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Poynter v. Ocwen Loan Servicing, LLC

United States District Court, W.D. Kentucky, Louisville Division

June 27, 2017

DEAN POYNTER and LOIS POYNTER, Plaintiffs,
v.
OCWEN LOAN SERVICING, LLC, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          David J. Hale, Judge

         Plaintiffs Dean and Lois Poynter claim that Defendants Wells Fargo and Ocwen Loan Servicing violated their rights under the Fair Debt Collection Practices Act (FDCPA), the Kentucky Consumer Protection Act, and the Real Estate Settlement Procedures Act when the Poynters defaulted on their home loan. (Docket Nos. 1; 26) Wells Fargo initiated foreclosure proceedings and retained Ocwen to service the loan. (D.N. 59, PageID # 1233) The parties were able to negotiate a loan modification agreement. (Id.) Throughout the process, the Poynters were represented by counsel. (Id.) The agreement contained three provisions relevant here: (1) a jury waiver provision, (2) a provision that all communications from Ocwen were to be sent directly to the Poynters, and (3) a provision that the terms of the agreement could only be changed by written consent from both the Poynters and Ocwen. (Id.) After the agreement was finalized, the Poynters' counsel wrote Ocwen to request that all future correspondence be directed to him, and not the Poynters. (D.N. 26, PageID # 284) Ocwen responded by sending an authorization form to the Poynters to certify that counsel should receive future communications. (D.N. 26-3, PageID # 311) The Poynters never responded. (D.N. 59, PageID # 1234) Instead, the Poynters filed suit, claiming that Ocwen's direct communications with them violated the FDCPA. (D.N. 1; D.N. 26) The Poynters' complaint included a jury demand, which Ocwen has moved to strike, citing the jury waiver provision in the loan modification agreement. (D.N. 38) Because the jury waiver provision is enforceable, the Court will grant this motion. The Poynters have also filed a motion seeking certification of a class consisting of themselves and others who were contacted by Ocwen while represented counsel. (D.N. 58) Because the Poynters have not demonstrated that they meet the requirements for class certification under Rule 23, the Court will deny this motion.

         I. BACKGROUND

         In July 2004, Dean and Lois Poynter took out a loan on their home. (See D.N. 26-7; D.N. 59) Wells Fargo bought the loan and currently holds the note. (D.N. 44-1, PageID # 493; D.N. 59, PageID # 1232-33) In 2008, the Poynters defaulted on the loan. (D.N. 59, PageID # 1233)

         Thereafter, Wells Fargo filed a foreclosure action and retained Ocwen Loan Servicing, LLC to service the loan. (Id.) The Poynters were represented during the foreclosure proceedings by attorney Teddy Gordon. (Id.) In 2011, Wells Fargo, Ocwen, and the Poynters agreed to a settlement of the foreclosure action. (Id.) As part of the settlement, the parties entered into a loan modification agreement. (Id.) The modification “declared their loan current, . . . reduced the Poynters' interest rate and required monthly payments going forward.” (Id.) The loan modification agreement contained the following provision:

17. No Trial By Jury: BY EXECUTING THIS MODIFICATION, BORROWERS IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS MODIFICATION AND ANY RELATED AGREEMENTS OR DOCUMENTS OR TRANSACTIONS CONTEMPLATED IN THIS MODIFICATION.

         (D.N. 38-1, PageID # 429)

         The modification agreement, which was signed by Dean Poynter, Teddy Gordon, and a representative from Ocwen, also stated:

19. Notices: All notices should be sent to: . . .
If to Borrowers:
Dean A. Poynter
Lois M. Poynter
[redacted]
Louisville, Kentucky 40272

(D.N. 38-2, PageID # 441-42) Additionally, the parties agreed that that the terms of the modification agreement could only be changed by written consent of both the Poynters and Ocwen. (Id., PageID # 440) A Home Affordable Modification Program (HAMP) cover sheet was used as the cover sheet for the loan modification agreement. (D.N. 56-1, PageID # 1072)

         The Obama Administration created HAMP in 2008 to help struggling homeowners by incentivizing loan investors and servicers to enter into mortgage modification agreements. Jean Braucher, Humpty Dumpty and the Foreclosure Crisis: Lessons from the Lackluster First Year of the Home Affordable Modification Program (HAMP), 52 Ariz. L. Rev. 727, 729 (2010). The HAMP program set forth detailed guidelines for borrower eligibility and required borrowers to submit specific documentation to the United States Treasury to qualify for the program. (D.N. 56-1, PageID # 1072) See also Braucher, 52 Ariz. L. Rev. at 729. Ocwen maintains that it did not submit the Poynters' modification as a HAMP modification to the U.S. Treasury. (D.N. 56-1, PageID # 1072)

         Rather than making payments on the loan themselves, the Poynters arranged for Gordon to make the payments for them. (D.N. 59, PageID # 1234) According to the Poynters, Ocwen “failed to apply payments made by the Poynters” and “assessed and attempted to collect from the Poynters['] fees and charges not owed.” (D.N. 26, PageID # 277) On April 17, 2012, and again in January 2013 and February 2013, Gordon wrote Ocwen to inform it that the Poynters were represented by him and requested that all future correspondence be directed to him, and not the Poynters. (Id., PageID # 284) On March 15, 2013, Ocwen wrote Lois Poynter:

Concern: We are in the receipt a correspondence [sic] from Teddy B. Gordon (Attorney at Law), who expressed concern regarding the late charge and lender placed insurance assessed on the above loan. We were requested to respond to the quires [sic] outlined in the correspondence.
Response: Our records indicate that Teddy B. Gordon (Attorney at Law) is not authorized to receive any information on the above-referenced loan number. Please note that in order for us to authorize Teddy B. Gordon (Attorney at Law), it is requested that you provide us with a written authorization.

(D.N. 26-3, PageID # 311) The Poynters never submitted written authorization for Gordon to receive future correspondence. (D.N. 59, PageID # 1234) As a result, Ocwen continued to send notices to the Poynters' home address. (Id.)

         In July 2013, the Poynters, represented by Teddy Gordon, filed the instant action in Jefferson County, Kentucky Circuit Court. (D.N. 1, PageID # 1) Ocwen removed the case to federal court. (Id.) In the Poynters' amended complaint, they claim violations of § 1692c of the FDCPA, the Kentucky Consumer Protection Act, and the Real Estate Settlement Procedures Act.

         They also seek class action certification for these claims. (D.N. 26) The Poynters allege that Ocwen improperly communicated with them as well as other consumers when Ocwen had actual knowledge that these consumers were represented by counsel. (Id., PageID # 285-86) In addition to their class action claims, the Poynters allege breach of contract; unjust enrichment; violations of the FDCPA, Kentucky Consumer Protection Act, and Truth in Lending Act (TILA); fraud; intentional infliction of emotional distress; defamation; and invasion of privacy in their individual capacities. (D.N. 26)

         Ocwen Loan and Wells Fargo filed a joint motion to dismiss. (D.N. 44) This Court granted the motion to dismiss in part, leaving four claims: (1) FDCPA (class action); (2) breach of contract; (3) FDCPA (individual); and (4) TILA violation. (D.N. 68)

         On September 10, 2015, Ocwen and Wells Fargo filed a joint motion to strike the plaintiffs' jury demand. (D.N. 38) Three months later, the Poynters filed a motion for class certification. (D.N. 58) The Court determined that a hearing on both motions would be helpful. (D.N. 68) A hearing was held November 21, 2016. (D.N. 74)

         II. DISCUSSION

         A.

         As grounds for their motion to strike, Ocwen and Wells Fargo argue that the loan modification agreement contained a jury waiver provision that should be enforced. (D.N. 38-1, PageID # 429) In response to the defendants' motion, the Poynters argue that the loan modification here was a HAMP modification and a HAMP modification cannot contain such waivers. (D.N. 50, PageID # 566-70)

         The Poynters also claim that they did not knowingly and voluntarily waive their right to a jury trial. (Id., PageID # 570-71) Third, the Poynters assert that the waiver is unenforceable because the defendants breached the contract first and thus cannot selectively enforce the jury waiver. (Id., PageID # 571-73) Finally, the Poynters argue that the jury waiver does not apply to its class action FDCPA claim because the claim does not rely on the modification agreement. (Id., PageID # 573-74)

         The defendants respond that the loan modification agreement was not a HAMP modification because it “was processed and administered internally” and was never submitted as a HAMP modification. (D.N. 56, PageID # 1061-63) The defendants maintain that the HAMP cover sheet was used purely as a matter of convenience. (D.N. 75, PageID # 1614-17) Next, the defendants argue that the Poynters are precluded from claiming that they did not knowingly and voluntarily agree or consent to the jury waiver because they signed the loan modification agreement and were represented by counsel throughout the process. (D.N. 56, PageID # 1063- 64) Finally, the defendants assert that the waiver provision is enforceable. (Id., PageID # 1064- 66)

         B.

         The right to a jury trial can be contractually waived provided the waiver is knowing and voluntary. K.M.C. Co. v. Irving Trust Co., 757 F.2d 752, 757-58 (6th Cir. 1985). “When a contract contains an express jury waiver provision, the party objecting to that provision has the burden of demonstrating that its consent to the waiver was not knowing and voluntary.” Integra Bank Nat'l Ass'n v. Rice, No. 3:11-CV-49, 2011 WL 2437789, at *5 (W.D. Ky. June 14, 2011) (quoting Efficient Sols., Inc. v. Meiners' Country Mart, Inc., 56 F.Supp.2d 982, 983 (W.D. Tenn. 1999)); see also K.M.C., 757 F.2d at 757-58. To determine whether a jury trial waiver is knowing and voluntary, courts have looked to the following factors:

(1) the conspicuousness of the waiver provision, (2) the level of sophistication and experience of the parties entering into the contract, (3) whether there was an opportunity to negotiate the terms of the contract, (4) the relative bargaining power of the parties, ...

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