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Perron v. J.P. Morgan Chase Bank, N.A.

United States Court of Appeals, Seventh Circuit

January 11, 2017

Stephen H. Perron and the United States Bankruptcy Trustee for the Southern District of Indiana on behalf of Christine M. Jackson, Plaintiffs-Appellants,
v.
J.P. Morgan Chase Bank, N.A., Defendant-Appellee.

          Argued January 11, 2016

         Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. l:12-cv-01853 - Tanya Walton Pratt, Judge.

          Before Easterbrook, Williams, and Sykes, Circuit Judges.

          Sykes, Circuit Judge.

         Stephen Perron and Christine Jackson owned their home in Indianapolis subject to a note and mortgage serviced by J.P. Morgan Chase Bank. In 2012 the couple divorced, ending their 25-year marriage. They blame Chase for contributing to the collapse of their marriage by failing to comply with its obligations under the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601-2617.

         RESPA requires mortgage servicers to correct account errors and disclose account information when a borrower sends a written request for information. In 2011 Perron and Jackson sent two such letters accusing Chase of erroneously paying the wrong homeowner's insurer using $1, 422 from their escrow account. The mistake was their own fault; they had switched insurers without telling Chase. When the bank learned of the change, it promptly paid the new insurer and informed the couple that their old insurer would send a refund check. The bank also told them to forward the refund check in order to replenish the depleted escrow.

         They didn't. When the refund came, they pocketed the money instead. So the bank adjusted their monthly mortgage payment to make up the shortfall. When the couple refused to pay the higher amount, the mortgage went into default. Instead of curing, they sent Chase two letters requesting information under RESPA and demanding that the bank reimburse their escrow. In response Chase sent a complete account history, including a detailed escrow statement.

         The couple then sued Chase claiming that its response was inadequate under RESPA and caused more than $300, 000 in damages-including the loss of their marriage. They tacked on a claim for breach of the implied covenant of good faith and fair dealing. The district judge entered summary judgment for Chase.

         We affirm. Chase's response almost perfectly complied with its RESPA duties. To the extent that any requested information was missing, Perron and Jackson suffered no actual damages and thus have no viable claim. Nor did Chase breach the duty of good faith and fair dealing, assuming that Indiana would recognize the implied covenant in this context.

         I. Background

         Perron and Jackson, a married couple, owned their home in Indianapolis subject to a 2003 note and mortgage. Chase became their loan servicer in 2005. Perron is a retired criminal investigator for the IRS; Jackson is an attorney who represents consumers fighting loan servicers. The dispute arises out of complications with the couple's mortgage. The story begins in 2009 with their failure to give Chase notice when they changed homeowner's insurers.

         Like many mortgage servicers, Chase had the responsibility of paying the couple's home-insurance premiums from their escrow account. In March 2009 Perron and Jackson changed their home-insurance provider from Allstate to Homesite Insurance without telling Chase. By that time, however, the bank had already paid Allstate's $1, 422 premium for that year. When the bank independently learned of the change, it promptly paid HomeSite's premium from the escrow account. Chase then sent the couple a letter explaining the situation and instructing them to remit the refund check from Allstate to replenish their escrow.

         Perron and Jackson received a refund check from Allstate but ignored Chase's instructions and deposited the money into a non-Chase account. This created an estimated escrow shortfall of $802.28 for the upcoming year.[1] To make up the deficiency, Chase notified the couple that their monthly mortgage payment would rise from $1, 432.15 to $1, 499.01 - an increase of $66.86 per month. The couple ignored this as well. From February 2010 to November 2010, they paid Chase only $1, 469.20 each month. (The amount is puzzling. It's lower than the 2010 required monthly payment yet higher than the 2009 monthly payments. Perron and Jackson haven't explained why they paid this sum.)

         In November 2010 Perron and Jackson reviewed their account information and decided that Chase had miscalculated their 2010 mortgage payments because of the "erroneous" escrow payment to Allstate in 2009-apparently forgetting that they had received and pocketed the refund check from Allstate despite Chase's instructions. To correct this "error, " they called Chase and said they would ...


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