United States District Court, W.D. North Carolina, Charlotte Division
J. Conrad, Jr. United States District Judge
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.
FINDINGS OF FACT
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
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
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).
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).
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).
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 ...