United States District Court, D. Kansas
MEMORANDUM AND ORDER
F. MELGREN UNITED STATES DISTRICT JUDGE.
Lata Tomlinson filed suit against Defendant Ocwen Loan
Servicing, LLC (“Ocwen”), in the District Court
of Sedgwick County, Kansas. She originally alleged four
violations of the Kansas Consumer Protection Act
(“KCPA”),  and sought a declaratory judgment
regarding insurance proceeds. Ocwen timely removed the case
to this Court and filed a motion to dismiss all five claims.
The Court granted the motion in part, dismissing all but two
of Tomlinson's KCPA claims-Count II (deceptive act) and
Count IV (unconscionable act). Ocwen now moves for summary
judgment on the two remaining claims. For the following
reasons, the Court denies Ocwen's Motion for Summary
Judgment (Doc. 58).
Factual and Procedural Background
2006, Tomlinson purchased residential property in Wichita,
Kansas. To finance her purchase of the property, Tomlinson
executed a promissory note in favor of Ownit Mortgage
Solutions, Inc. and a mortgage in favor of Mortgage
Electronic Registration Systems, Inc., as the nominee of
Ownit Mortgage and its successors and assigns.
years after she took out the loan, Tomlinson negotiated a
loan modification with the then-servicer of the loan, Litton
Loan Servicing, LP. Ocwen became the servicer of
Tomlinson's loan effective November 1, 2011. On June 27,
2012, U.S. Bank, N.A. filed a mortgage foreclosure suit against
Tomlinson in the Sedgwick County District Court. U.S. Bank
took a default judgment against Tomlinson on August 6, 2012.
before the mortgage foreclosure suit was initiated, on June
16, 2012, Ocwen sent Tomlinson an offer to apply for a loan
modification through the Home Affordable Modification Program
(“HAMP”). The parties dispute whether Tomlinson
completed the HAMP application. On July 6, shortly after the
mortgage foreclosure suit was initiated, Ocwen sent Tomlinson
another offer to apply for a loan modification through HAMP.
Two weeks later, on July 20, Ocwen sent Tomlinson numerous
letters stating that it had received her loan modification
applications, but further documentation was required to
complete the application process. The parties dispute whether
Tomlinson actually submitted the requested documentation.
Ocwen then sent Tomlinson two letters stating that she was
not eligible for a HAMP modification on August 24, 2012 and
June 3, 2013.
June 7, 2013, Ocwen sent Tomlinson a Shared Appreciation
Modification Offer (“the SAM Offer”). Per the
terms of the SAM Offer, Tomlinson had to complete and return
the SAM Offer to Ocwen, and pay $782.45 as an initial payment
on or before July 1, 2013, and a trial payment of $782.45 on
or before August 1, 2013. Section one of the Loan
Modification Agreement (“the Agreement”) attached
to the Offer expressly states that the Loan Documents shall
not be modified unless and until: (1) Tomlinson successfully
completes the Trial Period, and (2) Tomlinson receives from
Ocwen a copy of this agreement signed by Ocwen.
parties dispute whether the Offer would be “null and
void” if Tomlinson failed to send the initial and trial
payments on time. The Offer states: “If the payments
are made after their due dates or in amounts different from
the amount required, your loan may not be modified
(emphasis added).” However, as Ocwen points out, the
Agreement provides: “I acknowledge and agree that if I
fail to send any payment on or before the respective due
date, the Servicer's modification offer will be null and
void and this Agreement will not become effective . . .
deposition testimony, Tomlinson testified that she
“understood” that Ocwen could commence or resume
foreclosure proceedings if she failed to comply with the
terms of the Agreement. But, as Tomlinson points out, U.S.
Bank had already foreclosed on the Property by the time the
Offer was made on June 7, 2013. U.S. Bank initiated
foreclosure proceedings on June 27, 2012 and took a default
judgment against Tomlinson on August 6, 2012.
testified that she signed and executed the Agreement and sent
it to Ocwen before the July 1, 2013 deadline. Ocwen maintains
it never received a copy. But there is a notation in
Ocwen's Comments Log made on July 5, 2013, that states:
“Foreclosure sale postponed for forbearance, ”
because: “[f]ile is on hold for active forbearance
plan, as borrower has been approved for SAM modification
parties dispute whether Tonlinson made the required payments
and Ocwen received them. Ocwen cites to an August 19, 2013
entry in its Comments Log for Tomlinson's loan, which
states: “[Tomlinson] did not make the first trial
payment or down payment required for their SAM
modification.” But Tomlinson cites to three account
statements she received from Ocwen. Tomlinson's June 17
statement indicated that her “current forbearance
payment due by 08/01/13” was $782.45. This statement
did not indicate a past due forbearance payment. Her July 17
statement indicated the same- her “current forbearance
payment due by 08/01/13” was $782.45. And her August 19
statement stated that her current forbearance payment due by
09/01/2013 was $782.45, and that the past due forbearance
payment was also $782.45.
parties agree that Tomlinson never received a signed copy of
the SAM Offer from Ocwen, and that Ocwen denied Tomlinson a
loan modification under the SAM Offer. Ocwen sent Tomlinson a
letter dated August 27, 2013, which indicated that a
sheriff's sale of the Property had been scheduled. The
Property was sold to U.S. Bank at a sheriff's sale on
September 25, 2013 pursuant to the judgment the district
court had entered in 2012. Ocwen did not notify Tomlinson
that the Offer had been denied until November 2013, over a
month after U.S. Bank purchased the property at the
sheriff's sale. Ocwen asserts that this delay was due to
“coding issues” in Ocwen's system.
judgment is appropriate if the moving party demonstrates that
there is no genuine issue as to any material fact, and the
movant is entitled to judgment as a matter of
law.A fact is “material” when it is
essential to the claim, and issues of fact are
“genuine” if the proffered evidence permits a
reasonable jury to decide the issue in either party's
favor. The movant bears the initial burden of
proof and must show the lack of a genuine issue of material
fact and entitlement to judgment as a matter of
If the movant carries this initial burden, the nonmovant that
bears the burden of persuasion at trial may not simply rest
on its pleading but must instead “set forth specific
facts” that would be admissible in evidence in the
event of trial from which a rational trier of fact could find
for the nonmovant. These facts must be clearly identified
through affidavits, deposition transcripts, or incorporated
exhibits-conclusory allegations alone cannot survive a motion
for summary judgment. The Court views all evidence and
reasonable inferences in the light most favorable to the
party opposing summary judgment.
KCPA prohibits both deceptive and unconscionable acts and
practices by a supplier in connection with a consumer
transaction. Of Tomlinson's two remaining claims,
Count II alleges that Ocwen committed a deceptive act, and
Count IV alleges that Ocwen committed an unconscionable act.
Ocwen now seeks summary judgment on these two claims.
Deceptive Act Claim
II alleges a violation of K.S.A. § 50-626(b)(8).
Tomlinson claims that Ocwen committed a deceptive act by
falsely stating in the SAM Offer that her loan would be
modified if she completed the attached agreement and made
timely payments. Under this provision, it is per se deceptive
to falsely state, “knowingly or with reason to know,
that a consumer transaction involves consumer rights,
remedies or obligations.” And the solicitation of a
loan modification is a consumer transaction under the
KCPA. Whether or not a ...