Phillips et al v. Deutsche National Trust et al

OCR transcription for search; preserved printed pages are authoritative

The court incorporates by reference in this paragraph and adopts as the findings and orders
of this court the document set forth below.

Russ Kendig
United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO

EASTERN DIVISION
IN RE: ) CHAPTER 7
)
TIMOTHY N. PHILLIPS AND ) CASE NO. 02-66299
CINDY L. PHILLIPS, )
) ADV. NO. 09-6109
Debtors. )
) JUDGE RUSS KENDIG
TIMOTHY N. PHILLIPS, SR. AND _)
CINDY L. PHILLIPS, )
)
Plaintiffs, )
)
Vv. ) MEMORANDUM OF OPINION (NOT
) INTENDED FOR PUBLICATION)
DEUTSCHE NATIONAL TRUST, )
et al., )
)
Defendants. )

Plaintiffs’ (or “Debtors”) unopposed motion for summary judgment is before the court.
They seek a contempt finding against their mortgage company for a violation of the discharge
injunction under 11 U.S.C. § 524(i)' and Federal Rule of Bankruptcy Procedure 9020.

' Plaintiffs reference 11 U.S.C. § 528(i) in their complaint, but it is clear that this is in
error. Defendants did not take issue with the error.

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The court has jurisdiction of this proceeding pursuant to 28 U.S.C. §§ 1334 and the
general order of reference entered in this district on July 16, 1984. Venue in this district and
division is proper pursuant to 28 U.S.C. § 1409. This adversary is a core proceeding under 28
U.S.C. 157(b)(2). The following constitutes the court’s findings of facts and conclusions of law
under Federal Rule of Bankruptcy Procedure 7052.

This opinion is not intended for publication or citation. The availability of this opinion,
in electronic or printed form, is not the result of a direct submission by the Court.

BACKGROUND

On or about February 18, 2000, Debtors borrowed $155,000.00 from Bank One. The
note was secured by a mortgage on the real estate Debtors occupy as their primary residence.
Debtors defaulted on the note. On December 30, 2002, Debtors filed a joint chapter 13 petition
and proposed to cure the arrearage on the note. The plan was confirmed on May 1, 2003.

The law firm of Reimer & Lorber Co., L.P.A. (“Reimer and Lorber’) entered an
appearance on behalf of Bank One on April 22, 2003. Litton Loan Service LP, the servicing
agent for Bank One, through Reimer and Lorber, filed a proof of claim on April 22, 2003.2 The
total amount of the claim was $170,731.62, at 9.99% interest, including an arrearage claim

totaling $18,016.20.

On February 3, 2004, The Law Offices of John D. Clunk were substituted as counsel for
Bank One, replacing Reimer and Lorber. Subsequently, the mortgage claim was assigned from
Bank One to MTGLQ Investors, L.P. (““MTGLQ”) and Ocwen Federal Bank, FSB (“Ocwen
FSB”). A notice of the claim transfer was filed with the court on October 28, 2004. As set forth
in the Limited Power of Attorney attached to the claim transfer notice, MTGLQ was identified as
the Trustee and servicer of the loan “‘to carry out the intent and purposes of [an agreement]
between Goldman Sachs Mortgage Company and Ocwen Federal Bank, FSB.” Through the
power of attorney, Ocwen was named the attorney-in-fact for MTGLQ.

Debtors completed their chapter 13 plan and received a discharge. The chapter 13
trustee’s final report, filed on June 14, 2007, indicates Ocwen was paid $18,016.20 on the
arrearage claim and $76,826.40 for the continuing monthly mortgage payments. Debtors’ case

was closed.

On October 12, 2007, Debtors reopened their case in order to obtain an order from the
court deeming the mortgage current. In an order dated June 30, 2008, the court found the

* Attached to the proof of claim is a note bearing Debtors names and signatures.
Following the note, where a copy of the mortgage is generally provided, is a copy of a different

note for unrelated parties.

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mortgage current as of June 30, 2007. The agreed order was signed by Debtors’ counsel; Martha
Spaner, counsel for MTGLQ and Ocwen FSB; and the trustee. The case was again closed.

On September 2, 2009, Debtors again reopened their bankruptcy case because the
mortgage company maintained a default existed on the account. Debtors filed the instant
adversary action on October 5, 2009 alleging the defendants were in contempt for violating the
discharge order. Deutsche Bank National Trust Company (“Deutsche”), as Trustee for the
registered holders of GSAMP Trust 2005-SEA1, Mortgage Pass-Through Certificates, Series
2005-SEA1 (“GSAMP”), filed an answer to the amended complaint. It is not clear how
Deutsche came to possess the note and/or mortgage, but in its Motion for Leave to File Answer
Instanter, dated March 1, 2010, it admits it “holds a mortgage loan against the property located at
244 Frederick Street, Lexington, Ohio 44904.” Deutsche is represented by the law firm of

Shapiro, Van Ess, Phillips & Barragate, LLP.

Debtors filed a motion for summary judgment on October 4, 2010. Although Defendant
obtained an extension of the deadline to respond to the motion, no response was filed.

ANALYSIS

Motions for summary judgment are governed by Federal Rule of Bankruptcy Procedure
7056, which adopts Federal Rule of Civil Procedure 56 into bankruptcy practice. According to
Rule 56(c)(2), summary judgment is granted when “the pleadings, the discovery and disclosure
materials on file, and any affidavits show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.” The moving party bears the initial
burden on a motion for summary judgment, tasked with the obligation of “identifying those
portions of [the record] which it believes demonstrate the absence of a genuine issue of material
fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the movant also bears the
burden of persuasion on an issue, this initial showing requires movant to demonstrate all
essential elements of its claim. See Prestige Capital Corp. v. Michigan Gage and Mfg., LLC,
2010 WL 2787438 (E.D. Mich. 2010) (reporter citation not yet available); Brixey v. Confer (In re
Confer), 277 B.R. 374 (Bankr. S.D. Ohio 2002). Once movant meets its initial burden on a
motion for summary judgment, “an opposing party may not rely merely on allegations or denials
in its own pleading; rather, its response must—by affidavits or as otherwise provided in this
rule—set out specific facts showing a genuine issue for trial.” Fed.R.Civ.P. 56(e)(2). In
reviewing a motion for summary judgment, a court must construe the evidence in the light most
favorable to the nonmoving party. Adickes v. S.H.Kress & Co., 398 U.S. 144, 158-59 (1970).

Although the motion is unopposed, Plaintiffs must demonstrate they are entitled to
judgment as a matter of law. This requires a showing not only that the law is in their favor, but
that the factual foundation can be construed in their favor. After reviewing the facts presented,

the court cannot conclude Debtors succeeded.

Sadly, the Court finds no fault in Debtors’ story. Their frustration is evident and this

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decision in no means discounts the Court’s sympathy to their dilemma. The Court is not saying
Debtors are not entitled to relief, but they have not demonstrated their right to relief through this

motion.

Deutsche admits it holds the mortgage. It is not clear when Deutsche acquired the
mortgage. If Deutsche acquired the mortgage after the actions complained of by Debtors, it
could not have willfully violated the injunction. Plaintiffs’ arguments suggest Ocwen is acting
on behalf of Deutsche, which is plausible, but the record is lacking. Debtors motion’ is almost
entirely focused on actions taken by Ocwen Loan Servicing LLC (“Ocwen’).’ On page one of the
motion for summary judgment, Debtors state “Defendant Deutsche Bank National Trust
Company and OCWEN Loan Servicing LLC admitted they are parties in interest at the present
time,” and refer to paragraph six of the answer filed by those parties. This statement is not
accurate. The only party that filed an answer was Deutsche. Ocwen has not responded. At no
point does Deutsche plead any association with Ocwen. There is absolutely nothing in the record
that shows Ocwen is an agent for Deutsche. At this point, the Court has a good foundation for a

case against Ocwen, but not against Deutsche.

On review of the record, the court is not satisfied that Ocwen was properly served. The
summons was executed to Ocwen at

Ocwen Loan Servicing
PO Box 785063
Orlando, FL 32878

First, pursuant to the claim transfer notice, the last address for MTGLQ/Ocwen in the record is:

MTGLQ Investors, L.P.
Ocwen Federal Bank, FSB c/o
12560 Ingenuity Drive
Orlando, FL 32826

This is the address used in the heading in a letter dated August 14, 2007. Other Ocwen
correspondence contains various addresses, including P.O. Box 24737, West Palm Beach, FL
33416-4737; a correspondence address: Research Department, Ocwen Loan Servicing, L.P., P.O.
Box 785035, Orlando, FL 32878-5055; and two payment addresses: 1661 Worthington Road,
Suite 100, West Palm Beach, FL 33409 and P.O. Box 6440, Carol Stream, IL 60197-6440. The
court cannot find any basis for use of the address utilized by Plaintiffs for service. Additionally,
independent research revealed that Ocwen Loan Servicing, LLC has a statutory agent in Ohio.

> This is the entity sued by Debtors in the amended complaint. The relationship between
Ocwen FSB, the entity named in the claim transfer in the main case, and Ocwen Loan Servicing,
LLC is not clear, although the court notes that the correspondence provided by Debtors is from

Ocwen Loan Servicing LLC.

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See Exhibit A. Plaintiffs did not serve the statutory agent. Consequently, the court is not
convinced Ocwen was afforded due process.

Lastly, MTGLQ was also a named defendant and has not responded to the amended
complaint. The motion for summary judgment contains no allegations against MTGLQ, but is
against Deutsche as the trustee for GSAMP. As a result, summary judgment against MTGLQ is

not well-taken.

CONCLUSION

While Plaintiffs may have a case for violation of the discharge injunction under 11 U.S.C.
§ 524(i), there are gaps in the record that make granting relief on this motion untenable. First,
there is no indication when Deutsche became trustee of the mortgage. Thus, the court cannot
determine if it is responsible for any of the acts complained of by Plaintiffs. Second, most of the
record contains evidence of actions by Ocwen. There is no connection between Ocwen and
Deutsche in the record. Further, Ocwen was not properly served. The motion for summary
judgment does not state a case against MTGLQ. Thus, Plaintiffs failed to demonstrate that they
are entitled to judgment as a matter of law on the present record.

An appropriate order shall be issued immediately.

Service List:

Robert Goldberger

13 Park Ave W

#300

Mansfield, OH 44902

Christian E. Niklas

Shapiro, Van Ess, Phillips & Barragate
4805 Montgomery Road

Suite 320

Norwood, OH 45212

Ocwen Loan Servicing LLC
c/o Martha Spaner

Shapiro & Felty LLP

1500 W Third St, Ste 400
Cleveland, OH 44113

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MTGLQ Investors, L.P.
Ocwen Federal Bank, FSB c/o
12560 Ingenuity Drive
Orlando, FL 32826

Ocwen Loan Servicing, L.P.
Research Dept.

P.O. Box 785035

Orlando, FL 32878-5055

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BS_QRY_BUS_INFORMATION1 http://www2.sos.state.oh.us/pls/portal/PORTAL_BS.B S QRY_ BUS...

JENNIFER BRUNNER
OHIO SECRETARY OF STATE

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PROMOTING BUSINESS GROWTH _

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LOAN Limited 2002 Details Details Details

SERVICING, Liability Delaware

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EXHIBIT

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