Zirk, Corina v. Nationstar Mortgage

Filing 33

OPINION & ORDER denying as moot 15 Motion to Dismiss for Failing to Comply With Court Order/Discovery Sanction; granting 16 Motion for Summary Judgment. The clerk of court is directed to enter judgment in favor of defendant dismissing plaintiff's claims and close the case. Signed by District Judge James D. Peterson on 9/8/2017. (kwf)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

CORINA ZIRK,
Plaintiff,
v.

OPINION & ORDER
16-cv-448-jdp

NATIONSTAR MORTGAGE,
Defendant.

Plaintiff Corina Zirk brings claims against defendant Nationstar Mortgage for violations
of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., violations of Wis.
Stat. § 224.77, and breach of contract. Dkt. 1. Zirk contends that Nationstar gave her
confusing and conflicting information about the status of her mortgage and failed to apply
payments that she had made.
This case has not progressed smoothly, primarily because Zirk did not timely respond
to Nationstar’s discovery requests and she propounded no discovery requests of her own. But
the fault does not lie entirely with Zirk, because Nationstar waited too long to deal with Zirk’s
lack of diligence. As a result, the record before the court is sparse and something of a mess. But
this much is beyond genuine dispute: Zirk has failed to adduce admissible evidence to sustain
her burden to prove her federal claims. The court will grant Nationstar’s motion for summary
judgment. The court will decline jurisdiction over her state-law claims and dismiss them.

BACKGROUND
In 2004, plaintiff Corina Zirk, then known as Corina Kritz, purchased a duplex on the
corner of S. Walnut Street and Nicolet Street in Janesville, Wisconsin. The purchase was

financed by the First Federal Capital Bank of La Crosse and secured by a mortgage. In 2006,
the mortgage and loan were assigned to H&R Block Bank, and at some point defendant
Nationstar Mortgage became the servicer of the loan.
Then Zirk ran into financial difficulties, which she attributes to her ex-husband’s failure
to pay child support. In 2011, Zirk filed a chapter 13 bankruptcy petition. During the
bankruptcy proceedings, Nationstar filed a motion for relief from stay, contending that Zirk
had missed several mortgage payments in 2012. Nationstar and Zirk resolved that motion by
agreeing that Zirk had missed four payments and that she would amend her bankruptcy plan
accordingly. Zirk’s bankruptcy was converted to a chapter 7, Zirk received an order of
discharge, and the bankruptcy court closed the case. Zirk now lives in the house in Janesville
that secures the Nationstar mortgage. The bankruptcy is not really our concern: all that really
matters here is that the parties agree that Zirk was caught up on her mortgage as of March 2,
2015. Dkt. 30, ¶ 17 (citing Dkt. 24-8).
The central dispute concerns whether Nationstar properly credited Zirk’s payments in
the rest of 2015 and 2016. The facts that we have come from some statements from Nationstar
that Zirk has submitted to the court. Nationstar challenges the admissibility of these
statements, but we’ll deal with that later. For now, here’s what the statements show.
The annual tax statement for 2015 shows that Nationstar applied $2,770.42 to Zirk’s
principal balance in 2015. Dkt. 24-4, at 4.
A notice sent to Zirk in May 2016 shows that from July 2015 to July 2016, Zirk’s
monthly mortgage payment was supposed to be $1,740.98; $381.65 of that payment would
be applied to principal. Id. at 5.

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Five monthly statements that Zirk received from January 20, 2016, to May 18, 2016,
show that Zirk was not making payments. As of February 1, 2016, she owed Nationstar
$19,150.78. Id. at 15. The May 18 statement shows that Zirk owed $26,114.70 (her regular
monthly payment due June 1, plus $24,373.72 in overdue payments). Id. at 7-8. Thus, by May
18, Zirk had missed 14 payments, with another due on June 1. That same statement shows
that Nationstar had not received any payments from Zirk in 2016. Id. at 8.
The statements also cite legal fees and property inspection fees, marked “lender-paid
expenses.” See, e.g., id. at 8, 10. According to a footnote on the statements, “‘Lender Paid
Expenses’ are funds paid by Nationstar on [Zirk’s] behalf to another company.” Id. at 11. It is
not clear that Nationstar passed these expenses on to Zirk, because they were never included
in her “total amount due.”
Zirk adduces no other documentation of any payments to Nationstar, and she does not
remember anything that adds to the information in the billing statements. Zirk contends that
she had trouble figuring out how Nationstar had applied her payments. As a result, she feared
she would lose her house, and she began experiencing anxiety, stress, sleeplessness, and
headaches. She stopped participating in activities she enjoys.
In 2015, after her bankruptcy, Zirk applied for a modification of her loan. Zirk signed
her modification application packet on November 8, 2015. Zirk argues that Nationstar waited
until January 2016 respond to the modification application. But Nationstar has adduced
evidence that it responded to Zirk’s various modification requests on November 11, 2015,
November 18, 2015, January 11, 2016, January 13, 2016, and February 11, 2016. Dkt. 30,
¶ 39.

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Zirk filed suit on June 23, 2016, alleging that Nationstar’s actions had violated the
FDCPA and Wis. Stat. § 224.77 (prohibiting certain practices by mortgage lenders), and that
it had breached Zirk’s loan agreement.
Nationstar propounded discovery requests to Zirk on January 12, 2017. Zirk failed to
respond despite repeated demands, and Nationstar moved to compel responses on April 14,
2017, which was a mere ten days before the dispositive motion deadline. The court, through
Magistrate Judge Stephen Crocker, granted the motion to compel and moved the dispositive
motion deadline to May 8, 2017. Dkt. 14. The court deemed Zirk’s objections to have been
waived and ordered complete responses by April 21, 2017. Judge Croker also warned Zirk that
if she was late or served incomplete responses, he would recommend dismissing the case under
Rule 37(b). Zirk served her responses on April 18. Dkt. 15-1. Nationstar contends that the
responses are incomplete and it moves to dismiss the complaint under Rule 37. Dkt. 15.
Nationstar also moves for summary judgment on the merits. Dkt. 16.
The court has subject matter jurisdiction over Zirk’s FDCPA claims pursuant to 28
U.S.C. § 1331, because they arise under federal law. The court may exercise supplemental
jurisdiction over Zirk’s state-law claims pursuant to 28 U.S.C. § 1367.

ANALYSIS
Summary judgment is appropriate if the moving party “shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). “Only disputes over facts that might affect the outcome of the suit under the
governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). In reviewing Nationstar’s motion for summary judgment, the

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court construes all facts and draws all reasonable inferences in Zirk’s favor. Id. at 255. “To
survive summary judgment, the nonmovant must produce sufficient admissible evidence, taken
in the light most favorable to it, to return a jury verdict in its favor.” Fleishman v. Cont’l Cas.
Co., 698 F.3d 598, 603 (7th Cir. 2012). “[S]ummary judgment ‘is the “put up or shut up”
moment in a lawsuit, when a party must show what evidence it has that would convince a trier
of fact to accept its version of events.’” Johnson v. Cambridge Indus., Inc., 325 F.3d 892, 901 (7th
Cir. 2003) (quoting Schacht v. Wis. Dep’t of Corr., 175 F.3d 497, 504 (7th Cir. 1999)). A mere
“scintilla of evidence” is not enough to survive. Pugh v. City of Attica, 259 F.3d 619, 625 (7th
Cir. 2001).
A. Preliminary evidentiary issue
The court will decide this case on the merits of Nationstar’s motion for summary
judgment. Accordingly, the court does not need to reach Nationstar’s motion to dismiss the
case as a discovery sanction under Rule 37. However, the court must begin with a preliminary
issue involving discovery: are the Nationstar statements and notices admissible? Nationstar
contends that they are not admissible because they were not disclosed during discovery. The
court agrees.
Zirk did not produce the notices and billing statements in response to Nationstar’s
requests for production. For example, this is Nationstar’s first request for production and Zirk’s
response:
Request for Document No. l: All communications and other
documents concerning any payments made and/or not made in
connection with the Subject Loan.
Answer: See accompanying applications for modification.
Communications consisting of pleadings and other documents
also may be found in online court records of Zirk’s bankruptcy

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proceedings. Those are not being provided as they are equally
accessible by defendant.
Dkt. 18-4. The notices and billing statements would have been responsive to this request, and
to Nationstar’s request numbers 2 and 3. But Zirk did not produce the notices and statements,
or even refer to them in any way.
Zirk contends that she was not obligated to produce the notices and statements because
they had been provided to Nationstar with Zirk’s initial disclosures. To support this
contention, Zirk submits a declaration of her counsel, Briane Pagel, who states:
Attached hereto as Exhibit D are our initial disclosures, which we
served on October 21, 2016. I am including with that Exhibit C
the correspondence that was sent along with those disclosures. I
did not include these with the discovery responses because they
had been provided 6 months prior to those, when we first served
our initial disclosures.
Dkt. 24, ¶ 15. Exhibit D to the declaration is a two-page initial disclosure document
electronically signed by counsel, followed by a handwritten note from plaintiff to counsel, and
12 pages of notices and statements which appear to be from Nationstar. Dkt. 24-4. (The court
presumes that the reference to “Exhibit C” is simply an error.) The initial disclosure document
states that among the documents to be relied on are “Billing statements and correspondence
from Nationstar to Ms. Zirk. Copies in possession of Ms. Zirk are being sent with this
disclosure.” Id. at 2.
But Nationstar contends that the 12 pages of notices and statements were not included
with Zirk’s initial disclosures served on October 21. To support its contention, Nationstar
submits the declaration of one of its attorneys, Jeffrey Karek, who attaches the entire set of
emails that Pagel sent on October 21. Dkt. 32. The Karek declaration shows that Pagel sent
the two-page initial disclosure document as the single attachment to an email sent at 4:35 p.m.

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on October 21, 2016. Over the next 15 minutes, Pagel sent the rest of the initial disclosures in
17 more emails, eight of which had attachments. The disputed Nationstar notices and billing
statements were not included or attached to any of the emails. Although the Karek declaration
was filed with Nationstar’s reply, Pagel has not objected to or disputed Karek’s assertions in
any way. The Karek declaration, with its supporting documentation, shows that Pagel did not
provide the notices and statements with the October 21, 2016, initial disclosures.1
Nor did Zirk refer to the notices and statements in any of her responses to Nationstar’s
interrogatories. See Dkt. 18-3. Nationstar asked Zirk to disclose all communications between
plaintiff and Nationstar, and Zirk did not mention the notices and statements at all. Even if
Zirk had included the notices and statements with her initial disclosures, she had an obligation
to respond completely to the interrogatories, which required her to identify all the
communications she had with Nationstar.
Because Zirk did not disclose the notices and statements during discovery, Zirk may
not rely on these documents in opposition to Nationstar’s motion for summary judgment. See
Bluestein v. Cent. Wis. Anesthesiology, S.C., 296 F.R.D. 597, 602 (W.D. Wis. 2013) (noting that
“plaintiff cannot use any unproduced documents to prove or defend her case at summary
judgment or trial”); see also Fed. R. Civ. P. 37(c)(1) (“If a party fails to provide information . . .
as required by Rule 26(a) or (e), the party is not allowed to use that information . . . to supply
evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or
is harmless.”).

1

Pagel’s informal service of the initial disclosures through a series of 18 emails illustrates the
value of Bates numbering. Had Pagel identified his document production by range of Bates
numbers, there would be no confusion about what documents were disclosed and when.

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The notices and billing statements are excludable for a second reason: Zirk did not
comply with Rule 56’s affidavit requirements. Parties must “properly support an assertion of
fact” at summary judgment, and “[a]n affidavit or declaration used to support or oppose a
motion must be made on personal knowledge, set out facts that would be admissible in
evidence, and show that the affiant or declarant is competent to testify on the matters stated.”
Fed. R. Civ. P. 56(c)(4), (e). Here, Zirk filed the notices and billing statements only as exhibits
to her attorney’s declaration. Dkt. 24 and Dkt. 24-4. But Pagel does not have personal
knowledge of the billing statements, and he would not be the one to testify about them at trial.
“To be admissible, documents must be authenticated by and attached to an affidavit that meets
the requirements of Rule 56[] and the affiant must be a person through whom the exhibits
could be admitted into evidence.” Article II Gun Shop, Inc. v. Gonzales, 441 F.3d 492, 496 (7th
Cir. 2006) (quoting Scott v. Edinburg, 346 F.3d 752, 760 n.7 (7th Cir. 2003)). “[C]ounsel must
remember that the requirements of Rule 56(e) [now Rule 56(c)(4)] are set out in mandatory
terms and the failure to comply with those requirements makes the proposed evidence
inadmissible during the consideration of the summary judgment motion.” Friedel v. City of
Madison, 832 F.2d 965, 970 (7th Cir. 1987).
B. Zirk fails to adduce evidence of deceptive practices under the FDCPA
The FDCPA prohibits debt collectors from engaging in abusive, deceptive, or unfair
debt-collection practices. 15 U.S.C. § 1692 et seq. Zirk adduces only the notices and billing
statements to show that Nationstar violated the FDCPA. The court has excluded those
documents, so Zirk’s FDCPA claims fail as a result. But for completeness, the court will
entertain Zirk’s core contentions on the merits.

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Zirk contends that those documents communicate conflicting information about her
mortgage payments and show that Nationstar misapplied her payments. Here’s her theory. The
notices and the monthly statements show that (1) her monthly payments were supposed to be
$1,740.98; (2) she was $26,114.70 (or 15 monthly payments) behind as of June 2016; so (3)
Nationstar was clearly under the impression that Zirk had not made any monthly payments
since March 2015 (15 months from June 2016 is March 2015). So far, so good. But Zirk also
contends that the annual tax statement for 2015 shows that she made monthly payments
through July 2015. The tax statement shows that Nationstar applied $2,770.42 to the loan’s
principal balance in 2015. Zirk argues that this means that she made more than seven monthly
payments in 2015, because $381.65 of each monthly payment went to paying down the
principal. So, argues Zirk, she must have made monthly payments through July 2015.
According to Zirk, the tax statement cannot be reconciled with the monthly statements from
2016.
Zirk is entitled to the benefit of all reasonable inferences, but the inference that the
2015 tax statement shows that she made seven payments in 2015 is not reasonable. First,
$2,770.40 does not divide evenly by $381.65, which undermines the idea that Zirk made the
same regular payments of $1,740.98 throughout the first seven months of 2015. Zirk was still
in bankruptcy in the first months of 2015, which may have affected the amount credited to
her mortgage principal. Zirk says that making payments through July is consistent with her
recollection, Dkt. 25, ¶ 8, but that’s not the same as affirmative testimony that she actually
made payments through July. She adduces no evidence to corroborate her theory, such as
cancelled checks or a bank statement showing the payments. She offers no explanation why
she could not get this corroborating evidence, which should be well within her control. And she

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might have even been able to get corroborating evidence from Nationstar, but she did not make
any discovery requests. No reasonable jury could conclude from the evidence that Zirk has
adduced that Nationstar misapplied Zirk’s mortgage payments or issued incorrect or misleading
statements about the state of her mortgage.
C. Zirk fails to adduce evidence that her mortgage is a “debt” under the FDCPA
Zirk’s FDCPA claims suffer from another fundamental deficiency. For the FDCPA to
apply, two threshold criteria must be met: first, Nationstar must be a debt collector, and
second, Nationstar must have communicated with Zirk “in connection with the collection of
any debt.” Gburek v. Litton Loan Servicing LP, 614 F.3d 380, 384 (7th Cir. 2010) (quoting 15
U.S.C. §§ 1692c(a)-(b), 1692e, 1692g). A “debt” under the FDCPA is “any obligation or
alleged obligation of a consumer to pay money arising out of a transaction in which the money,
property, insurance, or services which are the subject of the transaction are primarily for
personal, family, or household purposes.” 15 U.S.C. § 1692a(5).
The court will assume that Nationstar is a debt collector. But Nationstar contends that
Zirk has not shown that her mortgage is a debt under the FDCPA. As Zirk acknowledges, “the
relevant time for determining the nature of the debt is when the debt first arises, not when
collection efforts begin.” Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C., 214
F.3d 872, 874 (7th Cir. 2000). So Zirk needs to adduce evidence that she purchased the
mortgaged property primarily for personal, family, or household purposes.
Zirk responded with evidence that she has been living in the house since 2011.2 But the
problem is that Zirk purchased the house and took out the loan in 2004. When Nationstar

2

Zirk’s bankruptcy schedules list the property as Zirk’s residence. See generally Dkt. 24-6
(noting “[r]esidence is duplex and debtor’s son rents the other half of the duplex”). Those
documents are from 2011. Zirk’s loan modification paperwork from 2015 and 2016 also lists

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asked Zirk to “[d]escribe in full and complete detail the factual basis for [her] implied
contention that the Subject Loan was primarily for personal, family or household purposes,”
Zirk answered that she “resided in and resides in the house.” Dkt. 18-3, at 5. That does not
show that she purchased the property in 2004 primarily for personal, family, or household
purposes. Tellingly, the property is a duplex, and Zirk has collected rent from her son (at least
as of 2011). Zirk’s pitch that “[t]here is no record that she ever lived anywhere else” is not the
same as adducing evidence that shows the nature of the debt when it arose. Dkt. 23, at 16-17.
Zirk has not adduced any affirmative evidence—even her own affidavit—that she purchased
the house in 2004 primarily for personal, family, or household purposes.
But Nationstar has pointed to evidence that Zirk did not purchase the house primarily
for personal, family, or household purposes, but that she intended to rent the property when
she purchased it. A debt securing a rental property falls outside of the FDCPA. See Miller, 214
F.3d at 874-75. The mortgage provides that Zirk must “maintain insurance against rent loss”
and that she “assigns and transfers to Lender all the rents and revenues (‘Rents’) of the
Property” if she defaults. Dkt. 24-7, at 26. And the section titled “Borrower’s Occupancy” was
deleted. Id. That section would have provided, “Borrower shall occupy, establish, and use the
Property as Borrower’s principal residence.” Id. at 14. And the loan was taken out from a
financial institution in La Crosse, not Janesville, where the property is located. All this raises
doubt about whether Zirk purchased the Janesville home as her own residence.

the property as her residence. Dkt. 24-5. That document is dated November 8, 2015. Id. at 6.

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Zirk has not adduced evidence that would allow a reasonable jury to find that
Nationstar violated the FDCPA. It is Zirk’s burden to adduce this evidence, and the court will
grant Nationstar’s motion for summary judgment on Zirk’s FDCPA claims.
D. State-law claims
That leaves Zirk’s state-law claims. Under 28 U.S.C. § 1367, the court may exercise
supplemental jurisdiction “over all other claims that are so related to claims in the action within
such original jurisdiction that they form part of the same case or controversy under Article III
of the United States Constitution.” Based on the court’s appraisal of Zirk’s theory of the case,
which relies on Nationstar’s notices and statements, Zirk has little chance of success on her
state-law claims.
But it is “the well-established law of this circuit that the usual practice is to dismiss
without prejudice state supplemental claims whenever all federal claims have been dismissed
prior to trial.” Groce v. Eli Lilly & Co., 193 F.3d 496, 501 (7th Cir. 1999); see also 28 U.S.C.
§ 1367(c)(3) (“The district courts may decline to exercise supplemental jurisdiction over a
claim under subsection (a) if . . . the district court has dismissed all claims over which it has
original jurisdiction . . . .”).
Zirk has failed to meet her burden on her federal claims, but the court sees no strong
reason to depart from the circuit’s general rule. Neither side has fully developed the underlying
factual record concerning Nationstar’s servicing of Zirk’s loan, so the court will decline to
exercise supplemental jurisdiction over Zirk’s state-law claims.

ORDER
IT IS ORDERED that:

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1. Defendant Nationstar Mortgage’s motion to dismiss plaintiff’s complaint pursuant
to the court’s April 14, 2017 discovery order, Dkt. 15, is DENIED as moot.
2. Defendant’s motion for summary judgment, Dkt. 16, is GRANTED. Plaintiff
Corina Zirk’s FDCPA claims are dismissed with prejudice; her state-law claims are
dismissed without prejudice.
3. The clerk of court is directed to enter judgment in favor of defendant dismissing
plaintiff’s claims and close the case.
Entered August 8, 2017.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge

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