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Farber v. Brock & Scott, LLC

United States District Court, D. Maryland

September 29, 2017

TODD FARBER & IVEY FARBER Plaintiffs,
v.
BROCK & SCOTT, LLC d/b/a BROCK & SCOTT, PLLC Defendant.

          MEMORANDUM OPINION

          WILLIAM CONNELLY, UNITED STATES MAGISTRATE JUDGE.

         On January 11, 2016, Plaintiffs Todd and Ivey Farber (“the Farbers”) filed this civil action against Defendants Brock & Scott, LLC d/b/a Brock & Scott, PLLC (“Brock & Scott”) and SunTrust Mortgage, Inc. (“SunTrust”), alleging violations of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601-2617 (2012), and the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692-1692p (2012).

         On March 4, 2016, Brock & Scott filed a Motion to Dismiss and, on March 25, 2016, the Farbers filed an Opposition to the motion. On April 6, 2016, the Farbers filed a notice of dismissal of all claims against SunTrust, see ECF No. 25, which Judge Chuang granted two days later, dismissing all claims against SunTrust with prejudice, see ECF No. 26. Also, on April 8, 2016, Brock & Scott filed its Reply memorandum. A motions hearing was held September 20, 2016. On October 6, 2016, Judge Chuang issued a Memorandum Opinion and Order granting in part and denying in part Brock & Scott's Motion to Dismiss. See ECF Nos. 33-34. Specifically, Judge Chuang granted the Motion to Dismiss as to Count I (RESPA) and denied as to Count II (FDCPA). Count III (Declaratory Judgment) was dismissed as moot. ECF No. 34.

         Pending before the court and ready for resolution is Brock & Scott's Motion for Summary Judgment (ECF No. 57). The Farbers filed a combined Response in Opposition and Cross-Motion for Partial Summary Judgment (ECF No. 58). Brock & Scott filed a combined Reply to Opposition to its Motion for Summary Judgment and an Opposition to the Farbers' Cross-Motion for Partial Summary Judgment (ECF No. 65). Finally, the Farbers filed their Reply in Support of their Cross-Motion for Partial Summary Judgment (ECF No. 67).

         Also pending before the court are three motions to strike, one filed by the Farbers (ECF No. 59) and two filed by Brock & Scott (ECF Nos. 61-62). These motions have been fully briefed. See ECF Nos. 60, 66, 67.

         All pending motions are ripe for resolution. No hearing is deemed necessary. The court now rules pursuant to Local Rule 105.6 (D. Md. 2016).

         BACKGROUND

         On May 10, 2007, the Farbers entered into a cash-out, refinanced mortgage loan with SunTrust for $675, 000 (“mortgage loan”). The Farbers executed a Note and Deed of Trust as part of the transaction. The Deed of Trust pledged the real property, commonly known as 712 Gatestone Street, Gaithersburg, Maryland (the “Property”) as security for the repayment of the mortgage loan. The Farbers' mortgage loan was assigned to U.S. Bank National Association, (“U.S. Bank”), as trustee for LMT 2007-7, holder of the Note and beneficiary of the Deed of Trust. SunTrust was the servicer of the mortgage loan.

         As of November 2009, the Farbers failed to make their monthly mortgage payment. In March 2010, SunTrust referred the Farbers' mortgage loan to the law firm of Bierman, Geesing & Ward for collection via foreclosure.

         On March 15, 2010, Bierman, Geesing & Ward filed an Order to Docket (foreclosure action) in the Circuit Court for Montgomery County, Maryland in order to foreclose on the Property. A foreclosure sale was scheduled for May 12, 2010 and the foreclosure sale was advertised in the newspaper. One day before the foreclosure sale, on May 11, 2010, the Farbers filed for Chapter 13 bankruptcy protection in the U.S. Bankruptcy Court for the District of Maryland (Greenbelt Division). As a result of the bankruptcy filing, the foreclosure proceedings were halted.

         On October 27, 2011, SunTrust and U.S. Bank moved for relief from the automatic stay of 11 U.S.C. § 362 because the Farbers failed to make their post-petition mortgage payments between September of 2010 through October of 2011. Thereafter, the Farbers moved to voluntarily dismiss their bankruptcy case. On November 16, 2011, the U.S. Bankruptcy Court granted the Farbers' motion to dismiss voluntarily their bankruptcy case and denied as moot SunTrust and U.S. Bank's motion for relief from the automatic stay.

         In late 2013 SunTrust referred again to Bierman, Geesing & Ward the Farbers' mortgage loan for collection via foreclosure. On December 11, 2013, Bierman, Geesing & Ward filed a second Order to Docket (foreclosure action) with the Circuit Court for Montgomery County, Maryland. As part of the initiation of this action, Bierman, Geesing & Ward filed, on behalf of SunTrust and U.S. Bank, a Notice of Intent to Foreclose which stated, among other things, that the Farbers' mortgage loan was past due since June 2, 2010. See ECF No. 57-1 at 4-8. Additionally, a November 20, 2013 Final Loss Mitigation Affidavit was submitted with the second Order to Docket. Karin Hughes, on behalf on SunTrust, declared that SunTrust conducted a loss mitigation analysis. According to SunTrust, the Farbers did not qualify for a loss mitigation program for the following reasons: “Borrower does not have sufficient income to support a modification. File was reviewed for retention option. Per investor cap mod only. Borrower did not show interest in liquidation option.” ECF No. 57-17 at 2.

         On December 31, 2013, the Farbers filed a Request for Foreclosure Mediation and paid the required fee. See ECF No. 57-3 at 2-4. On April 14, 2014, Tara Lehner, Administrative Law Judge, filed a Foreclosure Mediator's Notification of Status with the Circuit Court for Montgomery County, Maryland. The mediator reported, “[t]he parties participated in mediation but no agreement was reached.” ECF No. 57-4 at 2. Having received the report from the Office of Administrative Hearings, on April 28, 2014, the Circuit Court for Montgomery County, Maryland ordered that SunTrust and U.S. Bank “may schedule the foreclosure sale, subject to the right of the borrower to file a motion pursuant to Rule 14-211 to stay the sale and dismiss the action.” ECF No. 57-5 at 2.

         On June 2, 2014, the Farbers filed for Chapter 7 bankruptcy with the U.S. Bankruptcy Court for the District of Maryland (Greenbelt Division). By law, an automatic stay under 11 U.S.C. § 362 became operable. Seventeen days later, on June 19, 2014, SunTrust and U.S. Bank moved for relief from the automatic stay, advising the U.S. Bankruptcy Court that the amount the Farbers owe as of June 16, 2014 is approximately $885, 790.53 (excluding interest, attorneys' fees, and court costs). ECF No. 57-6 at 2. SunTrust and U.S Bank asked that the automatic stay be terminated “so as to enable [them] to proceed with a foreclosure action in the Circuit Court for Montgomery County, Maryland against the property located at 712 Gatestone Street, Gaithersburg, MD 20878[.]” Id. at 3. The Farbers did not oppose the motion for relief from the automatic stay. See ECF No. 57-15 at 7 (Farbers' Response to Request for Admission No. 13). On August 5, 2014, the U.S. Bankruptcy Court granted the relief requested by SunTrust and U.S. Bank ordering “that the automatic stay imposed by 11 U.S.C. § 362(a) is TERMINATED to enable Movant and/or its successors and assigns to cause the commencement or continuation of a foreclosure proceeding, and/or pursue other means, as permitted by state law, of obtaining or transferring title to the real property belonging to the Debtors and known as 712 Gatestone Street, Gaithersburg, MD 20878, and to allow the purchaser or transferee to obtain possession of same[.]” ECF No. 57-9 at 3.

         A foreclosure sale was scheduled for November 14, 2014. See ECF No. 57-21 at 2. In late October/early November 2014, the Farbers submitted a loss mitigation application to SunTrust, as acknowledged by SunTrust's letter of November 10, 2014. See ECF No. 57-22 at 2. On November 10, 2014, in responding to the Farbers' correspondence to the Consumer Financial Protection Bureau, SunTrust advised the Farbers that SunTrust “submitted a request to our foreclosure attorney to postpone the foreclosure sale scheduled for November 14, 2014, to allow time for loss mitigation review.” Id.

         Three days later, on November 13, 2014, SunTrust addressed individual letters to Todd S. Farber and Ivey Farber, see ECF No. 57-23 at 4-6, 15-17, informing them that their recent application for loss mitigation was carefully considered. SunTrust expressed its regret that it is unable to approve the application at this time despite considering several loss mitigation options. The Farbers were denied for each option as follows: Repayment Plan (cannot achieve affordable payment), Forbearance (reason for delinquency is not unemployment), Modification without Trial (cannot achieve affordable payment), Disaster Forbearance (property not affected by natural disaster), Conditional Short Sale (application not timely submitted), and Conditional Deed in Lieu (application not timely submitted). ECF No. 57-23 at 5, 16. None of these options were eligible for an appeal. Id.

         That on March 30, 2015, a Notice of Intent to Foreclose was sent to the Farbers. See ECF No. 57-11 at 2 ¶ 3. On April 9, 2015, Daniel Oliveros, on behalf of SunTrust, signed a Final Loss Mitigation Affidavit. Mr. Oliveros reported that SunTrust conducted a loss mitigation analysis and determined the Farbers did not qualify because the mortgage loan was reviewed for foreclosure avoidance alternatives but the Farbers were denied in November 2014 “for insufficient income to overcome 58 months of arrearages.” ECF No. 57-18 at 2. The next day, on April 10, 2015, SunTrust appointed the attorneys of Brock & Scott as Substitute Trustees of the May 10, 2007 Deed of Trust, replacing the attorneys at Bierman, Geesing & Ward. See ECF No. 57-10 at 2-3 (Deed of Appointment of Substitute Trustee). Also, on April 10, 2015, Brock & Scott filed with the Circuit Court for Montgomery County, Maryland an “Affidavit Pursuant to Section 7-105.1(e)(1)(ii) Concerning Default and Notice of Intent to Foreclose.” See ECF No. 57-11 at 2-3. On May 18, 2015, Brock & Scott filed an Order to Docket (foreclosure action) in the Circuit Court for Montgomery County, Maryland against the Farbers. See ECF No. 57-15 at 9 (Farbers' Response to Request for Admission No. 20). This was the third foreclosure action brought against the Property due to long-standing defaults on the mortgage loan.

         On June 3, 2015, the Farbers completed a Request for Foreclosure Mediation. See ECF No. 58-3 at 2-3. Brock & Scott became aware of this request on June 8, 2015. See ECF No. 58-2 at 5 (Brock & Scott's Response to Interrogatory No. 9). On June 9, 2015, the Office of Administrative Hearings (for Montgomery County, Maryland), sent a Notice of Mediation to Ivey W. Farber advising her that the mediation is scheduled for July 20, 2015. See ECF No. 58-4 at 2. An identical June 9, 2015 Notice of Mediation was addressed to Brock & Scott advising the firm of the July 20, 2015 mediation. See ECF No. 57-12 at 2.

         Brock & Scott placed a notice of impending foreclosure sale, scheduled for July 7, 2015, in the Washington Post which ran on June 19 and 26, 2015. See ECF No. 58-6 at 2. In a letter dated June 26, 2015, Brock & Scott advised “all occupants” of 712 Gatestone Street, Gaithersburg, Maryland 20878 about the attached Notice of Impending Foreclosure Sale, “pursuant to Section 7-105.9(c) of the Real Property Article of the Maryland Code.” ECF No. 58-5 at 2. On June 29, 2015, SunTrust sent the following to Brock & Scott regarding the Property.

The above referenced loan, which was previously referred to your firm for initiation of foreclosure proceedings[, ] remain in default for the June 01, 2010 and subsequent installments. Based on our review of the loan, SunTrust Mortgage, Inc. has determined that all of the investor's applicable delinquency management requirements have been compiled with and there is neither an approved payment arrangement nor a foreclosure alternative offer pending.
Therefore, SunTrust Mortgage certifies that your firm should continue with the foreclosure sale as scheduled.
Sincerely,
Default Services

ECF No. 57-19 at 2. According to Brock & Scott, on June 28, 2015, it received notice from the Circuit Court of Montgomery County, Maryland that the foreclosure mediation hearing would be held July 20, 2015. ECF No. 58-2 at 5 (Brock & Scott's Response to Interrogatory No. 9). Upon receipt of this notice, Brock & Scott advised SunTrust, canceled the July 7, 2015 foreclosure sale, and canceled any further notices of the foreclosure sale in the Washington Post.

         In advance of the forthcoming foreclosure mediation with the Office of Administrative Hearings, the Farbers claim they submitted a loss mitigation application to SunTrust on July 15, 2015. In answering Brock & Scott's First Set of Interrogatories, the Farbers list Bates No. FarberProduction 206-346 as proof of their loss mitigation application of July 15, 2015. See ECF No. 58-7 at 7 (Farbers' Response to Interrogatory No. 6).

         The foreclosure mediation was held July 20, 2015. Thomas G. Welshko, Administrative Law Judge (“ALJ”), acted as the mediator. On July 28, 2015, the Foreclosure Mediator's Notification of Status was filed with the Circuit Court for Montgomery County, Maryland. ALJ Welshko reported, “[t]he parties participated in the mediation but no agreement was reached.” ECF No. 57-13 at 2. Having received the mediator's report, on July 31, 2015, the Circuit Court for Montgomery County, Maryland issued an order directing “that the secured party may schedule the foreclosure sale, subject to the right of the borrower to file a motion pursuant to Rule 14-211 to stay the sale and dismiss the action.” ECF No. 57-14 at 2.

         According to the Farbers, after submitting the July 15, 2015 application and attending mediation on July 20, 2015, SunTrust requested the Farbers submit certain specified documents by August 15, 2015. They submitted the requested documents on August 12, 2015. Two days later, on August 14, 2015, SunTrust sent the Farbers a letter acknowledging receipt of the documents. See ECF No. 57-24 at 2-5. Three days later, on August 17, 2015, SunTrust sent an incomplete information notice to the Farbers listing the specific documents needed, by September 16, 2015, in order to complete the Farbers' application. See ECF No. 58-8 at 2-4. According to the Farbers, on September 15, 2015, they provided SunTrust all the requested documents or equivalent explanation letters, which made their loss mitigation application facially complete. According to the Farbers, SunTrust thereafter did not request additional documents nor did SunTrust issue a denial letter for the “July 15, 2015” loss mitigation application.

         According to Brock & Scott, on or about November 13, 2015, SunTrust requested continuation of foreclose proceedings against the Property. Brock & Scott scheduled the foreclosure sale on January 26, 2016. This second notice of impending sale was advertised in the Washington Post on January 8, 15, 22, 2016. On January 13, 2016, the Farbers' attorney sent an e-mail to Brock & Scott's attorney advising that a federal lawsuit has been filed by the Farbers against Brock & Scott and SunTrust and that the summons has been issued that day. “Before I spend any time on the pending [foreclosure ] sale, can you please advise what you and Substitute Trustees intend to do about the [foreclosure] sale while the federal litigation is pending?” ECF No. 58-12 at 3 (E-mail of 1/13/16 from Robinson, Esq. to Jung, Esq.). Five days later, Brock & Scott's attorney responded in part, “Please allow us to review the attachment you sen[t] and after conferring with the lender, we will reply to you accordingly.” Id. (E-mail of 1/18/16 from Jung, Esq. to Robinson, Esq.).

         On January 19, 2016, SunTrust prepared and forwarded to Brock & Scott the following letter.

The above referenced loan, which was previously referred to your firm for initiation of foreclosure proceedings[, ] remains in default for the June 01, 2010 and subsequent installments. Based on our review of the loan, SunTrust Mortgage, Inc. has determined that all of the investor's applicable delinquency management requirements have been complied with and there is neither an approved payment arrangement nor a foreclosure alternative offer pending.
Therefore, SunTrust Mortgage certifies that your firm should continue with the foreclosure sale as scheduled.
Sincerely,
Default Services

ECF No. 57-20 at 2. Due to inclement weather, the January 26, 2016 foreclosure sale did not occur. See ECF No. 58-12 at 2 (E-mail of 1/26/16 from Jung, Esq. to Robinson, Esq.) (“I just wanted to let you know that the inclement weather took care of cancelling the foreclosure sale for us. The courts were closed so no sales were held.”).

         MOTIONS TO STRIKE

         Before addressing the cross-motions for summary judgment, the court must resolve three motions to strike challenging documents and purported statements of undisputed material facts.

         A. Plaintiffs' Motion to Strike

         The Farbers move to strike and/or disregard the purported Affidavit of Tenesha Melton[1](ECF No. 57-16) submitted in support of Brock & Scott's motion for summary judgment. The Farbers object to Ms. Melton's affidavit on the following grounds: (a) Ms. Melton was not identified as an individual with knowledge of the facts alleged in the Farbers' Complaint or Brock & Scott's Answer and Affirmative Defenses; (b) Ms. Melton's affidavit contains hearsay since Ms. Melton lacks any personal knowledge; and (c) Brock & Scott improperly presented Ms. Melton's affidavit to the court.

         Specifically, via discovery requests, the Farbers sought the identities of persons with personal knowledge concerning the pleadings in the case or having discoverable information supporting a position of Brock & Scott. Ms. Melton was not identified by Brock & Scott. Nor did Brock & Scott supplement its discovery responses to Interrogatories 4 and 5 by disclosing the identity of Ms. Melton. Moreover, the non-disclosure of Ms. Melton's purported knowledge is inherently unfair to the Farbers. Brock & Scott should not be rewarded but sanctioned.

         Second, the Farbers contend Ms. Melton's affidavit contains a series of immaterial statements which are not admissible evidence and thus are not material to the claims before the court. Some of these statements constitute conclusory testimony, including legal conclusions, not based on Ms. Melton's personal knowledge.

         Third, Exhibit 4 (ECF No. 57-20) is a January 19, 2016 letter from SunTrust to Brock & Scott advising that the Farbers remain in default and certifying that Brock & Scott should continue with the foreclosure sale as scheduled. The Farbers claim this document was never disclosed during discovery and thus should be stricken. They ask the court to strike in part or in whole the affidavit of Ms. Melton and the accompanying exhibits in accordance with Federal Rule of Civil Procedure 37(c)(1) (“If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.”).

         In its Response, Brock & Scott notes, at the outset, that ECF No. 57-16 or Exhibit S is titled Affidavit of SunTrust, not Affidavit of Tenesha Melton. This affiant is a “Group Vice President at SunTrust Bank that oversees the Foreclosure, REO, Property Preservation (Loss Mitigation), and HOA departments.” ECF No. 60 at 1. Paragraph 2 of the Affidavit states, “[t]hat the Affiant is employed by SunTrust Bank, Inc. (hereinafter “SunTrust”) and has knowledge of the facts stated herein[.]” ECF No. 57-16 at 2. Admittedly, the affidavit should have been more specific about Ms. Melton's position and responsibilities with SunTrust. Nonetheless, via the affidavit, Ms. Melton is not presenting facts based solely upon her personal knowledge, but instead upon what knowledge SunTrust, as an institution, has with respect to the Farbers' mortgage loan.

         Second, although Brock & Scott did not specifically identify Ms. Melton in answering Interrogatories 4[2] and 5[3], its response to Interrogatory 4 included “the employees in SunTrust's loss mitigation department[, ]” and its response to Interrogatory 5 stated in pertinent part,

The employees in SunTrust's loss mitigation department - have knowledge of each of the loss mitigation applications submitted to SunTrust Mortgage by Todd and Ivey Farber and have knowledge of the denial and rejection letters sent to the Farbers.

         ECF No. 58-2 at 3. Brock & Scott is the Defendant in this case, and is a separate and distinct entity from SunTrust. The Farbers' counsel had an opportunity to conduct discovery on SunTrust. “The fact that Plaintiffs' counsel failed to conduct any discovery upon SunTrust and is now surprised that Ms. Tenesha Melton has knowledge of facts with respect to the Plaintiffs' mortgage loan with SunTrust should not be grounds for a Motion to Strike because the Defendant did not specifically identify Tenesha Melton and every other employee at SunTrust that could possibly have knowledge of the Plaintiffs' mortgage loan.” ECF No. 60 at 2. Brock & Scott denies withholding information or names.

         Third, Brock & Scott contends the Affidavit of SunTrust, via its employee Ms. Melton, complies with Federal Rule of Civil Procedure 56(c)(4) which provides, “[a]n affidavit . . . used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant . . . is competent to testify on the matters stated.” Brock & Scott concedes, although more details could have been provided as to Ms. Melton's personal knowledge[4] and her competency to testify[5], the Affidavit of SunTrust satisfies the requirements of Rule 56(c)(4) and therefore should not be stricken.

         Fourth, Brock & Scott admits it did not receive the executed Affidavit of SunTrust or become aware of Ms. Melton until April 3, 2017, a day before the dispositive motions deadline. Discovery closed on March 6, 2017. “It would have been a little late to supplement discovery on or after April 3, 2017.” ECF No. 60 at 3.

         Fifth, Brock & Scott rejects the Farbers' assertion that the Affidavit of SunTrust is conclusory and includes immaterial statements. “The Affidavit of SunTrust (ECF 57-16) provides the foreclosure history of the Plaintiffs' mortgage loan with Montgomery County Maryland Circuit Court and with the U.S. Bankruptcy Court in Greenbelt, Maryland, and that history is factual. Furthermore, the exhibits accompanying both the Affidavit of SunTrust (ECF 57-16) and the ...


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