Llewellyn v. Shearson Financial Network, Inc. et al
Filing
266
OPINION AND ORDER granting 182 CMS Motion for Summary Judgment; granting 247 Ocwen and NCCI's Motion for Summary Judgment; granting in part and denying in part 264 Ocwen and NCCIs Amended Motion to Strike Declarations by Judge William J. Martinez on 6/16/2011.(erv, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 08-cv-00179-WJM-KLM
GLEN LLEWELLYN,
Plaintiff,
v.
ALLSTATE HOME LOANS, INC. d/b/a ALLSTATE FUNDING,
OCWEN LOAN SERVICING, LLC.,
NOMURA CREDIT AND CAPITAL, INC.,
NCC SERVICING, LLC., and
CASTLE, MEINHOLD & STAWIARSKI, LLC.,
Defendants.
OPINION AND ORDER
This matter is before the Court on (1) Defendants Ocwen Loan Servicing, LLC
(“Ocwen”) and Nomura Credit and Capital, Inc.’s (“NCCI’s”) Motion for Summary
Judgment (ECF No. 247); (2) Ocwen and NCCI’s Amended Motion to Strike
Declarations (ECF No. 264); and (3) Defendant Castle Meinhold & Stawiarski, LLC’s
(“CMS’s”) Motion for Summary Judgment (ECF No. 182). The motions are fully briefed
and ripe for disposition. (See also ECF Nos. 251, 252, 259, 260, 265.) For the
following reasons, Ocwen and NCCI’s Motion for Summary Judgment is GRANTED,
Ocwen and NCCI’s Amended Motion to Strike is GRANTED IN PART and DENIED IN
PART, and CMS’s Motion for Summary Judgment is GRANTED.
I. BACKGROUND
A.
FACTUAL BACKGROUND
This is a case about an individual – Plaintiff Glen Llewellyn – who refinanced a
mortgage loan, but the company servicing the original loan, Ocwen, did not receive the
refinancing proceeds intended to pay off the loan. When Plaintiff understandably
stopped making monthly payments on the original loan, Ocwen understandably began
treating the original loan as in default. The entity allegedly responsible for taking receipt
of the refinancing funds has been named as a defendant but has not appeared in the
action. Plaintiff’s claims against Ocwen and NCCI, Ocwen’s parent, relate to Ocwen’s
negative reporting of Plaintiff to consumer reporting agencies (“CRAs”). Plaintiff’s
claims against CMS relate to its initiation of foreclosure proceedings on the underlying
property on behalf of Ocwen.
Unless otherwise noted, the following facts are not in dispute. On March 7, 2006,
Plaintiff purchased the property located at 7915 South Coolidge Way, Aurora, Colorado,
executing two notes with Allstate Home Loans, Inc. d/b/a Allstate Funding (“Allstate”)
totaling $559,980.00. (ECF No. 247, at 5 ¶¶ 1-3; id. Exs. A-4, A-6; ECF No. 251, at 7 ¶
9.) Plaintiff was required to make monthly payments on the loan to Equity Pacific
Mortgage, Inc. (“EPMI”), the loan servicer, and Plaintiff made the first monthly payment
for May 2006. (ECF No. 247, at 6 ¶¶ 4, 8-9; ECF No. 251, at 31, 7 ¶ 11).)
On May 15, 2006, the right to service the loan was transferred from EPMI to
1
Citations to “ECF No. 251, at 3” (without any specific paragraph number listed)
refers to the list of “Undisputed Material Facts” from Ocwen and NCCI’s motion to which
Plaintiff admits on page 3 of his Response.
2
Ocwen. (ECF No. 247, at 7 ¶ 10; id. Ex. A-16; ECF No. 251, at 3.) Ocwen serviced the
loan as the attorney-in-fact for NCCI, the investor that purchased the loan on the
secondary market. (ECF No. 247, at 7 ¶ 12; id. Ex. A-12 ¶ 7; ECF No. 251, at 3 ¶ 12.)
Plaintiff does not appear to dispute that he knew of this transfer. (ECF No. 247, at 7-8
¶¶ 15-21, 23; ECF No. 251, at 3.) Plaintiff’s next payment was due to Ocwen by June 1,
2006. (ECF No. 247, at 7 ¶ 16; ECF No. 251, at 3.)
On June 1, 2006, Plaintiff closed on a refinancing of the loan. (ECF No. 247, at 9
¶ 29; ECF No. 251, at 8 ¶ 18.) Plaintiff did not inform the closing agent, Staci Krehbiel,
that servicing of the loan had been transferred from EPMI to Ocwen. (ECF No. 247, at
9 ¶ 29; ECF No. 251, at 3.) Krehbiel prepared a HUD Settlement Statement, which
listed EPMI as the entity to whom the refinancing funds were to be disbursed. (ECF No.
251, at 9 ¶ 22; id. Ex. C-1.) On June 5, 2006, Plaintiff told an Ocwen representative by
telephone that the loan had been refinanced, but did not provide any details about the
refinancing. (ECF No. 247, at 9-10 ¶¶ 30-32; ECF No. 251 at 3 ¶¶ 31-32, id. Ex. B at
19.)
On June 14, 2006, the title company wired the refinancing funds to Washington
Mutual Bank, identifying EPMI as the beneficiary. (ECF No. 247, at 11 ¶ 39; ECF No.
251, at 10 ¶ 29.) On July 11, 2006, Kevin Rider at EPMI wired the funds to Allstate.
(ECF No. 247, at 11 ¶ 42; id. Ex. A-26; ECF No. 251, at 10 ¶ 31.) The record does not
suggest that Ocwen or NCCI ever received the refinancing funds from Allstate.
On July 17, 2006, Ocwen issued Plaintiff a past-due notice on the loan. (ECF
3
No. 251, at 10 ¶ 33; id. Ex. B at 19; ECF No. 260, at 112.) On August 1, 2006, Ocwen
sent Plaintiff a letter discussing foreclosure and its alternatives. (ECF No. 251, at 10-11
¶ 35; id. Ex. D-3; ECF No. 260, at 7 ¶ 35.) On August 6, 2006, Ocwen provided a
negative credit report regarding Plaintiff to a CRA. (ECF No. 251, at 11 ¶ 42; id. Ex. G1 at 85.)3
On August 7, 2006, Plaintiff again spoke with an Ocwen representative over the
telephone. (ECF No. 247, at 12 ¶ 46-48; ECF No. 251, at 11 ¶ 36; id. Ex. B at 18.)
Plaintiff told the representative that Plaintiff had refinanced the loan with Kevin Rider (at
EPMI) and that the loan was with Washington Mutual, but the representative told
Plaintiff that no one had sent any payoff funds to Ocwen and advised Plaintiff to contact
Washington Mutual to get details about the refinancing. (Id.)
After sending Plaintiff another past due notice on August 9, 2006 (ECF No. 251,
at 11 ¶ 38; id. Ex. D-5; ECF No. 260, at 7 ¶ 38), Ocwen initiated foreclosure on the
property on August 29, 2006 (ECF No. 251, at 11 ¶ 41; id. Ex. B at 18; ECF No. 260, at
74). On September 7, 2006, Defendant CMS sent Plaintiff a letter stating that it had
2
Citations to “ECF No. 260, at 11” (without any specific paragraph number listed)
refers to the list of “Undisputed Material Facts” from Plaintiff’s Response to which
Ocwen and NCCI admit on page 11 of their Reply.
3
Ocwen and NCCI dispute this (ECF No. 260, at 7 ¶ 42), but the Court accepts it
as true given that, at this stage of the proceedings, the Court must view the evidence in
a light most favorable to Plaintiff (see infra).
4
Ocwen and NCCI do not list this fact (“Undisputed Material Fact” ¶ 41 from
Plaintiff’s Response) as admitted on page 11 of their Reply, but also do not specifically
deny the fact on pages 6-11 of their Reply. Therefore, the Court will treat this fact as
admitted. The same is true for the “Undisputed Material Facts” ¶¶ 45, 97, and 99 of
Plaintiff’s Response, which are cited infra in this factual background section.
4
been retained by Ocwen and NCCI to initiate foreclosure proceedings. (ECF No. 251,
at 12 ¶ 44; id. Ex. D-6; ECF No. 260, at 11.) On September 21, 2006, Ocwen provided
another negative credit report about Plaintiff to a CRA. (ECF No. 251, at 12 ¶ 46; id.
Ex. B at 17; ECF No. 260, at 11.)
On September 25, 2006, Plaintiff faxed to CMS a copy of the HUD Settlement
Statement (showing that EPMI was to receive the refinancing funds) and a letter from
Washington Mutual to Plaintiff stating, “If Ocwen was to be paid off during the refinance
and was not, please contact your closing agent for research on the payoff wire.” (ECF
No. 251, at 12 ¶ 45; id. Ex. D-4; ECF No. 260, at 7.) During October 2006, Plaintiff
began increasing the frequency of his complaints to Ocwen and CMS, while also getting
his oft-used mortgage broker Candace Saport to call Ocwen on his behalf. (See ECF
No. 251, at 12-16 ¶¶ 51, 54-57, 61, 82, 85; ECF No. 260, at 8, 11.)
On October 19, 2006, Ocwen initiated an investigation into Plaintiff’s concerns,
and CMS informed Plaintiff that it had been directed by Ocwen to place its foreclosure
file on hold. (ECF No. 251, at 14-15 ¶¶ 69-70; id. Exs. D-9, D-10; ECF No. 260, at 11.)
Despite transferring its servicing rights over the loan to NCC Servicing, LLC on October
20 (ECF No. 247, at 14 ¶ 65; ECF No. 251, at 3), Ocwen continued investigating the
issue, requesting various documents from Plaintiff to prove that the refinancing funds
had been sent to EPMI. (ECF No. 247, at 15 ¶¶ 69, 71; ECF No. 251, at 3, 17 ¶ 90; id.
Exs. D-13, D-14, D-15; ECF No. 260, at 11.) During this investigation, Ocwen
continued to report to CRAs that the account was past due as of September 30, 2006.
5
(ECF No. 251, at 15-19 ¶ 77, 80, 95, 98, 101; id. Ex. B at 6-75, 11-12; ECF No. 260, at
9-11.) On November 10, 2006, Krehbiel sent CMS some documentation regarding the
refinancing (ECF No. 251, Ex. C-10), and on November 21, 2006 provided Ocwen with
the wiring log showing the payoff to EPMI (ECF No. 251, at 18 ¶ 97; id. Ex. C-3). On
December 5, 2006, CMS sent Plaintiff a letter stating,
This letter is intended to inform you that our client has indicated that this
loan should have been paid-in-full. As such, our client has advised us to
close and bill our foreclosure file on this case. Our client has also
indicated that Mr. Llewellyn’s credit report will be reversed as it has been
negatively effective [sic] by this action. As it takes some time to reverse
the credit reports, if our client has not fully done so, please feel free to
contact [CMS] and [we] will ensure that the problem is addressed.
(ECF No. 251, at 18 ¶ 99; id. Ex. G-71.)
Plaintiff’s attorney made attempts throughout January and early February 2007 to
get Ocwen to reverse its previous negative reports to CRAs. (See, e.g., ECF No. 251,
at 19-21 ¶¶ 105, 110, 115; ECF No. 260, at 10-11.) On February 15, 2007, Ocwen
finally “requested that the [CRAs] delete all of Ocwen’s credit reporting.” (ECF No. 247,
at 17 ¶ 78; ECF No. 251, at 21-22 ¶¶ 120-121; id. Ex. G-19.)
B.
PROCEDURAL BACKGROUND
Plaintiff filed this action on January 29, 2008, and filed the operative Second
Amended Complaint on June 23, 2009. (ECF No. 1, 149.) He brings two sets of
claims. The first are claims for theft and conversion against Allstate, based on the
5
The November 20 and 30, 2006 and December 15, 2006 reports to CRAs are
inconclusive as to whether, on those dates, Ocwen reported the account as past due
(as of September 30, 2006). Viewing the evidence in a light most favorable to Plaintiff
(see infra), the Court will assume that Ocwen did report the account as past due on
those dates.
6
alleged theft of the refinancing funds. (ECF No. 149, at 7.)6 Those claims are not at
issue in the pending motions.
The second set of claims are brought against Ocwen, NCCI, and CMS, the
movants here. Specifically, Plaintiff brings claims against Ocwen and NCCI under the
Fair Credit Reporting Act (“FCRA,” 15 U.S.C. § 1681s-2(b)) and Fair Debt Collection
Practices Act (“FDCPA,” 15 U.S.C. § 1692e), and a claim for outrageous conduct,
based on Ocwen and NCCI’s negative reporting of Plaintiff to CRAs. (Id. at 7-10.)7
Plaintiff also brings an FDCPA claim and outrageous conduct claim against CMS based
on its initiation of foreclosure on the property. (Id. at 7-8, 10-11.)
On March 18, 2011, Ocwen and NCCI filed their pending motion for summary
judgment. (ECF No. 247.) Plaintiff has filed his Response (ECF No. 251), and Ocwen
and NCCI have filed a Reply (ECF No. 260). Ocwen and NCCI also filed an Amended
Motion to Strike Declarations (declarations filed by Plaintiff in response to Ocwen and
NCCI’s motion for summary judgment) (ECF No. 264), to which Plaintiff has filed a
Response (ECF No. 265).
6
The original complaint also brought these claims against Kevin Rider, EPMI,
and Shearson Financial Network, Allstate’s parent company. (ECF No. 1.) Plaintiff has
voluntarily dismissed those three defendants from the action. (ECF No. 134, 149.)
Default has been entered against Allstate. (ECF No. 69.) Plaintiff subsequently
filed a motion for default judgment. (ECF No. 94, 95.) U.S. District Judge Marcia S.
Krieger, to whom this action was previously assigned, denied the motion without
prejudice on the ground that it was premature. (ECF No. 110.)
7
The claims against Ocwen and NCCI are also brought against NCC Servicing,
LLC (ECF No. 149, at 7-10), an entity that has not appeared in the action and thus has
not filed or joined in the pending motions for summary judgment.
Plaintiff also originally brought these claims against Ocwen Financial Corp. and
Nomura Securities International, Inc. (ECF No. 1.) Plaintiff has voluntarily dismissed
those two defendants from the action. (ECF No. 56, 57, 73, 74.)
7
CMS has also filed a motion for summary judgment (ECF No. 182), to which
Plaintiff filed a Response (ECF No. 252), and CMS filed a Reply (ECF No. 259).
On February 9, 2011, this action was reassigned to the undersigned. (ECF No.
232.)
II. ANALYSIS
The Court will first address Ocwen and NCCI’s Amended Motion to Strike
Declarations, which will resolve what evidence will be considered by the Court on
Ocwen and NCCI’s motion for summary judgment. The Court will then proceed to
analyze the pending motions for summary judgment.
A.
Amended Motion to Strike
In the Amended Motion to Strike, Ocwen and NCCI move the Court to strike four
declarations filed by Plaintiff in response to their motion for summary judgment: the
declarations of William Stollar (Plaintiff’s accountant), John M. McNamara, Jr. (Plaintiff’s
counsel), Candace Saport (Plaintiff’s former mortgage broker), and Plaintiff himself.
(See ECF No. 264.)
“Motions to strike are disfavored, particularly in the context of motions for
summary judgment.” Lobato v. Ford, No. 05-cv-01437, 2007 WL 2593485, *11 (D.
Colo. Sept. 5, 2007); see also Alexander v. Archuleta Cnty., No. 08-cv-00912, 2009 WL
3245915, at *4 (D. Colo. Oct. 2, 2009) (“[S]triking affidavits is disfavored in the context
of a summary judgment motion. . . . [L]itigation should promote the finding of the truth,
and, wherever possible, the resolution of cases on their merits.”) (internal citations and
quotation marks omitted). A decision whether to grant or deny a motion to strike lies
8
“within the sound discretion of the district court.” Fed. Deposit Ins. Corp. v. Isham, 782
F. Supp. 524, 530 (D. Colo. 1992).
1.
Stollar Declaration
Ocwen and NCCI argue that the Declaration of William Stollar (ECF No. 251, Ex.
E) should be stricken because Stollar was not previously formally disclosed as a fact
witness in the action, nor was he disclosed in Plaintiff’s discovery responses. (ECF No.
264, at 3-6.) Plaintiff appears to concede that he did not formally disclose Stollar as a
fact witness, but argues that Stollar was disclosed during Plaintiff’s deposition in the
case. (ECF No. 265, at 2-5.) Thus, he argues that Ocwen and NCCI knew Stollar had
discoverable information, but failed to depose him and in bad faith waited until the
summary judgment briefing to seek to exclude him. (Id.)
Federal Rule of Civil Procedure 37(c)(1) provides, “If a party fails to . . . identify a
witness as required by Rule 26(a) or (e), the party is not allowed to use that . . . witness
. . . unless the failure was substantially justified or is harmless.” “The determination of
whether a Rule 26(a) violation is justified or harmless is entrusted to the broad
discretion of the district court.” Woodworker’s Supply, Inc. v. Principal Mut. Life Ins.
Co., 170 F.3d 985, 993 (10th Cir. 1999) (discussing factors relevant to whether failure
was justified or harmless).
The obligation to supplement disclosures and discovery responses applies
whenever a party learns that its prior disclosures or responses are in
some material respect incomplete or incorrect. There is, however, no
obligation to provide supplemental or corrective information that has been
otherwise made known to the parties in writing or during the discovery
process, as when a witness not previously disclosed is identified during
the taking of a deposition.
Fed. R. Civ. P. 26(e) advisory committee’s note to the 1993 amendments (emphasis
9
added); see also Gutierrez v. AT&T Broadband, LLC, 382 F.3d 725, 733 (7th Cir. 2004)
(affirming denial of motion to strike affidavit where, although defendants did not identify
the affiant in their Rule 26(a) or 26(e) disclosures, plaintiffs knew of the affiant and the
fact that she possessed relevant information through depositions in the case).
The evidence indicates that Ocwen and NCCI knew during Plaintiff’s deposition
that Stollar had discoverable information related to Plaintiff’s purported damages.
Indeed, during the deposition, Ocwen and NCCI initiated questioning regarding Stollar,
questioning Plaintiff regarding a produced document that had been created by Stollar
for purposes of the litigation. (ECF No. 265, Ex. A at 58:15-60:24, 71:20-77:24, 81:216.) After not deposing Stollar, Ocwen and NCCI cannot now complain that they are
somehow prejudiced by the filing of Stollar’s declaration. See Ojeda-Sanchez v. Bland
Farms, LLC, No.608CV096, 2010 WL 2382452, at *2 (S.D. Ga. June 14, 2010) (“From
this [deposition testimony], Plaintiffs should have been aware that [the individual] had
discoverable information. . . . [T]he Court will not strike [the] affidavit simply because
Plaintiffs neglected to depose [the individual].”). The Court denies the Amended Motion
to Strike to the Stollar declaration.
2.
McNamara Declaration
Ocwen and NCCI argue that the Declaration of John N. McNamara, Jr. (ECF No.
251, Ex. G) should be stricken because McNamara was not disclosed as a fact witness
in the case, and also because McNamara’s attempt to both serve as counsel in the case
and provide testimony regarding underlying facts constitutes professional misconduct.
(Id. at 3-8.) In response, Plaintiff argues that Ocwen and NCCI have always known
about McNamara’s involvement in the underlying events, and argue that the declaration
10
does not violate rules of professional conduct because McNamara is not a necessary
witness, his statements pertain to uncontested facts, and he is allowed to provide such
factual testimony prior to trial. (Id. at 6-10.)
As Plaintiff concedes, the information contained in paragraphs 2 through 9 of
McNamara’s declaration is reflected in other evidence in the case. (ECF No. 265, at 8
& n.6.) Specifically, McNamara’s statements in paragraphs 2 through 9 of his
declaration are duplicative of deposition testimony of Michael Barron of Allstate, Kevin
Rider, Candace Saport, and Staci Krehbiel; and the content of documents attached to
McNamara’s declaration. (See id.; ECF No. 251, Ex. G.) The Court is troubled by the
fact that Mr. McNamara, Plaintiff’s counsel, chose to include paragraphs 2 through 9 in
his declaration, which are indeed loaded with hearsay (Mr. McNamara describing
deposition testimony and the contents of documents) and legal conclusions regarding
Defendants’ allegedly wrongful conduct. (See ECF No. 251, Ex. G ¶¶ 2-9.) The Court
believes that it was entirely unnecessary, and bordering on improper, to file this
document with the Court. Therefore, the Court grants the Amended Motion to Strike as
to paragraphs 2 through 9, inclusive, of the Declaration of John N. McNamara, Jr, and
denies the Amended Motion to Strike as to paragraphs 1 and 10 of the McNamara
Declaration, and exhibits attached to the McNamara declaration.
3.
Plaintiff’s Declaration and the Saport Declaration
Ocwen and NCCI argue that the declarations of Plaintiff and Candace Saport
(ECF No. 251, Exs. D & J, respectively) should be stricken because the declarations
contradict their deposition testimony. (Id. at 8-11.) “[I]n determining whether a material
issue of fact exists [at summary judgment], an affidavit may not be disregarded because
11
it conflicts with the affiant’s prior sworn statements. . . . [H]owever, courts [should]
disregard a contrary affidavit when they conclude that it constitutes an attempt to create
a sham fact issue.” Franks v. Nimmo, 796 F.2d 1230, 1237 (10th Cir. 1986).
The Court denies the Amended Motion to Strike as to the Declaration of Glen
Llewellyn. (ECF No. 251, Ex. D.) The most substantial example provided by Ocwen
and NCCI to show that Plaintiff’s declaration is inconsistent with his deposition
testimony is that Plaintiff’s declaration provides details regarding the various properties
he purchased in the past, but during deposition he testified that he could not recall
details regarding the purchases and financing of the properties. (ECF No. 264, at 8 &
n.17.) However, importantly, the parties do not appear to actually dispute any facts
regarding Plaintiff’s purchasing of these properties, including the amount of the original
loans, whether they were ever refinanced, and whether Plaintiff defaulted on the loans.
Also, it appears that Ocwen and NCCI have had for quite some time, including during
Plaintiff’s deposition, the underlying documents evidencing these purchases and loans.
Thus, it does not appear that Plaintiff’s inclusion of this information in his declaration
has in any way “sandbagged” Ocwen and NCCI, or created a “sham” factual dispute
where no factual dispute actually exists. Cf. Mitchael v. Intracorp, Inc., 179 F.3d 847,
854 (10th Cir. 1999) (holding that affidavit submitted by plaintiffs was properly struck
because it represented “an attempt to create a sham issue of fact” and was submitted in
an attempt to “sandbag[]” defendants); Juarez v. Utah, 263 F. App’x 726, 735 (10th Cir.
2008) (affirming striking of affidavit containing detailed information from the plaintiff’s
journal, where the plaintiff had not produced the journal and where during her previous
12
deposition she could not recall the contents of the journal).8
The Court also denies the Amended Motion to Strike as to the Saport
declaration. Ocwen and NCCI argue that Saport’s declaration that Plaintiff was not able
to obtain loans between September 2006 and March 2007 is contradicted by prior
deposition testimony regarding three loans Plaintiff was able to close during the relevant
time period. (ECF No. 264, at 10.) However, Saport specifically addressed this issue in
her declaration, clarifying that the three loans at issue “were already approved and
ready to go before Ocwen started ruining Glen’s credit score.” (ECF No. 251, Ex. J ¶
6.) Further, Ocwen and NCCI’s argument regarding inconsistencies in how far Plaintiff’s
credit score actually dropped is unpersuasive, because the relevant documentation only
goes through December 8, 2006 (ECF No. 247, Exs. A-71, A-72), whereas Saport’s
declaration clearly references the time period through March 2007 (ECF No. 251, Ex. J
¶ 10).
Accordingly, in analyzing Ocwen and NCCI’s motion for summary judgment, the
Court will consider the Stollar, Llewellyn, and Saport declarations, as well as paragraphs
1 and 10 of, and exhibits to, the McNamara declaration.
B.
Motions for Summary Judgment
1.
Standard of Review
8
The other two inconsistencies cited by Ocwen and NCCI (ECF No. 264, at 9)
are inconsequential, because Plaintiff’s credibility could have been questioned on these
issues at trial.
13
Summary judgment is warranted under Federal Rule of Civil Procedure 56 “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); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986). When, as here, “the moving party
does not bear the ultimate burden of persuasion at trial, it may satisfy its burden at the
summary judgment stage by identifying a lack of evidence for the nonmovant on an
essential element of the nonmovant’s claim.” Bausman v. Interstate Brands Corp., 252
F.3d 1111, 1115 (10th Cir. 2001) (internal quotation marks omitted). The nonmoving
party may not rest solely on the allegations in the pleadings, but instead must designate
“specific facts showing that there is a genuine issue for trial.” Celotex Corp. v. Catrett,
477 U.S. 317, 324 (1986); see also Fed. R. Civ. P. 56(e).
Only disputes over material facts can create a genuine issue for trial and
preclude summary judgment. Faustin v. City & Cnty. of Denver, 423 F.3d 1192, 1198
(10th Cir. 2005). A disputed fact is “material” if under the relevant substantive law it is
essential to proper disposition of the claim. Wright v. Abbott Labs., Inc., 259 F.3d 1226,
1231-32 (10th Cir. 2001). An issue is “genuine” if the evidence is such that it might lead
a reasonable jury to return a verdict for the nonmoving party. Allen v. Muskogee, 119
F.3d 837, 839 (10th Cir. 1997). When reviewing a motion for summary judgment, a
court must view the evidence in the light most favorable to the non-moving party. See
McBeth v. Himes, 598 F.3d 708, 715 (10th Cir. 2010).
2.
Ocwen and NCCI’s Motion for Summary Judgment
a.
FCRA Claim
14
Plaintiff’s FCRA claim against Ocwen and NCCI, brought under 15 U.S.C.
§ 1681s-2(b), alleges, inter alia, that Ocwen furnished inaccurate credit information to
CRAs and failed to conduct a reasonable or timely investigation after receiving notice
from CRAs that Plaintiff had disputed the credit information. (ECF No. 149, at 8-9.) 15
U.S.C. § 1681s-2(b)(1) provides, inter alia,
After receiving notice . . . of a dispute with regard to the completeness or
accuracy of any information provided by a person to a [CRA], the person
shall –
(A) conduct an investigation with respect to the disputed information; . . .
(C) report the results of the investigation to the [CRA];
(D) if the investigation finds that the information is incomplete or
inaccurate, report those results to all other [CRAs] to which the person
furnished the information . . .; and
(E) if an item of information . . . is found to be inaccurate or incomplete or
cannot be verified after any reinvestigation . . . promptly (I) modify that
item of information; (ii) delete that item of information; or (iii) permanently
block the reporting of that item of information.
I.
Violation(s) of the FCRA
In their motion for summary judgment, Ocwen and NCCI argue that the FCRA
claim should be dismissed because Ocwen accurately reported the loan as being in
default (because Ocwen was never paid), and also argue that Ocwen’s investigation
complied with section 1681s-2(b)(1). (Id. at 25-28.) In response, Plaintiff argues that
the loan was never in default because he refinanced it, and that Ocwen’s investigation
failed to comply with section 1681s-2(b)(1) because Plaintiff repeatedly provided Ocwen
with evidence of the refinancing. (ECF No. 251, at 23-29.)
Ocwen’s duty under section 1681s-2(b) to conduct an investigation was not
triggered until it was notified by a CRA of a dispute regarding information previously
furnished to the CRA; not when Plaintiff contacted Ocwen disputing the information.
15
See Pinson v. Equifax Credit Info. Servs., Inc., 316 F. App’x 744, 751 (10th Cir. 2009)
(affirming dismissal of FCRA claim where plaintiff consumers only alleged that they
themselves, and not a CRA, had notified the defendant of the dispute); see also Judge
Krieger’s previous order in this action on motions to dismiss, ECF No. 112, at 15
(“[C]ourts have nearly uniformly concluded that the duty to investigate disputes under
§ 1681-2(b) to arise only when the person furnishing the information is notified of the
dispute by a [CRA], not when the borrower directly contacts the person furnishing the
information.”).
Thus, Ocwen’s duty under the FCRA was not triggered by Plaintiff’s June 5, 2006
or August 7, 2006 telephone calls with Ocwen representatives, nor by Plaintiff’s
correspondence in late September 2006 and early October 2006 providing Ocwen with
copies of the HUD Settlement Statement and Washington Mutual letter. Ocwen
concedes that its duty under the statute was triggered on October 23, 2006 when a
CRA, Transunion, notified it of the dispute. (ECF No. 260, at 13-14.)9 The undisputed
evidence indicates that Ocwen proceeded to conduct an investigation, actually
voluntarily initiating the investigation a few days prior on November 19, 2006 in
response to Plaintiff’s complaints. (See ECF No. 251, Exs. D-9, D-10, D-12.) Thus,
Ocwen complied with 15 U.S.C. § 1681s-2(b)(1)(A) (requiring initiation of an
investigation) as a matter of law.
The first evidence suggesting that Ocwen’s investigation may have concluded is
9
Plaintiff has not pointed the Court to any evidence in the record, and the Court
is not aware of any, indicating that Ocwen or NCCI were notified of the dispute by a
CRA prior to October 23, 2006.
16
CMS’s December 5, 2006 letter to Plaintiff’s attorney stating, “[O]ur client has indicated
that this loan should have been paid-in-full. As such, our client has advised us to close .
. . our foreclosure file on this case. Our client has also indicated that Mr. Llewellyn's
credit report will be reversed . . . .” (ECF No. 251, Ex. G-7.) In their motion, Ocwen and
NCCI focus on a later date, January 24, 2007, the date on which Michael Barron of
Allstate executed a satisfaction of the deed of trust on the original loan. (ECF No. 247,
at 28.) They point out that just 22 days later, on February 15, 2007, Ocwen requested
that the CRAs delete the previous negative credit reporting. (Id.) Although Ocwen’s
investigation may have continued through January 24, 2007, there is some evidence –
CMS’s December 5, 2006 letter – indicating that Ocwen was on notice as of that date
that its previous negative credit reporting should be reversed. (ECF No. 251, Ex. G-7.)
The Court views this evidence in a light most favorable to Plaintiff, and finds that this
letter constitutes some evidence of conduct by Ocwen beginning on December 5, 2006
that is proscribed by the FCRA.10,11
The Court agrees with Plaintiff that this evidence of conduct by Ocwen is also
attributable to NCCI, as Ocwen’s principal on a theory of vicarious liability, a point NCCI
does not specifically dispute. See, e.g., Jones v. Federated Fin. Reserve Corp., 144
10
Specifically, 15 U.S.C. § 1681s-2(b)(1)(C) (requiring Ocwen to report the
results of the investigation to Transunion) and 15 U.S.C. § 1681-2(b)(1)(D) (requiring
Ocwen to inform all CRAs of its previous incomplete or inaccurate disclosures).
11
Ocwen argues that it never received the refinancing funds, but nevertheless
deleted the negative credit reporting in good faith. (ECF No. 247, at 28.) While a trier
of fact could have considered such an argument, the Court here must view the evidence
in a light most favorable to Plaintiff, and therefore must assume that, as of December 5,
2006, Ocwen was on notice that the negative credit history should be deleted.
17
F.3d 961, 964-66 (6th Cir. 1998) (holding that a principal can be vicariously liable under
the FCRA its agent’s acts, under common law agency principles); Cole v. Am. Family
Mut. Ins. Co., 410 F. Supp. 2d 1020, 1025-26 (D. Kan. 2006) (concluding that whether
employer should be held liable under FCRA for acts of its employee under an agency
theory was issue for the trier of fact).
Plaintiff argues that Ocwen’s investigation beginning in October “should have
[been] completed . . . immediately [rather than on December 5] because [Ocwen] had
already received from Llewellyn, among other things, the . . . HUD Settlement
Statement and . . . letter from Washington Mutual.” (ECF No. 251, at 26.) The Court
disagrees. The HUD Settlement Statement merely indicates to whom the refinancing
funds were supposed to be paid. Given that Ocwen had not been paid, it did not act
unreasonably by seeking actual proof of payment to EPMI. This is reinforced by the
Washington Mutual letter itself, which directed Plaintiff to “contact [his] closing agent for
research on the payoff wire.” (Id. Ex. D-4.) Krehbiel finally faxed Ocwen proof of the
payoff wire on November 21 (while shortly beforehand providing the information to
CMS), which was just 14 days prior to CMS’s December 5 letter. The Court concludes
that CMS’s investigation was not unreasonably long under the FCRA.12
12
Plaintiff also focuses on payments received by Ocwen from Allstate during
October 2006, two of which were rejected and the final one of which was accepted. The
Court is not persuaded that receipt of these payments somehow put Ocwen on notice
regarding Plaintiff’s refinancing, or shows Ocwen’s bad faith in reporting the loan as
past due to CRAs. First, these payments were not of sufficient amounts to bring the
loan with Ocwen out of default. And second, Ocwen’s reporting to CRAs between
October 2006 and December 2006 consistently reported the status of the loan only as
of September 30, 2006 (and thus did not account for the October payment accepted by
Ocwen).
Plaintiff also emphasizes an October 18, 2006 Ocwen call log entry as evidence
18
Plaintiff also focuses a great deal on the Real Estate Settlement Procedures Act
(“RESPA”), arguing that “the Mortgage Loan was never in default because the refinance
proceeds were paid to the prior loan servicer [EPMI] within the 60 day window set forth
in . . . RESPA.” (Id. at 23.) As an initial matter, Plaintiff has not brought a legal claim
under the RESPA in this action, and so cannot now argue that Ocwen and NCCI should
be held directly liable for violating the RESPA.13 Also, the evidence does not indicate
that Ocwen violated section 2605(d) of the RESPA,14 as Plaintiff argues: Allstate
transferred the loan to Ocwen on May 15, 2006, and Ocwen did not impose a late fee
until July 17, 2006, more than 60 days after the transfer. (See ECF No. 251, Ex. B at
19.) Further, as of July 17, 2006, Ocwen and NCCI were not on constructive notice that
the loan had been refinanced.
that Ocwen knew as of that date that the loan “was paid out prior to the loan being
boarded at Ocwen.” (ECF No. 251, at 26.) Plaintiff has not quoted the entire call log
entry – the entire entry casts doubt on Plaintiff’s conclusion. (See id. Ex. B at 14.) And
again, Ocwen’s duty under the FCRA was not even triggered until October 23 when
Transunion contacted it.
Plaintiff also emphasizes an October 27, 2006 email from an NCC Servicing, LLC
employee recognizing that Plaintiff’s credit should be corrected. Plaintiff’s claims
against NCC Servicing are not at issue in the pending motions for summary judgment,
and Plaintiff has not established that Ocwen or NCCI should be held accountable for
NCC Servicing’s apparent knowledge.
13
The Court’s own research reveals a multitude of cases in which plaintiff lenders
have brought actions against mortgage companies under both the RESPA and FCRA.
14
12 U.S.C. § 2605(d) provides, “During the 60-day period beginning on the
effective date of transfer of the servicing of any federally related mortgage loan, a late
fee may not be imposed on the borrower with respect to any payment on such loan and
no such payment may be treated as late for any other purposes, if the payment is
received by the transferor servicer (rather than the transferee servicer who should
properly receive payment) before the due date applicable to such payment.”
19
Plaintiff has come forward with some evidence of conduct by Ocwen between
December 5, 2006 and February 15, 2007 that is proscribed by the FCRA. However, as
discussed infra, summary judgment is appropriate on Plaintiff’s FCRA claim against
Ocwen and NCCI because Plaintiff has failed to come forward with sufficient evidence
showing damages caused by Ocwen and NCCI’s conduct during that time period.
ii.
Actual Damages
Ocwen and NCCI argue that Plaintiff has not created a triable issue as to
whether he suffered any actual damages as a result of Ocwen’s credit reporting. (ECF
No. 247, at 28-32.) Specifically, they argue, inter alia, that any decline in Plaintiff’s
creditworthiness was not caused by Ocwen’s reporting but instead on Plaintiff defaulting
on sixteen mortgage loans, Plaintiff was still afforded significant credit during the
relevant time period, and there is no evidence that Plaintiff was ever denied credit
during the relevant time period. (See id.) In response, Plaintiff argues (notably, without
any citations to the record) that after Ocwen’s reporting
Llewellyn’s credit was terrible and he could not refinance any of the loans
on his properties. The critical refinancing – unavailable because of
Ocwen’s erroneous credit reporting – caused to [sic] Llewellyn to lose
everything. . . . Llewellyn’s credit scores plummeted into the 500s after
Ocwen’s erroneous credit reporting . . . . As a result, Llewellyn could not
refinance any of his properties.
(ECF No. 251, at 29.) In so arguing, both parties focus only on actual economic harm.
A plaintiff may recover his actual damages caused by a defendant’s negligent
violations of the FCRA. See 15 U.S.C. § 1681o(a). Where a plaintiff fails to meet his
burden of showing actual damages caused by an FCRA violation, summary judgment is
appropriate. See Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1161 (11th
20
Cir. 1991) (affirming grant of summary judgment on FCRA claim because the plaintiff
failed to meet his burden “of coming forward with evidence supporting his claim that
[defendant’s] alleged inaccurate report caused him harm”); Birmingham v. Equifax, Inc.,
No. 2:06-cv-00702, 2009 WL 194985, *2 (D. Utah Jan. 26, 2009) (stating that Plaintiff’s
FCRA claims “fail as a matter of law because Plaintiff has failed to provide evidence (a)
that he suffered any damages or (b) that [Defendant] caused his alleged damages.”)
The Court finds that Plaintiff’s evidence of actual economic damages caused by
Ocwen and NCCI is weak, and in particular concludes that Plaintiff has not created a
triable issue as to whether he suffered actual economic damages caused by Ocwen and
NCCI’s conduct between December 5, 2006 and February 15, 2007.
First, the record indicates that Plaintiff did not produce during discovery, and has
failed to point the Court to, a single formal credit application of his that was denied
during the relevant time period. Second, even if he had, he would still face the
additional hurdle of showing that the application was denied because of Ocwen’s
negative credit reporting. And third, even if he had made such a showing, he would
face yet another hurdle of establishing that his eventual economic harm would not have
occurred but for Ocwen’s negative credit reporting.15 Further, the undisputed evidence
shows that Plaintiff was able to close three mortgage loans after Ocwen’s negative
reporting had begun. (See ECF No. 247, Exs. A-52, A-55, A-64, A-65.) One of these
15
The Court does not place significant weight on Michael Barron’s deposition
testimony that Barron engaged in informal discussions with Plaintiff’s attorney John
McNamara about refinancing one of Plaintiff’s loans, but declined to refinance them
because of Plaintiff’s poor credit. (ECF No. 251, Ex. I at 126:6-129:11.) Among other
reasons, there is absolutely no indication that Plaintiff’s economic situation would have
turned out differently if Barron had agreed to refinance one of Plaintiff’s loans.
21
loans, for $627,000, closed on January 19, 2007 (during the time period December 5,
2006 to February 15, 2007). (See ECF No. 247, Ex. A-52.)16
The declarations of Plaintiff and Candace Saport do not create a triable issue as
to whether Plaintiff’s negative economic situation was caused by Ocwen‘s failure to
correct his credit history from December 5, 2006 to February 15, 2007. Plaintiff’s
declaration states,
In about August 2006, Ocwen began making negative reports about me to
the 3 major credit bureaus . . . . I was no longer able to qualify for loans I
was easily able to qualify for in 2005 and 2006 through my mortgage
broker, Candace Saport. When I asked her why I was unable to qualify for
these loans, she told me that my credit rating was ‘screwed’ and it would
not support any loans to buy more properties. . . . When my credit was
ruined, I could no longer borrow or acquire new properties to scrape, fix
up, rent, or sell at a profit to pay the loans against the properties.
(Id. Ex. D ¶¶ 5, 9.) Saport’s declaration states,
Glen and I were both under tremendous pressure, particularly during
October, 2006, to about February 20, 2007, to save Glen’s good credit,
but it could not be saved. . . . By March, 2007 Glen’s credit was ruined, he
could not get any more loans to purchase more properties from at least
September, 2006, through March 2007 to keep his real estate portfolio
strong, and he told me he was financially ruined.
(ECF No. 251, Ex. J ¶ 10.) Given the evidence concerning loans Plaintiff was able to
close during the relevant time period, and given that Plaintiff has not provided any
specific evidence of a formal loan application being denied during the relevant time
16
Particularly as to this closing, occurring five months after Ocwen’s negative
credit reporting began, the Court is not particularly persuaded by the contention in
Saport’s declaration that the loan was “already approved and ready to go before Ocwen
started ruining Glen’s credit score.” (ECF No. 251, Ex. J ¶ 6.)
22
period, these vague and conclusory statements17 are insufficient to create a triable issue
as to economic harm caused by Ocwen’s failure to correct the credit history between
December 5, 2006 and February 15, 2007. See Adler v. Wal-Mart Stores, Inc., 144
F.3d 664, 674 (10th Cir. 1998) (“Vague, conclusory statements do not suffice to create a
genuine issue of material fact.”).18
iii.
Emotional Harm
Ocwen and NCCI also argue that Plaintiff has not created a triable issue as to
whether he suffered emotional damages caused by Ocwen’s credit reporting, focusing
on the fact that the events in question took place in 2006, but Plaintiff did not seek any
psychological counseling during the entire period 2002 through 2008. (ECF No. 247, at
32-33.) In response, Plaintiff argues that he was diagnosed with depression and sought
psychological counseling in late 2009 as a result of Ocwen and NCCI’s misconduct.
(ECF No. 251, at 30.)19
17
(Id. Ex. D ¶ 5 (“I was no longer able to qualify for loans,” “my credit rating was
‘screwed’ and it would not support any more loans”); id. Ex. D ¶ 9 (“I could no longer
borrow or acquire new properties”); id. Ex. J ¶ 10 (“he could not get any more loans”).)
18
It is unreasonable to infer, without more evidence, that Ocwen’s negative credit
reporting over an approximately six month period, and in particular its failure to correct
the negative reporting from December 5, 2006 to February 15, 2007, caused Plaintiff to
default on sixteen mortgage loans. See Carney v. City and Cnty. of Denver, 534 F.3d
1269, 1276 (10th Cir. 2008) (“Although our summary judgment standard requires us to
view the facts in the light most favorable to the non-moving party, it does not require us
to make unreasonable inferences in favor of the non-moving party.”) (citation and
internal quotation marks omitted).
19
Defendant does not appear to dispute that “actual damages” under the FCRA
include damages for emotional distress. See, e.g., Cooper v. Fed. Aviation Admin.,
622 F.3d 1016, 1032 (9th Cir. 2010); Sloane v. Equifax Info. Servs., 510 F.3d 495, 500
(4th Cir. 2007); Casella v. Equifax Credit Info. Servs., 56 F.3d 469, 474 (2d Cir. 1995);
Thompson v. San Antonio Retail Merchs. Ass’n, 682 F.2d 509, 513 (5th Cir. 1982).
23
The only medical documentation advanced by Plaintiff in support of his claim for
emotional damages are records from medical evaluations on August 25, 2009, October
13, 2009, and November 3, 2009. (See ECF No. 251, Ex. D-17.) Plaintiff argues that
the records not only show the severity of his conditions, but also show that the
conditions were caused by Ocwen’s conduct. (See ECF No. 251, at 30.) The records
do not so indicate. See, e.g., id. Ex. D-17, at L-Med 71 (“He is still avoiding the stressor
of ‘looking into the paperwork’ with his legal/past business issues. He is waiting for his
attorney to get back with him on this matter.”); id. at L-Med 81 (citing “financial loss” as
an adverse life event he suffered); id. at L-Med 210 (stating that patient “owned own
company and was previously wealthy but has had business trouble over last 2 years
with associated stress”). These documents are entirely insufficient to create a triable
issue as to whether Ocwen’s negative credit reporting during late 2006 and early 2007,
as opposed to Plaintiff’s defaulting on sixteen mortgage loans, caused the medical
issues Plaintiff was experiencing during the last half of 2009.20
Plaintiff also advances his own declaration to support his claim for emotional
damages caused by Ocwen’s negative credit reporting. A plaintiff’s own testimony can
be sufficient in itself to establish emotional damages under the FCRA, but the testimony
must contain more than conclusory allegations of harm and causation. See, e.g., Tilley
v. Global Payments, Inc., 603 F. Supp. 2d 1314, 1325 (D. Kan. 2009) (“Actual damages
under FCRA may include humiliation and embarrassment, even if the consumer
suffered no out-of-pocket losses. A plaintiff must present evidence beyond conclusory
20
As the Court has noted, it is unreasonable to infer based on this record that
Ocwen’s negative reporting caused Plaintiff to default on the sixteen mortgage loans.
24
allegations; however, a plaintiff’s own testimony [can be] sufficient . . . .”); Riley v.
Equifax Credit Info. Servs., Inc., 194 F. Supp. 2d 1239, 1244-45 (S.D. Ala. 2002) (“A
claim for mental distress damages [under the FCRA] must be supported by something
more than the plaintiff's own conclusory allegations.”).
There is no doubt that Plaintiff’s declaration details severe physical, emotional,
and psychological conditions he was experiencing during this general time period. (See
ECF No. 251, Ex. D ¶¶ 6-8, 11.) However, given that during this same time period
Plaintiff defaulted on sixteen mortgage loans, destroying his business and livelihood, the
Court concludes that his unsupported statements attributing these medical conditions to
Ocwen’s conduct are too conclusory to show that Ocwen caused Plaintiff’s emotional
harm.21 See Kittle v. Accredited Collection Agency Inc., No. 07-cv-01716, 2010 WL
2650479, at *2 (D. Colo. June 30, 2010).22 This failure to show causation is particularly
21
(See, e.g., id. ¶ 6 (“Due to Ocwen . . . ruining my credit, . . . my health began to
rapidly deteriorate.”); id. ¶ 7 (“I had none of these symptoms before Ocwen’s [sic]
wrongfully reported severe delinquency to the credit bureaus.”); id. ¶ 8 (“I felt completely
helpless as to how to manage my crumbling personal real estate investments, and felt
as though everything was ‘closing in.’”); id. (“Everything Ocwen said to the [CRAs], in
spite of me, my attorney Mr. McNamara, and Candace Saport’s help, was falling on
Ocwen’s . . . deaf ears. By mid 2007 to late 2007, I had lost everything I owned and
could not recover.”); id. ¶ 11 (“Ocwen[ ] caused me severe strain and anxiety and
related health problems described above in threatening to foreclose my . . . property. . .
. I began to suffer extreme nervousness and anxiety, including anxiety attacks. . . . I
was terrified that the threatened foreclosure would make my credit even worse. This is
what happened, and the reason I suffer so many health problems today.”).
22
In Kittle, the court stated,
[The plaintiff’s] statement that, as a result of the defendants’ actions, she
“was extremely upset, suffered emotional distress including excessive
stress, headaches, fear, sleeplessness, loss of appetite, withdrawal from
social situations and depression” is not sufficient to demonstrate that the
defendants’ actions caused these various forms of emotional distress. . . .
25
true as for Ocwen’s conduct in failing to reverse the negative credit reports between
December 5, 2006 and February 15, 2007, and thus the Court concludes that Plaintiff
has failed to raise a triable issue as to whether his emotional harm was caused by
Ocwen’s conduct between December 5, 2006 and February 15, 2007.
iv.
Statutory and/or Punitive Damages
Ocwen and NCCI also argue that Plaintiff has failed to raise a triable issue as to
whether they “willfully” violated the FCRA, and that therefore Plaintiff cannot recover
statutory or punitive damages. (ECF No. 247, at 34.) In response, Plaintiff argues that
Ocwen and NCCI recklessly disregarded their obligations under the FCRA, which is
sufficient to justify an award of statutory and/or punitive damages. (ECF No. 251, at 3132.)
The Court concludes that Plaintiff has not raised a triable issue as to whether
Ocwen and NCCI knowingly or recklessly violated the FCRA between December 5,
2006 and February 15, 2007. See 15 U.S.C. § 1681n (allowing for statutory and/or
punitive damages where person “willfully” fails to comply with the FCRA); Safeco Ins.
Co. of Am. v. Burr, 551 U.S. 47, 56-60 (2007) (holding that “willful” violations of the
FCRA include violations made knowingly or recklessly). Plaintiff has come forward with
no evidence of why the delay occurred in correcting the negative credit reporting. The
[The plaintiff] provides no details of any kind about her claimed emotional
distress, including the forms, timing, duration, and frequency of her
claimed distress, or whether she sought treatment for her claimed
distress. Such conclusory, general, and uncorroborated testimony
concerning emotional distress is not sufficient to support an award of
damages for emotional distress.
Id.
26
Court cannot assume knowing or reckless conduct simply based on the fact that this
delay occurred. This (lack of) evidence at most suggests negligence by Ocwen, which
is insufficient to show an entitlement to statutory or punitive damages. See McLaughlin
v. Richland Shoe Co., 486 U.S. 128, 133 (1988) (“The word ‘willful’ . . . is generally
understood to refer to conduct that is not merely negligent.”); Murray v. New Cingular
Wireless Servs., Inc., 523 F.3d 719, 725-26 (7th Cir. 2008) (“[S]tatutory damages are
available only for willful violations of the Act, [which] means . . . something more than
negligence . . . of the law’s requirements.”).
Accordingly, because Plaintiff has only come forward with some evidence of
conduct by Ocwen between December 5, 2006 and February 15, 2007 that is
proscribed by the FCRA, and because there is no triable issue as to whether Ocwen
and NCCI’s conduct during this period caused Plaintiff any damages, summary
judgment is appropriate on Plaintiff’s FCRA claim against Ocwen and NCCI.
b.
Outrageous Conduct Claim
Plaintiff’s outrageous conduct claim against Ocwen and NCCI alleges that
Defendants “engaged in extreme and outrageous conduct by knowingly providing false
credit information to several credit bureaus.” (ECF No. 149, at 8 ¶ 29.) Under Colorado
law, the elements of the tort of outrageous conduct are: (1) the defendant engaged in
extreme and outrageous conduct; (2) recklessly or with the intent of causing the plaintiff
severe emotional distress; and (3) causing the plaintiff severe emotional distress.
Culpepper v. Pearl St. Bldg., Inc., 877 P.2d 877, 882 (Colo. 1994). Ocwen and NCCI
argue that summary judgment is appropriate as to each of these elements. (ECF No.
247, at 34-37.) The Court agrees that there is no triable issue as to whether Ocwen and
27
NCCI engaged in extreme and outrageous conduct, or whether Ocwen and NCCI acted
recklessly or with the intent of causing Plaintiff severe emotional distress.23
“[T]he level of outrageousness required [to create liability for this tort] is
extremely high: . . . the conduct [must be] so outrageous in character, and so extreme in
degree, as to go beyond all possible bounds of decency, and to be regarded as
atrocious, and utterly intolerable in a civilized community.” Coors Brewing Co. v. Floyd,
978 P.2d 663, 666 (Colo. 1999). “Although the question of whether conduct is
outrageous is generally one of fact to be determined by a jury, it is first the responsibility
of a court to determine whether reasonable persons could differ on the question.”
Culpepper, 877 P.2d at 883. As for the intent element of the tort,
A person acts with intent to cause severe emotional distress when he
engages in conduct with the purpose of causing severe emotional distress
to another person, or he knows that his conduct is certain or substantially
certain to have that result. A person acts recklessly in causing severe
emotional distress in another if, at the time of the conduct, he knew or
reasonably should have known that there was a substantial probability that
his conduct would cause severe emotional distress to the other person.
Culpepper, 877 P.2d at 882-83.
Ocwen’s conduct over the entire time period is relevant to Plaintiff’s outrageous
conduct claim (unlike the FCRA claim, where Ocwen and NCCI’s duty to act was not
triggered until October 23, 2006 when Transunion contacted Ocwen). However, this
does not change the equation very much for the following reasons.
Plaintiff emphasizes that he first informed Ocwen on June 5, 2006 that the loan
had been refinanced, but on that call Plaintiff declined to give any details about the
23
Because of these conclusions, the Court need not reach the issue of whether
Plaintiff has raised a triable issue as to whether he suffered emotional harm.
28
refinancing. Plaintiff next spoke with an Ocwen representative on August 7. During that
call, Plaintiff advised the representative that he refinanced the loan with Kevin Rider and
the loan was with Washington Mutual, but the Ocwen representative told Plaintiff that
Ocwen had not received the refinancing funds and that Plaintiff should contact
Washington Mutual. Plaintiff argues that Ocwen should have initiated an investigation
following these two telephone calls. Certainly, given that Plaintiff did not provide any
details regarding the refinancing to Ocwen on June 5, 2006 Ocwen’s inactivity following
that call did not amount to extreme and outrageous conduct, or show a sufficient intent
to cause severe emotional distress. See Coors Brewing Co., 978 P.2d at 666;
Culpepper, 877 P.2d at 882-83. The same is true of the August 7, 2006 telephone call.
Although the Ocwen representative would have been providing good customer service
by voluntarily initiating an investigation at that point, his/her failure to do so at most
amounts to negligence. See Green v. Qwest Servs. Corp., 155 P.3d 383, 387 (Colo.
App. 2006) (affirming grant of summary judgment on outrageous conduct claim
because, “[w]hile reasonable people could find defendants’ alleged conduct was grossly
negligent,” “we conclude that it was not sufficiently egregious to establish a cause of
action for outrageous conduct”).
The undisputed evidence indicates that Plaintiff did not attempt to make further
contact with Ocwen until September 25, 2006, when Plaintiff faxed to CMS a copy of the
HUD Settlement Statement and Washington Mutual letter. Plaintiff then became much
more active in October 2006 in complaining to Ocwen and CMS. However, the
evidence also indicates that Ocwen proceeded to initiate an investigation on October
19, 2006. The Court concludes that this delay in initiating the investigation between
29
September 25, 2006 and October 19, 2006 at most amounts to negligence, and
therefore does not rise to the level of extreme and outrageous conduct. See Green,
155 P.3d at 387. The Court has also already held that Ocwen’s continuation of its
investigation through December 5, 2006 was not unreasonable, and so as a matter of
law did not amount to extreme and outrageous conduct. Coors Brewing Co., 978 P.2d
at 666. And finally, the Court has also already held that the (lack of) evidence of Ocwen
and NCCI’s intent or recklessness in failing to correct the negative reporting between
December 5, 2006 and February 15, 2007 also shows at most negligence, which is
insufficient to show extreme and outrageous conduct. See Green, 155 P.3d at 387; see
also Schultz v. Allstate Ins. Co., 764 F. Supp. 1404, 1411 (D. Colo. 1991) (holding that,
although fact-finder might reasonably conclude that “some of the circumstances
[surrounding the insurer’s conduct] support a finding of bad faith,” evidence did not
satisfy the more extreme standard for outrageous conduct).
For these reasons, summary judgment is appropriate on Plaintiff’s outrageous
conduct claim against Ocwen and NCCI.24
c.
FDCPA Claim
Plaintiff’s FDCPA claim against Ocwen and NCCI, brought under 15 U.S.C.
§ 1692e(8), alleges, inter alia, that Ocwen and NCCI, as debt collectors, communicated
24
In Judge Krieger’s previous order ruling on Ocwen’s motion to dismiss, she
held that Plaintiff stated a claim of extreme and outrageous conduct by alleging that
“Ocwen knowingly reported false information about the . . . loan being in default to credit
reporting agencies, and later . . . willfully failed to action to correct the error.” (ECF No.
112, at 11-13.) The Court now holds that Plaintiff has failed to come forward with
evidence showing the “knowing” or “willful” conduct referenced by Judge Krieger.
30
false information concerning Plaintiff’s creditworthiness to credit reporting agencies.
(ECF No. 149, at 10.) 15 U.S.C. § 1692e & 1692(e)(8) provide,
A debt collector may not use any false, deceptive, or misleading
representation or means in connection with the collection of any debt
[including] (8) [c]ommunicating or threatening to communicate to any
person credit information which is known or which should be known to be
false, including the failure to communicate that a disputed debt is
disputed.
The FDCPA applies only to “debt collectors.” See id.; id. § 1692(a)(6). However, the
statute specifically excludes from the definition of “debt collector” “any person collecting
or attempting to collect any debt . . . which was not in default at the time it was obtained
by such person . . . .” Id. § 1692(a)(6)(F). Courts have consistently ruled that a
creditor, mortgage servicing company, or assignee of the debt is not a “debt collector”
under the FDCPA if the entity acquired the loan before it was in default.25 See, e.g.,
Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985) (“[A] debt collector
[under section 1692a(6)] does not include the consumer’s creditors, a mortgage
servicing company, or an assignee of a debt, as long as the debt was not in default at
the time it was assigned”); Lyons v. WM Specialty Mortg. LLC, No. 08-cv-00018, 2008
WL 2811810, at *7 (D. Colo. July 18, 2008) (granting summary judgment in favor of
defendants on FDCPA claim because the loan was not in default when defendants, a
creditor and mortgage servicing company, obtained the loan).
In their motion, Ocwen and NCCI argue that they are not “debt collectors” under
the FDCPA because “Ocwen started servicing the Mortgage Loan on behalf of NCCI on
25
Both parties appear to agree on this point. (See ECF No. 247, at 38; ECF No.
251, at 35.)
31
May 15, 2006, when the loan was not in default.” (ECF No. 247, at 37.) In response,
Plaintiff first focuses on NCCI and states, “although Ocwen began servicing the Loan
effective May 15, 2006, at some unknown date the ownership of the Loan was
transferred from Allstate to NCCI. If NCCI took ownership of the Loan after the Loan
was allegedly in default, NCCI would be deemed a debt collector.” (ECF No. 251, at 3536.) Plaintiff then argues that if NCCI was a “debt collector,” Ocwen should also be
deemed a debt collector because it was servicing the loan for a debt collector (NCCI).
(Id. at 36-37.)26
As Plaintiff appears to concede, the undisputed evidence shows that the loan
was not in default on May 15, 2006 when Ocwen acquired the rights to service the loan.
Thus, under the case law, Ocwen is not a “debt collector” under the FDCPA (unless
Plaintiff’s argument as to Ocwen, discussed infra, is persuasive).
As for NCCI, there are two pieces of evidence suggesting that NCCI purchased
the loan on the same date – May 15, 2006 – before the loan went into default. First, the
Declaration of Gina Johnson, a Senior Loan Analyst with Ocwen, states, “Ocwen began
servicing the Mortgage Loan on or about May 15, 2006. . . . Ocwen serviced the
Mortgage Loan as the attorney-in-fact for [NCCI], the investor that purchased the loan
on the secondary market.” (ECF No. 247, Ex. A-12 ¶¶ 5, 7.) This evidence implies that
NCCI purchased the loan on May 15, 2006. And lending at least slightly more support
to this premise is Ocwen’s letter informing Plaintiff that “effective 5/15/2006 the servicing
26
Plaintiff also argues that Defendant NCC Servicing, LLC should be treated as a
“debt collector” under the FDCPA. (See ECF No. 251, at 37.) The Court declines to
consider this issue because NCC Servicing, LLC has not moved for summary judgment.
32
of your mortgage loan . . . will be assigned, sold and transferred from Allstate [] to
Ocwen.” (ECF No. 251, Ex. F-2.) This letter, in conjunction with the Johnson
Declaration, implies that, as of May 15, 2006, Allstate was giving up its ownership
interest in the loan to NCCI. The Court concludes that Ocwen has satisfied its burden
of showing a lack of a genuine dispute as to when NCCI purchased the loan from
Allstate. See Fed. R. Civ. P. 56(a); Liberty Lobby, Inc., 477 U.S. at 248-50.
Thus, the burden shifts to Plaintiff to designate “specific facts showing that there
is a genuine issue for trial” on this issue. Celotex Corp., 477 U.S. at 324. Plaintiff has
come forward with no evidence showing that NCCI purchased the loan from Allstate on
some date other than May 15, 2006.27 Therefore, Plaintiff has failed to raise a triable
issue as to whether NCCI is a “debt collector” under the FDCPA, which the undisputed
evidence shows it is not. And because NCCI is not a “debt collector” under the FDCPA,
Plaintiff’s argument that Ocwen should be treated as a “debt collector” under the
FDCPA because it was collecting a debt on behalf of a debt collector (NCCI) is
27
Plaintiff argues that, during discovery, Defendants failed to produce the Sale
Agreement relating to Allstate’s sale of the Loan to NCCI. (ECF No. 251, at 37 n.10.)
Plaintiff represents that a motion to compel was heard by U.S. Magistrate Judge Kristen
L. Mix on the issue, that Ocwen represented to Magistrate Judge Mix that it did not
possess the document, and on that basis Magistrate Judge Mix ruled that she could not
order Ocwen to produce a document that it did not possess. (See id.) (The only
evidence of a motion to compel being ruled on by Magistrate Judge Mix in this action is
docket entry # 192, in which Magistrate Judge Mix heard “Plaintiff’s oral Motion to
Compel Production of a document.” Counsel in the case provided Judge Mix with the
background and basis of the discovery dispute (which is not detailed in the minute
order), and the Judge denied the oral motion without explanation.)
Plaintiff now argues that Ocwen does have the document in its possession. (Id.)
Plaintiff is asking the Court to re-hear this discovery dispute, which it declines to do.
Further, there is no indication that Plaintiff ever propounded during discovery a simple
interrogatory asking on what date NCCI purchased the loan from Allstate.
33
unavailing.28
Because neither Ocwen nor NCCI are properly treated as “debt collectors” under
the FDCPA, summary judgment is appropriate as to the FDCPA claim against them.29
3.
CMS’s Motion for Summary Judgment
CMS also moves for summary judgment, both as to Plaintiff’s outrageous claim
and FDCPA claim brought against it. (See ECF No. 149, at 8, 10-11.)
a.
Outrageous Conduct Claim
In its motion, CMS argues that it did not engage in extreme and outrageous
conduct, and did not act recklessly or with the intent of causing Plaintiff severe
emotional distress, because it did not even initiate a foreclosure action against Plaintiff,
but instead merely followed Ocwen’s instructions to initiate foreclosure, then place
foreclosure on hold, and then finally close its foreclosure file. (ECF No. 182, at 8, 11.)
In response, Plaintiff first argues that CMS knew or should have known that the
debt was not owing when it sent Plaintiff its initial letter on September 7, 2006. In so
doing, Plaintiff focuses on CMS’s statement in its summary judgment motion that “CMS
received a foreclosure referral from Ocwen and after review by a CMS attorney
concerning the existence of a debt, sent out [the debt validation letter].” (ECF No. 182,
28
The Court also rejects Plaintiff’s implication that Ocwen should be treated as a
“debt collector” under the FDCPA because it was representing itself as a “debt collector
attempting to collect a debt” in its letters to Plaintiff. See Nwoke v. Countrywide Home
Loans, Inc., 251 F. App’x 363, 365 (7th Cir. 2007) (rejecting the same argument
advanced by Plaintiff).
29
Because of this conclusion, the Court need not reach Ocwen and NCCI’s
argument that Plaintiff’s FDCPA claim against them is barred by the applicable statute
of limitations.
34
at 2 (emphasis added).) Plaintiff argues, without citing any factual support, that
Thus, [CMS] had in its possession the title work on the Coolidge Property,
and knew that Wyman Funding was the lender with a purported first lien
on the Coolidge property. [CMS] could readily determine that Stewart Title
was the title company involved in the transaction, and could readily obtain
the HUD Settlement Statement, the wire payoff log, and even the title
insurance work in connection with the refinancing.
(ECF No. 252, at 26.) The Court is not aware of any factual support for these
statements. Notably, as of the September 7, 2006 letter, Plaintiff had had no direct
contact with CMS, and Plaintiff’s only contacts with Ocwen were the two telephone
conversations on June 5, 2006 and August 7, 2006. Plaintiff had not even sent Ocwen
relevant documentation as of September 7, 2006, not to mention CMS. There does not
appear to be any factual support for Plaintiff’s assertion that CMS knew or should have
known that the debt was not owing when it sent the September 7, 2006 letter, and thus
there is no triable issue as to whether sending this letter constituted extreme and
outrageous conduct. See Coors Brewing Co., 978 P.2d at 666; Celotex Corp., 477 U.S.
at 324.
Plaintiff also appears to suggest that CMS engaged in extreme and outrageous
conduct between September 7, 2006 and December 5, 2006. (ECF No. 251, at 26-29.)
The Court is unpersuaded. First, although Plaintiff had began providing documentation
to CMS as early as September 25, 2006, CMS’s delay until October 19, 2006 to inform
Plaintiff that foreclosure was being put on hold did not amount to extreme and
outrageous conduct.30 The same is true of CMS’s delay in closing its foreclosure file
30
Cf. Dean v. Allstate Ins. Co., 878 F. Supp. 1397, 1403 (D. Colo. 1993) (stating
that summary judgment was appropriate on claim that medical benefit payments were
willfully delayed by insurer where plaintiff had not come forward with any evidence that
35
until December 5, 2006, following Ocwen’s investigation. These conclusions are further
supported by the fact that the evidence shows that Ocwen was conducting the
investigation, and CMS was merely following Ocwen’s (its client’s) directions. See
Turman v. Castle Law Firm, LLC, 129 P.3d 1103, 1105 (Colo. App. 2006) (“As a general
rule, attorneys have no duty to act for the benefit of those who are not clients. Thus,
absent fraudulent or malicious conduct, attorneys are not liable for negligent acts or
omissions that may cause damage to third parties.”); cf. Clark v. Capital Credit &
Collection Services, Inc., 460 F.3d 1162, 1174 (9th Cir. 2006) (stating that debt collector
under the FDCPA did not have duty to independently investigate validity of debt and,
within reasonable limits, was entitled to rely on creditor’s statements to verify debt).
Finally, Plaintiff argues that CMS’s failure to correct Plaintiff’s credit reports
between December 5, 2006 and February 15, 2007 constituted outrageous conduct.
(See ECF No. 252, at 24, 29-31.) The Court concludes that it is not appropriate to
construe Plaintiff’s outrageous conduct claim so broadly as to include allegations
concerning CMS’s failure to correct the credit reports. In the operative complaint,
Plaintiff’s outrageous conduct claim alleges only the following as to CMS: “[CMS]
engaged in extreme and outrageous conduct by . . . pursuing foreclosure against
Plaintiff’s property after being repeatedly informed that Plaintiff was not in default and
that the Allstate loan had been paid through refinance.” (ECF No. 149, at 8 ¶ 30.) This
allegation involves pursuing foreclosure, not failing to correct the credit reports.
the delay was willful); Bucholtz v. Safeco Ins. Co. of Am., 773 P.2d 590, 593 (Colo. App.
1988) (holding that dismissal of outrageous conduct claim was appropriate where
plaintiff did not allege facts showing that insurer acted unreasonably or recklessly in
delaying the handling of Plaintiff’s claim for benefits).
36
Notably, the preceding paragraph of the complaint alleges outrageous conduct against
Ocwen and NCCI, and not CMS, based on their “knowingly providing false credit
information to several [CRAs].” (Id. at 8 ¶ 21.) The Court will not construe Plaintiff’s
outrageous conduct claim against CMS to include allegations concerning CMS’s failure
to correct Plaintiff’s credit reports.
Accordingly, the Court grants CMS’s motion for summary judgment as to the
outrageous conduct claim.31
b.
FDCPA Claim
As for the FDCPA claim against CMS, the Court concludes that the claim is
barred by the applicable statute of limitations.32 15 U.S.C. § 1692k(d) provides, “An
action to enforce any liability created by [the FDCPA] may be brought in any appropriate
United States district court . . . within one year from the date on which the violation
occurs.” See also Johnson v. Riddle, 305 F.3d 1107, 1113 (10th Cir. 2002) (applying
one-year statute of limitations to FDCPA claim).
In its motion, CMS argues that the statute of limitations began to run no later than
December 5, 2006, when it informed Plaintiff’s attorney that it was closing its foreclosure
file. (ECF No. 182, at 18-19.) In response, Plaintiff focuses entirely on CMS’s alleged
31
In Judge Krieger’s order on the motions to dismiss, she held that dismissal of
Plaintiff’s outrageous conduct claim against CMS was not appropriate where Plaintiff
alleged in the complaint that CMS attempted to foreclose upon property for which there
was no debt owing. (ECF No. 112, at 20.) However, following discovery, Plaintiff has
now failed to come forward with evidence showing that CMS acted recklessly or with the
intent of causing Plaintiff severe emotional distress.
32
Because of this conclusion, the Court need not address CMS’s arguments that
it is not a “debt collector” under the FDCPA, and that it did not threaten to take any
action that could not legally be taken. (See ECF No. 182, at 12-17.)
37
involvement in early 2007 in correcting Plaintiff’s credit reports: “[CMS] should have
caused the deletion of the [the negative credit reports] long before February 15, 2007,
and certainly on January 29, 2007, and each day thereafter. [CMS’s] failure to cause
the deletion of the [negative credit reports] each day commencing January 29, 2007,
constitutes separate violations of the FDCPA.” (ECF No. 252, at 39-41.)
Plaintiff’s argument is unavailing because, similarly, Plaintiff’s FDCPA claim
against CMS is based only on CMS’s initiation of foreclosure, not on CMS’s involvement
in cleaning up Plaintiff’s credit reports. The FDCPA claim against CMS in the operative
complaint alleges (only) that,
47.
48.
49.
[CMS], acting as a debt collection agency, threatened a foreclosure
action against Plaintiff’s property if Plaintiff did not make payment
on a non-existent debt.
The action of foreclosure could not legally be taken at the time of
the threat because the debt had been paid in full.
[CMS] was notified repeatedly that Plaintiff had paid the debt in full
and yet, upon information and belief, did not stop foreclosure
proceedings and/or rescind the threat until well after Plaintiff had
been irreparably damaged.
(ECF No. 149, at 10-11.) Plaintiff has not brought a claim against CMS based on its
failure to correct negative credit reporting, and thus CMS’s involvement in correcting the
credit reports in early 2007 is irrelevant to Plaintiff’s claim. Plaintiff’s FDCPA claim
against CMS, based entirely on CMS’s pursuit of foreclosure, accrued no later than
December 5, 2006. Because Plaintiff filed this action on January 29, 2008, more than
one year later, Plaintiff’s FDCPA against CMS is time-barred.
III. CONCLUSION
In accordance with the foregoing, it is therefore ORDERED as follows:
1.
Ocwen and NCCI’s Motion for Summary Judgment (ECF No. 247) is GRANTED.
38
2.
Ocwen and NCCI’s Amended Motion to Strike Declarations (ECF No. 264) is
GRANTED IN PART and DENIED IN PART. The Court GRANTS the Amended
Motion to Strike as to paragraphs 2 through 9, inclusive, of the Declaration of
John N. McNamara, Jr. (ECF No. 251, Ex. G). Paragraphs 2 through 9,
inclusive, of the Declaration of John N. McNamara, Jr., are hereby STRICKEN
from the record. The Court DENIES the Amended Motion to Strike as to the
Declarations of William Stollar (ECF No. 251, Ex. E), Glen Llewellyn (ECF No.
251, Ex. D), and Candace Saport (ECF No. 251, Ex. J). The Court also DENIES
the Amended Motion to Strike as to paragraphs 1 and 10 of the Declaration of
John N. McNamara, Jr., and exhibits attached to the McNamara declaration
(ECF No. 251, Ex. G).
3.
CMS’s Motion for Summary Judgment (ECF No. 182) is GRANTED.
4.
In any future filings with the Court, the parties shall use an amended caption that
lists as Defendants only the two remaining Defendants in the action, Allstate
Home Loans, Inc. d/b/a Allstate Funding, and NCC Servicing, LLC.
Dated this 16th day of June, 2011.
BY THE COURT:
________________________
William J. Martínez
39
United States District Judge
40
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