Berry v. Wells Fargo Home Mortg.
| Decision Date | 08 March 2021 |
| Docket Number | Case No. 11-28881-L |
| Parties | In re CHANDRA LYNETTE BERRY, Debtor. CHANDRA LYNETTE BERRY, Movant, v. WELLS FARGO HOME MORTGAGE, as servicer for THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., and FAY SERVICING, LLC, as servicer for NRZ INVENTORY TRUST and U.S. BANK N.A., as Trustee, Respondents. |
| Court | U.S. Bankruptcy Court — Western District of Tennessee |
The following is ORDERED:
Amended Motion for Contempt Sanctions [Dkt. No. 81]
Notice of Filing [Dkt. No. 91]
Motion to Dismiss/Withdraw [Dkt. No. 92]
Notice of Written Argument [Dkt. No. 99]
BEFORE THE COURT are the Debtor's Amended Motion to Hold Wells Fargo Bank the Servicer on behalf of Bank of New York Mellon, and Fay Servicing, LLC the Servicer on behalf of NRZ Inventory Trust and U.S. Bank N.A. as Trustee in Contempt and for Sanctions for Violations of Debtor's Discharge Injunction, filed January 21, 2021 [Dkt. No. 81] (the "Amended Motion for Sanctions"); Fay Servicing LLC's Objection to Motion for Contempt, filed February 10, 2021 [Dkt. No. 89]; Fay Servicing LLC's Notice of Filing, which included the omitted exhibit to its objection, filed February 11, 2021 [Dkt. No. 91]; Wells Fargo Home Mortgage, a division of Wells Fargo Bank, N.A.'s Motion and Memorandum of Law in Support of Motion to Dismiss, filed February 11, 2021 [Dkt. No. 92]; and the Debtor's Notice to the Court of Debtor's Written [Oral] Argument for Good Cause Shown, filed after oral argument on February 23, 2021, because the Debtor experienced technical difficulties on the day of argument. [Dkt. No. 99]. The certificate of service for the Amended Motion for Sanctions shows no service upon Respondent U.S. Bank, N.A. No proof appears in the record concerning its activities and no specific relief was sought by the Debtor with respect to U.S. Bank, N.A. The court heard oral argument for and against the Amended Motion for Sanctions with respect to Wells Fargo and Fay Servicing on February 18, 2021. Having heard the arguments of the Debtor and counsel and reviewed the exhibits presented by the parties, the court makes the following findings of fact and conclusions of law.
The Debtor commenced her case by filing a voluntary petition under Chapter 7 of the Bankruptcy Code on August 30, 2011. [Dkt. No. 1].
Among her assets was a house located at 6215 Malloch Drive, Memphis, Tennessee (the "Property"). [Dkt. No. 1, Schedule A].
The Property was encumbered by two liens, the first scheduled at $263,000, serviced by American Servicing Center, the second scheduled at $22,000, serviced by Greentree. [Dkt. No. 1, Schedule D].
America's Servicing Company, as servicer for The Bank of New York Mellon Trust Company, National Association f/k/a/ The Bank of New York Trust Company, N.A., as successor to JPMorgan Chase Bank, N.A., f/k/a/ JPMorgan Chase Bank, as Trustee for RASC 2004-KS9 ("Trustee BNY Mellon"), sought and received relief from the automatic stay. [Dkt. Nos. 14 and 22].
The Discharge of Debtor and Final Decree were entered December 14, 2011. [Dkt. Nos. 24 and 25].
At some point that does not appear from the record, Wells Fargo became the servicer of the first mortgage loan.
Wells Fargo completed foreclosure and sale of the first mortgage loan on May 8, 2015. [Dkt. No. 81, ¶ 7].
The Property was conveyed to Trustee BNY Mellon by Trustee's Deed on May 13, 2015. [Dkt. No. 46, Exhibit 11].
Trustee BNY Mellon filed a detainer action in Shelby County General Sessions Court and obtained a Writ of Possession on August 25, 2015. [Dkt. No. 52, Ex. 1].
The Debtor filed a Notice of Appeal on September 2, 2015. [Dkt. No. 52, Ex. 1].
The Debtor surrendered possession of the Property in June 2018 as the result of a settlement. [Dkt. No. 81, ¶ 14-15].
The Debtor has at all times maintained that the foreclosure was unlawful. [Dkt. No. 81, ¶ 18].
On April 10, 2020, Trustee BNY Mellon recorded an assignment of the original Deed of Trust executed by the Debtor to NRZ REO VII LLC. [Dkt. No. 52, Exhibit 4]. The Debtormaintains that this transfer was made by Wells Fargo, but no proof of that appears in the record and Wells Fargo denies it. [Dkt. No. 81, ¶¶ 21, 25; Dkt. No. 92, ¶13].
The Debtor maintains that the debt was sold to NRZ on August 13, 2020, for a profit of $177,000.00, but no proof of that appears in the record. [Dkt. No. 81, ¶¶ 20, 25].
The Debtor's pro se motion to reopen her bankruptcy case was granted by order entered January 8, 2021. [Dkt. No. 74].
The Amended Motion for Contempt was filed January 21, 2021.
Wells Fargo sent written notice to the Debtor dated August 27, 2020, that servicing of the loan was being transferred to Fay Serving ("Notice of Servicing Transfer"). [Dkt. No. 81, Exhibits, p. 2-3 of 67]. The following paragraph appears immediately after the Debtor's address and before the salutation:
PLEASE NOTE: This notice is being provided for informational purposes only. As a result of at least one bankruptcy case filing that included the above referenced account, Well Fargo Home Mortgage is NOT attempting in any way to violate any provision of the United States Bankruptcy Code or to collect a debt (deficiency or otherwise) from any customer(s) who is impacted by an active bankruptcy case or has received a discharge, where the account was not otherwise reaffirmed or excepted from discharge. THIS IS NOT A BILL OR A REQUEST FOR PAYMENT AS TO THESE CUSTOMER(S).
The Debtor responded to the Notice of Servicing Transfer with a letter dated September 15, 2020 (the "First Dispute Letter"). [Dkt. No. 81, Exhibits, pp. 32-33 of 67]. In the First Dispute Letter, the Debtor informed Wells Fargo that she had received a discharge in December 2011, that the property was foreclosed in May 2015, and that she had vacated the property in June 2018. The Debtor stated, "[Y]our communication is in violation of the bankruptcy injunction and Fair Debt Collection Practices Act (FDCPA)." Wells Fargo responded to the First Dispute Letter by letters dated September 22, 2020, October 5, 2020, October 20, 2020 (two letters), October 26, 2020, andOctober 27, 2020. [Dkt. No. 81, Exhibits, pp. 6, 25-30 of 67]. The first five of these letters did no more than acknowledge receipt of the First Dispute Letter. The sixth letter dated October 27, 2020, acknowledged that the Property was foreclosed and reiterated that servicing of the mortgage was transferring from Wells Fargo Home Mortgage to Fay Servicing, LLC. [Dkt. No. 81, Exhibits, pp. 29-30].
On September 27, 2020, Wells Fargo sent the Debtor a Final Escrow Review Statement. [Dkt. No. 81, Exhibits, p. 7 of 67]. The statement contains the following language directly below the Debtor's address:
PLEASE NOTE: If you are presently seeking relief (or have previously been granted relief) under the United States Bankruptcy Code, this statement is being sent to you for informational purposes only.
On October 5, the Debtor sent Wells Fargo and Bank of New York Mellon a letter informing them that the debt was discharged December 2011, that "Wells Fargo conducted a wrongful foreclosure" in May 2015, and that the property was surrendered in June 2018 (the "Second Dispute Letter"). [Dkt. No. 81, Exhibits, pp. 34-36 of 67]. Wells Fargo responded to the Second Dispute Letter with an acknowledgement dated October 30, 2020, and status updates dated November 13 and November 30. [Dkt. No. 81, Exhibits, pp. 58, 63, and 62 of 67].
At some point Fay Servicing sent the Debtor an undated NOTICE OF SERVICE TRANSFER informing her that servicing of her mortgage loan was transferred from Wells Fargo to Fay Servicing effective September 17, 2020. [Dkt. No. 81, Exhibits, p. 11 of 67]. The notice states in part:
At the bottom of the page, in much smaller type, appears this disclaimer (the "Fay Servicing Bankruptcy Disclaimer I"):
Fay Servicing LLC is a debt collector, and information you provide to us will be used for that purpose. To the extent your original obligation was discharged, or is subject to an automatic stay under the United States Bankruptcy Code, this is being provided for informational purposes only and does not constitute an attempt to collect a debt or impose personal liability.
Attached to this Notice of Servicing Transfer or perhaps in separate correspondence, Fay Servicing sent the Debtor a document styled, [Dkt. No. 81, Exhibits, p. 15 of 67]. This document provides the following information:
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