Neel v. Fannie Mae
| Decision Date | 17 March 2014 |
| Docket Number | CIVIL NO. 1:12cv311-HSO-RHW |
| Court | U.S. District Court — Southern District of Mississippi |
| Parties | CHARLES NEEL and BONNIE NEEL PLAINTIFFS v. FANNIE MAE; RESIDENTIAL CREDIT SOLUTIONS, INC.; SAXON MORTGAGE SERVICES, INC.; CAPITAL LENDING, LLC; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; and JOHN DOES 1-10 DEFENDANTS |
BEFORE THE COURT is Defendant Saxon Mortgage Services, Inc.'s ("Saxon") Motion for Summary Judgment [147], Plaintiffs Charles and Bonnie Neel's Response in Opposition [187], and Saxon's Rebuttal [205]. Also before the Court is Plaintiffs' Motion for Partial Summary Judgment as to Saxon [159], Saxon's Response in Opposition [185], and Plaintiffs' Rebuttal [206]. Having considered the parties' submissions, the record, and relevant legal authority, the Court is of the opinion that Saxon's Motion should be granted in part as to Plaintiffs' claims for fraud, breach of fiduciary duty, violation of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601, et seq. ("RESPA"), violation of the Fair Debt Collection Practices Act, 15 U.S.C § 1692 ("FDCPA"), and violation of the Home Affordable Modification Program ("HAMP"), but denied in part as toPlaintiffs' claims for breach of contract and negligence. The Court further finds that Plaintiffs' Motion for Partial Summary Judgment should be denied.
This civil action arises from the servicing of a note executed by Plaintiffs on February 23, 2007 ("the Note") [147-1]. The record establishes beyond dispute the following facts. Payment of the Note was secured by a Deed of Trust covering Plaintiffs' home located at 7012 Red Bud Lane, Ocean Springs, Mississippi ("the Property").1 Dep. of Charles and Bonnie Neel ("Neel Dep.") 7:3-9, 33:4-9 [162-5]; Deed of Trust [147-2]. Capital Lending, LLC ("Capital Lending") was listed as the lender on the Note, and AmTrust was the initial servicer. Note ¶ 1, Neel Dep. 42:4-11.
At the time they executed the Loan, Plaintiffs also executed an Initial Escrow Account Waiver ("Initial Waiver"). Ex. 1 to Pls.' Mot. for Partial Summ. J. [159-1]. Pursuant to the terms of the Initial Waiver, Plaintiffs promised to pay the taxes and assessments on the Property and premiums for any and all property insurance required by Saxon. Id. In executing the Initial Waiver, Plaintiffs understood that their failure to pay insurance premiums "may result in [l]ender placement of insurance at a potentially higher cost . . . ." Id.
Pursuant to the terms of the Deed of Trust, Mortgage Electronic Registration Systems, Inc. ("MERS") was listed as the beneficiary of record, as nominee for Capital Lending, its successors, and assigns, of the Deed of Trust that securedpayment of the Note. Deed of Trust 3. The terms of both the Note and Deed of Trust permitted transfer of both instruments by the lender. Note ¶ 1, Deed of Trust § 20. In March 2010, the Note was transferred to Fannie Mae, and Saxon replaced AmTrust as the Loan servicer. Neel Dep. 46:10-15, 49:22-25.
Plaintiffs timely made their Loan payments in March 2010 and April 2010. Neel Dep. 96:5-14, Ex. 4 to Pls.' Mot. for Partial Summ. J. [159-4], and Ex. "T" to Saxon's Rebuttal Br. in Supp. of Mot. for Summ. J. ("Saxon's Rebuttal Br.") [205-1]. It is undisputed that Plaintiffs did not make the May or June payments. Ex. 4 to Pls.' Mot. for Partial Summ. J. [159-4]. In July 2010, Plaintiffs applied for a loan modification. Neel Dep. 50:14-23, 75:5-7. Plaintiffs were approved for a trial loan modification on August 13, 2010. Ex. "K" to Saxon's Mot. for Summ. J. [147-11]. After making payments pursuant to the terms of the trial modification, Saxon offered Plaintiffs a permanent modification, but Plaintiffs rejected this offer on January 30, 2011. Ex. "S" to Saxon's Mot. for Summ. J. [147-19]. Plaintiffs asked that the Loan be returned to its original terms. Neel Dep. 112:17-22. Shortly thereafter, Plaintiffs made a payment on February 7, 2011, to Saxon in the amount of $6,348.88 which, according to Plaintiffs, represented the escrow balance and late fees accrued during the modification. Id. at 109:10-110:5, 111:11-112:12.
With respect to the insurance Plaintiffs agreed to keep on the Property at all times, it is undisputed that Plaintiffs allowed the Property's flood insurance to lapse from March 22, 2010, to June 22, 2010. Dep. of Bernard Jay Patterson ("Patterson Dep.") 49:14-16 [147-9]. Saxon learned of this lapse, and, at some point during thelapse, obtained flood insurance for the Property. Ex. "V" to Saxon's Rebuttal Br. [205-3]. As a result of the lapse in flood insurance, Saxon forwarded Plaintiffs an "Annual Escrow Account Disclosure Statement" dated June 19, 2010. Ex. "F" to Saxon's Mot. for Summ. J. [147-6]. This document provided Plaintiffs with a statement of the balance of the Loan's escrow account and updated payment information. Id. On June 22, 2010, however, Plaintiffs purchased flood insurance for the Property. Neel Dep. 52:19-24. Approximately seven months after the lapse in flood insurance, Plaintiffs allowed the hazard insurance on the Property to lapse from February 5, 2011, through February 15, 2011. Patterson Dep. 49:5-13. Saxon learned of this lapse, and although Plaintiffs subsequently procured hazard insurance, Saxon obtained hazard insurance on the Property for the lapse period. Ex. "N" to Saxon's Mot. for Summ. J. [147-14].
In March 2011, Saxon adjusted Plaintiffs' Loan to its original terms as requested by Plaintiffs when they rejected the modification. Ex. "K" to Saxon's Mot. for Summ. J. [147-11]. As stated by Saxon, Plaintiffs made "sporadic" payments thereafter, and the Loan remained in default. Ex. "T" to Saxon's Rebuttal Br. [2051]. Plaintiffs deny that the Loan was in default and contend that once the Loan was returned to its original terms, the escrow account should have been closed. Neel Dep. 124:8-13. In their efforts to convince Saxon that the escrow account should be closed, Plaintiffs repeatedly forwarded proof of the flood and hazard insurance that they procured for the Property. Id. at 122:19-123:21.
On May 1, 2012, Saxon ceased servicing the Loan and Residential Credit Solutions, Inc. ("RCS") took over as the servicer of the Loan. Ex. "T" to Saxon's Rebuttal Br. [205-1]. To date, Plaintiffs' home has not been foreclosed upon by Saxon or any other entity. Neel Dep. 172:17-19.
Plaintiffs sued Saxon, Fannie Mae, MERS, Capital Lending, and RCS on September 12, 2012, in the Circuit Court of Jackson County, Mississippi.2 Complaint [1-2]. On October 12, 2012, the case was removed to this Court on the basis of diversity jurisdiction. Notice of Removal 1 [1]. Plaintiffs filed an Amended Complaint [38] on March 26, 2013, and a Second Amended Complaint [63] on May 16, 2013. The Second Amended Complaint appears to assert claims for breach of contract, negligence, breach of the duty of good faith and fair dealing, breach of fiduciary duty, modification of the Loan, a mortgage surrender, retraction of all negative credit reporting, conspiracy, fraud, a RESPA violation, and failure to provide Plaintiffs with "adequate disclosures" in violation of the FDCPA. Second Am. Compl. 1-11.
Construing the pleadings in Plaintiffs' favor, they appear to advance claims against Saxon for breach of contract, negligence, conspiracy, fraud, a violation of RESPA, a violation of the FDCPA, and a violation of HAMP. Id. at ¶¶ 14, 17, 18, 22, 23, 28, 29, 31, 32, and 35. Saxon moves for summary judgment as to all claimsasserted against it by Plaintiffs, and Plaintiffs seek summary judgment as to Saxon on their breach of contract, negligence, fraud, and breach of fiduciary duty claims.
Rule 56(a) of the Federal Rules of Civil Procedure states that a court shall grant summary judgment if the moving party demonstrates that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). A genuine dispute as to a material fact "exists 'if the evidence is such that a reasonable jury could return a verdict for the non-moving party.'" Mudrick v. Cross Equip. Ltd., 250 F. App'x 54, 56 (5th Cir. 2007) (quoting Crawford v. Formosa Plastics Corp., 234 F.3d 899, 902 (5th Cir. 2000)). To rebut a properly supported motion for summary judgment, the opposing party must show, with "significant probative evidence," that there exists a genuine issue of material fact. Hamilton v. Segue Software, Inc., 232 F.3d 473, 477 (5th Cir. 2000). "'If the evidence is merely colorable, or is not significantly probative,' summary judgment is appropriate." Cutting Underwater Technologies USA, Inc. v. Eni U.S. Operating Co., 671 F.3d 512, 517 (5th Cir. 2012) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). In considering a motion for summary judgment, the Court "may not make credibility determinations or weigh the evidence" and "must resolve all ambiguities and draw all permissible inferences in favor of the non-moving party." Total E & P USA Inc. v. Kerr-McGee Oil and Gas Corp., 719 F.3d 424, 434 (5th Cir. 2013) (citations omitted).
When the moving party bears the burden of proof on the relevant issues at trial, the moving party "must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor." Fontenot v. Upjohn Co., 780 F.2d 90, 94 (5th Cir. 1986) (emphasis in original). "The moving party bears a heavier burden when seeking summary judgment on a claim or defense on which it would bear the burden of proof at trial." Cooper v. Wal-Mart Transp, LLC, 662 F. Supp. 2d 757, 772 (S.D. Tex. 2009) (citing Fontenot, 780 F.2d at 94).
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