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Germain v. U.S. Bank National Association

United States District Court, N.D. Texas, Dallas Division

March 28, 2018

MICHAEL GERMAIN, Plaintiff,
v.
U.S. BANK NATIONAL ASSOCIATION, and OCWEN LOAN SERVICING, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          BARBARA M. G. LYNN JUDGE

         Before the Court is a Motion for Summary Judgment [ECF No. 54] filed by Defendants U.S. Bank National Association, as Trustee for Morgan Stanley Mortgage Loan Trust 2006-7, Mortgage Pass-Through Certificates, Series 2006-7 (“U.S. Bank”), and Ocwen Loan Servicing, LLC (“Ocwen”) (collectively, “Defendants”). For the following reasons, Defendants' Motion for Summary Judgment is GRANTED.

         BACKGROUND

         This civil action arises out of foreclosure proceedings initiated against real property located at 15531 Bay Point Drive, Dallas, Texas 75248 (the “Property”). See 4th Am. Compl. 2 [ECF No. 48]. Plaintiff Michael Germain filed an original petition in the 193rd Judicial District Court in Dallas, Texas on May 1, 2015 seeking to prevent a May 5, 2015 foreclosure on the Property. See Case Summary [ECF No. 1-3 at 2]; Original Pet. [ECF No. 1-4 at 1 & 9]. On May 4, 2015, the state court issued a Temporary Restraining Order and set a May 15, 2015 hearing on Plaintiff's Application for Temporary Injunction. See Order [ECF No. 1-5 at 2-3]. Defendants removed the case to the federal district court the day before the hearing on May 14, 2015. See Notice of Removal [ECF No. 1].

         Plaintiff's operative Fourth Amended Complaint alleges the following claims: (1) violations of the Real Estate Settlement Procedure Act (“RESPA”) pursuant to Title 12, Code of Federal Regulations, Section 1024.41 (“Section 1024.41”) against Ocwen; (2) violations of the Texas Debt Collection Act (“TDCA”), pursuant to Texas Finance Code (“TFC”), Sections 392.301(a)(8), 392.304(a)(14), and 392.304(a)(19) against U.S. Bank and Ocwen; (3) promissory estoppel under Texas law against U.S. Bank and Ocwen; (4) violation of Section 83.001 of the Texas Government Code against dismissed defendant Power Default Services, Inc.; and (5) violation of the federal Declaratory Judgment Act under Title 12, United States Code, Section 2605(f) against all of the defendants. See 4th Am. Compl. 8-21 [ECF No. 48]. Plaintiff also alleges that Defendants are vicariously liable for the conduct of their employees, agents, attorneys, affiliated entities, vice principals, and representatives of their affiliated entities. See 4th Am. Compl. 7. Plaintiff seeks actual, statutory, and exemplary damages, and attorneys' fees. See 4th Am. Compl. 22. Plaintiff further asks the Court to “enjoin Defendants from selling the Property at a foreclosure sale un[less] the Defendants” comply with RESPA. See 4th Am. Compl. 22.

         Defendants filed their Motion for Summary Judgment on August 25, 2017. On September 15, 2017, Plaintiff filed his response [ECF No. 57]. Defendants filed their reply [ECF No. 60] on October 13, 2017. This matter has been fully briefed and is now ripe for adjudication.

         STANDARD OF REVIEW

         Summary judgment is proper when “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). A party seeking summary judgment bears the initial burden of showing the absence of a genuine issue for trial. See Duffy v. Leading Edge Prods., Inc., 44 F.3d 308, 312 (5th Cir. 1995). The movant's burden can be satisfied by demonstrating that there is an absence of evidence which supports the nonmoving party's case for which that party would have the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant meets its initial burden, the non-movant must show that summary judgment is not proper. See Duckett v. City of Cedar Park, 950 F.2d 272, 276 (5th Cir. 1992). The parties may satisfy their respective burdens “by tendering depositions, affidavits, and other competent evidence[.]” See Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir. 1992). All evidence must be viewed in the light most favorable to the party opposing the summary judgment motion. See Rosado v. Deters, 5 F.3d 119, 123 (5th Cir. 1993). However, “the court is under no duty to sift through the record to find evidence that supports a nonmovant's opposition to a motion for summary judgment.” Esquivel v. McCarthy, 2016 WL 6093327, at *2 (N.D. Tex. Oct. 18, 2016) (citing Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1988)).

         ANALYSIS

         On December 15, 2005, Plaintiff executed a Deed of Trust in favor of Morgan Stanley Credit Corporation (“Morgan Stanley”) that secured repayment on a Note for $144, 000 (the “Loan”) to refinance the Property. See Defs.' Exs. A [ECF No. 56 at 6], A-1 [ECF No. 56 at 14-26], A-2 [ECF No. 56 at 29-35]. In addition, Plaintiff signed a Loan Agreement Rider in connection with the Loan, which states, in pertinent part, that “[t]he Loan Agreements may not be varied by any oral agreements or discussions that occur before, contemporaneously with, or subsequent to the execution of the Loan Agreements” and that “[t]here are no unwritten oral agreements between the parties.” See Defs.' Ex. A-3 [ECF No. 56 at 38].

         Ocwen began servicing the Loan on April 2, 2012, and the Loan was assigned to U.S. Bank on August 19, 2014. See Defs.' Exs. A [ECF No. 56 at 6-7], A-4 [ECF No. 56 at 41]. At the time Ocwen began servicing the Loan, Plaintiff was in default and received a notice of default. See Defs.' Exs. A [ECF No. 56 at 7], A-6 [ECF No. 56 at 53-55]. Plaintiff has been in and out of default since 2009. See Defs.' Ex. B [ECF No. 56 at 147]. Plaintiff's last loan payment was in December 2013, and this payment was applied to the payment owed for May 2013. See Defs.' Ex. A. The balance remaining on the Loan as of August 24, 2017 is $87, 573.51. See Defs.' Ex. A [ECF No. 56 at 11].

         Plaintiff admits that he was in default on February 2, 2012. See Defs.' Exs. A-6 [ECF No. 56 at 53], Ex. B [ECF No. 56 at 176]. On July 7, 2012, Ocwen sent Plaintiff a letter with mortgage assistance options that were available to Plaintiff at that time such as a loan modification, a repayment plan, a short sale, and a deed in lieu of foreclosure. See Defs.' Exs. A-7 [ECF No. 56 at 57], A [ECF No. 56 at 7]. Plaintiff admits that he received the July 7, 2012 letter and several others. Defs.' Ex. B [ECF No. 56 at 177]. Because Ocwen did not receive a response to the July 7, 2012 letter, Ocwen scheduled the Property for foreclosure. See Defs.' Exs. A-8 [ECF No. 56 at 61], A [ECF No. 56 at 7].

         On August 24, 2012, Plaintiff submitted his first loss mitigation application. See Defs.' Ex. A-9 [ECF No. 56 at 69-81]. Plaintiff stated that he was experiencing financial difficulties in 2012 and “did not have the money to pay.” See Defs.' Ex. B [ECF No. 56 at 179]. Plaintiff stated that he understood that if he filled out the Loss Mitigation Application, he could be eligible for several options that may help with his delinquent loan. See Defs.' Ex. B [ECF No. 56 at 180]. Plaintiff also admitted that his delinquent loan in 2012 was caused by his financial problems and that it was not caused by “anything that Ocwen did.” See Defs.' Ex. B [ECF No. 56 at 182]. On August 28, 2012, Ocwen denied the loan modification request and explained that the owner of Plaintiff's loan did not allow the modification. See Defs.' Ex. A-10 [ECF No. 56 at 83]. Plaintiff admitted that he received the August 28, 2012 denial and that he received “one or two” of these letters. See Defs.' Ex. B [ECF No. 56 at 181]. On August 29, 2012, Plaintiff made a significant payment to bring the loan current, and Ocwen ceased further review of Plaintiff's Loan for mitigation options. See Defs.' Exs. A [ECF No. 56 at 8], B [ECF No. 56 at 183].

         Plaintiff's loan was again in default in June of 2013. See Defs.' Exs. A [ECF No. 56 at 8], B [ECF No. 56 at 184]. Plaintiff admitted that he failed to make one or more monthly payments of the principal and interest on the Loan in 2013. See Defs.' Ex. E [ECF No. 56 at 230]. Plaintiff also admitted that his financial difficulty was not due to the conduct of Ocwen. See Defs.' Ex. B [ECF No. 56 at 183]. On July 20, 2013, Ocwen sent Plaintiff another letter with the options of a loan modification, listing the Property for sale, and a deed in lieu as alternatives to foreclosure. See Defs.' Ex. A-11 [ECF No. 56 at 85]. On August 1, 2013, Ocwen sent a letter to Plaintiff following up, because it had not heard from Plaintiff. See Defs.' Exs. A [ECF No. 56 at 8], A-12 [ECF No. 56 at 88]. Plaintiff acknowledged receipt of the August 1, 2013 letter. See Defs.' Ex. B [ECF No. 56 at 184].

         On August 11, 2013, Plaintiff sent another loss mitigation application to Ocwen. See Defs.' Ex. A-13 [ECF No. 56 at 91-96]. On August 15, 2013, Ocwen sent a denial letter that was substantially similar to the letter sent in response to Plaintiff's August 24, 2012 application, and explained listing the Property for sale and a deed in lieu as alternatives to foreclosure. See Defs.' Ex. A-14 [ECF No. 56 at 99-101]. This letter also identified Morgan Stanley as the owner of Plaintiff's Loan. See Defs.' Ex. A-14 [ECF No. 56 at 99]. Plaintiff acknowledged that Morgan Stanley was identified as the owner of his Loan. See Defs.' Ex. B [ECF No. 56 at 186]. Plaintiff also acknowledged that Ocwen promptly responded to Plaintiff's applications and that the letter outlined the reason why a loan modification was rejected, namely, the owner of the Loan, Morgan Stanley, did not permit the modification. See Defs.' Ex. B [ECF No. 56 at 187].

         On September 23, 2013, Plaintiff and Ocwen discussed additional loss mitigation options other than a loan modification. See Defs.' Ex. A [ECF No. 56 at 8]. Plaintiff indicated that he was looking into filing for bankruptcy, and Ocwen advised him of the option of a deed in lieu, which Plaintiff declined. See Defs.' Ex. A [ECF No. 56 at 8]. On September 30, 2013, Plaintiff filed for bankruptcy. See Defs.' Ex. D [ECF No. 56 at 213]. Plaintiff stated that he filed for bankruptcy because he “wanted to avoid foreclosure.” See Defs.' Ex. B [ECF No. 56 at 188]. Due to Plaintiff's bankruptcy filing, Plaintiff was put on a repayment plan, and Ocwen ceased review of his loss mitigation application. See Defs.' Ex. A [ECF No. 56 at 9]. Plaintiff stated that his bankruptcy was dismissed, because he failed to file required documents. See Defs.' Ex. B [ECF No. 56 at 188].

         Plaintiff admitted that he did not make one or more payments of principal and interest on his Loan in 2014. See Defs.' Ex. E [ECF No. 56 at 230]. On February 19, 2014, Plaintiff sent another loss mitigation application to Ocwen. See Defs.' Exs. A-15 [ECF No. 56 at 103-120], B [ECF No. 56 at 180-90]. On February 26, 2014, Ocwen sent its denial of loan modification explaining that Morgan Stanley did not allow a loan modification, but that Ocwen conditionally approved for Plaintiff a short sale. See Defs.' Ex. A-17 [ECF No. 56 at 132]. Plaintiff acknowledged that this letter explained that Ocwen reviewed Plaintiff's application for all available loan modification options, denied his request for a loan modification, and approved for him a short sale. See Defs.' Ex. B [ECF No. 56 at 191].

         Ocwen evaluated Plaintiff for a forbearance plan under his February 2014 application, and Plaintiff was approved for a loan forbearance plan. See Defs.' Ex. A [ECF No. 56 at 10], C [ECF No. 56 at 210]. On July 30, 2014, Ocwen sent a Forbearance Stipulation Agreement that required Plaintiff to send a $13, 000 down payment. See Defs.' Ex. A-18 [ECF No. 56 at 136]. Plaintiff acknowledged receiving this agreement, but stated that he was not able to agree to its terms. See Defs.' Ex. B [ECF No. 56 at 194]. Plaintiff stated in his complaint that the $13, 000 was “too high for Plaintiff to make work.” See 4th Am. Compl. 4.

         On March 30, 2015, Plaintiff's Loan was accelerated pursuant to a Notice of Acceleration that referred back to a June 8, 2013 Notice of Default. See Defs.' Ex. A-21 [ECF No. 56 at 161-62]. Plaintiff admitted that he failed to make one or more monthly payments of principal and interest on his Loan in 2015 and 2016. See Defs.' Ex. E [ECF No. 56 at 230]. On May 1, 2015, Plaintiff filed his lawsuit in state court seeking to prevent foreclosure on his Property. See Case Summary [ECF No. 1-3 at 2]; Original Pet. [ECF No. 1-4 at 1 & 9]. Plaintiff testified at his May 31, 2017 deposition that he was still living in the Property as of that date. Defs.' Ex. B [ECF No. 56 at 166 & 186].

         RESPA

         Plaintiff contends that Ocwen violated Section 1024.41(c)(1)[1] by failing to evaluate him for all loss mitigation options and by failing to provide proper notice. 4th Am. Compl. 8-9. Plaintiff contends that Ocwen also violated Section 1024.41(d)[2] by failing to provide the specific investor information that resulted in the denial of Plaintiff's most recent loss mitigation application in December 2015, as well as potentially earlier applications. 4th Am. Compl. 9.

         Defendants argue that they are entitled to summary judgment with respect to Plaintiff's RESPA claims because: (1) RESPA's requirements apply to only one completed loss mitigation application; (2) Ocwen evaluated Plaintiff for all of the available loss mitigation options; (3) Ocwen provided notice and specific reasons for its determinations; (4) Ocwen specifically indicated why Plaintiff was denied a loan modification; (5) Ocwen identified Plaintiff's loan investor in response to Plaintiff's 2013 Loss Mitigation Application; and (6) Plaintiff has no evidence of actual or statutory damages. See Defs.' Br. 15-21 [ECF No. 55].

         “Section 1024.41 of the Code of Federal Regulations provides instructions on loss mitigation procedures.” Obazee v. Bank of New York Mellon, 2015 WL 4602971, at *2 (N.D. Tex. Jul. 31, 2015) (citing 12 C.F.R. § 1024.41). “This section does not require that the servicer provide the borrower any specific loss mitigation options.” Id. (citing 12 C.F.R. § 1024.41(a)). Rather, “it specifies procedures and timing for reviewing loss mitigation applications, including requiring the servicer to notify the borrower in writing, within 30 days of receipt of a complete loss mitigation application, which loss mitigation ...


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