Nationstar is Debtor’s mortgage lender. After a long history of dispute about Debtor’s mortgage, Debtor and Nationstar entered into a consent order that they thought would resolve all disputed issues. Under that order, Debtor agreed to pay his post-position arrearage in exchange for documentation about the loan’s history and status. Debtor now argues that Nationstar knowingly failed to comply with the order. Debtor requests compensatory and punitive damages and attorney’s fees as sanctions. Nationstar argues that it did comply and that its additional financial concessions sufficiently compensated Debtor for its delay.
Debtor filed his Chapter 13 bankruptcy petition on July 27, 2012. The Court confirmed Debtor’s Chapter 13 plan on November 20, 2012. Debtor’s plan provided, among other things, that Debtor would make ongoing post-petition mortgage payments of $1,286.00 outside the plan, directly to Nationstar.
On January 31, 2013, Debtor filed an Objection to Nationstar’s proof of claim. It listed the installment payment amount as $912.76 along with a number of additional items. Debtor objected to almost everything in Nationstar’s proof of claim, except the monthly payment amount of $912.76.
The Court held an evidentiary hearing on the objection. The Court issued a ruling holding that the confirmation order probably bound Nationstar, but granted Debtor’s objection to the claim nevertheless. The Court found, “None of the testimony or documents in the record sufficiently substantiates the amounts set out in the Proof of Claim.” Id. The Court ordered, “Nationstar’s allowed claim is $3,791.00 as an arrearage claim and $109,218.00 as a secured claim.” The Court did not make any finding about the proper monthly payment amount.
Debtor received a discharge on September 18, 2013. On September 20, 2013, the Chapter 13 Trustee, Carol Dunbar, filed her Notice of Final Cure Payment. She stated that Debtor had paid the $3,791.00 prepetition arrearage claim. Nationstar filed a response. It agreed that Debtor had paid the prepetition arrearage claim, but stated that Debtor was “post petition due for 3/01/13 thru 10/01/13 with payments each in the amount of $1,247.58 for a total of $9,980.64.”
On December 19, 2013, Debtor filed a motion to amend his plan, under which he had already completed plan payments, in response to Nationstar. Debtor’s modified plan set out $912.76—the amount he had been paying during his plan—as the monthly payment that he was to make to Nationstar during the plan. Debtor argued that his proper payment amount was $912.76 because that was the amount in Nationstar’s proof of claim.
Nationstar objected to Debtor’s motion to amend. It first argued that § 1329(a) barred Debtor from modifying his plan.1 It further argued that the proof of claim and supporting documents show that Debtor’s proper monthly payment amount should have been $1,255.98, not $912.76. Nationstar argued that this $1,255.98 amount includes a principle and interest component of $912.76 and an escrow payment of $343.22. Nationstar argued that, because Debtor had been making only the $912.76 principle and interest payment—not the $343.22 escrow payment—he was now delinquent on his post-petition payments.
One of the important and undisputed facts here is that, from February 2013 to April 2014, Debtor sent a letter to Nationstar with every monthly payment. Each letter asked for a payment schedule, notification if payments are due, and receipts for payments he had made. In every letter, Debtor noted that Nationstar had not responded to the requests he had made in previous letters. Debtor reiterated those requests each month. Nationstar cashed all the checks but never sent Debtor the requested information. It never informed him that his monthly payments were short $334.82 or that there was a shortfall in the escrow funds.
This all culminated in the filing of Debtor’s motion to amend and Nationstar’s objection. After those filings, the Court granted multiple continuances at the parties’ requests as they attempted to reach a settlement. On November 6, 2015, the parties informed the Court that they had reached a settlement. They submitted a proposed Consent Order on Motion to Amend Plan, which the Court entered on December 1, 2015 (“the Settlement Order”).
The Settlement Order provided, among other things, that Debtor would pay $7,207.62 to cure any post-petition mortgage arrearage. In exchange, the Order required Nationstar to provide Debtor with a statement showing how the funds were applied, the new principle balance, the new contractual due date, and an amortization schedule. Nationstar was to provide all of this within 30 days of the order. The order gave Debtor 21 days after that to approve or reject the statement that Nationstar provided. Both parties intended the Settlement Order to resolve the entire dispute. Nationstar would get the arrearage payment it thought it was owed and Debtor would get loan documentation and assurance about his current loan status.
Although Debtor agreed to pay $7,207.62 to cover the post-petition arrearage, Debtor did not actually think he owed this amount to Nationstar. Debtor believed the $912.76 monthly payments had been sufficient to pay Nationstar the full amount in its proof of claim. Debtor nevertheless agreed to pay $7,207.62 in order to get Nationstar to provide him clear information about the status of his loan. Debtor wanted certainty about his loan status, to resolve all disputes with Nationstar, to sell his home, and to move on with his life. Unfortunately, the Settlement Order did not provide him with the certainty he sought.
Nationstar did not provide the required documentation to Debtor within the 30-day deadline. On January 15, 2016 (16 days after the Settlement Order’s deadline), Nationstar’s counsel informed Debtor’s counsel that Nationstar was still adjusting the loan and it was “taking longer than expected.” Nationstar eventually agreed to waive the $7,207.62 payment due from Debtor under the Settlement Order “in exchange for additional time to complete the loan adjustment.” On January 19, 2016, Debtor agreed to “give Nationstar more time to adjust the loan in exchange for Debtor keeping the lump sum payment for the arrearage.”
The amortization schedule that Nationstar later provided to Debtor does not show that Nationstar actually waived the delinquency. Instead, it appears to show that Nationstar simply added additional payments to the back end of the loan. In essence, Nationstar did not waive the $7,207.62 payment, but simply deferred it to later in the loan payment schedule. This was not the agreement they had reached.
On February 24, 2016, Debtor’s counsel told Nationstar’s counsel that Nationstar had informed Debtor that “his loan modification was approved.” Debtor’s counsel asked if this modification was how Nationstar was going to adjust the loan. Nationstar’s counsel replied that he was guessing that that was the case but was not sure.
On March 3, 2016, Debtor’s counsel asked how much more time Nationstar needed to get the paperwork in order. On March 15, 2016, Debtor’s counsel asked for another update. That same day, Nationstar’s counsel replied that he would “get a hold of them today and get back to you either today or tomorrow to see where they are. I assure you I am on on top of it. I want the case over as well.” Later that day, Nationstar’s counsel informed Debtor’s counsel that for some reason Nationstar had stopped working on the loan modification discussed in the February 24 emails.