Thomas Lovegrove v. Ocwen Home Loans Servicing
Filing
UNPUBLISHED AUTHORED OPINION filed. Originating case number: 7:14-cv-00329-MFU-RSB Copies to all parties and the district court/agency. [999990739].. [15-2158]
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-2158
THOMAS W. LOVEGROVE,
Plaintiff – Appellant,
v.
OCWEN HOME LOANS SERVICING, L.L.C.,
Defendant – Appellee.
Appeal from the United States District Court for the Western
District of Virginia, at Roanoke. Michael F. Urbanski, District
Judge. (7:14-cv-00329-MFU-RSB)
Argued:
October 27, 2016
Before SHEDD and
Circuit Judge.
KEENAN,
Decided:
Circuit
Judges,
December 20, 2016
and
DAVIS,
Senior
Affirmed by unpublished opinion. Judge Shedd wrote the opinion,
in which Judge Keenan and Senior Judge Davis joined.
ARGUED: Gary M. Bowman, Roanoke, Virginia, for Appellant. Brett
Lawrence
Messinger,
DUANE
MORRIS
LLP,
Philadelphia,
Pennsylvania,
for
Appellee.
ON
BRIEF:
Christopher
M.
Corchiarino, GOODELL, DEVRIES, LEECH & DANN, LLP, Baltimore,
Maryland; Brian J. Slipakoff, DUANE MORRIS LLP, Philadelphia,
Pennsylvania, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
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SHEDD, Circuit Judge:
Thomas
Lovegrove
defaulted
on
his
mortgage
in
2009
and
received a Chapter 7 bankruptcy discharge of that debt in 2011.
Lovegrove
Servicing,
filed
this
L.L.C.
action
alleging
(“Ocwen”)
that
violated
both
Ocwen
Home
Loans
the
Fair
Debt
Collection Practices Act (FDCPA) and the Fair Credit Reporting
Act (FCRA) by attempting to collect his mortgage debt after it
had been discharged in bankruptcy and by falsely reporting to
consumer reporting agencies (“CRAs”) that the debt was still
owed.
Ocwen moved for summary judgment, and the district court
granted the motion.
The district court held that the FDCPA
claims fail because there was no attempt by Ocwen to collect a
debt,
that
the
FDCPA
claims
were
otherwise
precluded
by
the
Bankruptcy Code, and that Ocwen had no duty under the FCRA until
Lovegrove
reporting.
properly
notified
a
CRA
of
a
dispute
with
Ocwen’s
For the reasons stated below, we affirm.
I.
The following material facts are not in dispute.
Lovegrove
signed
a
promissory
note
in
the
In 2006,
amount
of
$1,239,000.00 in favor of Bank of America and secured by a deed
of trust on a home at Smith Mountain Lake in Moneta, Virginia.
Lovegrove defaulted on the loan in April 2009 but continues to
live at the property.
Lovegrove filed for Chapter 7 bankruptcy
2
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relief,
and
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in
March
2011,
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he
obtained
a
discharge
of
his
servicer
of
obligation to Bank of America under the promissory note.
On
October
1,
2012,
Lovegrove’s mortgage. 1
Ocwen
became
the
On October 5, 2012, Ocwen sent a letter
to Lovegrove with an accounting of the debt, which had been
discharged but not paid.
The letter provides for a procedure to
dispute
the
the
validity
of
debt
and
contains
the
following
disclaimer, in bold italicized font:
This communication is from a debt collector attempting
to collect a debt; any information obtained will be
used for that purpose.
However, if the debt is in
active bankruptcy or has been discharged through
bankruptcy, this communication is not intended as and
does not constitute an attempt to collect a debt.
J.A. 45.
On the same day, Ocwen sent another letter detailing
“Alternatives
to
Foreclosure”
which
contains
disclaimer but without the emboldened typeface.
an
identical
J.A. 151-52.
Ocwen then began sending monthly account statements.
See J.A.
48-49.
list
Among
other
things,
the
monthly
statements
the
principal balance, the next payment due date, a payment coupon,
and the total amount due.
Under a section entitled “Important
Messages,” the account statements provide the following:
If you are currently in bankruptcy or if you have
filed for bankruptcy since obtaining this loan, please
1
note.
There is an ongoing dispute as to who actually owns the
However, that dispute does not affect our analysis.
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read the bankruptcy information provided on the back
of this statement.
Our records indicate that your loan is in foreclosure.
Accordingly, this statement may be for informational
purposes only. . . .
J.A. 48.
The “Important Bankruptcy Information” section on the
back of the statements reads:
If you or your account are subject to pending
bankruptcy or the obligation referenced in this
statement has been discharged in bankruptcy, this
statement is for informational purposes only and is
not an attempt to collect a debt.
If you have any
questions regarding this statement, or do not want
Ocwen to send you monthly statements in the future,
please contact us . . .
J.A. 49.
The only other communication Ocwen sent to Lovegrove
was an escrow account disclosure statement mailed in July 2014.
This
communication
contains
October 5, 2012 letters.
the
same
disclaimer
as
the
two
See J.A. 158-63.
Additionally, from October 2012 through May 31, 2013, Ocwen
improperly reported to CRAs that Lovegrove still owed on the
discharged debt.
J.A. 257.
From November 2012 to April 2014,
Lovegrove wrote multiple letters to Ocwen requesting that Ocwen
“stop collection [and] reporting debt to the credit bureau’s
[sic].”
See J.A. 166.
In June 2014, Lovegrove wrote to the
three major CRAs 2 that Ocwen was misreporting a discharged debt.
2
The
TransUnion.
three
major
CRAs
4
are
Equifax,
Experian,
and
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J.A.
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105.
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On
July
21,
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2014,
Ocwen
received
a
dispute
notification from Experian, and on that same day, Ocwen sent a
notice to “all consumer reporting agencies to which it reports
removing any reporting as to [] Lovegrove’s discharged mortgage
debt.”
J.A. 41-43.
II.
In June 2014, Lovegrove filed this action in the Western
District of Virginia alleging that Ocwen violated the FDCPA by
attempting to collect a debt that was discharged in bankruptcy
by
misrepresenting
the
consequences
of
non-payment
and
that
Ocwen violated the FCRA by misreporting the status of the debt.
Following discovery, the district court granted Ocwen’s motion
for summary judgment as to both claims.
J.A. 262-91.
The court
held that Ocwen was not attempting to collect a debt within the
meaning
of
the
FDCPA
and
that
the
precluded by the Bankruptcy Code.
FDCPA
claims
were
also
The court also determined
that Lovegrove could not maintain a cause of action under the
FCRA or the FDCPA related to Ocwen’s misreporting of the debt.
Lovegrove timely appealed.
III.
Lovegrove
appeals
judgment to Ocwen.
the
district
court’s
grant
of
summary
We review de novo. Lee Graham Shopping Ctr.,
LLC v. Estate of Kirsch, 777 F.3d 678, 681 (4th Cir. 2015).
Summary judgment is appropriate if “the movant shows that there
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is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.”
56(a).
Lovegrove
argues
that
the
Fed. R. Civ. P.
district
dismissing his FDCPA and FCRA claims.
court
erred
in
We address each in turn.
A.
The
unfair
FDCPA
debt
Importantly,
connection
was
enacted
collection
it
with
only
the
to
curb
“abusive,
practices.”
applies
collection
15
to
of
deceptive,
U.S.C.
§
communications
a
debt. 3
See
1692(a).
sent
id.
and
§
in
1692e
(prohibiting false, deceptive, or misleading representations “in
connection
with
(prohibiting
the
unfair
collection
or
of
any
unconscionable
debt”);
means
id.
“to
§
1692f
collect
or
attempt to collect any debt”).
Although
there
is
no
bright-line
rule,
“[d]etermining
whether a communication constitutes an attempt to collect a debt
is a ‘commonsense inquiry’ that evaluates the ‘nature of the
parties' relationship,’ the ‘[objective] purpose and context of
the communication [ ],’ and whether the communication includes a
demand for payment.”
In re Dubois, 834 F.3d 522, 527 (4th Cir.
2016) (citing Gburek v. Litton Loan Servicing LP, 614 F.3d 380,
3
The parties do not dispute that Ocwen is a debt collector
and that Lovegrove is a consumer as defined by the FDCPA.
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385 (7th Cir. 2010)). 4
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Applying this commonsense inquiry, we
hold that Ocwen’s communications do not constitute an attempt to
collect a debt.
Here,
the
communications
were
for
informational
purposes
only, were non-threatening in nature, and contained clear and
unequivocal
connection
disclaimers
with
circumstances.
the
to
establish
collection
of
a
that
they
debt
were
under
not
in
Lovegrove’s
For instance, the two October 5, 2012 letters
and the July 5, 2014 letter state: “... [I]f the debt . . . has
been discharged through bankruptcy, this communication is not
intended as and does not constitute an attempt to collect a
debt.”
J.A.
45-46,
151-52,
158-63
Similarly,
the
monthly
statements
disclaimer:
“If
.
the
.
.
(emphasis
include
obligation
in
originals).
the
referenced
following
in
this
statement has been discharged in bankruptcy, this statement is
4
In granting summary judgment, the district court applied
the least sophisticated consumer test in determining whether
Ocwen’s activities constituted an attempt to collect a debt.
However, the district court did not have the benefit of this
Court’s In re Dubois opinion when it reached its decision.
We
believe that the “commonsense inquiry” described in In re Dubois
is the proper standard in this case.
Nevertheless, even under
the least sophisticated consumer standard, Lovegrove’s FDCPA
claims would fail for the reasons stated by the district court.
We note there is an argument that sophisticated and high-dollar
loan arrangements should not be analyzed under the least
sophisticated
consumer
standard.
Perhaps,
sophisticated
consumers should not get the benefit of the lenient standard
when they are part of a complex relationship or situation that
may be confusing to less sophisticated individuals.
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for informational purposes only and is not an attempt to collect
a debt.”
J.A. 49.
In a financial arrangement such as this, courts presume “a
basic level of understanding and willingness to read with care.”
United States v. Nat’l Fin. Servs., Inc., 98 F.3d 131, 136 (4th
Cir. 1996).
Thus, Lovegrove is deemed to have the knowledge of
these straightforward disclaimers.
and
the
understanding
bankruptcy,
Lovegrove
that
should
his
Armed with that knowledge
debt
have
had
known
been
that
discharged
Ocwen
was
in
not
attempting to collect a debt from him. 5
As noted by the district court:
This is not a case where a creditor harassed the
debtor or tried to pressure the debtor into making
payments through multiple phone calls or threats. Nor
is this a case where the debtor signed a modification
agreement or turned over the deed to the property and
the creditor continued to demand payment.
5
Additionally, as explained by the district court, the
communications were not sent for the “animating purpose” of
obtaining payment and most do not contain a demand for payment.
J.A. 279-83; see In re Dubois, 834 F.3d at 527.
The only
communications that could possibly be viewed as a demand for
payment are the monthly account statements.
See J.A. 48-49.
Even though the monthly statements generally request payments,
we believe that the disclaimer is sufficient to provide notice
that, for customers in bankruptcy, Ocwen was providing an
updated account summary and not demanding payment.
See Goodin
v. Bank of Am., N.A., 114 F.Supp.3d 1197, 1206 (M.D. Fla. 2015)
(“A regular bank statement sent only for informational purposes
is . . . not an action in connection with the collection of a
debt.”).
Again, Lovegrove is presumed to have read the
statements with care.
See Nat’l Fin. Servs., Inc., 98 F.3d at
136.
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J.A. 282-83. Rather, this is a case where a debtor, who has been
discharged in bankruptcy but continues to live in a milliondollar home, received documents that contain clear disclaimers
indicating that they are not an attempt to collect a debt. 6
Accordingly, under a “commonsense inquiry,” Lovegrove has
failed
to
adduce
sufficient
evidence
that
the
communications
were sent in connection with the collection of a debt.
For this
reason, we affirm the grant of summary judgment on the FDCPA
claim. 7
Because we find that Ocwen’s communications are not an
attempt to collect a debt and the FDCPA is not implicated, it is
not necessary to determine whether the Bankruptcy Code precludes
the FDCPA under these facts.
6
Foreclosure proceedings against Lovegrove are still
possible because foreclosure is an in rem action that survives a
bankruptcy discharge. Johnson v. Home State Bank, 501 U.S. 78,
83 (1991).
The FDCPA does not completely prohibit debt
collectors from communicating with or seeking payment from a
debtor
who
has
been
discharged
in
bankruptcy.
Such
communications, if they are in connection with the collection of
a debt, must simply comply with the FDCPA, for example, they
must not be false, deceptive, or misleading.
7
Ocwen’s actions could be described as a sharp business
practice. Oral Argument at 26:35, Lovegrove v. Ocwen Home Loans
Servicing,
No.
15-2158
(4th
Cir.
Oct.
27,
2016),
http://www.ca4.uscourts.gov/oral-argument/listen-to-oralarguments.
Nevertheless, the specific facts and circumstances
of this case simply remove Ocwen’s communications from the realm
of debt collection activity.
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B.
We next address Lovegrove’s claim that Ocwen violated the
FCRA.
The
FCRA,
in
relevant
part,
prohibits
a
person
from
providing inaccurate information “relating to a consumer to any
consumer reporting agency if the person knows or has reasonable
cause to believe that the information is inaccurate.”
§ 1681s-2(a)(1)(A).
15 U.S.C.
The Act also requires those who “regularly
and in the ordinary course of business furnish[] information to
one or more consumer reporting agencies” to correct and update
information
“complete
provided
and
to
accurate.”
CRAs
Id.
so
§
that
the
1681s-2(a)(2).
private right of action under § 1681s-2(a).
information
is
There
no
is
Id. § 1681s-2(c),
(d); Saunders v. Branch Banking & Trust Co., 526 F.3d 142, 149
(4th Cir. 2008).
A private right of action does exist under 15 U.S.C. §
1681s-2(b), which requires a “creditor who has been notified by
a [CRA] that a consumer has disputed information furnished by
that creditor” to investigate the dispute, “‘report the results
of the investigation to the consumer reporting agency,’” and, if
any
information
was
inaccurate,
investigation to the other CRAs.
report
the
results
of
the
Johnson v. MBNA Am. Bank, NA,
357 F.3d 426, 429-30 (4th Cir. 2004) (quoting 15 U.S.C. § 1681s2(b)).
The district court found that Ocwen complied with this
requirement.
J.A. 284-85.
We agree.
10
The undisputed facts
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support the conclusion that Ocwen complied with § 1681s-2(b)
when Ocwen immediately corrected the credit reporting error once
notified by a CRA of the dispute.
J.A. 41-43.
Lovegrove also attempts to repackage his FCRA claims as
violations of the FDCPA.
We have reviewed these claims and
conclude that they fail for the reasons stated by the district
court.
Accordingly,
present
we
sufficient
conclude
evidence
that
to
Lovegrove
create
a
has
to
issue
of
genuine
failed
material fact to establish this cause of action, under either
the
FCRA
reporting.
or
the
FDCPA,
arising
out
of
Ocwen’s
incorrect
For this reason, we affirm the grant of summary
judgment on the FCRA claim and any related FDCPA claim.
IV.
For the foregoing reasons, the judgment of the district
court is affirmed.
AFFIRMED
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