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Layne v. Ocwen Loan Servicing, LLC

United States District Court, E.D. Tennessee, Winchester

March 28, 2018

STEVEN R. LAYNE, Plaintiff,




         Before the Court is Defendant Ocwen Loan Servicing LLC's (“Ocwen”) motion for summary judgment (Doc. 18) on Plaintiff Steven Layne's claims arising out of the refinancing and modification of a loan. Plaintiff responded in opposition (Doc. 22), and Ocwen replied (Doc. 23). For the reasons that follow, the Court will GRANT Ocwen's motion for summary judgment (Doc. 18).

         I. BACKGROUND

         On July 28, 2007, Plaintiff Steven Layne and his wife Sheri Layne obtained a loan from Homecomings Financial, LLC (“Homecomings”) in the amount of $228, 000.00 (the “Loan”) to purchase certain real property in Hillsboro, Tennessee. (Doc. 18-1.) To secure the Loan, Plaintiff executed a promissory note (the “Note”) in favor of Homecomings (Doc. 18-1), as well as a deed of trust (the “Deed of Trust”) (Doc. 18-2), which identified Homecomings as the Lender and Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary. Through various transfers, [1] Ocwen was assigned both the Loan and the Deed of Trust. (Docs. 18-4 and 18-3, respectively.) Ocwen began servicing the Loan on February 16, 2013. (Doc. 18-4.)

         Plaintiff's Note initially set a fixed interest rate of 7.875%. (Doc. 18-1.) Plaintiff modified the Loan in 2009, fixing a new interest rate at 6.875%. (Doc. 18-5.) In its first year, the 2009 Loan modification required Plaintiff make $1, 601.79 in monthly principal and interest payments and $224.20 in escrow payments for a total monthly payment of $1, 825.99. (Id.) The 2009 Loan modification agreement explained that the monthly escrow payments would adjust annually, and by the time Ocwen began servicing the Loan in 2013, Plaintiff's escrow payment had increased to $436.47. (Doc. 18-6.) As a result of the increased escrow payments, Plaintiff's monthly payment rose to $2, 038.26.[2]

         In August 2015, Ocwen sent a letter to Plaintiff briefly discussing the possibility of refinancing his Loan. (Doc. 18-7.) Specifically, the letter stated that Plaintiff “may be eligible to participate in the Home Affordable Refinance Program (HARP), ” through Ocwen's lending affiliate. (Id.) Sometime thereafter, according to Plaintiff, an Ocwen representative, Bob Gormley, communicated to Plaintiff that the Loan was eligible for refinancing, which would drop the interest rate to 4.5% and decrease the total amount due. (Doc. 1.) However, after Plaintiff provided Ocwen with the requested documents, Gormley allegedly informed Plaintiff that the “refinancing would not be processed due to a mistake in Ocwen's records that erroneously indicated Plaintiff's land plot contained 25 acres instead of the factual 17 acres contained in the land plot.”[3] (Id.) Due to this alleged error, Ocwen denied refinancing the Loan.

         A few months later, Plaintiff contacted Ocwen about the possibility of refinancing his Loan. In February 2016, Ocwen offered and Plaintiff accepted a trial modification plan, which required Plaintiff to make trial period payments of $1, 088.40 monthly for three months. (Doc.18-8.) This was a lower monthly payment in the immediate, designed to provide relief and the opportunity to assess whether a lower monthly payment could be managed. However, the trial plan also specifically provided:

Any difference between the amount of the trial period payments and [Plaintiff's] regular mortgage payments will be added to the balance of [Plaintiff's] loan along with any other past due amounts. While this will increase the total amount that [Plaintiff] owe[s], it should not significantly change the amount of [Plaintiff's] modified mortgage payment.


         If Plaintiff successfully completed the trial period, the Loan could then be permanently modified. Under the terms of the proposed permanent modification (the “Permanent Modification Offer”), Plaintiff's new monthly Loan payment was to be $1, 097.22, with a new principal balance of $225, 359.53. According to the Permanent Modification Offer, this increase in the principal balance consisted of the “unpaid amount(s) loaned to [Plaintiff] . . . plus any interest and other amounts capitalized.” (Doc. 18-10.)

         Plaintiff timely made the trial period payments but objected to the Permanent Modification Offer. According to Plaintiff, the “modification agreement . . . fraudulently and inexplicably increased the outstanding principal balance associated with the mortgage from $213, 900 to over $225, 000.” (Doc. 1.) Plaintiff refused to sign the agreement until he received an explanation regarding the increase in the total amount due. (Doc. 21.) Stephen King, an Ocwen agent, allegedly refused to provide Plaintiff with an explanation, instead urging Plaintiff to sign the agreement anyway. (Id.) Plaintiff did not sign and return the Permanent Modification Offer within the specified time period, and Ocwen subsequently notified Plaintiff that, as a result, the Loan could no longer be modified. (Doc. 18-9.) Plaintiff's property was eventually foreclosed on after Plaintiff failed to make the required payments on the Loan.[4]

         On July 28, 2016, Plaintiff sent a twelve-page letter to Ocwen. (Doc. 18-11.) The letter purported to be a Qualified Written Request (“QWR”), asking Ocwen to hand over a long list of financial documents so that Plaintiff could “validate the debt” Ocwen claimed he owed. (Id.) Ocwen responded with a six-page letter of its own on September 1, 2016, providing some, but not all, of the information Plaintiff sought. (Doc. 18-12.)

         Plaintiff filed this action on January 24, 2017, alleging five causes of action: (1) violation of the Tennessee Consumer Protection Act (the “TCPA”), (2) fraud, (3) misrepresentation, (4) negligence, and (5) violation of the Real Estate Settlement Procedures Act (“RESPA”). Ocwen moves for summary judgment on each of Plaintiff's claims.


         Summary judgment is proper when “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). The moving party bears the burden of demonstrating no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Leary v. Daeschner, 349 F.3d 888, 897 (6th Cir. 2003). A factual dispute is “material” only if its resolution might affect the outcome of the lawsuit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court should view the evidence, including all reasonable inferences, in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Nat'l Satellite Sports, Inc. v. Eliadis Inc., 253 F.3d 900, 907 (6th Cir. 2001).

         To survive a motion for summary judgment, “the non-moving party must go beyond the pleadings and come forward with specific facts to demonstrate that there is a genuine issue for trial.” Chao v. Hall Holding Co., Inc., 285 F.3d 415, 424 (6th Cir. 2002). Indeed, a “[plaintiff] is not entitled to a trial on the basis of mere allegations.” Smith v. City of Chattanooga, No. 1:08-cv-63, 2009 WL 3762961, at *2-3 (E.D. Tenn. Nov. 4, 2009) (explaining the court must determine whether “the record contains sufficient facts and admissible evidence from which a rational jury could reasonably find in favor of [the] plaintiff”). In addition, should the non-moving party fail to provide evidence to support an essential element of its case, the movant can meet its burden of demonstrating no genuine issue of material fact exists by pointing out such failure to the court. Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479 (6th Cir. 1989).

         At summary judgment, the Court's role is limited to determining whether the case contains sufficient evidence from which a jury could reasonably find for the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). If the Court concludes a fair-minded jury could not return a verdict in favor of the non-movant based on the record, the Court should grant summary judgment. Id. at 251-52; Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir. 1994).


         Plaintiff alleges: (1) violations of the TCPA, (2) fraud, (3) misrepresentation, (4) negligence, and (5) a violation of RESPA. The Court addresses each in turn.

         A. Tennessee Consumer Protection Act Claims

         The TCPA prohibits “[u]nfair or deceptive acts or practices affecting the conduct of any trade or commerce.” Tenn. Code Ann. § 47-18-104.[5] To make out a claim under the TCPA, a plaintiff must establish: “(1) an ascertainable loss of money or property; (2) that such loss resulted from an unfair or deceptive act or practice; and (3) that the act or practice is declared unlawful under the TCPA.” Amour v. Bank of Am., N.A., 1:13-CV-144, 2013 WL 6497821, at *5 (E.D. Tenn. Dec. 10, 2013) (citing Tenn. Code Ann. § 47-18-109). A deceptive act or practice is “a material representation, practice, or omission likely to mislead . . . reasonable consumers to their detriment.” Id. (quoting Fayne v. Vincent, 301 S.W.3d 162, 177 (Tenn. 2009)).

         Plaintiff alleges three instances in which Ocwen violated the TCPA. Two of these incidents relate to attempts to modify Plaintiff's Loan. The ...

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