Zinetti v. Deutsche Bank Nat'l Tr. Co.
| Docket Number | Civil Action 19-1279-WCB |
| Decision Date | 03 August 2022 |
| Parties | DEAN ZINETTI and ANGELA K. ZINETTI, Plaintiffs, v. DEUTSCHE BANK NATIONAL TRUST COMPANY ET AL., Defendants. |
| Court | U.S. District Court — District of Delaware |
The plaintiffs (collectively, “the Zinettis”) and the defendants have each filed motions for summary judgment on various issues in this case. Dkt. Nos. 87, 90. The defendants have also filed a motion to exclude expert testimony under Daubert v. Merrill Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Dkt. No. 88. On July 29, 2022, I held oral argument on those motions. This order contains my disposition of each of those motions.[1]
I. Background
In 2019, the Zinettis brought this action against defendants Deutsche Bank National Trust Company (“Deutsche Bank”) and Ocwen Loan Servicing, LLC (“Ocwen”) in Delaware state court. The defendants subsequently removed the action to federal court based on the federal claims asserted in the complaint. Dkt. No. 1.
In their complaint, the Zinettis alleged violations of the federal Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq., and the federal Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., along with breach of contract and several other state law claims. Magistrate Judge Hall recommended that several of the Zinettis' claims be dismissed under Federal Rule of Civil Procedure 12(b)(6), Dkt. No. 25, and Judge Stark adopted her recommendation. Dkt. No. 29. The claims that remain in the lawsuit are the RESPA and FDCPA claims against Ocwen and a breach of contract claim against Deutsche Bank.
The underlying facts are somewhat complex. In 2007, the Zinettis obtained a home mortgage loan from Saxon Mortgage, Inc. (“Saxon”). Saxon initially serviced the loan and collected only the principal and interest due on the loan. In 2010, the Zinettis entered into a loan modification as part of the Home Affordable Modification Program (“HAMP”). The new arrangement modified the Zinettis' principal and interest payments, and it also established an escrow account for the payment of property taxes and insurance premiums. The HAMP modification provided that $799.62 from each monthly payment would be allocated to the principal and interest due on the loan, and the remainder of the payment would be allocated to escrow. Periodically the mortgage servicer would conduct an escrow analysis to determine how much money needed to be paid into the escrow account each month. That amount, added to the $799.62 principal and interest payment, became the “target” monthly payment amount.
Once the HAMP modification took effect, the Zinettis began making monthly payments that included amounts for principal interest, and escrow. In February and March 2010, the Zinettis made monthly payments in the amount of $1,525.35. From April 2010 to January 2011, the Zinettis made monthly payments in the amount of $1,142.77. And from February 2011 through June 2011, the Zinettis made monthly payments in the amount of $935.22. The Zinettis attempted to make payments in July and August 2011, but those payments were returned to the Zinettis and never credited to their mortgage account.[2] The Zinettis never re-submitted those two payments.
In May 2011, Saxon reversed each of the payments that the Zinettis had made on the mortgage since February 2010 and applied the funds from those payments to the Zinettis' suspense account, apparently to correct an error in the allocation of those payments to principal and interest. Dkt. No. 90-3 at 6 (rows 87-103); see also Dkt. No. 105 at 2. On May 17, 2011, before any of the Zinettis' payments were re-applied to their account, Saxon transferred the mortgage to Ocwen. After Ocwen began servicing the mortgage, it attempted to re-apply the funds that Saxon had placed into the Zinettis' suspense account to principal, interest, and escrow. Dkt. No. 90-3 at 6 (rows 105-113). However, Ocwen later realized that it had not properly re-applied the funds. Ocwen therefore reversed and re-applied the Zinettis' payments two additional times in September 2011. Id. at 7-8 (rows 125-198); see also Dkt. No. 105 at 2.
On September 2, 2011, Ocwen re-applied the Zinettis' earlier payments to principal, interest, and escrow for the final time. Dkt. No. 90-3 at 8 (rows 178-198). That re-application of payments applied $799.62 to principal and interest for each month in the period of February 2010 through October 2011. Once all the payments had been re-applied, Ocwen determined that the Zinettis had an escrow deficiency of $3,106.70.[3] Ocwen conducted an escrow analysis and increased the Zinettis' monthly target payment to $995.22 to account for that deficiency. Id. (row 202).
From that point forward, the Zinettis continued to make monthly payments on their mortgage account, but those payments fell short of the target payment amounts set by Ocwen. For example, the Zinettis made monthly payments of $935.22 between November 2011 and August 2012, each of which was $60.00 short of the target payment. In August 2012, Ocwen increased the target payment to $1,010.90, but the Zinettis continued to make monthly payments in the amount of $935.22.
Seeking to resolve what they describe as “accounting disputes” with Ocwen, the Zinettis filed a lawsuit against Ocwen in 2012. Dkt. No. 106-1 at 6. The Zinettis, Ocwen, and Deutsche Bank resolved that dispute by entering into a settlement agreement that took effect on March 6, 2013. The settlement agreement provided, among other things, that (1) Ocwen would perform an “accurate reconciliation of the [Zinettis'] escrow account”; (2) “[a]ny charges that were assessed [to the Zinettis] by reason of a claimed delinquency in payment shall be removed from the [mortgage] statement”; and (3) Ocwen would “update [its] credit reporting to state that the [Zinettis were] not in default on the Loan from May 2011” through March 6, 2013. Dkt. No. 87-3 at Apx250-51. The agreement further provided that the Zinettis released any additional claims that they had against Ocwen and Deutsche Bank at that time. Id. at Apx252-53.
On March 6, 2013, Ocwen completed the escrow analysis required by the settlement agreement and determined that the Zinettis' monthly payment should be $1,006.90. The Zinettis, however, continued to pay only $935.22 each month until May 2014, at which point they began making monthly payments in the amount of $1,000.00. Then, in September 2014, Ocwen conducted another escrow analysis and determined that the Zinettis' target monthly payment should be $1,138.45. In January 2015, the Zinettis increased their monthly payment amount to $1,100.00, but that amount continued to fall short of the target payment amount. In July 2015, the Zinettis' account went into default, and Ocwen began returning payments to the Zinettis. Ultimately, between February 2010 and July 2015, the Zinettis paid a total of approximately $4,600 less on their mortgage than Ocwen's target payments would have required them to pay.[4]
II. Legal Standard
The court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In the case of an issue on which the nonmoving party bears the burden of proof at trial, the party seeking summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed.R.Civ.P. 56(c) as of 1986). The burden on the nonmoving party in that situation can be satisfied by “showing,” that is, by “pointing out to the district court- that there is an absence of evidence to support the nonmoving party's case.” Id. at 325. If the moving party carries its burden, the nonmovant must “come forward with specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (cleaned up).
III. Defendants' Motion for Summary Judgment
I begin by addressing the defendants' motion for summary judgment. In their motion, the defendants allege that (1) the Zinettis' breach of contract claim fails because Ocwen did not bill them for an improper amount and because the claim is time-barred; (2) the Zinettis' FDCPA claims fail because Ocwen is not a debt collector and did not engage in improper debt collection activity, and because one of the claims is time-barred; and (3) the Zinettis' RESPA claim fails because Ocwen conducted a reasonable investigation of the Zinettis' claim that Ocwen's charges were unjustified.
The Zinettis' breach of contract claim alleges that Deutsche Bank breached the mortgage agreement (as modified under HAMP) by allowing Ocwen to improperly bill the Zinettis for the escrow amount due each month. The defendants argue that Ocwen properly billed the Zinettis throughout the relevant time period and that the claim is time-barred. For the reasons set forth below, the defendants' motion is GRANTED with respect to the Zinettis' breach of contract claim.
A core assertion underlying the Zinettis' breach of contract claim is that the mortgage loan was “current” at the time the 2013 settlement agreement was executed. In the Zinettis' view, the loan being “current” would mean that there were no delinquent payments or escrow deficiencies as of the time the settlement agreement was executed, i.e., there were no amounts due...
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