Kirby et al v. Bank of America, NA et al

Filing 122

ORDER granting 76 Motion for Summary Judgment; dismissing 83 Motion in Limine; dismissing 86 Motion in Limine; dismissing 119 Motion to Cease and Desist. Signed by Honorable David C. Bramlette, III on 3/22/2012 (PL)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
HATTIESBURG DIVISION
CLINTON E. KIRBY AND MARTHA B. KIRBY
VERSUS

PLAINTIFFS

CIVIL ACTION NO: 2:09-cv-182-DCB-JMR

BANK OF AMERICA, N.A. ET AL.

DEFENDANTS

MEMORANDUM OPINION AND ORDER
This cause is before the Court on Defendants’ Motion for
Summary Judgment [docket entry no. 76] and Motion in Limine [docket
entry no. 83]; and Plaintiffs’ Motion in Limine [docket entry no.
86] and Motion to Cease and Desist [docket entry no. 119]. Having
carefully considered the Motions, responses thereto, and applicable
statutory and case law, the Court finds and orders as follows:
I. FACTS AND PROCEDURAL HISTORY
On August 21, 2007, Plaintiffs Clinton and Martha Kirby
executed a promissory note (the “Note”) to Countrywide Bank, FSB
(“Countrywide”) whereby they agreed to pay Countrywide $226,800
plus interest.1 See Note, docket entry no. 88-3. The loan was
secured by a lien against the Kirbys’ home at 3100 Prince George
Road in Hattiesburg, Mississippi, and was a refinance of the
Kirbys’ previous loan on the property. Id. As part of the refinance
transaction, the Kirbys signed a service transfer disclosure form

1

Bank of America (“BANA”) is the successor in interest to
Countrywide and thus the Kirbys sometimes refer to BANA rather than
Countrywide. For the purposes of this Motion, however, this Court
will refer to the originator of the Kirbys’ loan as Countrywide.

recognizing that Countrywide “presently intend[ed] to assign, sell,
or transfer the servicing of [the] mortgage loan.” Servicing
Transfer Disclosure, docket entry no. 76-12. In addition, the
Kirbys executed a Deed of Trust (sometimes hereinafter referred to
as “Deed”) on the property in favor of MERS “as nominee for lender
and lender’s successors and assigns.” Deed of Trust, docket entry
no. 76-2. The Deed noted that Countrywide was the lender and
granted Countrywide various rights in the collateral. Id. The Deed
further stated that MERS “holds only legal title to the interests
granted by Borrower in this Security Instrument.”2 Id. ReconTrust
was listed as the trustee on the Deed of Trust. Id.
On August 30, 2007, only nine days after the Kirbys signed the
Note, Countrywide sold it to Fannie Mae, and on September 7, 2007,
indorsed it in blank and transferred it to the so-called “Fannie
Mae vault” at the ReconTrust offices in Simi Valley, California,
where it resided until Fannie Mae transferred it to Defendants’
counsel on April 22, 2010. See Decl. of Michele Sjolander, docket

2

Regarding MERS’s role in the transaction, Defendants explain
that the MERS system is a database which allows originators,
lenders, servicers, and investors in mortgages to track transfers
of servicing rights and beneficial ownership in notes that are
secured by the mortgages and deeds of trust held by MERS. For its
member organizations, including Countrywide and BANA, MERS holds
legal title to deeds of trust as an agent for lenders. MERS is then
recorded as the titleholder in the relevant land records and thus
when the note associated with the property secured by the deed of
trust
is
transferred–as
it
inevitably
is
in
today’s
marketplace–there is no need to record an assignment of the deed
because MERS remains the titleholder as an agent for the new owner
of the note.
2

entry

no.

100-1.

At

the

time

of

Fannie

Mae’s

acquisition,

Countrywide Home Loans Servicing (“CHLS”) retained the servicing
rights to the loan through an agreement between Countrywide and
Fannie Mae. Aff. of Sutton ¶ 6, docket entry no. 76-6. Not long
thereafter,

however,

CHLS

changed

its

name to

BAC

Home

Loan

Servicing, L.P. (“BAC”).3 Id. at ¶ 7. To summarize then, before the
Plaintiffs defaulted on their payment, Fannie Mae owned the Note,
having purchased it from Countrywide; MERS was the beneficiary of
the Deed of Trust, acting on behalf of Fannie Mae; and BAC,
formerly CHLS, was the servicer on the loan.
The Kirbys made their last payment on the Note to BAC on July
14, 2008, and then became delinquent. Id. ¶ 7; Aff. of Scheller ¶
9, docket entry no. 76-7. Fannie Mae’s procedure when a loan
becomes delinquent is to assign the Deed of Trust to the servicer
to carry out the foreclosure sale. Aff. of Sutton ¶ 7; Aff. of
Scheller ¶ 9. Thus, on July 13, 2009, MERS, as Fannie Mae’s agent,
executed a Corporate Assignment of the Deed of Trust to BAC, see
docket entry no. 76-4, and on July 20, 2009, the transfer of the
Deed of Trust was recorded in the Forrest County, Mississippi land
records. Aff. of Sutton ¶ 8; Aff. of Scheller ¶ 10. This assignment
made BAC both the beneficiary of the Deed of Trust and also the

3

The Defendants do not indicate when CHLS changed its name to
BAC Home Loan Servicing but the exact date is immaterial and thus
for clarity, this Court will assume that the name change occurred
at the same time that the Note was transferred to Fannie Mae.
3

servicer of the loan. As a part of the foreclosure proceeding, BAC
executed a Re-Appointment of the Trustee, reappointing ReconTrust
as the Trustee in the Deed of Trust,4 see docket entry no. 76-5;
Aff. of Scheller ¶ 12, and ReconTrust notified the Kirbys of the
possibility of foreclosure.5 See ReconTrust Letter, docket entry
no. 25-5.
Before ReconTrust could initiate the foreclosure proceedings
on the Kirbys’ home, the Kirbys filed suit against the Defendants
in the County Court of Forrest County, Mississippi. The Defendants
removed

to

this

Court

on

September

4,

2009,

and

this

Court

subsequently denied the Kirbys’ Motion to Remand. In their Amended
Complaint [docket entry no. 25], the Kirbys assert claims for (1)
quiet title, (2) tortious interference with contract, (3) breach of
fiduciary duty, (4) breach of contract, (5) slander of title, (6)
fraudulent misrepresentation, (7) negligent misrepresentation, (8)
and conspiracy to commit fraud. The Court will address these claims
seriatim.

4

Mindy Scheller explained that ReconTrust employees Jill
Arnold and Kari Marx, vested with authority to sign the ReAppointment of Trustee on BAC’s behalf, executed the reappointment
agreement. See Aff. of Scheller ¶ 12.
5

To complicate the matter further, shortly after the
Defendants filed their present Summary Judgment Motion, BANA merged
with BAC. See Dec. 7, 2011, Order, docket entry no. 104. As it
currently stands, BANA via its merger with BAC is now the servicer
of the loan. For clarity’s sake, the Court will refer to the
Parties as they stood at the time the Kirbys filed suit. In other
words, the Court will not refer to BANA in its analysis, even
though it has been substituted for BAC.
4

II. SUMMARY JUDGMENT STANDARD
Summary judgment is apposite “if the movant shows that there
is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. Pro. 56(a).
“A fact is ‘material’ if its resolution in favor of one party might
affect the outcome of the lawsuit under governing law. An issue is
‘genuine’ if the evidence is sufficient for a reasonable jury to
return a verdict for the non-moving party.” Ginsberg 1985 Real
Estate P’ship v. Cadle Co., 39 F.3d 528, 531 (5th Cir. 1994)
(citations omitted). The party moving for summary judgment bears
the initial responsibility of apprising the district court of the
basis for its motion and the parts of the record which indicate the
absence of a genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986).
“Once the moving party presents the district court with a
properly supported summary judgment motion, the burden shifts to
the

non-moving

party

to

show

that

summary

judgment

is

inappropriate.” Morris v. Covan World Wide Moving, Inc., 144 F.3d
377, 380 (5th Cir. 1998). “The evidence of the non-movant is to be
believed, and all justifiable inferences are to be drawn in his
favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
But the nonmovant must “do more than simply show that there is some
metaphysical doubt as to the material facts.” Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

5

Moreover, “[t]he mere existence of a scintilla of evidence is
insufficient to defeat a properly supported motion for summary
judgment.” Anderson, 477 U.S. at 252. Summary judgment must be
rendered when the nonmovant “fails to make a showing sufficient to
establish the existence of an element essential to that party’s
case, and on which that party will bear the burden of proof at
trial.” Celotex Corp., 477 U.S. at 322.
III. ANALYSIS
A. Quiet Title
Each of the Kirbys’ individual claims can be traced to a
single underlying premise–they do not believe that the Defendants’
transactions bestowed upon ReconTrust the requisite authority to
initiate the foreclosure process on their home. Throughout this
litigation, the Kirbys have painted a dim picture of the collective
actions

taken

by

the

Defendants,

essentially

accusing

the

Defendants of perpetrating a sophisticated and fraudulent scheme
against them. In their Amended Complaint, the Kirbys allege that
the current status of the Note and the title to their property is
clouded with uncertainty, citing two specific facts to support this
assertion:
(1) BAC admitted in its answer to the Kirbys’ first
complaint that Fannie Mae was the holder of the note at
the time litigation was begun, and (2) ReconTrust
communicated to a title insurance company that the
property had a “marketability of title issue” and stated
that “MERS” was the owner of the Deed of Trust and was
the servicer for the Noteholder.

6

Id. at 16.
On October 5th, 2011, the Court held an evidentiary hearing
regarding the instant Motion at the United States Courthouse in
Hattiesburg, Mississippi. At that hearing, Clinton Kirby expressed
additional frustration regarding the late appearance of an indorsed
copy of the Note they signed in favor of Countrywide, which was
different from the previous unindorsed Note presented to the Court
by the Defendants. Compare Note, docket entry nos. 25-10, 76-1,
with Note, docket entry 88-3. The newest version of the Note bore
the indorsements of Countrywide to CHLS and then CHLS in blank.
Indeed, the Court stated its own concern regarding this copy of the
Note, see Show Cause Order, docket entry no. 95, because as the
Kirbys

correctly

pointed

out,

the

Defendants

relied

on

the

unindorsed copy of the Note in their Summary Judgment Motion.6

See

Note, docket entry no. 76-1.
In response to the Plaintiffs’ arguments, counsel for the
Defendants admitted to the Court that the explanations regarding

6

The Defendants explained that when the Note was signed it
was scanned and the scanned image was placed in an electronic
origination file, which could tracked by the Defendant companies
and monitored by the Plaintiffs. The Note was then transferred to
a “collateral file” maintained by ReconTrust and indorsed on or
about September 7, 2007, before it was placed in the “Fannie Mae
Vault.” See Decl. of Michele Sjolander, docket entry no. 100-1. The
Plaintiffs questioned the veracity of this explanation, and the
Court, not wanting the Plaintiffs to be prejudiced by the lateproduction of the new copy of the Note, allowed them to conduct
limited discovery and file supplemental brief in opposition to the
Defendants’ Motion. See Dec. 7, 2011, Order.
7

the multiple transactions were less than clear. Tr. of Hrg. at 16.
After carefully reviewing the briefs and the record, the Court
agrees that the Defendants have made statements both before and
during

the

litigation

which

are

confusing

if

not

carefully

considered in the context of the entire process. Nevertheless,
while the transactions in this case may be relatively complex, the
gravamen of the case is simple: the Kirbys failed to make their
mortgage payments, and the Defendants have the right to foreclose
on their home.
The Kirbys’ chief argument in regard to their quiet title
claim appears to be that the Defendants “separated” the Note from
the Deed, which they argue makes any subsequent transfers of the
Note or the Deed void under Mississippi law.7 This once-novel
theory of mortgage law has been consistently rejected by courts
which

have

considered

its

merit.8

See,

e.g.,

Cervantes

v.

7

At the hearing, Clinton Kirby, conceded that he and his wife
must owe someone for the money that they borrowed and expressed his
desire for the Court to clarify which company they owe. Kirby’s
stated-concern is that he and his wife could be in danger of paying
one company for their loan only to later discover that they owe the
debt to another. Yet, the Kirbys have implied, without explicitly
stating so in their pleadings, that the Note and the Deed, once
split, can never be united, rending them both void in aeternum.
Despite their statements to the contrary, the Kirbys appear to be
attempting to wriggle free of mortgage under one of these theories.
See Tr. of Hrg. at 10. (“We must owe somebody. But that is the
question. Who is it? And I would submit that it is not any of the
defendants.”).
8

At its core, this theory challenges the validity of MERS’s
role in the initial agreement between the parties and the
subsequent transfers in which MERS was involved. The Deed of Trust,
8

Countrywide Home Loans, Inc., 656 F.3d 1034, 1044 (9th Cir. 2011)
(“[T]he plaintiffs advance a novel theory of wrongful foreclosure.
They contend that all transfers of the interests in the home loans
within the MERS system are invalid because the designation of MERS
as a beneficiary is a sham and the system splits the deed from the
note, and, thus, no party is in a position to foreclose.”); Kiah v.
Aurora Loan Servs., LLC, 2011 WL 841282, at *4 (D. Mass. Mar. 4,
2011) (“Plaintiff's theory that the note and the mortgage somehow
became disconnected from one another, and that the mortgage should
disappear as a result, is therefore not tenable as a matter of
law.”).
To support their legal position, the Kirbys cite a case
decided under Texas law in which the Fifth Circuit Court of Appeals
stated that “An assignment of the note carries the mortgage with
it, while an assignment of the latter alone is a nullity.” See
Kirby Lumber Corp. v. Williams, 230 F.2d 330, 333 (5th Cir. 1956).
The Plaintiffs, however, misunderstand the meaning of this concept,
which,

if

anything,

bolsters

the

Defendants’

position.9

The

under the heading TRANSFER OF RIGHTS IN PROPERTY, names MERS the
beneficiary of the Deed of Trust, acting as the nominee for the
lender. Deed of Trust at 1-3. Under the terms of the agreement,
MERS retained the legal right to exercise the security interest but
agreed at all times to act on behalf of the Note Holder, which
initially was Countrywide, but, due to the transferable nature of
the Note, eventually was acquired by Fannie Mae. Id.
9

The quotation comes from the Supreme Court case, Carpenter
v. Longan, 83 U.S. 271 (1872). The fundamental holding in Carpenter
is that when a mortgagor signs a promissory note in favor of a
9

Mississippi Supreme Court has articulated this rule in a way that
better suits the present circumstance: “[when] the mortgage and the
note[] are sufficiently connected. . . . [t]he assignment of the
note[] operate[s] an assignment of the mortgage also.” Holmes v.
McGinty, 44 Miss. 94, 1870 WL 4406, at *1 (Miss. 1870); see also
Lindsey v. Bates, 42 Miss. 397, 1869 WL 3765, at *2 (Miss. Err. &
App. 1869)(“[T]he assignment of the note carries with it the
mortgage, which is a mere incident to the debt, and the assignee of
the note is entitled to resort to the mortgage and all other
securities, which were given for the purpose of assuring its
payment, as its incidents.”). Under Mississippi case law, which is
consistent with general principles of mortgage law, the mortgage
follows

the

note.10

See

also

Restatement

(Third)

of

Property

(Mortgages) § 5.4.
Accordingly, the question critical to Kirbys’ quiet title
claim is a simple one: who held the Note at the time the Kirbys
filed the present suit? This question is also easily answered:

mortgagee, he agrees that the mortgage upon the real estate will
follow the note, and that when the note is assigned, the mortgage
accompanies the assignment. Id. at 273-74.
10

That “the security is a mere incident to debt” has proven
to be the decisive factor in many cases where courts have
considered transactions that involve MERS acting as the
“beneficiary of the deed of trust.” In re Robinson, 2011 WL 5854905
(Bkrtcy. E.D.N.C. Nov. 22, 2011) (applying North Carolina law); see
also Commonwealth Property Advocates, LLC v. Mortgage Electronic
Registration Systems, Inc., -- F.3d --, 2011 WL 6739431, at * (10
Cir. Dec. 23, 2011) (applying Utah law).
10

Fannie Mae. Despite the Kirbys’ attempt to cast some metaphysical
doubt over the Defendants’ uncontroverted testimony, see Zenith
Radio Corp., 475 U.S. at 586, at the time litigation began, the
Note was indorsed in blank and sitting in the “Fannie Mae vault” in
Simi Valley, California, making Fannie Mae the bearer of the Note.11
See Miss. Code Ann. § 75-3-205(b). Thus, Fannie Mae was entitled to
enforce the Note under Mississippi law. See Miss. Code Ann. § 73-3301. Reduced to these terms, the present suit loses much of its
complexity. Fannie Mae had the right to collect on the Note, which
carried the Deed of Trust with it. The only question that remains
is whether the Defendants were acting on behalf of Fannie Mae in
attempting to foreclose on the Kirbys’ home. See Holmes, 1870 WL
4406, at *1; Lindsey, 1869 WL 3765, at *2.
To answer that question, the Court needs only to look at the
transactions of the various parties. The evidence shows that all
Defendants are and were acting on Fannie Mae’s behalf and are
operating consistent with the agreements ratified by the Kirbys. At
the time the Kirbys defaulted, BAC was acting as servicer for
Fannie Mae, which had acquired the Note from Countrywide not long
after it was signed by the Kirbys. MERS, by virtue of the agreement

11

After reviewing the Plaintiffs’ supplemental brief regarding
the authenticity of the indorsements, the Court finds no genuine
dispute regarding the authenticity of the indorsements and accepts
the Defendants’ explanation regarding the discrepancies between the
two versions of the Note. To be clear, the Court finds there is no
genuine factual dispute that the Note was indorsed in blank and
delivered to Fannie Mae on September 7, 2011.
11

signed by the Kirbys at closing, was the nominee for the new lender
Fannie Mae and on Fannie Mae’s authority transferred the Deed to
BAC after the Kirbys defaulted on their loan. BAC, who was in
charge of collecting loan payments, subsequently reassigned the
Deed to ReconTrust to proceed with the foreclosure process.
There is no evidence to show that any of the named Parties
were operating independently of one another, or more importantly,
that there is any doubt regarding whether ReconTrust was legally
authorized to begin the process of foreclosure.12 Courts that have
examined similar or identical schemes have consistently upheld them
under state laws similar to Mississippi’s. Commonwealth Prop.
Advocates, LLC v. Mortg. Elec. Registration Sys., Inc., -- F.3d --,
2011 WL 6739431 (10 Cir. Dec. 10, 2011) (Utah law); Cervantes, 656
F.3d 1034 (Arizona law); Horvath v. Bank of N.Y., N.A., 641 F.3d
617 (4th Cir. 2011) (Virginia law); Schmitt v. Stearns Lending,
Inc., 2011 U.S. Dist. LEXIS 98868 (D. Utah Aug. 31, 2011) (Utah
law); Pedersen v. Greenpoint Mortg. Funding, Inc., 2011 U.S. Dist.
LEXIS 96397 (E.D. Cal. Aug. 26, 2011) (California law); Beyer v.
Bank of Am., 2011 U.S. Dist. LEXIS 85704 (D. Or. Aug. 2, 2011)

12

The Plaintiff attached a list of twenty-four (24) material
factual disputes [docket entry no. 118-2] to their Supplemental
Memorandum in response to the Defendants’ Motion. The Court has
reviewed each of the Defendants’ claims and finds them all
predicated their erroneous interpretation of Mississippi law.
Further, the Court rejects the Plaintiffs’ attempt to characterize
some of the Defendants’ admittedly oblique statements as evidence
of a factual dispute.
12

(Oregon law); White v. BAC Home Loans Servicing., L.P., 2011 U.S.
Dist. LEXIS 42234 (E.D. Mo. Apr. 19, 2011) (Missouri law); Corn v.
Recontrust Co., N.A., 2011 U.S. Dist. LEXIS 34032 (D. Nev. Mar. 24,
2011) (Nevada law); Kiah, 2011 WL 841282 (Massachusetts law).
Accordingly, the Court will grant summary judgment in favor of the
Defendants regarding the Plaintiffs’ quiet title claim.
B.

Tortious Interference with Contract

The Plaintiffs’ Amended Complaint alleges that sometime in May
2008, the Kirbys received a statement from BAC showing a tax escrow
deficiency which increased the Kirbys’ monthly payment obligation
under

the

Note

from

$1,783.00

to

$2,107.00

(an

increase

of

$324.00). As alleged by the Kirbys, BAC improperly computed the
proper escrow payment amount because it underestimated the Kirbys’
tax burden on the property by more than half of what the Kirbys had
paid the year before the refinance. Because the $324.00 monthly
payment increase was beyond the Kirbys’ ability to pay, they allege
that they contacted BAC and requested that they be able to pay the
tax escrow deficiency in full rather than pay higher monthly
payments, but BAC refused. BAC then informed the Kirbys that it
would not accept future payments at the old monthly payment rate.
The Kirbys were able to pay the increased monthly payment once but
thereafter were unable to make the higher monthly payments. The
Kirbys allege that BAC’s refusal to accept the full amount of the
tax escrow and refusal to accept the old, lower monthly payment

13

amounts

caused

them

to

default

on

the

Note

and

therefore

constitutes tortious interference with the contract between the
Kirbys and the Note Holder.13
To state a claim for tortious interference with contract under
Mississippi law, a plaintiff must show that:
(1) the acts were intentional and willful; (2) that they
were calculated to cause damage to the plaintiffs in
their lawful business; (3) that they were done with the
unlawful purpose of causing damage and loss, without
right or justifiable cause on the part of the defendant
(which constitutes malice); and (4) that actual damage or
loss resulted.
O.W.O. Inv., Inc. v. Stone Inv. Co., Inc., 32 So. 3d 439, 448-49
(Miss. 2010). Defendants move for summary judgment and argue,
primarily, that the Kirbys have not established the third element
of the claim because BAC, as servicer on the loan, acted in
conformity with the Deed of Trust in refusing to accept the full
escrow deficiency and thus did not act without right or justifiable
cause. The Deed of Trust expressly provides that partial payments
may not be accepted: “Lender may return any payment or partial
payment if the payment or partial payments are insufficient to
bring the loan current.” Deed of Trust at 3, document no. 76-2. The
Deed of Trust further provides that payments accepted by the Lender
are to be applied first to interest, then principal, then to escrow
items. Id. Thus, Defendants argue that BAC was in full compliance

13

The Kirbys maintain that they were unaware in May 2008 of
the true identity of the Note Holder and thus do not specify
whether it was Countrywide or Fannie Mae.
14

with the Note and Deed of Trust in refusing to accept a lump-sum
payment that the Kirbys intended to be applied solely to escrow.
The Kirbys do not respond to the Defendants’ argument directly
but instead focus on their argument that the identity of the Note
Holder was unknown at the time BAC refused to accept the escrow
payment. The Deed of Trust makes clear, however, the Note Holder
had the right to refuse partial payments and to apply payments
first to interest, then to principal, then to escrow items. In this
regard, BAC, acting as servicer on behalf of the Note Holder, was
within its rights to refuse the Kirbys’ offer to pay the escrow
deficiency in a lump sum. Moreover, the identity of the Note Holder
at the time BAC refused to accept the escrow payment is irrelevant
as the same Note and Deed of Trust were in effect at all times.
Accordingly, Defendants’ Motion for Summary Judgment as to the
Kirbys’ claim of tortious interference with contract must be
granted.
C.

Breach of Fiduciary Duty

The Kirbys next allege that BAC breached its fiduciary duties
to them in refusing to accept the Kirbys’ monthly payments for the
original monthly payment of $1,783.00 after BAC had informed the
Kirbys that their monthly payment would increase to $2,107.00
because of the tax escrow error. Defendants move for summary
judgment on the basis that they did not owe fiduciary duties to the
Kirbys, and even if they did, BAC’s refusal to accept a partial

15

payment was proper under the terms of the Deed of Trust and thus
could not violate any alleged fiduciary duties.
As discussed above, this Court agrees that BAC’s refusal to
accept a partial payment from the Kirbys was within the rights of
the Note Holder under the Deed of Trust and thus could not
constitute a breach of fiduciary duty. Even if that were not the
case, however, this Court agrees that the Defendants owed no
fiduciary duty to BAC. The Mississippi Supreme Court “has never
held that the relationship between a mortgagor and mortgagee is a
fiduciary one.” Hopewell Enters., Inc. v. Trustmark Nat’l Bank, 680
So. 2d 812, 816 (Miss. 1996). Instead, the mortgagor-mortgagee
relationship is “simply an arms length business transaction.” Id.
at 817. The Kirbys’ attempt to evade this clear precedent by
arguing that BAC was not the mortgagee but rather the servicer on
the mortgage.
The Kirbys further argue that the relevant factors laid out in
Hopewell point to the existence of a fiduciary duty here. Those
factors are:
(1) the activities of the parties go beyond their
operating on their own behalf, and the activities for the
benefit of both; (2) where the parties have a common
interest and profit from the activities of the other; (3)
where the parties repose trust in one another; and (4)
where one party has dominion or control over the other.
Id. at 816-17 (citing Carter Equip Co. v. John Deere Indus. &
Equip. Co., 681 F.2d 386 (1982)). But none of those factors
militate in favor of finding such a duty. BAC’s activities in
16

accepting mortgage payments for the mortgagee, either Countrywide
or Fannie Mae, were on its own behalf–to fulfill their obligations
to the mortgage–and the Kirbys’ actions in paying their mortgage
was for their own benefit–to fulfill their obligations under the
Note and Deed of Trust. Neither BAC’s nor the Kirbys’ activities
benefitted the other party. Secondly, the relationship between the
two was simply an arm’s length business transaction; it was not a
common endeavor where the activities benefitted both parties. Nor
have the Kirbys suggested that there was any particular trust
reposed between the Kirbys and BAC beyond those found in ordinary
business dealings. Lastly, while BAC may have had some power with
regard to the Kirbys in that they determined whether to refuse the
Kirbys’ mortgage payments, there was no “dominion or control.”
Again, this was simply an arm’s length business transaction, nearly
identical to that between a mortgagor and a mortgagee and found by
Hopewell

not

to

create

fiduciary

duties

absent

unusual

circumstances. In addition, it is noteworthy that although this is
a motion for summary judgment and the existence of a fiduciary duty
is a fact question, Carter, 681 F.2d at 390, the Kirbys do not cite
to anything in the record to support the existence of a fiduciary
duty. For all of these reasons, the motion for summary judgment as
to the fiduciary duty claim is granted.
D.

Breach of Contract

In their breach of contract claim, the Kirbys allege that

17

Countrywide failed to pay off their previous mortgage with New
South Federal Bank following the 2007 refinance with Countrywide.
The Kirbys allege that, following the refinance, New South Federal
claimed there was a balance of $1,800.00 on the original mortgage
because Countrywide failed to pay the full loan balance as was
intended in the refinance transaction. In their Amended Complaint,
the

Kirbys

do

not

identify

which

contract

was

breached

by

Countrywide’s failure to pay off the original mortgage but in
response to Defendants’ Motion for Summary Judgment, the Kirbys
argue that the HUD-1 Settlement Statement (“HUD-1”) reflected a pay
off to New South Federal Bank to be made at closing and thus
constituted

a

contract.

The

Kirbys

admit,

however,

that

“no

separate contract was drawn up explicitly stating that ‘Lender will
pay off your mortgage with New South Federal Bank.’” Pl. Resp. at
16, docket entry no. 79.
The Defendants move for summary judgment as to this breach of
contract claim, arguing that there was no contract requiring
Countrywide to pay off the Kirbys’ previous mortgage because
neither the Note nor the Deed of Trust address the pay off of the
New South Federal loan. As to the argument that the HUD-1 amounted
to a contract, the Defendants cite to a federal district court case
from Washington holding that the HUD-1 was not a contract because
there was no separate consideration for it and it contained no
promise to do something but rather was simply a “true and accurate

18

statement.” Cornelius v. Fidelity Nat. Title Co., 2009 WL 596585,
at *3-4 (W.D. Wash. Mar. 9, 2009).
This Court agrees that the HUD-1 is not a contract. Under
Mississippi

law,

the

elements

of

a

valid

contract

include

consideration and an agreement that is sufficiently definite. Green
Tree Serv. LLC v. McGee, 2010 WL 1141138, at *2 (S.D. Miss. Mar.
22, 2010). Here, the Kirbys do not point to the existence of any
facts on this motion for summary judgment to suggest there was
consideration for the signing of the HUD-1. Moreover, a cursory
reading of the HUD-1 reflects that it is not sufficiently definite
to amount to a contract. It consists of a list of various sums
involved in the refinance of the Kirbys’ mortgage but it contains
neither full sentences, nor paragraphs–nothing that would indicate
that either the Kirbys or any of the Defendants are contractually
bound. The Defendants’ Motion for Summary Judgment as to the breach
of contract claim is granted.
E.

Slander of Title

The Kirbys allege that BAC slandered the title to their
property by causing publication of a false claim to be the owner of
the Note and Deed of Trust in the Forrest County land records. The
Kirbys further claim that BAC knew that it was not the “legal
holder of said indebtedness” as claimed and thus that the claim was
malicious. In order to prevail on a slander of title claim, the
Kirbys must show that BAC “falsely and maliciously publish[ed]

19

matter which [brought] in question or disparag[ed] the title to
[the Kirbys’ property], thereby causing special damage to [them].”
See Jeanes-Kemp, LLC v. Johnson Controls, Inc., No. 1:09-CV-723
LG-RHW, 2010 WL 1667287, at *2 (S.D. Miss. April 23, 2010).
The Kirbys cannot meet any of the elements of a slander of
title claim. First, as discussed at length above, the information
published by BAC was neither false nor malicious. Secondly, as the
court

noted

in

Jeanes-Kemp,

a

slander

of

title

claim

often

accompanies a quiet title claim, which in the present case the
Court found has no merit. See Jeanes-Kemp, LLC, 2010 WL 1667287, at
*1. The Kirbys may have “questioned” which company held title to
their property, but their subjective confusion as to who owned the
title is not evidence that the title was “disparaged.” In the
present case, the title to the Kirbys’ home was never in doubt.
Finally and relatedly, the Kirbys have not adduced evidence that
they incurred special damage as a consequence of BAC’s actions. For
all these reasons, the Defendants are entitled to summary judgment
in their favor with respect to this claim.
F.

Fraudulent Misrepresentation

The Kirbys next allege fraudulent misrepresentation on the
part of the Defendants. This claim is primarily related to the fact
that MERS was listed as the nominee and beneficiary on the Deed of
Trust, despite that MERS was not the lender on the Note. The Kirbys
contend that Countrywide knew that MERS was not lending money to

20

the Kirbys or collecting payments and that Countrywide could
somehow conceal transfers of the Note by naming MERS as the
beneficiary on the Deed of Trust,14 thereby concealing the true
identity of the Note Holder and defrauding the Kirbys by having
someone other than the true Note Holder attempt to complete a
trustee’s

sale.

The

committed

fraud

in

Kirbys

further

representing

allege

that

that

MERS

was

Countrywide
a

separate

corporation, despite the fact that Countrywide was a “member” of
MERS and Countrywide employees completed paperwork purporting to
transfer ownership of the Deed of Trust from MERS to BAC in order
for BAC to conduct a sale of the property.
These

allegations

do

not

state

a

claim

for

fraudulent

misrepresentation under Mississippi law. The elements for such a
claim are:
(1) a representation; (2) its falsity; (3) its
materiality; (4) the speaker’s knowledge of its falsity
or ignorance of its truth; (5) his intent that it should
be acted on by the hearer and in the manner reasonably
contemplated; (6) the hearer’s ignorance of its falsity;
(7) his reliance on its truth; (8) his right to rely
thereon; and (9) his consequent and proximate injury.
Holland v. People’s Bank and Trust Co., 3 So. 3d 94, 100 (Miss.
2008). The second essential element is a false statement, which the
Kirbys have not alleged. First, listing MERS as the beneficiary of

14

The Kirbys state that BANA, not Countrywide or Fannie Mae,
was responsible for the alleged fraudulent acts. Presumably, the
Kirbys are referring to BANA in its position as successor in
interest to Countrywide.
21

the Deed of Trust when Countrywide was the Note Holder was not a
false statement. Moreover, with respect to the Kirbys allegation
that Countrywide, and later Fannie Mae, somehow concealed the fact
that MERS was the beneficial owner of the Deed of Trust but not the
Note Holder, the Deed of Trust specifically states that MERS is
acting as “nominee for Lender and Lender’s successors and assigns”
and “holds only legal title to the interests granted by Borrower in
this Security Instrument.” Deed of Trust at 1, 2, document no. 762. Thus, there was no misrepresentation as the documents, which the
Kirbys signed, disclosed the relationships among all the parties.
Lastly, the Kirbys have submitted no evidence to contradict
that MERS was a separate corporation from both Countrywide and
Fannie Mae or that a statement to that effect was false. The fact
that employees of Fannie Mae directed MERS to transfer the Deed of
Trust to BAC confirms only that the structure created by the Note
and Deed of Trust worked as intended. MERS acted on behalf of
Fannie Mae (and at the direction of Fannie Mae employees) and
assigned

the

Deed

of

Trust

to

BAC,

in

conformity

with

the

representation of the Deed of Trust that MERS was a nominee for the
Lender.

That

fact

does

not

indicate

that

MERS

and

either

Countrywide or Fannie Mae were the same corporate entity. In sum,
there is simply no basis in law or fact for the Kirbys’ claim of
fraudulent misrepresentation and thus summary judgment must be
granted.

22

G.

Negligent Misrepresentation

The Kirbys next assert a claim for negligent misrepresentation
based on Countrywide’s miscalculation regarding the escrow amount
for county taxes, alleging that Countrywide knew that the amount
was less than half the amount the Kirbys had paid the previous
year. The alleged damage resulted when the Kirbys were not able to
pay the increase in their monthly payments once the true amount of
county taxes was ascertained. The Defendants move for summary
judgment, first arguing that the claim is founded in the Real
Estate Settlement Procedures Act (“RESPA”), rather than state law,
and

RESPA

does

not

provide

a

private

right

of

action.

The

Defendants do not, however, cite any authority for the proposition
that a state law claim related to settlement procedures is somehow
preempted by RESPA and thus the Court does not address this
argument.
The

Defendants

further

argue

that

the

negligent

misrepresentation claim fails under a state law analysis because
the tax escrow amount that appeared on the HUD-1 was an estimate
and thus not a misrepresentation. Under Mississippi law, the
elements for a claim of negligent misrepresentation are:
(1) a misrepresentation or omission of a fact; (2) that
the
representation
or
omission
is
material
or
significant; (3) that the person/entity charged with the
negligence failed to exercise that degree of diligence
and expertise the public is entitled to expect of such
persons/entities; (4) that the plaintiff reasonably
relied upon the misrepresentation or omission; and (5)
that the plaintiff suffered damages as a direct and
23

proximate result of such reasonable reliance.
Mladineo v. Schmidt, 52 So. 3d 1154, 1164-65 (Miss. 2010) (quoting
Hazlehurst Lumber Co., Inc. v. Miss. Forestry Comm’n, 983 So. 2d
309, 313 (Miss. 2008)). This Court agrees that the Defendants
clearly disclosed that the tax escrow amount was an estimate and
thus it was not a misrepresentation. A document entitled “Initial
Escrow Account Disclosure Statement,” which was apparently part of
the loan closing

documents, states:

“This

is

an

estimate

of

activity in your escrow account during the coming year based on
payments anticipated to be made from your account.” Docket entry
no. 76-11. The Kirbys contend that their misrepresentation claim is
based on the HUD-1, which restates the tax escrow amount found on
the Account Disclosure Statement. But, as discussed above, the HUD1 is simply a list of all the relevant charges related to the loan
transaction and necessarily restates numbers that are derived from
other features of the loan agreement. The HUD-1 is not, standing
alone, the basis for misrepresentation. Indeed, the United States
District Court for the district of Maryland recently held that an
escrow estimate during a real estate settlement was not false as a
matter of law because it was explicitly deemed an estimate. AbelMalak v. JP Morgan Chase Bank, N.A., 748 F. Supp. 2d 505, 514 (D.
Md. 2010).
Plaintiffs’

Finding no basis in fact or law to support the
negligent

representation

claim,

summary judgment in favor of the Defendants.

24

the

Court

grants

H. Conspiracy to Commit Fraud
Under their eighth and final cause of action, the Plaintiffs
attempt to assert a claim for “conspiracy to commit fraud” based on
the premise that the Defendants “caused instruments to be filed in
the Forrest County land records and in the public domain that BAC,
not [FNMA], is or was the holder in due course with the right to
enforce the subject Note” despite the fact that the Defendants knew
Fannie Mae was the holder. Am. Compl. ¶¶ 92-95, docket entry no.
25. Plaintiffs’ legal basis for this theory is again predicated on
their misinterpretation of the court’s holding in Kirby Lumber
Corporation. This Court has consistently rejected the Plaintiffs’
theory that the Defendants’ actions were fraudulent and does so
again one final time with regard to their conspiracy claim: there
is no merit to the assertion that BAC’s filing of the Deed in the
land

records

is

evidence

of

a

conspiracy

to

commit

fraud.

Accordingly, the Court finds no merit to the Kirbys’ eighth and
final claim and therefore will grant summary judgment in favor of
the Defendants.
V. CONCLUSION
Having considered each individual claim in light of the record
before it and under Mississippi law, the Court finds no basis in
law or in fact to support any of the Plaintiffs’ claims and
therefore the Court finds that the Defendants are entitled to
summary judgment as a matter of law. Fed. R. Civ. Pro. 56(a).

25

Accordingly,
IT IS, THEREFORE, HEREBY ORDERED that the Defendants’ Motion
for

Summary

Judgment

[docket

entry

no.

76]

is

GRANTED.

Pursuant to Rule 58(a), a separate final judgment will be
entered dismissing the Plaintiffs’ case against the Defendants
with prejudice.
IT IS FURTHER ORDERED that the Defendants’ Motion in Limine
[docket entry no. 83] is DISMISSED as moot.
IT IS FURTHER ORDERED that the Plaintiffs’ Motion in Limine
[docket entry no. 86] is DISMISSED as moot.
IT IS FURTHER ORDERED that the Plaintiffs’ Motion to Cease and
Desist [docket entry no. 119] is DISMISSED as moot.
So ORDERED this the 22nd day of March, 2012.

/s/ David Bramlette
UNITED STATES DISTRICT JUDGE

26