The opinion
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
JESSICA A. STOLER,
Plaintiff,
v. Civil Action no. 2:18-cv-00988
PENNYMAC LOAN SERVICES, LLC,
Defendant.
MEMORANDUM OPINION AND ORDER
Pending is defendant PennyMac Loan Services, LLC’s
(“PennyMac”) motion for summary judgment, filed August 22, 2019.
The plaintiff, Jessica A. Stoler, filed a response, to which the
defendant has replied.
I. Background
This case involves the plaintiff’s April 2014
$109,693.00 mortgage loan, provided under United States
Department of Agriculture’s (“USDA”) Single Family Housing
Guaranteed Loan Program and serviced by defendant PennyMac.
Compl. at ¶¶ 4, 6.
In February 2017, plaintiff experienced a hardship
that made it difficult for her to afford her monthly loan
payments. Compl. at ¶ 7. On March 1, 2017, plaintiff submitted
a loss mitigation application to PennyMac. Mot. Summary
Judgment, “ECF # 50,” ¶ 9. The court notes that a loss
mitigation application “means an oral or written request for a
loss mitigation option,” which is “an alternative to
foreclosure.” 12 C.F.R. § 1024.31. When an applicant submits a
loss mitigation application, the servicer must determine whether
the applicant qualifies for a loan modification to help the
applicant bring the account current. See ECF # 50, Ex. B-1, 6.
On April 7, 2017, PennyMac sent plaintiff a letter denying
plaintiff’s loss mitigation application. Id. at ¶ 10.
In May 2017, plaintiff’s situation worsened when she
lost her job; she again submitted a loss mitigation application
to PennyMac on June 8, 2017. Compl. at ¶ 9; ECF # 50 at ¶ 11.
On June 30, 2017, PennyMac provided plaintiff with a forbearance
plan from July 2017 to December 2017, reducing monthly payments
from $704.95 to $411.73. ECF # 50, Ex. A-7.
In November 2017, plaintiff became unable to make her
forbearance payments because her unemployment income expired.
ECF # 50, Ex. D, 24. She then attempted without success to
contact PennyMac several times over a six-week period to inquire
about permanent modification of her loan. Plaintiff’s Mem. In
Opposition, “ECF # 53,” Ex. B, 25-27. PennyMac attempted to
call plaintiff four times in November 2017 to discuss
plaintiff’s employment status and the November 2017 monthly
payment. ECF # 50 at ¶ 14. Plaintiff failed to make the
forbearance payments for November and December 2017. ECF # 50
at ¶ 13.
On December 5, 2017, PennyMac denied plaintiff’s
request for a further forbearance plan because plaintiff
defaulted on the current forbearance plan. ECF # 50, Ex. A-9.
On December 20, 2017, plaintiff spoke with a PennyMac
representative about getting a hold on her foreclosure status
and receiving another loan modification. ECF # 53, Ex. F, 3-4.
The PennyMac representative informed plaintiff that her account
reflects an “active foreclosure” and that a foreclosure date
could be “assigned at any time.” ECF # 50, Ex B-1, 2. The
representative also informed plaintiff that the foreclosure
process would not be suspended until the loss mitigation
application was “awaiting decision” by PennyMac. ECF # 50, Ex
B-2, 4-5.
On December 21, 2017, PennyMac sent plaintiff a letter
indicating that plaintiff had called PennyMac the previous day
to start another loss mitigation application process. ECF # 50,
Ex. A-10. PennyMac also enclosed a blank loss mitigation
application. Id. The letter stated that PennyMac would
“continue to accept documentation to complete this application
up until 1/20/2018. . . . If your application is denied, we will
continue to accept good faith applications up until 37 days
before a scheduled sale date.” Id.
Plaintiff sent the loss mitigation application on
December 29, 2017. ECF # 50 at ¶ 20. On January 3, 2018,
Seneca Trustees, Inc. notified plaintiff that a trustee’s sale
of her property was scheduled for January 30, 2018. ECF # 50,
Ex. A-11. PennyMac received the plaintiff’s loss mitigation
application on January 8, 2018. ECF # 50 at ¶ 20. On January
10, 2018, PennyMac sent plaintiff a letter denying plaintiff’s
loss mitigation application because “the investor guideline
prohibits the modification of a loan when the borrower requests
the modification within 37 days of the foreclosure sale date.”
ECF #50, Ex. A-13.
On January 25, 2018, plaintiff contacted PennyMac,
notifying it of alleged servicing violations and requesting that
future communications be directed to plaintiff’s counsel. ECF #
50, Ex. A-15. After receiving this letter, PennyMac sent
plaintiff written communications and contacted her by telephone.
ECF # 50 at ¶ 27; ECF # 53, Ex. L.
Since plaintiff’s last payment under the forbearance
plan in October 2017 to now, two years later, plaintiff has made
two monthly payments of $705.00, the regular amount due, and two
token payments of $20.00 while continuing to occupy the
property. ECF # 50 at ¶ 29-30.
Plaintiff filed this action in the Circuit Court of
Kanawha County on May 2, 2018, bringing claims for violations of
the West Virginia Consumer Credit Protection Act (“WVCCPA”)
(Count I), negligence (Count II), tortious interference with
contract (Count III), and estoppel (Count IV).
PennyMac removed the action to this court on June 1,
2018, pursuant to the court’s diversity jurisdiction. The
plaintiff’s motion to remand was denied.
PennyMac filed a motion to dismiss on June 15, 2018.
The court granted the motion to dismiss for all counts, except
Count I insofar as it alleges that PennyMac violated the WVCCPA
by misrepresenting the reason for denying Ms. Stoler’s request
for loss mitigation, ignoring Ms. Stoler’s requests for
additional loss mitigation after she failed to make her
forbearance plan payments and instead scheduling foreclosure,
and contacting Ms. Stoler individually after it was advised that
she was represented by counsel. PennyMac now seeks summary
judgment on the remaining claim.
II. Standard of Review
Summary judgment is appropriate only “if the movant
shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). “Material” facts are those necessary to
establish the elements of a party’s cause of action. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also News
& Observer Publ’g Co. v. Raleigh-Durham Airport Auth., 597 F.3d
570, 576 (4th Cir. 2010). A “genuine” dispute of material fact
exists if, in viewing the record and all reasonable inferences
drawn therefrom in a light most favorable to the non-moving
party, a reasonable fact-finder could return a verdict for the
non-moving party. Anderson, 477 U.S. at 248.
Inferences that are “drawn from the underlying
facts . . . must be viewed in the light most favorable to the
party opposing the motion.” United States v. Diebold, Inc., 369
U.S. 654, 655 (1962). A party is entitled to summary judgment
if the record, as a whole, could not lead a rational trier of
fact to find for the non-moving party. Williams v. Griffin, 952
F.2d 820, 823 (4th Cir. 1991). Conversely, summary judgment is
inappropriate if the evidence is sufficient for a reasonable
fact-finder to return a verdict in favor of the non-moving
party. Anderson, 477 U.S. at 248.
III. Discussion
A. W. Va. Code § 46A-2-127 Claim
Section 46A-2-127 of the WVCCPA provides that “[n]o
debt collector shall use any fraudulent, deceptive, or
misleading representation or means to collect claims or to
obtain information concerning consumers.” W. Va. Code § 46A-2-
127.
In its motion for summary judgment, PennyMac contends
that denying plaintiff’s loss mitigation application after
receiving the application less than 37 days before the
foreclosure sale does not constitute a misrepresentation under
section 46A-2-127 of the WVCCPA. ECF # 50 at 10. PennyMac
relies on the federal regulation, which states,
If a borrower submits a complete loss mitigation
application after a servicer has made the first notice
or filing required by applicable law for any judicial
or non-judicial foreclosure process but more than 37
days before a foreclosure sale, a servicer shall not
move for foreclosure judgment or order of sale, or
conduct a foreclosure sale[.]
12 C.F.R. § 1024.41(g).
In response, plaintiff identifies three
misrepresentations made by PennyMac. First, plaintiff claims
that PennyMac representatives assured her that she would be
considered for a loan modification after her forbearance plan
ended in December 2017, yet in the written forbearance
agreement, Pennymac made the misrepresentations that plaintiff
would resume her regular monthly payments at the end of the
forbearance agreement and would only be considered for further
loss mitigation if all forbearance payments were paid. ECF # 53
at 10. However, the only evidence of this assurance by
PennyMac’s representatives is Ms. Stoler’s statement that the
PennyMac representative informed her that she “could possibly
apply for another program when [the forbearance plan] was over.”
ECF # 53, Ex. F, 3 (emphasis added). On December 5, 2017, when
the forbearance plan was over, PennyMac denied plaintiff’s
request for a new forbearance plan because, in keeping with the
written agreement, plaintiff defaulted on the current
forbearance plan. ECF # 50, Ex. A-9. She was told that she
could “possibly apply” for another program. Such language is
not a commitment that another program would be afforded her and
does not constitute a misrepresentation. As will be noted, she
did reapply.
Second, plaintiff claims that PennyMac’s
representative’s statements on the December 20, 2017 call that
indicated foreclosure will continue are inconsistent with
PennyMac’s responsibilities under USDA’s loss mitigation
guidelines. ECF # 53 at 10; See USDA Loss Mitigation Guide at 4
(“The servicer must: . . . [u]se loss mitigation whenever
feasible to avoid foreclosure.”). That, however, is not an
endless obligation. PennyMac evaluated plaintiff’s account for
a loan modification in April 2017, provided plaintiff with a
forbearance plan in June 2017, attempted to contact plaintiff
after plaintiff missed the November 2017 forbearance plan
payment, evaluated plaintiff’s account for another forbearance
plan in December 2017, and did not schedule foreclosure until
January 2018.
Third, plaintiff claims that the December 21, 2017
letter constitutes a misrepresentation. The letter states
We will continue to accept documentation to complete this
application up until 1/20/2018. At that point, we will
evaluate the information we have and let you know our
decision. If your application is denied, we will continue
to accept good faith applications up until 37 days before a
scheduled sale date, but you may have to provide updated
information and/or show a change in your financial
circumstances.
ECF # 50, Ex. A-10, 1. Plaintiff contends that the language is
deceptive and misleading for two reasons. First, PennyMac would
not have considered the application unless received by December
24, 2017 -- 37 days before the foreclosure sale. However,
plaintiff did not receive the letter until approximately
December 29, 2017. ECF # 53 at 11. Second, the letter is said
to be misleading by stating PennyMac will accept documentation
until January 20, 2018, and will evaluate the information
available at that point to discern a decision, when plaintiff
would have had to send documentation by December 24, 2017 to
comply with the 37-day deadline. Id.
The PennyMac letter could reasonably be interpreted to
mean that PennyMac would accept the loss mitigation application,
a form for which was enclosed, until January 20, 2018, and if
this application was denied, plaintiff could only resubmit an
application if it was at least 37 days before the foreclosure
sale. Plaintiff complied and sent the application on December
29, 2017. PennyMac received the application on January 8, 2018
and rejected the application by letter sent on January 10, 2018.
Since notice of the January 30, 2018 foreclosure sale occurred
on January 3, 2018, plaintiff would have been unable to meet
this deadline if the 37-day deadline applied.
Viewing this evidence in the light most favorable to
the plaintiff, as the court must, the court finds that there is
a genuine issue of material fact as to whether the language in
the December 21, 2017 letter is a misleading representation by
PennyMac. PennyMac’s motion for summary judgment on the section
46A-2-127 claim is for that reason denied.
B. W. Va. Code § 46A-2-128 General Claim
Section 46A-2-128 of the WVCCPA provides that “[n]o
debt collector may use unfair or unconscionable means to collect
or attempt to collect any claim.” W. Va. Code § 46A-2-128.
PennyMac contends that it did not violate section 46A-
2-128 by failing to properly process plaintiff’s loss mitigation
applications because PennyMac “timely and appropriately
responded to each of Plaintiff’s loss mitigation applications.”
ECF # 50 at 10. Regarding the December 29, 2017 loss mitigation
application, PennyMac informed plaintiff that her account was in
active foreclosure, that a foreclosure sale could be scheduled
at any time, and that the foreclosure process would not be
stopped until plaintiff submitted a complete loss mitigation
application. Id. at 12-13. PennyMac contends that it followed
federal regulations when it denied plaintiff’s December 29, 2017
loss mitigation application, as it was received within 37 days
of the scheduled foreclosure sale. Id. at 13.
Plaintiff asserts that she presented evidence of
PennyMac’s unconscionable conduct by showing PennyMac violated
applicable USDA guidelines. ECF #53 at 16. Specifically, she
asserts that PennyMac violated the guidelines mandate by (1)
denying Ms. Stoler’s request for a new forbearance plan on
December 5, 2017, and (2) proceeding to foreclosure instead of
considering Ms. Stoler’s application that PennyMac stated it
would accept until January 20, 2018. Id. at 14. Beginning in
April 2017, PennyMac followed USDA guidelines by reviewing
plaintiff’s account for loss mitigation options instead of
immediately seeking foreclosure. PennyMac further reviewed
plaintiff’s account in June 2017 and approved plaintiff for a
forbearance plan. PennyMac denied plaintiff’s December 2017
forbearance plan request and proceeded to foreclosure when
plaintiff was in default, not only on regular loan payments but
the forbearance plan as well. PennyMac’s conduct in this regard
does not rise to an unconscionable level. However, a reasonable
fact-finder could conclude that proceeding to foreclosure on
January 3, 2018, instead of considering plaintiff’s loan
modification application that PennyMac stated it would accept
until January 20, 2018, constitutes an unfair practice by
PennyMac.
C. W. Va. Code § 46A-2-128(e)
WVCCPA section 46A-2-128 further provides specific
examples of conduct deemed to violate the section. Subsection
(e) of the statute provides that “[a]ny communication with a
consumer made more than three business days after the debt
collector receives written notice from the consumer or his or
her attorney that the consumer is represented by an attorney
specifically with regard to the subject debt” constitutes unfair
or unconscionable conduct. The subsection further provides:
To be effective under this subsection, such notice must
clearly state the attorney's name, address and telephone
number and be sent by certified mail, return receipt
requested, to the debt collector's registered agent[.] . .
. Regular account statements provided to the consumer and
notices required to be provided to the consumer pursuant to
applicable law shall not constitute prohibited
communications under this section[.]
W. Va. Code § 46A-2-128(e).
First, PennyMac contends that plaintiff’s notice was
not effective because it was not sent to PennyMac’s registered
agent at the “1627 Quarrier Street, Charleston, WV” address, as
identified by PennyMac at the West Virginia Secretary of State’s
office. ECF # 50 at 13-14. However, plaintiff has presented
evidence that at the time the notice was sent, the address for
PennyMac’s registered agent was the “5400 D Big Tyler Road,
Charleston, WV” address, creating a genuine dispute of fact.
See ECF # 53, Ex. M.
Next, PennyMac moved for summary judgment on the
section 46A-2-128(e) claim, alleging that the exception to
section 46A-2-128(e)’s general prohibition applies in this case
because the communications sent after plaintiff retained counsel
were regular account statements or notices required by law. ECF
# 50 at 14. Plaintiff concedes that the some seventeen monthly
mortgage statements are exempt from the statute as regular
account statements. See ECF # 53 at 17.
Inasmuch as there is insufficient evidence to rule at
this juncture on the remaining contacts in issue, the motion for
summary judgment is denied as to them. Those consist of two
Servicemembers Civil Relief Act (“SCRA”) notices, one Federal
Housing Administration (“FHA”) pamphlet, three phone calls, four
loss mitigation solicitation notices, one 1098 tax form, one
escrow analysis, one privacy notice, one payoff statement, four
payment notices, three partial payment letters, and two emails.
IV. Conclusion
Accordingly, it is ORDERED as follows:
1. That PennyMac’s motion for summary judgment is granted
as to plaintiff’s W. Va. Code § 46A-2-127 claim except
that the motion is denied insofar as it is claimed
that PennyMac’s December 21, 2017 letter constitutes a
misrepresentation;
2. That PennyMac’s motion for summary judgment is granted
as to plaintiff’s W. Va. Code § 46A-2-128 general
claim that PennyMac participated in unconscionable
conduct but is denied insofar as it is claimed that
PennyMac participated in unfair conduct as noted
above; and
3. That PennyMac’s motion for summary judgment with
respect to plaintiff's W. Va. Code § 46A-2-128 (e)
claim is granted as to the some seventeen monthly
mortgage statements and is otherwise denied.
The Clerk is directed to transmit this memorandum
opinion and order to all counsel of record.
ENTER: October 11, 2019
- Bb,
Jo . Copenhaver, Jr.
Senior United States District Judge
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