Burch v. HSBC Bank

JAMES and TERRI BURCH,Husband and Wife PLAINTIFFS/COUNTER-DEFENDANTS v. HSBC BANK, NATIONAL ASSOCIATION,AS TRUSTEE FOR THE CERTIFICATEHOLDERSOF ACE SECURITIES CORP. HOME EQUITYLOAN TRUST, SERIES 2006-NC3 ASSET BACKEDPASS-THROUGH CERTIFICATES, andSELECT PORTFOLIO SERVICING DEFENDANTS/COUNTER-PLAINITFFS

Case No. 4:15-cv-00036-KGB

UNITED STATES DISRICT COURT EASTERN DISTRICT OF ARKANSAS WESTSERN DIVISION

March 31, 2016

OPINION AND ORDER

Plaintiffs James and Terri Burch bring this action against defendants HSBC Bank, National Association, as Trustee for the Certificate Holders of Ace Securities Corp. Home Equity Loan Trust, Series 2006-NC3 Asset Backed Pass-Through Certificates ("HSBC Bank"), and Select Portfolio Servicing, Inc. ("SPS") and seek a declaratory judgment that the statute of limitations bars defendants from foreclosing on the Burches' property (Dkt. No. 2). The Burches also state a claim for promissory estoppel. Defendants have counterclaimed for judicial foreclosure and a declaratory judgment that the statute of frauds does not bar foreclosure (Dkt. No. 4).

Before the Court is defendants' motion for summary judgment (Dkt. No. 15). The Burches have responded (Dkt. No. 20), and defendants have replied (Dkt. No. 21). As an initial matter, the Burches' response to defendants' motion for summary judgment is not in compliance with the Local Rules of this Court. Pursuant to Local Rule 56.1(b), a party opposing a summary judgment motion "shall file, in addition to any response and brief, a separate, short and concise statement of the material facts as to which it contends a genuine dispute exists to be tried." The Burches filed a single, combined response. Despite the Burches' failure to comply with Local Rule 56.1, the Court will consider the Burches' response.

For the reasons that follow, the Court grants defendants' motion for summary judgment (Dkt. No. 15).

I. Factual Background

The following facts are taken from defendants' Local Rule 56.1 statement of facts (Dkt. No. 17), unless otherwise noted by specific citation. The Burches concede the majority of the facts asserted by defendants.

On or about August 4, 2006, Ms. Burch executed a promissory note ("the Note") in the original principal amount of $147,800.00 payable to the Bank of England Mortgage Company d/b/a England Lending ("Bank of England") as lender on a mortgage loan secured by real property located at 2000 Osage Drive, North Little Rock, Arkansas 72116 (the "Property"). Concurrently with the execution of the Note, the Burches executed a Mortgage Security Instrument (the "Mortgage," and together with the Note, the "Loan Agreement") granting the Bank of England and its successors and assigns a lien on the Property to secure payment of the Note. The Mortgage was recorded in Pulaski County, Arkansas, as instrument number 2006063133.

The Note and Mortgage were subsequently assigned to New Century Mortgage Corporation. Defendant HSBC Bank is the current holder and owner of the Note and Mortgage, as evidenced by a written Assignment of Mortgage, recorded in Pulaski County as instrument number 2011062203, and an indorsement in blank on the Note. Defendant SPS services the Burches' loan on behalf of HSBC Bank.

Under the terms of the Loan Agreement, Ms. Burch was required to pay when due the principal and interest on the debt evidenced by the Note, as well as any applicable charges and fees due under the Note. The Loan Agreement further provides that, should Ms. Burch fail to make payments on the Note as they become due and payable or fail to comply with any or all of the covenants and conditions of the deed of trust, then defendants may enforce the deed of trust by selling the Property according to law and in accordance with the provisions set out in the Loan Agreement.

The Burches admit default on payments required under the Loan Agreement. According to defendants, the Burches have not made a payment on the Loan Agreement in more than five years, and the Loan Agreement is due for July 2009 and all subsequent monthly payments. The Burches contend that they first became in arrears in December 2008 and submit in support an affidavit from Ms. Burch (Dkt. No. 20, ¶ 2; Dkt. No. 20-1).

On November 16, 2012, defendants mailed to Ms. Burch, as the sole borrower on the Note, a Notice of Default and Right to Cure ("Notice of Default"), which was sent to her at the Property address. Notice of Acceleration was mailed to both Ms. Burch and Mr. Burch on or about February 5, 2014, at the Property address.

Defendants executed their Mortgagee's Notice of Default and Intention to Sell ("Notice to Sell") on or about September 11, 2014, which was recorded in Pulaski County as instrument number 2014052966. The Notice to Sell was mailed to both Ms. Burch and Mr. Burch on or about February 5, 2014, at the Property address. On or about October 30, 2014, defendants executed their Amended Mortgagee's Notice of Default and Intention to Sell ("Amended Notice to Sell") on or about October 30, 2014, and mailed via certified mail the Amended Notice to Sell to the Burches at the Property address. Defendants executed their Second Amended Mortgagee'sNotice of Default and Intention to Sell ("Second Amended Notice to Sell") on or about December 18, 2014.

At least $259,508.02 was due on the loan as of February 5, 2015. The Burches filed this suit in Pulaski County, Arkansas, on December 15, 2014, in an attempt to delay the foreclosure on the Property.

According to the Burches and Ms. Burch's affidavit, the Burches first became in arrears on or around December 2008, and in the spring of 2009, the Burches received communication from lenders stating that the loan in question was in default and that the entire amount was past due. Defendants object to the Court's consideration of portions of Ms. Burch's affidavit. The Burches also contend that SPS, as the servicer of the Burches' loan on behalf of HSBC Bank, released the lien on the Burches' property, citing in support a February 24, 2015, letter from SPS referencing account number 001395283 (Dkt. No. 20-2).

II. Summary Judgment Standard

Summary judgment is proper if the evidence, when viewed in the light most favorable to the nonmoving party, shows that there is no genuine issue of material fact and that the defendant is entitled to entry of judgment as a matter of law. Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A factual dispute is genuine if the evidence could cause a reasonable jury to return a verdict for either party. Miner v. Local 373, 513 F.3d 854, 860 (8th Cir. 2008). "The mere existence of a factual dispute is insufficient alone to bar summary judgment; rather, the dispute must be outcome determinative under the prevailing law." Holloway v. Pigman, 884 F.2d 365, 366 (8th Cir. 1989).

However, parties opposing a summary judgment motion may not rest merely upon the allegations in their pleadings. Buford v. Tremayne, 747 F.2d 445, 447 (8th Cir. 1984). Theinitial burden is on the moving party to demonstrate the absence of a genuine issue of material fact. Celotex Corp., 477 U.S. at 323. The burden then shifts to the nonmoving party to establish that there is a genuine issue to be determined at trial. Prudential Ins. Co. v. Hinkel, 121 F.3d 364, 366 (8th Cir. 2008). "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

III. Evidentiary Objections

Defendants raise several objections to Ms. Burch's affidavit submitted in support of the Burches' response to defendants' motion for summary judgment (Dkt. No. 20-1). In paragraph 3 of her affidavit, Ms. Burch contends she began receiving sometime early in 2009 foreclosure notices from her lender, including a notice that her entire mortgage was due in full. Defendants object that Ms. Burch's affidavit makes bald assertions without attaching any documentary evidence. As discussed in more detail below, the Court agrees with defendants that Ms. Burch may not create a genuine issue of material fact with regard to written documents based solely on allegations in her affidavit, when no documents are attached. "When written documents are relied on, they must be exhibited in full. The statement of the substance of written instruments or of affiant's interpretation of them . . . are not sufficient." N. Dakota State Univ. v. United States, 255 F.3d 599, 607 (8th Cir. 2001) (quoting Sprague v. Vogt, 150 F.2d 795, 800 (8th Cir. 1945)).

In paragraph 6 of her affidavit, Ms. Burch claims that her lender told her that, since she was in arrears and based on her income, she would qualify for loan modification. Defendants object, arguing that this paragraph is barred by the statute of frauds, Arkansas Code Annotated §4-59-101(a). In this Court's view, this objection is more appropriately addressed as a legal argument; the Court will consider it and analyze it along with the merits of the motion.

In paragraph 7 of her affidavit, Ms. Burch claims that, when she was told she would qualify for a loan modification, she disposed of the previous communications regarding foreclosure from her lender. Defendants object to paragraph 7 on the same grounds as they object to paragraph 1. Defendants also object to paragraph 7 based on the statute of frauds. For the reasons explained, the Court agrees that Ms. Burch may not create a genuine issue of fact by merely citing or summarizing what she contends regarding documents that are not attached to her affidavit or submitted in the record, and the Court determines that defendants' statute of frauds objection is more appropriately addressed by the Court as a legal argument.

In paragraph 11 of her affidavit, Ms. Burch claims that, after March 2010, she "again entered the modification process only to be notified that [she] was not approved several years later." (Dkt. No. 20-1). As with paragraphs 1 and 7, defendants object that this...