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Edwards v. Ocwen Loan Servicing, LLC

United States District Court, District of Columbia

December 29, 2015

Janice Edwards, Plaintiff,
v.
Ocwen Loan Servicing, LLC, et al., Defendants.

MEMORANDUM OPINION

Amit P. Mehta United States District Judge

I. INTRODUCTION

This case concerns events that led Plaintiff Janice Edwards to sell a residential property in Northeast Washington, D.C., which she had owned since at least 2003. In late 2008, the District of Columbia’s Department of Consumer and Regulatory Affairs designated Plaintiff’s property as “vacant, ” resulting in a substantial increase in her annual property tax for the 2009 tax year. Plaintiff never paid the increased tax assessment, resulting in a tax lien and the eventual tax sale of her property in 2011. Plaintiff’s mortgage loan servicer, Defendant Ocwen Loan Servicing, LLC, which had taken over loan servicing earlier that year from Litton Loan Servicing, LP, exercised its right to redeem the property by paying the past-due taxes and associated costs. This allowed Plaintiff, at least temporarily, to retain ownership of the property. Ocwen then sought to recover from Plaintiffs the costs associated with redemption, including the sums Ocwen had advanced to satisfy the unpaid property taxes. Unable to pay Ocwen the redemption-associated costs in full, and facing foreclosure by Ocwen, Plaintiff sold the property in March 2013.

Two months later, Plaintiff filed a Complaint against Defendants Ocwen Loan Servicing, LLC, and Ocwen Financial Corporation, alleging eleven causes of action stemming from Defendants’ allegedly improper service of Plaintiff’s mortgage loan. Defendants filed a Motion to Dismiss as to all eleven claims. In March 2014, Judge Leon granted Defendants’ Motion as to all but one claim-breach of fiduciary duty by Defendants in their capacity as Plaintiff’s escrow agent.

In June 2015, Defendants filed a Motion for Summary Judgment on Plaintiff’s claim for breach of fiduciary duty. Plaintiff filed a Cross-Motion for Summary Judgment in response. Defendants then moved to strike Plaintiff’s Cross-Motion in whole and also moved to strike certain exhibits. These motions are now before the court.

Upon consideration of the parties’ submissions and the record evidence, the court grants Defendants’ Motion for Summary Judgment and denies Plaintiff’s Cross-Motion for Summary Judgment. The court finds that Plaintiff’s claim for breach of fiduciary duty is barred by the statute of limitations. Plaintiff also has not shown that Defendants can be held liable for the conduct of their predecessor, Litton Loan Servicing, LP, under a corporate “successor” theory of liability. Defendants’ Motions to Strike are denied as moot.

II. BACKGROUND

A. Factual Background

1. Refinancing the Property

In February 2003, Plaintiff Janice Edwards refinanced the mortgage for a residential property she owned in Northeast Washington, D.C., located at 624 19th Street N.E. (the “Property”). See generally Pl.’s Cross-Mot. for Summ. J, ECF No. 38 [hereinafter Pl.’s Cross-Mot.], Ex. D, ECF No. 38-7 [hereinafter Pl.’s Ex. D]; Compl., ECF No. 1, ¶ 20. The refinanced mortgage was held by SouthStar Funding, LLC, Pl.’s Ex. D at 4, with loan servicing rights assigned to Litton Loan Servicing, LP (“Litton”), Compl. ¶¶ 20, 22. In September 2011, the loan’s servicing rights were transferred to Defendants Ocwen Loan Servicing, LLC, and Ocwen Financial Corporation (collectively, “Defendants”), [1] as result of Defendants’ acquisition of Litton in mid-2011. Pl.’s Cross-Mot., Ex. I, ECF No. 38-12 [hereinafter Pl.’s Ex. I], at 2; Compl. ¶¶ 27-28.

2. Plaintiff’s Tax Problems

In late 2008, Plaintiff began to encounter problems with the assessment of taxes on her Property. First, in October 2008, an employee of the District of Columbia’s Office of Vacant Property (“OVP”), which is a component of the Department of Consumer and Regulatory Affairs (“DCRA”), determined that Plaintiff’s property was vacant, based on the “excessive growth, ” “trash [and] debris, ” and “defective gutter” on site. Defs.’ Mem. in Support of its Mot. for Summ. J., ECF No. 36-1 [hereinafter Def.’s Mem.], Decl. of Christopher M. Corchiarino, ECF No. 36-12 [hereinafter Corchiarino Decl.], Ex. B, ECF No. 36-14, at 6. A notice of these findings was posted, presumably at the Property, [2] on October 9, 2008. Id. A follow-up “vacant property survey” by OVP on October 23, 2008, confirmed that the property was vacant, and further noted that there was “structural damage, ” the “awning [was] defective, ” and “exposed surfaces [were] peeling and [had] rust.” Id. at 10. On November 3, 2008, Plaintiff responded by sending OVP a letter informing it that the property had been cleaned up. Id. at 11.

Despite Plaintiff’s attempt to establish that her property was occupied, DCRA sent Plaintiff a letter on February 20, 2009, informing her that it had “inspected [her] property . . . and deemed it vacant, ” and notifying her of possible tax consequences. Id. at 12. Plaintiff responded to this notice, Pl.’s Cross-Mot., Aff. of Janice Edwards, ECF No. 38-3 [hereinafter Edwards Aff.], ¶ 9, and on March 27, 2009, DCRA sent Plaintiff a second letter confirming that it had “reviewed and approved [Plaintiff’s] request for [a] vacant property exemption, ” Corchiarino Decl., Ex B. at 14. According to DCRA, Plaintiff had provided “sufficient utility bills . . . and rental lease agreements” to verify that the property was “entitled to an exemption for the 2009 tax year and until such time as the property becomes vacant.” Id.

Yet for reasons unexplained by the record, the exemption did not stick. On June 9, 2009, DCRA sent Plaintiff yet another letter notifying her that DCRA had “inspected [her] property . . . and deemed it vacant.” Id. at 19. It again described possible tax consequences that could result from the property’s vacancy designation. Id. This time, however, it appears that Plaintiff did not respond to the notice.

As a result of at least one of these vacancy determinations-it is unclear which-Plaintiff’s property taxes increased from $2, 152.20 in 2008, to $26, 078.00 in 2009. Corchiarino Decl, Ex. A, ECF No. 36-13, at 38-39, 42-43. Litton records-corroborated in part by Plaintiff-show that its employees spoke with Plaintiff regarding tax issues in both March 2009 and September 2009. Pl.’s Cross-Mot., Ex. G, ECF No. 38-10 [hereinafter Pl.’s Ex. G], at 6-8. Plaintiff’s escrow account did not contain sufficient funds to cover the increased taxes and insurance costs. Litton paid $2, 300 toward the 2009 taxes, leaving a tax deficiency of nearly $30, 000, including penalties and interest. Defs.’ Mem., Aff. of Kevin Flannigan, ECF No. 36-3 [hereinafter Flannigan Aff.], Ex. C, ECF No. 36-6, at 1; Corchiarino Decl., Ex. A at 35.

3. Foreclosure, Sale, Redemption … and Sale

Beginning in early 2010, the District sent letters to Plaintiff informing her that unless the tax situation was remedied, her property would be sold at auction. Id. at 29, 34. Plaintiff did not, however, pay the past-due amounts. Id. at 35. Consequently, in late 2011, the District included the Property in its annual tax sale auction, ...


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