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Laws v. U.S. Bank National Association

United States District Court, E.D. North Carolina, Western Division

July 11, 2017

JOHN R. LAWS, II, Plaintiff,


          JAMES C. DEVER III Chief United States District Judge.

         On December 19, 2014, John R. Laws, II ("Laws" or "plaintiff'), filed a suit against U.S. Bank National Association ("U.S. Bank") and Nationstar Mortgage, LLC, ("Nationstar") (collectively, "defendants"), in Cumberland County Superior Court [D.E. 1 -1 ]. On January 2, 2015, defendants removed the action to this court [D.E. 1]. On January 30, 2015, defendants moved to dismiss Laws's complaint [D.E. 13]. On June 3, 2015, the court granted defendants' motion to dismiss Laws's complaint and granted Laws leave to file an amended complaint [D.E. 24]. On June 19, 2015, Laws filed an amended complaint [D.E. 25]. On July 20, 2015, defendants answered Laws's amended complaint [D.E. 28, 29].

         On November 21, 2016, defendants moved for summary judgment [D.E. 36] and filed a statement of material facts [D.E. 37], a memorandum in support [D.E. 39], and an appendix to the memorandum in support [D.E. 38]. On January 10, 2017, Laws responded to defendants' motion [D.E. 45] and filed a statement of material facts [D.E. 43] and an appendix with additional documents [D.E. 44]. As explained below, the court grants in part and denies in part defendants' motion for summary judgment.


         On June 6, 2005, Laws executed a $205, 200.00 promissory note ("the Note") in favor of Argent Mortgage Company, LLC. [D.E. 44-1] 2-3. At all relevant times, MLMI Trust, Certificate Series 2007-SD1, owned the loan, and U.S. Bank is the current trustee. [D.E. 37] ¶ 8; [D.E. 43] ¶ 8. The Note required Laws to make monthly payments of $ 1, 45 5.93, which the holder of the Note was to apply first to interest on the Note, second to the Note's principal, and third to escrow fees. [D.E. 44-1] 2, 7. The holder of the Note also was allowed to assess "late charges" and to return any payment that was "insufficient to bring the Loan current." Id. at 7. The Note allowed Laws to make advance payments, which after prepayment fees would be applied to the Note's principal. Id. A deed of trust on property located at 6911 Southstaff Road, Fayetteville, NC, ("the Deed of Trust") secured the Note. Id. at 5-16. The Deed of Trust provided that the holder of the Note "or its agents may make reasonable entries upon and inspection of the property." Id. at 9.

         Laws made timely monthly payments as required by the Note. [D.E. 44-13] 26-27. In 2010, Bank of America, N.A., ("BANA") or its predecessor began servicing Laws's loan. [D.E. 37] ¶ 7; [D.E. 43] ¶ 7. U.S. Bank is the trustee of Laws's loan for MLMI. [D.E. 44-3] 7; [D.E. 37] ¶ 8; [D.E. 43] ¶ 8.

         On November 18, 2011, Laws sued BANA, alleging servicing errors and other misconduct arising from BANA's servicing of his loan. [D.E. 37-5]. Essentially, Laws alleged that BANA had erroneously changed the name on his loan, refused to accept the payments Laws sent in his own name, and therefore had injured Laws by treating his loan as though it were in default.

         In 2013, BANA and Nationstar contracted to transfer the servicing of Laws's loan to Nationstar on July 1, 2013. [D.E. 37-6] 14; [D.E. 37] ¶ 10; [D.E. 43] ¶ 10. BANA credited Laws for a $1, 856.11 payment made on June 12, 2013, which was the last of Laws's payments BANA credited. [D.E. 37-1] 37; [D.E. 37] ¶¶ 11-12; [D.E. 43] ¶¶ 11-12. When the loan was transferred to Nationstar for servicing, the account statement reflected a $41, 187.98 delinquency, even though Laws had sent a full payment each month. [D.E. 37-1] 38-40. In June 2013, during a settlement conference with BANA, Laws learned for the first time that BANA planned to transfer servicing of his loan to Nationstar on July 1, 2013. [D.E. 44-13] 59.

         In a letter dated June 10, 2013, BANA wrote to Laws providing information regarding the pending transfer of service, including a statement that any Qualified Written Request ("QWR") regarding BANA's loan servicing be sent to a given address. [D.E.44-3] 1-4. In a letter dated June 25, 2013, Nationstar wrote to Laws regarding the impending transfer of loan servicing to Nationstar. [D.E. 37-6] 14. In a letter dated June 28, 2013, Nationstar again informed Laws of the impending transfer of loan servicing. Id. at 15.

         In a letter dated July 12, 2013, Nationstar sent Laws a "Notice of Servicing Transfer, " a welcome letter, and "Important Account Information." [D.E.44-3] 5-8. The communication stated that $39, 385.98 was currently due on the loan. Id. at 5. In a section titled "CONTACT INFORMATION" the communication indicated that any QWR should be sent to "350 Highland Drive, Lewisville, TX 75067." id. at 6. An asterisk directed the reader to a footnote which stated "PURSUANT TO RESPA, A 'QUALIFIED WRITTEN REQUEST' REGARDING THE SERVICING OF YOUR LOAN MUST BE SENT TO THIS ADDRESS: Nationstar Mortgage, 350 Highland Drive, Lewisville, TX 75067, Attn: Customer Relations Officer, " and went on to define what letters qualify as QWRs. Id. The July 12, 2013 communication also stated "[u]nless you dispute the validity of this debt, or any portion thereof, within thirty (30) days after receipt of this notice, the debt will be assumed to be valid by Nationstar" and "[i]f you notify Nationstar in writing within this thirty (30) day period that the debt, or any portion thereof, is disputed, Nationstar will obtain verification and such verification will be mailed to you." Id. at 7. From July 2013 through March 2014, Laws paid Nationstar in monthly amounts of $ 1, 856.11, which Nationstar accepted and applied to Laws's account for the months of August 2011 through May 2012. See [D.E. 37-1] 45-47; [D.E. 37] ¶17; [D.E. 43] ¶17.

         In a letter to Laws dated July 22, 2013, Nationstar sent a payoff quote stating that Laws owed $ 187, 675.29 in unpaid principal, $27, 501.50 in unpaid interest, $795 in unpaid fees and charges, and $4, 217.36 in unpaid escrow expenses for a total of $220, 189.15 owed. [D.E. 37-6] 22-23. The letter also stated that payoff funds sent by mail should be sent to:

Nationstar Mortgage LLC Attn: Payoff Processing 350 Highland Drive Lewisville, TX 75O67[.]

Id. at 22.

         On August 16, 2013, Laws's attorney sent a letter to:

Nationstar Mortgage, LLC 350 Highland Drive Louisville, TX 75067 ATTN: Payoff Processing

         stating that the $27, 501.50 of interest was incorrect because "[w]hen [Nationstar] purchased this mortgage, this mortgage had been in litigation for approximately 2 1/2 years, " and that the information regarding Laws's missed payments was "completely false and incorrect." [D.E. 44-4]. The letter described the basis for Laws's complaint against BANA-that Laws had been making timely payments but BANA had improperly refused to accept them-and that the case against BANA had been settled, demanded that Nationstar not report Laws's outstanding debt to credit reporting agencies, and expressed Laws's expectation that Nationstar would reply within five days. Id. at 2-3.

         On August 21, 2013, Nationstar's internal records show that it updated the mailing address on file from Laws's address to his attorney's address. [D.E. 37-8] 4. On August 22, 2013, Nationstar sent Laws's attorney a letter that was essentially identical to the July 22, 2013 letter, except that it stated that Laws owed $187, 415.79in unpaid principal, $27, 463.57 in unpaid interest, and $3, 817.18 in unpaid escrow expenses for a total of $219, 491.54 owed. [D.E. 44-3] 9-10.

         In a letter dated August 23, 2013, Nationstar sent to Laws's attorney an acknowledgment of Laws's August 16, 2013 letter and stated that Nationstar would investigate the matter and that "[i]n accordance with the Real Estate Settlement Procedures Act (RESPA), a response will be provided within 30 business days." [D.E. 44-4] 5.

         On September 19, 2013, Laws and BANA signed an agreement settling the November 18, 2011 suit ("the Settlement Agreement"). [D.E. 44-2]. The settlement provided that BANA (identified in the Settlement Agreement as "Defendant") would pay Laws $250, 000.00 plus mediator's fees, reinstate Laws's credit-card limits? and report Laws's loan payments to credit reporting agencies as current through June 30, 2013. Id. at 3. In exchange, Laws (identified in the Settlement Agreement as "Plaintiff') would dismiss the November 18, 2011 suit against BANA and release BANA from liability for acts relating to the November 18, 2011 suit. Id. at 4. Specifically, the release stated:

For consideration of the Payment and other covenants contained herein, the receipt and sufficiency of which are hereby expressly acknowledged, Plaintiff(s), for themselves and each of their present, former, arid future heirs, executors, administrators, partners, co-obligors, co-guarantors, guarantors, sureties, family members, spouses, attorneys, insurers, agents, representatives, predecessors, successors, assigns, and all those who claim through them or could claim through them unconditionally and irrevocably remise, waive, satisfy, release, acquit, and forever discharge Defendants) and each of their present, former, and future parents, predecessors, successors, assigns, assignees, affiliates, divisions, departments, subdivisions, owners, partners, principals, trustees, creditors, shareholders, joint ventures, co-venturers, officers, and directors (whether acting in such capacity or individually), attorneys, vendors, accountants, nominees, agents (alleged, apparent, or actual), representatives, employees, managers, administrators, and each person or entity acting or purporting to act for them or on their behalf, as well as any past, present, or future person or any entity that held or holds any interest in the Loan and the underlying Note or Security Instrument, including, but not limited to, Bank of America Corporation and all of its subsidiaries and affiliates (collectively, "Releasees"), and each of them, respectively, from and against any and all past, present, and future claims, counterclaims, actions, suits, rights, causes of action, lawsuits, set-offs, costs, losses, controversies, agreements, promises and demands, or liabilities, of whatever kind or character, direct or indirect, whether known or unknown or capable of being known, arising at law or in equity, by right of action or otherwise, including, but not limited to, suits, debts, accounts, bills, damages, judgments, executions, warranties, attorney's fees, costs of litigation, expenses, claims, and demands whatsoever that Plaintiffs(s) or their attorneys, agents, representatives, predecessors, successors, and assigns have or may have against the Releasees, for, upon, or by reason of any matter, cause, or thing, whatsoever, in law or equity, including without limitation, the claims made or which could have been made by Plaintiff(s) arising from the origination or servicing of the Loan as well as in any way related to the Property, Note, or Security Instrument, any servicing act or omission thereon as well as any claim or issue which was or could have been brought in the Litigation (collectively, the "Released Matters"). However, nothing in this agreement shall be construed to include a release as to Nationstar Mortgage, LLC or any of its agents, servants and employees with regard to the handling, servicing, or reporting of the Plaintiffs mortgage.

Id. at 4-5. Laws and BANA also

agreed that the Parties may provide a copy of this agreement... in any litigation, or negotiations with Nationstar Mortgage LLC or its successors or assigns as relates to any negotiations regarding the mortgage upon [Laws's] property, referenced herein, as relating to any penalties, interest or fees that Nationstar Mortgage LLC may seek to impose upon the plaintiff as a result of the transfer of the servicing of [Laws's] mortgage by [BANA] and any information submitted at the time or contemporaneously with said transfer.

Id. at 5. The Settlement Agreement contained a provision stating that "[t]o the extent that this Agreement keeps the Loan and underlying Note or Security Instrument in force ... this agreement shall not alter the rights, duties, and obligations of said Loan." Id. at 10. Finally, the Settlement Agreement contained a "Neutral Interpretation" provision, stating that "[t]he Parties shall be deemed to have cooperated in the drafting and preparation of this Agreement. Hence, any construction to be made of this Agreement shall not be construed against any Party." Id. at 8. Laws set aside "[a]ll of the $250, 000.00 for the purposes of paying the uncredited loan payments. [D.E. 37-2] 56-58.

         In a letter dated October 1, 2013, Nationstar wrote to Laws's attorney that Nationstar had received the letter dated August 16, 2013, [1] and that Nationstar was "still in the process of reviewing all the concerns addressed in the letter. A resolution will be sent as soon as it is available." [D.E. 44-4] 6.

         Laws lived on the property secured by the Note, which was located in a gated community. [D.E. 44-17] ¶¶ 2-5. If a visitor requested entrance to the community, and that visitor had not already been placed on a list of approved visitors, the community's security staff would contact the homeowner to ask if the visitor should be allowed to enter. Id. ¶¶ 4-6. On October 22, 2013, Nationstar completed a property inspection of Laws's property. [D.E. 44-11] 6. On November 12, 2013, Nationstar again inspected Laws's property. Id. Beginning on May 6, 2016, Nationstar's agents made "numerous attempts" to enter the community to inspect Laws's property, including attempting twice in the same day. [D.E. 44-17] ¶¶ 8-12. "Laws [was] contacted each time, " presumably by telephone, "to determine if such persons [were] authorized to enter." Id. ¶ 12. In total, Nationstar charged Laws for 33 property inspections over 36 months.

         In a letter dated April 28, 2014, Nationstar wrote to Laws's attorney asserting that Laws had "not made payments on [his] loan since" June 1, 2012, demanding payment of $39, 907.55, and threatening foreclosure. [D.E. 44*7] 2-3. In a letter dated May 19, 2014, Laws responded to Nationstar, stated that Nationstar had not responded to the August 16, 2013 letter, offered to provide additional information to assist in Nationstar's investigation, cited RESPA, and requested a resolution to the dispute. [D.E. 44-5] 2-3. In a letter dated May 29, 2014, Nationstar responded, asserting that Nationstar had reviewed Laws's dispute and found that no error had occurred, that the payment history was correct, that Nationstar would continue to report Laws's loan to credit reporting agencies as delinquent, and that the fees, advances, and interest would not be waived. Id. at 7-8. From May 2014 through December 2014, Nationstar declined to accept Laws's monthly payments and returned each month's payment check to Laws's attorney. [D.E. 37] ¶ 19; [D.E. 43] ¶ 19. In a letter dated June 20, 2014, Nationstar again wrote to Laws's attorney stating that Laws was delinquent on his loan and threatening foreclosure. [D.E. 37-6] 52-54.

         In a letter dated September 25, 2014, Laws's attorney wrote to Nationstar requesting documents and information regarding Laws's loan and Nationstar's delinquency claim. Id. at 72. In a letter dated October 6, 2014, Nationstar responded to Laws's attorney, stating that it hoped to provide a response by October 10, 2014. Id. at 74. In a letter dated October 8, 2014, Nationstar responded to Laws's attorney but did not provide any documents or information regarding Laws's loan or Nationstar's delinquency claim. [D.E. 37-1 ] ...

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