Solomon v. HSBC Mortgage Corporation et al
Filing
110
ORDER granting 75 Defendant Baer & Timberlake P.C.'s Motion for Summary Judgment; granting in part and denying in part 84 Defendant HSBC Mortgage Corporation, (USA), D/B/A HSBC Bank USA, as Trustee and Defendant America's Servicing Company's Corrected Amended Joint Motion for Summary Judgment. Signed by Honorable Robin J. Cauthron on 3/29/12. (lg, )
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
GARRY L. SOLOMON,
Plaintiff,
vs.
HSBC MORTGAGE CORPORATION
(USA), d/b/a HSBC BANK USA, AS
TRUSTEE; BAER & TIMBERLAKE,
P.C.; and AMERICA’S SERVICING
COMPANY, a/k/a ASC RECOVERY
SYSTEMS,
Defendants.
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Case Number CIV-09-200-C
MEMORANDUM OPINION AND ORDER
Plaintiff brought the present action asserting violations of the Fair Debt Collection
Practices Act, 15 U.S.C. § 1692 et seq. and various state law-based claims. Before
addressing the merits of the present motions, some procedural history of the case is
necessary.
In prior proceedings in this matter, the Court determined that Plaintiff had filed his
action outside the statute of limitations and on that basis dismissed the sole federal claim and
declined to exercise supplemental jurisdiction over Plaintiff’s state law claims. On appeal,
the Tenth Circuit reversed, finding Plaintiff had alleged at least some wrongdoing within the
limitations period. The Circuit remanded the matter for further proceedings. However, there
was no appeal or reinstatement of Plaintiff’s state law-based claims. Accordingly, that
portion of Defendant HSBC’s brief which raises arguments related to the state law-based
claims serves no purpose, as the only issue presently before the Court is whether or not
Defendant HSBC’s and/or ASC’s actions violated the FDCPA. With this backdrop, the
Court turns to the pending Motions.
STANDARD OF REVIEW
Summary judgment is appropriate if the pleadings and affidavits show there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a
matter of law. Fed. R. Civ. P. 56(c). “[A] motion for summary judgment should be granted
only when the moving party has established the absence of any genuine issue as to a material
fact.” Mustang Fuel Corp. v. Youngstown Sheet & Tube Co., 561 F.2d 202, 204 (10th Cir.
1977). The movant bears the initial burden of demonstrating the absence of material fact
requiring judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986). A fact is material if it is essential to the proper disposition of the claim. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). If the movant carries this initial burden,
the nonmovant must then set forth “specific facts” outside the pleadings and admissible into
evidence which would convince a rational trier of fact to find for the nonmovant.
Fed. R. Civ. P. 56(e). These specific facts may be shown “by any of the kinds of evidentiary
materials listed in Rule 56(c), except the mere pleadings themselves.” Celotex, 477 U.S. at
324. Such evidentiary materials include affidavits, deposition transcripts, or specific
exhibits. Thomas v. Wichita Coca-Cola Bottling Co., 968 F.2d 1022, 1024 (10th Cir. 1992).
“The burden is not an onerous one for the nonmoving party in each case, but does not at any
point shift from the nonmovant to the district court.” Adler v. Wal-Mart Stores, Inc., 144
F.3d 664, 672 (10th Cir. 1998). All facts and reasonable inferences therefrom are construed
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in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986).
DISCUSSION
Plaintiff brought this action against three Defendants: HSBC Mortgage Corporation
(USA), d/b/a HSBC Bank USA (“HSBC”); America’s Servicing Company, a/k/a ASC
Recovery Systems (“ASC”) and Baer & Timberlake, P.C. (“B&T”). When Plaintiff became
delinquent on his mortgage payment, Defendant B&T was hired to collect the debt,
including, if necessary, pursuing a foreclosure action. According to Plaintiff, all Defendants
engaged in activities which violated the Fair Debt Collection Practices Act, 15 U.S.C.
§§ 1692 et seq. (“FDCPA”). However, as to Defendants HSBC and ASC, it must first be
determined if they are creditors or debt collectors.
Defendants HSBC and ASC argue they are “creditors” as defined by the FDCPA, as
each only sought to recover a debt that it owned, rather than to collect a debt for another
entity. In response, Plaintiff argues that neither entity has established that it was a proper
owner of the note and therefore neither can qualify as a creditor under the FDCPA and
therefore each must be a debt collector. In their reply brief, Defendants HSBC and ASC
argue only that Plaintiff has admitted that he paid his debt to HSBC and therefore he has
acknowledged that it is the owner of the note and therefore a creditor rather than a debt
collector. Of course, this argument, without any supporting legal authority, is completely
unhelpful to the Court and offers no basis on which to support Defendants’ Motion for
Summary Judgment. Therefore, the Court is left to wade through the issues without
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assistance from Defendants HSBC and ASC to determine as a matter of law whether or not
their actions fall within the scope of the FDCPA.
The Court has reviewed the case law proffered by Plaintiff in his response to
Defendants’ Motion for Summary Judgment and finds that, measuring that law against the
facts that are either undisputed or viewed in the light most favorable to Plaintiff, questions
of fact exist as to Defendants HSBC’s and ASC’s status as debt collectors rather than
creditors. Accordingly, for purposes of resolving Defendants’ Motion for Summary
Judgment, the Court will treat Defendants HSBC and ASC as debt collectors and their
actions therefore are governed by the scope of the FDCPA.1
Assuming, for purposes of the summary judgment notion, that all three Defendants
are subject to the FDCPA, the Court turns to the claims presented in this case. On appeal,
the Tenth Circuit identified three potential FDCPA claims in Plaintiff’s Complaint, and the
parties appear to be in agreement that those are the issues for resolution. First, “(1) falsely
representing the amount of the debt or compensation for collection of a debt, see 15 U.S.C.
§ 1692e(2)(A); (2) generally engaging in false, deceptive, or misleading practices, see id.,
§ 1692f; and (3) failing to provide debt validation or to cease collection efforts within thirty
days after [plaintiff] disputed the debt, see § 1692g.” (Dkt. No. 39, p. 9.) The appellate court
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The Court makes clear that this determination is not a final determination on the
issue and that this matter will be revisited based upon the evidence presented at trial and the
question will be resolved finally either as a matter of law by the Court or as a factual
determination by the jury. However, the Court admonishes Defendants that if they intend
to establish their status as creditors, as opposed to debt collectors, it is incumbent upon them
to furnish a substantially better formulated legal argument on the issue.
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then remanded the matter for further consideration of the validity of these three claims. As
noted above, each Defendant now seeks summary judgment, arguing that the undisputed
material facts entitle it to judgment on each of these three allegations.
1.
Section 1692g Claims
The most efficient process requires the three potential claims to be considered in
reverse order. Relevant to the third claim the following facts are undisputed. On February
13, 2008, Defendant B&T sent Plaintiff a letter identifying that it was attempting to collect
a debt.2 Plaintiff sent a fax on February 26, 2008, and made a telephone call the next day.
Plaintiff argues that both communications were disputes of the debt. Defendant B&T argues
that the fax sent by Plaintiff on February 26 cannot be construed as a request for debt
validation. The text of the fax reads as follows:
To: Baer, Timberlake, Coulson & Cates, P.C.
I need to get the reinstatement fee for my Mortgage Loan No. XXXXXXXXXX614. Please call with he [sic] amounts to the cell number. The
cell is not my cells [sic] so please do not give it to the Wells Fargo Home
Mortgage or it [sic] partners. I will be out off [sic] town at that time. I will be
able to get the information at that number.
(Dkt. No. 75, Ex. 5.) The Court agrees that no reasonable juror could interpret the language
of this facsimile as seeking validation of the debt. To the contrary, the plain language of the
fax supports the premise that a debt existed and that Plaintiff was seeking the amount owed
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Although Plaintiff disputes when he received the letter, that fact is not material to
the present issue.
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in order to resolve the debt. Accordingly the undisputed material facts demonstrate that
Plaintiff did not dispute the debt in writing.
Plaintiff also argues that he called B&T on February 26, 2008. According to Plaintiff,
he specifically requested debt verification in that telephone call. Even accepting the facts as
true, as the Court must at this stage, Plaintiff’s act of calling Defendant B&T was not
sufficient to trigger the protections provided in § 1692g(b). That portion of the statute
specifically requires that any dispute of a debt be made in writing. See 15 U.S.C.
§ 1692g(b)(“If the consumer notifies the debt collector in writing within the thirty-day
period described in subsection (a) . . . .”) (emphasis added). Because Plaintiff failed to
dispute the debt in writing within the 30-day time period, Defendant was not required to
cease collection efforts.
As part of this potential claim, Plaintiff argues that by filing the foreclosure action
prior to the expiration of the 30-day window, B&T overshadowed its initial communication
letter which specifically permitted Plaintiff 30 days to dispute the debt. However, Plaintiff
fails to provide any legal authority indicating that merely filing a foreclosure petition is
sufficient to overshadow the notification provisions. In contrast, the Tenth Circuit has
recognized that where a debt verification notification was included in the same envelope as
a foreclosure petition, the petition did not overshadow the right of debt verification. The
Circuit recognized that even the least sophisticated consumer could distinguish between the
requirements of the two documents. Ferree v. Marianos, ___ F. App’x ___, Case No.
97-6061, 1997 WL 687693, *2 (10th Cir. Nov. 3, 1997). Under the facts of this case, the
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Court finds that overshadowing cannot exist. Plaintiff was clearly aware of his entitlement
to and the requirements for properly conveying a dispute of the debt well before the
foreclosure action was filed. Accordingly, the Court finds that the filing of the foreclosure
petition did not overshadow the notification provisions or violate Plaintiff’s rights under the
FDCPA. All Defendants are entitled to judgment on Plaintiff’s third claim for relief.
2.
Section 1692f Claims
The second possible claim identified by the Circuit was that Defendants engaged in
false, deceptive, or misleading practices in violation of the FDCPA. In support of his claim
against B&T on this issue, Plaintiff argues that B&T misrepresented the amount of debt.
According to Plaintiff, the total amount B&T identified as due was inconsistent with other
information and that the amount due fluctuated with each communication. Plaintiff also
complains that B&T’s fees increased with each communication. In seeking judgment,
Defendant B&T argues that the second claim fails as a matter of law because it relied upon
information from its client regarding the amount of the debt.
The Ninth Circuit has held that a debt collector is entitled to reasonably rely on its
client’s information and if it does so reasonably it cannot be held liable for any errors. Clark
v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162, 1174-77 (9th Cir. 2006); see also
Ferree, ___ U.S. F. App’x ___, Case No. 97-6061, 1997 WL 687693. Plaintiff offers no facts
or legal authority to dispute that B&T is permitted as a matter of law to rely on its client for
the amount of the debt.
Likewise, Plaintiff fails to offer any permissible evidence
demonstrating that the figures relied on by B&T were inaccurate.
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To the extent Plaintiff complains about the fees/amounts due fluctuating, the Court
finds that claim is also without merit. Defendant B&T goes through an analysis of the fees
challenged by Plaintiff, offering an explanation for each. Plaintiff does not counter this
showing with anything other than the conclusory allegations of his counsel. The law is clear
that the argument of counsel is insufficient to withstand a properly supported summary
judgment motion. Celotex, 477 U.S. at 324; Pinkerton v. Colo. Dep’t of Transp., 563 F.3d
1052, 1061 (10th Cir. 2009) (“argument of counsel is not evidence, and cannot provide a
proper basis to deny summary judgment”). Thus, the Court finds that Plaintiff has failed to
dispute Defendant B&T’s material facts. Because those undisputed facts demonstrate B&T
is entitled to relief, summary judgment will be granted in its favor.
As for Defendants HSBC’s and ASC’s potential for liability under § 1692f,
Defendants focus on whether or not Plaintiff was entitled to a detailed accounting of the debt
at issue; however, Plaintiff’s claim cannot be that narrowly drawn. Rather, Plaintiff’s claim
focuses on the language of § 1692f(6), noting that the FDCPA prohibits taking property
when there is no present right to possession of the property. As noted above, questions of
fact and law remain regarding the status of Defendants HSBC and ASC as proper holders of
the note.3 Accordingly, those questions prevent judgment on the § 1692f claim.
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As noted above, to the extent Defendants HSBC and ASC seek to challenge these
issues as a matter of law, any challenge must provide a more reasoned analysis than
previously provided. Simply because counsel for HSBC and ASC says something does not
make it so. Further, the Court notes that the Oklahoma Supreme Court recently decided J.P.
Morgan Chase Bank Nat’l Ass’n v. Eldridge, 2012 OK 24, --- P.3d --- which may provide
additional guidance on at least some of the relevant issues.
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As set forth above, Defendant B&T is entitled to judgment on Plaintiff’s claims for
violation of § 1692f, while Defendants HSBC and ASC’s motion must be denied.
3.
Section 1692e Claims
As the Circuit framed the issue, Plaintiff’s § 1692e claim alleges Defendants falsely
represented the amount of the debt or compensation for collection of a debt. Plaintiff argues
that §1692e prohibits a debt collector from falsely representing the character, amount, or
legal status of any debt and also from using false, deceptive, or misleading representations
or means in connection with the collection of any debt. Plaintiff argues that Defendant B&T
violated this statute because the foreclosure petition publicly mischaracterized the legal status
of the debt. According to Plaintiff, by omitting from the foreclosure petition that at least a
portion of the debt was disputed, Defendant B&T mischaracterized the debt. As for
Defendants HSBC and ASC, Plaintiff renews his arguments that HSBC was not the current
holder of the note and mortgage as required by Oklahoma law and therefore the
representations in ¶ 4 of the petition in foreclosure were false representations which also
violated § 1692e.
Defendant B&T again relies on the defense of good faith, arguing that because it
relied on its client for the nature, amount, and validity of the debt, it cannot be liable to
Plaintiff. As with the § 1692f claim, Plaintiff fails to offer any legal or factual basis which
would preclude Defendant B&T’s reliance on the good faith defense. Accordingly, judgment
will be entered in favor of B&T.
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As for Defendants HSBC and ASC, once again these Defendants fail to provide any
meaningful or helpful response to Plaintiff’s claims. Accordingly, the Court finds questions
of fact exists regarding whether HSBC and/or ASC violated § 1692e.
CONCLUSION
For the reasons set forth herein, Defendant Baer & Timberlake P.C.’s Motion for
Summary Judgment (Dkt. No. 75) is GRANTED. Defendant HSBC Mortgage Corporation,
(USA), d/b/a HSBC Bank USA, as Trustee and Defendant America’s Servicing Company’s
Corrected Amended Joint Motion for Summary Judgment (Dkt. No. 84) is GRANTED in
part and DENIED in part. Defendants HSBC and ASC are entitled to judgment on Plaintiff’s
claims brought pursuant to 15 U.S.C. § 1692g. In all other respect the motion is DENIED.
A separate judgment will issue at the close of this case.
IT IS SO ORDERED this 29th day of March, 2012.
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