Lawler v. Trinity Fin. Servs.

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KRISTEN LAWLER f/k/a Kristen Alleman, Plaintiff, v. TRINITY FINANCIAL SERVICES, Defendant.

No. 2:22-cv-2112

United States District Court, S.D. Ohio, Eastern Division

August 21, 2024

KIMBERLY A. JOLSON MAGISTRATE JUDGE

OPINION & ORDER

ALGENON L. MARBLEY CHIEF UNITED STATES DISTRICT JUDGE

This matter is before this Court on Plaintiff Kristen Lawler's Motion for Summary Judgment (ECF No. 24). For the reasons explained below, Plaintiff's Motion is GRANTED IN PART AND DENIED IN PART: GRANTED as to Plaintiff's April 2022 response letter FDCPA claim and Plaintiff's February Letter RESPA claim, and DENIED as to Plaintiff's October Letter RESPA claim.

I. BACKGROUND

This case revolves around Plaintiff and her ex husband's property in Marysville, Ohio. (ECF No. 2 at 5). Plaintiff and her then-husband financed the property in 2006 by way of an 80/20 loan, whereby they took out two mortgages through SouthStar Funding LLC. (Id.). Plaintiff was awarded their property in their divorce and, a few years later, in 2010, she entered into a loan modification with GMAC Mortgage, LLC to lower her interest rate. (Id. at 6). Plaintiff believed this loan modification combined both of the property's mortgages. (Id.). Just over a decade later, Plaintiff sought to sell the property in order to move out of state. (Id. at 7). During the attempted sale, Plaintiff learned that the loan modification did not, in fact, include the smaller of the two original mortgages, but instead remained as a lien against her property. (Id.).

Plaintiff therefore set out to confirm the details of this second mortgage. She first reached out to Defendant in September 2021, who informed her that FCI Lender Services had assumed servicing responsibilities for her second mortgage. (Id.). But when she called FCI, it informed her that Defendant had reassumed the second mortgage in 2016. (Id.). On her second attempt, Defendant then claimed the second mortgage, so Plaintiff requested “a copy of the Second Mortgage documents and as many details as possible.” (Id.). Defendant did not respond to the bulk of Plaintiff's request, but provided her with a payoff quote in early October 2021. (Id. at 8). The payoff quote explained that, to pay off the original $54,200 second mortgage, Plaintiff owed $173,002.17-including $114,453.23 in interest and $5,775.84 in late charges. (Id.). As this amount exceeded the equity Plaintiff had in the house, she was not able to move forward with the sale of her property. (Id.).

As a result, Plaintiff retained counsel and began to attempt to verify the second mortgage. (Id.). Counsel sent their first letter in October 2021 (“October Letter”) identifying Plaintiff and requesting a host of documents relating to her loan with Defendant. (Id. at 8-9). After Defendant did not respond to the October Letter, counsel sent another in February 2022 (“February Letter”), again identifying Plaintiff and requesting information on her second mortgage, and also highlighting what Plaintiff believed to be multiple errors with the loan, including Defendant's failure to send periodic statements, to respond to the October Letter, and to maintain a proper accounting. (Id. at 9-10). This time, Defendant acknowledged receipt of the February Letter about a month later, and substantively responded about two months later. (Id. at 10).

Unsatisfied with Defendant's responses thus far and believing that Defendant was unable to enforce her second mortgage, Plaintiff filed suit. (See ECF No. 2). In her complaint, Plaintiff sought relief by way of five separate counts for the damages she allegedly suffered, including: (1) the “consequential and incidental damages flowing from” her inability to complete the sale of her property; (2) emotional distress; and (3) myriad of actual damages, including but not limited to:

the costs associated with seeking information she was not provided, costs associated with Defendant's failure to address the errors asserted by Ms. Lawler, loss of profit from the sale of the Property, costs associated with the unrealized sale of the Property, as well as alleged arrearages on the Second mortgage, capitalized costs, loss of equity, and improperly charged fees and interest.

(Id. at 11).

Approximately a year-and-a-half after filing suit, Plaintiff dismissed without prejudice four of her claims against Defendant, including, relevant here, her claims for: (1) quiet title to the property; and (2) declaratory relief stating that Defendant has no right to enforce the second mortgage and that, even if it does, “no amounts are due and owing” due to Defendant's statutory violations. (ECF No. 22 (stipulation of dismissal); ECF No. 2 at 18-19 (declaratory judgment and quiet title claims)).^[1] Shortly thereafter, Plaintiff moved for summary judgment on her two remaining claims under the Fair Debt Collection Practices Act (“FDCPA”) and the Real Estate Settlement Procedures Act (“RESPA”). (See ECF No. 24). Each party has filed timely responses (ECF Nos. 29, 32), and this Court held oral argument on Plaintiff's Motion on August 7, 2024 (ECF No. 41). As no further briefing is required at this time, this Motion is ripe for this Court's review.

II. STANDARD OF REVIEW

Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56. A fact is deemed material only if it “might affect the outcome of the lawsuit under the governing substantive law.” Wiley v. United States, 20 F.3d 222, 224 (6th Cir. 1994) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)). The necessary inquiry for this Court is “whether ‘the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail[.]'” Patton v. Bearden, 8 F.3d 343, 346 (6th Cir. 1993) (quoting Anderson, 477 U.S. at 251-52). In evaluating such a motion, the evidence must be viewed in the light most favorable to the nonmoving party. United States S.E.C. v. Sierra Brokerage Servs., Inc., 712 F.3d 321, 327 (6th Cir. 2013).

III. LAW & ANALYSIS

A. FDCPA

The FDCPA is an “extraordinarily broad statute” enacted to address what Congress deemed the “widespread problem” of “abusive, deceptive, and unfair debt collection practices by many debt collectors.” Frey v. Gangwish, 970 F.2d 1516, 1518, 1521 (6th Cir. 1992) (citing 15 U.S.C. § 1692(e)). A successful FDCPA claim requires a plaintiff to prove four elements: 1) she is a “consumer”; 2) the debt at issue is a “consumer debt”; 3) defendant is a “debt collector”; and 4) defendant has violated one of the prohibitions in the FDCPA. 15 U.S.C. § 1692a-f.

Only the latter two of these elements are at issue here, as this Court agrees-and Defendant does not contest-that Plaintiff is a “consumer” seeking relief regarding a “consumer debt.” 15 U.S.C. § 1692a(3), (5). And as to the fourth, more substantive, element, Plaintiff alleges that Defendant used “false, deceptive, or misleading representation[s] or means in connection with the collection of any debt” in violation of 15 U.S.C. § 1692e. (ECF No. 24 at 18). This Court takes each of the disputed elements in turn.

1. Debt Collector

The parties disagree about whether Defendant is an FDCPA-qualifying “debt collector.” Under the FDCPA, a “debt collector” is “any person who”: (1) “uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts”; or (2) “regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another[.]” § 1692a(6) (emphasis added). Defendant argues it is not a debt collector per the language of this second prong, as it “has not sought to collect the debt in question on behalf of another, nor has [it] sought to collect the debt in question under a name other than its own,” the latter of which is a statutory exception. (ECF No. 29 at 6-7 (citing § 1692a(6), and Garner v. Select Portfolio Servicing, Inc., 6th Cir. No. 17-1303, 2017 U.S. App. LEXIS 21546, at *8 (Oct. 27, 2017)).

This Court agrees, but finds this explanation to be insufficient to defend against the label of debt collector: It ignores the first prong, which categorizes a person as a debt collector if its “principal purpose . is the collection of any debts,” regardless of whether the debts are one's own or someone else's. § 1692a(6) (emphasis added). While Plaintiff's opening brief is vague as to her theory for holding Defendant liable as a debt collector, she later more clearly articulates her theory that Defendant's “principal purpose ... is the collection of debts[.]” (ECF No. 32 at 13). So, this Court looks to the nature of Defendant's business operations.

By way of deposition, Defendant described that it “purchase[s] nonperforming second[] [mortgages] and then . tr[ies] to work with the . borrower or the homeowners regarding their delinquency.” (ECF No. 23-1 at 12). In terms of proportion, Defendant went on to explain that the purchasing of first liens is “not a big part of [its] portfolio” as the “majority of [its] portfolio would be second mortgages” such that the “[m]ajority, but not all” of the loans it purchases are “already in default when [it] purchase[s] them.” (Id. at 12-13). Given that, in Defendant's own words, Defendant's primary business is purchasing defaulted second mortgages, Defendant's “principal purpose ... is the collection of ... debts[.]” § 1692a(6). As such, Defendant is a debt collector under the FDCPA's definition of one.^[2]

2. Violation of 15 U.S.C. § 1692e

Having...