Bradford v. HSBC Mortg. Corp.

• Decision Date: 26 April 2012
• Docket Number: Case No. 1:09cv1226.
• Citation: 859 F.Supp.2d 783
• Parties: Norman BRADFORD, Plaintiff, v. HSBC MORTGAGE CORPORATION, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

859 F.Supp.2d 783

Norman BRADFORD, Plaintiff,

v.HSBC MORTGAGE CORPORATION, Defendant.

Case No. 1:09cv1226.

United States District Court,

E.D. Virginia,

Alexandria Division.

April 26, 2012.

Gregory Nicholas Bryl, Law Office of Gregory Nicholas Bryl, Washington, DC, for Plaintiff.

Abby Kelley Moynihan, Antoinette Nichole Moore, McCabe Weisberg & Conway LLC, Laurel, MD, for Defendant.

MEMORANDUM OPINION

T.S. ELLIS, III, District Judge.

At issue at the conclusion of this long-running TILA ¹ matter is the determination of a reasonable attorney's fee for a TILA claimant who enjoyed only partial success. This determination requires resolution of the following three questions:

(i) whether a TILA claimant who prevails on a § 1641(f)(2) claim against a loan servicer for failure to respond properly to the claimant's request for the identity of the loan's owner may include in his fee petition the hours his attorney spent litigating the owner's identity in pursuit of an ultimately unsuccessful TILA rescission claim;

(ii) whether the fee claim may include the attorney's hours spent litigating the fee request itself where, as here, the claimant's favorable judgment was entered pursuant to an a Rule 68, Fed.R.Civ.P. offer of judgment; and,

(iii) whether, for purposes of determining the prevailing market rate, the relevant market may include consumer-rights and residential-mortgage litigation generally and need not consist only of TILA litigation.

For the reasons that follow, all three questions must be answered in the affirmative.

I.

The facts and procedural history in this somewhat protracted case are set forth in several memorandum opinions.² Nonetheless, it is necessary to recount here the facts and history pertinent to the parties' fee dispute.

On September 20, 2006, plaintiff Norman Bradford (“Bradford”) and defendant HSBC Mortgage Corp. (“HSBC”) agreed to refinance the loan that had originally financed Bradford's purchase of his primary residence in Ashburn, Virginia (the “Ashburn home”). To this end, Bradford signed a promissory note (the “Note”), which was secured by a deed of trust on the Ashburn home that named HSBC as the lender. At the time of the refinancing, Bradford was not provided with a “Truth in Lending” statement that would have informed him of his right to rescind the transaction pursuant to TILA. Thus, Bradford established as an undisputed fact in this case “that various mandatory TILA disclosures were not provided at the time of closing, such that he was entitled to rescind his loan within the extended statutory three-year period.” Bradford I, 799 F.Supp.2d at 627. Several months after the refinancing, HSBC sold the Note to Ally Bank (“Ally”) but did not inform Bradford at the time that it had transferred the Note. Indeed, Bradford had no reason to know that the Note had been transferred, as HSBC continued to service the Ashburn loan and Bradford made all loan payments to HSBC.

On September 23, 2008, Bradford sent a letter to HSBC requesting, inter alia, the identity of the current noteholder. On October 16, 2008, Bradford sent another letter to HSBC purporting to “exercise [Bradford's] right to rescind the mortgage transaction[.]” (Doc. 30–5). Not until nearly two months later—on November 21, 2008—did HSBC respond to Bradford's first letter requesting the noteholder's identity. In its response, HSBC stated—unresponsively—that Bradford's letter “does not identify which aspects of the accounting or servicing of your loan you are questioning” and failed to disclose to Bradford the identity of the then-current noteholder, which at that time was Ally. (Doc. 30–4). Almost one month later, HSBC, by letter dated December 17, 2008, declined to honor Bradford's rescission request.

Bradford filed the instant action on October 29, 2009 alleging, inter alia, that HSBC had violated § 1635 of TILA by failing to honor Bradford's request for rescission. Bradford filed an amended complaint on August 5, 2010, although neither Ally (the noteholder from November 2006 until December 2009), nor RFC (the noteholder after December 2009), was named as a defendant. On January 28, 2011, after the original discovery period had closed, HSBC moved for summary judgment on the TILA claims on the ground, inter alia, that HSBC no longer possessed the Note, which HSBC averred had been endorsed to Ally and was in Ally's possession at that time. It followed, HSBC argued, that Bradford had failed to join the noteholder, a necessary party for rescission, and that such relief was therefore unavailable.

On March 3, 2011, Bradford's current counsel entered an appearance on Bradford's behalf. The next day, Bradford by counsel filed a legal memorandum and other materials opposing HSBC's summary-judgment motion on the ground, inter alia, that there were genuine fact issues concerning the noteholder's identity, which Bradford argued he could not determine as his prior pro se motion to reopen discovery had been denied. See Bradford v. HSBC Mortg. Corp., No. 1:09cv1226 (E.D.Va. Jan. 21, 2011) (Order) (Doc. 85). That day, Bradford also filed a motion to add Ally as a party based on HSBC's representation—later determined to be inaccurate—that Ally was the then-current noteholder.³ Bradford's motion was granted, and Ally was added as a defendant. See Bradford v. HSBC Mortg. Corp., No. 1:09cv1226, 2011 WL 8201970 (E.D.Va. Mar. 11, 2011) (Order). The March 11, 2011 Order also granted the parties leave to file supplemental legal memoranda on the then-pending summary-judgment motions. Id. On April 1, 2011, an Order issued granting the parties leave to submit additional supplemental legal memoranda in connection with the summary-judgment motions. See Bradford v. HSBC Mortg. Corp., No. 1:09cv1226 (E.D.Va. Apr. 1, 2011) (Order) (Doc. 123).

While HSBC's summary-judgment motion was pending, Bradford sought additional discovery against HSBC, MERS, and Ally, ostensibly to obtain facts relating to the noteholder-identity issue that was central to summary judgment. Bradford's first request was denied without prejudice. See Bradford v. HSBC Mortg. Corp., No. 1:09cv1226 (E.D.Va. Apr. 1, 2011) (Order) (Doc. 120). Thereafter, Bradford filed another motion for additional discovery, but this new motion sought discovery relating only to the issue of the noteholder's identity. In support of the motion, Bradford argued that the record did not establish whether the Note contained additional endorsements or whether HSBC, Ally, or some other entity actually possessed the Note at that time. This motion for limited additional discovery was granted by Order dated April 22, 2011, and Bradford was permitted to serve additional written discoveryrequests on HSBC. See Bradford v. HSBC Mortg. Corp., No. 1:09cv1226 (E.D.Va. Apr. 22, 2011) (Order). When HSBC failed to respond to Bradford's requests in a timely fashion, Bradford filed a motion to compel discovery responses, which was granted by Order dated May 26, 2011. See Bradford v. HSBC Mortg. Corp., No. 1:09cv1226 (E.D.Va. May 26, 2011) (Order). After Bradford filed his motion to compel, but before the May 26 Order issued, HSBC filed a pleading indicating that another entity, RFC, was actually the noteholder at that time.

Although HSBC served its written responses to Bradford's discovery requests related to the noteholder-identity issue on or around May 31, 2011, these responses were lacking in many respects, as Bradford noted in his motion for sanctions filed on June 11, 2011. Specifically, Bradford pointed out that HSBC's discovery responses failed to specify, inter alia, (i) whether physical possession of the Note was transferred, (ii) whether the Note contained endorsements other than the endorsement from HSBC to Ally, or (iii) the entity to which HSBC, as servicer, had disbursed Bradford's mortgage payments. Bradford also noted HSBC's odd contention that in November 2006 it had transferred the Note to RFC, not Ally, in contradiction of its representation that Ally had transferred the Note to RFC in December 2009. Bradford's sanctions motion was granted, and on June 17, 2011, HSBC was sanctioned in the amount of $810.00 for failing to file timely responses to Bradford's May 4, 2011 discovery requests. See Bradford v. HSBC Mortg. Corp., No. 1:09cv1226 (E.D.Va. June 17, 2011) (Order) (Doc. 187). Later, HSBC was sanctioned again, this time in the amount of $2,500.00 for the deficiencies in its responses to Bradford's discovery requests concerning the noteholder's identity. See Bradford v. HSBC Mortg. Corp., No. 1:09cv1226 (E.D.Va. Aug. 16, 2011) (Order).

Bradford filed a third verified amended complaint on June 6, 2011. Thereafter, HSBC, along with several other defendants, moved to dismiss the TILA § 1635 rescission and wrongful failure to rescind claims as untimely. On July 22, 2011, the dismissal motions as to these claims were granted given TILA's three-year statute of repose for rescission claims. See Bradford, 799 F.Supp.2d at 635. Thereafter, Bradford was allowed to file a fourth amended complaint to add a claim that HSBC violated § 1641(f)(2) by failing to respond properly to Bradford's September 2008 request for the noteholder's identity. HSBC then moved to dismiss the fourth amended complaint, arguing, with respect to the § 1641(f)(2) claim, that the claim was untimely. HSBC's motion to dismiss was converted into a motion to summary judgment pursuant to Rule 12(d), Fed.R.Civ.P. and then denied as to the § 1641(f)(2) claim on the ground that the claim had been timely asserted. See Bradford II, 829 F.Supp.2d at 353 n. 32. Subsequently, an Order issued scheduling a status conference. See Bradford v. HSBC Mortg. Corp., 799 F.Supp.2d 625 (E.D.Va.2011) (Order).

After the status conference, HSBC issued a Rule 68 offer of judgment on the § 1641(f)(2) claim to Bradford, who allowed the offer to lapse. Subsequently, HSBC issued another Rule 68 offer of judgment, which provided as follows:

Pursuant to Rule 68 of the...