ARELIS NUNEZ, Plaintiff,
v.
J.P. MORGAN CHASE BANK, N.A., Defendant.

Case No. 6:14-cv-1485-Orl-31GJK.United States District Court, M.D. Florida, Orlando Division.May 1, 2017.Arelis Nunez, Plaintiff, represented by Jeffrey Neil Golant, The Law Offices of Jeffrey N. Golant, P.A..

Arelis Nunez, Plaintiff, represented by Sean Xavier Foo, Law Offices of Jeffrey N. Golant, P.A., Ashley Renee Eagle, The Law Offices of Jeffrey N. Golant, P.A. & Kimberly Laura Sanchez, Community Legal Services of Mid-Florida, Inc..

J.P. Morgan Chase Bank, N.A., Defendant, represented by John Charles Matthews, Wargo & French, LLP, Rebecca A. Rodriguez, GrayRobinson, PA, Roland E. Schwartz, GrayRobinson, PA & Thomas H. Loffredo, GrayRobinson, PA.

ORDER

GREGORY A. PRESNELL, District Judge.

This matter comes before the Court, without hearing, on the Motion for Partial Summary Judgment (Doc. 86) filed by the Plaintiff, Arelis Nunez; the Response in Opposition (Doc. 92) filed by the Defendant, J.P. Morgan Chase Bank, N.A. (“Chase”); Nunez’s Reply thereto (Doc. 97); Chase’s Motion for Summary Judgment (Doc. 87); Nunez’s Response in Opposition (Doc. 93); and Chase’s Reply thereto (Doc. 98).

I. Background

A. Summary of the Facts

On June 29, 2006, Nunez financed the purchase of her home in Palm Bay, Florida with a mortgage in the amount of $156,000. (Doc. 24 ¶ 6.) Chase serviced Nunez’s mortgage up until September 16, 2014. (Id. ¶ 10.) Sometime in 2010, Nunez fell behind on her mortgage payments, and Chase began foreclosure proceedings. (Id. ¶ 12.) The state court entered a Final Summary Judgment of Mortgage Foreclosure on October 17, 2012, and set the property for auction on December 19, 2012. (Doc. 75-1.) In the meantime, Nunez applied for a mortgage modification. (Doc. 75-2 at 9.) While Chase reviewed Nunez’s application, it filed a motion to cancel the foreclosure sale. (Id.) The state court granted Chase’s motion on December 18, 2012, and postponed the foreclosure sale until March 20, 2013. (Doc. 75-3.)

In January 2013, Nunez and Chase entered into a trial modification agreement that required Nunez to make three trial payments. (Doc. 86-1 at 18:7-14.) Nunez made her first payment on February 18, 2013. (Doc. 86-1 at 19:21-20:3.) Despite the agreement and its receipt of Nunez’s first payment, Chase did not timely move to cancel the foreclosure sale and, instead, moved only after the sale had already been completed. (Doc. 75-4.) Predictably, the state court denied Chase’s motion. (Doc. 24-2 at 2.) Even so, Nunez submitted her next two trial payments on time, and on May 29, 2013, she executed the “permanent mortgage modification agreement” sent to her by Chase. (Doc. 86-1 at 19:21-20:3; Doc. 24-5 at 19; 24-1 at 5.)

On November 26, 2013, Chase filed its first motion to vacate the foreclosure sale. (Doc. 75-5.) The state court denied the motion on December 9, 2013, and Chase received a certificate of title to the property the following month. (Doc. 75-6.)

1. Nunez’s First Notice of Error Letter

On March 3, 2014, Nunez sent her first notice of error to Chase (“First NOE”). (Doc. 24-1.) The First NOE asserted that Chase made two errors: (1) that it failed to timely and properly advise the state court of the trial modification agreement, potentially avoiding foreclosure, and (2) that it erroneously returned payments that Nunez submitted under the modified loan agreement. (Doc. 24-1 at 2.) Nunez concluded her letter demanding that Chase investigate the alleged errors and take corrective action in accordance with the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-17 (“RESPA”), and its implementing regulation, 12 C.F.R. § 1024 (“Regulation X”).

Chase responded to the First NOE on March 13, 2014. (Doc. 24-2.) Chase began its response with the conclusion that there was no error. Despite its conclusion, Chase all but admitted that it failed to timely move to cancel or postpone the foreclosure sale. Specifically, Chase said:

On January 20, 2013, we again asked our foreclosure attorneys to request a postponement of the March 20, 2013, sale. We received confirmation on February 21, 2013, that the sale was still on hold.

On March 15, 2013, our foreclosure attorneys advised us that Brevard County required that a hearing to cancel the foreclosure sale must be scheduled 10 days prior to the scheduled sale. As that date had passed, we would have to proceed with the sale.

(Id. at 1-2.)

As to the alleged payments rejected in error, Chase explained that, when it received Nunez’s payments, “they could not be applied to her loan because the foreclosure sale had taken place.” (Id. at 2.) Thus, any received funds “were placed in a suspense fund” pending the outcome of Chase’s attempt to vacate the sale. (Id.) Once the state court denied Chase’s motion to vacate, Chase cancelled Nunez’s modification and applied her payments “to outstanding attorney’s fees and costs.” (Id.) And any payments Chase received after its rescission action failed were simply returned as insufficient. Chase concluded its response by notifying Nunez that it had begun another rescission effort and, if successful, it would review Nunez’s mortgage for modification a second time. (Id.)

Following Chase’s response, Nunez joined Chase in its April 4, 2014, motion to vacate the foreclosure sale and dismiss the action.^[1] (Doc. 75-9.) The state court granted the motion on April 21, 2014, and reversed the sale. (Doc. 75-10.) Meanwhile, Nunez had been sending the payments required under the purportedly-cancelled loan modification to her attorney to be held in escrow. (Doc. 94 ¶ 13.)^[2]

On June 4, 2014, Chase contacted Nunez’s attorney and informed her that the modification agreement could be reinstated, but it needed $3,450 to bring the loan current. Nunez’s attorney requested a letter stating the exact amount required by Chase, which she received on June 25, 2014.

Nunez’s attorney sent the required payment from the funds held for Nunez in escrow, and Chase received the payment on July 3, 2014. (Doc. 24-6 at 2.) But two weeks later, Chase sent two letters to Nunez stating its intent to accelerate the mortgage and begin foreclosure proceedings yet again. (Doc. 24-4 at 1, 5.) The letters also stated that Chase was holding over $5,000 of Nunez’s payments in a suspense account. (Id.) Chase’s stated reason for the acceleration, threatened foreclosure, and suspension of funds was its non-receipt of Nunez’s payments since July 2009. (Id.) Following these letters, Nunez, again, began sending her mortgage payments to her attorney to be held in escrow. (Doc. 94 ¶ 17.)

On August 15, 2014, Chase sent another letter that threatened acceleration and foreclosure and stated that the total payments held in suspense was now nearly $7,000. (Doc. 24-5 at 4.) In spite of these letters, Chase countersigned the loan modification agreement on August 18, 2014— more than one year after Nunez affixed her signature. (Doc. 24-5 at 11; Doc. 86-1 at 42:7-19.)

2. Nunez’s Second Notice of Error Letter

On September 8, 2014, Nunez sent her second notice of error letter (“Second NOE”) to Chase. Like the First NOE, the Second NOE identified two purported errors: (1) the confinement of Nunez’s payments to a suspense account, and (2) the continued failure to honor the loan modification agreement, as evidenced by Chase’s collection efforts. (Doc. 24-5 at 2.) Two days later, on September 10, 2014, Nunez filed the current action, and on September 16, 2014, Chase transferred the servicing of the loan to Bayview Loan Servicing, LLC (“Bayview”), who serviced the loan in conjunction with Manufacturers and Traders Trust Company (“M&T”). (Doc. 24-6 at 3.)

Chase sent its response to the Second NOE on October 27, 2014. (Id. at 1.) Chase, again, stated that it found no error in the servicing of Nunez’s loan and began with a summary of its findings:

• We responded timely to your previous Notice of Error.

• We applied the modification terms of the loan appropriately.

• Funds on the account listed on our August 15, 2014, letter were momentarily held in suspense during the process of correctly applying the terms of the modification to [Nunez’s] account.

• Corporate advances listing in our August 15, 2014, letter were listed on the account until they were resolved through the application of the terms of the loan modification.

(Id.) Following this list, Chase explained that the mortgage modification process was delayed due to the need to rescind the foreclosure sale. Specifically, Chase stated that, while rescission of the foreclosure sale was completed on May 15, 2014, Chase did not reverse the cancellation of the mortgage modification plan until August 18, 2014. Further, the loan updates were not completed until August 22, 2014. (Id.) Thus, Chase explained that Nunez’s payments—including the $3,450 sent by her attorney—were held in suspense until it completed loan updates and reinstated the mortgage modification. (Id. at 2.) Lacking, however, is any mention of Chase’s collection efforts.

3. Bayview and M&T

Not even a month after the servicing of her mortgage was transferred, Nunez began receiving debt collection letters from both Bayview and M&T. (Doc. 24-7 at 4, 18.) And, on October 8, 2014, Nunez sent a notice of error to Bayview detailing the correspondence that Nunez had with Chase and providing that, given Chase’s alleged, repeated misapplication of her funds, she was reluctant to remit payment until she could get assurances that her loan modification was in place and would be honored. (Id. at 2.) Neither Bayview nor M&T ever responded, and on February 18, 2016, while the current case was still pending, Bayview filed a foreclosure action against Nunez (Doc. 93-1).

B. Procedural History

Nunez filed her original Complaint (Doc. 1) with Chase as the only Defendant on September 10, 2014. Her claims were two-fold: that Chase failed to comply with RESPA when it responded to two notices of error sent by Nunez, and that Chase’s failure to execute its duties under RESPA was negligence per se. On December 29, 2014, Nunez filed her Amended Complaint (Doc. 24) adding a third count and additional RESPA claim against Bayview and M&T.

Chase filed a Motion to Dismiss (Doc. 31) on January 12, 2015, and Bayview filed a Motion to Dismiss (Doc. 34) on January 26, 2015. Both were granted by the Court on April 13, 2015. (Doc. 44.)

In granting said motions, the Court reasoned that Chase had complied with the letter and spirit of RESPA despite the apparent contradiction between Chase’s conclusions that no error occurred and the details of Nunez’s loan history. Essentially, the Court determined that, under the circumstances, Chase did the best it could to choose between RESPA’s binary response options: either state that it had erred and that the error was fixed, or state that there had been no error and explain why. Specifically, the Court found that a fair “assessment of the situation was that Chase reviewed the account, concluded that there was a problem (namely that the foreclosure proceeded when it should not have) and it was working to fix the problem.” (Doc. 44 at 7.) The Eleventh Circuit disagreed.

Upon review, the Eleventh Circuit concluded that the Court failed to recognize another set of Nunez’s allegations and construed facts favorably to Chase, rather than Nunez. Specifically, the Eleventh Circuit found that, “Throughout this case, Nunez has clearly alleged that Chase failed to properly implement and honor the loan-modification agreement, and has attached documents that support this claim.” Nunez v. J.P. Morgan Chase Bank, N.A., 648 F. App’x 905, 909 (11th Cir. 2016). The Eleventh Circuit continued:

Viewed in the light most favorable to her, Nunez has alleged that her home was wrongly foreclosed on despite a valid loan-modification agreement, simply because Chase failed to timely request postponement of the foreclosure. Chase later purported to cancel its loan-modification agreement with her because it could not rescind the wrongful foreclosure. Even though it eventually did rescind the foreclosure and accept payment from Nunez to renew the loan-modification agreement, Chase continued to shower Nunez with letters claiming she was in default and threatening another foreclosure. When she repeatedly notified Chase that these errors had occurred, Chase flatly denied any error. Nunez’s allegations—each supported by attachments—are not reflected in the district court’s conclusions. Her claim that Chase failed to conduct a reasonable investigation into or correct its errors as required by RESPA rises above the level of speculation.

Id. at 910 (citation omitted). Thus, on April 22, 2016, the Eleventh Circuit reversed the Court’s decision to grant Chase and Bayview’s motions, and remanded for further proceedings. Id.

Shortly thereafter, both M&T and Bayview settled with Nunez (Doc. 73), and Bayview voluntarily dismissed its foreclosure action on July 29, 2016. (Doc. 93-2.)

II. Standard of Review

A party is entitled to summary judgment when it can show that there is no genuine issue as to any material fact. Fed. R. Civ. P. 56(c); Beal v. Paramount Pictures Corp., 20 F.3d 454, 458 (11th Cir. 1994). Which facts are material depends on the substantive law applicable to the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party bears the burden of showing that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991); Watson v. Adecco Employment Servs., Inc., 252 F. Supp. 2d 1347, 1351-52 (M.D. Fla. 2003). In determining whether the moving party has satisfied its burden, the court considers all inferences drawn from the underlying facts in a light most favorable to the party opposing the motion, and resolves all reasonable doubts against the moving party. Anderson, 477 U.S. at 255.

When a party moving for summary judgment points out an absence of evidence on a dispositive issue for which the non-moving party bears the burden of proof at trial, the non-moving party must “go beyond the pleadings and by [its] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Celotex Corp., 477 U.S. at 324-25 (internal quotations and citations omitted). Thereafter, summary judgment is mandated against the non-moving party who fails to make a showing sufficient to establish a genuine issue of fact for trial. Id. at 322, 324-25; Watson, 252 F. Supp. 2d at 1352. The party opposing a motion for summary judgment must rely on more than conclusory statements or allegations unsupported by facts. Evers v. Gen. Motors Corp., 770 F.2d 984, 986 (11th Cir. 1985) (“conclusory allegations without specific supporting facts have no probative value”) (citations omitted); Broadway v. City of Montgomery, Ala., 530 F.2d 657, 660 (5th Cir. 1976).

III. RESPA and Regulation X

A. Legal Standard

“RESPA is a consumer protection statute that regulates the real estate settlement process.” Hardy v. Regions Mortg., Inc., 449 F.3d 1357, 1359 (11th Cir. 2006). “RESPA prescribes certain actions to be followed by entities or persons responsible for servicing federally related loans, including responding to borrower inquiries.” McLean v. GMAC Morg., Corp., 398 Fed. App’x 467, 471 (11th Cir. 2010). One such inquiry is a qualified written request.^[3] Upon receipt of a qualified written request, a servicer must “respond by fixing the error, crediting the borrower’s account, and notifying the borrower; or by concluding that there is no error based on an investigation and then explaining that conclusion in writing to the borrower.” Renfroe v. Nationstar Mortg., LLC, 822 F.3d 1241, 1244 (11th Cir. 2016) (citing 12 U.S.C. § 2605(e)(2); 12 C.F.R. § 1024.35(e)(1)(i)).

On January 10, 2014, new regulations implementing RESPA were promulgated by the Consumer Financial Protection Bureau pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”). PL 111-203, July 21, 2010, 124 Stat. 1376 (2010); 12 C.F.R. § 1024. This new regulation, Regulation X, clarified the duties owed by servicers of federally-related mortgages to borrowers after receiving a qualified written request or notice of error. Pertinent to the current action,

a servicer must respond to a notice of error by either:

(A) Correcting the error or errors identified by the borrower and providing the borrower with a written notification of the correction, the effective date of the correction, and contact information, including a telephone number, for further assistance; or

(B) Conducting a reasonable investigation and providing the borrower with a written notification that includes a statement that the servicer has determined that no error occurred, a statement of the reason or reasons for this determination, a statement of the borrower’s right to request documents relied upon by the servicer in reaching its determination, information regarding how the borrower can request such documents, and contact information, including a telephone number, for further assistance.

12 C.F.R. § 1024.35(e)(1)(i).

Thus, a servicer responding to a notice of error under 12 C.F.R. § 1024.35(e)(1)(i)(B) must fulfill two requirements. It must (1) conduct a reasonable investigation, and (2) provide a written response stating that it found no error, the reasons for its conclusion, the documentation it relied upon to reach that conclusion, and other specific disclosures. Id.

B. Analysis

As an initial matter, much of the evidence before the Court is the same as that which was before the Court when it granted Chase’s Motion to Dismiss and the Eleventh Circuit’s reversal thereof. Namely, Nunez’s First and Second NOEs, Chase’s responses, the loan modification agreement, collection letters sent from Chase to Nunez, and the notice of error letter Nunez sent to Bayview. (Doc. 24-1, 24-2, 24-3, 24-4, 24-5, 24-6, 24-7.) Thus, the Court reviews this evidence in light of the Eleventh Circuit’s decision.

Chase presents two arguments in its motion (Doc. 87). First, Chase argues that the undisputed facts show that it fully complied with RESPA and Regulation X—specifically, 12 C.F.R. § 1024.35(e)(1)(i)(B). (Id. at 16.) Second, Chase argues that Nunez has failed to provide sufficient evidence of damages. In her motion (Doc. 86), Nunez argues that Chase did not provide the “reason or reasons” that it found no error in its second RESPA response, and, therefore, violated RESPA as a matter of law.

1. Were Chase’s Investigations Reasonable?

As detailed above, Nunez sent two notices of error to Chase; one on March 3, 2014, and another on September 8, 2014. It is undisputed that both of these notices triggered Chase’s obligations under RESPA and Regulation X. Chase argues that the deposition testimony of its corporate representative and the detail of its responses show that Chase satisfied all of its obligations. However, it is clear that there remains a genuine question of fact as to whether Chase’s investigation was reasonable—especially in light of the Eleventh Circuit’s decision. Nunez v. J.P. Morgan Chase Bank, N.A., 648 F. App’x 905 (11th Cir. 2016).

Chase’s corporate representative testified that Chase “would have” investigated these notices of error by reviewing the pay history and notes in its servicing system, as well as court filings in the foreclosure proceeding. (Doc. 86-2 at 40-41.) She also testified that she knew that Chase followed its typical investigatory procedure in this case “[b]ecause of the detail in the responses date by date . . . responding to each of the specific complaints or questions.” (Id. at 41.) The Court agrees that the detail of Chase’s responses shows that it conducted an investigation into the alleged errors, but it does not necessarily follow that the investigation was reasonable.

Nunez’s First NOE raised two errors: (1) Chase’s alleged failure to notify the state court of the trial modification agreement, thus, failing to postpone the foreclosure sale, and (2) its rejection of payments that Nunez made under the trial modification agreement. Chase responded, concluding that there was no error and explained that it “requested that the foreclosure sale be postponed, but the judge did not approve [its] request.” (Doc. 24-2.) What Chase left out was that it only moved to postpone or cancel the sale after it had already taken place. (Doc. 75-4.)

Indeed, the record shows that Chase received Nunez’s first trial payment on February 18, 2013—over a month before the sale was to take place. Yet Chase waited until after the sale was completed to file its motion to postpone the sale.^[4]Thus, Chase’s conclusion that no error occurred is contradicted by very court filings that Chase’s corporate representative testified would be relied upon to investigate Nunez’s claims. And such an incongruous conclusion is contrary to “transparency and facilitation of communication” which RESPA was enacted to promote. Bates v. JPMorgan Chase Bank, NA, 768 F.3d 1126, 1135 (11th Cir. 2014).

The Second NOE raised two errors: (1) the improper suspension of Nunez’s payments, and (2) the continued failure to honor the loan modification agreement, as indicated by Chase’s collection efforts. Chase again responded that no error occurred and then provided the timeline of mortgage modification and how it related to the foreclosure rescission action. Chase also explained why the funds were held in suspense. Apparently, the cancellation of the mortgage modification had to be reversed before Nunez’s payments could be applied. Therefore, the payments received were held in suspense until Chase completed the necessary entries on August 22, 2014.

But Chase never directly addressed how it was honoring the loan modification agreement despite its acceleration and warning letters. Instead, Chase explained that it received Nunez’s July 3, 2014, payment, but the modification process “was delayed while [Chase] reversed the plan cancellation.” (Doc. 24-6 at 2.) Presumably, Chase meant that the acceleration and foreclosure warnings were only sent because account entries had not yet been performed.^[5] But such a presumption leads to a conclusion that the collection efforts were, in fact, erroneous—not to the conclusion that no error occurred.

Certainly, it is possible that Chase’s investigations were reasonable despite its contradictory conclusions. But a rational trier of fact might expect a reasonable conclusion from a reasonable investigation.

2. Did Chase’s Second Written Response Comply with RESPA?

Besides a reasonable investigation, 12 C.F.R. § 1024.35(e)(1)(i)(B) requires that servicers issue a written notification containing “a statement of the reason or reasons” for its determination that no error occurred.^[6] Nunez argues that Chase’s second response violated RESPA as a matter of law because Chase did not provide the “reason or reasons” that it found no error. 12 C.F.R. § 1024.35(e)(1)(i)(B).

Nunez relies on the deposition testimony of Chase’s corporate representative for support. The particular portion is related to an acceleration and foreclosure letter dated September 11, 2014. (Doc. 86-2 at 23:20-24:8.) Namely,

Q. Was the September 11th, 2014 letter sent in error?

. . .

A. No, because the August 1st and September 1st payments were still due.

Q. How is threatening foreclosure in September consistent with honoring the loan modification that you contend became effective in late August? Can you explain that to me?

. . .

A. The loan modification was put in place in August, August 18th. However, the payment for August 1st and September 1st were still not paid. So the loan was delinquent again.

(Id. at 25:5-20.) In other words, Chase’s representative testified that the September 11, 2014, acceleration and foreclosure letter was not erroneous, but, rather, consistent with honoring the loan modification agreement because the loan was delinquent. Nunez argues that this must mean that the “reason” Chase found no error was the delinquent status of the loan—a reason that was absent from Chase’s second RESPA response. Therefore, Nunez posits, Chase violated RESPA as a matter of law.

Nunez’s argument is compelling. Chase likely should have mentioned the loan’s delinquency, and a reasonable investigation would have uncovered that problem. But Nunez sent her Second NOE on September 8, 2014, two days before the September 11 letter referenced above, and therefore, the September 11 letter could not be included among the errors Nunez complained of in her Second NOE. Further, the remainder of the Chase representative’s testimony is consistent with the “reasons” supporting the conclusion it reached in its second RESPA response. Namely, Chase’s representative testified that, due to the need to reverse the cancellation of the mortgage modification, account “adjustments were not made until August 18th.” (Doc. 49 at 47:4-8.) The collections letter attached to Nunez’s Second NOE reflected “amounts due that were based on the pre-loan modification adjustment numbers that were in the system.” Thus, Chase’s representative relies on the timing of entries for her support that no error occurred, just as Chase said in its second RESPA response.

Therefore, taking all inferences in a light supporting Chase, a reasonable jury could find that Chase provided the reason or reasons that it found no error. And, thus, Nunez’s motion will be denied.

3. Has Nunez Provided Sufficient Evidence of Damages?

“Damages are `an essential element’ of a RESPA claim.” Lage v. Ocwen Loan Serv. LLC, 839 F.3d 1003, 1011 (11th Cir. 2016) (quoting Renfroe, 822 F.3d 1241, 1246 (11th Cir. 2016)).

There are two types of available damages under RESPA: (1) actual damages sustained as a result of the RESPA violation and (2) “any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $2,000.” 12 U.S.C. § 2605(f)(1). Nunez has alleged that she is entitled to both actual and statutory damages.

(a) Actual Damages

Chase argues that it is entitled to summary judgment because Nunez has failed to provide sufficient evidence of damages. Nunez alleges that she suffered actual damages in the form of (1) emotional distress, and (2) attorneys’ fees and related expenses. (Doc. 93 at 11.) To recover actual damages, a plaintiff must “present specific evidence to establish a causal link between the financing institution’s violation and [her] injuries.” McLean, 398 F. App’x at 471.

First, Nunez’s deposition testimony shows that she started suffering from depression after losing her job during the 2009 recession. (Doc. 95-1 at 74.) Nunez began feeling better after she was prescribed medication in 2010, but relapsed when Chase cancelled her modification. (Id. at 76.) She also testified that her emotional distress continued after Chase transferred service to M&T and Bayview because “nothing ha[d] been resolved.” (Id. at 80.) Thus, a reasonable jury could find that if Chase had fully complied with RESPA, Nunez would have had the information to solve any remaining problems with her loan and would have avoided foreclosure and collection notices from Chase, Bayview, and M&T; and any continued emotional distress. (Doc. 24-4 at 1, 5, 6; Doc. 24-7 at 4, 18.)

Second, Nunez claims she was damaged in the form of attorneys’ fees, costs, and related expenses flowing from both her continued effort to resolve the errors brought to Chase’s attention in her Second NOE, and the subsequent foreclosure action brought by Bayview. Nunez was represented by both pro bono and for-profit counsel throughout her interactions with Bayview and M&T. A reasonable jury could find that if Chase had complied with RESPA, Nunez would not have required further advice of counsel. Therefore, Nunez has presented sufficient evidence of actual damages to withstand a motion for summary judgment.

(b) Statutory Damages

Nunez also claims that she is entitled to statutory damages because “Chase’s repeated failures to properly respond to both of [her notices] are part of Chase’s pattern and practice of noncompliance with the RESPA/Regulation X error resolution procedures.” (Doc. 24 ¶ 33.) “In order to recover statutory damages [under RESPA], the plaintiff must show `a pattern or practice of noncompliance.'” McLean, 595 F. Supp. 2d at 1365. The term “pattern or practice of noncompliance” is interpreted within the usual meaning of the words and “suggests a standard or routine way of operating.” Id. (citations and quotation omitted). To establish the above, “a plaintiff must allege some RESPA violations `with respect to other borrowers.'” Renfroe, 822 F.3d at 1247 (quoting Toone v. Wells Fargo Bank, N.A., 716 F.3d 516, 523 (10th Cir. 2013)). “Though there is no magic number of violations that create a `pattern or practice of noncompliance,’ courts have held that two violations of RESPA are insufficient to support a claim for statutory damages.” Id. (quoting Kapsis v. Am. Home Mortg. Serv. Inc., 923 F. Supp. 2d 430, 445 (E.D.N.Y. 2013)). But, “allegations of five RESPA violations have been deemed adequate to plead statutory damages.” Id. (citing Ploog v. HomeSide Lending, Inc., 209 F. Supp. 2d 863, 868-69 (N.D. Ill. 2002)).

The entirety of the evidence that Nunez relies on to establish statutory damages are three unrelated cases where Chase defended against RESPA claims. Two were pending adjudication when Nunez filed her Amended Complaint (Doc. 24), but have since been dismissed with no finding that Chase violated RESPA. (Doc. 93-4; Doc. 93-5.)^[7] In the third, Marias v. Chase Home Financing, LLC, the court did, indeed, find that Chase violated RESPA. 24 F. Supp. 3d 712, 731 (S.D. Ohio).

Thus, outside of her own allegations, Nunez relies on only a single RESPA violation to support her claim for statutory damages. A single RESPA violation is inadequate to show a pattern or practice of noncompliance with RESPA. Renfroe, 822 F.3d at 1247. Therefore, Chase is entitled to summary judgment with respect to Plaintiff’s pattern or practice of noncompliance claim.

IV. Negligence Per Se

“A negligence per se claim [is] appropriate under Florida law when there is a violation of a `statute which establishes a duty to take precautions to protect a particular class of persons from a particular injury or type of injury.'” Liese v. Indian River Cty. Hosp. Dist., 701 F.3d 334, 353 (11th Cir. 2012) (quoting deJesus v. Seaboard Coast Line R, Co., 281 So. 2d 198, 201 (Fla. 1973)). Nunez’s negligence per se claim is dependent on a finding that Chase breached the duties imposed on it by RESPA. As described above, a reasonable jury could find that Chase violated RESPA and that Nunez suffered damages as a result. Therefore, Nunez’s negligence per se claim stands.

V. Conclusion

In summary, the Court finds that Nunez has presented sufficient evidence on which a reasonable jury could find that Chase violated RESPA and that she was damaged as a result. Thus, Nunez’s RESPA and negligence per se claims survive Chase’s motion. Additionally, a reasonable jury could find that Chase provided the reason or reasons supporting its conclusion of no error in its second RESPA response. Therefore, Nunez’s motion for summary judgment as to Chase’s second RESPA response will be denied.

It is, therefore, ORDERED that

(1) Chase’s Motion for Summary Judgment (Doc. 87) is GRANTED as to Nunez’s claim for statutory damages under RESPA, but DENIED otherwise; and

(2) Nunez’s Motion for Partial Summary Judgment (Doc. 86) is DENIED.

DONE and ORDERED.

[1] Curiously, the motion and resulting order cite the “Permanent Loan Modification” as the reason for dismissal, thus, contradicting the purported reason for the return of Nunez’s payments—i.e., cancellation of the loan modification. (Doc. 75-9; Doc. 75-10.)

[2] In her Response to Chase’s Motion for Summary Judgment (Doc. 93), Nunez relies on the affidavit of Alicia Magazu (Doc. 94), the pro bono attorney that represented Nunez at various times relevant to this case. Chase has moved to strike the affidavit raising two objections: (1) that the Affidavit contains and attaches as exhibits inadmissible hearsay and (2) that the affidavit covers information not within the affiant’s personal knowledge. (Doc. 99.) The Court has not relied on any portions of the affidavit that Chase complains of, and therefore, the motion has been denied. (See Doc. 101.)

[3] 12 U.S.C. § 2605(e)(1)(b)(“a qualified written request shall be a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that— (i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and (ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower”).

[4] The timestamp on Chase’s Motion to Cancel Foreclosure sale in the underlying foreclosure action clearly shows that it was filed on March 21, 2013. (Doc. 75-4.) The foreclosure sale took play on March 20, 2013. (Doc. 24-2 at 2; Doc. 75-3.)

[5] Indeed, even Chase’s corporate representative seemed to be confused as to why the acceleration and foreclosure warning letters were sent, stating, “I don’t know why those letters went out.” (Doc. 86-1 at 44:24.) But soon after her admission of ignorance, she came to a similar conclusion as the Court, stating, “Well, at the time that this letter went out on August 15th, the adjustments weren’t made until they started being made on August 18th through the 22nd.” (Id. at 45:7-11.)

[6] A servicer’s written notification must also contain “a statement of the borrower’s right to request documents relied upon by the servicer in reaching its determination, information regarding how the borrower can request such documents, and contact information, including a telephone number, for further assistance.” 12 C.F.R. § 1024.35(e)(1)(i). But these requirements are not at issue in the current case.

[7] JPMorgan Chase Bank, N.A., v. Lewis, No. 013-CA-0118, (Fla. 20th Cir. Ct. Dec. 28, 2015) (dismissed); Hernandez v. JP Morgan Chase Bank N.A., 1:14-cv-24254, (S.D. Fla. Sept. 9, 2016) (dismissed).

 

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EVERY SUNDAY
3:00 PM HAWAII
6:00 PM PACIFIC
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ON KHVH-AM
(830 ON THE DIAL)
AND ON
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The Raw Story-

The ongoing saga of lead-contaminated water in Flint, Michigan, got yet another layer on May 4, when 8,002 residents received foreclosure notices for failure to pay their water bills, according to the Washington Post.

The notices came a few weeks after the city ended a program that assisted residents in paying bills for their contaminated water.

According to letters like this one sent to a local news station, residents will have until February 2018 to pay their past due water bills, but many refuse to pay for water that they believe remains contaminated. There have been a dozen deaths in Flint from Legionnaire’s disease believed to be caused by the contaminated water, in addition to dozens more linked to pneumonia outbreaks that experts believe was cause by the contamination, as well.

[RAW STORY]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

NY POST-

The Justice Department’s investigation into Wall Street’s rigging of the $14 trillion Treasury market is zeroing in on Goldman Sachs — just as the bank’s former employees have taken over the agency that’s at the center of the probe, The Post has learned.

Goldman Sachs won almost all auctions for US Treasury bonds from 2007 to about 2011, a remarkable winning streak that came despite safeguards established by the Treasury to keep bidding competitive, sources familiar with the investigation said.

At the center of the case are chats and emails believed to show Goldman traders sharing sensitive price information with traders at other banks — a sign of possible price fixing and collusion, according to sources familiar with the investigation.

[NY POST]

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STANLEY P. BERMAN, Plaintiff and Appellant,
v.
HSBC BANK USA, N.A., Defendant and Respondent.

No. C081487.Court of Appeals of California, Third District, Nevada.Filed April 11, 2017.Appeal from the Superior Court No. CU14080886.

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115

ROBIE, Acting P. J.

When defendant HSBC Bank USA, N.A. (HSBC) notified plaintiff Stanley P. Berman in writing that HSBC was denying his application for a loan modification, HSBC told him he had 15 days to appeal the denial. Under the law, however, Berman actually had 30 days to appeal. (See Civ. Code,^[1] § 2923.6, subd. (d) [“[i]f the borrower’s application for a first lien loan modification is denied, the borrower shall have at least 30 days from the date of the written denial to appeal the denial”].)

Berman brought this action for injunctive relief under section 2924.12 on the theory that “the denial letter . . . [wa]s a material violation of sub[division] (d) [of section 2923.6] in that [the letter] only provide[d] fifteen days for appeal.” The trial court sustained HSBC’s demurrer to Berman’s complaint without leave to amend based on the conclusion that Berman had not alleged a violation of section 2923.6. On Berman’s appeal, we conclude the trial court erred: the denial letter constituted a material violation of section 2923.6 because it substantially misstated the time Berman was allowed by the law to appeal HSBC’s denial of his application for a loan modification. Moreover, we find no merit in any of HSBC’s alternate arguments for affirming the trial court. Accordingly, we will reverse.

FACTUAL AND PROCEDURAL BACKGROUND

Because this appeal arises from the sustaining of a demurrer, we summarize the facts alleged in the complaint, accepting as true the properly pleaded factual allegations. (See Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 435.)

Berman is the record owner of the property located at 15342 Carrie Drive, Grass Valley, California, where he resides. Berman defaulted on his home mortgage and a notice of default was recorded. Sometime prior to September 16, 2014, Berman submitted a complete application for a loan modification to HSBC, asserting a significant change in financial condition. By letter dated September 18, 2014, HSBC denied Berman’s request for a loan modification. HSBC’s denial letter stated that Berman had until October 2, 2014, (i.e., 15 days) to file an appeal of the decision.^[2]

On December 2, 2014, Berman commenced this action against HSBC by filing a complaint seeking injunctive relief. In his complaint, he asserted that because HSBC’s denial letter gave him only 15 days to appeal the denial, when section 2923.6, subdivision (d) provides for an appeal period of at least 30 days, the denial letter was “in violation of sub[division] (d) in that it only provides fifteen days for appeal [and] thus the requirements of sub[division] (f) describing the matter mandated to be included in the denial letter have not be[en] followed and the trustee sale can not [sic] legally proceed.”^[3] He further asserted that “[n]o significant injury to Defendants will occur through the granting of the injunction as all they would need to do is issue an amended denial letter which complies with the 30 day appeal requirement and then they would be legally entitled to conduct a trustee’s sale once that period had expired.” Thus, it was apparent that Berman was seeking injunctive relief that would require HSBC to issue a new denial letter before HSBC could proceed to notice and conduct a trustee’s sale.

The day after he filed his initial complaint, Berman filed a first amended verified complaint. The only difference between the two complaints was that the amended complaint was verified.

In July 2015, HSBC demurred to the first amended complaint, arguing (among other things) that “[s]ection 2923.6 only prohibits the recording of a notice of default or notice of sale, or conducting a sale, unless certain requirements are met,” and HSBC “did[] not actually conduct[] the sale within [the appeal] period. In fact, to date, the sale has not occurred in the six months after the September 18, 2014 Denial Letter.” The trial court sustained the demurrer with leave to amend, reasoning that “no violation of [subdivision (e) of section 2923.6 wa]s alleged” because Berman did not allege that HSBC “recorded a Notice of Sale or conducted a trustee’s sale prior to 31 days after [he] was notified in writing of the denial of the modification.”^[4]

On August 31, 2015, Berman filed a second amended complaint. The factual allegations in this complaint are similar in all relevant respects to the allegations in the first amended complaint (and the original complaint). In the second amended complaint, however, Berman asserted for the first time that “the denial letter . . . is a material violation of subdivision (d) in that it only provides fifteen days for appeal.” Berman further asserted that he was entitled to an injunction under section 2924.12 enjoining HSBC from conducting a trustee’s sale until the court determined that the violation was corrected.^[5]

HSBC demurred to the second amended complaint, again asserting that it had not violated section 2923.6 because it had not conducted a trustee’s sale within the statutory appeal period. The trial court agreed and sustained the demurrer without leave to amend because again Berman did not allege that HSBC “recorded a Notice of Sale or conducted a trustee’s sale prior to 31 days after [he] was notified in writing of the denial of the modification.” With respect to Berman’s reference to section 2924.12, the court noted that “that provision allows for injunctive relief if there is a material violation of another provision” and “[h]ere, Plaintiff has not demonstrated a violation of another provision.” The trial court subsequently entered judgment in favor of HSBC.

Berman timely appealed.

DISCUSSION

A demurrer tests the legal sufficiency of the complaint. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) We review the complaint to determine whether it alleges facts sufficient to state a cause of action. (Ibid.) For purposes of review, we accept as true all material facts alleged in the complaint, but not the contentions, deductions or conclusions of fact or law. (Ibid.)

Oddly enough — given that he acknowledges the issue for us to decide is whether the complaint alleges facts sufficient to state a cause of action — in the page and one-half he devotes to argument in his opening brief, Berman does not address that issue at all. Instead, he argues that HSBC “never raised the issue of materiality in its demurrer, materiality was never briefed by the parties, yet the Court’s ruling was based on its sua sponte consideration of the issue of materiality.” He contends this was “clear error and grounds for reversal.” He further asserts that he alleged materiality in his complaint when he alleged that the denial letter was a material violation of subsection (d) of section 2923.6.

Not only does Berman’s argument fail to address the only issue that really matters — whether his complaint alleges facts sufficient to state a cause of action — his argument is based on an entirely erroneous premise — namely, that the trial court’s sustaining of HSBC’s demurrer “was based on its sua sponte consideration of the issue of materiality.” That is simply not the case. It is true the trial court noted that in his second amended complaint, Berman sought injunctive relief under section 2924.12, which allows for injunctive relief if there is a “material violation” of any of various statutes, including section 2923.6, but the conclusion the trial court drew relative to section 2924.12 was only that Berman had “not demonstrated a violation” of any of the statutes referenced in section 2924.12. Thus, the trial court was not concerned with and did not consider “materiality” and the trial court’s ruling sustaining HSBC’s demurrer was in no way “based” on any “consideration of the issue of materiality,” sua sponte or otherwise. Rather, the trial court’s ruling was based on its conclusion that Berman had not alleged any violation of section 2923.6.

As to that issue — whether Berman’s second amended complaint alleged facts constituting a violation of section 2923.6 and thus facts sufficient to state a cause of action for injunctive relief under section 2924.12 — Berman’s opening brief offers no argument. This omission would be sufficient for us to affirm the judgment against Berman because “[i]t is the appellant’s burden to demonstrate the existence of reversible error” (Del Real v. City of Riverside (2002) 95 Cal.App.4th 761, 766), and “`”[w]hen an appellant fails to raise a point, . . . we treat the point as waived.”‘ [Citation.] `We are not bound to develop [an] appellant[‘s] argument for [him]. [Citation.] The absence of cogent legal argument or citation to authority allows this court to treat the contention as waived'” (Cahill v. San Diego Gas & Electrical Co. (2011) 194 Cal.App.4th 939, 956). Nevertheless, despite Berman’s failure to address in his opening brief the dispositive issue of whether his second amended complaint alleges facts sufficient to state a cause of action, we will not treat that issue as waived because, between the parties’ arguments in the trial court, and the arguments exchanged between HSBC’s respondent’s brief and Berman’s reply brief, the dispositive issue here has been adequately addressed by both sides and is sufficiently framed and developed for us to decide.

Essentially, the competing positions are as follows:

Berman claims that by sending a denial letter that purported to give him only 15 days to file an appeal, HSBC committed a material violation of section 2923.6 because subdivision (f) of that section provides that such a denial letter must include “[t]he amount of time from the date of the denial letter in which the borrower may request an appeal” and subdivision (d) of that section specifies that “the borrower shall have at least 30 days from the date of the written denial to appeal the denial.” Berman essentially reasons that if a denial letter identifies as “[t]he amount of time from the date of the denial letter in which the borrower may request an appeal” a period of time that is less than the 30-day minimum the law requires, the denial letter violates section 2923.6 and is “ineffective,” and an injunction can issue under section 2924.12 to enjoin any trustee’s sale until that violation is corrected by the issuance of a new denial letter that sets forth a legally adequate period for appeal. Berman further contends that he “is under no obligation to file his Notice of Appeal to the denial of the loan modification until [HSBC] has provided a denial letter that fully complies in all material aspects with the mandates of” section 2923.6, because (due to the fact that the initial denial letter was “ineffective”) “[t]he mandated thirty day appeal period has not yet begun running and [HSBC] remains in control as to when that thirty day period will begin running.”

For its part, HSBC takes the position that it did not violate subdivision (f) of section 2923.6 because that subdivision requires only that the denial letter include “[t]he amount of time from the date of the denial letter in which the borrower may request an appeal,” and the denial letter here did so — even if the amount of time specified in the letter was less than the minimum amount of time allowed by subdivision (d) of section 2923.6. HSBC further argues that it did not violate section 2923.6 because it did not conduct a trustee’s sale within the 30-day appeal period provided by subdivision (d), which is prohibited by both subdivision (c) of the statute — which applies while a “complete first lien loan modification application is pending”^[6] — and subdivision (e) of the statute — which applies once “the borrower’s application for a first lien loan modification is denied.”^[7] And as for the minimum 30-day appeal period provided by subdivision (d) of section 2923.6, HSBC asserts only that: (1) the 15-day period included in its denial letter was “within the statutory appeal period”; and (2) Berman did not appeal in the 30-day statutory period in any event, or even within all of the time that has passed since the September 2014 denial letter (now more than two and one-half years).

We conclude Berman has the better argument. It is without dispute that section 2923.6 does two things that are relevant here: (1) it requires a lender like HSBC to advise the borrower in the denial letter how much time the borrower has to appeal; and (2) it requires the lender to give the borrower at least 30 days to appeal. Thus, to comply with the law, the denial letter must inform the borrower of an appeal period that is at least 30 days in length. HSBC’s denial letter did not do that. Instead, HSBC’s letter advised Berman he had only 15 days to appeal — merely half of the period allowed by law. Because the denial letter did not give Berman the full amount of time to appeal provided by the Legislature, his right to do so was effectively diminished as a result. We conclude this was a material violation of section 2923.6.

To the extent HSBC argues that Berman did not allege a violation of section 2923.6 because Berman did not allege that HSBC conducted a trustee’s sale within the 30-day appeal period provided by subdivision (d), that argument establishes only that Berman did not allege a violation of subdivisions (c) or (e) of section 2923.6. But there is more to the statute than those two subdivisions, and when subdivisions (d) and (f) are considered, it is apparent (as we have concluded) that Berman did allege a violation of section 2923.6.

To the extent HSBC asserts the 15-day appeal period included in its denial letter was “within the statutory appeal period,” that assertion is nonsensical. Subdivision (d) of section 2923.6 requires an appeal period of “at least” 30 days. That means 30 days or more. Thus, an appeal period of only 15 days is not within the statutory appeal period.

To the extent HSBC contends Berman did not appeal within the 30-day statutory period in any event, or even in all of the time that has passed since the September 2014 denial letter (now more than two and one-half years), and thus “has not been prejudiced in any manner,” that contention does not carry the day either. We have concluded already that a denial letter that purports to give a borrower only 15 days to appeal the denial is a material violation of section 2923.6. Subdivision (a) of section 2924.12 provides that “[i]f a trustee’s deed upon sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of Section . . . 2923.6” and “[a]ny injunction shall remain in place and any trustee’s sale shall be enjoined until the court determines that the mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent has corrected and remedied the violation or violations giving rise to the action for injunctive relief.” Thus, it does not matter, for purposes of Berman’s request for injunctive relief under section 2924.12, that he has not yet filed an appeal from the September 2014 denial of his application for a loan modification. If Berman proves up the allegations in his second amended complaint, then the denial letter was a material violation of section 2923.6, and section 2924.12 will give Berman the right to an injunction against a trustee’s sale that will remain in place until the court determines that HSBC has corrected and remedied the violation — which HSBC can do by issuing an amended denial letter that properly notifies Berman that he has a period of no less than 30 days to appeal the denial.^[8] Nothing in the statutory scheme denies Berman the right to this relief because he did not file an appeal sooner, before the issuance of the amended denial letter. Thus, his failure to file an appeal is, at least for now, of no moment.

Turning to HSBC’s remaining arguments in support of affirming the trial court’s judgment, we find no merit in any of them. HSBC first contends that because Berman’s order to show cause for a preliminary injunction was denied and the previously issued temporary restraining order was dissolved in May 2015, Berman “was already formally denied the only relief he even could have obtained in this matter.” This argument lacks merit for several reasons. First, HSBC fails to point out that the denial of the order to show cause for a preliminary injunction was without prejudice. Second, HSBC fails to point out that the denial was without prejudice because there was no proof of service of the temporary restraining order or the order to show cause as required by the temporary restraining order itself. Third, HSBC fails to provide any authority for the suggestion that the denial of a preliminary injunction on whatever grounds precludes Berman from seeking a permanent injunction. Thus, HSBC has altogether failed to show that the denial of preliminary injunctive relief has any bearing on the merits of Berman’s complaint.

HSBC next contends that Berman’s complaint “fails as it is based on a purportedly defective denial letter in regards to a loan modification.” In HSBC’s view, because the statutory scheme did not guarantee Berman a modification of his loan (see § 2923.4, subd. (a) [“Nothing in the act that added this section . . . shall be interpreted to require a particular result of [the loan modification] process”]), he “cannot allege any harm, or subsequent violation of statute, for having his modification application denied.” This argument also lacks merit. Berman’s complaint does not allege harm from the denial of his application for a loan modification, nor is there any reason for it to. All he is seeking is the injunctive relief section 2924.12 allows to correct a material violation of section 2923.6. His right to such relief is not dependent on whether he is ultimately entitled to a loan modification. While he has no right to a modification, he does have a right to appeal the denial and the 15-day letter effectively cut off that right prematurely. Thus, the fact that he has no statutory right to a modification is entirely irrelevant here.

HSBC next contends Berman’s complaint lacks merit because “by his own concession . . . he was previously offered a . . . loan modification, which he failed to complete.” According to HSBC, the third page of the denial letter, which Berman attached as an exhibit to his first amended complaint, “states on its face . . . that he was denied for a . . . modification because [he] `did not successfully complete a previous Home Affordable Modification Program (HAMP) offer.'” HSBC argues that under subdivision (g) of section 2923.6, it was not obligated to evaluate Berman’s loan modification application because of his failure to complete the previous HAMP offer. HSBC also contends that subdivision (c) of section 2923.6 precludes the recording of a notice of default or notice of sale or conduct of a trustee’s sale only until the borrower defaults on or otherwise breaches his or her obligations under a loan modification.

Again, HSBC’s arguments are without merit. Subdivision (c) of section 2923.6 is not at issue here. Even assuming that Berman failed to complete a previous modification offer, that has no bearing on whether he is entitled to injunctive relief because HSBC’s failure to provide the full 30-day period to appeal the denial of a subsequent offer was a material violation of subdivisions (d) and (f) of that statute. As for HSBC’s reliance on subdivision (g) of section 2923.6, there are two problems. First, HSBC fails to explain how the fact that it may not have been obligated to evaluate Berman for a second loan modification excuses its material violation of the statute when it nonetheless decided to evaluate him for a second modification. Second, and more important, HSBC fails to explain why, on review of HSBC’s demurrer, we must accept as true a statement of purported fact contained in the denial letter that Berman attached to his complaint. Berman did not attach the letter to his complaint as proof of that purported fact (i.e., that he failed to complete a previous modification offer); he attached it to evidence HSBC’s unlawful provision of only a 15-day appeal period. In the absence of any authority from HSBC that we are bound to treat as true an assertion of fact that Berman did not allege in his complaint, just because that assertion was made in an exhibit Berman appended to his complaint for another reason altogether, we must reject HSBC’s argument based on that factual assertion.

Finally, HSBC contends that Berman has “concede[d] that this meritless action is nothing more than a delay tactic.” By this, HSBC appears to be referring to the fact that Berman is pursuing this action to force HSBC to issue an amended denial letter, and the suggestion that Berman may not even intend to take an appeal from the denial letter after all. Be that as it may, it has no bearing on Berman’s right to relief. As we have explained, section 2924.12 provides for an injunction to stop a trustee’s sale until the court has determined that a material violation of section 2923.6 has been corrected. Any delay in HSBC’s ability to sell Berman’s property at such a sale is the result of the relief the statute provides, HSBC’s failure to acknowledge its error in purporting to give Berman only 15 days to appeal the denial of his application for a loan modification, and HSBC’s stubborn refusal to correct that error in the intervening two and one-half years. In the end, what matters for our purposes is that Berman’s second amended complaint alleged facts sufficient to state a cause of action for injunctive relief. Thus, we must conclude that the trial court erred in sustaining HSBC’s demurrer.

DISPOSITION

The judgment is reversed, and the case is remanded to the trial court with instructions to vacate its order sustaining HSBC’s demurrer and to enter a new and different order denying the demurrer. Berman shall recover his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)

Murray, J. and Hoch, J., concurs.

[1] All further section references are to the Civil Code.

[2] The letter stated in pertinent part as follows: “You have the right to appeal our decline decision regarding the Homeowners Assistance Program. If you would like to appeal, you must contact us in writing at the address provided below by 10/02/2014 and state that you are requesting an appeal of our decision. . . . You may also specify the reasons for your appeal, and provide any supporting documentation. Your right to appeal expires 10/02/2014. Any appeal requests or documentation received after 10/02/2014 may not be considered.”

[3] As relevant here, subdivision (f)(1) of section 2923.6 provides that “[f]ollowing the denial of a first lien loan modification application, the mortgage servicer shall send a written notice to the borrower identifying the reasons for denial, including the following: [¶] (1) The amount of time from the date of the denial letter in which the borrower may request an appeal of the denial of the first lien loan modification and instructions regarding how to appeal the denial.”

[4] Subdivision (e) of section 2923.6 provides as follows: “If the borrower’s application for a first lien loan modification is denied, the mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or, if a notice of default has already been recorded, record a notice of sale or conduct a trustee’s sale until the later of: [¶] (1) Thirty-one days after the borrower is notified in writing of the denial. [¶] (2) If the borrower appeals the denial pursuant to subdivision (d), the later of 15 days after the denial of the appeal or 14 days after a first lien loan modification is offered after appeal but declined by the borrower, or, if a first lien loan modification is offered and accepted after appeal, the date on which the borrower fails to timely submit the first payment or otherwise breaches the terms of the offer.”

[5] As relevant here, subdivision (a) of section 2924.12 provides as follows: “(a)(1) If a trustee’s deed upon sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of Section . . . 2923.6. [¶] (2) Any injunction shall remain in place and any trustee’s sale shall be enjoined until the court determines that the mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent has corrected and remedied the violation or violations giving rise to the action for injunctive relief. An enjoined entity may move to dissolve an injunction based on a showing that the material violation has been corrected and remedied.”

[6] As relevant here, subdivision (c) of section 2923.6 provides as follows: “If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower’s mortgage servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification application is pending. A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale or conduct a trustee’s sale until any of the following occurs: [¶] (1) The mortgage servicer makes a written determination that the borrower is not eligible for a first lien loan modification, and any appeal period pursuant to subdivision (d) has expired.”

[7] See footnote 4, ante, for the text of subdivision (e) of section 2923.6.

[8] Indeed, we note, there appears to be no reason why HSBC could not have issued such an amended letter at any time in the last two and one-half years and thus brought an end to the present action.

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

Supreme Court of the State of New York
Appellate Division: Second Judicial Department

RUTH C. BALKIN, J.P.
JEFFREY A. COHEN
ROBERT J. MILLER
VALERIE BRATHWAITE NELSON, JJ.
2015-02811 DECISION & ORDER

Beneficial Homeowner Service Corp., appellant,

v

Theresa A. Tovar, also known as Theresa Tovar,
respondent, et al., defendants.

(Index No. 061092/14

Perkins Coie LLP, New York, NY (Gary F. Eisenberg of counsel), for appellant.

Young Law Group, PLLC, Bohemia, NY (Ivan E. Young of counsel), for respondent.

In an action to foreclose a mortgage, the plaintiff appeals from so much of an order
of the Supreme Court, Suffolk County (Behar, J.), dated December 22, 2014, as granted that branch
of the motion of the defendant Theresa A. Tovar, also known as Theresa Tovar, which was pursuant
to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against her as time-barred and to vacate the notice of pendency.
ORDERED that the order is affirmed insofar as appealed from, with costs.

The plaintiff commenced this mortgage foreclosure action in February 2014. The defendant Theresa A. Tovar, also known as Theresa Tovar (hereinafter the defendant homeowner), moved, inter alia, pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against her on the ground that the six-year statute of limitations had run. In support of the motion, she submitted, inter alia, the complaint in a foreclosure action commenced by the plaintiff in October 2007 (hereinafter the 2007 foreclosure action) to foreclose upon the same mortgage, in which the plaintiff elected to call due the entire amount secured by the mortgage. The defendant homeowner also submitted proof that the 2007 foreclosure action was dismissed as against her in 2010 for failure to effect personal service. In the order appealed from, the Supreme Court, inter alia, granted those branches of the defendant homeowner’s motion which were to dismiss the complaint insofar as asserted against her as time-barred pursuant to CPLR 3211(a)(5) and CPLR 213(4) and to vacate the notice of pendency. The plaintiff appeals.
“[E]ven if a mortgage is payable in installments, once a mortgage debt is accelerated, the entire amount is due and the Statute of Limitations begins to run on the entire debt” (EMC Mtge.
Corp. v Patella, 279 AD2d 604, 605; see Plaia v Safonte, 45 AD3d 747, 748; Koeppel v Carlandia
Corp., 21 AD3d 884; Federal Natl. Mtge. Assn. v Mebane, 208 AD2d 892, 894). The filing of the
summons and complaint and notice of pendency in the 2007 action constituted a valid election to
accelerate the maturity of the debt (see Albertina Realty Co. v Rosbro Realty Corp., 258 NY 472,
476; Fannie Mae v. 133 Mgt., LLC, 126 AD3d 670; EMC Mtge. Corp. v Smith, 18 AD3d 602, 603;
Clayton Natl. v Guldi, 307 AD2d 982; Arbisser v Gelbelman, 286 AD2d 693, 694).

Contrary to the plaintiff’s contention, the fact that the 2007 action was dismissed as against the defendant homeowner for failure to effectuate personal service does not invalidate the
plaintiff’s election to exercise its right to accelerate the maturity of debt. “The fact of election should not be confused with the notice or manifestation of such election” (Albertina Realty Co. v Rosbro Realty Corp., 258 NY at 476). Nothing in the parties’ agreement provides that the plaintiff’s election is not valid until the defendant homeowner receives notice thereof. Consequently, the failure to properly serve the summons and complaint upon the defendant homeowner did not as a matter of law destroy the effect of the sworn statement that the plaintiff had elected to accelerate the maturity of the debt (see id.; Fannie Mae v 133 Mgt., LLC, 126 AD3d 670; City Sts. Realty Corp. v Jan Jay Constr. Enters. Corp., 88 AD2d 558; cf. EMC Mtge. Corp. v Smith, 18 AD3d 602, 603; Arbisser v Gelbelman, 86 AD2d at 694; Hirsch v Badler, 3 AD2d 921).

The plaintiff’s reliance on Wells Fargo Bank, N.A. v Burke (94 AD3d 980), is misplaced inasmuch as in that case, the plaintiff in the prior foreclosure action had not been assigned the note or mortgage at the time the action was commenced and therefore was without authority to exercise the acceleration option in the agreement. Here, there is no dispute that the plaintiff was authorized to accelerate the debt when it filed the summons and complaint in 2007.

The plaintiff’s contention that it revoked its election to accelerate the mortgage debt in 2012 by voluntarily discontinuing the action is impropely raised for the first time on appeal (see Costikyan v Keeffe, 54 AD2d 573). Contrary to the plaintiff’s contention, this issue does not involve a question of law that appears on the face of the record and could not have been avoided if brought to the attention of the Supreme Court (see Vargas v Crown Container Co., Inc., 114 AD3d 762, 764-765; cf. Persky v Bank of Am. N.A., 261 NY 212, 218).

BALKIN, J.P., COHEN, MILLER and BRATHWAITE NELSON, JJ., concur.

ENTER:
Aprilanne Agostino
Clerk of the Court

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Lexology-

The Arizona Supreme Court filed an opinion on April 25, 2017, in which the Court invalidated a five percent late fee assessed against the unpaid principal balance when the loan matured, holding that it was an unenforceable penalty.

The promissory note at issue provided that the borrower would pay a five percent late fee on any late payment, including the final balloon payment. The borrower failed to pay the balloon payment on the maturity date. The lender then assigned the promissory note and the deed of trust to a third party (the “Noteholder”), which recorded a notice of trustee’s sale.

Prior to the trustee’s sale, the borrower requested a payoff statement. The Noteholder provided a payoff statement that included a late fee in the amount of $1.4 million, which represented five percent of the balloon payment that was due upon maturity. The borrower disputed the late fee and tendered payment of all amounts except for the late fee. When the Noteholder refused to release the deed of trust, the borrower sued for a declaratory judgment, asking the court to declare that the borrower was not obligated to pay the late fee.

[LEXOLOGY]

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DSNEWS-

In a 5-3 decision on Monday, the U.S. Supreme Court determined that cities can sue banks over lost tax revenue on foreclosed properties from urban blight. Law360 reported that Miami has the standing to sue Bank of America Corp. and Wells Fargo & Co. under the Fair Housing Act, stating that the banks’ discriminatory and predatory lending practices led to a major shortfall in city tax revenues.

The final ruling is not up to the high court, however, as the Supreme court sent the case back to the Eleventh District, in order to determine whether the banks’ lending practices were “proximate cause” for the damages. Law360 reported that all eight justices rejected the probable cause argument.

“The ruling is clearly a concern for lenders who believed cities did not have sufficient standing in order to assert claims that are more appropriate to be brought by the ultimate aggrieved parties, which should be the borrowers, assuming of course the allegations are true,” said Shaun K. Ramey, Shareholder, Sirote and Permutt, P.C. “That being said, although the Court granted cities the right to file suit, they set a high bar for proving proximate causation so the impact of the Supreme Court’s decision may not be as broad as it appears at first blush.”

[DSNEWS]

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USA Today-

The Supreme Court ruled Monday that cities can sue banks for discriminatory mortgage lending practices, but they must prove that predatory loans led to damages such as lost tax revenue and higher spending on municipal services.

The decision was a partial victory both for Miami, which sought standing to sue banks under the Fair Housing Act, and for Bank of America and Wells Fargo, which argued that the city’s damages were too many steps removed from the original loans.

The 5-3 ruling was written by Justice Stephen Breyer and backed by the court’s liberal justices and Chief Justice John Roberts. Three justices — Clarence Thomas, Anthony Kennedy and Samuel Alito — argued that the city had no right to sue under the landmark 1968 civil rights law in the first place. Newly confirmed Justice Neil Gorsuch did not take part in the decision.

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