Ackerman v. PNC Bank, National Association et al
Filing
89
ORDER denying 35 Motion for Partial Summary Judgment (Written Opinion). Signed by Judge Susan Richard Nelson on 3/7/13. (LPH)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Margaret K. Ackerman,
Plaintiff,
Civil No. 12-00042 (SRN/JSM)
v.
PNC Bank, National Association, Mortgage
Electronic Registration Systems, Inc., and
Federal National Mortgage Association,
MEMORANDUM OPINION
AND ORDER
Defendants.
Bryan R. Battina and William K. Forbes, Battina Law, PLLC, 700 Washington Avenue
North, Suite 209, Minneapolis, MN 55401, for Plaintiff.
David A. Schooler and Ankoor Bagchi, Briggs and Morgan, P.A., 80 South Eighth Street,
Suite 2200, Minneapolis, MN 55402, for Defendants.
SUSAN RICHARD NELSON, United States District Court Judge
This matter is before the Court on Plaintiff Margaret K. Ackerman’s Motion for
Partial Summary Judgment. [Doc. No. 35.] For the reasons set forth below, the Court
denies Plaintiff’s Motion.
I.
BACKGROUND
On or about March 28, 2006, Plaintiff entered into a Note and Mortgage with Bell
America Mortgage LLC related to the property she resided in located at 3257 Louisiana
Avenue North, Crystal, Minnesota. (Bagchi Aff., Ex. A, Pl.’s Dep. at 22:8–24 [Doc. No.
47] (hereinafter “Pl.’s Dep.”); Arthur Aff. ¶ 4, Exs. 1–2 [Doc. No. 46] .) PNC Bank,
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N.A. now holds the Note and Mortgage.1 (Pl.’s Dep. at 17:10–12, 16–18.) Under the
Note, Plaintiff was required to make a monthly payment of $1,148.38. (Id. at 17:19–22;
Arthur Aff. at Ex. 1 [Doc. No. 46].)
Beginning in 2008, Plaintiff had trouble making her monthly payments. (Pl.’s
Dep. at 17:23–18:5.) On July 15, 2008, PNC alleges that it sent Plaintiff a letter
informing her that she was in default of her payment obligations. (Arthur Aff., Ex. 3 at
PNC-ACK000879 [Doc. No. 46].) On July 24, 2008, PNC claims that it sent another
letter to Plaintiff providing notice of default. (Id. at PNC-ACK000880.) On September
25, 2008, PNC contends that it sent yet another letter to Plaintiff stating that “[f]ailure to
cure the breach or default [of failing to make payments on her mortgage by October 25,
2008] will result in the acceleration of the maturity date of the Note.” (Id. at PNCACK000883.) Plaintiff claims that she did not receive these letters and that they were
returned via certified mail return receipt to PNC. (Pl.’s Reply at 4 [Doc. No. 48].)
On November 7, 2008, PNC alleges that it sent a letter to Plaintiff informing her
that her “loan has been reviewed by our foreclosure committee and has been approved for
referral to the foreclosure department.” (Id. at PNC-ACK000886.) In March 2009,
Plaintiff filed for bankruptcy. (Pl.’s Dep. at 53:14–16.) Around July 2009, Plaintiff
applied for a loan modification pursuant to the Making Home Affordable Program. (Id.
at 20:19–25.) The application was denied because Plaintiff “[f]ailed to meet [the]
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Plaintiff’s Note and Mortgage were previously held by National City Mortgage,
which merged with PNC Bank, N.A. (PNC’s Opp’n Mem. at 2 n.1 [Doc. No. 45].) Since
Plaintiff does not dispute that PNC is National City Mortgage’s successor, the Court will
refer only to PNC throughout this Order.
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program eligibility requirements.” (Arthur Aff., Ex. 3 at PNC-ACK000901 [Doc. No.
46].)
In October 2009, Plaintiff and PNC entered into a Forbearance Agreement “in
order to [allow Plaintiff] to bring her loan current and avoid the foreclosure.” (Pl.’s Aff.
¶ 10, Ex. D [Doc. No. 37].) Under the Forbearance Agreement, PNC agreed to cancel the
foreclosure sale scheduled on December 22, 2009, and agreed to accept $50.00 payments
on November 10, 2009, December 1, 2009, January 1, 2010, February 1, 2010, March 1,
2010, and April 1, 2010. (Id.) The Forbearance Agreement stated that “[b]oth parties
acknowledge that the payments . . . will not fully reinstate the loan in accordance with the
note and mortgage, and [Plaintiff] will still owe additional sums for delinquent payments,
costs and attorneys’ fees incurred in the foreclosure.” (Id.) The Forbearance Agreement
also provided:
If all payments are received in the amounts and on the dates as specified,
[PNC] will review the loan for the purpose of possibly granting a loan
modification agreement. Any such agreement shall be on terms acceptable
to [PNC], will be in writing and must be executed by all parties to be
effective.
(Id.) The Forbearance Agreement further stated that if the payments were not received
“in a timely fashion” or the parties were unable to negotiate a loan modification within
sixty days of Plaintiff’s last payment, PNC had the right to terminate the Agreement by
written notice and recommence foreclosure proceedings. (Id.)
Plaintiff alleges that after the Forbearance Agreement was executed, she contacted
PNC in November 2009 and was instructed by a customer representative that she must
make her payments before the tenth day of each month. (Pl.’s Aff. ¶ 11 [Doc. No. 37].)
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Plaintiff claims that she relied on this oral representation from the customer service
representative and made each payment due under the Forbearance Agreement before the
tenth day of each month. (Id. ¶¶ 12–13.) Several days into April 2010, Plaintiff made the
final payment due under the Forbearance Agreement. (Pl.’s Mem. in Supp. of Mot. for
Summ. J. at 3 [Doc. No. 36].)
On April 7, 2010, PNC sent a letter to Plaintiff informing her that her request for
“hardship assistance” had been rejected because she had “fail[ed] to remit the scheduled
plan payments.” (Arthur Aff., Ex. 3 at PNC-ACK000904 [Doc. No. 46].) The letter also
stated that “[p]lease note that normal servicing of your loan will continue, including
collection and foreclosure proceedings.” (Id.) In response, Plaintiff alleges that she
called PNC and was instructed by a customer service representative that the letter was a
“mistake” and that the Forbearance Agreement “was still in effect.” (Pl.’s Mem. in Supp.
of Mot. for Summ. J. at 5 [Doc. No. 36]) (citing Pl.’s Aff. ¶ 20 [Doc. No. 37].)
On April 9, 2010, PNC alleges that it sent Plaintiff a letter noting that she had
“recently discussed mortgage relief options with a Loan Collector.” (Arthur Aff., Ex. 3 at
PNC-ACK000905 [Doc. No. 46].) The letter also instructed Plaintiff that if she wanted
to receive “hardship relief” she would need to provide PNC with “a hardship letter, recent
pay stubs, a copy of the list agreement if property is for sale, and a completed financial
form if you want to be considered for a relief option.” (Id.) The letter further provided
that “regular servicing of the mortgage will continue while your request is being
reviewed and that eligibility is subject to lender approval.” (Id.) Plaintiff asserts that she
never received this letter from PNC. (Pl.’s Reply at 7 [Doc. No. 48].) Plaintiff further
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disputes the accuracy of the letter because she claims she did not speak with PNC
representatives about mortgage relief options until April 12, 2010. (Id. at 8.)
Plaintiff did not provide the requested materials to PNC in April 2010. PNC
contends that Plaintiff was unable to do so because she had failed to obtain employment
during the six-month forbearance period under the Agreement. (PNC’s Opp’n Mem. at 5
[Doc. No. 45]) (citing Pl.’s Dep. at 34:15–35:8.) PNC argues that “[Plaintiff] admits that
she had no employment from November 2009 through April 2010 (i.e., the time frame of
the Forbearance Agreement.” (Id. at 17) (citing Pl.’s Dep. at 34:15–35:11.) Plaintiff
claims that the reason she never provided additional materials to PNC was because “she
had not received any instructions, guidelines or anything explaining what she needed to
do to modify her loan and that she did not know what their loan modification program
entailed.” (Pl.’s Reply at 9 [Doc. No. 48]) (citing Pl.’s Dep. at 57:7–14, 59:5–17,
148:20–28, 149:11–12.) Moreover, Plaintiff argues that her law firm, Ackerman Law
Office, was “in existence and earning income” during this period. (Pl.’s Reply at 6 [Doc.
No. 48].) Plaintiff also claims that she began working at a cow hoofing business and
provided a copy of a check she received from the hoofing business to PNC on June 14,
2010. (Id. at 12) (citing Battina Suppl. Aff., Ex. 1 at PNC-ACK000483 [Doc. No. 49].)
Plaintiff filed her Complaint in Minnesota state court on December 17, 2010,
alleging breach of contract, promissory estoppel, injunctive relief, a violation of Minn.
Stat. § 580, negligent misrepresentation, consumer fraud, and deceptive trade practices.
(Compl. at 6–10 [Doc. No. 1-1].) PNC filed a Notice of Removal to this Court on
January 5, 2012. [Doc. No. 1.] On February 1, 2012, Plaintiff moved to remand the
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action back to state court, which this Court denied on August 13, 2012. [Doc. No. 26.]
The Court issued a Pretrial Scheduling Order on March 26, 2012, which provided that all
discovery was to be completed prior to July 1, 2012. [Doc. No. 12.] Plaintiff filed this
Motion for Partial Summary Judgment on September 6, 2012, requesting that the Court
“set[] aside the wrongful foreclosure sale and return[] title of her home to her.” [Doc.
No. 35.] On September 7, 2012, the Court extended the Pretrial Scheduling Order and
provided that discovery was to be completed prior to December 1, 2012. [Doc. Nos. 40–
41.]
II.
DISCUSSION
A.
Standard of Review
Summary judgment is proper if there are no disputed issues of material fact and
the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The
Court must view the evidence and the inferences that may be reasonably drawn from the
evidence in the light most favorable to the nonmoving party. Enter. Bank v. Magna Bank
of Missouri, 92 F.3d 743, 747 (8th Cir.1996). However, “summary judgment procedure
is properly regarded not as a disfavored procedural shortcut, but rather as an integral part
of the Federal Rules as a whole, which are designed to secure the just, speedy, and
inexpensive determination of every action.” Celotex Corp. v. Catrett, 477 U.S. 317, 327,
(1986).
The moving party bears the burden of showing that there is no genuine issue of
material fact and that it is entitled to judgment as a matter of law. Id. at 323; Enter. Bank,
92 F.3d at 747. A party opposing a properly supported motion for summary judgment
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may not rest on mere allegations or denials, but must set forth facts in the record showing
that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256
(1986).
B.
Breach of Contract
Plaintiff requests that the Court grant her Partial Motion for Summary Judgment
and find that PNC breached the Forbearance Agreement. “A successful breach-ofcontract claim under Minnesota law has four elements: ‘(1) formation of a contract; (2)
performance by plaintiff of any conditions precedent; (3) a material breach of the contract
by defendant; and (4) damages.’” General Mills Operations, LLC v. Five Star Custom
Foods, Ltd., 703 F.3d 1104, 1107 (8th Cir. 2013) (citing Parkhill v. Minn. Mut. Life Ins.
Co., 174 F. Supp. 2d 951, 961 (D. Minn. 2000)). While both parties agree that a contract
was formed, PNC argues that genuine issues of material fact remain as to whether
Plaintiff performed her obligations under the contract, whether PNC materially breached
the contract, and whether Plaintiff suffered damages.
1.
Performance
In order to prevail on a breach of contract claim, the plaintiff must prove that she
performed her obligations under the contract. Parkhill, 174 F. Supp. 2d at 961. The
parties dispute whether Plaintiff made timely payments under the Forbearance
Agreement. Plaintiff admits that “the issue of whether her payments were due on the 1st
or 10th of the month is a fact question which this Court cannot rule upon for this motion.”
(Pl.’s Mem. in Supp. of Mot. for Summ. J. at 7 [Doc. No. 36].) Plaintiff argues, however,
that PNC is estopped from asserting she did not perform under the contract because a
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representative told her, in a November 2009 phone call, that her payments were due by
the 10th day of every month. (Id. at 8–9.) Plaintiff also argues that PNC’s acceptance
and retention of Plaintiff’s late payment in April means that PNC has waived its ability to
assert that she did not perform under the contract. (Id. at 11.) As such, Plaintiff contends
that she performed her obligations under the Forbearance Agreement.
PNC responds that Plaintiff “failed to perform her express obligations under the
Forbearance Agreement.” (PNC’s Opp’n Br. at 10 [Doc. No. 45].) Specifically, PNC
argues that Plaintiff did not make all of her payments by the dates specified in the
Forbearance Agreement and therefore it was entitled to schedule a foreclosure sale. (Id.)
PNC asserts that it is not estopped from declaring a default following Plaintiff’s late April
2010 payment because Plaintiff has only identified “hearsay and no admissible evidence
supporting” Plaintiff’s claim that a representative from PNC informed her she could
make payments before the 10th of each month. (Id. at 11.) Furthermore, in response to
Plaintiff’s argument that PNC accepted her late payment, PNC claims that “there is no
evidence that [Plaintiff] sent payment late in reliance on a supposed ability to do so—
which, again, would have been unreasonable under the express terms of the Forbearance
Agreement.” (Id. at 12.)
In response to Plaintiff’s waiver argument, PNC cites Valspar Refinish, Inc. v.
Gaylord’s, Inc., where the Minnesota Supreme Court stated that “[w]aiver generally is a
question of fact, and ‘[i]t is rarely to be inferred as a matter of law.’” 764 N.W.2d 359,
367 (Minn. 2009) (citations omitted). Moreover, PNC argues that waiver is not
applicable here because “[Plaintiff] promised to make forbearance payments by the first
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of each month; in early April 2010 PNC provided an unequivocal notice of default and
termination following [Plaintiff]’s untimely April 2010 payment; and [Plaintiff] knew as
of April 14, 2010, and PNC’s counsel confirmed in writing by late April or early May
2010, that a foreclosure sale was scheduled for June 17, 2010.” (Id. at 14–15.) As such,
PNC argues that there is a fact issue as to whether PNC intended to waive its right to
proceed with the foreclosure sale.
The Court agrees that genuine issues of material fact remain as to whether Plaintiff
performed her obligations under the contract, thus precluding the entry of summary
judgment. The parties dispute whether a PNC representative informed Plaintiff that she
could make her payments under the Forbearance Agreement before the 10th of each
month. The parties also dispute whether PNC is estopped from claiming Plaintiff did not
perform under the contact based on fact issues about whether conversations occurred
between Plaintiff and PNC and whether Plaintiff’s reliance on the alleged conversations
were reasonable. Additionally, fact issues exist as to whether PNC waived its right to
claim that Plaintiff did not perform under the Forbearance Agreement, such as whether
PNC properly provided notice of default and termination of the Forbearance Agreement
following Plaintiff’s late April 2010 payment. For these reasons, the Court finds that
there are genuine issues of material fact as to whether Plaintiff performed under the
Forbearance Agreement.
2.
Material Breach
In order to demonstrate a breach of contract claim under Minnesota law, a plaintiff
must prove that there has been a material breach. See, e.g., General Mills Operations,
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703 F.3d at 1107 (citing Parkhill, 174 F. Supp. 2d at 961);Boatwright Construction, Inc.
v. Kemrich Knolls, 238 N.W.2d 606, 607 (1976) (breach must be material). A material
breach is “[a] breach of contract that is significant enough to permit the aggrieved party
to elect to treat the breach as total (rather than partial), thus excusing that party from
further performance and affording it the right to sue for damages.” BOB Acres, LLC v.
Schumacher Farms, LLC, 797 N.W.2d 723, 728 (Minn. Ct. App. 2011) (citation omitted).
A material breach “goes to the root or essence of the contract.” Id. (citation omitted).
The Minnesota Supreme Court has held that even when express conditions of the contract
are violated, the breach is not necessarily material. Id. (citing Boatwright, 238 N.W.2d at
607). “Whether an act or omission constitutes a material breach of a contract is a fact
question.” Sitek v. Striker, 764 N.W.2d 585, 593 (Minn. Ct. App. 2009), review denied
(Minn. July 22, 2009).
Plaintiff contends that PNC breached the Forbearance Agreement “by not
attempting to modify [Plaintiff]’s loan for a period of 60 days and providing written
notice of termination before recommencing foreclosure proceedings.” (Pl.’s Mem. in
Supp. of Mot. for Summ. J. at 13 [Doc. No. 36].) Plaintiff also maintains that PNC
breached the Forbearance Agreement when it recommenced foreclosure proceedings on
April 12, 2010. (Id. at 14.) Plaintiff argues that PNC’s breach was material because
“attempting to modify the loan so as to avoid foreclosure goes to the root or essence of
the contract.” (Pl.’s Reply at 22 [Doc. No. 48].)
PNC responds that it did not breach the Forbearance Agreement and Plaintiff
received “every benefit of her bargain” because it allowed her to make six payments of
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$50.00 in exchange for cancelling a December 2009 foreclosure sale on her home.
(PNC’s Opp’n Mem. at 16 [Doc. No. 45].) PNC also argues that Plaintiff was allowed to
reapply for a loan modification in the 60-day period beginning in April 2010, but that
Plaintiff failed to do so because “she did not have adequate employment.” (Id.)
Moreover, once Plaintiff applied for a loan modification, PNC denied the application.
(Id.)
The Court agrees that genuine issues of material fact remain as to whether PNC
materially breached the contract. There are fact issues as to whether PNC allowed
Plaintiff to reapply for a loan modification within the 60-day period and whether Plaintiff
had any additional income that would have been relevant to PNC’s decision to grant her a
modification. Moreover, the language in the Forbearance Agreement merely suggests
that after Plaintiff made her six payments, PNC would review whether Plaintiff was
eligible for a loan modification during the 60-day period. PNC never promised to
provide Plaintiff with a modification, even if she had been able to obtain additional
employment. Furthermore, there are genuine issues of material fact regarding whether
Plaintiff obtained additional income to report to PNC under the Forbearance Agreement.
The tax returns of Plaintiff’s law firm from 2007 to 2009 show that the firm’s business
income was zero. (See Tr. at 14:1–25, 15:1–15 [Doc. No. 53].) Plaintiff has stated in an
affidavit, however, that her law firm “is still operational and continues to earn income.”
(See Pl. Suppl. Aff. ¶ 18 [Doc. No. 50].)2 There are also genuine issues of material fact
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Additionally, PNC noted at the hearing on Plaintiff’s Motion for Partial Summary
Judgment that additional discovery may be necessary to determine what her income was
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as to when Plaintiff was paid for her work from the cow hoofing business. (Tr. at 16:14–
25–19:1–8 [Doc. No. 53].) As such, the Court concludes that there are genuine issues of
material fact as to whether PNC materially breached the Forbearance Agreement.
3.
Damages
The final element of a breach of contract claim under Minnesota law is damages.
Parkhill, 174 F. Supp. 2d at 961; see also Jensen v. Duluth Area YMCA, 688 N.W.2d
574, 578–79 (Minn. Ct. App. 2004) (“A breach of contract claim fails as a matter of law
if the plaintiff cannot establish that he or she has been damaged by the alleged breach.”).
Plaintiff argues that she is “seeking a summary judgment motion finding liability on her
breach of contract claim,” but that the issue of “damages is properly reserved for trial.”
(Pl.’s Reply at 23 [Doc. No. 48].) Because damages is a necessary element of the breach
of contract claim itself under Minnesota law, the Court cannot find for Plaintiff in the
absence of proof of damages.
III.
ORDER
Based on the foregoing, and all the files, records and proceedings herein, IT IS
HEREBY ORDERED that Plaintiff’s Motion for Partial Summary Judgment [Doc. No.
35] is DENIED.
Dated: March 7, 2013
s/Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge
during the relevant time period. (Tr. at 19:11–25 [Doc. No. 53].) Specially, PNC stated
it intended to request information regarding Plaintiff’s law firm’s 2010 tax return. (Id.)
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