MARK A. KEARNEY, District Judge.
The effect of the residential home mortgage crisis beginning over ten years ago now involves two companies never meeting the homeowners who lost their homes. We today review an insurer's obligations in insurance policies on 30 defaulted mortgages. The loan servicer for the defaulted mortgages is now suing the insurer for coverage and damages. The parties chose these 30 defaulted mortgages as examples to guide us in resolving the scope of insurance coverage for over 7,000 other loan defaults. After studying both the loan servicer's and insurer's variety of arguments seeking judgment as a matter of law based on statute of limitations and contract interpretation, we enter the accompanying Order granting the parties' cross-motions for summary judgment in part but denying their cross-motions in part on issues either not developed or ripe for summary resolution.
While most of today's analysis arises in the microcosm of insurance policies of interest principally to trustees of mortgage investment vehicles and insurers, some brief context may be helpful to citizens. A home purchaser may borrow money from a bank to buy a home and provide her bank with a mortgage to secure the borrowing. The home purchaser provides information on, among other things, her finances, income, and type of residence. The lender studies this offered information and decides how much to lend the home purchaser secured by a mortgage on the home. If the homeowner defaults on her loan, the bank may foreclose on the home.
As occurred in the mid-2000s, the bank may sell the homeowner's mortgage into a pool of individual mortgages owned by an investment vehicle controlled by a trustee which, in turn, sells ownership interests in the pooled mortgages as securities. The trustee holding the thousands of pooled mortgages may also hire a mortgage loan "servicer" to collect the loan payments from the home purchaser and otherwise protect rights under the mortgage. The trustee may acquire insurance to cover losses for defaults in any of its pooled mortgages. The insurer describes its policy sold to the trustee as a "loan certificate" to cover an individual mortgage. If the homeowner defaults on her mortgage then held by the investment vehicle, the trustee through its loan servicer may seek to recover losses from the insurer.
Ocwen Loan Servicing, LLC and Homeward Residential, Inc. ("Ocwen") are residential mortgage loan servicers. Radian Guaranty, Inc. sells residential mortgage insurance.
This case involves 7,095 mortgages serviced by Ocwen and insured by Radian.
While there are arguably 7,095 different claims for coverage, many of the issues focus on our contract interpretation of common policy language in thousands of loan certificates. The parties agree many claims could be dismissed through dispositive motions. Consistent with our obligation under Federal Rule of Civil Procedure 1, we ordered discovery to proceed in two phases. In the first phase, we ordered each party to select 20 loans (40 loans total) "intended to present a good faith representative sampling bellwether of most, if not all, legal issues to be resolved."
During discovery, both parties agreed to cross-move for judgment on what they perceived to be common legal issues in 40 selected bellwether loans.
Radian seeks judgment dismissing Ocwen's breach of contract, bad faith, and equitable indemnification claims. Ocwen moves for judgment on its breach of contract claims. Neither party moves on Ocwen's declaratory judgment claim.
Ocwen alleges Radian breached the terms of the loan certificate for 30 bellwether loan certificates. Radian raises a variety of arguments seeking judgment: on 3 loan certificates, Radian already paid the Aggregate Risk Amount
Ocwen moves for summary judgment on its breach of contract claim on 4 of the loan certificates arguing Radian breached as a matter of law.
Radian moves for summary judgment on 3 loan certificates (53106980, 53108723, 53107616) arguing it paid the Aggregate Risk Amount under Pool Policy 06-103210 which covers all 3 loan certificates. Radian also moves for summary judgment on the other non-bellwether loan certificates covered under Pool Policy 06-103210 because it paid the Aggregate Risk Amount.
Pool Policy 06-103210 covers 3 loan certificates. It has an Aggregate Risk Amount of $28,645,690.
Radian's executive vice president for Mortgage Insurance and Services Operations declares Radian paid $28,650,559.89 in aggregate losses on Pool Policy 06-103210 which is $4,869.89 over the Aggregate Loss Limit.
We deny summary judgment for Radian on loan certificates 53106980, 53108723, and 53107616 because there is a genuine dispute of material fact whether Radian's payments under Pool Policy 06-103210 equaled the Aggregate Loss Amount.
Radian moves for summary judgment on 9 loan certificates arguing Ocwen's breach of contract claim is barred by the suit limitation provision under the specific policy for each certificate. The parties dispute which event triggers the contractual period of limitations. Radian argues the triggering event is the home foreclosure or other approved sale of the property but "solely for the purposes of this motion" argues the triggering event is the "insured's acquisition of the borrower's title to the property."
Radian's master policy generally governs its relationship with the "Insured" when Radian issues primary coverage for flow or bulk mortgage transactions.
Eight of the bellwether loans are governed by Radian's master policy.
The master policy states "[n]o suit or action arising from any right of the Insured under this this Policy shall be commenced in any court of law or equity. . . unless commenced within two (2) years after such right shall first arise."
One of the bellwether loans is governed by Radian's Pool Policy 05-048033.
The Pool Policy requires "[a] Suit against [Radian] must be commenced within three (3) years after the loss can be determined."
The triggering event for the contractual period of limitations is Radian's alleged breach of the mortgage insurance policy, not the date of "insured's acquisition of the borrower's title to the property."
For the master policy, Radian requires a claim under the policy to be submitted within one year after the bank acquires borrower's title to the property and barring exception, prohibits the submission of a claim until the bank acquires the borrower's title.
We do not agree with Radian's proposed interpretations. First, Radian's argument this limitations period begins "no later than the date of foreclosure or other approved sale" does not make sense when it requires the insured acquire title to the property to submit a claim under the policy. Under this argument, the clock would start running for the insured to bring its breach of contract claim against Radian before it could submit a claim to Radian under its own policy. We cannot read the master policy to have this inconsistent condition for the insured to assert its rights.
Radian's second proposed interpretation of "such right shall first arise" means the date the insured acquires the borrower's title to the property also produces inconsistent results when the master policy is read as a whole. We cannot construe the submission of claims provision and the suit limitation provision to begin with the same triggering event where Radian chose different language in each provision. In contract interpretation, we presume if Radian wanted these two provisions "to have the same meaning, [it] would have used the same language."
Construing the right arising on the date of Radian's alleged breach also makes sense logically. Following Radian's interpretation of "the right" being acquiring title to the borrower's property would produce the bizarre result of the insured alleging Radian breached the contract before the insured submitted the claim for coverage under the policy. It also could lead to the insured being denied the right to sue for breach of contract if Radian did not adversely act on the claim within two years of acquiring title and leave the insured without agreed upon recourse in court because the insured cannot maintain an action for breach of contract against Radian until it, in fact, breaches somehow.
We apply the same principles to the pool policy where Radian starts the claim submission deadline the day "the Insured has conveyed title to the property pursuant to an Approved Sale"
In support of its argument the triggering event is the foreclosure or sale of the property, Radian relies on our court of appeals' decision in U.S. Bank Nat. Ass'n v. First American Title Ins. Corp.
Two of loan certificates are for Florida properties.
The pool policy's conformity clause states if its provisions are "in conflict with the laws of the jurisdiction in which it is effective is hereby amended to conform with the minimum requirements of such laws."
Under the conformity clause's plain language, the relevant policies are amended to meet the minimum required by the state of Florida where there is a "clear conflict" between the policy and Florida's minimum requirements for Florida properties. There is a clear conflict between the suit limitations provisions for two or three years in the policy and Florida law because Florida law expressly prohibits and voids agreements where the parties attempt to shorten the statute of limitations from five years. The parties do not cite and we cannot locate a Pennsylvania case discussing the interplay between conformity clauses and other state's statute of limitations.
Courts around the country, however, consistently find an insurance contract's conformity clause does not require a suit limitation period conform to the state's statute of limitations unless state law forbids the parties from shortening the statute of limitations.
Ocwen's breach of contract claims for loan certificates 53001043, 64040480, 65575723, 65584131, 65817890, 82618193, 95652591, 96405536, and 96729457 are not barred by the suit limitation provision. We deny Radian's motion for summary judgment on this basis.
Radian moves for summary judgment on 14 loan certificates
The parties do not dispute Radian informed Ocwen by letter of its intent to rescind coverage for 13 of the bellwether loans. In each letter, Radian alleges it is rescinding coverage based on material misrepresentations or underwriting violations and gives Ocwen between 30 and 60 days to dispute or clarify the misrepresentations or Radian will formally rescind coverage.
One of the loan certificates, 69954693, Radian notified Ocwen of its intent to rescind coverage and Ocwen appealed Radian's decision.
While Ocwen does not dispute these facts, it adduces evidence through John V. Britti, Executive Vice President and Chief Executive Officer, to dispute the inference of mutual rescission. Mr. Britti swears Radian's policies do not state by depositing the refunded premium check Ocwen waives the insured's right to challenge the rescission.
Mr. Britti declares he is "aware of instances where (1) Ocwen cashed the premium refund check, (2) Ocwen appealed Radian's decision to rescind and (3) Radian responded to Ocwen's appeal but did not take the position that coverage has been rescinded by virtue of Ocwen having cashed the refund check."
While Pennsylvania law allows an insurer to unilaterally rescind an insurance policy by returning the premium where the insured knowingly or in bad faith made a false representation or clear and convincing evidence shows the insured knowingly failed to disclose and the information "was material to the risk to be insured," no court in Pennsylvania has discussed or allowed a defense of mutual rescission based on the insurance company rescinding and the insured depositing the returned premium checks.
Courts in other states addressing mutual rescission of an insurance contract agree "mutual rescission depends on the intent of the parties as evidenced by their acts and the attending circumstances, and that the act of [indorsing and depositing] a refund check after notice of cancellation as least raises an inference of mutual rescission."
The Colorado Supreme Court addressed mutual rescission of an insurance policy in a persuasive ruling in Avemco.
Avemco argued Northern Colorado's depositing the refunded premium check constituted mutual rescission and the insurance contract is void ab initio.
The Colorado Supreme Court noted mutual rescission is usually a question of fact but where there is no genuine dispute of material fact the insurer expressed its intent to rescind and refunded premiums and the insured endorsed and deposited the check "whether rescission has occurred may become a question of law for the court."
Ocwen and Radian do not dispute Radian informed Ocwen of its intent to rescind coverage with the refunded premium check and Ocwen deposited the refunded premium check for each loan certificate. Ocwen's accepting and depositing the refunded premium check raises the inference of mutual rescission as in Avemco where Northern Colorado's depositing Avemco's check after Avemco notified it of its intent to rescind coverage created the inference.
Ocwen adduced a genuine dispute of material fact to rebut the inference depositing the check signified mutual rescission through evidence of the parties' previous course of conduct when Radian rescinds coverage. Mr. Britti, unlike the employee declarations in Avemco, adduces evidence to rebut rescission beyond the simple subjective intent not to rescind. Here, Mr. Britti swears during in their interactions, Radian has never treated Ocwen's depositing of refunded premium check as mutual rescission because Radian allows Ocwen to appeal a rescission even after Ocwen deposited the refunded premium check, and if Radian decides to reinstate coverage after rescission, it requests Ocwen return the refunded premium check.
We deny Radian's motion for summary judgment because it does not establish its affirmative defense of mutual rescission as a matter of law on Ocwen's breach of contract claim on loan certificates 5300143, 5301065, 53108723, 53194326, 53225724, 65791708, 65818414, 65826484, 65860272, 65954693, 82618193, 96405536, 96413862, and 99573712. There are genuine disputes of material fact as to whether Ocwen assented to rescission when it deposited the refunded premium check.
Ocwen moves for summary judgment on its own breach of contract claim on loan certificates 99573712 and 65791708 arguing it adduced Radian improperly rescinded coverage based on borrower's misrepresentations because Radian did not adduce evidence the insured knew about the misrepresentations. Ocwen moves for summary judgment on its own breach of contract claim on loan certificate 96405536 because Radian improperly rescinded coverage based on underwriting guideline violations.
Loan certificate 99573712 is governed by the master policy under a delegated underwriting program. Ocwen submitted a claim for loan certificate 99573712. Radian rescinded coverage based on alleged misrepresentations because the loan application stated the borrower received $2,031.00 of Social Security income and $6,250.00 from a pension and after the claim, Radian interviewed the borrower who stated she never made those representations to the lender at origination.
Radian issued loan certificate 96405536 through a delegated underwriting program and the loan is governed by the master policy and the Delegated Underwriting Endorsement.
A copy of the Delegated Underwriting Endorsement is in the Appendix but Ocwen disputes this document governs either loan certificate at issue.
Under the endorsement, the Insured represents "all statements in any Application for Insurance. . . are true and correct in all material respects and supported by verified information in the Insured's origination file . . ."
The endorsement also states "in the event that a Program Loan deviates from [Radian's] Underwriting Guidelines. . . [Radian] shall have the right to immediately terminate the Insured's participation in the Program. Any such termination shall not have any impact on Certificates of Insurance issued to the Insured prior to the date of such termination."
Radian, under the master policy, does not cover losses on a loan certificate where Radian issued the policy in reliance on an "Application for Insurance containing any material misstatements, misrepresentation or omission, whether intentional or otherwise or as a result of any act of fraud; provided, however, that unless the Insured had knowledge of or participated in a Third-Party Misrepresentation or Fraud at the time it was made, [Radian] shall not rescind or deny coverage, or adjust any Claim based on such Third-Party Misrepresentation or Fraud"
The master policy defines Application for Insurance as "all documents, materials, statements and exhibits, whether or not prepared by the Insured" submitted to Radian.
Loan certificate 65791708 is governed by Pool Policy 05-078029.
Pool Policy 05-078029 provides Radian "shall not be liable for and the Policy shall not apply to, extend to or cover any loss for which a claim is made in connection with a Mortgage Agreement as to which there has been an intentional and material misstatement, misrepresentation or omission as a result of any other act of fraud."
Ocwen argues the master policy, the delegated underwriting endorsement, and Pool Policy 05-078029 do not permit Radian to rescind coverage based on solely on a borrower's misrepresentations or underwriting guideline violations in the loan application.
For loan certificate 65791708, Radian adduced facts showing the "borrower's purported employment/income cannot be independently verified as being accurate" and loan originator may have been aware based the borrower's handwritten letter claiming a higher income than later appeared on the application.
Whether Radian can rescind coverage for loan certificate 99573712 based on borrower's misrepresentations is more complicated because it is governed by both the delegated underwriting endorsement and the master policy and both policies address the effects of borrower's misrepresentation. We must interpret two documents forming an agreement and two different provisions on the same topic.
Under Pennsylvania law, the more specific provisions of a contract "should trump general provisions."
Ocwen argues under the delegated underwriting endorsement Radian may not rescind coverage for loan certificate 96405536 based only a lender's alleged guideline violation in miscalculating the borrower's debt to income ratio for the loan application. The endorsement states if the Insured underwrites a loan which does not meet guidelines, Radian can terminate the Insured's rights under the endorsement. But Radian's termination of the Insured's right to underwrite "shall not have any impact on Certificates of Insurance issued to the Insured prior to the date of such termination."
Where the Insured violates an underwriting guideline, the plain language of the endorsement defines Radian's recourse is to terminate the Insured's participation in the program but has no effect on the loan certificates already issued. Radian argues it may also rescind certificates quoting the provision allowing Radian to investigate and it "may result in a rescission of the Insured's Commitment and/or Certificate of Insurance."
Radian moves for summary judgment on 6 loan certificates arguing Ocwen's claims are barred by accord and satisfaction because Radian curtailed coverage and Ocwen accepted the curtailed payments.
For each curtailed loan, Radian responded to Ocwen's claim under the policy with an explanation of benefits summarizing the claim and, in the "Servicing Review Curtailment", detailed the reasons for reducing the claim amount. For example, in loan certificate 5301114, Radian issued an Explanation of Benefits on May 25, 2016.
Ocwen adduced evidence after Radian curtailed coverage and wired the payment to Ocwen, it still accepted Ocwen's appeal for the curtailment, revised its explanation of benefits, and issued an additional payment to Ocwen.
We first deny summary judgment on loan certificate 65858954 because Radian does not cite payment based on the curtailed claim in its statement of undisputed facts meaning there is no evidence of a payment for its accord and satisfaction affirmative defense. As to the other 6 loan certificates, we find genuine disputes of material fact whether Radian's explanation of benefits and its separate (and sometimes more than one) wire payments constitute an offer of payment to fully satisfy Ocwen's claim under the policy.
Where a debtor and creditor dispute the debt owed to the creditor, they may create a "substitute contract," called accord and satisfaction, where they agree to settlement their disputed debt by "some alternative performance other than full payment of the debt."
There are genuine disputes of material fact whether Radian even makes "a clear and unequivocal offer of payment in full satisfaction." The document Radian points to as the "clear and unequivocal" offer is the explanation of benefit which at best lists an authorized final claim amount and informs Ocwen why it curtailed payment. The explanation of benefits does not tie the authorized final claim to a "clear and unequivocal" statement the authorized final amount is offered to fully satisfy the disputed debt (Ocwen's claim under the policy). Further undercutting the explanation of benefits document as a clear offer of payment is the fact Radian paid Ocwen twice, first for authorized final amount listed and then for a second unexplained amount of money not tethered to the offering document. Ocwen also adduces evidence Radian accepted its appeals and issued further payments on loan certificates where Radian sent an explanation of benefits and wired the curtailed payment suggesting the explanation of benefits did not function as a final offer to settlement their disputed debt. These fact issues preclude us from finding as a matter of law Radian made a "clear and unequivocal offer of payment in full satisfaction" of Ocwen's claim under the policy.
We deny Radian summary judgment on its affirmative defense Ocwen's breach of contract claim on curtailed loans are barred by accord and satisfaction because there are genuine disputes of material fact.
Ocwen moves for summary judgment on loan certificate 53107616 because Radian curtailed payments under the policy using foreclosure timelines from servicing guidelines which were not part of the policy and without establishing Ocwen acted in a negligent manner, caused any loss, or the curtailed amount is related an actual loss suffered by Radian. Radian argues it relies on servicing guidelines and other factors to determine if Ocwen did not service the loan to the policy's standards and by what percentage to curtail coverage.
Radian issued coverage for loan certificate 53107616 under Pool Policy 06-103210.
Ocwen submitted a claim to Radian for Loan certificate 53107616. Radian curtailed coverage by 20% because the foreclosure happened after 115 days after the required date, Ocwen failed to make efforts to timely or adequately cure default, did not successfully make Quality Right Party Contact," did not timely pursue alternatives to foreclosure, and did not timely send a breach letter.
Radian argues Ocwen "explicitly undertook" to adhere to these servicing timelines in the pool policy by agreeing meet Option One's guidelines. We cannot rule as a matter of law whether Radian curtailed coverage loan certificate 53107616 based on Option One's guidelines because neither party attached Option One's procedures for our review.
Ocwen argues Radian impermissibly curtailed coverage for loan certificate 53107616 based on the Government-Sponsored Enterprises' servicing guidelines (for Fannie Mae and Freddie Mac). Radian admits its policies do not reference the Government-Sponsored Enterprises' servicing guidelines but argues because those servicing guidelines represent the industry standard and under the master policy, Ocwen agreed to service loans with the highest industry standards.
We deny Ocwen summary judgment because there are genuine disputes of material fact as to the servicing standard under Pool Policy 06-103210 for loan certificate 53107616 and whether Radian properly curtailed coverage based Ocwen's allegedly negligent conduct. These are fact questions for the fact-finder.
Radian moves for summary judgment on 3 loan certificates arguing it properly denied Ocwen's claims because Ocwen failed to timely submit the claims under the insurance policies. Ocwen argues Radian may not reject an otherwise valid insurance claim for being untimely unless Radian establishes actual prejudice from the late notice.
Loan certificate 53106980 is governed by Pool Policy 06-103210. This Policy is effective June 1, 2006 and "shall continue in force (1) as to each Residential Mortgage Agreement. . . until it has been paid in full, is no longer represented by the Security or is otherwise liquidated or (2) until the Security is redeemed or otherwise paid in full."
Loan certificate 65575723 is governed by the master policy. The master policy provides Radian will "provide coverage for the period of time shown on the face thereof" and allows for renewal for a new applicable time period.
We deny both parties summary judgment on loan certificate 65957170 because there is a genuine dispute of material fact whether Ocwen submitted a timely claim under the policies. For loan certificates 53106980 and 65575723, there is no dispute Ocwen submitted untimely claims under the relevant policy. The question is whether under Pennsylvania law, Radian can deny the claims solely because they are untimely or Radian must show actual prejudice from the untimely submission before denying.
In Brakeman v. Potomac Ins. Co., the Pennsylvania Supreme Court held an insurance company is not relieved of its duty under an insurance policy where the "insurance company's interests have not been harmed by a late notice."
The Pennsylvania Supreme Court held a showing of actual prejudice from late notice and not simply late notice is required based on two reasons. The court first held a "strict contractual approach" to insurance policies is "inappropriate" because the policy terms, including notice provisions, are dictated by the insurance company and not terms negotiated by the party.
Our court of appeals recognized with primary insurance policies "the Brakeman rule applies even to policies between sophisticated parties."
The parties dispute whether Brakeman applies to Ocwen, as servicer acting on behalf of the insured, submitting a claim for mortgage insurance after title is transferred through foreclosure or other approved sale. Radian argues the policies for the loan certificates at issue are claims-made policies, not occurrence liability policies and Pennsylvania courts have refused to extend Brakeman to claims-made policies.
"A pure claims-made policy provides coverage for claims made during the policy period regardless of when the events out of which the claim arose occurred. In contrast, an occurrence policy provides coverage for all `occurrences' which take place during a policy period regardless of when the claim is made."
The two relevant policies between Radian and the insured are occurrence policies because Radian provides coverage for losses on the insured mortgages during the effective dates of the policies. The master policy is an occurrence policy because it sets an effective date for coverage to begin and requires the insured to renew after a certain date to continue coverage for the loan certificate. The master policy also excludes coverage for any losses related to delinquencies before the effective start date of the policy.
The pool policy is also an occurrence policy because it issues coverage for loss on the mortgages until those mortgages are paid off (meaning no more possibility for claims under the policy) or until the security is transfer, redeemed, or paid in full.
Radian argues courts refuse to apply Brakeman "in a manner that imposes an unbargained-for extension of coverage."
Radian next argues Brakeman does not apply because the holding applies only to notice provisions, and not the insured's duties under the claim submission provision.
Our finding the notice provision is akin to the claims submission process is supported by the Pennsylvania Supreme Court's description of the notice provision in Brakeman as the "heads up" to the insurance company "to acquire, through an adequate investigation, full information about the circumstances of the case."
We deny Radian summary judgment on loan certificates 53106980 and 65575723 because there is a genuine dispute of material fact whether Ocwen's untimely submission of the claim actually prejudiced Radian.
Radian moves to dismiss Ocwen's bad faith claim on 17 loan certificates arguing Ocwen failed to bring the bad faith claim within Pennsylvania's statute of limitations.
Radian moves for summary judgment on Ocwen's bad faith claims on 17 loan certificates arguing Ocwen's claims are barred by the two year statute of limitations because Radian denied, rescinded, or curtailed coverage more than two years before December 22, 2016. Ocwen argues we should apply the longer contractual period rather than Pennsylvania's two year statute of limitations.
Of the 17 loan certificates, 10 loan certificates are governed by the master or bulk policies with a two year suit limitation provision. Below are the loan certificates and the undisputed last day Radian denied, rescinded, or curtailed coverage for loans covered by a two year suit limitation period:
Seven loan certificates are governed by the pool policy with a three year suit limitation provision. The suit limitation provides "[n]o suit or action on this Policy for recovery of any claim shall be sustained in any court of law or equity unless all material conditions of this Policy have been compiled with . . . . A suit against [Radian] must be commenced within three (3) years after loss can be determined."
Ocwen's bad faith claim under 42 Pa. C.S. § 8371 is governed by a two year statute of limitations.
We grant summary judgment for the 10 loan certificates (82618193, 99308281, 53001043, 53225724, 96405536, 96413862, 65584131, 64040480, 95652591, and 95910060) where Ocwen does not dispute the two year statute of limitations because it is undisputed Radian took its final action
We now turn to Ocwen's argument the pool policies' three year suit limitation provision modifies Pennsylvania's two year statute of limitations for statutory bad faith claims. While neither party addresses this issue, Pennsylvania law does allow parties to agree to a longer statute of limitations than statutorily proscribed.
The suit limitation specifies "[n]o suit or action on this Policy" and also ties the start date to when the insured can determine "its loss" which refers to breach of contract claims arising from the policy.
Because Ocwen's statutory bad faith claim is a separate and distinct claim from its claim based on the policy, the suit limitation provision does not modify Pennsylvania's two statute of limitations for bad faith claims under § 8371. We grant Radian summary judgment because Ocwen's bad faith claims on loan certificates 65860272, 65954693, 65791708, 53108723, 65957170, 65817890, and 53107616 are barred by the statute of limitations because Radian last denied, rescinded, or curtailed coverage before December 22, 2014.
Radian seeks summary judgment on Ocwen's request for equitable indemnification on loans where Ocwen seeks damages it suffered as the servicer, as opposed to its breach of contract claims on behalf on the insured. Radian does not dispute Ocwen's representation its equitable indemnification claim does not apply to the bellwether loan certificates. While Radian represents the parties agreed to move for summary judgment on these issues without proferring facts, the parties cannot agree away our Article III "prohibition on advisory opinions."
Radian counterclaims for statutory insurance fraud, breach of contract, unjust enrichment, and declaratory judgment. Ocwen moves for summary judgment on Radian's statutory insurance fraud claims under 18 Pa.C.S. § 4117 for all 30 loan certificates. Ocwen moves for summary judgment on Radian's breach of contract claims because Ocwen is not a party to the insurance policies for the bellwether loans. Ocwen moves for summary judgment on Radian's unjust enrichment claim because Radian fails to adduce evidence Ocwen received any benefit from Radian.
We deny Ocwen's motion for summary judgment on loan certificates 65815327, 96408079, and 65728594 because Ocwen failed to argue when it submitted its claim to Radian or facts to show Radian failed to adduce evidence to support its statutory insurance fraud claim. We cannot rule as a matter of law as to these loan certificates without fact support.
We next address Ocwen's argument Radian's statutory insurance fraud claims where Ocwen submitted a claim before August 10, 2015 are barred by the two year statute of limitations.
While Ocwen incorrectly argues every bellwether loan is barred by the statute of limitations because it submitted a claim before August 10, 2015, in the statement of undisputed facts, Ocwen agreed (1) it presented a claim for loan certificate 53011114 on April 6, 2016 and (2) it presented a claim for loan certificate 65858954 on March 11, 2016.
Radian now argues its claim for insurance fraud accrued when Ocwen filed its complaint December 22, 2016. Ocwen filed a detailed complaint which we found sufficient to survive a motion to dismiss. Radian now alleges a false or even misleading statement consists of Ocwen knowingly filed a false complaint in this court and its claim for insurance fraud accrued then. Even though Radian argues otherwise, its argument necessary implicates Ocwen's counsel as complicit for failing to make sure its client had a good faith basis for its allegations. For Radian's argument to survive, Radian would have to adduce evidence suggesting Ocwen "knowingly and with the intent to defraud" placed material false information in its complaint to support recovery on a bellwether loan certification. Radian does not adduce evidence showing Ocwen included false or misleading information in the complaint. If Radian is basing its statutory insurance fraud claim on Ocwen's alleged false or misleading statements in the claims submitted to Radian, then Radian's cause of action accrued when Ocwen submitted the original claim, and not the filing of this complaint.
Based on the adduced evidence, Radian's claim for insurance fraud under § 4117 on the bellwether loans accrued when Ocwen submitted the allegedly false claim to Radian and any claim submitted before August 10, 2015 is barred by the statute of limitations. We grant Ocwen summary judgment on Radian's claim for insurance fraud as to loan certificates 53010655, 65826484, 53194326, 96729457, 53106980, 65575723, 65818414, 99573712, 65957170, 53107616, 65791708, 53225724, 96413862, 96405536, 95910060, 99308281, 53108723, 65584131, 95652591, 82618193, 64040480, 65860272, 53001043, 65817890, and 65954693. The statute of limitations does not bar Radian's claims for loan certificate 53011114 and 65858954 so we address the merits of Radian's claims.
Ocwen argues Radian cannot bring an insurance fraud claim under § 4117 against it because Ocwen does not own any of the bellwether loans. Radian argues there are disputed facts whether Ocwen owns certain bellwether loans and § 4117 applies to Ocwen because includes "any person" who presents a false claim to an insurer. Ocwen also argues Radian failed to adduce evidence Ocwen knowingly and with the intent to defraud submitted false, incomplete, or misleading claims.
Pennsylvania defines insurance fraud under § 4117(a)(2) to apply to "a person . . . [who] presents, or causes to be presented" a fraudulent claim for insurance.
To prove a claim under § 4117, Radian must adduce evidence Ocwen "(1) knowingly (2) presented false, incomplete or misleading information (3) concerning any fact or thing material to a claim (4) to [Radian]."
At summary judgment, Radian must "go beyond the pleadings and by [its] own affidavits, or by depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial."
Ocwen moves for summary judgment on Radian's breach of contract claims on the grounds Ocwen is not a party to the insurance policies for the bellwether loans and cannot be liable for breach of contract. Radian argues its breach of contract claim against Ocwen is limited to loan certificates which Ocwen owns (as the "insured") and does include loans where Ocwen is only the servicer.
Radian adduces evidence Ocwen owns one bellwether loan and we should deny Ocwen's motion for summary judgment on its breach of contract for loan certificate 99573712 because Ocwen is the owner.
Ocwen moves for summary judgment on Radian's unjust enrichment claim because Radian fails to adduce evidence Ocwen received any benefit from Radian. Ocwen does not specify which loans certificate it moves for summary judgment on and does not cite to any factual evidence to support its argument. Radian also does not respond explaining which loan certificates it unjustly conferred a benefit or identifying which facts support this finding. At numerous points in their motions both parties stray afield from their Rule 56 duty to underpin their legal arguments with "supporting factual positions" and this is another example. We decline to root through the over 3,000 page appendix and determine which of the bellwether certificates Ocwen's argument applies when the parties do not cite the evidence.
Ocwen and Radian exhausted multiple arguments seeking judgment during the middle of their discovery period. In limited instances, we are unable to decide issues without a trial or otherwise have not been given a sufficient record. As shown, there are several issues which are ripe for summary judgment. In the accompanying Order, we grant in part and deny in part the cross-motions for summary judgment and the parties shall proceed to our April 16, 2018 trial.
