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Roundpoint Mortgage Servicing Corp. v. Five Brothers Mortgage Co. Services And Securing, Inc.

United States District Court, W.D. North Carolina, Charlotte Division

March 30, 2018



          Robert J. Conrad, Jr. United States District Judge


         Plaintiff RoundPoint Mortgage Servicing Corporation (“Plaintiff” or “RoundPoint”) and Defendant Five Brothers Mortgage Co. Services & Securing, Inc. (“Defendant” or “Five Brothers”) dispute which of the parties should pay for which legal fees pursuant to an indemnification clause contained in a contract between RoundPoint, Five Brothers, and 24 Asset Management. RoundPoint and Five Brothers had a contract called the Tri-Party Field Services Agreement (the “Contract”), (Pl. Ex. 2). Under the Contract, Five Brothers was to perform inspections and property preservation on properties for which RoundPoint had provided loan services. Litigation (“Hayes Litigation”) arose related to one of the properties in 2013 when a property owner filed a lawsuit against several parties including RoundPoint and Five Brothers. Both RoundPoint and Five Brothers retained their own counsel and bore their own legal fees. The issue at hand is the amount Five Brothers must indemnify RoundPoint for costs RoundPoint incurred in defending itself in the Hayes Litigation. Following a bench trial on July 18 and 19, 2017, the Court makes the following Findings of Fact and Conclusions of Law, ultimately concluding that Five Brothers owes RoundPoint $153,107.16 in legal fees incurred during the Hayes Litigation.


         RoundPoint is a mortgage servicer based out of Charlotte, North Carolina. (Trial Transcript at 8 (hereinafter “Tr.”)). Five Brothers provides property preservation services nationwide. (Id. at 271). RoundPoint and Five Brothers entered into a contract on December 2, 2011 entitled the “Tri- Party Field Services Agreement” (the “Contract”). (Pl. Ex. 2). Under the Contract, Five Brothers would perform inspection and property preservation services on properties secured by mortgage loans that RoundPoint serviced. (Id.). The Contract included an indemnification clause that stated:

Five Brothers shall indemnify and hold harmless 24 Asset and RoundPoint from any and all liabilities, expenses, demands, suits, judgments, losses, claims, injuries, damages, penalties, fines, forfeitures, attorney’s fees and costs, of any kind whatsoever (each a “Loss” and collectively, “Losses”), arising from or in any way connected with Five Brothers:
i) Violation of any law or regulation;
ii) Non-compliance with the terms of this Agreement or the breach of any warranty or representation set forth in this Agreement, including all exhibits and any other agreements incorporated in this Agreement by reference.
iii) Any claims or actions whatsoever brought by any subcontractor hired by Five Brothers
iv) Negligent, wrongful acts or misconduct by Five Brothers, its employees, officers, directors, agents, contractors or subcontract;
v) Any claims or actions brought by a third party alleging death or injury to any person or damage to or destruction of (whether fully or partially) property arising out of an act, error, or omission by Five Brothers; or
vi) Any mistakes by Five Brothers relating to the performance of the Services herein.

(Id. at 4–5). The Contract also included the following language:

It is expressly understood that this indemnity shall extend to any and all alleged acts, errors, or omissions (whether willful, intentional, negligent, or grossly negligent) committed by Five Brothers, its agents, employees, subcontractors, or independent contractors, while performing any services for RoundPoint. Five Brothers shall assume full responsibility for payment of the cost, defense and settlement of such claim action or proceeding.

(Id. at 5). Self-Help Services Corporation, doing business as Self-Help Credit Union (“SHCU”), was the owner of a 30-year mortgage loan to Annette Hayes (“Hayes”). (Tr. at 13; Pl. Ex. 1 at ¶22). SHCU contracted with RoundPoint to service the loan to Hayes. (Tr. at 14; Pl. Ex. 1 at ¶31).

         In January 2010, RoundPoint informed Ms. Hayes-who owned a condominium in Wilson, NC-that her loan was in default. (Pl. Ex. 1 at ¶¶19, 33). According to Ms. Hayes’ complaint, she negotiated a repayment plan with RoundPoint, which she subsequently honored. Ms. Hayes stated that RoundPoint nonetheless instituted a foreclosure action, obtained a foreclosure, and proceeded with plans to sell Ms. Hayes’ condo. (Id. at ¶¶34–39). Specifically, on June 9, 2010, RoundPoint caused the substitute trustee to initiate a foreclosure proceeding in Wilson County (the “June 2010 Foreclosure”). (Id. at ¶34). On July 15, 2010, the Wilson County Clerk entered an order of foreclosure authorizing the substitute trustee to proceed with the foreclosure sale. (Id. at ¶38).

         Ms. Hayes alleged that she continued to make mortgage payments as scheduled but endured “incomprehensible errors by Defendant RoundPoint in properly crediting her mortgage payments and in continuing to pursue foreclosure proceedings that [Ms. Hayes] had been assured were abated as a result of her compliance with the repayment plan . . . .” (Id. at ¶42). Ms. Hayes’ condo was eventually sold at public auction to the sole bidder SHCU. (Id. at ¶43). Ms. Hayes’ further alleged that after filing bankruptcy and causing a stay of the foreclosure related-activity, she became current with her mortgage, which was not recognized due to errors by RoundPoint. (Id. at ¶¶45–56).

         Part and parcel to foreclosing on Ms. Hayes’ condo, RoundPoint, on behalf of SHCU, attempted to secure the condo through Five Brothers and its agent, Douglas Allan Stuart (“Stuart”), which Ms. Hayes’ alleged amounted to trespassing. (Id. at 54). First, on March 1, 2013, Mr. Stuart, acting as Five Brothers’ agent, entered Ms. Hayes’ property to install a padlock and thereby locked Ms. Hayes out of her condo-an “unlawful self-help eviction” according to Ms. Hayes. (Id.). Although Ms. Hayes regained access to her condo in the following days, Mr. Stuart, acting on behalf of Five Brothers, again entered Ms. Hayes condo on March 17, 2013 and secured it with a padlock in “a second unlawful self-help eviction.” (Id. at 56). Ms. Hayes alleged that these “unlawful tactics are part of a pattern of misconduct by Defendant Five Brothers and its employees nationwide, as reflected in numerous civil suits filed against the company” (Id. at 57) (citing civil suits in Maryland, New York, Florida, and Michigan). Ms. Hayes further alleged ...

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