M.D.N.C. — Custer v. Dovenmuehle (IV): Transparency Wins Again — No Sealing of Documents at Summary Judgment (Post A)

Summary:

Short take: In yet another skirmish in the Custer v. Dovenmuehle litigation, Chief Judge Catherine Eagles refused to let either side keep key summary-judgment materials under seal—especially the evidence about “pay-to-pay” fees. If Dovenmuehle wants to defend its business model, it will have to do so in the sunlight.

What happened

As the parties teed up cross-motions for summary judgment, both sides filed exhibits and briefing under temporary seal. Dovenmuehle Mortgage, Inc. (“DMI”) then sought to keep significant portions sealed, including:

• What DMI pays its vendor (ACI) to process phone payments;

• ACI contracts and invoices;

• Internal data about fee exceptions; and

• Information about which loan types are subject to the “pay-to-pay” fee.

Custer, for his part, had filed a bank statement as an exhibit showing two payments to DMI—but the page also included his bank name, partial account number, balance, and unrelated transactions.

Judge Eagles denied both motions to seal, with two important nuances:

1. Custer’s bank statement (Exhibit L).
   The Court agreed that Custer’s irrelevant personal banking details should not be public—but criticized counsel for filing them unredacted in the first place. Rather than seal the whole exhibit, the Court ordered plaintiff’s counsel to submit a redacted replacement page limited to the two DMI payments. Once replaced, the exhibit would be fully unsealed.

2. DMI’s business information.
   Although the Court had allowed some of this material to remain sealed at the class certification stage, Judge Eagles held that the balance shifts at summary judgment, where public access is at its constitutional apex.

   Because a central question in the case is whether DMI’s phone-payment fee is unlawful under the North Carolina Debt Collection Act and the UDTPA, the Court ruled that the public has a strong interest in knowing:

   • What it actually costs DMI to provide the service; and

   • Whether the fee is profit-driven or cost-based.

   DMI failed to show a “compelling interest” narrowly tailored enough to justify secrecy, so its request to seal was flatly denied.

Result: The Clerk was ordered to unseal Custer’s brief (after redaction of the bank page) and to unseal DMI’s sealed materials in full.

Why this matters — and how it fits with Custer I & II

This decision is not just a procedural sideshow; it is very much of a piece with the earlier Custer rulings previously chronicled:

Custer I — “No default required” (Nov. 6, 2024 post)

Judge Eagles previously held that a borrower need not be in default to have a viable claim under the North Carolina Debt Collection Act. That ruling opened the door for routine mortgage servicing practices—like pay-to-pay fees—to be scrutinized even for current borrowers.

👉 Connection to today:
If DMI is charging a fee that is allegedly “unfair,” “unconscionable,” or not authorized by contract, the public should be able to see the economics behind it. Transparency is part of accountability.

Custer II (Nov. 21, 2025 post)

You previously highlighted how Custer’s claims survived aggressive arguments that his loss-mitigation-related fees were somehow insulated from state law.

👉 Connection to today:
The sealing order underscores that this case is not just about one borrower’s annoyance—it’s about systemic servicing practices affecting thousands of North Carolinians. When a practice is widespread, the public interest in transparency is at its zenith.

Custer III — Class Certification granted (your Jan. 7, 2026 post)

At class certification, the Court recognized common questions about DMI’s pay-to-pay practice and certified a class—while allowing some cost data to remain sealed for the moment.

👉 Connection to today:
Judge Eagles essentially said: That was then; this is now.
At summary judgment, secrecy gives way to the First Amendment. The very information that might show whether the fee is excessive is now presumptively public.

Commentary:

This ruling is vintage Chief Judge Eagles: careful on doctrine, pragmatic on procedure, and skeptical of reflexive secrecy.

Two themes jump out:

1. Sunshine as substance, not just process.
   DMI wanted to litigate in the shadows—arguing that its fee structure was commercially sensitive. But when a fee is alleged to violate North Carolina consumer law, secrecy becomes part of the problem. The public cannot evaluate whether a practice is abusive if the numbers are hidden.

2. Class actions change the stakes.
   Once a class is certified, the case stops being about George Custer alone. It becomes a public dispute over mortgage servicing practices in North Carolina. That status justifies greater openness.

3. A gentle but pointed rebuke to counsel.
   The Court did Custer a favor by allowing a redacted replacement instead of simply denying the motion outright. But the message was clear: lawyers should not dump sensitive personal data into the record and then ask the Court to clean it up.

What to watch next

With the cost data now not only in the open record  but also attached for everyone to pick through, expect:

• A sharper fight over whether the pay-to-pay fee is “reasonable,” “cost-based,” or simply a revenue stream;

• Potential expert battles on damages; and

• Possibly, stronger settlement pressure on DMI now that its numbers will be public.

If Judge Eagles ultimately rules that the fee violates the NCDCA or UDTPA, this case could become a leading precedent for attacking junk mortgage servicing fees across North Carolina—much like Bland and Greene reshaped the rent-to-own landscape.

To read a copy of the transcript, please see:

To read a copy of the transcript, please see: