For the third straight year, Allen Smith was selected by the publishers of Texas Monthly magazine as one of its SuperLawyers. According to the publisher, “Our objective with SuperLawyers is to create a credible, comprehensive, and diverse listing of outstanding attorneys.” The selection process began several months ago, when over 60,000 Texas lawyers were invited to participate in the nomination process. Lawyers were asked to nominate the best attorney they’ve personally observed in action. Once all of the nominations were in, a specialized research department examined the background and experience of the candidates, evaluating 12 separate indicators of peer recognition and professional achievement. Evaluations were based upon information gathered from a variety of sources. Allen’s name can be found on pages 59 and 94 of the 2009 Texas SuperLawyers magazine, and on pages 56 and 70 of the Texas SuperLawyer supplement to the October issue of Texas Monthly magazine, which have recently hit the newsstands. Allen Smith is a shareholder at SettlePou and Chair of its Commercial Litigation practice group. He has been practicing law for 25 years, and has been Board Certified in Commercial Trial Law by the Texas Board of Legal Specialization for over 17 of those years.
Rule 167 of the Texas Rules of Civil Procedure, titled "Offer of Settlement; Award of Litigation Costs," went into effect on January 1, 2004, and is still considered to be a new procedure in Texas. The general premise of the rule is to encourage early settlements by minimizing risks to the party making the offer, and increasing risks to the offeree. Specifically, certain litigation costs may be awarded against a party who rejects an offer to settle a claim for monetary damages, provided the offer is made pursuant to the procedure outlined in the rule. The rule applies to the settlement of monetary claims, including counterclaims, crossclaims, and third party claims, but it does not apply in certain types of cases, including, among others, class actions, shareholder's derivative suits, and actions brought by or against State or units of state government.
Before the rule can be utilized, a defendant must invoke the procedure by filing a declaration with the court. Once this is done, both the plaintiff and defendant are able to make offers pursuant to the rule. Making an offer "pursuant to the rule" simply means the party must follow the steps set forth in the rule itself. Specifically, the offer must: (1) be made in writing; (2) state it is being made pursuant to the rule; (3) identify who is making the offer and to whom it is made; (4) state the specific terms of the offer; and (5)
include a deadline to accept the offer. Additionally, the offer must be served on all parties to whom it is being made. Acceptance of an offer made pursuant to the rule must be made in writing. The offer must be made at least 14 days before the case is set for trial and the acceptance deadline must be at least 14 days after the offer is served. Due to certain aspects of this Rule, it is probably in the best interests of the Defendant to consider invocation of this rule as early as possible in this case.
If an offer is rejected and the case proceeds to trial, then depending on the outcome, the party to whom the Rule 167 offer is made could potentially be liable for the offeror's litigation costs. Specifically, if a judgment at trial is "significantly less favorable" to the offeree than the Rule 167 offer was, the court must award the party that made the offer its litigation costs against the offeree from the time the offer was rejected until the time of judgment. Thus, in the right situation, Rule 167 can be a helpful procedure in encouraging litigants to determine their interests and settlement options early on in a case. However, it may not be the best approach for every defendant in a lawsuit, so you should consult with trial counsel on whether to consider this litigation strategy.
By J. Allen Smith and Katherine L. Killingsworth
“Dear Servicer, Please provide all documents concerning the Loan, as required by RESPA. Sincerely, Borrower”
With the increase in residential mortgage defaults across the United States, mortgage servicers have also seen a rise in what is being termed a “qualified written request” (“QWR”) under the Real Estate Settlement Procedures Act (“RESPA”) from borrowers. Many of these alleged QWRs read like the title of this article, request voluminous documents, and cost servicers valuable time and resources to answer. When reviewing these purported QWRs, servicers should take a closer look to determine whether they actually qualify as such under RESPA.
Under 12 U.S.C. § 2605(e), a QWR means “a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that — (i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and (ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding the other information sought be the borrower.” Servicers must acknowledge receipt of the QWR within twenty business days of receipt by written response and take action on the inquiry, if necessary, within sixty business days of receipt of the QWR. Violating these provisions can result in liability for the borrower’s
actual damages and costs, including attorneys’ fees. 12 U.S.C. § 2605(f). An additional $1,000.00 can be awarded to the borrower if a pattern or practice of non-compliance with these requirements is found. Id.
Generally, it is relatively simple for servicers to investigate specific allegations of servicing errors and answer the same in an economic fashion and within the given time frames set by RESPA. However, some borrowers have latched onto the language “regarding other information sought by the borrower” at the end of Section 2605(e) and have used it to request extensive documents and other information concerning the loan that is not servicing-related. For example, borrowers will request entire loan origination files, the original Note or Security Instrument, information regarding attempted rescission of the loan, or other nonservicing issues. In effect, these borrowers are trying to conduct improper discovery without filing suit, stall default proceedings
on their loans, or submit the request for some other reason that is not supported by the intention of the statute.
Case law from numerous federal districts has shed light on the extent of what “other information sought by the borrower” can be sought through this Section. Specifically, courts have limited those requests for “other information” to information related to the servicing of the loan. Servicing is defined as “receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan, including amounts for escrow accounts…, and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the loan.” 12 U.S.C. § 2605(i)(3). As such, servicers would only be required to respond to requests relating to payment issues, not origination, validity of loan, or other issues frequently alleged by borrowers. When reviewing these purported QWRs, servicers should look to what documents or other information that is actually being requested and compare it to the definition of “servicing” as set forth in RESPA to see if it actually fits that description. Even if the request does not require an answer, it is the better practice to respond to the borrower, in writing, advising of such. Because this is a quickly expanding area of the law, servicers should consider consulting an attorney concerning any questions as to whether to answer the alleged QWR.
By J. Allen Smith and Jeremy J. Overbey