French et al v. Bank of America, N.A. et al (PLR1)
Filing
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MEMORANDUM OPINION in support of the following judgment. Signed by District Judge Pamela L Reeves on 5/19/16. (ADA)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
JAMES and BILLIE FRENCH,
Plaintiffs,
v.
SPECIALIZED LOAN SERVICING, LLC,
Servicing Agent for the Bank of New York
Mellon f/k/a the Bank of New York as
Trustee for the Certificate Holders of the
CWABS Inc., Asset-Backed Certificates,
Series 2007-8, and Bank of America,
Defendants.
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No. 3:14-CV-519-PLR-HBG
MEMORANDUM OPINION
Plaintiffs bring this action to prevent foreclosure of their home alleging causes of
action under the Fair Credit Reporting Act (FCRA), the Real Estate Settlement
Procedures Act (RESPA), the Fair Debt Collection Practices Act (FDCPA), and state law
for intentional/negligent infliction of emotional distress, gross negligence, and violation
of the Tennessee Consumer Protection Act (TCPA). Specifically, plaintiffs request that
the court declare their loan current and award them damages for monetary loss and
emotional distress.
Defendants respond that plaintiffs have only paid principal and
interest due on the loan through May 2012, and are in default as of June 1, 2012.
This matter is before the court on defendants’ motion for summary judgment [R.
15]. Plaintiffs have responded [Doc. 32]. The court has carefully considered the motion
and for the reasons stated herein, finds that defendants’ motion for summary judgment
should be granted.
I. Background
On June 18, 2007, plaintiffs executed a promissory note payable to Countrywide
Home Loans in the principal amount of $147,300. Plaintiffs also executed a Deed of
Trust as security for the promissory note.
After plaintiffs closed on the loan,
Countrywide sold and transferred the loan to The Bank of New York Mellon f/k/a The
Bank of New York, as Trustee for the Certificate Holders of the CWABS Inc. AssetBacked Certificates, Series 2007-8.
In July 2008, Bank of America acquired
Countrywide which subsequently changed its name to BAC Home Loans Servicing.
In 2009, plaintiffs failed to make their monthly payments for January and
February, and defendants sent a “Notice of Intent to Accelerate” to plaintiffs. In May
2010, the parties entered into a loan modification agreement.
In November 2011,
servicing of the loan was assigned to defendant Specialized Loan Servicing (SLS),
effective January 1, 2012. SLS received monthly payments from plaintiffs in January
and February 2012. On February 17, 2012, SLS sent a “Notice of Default and notice of
Intent to Foreclose” to plaintiffs for failure to pay the December 2, 2011 payment.
Plaintiffs state that after the loan modification agreement, their payments were
lower than their initial payments; however, defendants incorrectly marked their payments
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as incomplete payments and began sending plaintiffs collection letters.
Defendants
started foreclosure proceedings in 2012.
Plaintiffs filed Chapter 13 bankruptcy in March 2012. The proposed Chapter 13
plan called for payments of $1,200 per month. Plaintiffs made six payments totaling
$6,255 into the Chapter 13 plan. The parties reached an agreement that there was no
arrearage on the loan as of March 8, 2012. At that point, the Chapter 13 plan had not
been confirmed, and plaintiffs were to use the plan funds to apply toward the loan. SLS
did not receive any payments during the pendency of the bankruptcy, which was
dismissed in September 2012.
No payments were received until November and
December 2013, when plaintiffs made three trial period payments as part of an
application for a loan modification.
Plaintiffs were offered a loan modification in
January 2014, which plaintiffs declined. Since declining SLS’s loan modification offer,
plaintiffs have made no further payments on their loan.
Defendants contend that
plaintiffs have only paid principal and interest due on the loan through May 2012, and are
in default as of June 1, 2012.
II. Standard of Review
Defendants’ motion is brought pursuant to Federal Rule of Civil Procedure 56,
which governs summary judgment. Rule 56(a) sets forth the standard for summary
judgment and provides in pertinent part: “The court shall grant summary judgment 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.” The procedure set out in Rule 56(c) requires
that “a party asserting that a fact cannot be or is genuinely disputed must support the
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assertion.”
This can be done by citation to materials in the record, which include
depositions, documents, affidavits, stipulations, and electronically stored information.
Fed. R. Civ. P. 56(c)(1)(A). Rule 56(c)(1)(B) allows a party to “show that the materials
cited do not establish the absence or presence of a genuine dispute, or that an adverse
party cannot produce admissible evidence to support a fact.”
After the moving party has carried its initial burden of showing that there are no
genuine issues of material fact in dispute, the burden shifts to the non-moving party to
present specific facts demonstrating that there is a genuine issue for trial. Matsushita
Elec. Indus. Co, v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986).
The “mere
possibility of a factual dispute is not enough.” Mitchell v. Toledo Hosp., 964 F.2d 577,
582 (6th Cir. 1992). In order to defeat the motion for summary judgment, the nonmoving party must present probative evidence that supports its complaint. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986). The non-moving party’s evidence is to
be believed, and all justifiable inferences are to be drawn in that party‘s favor. Id. at 255.
The court determines whether the evidence requires submission to a jury or whether one
party must prevail as a matter of law because the issue is so one-sided. Id. at 251-52.
There must be some probative evidence from which the jury could reasonably find for the
nonmoving party. If the court concludes a fair-minded jury could not return a verdict in
favor of the non-moving party based on the evidence presented, it may enter a summary
judgment. Id.
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III. Analysis
A.
Fair Credit Reporting Act
Defendants move for summary judgment on plaintiffs’ claim under the FCRA.
Plaintiffs have failed to respond to defendants’ argument for dismissing their FCRA
claim; and therefore, have failed to come forward with evidence of any specific facts
showing the presence of any genuine issue for trial. Local Rule 7.2 of this court states
that “failure to respond to a motion may be deemed a waiver of opposition to the relief
sought.”
See Local Rule 7.2; Cargle v. City of Chattanooga, 2003 WL 23471545
(E.D.Tenn. 2003); Campbell v. McMinn Cnty, 2012 WL 369090 (E.D.Tenn. 2012).
Accordingly, the court finds that defendants are entitled to summary judgment on
plaintiffs’ claim under the FCRA, and the claim will be dismissed.
B.
Real Estate Settlement Procedures Act
Under RESPA, “if any servicer of a federally related mortgage loan receives a
qualified written request (QWR) from the borrower (or an agent of the borrower) for
information relating to the servicing of such loan, the servicer shall provide a written
response acknowledging receipt of the correspondence within 20 days unless the action
requested is taken within such period.” 12 U.S.C. § 2605(e)(1)(a). To constitute a QWR,
the correspondence from the borrower must enable the servicer to identify the name and
account of the borrower, include a statement of the reasons for the borrower’s belief that
the account is in error, or provide sufficient detail to the servicer regarding other
information sought by the borrower. See Jestes v. Saxon Mortgage Servs. Inc., 2014 WL
1847806 at *5 (M.D.Tenn. May 8, 2014). Within 60 days of receipt of a QWR, the
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servicer must either make appropriate corrections to the borrower’s account or, after
investigation, provide a written explanation including a statement of reasons the servicer
believes the account is correct or any other information requested by the borrower. See
12 U.S.C. § 2605(e)(2). Thus, to state a viable claim under RESPA, a plaintiff must
show that he sent a correspondence which met the requirements of a QWR, that the
servicer failed to timely respond, and that this failure caused plaintiff actual damages.
Jestes, 2014 WL 18746806 at *5. 1
Here, plaintiffs’ RESPA claim is based upon a December 8, 2011, 24-page letter
from plaintiffs’ counsel purporting to be a QWR. The letter contained a generic laundry
list of document requests and legal arguments, none of which were specific to plaintiffs
or their loan. The letter questions whether the “origination” of the loan was lawful and
whether “your company” is the “holder in due course” of the note. The letter then sets
forth pages of document requests for loan documents, origination documents,
agreements, “assignments, transfers, allonges,” etc. This is not a proper QWR as the
letter does not request information required to be responded to under RESPA. See
Minson v. CitiMortgage Inc., 2013 WL 2383658 at *5 (D.Md. May 29, 2013) (although
communication cited RESPA and claimed to be a QWR it was not because it sought
copies of loan documents and proof of servicer’s authority to service loan); Au v. State
Mortg. Co., 948 F.Supp.2d 1086, 1104 (D.Hawaii 2013) (letter which among other things
asked for loan documents was not a QWR and [servicer] had no obligation under RESPA
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The 20 day and 60 day acknowledge and response deadlines were the time periods in effect when plaintiffs sent
their purported QWR letter to defendants. RESPA has since been amended to reduce those time periods to 5 days
and 30 days, respectively.
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to respond); Barocio v. Bank of America N.A., 2012 WL 3945535 at *7 (N.D.Cal. Sept.
10, 2012) (request for loan documents is not a proper subject of a QWR); McGory v. BAC
Home Loan Servs. LP, 2011 WL 1743475 at *2-3 (N.D.Ohio May 6, 2011) (servicer had
no obligation to respond to purported QWR which requested all documents pertaining to
the origination of mortgage, as well as certified copies of loan documents, allonges,
assignment and transfer receipts). Under the authority cited, the court finds that the
December 2011 letter was not a valid QWR, and defendants had no obligation to respond
under RESPA.
Additionally, the record shows that defendants provided a sufficient response to
the letter. First, on December 15, 2011, defendants sent a letter to plaintiffs’ counsel,
attaching a copy of plaintiffs’ loan payment history, a detailed outline of transactions,
servicing expenses paid to third parties, tax and insurance payments, and any late charges
assessed and paid. The letter further stated that “if you have any questions, please call us
at 1-800-669-6607.” Second, on January 4, 2012, defendants sent two additional letters
to plaintiffs’ counsel referencing counsel’s “recent request.”
In one of the letters,
defendant responded to issues raised by counsel and provided a phone number for
customer representatives who could provide assistance to plaintiffs. In the other letter,
defendants notified plaintiffs that SLS was the new servicer of the loan and provided a
phone number and mailing address for SLS, and a phone number for customer service.
Based on the record in this case, the court finds that defendants responded to counsel’s
letter and provided information responsive to plaintiffs’ specific requests. Defendants
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were required to do no more under RESPA. Accordingly, plaintiff’s claim for violation
of RESPA will be dismissed.
C.
Fair Debt Collection Practices Act
Defendants move for summary judgment on plaintiffs’ claim for violation of the
FDCPA. Plaintiffs have failed to respond to defendants’ argument for dismissing their
claim; and therefore, have failed to come forward with evidence of any specific facts
showing the presence of any genuine issue for trial. Accordingly, the court finds that
defendants are entitled to summary judgment on plaintiffs’ claim for violation of the
FDCPA, and the claim will be dismissed.
D.
Intentional/Negligent Infliction of Emotional Distress
To state a claim for intentional infliction of emotional distress under Tennessee
law, a plaintiff must establish the following elements: (1) the defendant’s conduct was
intentional or reckless; (2) the defendant’s conduct was so outrageous that it cannot be
tolerated by civilized society; and (3) the defendant’s conduct resulted in serious mental
injury to the plaintiff. Lourcey v. Estate of Scarlett, 146 S.W.3d 48, 51 (Tenn. 2004). To
establish a claim for negligent infliction of emotional distress, a plaintiff must
demonstrate each of the elements of a general negligence claim, and in addition, a
plaintiff must establish the existence of a “serious or severe emotional injury that is
supported by expert medical or scientific evidence.” Id. at 52.
Plaintiffs allege that they “have suffered severe emotional distress from the
defendants’ outrageous actions that were either intentionally inflicted with gross
indifference or gross negligence and the defendants had to know and should have known
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their conduct would affect these injuries.”
Other than this conclusory statement,
plaintiffs offer no evidence that defendants acted intentionally or recklessly to inflict
emotional distress. Nor have plaintiffs presented any evidence of “outrageous” conduct.
See Sykes v. Bank of America Corp., 2014 WL 468608 at *6-7 (E.D.Mich. Sept. 19,
2014) (finding that defendants’ actions during the loan modification process did not
amount to outrageous conduct and dismissing claim for intentional infliction of emotion
distress).
Additionally, plaintiffs have presented no evidence of any “serious” mental injury.
Plaintiffs assert that they “have begun to suffer some signs of stress” and that they “have
developed a great distrust of SLS and Bank of America.”
constitute serious mental injury under Tennessee law.
However, this does not
In Hossain v. Ocwen Loan
Servicing LLC, the borrower asserted a claim for intentional infliction of emotional
distress based upon his allegation that the defendant knew that its actions would cause
him a “high degree of health and financial loss.” The court held that the plaintiff’s
allegations fell short of showing conduct by the defendant that “was so outrageous in
character and extreme in degree and that such conduct caused a serious mental injury to
the plaintiff.” Hossain, 2014 WL 4347620 at *8 (M.D.Tenn. Aug. 29, 2014). Plaintiffs
have presented no authority to the contrary. Accordingly, the court finds that plaintiffs
cannot establish a claim for intentional infliction of emotional distress.
As to their claim for negligent infliction of emotional distress, plaintiffs have not
presented any medical or scientific evidence to establish the existence of a serious or a
severe emotional injury.
See Prince v. Beal Bank SSB, 2010 WL 841273 at *6
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(M.D.Tenn. Mar. 4, 2010) (granting summary judgment to defendants in a wrongful
foreclosure action when plaintiff failed to present “any competent medical proof showing
that he suffered from a serious or severe emotional injury”).
The court finds that
plaintiffs cannot establish a claim for negligent infliction of emotional distress.
Accordingly, plaintiffs’ claims for intentional/negligent infliction of emotional distress
will be dismissed.
E.
Gross Negligence
Defendants move for summary judgment on plaintiffs’ gross negligence claim.
Plaintiffs have failed to respond to defendants’ argument for dismissing their gross
negligence claim; and therefore, have failed to come forward with evidence of any
specific facts showing the presence of any genuine issue for trial. Accordingly, the court
finds that defendants are entitled to summary judgment on plaintiffs’ claim for gross
negligence, and the claim will be dismissed.
F.
Tennessee Consumer Protection Act
Plaintiffs claim violation of the TCPA because they were promised a reduction in
their loan payments and induced to make trial payments toward a loan modification, only
to be told later that the modification was not going to be the amount they were promised.
Unfortunately for plaintiffs, the Supreme Court of Tennessee has held that the
TCPA does not apply to repossession and collateral disposition activities. See Pursell v.
First Am. Nat’l Bank, 937 S.W.2d 838, 841-42. Based primarily upon Pursell, Tennessee
courts, both state and federal, have held that the TCPA does not apply to alleged
deceptive conduct in foreclosure proceedings. See Jestes, 2014 WL 1847806 at *12.
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Moreover, it is well-settled that the TCPA is inapplicable to loan modification
proceedings because a loan modification deals with the “credit terms of a transaction,”
which are specifically exempted from coverage under the TCPA. See Shelton v. Bank of
America, 2015 WL 9480465 at *4 (M.D.Tenn. Dec. 29, 2015) (noting that “the TCPA
does not apply to either mortgage foreclosures or to actions involving the credit terms of
a transaction, such as loan modifications”); LeBlanc v. Bank of America N.A., 2013 WL
3146829 at *8 (W.D.Tenn. June 18, 2013) (holding that “there is no cause of action under
the TCPA related to loan modification proceedings as they are considered to arise out of
the extension of credit”). Accordingly, the court finds that plaintiffs’ TCPA claim fails as
a matter of law, and the claim will be dismissed.
G.
Declaratory Judgment
Plaintiffs request that the court declare their loan current. The record shows that
plaintiffs stopped making their monthly payments under the loan and are in default
having only paid principal and interest through May of 2012. Further, plaintiffs concede
in their filings that they have not been setting aside all of their monthly payments into
escrow during this four-year period and have neither offered nor indicated that they are
willing or able to tender the full past-due balance under the loan. Based upon these
undisputed facts, plaintiffs are not entitled to a declaration that their loan is current. See
Blake v. Amer. Trust Co., 292 N.W. 504 (Mich. 1940) (plaintiff cannot seek cancellation
of foreclosure where he failed to offer to repay outstanding loan or any part of it); Yuille
v. Amer. Home Mortg. Servs., 2012 WL 1914056 at *1 (6th Cir. May 29, 2012) (where
borrower had defaulted on loan, unclean hands doctrine applied to bar his quiet title
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action). Accordingly, the court finds defendants are entitled to judgment on plaintiffs’
request that the court declare their loan current and plaintiffs’ request for declaratory
relief will be dismissed.
IV. Conclusion
For the foregoing reasons, the court hereby GRANTS defendants’ motion for
summary judgment [R. 15] in its entirety, and this case is DISMISSED.
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UNITED STATES DISTRICT JUDGE
UNITED STATES DISTRICT
A S S
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