Verdecias v. BSI Financial Services Inc

Filing 123

DECISION AND ORDER signed by Magistrate Judge Nancy Joseph on 3/11/2025. IT IS HEREBY ORDERED that Verdecias' Motion to Alter Judgment (Docket # 118 ) is DENIED. IT IS FURTHER ORDERED that Verdecias has until 3/21/2025 to establish whether this Court has jurisdiction over his remaining state law claims. (cc: all counsel)(edr)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
LUIS C. VERDECIAS,
Plaintiff,
v.

Case No. 20-CV-1776

BSI FINANCIAL SERVICES,
Defendant.
DECISION AND ORDER ON VERDECIAS’ RULE 59 MOTION
Luis Verdecias filed a complaint against Servis One, Inc. d/b/a BSI Financial Services
(“BSI”) asserting various claims related to the servicing of his mortgage loan. The second
amended complaint alleges BSI violated the Fair Debt Collection Practices Act (“FDCPA”),
15 U.S.C. § 1692, et seq., the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §
2601, et seq., Wis. Stat. §§ 224.77(L), (k) and (m), breached the note and mortgage contract,
and committed conversion.
On October 11, 2024, I entered an order denying Verdecias’ Partial Motion for
Summary Judgment and granting, in part, BSI’s Motion for Summary Judgment dismissing
Verdecias’ FDCPA and RESPA claims for lack of standing. (Docket # 117.) Verdecias was
ordered to establish subject matter jurisdiction over his remaining state law claims by October
25, 2024. (Id.) Verdecias filed the present Motion to Alter Judgment under Federal Rule of
Civil Procedure 59(e) and requested an extension to establish jurisdiction pending the Court’s
ruling on his Motion. (Docket # 118, Docket # 120.) For the reasons further explained below,
the motion is denied.

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LEGAL STANDARD
Rule 59(e) allows a party to move the court for reconsideration of a judgment within
28 days following the entry of the judgment. A motion for reconsideration serves a very
limited purpose in federal civil litigation; it should be used only “to correct manifest errors of
law or fact or to present newly discovered evidence.” Rothwell Cotton Co. v. Rosenthal & Co.,
827 F.2d 246, 251 (7th Cir. 1987) (quoting Keene Corp. v. Int’l Fidelity Ins. Co., 561 F. Supp.
654 (N.D. Ill. 1982), aff’d 736 F.2d 388 (7th Cir. 1984)). “A ‘manifest error’ is not
demonstrated by the disappointment of the losing party. It is the ‘wholesale disregard,
misapplication, or failure to recognize controlling precedent.’” Oto v. Metro. Life Ins. Co., 224
F.3d 601, 606 (7th Cir. 2000) (quoting Sedrak v. Callahan, 987 F. Supp. 1063, 1069 (N.D. Ill.
1997)). Apart from manifest errors of law, “reconsideration is not for rehashing previously
rejected arguments.” Caisse Nationale de Credit Agricole v. CBI Industries, Inc., 90 F.3d 1264, 1270
(7th Cir. 1996). Whether to grant a motion for reconsideration “is left to the discretion of the
district court.” Id.
ANALYSIS
Verdecias sued BSI under §§ 1692e and 1692f of the FDCPA alleging BSI engaged in
illegal debt collection practices by attempting to collect a debt not owing, sending false
statements, and wrongly stating his mortgage loan was in foreclosure. Verdecias further
alleged that BSI failed to conduct a reasonable investigation into his mortgage account and
did not provide accurate and complete responses to his multiple requests for information in
violation of RESPA. Verdecias also asserted various state law claims. I previously found that
Verdecias lacked standing under the FDCPA and RESPA because he failed to establish a
concrete injury fairly traceable to the alleged violations. (Docket # 117.) Verdecias challenges

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the standing determination, and contends the prior decision overlooked the fact that he
incurred actual economic damage, in addition to emotional distress, as a result of BSI’s
misconduct.
1. FDCPA
To establish standing, the plaintiff must demonstrate an (1) an injury in fact, (2) that
is fairly traceable to the challenged conduct of the defendant, and (3) redressable by a
favorable judicial decision. Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016). “As the litigation
progresses, the way in which the plaintiff demonstrates standing changes.” Spuhler v. State
Collection Serv., Inc., 983 F.3d 282, 285 (7th Cir. 2020). Once the litigation reaches the
summary judgment stage, the plaintiff must establish standing by “‘set[ting] forth’ by affidavit
or other evidence ‘specific facts,’ that, taken as true, support each element of standing.” Id.
(quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)).
Verdecias rehashes many of the same arguments previously rejected. He maintains
that his damages consist of the missing funds from his escrow account, the payment of fees
that were discharged during his bankruptcy action, and the emotional distress stemming from
being incorrectly told his mortgage was subject to foreclosure and that he owed a debt he did
not lawfully owe. I previously rejected these arguments because Verdecias failed to establish
how the alleged FDCPA violations resulted in the claimed injuries or how he suffered a
concrete harm from BSI’s false and misleading communications.
For instance, Verdecias did not allege the FDCPA violations caused him to pay extra
money, affected his credit, or otherwise led him to pursue a different course of action. See
Ewing v. MED-1 Solutions, LLC, 24 F.4th 1146, 1154 (7th Cir. 2022) (finding standing where a
debt collector’s violations caused plaintiff’s credit score to decline); Lavelle v. Med-1 Solutions,

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LLC¸ 932 F.3d 1049, 1053 (7th Cir. 2019) (standing established where failure to provide
required disclosures placed debtor at “distinct disadvantage” in collection action against her).
Here, Verdecias cannot show how the specific FDCPA violations caused his alleged money
damages because the mismanagement of his escrow preceded the violations. In short, it is
unclear how the FDCPA violations caused the claimed illegal retention of his escrow funds.
Rather, Verdecias’ response to the foreclosure notices caused him to dispute the debt
and perhaps contact a lawyer for advice. These are not cognizable harms. Pierre v. Midland
Credit Mgmt., Inc., 29 F.4th 934, 939 (7th Cir. 2022). The Seventh Circuit has explained that
while “acting to one’s detriment due to confusion may be enough to establish standing,”
retaining counsel does not. Brunett v. Convergent Outsourcing, Inc., 982 F.3d 1067, 1069 (7th
Cir. 2020); Choice v. Kohn Law Firm, S.C.¸77 F.4th 636, 639 (7th Cir. 2023). Verdecias’ claims
of emotional distress are also insufficient to establish standing. Wadsworth v. Kross, Lieberman
& Stone, Inc., 12 F.4th 665, 668 (7th Cir. 2021).
Verdecias also alleges he incurred out-of-pocket expenses from faxing correspondence
to BSI and disputing the debt. However, if this were sufficient to establish standing, then
standing would be guaranteed each time a plaintiff received a letter violating the FDCPA.
Ebaugh v. Medicredit, Inc., 2024 WL 1194476, at *1 (E.D. Mo. Mar. 20, 2024). In any event,
Verdecias did not claim he suffered postage and faxing expenses in relation to his FDCPA
claim when opposing BSI’s motion for summary judgment. Rather, he focused on the alleged
misapplication of funds in his escrow. Caisse, 90 F.3d at 1270 (“Reconsideration is not an
appropriate forum for rehashing previously rejected arguments or arguing matters that could
have been heard during the pendency of the previous motion.”). While Verdecias disagrees
with my previous determination, he has not shown a manifest error of law or fact.

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2. RESPA
Verdecias also argues he has standing under RESPA because BSI’s responses to his
requests for information were inadequate to address the underlying issues associated with his
escrow account.
“[T]he injury requirement for standing overlaps with the injury requirement under
[RESPA].” Diedrich v. Ocwen Loan Servicing, LLC, 839 F.3d 583, 589 (7th Cir. 2016). In other
words, “the injury must be ‘actual,’ both for standing purposes and for purposes of the
statute.” Id. A plaintiff cannot recover under RESPA for bare procedural violations. Moore v.
Wells Fargo Bank, N.A., 908 F.3d 1050, 1059 (7th Cir. 2018).
Verdecias argues he has standing under RESPA because he suffered economic harms
due to BSI’s failure to provide adequate responses to his qualified requests for information.
The specific damages he claims are the misapplication of his escrow account and missing
funds. But these damages do not flow from any alleged RESPA violation. Rather, they relate
to issues that preceded Verdecias’ requests for information. Therefore, even assuming BSI
provided inadequate responses, any purported harms Verdecias suffered as a result of BSI’s
non-compliance remain unclear. I previously rejected these identical arguments. (Docket #
117, at 8–10.)
Lastly, Verdecias argues his out-of-pocket expenses for faxing and mailing his requests
for information establish standing. This assertion was previously rejected. (Id.) “This theory
would allow a borrower to create a RESPA claim that pulls itself by its own bootstraps,
creating the required damages by pursuing the inquiry . . . .” Moore, 908 F.3d at 1059; see also
Diedrich, 839 F.3d at 593. Accordingly, reconsideration is not warranted on this ground.
Verdecias’ motion is denied.

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ORDER
NOW, THEREFORE, IT IS HEREBY ORDERED that Verdecias’ Motion to Alter
Judgment (Docket # 118) is DENIED.
IT IS FURTHER ORDERED that Verdecias has until March 21, 2025 to establish
whether this Court has jurisdiction over his remaining state law claims.

Dated at Milwaukee, Wisconsin this 11th day of March, 2025.

BY THE COURT:

NANCY
NANCY
N
Y JOSEPH
JOSE
JO
SEPH
U
i dS
i
JJudge
d
United
States M
Magistrate

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