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Meaney v. Nationstar Mortgage

United States District Court, D. Maryland

February 21, 2018

TERESA MEANEY, Plaintiff,
v.
NATIONSTAR MORTGAGE, Defendant.

          MEMORANDUM OPINION

          THEODORE D. CHUANG, United States District Judge.

         Plaintiff Teresa Meaney (“Meaney”) has brought suit against Defendant Nationstar Mortgage (“Nationstar”) alleging violations of the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601-1667f (2012), the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681-1681x; the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601-2617 (2012); Section 12-118 of the Commercial Law Article of the Maryland Code, Md. Code Ann., Com. Law §§ 12-118, 14-202 (West 2013), and the Maryland Consumer Debt Collection Act (“MCDCA”), Md. Code. Ann., Com. Law §§ 14-201-04; and common law claims of defamation and false light. Meaney alleges that Nationstar falsely labeled her mortgage as delinquent, failed to provide proper notice of an interest rate increase, did not respond to her requests for information, and provided unnecessary notice to her ex-husband regarding her alleged delinquency. Meaney seeks actual, statutory, and punitive damages, costs, and a declaratory judgment from the Court regarding Meaney's mortgage. Pending before the Court are Meaney's Motion for Partial Summary Judgment and Nationstar's Motion for Summary Judgment. For the reasons set forth below, both Motions are granted in part and denied in part.

         BACKGROUND

          I. Mortgage and Bankruptcy

          On May 9, 2005, Meaney obtained an adjustable rate mortgage loan from Countrywide Home Loans, Inc. secured by property located on Lewisdale Road in Clarksburg, Maryland (“the Property”). As part of this transaction, Meaney and her then-husband, Michael Meaney, signed a Deed of Trust (“the Deed”) as borrowers.

         The Deed contained the following provision:

Notices. All notices given by Borrower or Lender in connection with the Security Instrument must be in writing. Any notice to Borrower in connection with this Security Instrument shall be deemed to have been given to Borrower when first mailed by first class mail or when actually delivered to Borrower's notice address if sent by other means. Notice to any one Borrower shall constitute notice to all Borrowers unless Applicable Law expressly requires otherwise. The notice address shall be the Property Address unless Borrower has designated a substitute address by notice to lender. Borrower shall promptly notify Lender of Borrower's change of address. If Lender specifies a procedure for reporting Borrower's change of address, then Borrower shall only report a change of address through that specified procedure. There may be only one designated notice address under this Security Instrument at any one time. Any notice to Lender shall be given by delivering it or mailing it by first class mail to Lender's address stated herein unless Lender has designated another address by notice to Borrower. Any notice in connection with this Security Instrument shall not be deemed to have been given to Lender until actually received by Lender. If any notice required by this Security Instrument is also required under Applicable Law, the Applicable Law requirement will satisfy the corresponding requirement under this Security Instrument.

Joint Record (“J.R.”) 16.

         On September 29, 2011, the Meaneys filed for Chapter 13 bankruptcy in the United States Bankruptcy Court for the District of Maryland (“the Bankruptcy Case”). The Meaneys were initially represented in the Bankruptcy Case by Timothy Sessing, who was listed as their counsel of record. Once the Meaneys filed their bankruptcy petition, they came under the protection of the automatic stay provision of 11 U.S.C. § 362(a), which, among other things, stayed “any act to collect, assess, or recover a claim against the debtor that arose before the commencement” of the Bankruptcy Case. 11 U.S.C. § 362(a)(6) (2012).

         On September 17, 2012, Michael Meaney was dismissed from the Bankruptcy Case. The Meaneys began divorce proceedings two weeks later. HSBC Bank USA, N.A. (“HSBC”) acquired rights to the Deed on December 14, 2012, and Nationstar became the servicer of the loan for HSBC on July 1, 2013. Seth Diamond entered an appearance as counsel of record for Teresa Meaney on September 4, 2013, but Timothy Sessing remained on the docket as her counsel as well. On November 25, 2013, Michael Meaney executed a quitclaim deed as part of the divorce proceedings, relinquishing his interest in the Property to Teresa Meaney. There is no allegation that either Teresa Meaney or Michael Meaney mailed any notification of the quitclaim deed to Nationstar.

         II. Bankruptcy Consent Order

         On July 29, 2014, HSBC filed a “Motion for Order Granting Relief from Automatic Stay and Co-Debtor Stay” in the Bankruptcy Case. J.R. 48. The Motion stated that Meaney had fallen behind on payments and was in default on the mortgage loan, owing a post-petition arrearage of $8, 782.37 consisting of “5 post petition monthly payments of $1, 915.01 each which were to be paid directly to [HSBC], less suspense of $792.68.” Id. at ¶ 7. In support of this Motion, HSBC attached a declaration from Shemar Ursin, an Assistant Secretary of Nationstar, dated July 23, 2014, stating that $8, 782.37 was “the amount necessary to cure any post-petition default on or about the date hereof.” J.R. 548. HSBC sought to lift the bankruptcy court's automatic stay in order to initiate foreclosure proceedings on the Property. At the time the Motion was filed, Meaney owed payments for March to July 2014.

         The next day, July 30, 2014, Meaney made a lump sum payment of $8, 800, plus payment fees, to Nationstar. Over the next six days, Nationstar applied these payments to Meaney's arrearage, crediting her for the payments due in March, April, May, and June 2014. This lump sum payment was not credited toward the payment due in July 2014.

         In an August 27, 2014 Consent Order (“the Consent Order”) signed by both parties, the bankruptcy court, with the agreement of HSBC and Meaney, ordered that the automatic stay be “terminated so as to permit [HSBC] to commence foreclosure proceedings.” J.R. 53. However, pursuant to the Consent Order, HSBC was precluded from initiating foreclosure proceedings so long as Meaney complied with the rest of its terms. Specifically, Meaney was required to “cure the post-petition arrearage of $3, 637.34, which amount includes payments through September 30, 2014, and includes $600.00 for legal fees and costs.” J.R. 54. The bankruptcy court set out a schedule to cure this arrearage under which Meaney was required to make a payment of $1, 915.01 by August 29, 2014, then make six payments of $287.05 each on the 15th day of each month from September 2014 to February 2015. Finally, Meaney was required to resume making regular monthly payments beginning with the payment due on October 1, 2014 and continuing every month thereafter.

         Meaney substantially complied with the requirements of the Consent Order by making a payment of $1, 956.07 on August 29, 2014 and making partial payments of $287.50 that were credited on September 15, 2014, October 15, 2014, November 17, 2014, December 16, 2014, and a final payment of $574.10 on December 23, 2014. Nationstar credited the August 29, 2014 payment toward July 2014, but did not credit the partial payments toward September 2014 when the final payment was received on December 23, 2014.

         III. Credit Disputes

         Meaney contested Nationstar's application of her payments following the Consent Order. On January 8, 2015, Meaney notified Nationstar in writing that she believed it had misapplied her payments. Nationstar responded two weeks later, stating that it had completed an investigation of Meaney's account and concluding that it had correctly applied all received payments in accordance with the Consent Order. On March 12, 2015, Meaney filed a complaint with the Consumer Financial Protection Bureau (“CFPB”) in which she stated that “the full amount requested by [Nationstar's] attorney's office was paid immediately - on Thursday, July 31, 2014.” J.R. 158-59. On April 24, 2015, Meaney emailed a Nationstar representative and requested that the company “credit [her] payments and make the loan current with the next loan payment due May 1st.” J.R. 163. Meaney contacted Nationstar again by email on January 19, 2016 and challenged its application of her payments since the entry of the Consent Order up to that date.

         On March 30, 2016, Meaney sent letters to Experian and TransUnion, two consumer reporting agencies (“CRAs”), to dispute the credit history relating to her mortgage. She sent a similar letter to Equifax, another CRA, on May 17, 2016. Although the credit reports from these CRAs had listed her as delinquent on her mortgage payments to Nationstar for several months in 2015, Meaney claimed that she was current on all payments throughout that period. Nationstar was notified of these disputes through a system known as e-OSCAR, which allows an entity such as Nationstar to receive automated notifications from CRAs about consumer credit disputes. Rather than receive a copy of a consumer's actual dispute, Nationstar receives an Automated Credit Dispute Verification (“ACDV”) through e-OSCAR each time a consumer submits a dispute to a CRA. The basis for the consumer's dispute is not fully described in the ACDV, which only contains a numeric dispute code with general instructions. For example, the ACDV that Nationstar received from TransUnion relating to Meaney's dispute contained the dispute code “109: Disputes Current Balance. Verify Original Loan Amount, Scheduled Monthly Payment Amount, Actual Payment Amount, Amount Past Due, Current Balance, and Original Charge-Off Amount.” J.R. 544.

         Nationstar received ACDVs relating to Meaney's disputes through e-OSCAR on April 7, 2016, April 14, 2016, and June 1, 2016. Each ACDV was assigned to the same Nationstar employee, Jeremy Kasza, who investigated each dispute and reviewed Meaney's loan file each time. On May 1, 2016, Kasza responded to ACDVs from TransUnion and Experian by updating Meaney's account history. The updated history listed Meaney as current for January to March 2016, but it added various notations of delinquency for March 2014 to December 2015. On May 1, 2016, Experian responded to Meaney's dispute letter by providing an updated credit history that showed Meaney delinquent for 11 of the previous 19 months. TransUnion responded the next day, showing similar discrepancies, but shifted back one month. For example, the Experian response listed Meaney as 60 days delinquent from April to July 2015, while the TransUnion response listed Meaney as 60 days delinquent from May to August 2015. Equifax sent a dispute response to Meaney on June 21, 2016, which showed delinquencies for Meaney through all of 2015.

         IV. Notices and Correspondence

          Meanwhile, in a July 18, 2013 phone call between Meaney and a Nationstar representative, Meaney stated that Sessing “no longer represented her.” J.R. 62. The representative advised her to have her attorney send Nationstar a letter with that information. In a separate phone call with a Nationstar representative in September 2013, Meaney identified Diamond as her attorney in the Bankruptcy Case. Then, on August 25, 2014, Diamond submitted a complaint on behalf of Meaney through the CFPB to Nationstar. Upon receiving the Complaint, however, a Nationstar representative noted that the Bankruptcy Case still listed Sessing as Meaney's attorney. At no point did Meaney, Diamond, or Sessing send a letter to Nationstar providing formal notice that Diamond now represented Meaney in the Bankruptcy Case or that Sessing no longer represented her.

         On November 5, 2014 and January 8, 2015, Nationstar sent letters to Sessing providing notice that Meaney's mortgage interest rate would increase, effective February 1, 2015, and that there would be an associated increase in her monthly payment. The letters were not sent to Meaney or to Diamond, Meaney's other counsel of record in the Bankruptcy Case. Sessing did not contact Meaney to inform her of the rate increase. Meaney continued to pay at the previous rate for three months. She learned of the rate increase on April 24, 2015, when Nationstar sent her an email informing her that she was delinquent for not paying the full amount and she discussed the matter during a phone call with a Nationstar representative. At that time, Meaney informed Nationstar by email that Sessing did not represent her. Having received notice of the rate increase, Meaney promptly cured the delinquency.

         On January 14, 2016, based on her alleged delinquencies, Nationstar sent a “Notice of Intent to Foreclose” to Meaney at the Property address, stating, “You have missed one or more payments on your mortgage loan or you are otherwise in default.” J.R. 188. That same day, Nationstar sent the same notice to Michael Meaney at his address in Hagerstown, Maryland. Nationstar also sent a letter to Michael Meaney, at the Property address, stating that the loan was past due for the month of December 2015 and that the letter was “sent as required by the terms of the security instrument securing your mortgage loan.” J.R. 182. Nationstar ultimately did not foreclose on the Property.

         The bankruptcy court closed the Bankruptcy Case on March 15, 2016. On March 23, 2016, Diamond sent a letter to Nationstar on Meaney's behalf, with the heading “Qualified Written Request, ” seeking a complete loan transaction history since the initiation of the Bankruptcy Case and various other records related to Nationstar's handling of Meaney's loan. J.R. 191-92. Nationstar acknowledged receipt of Diamond's letter on April 5, 2016. Nationstar drafted a responsive letter on April 18, 2016, addressed to Meaney, but Meaney claims that she never received the letter. According to Aaryn Richardson, a Litigation Resolution Analyst for Nationstar, every letter mailed by Nationstar is placed in a “document imaging system, ” which stores a copy of the letter but not any associated attachments. Richardson Dep. at 78, J.R. 468. However, Meaney's “collection history profile” with Nationstar, a record of all correspondence between Nationstar and a borrower, shows no record of the April 18, 2016 letter being sent to Meaney. J.R. 459.

         V. Medical History

         Meaney alleges that Nationstar's actions have caused her to suffer adverse health consequences, in particular, the exacerbation of existing health conditions. Meaney has suffered from celiac disease and associated acid reflux since 2005. Generally, this condition can be attributed to a genetic condition and autoimmune disorder, Moreover, although Meaney has reported abdominal pain, swelling, and cramps to her health care providers, in August 13, 2015, her physician attributed Meaney's abdominal issues to past abdominal surgeries, not to stress. Nevertheless, Meaney's symptoms “flare up” during times of stress. Meany Dep. at 195-96, J.R. 402. For example, Meaney attributes the start of her symptoms to a period in 2005 when she experienced significant financial difficulties. More recently, Meaney noted in her January 19, 2016 email to Nationstar that she had “spent many hours on the phone with Nationstar and suffered much stress and loss of sleep over this mortgage since the agreement was signed.” J.R. 492.

         Meaney has made regular trips to her physicians to address her symptoms and underlying conditions. In an April 4, 2017 appointment, her physician recorded that he was “concerned about the resistance of [Meaney's condition]” because even after seven years of treatment, she was still symptomatic. Despite this treatment, Meaney continues to be symptomatic, and she attributes the exacerbation of her symptoms to Nationstar's conduct.

         DISCUSSION

         Meaney asserts claims against Nationstar in eight counts: (I) a violation of TILA[1]pursuant to 15 U.S.C. § 1639f and 12 C.F.R. § 1026.36(c)(1), for failing to credit payments on her mortgage loan in a timely manner, including payments made pursuant to the Consent Order; (II) a violation of Section 12-118 of the Commercial Law Article of the Maryland Code, for failing to provide adequate notice of an increase in the interest rate on her mortgage; (III) a violation of the FCRA, 15 U.S.C. § 1681s-2(b), for failing to conduct a reasonable investigation upon receiving notice from the CRAs of a consumer dispute; (IV) a violation of RESPA, 12 U.S.C. § 2605, for failing to respond to Meaney's qualified written request; (V) multiple violations of the MCDCA, Md. Code. Ann., Com. Law § 14-202, for seeking unauthorized payments and late fees relating to Nationstar's incorrect allegation that Meaney was delinquent on her mortgage, for falsely notifying the CRAs that she was delinquent on her mortgage, and for falsely notifying her ex-husband of the same information; (VI) a false light claim for sending a notice of intent to foreclose to her ex-husband; and (VII) a defamation claim for the same mailing. In Count VIII, Meaney seeks a declaratory judgment that she has been current on her mortgage payments since no later than October 2014.

         Meaney has filed a Motion for Partial Summary Judgment as to Counts I, II, IV, V, and VIII, and the inaccuracy, notice, and willfulness elements of the FCRA alleged in Count III, based largely on her contention that she has been current on her mortgage payments since the entry of the Consent Order. Nationstar has countered with its own Motion for Summary Judgment on all counts, based in part on its positions that Meaney was in fact delinquent on her mortgage, Nationstar complied with all relevant legal requirements, and there is insufficient evidence to support a claim for emotional distress damages. The Court will first consider the issue of declaratory judgment before proceeding to consider each remaining count in turn.

         I. ...


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