United States District Court, M.D. Tennessee, Nashville Division
OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR
SUMMARY JUDGMENT AND DENYING DEFENDANT'S MOTION FOR
BERNARD A. FRIEDMAN, SENIOR UNITED STATES DISTRICT JUDGE
matter is before the Court on the parties' cross motions
for summary judgment [docket entries 67 and 69] and
defendant's motion to strike excess pages [docket entry
76]. As this matter is fully briefed, the Court will decide
these motions without a hearing.
following facts are summarized from the complaint and the
parties' briefing. Plaintiff is a Tennessee mortgage
company and defendant is a Kansas bank. In 2005, the parties
signed a Correspondent Loan Purchase Agreement (“the
Agreement”). The Agreement provides for the sale of
residential mortgage loans from defendant (the Seller) to
plaintiff (the Buyer) and outlines the parties'
respective obligations. Several provisions of the Agreement
are pertinent here:
Section 6: At all times the Seller makes the following
representations and warranties: . . .
6.2 Complies With Agency Requirements: There is no fact or
circumstance with respect to the Mortgage Loan that would
entitle: a) an Agency to demand repurchase of a Mortgage
Loan; [or] c) . . . an Agency, to claim indemnification . .
6.20 PMI: Each Mortgage Loan required to have private
mortgage insurance has a policy that a) complies with the
Agency Guide and the Manual; and b) is issued by an insurer
acceptable to the Agency and the Buyer.
Section 8: Seller agrees to repurchase one or more Mortgage
Loans from Buyer, upon terms and conditions hereinafter set
forth, in the event that: . . .
b) Buyer is required to repurchase the Mortgage Loan after it
has been sold to an Agency or a Private Investor due to a
deficiency in or omission with respect to any documents,
instrument, or agreement pertaining to the Mortgage Loan . .
Any such repurchase shall occur within thirty (30) business
days after written demand by Buyer . . . .
Section 10: In addition to the repurchase obligation of
Seller and any and all other rights and remedies available to
Buyer, Seller shall indemnify the Buyer . . . against any and
all losses . . . that the Buyer may incur . . . arising out
a) Any misrepresentation made by the Seller in . . . any
information provided to the Buyer, [or]
b) Any breach by the Seller of any of the Seller's
representations, warranties, or obligations . . . .
§ 8 and § 10 require defendant to, under certain
circumstances, repurchase or indemnify plaintiff for
defective mortgage loans. This case is about two defective
loans that defendant refuses to repurchase or indemnify
plaintiff for: the Salvino loan and the Turner loan.
originated the Salvino loan in early 2006. On June 30, 2006,
defendant sold the Salvino loan to plaintiff, who immediately
resold it to Wells Fargo. In March 2010, Wells Fargo notified
plaintiff of underwriting defects in the Salvino loan,
including misrepresentations of the Salvinos' income and
credit score. Plaintiff's contract with Wells
Fargo-similar to the Agreement-contains repurchase and
indemnification clauses. Plaintiff asked defendant to explain
the underwriting defects. At the same time, plaintiff
appealed Wells Fargo's determination within Wells Fargo.
In August 2010, Wells Fargo denied plaintiff's appeal. In
September 2010, Wells Fargo demanded that plaintiff
repurchase the Salvino loan, which plaintiff did for $116,
000 in early November 2010. Plaintiff immediately demanded
that defendant repurchase or indemnify it for the Salvino
loan, but defendant refused. Plaintiff then sold the Salvino
loan for $42, 000 on the “scratch and dent”
originated the Turner loan in mid-2007. On September 5, 2007,
defendant sold it to plaintiff, who immediately resold it to
Wells Fargo. In February 2010, Wells Fargo notified plaintiff
of lapsed insurance and underwriting defects in the Turner
loan, including misrepresentations of the Turners'
income. From then until December 2010, the parties and Wells
Fargo exchanged correspondence regarding the Turner loan.
Plaintiff appealed Wells Fargo's determination within
Wells Fargo, but eventually Wells Fargo denied
plaintiff's appeal. Plaintiff indemnified Wells Fargo in
November 2010, for $116, 689.94. Defendant has refused to
filed the instant action in October 2013. In February 2016,
it filed its amended complaint, which asserts two
breach-of-contract claims-one as to the Salvino loan and the
other as to the Turner loan. The parties have now filed cross
motions for summary judgment.
Fed.R.Civ.P. 56(a), summary judgment is appropriate “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.” “[T]he mere existence of
some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion for
summary judgment; the requirement is that there be no
genuine dispute as to any material
fact.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247-48 (1986) (emphasis in original). Viewing the
evidence in the light most favorable to the opposing party,
summary judgment may be granted only if the evidence is so
one-sided that a reasonable factfinder could not find for the
opposing party. See Id. at 248-50; Street v.
J.C. Bradford & Co., 886 F.2d 1472, 1478-80 (6th
Cir. 1989). In other words, “[a] material issue of fact
exists where a reasonable jury, viewing the evidence in the
light most favorable to the non-moving party, could return a
verdict for that party.” Vollrath v.
Georgia-Pacific Corp., 899 F.2d 533, 534 (6th Cir.
a diversity action such as this one, [the Court must] apply
the law, including the choice of law rules, of the forum
state.” Stenger v. Freeman, 683 F. App'x
349, 350 (6th Cir. 2017) (internal quotation marks omitted).
In Tennessee, a “plaintiff alleging breach of contract
must prove: (1) the existence of an enforceable contract, (2)
non-performance amounting to a breach of the contract, and
(3) damages caused by the breached contract.” Nw.
Tenn. Motorsports Park, LLC v. Tenn. Asphalt
Co., 410 S.W.3d 810, 816-17 (Tenn. Ct. App. 2011)
(internal quotation marks omitted). Here, only elements (2)
and (3) are at issue. In Tennessee, the
cardinal rule for interpretation of contracts is to ascertain
the intention of the parties and to give effect to that
intention, consistent with legal principles. The intention of
the parties is to be gleaned from the four corners of the
contract, and the contract's terms are to be given their
“ordinary meaning” in the absence of any
ambiguity. The court, at arriving at the intention of the
parties to a contract, does not attempt to ascertain the
parties' state of mind at the time the contract was
executed, but rather their intentions as actually embodied
and expressed in the contract as written.
United States v. Tennessee, 632 F.Supp.2d 795,
800-01 (W.D. Tenn. 2009) (citations and quotation marks
omitted). The Court will enforce “unwise or
burdensome” contracts. Id. at 801.
the Salvino loan, defendant breached its contract obligations
under § 8 and § 10. Fannie Mae regulations require
underwriters to calculate borrower income by averaging the
borrower's income information in his W-2 form from the
previous year and a current pay stub. Pl.'s Docs.
Defendant did not accurately average the Salvinos' W-2s
and current pay stubs: for example, defendant disregarded Ms.
Salvino's W-2s, overrepresenting the Salvinos' income
by over 20% and underrepresenting their debt-to-income ratio
by 16%. Def.'s Docs. 35-36, 123, 283-89;
Pl.'s Docs. 20-21, 689, 797-98. ...