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Englert v. Bank of New York Mellon

United States District Court, E.D. Virginia, Alexandria Division

March 29, 2017

TROY ENGLERT, Plaintiff,
v.
THE BANK OF NEW YORK MELLON, f/k/a THE BANK OF NEW YORK, AS TRUSTEE FOR THE HOLDERS OF THE CERTIFICATES, FIRST HORIZON PASS-THROUGH CERTIFICATES SERIES FHASI 2005-AR3, BY FIRST HORIZON HOME LOANS, A DIVISION OF FIRST TENNESSEE BANK NATIONAL ASSOCAITION, MASTER SERVICER, IN ITS CAPACITY AS AGENT FOR THE TRUSTEE UNDER THE POOLNG AND SERVICING AGREEMENT, Defendant.

          MEMORANDUM OPINION AND ORDER

          Gerald Bruce Lee United States District Judge.

         THIS MATTER is before the Court, first, on Defendant The Bank of New York Mellon's Motion for Summary Judgment (Dkt. No. 26) and, second, on Plaintiff Troy Englert's Partial Motion for Summary Judgment (Dkt. No. 36).[1] This case concerns Plaintiffs two-count Complaint alleging that Defendant breached a mortgage agreement by (1) improperly crediting payments timely made by Plaintiff, and (2) improperly charging Plaintiff for force-placed insurance even though Plaintiffs insurance never lapsed. Defendant's motion seeks summary judgment on both counts, while Plaintiffs motion seeks summary judgment on Count I only.

         There are two issues before the Court. The first issue is whether Defendant is entitled to summary judgment with respect to Count II, where Plaintiff asserts that he maintained the insurance required under the mortgage agreement and did not receive Defendant's letters requesting proof of insurance. The Court grants Defendant's Motion for Summary Judgment with respect to Count II because, regardless of whether Plaintiff received and responded to Defendant's letters, Defendant put forth uncontroverted evidence indicating that Plaintiffs insurance lapsed. In addition, the insurance documents put forth by Plaintiff indicate that during certain policy periods, the insurance policy did not comply with the terms of the mortgage agreement.

         The second issue is whether either party is entitled to summary judgment with respect to Count I, where Plaintiff asserts that he made all required payments under the mortgage agreement and that Defendant improperly credited his account. With respect to Count I, the Court grants Defendant's Motion for Summary Judgment and denies Plaintiffs cross-Motion for Summary Judgment for two reasons. First, Defendant has put forth detailed evidence demonstrating that Plaintiff failed to timely pay the full amount owed, and that Plaintiff remains in arrears. Second, Plaintiff admits that he has not paid the full amount he owes in principal and interest, and Plaintiffs evidence is insufficient to raise a genuine dispute of material fact that Defendant misapplied any particular payment.

         I. BACKGROUND

         A. Factual Background [2]

         In September 1999, Plaintiff purchased a home located in Alexandria, Virginia (the "Property"). Since that time, Plaintiff has owned and operated multiple companies, including Patrick's Design, LLC, Englert Development Corp., and ENG Imports, LLC. ENG Import Group, LLC was created in 2011.

         On April 1, 2005, Plaintiff refinanced his home mortgage loan. The refinance transaction was evidenced by, among other things, an adjustable rate note (the "Note"). The loan of $525, 000.00 made payable to First Horizon Home Loan Corporation (the "Loan") was secured by a deed of trust against the Property (the "Deed of Trust"). After origination, First Horizon Home Loan Corporation ("First Horizon") transferred the Loan to Defendant, The Bank of New York. On or about August 16, 2011, Nationstar became the loan servicer on behalf of Defendant.

         The payment provisions of the Note provide, in pertinent part:

[Plaintiff] will make a payment on the first day of every month. . . .
[Plaintiffs] payment will consist only of the interest due on the unpaid principal balance of mis Note. [After May 1, 2015], [Plaintiff) will pay principal and interest by making a payment every month as provided below....
[Plaintiffs] monthly payment will be in the amount of U.S. $2515.63. . .
The initial fixed interest rate [Plaintiff] will pay will change to an adjustable interest rate on the first day of May, 2015. . .
If the Note Holder has not received the full amount of any monthly payment by the end of 15 calendars after the date it is due, [Plaintiff will pay a late charge to the Note Holder. The amount of the charge will be 5.00% of [Plaintiffs] overdue payment. . . .
If [Plaintiff] do[es] not pay the full amount of each monthly on the date it is due, [Plaintiff] will be in default. . . .

Dkt. No. 27-1 at 7-9 (Ex. A to Def.'s Mem.); Dkt. No. 33-1 at 2-4 (Ex. 1 to Pl.'s Mem.).

         The payment provisions of the Deed of Trust provide, in pertinent part:

1. Payment of Principal, Interest, Escrow Items, Prepayment Charges, and Late Charges. . . . Lender may return any payment or partial payment if the payment or partial payments are insufficient to bring the Loan current. Lender may accept any payment or partial payment insufficient to bring the Loan current, without waiver of any rights hereunder or prejudice to its rights to refuse such payment or partial payments in the future, but Lender is not obligated to apply such payments at the time such payments are accepted.... Lender may hold such unapplied funds until Borrower makes payment to bring the Loan current....
2. Application of Payments or Proceeds.. . . Except as otherwise described in this Section 2, all payments accepted and applied by Lender shall be applied in the following order of priority: (a) interest due under the Note; (b) principal due under the Note; (c) amounts due under Section 3 [Funds for Escrow Items]. Such payments shall be applied to each Periodic Payment in the order in which it became due. ... If more than one Periodic Payment is outstanding, Lender may apply any payment received ...

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