Kline v. Mortg. Elec. Sec. Sys.

Decision Date23 December 2015
Docket NumberCase No. 3:08-cv-408
Citation154 F.Supp.3d 567
Parties Eugene Kline, et al., Plaintiffs, v. Mortgage Electronic Security Systems, et al., Defendants.
CourtU.S. District Court — Southern District of Ohio

Jeffrey Michael Silverstein, Dayton, OH, Paul Grobman, New York, NY, for Plaintiffs.

Reuel D. Ash, Ulmer & Berne LLP, Cynthia Margot Fischer, Rick David DeBlasis, Lerner Sampson & Rothfuss Co., Cincinnati, OH, Russell J. Pope, Douglas B. Riley, Treanor Pope & Hughes, Towson, MD, Barbara Friedman Yaksic, McGlinchey Stafford PLLC, Timothy T. Brick, Lori E. Brown, Gallagher Sharp, Catherine Peters, Cleveland, OH, Scott Allen King, Thompson Hine, Miamisburg, OH, Erik J. Wineland, Gallagher Sharp, Toledo, OH, Christopher Markus, Dressman Benzinger Lavelle PSC, Crestview Hills, KY, for Defendants.

DECISION AND ENTRY SUSTAINING THE MOTIONS FOR SUMMARY JUDGMENT FILED BY ALL DEFENDANTS (DOC. #414, #416, #417, #418, & #419), OVERRULING AS MOOT DEFENDANTS' MOTIONS IN LIMINE (DOC. #456, #457, #458, #459, #460, & #461), AND OVERRULING AS MOOT PLAINTIFF'S MOTION FOR RECONSIDERATION (DOC. #472); JUDGMENT TO ENTER IN FAVOR OF DEFENDANTS ON ALL OF PLAINTIFF'S CLAIMS; TERMINATION ENTRY.

WALTER H. RICE
, UNITED STATES DISTRICT JUDGE

In this case, a number of individuals set forth claims against eleven defendants, seeking monetary damages and injunctive relief based on claims alleging misconduct in mortgage servicing, misrepresentation in foreclosure filings, and the charging and collecting of improper and excessive fees from borrowers. At this time, the only remaining Plaintiff is Eugene Kline (Kline), and only his claims against the following Defendants remain viable: Defendants Mortgage Electronic Security Systems (MERS); Wells Fargo Bank, N.A. (Wells Fargo); Reimer, Arnovitz, Chernek & Jeffrey Co. L.P.A., (f.k.a. Defendant Reimer, Lorber & Arnovitz Co., L.P.A.) (the “Reimer Firm”); Lerner, Sampson & Rothfuss (the “Lerner Firm”); and Barclays Capital Real Estate, Inc. (“Barclays”). His claims arise under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692f(1)

; the Truth in Lending Act (“TILA”), 15 U.S.C. § 1666d ; the Ohio Consumer Sales Practices Act (“OCSPA”), Ohio Revised Code § 1345.01 ; and claims for unjust enrichment and breach of contract under the common law of Ohio. The Court's jurisdiction is based on federal question jurisdiction under 28 U.S.C. § 1331 and supplemental jurisdiction under 28 U.S.C. § 1367.

Pending before the Court are Defendants' Motions for Summary Judgment. Doc. #414, #416, #417, #418, & #419. Defendants have moved for summary judgment on all of Plaintiff's remaining claims. For the reasons set forth below, Defendants' motions are SUSTAINED. This ruling moots Defendants' Motions in Limine filed in anticipation of trial, and said motions are therefore OVERRULED. Furthermore, because the Court has determined that Plaintiffs' claims all fail as a matter of law, his Motion for Reconsideration (Doc. #472) of the Court's dismissal of his class claims is moot, and is therefore OVERRULED.

As a preliminary matter, Kline's Memorandum in Opposition to Wells Fargo's Motion for Summary Judgment did not address its arguments directed against his TILA claim. Doc. #466. The Sixth Circuit's “jurisprudence on abandonment of claims is clear: a plaintiff is deemed to have abandoned a claim when a plaintiff fails to address it in response to a motion for summary judgment.” Brown v. VHS of Michigan, Inc. , 545 Fed.Appx. 368, 372 (6th Cir.2013)

(collecting Sixth Circuit cases affirming grants of summary judgment when non-movant fails to defend a claim in response to summary judgment motion). Kline's failure to address the TILA claim constitutes its abandonment, and it will therefore be dismissed with prejudice.

A second preliminary matter concerns the Court's jurisdiction over Kline's state law claims. As explained more fully below, the Court finds that Defendants are entitled to summary judgment on the remaining federal claims in this action: the two FDCPA claims brought against the Reimer Firm and the Lerner Firm. Under 28 U.S.C. 1367(c)(3)

, a district court “may decline to exercise supplemental jurisdiction over” a state law claim if it has “dismissed all claims over which it has original jurisdiction.” Thus, the statute gives the Court the power to, at its discretion, dismiss Kline's state law claims against the Defendants, based on the dismissal of the FDCPA claims over which it had original jurisdiction. However, [t]hat power need not be exercised in every case in which it is found to exist.” United Mine Workers of Am. v. Gibbs , 383 U.S. 715, 726, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). In the absence of a federal claim, the “justification” for continuing to exercise jurisdiction over a plaintiff's state law claims “lies in considerations of judicial economy, convenience and fairness to litigants; if these are not present[,] a federal court should hesitate to exercise jurisdiction over state claims.” Id. In this case, such considerations weigh heavily in favor of the Court continuing to exercise jurisdiction over Kline's state law claims. It would ill-serve considerations of judicial economy for a state court, unfamiliar with Kline's claims and the evidence the parties have amassed, to have to take them up at this late date. Furthermore, due to the length and complexity of this litigation, it would be unfair and inconvenient to all parties to dismiss Kline's state law claims without resolving them. For these reasons, the Court will exercise its jurisdiction over Kline's state law claims, even in the absence of the federal claims that gave rise to its original jurisdiction over this action.

I. RELEVANT FACTUAL BACKGROUND

Unless noted, the following facts are undisputed by the parties.

A. The loan Transactions

On June 18, 2004, Kline entered into two loan transactions with WMC Mortgage Corporation (WMC). He signed a promissory note with an adjustable interest rate in the amount of $160,000 (“Adjustable Rate Note”), accompanied by a mortgage that placed a primary lien on his home (the “First Mortgage”). The second note, in the amount of $30,000, required payment of any unpaid principal and interest at its maturity (“Balloon Note”), and was secured by a second mortgage on Kline's home (Second Mortgage). Wells Fargo Mot. Summ. J. Ex. A, 8, C, & D (Docs. #417-2, #417-3, #417-4 & #417-5).1

B. Securitization of Kline's Loans

On an unknown date thereafter, WMC assigned or sold Kline's loans to Merrill Lynch Mortgage Investors, Inc., an entity that acted as a “depositor” of notes and mortgages into trusts of residential mortgage-backed securities (“RMBSs”).2 Kline's loans were deposited into an RMBS bearing the name Merrill Lynch Investors Trust, Mortgage Loan Asset-Backed Certificates, Series 2004-WMC5 (hereinafter, “Trust”), which was created pursuant to a Pooling and Services Agreement (“PSA”) dated October 1, 2004.3 The PSA identified Wells Fargo as the trustee and HomEq as the servicer of the mortgage loans held in the Trust. Doc. #417-6.

C. The 2005 Foreclosure

Kline fell behind on the payments on the Adjustable Rate Note. Am. Compl., ¶ 26 (Doc. #157 at 8). On August 17, 2005, the Reimer Firm filed a foreclosure action against Kline. The complaint identified the plaintiff as “Mortgage Electronic Registration Systems, Inc., c/o HomEq Servicing Corporation.” Doc. #465-5 at 2. On December 6, 2005, the Reimer Firm sent Kline a letter stating that the total amount required to reinstate his loan would be $10,001.47, with an attachment itemizing the individual fees and costs. Doc. #465-6 at 2-3. These included attorney fees of $1100 and various court costs.4 Id. Kline cured the default and HomEq reinstated the mortgage, leading to the dismissal of the foreclosure action. Compl. ¶ 30 (Doc. #157 at 8).

On November 1, 2006, Wachovia Bank, N.A., sold HomEq to Barclays, which assumed the servicing of Kline's loans after that date. Beck Aff. (Doc. #30-1).

D. Kline's First Federal Court Action

On March 6, 2007, Kline filed suit against HomEq and the Reimer Firm in this Court, asserting claims arising under the FDCPA and the OCSPA, as well as Ohio common law claims for unjust enrichment and breach of contract. Kline alleged that HomEq and Reimer had illegally and improperly charged him for “broker price opinions,” title reports, post-acceleration late fees, amounts that were not owed, and “excessive costs for service of process.” The allegations stated that the itemization of fees and costs provided had been inaccurate, but had nevertheless been paid. Case No. 3:07–cv–84, Doc. #1.

The case was assigned to Judge Rose, who dismissed the case on January 28, 2008. He ruled that the FDCPA claim was barred by the statute of limitations, and he dismissed the supplemental state law claims without prejudice. Case No. 3:07–cv–84, Doc. #33.

E. The 2007 Foreclosure

Kline again fell behind on his payments, and a second foreclosure action was filed in state court on March 16, 2007. The second foreclosure action was again filed by the Reimer Firm, and the plaintiff was identified as “Wells Fargo, N.A. as Trustee c/o HomEq Servicing Corporation.” In the complaint, Wells Fargo alleged that it was “the owner and holder” of the Adjustable Rate Note. Doc. #465-7.

Ten days after the second foreclosure action was filed, on March 26, 2007, MERS assigned the mortgage on Kline's home and the Adjustable Rate Note to Wells Fargo. The assignment identified MERS as the “nominee for WMC Mortgage Corp. and Wells Fargo as the assignee. The assignment was executed by John Dunnery, who was identified as a Vice President of MERS. Doc. #465-8.

On May 14, 2007, the Lerner Firm filed an answer on behalf of MERS, “as nominee for WMC Mortgage Corporation,” asserting an interest in the Balloon Note that was secured by the Second Mortgage. Doc. #465-9. The answer alleged that Kline owed $28,858.40 on the Balloon Note, as well as interest and...

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