Edwards v. Bayview Loan Servicing, LLC

Filing 43

MEMORANDUM OPINION. Signed by Judge Richard G. Andrews on 3/15/2019. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
JACQUELINE EDWARDS ,
Plaintiff,
: Civil Action No. 16-425-RGA

V.

BAYVIEW LOAN SERVICING, LLC ,
Defendant.

Jacqueline Edwards, Wilmington , Delaware. Pro Se Plaintiff.
Catherine M. Di Lorenzo , Esquire , Alba Law Group , P.A. , Newport, Delaware . Counsel
for Defendant.

MEMORANDUM OPINION

March {~2019
Wilmington , Delaware

Plaintiff Jacqueline Edwards , who appears pro se and has paid the filing fee , filed
this action on June 8, 2016 , alleging violations of the Fair Debt Collection Practices Act
("FDCPA") , 15 U.S.C. §§ 1692, et seq. (0.1. 2) . The Amended Complaint is the
operative pleading. (0.1. 23) . The parties have filed cross-motions for summary
judgment and briefing is complete. (0 .1. 32 , 34) .

I.

BACKGROUND
The verified Complaint alleged that Defendant is a debt collector, Plaintiff is a

consumer, and Defendant illegally communicated with Plaintiff by failing to comply with
15 U.S.C. § 1692c(a). (0 .1. 2) . The original complaint was dismissed upon Defendant's
motion and Plaintiff's motion for leave to amend .1 The Amended Complaint raises two
claims : Count 1, pursuant to 15 U.S.C . § 1692g (validation of debts) ;2 and Count 2 ,
pursuant to 15 U.S.C. § 1692e (false or misleading representations . (0 .1. 23) . Plaintiff
seeks statutory and actual damages .

1

The Court granted in part and denied in part Plaintiff's motion for leave to amend . It
found that the proposed Amended Complaint failed to state a claim under 15 U.S.C.
§ 1692d (harassment or abuse) . (0 .1. 16, 17). Plaintiff was given leave to file an
amended complaint to cure the pleading defects as to the § 1692d claim . (Id.) . She did
not.
2

The verified Complaint included an Exhibit 1, which was not included with the
Amended Complaint. (0.1. 2-1 ). Exhibit 1 is a debt validation letter, dated March 14,
2016 and postmarked March 15, 2016 , to Plaintiff from Defendant advising Plaintiff that
it sought to bring Plaintiff's mortgage account current, and that it was attempting to
collect a debt on behalf of "U.S. Bank National Association, as trustee , in trust for the
benefit of the holders of WB4B REMIC Trust 2016-1 beneficial interest certificates ,
series 2016-1" ("U.S. Bank"), the current owner of Plaintiff's loan. The letter advises
Plaintiff of the loan number, the property address , and the loan amount, further advises
Plaintiff how to dispute the validity of the debt, and provides contact information.

1

The Amended Complaint contains numerous exhibits, as follows : (1) Exhibit 1, a
March 14, 2016 letter to Plaintiff from Defendant introducing her "dedicated point of
contact"; (2) Exhibit 2, a March 18, 2016 , "transfer of service notice"; (3) Exhibit 3, an
April 11 , 2016 letter to Plaintiff from Defendant advising Plaintiff that its records show
expiration of hazard insurance ; (4) Exhibit 4, Plaintiff's May 3, 2016 notice of dispute to
Defendant; (5) Exhibit 5, Defendant's May 12, 2016 response to Plaintiff's dispute of the
validity of the debt, which includes copies of Defendant's account activity statements,
March 18, 2016 transfer of service notice, March 7, 2006 mortgage, undated Allonge to
Note payable to CitiFinancial Service LLC ; August 12, 2015 assignment of mortgage,
March 7, 2006 note, March 7, 2006 HUD-1 form , good faith estimate, September 11 ,
2014 notice of default, and July 18, 2010 notice of intent to accelerate ; (6) Exhibit 6, a
May 20 , 2016 letter from Defendant to Plaintiff regarding an adjustment affecting the
interest due and advising Plaintiff that if she received a debt validation letter when her
loan originally transferred to Defendant, an updated copy would be mailed to her;3 (7)
Exhibit 7, the updated May 23 , 2016 debt validation letter advising Plaintiff that it seeks
to bring Plaintiff's mortgage account current, that it is attempting to collect a debt on
behalf of U.S. Bank, the current owner of Plaintiffs loan , and advising Pla intiff of the
loan number, the property address , the loan amount, how to dispute the validity of the
debt, and providing contact information ; and (8) Exhibit 8, the August 14, 2016
mortgage statement. (See D.I. 23) .

3

Defendant first sent a debt validation letter to Plaintiff on March 14, 2016 , following
transfer to it on March 3, 2016 . (See D.I. 2 at Ex. 1; D.I. 23 at 26) .
2

Plaintiff executed a note and mortgage on March 7, 2006 with CitiFinancial , Inc.
(D.I. 23 at 53-58). Plaintiff defaulted on the loan in 2014 . See Bayview Loan Servicing

LLC v. Edwards , C.A. No. N16L-01-070 ALR , Amended Complaint (Del. Super. June
21 , 2016) .
On August 12, 2015 , CFNA Receivables , Inc. F/K/A CitiFinancial , Inc. assigned
its interest to CitiFinancial Servicing , LLC. (Id. at 59). On March 4, 2016 Defendant
became the new loan servicer for Plaintiff's loan .4 (Id. at 26). An allonge to the note
was executed on March 22 , 2016 wherein CitiFinancial Servicing , LLC endorsed the
instrument in blank. (D .I. 36 at Ex. D). On March 31 , 2016 CitiFinancial Servicing , LLC
assigned its interest to Defendant. (Id. at Ex. C) .
Defendant is the servicer for U.S. Bank with authority to administer the loan and
collect payments as creditor. (D .I. 42 at Ex. E, Admission Nos. 1, 2, 3) . The original
note was transferred to Defendant, and its custodian has possession of the original
promissory note. (Id. at Admission Nos. 7, 8). Defendant sent Plaintiff two letters on
March 14, 2016 , a debt validation letter indicating that it was attempting to collect a debt
on behalf of U.S. Bank and a letter designating a point of contact. (D .I. 36 at Exs . E ,
F) . On May 9, 2016 , Plaintiff disputed the debt by a letter dated May 3, 2016 . (D .I. 23
at 39-42) . On May 12, 2016 , Defendant acknowledged receipt of the dispute letter,
advising that it had acquired servicing of the loan on March 4, 2016 , and that it was
given the servicing rights . (Id. at 44) . With the May 12, 2016 letter Defendant provided

4

In Delaware Superior Court, Bayview Loan Servicing stated in its response to
Edwards' motion to dismiss that the loan was transferred to it on or about March 4,
2016 . (See C.A. No. N16L-01-070 ALR (Del. Super.)) .
3

Plaintiff a copy of an account activity statement that provided a detailed accounting of all
transactions, a notice of the transfer, mortgage , assignment of mortgage, note, HUD1 ,
good faith estimate , notice of default, and notice of intent to accelerate . (/d. at 44-72) .
On May 20 , 2016 , Defendant sent Plaintiff a letter advising that it had reviewed
her loan . The review resulted in an adjustment affecting the interest due and noted that
the new interest balance was as of the date Defendant received Plaintiff's last payment
or the date the loan was transferred to Defendant, "whichever is greater." (Id. at 74).
The letter further advised that if Plaintiff had received a debt validation letter when her
loan originally transferred to Defendant, an updated copy would be mailed to her. (Id.).
On May 23 , 2016 , Defendant sent Plaintiff another debt validation letter, and she
responded with a second notice of dispute on June 7, 2016 . (Id. at 76 ; D.I. 33 at 52 (Ex.
C, answer to interrogatory No. 6)). In August 2016 , Defendant sent Plaintiff an August
14, 2016 mortgage statement. (/d. at 80-81) .
Foreclosure proceedings were initiated against Plaintiff in the Superior Court of
the State of Delaware in and for New Castle County on January 18, 2016 by
CitiFinancial Servicing LLC . (D .I. 33 at 72 (Ex. D,

,m. With leave of Court, Defendant,

through its foreclosure counsel , amended the complaint to substitute the parties on
June 21 , 2016 (/d.). After Plaintiff failed to participate in the mortgage mediation
process, she was ordered to answer. (Id. at 73) . Defendant filed a motion for summary
judgment in the foreclosure proceeding , which was granted , and an order entered
against Plaintiff on March 13, 2017 for the principal balance of $104,315 .52 ; interest
from March 3, 2016 to September 23 , 2016 at $26 .20 per diem in the sum of
$21 ,956.20, as well as other costs, plus interest from September 23 , 2016 at $26.20 per
4

diem for a total debt due of $127,175.09 . (Id. at 70) . The Court takes judicial notice
that Plaintiff did not appeal the Delaware Superior Court order awarding judgment and
that the property was sold at an October 9, 2018 Sheriff's Sale . Plaintiff commenced
this action on June 8, 2016 prior to the sale of the property. (D .I. 1).

II.

LEGAL STANDARDS
Both parties move fo r summary judgment. Under Rule 56(a) of the Federal

Rules of Civil Procedure , "[t]he court shall grant summary judgment if the movant shows
that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law." The moving party bears the burden of demonstrating the
absence of a genuine issue of material fact. See Matsushita Elec. Indus. Co. , Ltd. v.
Zenith Radio Corp., 475 U.S. 574 , 585-86 (1986). An assertion that a fact cannot be or, alternatively, is - genuinely disputed must be supported either by "citing to particular
parts of materials in the record , including depositions, documents, electronically stored
information , affidavits or declarations, stipulations (including those made for purposes of
the motion only) , admissions , interrogatory answers , or other materials ," or by "showing
that the materials cited do not establish the absence or presence of a genuine dispute,
or that an adverse party cannot produce admissible evidence to support the fact. " Fed .
R. Civ. P. 56(c)(1 )(A) & (B) . If the moving party has carried its burden , the nonmovant

must then "come forward with specific facts showing that there is a genuine issue for
trial. " Matsushita , 475 U.S. at 587 (internal quotation marks omitted). The Court will
"draw all reasonable inferences in favor of the nonmoving party, and it may not make
credibility determinations or weigh the evidence. " Reeves v. Sanderson Plumbing
Prods. , Inc., 530 U.S. 133, 150 (2000) . The same standards and burdens apply on
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cross-motions for summary judgment. See Appelmans v. City of Philadelphia , 826 F.2d
214 , 216 (3d Cir. 1987).

Ill.

DISCUSSION
Both Plaintiff and Defendant contend that there are no genuine issues of material

fact in dispute and that summary judgment is appropriate for its side . Plaintiff's grounds
for summary judgment are that: (1) Defendant failed to send Plaintiff a debt validation
letter in violation of 15 U.S .C. § 1692g; and (2) Defendant made false and misleading
representations in violation of 15 U.S.C. § 1692e in its May 12, 20 , and 23 and August
14, 2016 communications . Defendant's position is that Plaintiff has no evidence of the
necessary material facts to support her claims that Defendant violated 15 U.S.C. §
1692g and § 1692e.
The FDCPA, 15 U.S.C. § 1692, et seq., "prohibits 'debt collector[s]' from making
false or misleading representations and from engaging in various abusive and unfair
practices ." Heintz v. Jenkins , 514 U.S. 291 , 292 (1995) . "Because the FDCPA is a
remedial statute , the Third Circuit has construed its language broadly so as to give
effect to its purpose ." Brown v. Card Serv. Ctr., 464 F.3d 450 , 453 (3d Cir. 2006). A
plaintiff bring ing an FDCPA claim must show that "(1) she is a consumer, (2) the
defendant is a debt collector, (3) the defendant's challenged practice involves an
attempt to collect a 'debt' as the Act defines it, and (4) the defendant has violated a
provision of the FDCPA in attempting to collect the debt. " Jensen v. Pressler &

Pressler, 791 F.3d 413 , 417 (3d Cir. 2015) . The Act is limited to "consumer debt,"
defined as those debts "arising out of ... transaction[s]" that are "primarily for personal ,
family, or household purposes." 15 U.S.C. § 1692a(5); Heintz, 514 U.S. at 293 .
6

A.

Section 1692g

The FDCPA requires debt collectors to furnish notice contain ing certain
information , within five days of an "initial communication ," to consumers believed to owe
a debt. See id. at§ 1692g(a). Under§ 1692g(a) the notice must contain:
(1) the amount of the debt; (2) the name of the creditor to whom the debt is
owed ; (3) a statement that unless the consumer, within thirty days after
receipt of the notice, disputes the validity of the debt, or any portion thereof,
the debt will be assumed to be valid by the debt collector; (4) a statement
that if the consumer notifies the debt collector in writing within the thirty-day
period that the debt, or any portion thereof, is disputed , the debt collector
will obtain verification of the debt or a copy of a judgment against the
consumer and a copy of such verification or judgment will be mailed to the
consumer by the debt collector; and (5) a statement that, upon the
consumer's written request within the thirty-day period , the debt collector
will provide the consumer with the name and address of the original creditor,
if different from the current creditor.
15 U.S.C. § 1692g(a). Upon receipt of such notice, the consumer has thirty days to
inform the debt collector in writing that he or she either disputes the debt or requests the
name and address of the original creditor. See id. at§ 1692g(b). If the consumer does
that, then the debt collector must cease its collection efforts until it provides verification
of the debt. See id.
Plaintiff's position (D. I. 33 at 1) is that her initial communication from Defendant
was the March 14, 2016 letter, mailed March 16, 2016 , introducing her to her dedicated
point of contact (D .I. 23 at 2,

,m 4-6 ; id. at 19-23 (Ex. 1)), and it did not contain the

required§ 1692g(a) clauses. Defendant's position is that it sent Plaintiff a debt
validation letter dated March 14, 2016 , and that, even if Plaintiff received the dedicated

7

point of contact letter first, Plaintiff received the debt validation letter within five days of
the initial communication (i.e., the dedicated point of contact letter).
The record reflects that Defendant sent Plaintiff the first debt validation letter on
March 14, 2016 , and that Plaintiff responded with a notice of dispute. Defendant sent
Plaintiff a second debt validation letter on May 23 , 2016 , and Plaintiff responded with a
second notice of dispute on June 7, 2016 . While not entirely clear, Plaintiff seems to
argue that her claim that Defendant did not send a debt validation letter is supported by
Defendant's discovery responses that U.S. Bank is the current owner of the loan and
Defendant did not mention the first debt validation letter sent to Plaintiff on March 14,
2016 or that Plaintiff failed to timely dispute the first debt validation letter. (See D.I. 33
at 5-6 ; Ex. Cat answer to interrogatory No. 9) . Plaintiff does not refer to the May 20 ,
2016 letter that advised her if she had received a debt validation letter when her loan
originally transferred to Defendant, an updated copy would be mailed to her.
It is puzzling that Plaintiff does not acknowledge the March 14, 2016 debt
validation letter given that she attached a copy of it to her initial complaint. (See D.I. 2
at Ex. 1) While Plaintiff describes the letter as a "dunning communication ," it is clea r
that it is a debt validation letter and is dated the same date, March 14, 2016 , as the
dedicated point of contact letter. (See id. at ,r 4 and Ex. 1). It is undisputed that the
March 14, 2016 debt validation letter contains all the clauses required by§ 1692g(a) as
does the May 23 , 2016 validation letter. Finally, regardless of which letter was received
first, the March 14th debt validation letter or the March 14th dedicated point of contact
letter, the evidence of record supports a finding that the debt validation letter was
furnished within five days of Defendant's initial communication with Plaintiff.
8

Plaintiff's position is simply not supported by the evidence of record and no
reasonable jury could find that Defendant violated 15 U.S.C. § 1692g. Therefore, as to
this issue , the Court will grant Defendant's motion for summary judgment and will deny
Plaintiff's motion for summary judgment.

B.

Section 1692e

"A debt collector may not use any false , deceptive , or misleading representation
or means in connection with the collection of any debt. " 15 U.S.C. § 1692e. Section
1692e ~r,J (1 )-(16) enumerates a non-exhaustive list of certain per se violations of false
and deceptive collection conduct under this section , including false representations
concerning the character, amount, or legal status of any debt. See 15 U.S.C. §
1692e(2)(A). A communication is deceptive for purposes of the FDCOA if "it can be
reasonably read to have two or more different meanings, one of which is inaccurate. "

Rosenau v. Unifund Corp. , 539 F.3d 218 , 222 (3d Cir. 2008) (quoting Brown v. Card
Serv. Ctr., 464 F.3d at 455) .
Claims under§ 1692e "should be analyzed from the perspective of the 'least
sophisticated debtor."' Brown , 464 F.3d at 453 (quoting Wilson v. Quadramed, 225
F.3d 350 , 354 (3d Cir. 2000)) . The standard requires more than '"simply examining
whether particular language would deceive or mislead a reasonable debtor' because a
communication that would not deceive or mislead a reasonable debtor might still
deceive or mislead the least sophisticated debtor." Id. at 454 (quoting Quadramed, 225
F.3d at 354). The least sophisticated debtor standard "also prevents liability for bizarre
or idiosyncratic interpretations of collection notices by preserving a quotient of
reasonableness and presuming a basic level of understanding and willingness to read
9

with care ." Quadramed, 225 F.3d at 354-55 (quotation marks omitted) . In addition ,
"[a]lthough established to ease the lot of the naive, the [least sophisticated debtor]
standard does not go so far as to provide solace to the willfully blind or non-observant.
Even the least sophisticated debtor is bound to read collection notices in their entirety."
Campuzano-Burgos v. Midland Credit Mgmt., Inc., 550 F.3d 294 , 299 (3d Cir. 2008) .
"Rulings that ignore these rational characteristics of even the least sophisticated debtor
and instead rely on unrealistic and fanciful interpretations of collection communications
that would not occur to even a reasonable or sophisticated debtor frustrate Congress's
intent to 'insure that those debt collectors who refrain from using abusive debt collection
practices are not competitively disadvantaged ."' Id. (quoting 15 U.S.C. § 1692(e)).
Plaintiff moves for summary judgment under§ 1692e on the grounds that the
May 12, 20, and 23 , 2016 letters, as well as the August 14, 2016 mortgage statement,
contain false and misleading information . Defendant moves for summary judgment
under§ 1692e on the grounds that Plaintiff produced no facts to support this claim .
Plaintiff contends Defendant made a false statement in its May 12, 2016 letter
that acknowledged Plaintiff was disputing the validity of the debt, asserting the letter
misrepresents that U.S. Bank is the owner of the loan, and misrepresents the
principal/escrow balance of $104 ,325 .52 , the current balance owed of $94 ,348.47 , and
the principal and interest payment of $834.03 . She contends Defendant's May 20 , 2016
letter advising of the adjustment affecting the interest due misrepresents that U.S . Bank
is the owner of the loan and misrepresents the new interest balance due of $16 ,716 .74 .
Plaintiff contends the May 23 , 2016 debt validation letter misrepresents that U.S. Bank
is the owner of the loan and misrepresents that she owed $123 ,156.04. Finally, Plaintiff
10

contends the August 14, 2016 mortgage statement misrepresents the $23 ,352 .84
amount due on September 13, 2016 that Plaintiff needed to pay to make her loan
current, the outstanding balance of $94 ,348.47 ,5 the deferred amount of $9 ,967 .06 , the
interest rate of 9.996% , and other miscellaneous fees.
To support her claim that Defendant misrepresented that U.S. Bank is the owner
of the loan , Plaintiff contends the initial communication received from Defendant dated
March 14, 2016 (presumably the first debt validation letter) misrepresented that U.S.
Bank was the owner of the note. Plaintiff's position is that the allonge to the note, dated
March 22 , 2016 , proves that U.S. Bank was not the owner of the note when she was
given the initial communication . Plaintiff's view is that each succeeding communication
referenced U.S. Bank as the owner of the loan was therefore misleading . (D .I. 42 at 7) .
Defendant responds that U.S. Bank received the note in March 2016 prior to the initial
communications that were sent to Plaintiff, U.S. Bank became owner upon delivery, and
therefore no false statements were made.
The evidence of record indicates that Plaintiff's loan , which had been serviced
by CitiFinancial Servicing LLC , was transferred for servicing to Defendant on March 4,
2016 , and that CitiFinancial Servicing LLC would stop accepting mortgage payments
after March 3, 2016 . (D .I. 23 at 26) . The unrefuted evidence is that original note was
transferred to Defendant and its custodian has possession of the original promissory
note. (D.I. 42 at 120). The evidence also indicates that in several communications
Defendant refers to U.S. Bank as the "current owner of [Plaintiff's] loan. (D.I. 2 at Ex 1;

5

The outstanding principal balance and the deferred amount total $104 ,315 .52 .
11

D.I. 23 at 44 , 76) . In addition , in response to Plaintiff's Request for Admission No. 20 ,
Defendant denied that it misrepresented U.S. Bank is the current owner of the loan .
(D.I. 33 at Ex. C) . Plaintiff presents no contrad ictory evidence .
Plaintiff relies upon the fact that the allonge to the note is dated March 22 , 2016.
But that is not the crucial fact.
The [Delaware Uniform Commercial Code] defines negotiation as "a
transfer of possession , whether voluntary or involuntary .... " "If an
instrument is payable to an identified person , negotiation requires transfer
of possession of the instrument and its indorsement by the holder." The
DUCC also notes "an instrument is transferred when it is delivered by a
person other than its issuer for the purpose of giving the person receiving
delivery the right to enforce the instrument." "Transfer of an instrument,
whether or not ... [by] negotiation , vests in the transferee any right of the
transferor to enforce the instrument (emphasis added) .. .. " Thus , the person
entitled to enforce an instrument is: (1) the holder of the instrument; (2) a
nonholder in possession of the instrument who has the rights of a holder; or
(3) a person not in possession of the instrument who is entitled to enforce
the instrument pursuant to Section 3-309 or 3-41 S(d).
Toelle v. Greenpoint Mortg. Funding, Inc., 2015 WL 5158276 , at *3 (Del. Super. 2015)

(footnotes omitted) .
Here, the evidence of record is that Defendant did not misrepresent the owner of
the loan and that the servicing of the loan was transferred to it as the new loan servicer
on March 4, 2016 , prior to the time it sent the March 14, 2016 debt validation letter, and
that the note was transferred to , and is in the possession of, Defendant's custodian .
Nor did the subsequent communications specifically referred to by Plaintiff misrepresent
the owner of the loan or the servicer of the loan .
Plaintiff also asserts that the dollar amounts in the four referenced
communications are false and misleading , but provides no evidence to support her
position. Customer account activity statements provided by Plaintiff contain figures that
12

are consistent with those in the May 12, 2016 letter acknowledging Plaintiff's dispute of
the validity of the debt. The Court takes judicial notice that the judgment entered
against Plaintiff in the mortgage foreclosure action included the principal balance
amount of $104 ,315 .52 , a figure consistent with the May 12, 2016 letter and the August
14, 2016 mortgage statement total of the outstanding principal balance and deferred
amount. In addition , the amount owed continued to change as interest accrued. Upon
review of the evidence , the Court concludes that even the least sophisticated consumer
would neither find the communications false nor be misled as to the monies Plaintiff
owed , including the principal , interest, interest rate , monthly payment and other
miscellaneous fees set forth in the communications referenced by Plaintiff. See, e.g. ,
Wahl v. Midland Credit Mgmt. , Inc. , 556 F.3d 643 , 646 (7 th Cir. 2009). Accordingly, the
Court finds there are no disputed issues of fact concerning the alleged violations of§
1692e, and no support for Plaintiff's case .
Based upon the evidence of record , no reasonable jury could find for Plaintiff on
the§ 1692e claim . Therefore, the Court will deny Plaintiff's motion for summary
judgment and will grant Defendant's motion for summary on this claim.
IV.

CONCLUSION
Based upon the above discussion , the Court will: (1) deny Plaintiff's motion for

summary judgment (D .I. 32) ; and (2) grant Defendant's motion for summary judgment
(D.I. 34) .
An appropriate order will be entered .

13