Williams v. Lakeview Loan Servicing LLC

694 F.Supp.3d 874

Ursula N. WILLIAMS, et al., Plaintiffs, v. LAKEVIEW LOAN SERVICING LLC and Loancare, LLC, Defendants.

Civil Action No. 4:20-cv-01900

United States District Court, S.D. Texas, Houston Division

Signed September 26, 2023

Britney A Littles, James Lawrence Kauffman, Bailey & Glasser LLP, Washington, DC, Edwin Lee Lowther, III, Joseph Henry Bates, III, Randall Keith Pulliam, Carney Bates & Pulliam, PLLC, Little Rock, AR, Victor S. Woods, Bailey Glasser LLP, Charleston, WV, William Fred Hagans, William G. Hagans, Hagans Montgomery Hagans, Houston, TX, for Plaintiffs.

Erica Calderas, Hahn Loeser et al., Cleveland, OH, Michael Gleason, Hahn Loeser et al., San Diego, CA, Mary E. Baker, Tiffany Serbousek Gilbert, Fidelity National Law Group, Plano, TX, Tiffany Gilbert, Fidelity National Law Group, Dallas, TX, for Defendant Lakeview Loan Servicing, LLC.

Erica Calderas, Hahn Loeser et al., Cleveland, OH, Michael Gleason, Hahn Loeser et al., San Diego, CA, Mary E. Baker, Tiffany Serbousek Gilbert, Fidelity National Law Group, Plano, TX, for Defendant Loancare, LLC.

ORDER ADOPTING MEMORANDUM AND RECOMMENDATION

Charles Eskridge, United States District Judge

Plaintiff Williams initiated this class action lawsuit against Defendants Lakeview Loan Servicing, LLC and LoanCare, LLC in May 2020, asserting that collection of pay-to-pay fees by Defendants violates the Texas Debt Collection Act (TDCA). Dkt 1. The matter was referred for pretrial management to Magistrate Judge Christina A. Bryan. Dkt 92.

Pending is a Memorandum and Recommendation by Magistrate Judge Christina A. Bryan on the parties' Cross-Motions for Summary Judgment. Dkt 125. She recommends denying the motion by Defendants and granting the motion by Plaintiffs, thus resolving certain issues as a matter of law and deferring resolution of other issues for trial or other future proceedings.

The district court reviews de novo those conclusions of a magistrate judge to which a party has specifically objected. See FRCP 72(b)(3) & 28 USC § 636(b)(1)(C); see also United States v Wilson, 864 F.2d 1219, 1221 (5th Cir. 1989, per curiam). The district court may accept any other portions to which there's no objection if satisfied that no clear error appears on the face of the record. See Guillory v PPG Industries Inc., 434 F.3d 303, 308 (5th Cir. 2005), citing Douglass v United Services Automobile Association, 79 F.3d 1415, 1430 (5th Cir. 1996, en banc); see also FRCP 72(b) advisory committee note (1983).

Defendants purported to file twenty-four distinct objections, cramming them into twenty-five pages that largely reiterate their original arguments. Dkt 129. To the contrary, Rule 72(b)(2) of the Federal Rules of Civil Procedure requires parties to file "specific written objections to the proposed findings and recommendations." By this standard, it isn't enough to dump a multifarious collection of issues on the district court with argument that says, essentially, "Here, you figure it out." But that, in the main, is all that's been done here.

Certain standards from the Fifth Circuit are clear in this regard. For instance, the findings and conclusions of the Magistrate Judge needn't be reiterated on review. See Koetting v. Thompson, 995 F.2d 37, 40 (5th Cir. 1993). Likewise, objections that are frivolous, conclusory, or general in nature needn't be considered. See Battle v United States Parole Commission, 834 F.2d 419, 421 (5th Cir. 1987); United States v Ervin, 2015 WL 13375626, at *2 (WD Tex.), quoting Arbor Hill Concerned Citizens Neighborhood Association v County of Albany, 281 F.Supp.2d 436, 439 (NDNY 2003). And de novo review isn't invoked by simply re-urging arguments contained in the underlying motion. Edmond v Collins, 8 F.3d 290, 293 n7 (5th Cir. 1993); see also Smith v Collins, 964 F.2d 483, 485 (5th Cir. 1992) (finding no error in failure to consider objections because plaintiff "merely reurged the legal arguments he raised in his original petition"); Williams v Woodhull Medical & Mental Health Center, 891 F Supp 2d 301, 310-11 (EDNY 2012) (de novo review not warranted for conclusory or general objections or which merely reiterate original arguments).

Simply put, where the objecting party makes only conclusory or general objections, or simply reiterates its original arguments, review of the memorandum and recommendation may permissibly be for clear error only. That's the situation here. Reasonable depth and explanation were needed to properly present any one of these issues, if de novo review was genuinely desired.

No clear error appears upon review and consideration of the Memorandum and Recommendation, the record, and the applicable law.

Even though that's all the review that was required, the Court has nevertheless also examined the objections de novo and finds that they lack merit for the reasons stated by the Magistrate Judge.

The objections by Defendants are OVERRULED. Dkt 129.

The Memorandum and Recommendation of the Magistrate Judge is ADOPTED as the Memorandum and Order of this Court. Dkt 125.

The motion for summary judgment by Defendants is DENIED. Dkt 102.

The motion for summary judgment by Plaintiffs is GRANTED. Dkt 104.

For the avoidance of doubt, the ruling in favor of Plaintiffs is without prejudice to consideration at the damages stage of whether (1) certain Plaintiffs are precluded from recovery due to loan modifications by PHH/Ocwen, on their own or through a settlement class, to expressly authorize the pay-to-pay fees; (2) certain Plaintiffs are precluded from recovery because they did not pay the pay-to-pay fee within the statute of limitations; and (3) certain Plaintiffs are precluded from recovery because they have filed bankruptcy.

SO ORDERED.

MEMORANDUM AND RECOMMENDATION

Christina A. Bryan United States Magistrate Judge

This class action lawsuit regarding mortgage loan fees is before the Court on the parties' Cross-Motions for Summary Judgment.¹ ECF 102; ECF 104. The Court heard oral argument on the record in open court on June 1, 2023. Having considered the parties' submissions, arguments of counsel at the hearing, and the law, the Court RECOMMENDS that Defendants' Motion for Summary Judgment be DENIED, and that Plaintiffs' Motion for Summary Judgment be GRANTED to the extent set forth below.

I. Factual and Procedural Background

The following facts, established by the record, are undisputed. In January 2012, Plaintiff Ursula Nichole Williams obtained an FHA loan in the amount of $237,077.00 to purchase her home at 3281 Stampede Drive in Bryan, Texas, where she continues to live with her husband. The mortgage was originally issued and serviced by PHH Mortgage Corporation. Lakeview Loan Servicing, LLC acquired master servicing rights in 2015 and executed a Sub-servicing Agreement with LoanCare, LLC. Williams routinely made her monthly mortgage payments by phone (even after filing this suit), and LoanCare collected a fee of $12.00 each time she did so. Williams refers to the $12.00 fee as a "pay-to-pay fee," and the Court also uses that phrase to refer to the fees at issue in this case.

On May 29, 2020, Williams filed this suit against Lakeview and LoanCare on behalf of herself and others similarly situated asserting that collection of the pay-to-pay fee from FHA borrowers, like herself, breached the borrowers' mortgage contracts and violated the Texas Debt Collection Act (TDCA). ECF 1. In August 2020, mere months after Williams filed this suit, LoanCare applied $456.00 directly to her next-due mortgage payment in what LoanCare characterizes as a refund of pay-to-pay fees it had collected from her to date. On March 30, 2021, LoanCare applied an additional $24.00 to Williams's loan balance due to additional fees it represents were collected in error, for a total credit to Williams's account of $480.00. ECF 102-2 at 60. Furthermore, LoanCare voluntarily stopped collecting all pay-to-pay fees in October 2020 following enactment of the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act. ECF 102-2 at 11.

Plaintiff Williams filed a Motion for Class Certification on April 2, 2021. ECF 72. On March 30, 2022, District Judge Charles Eskridge adopted Magistrate Judge Sam S. Sheldon's recommendation and certified a class action for violation of the TDCA for two classes of plaintiffs:

Lakeview Class: All persons in the United States (1) with an FHA-insured mortgage executed on or after March 1, 1990, securing a property located in the State of Texas (2) originated or serviced by Lakeview Loan Servicing LLC and (3) subserviced by LoanCare LLC and (4) who paid one or more pay-to-pay fee to LoanCare during the applicable statute of limitations period through March 30, 2022.

LoanCare Class: All persons in the United States (1) with an FHA-insured mortgage executed on or after March 1, 1990, securing a property located in the State of Texas (2) serviced or subserviced by LoanCare LLC and (3) who paid one or more pay-to-pay fee to LoanCare during the applicable statute of limitations period through March 30, 2022.

ECF 91 at 11. After the District Court granted class certification, Defendants filed a motion for leave in the Fifth Circuit to appeal the class certification Order under Federal Rule of Civil Procedure 23(f). The Fifth Circuit denied the motion. Williams v. Lakeview Loan Servicing LLC, No. 22-90019 (5th Cir. May 19, 2022). After the Court denied class certification for the breach of contract claims against Lakeview and LoanCare, Plaintiffs voluntarily dismissed those claims. ECF 35; ECF 93. The only claim remaining in the suit is the claim for violation of § 392.303(a)(2) of the TDCA, which prohibits debt collectors from:

collecting or attempting to collect interest or a charge, fee, or expense incidental to the obligation unless the interest or incidental charge, fee, or expense is expressly authorized by the agreement creating the obligation or legally chargeable to the consumer.

The parties have filed cross motions for summary...