Frye v. Ocwen Loan Servicing, LLC et al

Filing 18

OPINION AND ORDER Granting Defendants' 13 Motion for Summary Judgment. Signed by District Judge Matthew F. Leitman. (HRya)

Case 2:20-cv-11385-MFL-RSW ECF No. 18, PageID.762 Filed 09/16/22 Page 1 of 13

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
MARY FRYE,
Plaintiff,

Case No. 20-cv-11385
Hon. Matthew F. Leitman

v.
OCWEN LOAN SERVICING, LLC;
PHH MORTGAGE SERVICES a/k/a
PHH SERVICES CORPORATION;
NEWREZ, LLC; and U.S. BANK, NA
AS TRUSTEE FOR 2007 GSAMP
TRUST 2007-NC1 MORTGAGE PASS
THROUGH CERTIFICATES SERIES
2007-NC1,
Defendants.
__________________________________________________________________/
OPINION AND ORDER GRANTING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT (ECF No. 13)

In 2006, Plaintiff Mary Frye obtained a loan to purchase a condominium, and
she entered into a mortgage agreement to secure the loan. In 2020, Defendant PHH
Mortgage Services (“PHH”), which at that time was the servicer for Frye’s loan and
mortgage, determined that Frye was in default and informed Frye that it had retained
counsel to begin the process of foreclosing on the mortgage. Frye responded by
filing this action against PHH and several other Defendants.

She asserts the

following claims against the Defendants: (1) violation of 12 CFR § 1024.35 and 12
CFR § 1024.38, two federal regulations implemented in connection with the Real
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Estate Settlement Procedures Act, 12 U.S.C. § 2601, et. seq (“RESPA”); (2)
wrongful foreclosure in violation of a Michigan statute, Mich. Comp. Laws §
600.3204; (3) negligence; and (4) exemplary damages. Defendants have now filed
a motion for summary judgment on all four of Frye’s claims. (See Mot., ECF No.
13.)
For the reasons explained below, the Court will GRANT the motion because
all of Frye’s claims fail as a matter of law. First, her claim under 12 CFR § 1024.35
fails because that regulation is triggered only by a borrowers’ written request for a
correction of error relating to the servicing of the borrower’s loan, and Frye has not
presented any evidence that she ever submitted such a request. Second, her claim
under 12 CFR § 1024.38 is not viable because there is no private cause of action for
violations of that regulation. Third, her claim for wrongful foreclosure fails because
the undisputed evidence shows that, contrary to Frye’s allegations, she was in default
when the foreclosure began. Finally, Frye’s claim for exemplary damages fails
because there is no such claim under Michigan law. Exemplary damages are a form
of relief, not a cause of action. Because Frye has no viable claim, Defendants are
entitled to judgment as a matter of law.

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I
A
In 2006, Frye borrowed $109,600 (the “Loan”) to purchase a condominium
unit in the Golfpointe Village Condominiums at Plumbrook (the “Golfpointe Unit”).
(See Mot., ECF No. 13. PageID.212). The Loan was secured by a mortgage against
the Golfpointe Unit (the “Mortgage”). Defendant U.S. Bank, as Trustee (“U.S.
Bank”), a national banking association with its main office in Ohio, is the current
holder of the Mortgage. (See Assignments, ECF No. 13-11, PageID.331-337.)
The Mortgage and Loan were initially serviced by Litton Loan Servicing LP,
but the servicing was later transferred to Defendant Ocwen Loan Servicing, LLC
(“Ocwen”) in September 2011.

(See Service Transfer Letter, ECF No. 13-5,

PageID.275-279). Ocwen, in turn, later merged into PHH in June 2019. (See
Affidavit of Derrick Raleigh, ECF No. 13-6, PageID.284.) PHH now services Frye’s
Mortgage and Loan. (See id.)
B
In January 2018, Frye filed for Chapter 13 Bankruptcy.1 (See Resp., ECF No.
15, PageID.522.)

A bankruptcy plan was entered in the Bankruptcy Court’s

1

This was the second time that Frye filed for bankruptcy protection under Chapter
13. She previously filed for bankruptcy under Chapter 13 in 2012. The Bankruptcy
Court dismissed those proceedings due to Frye’s failure to comply with the court’s
orders and her failure to make payments required under her bankruptcy plan. (See
5/3/17 Bankruptcy Court Dismissal Order, ECF No. 13-14, PageID.382.)
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proceedings. Pursuant to that plan, Frye was required to make certain scheduled
payments to the Bankruptcy Court. The Chapter 13 Trustee assigned to her case
would then disburse the payments to satisfy her primary financial obligations,
including her obligations under the Mortgage and the separate obligations she owed
to her condominium association. (See Compl., ECF No. 1-2, PageID.22; see also
Frye Deposition at 11:9-20, ECF No. 13-12, PageID.342.)
Frye initially made some of the payments required under the bankruptcy plan.2
(See 2018 Bankruptcy Final Report and Account, ECF No. 13-17, PageID.393-396.)
As Frye made those payments, the Chapter 13 Trustee used the funds to satisfy some
of Frye’s financial obligations, including her obligation to make mortgage payments.
(See id.) More specifically, during Frye’s 2018 bankruptcy, the Chapter 13 Trustee
paid a total of $6,496.78 in mortgage payments on Frye’s behalf, and all of those
funds were applied to the balance owed under Frye’s Loan and Mortgage. (See
Raleigh Affidavit at ¶ 14, ECF No. 15-20, PageID.723.)
Due to challenging personal and family circumstances, Frye became unable
to make the payments she owed under her bankruptcy plan. (See Bankruptcy Court
Orders, ECF No. 13-16, PageID.389-391.) And because Frye failed to make those
payments, the Chapter 13 Trustee was not able to pay Frye’s Mortgage. The Trustee
stopped making mortgage payments on Frye’s behalf in May 2019, and Frye’s Loan

2

The payments were automatically withdrawn from Frye’s paycheck.
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and Mortgage went into default in June 2019. (See Raleigh Affidavit at ¶¶ 15-16,
ECF No. 13-6, PageID.284.) PHH then sent Frye a letter informing her that her
mortgage account had been referred to an attorney “to begin the foreclosure
process.” (See PHH Letter re: Foreclosure, ECF No. 1-2, PageID.82-83). But PHH
did not complete the foreclosure proceedings at that time because, as described
below, Frye commenced this action seeking to enjoin the proceedings.
C
In addition to defaulting on her Loan and Mortgage, Frye also failed to pay
assessments that she owed to her condominium association (the “Association”). As
a result, in December 2019, the Association recorded a lien against the Golfpointe
Unit to secure unpaid assessments exceeding $31,000. (See Sheriff’s Deed, ECF
No. 13-18, PageID.398-404.)

The Association then commenced foreclosure

proceedings against the Golfpointe Unit. (See id.) On February 28, 2020, the
Association purchased the Golfpointe Unit at a Sheriff’s sale. (See id.) The statutory
redemption period expired six months later, on August 28, 2020. See Mich. Comp.
Laws § 600.3240(8).
Frye thereafter brought a civil action in the Macomb County Circuit Court
challenging the Association’s foreclosure and seeking to have it set aside. She
alleged that the Association had no right to foreclose because, among other things,
it had “refus[ed] to apply” payments that it had received on her behalf from her

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Chapter 13 Trustee. (See Compl. against Association at ¶ 10, ECF No. 13-19,
PageID.409.) The state court rejected Frye’s challenge to the foreclosure and
granted the Association’s motion for summary disposition. (See State Court Opinion
and Order, ECF No. 13-20, PageID.415-424.) In doing so, the court explained that
while Frye had highlighted what she called “contradictions and suspicions” in the
Association’s records, she had “produced no evidence showing that the Association
failed to properly credit amounts received from the Bankruptcy Trustee or otherwise
miscalculated the amounts due.”

(Id. at PageID.420; emphasis added.)

The

Michigan Court of Appeals later affirmed that ruling. See Frye v. Golfpointe Village
Condominiums at Plumbrook, 2022 WL 726934 (Mich. Ct. App. Mar. 10, 2022).
According to the Court of Appeals, “the trial court correctly found that [Frye]
provided no evidence of any payments she made to [the Association] that were not
attributed to her outstanding balance, nor did she provide any evidence that any of
the assessments or fees [the Association] charged her were somehow improper or
inaccurate.” Id. at *5. The Court of Appeals concluded that Frye’s effort to defeat
the Association’s motion for summary disposition on her wrongful foreclosure claim
was doomed by a simple rule: “Merely claiming there is a question of fact does not
make it so.” Id. at *6.

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D
On May 7, 2020 – after the Association had purchased the Golfpointe Unit at
the Sherriff’s sale but before the statutory redemption period expired – Frye brought
this action in the Macomb County Circuit Court. (See Compl., ECF No. 1-2,
PageID.21.) Just as she alleged in her lawsuit against the Association, she claims in
her Complaint here that she “was not in default” under the Loan and Mortgage
because “payments were made through the bankruptcy court,” and those payments
“were not applied” to her account. (Id. at PageID.30.) She insists that because she
was not in default, there was no basis to foreclose. (See id.)
Frye named Ocwen, PHH, and U.S Bank as Defendants. As noted above, she
asserts four claims: (1) violations of 12 CFR §1024.35 and 12 CFR §1024.38; (2)
wrongful foreclosure in violation of Mich. Comp. Laws § 600.3204; (3) negligence;
and 4) exemplary damages. (See id. at PageID.24-33.)
After a period of discovery, Defendants moved for summary judgment on
May 3, 2021. (See Mot., ECF No. 13.) The Court held a hearing on the motion on
August 23, 2022.
II
Defendants have moved for summary judgment under Federal Rule of Civil
Procedure 56. Under that rule, a movant is entitled to summary judgment when it
“shows that there is no genuine dispute as to any material fact.” SEC v. Sierra

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Brokerage Servs., Inc., 712 F.3d 321, 326–27 (6th Cir. 2013) (quoting Fed. R. Civ.
P. 56). When reviewing the record, “the court must view the evidence in the light
most favorable to the non-moving party and draw all reasonable inferences in its
favor.” Id. But “the mere existence of a scintilla of evidence in support of the [nonmoving party’s] position will be insufficient; there must be evidence on which the
jury could reasonably find for [that party].” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 252 (1986). Summary judgment is not appropriate when “the evidence
presents a sufficient disagreement to require submission to a jury.” Id. at 251–52.
Defendants have moved for summary judgment on all four counts alleged in
Frye’s complaint. The Court will accordingly consider each of Frye’s four counts
in turn.
III
The Court begins with Frye’s claim that Defendants violated two of RESPA’s
implementing regulations: 12 CFR § 1024.35 and 12 CFR § 1024.38. These claims
both fail as a matter of law.
A
First, Frye has failed to present any evidence – and, indeed, has not even
alleged any facts showing – that Defendants violated 12 CFR § 1024.35. That
regulation requires loan servicers to investigate and respond to “any written notice
from the borrower that asserts an error and includes the name of the borrower,

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information that enables the servicer to identify the borrower’s mortgage loan
account, and the error the borrower believes has occurred.” 12 C.F.R. § 1024.35(a).
Frye has not alleged that she sent any such notice to any of the Defendants. Her
Complaint does not identify any written notice to Defendants that describes an error
that Frye believed to have occurred. And she did not identify any such written notice
in her deposition testimony. Moreover, she failed to produce during discovery a
copy of any written notice she sent to Defendants noting an error that she believed
they had made. Under these circumstances, there is no genuine dispute of material
fact as to whether Frye sent a written notice triggering Defendants’ duties under 12
CFR § 1024.35. Defendants are therefore entitled to summary judgment on Frye’s
claim under 12 CFR § 1024.35.
2
Second, Frye’s claim for violation of 12 CFR §1024.38 fails as a matter of
law because, as her counsel conceded at the hearing before the Court, that regulation
“does not confer a private enforceable right of action.” Fuller v. Select Portfolio
Servicing, 2021 WL 1080561, at *11 (W.D. Mich. Mar. 2, 2021).3

3

See also Pacifico v. Nationstar Mortg., LLC, 2017 WL 1213662, at *2 (E.D. Mich.
Feb. 10, 2017) (“Pacifico’s reliance on Section 1024.38, which sets forth reasonable
policies and procedures for servicers, is without merit because violations of that
section cannot support a private action.”); Ryan v. Ocwen Loan Serv., 2016 WL
1242433 (E.D. Mich. Mar. 30, 2016) (same).
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IV
The Court next turns to Frye’s claim for “wrongful foreclosure in violation of
MCL § 600.3204.”4 (Compl., ECF. No. 1-2, PageID.30.). (Id.) This claim rests
upon Frye’s allegation that PHH failed to apply payments from the Chapter 13
Trustee to her Loan and Mortgage. (See id. ¶ 31, PageID.30.)
There is no material factual dispute on this claim. PHH has presented
evidence that it applied every penny that it received from the Chapter 13 Trustee to
Frye’s balance, that these payments were insufficient to satisfy her obligations under
her Loan and Mortgage, and that she was in default. (See Raleigh Affidavit at ¶¶
12-14, ECF No. 15-20, PageID.723.) And Frye has not presented any competent
evidence to the contrary. In a sworn affidavit attached to her Complaint, Frye
asserted that she has “verified bankruptcy court records” confirming that additional
“payments were made electronically directly from my employer to the bankruptcy
court.” (Frye Affidavit at ¶ 11, ECF No. 15-14, PageID.655.) But this sworn
statement does not create a material factual dispute for two reasons. First (and most
importantly), Frye’s contention that additional payments were made “to the
bankruptcy court” says nothing about whether such payments were made to PHH

4

In relevant part, this statute provides that “a party may foreclose a mortgage by
advertisement if all of the following circumstances exist: (a) A default in a condition
of the mortgage has occurred, by which the power to sell became operative…”
Mich. Comp. Laws § 600.3204(1).

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and/or were misapplied by PHH. Simply put, even if, as Frye says, she made
additional payments to the Bankruptcy Court, that is not evidence that the Chapter
13 Trustee then made additional payments to PHH and that PHH then failed to apply
those payments to her account. Second, Frye has not produced a single document
that calls into question PHH’s evidence showing that it did apply all of the funds it
received from the Chapter 13 Trustee to her account and that she was nonetheless in
default. In sum, while Frye has arguably raised questions concerning whether
PHH’s records are perfectly accurate5, she has not presented any proof that PHH
actually failed to apply payments from the Chapter 13 Trustee or that PHH
wrongfully determined that she is in default under the Loan and Mortgage.
Therefore, Frye’s wrongful foreclosure claim fails as a matter of law.
V
The Court next turns to Frye’s negligence claim. A negligence claim under
Michigan law has four essential elements: (1) duty; (2) breach; (3) causation; and 4)
damages. See Schultz v. Consumers Power Co., 506 N.W.2d 175, 177 (Mich. 1993).

5

Frye identifies what she claims are inconsistencies in PHH’s records. (See Compl.
at ¶ 12, ECF No. 1-2, PageID.22-23.) For instance, she alleges that PHH said she
had an outstanding balance of $18,975.31 in April 2020 and an outstanding balance
of $18,990.31 on May of 2020, and she insists that these two outstanding balances
cannot be reconciled with one another. (See id.) But even if these outstanding
balances are not perfectly accurate, Frye has not presented any evidence that she had
no outstanding balance and therefore was not in default.

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Frye’s claim fails as a matter of law because she has failed to establish the first
element of her claim.
Frye contends that Defendants breached duties imposed upon them by the
RESPA regulations cited above: 12 CFR § 1024.35 and 12 CFR § 1024.38. But the
Sixth Circuit has explained that obligations imposed by RESPA regulations cannot
satisfy the duty element of a claim for negligence under Michigan law. See Wiggins
v. Ocwen Loan Servicing, LLC, 722 F. App’x 415, 419 n.2 (6th Cir. 2018) (affirming
district court decision holding that plaintiff could not satisfy the duty element of
negligence claim against mortgage servicer by pointing to regulations implemented
in connection with RESPA).6 Frye has not cited any case in which a court has
adopted her contention that a plaintiff may rely on RESPA regulations to satisfy the
duty element of a negligence claim. Under these circumstances, the Court concludes
that Frye’s negligence claim fails as a matter of law.
VI
Finally, the Court addresses Frye’s claim for “exemplary damages.” This
claim is not viable because “exemplary damages are a form of damages and do not

6

See also Deming-Anderson v. PNC Mortg., 119 F.Supp.3d 635, 642 (E.D. Mich.
2015) (rejecting claim that obligations imposed by 12 CFR § 1024.38 – one of the
same RESPA regulations that Frye relies on in this case – satisfied duty element of
a negligence claim under Michigan law).

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constitute a separate cause of action.” Chungag v. Wells Fargo Bank, N.A., 489 F.
App’x 820, 826 (6th Cir. 2012).
VII
For all of the reasons explained above, Defendants’ motion for summary
judgment (ECF No. 13) is GRANTED.
IT IS SO ORDERED.
s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE
Dated: September 16, 2022
I hereby certify that a copy of the foregoing document was served upon the
parties and/or counsel of record on September 16, 2022, by electronic means and/or
ordinary mail.
s/Holly A. Ryan
Case Manager
[phone]

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