Tederick v. Loancare, LLC

CourtDistrict Court, E.D. Virginia
DecidedFebruary 24, 2025
Docket2:22-cv-00394
StatusUnknown

This text of Tederick v. Loancare, LLC (Tederick v. Loancare, LLC) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tederick v. Loancare, LLC, (E.D. Va. 2025).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Norfolk Division GARY TEDERICK and LISA TEDERICK, individually and on behalf of all others similarly situated, Plaintiffs, v. CIVIL ACTION NO. 2:22-cv-394 LOANCARE, LLC, Defendant. MEMORANDUM OPINION AND ORDER Before the Court is LoanCare, LLC’s (“LoanCare”) Motion for Summary Judgment and Memorandum in Support. ECF Nos. 74, 75. (“Def. Mot”) (“Mem. Supp.”). Plaintiffs Gary and Lisa Tederick (“the Tedericks”) oppose the Motion. ECF No. 90. (“Resp. Opp’n”). LoanCare replied. ECF No. 95. (“Reply”). Upon review, the Court finds that a hearing on this Motion is not necessary. See E.D. Va. Local Civ. R. 7(J). This matter is now ripe for judicial determination. For the reasons stated herein, LoanCare’s Motion for Summary Judgment is GRANTED. I. FACTUAL AND PROCEDURAL HISTORY On September 20, 2022, the Tedericks filed a Complaint seeking class action status and alleging that LoanCare violated fair debt collection provisions of the West Virginia Consumer Credit and Protection Act, W. Va. Code § 46A-2-122 et seg. (““WVCCPA” or “the Act”), benefited from unjust enrichment, and converted their funds. Compl., ECF No. 1. On January 27, 2023, LoanCare filed its first motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim and Federal Rule of Civil Procedure 12(b)(7) for failure to join necessary parties under Rule 19. ECF No. 15. On October 2, 2023, the Court granted LoanCare’s Rule 12(b)(6)

motion on the Tedericks’ fraud-based claims in Count I and their Unjust Enrichment claim in Count II. See Order, ECF No. 25 (“Order on First Motion to Dismiss”); see Tederick v. LoanCare, LLC, No. 2:22-cv-394, 2023 WL 6465404 (E.D. Va. Oct. 2, 2023). The Court dismissed those claims without prejudice and granted leave to amend. The Court denied LoanCare’s Federal Rule of Civil Procedure 12(b)(6) Motion on the Tedericks’ remaining statutory claims in Count I and their conversion claim in Count III. The Court also denied LoanCare’s Federal Rule of Civil Procedure 12(b)(7) motion. On October 25, 2023, the Tedericks filed a Second Amended Complaint. ECF No. 30 (“SAC”). On November 8, 2023, LoanCare filed a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6). ECF No. 31. The Tedericks responded in opposition on November 22, 2023. ECF No. 37. LoanCare replied on December 8, 2023. ECF No. 38. On March 21, 2024, the Court granted the Motion to Dismiss on Counts Two and Three of the Second Amended Complaint and denied the Motion on Count One. ECF No. 40. The Tedericks built their home in 2002 in Hedgesville, West Virginia. SAC {| 7. On March 4, 2004, they decided to refinance their home by taking out a loan from Mid-States Financial Group, Inc. using a Note backed by a Deed of Trust and held by the Federal National Mortgage Association (“Fannie Mae”). Jd. 7-9; SAC Ex. A at 1, ECF No. 30-2 (“Note”); SAC Ex. B, ECF No. 30-3 (“Deed of Trust”). The terms of the loan required the Tedericks to make scheduled monthly payments of $875.36 to the Note Holder beginning May |, 2004, with any remaining amounts owed in full on April 1, 2034. Note { 3. Interest was to be “charged on unpaid principal until the full amount of Principal has been paid.” Jd. 4 2. The Note states that “[eJach monthly payment will be applied as of its scheduled due date and will be applied to interest before Principal.” Jd. 43. The Tedericks were entitled to “make

payments of Principal at any time before they are due. A payment of Principal only is known as a ‘Prepayment.”” Jd. 4/4. But the Tedericks “[could] not designate a payment as a Prepayment if [they had] not made all the monthly payments due under the Note,” and they had to notify the lender in writing when making a Prepayment. /d. Upon receipt of a Prepayment, the Note Holder “will use [the] Prepayments to reduce the amount of Principal” owed. /d. The Note Holder is also authorized “to apply [a] Prepayment to the accrued and unpaid interest on the Prepayment amount before applying [the] Prepayment to reduce the Principal amount of the Note.” Jd. The Deed of Trust further specifies that “[v]oluntary prepayments shall be applied first to any prepayment charges and then as described in the Note.” Deed of Trust § 2; SAC 11. The Tedericks frequently made Prepayments during the life of the loan. SAC { 12. When making payments, the Tedericks often wrote one check containing their monthly payment amount and a Prepayment amount, specifying in the memo line that a Prepayment amount was included in the total. Jd. 13. According to the Second Amended Complaint, the loan accrued scheduled interest, meaning the Tedericks did not owe interest on the loan until the scheduled monthly payments were due. SAC { 15. The Note and Deed of Trust are contained on “Fannie Mae/Freddie Mac UNIFORM INSTRUMENTIS].” See generally Note; Deed of Trust. The Fannie Mae Servicing Guidelines (“Guidelines”) address the order in which a lender or servicer should apply scheduled monthly payments and Prepayments. SAC 16. Guideline F-1-09 provides that when a borrower includes

a Prepayment “with the scheduled monthly payment,” the loan servicer must “apply the scheduled monthly payment first, then apply the [Prepayment].”! Jd.; SAC Ex. C at 1-2, ECF No. 30-3. In

1 The Guidelines use the term “curtailment,” which the Tedericks equate to “prepayment” in their Second Amended Complaint. See SAC Ex. C at 1-2; SAC { 16. As indicated above, Guideline C-1.2.-01 also refers to an “additional principal payment” as a “principal curtailment.” SAC Ex. D at 7; see also SAC { 18.

contrast, when the borrower submits a Prepayment at “any other time of the month, separately,” the loan servicer must “apply the [Prepayment] first, then apply the next scheduled monthly payment.” SAC 416; SAC Ex. C at 1-2. Guideline C-1.1-01 instructs servicers to “[a]pply scheduled payments, including late charges (if applicable) in the order specified in the security instrument. Note: When multiple payments are received, each payment must be applied separately.” SAC Ex. D at 1, ECF No. 30-4; see SAC {| 17. Finally, Guideline C-1.2.-01 provides that “[t]he servicer must immediately accept and apply an additional principal payment (referred to as a principal curtailment) identified by the borrower as such for a current mortgage loan.” SAC q 18; SAC Ex. D at 7. The Tedericks allege these Guidelines mean that when a borrower makes a Prepayment any time before the due date of a scheduled monthly payment, the servicer must immediately apply the Prepayment to the unpaid principal. SAC {| 19. Between 2005 and 2020 the Tedericks made 180 payments containing both a scheduled monthly payment and a Prepayment (“combined payment”) before the monthly payment due date. Id. 20. For at least 152 of those payments, a servicer failed to apply the Prepayment and scheduled monthly payment in the correct order. Jd. 21. Instead, the servicer applied the scheduled monthly payment, then the Prepayment. /d. { 22. Around April 2019, LoanCare became the subservicer of the Tedericks’ mortgage loan and began accepting and applying their loan payments.” Jd. § 24. That month, the Tedericks contacted LoanCare to explain that previous servicers misapplied their Prepayments and to request that

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Bluebook (online)
Tederick v. Loancare, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tederick-v-loancare-llc-vaed-2025.