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Marquard v. New Penn Financial, LLC

United States District Court, D. Oregon

May 31, 2017

LINDA MARQUARD and DAVID MARQUARD, Plaintiffs,
v.
NEW PENN FINANCIAL, LLC, dba SHELLPOINT MORTGAGE SERVICING, and THE BANK OF NEW YORK MELLON fka THE BANK OF NEW YORK, as TRUSTEE FOR THE CERTIFICATEHOLDERS of CWABS INC., ASSET-BACKED CERTIFICATES, SERIES 2007-3, Defendants.

          David L. Koen, Legal Aid Services of Oregon Attorneys for Plaintiffs.

          Donald G. Grant, Donald G. Grant Attorneys for Defendants.

          OPINION AND ORDER

          Michael H. Simon United States District Judge

         Plaintiffs Linda Marquard (“Mrs. Marquard”) and David Marquard (“Mr. Marquard”) (collectively, “the Marquards” or “Plaintiffs”) bring this lawsuit against Defendants New Penn Financial, LLC, dba Shellpoint Mortgage Servicing (“Shellpoint”); and the Bank of New York Mellon, fka the Bank of New York (the “Bank”) (collectively, “Defendants”). Before the Court is Plaintiffs' motion for preliminary injunction to prohibit Defendants, pending trial, from continuing to demand and collect from Plaintiffs a monthly escrow of $342.44 for Plaintiffs' anticipated 2017 property taxes. The Court held a hearing on May 31, 2017. For the following reasons, Plaintiffs' motion is granted.

         STANDARDS

         A preliminary injunction is an “extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter v. Nat. Res. Def. Council, 555 U.S. 7, 22 (2008). A plaintiff seeking a preliminary injunction generally must show that: (1) the plaintiff is likely to succeed on the merits; (2) the plaintiff is likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in favor of the plaintiff; and (4) an injunction is in the public interest. Winter, 555 U.S. at 20; see Id. at 20-23 (rejecting the Ninth Circuit's earlier rule that the mere “possibility” of irreparable harm, as opposed to its likelihood, was sufficient, in some circumstances, to justify a preliminary injunction).

         The Supreme Court's decision in Winter, however, did not disturb the Ninth Circuit's alternative “serious questions” test. All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131-32 (9th Cir. 2011). Under this test, “‘serious questions going to the merits' and a hardship balance that tips sharply toward the plaintiff can support issuance of an injunction, assuming the other two elements of the Winter test are also met.” Id. at 1132. Thus, a preliminary injunction may be granted “if there is a likelihood of irreparable injury to plaintiff; there are serious questions going to the merits; the balance of hardships tips sharply in favor of the plaintiff; and the injunction is in the public interest.” M.R. v. Dreyfus, 697 F.3d 706, 725 (9th Cir. 2012).

         FINDINGS OF FACT

         In 2005, Mrs. Marquard purchased a home in Portland, Oregon. She and her husband, Mr. Marquard, have been living there ever since. Their son currently lives with them. In 2007, the Marquards refinanced their home with the loan that is at issue in this lawsuit, and Mr. Marquard was added to the title. In February 2011, Mrs. Marquard was laid off from her job as an associate director of strategic planning for an energy conservation non-profit organization. Later in 2011, the Marquards became unable to make payments on their home loan.

         Mr. Marquard has two ruptured discs in his lower back, stemming from prior work, most recently from lifting a concrete fountain at a nursery. His injury causes him back pain and numbness in his legs. He is substantially limited in his ability to sit, stand, and bend. In 2015, the Social Security Administration found him to be disabled.

         In August 2015, Mrs. Marquard began working part-time as a cashier at a Fred Meyer supermarket, earning $10.50 per hour. In March 2016, Mrs. Marquard was diagnosed with non-small cell lung cancer. She then underwent surgery to remove the upper lobe of her right lung. In September 2016, Mrs. Marquard learned that her cancer had spread, and she was diagnosed with Stage IV non-small cell lung cancer. She has been unable to work since then. On September 29, 2016, Mrs. Marquard applied for Social Security Disability Insurance (“SSDI”) under the Social Security Administration's expedited Compassionate Allowances Initiative. Her application was approved. She receives $2, 485 per month in SSDI benefits.[1]

         Defendant Shellpoint has been the mortgage servicer for Plaintiffs' home loan since December 1, 2016, when it succeeded Plaintiffs' former servicer, Specialized Loan Servicing LLC (“SLS”). For the loan that is at issue in this lawsuit, Plaintiffs entered into their mortgage arrangement on January 26, 2007. Paragraph 3 of their Deed of Trust provides:

Borrower shall pay to Lender . . . a sum (the “Funds”) to provide for payment of amounts due for: (a) taxes and assessments and other items which can attain priority over this Security Instrument as a lien or encumbrance on the Property . . . . These items are called “Escrow Items.” . . . Borrower shall pay Lender the Funds for Escrow Items unless Lender waives Borrower's obligation to pay the Funds for any or all Escrow Items.
Lender may, at any time, collect and hold Funds in an amount (a) sufficient to permit Lender to apply the Funds at the time specified under RESPA, and (b) not to exceed the maximum amount a lender can require under RESPA. Lender shall estimate the amount of Funds due on the basis of current data and reasonable estimates of expenditures of future Escrow Items or otherwise in accordance with Applicable Law.

ECF 16-3 at 4 (Deed of Trust ¶ 3) (emphasis added). The Deed of Trust also provides: “If there is a surplus of Funds held in escrow, as defined under RESPA, Lender shall account to Borrower for the excess funds in accordance with RESPA.” ECF 16-3 at 4 (Deed of Trust ¶ 3).

         On June 14, 2016, the Oregon Department of Revenue (“DOR”) approved Plaintiffs' application for property tax deferral. Under the program (the “Oregon Tax Deferral Program”), the State of Oregon agreed to pay Plaintiffs' property taxes to Multnomah County on an annual basis, beginning November 15, 2016. Also under the program, on July 14, 2016, the State placed a lien on Plaintiffs' property to secure repayment of the property taxes paid by the State for Plaintiffs. In a confirmation letter sent to Plaintiffs, the DOR advised Plaintiffs:

If your mortgage company includes property tax in your monthly mortgage payments, tell them the state is paying your property taxes. They may adjust your mortgage payments. We recommend you send the mortgage company a copy of this letter.

ECF 17-2 at 1. The confirmation letter also states that Plaintiffs will remain in the Tax Deferral Program at least through the end of 2017 unless they become ineligible. Plaintiffs may become ineligible if “[t]he ownership of the property changes, ” “[t]he deferral applicant[s] die[], ” or “[t]he deferral applicant[s] move[] from the property for any reason other than health reasons.” ECF 17-2 at 1; see also Or. Rev. Stat. § 311.684.

         On November 1, 2016, Plaintiffs applied for a loan modification under the Home Affordable Modification Program (“HAMP”). Plaintiffs' loan modification application included a copy of their property tax deferral approval letter. Also on November 1, 2016, Plaintiffs, through their attorney, informed SLS, Shellpoint's predecessor as Plaintiffs' loan servicer, that Plaintiffs had been accepted into the Oregon Tax Deferral Program. Plaintiffs' attorney sent to the attorney for SLS, James A. Craft (“Craft”), proof that Plaintiffs' property tax deferral had been uploaded to the Oregon Foreclosure Avoidance Program portal.

         On November 7, 2016, Plaintiffs and their attorney met with a representative of SLS, who informed Plaintiffs that they could make trial-period modification payments in the monthly amount of $2, 105.83, which would include an escrow for one-twelfth of Plaintiffs' anticipated annual property taxes. At that meeting, Plaintiffs' attorney requested that SLS not require as part of Plaintiffs' trial-period payments any amount for an escrow of property taxes. At the meeting, SLS refused to grant the request. Instead, SLS stated at the meeting that if Plaintiffs made all three payments under the trial-period modification, SLS would reanalyze the escrow account for Plaintiffs' loan. SLS's ...


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