which lay out servicers’
obligations to borrowers. 12 C.F.R. § 1024 et seq. Borrowers may enforce the
provisions of Regulation X pursuant to RESPA § 6(f), which provides that “[w]hoever
fails to comply with any provision of [RESPA] shall be liable to the borrower for each
such failure.” 12 U.S.C. § 2605(f); see also 12 C.F.R. § 1024.41(a).
Ms. Benner claims that the Defendants committed more than a dozen RESPA
violations that added up to a pattern or practice of noncompliance.5 The purported
violations fall into two categories: (1) failure to “exercise reasonable diligence in
obtaining documents and information to complete [Ms. Benner’s] loss mitigation
application” in violation of 12 C.F.R. § 1024.41(b)(1); and (2) failure to timely or
completely respond to Ms. Benner’s purported Qualified Written Requests (“QWRs”)
or Notices of Error in violation of 12 U.S.C. § 2605(e) and 12 C.F.R. §§ 1024.35 and
1024.36. In her summary judgment motion, Ms. Benner claims that she has
established these violations as a matter of law.
For their part, the Defendants argue that they are entitled to summary
judgment on Ms. Benner’s RESPA claims because the record shows that they
expediently reviewed Ms. Benner’s loss mitigation application and satisfactorily
responded to Ms. Benner’s purported QWRs. The Defendants also raise two threshold
issues, which I address before turning to the parties’ arguments on Ms. Benner’s
individual RESPA claims.
Whether the Duplicative Request Rule Applies
Regulation X provides that “[a] servicer is only required to comply with the
requirements of this section for a single complete loss mitigation application for a
borrower’s mortgage loan account.” 12 C.F.R. § 1024.41(i) (2014).6 The Defendants
In addition to allowing for actual damages, § 2605 of RESPA allows courts to assign damages
of up to $ 2,000.00 against a defendant that has engaged in a pattern or practice of noncompliance
with that section. 12 U.S.C. § 2605(f).
Section 1024.41(i) was amended in October of 2016, effective October 19, 2017, as part of a
broader series of amendments to Regulation X. I rely herein on the versions of the regulations in effect
during the events at issue. I note that many of the amendments to Regulation X were aimed directly
argue that under this rule, once any servicer has received and evaluated a complete
loss mitigation application for a loan, no servicer need follow RESPA’s loss mitigation
requirements as to that loan going forward. Defs.’ Mot. 3. The Defendants note that
SPS received and evaluated two loss mitigation applications from Ms. Benner before
SLS took over servicing. Def.’s Mot. 3. Therefore, they argue, SLS was not bound to
follow RESPA’s requirements when handling Ms. Benner’s subsequent loss
mitigation applications. Def.’s Mot. 4.
The Defendants’ interpretation of § 1024.41(i) is at odds with the provision’s
plain language, which refers only to “a servicer,” and with the CFPB’s interpretations
of that rule. When the CFPB adopted § 1024.41(i), it explained:
In the propos[ed rule], the Bureau stated that where servicing was
transferred after the borrower received an evaluation on a complete loss
mitigation application from the transferor servicer, the transferee
servicer still may be required to comply with the requirements of
proposed § 1024.41. The Bureau believes that when an investor or
guarantor is transferring servicing to a new servicer, which may have
been driven by an investor’s or guarantor’s determination that the new
servicer can better achieve loss mitigation options with borrowers,
borrowers should be able to renew an application for a loss mitigation
option with the transferee servicer, subject to the applicable deadlines
and requirements in proposed § 1024.41.
Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act
(Regulation X), 78 Fed. Reg. 10696-01, 10836 (Feb. 14, 2013). The agency “finaliz[ed]
the rule as proposed,” id., and adopted a set of official comments to clarify that:
A transferee servicer is required to comply with the requirements of
§ 1024.41 regardless of whether a borrower received an evaluation of a
complete loss mitigation application from a transferor servicer.
at clarifying transferee servicers’ obligations after a servicing transfer. See 12 C.F.R. § 1041.41(k)
(2017). The reader should consider this decision within its appropriate regulatory context.
Documents and information transferred from a transferor servicer to a
transferee servicer may constitute a loss mitigation application to the
transferee servicer and may cause a transferee servicer to be required
to comply with the requirements of § 1024.41 with respect to a
borrower's mortgage loan account.
Id. at 10898 (codified as 12 C.F.R. Pt. 1024, Supp. I, cmt. 41(i)(1) (2014)).7 That is, the
CFPB contemplated that transferee servicers would comply with § 1024.41 when
evaluating a borrower’s loss mitigation application regardless of whether the
borrower already had received an evaluation of a complete loss mitigation application
and regardless of whether the transferor servicer had been processing a loss
mitigation application for that borrower.8
The CFPB has not deviated from this approach. When it amended the language
of § 1024.41(i) in October of 2016, the CFPB again emphasized that transferee
servicers must comply with § 1024.41’s requirements:
Section 1024.41(i) provides that a servicer need not comply with
§ 1024.41 for a subsequent loss mitigation application from a borrower
where certain conditions are met. A transferee servicer and a transferor
servicer, however, are not the same servicer. Accordingly, a transferee
servicer is required to comply with the applicable requirements of
§ 1024.41 upon receipt of a loss mitigation application from a borrower
whose servicing the transferee servicer has obtained through a servicing
These comments are “the primary vehicle by which the Bureau of Consumer Financial
Protection issues official interpretations of Regulation X.” 12 C.F.R. § 1024, Supp. I, Intro., cmt. 1. I
consider the CFPB’s commentary as highly persuasive authority when evaluating 12 C.F.R. § 1024.
See Nash v. PNC Bank, N.A., No. CV TDC-16-2910, 2017 WL 1424317, at *4 (D. Md. Apr. 20, 2017)
(finding the CFPB’s commentary “highly persuasive” when interpreting gaps in 12 C.F.R. § 1024, and
collecting cases that have relied on the CFPB’s commentary); cf. Auer v. Robbins, 519 U.S. 452, 461
(1997) (an agency's interpretation of its own ambiguous regulation is entitled to deference unless
“plainly erroneous or inconsistent with the regulation”).
As Ms. Benner notes, even if § 1024.41(i) could be interpreted to release transferee servicers
from § 1041’s requirements, the Defendants still would not be entitled to summary judgment. Section
1024.41(i) requires a servicer to comply with § 1024.41 only once for a complete loss mitigation
application. Here, Ms. Benner contends that SPS never fully complied with § 1024.41, including
because it failed to inform her in writing that it had rejected her previous loss mitigation applications.
transfer, even if the borrower previously received an evaluation of a
complete loss mitigation application from the transferor servicer.
12 C.F.R. Pt. 1024, Supp. I, cmt. 41(i)(2) (2017) (emphasis added).9
SPS’s review of Ms. Benner’s loss mitigation application is therefore of no
consequence to SLS’s obligations: Once servicing transferred to SLS, SLS was
required to comply with the provisions of § 1024.41 anew. The Defendants are not
entitled to summary judgment on Ms. Benner’s RESPA claims on the basis of
Whether Ms. Benner has Presented Evidence of Cognizable
“Damages are ‘an essential element’ of a RESPA claim.” Lage v. Ocwen Loan
Servicing LLC, 839 F.3d 1003, 1011 (11th Cir. 2016). RESPA permits plaintiffs to
recover “any actual damages to the borrower” or “in the case of a pattern or practice
of noncompliance [with RESPA],” statutory damages. 12 U.S.C. § 2605(f)(1). In the
case of actual damages, the plaintiff’s harm must have accrued “as a result of the
[defendant’s] failure” to comply with the Act. See 12 U.S.C. § 2605(f). Because any
damages that would have accrued regardless of a violation cannot have occurred “as
a result of” that violation, RESPA plaintiffs “must present specific evidence to
establish a causal link between the financing institution’s violation and their
injuries.” Moore v. Mortg. Elec. Registration Sys., Inc., No. 10-cv-241-JL, 2013 WL
The Defendants rely on Mangum v. First Reliance Bank to assert that the CFPB has in fact
interpreted this regulation in the opposite manner. No. 4:16-CV-02214-RBH, 2017 WL 1062534, at *3
(D.S.C. Mar. 21, 2017). At oral argument, counsel for the Defendants was at a loss to explain the
Mangum court’s reasoning in light of the regulation’s plain language and the CFPB’s clear guidance.
1773647, at *3 (D.N.H. Apr. 25, 2013) (quoting McLean v. GMAC Mortg. Corp., 398
F. App’x 467, 471 (11th Cir. 2010)).
The Defendants argue that Ms. Benner’s RESPA claim must be dismissed
because she has failed to present evidence that the Defendants’ purported RESPA
violations caused her actual damages. Ms. Benner responds that she has suffered
actual damages from the Defendants’ conduct in the form of emotional distress,
attorneys’ fees, and costs and expenses.10
Emotional Distress Damages
The Defendants dispute whether Ms. Benner can claim emotional distress
damages under RESPA. The First Circuit has not yet addressed whether RESPA
allows for emotional distress damages. However, in light of the First Circuit’s
directive to construe consumer protection statutes like RESPA “liberally in favor of
consumers,” Barnes v. Fleet Nat’l Bank, N.A., 370 F.3d 164, 171 (1st Cir. 2004), a
growing number of courts in this Circuit have concluded that the phrase “any actual
damages” should be read to include damages for emotional distress. McGahey v. Fed.
Nat’l Mortg. Ass’n, 266 F. Supp. 3d 421, 441 (D. Me. 2017); see also Afridi v.
Residential Credit Sols., Inc., 189 F. Supp. 3d 193, 200 (D. Mass. 2016); Moore, 848
F. Supp. 2d at 123. I concur with the reasoning of these decisions, and I find that
emotional distress damages are recoverable under RESPA.
Ms. Benner also claims as damages interest and fees that accrued on her loan from the date of
her default until the time of her successful modification. The Defendants argue that these fees and
interest cannot be considered as damages because the Defendants waived and did not capitalize the
interest that accrued on Ms. Benner’s account when they modified her loan. Defs.’ Mot. 13. Ms. Benner
does not respond to this argument and therefore concedes the point.
The Defendants argue that even if RESPA allows for emotional distress
damages, Ms. Benner has failed to connect her purported distress to the Defendants’
RESPA violations. Defs.’ Mot. 13-14. The Defendants point out that Ms. Benner has
testified that she suffered stress in connection with the foreclosure proceedings from
the time she first defaulted in 2011. They argue that Ms. Benner cannot disentangle
that stress from any stress she endured during SLS’s evaluation of her loss mitigation
application. Defs’. Mot. 14.
The Defendants attempt to brush aside the fact that Ms. Benner has submitted
a declaration that describes concrete symptoms of her distress and expressly connects
them to SLS’s repeated document requests:
When I knew that SLS kept wanting more documents, some I had
already sent in, and wasn’t giving me answer about the mod, I had a
hard time concentrating and sleeping because I kept worrying about
what SLS would do. I had vivid nightmares. I ate more and gained
weight. I knew the foreclosure was still active and I didn’t want to lose
my house to foreclosure. I cried easily and was more uptight with my
family. I was on edge always wondering if I could keep my home and if
not, what I would possibly do with a disabled son and dying
Benner Decl. ¶ 24.
The Defendants ask me to disregard Ms. Benner’s declaration as a self-serving
sham affidavit. “When an interested witness has given clear answers to unambiguous
questions, he cannot create a conflict and resist summary judgment with an affidavit
that is clearly contradictory, but does not give a satisfactory explanation of why the
testimony is changed.” Colantuoni v. Alfred Calcagni & Sons, Inc., 44 F.3d 1, 4-5 (1st
Cir. 1994). The Defendants claim that during her deposition, Ms. Benner testified
that she was not aware of the letters that her attorneys were receiving regarding her
loss mitigation application. The Defendants assert that this deposition testimony
contradicts her later statement that SLS’s document requests caused her emotional
The rule against sham affidavits does not apply here because Ms. Benner’s
declaration is consistent with her previous testimony. Ms. Benner did not testify that
she was unaware that “SLS kept requesting more documents,” she testified that Mr.
Thomas requested additional documents from her. Benner Depo. Tr. 73:2-9. Ms.
Benner also testified that she had to make repeated trips to visit Mr. Thomas to drop
off documents, SMF ¶ 206, and it is undisputed that Mr. Thomas emailed Ms. Benner
to ask for documents that SLS had requested. See SMF ¶ 93. It would be unreasonable
to assume that Ms. Benner received Mr. Thomas’s emails or provided him with
additional documents without understanding that they had been requested for use in
her loss mitigation application. I accordingly consider Ms. Benner’s declaration as
evidence that she suffered emotional distress because of the Defendants’ purported
At oral argument, the Defendants relied on Moore v. Mortgage Electronic Registration Systems,
Inc., No. 10-CV-241-JL, 2013 WL 1773647, at *3 (D.N.H. Apr. 25, 2013), for the proposition that Ms.
Benner has failed to surmount a “high burden” to establish emotional distress damages. Moore does
not support the Defendants’ position. There, the two plaintiffs testified, respectively, to having
developed a gluten allergy due to stress and to having begun to take medication due to stress. The
court found that this testimony did not suffice to establish emotional distress damages because both
of those events took place well before the defendant began servicing their loan, and because “neither
plaintiff testified that these conditions were enhanced or exacerbated by [the servicer’s] conduct.” Id.
at *3. Here, Ms. Benner has testified to symptoms that occurred while SLS was acting as her loan
servicer and that were caused or exacerbated by SLS’s purported misconduct.
“[A]ttorney’s fees are recoverable as actual damages under RESPA if they are
not incurred in connection with bringing a suit under the statute.” McGahey, 266 F.
Supp. 3d at 441.12 Thus, while Ms. Benner cannot claim as damages her attorney’s
fees for the case at bar, she may claim any fees that she incurred during the
foreclosure action solely as a result of the Defendants’ purported misconduct. See id.
at 441-42 (plaintiff could claim as damages attorneys’ fees spent to draft a QWR,
where the QWR would not have been drafted but for defendants’ failure to respond to
earlier RESPA communications).
Here, Ms. Benner has presented as evidence her attorney’s billing records.
Those records reflect that some of the fees that Ms. Benner paid to her attorney went
to time spent responding to SLS’s document requests. To the extent that Ms. Benner
can ultimately show that those requests would have been unnecessary but for SLS’s
RESPA violations, Ms. Benner may claim those fees as damages.
Costs and Expenses
Ms. Benner also claims to have incurred out-of-pocket expenses as a result of
the Defendants’ RESPA violations, including postage and the cost of travel to deliver
SLS’s requested documents to Mr. Thomas. While the Defendants argue that these
costs could have been avoided, they do not dispute that the costs were incurred, and
Kassner v. Chase Home Finance, LLC, on which the Defendants rely, is not contradictory. See
No. CIV.A. 11-10643-RWZ, 2012 WL 260392, at *7 (D. Mass. Jan. 27, 2012). In that case, the plaintiff
had sought as damages attorneys’ fees incurred in bringing suit under RESPA—not fees associated
with a separate foreclosure suit. Id. at *7.
I find that whether Ms. Benner should have mitigated these damages is a question of
Thus, the record contains sufficient evidence to allow a reasonable jury to find
that the Defendants’ purported RESPA violations caused actual damage to Ms.
Benner in the form of emotional distress damages, attorneys’ fees, and costs and
expenses. I therefore deny the Defendants’ motion for summary judgment on this
Whether SLS Exercised Reasonable Diligence Under 12 C.F.R.
Regulation X requires servicers to promptly review any loss mitigation
application that they receive more than 45 days before a foreclosure sale and to notify
the borrower whether the application is complete. 12 C.F.R. § 1024.41(b)(1)-(2). If the
application is incomplete, the servicer must “exercise reasonable diligence in
obtaining documents and information to complete” that application. 12 C.F.R.
§ 1024.41(b)(1). Section 1024.41 does not define “reasonable diligence.” However,
courts interpreting the regulation have found that a servicer may fail to exercise
reasonable diligence if it repeatedly requests documents it already possesses or
The Defendants also attempt to argue that Ms. Benner’s claims are barred because a remedy
for her alleged damages was available as part of the foreclosure action, and they have “since been
foreclosed by her acceptance of the modification and dismissal of the suit.” Defs.’ Mot. 19. The
Defendants’ sole authority for this position is Cunningham v. Nationstar Mortgage, LLC, which found
that a plaintiff was barred from bringing a RESPA claim because a state court judge had already
rendered a final judgment of foreclosure in an action on the plaintiff’s mortgage. No. 15-14274-CIV,
2015 WL 12556162, at *2 (S.D. Fla. Oct. 20, 2015) report and recommendation adopted, No. 2:15-CV14274, 2015 WL 12533152 (S.D. Fla. Nov. 9, 2015). The court noted that the plaintiff’s RESPA claims
“essentially restate[d]” demands he had made before the state court, and that allowing him to proceed
on his RESPA claims would “call the State Court’s Final Judgment into question, even if indirectly
so.” Id. Here, the foreclosure suit was voluntarily dismissed, and the preclusion and Rooker-Feldman
issues that concerned the Cunningham court do not exist.
documents that it knows or should know are not required to complete the borrower’s
application. Dionne v. Fed. Nat’l Mortg. Ass’n, No. 15-CV-56-LM, 2016 WL 6892465,
at *6 (D.N.H. Nov. 21, 2016); see also Jackson v. Bank of Am., N.A., No. 16-CV-787FPG, 2017 WL 5598856, at *4 (W.D.N.Y. Nov. 21, 2017) (plaintiff stated a claim for a
violation of 12 C.F.R. Pt. 1024.41(b)(1) in part because “Defendant repeatedly asked
Plaintiffs for documents, such as tax returns and social security letters, that they had
The CFPB has also suggested examples of reasonable diligence, including the
Servicing for a mortgage loan is transferred to a servicer and the
borrower makes an incomplete loss mitigation application to the
transferee servicer after the transfer; the transferee servicer reviews
documents provided by the transferor servicer to determine if
information required to make the loss mitigation application complete
is contained within documents transferred by the transferor servicer to
12 C.F.R. § 1024, Supp. I, cmt. 41(b)(1) ¶ 4.ii. The CFPB has further suggested that
reasonable diligence requires servicers to “promptly request the additional
information or a corrected version of a previously submitted document” if the servicer
determines during its review of a loss mitigation application that such information is
necessary. Id. cmt. 41(b)(2)(i)(B) ¶ 1; see also Jackson, 2017 WL 5598856, at *5 (“[I]t
This does not mean that borrowers are free to second-guess a servicer’s documentation
requirements. Regulation X allows servicers to request “the documents and information necessary to
make [a] loss mitigation application complete.” 12 C.F.R. § 1024.41(b)(2)(ii). The CFPB has confirmed
that so long as the servicer uses reasonable diligence to acquire those documents, Regulation X gives
a servicer “flexibility to establish its own application requirements and to decide the type and amount
of information it will require from borrowers applying for loss mitigation options.” 12 C.F.R. Pt. 1024,
Supp. I, cmt. 41(b)(1) ¶ 1.
was not necessarily reasonable for Defendant to wait nearly four months before
notifying Plaintiffs that they needed to submit a new hardship affidavit . . . [,]
particularly when [the affidavit’s] insufficiency was readily apparent from Plaintiffs’
Ms. Benner suggests that the Defendants, either deliberately or through
incompetence, gave her the runaround for six months. She chronicles numerous
purportedly unreasonable actions that SLS took while evaluating her loss mitigation
application, each of which she claims was a RESPA violation. In turn, the Defendants
emphasize that RESPA gives servicers flexibility to set their own review procedures
and argue that SLS’s process was reasonable. While the parties each assert that
undisputed facts run in their favor, I find that substantial material questions of fact
remain in dispute that must be resolved at trial.
For example, the parties dispute whether SLS exercised reasonable diligence
to obtain documents necessary to complete the loss mitigation application that Ms.
Benner had submitted to SPS. According to Ms. Benner, SLS failed in this obligation
when it sought a new loss mitigation application from her on June 20, 2015, instead
of obtaining her pending application directly from SPS. In response, the Defendants
argue that they were never informed of Ms. Benner’s pending application and that in
any event SLS acted with reasonable diligence. Upon review of the record, I find that
disputes of fact exist as to (i) whether SLS knew or should have known that Ms.
Benner had submitted an application to SPS, (ii) when SLS became aware or should
have become aware of such notice, and (iii) whether, regardless of any notice provided,
the steps that SLS took to obtain and to review loss mitigation documents from SPS
can be considered reasonably diligent.
I likewise cannot determine as a matter of law whether SLS exercised
reasonable diligence to obtain documents necessary to its review of Ms. Benner’s
August 20, 2015, loss mitigation application. Ms. Benner has presented evidence that
SLS made missteps in its handling of her application, including making duplicative
and potentially confusing requests for documents and, in at least one instance,
requesting documents from Mr. Benner when SLS itself had already determined that
those documents were not necessary to Ms. Benner’s application. However, the
Defendants have also provided evidence-backed explanations for many of the actions
that Ms. Benner claims were unreasonable. More significantly, as the Defendants
pressed at oral argument, Ms. Benner has not established—as a matter of law—that
the Defendants’ unexplained lapses were more than minor errors or inconveniences
that resulted from an otherwise reasonable approach to processing Ms. Benner’s
While a reasonable jury could ultimately find that SLS’s conduct did not satisfy
§ 1024(b)(1), they could also determine that, on the whole, SLS acted with reasonable
diligence. I therefore deny both parties’ motions for summary judgment on Ms.
Benner’s RESPA claim.15
Because I find that Ms. Benner’s RESPA claim survives summary judgment on the theory that
SLS violated § 1024.41(b)(1), I do not separately address her argument that SLS failed to adequately
respond to her purported Qualified Written Requests.
Unfair Trade Practices Act and Maine Consumer Credit Code Claims
Ms. Benner also asserts claims under Maine’s UTPA and § 9-311-A of the
MCCC. The UTPA broadly prohibits “[u]nfair methods of competition and unfair or
deceptive acts or practices in the conduct of any trade or commerce.” 5 M.R.S. § 207.16
The MCCC requires creditors to comply with RESPA and Regulation X. 9-A M.R.S. §
9-311-A. “Any violation of [the MCCC] constitutes a violation of the [UTPA].” 9-A
M.R.S. § 9-408.
My analysis of Ms. Benner’s RESPA claim necessarily applies to her claims
under the MCCC and, accordingly, the UTPA. See 9-A M.R.S. §§ 9-311-A, 9-408. I
therefore deny Ms. Benner’s motion for summary judgment on her MCCC and UTPA
claims for the reasons stated above. Likewise, I deny the Defendants’ motion for
summary judgment on the issue of liability under the MCCC and the UTPA for the
same reasons outlined in my discussion of Ms. Benner’s RESPA claim. Because Maine
law provides that any conduct in violation of RESPA is a per se violation of the UTPA,
I will not separately analyze whether that same conduct was also unfair or deceptive
for UTPA purposes.17
An unfair act or practice “(1) must cause, or be likely to cause, substantial injury to consumers;
(2) that is not reasonably avoidable by consumers; and (3) that is not outweighed by any countervailing
benefits to consumers or competition.” State v. Weinschenk, 868 A.2d 200, 206 (Me. 2005). A deceptive
act or practice “is a material representation, omission, act or practice that is likely to mislead
consumers acting reasonably under the circumstances.” Id. In this context, material means “likely to
affect [consumers’] choice of, or conduct regarding, a product.” Id. An act or practice can be deceptive
under the UTPA “regardless of a defendant's good faith or lack of intent to deceive.” Id.
Ms. Benner argues that SLS engaged in unfair or deceptive conduct above and beyond the
misconduct on which she rests her RESPA claims. Specifically, Ms. Benner avers that SLS violated
the UTPA by seeking an RMA for all financial contributors where none was required under the HAMP
guidelines and by failing to comply with 12 C.F.R. § 1024.38, which addresses whether a servicer has
adopted appropriate policies and procedures to ensure that they obtain documents from a transferor
As with Ms. Benner’s RESPA claim, the Defendants separately argue that Ms.
Benner’s UTPA claim must fail because she has not established damages. Damages
under the UTPA are limited to “a loss of money or property that results from the
violation.” William Mushero, Inc. v. Hull, 667 A.2d 853, 855 (Me. 1995) (citing 5
M.R.S. § 213). Emotional damages are therefore not recoverable under the UTPA. See
Bartner v. Carter, 405 A.2d 194, 202-03 (Me. 1979).18 Here, Ms. Benner has presented
evidence that she suffered pecuniary damages including travel costs and mailing
expenses, as well as attorneys’ fees expended to respond to SLS’s purportedly
unnecessary document requests.19 Summary judgment is therefore not warranted on
servicer. The parties dispute whether these acts or practices were unfair or deceptive, or were simply
reasonable business practices. Ms. Benner may raise these alternative theories at trial.
Ms. Benner contends that the Bartner decision was based on a previous version of 5 M.R.S.
§ 213, which only allowed damages for “restitution and for such other equitable relief . . . as the court
may deem to be necessary and proper.” See Bartner v. Carter, 405 A.2d 194, 199 (Me. 1979). Ms. Benner
is correct that 5 M.R.S. § 213 has been amended to allow plaintiffs to seek “actual damages” in addition
to “restitution.” See P.L. 1991, ch. 536, § 1. However, I find that this amendment likely would not cause
the Law Court to decide that emotional distress damages are permissible under the UTPA. In Bartner,
the Law Court focused not only on the term “restitution,” but on the fact that “the ‘loss’ for which an
action for restitution is permitted by section 213 is a loss ‘of money or property.’ ” Bartner, 405 A.2d at
202. The court found that “without the benefit of a strained interpretation, that language appears to
rule out recovery, under the statute, of several kinds of non-restitutionary damages, such as damages
for personal injury, mental distress or loss of time.” Id. The language to which the Law Court pointed
was not altered when § 213 was amended. In light of this “clear statement” of Maine law that emotional
distress damages are foreclosed under § 213, I find that Ms. Benner cannot recover emotional distress
damages for her UTPA claim. See Poulin v. Thomas Agency, 746 F. Supp. 2d 200, 206 (D. Me. 2010).
The Defendants note that in Poulin v. Thomas Agency, the court found that attorneys’ fees
spent to prevent unfair conduct are not recoverable as damages under the UTPA. Defs.’ Mot. 16 (citing
746 F. Supp. 2d 200). I find that McGahey, which allowed the plaintiff to claim attorneys’ fees as
damages under the UTPA where those fees were incurred in connection with an unrelated foreclosure
suit, provides the better rule. See 266 F. Supp. 3d at 436 (“McGahey asserts that as a consequence of
the alleged UTPA violations, he suffered damages in the form of: . . . (2) paying Defendants’ attorney’s
fees in connection with the 2012 foreclosure action; [and] . . . paying his attorney to prevent the 2012
foreclosure. . . . These alleged damages all constitute losses of money or property.”).
Whether Wells Fargo May Be Found Vicariously Liable for SLS’s
Vicarious Liability under RESPA
The Defendants argue that Wells Fargo cannot be found vicariously liable for
SLS’s RESPA violations because RESPA and Regulation X only impose obligations
on mortgage servicers and the parties agree that Wells Fargo never serviced Ms.
Benner’s loan. “The First Circuit has not addressed the issue of vicarious liability
under RESPA, and there is a split among other courts.” Bowen v. Ditech Fin. LLC,
No. 2:16-CV-00195-JAW, 2017 WL 4183081, at *30 (D. Me. Sept. 20, 2017).
A majority of courts have found that liability under RESPA and Regulation X
is limited to servicers and not to those servicers’ principals. Bowen, 2017 WL 4183081,
at *30; Hawk v. Carrington Mortg. Servs., LLC, No. 3:14-CV-1044, 2016 WL 4433665,
at *2 (M.D. Pa. Aug. 17, 2016); Bennett v. Nationstar Mortg., LLC, No. CV 15-00165KD-C, 2015 WL 5294321, at *10-11 (S.D. Ala. Aug. 17, 2015) report and
recommendation adopted 2015 WL 5294321 (Sept. 8, 2015); McAndrew v. Deutsche
Bank Nat. Tr. Co., 977 F. Supp. 2d 440, 445 (M.D. Pa. 2013); Gibson v. Mortg. Elec.
Registration Sys., Inc., No. 11-2173-STA, 2011 WL 3608538, at *5 (W.D. Tenn. Aug.
16, 2011). Those courts have reasoned that § 2605 of RESPA and its associated
regulations speak exclusively about the obligations of “servicers,” and that “Congress
presumably meant what it said” when it elected to speak only to servicers’
responsibilities. Bowen, 2017 WL 4183081, at *31 (quoting Hawk, 2016 WL 4433665,
at *4); see also Gibson, 2011 WL 3608538, at *5 (no vicarious liability because “RESPA
makes clear that only loan ‘servicers’ have a duty to timely respond to QWRs”); Hawk,
2016 WL 4433665, at *2 (“There is nothing in the language of RESPA that may be
read to extend statutory liability to the passive mortgage holder, however salutary
such a provision might be had it been included in the Act.”); Bennett, 2015 WL
5294321, at *10 (“[T]he provisions of RESPA and Regulation X specify exactly which
type of actor is burdened by those provisions.”). RESPA defines “servicer” as “the
person responsible for servicing of a loan (including the person who makes or holds a
loan if such person also services the loan).” 12 U.S.C. § 2605(i)(2). Additionally, as the
court in Bowen recently observed, “[a]lthough 12 U.S.C. § 2605(f) uses the language
‘whoever’ violates the section is liable, the obligations laid out in that section only
apply to servicers.” 2017 WL 4183081 at *31.
Two courts have reached the opposite conclusion. Rouleau v. US Bank, N.A.,
No. 14-CV-568-JL, 2015 WL 1757104 (D.N.H. Apr. 17, 2015); Cruz v. Green Tree
Mortg. Servicing, LLC, 2016 U.S. Dist. LEXIS 107391 (D. Conn. Aug. 15, 2016). In
Rouleau, the District Court for the District of New Hampshire found that a mortgagee
could be held vicariously liable under RESPA for the acts of its servicer. Rouleau,
2015 WL 1757104, at * 8. The court first noted the general rules that (1) statutes such
as RESPA that provide a remedy for a breach of a defined duty create “a species of
tort liability”; (2) “ ‘when Congress creates a tort action, it legislates against [a] legal
background of ordinary tort-related vicarious liability rules,’ ” and “its statutorily
created torts ‘incorporate those rules’ ”; and (3) “unless Congress has ‘expressed a
contrary intent’ . . . this court must infer that ‘ordinary rules  apply.’ ” Id. at *7
(quoting Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687, 709 (1999);
Meyer v. Holley, 537 U.S. 280, 285 (2003)). The court observed that the defendant had
offered no statutory language or precedent to suggest that Congress intended to
except RESPA from the ordinary rules of vicarious liability. Id. The court specifically
addressed RESPA’s definition of “servicer,” noting that:
All this language accomplishes is to make clear that a mortgagee or
noteholder that services its own loan is bound by the same statutory and
regulatory requirements that apply to servicers acting on behalf of other
entities. It does not shed any light on whether a mortgagee or noteholder
that does not service its own loan can be held liable where the servicer
acting on its behalf fails to abide by those requirements.
I agree with the court in Rouleau that RESPA and its regulations create a
species of tort and that therefore, absent some indication of contrary intent from
Congress, the ordinary rules of vicarious liability should apply. 2015 WL 1757104, at
*8. “In order to abrogate a common-law principle, [a] statute must ‘speak directly’ to
the question addressed by the common law.” United States v. Texas, 507 U.S. 529,
534 (1993). While Congress need not “ ‘affirmatively proscribe’ the common-law
doctrine at issue, . . . ‘courts may take it as a given that Congress has legislated with
an expectation that the [common law] principal will apply except ‘when a statutory
purpose to the contrary is evident.’ ” Id.; see also Meyer v. Holley, 537 U.S. 280, 287
(2003) (Court would not apply a rule of vicarious liability that reached beyond
traditional common-law principals, where it could find no expression of Congressional
intent to displace the ordinary rule); United States v. Bestfoods, 524 U.S. 51, 55 (1998)
(holding that the doctrine of corporate veil-piercing applied under the Comprehensive
Environmental Response, Compensation, and Liability Act because “the failure of the
statute to speak to a matter as fundamental as the liability implications of corporate
ownership demands application of” common-law principles).
I further agree with Rouleau that RESPA’s definition of and references to the
conduct of “servicers” do not suffice to show a Congressional intent to abrogate the
ordinary rules of vicarious liability. RESPA may limit direct liability to certain
parties, but it does not discuss the liability implications of those servicers’
relationships. Congress is well capable of expressing an intent to limit vicarious or
other indirect forms of liability. As discussed by the court in Cruz, which adopted the
reasoning of Rouleau, the Truth in Lending Act limits the indirect liability of
creditors’ assignees by providing that assignees “can be held liable only if certain
conditions are met.” 2016 U.S. Dist. LEXIS 107391 at *25, 38.20 RESPA includes no
such reference to derivative liability. This gap should be filled by reference to
ordinary common-law rules. For the foregoing reasons, I find that Wells Fargo may
be vicariously liable for SLS’s purported RESPA violations.
Vicarious Liability under the UTPA
The Defendants also argue that Wells Fargo cannot be held vicariously liable
for SLS’s UTPA violations because the “UTPA does not allow for vicarious liability.”
The Bowen and Hawk decisions offer an inverse version of this argument, noting that “when
Congress chose in RESPA to extend liability beyond loan servicers to others, it did so clearly and
explicitly.” Bowen v. Ditech Fin. LLC, No. 2:16-CV-00195-JAW, 2017 WL 4183081, at *31 (D. Me. Sept.
20, 2017); Hawk v. Carrington Mortg. Servs., LLC, No. 3:14-CV-1044, 2016 WL 4433665, at *2 (M.D.
Pa. Aug. 17, 2016). This argument refers to RESPA’s anti-kickback provisions, which state that “no
person” shall give or accept kickbacks. 12 U.S.C. § 2607. I am not persuaded. It is unsurprising that
Congress elected to use “global” language to define the scope of direct liability in the case of kickbacks,
which are two-sided transactions involving misconduct by both the provider and the recipient. As
discussed above, I do not doubt that Congress intended to limit direct liability under § 2605 to
servicers, but I find no indication that Congress similarly intended to limit indirect liability for
servicers’ violations of that provision.
Defs.’ Mot. 18. The Law Court has found precisely the opposite. See Advanced Const.
Corp. v. Pilecki, 901 A.2d 189, 196 (Me. 2006) (“In an action for the tortious conduct
of an agent, both the agent and the principal can be held liable. Actions pursuant to
the UTPA and actions for unlawful and deceptive conduct sound in tort.”).21 Following
this authority, I find that vicarious liability is available under the UTPA and that
Ms. Benner can seek to hold Wells Fargo liable as SLS’s principal for SLS’s purported
UTPA violations. I therefore deny the Defendants’ motion for summary judgment as
to Wells Fargo’s vicarious liability.22
MOTION TO SUPPLEMENT
Rule 15(d) of the Federal Rules of Civil Procedure provides that:
Upon motion and reasonable notice, the court may, on just terms, permit
a party to serve a supplemental pleading setting out any transaction,
The only authority the Defendants cite in support of their argument is James v. GMAC
Mortgage LLC, which found that a mortgagee was not responsible for the actions of a servicer because
“[l]iability under the Maine UTPA attaches only to the party that performed the unfair or deceptive
act.” 772 F. Supp. 2d 307, 321 (D. Me. 2011). However, the James decision offered no support for this
proposition other than a citation to 5 M.R.S.A. § 213(1), which does not limit the parties against which
an UTPA plaintiff can proceed.
Ms. Benner also brings her UTPA claim against Wells Fargo directly. Citing to a Consent
Judgment issued in United States v. Bank of America Corp., No. 12-0361 (D.D.C Apr. 4, 2012), Ms.
Benner asserts that Wells Fargo is obligated to ensure that its servicers “notify potentially eligible
borrowers of currently available loss mitigation options and, upon receipt of a complete application,
evaluate borrowers for all available loss mitigation options and offer and facilitate such modifications.”
Pl.’s Opp’n 22. Ms. Benner argues that here, Wells Fargo failed to fulfill this obligation.
The Consent Judgment has no effect on this action. By its express terms, the Consent
Judgment applies only to Wells Fargo’s “division(s) or major business unit(s) that are engaged in
customer-facing servicing of residential mortgages on owner-occupied properties.” Consent Judgment
¶ IX(B)(2) (ECF No. 73-8). Ms. Benner does not dispute that Wells Fargo both owns Ms. Benner’s loan
and has been sued in its capacity as Trustee for the MASTR 2007-NCW Trust, not as a servicer. I
therefore grant the Defendants’ motion for summary judgment as to Wells Fargo’s direct liability
under the UTPA.
occurrence, or event that happened after the date of the pleading sought
to be supplemented.
Fed. R. Civ. P. 15(d). By allowing litigants to plead events that occurred after the date
of the subject pleading, this rule “promot[es] as complete an adjudication of the
dispute between the parties as is possible.” U.S. ex rel. Gadbois v. PharMerica Corp.,
809 F.3d 1, 4 (1st Cir. 2015). Rule 15(d) also “helps courts and litigants to avoid
pointless formality: although causes of action accruing after the institution of a
lawsuit usually can be filed as separate actions, supplementation under Rule 15(d) is
often a more efficient mechanism for litigating such claims.” Id. Leave to supplement
is therefore encouraged “when doing so will promote the economic and speedy
disposition of the entire controversy between the parties, will not cause undue delay
or trial inconvenience, and will not prejudice the rights of any of the other parties to
the action.” Id.
There are, of course, limits to this liberal approach. Motions to supplement
“cannot be used to introduce a separate, distinct and new cause of action.” Lath v.
Manchester Police Dep’t, No. 16-CV-534-LM, 2017 WL 1740197, at *2-3 (D.N.H. May
4, 2017); see also Sheppard v. River Valley Fitness One, L.P., No. CIV.00-111-M, 2002
WL 197976, at *5 (D.N.H. Jan. 24, 2002) (“[A]fter-occurring events must ‘bear some
relationship to the subject of the original pleading.’ ” (quoting 3 MOORE'S FEDERAL
PRACTICE § 15.30 at 15-108)). Moreover, courts disfavor motions “whose timing
prejudices the opposing party by requiring a re-opening of discovery with additional
costs, a significant postponement of the trial, and a likely major alteration in trial
tactics and strategy.” Steir v. Girl Scouts of the USA, 383 F.3d 7, 12 (1st Cir. 2004).
Ms. Benner’s proposed “Supplemental First Amended Complaint” seeks to add
not only factual allegations, but also a new legal theory under her UTPA claim and
new claims under the federal Fair Debt Collection Practices Act and the Maine Fair
Debt Collections Practices Act. Proposed Supp. Compl. ¶¶ 233, 236-40 (ECF No. 70-1).
In their response to Ms. Benner’s motion, the Defendants principally argue that her
newly-proposed allegations and claims bear no nexus to the First Amended
Complaint. Defs.’ Opp’n to MTS 3-6 (ECF No. 71). The Defendants emphasize that
whereas the First Amended Complaint addressed the Defendants’ handling of Ms.
Benner’s loss mitigation applications, the proposed supplemental allegations deal
exclusively with SLS’s conduct in collecting Ms. Benner’s loan payments. Defs.’ Opp’n
to MTS 5.
I agree. The sole links between Ms. Benner’s First Amended Complaint and
the facts and claims added to her proposed Supplemental First Amended Complaint
are (1) the identity of the parties and (2) the subject loan. Ms. Benner attempts to
argue that the proposed supplemental facts support her existing claims by showing
ongoing misconduct and mismanagement of her loan. MTS 2. They do not. Ms. Benner
has drawn no connection between SLS’s debt collection practices and its loss
mitigation practices other than that she takes issue with both.23 This is not sufficient
Ms. Benner’s one-off allegation in her First Amended Complaint that SLS overcharged her
immediately following her loan modification does not impact this analysis. Pl.’s Reply in Support of
MTS 1-2 (ECF No. 72). Ms. Benner did not, as she suggests, claim that the initial overcharge
constituted a misrepresentation by SLS. Instead, her allegation as to that overcharge is included in
her description of the letter that she sent to SLS on June 4, 2016 and to which SLS purportedly failed
to link her original claims with her proposed supplemental ones. See Lath, 2017 WL
1740197, at *3 (denying motion to supplement because new claims asserted distinct
legal obligations from those addressed in the original complaint); Polansky v. Wrenn,
No. 12-CV-105-PB, 2013 WL 1165158, at *3 (D.N.H. Feb. 22, 2013), report and
recommendation adopted sub nom. Polansky v. N.H. Dep’t of Corr., No. 12-CV-105PB, 2013 WL 1155429 (D.N.H. Mar. 19, 2013) (plaintiff’s new claims for improper
treatment of an infection by prison medical staff were not sufficiently related to
earlier claims regarding treatment of his chronic medical condition to justify
While there might be some slight judicial economy to allowing Ms. Benner to
bring these unrelated, newly-asserted claims as part of this action, that benefit would
be overwhelmed by the delay caused by re-opening discovery into an entirely new
course of conduct unconnected to any of Ms. Benner’s original claims. In light of the
foregoing, I will deny Ms. Benner’s motion to supplement. My denial of Ms. Benner’s
motion is without prejudice to her bringing the requested claims as a new action. See
Lath, 2017 WL 1740197, at *4.
For the reasons stated above, the Court GRANTS the Defendants’ motion for
summary judgment as to Wells Fargo’s direct liability under the UTPA, but otherwise
DENIES the Defendants’ motion for summary judgment. The Court also DENIES
the Plaintiff’s motion for summary judgment and DENIES the Plaintiff’s motion to
/s/ Nancy Torresen
United States Chief District Judge
Dated this 29th day of March, 2018.
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