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McCleary v. DLJ Mortgage Capital, Inc.

United States District Court, S.D. Alabama, Southern Division

October 11, 2017

DLJ MORTGAGE CAPITAL, INC., et al., Defendants.



         This matter is before the Court on the motion of the three remaining defendants (“the defendants”) for summary judgment. (Doc. 107). The parties have submitted briefs[1] and evidentiary materials in support of their respective positions, (Docs. 107-08, 116-18), and the motion is ripe for resolution. After careful consideration, the Court concludes the motion is due to be granted in part and denied in part.


         According to the second amended complaint, (Doc. 77), the plaintiff financed the purchase of her home with a loan from Wilmington Finance (“Wilmington”), executing a promissory note in favor of Wilmington and a mortgage with Mortgage Electronic Registration Systems, Inc. (“MERS”) as nominee for Wilmington. The loan was sold to U.S. Bank N.A., (“U.S. Bank”), although the plaintiff disputes the validity of the transfer. MERS transferred the mortgage to GMAC but lacked authority to do so. MERS and GMAC then assigned the mortgage and note to U.S. Bank as trustee but lacked authority to do so. (Id. at 3).

         Since 2010, there have been four servicers of the loan. In chronological order, they are: Green Tree Servicing, Inc. (“Green Tree”); Select Portfolio Servicing, Inc. (“Select”); Selene Finance, LP (“Selene”); and DLJ Mortgage Capital, Inc. (“DLJ”). The only remaining defendants in this action are Select, Selene and DLJ (“the defendants”).[2] These defendants serviced the loan from June 2013 to the present. (Doc. 77 at 3-4).

         In November 2014, Selene, DLJ and U.S. Bank began foreclosure proceedings. They did so even though the plaintiff was not in default and even though the defendants had failed to accept the plaintiff's payments, had returned her payments, had accepted payments without properly crediting them to her account, had improperly assessed fees and expenses to the account, and had failed to respond to her written request for information and explanation. Moreover, the defendants initiated foreclosure proceedings even though the assignment of the note and mortgage was defective, void or otherwise unenforceable and even though the foreclosing entity lacked standing or authority to initiate such proceedings. The plaintiff's credit and reputation were damaged by the defendants' publication of information regarding the foreclosure and the plaintiff's alleged default as well as by their reporting false information regarding her alleged default to national credit bureaus. The plaintiff claims economic damages, reputational damages and mental anguish as a result of the defendants' actions. (Doc. 77 at 4-9).

         The second amended complaint includes eleven causes of action, each one asserted against all three defendants:

• Count One Negligence
• Count Two Wantonness
• Count Three Unjust enrichment
• Count Four Breach of contract
• Count Five False light
• Count Six Defamation
• Count Seven Truth in Lending Act (“TILA”)
• Count Eight Real Estate Settlement Procedures Act (“RESPA”)
• Count Nine Fair Credit Reporting Act (“FCRA”)
• Count Ten Fair Debt Collection Practices Act (FDCPA”)
• Count Eleven Declaratory relief

(Doc. 77 at 9-31).


         Summary judgment should be granted only if “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). The party seeking summary judgment bears “the initial burden to show the district court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). The moving party may meet its burden in either of two ways: (1) by “negating an element of the non-moving party's claim”; or (2) by “point[ing] to materials on file that demonstrate that the party bearing the burden of proof at trial will not be able to meet that burden.” Id. “Even after Celotex it is never enough simply to state that the non-moving party cannot meet its burden at trial.” Id.; accord Mullins v. Crowell, 228 F.3d 1305, 1313 (11th Cir. 2000); Sammons v. Taylor, 967 F.2d 1533, 1538 (11th Cir. 1992).

         “When the moving party has the burden of proof at trial, that party must show affirmatively the absence of a genuine issue of material fact: it must support its motion with credible evidence ... that would entitle it to a directed verdict if not controverted at trial. [citation omitted] In other words, the moving party must show that, on all the essential elements of its case on which it bears the burden of proof, no reasonable jury could find for the nonmoving party.” United States v. Four Parcels of Real Property, 941 F.2d 1428, 1438 (11th Cir. 1991) (en banc) (emphasis in original); accord Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993).

         “If the party moving for summary judgment fails to discharge the initial burden, then the motion must be denied and the court need not consider what, if any, showing the non-movant has made.” Fitzpatrick, 2 F.3d at 1116; accord Mullins, 228 F.3d at 1313; Clark, 929 F.2d at 608.

         “If, however, the movant carries the initial summary judgment burden ..., the responsibility then devolves upon the non-movant to show the existence of a genuine issue of material fact.” Fitzpatrick, 2 F.3d at 1116. “If the nonmoving party fails to make ‘a sufficient showing on an essential element of her case with respect to which she has the burden of proof, ' the moving party is entitled to summary judgment.” Clark, 929 F.2d at 608 (quoting Celotex Corp. v. Catrett, 477 U.S. 317 (1986)) (footnote omitted); see also Fed. R. Civ. P. 56(e)(2) (“If a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may … consider the fact undisputed for purposes of the motion ….”).

         In deciding a motion for summary judgment, “[t]he evidence, and all reasonable inferences, must be viewed in the light most favorable to the nonmovant ….” McCormick v. City of Fort Lauderdale, 333 F.3d 1234, 1243 (11th Cir. 2003). “Therefore, the plaintiff's version of the facts (to the extent supported by the record) controls, though that version can be supplemented by additional material cited by the defendants and not in tension with the plaintiff's version.” Rachel v. City of Mobile, 112 F.Supp.3d 1263, 1274 (S.D. Ala. 2015), aff'd, 633 Fed.Appx. 784 (11th Cir. 2016).

         There is no burden on the Court to identify unreferenced evidence supporting a party's position.[3] Accordingly, the Court limits its review to the exhibits, and to the specific portions of the exhibits, to which the parties have expressly cited.[4] Likewise, “[t]here is no burden upon the district court to distill every potential argument that could be made based upon the materials before it on summary judgment.” Resolution Trust Corp. v. Dunmar Corp., 43 F.3d 587, 599 (11th Cir. 1995); accord Gennusa v. Canova, 748 F.3d 1103, 1116 (11th Cir. 2014). The Court accordingly limits its review to those arguments the parties have expressly advanced.[5]

         I. Negligence and Wantonness.

         Counts One and Two allege that the defendants negligently or wantonly: (1) serviced the plaintiff's loan; (2) attempted to collect sums she did not owe; (3) caused her property insurance to be canceled; (4) defaulted her; (5) attempted a foreclosure sale; (6) failed to ensure that information disseminated to third parties regarding the loan's payment history was not false and was maximally accurate; (7) failed to properly train their employees on how to investigate disputed accounts; (8) failed to properly train and/or supervise their employees and agents regarding the handling of her account; and (9) failed to remove adverse reporting from her credit after she disputed it. (Doc. 77 at 9-11). The defendants argue that all aspects of these claims are claims for negligent or wanton mortgage servicing, which cause of action Alabama does not recognize. (Doc. 108 at 4-6).

         As this Court has noted, “[r]ecent federal precedent interpreting Alabama law has uniformly found that no cause of action for negligent or wanton servicing of a mortgage account exists under Alabama law, at least in the absence of personal injury or property damage ….” Selman v. CitiMortgage, Inc., 2013 WL 838193 at *5 (S.D. Ala. 2013). Moreover, “[t]he Court agrees with these decisions' construction of Alabama law, and particularly their emphasis that the mortgage servicing obligations at issue here are a creature of contract, not of tort, and stem from the underlying mortgage and promissory note executed by the parties, rather than a duty of reasonable care generally owed to the public.” Id. at *6. Therefore, such claims “fail as a matter of law.” Id. at *5; accord James v. Nationstar Mortgage, LLC, 92 F.Supp.3d 1190, 1198-99 (S.D. Ala. 2015); Quinn v. Deutsche Bank National Trust Co., 2014 WL 977632 at *6-7 (S.D. Ala. 2014). All three of these cases involved negligent servicing claims brought against a servicer.[6] The Court acknowledged these principles in resolving the defendants' motion to dismiss. (Doc. 74 at 2-3). The Court granted their motion to dismiss these claims to the extent they expressly or in effect assert a claim of negligent or wanton loan servicing. (Id. at 9). However, because the defendants “have not undertaken to demonstrate that the entirety of Counts One and Two is captured by the foregoing rule[, ] [t]he parameters of the movants' legal victory thus remain indeterminate.” (Id. at 3).

         The plaintiff does not ask the Court to reconsider its ruling, but the defendants request the Court to extend it to all nine aspects of the negligence and wantonness claims. They note the plaintiff's “admission” in her deposition that “all of the alleged actions or inactions of the defendants in [Counts One and Two] pertain to the servicing of [her] mortgage loan.” (Doc. 108 at 5). Whether conduct of a servicer falls within the prohibition on claims of negligent or wanton loan servicing, however, is a legal question that must be answered by legal authority and legal reasoning, not by a lay plaintiff's casual description of her claim.

         The defendants also cite Gregory v. Select Portfolio Servicing, Inc., 2016 WL 4540891 (N.D. Ala. 2016). (Doc. 108 at 3 n.2). The plaintiff in Gregory made exactly the same allegations of negligence and wantonness as does the plaintiff herein. Id. at *10. The Gregory Court ruled that the first five of these allegations fell within the prohibition on claims of negligent or wanton loan servicing. It also ruled that the sixth and ninth allegations were preempted by FCRA and that the seventh and eighth allegations failed because the plaintiff could not establish all the elements of a claim for negligent employment. Id. at *10-11.

         The Court agrees with the Gregory Court as to the first five of the plaintiff's allegations. Negligent servicing, negligent collection, negligent insurance cancellation, negligent default and negligent foreclosure all address the defendants' performance of their servicing obligations. The Court likewise considers the sixth and ninth allegations (negligent dissemination of inaccurate information and negligent failure to remove adverse reporting disputed by the plaintiff) to implicate the defendants' servicing obligations. E.g., Jackson v. Bank of New York Mellon, 2016 WL 4942085 at *4 (S.D. Ala. 2016).[7]

         The seventh and eighth allegations (negligent training and supervision) fall in a different category. While they appear also to implicate the defendants' servicing obligations, they are dressed in the language of a separately recognized family of torts, and it is not immediately apparent that the Alabama courts would not analyze them in the latter context. Even under that analysis, however, the plaintiff's claim would fail. Such a claim requires that “the employee committed a tort recognized under Alabama law ….” Selman, 2013 WL 838193 at *6; accord Gregory, 2016 WL 4540891 at *11. The only perceivable underlying tort an employee of the defendants could have committed with respect to investigating disputed accounts and handling the plaintiff's account is negligent or wanton loan servicing which, as noted above, is not a recognized tort under Alabama law. Id.; accord Costline v. BAC Home Loans, 946 F.Supp.2d 1224, 1235 (N.D. Ala. 2013); Collins v. BSI Financial Services, 2016 WL 6776284 at *10 (M.D. Ala. 2016); Bennett v. Nationstar Mortgage, LLC, 2015 WL 5294321 at *7 (S.D. Ala. 2015).

         The plaintiff in her response does not address or contest any of the foregoing. Instead, she argues that these counts are based on a duty not to mislead her by providing inaccurate information about the status of her loan. (Doc. 116 at 52-53). The second amended complaint's allegations of negligence and wantonness have been set forth above, and they do not include any allegation of misrepresentations to, or the provision of erroneous information to, the plaintiff. (Doc. 77 at 9-11). Because the plaintiff cannot amend her complaint by brief, [8] the Court need not and does not consider her argument further.

         For the reasons set forth above, the defendants' motion for summary judgment as to Counts One and Two is due to be granted.

         II. Unjust Enrichment.

         Count Three alleges that the plaintiff “has been forced to pay charges” that were improper and that the defendants have been unjustly enriched “by the payment of unauthorized and unearned” fees and other charges. (Doc. 77 at 12).

         The parties agree that, in order to prevail at trial on this claim, the plaintiff must prove that the defendants “hold” funds that should be returned to her. (Doc. 108 at 7; Doc. 116 at 54). See, e.g., Mantiply v. Mantiply, 951 So.2d 638, 654 (Ala. 2006) (“In order for a plaintiff to prevail on a claim of unjust enrichment, the plaintiff must show that the defendant holds money which, in equity and good conscience, belongs to the plaintiff or holds money which was improperly paid to defendant because of mistake or fraud.”) (emphasis added, internal quotes omitted).

         As the defendants point out, (Doc. 108 at 16), the plaintiff admits that the fees and charges on which Count Three is based have been charged to her account but have never been paid by her, voluntarily or otherwise, and the defendants consequently do not hold any of her money. (Doc. 107-1 at 31-33). The plaintiff offers no relevant response. (Doc. 116 at 53-55). Accordingly the defendants' motion for summary judgment as to Count Three is due to be granted.

         III. Breach of Contract.

         Count Four alleges that the defendants misapplied the plaintiff's monthly payments in violation of paragraph 2 of the mortgage and failed to send proper notices in violation of paragraph 22 of the mortgage. Pursuant to paragraph 22, the plaintiff disputes the existence of a default on her mortgage indebtedness. (Doc. 77 at 13-16).[9] The defendants acknowledge that the plaintiff's claim also includes allegations that they failed to honor a loan modification agreement and that they charged fees and costs not permitted by contract. (Doc. 108 at 8).[10]

         The defendants do not address this claim as it relates to violations of paragraphs 2 and 22 of the mortgage. (Doc. 108 at 7-9). To that extent, the claim necessarily survives the defendants' motion.[11]

         With respect to breach of the modification agreement, the defendants argue: (1) the plaintiff has no evidence they breached the contract; (2) it is uncontroverted the plaintiff is in breach; and (3) the plaintiff admits she has no actionable damages. (Doc. 108 at 3-4, 7-8).[12]

         The first two arguments are intertwined. Looking only at the evidence submitted by the defendants, [13] and viewing that evidence and the reasonable inferences therefrom in the light most favorable to the plaintiff, the defendants are in breach and the plaintiff is not. The note and mortgage were executed in 2006 and called for monthly payments of $1, 612.35. The plaintiff obtained a loan modification that reduced her monthly payments to $806, which she made.[14] The mortgage was foreclosed in 2010 but, in May 2012, a consent order was entered that nullified the foreclosure deed, revived and reinstated the note and mortgage, and declared the loan account current. In June 2012, the plaintiff sent her $806 payment to Green Tree, which returned it and demanded payment of approximately $56, 000, representing roughly two years of assertedly past-due payments. The plaintiff sent no more payments to Green Tree and instead tried without success to resolve the issue, until Select succeeded Green Tree in 2013. At that point, the plaintiff sent an $806 payment to Select, which returned it along with a demand for approximately $88, 000. In 2014, the plaintiff sent an $806 payment to Selene, which likewise returned it. (Doc. 107-1 at 6-7, 17, 31-32, 34, 36, 38-42; Doc. 107-4).

         Based on this evidence, the plaintiff's loan was current as of May 2012, and her monthly payment going forward was $806. The plaintiff timely made her next monthly payment of $806 in June 2012, but Green Tree improperly refused it and wrongly insisted the plaintiff's loan was not current but some $56, 000 in arrears. The plaintiff attempted to straighten out the error and twice more attempted to make her monthly payment, but she was uniformly rebuffed by the defendants, who continued to insist she owed large amounts she did not owe.

         It is an element of a claim for breach of contract that the plaintiff have performed her obligations under the contract. E.g., Winkleblack v. Murphy, 811 So.2d 521, 529 (Ala. 2001). The defendants argue the plaintiff cannot prove she performed her obligations because: (1) she admits her monthly payments after her loan modification were $1, 331.22; (2) she has no documentary evidence that she ever attempted to make any $806 payments; and (3) she has no excuse for not continuing to remit monthly payments every month since June 2012. (Doc. 108 at 8).

         As to the defendants' first contention, they have presented no evidence that the post-modification monthly payments were anything other than $806.[15] As to the second contention, the defendants have offered no authority for the proposition that a plaintiff's testimony that she sent in payments is inadequate to create a fact issue as to whether she did so.[16] As to the third contention, the plaintiff has explained that every time she submitted a monthly payment, the servicer returned it and erroneously announced she owed several years of payments (at the unmodified, original rate) even though the consent order had wiped out any such debt owed prior to its entry. To prevail on motion for summary judgment, it is incumbent on the defendants to demonstrate why futility or some similar concept ...

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