McGinnis v. Am. Home Mortg. Servicing Inc., Civil Action No. 5:11-CV-284 (CAR)

• Decision Date: 02 July 2013
• Docket Number: Civil Action No. 5:11-CV-284 (CAR)
• Parties: JANE MCGINNIS, Plaintiff, v. AMERICAN HOME MORTGAGE SERVICING INC., Defendant.
• Court: U.S. District Court — Middle District of Georgia

JANE MCGINNIS, Plaintiff,
v.
AMERICAN HOME MORTGAGE SERVICING INC., Defendant.

Civil Action No. 5:11-CV-284 (CAR)

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA MACON DIVISION

SO ORDERED: July 2, 2013

ORDER ON DEFENDANT'S PENDING MOTIONS

Before the Court are Defendant Homeward Residential, Inc. f/k/a American Home Mortgage Servicing Inc.'s ("Homeward") Motion for Summary Judgment [Doc. 34] and Motion for Limine to Exclude Certain Testimony of Thomas Berry [Doc. 43]. In her Amended Complaint, Plaintiff asserts the following claims against Homeward: 1) wrongful foreclosure; 2) violations of §§ 2605(e) and (k) of the Real Estate Settlement Procedures Act ("RESPA"); 3) intentional infliction of emotional distress; 4) conversion; 5) tortious interference with property rights; 6) defamation; 7) violation of Georgia RICO; 8) attorney's fees and expenses; and 9) punitive damages. Having considered the relevant facts, applicable law, and the parties' arguments, Defendant's Motion for Summary Judgment [Doc. 34] and Motion in Limine [Doc. 43] are GRANTED in part and DENIED in part.

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BACKGROUND

This lawsuit arises from Homeward's actions—or lack thereof—beginning immediately after Homeward began servicing Plaintiff Jane McGinnis's mortgage until it foreclosed on Plaintiff's property in June of 2011. What distinguishes this case from most other wrongful foreclosure actions is that the Court cannot conclude that Plaintiff's default and eventual foreclosure was, as a matter of law, solely attributable to her actions. The facts in the light most favorable to Plaintiff are as follows.

Plaintiff's Mortgage

Plaintiff has leased investment properties for over 35 years, and presently leases numerous commercial and residential properties in Monticello, Georgia, through her business, JCM Rentals, LLC.¹ On October 31, 2006, Plaintiff entered into a cash-out refinance loan (the "Loan") for seven of her investment properties, one of which is located at 172 Hilton Street in Monticello, Georgia (the "Property"), with Taylor, Bean & Whitaker ("TB&W").² To secure repayment of the Loan, Plaintiff simultaneously executed a Security Deed (the "Security Deed" or "Deed") and a Promissory Note (the "Note") in favor of TB&W, both of which contain identical provisions and obligations as the deeds and notes for the other six properties.³

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Plaintiff also executed identical "Family Riders" for all of her loans that contain supplemental covenants to those made in the deeds.⁴ Therein, Plaintiff agreed to assign all rents to the lender, and she agreed to a cross-default provision that renders Plaintiff's obligations under each deed interdependent.⁵ Thus, in the event that Plaintiff fails to timely pay the full amount every month on any one of her seven loans, she defaults on all of her loan obligations, and Homeward is legally entitled to foreclose on all of the properties.⁶ The Family Rider also deleted her right to reinstate the loans in the event of a default under § 19 of the Deed.⁷

Pursuant to the Note and Deed, Plaintiff must make full monthly payments to Homeward for the principal, interest, late charges, and escrow on the "1st day of each month," but no later than the 15th day.⁸ If Plaintiff fails to make a timely payment, Homeward may collect a late fee of 5% of her overdue payment and principal on the Loan.⁹ Also, if Plaintiff fails to submit a full monthly payment, Homeward may either "return ... [the] partial payment[ ]," or "accept any ... partial payment" without waiving any of its rights to refuse such a partial payment in the future.¹⁰ By accepting the partial payment, Homeward "is not obligated to apply such payments at the time

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such payments [are] accepted."¹¹ Instead, the partial payment is deposited into a "suspense account" and credited as a monthly payment once the suspense account receives funds equaling a complete monthly payment.¹²

Section 3 of the Deed, entitled "Funds for Escrow Items," defines "Escrow Items" to include "a sum ... to provide for payment of amounts due for: (a) taxes and assessments."¹³ To determine Plaintiff's monthly escrow payment, the lender "shall estimate the amount of Funds due on the basis of current data and reasonable estimates of expenditures of future Escrow items," but shall "not exceed the maximum amount" under the RESPA.¹⁴ If Plaintiff's escrow account has either a "shortage" or a "deficiency," the lender shall notify Plaintiff as required by RESPA, and in either case, the borrower shall make payments in accordance with RESPA, "but in no more than twelve monthly payments."¹⁵

Beginning in 2006 until her payment in October of 2009, Plaintiff made timely monthly payments to TB&W.¹⁶ In 2009, Plaintiff paid TB&W $605.58 a month, which included an escrow payment of $115.45.¹⁷

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Plaintiff's Loans Assigned to Homeward

Following TB&W's default and bankruptcy in the Fall of 2009, Homeward was assigned all seven of Plaintiff's loans, including the Loan at issue, effective October 17, 2009.¹⁸ On October 27, 2009, Plaintiff received a letter from Homeward to that effect.¹⁹ This letter did not, however, indicate any change to her monthly payment.²⁰ It is undisputed that Plaintiff was current on her Loan obligation through October 31, 2009, and Plaintiff's escrow account had a balance of $260.20 when Homeward obtained the Loan.²¹

The events that transpired immediately after Homeward began servicing Plaintiff's Loan are crucial to understanding Plaintiff's case. Unfortunately, however, Homeward's Rule 30(b)(6) witness, Default Case Manager Christopher Delbene, who Homeward proffered as the individual most familiar with Plaintiff's Loan, provides little insight.²² The Court was able to glean the following from the record, largely independent of his testimony.

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At some point in October of 2009, Homeward conducted an escrow analysis on the Property and increased Plaintiff's monthly escrow payment by $238.00, thereby increasing her total monthly payment from $605.58 to $843.58.²³ Plaintiff never received this analysis, and Homeward failed to produce this analysis during discovery. Because this analysis is not part of the record, the figures used and calculations therein are disputed. As Delbene so aptly testified: "Again, sir, while I'm sure an escrow analysis was performed to reach that figure, I have not seen the analysis and, therefore, I cannot account to how [Homeward] came to that number."²⁴

In addition to increasing Plaintiff's monthly payment without giving her notice, Homeward also retroactively applied the increased payment to the month of October without notice, thereby treating Plaintiff's Loan as delinquent on November 1, 2009, also without notice.²⁵ Compounding the problem, Plaintiff did not receive any monthly statements from Homeward the entire time Homeward serviced the Loan, despite the fact that monthly statements are "customar[il]y" sent to borrowers.²⁶ Thus, on

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November 1, 2009, Plaintiff was not aware that her payment increased and that it had been retroactively applied.

On November 6, 2009, Plaintiff made her first monthly payment to Homeward in her usual amount of $605.58.²⁷ Soon thereafter, Homeward notified Plaintiff that she was delinquent on her Loan payments to TB&W in the amount of $843.58, although Homeward now admits that Plaintiff was current on her TB&W obligations.²⁸ Plaintiff disputed Homeward's accounting, asserting that she submitted all of her payments of $605.58 to TB&W on time.²⁹ The following month, on December 9, Plaintiff again paid $605.58 to Homeward, but nevertheless continued to receive notifications from Homeward that she was behind one payment to TB&W.³⁰

Homeward's accounting records indicate that both Plaintiff's November and December payments of $605.58 were deposited into her suspense account as partial payments.³¹ When Homeward cashed Plaintiff's December payment on December 18th, Homeward withdrew $843.58 from Plaintiff's suspense account for her November payment as well as an additional $14.69 in late fees for the month of December.³² Consequently, because her suspense account did not have sufficient funds to cover her

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December payment by the end of 2009, Plaintiff was not "given credit" for her December payment.³³

Toward the end of 2009, Plaintiff received an escrow analysis dated December 17, 2009, from Homeward.³⁴ The December 2009 analysis stated that, beginning February 2010, Plaintiff's "present" payment of $843.58 was to decrease to $680.08 a month, $138.46 of which was escrow.³⁵ It was at this time that Plaintiff first discovered that her monthly escrow payment had at some point increased by $238.00, thereby increasing her total monthly payment from $605.58 to $843.58.³⁶ The analysis also quoted Plaintiff's 2009 property taxes at $1,269.49 and stated that Plaintiff's escrow account had a "shortage" of $617.83.³⁷ Because of this shortage, Homeward paid an escrow advance of $1,009.29 to cover the property taxes on December 10, 2009.³⁸

In January of 2010, Plaintiff again timely submitted a payment of $605.58 while continuing to dispute the $843.58 figure.³⁹ Homeward's records reveal that although Plaintiff's account was charged $843.58 for the month of January, her statement for

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