GE v. Lawrence Clancy et al. (2011)

RULING ON MOTION FOR SANCTIONS

The defendants, Lawrence and Gail Clancy, have moved for sanctions on the grounds that the plaintiff, GE Capital Consumer Card Co., failed to provide them with a timely payoff figure, thereby causing them to lose their approval on a reverse mortgage that they sought to pay off the plaintiff.   The plaintiff denies that the defendants ever requested payoff figures for the time at issue, and objects to the sanctions sought by the defendants, who have paid nothing on their mortgage since July 2009.

The defendants have filed the motion for sanctions through their attorney, who entered his appearance on February 4, 2011.   The motion is not accompanied by any affidavits from the defendants.   It claims that the defendants disclosed their plans to obtain a reverse mortgage at their first mediation and advised the plaintiff that they would need a payoff statement.   It further claims that at the second mediation session in June 2010, the defendants advised the plaintiff that their application for a reverse mortgage had been approved, subject to the plaintiff providing a payoff statement, but the plaintiff still failed to produce that statement.

The defendants further allege in their motion for sanctions that when they went to mediation again in August 2010, they were told that the plaintiff would mail the payoff statement to them, but a few weeks after the session, the Clancys learned that the approval for their reverse mortgage had lapsed and they had to pay additional fees to reapply.

The defendants allege that Mr. Clancy was in a convalescent home at the time of the next mediation session and that no payoff statement had been provided.   By letter dated January 13, 2011, the defendants learned that their second application for a reverse mortgage had been approved.   However, the second appraisal showed a value of $13,000 less than the prior appraisal.   As a result, the proceeds available through the reverse mortgage were $5,000 less than before.

The defendants are requesting that they received a credit of $575 to reflect application fee and appraisal fee they incurred to apply for the second reverse mortgage.   In addition, they want the interest to stop accruing after June 15, 2010 and do not want any attorneys fees awarded to the plaintiff following the first mediation session.   They also request a $300 credit, representing three days lost wages to Ms. Clancy for “fruitless” mediation sessions and a credit of $350 for their attorney's time in preparing the Motion for Sanctions.

The plaintiff alleges that it provided itemized reinstatement figures to the defendants at each mediation session as required under Uniform Foreclosure Mediation Standing Order D. The defendants attended only three mediation sessions:  May 4, 2010, June 18, 2010 and July 23, 2010, and failed to attend the September 3, 2010, October 20, 2010, December 16, 2010, and January 20, 2011 mediation.

The plaintiff further claims that the defendants never provided any written requests for payoff figures as required under Connecticut General Statutes § 49–10a.   The plaintiff has also attached copies of payoff letters which it sent to Mr. Clancy on August 19, 2010 and November 1, 2010.

The court cannot find sufficient evidence that the defendants requested the payoff figures as they claim.   First, they have produced no written request for payoff figures.   The only piece of documentary evidence they have produced is a letter from CJ Speno of Liberty Bank, dated February 1, 2011, to the defendants in which he/she states that he/she has been trying to obtain a payoff figure since April 2010 and reminds the defendants that since there was no payoff figure produced their loan application approval lapsed.   Apparently, CJ Speno also failed to request payoff figures in writing.

The plaintiff has cited the statute, § 49–10a, which provides:

A mortgagee shall, upon written request of the mortgagor or the mortgagor's attorney or other authorized agent provide a payoff statement or reinstatement payment statement in writing to the person requesting the payoff statement or reinstatement payment statement on or before the date specified in such request, provided such request date is at least seven business days after the date of receipt of the written request.

The defendants argue that that statute should not apply in the context of mediation.   However, they provide no authority for that argument.   The court is more persuaded by the plaintiff's argument that a written payoff request provides the mortgagee with a specific date for which the payoff is required, and that such date is necessary to arrive at an accurate payoff number.

Putting aside the issue of whether § 49–10a does or does not apply here, the court finds insufficient evidence that the defendants ever did request a payoff for a June 15, 2010 reverse mortgage approval, as they claim.   There is no evidence that they ever provided the plaintiff with a written request.   If, in fact, the only thing holding up the approval was the lack of payoff figures, it is unbelievable that the defendants, even pro se, did not send some writing to the plaintiff advising it that they needed the payoff figures, and that failure to have same would threaten their reverse mortgage approval.

The lack of writing is not the court's only reason to doubt the defendants' claims here.   A review of the court file, specifically, the mediator's reports and motions, contains no reference to a reverse mortgage until October 25, 2010.

The first mediation session occurred on May 4, 2010.   On May 11, 2010, Kevin Williams, the court mediator, filed a request for extension of mediation so that the plaintiff could review the defendants' documents.   That request makes no mention of any reverse mortgage.   On May 11, 2010, Kevin Williams also filed a report in which he indicated that the defendants were being referred for CFHA, FHA, HUD Counseling, Loss Mitigation.   The report does not refer to any reverse mortgage.   On June 18, 2010, the mediator again moved for an extension of the mediation period on the grounds that the plaintiff needed additional time to review the defendants' financial documents.   This was the same date on which the defendants now claim that they had advised the plaintiff at the mediation session of their reverse mortgage and their need for payoff figures.   Again, there is no mention of the defendants needing a payoff figure from the plaintiff or any mention of a reverse mortgage.

On July 28, 2010, mediator Williams filed another request for a 45 days extension so that the plaintiff could review the defendants' financial documents.   According to the defendants, their first reverse mortgage approval was still good at that time.   As Mr. Williams is extremely protective of the interests of borrowers, the court would expect to see some mention of the plaintiff's continued refusal to provide payoff figures at this point.   However, Mr. Williams makes no mention of the reverse mortgage or any, let alone repeated, requests for payoff figures from the plaintiff.

On October 25, 2010, the mediator filed a request for an extension of mediation until 12/31/10 on the grounds that the defendant is awaiting a total payoff letter from the plaintiff.   This is the first mention of payoff figures in the mediator's reports.

The defendants have also made reference to conversations between themselves and the plaintiff's representatives at the August 2010, mediation.   However, there was no mediation in August 2010.

The plaintiff has produced payoff letters to the defendants dated August 19, 2010 and November 1, 2010.   The defendants' attorney has simply stated that the defendants did not receive such letters.   There have been no affidavits submitted from the defendants on this point, or any other point.   The defendants claim that Mr. Clancy was hospitalized for some time, which is the reason the defendants advance for their failure to attend the last four mediation sessions.   It seems possible that the defendants may not have been aware that they received those letters due to Mr. Clancy's illness, or at least failed to advise their attorney of the receipt of same.

There is simply no evidence that the defendants requested payoff figures from the plaintiff prior to October 2010 and there is evidence that the plaintiff sent payoff figures as early as August 2010.   Based on the foregoing, the court cannot believe the defendants' claim that the plaintiff was asked to produce payoff figures, but failed to do so, causing the defendants to lose a June 2010 mortgage approval.   Therefore, the court cannot order any sanctions in this case.

The court hopes that the defendants will provide the plaintiff with a written request for payoff figures and the plaintiff will promptly provide such figures so that the defendants will obtain their reverse mortgage and end this litigation.

By the Court,

Aurigemma, J.

Aurigemma, Julia L., J.