Johns et al v. Wells Fargo Bank, NA
ORDER granting 49 Motion for Judgment on the Pleadings (converted to a motion for summary judgment); denying 53 Motion to Strike and motion to exclude (81) as set out. Signed by Judge Kristi K. DuBose on 12/17/2015. (cmj)
UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF ALABAMA
LAURIE B. JOHNS and JOSHUA R.
JOHNS, individually and on behalf of a
class of persons similarly situated,
WELLS FARGO BANK, N.A.,
Civil Action No. 14-0254-KD-C
This action is before the Court on defendant Wells Fargo Bank N.A.’s motion for
judgment on the pleadings and memorandum of law in support (which the Court has converted
to a motion for summary judgment), plaintiffs Laurie and Joshua Johns’ response, Wells
Fargo’s reply, and the parties’ supplemental briefs on motion for summary judgment (docs. 49,
50, 70, 73, 76, 78-80).
On December 16, 2015, a hearing was held on the motion. Upon consideration, and for
the reasons set forth herein and on the record, Wells Fargo’s motion for summary judgment is
The action is also before the Court on the Plaintiffs’ objection and motion to exclude
evidence submitted by Wells Fargo in support of its reply brief (doc. 81) and the Johns’ motion
to strike certain exhibits submitted by Wells Fargo with its answer (doc. 53). Upon
consideration, and for the reasons set forth herein, these motions are DENIED.
I. Factual and procedural background
In 2004, the Johns executed a mortgage, secured by their home, to Pinnacle Financial
Corporation. The loan was a “VA loan” that was insured by Government National Mortgage
Association (Ginnie Mae). Initially, Pinnacle serviced the loan. In February 2005, servicing was
transferred to Washington Mutual. In October 2005, the Johns filed a Chapter 13 bankruptcy.
At that time, they had failed to make several mortgage payments. According to the terms of the
loan, payment was due on the 1st day of each month (doc. 72-2, p. 1, Loan (“3. Payments. (A) I
will make my monthly payment on the 1st day of each month . . .”). The loan also required a
late charge for payments not received “by the end of 15 calendar days after the date it is due.”
(Id., p. 2) As to default, the loan provided as follows: “(B) If I do not pay the full amount of
each monthly payment on the date it is due, I will be in default.” (Id.).
Washington Mutual filed a motion for relief from the bankruptcy stay in order to
proceed with foreclosure. On November 1, 2006, the Bankruptcy Court entered a conditional
order to deny the motion and added the post-petition arrearage to Washington Mutual’s claim.
The Johns remitted their payment on November 13, 2006 (doc. 50, p. 3).
During the bankruptcy, the Federal Deposit Insurance Corporation placed Washington
Mutual in receivership and the loan servicing was transferred to Well Fargo. According to the
Johns, the transfer of servicing occurred on or about December 1, 2006, and at that time their
loan was in default.1 Wells Fargo agrees that servicing of the loan was transferred on December
In their amended complaint, the Johns alleged that the servicing of their loan was
transferred on or about February 16, 2007 (doc. 46, p. 3-4). However, in their response to the
motion for judgment on the pleadings, the Johns offer in their “Statement of Undisputed Facts”,
that the servicing was transferred on or about December 1, 2006 (doc. 73, p. 2).
1, 2006.2 Wells Fargo denies that the loan was in default or considered to be in default at time
of the servicing transfer (doc. 48, p. 4).
On October 30, 2009, the loan and mortgage were transferred to Wells Fargo from
Ginnie Mae (doc. 79-2). At that point, the mortgage and loan remained a VA loan but was
owned and serviced by Wells Fargo (doc. 48-4, p. 29-30).
The Johns were discharged from bankruptcy on February 10, 2011. Shortly before the
discharge, a dispute arose between the Johns and Wells Fargo as to the status of the mortgage.
Wells Fargo foreclosed on the Johns’ residence on March 2, 2011 and purchased the property at
the foreclosure sale (doc. 79-1, p. 3; doc. 79-4, Foreclosure Deed). A deficiency balance
remained (doc. 70 at 8).
Later, on April 13, 2011, Wells Fargo conveyed the property to the Secretary of
Veterans Affairs (doc. 79-1, p. 3; doc. 79-5, Special Warranty Deed). There is no evidence that
the deficiency balance was assigned to the VA. VRM, as agent for the Secretary of Veterans
Affairs filed an eviction action in the Circuit Court of Baldwin County, Alabama.
The Johns filed a counterclaim against VRM and a third-party complaint against Wells
Fargo. The case was settled and a release agreement was executed on October 10, 2013. The
terms of the settlement required the Johns to vacate the property by November 23, 2013 (doc.
70 at 9) Also, Wells Fargo and the VA agreed not to collect on the deficiency balance (See
Exh. 1 to hearing; minute entry dated December 16, 2016).
In late October 2013, the VA conveyed the property back to Wells Fargo (doc. 80-1,
Quit Claim Deed). In January, February and March 2014, Wells Fargo sent a statement to the
Wells Fargo cites the Welcome Letter dated November 25, 2006: “As of December 1,
2006, Washington Mutual will transfer the servicing of your mortgage loan to Wells Fargo
Home Mortgage, a division of Wells Fargo Bank, N.A. . . .” (Doc. 48, Exhibit 1).
Johns that stated, “Your loan has been referred to foreclosure . . .” and set out a payment
summary, balance summary, and year to date summary (doc. 79-6, Exhibit E to the Johns’
response). Wells Fargo sent the final settlement check to the Johns’ attorney in April 2014.
In June 2014, the Johns filed their putative class action complaint in this Court against
Well Fargo. The Johns alleged that Wells Fargo is a “debt collector” as defined in 15 U.S.C. §
1692a(6) of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. and that it violated
the provisions in the Act by, inter alia, using false and deceptive means to collect the debt.
Wells Fargo filed a motion to dismiss arguing that it was not a “debt collector” and
therefore the FDCPA did not apply. Alternatively, Wells Fargo argued that the Johns failed to
state a claim under 15 U.S.C. § 1692e(10) or 15 U.S.C. § 1692e(11). Magistrate Judge William
E. Cassady entered a report and recommendation finding that the Johns sufficiently pled that
Wells Fargo was a “debt collector” because they alleged that servicing of their loan was
transferred from Washington Mutual to Wells Fargo while their loan was “in default or
considered to be in default”; and thus, Wells Fargo did not come within the exclusion from
“debt collector” identified in 15 U.S.C. § 1692a(6)(F)(iii). Judge Cassady also found that the
Johns sufficiently plead a claim for using false representations or deceptive means to collect the
debt. See 15 U.S.C. § 1692e(10). However, Judge Cassady found that the Johns failed to state a
claim for Wells Fargo’s alleged failure to make certain disclosures in the initial communication
and all subsequent communications as required by the FDCPA. See 15 U.S.C. § 1692e(11).
Judge Cassady recommended dismissal without prejudice as to this claim and noted that the
Johns could amend their complaint.
The Court adopted the report and recommendation.3 Thereafter, the Johns filed their
amended complaint to better allege their claim under § 1629e(11) and to add factual allegation
in support of their claim that Wells Fargo was a debt collector as defined in the Act. In Count
One they allege that Wells Fargo violated § 1692e(2) by failing to comply with the requirement
that a debt collector not make certain false representations; violated § 1692e(5) by threatening
to take action that cannot legally be taken; violated § 1692e(10) by attempting to obtain
information by false or deceptive means; and violated §1592e(11) by failing to comply with the
disclosure requirements (doc. 46, p. 5-6). In support, the Johns allege that Wells Fargo sent
three “past due payment demands” on January 16, 2014, February 18, 2014, and March 17,
2014. (Id.). In Count Two, the Johns move the Court to certify a class action composed of
persons who have been subjected to this collection activity by Wells Fargo.
Wells Fargo then filed a motion for judgment on the pleadings. However, before the
Court ruled on the motion, the Court of Appeals for the Eleventh Circuit decided Davidson v.
Capital One Bank (USA) NA, 797 F. 3d 1309 (11th Cir. 2015). In Davidson the Court
determined that the status of the loan when acquired as either “in default” or “not in default”,
does not control the decision as to whether a bank was a “debt collector” as that term is defined
in the FDCPA. Rather, to be a “debt collector” a bank must either regularly collect or attempt
to collect debts owed or due to another or its principal business must be collection of debts. Id.
This Court converted Wells Fargo’s motion for judgment as a matter of law into a
motion for summary judgment. The parties were given the opportunity to provide additional
This order amends prior determinations to the extent that such determinations were in
error in the adopted report and recommendation.
briefing on the issue of whether Wells Fargo was a “debt collector” in view of the decision in
Davidson. The converted motion for summary judgment and additional briefing are now before
II. Conclusions of Law
A. Standard of Review
“The court shall grant summary judgment if the movant shows that 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) (Dec. 2010). Wells Fargo, as 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 party seeking summary judgment “always bears the initial
responsibility of informing the district court of the basis for its motion, and identifying those
portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine
issue of material fact.” Clark, 929 F.2d at 608 (quoting Celotex Corp. v. Catrett, 477 U.S. 317,
323, 106 S. Ct. 2548, 2553 (1986)). In deciding whether Wells Fargo has met its initial burden,
the Court must review the record and draw all reasonable inferences therefrom in a light most
favorable to the Johns, as the non-moving parties. See Whatley v. CNA Ins. Co., 189 F.3d 1310,
1313 (11th Cir. 1999).
Once Wells Fargo has satisfied this responsibility, the burden shifts to the Johns, as the
non-movants, to show the existence of a genuine issue of material fact that would preclude
summary judgment. See Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986). “In reviewing whether the [Johns have met their] burden, the court must stop short
of weighing the evidence and making credibility determination of the truth of the matter.
Instead, the evidence of the non-movant is to be believed, and all justifiable inferences are to be
drawn in his favor.” Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 999 (11th Cir. 1992)
(citing Anderson v. Liberty Lobby, 477 U.S. 242, 255, 106 S. Ct. 2505 (1986) ((bracketed text
added). However, Wells Fargo would be entitled to summary judgment if the Johns fail “to
make a sufficient showing on an essential element of [their] case with respect to which [they
have] the burden of proof.’” In re Walker, 48 F. 3d 1161, 1163 (11th Cir. 1995) (quoting
Celotex Corp., 477 U.S. at 323, 106 S. Ct. at 2552) (bracketed text added). Overall, the court
must “resolve all issues of material fact in favor of the [Johns], and then determine the legal
question of whether [Wells Fargo] is entitled to judgment as a matter of law under that version
of the facts.” McDowell v. Brown, 392 F.3d 1283, 1288 (11th Cir. 2004) (citing Durruthy v.
Pastor, 351 F.3d 1080, 1084 (11th Cir. 2003)) (bracketed text added).
However, the mere existence of any factual dispute will not automatically necessitate
denial of a motion for summary judgment; rather, only factual disputes that are material
preclude entry of summary judgment. Lofton v. Secretary of Dept. of Children and Family
Services, 358 F.3d 804, 809 (11th Cir. 2004). “An issue of fact is material if it is a legal
element of the claim under the applicable substantive law which might affect the outcome of the
case. It is genuine if the record taken as a whole could lead a rational trier of fact to find for the
nonmoving party.” Reeves v. C.H. Robinson Worldwide, Inc., 594 F.3d 798, 807 (11th Cir.
2010) (citation omitted).
1. The Johns’ motion to strike (doc. 53)
The Johns move to strike certain exhibits to Wells Fargo’s answer (doc. 53, motion; doc.
48, answer). Specifically, they move to strike an excerpt from Amber Nichole Ott’s deposition
taken July 2013 in BAC, as Servicing Agent v. Johns, Civil Action No. 11-901339 (Circuit
Court of Baldwin County, Alabama) on basis that she inaccurately testified that the due date for
the Johns’ monthly payment was the 13th day of each month (doc. 48-2, p. 118). The Johns
assert that their due date was the 1st day of each month.
The Johns also move to strike Deposition Exhibit 5, the Proof of Claim that was filed by
Washington Mutual in the Johns’ bankruptcy, because it is incomplete. They argue that Exhibit
5 did not include a copy of their note and mortgage. The Johns also move to strike Deposition
Exhibit 8, their Payment History, because it was illegible. Overall, the Johns argue that these
exhibits should be stricken because they are “incomplete, inaccurate, illegible, and confusing”
(doc. 53, p. 4). In support, the Johns submit a complete copy of the Proof of Claim and a
legible copy of the Payment History. The Johns assert that these are relevant because they show
that the payment due date was 1st of each month.
Wells Fargo responds that the Johns have failed to argue the elements of a Rule 12(f)
motion to strike – that the exhibits are “redundant, immaterial, impertinent or scandalous
matter” (doc. 67, p. 3). Wells Fargo argues that these exhibits are relevant to the issues before
the Court and that allowing the exhibits and deposition excerpt will not prejudice the Johns
because they again deposed Ott in 2015 and had the opportunity to seek further testimony on
any inaccurate or confusing statements in the first deposition in 2013.
Rule 12(f) provides that “[t]he court may strike from a pleading ... any redundant,
immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). “The purpose of a motion
to strike is to clean up the pleadings, streamline litigation, and avoid unnecessary forays into
immaterial matter.” Principal Bank v. First American Mortgage, Inc., 2014 WL 1268546, at *1
(M.D. Fla. Mar. 27, 2014) (internal citations, quotation marks, and brackets omitted).
The Johns do not argue that the exhibits are “redundant, immaterial, impertinent, or
scandalous matter.” Fed. R. Civ. P. 12(f). They do assert that the exhibits are “incomplete,
inaccurate, illegible and confusing” (doc. 53, p. 4). However, the Johns’ act of placing
complete and legible exhibits in the record resolves any perceived incompleteness or illegibility.
And the accuracy of the monthly due date as plead by Wells Fargo is actually a question of fact
that is not resolved by striking exhibits that do not comport with the Johns’ version of the facts.
Also, the Johns do not offer any argument as to how the exhibits they seek to strike are
confusing, but instead argue that the exhibits do not support their position that the monthly due
date was the 1st of the month.
Generally, the “court will not exercise its discretion under the rule to strike a pleading
unless the matter sought to be omitted has no possible relationship to the controversy, may
confuse the issues, or otherwise prejudice a party.” Principal Bank, 2014 WL 1268546 at *1.
After consideration of the parties’ arguments, the Court is unable to find that the excerpts from
Ott’s deposition and Deposition Exhibits 8 and 5 are unrelated to the controversy, confusing, or
prejudicial to the Johns. Accordingly, the motion to strike is DENIED. Principal Bank, 2014
WL 1268546 at *1 (“Because striking a portion of a pleading is a drastic remedy and because it
often is sought by the movant simply as a dilatory tactic, motions under Rule 12(f) are viewed
with disfavor and are infrequently granted.”).
2. The Johns’ objection and motion to exclude evidence (doc. 81)
The Johns argue that certain arguments and evidence are not properly before the Court
because they were offered for the first time in Wells Fargo’s reply. For the reasons set forth
herein, the objection is OVERRULED and the motion to exclude is DENIED.
In the summary judgment brief, Wells Fargo states that it was “undisputed” that it
“owned the debt at the time it allegedly sent collection letters to the Johnses in early 2014” and
therefore, it was not collecting a debt due to another (doc. 78, p. 7). Wells Fargo also argues
that the Johns failed to present evidence on an essential element of their FDCPA claim; that
Wells Fargo did not own the loan (Id. at 7-8).
In response, the Johns assert that Wells Fargo offered no evidence that it did own the
loan in early 2014. In support, the Johns point out that in July 2013, Ott, Wells Fargo’s 30(b)(6)
representative, testified that when Wells Fargo conveyed the property to the VA in April 2011,
the loan was transferred back to Ginnie Mae. The Johns assert that at that point, Wells Fargo no
longer owned the debt and therefore, was servicing the debt of another (doc. 79, p. 3-4, 8-9).
They argue that “[t]here is at least a factual question here regarding the ownership of the debt at
issue when the subject collection action was taken” in early 2014 (doc. 79, p. 8).
In reply, Wells Fargo argues that it regained ownership of the property in October 2013,
and continued to own the property in 2014. In support, Wells Fargo provides a copy of the Quit
Claim Deed from the VA to Wells Fargo (doc. 80; doc. 80-1, Exhibit A). Wells Fargo also
argues that Ott’s July 2013 testimony failed to establish that it did not own the loan in January
2014, pointing out that the VA transferred the property back to Wells Fargo in October 2013,
two months after the deposition. Wells Fargo also offers Ott’s June 1, 2015 deposition
testimony as further evidence that it owned the loan (doc. 80-1, Exhibit B, Deposition page 53 “I’m not sure why we made the business decision to purchase the loan”).
The Johns object to Wells Fargo’s evidentiary support for it’s argument in the reply that
it owned the loan when the alleged collection letters were sent in 2014 and move the Court to
exclude this evidence, i.e., the Quitclaim Deed, because it was not produced in discovery. The
Johns also argue that the Court should not allow new evidence or argument submitted with a
reply because it is too late for them to respond (doc. 81).
Wells Fargo responds that the Quitclaim Deed was submitted to rebut the argument that
it presented no evidence that it owned the loan and mortgage at the time the three statements
were sent, and was not a new argument raised for the first time in a reply. Wells Fargo also
argues that since the Johns carry the burden of proof, it was their obligation to provide evidence
that Wells Fargo did not own the loan (doc. 82).
The issue of ownership became more relevant after the decision in Davidson. Prior to
that time, the default status of the loan at time of acquisition was given controlling weight.
Thus, the parties’ initial briefing focused on the default status of the loan. Although Wells
Fargo did not produce the Quitclaim Deed, it did admit, as requested by the Johns, that it owned
and serviced the loan and mortgage (doc. 82-1, Wells Fargo’s response to Plaintiffs’ First
Request for Admissions, dated April 10, 2015, at ¶ 4: “Wells Fargo admits that it was the owner
and servicer of the subject debt owed by Plaintiffs.”). Discovery did not close until September
1, 2015 (doc. 33) and the Johns could have sought production of the evidence Wells Fargo
relied on to show proof of ownership of the debt. The Court finds no merit to the request to
strike rebuttal evidence.
The Johns also argue that Wells Fargo presented Ott’s June 1, 2015 testimony “out of
context” and assert that on page 53 of her deposition, she was “answering a question about the
October 30, 2009, transfer of the loan to Wells Fargo”, and not about a second transfer in
October 2013. The Johns cite to deposition pages 28 and 29, where Ott does testify about
obtaining ownership of the loan on October 30, 2009 from Ginnie Mae, and then cite to page
53, as if Ott continues to testify about the same transaction (doc. 81-1, Exhibit A). From this,
the Johns argue that Ott’s testimony is not evidence that Wells Fargo owned the loan in 2014
(doc. 81, p. 2)
The Court agrees that Ott testified about the October 30, 2009 purchase at pages 28 and
29,4 but the Court is without any information as to the testimony given on pages 30 to 52, such
that the Court cannot determine whether the testimony on page 53 was also about the October
30, 2009 purchase rather than any reacquisition of the loan in October 2013 (doc. 80-2, p. 2).
Thus, because the evidence is inconclusive, the objection is MOOT.
The Johns also argue that Wells Fargo violated S.D. Ala. CivLR 56(a) by not obtaining
leave of court before filing evidence, the Quitclaim Deed, with its reply. They assert that the
Rule requires that all evidence must be submitted with the motion for summary judgment, and
therefore, by submitting the Quitclaim Deed with the reply without court order of approval,
Wells Fargo has violated the Rule, and the evidence should be excluded. The Rule states in
relevant part as follows:
(a) Movant’s Supporting Materials. The movant must file a brief that includes:
(1) all facts relied upon, each supported by a specific, pinpoint citation to the
record; and (2) argument supported by legal authority as appropriate. The
movant must also file all evidence relied upon. . . . No other supporting
documents may be filed absent Court order.
Civil L.R. 56(a). The Johns rely upon the last sentence – “No other supporting documents may
be filed absent Court order” (Id.).
This is a strained interpretation of the Local Rule, which would functionally impair the
“Q. - - does [the Milestone] indicate when Wells Fargo obtained ownership of the
loan” . . . A. That was on October 30th, 2009” (doc. 81-1, p. 3) (bracketed text added). The
Milestone is a list of transfers of the servicing of the Johns’ loan and the ownership up to March
1, 2011, the foreclosure (doc. 79-2, Exhibit 11 to Ott’s July 2013 deposition; “Transfer
Beneficial Rights” from Ginnie Mae to Wells Fargo).
purpose of a reply – to rebut the response. Moreover, the Court has allowed evidence with a
reply brief where the evidence was in rebuttal to the response and not in support of a new
ground for relief. Alkhatib v. Steadman, 2011 WL 5553775, *6 (S.D. Ala. Nov. 15, 2011) (“As
a matter of course, the Court will accept and consider evidentiary materials submitted in support
of a movant's reply arguments where, as here, those arguments and supporting materials are
related and responsive to the non-movant's opposition brief and do not support new grounds for
relief.”). Accordingly, the Court finds no merit to this argument.
3. Wells Fargo’s motion for summary judgment
The FDCPA was enacted “to eliminate abusive debt collection practices by debt
collectors, to insure that those debt collectors who refrain from using abusive debt collection
practices are not competitively disadvantaged, and to promote consistent State action to protect
consumers against debt collection abuses.” 15 U.S.C. § 1692(e). The FDCPA prohibits a “debt
collector” from using a “false, deceptive, or misleading representation or means in connection
with the collection of any debt.” 15 U.S.C. § 1692e.
To succeed on an FDCPA claim, the Johns must prove (1) that they have been the object
of collection activity arising from a consumer debt; (2) that Wells Fargo is a debt collector as
defined by the FDCPA; and (3) that Wells Fargo has engaged in an act or omission prohibited
by the FDCPA. Alvarado v. Credit Protection Ass'n, L.P., 2015 WL 1815863, at *3 (M.D. Fla.
Apr. 22, 2015); See Reese v. Ellis, Painter, Ratterre & Adams, LLC, 678 F.3d 1211, 1216 (11th
In relevant part, the FDCPA defines “debt collector” as follows:
(6) The term “debt collector” means any person who uses any instrumentality of
interstate commerce or the mails in any business the principal purpose of which is
the collection of any debts, or who regularly collects or attempts to collect,
directly or indirectly, debts owed or due or asserted to be owed or due another.
15 U.S.C. § 1692a(6).
A. Whether Wells Fargo’s principal purpose is debt collection
Addressing the first definition, Wells Fargo argues that it is not a “debt collector”
because its principal business purpose is not debt collection. Wells Fargo argues that it
performs a number of other services – banking, insurance, investment, mortgage, and consumer
and commercial finance. Wells Fargo also argues that loan servicing encompasses more than
debt collection and includes activities such as handling incoming payments and outgoing
disbursements, maintaining the notes, maintaining the records, communications with the
borrowers, and handling modification requests. In support, Wells Fargo provides the July 31,
2015 Form 110-Q, S.E.C. filing to show that its principal business purpose is not debt
The Johns did not respond to this argument.5 Despite this, the Court must still determine
whether summary judgment could be granted as to the first part of the definition. Since Wells
Fargo has presented sufficient evidence to show that there is no genuine issue of fact that the
collection of debts is not the principal purpose of its business, the Court finds that Wells Fargo
does not come within the first definition of “debt collector” in the FDCPA. See Davidson, 797
F. 3d at 1317(“The amended complaint provides a basis from which we can plausibly infer that
some part of Capital One’s business is debt collection, but it fails to provide any basis from
which we could plausibly infer that the ‘principal purpose’ of Capital One’s business is debt
collection.”) (Italics in original); see also Schlegel v. Wells Fargo Bank, N.A., 720 F.3d 1204,
The Johns appear to rely solely on the second definition of debt collector. Doc. 79 at 8
(“Wells Fargo is a debt collector because it regularly collects debts of another….”)
1208-09 (9th Cir. 2013) (dismissing the FDCPA claim because the plaintiffs alleged facts
sufficient to establish that debt collection is some part of Wells Fargo’s business but not that it
was principal purpose).
B. Whether Wells Fargo regularly collects debts owed or due to another
The Johns argue that Wells Fargo comes within the second definition because it operates
a mortgage loan servicing business and regularly collects the debts of others. Relying upon the
Wells Fargo Annual Report, the Johns argue that the majority of loans that Wells Fargo services
were serviced for other entities and that only a small percent was composed of loans owned by
Wells Fargo. From the Johns’ evidence, a reasonable inference can be raised that regularly
collecting debts owed to others is at least some part of Wells Fargo’s regular activity of loan
C. Whether Wells Fargo debt collection activity is excluded
However, the inquiry does not end with the determination that Wells Fargo regularly
collects debts owed to others, as there are six situations in which an entity that regularly collects
debt of another will not be considered to be a debt collector. The most applicable appears to be
15 U.S.C. § 1692a(6)(A): when a creditor is collecting its own debt.7
At least one other court has found that Wells Fargo is subject to the FDCPA because it
regularly collects debts of another. See Oppong v. First Union Mortg. Corp., 215 Fed.Appx.
114, 119 (3rd Cir. 2007) (finding that “the District Court was correct to conclude that Wells
Fargo is a debt collector under the FDCPA because it ‘regularly’ collects debts owed to
another”, even though the proportion of mortgage debt collection was small in comparison to
Wells Fargo’s other business purposes).
The term “creditor” is defined to exclude an entity “to whom a debt is owed”, but who
received the debt while it was in default, “solely for the purpose of facilitating collection of
such debt for another.” 15 U.S.C. § 1692(4) The Johns have not alleged that transfer of the
debt to Wells Fargo was for the sole purpose of Wells Fargo collecting the debt for another.
Instead, the Johns argue only that the debt was in default when it was transferred.
Wells Fargo argues that it is entitled to summary judgment because there is no dispute of
fact that it owned the loan at the time it is alleged to have sent the alleged collection letters to
the Johns in early 2014, and therefore, was not collecting a loan or debt due to another.
The Johns respond that summary judgment should be denied because there is a dispute
of fact as to whether Wells Fargo owned the loan at that time. The Johns argue that based upon
the July 2013 deposition testimony of Wells Fargo’s corporate representative Ott, the loan was
transferred to the VA by Special Warranty Deed in 2011, and therefore, despite Wells Fargo’s
unsupported allegations that it owns the debt, it was actually servicing the loan for the VA and
Ginnie Mae at the time it sent the alleged collection letters in 2014.
In reply, Wells Fargo provides a copy of a Quitclaim Deed dated October 2013, whereby
the VA conveyed the Johns’ property back to Wells Fargo. However, as fleshed out at the
hearing, who owns the property is not the issue. The issue is who owns the debt.
Under Alabama law, once a property is foreclosed the mortgage is extinguished, on the
date of the foreclosure sale, to the amount of the purchase price. Davis v. Huntsville Prod.
Credit Ass’n, 481 So.2d 1103, 1105-1106 (Ala. 1985). Thus, the only debt that remained as of
March 2, 2011, was an unsecured deficiency balance. This deficiency balance would not travel
with the previous collateral (the property) because a deficiency balance by definition is
There is no evidence in the record that Wells Fargo ever assigned the deficiency balance.
Although Ott stated the loan and property were transferred to Ginnie Mae in April 2011, this is
insufficient to sustain the Johns’ burden to show that the deficiency balance was assigned to
Ginnie Mae and not owned by Wells Fargo.
Thus, because Wells Fargo owned the debt and was collecting its own debt, it is exempt
as a “creditor” under 15 U.S.C. § 1692a(6)(A). Jenkins v. Sec. Sav. Bank of Michigan, 28 F.3d
113, *4 (10th Cir. 1994) (“The Bank Defendant and its officers and employees are clearly
exempted from the terms of the Act as, respectively, a creditor and officers and employees of
the creditor collecting a debt in the name of the creditor. 15 U.S.C. § 1692a(6)(A).”)
(unpublished opinion); Gowing v. Royal Bank of Canada, 100 F.3d 962, *1 (9th Cir. 1996)
(“The Act exempts from its definition of debt collectors, “any officer or employee of a creditor
while, in the name of the creditor, collecting debts for such creditor.” 15 U.S.C. § 1692a(6)(A).
Because Royal Bank was collecting a debt on its own behalf, it was not a debt collector for the
purposes of the FDCPA, even though in this instance it was an assignee of the original
creditor.”) (unpublished opinion).
Upon consideration, and for the reasons set forth herein, the Court finds that Defendant
Wells Fargo is entitled to judgment as a matter of law as to the Johns’ claims. See McDowell v.
Brown, 392 F.3d 1283, 1288 (11th Cir. 2004) (having resolved all issues of material fact in
favor of the non-movant, the court must “then determine the legal question of whether the
[movant] is entitled to judgment as a matter of law under that version of the facts.”) (citation
omitted). Accordingly, Wells Fargo’s motion for summary judgment is GRANTED.
Judgment shall be entered by separate document as provided in Rule 58 of the Federal
Rules of Civil Procedure.
DONE and ORDERED this the 17th day of December 2015.
s/ Kristi K. DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE
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