United States District Court, W.D. Virginia, Charlottesville Division
K. MOON SENIOR UNITED STATES DISTRICT JUDGE.
case is before the Court on motions for summary judgment, to
compel discovery, and to amend the complaint. It concerns the
status of a mortgage and a home equity loan made to the
Judith Woodson. Woodson purchased a home in Gordonsville,
Virginia. She financed that purchase with a mortgage issued
by a predecessor of Beneficial Financial I, Inc.
(“Beneficial”). Roughly a year later, she
received another loan from Beneficial based on her equity in
that home. Beneficial sold that second loan to Ditech
Financial, LLC (“Ditech”). However, Woodson
eventually fell behind in making payments on these loans.
Woodson passed away in 2015, and the three plaintiffs in this
suit (“the heirs”) inherited the home. Because of
delinquencies on the loans, Beneficial moved to foreclose.
The heirs filed this suit to stop the foreclosure
proceedings. During the pendency of the suit, Carrington
Mortgages Services, LLC (“Carrington”), who is
not a party to this suit, purchased the first mortgage from
heirs, in an action for quiet title, asked the Court to
determine whether Beneficial discharged the home equity loan
(Count One). Because they alleged that this loan had been
discharged, the heirs also argued Beneficial and Ditech
wrongly refused to remove a related lien on the property
(Counts Two and Three). This failure to remove the lien
allegedly prevented the heirs from selling the property and
discharging the first loan, the mortgage. And so the heirs
asked for a declaratory judgment preventing foreclosure and
the imposition of related costs (Counts Four and Five). The
heirs finally asked the Court for a declaratory judgment
about the outstanding balance on the first loan (Count Six).
and Ditech moved for summary judgment on these claims. I
grant summary judgment on the claims relating to the home
equity loan because no reasonable jury could find that
Beneficial or Ditech ever cancelled that loan. I dismiss the
claims relating to the mortgage without prejudice because
Beneficial has sold the mortgage, and so the requests for
declaratory judgments against it are moot. Finally, I deny
the motion to compel because the heirs did not conform with
Judge Conrad's scheduling orders. I deny the motion to
amend because amendment at this stage would prejudice these
Motion to Compel Discovery
heirs' motion to compel, (dkt. 59), was automatically
denied by operation of Judge Conrad's scheduling order.
The motion, filed on September 20, 2017, claimed that
Beneficial did not sufficiently respond to the heirs'
requests for Beneficial's files on the two loans.
(Id. at ECF 2-5). According to Judge Conrad's
scheduling orders, the heirs were required to schedule a
hearing or advise the Court that the motion was ripe for
decision within 45 days of filing that motion. (Dkt. 52 at
ECF 3; see also dkt. 62 at ECF 3). The parties
continued with discovery, with the heirs' taking the
defendants' depositions and the defendants turning over
more documents. (Dkts. 60, 61, 90). Discovery concluded on
October 18, 2017, (dkt. 62 at ECF 1), and the Court did not
hear any more about this dispute until the heirs'
opposition to summary judgment, (dkt. 77 at ECF 3). The heirs
never scheduled a hearing or advised the Court that the
motion was ripe for decision. Per the language of Judge
Conrad's scheduling orders, this motion was automatically
denied by virtue of the passing of time. See dkt. 62
at ECF 3 (“[T]he motion will be deemed denied without
further notice or order of this court . . . .”);
see also Local Rule 11(b) (“Unless otherwise
ordered, a motion is deemed withdrawn if the movant does not
set it for hearing (or arrange to submit it without a
hearing) within 60 days after the date on which the motion is
filed.”). Holding otherwise would prejudice the
defendants, who briefed summary judgment on the belief that
the dispute was resolved, (dkt. 90), and would potentially
delay the resolution of this case by requiring the reopening
of discovery. Whether all of the appropriate documents were
produced was a matter that the heirs needed to bring up
within the deadlines set by Judge Conrad. The Court will not
reopen discovery now; the motion is denied.
Standard of Review
move on to the defendants' motions for summary judgment.
Federal Rule of Civil Procedure 56(a) provides that a court
shall grant summary judgment “if the movant shows that
there is no genuine dispute as to any material fact.”
“As to materiality . . . [o]nly disputes over facts
that might affect the outcome of the suit under the governing
law will properly preclude the entry of summary
judgment.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). In order to preclude summary
judgment, the dispute about a material fact must be
“genuine.” Id. A dispute is
“genuine” if “the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party.” Id. But “[t]he responsibility to
comb through the record in search of facts relevant to
summary judgment falls on the parties-not the court.”
Carlson v. Boston Sci. Corp., 856 F.3d 320, 325 (4th
Cir. 2017). I must view the cited materials as a whole and
draw all reasonable inferences in the light most favorable to
the nonmoving party. See, e.g., Celotex Corp. v.
Catrett, 477 U.S. 317, 322-24 (1986).
Woodson purchased a home in Gordonsville, Virginia in January
2005. To finance the purchase, she received a mortgage for
$117, 304.54 from Beneficial Mortgage Company. (Dkt. 69-1 at
ECF 4; dkt. 69-2 at ECF 2; dkt. 69-3 at ECF 2). This loan was
secured by the property. (Dkt. 69-3 at ECF 2). As part of the
mortgage, Woodson promised to make monthly repayments on the
loan. (Dkt. 69-2 at ECF 3). A little over a year later, in
March 2006, Woodson received a second loan from Beneficial
for $31, 200.00. (Dkt. 69-4; dkt. 69-5 at ECF 2). This loan
was also secured by Woodson's property, and Woodson again
promised to make repayments. (Dkt. 69-4; dkt. 69-5 at ECF 2).
loan payment histories and statements demonstrate Woodson was
frequently behind on both loans. (Dkt. 69-10 at ECF 5; dkt.
84-1 at ECF 2-26 (demonstrating irregular payments and late
charges throughout the lives of the loans)). Beneficial's
statement to Woodson indicated that the mortgage had an
amount past due of $3, 578.30 at the end of 2011. (Dkt. 84-1
at ECF 284). The home equity loan was also behind at that
time. (Id. at ECF 474). Internally, Beneficial
marked the home equity loan as “charged off.”
This designation meant that Beneficial felt repayment was
unlikely, although Beneficial did not indicate that Woodson
had repaid the loan or that Beneficial would stop trying to
recover the remaining balance. (Dkt. 69-6 at ECF 4).
sent a Form 1099-C to Woodson concerning fiscal year 2012.
(Dkt. 69-6 at ECF 3; dkt. 69-7; dkt. 69-8 at ECF 3). A Form
1099-C is an IRS form that creditors must file with debtors
when they discharge indebtedness. 26 C.F.R. §
1.6050P-1(a). This form indicated that $30, 749.87 of
Woodson's mortgage debt had been discharged. (Dkt. 69-7).
However, Beneficial believed that it had sent this form in
mistake, and so it issued a corrected Form 1099-C that
indicated that no mortgage debt had been discharged. (Dkt.
69-9; dkt. 69-6 at ECF 3).
2013, the parties talked about settling the outstanding
second loan. Beneficial sent settlement offers to Woodson
regarding this loan after it had been charged off. (Dkt. 69-6
at ECF 5). Woodson agreed to a settlement plan and made some
payments on it. (Id.). In April 2013, Woodson
advised Beneficial that she would not be able to make the
final payments on the settlement plan because she had lost
her job. (Dkt. 84-1 at ECF 614; dkt. 69-6 at ECF 5).
Woodson's daughter stated that she had a separate call
with Beneficial during April 2013 and that a Beneficial
representative told her that “no payments needed to be
made” on the second loan. (Dkt. 77-2 at ECF 6-7).
Woodson's daughter also stated that she overheard a
similar conversation when her mother was on a phone call with
Beneficial in February 2014. (Dkt. 77-3 at ECF 1-2). The
settlement plan was never completed. Approximately a year
later, in May 2014, Beneficial sold the home equity loan to
Ditech's predecessor. (Dkt. 84-1 at ECF 613; dkt. 69-8 at
ECF 4; dkt. 69-12; dkt. 71-1 at ECF 2).
March 2014, Beneficial and Woodson did negotiate an
adjustment to the underlying mortgage, the first loan. (Dkt.
77-3 at ECF 2-3, 7-13). This agreement reduced the principal
of that loan. (Id. at ECF 16). But even with this
adjustment, Woodson fell behind again and asked Beneficial to
engage in a short sale. (Id. at ECF 50; dkt. 84-1 at
ECF 6). Beneficial declined to engage in a short sale because
it believed there was still equity in the home. (Dkt. 77-2 at
died intestate in March 2015. (Dkt. 69-10 at ECF 4). After
Woodson's death, the plaintiffs inherited the property.
(Dkt. 69-10 at ECF 5). Woodson's heirs sought to have the
liens on the property released by Beneficial and were
referred to the lien release department. (Dkt. 77-3 at ECF
3). Beneficial moved to foreclose on the property in August
2016, but was enjoined by the Louisa County Circuit Court.
(Dkt. 7 at ECF 157). The case was then removed to this Court.
(Dkt. 1). In September 2017, while this case was pending,
Beneficial sold the first loan to Carrington Mortgage
Services, LLC. (Dkt. 71-1 at ECF 4).
heirs have two categories of claims: those seeking relief
related to the home equity loan and those seeking relief
related to the first mortgage. The claims related to the home
equity loan fail because no reasonable jury could find that
Beneficial discharged that loan. The claims seeking relief
related to the first mortgage fail because they became moot
when Beneficial sold the loan to Carrington. Because
Beneficial no longer owns the mortgage, the heirs cannot get