After several attempts to foreclose on their mortgage, an Oregon couple sought to enjoin a trustee’s sale citing several claims for relief, including breach of contract, unfair trade practices, a RESPA violation and a violation of the Fair Debt Collections Act. The defendants sought summary judgement on all claims.
The case is Gary Gosha and Kit Gosha v. Bank of New York Mellon Corp., Community Loan Servicing, LLC and Clear Recon Corp. (No: 3:19-cv-00470-HZ, United States District Court, D. Oregon).
The facts
Gary and Kit Gosha obtained a cash-out loan in October 2005, taking substantial cash out of their Oregon home and modifying their mortgage terms. In August 2011, after their loan payments increased substantially per month, the Goshas stopped making payments.
Allegedly, they stopped paying because an agent of the loan servicer told them that help was only available if they were in default. Their servicer subsequently issued several notices detailing the amount outstanding and “threatened foreclosure.
After years of bankruptcy proceedings and foreclosure mediation, the Goshas filed their first suit to stop the foreclosure proceedings. They alleged the deed of trust was void and that the defendants committed fraud in attempting to foreclosure on the debt. After that action was dismissed with prejudice, the defendants voluntarily rescinded their initial non-judicial foreclosure proceedings.
To begin the non-judicial foreclosure process a second time, the loan servicer (Community) invited the Goshas to participate in the Oregon Foreclosure Avoidance Program (OFAP) in June of 2018. The OFAP conference ended “with an adverse result for” the Goshas because Bayview, the former servicer, was provided with a certificate of compliance, allowing them to pursue the nonjudicial foreclosure under Oregon law.
On Oct. 10, 2018, Clear Recon Corp. recorded its second notice of default in Washington County. Before recording, Recon had sent the Goshas several notices showing the amounts due and the amounts necessary to reinstate. The Goshas sent a dispute letter to Recon demanding that the foreclosure be rescinded because the order in which the notices were sent did not comply with Oregon law. Shortly thereafter, Recon rescinded the second notice of default and acceleration of the debt, recording a recission in Washington County on Oct. 30.
On Dec. 22, 2018, the Goshas were served with another trustee’s notice of sale commencing the non-judicial foreclosure at hand. The notice indicated that the current beneficiary of the deed of trust is Bank of New York Mellon and the trustee is Recon. The notice reflected delinquent payments by the Goshas beginning in September of 2011, with a total required to reinstate of $247,892.26. Along with the notice of sale, the defendants issued a third notice of default, which was recorded on Dec. 20, 2018.
In April 2019, the Goshas sought to enjoin the trustee’s sale and filed several claims for relief. The defendants moved to dismiss, and the court granted dismissal on several claims. The remaining claims at issue on summary judgment were breach of contract claim against Recon and Bayview; Oregon Unfair Trade Practices Act claim against all defendants; a RESPA claim against Bayview; and a Fair Debt Collection Practices Act (FDCPA) claim against Recon.
The ruling
U.S. District Court Judge Marco Hernandez granted the defendants’ motions for summary judgement.
“Plaintiffs have not made mortgage payments in almost 11 years. Plaintiffs have already filed (and lost) one lawsuit in this district related to this same saga,” Hernandez wrote. “Reviewing the plaintiffs’ briefing, it is clear to the court that plaintiffs believe they have been mistreated—they perceive defendants as bad actors who concealed evidence and failed to work with plaintiffs to implement a foreclosure mitigation procedure. But it is also clear to the court that plaintiffs mean to delay the foreclosure process by accusing the defendants of impropriety at every turn. They fail, however, to support their drastic allegations with relevant evidence. And with each new motion, their allegations grow ever more accusatory and extreme.”
Hernandez ruled the Goshas couldn’t recover for any alleged breach because they failed to perform.
“No matter how you spin it, a fatal flaw appears throughout plaintiffs’ breach of contract claims: the Goshas have not performed their fundamental obligation under the agreement they seek to enforce, i.e., the deed of trust. The first ‘uniform covenant’ in the deed states ‘Borrower shall pay when due...the debt evidenced by the note.’ And in Mr. Gosha’s deposition, when asked what he understood his obligations under the trust deed to be, he responded ‘[t]o make each monthly payment,’” Hernandez wrote.
“Yet plaintiffs had not made payments for seven years before the foreclosure at issue here and its allegedly deficient procedure. And, to this day, they have still not made any additional payments. Their last payment was in 2011,” the judge continued. “This acknowledged failure to perform under the agreement precludes their claim seeking damages for the defendants’ alleged failure to comply with Paragraph 22 of the same agreement. Indeed, the same logic would bar any claim seeking damages or performance under the agreement. More to the point, determining whether defendants breached is unnecessary given plaintiffs prior, material breach.”
The judge ruled the Goshas remaining claims also failed.
“With respect to the FDCPA claim, the court agrees that this claim is premised on the breach of contract claim and that it fails for the same reasons described above,” he wrote. “Accordingly, because plaintiffs cannot show that defendants lacked authority to foreclose under the agreement for failing to comply with Paragraph 22, judgment is appropriate for defendants on plaintiffs’ FDCPA claim.”
Hernandez continued: “The court determines that the Oregon UTPA claim and the RESPA claim may not rely on the same theory as the breach of contract claim. Even construed liberally, however, the court concludes that each of these claims fail for a common reason: plaintiffs’ failure to provide evidence of cognizable damages.”