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Dautrich v. Nationstar Mortgage, LLC

United States District Court, D. New Jersey, Camden Vicinage

June 29, 2018




         This matter comes before the Court upon Defendant Nationstar Mortgage LLC's (“Nationstar”) Motion for Summary Judgment and Plaintiffs David and Diane Dautrich's Cross Motion for Summary Judgment on Counts 2 and 3 of the Complaint. For the reasons set forth below, the Court will grant in part and deny in part Nationstar's motion, and deny the Dautrichs' motion.[1]

         I. Facts and Procedural History

         At all relevant times, the Dautrichs have owned a five bedroom, four and a half bathroom, oceanfront second home in Stone Harbor, New Jersey. (Plaintiffs' Response to Defendant's Statement of Undisputed Facts ¶¶ 4, 9) The house's fair market value is approximately 2.9 to 3.6 million dollars. (Id. ¶ 8)

         It is undisputed that in July 2012, when Defendant Nationstar took over servicing the Dautrichs' mortgage on the Stone Harbor property[2], the Dautrichs were already in default. (Plaintiffs' Response to Defendant's Statement of Undisputed Facts ¶ 5) Nationstar's first letter to the Dautrichs advising them of the servicing change reflects that, as of July 15, 2012, the Dautrichs' monthly mortgage payment was $11, 122.83, their principal balance was $1, 480, 682.89, and the escrow balance was $0.00. (David Dautrich Cert. Ex. 2)

         Once loans are in default, Nationstar “maintains protocols to inspect the property at least once a month.” (Plaintiffs' Response to Defendant's Statement of Undisputed Facts ¶ 15) While the precise legal relationship between Nationstar and Defendant Safeguard Properties (“Safeguard”)[3] is presently unclear, it is undisputed that Safeguard inspected the Dautrichs' Stone Harbor property on a monthly basis beginning in October, 2013 through March, 2014. (Deutch Cert. ¶ 3)[4]

         Based on an inspection performed on February 27, 2014, Safeguard concluded that the property was “vacant but maintained.” (Deutch Cert. Ex. 7) On March 4, 2014, Safeguard sent a work order to Four Corners Management directing Four Corners to change the locks and winterize the property. (Id. Exs. 8-9) The Dautrichs assert that during the course of changing the locks and winterizing the property, the front door doorjam was “damaged, ” the custom-made back door was “damaged, ” the custom-made crawlspace door was “dented and scratched, ” and the water heater was improperly drained without turning off the electricity which caused the water heater to burn out. (David Dautrich July 7, 2017 Dep. p. 25-41) The Dautrichs also assert that inspection stickers were placed on granite and porcelain surfaces in the house. (Id. p. 42)

         David Dautrich discovered that the locks had been changed on the house sometime in “late March or early April 2014.” (David Dautrich July 7, 2017 Dep. p. 22) The record does not disclose exactly what happened after it was determined that the Dautrichs had not abandoned the house; David Dautrich testified that he and his wife were still able to rent out the house without a decrease in the rental value. (Id. p. 41)

         A few months later, in a letter dated July 28, 2014, Nationstar sent the Dautrichs a proposed Loan Modification Agreement. (David Dautrich Cert. Ex. 4) The proposed modification was a two year reduction of the interest rate and a two year interest-only monthly payment of $5, 612.42. (Id.) (emphasis added). The letter stated that “to take advantage of this opportunity you must” sign the agreement before a notary and return the signed, notarized agreement with “your initial payment of $14, 398.38.”[5] (Id.) Significantly, the letter also stated that, “[t]his offer to modify your loan expires on 31JUL2014.” (Id.)

         David Dautrich testified that he received the letter in the evening of July 29th or 30th, and called Nationstar the next day to tell them that he was interested in a loan modification but that it would be “impossible” to perform in such a short period of time. (David Dautrich Dec. 8, 2016 Dep. p. 39)[6] Dautrich further testified that he told Nationstar's representative, “Joe”, that Dautrich and his wife “want[ed] to back everything up 30 days” so that they could have enough “time to get the money together.” (Id. p. 42) It is undisputed that “Nationstar agreed to change the date upon which the qualifying payment and Loan Modification Agreement had to be returned executed.” (Plaintiffs' Response to Defendant's Statement of Undisputed Facts ¶ 28)

         In a letter to Nationstar dated August 1, 2014, David Dautrich memorialized his telephone conversation with Nationstar concerning the proposed modification:

         Dear Ms. Drake:

         Late in the evening on July 30, 2014, we received the package from Nationstar with the enclosed Letter Acknowledgement, Loan Modification Agreement and the Agreement to Maintain Escrow Account. Obviously, we could not return those documents, along with a check in the amount of $14, 398.38 ("Qualifying Payment") by July 31, 2014, as Nationstar's letter requested.

         Therefore, I called to speak with you from my attorney's office today, August 1, 2014, and requested that the temporary modification offered documents be extended until August 28, 2014. Nationstar Employee No. 8972096, Joe, said he received authority to extend Nationstar's modification offer to August 28, 2014. That said, my wife and I will be signing the three documents referenced above and returning them to Nationstar via FedEx, along with our check in the amount of $14, 398.38. I understand from speaking to Joe, No. 8972096, that any foreclosure proceedings will be withdrawn and halted and this is, essentially, a new start, at least for the two years during which the loan modification will be in effect.

         I would still appreciate an explanation from you as to how our initial payment of $14, 398.38 was computed and, also, an explanation as to how those proceeds will be applied to our obligation:'' You will be receiving our check in the amount of $14, 398.38 ("Qualifying Payment"), along with our signed and properly notarized Loan Modification Agreement and Agreement to Maintain Escrow Account by the extended date of August 28, 2014 via FedEx.

         (Steinlight Cert. Ex. I)

         Around August 28, 2014, the Dautrichs delivered to Nationstar a check in the amount of $14, 398.38 and executed copies of the documents Nationstar included in its July 28thletter. (Plaintiffs' Response to Defendant's Statement of Undisputed Facts ¶ 31)[7] Importantly, however, the Dautrichs changed material terms of the proposed Loan Modification Agreement before they executed it:

         (Image Omitted)

(Dautrich Cert. Ex. 4) It is undisputed that Nationstar never executed the altered Loan Modification Agreement. (Plaintiffs' Response to Defendant's Counterstatement of Undisputed Facts ¶ 32) Nationstar deposited the Dautrichs' check into their “suspense account” and did not credit any of the money towards the loan at issue. (Plaintiffs' Response to Defendant's Counterstatement of Undisputed Facts ¶ 33)[8]

         On September 16, 2014, approximately two weeks after Nationstar maintains that the Dautrichs' next mortgage payment was due, Nationstar commenced a foreclosure proceeding against the Dautrichs. (Plaintiffs' Response to Defendant's Counterstatement of Undisputed Facts ¶ 36)[9] Sometime around this time, the Dautrichs sent Nationstar another check in the amount of $5, 612.42. (Clopton Dep. p. 60-61, 70-71) Like the Qualifying Payment check, Nationstar deposited the $5, 612.42 check into the suspense account and did not credit any of the money toward the Dautrichs' loan. (Plaintiffs' Response to Defendant's Counterstatement of Undisputed Facts ¶ 33)

         In the following months, David Dautrich continued to send Nationstar checks in the amount of $5, 612.42, interest-only payments under the Loan Modification Agreement. (Dautrich Cert. Ex. 7) Each time Nationstar received a check, it returned the check to the Dautrichs with a letter explaining why the check was being returned. (Id.) In total, Nationstar sent twelve such letters. Eleven letters state:

Dear Mr/Mrs Borrower:
At Nationstar Mortgage, we strive to keep our customers informed on matters relating to their loans.
We recently received a payment on your behalf in the amount of $5612.42. We are returning these funds as they are insufficient to bring your account current.
As of the date of this letter, the total amount required to bring this account current is $99999.99. Account statuses are subject to change. Please contact us for up-to-date account information and amounts owed.

(Dautrich Cert. Ex. 7; Plaintiffs' Response to Defendant's Statement of Undisputed Facts ¶ 40) A twelfth letter is identical to the other letters except that it states “[w]e recently received a payment on your behalf in the amount of $1, 000.00.” (Defendant's Response to Plaintiffs' Statement of Undisputed Facts ¶ 25) Each of the twelve letters is undisputedly erroneous insofar as the amount required to bring the Dautrichs' loan current at all times greatly exceeded $99, 999.99. (Id. ¶ 31)[10] As discussed further infra, Nationstar asserts that the erroneous $99, 999.99 figure resulted from a computer “glitch” which prevented dollar amounts exceeding seven digits from being auto-populated in the letters.[11]

         The Complaint asserts six counts: (1) breach of the Loan Modification Agreement; (2) violation of the Fair Debt Collection Practices Act, “FDCPA”, 15 U.S.C. § 1692e; (3) violation of the New Jersey Consumer Fraud Act, “NJCFA”, N.J.S.A. 56:8-2; (4) violation of the Truth in Lending Act, “TILA”, 15 U.S.C. § 1639f(a); (5) violation of the Real Estate Settlement Procedures Act, “RESPA”, 12 U.S.C. § 2605(f); and (6) “property tortiously damaged.” In response to Nationstar's Motion for Summary Judgment, Plaintiffs state in their opposition brief, “Plaintiffs withdraw/dismiss their claim for relief under the Truth in Lending Act set forth under Count IV of the Complaint.” (Opposition Brief, p. 1) Accordingly, the Court will dismiss the TILA claim (Count 4) pursuant to Fed.R.Civ.P. 41(a)(2).

         II. Summary Judgment Standard

         Summary judgment shall be granted 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). A fact is “material” only if it might impact the “outcome of the suit under the governing law.” Gonzalez v. Sec'y of Dept of Homeland Sec., 678 F.3d 254, 261 (3d Cir. 2012). A dispute is “genuine” if the evidence would allow a reasonable jury to find for the nonmoving party. Id.

         In determining the existence of a genuine dispute of material fact, a court's role is not to weigh the evidence; all reasonable inferences and doubts should be resolved in favor of the nonmoving party. Melrose, Inc. v. City of Pittsburgh, 613 F.3d 380, 387 (3d Cir. 2010). However, a mere “scintilla of evidence, ” without more, will not give rise to a genuine dispute for trial. Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001). Moreover, a court need not adopt the version of facts asserted by the nonmoving party if those facts are “utterly discredited by the record [so] that no reasonable jury” could believe them. Scott v. Harris, 550 U.S. 372, 380 (2007). In the face of such evidence, summary judgment is still appropriate “where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party.” Walsh v. Krantz, 386 Fed.Appx. 334, 338 (3d Cir. 2010).

         The movant has the initial burden of showing through the pleadings, depositions, answers to interrogatories, admissions on file, and any affidavits “that the non-movant has failed to establish one or more essential elements of its case.” Connection Training Servs. v. City of Phila., 358 Fed.Appx. 315, 318 (3d Cir. 2009). “If the moving party meets its burden, the burden then shifts to the non-movant to establish that summary judgment is inappropriate.” Id. In the face of a properly supported motion for summary judgment, the nonmovant's burden is rigorous: he “must point to concrete evidence in the record”; mere allegations, conclusions, conjecture, and speculation will not defeat summary judgment. Orsatti v. New Jersey State Police, 71 F.3d 480, 484 (3d Cir. 1995); accord. Jackson v. Danberg, 594 F.3d 210, 227 (3d Cir. 2010) (citing Acumed LLC. v. Advanced Surgical Servs., Inc., 561 F.3d 199, 228 (3d Cir. 2009) (“[S]peculation and conjecture may not defeat summary judgment.”). However, “the court need only determine if the nonmoving party can produce admissible evidence regarding a disputed issue of material fact at trial”; the evidence does not need to be in admissible form at the time of summary judgment. FOP v. City of Camden, 842 F.3d 231, 238 (3d Cir. 2016).

         III. Analysis

         A. Breach of the Loan Modification Agreement

         Nationstar moves for summary judgment on the breach of contract claim (Count 1) arguing[12]: (1) “a contract was never formed with respect to the Loan Modification Agreement because Plaintiffs made a counteroffer with new terms, namely a modified payment schedule, which Nationstar never accepted.” (Moving Brief, p. 22), and alternatively, (2) even if a contract was formed, the Dautrichs breached the contract by failing to pay escrow charges.[13] In opposition, the Dautrichs argue, (1) “[t]here is a legitimate question of fact as to whether Nationstar's August 1 adjustment of the deadline to submit the qualifying payment and executed Modification also included an adjustment to the first monthly payment of $5, 612.42 from September 1 to October 1, ” (Opposition Brief, p. 6); and (2) Nationstar failed to disclose “what escrow was owed.” (Id. p. 9)

         The record evidence that Nationstar agreed to push back the first modified loan payment of $5, 612.42 from September 1 to October 1 is exceedingly thin. David Dautrich's deposition testimony concerning his telephone conversation with a Nationstar representative on August 1 is muddled at best. Three times during David Dautrich's deposition, Dautrich was specifically asked whether Nationstar agreed to ...

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