Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-01436/USCOURTS-azd-2_11-cv-01436-1/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1444 Petition for Removal- Foreclosure

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WO

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Kathi Ann Sharpe, 

Plaintiff, 

v. 

Select Portfolio Services, Inc., 

Defendant.

No. CV-2011-01436-PHX-GMS

ORDER 

 Pending before the Court is the Motion for Summary Judgment (Doc. 21) of 

Defendant Select Portfolio Servicing Incorporated (“Select”).1

 The Motion is fully 

briefed, and no party has requested oral argument. As it appears to the Court that transfer 

may be required, Select’s motion for summary judgment will not be addressed herein. 

I. Background 

 On March 25, 2002, Plaintiff Kathi Sharpe (“Plaintiff”) refinanced her home 

mortgage with Fremont Investment & Loan. (Doc. 22 ¶ 1; Doc. 25 ¶ 1). Plaintiff was 

informed by letter that effective October 1, 2002, servicing of the loan was transferred to 

Select. (Doc. 22 ¶ 2). Plaintiff went into default on the loan, and on May 23, 2002, 

Select noticed a trustee’s sale for August 28, 2003. (Id. at ¶ 15). On July 24, 2003, 

 

1

 At the time of the incidents giving rise to this litigation, Select Portfolio Services, 

Inc. went by the name of Fairbanks Capital Corporation. After settling two lawsuits, one a class action and one brought by the Federal Trade Commission (“FTC”) alleging various unfair business practices, it changed its name to Select Portfolio Services, Inc. 

For clarity, Defendant will be referred to as Select throughout this Order. 

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Plaintiff notified Select that she intended to rescind the loan because she was not 

provided with a signed and dated notice of her right to rescind pursuant to the Truth in 

Lending Act (“TILA”). 15 U.S.C. § 1635(f) (2006). (Doc. 22 ¶ 17; Doc. 25 ¶ 10). On 

September 4, 2003, Select cancelled the trustee’s sale to allow time to investigate 

Plaintiff’s rescission demand. (Doc. 22 ¶ 19). 

 In 2003 Select had been the defendant in a class action in the District Court of 

Massachusetts and a related enforcement action brought by the Federal Trade 

Commission (“FTC”) and the Department of Housing and Urban Development (“HUD”). 

(Doc. 1, Ex. 1 ¶ 14). The suits alleged that “[Select] has engaged in a pattern and practice 

of uniform nationwide unfair, unlawful and deceptive business practices in its Servicing 

of residential mortgage loans, and that [Select] has engaged in other conduct that 

breaches statutes, contracts, and common law.” (Doc. 6, Ex. 10 at 1). The alleged 

misconduct “resulted in substantial overpayment of fees and charges in connection with 

their mortgage loans, and has exacerbated delinquencies and caused unnecessary or 

illegal foreclosures.” (Id. at 2). Both suits were settled together by an agreement 

approved by the Massachusetts District Court. United States v. Fairbanks Capital Corp., 

No. 03-12219-DPW, 2004 WL 3322609 (D. Mass. May 12, 2004); Curry v. Fairbanks 

Capital Corp., No. 03-10895-DPW, 2004 WL 3322609 (D. Mass. May 12, 2004). The 

Settlement Agreement certified a class consisting of, among others, all persons whose 

loans were serviced by Select between January 1, 1999, and November 14, 2003, and 

whose loans were “in Default or treated as being in Default by [Select]” during that 

period. (Doc. 23-2. Ex. A at 62 § I(3)(a)(i)). The Settlement Agreement established a 

$40 million redress fund and substantial injunctive relief, including creating a “Default 

Resolution Program” and implementing specified “Operational Practices” designed to 

assist borrowers. (Id. at 60 ¶ L). The Default Resolution Program became effective June 

13, 2004, and the Operational Practices became effective July 1, 2004. (Doc. 22 ¶ 38). 

In its order approving the settlement, the court wrote, “the Court hereby retains exclusive 

jurisdiction of all matters relating to the interpretation, administration, implementation, 

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effectuation, termination (under the Settlement Agreement or otherwise) and enforcement 

of the Agreement and any orders entered in these cases.” Fairbanks, 2004 WL 3322609, 

at *5. The Settlement Agreement contains a section entitled “Reserved Claims and 

Defenses,” which excepts from release, “any claims or defenses that a Settlement Class 

Member asserts, affirmatively or defensively, with respect to [Select]’s Servicing in an 

effort to defeat any pending or future real estate foreclosure action (whether judicial or 

nonjudicial), including those related to the Servicing practices covered by this 

agreement.” (Doc. 23-2, Ex. A at 69-70 § I(31)(a)). 

 Plaintiff’s home was sold at a trustee’s sale on September 21, 2004. (Doc. 22 

¶ 45; Doc. 25 ¶ 29). 

 Plaintiff filed this suit in Maricopa County Superior Court. Select removed this 

matter to federal court based upon diversity jurisdiction. (Doc. 1). Plaintiff’s breach of 

contract cause of action is her only claim that survived the Court’s January 10, 2010, 

Order (Doc. 10), which dismissed Plaintiff’s other claims. 

II. Discussion

 The Court’s prior Order (Doc. 10) found that Plaintiff’s breach of contract cause 

of action was predicated upon Select’s failure to notify Plaintiff of her status as a class 

member, in addition to Select’s failure to abide by the terms of the Settlement 

Agreement. (Doc. 10 at 10-11). The Court noted that Select made “no effort to dispute” 

the allegation that it failed to provide Plaintiff notice of her class status. 

(Doc. 10 at 11). Due to the notice issue, the Court determined it was unclear whether the 

provisions of the Settlement Agreement retaining jurisdiction applied. (Doc. 10 at 10). 

 In its motion for summary judgment, Select now proffers evidence establishing 

that Plaintiff was mailed notice of her class status and of the preliminary settlement 

agreement on February 24, 2004. (Doc. 26 at 4; Doc. 23-2, Ex. C). Whether this notice 

is sufficient to establish that Select provided best notice practicable under the 

circumstances, so as to bind Plaintiff, is in fact a question relating to “the interpretation, 

administration, implementation, effectuation, . . . and enforcement of the Agreement.” 

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Fairbanks, 2004 WL 3322609. Similarly, whether Plaintiff may assert a claim under the 

Settlement Agreement is also a question concerning “the interpretation, administration, 

implementation, effectuation, . . . and enforcement of the Agreement.” Id. 

 Given the District of Massachusetts’s familiarity with and continuing jurisdiction 

over the matters that form the basis of Plaintiff’s surviving claim, the Court is inclined to 

find that transfer of the case to the District of Massachusetts is warranted. See Dowling v. 

Select Portfolio Servicing, Inc., 2007 WL 2815567, at *2, 5 (S.D. Ohio 2007) (granting 

plaintiff’s motion to dismiss in part because plaintiff wanted to challenge Select’s 

compliance with the Settlement Agreement, which “she can only do before the Curry 

court, given that court’s continuing jurisdiction over the Curry Settlement.”); see also 

Koehler v. Green, 358 F. Supp. 2d 346, 347 (S.D.N.Y. 2005) (transferring case to Eastern 

District of Missouri where the claim asserted arose out of a previous case that resulted in 

a settlement agreement, and the court that approved the settlement had retained 

jurisdiction over the case “for all matters relating thereto.”); Willoughby v. Potomac Elec. 

Power Co., 853 F. Supp. 174, 176 (D.Md. 1994) (transferring case to District of 

Columbia where the case was “tightly intertwined with the Consent Decree recently 

issued by the District of Columbia Court” and noting that “a district court that enters a 

consent decree and retains enforcement jurisdiction in all probability has exclusive 

jurisdiction over claims relating to it.”). See also Minn. Mining & Mfg. Co. v. Technical 

Tape Corp., 123 F. Supp. 497 (N.D. Ill. 1954) (“Section 1404(a) of Title 28 was designed 

to prevent duplicate trials of the same subject matter.”). Accordingly, 

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 IT IS HEREBY ORDERED that within 30 days of the filing date of this Order, 

the Parties must show cause why this action should not be transferred to the District of 

Massachusetts. 

 Dated this 17th day of December, 2012. 

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