Sealy et al v. Ocwen Mortgage Servicing, Inc. et al

Filing 33

ORDER granting 30 Motion for Summary Judgment ; granting 26 Motion for Summary Judgment. This case is DISMISSED with prejudice. Signed by District Judge Max O. Cogburn, Jr on 10/19/2017. (chh)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
DOCKET NO. 3:16-cv-143-MOC-DCK
MICHAEL L. SEALY & SHELLY N. SEALY,
Plaintiffs,
Vs.
FAY SERVICING, LLC; ET AL.,
Defendants.

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ORDER

THIS MATTER is before the court on defendants’ Motions for Summary Judgment
(#26 and #30). The deadline for plaintiffs to respond has passed with no response and the matter
is ripe for review. Plaintiffs are represented by counsel. Having considered defendants’ motion
and reviewed the pleadings, the court enters the following Order.
I.

Background
This case centers on a purported loan modification agreement. In April 2008, plaintiffs

obtained a mortgage loan from Countrywide or its affiliate entity for their personal residence at
3901 Blythe Road, Waxhaw, North Carolina. Years later, plaintiffs contacted the loss mitigation
department at defendant Ocwen Loan Servicing and made a written request for a loan
modification. On July 2, 2012, Ocwen approved the loan modification, subject to certain terms
and conditions. On November 2012, after making Trial Period Plan (“TPP”) payments in a
timely fashion, Ocwen approved the loan modification for the plaintiffs. (#1-1) at 7-8.
Plaintiffs then contend that, despite complying with all the requisite terms and conditions
and making every necessary payment, defendant Ocwen (and later, defendants Fay Servicing and

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Christiana Trust) failed to make the loan modification permanent and attempted to void it, in
order to proceed with a foreclosure. (#1-1) at 11-12. Plaintiffs allege that in doing so, defendants
are liable under theories of breach of contract, breach of the implied covenant of good faith and
fair dealing, promissory estoppel, and unfair and deceptive trade practices. Plaintiffs also claim a
declaratory judgment should be made to enforce the modification. (#1-1) at 10-16.
Defendants contend that they did not fail to make the loan modification permanent, but
rather plaintiffs failed to do so by neglecting to accept the offer of permanent loan modification
and failing to make the necessary payments at the proper time. (#27) at 1-2; (#31) at 1. In doing
so, defendants contend there never was a contract to begin with, and plaintiffs’ arguments are
thus null and void.
II.

Standard of Review
Summary judgment shall be granted “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. P.
56(a). A factual dispute is genuine “if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
A fact is material only if it might affect the outcome of the suit under governing law. Id. The
movant has the “initial responsibility of informing the district court of the basis for its motion,
and identifying those portions of the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, which it believes demonstrate the absence
of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal
citations omitted). Once this initial burden is met, the burden shifts to the nonmoving party. That
party “must set forth specific facts showing that there is a genuine issue for trial.” Id. at 322 n.3.

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The nonmoving party may not rely upon mere allegations or denials of allegations in his
pleadings to defeat a motion for summary judgment. Id. at 324. Instead, that party must present
sufficient evidence from which “a reasonable jury could return a verdict for the nonmoving
party.” Anderson, 477 U.S. at 248; accord Sylvia Dev. Corp. v. Calvert Cnty., Md., 48 F.3d 810,
818 (4th Cir. 1995).
When ruling on a summary judgment motion, a court must view the evidence and any
inferences from the evidence in the light most favorable to the nonmoving party. Anderson, 477
U.S. at 255. “‘Where the record taken as a whole could not lead a rational trier of fact to find for
the nonmoving party, there is no genuine issue for trial.’” Ricci v. DeStefano, 557 U.S. 557, 586
(2009) (quoting Matsushita v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). In the end, the
question posed by a summary judgment motion is whether the evidence “is so one-sided that one
party must prevail as a matter of law.” Anderson, 477 U.S. at 252.
III.

Discussion
Plaintiffs make arguments on five grounds: breach of contract, breach of the implied

covenant of good faith and fair dealing, promissory estoppel, declaratory judgment, and unfair
and deceptive trade practices. The court shall address each ground seriatim.
a. Breach of contract
First, plaintiffs assert that defendants breached their contract with plaintiffs by failing to
honor the terms of the purported permanent loan agreement. For a breach of contract claim to
succeed, there must be both the existence of a valid contract and a breach of the terms of that
contract. Branch v. High Rock Lake Realty, Inc., 151 N.C. App. 244, 250 (2002); Jackson v.
California Hardwood Co., 120 N.C. App. 870, 871 (1995). Here, it is undisputed that plaintiffs

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requested a permanent loan modification and successfully met all requirements in the months
that followed. Plaintiffs then allege that defendants repeatedly failed to provide the necessary
final paperwork, which has ultimately led to plaintiffs’ filing suit. However, defendants have
offered evidence that plaintiffs failed to agree to the permanent loan modification offer after
defendants sent the proper paperwork. Specifically, the record contains multiple phone calls
where plaintiffs stated they received the final paperwork but had not yet accepted it. See Exhibit
A, Lucas Affidavit, ¶ 18; Exhibit A-6, Transcript of Dec. 20, 2012 Call, pp. 2:13-21; Exhibit A7, Transcript of Feb. 1, 2013 Call, pp. 2:11-14. Then, in one phone call, plaintiff Michael Sealy
appeared to refuse the offered final modification agreement, saying that plaintiffs would be
“unable to start the payments at the timeline that they set” and that “I can’t afford the mod for
another 60 days.” Id. Essentially, plaintiffs received a final offer from defendants but refused it,
failing to return the agreement and failing to make payments in accordance with the agreement.
Plaintiffs have offered nothing that contradicts this persuasive evidence, and the court must find
that the final loan modification agreement was not binding between the plaintiffs and any
defendant. Plaintiffs’ breach of contract claim thus fails.
b. Breach of implied covenant of good faith and fair dealing
Next, plaintiffs assert that defendants breached the implied covenant of good faith and
fair dealing. When a contract exists, there is an “implied covenant of good faith and fair dealing
that neither party will do anything which injures the right of the other to receive the benefits of
the agreement.” Bicycle Transit Auth. V. Bell, 314 N.C. 219, 228 (1985) (citation omitted).
Further, if a party does not breach a contract, it is impossible to conclude that the party somehow
did breach implied terms of the same contract. See Suntrust Bank v. Bryant/Sutphin Props., LLC,

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222 N.C. App. 821. For the aforementioned reasons, it is undisputed that a contract did not exist
between plaintiffs and defendants due to plaintiffs’ failure to accept defendants’ offer. Thus,
there was no breach of the implied covenant of good faith and fair dealing, and this count of
plaintiffs’ claim likewise fails.
c. Promissory estoppel
In the alternative to their breach of contract and implied covenant claims, plaintiffs allege
promissory estoppel as a theory of recovery. Under North Carolina law, promissory estoppel is at
best a questionable basis for such a claim. See Dealers Supply Co. v. Cheil Indus., 348 F.Supp.
2d 579 (M.D.N.C. 2004) (court found that North Carolina has rejected the affirmative use of
promissory estoppel); Home Elec. Co. v. Hall & Underdown Heating & Air Conditioning Co.,
86 N.C. App. 540 (1987) (court held that North Carolina case law recognizes promissory
estoppel to a limited extent, but does not approve it for affirmative relief). That said, even if
promissory estoppel was widely recognized as a basis for affirmative relief, there is not a dispute
of material fact between the parties. As laid out above, plaintiffs failed to either sign and return
the final loan agreement or execute it by making the necessary payments. There is no evidence in
the record to support the idea that defendants made a promise that plaintiffs relied upon to their
detriment. Consequently, plaintiffs’ promissory estoppel claim is meritless.
d. Declaratory judgment
Plaintiffs next move for a declaratory judgment, requesting that the court declare the final
loan modification agreement to be a binding modification by the parties. Once again, there is no
evidence that the loan modification agreement was ever final. For the same reasons laid out

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above, it is undisputed that plaintiffs failed to execute and return the proposed loan modification
agreement, and the court declines to make a declaratory judgment over an incomplete contract.
e. Unfair and deceptive trade practices
Finally, plaintiffs allege that the defendants perpetrated unfair and deceptive trade
practices for which plaintiffs are entitled to relief. The elements of such a claim under N.C. Gen.
Stat. § 75-1.1 are: “(1) an unfair or deceptive act or practice, (2) in or affecting commerce, which
(3) proximately caused actual injury to the claimant.” Boyce & Isley, PLLC v. Cooper, 153 N.C.
App. 25, 35 (2002). “A practice is unfair when it offense established public policy as well as
when the practice is immoral, unethical, oppressive, unscrupulous, or substantially injurious to
consumers.” Marshall v. Miller, 302 N.C. 539, 548 (1981). A practice is deceptive if it
“possesse[s] the tendency or capacity to mislead, or create[s] the likelihood of deception.”
Overstreet v. Brookland, Inc., 52 N.C. App. 444, 453 (1981). Whether a particular act constitutes
an unfair or deceptive trade practice is a question of law for the court to decide. McInerney v.
Pinehurst Area Realty, Inc., 162 N.C. App. 285, 289 (2004).
Here, it is unclear what plaintiffs are alleging as unfair and deceptive trade practices. In
their complaint, they state only that all of defendants’ conduct was in or affecting commerce and
constitutes unfair or deceptive trade practice, and allege damages thereby. (#1-1) at 15. Plaintiffs
have offered no factual basis on which the court could find a dispute exists, and the court cannot
find in the record any such conduct by defendants which would potentially constitute a deceptive
or unfair trade practice. As a result, the court holds that plaintiffs’ claim of deceptive or unfair
trade practices fails.

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For the foregoing reasons, the court finds there is no dispute of material fact present on
any of the five counts alleged by plaintiffs against any of the defendants. As a result, the court
finds for the defendants on each count as a matter of well-settled law and will grant summary
judgment in their favor.
ORDER
IT IS, THEREFORE, ORDERED that defendants’ Motions for Summary Judgment
(#26 and #30) is GRANTED and this case is DISMISSED with prejudice.

Signed: October 16, 2017

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