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Wenzel v. National Creditors Connection, Inc.

United States District Court, D. New Hampshire

April 20, 2018

Sasha Wenzel and Eric Daneault
National Creditors Connection, Inc. and Carrington Mortgage Services


          Landya McCafferty, United States District Judge

         Sasha Wenzel and Eric Daneault brought suit in New Hampshire Superior Court, Hillsborough County against defendants Carrington Mortgage Services (“Carrington”) and National Creditors Connection, Inc. (“National Creditors”), alleging that Carrington's unlawful conduct in mishandling their loan payments forced them into default on their mortgage agreement.

         Plaintiffs also alleged that Carrington and National Creditors violated federal and state law in their efforts to collect on plaintiffs' debt. Defendants removed the case to this court and move for summary judgment on all of plaintiffs' claims. Plaintiffs object.


         A movant is entitled to summary judgment if it “shows that there is no genuine dispute as to any material fact and [that it] is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In reviewing the record, the court construes all facts and reasonable inferences in the light most favorable to the nonmovant. Kelley v. Corr. Med. Servs., Inc., 707 F.3d 108, 115 (1st Cir. 2013).

         “On issues where the movant does not have the burden of proof at trial, the movant can succeed on summary judgment by showing ‘that there is an absence of evidence to support the nonmoving party's case.'” OneBeacon Am. Ins. Co. v. Commercial Union Assur. Co. of Canada, 684 F.3d 237, 241 (1st Cir. 2012) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). If the moving party provides evidence to show that the nonmoving party cannot prove a claim, the burden shifts to the nonmoving party to show that there is at least a genuine dispute as to a factual issue that precludes summary judgment. Woodward v. Emulex Corp., 714 F.3d 632, 637 (1st Cir. 2013).

         Under the Local Rules of this district, “[a] memorandum in support of a summary judgment motion shall incorporate a short and concise statement of material facts, supported by appropriate record citations, as to which the moving party contends there is no genuine issue to be tried.” LR 56.1(a). “A memorandum in opposition to a summary judgment motion shall incorporate a short and concise statement of material facts, supported by appropriate record citations, as to which the adverse party contends a genuine dispute exists so as to require a trial.” LR 56.1(b). Importantly, “[a]ll properly supported material facts set forth in the moving party's factual statement may be deemed admitted unless properly opposed by the adverse party.” Id.


         On December 17, 2007, plaintiffs executed a promissory note in favor of SurePoint Lending abn First Residential Mortgage Network, Inc. (“SurePoint”) in exchange for a loan in the amount of $235, 480. The note was secured by a mortgage on plaintiffs' home in Manchester, New Hampshire.

         Plaintiffs timely submitted their first four monthly payments due under the note. They failed to make their fifth monthly payment, or any payment due under the note thereafter.

         On April 22, 2011, Mortgage Electronic Registration Systems, Inc. (“MERS”), as SurePoint's nominee, assigned the mortgage to BAC Home Loans Servicing, L.P. (“BAC”). On February 2, 2012, MERS, as BAC's nominee, assigned the mortgage to Bank of America, N.A. (“Bank of America”). Bank of America was also the servicer of the loan.

         On December 5, 2012, plaintiffs and Bank of America entered into a loan modification agreement (the “first loan modification agreement”). At that time, plaintiffs were 54 months in arrears on their loan. Plaintiffs made the first 14 payments required under the first loan modification agreement, but, beginning with their payment due on February 1, 2014, they failed to make the next nine payments.

         In November 2014, plaintiffs and Bank of America executed a second loan modification agreement. Plaintiffs submitted their first payment under the second agreement on time, but were late on their second payment and fell behind by two months. Since that time, plaintiffs made 33 payments, all of which have been a minimum of 60 days late.[2]

         I. Service Responsibilities Transferred to Carrington

         On June 10, 2016, Bank of America sent plaintiffs a notice that servicing responsibilities of their mortgage loan would be transferred to Carrington on July 1, 2016. See doc. no. 1-1 at 16-19. At some point in July, Carrington sent plaintiffs a “Notice of Servicing Transfer.” The Notice of Servicing Transfer is dated July 11, 2016, and Carrington asserts that it mailed the notice on or around that date. Wenzel states in an affidavit that she did not receive the notice until July 26, 2016. See doc. no. 41-1 at ¶ 5.

         On July 26, 2016, Wenzel called Carrington, explained to a representative that she had just received paperwork from Carrington indicating that it was her new loan servicer on that same date, and attempted to make a monthly payment over the phone. Wenzel explained to the representative that she had been two months behind in her mortgage payments “forever” but that Bank of America always allowed her to make a one-month payment over the phone.[3] The representative informed Wenzel that because her paperwork showed her as being at least two months behind on her payments (for May and June 2016), Carrington could not accept one month's payment over the phone, and she would need to mail the payment or submit it online. During the call, the representative told Wenzel that she needed to update her contact information, including her telephone number. Wenzel provided her cell phone number, which she stated was her only telephone number.[4]

         During that same call, Wenzel told the Carrington representative that the paperwork she had received listed her outstanding balance as $244, 672.23, but that she believed this information was incorrect. Wenzel stated that paperwork from Bank of America showed that her outstanding balance was $243, 053.15. The representative confirmed that Wenzel's outstanding balance was $243, 053.15.

         Three days later, on July 29, 2016, Carrington sent plaintiffs a notice of intent to foreclose. The notice stated that Carrington had not received the payment due on May 1, 2016, and that the amount required to cure the delinquency was $5, 502.30. See doc. no. 1-1 at 21-23.

         Wenzel subsequently mailed in a monthly payment, and Carrington accepted it on August 9, 2016, as plaintiffs' payment for May. Shortly thereafter, Wenzel mailed in a second payment, which Carrington accepted on August 31, 2016, as plaintiffs' payment for June.

         At some point, Wenzel sent in a third payment, which she asserts Carrington “initially rejected, and held, before [it was] eventually accepted and cashed.” Doc. no. 41-1 at ¶ 8. Carrington acknowledges that it accepted Wenzel's July payment on September 30, 2016, and applied it to plaintiffs' outstanding balance. Plaintiffs have made no further loan payments since that time.

         II. Debt Collection Efforts

         From July 28 through October 11, 2016, Carrington made seven calls on different dates to Wenzel's cell phone. Carrington left two short voicemails on Wenzel's phone, on August 18 and 19.

         On August 5, 2016, Carrington provided plaintiffs' address, but not Wenzel's phone number, to National Creditors. That same day, National Creditors sent a Debt Validation Notice to Wenzel at plaintiffs' address. The notice advised that National Creditors was acting on behalf of Carrington, and stated that Carrington's records showed that Wenzel owed a debt to Bank of America of $7, 336.40 as of August 5, 2016. The letter advised Wenzel that unless she disputed the validity of the debt within 30 days of receipt of the notice, National Creditors would assume the debt to be valid. Wenzel did not contact National Creditors to dispute the debt.

         On August 8, 2016, National Creditors, on Carrington's behalf, sent a field agent to plaintiffs' home. The field agent rang the doorbell and knocked on the door, but no one answered. The agent left a contact letter in a sealed personal and confidential envelope. The letter, which had Carrington's name and address in the header, stated that plaintiffs owed $7, 336.40 as of August 5, 2016, and stated that it “is imperative that you contact a representative at the telephone number listed below immediately upon receipt of this letter.” Doc. no. 35-2 at 2. The telephone number listed on the letter was Carrington's contact information. After the August 8, 2016 visit to the home, National Creditors had no contact, by phone or otherwise, with plaintiffs.


         Plaintiffs bring seven claims against Carrington only: Violation of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq. (Count I); Negligent Misrepresentation (Count II); Breach of the Covenant of Good Faith and Fair Dealing (Count III); Violation of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227 (Count IV); Two Counts of Violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. (Counts V and VII); and “Standing” (Count IX). They also allege two counts against both Carrington and National Creditors: Violation of the FDCPA (Count VI); and Negligent Infliction of Emotional Distress (Count VIII). Defendants move for summary judgment on all claims. Plaintiffs object.

         I. Defendants' Affidavits

         In support of their motion for summary judgment, defendants submitted affidavits from Elizabeth Ostermann, a Vice President for Carrington[5] (doc. no. 34) and Mark Hunt, Custodian of Records and Director of Compliance for National Creditors (doc. no. 35). These affidavits provide support for the statement of undisputed facts included with defendants' motion for summary judgment.

         Plaintiffs assert that pursuant to Federal Rule of Civil Procedure 37(c)(1), the court should not consider these affidavits because Ostermann and Hunt were not identified in defendants' initial disclosures, and defendants only disclosed their identities shortly before the close of discovery.[6] They argue that defendants acted in bad faith and that the late disclosure was highly prejudicial to plaintiffs because they had no opportunity to depose these witnesses.

         Plaintiffs fail to provide any legitimate basis for their assertion that defendants acted improperly or in bad faith or that plaintiffs suffered any prejudice. Although defendants did not identify Ostermann or Hunt in their initial disclosures, they supplemented those disclosures on October 24, 2017.[7] See doc. no. 48-1. Consistent with their pattern during the course of this litigation, plaintiffs could have, but did not, seek to depose either Ostermann or Hunt prior to the close of discovery on November 17, 2017. See doc. nos. 20 & 23 (detailing plaintiffs' failure to seek discovery throughout the litigation).

         The case on which plaintiffs rely and attach to their objection, Rigby v. Philip Morris USA Inc. et al., No. 16-16831 (11th Cir. Oct. 23, 2017), does not support their argument. In Rigby, the Eleventh Circuit held that the district court did not abuse its discretion in excluding affidavits offered by plaintiff in his objection to defendants' motion for summary judgment. The Eleventh Circuit noted that plaintiff supplemented his disclosures and identified his witnesses “only after the discovery period had ended and defendants had filed their motion for summary judgment.” Doc. no. 41-2 at 4 (emphasis added).

         Here, in contrast, defendants disclosed Ostermann's and Hunt's names and the topics about which they have knowledge in a timely fashion. Plaintiffs had the opportunity to depose these witnesses, but, consistent with their behavior throughout this litigation, made no effort to do so. Plaintiffs' argument that the court should exclude the affidavits under Federal Rule of Civil Procedure 37 is unavailing.[8]

         II. RESPA (Count I)

         In their complaint, plaintiffs allege that Carrington violated RESPA, and specifically 12 U.S.C. § 2605, in the following ways: 1) Carrington did not send plaintiffs a timely notice of transfer of servicing of the loan; 2) Carrington added late fees during the 60-day “grace period” after the transfer date; and 3) Carrington continued to add late fees despite receiving payments before their due date, and returned plaintiffs' monthly mortgage payments. See doc. no. 1-1 at ¶¶ 30-35. Defendants argue that they are entitled to summary judgment because the evidence in the record shows that Carrington did not take any of the actions plaintiffs allege in support of their RESPA claim and that, regardless, there is no evidence that plaintiffs suffered any damages from Carrington's alleged RESPA violations. See Bulmer v. MidFirst Bank, FSA, 59 F.Supp.3d 271, 279 (D. Mass. 2014) (“To succeed on a compensatory claim, a plaintiff must demonstrate both a violation of the statute and actual damages caused by the RESPA violation.”). The court addresses each of plaintiffs' allegations below.

         A. Notice of Servicing Transfer

         Plaintiffs first allege that Carrington failed to provide timely notice of the transfer of servicing responsibilities of their loan. Under RESPA, “[e]ach transferee servicer to whom the servicing of any federally related mortgage loan is assigned, sold, or transferred shall notify the borrower of any such assignment, sale, or transfer.” 12 U.S.C. § 2605(c)(1). The “notice required under paragraph (1) shall be made to the borrower not more than 15 days after the effective date of transfer of the servicing of the mortgage loan (with respect to which such notice is made).” Id. at § 2605(c)(2)(A).

         Defendants argue that the undisputed evidence in the record shows that Carrington sent plaintiffs the required notice of transfer within 15 days of July 1, 2016, the effective date of the transfer. But defendants themselves appear confused as to the date Carrington sent the notice.

         The notice of transfer is dated July 11, 2016. See doc. no. 34-5 at 2-3. Defendants assert in their memorandum in support of their summary judgment motion that Carrington sent the notice on that same date, relying on Ostermann's affidavit. See doc. no. 33 at 10. The statement in the affidavit upon which defendants rely, however, merely refers to the date of the letter itself, and does not provide the date that Carrington sent the notice. See doc. no. 34 at ¶ 14. Later in their memorandum, defendants state that Carrington mailed the notice of transfer “on or about July 18, 2016”-a date outside of the 15-day deadline. See doc. no. 33 at 14 (“Indeed, indisputable evidence shows that on or about July 18, 2016, [Carrington] sent Plaintiffs notice to the Subject Property address that the Subject Loan's servicing had been transferred from [Bank of America] to [Carrington].”). Then, in their reply brief, defendants represent that “the Subject Loan's servicing notes unequivocally establish Carrington sent the servicing transfer notice on July 16, 2016, which is fifteen days (15) after the July 1, 2016 effective day of transfer.”[9] Doc. no. 48 at 5.

         Even if defendants had settled on a single date that Carrington sent the notice, plaintiffs provide evidence that Carrington failed to comply with the 15-day deadline. On July 26, 2016, Wenzel called Carrington and stated that she received on that date a package from Carrington, which included the notice of transfer. In her affidavit, Wenzel states that she received the notice on July 26, 2016.

         On the basis of this conflicting record, a genuine issue of material fact exists as to whether Carrington complied with its obligations under § 2605(c).[10]

         B. Late Fees Within 60 Days of Service Transfer

         Plaintiffs next allege that Carrington “failed to treat the Plaintiffs' payments as required by 12 U.S.C. 2605(d) during the 60 day period beginning at the effective date of the transfer.” Doc. no. 1-1 at ¶ 32. Because of the confusion that can result when a new loan servicer takes over, RESPA protects debtors who make timely payments to the predecessor servicing company for a period of 60 days after the transfer. Plaintiffs' allegation appears to be that Carrington improperly added late fees and/or other fees during that 60-day grace period.

         Section 2605(d) provides:

During the 60-day period beginning on the effective date of transfer of the servicing of any federally related mortgage loan, a late fee may not be imposed on the borrower with respect to any payment on such loan and no such payment may be treated as late for any other purposes, if the payment is received by the transferor servicer (rather than the transferee ...

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