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Newton v. Beneficial Financial I, Inc.

United States District Court, W.D. Virginia, Charlottesville Division

March 26, 2018

Tonia Woodson Newton, ET AL., Plaintiffs,
Beneficial Financial I, Inc., ET AL., Defendants.



         This matter is before the Court upon Defendants' renewed motions for summary judgment. (Dkts. 142, 144). For the reasons stated herein, the Court will grant the motions.

         I. Facts & Procedural History

         The Court's February 16, 2018 opinion adequately outlined the standard of review on summary judgment, (dkt. 95 at 3-4), as well as the facts of this case. (Id. at 1, 4 - 6). The Court incorporates by reference these portions of its February 16 opinion. Nonetheless, a brief summation of the factual background and procedural history of the case is in order.

         Judith Woodson purchased a home in Gordonsville, Virginia in January 2005. She financed the purchase with a mortgage issued by a predecessor of Defendant Beneficial Financial I, Inc. (“Beneficial”). Approximately one year later, Woodson received a second loan from Beneficial based on her equity in the home. Beneficial sold this second loan to Defendant Ditech Financial, LLC (“Ditech”). Woodson eventually fell behind in making payments on these loans. For fiscal year 2012, Beneficial completed a Form 1099-C for the second loan, indicating that Woodson's mortgage debt had been discharged. Beneficial presents evidence that it subsequently issued a corrected Form 1099-C for fiscal year 2012. When Woodson defaulted on the second loan by failing to make any payments after January 2012, Beneficial marked her second loan account as “charged off, ” which Beneficial maintains is an internal notation reflecting an unlikelihood of repayment.

         Woodson died in 2015, and the three plaintiffs (“the heirs”) inherited the home. Due to delinquencies on the loan, Beneficial moved to foreclose on the property in August 2016. The heirs filed suit in state court to stop the foreclosure proceedings. (Dkt. 1). Defendants removed the case to federal court based on diversity jurisdiction. Judge Conrad transferred the case to me in December 2017. (Dkt. 87). During the pendency of this suit, Carrington Mortgages Services, LLC (“Carrington”), who is not a party to the suit, purchased the first mortgage from Beneficial.

         In their quiet title action, the heirs asked the Court to determine whether Beneficial discharged the home equity loan (Count One). The heirs sought the removal of a lien related to this loan (Count Two) and compensatory damages based on Beneficial's refusal to remove the lien (Count Three). The heirs sought declaratory judgments preventing foreclosure and the imposition of related costs (Counts Four and Five). Lastly, the heirs sought a declaratory judgment on the balance of the mortgage loan and a related lien (Count Six). (Dkt. 35).

         On February 16, 2018, this Court granted Defendants' motions for summary judgment and denied the heirs' motion to compel discovery as moot by operation of Judge Conrad's scheduling order. (Dkt. 96). However, on May 2, 2018, the Court granted the heirs' motion for reconsideration after the heirs offered e-mail correspondence showing that the motion to compel was not moot. (Dkt. 111). The Court vacated its previous orders in part, reinstated the case on its active docket, reopened the motions to compel and for summary judgment, and referred the motion to compel to U.S. Magistrate Judge Joel C. Hoppe. (Id. at 3).

         Judge Hoppe granted the motion to compel in part, permitting the heirs to reopen their deposition of Beneficial in light of six newly-produced pages of account notes and requiring Beneficial to, if possible, produce a letter corresponding to an entry in the aforementioned account notes. (Dkt. 118). Judge Hoppe subsequently allowed the heirs to serve three additional interrogatories on Beneficial “requesting information about the steps Beneficial took to uncover” 156 pages of documents “Beneficial's counsel belatedly produced” and “the steps Beneficial has taken to ensure it has produced all non-privileged documents” requested by the heirs and relevant to the case. (Dkt. 139 at). The sole question now is whether any of this discovery added new evidence that changes the Court's previous conclusion that Defendants' motions for summary judgment should be granted.

         II. Analysis

         The heirs contend that it would be premature to grant summary judgment because discovery remains outstanding under Judge Hoppe's order permitting additional interrogatories. The heirs further argue that the Court should deny summary judgment on substantive grounds because a genuine dispute of material fact exists about whether Defendants cancelled the home equity loan. Defendants' arguments with respect to outstanding discovery are without merit, and the Court again concludes that no reasonable jury could find that the home equity loan was discharged. Thus, the Court will grant Defendants' renewed motions for summary judgment.

         A. The Heirs' Discovery-Related Arguments

         The heirs assert that it would be “premature” to grant summary judgment because Beneficial's responses to the three additional interrogatories authorized by Judge Hoppe were “woefully deficient.” (Dkt. 148 at 4, 18-20). Specifically, the heirs contend that Beneficial “refused to identify” all of the “technology systems that it used” from January 2005 to June 2018 “to produce under Bates numbers the documents it produced in discovery”; “refused to provide any meaningful facts as to when, where, or how it searched available sources of information”; and “refused to provide any information concerning its [document retention accessibility] policies and practices.” (Id. at 4). In a declaration, the heirs' counsel maintains that Beneficial “should be required to answer” these interrogatories, and “Plaintiffs should be allowed to re-open and fully depose” Beneficial regarding irregularities in Defendants' production of documents. (Dkt. 148-25 at 2).

         The Court notes at the outset that Judge Hoppe already denied the heirs' motion to reopen and extend their deposition of Beneficial. (Dkt. 139). Moreover, the Court has reviewed Beneficial's responses to the heirs' interrogatories, (dkt. 148-3), and finds Beneficial's answers responsive and in compliance with Judge Hoppe's ...

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