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Martinez v. Citimortgage, Inc.

United States District Court, D. New Mexico

September 20, 2018

LEONARD MARTINEZ, Plaintiff,
v.
CITIMORTGAGE, INC., a successor in interest by Merger to ABN AMRO Mortgage Group, Inc.; DITECH FINANCIAL, LLC, and SHELLPOINT MORTGAGE SERVICING, Defendants.

          Eric N. Ortiz Joseph C. Gonzales Eric Ortiz Law Albuquerque, New Mexico Attorneys for the Plaintiff

          Chris R. Marques Justin Bert Breen Keleher & McLeod, P.A Albuquerque, New Mexico Attorneys for the Defendant Citimortgage, Inc.

          Mark 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

          Eraina Marie Edwards Rose L. Brand & Associates, P.C. Albuquerque, New Mexico Attorney for the Defendant Shellpoint Mortgage Servicing

          MEMORANDUM OPINION AND ORDER

         THIS 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 Quash.

         FACTUAL BACKGROUND

         The 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.

         Martinez 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.

         Around 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.

         Findings of Fact of Rule 12(b)(5) Motion

         There 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. 53).
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, at 2.
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.

         PROCEDURAL BACKGROUND

         Martinez 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 of Removal”).

         1. The Judgment Motion.

         On 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.

         2. Motion to Quash.

         Shellpoint 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 ...


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