CAVE et al v. SAXON MORTGAGE SERVICES, INC. et al

Filing 199

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE JOHN R. PADOVA ON 2/8/17. 2/8/17 ENTERED AND COPIES E-MAILED.(mbh, )

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF PENNSYLVANIA

LISA and SCOTT CAVE, on behalf of
themselves and all others similarly situated,
Plaintiffs,
Civ. A. No. 11-4586

v.
SAXON MORTGAGE SERVICES, INC.,
Defendant.
WILLIAM D. CAVE, on behalf of himself and
all others similarly situated,
Plaintiffs,
v.

Civ. A. No. 12-5366
SAXON MORTGAGE SERVICES, INC.,
Defendant.

MEMORANDUM
Padova, J.

I.

February 8, 2017

INTRODUCTION
The class certification motions of Plaintiffs Lisa and Scott Cave in Civil Action Number

11-4586 and Plaintiff William D. Cave in Civil Action Number 12-5366 were denied in an
Opinion dated October 11, 2016. (See Docket Entry 191 (“Class Cert. Opinion”). 1) William D.

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Unless otherwise noted, all Docket Entry references are to Civil Action Number 125366. Because the parties are well familiar with the prior proceedings, submissions and
decisions in these cases, we set out only the elements of the record necessary to the discussion of
the pending Motion.

Cave (“Cave”) now moves for reconsideration of that decision. He argues that we erred in
concluding that he could not meet the predominance element of Fed. R. Civ. P. 23(b). He also
argues that we erred in finding that he was an atypical and inadequate representative for the class
under Rule 23(a). As there was no manifest error in our predominance determination that the
putative class members’ eligibility for a permanent Home Affordable Modification Program
(“HAMP”) modification was an individual determination that could not be shown through
common evidence or in our finding that Cave’s individual situation made him atypical of the
Class he sought to represent, there is no cause to reconsider our decision.
II.

LEGAL STANDARD
‘“The purpose of a motion for reconsideration . . . is to correct manifest errors of law or

fact or to present newly discovered evidence.”’ Howard Hess Dental Labs. Inc. v. Dentsply Int’l,
Inc., 602 F.3d 237, 251 (3d Cir. 2010) (quoting Max’s Seafood Cafe ex rel. Lou-Ann, Inc. v.
Quinteros, 176 F.3d 669, 677 (3d Cir. 1999) (quoting Harsco Corp. v. Zlotnicki, 779 F.2d 906,
909 (3d Cir. 1985))). A proper motion for reconsideration under Fed. R. Civ. P. 59(e) ‘“must
rely on one of three grounds: (1) an intervening change in controlling law; (2) the availability of
new evidence; or (3) the need to correct clear error of law or prevent manifest injustice.”’ Wiest
v. Lynch, 710 F.3d 121, 128 (3d Cir. 2013) (quoting Lazaridis v. Wehmer, 591 F.3d 666, 669 (3d
Cir. 2010) (quotation omitted)). “Because federal courts have a strong interest in finality of
judgments, motions for reconsideration should be granted sparingly.” Continental Cas. Co. v.
Diversified Indus., Inc., 884 F. Supp. 937, 943 (E.D. Pa. 1995). It is improper on a motion for
reconsideration to ask the Court to ‘“rethink what it had already thought through — rightly or
wrongly.’” In re Blood Reagents Antitrust Litig., 756 F. Supp. 2d 637, 640 (E.D. Pa. 2010)
(quoting Glendon Energy Co. v. Borough of Glendon, 836 F. Supp. 1109, 1122 (E.D. Pa. 1993)).

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Therefore, “[m]ere dissatisfaction with the Court’s ruling . . . is not a proper basis for
reconsideration.” Progressive Cas. Ins. Co. v. PNC Bank, N.A., 73 F. Supp. 2d 485, 487 (E.D.
Pa. 1999).
III.

THE PREDOMINANCE ISSUE
Cave argues that we made an error of law when we determined that the question of

whether class members had satisfied the two conditions precedent to receive a permanent
modification could not be shown using evidence that was common to the class. (Class Cert.
Opinion at 41.) In making this argument he does not contest that these conditions precedent were
applicable to class members’ entitlement to receive a permanent modification, but he argues that
we “did not consider which party is contractually obligated to verify the truth and accuracy of
the borrower’s financial information.” (Docket Entry 195, Pl. Mem. in Support of Mot. for
Reconsideration (“Pl. Mem.”) at 8.) He argues that under Section 2.F of the Temporary Payment
Plan agreement (“TPP”), Saxon was obligated to verify by his Modification Effective Date
(“MED”) that his prior verbal representations remained true and accurate during the trial period.
Cave contends that “the Court has improperly shifted this verification obligation to the borrower
and also ignored Saxon’s obligation to provide written notice by the MED if the borrower did not
qualify.” (Id. at 8-9.)
This argument provides no basis to reconsider our decision. First, the TPP language from
which the Class claim flows is not only Section 2F, but also from the first sentence of the TPP, as
reiterated later in Section 3. These provisions set out the two conditions precedent that a borrower
was required to satisfy to receive a permanent modification after the completion of his trial
period: (1) making each trial period payment in full and on time, and (2) the continued validity of
financial information the borrower orally submitted when initially applying for the TPP. (See

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TPP (Pl. Ex. 22 (“If I am in compliance with this [TPP] and my representations in Section 1
continue to be true in all material respects, then the Lender will provide me with a [Modification
Agreement] as set forth in Section 3 . . .”)).) (emphases added). In earlier decisions we held that
an initial communication from Saxon that a borrower “qualified” for a TPP based on his verbal
representations — in the form of countersigning the TPP and returning it to the borrower — made
that agreement a binding contract, but that a permanent modification provided by Saxon was
explicitly subject to these two conditions precedent. (See Cave v. Saxon Mortg. Servs., Inc., Civ.
A. No. 11-4586, 2016 WL 4203864, at *2 (E.D. Pa. Mar. 4, 2016) (“March 2016 Opinion”)
(quoting Cave v. Saxon Mortg. Servs., Inc., Civ. A. No. 11-4586, 2012 WL 1957588, at *5 (E.D.
Pa. May 30, 2012) (“May 2012 Opinion”) (“We therefore conclude that the TPP contains a clear
promise that Saxon will provide Plaintiffs with a permanent modification if several conditions
precedent are met. However, it is clear that Saxon was only obligated to provide a permanent
modification if Plaintiffs qualified.”); March 2016 Opinion at *6 (“Saxon’s countersigning the
Cave II Plaintiff’s TPP and returning it to the borrower formed a binding obligation so long as the
two conditions precedent were satisfied. . . .”) Cave v. Saxon Mortg. Servs., Inc., Civ. A. No.
11-4586, 2015 WL 6153754, at *2, 4-5, 8 (E.D. Pa. Oct. 20, 2015) (“In deciding Saxon’s earlier
motions to dismiss the Cave I and Cave II complaints, we determined that the Plaintiffs had
plausibly alleged breach of contract claims based upon the allegation that Saxon’s countersigning
a borrowers’ TPP (1) constituted a determination that the borrower qualified for a HAMP
modification, and (2) created a binding obligation to make the modification subject to two
conditions precedent.”). The Class Cert. Opinion reaffirmed this ruling, stating that “to be
‘actually eligible’ for a permanent modification, each borrower had to satisfy [the same] two
conditions precedent.” (Class Cert. Opinion at 41.)

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We held that predominance was lacking because there was no way to determine from
evidence that was common to the class whether a borrower’s representations were in fact true in
all material respects. Rather, an evaluation of the individual statements and submissions of each
borrower was required to determine whether they satisfied the conditions precedent to a
permanent modification. Id. (“Whether a borrower submitted accurate financial information and
whether that information remained true during the course of the trial plan period requires
evaluation of each borrower’s verbal representations and their follow-up document
submissions.”). Cave’s contention that we did not consider which party is contractually obligated
to verify the truth and accuracy of the borrower’s financial information, does not address the
discrete focus of our predominance holding that each class member had the obligation to submit
accurate information to satisfy the TPP’s conditions precedent to recover on their claim, and that
determining whether submitted information was accurate was incapable of being shown by
common evidence. 2

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To the extent that Cave bases his arguments on language contained in our prior Daubert
opinions, we find there is no ground for reconsideration. One of the Daubert “fit” issues
concerned the opinions expressed by Saxon’s expert on the issue of whether the MED listed in a
borrower’s TPP was fixed or variable. In addressing this issue, we rejected the expert’s reliance
on extrinsic evidence to show the date was variable, stating that because ‘“it was incumbent upon
Saxon under the terms of the signed TPP to issue a notice of denial within the time period
specified’ . . . [it] follows inescapably from our prior holding that, for the Cave II Class, a
permanent modification would otherwise ‘occur automatically upon the expiration of the threemonth trial period.’” Cave v. Saxon Mortg. Servs., Inc., Civ. A. No. 11-4586, 2016 WL
4203864, at *6 (E.D. Pa. Mar. 4, 2016) (quoting May 2013 Opinion, at *7 (quoting October
Opinion, at *5 (emphasis omitted) and May 2012 Opinion at *5))). In so holding, we were not
focused on the borrowers’ satisfaction of the conditions precedent, but rather the consequences
arising thereafter. We prefaced that discussion by noting that a binding obligation to provide a
permanent modification arose “so long as the two conditions precedent were satisfied.” Id.;
accord Cave v. Saxon Mortg. Servs., Inc., Civ. A. No. 12-5366, 2013 WL 1915660, at *7 (E.D.
Pa. May 9, 2013) (stating that Saxon’s “reading of Sections 2.F and 2.G is contrary to Saxon’s
clear obligation under the TPP to provide permanent modifications if Plaintiffs made all trial
payments and their financial information continued to be true and accurate.” (emphasis added).)
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Cave also argues that we erred in concluding that “actual eligibility” for a HAMP
modification was “a definitional element of the Class.” (Pl. Mem. at 9 (“Moreover, the Court is
incorrect in concluding that ‘actual eligibility’ for a HAMP modification is a definitional element
of the Class”).) He argues that he included the “did not receive a permanent modification” term
in the proposed class definition “because that is one of the events that caused harm to Plaintiff
and the Class members.” (Id.) He asserts that in the absence of a timely eligibility determination
by Saxon and provision of written notice to the borrower terminating the trial period, Saxon’s
voluntary countersignature of the TPP at the beginning of the HAMP process conclusively
establishes the borrower’s HAMP eligibility and no further common evidence of an individual
borrower’s purported “actual eligibility” for a permanent modification is required. (Id. at 10.)
Cave’s assertion that we erred by “redefining” the proposed class is not cause to
reconsider our decision. The Class proposed by William Cave included all borrowers in certain
states whose loans had been serviced by Saxon and who, “during the period between April 2009
and October 2009: (i) entered into TPP Contracts with Saxon that are substantially similar to
Plaintiff William Cave’s TPP Contract and that Saxon counter-signed and returned to the
borrowers, (ii) made all monthly payments as required by their respective TPP Contracts, (iii) and
did not receive permanent Home Affordable Modifications by the Modification Effective Date set
forth in their respective TPP Contracts.” (Docket Entry 64, Cave II SAC at ¶ 94a.) Because of
the conditions precedent, we concluded that the claim could not be shown by evidence that was
common to the class:
Whether a borrower submitted accurate financial information to Saxon is a
condition precedent to receiving a permanent modification under the terms of the
TPP and the HAMP regulations and, we find, is an individual issue not capable of
proof with evidence that is common to the class. Plaintiffs have proposed a class
definition for the Cave II Class that premises membership on eligibility for a
HAMP modification — i.e., “not receiving a permanent modification” — but that
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fails to incorporate both requirements for receiving a permanent modification.
We find that this makes class treatment of the claim ultimately unworkable since
common questions cannot predominate and individual issues concerning whether
each member of the proposed class satisfied the eligibility requirements for a
permanent modification overwhelms questions that are common to the class.
(Class Cert. Opinion at 41-42 (internal citation and footnote omitted).)
Based on this quoted language, Cave asserts that we concluded that actual eligibility was
“a definitional element of the Class.” (Pl. Mem. at 9.) This is inaccurate. We did not change the
proposed Cave II Class definition. We held that the definition, as proposed, could not qualify for
class treatment because it failed to incorporate the requirement set out in each member’s TPP to
“submit accurate financial information,” which was a necessary element of the underlying claim
that the Class would have to prove as part of its liability case. (Class Cert. Opinion at 41 (“To
resolve this Rule 23(b)(3) predominance issue, we must first determine what Plaintiffs need to
prove at trial to establish their claim, since it is the elements of the underlying legal claim — and
not the class definition — which plaintiffs must demonstrate are “capable of proof at trial through
evidence that is common to the class rather than individual to its members.”) (citations omitted).)
Since the Class had not shown that this element could be proven by evidence that was common to
the class, we rejected the argument that common issues predominated. Since there was no error in
our conclusion that borrowers had to meet these two conditions precedent to prove their breach of
contract claim, we did not err in our conclusion that the Class had to demonstrate how it would
show this by common evidence. 3

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Alternatively, because the instant Motion repeats the argument Cave raised in his class
certification submissions — and which we previously considered and rejected — he is not entitled
to reconsideration. He argued in numerous submissions that the TPP required a permanent
modification to automatically issue unless Saxon determined that he was ineligible by the MED.
(See Docket Entry 104 at 45 (“. . . Saxon countersigned the Cave II Class members’ TPPs. Once
Saxon countersigned the Class members’ TPPs, it established that they did, in fact, qualify for
modifications. Thus, the borrowers’ submission of documents, verifications, and other obligations
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Finally, even if Cave is correct that our discussion of the “submit accurate financial
information” part of the predominance issue was erroneous, it would not alter our alternative
reason for finding that common issues do not predominate. We also based our predominance
finding on the wholly separate problem of the Class’s inability to show through common
evidence that Saxon failed to meet its obligation to issue denials by the MED listed in each
borrowers’ TPP (see Class Cert. Opinion at 43). While Cave relied on Saxon’s 30(b)(6) witness
testimony that Saxon did not issue any written denials until at least March 2010, we held that (1)
the form of denial notice was not specified in the TPP, (2) the parties could agree to modify the
length of the trial period, and (3) Saxon produced sufficient evidence from which a jury could
conclude that it extended the trial periods for individual borrowers. 4 (Id.) Whether the parties
agreed to extend the trial plans was also found to be an individual inquiry not capable of proof
through common evidence.

aimed toward qualifying for the modifications, all become moot.”); Docket Entry 90-1 at 37
(arguing that because Saxon admitted it did not issue any denials until after the latest possible
MED for Cave II Class’s TPPs, “Plaintiffs can establish Saxon’s breach of the TPPs on a classwide basis” based on that proof alone); Dkt. No. 181 at 12 (“Since Saxon’s Rule 30(b)(6)
witnesses have established that all members of the Cave II Class would have received TPPs
countersigned by Saxon, and Saxon failed to issue any denials by the MED, there is no need for
any individualized inquiries.”).)
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While Cave characterizes this evidence in the instant Motion as Saxon “unilaterally
instruct[ing] borrowers to continue making trial payments and [making] unending requests for
more documents without giving homeowners like Mr. Cave any idea as to when they could
expect a final eligibility decision” (Pl. Mem. at 17), we held that a jury could find that Saxon
offered to extend borrowers’ trial plans as provided in Treasury directives and that the offer
could be accepted by way of a borrower continuing to make trial period payments, thereby
further delaying or avoiding foreclosure or other default remedies. (Class Cert. Opinion at 4445.) Cave’s characterization of the evidence as “unilateral” does not refute that Saxon’s
individual interactions with borrowers is evidence of individual issues precluding his ability to
show predominance. Under the holding of In re Hydrogen Peroxide Antitrust Litig., 552 F.3d
305, 320 (3d Cir. 2008), we were required to “resolve factual disputes by a preponderance of the
evidence and make findings that each Rule 23 requirement is met or is not met, having
considered all relevant evidence and arguments presented by the parties.”
Cave’s
characterization of the evidence is insufficient to show our finding was manifestly erroneous.
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IV.

THE TYPICALITY AND ADEQUACY ISSUE
Cave also seeks reconsideration of our decision that he was not typical of the class he

sought to represent. We found that Cave failed the typicality and adequacy tests because he was
likely subject to a defense that was inapplicable to many class members and that would likely
become a major focus of the litigation, namely, whether the oral financial information he
provided to Saxon to get his TPP was accurate. He thus arguably never personally satisfied the
condition precedent that his submitted financial information remain true and correct during the
trial period, which made him atypical of the Cave II Class. (Class Cert. Opinion at 36-37.) In
the instant Motion, Cave incorporates his arguments regarding error on the predominance issue
by asserting that (1) the ability to satisfy the conditions precedent is irrelevant and (2) we erred
in finding that he was atypical and inadequate since, like the other members of the class, he
received a countersigned TPP, made his trial payments, and did not receive a permanent
modification.
Because we find that Cave is not entitled to reconsideration on his predominance
arguments, we did not err in concluding that he could not demonstrate typicality and adequacy.
Part of the predominance inquiry was to determine what the class had to prove at trial to prevail
on its breach of contract claim.

The evidence of Cave’s inaccurate financial information

establishes that he could not personally prevail on his claim even if other class members could
demonstrate the “submit accurate financial information” element with proof that is common to
the class.
The balance of Cave’s reconsideration arguments on typicality and adequacy focus on the
disputed evidence regarding his financial information. He asserts that he “believed” at the start
of the process that he would qualify if Saxon considered his wife’s income, and he denies that he

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overstated his income. (Pl. Mem. at 19.) We addressed the issue of his wife’s income in the
Class Cert. Opinion by (1) noting that he made the request that her income be considered on
March 15, 2010, after Saxon informed him that he did not qualify for HAMP because his own
income was insufficient, and (2) finding that his wife was not a borrower on the Mortgage and
Note and did not regularly contribute to the mortgage payments. (Class Cert. Opinion at 34
(citing Def. Ex. 34; Lechtzin Decl. Ex. 4 (deposition transcript of Wm. Cave (“Wm. Cave Tr.”) at
47:4-7, 54:21-24).) We also noted that Saxon put on evidence that Cave never submitted his
2009 Form W-2 before the servicing of his loan by Saxon ended, and that Cave did not allege or
prove otherwise. (Id.) Cave’s Motion for Reconsideration provides no basis to conclude that the
financial information findings were manifestly erroneous.
We reject Cave’s assertion that we erred in finding that he misstated his financial
information. The class certification record shows that although Cave could not recall at his
deposition what income figures he provided to Saxon during in his initial phone contact, Saxon
calculated that these figures were a monthly net income of $2,000 and a monthly gross income of
$2,500 by referring to its own servicing records — which indicated the trial period payment was
set at $775.84 — since the HAMP guidelines required that the trial period payment equal 31% of
a borrower’s gross income. (See Lechtzin Decl. Ex. 21 (Wm. Cave TPP Package) (showing trial
period payment was $775.84/month); Docket Entry 93 (Saxon Ex. 8 (recording income
“calculated for loan” in Saxon’s database)) 5; Wm. Cave Tr. at 228:3-230:17 (stating Cave did not
remember what he told Saxon but stating that trial payment was $775.84/month).) It also put on
evidence that Cave’s documents did not show that he had a net monthly income of $2,000.

5

Cave argues that any statement attributed to him in Exhibit 8 is hearsay under Fed. R.
Evid. 801(c) and is inadmissible under Rule 802. He does not, however, address the application
of the business record exclusion contained in Rule 803(6)(B).
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(Docket Entry 93 (Saxon Ex. 9 (Cave profit and loss statement showing monthly income of
$400)).) Since Cave testified that he could not remember the income information he had
provided, there was no manifest factual error in our conclusion that Cave’s verbal information
was as Saxon asserted and that Cave’s subsequently submitted documents showed his verbal
information was not accurate.
Additionally, any alleged error arising from this finding was harmless. Cave does not
contest that, as we stated in the Class Cert. Opinion, the typicality inquiry asks whether the
named plaintiff “is subject to a defense that is both inapplicable to many members of the class
and likely to become a major focus of the litigation.” (Id. at 32 (citing Marcus v. BMW of No.
Am., LLC, 687 F.3d 583, 598-99 (3d Cir. 2012).) Saxon argued that Cave was not typical
because his income was insufficient and because he failed to submit required documentation.
The failure to submit documentation made Cave subject to an individual defense that alone
rendered him atypical and thus unable to show that our typicality conclusion was manifestly
erroneous.
V.

CONCLUSION
The Motion for Reconsideration is denied since Plaintiff has not shown that our class

certification findings were manifestly erroneous. It was incumbent on Class members to show by
common evidence that they could satisfy the two conditions precedent to receive a permanent
modification. Nothing in the Motion for Reconsideration demonstrates that they can do that. It
was incumbent on Cave to show that his claims were typical of those of the Class. He was unable
to prove typicality because Saxon established that he was subject to defenses not generally

11

applicable to other class members. Nothing in the Motion for Reconsideration changes this
conclusion.
An appropriate Order will be entered.
BY THE COURT:

/s/ John R. Padova
________________________________
JOHN R. PADOVA, J.

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