Cappellini v. Mellon Mortgage Co.

991 F. Supp. 31
CourtDistrict Court, D. Massachusetts
DecidedJanuary 15, 1998
DocketCivil Action 96-CV11413-DPW
StatusPublished
Cited by12 cases

This text of 991 F. Supp. 31 (Cappellini v. Mellon Mortgage Co.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cappellini v. Mellon Mortgage Co., 991 F. Supp. 31 (D. Mass. 1998).

Opinion

MEMORANDUM

WOODLOCK, District Judge.

The advent of various forms of electronic technology has provided a range of opportunities to increase office efficiency and profitability. One parallel development has been the tendency of service providers to shift the costs of their office operations to others by means of user fees associated with the new technology.

In this ease an individual, seeking to refinance the house he owns jointly with his wife, paid fees totaling $40 dollars for facsimile reproductions of payoff reports from the servicing company for their prior mortgage. The charges were passed through to him by the closing attorney, selected by the new lender, who ordered the reports. This litigation involved a challenge to the imposition by the servicing company of fees of that type.

By a Memorandum and Order entered October 27, 1997, I disposed of cross motions for summary judgment seeking to determine at the threshold of this litigation the propriety of such fees. I had framed the threshold issues, by means of scheduling orders, as whether a payoff report fee is either 1) a prepayment charge, expressly prohibited by the note, or 2) a charge not expressly authorized by either the note or the mortgage and therefore not permitted.

I found that, while the charges evidence a degree of low-grade avarice 1 on the part of the servicing company in the nickel and dim-ing of consumers, 2 as a general proposition the fees at issue here are neither illegal nor in breach of contract. The manner, of the *34 imposition of these charges on the named plaintiff individually, however, raised a genuine issue of material fact preventing the full grant of defendant’s motion for summary judgment. Nevertheless, because the remaining amount in controversy — $40—creat-ed a question about continuing federal jurisdiction of this matter, I invited the parties to brief whether the case should continue to be litigated in federal court. When the defendant thereupon moved to dismiss the case, the plaintiff did not oppose and after further hearing I allowed the motion to dismiss, finding no viable federal jurisdiction for the dispute after resolution of the threshold issues. 3 This Memorandum, a revised and expanded version of that issued on October 27, 1997, is designed to provide a full explication of the disposition of the case in this Court.

I. BACKGROUND

A. The Mortgage and the Note

On September 23, 1994, the plaintiff, Christopher Cappellini, and his wife Traci obtained a mortgage loan from Equity One Mortgage, Inc. Equity One then immediately sold the Note and Mortgage to the Huntington Mortgage Company. Huntington sold the. Note and Mortgage to the defendant, Mellon Mortgage Company, on March 2, 1995.

The Note was written on a standard Federal National Mortgage Association (“FNMA”)/Federal Home Loan Mortgage Corporation (“FHLMC”) form. Paragraph 4 of the form Note, entitled Borrower’s Right to Prepay, states:

I have the right to make payments of principal at any time before they are due. A payment of principal only is known as a “prepayment.” When I make a prepayment, I will tell the Note Holder in writing that I am doing so.
I may make a full prepayment or partial prepayments without paying any prepayment charge. The Note Holder will use all of my prepayments to reduce the amount of principal that I owe under the Note. If I make a partial prepayment, there will be no changes in the due date or in the amount of my monthly payment unless the Note Holder agrees in writing to those changes.

(emphasis added.)

The Mortgage is also on a standard. FNMA/FHLMC form and contains language *35 authorizing certain charges. For example, Paragraph 4 of the Mortgage, entitled Charges; Liens, states in part:

Borrower shall pay all taxes, assessments, charges, fines and impositions attributable to the property which may attain priority over this Security Instrument, and leasehold payments or ground rents, if any.

Other charges or fees for which the borrower is responsible and which are specifically referenced in the Mortgage include obligations to pay principal and interest in accordance with the Note, to pay late charges, to pay tax and insurance escrows, to pay charges related to outstanding security interests on the property, to pay for hazard insurance on the property, to pay for repair and maintenance of the property, to pay for mortgage insurance, to pay for condemnation or taking of the property, and to pay all costs of recordation of the discharge releasing the mortgage. In addition, Paragraph 22"of the Mortgage contains a provision which states:

Upon payment of all sums secured by this Security Instrument, Lender shall discharge this Security Instrument without charge to Borrower. Borrower shall pay any recordation costs.

B. The Refinancing

In 1996, the Cappellinis decided to refinance the Mellon Loan with a new lender. James Paolino was the closing attorney for the new lender. The Cappellinis provided Paolino, through the new lender, with the loan number and related information in order to obtain payoff numbers from Mellon.

On March 1, 1996, five days before the scheduled closing on the new loan, Donna Medeiros, an employee in Paolino’s office called Mellon and ordered a faxed payoff statement from Mellon’s Voice Response Unit (“VRU”). On March 5, 1996, another faxed payoff statement was ordered from Mellon’s VRU by Medeiros. Mellon faxed the requested payoff statements to Paolino’s office.

Mellon charged the Cappellinis a $15 “fax fee” and a $25 “duplicate statement fee” for these services. These fees appeared on the March 5,1996 payoff statement as a “fax fee” and a “statement fee.” These fees are not among those charges specifically enumerated in the Note or Mortgage.

Before the closirlg, but after he had seen the March 5, 1996 statement including the fax and statement fees, Cappellini called the Mellon customer service number. Cappellini inquired about these fees and was told that the fees “were charged by Mellon Mortgage for the purposes of obtaining this information to make a payoff.” Cappellini never asked Mellon to waive or remove these fees.

After the closing on the new loan, the Cappellinis paid Mellon the full balance of principal and interest due on their loan, as well as the $15 fax fee and the $25 duplicate statement fee.

C. Mellon Policies

Mellon services residential mortgage loans throughout the country. Mellon has servicing centers in Denver, Colorado, Houston, Texas and Overland Park, Kansas. The Cappellin-is’ mortgage was serviced out of the Houston center.

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Cite This Page — Counsel Stack

Bluebook (online)
991 F. Supp. 31, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cappellini-v-mellon-mortgage-co-mad-1998.