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Harte v. Ocwen Financial Corp.

United States District Court, E.D. New York

March 30, 2018

DEBORAH HARTE, on behalf of herself and all others similarly situated, Plaintiff,
v.
OCWEN FINANCIAL CORP. and OCWEN LOAN SERVICING, LLC, Defendants.

          MEMORANDUM & ORDER

          MARGO K. BRODIE, United States District Judge.

         Plaintiff Deborah Harte commenced this action in New York state court on behalf of herself and a nationwide class of similarly situated homeowners, alleging that Defendants Ocwen Financial Corporation (“OFC”) and Ocwen Loan Servicing, LLC (“OLS”) made misrepresentations to borrowers in violation of New York statutory and common law. (Compl. 1, annexed to Notice of Removal as Ex. A, Docket Entry No. 1.)[1] Currently before the Court is Plaintiff's motion for class certification and Defendants' motion for summary judgment, both of which were referred to Magistrate Judge Ramon E. Reyes, Jr. for a report and recommendation. (Order dated June 22, 2017.)

         By report and recommendation dated February 8, 2018, Judge Reyes recommended that the Court deny Defendants' motion for summary judgment as to Plaintiff's claim pursuant to section 349 of New York's General Business Law (“GBL”) for “dual tracking, ”[2] and grant Plaintiff's motion to certify a dual tracking class (the “R&R”). (R&R 20-23, Docket Entry No. 143.) Judge Reyes also recommended that the Court grant Defendants' motion as to Plaintiff's GBL section 349 claim for failure to provide pre-foreclosure notice, [3] and as to Plaintiff's promissory estoppel claim under New York state common law. (Id. at 14-20.) For the reasons set forth below, the Court adopts the R&R as to Plaintiff's promissory estoppel claim, and as to Plaintiff's section 349 claim for failure to provide pre-foreclosure notice. The Court reserves decision on Defendants' motion for summary judgment as to Plaintiff's section 349 dual tracking claim, and Plaintiff's motion for class certification of this claim.

         I. Background

         The Court assumes familiarity with the facts and procedural posture as discussed in its prior decisions in the case[4] and the R&R, and provides only a summary of the pertinent facts and procedural background.

         a. Factual background

         The following facts are undisputed unless otherwise noted. On September 15, 2005, Plaintiff obtained a mortgage loan from the federal Mortgage & Investment Corporation in the amount of $420, 000, and executed a mortgage on her Brooklyn, New York home as security for the loan. (Defs. Statement of Material Facts Pursuant to Local R. 56.1 (“Defs. 56.1”) ¶¶ 32-33, Docket Entry No. 136-4; Pl. Resp. to Defs. 56.1 and Counterstatement of Material Facts (“Pl. 56.1”) ¶¶ 32-33, Docket Entry No. 137-3.)

         In late 2006 to early 2007, Plaintiff began experiencing difficulties making her mortgage payments. (Defs. 56.1 ¶ 35; Pl. 56.1 ¶ 35.) After taking initial steps to manage the debt, [5] Plaintiff received a letter from OLS[6] in October of 2011, offering to “work with [her] to identify a solution that will resolve [her] delinquent mortgage loan” and “presenting [her] with some of the ways [OLS] may be able to help.”[7] (Pl. 56.1 ¶ 72; Defs. Resp. to Pl. 56.1 (“Defs. 56.1 Resp.”) ¶ 72, annexed to Defs. Mot. to Seal as Ex. F, Docket Entry No. 136-6; Letter dated Oct. 21, 2011, annexed to Decl. of Robert I. Harwood in Opp'n to Defs. Mot. (“Harwood Opp'n Decl.”) as Ex. 6, Docket Entry No. 137-4.)

         By letter dated December 5, 2011, Plaintiff was notified by a law firm engaged by OLS that her mortgage loan had been referred for foreclosure. (Defs. 56.1 ¶ 44; Pl. 56.1 ¶ 44.) The letter states, among other things, that “[w]hile the foreclosure process has begun, you may still have foreclosure prevention alternatives available to you, ” and lists “forbearance, repayment, [and] modification” as options that may enable distressed borrowers to stay in their homes. (Letter dated Dec. 5, 2011, annexed to First Decl. of Brian M. Forbes (“First Forbes Decl.”) as Ex. 11, Docket Entry No. 136-2.)

         On December 28, 2011, Plaintiff submitted an initial application for a loan modification, including certain supporting documentation. (Defs. 56.1 ¶ 45; Pl. 56.1 ¶ 45.) The first page of the application states that Plaintiff “must submit all the [requested] documentation, ” that failure to do so would result in her application not being reviewed, and that:

[t]he review process may take up to [thirty] days after the receipt of the completed package. During this time, Ocwen will not delay or stop any collections or legal activity on your loan. Therefore, it is important to complete the package and fax/email it back to Ocwen as quickly as possible.

(Defs. 56.1 ¶ 46; Pl. 56.1 ¶ 46; see also Loan Modification App. at 3, [8] annexed to Forbes Decl. in Supp. of Defs. Opp'n to Pl. Mot. (“Forbes Opp'n Decl.”), Docket Entry No. 121-10.) The parties dispute whether Plaintiff's application as initially submitted was complete. (Compare Defs. 56.1 ¶ 47 with Pl. 56.1 ¶ 47, 73-81.) Beginning with a letter dated January 2, 2012 and continuing through April 24, 2012, OLS sent Plaintiff multiple letters claiming that her application was incomplete and requesting additional supporting documents. (Defs. 56.1 ¶ 48.) Plaintiff does not dispute receiving such letters, but maintains that (1) she submitted all required documentation with her initial application, (Pl. 56.1 ¶ 48), (2) she nevertheless submitted the additional documents requested in OLS' subsequent letters, and (3) OLS' own records reflect that, in one instance, it “found” the documents it claims that Plaintiff failed to submit, (id. ¶¶ 76- 81).

         During this period, Plaintiff also received “at least [ten]” letters providing information about the loan modification process. (Defs. 56.1 ¶¶ 49-50, 54; Pl. 56.1 ¶¶ 49-50, 54.) In a section entitled “Frequently Asked Questions, ” the letters state: “[w]hile we consider your request [for a loan modification], we will not initiate a new foreclosure action and we will not move ahead with the foreclosure sale on an active foreclosure so long as we have received all required documents and you have met the eligibility requirements.” (Defs. 56.1 ¶ 50; Pl. 56.1 ¶ 50.) The letters further explain that “[i]f your loan has been previously referred to foreclosure, we will continue the foreclosure process while we evaluate your loan for HAMP.[9] However, no foreclosure sale will be conducted and you will not lose your home during the HAMP evaluation.” (Defs. 56.1 ¶ 51; Pl. 56.1 ¶ 51.) The letters also state the following:

Important - Do not ignore foreclosure notices. The HAMP evaluation and the process of foreclosure may proceed at the same time. You may receive foreclosure/eviction notices . . . or you may see steps being taken to proceed with a foreclosure sale on your home. While you will not lose your home during the HAMP evaluation, to protect you [sic] rights . . . you may need to respond to these foreclosure notices or take other actions.

(Defs. 56.1 ¶ 52; Pl. 56.1 ¶ 52.) Finally, the letters state:

If you do not qualify for HAMP, or if you fail to comply with the terms of the Trial Period Plan, you will be sent a Non-Approval Notice. In most cases, you will have [thirty] days to review the reason for non-approval and contact us to discuss any concerns you may have. During this [thirty]-day review period, we may continue with the pending foreclosure action, but no foreclosure sale will be conducted and you will not lose your home.

(Defs. 56.1 ¶ 53; Pl. 56.1 ¶ 53; see also Loan Modification Letters, annexed to Forbes Opp'n Decl. as Exs. 12-21, Docket Entry Nos. 121-12-21.) The parties dispute the extent to which Plaintiff reviewed these letters. (Defs. 56.1 ¶¶ 55-58; Pl. 56.1 ¶¶ 55-58, 82; Defs. 56.1 Resp. ¶ 82.)

         Plaintiff received two additional letters from OLS, both dated April 24, 2012. (Pl. 56.1 ¶ 84; Defs. 56.1 Resp. ¶ 84.) The first letter states that Plaintiff was “not eligible for a modification under [HAMP]” and states:

You have [thirty] calendar days from the date of this notice to contact Ocwen to discuss the reason for non-approval for a HAMP modification or to discuss alternative loss mitigation options that may be available to you. Your loan may be referred to foreclosure during this time, or any pending foreclosure action may continue. However, no foreclosure sale will be conducted and you will not lose your home during this [thirty]-day period . . . .

(Defs. 56.1 ¶¶ 61-62; Pl. 56.1 ¶¶ 61-62; Letter dated Apr. 24, 2012 annexed to Forbes Opp'n Decl. as Ex. 22, Docket Entry No. 121-22.) The second letter contained similar language. (Letter dated Apr. 24, 2012, annexed to Forbes Opp'n Decl. as Ex. 23, Docket Entry No. 121-23.) The second letter also repeated that Plaintiff was “not eligible” for a HAMP loan and noted that “[t]here were missing or incomplete documents in your application. Notification was sent over [thirty] days ago regarding this issue but there was no response or we did not receive all of the missing or incomplete documents.” (Id.) Defendants contend that these letters reflect a denial of Plaintiff's loan modification application due to missing documents. (Defs. 56.1 ¶¶ 61- 63.) Plaintiff disputes both the characterization of these letters as a “denial” of her pending application and the assertion the she failed to submit required documents. (Pl. 56.1 ¶¶ 61-63.) Plaintiff asserts that OLS sent her a letter dated April 30, 2012 requesting the documents it had purportedly not received, and that an OLS representative followed up with a telephone call on May 1, 2012. (Pl. 56.1 ¶¶ 85-86.) Defendant acknowledges that OLS' records reflect correspondence on those dates, but disputes “Plaintiff's characterization of the substance” of these communications. (Defs. 56.1 Resp. ¶¶ 85-86.)

         On May 16, 2012, OLS filed a foreclosure action against Plaintiff. (Pl. 56.1 ¶ 87; Defs. 56.1 Resp. ¶ 87.) Plaintiff asserts that OLS did not notify her of the foreclosure action. (Pl. 56.1 ¶ 87.) Defendants acknowledge that a foreclosure action was filed against Plaintiff on this date, but disputes “that Plaintiff's awareness of the foreclosure is material to the issues raised in Defendants' [m]otion for [s]ummary [j]udgment.” (Defs. 56.1 Resp. ¶ 87.) Plaintiff asserts that she spoke with an OLS representative on May 20, 2012, and that on May 22, 2012, she submitted documents that the representative requested in support of her loan modification application. (Pl. 56.1 ¶ 88.) Defendants again acknowledges that OLS' “log entries cited by Plaintiff” reflect that a call with an OLS representative took place on May 20, 2012, and agrees that Plaintiff submitted documents on or about May 22, 2012, but disputes “Plaintiff's characterization of the substance of the conversation” with the OLS representative, and disputes her characterization of the documents submitted. (Defs. 56.1 Resp. ¶ 88.) The parties agree that OLS sent Plaintiff additional letters dated May 24, 2012 and June 1, 2012, but dispute whether those letters reflect additional requests for purportedly missing documents to support Plaintiff's loan modification application. (See Pl. 56.1 ¶¶ 89, 91; Defs. 56.1 Resp. ¶¶ 89, 91.) There is no dispute that on May 24, 2012, OLS assessed Plaintiff three foreclosure fees of $600, $175 and $550, respectively. (Pl. 56.1 ¶ 90; Defs. 56.1 Resp. ¶ 90.)

         OLS sent Plaintiff a letter dated July 8, 2012. (Letter dated July 8, 2012, annexed to Harwood Opp'n Decl. as Ex. 15, Docket Entry No. 137-10.) The header of the letter reads “Final Notice, ” and states that:

It has been thirty (30) days since we sent you notification specifying outstanding conditions that have not allowed us to complete the review of your modification application. If the documents identified in REQUIRED DOCUMENTS are not received by DUE DATE, we will have no other option but to deny your application under the Making Home[] Affordable Modification Program. Please act quickly to take advantage of this opportunity to modify your mortgage loan.

(Id. at 2;[10] Pl. 56.1 ¶ 93; Defs. 56.1 Resp. ¶ 93.) In the July 8, 2012 letter, OLS also requested that Plaintiff submit certain additional documents by July 23, 2012, and that “[f]ailure to provide these documents within the timeline will result in the denial of your modification application and you will not be able to re-apply for the Making Home Affordable Modification.” (Letter dated July 8, 2012 at 2.)

         OLS then sent Plaintiff another letter, dated July 11, 2012. (Letter dated July 11, 2012, annexed to Harwood Opp'n Decl. as Ex. 16, Docket Entry No. 137-11.) The header on the July 11, 2012 letter reads: “YOU COULD LOSE YOUR HOME. PLEASE READ THE FOLLOWING NOTICE CAREFULLY.” (Id.) The July 11, 2012 letter further states:

As of July 11, 2012, your home loan is 345 days in default. Under New York state law, we are required to send you this notice to inform you that you are at risk of losing your home. You can cure this default by making the payment of 32, 116.04 dollars by 10/02/2012.

(Id. at 2; see also Defs. 56.1 Resp. ¶ 94; Pl. 56.1 ¶ 94.)

         Plaintiff testified that around this time, she “realized that it appeared to [her] that there was not going to be a resolution to the loan modification to help me save my home.” (Pl. 56.1 ¶ 96.) Plaintiff filed for Chapter 13 Bankruptcy in December of 2012. (Pl. 56.1 ¶ 98.) To date, Defendants have not obtained a foreclosure judgment against Plaintiff, and Plaintiff still resides at the property. (Defs. 56.1 ¶ 67; Pl. 56.1 ¶ 67.)

         b. Procedural background

         Defendants removed this action from New York state court on September 30, 2013. (Notice of Removal.) Defendants thereafter moved to dismiss the Complaint on February 7, 2014, which the Court granted in part and denied in part. See Harte I, 2014 WL 4677120 at *1.

         Plaintiff subsequently twice amended the Complaint. (See Am. Compl., Docket Entry No. 54; Sec. Am. Compl. (“SAC”), Docket Entry No. 60.) In the SAC, Plaintiff asserts claims for breach of contract, promissory estoppel and violation of section 349. (SAC ¶¶ 123-50.)

         By Memorandum and Order dated July 1, 2016, the Court dismissed Plaintiff's breach of contract claim. Harte III, 2016 WL 3647687.

         Relevant to the present dispute, Plaintiff filed a letter on January 6, 2017, [11] indicating her intent to move for class certification. (Pl. Letter dated Jan. 6, 2017, Docket Entry No. 97.) The letter states, among other things, that Plaintiff planned to seek certification of the following class and subclasses:

All New York homeowners with a residential mortgage serviced by Ocwen who, between August 14, 2007 and the present: (a) applied for a loan modification, were directed by an Ocwen representative to withhold payments while the application was pending, and then were penalized for doing so (the “Payments Subclass”); (b) against whom Ocwen commenced the foreclosure proceedings prior to service of a 90-day demand letter (the “90-day Demand Subclass”); or (c) against whom Ocwen pursued foreclosure while loan a [sic] modification application was pending (the “Dual-Tracking Subclass”).

(Id. at 1.) Defendants responded on January 13, 2017. (Defs. Letter dated Jan. 13, 2017, Docket Entry No. 98.) In their letter, Defendants asserted that class certification is improper as to all claims, and argued that:

Plaintiff defines the 90-day Demand Subclass as consisting of borrowers as to whom OLS allegedly “commenced foreclosure proceedings prior to service of a 90-day demand letter.” While Plaintiff had pled a breach of contract claim based on similar allegations, which claim was dismissed, a demand letter issue is not otherwise pled in her only remaining claims, [section] 349 and promissory estoppel. Absent a viable claim based on the alleged lack of a demand letter, Plaintiff cannot represent this class.

(Id. at 2 (internal citations omitted).)

         Defendants reiterated their argument that Plaintiff did not plead a “[ninety]-day notice claim” in a pre-motion conference letter to the Court dated March 29, 2017, in anticipation of their motion for summary judgment. (Defs. Letter dated Mar. 29, 2017 at 1-2, Docket Entry No. 107.) Plaintiff responded by letter dated April 13, 2017, arguing principally that “[c]laims for violations of GBL [section] 349 based on Ocwen's practice of foreclosing without notice are alleged in the SAC.” (Pl. Letter dated Apr. 13, 2017 at 2, Docket Entry No. 109.)

         On May 23, 2017, after the close of discovery targeted toward Plaintiff's remaining individual claims and “class certification issues, ”[12] Plaintiff moved for class certification. (Pl. Mot. for Class Cert. (“Pl. Mot.”), Docket Entry No. 125; Pl. Mem. in Supp. of Pl. Mot. (“Pl. Mem.”), Docket Entry No. 126; Decl. of Robert I. Harwood in Supp. of Pl. Mot. (“Harwood Decl.”), Docket Entry No. 127.) Defendants moved for summary judgment on July 24, 2017. (Defs. Mot. for Summary J. (“Defs. Mot.”), Docket Entry No. 133; First Forbes Decl., Docket Entry No. 134; Second Decl. of Brian M. Forbes (“Second Forbes Decl.”), Docket Entry No. 135; Defs. 56.1; Defs. Mem. in Supp. of Defs. Mot. ...


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