Morrow v. Bank of Am., N.A.

Decision Date07 May 2014
Docket NumberNo. DA 13–0241.,DA 13–0241.
PartiesAbraham B. MORROW and Betty Jean Morrow, Plaintiffs and Appellants, v. BANK OF AMERICA, N.A., BAC Home Loans Servicing, LP, fka Countrywide Home Loans Servicing, LP, Defendants and Appellees.
CourtMontana Supreme Court


For Appellants: David K. W. Wilson, Jr. (argued), Morrison, Sherwood, Wilson & Deola, PLLP, Helena, Montana, John Heenan, Bishop and Heenan, Billings, Montana.

For Appellees: Kenneth K. Lay (argued), Christopher K. Oliveira, Crowley Fleck PLLP, Helena, Montana.

For Amicus Montana Legal Services Association: Flint Murfitt, Robert Olsen, Lawson Konvalinka, Montana Legal Services Association, Helena, Montana.

For Amicus State of Montana Department of Justice: Timothy C. Fox, Montana Attorney General, Chuck Munson, Assistant Attorney General, Helena, Montana.

For Amicus Montana Bankers Association: Doug James, Adam J. Tunning, Moulton Bellingham P.C., Billings, Montana.

For Amicus National Association of Consumer Advocates: James C. Sturdevant, The Sturdevant Law Firm, P.C., San Francisco, California, Jonathan McDonald, Dix, Hunt & McDonald, Helena, Montana.

Chief Justice MIKE McGRATH delivered the Opinion of the Court.

¶ 1 Abraham B. Morrow and Betty Jean Morrow appeal from an order of the First Judicial District Court, Lewis and Clark County, granting Defendant Bank of America's motion for summary judgment. We affirm in part, reverse in part, and remand.

¶ 2 The following issues are presented for review:

¶ 3 Issue One: Whether the District Court erred in finding the Morrows failed to establish the existence of an oral contract for modification of their loan.

¶ 4 Issue Two: Whether the District Court erred in finding that Bank of America owed no common law or fiduciary duty to the Morrows.

¶ 5 Issue Three: Whether the District Court erred in granting summary judgment to Bank of America on the Morrows' claim of negligent misrepresentation.

¶ 6 Issue Four: Whether the District Court erred in finding that the Statute of Frauds precluded the Morrows' claims of actual fraud, constructive fraud, and violations of the Montana Consumer Protection Act.

¶ 7 Issue Five: Whether the District Court erred in granting summary judgment to Bank of America on the Morrows' claim of actual fraud.

¶ 8 Issue Six: Whether the District Court erred in granting summary judgment to Bank of America on the Morrows' claim of constructive fraud.

¶ 9 Issue Seven: Whether the District Court erred in granting summary judgment to Bank of America on the Morrows' claim under the Montana Consumer Protection Act.


¶ 10 Abraham B. Morrow and Betty Jean Morrow, husband and wife, are the owners of a home on fifty acres of land outside White Sulphur Springs, Montana. The Morrows, who are from South Carolina, built the home in 2006 and planned to spend their retirement there. This case arises from the Morrows' attempts to secure a modification of their home loan, serviced by Bank of America, through the federal Home Affordable Modification Program (HAMP).

¶ 11 HAMP is intended to help homeowners in default or at immediate risk of default on their home loans by modifying their monthly payments to affordable levels. The program requires participating loan servicers to execute a servicer participation agreement and service eligible loans according to a uniform modification process. The process begins with a Trial Period Plan, under which the homeowner makes reduced payments for three months, while the loan servicer verifies income and other eligibility information. At the end of the trial period, if the homeowner has successfully made the trial payments and if eligibility has been verified, the modification is made permanent. At the time relevant to the Morrows' claims, only loans secured by the borrower's primary residence were eligible for HAMP.

¶ 12 The Morrows' home was financed by Quicken Loans for $291,200.00, secured by a deed of trust. The loan was to be repaid over a fifteen-year term at 4.99% interest, with monthly payments of $2,301.28. The loan was subsequently sold to Countrywide. Bank of America is the successor by merger to Countrywide and BAC Home Loans Servicing, LP.

¶ 13 In 2009, the Morrows lost most of their anticipated retirement income when the purchaser of two businesses they had owned in South Carolina defaulted on his payments. The Morrows resumed control of one of the businesses and returned to South Carolina to manage it until they could find a new buyer. From February 2009 until May 2012, they spent most of their time in South Carolina, returning to the Montana property for only six to eight weeks of each year. The Morrows first contacted Bank of America to discuss a modification of their loan in May 2009, beginning a process that would continue for nearly two years.

¶ 14 The Morrows remained current on their payments until November 2009. They claim that in October 2009, a Bank of America employee informed them they should intentionally miss the following month's payment to become eligible for a modification. Bank of America denies its employees would instruct a borrower to intentionally default, and argues that the Morrows defaulted because they could not afford their payments.

¶ 15 On December 8, 2009, the Morrows spoke with Sunil Kumar, a Bank of America representative from Hyderabad, India, who identified himself as “Brian.” According to the Morrows, Kumar told them they were “locked” for a modification with trial payments of $1,239.99. Kumar explained to the Morrows they would be required to make the trial payments for three to four months. At the end of that period, if the Morrows had successfully made the trial payments, the modification would be made permanent. The modification, according to the Morrows, extended the period of the loan from fifteen to forty years and reduced the interest rate from 4.99% to 2%. The Morrows believed the modification had been approved, subject to execution of the documents and completion of the trial period. Bank of America claims the Morrows were informed during this conversation that they were only applying for a modification and had not yet been approved. Kumar has no specific recollection of his conversation with the Morrows, but denies he would tell a customer over the phone that they were approved for a modification.

¶ 16 The Morrows made their first trial payment of $1,239.99 in December 2009. They also submitted financial documentation including their tax return, bank statement, and employment verification. On February 16, 2010, Bank of America sent the Morrows a notice of intent to accelerate indicating their loan was in default. Mr. Morrow claims he called Bank of America on March 2, 2010 and spoke with an employee named “Ron,” who instructed him to ignore the letter and continue making the reduced payments. Bank of America records indicate that on March 2, 2010, an employee named Rohitash S. Banerjee advised Mr. Morrow that the account was under review. Banerjee also noted that the Morrows intended to pay the trial amount by the end of the month. The Morrows continued to make monthly payments of $1,239.99 until February 2011.

¶ 17 On March 3, 2010, the day after Banerjee informed Mr. Morrow his account was under review, Bank of America issued another notice of intent to accelerate. On March 16, 2010, Bank of America sent a letter to the Morrows acknowledging receipt of the financial information they had submitted in December 2009. The letter, issued over ninety days after the Morrows had sent their financial information to Bank of America, also indicated that “receipt of your documentation starts the review process, which may take up to 45 days to complete.”

¶ 18 On April 22, 2010, Bank of America sent a form letter to the Morrows inviting them to apply for HAMP. The letter stated:

Once we receive all of your documents, we will validate your information and check your eligibility. You can expect to hear back from us within 10 business days. If you qualify for the program, you will enter a three month Trial Period Plan where you will make a monthly trial period payment for three months.... You will receive a permanent modification if you successfully make all of your Trial Period Plan payments and you are notified in writing that your modification has been approved.


As long as you comply with the terms of the Trial Period Plan, we will not start foreclosure proceedings. If foreclosure proceedings have already started, we will not conduct a foreclosure sale as long as you comply with the terms of the Trial Period Plan.

According to the Morrows, by the time they received this letter, they had already been making trial payments for at least four months.

¶ 19 On May 24, 2010, the Morrows filled out a Request for Modification and Affidavit as required under HAMP. The Morrows certified that the property was owner-occupied and they intended to reside there for the next twelve months. On May 26, 2010, Bank of America sent the Morrows a letter requesting additional documentation. On July 8, 2010, Bank of America sent the Morrows another notice of intent to accelerate. On August 6, 2010, the Morrows received another request for additional documentation, and on August 31, 2010, they received another notice of intent to accelerate. The Morrows claim each time they received a notice, they contacted Bank of America, and each time, a Bank of America employee instructed them to ignore the notice and continue making the modified payments.

¶ 20 In October 2010, the Morrows were informed their modification had been denied due to missing or incomplete paperwork. Mr. Morrow filed a complaint with the Office of the Comptroller of the Currency. Bank of America assigned a liaison, Luke Mai, to handle the Morrows' account. Mr. Morrow claims that in December 2010, Mai informed him over the phone that the modification had been approved. Mai does...

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