Bibolotti v. American Home Mortgage Servicing, Inc. et al

Filing 91

MEMORANDUM OPINION AND ORDER - GRANTING IN PART AND DENYING IN PART 53 Defendant's Motion for Summary Judgment, GRANTING IN PART AND DENYING IN PART 55 Plaintiff's Motion for Partial Summary Judgment (Liability Only), GRANTING IN PART A ND DENYING IN PART 66 Defendants' Objections to, and Motion to Strike Portions of, the Affidavit of Enzo Bibolotti, GRANTING IN PART AND DENYING IN PART 67 Plaintiff's Motion to Strike the Affidavit of Cindi Ellis. Signed by Magistrate Judge Amos L. Mazzant on 5/15/2013. (baf, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

ENZO BIBOLOTTI

§
§
§
§
§
§

v.
AMERICAN HOME MORTGAGE
SERVICING, INC., et. al.

CASE NO. 4:11-CV-472
Judge Mazzant

MEMORANDUM OPINION AND ORDER
Pending before the Court are Defendants’ Motion for Summary Judgment (Dkt. #53),
Plaintiff’s Motion for Partial Summary Judgment (Liability Only) (Dkt. #55), Defendants’
Objections to, and Motion to Strike Portions of, the Affidavit of Enzo Bibolotti (Dkt. #66), and
Plaintiff’s Motion to Strike the Affidavit of Cindi Ellis (Dkt. #67).
BACKGROUND
In February 2006, Plaintiff and Jessica Bibolotti sought and obtained a mortgage loan
(the “Loan”) in connection with the property located at 3668 Braeden Court, Middleburg, Florida
32068 (the “Property”) (Dkt. #53 at Ex. A-1). The borrowers executed an Adjustable Rate Note
(the “Note”) in the amount of $200,000, and a Mortgage (the “Mortgage”) securing the
indebtedness (Dkt. #53 at Exs. A-1 and A-2).
The original lender in connection with the Loan was Option One Mortgage Corporation
(“Option One”). Id. Option One subsequently indorsed the Note in blank and transferred the
Note to Deutsche Bank National Trust Company, as trustee for Soundview Home Loan Trust
2006-OPT 2, Asset Backed Certificates, Series 2006-OPT 2 (“Deutsche”). Deutsche became the
owner of the Note on April 1, 2006, and is currently the owner of the Note indorsed in blank, and
the current creditor in connection with the Loan.

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In July of 2008, Option One transferred the servicing rights on the Loan to American
Home Mortgage Servicing, Inc. (“AHMSI”), and AHMSI began servicing the Loan. At the time
the servicing was transferred to AHMSI, the Loan was current and was not in default.
On August 12, 2010, Plaintiff filed his Voluntary Chapter 7 Petition for Bankruptcy,
styled In re Bibolotti, Case No. 10-42702, in the United States Bankruptcy Court for the Eastern
District of Texas, Sherman Division (the “Bankruptcy Proceeding”) (Dkt. #53 at Ex. E-2).
Plaintiff contends he was current on his mortgage prior to his bankruptcy. In addition, Plaintiff
vacated the Property prior to moving to Texas and prior to filing bankruptcy and did not return.
Plaintiff scheduled the debt in connection with the Loan as due and owing to AHMSI, and
indicated in his statement of intentions that he wished to surrender the Property (Dkt. #53 at Ex.
E-2). On November 21, 2012, the Bankruptcy Court entered its Order granting Plaintiff’s
discharge in the Bankruptcy Proceeding. Id. at Ex. E-5.
Following Plaintiff’s discharge, Defendants sent numerous communications to Plaintiff.
On November 26, 2010, Defendant G. Moss & Associates, LLP (“Moss”) sent Plaintiff one letter
containing a notice of default and acceleration, and notice of opportunity to cure in connection
with the foreclosure. Id. at Ex. B-1. This is the only communication Plaintiff alleges Moss sent.
On November 26, 2010, December 28, 2010, and February 14, 2011, AHMSI and Deutsche sent
Plaintiff letters regarding a loan modification under the Home Affordable Modification Program
(“HAMP”) or other various “loss mitigation” options. Id. at Exs. A-6, A-9, C-2. On January 19,
2011, February 14, 2011, August 17, 2011, February 15, 2012, and August 17, 2012, AHMSI
and Deutsche sent Plaintiff letters regarding an interest rate adjustment with the Loan. Id. at Exs.
A-9, C-1. On January 25, 2011, AHMSI and Deutsche sent Plaintiff a letter regarding insurance
on the Property. Id. at Exs. A-9, C-3. In addition, on May 31, 2011, August 18, 2011, August

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29, 2011, and August 30, 2011, representatives from AHMSI attempted to call or called
Plaintiff.1 Id. at Ex. A-7. Finally, beginning in September 2010 and continuing through April of
2011, AHMSI reported Plaintiff’s default history in connection with the Loan.2
Defendants received notice of Plaintiff’s bankruptcy filing and participated in the
bankruptcy by filing a motion for relief from stay. Plaintiff did not initiate or invite any of the
post-discharge communications from Defendants.

In addition, Defendants had notice that

Plaintiff intended to surrender his property in bankruptcy.
On December 20, 2012, Defendants filed their Motion for Summary Judgment (Dkt.
#53). Plaintiff filed his response on January 18, 2013 (Dkt. #69). On February 8, 2013,
Defendants filed their reply (Dkt. #78).
On December 23, 2012, Plaintiff filed his Motion for Partial Summary Judgment
(Liability Only) (Dkt. #55). Moss filed its response on January 18, 2013 (Dkt. #63). Also on
January 18, 2013, AHMSI and Deutsche filed their response (Dkt. #64). Plaintiff filed his
replies to both responses on February 8, 2013 (Dkt. #74, #75).
On January 18, 2013, Defendants filed their Objections to, and Motion to Strike Portions
of, the Affidavit of Enzo Bibolotti (Dkt. #66). Plaintiff filed his response on February 8, 2013
(Dkt. #76). Defendants filed their reply on February 19, 2013 (Dkt. #83).
Also on January 18, 2013, Plaintiff filed his Motion to Strike the Affidavit of Cindi Ellis
(Dkt. #67). Defendants filed their reply on February 8, 2013 (Dkt. #77). Plaintiff filed his reply
on February 18, 2013 (Dkt. #82).
On March 25, 2013, Plaintiff filed a Motion to Supplement Summary Judgment Record
(Dkt. #85). That motion was granted by the Court on March 29, 2013 (Dkt. #86). On April 4,
1

These dates are listed according to Defendants’ statement of facts. Plaintiff contends that more calls were made at
different times. Defendants contend that only one phone call was actually completed to Plaintiff.
2
Defendants contend that such credit reporting activity ceased in August of 2011.
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2013, Defendants filed their Motion for Leave to Supplement Summary Judgment Briefing (Dkt.
#87), and additional attachments (Dkt. #88). That motion was granted by the Court on April 5,
2013 (Dkt. #89).
LEGAL STANDARD
The purpose of summary judgment is to isolate and dispose of factually unsupported
claims or defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). Summary judgment
is proper if the pleadings, the discovery and disclosure materials on file, and any affidavits
“[show] that there is no genuine issue as to any material fact and that the movant is entitled to
judgment as a matter of law.” FED. R. CIV. P. 56(a). A dispute about a material fact is genuine
“if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The trial court must resolve all
reasonable doubts in favor of the party opposing the motion for summary judgment. Casey
Enters., Inc. v. Am. Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981) (citations
omitted). The substantive law identifies which facts are material. Anderson, 477 U.S. at 248.
The party moving for summary judgment has the burden to show that there is no genuine
issue of material fact and that it is entitled to judgment as a matter of law. Id. at 247. If the
movant bears the burden of proof on a claim or defense on which it is moving for summary
judgment, it must come forward with evidence that establishes “beyond peradventure all of the
essential elements of the claim or defense.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th
Cir. 1986). But if the nonmovant bears the burden of proof, the movant may discharge its burden
by showing that there is an absence of evidence to support the nonmovant’s case. Celotex, 477
U.S. at 325; Byers v. Dallas Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000). Once the
movant has carried its burden, the nonmovant must “respond to the motion for summary

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judgment by setting forth particular facts indicating there is a genuine issue for trial.” Byers, 209
F.3d at 424 (citing Anderson, 477 U.S. at 248-49). The nonmovant must adduce affirmative
evidence. Anderson, 477 U.S. at 257. The Court must consider all of the evidence but refrain
from making any credibility determinations or weighing the evidence. See Turner v. Baylor
Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007).
ANALYSIS
A.

Defendants’ Objections to, and Motion to Strike Portions of, the Affidavit of Enzo
Bibolotti (Dkt. #66)
Defendants contend that the Affidavit of Enzo Bibolotti contains numerous inadmissible

and objectionable statements and exhibits. Defendants object to these statements and exhibits on
the following ground, and ask the Court to disregard them.
Defendants’ first objection is that Plaintiff’s credit reports and medical records are
inadmissible because they are not properly authenticated, and constitute inadmissible hearsay.
Attached to Plaintiff’s Affidavit as Exhibit A are copies of all the credit alerts Plaintiff received
from a credit monitoring service, True Credit (Dkt. #55 at Ex. A). Attached as Exhibit B are
copies of Plaintiff’s credit reports dated September 4, 2009, October 10, 2010, and March 30,
2012, obtained through True Credit. Id. at Ex. B. Finally, Attached as Exhibit C are copies of
Plaintiff’s credit scores dated September 4, 2009, October 10, 2010, and March 30, 2012. Id. at
Ex. C.
Federal Rule of Evidence 901 requires that a proponent of an item of evidence must
produce evidence sufficient to support a finding that the item is what the proponent claims it is.
Private web-sites, however, are not self-authenticating. See Mendoza v. Detail Solutions, LLC,
No. 3:10-CV-2436-G, 2012 WL 6115947, at *1 (N.D. Tex. Dec. 10, 2012) (rejecting
unauthenticated internet printouts offered in support of summary judgment because the materials
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did not comply with Federal Rule of Evidence 901); see also Fraserside IP LLC v. Netvertising,
Ltd., No. C11-3034-MWB, 2012 WL 4762125, at *11 n.9 (N.D. Iowa Oct. 5, 2012). An item of
evidence may be authenticated in a variety of ways, for example, with testimony of a witness
with knowledge of the website or the manner in which the reports were created. In this case,
Plaintiff has made no attempt to properly authenticate these documents, and thus, the Court finds
they are “of dubious evidentiary value, because they are unaccompanied by any extrinsic
evidence of authenticity (such as an affidavit describing how the exhibits were put together).” In
re Mahoney, 369 B.R. 579, 593 (W.D. Tex. 2007). Therefore, Defendants’ objection number
one to Exhibits A, B, and C of Plaintiff’s partial motion for summary judgment is SUSTAINED,
and the exhibits will be struck from the summary judgment record. However, the Court finds no
need to strike the statements in paragraph 10 of Plaintiff’s affidavit on this basis. To the extent
Defendants object to paragraph 10 of Plaintiff’s affidavit, the objection is OVERRULED.
Defendants also assert that the medical records attached to Plaintiff’s affidavit as Exhibit
H are inadmissible (Dkt. #55 at Ex. H). Medical records constitute hearsay, and are inadmissible
unless properly excepted under the business records exception. FED. R. EVID. 803(6). The
medical records are not properly submitted as business records. In addition, the medical records
in Exhibit H are not certified copies, and are not authenticated with an affidavit under Federal
Rule of Evidence 901. Therefore, Defendants’ objection to Exhibit H is SUSTAINED, and
Exhibit H will be struck from the summary judgment record.

However, the Court finds

Defendants’ objections to the testimony of Plaintiff contained in paragraph 16 of the affidavit are
OVERRULED. Plaintiff may testify to his own medical issues because it is within his own
personal knowledge, and it is relevant to determining whether Plaintiff suffered an injury in this
case.

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Next, Defendants object to a number of statements contained in Plaintiff’s affidavit
stating that Plaintiff lacks personal knowledge to testify “regarding Defendants’ alleged motive
or the reasons for their actions and communications” (Dkt. #66 at 4). However, the Court finds
these statements contained in Plaintiff’s affidavit are within his personal knowledge, and
Plaintiff is entitled to testify regarding the fact that his credit reports reflected a debt he asserts
was not owed, his interpretation of the letters sent to him by Defendants, the content of the calls
he received from the call center, and his medical issues. All of these matters are clearly within
the personal knowledge of Plaintiff, and thus, Defendants’ objection number two is
OVERRULED.
Next, Defendants object to the affidavit of Plaintiff as a sham affidavit. Specifically,
Defendants contend that two statements made by Plaintiff in his affidavit contradict his prior
testimony. A “nonmovant cannot defeat a motion for summary judgment by submitting an
affidavit which contradicts, without explanation, his previous testimony.”

Quicksilver

Resources, Inc. v. Eagle Drilling, LLC, No. H-08-868, 2010 WL 4115397, at *1 (S.D. Tex. Oct.
19, 2010) (citation omitted). However, the two statements objected to by Defendants do not
contradict Plaintiff’s prior deposition testimony. In his affidavit, Plaintiff states, “Every time I
spoke with an AHMSI representative, they were trying to collect from me” (Dkt. #55 at Ex. 1, ¶
14). Defendants contend that this contradicts with Plaintiff’s prior testimony that he did not
remember the substance of the phone calls, the date of the phone calls, or the person he spoke
with, and Plaintiff could only remember that the AHMSI representative communicated to him
that he owed money (Dkt. #66 at 5). These two statements are entirely consistent with each
other. Further, during his deposition, Plaintiff stated that “all the phone calls were you owe

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money. You have to pay the money. That’s the basic language on these phone calls” (Dkt. #53
at Ex. D, 183:3-5). This statement reflects exactly what Plaintiff explains in his affidavit.
Defendants also object to Plaintiff’s statement that “In March of 2011, the stress of it all
overwhelmed me, and I was taken by ambulance to the hospital… To be clear, I am not saying
that the Defendants are or were the only source of stress in my life. However, they are definitely
a major contributor” (Dkt. #55 at Exhibit 1, ¶ 16). Defendants assert that Plaintiff testified at his
deposition that his separation, divorce, issues with children, his work and school schedule, and
his bankruptcy were the main contributors to his stress levels.

However, this assertion

mischaracterizes Plaintiff’s testimony. It is clear from the deposition transcript that Plaintiff had
many stressors in his life at that time. However, Plaintiff was not asked by counsel to list the
major contributors, and was not even asked if he would consider his problems with Defendants’
alleged debt collection activities a major contributor. Therefore, the Court finds this testimony is
not inconsistent, and thus, Defendants’ objection number 3 is OVERRULED.
Next, Defendants object to several statements in Plaintiff’s affidavit as conclusory,
impermissible legal conclusions, hearsay, or on the basis of the Best Evidence Rule. Defendants
object to many of Plaintiff’s statements arguing that they are improper legal conclusions;
however, the Court finds that Plaintiff’s affidavit does not contain legal conclusions, but rather,
Plaintiff’s statements reflect his state of mind at the time of bankruptcy, and his interpretation
and expectations regarding the bankruptcy discharge. Defendants also object on the basis of the
Best Evidence Rule; however, the Court finds that the documents referred to by Plaintiff are
already in evidence before the Court as attachments to either Plaintiff’s or Defendants’ briefs.
Therefore, the Court can review the documents as the best evidence of the statements they
contain. As to documents contained in Plaintiff’s Exhibit F bearing the heading of Citizens

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Property Insurance Corporation and Southern Fidelity Property and Casualty, the Court agrees
that these documents have not been properly authenticated or shown that they originated from
Defendants (Dtk. #55 at Ex. F, 419-439). Therefore, as to those specific documents, Defendants’
objection is SUSTAINED, and these pages will be struck from the summary judgment record.
All other objections contained within Defendants’ objection number four are OVERRULED.
Finally, Defendants object to the statements of fact in Plaintiff’s Motion relating to
Defendants’ policies and procedures, as well as the excerpts of deposition testimony that are
offered in support of these arguments. Defendants contend that they are irrelevant to Plaintiff’s
claims. The Court finds Defendants’ objection number five is OVERRULED.
Therefore, Defendants’ Objections to, and Motion to Strike Portions of, the Affidavit of
Enzo Bibolotti (Dkt. #66) is GRANTED IN PART and DENIED IN PART.
B. Plaintiff’s Motion to Strike Affidavit of Cindi Ellis (Dkt. #67)
Plaintiff objects to the Affidavit of Cindi Ellis attached to Defendants’ motion for
summary judgment as Exhibit A.

Specifically, Plaintiff contends that Ms. Ellis was not

disclosed to Plaintiff as a person with discoverable information that Defendants would rely on to
support its claims and defenses.
Federal Rule of Civil Procedure 26(a)(1)(A) requires a party to provide to the other
parties, “the name and, if known, the address and telephone number of each individual likely to
have discoverable information – along with the subjects of that information – that the disclosing
party may use to support its claims or defenses.” In addition, a party is under a duty to
supplement the disclosures if the party learns additional or corrective information that has not
otherwise been known to the other parties. FED. R. CIV. P. 26(e)(1). “If a party fails to provide
information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use

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that information or witness to supply evidence on a motion… unless the failure was substantially
justified or harmless.” FED. R. CIV. P. 37(c).
In their initial disclosures, Defendants designated only the “Custodian of Records and/or
Corporate Representatives” of AHMSI. The plain language of the rule clearly requires a party
to disclose the names of individuals with discoverable information. Thus, Defendants’ initial
disclosures did not comply with the requirements of Rule 26. Further, Defendants had a duty to
supplement their disclosures once they had knowledge that Ms. Ellis’ testimony would be
offered as a custodian of records with knowledge of the loan records and the documents offered
in support of the motion for summary judgment. There is nothing precluding Defendants from
having both Ms. Ellis and Ms. Lorraine Baggs (“Ms. Baggs”), AHMSI’s designated corporate
representative, testify regarding matters relevant to this case, provided they were both properly
disclosed to Plaintiff. In this case, Ms. Ellis was not properly disclosed.
Defendants argue that they were not required to designate a corporate representative
under Rule 26(a)(1)(i) in the first place because the testimony of Ms. Ellis was offered to
demonstrate why Plaintiff’s claims fail as a matter of law. Defendants contend that the rule only
requires disclosures of a witness that a party may use to support its claims or defenses. This
argument is nonsensical. Clearly, Defendants are using Ms. Ellis’ testimony in support of their
defenses to Plaintiff’s claims.
To determine whether the failure to disclose was harmless, the Court may consider “(1)
the importance of the evidence; (2) the prejudice to the opposing party of including the evidence;
(3) the possibility of curing such prejudice by granting a continuance; and (4) the explanation for
the party’s failure to disclose.” Tex. A & M Research Found. v. Magna Transp., Inc., 338 F.3d
394, 402 (5th Cir. 3003). As to the first factor, the Court finds that Ms. Ellis’ testimony is very

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important to the Defendants’ case because Ms. Ellis is the authenticating witness for a large
number of documents related to the loan records and documents offered in support of
Defendants’ motion for summary judgment. As to the second factor, the Court finds that
Plaintiff would not be prejudiced by allowing a majority of Ms. Ellis’ testimony. The loan
records were exchanged in discovery and most of Ms. Ellis’ testimony was known to Plaintiff.
However, Plaintiff complains specifically of Ms. Ellis’ testimony that is contrary to the
testimony of AHMSI’s corporate representative, Ms. Baggs. Plaintiff contends that he had no
way to know that Ms. Ellis would offer materially different testimony on the dates and number
of phone calls made to Plaintiff, and the extent of the credit reporting done by Defendants. The
Court agrees, and finds that there is substantial prejudice to Plaintiff as to these two areas of Ms.
Ellis’ testimony. Defendants contend that Plaintiff had notice of the Ms. Ellis’ affidavit on
December 20, 2012, the date that the summary judgment motion was filed, and argue that
Plaintiff had one month before the close of discovery to depose Ms. Ellis. However, the Court
finds this time period too short for Plaintiff to conduct a deposition, especially given the fact that
summary judgment motions had already been filed based on the previous testimony of Ms.
Baggs. Further, that one-month time frame included two major holidays – Christmas and the
New Year – which would have required a substantial burden on Plaintiff to accomplish another
deposition in such a short time and during a major holiday season. As for the third factor, the
availability of a continuance to cure the prejudice, the Court finds that a continuance is not
available to the parties at this late date in the proceedings. The summary judgment motions are
ripe for consideration, and the trial is scheduled for June 2013. Finally, as to the fourth factor,
the explanation for the failure to disclose, the Court finds that Defendants have offered no reason
why they failed to disclose Ms. Ellis, other than the fact that they are a large corporation with a

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lot of employees. The Court finds this explanation insufficient for failing to disclose Ms. Ellis
prior to the filing of their summary judgment motion.
Given the factors above, the Court finds that it will strike paragraph 9, except for the first
two sentences. The Court will also strike paragraph 10, except for the last sentence. The Court
will not strike the exhibits contained at A-7 and A-10, since Plaintiff does not assert that the
documents were not produced timely. Therefore, Plaintiff’s Motion to Strike the Affidavit of
Cindi Ellis (Dkt. #67) is GRANTED IN PART and DENIED IN PART.
C. Cross-Motions for Summary Judgment
Plaintiff alleges that Defendants violated the bankruptcy discharge, the Fair Debt
Collection Practices Act (“FDCPA”), the Texas Fair Debt Collection Act (“TDCA”), and the
Deceptive Trade Practices Act (“DTPA”). Both Plaintiff and Defendants move for summary
judgment on the basis that there are no disputed fact issues remaining between the parties. The
Court will address each of Plaintiff’s claims.
First, Plaintiff contends that Defendants violated the bankruptcy discharge injunction by
sending correspondence, making phone calls to Plaintiff, and continuously reporting his debt as
outstanding to credit reporting agencies. A discharge in bankruptcy “operates as an injunction
against the commencement or continuation of an action, the employment of process, or an act, to
collect, recover or offset any such debt as a personal liability of the debtor, whether or not
discharge of such debt is waived.” 11 U.S.C. § 524(a)(2). “[A] violation of the post-discharge
injunction may only be sanctioned through a proceeding for civil contempt.” In re Eastman, 419
B.R. 711, 725 (W.D. Tex. 2009) (citations omitted). In order to succeed on his claim for a
violation of the post-discharge injunction, Plaintiff must establish by clear and convincing
evidence that: (1) a court order was in effect; (2) the order required certain conduct by the

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respondent; and (3) the respondent failed to comply with the court’s order. See Whitcraft v.
Brown, 570 F.3d 268, 271-72 (5th Cir. 2009); see also Eastman, 419 B.R. at 725. Plaintiff must
also establish by clear and convincing evidence that Defendants: (1) took an action to collect a
debt; (2) the action was to collect the debt as a personal liability of the debtor; (3) Defendants
had knowledge of the discharge; and (4) Defendants continued the activity despite the discharge.
Eastman, 419 B.R. at 724-25. It is undisputed that there was a court order in effect from the
bankruptcy court. The order prohibits:
any attempt to collect from the debtor a debt that has been discharged. For
example, a creditor is not permitted to contact a debtor by mail, phone, or
otherwise, to file or continue a lawsuit, to attach wages or other property, or to
take any other action to collect a discharged debt from the debtor… However, a
creditor may have the right to enforce a valid lien, such as a mortgage or security
interest, against the debtor’s property after the bankruptcy, if that lien was not
avoided or eliminated in the bankruptcy case.
(Dkt. #53 at E-5). It is also undisputed that Defendants had knowledge of Plaintiff’s bankruptcy,
as well as the discharge injunction, and they continued the activities complained of, despite the
discharge. Thus, this case comes down to whether Defendants took an action to collect a debt as
a personal liability of the debtor, as opposed to acting on their right to enforce a valid lien against
the debtor’s property, in violation of the bankruptcy court’s discharge order. It appears that
although this issue has been considered by many courts, “few clear rules emerge.” In re
Mahoney, 368 B.R. 579, 584 (W.D. Tex. 2007).
As an initial matter, the Court notes that the bankruptcy discharge does not eliminate the
existence of a debt. “Fundamentally, a discharge merely releases the debtor from personal
liability on the discharge debt; when a creditor holds a mortgage lien or other interest to secure
the debt, the creditor’s rights in collateral, such as foreclosure rights, survive or pass through
bankruptcy.” In re Ruess, No. DT-07-05279, 2011 WL 1522333, at *2 (Bankr. W.D. Mich.

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April 12, 2011); see also Johnson v. Home State Bank, 501 U.S. 78, 84 (1991) (liens, unless
avoided, pass through bankruptcy unaffected). Thus, upon discharge, “it is only a debtor’s
personal obligation to pay the debt that is effectively extinguished; the debt itself remains.”
Mahoney, 368 B.R. at 585 (citation omitted).
In addition, the Bankruptcy Code provides an exception to the discharge injunction for:
[A]n act by a creditor that is the holder of a secured claim, if(1) such creditor retains a security interest in real property that is the
principal residence of the debtor;
(2) such act is in the ordinary course of business between the creditor and
the debtor; and
(3) such act is limited to seeking or obtaining periodic payments
associated with a valid security interest in lieu of pursuit of in rem relief to
enforce the lien.
11 U.S.C. 524(j).

Defendants contend that their actions fall within this exception to the

discharge injunction because Plaintiff obtained the Loan in connection with the Property, which
was his principal residence at the time he obtained the Loan, the communications were sent in
the ordinary course of business of servicing of the Loan, and the communications offered
Plaintiff an opportunity to cure or engage in loss mitigation services if he intended to retain the
Property.
Plaintiff contends that this provision is not applicable to Defendants because the Property
is not Plaintiff’s principal residence, and was not his principal residence at the time the
bankruptcy was filed and the discharge injunction was entered. Plaintiff argues that the principal
residence of the debtor should be determined at the time of bankruptcy; otherwise, Defendants
would be able to circumvent the restrictions of the discharge injunction. Defendants argue that
whether the principal residence of the debtor is determined at the time the loan agreement is
entered into. In support of this assertion Defendants cite several cases that construe a different

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provision of the Bankruptcy Code, 11 U.S.C. § 1322(b)(2).

3

This provision refers to the

contents of the plan in a Chapter 13 bankruptcy case, and provides that the plan may “modify the
rights of holders of secured claims, other than a claim secured by only a security interest in real
property that is the debtor’s principal residence, or of holders of unsecured claims, or leave
unaffected the rights of holders of any class of claims.” 11 U.S.C. § 1322(b)(2). In the cases
cited by Defendants, the courts found that the debtor’s principal residence should be determined
at the time the loan agreement was entered into because it would support the interest of a secured
creditor by “assur[ing] that its rights under the subject mortgage could not be modified through
bifurcation in a future Chapter 13 case involving its borrowers.” In re Smart, 214 B.R. 63, 68
(Bankr. D. Conn. 1997). That rationale is not applicable to the statute presently before the Court,
and the Court finds Defendants’ cited case law inapplicable to this situation in which we have a
Chapter 7 bankruptcy with no modification plan at issue.
Neither party presents the Court with case law regarding this issue. Defendants argue
that the phrase “real property that is the principal residence of the debtor,” means the principal
residence of the debtor as of the date the loan agreement was entered into. Plaintiff contends that
Defendants interpretation is inconsistent with the purposes of the discharge injunction and the
legislative history. The Court agrees. The purpose of the injunction
is to give complete effect to the discharge and to eliminate any doubt concerning
the effect of the discharge as a total prohibition on debt collection efforts… The
change is… intended to insure that once a debt is discharged, the debtor will not
be pressured in any way to repay it. In effect, the discharge extinguishes the debt,
and creditors may not attempt to avoid that…
H. Rept. No. 95-595 to accompany H.R. 8200, 95th Cong., 1st Sess. (1977), at pp. 365-66. Given
the purposes of the discharge injunction, the exception provided in 11 U.S.C. § 524(j) makes
3

Defendants cite In re Smart, 214 B.R. 63 (Bankr. D. Conn. 1997) (citing In re Nobelman, 508 U.S. 324 (1993)),
U.S. Dep’t of Agr. v. Jackson, No. 5:05-CV-20(CAR), 2005 WL 1563529, at *3 (M.D. Ga. 2005), and In re Bulson,
327 B.R. 830, 846 (Bankr. W.D. Mich. 2005) in support of this proposition.
15

sense only if the real property is the principal residence of the debtor at the time of the
bankruptcy. The exception would allow a secured creditor to remain in contact with a debtor
who was living in the real property as his principal residence, send communications in the
regular course of business, and explore the possibility of the debtor retaining his principal
residence – i.e., collecting payments in lieu of foreclosure. However, for the debtor who no
longer uses the real property as his principal residence at the time of bankruptcy, even if was his
principal residence at the time he entered the loan agreement, there is no need for the secured
creditor to continue communicating with the debtor regarding retaining the property or
negotiating some type of modification in the ordinary course of business between the creditor
and debtor. Therefore, the Court finds that, at least in the context of this provision, “real
property that is the principal residence of the debtor,” means the property that is the principal
residence of the debtor at the time of bankruptcy. It is undisputed that Plaintiff vacated the
Property at issue in this case prior to filing his bankruptcy petition, and therefore, Defendants are
unable to claim that this exception applies to their actions.
The parties dispute whether the Court should look at each action taken by Defendants in
isolation, or review the totality of the circumstances together to determine whether the discharge
injunction was violated. The Court finds that it is appropriate to look at both the individual act
as well as the overall fact situation. In every case cited by both Plaintiff and Defendants, courts
across the nation have considered a variety of factors in determining whether the discharge
injunction was violated. For example, the court in In re Mahoney, used a “fanciful” example to
illustrate that an act, such as sacrificing a goat, could constitute debt collection if it “is part of a
larger tactic to collect a debt.” 368 B.R. at 589. The court found that credit reporting activity
alone did not constitute debt collection, but perhaps it could if it was considered along with other

16

collection activities. Id. The court in In re Garske, 287 B.R. 537, 545 (B.A.P. 9th Cir. 2002),
considered the nature of the fourteen (14) phone calls made to the plaintiff in connection with the
fact that the plaintiff wanted to retain her property, and that the creditor merely informed the
plaintiff that if she wanted to retain the property she had to make payments. The court in In re
Burch, No. C/A 09-07802-DD, 2011 WL 3207083 (D. South Carolina July 26, 2011), considered
all of the actions taken by defendant, including correspondence requesting payment, offering
opportunities for a loan modification, and repeated telephone calls harassing the plaintiff and his
parents for payment of the debt. There are many other courts that considered a variety of factors,
such as the specific plaintiff, circumstances that could make a plaintiff more or less susceptible
to repeated contacts with a defendant, the total conduct of defendants, and the coercive or
harassing effect of the conduct of defendants. Thus, the Court finds it would be remiss if it failed
to consider the facts, as they pertain to this specific Plaintiff, as well as the acts committed by
Defendants, and the overall effect such contacts may have had on Plaintiff.
Among the first of the communications sent to Plaintiff is a notice of default and intent to
accelerate letter sent by Moss (Dkt. #53 at Ex. B-1). The letter contains formal notice that
Plaintiff is in default under the terms and conditions of the Note and Security Instrument. The
letter also gives Plaintiff an opportunity to cure the default, notice of the intent to accelerate, and
notice of AHMSI’s intent to foreclose on the Property.

The plain language of this letter

demonstrates that it is an act to enforce the secured creditor’s foreclosure rights, and is not an act
to collect the debt as a personal liability of Plaintiff. Plaintiff complains of this letter as
threatening acceleration, and requiring Plaintiff to tender payment to Defendants as an act to
collect from Plaintiff personally. Plaintiff contends that this letter could not have been an in rem
action against the Property, since the Property could not pay Defendants any money, only

17

Plaintiff could. However, the Court disagrees. This letter merely serves as notice to Plaintiff of
the amount of default, and the opportunity to cure prior to acceleration, should he desire to do so.
Otherwise, the letter informs Plaintiff that Defendants intend to foreclose on the Property. This
letter is permissible under the discharge injunction, and appears to be precisely the type of
communication the discharge injunction allows secured creditors to use in order to enforce their
rights against a property in rem, rather than personally against a debtor. See, e.g., In re Reuss,
No. DT-07-05279, 2011 WL 1522333, at *2 (Bankr. W.D. Mich. April 12, 2011); Palmer v.
Wells Fargo, N.A., No. CIV S-11-1786-KJM-CMK, 2011 WL 5838365, at *2-3 (E.D. Calif.
Nov. 21, 2011) (notice of default and institution of foreclosure proceedings does not violate the
discharge).

Therefore, the Court finds that this is not an act to collect a debt as a personal

liability of Plaintiff, and not a violation of the discharge injunction.4
The evidence indicates that Defendants AHMSI and Deutsche contacted or attempted to
contact Plaintiff fifteen (15) times for various reasons following the discharge injunction, either
by phone or by mail. Defendants sent one letter regarding insurance to Plaintiff, and a number of
letters informing Plaintiff that the interest rate on the Adjustable Rate Mortgage had already
changed or was going to change (“ARM Notices”). The insurance letter, dated January 25, 2011,
states:
Please be advised that [AHMSI] has recently received notification from our
property inspection company that your property appears to be vacant. AHMSI is
obligated to advise your insurance company of these findings.
(Dkt. #53 at Ex. C-3). There is no demand for payment, or request that any action be taken by
Plaintiff at all. Therefore, the Court finds that this insurance letter does not violate the discharge
injunction because it is not an act to collect a debt from Plaintiff personally.

4

Because this is the only act Plaintiff alleges Moss took that violated the discharge injunction, the Court finds that
Plaintiff’s claims against Moss for violating the discharge injunction are dismissed.
18

The ARM Notices inform Plaintiff generally that the “loan will undergo an interest rate
adjustment” (Dkt. #53 at Ex. C-1). The ARM Notices provide a date, and inform Plaintiff that a
new payment amount will be calculated based on the new interest rate. The first ARM Notice,
dated January 19, 2011, contains only information regarding the new interest rate, and the Court
finds that this ARM Notice does not violate the discharge injunction. However, the remaining
notices, dated February 14, 2011, August 17, 2011, February 15, 2012, August 17, 2012, include
additional information, such as payment and outstanding balance information. For example, the
ARM Notice dated February 14, 2011, informs Plaintiff that “the new total monthly payment,
including amounts required for escrow if any, will be $1,806.55,” and further states:
Effective with the installments due on 04-01-11, the adjusted principal and
interest payment will be $1,539.71. Your outstanding principal balance is
$192,650.01. The projected principal balance on which the adjusted principal and
interest payment is based is $191,213.93.
(Dkt. #53 at C-1 at 1408). Finally, the ARM Notice contains the following statement:
[AHMSI] is a debt collector attempting to collect a debt. Any information
obtained will be used for that purpose. However, in the event the debt has been
discharged pursuant to or the addressee or recipient is under the protection of
federal bankruptcy law, this communication is solely for informational purposes
and is not an attempt to collect a debt.
Id. at 1409. The other ARM Notices contain the same or similar language reflecting the interest
rate change, the date of the next installment due, the amount of the payment, the adjusted
principal and interest payment, the outstanding principal balance, and the projected principal
balance.
Further, Plaintiff received two letters regarding the HAMP program. These letters, which
the Court would describe as packets, since they included numerous forms for the borrower to fill
out in order to begin the HAMP process, inform the borrower that AHMSI was willing to work
with Plaintiff to make his mortgage payment affordable, and offering to help him through the
19

HAMP program. Defendants assert that these letters were sent solely for informational purposes.
Interestingly enough, it is undisputed by the parties that Plaintiff was not ever eligible for
HAMP, and would not have qualified had he been interested.
Plaintiff also received a letter on February 14, 2011, detailing various “workout options.”
Again, supposedly for informational purposes, the letter states “[AHMSI] would like to
understand what has prevented you from making your loan payments as required by your loan
documents.”5 The letter then lists out the “possible solutions” that AHMSI can offer that “could
potentially help you avoid a foreclosure sale and bring your loan current.” The letter gives
Plaintiff the following options: (1) repayment plan; (2) loan modification; (3) short sale or preforeclosure sale; and (4) deed-in-lieu of foreclosure (Dkt. #53 at Ex. A-6).6
Defendants also contacted Plaintiff via telephone. The parties dispute the number of
times Plaintiff was contacted. Plaintiff testified at deposition that he received several phone calls
from AHMSI requesting payment for the debt (Dkt. #53 at Ex. D, 181:14-15). Plaintiff testified
that each caller informed him that he owed money, his payments were not up-to-date, and he had
to pay. Id. at 183:8-14. Plaintiff also testified that he told them about the bankruptcy discharge,
and that they needed to contact his attorney. When questioned by counsel for Defendants,
Plaintiff stated he could not remember the dates, times, specific amount of phone calls, or with
whom he spoke. Id. at 180:7-187:22. Defendants’ corporate representative, Ms. Baggs, testified
that Defendants attempted to contact Plaintiff six times after August 12, 2010 (Dkt. #55 at Ex. 3,
11:3-10). She also testified that the purpose of the calls was for “loss mitigation purposes,”
which she clarified as “communicat[ing] to the borrower the options for potential working out
5

This statement appears in the letter despite the fact that it was sent three (3) months after Plaintiff’s discharge in
bankruptcy, of which it is undisputed that Defendants had knowledge.
6
The Court notes that this letter is dated the same day as one of the ARM Notices, which, as stated previously,
inform Plaintiff of his current payment amount, date the payment is due, outstanding balance, and other payment
information related to the loan.
20

modification for the loan or for the Home Affordable Mortgage program and/or possible options
of short sale or deed in lieu of foreclosure.” Id. at 12:14-23. AHMSI’s records indicate that it
attempted to contact Plaintiff five times by telephone (Dkt. #53 at Ex. A-7). The records indicate
that four times the phone was either disconnected, met with “dead air,” or no answer. Id. One
phone call was completed on August 30, 2011. Id.
Finally, Defendants continuously reported Plaintiff’s credit to credit bureaus as
delinquent, beginning in December of 2010 and continuing every month until April of 2012
(Dkt. #53 at Ex. A-10).
The Court finds that the four ARM Notices, two HAMP packets, one “workout options”
letter, one phone call to Plaintiff, and Defendants continuous credit reporting to be acts to collect
a debt in violation of the discharge injunction. First, like any bill or statement sent to a debtor
from a creditor, the ARM Notices contain the payment due date, the amount of payment, the
outstanding balance, and the interest rate used to calculate the payment amount. In addition, the
letters specifically inform Plaintiff that the installments are due and owing, and specifies the
amount of the outstanding principal balance. Defendants assert that these letters were sent to
Plaintiff in the course of servicing the loan, and that they were required to send such letters by
the terms of the Loan documents. Defendants further contend that these letters do not contain a
demand for payment, and contain effective disclaimer language.

The Court finds these

arguments unpersuasive. Although, Defendants are correct that they were required by the terms
of the Loan documents to send notice of the new interest rate and payment amount, the other
information provided by Defendants in the letters was not required by the Loan documents. This
additional information and the structure of the letter transforms it from an informational letter
sent to service the Loan into a letter intended to coerce Plaintiff into entering into a loan

21

modification or being repaying his Loan. It is disingenuous for Defendants to argue that the
letters do not contain a demand for payment, when, in fact, the ARM Notices contain everything
a billing statement or invoice would contain. True, the notices do not say the magic words
“remit payment to” or “mail your check,” or some other final statement regarding payment.
However, everything else in the letters constitutes a demand for payment, and the Court will
consider it as such.
The Court also considers that fact that several of these ARM Notices that demand
payment and loan modification or “workout options” were sent to Plaintiff on the same day. It
appears that the intent of Defendants was to demonstrate to Plaintiff how much was owed on the
outstanding principal balance, what the new monthly payment amount would be, and then advise
him of various loan modifications or other repayment options were available to him. In fact,
Plaintiff had no remaining personal obligation on the Loan, and it was improper for Defendants
to continue corresponding with him. The Court finds that these tactics were improperly coercive
and could have induced Plaintiff to begin repaying on the Loan, when in fact he had no
obligation to do so.
Defendants also argue that the ARM Notices, as well as the HAMP packets and February
14, 2011 loss mitigation letter, were sent for informational purposes. However, the Court
questions what “information” Defendants were hoping to give Plaintiff. In bankruptcy, Plaintiff
announced his intent to surrender the Property in his statement of intentions.7 It is undisputed
that Defendants were aware of this. Further, Defendants were aware that Plaintiff had vacated
the Property, and was no longer residing there. In fact, Defendants obtained Plaintiff’s new
7

Defendants contend that Plaintiff’s statement of intentions is irrelevant because it does not alter the debtor’s or
trustee’s rights with regard to the Property (Dkt. #53 at 21). While this may be true, the Court finds the statement of
intentions relevant only to the extent that it put Defendants on notice of Plaintiff’s intentions as to the Property.
Clearly Plaintiff was not intending to repay the loan, enter into a loan modification, or any other relationship with
Defendants. Plaintiff intended to surrender the Property in bankruptcy, and Defendants clearly had notice of this
intention.
22

address in Dallas, Texas, and were communicating with him at that address. Finally, Plaintiff
never requested any information regarding a loan modification or any other repayment plan, and
never communicated with Defendants in response to their constant correspondence. In fact,
Defendants’ intent is illuminated in the testimony by Ms. Baggs, Defendants’ corporate
representative, who explained that this information is given in the event that “they have changed
their mind and they decide they want to continue to make payments on the property” (Dkt. #55 at
Ex. 3, 20:9-11). The Court finds that it is an impermissible violation of the discharge injunction
to continuously send information regarding loan modifications, possible repayment plans, or
other so-called “informational” letters with the underlying intent that Plaintiff would begin
repaying the debt as a personal liability.
All of the correspondence sent to Plaintiff by Defendants contains the following
language:
[AHMSI] is a debt collector attempting to collect a debt. Any information
obtained will be used for that purpose. However, in the event the debt has been
discharged pursuant to or the addressee or recipient is under the protection of
federal bankruptcy law, this communication is solely for informational purposes
and is not an attempt to collect a debt.
Defendants contend that this language is highly persuasive evidence that Defendants did not
violate the discharge injunction. In In re Bruce, No. 00-50556 C-7, 2000 WL 33673773, at *4
(Bankr. M.D.N.C. Nov. 7, 2000), the bankruptcy court found a mortgage company in civil
contempt for knowingly and willfully violating the discharge injunction by continuing to send
the debtor requests for payment and telephoning the debtor at his place of employment. “In [In
re Bruce], after the mortgage company (1) received notice that the [d]ebtor vacated the property,
(2) obtained relief from stay to proceed with foreclosure, and (3) received notice of the debtor’s
discharge, it mailed mortgage loan statements to the debtor.” In re Brown, 481 B.R. 351, 360

23

(Bankr. W.D. Pa. 2012). The statements the debtor received contained disclaimer language
acknowledging the bankruptcy case and indicating that they were not demands for payment, and
included payment coupons showing current payments due and the current due dates. In addition,
the lender was made aware that the debtor moved, it continued to send notices offering the
debtor assistance to keep him home. Id. However, other courts have held that disclaimer
language that was in a “conspicuously outlined box” on a statement was not an attempt to collect
a debt. See In re Schatz, 452 B.R. 544, 549 (Bankr. M.D. Pa. 2012). The court found it
significant that the statement did not indicate the amount as being past due, did not demand
immediate payment, and did not threaten consequences for the debtor’s failure to act. Id.
In the present case, Defendants (1) had knowledge that Plaintiff vacated the Property, and
have had that knowledge for a significant period of time; (2) obtained relief from the bankruptcy
stay to proceed with foreclosure; and (3) received notice of the debtor’s discharge. Further,
Defendants sent multiple communications to Plaintiff requesting that he consider a loan
modification, informing him of the outstanding balance of the loan and payment dates, and
advising him that there were a variety of “workout options” available should he “change his
mind.”

Although the letters do contain the disclaimer language, the Court finds that this

language is not conspicuously located, in fact, the language is located at the end of the letter on
the second page, and is not distinguishable in any way from the other text contained in the letter.
Further, the some of the letters indicate that there is a past due amount, an outstanding balance,
and the payment dates. The disclaimer language basically amounts to an admission that it is an
attempt to collect a debt, unless, of course, the debtor is under the protection of federal
bankruptcy law. In that case, the letter is merely for informational purposes. Thus, the Court

24

finds this language is insufficient to make these communications permissible communications
under the discharge injunction.
Plaintiff also asserts that during this time he received multiple phone calls from
Defendants attempting to collect money. As stated above, Defendants dispute this fact. Ms.
Baggs testified that Defendants called Plaintiff approximately five (5) or six (6) times to discuss
loss mitigation options. In addition, Defendants’ records show that while they attempted to
contact Plaintiff several times, only one phone call on March 31, 2011, reached a person. The
parties dispute whether this call was for loss mitigation or collection purposes. However, the
Court finds that under these circumstances, even if the call was for loss mitigation purposes, the
phone call violated the discharge injunction. Plaintiff was, quite frankly, bombarded by “loss
mitigation” information. To be clear, this information would not have mitigated Plaintiff’s loss
in any way, it was purely for the benefit of Defendants. Based on the amount of communication,
the Court can only assume that Defendants were attempting to collect a debt from Plaintiff as a
personal liability, and there was no other reason for the repeated communications.
Plaintiff also asserts that Defendants continuously reported his debt to credit bureaus as
delinquent beginning on January 5, 2011, and continuing every month until April 5, 2012. The
Court agrees that “the mere reporting of credit information about a debtor vel non is not an ‘act’
to collect a discharged debt within the meaning of the statute, unless the evidence shows… that
there is a linkage between the act of reporting and the collection or recovery of the discharged
debt.” In re Mahoney, 368 B.R. at 584. In other words, “[t]he act of credit reporting could be
part of a larger course of conduct that, taken together, might constitute an act likely to be
effective to collect a debt.” Id. at 589. The Court finds that in this case, the continuous credit
reporting, combined with the constant communications regarding “loss mitigation” options, and

25

the ARM Notices that continued to remind Plaintiff of the changing interest rate, payment
amount, payment due date, and the outstanding principal balance due, that this is a larger course
of conduct intended by Defendants to coerce Plaintiff into “voluntarily” making payments or
entering into a loan modification or other repayment plan with Defendants. In addition, the
Court finds that these acts are likely effective as measures to collect on the debt. It is clear from
the testimony of Plaintiff that he made all payments up until the time of bankruptcy on the Loan.
Plaintiff struggled after filing bankruptcy with improving his credit score, and the
communications sent by Defendants could have coerced Plaintiff into entering into a new
relationship with Defendants if he believed that it would help improve his credit and get him
back on his feet. Therefore, the Court finds that Defendants’ continuous reporting of Plaintiff’s
debt as delinquent is also a violation of the bankruptcy discharge.
Defendants argue that the Court should not find in favor of Plaintiff because it is contrary
to the law, the Bankruptcy Code, and has dangerous policy implications (Dkt. #64 at 18).
Defendants contend that if the Court finds in favor of Plaintiff, it would eliminate a creditor’s
ability to service a loan or pursue its rights in rem in connection with a lien that survives
bankruptcy. Id. In addition, Defendants argue that a finding in favor of Plaintiff would prohibit
a lender from communicating with a borrower at all. However, this is not accurate. The Court in
no way is precluding Defendants from sending communications regarding servicing a loan or
pursuing its rights in rem, in a way that does not violate the bankruptcy discharge injunction. In
fact, the Court found that some of Defendants’ communications were permissible. However,
Defendants should be more cautious about the types of correspondence, the contents of the
correspondence, phone calls, and number of times they report misleading credit information
regarding a debtor following the discharge injunction. Defendants contend that it was necessary

26

for them to send information to Plaintiff because it was unaware what the intentions of both
Plaintiff and his ex-wife were as to the Property. The Court finds this argument unpersuasive.
Plaintiff clearly surrendered the Property in bankruptcy, the home was vacant, and the
correspondence sent to Plaintiff was addressed to both of them and sent to his address. Further,
Plaintiff and his ex-wife were clearly in default and the Property was vacant for a significant
period of time. It does not appear that Defendants ever sent Plaintiff or his ex-wife a letter
asking them what their intentions were, and the Court finds that it is disingenuous for Defendants
to argue that their post-discharge communications were solely for the purpose of finding out
what the borrowers’ intentions were for the Property. Defendants could have foreclosed on the
Property and exercised their in rem rights. It absolutely does not matter what either Plaintiff or
his ex-wife’s intentions were as to the Property. Finally, Defendants argue that this will prevent
lenders from offering information about loan modifications to borrowers in bankruptcy.
However, this statement is also inaccurate. The Court’s findings are based entirely on the facts
and circumstances of this case. If Defendants are correct in stating that many debtors do wish to
receive information about loan modifications in bankruptcy, there is nothing in the order
prohibiting Defendants from providing a debtor with this information. However, there are a few
facts in this case, which makes it impermissible for Defendants to send communications to this
Plaintiff regarding loan modifications. First, Plaintiff did not request this information. Second,
the Property had been vacant for a significant period of time, and Defendants had knowledge of
the vacancy. Third, the sheer number of “loss mitigation” or loan modification correspondence
sent in this case, combined with the ARM Notices that basically amounted to a demand for
payment. Fourth, Plaintiff never did and would never have qualified for a loan modification.
These facts lead the Court to the conclusion that there was simply no reason for Defendants to

27

send these documents to this Plaintiff. It certainly does not preclude Defendants from contacting
other debtors in bankruptcy under a different fact situation.
In conclusion, for the above-mentioned reasons, the Court finds that Defendants violated
the post-discharge injunction by sending ARM Notices that amounted to an act to collect a debt,
repeated “loss mitigation” letters, a phone call discussing “loss mitigation,” and continuing in
repeated and misleading credit reporting activity.

The Court will now turn to Plaintiff’s

remaining claims.
Plaintiff alleges that Defendants’ post-discharge communications violated the FDCPA.
Defendants move for summary judgment on these claims, asserting that they are not “debt
collectors” as defined by the FDCPA. “Only parties who meet the statutory definition of debt
collector are subject to civil liability under the FDCPA.” Vick v. NCO Fin. Sys., Inc., No. 2:09CV-114-TWJ-CE, 2011 WL 1193027, at *2 (E.D. Tex. Mar. 7, 2011). The FDCPA’s definition
of debt collector “does not include the consumer’s creditors, a mortgage servicing company, or
an assignee of a debt, as long as the debt was not in default at the time it was assigned.” Perry v.
Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir.), modified on other grounds, 761 F.2d 237 (5th
Cir. 1985). In the present case, AHMSI is the mortgage servicing company, and the Loan was
not in default at the time the servicing was transferred to AHMSI. Therefore, AHMSI is not a
debt collector for purposes of the FDCPA. Further, Deutsche is the creditor in connection with
the Loan, and thus, is not a debt collector for the purposes of the FDCPA. Therefore, the Court
finds Plaintiff’s claims under the FDCPA against AHMSI and Deutsche should be dismissed
since neither Defendant is a debt collector.
Defendant Moss was retained for the purpose of sending the foreclosure notice of default
and acceleration, and Moss did not send Plaintiff any other communications. The Court finds

28

that this is not debt collection activity under the FDCPA. See, e.g., Brown v. Morris, 243 F.
App’x 31, 35 (5th Cir. 2007) (affirming jury’s determination that initiating foreclosure did not
constitute debt collection); Sweet v. Wachovia Bank and Trust Co., N.A., No. 3:03-CV-1212-R,
2004 WL 1238180, at *2 (N.D. Tex. Feb. 26, 2004) (foreclosure proceedings are not debt
collection under the FDCPA); Bittinger v. Wells Fargo Bank, NA, 744 F. Supp. 2d 619, 626
(S.D. Tex. 2010) (“The activity of foreclosing on a property pursuant to a deed of trust is not the
collection of debt within the meaning of the FDCPA.”).

Therefore, the Court finds that

Plaintiff’s claims under the FDCPA against Moss should be dismissed because sending the
notice of default and acceleration letter is not debt collection under the FDCPA.
Defendants assert that Plaintiff’s claims under the Texas Fair Debt Collection Practices
Act (“TDCA”) fail as a matter of law because Defendants have not violated the Act. TEX. FIN.
CODE § 392.001, et seq.
Plaintiff asserts violations of the Texas Finance Code, Sections 392.304(4),
392.304(a)(4), 392.304(a)(6), 392.304(a)(8) and (19).

Plaintiff contends that violating the

discharge injunction is a per se violation of the TDCA, and that Defendants’ continuous “false
derogatory” reporting of Plaintiff’s delinquency to the credit bureaus violated the TDCA.
The TDCA prohibits debt collectors from using threats, coercion, or other wrongful
practices in the collection of consumer debts. See Brown v. Oaklawn Bank, 718 S.W.2d 678, 680
(Tex. 1986). In order to state a claim under the TDCA, Plaintiff must show: (1) the debt at issue
is a consumer debt; (2) Defendants are debt collectors within the meaning of the TDCA; (3)
Defendants committed a wrongful act in violation of the TDCA; (4) the wrongful act was
committed against Plaintiff; and (5) Plaintiff was injured as a result of Defendants’ wrongful act.
See TEX. FIN. CODE § 392.001, et seq. The TDCA does not prevent a debt collector from

29

“exercising or threatening to exercise a statutory or contractual right of seizure, repossession, or
sale that does not require court proceedings.” TEX. FIN. CODE § 392.301(b)(3); Sweet, 2004 WL
1238180, at *3.
There is no evidence that Defendants threatened to take an action prohibited by law.
TEX. FIN. CODE § 392.301(a)(8). There is also no evidence that Defendants failed to disclose the
name of the person for whom the debt was assigned or owed, that Defendants used a written
communication that failed to indicate clearly the name of the debt collector and the debt
collector’s street address, or that Defendants used a written communication that demands a
response to a place other than the debt collector’s or creditor’s street address. TEX. FIN. CODE §§
392.304(a)(4), 392.304(a)(6), 392.304(a)(7). In addition, Plaintiff has no evidence that
Defendants made repeated or continuous telephone calls. TEX. FIN. CODE § 392.302(4). The
only evidence in the record is that Defendants completed one phone call to Plaintiff. Therefore,
the Court finds that these sections cannot be the basis for a violation of the TDCA.
Section 392.304(a)(8) states, “in debt collection or obtaining information concerning a
consumer, a debt collector may not use a fraudulent, deceptive, or misleading representation
that… misrepresent[s] the character, extent, or amount of a consumer debt.” For a statement to
constitute a misrepresentation under the TDCA, Defendants must have made a false or
misleading assertion. Reynolds v. Sw. Bell Tel., L.P., No. 2-05-356-CV, 2006 WL 1791606, at
*7 (Tex. App. – Ft. Worth June 29, 2006, pet. denied). Plaintiff contends that Defendants’
continuous reporting of the Loan as delinquent to credit bureaus is a misleading assertion
regarding the character, extent, or amount of a consumer debt. It is undisputed that the Loan was
in default and Defendants did not misrepresent the amount of the debt. The statute requires that
the misrepresentation be made in debt collection or in obtaining information concerning a

30

consumer. TEX. FIN. CODE § 392.304(a)(8). However, as discussed above, credit reporting itself
is not debt collection and Defendants were not obtaining information concerning a consumer.
Therefore, the Court finds that the mere reporting of the debt to credit bureaus as delinquent is
not sufficient to support a claim for violating the TDCA.
Further, Plaintiff has no evidence that he suffered any injury as a result of the credit
reporting. Plaintiff contends that as a result of this activity he was rejected multiple times for a
car loan, and had an artificially lower credit score. However, this is not sufficient to show an
actual injury. The evidence reveals that Plaintiff did receive the car loan after multiple attempts
to obtain one, and has not alleged that his artificially lower credit score has prevented him from
obtaining any other type of loan. Thus, the Court finds that Plaintiff no evidence of actual
damages suffered as a result of Defendants credit reporting, and his claims against the
Defendants under the TDCA are dismissed.
Finally, Defendants move for summary judgment on Plaintiff’s claims under the DTPA
asserting that Plaintiff is not a consumer. Plaintiff does not respond to Defendants’ arguments
and does not move for summary judgment on this claim. The Court agrees that Plaintiff is not a
“consumer” as defined by the DTPA. To qualify as a consumer under the DTPA, a plaintiff
must (1) seek or acquire goods or services and (2) the goods or services purchased or leased must
form the basis of the complaint. Modelist v. Deutsche Bank Nat. Trust Co., No. H-05-1180,
2006 WL 2792196, at *7 (S.D. Tex. Aug. 25, 2006) (citing Sherman Simon Enters., Inc. v. Lorac
Serv. Corp., 724 S.W.2d 13, 14 (Tex. 1987)). In evaluating whether Plaintiff is a consumer
under the DTPA, the Court must look to the object of the transaction. TEX. BUS. & COM. CODE §
17.45; La Sara Grain Co. v. First Nat’l Bank of Mercedes, 673 S.W.2d 558, 567 (Tex. 1984). In
La Sara Gran Company, the Texas Supreme Court held that a lender may be subject to a DTPA

31

claim if the borrower’s “objective” was the purchase or lease of a good or service. La Sara
Grain Co., 73 S.W.2d at 567. However, a person whose objective is merely to borrow money is
not a consumer because the lending of money does not involve either the purchase or lease of a
good or service. Riverside Nat’l Bank v. Lewis, 603 S.W.2d 169, 173 (Tex. 1980).
In the present case, it is undisputed that Plaintiff’s claims arise out of a loan and do not
involve the purchase or lease of either goods or services. Plaintiff did not seek to purchase any
goods or services from Defendants. Therefore, Plaintiff is not a “consumer” with respect to the
Loan, and therefore, this claim must be dismissed as a matter of law.
CONCLUSION
Based on the foregoing, it is ORDERED that Defendants’ Objections to, and Motion to
Strike Portions of, the Affidavit of Enzo Bibolotti (Dkt. #66) is GRANTED IN PART and
DENIED IN PART, and Plaintiff’s Motion to Strike the Affidavit of Cindi Ellis (Dkt. #67) is
GRANTED IN PART and DENIED IN PART.
It is further ORDERED that Defendants’ Motion for Summary Judgment (Dkt. #53) is
GRANTED IN PART and DENIED IN PART and Plaintiff’s Motion for Partial Summary
Judgment (Liability Only) (Dkt. #55) is GRANTED IN PART and DENIED IN PART. The
Court finds that Defendants AHMSI and Deutsche violated the discharge injunction and are
found to be in civil contempt. The Court further finds that Plaintiff’s claims arising under the
FDCPA, TDCA, and DTPA are dismissed.
It is further ORDERED that within fourteen (14) days of this Order, Plaintiff shall file a
brief discussing an appropriate sanctions award. Similarly, within fourteen (14) days of the
filing of Plaintiff’s brief, Defendants may file a response. Within five (5) days of the filing of
Defendants’ response, Plaintiff may file a reply. Within five (5) days of the filing of Plaintiff’s

32

.
reply, Defendants may file a sur-reply. The Court will enter a separate judgment consistent with
this opinion.
IT IS SO ORDERED.

SIGNED this 15th day of May, 2013.

___________________________________
AMOS L. MAZZANT
UNITED STATES MAGISTRATE JUDGE

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