Reed et al v. Chase Home Finance, LLC
ORDER denying Plaintiffs' 53 Motion for Summary Judgment; granting Defendant's 57 Motion for Summary Judgment. The 70 Motion to Strike, 71 Motion to Strike, 79 Motion for Leave to File, 82 Motion to Strike, 86 Motion to Supplement are denied as moot. Signed by Chief Judge William H. Steele on 9/26/2012. (tgw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
MAX LEROY REED, JR., et al.,
CHASE HOME FINANCE, LLC,
) CIVIL ACTION 11-0412-WS-C
This matter is before the Court on the parties’ cross-motions for summary
judgment. (Docs. 53, 57). The parties have submitted briefs, evidentiary materials and
other filings in support of their respective positions, (Docs. 54-56, 58-60, 73-76, 88, 9093), and the motions are ripe for resolution. After careful consideration, the Court
concludes that the plaintiffs’ motion for summary judgment is due to be denied and that
the defendant’s motion for summary judgment is due to be granted.1
According to the complaint, the plaintiffs obtained a mortgage loan from a third
party and executed a mortgage in favor of that third party. Servicing of the loan was later
transferred to the defendant. In September 2010, “ownership interest in the Plaintiff’s
mortgage and note was assigned to” the defendant. The single count of the complaint is
that the defendant did not give the plaintiffs the notice required by 15 U.S.C. § 1641(g).
(Doc. 2). The defendant argues: (1) that the Court lacks subject matter jurisdiction; (2)
The defendant’s request for oral argument, (Doc. 58 at 1), construed as a motion for oral
argument, is denied. See Local Rule 7.3.
that it is not subject to Section 1641(g); and (3) that, if it would otherwise be so subject, it
falls within the “safe harbor” of Section 1641(f).
Summary judgment should be granted only if “there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a). The party seeking summary judgment bears “the initial burden to show the
district court, by reference to materials on file, that there are no genuine issues of material
fact that should be decided at trial.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608
(11th Cir. 1991). The moving party may meet its burden in either of two ways: (1) by
“negating an element of the non-moving party’s claim”; or (2) by “point[ing] to materials
on file that demonstrate that the party bearing the burden of proof at trial will not be able
to meet that burden.” Id. “Even after Celotex it is never enough simply to state that the
non-moving party cannot meet its burden at trial.” Id.; accord Mullins v. Crowell, 228
F.3d 1305, 1313 (11th Cir. 2000); Sammons v. Taylor, 967 F.2d 1533, 1538 (11th Cir.
“When the moving party has the burden of proof at trial, that party must show
affirmatively the absence of a genuine issue of material fact: it must support its motion
with credible evidence ... that would entitle it to a directed verdict if not controverted at
trial. [citation omitted] In other words, the moving party must show that, on all the
essential elements of its case on which it bears the burden of proof, no reasonable jury
could find for the nonmoving party.” United States v. Four Parcels of Real Property,
941 F.2d 1428, 1438 (11th Cir. 1991) (en banc) (emphasis in original); accord Fitzpatrick
v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993).
“If the party moving for summary judgment fails to discharge the initial burden,
then the motion must be denied and the court need not consider what, if any, showing the
non-movant has made.” Fitzpatrick, 2 F.3d at 1116; accord Mullins, 228 F.3d at 1313;
Clark, 929 F.2d at 608.
“If, however, the movant carries the initial summary judgment burden ..., the
responsibility then devolves upon the non-movant to show the existence of a genuine
issue of material fact.” Fitzpatrick, 2 F.3d at 1116. “If the nonmoving party fails to
make ‘a sufficient showing on an essential element of her case with respect to which she
has the burden of proof,’ the moving party is entitled to summary judgment.” Clark, 929
F.2d at 608 (quoting Celotex Corp. v. Catrett, 477 U.S. 317 (1986)) (footnote omitted);
see also Fed. R. Civ. P. 56(e)(2) (“If a party fails to properly support an assertion of fact
or fails to properly address another party’s assertion of fact as required by Rule 56(c), the
court may … consider the fact undisputed for purposes of the motion ….”).
In deciding a motion for summary judgment, “[t]he evidence, and all reasonable
inferences, must be viewed in the light most favorable to the nonmovant ….”
McCormick v. City of Fort Lauderdale, 333 F.3d 1234, 1243 (11th Cir. 2003).
There is no burden on the Court to identify unreferenced evidence supporting a
party’s position.2 Accordingly, the Court limits its review to the exhibits, and to the
specific portions of the exhibits, to which the parties have expressly cited. Likewise,
“[t]here is no burden upon the district court to distill every potential argument that could
be made based upon the materials before it on summary judgment,” Resolution Trust
Corp. v. Dunmar Corp., 43 F.3d 587, 599 (11th Cir. 1995), and the Court accordingly
limits its review to those arguments the parties have expressly advanced.
I. Subject Matter Jurisdiction.
In the absence of constitutional standing, a court lacks subject matter jurisdiction.
E.g., Stalley ex rel. United States v. Orlando Regional Healthcare System, 524 F.3d 1229,
1234-35 (11th Cir. 2008). In the short concluding section of its principal brief, the
Fed. R. Civ. P. 56(c)(3) (“The court need consider only the cited materials, but it may
consider other materials in the record.”); accord Adler v. Wal-Mart Stores, Inc., 144 F.3d 664,
672 (10th Cir. 1998) (“The district court has discretion to go beyond the referenced portions of
these [summary judgment] materials, but is not required to do so.”).
defendant points to testimony that the plaintiffs suffered no economic harm, emotional
distress or other adverse impact from failing to receive the notice required by Section
1641(g). Without elaboration, the defendant concludes that this testimony proves the
plaintiffs experienced no injury-in-fact and therefore lack constitutional standing. (Doc.
58 at 39-42).3
An injury-in-fact that is both “concrete and particularized” and “actual or
imminent, not conjectural or hypothetical,” is part of “the irreducible constitutional
minimum of standing.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)
(internal quotes omitted). But “‘[t]he … injury required by Art. III may exist solely by
virtue of statutes creating legal rights, the invasion of which creates standing.’” Id. at 578
(quoting Linda R.S. v. Richard D., 410 U.S. 614, 617 n.3 (1973)).
This principle is fairly illustrated by Havens Realty Corp. v. Coleman, 455 U.S.
363 (1982). Section 804(d) of the Fair Housing Act of 1968 made it unlawful to falsely
represent to any person, because of race, sex or other listed category, that a dwelling is
not available for inspection, sale or rental. The Havens Realty Court held that Section
804(d), “which, in terms, establishes an enforceable right to truthful information
concerning the availability of housing, is such an enactment” as described by Linda R.S.
Id. at 373. “A tester who has been the object of a misrepresentation made unlawful under
§ 804(d) has suffered injury in precisely the form the statute was intended to guard
against, and therefore has standing to maintain a claim for damages under the Act’s
provisions,” even if the tester had no intention of renting or buying and even if she did
not rely on the false information. Id. at 373-74. In particular, “the Art. III requirement of
injury in fact is satisfied.” Id. at 374. In the same way, Section 1641(g) creates a legal
right to certain disclosures, and an invasion of that right can create standing.
The defendant does not challenge the existence of statutory standing. (Doc. 58 at 41
A violation of Section 1641(g) enables a plaintiff to recover both actual damages
and statutory damages, and the latter are recoverable even in the complete absence of the
former. E.g., Brown v. CitiMortgage, Inc., 817 F. Supp. 2d 1328, 1331 (S.D. Ala. 2011).
Courts have repeatedly held that the availability of statutory damages for the violation of
a statutory right satisfies Article III’s injury-in-fact requirement, even when no actual
damages were incurred. E.g., Alston v. Countrywide Financial Corp., 585 F.3d 753, 76263 (3rd Cir. 2009) (Real Estate Settlement Procedures Act); Beaudry v. TeleCheck
Services, Inc., 579 F.3d 702, 707 (6th Cir. 2009) (Fair Credit Reporting Act); Robey v.
Shapiro, Marianos & Cejda, L.L.C., 434 F.3d 1208, 1212 (10th Cir. 2006) (Fair Debt
Collection Practices Act); DeMando v. Morris, 206 F.3d 1300, 1303 (9th Cir. 2000)
(Truth in Lending Act); Mabary v. Hometown Bank, N.A., ___ F. Supp. 2d ___, 2012 WL
3765020 at *3 (S.D. Tex. 2012) (Electronic Funds Transfer Act); Hammer v. JP’s
Southwestern Foods, L.L.C., 739 F. Supp. 2d 1155, 1161-62 (W.D. Mo. 2010) (Fair and
Accurate Credit Transactions Act); Landsman & Funk, P.C. v. Lorman Business Center,
Inc., 2009 WL 602019 at *3 (W.D. Wis. 2009) (Telephone Consumer Protection Act).
The defendant does not acknowledge these lines of authority, even though the
plaintiffs’ brief invokes them both. (Doc. 76 at 26). Instead, it notes only that Congress
“cannot erase Article III’s standing requirements by statutorily granting the right to sue to
a plaintiff who would not otherwise have standing.” (Doc. 90 at 18 (quoting Raines v.
Byrd, 521 U.S. 811, 820 n.3 (1997)). This is a correct proposition, but it is inapposite
here. In Raines, Congress inserted into the Line Item Veto Act a provision that “[a]ny
Member of Congress or any individual adversely affected by [this Act] may bring an
action … on the ground that any provision of this part violates the Constitution.” 521
U.S. at 815-16. That Congress authorized its members to sue could not of itself invest
them with constitutional standing, which depends upon the plaintiff’s suffering of an
injury-in-fact as defined in Lujan and other cases. Id. at 818-20. But Congress in Section
1641(g) did not simply tell borrowers they could sue; it created a legally protected right
to receive certain information under certain circumstances and granted a financial remedy
for violations of that right, a remedy obtainable even absent other damage.
For the reasons set forth above, the Court concludes that the plaintiffs have alleged
an injury-in-fact and that the Court thus possesses subject matter jurisdiction to hear this
II. Coverage under Section 1641(g).
Section 1641(g) reads as follows:
In addition to other disclosures required by this subchapter, not later
than 30 days after the date on which a mortgage loan is sold or otherwise
transferred or assigned to a third party, the creditor that is the new owner
or assignee of the debt shall notify the borrower in writing of such transfer,
(A) the identity, address [and] telephone number of the new creditor;
(B) the date of transfer;
(C) how to reach an agent or party having authority to act on behalf of the
(D) the location of the place where transfer of ownership of the debt is
(E) any other relevant information regarding the new creditor.
Section 1641(g) imposes a notification obligation on the “new creditor” or “new
owner or assignee of the debt.” The Court thus traces the history of the plaintiffs’ loan
and the mortgage securing it.4
In 2006, the plaintiffs obtained mortgage refinancing from Pensacola Guarantee
Mortgage (“Pensacola”). In connection with the refinancing, the plaintiffs executed a
promissory note (“the Note”) in favor of Pensacola. (Doc. 59, Exhibit 2(A)). They also
executed a mortgage (“the Mortgage”) naming Mortgage Electronic Registration
Systems, Inc. (“MERS”) as the mortgagee. (Doc. 54, Exhibit 1). The Mortgage
identifies MERS as “a separate corporation that is acting solely as a nominee for
[Pensacola] and [Pensacola’s] successors and assignees.” (Id. at 1). The Mortgage
conveys to MERS (as nominee) legal title to the realty and grants to MERS (as nominee)
Except as expressly noted, the parties are in agreement as to all statements of fact listed
in this section.
the power of sale. (Id. at 2-3). Specifically, the Mortgage provides that “Borrower
understands and agrees that MERS holds only legal title to the interests granted by
Borrower in this Security Instrument, but, if necessary to comply with law or custom,
MERS (as nominee for Lender and Lender’s successors and assigns) has the right: to
exercise any or all of those interests, including, but not limited to, the right to foreclose
and sell the Property; and to take any action required of Lender including, but not limited
to, releasing and canceling this Security Instrument.” (Id. at 3).
Shortly after closing, Pensacola executed an allonge to the Note, transferring
ownership of the Note to SunTrust Mortgage (“SunTrust”). (Doc. 59, Exhibit 6(2) at 7).
SunTrust later endorsed the Note in blank. (Id. at 4).
According to the declaration of Thomas Kowick, a director of the Federal National
Mortgage Association (“Fannie Mae”), Fannie Mae acquired ownership of the Note from
SunTrust in early 2007. (Doc. 59, Exhibit 7). The plaintiffs object that Kowick has no
personal knowledge concerning this proposition and is instead relying on a computer
screen grab from a Fannie Mae website rather than on a “conveyance document”
transferring ownership of the Note to Fannie Mae. (Doc. 76 at 2-4, 13, 17-19). For
reasons that appear below, the Court concludes it is uncontroverted that Fannie Mae
received ownership of the Note in or before September 2007.
First, in September 2007, the defendant received physical possession of the Note
from Fannie Mae and thereafter served as custodian of the Note on behalf of Fannie Mae.
(Smith Deposition at 108, 117-20, 209-10; Doc. 76 at 5). This uncontroverted evidence
establishes that Fannie Mae had physical possession of the Note prior to its delivery of
the Note to the defendant.
Second, the Note is a “negotiable instrument” as that term is defined by Alabama
law. Ala. Code § 7-3-104(a). As used in that chapter, “‘[i]nstrument’ means a negotiable
instrument.” Id. § 7-3-104(b). “If an instrument is payable to bearer, it may be
negotiated by transfer of possession alone.” Id. § 7-3-201(b). Specifically, “[w]hen
endorsed in blank, an instrument becomes payable to bearer and may be negotiated by
transfer of possession alone unless specially indorsed.” Id. § 7-3-205(b). Because the
Note was endorsed in blank and without special endorsement, it was negotiable by
transfer of possession alone.
Since negotiation of the Note could be accomplished by mere transfer of
possession, and since it is uncontroverted that Fannie Mae had possession of the Note
when it transferred possession to the defendant, the Note necessarily had been negotiated
to Fannie Mae by transfer of possession. Negotiation made Fannie Mae the Note’s
holder, Ala. Code § 7-3-201(a), and, as a holder, Fannie Mae was entitled to enforce the
Note. Id. § 7-3-301.
Servicing of the loan was transferred from Pensacola to SunTrust shortly after
closing. (Doc. 59, Exhibit 2(D)). Servicing was transferred from SunTrust to the
defendant in September 2007. (Smith Deposition at 91; Kibble Deposition at 121-22;
Doc. 76 at 4).
In July 2010, the defendant sent the plaintiffs an “acceleration warning (notice of
intent to foreclose),” based on the plaintiffs’ failure to make several monthly payments.
(Doc. 54, Exhibit 4). By letter dated September 3, 2010, the defendant issued the
plaintiffs a “notice of acceleration of promissory note and mortgage” and announced that
it was “commencing foreclosure under the terms of the Mortgage.” (Id., Exhibit 5). On
September 7, 2010, MERS executed an “assignment of mortgage” (“the Assignment”),
transferring to the defendant “all right, title and interest of [MERS] in and to that certain
Mortgage executed by” the plaintiffs. (Id., Exhibit 6).
It is this September 2010 Assignment that, according to the plaintiffs, triggered
Section 1641(g). At the risk of oversimplification, the Court summarizes the plaintiffs’
argument as follows. Citing an implementing regulation, the plaintiffs argue that a “new
owner or assignee” under the statute is one holding “legal title” to the underlying debt.
Citing Alabama case law, the plaintiffs argue that legal title means “apparent ownership”
of the debt, with no requirement of a beneficial interest in the debt. Citing the Mortgage,
the plaintiffs argue that it gives MERS all rights of the lender, including the right to
foreclose. Citing the Assignment, the plaintiffs argue that the defendant succeeded to
these rights. Citing an Alabama statute, the plaintiffs argue that foreclosure can lawfully
be undertaken only by one “entitled to the money thus secured.” Citing Alabama case
law, the plaintiffs argue that transfer of a mortgage raises a presumption that title to the
secured debt is transferred as well. Citing an Alabama case, the plaintiffs argue that the
Mortgage and Assignment thereby conveyed to the defendant the apparent ownership of
the debt and thus legal title to it. (Doc. 54 at 6-10).5
The parties’ briefing as to the defendant’s status vel non as a “new owner or
assignee of the debt” under Section 1641(g) raises several interesting and apparently
intricate questions of state and federal law. But the Court need not address them because,
even were they to be resolved favorably to the plaintiffs, under the uncontroverted facts
the defendant falls within the safe harbor of Section 1641(f) as a matter of law.
III. Administrative Convenience.
Section 1641(f) provides in pertinent part as follows:
(f) Treatment of servicer
(1) In general
A servicer of a consumer obligation arising from a consumer
credit transaction shall not be treated as an assignee of such
obligation for purposes of this section unless the servicer is or
was the owner of the obligation.
(2) Servicer not treated as owner on basis of assignment for
A servicer of a consumer obligation arising from a consumer credit
transaction shall not be treated as the owner of the obligation for
While suggesting vaguely at various points in their briefing that perhaps Fannie Mae
retains no beneficial interest in the loan, the plaintiffs expressly represent that the proposition
that “Fannie Mae remains the beneficial owner of the loan,” (Doc. 58 at 10), is “not disputed.”
(Doc. 76 at 6). That admission is dispositive, and only the location of legal title to the debt is at
purposes of this section on the basis of an assignment of the obligation
from the creditor or another assignee to the servicer solely for the
administrative convenience of the servicer in servicing the obligation.
Under subsection (1), a servicer has no duty of notification under Section 1641(g)
unless the servicer “is or was the owner of the obligation.” Under subsection (2), the
servicer “shall not be treated as the owner of the obligation,” and thus shall not be subject
to Section 1641(g), if it was assigned the obligation “solely for the administrative
convenience of the servicer in servicing the obligation.”
It is uncontroverted that the defendant was appointed as servicer of the plaintiffs’
loan. (Doc. 76 at 4). The question is whether it is uncontroverted that the defendant –
assuming for the moment that it was assigned the obligation at all – was assigned the
obligation solely for its administrative convenience in servicing the obligation.
The parties have identified, and the Court has located, no case defining
“administrative convenience” under Section 1641(f), and the implementing regulation
uses the term without attempting to explain it. 12 C.F.R. § 226.39(a)(1). Invoking
“common sense,” the plaintiffs assert that the phrase captures only “non-substantial
ministerial duties.” Using this crabbed definition, they conclude that administrative
convenience “could never encompass something as fundamental and essential to the
mortgagee/mortgagor relationship as acceleration and foreclosure.” They insist that any
contrary conclusion would be “bizarre.” (Doc. 76 at 23-24).
The Court acknowledges that “[t]he rule of common sense must be applied to the
construction of criminal statutes, the same as others.” United States v. Haun, 494 F.3d
1006, 1009-10 (11th Cir. 2007) (internal quotes omitted). But that is not where the
inquiry commences. Instead, “[w]e begin with the familiar canon of statutory
construction that the starting point for interpreting a statute is the language of the statute
itself.” Jian Le Lin v. United States Attorney General, 681 F.3d 1236, 1239 (11th Cir.
2012) (internal quotes omitted). “And where the statutory language provides a clear
answer, it ends there as well.” Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438
The term “administrative convenience” is not defined by statute. Therefore, the
Court “assum[es] that the ordinary meaning of that language accurately expresses the
legislative purpose.” Dionne v. Floormasters Enterprises, Inc., 667 F.3d 1199, 1205
(11th Cir. 2012) (internal quotes omitted). “In determining the ordinary meaning of
statutory terms, we often find guidance in dictionary definitions.” In re: James, 406
F.3d 1340, 1343 (11th Cir. 2005).
Something is “convenient” if it is “[a]ppropriate or favorable to one’s comfort,
purpose, or needs.” Webster’s New College Dictionary at 252 (3rd ed. 2008).6
“Convenience,” then, denotes “[s]omething that increases comfort or makes work less
difficult.” Id.7 To “administer” is to “manage.” Id. at 15.8 “Administration” is simply
“[t]he act or process of administering …,” and “administrative” is merely the adjectival
form of the word. Id. Thus, “administrative convenience” is that which makes it easier or
Accord Oxford English Dictionary (online ed. 2012) (“OED”) (defining “convenient” as
“[p]ersonally suitable or well-adapted to one’s easy action or performance of functions;
favourable to one’s comfort, easy condition, or the saving of trouble; commodious”); American
Heritage Dictionary 400-01 (5th ed. 2011) (“AHD”) (defining “convenient” as “[s]uited or
favorable to one’s comfort, purpose, or needs”).
The Supreme Court and the Eleventh Circuit have repeatedly relied on these and similar
dictionaries in construing statutory language. See, e.g., Mohamad v. Palestinian Authority, 132
S. Ct. 1702, 1707 (2012); Schindler Elevator Corp. v. United States ex rel. Kirk, 131 S. Ct. 1885,
1891 (2011); Stein v. Paradigm Mirasol, LLC, 586 F.3d 849, 854 (11th Cir. 2009); Jackson v.
State Board of Pardons and Paroles, 331 F.3d 790, 795 (11th Cir. 2003); In re: Cash Cow
Services, LLC, 296 F.3d 1261, 1263 (11th Cir. 2002).
Accord OED (defining “convenience” as “[t]he quality of being convenient” as defined
above); AHD at 400 (defining “convenience” as “[t]he quality of being suitable to one’s comfort,
purposes, or needs”).
Accord OED (defining “administer” as “to carry out or oversee the tasks necessary for
the running of (an organization) or the effecting of (a state of affairs); to manage, run (an
operation, affairs, etc.); to manage the affairs of (an institution, community, etc.)”); AHD at 22
(defining “administer” as “[t]o have charge of; manage”).
less difficult to manage whatever is being managed. Cf. Reno v. Flores, 507 U.S. 292,
311 (1993) (equating “administrative convenience” with “administrative efficiency”).
The plaintiffs’ restriction of administrative convenience to “non-substantial
ministerial duties” will not hold water. They cite no authority of any kind for the
proposition that administrative convenience can be so tightly cabined, and even a casual
review of the contexts in which the phrase is used demonstrates that it cannot be so
limited. For example, the Supreme Court has recently described a union’s decision to
calculate the fee that non-members must pay by using the union’s expenses during the
previous year as sustainable “[i]n the interest of administrative convenience,” Knox v.
Service Employees International Union, 132 S. Ct. 2277, 2285 (2012) (describing
Chicago Teachers Union v. Hudson, 475 U.S. 292 (1986)), yet it cannot be seriously
suggested that a union’s determination of the fee charged to non-members is a “nonsubstantial ministerial dut[y].” Similarly, the High Court has found a tax exemption for
businesses with fewer than eight employees to be rational in light of the “administrative
convenience” of not taxing smaller businesses, Armour v. City of Indianapolis, 132 S. Ct.
2073, 2081 (2012) (describing Carmichael v. Southern Coal & Coke Co., 301 U.S. 495
(1937)), even though taxation plainly is not a ministerial task.
Congress as well has used the term “administrative convenience” in contexts that
could not possibly support the construction the plaintiffs attempt to place on it. For
example, a reorganization plan under Chapter 11 must place each claim in a particular
class “only if such claim or interest is substantially similar to the other claims or interests
of such class,” except that “[a] plan may designate a separate class of claims consisting
only of every unsecured claim that is less than or reduced to an amount that the court
approves as reasonable and necessary for administrative convenience.” 11 U.S.C. §
1122. The classification of claims in a bankruptcy case cannot easily be construed as a
ministerial task, especially given that the classification must be judicially approved.
Similarly, Congress has prohibited the termination or reduction of certain tribal grants
based on the administrative convenience of the administering agency, 25 U.S.C. §§
2502(g), 3303(d), yet grant decisions cannot be viewed as ministerial.
The plaintiffs’ novel proposed restriction of “administrative convenience” to
ministerial duties makes no more sense in the context of Section 1641(f) than it does
elsewhere. By its terms, the statute negates servicer liability whenever the servicer
receives ownership of the underlying obligation for its administrative convenience “in
servicing the obligation.” It thereby extends protection to assignments of the obligation
that are administratively convenient to any and all servicing duties undertaken by the
servicer – substantive as well as ministerial.
The plaintiffs suggest that their narrow reading of Section 1641(f) has been
endorsed by the Northern District of Illinois. (Doc. 76 at 24-25). According to them, the
Court in Fairbanks Capital Corp. v. Jenkins, 225 F. Supp. 2d 910 (N.D. Ill. 2002),
“soundly rejected the notion that [the servicer] could at the same time be both an owner
of the debt for the purposes of conducting a foreclosure in its own name and also a
‘servicer’ accepting assignment ‘solely for administrative convenience.’” (Doc. 76 at
24). But the Fairbanks Capital Court said no such thing. What it actually stated was that
the servicer could not allege in its complaint that it was the owner of the note and
simultaneously deny that it fell within Section 1641(f)(1). 225 F. Supp. 2d at 914. In
addressing the safe harbor provision of Section 1641(f)(2), the Court made only the
unremarkable ruling that, on a motion to dismiss, it could not determine the factual issue
of whether the assignment had been made solely for administrative convenience. Id.
“We will only look beyond the plain language of a statute at extrinsic materials to
determine the congressional intent if: (1) the statute’s language is ambiguous; (2)
applying it according to its plain meaning would lead to an absurd result; or (3) there is
clear evidence of contrary legislative intent.” In re: Tennyson, 611 F.3d 873, 877 (11th
Cir. 2010) (internal quotes omitted). A statute is ambiguous when it is “capable of being
understood in two or more possible senses or ways.” Chickasaw Nation v. United States,
534 U.S. 84, 90 (2001) (internal quotes omitted). Since only two readings of Section
1641(f) have been proposed, and since the statute is not capable of being understood as
the plaintiffs would read it, there is no ambiguity to be resolved. Applying the Court’s
construction leads to no absurd results, and the plaintiffs suggest none. Nor do they
identify any evidence of contrary legislative intent – indeed, they do not address
legislative intent at all. The Court’s reading therefore obtains.
To the question, then: was assignment of the obligation to the defendant (if it
indeed occurred) “solely for the administrative convenience of the servicer in servicing
the obligation”? That is, did such assignment make it less difficult for the defendant to
perform a servicing duty, and was that the purpose of the assignment? The answer
plainly must be in the affirmative.
As noted in Part II, the plaintiffs insist that assignment of a mortgage carries with
it as a matter of Alabama law an assignment of the debt and that foreclosure can legally
be undertaken in Alabama only by one holding title to the debt. If neither proposition is
true, then the defendant could not be a creditor under Section 1641(g), and the plaintiffs’
case fails under Part II. But if (as the Court assumes for argument) either is true, then
assignment of the debt to the defendant necessarily was administratively convenient to
the defendant in servicing the obligation.
As the plaintiffs admit, conducting foreclosure proceedings is an integral part of
the defendant’s duties as servicer. (Doc. 58 at 9; Doc. 76 at 6-7). As the plaintiffs admit,
the defendant was required by its arrangements with Fannie Mae to foreclose in its own
name – not in Fannie Mae’s name and not in MERS’ name. (Doc. 58 at 9-10; Doc. 76 at
6-7). As the plaintiffs admit, in order to foreclose in its own name, the defendant was
required to be the mortgagee of record, which status required an assignment of the
Mortgage to it from MERS. (Id. at 9, 20-21). As the plaintiffs admit, Fannie Mae
requires the defendant to obtain such an assignment. (Id. at 11).
Given the plaintiffs’ position that assignment of the debt follows assignment of the
mortgage and/or that assignment of the debt is a legal prerequisite to foreclosure,
assignment of the debt (if it occurred) made it less difficult for the defendant to fulfill its
servicing duty of foreclosing in its own name. Indeed, under the plaintiffs’ theory it
would not have been legal or even possible for the defendant to fulfill this duty without
being assigned the debt. Any assignment of the debt to the defendant therefore was
administratively convenient within the contemplation of Section 1641(f). 9
The plaintiffs object that the defendant’s Rule 30(b)(6) deponents do not expressly
describe the Assignment as being “administratively convenient.” (Doc. 76 at 8-9).10 The
uncontroverted facts listed two paragraphs above – all of which have been conceded by
the plaintiffs – of themselves establish a complete factual predicate for the conclusion
that any assignment of the debt was administratively convenient to the defendant in
carrying out its servicing duty of foreclosing in its own name. The Assignment was
administratively convenient for the same reasons. It is irrelevant whether the defendant
produced witnesses echoing that conclusion.
The plaintiffs next argue that, even if the Assignment was administratively
convenient, the defendant offers no evidence that such convenience was the purpose of
the Assignment. (Doc. 76 at 8-9, 11-12). This argument is foreclosed by the plaintiffs’
admission that “[i]t is undisputed that the purpose of this assignment was to allow Chase
to accelerate the debt and conduct a foreclosure on the Reed’s home.” (Id. at 13). The
plaintiffs thereby admit that the defendant’s purpose in preparing and accepting the
Assignment was to allow (that is, make less difficult) its performance of its servicing
duty of foreclosing in its own name. Since they contend that assignment of the debt
The plaintiffs appear to believe that any act which benefits the servicer’s client and/or
costs the servicer money (such as the cost of preparing and recording the Assignment) cannot be
administratively convenient to the servicer. (Doc. 76 at 11). This is a non sequitur. Every
business in America incurs costs in the course of delivering what the client wants and would
quickly go out of business if it did not incur those costs or satisfy its clientele. What makes
conduct administratively convenient under Section 1641(f) is that the conduct renders it easier
for the servicer to perform that which its client requires in servicing the obligation.
Under Section 1641(f), the assignment that matters is assignment of the debt. The
plaintiffs, however, focus their arguments on the Assignment of the Mortgage, presumably
because, under their theory, assignment of the Mortgage for purposes of foreclosure
encompasses or requires assignment of the debt.
follows assignment of the Mortgage and that assignment of the debt is necessary to
foreclosure, their admission extends to assignment of the debt.
The plaintiffs stress that Section 1641(f) requires that administrative convenience
be the “sole” reason for the assignment. (Doc. 76 at 8-9, 11-12, 23). Their admission as
to the “the purpose” of the Assignment sweeps this argument before it, since there is no
difference between “the purpose” as the plaintiffs have used it and “the sole purpose.”11
Finally, the plaintiffs argue there is evidence that the reason for the Assignment
was to benefit Fannie Mae, primarily by avoiding or minimizing transfer taxes. (Doc. 76
at 11). Again, the plaintiffs have already admitted that the purpose of the Assignment
was to allow the defendant to perform its servicing duty of foreclosing in its own name,
and that admission is dispositive. But the plaintiffs are also mistaken on the merits.
Section 1641(f) is concerned only with why a servicer takes an assignment, while the
plaintiffs’ argument addresses not the defendant’s motivation in taking the Assignment
but the separate (and irrelevant) question of Fannie Mae’s motivation in requiring the
For the reasons set forth above, the plaintiffs’ motion for summary judgment is
denied and the defendant’s motion for summary judgment is granted. Judgment shall be
entered accordingly by separate order.12
See, e.g., In re: Cardelucci, 285 F.3d 1231, 1234 (9th Cir. 2002) (“The definite article
‘the’ instead of the indefinite ‘a’ or ‘an’ indicates that Congress meant for a single source to be
used to calculate post-petition interest.”); American Business Association v. Slater, 231 F.3d 1, 5
(D.C. Cir. 2000) (“Indeed, it is a rule of law well established that the definite article ‘the’
particularizes the subject which it precedes. It is a word of limitation ….”) (internal quotes
The following ancillary motions are denied as moot, as the Court has not relied on any
of the evidence made the subject of the motions: (1) the plaintiffs’ motion to strike the
declaration of Thomas Reardon, (Doc. 70); (2) the plaintiffs’ motion to strike the declaration of
Thomas Kowick, (Doc. 71); (3) the defendant’s motion for leave to file supplemental
DONE and ORDERED this 26th day of September, 2012.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE
declarations of Kowick and Reardon, (Doc. 79); (4) the plaintiffs’ restated motion to strike the
declarations of Kowick and Reardon, (Doc. 82); and (5) the defendant’s addended motion for
leave to file supplemental declarations of Kowick and Reardon. (Doc. 86).
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