Stovall v. SELECT PORTFOLIO SERVICING, INC. AS SERVICER FOR D
11-00412
| Bankr. N.D. Ala. | May 18, 2012Background
- Charlene Stovall, debtor and plaintiff, filed an adversary proceeding in the Northern District of Alabama (Bankruptcy Court) against Select Portfolio Servicing, the loan servicer for DLJ Mortgage (and ultimately U.S. Bank as holder of the note).
- Stovall’s loan was a $193,500 adjustable-rate note secured by a mortgage; Select began servicing in June 2005 and pursued possible modification under HAMP after she fell behind on payments.
- A HAMP trial-period modification was proposed in February 2010 with a three-month payment plan; missing documents led to a denial of the modification by June 21, 2010, and a default/cure notice followed on June 28, 2010.
- Foreclosure-related steps began with acceleration and a sale notice in April 2011; Stovall later filed for bankruptcy on May 9, 2011, and the plan was dismissed after she failed to cure delinquency.
- Stovall filed this AP in November 2011; discovery issues and missed hearings led to a scheduling order and resolutions: Select moved for summary judgment and to strike, which the court granted.
- The court granted both the motion to strike Stovall’s late memorandum and the motion for summary judgment, concluding no tort, contract, or wrongful-foreclosure claims were proven and that Select did not owe a modification obligation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Stovall’s late memorandum justifies strike of response | Stovall argues excusable neglect and should have time extended; asserts computer illness issues. | Stovall disregarded scheduling orders and did not show good cause to extend; late filing warrants strike. | Grant the strike; response late and no excusable neglect established. |
| Whether Select is entitled to summary judgment on all counts | Modification mishandled; breach and tort theories; damages from delayed modification and foreclosure. | No contract duty to modify; no negligent hiring, no fraud with particularity; evidence fails for breach or wrongful-foreclosure claims. | Grant summary judgment on all counts; no actionable tort or contract claim. |
| Whether Stovall states a cognizable negligence claim | Select breached duty by mishandling modification process and information. | No legal duty to modify; information provided; no breach of duty proven. | Denied; negligence claim fails as a matter of law. |
| Whether negligent hiring/supervision claims survive | Select employees’ incompetence caused injury via mishandling modification. | No act by employees caused injury; no negligent hiring claim viable. | Denied; no basis for negligent hiring/supervision liability. |
| Whether fraud, breach of contract, or wrongful-foreclosure claims survive | Fraud for misrepresentations; contract breach; improper foreclosure. | Fraud not pled with specificity; no contract to modify; foreclosure not improper in the absence of misuse. | Denied; counts dismissed with prejudice; no evidence of fraud or breach. |
Key Cases Cited
- Armstrong Bus. Servs., Inc. v. AmSouth Bank, 817 So.2d 665 (Ala. 2001) (tort duties not arising outside contract or law)
- Crestview Mem'l Funeral Home, Inc. v. Gilmer, 79 So.3d 585 (Ala. 2011) (elements of breach of contract require contract, breach, damages)
- Ziemba v. Cascade Intern., Inc., 256 F.3d 1194 (11th Cir. 2001) (fraud allegations must be pleaded with particularity)
- Adickes v. S.H. Kress & Co., 398 U.S. 144 (U.S. 1986) (summary judgment burden on movant; view evidence in light most favorable to nonmovant)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (documentary proof shifts burden; absence of proof defeats movant)
- Lynch v. I.R.S. (In re Lynch), 430 F.3d 600 (2d Cir. 2005) (no error in dismissing appeal for late-filed document without excusable neglect)
- Johnson v. Shirley, 539 So.2d 165 (Ala. 1988) (wrongful-foreclosure must show improper use of power of sale)