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Traut v. Homeward Residential, Inc.

United States District Court, D. Massachusetts

March 7, 2018



          Nathaniel M. Gorton United States District Judge

         In September, 2015, Conrad and Celina Traut (collectively, “plaintiffs” or “the Trauts”) brought this action against Quantum Servicing Corporation (“Quantum”), Residential Credit Solutions, Inc. (“RCS”), Rushmore Loan Management Services LLC (“Rushmore”) and Elizon Master Participation Trust I, U.S. Bank Trust National Association as Owner/Trustee (“Elizon” or “the Trust”) (collectively, “defendants”) seeking injunctive relief and civil damages for defendants' alleged conduct with respect to plaintiffs' residential mortgage. Pending before the Court are Quantum's motion for summary judgment (Docket No. 119) and Elizon and Rushmore's motion for summary judgment (Docket No. 124). For the reasons that follow, Quantum's motion will be denied and Elizon and Rushmore's motion will be allowed.

         I. Background and Procedural History

         Plaintiffs own a residence in Sharon, Massachusetts. In 2007, plaintiffs executed a note and 30-year mortgage with American Home Mortgage (“AHM”) to secure a loan in the amount of $415, 200. Shortly thereafter, AHM transferred the note and mortgage to Societe Generale S.A. which retained Quantum to service the loan. The terms of the mortgage included a low introductory interest rate, an initial monthly payment of less than full interest and a subsequent rate increase set only to repay accrued interest.

         In July, 2010, plaintiffs made a late payment due to financial hardship. Quantum, as the loan servicer, marked the loan delinquent and threatened foreclosure. Plaintiffs state that they attempted to make subsequent payments but that such efforts were rejected by Quantum. They attempted to obtain a modification of their loan throughout 2011. In December, 2011, those efforts resulted in receipt of a forbearance agreement (“the forbearance agreement”) and letter indicating that plaintiffs' loan would be modified “upon completion of the 6 month trial plan agreement”. The forbearance agreement called for an additional down payment and six monthly installment payments. Plaintiffs executed the document to prevent an imminent foreclosure sale.

         In August, 2012, RCS succeeded Quantum as the loan servicer. Quantum declined a permanent modification of the loan prior to transferring the servicing to RCS. The forbearance plan was extended for two months and plaintiffs made two final payments in July, 2012 and August, 2012. RCS did not permanently modify the loan and rejected three applications for a loan modification submitted by the Trauts.

         In December, 2014, the Trauts received a letter informing them that, effective January 1, 2015, Rushmore would assume loan servicing. Rushmore notified plaintiffs in February, 2015 that the loan was in foreclosure. Throughout the spring of 2015, Rushmore was in contact with plaintiffs. In May, 2015, plaintiffs' counsel sent Rushmore a cease and desist letter advising Rushmore that all further communications should be made through plaintiffs' counsel. They also sent a demand letter to Quantum, RCS and Rushmore in May, 2015 pursuant to M.G.L. C. 93A.

         In September, 2015, plaintiffs initiated this action by filing a complaint against defendants alleging 1) breach of contract by Quantum, RCS, Rushmore and Elizon, 2) promissory estoppel against Quantum, RCS, Rushmore and Elizon, 3) negligent misrepresentation by Quantum, 4) violations of the Fair Debt Collection Practices Act (“FDCPA”) by Quantum, RCS and Rushmore and 5) violations of M.G.L. c. 93A (“Chapter 93A”) by Quantum, RCS, Rushmore and Elizon. In January, 2016, plaintiffs and Quantum filed a stipulation of partial dismissal as to Counts III and IV and as to Count V, with respect to claims regarding the alleged improper origination of the loan. That same day, plaintiffs and Rushmore filed a stipulation of partial dismissal of Count V insofar as it alleged improper origination and enforcement of the loan.

         In November, 2015, the parties filed a stipulation with respect to the mortgage payments that would become due during the pendency of the litigation. The agreement provided that plaintiffs would continue making monthly payments, to be held in escrow, and defendants agreed to forbear all foreclosure activity. In September, 2017, Elizon filed a motion to amend its answer and assert a counterclaim, stating that plaintiffs had violated the terms of the stipulation. That motion was allowed and Elizon filed its counterclaim in October, 2017, alleging breach of contract by and the unjust enrichment of Conrad Traut.

         In August, 2017, plaintiffs and RCS filed a stipulation of dismissal as to defendant RCS only. In October, 2017, on the eve of trial, the parties jointly moved to continue the pretrial conference and the scheduled trial date. This Court allowed that motion and, in January, 2018, Quantum, Rushmore and Elizon moved for summary judgment on all claims. The motions for summary judgment are the subject of this memorandum.

         II. Motions for Summary Judgment

         A. Legal Standard

         The role of summary judgment is “to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.” Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991). The burden is on the moving party to show, through the pleadings, discovery and affidavits, “that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is material if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine issue of material fact exists where the evidence with respect to the material fact in dispute “is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         If the moving party has satisfied its burden, the burden shifts to the non-moving party to set forth specific facts showing that there is a genuine, triable issue. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The Court must view the entire record in the light most favorable to the non-moving party and indulge all reasonable ...

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