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Allen v. Bank of America N.A.

United States District Court, D. Maryland

March 19, 2013

WILLIAM L. ALLEN, et al.
v.
BANK OF AMERICA, N.A., et al

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For William L. Allen, Plaintiff: Jane Santoni, LEAD ATTORNEY, Kathleen Susan Skullney, Williams and Santoni LLP, Towson, MD.

For Ann L. Allen, Denise Angles, Plaintiffs: Jane Santoni, Kathleen Susan Skullney, LEAD ATTORNEYS, Williams and Santoni LLP, Towson, MD.

For Bank of America Corporation, doing business as Bank of America Home Loans, Defendant: Glenn A Cline, LEAD ATTORNEY, Robert A Scott, Ballard Spahr LLP, Baltimore, MD.

For Western Union Company, doing business as Paymap, Western Union Company, doing business as Equity Accelerator, Defendants: John Patrick Molloy Sherry, LEAD ATTORNEY, The Law Offices of David L Marks, Fairfax, VA.

For Federal National Mortgage Association, (FNMA), BAC Home Loans Servicing, LP, (A subsidiary of Bank of America, N.A.), Defendants: Glenn A Cline, Ballard Spahr LLP, Baltimore, MD.

For Western Union Financial Services, Inc., (A subsidiary of Western Union Company), Defendant: John Patrick Molloy Sherry, LEAD ATTORNEY, The Law Offices of David L Marks, Fairfax, VA; Glenn A Cline, Ballard Spahr LLP, Baltimore, MD.

OPINION

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Catherine C. Blake, United States District Judge.

MEMORANDUM

Plaintiffs William and Ann Allen and Denise Angles (" the Allens" ) brought this action alleging that defendants Western Union (and related entities) (" Western Union" ), Fannie Mae, and Bank of America, N.A. (and related entities) (" BANA" ), violated provisions of state and federal law in providing mortgage servicing and mortgage payment services to the Allens. Western Union and BANA have each filed motions for summary judgment and motions to exclude the testimony of the Allens' damages expert, and the Allens have cross-moved for summary judgment and to exclude the defendants' respective damages experts.

BACKGROUND[1]

The Allens obtained a mortgage loan secured by their home in Baltimore County, which they have lived in since 1967, originated by nonparty GreenPoint and acquired by Fannie Mae in 2002. (BANA Mot. Summ. J., Ex. 1 (" Angles Dep." ), ECF No. 80-2, at 20-22; Ex. 3 (" McDonald Dep." ),

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ECF No. 80-4, at 23-25). GreenPoint continued to service the mortgage when Fannie Mae acquired it. (McDonald Dep., ECF No. 80-4, at 23-25). The mortgage note required the Allens to pay slightly more than $900 a month, due on the first of the month, and it provided a 15-day grace period in which the Allens could pay before the payment was considered late. (Pls.' Opp. to BANA Summ. J., Ex. 5 at 392-93 (" Mortgage Note" ), ECF No. 97-6, at 393; Ex. 4 (" Samara Dep." ), ECF No. 97-5, at 173).

In 2006, the Allens enrolled in the " Equity Accelerator Program" sponsored by GreenPoint and administered by a Western Union subsidiary. (BANA Mot. Summ J., Ex. 4 (" Allen Dep." ), ECF No. 80-5, at 26; Ex. 5, (" Bunge Dep." ), ECF No. 80-6, at 13-14). The program was designed to speed up payment of the Allens' mortgage by withdrawing half a mortgage payment twice a month, plus a small additional amount, into the sponsor's (GreenPoint's) custodial account and then transmitting a full payment from that account to the Allen's mortgage servicer whenever enough money for a full payment was in the account. (Bunge Dep., ECF No. 80-6, at 165-66). GreenPoint received a monthly commission for this service. ( Id. at 167-68). The terms and conditions of the program, which the Allens received when they enrolled, expressly stated in all-caps that the Allens were " solely responsible for complying with the terms of all loan and other agreements . . . [and] solely responsible for any payments due and any interest, late fees[,] or other charges that may be assessed." (Western Union Mot. Summ. J., Ex. C (" Program Terms" ), ECF No. 83-4, ¶ 28). The terms also limited any liability that might be incurred to direct damages of no more than $500, and they expressly disclaimed any liability for consequential, indirect, or other damages. ( Id. ).

Scheduling related to the timing of the Allens' retirement income and withdrawals under the program caused a number of payment errors, culminating in a missed payment in October 2007. (Bunge Dep., ECF No. 80-6, at 154-59). GreenPoint reported the Allens' mortgage one-month delinquent to credit agencies nine non-consecutive times, beginning in November 2007, because of the single missed payment under the program. (BANA Mot. Summ. J., Ex. 7 (" Smith Dep." ), ECF No. 80-8, at 105-06). In March 2008, the Allens were denied refinancing by Beneficial Finance because their credit scores had fallen. (Allen Dep., ECF No. 80-5, at 100).

In October 2008, servicing of the Allens' mortgage was transferred from GreenPoint to BANA. [2] (BANA Mot. Summ. J., Ex. 9 (" Samara Dep." ), ECF No. 80-10, at 39). In the notice sent to the Allens by BANA advising them of the assignment of their mortgage and transfer of servicing rights, BANA stated: " If your previous servicer was automatically drafting/deducting your monthly payment from your bank account, please disregard the coupon attached below because [BANA] will continue this service without interruption." (Pls.' Opp. to BANA Summ. J., Ex. 5 at 412 (" Welcome Notice" ), ECF No. 97-6, at 412). Western Union's records indicate that the program did, without the Allens' prompting, transmit funds to BANA the month after the servicing was transferred.

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(Pls.' Opp. to BANA Summ. J., Ex. 3 (" Electronic Payment Record" ), ECF No. 97-4; Ex. 2 (" Bunge Dep." ), ECF No. 97-3, at 121-22).

What happened to the Allens' mortgage after the servicing transfer to BANA is in dispute. BANA's records do not reflect that a November 2008 payment was made, (BANA Mot. Summ. J., Ex. 11 (" Loan History" ), ECF No. 80-12), but Western Union's records reflect that a payment was transmitted to BANA's custodial account on November 6, 2008. (Electronic Payment Record, ECF No. 97-4; Bunge Dep., ECF No. 97-3, at 121-22). Western Union's electronic payment record also reflects that regular payments were made to GreenPoint through October 2008, except for the October 2007 missed payment. ( Id. ). Apparently, the Allens' loan was not " boarded" in BANA's systems until November 11, 2008, (Samara Dep., ECF No. 97-5, at 50), and this could account for any initial discrepancies in BANA's accounting of the Allens' payments. But, the irregularities in BANA's processing of the Allens' payments continued. First, when BANA boarded the loan, there appears to have been a partial payment held in suspense of $601.64 in the account when it was transferred. (Loan History, ECF No. 80-12). This amount was apparently a holdover from the October 2007 missing full payment. Rather than continuing to hold the amount in suspense or apply it as a payment, BANA appears to have zeroed out that amount by applying it as " late charges." ( Id. ). BANA suggests that this was an accounting practice permitted by the mortgage note. (BANA Summ. J. Reply, ECF No. 103, at 26) (" [T]he partial payment held in suspense was not applied to past-due late charges . . . it was applied to late charges as they came due in future months, as allowed by the Note." ). Both parties agree that the Equity Accelerator Program then malfunctioned again, as it did in October 2007, and the December 2008 payment was not sent to BANA. In January, however, one and a half payments were sent to BANA. (Loan History, ECF No. 80-12). The January half payment, combined with the initial partial-payment in suspense that was zeroed out, would have covered the missing December payment, as permitted by the deed. ( See BANA Mot. Summ. J., Ex. 2 (" Deed" ), ECF No. 80-3, at ¶ 2). But, BANA appears to have simply accepted the half-payment without taking any other action or crediting the Allens for it. BANA also disputes Western Union's records showing that the Allens transmitted, to BANA's custodial account (as indicated by the account number on their electronic payment record), all payements due through June 2009. (Electronic Payment Record, ECF No. 97-4; Bunge Dep., ECF No. 97-3, at 121-22). BANA alleges that the Allens missed their November 2008 and April and June 2009 payments, and that they stopped making payments altogether after May 2009, but the Allens allege that BANA began refusing payments at some point during that summer. ( See BANA's Mot. Summ J., Mem., ECF No. 80-1, at 8; Pls.' Opp. to BANA Summ. J., Mem., ECF No. 97-1, at 5-6). To summarize: the parties only agree that the Allens missed the October 2007 and December 2008 payments, and, even then, the Allens contend that BANA's mishandling of funds it received from GreenPoint and the Equity Accelerator Program were sufficient to have covered the December 2008 missing payment as permitted by the deed, albeit one month late.

On December 8, 2008, BANA first sent the Allens a Notice of Intent to Accelerate demanding payments for October, November, and December 2008. (Samara Dep., ECF No. 97-5, at 44). BANA only made one negative report to a credit reporting agency in February 2009, stating that the account was 90 days past due. (BANA

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Mot. Summ. J., Ex. 10 (" Ans. to Pls.' Interrog." ), ECF No. 80-11, at 12). It then reported in March 2009 that the account was current. ( Id. ). As stated above, at the behest of either BANA or the Allens, no payments were made on the account as of July 2009, and BANA instituted a foreclosure action on September 24, 2009. ( See BANA Mot. Summ. J., Ex. 12 (" Foreclosure Docket" ), ECF No. 80-13). The foreclosure action was voluntarily dismissed on April 19, 2010. ( Id. ).

The Allens subsequently filed suit against the defendants and the suit was removed to this court in January 2011. In August 2011, the court granted in part and denied in part the defendants' motions to dismiss. Allen v. Bank of America Corp., 2011 WL 3654451 (D. Md. Aug 18, 2011). Now at issue are the Allens' surviving claims. Against BANA (and Fannie Mae), the Allens have brought claims under the Maryland Consumer Debt Collection Act (" MCDCA" ), the Maryland Consumer Protection Act (" MCPA" ), the Fair Debt Collection Practices Act (" FDCPA" ), the Real Estate Settlement Procedures Act (" RESPA" ), and common-law breach of contract and negligence claims. ...


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