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Lambert v. First Federal Mortgage

United States District Court, N.D. Alabama, Middle Division

September 17, 2014

ALLAN R. LAMBERT, an individual; SHELLEY R. LAMBERT, an individual; Plaintiffs,
v.
FIRST FEDERAL MORTGAGE, a domestic entity; FIRST FEDERAL BANK, a domestic corp.; and JPMORGAN CHASE BANK, N.A., a foreign bank, Defendants

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For Allan R Lambert, Shelley R Lambert, Plaintiffs: Jon E Lewis, LEWIS FELDMAN & LEHANE LLC, Birmingham, AL.

For First Federal Mortgage, a domestic entity, First Federal Bank, a domestic corporation, Defendants: Robert P Reynolds, LEAD ATTORNEY, REYNOLDS REYNOLDS & LITTLE LLC, Tuscaloosa, AL; Gilbert C Steindorff, IV, REYNOLDS REYNOLDS & DUNCAN LLC, Tuscaloosa, AL.

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MEMORANDUM OPINION

KARON OWEN BOWDRE, CHIEF UNITED STATES DISTRICT JUDGE.

This matter--asserting the violation of the Real Estate Settlement and Procedures Act (RESPA), the breach of a loan agreement, fraud and other torts related to the loan processing--comes before the court on the " Amended Motion for Summary Judgment by Defendant First Federal Bank" (doc. 16) and " Defendant First Federal Bank's Motion to Strike in Reply to Plaintiffs' Response to First Federal's Motion for Summary Judgment" (doc. 19). The Plaintiffs responded (doc. 18) to the amended motion for summary judgment and accompanying brief, and Defendant First Federal's motion to strike represents its reply. Plaintiffs did not respond to the motion to strike.

For the reasons stated in this Memorandum Opinion, the court FINDS that the motion to strike is due to be DENIED; that the RESPA claims set forth in Count IV are due to be DISMISSED WITH PREJUDICE; and that, as to the remaining claims, the amended motion for summary judgment is due to be GRANTED IN PART and DENIED IN PART.

More specifically, the court will GRANT the amended motion for summary judgment as to the breach of contract claim in

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Count III and will DENY it as to the tort claims in Counts I and II.

I. PROCEDURAL HISTORY

On May 5, 2013, Plaintiffs filed the instant suit in the Circuit Court of St. Clair County, Alabama, and Defendants removed it to this court on June 7, 2013. First Federal Bank, also doing business as First Federal Mortgage, filed the current amended motion for summary judgment on February 26, 2014, and the motion to strike on April 2, 2014.

On April 16, 2014, the Plaintiffs and Defendant JPMorgan Chase Bank, N.A. filed a Pro Tanto Joint Stipulation of Dismissal (doc. 20), requesting that this court dismiss any and all claims among them. Later that day, the court dismissed with prejudice Defendant JPMorgan Chase Bank, N.A. as a party Defendant. (Doc. 21).

II. MOTION TO STRIKE

The first matter raised in the motion to strike is the form of the affidavits; Defendant asserts that although the affidavits state that each affiant was " duly sworn" and contain a notary's signature and date, they do not qualify as sworn affidavits or declarations under penalty of perjury. The court rejects that argument and FINDS that the form of the document comports with the requirements of Rule 56, and that the affidavits as a whole are not due to be stricken.

As to the argument that certain facts contained in the affidavits are inadmissible hearsay and violative of the statute of frauds, the court rejects those arguments. The Plaintiffs can testify to statements that First Federal employees made directly to them, and the allegations in this suit are not limited to breach of a contract to lend money. Accordingly, the court will DENY the motion to strike.

III. FACTS

In 2011, the Plaintiffs, Allan and Shelley Lambert, were in the process of buying a new home and selling their old one. As part of that process, on September 1, 2011, they applied for a mortgage loan from Defendant, First Federal Bank, who also does business under the trade name First Federal Mortgage, subject to a guaranty by the United States Department of Agriculture. The court will refer to these Defendants collectively as " First Federal." On that date, the Lamberts provided DeDee Jenkins, a First Federal employee, with all of the required paperwork for the loan. Jenkins told the Lamberts that First Federal needed to send the paperwork to the underwriter as soon as possible and that she would begin the process that afternoon. The Lamberts understood that Jenkins would be sending the paperwork in the next day. They did not make the finalization of the First Federal loan a contingency in their contract to sell their home.

The " Fees Worksheet" dated 8/29/2011--setting out the proposed loan amount, interest rate, fees, estimated funds needed to close and total estimated monthly payment--gives no closing date and contains the following statement:

THIS IS NOT A GOOD FAITH ESTIMATE (GFE). This " Fees Worksheet" is provided for informational purpose ONLY, to assist you in determining an estimate of cash that may be required to close and an estimate of your proposed monthly mortgage payment. Actual charges may be more or less, and your transaction may not involve a fee for every item listed.

( Doc. 18-2, at 6). The worksheet has the

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signature of Allan Lambert [1] but does not include signatures of representatives of First Federal or the USDA.

On September 12, 2011, Shelley Lambert received a call from Jenkins's assistant, Natalie, asking for the name of the Lambert's homeowners insurance carrier, and Mrs. Lambert provided the information. When Mrs. Lambert responded that she thought First Federal had already sent in the paperwork, Natalie advised her that First Federal had not yet sent in the loan paperwork to the USDA, but that she would be sending it in.

Later that week, the Lamberts spoke to Jenkins who said the USDA had told her that as long as the USDA received the Lambert paperwork by September 15, 2011, the Lamberts should be able to close the loan by September 30, 2011. First Federal entered into no written agreement with the Lamberts committing to a specific closing date for their loan.

During the week beginning Monday, September 26, 2011, the Lamberts began calling Jenkins to check on the status of the loan closing. Jenkins advised them that First Federal had not yet received the paperwork back, but that First Federal staff members were checking on it every day, and would let the Lamberts know as soon as First Federal received it.

On Wednesday, September 28, 2011, Allan Lambert called First Federal to check on the paperwork, and Jenkins advised him that she had just learned that the paperwork had come in on Monday or Tuesday. The Lamberts then called their real estate agent and scheduled a closing, presumably on their new hom, for Friday, September 30, 2011.

On that Friday afternoon, Allan Lambert called Jenkins, and she advised him that she had made a mistake; First Federal had not yet received the paperwork from the USDA. However, she told the Lamberts they " would be fine with the PMI [Purchase Mortgage Insurance] and homestead exemption since [they] turned the paperwork in on September 13, 2011." (Doc. 18-2, at 3 ¶ 16; Doc. 18-3, at 3 ¶ 14).

Because the buyers of the Lambert home wanted to close on Tuesday, October 3, 2011, the Lamberts called Jenkins on Monday, October 3, 2011, and they set up an afternoon meeting. At that meeting, Jenkins told the Lamberts that First Federal had never submitted their paperwork to the USDA; it had only submitted their appraisal.

In light of that failure, Jenkins advised them that they would have to start the loan process over again, and she presented them with new October loan paperwork. Several times during the October 3 meeting, Jenkins stated, " I'm not going to take the blame for this because it's not my fault. People make mistakes. We are all human." (Doc. 18-3, at 3).

On October 13, 2011, First Federal extended a mortgage loan to the Lamberts in the original amount of $204,018.00, subject to a 90% guaranty by the USDA. This October loan reflects that the monthly payments increased $84.75 over the projected monthly payments on the August/September worksheet.

The Lamberts claim, however, that their monthly payments were $193.38 more than they would have been had they closed on September 30, 2011. To reach this number, they point to two increased monthly charges on the October worksheet--real estate taxes of $142.80 (with an increase of $67.80 over the prior month) and mortgage insurance (with an increase of $50.58 because

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the August/September worksheet included no monthly charge on the line listed for mortgage insurance)--without taking into account other October charges that decreased since August/September. The Lamberts state in their affidavits that the increased real estate taxes occurred because of their " failure to close by September 30, 2011 and claim our homestead exemption." (Doc. 18-2, at 4; Doc. 18-3, at 3). Although the Lamberts do not explain this statement, presumably they refer to the October 1 property tax due date with the homestead exemption based on who owns the property and occupies it as the primary residence on the first day of the tax year. This homestead exemption problem would affect the property tax payments for one year. The Lamberts state that, because of the homestead ...


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