Little et al v. Seterus, Inc.

Filing 92

ORDER granting 70 Motion for Summary Judgment. Signed by Judge Beth Bloom on 2/13/2017. (ail)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 16-cv-60700-BLOOM/Valle
GERALD P. LITTLE and
KELLY LITTLE,
Plaintiffs,
v.
SETERUS, INC.,
Defendant.
___________________________/
ORDER ON MOTION FOR SUMMARY JUDGMENT
THIS CAUSE is before the Court upon Defendant Seterus, Inc.’s (“Defendant” or
“Seterus”) Motion for Summary Judgment, ECF No. [70] (“Motion”). Plaintiffs Gerald Little
(“Mr. Little”) and Kelly Little (“Mrs. Little”) (together, “Littles” or “Plaintiffs”), filed a
Response in Opposition to Defendant’s Motion for Summary Judgment, ECF No. [81]
(“Response”), on January 27, 2017. The Court has carefully reviewed the Motion, all supporting
and opposing filings, the record in this case and the applicable law, and is otherwise fully
advised. For the reasons set forth below, the Motion is granted.
I.

Relevant Facts
This action stems from Seterus’s servicing of a residential mortgage loan. Mr. Little

executed a note payable to Lehman Brothers Bank, FSB in the original principal amount of
$315,000, ECF No. [69-1] at 7-15 (the “Loan”). See Seterus’s Statement of Material Facts
(“Def. SOMF”), ECF No. [69] ¶ 1.1 The Loan was secured by a residential mortgage, ECF No.

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Where a fact is uncontroverted by the opposing party, the Court cites only to the originating
Statement of Facts.

Case No. 16-cv-60700-BLOOM/Valle
[69-1] at 17-40 (the “Mortgage”), signed by Mr. Little and Mrs. Little. Def. SOMF ¶ 2;
Plaintiffs’ Response to Seterus’s Statement of Material Facts (“Pl. SOMF”), ECF No. [74] ¶ 2.
Seterus began to service the Loan on August 2, 2010. Def. SOMF ¶ 4. On February 18, 2010,
Aurora Loan Services LLC (“Aurora”) filed a complaint against Plaintiffs in Broward County
Circuit Court, seeking foreclosure. Id. ¶ 5. Aurora thereafter assigned the Mortgage to the
Federal National Mortgage Association (“Fannie Mae”) on March 8, 2012. Id. ¶ 6. On March
18, 2015, Mr. Little filed a complaint in federal court against Seterus alleging violations of the
Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and the Florida
Consumer Collection Practices Act (“FCCPA”), Florida Statutes §§ 559.55-559.785, (“Prior
Litigation”). Id. ¶¶ 7-8. On July 10, 2015, Mr. Little and Seterus, as the loan servicer for Fannie
Mae, executed a loan modification agreement, ECF No. [69-1] at 47-56 (the “Loan Modification
Agreement”), pursuant to which the escrow amounts were subject to adjustment. Id. ¶¶ 9-10, 1213. As a result of the Loan Modification Agreement, the foreclosure proceeding was voluntarily
dismissed. Id. ¶ 14. Subsequently, Mr. Little and Seterus entered into a settlement agreement
with respect to the claims asserted in the Prior Litigation, and the case was dismissed with
prejudice. Id. ¶ 16. The settlement agreement, ECF No. [69-1] at 58-64 (the “Settlement
Agreement”), contains a general release of claims. See Settlement Agreement ¶ 5. Although
Mrs. Little signed the Mortgage, she was not a signatory to either the Loan or the Loan
Modification Agreement.
In the present case, Plaintiffs assert claims against Seterus for violations of the FDCPA,
FCCPA, breach of contract, and negligence. See ECF No. [1] (“Complaint”). The claims stem
from multiple alleged discrepancies in their account resulting from Seterus’s improper escrow
analysis beginning in September, 2015. Def. SOMF ¶ 15. Mr. Little first noticed a discrepancy

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Case No. 16-cv-60700-BLOOM/Valle
in his account statement in July, 2015. Def. SOMF ¶ 17; Pl. SOMF ¶ 17. However, Plaintiffs
assert that although they were aware of a significant misapplication of funds with respect to their
escrow account, they were lead to believe by Seterus’s December 2015 account statement that
the error had been corrected. Pl. SOMF ¶ 22. Nevertheless, the discrepancies varied and
continued to occur from December, 2015 through the start of this year. Id. ¶ 17. As a result of
the repeated uncertainties with respect to their loan, Plaintiffs have experienced mental and
physical distress. Id. ¶¶ 25-27.
II.

Legal Standard
A party may obtain summary judgment “if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). The parties may support their positions by citation to the record, including inter
alia, depositions, documents, affidavits, or declarations. Fed. R. Civ. P. 56(c). An issue is
genuine if “a reasonable trier of fact could return judgment for the non-moving party.”
Miccosukee Tribe of Indians of Fla. v. United States, 516 F.3d 1235, 1243 (11th Cir. 2008)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)). A fact is material if it
“might affect the outcome of the suit under the governing law.” Id. (quoting Anderson, 477 U.S.
at 247-48). The Court views the facts in the light most favorable to the non-moving party and
draws all reasonable inferences in the non-moving party’s favor. See Davis v. Williams, 451 F.3d
759, 763 (11th Cir. 2006). “The mere existence of a scintilla of evidence in support of the
plaintiff’s position will be insufficient; there must be evidence on which a jury could reasonably
find for the plaintiff.” Anderson, 477 U.S. at 252. Further, the Court does not weigh conflicting
evidence. See Skop v. City of Atlanta, Ga., 485 F.3d 1130, 1140 (11th Cir. 2007) (quoting Carlin
Comm’n, Inc. v. S. Bell Tel. & Tel. Co., 802 F.2d 1352, 1356 (11th Cir. 1986)).

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Case No. 16-cv-60700-BLOOM/Valle
The moving party shoulders the initial burden of showing the absence of a genuine issue
of material fact. Shiver v. Chertoff, 549 F.3d 1342, 1343 (11th Cir. 2008). Once this burden is
satisfied, “the nonmoving party ‘must do more than simply show that there is some metaphysical
doubt as to the material facts.’” Ray v. Equifax Info. Servs., L.L.C., 327 F. App’x 819, 825 (11th
Cir. 2009) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586,
106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986)). Instead, “the non-moving party ‘must make a
sufficient showing on each essential element of the case for which he has the burden of proof.’”
Id. (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). Accordingly, the non-moving
party must produce evidence, going beyond the pleadings, and by its own affidavits, or by
depositions, answers to interrogatories, and admissions on file, designating specific facts to
suggest that a reasonable jury could find in the non-moving party’s favor. Shiver, 549 F.3d at
1343. Even “where the parties agree on the basic facts, but disagree about the factual inferences
that should be drawn from those facts,” summary judgment may be inappropriate. Warrior
Tombigbee Transp. Co., Inc. v. M/V Nan Fung, 695 F.2d 1294, 1296 (11th Cir. 1983). It is
through this lens that the Court analyzes the instant Motion.
III.

Discussion
Seterus advances four principal arguments in support of summary judgment.

First,

Seterus argues that Mr. Little’s claims are barred by the releases contained in the Settlement
Agreement. Next, Seterus argues that the Littles’ breach of contract claim fails for lack of
damages. Third, Seterus argues that the Littles’ negligence claim fails because Seterus did not
owe them a duty under the Loan Modification Agreement. Finally, Seterus argues that Mrs.
Little lacks standing to assert any claims because she was not a party to the Loan or the Loan
Modification Agreement.

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Case No. 16-cv-60700-BLOOM/Valle
A. Effect of the Settlement Agreement
It is undisputed that Mr. Little signed a general release of claims with respect to the Prior
Litigation. “Releases are a form of contract, and therefore, must be interpreted pursuant to
contract law.” Allapattah Servs., Inc. v. Exxon Corp., 188 F.R.D. 667, 682 (S.D. Fla. 1999)
(internal citations omitted). “A party is bound by, and a court is powerless to rewrite, the clear
and unambiguous terms of a voluntary contract.” Mergens v. Dreyfoos, 166 F.3d 1114, 1117
(11th Cir. 1999) (quoting Med. Ctr. Health Plan v. Brick, 572 So. 2d 548, 551 (Fla. 1st DCA
1990)). The Settlement Agreement states, in pertinent part, as follows:
Upon the execution of this Agreement and without need for further
documentation, Plaintiff[], on behalf of himself . . . hereby releases
and forever discharges Seterus . . . of and from any and all claims
under the FDCPA and the FCCPA, defenses, charges, allegations,
demands, actions, causes of action, counterclaims, third-party
claims, damages punitive damages, penalties, injuries, losses, costs
attorneys’ fees, expenses, compensation, and any and all incidental
or consequential damages, whether known or unknown, resulting
directly or indirectly from or arising in any way out of the Loan
and/or the matters alleged in the Litigation and/or Foreclosure
action, and/or any other matters relating thereto, which Plaintiff at
any time up until the date of execution of this Agreement had or
has against Seterus and/or any or all of the other Released Parties,
whether or not now known, claimed, asserted, suspected or
discoverable by Plaintiff and/or his attorneys . . . .
Settlement Agreement ¶ 5. The parties appear to agree that the Settlement Agreement bars any
claims that arose up to the time of execution of the Agreement. See Motion at 6; Response at 4.
However, Mr. Little asserts that the release does not include any future acts by Seterus. The
Court disagrees. The Settlement Agreement goes on to state in no uncertain terms that,
[b]y executing this Agreement, it is the full intent of the parties
that Plaintiff releases Seterus and the other Released Parties of and
from any and all liability for such unknown and/or unforeseen
losses, costs, expenses, liabilities, claims, damages and
consequences thereof, including those not known, recognized nor
contemplated, resulting directly or indirectly from or arising in any

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Case No. 16-cv-60700-BLOOM/Valle
way out of Plaintiff’s Claims. A portion of the consideration
herein is for the release of such unknown or future injuries or
damages.
Settlement Agreement ¶ 5 (emphasis added). In the Response, the Littles do not address directly
this language regarding the release of future claims, but instead attempt to cabin their claims
outside the reach of the Settlement Agreement by arguing that the claims are independent from
Seterus’s original misrepresentation in the July 2015 mortgage statement.

The Court is

unpersuaded. This action stems from alleged errors contained in Seterus’s account statements
and the manner in which Seterus applied payments made by the Littles, including escrow
analysis, scheduled disbursements, and assessment of fees and charges related to the Loan, which
occurred prior to and after execution of the Settlement Agreement. Regardless of the timing of
the alleged errors, they are all related. As such, the Littles’ FDCPA and FCCPA claims fall
squarely within the language of the releases contained within the Settlement Agreement, and are
therefore barred. The plain language in the Settlement Agreement compels this result and the
Court may not rewrite those terms.
Furthermore, the Court finds that the Littles’ breach of contract and negligence claims
also fall within the purview of the releases. Under Florida law, “a general release which is not
restricted by its terms to particular claims or demands . . . will ordinarily be regarded as
embracing all claims or demands which had matured at the time of its execution.” Gulf Grp.
Holdings, Inc. v. Coast Asset Mgmt. Corp., 516 F. Supp. 2d 1253, 1268 (S.D. Fla. 2007) (citing
Sottile v. Gaines Constr. Co., 281 So. 2d 558, 561 (Fla. 3d DCA 1973) (internal quotations
omitted). As stated above, the Littles admittedly became aware of accounting errors upon review
of Seterus’s July 2015 mortgage statement. See Def. SOMF ¶ 17; Pl. SOMF ¶ 17.2 As a result,

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Although the Littles dispute that the discrepancies they rely upon as a basis for their claims in
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Case No. 16-cv-60700-BLOOM/Valle
any claims related to such discrepancies or errors were released at the time of execution of the
Settlement Agreement, and any future claims, per the terms of the Agreement. Accordingly, the
Court need not address Seterus’s remaining arguments with respect to the contract and
negligence claims.
B. Mrs. Little’s Standing
Seterus argues that Mrs. Little lacks standing to assert claims because she is not a party to
the Loan or the Loan Modification Agreement and is therefore not a “consumer,” as defined
under the FDCPA. In response, the Littles argue that Mrs. Little has standing because she is a
party to the Mortgage as modified, and that even though she is not a party to the Note, Seterus
nevertheless mailed one letter to her threatening foreclosure. Response at 16.
Standing involves constitutional and prudential requirements. Harris v. Evans, 20 F.3d
1118, 1121 (11th Cir. 1994). In order for a plaintiff to have Article III standing, she must make a
three-part showing: she has suffered 1) an injury-in-fact, 2) that is fairly traceable to the
defendant’s actions, and 3) likely to be redressed by a favorable decision. Johnson v. Ocwen
Loan Servicing, 374 F. App’x 868, 873 (11th Cir. 2010) (internal citations omitted). Courts also
apply prudential limits in addition to the constitutional requirement of standing. In general, a
plaintiff “must assert [her] own legal rights and interests, and cannot rest [her] claim to relief on
the legal rights or interests of third parties.” Valley Forge Christian College v. Ams. United for
Separation of Church & State, Inc., 454 U.S. 464, 474 (1982) (quoting Warth v. Seldin, 422 U.S.
490, 499 (1975)). Furthermore, a plaintiff’s claim “must fall within the zone of interests to be

the case at bar appeared on the July 2015 statement, they do not dispute that a discrepancy
appeared on the July 2015 statement. The Court has previously rejected the Littles’ attempts to
distinguish the discrepancies, which are all related to Seterus’s servicing of the loan.
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protected or regulated by the statute . . . in question.” Id. at 475 (quoting Assoc. of Data
Processing Serv. Orgs. v. Camp, 397 U.S. 150, 153 (1970)).
Here, as in Johnson, Mrs. Little’s claim does not fall within the zone of interests to be
protected by the FDCPA (or FCCPA3) because she is not a debtor or “consumer” of the loan.
374 F. App’x at 874. Even though Mrs. Little is a signatory to the Mortgage, and designated a
“borrower” under its terms, she is nevertheless not bound by the Note. The Mortgage states, in
pertinent part:
13. Joint and Several Liability; Co-signers; Successors and
Assigns Bound. Borrower covenants and agrees that Borrower’s
obligation and liability shall be joint and several. However, any
Borrower who co-signs this Security Instrument but does not
execute the Note (a “co-signer”); (a) is co-signing this Security
Instrument only to mortgage, grant and convey the cosigner’s interest in the Property under the terms of this
Security Instrument; (b) is not personally obligated to pay the
sums secured by this Security Instrument; and (c) agrees that
Lender and any other Borrower can agree to extend, modify
forbear or make any accommodations with regard to the terms of
this Security Instrument or the Note without the co-signer’s
consent.
Mortgage at 28 (emphasis added). By the express terms of the Mortgage, Mrs. Little granted or
conveyed her interest in the property and was not personally obligated to pay the amounts due
under the Loan. As such, the Littles fail to point to a cognizable duty owed to Mrs. Little. In
Johnson, the Eleventh Circuit determined that an individual who was not a borrower or
otherwise obligated on the subject loan, was not a “consumer” protected by the FDCPA,
including sections 1692c-g. 374 F. App’x at 873-74.

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Florida Statutes section 559.77(5) states in pertinent part, “[i]n applying and construing this
section, due consideration and great weight shall be given to the interpretations of the Federal
Trade Commission and the federal courts relating to the federal Fair Debt Collection Practices
Act.”
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Case No. 16-cv-60700-BLOOM/Valle
The Littles do not address Johnson, but rather argue that Mrs. Little’s receipt of one letter
with respect to the Loan confers standing, relying on Reese v. Ellis, Painter, Ratterree & Adams,
LLP, 678 F.3d 1211, 1217 (11th Cir. 2012).

However, the Littles’ reliance on Reese is

unavailing because, unlike in the case at bar, both plaintiffs in Reese were signatories to the
promissory note.

678 F.3d at 1214.

Furthermore, the court in Reese specifically drew a

distinction between a promissory note—which is a promise to pay a debt—and a security
interest—which is given as collateral in the event that a payment obligation is not fulfilled—in
determining that the plaintiffs’ obligation to pay off the promissory note was a “debt” under the
FDCPA. Id. at 1216-17. Here, the relevant issue is not whether there is a “debt,” but whether
Mrs. Little is a “consumer” to which the FDCPA applies. Pursuant to Johnson, she is not. See
also Coburn v. Gonzalez, 141 F. Supp. 3d 1339, 1341-42 (S.D. Fla. 2015) (plaintiff lacked
standing to sue under FDCPA because she was not a party to the mortgage or promissory note,
and therefore not a consumer). The fact that Mrs. Little received one letter from Seterus with
respect to the Loan does not make her a “consumer.” See Solis v. CitiMortgage, Inc., 2016 U.S.
Dist. LEXIS 150517, at *12 (S.D. Fla. Oct. 26, 2016) (where plaintiff, who was current owner of
the property, but not a party to the loan, received a letter regarding outstanding amount due on
underlying loan and was joined in foreclosure as an indispensable party, plaintiff was not a
consumer and lacked standing under the FDCPA).
The Littles fail to establish the requirements for either Article III or prudential standing
with respect to the FDCPA, FCCPA, breach of contract4, or negligence claims. Johnson, 374 F.
App’x at 873-74; see also Shedd v. Wells Fargo Home Mortg., Inc., 2015 WL 6479537, at *4
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The Court notes that although the parties address the breach of contract claim as if made on
behalf of both Plaintiffs, Count IV of the Amended Complaint, ECF No. [28], is stated only on
behalf of Mr. Little, even though Mrs. Little apparently “suffered from headaches, stomach
pains, and loss of sleep” due to Seterus’s alleged breaches. See ECF No. [28] ¶¶ 130-135.
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Case No. 16-cv-60700-BLOOM/Valle
(S.D. Ala. Oct. 26, 2015) (party who was a borrower under the mortgage but not obligated under
the note had no standing under FDCPA, or to assert a claim for breach of contract).
IV.

Conclusion
For the reasons set forth above, Seterus’s Motion, ECF No. [70], is GRANTED. The

Court will enter final judgment by separate order.
DONE AND ORDERED in Miami, Florida, this 13th day of February, 2017.

_________________________________
BETH BLOOM
UNITED STATES DISTRICT JUDGE
Copies to: Counsel of Record

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