In re Gravel
MEMORANDUM OF DECISION
Granting Trustee’s Motions to Sanction PHH Mortgage Corporation, Disallowing PHH Mortgage’s Post-Petition Charges, and Directing PHH Mortgage to Pay Sanctions to Legal Services Law Line of Vermont
The Chapter 13 trustee filed a motion asking this Court to make a finding of contempt, disallow certain post-petition fees, and impose sanctions on PHH Mortgage Corporation, in each of the three above-captioned cases, based upon PHH Mortgage Corporation’s failure to comply with Bankruptcy Rule 3002.1 and its violation of this Court’s orders.
For the reasons set forth below, the Court makes the following findings. First, in all three of the instant cases, the Court finds PHH Mortgage Corporation failed to comply with Bankruptcy Rule 3002.1, and that misconduct warrants the disallowance of all post-petition charges and an award of sanctions, under Rule 3002.1(i) and § 105. Second, the Court finds PHH Mortgage Corporation violated this Court’s orders in the Gravel and Beaulieu cases, and additional sanctions are warranted under this Court’s inherent powers and § 105 for this violation. Third, the Court finds it is most equitable for PHH Mortgage Corporation to pay the sanctions to a nonprofit legal services entity.
Based upon these findings, the Court imposes a sanction of $375,000 and directs PHH Mortgage Corporation to pay that sum to Legal Services Law Line of Vermont.
PROCEDURAL HISTORY
While the Chapter 13 trustee’s allegations are similar in all three cases, each case has a distinct procedural posture. Therefore, a brief summary of each case’s procedural history, as well as any unique arguments the parties raised, is set forth below.
1. In re Gravel (Chapter IS case # 11-10112)
On May 20, 2016, the Court entered an order determining Mr. and Mrs. Gravel had cured all pre-petition mortgage defaults, and were current on all post-petition mortgage payments, to PHH Mortgage Corporation (referred to herein as “PHH” or “the Creditor”). That order (doc. # 74, the “Debtors Current Order”) declared
the debtors, by their payments through the Office of the Chapter 13 Trustee, have made all payments due during the pendency of this case through April 1, 2016, including all monthly payments and any other charges or amounts due under their mortgage with PHH Mortgage Corporation.
Doc. # 74 (emphasis added). On May 25, 2016, five days after entry of the Debtors Current Order, PHH sent the Debtors a mortgage statement for the month of May 2016 (the “May Statement”) which, contrary to the recently entered Debtors Current Order, asserted property inspection fees of $258.75 were due.
On June 13, 2016, the Chapter 13 trustee (hereafter “the Trustee”) filed a motion
In PHH’s opposition to the Gravel Sanctions Motion (doc. #77, the “Creditor’s Opposition”), it (i) admitted the property inspection fees were erroneously included in the electronically-generated May Statement, (ii) acknowledged the fees were more than 180 days old, (iii) conceded it did not file a notice of post-petition fees (as required by Rule 3002.1(c)), and (iv) averred that, upon notice of the Trustee’s Gravel Sanctions Motion, it promptly waived and removed the fees from the Gravels’ account. It concluded the Court should deny the Trustee’s motions for sanctions because (1) the Debtors suffered no harm, because the Debtors never paid the charges in question; (2) the purpose of Rule 3002.1 was not frustrated because PHH ultimately removed the charges from the Debtors’ accounts and waived its right to collect them; (3) its conduct did not constitute civil contempt because its inclusion of the post-petition charges on the May Statement was a “one-time error”; and (4) it did not violate any court order. PHH also emphatically disputed that there was any “systemic problem.”
In response, the Trustee contended PHH’s improper billing of the post-petition charges without notice warranted a sanction for violation of Rule 3002.1. He argued that PHH’s conduct caused no harm only became the Trustee recognized the charges were improperly assessed, and instead of paying these charges, he filed the Gravel Sanctions Motion, which prompted the Creditor to remove them. He further asserted PHH only removed those charges because “it realized it had been caught violating [Rule 3002.1] (again)” (doc. # 78, p. 5). The Trustee also argued the Creditor’s conduct did indeed thwart the purpose of Rule 3002.1 because if the Trustee had not filed his motion, the charges would likely have remained on the Gravels’ account following the conclusion of their case, threatening their fresh start. The Trustee vigorously disputed PHH’s representation that this Rule 3002.1(c) violation was a “one-time error,” specifying that (i)
The Trustee insisted that sanctions are also justified and necessary based on PHH’s flagrant violation of Debtor Current Orders. He declared there is absolutely no excuse for PHH’s issuance of the May 2016 Statement, reflecting charges that had been on the Debtors’ statements for many months, after PHH affirmatively concurred the Debtors were current in all post-petition payments as of April 1, 2016.
2. In re. Beaulieu (Chapter 13 case # 11-10281)
The procedural posture of this case is substantially similar to that of the Gravel case.
On May 5, 2016, the Court entered an order determining Mr. and Mrs. Beaulieu had cured all pre-petition mortgage defaults and were current on all post-petition mortgage payments to PHH (doe. #82, “Debtors Current Order”). On May 25, 2016, the Creditor sent out a monthly statement that included old charges (ah NSF fee of $30 and a property inspection fee of $56.25) — charges for which it had never sent a Rule 3002.1(c) notice. On June 14, 2016, the Trustee filed a motion for contempt and sanctions (doc. #90, the “Beaulieu Sanctions Motion”) essentially articulating the same arguments and seeking the same relief as he did in the Gravel Sanctions Motion, with regard to both PHH’s failure to comply with Rule 3002.1 and PHH’s violation of the Debtors Current Order.
PHH filed its opposition to the Beaulieu Sanctions Motion on July 11, 2016 (doc. # 95), and the Trustee responded to that opposition on July 14, 2016 (doc. #96). Both the Creditor’s opposition and the Trustee’s response in Beaulieu contained the same arguments as were made in the Gravel case.
The facts of this case are materially distinguishable from the Gravel case in only three respects: (i) the specific amount of post-petition fees the Creditor charged to the Debtors’ account and the specific date those fees accrued, (ii) the Creditor’s lack of response to the Trustee’s motion for final determination before the Debtors Current Order was entered, and (iii) PHH was not previously sanctioned in this case.
3. In re Knisley (Chapter 13 case # 12-10512)
In contrast to the Gravel and Beaulieu cases, the Court did not enter a Debtors Current Order in the Knisley case. Therefore, the Trustee’s motion for contempt and sanctions in this case focuses solely on the Creditor’s failure to comply with Rule 3002.1 (doc. #50, the “Knisley Sanctions Motion”). He alleges PHH issued a monthly mortgage statement on May 25, 2016 that included charges more than 180 days old ($246.50 in property inspection fees and $124.50 in late charges), without ever filing the required and corresponding Rule 3002.1(c) notices.
The Creditor filed an opposition to the Trustee’s Motion (doc. # 51), and the Trustee responded to that opposition (doc. #52), both of which set forth the same arguments made in the other two cases, with respect to the Rule 3002.1 defalcation.
The parties appeared at a hearing on all three Sanctions Motions on July 27, 2016. At that hearing, PHH acknowledged it had included erroneous post-petition charges on statements that were sent without notice, declared it was working to change its internal system to prevent these errors from recurring, and protested that sanctions were neither warranted nor necessary. The Trustee reiterated the arguments from his Sanctions Motions, emphasized that PHH’s automated issuance of post-petition mortgage statements— without notice of the alleged fees to the Debtors — was exactly the type of conduct Rule 3002.1 was enacted to prevent, and urged the Court to impose sanctions sufficient “to make violation of Rule 3002.1 an unprofitable business practice” and deter PHH from continued transgression of Debtor Current Orders (Gravel, doc. # 78, p.6).
Based upon the parties’ filings and their representations at the hearing, the Court determined sanctions were warranted and necessary. The Court offered both parties an opportunity to be heard on the appropriate amount of sanctions; neither party wished to specify a particular amount and left that issue to the Court’s discretion.
ISSUES PRESENTED
The first issue presented in these contested matters is whether PHH violated Rule 3002.1(c) in these three cases, and if so, the nature and appropriate amount of sanctions to be imposed under Rule 3002.1(i). The second issue is whether PHH violated orders of this Court, in the Gravel and Beaulieu cases, and if so, under what authority the Court can impose sanctions for that misconduct and the appropriate amount of such sanctions. The final issue is to whom any sanctions should be paid.
JURISDICTION
The Court has jurisdiction over this contested matter pursuant to
DISCUSSION
A. PHH’S Failure to Comply with Rule 3002.1
Bankruptcy Rule 3002.1 (the “Rule”) was promulgated in 2011, in response to a growing problem that had arisen in Chapter 13 cases throughout the country: debtors who had successfully completed their Chapter 13 plans, and paid all of-their mortgage arrears and post-petition installment payments, would find themselves in renewed foreclosure proceedings due to undisclosed and unpaid post-petition charges and fees — a result clearly at odds with a debtor’s right to a fresh start. To promote further transparency and more emphatically safeguard debtors’ fresh starts, the Rule requires the holder of a claim secured by a Chapter 13 debtor’s principal residence to file a detailed notice setting forth all post-petition fees, expenses, and charges it seeks to recover from the debtor:
The holder of the claim shall file and serve on the debtor, debtor’s counsel, and the trustee a notice itemizing all fees, expenses, or charges (1) that were incurred in connection with the claim after the bankruptcy case was filed, and (2) that the holder asserts are recoverable against the debtor or against the debtor’s principal residence. The notice shall be served within 180 days after thedate on which the fees, expenses, or charges are incurred.
Fed. R. Banxr. P. 3002.1(c). The Advisory Committee Note to the Rule articulates the purpose of Rule 3002.1 as follows:
[The Rule] is added to aid in the implementation of § 1322 (b)(5), which permits a chapter 13 debtor to cure' a default and maintain payments on a home mortgage over the course of the debtor’s plan. ... In order to be able to fulfill the obligations of § 1322(b)(5), a debtor and the trustee have to be informed of the exact amount needed to cure any pre-petition arrearage, see Rule 3001(c)(2), and the amount of the postpetition payment obligations. If the latter amount changes over time, due to the adjustment of the interest rate, escrow account adjustments, or the assessment of fees, expenses, or' other charges, notice of any change in payment amount needs to be conveyed to the debtor and trustee. Timely notice of these changes will permit the debtor or trustee to challenge the validity of any such charges, if appropriate, and to adjust post-petition mortgage payments to cover any undisputed claimed adjustment.
Fed. R. Banke. P. 3002.1 Advisory Committee Note (2011).
The importance of the obligations mandated by this Rule is underscored by inclusion of a penalty for violations. When a party fails to comply with Rule 3002.1(c), Rule 3002.1(i) explicitly empowers a court to impose sanctions. It authorizes bankruptcy courts to preclude the mortgage creditor from presenting information it failed to disclose in accordance with the Rule, and to “award other appropriate relief, including reasonable expenses and attorney’s fees caused by the failure.”
In addition to this express authority to impose sanctions' for
Neither party has cited, and this Court has not found, any case in which a court imposed sanctions under
For example, in In re Jones, a case that pre-dated
Bankruptcy courts cannot function if secured lenders are allowed to assess post-petition fees without disclosure,. It is unconscionable that a lender would represent a certain debt was due, allow debtor to base his repayment plan on that sum, and then arbitrarily arid without notice change the amounts owed without disclosure or amendment to its proof of claim.
Id. at 603. After a hearing at which Wells Fargo offered to implement improved accounting practices to avoid being sanctioned, the court observed that the “imposition of a fine or penalty may be the only means of deterring a recalcitrant litigant,” but concluded in that particular case “[the court was] convinced that [it had] secured [the creditor’s] attention and that [the creditor’s] offer to amend its practices [was] real.” In re Jones, No. 06-1093,
Since
With respect to the first of these factors, the Court finds PHH had adequate notice of the specific need to comply with
PHH has not claimed it lacked notice of its obligation to comply with
As to the second factor, the Court finds this is not the first instance where PHH has failed to comply with
With regard to the third factor, the Court finds PHH was given an opportunity to correct the underlying processes which apparently caused the
[PHH] has made the corrections to Debtors’ account so that the post-petition payments are current at this time. As well, [PHH] has implemented a manual process to provide quality control and oversight over its automated payment processing of Vermont mortgage loans in Chapter 13. This has been done in an attempt to assure proper application of payments for this and all other Vermont loans serviced by [PHH] and which are in Chapter 13... [A]ny sanctions issued by this Court should be progressive in nature. It is believed that there have been no prior requests for sanctions against [PHH] in this Court. [It] respectfully requests that this Court take into consideration in determining if sanctions are appropriate and, if so, the amount of any sanction. As stated above, [PHH] has implemented remedial efforts in order to prevent future accounting issues. [It] requests an opportunity to prove the efficiency of such efforts and that this opportunity be allowed before the imposition of severe sanctions.
Doc. #44 (emphasis added). This Court granted PHH’s entreaty for an opportunity to “prove the efficiency of its [remedial]
While neither the Trustee nor the Creditor has availed themselves of the opportunity to be heard on the extent of sanctions, it is evident in light of the factors set out above that $9,000 was insufficient to deter PHH from continuing to violate
B. PHH’S VIOLATION OF A COURT ORDER
In addition to seeking sanctions based on PHH’s failure to comply with
[ T]he debtors, by their payments through the Office of the Chapter 13 Trustee, have made all payments due during the pendency of this case.. .including all monthly payments and any other charges or amounts due under their mortgage with [PHH Mortgage].
[ T]he mortgagee shall be precluded from disputing that the debtors are current (as set forth herein) in any other proceeding.
Gravel, doc. # 74 (emphasis added). In direct contradiction to these terms, after entry of these Orders, PHH sent mortgage statements claiming miscellaneous post-petition fees were still due. Therefore, the Court finds PHH violated the Debtors Current Orders in the Gravel and Beaulieu cases.
The Trustee asks the Court to impose civil contempt sanctions for this violation, but the particular goals he seeks to accomplish are beyond the scope of civil contempt sanctions. It is well-settled that the purpose of a civil contempt sanction is “either to coerce the contemnor into future compliance with the court’s order or to compensate the complainant for losses re-suiting from the contemnor’s past noncompliance.” New York State Nat. Org. for Women v. Terry, 886. F.2d 1339, 1352 (2d Cir.1989); In re 1990’s Caterers Ltd.,
However, the inquiry does not end there. The record strongly supports the imposition of sanctions against PHH, for its violation of this Court’s orders, under both the Court’s inherent powers and
In contrast to civil contempt sanctions, which are appropriate only for coercive and compensatory purposes, sanctions may be imposed pursuant to a court’s inherent authority to punish and/or deter offending conduct.
In the Second Circuit, inherent power sanctions ordinarily require a clear showing of bad faith on the part of the party to be. sanctioned. See Wolters Kluwer Fin. Servs., Inc. v. Scivantage,
sanction misconduct by an attorney that involves that attorney’s violation of a court order or other misconduct that is not undertaken for the client’s benefit, the [court] need not find bad faith before imposing a sanction under its inherent power.
Id. at 42 (emphasis added). This exception is not limited to attorneys since a court may exercise its inherent authority to impose sanctions on parties as well. In re Ormand Beach Associates L.P.,
In addition to bankruptcy courts’ inherent power to sanction a party who violates a court order,
issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of [Title 11]... [and to] sua sponte, tak[e] any action or mak[e] any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.
Bankruptcy courts have extensive discretion under
Here, based upon the Court’s finding that PHH violated the Debtors Current Orders, a sanction imposed under this Court’s inherent power and
Second, PHH’s instant violation of the Debtors Current Orders is not the first time PHH has violated a court declaration that the Debtors are current in their post-petition payments. The Sanctions Order, entered on March 31, 2014, in the Gravel case, not only sanctioned PHH for sending the Debtors inaccurate mortgage statements, but also unambiguously declared the debtors were current as of that date:
[The Trustee] having filed a Motion to Compel [PHH Mortgage] to correct misapplied mortgage payments disbursed to it by the trustee in this case and for sanctions arising from its failure during this case to correctly apply such payments, the trustee and PHH, by filing their consent to this order, have stipulated and agreed to the following:
(1) Subsequent to the filing of the motion, PHH has taken steps to re-apply the misapplied mortgage payments, paid to it by the trustee, and is now showing the debtor’s mortgage payments, post-petition, as current[.]
Doc. # 49 (emphasis added). Thus, the erroneous post-petition property inspection fees of $258.75 PHH claimed on the March 31, 2014 statement should have been permanently deleted from the debtors’ account. Instead, that exact amount also appears on.the May 2016 Statement. This implies that, contrary to PHH’s representation to this Court and the terms of the Sanctions Order, the improper inspection charge was never removed. Thus, not only did PHH violate the instant Debtors Current Orders, but it also violated the Sanctions Order in Gravel. This persistence in assessing the charge after entry of the Sanctions Order manifests a lack of respect for this Court’s orders, an abuse of the bankruptcy process, a disregard for the imperatives of Chapter 13 and
Finally, the Court must take- into account that PHH is a sophisticated commercial lender and an entity of substantial financial means. According to the public statements on its website, PHH is a top-ten originator and servicer of residential mortgages in the United States, boasting “approximately $41 billion in mortgage financing and maintained an average servicing portfolio of approximately 1.1 million loans” in 2015 alone.
After careful consideration of all of these factors, and mindful of the need to limit the magnitude of the sanction to the amount necessary to deter future misconduct, the Court imposes a $100,000 sanction in the Beaulieu case. The Court believes this amount is warranted, reasonable, and necessary to communicate to PHH the gravity of its violation of this Court’s Debtor Current Order in this case, to punish the violation, and to deter PHH from violating court orders in the future.
While the underlying violation of the Debtors Current Order is the same in both Gravel and Beaulieu, the factual distinctions between those cases compel the imposition of a higher sanction in Gravel. In that case, PHH’s misconduct was more egregious because (i) prior to the Sanctions Order, PHH had sent the Debtors blatantly incorrect mortgage statements for 2 years and ignored the Trustee’s repeated demands to correct those statements; (ii) it was only after the Trustee filed a motion for sanctions that PHH admitted the statements were incorrect; (iii) in lieu of paying the $12,000 sanction the Trustee had sought in 2014, PHH paid a lower sanction of $9,000 and promised to promptly correct the flaws in its procedures for handling debtor mortgage accounts; (iv) upon the Trustee’s motion for a
C. PHH Should Pay the Sanction to a Non-Profit Legal Services Entity
The Debtors in these cases might well have found themselves' confronted with unexpected charges and possible suit by PHH, after their bankruptcy cases were concluded, if the -Trustee had not been zealous in his efforts to compel PHH to remove the incorrect charges from the Debtors’ monthly mortgage statements. Without the Trustee’s vigilance and- his filing of the Sanctions Motions, the. Debtors’ fresh start might have been jeopardized — -just as the drafters of Rule. 3002.1 had warned. The Court levies a substantial sanction on PHH in these cases to deter PHH from continuing to' violate Debtor Current Orders, even though the Debtors suffered no economic injury. Moreover, while the Court is persuaded that any lesser sanction would be insufficient to deter PHH from engaging in this type of misconduct in the future, payment of the sanction to either the Debtors or the Trustee would be an unjustified windfall for those parties. Under these circumstances, where the sanction is absolutely necessary to punish serious misconduct, but the opposing party did not suffer financial harm, it is not uncommon for bankruptcy courts to direct the offending party to pay the sanction to a third party nonprofit legal organization or a volunteer lawyer project. See In re Whitehill,
As in Miller, the Court believes the best way to protect consumer debtors who cannot afford to dispute and litigate the assessment . of improper post-petition charges — and thus are at risk of having their fresh starts diluted — is to direct PHH to pay this sanction to Legal Services Law Line of Vermont. This way, PHH suffers a substantial financial penalty purposefully formulated to motivate PHH to bring its procedures into compliance with both
CONCLUSION
For the' reasons set forth above, the Court makes the following findings. First, the Court finds that PHH Mortgage' Corporation failed to comply with Bankruptcy
The Court does not impose these sanctions lightly. Rather, it has found cause to impose the type and amount of sanctions described in this memorandum based upon the particular party, conduct, and circumstances involved. Moreover, the Court deliberately levies this substantial penalty on PHH to convey a clear message to PHH, and other mortgage creditors, that they may not violate court orders with impunity and will suffer significant monetary sanctions if they conduct their mortgage accounting operations in a manner that fails to fully comply with
Accordingly, the Court (1) disallows the post-petition charges PHH assessed in each of these three cases; (2) imposes a $25,000 sanction for PHH’s repeated failure to file and serve the required notices under
This constitutes the Court’s findings of fact and conclusions of law.
ORDER
GraNting Trustee’s Motions to Sanction PHH Mortgage Corporation, Disallowing PHH Mortgage’s Post-Petition Charges, and Directing PHH Mortgage to Pay Sanctions to Legal Servioes Law Line of Vermont
The Chapter 13 trustee has filed a motion, in each of the three above-captioned cases, asking this Court to make a finding of contempt, disallow certain post-petition charges, and impose sanctions on PHH Mortgage Corporation based upon PHH Mortgage Corporation’s failure to comply with Bankruptcy
For the reasons set forth in a memorandum of decision of even date, the Court makes the following findings. First, the Court finds PHH Mortgage Corporation failed to comply with Bankruptcy
Based upon these findings, IT IS HEREBY ORDERED that all post-petition fees PHH Mortgage Corporation seeks in these three above-captioned cases are disallowed.
IT IS FURTHER ORDERED that PHH Mortgage Corporation pay the following sanctions:
(1) in the Gravel case, PHH Mortgage Corporation shall pay a $25,000 sanction for its failure to comply with
(2) in the Beaulieu case, PHH Mortgage Corporation shall pay a $25,000 sanction for its failure to comply with
(3) in the Knisley ease, PHH Mortgage Corporation shall pay a sanction of $25,000 (twenty-five thousand dollars) for its failure to comply with
IT IS FURTHER ORDERED that since neither the Debtors in any of these cases, nor the Chapter 13 Trustee, suffered any direct financial or economic harm as a result of PHH Mortgage Corporation’s misconduct, and the harm was to the integrity of the bankruptcy system as a whole,
(a) PHH Mortgage Corporation shall pay the sum due for all sanctions imposed by this Order, in the amount of $375,000 (three hundred seventy-five thousand dollars) to Legal Services Law Line of Vermont, located in Burlington, Vermont;
(b) PHH Mortgage Corporation shall deliver $375,000 to Legal Services Law Line of Vermont, at 274 N. Winooski Avenue # 2, Burlington, VT 05401, within 14 (fourteen) days of entry of this Order; and
(c) PHH Mortgage Corporation shall file a certificate of service affirming delivery of the sanction payment, in each of the three above-captioned cases, within 3 (three) business days of delivery.
SO ORDERED.
Notes
. The Trustee acknowledges the improperly assessed charges in this case are not substantial, and that neither he nor the Debtors suffered any direct financial harm from PHH’s claim for those sums. However, he asserts it is important to impose sanctions because PHH’s unauthorized charging of post-petition fees to debtors’ mortgage accounts is a "systemic problem,” which will likely continue unless it suffers a monetary consequence for this behavior. The Trustee suggests that under these facts it would be most equitable to direel PHH to pay a monetary sanction to a non-profit entity (doc. # 75, pp. 2-3).
. In its Opposition, the Creditor also asserted the Gravel Sanctions Motion should be denied because the Trustee failed to confer with PHH prior to his filing of that motion, as required under Vt. LBR 9013-l(b). Based upon the arguments the Trustee presented on this point at the July 27, 2016 hearing, the Court finds the Trustee had good cause not to contact PHH prior to filing his motion and denies PHH’s request for relief on this basis.
. All statutory citations refer to Title 11 United States Code (the "Bankruptcy Code”), unless otherwise indicated.
. The Court recognizes that the creditor in Jones also paid itself undisclosed fees and charges from the estate property, which is much more egregious misconduct than a failure to file notices of those fees and charges, and therefore would not find cause to impose a sanction of the same magnitude here. This case is instructive, however, with respect to the factors the court found salient in assessing whether sanctions were warranted, as is more fully described below.
. In each case, the Trustee attached several mortgage statements to his papers showing the post-petition fees accumulated over the course of several years and were never removed from the Debtors’ accounts. He states that "[t]hese fees remained on the monthly statements up to, and including” the,May 2016 Statements (Gravel, doc. - #78, ¶ 4; Beaulieu, doc. # 96, ¶ 4; Knisley, doc. # 52, ¶ 4). The Court calculates the number of months from the date of the Sanctions Order to the recently sent May Statements to arrive at -the number of monthly mortgage statements that not only continued to include these erroneous fees but also were sent without the required and corresponding 3002.1(c) notices.
. PHH’s prayer for an opportunity to prove the efficiency of remedial accounting systems it would implement “before the imposition of severe sanctions” (Gravel, doc. # 44), signals its awareness that failure to rectify its systems could indeed come with significant penalties.
. PHH issued June 2016 mortgage statements in each case which showed the Debtors owed no sums to the Creditor and were current on all pre- and post-petition payment obligations.
. See In re Charbono,
. This constellation of factors can be observed in the following cases: In re Charbono,
. While there is no requirement to make a bad faith finding, PHH’s conduct cannot realistically be attributed to an innocent mistake. PHH had knowledge of the Debtors Current Order, violated it in at least the two instant cases by including postpetition fees that should never have appeared in the first place, only corrected the statements after the Trustee filed a motion for sanctions, and then asserted it did not violate a court order at all. Taken together, particularly in the context of prior court warnings, these actions raise serious concerns about whether PHH is malting a good faith effort to comply with
. Though not directly germane to the issue of PHH's notice of the Debtor Current Orders, it is relevant that PHH had other notice of its risk of sanctions: This Court alerted PHH in the Gravel case, in March 2014, that it could be sanctioned (again) if it continued to send inaccurate post-petition mortgage statements to debtors and engage in careless conduct, see Sanctions Order, which essentially echoed exhortation the Owens court delivered to PHH, in January 2014.
, Upon PHH's plea that sanctions be progressive in nature and that the Court be lenient for this first-time offense, at the hearing held on March 21, 2014, the Court responded: "My theory is if a sanction is imposed, I shouldn't ever see that party again, I don’t want to impose sanctions on the expectation that I’m going to impose a low sanction today, and the next time you do it, you'll get a higher sanction. That's contrary to how sanctions should work, They should be effective and enough to stop the conduct entirely.”
. About Us, Who Ws Are, PHH Mortgage (Sept. 12, 2016, 3:20 P.M.), https://www. phhmortgage.com/13571/about-us/who-we-are.html
, As the bankruptcy court observed in In re Ramos, No, 10-23019,