Saul Catalan v. RBC Mortgage Compan

In the

United States Court of Appeals

For the Seventh Circuit

No. 09-2182

S AUL H. C ATALAN and M IA M ORRIS,

Plaintiffs-Appellants,

v.

GMAC M ORTGAGE C ORP.,

Defendant-Appellee.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 05 C 6920—George W. Lindberg, Judge.

A RGUED F EBRUARY 12, 2010—D ECIDED JANUARY 10, 2011

Before E ASTERBROOK, Chief Judge, H AMILTON, Circuit

Judge, and SPRINGMANN, District Judge.Œ

H AMILTON, Circuit Judge. Plaintiffs Saul H. Catalan and

Mia Morris sued defendants RBC Mortgage Company

and GMAC Mortgage Company under the federal Real

Œ

Hon. Theresa L. Springmann of the Northern District of

Indiana, sitting by designation.

2 No. 09-2182

Estate Settlement Procedures Act (“RESPA”), 12 U.S.C.

§ 2601, et seq., and under Illinois law for gross negligence,

breach of contract, and willful and wanton negligence.

The district court dismissed the plaintiffs’ gross negli-

gence claim as merely duplicating the willful and

wanton negligence claim. The court granted summary

judgment to GMAC Mortgage on the plaintiffs’ RESPA,

breach of contract, and remaining negligence claims. The

plaintiffs appeal those decisions. We reverse the grant

of summary judgment for GMAC Mortgage on the plain-

tiffs’ RESPA and breach of contract claims, and we

affirm summary judgment on their negligence claims.1

I. The Real Estate Settlement Practices Act

Before digging into the details of plaintiffs’ maddening

troubles with their mortgage, we provide a sketch of the

relevant RESPA requirements. RESPA is a consumer

protection statute that regulates the real estate settle-

ment process, including servicing of loans and assign-

ment of those loans. See 12 U.S.C. § 2601 (Congressional

findings). The statute imposes a number of duties on

lenders and loan servicers. Most relevant here are the

requirements that borrowers be given notice by both

1

Plaintiffs’ claims against RBC proceeded to trial. The jury

found in favor of the plaintiffs on their RESPA and negligence

claims, awarding them $1,100 and $10,000 for those claims,

respectively. The jury found for RBC on the plaintiffs’ breach

of contract claim. The plaintiffs’ claims against RBC are not

part of this appeal, and RBC is no longer a party.

No. 09-2182 3

transferor and transferee when their loan is transferred

to a new lender or servicer, 12 U.S.C. §§ 2605(b) and (c),

and that loan servicers respond promptly to borrowers’

written requests for information, § 2605(e).

The details of the requirement for responding to

written requests will become relevant here. First, it

takes a “qualified written request” to trigger the loan

servicer’s duties under RESPA to acknowledge and

respond. The statute defines a qualified written request

as written correspondence (other than notices on a pay-

ment coupon or similar documents) from the borrower

or her agent that requests information or states reasons

for the borrower’s belief that the account is in error. 12

U.S.C. § 2605(e)(1)(B). To qualify, the written request

must also include the name and account of the borrower

or must enable the servicer to identify them. Id.

Within 60 days after receiving a qualified written re-

quest, the servicer must take one of three actions: either

(1) make appropriate corrections to the borrower’s

account and notify the borrower in writing of the cor-

rections; (2) investigate the borrower’s account and pro-

vide the borrower with a written clarification as to why

the servicer believes the borrower’s account to be cor-

rect; or (3) investigate the borrower’s account and

either provide the requested information or provide

an explanation as to why the requested information is

unavailable. See 12 U.S.C. §§ 2605(e)(2)(A), (B), and (C).

No matter which action the servicer takes, the servicer

must provide a name and telephone number of a rep-

resentative of the servicer who can assist the borrower.

4 No. 09-2182

See id. During the 60-day period after a servicer receives

a qualified written request relating to a dispute re-

garding the borrower’s payments, “a servicer may not

provide information regarding any overdue payment,

owed by such borrower and relating to such period or

qualified written request, to any consumer reporting

agency.” 12 U.S.C. § 2605(e)(3).

RESPA provides for a private right of action for viola-

tions of its requirements. 12 U.S.C. § 2605(f). The provi-

sion for a private right of action includes a “safe harbor”

provision, which provides in relevant part that a

transferee service provider like GMAC Mortgage shall

not be liable for a violation of section 2605 if, “within

60 days after discovering an error (whether pursuant to

a final written examination report or the servicer’s

own procedures) and before the commencement of an

action under this subsection and the receipt of written

notice of the error from the borrower, the servicer

notifies the person concerned of the error and makes

whatever adjustments are necessary in the appropriate

account to ensure that the person will not be required

to pay an amount in excess of any amount that the

person otherwise would have paid.” 12 U.S.C. § 2605(f)(4).

II. The Facts

Because the plaintiffs appeal the district court’s grant

of summary judgment, we review the trial court’s deci-

sion de novo, viewing all evidence in the light most favor-

able to and drawing all reasonable inferences for the

plaintiffs, as the non-moving parties. See Fed. R. Civ. P.

No. 09-2182 5

56(c); Hukic v. Aurora Loan Services, 588 F.3d 420, 432

(7th Cir. 2009); Burnett v. LFW Inc., 472 F.3d 471, 477 (7th

Cir. 2006). We trace the plaintiffs’ problems with their

original mortgage servicer, then with the transfer of

the mortgage to GMAC Mortgage, as relevant to plain-

tiffs’ claims that GMAC Mortgage violated RESPA

by failing to provide notice of the transfer and by failing

to respond to their qualified written requests, and by

failing to correct erroneous information it had given to

credit-reporting services.

Plaintiffs’ Problems with RBC Mortgage: In June 2003,

the plaintiffs bought a home in Matteson, Illinois. They

obtained a Federal Housing Administration loan by

executing a mortgage and note in favor of RBC. At the

outset, theirs was a 30-year fixed loan at 5.5% annual

interest with a monthly payment of $1,598 that

included principal, interest, and escrow.

Although the plaintiffs’ first payment was not due

until August 1, 2003, RBC incorrectly entered the plain-

tiffs’ mortgage into its computer accounting system to

show a first payment due date of July 1, 2003. Because of

this error, when the plaintiffs made their first payment

they were already behind—at least according to RBC’s

system. By the time the plaintiffs made their second

payment, RBC had determined that their loan was in

default, and it increased their monthly payment amount

to $1,787. The plaintiffs, at first unaware of the in-

crease, and then, without receiving an explanation of the

increase, continued to send their mortgage payments

for the original amount. RBC returned those checks

uncashed.

6 No. 09-2182

RBC filed for foreclosure on the plaintiffs’ home on

February 26, 2004. In May and June, the plaintiffs pro-

vided checks to RBC in an attempt to make up for the

uncashed payments. However, the plaintiffs’ May 2004

payment was still due even after this reconciliation of

their account. RBC did not provide the plaintiffs with an

account statement or otherwise inform them of that

delinquency. Then, when the plaintiffs sent their

August 2004 payment to RBC, RBC did not apply that

payment to the loan.

GMAC Mortgage Steps In: In September 2004, RBC

assigned the plaintiffs’ loan to GMAC Mortgage. When

GMAC Mortgage assumed the plaintiffs’ mortgage, it

did not send the plaintiffs a letter notifying them of the

transfer. Plaintiffs, not knowing that GMAC Mortgage

was their new mortgage holder, sent their Septem-

ber payment to RBC. RBC did not cash it but forwarded

it to GMAC Mortgage.

At some point in this period, GMAC Mortgage sent the

plaintiffs an account statement dated September 15,

2004, which they received. That account statement was

based on information that GMAC Mortgage had received

from RBC. It showed that the plaintiffs’ account was

past due in the amount of $7,990 and that GMAC

Mortgage had already assessed late fees totaling $255.

On September 23, 2004, GMAC Mortgage sent the plain-

tiffs a letter demanding proof of their homeowners’

insurance coverage. Then, on September 27th, GMAC

Mortgage returned the plaintiffs’ September payment,

which they had sent to RBC. The letter returning the

No. 09-2182 7

payment informed the plaintiffs that the payment repre-

sented only one of five payments that were then due

(from May to September), and provided the plaintiffs

with a phone number.

On October 6, 2004, the plaintiffs wrote to the United

States Department of Housing and Urban Development

(“HUD”) detailing what they understandably described

as their “nightmare” with RBC. They explained:

Despite admissions by RBC that they made errors,

they feel no obligation to correct the grievance [sic]

wrongs by supplying information necessary to

bring closure to this situation, and they have cashed

checks as if there was never any question raised or

breach of obligation on their part. This is the same

company that as of a few weeks ago was in hot

pursuit of our home by means of foreclosure and

had for months refused to accept our payments. The

last message we received from RBC stated that

there were updates on our account yet they have

continually refused to operate in a professional

manner by providing a written explanation that

would offer us clarity and accountability on their part.

The letter provided a detailed outline of the plaintiffs’

account history with RBC, including the fact that their

first payment had been due in August 2003. It also re-

counted that RBC did not cash their August or Septem-

ber 2004 payments, and that on October 4th they re-

ceived a letter from GMAC Mortgage returning their

September 2004 payment and informing them that the

payment was not enough to cover the past due balance

8 No. 09-2182

because five payments were then due. The plaintiffs

wrote: “GMAC claims that they took over our mortgage in

May 04. No information to that effect had ever previously

been provided by RBC or GMAC.” Finally, their letter

asked several questions about RBC’s and GMAC Mort-

gage’s servicing practices, among them:

• Why did [RBC] cash checks in July for an account

that they did not hold and according to GMAC

had purportedly been sold in May?

• What happened to the funds that were taken in

July?

• Why were previous checks not forwarded to the

new company?

• Why would GMAC just now initiate contact?

• Why would GMAC purchase a “nonperforming”

mortgage?

The plaintiffs sent their letter to HUD, which forwarded

it to GMAC Mortgage, which received it on October 14,

2004.

In the meantime, on October 7th and again on Octo-

ber 15th, the plaintiffs wrote to GMAC Mortgage

directly, requesting information concerning the transfer

of their loan, including the date of the transfer, the

amount transferred, confirmation of their monthly pay-

ment amount, and the payment address. The Octo-

ber 15th letter further sought “any information avail-

able about this account.”

On October 13th, in response to the plaintiffs’ October

7th letter, GMAC Mortgage advised the plaintiffs that

No. 09-2182 9

their account had been transferred on September 1, 2004

and that a monthly payment of $1,661 had been

due on May 1st. The response also listed plaintiffs’ then-

current principal balance. Then, under separate cover,

when GMAC Mortgage did not receive the plaintiffs’

October 2004 payment, the company demanded

$9,588 for payments on the plaintiffs’ account since

May 2004, plus $255 in late fees. In that letter dated

October 15, 2004, GMAC Mortgage informed the plain-

tiffs that they were in default and stated that they

could cure by paying the total amount due within 30

days. Days later on October 20th, GMAC sent an odd

letter informing plaintiffs that their monthly payment

was $1,598, their “next payment due date” was May 1,

2004, and that there was an escrow shortage in their

account of $7,022.

On October 21, 2004, GMAC Mortgage responded to

the letter that it had received from HUD in a letter to

HUD captioned “Re: Saul Catalan and Mia Morris . . .

Payment Dispute.” GMAC Mortgage informed HUD that

there was no indication that the plaintiffs’ funds were

missing or misapplied based on the records that

GMAC Mortgage had received from RBC. GMAC Mort-

gage also told HUD that those records reflected that the

plaintiffs’ first payment had been due in July 2003.

GMAC Mortgage sent a letter to the plaintiffs on

October 25, 2004 to advise them that their mortgage

had “reached an advanced stage of delinquency” and

to offer alternatives, such as a repayment plan, loan

modification, or deed in lieu of foreclosure, to avoid a

completed foreclosure.

10 No. 09-2182

On November 15, 2004, the plaintiffs sent a letter to

GMAC Mortgage, describing their history with RBC

and enclosing a check for $11,186 to cover seven pay-

ments of $1,598. In that letter they informed GMAC

Mortgage that “RBC received payments from us that

were not applied promptly, other payments that were

never applied and they never provided a clear explana-

tion for their refusal to accept our payments, an action

which resulted in our home being wrongfully placed

in foreclosure.” They also set forth their “expectations” for

how their account would be handled, advising GMAC

Mortgage that they expected that “any request from us

for information will be provided,” “any changes to our

account or information that requires correspondence

will be forwarded to us in writing,” and “all payments

will be processed in a timely manner.” Finally, they

advised GMAC Mortgage that “if you have any ques-

tions regarding this account I would appreciate them

being asked in writing from the standpoint that docu-

mentation is clarity. It is an unsafe approach to take the

word of RBC as fact because as a company they have

proven to me that fact for them is evasive.” 2 On Novem-

ber 24, 2004, GMAC Mortgage commenced foreclosure

proceedings. By December 2004, GMAC Mortgage

2

GMAC Mortgage suggests that the plaintiffs’ insistence on

communication in writing equates to a failure to cooperate or

to communicate with GMAC Mortgage. Given the history of

the debacle, plaintiffs’ insistence seems at least reasonably

prudent and should not be faulted. As will be seen, the plain-

tiffs’ insistence likely saved their claims under RESPA.

No. 09-2182 11

was reporting the plaintiffs’ loan as delinquent to the

credit bureaus.

On December 2, 2004, the plaintiffs sent GMAC

Mortgage another letter to request that GMAC Mortgage

apply the $11,186 payment to their account, explaining

that “it becomes a major disruption to have large sums

of money unaccounted for.” They wrote again on Decem-

ber 9th, again asking GMAC Mortgage to process

the $11,186 check and requesting “quick resolution of

whatever issues remain since the transfer of this account

to your company by processing and updating this and

all future payments received immediately.” The plain-

tiffs sent their December mortgage payment on the

same date under separate cover. On December 13th,

GMAC Mortgage returned the $11,186 check, ex-

plaining that the funds did not represent the full amount

required to bring the plaintiffs’ account current and

advising the plaintiffs that their account had been sent

to an attorney to begin foreclosure proceedings. It then

responded to the plaintiffs’ December 2nd and 9th

letters on December 23rd and 30th. In each of those

letters, it stated, “thank you for your inquiry on your

account. We are currently processing your request and

will respond in writing within 20 days.” The record does

not contain these promised follow-up responses.

The plaintiffs then wrote GMAC Mortgage’s outside

foreclosure counsel a letter dated December 17th stating

that they disputed GMAC Mortgage’s attempt to collect

on their account and that they had sent everything neces-

sary to bring their account current. They also requested

12 No. 09-2182

an explanation for why, according to the letter they

had received from foreclosure counsel, the balance of

their account had been increased by $19,200 between

September and November 2004. That same day (and 23

days after it had filed for foreclosure), GMAC Mortgage

dismissed the foreclosure proceedings. Then, inex-

plicably, on December 22nd, GMAC Mortgage sent

another letter to the plaintiffs advising them that their

account had been transferred to GMAC Mortgage’s

attorney for foreclosure proceedings and returning their

December 2004 payment!

On January 25, 2005, HUD again intervened, requesting

that, upon receipt of ten mortgage payments from the

plaintiffs (for the months of May 2004 to February 2005),

GMAC Mortgage reinstate the plaintiffs’ loan as current

and waive any and all extra charges and attorney fees.

The plaintiffs sent a check for $15,980 to GMAC Mortgage

on February 3, 2005. That amount represented ten mort-

gage payments and included no account fees or costs,

and thus amounted to what the plaintiffs would have

otherwise paid in regular mortgage payments over

ten months. Once it had received the plaintiffs’ check,

GMAC Mortgage brought their account current with-

out charging them penalties or additional interest.

In April 2005, HUD contacted GMAC Mortgage on the

plaintiffs’ behalf to request that GMAC Mortgage stop

reporting them as delinquent to the credit bureaus. On

May 4, 2005, GMAC Mortgage complied, and in

August 2005 it sent the plaintiffs a letter claiming that

its records indicated that it had not reported any deroga-

No. 09-2182 13

tory credit information on the plaintiffs’ account

from September 2004 through July 2005.

The District Court Proceedings: GMAC Mortgage moved

for summary judgment on all of the plaintiffs’ claims.

Without reaching the merits of the plaintiffs’ RESPA

claims, the court found that GMAC Mortgage qualified

for RESPA’s safe harbor provision and was therefore not

liable for any violations under that statute. The court

dismissed the plaintiffs’ gross negligence claim, finding

that it duplicated the plaintiffs’ willful-and-wanton

negligence claim. The court granted summary judg-

ment for GMAC Mortgage on the plaintiffs’ willful-and-

wanton negligence claim after finding that GMAC Mort-

gage promptly corrected the errors relating to the

plaintiffs’ account when it received notice of the plain-

tiffs’ payment dispute, so that its conduct could not be

deemed willful or wanton. The court found that the

plaintiffs could not recover for breach of contract

because the plaintiffs had purposely withheld their

October 2004 mortgage payment and were themselves

in breach.

III. Plaintiffs’ RESPA Claims

Plaintiffs contend that GMAC Mortgage violated

RESPA in a number of ways, including failing to give

notice of the transfer of their mortgage, failing to

respond promptly to qualified written requests for infor-

mation, and failing to correct wrong information pro-

vided to credit-reporting agencies. The district court did

not reach the merits of those claims because it found

14 No. 09-2182

that GMAC Mortgage was entitled to the protection of

the RESPA safe harbor provision in 12 U.S.C. § 2605(f)(4).

We address first the safe harbor provision and then

the substantive claims.

A. RESPA’s “Safe Harbor”

Although RESPA provides a private right of action for

violations of its requirements, it also includes a non-

liability or “safe harbor” provision, which provides:

A transferor or transferee servicer shall not be

liable under this subsection for any failure to

comply with any requirement under this section if,

within 60 days after discovering an error (whether

pursuant to a final written examination report or

the servicer’s own procedures) and before the com-

mencement of an action under this subsection and

the receipt of written notice of the error from the

borrower, the servicer notifies the person concerned

of the error and makes whatever adjustments are

necessary in the appropriate account to ensure that

the person will not be required to pay an amount

in excess of any amount that the person otherwise

would have paid.

12 U.S.C. § 2605(f)(4).

GMAC Mortgage is not entitled to the protection of

the safe harbor in section 2605(f)(4). Although the

parties have debated other requirements in the safe

harbor provision, GMAC Mortgage did not argue, and

nothing in the record shows, that GMAC Mortgage

No. 09-2182 15

“notif[ied] the person concerned of the error,” as required

to invoke the protection. On this basis alone, GMAC

Mortgage was not eligible for protection in the RESPA

safe harbor. The district court’s finding otherwise

was error.

In the district court, GMAC Mortgage argued that it

was protected by the safe harbor because, when all was

said and done, the plaintiffs did not pay any money in

excess of what they otherwise would have paid, and

GMAC Mortgage corrected all errors in the plaintiffs’

account within 60 days after receiving the plaintiffs’

December 17, 2004 letter, and before the plaintiffs filed

suit. Under this view of the statute, the defendant

must have corrected the error only before plaintiffs

filed suit, even if the defendant did not discover and

correct the error before receiving written notice of it

from the borrower. Plaintiffs contend that the safe

harbor provision requires the defendant to have cor-

rected the error both before suit was filed and before the

defendant received written notice of the error from the

borrower. Because GMAC Mortgage’s failure to provide

notice keeps it out of the safe harbor in this case, we

express no view on the district court’s reasoning on

this point.

B. The “Qualified Written Request” Issue

The plaintiffs argue that the letters they sent on

October 6, November 15, December 2, December 9 and

December 17 were qualified written requests. They con-

tend that GMAC Mortgage violated RESPA by re-

16 No. 09-2182

porting their account as delinquent to the credit bureaus

within the 60-day window after each of those qualified

written requests was received, and that GMAC

Mortgage also failed to investigate properly or to take

corrective action in response to the October 6, Novem-

ber 15, December 2 and December 9 qualified written

requests.

RESPA defines a qualified written request as follows:

For purposes of this subsection, a qualified written

request shall be a written correspondence, other

than notice on a payment coupon or other payment

medium supplied by the servicer, that—

(i) includes, or otherwise enables the servicer to iden-

tify, the name and account of the borrower; and

(ii) includes a statement of the reasons for the belief

of the borrower, to the extent applicable, that the

account is in error or provides sufficient detail to

the servicer regarding other information sought by

the borrower.

12 U.S.C. § 2605(e)(1)(B).

GMAC Mortgage argues that the letters in question

were not qualified written requests because the letters

“do not identify an error in plaintiffs’ account or pro-

vide any statement of the reasons plaintiffs believe

their account was in error.” GMAC Mortgage Br. 16.3

3

Although GMAC Mortgage conducted an investigation

and corrected the plaintiffs’ account in response to their Decem-

(continued...)

No. 09-2182 17

Relying on several district court decisions, GMAC Mort-

gage contends that letters that “merely dispute a debt or

request information are not ‘qualified written requests,’

and do not trigger the obligations under section 2605.”

Id., citing Moore v. Federal Deposit Ins. Corp., 2009 WL

4405538, at *4 (N.D. Ill. Nov. 30, 2009) (plaintiffs’ letters

requesting information regarding reinstatement of a

defaulted mortgage loan and the amounts of delinquent

mortgage payments due did not relate to “servicing” and

thus were not qualified written requests), Champlaie v.

BAC Home Loans Servicing, LP, 2009 WL 3429622, at *7

(E.D. Cal. Oct. 22, 2009) (plaintiffs’ claim that lender

failed to respond in violation of RESPA was dismissed

because plaintiff did not allege that his written request

for rescission of the loan related to the servicing of

his loan and thus his communication was not a

qualified written request), Keen v. American Home Mortgage

Servicing, 664 F. Supp. 2d 1086, 1097 (E.D. Cal. 2009)

(plaintiff’s demand to cancel trustee’s sale of home and

for rescission disputed the validity of the loan but did

not dispute the servicing of the loan and was not a quali-

fied written request), Pettie v. Saxon Mortgage Services,

2009 WL 1325947, at *2 (W.D. Wash. May 12, 2009) (plain-

tiffs’ “inquiry letter” disputing amount owed and re-

questing 26 sets of documents did not offer reasons for

their dispute and thus was not a qualified written

3

(...continued)

ber 17th letter, it disputes whether that letter was a qualified

written request under the technical requirements of the stat-

ute. GMAC Mortgage Br. 17.

18 No. 09-2182

request under section 2605(e)(1)(B)); MorEquity, Inc. v.

Naeem, 118 F. Supp. 2d 885, 900-01 (N.D. Ill. 2000) (letter

seeking information about the validity of a loan and

mortgage documents but making no inquiry as to the

account balance or credit for periodic payments did not

relate to “servicing” and was thus not a qualified

written request). By GMAC Mortgage’s argument, a

lender would have no obligation to respond to a borrower

who expressed her belief that her account was in error

but was unable to provide specific reasons for that belief,

an untenable result under the language of the statute.

RESPA does not require any magic language before

a servicer must construe a written communication from

a borrower as a qualified written request and respond

accordingly. The language of the provision is broad and

clear. To be a qualified written request, a written corre-

spondence must reasonably identify the borrower and

account and must “include a statement of the reasons

for the belief of the borrower, to the extent applicable, that

the account is in error or provides sufficient detail to

the servicer regarding other information sought by the

borrower.” 12 U.S.C. § 2605(e)(1)(B) (emphasis added).

Any reasonably stated written request for account infor-

mation can be a qualified written request. To the extent

that a borrower is able to provide reasons for a belief

that the account is in error, the borrower should provide

them, but any request for information made with suf-

ficient detail is enough under RESPA to be a qualified

written request and thus to trigger the servicer’s obliga-

tions to respond. See 12 U.S.C. §§ 2605(e)(1)(a), (e)(2),

and (e)(3); see also Garcia v. Wachovia Mortgage Corp., 676

No. 09-2182 19

F. Supp. 2d 895, 909 (C.D. Cal. 2009) (when construed

in light most favorable to borrower, letter was a

qualified written request even though it did not contain

a statement of reasons for borrower’s belief of error;

letter provided sufficient detail regarding “other infor-

mation” being sought); Rawlings v. Dovenmuehle Mortgage,

Inc., 64 F. Supp. 2d 1156, 1162 (M.D. Ala. 1999) (plaintiffs’

claims survived summary judgment where court found

that descriptions of payments made to a prior servicer

sufficiently stated plaintiffs’ reasons for their belief

that their account was in error and were qualified

written requests). We turn to the disputed letters.

1. Letter of October 6, 2004

The plaintiffs’ October 6th letter included content

that was clearly sufficient to be a qualified written re-

quest. The three-page letter described in great detail the

difficulties the plaintiffs encountered at the hands of

RBC. The letter recounted that their first payment was

due in August 2003, but that RBC failed to process

the plaintiffs’ August payment in a timely manner,

and that a discrepancy arose between the plaintiffs

and RBC as to whether the plaintiffs had made their

payments or not. The letter described how RBC raised

the plaintiffs’ monthly payment amount without

informing them of the change, and that each of the plain-

tiffs’ attempts to communicate with RBC was rebuffed

until RBC at last acknowledged its error and dismissed

its foreclosure action against the plaintiffs in July 2004.

The letter then reported that RBC did not cash the plain-

20 No. 09-2182

tiffs’ August and September 2004 payments, but that

GMAC Mortgage returned the plaintiffs’ September

2004 payment uncashed, even though that payment

had been sent to RBC, and that GMAC Mortgage in-

formed the plaintiffs that their September 2004 payment

was insufficient to cover the amount they then owed on

their mortgage account, which, according to GMAC

Mortgage, was five months overdue. The plaintiffs,

naturally, wrote this description of the history of their

loan’s servicing from their perspective, and without access

to the (incorrect) information that GMAC Mortgage had

acquired from RBC. But the letter was certainly a

thorough statement of “the reasons for the belief of the

borrower, to the extent applicable, that the account is in

error” under section 2605(e)(1)(B).

The letter then continued, requesting very specific

information. Plaintiffs asked that RBC explain why it

had cashed the checks they had sent in July if, as they

had been told by GMAC Mortgage, RBC had sold their

account to GMAC Mortgage in May. The letter also

sought an accounting of the funds plaintiffs had paid in

July and sought information related to the transfer—

specifically, why RBC had not forwarded their checks

to GMAC Mortgage, why GMAC Mortgage had

delayed initiating contact with them after purchasing

their account, and why GMAC Mortgage would purchase

a “nonperforming” mortgage. Some of this informa-

tion might have been “unavailable or [unable] to be

obtained by the servicer” under section 2605(e)(2)(C),

but whether the information the plaintiffs sought

was unavailable or whether their questions were unan-

No. 09-2182 21

swerable does not negate the fact that they had

“provide[d] sufficient detail to the servicer regarding other

information sought by the borrower” under section

2605(e)(1)(B). Their October 6th letter was a qualified

written request, and GMAC Mortgage was obligated to

respond.

Of course, the plaintiffs did not send their October 6,

2004 letter directly to GMAC Mortgage. They sent it

to HUD, which forwarded it to GMAC Mortgage. The

statute requires that qualified written requests be

received “from the borrower (or an agent of the bor-

rower).” 12 U.S.C. § 2605(e)(1)(A). We do not have diffi-

culty interpreting that requirement, under the circum-

stances of this case, to include HUD’s intercession on

the plaintiffs’ behalf. RESPA is a consumer protection

statute, and on summary judgment we must view the

facts in the plaintiffs’ favor. Here, the record amply

demonstrates that the plaintiffs had exhausted every

reasonable avenue in their communications with RBC,

yet in the fall of 2004, they were back in the same night-

mare with a different company. Again they were being

accused of not paying their mortgage, and again they

were being threatened with foreclosure. Their confu-

sion and desperation at this point were palpable, and

they reasonably sought help from HUD. Besides, when

it received the plaintiffs’ letter, GMAC Mortgage tacitly

acknowledged that the letter was a request for informa-

tion and raised a dispute with their account. After all, in

its response to HUD, GMAC Mortgage provided a

detailed accounting of the history and transfer of the

22 No. 09-2182

plaintiffs’ mortgage and captioned its letter as a response

to the plaintiffs’ “payment dispute.” After the months

the plaintiffs had spent writing to and getting nowhere

with RBC, and due to the fact that GMAC Mortgage

received the plaintiffs’ October 6th letter and treated it

as a payment dispute and as a request for information,

the fact that GMAC Mortgage received the letter from

HUD and not directly from the plaintiffs does not

prevent the plaintiffs’ October 6th letter from being a

qualified written request under RESPA.

2. Letter of November 15, 2004

In the plaintiffs’ November 15th letter, they explained

their understanding that, based on information they

had received from GMAC Mortgage, there were seven

payments due on their mortgage of $1,598 each, for a

total of $11,186. A check for that amount was enclosed

with the letter. The plaintiffs also set forth their expecta-

tions for how GMAC Mortgage would handle their

account going forward, including that GMAC Mortgage

would provide any information they request, that any

requested information and any changes to their account

would be in writing, and that their mortgage pay-

ments would be applied in a timely manner. However,

the plaintiffs did not raise any disputes or errors in

their account, and their “expectations” were not

requests for information. We cannot construe the plain-

tiffs’ November 15th letter as a qualified written

request under RESPA.

No. 09-2182 23

3. Letter of December 2, 2004

In the plaintiffs’ letter of December 2nd, they explained

that they sent a check to GMAC Mortgage for $11,186

on November 26, 2004, which GMAC Mortgage had not

yet cashed. Their letter requested that GMAC Mortgage

cash their check and apply the funds to their account

because “it becomes a major disruption to have large

sums of money unaccounted for.” Although this letter

certainly pertained to the servicing of their account,

the plaintiffs were not requesting information and were

not stating a belief that their account was in error. The

plaintiffs were requesting that GMAC Mortgage process

their payment more quickly, but in and of itself, that

request does not seem to be based on any belief that an

underlying error was causing the delay. The plaintiffs’

December 2nd letter was not a qualified written re-

quest under RESPA.

4. Letter of December 9, 2004

The plaintiffs’ letter of December 9th was similar to their

letter of December 2nd. They recounted how GMAC

Mortgage returned their August and September 2004

mortgage payments and how they sent a check for

$11,186 in response to GMAC Mortgage’s statement

that $9,843 was necessary to bring the plaintiffs’ account

current. They stated that GMAC Mortgage’s “refusal to

process this check when only having an association

with the account for two months raises questions in our

minds about your motivation for acquiring our ac-

count,” and that:

24 No. 09-2182

the chaotic state that existed when you acquired

the account was a direct result of the extreme mis-

management of our account by RBC. However

your actions also give me pause to wonder if your

interest is more in acquiring our home than servicing

the account. Additionally, it is extremely questionable

as to why your company would assume an account

that appeared to be in as severe disarray as the

one received from RBC.

The plaintiffs then asked for “quick resolution of what-

ever issues remain since the transfer of this account to

your company by processing this and all future pay-

ments immediately.” Although the plaintiffs were under-

standably frustrated that GMAC Mortgage had not

yet cashed their $11,186 check and applied that amount

to their account, we do not interpret the plaintiffs’ Decem-

ber 2nd letter as a statement of their belief that

GMAC Mortgage’s servicing of their account was in

error. Again, their letter expressed their desire that

GMAC Mortgage process their payment more quickly,

which is not a statement of error or a request for infor-

mation. They also hinted at “issues” remaining since

GMAC Mortgage acquired their account from RBC, but

we cannot reasonably construe the plaintiffs’ use of the

word “issues” as a statement of error, or as a request

for information. The plaintiffs’ December 9th letter

was not a qualified written request.

5. Letter of December 17, 2004

The plaintiff’s December 17th letter was unequivocally

a qualified written request under RESPA. The first sen-

No. 09-2182 25

tence of the letter said: “I am disputing your attempt

to collect on the above referenced account.” The plaintiffs

stated that they had sent GMAC Mortgage the full

amount required to bring the account current, but by

then GMAC Mortgage had returned their $11,186 check

and had advised them that it was seeking foreclosure

against them. Against this backdrop, the plaintiffs’ state-

ment that GMAC Mortgage had “refused to process

checks to alleviate any unnecessary actions or undue

harm” was a statement of their belief that their account

was in error. 4 They also very clearly requested specific

information regarding their account—namely, an ex-

planation of how their account balance increased from

$229,098 to $248,298 over a two-month time span. The

December 17th was also a qualified written request.

Having found that the plaintiffs’ October 6th and Decem-

ber 17th letters were qualified written requests under

RESPA, we leave it to the district court to resolve on

remand whether GMAC Mortgage satisfied its obliga-

tions to investigate and respond under 12 U.S.C.

§§ 2605(e)(1)(A) and 2605(e)(2) and to refrain from re-

porting the plaintiffs as delinquent to the credit re-

porting bureaus under 12 U.S.C. § 2605(e)(3). On

remand, the district court will also need to consider

the plaintiffs’ claims that GMAC Mortgage violated

4

The context explains why this December 17th letter was a

qualified written request and the plaintiffs’ December 2nd and

9th letters were not, even though all three expressed the plain-

tiffs’ belief that GMAC Mortgage had failed to process their

payments in a timely manner.

26 No. 09-2182

RESPA by not sending them an appropriate notice that

their loan had been transferred and by charging them

late fees within 60 days of the transfer. See 12 U.S.C.

§ 2605(c) (requiring transferee servicer to notify the

borrower of the transfer within 15 days of the effective

date of transfer, with certain exceptions); 12 U.S.C.

§ 2605(d) (prohibiting transferee servicer from imposing

a late fee if borrower’s payment is received by the trans-

feror servicer before the payment due date). Summary

judgment for GMAC Mortgage on the plaintiffs’ RESPA

claims is reversed, and we remand to the district court

for further proceedings.

IV. Common Law Claims

A. Breach of Contract

The plaintiffs also claimed that GMAC Mortgage

breached the mortgage-and-note contract when it refused

to accept the payments they sent on September 27, 2004

and November 15, 2004.5 The district court dismissed

the plaintiffs’ breach of contract claim on summary

judgment. The court found that the plaintiffs had pur-

posely withheld their October 2004 payment and that this

withholding was itself a breach. We agree with plaintiffs

that this was an error.

5

On reply, the plaintiffs abandoned their argument that

regulations of the Department of Housing and Urban Develop-

ment were incorporated into their mortgage contract, and that

those regulations provided an independent basis for their

breach of contract claims. Pl. Reply 6, n. 6.

No. 09-2182 27

GMAC Mortgage does not dispute that it refused the

plaintiffs’ September 27th and November 15th payments

and did not immediately apply those payments to the

plaintiffs’ debt. It argues instead that its failure to do so

did not amount to a breach of the contract. Nothing in

the contract required GMAC Mortgage to apply the

payments according to any sort of schedule, it argues, and

it attempts to reframe the plaintiffs’ breach of contract

claim as nothing more than a “gripe” that the payments

“were not applied as plaintiffs would have liked,” pointing

out that in time, all of the plaintiffs’ payments were

applied properly. GMAC Mortgage Br. 25.

To swallow GMAC Mortgage’s argument, we would

have to accept, as a matter of law, that a lender is free

to refuse a tendered payment and then to hold the bor-

rower responsible for having failed to make the pay-

ment. We would have to accept, as a matter of law, that

it does not matter if a holder of a promissory note with-

out a specified time period for its own performance

performs its obligations under the contract in a reasonable

time, so long as the party performs its obligations . . .

eventually. We do not accept that argument. It is a

basic tenet of contract law, recognized in Illinois, that

where no time for performance is specified, the law

implies a reasonable time. See In re Marriage of Tabassum

and Younis, 881 N.E.2d 396, 408 (Ill. App. 2007); Rose v.

Mavrakis, 799 N.E.2d 469, 475 (Ill. App. 2003); Meyer v.

Marilyn Miglin, Inc., 652 N.E.2d 1233, 1239 (Ill. App. 1995).

Whether or not GMAC Mortgage’s delay in applying

the plaintiffs’ payments was reasonable—especially

when GMAC Mortgage was claiming that plaintiffs

28 No. 09-2182

were in breach by failing to make those same pay-

ments—is an issue of material fact that precludes sum-

mary judgment for GMAC Mortgage on the claim.

GMAC Mortgage also argues that its breach should be

excused because the plaintiffs breached the contract first

when they failed to remit their October 2004 payment.6

True, another general tenet of contract law is that plain-

tiffs cannot succeed on a breach of contract claim unless

they demonstrate their own performance of the con-

tract’s requirements. See Hukic v. Aurora Loan Services, 588

F.3d 420, 433 (7th Cir. 2009); Solai & Cameron, Inc. v.

Plainfield Community Consolidated School Dist. No. 202,

871 N.E.2d 944, 953 (Ill. App. 2007) (“ ‘under general

contract principles, a material breach of a contract provi-

sion by one party may be grounds for releasing the

other party from his contractual obligations’ ”), quoting

Mohanty v. St. John Heart Clinic, S.C., 866 N.E.2d 85, 95 (Ill.

2006); Borys v. Rudd, 566 N.E.2d 310, 315 (Ill. App. 1990)

6

GMAC Mortgage also contends that the plaintiffs had ten-

dered some earlier payments to RBC that were returned for

insufficient funds. GMAC Mortgage Br. 28, citing GMAC

Mortgage Ex. 89, ¶ 3. It is unclear whether those checks bounced

because the plaintiffs had insufficient funds to cover the

checks or, as counsel for plaintiffs asserted at oral argument,

whether the checks were not processed for some other reason

related to RBC’s servicing of the plaintiffs’ account. We cannot

resolve this issue on summary judgment, even if GMAC

Mortgage had explained how the plaintiffs’ alleged failure to

remit payments to RBC would excuse GMAC Mortgage’s

subsequent breach.

No. 09-2182 29

(only material breach of a contract provision will justify

non-performance by the other party). The plaintiffs were

certainly obligated to make timely payments under the

note-and-mortgage contract. But the servicers had their

own obligations under the contract, one of which was

to provide timely and accurate information about

where and to whom those payments should be sent in

the event of a transfer. Such notice was also required

under RESPA. See 12 U.S.C. §§ 2605(b) and (c). On these

facts, which party breached first is not a question with

a clear answer. A reasonable jury could find that the

plaintiffs’ failure to submit their October 2004 payment

in a timely manner was justified by earlier wrongs by

RBC Mortgage and GMAC Mortgage.

In September 2004, GMAC Mortgage assumed the

plaintiffs’ mortgage from RBC, but the plaintiffs

were not informed of the transfer. Not knowing that

GMAC Mortgage was their new mortgage holder, the

plaintiffs sent their September payment to RBC. That

payment was later returned to the plaintiffs uncashed,

not by RBC but by GMAC Mortgage, along with a letter

informing them that they owed not one payment but

five, relying on inaccurate information from RBC. When,

on October 15th, GMAC Mortgage told the plaintiffs

that they could bring their account current by paying

$9,588, the plaintiffs paid $11,186—a check that

GMAC Mortgage again returned, uncashed. (Why

GMAC Mortgage did not accept the plaintiffs’ Septem-

ber and November checks as partial payment of the

total amount it believed the plaintiffs owed is not ex-

plained by the parties and remains a mystery.) A rea-

30 No. 09-2182

sonable jury could conclude that the plaintiffs were

doing their best to hold up their end of the bargain—

after all, they were not squandering their uncashed

mortgage payments, and in November they were able to

send GMAC Mortgage more than it asked for. A jury

could also find that plaintiffs’ attempts were thwarted,

first by RBC’s and then by GMAC Mortage’s misman-

agement of their account. Given the plaintiffs’ under-

standable confusion and frustration with the servicing

of their loan in the fall of 2004 and GMAC Mortgage’s

mixed messages regarding how they might fix the prob-

lems, a reasonable jury could conclude that the plaintiffs’

failure to submit their October 2004 payment to GMAC

Mortgage was excused.

GMAC Mortgage cites our decision in Hukic, arguing

that any misstep by a borrower in performance of the

contract absolves a lender from liability for a later breach

of the contract. We do not read Hukic so broadly. Hukic

paid his property taxes and insurance directly, as his

mortgage contract permitted him to do so long as he

also submitted proof of payment to his mortgage

company (or companies—Hukic’s mortgage was also

transferred from one servicer to another several times).

Hukic, 588 F.3d at 425. This he failed to do despite his

servicers’ repeated requests for the required proof.

Because they were unaware that Hukic had already

paid those items, the mortgage servicers also paid

them, which put Hukic’s mortgage account in arrears.

Hukic brought suit against the servicers for breach

of contract. We upheld summary judgment for the mort-

gage servicers, finding that Hukic had breached the

contract by not informing the companies that he had

No. 09-2182 31

paid the property taxes and homeowner’s insurance, as

he was contractually obligated to do. Id. at 433. Hukic’s

failure to comply with his contractual obligations was

material and absolved the servicers from liability

because it directly caused the servicers’ actions that were

the basis of his own breach of contract claims. There was

no issue in Hukic concerning whether or not Hukic’s

breach was excusable.

Here, even assuming that the plaintiffs delayed in

making their October payment as GMAC Mortgage

contends, that delay did nothing to exacerbate

the already serious problems with GMAC Mortgage’s

servicing of the plaintiffs’ mortgage account. Their delay

in submitting their October 2004 payment, viewed in

light of RBC’s and GMAC Mortgage’s repeated failures

to provide them with information regarding their

account or to conduct an investigation into the errors in

transferring their account, is not comparable to Hukic’s

stonewalling. A reasonable trier of fact could find that

the plaintiffs’ failure to remit their October 2004 pay-

ment in a timely manner, although a breach of the

contract, was excused due to the lenders’ earlier breaches

and errors and the resulting confusion surrounding

their account. Summary judgment for GMAC Mortgage

on the plaintiffs’ breach of contract claim is reversed.

B. Negligence

Finding that GMAC Mortgage promptly corrected the

errors in the plaintiffs’ account, the district court held

that GMAC Mortgage could not be found to have acted

willfully or wantonly for its own financial gain, and the

32 No. 09-2182

court dismissed the plaintiffs’ consolidated negligence

claims on summary judgment. The plaintiffs appeal. They

describe their negligence claims as “willful and wanton

negligence or negligence based on willful or wanton

misconduct.” They argue that, however described, the

issue of willfulness or wantonness is one for a jury and

that the trial court erred in dismissing their negligence

claims.

Plaintiffs are foreclosed from recovering on their negli-

gence claims under the economic loss doctrine, which

bars tort recovery for purely economic losses based on

failure to perform contractual obligations. See Moorman

Mfg. Co. v. National Tank Co., 435 N.E.2d 443, 448-49 (Ill.

1982). In Moorman, the Illinois Supreme Court found that

contract law protects the contracting parties’ expectation

interests and “provides the proper standard when a

qualitative defect is involved,” so a contracting party

may not “recover for solely economic loss under the

tort theories of strict liability, negligence and innocent

misrepresentation.” Id. at 448, 453. Illinois recognizes

three general exceptions to the doctrine, which its

Supreme Court recently set forth as follows: “(1) where

the plaintiff sustained damage, i.e., personal injury or

property damage, resulting from a sudden or dangerous

occurrence; (2) where the plaintiff’s damages are proxi-

mately caused by a defendant’s intentional, false rep-

resentation, i.e., fraud; and (3) where the plaintiff’s dam-

ages are proximately caused by a negligent misrepresenta-

tion by a defendant in the business of supplying infor-

mation for the guidance of others in their business trans-

actions.” First Midwest Bank, N.A. v. Stewart Title Guaranty

Co., 843 N.E.2d 327, 333-34 (Ill. 2006) (internal citations

No. 09-2182 33

omitted). These exceptions have in common the ex-

istence of an extra-contractual duty between the parties,

giving rise to a cause of action in tort separate from one

based on the contract itself.

The plaintiffs do not argue that their negligence claim

falls into one of the three recognized exceptions, but they

attempt to fashion a duty from the note-and-mortgage

contract, from common law, and from GMAC Mortgage’s

obligations under RESPA. See Pl. Reply Br. 8-15. However,

each duty that the plaintiffs identify has its root in the

note-and-mortgage contract itself. No matter GMAC

Mortgage’s failings, the contract itself cannot give rise to

an extra-contractual duty without some showing of a

fiduciary relationship between the parties. See Judd v.

First Federal Sav.& Loan Ass’n of Indianapolis, 710 F.2d

1237, 1241-42 (7th Cir. 1983) (holding under Indiana law

that mortgage contract did not create a trust requiring

the mortgagee to account to the mortgagors as beneficia-

ries, nor did it transform a traditional debtor-creditor

relationship into a fiduciary relationship); Ploog v.

HomeSide Lending. Inc., 209 F. Supp. 2d 863, 874-75 (N.D.

Ill. 2002) (denying lender’s motion to dismiss borrower’s

negligence claim because lender’s duty to manage

escrow funds properly could give rise to fiduciary rela-

tionship between lender and borrower); Choi v. Chase

Manhattan Mortgage Co., 63 F. Supp. 2d 874, 885 (N.D. Ill.

1999) (same). The plaintiffs have made no such

showing, and the trial court’s dismissal of their negli-

gence claims is affirmed.

34 No. 09-2182

V. Damages

We are not quite done yet. GMAC Mortgage argues

in the alternative that even if plaintiffs’ claims survive

summary judgment on the issues already addressed,

their RESPA and breach of contract claims cannot

survive because they do not have competent evidence

of damages. The district court did not address the ques-

tion of damages. In doing so now, we conclude that the

plaintiffs have raised disputed issues of material fact

that bar summary judgment on this basis.

Plaintiffs must come forward with evidence sufficient

to support an award of actual damages to pursue their

RESPA and breach of contract claims. RESPA allows for

damages in an amount equal to the sum of:

(A) any actual damages to the borrower as a result

of the failure; and

(B) any additional damages, as the court may allow,

in the case of a pattern or practice of noncompliance

with the requirements of this section, in an amount

not to exceed $1,000.

12 U.S.C. § 2605(f)(1). The plaintiffs do not contend that

GMAC Mortgage engaged in a “pattern or practice” of

noncompliance, and so to prevail under RESPA they

must prove actual damages. Damages are also an

essential element of their surviving breach of contract

claim. See Akinyemi v. JP Morgan Chase Bank, N.A., 908

N.E.2d 163, 169 (Ill. App. 2009) (dismissal of breach of

contract claim upheld where plaintiff pled only that he

“suffered damages in an amount to be proven at trial”).

No. 09-2182 35

The plaintiffs contend that, as a result of GMAC Mort-

gage’s conduct, they were denied home-equity lines

of credit and a small business loan, and that they

suffered emotional distress.7 Keeping in mind the

standard applicable for summary judgment, we review

the relevant evidence in the light reasonably most favor-

able to plaintiffs as the non-moving parties.

A. Denials of Credit Applications

While the issues with plaintiffs’ mortgage were still

ongoing, they applied for four home equity lines of credit,

three with LaSalle Bank and one with Quicken Loans.

Plaintiff Morris also applied for a business loan with

First American Bank. Each of these applications was

denied. In response to the plaintiffs’ contentions that they

were denied loans and credit lines as a result of GMAC

Mortgage’s actions, GMAC Mortgage counters that no

admissible facts support the plaintiffs’ claim that they

were denied credit as a result of GMAC Mortgage’s

report of negative information to the credit bureaus.

A representative of LaSalle Bank testified that the bank’s

decisions to deny the plaintiffs’ applications of Decem-

ber 1, 2004, March 7, 2005, and October 14, 2005 would

have been no different regardless of the issues between

7

The plaintiffs offer no response to GMAC Mortgage’s argu-

ment that their damages claims relating to loans made by

plaintiff Morris’s mother should be dismissed. Accordingly,

that damages theory is not available on remand.

36 No. 09-2182

RBC, GMAC Mortgage, and the plaintiffs. The plaintiffs

presented contrary evidence. Morris testified that a

LaSalle Bank loan officer told her that the plaintiffs’ home-

equity loan applications would not be approved until

their foreclosure was removed.

GMAC Mortgage argues that the plaintiffs’ evidence

about what the LaSalle Bank loan officer said is not suf-

ficient to avoid summary judgment because it is “classic”

hearsay. We disagree. Hearsay, of course, is “a statement,

other than one made by the declarant while testifying

at the trial or hearing, offered in evidence to prove

the truth of the matter asserted.” Fed. R. Evid. 801(c). The

loan officer’s statement to Morris was not hearsay. It

was not an assertion of a factual matter but a statement

describing the bank’s collective intentions: we won’t

approve a loan until you get the foreclosure issue re-

solved. There is also an exception to the exclusion of

hearsay for “a statement of the declarant’s then existing

state of mind, emotion, sensation, or physical condition

(such as intent, plan, motive, design, mental feeling, pain,

and bodily health).” Fed. R. Evid. 803(3); see Citizens

Financial Group, Inc. v. Citizens National Bank, 383 F.3d

110, 133 (3d Cir. 2004) (bank tellers’ statements re-

garding their personal experiences with certain cus-

tomers were not hearsay because the tellers described

the actions they took with regard to those customers and

why); United States v. Heath, 970 F.2d 1397, 1404 (5th

Cir. 1992) (statement by vice president and loan officer

of bank that he was concerned a loan was a sham

was not hearsay; his statement was offered not to show

that the loan was a sham but to reveal whether the

loan had aroused the witness’s suspicions and whether

No. 09-2182 37

the witness had notified any other bank officer about

it); United States v. Visa U.S.A., Inc., 2007 WL 1741885, at *9

(S.D.N.Y. June 15, 2007) (statements of bank employees

regarding the banks’ reasons for dealing with one

supplier rather than another were not hearsay). Also,

because the loan officer was speaking during the em-

ployment relationship concerning matters within the

scope of her employment, her statement may be

imputed to the bank. Thus, the LaSalle loan officer’s

statements to plaintiff Morris about the need to resolve

the mortgage problem were expressions of the inten-

tions of the bank made by its representative. The state-

ments fall outside the definition of hearsay, and even

if they amounted to hearsay, the Rule 803(3) hearsay

exception would apply. The testimony from Morris

about the bank representative’s statements is admissible.

The evidence presented by the parties presents a

disputed issue of material fact that bars summary judg-

ment on this issue.

The plaintiffs also applied for a fourth home equity

loan with Quicken Loans in October 2005. The denial

letter informed them that their application was rejected

because of their poor credit scores. GMAC Mortgage

argues that the denial of this loan cannot be attributed

to its conduct because a different lender pulled the plain-

tiffs’ credit report on the same day that Quicken did, and

the report relied on by the other lender showed only

positive information being reported by GMAC Mortgage

on that date. However, without additional evidence to

connect the dots, there is no way to conclude beyond

38 No. 09-2182

reasonable dispute that Quicken did not rely on the

negative and erroneous credit information that GMAC

Mortgage had reported to the credit bureaus only five

months earlier. GMAC Mortgage’s unbolstered assump-

tion is speculative and insufficient to support summary

judgment.

The plaintiffs support their claim that Morris was

denied a business loan through First American Bank due

to GMAC Mortgage’s actions with an email sent by a

representative of the bank to a First American loan

officer expressing concern regarding Morris’s “mortgage

situation.” 8 GMAC Mortgage argues that the representa-

tive who sent that email later testified that Morris’s

application was denied for reasons having nothing to

do with GMAC Mortgage. GMAC Mortgage’s argu-

ment goes to weight, not admissibility, and does not

resolve this dispute of material fact. Taken in the light

most favorable to the plaintiffs, a reasonable jury could

conclude that GMAC Mortgage’s actions resulted in

8

The plaintiffs also argue that a “former” First American loan

officer told Morris that her business loan was denied due to

the foreclosure. Although the plaintiffs disclosed this former

First American loan officer to GMAC Mortgage as a potential

witness, neither Morris’s deposition testimony nor any other

evidence in the record supports the plaintiffs’ assertion of this

statement. Even assuming that the loan officer made this

statement to plaintiff Morris, there is no indication that she

made the statement during the time she was an agent of the

bank, so the statement has not been shown to be admissible.

No. 09-2182 39

plaintiff Morris’s business loan application being denied.9

B. Emotional Distress Damages

Regarding the plaintiffs’ claim of emotional distress,

Plaintiff Morris’s medical records indicate that she was

under increased stress during this time period because of

her “house situation.” Also, both of the plaintiffs testified

regarding their emotional distress. Plaintiff Morris ex-

plained:

It is hard to feel like people aren’t listening to you, that

they’re ignoring you. It makes me nervous. It makes

me shaky. It depresses me. It concerns me. It embar-

rasses me.

I can’t sleep. I don’t like people ringing my doorbell.

Any and every way that you should feel in your

own home, I don’t feel, and only now are we

really starting to do things in our house because

I was concerned that it wasn’t going to be my

house. . . . It makes me sad because I’ve taken time

away from my husband and from my child and from

9

In the long run, of course, simply being denied a loan that

would have to be repaid would not be sufficient by itself to

prove damages; the plaintiffs would need to show further

damages resulting from the loan denial. As the case comes to

us, however, those issues are not before us. We focus only on

the threshold step of whether the loans were denied as a

result of GMAC Mortgage’s actions.

40 No. 09-2182

myself because I have been consumed with this and

dealing with this, and I’m angry about it.

I understand to an extent that [GMAC Mortgage]

inherited an issue that was preexisting, but it seemed

like [GMAC Mortgage] jumped on the bandwagon

and didn’t listen, ignored what was said to you.

I get headaches thinking about it and dealing with it.

I’m just tired of it.

And, plaintiff Catalan testified:

If I see my wife upset, I can’t let her know that I’m

upset. So the whole time that we were going through

this process, I had to deal with my wife every day

crying and being upset, not being able to take care

of my son the way she was supposed to. And I had

to take care of my son . . . try to console my wife, and

at the same time, I couldn’t let anybody know how

I felt about it.

....

Every day I just felt useless. I couldn’t do anything

to help her. I couldn’t resolve the situation. I couldn’t

fix her problem.

....

It was killing me every day.

GMAC Mortgage concedes that emotional distress

damages are available as actual damages under RESPA,

at least as a matter of law, but argues that the plain-

tiffs’s evidence is not sufficient to support a damages

No. 09-2182 41

award because it did not show “extreme” emotional

distress and was “self-serving and conclusory.” GMAC

Mortgage Br. 35, 36. We disagree. Although not exten-

sive, the plaintiffs’ testimony is not conclusory. They

described their emotional turmoil in reasonable detail

and explained what they believe to be the source of

that turmoil. Although also “self-serving,” most testimony

by a party is, see, e.g., Payne v. Pauley, 767, 772 (7th Cir.

2003) (reversing summary judgment), so that charac-

terization does not assist GMAC Mortgage. So long as

the statements were made with personal knowledge,

which they certainly were, plaintiffs’ testimony on this

point is admissible. GMAC Mortgage will be free to

argue on remand that any such distress was minor and

that other stressors in the plaintiffs’ lives were the true

causes of their distress, but the plaintiffs’ testimony is

sufficient to preclude summary judgment for GMAC

Mortgage on the question of whether the plaintiffs

suffered emotional harm as a result of GMAC

Mortgage’s actions—and inaction.1 0

10

Before leaving the issue of damages, recall that plaintiffs

already won a judgment for $11,100 against RBC Mortgage. To

the extent that plaintiffs are seeking damages against GMAC

Mortgage for any of the same injuries, on remand the district

court will need to ensure that plaintiffs do not recover twice

for the same injury.

42 No. 09-2182

Conclusion

The district court’s grant of summary judgment for

GMAC Mortgage on the plaintiffs’ RESPA claims and

breach of contract claim is R EVERSED and R EMANDED for

further proceedings. The court’s grant of summary judg-

ment to GMAC Mortgage on the plaintiffs’ negligence

claims is A FFIRMED.

1-10-11