Hughes v. U.S. Bank Nat'l Ass'n (In re Hughes), Bankruptcy No.: 16-04559-jw

CourtUnited States Bankruptcy Courts. Fourth Circuit. U.S. Bankruptcy Court — District of South Carolina
Writing for the CourtJohn E. Waites, US Bankruptcy Judge
Citation627 B.R. 327
Parties IN RE: Michael Dante Hughes Angela Ann HUGHES, Debtors. Michael Dante Hughes Angela Ann Hughes, Plaintiffs, v. U.S. Bank National Association, as Trustee for Residential Asset Securities Corporation Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2007-KS3 ; Ocwen Loan Servicing, LLC; PHH Mortgage Corporation; Defendants.
Docket NumberAdv. Pro. No.: 19-80060-jw,Bankruptcy No.: 16-04559-jw
Decision Date04 March 2021

627 B.R. 327

IN RE: Michael Dante Hughes Angela Ann HUGHES, Debtors.

Michael Dante Hughes Angela Ann Hughes, Plaintiffs,
v.
U.S. Bank National Association, as Trustee for Residential Asset Securities Corporation Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2007-KS3 ; Ocwen Loan Servicing, LLC; PHH Mortgage Corporation; Defendants.

Bankruptcy No.: 16-04559-jw
Adv. Pro.
No.: 19-80060-jw

United States Bankruptcy Court, D. South Carolina.

Signed March 4, 2021


627 B.R. 332

Tucker S. Player, Player Law Firm, Columbia, SC, for Debtors.

Robert H. Cooper, The Cooper Law Firm, Greenville, SC, for Plaintiffs.

Brian A. Calub, McGuirewoods LLP, Kristen N. Nichols, Turner Padget Graham & Laney, P.A., Charleston, SC, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART THE MOTION FOR SUMMARY JUDGMENT

John E. Waites, US Bankruptcy Judge

This matter comes before the Court upon the Motion for Summary Judgment ("Motion") filed by U.S. Bank National Association as Trustee for Residential Asset Securities Corporation Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2007-KS3 ("U.S. Bank"), Ocwen Loan Servicing, LLC ("Ocwen"), and PHH Mortgage Corporation ("PHH") (collectively "Defendants") on December 29, 2020. On January 12, 2021, Michael Dante Hughes and Angela Ann Hughes (collectively, "Plaintiffs") filed

627 B.R. 333

a response to the Motion. A telephonic hearing on the Motion was held, attended by counsel for the Defendants and counsel for the Plaintiffs. At the hearing, the Court announced an oral ruling on the Motion. This Order memorializes the findings and conclusions announced by the Court at that hearing.

History of the Adversary Proceeding

Plaintiffs had previously filed a petition for relief under Chapter 11 the Bankruptcy Code on September 7, 2016. In the chapter 11 case, Plaintiffs confirmed a chapter 11 plan on August 7, 2017, which provided for the valuation and bifurcation of the mortgage loan held by U.S. Bank and serviced by Ocwen as to Plaintiffs' residential rental property better known as 6001 S. Kings Highway, Cite-C-21, Myrtle Beach, South Carolina (the "Subject Property"). PHH became the servicer of the mortgage loan upon its merger with Ocwen in April 2019.

On August 26, 2019, Plaintiffs commenced the present adversary proceeding. The adversary proceeding centers on Defendants' alleged violations of the chapter 11 plan, including improperly accounting for plan payments, as well as other mortgage servicing issues, including the alleged improper placement of force placed insurance and alleged misreporting of information On July 13, 2020, Plaintiffs amended their complaint. The amended complaint contains seven causes of action: causes of action for alleged violations of the Fair Debt Collections Practices Act ("FDCPA"), the Fair Credit Reporting Act ("FCRA"), the Real Estate Settlement Procedures Act ("RESPA") and the South Carolina Unfair Trade Practices Act ("SCUTPA"); causes of action based on alleged Tortious Interference with Contractual Business Relationship, Negligent and/or Intentional Infliction of Emotional Distress, and violations of the Court's Chapter 11 Confirmation Order. After the Court's entry of a scheduling order, the parties completed discovery and Defendants filed the present Motion.

STANDARD OF REVIEW

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law.1 After the movant has carried its burden of identifying issues where there is no genuine issue of material fact, the non-moving party must then produce evidence upon which a fact-finder could reasonably base a verdict in its favor.2 If the non-moving party bears the burden of proof at trial, the moving party need only point to the absence of any fact issue in the record, and the evidentiary burden shifts to the non-moving party to show with "significant probative" evidence that there is a triable issue of fact.3

I. Negligent Infliction of Emotional Distress

Except in the context of "bystander liability," South Carolina courts have expressly rejected a cause of action for negligent infliction of emotional distress.4 In order to prevail under a negligent infliction of emotional distress cause

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of action, a plaintiff must show that: "(a) the negligence of the defendant caused death or serious physical injury to another; (b) the plaintiff bystander was in close proximity to the accident ; (c) the plaintiff and the victim are closely related; (d) the plaintiff contemporaneously perceived the accident ; and (e) the plaintiff's emotional distress manifests itself by physical symptoms capable of objective diagnosis and be established by expert testimony ."5

Plaintiffs have neither pled, nor presented any evidence of a cognizable claim for negligent infliction of emotional distress. South Carolina courts are clear, a negligent infliction of emotional distress claim is limited to situations involving bystander liability, such as where a plaintiff parent observes the death of their child.6 Plaintiffs have not pled or shown any physical injury to anyone which they observed. They have not pled or shown any evidence that they perceived any accident to another. Therefore, summary judgment is appropriate on this cause of action. Further, at the hearing on the Motion for Summary Judgment, the Plaintiffs withdrew their claim for negligent infliction of Emotional distress. The cause of action is dismissed with prejudice.

II. Intentional Infliction of Emotional Distress

The tort of intentional infliction of emotional distress or "outrage" arises when one by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another.7 To recover for this tort, the plaintiff must establish that (1) the defendant intentionally or recklessly inflicted severe emotional distress or was certain or substantially certain that such distress would result from his conduct, (2) the conduct was so "extreme and outrageous" as to exceed "all possible bounds of decency" and must be regarded as "atrocious, and utterly intolerable in a civilized community," (3) the actions of the defendant caused the plaintiff's emotional distress; and (4) the emotional distress suffered by the plaintiff was "severe" so that "no reasonable man could be expected to endure it."8 Whether the conduct complained of may reasonably be found to be sufficiently outrageous as to permit recovery is a question of law.9 To establish intentional infliction of emotional distress, it is not enough that the conduct is intentional and outrageous. It must be conduct directed at the plaintiff, or occur in the presence of a plaintiff of whom the defendant is aware.10 As a matter of policy, courts have limited such recovery "to the most extreme cases of violent attack, where there is some especial likelihood of

627 B.R. 335

fright or shock."11 "The tort of outrage was designed not as a replacement for the existing tort actions. Rather, it was conceived as a remedy for tortious conduct where no remedy previously existed."12

"In order to prevent claims for intentional infliction of emotional distress from becoming ‘a panacea for wounded feelings rather than reprehensible conduct,’ the court plays a significant gatekeeping role in analyzing a defendant's motion for summary judgment."13 The Supreme Court of South Carolina has stated that at the summary judgment stage:

Under the heightened standard of proof for emotional distress claims[ ], a party cannot establish a prima facie claim for damages resulting from a defendant's tortious conduct with mere bald assertions. To permit a plaintiff to legitimately state a cause of action by simply alleging, "I suffered emotional distress" would be irreconcilable with this Court's development of the law in this area. In the words of Justice Littlejohn, the court must look for something "more"—in the form of third party witness testimony and other corroborating evidence—in order to make a prima facie showing of "severe" emotional distress.14

In the present matter, Plaintiffs have not pled or shown any evidence that their emotional distress manifested in physical symptoms capable of objective diagnosis, let alone by expert testimony. Plaintiffs have failed to designate any expert. Therefore, the Court finds that Defendants are entitled to summary judgment on Plaintiffs' claim for intentional infliction of emotional distress. Further, at the hearing on the Motion, Plaintiffs withdrew this cause of action with prejudice.

III. Tortious Interference with Contractual and other Business Relationships

The Court considers this cause of action as two separate causes of action under South Carolina Law: (1) Tortious Interference with Contract and (2) Intentional Interference with Contractual Relations. To recover in an action for tortious interference with an existing contractual relationship, Plaintiffs must prove the following: (1) a contract; (2)...

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