Saul Catalan v. RBC Mortgage Compan

In the
United States Court of Appeals
For the Seventh Circuit
No. 09-2182
S AUL H. C ATALAN and M IA M ORRIS,
Plaintiffs-Appellants,
v.
GMAC M ORTGAGE C ORP.,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 05 C 6920—George W. Lindberg, Judge.
A RGUED F EBRUARY 12, 2010—D ECIDED JANUARY 10, 2011
Before E ASTERBROOK, Chief Judge, H AMILTON, Circuit
Judge, and SPRINGMANN, District Judge.Œ
H AMILTON, Circuit Judge. Plaintiffs Saul H. Catalan and
Mia Morris sued defendants RBC Mortgage Company
and GMAC Mortgage Company under the federal Real
Œ
Hon. Theresa L. Springmann of the Northern District of
Indiana, sitting by designation.
2 No. 09-2182
Estate Settlement Procedures Act (“RESPA”), 12 U.S.C.
§ 2601, et seq., and under Illinois law for gross negligence,
breach of contract, and willful and wanton negligence.
The district court dismissed the plaintiffs’ gross negli-
gence claim as merely duplicating the willful and
wanton negligence claim. The court granted summary
judgment to GMAC Mortgage on the plaintiffs’ RESPA,
breach of contract, and remaining negligence claims. The
plaintiffs appeal those decisions. We reverse the grant
of summary judgment for GMAC Mortgage on the plain-
tiffs’ RESPA and breach of contract claims, and we
affirm summary judgment on their negligence claims.1
I. The Real Estate Settlement Practices Act
Before digging into the details of plaintiffs’ maddening
troubles with their mortgage, we provide a sketch of the
relevant RESPA requirements. RESPA is a consumer
protection statute that regulates the real estate settle-
ment process, including servicing of loans and assign-
ment of those loans. See 12 U.S.C. § 2601 (Congressional
findings). The statute imposes a number of duties on
lenders and loan servicers. Most relevant here are the
requirements that borrowers be given notice by both
1
Plaintiffs’ claims against RBC proceeded to trial. The jury
found in favor of the plaintiffs on their RESPA and negligence
claims, awarding them $1,100 and $10,000 for those claims,
respectively. The jury found for RBC on the plaintiffs’ breach
of contract claim. The plaintiffs’ claims against RBC are not
part of this appeal, and RBC is no longer a party.
No. 09-2182 3
transferor and transferee when their loan is transferred
to a new lender or servicer, 12 U.S.C. §§ 2605(b) and (c),
and that loan servicers respond promptly to borrowers’
written requests for information, § 2605(e).
The details of the requirement for responding to
written requests will become relevant here. First, it
takes a “qualified written request” to trigger the loan
servicer’s duties under RESPA to acknowledge and
respond. The statute defines a qualified written request
as written correspondence (other than notices on a pay-
ment coupon or similar documents) from the borrower
or her agent that requests information or states reasons
for the borrower’s belief that the account is in error. 12
U.S.C. § 2605(e)(1)(B). To qualify, the written request
must also include the name and account of the borrower
or must enable the servicer to identify them. Id.Within 60 days after receiving a qualified written re-
quest, the servicer must take one of three actions: either
(1) make appropriate corrections to the borrower’s
account and notify the borrower in writing of the cor-
rections; (2) investigate the borrower’s account and pro-
vide the borrower with a written clarification as to why
the servicer believes the borrower’s account to be cor-
rect; or (3) investigate the borrower’s account and
either provide the requested information or provide
an explanation as to why the requested information is
unavailable. See 12 U.S.C. §§ 2605(e)(2)(A), (B), and (C).
No matter which action the servicer takes, the servicer
must provide a name and telephone number of a rep-
resentative of the servicer who can assist the borrower.
4 No. 09-2182
See id. During the 60-day period after a servicer receives
a qualified written request relating to a dispute re-
garding the borrower’s payments, “a servicer may not
provide information regarding any overdue payment,
owed by such borrower and relating to such period or
qualified written request, to any consumer reporting
agency.” 12 U.S.C. § 2605(e)(3).
RESPA provides for a private right of action for viola-
tions of its requirements. 12 U.S.C. § 2605(f). The provi-
sion for a private right of action includes a “safe harbor”
provision, which provides in relevant part that a
transferee service provider like GMAC Mortgage shall
not be liable for a violation of section 2605 if, “within
60 days after discovering an error (whether pursuant to
a final written examination report or the servicer’s
own procedures) and before the commencement of an
action under this subsection and the receipt of written
notice of the error from the borrower, the servicer
notifies the person concerned of the error and makes
whatever adjustments are necessary in the appropriate
account to ensure that the person will not be required
to pay an amount in excess of any amount that the
person otherwise would have paid.” 12 U.S.C. § 2605(f)(4).
II. The Facts
Because the plaintiffs appeal the district court’s grant
of summary judgment, we review the trial court’s deci-
sion de novo, viewing all evidence in the light most favor-
able to and drawing all reasonable inferences for the
plaintiffs, as the non-moving parties. See Fed. R. Civ. P.
No. 09-2182 5
56(c); Hukic v. Aurora Loan Services, 588 F.3d 420, 432
(7th Cir. 2009); Burnett v. LFW Inc., 472 F.3d 471, 477 (7th
Cir. 2006). We trace the plaintiffs’ problems with their
original mortgage servicer, then with the transfer of
the mortgage to GMAC Mortgage, as relevant to plain-
tiffs’ claims that GMAC Mortgage violated RESPA
by failing to provide notice of the transfer and by failing
to respond to their qualified written requests, and by
failing to correct erroneous information it had given to
credit-reporting services.
Plaintiffs’ Problems with RBC Mortgage: In June 2003,
the plaintiffs bought a home in Matteson, Illinois. They
obtained a Federal Housing Administration loan by
executing a mortgage and note in favor of RBC. At the
outset, theirs was a 30-year fixed loan at 5.5% annual
interest with a monthly payment of $1,598 that
included principal, interest, and escrow.
Although the plaintiffs’ first payment was not due
until August 1, 2003, RBC incorrectly entered the plain-
tiffs’ mortgage into its computer accounting system to
show a first payment due date of July 1, 2003. Because of
this error, when the plaintiffs made their first payment
they were already behind—at least according to RBC’s
system. By the time the plaintiffs made their second
payment, RBC had determined that their loan was in
default, and it increased their monthly payment amount
to $1,787. The plaintiffs, at first unaware of the in-
crease, and then, without receiving an explanation of the
increase, continued to send their mortgage payments
for the original amount. RBC returned those checks
uncashed.
6 No. 09-2182
RBC filed for foreclosure on the plaintiffs’ home on
February 26, 2004. In May and June, the plaintiffs pro-
vided checks to RBC in an attempt to make up for the
uncashed payments. However, the plaintiffs’ May 2004
payment was still due even after this reconciliation of
their account. RBC did not provide the plaintiffs with an
account statement or otherwise inform them of that
delinquency. Then, when the plaintiffs sent their
August 2004 payment to RBC, RBC did not apply that
payment to the loan.
GMAC Mortgage Steps In: In September 2004, RBC
assigned the plaintiffs’ loan to GMAC Mortgage. When
GMAC Mortgage assumed the plaintiffs’ mortgage, it
did not send the plaintiffs a letter notifying them of the
transfer. Plaintiffs, not knowing that GMAC Mortgage
was their new mortgage holder, sent their Septem-
ber payment to RBC. RBC did not cash it but forwarded
it to GMAC Mortgage.
At some point in this period, GMAC Mortgage sent the
plaintiffs an account statement dated September 15,
2004, which they received. That account statement was
based on information that GMAC Mortgage had received
from RBC. It showed that the plaintiffs’ account was
past due in the amount of $7,990 and that GMAC
Mortgage had already assessed late fees totaling $255.
On September 23, 2004, GMAC Mortgage sent the plain-
tiffs a letter demanding proof of their homeowners’
insurance coverage. Then, on September 27th, GMAC
Mortgage returned the plaintiffs’ September payment,
which they had sent to RBC. The letter returning the
No. 09-2182 7
payment informed the plaintiffs that the payment repre-
sented only one of five payments that were then due
(from May to September), and provided the plaintiffs
with a phone number.
On October 6, 2004, the plaintiffs wrote to the United
States Department of Housing and Urban Development
(“HUD”) detailing what they understandably described
as their “nightmare” with RBC. They explained:
Despite admissions by RBC that they made errors,
they feel no obligation to correct the grievance [sic]
wrongs by supplying information necessary to
bring closure to this situation, and they have cashed
checks as if there was never any question raised or
breach of obligation on their part. This is the same
company that as of a few weeks ago was in hot
pursuit of our home by means of foreclosure and
had for months refused to accept our payments. The
last message we received from RBC stated that
there were updates on our account yet they have
continually refused to operate in a professional
manner by providing a written explanation that
would offer us clarity and accountability on their part.
The letter provided a detailed outline of the plaintiffs’
account history with RBC, including the fact that their
first payment had been due in August 2003. It also re-
counted that RBC did not cash their August or Septem-
ber 2004 payments, and that on October 4th they re-
ceived a letter from GMAC Mortgage returning their
September 2004 payment and informing them that the
payment was not enough to cover the past due balance
8 No. 09-2182
because five payments were then due. The plaintiffs
wrote: “GMAC claims that they took over our mortgage in
May 04. No information to that effect had ever previously
been provided by RBC or GMAC.” Finally, their letter
asked several questions about RBC’s and GMAC Mort-
gage’s servicing practices, among them:
• Why did [RBC] cash checks in July for an account
that they did not hold and according to GMAC
had purportedly been sold in May?
• What happened to the funds that were taken in
July?
• Why were previous checks not forwarded to the
new company?
• Why would GMAC just now initiate contact?
• Why would GMAC purchase a “nonperforming”
mortgage?
The plaintiffs sent their letter to HUD, which forwarded
it to GMAC Mortgage, which received it on October 14,
2004.
In the meantime, on October 7th and again on Octo-
ber 15th, the plaintiffs wrote to GMAC Mortgage
directly, requesting information concerning the transfer
of their loan, including the date of the transfer, the
amount transferred, confirmation of their monthly pay-
ment amount, and the payment address. The Octo-
ber 15th letter further sought “any information avail-
able about this account.”
On October 13th, in response to the plaintiffs’ October
7th letter, GMAC Mortgage advised the plaintiffs that
No. 09-2182 9
their account had been transferred on September 1, 2004
and that a monthly payment of $1,661 had been
due on May 1st. The response also listed plaintiffs’ then-
current principal balance. Then, under separate cover,
when GMAC Mortgage did not receive the plaintiffs’
October 2004 payment, the company demanded
$9,588 for payments on the plaintiffs’ account since
May 2004, plus $255 in late fees. In that letter dated
October 15, 2004, GMAC Mortgage informed the plain-
tiffs that they were in default and stated that they
could cure by paying the total amount due within 30
days. Days later on October 20th, GMAC sent an odd
letter informing plaintiffs that their monthly payment
was $1,598, their “next payment due date” was May 1,
2004, and that there was an escrow shortage in their
account of $7,022.
On October 21, 2004, GMAC Mortgage responded to
the letter that it had received from HUD in a letter to
HUD captioned “Re: Saul Catalan and Mia Morris . . .
Payment Dispute.” GMAC Mortgage informed HUD that
there was no indication that the plaintiffs’ funds were
missing or misapplied based on the records that
GMAC Mortgage had received from RBC. GMAC Mort-
gage also told HUD that those records reflected that the
plaintiffs’ first payment had been due in July 2003.
GMAC Mortgage sent a letter to the plaintiffs on
October 25, 2004 to advise them that their mortgage
had “reached an advanced stage of delinquency” and
to offer alternatives, such as a repayment plan, loan
modification, or deed in lieu of foreclosure, to avoid a
completed foreclosure.
10 No. 09-2182
On November 15, 2004, the plaintiffs sent a letter to
GMAC Mortgage, describing their history with RBC
and enclosing a check for $11,186 to cover seven pay-
ments of $1,598. In that letter they informed GMAC
Mortgage that “RBC received payments from us that
were not applied promptly, other payments that were
never applied and they never provided a clear explana-
tion for their refusal to accept our payments, an action
which resulted in our home being wrongfully placed
in foreclosure.” They also set forth their “expectations” for
how their account would be handled, advising GMAC
Mortgage that they expected that “any request from us
for information will be provided,” “any changes to our
account or information that requires correspondence
will be forwarded to us in writing,” and “all payments
will be processed in a timely manner.” Finally, they
advised GMAC Mortgage that “if you have any ques-
tions regarding this account I would appreciate them
being asked in writing from the standpoint that docu-
mentation is clarity. It is an unsafe approach to take the
word of RBC as fact because as a company they have
proven to me that fact for them is evasive.” 2 On Novem-
ber 24, 2004, GMAC Mortgage commenced foreclosure
proceedings. By December 2004, GMAC Mortgage
2
GMAC Mortgage suggests that the plaintiffs’ insistence on
communication in writing equates to a failure to cooperate or
to communicate with GMAC Mortgage. Given the history of
the debacle, plaintiffs’ insistence seems at least reasonably
prudent and should not be faulted. As will be seen, the plain-
tiffs’ insistence likely saved their claims under RESPA.
No. 09-2182 11
was reporting the plaintiffs’ loan as delinquent to the
credit bureaus.
On December 2, 2004, the plaintiffs sent GMAC
Mortgage another letter to request that GMAC Mortgage
apply the $11,186 payment to their account, explaining
that “it becomes a major disruption to have large sums
of money unaccounted for.” They wrote again on Decem-
ber 9th, again asking GMAC Mortgage to process
the $11,186 check and requesting “quick resolution of
whatever issues remain since the transfer of this account
to your company by processing and updating this and
all future payments received immediately.” The plain-
tiffs sent their December mortgage payment on the
same date under separate cover. On December 13th,
GMAC Mortgage returned the $11,186 check, ex-
plaining that the funds did not represent the full amount
required to bring the plaintiffs’ account current and
advising the plaintiffs that their account had been sent
to an attorney to begin foreclosure proceedings. It then
responded to the plaintiffs’ December 2nd and 9th
letters on December 23rd and 30th. In each of those
letters, it stated, “thank you for your inquiry on your
account. We are currently processing your request and
will respond in writing within 20 days.” The record does
not contain these promised follow-up responses.
The plaintiffs then wrote GMAC Mortgage’s outside
foreclosure counsel a letter dated December 17th stating
that they disputed GMAC Mortgage’s attempt to collect
on their account and that they had sent everything neces-
sary to bring their account current. They also requested
12 No. 09-2182
an explanation for why, according to the letter they
had received from foreclosure counsel, the balance of
their account had been increased by $19,200 between
September and November 2004. That same day (and 23
days after it had filed for foreclosure), GMAC Mortgage
dismissed the foreclosure proceedings. Then, inex-
plicably, on December 22nd, GMAC Mortgage sent
another letter to the plaintiffs advising them that their
account had been transferred to GMAC Mortgage’s
attorney for foreclosure proceedings and returning their
December 2004 payment!
On January 25, 2005, HUD again intervened, requesting
that, upon receipt of ten mortgage payments from the
plaintiffs (for the months of May 2004 to February 2005),
GMAC Mortgage reinstate the plaintiffs’ loan as current
and waive any and all extra charges and attorney fees.
The plaintiffs sent a check for $15,980 to GMAC Mortgage
on February 3, 2005. That amount represented ten mort-
gage payments and included no account fees or costs,
and thus amounted to what the plaintiffs would have
otherwise paid in regular mortgage payments over
ten months. Once it had received the plaintiffs’ check,
GMAC Mortgage brought their account current with-
out charging them penalties or additional interest.
In April 2005, HUD contacted GMAC Mortgage on the
plaintiffs’ behalf to request that GMAC Mortgage stop
reporting them as delinquent to the credit bureaus. On
May 4, 2005, GMAC Mortgage complied, and in
August 2005 it sent the plaintiffs a letter claiming that
its records indicated that it had not reported any deroga-
No. 09-2182 13
tory credit information on the plaintiffs’ account
from September 2004 through July 2005.
The District Court Proceedings: GMAC Mortgage moved
for summary judgment on all of the plaintiffs’ claims.
Without reaching the merits of the plaintiffs’ RESPA
claims, the court found that GMAC Mortgage qualified
for RESPA’s safe harbor provision and was therefore not
liable for any violations under that statute. The court
dismissed the plaintiffs’ gross negligence claim, finding
that it duplicated the plaintiffs’ willful-and-wanton
negligence claim. The court granted summary judg-
ment for GMAC Mortgage on the plaintiffs’ willful-and-
wanton negligence claim after finding that GMAC Mort-
gage promptly corrected the errors relating to the
plaintiffs’ account when it received notice of the plain-
tiffs’ payment dispute, so that its conduct could not be
deemed willful or wanton. The court found that the
plaintiffs could not recover for breach of contract
because the plaintiffs had purposely withheld their
October 2004 mortgage payment and were themselves
in breach.
III. Plaintiffs’ RESPA Claims
Plaintiffs contend that GMAC Mortgage violated
RESPA in a number of ways, including failing to give
notice of the transfer of their mortgage, failing to
respond promptly to qualified written requests for infor-
mation, and failing to correct wrong information pro-
vided to credit-reporting agencies. The district court did
not reach the merits of those claims because it found
14 No. 09-2182
that GMAC Mortgage was entitled to the protection of
the RESPA safe harbor provision in 12 U.S.C. § 2605(f)(4).
We address first the safe harbor provision and then
the substantive claims.
A. RESPA’s “Safe Harbor”
Although RESPA provides a private right of action for
violations of its requirements, it also includes a non-
liability or “safe harbor” provision, which provides:
A transferor or transferee servicer shall not be
liable under this subsection for any failure to
comply with any requirement under this section if,
within 60 days after discovering an error (whether
pursuant to a final written examination report or
the servicer’s own procedures) and before the com-
mencement of an action under this subsection and
the receipt of written notice of the error from the
borrower, the servicer notifies the person concerned
of the error and makes whatever adjustments are
necessary in the appropriate account to ensure that
the person will not be required to pay an amount
in excess of any amount that the person otherwise
would have paid.
12 U.S.C. § 2605(f)(4).
GMAC Mortgage is not entitled to the protection of
the safe harbor in section 2605(f)(4). Although the
parties have debated other requirements in the safe
harbor provision, GMAC Mortgage did not argue, and
nothing in the record shows, that GMAC Mortgage
No. 09-2182 15
“notif[ied] the person concerned of the error,” as required
to invoke the protection. On this basis alone, GMAC
Mortgage was not eligible for protection in the RESPA
safe harbor. The district court’s finding otherwise
was error.
In the district court, GMAC Mortgage argued that it
was protected by the safe harbor because, when all was
said and done, the plaintiffs did not pay any money in
excess of what they otherwise would have paid, and
GMAC Mortgage corrected all errors in the plaintiffs’
account within 60 days after receiving the plaintiffs’
December 17, 2004 letter, and before the plaintiffs filed
suit. Under this view of the statute, the defendant
must have corrected the error only before plaintiffs
filed suit, even if the defendant did not discover and
correct the error before receiving written notice of it
from the borrower. Plaintiffs contend that the safe
harbor provision requires the defendant to have cor-
rected the error both before suit was filed and before the
defendant received written notice of the error from the
borrower. Because GMAC Mortgage’s failure to provide
notice keeps it out of the safe harbor in this case, we
express no view on the district court’s reasoning on
this point.
B. The “Qualified Written Request” Issue
The plaintiffs argue that the letters they sent on
October 6, November 15, December 2, December 9 and
December 17 were qualified written requests. They con-
tend that GMAC Mortgage violated RESPA by re-
16 No. 09-2182
porting their account as delinquent to the credit bureaus
within the 60-day window after each of those qualified
written requests was received, and that GMAC
Mortgage also failed to investigate properly or to take
corrective action in response to the October 6, Novem-
ber 15, December 2 and December 9 qualified written
requests.
RESPA defines a qualified written request as follows:
For purposes of this subsection, a qualified written
request shall be a written correspondence, other
than notice on a payment coupon or other payment
medium supplied by the servicer, that—
(i) includes, or otherwise enables the servicer to iden-
tify, the name and account of the borrower; and
(ii) includes a statement of the reasons for the belief
of the borrower, to the extent applicable, that the
account is in error or provides sufficient detail to
the servicer regarding other information sought by
the borrower.
12 U.S.C. § 2605(e)(1)(B).
GMAC Mortgage argues that the letters in question
were not qualified written requests because the letters
“do not identify an error in plaintiffs’ account or pro-
vide any statement of the reasons plaintiffs believe
their account was in error.” GMAC Mortgage Br. 16.3
3
Although GMAC Mortgage conducted an investigation
and corrected the plaintiffs’ account in response to their Decem-
(continued...)
No. 09-2182 17
Relying on several district court decisions, GMAC Mort-
gage contends that letters that “merely dispute a debt or
request information are not ‘qualified written requests,’
and do not trigger the obligations under section 2605.”
Id., citing Moore v. Federal Deposit Ins. Corp., 2009 WL
4405538, at *4 (N.D. Ill. Nov. 30, 2009) (plaintiffs’ letters
requesting information regarding reinstatement of a
defaulted mortgage loan and the amounts of delinquent
mortgage payments due did not relate to “servicing” and
thus were not qualified written requests), Champlaie v.
BAC Home Loans Servicing, LP, 2009 WL 3429622, at *7
(E.D. Cal. Oct. 22, 2009) (plaintiffs’ claim that lender
failed to respond in violation of RESPA was dismissed
because plaintiff did not allege that his written request
for rescission of the loan related to the servicing of
his loan and thus his communication was not a
qualified written request), Keen v. American Home Mortgage
Servicing, 664 F. Supp. 2d 1086, 1097 (E.D. Cal. 2009)
(plaintiff’s demand to cancel trustee’s sale of home and
for rescission disputed the validity of the loan but did
not dispute the servicing of the loan and was not a quali-
fied written request), Pettie v. Saxon Mortgage Services,
2009 WL 1325947, at *2 (W.D. Wash. May 12, 2009) (plain-
tiffs’ “inquiry letter” disputing amount owed and re-
questing 26 sets of documents did not offer reasons for
their dispute and thus was not a qualified written
3
(...continued)
ber 17th letter, it disputes whether that letter was a qualified
written request under the technical requirements of the stat-
ute. GMAC Mortgage Br. 17.
18 No. 09-2182
request under section 2605(e)(1)(B)); MorEquity, Inc. v.
Naeem, 118 F. Supp. 2d 885, 900-01 (N.D. Ill. 2000) (letter
seeking information about the validity of a loan and
mortgage documents but making no inquiry as to the
account balance or credit for periodic payments did not
relate to “servicing” and was thus not a qualified
written request). By GMAC Mortgage’s argument, a
lender would have no obligation to respond to a borrower
who expressed her belief that her account was in error
but was unable to provide specific reasons for that belief,
an untenable result under the language of the statute.
RESPA does not require any magic language before
a servicer must construe a written communication from
a borrower as a qualified written request and respond
accordingly. The language of the provision is broad and
clear. To be a qualified written request, a written corre-
spondence must reasonably identify the borrower and
account and must “include a statement of the reasons
for the belief of the borrower, to the extent applicable, that
the account is in error or provides sufficient detail to
the servicer regarding other information sought by the
borrower.” 12 U.S.C. § 2605(e)(1)(B) (emphasis added).
Any reasonably stated written request for account infor-
mation can be a qualified written request. To the extent
that a borrower is able to provide reasons for a belief
that the account is in error, the borrower should provide
them, but any request for information made with suf-
ficient detail is enough under RESPA to be a qualified
written request and thus to trigger the servicer’s obliga-
tions to respond. See 12 U.S.C. §§ 2605(e)(1)(a), (e)(2),
and (e)(3); see also Garcia v. Wachovia Mortgage Corp., 676
No. 09-2182 19
F. Supp. 2d 895, 909 (C.D. Cal. 2009) (when construed
in light most favorable to borrower, letter was a
qualified written request even though it did not contain
a statement of reasons for borrower’s belief of error;
letter provided sufficient detail regarding “other infor-
mation” being sought); Rawlings v. Dovenmuehle Mortgage,
Inc., 64 F. Supp. 2d 1156, 1162 (M.D. Ala. 1999) (plaintiffs’
claims survived summary judgment where court found
that descriptions of payments made to a prior servicer
sufficiently stated plaintiffs’ reasons for their belief
that their account was in error and were qualified
written requests). We turn to the disputed letters.
1. Letter of October 6, 2004
The plaintiffs’ October 6th letter included content
that was clearly sufficient to be a qualified written re-
quest. The three-page letter described in great detail the
difficulties the plaintiffs encountered at the hands of
RBC. The letter recounted that their first payment was
due in August 2003, but that RBC failed to process
the plaintiffs’ August payment in a timely manner,
and that a discrepancy arose between the plaintiffs
and RBC as to whether the plaintiffs had made their
payments or not. The letter described how RBC raised
the plaintiffs’ monthly payment amount without
informing them of the change, and that each of the plain-
tiffs’ attempts to communicate with RBC was rebuffed
until RBC at last acknowledged its error and dismissed
its foreclosure action against the plaintiffs in July 2004.
The letter then reported that RBC did not cash the plain-
20 No. 09-2182
tiffs’ August and September 2004 payments, but that
GMAC Mortgage returned the plaintiffs’ September
2004 payment uncashed, even though that payment
had been sent to RBC, and that GMAC Mortgage in-
formed the plaintiffs that their September 2004 payment
was insufficient to cover the amount they then owed on
their mortgage account, which, according to GMAC
Mortgage, was five months overdue. The plaintiffs,
naturally, wrote this description of the history of their
loan’s servicing from their perspective, and without access
to the (incorrect) information that GMAC Mortgage had
acquired from RBC. But the letter was certainly a
thorough statement of “the reasons for the belief of the
borrower, to the extent applicable, that the account is in
error” under section 2605(e)(1)(B).
The letter then continued, requesting very specific
information. Plaintiffs asked that RBC explain why it
had cashed the checks they had sent in July if, as they
had been told by GMAC Mortgage, RBC had sold their
account to GMAC Mortgage in May. The letter also
sought an accounting of the funds plaintiffs had paid in
July and sought information related to the transfer—
specifically, why RBC had not forwarded their checks
to GMAC Mortgage, why GMAC Mortgage had
delayed initiating contact with them after purchasing
their account, and why GMAC Mortgage would purchase
a “nonperforming” mortgage. Some of this informa-
tion might have been “unavailable or [unable] to be
obtained by the servicer” under section 2605(e)(2)(C),
but whether the information the plaintiffs sought
was unavailable or whether their questions were unan-
No. 09-2182 21
swerable does not negate the fact that they had
“provide[d] sufficient detail to the servicer regarding other
information sought by the borrower” under section
2605(e)(1)(B). Their October 6th letter was a qualified
written request, and GMAC Mortgage was obligated to
respond.
Of course, the plaintiffs did not send their October 6,
2004 letter directly to GMAC Mortgage. They sent it
to HUD, which forwarded it to GMAC Mortgage. The
statute requires that qualified written requests be
received “from the borrower (or an agent of the bor-
rower).” 12 U.S.C. § 2605(e)(1)(A). We do not have diffi-
culty interpreting that requirement, under the circum-
stances of this case, to include HUD’s intercession on
the plaintiffs’ behalf. RESPA is a consumer protection
statute, and on summary judgment we must view the
facts in the plaintiffs’ favor. Here, the record amply
demonstrates that the plaintiffs had exhausted every
reasonable avenue in their communications with RBC,
yet in the fall of 2004, they were back in the same night-
mare with a different company. Again they were being
accused of not paying their mortgage, and again they
were being threatened with foreclosure. Their confu-
sion and desperation at this point were palpable, and
they reasonably sought help from HUD. Besides, when
it received the plaintiffs’ letter, GMAC Mortgage tacitly
acknowledged that the letter was a request for informa-
tion and raised a dispute with their account. After all, in
its response to HUD, GMAC Mortgage provided a
detailed accounting of the history and transfer of the
22 No. 09-2182
plaintiffs’ mortgage and captioned its letter as a response
to the plaintiffs’ “payment dispute.” After the months
the plaintiffs had spent writing to and getting nowhere
with RBC, and due to the fact that GMAC Mortgage
received the plaintiffs’ October 6th letter and treated it
as a payment dispute and as a request for information,
the fact that GMAC Mortgage received the letter from
HUD and not directly from the plaintiffs does not
prevent the plaintiffs’ October 6th letter from being a
qualified written request under RESPA.
2. Letter of November 15, 2004
In the plaintiffs’ November 15th letter, they explained
their understanding that, based on information they
had received from GMAC Mortgage, there were seven
payments due on their mortgage of $1,598 each, for a
total of $11,186. A check for that amount was enclosed
with the letter. The plaintiffs also set forth their expecta-
tions for how GMAC Mortgage would handle their
account going forward, including that GMAC Mortgage
would provide any information they request, that any
requested information and any changes to their account
would be in writing, and that their mortgage pay-
ments would be applied in a timely manner. However,
the plaintiffs did not raise any disputes or errors in
their account, and their “expectations” were not
requests for information. We cannot construe the plain-
tiffs’ November 15th letter as a qualified written
request under RESPA.
No. 09-2182 23
3. Letter of December 2, 2004
In the plaintiffs’ letter of December 2nd, they explained
that they sent a check to GMAC Mortgage for $11,186
on November 26, 2004, which GMAC Mortgage had not
yet cashed. Their letter requested that GMAC Mortgage
cash their check and apply the funds to their account
because “it becomes a major disruption to have large
sums of money unaccounted for.” Although this letter
certainly pertained to the servicing of their account,
the plaintiffs were not requesting information and were
not stating a belief that their account was in error. The
plaintiffs were requesting that GMAC Mortgage process
their payment more quickly, but in and of itself, that
request does not seem to be based on any belief that an
underlying error was causing the delay. The plaintiffs’
December 2nd letter was not a qualified written re-
quest under RESPA.
4. Letter of December 9, 2004
The plaintiffs’ letter of December 9th was similar to their
letter of December 2nd. They recounted how GMAC
Mortgage returned their August and September 2004
mortgage payments and how they sent a check for
$11,186 in response to GMAC Mortgage’s statement
that $9,843 was necessary to bring the plaintiffs’ account
current. They stated that GMAC Mortgage’s “refusal to
process this check when only having an association
with the account for two months raises questions in our
minds about your motivation for acquiring our ac-
count,” and that:
24 No. 09-2182
the chaotic state that existed when you acquired
the account was a direct result of the extreme mis-
management of our account by RBC. However
your actions also give me pause to wonder if your
interest is more in acquiring our home than servicing
the account. Additionally, it is extremely questionable
as to why your company would assume an account
that appeared to be in as severe disarray as the
one received from RBC.
The plaintiffs then asked for “quick resolution of what-
ever issues remain since the transfer of this account to
your company by processing this and all future pay-
ments immediately.” Although the plaintiffs were under-
standably frustrated that GMAC Mortgage had not
yet cashed their $11,186 check and applied that amount
to their account, we do not interpret the plaintiffs’ Decem-
ber 2nd letter as a statement of their belief that
GMAC Mortgage’s servicing of their account was in
error. Again, their letter expressed their desire that
GMAC Mortgage process their payment more quickly,
which is not a statement of error or a request for infor-
mation. They also hinted at “issues” remaining since
GMAC Mortgage acquired their account from RBC, but
we cannot reasonably construe the plaintiffs’ use of the
word “issues” as a statement of error, or as a request
for information. The plaintiffs’ December 9th letter
was not a qualified written request.
5. Letter of December 17, 2004
The plaintiff’s December 17th letter was unequivocally
a qualified written request under RESPA. The first sen-
No. 09-2182 25
tence of the letter said: “I am disputing your attempt
to collect on the above referenced account.” The plaintiffs
stated that they had sent GMAC Mortgage the full
amount required to bring the account current, but by
then GMAC Mortgage had returned their $11,186 check
and had advised them that it was seeking foreclosure
against them. Against this backdrop, the plaintiffs’ state-
ment that GMAC Mortgage had “refused to process
checks to alleviate any unnecessary actions or undue
harm” was a statement of their belief that their account
was in error. 4 They also very clearly requested specific
information regarding their account—namely, an ex-
planation of how their account balance increased from
$229,098 to $248,298 over a two-month time span. The
December 17th was also a qualified written request.
Having found that the plaintiffs’ October 6th and Decem-
ber 17th letters were qualified written requests under
RESPA, we leave it to the district court to resolve on
remand whether GMAC Mortgage satisfied its obliga-
tions to investigate and respond under 12 U.S.C.
§§ 2605(e)(1)(A) and 2605(e)(2) and to refrain from re-
porting the plaintiffs as delinquent to the credit re-
porting bureaus under 12 U.S.C. § 2605(e)(3). On
remand, the district court will also need to consider
the plaintiffs’ claims that GMAC Mortgage violated
4
The context explains why this December 17th letter was a
qualified written request and the plaintiffs’ December 2nd and
9th letters were not, even though all three expressed the plain-
tiffs’ belief that GMAC Mortgage had failed to process their
payments in a timely manner.
26 No. 09-2182
RESPA by not sending them an appropriate notice that
their loan had been transferred and by charging them
late fees within 60 days of the transfer. See 12 U.S.C.
§ 2605(c) (requiring transferee servicer to notify the
borrower of the transfer within 15 days of the effective
date of transfer, with certain exceptions); 12 U.S.C.
§ 2605(d) (prohibiting transferee servicer from imposing
a late fee if borrower’s payment is received by the trans-
feror servicer before the payment due date). Summary
judgment for GMAC Mortgage on the plaintiffs’ RESPA
claims is reversed, and we remand to the district court
for further proceedings.
IV. Common Law Claims
A. Breach of Contract
The plaintiffs also claimed that GMAC Mortgage
breached the mortgage-and-note contract when it refused
to accept the payments they sent on September 27, 2004
and November 15, 2004.5 The district court dismissed
the plaintiffs’ breach of contract claim on summary
judgment. The court found that the plaintiffs had pur-
posely withheld their October 2004 payment and that this
withholding was itself a breach. We agree with plaintiffs
that this was an error.
5
On reply, the plaintiffs abandoned their argument that
regulations of the Department of Housing and Urban Develop-
ment were incorporated into their mortgage contract, and that
those regulations provided an independent basis for their
breach of contract claims. Pl. Reply 6, n. 6.
No. 09-2182 27
GMAC Mortgage does not dispute that it refused the
plaintiffs’ September 27th and November 15th payments
and did not immediately apply those payments to the
plaintiffs’ debt. It argues instead that its failure to do so
did not amount to a breach of the contract. Nothing in
the contract required GMAC Mortgage to apply the
payments according to any sort of schedule, it argues, and
it attempts to reframe the plaintiffs’ breach of contract
claim as nothing more than a “gripe” that the payments
“were not applied as plaintiffs would have liked,” pointing
out that in time, all of the plaintiffs’ payments were
applied properly. GMAC Mortgage Br. 25.
To swallow GMAC Mortgage’s argument, we would
have to accept, as a matter of law, that a lender is free
to refuse a tendered payment and then to hold the bor-
rower responsible for having failed to make the pay-
ment. We would have to accept, as a matter of law, that
it does not matter if a holder of a promissory note with-
out a specified time period for its own performance
performs its obligations under the contract in a reasonable
time, so long as the party performs its obligations . . .
eventually. We do not accept that argument. It is a
basic tenet of contract law, recognized in Illinois, that
where no time for performance is specified, the law
implies a reasonable time. See In re Marriage of Tabassum
and Younis, 881 N.E.2d 396, 408 (Ill. App. 2007); Rose v.
Mavrakis, 799 N.E.2d 469, 475 (Ill. App. 2003); Meyer v.
Marilyn Miglin, Inc., 652 N.E.2d 1233, 1239 (Ill. App. 1995).
Whether or not GMAC Mortgage’s delay in applying
the plaintiffs’ payments was reasonable—especially
when GMAC Mortgage was claiming that plaintiffs
28 No. 09-2182
were in breach by failing to make those same pay-
ments—is an issue of material fact that precludes sum-
mary judgment for GMAC Mortgage on the claim.
GMAC Mortgage also argues that its breach should be
excused because the plaintiffs breached the contract first
when they failed to remit their October 2004 payment.6
True, another general tenet of contract law is that plain-
tiffs cannot succeed on a breach of contract claim unless
they demonstrate their own performance of the con-
tract’s requirements. See Hukic v. Aurora Loan Services, 588
F.3d 420, 433 (7th Cir. 2009); Solai & Cameron, Inc. v.
Plainfield Community Consolidated School Dist. No. 202,
871 N.E.2d 944, 953 (Ill. App. 2007) (“ ‘under general
contract principles, a material breach of a contract provi-
sion by one party may be grounds for releasing the
other party from his contractual obligations’ ”), quoting
Mohanty v. St. John Heart Clinic, S.C., 866 N.E.2d 85, 95 (Ill.
2006); Borys v. Rudd, 566 N.E.2d 310, 315 (Ill. App. 1990)
6
GMAC Mortgage also contends that the plaintiffs had ten-
dered some earlier payments to RBC that were returned for
insufficient funds. GMAC Mortgage Br. 28, citing GMAC
Mortgage Ex. 89, ¶ 3. It is unclear whether those checks bounced
because the plaintiffs had insufficient funds to cover the
checks or, as counsel for plaintiffs asserted at oral argument,
whether the checks were not processed for some other reason
related to RBC’s servicing of the plaintiffs’ account. We cannot
resolve this issue on summary judgment, even if GMAC
Mortgage had explained how the plaintiffs’ alleged failure to
remit payments to RBC would excuse GMAC Mortgage’s
subsequent breach.
No. 09-2182 29
(only material breach of a contract provision will justify
non-performance by the other party). The plaintiffs were
certainly obligated to make timely payments under the
note-and-mortgage contract. But the servicers had their
own obligations under the contract, one of which was
to provide timely and accurate information about
where and to whom those payments should be sent in
the event of a transfer. Such notice was also required
under RESPA. See 12 U.S.C. §§ 2605(b) and (c). On these
facts, which party breached first is not a question with
a clear answer. A reasonable jury could find that the
plaintiffs’ failure to submit their October 2004 payment
in a timely manner was justified by earlier wrongs by
RBC Mortgage and GMAC Mortgage.
In September 2004, GMAC Mortgage assumed the
plaintiffs’ mortgage from RBC, but the plaintiffs
were not informed of the transfer. Not knowing that
GMAC Mortgage was their new mortgage holder, the
plaintiffs sent their September payment to RBC. That
payment was later returned to the plaintiffs uncashed,
not by RBC but by GMAC Mortgage, along with a letter
informing them that they owed not one payment but
five, relying on inaccurate information from RBC. When,
on October 15th, GMAC Mortgage told the plaintiffs
that they could bring their account current by paying
$9,588, the plaintiffs paid $11,186—a check that
GMAC Mortgage again returned, uncashed. (Why
GMAC Mortgage did not accept the plaintiffs’ Septem-
ber and November checks as partial payment of the
total amount it believed the plaintiffs owed is not ex-
plained by the parties and remains a mystery.) A rea-
30 No. 09-2182
sonable jury could conclude that the plaintiffs were
doing their best to hold up their end of the bargain—
after all, they were not squandering their uncashed
mortgage payments, and in November they were able to
send GMAC Mortgage more than it asked for. A jury
could also find that plaintiffs’ attempts were thwarted,
first by RBC’s and then by GMAC Mortage’s misman-
agement of their account. Given the plaintiffs’ under-
standable confusion and frustration with the servicing
of their loan in the fall of 2004 and GMAC Mortgage’s
mixed messages regarding how they might fix the prob-
lems, a reasonable jury could conclude that the plaintiffs’
failure to submit their October 2004 payment to GMAC
Mortgage was excused.
GMAC Mortgage cites our decision in Hukic, arguing
that any misstep by a borrower in performance of the
contract absolves a lender from liability for a later breach
of the contract. We do not read Hukic so broadly. Hukic
paid his property taxes and insurance directly, as his
mortgage contract permitted him to do so long as he
also submitted proof of payment to his mortgage
company (or companies—Hukic’s mortgage was also
transferred from one servicer to another several times).
Hukic, 588 F.3d at 425. This he failed to do despite his
servicers’ repeated requests for the required proof.
Because they were unaware that Hukic had already
paid those items, the mortgage servicers also paid
them, which put Hukic’s mortgage account in arrears.
Hukic brought suit against the servicers for breach
of contract. We upheld summary judgment for the mort-
gage servicers, finding that Hukic had breached the
contract by not informing the companies that he had
No. 09-2182 31
paid the property taxes and homeowner’s insurance, as
he was contractually obligated to do. Id. at 433. Hukic’s
failure to comply with his contractual obligations was
material and absolved the servicers from liability
because it directly caused the servicers’ actions that were
the basis of his own breach of contract claims. There was
no issue in Hukic concerning whether or not Hukic’s
breach was excusable.
Here, even assuming that the plaintiffs delayed in
making their October payment as GMAC Mortgage
contends, that delay did nothing to exacerbate
the already serious problems with GMAC Mortgage’s
servicing of the plaintiffs’ mortgage account. Their delay
in submitting their October 2004 payment, viewed in
light of RBC’s and GMAC Mortgage’s repeated failures
to provide them with information regarding their
account or to conduct an investigation into the errors in
transferring their account, is not comparable to Hukic’s
stonewalling. A reasonable trier of fact could find that
the plaintiffs’ failure to remit their October 2004 pay-
ment in a timely manner, although a breach of the
contract, was excused due to the lenders’ earlier breaches
and errors and the resulting confusion surrounding
their account. Summary judgment for GMAC Mortgage
on the plaintiffs’ breach of contract claim is reversed.
B. Negligence
Finding that GMAC Mortgage promptly corrected the
errors in the plaintiffs’ account, the district court held
that GMAC Mortgage could not be found to have acted
willfully or wantonly for its own financial gain, and the
32 No. 09-2182
court dismissed the plaintiffs’ consolidated negligence
claims on summary judgment. The plaintiffs appeal. They
describe their negligence claims as “willful and wanton
negligence or negligence based on willful or wanton
misconduct.” They argue that, however described, the
issue of willfulness or wantonness is one for a jury and
that the trial court erred in dismissing their negligence
claims.
Plaintiffs are foreclosed from recovering on their negli-
gence claims under the economic loss doctrine, which
bars tort recovery for purely economic losses based on
failure to perform contractual obligations. See Moorman
Mfg. Co. v. National Tank Co., 435 N.E.2d 443, 448-49 (Ill.
1982). In Moorman, the Illinois Supreme Court found that
contract law protects the contracting parties’ expectation
interests and “provides the proper standard when a
qualitative defect is involved,” so a contracting party
may not “recover for solely economic loss under the
tort theories of strict liability, negligence and innocent
misrepresentation.” Id. at 448, 453. Illinois recognizes
three general exceptions to the doctrine, which its
Supreme Court recently set forth as follows: “(1) where
the plaintiff sustained damage, i.e., personal injury or
property damage, resulting from a sudden or dangerous
occurrence; (2) where the plaintiff’s damages are proxi-
mately caused by a defendant’s intentional, false rep-
resentation, i.e., fraud; and (3) where the plaintiff’s dam-
ages are proximately caused by a negligent misrepresenta-
tion by a defendant in the business of supplying infor-
mation for the guidance of others in their business trans-
actions.” First Midwest Bank, N.A. v. Stewart Title Guaranty
Co., 843 N.E.2d 327, 333-34 (Ill. 2006) (internal citations
No. 09-2182 33
omitted). These exceptions have in common the ex-
istence of an extra-contractual duty between the parties,
giving rise to a cause of action in tort separate from one
based on the contract itself.
The plaintiffs do not argue that their negligence claim
falls into one of the three recognized exceptions, but they
attempt to fashion a duty from the note-and-mortgage
contract, from common law, and from GMAC Mortgage’s
obligations under RESPA. See Pl. Reply Br. 8-15. However,
each duty that the plaintiffs identify has its root in the
note-and-mortgage contract itself. No matter GMAC
Mortgage’s failings, the contract itself cannot give rise to
an extra-contractual duty without some showing of a
fiduciary relationship between the parties. See Judd v.
First Federal Sav.& Loan Ass’n of Indianapolis, 710 F.2d
1237, 1241-42 (7th Cir. 1983) (holding under Indiana law
that mortgage contract did not create a trust requiring
the mortgagee to account to the mortgagors as beneficia-
ries, nor did it transform a traditional debtor-creditor
relationship into a fiduciary relationship); Ploog v.
HomeSide Lending. Inc., 209 F. Supp. 2d 863, 874-75 (N.D.
Ill. 2002) (denying lender’s motion to dismiss borrower’s
negligence claim because lender’s duty to manage
escrow funds properly could give rise to fiduciary rela-
tionship between lender and borrower); Choi v. Chase
Manhattan Mortgage Co., 63 F. Supp. 2d 874, 885 (N.D. Ill.
1999) (same). The plaintiffs have made no such
showing, and the trial court’s dismissal of their negli-
gence claims is affirmed.
34 No. 09-2182
V. Damages
We are not quite done yet. GMAC Mortgage argues
in the alternative that even if plaintiffs’ claims survive
summary judgment on the issues already addressed,
their RESPA and breach of contract claims cannot
survive because they do not have competent evidence
of damages. The district court did not address the ques-
tion of damages. In doing so now, we conclude that the
plaintiffs have raised disputed issues of material fact
that bar summary judgment on this basis.
Plaintiffs must come forward with evidence sufficient
to support an award of actual damages to pursue their
RESPA and breach of contract claims. RESPA allows for
damages in an amount equal to the sum of:
(A) any actual damages to the borrower as a result
of the failure; and
(B) any additional damages, as the court may allow,
in the case of a pattern or practice of noncompliance
with the requirements of this section, in an amount
not to exceed $1,000.
12 U.S.C. § 2605(f)(1). The plaintiffs do not contend that
GMAC Mortgage engaged in a “pattern or practice” of
noncompliance, and so to prevail under RESPA they
must prove actual damages. Damages are also an
essential element of their surviving breach of contract
claim. See Akinyemi v. JP Morgan Chase Bank, N.A., 908
N.E.2d 163, 169 (Ill. App. 2009) (dismissal of breach of
contract claim upheld where plaintiff pled only that he
“suffered damages in an amount to be proven at trial”).
No. 09-2182 35
The plaintiffs contend that, as a result of GMAC Mort-
gage’s conduct, they were denied home-equity lines
of credit and a small business loan, and that they
suffered emotional distress.7 Keeping in mind the
standard applicable for summary judgment, we review
the relevant evidence in the light reasonably most favor-
able to plaintiffs as the non-moving parties.
A. Denials of Credit Applications
While the issues with plaintiffs’ mortgage were still
ongoing, they applied for four home equity lines of credit,
three with LaSalle Bank and one with Quicken Loans.
Plaintiff Morris also applied for a business loan with
First American Bank. Each of these applications was
denied. In response to the plaintiffs’ contentions that they
were denied loans and credit lines as a result of GMAC
Mortgage’s actions, GMAC Mortgage counters that no
admissible facts support the plaintiffs’ claim that they
were denied credit as a result of GMAC Mortgage’s
report of negative information to the credit bureaus.
A representative of LaSalle Bank testified that the bank’s
decisions to deny the plaintiffs’ applications of Decem-
ber 1, 2004, March 7, 2005, and October 14, 2005 would
have been no different regardless of the issues between
7
The plaintiffs offer no response to GMAC Mortgage’s argu-
ment that their damages claims relating to loans made by
plaintiff Morris’s mother should be dismissed. Accordingly,
that damages theory is not available on remand.
36 No. 09-2182
RBC, GMAC Mortgage, and the plaintiffs. The plaintiffs
presented contrary evidence. Morris testified that a
LaSalle Bank loan officer told her that the plaintiffs’ home-
equity loan applications would not be approved until
their foreclosure was removed.
GMAC Mortgage argues that the plaintiffs’ evidence
about what the LaSalle Bank loan officer said is not suf-
ficient to avoid summary judgment because it is “classic”
hearsay. We disagree. Hearsay, of course, is “a statement,
other than one made by the declarant while testifying
at the trial or hearing, offered in evidence to prove
the truth of the matter asserted.” Fed. R. Evid. 801(c). The
loan officer’s statement to Morris was not hearsay. It
was not an assertion of a factual matter but a statement
describing the bank’s collective intentions: we won’t
approve a loan until you get the foreclosure issue re-
solved. There is also an exception to the exclusion of
hearsay for “a statement of the declarant’s then existing
state of mind, emotion, sensation, or physical condition
(such as intent, plan, motive, design, mental feeling, pain,
and bodily health).” Fed. R. Evid. 803(3); see Citizens
Financial Group, Inc. v. Citizens National Bank, 383 F.3d
110, 133 (3d Cir. 2004) (bank tellers’ statements re-
garding their personal experiences with certain cus-
tomers were not hearsay because the tellers described
the actions they took with regard to those customers and
why); United States v. Heath, 970 F.2d 1397, 1404 (5th
Cir. 1992) (statement by vice president and loan officer
of bank that he was concerned a loan was a sham
was not hearsay; his statement was offered not to show
that the loan was a sham but to reveal whether the
loan had aroused the witness’s suspicions and whether
No. 09-2182 37
the witness had notified any other bank officer about
it); United States v. Visa U.S.A., Inc., 2007 WL 1741885, at *9
(S.D.N.Y. June 15, 2007) (statements of bank employees
regarding the banks’ reasons for dealing with one
supplier rather than another were not hearsay). Also,
because the loan officer was speaking during the em-
ployment relationship concerning matters within the
scope of her employment, her statement may be
imputed to the bank. Thus, the LaSalle loan officer’s
statements to plaintiff Morris about the need to resolve
the mortgage problem were expressions of the inten-
tions of the bank made by its representative. The state-
ments fall outside the definition of hearsay, and even
if they amounted to hearsay, the Rule 803(3) hearsay
exception would apply. The testimony from Morris
about the bank representative’s statements is admissible.
The evidence presented by the parties presents a
disputed issue of material fact that bars summary judg-
ment on this issue.
The plaintiffs also applied for a fourth home equity
loan with Quicken Loans in October 2005. The denial
letter informed them that their application was rejected
because of their poor credit scores. GMAC Mortgage
argues that the denial of this loan cannot be attributed
to its conduct because a different lender pulled the plain-
tiffs’ credit report on the same day that Quicken did, and
the report relied on by the other lender showed only
positive information being reported by GMAC Mortgage
on that date. However, without additional evidence to
connect the dots, there is no way to conclude beyond
38 No. 09-2182
reasonable dispute that Quicken did not rely on the
negative and erroneous credit information that GMAC
Mortgage had reported to the credit bureaus only five
months earlier. GMAC Mortgage’s unbolstered assump-
tion is speculative and insufficient to support summary
judgment.
The plaintiffs support their claim that Morris was
denied a business loan through First American Bank due
to GMAC Mortgage’s actions with an email sent by a
representative of the bank to a First American loan
officer expressing concern regarding Morris’s “mortgage
situation.” 8 GMAC Mortgage argues that the representa-
tive who sent that email later testified that Morris’s
application was denied for reasons having nothing to
do with GMAC Mortgage. GMAC Mortgage’s argu-
ment goes to weight, not admissibility, and does not
resolve this dispute of material fact. Taken in the light
most favorable to the plaintiffs, a reasonable jury could
conclude that GMAC Mortgage’s actions resulted in
8
The plaintiffs also argue that a “former” First American loan
officer told Morris that her business loan was denied due to
the foreclosure. Although the plaintiffs disclosed this former
First American loan officer to GMAC Mortgage as a potential
witness, neither Morris’s deposition testimony nor any other
evidence in the record supports the plaintiffs’ assertion of this
statement. Even assuming that the loan officer made this
statement to plaintiff Morris, there is no indication that she
made the statement during the time she was an agent of the
bank, so the statement has not been shown to be admissible.
No. 09-2182 39
plaintiff Morris’s business loan application being denied.9
B. Emotional Distress Damages
Regarding the plaintiffs’ claim of emotional distress,
Plaintiff Morris’s medical records indicate that she was
under increased stress during this time period because of
her “house situation.” Also, both of the plaintiffs testified
regarding their emotional distress. Plaintiff Morris ex-
plained:
It is hard to feel like people aren’t listening to you, that
they’re ignoring you. It makes me nervous. It makes
me shaky. It depresses me. It concerns me. It embar-
rasses me.
I can’t sleep. I don’t like people ringing my doorbell.
Any and every way that you should feel in your
own home, I don’t feel, and only now are we
really starting to do things in our house because
I was concerned that it wasn’t going to be my
house. . . . It makes me sad because I’ve taken time
away from my husband and from my child and from
9
In the long run, of course, simply being denied a loan that
would have to be repaid would not be sufficient by itself to
prove damages; the plaintiffs would need to show further
damages resulting from the loan denial. As the case comes to
us, however, those issues are not before us. We focus only on
the threshold step of whether the loans were denied as a
result of GMAC Mortgage’s actions.
40 No. 09-2182
myself because I have been consumed with this and
dealing with this, and I’m angry about it.
I understand to an extent that [GMAC Mortgage]
inherited an issue that was preexisting, but it seemed
like [GMAC Mortgage] jumped on the bandwagon
and didn’t listen, ignored what was said to you.
I get headaches thinking about it and dealing with it.
I’m just tired of it.
And, plaintiff Catalan testified:
If I see my wife upset, I can’t let her know that I’m
upset. So the whole time that we were going through
this process, I had to deal with my wife every day
crying and being upset, not being able to take care
of my son the way she was supposed to. And I had
to take care of my son . . . try to console my wife, and
at the same time, I couldn’t let anybody know how
I felt about it.
....
Every day I just felt useless. I couldn’t do anything
to help her. I couldn’t resolve the situation. I couldn’t
fix her problem.
....
It was killing me every day.
GMAC Mortgage concedes that emotional distress
damages are available as actual damages under RESPA,
at least as a matter of law, but argues that the plain-
tiffs’s evidence is not sufficient to support a damages
No. 09-2182 41
award because it did not show “extreme” emotional
distress and was “self-serving and conclusory.” GMAC
Mortgage Br. 35, 36. We disagree. Although not exten-
sive, the plaintiffs’ testimony is not conclusory. They
described their emotional turmoil in reasonable detail
and explained what they believe to be the source of
that turmoil. Although also “self-serving,” most testimony
by a party is, see, e.g., Payne v. Pauley, 767, 772 (7th Cir.
2003) (reversing summary judgment), so that charac-
terization does not assist GMAC Mortgage. So long as
the statements were made with personal knowledge,
which they certainly were, plaintiffs’ testimony on this
point is admissible. GMAC Mortgage will be free to
argue on remand that any such distress was minor and
that other stressors in the plaintiffs’ lives were the true
causes of their distress, but the plaintiffs’ testimony is
sufficient to preclude summary judgment for GMAC
Mortgage on the question of whether the plaintiffs
suffered emotional harm as a result of GMAC
Mortgage’s actions—and inaction.1 0
10
Before leaving the issue of damages, recall that plaintiffs
already won a judgment for $11,100 against RBC Mortgage. To
the extent that plaintiffs are seeking damages against GMAC
Mortgage for any of the same injuries, on remand the district
court will need to ensure that plaintiffs do not recover twice
for the same injury.
42 No. 09-2182
Conclusion
The district court’s grant of summary judgment for
GMAC Mortgage on the plaintiffs’ RESPA claims and
breach of contract claim is R EVERSED and R EMANDED for
further proceedings. The court’s grant of summary judg-
ment to GMAC Mortgage on the plaintiffs’ negligence
claims is A FFIRMED.
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