Federal Home Loan Mortgage Corp. v. Capps

          MEMORANDUM OPINION ^[1]

          JOHN H. ENGLAND, III, UNITED STATES MAGISTRATE JUDGE.

         Plaintiff Federal Home Loan Mortgage Corporation (“Plaintiff” or “Freddie Mac”) brought this action against Defendants Robert B. Capps and Brenda N. Capps (“Defendants” or “the Capps”) in the Circuit Court of Jefferson County, seeking possession of real property the Capps had allegedly refused to vacate after foreclosure. (Doc. 1-1 at 2-10). The Capps initially answered, (doc. 1-1 at 19-24), but then amended their answer and counterclaimed against Freddie Mac and other entities, (id. at 32-67). The Capps last amended their counterclaim on September 19, 2016, asserting claims against: Freddie Mac; Mortgage Electronic Registration Systems, Inc. (“MERS”); New Penn Financial LLC, both individually and d/b/a Shellpoint Mortgage Servicing; Shellpoint Mortgage Servicing; and Shellpoint Partners, LLC^[2] (all collectively, the “Counter-Defendants”).^[3](Doc. 1-5 at 48-84). On October 20, 2016, Freddie Mac removed the action to this court. (Doc.1).

         Counter-Defendants have now moved for summary judgment on the Capps' counterclaim. (Doc. 32). The Capps have responded in opposition, (doc. 38), ^[4] and Counter-Defendants have submitted a reply brief, (doc. 39). The motion is fully briefed and ripe for review. For the reasons stated more fully below, Counter-Defendants' motion for summary judgment is GRANTED IN PART and DENIED IN PART

         I. Standard of Review

         Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment is proper “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.” “Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 447 U.S. 317, 322 (1986). The moving party bears the initial burden of proving the absence of a genuine issue of material fact. Id. at 323. The burden then shifts to the nonmoving party, who is required to “go beyond the pleadings” to establish that there is a “genuine issue for trial.” Id. at 324. (citation and internal quotation marks omitted). A dispute about a material fact 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).

         The Court must construe the evidence and all reasonable inferences arising from it in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); see also Anderson, 477 U.S. at 255 (all justifiable inferences must be drawn in the non-moving party's favor). Any factual disputes will be resolved in Plaintiff's favor when sufficient competent evidence supports Plaintiff's version of the disputed facts. See Pace v. Capobianco, 283 F.3d 1275, 1276-78 (11th Cir. 2002) (a court is not required to resolve disputes in the non-moving party's favor when that party's version of the events is supported by insufficient evidence). However, “mere conclusions and unsupported factual allegations are legally insufficient to defeat a summary judgment motion.” Ellis v. England, 432 F.3d 1321, 1326 (11th Cir. 2005) (per curiam) (citing Bald Mtn. Park, Ltd. v. Oliver, 836 F.2d 1560, 1563 (11th Cir. 1989)). Moreover, “[a] mere ‘scintilla' of evidence supporting the opposing party's position will not suffice; there must be enough of a showing that the jury could reasonably find for that party.” Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990) (citing Anderson, 477 U.S. at 252).

         II. Summary Judgment Facts^[5]

         On March 5, 2009, Robert Capps executed and delivered a note in the original principal amount of $245, 000.00, (doc. 32-2), to MetLife Home Loans, secured by a real estate mortgage executed by the Capps for the real property located at 3200 Cahaba Brook Circle, Birmingham, Alabama, 35242 (“the Property”), (doc. 32-3). (Doc. 1-5 at ¶ 5; doc. 32-18 at 4-5 (32:12-33:17), 6 (37:10-38:15)). The mortgage was assigned to JPMorgan Chase Bank, N.A. (“Chase”), effective December 12, 2013. (Doc. 32-19 at 2). Servicing of the loan transferred to Chase on March 1, 2013. (Doc. 32-18 at 8 (45:10-46:15)). Chase then assigned the mortgage to Shellpoint, effective July 20, 2013. (Doc. 32-1^[6] at ¶ 7; doc. 32-4). Servicing of the loan was transferred to Resurgent Mortgage Servicing (“Resurgent”) effective July 17, 2013. (Doc. 32-1 at ¶ 8; doc. 32-5). Resurgent was subsequently acquired by Shellpoint, and servicing of the loan transferred to Shellpoint effective March 1, 2014. (Doc. 32-1 at ¶ 9; doc. 32-6).

         The Capps fell behind on their loan payments and were in default for most of the period that Resurgent and Shellpoint serviced the loan. (Doc. 32-18 at 7 (41:11-14); doc. 32-7). The Capps requested, applied for, and were reviewed for loss mitigation on the loan several times during this period. (Doc. 32-18 at 11 (43:5-9), 14 (55:5-56:21), 16 (63:7-64:17), 17-18 (68:8-70:9)).

         On March 3, 2014, Shellpoint offered the Capps a temporary repayment plan, attempting to allow them to cure their default. (Doc. 32-1 at ¶ 11; doc. 32-8; doc. 32:18 at 16 (63:7-64:17)). The Capps ultimately failed to make the payments required under the temporary repayment plan, and it was cancelled on September 5, 2014. (Doc. 32-1 at ¶ 12; doc. 32-9; doc. 32-18 at 16-17 (64:18-65:20)).

         The Capps made their last payment on the loan on October 13, 2014, in the amount of $6, 121.44; this was applied as three regular monthly payments of $2, 040.48, but the Capps' payment for September 1, 2014 remained due and their loan remained in default. (Doc. 32-1 at ¶ 13; doc. 32-7; doc. 32-18 at 28-29 (135:13-137:17)). The Capps have made no further payments on the loan. (Doc. 32-1 at ¶ 13; doc. 32-7)).

         On October 16, 2014, Shellpoint sent a Notice of Default and Intent to Accelerate to the Capps. (Doc. 32-1 at ¶ 14; doc. 32-10; doc. 32-18 at 13 (66:20-67:17)). The notice informed the Capps that their loan was in default, with $4, 540.08 required to bring the loan current. (Id.).

         Shellpoint sent a Streamlined Modification Solicitation Letter to the Capps on January 30, 2015. (Doc. 32-1 at ¶ 15; doc. 32-11). However, the Capps failed to respond to this letter and did not accept the modification offer. (Doc. 32-1 at ¶ 15; doc. 32-18 at 14 (69:20-72:6)).

         On September 18, 2015, Shellpoint sent the Capps a letter informing them of their options for loss mitigation assistance and how to apply for that assistance. (Doc. 32-1 at ¶ 16; doc. 32-12). On November 6, 2015, Shellpoint sent another letter to the Capps stating “Shellpoint Mortgage Servicing has reviewed you request for a loan modification in addition to other loss mitigation options. We are unable to offer you a loss mitigation option because you did not provide us with the documents we requested.” (Doc. 32-1 at ¶ 17; doc. 32-13; doc. 32-18 at 16 (78:8-79:10)).

         On January 5, 2016, Shellpoint sent a Notice of Acceleration to the Capps via certified mail and regular mail. (Doc. 32-1 at ¶ 19; doc. 32-16). In the notice, Shellpoint stated it had accelerated the payments on the loan and scheduled a foreclosure sale for February 10, 2016. (Doc. 32-16).

         The Capps faxed an application for loss mitigation assistance and other documents to Shellpoint on January 27, 2016. (Doc. 32-1 at ¶ 18; doc. 32-14; doc. 32-18 at 16-17 (82:15-85:8)). Shellpoint sent a letter to the Capps the next day, denying this request on the basis that the Property was set for foreclosure sale. (Doc. 32-1 at ¶ 18; doc. 32-15; doc. 32-18 at 17 (85:9-86:23))

         Shellpoint published the Notice of Sale for three consecutive weeks — January 6, 13, and 20, 2016 — in the Alabama Messenger. (See doc. 32-20). On February 10, 2016, the mortgage was foreclosed; as Freddie Mac was the highest bidder at the foreclosure sale, it became the owner of the Property. (Doc. 32-1 at ¶ 20; doc. 32-17). However, the Capps never vacated the property, and they continue to occupy it. (Doc. 32-18 at 22 (88:6-10)).

         III. Analysis

         The Capps' second amended counterclaim, ^[7] the operative pleading in this action, contains the following counts: Count I, for negligence, asserted against all Counter-Defendants, (doc. 1-5 at ¶¶ 19-22); Count II, for wantonness, asserted against all Counter-Defendants, (id. at ¶¶ 23-28); Count III, for unjust enrichment, asserted against Shellpoint, (id. at ¶¶ 29-32); Count IV, for wrongful foreclosure, asserted against Shellpoint and Freddie Mac, (id. at ¶¶ 33-36); Count V, for slander of title, asserted against “Counter-Defendants, Freddie Mac & Shellpoint, ” (id. at ¶¶ 37-39); Count VI, for breach of contract, asserted against all Counter-Defendants, (id. at ¶¶ 40-48); Count VII, for fraud, asserted against all Counter-Defendants, (id. at ¶¶ 49-53); Count VIII, for false light, asserted against all Counter-Defendants, (id. at ¶¶ 54-59); Count IX, for defamation asserted against Shellpoint, ^[8] (id. at ¶¶ 60-68); Count X, for unfair and deceptive trade practices, asserted against Shellpoint, (id. at ¶¶ 69-70); Count XI, for breach of the covenant of good faith and fair dealing, asserted against Shellpoint, (id. at ¶¶ 71-72); Count XII, for violations of the Fair Debt Collection Practices Act (“FDCPA”), asserted against Shellpoint, (id. at ¶¶ 73-80); Count XIII, for violations of the Fair Credit Reporting Act (“FCRA”), asserted against Shellpoint, (id. at ¶¶ 81-92); and Count XIV, for declaratory relief, asserted against no specific Counter-Defendants but referencing “Counter-Defendants” actions, (id. at ¶¶ 93-94).^[9] Counter-Defendants seek summary judgment on and/or dismissal of each of these counts. (See doc. 32).

         A. Unjust Enrichment (Count III), Fraud (Count VII), False Light (Count VIII), Deceptive Trade Practices (Count X), and FCRA (Count XIII)

         The Capps do not respond to Counter-Defendants' arguments supporting dismissal of their unjust enrichment, fraud, false light, deceptive trade practices, or FCRA counts. Therefore, the Capps have abandoned those claims, and they are due to be dismissed. See Coalition for the Abolition of Marijuana Prohibition v. City of Atlanta, 219 F.3d 1301, 1326 (11th Cir. 2000) (“The appellants' failure to brief and argue this issue during the proceedings before the district court is grounds for finding that the issue has been abandoned.”); Bush v. J.P. Morgan Chase Bank, N.A., No. 2:15-CV-00769-JEO, 2016 WL 324993, at *6 (N.D. Ala. Jan. 27, 2016); Boyd v. Daniels, No. 2:13-CV-354-MEF, 2014 WL 1245885, at *3 (M.D. Ala. Mar. 24, 2014) (dismissing claims on motion to dismiss for failure to respond); Joseph ex rel. Joseph v. Allen, No. CV-13-S-695-NE, 2013 WL 3712334, at *5 (N.D. Ala. July 12, 2013) (dismissing claims on motion to dismiss for failure to respond); Hooper v. City of Montgomery, 482 F.Supp.2d 1330, 1334 (M.D. Ala. 2007) (same) (citing Resolution Trust Corp. v. Dunmar Corp., 43 F.3d 587, 599 (11th Cir. 1995) (dismissing undefended claims on summary judgment)); Hudson v. Norfolk S. Ry. Co., 209 F.Supp.2d 1301, 1324 (N.D.Ga. 2001) (“When a party fails to respond to an argument or otherwise address a claim, the Court deems such argument or claim abandoned.”).

         B. Negligence and Wantonness (Counts I and II)

         To prevail on a negligence claim under Alabama law, a plaintiff must show “(1) a duty to a foreseeable plaintiff; (2) a breach of that duty; (3) proximate causation; and (4) damage or injury.” Martin v. Arnold, 643 So.2d 564, 567 (Ala. 1994) (citation omitted). “To establish wantonness, [a] plaintiff must prove that the defendant, with reckless indifference to the consequences, consciously and intentionally did some wrongful act or omitted some known duty. To be actionable, that act or omission must proximately cause the injury of which the plaintiff complains.” Id.

         Counter-Defendants contend the Capps' negligence and wantonness counts are not cognizable under Alabama law because Alabama does not recognize a cause of action for negligent or wanton mortgage servicing when a plaintiff alleges only economic damages. (Doc. 32 at 12-13). The Capps make a token effort at saving the negligence claim (but not the wantonness claim) by folding it into an argument that Alabama law recognizes a tort of wrongful foreclosure with nonspecific elements. (Doc. 38 at 46-47). To the extent the Capps' contend their negligence and wantonness claims duplicate their wrongful foreclosure claim, Count IV is discussed separately.

         As for their other allegations, the Capps' second amended counterclaim states the Counter-Defendants “negligently serviced the loan made the basis of this suit, negligently attempted to collect sums not owed by the Counter-Plaintiffs, negligently caused their property insurance to be canceled, negligently defaulted the Counter-Plaintiffs, negligently conducted a foreclosure sale on Counter-Plaintiff' [sic] property, were negligent by failing to make sure that information disseminated to others (including the national credit bureaus and those credit grantors likely to use the information provided by those bureaus) was not false, neither libelous nor slanderous, and rose to the level of maximum accuracy; negligent by failing to properly train their employees on the thorough investigation of disputed accounts; negligent by failing to properly train, and/or supervise their employees and agents with regard to the handling of Plaintiff's [sic] loan account and failing to remove the adverse reporting from Plaintiff's [sic] credit once she [sic] disputed ...