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Sanchez v. Bank of America, N.A.

United States District Court, D. Kansas

November 7, 2014



J. THOMAS MARTEN, District Judge.

Plaintiff Diane Sanchez seeks damages against defendants Bank of America, N.A. ("BOA") and Urban Settlement Services (d/b/a Urban Lending Solutions) ("Urban") (collectively "defendants")[1] for alleged breach of contract, promissory estoppel, negligent misrepresentation, fraud, and violations of the Kansas Consumer Protection Act ("KCPA"), K.S.A. ยง 50-623 et seq. This matter is before the court on defendants' Motions to Dismiss (Dkts. 4 and 9).[2] For the reasons stated below, defendants' motions are denied.

I. Factual and Procedural Background

This case arises out of plaintiff's attempt to refinance her home mortgage. At some point prior to 2009, plaintiff obtained a home mortgage from lender Countrywide. Countrywide's mortgage servicing unit was thereafter purchased by BOA. Sometime between 2009 and 2011, plaintiff fell behind on her mortgage payments. On December 21, 2012, plaintiff requested a mortgage refinance in an effort to correct her delinquent balance.

On January 9, 2013, defendants approved plaintiff's modification request and extended a formal offer for a modified mortgage. To accept the offer, plaintiff was required to sign, have notarized, and return all loan paperwork by February 8, 2013. Plaintiff went to one of BOA's branches in Wichita, Kansas, had her signature notarized, and returned the completed paperwork on February 5, 2013. Pursuant to the loan modification, plaintiff was to submit monthly payments in the amount of $615.68 beginning in February 2013. Plaintiff alleges that she has made these monthly payments in full without exception.

On February 19, 2013, plaintiff was notified that there was an error with regard to the notary's signature and was directed to correct and resubmit her loan modification paperwork. Plaintiff complied and, on April 5, 2013, was informed that her paperwork was being processed. However, on April 13, 2013, plaintiff received a letter denying her application because, according to defendants' records, "after being offered assistance, [plaintiff] indicated that [she] did not wish to accept the offer, or after initially asking to be considered for loan assistance, [she] withdrew the request." Dkt. 38, at 57. According to plaintiff, thus began her trouble.

Plaintiff alleges that, over the next year, she had multiple conflicting communications from defendants. After receiving the April 13th letter, plaintiff spoke with a representative who allegedly told her to ignore the letter. In late April 2013, defendants informed plaintiff that her second set of documents also had been improperly notarized. Plaintiff again corrected and re-submitted the documents. She subsequently received, on the same date, one letter stating that her loan application was complete and another that requested additional information. When plaintiff inquired as to the conflicting errors, defendants allegedly told her that the second letter had been generated in error and that her loan modification was in post-closing status. However, just a few days later, plaintiff received a call notifying her that her application was incomplete.

On June 28, 2013, plaintiff received a letter denying her loan modification because her "loan was modified for [her] current hardship, or a related hardship, within the past three years." Dkt. 38, at 62. Plaintiff alleges that she did not modify her mortgage during that time. When plaintiff inquired about this denial, she was informed that her signature on her original loan did not include her middle initial, whereas her signature on the modified loan did. These signatures allegedly had to be identical in order for defendants to process the application. Plaintiff again re-submitted the loan paperwork.

In July 2013, plaintiff began receiving notices that her reduced monthly payments were "less than the total amount needed to bring [her] loan up to date." Dkt. 38, at 63. On August 5, 2013, defendants told plaintiff that her loan modification documents had been received and that her account would be updated once the papers were legally recorded. However, on September 10, 2013, plaintiff received the following notice: "your account remains seriously delinquent. If we do not hear from you immediately, we will have no alternative but to take appropriate action to protect the interest of the Noteholder in your property." Dkt. 38, at 90.

Plaintiff immediately contacted BOA and was assured that her loan modification agreement was on file and was instructed to ignore the September 10th letter. Plaintiff claims that BOA allegedly promised to notify all three credit bureaus that she was not delinquent in her loan obligations. Plaintiff subsequently received a letter that her loan was delinquent and BOA was considering foreclosure proceedings. In October 2013, defendants informed plaintiff that she had twenty payments due and that foreclosure was expected on February 5, 2014.

By December 2013, plaintiff's account still had not been updated with the loan modification information. Plaintiff alleges that defendants told her to keep making payments on her mortgage under the refinanced terms, which she did. On January 8, 2014, defendants informed that her loan modification documents had been rejected and that she could re-apply but modification was not guaranteed.

On March 7, 2014, plaintiff received a letter notifying her that her monthly mortgage payment had increased to $702.62, which was the monthly amount due under her original mortgage agreement. One month later, on April 7, 2014, plaintiff received two letters from the law firm of Millsap & Singer. One letter stated that the firm had been instructed to foreclose on the property and that plaintiff was being charged interest, late charges, attorney fees, and collection costs due to the loan's delinquency. The other letter stated that if plaintiff's deficiency was not corrected, the firm might seek foreclosure on the property. Four days later, on April 11, 2014, defendants referred plaintiff's property for foreclosure.

Plaintiff filed suit against defendants in the District Court of Sedgwick County, Kansas, on April 18, 2014, case number 14cv1176, for alleged breach of contract and violations of the KCPA. Dkt 1-1. On May 13, 2014, Urban removed this case to the United States District Court for the District of Kansas. Dkt. 1. On May 14, 2014, and May 20, 2014, BOA and Urban, respectively, filed Motions to Dismiss plaintiff's claims of KCPA violations. Dkts. 4 and 9. On September 12, 2014, plaintiff filed a motion to amend her complaint, which was granted. On September 30, 2014, plaintiff filed a second motion to amend her complaint, which was also granted. Plaintiff filed her Second Amended ...

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