Payne v. Seterus Inc
MEMORANDUM RULING denying 48 Motion for Summary Judgment filed by Defendant. Signed by Magistrate Judge Karen L Hayes on 6/26/2017. (crt,Crawford, A)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
ROBERT CHARLES PAYNE, JR.
CIVIL ACTION NO. 16-0203
MAG. JUDGE KAREN L. HAYES
Before the Court is a Motion for Summary Judgment [doc. # 48] filed by Defendant
Seterus Inc. Plaintiff did not file a brief in opposition and the motion is therefore deemed
unopposed.1 See doc. #49. Pursuant to 28 U.S.C. § 636(c)(1), the parties have consented to this
case being referred to Magistrate Judge Karen L. Hayes for final decision. For reasons stated
below, the motion is DENIED.
On February 12, 2016, Robert Payne Jr. filed the instant suit against Seterus Inc.
(“Seterus”) for violations of the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601, et
seq. (“RESPA”), the Truth in Lending Act, 15 U.S.C. §§ 1601, et seq. (“TILA”), and associated
regulations. [doc. #1]. On March 21, 2016, Seterus filed a motion to dismiss for failure to state a
claim under Federal Rule of Civil Procedure 12(b)(6). [doc. #8]. On August 26, 2016, the Court
provisionally granted Defendant’s motion to dismiss, deferring entry of judgment to accord
Plaintiff fourteen days to seek leave to amend his complaint if he could in good faith do so. [doc.
A motion for summary judgment cannot be granted simply because there is no
opposition. Seterus still has the burden to establish the absence of a genuine issue of material fact
and, unless it has done so, the Court may not grant the motion, irrespective of whether any
response was filed. See Hetzel v. Bethlehem Steel Corp., 50 F.3d 360, 363 & n. 3 (5th Cir. 1995).
On September 13, 2016, Payne filed a supplemental complaint, adding eleven additional
paragraphs to his original complaint. On September 23, 2016, Seterus filed a motion to dismiss
Payne’s supplemental complaint. [doc. #28]. Payne did not file an opposition.
On October 26, 2016, the undersigned granted in part and denied in part Seterus’s motion
to dismiss. [doc. #32]. The Court dismissed all of Plaintiff’s claims,2 except for his claim under
RESPA, 12 U.S.C. § 2605, for Seterus’s failure to adequately respond to Plaintiff’s Qualified
Written Requests (“QWRs”). Id. at 12.
On March 28, 2017, the Court granted Payne leave to file a second amended complaint
wherein Payne asserted an additional cause of action against Seterus under the Fair Credit
Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq. [docs. #45, #46].
On June 22, 2017, Seterus filed a motion for summary judgment arguing that it
adequately responded to Plaintiff’s QWRs and, even if it did not adequately respond, Plaintiff
has failed to adduce any evidence of actual damages resulting from Seterus’s alleged RESPA
violations. [doc. #48-1, p. 3]. Defendant also argues that Plaintiff’s FCRA claim fails because
Experian never notified Seterus of a credit dispute as is required in order to trigger Seterus’s
FCRA obligations. Id. at 5-6. Plaintiff did not file a response and the deadline to do so has
lapsed. Thus, the matter is ripe for decision.
Law and Analysis
Summary Judgment Standard
Summary judgment is appropriate when the evidence before a court shows “that there is
The Court dismissed Plaintiff’s claims under RESPA, 12 U.S.C. § 2609 and 12 C.F.R. §
1024.35, as well as his claims under TILA, 15 U.S.C. § 1639f and 12 C.F.R. § 1026.36.
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). A fact is “material” if proof of its existence or nonexistence would
affect the outcome of the lawsuit under applicable law in the case. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). A dispute about a material fact is “genuine” if the evidence is
such that a reasonable fact finder could render a verdict for the nonmoving party. Id.
“[A] party seeking summary judgment always bears the initial responsibility of informing
the district court of the basis for its motion, and identifying those portions of ‘the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the affidavits, if
any,’ which it believes demonstrate the absence of a genuine issue of material fact.” Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Anderson, 477 U.S. at 247). “The moving
party may meet its burden to demonstrate the absence of a genuine issue of material fact by
pointing out that the record contains no support for the non-moving party’s claim.” Stahl v.
Novartis Pharm. Corp., 283 F.3d 254, 263 (5th Cir. 2002). Thereafter, if the non-movant is
unable to identify anything in the record to support its claim, summary judgment is appropriate.
Id. “The court need consider only the cited materials, but it may consider other materials in the
record.” FED. R. CIV. P. 56(c)(3).3
In evaluating a motion for summary judgment, courts “may not make credibility
determinations or weigh the evidence” and “must resolve all ambiguities and draw all
permissible inferences in favor of the non-moving party.” Total E & P USA Inc. v. Kerr–McGee
Oil and Gas Corp., 719 F.3d 424, 434 (5th Cir. 2013) (citations omitted). While courts will
“resolve factual controversies in favor of the nonmoving party,” an actual controversy exists only
However, Rule 56 does not require a court to “sift through the record in search of
evidence to support a party’s opposition to summary judgment.” Willis v. Cleco Corp., 749 F.3d
314, 317 (5th Cir. 2014) (quoted source omitted).
“when both parties have submitted evidence of contradictory facts.” Little v. Liquid Air. Corp.,
37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). To rebut a properly supported motion for summary
judgment, the opposing party must show, with “significant probative evidence,” that a genuine
issue of material fact exists. Hamilton v. Segue Software, Inc., 232 F.3d 473, 477 (5th Cir. 2000)
(emphasis added). “‘If the evidence is merely colorable, or is not significantly probative,’
summary judgment is appropriate.” Cutting Underwater Tech. USA, Inc. v. Eni U.S. Operating
Co., 671 F.3d 512, 517 (5th Cir. 2012) (quoting Anderson, 477 U.S. at 248).
Relatedly, there can be no genuine dispute as to a material fact when a party fails “to
make a showing sufficient to establish the existence of an element essential to that party’s case,
and on which that party will bear the burden of proof at trial.” Celotex Corp., 477 U.S. at 322-23.
When a movant bears the burden of proof on an issue, it must establish “beyond peradventure4 all
of the essential elements of the claim . . . to warrant judgment in [its] favor.” Fontenot v. Upjohn
Co., 780 F.2d 1190, 1194 (5th Cir. 1986). In other words, the movant must affirmatively
establish its right to prevail as a matter of law. Universal Sav. Ass’n v. McConnell, 14 F.3d 52
(5th Cir. Dec. 29, 1993) (unpubl.).
A. RESPA Claim for Failure to Respond Under 12 U.S.C. § 2605
Payne alleges that Seterus violated RESPA by failing to timely and adequately respond to
his QWRs. Pursuant to RESPA, “[i]f any servicer of a federally related mortgage loan receives a
qualified written request from the borrower . . . for information relating to the servicing of such
loan, the servicer shall provide a written response acknowledging receipt of the correspondence
within 5 days . . . .” 12 U.S.C. § 2605(e). Additionally, “[n]ot later than 30 days (excluding legal
I.e., beyond doubt.
public holidays, Saturdays, and Sundays) after the receipt from any borrower of any qualified
written request . . . the servicer shall—
(A) make appropriate corrections in the account of the borrower, including the
crediting of any late charges or penalties, and transmit to the borrower a written
notification of such correction (which shall include the name and telephone number
of a representative of the servicer who can provide assistance to the borrower);
(B) after conducting an investigation, provide the borrower with a written
explanation or clarification that includes—
(i) to the extent applicable, a statement of the reasons for which the servicer
believes the account of the borrower is correct as determined by the servicer;
(ii) the name and telephone number of an individual employed by, or the
office or department of, the servicer who can provide assistance to the
(C) after conducting an investigation, provide the borrower with a written
explanation or clarification that includes—
(i) information requested by the borrower or an explanation of why the
information requested is unavailable or cannot be obtained by the servicer;
(ii) the name and telephone number of an individual employed by, or the
office or department of, the servicer who can provide assistance to the
Id. § 2605(e)(2). Furthermore, a servicer shall not “fail to take timely action to respond to a
borrower’s requests to correct errors relating to allocation of payments, final balances for
purposes of paying off the loan, or avoiding foreclosure, or other standard servicer’s duties.” Id. §
To state a viable claim under § 2605(e), Payne must show that his correspondence(s) met
the requirements of a QWR, that Seterus failed to make a timely and adequate response, and that
Seterus’s failure caused him actual damages. See Williams v. Wells Fargo Bank, N.A., 560
F.App’x 233, 241 (5th Cir. 2014). Seterus concedes that it received QWRs from Payne. [doc.
#48-1, p. 4]. But Seterus argues that it adequately responded to Plaintiff’s QWRs in a letter to
Payne’s bankruptcy counsel dated December 16, 2015. Seterus also asserts that Plaintiff has not
established any evidence of actual damages resulting from Seterus’s alleged failure to respond to
his QWRs. The Court will address each argument in turn.
A. Adequate Response
Seterus contends that it adequately responded to Plaintiff’s QWRs by sending a letter to
Payne’s bankruptcy counsel dated December 16, 2015. The letter stated as follows:
Dear Mr. Young
On behalf of Seterus, Inc., I am responding to correspondence regarding the abovereferenced borrowers. As our records indicate you represent the borrowers, we are
forwarding our response to you for review. If you no longer represent Mr. Payne . .
. , please send notice to the Correspondence address above or fax it to 877.649.0743.
Mr. Payne . . . ha[s] requested that monthly Account Statements be sent to [him]
directly as well as update the information reported to the credit agencies, as [he] has
received a discharge of the Chapter 13 Bankruptcy.
As our records indicate the Bankruptcy has been discharged and not yet terminated,
we must decline the requests of Mr. Payne . . . . At this time, the loan is contractually
due for the November 1 and December 1, 2015 installments, each in the amount of
If you have any questions, please contact our customer service department at our tollfree number above.
Correspondence Response Team
[doc. #48-3, Exh. B].
Seterus’s response does not indicate that it made any “corrections” to Payne’s account,
nor did the response provide “a statement of reasons” for why it believes Payne’s account was
correct, so subsections (A) and (B) are not applicable. Arguably, Seterus’s response can be
construed as a “written explanation or clarification that includes” “an explanation of why the
information requested is unavailable,” in compliance with subsection (C).
However, Seterus’s response does not indicate that the requested information was
“unavailable”; rather, Seterus refused to provide the requested information on the unfamiliar
basis that Payne’s bankruptcy was only discharged and not yet terminated at that time. Seterus
provides no authority for the proposition that Payne’s bankruptcy discharge prevented it from
providing him with the requested information. See, e.g., In re Jacques, 416 B.R. 63, 72-73 (E.D.
N.Y. 2009) (noting that debtors may assert a RESPA claim in the context of a bankruptcy case);
In re Thompson, 350 B.R. 842, 852 (E.D. Wisc. 2006) (servicer violated § 2605(e) where
bankruptcy debtors “never received any meaningful action on their requests.”). Moreover,
Seterus does not provide any reason to justify its refusal to transmit its response directly to
Payne, as opposed to his bankruptcy counsel. See Payne v. Seterus Inc., No. 16-203, 2016 WL
4521659, *5-*6 (W.D. La. Aug. 26, 2016); see, e.g., In re Julien, 488 B.R. 502, 504 (D. Mass.
2013) (servicer responding directly to bankruptcy debtor). Seterus’s sole response to Payne’s
bankruptcy attorney does not establish that Seterus responded adequately to Plaintiff’s QWRs.
Additionally, Seterus had a duty to provide a written response acknowledging receipt of
Payne’s correspondence within five days. This it did not do. Payne faxed a QWR to Seterus on
November 10th, 17th, and 24th, 2015. He also mailed a copy of the QWR to Seterus on November
24th and December 21st, 2015. Seterus did not respond until December 16, 2015, and failed to
even mention which correspondence to which it was responding. See Pedleton v. Wells Fargo
Bank, N.A., 993 F.Supp.2d 1150, 1152 (C.D. Cal. 2013) (denying motion to dismiss where
Defendant failed to acknowledge receipt of Plaintiff’s correspondence within five days); In re
Thompson, 350 B.R. at 852 (servicer failed to comply with § 2605(e) where it untimely
acknowledged only one of five written requests).
As such, Seterus has failed to establish the absence of a genuine issue of material fact
regarding whether its response sent to Payne’s bankruptcy attorney was adequate and timely
B. Actual Damages
Seterus also argues that Plaintiff has not established any evidence of actual damages
resulting from Seterus’s alleged failure to adequately and timely respond to his QWRs.
In its October 26, 2016, memorandum ruling on Seterus’s motion to dismiss, the Court
held that the $9.88 in postage costs that Payne incurred after an incomplete or insufficient
response from Seterus constituted actual damages under RESPA. [doc. #32, p. 7]. Indeed, courts
have held that postage costs incurred after an incomplete or insufficient response to a QWR are
actionable under RESPA. Miranda v. Ocwen Loan Servicing, LLC, 148 F.Supp.3d 1349, 1355
(S.D. Fla. 2015) (holding that Plaintiffs may seek photocopying costs and postage costs incurred
as a result of having to send additional correspondence due to Defendant’s alleged failure to
respond); Cf. Steele v. Quantum Servicing Corp., No. 12-2897, 2013 WL 3196544, *8 (N.D.
Tex. June 25, 2013) (noting that postal costs allegedly incurred by Plaintiffs in preparing and
sending the initial QWR are not actionable because any such costs would have necessarily been
incurred before the RESPA violation). The Court also held that Plaintiff’s allegations that
Seterus’s adverse credit reports resulted in Payne twice being denied a car loan, and ultimately
paying a higher interest rate, were sufficient to state a plausible claim for actual damages under
Federal Rule of Civil Procedure 8. Id. at 8-9.
Even if Seterus’s RESPA violations did not result in damage to Payne’s credit during the
relevant time period, Plaintiff’s actual damages in the amount of postage costs are still in dispute.
Seterus contends that it attempted to remit payment for Plaintiff’s postage costs, but Plaintiff has
refused to provide the information necessary to process the payment. [doc. #48-4, Exh. C].
However, a “Rule 68 offer of judgment, once rejected, ha[s] no continuing efficacy” and “does
not moot a plaintiff’s case.” Sandoz v. Cingular Wireless, L.L.C., 675 F.App’x 448, 454 (5th Cir.
2017) (citing Campbell-Ewald Co. v. Gomez, 136 S.Ct. 663, 665 (2016)). The same is true for a
settlement offer not made under Rule 68. See Ibe v. Nat’l Football League, No. 11-248, 2014
WL 4906886, *11 (N.D. Tex. Sept. 30, 2014). Thus, there is a genuine dispute of material fact
regarding whether Payne suffered actual damages as a result of Seterus’s RESPA violation.
Defendant is not entitled to judgment as a matter of law on Plaintiff’s RESPA claim.
B. FCRA Claim Under 15 U.S.C. § 1681s-2(b)
Payne alleges that Defendant violated the FCRA when it reported to Experian that
Plaintiff’s loan serviced by Seterus was 60 days past due in March 2016. [doc. #46, p. 1]. In his
second amended complaint, Plaintiff contends that he notified Experian that the report was
inaccurate and disputed, and that Experian then notified Seterus of the dispute. Id. Plaintiff
argues that Seterus failed to note the fact on its report that Plaintiff disputed the alleged
delinquency, and failed to properly investigate the dispute or correct the misinformation. Id.
Plaintiff alleges that he has suffered in excess of $5,000.00 in damages as a result of Seterus’s
improper reporting of credit information. Id. at 2.
Congress enacted the FCRA, 16 U.S.C. §§ 1681-1681x, in 1970 “to ensure fair and
accurate credit reporting, promote efficiency in the banking system, and protect consumer
privacy.” Safeco Ins. Co. of Am. v. Burr, 127 S.Ct. 2201, 2205 (2007). The FCRA seeks to make
“consumer reporting agencies exercise their grave responsibilities in assembling and evaluating
consumers’ credit, and disseminating information about consumers’ credit with fairness,
impartiality, and a respect for the consumer’s right to privacy.” Gorman v. Wolpoff & Abramson,
LLP, 584 F.3d 1147, 1153 (9th Cir. 2009) (internal citations omitted).
Pertinent to this case is § 1681s-2(b) of the FCRA which imposes duties on the
sources—called “furnishers” under the statute—that provide credit information to credit
reporting agencies. Id. Specifically, section 1681s-2(b) provides,
(b) Duties of furnishers of information upon notice of dispute
(1) In general
After receiving notice pursuant to section 1681i(a)(2) of this title of a dispute
with regard to the completeness or accuracy of any information provided by
a person to a consumer reporting agency, the person shall–
(A) conduct an investigation with respect to the disputed information;
(B) review all relevant information provided by the consumer
reporting agency pursuant to section 1681i(a)(2) of this title;
(C) report the results of the investigation to the consumer reporting
(D) if the investigation finds that the information is incomplete or
inaccurate, report those results to all other consumer reporting
agencies to which the person furnished the information and that
compile and maintain files on consumers on a nationwide basis; and
(E) if an item of information disputed by a consumer is found to be
inaccurate or incomplete or cannot be verified after any
reinvestigation under paragraph (1), for purposes of reporting to a
consumer reporting agency only, as appropriate, based on the results
of reinvestigation promptly–
(i) modify that item of information;
(ii) delete that item of information; or
(iii) permanently block the reporting of that item of
15 U.S.C. § 1681s-2(b).
Although the Fifth Circuit initially declined to reach the issue of whether there is a private
cause of action under § 1681s-2(b), see Young v. Equifax Credit Information Servs., Inc., 294
F.3d 631, 639 (5th Cir. 2002), it recently held that § 1681s-2(b) does create a private cause of
action. Jett v. Am. Home Mortg. Serv’g, Inc., 614 F.App’x 711, 713 (5th Cir. 2015) (unpubl.).
Seterus argues that Payne has provided no evidence that Experian gave Seterus notice of a
dispute. “Such notice is necessary to trigger the furnisher’s duties under Section 1681s-2(b).”
Young, 294 F.3d at 639 (holding that Plaintiff’s § 1681s-2(b) claim failed as a matter of law
because Plaintiff “point[ed] to no evidence tending to prove that Penney received notice of a
dispute from a consumer reporting agency”); Bank One, N.A. v. Colley, 294 F.Supp.2d 864, 870
(M.D. La. 2003) (holding that Plaintiffs’ § 1681s-2(b) claim failed because they did not submit
any evidence that any consumer reporting agency (“CRA”) notified the furnisher of a dispute);
Kennedy v. Victoria’s Secret Stores, Inc., No. 03-2691, 2004 WL 2186613, *3 (E.D. La. Sept. 29,
2004) (“Plaintiffs do not allege that VS or WFNNB received notice of a dispute from a consumer
reporting agency within five days, as is required to trigger their duties under Section 1681s2(b).”).
The Court agrees that Payne has pointed to no evidence that Seterus ever received notice
of a dispute from Experian. See doc. #48-6, Exh. E, Dep. Robert Payne, pp. 70-72. However, as
Seterus concedes, it did receive notice of a dispute from Equifax dated March 1, 2016. [doc. #481, p. 7 n. 5; doc. #48-5, Exh. D, Seterus’s Response to Interrogatory No. 6]. Seterus apparently
responded to that dispute, but the Court was not provided a copy of Seterus’s response and
necessarily has no way of determining whether Seterus’s investigation and/or subsequent actions
satisfied its obligations under § 1681s-2(b). See id. The mere fact that Plaintiff’s second amended
complaint only mentions Experian, as opposed to Equifax, is insufficient to grant Defendant
judgment as a matter of law. Seterus’s obligations as they relate to Plaintiff were triggered upon
notice of a dispute from any credit reporting agency. Accordingly, Seterus has failed to establish
the absence of a genuine issue of material fact regarding whether it received notice of a dispute
from a credit reporting agency and whether it adequately investigated Payne’s dispute under the
FCRA. Defendant is not entitled to judgment as a matter of law on Plaintiff’s FCRA claim.
For the above assigned reasons,
The motion for summary judgment filed by Defendant Seterus [doc. #48] is hereby
DENIED in its entirety.
IT IS SO ORDERED.
In Chambers, at Monroe, Louisiana, this 26th day of July 2017.
KAREN L. HAYES
UNITED STATES MAGISTRATE JUDGE
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