Opinion
19-P-1041
11-18-2020
SERGIO DESOUZA v. ONEWEST BANK GROUP, LLC, & others.
NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
The plaintiff mortgagor, Sergio DeSouza, appeals from a summary judgment entered in favor of the defendants, OneWest Bank Group, LLC; OneWest Bank, FSB (together, OneWest); IndyMac Financial Services, a division of OneWest (IndyMac); and Harmon Law Offices (Harmon). As we discuss in more detail below, DeSouza owned property located at 30 Hancock Street in Salem (property). OneWest held a mortgage on the property and conducted a foreclosure sale on September 30, 2009. Harmon served as its foreclosure counsel. Following the sale of the property, DeSouza brought this action alleging negligence; gross negligence; promissory estoppel; breach of contract; fraud, misrepresentation, and civil conspiracy; and violation of G. L. c. 93A, all in connection with the foreclosure and loan modification negotiations that preceded the foreclosure. On cross motions for summary judgment, a judge of the Superior Court determined, among other things, that because there was no dispute that DeSouza failed to comply with the terms of the preliminary loan modification agreement (trial period plan agreement or TPP), and furthermore, because even if he had, it was similarly undisputed that DeSouza did not qualify for a permanent loan modification as a result of his insufficient income, OneWest had a legitimate basis for denying the loan modification and proceeding to foreclose on the property. Consequently, the judge concluded, DeSouza had suffered no actual harm nor incurred any damages as a result of OneWest's conduct, and OneWest was entitled to summary judgment. The judge also allowed Harmon's motion for summary judgment on the ground, among others, that Harmon, as counsel to OneWest, owed no duty to DeSouza, had no contract with DeSouza, made no misrepresentations about the pending foreclosure, and did not engage in any conduct other than serving as OneWest's attorney. DeSouza's cross motion for summary judgment was denied and this appeal ensued. We affirm.
Since OneWest and IndyMac are related entities, we refer to them both as OneWest unless otherwise noted.
Background. "We summarize the undisputed facts contained in the summary judgment record." Boazova v. Safety Ins. Co., 462 Mass. 346, 347 (2012).
DeSouza purchased the property, a three-unit residence, on August 6, 2004, and financed the purchase with a mortgage. In December 2005, DeSouza refinanced the mortgage with a loan from IndyMac. In December 2006, DeSouza conveyed the property by quitclaim deed to Griffo Realty Trust, with himself as trustee. This deed was recorded at the registry of deeds. About two years later, on September 2, 2008, DeSouza received a notice that he was in default of the loan terms for failure to pay monthly installments.
In May 2009, the mortgage was assigned to OneWest. In June 2009, DeSouza and OneWest executed an agreement under the Home Affordable Modification Program (HAMP). The agreement included a TPP, which provided for temporary, reduced mortgage payments. The TPP specified that these payments could become permanent if DeSouza complied with certain prerequisites, including the submission of (1) an affidavit explaining his financial hardship, (2) Internal Revenue Service form 4506-T (request for transcript of tax return), (3) a profit and loss statement, and (4) because DeSouza had rental income, Federal tax returns from the most recent two years. The deadline for submission of the documents described above was June 23, 2009. In addition, DeSouza was required to make timely monthly payments in the amount of $1,897.97 for three months.
We described the history and purposes of HAMP in Santos v. U.S. Bank Nat'l Ass'n, 89 Mass. App. Ct. 687, 688-689 (2016).
DeSouza submitted his first two payments (on July 1 and July 31, 2009), and some of the required documents, but did not provide the required income verification information by the June 23, 2009 deadline. In particular, he did not submit a profit and loss statement or his tax returns. By letter dated July 8, 2009, DeSouza was notified that a foreclosure sale had been scheduled for August 10, 2009. The letter was sent by Harmon on behalf of OneWest. However, because DeSouza was undergoing a loan modification review, the foreclosure sale was canceled.
A few weeks later, by letter dated August 21, 2009, OneWest informed DeSouza that his application for a loan modification had been denied because he had failed to submit the required income documentation. OneWest then resumed the foreclosure process and by letter dated August 26, sent by Harmon on behalf of OneWest, DeSouza's attorney was notified that a foreclosure sale was scheduled for 2 P.M. on September 30, 2009.
Between September 22, 2009, and September 30, 2009, DeSouza's attorney contacted OneWest numerous times by telephone to determine whether the foreclosure sale could be postponed. Various OneWest representatives provided inconsistent and erroneous information about the scheduled foreclosure sale. During one conversation, a OneWest representative said that a foreclosure sale had not been scheduled and in another, DeSouza's attorney was advised that the sale, which was scheduled for September 30, could be postponed if DeSouza submitted additional income documentation. DeSouza's attorney then sent the requested information, including DeSouza's 2008 and 2009 tax returns via facsimile. Thereafter, DeSouza's attorney was twice informed, erroneously, that no foreclosure sale was scheduled for September 30.
Although the judge wrote in his memorandum of decision and order that during this call the OneWest representative stated that "the September 30th sale could not be put on hold," we note that in his affidavit submitted in connection with the summary judgment proceedings, DeSouza's attorney averred that the OneWest representative said, "[O]nce he receives the documents they can cancel the foreclosure." Viewing the evidence in the light most favorable to DeSouza, see Boazova, 462 Mass. at 350, we accept DeSouza's attorney's representation.
Meanwhile, on or about September 28, 2009, OneWest completed its review of DeSouza's financial information and determined that DeSouza did not qualify for a HAMP loan modification because his income was insufficient. Based on the information provided by DeSouza, OneWest calculated DeSouza's monthly income as $3,264. It was not disputed that, even if DeSouza's loan were modified as proposed, namely by reducing the interest rate to two percent, extending the loan term to forty years (from thirty years), and reducing the principal by thirty percent, the monthly payment on DeSouza's loan would be $2,173.72, an amount equal to sixty-seven percent of DeSouza's monthly income. HAMP guidelines require a debt-to-income ratio not to exceed thirty-one percent. Because DeSouza's debt-to-income ratio exceeded thirty-one percent, DeSouza did not qualify for a loan modification. OneWest informed DeSouza's attorney that DeSouza did not qualify for a HAMP loan modification, and a foreclosure sale was conducted on September 30, 2009. The property was sold to a third party. DeSouza then brought this action in October 2009.
DeSouza filed his original complaint and his amended complaint solely in his capacity as trustee of the Griffo Realty Trust (trust). A judge of the Superior Court granted the defendants' motions for summary judgment and entered judgment in their favor on the grounds that, as trustee, DeSouza lacked standing. On appeal, a panel of this court dismissed the case because no final judgment had been entered on a counterclaim and it appeared that the trust did not have standing. See DeSouza vs. OneWest Bankgroup, LLC, Mass. App. Ct., No. 15-P-832 (Aug. 25, 2016). DeSouza then filed his second amended complaint individually and in his capacity as trustee on October 31, 2016.
Discussion. "Summary judgment is appropriate where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See Mass. R. Civ. P. 56 (c), as amended, 436 Mass. 1404 (2002)." Boazova, 462 Mass. at 350. "We review a decision to grant summary judgment de novo." Id. "In a case like this one where both parties have moved for summary judgment, the evidence is viewed in the light most favorable to the party against whom judgment [has entered]" (quotation omitted). Id. Where, as here, the plaintiff has the burden of proof on his claims, the defendant must establish that the plaintiff "has no reasonable expectation of proving an essential element of [his] case" (quotation omitted), Ravnikar v. Bogojavlensky, 438 Mass. 627, 629 (2003), and "that there is no triable issue of fact," Ng Bros. Constr., Inc. v. Cranney, 436 Mass. 638, 644 (2002).
1. OneWest. The judge concluded that DeSouza's claims against OneWest fail as a matter of law in the absence of any evidence that (1) DeSouza suffered actionable harm, (2) OneWest breached the TPP, or (3) DeSouza reasonably relied to his detriment on OneWest's erroneous statements regarding the postponement of the foreclosure sale. Although our review is de novo, we agree with the judge's conclusions.
As the judge correctly observed, all of DeSouza's claims require proof of harm or injury. See Foster v. Commissioner of Correction (No. 1), 484 Mass. 698, 712 (2020) (injunctive relief); Balles v. Babcock Power Inc., 476 Mass. 565, 573 (2017) (fraud); Bulwer v. Mount Auburn Hosp., 473 Mass. 672, 690 (2016) (breach of contract); Donovan v. Philip Morris USA, Inc., 455 Mass. 215, 221-222 (2009) (actions in negligence); Nessralla v. Peck, 403 Mass. 757, 761 (1989) (specific performance); DiMarzo v. American Mut. Ins. Co., 389 Mass. 85, 93 n.7 (1983) (G. L. c. 93A); Weiner v. Lowenstein, 314 Mass. 642, 646 (1943) (civil conspiracy to defraud); Barrie-Chivian v. Lepler, 87 Mass. App. Ct. 683, 685-686 (2015) (promissory estoppel); Zimmerman v. Kent, 31 Mass. App. Ct. 72, 77 (1991) (misrepresentation).
First, there is no support in the record for DeSouza's claim that the TPP was a binding agreement. The undisputed facts demonstrate that the TPP was a temporary agreement, and compliance with its terms was a prerequisite to obtaining a HAMP loan modification. The TPP states that it is "the first step" in obtaining a loan modification, and that a modification can be obtained only after a borrower's income and eligibility are confirmed and only if the borrower successfully completes the trial period. The TPP further states that if a borrower fails to comply with its terms, "your loan will be enforced according to its original terms, which could include foreclosure." The TPP also refers to a separate modification agreement, stating that "[o]nce we are able to confirm your income and eligibility for the program, we will finalize your modified loan terms and send you a modification agreement." Thus, the TPP, by its terms, does not support DeSouza's contention that it was a final, binding loan modification agreement.
In addition, the record does not support DeSouza's claim that he was in complete compliance with the terms of the TPP, even as a provisional agreement. He cannot point to any documents in the record to demonstrate that he provided the required income documentation by the June 23, 2009 deadline. In fact, it is undisputed that DeSouza submitted his tax returns and a profit and loss statement three months after the deadline.
DeSouza's reliance on the affidavit submitted by Erica Johnson-Seck (Johnson-Seck affidavit), a vice-president at IndyMac, to support his claim that he was in compliance, is misplaced. Although the Johnson-Seck affidavit refers to IndyMac's receiving "completed financial information" from DeSouza, in context, this statement does not establish DeSouza's compliance with the TPP's requirements. The remainder of the Johnson-Seck affidavit makes clear that the materials submitted by DeSouza's attorney were insufficient. For example, there was no profit and loss statement or up-to-date proof of income. In sum, because DeSouza failed to comply with the terms of the TPP requiring him to submit the required documents by the June 23, 2009 deadline, OneWest had the authority to deny him a final, permanent loan modification and to cancel the TPP.
Second, even if DeSouza had submitted the required materials, the record does not support his contention that OneWest was required to enter into a loan modification agreement with him. As the TPP made clear, compliance with its terms was the first step to obtaining a loan modification. A modification agreement would follow only after OneWest had "confirmed [DeSouza's] income and eligibility." Despite receiving DeSouza's income documentation after the June 23, 2009 deadline specified in the TPP and after OneWest had canceled the TPP, OneWest proceeded to evaluate DeSouza's income and eligibility for a loan modification. This analysis revealed that, late compliance with the TPP notwithstanding, DeSouza did not qualify for a loan modification because his income was insufficient. Thus, OneWest did not breach any contract or otherwise act negligently when it canceled the TPP and declined to enter into a permanent loan modification agreement.
The parties further dispute whether DeSouza's failure to disclose that he transferred the property to himself as trustee of the Griffo Realty Trust provided an independent basis for OneWest to deny him a loan modification. Because we conclude that DeSouza did not qualify for a loan modification due to his insufficient income, we need not reach this issue. Nevertheless, we note that the TPP states that if any of DeSouza's certifications are found to be untrue, the loan modification may be denied. As part of executing the TPP, DeSouza represented that "[t]here has been no change in the ownership of the Property since I signed the Loan Documents." This representation was false.
Lastly, DeSouza was not harmed by OneWest's erroneous representations regarding postponement of the foreclosure sale for the simple reason that foreclosure was inevitable. Simply put, because OneWest had the authority to proceed with a foreclosure sale of the property, DeSouza cannot show that the erroneous representations of OneWest's employees caused him any harm.
The judge pointed out additional infirmities with DeSouza's claims against OneWest, including the absence of evidence to establish (1) intentionally false statements to support his fraud claim; or (2) any agreement or promise that bound OneWest to enter into a loan modification to support his contract or estoppel claims. We agree with the judge's conclusion that the absence of evidence to support these claims constitutes an independent basis for granting OneWest's motion for summary judgment.
2. Harmon. The entry of summary judgment in favor of Harmon also was proper. A law firm's representation of a foreclosing lender does not by itself form a basis for liability. See Galiastro v. Mortgage Elec. Registration Sys., Inc., 467 Mass. 160, 174 (2014) (dismissing lawsuit against mortgagee's attorney because allegations that attorney represented lender "do not alone suggest a plausible claim for relief"). Because DeSouza has no reasonable expectation of proving that Harmon owed him a duty or engaged in any conduct or made any representations beyond representing OneWest that would give rise to liability, we affirm the summary judgment for Harmon.
Harmon's request for appellate attorney's fees and costs is denied.
Judgment affirmed.
By the Court (Vuono, Sullivan & Englander, JJ.),
The panelists are listed in order of seniority. --------
/s/
Clerk Entered: November 18, 2020.