MICHAEL MALEY v. SPECIALIZED LOAN SERVICING LLC аnd E*TRADE BANK
Case No. 18-13245
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION
May 6, 2021
ROBERT H. CLELAND
Plaintiff Michael Maley brings this action asserting claims under the Real Estate Settlement Procedures Act (“RESPA“),
The parties completed discovery, and Defendants moved for summary judgment. (ECF No. 50.) The matter has been thoroughly briefed. (ECF Nos. 53, 55.) After reviewing the record, the court finds a hearing to be unnecessary. E.D. Mich. LR 7.1(f)(2). For the reasons provided below, the court will grant Defendants’ motion.
The following facts are taken from the record established by both parties. Those noted as established are either agreed upon or lack contradictory evidence. Others may be noted as assumed true in the light most favorable to the non-moving party.
On August 5, 2004, Plaintiff entered into a mortgage loan agreement with Quicken Loans for $100,000. (ECF No. 53, PageID.482.) Quicken Loans sold its rights to the loan to Defendant E*Trade Bank, and in February 2015 Defendant SLS became the servicer of the loan. (Id.) At the time SLS became the servicer, Plaintiff was in default; he had failed to make his monthly payments, which amounted to approximately $400. (Id.) The loan used a variable interest rate that fluctuated based on a market index. (Id., PageID.485; see also ECF No. 51, PageID.418, Promissory Note.)
Defendants assert that due to an administrative error Defendant SLS did not receive complete information regarding Plaintiff‘s account. (ECF No. 50, PageID.368.) Defendant SLS sent Plaintiff monthly statements listing the principal as $103,449.58, the interest rate as 0%, and the monthly payments as $1. (ECF No. 53, PageID.483-84; ECF No. 54, PageID.564, PageID.564-78.) Between May 2016 and November 2016, due to a systems error, Defendant SLS did not send Plaintiff monthly stаtements at all. (ECF No. 53, PageID.484-85; ECF No. 51, PageID.426.) In December 2016, Defendant SLS corrected its systems error and sent Plaintiff a billing statement reflecting the accurate variable interest rate of 5.25%, the monthly payment amount of $446.52, and the payments Plaintiff missed since February 2015. (ECF No. 53, PageID.485; ECF No. 54, PageID.580; ECF No. 51, PageID.426, 428.)
In December 2016, Defendant SLS offered an amendment to the terms of the loan contract. The offer, titled the “Structured Settlement Proposal,” would have reduced Plaintiff‘s monthly payments to $200 with a 0% interest rate and increased the principal balance to $112,974.87. (ECF No. 53, PageID.486.) The parties failed to agree to the proposal and Dеfendant SLS did not reclassify the principal amount as $112,974.87. (Id., PageID.486-87; ECF No. 54, PageID.580-85.)
Beginning in April 2017, Plaintiff began contacting Defendant SLS about the loan, his payment schedule, the Structured Settlement Proposal, and Defendants’ communications with government regulators. (ECF No. 53, PageID.487-88.) Defendant SLS provided responses to these inquiries, detailing the principal amount, the monthly payment Plaintiff owed, the rejection of the Structured Settlement Proposal, Plaintiff‘s payment history, and his failure to make adequate payments since early 2015. (Id., PageID.489-92.)
II. STANDARD
To prevail on a motion for summary judgment, a movant must show—point out—that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Second, “the nonmoving party must come forward with ‘specific facts showing that there is a genuine issue for trial.‘” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis removed) (quoting
III. DISCUSSION
Defendants move for summary judgment on all four of Plaintiff‘s claims. The court will address each count in turn.
A. RESPA
RESPA plаces responsibilities on loan servicers to respond to certain “qualified written requests” (“QWR“) made by debtors that seek information or dispute charges.
Plaintiff asserts that Defendant SLS violated RESPA by failing to timely respond to communications Plaintiff sent to Defendant SLS. (ECF No. 53, PageID.498-501.) He claims that the communications qualify as QWRs. (Id.) However, it is undisputed that all the letters and communiсations Plaintiff relies on for his RESPA claim were either faxed or mailed to an unidentified address. (ECF No. 53, PageID.488-89.) None of the messages were sent to the address Plaintiff specifically designated to receive QWRs.
It is well established that, when a loan servicer provides an address at which the servicer receives QWRs, debtors must submit their requests to that address in order to trigger RESPA response obligations. RESPA regulations explicitly state that “[a] servicer may, by written notice provided to a borrower, establish an address that a borrower must use to request information in accordance with the procedures in this section.”
In fact, the Sixth Circuit reviewed a RESPA claim very similar to Plaintiff‘s in Lawson v. Specialized Loan Servicing, LLC, Case No. 18-5250, 2018 WL 7575708 (6th Cir. Sep. 14, 2018). In Lawson, the plaintiffs alleged that they sent Defendant SLS two letters requesting information on a mortgage loan. Id. at *1. The plaintiffs also alleged that they called Defendant SLS directly about the loan. Id. According to the plaintiffs, Defendant SLS failed to respond to the plaintiff‘s repeated inquires in accordance with RESPA. Id. The Sixth Circuit noted that Defendant SLS informed the plaintiffs, after they sent SLS two letters, that they must submit written requests, including QWRs, to SLS‘s Littleton address. Id. at *4. The court reiterated that “a servicer may designate an exclusive address for the receipt of QWRs” and affirmed dismissal of the claim. Id.
Here, like the plaintiffs in Lawson, it is uncontested that Defendant SLS specifically identified in its billing statements that Plaintiff must transmit “Notices of Error or Requests for Information (Including Qualified Written Requests)” to the Littleton address. (ECF No. 51, PageID.445; ECF No. 53, PageID.486.) Defendant SLS informed Plaintiff that such requests “must be sent to” that address. (ECF No. 51, PageID.445; ECF No. 53, PageID.486.) Unlike the plaintiffs in Lawson, Plaintiff here does not contend that the QWR address designation was made after Plaintiff attempted to send QWRs to Defendant SLS. Furthermore, unlike the plaintiff in Best v. Ocwen Loan Servicing, LLC, Plaintiff did not fail to send a QWR to the right address due merely to a typographical error. 2016 WL 10592245, at *2 (affirming dismissal of the RESPA claim).
Plaintiff contends that Defendant SLS violated RESPA because, when SLS communicated with him regarding his loan balance and account information, they provided a telephone number to contact. (ECF No. 53, PageID.500.) He also asserts that Defendant SLS never used the word “exclusive” in their notices identifying the Littleton address as the designated QWR address. (Id., PageID.500-01.)
First, Defendants accurately note that, in response to Plaintiff‘s inquiries, Defendant SLS informed him on at least one occasion that his communications did not qualify as QWRs because he failed to mail the requests to the Littleton address. (ECF No. 51, PageID.432; ECF No. 55, PageID.648-49.) Furthermore, the Sixth Circuit has repeatedly held that, under RESPA, a debtor must send QWRs to the servicer‘s designated address, even when the debtor communicates with the loan servicer in some other manner and even when the servicer has actual notice of the debtor‘s requests. See Lawson, 2018 WL 7575708, at *4; Best, 2016 WL 10592245, at *2; see also Best v. Ocwen Loan Servicing, LLC, Case No. 15-13007, 2016 WL 125875, at *3 (E.D. Mich. Jan. 12, 2016) (Ludington, J.) (“[A servicer] did not subject itself to a RESPA duty
B. Breach of Contract
Plaintiff‘s breach of contract claim is not well articulated. In the complaint, Plaintiff asserts that the parties “had an agreement evidenced in writing whereby the Plaintiff would pay the amounts set forth in the invoices sent to the Plaintiff.” (ECF No. 21, PageID.135.) Between February 2015 and April 2016, the parties accept that Defendant SLS mailed Plaintiff monthly statements identifying an interest rate of 0% and a monthly payment of $1. (ECF No. 53, PageID.483-84; ECF No. 54, PageID.564, PageID.564-78.) However, Defendants cite their loan and mortgage contracts with Plaintiff and assert that “no agreement between Plaintiff and [Defendants] . . . contains a provision
In response to this evidence аnd Defendants’ arguments for summary judgment, Plaintiff fails to provide any substantive argument. He does not dispute the factual assertions made by Defendants, and he provides no evidentiary citation in support of his position. Specifically, he does not dispute that the parties’ loan and mortgage agreement included no terms setting the interest rate and monthly payments based on monthly statements or invoices. Instead of addressing Defendants’ arguments, Plaintiff asserts merely that “[t]he First Amended Complaint states that SLS modified the Plaintiff‘s loan in writing in invoices which set forth the material terms of the agreement.” (ECF No. 53, PageID.507.) However, at the summary judgment stage, Plaintiff must “go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Smith v. Freland, 954 F.2d 343, 345 (6th Cir. 1992) (quoting Celotex Corp., 477 U.S. at 324); Matsushita Elec. Indus. Co., 475 U.S. at 587 (“[T]he nonmoving party must come forward with specific facts showing that there is a genuine issue for trial.“). Plaintiff cannot simply cite conclusory allegations in the complaint, without evidentiary support, and establish an issue of fact for trial. In addition, he cannot
To prove a valid contract modification under Michigan law, Plaintiff must show that the alteration was made “by mutual consent.” Kloian v. Domino‘s Pizza LLC, 733 N.W.2d 766, 771 (Mich. Ct. App. 2006). “The mutuality requirement is satisfied where a modification is established through clear and convincing evidence of a written agreement, oral agreement, or affirmative conduct establishing mutual agreement to waive the terms of thе original contract.” Id. (quoting Quality Prods. and Concepts Co. v. Nagel Precision, Inc., 469 Mich. 362, 666 N.W.2d 251, 258 (2003)). “[T]he principle of freedom to contract does not permit a party unilaterally to alter [a] contract.” Quality Prods. and Concepts Co., 666 N.W.2d at 253. Plaintiff does not cite any caselaw on modification in support of his argument. In the response, Plaintiff fails to identify and explain evidence to show that Defendants, or Plaintiff, consented to fundamentally changing the loan agreement to establish certain monthly statements as the contractually binding interest rate and monthly payments. He has not provided substantive arguments in favor of his position, let alone enough to allow a jury to find by “clear and convincing evidence” that Defendants agreed to modify the loan and mortgage contracts. Kloian, 733 N.W.2d at 771; Anderson, 477 U.S. at 248. Summary judgment is warranted on the contract modification claim.
Plaintiff‘s second argument is that Defendant SLS failed to send him monthly billing statements from May to November 2016. (ECF No. 53, PageID.507.) According
Plaintiff is arguing in favor of a new breach of contract claim at the summary judgment stage. However, it is well established that a party “cannot assert new claims in response to summary judgment.” Tchankpa v. Ascena Retail Grp., Inc., 951 F.3d 805, 817 (6th Cir. 2020); accord Bridgeport Music, Inc. v. WM Music Corp., 508 F.3d 394, 400 (6th Cir. 2007) (“To the extent [the plaintiff] seeks to expand its claims to assert new theories, it may not do so in response to summary judgment.“). Nothing in Plaintiff‘s complaint put Defendants on notice that Plaintiff intended to bring a breach of contract claim due to Defendant SLS‘s failure to mail monthly statements between May and November 2016. Two and a half years have passed since the complaint was filed, and over a year has passed since discovery closed. (ECF Nos. 1, 27.) The court will not consider a new claim made in passing in a summary judgment response. Tchankpa, 951 F.3d at 817. (See ECF No. 21.)
Plaintiff asserts in conjunction with this novel claim that Defendants “unilaterally raised Plaintiff‘s interest rate to 5.25% and stated that he owed a past due balance of
C. FDCPA and MOC
1. Statute of Limitations for the FDCPA Claim
Defendants first argue that Plaintiff‘s FDCPA claim is barred by the statute of limitations. Under
Defendants point to allegations in the complaint on which Plaintiff bases his FDCPA claim. (ECF No. 50, PageID.385.) After Defendant SLS stopped sending billing statements from May to November 2016, Plaintiff alleged that SLS sent a statement in
Plaintiff now accepts that the parties never agreed to the Structured Settlement Proposal, and uncontested evidence shоws that Defendants never attempted to collect payments for an enhanced $112,974.87 principal amount. (ECF No. 53, PageID.486-87; ECF No. 54, PageID.580-85.)
However, Plaintiff still claims that Defendants violated the FDCPA for sending a billing statement with a 5.25% interest rate and $9,823.44 past amount due. First, Plaintiff states that “[t]he offensive communication” underlying his FDCPA claim “is comprised of the erroneous account statements issued from February 2015 to April 2016.” (ECF No. 53, PageID.508.) This is an unconvincing statement given that Plaintiff repeatedly asserts, in the complaint and in briefing, that the February 2015 to April 2016 statements accurately reflect the terms of the parties’ agreement. (ECF No. 12, PageID.21, Amended Complaint (“On or about February 19, 2015, Defendants modified the terms of the mortgage.“); ECF No. 53, PageID.509, Plaintiff‘s Response (“Defendants modified the terms” of the parties’ agreement by setting an interest rate of 0% and a monthly payment of $1.).) Nonetheless, those statements would fall outside the bounds of the FDCPA‘s statute of limitations, which reaches back only a year to October 17, 2017.
“A party is not entitled to wait until the discovery cutoff date has passed and a motion for summary judgment has been filed on the basis of claims asserted in the original complaint before introducing entirely different legal theories.” Yanovich v. Zimmer Austin, Inc., 255 F. App‘x 957, 970 (6th Cir. 2007) (quoting Priddy v. Edelman, 883 F.2d 438, 446 (6th Cir. 1989)); Bridgeport Music, Inc., 508 F.3d at 400 (“To the extent [the plaintiff] seeks to expand its claims to assert new theories, it may not do so in response to summary judgment.“). Plaintiff fails to provide any explanation for how separate billing statements made after December 2016 or the December 2019 Notice of Default relate to the FDCPA claim as alleged in the complaint, upon which Defendants relied to build their defenses, engage in discovery, and draft a motion for summary judgment.
In support of his “continuing violations” theory, Plaintiff fails to cite a single case. The Sixth Circuit has repeatedly rejected attempts to extend FDCPA statute of limitations through claims of continuing violations, reasoning that an FDCPA violation is a discrete event and the statute of limitations must begin when the initial violation occurs. See Jodway v. Orlans, P.C., 759 F. App‘x 374, 379-80 (6th Cir. 2018) (finding that a continuing-violation claim did not apply to an FDCPA suit where the plaintiff alleged the defendants “continuously misrepresented the validity of the mortgage“); Smith v. Lerner, Sampson & Rothfuss, 658 F. App‘x 268, 273 (6th Cir. 2016) (rejecting the application of a continuing-violation theory where a bank made repeated alleged misrepresentations on a mortgage interest, reasoning that the bank‘s actions gave “continuing effect to [its] initial assertion“); Slorp v. Lerner, Sampson & Rothfuss, 587 F. App‘x 249, 257-59 (6th Cir. 2014) (refusing to apply the continuing-violation doctrine, stating that applying it “to FDCPA claims would be inconsistent with the principles underlying the Supreme Court‘s limited endorsement of that doctrine“). The parties do not dispute that Defendants sent Plaintiff the December 2016 monthly statement well
2. Merits of the FDCPA and MOC Claims
Even if Plaintiff‘s FDCPA claim were not barred by the statute of limitations, summary judgment would be warranted on the merits. The parties do not distinguish between the MOC and FDCPA claims, and the court, like the parties, will analyzе the claims together. (ECF No. 50, PageID.387, Defendants’ Motion for Summary Judgment (“[Mich. Comp. Laws §] 339.915 mirrors FDCPA Section 1692(e)(10).“); ECF No. 53, PageID.508-09, Plaintiff‘s Response (“Similar to the FDCPA, the MOC prohibits a company such as the Defendants from making misleading statements to a debtor.“).)
In the complaint, Plaintiff alleges Defendants violated
Section 1692e(10) prohibits the “use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer,” and § 1692f(1) bars “[t]he сollection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.” Plaintiff restated the language of these provisions in the complaint when he alleged Defendants in December 2016 “unilaterally rais[ed] his interest rate to 5.25% and stat[ed] that he owed a past due balance of $9,823.44” and “stat[ed] falsely that the unpaid principal balance on the mortgage was $112,974.87.” (ECF No. 21, PageID.126-27.) The complaint stated thаt, in taking these actions, Defendants attempted to charge Plaintiff amounts that were “not authorized by contract” and were “not permitted by law.” (Id., PageID.127.) Plaintiff reiterates this legal theory in his briefing. In the response, he asserts that Defendants “modified the terms of the mortgage” by sending monthly statements indicating a 0% interest rate and that Defendants, in December 2016, “unilaterally rais[ed] his interest rate to 5.25% and stating that he owed a past due balance of $9,823.44.” (ECF No. 53, PageID.509.) As described above, Plaintiff no longer argues that Defendants falsely raised the loan principal to $112,974.87 рursuant to the Structured Settlement Proposal. (See ECF No. 53; ECF No. 54, PageID.580-85.)
However, as the court found in its previous analysis, summary judgment is justified on the breach of contract claim. Plaintiff has failed to explain how Defendants provided consent to modify the loan and mortgage agreement to make interest rates
IV. CONCLUSION
Based on the record as established by the parties, there is no genuine dispute of fact that Plaintiff did not send his disputes and requests for information to Defendant SLS‘s designated QWR address. Plaintiff has neither cited evidence nor provided substantive argument in support of the position that Defendants’ monthly statements
IT IS ORDERED that Defendants’ Motion for Summary Judgment (ECF No. 50) is GRANTED.
s/Robert H. Cleland
ROBERT H. CLELAND
UNITED STATES DISTRICT JUDGE
Dated: May 6, 2021
I hereby certify that a cоpy of the foregoing document was mailed to counsel of record on this date, May 6, 2021, by electronic and/or ordinary mail.
s/Lisa Wagner
Case Manager and Deputy Clerk
(810) 292-6522
S:\Cleland\Cleland\JUDGE‘S DESK\C2 ORDERS\18-13245.MALEY.MotionforSummaryJudgment.RMK.RHC.2.docx