Kelly Floyd v. U.S. Bank National Association, et al
Filed opinion of the court by Judge Easterbrook. AFFIRMED. Frank H. Easterbrook, Circuit Judge; Michael S. Kanne, Circuit Judge and Diane S. Sykes, Circuit Judge. [6916706-1]  [17-1770]
United States Court of Appeals
For the Seventh Circuit
KELLY JEAN LINDERMAN,
U.S. BANK NATIONAL ASSOCIATION,
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. 1:16-cv-00104-LJM-DML — Larry J. McKinney, Judge.
ARGUED MARCH 28, 2018 — DECIDED APRIL 10, 2018
Before EASTERBROOK, KANNE, and SYKES, Circuit Judges.
EASTERBROOK, Circuit Judge. Kelly Jean Floyd bought a
home in 2004 and lived there with her ex-husband, their four
children, and her parents. In June 2013 her mother asked her
to move out to reduce intra-family conﬂicts. Floyd left—and
she also stopped paying the loan that is secured by a mortgage on the house. A few months later her mother departed
(her father had died years earlier), leaving the house occupied by a single daughter, who moved away in May 2014.
The unoccupied structure was vandalized; thieves removed
its copper pipe and wiring. U.S. Bank, which owns the note
and mortgage, started foreclosure proceedings in March
2014; Floyd asserts that she was not notiﬁed. A default
judgment was entered, then vacated in June 2015 at her request. (The parties have not told us what has happened in
the foreclosure case since then.) In 2014 Floyd remarried and
took the name Linderman, which we use from now on. She
has divorced the new husband and has never reoccupied the
home (or resumed paying oﬀ the loan)—though in August
2015, with the aid of an inheritance, she did buy another
house nearby. She lives in that house today.
The 2014 vandalism produced insurance money that was
sent to the Bank, to be held in escrow for use in making repairs or as additional security. Linderman hired a homerepair contractor, and early in 2015 the Bank disbursed
$10,000 from the escrow toward the cost of repairs. The contractor abandoned the job in April 2015, however, telling
Linderman that it was not conﬁdent that she could pay the
full cost of its work. The house was vandalized twice more
that spring, and a storm damaged the roof in June 2015.
Linderman has not hired a replacement contractor or
asked the Bank to disburse additional funds from the escrow. But she did send the Bank a leger, dated September 5,
2015, asking about the status of the loan and particularly
about how the insurance money was being handled. The
Bank sent a response dated September 25. Asserting that she
had not received that response, Linderman ﬁled this suit
under the Real Estate Seglement Procedures Act, which the
parties call RESPA and we call the Act.
The district judge assumed that the leger met the deﬁnition of a “qualiﬁed wrigen request”, 12 U.S.C. §2605(e)(1)(B),
and further assumed that a “servicer” (another deﬁned term)
must ensure that its response is received. We do not decide
whether either assumption is correct; the second is questionable given 12 C.F.R. §1024.11, which says that mailing a
timely and properly addressed response satisﬁes the Act
whether or not the response is received. (The statute is silent
on this issue.) Even with the beneﬁt of these two favorable
assumptions, Linderman lost, because a remedy depends on
proof of “actual damages”. 12 U.S.C. §2605(f)(1)(A). The district judge found that Linderman’s non-receipt of the information could not have caused or aggravated any of her injuries. 242 F. Supp. 3d 764 (S.D. Ind. 2017).
The dates we have mentioned show why the district
court reached this conclusion. Only Linderman’s divorce
from her new husband occurred after September 2015, but
the events that led to the divorce (inability to ﬁnd an aﬀordable place to live, disagreements about parenting styles, Linderman’s deteriorating mental health) predated the leger to
the Bank. Here are a few more dates: in October 2014 Linderman saw a property-preservation company (which she
had not hired) carting things away from the house; in July
2015 the City of Indianapolis began to send Linderman notices that the house had become a nuisance and demanding
that she take steps to secure and repair it to building-code
requirements (she estimates that she has spent $5,000 responding to the City’s demands); in August 2015 Linderman
entered treatment for depression and anxiety. None of these
events can be traced to non-receipt of the Bank’s leger in late
Still, Linderman asserts, the lack of a response from the
Bank has aggravated her problems. She does not explain
how. The lack of money disbursed from the escrow may be a
cause of continuing loss, if she cannot aﬀord to repair or secure the house. Similarly, the house’s condition could aﬀect
her mental well-being. Linderman asserts that she “began to
feel more anxious and depressed as [she] watched [her]
home continue [to] deteriorate”. Yet the Act does not require
a servicer to pay money in response to a wrigen request.
The Act requires a servicer to correct errors in its records
(§2605(e)(2)(A)) or provide appropriate information if no error needs ﬁxing (§2605(e)(2)(B), (C)). It requires the servicer
to refrain, for 60 days, from taking steps that would jeopardize the borrower’s credit rating (§2605(e)(3)). Linderman
does not accuse the Bank of violating the rule about credit
reports and does not explain how earlier access to the Bank’s
description of how the account has been handled could have
helped her. Nor do we see how lack of an adequate response, as opposed to the ongoing foreclosure and need of
money for repairs, could have contributed to her mental issues. And some of her asserted injuries, such as the breakdown of her marriage, are outside the scope of the Act. Perron v. J.P. Morgan Chase Bank, N.A., 845 F.3d 852, 858 (7th Cir.
2017) (“the breakdown of a marriage is not the type of harm
that faithful performance of RESPA duties avoids”).
A focus on federal rules can distract people (including
lawyers) from the more mundane doctrines of state law that
may oﬀer greater prospect of success. The contract between
Linderman and the Bank, not federal law, determines how
insurance proceeds must be handled and when the Bank
must disburse money from the escrow to make repairs. The
Act does not require servicers to explain the details of contracts (or contract law) to customers or their lawyers. Contract law also governs the arrangement between Linderman
and the repair ﬁrm that walked in April 2015; if the contract
required the ﬁrm to ﬁnish the job, Indiana law would supply
a remedy. Likewise Indiana law (rules of conversion, replevin, and trespass) could provide relief against the company
that may have taken harmful steps in October 2014. Linderman may even have a claim against her mother, who did not
pay the loan after Linderman moved out. (Linderman told
the district judge that she believed that her mother would
repay the loan, though she does not say that her mother
promised to do so or that she took any step to add her mother to the account with the Bank.) Yet she does not pursue any
of these theories. The sole claim in this suit is that the Bank
injured her by not adequately responding to her leger. That
claim fails for the reasons we have given.
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