Lynk v. Chase Home Finance, LLC
| Decision Date | 29 July 2009 |
| Docket Number | Case No. 07-14772. |
| Citation | 644 F.Supp.2d 868 |
| Parties | Lynda LYNK, Plaintiff, v. CHASE HOME FINANCE, LLC, Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
Rita F. Young, Detroit, MI, for Plaintiff.
Joseph A. Doerr, Joseph H. Hickey, Dykema Gossett, Bloomfield Hills, MI, for Defendant.
The plaintiff filed a complaint in state court alleging that the defendant, a mortgage company, violated the Fair Credit Reporting Act and various state laws by falsely reporting to credit reporting agencies that the plaintiff had filed for bankruptcy. The effect of the erroneous information, the plaintiff alleges, was that the plaintiff was prevented for a time from refinancing her home mortgage with another lender, making her a captive to the onerous interest rates and payment schedules demanded by the defendant. After the case was removed to this Court, the plaintiff filed an amended complaint, and now she has filed a motion seeking leave to amend the complaint once again. Meanwhile, the defendant filed a motion to dismiss or for summary judgment and opposes the later-filed motion for leave to file a second amended complaint. On June 8, 2009, the Court heard oral argument on the motions. The Court now finds that the liberal amendment policy expressed in the Federal Rules of Civil Procedure favors the plaintiff's motion to file a second amended complaint. However, even with the amendments, the plaintiff's claims fail as a matter of law, except part of the claim stated in count I brought under the Michigan Collection Practices Act. Therefore, the Court will grant the motion to file a second amended complaint, grant in part and deny in part the defendant's motion for summary judgment, and dismiss all counts of the second amended complaint except for a portion of count I.
The plaintiff alleges that in 2002, dire family circumstances forced her to refinance her home mortgage: her husband was killed in a car accident in 2001, and she was left with two small children and began to struggle financially. She refinanced her home through Aegis Mortgage Corporation under an arrangement that allowed her to take some additional cash for home repairs, but she believed that her monthly payments would not change. A few days later, Aegis assigned the mortgage to Chase, the defendant in this case. The plaintiff soon realized that her payments under the new mortgage did not include escrow payments for taxes and insurance and her mortgage had an adjustable rate of interest. Although in December of 2002 she signed and initialed each page of the Adjustable Rate Note, which outlined the interest rate and monthly changes in upper case script, the plaintiff claims that she became aware of the added obligations for the first time in late 2005.
The plaintiff contends that Chase attempted to collect additional payments to cover the escrow through a series of "repeated harassing phone calls" to the plaintiff. Second Am. Compl. ¶ 7. When the additional payments were not made, Chase adjusted the plaintiff's mortgage to a rate of 12.299%, doubling the plaintiff's mortgage payments from $1,200 to $2,400 a month, an amount well beyond her means.
With her financial situation turning more difficult, the plaintiff says she considered filing for bankruptcy protection but did not do so because she could not afford to pay the filing fees. Mot. for Summ. J., Ex. 1 (Lynk Dep.) at 18-20. She testified that she spoke with numerous credit counseling agencies, but obtained no relief. Id. at 19. In the spring and summer of 2006, the plaintiff sought to refinance yet again. She first contacted Access Mortgage, which refused to refinance her loan because the house was appraised at a lower than expected value. Next, in May of 2006, she contacted a company called Wilmington Mortgage (which she also referred to occasionally as "Remington" Mortgage), which also declined to refinance, informing her for the first time of a bankruptcy notation on her report. She also applied to Stratford Funding, which declined. Finally, in September of 2006, she contacted SurePoint Lending. A representative of SurePoint Lending advised her that "Chase is saying that you're in bankruptcy," and declined to assist with refinancing as well. Lynk Dep. at 37.
The plaintiff testified that initially she dismissed the rumors of bankruptcy, but then noticed the recurring assertions of bankruptcy from different lenders. She described a conversation with a representative of Wilmington Mortgage in May of 2006, and with Stratford Funding in July:
The guy's name was Mike. Okay. He said something to the effect that, you know—I told him my credit score up front and he said that's no problem. Then when he got my report, he said something to the effect bankruptcy will be a problem. You know, he was nasty and he basically hung up on me.... So I dismissed it, you know, I just dismissed it, you know. I'm not in bankruptcy, what is he talking about. So I tried to fix some more things on my credit—in my home, so I could get a higher appraisal.
Then I tried again in July. This time it was Stratford Funding and the guy's name was Brian, that's G-I-E-R-I-N-G. Okay. He just snubbed me, you know. So I'm saying okay, what's going on. Access in March and April, you know, eager, excited. I had two companies in March and April fighting over me. I can't remember the name of the second company, but it would be on my phone records.
Okay. So in July with Stratford I tried again. Again, this guy, after he gets my credit repots, he just blow [sic] me off. He just nasty, too; he just blows me off. I said something is wrong here.
The plaintiff states that she contacted Chase on September 26, 2006 to demand that it remove references to bankruptcy from her credit report. Before contacting Chase, the plaintiff had not contacted any of the reporting agencies, claiming that she had "no clue how to deal with a credit reporting agency," and was skeptical that disputing the records directly with the credit reporting agency would bring any results. Lynk Dep. at 80. The plaintiff now seeks to qualify this statement in her proposed second amended complaint by alleging that a Chase employee discouraged her from contacting TransUnion (the only credit reporting agency that apparently reported the errant bankruptcy notation) directly. She states that she hired a law firm, Lexington Legal, that contacted TransUnion on her behalf, but the records of the company indicate that Lexington did not contact TransUnion until April 21, 2007, well after the plaintiff called Chase about the bad information. Pl.'s Response to Def.'s Mot. for Sum. Jmt., Ex. D (Letter from Lexington to Lynk).
The plaintiff alleges that a Chase representative conceded that the mistake occurred because "Chase was under the impression that Plaintiff was `thinking' or `talking about' filing for bankruptcy." Second Am. Compl. ¶ 12. However, it was not until March 2007 that Chase instructed the credit bureaus to remove the references to bankruptcy.
Chase contends, however, that it had never supplied any report of bankruptcy to the reporting agencies, and the notation on the plaintiff's credit report was TransUnion's—and not the defendant's—mistake. Chase states that its "detailed system notes, records, and policies" contain no reference to Lynk's bankruptcy, and their own research into Lynk's credit report did not reveal that Chase had furnished any information regarding bankruptcy to the credit bureaus. Chase produced a copy of the plaintiff's credit reports from the three major credit reporting agencies, and only the TransUnion report contained a notation that the plaintiff's loan with Chase was in bankruptcy. Chase argues that if it provided any information to the credit reporting agencies, it would have provided this information uniformly to all three agencies. Further, Chase states that its internal practice is to refer the loan included in bankruptcy to a "specific bankruptcy department," retain outside counsel to protect Chase's interests, and make a special notation in its system notes. Mot. for Summ. J., Ex. 2 (Reardon Aff.) at ¶ 20. The bankruptcy-related routine is described as follows:
21. As for the system notes, if Chase were furnishing information to the credit reporting bureaus that a loan was "included in bankruptcy," it would be Chase's regularly conducted business to utilize and rely on the system notes by making the following notations: (a) an auto generated "BANKO" entry statement showing chapter (either chapter 7 or 13), case number, filing date, court of jurisdiction and the name of filer(s); and (b) an auto generated bankruptcy protection to populate the fields in the system to notify Chase employees to refrain from calls to the borrower and/or to stand down on foreclosure/eviction efforts (had such procedures been implemented) to avoid potential violations of the bankruptcy automatic stay.
22. Furthermore, in cases where a bankruptcy has been filed, the loans are moved into a special service module, Derivative Research Interface, where only default loan specialists (bankruptcy, foreclosure, REO, loss mitigation and litigated services) have access to the files. In other words, the loan is transferred to a separate system and a restricted set of system notes would be created.
23. Finally, any time that a Chase loan is associated with a bankruptcy filing, it would be Chase's regularly conducted business activity to, much like it does with the system notes, memorialize that fact via the AUD. Specifically, the AUD would contain a conspicuous notation, an alpha character, as opposed to a number or "-,'" for any month that the loan...
To continue reading
Request your trial
-
Yaldu v. Bank Of Am. Corp.
...held that there is a private right of action to enforce the provisions of section 1681s-2(b) of the FCRA. Lynk v. Chase Home Finance, LLC, 644 F.Supp.2d 868, 881-82 (E.D.Mich.2009), order vacated in part on reconsideration on other grounds. Under section 1681s-2(b), “[u]pon receiving notice......