Vanamann v Nationstar Mortgage, LLC

Filing 82

ORDER that 41 Defendant's Motion for Summary Judgment is GRANTED. FURTHER ORDERED that all other outstanding motions are DENIED as moot. FURTHER ORDERED that the Clerk enter JUDGMENT for Defendant and against Plaintiff. Signed by Judge Kent J. Dawson on 3/22/17. (Copies have been distributed pursuant to the NEF - MMM)

1
2
3
4
5
6
7

UNITED STATES DISTRICT COURT

8

DISTRICT OF NEVADA

9
10

KIM VANAMAN, individually and on
behalf of all other similarly situated.

11

Case No. 2:15-CV-00906-KJD-NJK
Plaintiff,

12

ORDER
v.

13
NATIONSTAR MORTGAGE, LLC,
14
Defendant.
15
16

Presently before the Court is Defendant’s Motion for Summary Judgment (#41). Plaintiff

17

filed a response in opposition (#48) to which Defendant replied (#53).

18

I. Facts

19

On or about December 22, 2009, Plaintiff filed a Chapter 13 voluntary bankruptcy petition. In

20

Schedule D of her petition, Plaintiff listed Bank of America Home Loan Servicing (“Bank of

21

America”) as the first mortgage creditor on her mortgage loan for her primary residence at 7593

22

Slipstream Street, Las Vegas, NV 89139 (“the Slipstream property”). Her case was voluntarily

23

converted to Chapter 7 on December 11, 2012.

24

On May 1, 2013, the bankruptcy court entered an order discharging Debtor, Bank of America,

25

in Plaintiff’s Chapter 7 proceeding. On December 1, 2013, Bank of America transferred servicing of

26

Plaintiff’s mortgage loan to Nationstar. On December 13, 2013, the bankruptcy court entered an

1

order approving sale of the Slipstream property pursuant to § 363(b) of the Bankruptcy Code subject

2

to all existing liens and encumbrances, including the lien secured by the mortgage loan serviced by

3

Nationstar.

4

Nationstar, as servicer, obtained Plaintiff’s consumer credit report for account review

5

purposes on six occasions between January 2014 and August 2015. On each occasion, the lien still

6

attached to the Slipstream property and a balance still existed on the mortgage account.

7

Nationstar, in the regular course of business, performs “soft pulls” of consumer reports for its

8

mortgage accounts for a variety of account maintenance reasons. The soft pull populates

9

approximately 150 generic credit attributes to Nationstar’s files. Data obtained, included, but was not

10

limited to: summaries of outstanding credit balances, addresses, alerts for identity theft or fraud,

11

information about consumer status such as whether she is in the military, incarcerated, divorced,

12

deceased, bankrupt or has tax liens or other judgments against her.

13

A soft pull does not provide individual account or tradeline information found on a full

14

consumer report obtained for a “hard pull” for the extension of credit. The soft pull helps the

15

mortgage servicer determine the consumer’s status and predict the consumer’s future behavior.

16

Nationstar regularly, usually quarterly, pulls consumer information for account review and servicing

17

reasons. An account remains “active” or “open” in Nationstar’s internal systems and servicing

18

platform until (1) the account balance has been “zeroed”, including escrow balances and unpaid

19

principal balances, and (2) the final tax forms required for liquidation or servicing transfer have been

20

completed.

21

Nationstar has continuing contractual obligations as the mortgage servicer. The life cycle of

22

servicing includes servicing of accounts for Nationstar customers, including those current with

23

payments, those in default, bankrupt customers, escrow customers, customers seeking modification

24

and liquidation customers. Duties and obligations included: property preservation and eviction; tax

25

and escrow reporting via 1098 and 1099 forms; compliance with loan programs such as the Home

26

Affordable Modification Program (“HAMP”); evaluating customers for loan modification; cash-for2

1

keys settlements; accepting deeds-in-lieu of foreclosure; short sales; and preventing identity theft and

2

fraud.

3

Bankruptcy discharge had only a limited effect on Nationstar’s on-going servicing

4

requirements. Discharge did not affect whether an account was active, open or existed within the

5

Nationstar system. A remaining balance on the Nationstar account was still secured by a lien on the

6

Slipstream property serving as collateral. The soft pulls helped to provide Nationstar information

7

necessary to proceed with the account post-discharge. Nationstar had to determine how a consumer

8

would proceed: stay in the property and continue to make payments; attempt loan modification;

9

accept a loss mitigation alternative; or subject the property to foreclosure.

10

Plaintiff filed the present complaint asserting a single claim under the Fair Credit Reporting

11

Act (“FCRA”): that Nationstar’s account review inquiries, or “soft pulls” lacked any permissible

12

purpose after the bankruptcy discharge. See 15 U.S.C. § 1681b(f). After discovery, Defendant filed

13

the present motion for summary judgment asserting that as a matter of law, Plaintiff could not show

14

that Defendant’s actions were “willfull.”

15

II. Standard for Summary Judgment

16

Summary judgment may be granted if the pleadings, depositions, answers to interrogatories,

17

and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any

18

material fact and that the moving party is entitled to a judgment as a matter of law. See Fed. R. Civ.

19

P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the

20

initial burden of showing the absence of a genuine issue of material fact. See Celotex, 477 U.S. at

21

323. The burden then shifts to the nonmoving party to set forth specific facts demonstrating a

22

genuine factual issue for trial. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

23

587 (1986).

24

All justifiable inferences must be viewed in the light must favorable to the nonmoving party.

25

See Matsushita, 475 U.S. at 587. However, the nonmoving party may not rest upon the mere

26

allegations or denials of his or her pleadings, but he or she must produce specific facts, by affidavit
3

1

or other evidentiary materials as provided by Rule 56(e), showing there is a genuine issue for trial.

2

See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). The court need only resolve factual

3

issues of controversy in favor of the non-moving party where the facts specifically averred by that

4

party contradict facts specifically averred by the movant. See Lujan v. Nat’l Wildlife Fed’n, 497

5

U.S. 871, 888 (1990); see also Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337, 345

6

(9th Cir. 1995) (stating that conclusory or speculative testimony is insufficient to raise a genuine

7

issue of fact to defeat summary judgment). Evidence must be concrete and cannot rely on “mere

8

speculation, conjecture, or fantasy. O.S.C. Corp. v. Apple Computer, Inc., 792 F.2d 1464, 1467 (9th

9

Cir. 1986). “[U]ncorroborated and self-serving testimony,” without more, will not create a “genuine

10

issue” of material fact precluding summary judgment. Villiarimo v. Aloha Island Air, Inc., 281 F.3d

11

1054, 1061 (9th Cir. 2002).

12

Summary judgment shall be entered “against a party who fails to make a showing sufficient

13

to establish the existence of an element essential to that party’s case, and on which that party will

14

bear the burden of proof at trial.” Celotex, 477 U.S. at 322. Summary judgment shall not be granted

15

if a reasonable jury could return a verdict for the nonmoving party. See Anderson, 477 U.S. at 248.

16

III. Analysis

17

A. Fair Credit Reporting Act.

18

Congress enacted the FCRA in 1970 in response to concerns about corporations' increasingly

19

sophisticated use of consumers' personal information in making credit and other decisions. Syed v.

20

M-I, LLC, 846 F.3d 1034, 1037 (9th Cir. 2017); Fair Credit Reporting Act of 1970, Pub. L. 91–508,

21

§ 602, 84 Stat. 1114, 1128. Specifically, Congress recognized the need to “ensure fair and accurate

22

credit reporting, promote efficiency in the banking system, and protect consumer privacy.” Safeco

23

Ins. Co. v. Burr, 551 U.S. 47, 52 (2007). Congress thus required the use of reasonable procedures in

24

procuring and using a “consumer report,” defined as:

25
26

any written, oral, or other communication of any information by a
consumer reporting agency bearing on a consumer's credit worthiness,
credit standing, credit capacity, character, general reputation, personal
4

1

characteristics, or mode of living which is used or expected to be used or
collected in whole or in part for the purpose of serving as a factor in
establishing the consumer's eligibility for (A) credit or insurance to be used
primarily for personal, family, or household purposes; (B) employment
purposes; or (C) any other purpose authorized under [the statute].

2
3
4

15 U.S.C. §1681a(d).
5
The Act provides civil liability for both willful violations, id. § 1681n, and negligent
6
violations, id. § 1681o. The decision of the Supreme Court in Safeco governs definition of a willful
7
violation of the Act. To prove a willful violation, a consumer must prove that a defendant either
8
knowingly or recklessly violated the requirements of the Act. Safeco, 551 U.S. at 56-7. To prove a
9
reckless violation, a consumer must establish that the action “is not only a violation under a
10
reasonable reading of the statute's terms, but shows that the company ran a risk of violating the law
11
substantially greater than the risk associated with a reading that was merely careless.” Id. at 69. An
12
interpretation that favors the company must be “objectively unreasonable” under either the text of the
13
Act or “guidance from the courts of appeals or the Federal Trade Commission that might have
14
warned it away from the view it took.” Id. at 70; Levine v. World Fin. Network Nat. Bank, 554 F.3d
15

1314 (11th Cir. 2009).1

16
Unlike Syed, which found that the portion of the act that made it illegal to procure a credit
17

report after including a liability waiver in the same document as a statutorily mandated disclosure2

18
was unambiguous, courts have found that the portion of the Act relied upon by Vanamann to
19
establish a claim, 15 U.S.C. § 1681b(a)(3)(A), is “far from pellucid[.]” Levine, 554 F.3d at 1318
20
(internal quotations omitted). Under § 1681b(a)(3)(A), a consumer report may be sold when the
21
seller “has reason to believe [that the buyer] intends to use the information in connection with a
22
23
24
25
26

1

To the extent that Plaintiff relies upon staff opinion letters from the FTC, the Supreme Court expressly rejected
such letters as “authoritative guidance” finding that “an informal staff opinion . . . [was] not binding on the commission.”
Safeco, 551 U.S. at 70, n.19.
2

See 15 U.S.C. § 1681(b)(2)(A).

5

1

credit transaction involving the consumer . . . and involving the . . . review or collection of an

2

account[.]” Here, there is no indication that the statute limited approved use only to open accounts.

3
4
5
6

“Where, as here, the statutory text and relevant court and agency guidance
allow for more than one reasonable interpretation, it would defy history and
current thinking to treat a defendant who merely adopts one such
interpretation as a knowing or reckless violator. Congress could not have
intended such a result for those who followed an interpretation that could
reasonably have found support in the courts, whatever their subjective
intent may have been.”

7

Safeco, 551 U.S. at 70, n.20. Further, any evidence of “subjective bad faith” is irrelevant. Id.; see

8

also Levine, 554 F.3d at 1319. Plaintiff’s entire action is predicated upon her belief that §§

9

1681b(a)(3)(A), (F) do not apply to debt that has been discharged in bankruptcy.

10

However, after discharge, the consumer is no longer indebted on the loan, but is indebted to

11

the extent of the collateral, the Slipstream property. See 11 U.S.C. § 726-27. Plaintiff asserts that

12

Nationstar’s soft pulls were not permissible, under § 1681b(a)(3)(A) because “there was no credit

13

transaction,” and therefore “ . . . review . . . of an account ...” cannot be used to justify the pull.

14

However, the mortgage loan and particularly, the continuing lien, is the credit transaction for which

15

an in rem obligation exists, even after discharge. See Johnson v. Home State Bank, 501 U.S. 78, 84

16

(1991)(“a bankruptcy discharge extinguishes only one mode of enforcing a claim – namely, an action

17

against the debtor in personam – while leaving intact another – namely, an against the debtor in

18

rem.”). “[T]here can be no doubt that the surviving mortgage interest corresponds to an enforceable

19

obligation of the debtor.” Id. Thus, rather than create a limitation on access to Plaintiff’s credit

20

information, post-discharge, § 1681b(a)(3) provides broad discretion for Nationstar’s access to “soft

21

pull” information for “review or collection of an account” or any other “legitimate business need[.]”

22

15 U.S.C. §§ 1681b(a)(3)(A),(F).

23
24

Additionally, Plaintiff has pointed to no authority, circuit court or otherwise, demonstrating
that it is objectively unreasonable to interpret the FCRA as prohibiting a creditor from obtaining a

25
26
6

1

consumer’s credit report after a consumer’s account is closed. See Safeco, 551 U.S. at 69-70.3 In

2

fact, the Eleventh Circuit held in Levine that it is not objectively unreasonable to interpret the FCRA

3

as permitting the sale of a consumer credit report to a creditor for “account review” purposes after

4

the consumer has closed their account with that creditor. Levine, 554 F.3d at 1318-19 (noting that the

5

FCRA does not distinguish between open and closed accounts); see also, Wilting v. Progressive

6

County Mut. Ins. Co., 227 F.3d 474, 476 (5th Cir. 2000)(neither the statute or FTC commentary

7

suggest that a report may only be permissibly obtained during particular points in a credit

8

relationship); Saumweber v. Greentree Servicing, LLC, 2015 WL 2381131 (D. Minn. May 19,

9

2015); Germain v. Bank of Am., 2014 WL 5802018 (W.D. Wisc. Nov. 7, 2014); Banga v. Experian

10

Info. Solutions, 2013 WL 5539690 (N.D. Cal. September 30, 2013); Godby v. Wells Fargo, 559

11

F.Supp.2d 934, 944 (S.D. Ohio 2008).

12

Unlike the defendant in Syed, Nationstar did not run an “unjustifiably high risk of violating

13

the statute[,]” when it conducted soft pulls of Plaintiff’s credit report after the Chapter 7 bankruptcy

14

discharge. See Syed, 846 F.3d at 1046. Whether a FCRA violation may give rise to a claim for

15

statutory damages can be analogized to whether government employees may be held personally liable

16

in suits for damages. See Safeco, 551 U.S. at 70. In the qualified immunity context, the Ninth Circuit

17

“has held that when an officer’s conduct is so patently violative of the constitutional right that

18

reasonable officials would know without guidance from the courts that the action was

19

unconstitutional, closely analogous pre-existing case law is not required to show that the law is

20

clearly established.” See Syed, 846 F.3d at 1045. Here, the soft pulls by Nationstar were not so

21

patently violative of Plaintiff’s rights as to give rise to a claim for statutory damages. That conclusion

22

is only buttressed by the fact that the Eleventh Circuit and many district courts have come to the

23

conclusion that the statute is “less than pellucid” and that §§1681b(a)(3)(A), (F) apply to both open

24
3

25
26

The case that Plaintiff did cite, Pintos v. Pac. Creditors Assoc., 605 F.3d 665 (9th Cir. 2009), is completely
distinguishable, because debtor in that case did not voluntarily enter into a credit agreement, but became subject to a
deficiency action after her unregistered vehicle was towed and impounded. Here, Plaintiff voluntarily entered into her
mortgage loan.

7

1

and closed consumer accounts. Therefore, the Court grants Defendant’s motion for summary

2

judgment.

3

IV. Conclusion

4
5

Accordingly, IT IS HEREBY ORDERED that Defendant’s Motion for Summary Judgment
(#41) is GRANTED;

6

IT IS FURTHER ORDERED that all other outstanding motions are DENIED as moot;

7

IT IS FURTHER ORDERED that the Clerk of the Court enter JUDGMENT for Defendant

8
9

and against Plaintiff.
DATED this 22nd day of March 2017.

10
11
12
13

_____________________________
Kent J. Dawson
United States District Judge

14
15
16
17
18
19
20
21
22
23
24
25
26
8