Gordon v. U.S. Bank N.A., 082819 IDSCCI, 45202

Docket Nº:45202
Opinion Judge:STEGNER, Justice.
Party Name:(ELLEN) GITTEL GORDON, Plaintiff-Appellant, v. U.S. BANK NATIONAL ASSOCIATION, J.P. MORGAN LOAN TRUST 2006-03 company, LISA McMAHON-MYHRAN, SELECT PORTFOLIO SERVICING, INC., Defendants-Respondents, and JOHN DOES 1-10, Defendants.
Attorney:Ellen Gittel Gordon, appellant pro se. Parsons Behle & Latimer, Idaho Falls, for respondents U.S. Bank National Association, J.P. Morgan Loan Trust, Lisa McMahon-Myhran, and Select Portfolio Servicing, Inc. Jon A. Stenquist argued.
Judge Panel:Chief Justice BURDICK, Justices BEVAN, MOELLER and Justice Pro Tem TROUT CONCUR.
Case Date:August 28, 2019
Court:Supreme Court of Idaho
 
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(ELLEN) GITTEL GORDON, Plaintiff-Appellant,

v.

U.S. BANK NATIONAL ASSOCIATION, J.P. MORGAN LOAN TRUST 2006-03 company, LISA McMAHON-MYHRAN, SELECT PORTFOLIO SERVICING, INC., Defendants-Respondents,

and

JOHN DOES 1-10, Defendants.

No. 45202

Supreme Court of Idaho

August 28, 2019

Appeal from the District Court of the Fifth Judicial District, State of Idaho, Blaine County. Jonathan Brody, District Judge.

The amended judgment of the district court is affirmed.

Ellen Gittel Gordon, appellant pro se.

Parsons Behle & Latimer, Idaho Falls, for respondents U.S. Bank National Association, J.P. Morgan Loan Trust, Lisa McMahon-Myhran, and Select Portfolio Servicing, Inc. Jon A. Stenquist argued.

STEGNER, Justice.

After Ellen Gittel Gordon (Gordon) defaulted on her mortgage, the loan servicer initiated nonjudicial foreclosure proceedings to sell her home at auction. Gordon submitted multiple loan modification applications and appeals in an attempt to keep her home but all were ultimately rejected. As a result, Gordon initiated the underlying action in district court to enjoin the foreclosure sale. Upon the filing of a motion to dismiss that was later converted to a motion for summary judgment, the district court dismissed Gordon's action and allowed the foreclosure sale to take place. Gordon timely appealed. For the reasons that follow, we affirm the district court's dismissal of Gordon's complaint.

I. FACTUAL AND PROCEDURAL BACKGROUND

On February 28, 2006, Gordon borrowed $1.44 million from MortgageSelect, a corporation organized and operating in the State of New York, to purchase a home in Ketchum, Idaho (the property). Gordon signed a promissory note to that effect (the note), which included an adjustable interest rate. Gordon's initial monthly payment was $7, 050. The note was secured by a Deed of Trust (trust deed), also executed by Gordon on the same date. The trust deed identified Sun Valley Title Company as the trustee and Mortgage Electronic Registration Systems, Inc. (MERS) as MortgageSelect's successor and the beneficiary under the trust deed.

At some point, JPMorgan Chase Bank (Chase) began servicing the loan and Gordon made her payments to it. Gordon eventually experienced a drop in income that coincided with a drop in the value of the property. Consequently, Gordon sought to modify her mortgage through Chase. According to Gordon, in June 2012, a Chase loan modification processor advised her to stop making her monthly payments in order to initiate the modification process. Hoping to initiate a loan modification, Gordon made her last payment in May of 2012, which resulted in her defaulting on the mortgage in June 2012. The record does not contain the details of this initial attempted modification with Chase, but it is clear it was unsuccessful.

On November 7, 2012, the note was assigned to U.S. Bank as trustee of J.P. Morgan Alternative Loan Trust 2006-A3 Mortgage Pass-Through Certificates (J.P. Morgan Loan Trust), a mortgage-backed security pool. The trust deed was also assigned to U.S. Bank in its capacity as trustee of J.P. Morgan Loan Trust. (For ease of reference, "U.S. Bank" will be used to refer to the beneficiary of the note and the holder of the trust deed.)

On August 1, 2013, Select Portfolio Servicing, Inc. (SPS), began servicing Gordon's loan. Gordon then began attempting to modify her mortgage through SPS. Because Gordon still had made no payments since May 2012, a foreclosure sale was scheduled for August 15, 2014. The date for the scheduled sale came and went without the sale occurring.

Gordon sought to sell the property to avoid foreclosure. On April 17, 2014, she had her loan evaluated for a payment plan that would allow her to sell the property; however, she was ineligible for the plan due to the delinquency of her mortgage. Later, on July 15, 2014, Gordon submitted a short sale offer to SPS for its review. Gordon withdrew that submission on August 12, 2014, hoping to obtain a better offer for the property. Evidently, this maneuver postponed the scheduled August 15, 2014, foreclosure sale because on October 22, 2014, Gordon submitted an Assistance Review Application (or loan modification application) to SPS for review of "all foreclosure prevention options."

On May 7, 2015, SPS sent a letter to Gordon denying her first modification application and informing her she could appeal the denial or notify SPS of any errors. On May 13, 2015, Gordon submitted a notice of error regarding the May 7, 2015, denial, citing SPS's failure to include income from her trust. Gordon also requested a postponement of the foreclosure sale.

On June 12, 2015, SPS wrote to Gordon to inform her there had been no error and her income had been calculated correctly based on the information she had provided. In a later letter, SPS clarified that it did not receive proof of Gordon's trust income with the May 13, 2015, notice of error or with the original application; thus, the calculation had been accurately based on the amount of income Gordon had provided. SPS then affirmed the May 7, 2015, denial, noted that a foreclosure sale was scheduled for June 30, 2015, and informed Gordon that if she wished to have her account reevaluated, she would need to submit a new application.

As a result of this denial, Gordon filed a complaint with the Consumer Financial Protection Bureau (CFPB). The complaint alleged that SPS had engaged in dual tracking[1] and failed to properly review Gordon's modification application. By August 18, 2015, SPS had received correspondence from the CFPB relaying the information about Gordon's complaint. On August 26, 2015, SPS wrote to Gordon's attorney, Scott Rose (Rose). In that letter, SPS denied committing any improper dual tracking and noted that no foreclosure sale was scheduled. (Apparently, SPS must have cancelled the June 30, 2015, sale.) Subsequently, SPS accepted a second Assistance Review Application from Gordon.

On September 15, 2015, SPS denied this second loan modification application, sending Gordon a form denial stating there were no loss mitigation options available to her. This second denial was largely identical to the May 7, 2015, denial; however, this second denial stated that a modification was unavailable because a payment equal to 31% of Gordon's reported income could not be effectuated without impermissibly changing the terms of the loan. Prompted by Gordon's subsequent communication with U.S. Bank, SPS sent an explanatory letter to Rose on September 17, 2015. The letter clarified that although an initial error had been made in calculating Gordon's income, the September 15, 2015, denial was based on a recalculation done on September 11, 2015, which included Gordon's trust income. Accordingly, SPS clarified that the most recent denial remained in effect, despite Gordon's accurate monthly income, which included her monthly trust income of $9, 681.75.

Gordon continued to have questions about this second denial and corresponded with SPS yet again; Gordon alleged that SPS had violated the Dodd-Frank Act by engaging in dual tracking. SPS responded on November 19, 2015, admitting that the first, May 7, 2015, denial had been erroneously predicated on an incorrect income. Regardless, SPS provided additional information on why its second denial on September 15, 2015, was proper even when considering Gordon's $9, 681.75 monthly trust income. Gordon, still unsatisfied, requested another Assistance Review Application. SPS sent the third requested application to Gordon on February 18, 2016.

On January 28, 2016, SPS, as U.S. Bank's attorney-in-fact, appointed Lisa McMahon-Myhran (McMahon-Myhran) as the trustee of the trust deed. On August 31, 2016, McMahon-Myhran recorded a Notice of Default declaring all sums due and announcing U.S. Bank's intent to foreclose the trust deed by sale at public auction.2 On September 6, 2016, McMahon-Myhran also executed a Trustee's Notice of Sale, which announced that the property would be sold at public auction at the front steps of the Blaine County Courthouse, in Hailey, Idaho, on January 11, 2017. The Notice of Trustee's Sale and other notices were posted on the property September 28, October 8, and October 17, 2016. The Notice of Trustee's Sale was also published in the local newspaper.

Almost ten months after Gordon received her third modification application, SPS alerted Gordon on December 7, 2016, that the third application had not been completed within the given timeline and closed her request. On January 5, 2017, Gordon contacted SPS regarding this latest denial, sending SPS an undated appeal and a notice of error dated that same date.

On January 9, 2017, just two days before the scheduled foreclosure sale, Gordon filed her complaint in district court against J.P. Morgan Loan Trust, U.S. Bank, McMahon-Myhran, and SPS (collectively...

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