JERRY A. BROWN, Bankruptcy Judge.
This matter arose out the foreclosure of the mortgage on the debtors' home by the Bank of New York ("BONY"). The adversary proceeding came on for trial on October 26, 2015 on the first amended complaint (P-31) of the debtors, Qunston and Yolanda Coleman (the "debtors") against defendants Barclays Capital Real Estate Inc. d/b/a Homeq Servicing, Deutche Bank National Trust Company as Trustee, Mortgage Electronic Registration System a.k.a. MERS, The Bank of New York Mellon National Association as Grantor Trustee of Protium Master Grantor Trust ("BONY"), Equifirst Corporation, Homeq Servicing, and Statebridge Company LLC ("Statebridge") (the "defendants"). The first amended complaint alleged the following causes of action: Breach of Contract, Violation of the Automatic Stay, Demand for Turnover, Negligent Misrepresentation, Fraudulent or Intentional Misrepresentation, Breach of Good Faith and Fair Dealing, Violations of RESPA, and Misappropriation of Funds and Accounting Issues. The defendants appealed this court's denial of their motion to dismiss, and the district court dismissed the claim that BONY lacked standing to file the foreclosure action against the debtors; the claim that the state court foreclosure action was a nullity; and the claim for violations of RESPA. At the close of trial, this court ruled for the bank and dismissed the claim for violation of the automatic stay. As to the remaining counts, the court finds that the defendants owe the debtors $2,065.08, the amount the debtors were overcharged for force placed hazard insurance. All remaining causes of action are dismissed.
The debtors purchased a house in Marrero, Louisiana and executed a note and mortgage on November 5, 2007.
The debtors' amended complaint still raises several causes of action. First, the debtors allege that there was a breach of contract in that Statebridge, the loan servicer and an agent of BONY, "force placed" hazard insurance on the property from March 29, 2010 to March 29, 2012 even though the debtors had hazard insurance of their own during this time period. Statebridge then charged the debtors for this extra insurance. The defendants' response is that Statebridge did not purchase hazard insurance from March 29, 2010 to March 29, 2011, and as to the period between March 29, 2011 and March 29, 2012, the debtors did not inform Statebridge that they had their own insurance, so the purchase of the extra hazard insurance was proper. Neither party contests that hazard insurance was required by the terms of the mortgage.
The documents entered into evidence show that the debtors had hazard insurance in place from March 29, 2010 to March 29, 2012.
The court finds that the evidence presented at trial, which includes the testimony of Mr. Coleman and exhibits 19 and 25, show that the debtors did indeed have hazard insurance in place from March 29, 2011 to March 29, 2012, and that Statebrindge erroneously charged the debtors for the hazard insurance during that time period. It appears that Mr. Coleman notified Statebridge and/or BONY of this fact both over the phone personally, and in writing through his insurance agent. Thus Statebridge overcharged the debtors in the amount of $2,065.08.
The debtors also allege that they have a breach of contract claim in connection with what they designate as a settlement agreement to resolve the foreclosure action. The defendants respond to this by arguing that there was only an agreement to postpone the April 23, 2013 sales date, which they did do, but no agreement to settle the foreclosure and because no agreement was reached before the foreclosure finally took place, there was no contract, and thus there can be no breach of contract.
When the debtors first learned that foreclosure was imminent, they hired an attorney, Michael Allday, to represent them. Several of the letters between Mr. Allday and the attorney for the defendants, Benjamin Dean were entered into evidence. Additionally, both attorneys testified at trial. From the letters and the testimony, the court finds that although Mr. Allday was successful in having the initial foreclosure sale, which was scheduled for April 23, 2013, postponed so that the debtors could attempt to work out a loan modification, no final agreement in writing was ever reached between the parties resulting in a second contract between them. Although the debtors argue that the agreement by the defendants to postpone the foreclosure sale and allow the debtors to apply for a loan modification was the second agreement, the debtors acknowledge that the loan modification application was eventually denied.
The remaining claims of the debtors for negligent and intentional misrepresentations, and detrimental reliance, are barred by a Louisiana statute. The Louisiana Credit Agreement Act codified at LSA R.S. § 6:1121 et seq. operates as a "statute of frauds" for the credit industry and bars exactly the type of recovery the debtors here are seeking. It's purpose "is to prevent potential borrowers from bringing claims against lenders based on oral agreements."
For the foregoing reasons, the court finds that the defendants erroneously charged the debtors for force placed hazard insurance in the amount of $2,065.08, and that amount shall be payable to the debtors. All remaining counts are dismissed. A separate order shall be entered in accordance with this memorandum opinion.