Morris v. Wells Fargo, N.A. (In re Morris)

• Decision Date: 29 July 2014
• Docket Number: Adversary No. 12–00071–BGC.,Bankruptcy No. 11–03628–BGC–7.
• Citation: 514 B.R. 658
• Parties: In re Penny Lynn MORRIS, Debtor. Penny Lynn Morris, Plaintiff, v. Wells Fargo, N.A., Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Alabama

514 B.R. 658

In re Penny Lynn MORRIS, Debtor.

Penny Lynn Morris, Plaintiff,

v.Wells Fargo, N.A., Defendant.

Bankruptcy No. 11–03628–BGC–7.

Adversary No. 12–00071–BGC.

United States Bankruptcy Court,

N.D. Alabama,

Southern Division.

Signed July 28, 2014.

Entered July 29, 2014.

Eugenia W. Hamilton, Hamilton & Associates, Helena, AL, for Plaintiff.

Catherine Crosby Long, Stephen K. Pudner, James H. White, Baker, Donelson, Bearman, Caldwell & Berkowitz, Birmingham, AL, for Defendant.

MEMORANDUM OPINION

BENJAMIN COHEN, Bankruptcy Judge.

The matter before the Court is the defendant Wells Fargo, N.A.'s Motion for Summary Judgment filed on April 25, 2013. A.P. Docket No. 15. After notice, a hearing was held on September 12, 2013. Appearing were Ms. Catherine Crosby Long, the attorney for the defendant; Ms. Eugenia W. Hamilton, the plaintiff's attorney; and the plaintiff, Ms. Penny Lynn Morris.

The pending motion was filed in response to the Debtor's Complaint Against Wells Fargo for Violation of the Stay, filed May 13.2012, A.P. Docket No. 1.

The matter was submitted on the records in this case and in Bankruptcy Case No. 11–03628–BGC–7, the briefs of counsel, and attached exhibits. Based on those submissions, the Court finds that there are no genuine issues of material fact, and that the defendant is entitled to judgment as a matter of law.

I. Findings of Fact

On May 15, 2004, the debtor-plaintiff, Ms. Penny Morris obtained a loan for $133,000 from Americapital Funding Corp. Repayment of the loan was secured by a mortgage on her residence located at 1816 Valgreen Lane in Birmingham, Alabama. The note executed by Ms. Morris in connection with that loan required her to repay the amount borrowed, with interest at the rate of 5.875% per annum, over a period of 30 years in monthly installments of $786.75 each. When she obtained the loan, Ms. Morris was gainfully employed and had the ability to make her loan payments.

On April 30, 2005, Wells Fargo became the servicer of the note and mortgage.

In 2006, Ms. Morris contracted rheumatoid arthritis which impeded her ability to work full time resulting in a dramatic reduction of her income. By July 2008, she had been rendered completely disabled by the disease, which required her to apply for social security disability payments. Her application was granted, but payments did not begin until about six months later. Around that time, she also began to receive social security benefits for the support for her minor son.

Because of her physical impairment, Ms. Morris's financial situation deteriorated, and she was unable to make all of her mortgage payments. In an effort to rectify that default, Wells Fargo extended to Ms. Morris the opportunity to enter into a forbearance agreement that would permit her to avoid foreclosure and cure her default. This “Special Forbearance Agreement” was executed by Ms. Morris on June 28, 2009. Brief in Support of Motion for Summary Judgment, A.P. Docket No. 16, Exhibit B. The agreement required Ms. Morris to make a payment of $511.03 on July 20, 2009; another payment of $511.03 on August 20, 2009; a third payment of $511.03 on September 20, 2009; and a payment of $5,595.34 on October 20, 2009.

Ms. Morris was not able to satisfy the terms of the “Special Forbearance Agreement;” therefore, the loan remained in default. Seeking to address her mortgage arrearage, on September 13, 2009, Ms. Morris executed another agreement with Wells Fargo, this time a “Home Affordable Modification Trial Period Plan.” Brief in Support of Motion for Summary Judgment, A.P. Docket No. 16, Exhibit C. The copy of that agreement attached to Wells Fargo's motion contains no information about the amount of the arrearage, or how the payments were to be caught up, or what other modifications, if any, were to be made to the loan. It is merely a form document, bearing Ms. Morris' signature and handwritten date, with standard printed language and blanks to be filled in for custom information related to the loan in question, which had not been filled in.

While it was not possible to tell what the terms of the second agreement between Ms. Morris and Wells Fargo were relating to catching up the loan arrearage, it is possible to determine that the loan remained in default and the missed payments were not paid. This condition led to a third loan modification agreement between the parties on March 19, 2010. Brief in Support of Motion for Summary Judgment, A.P. Docket No. 16, Exhibit D. Under that agreement, entitled “Loan Modification Agreement,” the parties agreed that the unpaid balance due on the loan was $126,606.73; that Ms. Morris would not have to make a payment until June 1, 2010; that her monthly payments would be increased to $820.73; that the maturity date on the loan would not change but would remain June 1, 2034; and that she would pay any balance that remained on the loan on the maturity date.

Again, Ms. Morris was not able to make the payments in the agreement and bring her mortgage payments current. Her efforts were rendered even more difficult in April 2011 when her minor son reached 18 years old, and she stopped receiving social security assistance for him.

Based on the parties' contracts and the missed payments, Wells Fargo accelerated the note then scheduled and noticed a foreclosure sale.

Ms. Morris filed the pending Chapter 7 bankruptcy case on July 21, 2011, prior to the scheduled foreclosure sale. Wells Fargo filed a Motion for Relief from Automatic Stay. Case Docket No. 26. The fact summary filed by Wells Fargo in support of its motion indicated at the time Ms. Morris was $3,347.01 in arrears on her mortgage payments. Fact Summary for Motion for Relief From Automatic Stay in Chapter 7 and 13 Cases, Case Docket No. 27. After notice, a hearing was held on September 27, 2011. Appearing were Ms. Morris and her attorney, Ms. Eugenia Hamilton, and Mr. Tom Tutten, one of the attorneys for Wells Fargo. On September 30, 2011, this Court entered an order granting the motion for relief. Case Docket No. 32.

On October 11, 2011, Ms. Morris filed a Motion to Reinstate the Stay Against Wells Fargo, Case Docket No. 34. It read:

On September 27, 2011 the Debtor appeared before this Honorable Court and agreed to lift the stay against Wells Fargo in this case in an effort to work toward a loan modification so she may keep her home. On the date, the Debtor asked if she would be able to meet with a representative of Wells Fargo in person for the negotiation of the loan modification and was assured that could and would happen.

Since that time, the Debtor has spent approximately ten hours trying to arrange an in-person meeting with a Wells Fargo representative authorized to handle a loan modification. This attorney has spent over five hours trying to arrange a meeting and has also had an assistant spend several hours on the project. To date, we have been unable to find anyone willing to meet with us to accomplish this goal.

Ms. Morris feels that a face-to-face meeting is imperative as her previous experiences with Wells Fargo have been extremely stressful and negative. Twice she has negotiated a loan modification by phone only to be told by the next caller from Well Fargo that the last person she had spoken with did not have the authority to negotiate the deal. On another occasion, a man came to Ms. Morris's home with proper credentials from Wells Fargo to negotiate a loan modification. They spent hours completing forms and arriving at a deal. The very next day the man returned and informed her that he had been fired by Wells Fargo and the modification would not be approved.

On the day of the hearing, Debtor and her attorney spoke with the Honorable Mr. Tutten representing Wells Fargo about a loan modification. He advised them to contact the “Loss Mitigation Department.” After two hours on the phone, this attorney was informed there is no “loss mitigation department” and to contact the attorney who handled the case and that attorney would handle the loan modification. As Mr. Tutten had already informed us he did not handle that part, this attorney was hesitant, but did attempt to call Mr. Tutten and finally sent an email. His response was not at all helpful.

Ms. Morris is disabled and suffers from stress related illnesses. This issue is extremely important to her as she wants to keep her home. She begs this Court to set aside its previous ruling and replace the stay against Wells Fargo until such time as an appropriately authorized representative of that company will meet with her face-to-face to negotiate a loan modification.

Id.

That motion was heard on November 29, 2011. Appearing were Ms. Morris and her attorney, Ms. Eugenia Hamilton. No one appeared for Wells Fargo.

On December 2, 2011, the Court entered an order that set aside the order granting relief from the stay to Wells Fargo and extended the stay with respect to the Wells Fargo debt and mortgage for 180 days. The stay extension was based on Ms. Morris' representation that a “reasonable” loan modification could be achieved and was relatively imminent. The Court's Order explained:

The debtor's motion relates old and new facts of her attempt to obtain a modification of her mortgage loan with Wells Fargo. At the hearing on that motion the debtor explained in detail the negotiations she has had over the last two years. Those negotiations included many misunderstandings between the parties, difficulties, and multiple submissions of paper work. It also included different representatives of Wells Fargo, as the debtor explains it, representing to the debtor that a loan modification had been approved, or that one was at least possible.

Also at the hearing the debtor discussed two recent events that directly impact the applicability of her Rule 59(e) motion. First, the debtor represented that within the last few days she has spoken with a Wells Fargo representative who assured her that this representative would be the...