TOM S. LEE, District Judge.
This cause is before the court on the motion of plaintiffs Pieter and Lisa Teeuwissen for partial summary judgment as to liability against Nationwide Trustee Services, Inc. (Nationwide) and Johnson & Freedman, LLC, and on the cross-motion of defendants Nationwide and Johnson & Freedman for summary judgment. These motions have been fully briefed and the court, having considered the memoranda of authorities, together with attachments, submitted by the parties, concludes that defendants' motion for summary judgment should be granted and plaintiffs' motion denied.
On December 7, 2010, after learning that a foreclosure sale of their home was scheduled for December 21, 2010, the Teeuwissens, husband and wife, commenced the present action in the Chancery Court of Hinds County, Mississippi against their mortgagee, JP Morgan Chase Bank, N.A. a/k/a Chase Home Finance, LLC (Chase), and Nationwide Trustee Services, Inc. (Nationwide), the Substitute Trustee for foreclosure, seeking to enjoin the foreclosure and additionally asserting claims for affirmative relief against Chase relating to its alleged improper handling of their mortgage loan. Although the foreclosure sale went forward as scheduled on December 21, 2010, the chancery court held a hearing on December 22, 2010 on plaintiffs' request for injunctive relief, and on December 23, 2010, the chancellor entered an order purporting to grant "a limited preliminary (temporary) injunction" enjoining Chase "from any action against the Plaintiffs related to or in any way connected with foreclosure of the Plaintiffs' real property." The chancellor set a hearing on the merits for January 10, 2011; but prior to the date of the scheduled hearing, Chase removed the case to
In the meantime, plaintiffs amended their complaint to allege claims against Chase and Nationwide for wrongful foreclosure and seeking to set aside the foreclosure; and following removal, plaintiffs sought and were granted leave to amend to add as a defendant the law firm of Johnson & Freedman, LLC, which they allege was involved in the mishandling of their mortgage and the wrongful foreclosure of their home.
In a November 17, 2011 memorandum opinion and order granting in part and denying in part Chase's motion to dismiss,
Plaintiffs have now moved for partial summary judgment on liability on their claims. Defendants Chase and Johnson & Freedman oppose this motion, and seek summary judgment on all plaintiffs' claims against them.
As the court wrote in its previous opinion, a wrongful foreclosure occurs under Mississippi law "when a foreclosure is attempted solely for a malicious desire to injure the mortgagor, or the foreclosure is conducted negligently or in bad faith to the mortgagor's detriment." Teeuwissen, 2011 WL 5593164, at *4 (citing West v. Nationwide Trustee Servs., Inc., No. 1:09CV295LG-RHW, 2009 WL 4738171, *3 (S.D.Miss. Dec. 4, 2009)). Here, plaintiffs allege that defendants conducted the foreclosure negligently or in bad faith in that they failed to provide (1) the notice of foreclosure required under the deed of trust, and also as required by the applicable Mississippi statutes controlling power of sale foreclosure; and (2) an accounting of the mortgage loan prior to the foreclosure sale of December 21, 2010.
Plaintiffs assert that defendants failed to provide them notice of foreclosure as required under the deed of trust and notice as required by the applicable Mississippi statutes controlling power of sale foreclosure. Plaintiffs note that under the terms of the deed of trust, "if Lender invokes the power of sale, Lender shall give Borrower, in the manner provided in Section 15, notice of Lender's election to sell the Property. Trustee shall give notice of sale by public advertisement for the time and in the manner prescribed by applicable law." Mississippi Code Annotated § 89-1-55 provides that the sale of lands sold under mortgages and deeds of trust
In response to defendants' summary judgment motion, and in support of their own motion, plaintiffs challenged the competency of defendants' putative proof of posting at the courthouse, noting that the "Certificate of Posting" offered by defendants, which is signed by Matthew Lindsay and recites that he posted a Substitute Trustee's Notice of Sale on the Hinds County Courthouse bulletin board on November 30, 2010, is unsworn. Plaintiffs argued that defendants could not possibly prevail on their motion in the absence of sworn proof that a notice of sale was properly posted at the courthouse. They also contended that irrespective of the competency of defendants' proof, their own sworn evidence tends to show that notice was not properly posted so that at the very least, defendants are not entitled to summary judgment. Specifically, plaintiffs presented an affidavit from a witness attesting that she checked the bulletin board at the Hinds County Courthouse on December 7, 2010, i.e., a date within twenty-one days of the December 21 foreclosure date, and found no notice of sale relating to the Teeuwissen residence.
In rebuttal, defendants submitted a sworn affidavit from Matthew Lindsay in which he reiterated, under oath, that on November 30, 2010, he posted the Substitute Trustee's Notice of Sale on the notice board at the Hinds County Courthouse. Lindsay's affidavit affirmatively establishes that the notice was properly posted three weeks in advance of the foreclosure, as required by the statute.
Plaintiffs alleged in their second amended complaint that defendants failed to provide notice of foreclosure as required by their deed of trust, stating:
To refute this allegation, defendants have presented sworn proof that in addition to publishing notice in the Clarion Ledger and posting notice on the courthouse bulletin board, a copy of the Substitute Trustee's Notice of Sale was mailed to plaintiffs on November 15, 2010 via first class mail postage prepaid at the residence address, consistent with Section 15 of the deed of trust, which states that notice required under the deed of trust "shall be deemed to have been given to Borrower when mailed by first class mail." Plaintiffs apparently no longer dispute that such notice was, in fact, mailed to them, or at least they have offered no proof to contradict that offered by defendants. However, they argue in their motion and in response to defendants' motion that defendants failed to provide notice in accordance with the first paragraph of paragraph 22 of the deed of trust, which states, in pertinent part,
Plaintiffs evidently now take the position that their mortgage loan was not properly accelerated before foreclosure because defendants
Plaintiffs further suggest that defendants failed to comply with the notice requirements of the deed of trust because defendants did not mail plaintiffs a copy of the Certificate of Posting. In this regard, plaintiffs note that the deed of trust states:
Section 15, in turn, states that "all notices given ... in connection with the Security Instrument must be in writing," and that "[a]ny notice to Borrower in connection with this Security Instrument shall be deemed to have been given to Borrower when mailed by first class mail." Plaintiffs submit that because the Certificate of Posting is a notice "in connection with the subject security instrument," then the deed of trust required that defendants mail them a copy of such notice. In the court's opinion, however, the Certificate of Posting is not "a notice to Borrower in connection with [the] Deed of Trust" but is instead merely a document verifying that the actual Notice of Sale (a copy of which was provided to plaintiffs by mail) was posted properly.
This court previously concluded that a mortgagee such as Chase has a duty to account to the mortgagors for all sums due to bring the mortgage current prior to foreclosure, and that plaintiffs had stated a claim for wrongful foreclosure based on defendants' alleged failure to provide plaintiffs an accounting prior to foreclosure. In their motion for summary judgment, defendants argue that there is no requirement under Mississippi law or the terms of the deed of trust that required Chase or any of the defendants to provide plaintiffs with an accounting at any time prior to foreclosure, and that this court's contrary conclusion was in error.
Plaintiffs assert a variety of reasons for concluding that the documents identified by defendants did not satisfy defendants' alleged obligation to provide an accounting. In the court's opinion, none of their positions has merit.
Plaintiffs first contend that Nationwide cannot rely on the documents sent to plaintiffs on February 8, 2010 as fulfilling its obligation to furnish plaintiffs an accounting, since records of the Tennessee Secretary of State reflect that Nationwide had been administratively dissolved on November 4, 2009, and that it was only restored its corporate status on February 10, 2010, two days after the putative accounting documents were sent to plaintiffs. Plaintiffs' suggestion that actions taken by Nationwide during the period of its dissolution are a nullity is without merit. See T.C.A. § 48-24-203(c) (providing that "[w]hen the reinstatement is effective, it relates back to and takes effect as of the effective date of the administrative dissolution, and the corporation resumes carrying on its business as if the administrative dissolution had never occurred"); Grand Valley Lakes Prop. Owners Assoc., Inc. v. Cary, 897 S.W.2d 262, 269 (Tenn.Ct.App. 1994) (explaining that "reinstatement of the charter validates the corporation's existence and privileges from the date of revocation").
Plaintiffs next argue that no action taken by Nationwide and/or Johnson & Freedman prior to May 6, 2010 could have possibly satisfied their duty (on behalf of Chase) to provide plaintiffs an accounting because the substitution of trustee naming
Plaintiffs finally argue that defendants' putative accounting was deficient because defendants did not properly calculate the amounts owed and did not provide plaintiffs an explanation of all sums due and purportedly owed prior to the foreclosure sale of their home. In this regard, plaintiffs submit that the accounting figures they were provided by defendants were "unequivocally erroneous and unreliable" because each defendant did not independently verify the information in the documents and instead simply relied on information provided by Chase, which according to plaintiffs, was inaccurate. However, plaintiffs have offered no evidence, but instead only unsupported allegations, to support their contention that the figures they were provided were inaccurate. Defendants, on the other hand, have provided to the court a detailed explanation of the source and accuracy of the figures. The court readily concludes that plaintiffs were provided with a proper and accurate payment history, as well as payoff and reinstatement quotes prior to the foreclosure sale.
On December 7, 2010, plaintiffs filed in the Hinds County Chancery Court a "Complaint for Wrongful Foreclosure, to Set Aside Foreclosure Sale, for Preliminary Injunction (Temporary) Injunction, Permanent Injunction, Accounting and Other Relief." Plaintiffs allege that by proceeding with the foreclosure, and thereafter attempting to evict plaintiffs from their home, defendants violated the December 23, 2010 order of the Hinds County Chancery Court which purported to enjoin Chase, and its agents and representatives,
Plaintiffs allege that defendants violated the terms of the injunction on March 10, 2011, when Chase wrote to plaintiffs demanding that they vacate the premises and threatening to take action to have them removed from the home if they failed to do so.
Plaintiffs' complaint in the chancery court requested a "preliminary (temporary) injunction." There is no provision in the Mississippi Rules of Civil Procedure for a "preliminary (temporary) injunction." Rather, Rule 65(a) provides for issuance of a "preliminary injunction" and Rule 65(b) provides for issuance of a "temporary restraining order." Unlike a temporary restraining order (TRO), which may be issued without notice to the adverse party in specified circumstances,
The record reflects that what plaintiffs initially sought from the chancery court was a TRO, as evidenced by the fact that on December 21, 2010, their attorney, Lara Gill, filed with the chancery court a "Certificate of Compliance with Rule 65(b)(2)," in which she described her efforts to notify the defendants "regarding [plaintiff's complaint]," recited that her efforts had not been successful, and asserted that "notice in this matter should not be required." However, at the hearing on December 23, 2010, Ms. Gill represented to the court that she had provided notice to Chase and Nationwide on December 22, 2010, via facsimile and e-mail to Charity Bridgewater, an attorney with Johnson & Freedman. Based on Ms. Gill's representations, the court specifically found that "[t]he notice requirements of Rule 65(a)(1) have been met[,]" and the court entered a preliminary injunction enjoining defendants "from any action against the Plaintiffs related to or in any way connected with foreclosure of the Plaintiffs' real property" and prohibiting them "from instituting any and all collection efforts against the Plaintiffs until further order of this Court and pending further hearing on this matter on the merits." There has been no further order of the court nor further hearing on the matter on the merits. Notwithstanding the court's order, on March 10, 2011, Nationwide sent to plaintiffs a letter referencing the December foreclosure and advising that "[l]ender may have no alternative other than to file an appropriate State Court action if you fail to deliver possession."
Defendants' only argument in opposition to plaintiffs' allegations regarding defendants' violation of the chancery court's order is that "because inadequate notice was given" and because "counsel for Plaintiffs filed a Certificate of Compliance with
However, the only act on the part of defendants which plaintiffs have identified as violating the injunction is the March 10, 2011 letter advising them that "[l]ender may have no alternative other than to file an appropriate State Court action if you fail to deliver possession." There is no evidence that defendants actually commenced eviction proceedings or otherwise undertook to have plaintiffs removed from the residence. To the contrary, the evidence reflects that upon plaintiffs' receipt of this letter, their attorney promptly complained that the letter violated the injunction; and plaintiffs have identified nothing since that time that defendants have done to violate the injunction.
In their complaint, plaintiffs allege that "[t]he violations of said Injunction by the Defendants have caused the Plaintiffs' damages[,]" and as relief for defendants' violation of the injunction, they "request that this Court enter its judgment awarding the Plaintiffs damages in amount to be proven at trial for their continuous and persistent harassment of Plaintiffs and their willful violations of the Injunction entered herein." Defendants argue in their motion that plaintiffs have sustained no compensable damages relative to any of the claims they have alleged. Plaintiffs respond generally that they "have been damaged by the Defendants' wrongful foreclosure," and that their evidence shows "the resulting injury to them as a result of the wrongful foreclosure." Yet they do not argue that they have suffered any compensable harm as a result of the March 10, 2011 letter; and they certainly have not pointed to any evidence to show that they suffered any compensable harm as a result of this letter. For this reason, the court concludes that plaintiffs' claim for violation of the injunction is due to be dismissed.
Plaintiffs allege in their complaint, and in their motion for partial summary judgment, that defendants have violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (FDCPA), and in particular, 15 U.S.C. § 1692g(a) & (b), which require that a "debt collector" must provide notice to the debtor as to the particulars of the debt which is sought to be collected, and to cease debt collection efforts and provide certain additional information in the event the debtor timely disputes the debt, or any portion thereof.
15 U.S.C. § 1692a(6). As the court explained in Fouche',
Fouche', 575 F.Supp.2d at 783-84. The court recognized that "most federal courts have held that the provisions of the FDCPA (with the exception of § 1692f(6) and § 1692i(a), which are expressly applicable to the enforcement of security interests), to be inapplicable to the enforcement of security interests, such as in the context of the typical non-judicial home foreclosure." Id. at 785.
Fouche', 575 F.Supp.2d at 786. Plaintiffs have offered no evidence that defendants engage in debt collection other than non-judicial foreclosures, or that they regularly take actions beyond those necessary to foreclose under deeds of trust. Thus, as plaintiffs have failed to present evidence tending to show that defendants are general "debt collectors," their claim against defendants under the FDCPA fails as a matter of law.
In their complaint, plaintiffs assert a count for negligence against defendants based on the following allegations:
The court has concluded that Chase had the right to impose an escrow account; that plaintiffs fell into arrears because of their refusal to acknowledge Chase's right in this regard; that plaintiffs were provided an accurate accounting; and that defendants provided proper notice of foreclosure. Defendants did not breach the contract or violate any provision of the law regarding the foreclosure. Thus, the only potentially viable allegation of negligence remaining is that defendants "continued to demand payments from the Plaintiffs despite entry of an injunction." However, as the court observed supra, the only violation of the injunction of which there is any proof is the letter of March 10, 2011; and the court has concluded that plaintiffs have failed to present evidence to show they suffered compensable damages as a result of this violation. Accordingly, plaintiffs can have no cognizable claim for negligence.
Based on all of the foregoing, it is ordered that defendants' motion for summary judgment is granted and plaintiffs' motion for partial summary judgment is denied.
A separate judgment will be entered in accordance with Rule 58 of the Federal Rules of Civil Procedure.
Teeuwissen, 2011 WL 5593164, at *5. Defendants argue that this court's reliance on West was improper since the West court's conclusion on this issue was reached in error. Defendants maintain that West's reliance on Williams was misplaced, as was its reliance on Johnson v. Gore, 224 Miss. 600, 80 So.2d 731 (1955), since both cases were patently distinguishable. They point out that in Williams, in contrast to the present case, there was an issue both as to whether the borrowers were actually delinquent and as to the extent of any delinquency. And they argue that in Johnson, the court found a duty to render a substantially correct account of the indebtedness based on a fiduciary or trust relationship that arose because the borrower was imprisoned and the mortgagee took over duties related to the leasing of the subject property. Defendants note there is no basis in this case for finding a fiduciary or trust relationship.
While the court at present is not persuaded that its earlier conclusion was in error, the court need not linger on this issue since it is clear from the evidence that an accurate accounting was provided to plaintiffs.
In his declaration, Chase Vice-President Thomas Reardon attested to the accuracy of the payoff and reinstatement figures and explained in detail the basis for the calculations behind those figures. While plaintiffs obviously question the figures, they have presented no evidence to show the figures are inaccurate.
Plaintiffs additionally point to a December 23, 2010 notice from a local realtor posted on the Teewissens' door indicating that he had been retained to sell the property as a violation of the injunction. However, this notice indicates it was generated at 1:00 a.m. on December 23, 2010, before the injunction was issued.
