Larry Duffey, et al v. Nationstar Mortgage, et al

Filing

OPINION filed : AFFIRMED, decision not for publication. Ralph B. Guy , Jr., (AUTHORING) Circuit Judge; Alice M. Batchelder, Circuit Judge and Julia Smith Gibbons, Circuit Judge.

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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 15a0436n.06

FILED

No. 14-2303
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
LARRY DUFFEY; DIANNE DUFFEY,
Plaintiffs-Appellants,
v.
NATIONSTAR MORTGAGE;
DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee for Harborview
Mortgage Loan Trust Mortgage Loan
Pass-Through Certificates, Series 2006-9,

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Jun 10, 2015
DEBORAH S. HUNT, Clerk

On Appeal from the United States
District Court for the Eastern
District of Michigan

Defendants-Appellees.
_________________________________/
Before: GUY, BATCHELDER, and GIBBONS, Circuit Judges.
RALPH B. GUY, JR. Circuit Judge. Plaintiffs, Larry and Dianne Duffey, sued
defendants, Nationstar Mortgage and Deutsche Bank National Trust Company, claiming
they wrongfully foreclosed on the Duffeys’ home. Nationstar and Deutsche Bank filed a
motion to dismiss, which the district court granted. The Duffeys appeal that order. For
the following reasons, we AFFIRM.

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I.
In 2010, Larry Duffey defaulted on his home mortgage. In 2013, Deutsche Bank,
the holder of that mortgage, began foreclosure proceedings. At that time, Bank of
America, N.A. was servicing the loan, although that role was in the process of being
transferred to Nationstar.
The law office of Fabrizio & Brook, P.C., counsel for both Deutsche Bank and
Bank of America, mailed notice to Larry Duffey in June 2013, in accordance with M.C.L.
§ 600.3205a, notifying him of certain rights he had in relation to the foreclosure
proceedings including his right to request loan modification.1 The notice incorrectly
listed Deutsche Bank as the loan servicer instead of Bank of America.

The letter

correctly listed Fabrizio and Brook, P.C. as counsel for both Bank of America and
Deutsche Bank, and gave the correct information to contact that firm.
Duffey never contacted the firm and his home was sold at a sheriff sale on October
3, 2013. Duffey failed to redeem the property within the six-month redemption period.
The Duffeys filed the present lawsuit against Deutsche Bank and Nationstar on April 9,
2014, claiming that the defendants improperly foreclosed on their home due mainly to the
failure to properly identify the loan servicer as Bank of America in the June 2013 notice.
The Duffeys also sought equitable relief in the form of having the sheriff’s deed set aside.
Deutsche Bank and Nationstar filed a motion to dismiss, which the district court
granted. The Duffeys filed this timely appeal. We address each of their arguments in

1

M.C.L. § 600.3205a was repealed effective June 30, 2013. Neither party argues that this affects the
outcome of this appeal.

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turn.
II.
We review the district court order granting defendants’ motion to dismiss de novo.
Conlin v. Mortg. Elec. Registration Sys., Inc., 714 F.3d 355, 358 (6th Cir. 2013).
“Following [Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)] and [Ashcroft v. Iqbal, 556
U.S. 662 (2009)], it is well settled that a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face.” Id. (internal
quotation marks and citations omitted). “A claim is plausible on its face if the ‘plaintiff
pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.’” Id. (quoting Iqbal, 556 U.S. at 678).
III.
A.

M.C.L. § 600.3204(1)(d)
The Duffeys claim that the defendants failed to satisfy M.C.L. § 600.3204(1)(d)

because the June 2013 notice misidentified Deutsche Bank as the loan servicer. Section
600.3204(1)(d) allows a party to foreclose a mortgage through advertisement if the party
meets certain requirements including that the party “is either the owner of the
indebtedness or of an interest in the indebtedness secured by the mortgage or the
servicing agent of the mortgage.”
To set aside a foreclosure sale for failure to comply with M.C.L. § 600.3204,
however, “plaintiffs must show that they were prejudiced by defendant's failure to
comply with MCL 600.3204. To demonstrate such prejudice, they must show that they

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would have been in a better position to preserve their interest in the property absent
defendant's noncompliance with the statute.” Kim v. JPMorgan Chase Bank, N.A., 493
Mich. 98, 115-16 (2012). The district court noted that the Duffeys failed to allege that
the error in the June 2013 notice prejudiced them given that the contact information in
such notice was correct – Fabrizio & Brook represented both Bank of America (the loan
servicer) and Deutsche Bank (the creditor).
On appeal, the Duffeys claim that they were prejudiced because: (1) the original
loan was a predatory loan that targeted African-Americans; (2) the servicer changed
during the foreclosure process; and (3) the Michigan foreclosure process, generally, does
not result in many loan modifications. None of the claims of prejudice relates to the
alleged failure to comply with M.C.L. § 600.3204. Thus, even assuming that the error in
the June 2013 notice constituted a failure to comply with M.C.L. § 600.3204(1)(d) – a
question we do not reach – the Duffeys’ claimed prejudice is insufficient under Kim to set
aside the sale.
B.

M.C.L. § 339.915(e)
The Duffeys’ next claim is that the defendants violated M.C.L. § 339.915(e) of the

Michigan Occupational Code (MOC), which prohibits licensed collection agencies from
“[m]aking an inaccurate, misleading, untrue, or deceptive statement or claim in a
communication” with a debtor. The district court dismissed the Duffeys’ claim ruling
that because the defendants did not meet the definition of a “collection agency” under
M.C.L. § 339.901, the MOC did not apply to them.

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The Duffeys argue, without reference to the pleadings or any authority, that the
defendants are collection agencies and subject to the MOC. The argument is both
conclusory and undeveloped, and we will not consider it on appeal. See Gen. Star Nat.
Ins. Co. v. Administratia Asigurarilor de Stat, 289 F.3d 434, 441 (6th Cir. 2002).
The Duffeys also make a passing argument that the defendants are collection
agencies because at the bottom of the June 2013 notice from Fabrizio & Brook, there was
the following statement:

“FABRIZIO & BROOK, P.C. IS THE CREDITOR’S

ATTORNEY AND IS ATTEMPTING TO COLLECT A DEBT ON ITS BEHALF . . . .”
This statement does not transform the defendants into collection agencies under the
MOC; if anything, the letter makes clear that the defendants are the creditors and
Fabrizio & Brook is the collector.
C.

M.C.L. § 445.252
The Duffeys also claim that the defendants violated M.C.L. § 445.252(e), which

regulates collection practices in Michigan.2

That provision prohibits “regulated

person[s]” from, “[m]aking an inaccurate, misleading, untrue, or deceptive statement or
claim in a communication to collect a debt . . . .” The district court dismissed the
Duffeys’ claim under the statute because the Duffeys failed to plead a causal link
between the alleged misrepresentation in the June 2013 notice and their alleged harm,
which the court deemed was required, citing Hewitt v. Bank of America N.A., 1:13-CV310, 2013 WL 3490668, *7 (W.D. Mich. July 11, 2013). See also M.C.L. § 445.257(1);
2

Although the Duffeys did not specifically limit their claims under M.C.L. Chapter 445 to § 445.252(e),
the district court construed their complaint as being limited to such subsection – a determination that they
do not challenge on appeal.

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see also Bolone v. Wells Fargo Home Mortg., Inc., 858 F. Supp. 2d 825, 837 (E.D. Mich.
2012). The Duffeys do not challenge this conclusion on appeal. Instead, they argue that
they have properly pleaded that defendants’ misrepresentation was “willful” under the
statute. Because the Duffeys fail to point to any error in the district court’s order, we find
none.
D.

Fair Debt Collection Practices Act
The Duffeys also claim that the error in the June 2013 notice violated the Fair

Debt Collection Practice Act, 15 U.S.C. § 1692e. In its order of dismissal, the district
court held that the defendants were “creditors” under the FDCPA, and not subject to the
Act. We agree that the Duffeys’ FDCPA claim should be dismissed but for a reason
other than the reason given by the district court. See Lawrence v. Chancery Court of
Tenn., 188 F.3d 687, 691 (6th Cir. 1999) (noting the rule that we may affirm a district
court’s grant of a motion to dismiss “on any ground supported by the record, even if it is
different from the grounds relied on by the district court.”).
The claim should be dismissed because the misstatement at issue is not a
materially false or misleading statement, as required under the Act. Under the Act, debt
collectors are prohibited from using “any false, deceptive, or misleading representation or
means in connection with the collection of any debt.” Wallace v. Wash. Mut. Bank, F.A.,
683 F.3d 323, 326 (6th Cir. 2012) (citing 15 U.S.C. § 1692e). We apply the “least
sophisticated consumer” test to determine whether a debt collector’s actions are false,
deceptive, or misleading under 15 U.S.C. § 1692e. Id. To satisfy this standard, “we have

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also held that a statement must be materially false or misleading to violate Section 1692e
. . . [which] simply means that in addition to being technically false, a statement would
tend to mislead or confuse the reasonable unsophisticated consumer.” Id. at 326-27
(emphasis in the original).
The statement at issue here does not meet the “materially false” standard. In
Wallace, we held that “a clearly false representation of the creditor’s name” constituted a
materially false statement where the plaintiff-mortgagor alleged that such representation
caused her to contact the wrong party, and otherwise caused her confusion and delay in
trying to cure her default. Id. at 327-28 (emphasis added). The statement at issue here
reads:
Your mortgage is being serviced by DEUTSCHE BANK NATIONAL
TRUST COMPANY . . . located at c/o FABRIZIO & BROOK, P.C., 888
W. Big Beaver, Ste. 800, Troy, MI 48084 with a phone number of (248)
362-2600. Your servicer has designated Jonathan L. Engman, counsel for
Bank of America as the person to contact regarding resolving your default.
Such language identifies the correct person to contact – a point the Duffeys do not
dispute.

The notice correctly identifies Fabrizio & Brook as counsel for Bank of

America, the loan servicer at the time. And unlike the mortgagor in Wallace, the Duffeys
never claim that the misidentification caused them to contact the wrong party or
otherwise delay in acting. Because the statement at issue identifies the correct entity to
contact, and such entity represented both the creditor and the loan servicer, we hold that it
would not tend to mislead or confuse the reasonable unsophisticated consumer.

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Equitable Relief
The Duffeys also ask the court to exercise its equitable powers to set aside the

sheriffs sale of the property. The Duffeys argue that the court is empowered to grant
such relief because the loan originator – Countrywide Mortgage – obtained the mortgage
at issue through fraud and discrimination, and those acts should be imputed to Deutsche
Bank.

The district court ruled that, as a matter of law, the alleged fraud and

discrimination could not be imputed to the defendants, and equitable relief was therefore
not available. The Duffeys challenge this holding, arguing without reference to any
authority, that Deutsche Bank was “an original participant in Countrywide’s scheme to
defraud America’s African-American community and, as such, they are rightfully and
properly [a] party to the original fraud.” This argument is without merit as it is both
conclusory and undeveloped, and we will not consider it on appeal. See Gen. Star Nat.
Ins. Co., 289 F.3d at 441.
F.

Dower Rights
The Duffeys originally claimed that the defendants violated Dianne Duffey’s

dower rights. They have expressly abandoned this claim on appeal so we do not address
it.
AFFIRMED.