Arnold v. Bayview Loan Servicing, LLC et al

Filing 81

ORDER granting the 58 Motion to Seal; finding as moot the redundant 57 Motion to Seal. The 76 Motion for Leave to File Sur-Reply is granted. The 59 Motion for Summary Judgment is granted and plaintiff's claims against all defendants are dismissed with prejudice. The 56 Motion to Certify Class and related Motions (Docs. 61 & 70) are moot. Signed by Chief Judge William H. Steele on 1/29/2016. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
ROBERT L. ARNOLD,
Plaintiff,
v.
BAYVIEW LOAN SERVICING, LLC,
et al.,
Defendants.

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CIVIL ACTION 14-0543-WS-C

ORDER
This matter comes before the Court on Defendants’ Motion for Summary Judgment (doc.
59), Defendants’ Motion to Seal (docs. 57 & 58), and Plaintiff’s Motion for Leave to File SurReply (doc. 76).1 In the undersigned’s discretion, the Motion for Leave to File Sur-Reply is
granted, and the Court will consider both plaintiff’s Sur-Reply (doc. 76-1) and defendants’
substantive response to same (see doc. 80) in adjudicating the pending Motion for Summary
Judgment.
1

Also pending are plaintiff’s Motion for Class Certification (doc. 56) under Rule
23, Fed.R.Civ.P., and various Motions relating to same (docs. 61, 70). All such Motions have
been briefed. Under the circumstances, the Court finds it appropriate to address the Rule 56
Motion first in the interests of efficiency and judicial economy, and in the absence of any reason
to believe that either plaintiff or putative class members will be unfairly prejudiced. See
generally Smith v. Network Solutions, Inc., 135 F. Supp.2d 1159, 1165 (N.D. Ala. 2001)
(deeming it “appropriate to address the merits of Defendants’ motion to dismiss or for summary
judgment prior to addressing the issue of Plaintiff’s motion for class certification, given the
nature of the pending dispositive motion and the absence of prejudice to putative class
members”); Thornton v. Mercantile Stores Co., 13 F. Supp.2d 1282, 1289 (M.D. Ala. 1998)
(“Ruling on a dispositive motion prior to addressing class certification issues may be appropriate
where there is sufficient doubt regarding the likelihood of success on the merits of a plaintiff’s
claims, … where inefficiency would result, … or where neither plaintiffs nor members of a
putative class would be prejudiced.”) (citations omitted); Shepherd v. Pilgrim’s Pride Corp.,
2007 WL 781883, *2 (N.D. Ga. Mar. 12, 2007) (“courts have recognized that, at least in some
cases, it may be appropriate in the interest of judicial economy to resolve a motion for summary
judgment or a motion to dismiss prior to ruling on class certification”).

I.

Nature of the Case.
In his First Amended Complaint (doc. 66), plaintiff, Robert L. Arnold, purporting to

proceed individually and on behalf of similarly situated individuals, brought claims against
Bayview Loan Servicing, LLC (“Bayview”), and U.S. Bank National Association, as trustee, in
trust for the benefit of the Holders of Bayview Opportunity Master Fund IIIa REMIC Trust
2013-14NPL 1 Beneficial Interest Certificates, Series 2013-14NPL-1 (“U.S. Bank”), for
violation of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (the “FDCPA”).
According to the First Amended Complaint, Bayview (servicer) and U.S. Bank (owner/holder)
violated §§ 1692d, 1692e and 1692f(1) of the FDCPA by sending two “Monthly Billing
Statements” to Arnold for his mortgage loan in December 2013. Arnold’s position is that these
bills violated the FDCPA because (i) “Plaintiff’s debt had been discharged” (doc. 66, ¶ 41), (ii)
sending the statements “constitutes harassment” (id., ¶ 42), (iii) the statements were “deceptive
because they imply that Plaintiff owes money on the discharged mortgage loan” (id., ¶ 43), (iv)
the balance recited on the statements “was grossly inflated because the defendants are not
entitled to collect, again, amounts that were paid at the foreclosure sale” (id., ¶ 44), and (v) the
listed balances “are not accurate because the statements do not credit Plaintiff with the amount
paid at the foreclosure sale” (id., ¶ 45).
Defendants’ Answer (doc. 10) filed on January 9, 2015 raised 11 purported affirmative
defenses, one of which bears particular relevance to the pending Rule 56 Motion. As their fourth
affirmative defense, defendants pleaded as follows: “Plaintiff’s individual and class claims are
barred by the bona fide error defense pursuant to the FDCPA, 15 U.S.C. § 1692, et seq.” (Doc.
10, at 13.) The Answer did not elaborate further; however, at no time did plaintiffs move to
strike such defense pursuant to Rule 12(f), Fed.R.Civ.P.
II.

Motion to Seal.
Before turning to the Rule 56 Motion, the Court pauses to consider the status of four

exhibits addressed in Defendants’ Motion to Seal.2 The vast majority of defendants’ summary
2

In an apparent clerical error, defendants filed two identical copies of their Motion
to Seal (compare docs. 57 & 58), one of which attached the four exhibits for which sealed status
was sought, and the other of which did not. Of course, there was no need to file the same Motion
twice. The redundant iteration of the Motion to Seal (doc. 57) that omitted copies of the subject
exhibits is moot.

-2-

judgment filings in this matter have been presented in unsealed, publicly accessible form.
Through this Motion, however, defendants seek sealed status for four discrete summary
judgment exhibits, to-wit: (i) a one-page exhibit from an internal Bayview manual concerning
loan codes (Exhibit G); (ii) a one-page exhibit from an internal Bayview manual concerning
functions of the Asset Management Department (Exhibit J); (iii) a nine-page exhibit consisting
of Bayview’s internal FDCPA Policy (Exhibit K); and (iv) a four-page exhibit reflecting portions
of a FDCPA training course utilized by Bayview (Exhibit L).
Federal courts have long recognized a strong presumption in favor of allowing public
access to judicial records. See, e.g., Chicago Tribune Co. v. Bridgestone/Firestone, Inc., 263
F.3d 1304, 1311 (11th Cir. 2001) (“The common-law right of access to judicial proceedings, an
essential component of our system of justice, is instrumental in securing the integrity of the
process. … [T]he common-law right of access includes the right to inspect and copy public
records and documents.”). “Indeed, the common law right of public access to judicial documents
is said to predate the Constitution.” United States v. Byrd, 11 F. Supp.3d 1144, 1148 (S.D. Ala.
2014) (citation and internal marks omitted). The presumption of access extends to “[m]aterial
filed in connection with any substantive pretrial motion, unrelated to discovery,” and to any
“motion that is presented to the court to invoke its powers or affect its decisions.” Romero v.
Drummond Co., 480 F.3d 1234, 1246 (11th Cir. 2007) (citations and internal quotation marks
omitted). “Litigants may not override that presumption by simply referencing a protective
order.” Allstate Ins. Co. v. Regions Bank, 2015 WL 4073184, *2 n.3 (S.D. Ala. July 2, 2015);
see also Suell v. United States, 32 F. Supp.3d 1190, 1192 (S.D. Ala. 2014) (“[t]he mere existence
of a protective order does not automatically override the public’s right of access”). In
recognition of these principles, the Local Rules require any party seeking a sealing order to set
forth “[t]he basis upon which the party seeks the order, including the reasons why alternatives to
sealing are inadequate.” General L.R. 5.2(b)(2)(B). In so doing, “the party seeking to maintain
secrecy must establish good cause for continued protection under Rule 26.” Suell v. United
States, 32 F. Supp.3d 1190, 1192 (S.D. Ala. 2014) (citation and internal quotation marks
omitted).
Upon review of the Motion to Seal, the Court finds that defendants have adequately
established “good cause” why the Clerk of Court should maintain the four enumerated exhibits
under seal. In particular, defendants have shown that those particular exhibits contain

-3-

confidential, proprietary information relating to Bayview’s business operations that could
irreparably harm Bayview if made public; that no reasonable alternatives to sealing these
exhibits would protect the commercially sensitive information from disclosure; that the interests
of Bayview in maintaining confidentiality of this small subset of defendants’ exhibits outweigh
the public’s interest in accessing judicial records (particularly where the public will have
unfettered access to numerous other exhibits, the parties’ summary judgment briefs, and this
Order); and that the Rule 26 good cause balancing test thus favors sealing the exhibits.
Accordingly, Defendants’ Motion to Seal (doc. 58) is granted. Exhibits G, J, K and L to
defendants’ Motion for Summary Judgment (docs. 58-1, 58-2, 58-3 & 58-4) are sealed.
However, the Clerk’s Office is directed to unseal the Motion to Seal (doc. 58) itself. While the
appended exhibits are confidential and proprietary, the Motion is not. General L.R. 5.2(b)(2)
specifically provides that motions to seal are to be filed as unsealed documents.
III.

Relevant Background.3
A.

The Underlying Loan, Default and Foreclosure.

The material facts are largely undisputed and uncontroversial. Back in 2001, Arnold
bought a house on Pineview Place in Gulf Shores, Alabama, that he used as a primary residence.
(Arnold Dep. (doc. 60, Exh. A), at 16-17.)4 In September 2005, Arnold refinanced the mortgage
3

The Court is mindful of its obligation under Rule 56 to construe the record,
including all evidence and factual inferences, in the light most favorable to the nonmoving party.
See Skop v. City of Atlanta, GA, 485 F.3d 1130, 1136 (11th Cir. 2007). Thus, Arnold’s evidence
is taken as true and all justifiable inferences are drawn in his favor. Also, federal courts cannot
weigh credibility at the summary judgment stage. See Feliciano v. City of Miami Beach, 707
F.3d 1244, 1252 (11th Cir. 2013) (“Even if a district court believes that the evidence presented by
one side is of doubtful veracity, it is not proper to grant summary judgment on the basis of
credibility choices.”). Therefore, the Court will “make no credibility determinations or choose
between conflicting testimony, but instead accept[s] [Arnold’s] version of the facts drawing all
justifiable inferences in [his] favor.” Burnette v. Taylor, 533 F.3d 1325, 1330 (11th Cir. 2008).
4

The Local Rules require litigants to provide chambers with courtesy copies of
voluminous exhibits. See Civil L.R. 7(g) (“If a party’s exhibits in support of, or in opposition to,
a motion exceed fifty (50) pages in the aggregate, that party must submit a courtesy copy to
chambers.”). In this respect, the Local Rules echo Magistrate Judge Cassady’s Rule 16(b)
Scheduling Order in this case, which provides that “[i]f a party’s exhibits in support of or in
opposition to a motion exceed 50 pages in the aggregate, then that party must deliver a courtesy
hard copy of those exhibits to Chambers by mail or hand delivery.” (Doc. 18, ¶ 12(c).) Plaintiff
has complied with this requirement; however, defendants have not. In its discretion, and to avoid
(Continued)
-4-

loan on that property for $245,000, but subsequently fell behind on his payments. (Id. at 17, 37.)
On June 7, 2012, after he was in default of his loan for nonpayment, Arnold filed a petition for
Chapter 7 protection in U.S. Bankruptcy Court for the Southern District of Alabama, listing the
note and mortgage on the appropriate liability schedules. (Arnold Decl. (doc. 73, Exh. 1), ¶¶ 57.) On September 21, 2012, Bankruptcy Judge Mahoney entered a Discharge of Debtor in which
she ordered that Arnold “is granted a discharge” under 11 U.S.C. § 727. (Arnold Decl., ¶ 9 &
Exh. A.) Arnold had moved out of the Pineview Place residence in the summer of 2012, after
which it was vacant. (S. Arnold Dep. (doc. 73, Exh. 2), at 47.)
In January 2013, Arnold received written notification that “[e]ffective February 1, 2013,
your mortgage loan servicing will be transferred … to Bayview Loan Servicing, Inc.” (Arnold
Decl., ¶ 11 & Exh. C.) And in September 2013, Arnold received written notification that
ownership of his loan had been transferred to U.S. Bank; however, that notice reaffirmed
Bayview’s role as servicer and point of contact for the loan. (Id., ¶ 12 & Exh. D.) Bayview has
been the only servicer of Arnold’s mortgage loan since it was transferred to Bayview from a
prior servicer on February 1, 2013. (Rushia Decl. (doc. 60, Exh. F), ¶ 7.) At no time did U.S.
Bank engage in any activities to collect any debt or service any loan contained in the Bayview
Opportunity Masterfund IIIa REMIC Trust 2013-14NPL 1 Beneficial Interest Certificates, Series
2013-14NPL 1 (the “Trust”). (Id., ¶¶ 3-6.)5
The record is clear that, from the time it began servicing the loan in February 2013,
Bayview knew that Arnold’s loan was in default and that the accompanying debt had been
discharged in bankruptcy. (Rushia Dep., at 22, 23, 32 , 37, 59-60.) After Bayview assumed

delaying resolution of the summary judgment motion, the Court takes the Motion under
submission without entering another order reminding defendants to submit hard copies that
should have been furnished some time ago.
5

For purposes of this Order, the undersigned may characterize defendant U.S.
Bank as the owner of Arnold’s loan. A more technically precise description is that the Trust
actually owned the loan (see Rushia Dep., at 20), with U.S. Bank acting in the capacity of
Trustee for the Trust. The distinction is immaterial for this summary judgment analysis;
therefore, as a convenient shorthand and to minimize confusion, this Order will refer to U.S.
Bank as the owner of the loan during the relevant time period; however, it should be understood
that references to U.S. Bank include the Trust, as well.

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these servicing responsibilities, the foreclosure process was started and the Pineview Place
property went into foreclosure based on Arnold’s default. (Id. at 59.) Bayview purchased the
subject property for the sum of $238,800.00 at a foreclosure sale conducted on November 25,
2013. (Arnold Decl., ¶ 13 & Exh. E.) The foreclosure sale amount covered most of the
$244,038.97 outstanding principal balance on Arnold’s loan.
B.

Bayview Billing Statements in December 2013.

Defendant’s evidence shows, and plaintiff concedes, that from February 1, 2013 (when
Bayview began servicing the loan) through December 1, 2013, Arnold never received a single
written billing statement from Bayview. (Doc. 73, at 3; Rushia Dep., at 46 (“This was coded
with a foreclosure man code, which prevented any statements from going out, and no statements
went out until this one on 12/2.”).)6 In December 2013, however, Arnold received two “Monthly
Billing Statements” from Bayview, one dated December 2, 2013 and the other dated December
16, 2013. (Arnold Decl., ¶¶ 14-15.)7
6

To be sure, plaintiff identifies various other objectionable contacts from Bayview
between February 2013 and July 2013, including “harassing” letters regarding lack of insurance
on the property, telephone calls placed directly to Arnold (rather than to his attorney) and the
like. (Doc. 73, at 3-4.) Nonetheless, Arnold’s FDCPA claims asserted in this litigation do not
relate to these contacts, but are confined solely to the two December 2013 billing statements.
(Doc. 66, ¶¶ 37-46.) As Arnold admits in his Amended Complaint, “Contacts made during the
one-year limitations period of the FDCPA include two made during December of 2013” (id., ¶
37), suggesting (accurately) that the prior contacts are outside the relevant limitations period and
therefore not actionable here. Because Arnold’s FDCPA claim hinges solely on the two
December 2013 billing statements, the analysis herein will focus on those contacts, as opposed to
earlier Bayview letters or telephone calls as to which Arnold is not seeking relief under the
FDCPA in this action. The Court understands that those previous contacts may be germane to a
separate contempt proceeding that Arnold is pursuing against Bayview in Bankruptcy Court (see
doc. 75, at 3); however, they do not form the basis of any FDCPA claim asserted here. Also,
plaintiff has not brought a claim against Bayview in this action under 22 U.S.C. § 524 for
violation of the bankruptcy discharge injunction, nor could he validly do so. See Church v.
Accretive Health, Inc., 2014 WL 7184340, *12 (S.D. Ala. Dec. 16, 2014) (“[T]his Court has no
qualms about hewing to the overwhelming weight of the case law that refuses to recognize a
private right of action (i.e., a new, judicially created remedy, above and beyond the carefully
articulated set of rights and remedies fashioned by Congress in the Bankruptcy Code) for §
524(a)(2) violations.”). In short, Arnold’s claims herein turn on the two billing statements, not
anything else that Bayview did or failed to do in servicing the loan.
7

To be precise, Bayview did not actually transmit the statements to Arnold itself;
rather, it retained a third-party vendor in Jacksonville, Florida to do so on Bayview’s behalf.
(Continued)
-6-

Each of these statements purported to reflect an outstanding principal balance of
$244,038.97 on Arnold’s loan, with a past due balance in excess of $34,000. (Id.) Neither of
these billing statements recited any credits or adjustments to the balance to account for the
foreclosure sale that had taken place on November 25, 2013. (Rushia Dep., at 54-55.) Nor did
these bills reference Arnold’s bankruptcy discharge in September 2012. Rather, the December 2
statement indicated “Payment Amount Due $34,457.79,” and the December 16 statement
specified “Payment Amount Due $35,926.10,” each listing a “Payment Due Date” of January 1,
2012 (i.e., 23 months earlier). (Arnold Decl., at Exh. F & G.) The fourth page of each statement
included a pre-printed disclaimer, reading in part as follows:
“To the extent that your obligation has been discharged or is subject to an
automatic stay of bankruptcy this notice is for compliance and informational
purposes only and does not constitute a demand for payment or any attempt to
collect such obligation.”
(Id.)
Sometime later, Bayview researched the circumstances that led to the issuance of the
December 2 and December 16 billing statements to Arnold. (Rushia Dep., at 45-46.) To
understand Bayview’s conclusions, one must have a basic working knowledge of its servicing
system. At all relevant times, Bayview used a computer system whose servicing component was
known as Mortgage Servicing Package (“MSP”). (Id. at 26.) Through the MSP platform,
Bayview utilized fields, called “codes,” to “drive[] other processes” relating to the servicing of a
particular loan. (Id.) Each code is “a field that is inside the system that [can] be populated by
either a user, or a process.” (Id. at 27.) For example, if a loan arrives at Bayview in an active
bankruptcy, then Bayview uses a code in the MSP system to “put[] the loan into an entirely
different area of servicing. It’s under the jurisdiction of the bankruptcy department.” (Id. at
33.)8 Arnold’s loan was not coded for the bankruptcy department, because the underlying

(Rushia Dep., at 42.) While it may be of academic interest, that distinction is not material to any
issue before the Court on summary judgment.
8

The MSP system uses what is called a “man code” or a “person code” to indicate
which specific department within Bayview (i.e., foreclosure department, bankruptcy department,
asset management department, etc.) is handling a particular loan file. (Doc. 58, Exh. G; Rushia
Decl., ¶ 13.) These codes are significant because Bayview “can code the loan … with the
appropriate man code that would stop the statement from being issued” in cases such as
(Continued)
-7-

bankruptcy proceedings had concluded several months before Bayview assumed servicing
responsibilities. (Id.) Instead, when Bayview received Arnold’s loan from the prior servicer,
“the loan was coded as a foreclosure, which prevents statements from going out.” (Id. at 46.) In
other words, Bayview’s use of a foreclosure code in the MSP system for Arnold’s loan
automatically suppressed billing statements from being issued to Arnold after Bayview began
servicing the loan in February 2013, resulting in no statements going out until December 2, 2013.
(Id.) Because Arnold’s loan was coded for foreclosure, Bayview’s perspective was that “[d]ebt
collection at that point ceases.” (Id. at 60.) Bayview was not attempting to collect on the Arnold
loan when it began servicing same; rather, Bayview’s role was limited to exploring whether
other pre-foreclosure options might allow Arnold to retain his home, if he so desired. (Id. at
130.)
The obvious question is why Bayview sent monthly billing statements to Arnold on
December 2, 2013 and December 16, 2013, even though his loan had been properly coded as a
foreclosure to suppress the issuance of such statements for the previous ten months. Bayview’s
investigation revealed (and plaintiff has not disputed) that “the man code indicating a foreclosure
was inadvertently removed, which allowed the statement process to actually issue a statement” to
Arnold on two occasions in December 2013. (Rushia Dep., at 47.) Bayview’s corporate
representative was unaware of this erroneous code removal happening to any other borrowers
whose loans Bayview was servicing. (Id. at 47, 51; Rushia Decl., ¶ 20.) Indeed, Bayview
certified in written discovery responses that “Plaintiff was the only consumer affected by the
inadvertent error that caused Plaintiff to receive monthly statements after foreclosure.” (Doc. 73,
Exh. 5, at #17.)
Getting down to the mechanics of the error, Bayview’s internal review showed that the
man code for Arnold’s loan was changed from an F (meaning foreclosure) to an A (assigning the
loan to the asset management department) shortly before the November 25, 2013 foreclosure sale
Arnold’s. (Rushia Dep., at 128.) In Bayview’s system, “a loan that is current would receive
statements. … [F]oreclosures would not. Active bankruptcies, would not. Any customers that
asked not to receive statements would not.” (Id. at 132.) The mechanism through which
Bayview controls which customers do or do not receive monthly billing statements is the man
code, through which the MSP system suppresses issuance of monthly statements to Bayview
borrowers whose loans are in foreclosure, for example.

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when a Bayview quality assurance employee named Farrah Peterson performed pre-foreclosure
review of the loan. (Rushia Dep., at 48-49.) To complete that review, Peterson went through “a
checklist … to make sure that all of the regulatory components and all of the policies and
procedures were followed in the foreclosure process.” (Id. at 49.)9 In so doing, she mistakenly
“reactivated the loan” in the computer system, “[w]hich was not part of her standard operating
procedure.” (Id.) That error automatically caused the man code for the Arnold loan to be
changed “systematically” in the MSP system from an F to an A. (Id. at 48.) Bayview
acknowledges that “the man code should not have been changed on the Arnolds’ loan[] from an
F to an A because it … was clearly headed for a foreclosure sale.” (Id. at 53.) When a loan is
coded “A” in Bayview’s system, the MSP system allows monthly billing statements to be issued.
(Rushia Decl., ¶ 14.)
The result of the inadvertent recoding of Arnold’s loan was that billing statements (which
had been suppressed from February 2013 through November 2013 via the correct “F” code) were
now allowed, such that statements were sent to Arnold in December 2013 “[d]ue to the error” in
the loan coding. (Rushia Dep., at 60; Rushia Decl., ¶ 19.) “[H]ad the code not been
inadvertently changed on the Arnold loan, the statement would never have been produced.”
(Rushia Dep., at 55.) Again, the Arnolds “weren’t sent any statements until their code was
erroneously changed.” (Id. at 101.) Bayview’s conclusion, then, is that Arnold “got two

9

Defendants have placed in the record a copy of the checklist completed by
Peterson with respect to Arnold’s loan. (Doc. 60, Exh. H.) That document, styled “Operations
Quality Control Analyst Loan Audit – Pre Foreclosure Sale,” includes dozens of questions
spanning three pages and covering topics such as foreclosure eligibility status, Home Affordable
Modification Program (“HAMP”) compliance, BLS compliance, contact/workout
attempts/solicitation, skip trace attempts, occupancy/inspection, and FCL bid. The document
confirms that Peterson answered each question on the checklist, sometimes adding comments to
elaborate on those responses, and concluded, “QC review completed and loan can go to sale
11/25/13. Borrower has no interest in keeping home. … Loan is tier 2 eligible. Due for 1/1/12
with a UPB of $244,038.97. Property is vacant per the insp report.” (Doc. 60, Exh. H, at 3.)
Neither party has identified any errors in Peterson’s completion of the checklist, or any
inaccuracies or misrepresentations in her responses to the questions therein. Nothing in the
exhaustive checklist would instruct or advise a Bayview quality assurance employee to reactivate
a loan or adjust its man code in the MSP system during pre-foreclosure review.

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statements because of an error that was made by someone doing a pre foreclosure check, that’s
what happened.” (Id. at 135.)10
C.

Bayview’s Policies and Procedures Regarding FDCPA Compliance.

In relation to its “bona fide error” defense, Bayview has presented substantial,
unchallenged evidence regarding its policies and procedures for FDCPA compliance. For
example, Bayview offers a nine-page written policy entitled “FDCPA Policy.” (Doc. 58, Exh.
K.) This written FDCPA Policy includes detailed explanations of the Act’s requirements and
prohibitions, and provides that “[i]t is against [Bayview] policy that an agent, in the process of
collecting a debt, use any false, deceptive or misleading representation.” (Id. at 4.) The Policy
enumerates more than a dozen examples of prohibited “false, deceptive or misleading
representations,” including “[f]alsely representing the character, amount, or legal status of the
debt.” (Id. at 5.) The policy also specifically requires that “all [Bayview] personnel receive
appropriate training on the Fair Debt Collection Practices Act and the directives of this policy on
an annual basis.” (Id. at 7.)
To implement its written policies, Bayview requires all employees in servicing roles to
complete assigned courses regarding FDCPA and other legal obligations on a regular basis.
(Rushia Dep., at 14.) In that regard, Bayview utilizes a 126-page on-line training course for the
FDCPA. (Rushia Dep., at 97; doc. 58, Exh. L.) That training course includes specific directives
to Bayview employees that “[d]ebt collectors may not … state any false information, as a way to
mislead the consumer in attempting to collect a debt;” and that they may not “[f]alsely stat[e] the
status or amount of the debt.” (Doc. 58, Exh. L, at 4.)
IV.

Summary Judgment Standard.
Summary judgment should be granted only “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.” Rule
56(a), Fed.R.Civ.P. 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).
10

The reason why Arnold received only two billing statements is that Bayview
subsequently changed the man code to an “R” (showing that the loan was being handled by the
Real Estate Owned Department) after the foreclosure sale, thereby suppressing billing statements
to Arnold once again. (Doc. 60, Exh. I, at #6; Rushia Decl., ¶ 16.)

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Once the moving party has satisfied its responsibility, the burden shifts to the non-movant to
show the existence of a genuine issue of material fact. Id. “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.” Id. (quoting Celotex Corp. v.
Catrett, 477 U.S. 317 (1986)) (footnote omitted). “In reviewing whether the nonmoving party
has met its burden, the court must stop short of weighing the evidence and making credibility
determinations 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 GMBHSiegen, 965 F.2d 994, 999 (11th Cir. 1992) (internal citations and quotations omitted).
“Summary judgment is justified only for those cases devoid of any need for factual
determinations.” Offshore Aviation v. Transcon Lines, Inc., 831 F.2d 1013, 1016 (11th Cir. 1987)
(citation omitted).
V.

Analysis.
A.

The Bona Fide Error Defense is Properly in the Case.

Defendant Bayview’s sole ground for seeking summary judgment is that Arnold’s claims
are properly dismissed pursuant to the bona fide error defense. This defense forestalls FDCPA
liability where a defendant’s violation was unintentional and resulted from a bona fide error
notwithstanding defendant’s procedures reasonably adapted to avoid such errors. Antecedent to
reaching the merits of that defense, the Court examines plaintiff’s threshold contention that
Bayview failed properly to plead the defense in the Answer. Arnold’s position is that the “bona
fide error” defense is an affirmative defense subject to heightened pleading requirements that
Bayview did not satisfy.
Plaintiff is correct that federal courts have required defendants to plead the FDCPA bona
fide error defense with particularity. See, e.g., Walters v. Performant Recovery, Inc., --- F.
Supp.3d ----, 2015 WL 4999796, *4 (D. Conn. Aug. 21, 2015) (“[B]ecause the bona fide error
defense rests upon mistake, the circumstances surrounding the mistake must be stated with
particularity. … [T]o satisfy Rule 9(b), the defense must articulate ‘who, what, when, where, and
how’ the bona fide error occurred.”) (citations and internal quotation marks omitted).11 Plaintiff

11

See also Youssofi v. Allied Interstate LLC, 2016 WL 29625, *3 (S.D. Cal. Jan. 4,
2016) (“District courts have held that the affirmative defense of bona fide error must be stated
(Continued)
-11-

is also correct that Bayview failed to satisfy the Rule 9(b) particularity requirement in pleading
the bona fide error defense. Indeed, the Answer mentions the defense only in general terms, towit: “Plaintiff’s individual and class claims are barred by the bona fide error defense pursuant to
the FDCPA, 15 U.S.C. § 1692, et seq.” (Doc. 10, at 13.)
Notwithstanding Arnold’s identification of this pleading deficiency, plaintiff’s argument
fails because it comes too late. Defendants filed their Answer – including the bona fide error
defense – back on January 9, 2015. (See doc. 10.) Plaintiff never challenged the sufficiency of
that defense, much less moved to strike it, until filing his summary judgment response on
November 23, 2015. (See doc. 73.) The Federal Rules of Civil Procedure do not allow plaintiffs
to sit on technical objections to the manner in which an affirmative defense is pleaded for more
than ten months until a strategically advantageous moment. If Arnold wished to challenge the
sufficiency of defendants’ pleading of the bona fide error defense, his remedy was to file a
motion to strike within 21 days after service of the Answer. See Rule 12(f)(2), Fed.R.Civ.P.
(“The court may strike from a pleading an insufficient defense … on motion made by any party
… within 21 days after being served with the pleading.”). He did not do so. The upshot is that
plaintiff cannot raise this technical pleading defect for the first time on summary judgment as a
means of derailing the Rule 56 Motion and excising that defense from the case.12
To be sure, the Court appreciates that district courts have discretion to relax the Rule
12(f)(2) deadline and grant a meritorious motion to strike insufficient defenses from a pleading,
even if the motion is untimely. Here, however, such a course of action is unwarranted. To strike
Bayview’s bona fide error defense now on purely technical pleading grounds would be unjust.

with particularity under Rule 9(b).”); Wiebe v. Zakheim & Lavrar, P.A., 2012 WL 5382181, *2
(M.D. Fla. Nov. 1, 2012) (“A claim of bona fide error is tantamount to a claim of mistake and
therefore, the Defendant must plead this defense with the particularity required by Rule 9(b).”).
12

See, e.g., Action Nissan, Inc. v. Hyundai Motor America, 617 F. Supp.2d 1177,
1187 (M.D. Fla. 2008) (rejecting plaintiff’s request on summary judgment to strike affirmative
defense, where plaintiff raised issue 15 months after answer was filed); Cowart v. City of Eau
Claire, 571 F. Supp.2d 1005, 1008 (W.D. Wis. 2008) (“Defendants filed their amended answer
on January 7, 2008; plaintiffs filed the motion to strike on April 9, 2008. Therefore, it will be
denied as untimely.”); Blanc v. Safetouch, Inc., 2008 WL 4059786, *1 (M.D. Fla. Aug. 27, 2008)
(opining that, where plaintiff moved to strike affirmative defense 84 days after answer was filed,
“Plaintiffs’ Motion to Strike is untimely and can be denied on that basis alone”).

-12-

Bayview would be blindsided if it were stripped of a key affirmative defense because of a mere
pleading error that it could have readily corrected long ago had Arnold raised the issue then.
More importantly, Arnold will not be prejudiced by the continued inclusion of the bona fide error
defense in this litigation. As noted, Arnold has been on notice of that defense for a year, and had
a full opportunity to explore the who/what/when/where/how details of that defense during
discovery. In that regard, Bayview furnished plaintiff with specific facts undergirding the bona
fide error defense in interrogatory responses served on June 30, 2015. (See doc. 60, Exh. I, at
#6.) Plaintiff’s counsel interrogated Bayview’s corporate representative extensively concerning
the facts supporting the bona fide error defense in a Rule 30(b)(6) deposition conducted on
August 14, 2015. (See Rushia Dep., at 46-49, 53, 55, 60, 101, 135.) Under the circumstances,
plaintiff’s conclusory protestation that he “was deprived of an opportunity to address in
discovery any specific bona fide error Bayview claimed qualified as an FDCPA defense” (doc.
73, at 8) is irreconcilable with the record. The information before the undersigned shows that
defendants disclosed to plaintiff during discovery all facts on which their bona fide error defense
rests.
The bottom line is this: Plaintiff could have moved to strike the bona fide error defense
from the Answer pursuant to Rule 12(f)(2) back in January 2015. He chose not to do so, instead
waiting until the summary judgment stage to request that the defense must be stricken as
inadequately pleaded. To grant plaintiff’s request now would impose a harsh, unfair sanction on
Bayview, which could have corrected its pleading defect a year ago had plaintiff objected then.13
By contrast, to deny plaintiff’s request at this time would work no unfair prejudice on Arnold,
given that he (i) was on notice of the defense, and (ii) received all of defendant’s information
relevant to that defense and explored that issue at length in Bayview’s Rule 30(b)(6) deposition
during the discovery process. For these reasons, plaintiff’s objection to Bayview’s bona fide
error defense on timeliness grounds is overruled.

13

See generally Wiebe, 2012 WL 5382181, at *2 (“While affirmative defenses are
subject to being stricken if they are legally insufficient, striking a defense is a drastic remedy
which is disfavored by the courts.”) (citations and internal quotation marks omitted).

-13-

B.

Parameters of FDCPA Bona Fide Error Defense.

“[T]he FDCPA affords a narrow carve-out to the general rule of strict liability, known as
the ‘bona fide error’ defense.” Owen v. I.C. System, Inc., 629 F.3d 1263, 1271 (11th Cir. 2011).
By its terms, the Act provides that “[a] debt collector may not be held liable in any action
brought under this subchapter if the debt collector shows by a preponderance of evidence that the
violation was not intentional and resulted from a bona fide error notwithstanding the
maintenance of procedures reasonably adapted to avoid any such error.” 15 U.S.C. § 1692k(c).
As construed by the courts, this defense is unavailable for mistakes of law or misinterpretations
of the FDCPA’s requirements, but instead is designed to “protect[] against liability for errors like
clerical or factual mistakes.” Prescott v. Seterus, Inc., --- Fed.Appx. ----, 2015 WL 7769235, *5
(11th Cir. Dec. 3, 2015) (citation and internal quotation marks omitted). In this way, the “bona
fide error” defense “insulates [debt collectors] from liability even when they have failed to
comply with the Act’s requirements.” Edwards v. Niagara Credit Solutions, Inc., 584 F.3d
1350, 1352 (11th Cir. 2009).
To prevail on this defense, “a debt collector bears a three-part burden of showing that its
FDCPA violation (1) was not intentional; (2) was a bona fide error; and (3) occurred despite the
maintenance of procedures reasonably adapted to avoid any such error.” Owen, 629 F.3d at 1271
(citation and internal quotation marks omitted); see also Isaac v. RMB Inc., 604 Fed.Appx. 818,
820 (11th Cir. Mar. 17, 2015) (“To assert the bona fide error defense, a debt collector must prove
by a preponderance of evidence that its violation of the FDCPA was unintentional and was the
result of a bona fide error, despite procedures reasonably adapted to avoid errors.”). “The failure
to meet any one of those three requirements is fatal to the defense.” Edwards, 584 F.3d at 1353.
C.

Adequacy of Bayview’s Proof of Bona Fide Error Defense.

As discussed supra, the purportedly unlawful conduct for which plaintiff brings FDCPA
claims against Bayview consists of the Monthly Billing Statements sent to Arnold on December
2, 2013 and December 16, 2013. Again, plaintiff contends that such correspondence was
violative of FDCPA because the bills related to debt that had been discharged in bankruptcy,
inflated the debt by failing to credit amounts paid at the November 2013 foreclosure sale, and
constituted harassment. Simply put, Arnold’s FDCPA claim is that Bayview’s issuance of the
December 2 and December 16 billing statements violated the Act. It is to that theory of liability
that Bayview’s bona fide error defense is properly applied.

-14-

The first prong of the defense is that Bayview must show that its purported FDCPA
violation (i.e., sending the December 2 and December 16 billing statements to Arnold) was
unintentional. This element requires a showing “that the violation was unintentional, not that the
underlying act itself was unintentional,” such that Bayview must “establish the lack of specific
intent to violate the Act.” Johnson v. Riddle, 443 F.3d 723, 728 (10th Cir. 2006).14 “In other
words, the intent prong of the bona fide error defense is a subjective test.” Id. Here, Bayview
has readily shown that any violation of the FDCPA with regard to the mailing of the December
2013 billing statements was unintentional because (i) Arnold’s loan had been coded with a
foreclosure man code when Bayview assumed servicing responsibilities, effectively suppressing
all billing statements; (ii) Bayview sent no billing statements to Arnold between February 2013
and November 2013; (iii) the Bayview employee who performed a pre-foreclosure review of
Arnold’s loan was bound to follow a Bayview checklist that did not call for changing the man
code or issuing billing statements; (iv) nothing in the checklist or employee comments suggested
that this individual intended to change the man code or reactivate Arnold’s loan; (v) the man
code was changed anyway, even though Bayview had no reason to do so in its pre-foreclosure
review; (vi) Bayview ceased communications to Arnold when it discovered the error; and (vii)
Bayview provides extensive, ongoing training to employees in the area of FDCPA compliance.
Viewing these facts through the inferential, subjective lens ascribed to the intent prong, the Court
concludes that no reasonable finder of fact could disagree that Bayview’s alleged error was
unintentional. Defendant has conclusively shown that Bayview never meant to send FDCPAnoncompliant bills to Arnold while his loan was in foreclosure.
Second, Bayview must establish that the transmission of the December 2013 billing
statements to Arnold was a bona fide error. “A bona fide error is a mistake that occurred in good
faith.” Isaac, 604 Fed.Appx. at 820; see also Edwards, 584 F.3d at 1353 (“As used in the Act
‘bona fide’ means that the error resulting in a violation was made in good faith; a genuine
mistake, as opposed to a contrived mistake.”) (citations and internal quotation marks omitted);
14

See also Rush v. Portfolio Recovery Associates LLC, 977 F. Supp.2d 414, 427
n.14 (D.N.J. 2013) (noting that courts “focus their intent inquiry on whether the debt collector
intended to violate the FDCPA”); Rose v. Roach, 2013 WL 1563655, *4 (W.D. Va. Apr. 12,
2013) (“Regarding the first prong, the bona fide error defense requires only the negation of
specific intent to violate the FDCPA”).

-15-

Goodin v. Bank of America, N.A., --- F. Supp.3d ----, 2015 WL 3866872, *8 (M.D. Fla. June 23,
2015) (“An error is bona fide only where it was made in good faith and was objectively
reasonable.”). This element of the defense “serves to impose an objective standard of
reasonableness upon the asserted unintentional violation.” Johnson, 443 F.3d at 729 (citations
omitted). All record information before the Court reflects that it was objectively reasonable for
Bayview to rely on the foreclosure man code to suppress monthly statements to Arnold; that
Bayview had no reason to believe that the man code would be changed during the preforeclosure review process; and that it had provided appropriate training and checklists to its
employees concerning pre-foreclosure review. All of these facts considered together support a
compelling inference that Bayview’s mistake in issuing the December 2013 billing statements to
Arnold was made in good faith and was objectively reasonable (i.e., not a contrived mistake).
Third, “to qualify for the bona fide error defense, the debt collector has an affirmative
statutory obligation to maintain procedures reasonably adapted to avoid readily discoverable
errors.” Owen, 629 F.3d at 1276-77. This “procedures” prong of the defense “involves a twostep inquiry. … The first step is whether the debt collector ‘maintained’ – i.e., actually employed
or implemented – procedures to avoid errors. … The second step is whether the procedures were
reasonably adapted to avoid the specific error at issue.” Id. at 1274 (citations and internal
quotation marks omitted). “In other words, the errors must have occurred despite regular
processes that are mechanical or otherwise orderly in nature.” Goodin, 2015 WL 3866872, at *8.
The Supreme Court has explained that “the relevant procedures are ones that help to avoid errors
like clerical or factual mistakes.” Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559
U.S. 573, 587, 130 S.Ct. 1605, 176 L.Ed.2d 519 (2010). This is a “fact-intensive inquiry” that
proceeds “on a case-by-case basis and depend[s] upon the particular facts and circumstances of
each case.” Owen, 629 F.3d at 1274; see also Gibbs v. Palm Beach Credit Adjustors, Inc., 2015
WL 4698427, *2 (S.D. Fla. Aug. 6, 2015) (“Whether a defendant’s procedures support a bona
fide error defense is fact-intensive, two-step inquiry.”).
To satisfy its burden as to the “procedures” element, Bayview points to both its general
training procedures and its specific procedures for pre-foreclosure review. As to the former,
Bayview’s evidence is that it has promulgated written policies and administers substantial
ongoing training to employees regarding FDCPA compliance, including prohibitions on false,
deceptive or misleading representations, such as falsely stating the character, amount or legal

-16-

status of the debt. As to the latter, Bayview shows that it utilizes a detailed multipage checklist
styled “Operations Quality Control Analyst Loan Audit – Pre Foreclosure Sale” (Doc. 60, Exh.
H) to guide the actions of quality assurance employees like Farrah Peterson, who performed the
fateful pre-foreclosure review of Arnold’s loan. Nothing in that checklist (which spans dozens
of specific items) would call for, prompt, instruct or induce a Bayview employee performing preforeclosure review to reactivate the loan in a manner that would alter the man code and trigger
monthly statements. The Court agrees with Bayview that this evidence, taken in the aggregate,
adequately reflects that Bayview has mechanical, orderly processes in place to avoid errors, and
that those procedures were reasonably adapted to avoid the specific error that occurred here (i.e.,
the reactivation of a borrower’s loan on pre-foreclosure review, thereby changing the man code
on the loan and erroneously ending suppression of monthly billing statements). It appears
uncontroverted and uncontroversial that, had employee Peterson simply followed the checklist
and abided by her FDCPA training, she would not have reactivated the Arnold loan. Absent
such reactivation, of course, the loan’s man code never would have been changed from an F to
an A, and Arnold would not have received billing statements in December 2013. Thus, all
evidence before the Court confirms that Bayview has satisfied the “procedures” prong of the
bona fide error defense.
D.

Arnold’s Stance on the Merits of the Bona Fide Error Defense.

Faced with this evidence and argument in support of Bayview’s bona fide error defense,
plaintiff does not challenge defendant’s reasoning or conclusion head-on. He does not suggest
that Bayview’s reactivation of Arnold’s loan during pre-foreclosure review and ensuing issuance
of two billing statements was an intentional violation of the FDCPA.15 He does not present
evidence or argument that Peterson’s reactivation of the loan and the resulting automatic change
to the man code for Arnold’s loan was anything but a genuine mistake made in good faith. And
he does not dispute Bayview’s showing that it maintained mechanical procedures reasonably
15

Walking the narrative back one step further, plaintiff also does not quarrel with
Bayview’s explanation of how it came to be that inaccurate monthly billing statements were sent
to Arnold in December 2013. In other words, plaintiff expresses no disagreement with, and
presents no evidence contradicting, Bayview’s investigative determinations as to the chain of
events causing the purportedly violative billing statements to be mailed to Arnold. Plaintiff
offers no other theories, competing explanations or contrary evidence with respect to the genesis
of the offending billing statements.

-17-

adapted to prevent the error that occurred here (again, Peterson’s reactivation of the loan on preforeclosure review, resulting in inadvertent change of the man code to end suppression of
monthly billing statements) from taking place.
Rather than rebutting Bayview’s formulation of the bona fide error defense as it applies
to this specific error, plaintiff’s analysis adopts a vastly different trajectory. In particular,
plaintiff rails against Bayview for not taking sufficient steps to avoid attempting to collect debts
discharged in bankruptcy generally. Plaintiff insists that “Bayview has no procedure to prevent
it from attempting collection of discharged debts because it intentionally sends bills and
statements to borrowers who have received a discharge.” (Doc. 73, at 9.) Plaintiff asserts that
“there is no doubt that Bayview intentionally bills consumers with discharged debts by default.”
(Id. at 10.)16 According to plaintiff, “[b]ecause Bayview has no procedure to avoid billing
consumers whose debts are discharged its BFE defense fails.” (Id. at 12.) Plaintiff also
maintains that the pre-foreclosure review checklist is inadequate because it is not “maintained to
avoid the attempted collection of discharged debt.” (Id. at 14.) In plaintiff’s view, Bayview’s
general practice of sending billing statements to borrowers whose debts were discharged in
bankruptcy, except where the borrower objects, precludes assertion of the “bona fide error”
defense here because it shows that Bayview’s violations were intentional, not made in good faith,
and not subject to reasonable procedures to avoid such errors.
The fundamental problem with plaintiff’s analysis is that it is not tailored to the specific
error that forms the basis of Arnold’s FDCPA claims against Bayview. Case law is clear, and
the parties themselves acknowledge, that the bona fide error defense must be examined as to “the
specific error at issue.” Owen, 629 F.3d at 1276-77. The “specific error at issue” in this case is
the inadvertent reactivation of Arnold’s loan by a Bayview employee performing pre-foreclosure
review. This specific error changed the man code associated with Arnold’s loan and resulted in
two billing statements being sent to Arnold in December 2013. Those two bills form the entire
16

Record evidence supports plaintiff’s characterization of Bayview’s practices. The
following exchange from Bayview’s Rule 30(b)(6) deposition is illustrative:
“Q:
“A:

Is it Bayview’s policy to continue to send statements to the borrowers who
have received a discharge?
If the borrower has not objected to receiving the statement.”

(Rushia Dep., at 128-29.)

-18-

factual predicate of Arnold’s FDCPA cause of action.17 If Bayview did not intentionally send
violative billing statements to Arnold in December 2013, if the reactivation of the loan and
changing of the man code were genuine mistakes made in good faith, and if Bayview maintained
procedures reasonably adapted to avoid such inadvertent reactivation and recoding of loans
during pre-foreclosure review, then the bona fide error defense applies here, irrespective of other
errors that Bayview may have made with respect to Arnold, or to borrowers with discharged
debts generally. Bayview has shown that all of these conditions are satisfied with regard to the
specific error at issue; therefore, the defense applies.
Stated differently, plaintiff’s fixation on Bayview’s purported practice of billing
borrowers whose debts have been discharged is unavailing because that general practice was not
the specific error that caused Arnold to receive billing statements. It is undisputed that, during
the first ten months that Bayview serviced the loan, Bayview never sent a single monthly billing
statement to Arnold. This is so, even though Arnold’s debt had been discharged in bankruptcy
well before Bayview began servicing his loan. Because Bayview successfully suppressed billing
statements to Arnold for that ten-month span, we know that the specific error here was not
Bayview’s purported general practice of billing customers whose debts had been discharged.
Regardless of what Bayview’s general practices were, Arnold’s loan was coded properly, and
statements were correctly suppressed, from February 1, 2013 through December 1, 2013. What
changed in December? Certainly not Bayview’s general policies and practices concerning
discharged debts. No evidence to that effect has been presented. What changed was that a single
Bayview employee made a single processing error that changed the code on Arnold’s loan,
17

In response to Bayview’s bona fide error defense, plaintiff points to “undisputed”
facts that Bayview “committed numerous FDCPA violations” with regard to the Arnold loan,
such as contacting Arnold while he was represented by counsel, fraudulently billing him for
force-placed insurance, and failing to cease communications. (Doc. 73, at 12-13.) But plaintiff
admits that these purported transgressions “were outside of the one year limitations period when
the complaint was filed.” (Id. at 13.) Accordingly, they are not part of Arnold’s FDCPA claims
against Bayview, and they do not constitute the “specific error at issue” for purposes of the bona
fide error defense. Whether Bayview could invoke the bona fide error defense against claims
that it contacted Arnold directly after he was represented by counsel, for example, is simply not
the question presented here because no FDCPA cause of action predicated on such a violation is
presented in the First Amended Complaint. Again, the bona fide error defense must be analyzed
in terms of the specific error at issue, i.e., the issuance of the December 2013 billing statements,
and nothing more.

-19-

effectively ending the suppression of billing statements and allowing the December 2 and
December 16 statements to go out. That is the “specific error” on which the bona fide error
defense analysis appropriately centers. And that specific error had nothing whatsoever to do
with Bayview’s general practices concerning borrowers whose debts have been discharged.18
Plaintiff’s argument to the contrary would disregard undisputed record facts, would transform
this action into something it is not, and would misapply the legal principles used in adjudicating
the bona fide error defense.
In light of the foregoing, the Court finds that Bayview has met its burden of establishing
entitlement to the bona fide error defense for Arnold’s FDCPA claims. No genuine issues of fact
appearing in the record, Bayview is entitled to judgment in its favor on that affirmative defense
as a matter of law. Accordingly, the Motion for Summary Judgment will be granted as to
Arnold’s claims against defendant Bayview.
E.

Defendant’s Motion Pertaining to U.S. Bank as Trustee.

In contrast to the parties’ hard-fought briefing as to whether Bayview is entitled to
summary judgment, there appears to be no dissent that U.S. Bank is entitled to dismissal of
18

Perhaps plaintiff is suggesting that Bayview could have done something more to
make sure that Arnold did not get billed, such as instituting an across-the-board prohibition on
sending billing statements to borrowers with discharged debts. That argument might have
superficial allure. After all, if Bayview had imposed a blanket ban on statements to customers
with discharged debts, such a policy would have blocked the December 2013 statements,
notwithstanding the reactivation error during the pre-foreclosure review process. But the bona
fide error defense does not require a defendant to exhaust all possible means of preventing the
specific error. Again, the legal standard is that the defendant “maintain procedures reasonably
adapted to avoid readily discoverable errors.” Owen, 629 F.3d at 1276-77. Bayview was not
obliged to do everything imaginable to prevent Arnold from being billed. See, e.g., Kort v.
Diversified Collection Services, Inc., 394 F.3d 530, 539 (7th Cir. 2005) (even though defendant
“could have done more,” FDCPA “does not require debt collectors to take every conceivable
precaution to avoid errors; rather, it only requires reasonable precaution”); Cerrato v. Solomon &
Solomon, 909 F. Supp.2d 139, 148 (D. Conn. 2012) (“When attempting to show that he is
entitled to the bona fide error defense, a debt collector need not demonstrate that his procedures
for avoiding FDCPA violations are fool proof, but rather, must only show that its procedures
constitute a reasonable precaution.”) (citations and internal marks omitted); Tucker v. CBE
Group, Inc., 710 F. Supp.2d 1301, 1306 n.5 (M.D. Fla. 2010) (“The bona fide error defense is
used when the Defendant demonstrates that reasonable procedures are in place to prevent errors;
the procedures need not be foolproof.”). And the Court has expressly found that Bayview
procedures were reasonably adapted to prevent this error from occurring in circumstances like
Arnold’s. Nothing more was required, even if something more was possible.

-20-

Arnold’s claims. Indeed, plaintiff has expressly conceded that “it appears that the Trust is
entitled to summary judgment.” (Doc. 73, at 19.)
As a matter of black-letter law, plaintiff’s FDCPA claims against U.S. Bank are not
viable unless U.S. Bank qualifies as a debt collector within the meaning of the Act. See, e.g.,
Davidson v. Capital One Bank (USA), N.A., 797 F.3d 1309, 1313 (11th Cir. 2015) (“There is no
dispute that § 1692e applies only to debt collectors.”).19 Unsurprisingly, “[a] ‘debt collector’ is a
term of art in the FDCPA.” Ausar-El ex rel. Small, Jr. v. BAC (Bank of America) Home Loans
Servicing LP, 448 Fed.Appx. 1, 2 (11th Cir. Sept. 21, 2011). Subject to certain enumerated
exclusions, the Act defines the term “debt collector” to mean “[1] 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 [2] 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).
With regard to the second prong, the Eleventh Circuit has clarified that “our inquiry under §
1692a(6) is not whether [defendant] regularly collects on debts originally owed or due another
and now owed to [defendant]; our inquiry is whether [defendant] regularly collects on debts
owed or due another at the time of collection.” Davidson, 797 F.3d at 1318.
This brings us to the fatal flaw with Arnold’s claims against U.S. Bank. There is no
evidence that U.S. Bank, as trustee for the real estate investment trust that acquired Arnold’s loan
in July 2013, is engaged in any business whose principal purpose is the collection of debts. It is
self-evident, after all, that the “principal purpose” of an investment trust’s business is to earn
financial returns on investments. Besides, defendant’s uncontested evidence establishes that
“U.S. Bank does not engage in debt collection or servicing of any loans contained in the Trust,”
and that “[t]he Trust does not engage in debt collection or servicing of any loans contained in the
Trust.” (Rushia Decl., ¶¶ 5-6.) So U.S. Bank cannot be a debt collector within the meaning of
the first prong of § 1692a(6). Nor can Arnold hold U.S. Bank liable as a debt collector under the
19

See also Milijkovic v. Shafritz and Dinkin, P.A., 791 F.3d 1291, 1297 (11th Cir.
2015) (“The FDCPA regulates what debt collectors can do in collecting debts.”); Harris v.
Liberty Community Management, Inc., 702 F.3d 1298, 1302 (11th Cir. 2012) (observing that
“[t]he Act’s restrictions apply only to debt collectors,” as defined in the statute); White v. Bank of
America Bank, NA, 597 Fed.Appx. 1015, 1020 (11th Cir. Dec. 29, 2014) (“The FDCPA imposes
civil liability on ‘debt collectors' for certain prohibited debt-collection practices.”).

-21-

second definition in § 1692a(6) because a key aspect of that formulation is that the entity must
regularly collect debts “owed or due another.” U.S. Bank was the owner of Arnold’s loan and all
the other loans contained within the Trust; therefore, even if U.S. Bank did engage in activities to
collect on those debts, it would not fall within the definition of “debt collector” because those
debts were not “owed or due another at the time of collection.” Davidson, 797 F.3d at 1318.20
As noted, plaintiff prudently capitulates in his response brief by acknowledging that,
based on Davidson, U.S. Bank is entitled to summary judgment. Accordingly, and in light of the
foregoing principles unambiguously establishing that U.S. Bank is not a “debt collector” within
the meaning of § 1692a(6) and therefore cannot incur FDCPA liability for the Arnold loan, the
Motion for Summary Judgment is granted as to defendant U.S. Bank, and all claims against that
defendant will be dismissed. Simply put, U.S. Bank (as trustee for the Trust) was not engaged in
a business whose principal purpose was debt collection, and did not regularly collect on debts
owed or due another at the time of collection. Therefore, Arnold’s claims against the U.S. Bank
/ Trust defendant are not sustainable, as a matter of law.
VI.

Conclusion.
For all of the foregoing reasons, it is ordered as follows:
1.

Defendants’ Motion to Seal (doc. 58) is granted. Exhibits G, J, K and L to
defendants’ Motion for Summary Judgment (see docs. 58-1, 58-2, 58-3 & 58-4)
are to remain sealed. The Clerk’s Office is directed to unseal defendants’ Motion
to Seal (doc. 58), but not the appended exhibits;

20

In his First Amended Complaint, Arnold attempted to cast U.S. Bank as a debt
collector under both § 1692a(6) definitions. First, Arnold alleged that “[t]he sole purpose of the
Trust is the purchase of defaulted mortgage loans, at deeply discounted prices, and the collection
[of] those loans.” (Doc. 66, ¶ 10.) However, plaintiff has identified no evidence to support such
a claim, and defendants’ uncontroverted evidence is that the principal purpose of U.S. Bank’s
business could not be collection of defaulted mortgage loans because U.S. Bank does not engage
in collection of any loans within the Trust. Second, Arnold pleaded that “[t]he Trust is also a
debt collector because it obtained the Plaintiff’s loan after it was in default for the purpose of
collection” (doc. 66, ¶ 13), thereby suggesting that this debt was at some time “owed or due
another.” However, Davidson conclusively forecloses that pathway to FDCPA debt collector
status. See Davidson, 797 F.3d at 1316 (“[A]pplying the plain language of the statute, we find
that a person who does not otherwise meet the requirements of § 1692(a)(6) is not a ‘debt
collector’ under the FDCPA, even where the consumer’s debt was in default at the time the
person acquired it.”).

-22-

2.

Defendants’ redundant Motion to Seal (doc. 57) is moot;

3.

Plaintiff’s Motion for Leave to File Sur-Reply (doc. 76) is granted and the
proposed Sur-Reply (doc. 76-1) appended to same has been considered herein
(along with Defendants’ Memorandum in Opposition (doc. 80)) insofar as it may
be relevant;

4.

Defendants’ Motion for Summary Judgment (doc. 59) is granted, and plaintiff’s
claims against all defendants are dismissed with prejudice;

5.

In light of these rulings, the Motion for Class Certification (doc. 56) under Rule
23, Fed.R.Civ.P., and various related Motions relating to same (docs. 61, 70) are
moot; and

6.

A separate judgment will enter.

DONE and ORDERED this 29th day of January, 2016.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE

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