United States District Court, D. Montana, Billings Division
OPINION AND ORDER
P. WAITERS United States District Judge
the Court are Defendants Caliber Home Loans and LSF9 Master
Participation Trust's Motion for Summary Judgment (Doc.
22), Defendant Bank of America, N.A.'s Motion for Summary
Judgment and Alternative Motion for Judgment on the
Pleadings, (Doc. 30), and Plaintiff Alexandra Armitage's
cross Motion for Summary Judgment Vacating the State Court
Default Judgment. (Doc. 34). For the foregoing reasons, the
Court GRANTS Defendants' motions and DENIES
early July 2007, Plaintiff Alexandra Armitage obtained a loan
from Mann Mortgage, LLC, in the amount of $189, 000, to
purchase a house in Red Lodge, Montana, ("the
Property"). (Doc. 26 at ¶ 2). In order to get the
loan, Armitage executed a Note in favor of Mann Mortgage,
LLC, which was secured by a Deed of Trust on the Property.
The Deed of Trust designated Mortgage Electronic Registration
System, Inc., ("MERS") as the nominee beneficiary
for the Lender.(Id.). Countrywide Homes Servicing
took over as the loan servicer later that month. (Doc. 45 at
began renting out the house in 2008. (Doc. 26 at ¶ 4).
By March 2008, she had defaulted on the loan repayment terms.
(Id. at ¶ 5). Countrywide sent Armitage a
letter in April 2008 regarding the default. (Id. at
December 2009, Armitage had failed to cure the default on her
loan. As a result, on December 4, 2009, an Assignment of Deed
of Trust was recorded in the official records of Carbon
County, Montana, noticing the public that MERS assigned the
Deed of Trust to the Property to Countrywide. (Doc. 25-1 at
24). The same day, a Substitution of Trustee was also
recorded against the property, substituting ReconTrust
Company, N.A. for Countrywide as the Trustee, and a Notice of
Trustee's Sale to occur on April 19, 2010, was recorded
in the official records of Carbon County. (Doc. 25-1 at 28).
April 19, 2010, ReconTrust, as substitute trustee, sold the
property at a foreclosure sale to the Federal National
Mortgage Association. (Doc. 25-1 at 28). A Trustee's Deed
Upon Sale and an Assignment of Deed of Trust were recorded on
April 26, 2010, noticing the public that ReconTrust assigned
the Deed of Trust to the Federal National Mortgage
Association. (Id. at 31-37). Almost two years later,
on January 31, 2012, Federal National Mortgage Association
assigned the Deed of Trust to defendant Bank of America, and
another Assignment of Deed of Trust was recorded in Carbon
County. (Id. at 38-39).
point after the April 19, 2010, sale, Bank of America learned
that the April 19, 2010, Trustee's Sale and Deed were
invalid due to ReconTrust's failure to record the Notice
of Trustee's Sale with the Affidavit of Mailing prior to
the sale, as required under Montana law. (Doc. 32-9 at 5).
Accordingly, on March 22, 2012, Bank of America sued Armitage
to rescind the Trustee's Deed, vacate the 2010
foreclosure sale, and reinstate Bank of America's lien
upon the property. (Id.; Doc. 32 at ¶ 9). After
attempting to find Armitage in the state, Bank of America
moved the state district court to allow service by
publication. The state district court granted Bank of
America's motion and Armitage was served by publication,
but never appeared in the lawsuit. (Doc. 32-8 at 1). The
state district court entered default judgment against
Armitage on October 12, 2012. (Doc. 32 at ¶17). As a
result of the default judgment, the 2010 foreclosure sale was
rescinded, Armitage was reinstated as owner of the Property,
and Bank of America held the lien on the Property.
default judgment had been entered against her, Armitage
resumed leasing the property in 2013. (Doc. 46 at
¶¶ 14-15). She received rental payments and work in
exchange for leasing the property. (Id. at ¶
16). In May 2013, Armitage submitted a loan modification
application to Bank of America. (Id. at ¶ 17).
Bank of America denied the loan modification and the loan
remained in default. (Id. at¶ 18).
year later, on November 16, 2014, Caliber Home Loans, Inc.,
took over servicing the loan from Bank of America. (Doc. 26
at ¶ 20). On November 17, 2014, Caliber notified
Armitage via regular mail that Caliber was the new loan
servicer and LSF9 Master Participation Trust was the new loan
owner. (Doc. 24-1 at 9, 14). The loan remained in default and
due. (Doc. 24 at ¶ 9). Twice in December 2014, Caliber
sent Armitage default letters, advising her that the loan
remained in default and that if she did not cure her default,
her entire loan could become due, foreclosure by judicial
proceeding could occur, and her property could be sold. (Doc.
23-1 at 15-21).
January to May 2015, Caliber tried to contact Armitage on the
number she listed on her loan modification application, but
did not reach her. (Doc. 24 at ¶¶ 12-13). While
Armitage disputes receiving any calls, she admits that she
probably gave her telephone number to Caliber and Bank of
America. (Doc. 46 at ¶ 27). Throughout this period,
Armitage continued renting the property for $850.00 per
month. (Doc. 26 at ¶ 26).
April 8, 2015, Bank of America assigned the Deed of Trust to
LSF9 and recorded an Assignment of Deed of Trust in the
official records of Carbon County. (Doc. 26 at ¶ 27). On
September 8, 2015, First American Title Company of Montana,
Inc., was substituted as Trustee under the Deed of Trust. A
Substitution of Trustee was recorded in Carbon County. (Doc.
25-1 at 48). Because Armitage had yet to cure the default on
the loan, a Notice of Trustee's Sale was recorded in
Carbon County on September 11, 2015. (Doc. 25-1 at 57-59).
The unpaid principal of the loan is $188, 101.93.
(Id. at 58). The Trustee's sale was cancelled
and Cancellation of the Notice of Trustee's Sale was
recorded on September 22, 2015. (Id. at 60).
filed a complaint in state court in November 2015,
challenging the foreclosure and seeking money damages. (Doc.
3). LSF9 removed the case to federal court as a diversity
action. (Doc. 1). In her Amended Complaint, Armitage advances
the following claims against the Defendants under federal and
1. Breach of the Trust Indenture and Damages for Wrongful
Exercise of Power of Sale and Attempted Wrongful Exercise of
Power of Sale (Count I): Armitage alleges that because
the default judgment and the deed transfers were illegal,
Defendants attempted sale of the Property violated the Trust
Indenture and the Small Tract Financing Act. She argues that
because it didn't own the property, Bank of America's
demands for payment in January 2013, breached the Deed of
Trust. (Doc. 32-5 at 13).
2. Violation of the Fair Debt Collection Practices Act
(Count II): Armitage alleges that because the 2010 sale
was invalid, Bank of America's requests for accumulated
costs, fees, interest, principal, and other charges,
constituted demands for debts Armitage did not owe and
constitute unfair and deceptive debt collection practices.
(Doc. 32-5 at 13).
3. Negligence (Count III): Armitage alleges the
Defendants wrongfully sought an illegal default judgment
against her, wrongfully alleged an illegal obligation, and
wrongfully attempted to induce her to pay that debt. She also
alleges the Defendants failed to convey the Property back to
her, to ...