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Boster v. Live Well Financial, Inc.

United States District Court, S.D. West Virginia, Charleston

March 25, 2019

WILLIAM W. BOSTER, JR., Plaintiff,
v.
LIVE WELL FINANCIAL, INC. and COMPU-LINK COPRORATION, d/b/a CELINK, Defendants.

          MEMORANDUM OPINION AND ORDER

          John T. Copenhaver, Jr. Senior United States District Judge.

         Pending is a motion for summary judgment filed by the plaintiff, William W. Boster ("Mr. Boster"), on May 21, 2018, and a joint motion for summary judgment filed by the defendants, Live Well Financial, Inc. ("Live Well") and Compu-Link Corporation, d/b/a Celink ("Celink"), also on May 21, 2018.

         I. Background

         This case involves a dispute between Mr. Boster, who took out a reverse mortgage on behalf of his mother as her attorney-in-fact under a durable power of attorney, and Live Well and Celink, the servicer and sub-servicer of the loan. Mr. Boster now seeks to nullify the loan on the alleged grounds that it was illegal.

         On June 26, 2001, Mr. Boster's Mother, Wanda Jean Boster, conveyed to the plaintiff a remainder interest in her home located in Nitro, West Virginia, in which she reserved a life estate for herself. Defs.' Mot. Summ. J., Ex. A at ¶ 4; PL's Mot. Summ. J. 1. The mother died November 25, 2016. Defs.' Mot. Summ. J., Ex. A at ¶ 4. Mr. Boster currently resides in the home. PI.'s Mot. Summ. J. 1.

         In July 2007, Wanda Jean Boster provided Mr. Boster with a power of attorney over "any mortgages, loans, deed of trust on any of [her] real property or interests." Defs.' Mot. Summ. J., Ex. A. at ¶ 4. In March 2014, several years after the creation of the remainder interest, Mr. Boster sought a reverse mortgage loan on behalf of his mother to provide necessary funds for her care. Defs.' Mot. Summ. J. 3; PI.'s Mot. Summ. J. 1. To obtain the loan through the Home Equity Conversion Mortgage ("HECM") program, the plaintiff attended required counseling wherein he signed the Certificate of HECM Counseling, which provided that the HECM would be "due and payable when no remaining borrower lives in the mortgaged property, or when any other covenants of the mortgage have been violated. (Borrowers are those parties who have signed the Note and Mortgage or Deed of Trust.)" Defs.' Mot. Summ. J. 3-4, Ex A ¶ 4; Ex. D. As will be seen, Mr. Boster did not sign the Note in issue here and thus was not a "borrower."

         On March 20, 2014, Mr. Boster, solely as attorney-in-fact for his mother, executed two promissory notes for a federally-insured loan under the HECM program, one with Proficio Mortgage Ventures LLC ("Proficio"), and the other with the Secretary of HUD (collectively, the "Note"). Defs.' Mot. Summ. J. at Ex. E ¶ 5; Ex. F. Mr. Boster signed the Note as "Wanda Jean Boster by William Wayne Boster, as Attorney-in-Fact" and signed a "Home Equity Conversion Mortgage Loan Agreement" ("Loan Agreement") as his mother's attorney-in-fact. Id. at Ex. A ¶ 4; Ex. G. And so, he signed neither the Note nor the Loan Agreement in his personal capacity. Id. at 4; Compl. ¶ 32.

         Because Mr. Boster held a remainder interest in the property, he signed two deeds of trust ("Deed of Trust"), which pledged the property as collateral for the Note. Id. at Ex. E ¶ 4; Ex. H.[1] The Deed of Trust required payment of "all property charges consisting of taxes . . . and hazard insurance premiums." Id. at Ex. H. It stated that the lender could collect fees and charges authorized by HUD as grounds for acceleration, and also require payment in full if "[a] Borrower dies and the Property is not the principal residence of at least one surviving Borrower." Id. The Loan could also be declared due and payable, with HUD's approval, if "[a]n obligation of the Borrower under th[e] Security Instrument is not performed." Id.

         Mr. Boster also signed four documents as attorney-in-fact which explained his role as a non-borrowing resident: (1) Non-Borrowing Resident Disclosure; (2) Important Notice to Non-Borrowing Spouse or Resident; (3) Ownership Interest Certification; and (4) Notice to Non-Borrowing Spouse or Resident. Defs.' Mot. Summ. J. at Ex. A ¶ 4; Ex. I. Each document indicated that "[i]f the borrowing homeowner predeceases you or otherwise no longer occupies the property as their property residence, the reverse mortgage will become due and payable." Id. at Ex. I.

         Defendant Live Well took the Loan by assignment from Proficio on April 2, 2014. Compl. ¶ 16; Defs.' Mot. Summ. J. at Ex. E ¶ 3. The Loan was serviced by defendant Celink. Compl. ¶ 20; Defs.' Mot. Summ. J. at Ex. A ¶¶ 4-6. Pursuant to the Reverse Mortgage, Mrs. Boster was required to pay the taxes and insurance on the home to avoid defaulting on the Loan. Defs.' Mot. Summ. J. at Ex. E ¶¶ 4, 6. Mrs. Boster immediately defaulted on these obligations. Id. at Ex. E ¶ 7.

         As a result of Mrs. Boster's failure to pay taxes and insurance on the property, Live Well fulfilled these payment obligations on her behalf in order to "protect its collateral." Id. at Ex. E ¶ 8. Those payments by Live Well began in October 2014 and ended in June 2017; however, the defendants claim that even after Live Well transferred the Reverse Mortgage to TIAA FSB d/b/a EverBank ("Everbank") on March 15, 2017, Live Well retained servicing rights and continued to advance funds for taxes and insurance on the home into 2018. Defs.' Mot. Summ. J. at Ex. E ¶ 16. After this transfer, defendant Live Well became merely a servicer of the Loan and defendant Celink became the sub-servicer. The defendants currently hold these roles with respect to the reverse mortgage.

         On June 2, 2016, Celink sent Mrs. Boster a letter to inform her that Live Well advanced funds on June 1, 2016 to pay for delinquent taxes and/or insurance on the Loan. Defs.' Mot. Summ. J. at Ex. A ¶ 4; Ex. E ¶ 11; Ex. J. Celink further indicated that the Loan was "now considered to be inxTax/Insurance Default' status" and accordingly, she was required to pay $410.00 in order to cure the default. Id. at Ex. A. Subsequently, Celink sent several more letters on Live Well's behalf regarding her delinquent tax/insurance, but she failed to make the $410.00 payment during that time. Defs.'s Mot. Summ. J. 7, Ex. A ¶ 4; Ex. K.

         In light of Mrs. Boster's continued failure to meet her insurance and tax payment obligations, which constituted default under the loan agreement, Seneca Trustees, Inc. ("Seneca"), began initiating foreclosure on her home and notified Mr. Boster and his mother of this by letter dated October 19, 2016. Id. at Ex. A ¶ 4; Ex. L. On or around November 10, 2016, Celink received a check in the amount of $410.00 for the outstanding taxes/insurance payment, but there was also $151.36 due for additional taxes and insurance that Celink did not receive at that time. Id. at Ex. A ¶ 8. On November 16, 2016, Samuel I. White, P.C., attorney for Celink, sent a letter addressed to Mrs. Boster that she had breached the terms of the Note by failing "to pay the installments hereinafter stated." Id. at Ex. A ¶ 4; Ex. M. The installments totaled $66, 590.23 and included: an unpaid principal balance of $54, 476.16; accrued interest in the amount of $7, 752.94; mortgage insurance ("MIP") in the amount of $4, 209.77; and taxes in the amount of $151.36. Id. Pursuant to the letter, she was given 30 days to cure the breach. Id.

         Shortly after Mrs. Boster passed away on November 25, 2016, Celink received on December 8, 2016 a check in the amount of $151.36 for the outstanding taxes and insurance. Defs.' Mot. Summ. J. 7, Ex. A ¶ 9. Because Mrs. Boster died, the $156.36 and $410.00 payments were both returned to the sender. Defs.'sMot. Summ. J. 8, Ex. A ¶ 10. In light of his mother's death, Celink called Mr. Boster that same day and "advised him of five options with no recourse: (1) sell the Property; (2) refinance the Property; (3) short sale of the Property; (4) deed-in-lieu of foreclosure; or (5) foreclosure." Defs.' Mot. Summ. J. 8, Ex. A ¶ 11.

         On December 27, 2016, Seneca sent notice to Mrs. Boster and her son, informing them that the Loan would be accelerated, and the property would be sold pursuant to the Deed of Trust. Defs.' Mot. Summ. J. at Ex. A ¶ 4; Ex. N; PL's Mot. Summ. J. 2-3. Mr. Boster sought counsel to avoid eviction. PL's Mot. Summ. J. 3. On February 27, 2017, Mr. Boster sent Proficio, Live Well, and Seneca Trustees, Inc., a letter indicating that he was rescinding the Loan and security interest pursuant to 15 U.S.C. § 1635. PL's Mot. Summ. J. at Ex. 3. He claims that "[n]o action was taken within the 20 days allowed after receipt of that notice to release the lien on plaintiff s home or to seek a court order to alter the statutory revision process." PI.'s Mot. Summ. J. 3.

         As noted, on March 15, 2017, Live Well transferred the Reverse Mortgage, including the Deed of Trust, to EverBank. Defs.' Mot. Summ. J. 8, Ex. E ¶ 13; PL's Mot. Summ. J. 3. By letter dated March 16, 2017, addressed to Mrs. Boster, notice of the transfer was given by Live Well. Ex. E ¶¶ 14, 15; Ex. 0.

         On July 3, 2017, Mr. Boster brought this action in the Circuit Court of Kanawha County, West Virginia. With the consent of Celink, Live Well timely removed the case to this court, invoking diversity jurisdiction pursuant to 28 U.S.C. § 1332. Notice of Removal ¶¶ 6, 11. Plaintiff's complaint asserts two counts against the defendants.

         First, Mr. Boster asks in Count I that the court "declare defendants' claimed lien void and unenforceable, and to enter a preliminary and a permanent injunction barring defendants from any action to enforce or assign it." Compl. ¶ 59. Mr. Boster asserts that the lien is unenforceable because the Loan violates the West Virginia Residential Mortgage Lender, Broker, and Servicer Act ("RMLBSA"), W.Va. Code § 31-17-1, et seq., and because the reverse mortgage has been rescinded under the Truth in Lending Act, ("TILA"), see 15 U.S.C. § 1635.

         It is noted that the court, by ordered entered on defendants' motion to dismiss on March 30, 2018, dismissed two other grounds raised by plaintiff for Count I relief, consisting of the West Virginia Reverse Mortgage Enabling Act ("Reverse Mortgage Act"), W.Va. Code § 47-24-1, et seq., and the West Virginia Consumer Credit and Protection Act ("WVCCPA"), W.Va. Code § 46A-2-104 (a) . See Id; at ¶¶ 47-49, 53-55.

         Second, he asserts in Count II that defendants engaged in illegal debt collection acts in violation of provisions of the WVCCPA, W.Va. Code ...


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