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Francesca BLOOM, Individually and on behalf of all others similarly situated, Plaintiff, v. NATIONSTAR MORTGAGE LLC d/b/a Mr. Cooper, Defendant.
Defendant Nationstar Mortgage LLC d/b/a Mr. Cooper moves for an order:
1) granting it summary judgment; and
2) decertifying the classes in the instant action pursuant to CPLR § 902.
Plaintiff Francesca Bloom moves for an order:
a) granting, pursuant to CPLR Rule 3212, summary judgment to plaintiff/class representative, Fancesca Bloom, as to Nationstar's liability;
b) granting, pursuant to CPLR Rule 3212, summary judgment to plaintiff/class representative, Francesca Bloom, as to damages for Class Two, subject to notification of all class members pursuant to CPLR Rule 907(2), (5); or, in the alternative;
c) granting, pursuant to CPLR 3212, summary judgment to plaintiff/class representative, Francesca Bloom, as to damages for Class One subject to notification of all class members pursuant to CPLR Rule 907(2), (5);
d) enjoining Nationstar from further charging borrowers a fax fee for their residential payoff statements when less than five payoff statements were requested in a calendar year by the borrower pursuant to General Business Law § 349(h);
e) reserving judgment as to plaintiff's request for attorneys’ fees and expenses incurred for notification to class members, and
f) for such other and further relief this Court deems just and proper.
It is hereby ORDERED that the defendant Nationstar Mortgage LLC d/b/a Mr. Cooper's motion for summary judgment and decertification is granted to the extent that Class Two is decertified and Class One is narrowed as set forth below. All other requested relief is denied.
Plaintiff Francesca Bloom's motion is granted to the extent that the description of Class One is amended to read as follows:
“A class consisting of all mortgagor(s), after October 3, 2015, who were charged by Nationstar a Fax Fee for furnishing the first requested payoff statement via fax for their mortgage when it related to an owner occupied, one-to-six family residential structure or residential condominium unit in New York State, and then paid that fax fee to Nationstar.” It is undisputed that a Fax Fee was paid to Nationstar only when a loan was actually paid off. Accordingly, the statutory requirement that the payoff request be for the purpose of completing a transaction where the loan is reasonably expected to be paid off is satisfied. In addition, plaintiff Francesca Bloom has established as a matter of law that she is entitled to reimbursement of the $25 Fax Fee paid to defendant Nationstar Mortgage LLC. “Pursuant to Real Property Law § 274-a(2)(a), [Nationstar] was prohibited from charging the plaintiff” for plaintiff's first requested payoff letter in connection with the sale of her home (Dougherty v. North Fork Bank, 301 A.D.3d [A.D.2d] 491, 492 [753 N.Y.S.2d 130] [2nd Dept., 2003] citing Negrin v. Norwest Mortg., Inc., 263 A.D.2d 39 [700 N.Y.S.2d 184]; see also Dowd v. Alliance Mortg. Co., 32 A.D.3d 894 [822 N.Y.S.2d 558] [2nd Dept., 2006]; MacDonell v. PHH Mortg. Corp., 45 A.D.3d 537 [846 N.Y.S.2d 223] [2nd Dept., 2007]). Further, plaintiff's motion for summary judgment is granted with respect to Class One as amended. It is uncontroverted that there were 10,383 “Single-Quote Owner-Occupied Borrowers” who were charged a Fax Fee for their first and only payoff statement. In addition, it is uncontroverted that these Single-Quote Owner-Occupied Borrowers paid a total of $229,566.69 in Fax Fees to the defendant. All of these Fax Fees were paid in violation of Real Property Law § 274-a.1 Accordingly, plaintiff is entitled to summary judgment against the defendant in the amount of $229,566.69 plus interest at the rate of 9% per annum from March 2, 2019 with respect to Class One as amended. Plaintiff's application to reserve judgment as to plaintiff's request for attorney's fees and expenses incurred for notification to class members is granted. All other requested relief is denied.
On April 17, 2018 plaintiff Francesca Bloom's attorney requested a faxed payoff statement from the defendant Nationstar Mortgage LLC for the upcoming sale of her single-family home. This was the first and only payoff request made by the plaintiff. Defendant provided the faxed payoff statement but included a $25 Fax Fee in the payoff figure. Accordingly, the only way for the plaintiff to pay the loan in full was to pay the Fax Fee. The plaintiff, in order to complete the sale of her home, paid defendant the $25 Fax Fee included in the payoff figure. Thereafter, the plaintiff commenced the instant action against the defendant for, inter alia, violation of Real Property Law § 274-a.
Real Property Law § 274-a(2)(a) provides as follows: “The mortgagee of an owner-occupied, one-to six-family residential structure or residential condominium unit, shall deliver within thirty days, any mortgage related documents to an authorized individual making a bona fide written demand for such documents. The mortgagee shall not charge for providing the mortgage-related documents, provided, however, the mortgagee may charge not more than twenty dollars, or such amount as may be fixed by the superintendent of financial services, for each subsequent payoff statement provided under this subdivision. If the mortgagee fails to deliver the mortgage-related documents, the mortgagee shall be liable for the actual damages to the mortgagor by reason of such failure. In computing actual damages the court may consider the actual rate of interest on the mortgage debt and current prevailing rate or rates of interest on comparable debts. However, actual damages do not include pain and suffering, mental or emotional distress or the like. The replacement costs of a lost abstract of title required to be delivered hereunder, may be deducted from the amount required to satisfy the mortgage.” By charging the plaintiff for her first requested payoff statement in connection with the sale of her home, the defendant violated Real Property Law § 274-a. Further, “the plaintiff does possess a private right of action for the defendant's ․ violation of Real Property Law § 274-a” (Negrin v. Norwest Mortgage, Inc., 263 A.D.2d 39, 700 N.Y.S.2d 184 [2nd Dept., 1999]; see also MacDonell v. PHH Mortg. Corp., 45 A.D.3d 537, 846 N.Y.S.2d 223 [2nd Dept., 2007]; Dowd v. Alliance Mortg. Co., 74 A.D.3d 867, 903 N.Y.S.2d 104 [2nd Dept., 2010]; Dowd v. Alliance Mortg. Co., 32 A.D.3d 894, 822 N.Y.S.2d 558 [2nd Dept., 2006]; Dougherty v. North Fork Bank, 301 A.D.2d 491, 753 N.Y.S.2d 130 [2nd Dept., 2003]).
While the plaintiff has a private right of action for defendant's violation of Real Property Law § 274-a, she does not have a private right of action for defendant's alleged violation of 3 NYCRR 419.9. 3 NYCRR 419.9, now renumbered as 3 NYCRR 419.4, provides as follows: “A servicer shall not charge a fee for providing a payoff statement or for issuing a release upon full prepayment, provided that a servicer may charge a reasonable fee for providing a payoff statement after issuing five or more payoff statements to a borrower in any calendar year.” 3 NYCRR 419.9 is included within Part 419, which is “a regulatory scheme applicable to certain mortgage loan servicers and other entities engaged in servicing mortgage loans” (Wells Fargo Bank v. Vanderkamp, 45 Misc. 3d 1213(A), 5 N.Y.S.3d 331 ). 3 NYCRR 419.9 is enforceable by New York State's Department of Financial Services. “Where, as here, a [regulation] does not explicitly provide for a private right of action, recovery may only be had under the [regulation] if a legislative intent to create such a right of action may “fairly be implied” in the statutory provisions and their legislative history” (Kamins v. United Healthcare Insurance Company of New York, Inc., 171 A.D.3d 715, 716, 98 N.Y.S.3d 96 [2nd Dept., 2019] citing Sheehy v. Big Flats Community Day, Inc., 73 N.Y.2d 629, 633, 543 N.Y.S.2d 18, 541 N.E.2d 18; see Brian Hoxie's Painting Co. v. Cato-Meridian Cent. School Dist., 76 N.Y.2d 207, 211, 557 N.Y.S.2d 280, 556 N.E.2d 1087; Ader v. Guzman, 135 A.D.3d 671, 672, 23 N.Y.S.3d 292).
The applicable “inquiry involves three factors: ‘(1) whether the plaintiff is one of the class for whose particular benefit the statute was enacted; (2) whether recognition of a private right of action would promote the legislative purpose; and (3) whether creation of such a right would be consistent with the legislative scheme’ ” (Kamins v. United Healthcare Insurance Company of New York, Inc., 171 A.D.3d 715, 716, 98 N.Y.S.3d 96 [2nd Dept., 2019] citing Maimonides Med. Ctr. v. First United Am. Life Ins. Co., 116 A.D.3d 207, 211, 981 N.Y.S.2d 739 quoting Carrier v. Salvation Army, 88 N.Y.2d 298, 302, 644 N.Y.S.2d 678, 667 N.E.2d 328; see Ader v. Guzman, 135 A.D.3d at 672-673, 23 N.Y.S.3d 292). “The third factor is often noted to be the ‘most important’ ” (Kamins v. United Healthcare Insurance Company of New York, Inc., 171 A.D.3d 715, 716, 98 N.Y.S.3d 96 citing Ader v. Guzman, 135 A.D.3d at 673, 23 N.Y.S.3d 292, quoting Cruz v. TD Bank, N.A., 22 N.Y.3d 61, 70, 979 N.Y.S.2d 257, 2 N.E.3d 221). “In that regard, the Court of Appeals has held that ‘regardless of its consistency with the basic legislative goal, a private right of action should not be judicially sanctioned if it is incompatible with the enforcement mechanism chosen by the Legislature or with some other aspect of the over-all statutory scheme’ ” (Cruz v. TD Bank, N.A., 22 N.Y.3d at 70-71, 979 N.Y.S.2d 257, 2 N.E.3d 221 quoting Sheehy v. Big Flats Community Day, Inc., 73 N.Y.2d at 634-635, 543 N.Y.S.2d 18, 541 N.E.2d 18; see Goldman v. Simon Prop. Group, Inc., 58 A.D.3d 208, 215, 869 N.Y.S.2d 125). Thus, where “the legislature clearly contemplated administrative enforcement of the statute ‘ “[t]he question then becomes whether, in addition to administrative enforcement, an implied private right of action would be consistent with the legislative scheme” ’ ” (Kamins v. United Healthcare Insurance Company of New York, Inc., 171 A.D.3d 715, 716, 98 N.Y.S.3d 96 [2nd Dept., 2019] citing Ader v. Guzman, 135 A.D.3d at 673, 23 N.Y.S.3d 292, quoting AHA Sales, Inc. v. Creative Bath Prods., Inc., 58 A.D.3d 6, 16, 867 N.Y.S.2d 169, quoting Uhr v. East Greenbush Cent. School Dist., 94 N.Y.2d 32, 40, 698 N.Y.S.2d 609, 720 N.E.2d 886). “A review of the relevant portions of [Part 419] indicates that allowing such a private right of action would be inconsistent with the legislative scheme” (Bhandari v. Isis, 45 A.D.3d 619, 621, 846 N.Y.S.2d 266 [2nd Dept., 2007] citing Pelaez v. Seide, 2 N.Y.3d 186, 201, 778 N.Y.S.2d 111, 810 N.E.2d 393; Sheehy v. Big Flats Community Day, Inc., 73 N.Y.2d 629, 634-635, 543 N.Y.S.2d 18, 541 N.E.2d 18). Accordingly, a private right action does not exist for violation of 3 NYCRR 419.9. Further, utilizing General Business Law § 349 to allege a violation of 3 NYCRR 419.9 “would constitute an impermissible ‘end run’ around the absence of a private right of action under” 3 NYCRR 419.9 (Seller v. Citimortgage, Inc., 118 A.D.3d 511, 988 N.Y.S.2d 32 [1st Dept., 2014]). Thus, Class Two must be decertified as it is based upon violation of 3 NYCRR 419.9. Class One, which is based upon violation of Real Property Law § 274-a, survives as amended.
The foregoing constitutes the Decision and Order of this Court.
1. While defendant argues that the $25 fax fee constitutes a “Special Service” and allude to such fees as being permissible under federal loans and the agreements related thereto, New York Real Property Law § 274-a and the New York State Department of Financial Services regulations are controlling.
Craig Stephen Brown, J.
Response sent, thank you
Docket No: Index No. EF010147/2018
Decided: August 24, 2021
Court: Supreme Court, Orange County, New York.
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