Court Opinion

ID: 9866833
Source: CourtListenerOpinion
Date Created: 2023-09-26 14:00:44.807963+00
Date Added: 2024-06-11T07:41:46.122840
License: Public Domain

USCA11 Case: 22-12584   Document: 21-1      Date Filed: 09/26/2023   Page: 1 of 14

                                                   [DO NOT PUBLISH]
                                   In the
                 United States Court of Appeals
                        For the Eleventh Circuit

                         ____________________

                               No. 22-12584
                         Non-Argument Calendar
                         ____________________

        In re: MICHAEL D. LYNCH,
         CANDENCE B. LYNCH,
                                                                Debtors.
        ___________________________________________________
        MICHAEL D. LYNCH,
        CANDENCE B. LYNCH,
                                                    Plaintiﬀs-Appellants,
        versus
        OCWEN LOAN SERVICING, LLC,
        DEUTSCHE BANK NATIONAL TRUST COMPANY,
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        2                     Opinion of the Court                22-12584

                                                    Defendants-Appellees.

                            ____________________

                  Appeal from the United States District Court
                      for the Southern District of Florida
                     D.C. Docket No. 1:20-cv-22231-MGC
                           ____________________

        Before LAGOA, ABUDU, and ANDERSON, Circuit Judges.
        PER CURIAM:
                Michael and Candence Lynch (“the Lynches”) appeal the
        district court’s affirmance of a bankruptcy court’s grant of sum-
        mary judgment in favor of the appellees in an adversary proceeding
        they filed against a loan servicer. GMAC Mortgage LLC
        (“GMACM”) originally serviced the loan, before transferring it to
        Ocwen Loan Servicing, LLC (“Ocwen”).
               On appeal, the Lynches argue that the bankruptcy court im-
        properly denied their motion to stay, and that the district court
        erred in granting summary judgment in favor of the appellees on
        two counts. For the reasons outlined below, we affirm.
            I.    FACTUAL BACKGROUND & PROCEDURAL
                  HISTORY
                  A. The Mortgage
               In 2004, the Lynches purchased a residential property in Mi-
        ami, Florida (the “Property”), which they ﬁnanced with a mortgage
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        22-12584              Opinion of the Court                        3

        from New Century Mortgage Corporation (“New Century”), as
        evidenced by a promissory note (the “Note”). The Note was se-
        cured by the mortgage, through which the Lynches conveyed to
        New Century an interest in the Property. Shortly thereafter, New
        Century transferred the mortgage to GMACM and, in 2007, New
        Century ﬁled for Chapter 11 bankruptcy.
               The mortgage contained a provision waiving the necessity
        of creating and maintaining an escrow account. It stated that, in
        the event of such waiver, GMACM could revoke the waiver at any
        time so long as GMACM gave the Lynches notice and that, upon
        such revocation, the Lynches would be required to reimburse
        GMACM the amounts it expended on the Lynches’ behalf. The
        mortgage also stated that, should the Lynches fail to perform the
        covenants and agreements set forth in the mortgage and corre-
        sponding documents, GMACM could do and pay for whatever was
        reasonable and appropriate to protect its interests in the Property.
        Moreover, the mortgage explained that any forbearance by
        GMACM in exercising its rights or remedies would not constitute
        a waiver of its rights or remedies.
               Mr. Lynch signed a document containing a waiver of an es-
        crow account, which warned the couple that if they were delin-
        quent in paying their hazard insurance premiums, GMACM could
        require them to pay impounds. Mr. Lynch also signed another doc-
        ument which warned that, if GMACM did not receive valid proof
        of insurance, a hazard insurance policy would be forcibly placed on
        the property.
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        4                      Opinion of the Court                22-12584

               Notwithstanding these provisions, the Lynches failed to pro-
        vide evidence of insurance coverage on the Property on three sep-
        arate occasions. In each instance, GMACM, after giving the
        Lynches notice of their insurance coverage delinquencies, obtained
        lender placed insurance (“LPI”) on the Property. In the ﬁrst two
        instances, GMACM obtained LPI, but ultimately cancelled the pre-
        mium without requiring payment from the Lynches after the
        Lynches provided proof of insurance.
               On the third instance, in 2011, GMACM sent the Lynches
        two notices informing them that if GMACM did not receive proof
        of hazard insurance on the Property, GMACM would create an es-
        crow account and use those funds to purchase LPI and the Lynches
        would ultimately have to cover the LPI costs. Although GMACM
        gave the Lynches a total of 93 days to provide proof of hazard in-
        surance on the Property, the Lynches failed to provide such proof,
        prompting GMACM to obtain LPI on the Property and establish an
        escrow account. Approximately 43 days after GMACM purchased
        LPI for the Property, the Lynches provided proof of insurance and
        GMACM canceled the LPI. Notwithstanding the LPI cancellation,
        the Lynches still had an escrow shortage of over $600.
              Then, in July 2012, the Lynches ﬁled a pro se petition for
        Chapter 7 bankruptcy relief in the Southern District of Florida’s
        bankruptcy court. In their initial bankruptcy ﬁlings, they listed the
        Property as an asset and identiﬁed GMACM as the primary lender.
        In August 2013, the Lynches declared their intent to remain on the
        Property and to maintain the mortgage.
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        22-12584               Opinion of the Court                        5

                   B. Adversary Complaints & Appeals
               In September 2013, the Lynches ﬁled their ﬁrst adversary
        complaint against GMACM, Ocwen, and Deutsche Bank National
        Trust Co. (“Deutsche Bank”), as Trustees for certain New Century
        assets (collectively, “the appellees”). In their complaint, they con-
        tended that GMACM erroneously claimed on several occasions
        that the Lynches had not provided proof of hazard insurance for
        the Property, as the mortgage required, and that GMACM’s contin-
        ued obtainment of LPI interfered with their right to pay their in-
        surance premium without an escrow account.
              In their ﬁrst adversary complaint, the Lynches noted that
        they had jointly ﬁled for Chapter 7 bankruptcy in 2012, but
        GMACM did not ﬁle a claim or objection and, in February 2013,
        GMACM transferred the servicing rights to their loan to Ocwen.
        Then, Ocwen attempted to collect on a debt related to the preced-
        ing, which the bankruptcy court had already discharged.
               Overall, as relevant to the current appeal, the Lynches as-
        serted two counts challenging GMACM’s revocation of the mort-
        gage’s escrow waiver provision. In Count 1, the Lynches argued
        that GMACM and Ocwen committed “Mortgage Servicing
        Abuse,” and in Count 2, they alleged that they were entitled to a
        waiver of the escrow account requirement and that GMACM
        breached their agreement.
              Before the bankruptcy court could resolve the ﬁrst adversar-
        ial complaint, the Lynches ﬁled a second adversary proceeding
        against the appellees which challenged the overall enforceability of
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        6                      Opinion of the Court                22-12584

        the Note. The appellees moved for summary judgment on the
        Lynches’ claims in the second adversary proceeding, which the
        bankruptcy court granted in June 2017. The Lynches administra-
        tively appealed, and the district court aﬃrmed in November 2017.
        The Lynches then appealed to this Court, where we aﬃrmed the
        bankruptcy court’s ruling. Lynch v. Deutsche Bank Nat’l Trust Co. (In
        re Lynch), 755 F. App’x 920 (11th Cir. 2018) (unpublished).
                  C. Summary Judgment & Motion to Stay in the First
                     Adversarial Proceeding
                Once the proceedings on the second adversarial complaint
        concluded, in 2019, the appellees moved for summary judgment as
        to the Lynches’ remaining two claims in their ﬁrst adversary pro-
        ceeding arguing, as relevant here, that GMACM had the right to
        create an escrow account on the loan after the Lynches repeatedly
        failed to provide evidence of insurance coverage.
               In support of their motion, the appellees attached an aﬃda-
        vit from Richard Schwiner, a Senior Loan Analyst for Ocwen.
        Schwiner stated that he was among the individuals who had cus-
        tody and control of Ocwen’s business records regarding the
        Lynches’ loan. He stated that the records had been made “at or
        near the time of the events underlying the subject indebtedness,
        and recorded by a person with knowledge of the events and
        charged with the responsibility of recording such events” and were
        “kept in the ordinary course of Ocwen’s regularly conducted busi-
        ness activities.” Schwiner attested that the aﬃdavit was given
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        22-12584              Opinion of the Court                       7

        based on his personal knowledge and after a review of the business
        records.
               The Lynches did not immediately oppose the appellees’ mo-
        tion for summary judgment. Instead, on the date upon which dis-
        positive motions were due, the Lynches moved to stay the disposi-
        tive motion deadline and pretrial conference for 15 months. In sup-
        port, they stated that they intended to move the bankruptcy court
        in Delaware to reopen New Century’s 2007 Chapter 11 case. They
        claimed that they intended to ﬁle an adversary complaint in that
        case to challenge the validity and enforceability of the Note and
        documents that the bankruptcy court had rejected in their second
        adversary proceeding. The appellees opposed the Lynches’ mo-
        tion.
               Following a hearing on the motion for summary judgment
        and the motion to stay, the bankruptcy court denied the motion to
        stay. Then, in May 2020, the bankruptcy court granted summary
        judgment in favor of the appellees on the remaining counts of the
        Lynches’ ﬁrst adversary complaint, relying in part on the Schwiner
        aﬃdavit and records attached to the motion. The bankruptcy court
        entered an order to this eﬀect in May 2020, and the Lynches timely
        appealed to the district court.
               Before the district court, the Lynches argued that the bank-
        ruptcy court erred in granting summary judgment in favor of
        GMACM. They asserted, for the ﬁrst time, that the Schwiner aﬃ-
        davit constituted inadmissible hearsay. With respect to the stay,
        they argued that the bankruptcy court’s denial deprived them of
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        8                       Opinion of the Court                  22-12584

        their rights to due process and equal protection because they lacked
        resources to simultaneously proceed in two diﬀerent courts.
                The district court found the aﬃdavit admissible and aﬃrmed
        the grant of summary judgment in favor of the appellees. How-
        ever, the court ruled that it lacked jurisdiction to consider the bank-
        ruptcy court’s denial of the motion to stay because the Lynches’
        appeal of that order was untimely. The Lynches ﬁled a motion for
        reconsideration arguing, for the ﬁrst time, that the appellees
        breached an implied covenant of good faith and fair dealing. They
        did not, however, challenge the bankruptcy court’s denial of their
        motion for a stay. The district court denied the Lynches’ motion
        for reconsideration, and the Lynches now appeal that lower court
        decision.
            II.   DISCUSSION
               We liberally read briefs ﬁled by pro se litigants. Timon v.
        Sampson, 518 F.3d 870, 874 (11th Cir. 2008). Moreover, we may af-
        ﬁrm on any ground supported by the record, regardless of the
        ground stated in the district court’s order or judgment. In re Beland,
        989 F.3d 919, 922 (11th Cir. 2021).
                  A. Motion to Stay
              On appeal, the Lynches maintain that the bankruptcy court
        abused its discretion in denying their motion for a stay.
                As noted, we may aﬃrm the district court’s decision “for any
        reason supported by the record, even if not relied upon by the dis-
        trict court[.]” Worthy v. City of Phenix City, 930 F.3d 1206, 1216 (11th
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        22-12584                Opinion of the Court                          9

        Cir. 2019) (quoting Allen v. USAA Cas. Ins. Co., 790 F.3d 1274, 1278
        (11th Cir. 2015)). This is true even in circumstances when the dis-
        trict court dismisses an issue on jurisdictional grounds as opposed
        to on the merits. See id. at 1216-17 (holding that, although the dis-
        trict court erred in concluding that the appellants lacked standing,
        aﬃrmance was still appropriate because it was supported by the
        record). Indeed, the “prevailing party is entitled to defend its judg-
        ment on any ground preserved in the district court[.]” Id. at 1216
        (quoting Molina v. Aurora Loan Servs., LLC, 635 F. App’x 618, 623
        (11th Cir. 2015) (unpublished) (holding that the district court erred
        in dismissing a claim for lack of subject-matter jurisdiction, but
        nevertheless aﬃrming the dismissal because it was supported by
        the record)).
               “We review de novo questions concerning the jurisdiction of
        the district court.” United States v. Oliver, 148 F.3d 1274, 1275 (11th
        Cir. 1998). Whether a notice appealing a bankruptcy court's order
        is timely presents a jurisdictional question. In re Ocean Warrior, Inc.,
        835 F.3d 1310, 1318 (11th Cir. 2016). An appeal from a ﬁnal judg-
        ment presents for review all preceding non-ﬁnal orders that pro-
        duced it. Barﬁeld v. Brierton, 883 F.2d 923, 930-31 (11th Cir. 1989).
        Generally, a ﬁnal order is one that ends the litigation on the merits,
        leaving nothing to be done but to execute the judgment. Barben v.
        Donovan (In re Donovan), 532 F.3d 1134, 1136 (11th Cir. 2008).
                Where a court stays proceedings on its own docket, such ac-
        tion is under the court’s inherent powers to regulate the admin-
        istration of its own business. Castanho v. Jackson Marines, Inc., 650
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        10                     Opinion of the Court                  22-12584

        F.2d 546, 548 (5th Cir. Unit A June 1981); see also Landis v. N. Am.
        Water Works & Elec. Co., 299 U.S. 248, 254 (1936) (“[T]he power to
        stay proceedings is incidental to the power inherent in every court
        to control the disposition of the causes on its docket[.]”). We re-
        view a lower court’s exercise of its discretionary authority to stay
        proceedings before it for an abuse of discretion. CTI-Container Leas-
        ing Corp. v. Uiterwyk Corp., 685 F.2d 1284, 1288 (11th Cir. 1982). This
        standard of review is highly deferential and extremely limited, and
        an abuse of discretion may only be found when the bankruptcy
        court fails to apply the proper legal standard or fails to follow
        proper procedures in making its determinations. Law Sol. of Chi.
        LLC v. Corbett, 971 F.3d 1299, 1304-05 (11th Cir. 2020).
                Here, the district court erred in concluding that it lacked ju-
        risdiction to review the bankruptcy court’s denial of the Lynches’
        motion to stay the proceedings. The denial of the motion to stay
        did not end the litigation on the merits. Instead, the bankruptcy
        court did not enter its ﬁnal order until after it granted summary
        judgment in favor of the appellees. Thus, the Lynches’ appeal from
        the ﬁnal judgment brought up for review all preceding non-ﬁnal
        orders that produced it, including the motion to stay. Barﬁeld, 883
        F.2d at 930-31.
               The Lynches sought to stay the proceedings before the bank-
        ruptcy court because they intended to belatedly challenge, yet
        again, an unfavorable bankruptcy court decision that the district
        court and this Court have already aﬃrmed. See In re Lynch, 755 F.
        App’x at 926. The bankruptcy court acted within its inherent
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        22-12584                Opinion of the Court                           11

        discretionary authority when it denied the motion. Thus, the bank-
        ruptcy court did not abuse its discretion in denying the stay. Law
        Sol. of Chi. LLC, 971 F.3d at 1304-05. As such, we aﬃrm on this
        issue.
                   B. Motion for Summary Judgment
               The Lynches also argue that the bankruptcy court erred in
        granting the appellees’ motion for summary judgment on Counts
        1 and 2. They contend that the bankruptcy court erroneously re-
        lied on the Schwiner aﬃdavit because it was not a properly authen-
        ticated business record and, thus, constituted inadmissible hearsay.
        They also argue that they adequately pled a claim for breach of the
        implied covenant of good faith and fair dealing, and assert that
        GMACM breached the contract ﬁrst, and therefore waived its right
        to revoke the escrow waiver provision.
                We, as a second court of review of a bankruptcy court’s de-
        cisions, independently examine that court’s factual and legal deter-
        minations, applying the same standards of review as the district
        court. In re Int’l Admin. Serv., Inc., 408 F.3d 689, 698 (11th Cir. 2005).
        Where the district court has made no factual ﬁndings in its function
        as an appellate court, our review is de novo. Id. We review de novo
        any determinations of law and review the bankruptcy court’s fac-
        tual ﬁndings for clear error. Id. Nevertheless, neither we nor the
        district court may make independent factual ﬁndings. Law Sol. of
        Chi. LLC, 971 F.3d at 1304. Importantly, we generally decline to
        review issues on appeal that a party did not ﬁrst raise with the
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        12                     Opinion of the Court                 22-12584

        bankruptcy court. Ala. Dep’t of Econ. & Cmty. Aﬀs. v. Ball Healthcare-
        Dallas, LLC (In re Lett), 632 F.3d 1216, 1226 (11th Cir. 2011).
               Summary judgment is appropriate when the evidence,
        viewed in the light most favorable to the nonmoving party, presents
        no genuine issue of material fact and compels judgment as a matter
        of law. Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317,
        322-23 (1986). The Federal Rules of Bankruptcy Procedure incor-
        porate by reference the summary judgment standard from the
        rules of civil procedure and apply that same standard in adversary
        proceedings. Fed. R. Bankr. P. 7056.
                A statement that is otherwise inadmissible hearsay is admis-
        sible as a business record if it is a record of an event and: (1) was
        made at or near the time of the event by someone with knowledge;
        (2) was kept in the course of a regularly conducted business activ-
        ity; (3) making the record was a regular practice of that activity;
        and (4) those conditions are shown by the testimony of the custo-
        dian of the records or another qualiﬁed witness. Fed. R. Evid.
        803(6). The “qualiﬁed witness” need not himself have prepared the
        documents, “so long as other circumstantial evidence and testi-
        mony suggest their trustworthiness.” Itel Cap. Corp. v. Cups Coal Co.,
        707 F.2d 1253, 1259 (11th Cir. 1983). Reliability is the “touchstone
        of admissibility” under Rule 803(6) and the district court has “broad
        discretion” to admit evidence under this rule. United States v.
        Arias-Izquierdo, 449 F.3d 1168, 1183 (11th Cir. 2006) (quoting United
        States v. Bueno-Sierra, 99 F.3d 375, 378-79 (11th Cir. 1996)).
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        22-12584              Opinion of the Court                       13

               Florida law recognizes an implied covenant of good faith
        and fair dealing in every contract. Burger King Corp. v. Weaver, 169
        F.3d 1310, 1315 (11th Cir. 1999); QBE Ins. Corp. v. Chalfonte Condo.
        Apartment Ass’n, Inc., 94 So. 3d 541, 548 (Fla. 2012). The implied
        covenant is intended to protect “the reasonable expectations of the
        contracting parties in light of their express agreement.” QBE Ins.
        Corp., 94 So. 3d at 548 (quoting Barnes v. Burger King Corp., 932 F.
        Supp. 1420, 1438 (S.D. Fla. 1996)). However, an exception exists
        where application of the covenant would contravene the express
        terms of the agreement. Id. Further, under Florida law, a material
        breach excuses a party from performance of the contract, although
        the injured party may waive the breach. MDS (Canada) Inc. v. Rad
        Source Techs., Inc., 720 F.3d 833, 852 (11th Cir. 2013).
                Here, as an initial matter, the issues of whether Schwiner’s
        aﬃdavit contained inadmissible hearsay, GMACM violated the im-
        plied covenant of good faith and fair dealing, and GMACM waived
        its right to revoke the escrow waiver, are not properly before us
        because the Lynches failed to raise these arguments before the
        bankruptcy court. In re Lett, 632 F.3d at 1226.
                Nevertheless, considering the Lynches’ pro se status and be-
        cause our general rule barring review is non-jurisdictional, we will
        review these claims on the merits. First, the bankruptcy court did
        not clearly err in relying on Schwiner’s aﬃdavit because Schwiner
        properly authenticated the business records upon which he relied.
        Itel Cap. Corp., 707 F.2d at 1259; see also Fed. R. Evid. 803(6).
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        14                     Opinion of the Court                22-12584

               Second, the Lynches’ argument related to the implied cove-
        nant of good faith and fair dealing fails because the plain language
        of the mortgage gave GMACM the discretion to grant the Lynches
        a waiver of the requirement to pay into an escrow account, and it
        allowed GMACM to revoke the waiver at any time subject to a no-
        tice requirement. Thus, to adopt the Lynches’ argument would
        improperly override the express contractual provision for revoca-
        tion of the escrow waiver. QBE Ins. Corp., 94 So. 3d at 548.
                Finally, the Lynches’ argument that GMACM waived the
        right to require the creation of an escrow account is meritless.
        Their reliance on the ﬁrst breach rule is misplaced as there is no
        indication that GMACM ever ceased performance under the con-
        tract, let alone that any breach was material. MDS (Canada) Inc.,
        720 F.3d at 852. Further, the record does not support a ﬁnding that
        GMACM waived its right to revoke the escrow waiver provision as
        it repeatedly sent the Lynches notices about their failure to provide
        insurance. This conclusion is also supported by the mortgage’s
        plain language, which provided that any forbearance by GMACM
        in exercising its rights would not be considered a waiver of such
        rights. Accordingly, we aﬃrm as to the district court’s grant of
        summary judgment.
             III.   CONCLUSION
             Based on the foregoing, the district court’s rulings are
        AFFIRMED.