Richard Sibert v. Wells Fargo Bank, N.A.
PUBLISHED AUTHORED OPINION filed. Originating case number: 3:14-cv-00737-HEH. . [16-1568]
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UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
RICHARD D. SIBERT,
Plaintiff - Appellant,
WELLS FARGO BANK, N.A.,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern District of Virginia, at
Richmond. Henry E. Hudson, District Judge. (3:14-cv-00737-HEH)
Argued: May 10, 2017
Decided: July 17, 2017
Before NIEMEYER, KING, and DUNCAN, Circuit Judges.
Affirmed by published opinion. Judge Niemeyer wrote the majority opinion, in which
Judge Duncan joined. Judge King wrote a dissenting opinion.
ARGUED: John Daniel Hafemann, MILITARY JUSTICE ATTORNEYS, PLLC,
Savannah, Georgia; Jeremy S. McKenzie, KARSMAN, MCKENZIE & HART,
Savannah, Georgia, for Appellant. Terry Catherine Frank, KAUFMAN & CANOLES,
P.C., Richmond, Virginia, for Appellee. ON BRIEF: Hunter W. Sims, Jr., KAUFMAN
& CANOLES, P.C., Norfolk, Virginia, for Appellee.
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NIEMEYER, Circuit Judge:
While serving in the U.S. Navy, Richard Sibert obtained a loan secured by a
mortgage to purchase a house in Virginia Beach, Virginia. Soon after his discharge from
the Navy, he defaulted on the loan, and the lender began foreclosure proceedings. During
those proceedings, however, and before any foreclosure sale was held, Sibert enlisted in
the U.S. Army. The lender continued to pursue foreclosure and sold Sibert’s house at a
foreclosure sale shortly after Sibert had begun his service in the Army.
Sibert commenced this action against Wells Fargo Bank, N.A., alleging that the
foreclosure sale was invalid under the Servicemembers Civil Relief Act (“SCRA”),
which requires a lender to obtain a court order before foreclosing on or selling property
owned by a current or recent servicemember where the mortgage obligation “originated
before the period of the servicemember’s military service.” 50 U.S.C. § 3953(a); see id.
§ 3953(c). The district court granted summary judgment to Wells Fargo, concluding that,
because Sibert incurred his mortgage obligation during his service in the Navy, the
obligation was not subject to SCRA protection.
For the reasons that follow, we affirm.
Sibert entered the Navy in July 2004, and while in the Navy — on May 15, 2008
— he purchased a house in Virginia Beach, financing the purchase with a loan of
$174,650 from Advance Mortgage, which was secured by a deed of trust on the house.
Sibert’s loan was subsequently acquired by Wells Fargo Bank, N.A.
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After his discharge from the Navy in July 2008, Sibert went into default on his
loan, and, several months later, Wells Fargo mailed him a notice a default. In March
2009, Wells Fargo notified Sibert that it had begun steps to foreclose on his house. But, a
month later, before the foreclosure sale, Sibert enlisted in the Army. In May 2009, just
after Sibert entered the Army, Wells Fargo sold Sibert’s house at a foreclosure sale.
After signing a move-out agreement, Sibert also executed a “Servicemembers’ Civil
Relief Act Addendum to Move Out Agreement,” in which he stated that he was
“affirmatively waiv[ing] any rights and protections provided by [50 U.S.C. § 3953] with
respect to the May 15, 2008 Deed of Trust . . . and the May 13, 2009 foreclosure sale.”
Over a year later, Sibert and his wife filed a voluntary Chapter 7 bankruptcy
petition. In their filings, they did not list any potential claims against Wells Fargo, nor
did they advise the bankruptcy court or the trustee of any such possible claim. The
bankruptcy court granted Sibert and his wife a discharge on May 9, 2011.
Sibert commenced this action on October 29, 2014, more than five years after the
foreclosure sale, alleging that Wells Fargo, by foreclosing on his property and selling his
house without a court order while he was in the Army, violated the SCRA, rendering the
See 50 U.S.C. § 3953(c).
The parties filed cross-motions for
summary judgment, and, in its motion, Wells Fargo argued, as threshold matters, that
Sibert was judicially estopped from bringing an SCRA claim against Wells Fargo
because he failed to list the claim in his bankruptcy proceedings and that, because his
debts had been discharged, he lacked standing to bring the claim. After conducting an
evidentiary hearing, the district court held that Sibert’s claim was not barred by judicial
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estoppel and entered an order staying the action pending the reopening of Sibert’s
bankruptcy case to allow the trustee to decide whether to pursue the SCRA claim. The
trustee filed a motion to substitute herself as the real party-in-interest, and the district
court granted the motion and lifted the stay, allowing this case to proceed.
In an opinion and order entered in this case, the district court granted Wells
Fargo’s motion for summary judgment, concluding that Sibert’s mortgage obligation was
not protected by the SCRA. The court stated that resolution of the case “turn[ed] on the
interpretation of the phrase ‘originated before the period of the servicemember’s military
service’” in 50 U.S.C. § 3953(a), and noted that the application of that language to
multiple periods of military service was an issue of first impression. “On its own,” the
court explained, “the language . . . is unclear on whether it contemplates multiple periods
of military service,” but the court found that “the specific context of the language
indicates that the statute does not apply to obligations incurred while one is in the
military, because the underlying concern is the impact military service may have on a
servicemember’s income and status, uncontemplated at the time when they incurred the
The court accordingly concluded that “[b]ecause it is undisputed that
Sibert’s mortgage originated while he was in the military, that obligation does not qualify
under [§ 3953(a)]” and, “[a]s a result, Sibert cannot claim the remedy provided in [§
Because of its ruling, the court did not reach Wells Fargo’s alternative
argument that Sibert had waived his rights under the SCRA by executing the addendum
to his move-out agreement.
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From the district court’s judgment dated May 4, 2016, Sibert filed this appeal.
After Sibert filed his opening brief, Wells Fargo filed a motion to dismiss the appeal,
contending that Sibert was not a proper party to the appeal and therefore lacked standing.
We denied the motion by an order dated November 30, 2016.
The relevant section of the SCRA provides protection to servicemembers’
“obligation[s] on real or personal property” only when the obligation “originated before
the period of the servicemember’s military service.”
50 U.S.C. § 3953(a).
protections afforded by the SCRA include stays of enforcement, adjustments to preserve
the interests of the parties, and the invalidation of foreclosures and sales pursued without
a court order while the servicemember is in service and for one year thereafter. Id. §
In this case, Sibert incurred his obligation during his service in the Navy, and
Wells Fargo began foreclosure proceedings after Sibert left the Navy. Before the sale of
his house in foreclosure, however, Sibert entered the Army, and his house was sold while
he was in the Army.
The district court concluded that 50 U.S.C. § 3953(a) “does not apply to
obligations that originate while a servicemember is already in the military” and that
therefore it did not provide protection to Sibert’s mortgage, which was incurred while he
was in the Navy.
The court reasoned that “[t]he Act was designed to ensure that
servicemembers do not suffer financial or other disadvantages as a result of entering the
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service,” explaining that the Act accomplishes this goal “by shielding servicemembers
whose income changes as a result of their being called to active duty, and who therefore
can no longer keep up with obligations negotiated on the basis of prior levels of income.
Such a change in income and lifestyle was not a factor in Sibert’s case, as the mortgage at
issue here originated while he was already in the service.” We agree with the district
court’s interpretation of the statute.
Section 3953(a) explicitly creates two classes of obligations — those protected
and those not. It provides protection to only those obligations that originate before the
servicemember enters the military service.
It thus grants protection to obligations
incurred outside of military service, while denying protection to obligations originating
during the servicemember’s military service. In this case, Sibert’s obligation originated
while he was in the Navy and therefore was not in the class of obligations protected by
In choosing to protect obligations incurred during civilian life, Congress
recognized that those obligations could unexpectedly be impacted by entry into military
service and the changes in the servicemember’s income and status, which were not
contemplated at the time the obligation was incurred. Conversely, it chose not to protect
obligations incurred during military service because both the servicemembers and lenders
would be aware of the servicemember’s income and military status. The history of the
SCRA and its predecessors further supports this distinction that Congress made. The
Soldiers’ and Sailors’ Civil Relief Act, Pub. L. No. 65-103, 40 Stat. 440 (1918), a World
War I–era law, invalidated non-judicial foreclosures on certain mortgages, limiting its
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application to obligations (1) “originating prior to the date of [the law’s] approval” and
(2) “owned by a person in military service at the commencement of the period of the
military service and still so owned by him.” Id. § 302, 40 Stat. at 444. That law expired
after World War I.
Congress reenacted a largely identical bill as World War II unfolded — The
Solders’ and Sailors’ Civil Relief Act of 1940, Pub. L. No. 76-351, Ch. 888, 54 Stat.
1178 — containing the same relevant limitations on covered mortgage obligations. See
54 Stat. at 1182. But in 1942, in reaction to the attack on Pearl Harbor and the United
States’ entry into the war, Congress amended the 1940 law to expand its protections.
H.R. Rep. 77-219, at 1. Among many changes, the 1942 amendments eliminated the
requirement that a mortgage obligation be incurred prior to the Act’s approval to receive
protection. It replaced that requirement — one onerous to recent draftees and enlistees
— with the requirement that the “obligations originated prior to such person’s period of
military service.” See Pub. L. No. 77-732, § 9(b), 56 Stat. 769, 771. As such, the 1942
law protected mortgage obligations “owned by a person in military service at the
commencement of the period of the military service and still so owned by him which
obligations originated prior to such person’s period of military service.” H.R. Rep. 77219, at 11. This language remained in force until the 2013 enactment of the SCRA,
which was designed only as a “comprehensive restatement” of prior versions, made for
the sake of “clarity.” H.R. Rep. 108-81 at 2380, 2390. Thus, the current language of 50
U.S.C. § 3953(a) aimed simply to restate the 1942 law’s two restrictions on covered
mortgages — (1) that the obligation was owned by a servicemember at the
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commencement of his military service, and (2) that it originated before that person’s
period of military service. In order to give these two requirements independent legal
force, the word “before” (or “prior” in the 1942 version) must be read as excluding
obligations made during military service.
Sibert argues that, even though his obligation was not a protected obligation at the
time he incurred it, as it was not incurred before he entered the Navy, he obtained
retroactive protection when he later entered the Army because the obligation was
incurred before he entered the Army. This construction, however, reads the singular
word “before” myopically.
It would lead to inconsistent treatment of substantially
identical obligations and would introduce arbitrariness into Congress’ distinction between
protected and unprotected obligations.
Under Sibert’s reading, a servicemember could incur an obligation fully aware of
his military pay and lifestyle, yet defeat the statutory exclusion of his obligation by
leaving military service and thereafter reenlisting. But allowing a subsequent period of
service to trigger statutory protection for an obligation incurred during military service
defies the distinction between protected and unprotected obligations that is embodied in
the SCRA. Additional military service does not retroactively erase the servicemember’s
and lender’s knowledge of the risks attending an obligation incurred during service or
alter the substance of the risks for which the SCRA provides protection. This is why the
statute provides protection based on when the obligation was incurred, distinguishing
between before and during military service. Under Sibert’s argument, the statute would
grant protection based not on the circumstances under which the obligation was incurred
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but rather on his subsequent decision to leave and then reenter the service, treating
substantially identical obligations in two different and inconsistent ways.
We conclude that, because Sibert’s mortgage obligation originated when he was in
the Navy, it was not a protected obligation under § 3953(a), and his later enlistment in the
Army did not change that status to afford protection retroactively. Accordingly, we
affirm the district court’s judgment.
Because of our ruling, we need not determine, whether, in the alternative, Sibert
executed a valid waiver of his rights under the SCRA.
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KING, Circuit Judge, dissenting:
Unlike my friends of the panel majority, I am entirely confident that plaintiff
Richard Sibert, an active duty soldier in the United States Army, is entitled to avail
himself of the statutory protection accorded to American servicemembers against nonjudicial foreclosure sales of their homes. That protection is afforded to Sergeant Sibert
by the Servicemembers Civil Relief Act, 50 U.S.C § 3901 et seq. (“SCRA”). I therefore
write separately in dissent.
Put simply, my good colleagues are wrong to withhold SCRA protection from
Sibert for two sound reasons. First, the plain language of § 3953 of Title 50 prohibits a
non-judicial home foreclosure sale against Sibert, as an active duty soldier, on an
obligation he incurred prior to his Army service — notwithstanding Sibert’s earlier
period of military service in the United States Navy. Second, if any further effort at
statutory interpretation is required, § 3953 must be construed liberally in favor of Sibert.
In July 2004, Sergeant Sibert began serving this country as an active duty sailor in
the Navy. In May 2008, during his Navy service, Sibert purchased a home in Virginia
Beach, Virginia. That purchase was financed with a loan of nearly $175,000 from a
company called Advance Mortgage, and it was secured by a deed of trust on Sibert’s
residence. Sibert’s loan was subsequently acquired by defendant Wells Fargo Bank.
Sibert was discharged from the Navy in July 2008, when his period of active duty ended.
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After his Navy service, Sibert worked as a civilian. In March 2009, while he was
a civilian, Wells Fargo initiated foreclosure proceedings on Sibert’s home in Virginia
Beach. The next month, however, Sibert began another period of active duty military
service by entering the United States Army. In May 2009, while Sibert was on active
duty as an enlisted man in the Army, Wells Fargo sold his Virginia Beach home at a nonjudicial foreclosure sale. That sale — and the fact that it was conducted without prior
court approval — is the subject of this litigation.
SCRA was enacted, according its provisions, “to provide for, strengthen, and
expedite the national defense through protection extended . . . to servicemembers of the
United States to enable such persons to devote their entire energy to the defense needs of
the Nation.” See 50 U.S.C. § 3902(1). Additionally, SCRA aims “to provide for the
temporary suspension of judicial and administrative proceedings and transactions that
may adversely affect the civil rights of servicemembers during their military service.” Id.
Most relevant here is SCRA’s prohibition against a non-judicial foreclosure sale of
a servicemember’s property “during, or within one year after, the period of the
servicemember’s military service.” See 50 U.S.C. § 3953(c). That prohibition
applies only to an obligation on real or personal property owned by a
servicemember that —
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originated before the period of the servicemember’s
military service and for which the servicemember is
still obligated; and
is secured by a mortgage, trust deed, or other security
in the nature of a mortgage.
Id. § 3953(a). In this appeal, we are obliged — in the context of the sale of Sergeant
Sibert’s Virginia Beach home by Wells Fargo — to discern what constitutes “the period
of the servicemember’s military service.” We review de novo this issue of statutory
interpretation. See United States v. Weaver, 659 F.3d 353, 356 (4th Cir. 2011).
According to the panel majority, Sergeant Sibert, despite having incurred his home
mortgage obligation nearly a year before he entered into active duty Army service, cannot
avail himself of SCRA’s protection against a non-judicial foreclosure sale. That is so, the
majority rules today, because Sibert incurred his mortgage obligation to Wells Fargo
during his service as a sailor in the Navy. In reaching that conclusion, my friends have
rewritten § 3953 to protect servicemembers with respect to only those financial
“obligations incurred outside of military service.” See ante at 6. I am unable to subscribe
to the majority’s statutory revision.
To begin, an elementary principle of statutory interpretation is that, “unless there
is some ambiguity in the language of a statute, a court’s analysis must end with the
statute’s plain language.” See In re Sunterra Corp., 361 F.3d 257, 265 (4th Cir. 2004)
(internal quotation marks omitted).
That principle is subject to only two narrow
exceptions. The first such exception is “premised on absurdity” and “exists when literal
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application of the statutory language at issue results in an outcome that can truly be
characterized as absurd, i.e., that is so gross as to shock the general moral or common
sense.” Id. (internal quotation marks omitted). The second exception is “premised on
legislative intent” and “exists only when literal application of the statutory language at
issue produces an outcome that is demonstrably at odds with clearly expressed
congressional intent.” Id. (internal quotation marks omitted).
A non-judicial foreclosure sale cannot be effected against Sibert, as an active duty
soldier in the United States Army, “during, or within one year after, the period of [his]
military service,” see 50 U.S.C. § 3953(c), if Sibert’s mortgage obligation “originated
before the period of [his] military service,” id. § 3953(a)(1).
Both of those SCRA
provisions are concerned with a single period of military service — i.e., the period of
military service — not a or any period of such service. Nor is either SCRA provision
concerned with the initial or first period of military service. Plainly then, the breach of
an obligation that originated prior to Sibert’s current active duty Army service cannot
result in a non-judicial foreclosure sale during his Army service.
Wells Fargo conducted its foreclosure sale — without court approval — of
Sibert’s Virginia Beach home in May of 2009, when Sibert was on active duty as an
enlisted man in the Army’s artillery forces at Fort Sill, Oklahoma. The relevant mortgage
obligation was, however, incurred in May of 2008, nearly a year before Sibert entered
into his active duty service with the Army. Pursuant to the plain terms of SCRA, Sibert
is thus entitled to avail himself of SCRA’s protection against a non-judicial foreclosure
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The outcome of this dispute that I sponsor today is neither “absurd” nor
“demonstrably at odds with clearly expressed congressional intent.” See In re Sunterra
Corp., 361 F.3d at 265 (internal quotation marks omitted). Indeed, the congressional
intent divined by the panel majority — i.e., that Congress intended for SCRA to apply
only to mortgage obligations incurred by a servicemember outside of any period of
military service — is not expressed (clearly or otherwise) in the statute.
If SCRA’s language is somehow ambiguous — and thus requires some further
interpretative effort — Sergeant Sibert is yet entitled to avail himself of its protection.
For that reason as well, I disagree with my friends in the majority.
In 1943, Justice Jackson, writing for the Supreme Court in Boone v. Lightner,
explained that the Soldiers’ and Sailors’ Civil Relief Act of 1940 — SCRA’s statutory
predecessor — “is always to be liberally construed to protect those who have been
obliged to drop their own affairs to take up the burdens of the nation.” See 319 U.S. 561,
575 (1943). The liberal construction afforded to SCRA’s predecessor has been properly
extended to SCRA, which was enacted in 2013. See, e.g., Brewster v. Sun Trust Mortg.,
Inc., 742 F.3d 876, 878 (9th Cir. 2014) (relying on Boone for proposition that SCRA
must be liberally construed).
My colleagues have nevertheless narrowly construed
SCRA’s limitations against Sibert — and thus all his fellow American servicemembers
— by effectively treating his separate periods of military service as a single period of
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Affording the mandated liberal construction to SCRA, each separate period of
Sibert’s military service — Navy and Army — must be viewed in isolation. In other
words, the breach of the home mortgage obligation incurred prior to Sibert’s active duty
service in the Army cannot result in a non-judicial foreclosure sale of his home during his
Army service. Thus, even if the language of § 3953 is somehow ambiguous, Sibert is
entitled to SCRA’s protection.
As I see it, Sergeant Sibert is entitled to avail himself of SCRA’s protection
against a non-judicial foreclosure sale. Because Sibert incurred his home mortgage
obligation before entering the Army, Wells Fargo was not entitled to effect a non-judicial
foreclosure sale of his residence in Virginia Beach during his Army service. That view is
supported by SCRA’s plain language and, if necessary, the mandated liberal reading
Pursuant to the foregoing, I would vacate and remand for further proceedings. I
therefore respectfully dissent.
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