![]() |
The OCWEN Story The $11.5 million dollar verdict on a $31,000 loan. |
|
Updated April 25, 2012 by popular request
Texas Jury Rules Against OcwenSealy Davis vs. Ocwen
Friday, December 02, 2005 A jury in Galveston, Texas, has awarded $11.5 million to a customer of Ocwen Financial Corp. and its former Ocwen Federal Bank subsidiary, after determining they committed fraud in servicing her home equity loan.The verdict against West Palm Beach-based Ocwen Financial (NYSE: OCN) and Ocwen Federal was issued Tuesday in Texas's 212th District Court. The jury ordered the Ocwen companies to pay Sealy Davis $10 million in actual damages and about $1.5 million for mental anguish and economic damages. Ocwen Financial had $1.3 billion in assets on Sept. 30, according to its Securities and Exchange Commission filings. The jury found the Ocwen companies made fraudulent, deceptive and misleading representations to Davis after she missed a loan payment while hospitalized in 2003. Documents filed in the civil suit assert Ocwen began demanding additional money to make up for the missed payment and then began foreclosure proceedings on Davis's home in Texas City, Texas. Davis retained the home after filing for Chapter 13 bankruptcy protection, court documents state. Davis, in 2002, got a $31,000 home equity loan from Aames Home Loan with Deutsche Bank as trustee. Ocwen Federal Bank serviced the loan, including collecting payments. The jury determined Ocwen contributed 100 percent to a wrongful foreclosure and none of that activity was attributable to the other defendants, Deutsche Bank, its law firm Baxter & Schwartz and several attorneys with that firm. William Erbey, Ocwen's chairman and chief executive officer, and Kelly Herzik, a Wichita, Kan.-based attorney who represented Ocwen, did not return phone calls. The Business Journal's questions included whether Ocwen might appeal the verdict to a Texas court of appeals. Ocwen "has a specific plan and scheme to take homes that have equity in them," said Robert Hilliard, a partner in Corpus Christi, Texas-based Hilliard & Munoz, which represented Davis. Hilliard said he represents about 100 people who are considering similar suits against Ocwen in Texas state courts. In April 2004, Ocwen Federal Bank, which was based in Fort Lee, N.J., signed a written agreement with the U.S. Office of Thrift Supervision, agreeing to improve its compliance with the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. The OTS written agreement is no longer in force because Ocwen Federal has ceased operations, OTS spokeswoman Erin Hickman said. Nearly six months ago, the OTS approved Ocwen Financial's request for "voluntary dissolution" of Ocwen Federal. In that arrangement, Ocwen Financial sold the bank's Fort Lee office to Marathon National Bank of Astoria, N.Y., and transferred its assets and liabilities to several other banks. Ocwen Financial's activities include servicing commercial and residential loans, and conducting activities for companies that are attempting to recover unsecured receivables, including credit cards. This article was brought to you by the Bank Fraud Victim Center. Our mission is to educate homeowners about predatory lending practices, bank fraud and the legal options available to them. website: http://mortgage-home-loan-bank-fraud.com
We believe that if you don't know your rights, you don’t know your options.
|
Originally posted on March 31, 2008 Original
Source: Voice of the People Ocwen,
Allegations of Fraud, Malice, Misrepresentation and Manipulation.
Or are their customers failing to meet their obligations and looking for
a quick court buck? Mr.
Smith wanted to refinance, but it appears Ocwen has already contacted
the Credit Bureaus and reported him being late, he can’t get
refinanced. |
OCWEN
LOSES $11.5 MILLION VERDICT ON $31,000 LOAN
A
Texas jury awarded a Texas City woman $11.5 million from Ocwen Federal
Bank. The jury found that Ocwen engaged in “a scheme of unfair,
unlawful and deceptive business practices” in loan servicing. Ocwen
Federal Bank is and remains the sole managing contractor for all
Veteran’s Administration REO in the country. At
trial, a former Ocwen employee testified to the company’s unfair
practices, including paying incentives to its loan collectors for moving
properties with equity into foreclosure. Evidence also showed that the
company engaged in predatory servicing by not informing borrowers of how
to make their loans current and failing to give credit for payments when
they were made. GALVESTON,
Texas, Nov. 29 /PRNewswire/ — A Galveston County jury has awarded a
Texas City woman $11.5 million after finding that West Palm Beach,
Fla.-based Ocwen Federal Bank
engaged in a scheme of unfair, unlawful and deceptive business practices
in its servicing of her home equity loan. The
jury verdict, handed down in Judge Susan Criss’ 212th District Court
on Nov. 29, followed eight days of trial and two days of deliberation in
Sealy Davis v. Ocwen Federal Bank,
et al. In
February 2002, Ms. Davis, 64, took out a $31,000 home equity loan on the
Texas City residence where she had lived since 1942. Ocwen acted as the
servicing agent on the loan. In
2003, Ms. Davis became ill and spent four days in the hospital, which
forced her to miss one loan payment. Ocwen told her it would put her on
a payment plan, but never did. Ocwen also failed to credit Ms. Davis for
the money she paid, and began to foreclose on her house while continuing
to assure her she was on a payment plan. Ocwen
eventually foreclosed on Ms. Davis’ home, and she filed for Chapter 13
bankruptcy in the hopes of ending Ocwen’s harassment. During the
bankruptcy, however, Ocwen requested an additional $390 to cover its
costs and fees related to the default she already cured. “We’re
pleased the jury decided that Ocwen should be held liable for what it
did to Ms. Davis,” said attorney Robert Hilliard, lead counsel for Ms.
Davis and name partner in Corpus Christi’s Hilliard & Munoz, L.L.P.
“Home loan companies should help people own a place to live, but Ocwen
apparently is more interested in taking away the homes of its
customers.” At
trial, a former Ocwen employee testified to the company’s unfair
practices, including paying incentives to its loan collectors for moving
properties with equity into foreclosure. Evidence also showed that the
company engaged in predatory servicing by not informing borrowers of how
to make their loans current and failing to give credit for payments when
they were made. In
a 10-2 vote, the jury found that Ocwen knowingly and intentionally
deceived Ms. Davis, and awarded her $10 million in punitive damages and
$1.15 million in attorneys fees. Mr.
Hilliard currently represents more than 100 additional homeowners in
lawsuits against Ocwen, and previously received a $3 million verdict in
a similar case in Corpus Christi. Also representing Ms. Davis were
William H. Oliver of San Antonio’s Pipkin, Oliver & Bradley, L.L.P.,
and Edward M. Carstarphen of Houston’s Ellis, Carstarphen, Dougherty
& Goldenthal, P.C. For more information, please call Alan Bentrup at 214.559.4630, cell 817.366.0442 or alan@legalpr.com |
SUMMARY |
Source: MoreLaw Date: 11-29-2005 Case Style: Davis v. Ocwen Federal Bank, et al. Case Number: Unknown Judge: Susan Criss Court: 212th District Court, Galveston County, Texas Plaintiff's Attorney: Robert Hilliard of Hilliard & Munoz, L.L.P., Corpus Christi, Texas; William H. Oliver of Pipkin, Oliver & Bradley, L.L.P., San Antonio, Texas; and Edward M. Carstarphen of Ellis, Carstarphen, Dougherty & Goldenthal, P.C., Houston, Texas Defendant's Attorney: Unknown Description: In February 2002, Sealy Davis, 64, took out a $31,000 home equity loan on the Texas City residence where she had lived since 1942. Ocwen acted as the servicing agent on the loan. In 2003, Ms. Davis became ill and spent four days in the hospital, which forced her to miss one loan payment. Ocwen told her it would put her on a payment plan, but never did. Ocwen also failed to credit Ms. Davis for the money she paid, and began to foreclose on her house while continuing to assure her she was on a payment plan. Ocwen eventually foreclosed on Ms. Davis' home, and she filed for Chapter 13 bankruptcy in the hopes of ending Ocwen's harassment. During the bankruptcy, however, Ocwen requested an additional $390 to cover its costs and fees related to the default she already cured. "We're pleased the jury decided that Ocwen should be held liable for what it did to Ms. Davis," said attorney Robert Hilliard, lead counsel for Ms. Davis and name partner in Corpus Christi's Hilliard & Munoz, L.L.P. "Home loan companies should help people own a place to live, but Ocwen apparently is more interested in taking away the homes of its customers." At trial, a former Ocwen employee testified to the company's unfair practices, including paying incentives to its loan collectors for moving properties with equity into foreclosure. Evidence also showed that the company engaged in predatory servicing by not informing borrowers of how to make their loans current and failing to give credit for payments when they were made. Outcome: In a 10-2 vote, the jury found that Ocwen knowingly and intentionally deceived Ms. Davis, and awarded her $10 million in punitive damages and $1.15 million in attorneys fees. Plaintiff's Experts: Unknown Defendant's Experts: Unknown
|
Initial Brief: Appellee-Respondent |
2
of 100 DOCUMENTS OCWEN LOAN SERVICING,
LLC, AND DEUTSCHE
BANK NATIONAL TRUST COMPANY F/K/A BANKERS
TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE FOR AAMES
MORTGAGE TRUST 2002-1 MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2002-1, Appellants, vs.
SEALY DAVIS,
Appellee. the
Honorable Susan Criss presiding. EDWARD M.
CARSTARPHEN, State Bar No. 03906700, ELLIS, CARSTARPHEN, DOUGHERTY
& GOLDENTHAL, P.C., 5847 San Felipe, Suite 1900, Houston, Texas
77057, Telephone: (713) 647-6800, Telecopier: (713) 647-6884. Kevin W.
Grillo, Of Counsel, State Bar No. 08493500, So. District I.D. No.
4647, Robert C. Hilliard, HILLIARD & MUNOZ, L.L.P., 719 S.
Shoreline Boulevard, Suite 500, Corpus Christi, Texas 78401,
Telephone: (361) 882-1612, Telecopier: (361) 882-3015, ATTORNEYS FOR
APPELLEE. [*ii]
STATEMENT CONCERNING ORAL ARGUMENT Appellee
requests oral argument. See TEX. R. APP. P. 39.1. STATEMENT
OF THE CASE This
case has as its origin, the predatory lending practices
of Ocwen Loan Servicing, LLC ("Ocwen"), and its various
financing partners, which, in this case, was Deutsche Bank National
Trust Company ("Deutsche Bank"). The predatory lending
practices of Ocwen led to the United States Office of Thrift
Supervision requiring Ocwen to enter a consent decree to force Ocwen
to cease its practices similar to those that contributed [**8]
to the wrongful foreclosure, Texas Deceptive Trade Practices
Act ("DTPA"), and Texas Debt Collection Act ("DCA")
claims made by Plaintiff in this case. (RR, Vol. 10c, P's Ex. 9.1). n1
(Consent Decree, Appendix, Ex. 1). Plaintiff
filed a Petition and Application for Temporary Restraining Order
("TRO") to prevent Ocwen from evicting her from her home and
obtained a TRO. (CR I, p. 2) (CR I, p. 19). Ocwen and its
representatives violated that order by filing a Forcible Entry and
Detainer ('FED") suit, and sending a sheriff to Plaintiff's 800
square foot home to force her out of the home her father built. (RR,
Vol 10C, P's [**9] Ex. 28,
29, 30). Eventually, Ocwen and its counsel and representatives finally
followed Texas law and complied with the temporary injunction
precluding Ocwen from evicting Plaintiff. Prior
to the trial scheduled for November 14, 2005, Ocwen requested
injunctive relief never granted anywhere in the United States -
seeking to enjoin Plaintiff's counsel from: Litigation
or otherwise participating in any pending or future lawsuit in a
federal or state court that asserts mortgage servicing allegations
encompassed within the Consolidated Complaint in MDL NO. 1604, until
[*2] such time as
pretrial proceedings in MDL No. 1604 are completed, or until further
Order of the Court. Judge
Charles Norgle of the United States District Court for the Northern
District of Illinois, MDL No. 1604, granted Ocwen's requested
injunctive relief on November 9, 2005. (CR IX, pp. 1654-1670). The
United States Court of Appeals for the Seventh Circuit granted
Plaintiff's counsel's emergency motion for stay of injunction pending
appeal on November 10, 2005, allowing this case to go to trial.
(Appendix, Ex. 2). On December 13, 2005, the Seventh Circuit vacated
Ocwen's injunction in its entirety.
[**10] (Appendix,
Ex. 3). Based
on the evidence admitted at trial, including the unrebutted testimony
of a former Ocwen employee, Ron Davis, the jury answered yes to DTPA,
DCA and wrongful foreclosure questions and awarded damages. (CR XI,
2063). The Court entered judgment based on the jury verdict, including
the attorneys' fees, which included setting aside Ocwen's wrongful
injunction obtained in Chicago, Illinois. [*3]
ISSUES PRESENTED (1)
If the unrebutted testimony of a former employee of the mortgage
servicer, Ocwen, is that Ocwen has a business practice of lying,
losing payments, delaying credit payments or not crediting payments
with the intent to make a homeowner homeless, or forcing the homeowner
to live under a bridge or in a cardboard box, and the defense attorney
argues to the jury that Plaintiff won't be kicked out for at least a
week if the jury renders a defense verdict, can any discussion of
fiduciary duty, even if error, be sufficiently harmful to cause a
improper judgment? (2)
Whether a Plaintiff qualifies as a consumer if she purchases home
improvement goods with a home improvement loan in accordance with Flenniken
v. Longview Bank & Trust Co, 661 S.W.2d 705 (Tex. 1983)?
[**11] (3)
Whether an agreed order in bankruptcy court signed by defendant
modifies the underlying loan documents? (4)
Whether claims arising after the filing of a Chapter 7 bankruptcy
petition belongs to the bankruptcy estate or the Plaintiff? (5)
Whether a Debt Collection Act consumer who asserts a claim under the
DTPA pursuant to the DTPA tie-in section, 17.50(h), and does not rely
on a consumer section of the DTPA, must also be a "consumer"
as defined in the DTPA? (6) Whether
factually sufficient evidence exists that Ocwen misrepresented the
extent, character or amount of a consumer debt by representing in
bankruptcy court it would accept payments, refusing to accept and
credit them, and then claim Plaintiff is in default and foreclosing? [*4]
(7) Whether factually sufficient evidence exists to support an
award of $ 700,000 for attorneys through trial, where the unrebutted
and uncross-examined testimony is that $ 150,000 was incurred just to
fight Ocwen's wrongful injunction issued in the Ocwen MDL, and where
the jury awarded less than one-third of the amount that unrebutted
testimony established would be reasonable based on the factors
identified in Arthur Anderson & Co. v. Perry Equip. Corp., 945
S.W.2d 812, 818 (Tex. 1997)? [**12] (8)
Whether factually sufficient evidence supports the award of appellate
fees when the evidence was not rebutted or cross examined? (9)
Whether Ocwen acted as a fiduciary under the facts of this case and
whether factually sufficient evidence supports the jury's finding? (10)
Whether claiming Plaintiff to be in default because Ocwen refused to
accept and credit payments as ordered by the Bankruptcy Court, and
proceeding to foreclose constitutes wrongful foreclosure? [*5]
STATEMENT OF FACTS Sealy
Davis, 62 at the time of trial, was the owner of her home at 5330
Campbell Street, Texas City, Texas. The 884 square foot home was built
by her father in 1943. Ms. Davis was raised in that house, inherited
it from her father, and proceeded to raise eight children in the home.
From 1972 to 1999, Ms. Davis was employed at Shriner's Hospital as a
burn technician, which required her to debride burned children
admitted to the hospital. In 1999, she had to retire due to health
reasons. From that time on, she was on a fixed income consisting of
social security and a $ 226 monthly pension. (RR 5, p. 57-76, 96). Ms.
Davis received an unsolicited offer in 2002 for a home [**13]
equity loan from Aames Funding Corp., d/b/a Aames Home Loan
("Aames"). (RR 5, p. 78). Aames works with Ocwen to obtain
loans, then, sends them to Ocwen for servicing via a pooling
agreement. (RR 10A, P's Ex. 6). Even though Galveston County had
appraised Ms. Davis's home at $ 19,000, Aames was able to obtain an
appraisal of her home for $ 47,000. (Def. Ex. 9). Based on that
appraisal, Aames offered Ms. Davis a $ 35,000 home equity loan. (RR 5,
78). The $ 35,000 figure was based on a contractor estimate as to what
would be necessary to fix up her home to comply with city standards.
(RR 5, 78). Ms. Davis signed the loan papers and received a check for
$ 19,000. (RR 5, 79-80). Ms. Davis used that money for home
improvements, including aluminum windows, blinds, leveling the house,
replacing the roof and adding aluminum siding. (RR 5, pp. 80-81).
Pursuant to Aames's agreement with Ocwen, Aames immediately
transferred the loan to Ocwen. Ms. Davis began making her payments to
Ocwen until September 2003, when she became ill. (RR 5, pp. 82-83).
Once she got [*6]
behind because of her illness, Ocwen began following a pattern
of harassment, not calling back or giving misleading information,
[**14] activities
that were the same type of conduct that led to the consent agreement
with the OTS. (RR 5, pp. 83-94). Ms. Davis then filed a complaint with
the Texas Attorney General's office (RR 5, pp. 94-97) (RR 10-A, P's
Ex. 9). Ocwen
replied to the Attorney General implying it would conduct an internal
market analysis and review her situation and see if it could rework
her loan. (RR 10A, P's Ex. 11). However, Ocwen failed to take any of
the actions it told the Attorney General it would undertake. (RR 5,
pp. 23-24, 26, 31, 33). In
order to address some of the late or missed payments, Ocwen told Ms.
Davis to send a $ 600 catch up payment to Ocwen California. Ms. Davis
borrowed the $ 600 for the payment from her daughter (RR 4, pp. 28,
53-54). Ms. Davis then sent the payment to Ocwen California as
instructed. Ms. Davis later found out that Ocwen Florida claimed it
never received payment. (RR 5, p. 102). Loss of the $ 600 to a low
income person such as Ms. Davis only exacerbated her ability to catch
up on payments. When
Ocwen continued to pressure her to make payments, Ms. Davis used the
money she was reserving for her medicine to pay Ocwen. This led to Ms.
Davis becoming ill and having [**15]
to go to the emergency room. (RR 5, pp. 131-132). Ocwen's
own records established that Ms. Davis was approved for a payment plan
and Ocwen requested another catch up payment. Ms. Davis sent in the
requested payment but Ocwen did not set up the promised plan. (RR 5,
pp. 92-94) (RR 10A, P's Ex. 7, 8) (Appendix, Ex. 4). The forbearance
agreement would have had the effect of allowing Ms. Davis to make
lower payments for a certain length of time. (RR 5, p. 92-94).
[*7] Ultimately,
Ms. Davis filed for bankruptcy. As part of the bankruptcy proceeding,
Ocwen represented it would accept payments on the home improvement
loan. (RR 7, pp. 54-56). In fact, the bankruptcy court modified Ms.
Davis' loan requirements to allow her to make a specified payment
during bankruptcy, which Ocwen represented, and agreed, it would
accept. These representations also proved to be false. Ron Gipson, Ms.
Davis's bankruptcy attorney, testified that Ocwen failed to credit
payments sent in by Ms. Davis during bankruptcy, even though Ocwen
agreed to the order, which required it to credit those payments. (RR
7, pp. 38-41). This
scheme of Ocwen, of losing payments, refusing to accept payments and
making misrepresentations [**16] to
Sealy Davis, was revealed as a standard business practice in stunning
testimony by Ron Davis, a former Loan Resolution Consultant and
Supervisor of Ocwen. Ron Davis confirmed that during the time frame
Ms. Davis was being harassed by calls, misled and lied to, it was
Ocwen's policy to deceive customers, use automated dialers for
harassment, lie about adjusting their loans, lose payments from
customers or post them late. (RR 3, pp. 93, 94, 99, 107-108, 196). As
Mr. Davis admitted, Ocwen's collection personnel, such as Mr. Davis,
would: "call the customers and ask them what bridge they were
going to live under or the next cardboard box they would have to cut
out, what curb they would be kicked to, ..." (RR 3, pp.103-104).
Ocwen would reward its Loan Resolution Consultants for this activity
by giving them kickbacks or "bumps" based on the money they
made from foreclosed property. (RR 3, pp. 93-94, 99-100). No Ocwen
representative was called to dispute Mr. Davis' testimony. [*8]
Plaintiff filed suit to stop Ocwen's eviction proceeding and
requested a temporary restraining order ("TRO") and
temporary injunction. (CR I, 1, 2). Judge Frank Carmona, acting as
visiting judge, granted [**17] the
TRO. (CR I, 19). The TRO was immediately forwarded to Ocwen's agent,
Baxter & Schwartz. (RR, 10C, P's Ex. 28, 29. 30). Ocwen and its
agent then violated the TRO. That violation became the subject of a
Motion for Sanctions, which was taken under advisement by the Court.
(CR I, 48). Ocwen then began refusing to provide discovery, which
became the subject of motions to compel. (CR III, 537, 544). Rather
than produce discovery, Ocwen sought and obtained injunctive relief
from the Ocwen MDL Judge. (CR IX, 1654). Plaintiff's counsel was
forced by Ocwen to retain local counsel in Chicago, Illinois, retain
Columbia University Law Professor Henry Monaghan, attend a hearing in
Chicago, to ultimately have the U.S. Court of Appeals for the Seventh
Circuit set aside the injunction. See Appendix 2, 3 and RR 3,
pp. 208-210. After Ocwen's injunction was set aside by the Seventh
Circuit, the case went to trial on November 14, 2005. After
having heard testimony from Ron Davis about Ocwen's business scheme
and hearing Ocwen's counsel telling the jury that Ms. Davis wouldn't
be kicked out for at least a week if it rendered a defense verdict (RR
9, p. 60), the jury returned a verdict of approximately [**18]
$ 12,000,000. It was reduced in accordance with Texas law and
judgment entered. SUMMARY
OF THE ARGUMENT The
jury heard unrebutted testimony of a former employee, Ron Davis, that
Ocwen's business practice included losing checks (like was done with
Ms. Davis), not [*9]
crediting checks at all or timely (like was done with Ms.
Davis), lying to the customers and promising them help, modification
or forbearance agreements while never intending to live up to these
responsibilities and proceeding to foreclosure (like happened with Ms.
Davis). Ocwen's own documents acknowledge that it acts as a counselor
to assist its customers. Ocwen also acts as an escrow agent (a
fiduciary) with responsibility to insure funds sent to it as part of
its counseling of its customers, are properly accepted, credited and
applied. Ocwen then directs the trustee/substitute trustee to
foreclose, even when Ocwen is guilty of malfeasance. The substitute
trustee is a special agent entrusted with fiduciary-type
responsibilities. The evidence supports the finding of the jury that
Ocwen acted as fiduciary. Further, any harm related to use of the term
"fiduciary" could never outweigh the harm of Ocwen [**19]
not calling an employee to rebut the testimony of Ron Davis
regarding Ocwen's scheme, plan or business practice nor the harm of
defense counsel suggesting Ms. Davis would be kicked out if there was
a defense verdict. Plaintiff
was a consumer as to her DTPA claim since the purpose of her loan was
to acquire home improvement goods, such as a new roof and aluminum
siding. The evidence described above fully supports the jury's finding
that Ocwen failed to disclose information, whether the original
transaction with Aames or with the order in bankruptcy which changed
the terms of the original note, which Ms. Davis would have acted on.
Further, the same facts are factually sufficient to support the
"unconscionable" finding under the DTPA. The
facts establish that Ocwen misrepresented the character, extent or
amount of debt Ocwen claimed was owed, by not crediting money received
or by losing [*10]
payments. Further, Ocwen misrepresented the consumer debt
status, character or extent to the bankruptcy court by failing to
credit payments as Ocwen represented it would. The
jury's assessment of the credibility of Ms. Davis and her testimony
and the testimony of her daughter, provide factually [**20]
sufficient evidence to support the award of mental anguish for
Plaintiff. Ocwen's
actions in representing and agreeing to accept payments while Ms.
Davis was in bankruptcy and then refusing to represent them, establish
that Ocwen failed to comply with its agreed modification and acts as a
basis for wrongful foreclosure. Plaintiff
agrees to a remittitur of the Fifty Thousand Dollars award of damages
for wrongful foreclosure. The award of the home because of wrongful
foreclosure was correct. Ocwen and Deutsche never sought a finding of
any delinquency on the indebtedness nor assert at trial a
counterclaim, deficiency or reinstatement of the loan and have waived
any claim to same. ARGUMENT I.
PLAINTIFF'S DECEPTIVE TRADE PRACTICE CLAIM IS SUPPORTED BY FACTUALLY
SUFFICIENT EVIDENCE A.
Plaintiff has Standing as a Consumer Under the Texas Deceptive
Practices Act. The
Texas Deceptive Trade Practices Act ("DTPA") requires that a
person listed in Tex. Bus. & Comm. Code § 17.45(4), sought or
acquired, by purchase or lease, goods or services. The undisputed
evidence in this case is that Plaintiff sought a home
[*11] improvement
loan for the purpose [**21] of
home improvement, not a mere loan of money. Ms. Davis testified that
she learned of Aames because she wanted to make home improvements on
her home. (RR 5, p. 78). She asked a contractor what it would take to
get her home into compliance with Texas City codes and was told about
$ 35,000. (RR 5, p. 78). She then sought $ 35,000 from Aames. After
she signed the papers with Aames, Ms. Davis was given a check for $
19,000. Once she got the check, she purchased aluminum windows,
blinds, had her house leveled, had a roof put on and aluminum siding.
(RR 5, pp. 80-81). Obviously,
if the same goods were purchased through a retail installment contact,
there would be no question that Ms. Davis would have standing as a
consumer under the DTPA. See Knight v. International Harvestor
Credit Corp., 627 S.W.2d 382, 389 (Tex. 1982). The Texas Supreme
Court has made it clear, the issue of whether a person is a consumer
turns on whether one sought only to borrow money, or that the money in
the transaction was to be used to purchase goods or services. In Flenniken
v. Longview Bank & Trust Co., 661 S.W.2d 705 (Tex. 1983), the
Court noted that if one seeks only money [**22]
in a transaction, or the sole complaint is the failure to make
a loan, then the person would not be a consumer. See Flenniken,
supra at 707-708 (citing Riverside Nat'l. Bank v. Lewis).
Here, unlike the Riverside case and cases cited by Ocwen, the
express purpose of the home improvement loan was home improvement and
the evidence establishes the proceeds were used for the home
improvement. The transaction is similar to getting a mortgage to buy a
home. See Norwest Mortgage v. Salinas, 999 S.W.2d 846, 855
(Tex. App.--Corpus Christi 1999, pet. denied). The only
[*12] difference is
that the house is already purchased, but the consumer is purchasing
goods to "improve" the home. Ocwen
attempts to assert that it is not responsible for Aames' actions.
However, any privity requirement for DTPA claims has long been
abolished. As the Supreme Court noted in Flenniken: "Privity
between the plaintiff and defendant is not a consideration in deciding
the Plaintiff's status as a consumer under the DTPA." See
Flenniken at 707. Further, the deceptive act does not have to
occur simultaneous with the transaction [**23]
in question. Id. In
this case, Aames and Ocwen and Deutsche are inextricably intertwined
as noted in the Pool Servicing Agreement. Aames signs up the note,
takes their ($ 16,000) cut, and assigns the note to Ocwen, who then
services the note, benefiting Aames, Ocwen and Deutsche. (RR 10A, P's
Ex. 6). It was known to Ocwen and Aames that Ocwen, not Aames, would
service the loan. Ms. Davis was not informed of this. Examples of
Ocwen's unconscionable course of action can be seen in the admissions
in its e-mails (RR 10A, P's Ex. 7, 8). The e-mails state that Ocwen
agreed to a forbearance agreement with Ms. Davis (which Ocwen
immediately recants in responding to the Texas Attorney General), yet
never provided the promised forbearance agreement. Ocwen's
unconscionable course of action is also [**24]
shown in the [*13]
bankruptcy action where Ocwen represents it will credit
payments received from Ms. Davis but then refuses to do so (RR 7, pp.
38-41). All of Ocwen's unconscionable and deceptive acts were
committed in the context of the home improvement purchases. In
addition to the home improvement purchase, Ocwen's dealings with Ms.
Davis grew to the point when it was providing services to Ms. Davis.
As Ron Davis testified (former Ocwen Loan Resolution Consultant),
Ocwen could modify loans (RR 3, pp. 94, 97), and would help a
customer: Not
one Ocwen representative was called to contradict Mr. Davis. In
addition to the service, counseling and assistance described by Mr.
Davis, Ocwen's own e-mails indicate "She is approved [**25]
for a payment plan." (RR 10A, P's Ex. 7, 8) (Appendix, Ex.
4). However, after Ocwen sent its letter to the Attorney General (RR
10A, P's Ex. 11), it simply failed to live up to its representations
to Ms. Davis and the Attorney General. The services provided by Ocwen
are also set out in the guidelines produced by Ocwen's consumer
Ombudsman's deposition. (P. Ex. 31) ("Once the counselor has
determined the customer's willingness and ability to pay, they will
act as a consultant to help the customer restructure and reprioritize
their financial obligations"). Consequently, in addition to the
home improvement purchases, Ocwen's actions in providing financial
information, advise and counseling constitute a service
[*14] sufficient to
convey standing. See e.g. First Fed. Savings and Loan Assn. V.
Ritenour, 704 S.W.2d 895, 899-900 (Tex. App.--Corpus Christi 1986,
writ ref'd. n.r.e.); Federal Deposit Ins. Corp. v. F&A Equip.
Leasing, 854 S.W.2d 681, 690-91 (Tex. App.--Dallas 1993, no writ). There
should be no dispute that Ocwen's actions are deceptive. Ocwen was
acting as servicing [**26] agent
for Deutsche Bank. The Deutsche Bank representative made judicial
admissions that: (2)
Ocwen has authority to waive fees (RR 4, p. 67). A:
Yes, if it violated the terms of the agreement (RR 4, p. 133). Q:
Would it be deceptive to promise to put her in a plan and then not
fulfill that promise? (RR 3, p. 141). A:
It is not deceptive if the terms of the deal aren't made. (RR 3, p.
141). Q:
If the terms are met? A:
Then Ocwen should honor the forbearance. Q:
And if they do not, that's deceptive? A:
In your hypothetical of that agreement, this agreement with the deal,
yes. Q:
Finally, yes, it is deceptive? [*15]
A: Yes. The
evidence factually supports the fact that Ms. Davis was not informed
of Ocwen's participation in this matter, that Ocwen had a business
practice of losing payments, [**27]
failing to credit payments, credit them late, lying about
helping a customer while proceeding with foreclosure, or that once in
bankruptcy court, Ocwen would not live up to the representations about
crediting payments. Had Ms. Davis been informed of this, Ms. Davis
would never have become entangled with Ocwen, Deutsche or Aames. The
same evidence heard by the jury factually supports the jury's finding
that Ocwen acted unconscionably. See Weiler v. United Savings Asso.
of Texas, FSB, 887 S.W.2d 155 (Tex. App.--Texarkana 1994, writ
den.). A
plaintiff can maintain a DTPA suit based on the violations of other
"consumer protection statutes that have been incorporated in the
DTPA (tie-in statutes)." See generally, O'Connor, Texas Causes
of Action 2006, pp. 192-193 (2006). Further, when a tie-in statute
allows recovery of actual damages, such damages can include personal
injury or death. See TEX. BUS. & COMM. CODE § 17.50(h). The
tie-in statute allows recovery of "actual damages" rather
than only DTPA damages. It
is illogical to assume as Ocwen suggests, that if two [**28]
persons suffer identical Debt Collection Act ("DCA")
violations, but one claim involves a good or service and the other a
non DTPA consumer claim, that only the DTPA consumer gets to use the
DTPA remedies. That is not how the statutes are written. As the
Revisor's Note states in the [*16]
Debt Collection Act, "An accepted general principal of
statutory construction requires a statute to be given cumulative
effect with other statutes unless it provides otherwise or unless the
statutes conflict." See TEX. BUS & COMM. CODE § 392.404 (Revisor's
Note) (Vernon's 1998). This
interpretation is consistent with the line of cases that don't require
consumer status for certain violations of 17.46(b). For example, in Webb
v. International Trucking Company, Inc., 909 S.W.2d 220, 227-28
(Tex. App.--San Antonio 1995, no writ), DTPA consumer status was not
required under DTPA section 17.46(b)(12). Similarly, as to
misrepresenting the character, extent or amount of a debt against a
consumer (DCA consumer), no DTPA consumer requirement exists.
Consequently, Sealy Davis is not required to be a DTPA consumer as to
a violation of TEX. FIN. CODE § 392.304 (8) to obtain the cumulative
[**29] remedies set out in
the DTPA and DCA. Although Judge Buckmeyer offered a contrary opinion
in Marketic v. U.S. Bank National Assoc., 2006 WL 166 7985 (N.D.
Tex. 2006), his opinion fails to undertake any analysis of how he
came to his opinion. His opinion is contrary to the language of the
tie-in section of the DTPA as well as inconsistent with the use of
tie-in statute with the DTPA and is in conflict with the portion of
the tie-in section which states "notwithstanding any other
provisions of this chapter". Further, the case Judge Buckmeyer
relies on, Mendoza v. American Nat'l Ins. Co., 392 S.W.2d 605, 608
(Tex. App.--San Antonio 1996, no writ), confirms that even if a
Plaintiff is not a DTPA consumer, he can rely on sections of 17.46
that don't require DTPA consumer status. Id at 608. Sealy Davis
is a consumer under the DCA, and, pursuant to the TEX. BUS. &
COMM. CODE § 17.50(h), is entitled to recover damages based on the
Jury's answer to Question No. 1. The
actions of Ocwen, whether [**30] the
numerous lies, misrepresentations, "lost" payments, or
actions leading to foreclosure as described by Ron Davis, and Ocwen's
representation that it would credit payments after bankruptcy was
filed, and its subsequent refusal to credit payments, are factually
supported by the evidence. Further, there should be no dispute that
Ocwen's actions were a producing cause of the foreclosure which
occurred in 2005. Ocwen's
complaint regarding the damages caused by these deceptive acts is not
well founded. Ocwen acquired this loan from Aames pursuant to its
agreement with Aames. Aames obtained an appraisal for Ms. Davis's
house for $ 47,000 (RR 10C, Def's Ex. 9). Ms. Davis obtained a loan
for $ 35,000. If Aames makes a loan to Sealy Davis for $ 35,000 based
on Aames obtaining an appraisal of $ 47,000 on Sealy Davis' house, and
Ocwen assumes all of the matters relied on by Aames, Ocwen should be
estopped to now claim the value of the house is not $ 47,000, the
amount Aames claimed it was. See Wheeler v. American National Bank,
347 S.W.2d 920, 921 (Tex. 1961) (banks estopped to urge falsity of
own statements); Franco v. Slavonic Mut. Fire Ins. Assn., 154
S.W.3d 777, 787 [**31] (Tex.
App.--Houston [14<th> Dist.] 2004, no pet.). Ocwen claimed that
Ms. Davis owed approximately $ 36,000 on the note. That would still
leave equity, based on Ocwen's records, in excess of Five Thousand
Dollars. Even though Ms. Davis was somewhat behind in payments, any
attempts to catch up or make payments were thwarted by Ocwen's
actions. Certainly, Mr. Gipson's testimony that Ocwen violated the
bankruptcy order requiring Ocwen to accept and credit payments
[*18] was a direct
cause of Ocwen then seeking to foreclose on Ms. Davis. (RR 7,
pp.38-41). Ms. Davis lost her home to Ocwen's foreclosure because of
Ocwen's actions. Consequently, factually sufficient evidence exists to
support the award of $ 5,000 actual damages. Similarly,
Ocwen's position that Ms. Davis has not suffered any mental anguish
sufficient to support the jury's award defies imagination. Here, the
evidence is that this home was built by Ms. Davis's father, she was
raised in the home with her siblings, she raised her eight children
there, and now, was threatened with the loss of the house despite her
sending payments that were [**32]
lost by Ocwen, despite Ocwen representing to her and the
bankruptcy court it would credit payments and then refusing to credit
payments so it could then seek to foreclose on her. Ms.
Davis testified: It
hurt me to have to do it to the point that I just stayed sick all the
time. And my children were constantly coming down to see me. And it
hurt me to worry like that. And my daughter would come and cry. (RR 5,
p. 103). In
February 04, I sent everything that came to me through them, and I
could not afford to pay my medication. Therefore, I went through
without medicine in the month of February. (RR 5, p 106-107). Then,
after Ocwen's agents and representatives were notified that a
Temporary Restraining Order was in effect, Ocwen and its agents
violated that order and proceeded to try to evict Ms. Davis. Q:
Why were you afraid to answer the door? A:
Because I thought it was a - the constable coming back. And I just hid
in the house. Q:
And what were you afraid he was going to do? A:
Take me out of my home. Although
the record doesn't fully reflect what happened in the courtroom, the
jury was able to see the fear and anguish associated with Ms. Davis
reliving the Ocwen nightmare, breaking down in tears and sobbing. Ms.
Davis's daughter, Trenell Strachan, testified: Factually
sufficient evidence supports the award of mental anguish under the
DTPA or Debt Collection Act. See Brown v. Oaklawn Bank, 718 S.W.2d
6778, 680-81 (Tex. 1986) ("seriously upset, difficulty eating
and sleeping", "affect on work performance" some
evidence of actual damages); Campbell v. Beneficial Finance Co.,
[*20] 616
S.W.2d 373, 375 (Tex. Civ. App.--Texarkana 1981, writ denied)
("no physical illness or injury required to recover damages under
Debt Collection Act). There
is no dispute that Plaintiff is a consumer under the Debt Collection
Act, (TEX. FIN. CODE § 392.001(1)), that this debt is a consumer
debt, (TEX. FIN. CODE § 392.001(2)), or that Ocwen and its agents are
debt collectors. Ocwen's only complaint as to the jury's findings was
that Plaintiff "failed to introduce sufficient evidence."
Yet, the record is replete with evidence that Ms. Davis sent payments
in, Ocwen lost the payments (as Ron Davis testified was the practice),
or, did not post items, [**35]
or sent them back after representing it would accept the
payments. The facts of this case as to Ocwen's continued
misrepresentations as to the character, extent or amount of debt, are
remarkably consistent with that in Waterfield Mortgage Co., Inc. v.
Rodriguez, 929 S.W.2d 641, 642 (Tex. App.--San Antonio 1996, no
wit). In that case, there were claims by the Plaintiff of calling the
mortgage company, promises that no foreclosure would take place if
money was sent, then the mortgage company denies the conversation
taking place, money being sent and then returned after agreeing to
accept it, and ultimately foreclosing. The trial judge found those
actions were evidence of a violation of "misrepresenting the
character, extent, or amount of a debt against a consumer." The
San Antonio Court of Appeals affirmed that finding. See also
Gonzalez v. Temple Inland Mortgage Corp., 28 S.W.3d 622 (Tex.
App.--San Antonio 2000, no pet.). [*21]
The evidence in this case is: "Send 600 to Ocwen
California- then it's lost; send in a payment and you will have a
forbearance plan, doesn't happen; send in payments and we will credit
them, doesn't happen. Then Ocwen represents [**36]
that Ms. Davis won't make any payment, even though Ocwen
wrongfully refuses them. The
testimony of Ronald Gipson, Ms. Davis's bankruptcy attorney, may be
most telling. He noted Ocwen represented that "if debtor provides
proof of post petition payments not credited, Movant will credit those
payments and reduce the monthly payments." (RR 7, pp. 38-39).
Yet, Ocwen did not credit her for the payments, thus misrepresenting
the character, extent or amount of debt. (RR 7, pp. 34, 40, 41, 54). Our
agreement in the bankruptcy was they would reduce the amount she had
to pay. The agreement set out in the order we looked at was she would
resume her regular monthly payments to Ocwen, which she did, and made
all those on time. And she would also make a second payment to Ocwen
every month for six months called [**37]
a cure payment to cure her post-petition default. The
agreement with Ocwen set out in the order if we provided proof she
made the payment, and were talking three months of September, October
and November, that they would reduce the amount she had to pay every
month. They did not do that. I mailed Ocwen copies of the proof of
payment in a timely manner. I had one of my office staff call their
people another couple of weeks after that, and they never credited her
for any of those payments. When
they were demanding that she cure the default, they were demanding
that she pay an amount which was more than she would have had to pay.
And in my opinion, a women at her level of income, that difference was
very significant. There
is factually sufficient evidence of a violation of the Debt Collection
Act, whether it was the character, extent or amount of a debt, or,
misrepresenting the debt status in a judicial proceeding. Certainly,
Ocwen misrepresented the debt, and proceeded to foreclose on Ms.
Davis, causing her loss of equity on her house and mental anguish as
described above. II.
THE UNOBJECTED-TO, UN-CROSS EXAMINED AND UNDISPUTED
[**38] EVIDENCE
PRESENTED TO THE JURY WAS FACTUALLY SUFFICIENT TO SUPPORT THE JURY'S
AWARD OF ATTORNEYS' FEES. Although
Ocwen seeks to minimize this case as a "one plaintiff wrongful
foreclosure action", Ocwen made it into a case national in scope
by attempting to keep Plaintiff's counsel from practicing law in the
United States. Ocwen helped drive Plaintiff's fees and should not now
be allowed to complain. Pursuant
to the jury verdict, Plaintiff was the prevailing party. Consequently,
Plaintiff was entitled to submit a jury issue regarding attorneys'
fees. The
evidence regarding attorneys' fees was provided through the testimony
of Bill Oliver. Mr. Oliver testified regarding his background,
qualifications and his first hand, personal knowledge of the fees. See
Goad v. Goad, 768 S.W.2d 356, 359 (Tex. App.--Texarkana 1989, writ
denied). No objection was made to Mr. Oliver's qualifications. Mr.
Oliver testified that his firm and two other firms were involved in
the representation of Ms. Davis. (RR 3, pp. 207-209). Oliver further
testified [**39] that Ms.
Davis's attorneys had to hire a local attorney in Chicago, Illinois,
as well as Columbia [*23]
Law Professor Henry Monaghan to respond to the injunction
obtained by Ocwen. (RR 3, pp.208-210). Mr. Oliver specifically
addressed the Anderson factors, as required by the Texas Supreme
Court. See Arthur Anderson Co. v. Perry Equip. Corp., 945 S.W.2d
812, 818 (Tex. 1997). Mr. Oliver reviewed the number of hours and
hourly rate (lodestar amount). Mr. Oliver testified, without
objection, that that amount of $ 460,087.50, for his firm, Hilliard
& Munoz, Ellis Carstarphen firm, Andrew Porter in Chicago, Henry
Monaghan, Columbia University Law School, Ervin Apfel's firm, David
Salyer and Fred Raschke's firm, was the reasonable fees incurred in
this case. (RR 4, p. 6). Mr. Oliver also addressed the fact there this
case was taken on a contingency, that $ 150,000 in hourly fees had
been paid out for the Chicago lawyers, Professor Monaghan and the
Apfel firm, the preclusion of other employment, the attorneys' fees
customarily charged, experience and reputation of Plaintiff's
attorneys and their co-counsel. (RR 4, p. 7-11). In
addition to the foregoing, unobjected to [**40]
testimony, Mr. Oliver provided an opinion that the amount of
fees should be adjusted based on the Anderson factors. (RR 4,
pp. 11-15). Mr. Oliver's opinion was that, based on the contingent
nature of the fee and other Anderson factors, the fee should be
adjusted by 6, for a total of $ 2,760,525. (RR 4, p. 13). The jury
only awarded $ 700,000 for fees through trial, approximately a 1-1/2
times adjustment: This adjustment by the jury was reasonable based on
the testimony provided by Mr. Oliver. See Haggar Apparel Co. v.
Leal, 100 S.W.3d 303, 315 (Tex. App.--Corpus Christi 2002, rev'd
on other grounds 154 S.W.3d 98 (Tex. 2004); Guity v. C.C.I.
Enterprise Co., 54 S.W.3d 526, 528-29 (Tex. App.--Houston [1<st>
Dist] 2001, no pet.). [*24]
What may be more important than what Mr. Oliver testified to,
is that there was no cross examination of Mr. Oliver which in any way
attempted to discredit or question Mr. Oliver's opinion. The
cross-examination consisted of questions whether the contingency
contract with Ms. Davis was 40% or 50% (RR 4, pp. 15-17), who makes
settlement decisions (RR 4, p. 17-19), and if the foreclosure was
valid, [**41]
there would be no fee. (RR 4, p. 19). Not only was there no
relevant cross-examination, no testimony was offered by any defendant
to contradict any of the testimony of Mr. Oliver. Mr.
Oliver offered uncontradicted testimony that a reasonable appellate
fee would be $ 450,000 and explained the basis for his opinion. (RR 4,
pp. 13-15). The testimony of Mr. Oliver was not only uncontradicted by
any other testimony, it was not even cross-examined. Factually
sufficient evidence supports the award of attorneys' fees in this
case, particularly in light of no cross-examination and no contrary
testimony offered by any of the defendants. No
objection was made during Bill Oliver's testimony relating to
reasonable and necessary attorneys' fees, that the fees were not
segregated. Ordinarily, that could result in waiver of such objection.
See Aero Energy v. Circle C. Drilling Co., 699 S.W.2d 821, 823
(Tex. 1985). However, Mr. Oliver testified at the close of
evidence that the claims arise out of the same set of facts and were
so related that there would be no way to [**42]
segregate the claims. (RR 7, pp. 83-84). This testimony was
never contradicted. The only evidence in this trial was the fees were
intertwined with all claims and could not be segregated. See
Stewart Title Guaranty Co. v. Sterling, 822 S.W.2d 1, 10-11
[*25] (Tex.
1991); Stamp-Ad, Inc. v. Barton Raben, Inc., 915 S.W.3d 932,
937-38 (Tex. App.--Houston [1<st> Dist.] 1996, no writ). III.
PLAINTIFF'S CLAIMS ARE NOT BARRED. Defendant
fails to explain how a Chapter 7 post petition claim can be barred. It
is not. As Mr. Gipson explained, Plaintiff's wrongful foreclosure was
not in existence at the time the Chapter 13 was converted to 7. In
fact, under Texas law, there is no attempted wrongful foreclosure. See
Port City State Bank v. Leyco Constr. Co, Inc., 561 S.W.2d 546, 547
(Tex. Civ. App.--Beaumont 1977, no writ). Further, causes of action
that arise after filing of a Chapter 7 are not part of the bankruptcy.
(RR 7, p. 59). Ocwen's lawyers were there for that testimony. Yet,
they argue frivolously to the Court that this is not the law.
[**43] Bankruptcy
Code § 103(g) makes the provision of Chapter 11 inapplicable to
Chapter 13, unless they are specifically incorporated in Chapter 13.
The res judicata effect of a Chapter 13 confirmation order is vacated
if the case is converted to another Chapter. See In Re Nash, 765
F.2d 1410 (9th Cir. 1985); In Re Doyle, 11 Bank R. 110, (Bankr.
E.D. Pa. 1981). The
effect of conversion to a 7 is that the case is treated as being filed
when the original filing for the 13 occurred. See In Re Redick, 81
B.R. 881, 884 (E.D. Mich. 1987). Claims that arise after the
filing date in a Chapter 7 are not part of the estate. See In Re
Peters, B.R., 44 B.R. 68 (Bankr. M.D. Tenn. (1984). See Ron
Gipson testimony, (CRR 7, p. 59). All representations after the
filing, and the wrongful [*26]
foreclosure, which occurred after the filing, are not part of
the estate and cannot be barred. Ms.
Davis's actions do not fit into the requirements to support judicial
estoppel. First, listing a debt on a plan is not [**44]
taking a position regarding the viability of claims. Secondly,
the Court did not accept the previous position. See Reynolds v.
Commission of IRS 861 F.2d 469, 473 (6th Cir. 1988). Third, any
non disclosure was clearly inadvertent. See Johnson Serv. Co. v.
Transamerica Ins. Co., 485 F.2d 164, 175 (5th Cir. 1973) (applying
Texas law in judicial estoppel: "the rule looks toward cold
manipulation and not unthinking or confused blunder.") None of
the elements of judicial estoppel are met. Further,
the failure to disclose a cause of action that does not exist cannot
support a judicial estoppel argument. See In Re Wakefield, 312 B.R.
333 (N. D. Tex. 2004). Ocwen
mischaracterized what the bankruptcy code required. Ms. Davis did not
list her debts as valid and accrued. It is a list of what creditors
claim they are owed - not a list of what she claims to owe creditors.
The debtor is to file schedules of assets and liabilities. 11
U.S.C. § 521(1). The Bankruptcy Code contemplates a process of
allowance or disallowance. 11 U.S.C. § 502. The Bankruptcy
Code allows the debtor in Chapter 13 to object [**45]
to scheduled claims. They do not have to be listed as disputed
or contingent. Ms. Davis would have no reason to object because the
Chapter 13 was converted to a 7 and no longer res judicata. A Chapter
7 "no asset" case would make
[*27] an objection
only on academic exercise. Thus, the schedule is not inconsistent with
objection to the foreclosure, particularly when Ocwen violated its own
representations to the bankruptcy court that it would credit Ms.
Davis's payments. Additionally,
the order related to the relief from the automatic stay confers no res
judicata or collateral or judicial estoppel effect. Pursuant to the
Local Rules of the Bankruptcy Court for the Southern District of
Texas, "Motion for Relief from Stay shall never be combined with
a request for any other relief except for a request for adequate
protection." See Local Rule 4001(a)(3), Bankr. Ct., S.D. Tex.
Because of the local rule and the expedited timeline for a motion for
relief, the res judicata affect of an order modifying the automatic
stay is not given the same effect as a final judgment after trial. See
D-1 Enterprises, Inc. v. Commercial State Bank, 864 F.2d 36, 38-39
(5th Cir. 1989). [**46] Ocwen
is wrong. Plaintiff's claims are not barred. IV.
THE EVIDENCE ESTABLISHES THIS IS A STATUTORY VIOLATION, NOT A MERE
CONTRACT CLAIM. As
the Texas Supreme Court noted, "tort damages are not precluded
simply because a fraudulent representation claim causes only an
economic loss. See Formosa Plastics Corp. USA v. Presido Eng. &
Contr., Inc., 960 S.W.2d 41, 47 (Tex. 1998). Further, the fact
that a contract may exist does not insulate a defendant from DTPA or
Debt Collection Act claims for misrepresentation or violation of the
Act. See Clay Corp. v. Smith, 949 S.W.2d 452, 463-64 (Tex.
App.--Fort Worth 1997, pet. denied) (duty to refrain from making
misrepresentations imposed by law, not contract). See also Bekins
Moving & Storage Co. v. Williams, 947 S.W.2d 568, 577-78 (Tex.
App.--Texarkana 1997, no writ). Similar, misrepresentations made by a
defendant can arise to [*28]
more than a mere failure to perform. See Munawar v. Cadle
Co., 2 S.W.3d 12, 18-19 (Tex. App.--Corpus Christi 1999, pet
denied). Similarly,
Defendants' statue of frauds argument fails as to the DTPA claim. The
Texas Supreme Court [**47] has
held that neither the parol evidence rule nor the statute of frauds
would bar admission of representations, which are the basis of a DTPA
claim. See Weitzel v. Barnes, 691 S.W.2d 598, 600 (Tex. 1985).
Certainly, none of the cases cited by Defendants support its position
that the mere existence of a contract would somehow bar a debt
collection act claim. In fact, the existence of a contract will likely
always be the basis of a debt collection act claim. V.
TRIAL COURT PROPERLY ALLOWED EVIDENCE REGARDING PLAINTIFF'S CLAIM. Defendant
spends a great deal of time criticizing the trial judge in this matter
rather than addressing the merits. Yet, how can the background of the
Plaintiff be disregarded when Plaintiff has the burden to show
damages, including mental anguish, without providing information to
the jury to assess Ms. Davis, assess the threatened loss of her home
she lived in her entire life, that was built by her father, when she
was dealing with a company that even the Office of Thrift Supervision
criticized for using the exact same practices Ocwen was using on Sealy
Davis. But, the real harm is not the action of the trial court, but
Ocwen itself. [**48]
If it was not true that Ocwen lied to its customers, lost
payments, would make promises it would not keep with the intent to
make the Plaintiff homeless living under a bridge or in a cardboard
box, why did Ocwen not call one single witness to rebut the testimony
of Ron Davis. (RR 3 pp. 93-94, 99, 107-108, 196). In fact, Ocwen did
not even allow a corporate representative to appear
[*29] in court
towards the end of the jury trial for fear of what he would have to
admit. There was no erroneous admission of evidence. Ocwen overlooks
that it may be Ocwen and the defense attorneys' trial strategy that
may have contributed to the jury verdict. As Judge Criss noted: In
light of the uncontradicted evidence of the evil business scheme of
Ocwen as described by Ron Davis, and defense counsel's argument to the
jury, any erroneous omission of evidence was harmless and did not
cause an improper rendition of judgment. See Tex. Dept. of Transp.
V. Able, 35 S.W.3d 608, 617 (Tex. 2000). VI.
OCWEN ASSUMED RESPONSIBILITY OF A FIDUCIARY BY PROVIDING FINANCIAL
SERVICES AND CONTROLLING THE SUBSTITUTE TRUSTEE. Ocwen's
responsibility in this matter was to service Ms. Davis's home equity
loan. In that process, Ocwen was charged with the responsibility of
insuring payments were properly received, properly applied and that it
credited accounts as it represented it would. Although no formal
escrow was established during their relationship, Ocwen acted in a
manner consistent with an escrow agent. Escrow agents owe a fiduciary
duty to both parties to a contract. See Watkins v. Williamson, 869
S.W.2d 383, 387 (Tex. App.--Dallas 1983, no writ);
[**50] Trevino
v. Brookhill Capital Res., Inc., 782 S.W.2d 278, 281
[*30] (Tex.
App.--Houston [1<st> Dist.] 1989, writ denied). Here, not only
did Ocwen not properly account for monies or credit monies received,
it intentionally misled Ms. Davis by forcing her to send $ 600 to the
"wrong" address, put her further in default, refusing to
credit payments received as it had represented, and undertaking this
action to put her under a bridge or in a cardboard box." Ocwen
breached its duty of full disclosure to Ms Davis and duty of loyalty. See
City of Fort Worth v. Pippen, 439 S.W.2d 660, 665 (Tex. 1969); Watkins,
supra at 387. In
addition to the escrow responsibilities, Ocwen was responsible for the
acts of its agents. Here, Baxter & Schwartz, and Chad Rausch,
acted as trustee or substitute trustees for Ocwen. The
trustee/substitute trustee acts as a special agent for both parties,
and must act with absolute impartiality and fairness to the mortgager
(Plaintiff) in carrying out duties under a deed of trust. See
Hammonds v. Holmes, 559 S.W.2d 345, 347 (Tex. 1977); Bonilla v.
Roberson, 918 S.W.2d 17, 21 [**51]
(Tex. App.--Corpus Christi 1996, no writ). Ocwen's agent, the
trustee and substitute trustee, was specifically informed of the
request for a Temporary Restraining Order (TRO) by letter dated
December 27, 2004. (RR 10c, P's Ex. 23). (P's Ex. 25, P's Ex. 26, P's
Ex. 28). Further, Ocwen and its agents, the trustee/substitute trustee
violated the TRO by attempting to evict Ms. Davis and send a constable
to her house, which forced her to cower in fear behind her bed. (P's
Ex. 28, P's Ex. 30). Certainly,
Ocwen assumed greater responsibilities sufficient to impose fiduciary
duties. Ocwen "counsels" the customer regarding their
account. (RR 10c, P's Ex. 31). Ocwen then acts as a
"consultant" to "restructure and reprioritize" the
customer's [*31]
financial obligation. (Id.) Consequently, Ms. Davis
being counseled by Ocwen, had to arrange her finances with Ocwen, and
must rely on Ocwen with a high degree of trust, influence or
confidence. See Crim Truck & Tractor Co. v. Navister Intl.
Transp. Corp., 823 S.W.2d 591, 544 (Tex. 1992). Evidence
introduced at trial supports the jury's finding that Ocwen acted as a
fiduciary under the facts of this case. VII.
REFERENCE
[**52] TO
OCWEN AS FIDUCIARY WAS NOT REVERSIBLE ERROR. When
a defendant refers to itself as a "counselor" and acts as a
"consultant to help the customer restructure and reprioritize
their financial obligation", acts as de facto escrow agent in
holding money for the Plaintiff to be properly applied and does not,
and sends the substitute trustee to foreclose and evict in violation
of a TRO, while losing payments or not crediting payments, it was
reasonable for Plaintiff to assert Ocwen acted as a fiduciary and
submit an issue regarding that issue. In light of unrebuted testimony
that Ocwen has a business plan to lose payments, not credit payments,
lie and cheat customers, any mention of fiduciary duty would not cause
an improper judgment. See - Tex. Dept. of Transp. v. Able, supra,
at 617. VIII.
THE EVIDENCE IS FACTUALLY SUFFICIENT TO SUPPORT THE JURY'S FINDING OF
WRONGFUL FORECLOSURE. This
wrongful action began when Ocwen's pooling agreement partner, Aames,
induced Sealy Davis to enter into a home improvement loan by obtaining
an appraisal for $ 47,000 on her home. Then, Aames provided Sealy
Davis $ 19,000 out of a $ 35,000 loan for home improvements. The
underlying [**53] note was
immediately transferred to Ocwen as part of the pooling agreement
between Aames and Ocwen. As Sealy Davis
[*32] testified,
she became ill and informed Ocwen she would likely miss some payments
due to costs associated with her illness. Yet, Ocwen then thwarted her
at every turn when she tried to catch up. Sealy Davis sent $ 600 as a
catch up payment to Ocwen but it was (as Ron Davis suggested was a
standard Ocwen practice), lost by Ocwen. Other attempts by Sealy Davis
to catch up her payments were thwarted by Ocwen saying they would give
her a forbearance agreement, telling the Attorney General that Ocwen
would reevaluate her, and then Ocwen would move toward foreclosure
(another business practice testified to by Ron Davis). Once
Sealy Davis filed bankruptcy, Ocwen represented and agreed that it
would accept and credit the payments she made. Certainly, the written
order agreed to by Ocwen that it would accept the payments, modified
any prior notes or agreements. See Wieler v. United Savings Assoc.
of Texas, FSB, 887 S.W.2d 155 (Tex.App.--Texarkana 1994, writ
den.). As Ms. Davis's bankruptcy attorney testified, Ocwen refused to
accept the payments despite [**54]
the language in the order. (RR 7, pp. 38-41). The result of
refusing to accept the payments and credit them was that Ocwen put
Sealy Davis in default of the agreed order. Any actions afterward,
notices of intent to accelerate the debt, notices of acceleration and
notice of foreclosure based on the default manipulated by Ocwen, would
constitute irregularities in the foreclosure process. Generally,
irregularities in the foreclosure process can invalidate a sale in a
foreclosure proceeding. See Shearer v. Allied Live Oak Bank, 758
S.W.2d 940. 942 (Tex. App.--Corpus Christi 1998, writ denied). In
a remarkably similar fact pattern, in Wieler v. United Savings
Association of Texas, FSB, 887 S.W.2d 155 (Tex.App.--Texarkana
1994, no pet.), the Plaintiffs [*33]
sought protection in bankruptcy court regarding their house.
The bankruptcy court modified the payment obligations and the
Plaintiffs attempted to meet increasing obligations imposed by their
bank. Id. at 157. Ultimately, it was determined the Defendants'
actions deprived them of any right to cure. Id. at 158. In this
case, it was Ocwen's actions that led to the [**55]
default of the bankruptcy payments by refusing to accept
payments. Such action is unconscionable under the DTPA and serves as a
basis for wrongful foreclosure. See Wieler, supra at 159-160. Ocwen's
numerous pages of argument in its brief regarding oral modifications,
no evidence regarding wrongful foreclosure becomes meaningless in
light of Ron Gipson's testimony that Ocwen violated the order (and
thus the loan terms) by refusing to credit the payments sent in by Ms.
Davis (RR 7, pp. 38-41). As noted in the Wieler case, this was
not only evidence of wrongful foreclosure, but supported the jury's
findings of unconscionability. IX.
NO MULTIPLE RECOVERY. Although
Plaintiff does not agree the judgment results in a double recovery,
Plaintiff agrees to remit the $ 50,000 awarded as wrongful foreclosure
damages, if the judgment requiring the house to be reconveyed to Ms.
Davis is affirmed. Plaintiff
was required to submit a issue on wrongful foreclosure to seek return
of her house. Neither the DTPA nor Debt Collection Act specifically
provide her that relief. However, to avoid any argument about the
recovery for wrongful foreclosure is a double recovery,
[**56] Plaintiff
agrees to remit the $ 50,000 damages award by the jury and request
[*34] the judgment
be reduced by that amount, if the judgment requiring the house be
reconveyed to Ms. Davis is affirmed. However,
the fact remains that the jury determined that the foreclosure was
wrongful. Accordingly, it was appropriate for the court to award
return of the house to Sealy Davis. See Klein v. Garth, 677 S.W. 2d
712, 717 (Tex. App.--Tyler 1984, ref. n.r.e.). Deutsche
Bank complains in its brief that the jury did not find it did anything
wrong. However, Deutsche cannot escape the language of the Pooling and
Servicing Agreement (RR 10A, P's Ex. 6, p. 53) which allows Ocwen to
sue on behalf of the Deutsche. Further, Deutsche Bank's
representative, David Co. confirmed that, under the Pooling Agreement,
Ocwen has authority to modify Sealy Davis's obligations under the loan
(RR 4, pp. 62-63, 140-142). Further, if Ocwen forecloses, Deutsche
holds the property (RR 4, pp. 70-71). Consequently, for the purpose of
this case, the Pooling and Servicing Agreement allows Ocwen to act as
the agent for Deutsche in servicing the loan and foreclosing. The jury
found that Ocwen, who was [**57] authorized
by Deutsche to act on its behalf, wrongfully foreclosed on Sealy
Davis. This evidence establishes as a matter of law that Ocwen was the
agent for Duetshe, particularly because Ocwen transferred the property
to Deutsche and Deutsche is the holder of the title to the house. (RR
4, pp. 54-55). See Republic Bankers Life Ins. Co. v. Wood, 792
S.W.2d 768, 778 (Tex. App.--Fort Worth 1990, den.). In addition,
neither Ocwen nor Deutsche sought reinstatement of the loan nor did
they seek a deficiency. Such claim arose out of same set of facts
which Plaintiff's claims arose. Those Defendants have waived any right
to assert such claim. See Jack H. Brown & Co. v. Northwest Sign
Co., 718 S.W.2d 397, 398-99 [*35]
(Tex. Civ. App.--Dallas 1986, writ den. n.r.e.). Consequently,
the evidence supports the court's order that the house should be
reconveyed to Sealy Davis because of the wrongful foreclosure. PRAYERaintiff
agrees to a remittitur of $ 50,000.00 related to the wrongful
foreclosure damages if the portion of the judgment conveying the home
to Sealy Davis is affirmed, and prays, subject to the remittitur, the
judgment be affirmed. [**58]
Respectfully
submitted, By:
KEVIN W. GRILLO, OF COUNSEL State
Bar No. 08493500 HILLIARD
& MUNOZ, L.L.P. 719
S. Shoreline Boulevard, Suite 500 Corpus
Christi, Texas 78401 Telephone
No.: 361-882-1612 Telecopier
No.: 361-882-3015 Robert
C. Hilliard State
Bar No. 09677700 HILLIARD
& MUNOZ, L.L.P. 719
S. Shoreline Boulevard, Suite 500 Corpus
Christi, Texas 78401 Telephone
No.: 361-882-1612 Telecopier
No.: 361-882-3015 William
H. Oliver State
Bar No. 15265200 PIPKIN,
OLIVER & BRADLEY, L.L.P. 1020
N.E. Loop 410, Ste. 810 San
Antonio, Texas 78209 Telephone
No.: 210-820-0082 Telecopier
No.: 210-820-0077 [*36]
Edward M. Carstarphen State
Bar No. 03906700 David
B. Mantor State
Bar No. 12957533 ELLIS,
CARSTARPHEN, DOUGHERTY & GOLDENTHAL,
P.C. 5847
San Felipe, Suite 1900 Houston,
Texas 77057 Telephone
No.: 713-647-6800 Telecopier
No.: 713-647-6884 ATTORNEYS
FOR APPELLEE SEALY
DAVIS CERTIFICATE
OF SERVICE I
hereby certify that a true and correct copy of the above and foregoing
instrument has been forwarded to all counsel of record, via certified
mail, return receipt requested, [**59]
on this the 27<th> day of October, 2006, pursuant to
Texas Rule of Appellate Procedure 6.3 and 9.5(b), (d), (e). Via
CM/RRR 7006 0810 0001 0927 9941 Mr. David
Schenck Ms. Michelle
A. Morgan Ms. Angela
Colmenero JONES DAY 2727 N.
Harwood Street Dallas, Texas
75201-1515 Via
CM/RRR 7006 0810 0001 0927 9972 Mr. Scott D.
Daniel Greer, Herz
& Adams, LLP One Moody
Plaza, 18<th> Floor Galveston,
Texas 77550 Via
CM/RRR 7006 0810 0001 0927 9989 Ms. Kelly S.
Herzik Morris, Laing,
Evans, Brock & Kennedy, Chtd Old Town
Square 300 N. Mead,
Suite 200 Wichita, KS
67202 KEVIN
W. GRILLO [SEE APPENDIX IN ORIGINAL] |
|