In re Residential Capital, LLC
| Decision Date | 23 April 2015 |
| Docket Number | Case No. 12-12020 (MG) |
| Parties | In re: RESIDENTIAL CAPITAL, LLC, et al., Debtors. |
| Court | U.S. Bankruptcy Court — Southern District of New York |
NOT FOR PUBLICATION
Jointly Administered
Pending before the Court is the ResCap Borrower Claims Trust's (the "Trust") objection to Claim Number 2079 (the "Claim") filed by Maurice Sharpe ("Sharpe"). The objection is included in the ResCap Borrower Claims Trust's Sixty-Ninth Omnibus Claims Objection to Claims (No Liability Borrower Claims) (the "Objection," ECF Doc. # 7188).1 Sharpe filed an opposition (the "Opposition," ECF Doc. # 7335).2 The Trust then filed a supplemental objection to the Claim (the "Supplemental Objection," ECF Doc. # 8288),3 Sharpe filed an opposition to the Supplemental Objection (the "Supplemental Opposition," ECF Doc. # 8393), and the Trust filed a reply (the "Reply," ECF Doc. # 8483). The Court held a hearing on the Objection on April 16, 2015 (the "Hearing") and took the Objection to the Claim under submission.
The Claim stems from the refinancing of Sharpe's mortgage loan that Sharpe alleges was fraudulently procured by his now ex-girlfriend using his personal information. After receivingnotice of Sharpe's identity theft and forgery allegations, Debtor GMAC Mortgage, LLC ("GMACM"), the servicer of the refinanced loan, foreclosed on Sharpe's home. Although the parties agree that the mere notice of the forgery allegations did not impose a legal duty upon GMACM not to foreclose, the parties disagree whether GMACM should ultimately bear the risk of loss on Sharpe's wrongful foreclosure claim should the refinanced loan be deemed void due to forgery.
The Trust raises several arguments against the Claim, including untimeliness, claim preclusion, issue preclusion, estoppel, and waiver. Applicable Nevada law, however, substantiates none of these arguments. The Trust also contests the Claim on its merits, but fails to establish that the Claim should be disallowed and expunged as a matter of Nevada law. The Objection to the Claim is therefore OVERRULED in its entirety. To the extent the Objection contests the merits of the Claim, the Objection is overruled without prejudice; an evidentiary hearing is required to resolve remaining disputed issues of fact.
Sharpe became the record owner of real property located at 2105 Grand Island Court, Las Vegas, Nevada 89117 (the "Property") in November 2004. (Supp. Obj. ¶ 12 (citing Handley Decl. Ex. F).) On October 24, 2005, Sharpe financed the purchase of the Property with a $191,000.00 loan (the "Original Loan") from Hometown Lending, evidenced by a note secured by a deed of trust encumbering the Property (Handley Decl. Ex. G); only Sharpe was listed as the borrower. In March 2008, the Original Loan was refinanced with Ssafe Mortgage, Inc. ("Ssafe Mortgage"). (Supp. Obj. ¶ 14 ).) The validity, or lack thereof, of this refinancing is the crux of Sharpe's Claim.
Sharpe dated a woman named Tracy Johnson ("Tracy"), beginning in 2000 or 2001, through March 2009. (Supp. Obj. ¶ 6 (citing Handley Decl. Ex. C at 9:15-12:3, 26:15-23, 39:7-12).) The couple lived together and Tracy changed her last name to Sharpe, but the couple never legally married. (Id.) While the couple lived together, Tracy was responsible for and paid all of the couple's bills, including the monthly mortgage payments despite the mortgage only being in Sharpe's name. (Id. ¶¶ 7-8 (citing Handley Decl. Ex. C at 31:9-12, 41:1-2, 54:7-8, 67:3-4, 77:14-17).) The couple had a joint checking account, but according to Sharpe, Tracy had full control of the account, and to Sharpe's knowledge, no one other than Tracy and himself had access to the joint account. (Id. ¶ 9 .) Tracy kept possession of the couple's checkbook and wrote all of their checks. (Id. ¶ 10 (citing Handley Ex. C at 54:15-24).) Only Tracy checked the couple's mail while they lived together. (Id. ¶ 11 (citing Handley Decl. Ex. C at 78:12-24).)
Tracy and another individual (the "Man"), which was either Sharpe or another man impersonating him, applied to refinance the Original Loan with Ssafe Mortgage. (Id. ¶14 ).) The Man completed a loan application using Sharpe's social security number. (Id. (citing Handley Ex. H).) Two of Ssafe Mortgage's brokers, Silvano Barragan and Suzy Barragan, assisted Tracy and the Man. (Id. (citing Handley Decl. Ex. Q ¶¶ 18-35).)
On February 11, 2008, Ssafe Mortgage ordered a title report from Fidelity National Title Insurance Company of Nevada ("Fidelity"); it listed Tracy and the Man as the proposedborrowers. (Id. ¶ 15 (citing Handley Ex. I).) On February 13, 2008, Fidelity opened an escrow account, listing the borrowers as Tracy and Sharpe. (Id. (citing Handley Ex. J).)
With Sharpe's identification, the Man qualified for a $417,000 loan (the "Refinance Loan") from Mountain View Mortgage secured by a deed of trust on the Property. (Id. ¶ 16 (citing Handley Ex. Q ¶ 34).) The closing for the Refinance Loan took place on March 17, 2008. Vicki Longden ("Longden") acted as the escrow officer. The Man was present and provided proof of identification in the form of a Nevada driver's license in Sharpe's name. (Id. (citing Handley Ex. Q ¶ 49).) Sharpe's Original Loan was paid off and Fidelity wired the remaining $202,547.92 to a joint bank account held by Tracy and Sharpe. (Id. ¶ 18 (citing Handley Decl. Ex. K; id. Ex. D).) These excess loan proceeds were used in part to pay closing costs, pay off Sharpe's credit cards, which had accumulated to $24,086 and exceeded his credit limits, and pay past due taxes on the Property in the amount of $18,423.21. (Id. ¶ 19 (citing Handley Decl. Ex. K).) The joint bank account statements indicate, however, that approximately $49,000 was withdrawn the day after the closing, and approximately $72,000 was withdrawn the day after that. (Id. ¶ 21 (citing Handley Decl. Ex. D).) Within a month after the Refinance Loan proceeds were deposited into the couple's joint bank account, the couple had made payments or withdrawals reducing the balance in the account to $31,000. (Id.)
After the closing, Fidelity mailed a letter to Sharpe at the Property stating that the escrow had in fact closed. (Id. ¶ 20 (citing Handley Decl. Ex. L).) One of the Ssafe Mortgage brokers also sent an email to Fidelity's closing officer, Longden, in April 2008, stating "she says she got a bill on the tax on her property." (Id. (citing Handley Decl. Ex. M).)
None of the Debtors, including GMACM, participated in the origination of the Original Loan or the Refinance Loan. (Id. ¶ 17 (citing Priore Decl. ¶ 7).) After the March 17, 2008closing, GMACM purchased the Refinance Loan. (Id. ¶ 17.) GMACM later sold the Refinance Loan, but retained the servicing rights. (Id.)
The first four payments on the Refinance Loan were timely made in April, May, June, and July 2008. The Refinance Loan became delinquent as of August 2008. (Id. ¶ 22.) On December 10, 2008, Debtor Executive Trustee Services, LLC ("ETS"), the substitute trustee, recorded a notice of default and election to sell the Property. (Id. ¶ 23 .) ETS scheduled a foreclosure sale for April 2, 2009. (Id. ¶ 24 (Priore Decl. ¶ 10, Ex. B).)
In early March 2009, GMACM received a fax from Deborah Feltner from Foreclosure Short Sale Specialist that included an authorization signed by Sharpe to release information and to discuss Sharpe's loan with Danijela Mikulic ("Mikulic") and Debbie Paaren ("Paaren"). (Id. ¶ 25 (citing Priore Decl. Ex. 11, Ex. C).) On March 25, 2009, an individual named "Debbie" called GMACM to discuss the foreclosure notices received by Sharpe.4 (Id. ¶ 26 (citing Priore Decl. ¶ 12).) The call was transferred to GMACM's loss mitigation department. "Debbie" told GMACM that the borrower was requesting a loan modification, explaining that the default resulted from a loss of income by the borrower's wife. (Id. ¶ 26 (citing Priore Decl. ¶ 12).) "Debbie" called GMACM again on the same day requesting that the foreclosure be postponed since a loan modification was going to be considered. (Id. ¶ 27 (citing Priore Decl. ¶ 13).)
On March 30, 2009, GMACM sent Sharp information about the Home Affordable Modification Program ("HAMP"). (Id. ¶ 28 (citing Priore Decl. ¶¶ 14-15).) On March 31,2009, GMACM authorized ETS to postpone the foreclosure sale to May 4, 2009. (Id.) Mikulic contacted GMACM on April 1, 2009, confirming that he is an authorized third party to discuss Sharpe's account. (Id. ¶ 29 (citing Priore Decl. ¶ 16).) On April 6, 2009, either Paaren or Mikulic called GMACM to discuss the account, but GMACM's servicing notes do not reflect the substance of the conversation. (Id. ¶ 30 (citing Priore Decl. ¶ 17).)
On April 9, 2009, GMACM sent Sharpe a letter enclosing a financial analysis form for him to complete and return to assist in determining available loss mitigation options for his account. (Id. ¶ 31 (citing Priore Decl. ¶ 18, Ex. D).) On April 10, 2009, GMACM called Sharpe and left a message advising that he needed to return the HAMP information for GMACM to review his loan for modification. (Id. ¶ 32 (citing Priore Decl. ¶ 19).) That same day GMACM requested that ETS postpone the foreclosure sale for an additional 30 days. (Id.) On April 13, 2009, GMACM again attempted to contact Sharpe and left another voice message. (Id. ¶ 33 (citing Priore Decl. ¶ 20).) Sharpe never submitted the financial analysis form or any documentation for the loss mitigation review. (Id. ¶ 34 (citing Priore Decl. ¶ 21).)
On April 14, 2009, Sharpe,...
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