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Young v. Wells Fargo Bank, N.A.

United States District Court, D. Massachusetts

June 15, 2015

SUSAN K. YOUNG, Plaintiff,


LEO T. SOROKIN, District Judge.

Plaintiff Susan Young brought this suit against the trustee of the trust that holds the mortgage to her home, Defendant Wells Fargo Bank, and the servicer of the mortgage, Homeward Residential.[1] Before the Court is Defendants' Motion for Summary Judgment on all of Plaintiffs' remaining claims. Doc. No. 89. Plaintiff has opposed the Motion, Doc. No. 95, and the Court heard the parties on the Motion on April 27, 2015. For the reasons that follow, Defendants' Motion for Summary Judgment is ALLOWED IN PART and DENIED IN PART.


As the background to this litigation have been set forth extensively by the First Circuit in its opinion, Young v. Wells Fargo Bank, N.A., 717 F.3d 224, 229-31 (1st Cir. 2013), the Court only recites those undisputed facts relevant to the pending Motion for Summary Judgment and reserves certain facts for the discussion of particular claims to which they are relevant. In October 2009, the parties entered into a Trial Payment Plan agreement ("TPP") pursuant to the Home Affordable Modification Plan ("HAMP"), which provided, in relevant part, that Plaintiff make three trial period payments "On or before" November 1st, December 1st, and January 1st of 2009 and 2010, respectively. Doc. No. 91-1 at 36. The document made clear the significance of this plain language: "TIME IS OF THE ESSENCE under this Plan. This means I must make all payments on or before the days that they are due." Id . (emphasis in the original).

The undisputed facts establish that Plaintiff mailed her second payment November 30th, and that the payment was received by Defendants on December 2nd. Doc. No. 95-1 ¶ 72. Similarly, she mailed her third payment on December 30th, and that payment was received by Defendants on January 2nd. Doc. No. 95-1 ¶ 73. Plaintiff's payments were, unquestionably, late and thus not timely. Indeed, on January 13, 2010, Homeward wrote to Plaintiff informing her that her payments were untimely. Doc. No. 95-1 ¶ 74. On February 17, 2010, Plaintiff's representative, Jerry DeSalvatore, spoke with "Diane" at Homeward who informed the representative that the January 13th letter was sent by mistake. Doc. Nos. 95 at 3, 95-1 ¶ 77. On March 10, 2010, DeSalvatore spoke to employees at Homeward who told him that the permanent modification agreement was being drafted by a third party and was taking "longer than it should." Doc. No. 95-2 ¶ 86. On June 14, 2010, Homeward sent Young a traditional, rather than a HAMP, loan modification offer. Id . ¶¶ 87-88.


Summary judgment is appropriate when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). Once a party "has properly supported its motion for summary judgment, the burden shifts to the non-moving party, who may not rest on mere allegations or denials of his pleading, but must set forth specific facts showing there is a genuine issue for trial.'" Barbour v. Dynamics Research Corp., 63 F.3d 32, 37 (1st Cir. 1995) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986)). The Court is "obliged to []view the record in the light most favorable to the nonmoving party, and to draw all reasonable inferences in the nonmoving party's favor." LeBlanc v. Great Am. Ins. Co., 6 F.3d 836, 841 (1st Cir. 1993). Even so, the Court is to ignore "conclusory allegations, improbable inferences, and unsupported speculation." Prescott v. Higgins, 538 F.3d 32, 39 (1st Cir. 2008) (quoting Medina-Muñoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990)). A court may enter summary judgment "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).


A. Breach of Contract

Defendants contend that Plaintiff breached the TPP by not making timely payments thereby precluding her from proceeding with her claim for breach of the TPP. The question is whether Plaintiff's late payments constitute a material breach of the agreement such that further performance by Defendants was excused. Teragram Corp. v., Inc., 444 F.3d 1, 11 (1st Cir. 2006). Plaintiff says no, pointing out that Defendants often did not cash the checks Plaintiff submitted until fourteen days after receipt. Doc. No. 95 at 6 (citing Doc. No. 95-1 ¶¶ 10-11). Plaintiff emphasizes that Homeward received the payments the day after the due date, one of the due dates was a federal holiday, and no specific provision of the TPP establishes the materiality of the brief delay, as a matter of law. These are not, however, the only relevant materiality considerations, for this was not merely a contract between Plaintiff and Defendants, it was a contract during which Defendants would consider Plaintiff for a HAMP loan modification. Thus, there is an additional and decisive consideration.

The TPP rendered Plaintiff eligible for consideration for a HAMP modification of her loan. The rejection letter Homeward issued stated only that she was ineligible for a HAMP modification due to the timing of her payments. Doc. No. 91-21 at 2, 4. The only evidence regarding the HAMP program or guidelines governing the modification Defendants were then considering for Plaintiff's mortgage comes from Crystal Kearse, a Rule 30(b)(6) deponent for Defendants. She testified as follows regarding the TPP's timing requirements: "You have to comply strictly with the trial payment plan in order to be entered into a formal or loan modification under HAMP." Doc. No. 91-10 119:9-12. She explained the reasoning behind this requirement: HAMP is "very strict. It's due to government guidelines, so there is little to no wiggle room with regard to payments being received and things of that sort." Doc. No. 91-10 119:6-9. Finally, Kearse testified that untimely payments preclude further consideration of a HAMP modification:

Q: But in the event that a borrower fails to make timely payment, can they get back into HAMP?
A: No, and we have no control over that. We are not able to put a person back into HAMP. Generally, if a borrower is kicked out of a HAMP program due to failure of making the trial payment plan, we can try to work them up on a traditional loan modification agreement.

Doc. No. 91-10 119:13-20.

In light of the foregoing, the Court finds that, as a matter of law, Plaintiff's late payments, albeit late by only one day, constitute a material breach of the TPP insofar as HAMP program requirements mandated strict compliance with payment receipt deadlines. Such a material breach on Plaintiff's part excuses Defendants from further performance, i.e. further consideration of Plaintiff for a HAMP modification, and renders Defendants not liable to Plaintiff for damages arising from that nonperformance of that obligation. See Teragram Corp., 444 F.3d at 11. Plaintiff objects to the foregoing analysis in several ways.

First, Plaintiff complains that Kearse lacked sufficient training in HAMP. Whatever the depth of Kearse's knowledge of HAMP, her testimony makes clear that she is familiar with HAMP and its requirements. See Doc. No. 91-10 118:25-119:20. More importantly, Plaintiff offers no evidence that HAMP operates differently than Kearse explained. Second, Plaintiff complains that no employee made the decision that Plaintiff was ineligible for a HAMP modification. Rather, the decision was made by a computer. Doc. No. 95 at 4. Plaintiff, however, points to nothing that prevents Homeward from automating that aspect of the calculation especially in light of Kearse's testimony that the requirements were strict. Finally, Plaintiff points out, correctly, that on February 17, 2010, her representative spoke with "Diane" at Homeward who informed the representative that the January 13th letter stating that Plaintiff was ineligible for a HAMP modification was sent by mistake. Doc. Nos. 95 at 3, 95-1 ¶ 77. Her representative sent a confirmatory letter on February 17, 2010, repeating "Diane's" claim, Doc. No. 95-1 ¶ 78, and Homeward documents confirm that someone memorialized making this statement regarding the letter, Doc. No. 91-23 at 2-3. These statements by Homeward's employee provide no explanation for the basis for the belief that the letter was sent in error. In the face of Kearse's testimony that HAMP guidelines from the government are strict, and with no contrary evidence as to that specific point, the statement that the letter was sent in error fails to create a genuine issue of material fact. This is so especially when the more general representation, that Defendants were considering (and did consider) Plaintiff for a non-HAMP loan modification is undisputed; indeed Defendants offered Young a non-HAMP modification in June. Accordingly, Defendant's Motion for Summary Judgment is ALLOWED as to the breach of contract claim, Count I of the Complaint.

This claim, Count I, also fails for a second independent reason. The First Circuit determined that the only contract claim pled by the Complaint arose from Defendants' failure "to provide a permanent modification agreement by the modification effective date [of February 1, 2010]." See Young, 717 F.3d at 235. In moving for summary judgment, Defendant has established that Plaintiff has no evidence of damages on this breach of contract claim. In fact, the First Circuit, in its opinion, presaged this outcome, noting that "[o]f course, a breach of contract claim requires proof of damages, and Young's complaint leaves some uncertainty about the nature of the damages she seeks[, ]" and that damages will "be important at later stages of the case." Id. at 236 n.8.

The undisputed evidence establishes that Defendants offered Plaintiff a permanent modification on June 14, 2010. Doc. No. 95-2 at ¶ 87. Plaintiff offers no evidence whatsoever regarding the terms of the HAMP modification to which she was entitled under the TPP. She has not provided the Court with an expert analysis of the HAMP guidelines applied to the financial information she had submitted to Defendants, nor has she otherwise pointed to rules or guidelines defining the type of modification to which she was entitled under HAMP. In the absence of any such evidence, she cannot establish that the permanent modification offered by Defendants differed in any material way from the HAMP modification to which she claims entitlement. Notably, the offered modification was a permanent modification, it provided for an initial interest rate of 4.625 percent climbing ultimately to five percent (the rate Plaintiff had requested, Doc. Nos. 91-4 at 111:7-18, 91-16 at 6), and it offered a monthly payment rate lower than she had owed prior to the TPP. Compare Doc. No. 91-1 at 32 (showing Plaintiff to be behind four payments of $2, 456.08 in September 2008) with Doc. No. 91-1 at 46 (setting monthly payment of modification offer at $1658.71 initially, rising to $1718.93 after thirty-six payments). Plaintiff has identified no other mortgage-related delay damages-Defendants waived all late fees for the period between February and June. See Doc. No. 91-1 at 50 (schedule of offered modification showing no amount due for "Other Accrued and Unpaid Fees")

The offered modification did increase the monthly payment from the amount due under the TPP. The monthly payment under the modification offered was $1658.71 per month, approximately three hundred dollars more than the $1368.94 trial period payments, Doc. No. 91-1 at 36. But, the First Circuit has already ruled that "Young has failed to state a breach of contract claim based on the mere fact that the permanent modification agreement increased her monthly payments." Young, 717 F.3d at 233. In interpreting the TPP, the Court of Appeals read the TPP as "draw[ing] a crystalline distinction between the trial period payment amount and the monthly amount owed under the permanent modification[, ]" stating that the TPP "expressly allow[s]" for an alteration in the payment ...

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