PHH Mortgage Corporation v. Joseph Scott Stuber, et al.

Summary

The United States District Court for the District of Kansas denied PHH Mortgage Corporation’s motion for summary judgment in its foreclosure action against Joseph Scott Stuber. The court found that evidence regarding the alleged misapplication of mortgage payments to an escrow account could allow a reasonable factfinder to conclude that the lender’s predecessor induced Stuber’s breach. The court also denied Stuber’s motion for reconsideration and rejected PHH’s issue-preclusion argument based on a prior bankruptcy proceeding.

Holdings

1. Summary judgment was inappropriate because a rational factfinder could conclude that Ocwen improperly applied Stuber's mortgage payments to escrow, causing or inducing his contractual breach.
2. PHH failed to establish issue preclusion because it did not show that the bankruptcy proceeding decided the identical improperly-applied-payments issue or finally adjudicated that issue on the merits.
3. PHH was not entitled to summary judgment against the remaining defendants because it had not demonstrated proper service or due diligence supporting service by publication.
4. The motion for reconsideration was untimely under Rule 54(b) and D. Kan. Rule 7.3, and Rule 60(b) was unavailable because no final, appealable judgment had been entered.
5. Even if timely, Stuber's motion failed on the merits because he did not show clear error or manifest injustice; the counterclaim pleaded a Kansas Consumer Protection Act claim subject to a three-year limitations period.

Questions Presented

1. Whether PHH was entitled to summary judgment on its foreclosure and breach-of-contract claim when the record supported a reasonable inference that PHH's predecessor misapplied Stuber's mortgage payments and thereby caused or induced the alleged breach.
2. Whether Stuber's defense based on allegedly misapplied payments was barred by issue preclusion based on a prior bankruptcy proceeding.
3. Whether PHH was entitled to summary judgment against the remaining defendants when it had not shown due diligence supporting service by publication.
4. Whether Stuber was entitled to reconsideration of the prior dismissal of his counterclaim under Federal Rules of Civil Procedure 54(b) or 60(b) and D. Kan. Rule 7.3.

Disposition

other