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Davis v. Hunt Leibert Jacobson, P.C.

United States District Court, D. Connecticut

May 20, 2016

JAMES DAVIS, Plaintiff,


          Janet Bond Arterton, U.S.D.J.

         Plaintiff James Davis, an active duty service member in the U.S. Navy, filed this suit against the law firm Hunt Leibert Jacobson, P.C. ("Hunt Leibert") and Wells Fargo Bank, N.A. ("Wells Fargo") for claims arising from home foreclosure proceedings they initiated against him. Defendants now move [Doc. ## 106, 108] for summary judgment on Plaintiffs claims[1] of violations of the Servicemembers Civil Relief Act ("SCRA") (Count One); the Connecticut Unfair Trade Practices Act ("CUTPA") (Count Two); the Connecticut Creditors' Collection Practices Act ("CCPA") (Count Three); Negligent Infliction of Emotional Distress ("NIED") (Count Five); and Breach of the Covenant of Good Faith and Fair Dealing (Count Six) (Wells Fargo only). Following oral argument on these motions, Defendants further moved [Doc. ## 142, 144] to dismiss Mr. Davis's SCRA claim on the grounds that the Court lacks subject-matter jurisdiction. For the following reasons, Defendants motions to dismiss Count one are granted; Hunt Leibert's motion for summary judgment is granted on all counts; and Wells Fargo's motion for summary judgment is granted as to Counts Six and Three and denied as to Counts Two and Five.


         In April 2006, Mr. Davis, an active duty service member in the U.S. Navy, purchased a home for his family at 3 Exley Road in Plainfield, Connecticut (Davis Dep., Ex. 1 to Defs.' Loc. R. 56(a)l Stmt. [Doc. # 106-21] at 10-11), executing and delivering a Note in the original principal amount of $268, 552.00 to CTX Mortgage Company, LLC, which subsequently assigned the Note and mortgage to Wells Fargo (Neely Aff., Ex. 5 to Defs.' Loc. R. 56(a) 1 Stmt, f 3).

         Plaintiff stopped making regular payments on the Note prior to November 5, 2007, resulting in several notifications from Wells Fargo that his "loan [wa]s in default" and that "[u]nless the payments on [his] loan can be brought current" it would "become necessary to accelerate [his] Mortgage Note and pursue the remedies provided for in [his] Mortgage or Deed of Trust." (November 5, 2007 Ltr., Ex. 6 to Defs.' Loc. R. 56(a) 1 Stmt, at 116; January 7, 2008 Ltr., Ex. 7 to Defs.' Loc. R. 56(a) 1 Stmt, at 119; April 6, 2008 Ltr., Ex. 8 to Defs.' Loc. R. 56(a) 1 Stmt, at 122; June 8 Ltr., Ex. 9 to Defs.' Loc. R. 56(a) 1 Stmt, at 125.)

         A. Loan Modification Agreement

         On June 12, 2008, Mr. Davis entered into a Loan Modification Agreement ("Modification Agreement") with Wells Fargo with his first payment due September 1, 2008. (Modification Agreement, Ex. 10 to Defs.' Loc. R. 56(a) 1 Stmt, at 128.) However, Plaintiff failed to make the requisite payment under the Agreement.[2] (Davis Dep. at 14- 16.) Thus, on October 5, 2008, Wells Fargo advised Plaintiff that he was in default on his loan (October 5, 2008 Ltr., Ex. 11 to Defs.' Loc. R. 56(a) 1 Stmt, at 133), and referred the defaulted Note to Hunt Leibert (Neely Aff. J 3), which commenced a foreclosure action in state court against Plaintiff on February 13, 2009 (see Marshal Proof of Service, Ex. 12 to Defs.' Loc. R. 56(a) 1 Stmt, at 136-37). On February 19, 2009, Mr. Davis filed a pro se appearance in the foreclosure action (see Pro Se Appearance, Ex. 13 to Defs.' Loc. R. 56(a) 1 Stmt, at 139), and filed an application to participate in a Foreclosure Mediation Program (Foreclosure Mediation Program App., Ex. 16 to Defs.' Loc. R. 56(a) 1 Stmt, at 153), which was granted on March 5, 2009 (Case Details, Ex. 17 to Defs.' Loc. R. 56(a) 1 Stmt, at 156). Plaintiff testified that he attended two or three mediation sessions. (Davis Dep. at 59-60.)

         B. Temporary Forbearance Agreement

         On August 31, 2009, Wells Fargo and Plaintiff entered into a Temporary Forbearance Agreement ("Forbearance Agreement") under which Plaintiff agreed to make payments of $1, 896.03 on October 1, November 1, and December 1, 2009. (Forbearance Agreement, Ex. 18 to Defs.' Loc. R. 56(a) 1 Stmt, at 159-60.)

         Wells Fargo maintains that it entered into this agreement to determine if Mr. Davis qualified for a permanent loan modification and that Mr. Davis was aware of this objective from the September 2009 Foreclosure Mediation Report sent to him which stated that "Defendant [Davis] has received a 3 Month Trial Period offer for a workout. The last payment under the agreement is scheduled to be made on or before 11/1/09, after which the loan will be reviewed for a permanent loan modification." (Foreclosure Mediation Report, Ex. 19 to Defs.' Loc. R. 56(a) 1 Stmt, at 162.) Mr. Davis claims that he believed any future payments would be $1, 896.03 per month or less. (Davis. Dep. II, Ex. 1 (Vol. I) to PL's Loc. R. 56(a)2 Stmt. [Doc. # 117-2] at 124.)

         In October 2009, Mr. Davis deployed overseas on a nuclear submarine and did not return to the United States until April 2010, believing that he had put his home mortgage affairs in order before his deployment. His wife made the required payments in October, November, and December but when she tried to make a fourth payment in January 2010, Wells Fargo refused to accept it. (Davis Dep. II (Vol. I) at 40-41.) Mr. Davis contacted Wells Fargo while he was in Spain on a temporary shore visit and was told that Defendant would "continue to discuss and negotiate with [his] wife, Kathy, " and if the situation did not resolve, discussions would resume when Mr. Davis returned to the United States sometime in April or May 2010. (Davis Aff. To PL's Opp'n to Defs.' Mots for Summ. J. [Doc. #119-1] f 24.)

         On February 8, 2010, while Mr. Davis was still deployed, the foreclosure mediator issued a Final Report stating that because Mr. Davis had failed to attend mediation sessions scheduled June 22, 2009, September 03, 2009, November 18, 2009, and January 13, 2010, and had not requested any extension of time, "[t]he mediation period [wa]s now terminated." (Final R., Ex. 22 to Defs.' Loc. R. 56(a)! Stmt, at 184.) The mediator also checked the "Settled" box on the Final Report, under which she indicated that the case was to be withdrawn by June 7, 2010, a date on which Mr. Davis was not deployed. (Id.)[3]

         On March 16, 2010, while Mr. Davis was deployed, Wells Fargo wrote to him that "after carefully reviewing the information [he provided], [it was] unable to adjust the terms of [his] mortgage" and that this decision "was made because [he] did not provide [Wells Fargo] with all of the information needed within the time frame required per [the] trial modification period workout plan." (March 16, 2010 Ltr., Ex. 23 to Defs.' Loc. R. 56(a) 1 Stmt, at 186.) However, Plaintiff states that he was unaware that the August 2009 Temporary Forbearance Agreement contained any documentation requirement and that at no point after this agreement was executed did Wells Fargo make requests for financial information, nor advise Mr. Davis that "more information was needed if [Defendant was] going to continue to honor [the agreement] to stay the foreclosure (Davis Aff. f 22). Defendants offer nothing to reflect that Wells Fargo's requested additional information at any point prior to March 16, 2010, and the Forbearance Agreement is silent as to any such requirements. (See Forbearance Agreement at 159-60)

         When Mr. Davis returned from deployment in April 2010, he sent Wells Fargo a hardship letter, financial worksheet, and proof of salary, prompting Wells Fargo to offer a Stipulated Partial Reinstatement/Repayment Agreement, which required Mr. Davis to pay $10, 000 upfront and $3, 030 a month over the course of a year. (See Repayment Agreement, Ex. 25 to Defs.' Loc. R. 56(a) 1 Stmt, at 196-97.) Mr. Davis could not afford Wells Fargo's offer, but expected to receive another offer, which Wells Fargo never made. (Davis Dep. at 27.)

         C. Dismissal of Action and Strict Foreclosure

         On June 7, 2010, after Mr. Davis's deployment had concluded, the foreclosure action was dismissed (Case Details at 156), although Mr. Davis did not know of this disposition and was "still in fear of losing the house."[4] Mr. Davis recalls several conversations he had with Wells Fargo during the June-August 2010 time period, which made him believe that they "were progressing towards some end that [Plaintiff would] somehow be able to keep [his] home." (Davis. Dep. Ill. at 37-38.)

         On June 17, 2010, five days before Mr. Davis was underway and after the foreclosure action was dismissed, Defendants inexplicably moved for summary judgment on the already-closed foreclosure action (2010 Mot. Summ. J., Ex. 28 to Defs.' Loc. R. 56(a) 1 Stmt.), sending a copy of the motion to Mr. Davis, which Plaintiff claims he never received. The next day, Defendants, presumably realizing the procedural posture of the case, filed a Motion to Reopen and Set Aside Judgment of Dismissal, again sending a copy to Mr. Davis (Mot. Reopen, Ex. 26 to Defs.' Loc. R. 56(a) 1 Stmt, at 205), which Plaintiff again states that he never received (Davis Dep. Ill. at 38-39). Although when the state court held a hearing on this motion on June 28, 2010, at which Ms. Davis appeared and advised the judge and Bruce Fair, Wells Fargo's attorney, that her "husband was at sea and unavailable." (Kathy Davis Aff., Loc. R. PL's 56(a)2 Stmt, at J 14.) The judge informed the parties that he would grant the motion to reopen and stated that "as soon as [Mr. Davis] gets back, [the case would] have to [be] put back into mediation, " while directing Attorney Fair to give Ms. Davis his information so that she could contact him directly. (Transcript of Proceeding, Ex. 6 to PL's Loc. R. 56(a)2 Stmt. [Doc. # 118-7] at 3-4; Order Granting Mot. Reopen, Ex. 27 to Defs.' Loc. R. 56(a) 1 Stmt, at 207.) However, the case was never returned to foreclosure mediation.

         On July 13, 2010, a day after Mr. Davis returned from being underway, Defendants filed a Motion for Strict Foreclosure and Finding of Entitlement to Possession (Mot. Strict Foreclosure, Ex. 31 to Defs.' Loc. R. 56(a) 1 Stmt, at 275-78). Mr. Davis, who claims not to have received this motion either (Davis Dep. Ill. Ex. 2 to PL's Loc. R. 56(a)2 Stmt, at 39), failed to oppose. The state court granted the motion on July 26, 2010, and set the first law day for September 13, 2010. (Order on Mot. Strict Foreclosure, Ex. 32 to Defs.' Loc. R. 56(a) 1 Stmt, at 280.)

         D. The August 2010 Vacate Letter

         Sometime in early-to-mid August 2010, after returning from being underway, Mr. Davis received a letter informing him that his family needed to be "off the premises" or they would be "forcibly removed" on or about September 12th [the day before the first law day] and that "the motion for foreclosure ha[d] moved forward." (Davis Dep. at 29-32.) At the time Mr. Davis received this letter, he still believed that he owned the property and was hopeful that he would be able to keep it. (Davis Dep. II (Vol. II), Ex. 1 to PL's Loc. R. 56(a)2 at 55-57.) After receiving the letter, he and his wife "sat in the driveway and kind of cried over it" and then shared it with two of their children and their son's girlfriend, and later, discussed it with a Wells Fargo employee. (Davis Dep. at 29, 34; Davis Dep. II (Vol. I) at 253.)

         Mr. Davis "didn't know who sent the letter" and stated that "the only way we're ever going to know is, it seems like, is to lay eyes on said document." (Davis Dep. II (Vol. I) at 253.) However, he has never produced the letter and believes that it may have gotten lost in the hurried move to Kittery, Maine, where the Davis family relocated after vacating 3 Exley Road as demanded by the letter. Mr. Davis alleged that because Wells Fargo typically sent correspondence by "normal mail" and Hunt Leibert hand-delivered its correspondence, [5] he believed it more likely that Hunt Leibert sent the letter because his son told him that it had been "dropped off' or "left at the door" and not placed in the mailbox. (Davis Dep. at 30-31.)

         Hunt Leibert declares that it never sent Mr. Davis any such letter, relying on an absence in its file of a referral by Wells Fargo to initiate eviction proceedings and its general business practice to never send an eviction letter in a foreclosure case without first having obtained "an ejectment order in the foreclosure case or a proper eviction order from the housing court." (Staskiewicz Aff, Ex. 14 to Defs.' Loc. R. 56(a) 1 Stmt, f f 4-6.) Wells Fargo also denies sending any such letter to Plaintiff, pointing to the absence of any record in its file. After the Davis family vacated the home, Wells Fargo assumed maintenance of the property.

         E. Vacating Judgment of Strict Foreclosure

         On September 14, 2010, Hunt Leibert filed a Motion to Open and Extend the Law Day until November 15, 2010 "for the purpose of allowing [it] additional time to comply with the Veteran's Administration's internal requirements, including obtaining Veteran's Administration bids." (Hunt Leibert Mot. Open & Extend Law Day, Ex. 33 to Defs.' Loc. R. 56(a) 1 Stmt, at 282.) It sent a copy to Mr. Davis at 3 Exley Road (id. at 283), but Mr. Davis, who had moved to Maine by that time, denies having received it (Davis Dep. Ill. at 39-40).

         On November 15, 2010, Hunt Leibert filed a Motion to Open and Vacate the Judgment of Strict Foreclosure representing that Mr. Davis was "currently active in the United States military service" and requesting "additional time to review the file to ensure that the foreclosure complied with its internal requirements." (Mot. Vacate J., Ex. 35 to Defs.' Loc. R. 56(a) 1 Stmt, at 287.) The motion was granted and the foreclosure action was dismissed on January 18, 2011 (Case Details at 157.)

         After Mr. Davis learned of this dismissal, he travelled to Connecticut to examine and inspect the home and found it vandalized, damaged, and unfit for occupancy. He then commenced this action against Hunt Leibert and Wells Fargo on July 31, 2012.

         II. Discussion

         A. Defendants' Motions to Dismiss Plaintiffs SCRA claim (Count One)[6]

         Because the Court must dismiss an action if it determines "at any time that it lacks subject-matter jurisdiction, " Fed R. Civ. P. 12(h)(3) (emphasis added), the Court will begin by addressing Defendants' recent, albeit belated, jurisdictional motions in which they maintain that this Court lacks subject-matter jurisdiction because the SCRA, as it existed in July 2010 when the conduct relevant to Plaintiffs SCRA occurred, did not provide an express or implied private right of action for damages, and the 2010 amendment[7] which added an express private right of action, effective October 2010, does not apply retroactively.

         Amended in 2003, the SCRA "restated and strengthened" the Soldiers' and Sailors' Civil Relief Act ("SSCRA"), [8] and is liberally construed to effectuate its purpose of "preventing] default judgments from being entered against members of the armed services in circumstances where they might be unable to appear and defend themselves." United States v. Kaufman, 453 F.2d 306, 309 (2d Cir. 1971); see In re Templehoff, 339 B.R. 49, 53 (S.D.N.Y. 2005). Section 3931(a)[9] of the SCRA ("Protection of servicemembers against default judgments") applies "to any civil action or proceeding ... in which the defendant [active duty servicemember] does not make an appearance." Under this provision-the only provision of the SCRA at issue in this case-"the court, before entering judgment for the plaintiff, shall require the plaintiff to file with the court an affidavit" stating whether or not the defendant is in military service. 50 U.S.C. § 3931(b)(1). If the defendant is in military service, "the court may not enter a judgment until after the court appoints an attorney to represent the defendant, " id. § 3931(b)(2), and can stay the proceedings until the defendant-servicemember is located, id. § 3931(d). If default judgment is entered against a servicemember on military service, "the court entering the judgment shall, upon application by or on behalf of the servicemember, reopen the judgment for the purpose of allowing the servicemember to defend the action" so long as the servicemember was "materially affected by reason of that military service in making a defense to the action" and "has a meritorious or legal defense to the action or some part of it." Id. § 3931(g).

         Defendants contend that this Court lacks subject-matter jurisdiction with respect to Plaintiffs SCRA claim because (1) § 4042 does not apply retroactively, and (2) § 3931(b) contains no implied private right of action for damages.

         1. Does § 4042 Apply Retroactively?

         Under the framework established in Landgrafv. USI Film Products, 511 U.S. 244 (1994), determining whether the normal presumption against retroactivity applies in a particular case requires courts to first determine whether "Congress has expressly prescribed the statute's proper reach." Id. at 280. If Congress has not, then courts decide whether applying the statute retroactively would "impair rights a party possessed when he acted, increase a party's liability for past conduct, or impose new duties with respect to transactions already completed." Id. If the answer is yes, the presumption against retroactivity applies "absent clear congressional intent" that the statute should apply retroactively. Id.

         It is undisputed that § 4042 is silent with respect to retroactivity. See Gordon v. Pete's Auto Serv. of Denbigh, Inc., 637 F.3d 454, 459 (4th Cir. 2011). The parties' dispute focuses instead on the second step of the Landgraf 'retroactivity analysis, [10] i.e., whether retroactive application of ยง 4042 "to the person objecting would have a ...

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