Bauman et al v. Bank of America, N.A.

Filing 35

ORDER AND JUDGMENT in favor of Bank of America, N.A., Hudson City Savings Bank against Brian Bauman, Cynthia Bauman. Bank of America, N.A. and Hudson City Savings Banks (Hudson Savings) 02/14/2014 motion for summary judgment 28 is GRANTED, and plaintiffs Brian Bauman and Cynthia Baumans 02/14/2014 30 is DENIED. Signed by Magistrate Judge Mark R. Abel on 05/09/2014. (sr1)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Brian Bauman & Cynthia Bauman,
Plaintiffs
v.

:
:

Civil Action 2:12-cv-00933

:

Bank of America, N.A. and Hudson
City Savings Bank,

:

Magistrate Judge Abel

:
Defendants
ORDER
This matter is before the Court on defendants Bank of America, N.A. and
Hudson City Savings Bank’s (“Hudson Savings”) February 14, 2014 motion for
summary judgment (doc. 28) and plaintiffs Brian Bauman and Cynthia Bauman’s
February 14, 2014 (doc. 30).
Background. The complaint pleads claims under the Fair Debt Collection
Practices Act (“FDCPA”) and the Ohio Consumer Sales Practices Act (“OCSPA”).
Complaint, ¶¶ 38-42 and 43-53. It makes the following allegations. Bank of America,
N.A. (“BANA”) is the purported servicer of a mortgage loan on the Baumans' residence.
Id., ¶¶ 11 and 19. BANA maintains that the loan has been in default since May 2009. In
July 2010, BANA filed a foreclosure action, asserting it was the holder of the note. Id., ¶
22. It was not. Id., ¶ 25. The Common Pleas Court denied BANA's motion for summary
judgment, and in February 2012 the Bank dismissed the action. Id., ¶ 27.

Among other defenses, the answer pleads that there is no claim under the
FDCPA because BANA is a creditor, not a debt collector. It also asserts that the
Baumans did not submit a qualified written request to BANA's servicer in the manner
required by 12 U.S.C. § 2605(e).
Plaintiffs’ Motion for Summary Judgment. Plaintiffs maintain that the issues in
this case are whether Hudson Savings and BANA are debt collectors, and if so, did their
actions violated section 1692(e) of Title 15 of the United States Code. Plaintiff argues
BANA is a “debt collector” as defined in the FDCPA. When an entity that did not
originate the debt in question but acquired it and attempts to collect on it, whether that
entity is a creditor or an debt collector under the FDCPA depends on the default status
of the debt at the time it was acquired. A loan servicer can either stand in the shoes of a
creditor or be a debt collector depending on whether the debt was assigned for
servicing before or after the alleged default.
Plaintiffs argue that defendants should be estopped from asserting that the debt
was not in default when it was acquired because, according to plaintiffs, BANA made
several blatantly false factual representations. In the state foreclosure action, BANA, as
successor to BAC Home Loan Servicing, LP (“BAC”), attached a false allonge to its
complaint representing it was a holder with standing to sue, but BANA’s records show
that Hudson Savings was in possession of the Note.
Plaintiffs contend that BANA continued to falsely represent the status of
ownership of the debt after BAC dismissed the foreclosure action. Because of their
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questions concerning ownership of the Note, the Baumans sent a request to BANA
seeking to inspect the original note. BANA denied the Bauman’s request and sent them
a “true and correct copy of the original note.” Plaintiffs maintain that the Note did not
bear the TBW or Countrywide indorsement. BANA also relies on the March 3, 2010
MERS assignment transferring interest from TBW to BAC. Plaintiff maintains that these
representations were materially false and conflicted with BANA’s business records
showing that Hudson Savings possessed the Note with indorsements and that MERS
assigned TBW’s interest to Hudson Savings in 2004. Plaintiffs contend that BANA sent
plaintiffs correspondence falsely notifying them that their loan was in foreclosure and
requested that they submit documents to review possible alternatives. Plaintiffs
maintain that they relied on this information in pursuing foreclosure alternatives and
filing this lawsuit, and BANA cannot falsely hold itself out as the holder of loan for the
purpose of the foreclosure action, produce a false mortgage assignment, and now, for
the purposes of this lawsuit, claim that it has been the servicer since before the alleged
date of default.
Plaintiff also argues that Hudson Savings is a “debt collector” under the FDCPA
because in the process of collecting its own debt, it used BANA’s name and BANA did
not indicate it was collecting or attempting to collect a debt on behalf of Hudson
Savings. Plaintiff further argues that Hudson Savings is vicariously liable for the
conduct of its agents because it is a debt collector.

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Plaintiff contends that the conduct of defendants violated the FDCPA. BANA’s
October 2, 2012 letter contained false, deceptive and misleading statements to collect a
debt. The letter stated, “your home is now in foreclosure, it’s not too late to get help***it
is extremely important that you call use today discuss your options.” Exh. 18. This was
received shortly after plaintiffs received a letter from an attorney stating that he had
been retained by BANA. That letter stated, “foreclosure proceedings [may] be initiated
by the filing of a Complaint.” Exh. 17. Plaintiff maintains that even a sophisticated
consumer would believe that BANA had filed a foreclosure action based on these two
letters. Plaintiffs further argue that BANA did not have authority to offer any of the
alternatives to foreclosure mentioned in its letter.
Plaintiff argues that documents submitted in support of the foreclosure action
were fraudulent. A mortgage foreclosure action is a debt collection practice under the
FDCPA. BAC falsely asserted that it was holder of the note and mortgage. BANA also
submitted an allonge1 that directly conflicted with business records showing that
Hudson Savings was in possession of the note with indorsements from TBW to
Countrywide and Countrywide in blank. BANA falsely represented in its affidavit in
support of summary judgment that BAC was in possession.
Plaintiff contends that BANA continued to materially misrepresent its ability to
collect the alleged debt in its September 21, 2012 response letter. BANA attached the
February 3, 2010 MERS assignment to BAC to its letter. But plaintiffs maintain that
1

An indorsement added to a note. See, fn. 2, below.
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MERS could not have had the authority to transfer its interest as nominee for TBW
because it already had transferred that interest to Hudson Savings in 2004.
Defendants’ Response. Defendants BANA and Hudson Savings maintain that
neither of them are debt collectors under the FDCPA because Section 1692A(6)(iii) of
Title 15 of the United States Code specifically provides that an entity is not a debt
collector if the debt is not in default at the time it was assigned. Defendants contend that
plaintiffs have offered no evidence regarding when either defendant acquired their
interest in the debt. According to defendants, Hudson Savings bought the loan in 2004,
and BANA, through its predecessor-in-interest, has been servicing the loan since 2008.
Defendants argue that plaintiffs cannot prove the elements necessary to assert equitable
estoppel because they cannot show reasonable reliance on the false statements and a
resulting detriment. Defendants argue that Hudson Savings is not liable under the
FDCPA under the false name exception because that exception only applies to creditors
that falsely represent themselves as someone else. Plaintiffs have not provided
evidentiary support for any such false statements by Hudson Savings, and any conduct
by BANA cannot be imputed to Hudson Savings because Hudson Savings did not
control BANA’s actions.
Defendants distinguish the line of cases relied upon by plaintiffs regarding the
application of equitable estoppel to prevent a party from alleging that a loan was not in
default at the time it was assigned. Defendants maintain that the issue in those cases
was that the party claiming to be a creditor treated the loan as if it were in default at the
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time it was assigned, which means that the facts established them as debt collectors
under 15 U.S.C. § 1692A(6)(F)(iii). Defendants further argue that regardless of whether
plaintiffs have sufficiently established that any of BANA’s statements were false or
misleading, they still have failed to establish that BANA’s actions induced “actual
reliance that was reasonable and in good faith or that they suffered any detriment as a
result. Defendants argue that it is clear that the Baumans did not rely on any statements
that BANA was either the holder of the note or owner of the note as they have filed this
lawsuit. Where a party challenges an action in a court proceeding they cannot later
claim that they relied on it.
BANA further argues that equitable estoppel cannot make it a debt collector
because the allegedly false statements are not inconsistent with its current position. The
statements plaintiffs challenge have nothing to do with whether BANA was either the
holder or owner of the note. BANA maintains that there is no inherent contradiction
between servicing the loan prior to plaintiffs’ 2009 default and having possession of the
note in 2010. The allegation that statements in a 2012 loss mitigation letter regarding
whether the loan was in foreclosure and potential foreclosure alternatives have no
bearing on BANA’s status as a creditor.
Defendants further argue that Hudson Savings is not a debt collector because it
bought the loan in 2006. It is uncontested that Hudson Savings had physical possession
of the note indorsed in blank from 2006 through 2013. Under plaintiffs’ reasoning, every
investor who uses a loan servicer would automatically become a debt collector.
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Plaintiffs have failed to allege how Hudson Savings engaged in any action to collect its
own debt. Hudson Savings made no attempt to collect its own debt or use another
party’s name to do so. BANA performed all of the debt collection activities. Defendants
further maintain that Hudson Savings is not vicariously liable for the conduct of BANA.
Finally, defendants argue that plaintiffs’ claim arising out of the 2010 foreclosure
action are barred as a matter of law based on the statute of limitations.
Defendants’ Motion for Summary Judgment. Defendants argue that the FDCPA
only applies to parties that are “debt collectors” as defined by the Act and that the
evidence establishes that neither BANA nor Hudson Savings satisfy this definition. Both
Hudson Savings and BANA acquired their interest in the loan during periods when
plaintiffs were current on their loan.
For Hudson Savings to be liable under the FDCPA, plaintiffs would have to
prove that the Hudson Savings had control over BANA. According to defendants, the
evidence clearly establishes that Hudson Savings did not control BANA’s
communications with plaintiff.
Defendants further argue that one of plaintiffs’ claims is entirely barred by the
statute of limitations governing FDCPA claims. Plaintiffs alleged that BANA violated
the FDCPA by initiating foreclosure proceedings against them when they were more
than a year behind on their payments, but plaintiffs action was brought over a year after
the 2010 action was filed.

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Uncontroverted Facts. On August 13, 2004, plaintiffs executed a note in favor of
Taylor, Bean, and Whittaker Mortgage Corp. in the amount of $539,250.00 to obtain a
loan. Alison Krivansky's February 11, 2014 Affidavit, ¶ 3a and Ex. A-1, Doc. 28-1,
PageID 460 and 462. The note was secured by a mortgage on property located at 1094
Forsythe Lane, Galena, Ohio. Id., ¶ 3b and Ex. A-2, PageID 460 and 465.
The loan was sold to Countrywide Home Loans, Inc. Id., Ex. A-1, PageID 464.2 In
October 2004, Countrywide Home Loans, Inc. sold the loan to Hudson City Savings
Bank, but Countrywide Home Loans, Inc. retained the servicing rights. Id., ¶ 4, PageID
461; February 11, 2014 Affidavit of Brian McClenahan, ¶ 3, PageID 495.3 In November
2008, Countrywide Home Loans Servicing, LP took over servicing the loan. Id. In April
2009, Countrywide Home Loans Servicing, LP changed its name to BAC Home Loans
Servicing, LP. Id., ¶ 3c and Ex. A-3, PageID 460 and 478-79. On July 1, 2011, BAC Home
Loans Servicing, LP subsequently merged with BANA. Id., ¶ 3d and A-4, PageID 460
and 480-85. BANA is currently servicing the loan. Id., ¶ 4.
Plaintiffs were current on their loan from November 2005 to May 2009. Id., ¶ 5
and Ex. A-5, PageID 461 and 486-94. On July 20, 2010, BAC Home Loans Servicing, LP
filed a foreclosure action. On October 11, 2012, plaintiffs filed this action alleging
violations of the FDCPA challenging BAC Home Loans Servicing, LP’s standing to
2

The note contains an indorsement by the loan originator Taylor, Bean &
Whitaker Mortgage Corp. that it is payable to Countrwide Home Loans, Inc.
3

The note itself has an indorsement by Countrywide Home Loans Inc. to pay to
the order of blank. Krivansky Aff., Id., Ex. A-1, PageID 464.
8

bring the 2010 foreclosure action and language in a October 2, 2012 loss mitigation letter
sent to plaintiffs.
Summary Judgment. Summary judgment shall be granted “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). A party asserting the absence or
presence of a genuine dispute must support that assertion by either “(A) 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 “(B) 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 party may object that the cited material “cannot be presented in a form that
would be admissible in evidence,” and “[t]he burden is on the proponent to show that
the material is admissible as presented or to explain the admissible form that is
anticipated.” Fed. R. Civ. P. 56(c)(2); Fed. R. Civ. P. 56 advisory committee’s note. If a
party uses an affidavit or declaration to support or oppose a motion, such affidavit or
declaration “must be made on personal knowledge, set out facts that would be
admissible in evidence, and show that the affiant or declarant is competent to testify on
the matters stated.” Fed. R. Civ. P. 56(c)(4).

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While the court must consider the cited materials, it may also consider other
materials in the record. Fed. R. Civ. P. 56(c)(3). However, “[i]n considering a motion for
summary judgment, the district court must construe the evidence and draw all
reasonable inferences in favor of the nonmoving party.” Revis v. Meldrum, 489 F.3d 273,
279 (6th Cir. 2007) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986)). “The central issue is ‘whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that one party
must prevail as a matter of law.’” Id., 489 F.3d at 279–80 (citing Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 251–52 (1986)).
Discussion. The purpose of the Fair Debt Collection Practices Act is
to eliminate abusive debt collection practices by debt collectors, to insure
that those debt collectors who refrain from using abusive debt collection
practices are not competitively disadvantaged, and to promote consistent
State action to protect consumers against debt collection abuses.
15 U.S.C. § 1692(e). A “debt collector” is defined as
any person who uses any instrumentality of interstate commerce or the
mails in any business the principal purpose of which is the collection of
any debts, or who regularly collects or attempts to collect, directly or
indirectly, debts owed or due or asserted to be owed or due another.
15 U.S.C. § 1692a(6). The FDCPA does not apply to a party to whom the debt is due. The
FDCPA “refers only to persons attempting to collect debts due ‘another.’” MacDermid v.
Discover Fin. Servs., 488 F.3d 721, 735 (6th Cir. 2007). The statute further provides that
the definition of a debt collector does not include “any person collecting or attempting
to collect any debt owed or due or asserted to be owed or due another to the extent such
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activity . . . concerns a debt which was not in default at the time it was obtained by such
person . . . .” 15 U.S.C. § 1692a(6)(F). Creditors and mortgage servicers are excluded
from the definition of “debt collector,” if the creditor or servicer did not acquire the debt
when it was in default or treat the debt as if it were in default at the time of acquisition.
Bridge v. Ocwen Fed. Bank., 681 F.3d 355, 362 (6th Cir. 2012) (“For an entity that did not
originate the debt in question but acquired it and attempts to collect on it, that entity is
either a creditor or a debt collector depending on the default status of the debt at the
time it was acquired.”).
On July 20, 2010, BAC Home Loan Servicing, L.P. filed a complaint against the
Baumans in the Delaware Court of Common Pleas. The complaint alleged that plaintiff
BAC Home Loan Servicing was the holder of the promissory note and mortgage deed
securing the payment of the note. Pls.’ Exh 10 at ¶¶ 1-2; Doc. 30-10 at PageID 600. BAC
Home Loan Servicing attached an “Allonge4 to Promissory Note for Endorsement” that
added a purported indorsement to pay the note to the Order of BAC Home Loan
Servicing, L.P., fka Countrywide Home Loans Servicing, L.P. Doc. 30-10 at PageID 606.
On September 30, 2011, BAC Home Loan Servicing filed a motion for summary
judgment. Doc. 30-11. In its motion, BAC Home Loan Servicing asserted that it had
possession of the note. Id. Plaintiffs filed a memorandum in opposition to BAC Home

4

An allonge is a piece of paper attached to a promissory note containing an indorsement. See, Wagner v. Loan Corp., 2014 WL 114688, *2, n. 4 (11th Cir. Jan. 4, 2014);
Deutsche Bank v. Edington, 2014 @L 1691646 (Ohio Ct. App. 4th Dist. April 24, 2014); U.S.
Bank, N.A. v. Shipp, 2013 WL 3019436, *2 (Ohio Ct. App. 2nd Dist. June 14, 2013).
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Loan Servicing’s motion for summary judgment and argued that there was no evidence
that the allonge was at anytime attached to the original promissory note. Plaintiffs
argue that there was no evidence demonstrating that the property was ever assigned
from Taylor, Bean & Whitaker to BAC Home Loan Servicing or any other entity.
It is uncontroverted in this lawsuit that Hudson Savings is the holder of the
note.5 As the holder of the note, Hudson Savings is not a debt collector under the
FDCPA. Plaintiffs’ assertion that Hudson Savings used a name other than its own
which would indicate a third person was attempting to collect the debt is has no
evidentiary support in the record. All efforts to collect on the debt were through either
BAC Home Loan Servicing or BANA, not Hudson Savings. Plaintiffs also have not
demonstrated that Hudson Savings acquired its interest in the loan after the default.
Because Hudson Savings is not a debt collector, it cannot be liable for the actions of
BANA:
We do not think it would accord with the intent of Congress, as
manifested in the terms of the Act, for a company that is not a debt
collector to be held vicariously liable for a collection suit filing that
violates the Act only because the filing attorney is a “debt collector.”
Section 1692k imposes liability only on a “ debt collector who fails to
comply with [a] provision of this subchapter....” 15 U.S.C. § 1692k(a)
(emphasis supplied). The plaintiffs would have us impose liability on
non-debt collectors too. This we decline to do.

5

No explanation has been given for BAC Home Loan Servicing's false assertion in
the Deleware County Common Pleas Court foreclosure action that it was the owner of
the note. Plaintiffs' remedy, if any, for that misrepresentation lay in that lawsuit, in
which they ultimately prevailed. The false assertion does not change the uncontroverted fact that Hudson Savings was then the owner of the note and mortgage.
12

Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 108 (6th Cir. 1996). But see Huy Thanh
Vo v. Nelson & Kennard, 931 F. Supp. 2d 1080, 1090 (E.D. Cal. 2013)(“[H]olding non-‘debt
collector’ creditors vicariously liable for their attorneys' actions creates needed
incentives for creditors to monitor their attorneys' compliance with fair debt collection
laws.”).
Plaintiffs contend that BANA made several false representations and that it
should be estopped from denying its status as a debt collector. None of the false
statements allegedly made by BANA demonstrate that BANA is a debt collector under
the statute. BANA incorrectly identified itself as a holder of the note with standing to
sue. At the time of the foreclosure action, however, Hudson Savings was in fact the
holder of the note. At the time of the foreclosure action, BANA was, according to
uncontested evidence before the Court, the mortgage servicer, and a mortgage servicer
is not considered a debt collector if the debt was not in default at the time of acquisition.
As a successor in interest, BANA began servicing the mortgage prior to the default.
Plaintiffs maintain that the allonge to the note was fabricated. Plaintiffs do not
challenge, however, that BANA is and had been the servicer prior to the default.
Plaintiffs seek to hold BANA to the fact that it identified itself as the holder of the note
rather than servicer. Under either scenario, BANA is still not a debt collector under the
statute, and its position in the state foreclosure action is not necessarily inconsistent
with its assertion that it is a servicer and not subject to the FDCPA in this action.

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Had BANA not serviced the debt until after the default, its alleged conduct or
misrepresentations could possibly violate the FDCPA. But, because BANA is not a debt
collector as defined by the FDCPA, it is not subject to the FDCPA.
Conclusion. For the reasons stated above, defendants Bank of America, N.A. and
Hudson City Savings Bank’s (“Hudson Savings”) February 14, 2014 motion for
summary judgment (doc. 28) is GRANTED, and plaintiffs Brian Bauman and Cynthia
Bauman’s February 14, 2014 (doc. 30) is DENIED.
The Clerk of Court is DIRECTED to enter JUDGMENT for defendants Bank of
America, N.A. and Hudson City Savings Bank.

s/Mark R. Abel
United States Magistrate Judge

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