Laws v. U.S. Bank Nat'Lass'N

• Court: U.S. District Court — Eastern District of North Carolina
• Writing for the Court: JAMES C. DEVER III Chief United States District Judge
• Decision Date: 11 July 2017
• Docket Number: No. 5:15-CV-1-D,5:15-CV-1-D
• Citation: Laws v. U.S. Bank Nat'l Ass'n, No. 5:15-CV-1-D (E.D. N.C. Jul 11, 2017)
• Parties: JOHN R. LAWS, II, Plaintiff, v. U.S. BANK NATIONAL ASSOCIATION, TRUSTEE, and NATIONSTAR MORTGAGE, L.L.C., Defendants.

JOHN R. LAWS, II, Plaintiff, v. U.S. BANK NATIONAL ASSOCIATION, TRUSTEE,and NATIONSTAR MORTGAGE, L.L.C., Defendants.

No. 5:15-CV-1-D

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION

July 11, 2017

ORDER

On December 19, 2014, John R. Laws, II ("Laws" or "plaintiff"), filed a suit against U.S. Bank National Association ("U.S. Bank") and Nationstar Mortgage, LLC, ("Nationstar") (collectively, "defendants"), in Cumberland County Superior Court [D.E. 1-1]. On January 2, 2015, defendants removed the action to this court [D.E. 1]. On January 30, 2015, defendants moved to dismiss Laws's complaint [D.E. 13]. On June 3, 2015, the court granted defendants' motion to dismiss Laws's complaint and granted Laws leave to file an amended complaint [D.E. 24]. On June 19, 2015, Laws filed an amended complaint [D.E. 25]. On July 20, 2015, defendants answered Laws's amended complaint [D.E. 28, 29].

On November 21, 2016, defendants moved for summary judgment [D.E. 36] and filed a statement of material facts [D.E. 37], a memorandum in support [D.E. 39], and an appendix to the memorandum in support [D.E. 38]. On January 10, 2017, Laws responded to defendants' motion [D.E. 45] and filed a statement of material facts [D.E. 43] and an appendix with additional documents [D.E. 44]. As explained below, the court grants in part and denies in part defendants' motion for summary judgment.

I.

On June 6, 2005, Laws executed a $205,200.00 promissory note ("the Note") in favor of Argent Mortgage Company, LLC. [D.E. 44-1] 2-3. At all relevant times, MLMI Trust, Certificate Series 2007-SD1, owned the loan, and U.S. Bank is the current trustee. [D.E. 37] ¶ 8; [D.E. 43] ¶ 8. The Note required Laws to make monthly payments of $1,455.93, which the holder of the Note was to apply first to interest on the Note, second to the Note's principal, and third to escrow fees. [D.E. 44-1] 2, 7. The holder of the Note also was allowed to assess "late charges" and to return any payment that was "insufficient to bring the Loan current." Id. at 7. The Note allowed Laws to make advance payments, which after prepayment fees would be applied to the Note's principal. Id. A deed of trust on property located at 6911 Southstaff Road, Fayetteville, NC, ("the Deed of Trust") secured the Note. Id. at 5-16. The Deed of Trust provided that the holder of the Note "or its agents may make reasonable entries upon and inspection of the property." Id. at 9.

Laws made timely monthly payments as required by the Note. [D.E. 44-13] 26-27. In 2010, Bank of America, N.A., ("BANA") or its predecessor began servicing Laws's loan. [D.E. 37] ¶ 7; [D.E. 43] ¶ 7. U.S. Bank is the trustee of Laws's loan for MLMI. [D.E. 44-3] 7; [D.E. 37] ¶ 8; [D.E. 43] ¶ 8.

On November 18, 2011, Laws sued BANA, alleging servicing errors and other misconduct arising from BANA's servicing of his loan. [D.E. 37-5]. Essentially, Laws alleged that BANA had erroneously changed the name on his loan, refused to accept the payments Laws sent in his own name, and therefore had injured Laws by treating his loan as though it were in default.

In 2013, BANA and Nationstar contracted to transfer the servicing of Laws's loan to Nationstar on July 1, 2013. [D.E. 37-6] 14; [D.E. 37] ¶ 10; [D.E. 43] ¶ 10. BANA credited Laws for a $1,856.11 payment made on June 12, 2013, which was the last of Laws's payments BANAcredited. [D.E. 37-1] 37; [D.E. 37] ¶¶ 11-12; [D.E. 43] ¶¶ 11-12. When the loan was transferred to Nationstar for servicing, the account statement reflected a $41,187.98 delinquency, even though Laws had sent a full payment each month. [D.E. 37-1] 38-40. In June 2013, during a settlement conference with BANA, Laws learned for the first time that BANA planned to transfer servicing of his loan to Nationstar on July 1, 2013. [D.E. 44-13] 59.

In a letter dated June 10, 2013, BANA wrote to Laws providing information regarding the pending transfer of service, including a statement that any Qualified Written Request ("QWR") regarding BANA's loan servicing be sent to a given address. [D.E. 44-3] 1-4. In a letter dated June 25, 2013, Nationstar wrote to Laws regarding the impending transfer of loan servicing to Nationstar. [D.E. 37-6] 14. In a letter dated June 28, 2013, Nationstar again informed Laws of the impending transfer of loan servicing. Id. at 15.

In a letter dated July 12, 2013, Nationstar sent Laws a "Notice of Servicing Transfer," a welcome letter, and "Important Account Information." [D.E. 44-3] 5-8. The communication stated that $39,385.98 was currently due on the loan. Id. at 5. In a section titled "CONTACT INFORMATION" the communication indicated that any QWR should be sent to "350 Highland Drive, Lewisville, TX 75067." Id. at 6. An asterisk directed the reader to a footnote which stated "PURSUANT TO RESPA, A 'QUALIFIED WRITTEN REQUEST' REGARDING THE SERVICING OF YOUR LOAN MUST BE SENT TO THIS ADDRESS: Nationstar Mortgage, 350 Highland Drive, Lewisville, TX 75067, Attn: Customer Relations Officer," and went on to define what letters qualify as QWRs. Id. The July 12, 2013 communication also stated "[u]nless you dispute the validity of this debt, or any portion thereof, within thirty (30) days after receipt of this notice, the debt will be assumed to be valid by Nationstar" and "[i]f you notify Nationstar in writing within this thirty (30) day period that the debt, or any portion thereof, is disputed, Nationstar willobtain verification and such verification will be mailed to you." Id. at 7. From July 2013 through March 2014, Laws paid Nationstar in monthly amounts of $1,856.11, which Nationstar accepted and applied to Laws's account for the months of August 2011 through May 2012. See [D.E. 37-1] 45-47; [D.E. 37] ¶ 17; [D.E. 43] ¶ 17.

In a letter to Laws dated July 22, 2013, Nationstar sent a payoff quote stating that Laws owed $187,675.29 in unpaid principal, $27,501.50 in unpaid interest, $795 in unpaid fees and charges, and $4,217.36 in unpaid escrow expenses for a total of $220,189.15 owed. [D.E. 37-6] 22-23. The letter also stated that payoff funds sent by mail should be sent to:

Nationstar Mortgage LLC

Attn: Payoff Processing

350 Highland Drive

Lewisville, TX 75067[.]

Id. at 22.

On August 16, 2013, Laws's attorney sent a letter to:

Nationstar Mortgage, LLC

350 Highland Drive

Louisville, TX 75067

ATTN: Payoff Processing

stating that the $27,501.50 of interest was incorrect because "[w]hen [Nationstar] purchased this mortgage, this mortgage had been in litigation for approximately 2 ½ years," and that the information regarding Laws's missed payments was "completely false and incorrect." [D.E. 44-4]. The letter described the basis for Laws's complaint against BANA—that Laws had been making timely payments but BANA had improperly refused to accept them—and that the case against BANA had been settled, demanded that Nationstar not report Laws's outstanding debt to credit reporting agencies, and expressed Laws's expectation that Nationstar would reply within five days. Id. at 2-3.

On August 21, 2013, Nationstar's internal records show that it updated the mailing address on file from Laws's address to his attorney's address. [D.E. 37-8] 4. On August 22, 2013, Nationstar sent Laws's attorney a letter that was essentially identical to the July 22, 2013 letter, except that it stated that Laws owed $187,415.79 in unpaid principal, $27,463.57 in unpaid interest, and $3,817.18 in unpaid escrow expenses for a total of $219,491.54 owed. [D.E. 44-3] 9-10.

In a letter dated August 23, 2013, Nationstar sent to Laws's attorney an acknowledgment of Laws's August 16, 2013 letter and stated that Nationstar would investigate the matter and that "[i]n accordance with the Real Estate Settlement Procedures Act (RESPA), a response will be provided within 30 business days." [D.E. 44-4] 5.

On September 19, 2013, Laws and BANA signed an agreement settling the November 18, 2011 suit ("the Settlement Agreement"). [D.E. 44-2]. The settlement provided that BANA (identified in the Settlement Agreement as "Defendant") would pay Laws $250,000.00 plus mediator's fees, reinstate Laws's credit-card limits, and report Laws's loan payments to credit reporting agencies as current through June 30, 2013. Id. at 3. In exchange, Laws (identified in the Settlement Agreement as "Plaintiff") would dismiss the November 18, 2011 suit against BANA and release BANA from liability for acts relating to the November 18, 2011 suit. Id. at 4. Specifically, the release stated:

For consideration of the Payment and other covenants contained herein, the receipt and sufficiency of which are hereby expressly acknowledged, Plaintiff(s), for themselves and each of their present, former, arid future heirs, executors, administrators, partners, co-obligors, co-guarantors, guarantors, sureties, family members, spouses, attorneys, insurers, agents, representatives, predecessors, successors, assigns, and all those who claim through them or could claim through them unconditionally and irrevocably remise, waive, satisfy, release, acquit, and forever discharge Defendant(s) and each of their present, former, and future parents, predecessors, successors, assigns, assignees, affiliates, divisions, departments, subdivisions, owners, partners, principals, trustees, creditors, shareholders, joint ventures, co-venturers, officers, and directors (whether acting in such capacity orindividually), attorneys, vendors, accountants, nominees, agents (alleged, apparent, or actual), representatives, employees, managers, administrators, and each person or entity acting or purporting to act for them or on their behalf, as well as any past, present, or future person or any entity that held or holds any interest in the Loan and the underlying Note or Security Instrument, including, but not limited to, Bank of America Corporation and all of its subsidiaries and affiliates (collectively, "Releasees"), and each of them, respectively, from and against any and all past, present, and

...