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Reece v. Bank of New York Mellon

United States District Court, E.D. Arkansas, Western Division

March 31, 2019




         Before the Court is a motion for summary judgment filed by defendant Bank of New York Mellon, as Trustee for CIT Mortgage Loan Trust 2007-1 (“Mellon”) (Dkt. No. 14). Plaintiff Gary Reece responded in opposition to the motion (Dkt. No. 18), and Mellon replied (Dkt. No. 19). For the following reasons, the Court grants Mellon's motion for summary judgment and enters judgment in favor of Mellon.

         I. Factual Background

         The following facts are taken from Mellon's statement of uncontested facts in support of its motion for summary judgment (Dkt. No. 16), unless otherwise noted. Mr. Reece sets forth facts he maintains are in dispute in his statement of contested facts and his response to the motion for summary judgment (Dkt. Nos. 18-1, 18).

         Mr. Reece executed a $144, 000.00 note on June 4, 2004, in favor of Wilmington Finance, a division of AIG Savings Bank (“Wilmington”).[1] The note is secured by a mortgage executed by Mr. Reece, which encumbers real property located at 1015 N. Mississippi Road, Little Rock, Arkansas (the “Property”) (Dkt. No. 16, ¶¶ 1-2).

         According to Mellon, the loan was assigned from Wilmington to CIT Group/Consumer Finance, Inc. (“CIT”), and then CIT assigned the loan to Mellon (Dkt. No. 16, ¶¶ 3-4). Mellon maintains that Mr. Reece, but not the lender, signed a “stipulation agreement” on January 22, 2010 (the “2010 Agreement”) (Dkt. No. 18-2), in which Mr. Reece agreed to make a discounted reinstatement payment in exchange for forbearance of foreclosure (Dkt. No. 16, ¶5).

         Mr. Reece admits that the mortgage was assigned numerous times and maintains that, at one time, it was held by Vericrest Financial, Inc. (“Vericrest”) (Dkt. Nos. 18, at 1; 18-1, ¶ 1). Mr. Reece asserts that, at least as of January 2010, Vericrest held itself out to Mr. Reece as the owner of his mortgage (Dkt. No. 18, at 1-2). Mellon does not appear to dispute that Vericrest was a prior mortgage servicer for Mr. Reece's mortgage (Dkt. No. 14-1, ¶ 13). Mr. Reece asserts that he and Vericrest entered into the 2010 Agreement, and Mr. Reece characterizes this as a binding contract regarding the mortgage (Dkt. No. 18-2). According to Mr. Reece, he and Vericrest negotiated the 2010 Agreement, and when his mortgage was thereafter assigned to Mellon, Mellon was an assignee of the 2010 Agreement (Dkt. No. 18, at 2; Dkt. No. 18-1, ¶ 4).

         Mr. Reece claims that, per the 2010 Agreement, he was to make an initial payment in the amount of $5, 223.61 to Vericrest on or before February 26, 2010 (Dkt. No. 18, at 2). On February 24, 2010, Mr. Reece claims that he tendered payment of $5, 300.00 but that Vericrest refused to accept the payment (Dkt. No. 18, at 2; Dkt. No. 18-1, ¶ 6). He asserts that Vericrest breached the 2010 Agreement by failing to accept his initial payment (Dkt. No. 18, at 1-2; Dkt. No. 18-1, ¶ 2). He maintains that, since that date, Vericrest and Mellon have refused to accept payments from him (Dkt. No. 18, at 1-2). As a result, Mr. Reece asserts that Vericrest and Mellon breached the contract. He also maintains that this breach by Vericrest and Mellon excused his further performance under the 2010 Agreement (Id., at 2; Dkt. No. 18-1, ¶ 7).

         According to Mellon, Mr. Reece as the borrower was involved in 2010 litigation against the prior trustee for the subject loan involving the ability of a national banking association to foreclose without registration with the state banking authority (Dkt. No. 16, ¶ 6). Mellon maintains that the 2010 litigation, which was a class action, did not involve Mr. Reece's defenses to the foreclosure that are now pending before this Court (Id., ¶ 7).

         Mr. Reece acknowledges that, on October 15, 2010, he filed his initial lawsuit challenging the privity of contract with Mellon and Mellon's ability to avail itself of non-judicial foreclosure procedures (Dkt. No. 18, at 3). Reece v. Bank of N.Y. Mellon, 760 F.3d 771, 773 (8th Cir. 2014). According to Mr. Reece, that litigation lasted from October 15, 2010, to July 23, 2014; had the effect of preventing any foreclosure proceedings; and therefore tolled the limitations period for any breach of contract claim (Dkt. No. 18-1, ¶¶ 8-9, 11). In that case, a temporary restraining order was entered in Mr. Reece's favor initially, but the case eventually was dismissed by the district court. The Eighth Circuit Court of Appeals affirmed the dismissal on July 23, 2014. Mr. Reece asserts that the 2010 litigation sought a remedy superior to Mr. Reece's current breach of contract claim (Dkt. No. 18-1, ¶ 10). Mr. Reece contends that Mellon did not take any action to initiate foreclosure proceedings until 2017, over three years after the conclusion of the initial litigation (Dkt. No. 18, at 3).

         Mellon maintains that Mr. Reece has not made a regular monthly payment since October 2009 (Dkt. No. 16, ¶ 8). Mellon has maintained taxes, insurance, and homeowners' association dues on the Property since 2009 (Id., ¶ 9). Mr. Reece has not attempted to reinstate the loan (Id., ¶ 10). Mr. Reece has not attempted to pay off the loan (Id., ¶ 11). Mr. Reece does not appear to dispute these facts.

         On September 5, 2017, Mellon, through its counsel, sent to Mr. Reece a Notice of Default and Intent to Sell (Id., ¶ 12). On October 12, 2017, Mellon's counsel recorded an affidavit outlining its compliance with the Arkansas Statutory Foreclosure Act (Id., ¶ 13). To date, the parties have been unable to reach a settlement agreement (Id., ¶ 14).

         II. Legal Standard

         Summary judgment is proper if there is no genuine issue of material fact for trial. UnitedHealth Group Incorporated v. Executive Risk Specialty Ins. Co., 870 F.3d 856, 861 (8th Cir. 2017) (citing Fed.R.Civ.P. 56). Summary judgment is proper if the evidence, when viewed in the light most favorable to the nonmoving party, shows that there is no genuine issue of material fact and that the defendant is entitled to entry of judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.Johnson Regional Medical Ctr. v. Halterman, 867 F.3d 1013, 1016 (8th Cir. 2017) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). A factual dispute is genuine if the evidence could cause a reasonable jury to return a verdict for either party. Miner v. Local 373, 513 F.3d 854, 860 (8th Cir. 2008). “The mere existence of a factual dispute is insufficient alone to bar summary judgment; rather, the dispute must be outcome determinative under the prevailing law.” Holloway v. Pigman, 884 F.2d 365, 366 (8th Cir. 1989).

         However, parties opposing a summary judgment motion may not rest merely upon the allegations in their pleadings. Buford v. Tremayne, 747 F.2d 445, 447 (8th Cir. 1984). The initial burden is on the moving party to demonstrate the absence of a genuine issue of material fact. Celotex Corp., 477 U.S. at 323. The burden then shifts to the nonmoving party to establish that there is a genuine issue to be determined at trial. Prudential Ins. Co. v. Hinkel, 121 F.3d 364, 366 (8th Cir. 2008), cert. denied, 522 U.S. 1048 (1998). “The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

         III. Analysis

         A. Breach Of Contract Claim

         Mellon makes several arguments in support of its motion for summary judgment on Mr. Reece's breach of contract claim. The Court ...

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