Boltz-Rubinstein v. Bank of Am. (In re Boltz-Rubinstein)

• Decision Date: 08 February 2019
• Docket Number: Bky. No. 10-16541 ELF,Adv. No. 16-0265
• Citation: 596 B.R. 494
• Parties: IN RE: Susan M. BOLTZ-RUBINSTEIN, Debtor. Susan M. Boltz-Rubinstein, Plaintiff, v. Bank of America, Defendant.
• Court: U.S. Bankruptcy Court — Eastern District of Pennsylvania

596 B.R. 494

IN RE: Susan M. BOLTZ-RUBINSTEIN, Debtor.

Susan M. Boltz-Rubinstein, Plaintiff,

v.Bank of America, Defendant.

Bky. No. 10-16541 ELF

Adv. No. 16-0265

United States Bankruptcy Court, E.D. Pennsylvania.

Signed February 8, 2019

Eran Rubinstein, Law Offices of Eran Rubinstein, Furlong, PA, for Plaintiff.

Robert E. Warring, Daniel P. Wotherspoon, Reed Smith LLP, Philadelphia, PA, for Defendant.

MEMORANDUM

ERIC L. FRANK, U.S. BANKRUPTCY JUDGE

I. INTRODUCTION

Susan Boltz-Rubinstein ("the Debtor") filed this chapter 13 bankruptcy case on August 3, 2010. She obtained confirmation of her chapter 13 plan and then performed her obligations under her confirmed chapter 13 plan. She also received a discharge.

The Debtor commenced this adversary proceeding in 2016.. She seeks damages pursuant to 11 U.S.C. § 362(k) for an asserted willful violation of the automatic stay that occurred in 2016, after she completed her plan, but before the entry of her discharge. She alleges that Defendant Bank of America ("BOA") violated the stay when it attempted to collect a pre-petition debt by sending notices in furtherance of the applicable state law procedural requirements for foreclosure against her residential real property.

BOA asserts there was no stay violation because it was acting as servicer for the actual holder of the mortgage, National Residential Assets Corporation ("NRAC"), which obtained relief from the automatic stay before BOA sent the notices to the Debtor. BOA points to a 2005 servicing agreement between its predecessor, BAC Home Loans Servicing, LP ("BAC") and Bank of New York Mellon ("BNYM"), the parent company of NRAC as proof of that agency relationship.

The Debtor counters that, notwithstanding the existence of a servicing agreement between BNYM (NRAC's parent) and BAC (BOA's predecessor), BOA lacked authority to act on NRAC's behalf and therefore is liable for its collection efforts in violation of the automatic stay.

BOA filed a motion for summary judgment on April 27, 2018 ("the Motion").

For the reasons discussed below, I conclude that a material issue of fact remains whether there was an agency relationship between BOA and NRAC when BOA sent the notices to the Debtor in 2016. Therefore, I will deny the Motion.

II. PROCEDURAL AND FACTUAL HISTORY

A. Procedural History

Much of the history of this adversary proceeding was stated in the court's opinion published on September 18, 2017, which granted in part and denied in part the Defendants' motions to dismiss this adversary proceeding (and related adversary proceeding, Adv. No. 16-362). See In re Boltz-Rubinstein, 574 B.R. 542 (Bankr. E.D. Pa. 2017) (the "Prior Opinion"). Only a portion of that history will be repeated here.

The Debtor initiated this adversary proceeding against BOA on August 17, 2016. She filed an Amended Complaint on August 29, 2016. In the Order accompanying the Prior Opinion, I dismissed three (3) of the four (4) counts of the Amended Complaint; only Count IV, stating a cause of action for violation of the automatic stay, survived. The Defendant answered the Amended Complaint on October 10, 2017.

Following multiple, extended discovery disputes, involving motions to compel discovery and for protective orders, the Defendant filed the Motion on April 27, 2018. The Debtor responded on June 3, 2018. BOA filed a reply on June 4, 2018 ("the Reply"), which BOA answered on June 11, 2018. The Debtor filed a sur-reply on June 18, 2018 ("the Sur-Reply"). With leave of the court, the Debtor filed a second reply to the Motion on June 28, 2018.

Further, in partial response to the Motion, the Debtor filed two (2) Motions to Strike Affidavits filed by the Defendant (Doc. #'s 109, 110). The Motions to Strike sought to exclude the affidavits of Heather D. Nolan and Leticia Pasillas. By Orders dated June 4, 2018, I denied both Motions to Strike without prejudice and provided that the requests that the affidavits be disregarded would be considered as part of the Debtor's response to the Motion. (Doc. #'s 111, 112).¹

B. Undisputed Facts

1. the servicing agreement

On November 15, 2005, the Debtor borrowed $ 593,334.00 from BOA. The loan was secured by a mortgage on her primary residence located at 3444 Wiltshire Rd. in Furlong, Pennsylvania ("the Property"). On December 10, 2010, the Mortgage was assigned from BOA to NRAC.²

On November 1, 2005, prior to the issuance of the Debtor's mortgage, BAC and BNYM³ entered into a "Flow Mortgage Loan Sale and Servicing Agreement" (the "Servicing Agreement").⁴ (Affid. of Leticia Pasillas ("Pasillas Affid."), Ex. C) (Doc. # 98). Pursuant to the terms of the Servicing Agreement, BOA was to continue servicing various loans that BOA transferred to BNYM.⁵

More pertinent to the current dispute, the Servicing Agreement permits BOA to "effectuate foreclosure or other conversion of the ownership of the Mortgaged Property securing any Mortgage Loan it services." (Pasillas Affid., Ex. C § 10.01, at 37).⁶

On February 8, 2010, the Servicing Agreement was amended by letter ("the Servicing Amendment") (Id., Ex. H). The Servicing Amendment provides, in pertinent part:

if title to any Mortgaged Property is acquired in foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale shall be taken in the name of ‘National Residential Assets Corp.’ unless [BOA] is directed otherwise by [BNYM].

2. the events during the bankruptcy case

The Debtor commenced her chapter 13 case on August 10, 2010.

On March 21, 2011, BAC, purportedly as servicer for NRAC, filed a proof of claim in the amount of $ 587,118.56 (Claim No. 17-1) ("the Claim"). The Claim states that the debt is secured by the Property.

The Debtor's chapter 13 plan was confirmed on January 10, 2012. The plan does not provide for a cure of the delinquent mortgage on the Property. Rather, the plan states:

The pre-petition mortgage arrears owed to Bank of America Home Loans Servicing, LP, and the pre-petition real estate tax arrears owed to Bucks County Tax Claims Bureau will not be paid through the plan.... The aforesaid arrears ... will be cured through the mortgage loan modification.

(Third Amended Plan § 7(f) and (g) ) (Bky. No. 10-16541, Doc. # 167).

On May 4, 2016, NRAC filed a motion for relief from the automatic stay in order to prosecute a foreclosure proceeding against the Property, asserting that the Debtor had no equity in the Property and that NRAC was not adequately protected ("the Motion for Relief") (Doc. # 283). Following a hearing on June 23, 2016, the Motion for Relief was granted. (Bky. No. 10-16541, Doc. # 293) (the "Stay Relief Order"). The Stay Relief Order granted NRAC relief but noted that "[n]othing in this Order constitutes a determination that [NRAC] is the holder of the Note or Mortgage referenced in the Motion and all such issues may be determined by another court of competent jurisdiction."⁷

Shortly following the issuance of the Stay Relief Order, BOA sent the Debtor the following four (4) communications relating to her mortgage on the Property:

• an Act 91 notice, dated July 18, 2016, informing the Debtor of a default on her mortgage and stating that the Debtor must either cure the default or risk foreclosure;⁸ and

• three (3) loan assistance offer letters, dated July 19, 2016, July 20, 2016, and August 5, 2016, that referenced the possibility of loan modification, refinancing, forbearance, delinquency repayment plan, short sale and deed-in-lieu of foreclosure.

(See Amended Complaint, Exhibits B, C, D, F) (collectively, the "Notices").

The Debtor contends that BOA violated the automatic stay by sending the Notices.

III. SUMMARY JUDGMENT STANDARD

Pursuant to Fed. R. Civ. P. 56(a), applicable in this adversary proceeding through Fed. R. Bankr. P. 7056, summary judgment must be granted to a moving party when, drawing all reasonable inferences in favor of the nonmoving party, there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. E.g., Steele v. Cicchi, 855 F.3d 494, 500 (3d Cir. 2017) ; In re Bath, 442 B.R. 377, 387 (Bankr. E.D. Pa. 2010) ; see also In re Asbestos Prods. Liab. Litig. (No. VI), 837 F.3d 231, 235-36 (3d Cir. 2016).

On a motion for summary judgment, the court's role is not to weigh the evidence, but to determine whether there is a disputed, material fact for resolution at trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue of material fact is one in which sufficient evidence exists that would permit a reasonable fact finder to return a verdict for the non-moving party. Id. at 248, 106 S.Ct. 2505. A fact is material "if its existence or nonexistence might impact the outcome of the suit ... A dispute over a material fact is ‘genuine’ if nonexistence might impact the outcome of the suit ...." Betz v. Satteson, 715 Fed. Appx. 213, 215 (Nov. 16, 2017) (non precedential) (quoting Wiest v. Tyco Elecs. Corp., 812 F.3d 319, 328 (3d Cir. 2016) ) (additional citation omitted).

The parties' respective burdens of proof also play a role in determining the merits of a summary judgment motion. See In re Polichuk, 506 B.R. 405, 421 (Bankr. E.D. Pa. 2014).

If the movant is the defendant or the party without the burden of proof, the movant must demonstrate the absence of a genuine issue of material fact, but the movant is not required to support the motion with affidavits or other materials that negate the opponent's claim. Rather, the movant may assert that the party with the burden of proof has not come forward with evidence to support one or more elements of its claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-34, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

On the other hand, if the movant is the party with the burden of proof at trial, the standard is more stringent. The movant "must produce enough evidence to justify a directed verdict in its favor in order to meet its initial burden." Nat'l State Bank v. Fed. Reserve Bank of New York, 979 F.2d 1579,...