Jacobson v. Bayview Loan Servicing, LLC

• Decision Date: 04 May 2016
• Docket Number: No. DA 15–0108.,DA 15–0108.
• Citation: 371 P.3d 397,383 Mont. 257,2016 MT 101
• Parties: Robin C. JACOBSON and Kathleen S. Jacobson, Plaintiffs and Appellees, v. BAYVIEW LOAN SERVICING, LLC, and Charles J. Peterson, Trustee, Defendants and Appellants.
• Court: Montana Supreme Court

383 Mont. 257

371 P.3d 397

2016 MT 101

Robin C. JACOBSON and Kathleen S. Jacobson, Plaintiffs and Appellees

v.BAYVIEW LOAN SERVICING, LLC, and Charles J. Peterson, Trustee, Defendants and Appellants.

No. DA 15–0108.

Supreme Court of Montana.

Submitted on Briefs Dec. 9, 2015.

Decided May 4, 2016.

For Appellants: Maxon R. Davis, Derek J. Oestreicher, Davis, Hatley, Haffeman & Tighe, P.C., Great Falls, Montana.

For Appellees: Raymond G. Kuntz, Attorney at Law, Red Lodge, Montana.

Justice MICHAEL E. WHEAT delivered the Opinion of the Court.

¶ 1 Bayview Loan Servicing, LLC, (“Bayview”) and Charles J. Peterson, Trustee, (“Peterson”) appeal from the Order of the Montana Twenty–Second Judicial District granting judgment for Robin C. Jacobson and Kathleen S. Jacobson (“Jacobsons”). The District Court determined that Bayview violated the Fair Debt Collections Practices Act (“FDCPA”), 15 U.S.C. § 1692a –p, and the Montana Consumer Protection Act (“MCPA”), Title 30, Chapter 14, part 1, MCA. The District Court also awarded damages in the amount of $226,408.14 and attorney fees in the amount of $109,108.50 to the Jacobsons. The Jacobsons also prevailed on two post-trial motions for additional relief and the District Court awarded the Jacobsons an additional $60,000.00 in damages and $31,020.00 in attorney fees. We affirm.

ISSUES

¶ 2 Appellant raises several issues on appeal, which we address as follows:

1. Whether the District Court erred in determining that Bayview violated the FDCPA.

2. Whether the District Court erred in determining that Bayview violated the MCPA.

3. Whether the District Court erred in awarding damages to the Jacobsons.

4. Whether this Court should award costs and fees to the Jacobsons on appeal.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 In October 2007, the Jacobsons borrowed money and purchased a home and land on Elbow Creek Road in Carbon County, Montana. They executed a Promissory Note and Trust Indenture in the amount of $391,400.00 to secure the loan. The original lender and servicer on the loan was CitiMortgage, Inc. and the “nominee” beneficiary of the Trust Indenture was Mortgage Electronic Registration Systems, Inc. (“MERS”). The 2008 economic crisis brought negative financial impacts to Robin's business as a home builder. As a result, the Jacobsons missed at least one mortgage payment in December 2008. CitiMortgage worked with the Jacobsons by entering into an extension agreement to defer the delinquent payment and interest to the end of the loan. On March 7, 2009, CitiMortgage transferred the loan servicing duties to Bayview Loan Servicing, LLC.

¶ 4 On March 24, 2009, Bayview sent the Jacobsons a default letter demanding payment of all past due amounts within 30 days or the loan would be accelerated with the entire obligation due and payable, along with the commencement of foreclosure proceedings. The letter further advised that once the loan was accelerated, it could be reinstated if all past due installments and late charges were paid at least 5 days before the scheduled foreclosure sale.

¶ 5 Both the Trust Indenture and the Promissory Note signed by the Jacobsons provide rules for notice when the borrower is delinquent on payments or in default. Section 22(c) of the Trust Indenture provides:

Acceleration; Remedies. Lender shall give notice to Borrower prior to acceleration following Borrower's breach of any covenant or agreement in this Security Instrument (but not prior to acceleration under Section 18 [transfer of property] unless Applicable law provides otherwise). The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration....

If the default is not cured on or before the date specified in the notice, Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the power of sale and any other remedies permitted by Applicable Law. (Emphasis added).

With regard to the Promissory Note, Section 6(c) states:

Notice of Default

If I am in default, the Note Holder may send a written notice telling me that if I do not pay the overdue amount by a certain date, the note holder may require me to pay immediately the full amount of Principal which has not been paid and all the interest that I owe on that amount. That date must be at least 30 days after the date on which the notice is mailed to me or delivered by other means. (Emphasis added.)

¶ 6 As part of its efforts to collect payment from the Jacobsons, Bayview sent the aforementioned default letter but did not send a notice of acceleration with a “date specified” or “certain date” by “which the default must be cured” subsequent to the default letter of March 24 as required by the Promissory Note. (If the default letter was meant to be the notice, it did not conform to the requirements of the Promissory Note because it failed to give the full 30 days and failed to specify the “certain date.”)

¶ 7 The Jacobsons made a payment on their loan on April 30, but Bayview resisted acceptance of that payment. A Bayview representative told the Jacobsons to stop making payments on their loan in May 2009, advising them that this would help them qualify for a loan modification. Bayview represented to the Jacobsons in May 2009 that it would process a loan modification for them, but did not forward an application for the HAMP¹ program until January 2011. Instead, Bayview reinitiated foreclosure proceedings, sending a second default letter on May 4, 2009, containing language identical to the March foreclosure letter. Similar to the March foreclosure letter, Bayview failed to send a notice of acceleration and provide a “certain date” for cure.

¶ 8 On July 21, 2009, as part of the first foreclosure proceeding, Bayview filed, through Peterson, three documents with the clerk and recorder. The documents were an “Assignment of Deed of Trust,” the “Substitution of Trustee,” and a “Notice of Trustee's Sale.” The “Assignment of Deed of Trust” assigned the deed of trust from MERS to CitiMortgage. The “Substitution of Trustee” substituted Peterson as trustee in the place of the original trustee, First American Title. Bayview also filed a “Notice of Trustee's Sale,” seeking to exercise the power of sale under the trust and setting a sale of the Jacobsons property for November 23, 2009. In the Notice of Trustee's Sale, Bayview and Peterson identified Bayview as the beneficiary under the Trust Indenture, when Bayview has never been the beneficiary of the Trust Indenture. The Notice of Trustee's Sale states in bold letters at the bottom of page 2 “THIS IS AN ATTEMPT TO COLLECT A DEBT.”

¶ 9 In September 2009, Bayview informed the Jacobsons that they were not qualified for HAMP, even though the Jacobsons were never given an application for modification under the program. At this point, according to the record, the Jacobsons complained to the Better Business Bureau because Bayview was “offering” modification while simultaneously pursuing foreclosure against them. The Better Business Bureau apparently contacted Bayview, because Bayview responded by cancelling the trustee's sale scheduled for November 2009 and offering a loan modification. Bayview then offered to lower the interest rate from 9.5% to 7.5% and extend the term of the loan out to 480 months. The Jacobsons rejected the offer. The Jacobsons then complained about Bayview's practices to U.S. Senator Jon Tester. In a conference call with the Senator's office, Bayview, and the Jacobsons, Bayview made a second offer: offering to dismiss the foreclosure action, waive the late charges, remove the negative credit reporting, dismiss legal fees and costs, and reduce the interest rate to 7.5%, if the loan was brought current. The Jacobsons accepted this offer, but Bayview refused to put the offer in writing. As a result, no agreement was finalized between the parties.

¶ 10 In December 2009, Bayview once again sent the Jacobsons “notice of default” letters. These letters again failed to provide a date for cure under § 22 of the Trust Indenture and failed to grant the Jacobsons the ability to cure within the 5 days prior to the date set for sale. Bayview also failed to send the required acceleration notice subsequent to the default letter.

¶ 11 In January 2010, CitiMortgage, the true beneficiary of the loan, executed a power of attorney, effective January 14, 2010, naming Bayview as its attorney-in-fact, but the document did not ratify the past actions of Bayview. On February 5, 2010, Peterson executed a second Notice of Trustee's Sale setting a sale date of June 15, 2010. This second notice also erroneously identified Bayview Loan Servicing as the beneficiary. On March 9, 2010, Bayview assigned the Trust Indenture to U.S. Bank as trustee, and then assigned it again to another entity identified as “CBO–6 REO Corp.” Bayview represented that it was acting as attorney-in-fact for U.S. Bank for the purposes of this second assignment when it had no such authority. Bayview subsequently executed a false notarization of the assignment of the Trust Indenture to CBO–6 REO. Corp. CBO–6 REO Corp. did not exist on March 9 when Bayview purported to assign the Jacobsons' Trust Indenture to that entity. Bayview claimed that it meant to assign the Trust Indenture to “CBO–6 Corp.” and that the “REO” was a typographical error. Nevertheless, CBO–6 Corp. was not formed until June 3, 2010, three months after the alleged “typographical error” assignment on March 9.

¶ 12 On March 23, 2010, Bayview informed the Jacobsons that it was now servicing their loan on behalf of U.S. Bank, with knowledge that U.S. Bank was not the beneficiary. Bayview falsely represented that CBO–6 REO Corp. existed and that the Jacobsons' loan was transferred to the...