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Phillips v. Ocwen Loan Servicing, LLC

United States District Court, N.D. Georgia, Atlanta Division

March 12, 2015

JEFFREY PHILLIPS, On Bebalf of Himself and All Otber Persons in the State of Georgia wbo are Similarly Situated, Plaintiff,

Page 1256

For Jeffrey Phillips, On Behalf of Himself and All Other Persons in the State of Georgia who are Similarly Situated, Plaintiff: Robert Keegan Federal, Jr., LEAD ATTORNEY, Jeannine Lowery, Rene Octavio Lerer, The Federal Firm, LLC, Atlanta, GA USA; Bruce P. Brown, Bruce P. Brown Law, Atlanta, GA USA.

For Ocwen Loan Servicing, LLC, Defendant: Brett J. Natarelli, LEAD ATTORNEY, Buckley Sandler, LLP-IL, Chicago, IL USA; Richard E. Gottlieb, PRO HAC VICE, Fredrick S. Levin, LEAD ATTORNEY, Buckley Sandler, LLP -CA, Santa Monica, CA USA; Sarah-Nell Walsh, LEAD ATTORNEY, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Atlanta, GA USA; William Allen McBride, Jr., LEAD ATTORNEY, Baker, Donelson, Bearman, Caldwell & Berkowitz, Atlanta, GA USA.

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This matter is before the Court on Plaintiff Jeffrey Phillips's (" Plaintiff' or " Phillips" ) Objections [1 39] to Magistrate Judge Justin S. Anand's Final Report and Recommendation (" R& R" ) [135]. The R& R recommends granting Defendant Ocwen Loan Servicing, LLC's (" Defendant" or " OLS" ) Motion for Summary Judgment [104]. Also before the Court is Plaintiffs Motion for a Hearing [141] on his Objections.[1]

Page 1258


A. Facts

On December 7, 1998, Plaintiff obtained a loan (the " Loan" ) from HomeAmerican Credit, Inc., d/b/a/ Upland Mortgage (" Upland" ) and executed in favor of Upland a promissory note (the " Note" ), in the amount of $86,400. (Note [104.4]). The Note provides, in pertinent parts:

Interest will be charged on unpaid principal until the full amount of principal has been paid. I will pay interest at a yearly rate of 10.890%.
. . .


(A) Time and Place of Payments

I will pay principal and interest by making payments every month.

I will make my monthly payments on the 15th day of each month beginning on January 15, 1999.
I will make these payments every month until I have paid all of the principal and interest and any other charges . . . that I may owe under this Note. My monthly payments will be applied to interest before principal. . . .
. . .

(B) Amount of Monthly Payments

My monthly payment will be in the amount of U.S. $815.64.
. . .


. . .

(B) Default

If I do not pay the full amount of each monthly payment on the date it is due, I will be in default.

(C) Notice of Default

If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount of principal which has not been paid and all the interest that I owe on that amount.

(Note ¶ ¶ 2-3, 6).

Repayment of Plaintiff's loan was also secured by a deed (the " Security Deed" ) (together with the Note, the " Loan Agreement" ) to real property located at 728 Kennolia Drive, Atlanta, Georgia (the " Property" ). (Security Deed [104.5]). The Security Deed was executed in favor of Upland. (Id.). The Security Deed provides, in pertinent parts:

3. Application of Payments. . . . [A]ll payments received . . . shall be applied: first, to any prepayment charges due under the Note; second, to amounts payable [for escrow items, including taxes and insurance]; third, to interest due; fourth, to principal due; and last, to any late charges due under the Note.
4. Charges; Liens. Borrower shall pay all taxes, assessments, charges, fines and impositions attributable to the Property . . . .
5. Hazard or Property Insurance. . . . If Borrower fails to maintain coverage described above, Lender may, at Lender's option, obtain coverage to protect Lender's rights in the Property . . . .
. . .
7. Protection of Lender's Rights in the Property. If Borrower fails to perform the covenants and agreements contained in this Security [Deed] . . . then Lender may do and pay for whatever is necessary to protect the value of the Property and Lender's rights in the Property. . . .
. . .
19. Sale of Note; Change of Loan Servicer. The Note or a partial interest

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in the Note (together with this Security [Deed]), may be sold one or more times without prior notice to Borrower. A sale may result in a change in the entity (known as the " Loan Servicer" ) that collects monthly payments due under the Note and this Security [Deed]. There also may be one or more changes of the Loan Servicer unrelated to a sale of the Note. . . .
. . .
21. Acceleration; Remedies. Lender shall give notice to Borrower prior to acceleration following Borrower's breach of any covenant or agreement in this Security [Deed] . . . . The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security [Deed] and sale of the Property. . . . If the default is not cured on or before the date specified in the notice, Lender, at its option, may require immediate payment in full of all sums secured by this Security [Deed] without further demand and may invoke the power of sale granted by Borrower . . . .

(Security Deed ¶ ¶ 3-5, 7, 19, 21).

In May 2005, OLS became the servicer of Plaintiff's loan. (Def's Statement of Material Facts (" SOMF" ) at ¶ 6). On May 6, 2005, OLS sent Plaintiff an account statement, which states:

Please note that you have a Simple Interest Loan that accrues interest from the last date that interest was paid through the date your next payment is received. When your next payment is received, the interest amount will be calculated from the date listed in the " Interest Paid Through Date" field (listed above) through the date that your payment was received. It is important to ensure that your payments are received timely and consistently so that your accrued interest each period is limited to approximately one month's interest. If you elect to take advantage of your grace period, please note that this will cause a greater portion or all of your payment to be applied to interest.

(05/06/2005 Account Statement [104.6]).

On October 30, 2009, OLS offered Plaintiff a loan modification. (Pl's SOMF ¶ 11). Plaintiff did not sign the modification agreement.

On November 20, 2009, OLS sent Plaintiff a Notice of Default, which states that Plaintiff's " mortgage payments are past due, which puts [Plaintiff] in default of [his] loan agreement." (Notice of Default [140.1] at 1).[2] The Notice of Default also states that, as of November 20, 2009, Plaintiff owes $12,068.64, which includes past due principal and interest of $2,446.92, that the " debt is owed to [OLS] as the owner or servicer of your home loan and mortgage," and that payment is due by December 20, 2009. (Id.). The Notice of Default provides:

Failure to bring your account current may result in our election to exercise our right to foreclose on [the P]roperty. Upon acceleration, your total obligation will be immediately due and payable without further demand. . . .
. . .
After acceleration of the debt, but prior to foreclosure, you may have the right to reinstate the mortgage loan, depending on the terms of the note and mortgage. . . .

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Payments received that are less than the amount required to reinstate the mortgage loan will be returned, and will not stop any foreclosure proceedings that have begun. . . .

(Notice of Default at 2).

On December 21, 2009, Plaintiff sent a payment, in the amount of $855, to OLS, and OLS returned the payment to Plaintiff. (Def's SOMF ¶ 34). Plaintiff did not make another loan payment to OLS until March 9, 2010. (Id. ¶ 35).

On January 16, 2010, OLS offered Plaintiff another loan modification and sent him a Proposed Modification Agreement (" PMA" ). (Def's SOMF ¶ 25; PMA [104.34]). The PMA states:

In order to accept this modification on your loan, you must complete ALL of the following steps on or before 1/29/10, (" Due Date" ):
1. SIGN the bottom of the Agreement . . . .
2. FAX the fully executed Agreement to [OLS]
3. PAY the full initial payment in the amount of: $1,022.82
Principal and Interest Payment: $857.00
Escrow Payment: $165.82
Total (which may or may not include escrow): $1,022.82
starting on 3/15/10
. . .
. . . If ALL of the items above are not completed by the Due Date, the Agreement shall have no force or effect and any down payment received will be returned to you. Please be advised that [OLS] will not delay, postpone or otherwise stop any collection efforts until ALL of the steps above have been completed.

(PMA at 1). Plaintiff did not sign the PMA. (Def's SOMF ¶ 26).

On March 1, 2010, Weismann Nowack Curry & Wilco, P.C., on behalf of " Bank of America, National Association, as Successor by Merger to LaSalle Bank National Association, as Trustee for the Registered Holders of Credit Suisse Seasoned Loan Trust 2006-1, Home Equity Pass-Through Certificates, Series 2006-1" (the " Trustee" ), sent Plaintiff a Notice of Foreclosure Sale (" NFS" ). (NFS [69.5] at 1). The NFS states that the Trustee is the holder of Plaintiff's Note and Security Deed, that OLS is the entity with full authority to negotiate, amend and modify the terms of Plaintiff's mortgage, that Plaintiff had defaulted on his loan obligations, and that, if Plaintiff did not pay the entire balance of his loan, the Trustee would conduct a foreclosure sale of the Property. (Id.).

On March 8, 15, 22, and 29, 2010, OLS published in the Fulton County Daily Report a Notice of Sale Under Power (" NSUP" ), which states that the Trustee will conduct a foreclosure sale of the Property on the first Tuesday in April, 2010. (NSUP [104.37]). The NSUP states that

the debt secured by [the] Security Deed has been and is hereby declared due because of, among other possible events of default, failure to pay the indebtedness as and when due and in the manner provided in the Note and Security Deed. The debt remaining in default, this sale will be made for the purpose of paying the same and all expenses of this sale . . . .
. . .
The sale will be conducted subject . . . to final confirmation and audit of the status

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of the loan with the holder of the [S]ecurity [D]eed.

(NSUP [104.37]).

On March 9, 2010, Plaintiff mailed a payment to OLS, and OLS deposited the payment on March 11, 2010. (Pl's Resp. to Def's SOMF ¶ 35).

On March 10, 2010, Upland assigned its rights under the Security Deed to the Trustee. (Assignment [104.35]).[3]

On May 3, 2010, Plaintiff, represented by counsel, filed a petition for relief under the United States Bankruptcy Code. (Def's SOMF ¶ 30). In the Bankruptcy Action, Plaintiff stated, under penalty of perjury, that as of May 3, 2010, he was $5,000 in arrears on his loan, and he did not indicate that he disputed the amount of the debt. (Id. ¶ 31).

On May 12, 2010, OLS filed in the Bankruptcy Action its Proof of Claim, which states that the arrearage on Plaintiff's loan was $22,064.00, including $5,709.48 in missed monthly payments. (Id. ¶ 32). Plaintiff did not object to OLS's Proof of Claim. (Id. ¶ 33).

On August 20, 2010, Plaintiff's Bankruptcy Petition was dismissed because Plaintiff failed to make payments under his proposed bankruptcy plan. (Pl's Resp. to Def's SOMF ¶ 30).

It is undisputed that OLS has not conducted a foreclosure sale of the Property, that Plaintiff continues to reside at the Property, and that Plaintiff has not made any loan payments since March 9, 2010. (Def's SOMF ¶ ¶ 36-38).

B. Procedural History

On November 16, 2010, Plaintiff, proceeding pro se, filed his original complaint [1.1 at 2-7] against OLS in the Superior Court of Fulton County, Georgia.[4] Plaintiff sought to remove the cloud on his title to the Property caused by his mortgage, to recover all loan payments he made after Upland filed for bankruptcy protection in 2005, and to recover damages for alleged fraud and misrepresentation.

On October 5, 2012, after retaining counsel, Plaintiff filed his First Amended Complaint (" FAC" ) [4], seeking to bring a putative class action and asserting additional claims, including for violation of the Fair Debt Collection Practices Act (" FDCPA" ), 15 U.S.C. § 1692 et seq., wrongful attempted foreclosure, false light invasion of privacy, punitive damages, expenses of litigation, and injunctive relief.[5]

On November 2, 2012, OLS removed the Fulton County Action to this Court based on federal question jurisdiction and the Class Action Fairness Act [1].

On December 12, 2012, OLS moved to dismiss Plaintiff's FAC for failure to state a claim [13].

On September 10, 2013, the Court dismissed most of Plaintiff's claims, but allowed his claims for wrongful attempted foreclosure and false light invasion of privacy

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to proceed. Plaintiff's claims for punitive damages, attorney's fees and costs, and injunctive relief were also allowed to proceed to the extent Plaintiff sought those remedies in connection with his claims for wrongful attempted foreclosure and false light invasion of privacy. (Order of Sept. 10, 2013 [51]).

On October 30, 2013, Plaintiff moved for leave to file a second amended complaint, which the Magistrate Judge granted only to the extent Plaintiff sought to add a new claim for breach of contract and to replead his claims for wrongful attempted foreclosure, false light invasion of privacy, and claims for relief.[6]

On December 3, 2013, Plaintiff filed his Second Amended Complaint (" SAC" ) [69], asserting claims for: wrongful attempted foreclosure (Count 1); false light invasion of privacy (Count 2); breach of contract (Count 3); punitive damages (Count 4); expenses of litigation (Count 5); and preliminary and permanent injunctive relief (Count 6).[7]

On December 20, 2013, OLS moved to dismiss (1) the portions of Plaintiff's claims in his SAC that are based on Plaintiff's newly-alleged theories that the Assignment was not valid and that OLS and the Trustee lacked authority to foreclose on the Property; and (2) Plaintiff's breach of contract claim.

On May 19, 2014, OLS filed its Motion for Summary Judgment [104].

On September 12, 2014, the Court dismissed Plaintiff's claims for wrongful attempted foreclosure and false light invasion of privacy to the extent they were based on perceived defects in the Assignment and Defendant's alleged lack of authority to foreclose. The Court found that Plaintiff cannot state a claim for relief based on his assertions that the Assignment is not valid and that OLS and the Trustee lacked authority to foreclose on the Property because these statements, even if false, do not concern Plaintiff's financial condition. The Court found that Plaintiff had alleged sufficient facts to state a plausible claim for breach of contract and declined to determine, at the motion to dismiss stage, whether OLS's agency was disclosed to Plaintiff or whether OLS was acting as a principal or owner of the Note and Security Deed. (Order of Sept. 12, 2014 [126]).

On October 29, 2014, Magistrate Judge Anand issued his Final R& R [135], recommending that the Court grant OLS's Motion for Summary Judgment. The Magistrate Judge concluded that Defendant is entitled to summary judgment on Plaintiff's claims for wrongful foreclosure and false light invasion of privacy because the undisputed facts show that Plaintiff failed to make his monthly payments on a timely basis, as required by the Note and Security Deed, and Plaintiff was thus in default on his loan obligations at the time the NSUP was published. The Magistrate

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Judge concluded that Defendant also is entitled to summary judgment on Plaintiff's breach of contract claim because the undisputed facts show that OLS was not a party to, or an assignee of, the Note or Security Deed, and as Plaintiff's loan servicer, OLS was a disclosed agent of the holder of the Note and Security Deed. The Magistrate Judge found further that, even if OLS is considered a party to the loan, Plaintiff failed to present any evidence creating a genuine issue of material fact whether OLS breached any of the terms of the Note or Security Deed.[8]

On December 3, 2014, Plaintiff filed his Objections [139] to the R& R.


A. Legal Standards

1. Review of a Magistrate Judge's Report and Recommendation

After conducting a careful and complete review of the findings and recommendations, a district judge may accept, reject, or modify a magistrate judge's report and recommendation. 28 U.S.C. § 636(b)(1); Williams v. Wainwright, 681 F.2d 732 (11th Cir. 1982), cert. denied, 459 U.S. 1112, 103 S.Ct. 744, 74 L.Ed.2d 964 (1983). A district judge " shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1). This requires that the district judge " give fresh consideration to those issues to which specific objection has been made by a party." Jeffrey S. v. State Bd. of Educ. of Ga., 896 F.2d 507, 512 (11th Cir. 1990) (internal quotation marks omitted). With respect to those findings and recommendations to which objections have not been asserted, the Court must conduct a plain error review of the record. United States v. Slay, 714 F.2d 1093, 1095 (11th Cir. 1983), cert. denied, 464 U.S. 1050, 104 S.Ct. 729, 79 L.Ed.2d 189 (1984).

2. Motion for Summary Judgment

A court " shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). Parties " asserting that a fact cannot be or is genuinely disputed must support that assertion by . . . citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials." Fed.R.Civ.P. 56(c)(1).

The party seeking summary judgment bears the burden of demonstrating the absence of a genuine dispute as to any material fact. Herzog v. Castle Rock Entm't,193 F.3d 1241, 1246 (11th Cir. 1999). Once the moving party has met this burden, the non-movant must demonstrate that summary judgment is inappropriate by designating specific facts showing a genuine issue for trial. Graham v. State Farm Mut. Ins. Co.,193 F.3d 1274, 1282 (11th Cir. 1999). Non-moving parties " need not present ...

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