Hammer v. Residential Credit Solutions, Inc.

• Decision Date: 03 December 2015
• Docket Number: No. 13 C 6397,13 C 6397
• Court: U.S. District Court — Northern District of Illinois
• Parties: ALENA W. HAMMER, Plaintiff, v. RESIDENTIAL CREDIT SOLUTIONS, INC., Defendant.

ALENA W. HAMMER, Plaintiff, v. RESIDENTIAL CREDIT SOLUTIONS, INC., Defendant.

No. 13 C 6397

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

December 3, 2015

Judge Thomas M. Durkin

MEMORANDUM OPINION AND ORDER

I.INTRODUCTION

Plaintiff Alena W. Hammer ("Hammer") filed suit against Defendant Residential Credit Solutions, Inc. ("RCS") for claims arising out of RCS's servicing of Hammer's home mortgage loan and debt collection activities. Hammer alleged claims for (1) breach of contract, (2) violations of Illinois' Consumer Fraud and Deceptive Business Practices Act ("Illinois Consumer Fraud Act"), 815 ILCS § 505/1 et seq., and (3) violations of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601, et seq. After a five-day trial, the jury returned a verdict in favor of Hammer on all three of her claims and awarded $500,000 in compensatory damages and $1,500,000 in punitive damages. Presently before the Court are RCS's post-trial motions for judgment as a matter of law, a new trial, and remittitur. For the reasons that follow, RCS's post-trial motions are denied.

II.BACKGROUND

The following is based on the evidence introduced at trial. Hammer was approximately 63 years old when her mortgage troubles began in August 2009. AmTrust Bank ("AmTrust"), the servicer on Hammer's home mortgage loan, initiated foreclosure proceedings after she defaulted on her loan payments. But in December 2009, the foreclosure proceedings were stayed after the Federal Deposit Insurance Corporation ("FDIC") took over as receiver for AmTrust. R. 169 at 54 (Tr. Transcript 368). Thereafter, the FDIC worked with Hammer on a loan modification with the goal of lowering Hammer's monthly payments and avoiding foreclosure. In or about the last week of June 2010, the FDIC sent Hammer a written loan modification agreement ("the Loan Modification Agreement" or "Agreement") for Hammer to execute. A cover letter sent by the FDIC¹ with the Loan Modification Agreement asked Hammer to sign the Agreement and return it to AmTrust by June 25, 2010.

Hammer testified that she did not receive the FDIC's cover letter with the enclosed Loan Modification Agreement ("Loan Package") until sometime between June 25 and June 28. R. 170 at 216 (Tr. Transcript 708). Upon receipt of the Loan Package, Hammer saw that the FDIC had charged her $2,303.60 in fees and costs,which had been added to the loan's principal balance and increased that amount from $207,167.99 to $209,471.59. As a result, Hammer's monthly payment under the loan modification also increased, from $741.63 to $749.88. R. 202-2 at 2 (Pl. Tr. Ex. 5); R. 202-3 at 2 (Pl. Tr. Ex. 6); R. 169 at 29, 36-37 (Tr. Transcript 343, 350-51). When Hammer received the Loan Package, the first payment under the Agreement was due in only a week or less. R. 202-3 at 2 (Pl. Tr. Ex. 6). Hammer called the FDIC to ask about the additional fees and costs. R. 170 at 210, 217 (Tr. Transcript 702, 709). The person with whom Hammer spoke told Hammer that she needed to begin making payments immediately according to the Agreement as written. In the meantime, Hammer was told, the added fees and costs would be investigated and someone would get back to her about them. R. 170 at 210-11 (Tr. Transcript 702-03). Hammer testified that she followed the instructions given to her and sent her first payment in the amount of $749.88 to AmTrust on or about June 28, 2010. R. 170 at 211, 215-18 (Tr. Transcript 703, 707-10); R. 202-16 at 2 (Pl. Tr. Ex. 28). Hammer made a second payment of $749.88 to AmTrust on or about July 28, 2010. R. 202-16 at 3 (Pl. Tr. Ex. 28). Both of these payments were for the amount stated in the Loan Package, which included the additional $2,303.60 in fees and costs. Hammer made these payments although she did not sign the Agreement at this time.

In approximately mid-July 2010, Hammer received two written notices, one from the FDIC and one from RCS, informing her that the servicing of her loan was being transferred from the FDIC to RCS effective August 1, 2010. R. 189-6 at 2-4(Def. Tr. Exs. 21, 22). After sending in her August payment on July 28, 2010, Hammer contacted the FDIC to inquire again about the added fees and costs. This second conversation about the fees and costs took place in mid-August 2010, after the loan had transferred to RCS. Hammer testified that she spoke by phone with Theresa Hoke, who was an FDIC loan negotiator. R. 170 at 158 (Tr. Transcript 650); R. 171 at 77-80 (Tr. Transcript 849-52). Hammer testified that Hoke told her to sign the Agreement right away and mail it to RCS, because RCS was now the loan servicer. Hoke further instructed Hammer to cross out the typed principal loan balance of $209,471.59 and write in the amount of $207,167.99 in its place. Id. Either Hammer crossed out the $209,471.59 figure and replaced it with $207,167.99, or else she directed the attorney she had hired to review the Agreement to do so based on Hoke's instructions. The notary date on the Agreement indicates that Hammer signed it on August 16, 2010. RCS does not dispute receiving the executed Loan Modification Agreement a short time later.

Hammer first learned RCS had a problem with the Loan Modification Agreement in a phone conversation that took place towards the end of August 2010. A representative of RCS told either Hammer or her attorney that the Loan Modification Agreement was invalid and that, if Hammer wanted a loan modification, she would have to sign a new agreement with RCS. Hammer refused to enter into a new loan modification agreement with RCS, and instead kept mailing mortgage payments to RCS based on the Agreement with the FDIC. R. 171 at 75-76 (Tr. Transcript 847-48). Thus began a course of conduct continuing over thenext two years, in which Hammer consistently sent RCS loan payment checks each month in the amount of $749.88 based on the FDIC's Loan Modification Agreement, and RCS consistently returned Hammer's checks uncashed because RCS demanded Hammer pay $1,519.49 per month pursuant to the terms of the original, unmodified AmTrust loan as well as make up with one lump sum payment all her previous missed monthly payments under the original loan. In addition, because RCS took the position that Hammer continued to be in default under the original loan notwithstanding her attempts to make payments under the Loan Modification Agreement, RCS revived the state foreclosure proceeding originally initiated by AmTrust in August 2009. Hammer hired another attorney to defend her in the foreclosure action, who filed a motion to dismiss based on the Loan Modification Agreement. A hearing on Hammer's motion to dismiss was held, after which the state court entered an order in Hammer's favor dismissing RCS's foreclosure action. Thereafter, RCS and Hammer failed to reach a resolution of their differences, and RCS subsequently filed a second foreclosure action. Hammer then filed this lawsuit.²

III.ANALYSIS

A.RCS's Motion For Judgment As A Matter of Law

A party who, before the case was submitted to the jury, filed a motion for judgment as a matter of law under subsection (a) of Fed. R. Civ. P. 50, may no later than 28 days after the entry of judgment file a renewed motion for judgment as a matter of law under subsection (b) of Fed. R. Civ. P. 50. "In ruling on the renewed motion, the [C]ourt may: (1) allow judgment on the verdict, if the jury returned a verdict; (2) order a new trial; or (3) direct the entry of judgment as a matter of law." Fed. R. Civ. P. 50(b). Judgment as a matter of law on any issue may be granted if "a reasonable jury would not have a legally sufficient evidentiary basis to find for the [nonmoving] party on that issue." Fed. R. Civ. P. 50(a)(1). "The standard governing a Rule 50 motion mirrors that employed in evaluating a summary judgment motion. Looking to all of the evidence in the record, [the Court] must ask whether any reasonable jury could have found" for the nonmoving party. Appelbaum v. Milwaukee Metro. Sewerage Dist., 340 F.3d 573, 578 (7th Cir. 2003) (quotation marks and citation omitted). "In undertaking this review, [the Court] must construe the evidentiary record in [Hammer's] favor, drawing all reasonable inferences in her favor and resisting temptation to weigh the evidence or to make [the Court's] own credibility determinations." Id. at 579.

Because a Rule 50(b) motion is a renewal of the pre-verdict Rule 50(a) motion, it can be granted only on grounds advanced in the pre-verdict motion:

The earlier motion informs the opposing party of the challenge to the sufficiency of the evidence and affords a clear opportunity to provide additional evidence that may be available. The earlier motion also alerts the court to the opportunity to simplify the trial by resolving some issues, or even all issues, without submission to the jury. This fulfillment of the functional needs that underlie present Rule 50(b) also satisfies the Seventh Amendment.

Fed. R. Civ. P. 50, advisory committee note, 2006 amendment.

As an initial matter, Hammer argues that RCS has waived several of the arguments it makes in its Rule 50(b) motion based on its failure to raise those issues in its earlier Rule 50(a) motion. R. 202 at 3, 4, 6, 13. RCS takes issue with Hammer's waiver arguments, asserting that its oral Rule 50(a) motion made at the close of evidence was sufficient to preserve any arguments for judgment as a matter of law not contained in its written Rule 50(a) motion made earlier at the close of Hammer's case. RCS also asserts that "the individual legal propositions" that support many of RCS's contentions in its Rule 50(b) motion "were [ ] raised throughout the proceedings" even though not necessarily included in RCS's written Rule 50(a) motion or encompassed by RCS's oral renewal of the earlier written motion. R. 203 at 10-11.

On the one hand, the Court agrees with Hammer that some issues RCS raises in its Rule 50(b) motion were not preserved by its Rule 50(a) ...