Michael D. v. Gmac Mortgage Llc

• Decision Date: 13 January 2011
• Docket Number: No. 08–00568–CV–W–DGK.,08–00568–CV–W–DGK.
• Citation: 763 F.Supp.2d 1091
• Parties: MICHAEL D. and Sharron Mayo, individually and on behalf of all those similarly situated, Plaintiffs,v.GMAC MORTGAGE, LLC, UBS Real Estate Securities, Inc., Deutsche Bank National Trust Company (in its capacity as trustee of the MASTR Specialized Loan Trust 2007–01), and Residential Funding Company, LLC, Defendants.
• Court: U.S. District Court — Western District of Missouri

763 F.Supp.2d 1091

MICHAEL D. and Sharron Mayo, individually and on behalf of all those similarly situated, Plaintiffs,

v.GMAC MORTGAGE, LLC, UBS Real Estate Securities, Inc., Deutsche Bank National Trust Company (in its capacity as trustee of the MASTR Specialized Loan Trust 2007–01), and Residential Funding Company, LLC, Defendants.

No. 08–00568–CV–W–DGK.

United States District Court, W.D. Missouri, Western Division.

Jan. 13, 2011.

David M. Skeens, Garrett Mark Hodes, J. Michael Vaughan, Kip D. Richards, R. Frederick Walters, Walters Bender Strohbehn & Vaughan, Kansas City, MO, for Plaintiffs.Catesby Ann Major, Craig S. O'Dear, Irvin Victor Belzer, Bryan Cave, LLP, Leslie A. Greathouse, J. Loyd Gattis, III, Spencer Fane Britt & Browne LLP, Daniel L. McClain, Scharnhorst, Ast & Kennard, P.C., Catesby Ann Major, Irvin Victor Belzer, Bryan Cave, LLP, Kansas City, MO, David C. Bohan, David J. Stagman, Sheldon T. Zenner, Katten Muchin Rosenman, LLP, Chicago, IL, Elizabeth A. Frohlich, Jami Wintz McKeon, Morgan Lewis & Bockius LLP, San Francisco, CA, for Defendants.

SUMMARY JUDGMENT ORDER

GREG KAYS, District Judge.

This case is a putative class action brought under the Missouri Second Mortgage Loan Act (“MSMLA”). Plaintiffs Michael and Sharron Mayo allege they were charged illegal fees at closing in connection with their residential second mortgage loan, and they are suing the various companies who subsequently acquired or serviced their loan.

Before the Court are the Defendants' various motions for summary judgment. ¹ The motions are GRANTED IN PART. The Court holds (1) Mrs. Mayo was not a party to the Loan thus she does not have standing to sue Defendants; (2) the funding fee and underwriting fee charged at closing both violate the MSMLA, but the other fees charged do not; (3) the loan servicers did not violate the MSMLA, but Assignee Defendants indirectly violated it by virtue of the fact that illegal fees were rolled into the principal of the Loan at closing, and Assignee Defendants subsequently received these fees in monthly payments; (4) Mr. Mayo may sue for interest previously paid to the Assignee Defendants; and (5) Defendants are not entitled to summary judgment on the issue of punitive damages.

All claims against Defendants GMAC Mortgage, LLC and Residential Funding Company, LLC are dismissed with prejudice.

Summary Judgment Standard

A moving party is entitled to summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). A party who moves for summary judgment bears the burden of showing that there is no genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When considering a motion for summary judgment, a court must scrutinize the evidence in the light most favorable to the nonmoving party, and the nonmoving party “must be given the benefit of all reasonable inferences.” Mirax Chem. Prods. Corp. v. First Interstate Commercial Corp., 950 F.2d 566, 569 (8th Cir.1991) (citation omitted).

To establish a genuine issue of fact sufficient to warrant trial, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Instead, the nonmoving party must set forth specific facts showing there is a genuine issue for trial. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. But the nonmoving party “cannot create sham issues of fact in an effort to defeat summary judgment.” RSBI Aerospace, Inc. v. Affiliated FM Ins. Co., 49 F.3d 399, 402 (8th Cir.1995) (citation omitted).

Facts

Viewing the evidence in the light most favorable to the Plaintiffs, for purposes of resolving the pending motion the Court finds the facts to be as follows. Argument, controverted facts, facts immaterial to the resolution of the pending motion, facts not properly supported by the cited portion of the record, and contested legal conclusions have been omitted.

Plaintiffs Michael and Sharron Mayo are a husband and wife who reside at a house in Grandview, Missouri. They bought their home on October 28, 2005 for $130,000.00. To finance the purchase Mr. Mayo applied for a loan with Wells Fargo Bank, N.A. The Mayos thought that there would simply be one loan from Wells Fargo, but when they arrived at the closing on October 28, 2005, they were told Wells Fargo was not lending the entire purchase price. Wells Fargo would lend $104,000 (80% of the loan), and Option One Mortgage Corporation would lend the remaining $25,800 (20% of the loan).

Mr. Mayo signed two separate loan applications, both dated October 28, 2005. For each loan there was a separate loan underwriting and approval process; separate verification of income and employment; separate wire transfers; separate loan submissions; separate instructions to the closing agent; separate credit checks; and separate title insurance policies. Mr. Mayo also gave Wells Fargo formal notice as the first lien holder that he had given Option One a junior mortgage in the property.

The Wells Fargo loan had an adjustable rate note. The deed of trust for this loan identifies both Mr. and Mrs. Mayo as the “Borrower.” Mr. and Mrs. Mayo each signed the deed of trust, but Mrs. Mayo is identified as a “Non–Borrower” on the page bearing the notary's signature. Included with the deed of trust was an “Adjustable Rate Rider” and a “Prepayment Rider,” each of which is signed by Mr. and Mrs. Mayo.

The Loan at issue in this case.

The second mortgage loan made by Option One (“the Option One loan” or “the Loan”), is at the center of this lawsuit. The Loan was secured by a subordinate lien deed of trust. The Loan was to be repaid with interest at yearly rate of 11.65% in consecutive monthly installments over 30 years. The promissory note identifies Option One as the lender. The promissory note and addendum are signed by Mr. Mayo only. The HUD–1 Settlement Statement is signed by both Mr. and Mrs. Mayo.

Both Mr. and Mrs. Mayo executed a Deed of Trust for the benefit of Option One. The Deed of Trust identifies “Michael and Sharron Mayo, husband and wife as joint tenants” as the “Grantor,” and is signed by both. The Deed of Trust granted Option One a security lien in residential real estate which real estate was subject to one or more prior mortgage loans, namely, the Wells Fargo loan. The Deed of Trust contains the following notation at the bottom left-hand corner of the first page: “Missouri—Second Mortgage.”

Both loans closed concurrently on October 28, 2005. The Deed of Trust for the Loan was filed with the Jackson County Recorder of Deeds' Office on November 10, 2005.

The challenged settlement charges.

Capital Title Agency, Inc. provided title and closing services for the Loan. At closing Mr. and Mrs. Mayo signed a HUD–1 Settlement Statement supplied by Option One which identified “Option One Mortgage Corp.” as the lender. The statement set out the following fees which Plaintiffs allege violate the Missouri Second Mortgage Loan Act:

Tax Service Contract fee to Fidelity National Tax Service$ 65.00Funding Fee to Option One$ 50.00Underwriting Fee to Option One$395.00Flood Search fee to First American Flood Data Services$ 12.00Interest to Option One$ 33.40Settlement or Closing Fee to Capital Title Agency, Inc.$100.00Courier/Delivery Fee to Capital Title Agency, Inc.$ 25.00Wire Fee to Capital Title Agency, Inc.$ 20.00

These fees total $1,015.40 and were paid at closing by rolling the amounts owed into the Loan principal.

None of the Defendants directly contracted for, charged, or received any of these fees in connection with the making or closing of the Loan. None of the Defendants are, or ever have been, related to, controlled by, or affiliated by common ownership with Capital Title Agency, Inc., Fidelity National Tax Service, or First American Flood Data Services.

The “Funding Fee” and “Underwriting Fee” were paid to Option One.

Capital Title coordinated and performed all tasks associated with closing the Loan. Specifically, Capital Title compiled from various sources the loan documents needed for the closing, including the deed of trust and note. Capital Title also copied and transmitted documents to Option One and the Plaintiffs in connection with the Loan after the closing. It also filed the mortgage with the Jackson County Recorder of Deeds. Capital Title charged three fees for the services that it provided: It charged a $100 “settlement or closing fee” to conduct a title examination, issue title insurance, and prepare the settlement statement and other documents related to the Loan; ² it charged a $25 “courier/delivery fee” for collecting and sending documents necessary to conduct the title examination, prepare the title commitment, and record documents relating to the Loan; ³ and it charged a $20 “wire fee” for the cost of electronically disbursing the Loan proceeds.⁴

Option One paid out two of the other challenged fees to third-parties. It paid the $65.00 tax service contract fee to Fidelity National Tax Service for conducting a search to confirm payment of property taxes on the Plaintiffs' property. It also paid the $12.00 flood search fee to First American Flood Data Services for determining whether the house is located in a flood hazard area. Option One was not affiliated with either Fidelity National Tax Service or First American Flood Data Services.

A $33.40 pre-paid interest charge was imposed. Under the note, Mr. Mayo was required to make monthly payments to Option One of principal and interest, to be made on the 1 st day of each month, with the first monthly payment for the month of November 2005 due on December 1, 2005. The note is dated ...