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Jackson v. Bank of America, N.A.

United States District Court, W.D. New York

December 30, 2019

BANK OF AMERICA, N.A., Defendant.




         Plaintiffs Bobbi and Matthew Jackson (“Plaintiffs”) filed a putative class action complaint on September 30, 2016, alleging that their mortgage loan servicer, Defendant Bank of America (“Defendant”), improperly and untimely processed their mortgage assistance applications so that it could charge them excessive loan delinquency fees. Specifically, Plaintiffs alleged Defendant violated the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601-2617, its implementing regulations, 12 C.F.R. §§ 1024.1-1024.41, and Section 349 of New York's General Business Law (“GBL”).

         Defendant moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6). ECF No. 6. On November 21, 2017, the Court dismissed all of Plaintiffs' claims except for those relating to the time period between January 28, 2014 and December 20, 2014, leaving only the claim that Defendant failed to use “reasonable diligence” in violation of 12 C.F.R. § 1024.41(b)(1). ECF No. 15. The Court denied leave to amend the complaint and the parties commenced discovery. ECF No. 39.

         Presently before the Court is Plaintiffs' motion to certify a class pursuant to Rule 23 (ECF No. 77) and Defendant's motion to strike the purported expert report Plaintiffs submitted in support of their motion to certify the class (ECF No. 87). For the reasons stated below, Defendant's motion is DENIED and Plaintiffs' motion is DENIED.

         BACKGROUND [[1]]

         I. Regulatory Background

         After the 2008 recession, mortgage loan servicers such as Bank of America struggled to handle the increase in delinquent loans, mortgage modification requests, and foreclosures they were required to process. ECF. No. 1 at 11. Servicers were either too overwhelmed to timely process mortgage assistance applications, or in some instances, unwilling to. Because servicers earn revenue from “fees assessed on borrowers, such as late fees, ” servicers had every incentive to delay the loss mitigation application process. Id. In one case, former Bank of America employees stated that they were “instructed that their job was to maximize fees for Bof A by delaying and refusing to process loss mitigation applications, ” and were instructed to “tell borrowers that their loss mitigation applications were under review, even though that was not the case or to falsely claim that documents were incomplete or missing.” ECF No. 1 at 21.

         In an effort to help borrowers seeking mortgage assistance, the Consumer Financial Protection Bureau issued final rules under RESPA requiring servicers to follow strict procedures and deadlines for processing mortgage assistance applications and disclose important information to borrowers about the status of their application. See 12 C.F.R. § 1024.41. Section 6(f) of RESPA gives borrowers a private right of action against servicers that fail to comply with any portion of 12 C.F.R. § 1024.41. ECF No. 1 at 17. Borrowers can recover actual damages, as well as statutory damages if a servicer demonstrates a “pattern or practice” of noncompliance with the rules. Id. at 24. These rules became effective on January 10, 2014. Id.

         II. Facts

         Plaintiffs purchased their home in 2007. Their initial monthly mortgage payment was $609.44, and Defendant subsequently became the servicer of Plaintiffs' mortgage. In 2009, Plaintiffs fell behind on their mortgage payments after Plaintiff Matthew Jackson's employer laid him off. In 2010, after Mr. Jackson found a new job, Plaintiffs attempted to make partial payments on the overdue amount they owed Defendant. Defendant rejected the partial payments, demanding instead that Plaintiffs pay the overdue amount in a single lump sum or face foreclosure. Plaintiffs could not afford to pay a lump sum, and repeatedly requested mortgage assistance from Defendant. Defendant rejected the requests, informing Plaintiffs that it was missing information from them, even though Plaintiffs had already submitted the information Defendant claimed it was missing. Because Defendant would not grant Plaintiffs mortgage assistance and rejected Plaintiffs' partial payments, the outstanding amount Plaintiffs owed on their mortgage continued to grow, and Defendant assessed late fees, property inspection fees, fees for mortgage insurance, and other charges to the balance of what Plaintiffs owed.

         At the beginning of 2014, regulations[2] requiring servicers to comply with certain procedures when processing borrowers' mortgage assistance applications went into effect. Plaintiffs subsequently applied for mortgage assistance on January 28, 2014. On January 30, Defendant acknowledged receipt of Plaintiffs' application.

         Plaintiffs' complaint contained numerous allegations of violations of the 2014 regulations, as applied to Plaintiffs' application for mortgage assistance. However, the Court dismissed all of Plaintiffs' claims except for the claim arising out of § 1024.41(b)(1) that Defendant failed to use reasonable diligence in obtaining documents and information to complete a loss mitigation application. ECF No. 15 at 16. None of Plaintiffs' other claims regarding the mishandling of their application survive.[3] Therefore, the only remaining claim alleges that Defendant failed to use reasonable diligence, as described below.

         On February 1, Defendant sent Plaintiffs a letter claiming that it could not complete its review because it needed copies of IRS Form 4506-T, which would allow Defendant to request a transcript of Plaintiffs' tax return. It also requested a copy of a social security award letter or benefits letter. Plaintiffs, however, had already submitted copies of both documents with their initial application package. Defendant's letter also asked Plaintiffs to provide copies of their tax returns, even though Defendant did not require Plaintiffs to submit their tax returns with their initial application. Finally, the letter asked for copies of bank account statements from Plaintiff Bobbi Jackson, even though Plaintiffs had already provided copies of statements for their joint bank account, which was the only bank account they had.

         Defendant sent two additional letters on February 20, 2014 and March 4, 2014 stating that it had received the documentation Plaintiffs had sent it supporting their request for mortgage assistance, but that Defendant needed all required documentation specified in its “initial notice.” The letters did not identify what information was missing. Instead, it instructed the Plaintiffs to refer back to their initial application package or to Defendant's website to see which documents Defendant had received. The website, however, did not specify which documents were missing- it provided only a generic list of all documents a borrower may need to complete their application.

         On March 5, Defendant again asked for Ms. Jackson's bank statements, even though Plaintiffs had already provided statements for their joint bank account. Defendant next sent Plaintiffs two identical letters dated March 13 and March 25 stating it had received the documentation supporting their request for mortgage assistance and referring them back to their initial application package or Defendant's website to determine if any information was still missing.

         Defendant sent Plaintiffs a letter on April 12, 2014, again asking them to provide an IRS Form 4506-T and copies of their tax returns-both of which Plaintiffs had already provided on numerous occasions. It also asked for copies of Mr. Jackson's pay stubs that Plaintiffs had already submitted. On April 15, Defendant sent another identical letter to Plaintiffs.

         On May 20, Defendant sent Plaintiffs a letter asking them to submit another copy of their initial mortgage assistance application because the required hardship affidavit-a statement explaining why Plaintiffs were seeking mortgage assistance-was allegedly missing from their original January 28 application. Plaintiffs had not written the hardship explanation in the correct spot of the application, and had not provided enough information about why they needed mortgage assistance. Plaintiffs then resubmitted their application, this time with the requested hardship affidavit in the correct format, and Defendant acknowledged receipt on May 22 and June 6, 2014.

         After all this, Defendant sent Plaintiffs a letter on June 28, 2014 stating that it had not received the documentation requested in its May 20, 2014 letter, and informed Plaintiffs that it was no longer reviewing their application. Plaintiffs argue that Defendant did all of the above in violation of § 1024.41(b)(1)'s requirement to exercise “reasonable diligence” in completing an application.


         I. Motion to Strike Expert Report

         Defendant seeks to exclude the expert report of Geoffrey A. Oliver, CPA, CFF, CMB on the basis that he is not qualified to render an expert opinion in support of Plaintiffs' motion for class certification because the opinions he expresses in the expert report do not meet the standards of relevance and reliability as outlined in Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993) and its progeny. Oliver's expert report purports to create a methodology to review Defendant's failure to comply with 12 C.F.R. § 1024.41 as applied to the putative class.

         a. Legal Standard

         The admissibility of expert testimony is governed by Rule 702 of the Federal Rules of Evidence, which permits an expert “qualified . . . by knowledge, skill, experience, training, or education” to testify if the testimony would be helpful to the trier of fact, is “based on sufficient facts or data, ” and is “the product of reliable principles and methods, ” reliably applied to the facts of the case. Fed.R.Evid. 702; see Hunter v. Time Warner Cable Inc., No. 15-CV-6445 (JPO), 2019 WL 3812063, at *4 (S.D.N.Y. Aug. 14, 2019). “When a motion to exclude expert testimony is made at the class certification stage, the Daubert standard applies, but the inquiry is limited to whether or not the expert reports are admissible to establish the requirements of Rule 23.” Ge Dandong v. Pinnacle Performance Ltd., No. 10 CIV. 8086, 2013 WL 5658790, at *13 (S.D.N.Y. Oct. 17, 2013) (quoting another source) (alternation omitted). “The question is not, therefore, whether a jury at trial should be permitted to rely on [the expert]'s report to find facts as to liability, but ...

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