Odom v. Bank of N.Y. Mellon

• Decision Date: 10 March 2020
• Docket Number: DA 19-0013
• Court: Montana Supreme Court
• Parties: William R. ODOM, Plaintiff, Appellant, and Cross-Appellee, v. The BANK OF NEW YORK MELLON f/k/a The Bank of New York, as Trustee for the Certificate holders of CWMBS, Inc., CHL Mortgage Pass-Through Trust 2006-20, Mortgage Pass-Through Certificates, Series 2006-20, Defendants, Appellees, and Cross-Appellants.

399 Mont. 552

459 P.3d 225 (Table)

2020 MT 58 N

William R. ODOM, Plaintiff, Appellant, and Cross-Appellee,

v.The BANK OF NEW YORK MELLON f/k/a The Bank of New York, as Trustee for the Certificate holders of CWMBS, Inc., CHL Mortgage Pass-Through Trust 2006-20, Mortgage Pass-Through Certificates, Series 2006-20, Defendants, Appellees, and Cross-Appellants.

DA 19-0013

Supreme Court of Montana.

Submitted on Briefs: January 2, 2020

Decided: March 10, 2020

For Appellant: Sean S. Frampton, Frampton Purdy Law Firm, Whitefish, Montana

For Appellees: Chandler P. Thompson, Akerman LLP, Salt Lake City, Utah, Mark D. Etchart, Morgan M. Weber, Browning, Kaleczyc, Berry & Hoven PC, Missoula, Montana

Justice Ingrid Gustafson delivered the Opinion of the Court.

¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating Rules, this case is decided by memorandum opinion and shall not be cited and does not serve as precedent. Its case title, cause number, and disposition shall be included in this Court’s quarterly list of noncitable cases published in the Pacific Reporter and Montana Reports.

¶2 Plaintiff, Appellant, and Cross-Appellee William R. Odom (Odom) appeals a series of rulings issued by the Montana Eleventh Judicial District Court, Flathead County, along with the accompanying final judgment entered on November 30, 2018. The Bank of New York Mellon fka the Bank of New York, as Trustee for the Certificateholders of CWMBS, Inc., CHL Mortgage Pass-Through Trust 2006-20, Mortgage Pass-Through Certificates, Series 2006-20 (BNYM) cross-appeals several rulings made by the District Court. We affirm.

¶3 In 2006, Odom borrowed $1,170,000 from First National Bank of Montana to build a home on Little Bitterroot Lake near Marion. Odom signed a Deed of Trust encumbering the house and a portion of his 42 acres of land near the lake. Odom’s loan was initially serviced by Countrywide Home Loans, Inc., until Bank of America acquired Countrywide in 2008 and began servicing Odom’s loan. After building the house, Odom went through a divorce and learned his home was valued at roughly $600,000 less than the amount he borrowed. While seeking to get a principal reduction on his loan, Odom continued to make payments until September 2012. In September 2012, Odom stopped making payments and went into default. After defaulting, Odom primarily resided in California, but returned to visit the lake house a few times per year.

¶4 After Odom went into default, the Deed of Trust was assigned to BNYM. In August 2013, Bank of America contracted with Shellpoint Mortgage Services (Shellpoint)¹ to service Odom’s loan. Shellpoint informed Odom of its intent to begin foreclosure proceedings and Odom hired counsel. Shellpoint subcontracted with Mortgage Contracting Services (MCS) to inspect Odom’s property to confirm it was occupied and secure. MCS hired subcontractors to find local inspectors who would visually inspect the property.

¶5 Shellpoint’s inspectors visually inspected the property beginning in August 2013. For several months, the inspectors reported to Shellpoint that the property appeared to be occupied. In September 2014, however, inspector Larry Eslick (Eslick) visited the property and determined it was vacant after performing his inspection. Eslick then informed MCS that the property was vacant. MCS reviewed Eslick’s report and found it credible. Neither MCS nor Shellpoint contacted Odom regarding the vacancy report to determine whether the house was indeed vacant or abandoned.

¶6 In October 2014, MCS contractors secured the house. The contractors replaced the front lock, padlocked the garage, winterized the house, and drilled out internal locks on Odom’s office and workshop to inspect for possible hazards. The contractors did not change the lock on the back door. In addition, the contractors left a key to the front door in a coded lockbox and posted a number Odom could call to get the code. In November 2014, Eslick again reported the property as vacant after his inspection. In December 2014, Odom’s friend, Robert Mack (Mack), visited the house and discovered the lockbox. Odom’s counsel then obtained the code to the lockbox and Mack returned later in December to re-winterize the house.

¶7 In February 2015, Odom visited the house for the first time since it was reported as vacant and found the lockbox unlocked. Odom removed the lockbox and MCS’s locks, reinstalled his own locks, and then left after a few hours. Mack returned in late May of 2015 and de-winterized the house. Odom visited the house in mid-June of 2015 and discovered that the house had apparently been burglarized as several items were missing. Odom reported the burglary to police, but the burglary was not solved.

¶8 On April 27, 2015, BNYM filed its Complaint in this matter, seeking to foreclose on the entirety of Odom’s property. On July 22, 2015, Odom filed an Answer and Counterclaim, confessing judgment to the portion of land pledged in his Deed of Trust (but not the entirety of his property as sought in BNYM’s Complaint) and counterclaiming against BNYM for breach of contract, breach of the implied covenant of good faith and fair dealing, bad faith, and constructive fraud. After BNYM amended its complaint, Odom amended his answer and added further counterclaims for declaratory judgment, trespass, conversion, and negligence. The matter ultimately went to a week-long trial in March of 2018. The jury found that BNYM breached the deed of trust, that Odom suffered no damages, and that BNYM was not liable for trespass. Odom appeals and BNYM cross-appeals. Additional relevant facts will be discussed below as necessary.

Odom’s Appealed Issues

¶9 Odom identified six issues for appeal, which we restate as follows: (1) whether the District Court abused its discretion by excluding a portion of the testimony of Jean Knowles; (2) whether the District Court abused its discretion by denying Odom’s motion for a continuance; (3) whether the District Court erred by striking Odom’s contention number 11 from the Pretrial Order; (4) whether the District Court abused its discretion by precluding Odom from arguing that his loan servicer told him to stop paying his mortgage in order to qualify for a loan program; (5) whether the District Court erred by granting BNYM’s motion for judgment as a matter of law regarding Odom’s tortious bad faith claim; and (6) whether the District Court abused its discretion by not awarding Odom attorney fees.

¶10 "A district court retains broad discretion in determining whether evidence is relevant and admissible, and we will not overturn its evidentiary determinations absent an abuse of discretion." Schindler v. United Servs. Auto. Ass’n , 2011 MT 129, ¶ 29, 360 Mont. 528, 254 P.3d 583 (citation omitted). "A witness may not testify as to a matter unless evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter." M. R. Evid. 602.

¶11 Jean Knowles (Knowles) was BNYM’s first M. R. Civ. P. 30(b)(6) witness. Odom deposed Knowles in January of 2017. Knowles, a "foreclosure litigation specialist" from Shellpoint’s Mortgage Department, was unable to testify intelligently regarding numerous procedures of Shellpoint’s Collateral Management Department. After deposing Knowles, Odom filed the Defendant’s Motion for Default Judgment or, Alternatively, Second Motion to Compel,² arguing that Knowles "lacked knowledge on all subject matters identified" in the Amended Notice of Deposition.

¶12 On November 14, 2017, the District Court issued its Order on William Odom’s Motion for Default Judgment or, Alternatively, Second Motion to Compel. The District Court found that Knowles was not adequately educated or prepared for the deposition and granted Odom’s motion in part. The District Court denied Odom a default judgment, but granted his motion to compel and ordered BNYM to produce a new, competent Rule 30(b)(6) witness from Shellpoint’s Collateral Management Department and to pay Odom’s reasonable expenses incurred in making the motion. On January 24, 2018, Odom took the Rule 30(b)(6) deposition of Tracy Hall (Hall), a supervisor in the property preservation department of Shellpoint.

¶13 On February 23, 2018, BNYM filed Bank of New York Mellon’s Third Motion in Limine, which sought to exclude the testimony of Knowles for those subject matters which Odom obtained a supplemental deposition pursuant to the District Court’s November 14, 2017 Order. BNYM argued that Odom judicially admitted that Knowles was not competent to testify because she lacked personal knowledge, as required by M. R. Evid. 602, of Shellpoint’s inspection and property preservation procedures. The District Court granted BNYM’s motion in part, holding Knowles was able to testify "concerning Shellpoint’s structure and practices, as well as their databases and document storage platform," but that Knowles

is not qualified to testify concerning policies and procedures on preserving or inspecting a borrower’s property; abandonment; the frequency of inspecting a borrower’s property; hiring inspectors to inspect a borrower’s property; the protocol after an inspector determines that a borrower has abandoned his property; hiring a person to enter a borrower’s property after it is determined that the home is abandoned; the protocol once an agent enters the home of a borrower after it’s been determined that the home is abandoned; drilling locks within the home; and also the history of the inspections and preservation of Odom’s property, including communications regarding those inspections, the effort Shellpoint or MCS took to check the inspectors’ background and ensure they were trustworthy.

The District Court further ordered Odom to amend his deposition designation for Knowles to comply with the court’s ruling.

¶14 Odom argues BNYM is bound by the testimony of Knowles, as BNYM designated her as its original Rule 30(b)(6) witness before being required to produce Hall after Odom’s Motion...