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James v. Ocwen Loan Servicing, LLC

United States District Court, S.D. Ohio, Western Division

December 12, 2017

H. ANTHONY JAMES, et al., Plaintiffs,

          Dlott, J.


          Stephanie K. Bowman, United States Magistrate Judge

         This civil action involves Defendant Ocwen Loan Servicing, LLC's (“Defendant”) efforts to collect upon and modify the terms of the defaulted 2011 home loan of Plaintiffs H. Anthony James and Olive P. James (collectively, “Plaintiffs”). Currently pending are the parties' cross-motions for summary judgment. (Docs. 29, 30). For the following reasons, the undersigned recommends that Defendant's motion (Doc. 29) be GRANTED IN PART and DENIED IN PART, and that Plaintiffs' motion (Doc. 30) be GRANTED IN PART and DENIED IN PART.

         I. BACKGROUND

         Plaintiffs filed this lawsuit against Defendant in which they sought relief under three separate federal statutes in relation to Defendant's efforts to collect on a 2011 Note that is secured by a mortgage on Plaintiffs' property located at 8019 Glendale Milford Road in Camp Dennison, Ohio. (Doc. 1). Specifically, in the First Count, Plaintiffs claim that Defendant violated multiple sections of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601, et seq. and Regulation X, 12 C.F.R. § 1024.1, et seq. (Id., PageID 8-9). In the Second Count, Plaintiffs claim that Defendant violated the Fair Debt Collections Practices Act (“FDCPA”), 15 U.S.C. §§ 1692c(a)(2), 1692c(c), and 1692f by continuing to communicate with Plaintiffs directly in connection with the collection of a debt despite knowing Plaintiffs were represented by an attorney with respect to that debt. (Id., PageID 8-9). In the Third Count, Plaintiffs seek a declaratory judgment under 28 U.S.C. § 2201 and Ohio Rev. Code § 2721.03 regarding the person entitled to enforce the Note, the owner of Plaintiffs' obligation, the amount due and owing under the Note and Mortgage, and whether Plaintiffs are in default under that Note and Mortgage. (Id., PageID 9-10).


         Both parties have submitted what they contend are undisputed findings of fact in this case. To the extent a genuine dispute exists, the dispute will be construed in favor of the nonmoving party.

         On February 3, 2006, Plaintiffs signed a Note and Mortgage in the amount of $154, 800.00 for their home residence located at 8019 Glendale Milford Road in Camp Dennison, Ohio (“Loan”). (Doc. 29-2, PageID 269-87; Doc. 30-1, PageID 392-410). In or about June 2011, IndyMac Mortgage Services, the then-servicer of the Loan, initiated foreclosure proceedings against Plaintiffs. (Doc. 27-1, PageID 118). Those foreclosure proceedings eventually were dismissed. (Id., PageID 120). On November 1, 2013, IndyMac transferred the servicing of the Loan to Defendant. (Doc. 29-2, PageID 261; Doc. 30-2, PageID 425). The Loan was in default at the time Defendant obtained servicing rights. (Doc. 30-2, PageID 425).

         After obtaining servicing rights for the Loan, Defendant began calling Plaintiffs repeatedly, sometimes multiple times in a single day. (Doc. 30-3, PageID 444-55; see also Doc. 27-1, PageID 125). On or about January 13, 2015, Plaintiffs' attorney sent Defendant a letter requesting that “[a]ll correspondence and negotiations of the debt with your firm should flow through [the attorney's] office[.]” (Doc. 30-5, PageID 469). The letter contained a signed authorization for release of Plaintiffs' account information to their attorney. (Id.).

         On or about January 14, 2015, Plaintiffs' attorney sent Plaintiffs' loan modification application to an attorney who passed along the application to Defendant on January 16 and January 17, 2015. (Doc. 29-3, PageID 288-366; Doc. 30-6, PageID 470-93).[1]Defendant's account log indicates that Defendant received the application on January 19, 2015. (Doc. 30-7, PageID 527-28).[2]

         On January 20, 2015, Defendant sent Plaintiffs a letter to the Camp Dennison address that acknowledged receipt of their application. (Doc. 29-4, PageID 367-68; Doc. 30-8, PageID 542-43). Plaintiffs received that acknowledgement letter from Defendant. (Doc. 27-1, PageID 131).

         A second letter from Defendant addressed to Plaintiffs at their Camp Dennison address is dated January 23, 2015. (Doc. 29-4, PageID 369-74; Doc. 30-9, PageID 544-49). That letter contains the salutation “Dear Customer(s), ” indicates that their “document due date was 6/18/2014[, ]” and requests that Plaintiffs submit the required documents listed in the letter “as soon as possible” to allow Defendant to evaluate Plaintiffs for all available loss mitigation options. (Doc. 29-4, PageID 369; Doc. 30-9, PageID 544). It further states: “Since your document due date has now passed, you may no longer be eligible for certain protections under applicable laws and/or certain loss mitigation options.” (Doc. 29-4, PageID 369; Doc. 30-9, PageID 544). The letter advises the customers to submit a complete application as soon as possible, noting that Defendant may still evaluate complete applications submitted after the document due date. (Doc. 29-4, PageID 369; Doc. 30-9, PageID 544). Defendant's corporate representative testified that Defendant creates the letter and then sends it to a third party for mailing. (Doc. 28-1, PageID 213-14). That corporate representative further testified that the letter customarily would have been sent by regular mail unless it was one that had to be sent by certified mail. (Id., PageID 213). She indicated it was possible that the third party could have failed to send the letter as required. (Id., PageID 214). Defendant's account log includes a notation that the letter had been sent, but does not display a tracking number for the letter. (Doc. 30-7, PageID 530).[3] Plaintiff H. Anthony James testified that he did not receive that second letter from Defendant. (Doc. 27-1, PageID 133).[4]

         On February 4, 2015, Plaintiff H. Anthony James resent the January 13, 2015 request to Defendant that all communications about the debt on their account be directed to Plaintiffs' attorney. (Doc. 30-10, PageID 550-51). Defendant's account log notes receipt of the authorization on February 9, 2015. (Doc. 30-7, PageID 531). Defendant continued to place phone calls to Plaintiffs after receipt of that authorization. (Doc. 30-3, PageID 450-55).

         On February 14, 2015, Plaintiff H. Anthony James called Defendant to inquire about his loan modification application status. (Doc. 30-7, PageID 532). Defendant provided the requested status update and informed Plaintiff about the missing documents he needed to complete his loan modification application. (Id.). Plaintiff made a follow-up appointment to speak with Defendant about his loan modification application on February 17, 2015. (Id.). Defendant's representative thereafter called and spoke to Plaintiff H. Anthony James on February 17, 2015 per the scheduled appointment. (Doc. 30-7, PageID 533). During that phone call, Plaintiff H. Anthony James was irate, became argumentative, and refused to send some of the documents requested by Defendant for the loan modification application. (Id.). On March 5, 2015, Defendant's account log notes an email was sent regarding the missing documents. (Doc. 30-7, PageID 534). Plaintiffs never submitted the additional information and documents that Defendant had requested to complete the loan modification application. (Doc. 29-1, PageID 259).

         On March 13, 2015, Defendant's representative called Plaintiffs and Plaintiffs told the representative that Defendant needed to call Plaintiffs' attorney. (Doc. 30-7, PageID 534). Defendant's representative informed Plaintiffs that Defendant could not do so because Defendant used an auto dialer to make the phone calls. (Id.). Defendant thereafter continued to make phone calls to Plaintiffs through August 19, 2015. (Doc. 30-3, PageID 451-55).


         Federal Rule of Civil Procedure 56(a) provides that summary judgment is proper “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.” A dispute is “genuine” when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A court must view the evidence and draw all reasonable inference in favor of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The moving party has the burden of showing an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).

         Once the moving party has met its burden of production, the nonmoving party cannot rest on the pleadings, but must present significant probative evidence in support of their case to defeat the motion for summary judgment. Anderson, 477 U.S. at 248-49. The mere scintilla of evidence to support the nonmoving party's position will be insufficient; the evidence must be sufficient for a jury to reasonably find in favor of the nonmoving party. Id. at 252.

         The fact that the parties have filed cross-motions for summary judgment in this case does not alter the applicable standard of review.

The Court reviews each party's motion separately, determining, for each side, whether a judgment may be entered in accordance with the standards of Rule 56. Both motions must be denied if the Court finds there is a genuine issue of material fact. If however, there is no genuine issue and one or the other party is entitled to prevail as a matter of law, the Court will render judgment.

Klaus v. Hilb, Rogal & Hamilton Co. of Ohio, 437 F.Supp.2d 706, 732 (S.D. Ohio 2006).

         IV. ANALYSIS

         Defendant has moved for summary judgment on all three Counts of Plaintiffs' Complaint. Plaintiffs, on the other hand, have moved for summary judgment on portions of their First and Second Count. The parties' respective arguments on each Count are addressed below.

         A. RESPA (First Count)

         “‘RESPA is a consumer protection statute that regulates the real estate settlement process.'” Washington v. Green Tree Servicing LLC, No. 1:15-cv-354, 2017 WL 1857258, at *3-4 (S.D. Ohio May 5, 2017) (quoting Hardy v. Regions Mortg., Inc., 449 F.3d 1357, 1359 (11th Cir. 2006)), report and recommendation adopted, 2017 WL 2599252 (S.D. Ohio June 15, 2017). Through the enactment of RESPA, Congress intended “to insure that consumers throughout the Nation are provided with greater and more timely information on the nature and costs of the settlement process and are protected from unnecessarily high settlement charges caused by certain abusive practices that have developed in some areas of the country.” 12 U.S.C. § 2601(a). “‘Although the “settlement process” targeted by the statute was originally limited to the negotiation and execution of mortgage contracts, the scope of the statute's provisions was expanded in 1990 to encompass loan servicing.'” Marais v. Chase Home Fin. LLC, 736 F.3d 711, 719 (6th Cir. 2013) (quoting Medrano v. Flagstar Bank, FSB, 704 F.3d 661, 665-66 (9th Cir. 2012)). “As a remedial statute, RESPA is construed broadly to effectuate its purposes.” Id.

         “The Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act (‘Regulation X') is a Consumer Financial Protection Bureau regulation promulgated pursuant to section 1022(b) of the Dodd-Frank Act, 12 U.S.C. § 5512(b), and [RESPA], 12 U.S.C. § 2601, et seq.” Cooper v. Fay Servicing, LLC, 115 F.Supp.3d 900, 903 n.6 (S.D. Ohio 2015). Regulation X imposes certain obligations on a loan servicer with respect to loss mitigation generally and the processing of a borrower's loan modification application. Washington, 2017 WL 1857258, at *3-4. As relevant here, Regulation X requires a servicer to exercise “reasonable diligence in obtaining documents and information to complete a loss mitigation application.” 12 C.F.R. § 1024.41(b)(1). To comply with this diligence requirement, a servicer must promptly review a loss mitigation application for completeness and “[n]otify the borrower in writing within 5 days . . . after receiving the loss mitigation application that the servicer . . . has determined that the loss mitigation application is either complete or incomplete.” 12 C.F.R. § 1024.41(b)(2)(i)(A)-(B). The servicer also “must include a reasonable date [in the written notice sent by the servicer] by which the borrower should submit the documents and information necessary to make the loss mitigation application complete.” 12 C.F.R. § 1024.41(b)(2)(ii).

         “A borrower may enforce provisions of [§ 1024.41 of Regulation X] pursuant to section 6(f) of RESPA (12 U.S.C. 2605(f)).” 12 C.F.R. § 1024.41(a). “Whoever fails to comply with any provision of [RESPA] shall be liable to the borrower for each such failure[.]” 12 U.S.C. § 2605(f). Upon a showing of liability, an individual may recover actual damages, and any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of RESPA and Regulation X, in an amount not to exceed $2, 000. 12 U.S.C. § 2605(f)(1). An individual also may be awarded the costs of the action and reasonable attorneys' fees. 12 U.S.C. § 2605(f)(3).

         Defendant moves for summary judgment on each violation of RESPA and Regulation X alleged by Plaintiffs in their Complaint. (Doc. 29, PageID 246-52). Rather than disputing Defendant's arguments or moving for summary judgment on each violation alleged in their Complaint, Plaintiffs narrow their claims by focusing on three arguments under 12 C.F.R. §§ 1024.41(b)(1), (b)(2)(i)(B) and (b)(2)(ii) of Regulation X in their opposition brief and cross-motion for summary judgment. (Doc. 30, PageID 386-89; Doc. 31, PageID 557-59; Doc. 36, PageID 624-25).[5] Both parties contend that no genuine issue of material fact exists with respect to those three alleged violations.

         Having considered the evidence favorably for each party, the undersigned recommends granting in part Defendant's motion for summary judgment and denying Plaintiffs' motion for summary judgment based on the RESPA claims.

         1. There are genuine issues of material fact as to whether Defendant sent the written notice required by 12 C.F.R. § 1024.41(b)(2)(i)(B).

         Plaintiffs argue that Defendant violated Regulation X by failing to send a written notice stating whether Plaintiffs' loss mitigation application either was complete or incomplete as required by 12 C.F.R. § 1024.41(b)(2)(i)(B), and move for summary judgment on that basis. (Doc. 30, PageID 387-88; Doc. 31, PageID 558; Doc. 36, PageID 624-25).[6] Defendant, on the other hand, argues that summary judgment is appropriate because there is undisputed evidence of mailing, which includes a copy of the January 23, 2015 letter from its business records that is addressed to Plaintiffs at the same address they received a prior letter, an affidavit from its representative that the letter had been sent, and testimony from its corporate representative as to the mailing process. (Doc. 29, PageID 248-49; Doc. 32, PageID 567-70; Doc. 35, PageID 612-13). Defendant contends that Plaintiffs rely on nothing more than the unsupported, self-serving testimony of Plaintiff H. Anthony James, which is insufficient to create a genuine issue of material fact. (Doc. 32, PageID 567-70; Doc. 35, PageID 612-13).

         The copy of the January 23, 2015 letter provides the starting place for the analysis. It is undisputed that Defendant has a copy of a letter dated January 23, 2015 in its business records that is addressed to Plaintiffs at the same Camp Dennison address where they admit they received the January 20, 2015 letter mailed by Defendant. Defendant's account log contains a notation that the January 23 letter was sent. This evidence supports Defendant's argument that it mailed the letter.

         Yet, other evidence presented is probative of non-mailing. The January 23 letter uses a generic salutation of “Dear Customer(s)” rather than the personalized salutation of “Dear H. Anthony James, Olive P. James” used in the January 20 letter that Plaintiffs received. (Doc. 29-4, PageID 367, 369). The January 23 letter also identifies Plaintiffs' original document due date as June 18, 2014, which was six months before Plaintiffs even submitted their loan modification application. (Id.). Defendant has offered no explanation for the puzzling inclusion of this due date. Viewed together, this evidence could indicate that the letter contained in Defendant's business records was never finalized for mailing.

         Adding to those irregularities in the January 23 letter is the testimony from Defendant's corporate representative. That corporate representative testified that a third party mails the letters on Defendant's behalf, such that she was unable to say definitively that the January 23 letter had been mailed. (Doc. 28-1, PageID 213-14). She also conceded that the third party potentially could have failed to mail the letter. (Id., PageID 214). Although she did testify that the letter customarily would be sent by regular mail if it was not one that had to be sent by certified mail, she did not know whether the January 23 letter was one that had to be sent by certified mail. (Id., PageID 213). No tracking number or certified mail receipt has been provided for the January 23 letter that would definitively prove the fact of mailing.

         As for the testimony of Plaintiff H. Anthony James, it is further probative of, but cannot conclusively establish, non-mailing of the letter. Although Defendant claims the testimony is merely unsupported, self-serving testimony that cannot be considered on summary judgment, the undersigned disagrees. The testimony has not been provided in a vacuum. Defendant has claimed that Plaintiffs' receipt of the January 20 letter demonstrates that the January 23 letter had been sent properly to Plaintiffs' current address. (Doc. 29, PageID 248-49; Doc. 32, PageID 567-70; Doc. 35, PageID 612-13). Following Defendant's logic, Plaintiffs would have received the January 23 letter if it had been sent. Plaintiff H. Anthony's testimony of non-receipt (Doc. 27-1, PageID 133) therefore directly counters Defendant's argument as to mailing. That testimony also is supported by the other above-referenced evidence that is probative of non-mailing.

         The averment of Defendant's Senior Loan Analyst that the January 23 letter was sent is not based on personal knowledge of mailing by the third party. Instead, that averment is based on information gleaned from the business records of Defendant that are discussed above. (Doc. 29-1, PageID 259). The credibility of that averment therefore depends upon whether the evidence contained within Defendant's business records is found to be the most convincing on the issue of mailing. As that determination is within the province of the jury, the Senior Loan Analyst's averment cannot be conclusive evidence of mailing.

         Finally, Defendant's reliance on the “mailbox rule” (Doc. 32, PageID 568; Doc. 35, PageID 612) is misplaced. The mailbox rule presumes the fact of mailing. Reynolds v. Reliance Standard Life Ins. Co., No. C-3-06-010, 2006 WL 2990385, at *7 (S.D. Ohio Oct. 18, 2006) (“The ‘mailbox rule' provides that once a notice is mailed, it is presumed to be received in due course.”) (emphasis added). Here, there are genuine issues of material fact as to whether Defendant actually mailed the January 23 letter in the first instance, which make the rule inapplicable to this analysis.

         Accordingly, the undersigned recommends denying summary judgment to both parties on Plaintiffs' claim under 12. C.F.R. § 1024.41(b)(2)(i)(B) for failure to notify Plaintiffs in writing as to whether the ...

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