Nelson v. Nationstar Mortg., LLC
| Decision Date | 25 November 2020 |
| Docket Number | CIVIL ACTION 19-01005-WS-B |
| Citation | 504 F.Supp.3d 1307 |
| Parties | Clifford NELSON, et al., Plaintiffs, v. NATIONSTAR MORTGAGE, LLC, et al., Defendants. |
| Court | U.S. District Court — Southern District of Alabama |
Kenneth J. Riemer, Underwood & Riemer, Mobile, AL, Max Cassady, Jr., Cassady & Cassady PC, Fairhope, AL, for Plaintiffs.
Michael J. McKleroy, Jr., Akerman LLP, Dallas, TX, Ashley Elizabeth Calhoun, Akerman LLP, Denver, CO, Carl J. Emmons, Tiffany & Bosco, P.A., Jacob Andrew Kiser, McCalla Raymer Leibert Pierce, LLC, Birmingham, AL, Erin Edwards, Pro Hac Vice, Akerman LLP, Chicago, IL, for Defendants.
This matter comes before the Court on defendant Nationstar Mortgage LLC's Motion for Summary Judgment (doc. 56) and defendant Federal National Mortgage Association's Motion for Summary Judgment (doc. 59). Both Motions have been briefed and are now ripe.
Plaintiffs, Clifford Nelson and Susan Nelson, brought this action against defendants, Nationstar Mortgage LLC and Federal National Mortgage Association, based on allegations of mismanagement of plaintiffs' mortgage loan. Although the Nelsons allege an array of statutory and common-law causes of action against defendants, the central allegations animating the Amended Complaint are that Nationstar, as servicer of the Nelsons' mortgage loan and on behalf of Fannie Mae as lender, twice failed and/or refused to credit loan payoff amounts properly tendered by the Nelsons, larded the loan balance with unwarranted additional fees and charges, falsely reported the loan as delinquent to major credit bureaus, and wrongfully initiated foreclosure proceedings against the Nelsons' home.
Most of the facts upon which defendants' Rule 56 Motions rest are undisputed, although plaintiffs insist on multiple occasions in their briefing that further discovery is necessary to develop a more comprehensive record of the pertinent facts bearing on plaintiffs' claims as to which defendants seek summary judgment.2 The basic facts, viewed in the light most favorable to plaintiffs, are as follows: On January 27, 2012, nonparty Citibank, N.A., loaned the Nelsons the sum of $78,213.00 for the purchase of their primary residence on Pine Needle Drive in Mobile, Alabama. The loan was secured by a mortgage on the property, with the Nelsons as mortgagors and nonparty Mortgage Electronic Registration Systems, Inc. listed as mortgagee as a nominee for Citibank and its successors and assigns. (Doc. 56-1, Exh. B, PageID.408.) On April 12, 2017, Nationstar sent the Nelsons a letter notifying them that "[a]s of 04/01/17, CITIMORTGAGE, INC has transferred the servicing of your mortgage loan to Nationstar Mortgage." (Doc. 56-1, Exh. C, PageID.425.) According to Nationstar's records, Fannie Mae was the loan investor and owner of the promissory note during all times relevant to this dispute. (Doc. 56-1, PageID.396, ¶ 9.)3
In April 2019, the Nelsons decided to utilize savings to pay off their mortgage loan balance in its entirety. They requested and obtained a Mortgage Payoff Statement reflecting that the total amount needed to satisfy the loan in full was $37,194.66 and providing a May 13, 2019 "good through" date. (Doc. 56-1, Exh. D, PageID.432.) On or about April 26, 2019, Nationstar received a cashier's check from the Nelsons dated April 24, 2019, in the amount of $37,194.66, the exact figure that Nationstar had quoted them to pay off the loan in full. (Doc. 56-1, Exh. E, PageID.435.) Because of an internal error, Nationstar returned the cashier's check, unnegotiated, to the Nelsons on May 2, 2019, incorrectly explaining that Nationstar had been unable to process the payment because "Other: Loan paid off." (Doc. 56-1, Exh. G, PageID.440.) In other words, Nationstar mistakenly believed the Nelsons' loan had already been paid off, so it returned to the Nelsons the very cashier's check that the Nelsons had submitted to pay off such loan. To compound the confusion, Nationstar's internal records documented the loan as having been paid, which of course it had not.
For the next few months, nothing happened. No more payments were submitted by the Nelsons or received by Nationstar. No billing statements were sent by Nationstar or requested by the Nelsons. The summary judgment record does not reflect that the Nelsons ever reached out to Nationstar to resolve what they knew to be an obvious misunderstanding about the status of their loan, or that Nationstar contacted the Nelsons with instructions as to how to proceed. Rather, the record shows that the next communication between the parties took the form of a letter from Nationstar to the Nelsons dated September 16, 2019, nearly five months after the failed payoff snafu. In that letter, Nationstar wrote, (Doc. 56-1, Exh. I, PageID.444.) Nationstar demanded that the Nelsons pay the sum of $4,413.81 by October 21, 2019 to cure the default, and indicated that failure to do so may result in acceleration of the loan and initiation of foreclosure proceedings.
On October 1, 2019, the Nelsons sent a letter to Nationstar that they designated as a "Qualified Request and Notice of Servicing Error." (Doc. 56-1, Exh. J.) In the October 1 letter, the Nelsons emphasized the glaring mistake that Nationstar had made in processing their pay-off funds back in April 2019. They further indicated that "[w]e have not received monthly statements from you since May 2019" and that "[w]e are ready to re-send the original pay-off funds to you immediately," provided that Nationstar would furnish them "written confirmation ... that no further funds are required." (Id. , PageID.448.) On October 15, 2019, Nationstar responded in writing with a letter setting furth results of its internal investigation. In the October 15 letter, Nationstar indicated that "[w]e discovered an error originated with our cash team" as to the Nelsons' attempted April 2019 loan payoff, acknowledged that "monthly billing statements were not being generated," and observed that "the account is approximately six (6) payments delinquent." (Doc. 56-1, Exh. K, PageID.460.) Nationstar continued, "This letter notifies you failure to cure the loan by October 21, 2019, may result in foreclosure proceedings and sale of the property." (Id. , PageID.461.) In the very next paragraph, however, Nationstar stated that it was providing the Nelsons with a new payoff quote for $37,925.36 "good through November 6, 2019." (Id. )4 The Nelsons did not cure the loan by the October 21, 2019 deadline for potential foreclosure proceedings to commence. However, on October 24, 2019, the Nelsons responded with a letter to Nationstar enclosing a cashier's check in the amount of $37,925.36, but reflecting that "we are paying this amount UNDER PROTEST and reserve the right to take action against you for requesting funds in addition to the original payoff amount." (Doc. 56-1, Exh. L, PageID.477.)5
One might reasonably expect the Nelsons' October 24 letter and remittance of the full amount of the new payoff quote to resolve the matter, save perhaps for lingering discussions concerning the $730.70 differential between the April 2019 payoff quote ($37,194.66) and the October 2019 payoff quote ($37,925.36). Unfortunately, it did not. On November 4, 2019, Nationstar sent another letter to the Nelsons stating that while it had received the $37,925.36 cashier's check, "these funds are unapplied and are in a suspense account as they are not sufficient to pay the loan off." (Doc. 56-1, Exh. M, PageID.490.) The November 4 letter went on to explain for the first time that an additional $3,165.91 was necessary to pay the loan in full, "due to associated fees you have been charged relating to a home loan in default or foreclosure, which can include attorney fees, filing fees, and inspection fees." (Id. ) The November 4 letter also notified the Nelsons for the first time that Nationstar had referred their property to foreclosure on October 23, 2019 (two days after the cure deadline specified in the October 15 letter) and that "collection activity including foreclosure proceedings may continue at any time." (Id. , PageID.491.) Nationstar concluded the November 4 letter by stating that, upon the conclusion of its investigation, "we determined that overall, there were no errors on our part." (Id. ) Then on November 14, 2019, Nationstar's foreclosure counsel sent the Nelsons a letter notifying them that the loan had been accelerated, that the total amount due was $37,987.51 (a mere $62.15 more than the $37,925.36 that the Nelsons had remitted to Nationstar less than three weeks earlier but which Nationstar had refused to apply to the loan balance), that counsel were commencing foreclosure under the terms of the Mortgage, and that the foreclosure sale was scheduled for December 20, 2019. (Doc. 75-3, PageID.936.)6 Six days after that letter, on November 20, 2019, the Nelsons commenced this litigation by filing their Complaint against Nationstar and Fannie Mae. (Doc. 1.)7
Even after this action commenced, Nationstar moved forward with foreclosure proceedings as to the Nelsons' residence. The foreclosure sale was advertised in The Call News on three occasions in November and December 2019, with a published foreclosure sale date of December 20, 2019. (Doc. 56-1, Exh. O, PageID.511.) On December 11, 2019, Nationstar's foreclosure counsel notified the Nelsons' counsel that the foreclosure sale had been canceled at Nationstar's instruction. (Doc. 56-2, PageID.552.) Ultimately, in February 2020, Nationstar agreed to accept the Nelsons' payment of $37,194.66 in full satisfaction of the loan, in accordance with the April 2019 loan payoff...
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