Hochroth v. Ally Bank

• Decision Date: 21 May 2020
• Docket Number: CIVIL NO. 18-00319 JAO-KJM
• Citation: 461 F.Supp.3d 986
• Parties: John HOCHROTH, Plaintiff, v. ALLY BANK, a Utah for profit corporation; Cenlar FSB, a federally chartered bank; Does 1–10, Defendants.
• Court: U.S. District Court — District of Hawaii

461 F.Supp.3d 986

John HOCHROTH, Plaintiff,

v.ALLY BANK, a Utah for profit corporation; Cenlar FSB, a federally chartered bank; Does 1–10, Defendants.

CIVIL NO. 18-00319 JAO-KJM

United States District Court, D. Hawai‘i.

Signed May 21, 2020

Matthew Peter Holm, Richard T. Forrester, Forrester Legal LLLC, Honolulu, HI, for Plaintiff.

Gabriele V. Provenza, Nicholas R. Monlux, Jesse W. Schiel, Kobayashi Sugita & Goda, Honolulu, HI, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS ALLY BANK AND CENLAR FSB'S MOTION FOR SUMMARY JUDGMENT AND REQUEST FOR SANCTIONS FOR PERJURY

Jill A. Otake, United States District Judge

This action arises from Plaintiff John Hochroth's ("Plaintiff") default on his mortgage and subsequent reinstatement efforts with Defendants Ally Bank ("Ally") and Cenlar FSB ("Cenlar"). Defendants seek summary judgment on all claims—Fair Debt Claims Protection Act ("FDCPA") (Counts 1 to 11) and state-law reinstatement claims (Counts 12 to 14)—and request sanctions for false statements in the Complaint. For the following reasons, the Court HEREBY GRANTS IN PART AND DENIES IN PART Defendants' Motion for Summary Judgment and Request for Sanctions for Perjury. ECF No. 49.

BACKGROUND

I. Factual History

A. Default and Property Inspection

Ally is the holder of Plaintiff's mortgage, which Plaintiff defaulted on in or around June 2014. ECF No. 89. Cenlar began servicing the loan on approximately July 1, 2014 and retained Five Brothers Mortgage Company Services and Securing ("Five Brothers") to conduct monthly visual inspections of Plaintiff's real property and to leave door hangers on the property or with Plaintiff. Defs.' Concise Statement of Facts ("CSF"), ECF No. 50 ¶ 23; Decl. of Rep. of Cenlar, Diane Constantine ("Constantine Decl."), ECF No. 50-2 ¶ 21; Decl. of Rebecca Sutton ("Sutton Decl."), ECF No. 50-3 ¶ 12. The purpose of the inspections was to verify occupancy and to confirm the exterior condition of the property. Defs.' CSF ¶ 23; Constantine Decl. ¶ 21; Sutton Decl. ¶ 14. The door hangers were left at the property so that Plaintiff would contact Cenlar.¹ Defs.' CSF ¶ 28; Sutton Decl. ¶ 25.

All facts pertaining to Five Brothers are undisputed. Cenlar did not provide Five Brothers with any financial information concerning Plaintiff's debt or foreclosure process; Cenlar did not hire Five Brothers to collect funds from Plaintiff, enforce any security interest, or pay Five Brothers based on amounts paid by Plaintiff; and Cenlar provided all information for the door hangers to Five Brothers and approved the final product. Defs.' CSF ¶¶ 24–25, 27; Constantine Decl. ¶¶ 22–23, 25, 30; Sutton Decl. ¶¶ 6–11, 15–19, 29–32. Five Brothers does not send mailings to debtors and it did not mail anything to Plaintiff. Defs.' CSF ¶ 29; Sutton Decl. ¶¶ 7, 34.

For each inspection conducted from March 16, 2015 to February 2018, Five Brothers prepared a Property Inspection Report. Defs.' CSF ¶ 31; Sutton Decl. ¶¶ 13, 20–21; Ex. U, ECF No. 50-32. During the inspections, which occurred between 8:00 a.m. and 8:00 p.m., Five Brothers did not serve Plaintiff with any documents. Defs.' CSF ¶¶ 30, 32; Sutton Decl. ¶¶ 23, 36. Property inspections are conducted pursuant to strict instructions to: (1) visually confirm and document (with photos) the property's condition; (2) attempt to contact the occupant by knocking on the door; (3) tell the occupant that the inspector was hired by the servicer to inspect the exterior of the property; (4) if the occupant confirms that he or she is the mortgagor, tell him or her to contact the servicer at the telephone number provided with the door hanger if he or she needs additional information; and (5) leave a door hanger with the occupant who spoke to the inspector, or leave the door hanger on or near the entry door. Defs.' CSF ¶ 34; Sutton Decl. ¶ 24. The Court has no evidence before it that the Five Brothers inspectors here did otherwise.

B. Reinstatement

On February 19, 2016, Ally initiated a foreclosure action against Plaintiff and others in the Circuit Court of the First Circuit, State of Hawai‘i. Mem. in Supp. of Mot. at 4. On October 16, 2017, judgment entered against Plaintiff. Defs.' CSF ¶ 1; Ex. A, ECF No. 50-4. Later that month, Plaintiff's counsel, Richard Forrester, requested reinstatement amounts from Ally. Defs.' CSF ¶ 2; Decl. of Counsel, Jesse Schiel ("Schiel Decl."), ECF No. 50-1 ¶ 6; Pl.'s CSF in Opp'n (additional facts), ECF No. 74 ¶ 1; Ex. 2, ECF No. 73-4. At the time, Ally determined that the deadline for reinstatement under the mortgage had expired. Defs.' CSF ¶ 3; Schiel Decl. ¶ 6; Pl.'s CSF in Opp'n (additional facts) ¶ 2; Ex. 16, ECF No. 73-18.

Plaintiff then called Cenlar about reinstating the mortgage. Defs.' CSF ¶ 4; Ex. D, ECF No. 50-7 at 4:14–16, 5:24–6:21. Between December 2017 and February 2018, Plaintiff telephoned Cenlar 12 times. Defs.' CSF in Opp'n ¶¶ 14–15; Ex. Q, ECF No. 50-28; Ex. R, ECF No. 50-29; Decl. of John Hochroth ("Hochroth Decl."), ECF No. 73-1 ¶¶ 19, 21, 23, 25–29, 31–33, 36. Plaintiff claims that on January 6, 2018, Cenlar left him a voicemail. Hochroth ¶ 10; Ex. 211.

On December 27, 2017, Plaintiff sent Cenlar a letter stating that it could communicate with him directly and that neither he nor his attorney had any cease and desist document in place prohibiting direct communication with him.² Defs.' CSF ¶¶ 5–6; Ex. C, ECF No. 50-6; Ex. R. During communications with Plaintiff, Cenlar representatives repeatedly told him that he must obtain the reinstatement amount from, and negotiate any attorneys' fees and costs with, its attorneys. Defs.' CSF ¶ 9; Ex. D at 5:24–7:7; Ex. E, ECF No. 50-10 at 18:20–19:21, 22:20–24:11, 25:25–28:1, 29:5–30:3, 31:7–9; Ex. F, ECF No. 50-12 at 41:17–42:6, 43:17–50:20. Plaintiff complains that Cenlar provided contradictory information about the law firm representing them for his foreclosure, but the record demonstrates otherwise. Plaintiff acknowledged that Jesse Schiel was the attorney referenced in his conversations.³ Ex. F at 45:22–25 ("All I want is a letter, an e-mail, a fax that says: To: Jesse Schiel, at whatever that firm is that you hired—it's okay to go ahead and give Mr. Hochroth the reinstatement quote.").

After receiving a copy of Plaintiff's December 18, 2017 loan statement from Cenlar, Ally responded that it would permit reinstatement in the amount of $113,356.91, even though it was not obligated to do so under applicable law and the terms of the note and mortgage. Defs.' CSF ¶¶ 7–8; Ex. B, ECF No. 50-5; Ex. G, ECF No. 50-14. As a condition of the reinstatement, Ally required Plaintiff to pay $47,021.68 in attorneys' fees and costs incurred in the foreclosure action through January 31, 2018. Defs.' CSF ¶ 8; Ex. G. Plaintiff accepted the proposed reinstatement amount but rejected the proposed attorneys' fees. Ex. 43, ECF No. 73-45. Plaintiff agreed to pay $5,500 in fees and asked that his ex-wife not be part of any settlement. Id.

Following email discussions about Ally's proposal, by email dated February 6, 2018, Mr. Forrester responded:

Jesse:

I spoke with Mr. Hochroth and it seems we are in a [sic] agreement on all of the material terms, namely: (1) $113,356.91 to Cenlar (or similar adjusted figure if Feb 14 passes); (2) reasonable attorneys' fees should be decided by motion (hearing or non-hearing); (3) a settlement agreement documenting the above; and (4) dismissals of all claims and appeals.

However, for reasons we can discuss tomorrow, we need you to file your motion for attorneys' fees first. Mr. Hochroth can provide proof of funds for the reinstatement to Cenlar in the meantime.

Ex. H, ECF No. 50-15; Defs.' CSF ¶ 11. Notwithstanding this communication, Plaintiff contacted Cenlar that day to inquire about the reinstatement amount—whether it was $113,356.91, as provided in the email from Mr. Schiel, or $114,127.73, per his January statement. Defs.' CSF ¶ 12; Ex. I, ECF No. 50-16 at 80:8–81:7; Constantine Decl. ¶¶ 14–15, 19. The Cenlar representative advised Plaintiff that he should rely on the amount provided by Mr. Schiel. Defs.' CSF ¶ 13; Ex. I at 81:16–18. But the next day, Plaintiff sent Cenlar a $114,127.73 certified check, the January statement amount. Defs.' CSF ¶ 13; Constantine Decl. ¶ 20. Plaintiff construes the January statement as a "bonafide offer" to reinstate the mortgage.⁴ Pl.'s CSF in Opp'n ¶ 8; Ex. 38, ECF No. 73-40.

By letter dated February 26, 2018, Cenlar notified Plaintiff that it received his reinstatement payment and that any foreclosure action would be closed. Defs.' CSF ¶ 19; Ex. M, ECF No. 50-24 at Ex. A. The letter also advised Plaintiff that "there may be default-related charges that were not yet billed at the time your last billing statement was issued. Any such fees will be included on a future billing statement." Ex. M at Ex. A. Plaintiff's loan statements in the months following reinstatement did not include charges for attorneys' fees and costs. Defs.' CSF ¶ 21; Ex. S, ECF No. 50-30.

To comply with what it thought was an agreement between the parties, Ally filed a motion for fees and costs in the foreclosure action. Defs.' CSF ¶ 16; Ex. J, ECF No. 50-18. Plaintiff disputes that he reached an agreement with Ally. Decl. of Counsel, Richard T. Forrester ("Forrester Decl."), ECF No. 73-2 ¶ 97. Yet Mr. Forrester never argued that fees and costs were satisfied; he only challenged the reasonableness of the fees and costs. Defs.' CSF ¶ 17; Ex. J; Ex. J1, ECF No. 50-19; Ex. J2, ECF No. 50-20; Ex. J3, ECF No. 50-21. The state court awarded Ally attorney's fees totaling $44,293.70. Defs.' CSF ¶ 18; Ex. K, ECF No. 50-22; Ex. L, ECF No. 50-23.

Following the issuance of the fee orders, Mr. Forrester submitted a letter to the state court asserting that a post-reinstatement February 26, 2018 letter from Cenlar to Plaintiff negated the fee order. Defs.' CSF ¶ 19; Ex. M. The state court nevertheless issued a Judgment for Attorneys' Fees and Costs on July 27, 2018.⁵ Defs.' CSF ¶...