Fed. Home Loan Mortg. Corp. v. Gilbert
| Decision Date | 07 July 2016 |
| Docket Number | Case No. 15-5796 |
| Parties | FEDERAL HOME LOAN MORTGAGE CORPORATION, Plaintiff-Appellee, v. DONALD GILBERT, et al., Defendants, ANDREA LEE GILBERT, Third Party Plaintiff-Appellant, v. FEDERAL HOME LOAN MORTGAGE CORPORATION, Counter Defendant-Appellee, WELLS FARGO BANK, N.A., Third Party Defendant-Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
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When Wells Fargo foreclosed on Andrea Gilbert's home in 2010, she refused to leave, claiming that the bank had agreed to modify the terms of her loan. All the bank had done at that point, however, was agree to provide her with an application that would allow her to request a loan modification. Because she later failed to qualify for the loan modification, the district court held that the bank had the right to seize her home. We affirm.
Andrea fell behind on her mortgage around the same time her marriage to Donald Gilbert fell apart. Any hope of staying in her home apparently hinged on Donald, whom the divorce court ordered to pay the mortgage in lieu of child support. Donald, sad to say, paid nothing, leaving Andrea (and their children) in the lurch. By early 2010, Andrea was ten monthly payments behind on the mortgage and lacked the resources to pay what she (in truth her former husband) owed.
She asked Wells Fargo if there was any way she could modify the terms of the loan. The bank told her about the federal Home Affordable Modification Program, which "encourage[s] mortgage holders to renegotiate qualifying loans to reduce the homeowner's mortgage payments to a sustainable level" and delays foreclosure while the bank reviews the homeowner for eligibility. Thompson v. Bank of Am., N.A., 773 F.3d 741, 747 (6th Cir. 2014). That sounded like manna from heaven. Andrea gave Wells Fargo her financial information, including her estimated monthly income, and the bank told her that she "prequalified" for a modification. R. 44-12 at 12. "To be reviewed [further] for the [program]," the bank explained, she needed to complete a three-month trial period plan, apply for a permanent loan modification, and "provide [some] requested documentation," including her current income. Id. at 11-12. She made the three monthly trial payments and submitted her application, which listed her monthly income at $1545—$845 of which purportedly came from "Child Support/Alimony." R. 44-14 at 19. But she was never able to provide proof that she received the child-support payments because Donald never made them. The bank requested documentation of the payments at least five times,including proof of "a Divor[ce] Decree" to show how long the payments would last and "proof of Child Support" to show she received the money each month. Id. at 26-27. Andrea responded that she "had neither [of the] documents" that the bank "told" her to send. Id.
Without the documents, the bank could not confirm that Andrea's income sufficed to modify the loan. The bank denied her application on May 18, 2010. Later efforts to modify the loan failed as well, and the bank foreclosed on her property on August 30, 2010. The bank assigned its interest to the Federal Home Loan Mortgage Corporation, better known as Freddie Mac.
Andrea refused to leave the home, prompting Freddie Mac to file an unlawful detainer action in Tennessee state court to evict her. Andrea counterclaimed against Freddie Mac (on several state law grounds) and filed a third-party claim against Wells Fargo, alleging it had agreed to modify her loan. Freddie Mac removed the case to federal court and, together with Wells Fargo, moved for judgment as a matter of law. See 12 U.S.C. § 1452(f). The district court dismissed many of Andrea's claims on the pleadings and granted the defendants summary judgment on the rest. With respect to Freddie Mac's eviction claim, the court denied Andrea's motion to dismiss for lack of subject matter jurisdiction, struck her answer as untimely, and set the case for trial. Before trial, the district court entered judgment for Freddie Mac on the remaining claim as a matter of law.
On appeal, Andrea challenges (1) the district court's summary judgment decision rejecting her state law claims against Wells Fargo, (2) its denial of her motion to dismiss Freddie Mac's eviction action, and (3) its decision to strike her answer to the eviction action.
State law claims against Wells Fargo. Andrea first claims that Wells Fargo breached a contract to modify her loan. But no such contract existed. Wells Fargo invited Andrea to applyto modify her loan and offered to review her application if she complied with certain requirements. She applied. But she failed to meet the application's requirements, namely that she submit documentation of her current income. Her application thus remained just that. Now, as ever, an "application when made is not a contract." Travelers Ins. Co. v. Wolfe, 78 F.2d 78, 81 (6th Cir. 1935); see Fed. Ins. Co. v. Winters, 354 S.W.3d 287, 291 (Tenn. 2011); Canton Cotton Mills v. Bowman Overall Co., 257 S.W. 398, 402 (Tenn. 1924).
Look no further than the application itself to confirm the point. "The Trial Period Plan," it says, "is the first step" to permanent modification. R. 44-13 at 4. It "is not a modification of the Loan Documents" itself. R. 1-1 at 292. Permanent modification, it adds, does not occur "unless and until" Andrea satisfied "all of the conditions required for modification." Id. One such condition required Andrea to provide "documentation for all income" that she regularly received, including "any child support or alimony." Id. at 291. She thus needed to provide a copy of her divorce decree "that states the amount of the alimony or child support" and "[p]roof of full, regular and timely payments." R. 44-13 at 3. Yet, as Andrea admitted to the bank at the time, she sent "neither [of those] documents." R. 44-14 at 26-27. That meant she did not "meet all of the conditions required for modification," and that meant her application never became a loan-modification contract. R. 1-1 at 292.
Unfortunate though this conclusion may be, it is supported by communications between Wells Fargo and Andrea at the time. The bank told Andrea that "[i]f [her] income documentation does not support the income amount that [she] previously provided . . . [she] may not qualify for this loan modification program." R. 44-13 at 2. And Andrea recalled being "told" to provide the documentation and repeatedly called and wrote Wells Fargo to discuss the relevant documents. E.g., R. 44-14 at 26-27. She said that she was still "waiting on [the]Divor[ce] Decree + Child Sup.," id. at 25, and still "working on getting" the money and corresponding documents, id. at 26-27. But because her ex-husband, a one-time defendant in this saga and a less-than-admirable figure in it, never paid the child support, the money never came. Neither did any documentation of a payment. Neither did any binding contract to modify the mortgage.
Andrea tries to counter this conclusion on several grounds. She contends that she did supply sufficient documentation of her regular monthly income. But the document that she provided—the divorce court's February 2010 order for her to receive past-due and future child support—showed only that she expected to receive future payments, not that she had actually received "regular and timely" payments as Wells Fargo required. R. 44-13 at 3. Nor does Andrea's prequalification for a loan modification mean that she was in fact qualified for one. Cf. Martin Marietta Materials, Inc. v. Kan. Dep't of Transp., 810 F.3d 1161 (10th Cir. 2016). Her "income documentation," without the payments from Donald, could show a monthly income of only $700, which did "not support the income amount" of $1545 that she used to become prequalified. R. 44-13 at 2. Nor was anything amiss with Wells Fargo's denial letter. It gave Andrea sufficient notice of the denial. And it was issued "as quickly as possible," R. 44-13 at 5, with any delay attributable to the bank's "extension of time" for Andrea to "gather [her] documents," id. at 3. It's hard to fault the bank for working with Andrea to try to qualify her for the loan modification rather than denying the application the first chance it had.
Andrea persists that she made the three trial payments when she used the lump-sum award she received from Donald's past-due child support. But just because Andrea could make past payments based on a past lump-sum award does not prove that she could make present (to say nothing of future) payments on a "regular and timely" basis, as required. Id. In point of fact,the past-due child support dried up quickly—after the three payments—and when it did, Andrea (no fault of her own) had no way to make any ongoing payments. The bank in the final analysis did not breach any contract with Andrea.
Andrea separately claims that the district court should not have rejected her promissory estoppel claim. But just as Andrea did not produce evidence of a contract to modify her loan, she did not produce evidence of a promise to do so either. Such a promise, we have insisted, "must be actual, clear, and definite—a conditional promise will not do." Olson v. Merrill Lynch Credit Corp., 576 F. App'x 506, 511 (6th Cir. 2014) (quotation omitted). The Tennessee courts say the same thing. A promise "must be unambiguous and not . . . vague." Amacher v. Brown-Forman Corp., 826 S.W.2d 480, 482 (Tenn. Ct. App. 1991).
Andrea's problem is that Wells Fargo did not make an "actual, clear, and definite" or "unambiguous" promise to modify her loan. To the contrary, it told her that it didn't "guarant[ee] anything at all," R. 48-6 at 33, and used words like "may," "maybe," "if," "could," and "possibly" to back that up, e.g., R. 44-8; R. 44-10; R. 44-12. "At most, [Wells...
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