Kang v. Nationstar Mortgage LLC

1 2 3 4 5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 MANJEET K. KANG et al., CASE NO. C23-5106-KKE 8 Plaintiffs, v. ORDER GRANTING DEFENDANTS’ 9 MOTION FOR SUMMARY JUDGMENT NATIONSTAR MORTGAGE LLC, et al., 10 Defendants. 11 12 Plaintiffs Manjeet and Amrik Kang, appearing pro se, filed this case to stop the pending 13 trustee sale on their property. They sued Defendants Nationstar Mortgage LLC (“Nationstar”) and 14 U.S. Bank National Association1 (“US Bank”) for violating their obligations under the parties’ 15 agreements, including failing to honor a debt forgiveness term and incentive payment term and 16 mismanaging the Kangs’ payments and escrow funds. Defendants2 now move for summary 17 judgment dismissing the case arguing it is barred by res judicata and the class action settlement in 18 Robinson v. Nationstar Mortgage LLC and because Defendants complied with all the relevant 19 20 21 1 The Kangs named “U.S. Bank National Association, whose parent company is U.S. Bancorp” as a defendant. Dkt. No. 1 at 2. In its answer, Defendants argue the correct entity is “U.S. Bank National Association, as Trustee for Specialty Underwriting and Residential Finance Trust Mortgage Loan Asset-Backed Certificates, Series 2006-BC5.” 22 Dkt. No. 29 ¶ 2. The Kangs do not dispute this is the correct defendant, and the July 12, 2013 notice to the Kangs confirms Nationstar is servicing the loan on behalf of “U.S. BANK NA AS TRUSTEE FOR SURF 2006-BC5.” Dkt. 23 No. 26-4. 2 Neither party differentiates between the actions of the two Defendants, so the Court will generally refer to 24 “Defendants” unless the context requires differentiating between them. 1 agreements. The Court finds res judicata does not apply here as the scope of the release in 2 Robinson does not cover these claims. But the Court grants summary judgment for Defendants on 3 the Kangs’ claims because Defendants complied with the agreements. 4 I. BACKGROUND 5 On July 10, 2006, the Kangs received a $268,200 loan in exchange for an Adjustable Rate 6 Note secured by a Deed of Trust on real property located in Puyallup, Washington. Dkt. Nos. 7 26-2, 26-3. After the Kangs defaulted on the loan (Dkt. No. 26-5) and Nationstar commenced 8 nonjudicial foreclosure (Dkt. No. 26-1 ¶ 8), the Kangs applied for loss mitigation through 9 applications for mortgage assistance (id.; Dkt. Nos. 26-6, 26-7). 10 On June 13, 2016, Nationstar sent a trial period plan notice to the Kangs in which they 11 would make three trial period payments and submit certain documents to qualify them for a 12 permanent modification of the loan terms. Dkt. No. 26-8 at 2–3. This notice included a FAQ 13 document. Id. at 4–8. In response to a question about qualifying for a modified loan, the answer 14 said, “Once you make all of your trial period payments on time, we will send you (i) a Streamline 15 HAMP Affidavit and (ii) two copies of a modification agreement detailing the terms of the 16 modified loan.” Id. at 4. The FAQ also stated, “If your loan is permanently modified and you 17 remain in good standing for six years, you will receive a one-time pay-for-success incentive of 18 $5,000” (“Incentive Payment”). Id. at 6. The Kangs timely paid the three trial period payments. 19 Dkt. No. 26-1 ¶ 10. 20 On September 6, 2016, Nationstar sent a packet of materials to the Kangs regarding the 21 loan modification. Dkt. No. 26-9. At the front, the packet included a cover letter that stated, “The 22 enclosed Home Affordable Modification Agreement… reflects the proposed terms of the modified 23 mortgage” and instructed the Kangs that “[t]o accept this offer, you must sign and return both 24 copies of the Modification Agreement[.]” Id. at 3. The cover letter also stated, “To better 1 understand the proposed terms of the modified mortgage, please read the attached summary of the 2 modified mortgage and the Modification Agreement.” Id. The cover letter listed “Attachments: 3 Summary of the Modified Mortgage, Two copies of the Modification Agreement.” Id. at 4. 4 After the cover letter, the packet then included a summary describing the terms of the 5 modified mortgage (“Summary Document”), including a section entitled “Principal Reduction 6 Alternative” (“PRA”) that stated 7 You may be eligible to have some of the principal forgiven on a deferred basis. If you make the voluntary monthly mortgage payments on time, we 8 will forgive $46,505.51 of the principal balance of the loan each year on the anniversary of the first trial period payment date for three years. 9 Dkt. No. 26-9 at 5. The Summary Document also contains a provision entitled “Deferral of 10 Principal,” which states that Nationstar “will defer collection of and not collect interest on 11 $139,516.52 of your outstanding principal. You will not be required to make monthly payments 12 on that portion. This portion of principal will be due when you pay off the modified loan….” Id. 13 After the Summary Document, the packet included a Loan Modification Clarity 14 Commitment “intended to be a clear and simple summary of the final loan modification that we 15 are pleased to offer you,” which broke down the new principal balance. Dkt. No. 26-9 at 6 16 (“Clarity Commitment”). The Clarity Commitment does not contain the PRA term or reference 17 any loan forgiveness option. Id. It does include the Deferred Principal Balance of $139,516.52 18 and states, “Borrower will not be required to pay interest or make monthly payments on the 19 Deferred Principal Balance until the time of maturity.” Id. 20 Nationstar next included a document listing closing and signing requirements and 21 confirming “Borrower must return Both sets of ORIGINAL signed documents….” Dkt. No. 26-9 22 at 7. Following this document, the packet included a two-page Agreement to Maintain Escrow 23 Account (id. at 8–9), then a two-page document for borrowers to complete to activate autopay (id. 24 1 at 9–10). Finally, there were two copies of a seven-page document entitled Home Affordable 2 Modification Agreement (“HAMA”). Id. at 12–26. Unlike the Summary Document, these 3 documents did not contain a PRA provision or any provision providing debt forgiveness. Id., Dkt. 4 No. 26-1 ¶ 11. Instead, the HAMA deferred $139,516.52 of the new balance without interest and 5 increased the repayment term to 40 years at a fixed 3.125% interest rate, totaling “monthly 6 installments of principal and interest of $1,188.95 and a monthly escrow of $399.71 subject to 7 periodic adjustment.” Dkt. No. 26-1 ¶ 11, see also Dkt. No. 26-12 at 13–19. 8 The Kangs signed the Agreement to Maintain Escrow Account on September 9, 2016 9 (“Escrow Agreement”). Dkt. No. 26-12 at 20–21. The Kangs also signed the HAMA. Id. at 19. 10 Nationstar countersigned the HAMA on September 19, 2016. Dkt. No. 26-12 at 13–19. 11 The Kangs began making timely monthly payments under the HAMA in September 2016. 12 Dkt. No. 26-1 ¶ 14. 13 On December 15, 2016, Nationstar mailed a letter to the Kangs stating, “When we 14 previously forwarded the Streamline HAMP modification documents to you, this affidavit was 15 omitted. It is imperative that you sign and return this affidavit to us at your earliest convenience 16 to ensure you are eligible for the Six Year Pay for Performance incentive payment of $5,000.” 17 Dkt. No. 30-7. There is no evidence this affidavit was ever signed by the Kangs or returned to 18 Nationstar. 19 On January 16, 2020, the Kangs signed a Biweekly AutoPay Authorization Form, which 20 initiated automatic recurring ACH debits every other Friday. Dkt. No. 26-10. 21 In April 2020, the Kangs contacted Nationstar criticizing the biweekly autopay process and 22 related processing fee. Dkt. No. 26-11. They also argued that Nationstar had violated the original 23 agreement by refusing to forgive the $139,516.52 as promised in the HAMA. Id. On April 30, 24 2020, Nationstar responded to the Kangs’ letter and explained the Kangs had signed an 1 authorization for biweekly autopay that stated, “there may be a fee of up to $2.50 per debit” and 2 that the Kangs had not cancelled their biweekly autopay. Dkt. No. 26-12 at 3. The letter also 3 explained that the PRA language was included by mistake in the Summary Document, but that 4 Nationstar would nonetheless honor the PRA and forgive $139,516.52 and honor the $5,000 5 Incentive Payment under the Six Year Pay for Performance term subject to the Kangs’ agreement 6 to an updated loan modification document. Id. at 2–3. Nationstar sent an updated loan 7 modification that included the terms for forgiveness of $139,516.32 and $5,000 outlined in the 8 response letter (“Updated Loan Modification”). Dkt. No. 26-13 at 10–13. This new packet 9 included another Agreement to Maintain Escrow Account. Id. at 6–7. In its cover letter with the 10 Updated Loan Modification, Nationstar stated the Kangs must “sign and return both original 11 Modification Agreements in the enclosed pre-paid envelope so they are received by us on or before 12 May 31, 2020.” Id. at 2. The Kangs did not return the Updated Loan Modification. Dkt. No. 26-1 13 ¶ 18. 14 On August 13, 2020, the Kangs sent another dispute letter to Nationstar claiming Nationstar 15 had violated the HAMA, “cheated” on the biweekly mortgage, failed “to offer an interest rate in 16 line with the current market rates even by changing the term of the loan and still calls it a loan 17 modification[,]” changed the loan specialist, failed to assure loan forgiveness, and that it “has kept 18 it intentionally murky as to what will happen to ‘almost one year since last October.’” Dkt. No. 19 26-14. The Kangs also generally complained about Nationstar’s failure to answer the phone. Id. 20 Lastly, the Kangs criticized Nationstar’s “willingness to take care of the largest issue” of the 21 HAMA violation “and then started to give me the run around to make the deadline expire because 22 you were never sincere or truthful to begin with.” Id. 23 On August 31, 2020, Nationstar responded to the Kangs with explanations for the interest 24 rate and biweekly payments. Dkt. No. 26-15. Nationstar also offered to retroactively extend the 1 acceptance deadline for the Updated Loan Modification from May 31, 2020 until September 7, 2 2020. Id. at 3. The Kangs received this letter on September 8, 2020 (Dkt. No. 30 at 11), and 3 returned the signed Updated Loan Modification on September 10, 2020, with a handwritten 4 addition to paragraph two. Dkt. No. 26-1 ¶ 21. The Kangs inserted language that said: “The 5 forgiveness amount of $139,516.52 will be reduced by one-third ($46,505.51) each year starting 6 October 1st 2019, and will be zero in three years on October 1st 2022.” Dkt. No. 26-16 at 3, 7. 7 The Kangs did not return a signed copy of the new Agreement to Maintain Escrow Account. Dkt. 8 No. 26-1 ¶ 21. Nationwide never countersigned the Updated Loan Modification with the Kangs’ 9 additions. Dkt. No. 26-1 ¶ 21, Dkt. No. 30 at 11. 10 The Kangs continued to make timely payments until they entered the COVID forbearance 11 plan in October 2020, which paused their payments until September 1, 2021. Dkt. No. 26-1 ¶ 22, 12 Dkt. No. 26-17. At the end of the forbearance, the Kangs deposited money to cover the paused 13 payments. The Kangs allege that when they recommenced regular mortgage payments, a 14 refundable excess amount of around $2,700 remained in their escrow account. Dkt. No. 1 ¶ 5. 15 The Kangs contend that they requested a refund of this amount in October, November, and 16 December 2021 (Dkt. No. 38 at 5), and that Defendants refused to refund the excess or apply it to 17 future escrow payments until the annual escrow analysis could be completed in May 2022. Dkt. 18 No. 30 at 12–13. Thus, in January 2022, “the Kangs started submitting payments of $1,188.95 19 instead of the full amount of $1,652.82[.]” Dkt. No. 26-1 ¶ 26, see also Dkt. No. 26-22 at 124– 20 26. 21 On January 19, 2022, the Kangs submitted an online dispute form to Nationstar 22 complaining that “Nationstar had the Kangs deposit more money into the escrow account than was 23 24 1 actually needed to make the ‘loan current.’”3 Dkt. No. 26-1 ¶ 27. Nationstar responded on January 2 28, 2022, referring the Kangs to the Deed of Trust and explaining “funds cannot be applied to a 3 monthly payment if the amount is short of the full amount needed for all portions of your monthly 4 payment including the interest due, principal portion, and escrow account” and providing 5 instructions on when the escrow account could be cancelled or waived. Dkt. No. 26-19 at 2. 6 On April 27, 2022, the Kangs sent a letter to Nationstar complaining about an April 1, 2022 7 letter “threatening me with a foreclosure,”4 “wrongful shortfalls in my account,” “breach of 8 contract by not removing the non interest bearing amount from my mortgage,” and failure to apply 9 escrow funds. Dkt. No. 30-8, Dkt. No. 26-1 ¶ 28. On May 19, 2022, Nationstar responded 10 explaining that Nationstar had only received partial payments since January 2022, and stating, “To 11 bring the account current, funds in the amount of $2,319.35 are needed.” Dkt. No. 26-20 at 3. The 12 response also explained the April 1, 2022 letter was sent to the Kangs “per Washington State 13 Guidelines [] to inform you of your rights and a notice of pre-foreclosure options.” Id. 14 On February 8, 2023, the Kangs sued Defendants. Dkt. No. 1. While the Kangs did not 15 list any specific causes of action, they mainly complained about the trustee sale scheduled for May 16 5, 20235 on the Puyallup property and Nationstar’s failure to comply with the HAMA. Id. The 17 Kangs allege Nationstar (1) violated the HAMA by not forgiving the $139,516.52 or honoring the 18 $5,000 Incentive Payment promised in the HAMA (id. ¶¶ 1–2), (2) incorrectly applied the Kangs’ 19 biweekly automatic payment and improperly charged $2.50 for each payment (id. ¶ 3), and (3) 20 21 22 3 The Kangs belatedly argue they did not submit such a dispute. Dkt. No. 38 at 7. The Court finds it unnecessary to resolve this issue. 23 4 Neither party provided a copy of this communication to the Court. 24 5 The trustee sale was postponed and has not occurred. See Dkt. No. 34 at 14, Dkt. No. 37 at 4 n.2. 1 engineered the Kangs’ delinquency by incorrectly applying the Kangs’ payments for principal and 2 interest and mismanaging escrow funds (id. ¶¶ 5, 7, 8). 3 Defendants now move for summary judgment dismissing the Kangs’ case because it is 4 barred by res judicata; the parties never agreed to the terms the Kangs allege Defendants violated; 5 and the Kangs had notice of, and agreed to, the acts they now dispute. Dkt. No. 26. The Kangs 6 filed an opposition (Dkt. No. 30), Defendants filed a reply (Dkt. No. 33), the Kangs filed another 7 response (Dkt. No. 34),6 and the Court instructed Defendants to file any new response by July 15, 8 2024, which they did (Dkt. No. 37). Four days later, the Kangs filed a third response with four 9 exhibits. Dkt. No. 38.7 The matter is ripe for the Court’s consideration. 10 II. ANALYSIS 11 A. The Court Has Subject Matter Jurisdiction. 12 The Kangs allege the Court has subject-matter jurisdiction under 28 U.S.C. § 1332. Dkt. 13 No. 1 at 2. Diversity jurisdiction exists over all civil actions where the matter in controversy 14 exceeds $75,000 and the action is between citizens of different states. 28 U.S.C. § 1332(a)(1). 15 The amount in dispute exceeds $75,000. Id. ¶ 3. The Kangs are each a citizen of Washington 16 state. Id. ¶ 1. Nationstar is a citizen of Delaware. Dkt. No. 12. U.S. Bank is a citizen of Ohio. 17 28 U.S.C. § 1348 (“All national banking associations shall, for the purposes of all other actions by 18 or against them, be deemed citizens of the States in which they are respectively located.”); see 19 20 21 6 The Court acknowledges that the Kangs did not follow this Court’s local rules when it filed this untimely additional response. See Local Rules W.D. Wash. LCR 7. However, because the Court provided Defendants an opportunity to 22 respond (Dkt. No. 35) and Defendants explicitly do not seek to strike the additional brief (Dkt. No. 37 at 6), the Court will consider it. 23 7 Again, Plaintiffs violated Court rules when filing their third response. The Court will consider the document because Defendants do not oppose the late filing and will not be prejudiced since the Court grants Defendants’ motion for 24 summary judgment. 1 U.S. Bank National Association, Statement of Eligibility Under the Trust Indenture Act of 1939 2 of a Corporation Designated to Act as a Trustee, Ex. 1 (Form T-1) (Feb. 26, 2002). 3 “[F]ederal courts sitting in diversity apply state substantive law.” Cuprite Mine Partners 4 LLC v. Anderson, 809 F.3d 548, 554 (9th Cir. 2015). 5 B. Legal Standard on Summary Judgment 6 Under Federal Rule of Civil Procedure 56(a), summary judgment is appropriate “if the 7 movant shows that there is no genuine dispute as to any material fact and the movant is entitled to 8 judgment as a matter of law.” A principal purpose of summary judgment “is to isolate and dispose 9 of factually unsupported claims[,]” so that “factually insufficient claims or defenses [can] be 10 isolated and prevented from going to trial with the attendant unwarranted consumption of public 11 and private resources.” Celotex Corp. v. Catrett, 477 U.S. 317, 323–24, 327 (1986). In resolving 12 a motion for summary judgment, the Court considers “the threshold inquiry of determining 13 whether there is the need for a trial—whether, in other words, there are any genuine factual issues 14 that properly can be resolved only by a finder of fact because they may reasonably be resolved in 15 favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). 16 The moving party bears the initial burden of identifying those portions of the pleadings, 17 discovery, and affidavits that demonstrate the absence of a genuine issue of material fact. Celotex 18 Corp., 477 U.S. at 323. When the non-moving party opposing summary judgment would have the 19 burden of proof at trial, the moving party need only show “that there is an absence of evidence to 20 support the nonmoving party’s case.” Id. at 325. If the moving party meets its initial burden, the 21 non-moving party must set forth, by affidavit or as otherwise provided in Rule 56, “specific facts 22 showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 250. 23 24 1 C. Defendants’ Motions to Strike Are Denied. 2 Federal Rule of Civil Procedure 37(c) provides in part that “[i]f a party fails to provide 3 information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use 4 that information or witness to supply evidence on a motion, at a hearing, or at trial, unless the 5 failure was substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1); see R & R Sails, Inc. 6 v. Ins. Co. of Penn., 673 F.3d 1240, 1247 (9th Cir. 2012) (“We recognize that, in the ordinary case, 7 violations of Rule 26 may warrant evidence preclusion.”). The party facing sanctions bears the 8 burden of proving the late disclosure was substantially justified or is harmless. See id. at 1246. 9 The 1993 advisory committee notes to Rule 37(c) clarify that limiting the automatic sanction for 10 insufficient disclosure “to violations ‘without substantial justification,’ coupled with the exception 11 for violations that are ‘harmless,’ is needed to avoid unduly harsh penalties in a variety of 12 situations,” such as when a pro se litigant lacks knowledge “of the requirement to make 13 disclosure.” Fed. R. Civ. P. 37(c) Advisory Committee Notes (1993). 14 Defendants move to strike two sets of exhibits. Dkt. No. 33 at 7–10, Dkt. No. 37 at 6–7. 15 First, they move to strike nine exhibits filed by the Kangs with their opposition to the motion for 16 summary judgment because the documents were not produced in discovery. Dkt. No. 33 at 7–10. 17 The Court only considered exhibit 8 submitted with the Kangs’ opposition, as the remaining 18 exhibits are not relevant. See Dkt. Nos. 30-8, 30-11; In re Medvedev, No. BR 22-10858-MLB, 19 2024 WL 2723776, at *3 n.1 (W.D. Wash. May 28, 2024) (denying a motion to strike as moot 20 when the “Court does not rely on the challenged evidence in resolving the issues pending before 21 it”). Accordingly, Defendants’ request to exclude the other exhibits under FRCP 37(c) is denied 22 as moot. 23 Exhibit 8 is an April 27, 2022 letter from the Kangs to Nationstar (Dkt. No. 30-8), which 24 Nationstar refers to in its corporate declaration. Dkt. No. 26-1 ¶ 28 (“Nationstar received a further 1 dispute from the Kangs in April 2022 concerning the escrow account.”). Nationstar knew about 2 this document, and while the Kangs may have had to disclose this document in discovery, 3 exclusion is unwarranted because any failure to disclose was harmless. See Joe Hand Promotions, 4 Inc. v. Santana, 964 F. Supp. 2d 1067, 1072 n.3 (N.D. Cal. 2013) (finding failure to disclose was 5 harmless because defendants “presumably knew their contents and had access to them”). 6 Defendants’ motion to strike this exhibit is denied. 7 Second, Defendants move to strike 18 exhibits filed in support of the Kangs’ second 8 response, again, for failure to disclose the documents during discovery. Dkt. No. 37 at 6–7. The 9 Court does not rely on any of these exhibits in making its decision, so Defendants’ request to 10 exclude these exhibits under FRCP 37(c) is denied as moot.8 11 D. This Case Is Not Barred by Res Judicata. 12 Defendants argue this case is barred by the nationwide class settlement in Robinson v. 13 Nationstar Mortgage LLC, Case No. 8:14-cv-03667-TJS, in the United States District Court for 14 the District of Maryland (“Robinson”) because that settlement released Nationstar from liability 15 for certain claims, including ones like this. Dkt. No. 26 at 9–13. To determine whether res judicata 16 applies, the Court must determine whether the release of claims in Robinson binds the Kangs and 17 includes the claims here. See Wojciechowski v. Kohlberg Ventures, LLC, 923 F.3d 685, 689–90 18 (9th Cir. 2019) (“[G]iven the contractual nature of...settlement agreements, the preclusive effect 19 of a judgment based on such an agreement can be no greater than the preclusive effective of the 20 agreement itself.” (quotations omitted)). 21 22 23 8 The Court references docket number 34-3 in this decision, a bank transaction summary showing the amounts the Kangs paid in September and October 2021 to Nationstar. But the Court does not rely on the contents of that exhibit to make its decision, instead referencing the exhibit as an example of irrelevant evidence. 24 1 The Robinson class settlement resolved all claims against Nationstar’ “in connection with 2 || the submission of loss mitigation applications” from January 10, 2014 through September 9, 2019. 3 Dkt. No. 26-24 at 3, 17. Nationstar showed the Kangs did not opt out of this settlement (Dkt. No. 4 26-25), and the Kangs have provided no evidence to the contrary. 5 While the Court agrees the Kangs are bound by the Robinson settlement, Defendants have 6 shown that the claim is connected with “the submission of loss mitigation applications” such 7 || that it was released by the Robinson settlement. While the phrase “submission of loss mitigation 8 applications” is vague, reviewing the rest of the Settlement Agreement clarifies that the type of 9 claims resolved by the agreement include: 10 - Nationstar didn’t send me a letter within 5 days of getting my loss mitigation application. - Nationstar didn’t make a decision on my loan 12 modification application within 30 days. 13 - Nationstar didn’t tell me I could appeal its decision. 14 - Nationstar asked me to submit documents I had already submitted. Dkt. No. 26-24 at 9 (excerpt from Question 1 of the claim form). The Settlement Agreement 16 explicitly states that “Each Claimant who selects ‘No’ in response to Question | will not receive a Settlement Share.” /d. The Kangs do not complain about these actions, or any other actions 18 connected to their loss mitigation application. Instead, the Kangs complain about actions taken 19 after they were found eligible for a modified loan, after and separate from the application process. 20 The Robinson settlement does not bar these claims against Nationstar, and Defendants’ motion for 21 summary judgment on this ground is denied. 22 23 24 Defendants do not explain how the Robinson settlement would impact claims against U.S. Bank. 1 E. The Parties Did Not Agree to the PRA Term. 2 The Kangs argue two alternative theories about why Nationstar should be bound by the 3 PRA term included in the Summary Document and forgive $139,516.52 of their loan. Neither 4 raises an issue of fact sufficient to defeat Defendants’ motion. 5 First, the Kangs argue the PRA language, agreeing to forgive $46,505.51 of the principal 6 balance of the loan each year for three years, included in the Summary Document was an 7 enforceable term of the HAMA. Dkt. No. 1 ¶ 1. Defendants respond that the PRA language was 8 not a part of the actual HAMA, and the Summary Document is not an enforceable agreement under 9 the statute of frauds. Dkt. No. 26 at 13. The Court agrees. 10 There is no dispute that the HAMA does not include a PRA term or any similar loan 11 forgiveness provision. Dkt. No. 26-12 at 13–19. If the Kangs argue the Summary Document 12 included in the packet of material sent by Nationstar in September 2016 should be considered part 13 of the HAMA and enforceable, the evidence does not support this theory for at least three reasons. 14 First, the bottom of the Summary Document states, “Please read the enclosed Modification 15 Agreement carefully and make sure that you understand it and that the statements set forth therein, 16 including, but not limited to, the ‘My Representations’ section, are true and accurate.” Dkt. No. 17 26-9 at 5. This notice alone should have notified the Kangs that the Summary Document was not, 18 itself, a part of the HAMA. Second, the Clarity Commitment, which was described as a “clear and 19 simple summary of the final loan modification that we are pleased to offer you,” includes the 20 Deferral of Principal Term but does not mention any PRA loan forgiveness. Dkt. No. 26-9 at 6. 21 Third, Nationstar explains in the packet (Dkt. No. 26-9 at 3, 7) and the FAQ page of the trial period 22 document (Dkt. No. 26-8 at 4) that two copies of the agreement must be signed and returned and 23 there were only two copies of the seven-page HAMA. 24 1 If the Kangs argue the Summary Document alone is an enforceable contract, Defendants 2 are correct such an unsigned document is barred by the statute of frauds because it could not be 3 performed within a year. WASH. REV. CODE § 19.36.010 (requiring “[e]very agreement that by its 4 terms is not to be performed in one year from the making thereof” to “be in writing, and signed by 5 the party to be charged therewith”). Moreover, the PRA term in the Summary Document does not 6 guarantee loan forgiveness, but states, “You may be eligible to have some of the principal forgiven 7 on a deferred basis.” Dkt. No. 26-9 at 5 (emphasis added). In short, the PRA term is not 8 enforceable via the HAMA or the Summary Document. 9 Second, the Kangs argue that the PRA loan forgiveness term was included in the Updated 10 Loan Modification, which they accepted by signing and returning to Nationstar on September 10, 11 2020. Dkt. No. 1 ¶ 1, Dkt. No. 30 at 9. Defendants argue the Updated Loan Modification was 12 never agreed to because the copy signed by the Kangs included a handwritten new term that was 13 not accepted by Nationstar. Dkt. No. 26 at 16.10 The handwritten term that the Kangs added in 14 September 2020 states, “The forgiveness amount of $139,516.52 will be reduced by one-third 15 ($46,505.51) each year starting October 1st 2019, and will be zero in three years on October 1st 16 2022.” Dkt. No. 26-16 at 3, 7. In Washington, 17 [t]he acceptance of an offer is always required to be identical with the offer, or there is no meeting of the minds and no contract. An expression of assent 18 that changes the terms of the offer in any material respect may be operative as a counteroffer; but it is not an acceptance and consummates no contract. 19 Blue Mountain Const. Co. v. Grant Cnty. Sch. Dist. No. 150-204, 306 P.2d 209, 212 (Wash. 1957) 20 (cleaned up). The handwritten addition changed the contract’s material terms by including loan 21 22 10 The Kangs dispute whether the September 7, 2020 deadline to return the Update Loan Modification was reasonable. Dkt. No. 30 at 11. While Defendants note Nationstar received the signed copy late (Dkt. No. 26 at 2), Defendants do 23 not argue that this delay impacts the enforceability of the contract. See generally Dkt. Nos. 26, 33. Thus for purposes of this motion, the Court will assume that, had the signed Updated Loan Modification not included the handwritten term, it would be enforceable. 24 1 forgiveness over multiple years.11 The Kangs’ return of the Updated Loan Modification with the 2 added term was a counteroffer which the parties agree was never accepted by Nationstar. See Dkt. 3 No. 30 at 9 (“[A] signed agreement was sent to the defendant by the plaintiff Manjeet K. Kang on 4 September 10, 2020 [] but Nationstar never signed it[.]”). Thus, the parties did not agree to the 5 Updated Loan Modification and it is not an enforceable contract. 6 Even though Nationstar is not bound by the PRA term and the Kangs have not shown they 7 are entitled to the relief, the Court is troubled by Nationstar’s erroneous inclusion of the PRA term 8 in the Summary Document, for seemingly not the first time. See Greer v. U.S. Bank Nat’l Ass’n 9 as Tr. for Structured Asset Sec. Corp. Mortg. Loan Tr. Mortg. Pass-Through Certificates Series 10 2006-BC5, No. 19 C 2618, 2019 WL 13249556, at *4 (N.D. Ill. July 29, 2019). Such errors cause 11 understandable confusion to consumers like the Kangs. 12 In sum, there is no evidence the parties entered into an enforceable agreement regarding 13 the PRA loan forgiveness term, and this claim is dismissed. 14 F. The Parties Did Not Agree to the $5,000 Incentive Payment. 15 The Kangs also argue they are entitled to the $5,000 Incentive Payment included in the 16 trial period plan notice FAQ sent by Nationstar in June 2016. See Dkt. No. 26-8 at 6. Under the 17 Incentive Payment, Nationstar would have needed to pay Plaintiffs $5,000 if the Kangs maintained 18 the loan in good standing for six years. Id. Because the agreement was to be performed over more 19 than one year, any such agreement was required to “be in writing, and signed by the party to be 20 charged therewith” under Washington’s statute of frauds. WASH. REV. CODE § 19.36.010. The 21 Kangs provide no evidence of a signed agreement with Nationstar relating to the Incentive 22 Payment. 23 11 The Court need not determine whether the Kangs meant the handwritten term to ask for loan forgiveness for an 24 additional $139,516.52 or merely different terms for $139,516.52 of the agreed $144,516.52. 1 There are three documents in the record that reference the Incentive Payment, none of 2 which comprise an enforceable agreement. First, the Incentive Payment is mentioned in the FAQ 3 included with the June 2016 trial period plan notice sent by Nationstar with the HAMA application. 4 Dkt. No. 26-8 at 6. The parties did not sign this FAQ document. Nationstar also references the 5 Incentive Payment in its December 15, 2016 letter to the Kangs. Dkt. No. 30-7. There, Nationstar 6 explained that they mistakenly omitted the Streamline HAMP Affidavit from the prior loan 7 modification packet. The letter stated, “to ensure that [Plaintiffs] are eligible for the Six Year Pay 8 for Performance incentive payment of $5,000[,]” the Kangs had to sign and return the affidavit “at 9 [their] earliest convenience.” Id. There is no evidence either party signed this affidavit. Lastly, 10 as with the PRA loan forgiveness term, the Updated Loan Modification’s offer of $5,000 in loan 11 forgiveness (as an equivalent to the Incentive Payment) is unenforceable because, as described 12 above, the Updated Loan Modification was never executed by the parties. 13 Thus, the Kangs are not entitled to either the $5,000 Incentive Payment or loan forgiveness 14 in that amount, and this claim is dismissed. 15 G. Nationstar Processed the Kangs’ Biweekly Auto Payments as Agreed. 16 The Kangs allege that Nationstar wrongly implemented the biweekly autopayment process 17 by waiting to receive the second payment before applying the funds to the loan and by charging a 18 $2.50 processing fee for each payment. Dkt. No. 1 ¶ 3. To support their motion, Defendants 19 submitted the Biweekly AutoPay Authorization Form signed by the Kangs which explained that 20 “[a] full monthly payment is posted to my account on the next business day following the second 21 one-half (1/2) payment draft” and that there “may be a fee of up to $2.50 per debit.” Dkt. No. 22 26-10. The Kangs do not dispute that they agreed to these terms or otherwise explain how 23 Defendants violated this agreement. Accordingly, any claim arising from the processing of 24 biweekly payments is dismissed. 1 H. Nationstar Processed the Kangs’ Payments as Agreed. 2 The Kangs’ remaining claims all concern the processing of their payments from January 3 2022 to present, which they allege Defendants engineered to create an artificial delinquency on the 4 mortgage. The Kangs raise four categories of error. 5 First, the Kangs allege that when they exited the forbearance plan in Fall 2021, they were 6 “bamboozled by the defendants to deposit more than the amount needed to bring the account 7 current” and that when they asked Defendants to refund the excess amount, “[t]he defendants 8 refused to do so with the excuse that the escrow analysis would be done in May 2022.” Dkt. No. 9 1 at 9; see also Dkt. No. 30 at 2, 11–13; Dkt. No. 34 at 5–7. To support this allegation, the Kangs 10 cite their own April 27, 2022 letter that includes this assertion (Dkt. No. 30-8) and a bank 11 transaction summary showing the amounts they paid in September and October 2021 to Nationstar 12 (Dkt. No. 34-3). But there is no evidence that the amounts they paid exceeded what was owed, or 13 that if such an excess existed, how it was handled by Defendants. At this stage of the case, the 14 Court cannot conclude an excess existed based on mere allegations. 15 Second, the Kangs allege Defendants mismanaged the Kangs’ checks, either by never 16 depositing them or depositing them into an “unapplied funds” account, which artificially increased 17 the Kangs’ debt. Dkt. No. 1 at 6–7; Dkt. No. 30 at 7; Dkt. No. 34 at 9, 11, 14. The Kangs admit 18 that each of the identified checks was written for only the amount of principal and interest and did 19 not include the required amount for escrow. Dkt. No. 34 at 8. As Defendants explained in multiple 20 letters to Plaintiffs (Dkt. Nos. 26-19, 26-20), by signing the Escrow Agreement, they agreed to 21 “pay Lender the Funds for Escrow Items unless this Agreement is terminated either by Lender, or 22 pursuant to applicable law.” Dkt. No. 26-12 at 20. Escrow Items include “taxes and assessments” 23 and “premiums for any and all insurance.” Id. Further the Deed of Trust explains: 24 1 Lender may return any payment or partial payment if the payment or partial payments are insufficient to bring the Loan current. Lender may accept any 2 payment or partial payment insufficient to bring the Loan current, without waiver of any rights hereunder or prejudice to its rights to refuse such 3 payment or partial payments in the future, but Lender is not obligated to apply such payments at the time such payments are accepted. 4 Dkt. No. 26-3 at 5. Because the Kangs submitted partial payments by not including the escrow 5 amount, Defendants were authorized under the Deed of Trust to decide whether to deposit a partial 6 payment. While understandably confusing to the Kangs, Nationstar’s conduct was permitted by 7 the Deed of Trust. 8 Third, the Kangs argue that even after they started paying their property taxes directly to 9 Pierce County, Defendants continued to pay the property taxes from the Kangs’ escrow account, 10 increasing the delinquency. Dkt. No. 1 at 6; Dkt. No. 30 at 14, 17, 18; Dkt. No. 34 at 8–9, 13. As 11 explained above, the Kangs signed the Escrow Agreement in which they agreed that Defendants 12 would pay the property taxes through the escrow account. Dkt. No. 26-12 at 20. Neither the 13 Kangs’ displeasure with and lack of trust in Defendants, nor the Kangs’ unilateral decision to pay 14 the property taxes themselves amended the Escrow Agreement. The Kangs also object to the 15 summary of property tax payments in Nationstar’s corporate declaration (Dkt. No. 26-1 ¶ 24), 16 arguing the summary misrepresents who paid which property taxes. Dkt. No. 30 at 17–18; Dkt. 17 No. 34 at 8, 13. But the Kangs’ decision to pay their property taxes directly (for which the County 18 apparently refunded them (see Dkt. No. 33 at 6)) does not mean Defendants were “pretending” to 19 make these payments or that the declaration describing these payments is false. The Kangs have 20 not provided evidence that Defendants acted wrongly in their payment of the property taxes. 21 Finally, the Kangs complain that Defendants illegally overcharged them for property 22 insurance. Dkt. No. 1 ¶ 7, Dkt. No. 30 at 7. The Kangs argue that Defendants chose property 23 insurance that cost $1,079 per year when the Kangs found cheaper insurance for $855 per year 24 1 (Dkt. No. 38 at 2–3). The Kangs provide no authority to show their ability to find lower-cost 2 property insurance means the property insurance Defendants identified was illegally excessive or 3 that Defendants colluded with the insurance company. And as explained above, under the parties’ 4 agreements, payment for property insurance was to go through Defendants; the Kangs could not 5 unilaterally decide to pay the insurance company directly. The Kangs fail to raise an issue of fact 6 on Defendants’ processing of the property insurance payments. 7 III. CONCLUSION 8 For these reasons, the Court GRANTS Defendants’ motion for summary judgment. Dkt. 9 No. 26. The case is dismissed with prejudice. 10 Dated this 20th day of September, 2024. 11 A 12 Kymberly K. Evanson 13 United States District Judge 14 15 16 17 18 19 20 21 22 23 24