Stephen H. Perron v. J.P. Morgan Chase Bank, N.A.
2017 U.S. App. LEXIS 496
7th Cir.2017Background
- Stephen Perron and Christine Jackson owned a mortgaged home serviced by J.P. Morgan Chase; they changed homeowners insurers in 2009 but did not notify Chase.
- Chase had already paid the old insurer’s $1,422 premium from escrow, later paid the new insurer, and told the couple to forward the refund check to replenish escrow.
- Perron and Jackson deposited the refund instead of returning it, creating an escrow shortfall; Chase increased monthly payments to cover the deficit.
- The couple underpaid and made a partial December 2010 payment that Chase held in suspense, causing a default; they then sent two letters labeled qualified written requests (QWRs) under RESPA.
- Chase responded with a full account history and escrow analysis; plaintiffs alleged the response was inadequate and sued under RESPA and for breach of the implied covenant of good faith and fair dealing.
- The district court granted summary judgment for Chase; the Seventh Circuit affirmed, finding Chase substantially complied with RESPA and that plaintiffs showed no actual damages or a pattern of noncompliance.
Issues
| Issue | Perron & Jackson's Argument | Chase's Argument | Held |
|---|---|---|---|
| Whether Chase breached implied covenant of good faith by holding partial payment in suspense | Chase accepted reduced payment as full satisfaction; holding it in suspense was unfair | Mortgage contract permits accepting partial payments without waiving rights; no agreement to accept as full | No breach; contract allows suspense handling and plaintiffs offered no evidence of agreement to accept partial payment as full |
| Whether Chase’s responses to the QWRs complied with RESPA §2605(e) | Chase failed to identify recipient of $1,422 escrow payment and explain suspense handling; response was inadequate | Chase provided complete account history and escrow analysis; missing details were already known to plaintiffs | Chase substantially complied; any minor omission caused no actual damages because plaintiffs already knew the facts |
| Whether plaintiffs proved actual damages or proximate causation for RESPA claim (including emotional harm/marriage breakdown) | Plaintiffs seek >$300,000 including emotional-distress damages from marriage collapse | Alleged harms are too attenuated and not caused by any RESPA violation; no actual monetary harm from informational omission | No actual damages tied to any RESPA breach; marital breakdown too remote for proximate cause; emotional distress claim fails |
| Whether plaintiffs proved a pattern or practice of RESPA noncompliance to recover statutory damages | Point to two prior district-court Chase losses as showing pattern | Two isolated, uncoordinated cases are insufficient to establish a pattern or practice | No pattern or practice shown; statutory damages unavailable |
Key Cases Cited
- Kuttner v. Zaruba, 819 F.3d 970 (7th Cir.) (standard of review for summary judgment)
- Catalan v. GMAC Mort. Corp., 629 F.3d 676 (7th Cir.) (RESPA allows recovery of actual and emotional-distress damages; defines relief for servicer failures)
- Medrano v. Flagstar Bank, FSB, 704 F.3d 661 (9th Cir.) (scope of RESPA QWR duties limited to servicing-related inquiries)
- Poindexter v. Mercedes-Benz Credit Corp., 792 F.3d 406 (4th Cir.) (distinguishing servicing duties from disputes about loan terms)
- Old Nat’l Bank v. Kelly, 31 N.E.3d 522 (Ind. Ct. App.) (explaining Indiana’s limited recognition of implied covenant of good faith and fair dealing)