Parker v. Bac Home Loans Servicing Lp ( 2015 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_________________________________
)
DAVID H. PARKER, Jr., )
)
Plaintiff, )
)
v. ) Civil Action No. 11-CV-0520 (KBJ)
)
BANK OF AMERICA, N.A., )
)
Defendant. )
)
_________________________________ )
MEMORANDUM OPINION
During the severe economic downturn of the last decade, Plaintiff David H.
Parker fell behind in paying his home mortgage. Parker reached an agreement with the
loan servicer, Defendant Bank of America (“BOA”), to modify his monthly mortgage
payments; however, unbeknownst to Parker, BOA did not implement the terms of the
mortgage modification agreement for nearly two years. In the interim, Parker received
from BOA a series of foreclosure notices, demands for balloon payments and late fees,
and statements threatening to report his alleged delinquency to credit agencies—none of
which would have happened if BOA had promptly and properly executed the loan
modification agreement. Parker has filed this civil action against BOA, alleging that
BOA breached and/or tortiously interfered with the terms of his mortgage modification
agreement causing him injury, and that BOA’s failure to implement the agreement was
the result of uniform and systematic policies that have injured many other borrowers.
Before this Court at present is a motion for class certification that Parker filed on
March 4, 2014. Parker seeks to certify a class of borrowers whose valid, binding
mortgage modifications were not implemented by BOA in a timely fashion and who, as
a result, “experienced the acceleration of their full mortgage balances, derogatory credit
reporting, and/or late fees.” (Pl.’s Mot. to Certify the Class, Mot. to Appoint Class
Counsel, and Mot. to Appoint Class Representative (“Pl.’s Mot.”), ECF No. 62, at 3.) 1
BOA opposes Parker’s class certification motion on the grounds that, regardless of the
merits of Parker’s individual claim, Parker has failed to establish that BOA breached or
tortiously interfered with valid, binding mortgage loan modification agreements on a
classwide basis.
On March 31, 2014, this Court entered an order that, among other things,
DENIED Parker’s motion for class certification. (Order, ECF No. 86.) In the instant
Memorandum Opinion, the Court explains the reasoning behind that ruling. In short,
this Court has concluded that Parker has failed to satisfy the commonality requirement
of Federal Rule of Civil Procedure 23(a) because he has not demonstrated that BOA
systematically applied common policies or practices to the mortgage modification
agreements it entered into with borrowers in a manner that breached those contracts
systemically and thereby injured each putative class member in a similar way.
Consequently, class certification is not appropriate. The Court has also determined that
Parker’s related motion to exclude the testimony of BOA’s fact witness Michael Sunlin
should be DENIED because the record evidence does not support the assertion that
Sunlin’s testimony is improper and should be stricken. In addition, having denied
Parker’s motion for class certification on commonality grounds, the Court also
DENIED AS MOOT and without prejudice the remaining motions to strike and/or to
exclude certain evidence that both parties filed to bolster their other class certification
1
Page numbers throughout this Opinion, with the exception of deposition page numbers, refer to those
that the Court’s electronic filing system assigns.
2
arguments—these motions can be refiled if the same evidentiary issues arise in the
context of Parker’s individual claim.
I. BACKGROUND
A. Facts Regarding Parker’s Mortgage Modification
David Parker is a firefighter with the District of Columbia Fire Department and a
District of Columbia resident. (Am. Compl., ECF No. 19, ¶¶ 10, 15.) Parker purchased
a piece of real estate in the District in 1999, and he currently has two mortgages on that
property. (Pl.’s Mem. in Supp. of Pl.’s Mot. (“Pl.’s Mem.”), ECF No. 62, at 17.)
Fannie Mae owns Parker’s first mortgage—which is the loan at issue here—and BOA
services that mortgage loan. (Id.) 2
In 2008, Parker suffered a number of personal hardships that made it difficult for
him to keep up with the monthly mortgage payments, including his wife’s discharge
from her job and his having to pay considerable additional expenses related to his
mother’s funeral. (Id.) Parker contacted BOA to request a modification of his
mortgage loan payments, and Parker and BOA commenced a process designed to result
in the modification of the mortgage loan’s terms. (Id. at 17–18; Am. Compl. ¶ 16.) 3
The modification under consideration in Parker’s case reduced Parker’s monthly
mortgage payments by over $400—from $1,761.62 a month to $1,342.74. (Pl.’s Mem.
at 18.)
2
A mortgage servicer manages loans owned by third parties (hereinafter referred to as “noteholders”)
in exchange for a servicing fee and ancillary fees such as late fees charged to a borrower. See Mortg.
Bankers Ass’n, Residential Mortgage Servicing in the 21st Century 5 (2011). Parker ’s noteholder,
Fannie Mae, is not a party to this case, and the identities of the various noteholders of the putative class
members are irrelevant to the instant class action motion.
3
BOA is the successor by merger of BAC Home Loan Servicing, LP, which was formerly known as
Countrywide Home Loans Servicing LP. BAC was the initial Defendant in this lawsuit; for the purpose
of this opinion, Parker’s loan servicer is hereinafter refer red to as “BOA.”
3
In the summer of 2009, BOA approved Parker’s loan modification, and sent him
a letter dated July 11, 2009, stating that “[i]n order for the modification to be valid, the
enclosed documents need to be signed and returned.” (Ex. 7 to Pl.’s Mot., ECF No. 60-
13, at 6.) The letter specified that Parker’s “new modified monthly payment will be
$1,342.74, effective with your September 1, 2009 payment.” (Id.) The letter also
clarified that Parker’s interest rate was being reduced from the then-existing market rate
of 6% to a “new reduced rate of 4.000%[,]” which would “be effective as of the
September 1, 2009 payment.” (Id.) In addition, the letter specifically instructed Parker
to “sign, date, and return one (1) complete set of enclosed docum ents to us in the re-
usable Fed-Ex envelope . . . no later than August 10, 2009[,]” and it warned that “[i]n
the event that you do not or cannot fulfill ALL of the terms and conditions of this letter
no later than August 10, 2009, we will continue our collections actions without giving
you additional notices or response periods.” (Id. at 8).
Parker duly signed and returned the documents, which included copies of the
modified mortgage agreement, as instructed. (Pl.’s Mem. at 19.) Parker also called
BOA and received confirmation that his documents had been received. (Am. Compl.
¶ 18.) Shortly thereafter, Parker received additional correspondence from BOA,
including “documents welcoming him into Defendant’s modification plan on a
permanent basis[.]” (Id. ¶ 19.) Parker began making payments in accordance with the
modified terms of the mortgage agreement as of September of 2009. (Pl.’s Mem. at 18.)
Notably, the first mortgage statement that Parker received from BOA after the
effective date of his modification agreement did not reflect the change to his loan
payment terms. (Id. at 19.) However, the statement did include prominent language to
the effect that if the borrower and BOA “have entered into an agreement to address [the
4
borrower’s] monthly payments, please make payments in accordance with this
agreement.” (Ex. 8 to Pl.’s Mot., ECF No. 60-14, at 2 (emphasis added).) Every
mortgage statement that arrived in Parker’s mailbox thereafter would similarly fail to
reflect the modified terms, but the statement would also include this language
indicating that the borrower should assume that the modification is in effect and should
pay in accordance with the modified mortgage agreement. (Pl.’s Mem. at 19.)
On August 2, 2010, nearly twelve months after the modification agreement
supposedly had taken effect, Parker received a “Notice of Intent to Accelerate” from
BOA. (Id. at 22.) This letter informed Parker that he was “in serious default” on his
mortgage payments, to the tune of more than $23,000. (Ex. 12 to Pl.’s Mot., ECF No.
60-18, at 2.) A week later, Parker received a second “Notice of Intent to Accelerate,”
and that notice contained a slightly lower calculation of payments due, but still
demanded more than $22,000. (Id. at 4–5.) The amounts in both letters approximated
what Parker would have owed if there had not been any modification agreement at all.
Furthermore, as another indication that his loan modification agreement was not in
effect, Parker received from BOA on August 27, 2010, a proposal to modify the terms
of his mortgage loan, and the suggested modification proposed a higher monthly
payment amount than the amount Parker was paying pursuant to the 2009 modification
agreement. (See Ex. 14 to Pl.’s Mot., ECF No. 60-20, at 2; Pl.’s Mem. at 23.) Parker
also received a letter dated October 6, 2010, from a law firm representing BOA that
threatened foreclosure if Parker did not make the required payments. (See Ex. 13 to
Pl.’s Mot., ECF No. 60-19.)
Through all this, Parker repeatedly contacted BOA in an attempt to clear up the
apparent misunderstanding regarding the effective terms of his mortgage loan. When
5
Parker first contacted BOA in August of 2010, a BOA representative denied the
existence of a modification agreement. (Am. Compl. ¶ 23.) Parker contacted BOA
once again in October of 2010, and thereafter he received a letter informing him that, if
a modification agreement existed, BOA was not able to locate it. (Ex. 15 to Pl.’s Mot.,
ECF No. 60-21.) Parker persisted in making monthly payments in accordance with the
terms of the 2009 modification agreement until November of 2010, when BOA rejected
his payment entirely because his mortgage was considered delinquent. (Am. Compl.
¶¶ 26, 29, 31; Pl.’s Mem. at 24.)
B. Procedural History
On February 8, 2011, Parker filed suit in District of Columbia Superior Court
seeking to enforce the terms of the agreement that he had made with BOA regarding
modification of his mortgage loan payments. Parker’s initial complaint alleged breach
of contract claims and similar claims that pertained only to his own mortgage
modification experience. BOA removed the case to federal court on diversity and
federal question grounds (see Notice of Removal, ECF No. 1), and on July 20, 2011,
Parker was permitted to amend his complaint (see Order, ECF No. 18). In so doing,
Parker raised the possibility of classwide claims for the first time. (See Am. Compl.
¶¶ 58–65.)
Parker’s amended complaint contained four separate counts against BOA:
breach of contract (Count I), tortious interference with contract (Count II), and two
violations of the Fair Debt Collection Practices Act (Counts III and IV). ( Id. ¶¶ 66–
109.) BOA moved to dismiss Counts II, III, and IV shortly after the amended complaint
was filed (see Def.’s Mot. to Dismiss Counts Two, Three, and Four of Pl.’s Am.
Compl., ECF No. 23), and the Court granted BOA’s motion to dismiss the Federal Debt
6
Collection Practices Act claims (Counts III and IV), but denied BOA’s motion to
dismiss the tortious interference with contract claim (Count II), see Parker v. BAC
Home Loans Servicing LP, 831 F. Supp. 2d 88, 94–95 (D.D.C. 2011) (Boasberg, J.).
Following this ruling, BOA filed an answer to Parker ’s amended complaint (Am.
Answer, ECF No. 40), and the parties entered into class-certification-related discovery,
which lasted until November of 2013.
Parker filed a motion for class certification on March 4, 2014. Parker ’s motion
requests certification of two classes—one under Federal Rule of Civil Procedure
23(b)(1)(B) and the other under Rule 23(b)(3)—and the requested class definition is the
same for both proposed classes:
(a) All current and former borrowers of residential mortgage
loans since August 1, 2008, (b) across the United States of
America (c) whose loans were serviced by Defendant BOA,
N.A., (d) were coded “Complete” (e) and who despite having
paid on time, in full thereunder, (f) experienced the
acceleration of their full mortgage balances, derogatory
credit reporting, and/or late fees.
(Pl.’s Cert. Mot. at 3.) 4 Parker’s class certification motion has now been fully briefed
(see Def.’s Opp’n to Pl.’s Mot. (“Def.’s Opp’n”), ECF No. 68; Pl.’s Reply in Supp. of
Pl.’s Mot. (“Pl.’s Reply”), ECF No. 77), and in addition, the parties have filed and
briefed motions seeking to strike or exclude various witnesses that each side has
identified in support of their respective positions regarding class certification. 5 This
Court held a hearing on all of the pending motions on December 16, 2014.
4
Parker’s class certification motion suggests that he is seeking the certification of two classes with
identical definitions under two different certification rules in order to be able to recover punitive
damages on a classwide basis. (See Pl.’s Mem. at 3, 80.)
5
The parties have, collectively, proffered four expert witnesses with respect to class certification, and
Defendant BOA has also presented additional fact witnesses. At this point, a motion to exclude is
pending with respect to each expert witness and al so one of BOA’s fact witnesses. BOA has filed a
single motion requesting that all three of Parker ’s expert witnesses be stricken. ( See Def.’s Mot. to
Strike the Purported Expert Witness Reports of Keshav Raghunathan, Mark Riley, and Dean Binder,
7
C. BOA’s Mortgage Modification Process
Significantly for present purposes, the parties’ class certification briefs present
strikingly different assertions of fact regarding BOA’s mortgage modification process.
Because there is such stark disagreement about whether, and to what extent, BOA
applies a standardized process in a systematic way when it implements loan
modification agreements—an issue of fact that lies at the heart of the instant class
certification dispute—a brief description of the parties’ widely differing views of the
applicable mortgage modification procedures is warranted.
1. Parker’s View: BOA Uniformly Implements A Staged Post-Modification
Review Process
According to Parker, after BOA receives a signed modification agreement back
from a borrower, two significant and uniform internal processing steps occur. First,
BOA reviews the executed agreement to ensure that any conditions precedent to the
modification—conditions such as the submission of additional documentation, income
verification, or resolution of bankruptcy issues—have been satisfied. (See Pl.’s Reply
at 7–9.) If so, according to Parker, BOA will mark that borrower’s electronic file
“Completed.” (Pl.’s Mem. at 28.) Parker attributes substantial significance to the
“Completed” designation because, in Parker’s view, any account that has been coded as
“Completed” is an account in which the borrower and BOA have both consented to the
terms of the modification agreement and have fulfilled any conditions precedent such
that there is a binding contractual agreement. (Id. at 29 n.12; see also id. at 28
(emphasizing one internal BOA document that appears to define the term “Completed”
ECF No. 67.) Parker has filed two separate motions, one that seeks to exclude the testimony of BOA ’s
one expert witness (see Pl.’s Mot. In Limine to Exclude Test. of David Skanderson, ECF No. 79), and
another that seeks to exclude the testimony of BOA ’s fact witness Michael Sunlin (see Pl.’s Mot. In
Limine to Exclude Test. of Michael Sunlin (“Pl. ’s Mot. to Strike Sunlin”), ECF No. 78). The parties ’
three evidentiary motions have been fully briefed.
8
as meaning “[f]iles that have accepted an offer, a decision has been made, agre ed by all
parties and correctly executed documents have been returned by the customer”).
Parker maintains that after a file has been marked “Completed,” BOA moves on
to a second uniform procedural step: it engages in what Parker calls a “Post Loan
Modification Review.” (See id. at 33.) This process allegedly involves a review of the
binding modification agreement by BOA in order to determine whether there have been
any errors in the making of the agreement. (See id.) Parker contends that there are two
basic errors that BOA looks for during the Post Loan Modification Review: (a) an
accounting or mathematical error, such as a miscalculation of how much principal
remains or of what the borrower’s monthly payments will be, or (b) a violation of the
noteholder’s rules. (Id. at 34–35.) 6
According to Parker, if no errors are detected during the Post Loan Modification
Review, BOA ensures that the borrower’s electronic file reflects that fact by changing
the “Warning Code” in the borrower’s account to “0.” (Id. at 34.) Then, according to
Parker, that borrower’s file is “returned to normal servicing[,]” meaning that the terms
of the modification agreement are put into effect. (Id. at 32–33.) But, says Parker, if
one of the aforementioned errors is identified as part of the Post Loan Modification
Review, BOA will not change the borrower’s Warning Code to “0” and the borrower’s
file will not be returned to normal servicing. (Id. at 35.) Instead, with respect to
6
As noted earlier, see footnote 2, supra, the mortgage servicer is an agent of a noteholder. As such,
the servicer’s ability to manage a mortgage is subject to rules that the noteholder imposes, and one of
the primarily responsibilities of a mortgage servicer is to offer modifications to borrowers in
accordance with the noteholder’s rules. (See Dep. of Charles Kelly (“Kelly Dep.”), Ex. 21 to Pl. ’s
Motion, ECF No. 60-27, at 62:24–63:2 (noting examples of noteholder rules for modifications such as
“can’t modify more than once every two years” or “not allowed to reduce a payment by X% or an
interest rate by X%”).) It is undisputed that, if a mortgage servicer breaches a noteholder ’s rules for
modifying a contract, the noteholder might impose a fine on the mortgage servicer or force the
mortgage servicer to purchase the modified loan from the noteholder. (See id. at 133:24–25, 136:5–8.)
Parker alleges that BOA engages in a Post Loan Modification Review partly to avoid this result. (See
Pl.’s Mem. at 42.)
9
borrowers who find themselves in this circumstance, BOA will intentionally refuse to
execute the borrower’s mortgage modification agreement despite the fact that a valid
and binding contract exists, and BOA may even propose to the borrower a new
modification agreement, usually on worse terms than the original agreement. (See id. at
35–36; see also Dep. of John Goodrum (“Goodrum Dep.”), Ex. 19 to Pl.’s Mot., ECF
No. 60-25, at 80:17–21 (speculating that the 2011 modification proposal that was sent
to Parker was likely in response to BOA’s rejection of the earlier modification).)
According to Parker, at least two separate injuries to the borrower occur as a
result of BOA’s failure to effectuate the terms of a modification agreement if errors are
detected during the Post Loan Modification Review, both of which Parker asserts
require classwide compensation. First, BOA’s failure to implement the terms of a
modification agreement leads to the imposition of allegedly inappropriate and unlawful
late fees. (See Pl.’s Mem. at 89–90.) Such fees are imposed as a consequence of
BOA’s standard policy of not crediting partial payments as timely; specifically, Parker
asserts that if the mortgage modification is not made effective as a result of the Post
Loan Modification Review and the borrower unwittingly pays the lower modification
amount on time in accordance with the modified mortgage agreement, such payment is
reflected as an untimely partial payment in BOA’s internal systems and late fees are
incurred. (See id.) The second injury, Parker says, is the fact that BOA’s failure to
implement a modification agreement damages a borrower’s credit score. (See id. at 44–
46.) For example, Parker claims that he was injured because, although he was making
prompt payments in accordance with the modification agreement, BOA did not
acknowledge his payments as being made in satisfaction of the modified mortgage
10
agreement and was simultaneously filing credit reports that falsely stated that Parker
was behind on his mortgage payments. (Id. at 44.)
2. BOA’s Position: A Mortgage Loan Modification Is A Customized Process
Tailored To Each Borrower’s Particular Circumstances
BOA vehemently denies that it engages in any uniform process when it enters
loan modification agreements with borrowers, much less the systemic two-stage post-
modification review process that Parker relies upon in support of his class certification
request. Instead, according to BOA, its mortgage modification programs involve a
highly individualized assessment of each borrower’s mortgage loan terms and
circumstances, and whether or not an enforceable modification agreement is ever
reached “depends upon an array of contractual conditions which differ from borrower to
borrower depending on the terms of the loan, the modification program, the time period,
and other factors.” (Def.’s Opp’n. at 13; see also id. at 25 (maintaining that “there is
enormous variation in the contractual language used in the million -plus modification
agreements Bank of America has completed over the last 5 ½ years” (emphasis in
original)).)
BOA also takes direct aim at the twin linchpins of Parker’s argument that class
certification is appropriate in this case, to wit—(1) Parker’s assertion that BOA marks a
borrower’s file “Completed” once it has determined that all of the contractual
conditions are satisfied and a binding agreement has been formed , and (2) Parker’s
contention that, after such a binding contract is formed, BOA undertakes a review for
errors that can, and does, result in the binding loan modification not being put into
effect. First, in direct contrast with Parker’s position, BOA maintains that there is no
legal significance whatsoever to a borrower’s file being coded “Completed” in BOA’s
internal systems, and that this designation has no bearing on BOA’s own view of
11
whether a valid modification agreement has been formed. In this regard, BOA points to
a later version of the same document that Parker relies upon to establish the meaning of
“Completed,” and this later version states merely that “[t]he completed status is how the
associates are aware that the customer successfully returned the agreement.” ( See Ex.
15 to Def.’s Opp’n, ECF No. 63-36, at 19.) Thus, according to BOA, a “Completed”
designation simply reflects that a borrower’s application is at a particular stage of the
modification process, not that there is necessarily a binding modification contract at
that point in time. (See Def.’s Opp’n at 18 (explaining that the “Completed” status “has
meant different things at different times, as Bank of America ’s policies and IT systems
have evolved, but it has never meant that the parties have reached a ‘binding
agreement’ or that a loan must be modified”).)
BOA additionally asserts that there is simply no such thing as the “Post Loan
Modification Review” stage of BOA’s mortgage modification process; it charges that
Parker has invented the notion that BOA has any sort of uniform review policy when
processing loan modifications entirely out of whole cloth. (Def.’s Opp’n at 19; see also
id. at 44 (“Lacking anything in the record to suggest any such policy exists, Plaintiff
made one up.”).) BOA admits that there are processes that it follows when modifying
mortgage loans; however, BOA contends that these processes differ according to the
type of loan, the identity of the noteholder, the type of modification sought, and when
the modification is sought. (Id. at 19–21.) Moreover, as to the two types of “errors”
that Parker says are identified at this alleged second stage of the modification process,
BOA acknowledges that errors sometimes are made in the loan modification process, as
with any other complicated transaction, but maintains that these errors are resolved in
any number of ways, without application of any uniform policy. (Id. at 20.) BOA also
12
asserts that it does not engage in a review of a modification agreement to ensure
compliance with noteholder rules after that agreement is executed (id. at 21), and that,
in any event, BOA’s approach to late-discovered errors is not to prevent the loan from
being serviced in accordance with the modification but “to take whatever steps are
necessary to resolve the issue so that the loan can be returned to normal servicing”
(Def.’s Opp’n at 23 (emphasis omitted))—steps that BOA says vary from case to case.
In sum, whereas Parker contends that BOA follows a standardized process for
loan modifications pursuant to which each modification agreement goes through at least
two common steps, BOA presents a portrait of a mortgage modification process that is
specific to the characteristics of the individual borrower, and that changes over the
prescribed class period. In light of this dispute, the primary issue for this Court in
ruling on Parker’s motion for class certification is whether Parker has satisfied his
burden of demonstrating that BOA’s failure to implement the loan modification
agreement in his individual case derives from a policy or practice that BOA has applied
consistently with respect to other borrowers’ mortgage modification agreements and
that has resulted in injuries to other borrowers such that Parker’s suit can properly
proceed as a class action.
II. CLASS CERTIFICATION MOTIONS
A. Federal Rule of Civil Procedure 23(a)
“The class action is an exception to the usual rule that litigation is conducted by
and on behalf of the individual named parties only.” Comcast Corp. v. Behrend, 133 S.
Ct. 1426, 1432 (2013) (internal quotation marks and citation omitted). The Federal
Rules of Civil Procedure specifically delineate the requirements that must be satisfied
in order for a court to conclude that the exceptional class action litigation procedure is
13
warranted. First and foremost, every class action must satisfy four basic requirements
that are set forth in Rule 23(a) of the Federal Rules of Civil Procedure :
(1) the class is so numerous that joinder of all members is
impracticable; (2) there are questions of law or fact common
to the class; (3) the claims or defenses of the representative
parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately
protect the interests of the class.
Fed. R. Civ. P. 23(a). These four requirements are referred to colloquially as
numerosity, commonality, typicality, and adequacy of representation. Amgen Inc. v.
Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1191 (2013). Moreover, in addition
to these four requirements, there is an “implied requirement” that the proposed class
must be definite and ascertainable. Thorpe v. District of Columbia, 303 F.R.D. 120,
139 (D.D.C. 2014). These threshold requirements are mandatory: if any is not
satisfied, then a class cannot be certified.
Among these threshold requirements, the “commonality” mandate has caused
considerable confusion, stemming partly from the fact that whether or not common
questions of law or fact that can support a class action exist relates largely to the
underlying claims that are being brought. See Wal-Mart Stores, Inc. v. Dukes, 131 S.
Ct. 2541, 2545 (2011) (explaining that the relevant “common” question is “an issue that
is central to the validity of each one of the claims”). So for example, where, as here,
the plaintiff contends that the defendant has engaged in widespread and systematic
breaches of contract and tortious interference with contracts that can be addressed on a
classwide basis, the plaintiff must, at a minimum, offer evidence that the class members
have in common the elements of those claims—e.g., for breach of contract, that there is
“(1) a valid contract between the parties; (2) an obligation or duty arising out of the
contract; (3) a breach of that duty; and (4) damages caused by breach.” Tsintolas
14
Realty Co. v. Mendez, 984 A.2d 181, 187 (D.C. 2009) (citation omitted); see also Casco
Marina Dev., LLC v. D.C. Redevelopment Land Agency, 834 A.2d 77, 83 (D.C. 2003)
(“[T]he elements of tortious interference with contract are: ‘(1) the existence of a
contract; (2) knowledge of the contract; (3) intentional procurement of a breach of the
contract; and (4) damages resulting from the breach.’” (quoting Paul v. Howard Univ.,
754 A.2d 297, 309 (D.C. 2000))). 7 Moreover and in this regard, a factor to consider
when deciding whether a breach of contract claim can properly proceed as a class action
is whether the terms of the putative class members’ contracts are relatively uniform
such that the circumstances of the alleged breach are virtually identical or,
alternatively, whether there are material differences in the contract terms that will
necessitate individual review of each contract and the circumstances under which it may
have been breached. Compare In re Cablevision Consumer Litig., No. 10-cv-4992,
2014 WL 1330546, at *6–8 (E.D.N.Y. Mar. 31, 2014) (finding presence of standard
form contracts satisfies commonality), with Spread Enters. v. First Data Merch. Servs.
Corp., 298 F.R.D. 54, 72–73 (E.D.N.Y. 2014) (finding material differences in
contractual terms defeats commonality).
In the relatively recent landmark case of Wal-Mart Stores, Inc. v. Dukes, the
Supreme Court provided substantial guidance regarding what a movant seeking
certification of a putative class action must do to satisfy Rule 23(a)’s commonality
requirement. Wal-Mart involved a class certification petition filed on behalf of millions
of current and former Wal-Mart employees in the context of a lawsuit that alleged that
7
Because Parker has requested a nationwide class action, application of the laws of all fifty states
would be required to assess true commonality. See In re Bridgestone/Firestone, Inc., 288 F.3d 1012,
1015 (7th Cir. 2002) (“No class action is proper unles s all litigants are governed by the same legal
rules. Otherwise the class cannot satisfy the commonality and superiority requirements of Fed. R. Civ.
P. 23(a), (b)(3).”). This Court will assume for the purpose of the instant motion that the basic elements
of a breach of contract action are the same in every state, as Parker asserts. ( See Pl.’s Mem. at 98–
100.)
15
Wal-Mart had engaged in a pattern or practice of gender discrimination in violation of
Title VII. The Supreme Court explained that common questions such as “Do all of us
plaintiffs indeed work for Wal-Mart? Do our managers have discretion over pay? [and]
Is that an unlawful employment practice?” were insufficient to establish commonality
for Rule 23(a) purposes because Title VII “can be violated in many ways” and
“[c]ommonality requires the plaintiff to demonstrate that the class members have
suffered the same injury[.]” Wal-Mart, 131 S. Ct. at 2251 (emphasis added) (internal
quotation marks and citation omitted). Thus, the relevant commonality criterion is not
merely whether members of the putative class “have all suffered a violation of the same
provision of law” but whether the legal action is based upon “a common contention”
that “is capable of classwide resolution” because its establishment “will resolve an
issue that is central to the validity of each one of the claims in one stroke.” Id.; see
also id. (“[T]he mere claim by employees of the same company that they have suffered
a Title VII injury, or even a disparate-impact Title VII injury, gives no cause to believe
that all their claims can productively be litigated at once.”).
In the context of the claims being made in the Wal-Mart litigation, the Supreme
Court determined that one such common contention—i.e., the “glue” that had the
potential of “holding the alleged reasons for the [challenged employment] decisions
together”—was the plaintiffs’ assertion that Wal-Mart “engages in a pattern or practice
of discrimination.” Id. at 2552 (emphasis omitted); see also id. at 2553 (explaining that
an allegation “‘that an employer operated under a general policy of discrimination
conceivably could justify a class . . . if the discrimination manifested itself in hiring and
promotion practices in the same general fashion’” (quoting Gen. Tel. Co. of Sw. v.
Falcon, 457 U.S. 147, 159 n.15 (1982)).). Accordingly, the Wal-Mart Court clearly
16
emphasized that is not enough that a class certification motion raises common
questions; what matters is “‘the capacity of a classwide proceeding to generate common
answers apt to drive the resolution of the litigation.’” Id. at 2251 (emphasis in original)
(quoting Richard A. Nagareda, Class Certification in the Age of Aggregate Proof, 84
N.Y.U. L. Rev. 97, 132 (2009)).
The D.C. Circuit has recognized that the Supreme Court’s Wal-Mart analysis
extends beyond the Title VII context. See DL v. District of Columbia, 713 F.3d 120,
126 (D.C. Cir. 2013) (noting that “Wal–Mart’s interpretation of Rule 23(a)(2) has
changed the landscape”). For example, the Circuit decided that an allegation that the
District of Columbia government had violated the Individuals with Disabilities
Education Act (“IDEA”) with respect to a putative class of students who allegedly had
been discriminated against in a variety of ways “speaks too broadly because it
constitutes only an allegation that the class members ‘have all suffered a violation of
the same provision of law,’ which . . . is insufficient to establish commonality given
that the same provision of law ‘can be violated in many different ways.’” Id. (quoting
Wal-Mart, 131 S. Ct. at 2551). Thus, binding precedent in this jurisdiction establishes
that a plaintiff must allege that the “policy or practice affects all members of the class”
in the same way to establish commonality, and that anything less “is not faithful to the
[Supreme] Court’s interpretation of Rule 23(a)[.]” Id.
B. Federal Rule of Civil Procedure 23(b)
Beyond the initial requirements of Rule 23(a), there are also additional
certification requirements that vary depending on the type of class the plaintiff wishes
to have certified. The instant action involves a request for certification under Rule s
23(b)(1)(B) and 23(b)(3).
17
Rule 23(b)(1)(B) generally permits certification if there is a risk that separate
actions by individual class members will lead to binding adjudications of the rights of
other individuals. See Fed. R. Civ. P. 23(b)(1). “Classic examples” of when
certification under Rule 23(b)(1)(B) is appropriate include “actions by shareholders to
declare a dividend” or “actions charging a breach of trust by an indenture trustee or
other fiduciary similarly affecting the members of a large class of beneficiaries[.]”
Ortiz v. Fibreboard Corp., 527 U.S. 815, 833–34 (1999) (internal quotation marks and
citations omitted).
A Rule 23(b)(3) class is appropriate where the movant can establish that
“questions of law or fact common to class members predominate over any questions
affecting only individual members, and that a class action is superior to other available
methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P.
23(b)(3). Rule 23(b)(3) “allows class certification in a much wider set of
circumstances” than permitted by the other subsections of Rule 23(b) “but with greater
procedural protections[.]” Wal-Mart, 131 S. Ct. at 2558. Class actions under Rule
23(b)(3) require that all class members receive a notice informing them of the nature of
the case and their right to opt out. See Fed. R. Civ. P. 23(c)(2).
C. Standard Of Proof
Class certification motions have their own distinct burdens and fact finding
requirements. The D.C. Circuit has not yet spoken to the precise burden of proof
applicable to establishing that the requirements of Rule 23 have been met; however,
courts in this Circuit have routinely applied a preponderance of the evidence standard.
See In re Navy Chaplaincy, No. 07-mc-269, 2014 WL 4378781, at *9 (D.D.C. Sept. 4,
2014) (“The proponent of class certification must prove by a preponderance of the
18
evidence that the requirements of Rule 23 are satisfied.”); In re Rail Freight Fuel
Surcharge Antitrust Litig., 287 F.R.D. 1, 22 (D.D.C. 2012) (“Although the D.C. Circuit
has not yet had occasion to provide much guidance on these questions . . . the Court
concludes . . . that it should apply a preponderance of the evidence standard of proof[.]”
(internal citations omitted)), vacated on other grounds, 725 F.3d 244 (D.C. Cir. 2013).
Further, courts are permitted to make factual findings to the extent necessary to rule on
a motion for class certification. See In re Rail Freight Fuel Surcharge Antitrust Litig.,
287 F.R.D. at 22. (“[T]he Court concludes . . . that it can and must resolve any factual
disputes relevant to the requirements for class certification —even if that requires
considerations enmeshed in the factual and legal issues comprising plaintiffs ’ claim on
the merits[.]”); see also Artis v. Yellen, No. 01-cv-400, 2014 WL 4801783, at *7 n.11
(D.D.C. Sept. 29, 2014) (“[P]laintiffs wrongly assert that the y are entitled to have a jury
determine the facts at this stage. A jury may be the ultimate fact finder, but ‘at the
class certification stage . . . the judge is the decision maker.’” (alteration in original)
(internal citations omitted) (quoting In re Zurn Pex Plumbing Prods. Liab. Litig., 644
F.3d 604, 613 (8th Cir. 2011))).
Notably, when the commonality element of a class certification motion hinges on
the plaintiff’s contention that the defendant has engaged in a policy or practice that has
consistently and uniformly injured the putative class members, the plaintiff must
provide “significant proof” that such a policy or practice exists. Wal-Mart, 131 S. Ct.
at 2553 (emphasis added). In other words, the movant must do more than merely allege
a common contention that conceivably could give rise to the conclusion that there has
been the same classwide injury; he must support that allegation with significant
evidence. Id. at 2553; see also id. at 2251 (“Rule 23 does not set forth a mere pleading
19
standard. A party seeking class certification must affirmatively demonstrate his
compliance with the Rule—that is, he must be prepared to prove that there are in fact
sufficiently numerous parties, common questions of law or fact, etc.”). Although it
appears that “[c]ourts have taken different views of whether Wal–Mart’s significant
proof standard applies to all class certification decisions or only to claims alleging
systemic discrimination[,]” Parsons v. Ryan, 754 F.3d 657, 684 n.29 (9th Cir. 2014),
Parker has not argued that the “significant proof” standard applies only to actions
alleging a general policy of discrimination, and this Court sees no reason to make any
such distinction. Consequently, this Court agrees with those cases that have held that
the “significant proof” standard applies where, as here, a movant seeks class
certification based on classwide injuries allegedly caused by a general policy or
practice. See Jamie S. v. Milwaukee Pub. Sch., 668 F.3d 481, 498 (7th Cir. 2012)
(applying the “significant proof” standard to a class action arising under the IDEA);
NBL Flooring, Inc. v. Trumbull Ins. Co., No. 10-cv-4398, 2014 WL 615967, at *3 (E.D.
Pa. Feb. 12, 2014) (applying the “significant proof” standard to a breach of contract
class action). Accordingly, when a plaintiff seeks class certification based on an
allegation that a defendant has a policy or practice that results in the systematic breach
of binding contractual agreements, the plaintiff must support his certification motion
with significant evidence that such policy or practice exists. See, e.g., NBL Flooring,
Inc., 2014 WL 615967, at *3.
III. ANALYSIS
As explained above, in order for Parker to establish that his breach of contract
and tortious interference claims raise common questions of law and fact that are
suitable for class certification under Rule 23(a), Parker must provide significant proof
20
that BOA engages in a practice or policy that has breached the putative class members ’
mortgage modification agreements in the same way. See Wal-Mart, 131 S. Ct. at 2553–
54; see also In re Cablevision Consumer Litig., 2014 WL 1330546, at *6–7. To mount
this hurdle, Parker maintains that BOA systematically determines which mortgage
modification agreements are valid and binding; reviews those binding agreements for
errors; and, if certain errors are found, refuses to execute the terms of those agreements
to the borrowers’ detriment. (See Pl.’s Mem. at 33.) However, as explained fully
below, this Court finds that Parker has not provided s ufficient proof that BOA has any
such policy or practice. Thus, Parker has failed to satisfy Rule 23(a)’s commonality
mandate, and for this reason alone, Parker’s certification motion must fail.
A. Parker Has Failed To Satisfy The Commonality Requirement Of Rule
23(a)
To understand Parker’s commonality contentions—and why they are deficient—
it is important to note that Parker primarily relies on the following three fact-based
arguments and related evidence to demonstrate commonality for the purpose of Rule
23(a): (1) he maintains that BOA’s modification agreements are essentially standard
form contracts that do not differ materially from one another and thus do not require
individualized review (see Pl.’s Mem. at 37–38); (2) he argues that BOA consistently
engages in the practice of identifying borrowers who have valid and enforceable
modification agreements by coding their files as “Completed” (see id. at 28, 33); and
(3) he contends that BOA systematically reviews the “Completed” mortgage
modification files and intentionally refrains from effectuating the terms of these binding
modification agreements if errors are detected, in breach of the borrowers’ contracts
(see id. at 34–36). This Court has examined the record evidence related to each of these
prongs of Parker’s commonality argument, and for the reasons explained below, it has
21
determined that Parker’s contention that BOA has a policy or practice of subjecting
borrowers with valid modification contracts to additional scrutiny and of systematically
breaching those contracts in a manner that causes identical harm to members of the
putative class is insufficiently supported. (Id.)
1. Parker Has Not Shown That BOA Uses A Small Number Of
Substantially Similar Standard Form Modification Contracts
Class certification motions brought against mortgage servicers alleging breach of
contract are regularly denied for lack of commonality when the underlying claims turn
on the classwide interpretation of a large number of mortgage agreements. See, e.g.,
Gustafson v. BAC Home Loans Servicing, LP, 294 F.R.D. 529, 542–43 (C.D. Cal.
2013); Campusano v. BAC Home Loans Servicing LP, No. 11-cv-4609, 2013 WL
2302676, at *5–6 (C.D. Cal. Apr. 29, 2013). This is so because the terms of mortgage
agreements tend to vary across borrowers, making it difficult to determine “in one
stroke” whether a defendant’s actions have resulted in the breach of every class
member’s contract. Wal-Mart, 131 S. Ct. at 2551. To be sure, a class action may still
satisfy the commonality requirement if the material terms of the disputed agreements
are essentially identical across all class members. See In re Bank of Am. Home
Affordable Modification Program (HAMP) Contract Litig., MDL No. 10-2193, 2013
WL 4759649, at *4 (D. Mass. Sept. 4, 2013); Gaudin v. Saxon Mortg. Servs., Inc., 297
F.R.D. 417, 424–25 (N.D. Cal. 2013); see also Sacred Heart Health Sys., Inc. v.
Humana Military Healthcare Servs., Inc., 601 F.3d 1159, 1171 (11th Cir. 2010) (“It is
the form contract, executed under like conditions by all class members, that best
facilitates class treatment.”). However, the plaintiff who seeks class action certification
of a breach of contract claim bears the burden of establishing that there are no material
22
variations in the class members’ agreements. See Campusano, 2013 WL 2302676, at
*5–6.
Given the importance of uniform contract terms to the classwide resolution of a
breach of contract action, it is not surprising that Parker asserts here that BOA relies on
a limited number of standard form contracts when it enters into an agreement to modify
the terms of a borrower’s mortgage. (Pl.’s Mem. at 37–38.) To support this allegation,
Parker has submitted a “voluminous” number of “pre-printed, form agreements” that he
purportedly obtained through discovery. (Id. at 38; see also Exs. 28–39 to Pl.’s Mot.,
ECF No. 60-34–60-45.) 8 BOA argues that the contracts Parker points to are hardly
“standard” in form (Def.’s Opp’n at 33), and indeed, this Court finds that even the most
cursory review of the thousands of pages that Parker has offered reveals significant
variations between the templates (compare, e.g., Ex. 36 to Pl.’s Mot., ECF No. 60-42, at
221 (containing requirement that borrowers certify that they are suffering financial
hardship), with Ex. 35 to Pl.’s Mot., ECF No. 60-41, at 124 (containing no requirement
that borrowers certify that they are suffering financial hardship)).
Moreover, and perhaps most significantly for present purposes, not only do
BOA’s mortgage modification contract templates vary, they also appear to contain a
wide variety of conditions precedent to the formation of a valid agreement—i.e.,
conditions that “must occur, unless [their] non-occurrence is excused, before
performance under a contract becomes due.” Restatement (Second) of Contracts § 224
(1981). Where a contract contains a condition precedent, the offer and an acceptance
alone are not enough for the agreement to be valid and take effect; the condition
precedent must also be satisfied. And, here, those conditions vary widely—for
8
Although neither party details the precise number of form modification agreements contained in these
exhibits, Parker’s submission totals well over 2,500 pages.
23
example, some of the templates require that the borrower undergo an income
verification process before the modification agreement becomes binding. (See, e.g., Ex.
34 to Pl.’s Mot., ECF No. 60-40, at 149 (“Please note that this offer is contingent upon
verification of your income.”).) Others require that the borrower submit further
documentation. (See e.g., Ex. 35 to Pl.’s Mot. at 119 (“This offer is contingent on . . .
[a c]opy of your most recent supporting income receipts (pay stubs)[.]” ) Still others
condition implementation of the modification agreement on BOA countersigning the
contract after the borrower returns it. (See, e.g., Ex. 37 to Pl.’s Mot., ECF No. 60-43, at
75 (“This modification agreement will not be binding or effective unless and until it has
been signed by both you and [BOA].”).) And some, like Parker’s own mortgage
modification agreement, do not contain any of these preconditions. (See Ex. 7 to Pl.’s
Mot.)
Thus, rather than supporting Parker’s assertion that certification is appropriate
because BOA utilizes various standard form contracts when it reaches mortgage
modification agreements with borrowers, “[t]he sheer number of [different] form
contracts at issue here counsels against certification” of Parker’s breach of contract
action. Gustafson, 294 F.R.D. at 542. Put another way, this Court finds that, with
respect to Parker’s burden of demonstrating commonality, the form contracts here don’t
help, because there really is no difference between the wide variety of form contracts
that BOA uses for modification agreements (which likely would still need to be
reviewed individually to determine which terms apply to various members of the class)
and individually-tailored, non-form contracts (which typically are not amenable to class
certification treatment). See id. Consequently, to the extent that Parker is seeking to
satisfy Rule 23(a)’s commonality requirement by making an initial showing that the
24
contracts of the putative class members have no significant variations that would
require individualized review of each agreement, Parker’s effort fails.
2. Parker Has Not Shown That The “Completed” Designation
Indicates The Existence Of A Valid, Binding Modification
Agreement
In order for Parker to provide the requisite significant proof that the putative
class members have been injured as a result of BOA’s systematic breach of valid
modification agreements, it must first be established that each member of the class
actually had a valid modification agreement, which is a formidable task in light of the
prior discussion regarding the variation among BOA’s mortgage modification offers.
Undaunted, Parker maintains that the existence of a valid, binding contract (a
prerequisite to any breach of contract action) can easily be ascertained on a classwide
basis under the circumstances presented here based on BOA’s alleged practice of
coding a borrower’s file as “Completed” once a borrower has returned a signed
modification agreement and after any conditions to the formation of a valid contract
have been satisfied. In other words, according to Parker, the fact that members of the
putative class may have had different form contracts containing various conditions
precedent such that their modification agreements became valid and binding at
potentially different times is no impediment to class action treatment because BOA
“uses the term ‘Completed’ to show that the parties have reached a binding agreement”
(Pl.’s Mem. at 28), and the “Completed” designation is only made in BOA’s internal
systems when a borrower has no other obligation than “paying on time and in full” (id.
at 97). BOA responds that the “Completed” designation indicates nothing more than
that the borrower has properly returned the modification agreement (Def. ’s Opp’n at
18–19), and this Court has little trouble concluding that the record does not support
25
Parker’s contentions regarding the significance of the “Completed” designation for
several reasons.
First of all, Parker’s primary evidence for the proposition that the “Completed”
designation indicates the existence of a valid, binding contract is a document that says
no such thing when it is considered as a whole and in context. The document—which is
entitled “Loan Modification Master Procedure” and dated November 24, 2009—appears
to be an instruction guide of sorts for the BOA employees who process loan
modification agreements. (See Ex. 20 to Pl.’s Mot.; see also Pl.’s Mem. at 28.) The
document itself states that a file is to be coded “Completed” when a modification
agreement has been returned to BOA and BOA determines that the agreement “is
properly signed, dated, and notarized[.]” (Ex. 20 to Pl.’s Mot. at 33.) Parker primarily
relies on the fact that the Master Procedure document also contains a glossary in which
the term “Completed” is defined more broadly: “[f]iles that have accepted an offer, a
decision has been made, agreed by all parties and correctly executed documents have
been returned by the customer.” (Id. at 46; see also Pl.’s Mem. at 28.) But that
glossary definition says nothing about whether all conditions precedent must have been
satisfied by the time a file is coded as “Completed.” And even setting aside the fact
that the glossary definition fails to convey that “Completed” necessarily means that a
binding contract has been reached, it is not at all clear how the glossary relates to the
underlying Master Procedure document, given that a number of words that the glossary
purports to define (such as “Decisioned,” “Rejected,” and “Qualified”) appear nowhere
in the record copy of the Master Procedure document.
What is more, even if it was clear that the glossary’s definition of “Completed”
referenced and related to the database code discussed in the Master Procedure
26
document, there is no dispute that less than one week after BOA issued the Master
Procedure document, BOA issued a revised version that was identical to the prior
document in every respect except for the fact that it did not include the glossary. (See
Ex. 14 to Def.’s Opp’n, ECF No. 63-35.) Then, just six months later, BOA issued
another revised version of the same Master Procedure document—and this version not
only lacked the glossary, it also clearly stated that “Completed” means “that the
[borrower] successfully returned the agreement” period—i.e., without any reference to
offer and acceptance. (Ex. 15 to Def.’s Opp’n at 19.) Thus, Parker’s reliance on the
2009 glossary definition of “Completed” is clearly misplaced: the glossary is not only
internally ambiguous, it was also essentially repealed less than a week after it was
issued, and Parker has not shown that that same “Completed” definition was ever again
in effect throughout the class period.
Second, the record testimony regarding the meaning of the “Completed”
designation simply does not support Parker’s version of how BOA used that term in
processing modification agreements. For example, BOA has offered an affidavit from
Michael Sunlin, a BOA Vice President whose department specializes in locating and
extracting data from BOA’s databases, in which Sunlin testifies that “Completed”
indicates only that the borrower has signed and returned a modification agreement and
does “not [reflect] that the loan can or should immediately be r eturned to normal
servicing.” (Ex. 3 to Def.’s Opp’n, ECF No. 63-24, ¶ 6.) And the purportedly
contrasting deposition testimony that Parker points to—specifically, deposition
testimony from Charles Kelly, a BOA senior vice president acting as a corporate
representative for BOA under Federal Rule of Civil Procedure 30(b)(6) (see Pl.’s Mem.
at 28)—is not to the contrary. Although Kelly does state that modification agreements
27
such as Parker’s are “not complete until all parties agree to the terms” (id.; see also
Dep. of Charles Kelly (“Kelly Dep.”), Ex. 21 to Pl.’s Motion, ECF No. 60-27, at 96:19–
20), there is no indication from the question presented or otherwise that Kelly is
discussing the meaning of BOA’s “Completed” designation. Regardless, when Kelly’s
statements are considered in context, it is clear that Kelly used the term “complete” to
indicate that the parties have agreed to the terms of the modification agreement; he is
not asserting that the files BOA marks “Completed” are those in which all of the
conditions have been satisfied and a binding contract exists. 9
Finally, to the extent that Parker is suggesting that the evidence shows that the
fulfillment of the conditions precedent to a binding modification agreement (such as
income verification and a countersignature) necessarily occurs prior to the “Completed”
designation—and thus one can infer that all such conditions have been deemed satisfied
and the parties have a binding agreement when the “Completed” designation is made—
Parker is mistaken. For example, Parker relies primarily on deposition testimony to
establish that the borrower’s income is verified prior to BOA coding his file as
“Completed.” (Pl.’s Reply at 11–12.) However, nearly every deponent who references
income verification does so in the context of qualifying for a mortgage modification in
the first place, not in the context of BOA’s review of an already-approved modification
9
Parker has moved to have Sunlin’s testimony stricken on the grounds that it contradicts the deposition
testimony of Kelly and of certain other BOA employees and therefore implicates the sham affidavit
doctrine. (See Pl.’s Mem. in Supp. of Pl.’s Mot. to Strike Sunlin, ECF No. 78, at 6 –7, 15–18.) Parker
has not established that the sham affidavit doctrine —which is clearly tied to the legal standard for
summary judgment—applies in the context of class certification. See In re Front Loading Washing
Mach. Class Action Litig., No. 08-51, 2013 WL 3466821, at *9 (D.N.J. July 10, 2013); see also
Raymond v. Architect of Capitol, No. 11-CV-01088, 2014 WL 2810642, at *2 n.5 (D.D.C. June 23,
2014) (internal quotation marks and citations omitted) (“The sham affidavit rule precludes a party from
creating an issue of material fact by contradicting prior sworn testi mony unless the shifting party can
offer persuasive reasons for believing the supposed correction is more accurate than the prior
testimony.”). Moreover and in any event, this Court concludes that nothing in Sunlin ’s affidavit is
inconsistent with the deposition testimony of other BOA employees, as discussed here and infra.
Accordingly, Parker’s [78] motion to strike has been DENIED.
28
offer. (See, e.g., Kelly Dep. at 36:4–8; Dep. of Suzanne Haumesser (“Haumesser
Dep.”), Ex. 22 to Pl.’s Mot., ECF No. 60-28, at 17:4–18:4.) And the one deponent who
does mention income verification in the context of a borrower returning a signed
modification agreement says nothing about whether this condition must be satisfied
before a borrower’s file is coded as “Completed.” (See Goodrum Dep. at 20:13–16.)
Nor has Parker shown that the “Completed” designation itself satisfies the
countersignature requirement (where such a condition exists) and thus necessarily
indicates that a binding modification agreement is in effect once that designa tion is
made. BOA points to four different clauses contained within various modification
agreements that require the bank’s countersignature before they go into effect. For
example, one form agreement states that “[t]his modification agreement will not be
binding or effective unless and until it has been signed by both” the borrower and Bank
of America (Ex. 37 to Pl.’s Mot., at 75), while another agreement requires a borrower to
attest that “I understand that the Loan Documents will not be modified unless and until
. . . the Lender accepts this Agreement by signing and returning a copy of it to me” (Ex.
29 to Pl.’s Mot., ECF No. 60-35, at 206). To avoid the implications of this
countersignature condition on his argument that “Completed” signifies a binding
contract, Parker argues that Bank of America uses the “Completed” designation instead
of a physical signature as its way of countersigning modification agreements and
satisfying any countersignature requirement. (See Pl.’s Reply at 16–17.) But it is well
established that an electronic signature such as a database code cannot constitute a valid
signature unless the signing party intends for the “electronic sound, symbol, or process”
to constitute a signature, Unif. Elec. Transactions Act § 2(8) (1999); see also
Restatement (Second) of Contracts § 134; 10 Williston on Contracts § 29:36 (4th ed.
29
2011), and Parker gives this Court no basis for concluding that BOA intended the
coding of a borrower’s file as “Completed” to serve as a countersignature, and, indeed,
indicates to the contrary. (See Pl.’s Mem. at 72 (admitting that “the evidence suggests
that [BOA] does not consider the loan modification contracts as binding until [the Post
Loan Modification Review] ha[s] run [its] course”).)
The bottom line is this: although Parker struggles valiantly to advance his own
interpretation of BOA’s “Completed” designation in an attempt to satisfy his burden of
providing significant proof that BOA has a systematic policy or practice that harmed all
class members in the same way, Parker has not demonstrated that BOA has any sort of
consistent internal process for determining that a valid modification agreement has been
reached, much less that the “Completed” designation properly identifies those
borrowers who have binding modification agreements as a matter of law. Therefore,
Parker has not shown that this Court can, in one stroke, determine that each class
member has a binding modification agreement that BOA then systematically breached.
3. Parker Has Not Offered Significant Proof That BOA Conducts Any
“Post Loan Modification Review” That Results In Systematic
Breach Of Valid Modification Agreements
The crux of a classwide breach of contract claim is, of course, the assertion that
the defendant engaged in conduct that amounts to a systematic violation of the terms of
the class members’ binding contractual agreements. See, e.g., Trombley v. Nat’l City
Bank, 826 F. Supp. 2d 179, 192 (D.D.C. 2011) (certifying settlement class where bank
systematically imposed improper overdraft fees). Here, Parker insists that his breach of
contract and tortious interference with contract claims raise questions of law and fact
that are common to all members of the putative class because a factfinder could
conclude that the mortgage modification agreements of all of the putative class
members were breached in the same way—specifically, as a result of the additional
30
inappropriate scrutiny that BOA allegedly applies once a valid modification agreement
is entered into (the so-called “Post Loan Modification Review”). However, Parker has
done little to establish that BOA actually engages in any systematic post-modification
review process with respect to valid and binding modification agreements, and this
failure, too, dooms Parker’s quest to satisfy Rule 23(a)’s commonality element.
Parker’s view of BOA’s loan modification review process is explained fully
above, see Part I.C.2, supra; suffice it to say here that, by Parker’s telling, BOA has a
policy or practice whereby binding loan modification agreements are reviewed for
errors and BOA determines whether or not to proceed with implementing the terms of
those contracts. And if BOA does, in fact, systematically place binding loan
modification agreements that have been designated “Completed” into this critical
“Review” phase, as Parker alleges, then one would certainly and reasonably expect that
the details of such a review procedure would be memorialized in writing to ensure
consistent application or would at least be made clear t o those who are tasked with
assessing and implementing BOA’s mortgage modification contracts. But Parker has
not offered a single internal BOA document that describes or references any such
review process, or that otherwise proves its existence, let alone any significant proof
that BOA consistently applied such policy to the putative class members ’ modification
agreements, as the commonality element requires. Rather, Parker mentions only two
allegedly supporting documents in the section of his certification motion that addresses
BOA’s “systems and practices in servicing loan modifications” (Pl.’s Mem. at 33), and
neither says anything about an automatic or systematic review of binding modification
agreements. 10
10
BOA’s “Loan Modification Overview” (Ex 24 to Pl. ’s Mot., ECF No. 60-30), states only the
obvious—that “loan mod[ification] documentation can be calculated incorrectly” ( id. at 2)—which by
31
The deposition testimony that Parker points to is also devoid of any statements
that establish the general modification review practice that Parker describes. In this
regard, Parker primarily relies on the testimony of Lourdes Duarte, an operations team
manager at BOA and Rule 30(b)(6) deponent, and John Goodrum, a unit manager who
interacted with Parker in the course of Parker’s attempts to have BOA implement his
modification agreement. (See Pl.’s Mem. at 33–36.) However, when these deponents’
testimony is read closely and in context, it is clear that neither actually supports
Parker’s vision of a post-modification review process to which valid and binding
modification agreements are systematically subjected.
For example, Duarte describes a process whereby modification agreements are
“reviewed by the closing team” in order to determine whether a modification agreement
is “valid” and complies with applicable requirements. (Dep. of Lourdes Duarte
(“Duarte Dep.”), Ex. 23 to Pl.’s Mot., ECF No. 60-29, at 43:10–12, 43:22–25.)
According to Duarte, the closing team will ensure that a modification agreement has
been properly signed and returned on time (id. at 44:15–19); that nothing “within the
loan” has changed (id. at 78:8–9); and that the terms of the modification agreement
satisfy requirements such as the noteholder’s rules (id. at 78:8–10). Duarte also states
that, upon finishing this review, the closing team will “complete [the modification] with
an approval or a decline.” (Id. at 43:13–14.) Goodrum describes a somewhat similar
process whereby a modification agreement is sent to BOA ’s closing team “once the
modification documents are returned.” (Goodrum Dep. at 74:6 –7.) Goodrum admits
that he has not personally participated in the closing process (see id. at 75:1–2, 75:8–9),
no means supports the contention that BOA actively or systematically searches for errors after it
reaches binding agreements with borrowers. Li kewise, the “Modification Correction Template” (Ex. 25
to Pl.’s Mot., ECF No. 60-31), provides merely one example of one possible solution if an error is made
at some point in the modification process.
32
but it is his understanding that the closing team is responsible for reviewing the
modification documents that a borrower returns to ensure that everything is in order (id.
at 74:13–21), and the closing team’s review involves such steps as making sure that the
various terms and conditions contained in the proposed modification agreement are
accurate (id. at 75:2–8) and that the agreement complies with noteholder rules (id. at
75:14–16). 11
With respect to Parker’s burden of establishing the existence of the allegedly
improper Post Loan Modification Review procedure, what is missing from both
Duarte’s and Goodrum’s testimony is any indication that the “closing” process occurs
after valid and binding modification agreements have been reached, as Parker contends.
To the contrary, Duarte states that part of the closing process entails reviewing returned
modification documents to ensure that they have been properly executed (Duarte Dep.
at 44:14–18), which necessarily means that the closing team is actively involved in
evaluating the returned modification materials prior to the formation of a binding
modification contract. Similarly, Duarte explains that it is the closing team that
“complete[s] the modification,” and that a modification agreement is not deemed
“valid” until the closing team determines that the documents that BOA receives from
the borrower comply with the applicable requirements (id. at 43:8–14)—a determination
that appears to be part of the contract formation process rather than a post -hoc
procedure designed to undermine the modification agreement. Goodrum’s testimony
11
BOA’s brief explains that such a closing process is required even after a modification offer has been
tendered and the borrower has returned related documents because changing a mortgage agreement is a
complex endeavor in which “[e]rrors will inevitably arise[.]” (Def.’s Opp’n at 20.) BOA claims that,
contrary to Parker’s suggestion, these errors are not merely BOA’s own errors but also include
borrower errors such as a failure to properly keep up with current monthly mortgage loan payments.
(Id.) “Closing” is designed to “find those errors and address them” prior to finalizing the terms of the
modification agreement. (Id.) To this extent, then, BOA’s argument is that “closing” is part of the
process of forming a binding agreement to modify the terms of a mortgage loan.
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also strongly suggests that the closing process occurs, at least in part, pr ior to contract
formation. (See Goodrum Dep. at 74:6–7 (explaining that closing occurs when a
borrower returns the modification agreement).) Thus, Duarte’s and Goodrum’s
statements do not constitute significant proof that BOA subjects already valid and
binding modification agreements to a Post Loan Modification Review process, as Parker
maintains. 12
Parker has also failed to establish that BOA’s “closing” process is a uniform and
systematic procedure. In this regard, Parker again relies entirely on the testimony of
Duarte and Goodrum (see Pl.’s Mem. at 33), and once again the proffered testimony
falls short. For example, Duarte speaks only of what the closing team “could” do as
part of its review (Duarte Dep. at 44:12–13), which clearly indicates that the substance
of any review can vary. For his part, Goodrum avers that he does not have any
knowledge of the specifics of the closing process (Goodrum Dep. at 75:1–2, 75:8–9),
and Laurence Reichenbach, an Operations Project Manager at BOA, expressly denies
that BOA conducts any sort of systematic, uniform review. (See Ex. 4 to Def.’s Opp’n,
ECF No. 63-25, ¶ 2.)
At the end of the day, this Court has come to the conclusion that the picture of a
systematic and injurious post-modification review process that Parker attempts to paint
in his motion for class certification appears in the record only in the broadest of strokes,
and is based solely on snippets of deposition testimony that Parker’s certification
12
If Parker is also attempting to rely on the deposition testimony of Suzanne Haumesser —another BOA
employee and Rule 30(b)(6) deponent (see Pl.’s Mem. at 33–36)—this Court does not know why,
because as far as this Court can tell, Haumesser does not refer to any sort of review of returned
modification agreements at all. Instead, the Haumesser testimony that Parker cites describes BOA ’s
process of returning a borrower’s file to normal servicing by changing a borrower ’s “Warning Code” to
“0.” (See Haumesser Dep. at 107:12–18.) And although this process of a return to normal servicing is
one part of Parker’s broader narrative, Haumesser’s testimony in no way relates to Parker ’s description
of BOA’s Post Loan Modification Review.
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motion extracts and embellishes. There are no internal BOA documents that
definitively establish any such process, and the deponents’ full statements bear little
resemblance to the contentions that their testimony purportedly supports. Put another
way, while Parker’s depiction of the systematic manner in which BOA undertakes to
breach binding loan modification agreements is bold, vibrant, and compelling, the
record evidence shows only the faintest traces of any systematic review of modification
terms, and it is entirely unclear both as to when, exactly, BOA’s supposed Post Loan
Modification Review occurs or what, if anything, it entails. Consequently, Parker has
failed to provide significant proof that BOA engages in a uniform, systematic review of
binding modification agreements that would support a finding of commonality in
satisfaction of the Rule 23(a) requirement under the Suprem e Court’s Wal-Mart
standard.
B. This Court Need Not Address The Other Class Action Certification
Requirements, Nor Must It Reach The Parties’ Evidentiary Motions
It is clear beyond cavil that the “[f]ailure to meet any of Rule 23(a) or 23(b)’s
requirements precludes certification.” Danvers Motor Co. v. Ford Motor Co., 543 F.3d
141, 147 (3d Cir. 2008); accord In re LifeUSA Holding Inc., 242 F.3d 136, 147 (3d Cir.
2001); Harriston v. Chicago Tribune Co., 992 F.2d 697, 703 (7th Cir. 1993). This
means that, having determined that Parker has failed to satisfy the essential prerequisite
of commonality, this Court need not proceed to address each of the other certification
requirements. See Wal-Mart, 131 S. Ct. at 2551 n.5 (“In light of our disposition of the
commonality question, however, it is unnecessary to resol ve whether respondents have
satisfied the typicality and adequate-representation requirements of Rule 23(a).”); see
also Eastman v. First Data Corp., 292 F.R.D. 181, 190 (D.N.J.) (“Because of the lack
of commonality, the Court need not reach the other Rule 23(a) questions of typicality
35
and adequacy of representation or Rule 23(b).”); Cook v. Boorstin, 38 Fed. R. Serv. 2d
837 (D.D.C. 1983) (“In the present case, the Court need not reach the issues of
numerosity, commonality, and adequacy-of-representation, as the resolution of the
question of typicality prevents the certification of a class action.”) .
This Court also need not decide the remaining evidentiary motions that the
parties have filed with respect to the four expert witnesses they have collectively
commissioned to support arguments related to other aspects of the class certification
question. BOA seeks to strike the testimony of Parker’s three expert witnesses, who
have testified regarding the identification of class members, calculation of damages
arising out of late fees, and calculation of damages arising out of false credit reports
(see Def.’s Mot. to Strike the Purported Expert Witness Reports of Keshav
Raghunathan, Mark Riley, and Dean Binder, ECF No. 67), while Parker seeks to strike
the testimony of a rebuttal expert witness that BOA has procured to discredit Parker’s
expert testimony (see Pl.’s Mot. In Limine to Exclude Test. of David Skanderson, ECF
No. 79). None of these four expert witnesses speaks to the commonality inquiry, which
means that their testimony is not relevant to the instant denial of class certification and
the parties objections can be set aside as moot. Nevertheless, to the extent that the
parties might somehow seek to rely upon this expert testimony in the context of
Parker’s individual claim, the evidentiary motions have been denied without prejudice
to raising these objections again.
IV. CONCLUSION
For the reasons explained in this Memorandum Opinion, the Court has issued an
order denying Parker’s motion for class certification. Parker can proceed to litigate the
issue of whether BOA breached or tortuously interfered with his own mortgage
36
modification agreement, but Parker has not provided significant proof of the existence
of a general policy or practice on the part of BOA that resulted in the systematic breach
of, or tortious interference with, the modification agreements of other borrowers. The
Supreme Court requires such a showing after Wal-Mart, and without it, Parker cannot
satisfy the commonality requirement of Rule 23(a).
DATE: April 16, 2015 Ketanji Brown Jackson
KETANJI BROWN JACKSON
United States District Judge
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