569 B.R. 747
Bankr. W.D. Wis.2017Background
- Aaron and Linda Lofton borrowed in 2004 and executed a Note and Mortgage; Beneficial Financial Wisconsin Inc. (later merged into Beneficial) serviced the loan and Beneficial prosecuted foreclosure proceedings beginning in 2009.
- WHEDA (first mortgage holder) foreclosed in 2015; sheriff sale occurred and Beneficial was the high bidder; the Loftons filed Chapter 13 on November 16, 2015 and then this adversary to recover damages for alleged servicing-transfer notice violations.
- Loftons allege Beneficial either transferred servicing (around Aug. 2015) without providing RESPA notice or fraudulently denied owning/servicing the loan, violating Wis. Stat. § 224.77 and giving rise to damages under Wis. Stat. § 224.80.
- Beneficial moved for summary judgment; parties consented to the bankruptcy court entering final judgment despite the case being designated non-core.
- Evidence in opposition consisted largely of Linda Lofton’s and a paralegal’s affidavits recounting internet phone searches and unsuccessful calls; record lacks clear proof of any servicer-change or that Beneficial altered payee, account number, payment address, or amount due.
- Court concluded: material factual dispute exists only as to whether a merger/acquisition notice exception to RESPA applied; Loftons failed to present evidence of actual damages causally linked to any violation, so summary judgment granted to Beneficial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Beneficial violated Wis. Stat. § 224.77(l)(m) by denying it held/serviced the loan (fraud/improper dealing) | Lofton: Beneficial told her to contact others and denied servicing, causing confusion and deceptive conduct | Beneficial: Lofton relied on internet searches, ignored written contact information, and Beneficial did not initiate or prolong confusion | Court: No evidence Beneficial engaged in improper/fraudulent denial; summary judgment for Beneficial. |
| Whether Beneficial violated RESPA (12 U.S.C. § 2605(b)) by failing to give notice of transfer of servicing | Lofton: Beneficial failed to notify of a servicing transfer (alleged 2015 change) | Beneficial: No transfer triggering notice occurred; merger/acquisition exception applies if payee/account/address/amount unchanged | Court: Record lacks facts to determine whether the merger/acquisition exception applies; material fact exists on this narrow point, but resolution unnecessary because no damages shown. |
| Whether Loftons suffered "actual damages" under Wis. Stat. § 224.80 or RESPA (12 U.S.C. § 2605(f)) | Lofton: Incurred attorney fees, continued payments to WHEDA, and emotional distress | Beneficial: Fees and voluntary payments lack causal connection; no medical evidence of distress; no pattern of RESPA noncompliance shown | Court: Plaintiffs failed to prove actual damages causally linked to any violation; attorney fees are not actual damages without causal link; emotional distress unsupported. Summary judgment for Beneficial. |
| Whether statutory/treble/pattern damages under RESPA apply | Lofton: Seeks actual and statutory damages for RESPA violation | Beneficial: No evidence of pattern/practice of noncompliance or of actual damages | Court: No evidence of pattern or actual damages; statutory additional damages not warranted. |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard and material fact definition)
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden-shifting principles)
- Stern v. Marshall, 564 U.S. 462 (bankruptcy constitutional authority issues)
- Catalan v. GMAC Mortg. Corp., 629 F.3d 676 (RESPA is a consumer protection statute; evidentiary standard for emotional distress)
- Diedrich v. Ocwen Loan Servicing, LLC, 839 F.3d 583 (plaintiff’s burden to prove injury under related statutory claim)