Knowles v. Bayview Loan Servicing Llc

• Citation: 442 B.R. 150
• Decision Date: 03 January 2011
• Docket Number: BAP No. EB 10–022.,Adversary No. 08–01020–LHK.,Bankruptcy No. 05–13492–LHK.
• Parties: Mona Lisa KNOWLES, Debtor.Mona Lisa Knowles, Plaintiff–Appellant,v.Bayview Loan Servicing, LLC, Defendant–Appellee.
• Court: Bankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, First Circuit

442 B.R. 150

Mona Lisa KNOWLES, Debtor.Mona Lisa Knowles, Plaintiff–Appellant,
v.
Bayview Loan Servicing, LLC, Defendant–Appellee.

BAP No. EB 10–022.

Bankruptcy No. 05–13492–LHK.

Adversary No. 08–01020–LHK.

United States Bankruptcy Appellate Panel of the First Circuit.

Jan. 3, 2011.

[442 B.R. 152]

J. Scott Logan, Esq., on brief, Biddeford, ME, for Plaintiff–Appellant.James L. Audiffred, Esq., on brief for Defendant–Appellee.Before FEENEY, TESTER, and BAILEY, United States Bankruptcy Appellate Panel Judges.BAILEY, U.S. Bankruptcy Appellate Panel Judge.

Mona Lisa Knowles (the “Debtor”) filed a complaint against Bayview Loan Servicing, LLC (“Bayview”), the servicer of the first mortgage on her home, alleging ¹ violations of the Real Estate Settlement Procedures Act ² and of the automatic stay

[442 B.R. 153]

and seeking to establish liability under 11 U.S.C. § 105(a) (“ § 105(a)”).³ The bankruptcy court entered summary judgment in favor of Bayview on the RESPA count, holding that RESPA does not apply to the Debtor's loan. The court subsequently entered judgment in favor of Bayview on the automatic stay and § 105(a) counts on the grounds that Bayview's acts were not against property of the Debtor or the estate, and that Bayview did not violate § 105(a) by filing its proof of claim after confirmation of the Debtor's chapter 13 plan. For the reasons discussed below, we AFFIRM. Additionally, we DENY Bayview's motion for fees and costs under Bankruptcy Rule 8020.

BACKGROUND

On November 14, 2002, the Debtor executed a note in favor of Peter and Leimomi Thompson (the “Thompsons”) and granted them a first mortgage on her residence located in Strong, Maine. On November 22, 2002, the Thompsons assigned the note and mortgage to a third party that is not a party to this case. The record also reflects that the Thompsons assigned the note and mortgage to Wachovia Bank, N.A. (“Wachovia”). At oral argument, however, the parties clarified that the Thompsons had assigned the note and mortgage to a broker, who in turn made a further assignment to Wachovia. Bayview services the loan.

The Debtor filed a chapter 13 petition on October 16, 2005. She listed Bayview as a secured creditor holding a mortgage on her residence. On November 9, 2005, Wachovia filed a proof of claim in the amount of $9,273.39 for the pre-petition arrears ⁴ on the Debtor's mortgage and a total debt in the amount of $53,960.27.⁵ On March 15, 2006, Wachovia filed an amended proof of claim in which it claimed pre-petition arrears of $9,398.39 and a total unpaid balance of $54,085.27.

On June 12, 2006, the bankruptcy court confirmed the Debtor's Amended Chapter 13 Plan (the “Amended Plan”). The Amended Plan provided for payments on the pre-petition arrearage to Bayview in the amount of $9,273.00.⁶ The confirmation order provided that confirmation was:

subject to (i) resolution of actions to determine the avoidability, priority, or extent of liens, (ii) resolution of all disputes over the amount and allowance of claims entitled to priority under Sec. 507, (iii) resolution of actions to determine the allowed amount of secured claims under Sec. 506, and (iv) resolution of all objections to claims.The confirmation order also set forth procedures regarding the allowance of claims and the filing of proofs of claim or amended proofs of claim.

In the fall of 2007, the Debtor's house was destroyed by fire. In late 2007, the Debtor received a check in the amount of

[442 B.R. 154]

$209,996.00 from the insurance company that insured the real estate. The check was made payable to several parties, including the Debtor and Bayview, payable only upon endorsement by all parties.

The Debtor received an annual tax and interest statement from Bayview dated December 31, 2007. The statement indicated a principal balance of $39,484.72 and an escrow balance of negative $3,018.26, for a total unpaid balance of $42,502.98. The statement provided “Instructions for Payer/Borrower” which explained that the information provided in the statement was “important tax information” that was “being furnished to the Internal Revenue Service.” The instructions further explained the tax implications of the various balances reflected in the statement.

On February 15, 2008, the Debtor's counsel sent a payoff request to Bayview and attached to it a “Qualified Written Request,” pursuant to RESPA, in which he requested detailed information on the Debtor's mortgage. On February 28, 2008, Bayview sent payoff information to the Debtor's attorney in which it stated that the Debtor owed $39,303.76 in current unpaid principal, $956.57 in interest, $10.00 in fees, $50.00 in release fees, $630.00 in legal fees, and $6,058.05 in “other funds,” for a total payoff amount of $47,008.38. In the payoff statement, Bayview noted that “[p]ayoff figures have been requested on the loan for the borrower and property described below,” and it described the payoff amount as the “[t]otal amount due to payoff loan in full.” Additionally, Bayview explained that interest would continue to accrue daily and that the Debtor must call for updated figures “prior to remitting funds.” Bayview also noted that the statement did not “suspend the contract requirements to make the mortgage payment when due.”

On March 12, 2008, and April 3, 2008, the Debtor's attorney sent a second and a third “Qualified Written Request” to Bayview. On April 24, 2008, Bayview sent payoff information to the Debtor's attorney, indicating a total payoff amount of $47,826.21. The second payoff statement contained the same explanatory language contained in the first statement.

The parties disagreed as to the payoff amount the Debtor owed Bayview, and the Debtor filed a motion to compel Bayview to endorse the insurance check. ⁷ The parties resolved the dispute with a consent order, which provided that $42,500.00 be paid to Bayview and $6,125.91 be held in escrow pending determination of any additional balance owed to Bayview.

On May 16, 2008, the Debtor filed the complaint against Bayview that gives rise to this appeal. The complaint included three relevant counts. In Count I, the Debtor sought damages for violation of RESPA. In Count II, she sought damages for violation of the automatic stay, § 362(a), contending that Bayview violated the stay by sending payoff statements that included bankruptcy charges and attorney fees that had not been authorized by the bankruptcy court and by requesting payment of these charges as a condition to its release of the Debtor's mortgage. And in Count III, entitled “Liability Pursuant to Title 11 Section 105 Generally,” the Debtor alleged that Bayview was bound by its treatment under the Debtor's confirmed plan and that its attempts to collect additional funds violated § 105. In support of this count, the Debtor further argued that Bayview was not entitled to post-confirmation

[442 B.R. 155]

attorney and bankruptcy fees pursuant to § 506(b) or, in the alternative, if it was entitled to such fees, that it had failed to file a fee application as required by Bankruptcy Rule 2016.

After Bayview filed an answer, the Debtor moved for summary judgment on Counts II and III. Bayview opposed the Debtor's motion and cross-moved for summary judgment on all counts. With respect to Count I, for violation of RESPA, Bayview argued that RESPA does not apply to Bayview's loan because the loan was not a “federally related mortgage loan” as that term is defined in RESPA. Bayview further argued that even if RESPA applies, the Debtor's purported “qualified written requests” did not satisfy the requirements of RESPA because the requests were overly broad in that they did not identify a particular item in dispute. In support of its motion, Bayview filed a joint affidavit of the Thompsons in which they averred that they buy and sell real estate to supplement their retirement income, that the total amount of their mortgage loans has not exceeded $1,000,000.00, that they do not make a practice of selling their mortgages, and that they had sold the Debtors' mortgage to a company in Texas during 2000 or 2001.

With respect to Count II, for violations of the automatic stay, Bayview argued that § 506(b) entitled it to collect reasonable attorneys' fees, legal expenses, and other reasonable costs incurred in collecting on the note. With respect to Count III, for “Liability Pursuant to Title 11 Section 105 Generally,” Bayview argued that its claim had not yet been fully adjudicated, and that it intended to move for approval of its legal fees and costs.

The Debtor opposed Bayview's motion for summary judgment and subsequently filed a statement of material facts. On July 16, 2009, the bankruptcy court held a hearing at which it granted summary judgment in favor of Bayview on Count I and denied summary judgment to both parties on the remaining counts. In the later memorandum of decision that accompanied the judgment on Counts II and III, the bankruptcy court explained that it had granted summary judgment in favor of Bayview on Count I because “the loan was originated by private individuals and was therefore not a ‘federally related mortgage loan’ within the meaning of 12 U.S.C. § 2602.” The court explained:

The issue was whether the private individuals originating the mortgage were “a ‘creditor,’ as defined in section 1602(f) of title 15, who makes or invests in residential real estate loans aggregating more than $1,000,000 per year.” 12 U.S.C. § 2602(1)(B)(iv). The court found that the Debtor had not met her burden of showing that the originators of this mortgage met the statutory definition.

Thereafter, the parties filed pretrial memoranda in which they reiterated and expanded upon their arguments with respect to the remaining counts. The bankruptcy court held a trial on these counts and subsequently entered judgment for Bayview on both counts.⁸ In the memorandum of decision that accompanied its decision, the bankruptcy court concluded with respect to Count II...