United States District Court, D. New Mexico
N. Ortiz Joseph C. Gonzales Eric Ortiz Law Albuquerque, New
Mexico Attorneys for the Plaintiff
R. Marques Justin Bert Breen Keleher & McLeod, P.A
Albuquerque, New Mexico Attorneys for the Defendant
C. Willis Kutak Rock LLP Denver, Colorado, Matthew W. Park
Lewis Roca Rothergerber Christie LLP Las Vegas, NV, Richard
L. Alvidrez Miller Stratvert PA Albuquerque, New Mexico, Ryan
M Walters Lewis Roca Rothergerber Christie LLP Albuquerque,
New Mexico Attorneys for the Defendant Ditech Financial, LLC
Marie Edwards Rose L. Brand & Associates, P.C.
Albuquerque, New Mexico Attorney for the Defendant Shellpoint
MEMORANDUM OPINION AND ORDER
MATTER comes before the Court on: (i) the
Plaintiff's Motion for Default Judgment Against Defendant
Shellpoint Mortgage Servicing, filed February 21, 2018 (Doc.
15)(“Judgment Motion”); and (ii) Defendant New
Penn Financial, LLC DBA Shellpoint Mortgage Servicing's
Motion to Quash Service of Summons on Complaint, filed August
20, 2018 (Doc. 52)(“Motion to Quash”). The Court
held a hearing on August 22, 2018. The primary issues are:
(i) whether Plaintiff Leonard Martinez properly served
Defendant Shellpoint Mortgage Servicing with the Summons on
Complaint for Violation of the Unfair Practices Act,
Violation of the Real Estate Settlement Procedure Act
(“RESPA”), Breach of Contract, Breach of the
Covenant of Good Faith and Fair Dealing, filed January 25,
2018 (Doc. 8)(“Summons”), and Complaint for
Violation of the Unfair Practices Act, Violation of the Real
Estate Settlement Procedures Act (“RESPA”),
Breach of Contract, and Breach of the Covenant of Good Faith
and Fair Dealing, D-202-CV-2017-07661 (Second Judicial
District Court, County of Bernalillo, State of New Mexico,
filed October 25, 2017), filed in federal court December 5,
2017 (Doc. 1- 1)(“Complaint”), when he sent those
documents via certified mail to the general payment address
that was listed on the monthly mortgage statements that
Shellpoint Mortgage gave Martinez; and (ii) if there was
proper service, whether the Court should enter default
judgment against Shellpoint Mortgage. The Court concludes
that Martinez did not properly serve the Summons and the
Complaint, because sending the Summons and Complaint to a
general payment address does not satisfy rule 4 of the
Federal Rules of Civil Procedure or rule 4 of the New Mexico
Rules of Civil Procedure. Accordingly, the Court will not
enter default judgment against Shellpoint Mortgage, it will
deny the Judgment Motion, and it will grant the Motion to
Court takes its facts from the Complaint. The Court provides
these facts for background. It does not adopt them as the
truth, and it recognizes that these facts are largely
Martinez' version of events.
is a homeowner in Bernalillo County, New Mexico. See
Complaint ¶¶ 5, 7, at 2. A mortgage mote secures
the property Martinez owns at 34 Vallecitos, Tijeras New
Mexico 87059. See Complaint ¶ 9, at 2.
Defendants CitiMortgage, Inc. and Ditech Financial, LLC are
prior servicers of the mortgage note, and Shellpoint Mortgage
is the current servicer. See Complaint ¶¶
10-12, at 2.
December, 2015, Martinez wanted to modify his loan agreement,
so he entered a Trial Payment Plan (“TPP”) with
CitiMortgage, Inc. that, if he successfully completed, would
qualify him for a loan modification. See Complaint
¶ 14, at 2. Martinez made his first four TTP payments in
December, 2015, January, 2015, February, 2016, and April,
2016, respectively. See Complaint ¶ 16, at 2-3.
In April, 2016, however, Martinez received a letter from
CitiMortgage, Inc. stating that the
“Repayment/Forbearance plan on your account has been
removed.” Complaint ¶ 19, at 3. CitiMortgage, Inc.
subsequently transferred Martinez' loan to Ditech
Financial. See Complaint ¶¶ 20-23, at 3.
Although Martinez made several mortgage payments to Ditech
Financial, Ditech Financial informed Martinez that he was not
eligible for a loan modification and initiated foreclosure
proceedings on Martinez' home. See Complaint
¶ 25, at 3. Despite those proceedings, Ditech Financial
transferred the loan to Shellpoint Mortgage, which began
servicing the loan on June 16, 2017. See Complaint
¶ 26, at 4. Shellpoint Mortgage did not recognize or
honor the TPP that CitiMortgage, Inc. offered to Martinez.
See Complaint ¶ 26, at 4.
of Fact of Rule 12(b)(5) Motion
are several factual issues in deciding the motion. The Court
makes the following findings of fact:
1. On November 7, 2017, Martinez sent the Summons and
Complaint via certified mail to Shellpoint Mortgage at:
Shellpoint Mortgage Servicing, P.O. Box 740039, Cincinnati,
Ohio, 45274-003. See Plaintiff's Response to
Defendant New Penn Financial, LLC DBA Shellpoint Mortgage
Servicing's Motion to Quash Service of Summons on
Complaint, App. 1, filed August 21, 2018 (Doc.
52)(“Motion to Quash Response”).
2. The certified mail receipt was signed, and the envelope
was stamped with a delivery date of November 7, 2017.
See Exhibit 1, at 1, filed August 21, 2018 (Doc.
3. Shellpoint Mortgage did not respond to the service or
defend the action. See Affidavit of Eric N. Ortiz
¶¶ 4-5, at 1 (executed February 21, 2018), filed
February 21, 2018 (Doc. 15)(“Ortiz
Aff.”)(attesting that Shellpoint Mortgage has not
defended in this action).
4. On July 19, 2018, Martinez corresponded with Shellpoint
Mortgage via telephone to notify Shellpoint Mortgage that
“he was going to court.” Affidavit of Caroline
Trinkley ¶ 12, at 3 (executed August 20, 2018), filed
August 20, 2018 (Doc. 52)(“ Trinkley Aff.”).
5. On August 10, 2018, Shellpoint Mortgage's “legal
department was advised by co-defendant Ditech Financial, LLC
(“Ditech”)” of the Judgment Motion.
Trinkley Aff. ¶ 13, at 3.
6. Shellpoint Mortgage filed the Motion to Quash on August
20, 2018. Motion to Quash, ¶ 21, at 7.
7. Shellpoint Mortgage uses the P.O. Box in Cincinnati, Ohio
“for the sole purpose of collecting mortgage loan
payments submitted by borrowers.” Trinkley Aff. ¶
8, at 2.
8. Shellpoint Mortgage does not maintain “any officers,
managers, general agents or persons authorized by appointment
or law to receive service of process” on its behalf at
P.O. Box 740039 in Cincinnati, Ohio. Trinkley Aff. ¶ 9,
9. New Penn Financial, LLC does business as Shellpoint
Mortgage. See Trinkley Aff. ¶ 2, at 1.
10. On June 19, 2015, Shellpoint Mortgage registered an agent
for service of process in New Mexico. See Trinkley
Aff. ¶ 10, at 3.
11. On the website for the Secretary of State of New Mexico,
the registered agent is listed under entity name “New
Penn Financial, LLC.” See Search Information,
at 1, filed August 20, 2018 (Doc. 52)(dated August 17, 2018).
12. The address for the registered agent is: 123 East Marcy
St., Suite 101, Santa Fe, New Mexico, 87501. See
Search Information, at 1.
13. The case presents a federal question as to whether
Defendants violated the Real Estate Settlement Procedures
Act, 12 U.S.C. §§ 2601-17 (“RESPA”).
See Complaint ¶¶ 52-63, at 7-8.
sues, contending that CitiMortgage, Inc., Ditech Financial,
and Shellpoint Mortgage violated the TPP Agreement, which
specifies that, if Martinez makes three TPP payments, his
loan will be modified. See Complaint ¶ 31, at
4; id. ¶ 45, at 6. He argues, under similar
theories, that CitiMortgage, Inc., Ditech Financial, and
Shellpoint Mortgage breached the implied covenant of good
faith and fair dealing, and that CitiMortgage, Inc. violated
the Real Estate Settlement Procedures Act, 12 U.S.C.
§§ 2601-17 (“RESPA”) and the New Mexico
Unfair Practices Act, N.M. Stat. Ann. §§ 57-12-1 to
-26 (“NMUPA”). Complaint ¶¶ 34-43,
47-63, at 4-8. CitiMortgage, Inc. removed the case to federal
court, asserting that the Court had jurisdiction, because the
Complaint presents a federal question. Notice of Removal
¶ 2, at 1, filed December 5, 2017 (Doc. 1)(“Notice
The Judgment Motion.
February 21, 2018, Martinez filed the Judgment Motion,
arguing that the Court should enter a default judgment
against Shellpoint Mortgage, because he served Shellpoint
Mortgage via certified mail on November 7, 2017, and
Shellpoint Mortgage did not timely respond to that service.
See Judgment Motion ¶¶ 2-4, at 1-2.
According to Martinez, “‘[w]hen a party . . . has
failed to plead or otherwise defend, and that failure is
shown by affidavit or otherwise, the clerk must
enter the party's default.'” Judgment Motion
¶ 5, at 2 (quoting Fed.R.Civ.P. 55(a)(emphasis in
Judgment Motion)). Martinez concludes, thus, that, because
Shellpoint Mortgage has not defended and because Martinez
presents an affidavit attesting that Shellpoint Mortgage has
not defended, the Court should enter default judgment against
Shellpoint Mortgage. See Judgment Motion ¶ 6,
at 2. See also Ortiz Aff.
Motion to Quash.
Mortgage moves to quash service of the Summons and Complaint,
arguing that the address Martinez used for service is used
“solely to collect mortgage
payments in its regular course of business as a mortgage
servicer.” Motion to Quash at 2 (emphasis original).
According to Shellpoint Mortgage, Martinez' use of that
mailing address does not satisfy the federal or state
servicing rules, because Martinez did not deliver the Summons
and Complaint on an officer, manager, general agent, or any
other agent authorized to accept service. See Motion
to Quash at 5-6 (citing Fed.R.Civ.P. 4(e)(1), (h)(1); N.M.
Rules Ann. 1-004(G)(1)(a)-(G)(3)). Shellpoint Mortgage adds
that it was not aware of this action until August 14, 2018,
when Ditech Financial contacted Shellpoint Mortgage about it.
See Motion to Quash at 6. It concludes that, because