Title: Anderson v. Barclay's Capital Real Estate, Inc.

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Anderson v. Barclay’s Capital Real Estate, Inc., Slip Opinion No. 2013-Ohio-1933.] 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2013-OHIO-1933 
ANDERSON v. BARCLAY’S CAPITAL REAL ESTATE, INC.,  
D.B.A. HOMEQ SERVICING. 
[Until this opinion appears in the Ohio Official Reports advance sheets,  
it may be cited as Anderson v. Barclay’s Capital Real Estate, Inc.,  
Slip Opinion No. 2013-Ohio-1933.] 
Certified questions of state law—The servicing of a borrower’s residential 
mortgage loan is not a “consumer transaction” as defined in R.C. 
1345.01(A)—An entity that services a residential mortgage loan is not a 
“supplier” as defined in R.C. 1345.01(C). 
(No. 2011-0908—Submitted February 26, 2013—Decided May 14, 2013.) 
ON ORDER from the United States District Court for the Northern District of Ohio, 
Western Division, Certifying Questions of State Law, No. 3:09-cv-02335-JGC. 
____________________ 
SYLLABUS OF THE COURT 
1. The servicing of a borrower’s residential mortgage loan is not a “consumer 
transaction” as defined in R.C. 1345.01(A). 
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2. An entity that services a residential mortgage loan is not a “supplier” as defined 
in R.C. 1345.01(C). 
____________________ 
O’CONNOR, C.J. 
{¶ 1} In this appeal, which is before us on the certification of state-law 
questions by the United States District Court for the Northern District of Ohio, 
Western Division, we address whether the Ohio Consumer Sales Practice Act 
(“CSPA”), codified in R.C. Chapter 1345, applies to the servicing of residential 
mortgage loans.  We determine that it does not. 
RELEVANT BACKGROUND 
{¶ 2} The federal court provided the following facts, circumstances, and 
allegations from which the questions of law arise: 
{¶ 3} Barclays Capital Real Estate, Inc., doing business as HomEq 
Servicing (“HomEq”), defendant in the underlying action and petitioner here, is a 
“mortgage servicer” that engages in the business of servicing residential 
mortgages of individuals.  HomEq is not a bank, financial institution, or any other 
entity defined in R.C. 5725.01. 
{¶ 4} HomEq “accepts, applies and distributes mortgage loan payments 
and other fees, penalties and assessments, and in connection with so doing 
exercises discretion regarding the fees charged or applied to a particular mortgage 
loan account.”  HomEq is paid for its loan administration and other services “from 
the payment stream generated by the consumers’ residential mortgages.” 
{¶ 5} HomEq “maintains customer service departments and call centers 
to which Ohio residents with loans being serviced by HomEq are directed to call 
with questions [or] concerns about their mortgage loans” and “directs customers 
who are in default or danger of default to contact it for options concerning loss 
mitigation or loan modification and further holds itself out as having authority to 
make substantive decisions regarding which customers, if any, will receive loan 
 
January Term, 2013 
3 
 
modification agreements or loss mitigation assistance.”  HomEq “handles 
consumer disputes regarding their mortgage loans,” “negotiates and executes loan 
modification, forbearance and other agreements directly with customers,” and 
“makes customer service related promises on its website to which consumers are 
directed by the servicer.”  It also “purchases homeowner’s insurance on behalf of, 
and at the expense of, consumers who HomEq believes not to have purchased 
insurance required by the note and mortgage.” 
{¶ 6} The federal court determined that the interpretation of R.C. 
1345.01(A) and (C) may be determinative of the case pending before it.  Finding 
no controlling precedent on the determinative issue in Ohio case law, the federal 
court certified the following questions to us for answers: 
 
1. Does the servicing of a borrower’s residential mortgage 
loan constitute a “consumer transaction” as defined in the Ohio 
Consumer Sales Practices Act, R.C. 1345.01(A)? 
2. Are entities that service residential mortgage loans 
“suppliers * * * engaged in the business of effecting or soliciting 
consumer transactions” within the meaning of the Ohio Consumer 
Sales Practices Act, R.C. § 1345.01(C)? 
 
{¶ 7} Before us, Sondra Anderson, plaintiff in the underlying, contends 
that mortgage servicing is a “consumer transaction” because the mortgage 
servicer provides a number of services to borrowers, including accepting 
payments and working with borrowers to obtain loan modifications.  She asserts 
that we must answer the certified questions in the affirmative.  But HomEq 
counters that mortgage servicers perform services for financial institutions, not for 
borrowers, and therefore the transactions are commercial in nature and are not 
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covered by the CSPA.  It thus avers that we must answer the questions in the 
negative.  For the reasons that follow, we agree with HomEq. 
ANALYSIS 
{¶ 8} The CSPA prohibits unfair or deceptive acts and unconscionable 
acts or practices by suppliers in consumer transactions whether they occur before, 
during, or after the transaction.  R.C. 1345.02(A) and 1345.03(A); Williams v. 
Spitzer Autoworld Canton, L.L.C., 122 Ohio St.3d 546, 2009-Ohio-3554, 913 
N.E.2d 410, ¶ 10.  The CSPA defines a “consumer transaction” to be 
 
a sale, lease, assignment, award by chance, or other transfer of an 
item of goods, a service, a franchise, or an intangible, to an 
individual for purposes that are primarily personal, family, or 
household, or solicitation to supply any of these things.  
“Consumer transaction” does not include transactions between 
persons, defined in sections 4905.03 and 5725.01 [financial 
institution defined] of the Revised Code, and their customers, 
except for transactions involving a loan made pursuant to sections 
1321.35 to 1321.48 of the Revised Code and transactions in 
connection with residential mortgages between loan officers, 
mortgage brokers, or nonbank mortgage lenders and their 
customers; transactions involving a home construction service 
contract as defined in section 4722.01 of the Revised Code; 
transactions between certified public accountants or public 
accountants and their clients; transactions between attorneys, 
physicians, or dentists and their clients or patients; and transactions 
between veterinarians and their patients that pertain to medical 
treatment but not ancillary services. 
 
 
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5 
 
R.C. 1345.01(A). 
{¶ 9} The CSPA is remedial in nature, having been designed to 
compensate for incomplete consumer remedies available at common law.  
Einhorn v. Ford Motor Co., 48 Ohio St.3d 27, 29, 548 N.E.2d 933 (1990); see 
Roberts & Martz, Consumerism Comes of Age: Treble Damages and Attorney 
Fees in Consumer Transactions—The Ohio Consumer Sales Practices Act, 42 
Ohio St.L.J. 927, 928 (1981).  Thus, we must liberally construe the statute in 
favor of the consumer.  Whitaker v. M.T. Automotive, Inc., 111 Ohio St.3d 177, 
2006-Ohio-5481, 855 N.E.2d 825, ¶ 11, quoting Einhorn at 29; see also R.C. 
1.11. 
{¶ 10} Notably, however, the CSPA has no application in a “pure” real 
estate transaction.  Brown v. Liberty Clubs, Inc., 45 Ohio St.3d 191, 193, 543 
N.E.2d 783 (1989).  In fact, real estate transactions are excluded from the statute’s 
definition of “consumer transaction.”  R.C. 1345.01(A); see Shore W. Constr. Co. 
v. Sroka, 61 Ohio St.3d 45, 48, 572 N.E.2d 646 (1991); Heritage Hills, Ltd. v. 
Deacon, 49 Ohio St.3d 80, 551 N.E.2d 125 (1990). 
Is servicing of a borrower’s residential mortgage loan 
a “consumer transaction”? 
{¶ 11} The first question asks whether the servicing of a borrower’s 
residential mortgage loan constitutes a “consumer transaction” as defined in the 
Ohio Consumer Sales Practices Act, R.C. 1345.01(A)?  It does not. 
{¶ 12} In the servicing of a real estate mortgage, one essential element of 
R.C. 1345.01(A) is not met:  there is no sale, lease, assignment, award by chance, 
or other transfer of a service to a consumer. 
{¶ 13} Mortgage servicing is a contractual agreement between the 
mortgage servicer and the financial institution that owns both the note and 
mortgage.  Mortgage servicing is carried out in the absence of a contract between 
the borrower and the mortgage servicer.  We recognize that the mortgage 
SUPREME COURT OF OHIO 
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servicer’s duties may involve direct and indirect interactions with borrowers on 
behalf of the financial institution.  Sometimes the mortgage servicer may even 
assist the borrower in modifying the terms of the note, but the mortgage servicer 
undertakes the negotiation not for itself but on behalf of the financial institution. 
{¶ 14} These interactions do not satisfy the language found in R.C. 
1345.01(A).  Instead, mortgage servicing, similar to appraisal services and title 
services, is a “collateral service” associated with a pure real estate transaction.  
Except for the transactions specified in the statute, the CSPA does not apply to 
“collateral services that are solely associated with the sale of real estate and are 
necessary to effectuate a ‘pure’ real estate transaction.”  U.S. Bank v. Amir, 8th 
Dist. No. 97438, 2012-Ohio-2772, ¶ 42-43, citing Hurst v. Ent. Title Agency, Inc., 
157 Ohio App.3d 133, 2004-Ohio-2307, 809 N.E.2d 689, ¶ 34-35 (holding that 
the escrow services involved were collateral services related to the real estate 
transaction and that they were therefore not subject to the CSPA), citing Colburn 
v. Baier Realty & Auctioneers, 11th Dist. No. 2002-T-0161, 2003-Ohio-6694, 
¶ 16.  See also Hanlin v. Ohio Builders & Remodelers, Inc., 212 F.Supp.2d 752, 
757 (S.D.Ohio 2002) (closing services were “part and parcel of the real estate 
transaction” and thus outside the CSPA). 
{¶ 15} Moreover, transactions between mortgage-service providers and 
homeowners are not “consumer transactions” within the meaning of the CSPA 
because there is no “transfer of an item of goods, a service, a franchise, or an 
intangible, to an individual.”  See R.C. 1345.01(A) (“ ‘Consumer transaction’ 
means a sale, lease, assignment, award by chance, or other transfer of an item of 
goods, a service, a franchise, or an intangible, to an individual for purposes that 
are primarily personal, family, or household, or solicitation to supply any of these 
things”).  A financial institution may contract with a mortgage servicer to service 
the loan, but the mortgage servicer does not transfer a service to the borrower, 
which is what would be required in order to trigger the CSPA. 
 
January Term, 2013 
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{¶ 16} The term “transfer” is not defined in the CSPA, so we must give it 
its plain and ordinary meaning.  See State v. Anthony, 96 Ohio St.3d 173, 2002-
Ohio-4008, 772 N.E.2d 1167, ¶ 11.  Black’s Law Dictionary defines the term to 
mean “[t]o sell or give.”  Black’s Law Dictionary 1636 (9th Ed.2009). 
{¶ 17} Here, the mortgage servicer neither sells nor gives the borrower the 
services it provides to the owner of the mortgage and note.  A mortgage servicer 
provides a service to a financial institution, but providing such a service to a 
financial institution is neither analogous to transferring a service to a borrower nor 
sufficient to impose liability under the CSPA.  See Rossbach v. FBS Mtge. Corp., 
Minn.App. Nos. C3-97-1622 and C9-97-1852, 1998 WL 156303, *3 (Apr. 7, 
1998) (affirming order granting summary judgment to mortgage servicer on state 
consumer-protection-act claims because the mortgage servicer operated through a 
contract with the entity that owned the mortgage on plaintiff’s home).  Accord 
Indep. Glass Assn., Inc. v. Safelite Group, Inc., D.Minn. No. 05-238, 2005 WL 
2093035 *7 (Aug. 26, 2005) (dismissing claim of violation of state consumer-
protection laws where the defendant was a third-party administrator who was 
“fulfilling a contractual obligation” to insurers and noting that the administrator 
“provides the service for the benefit of the insurance companies” rather than 
insureds, and thus there was no service provided to the consumer).  Thus, under a 
plain reading of the statute, the servicing of a borrower’s residential mortgage 
loan is not a “consumer transaction” as defined in R.C. 1345.01(A).  The statute 
simply cannot be read to cover instances in which a financial institution contracts 
with an entity to service its loans and mortgages. 
{¶ 18} Our conclusion is buttressed by the commentary to the Uniform 
Consumer Sales Practices Act, on which the CSPA is modeled.  The commentary 
states, “On the assumption that land transactions frequently are, and should be, 
regulated by specialized legislation, they are excluded altogether.” 7A, Part I, 
National Conference of Commissioners on Uniform State Laws, Uniform Laws 
SUPREME COURT OF OHIO 
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Annotated, Business and Financial Laws, Uniform Consumer Sales Practices Act, 
Official Comment to Section 2(1), at 73 (Master Ed.2002).  The transactions 
presented here include the acceptance and application of mortgage payments and 
management of loans in default.  Those transactions do not cease to be part of the 
land transaction simply because an entity that did not originate the loan and 
mortgage executes them. 
{¶ 19} Further, other states that have enacted a consumer-sales-practices 
act based on the uniform act included specific language referencing land 
transactions in the statutes when they wanted real estate transactions to be 
covered.  See, e.g., Kan.Stats.Ann. 50-624(c) and (j) (defining “consumer 
transaction” to mean “disposition for value of property” and defining “property” 
to include real estate).  Ohio did not.  That omission is important. 
{¶ 20} In past decisions interpreting the CSPA, we have taken note of the 
General Assembly’s decision not to include certain language.  For example, in 
Heritage Hills, we rejected a residential tenant’s attempt to bring her complaint 
against her landlord within the ambit of R.C. Chapter 1345.  In so doing, we 
recognized that the General Assembly had considered, but not enacted, a bill that 
would have included the lease of real property within the definition of “consumer 
transaction.”  49 Ohio St.3d at 82-83, 551 N.E.2d 125. 
{¶ 21} Here, we recognize that the General Assembly has repeatedly 
amended R.C. Chapter 1345 to reach specific transactions that take place in the 
mortgage industry.  But it has chosen not to incorporate mortgage services within 
the expanded definition of transactions subject to CSPA’s provisions. 
{¶ 22} For example, the General Assembly, through Am.Sub.S.B. No. 
185 (“S.B. 185”), amended R.C. 1345.01(A), effective in 2007, to expressly 
include three types of entities actively engaged in the residential mortgage market 
that were not previously subject to the CSPA:  loan officers, mortgage brokers, 
 
January Term, 2013 
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and nonbank mortgage lenders.  But, notably, the legislature has not expanded the 
application of the CSPA to include mortgage servicers. 
{¶ 23} Indeed, after S.B. 185 passed, the 128th General Assembly 
considered a bill that would have brought more extensive regulation to mortgage 
servicers and included them within the ambit of the CSPA.  Am.Sub.H.B. No. 3.  
That bill was not enacted, however. 
{¶ 24} We will not speculate as to why the bill failed.  But we do take 
notice of the fact that the legislative branch considered and rejected an 
amendment to the statutory scheme that would have specifically made mortgage 
servicers liable under the CSPA. 
{¶ 25} We conclude that the General Assembly’s rejection of the 
proposed amendment supports our conclusion that mortgage servicers are not 
covered by the current language of R.C. Chapter 1345.1  If the General Assembly 
is dissatisfied with our interpretation, it may amend the Revised Code.  See, e.g., 
Shay v. Shay, 113 Ohio St.3d 172, 2007-Ohio-1384, 863 N.E.2d 591, ¶ 25 (noting 
that within six months of a decision interpreting R.C. 3937.31, the General 
Assembly responded by amending R.C. 3937.31). 
{¶ 26} We turn now to the second certified question. 
Is a mortgage servicer a “supplier”? 
{¶ 27} The second question presented asks, “Are entities that service 
residential mortgage loans, ‘suppliers * * * engaged in the business of effecting or 
soliciting consumer transactions’ within  the meaning of the Ohio Consumer Sales 
Practices Act, O.R.C. § 1345.01(C)?”  We hold that they are not. 
                                                          
 
1 Amici, including legal-aid organizations that are concerned about the number of foreclosures that 
continue to take place in Ohio, raise some thought-provoking arguments.  And we accept for the 
sake of argument that regulation may be warranted.  But it is the legislature’s role, not ours, to 
bring mortgage servicers within the CSPA’s scope.   
 
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{¶ 28} Anderson’s argument centers on her belief that because servicers 
like HomEq engage in transactions with borrowers, and essentially function as 
collection agencies, they are “suppliers” under the CSPA.  But the term “supplier” 
under the CSPA does not include a mortgage servicer. 
{¶ 29} “ ‘Supplier’ means a seller, lessor, assignor, franchisor, or other 
person engaged in the business of effecting or soliciting consumer transactions, 
whether or not the person deals directly with the consumer.”  R.C. 1345.01(C).  
The terms “effecting” and “soliciting” are not defined by the statute, so we give 
the terms their plain and ordinary meanings. 
{¶ 30} “Effect” is defined as “[t]o bring about; to make happen.”  Black’s 
Law Dictionary at 592.  “Solicitation” is defined as “[t]he act or an instance of 
requesting or seeking to obtain something; a request or petition.”  Black’s at 1520.  
Thus, under the CSPA, “suppliers” are those that cause a consumer transaction to 
happen or that seek to enter into a consumer transaction. 
{¶ 31} Here, HomEq does not engage in the business of effecting or 
soliciting consumer transactions.  The residential mortgage transaction is a 
transaction that occurs between the financial institution and the borrower.  
Mortgage servicers are not part of this transaction.  And simply servicing the 
mortgage is not causing a consumer transaction to happen.  Similarly, mortgage 
servicers do not seek to enter into consumer transactions with borrowers. 
{¶ 32} We therefore have little trouble concluding that an entity that 
services a residential mortgage loan is not a “supplier” as defined in R.C. 
1345.01(C). 
CONCLUSION 
{¶ 33} We answer both of the certified state-law questions in the negative.  
Mortgage servicing is not a consumer transaction under the CSPA, and an entity 
that services a residential mortgage loan is not a “supplier” under the CSPA. 
So answered. 
 
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11 
 
O’DONNELL, LANZINGER, and KENNEDY, JJ., concur. 
FRENCH, J., concurs in judgment only. 
PFEIFER and O’NEILL, JJ., dissent. 
____________________ 
O’NEILL, J., dissenting. 
{¶ 34} I dissent from the majority’s decision answering the certified 
questions in the negative.  I believe that this court should answer the certified 
questions in the affirmative and hold that the Consumer Sales Practices Act 
(“CSPA”) applies to mortgage-loan servicers. 
{¶ 35} In this case, and in many like it, a residential homebuyer 
contracted with a lender to provide her residential real estate loan.  Subsequent to 
executing the note and mortgage for the property, the lending institution entered 
into an agreement with a mortgage servicer, HomEq.  HomEq receives payment 
for its services by keeping a portion of the consumer’s residential mortgage 
payments.  Thus, the lender is contractually responsible for paying HomEq, but 
the payment is incorporated into the interest rate and fees paid by the consumer, 
in effect transferring the cost of HomEq’s services to the consumer.  As described 
by the majority opinion, HomEq’s services are extensive and primarily involve 
interaction with the consumer.  But HomEq is not a party to the mortgage 
contract, and although the consumer does not necessarily want to have any sort of 
relationship with HomEq, he or she has no choice in the matter. 
{¶ 36} According to Sondra Anderson, the plaintiff/consumer in the 
underlying case, her complaint alleges that HomEq failed to apply her mortgage 
payments in the manner required by her note and mortgage, failed to provide 
accurate information in response to her repeated inquiries about her residential 
mortgage loan, and accepted payments without acknowledging them and without 
forwarding them to her mortgage-loan lender.  Thus, she was subject to HomEq’s 
SUPREME COURT OF OHIO 
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neglect and/or malfeasance and yet she had no means of recourse because she did 
not have a contractual relationship with HomEq. 
{¶ 37} Although some federal district courts have interpreted Ohio’s 
CSPA in similar cases, the federal court reviewing the present case determined 
that there was no controlling precedent on the definitions of “consumer 
transaction” and “supplier” in the context of mortgage-loan servicers.  I agree 
with Anderson’s assertion that mortgage-loan-servicing companies transfer their 
services to the consumers, because the provided services do not constitute part of 
the original real estate transaction and because the plain language of R.C. 
1345.01(A) does not provide any exceptions for mortgage servicers. 
{¶ 38} R.C. 1345.01(A) provides as follows: 
 
“Consumer transaction” means a sale, lease, assignment, 
award by chance, or other transfer of an item of goods, a service, a 
franchise, or an intangible, to an individual for purposes that are 
primarily personal, family, or household, or solicitation to supply 
any of these things.  “Consumer transaction” does not include 
transactions between persons, defined in sections 4905.03 and 
5725.01 of the Revised Code, and their customers, except for 
transactions involving a loan made pursuant to sections 1321.35 to 
1321.48 of the Revised Code and transactions in connection with 
residential mortgages between loan officers, mortgage brokers, or 
nonbank mortgage lenders and their customers; transactions 
involving a home construction service contract as defined in 
section 4722.01 of the Revised Code; transactions between 
certified public accountants or public accountants and their clients; 
transactions between attorneys, physicians, or dentists and their 
 
January Term, 2013 
13 
 
clients or patients; and transactions between veterinarians and their 
patients that pertain to medical treatment but not ancillary services. 
 
{¶ 39} To summarize the foregoing language, the statute establishes that a 
consumer transaction includes transactions that involve the provision of goods, 
services, or intangibles to individual consumers for personal, family, or household 
purposes.  The statute then provides exceptions.  Those exceptions include 
transactions between a customer and a financial institution, a dealer in intangibles, 
or an insurance company.  The statute then provides an exception to those 
exceptions: even if the entity is a financial institution or other exempted entity, the 
transaction nonetheless constitutes a consumer transaction if it is a particular kind 
of short-term loan under $500, or if it is a transaction involving a home 
construction contract or a transaction in connection with a residential mortgage 
involving an interaction between a customer and his or her loan officer, mortgage 
broker, or non-bank mortgage lender.  Finally, the statute exempts transactions 
between certain professionals and their clients or patients, but those transactions 
are not pertinent to the present controversy. 
{¶ 40} The CSPA is a remedial law, so it must be liberally construed in 
favor of the consumer.  Einhorn v. Ford Motor Co., 48 Ohio St.3d 27, 29, 548 
N.E.2d 933 (1990), citing R.C. 1.11.  HomEq is not a financial institution, dealer 
in intangibles, or an insurance company, nor does it fit within the definitions of 
loan officer, mortgage broker, or nonbank mortgage lender.  Thus HomEq does 
not fit within the exceptions for any particular entities.  Because mortgage 
servicers are not excluded by the statute, they must be included, and their services 
therefore constitute consumer transactions that are covered by the CSPA. 
{¶ 41} The majority’s primary holding is that HomEq’s collection of 
mortgage payments and other services cannot be considered consumer 
transactions, because the consumers’ only contractual relationship is with the 
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lending institutions and because the underlying transaction that HomEq’s services 
facilitate is the original real estate transaction.  Thus, the majority focuses entirely 
on the transactions rather than on the parties to the transactions.  However, the 
language of R.C. 1345.01(A) demonstrates that the nature of the underlying 
transaction does not matter as much as the identity of the commercial entity 
involved in the transaction.  Specifically, the statute provides that the transaction 
between a consumer and a “nonbank mortgage lender” qualifies as a consumer 
transaction, even though that relationship will obviously involve a pure real estate 
transaction. 
{¶ 42} Further, in many federal decisions that address the applicability of 
Ohio’s CSPA to mortgage-loan servicers, the courts have held that the CSPA may 
apply.  Dowling v. Litton Loan Servicing, L.P., S.D.Ohio No. 2:05-CV-0098, 
2006 WL 3498292, at *13-14 (Dec. 1, 2006); Kline v. Mtge. Electronic 
Registration Sys., Inc., S.D.Ohio No. 3:08cv408, 2011 WL 1233642, at *4-5 
(Mar. 29, 2011); Jent v. BAC Home Loans Servicing, L.P., S.D.Ohio No. 1:10-
CV-00783, 2011 WL 2971846, at *3 (July 21, 2011); Munger v. Deutsche Bank, 
N.D.Ohio No. 1:11-CV-00585, 2011 WL 2930907, at *9 (July 18, 2011); Sims v. 
CitiMortgage, Inc., N.D.Ohio No. 1:12 CV 00096, 2013 WL 310236, at *5 (Jan. 
25, 2013).  These decisions rely on the principle of liberal application in favor of 
the consumer or analogize mortgage servicers to consumer-debt collectors.  “Ohio 
courts have long held that entities engaging in the collection of consumer debts 
are suppliers.”  Kline at *4, citing Celebrezze v. United Research, Inc., 19 Ohio 
App.3d 49, 482 N.E.2d 1260 (9th Dist.1984). 
{¶ 43} By way of comparison, the evolution of court holdings on the issue 
whether debt collectors fall within the purview of the CSPA confirms that the 
appropriate focus in this analysis is on the identity of the commercial entity 
involved in the transaction instead of the nature of the original underlying 
transaction.  Early federal decisions on the subject had determined that debt 
 
January Term, 2013 
15 
 
collecting did not involve consumer transactions under the Ohio CSPA if the 
original lender was a financial institution, even when the debt collection took 
place after the debt had been transferred to a debt collector.  See Gionis v. Javitch, 
Block & Rathbone, 405 F.Supp.2d 856, 869 (S.D.Ohio 2005).  Later, federal 
courts rejected that view and determined that an assignee of a debt who is not a 
financial institution has no entitlement to the financial-institution exemption to the 
CSPA. The reasoning is compelling.  A debt collector is not a financial 
institution; much like a mortgage servicing company is not as well. See Lee v. 
Javitch, Block & Rathbone, L.L.P., 522 F.Supp.2d 945, 956 (S.D.Ohio 2007).  
The holding that a non-exempted entity cannot hide behind the exempted status of 
the original entity is supported by the fact that “[a] bank customer has other 
adequate remedies if a bank should engage in deceptive or unfair conduct in 
making a loan or issuing a credit card.  But if the financial institution sells a past 
due or defaulted debt at a deep discount to an unrelated party, whose only 
business is debt collection, the sound policy for the financial institution exemption 
evaporates.”  Id. 
{¶ 44} In fact, the other exceptions to the CSPA are also justified by the 
fact that the transactions involved are heavily regulated by other statutory 
schemes.  See, e.g., Heritage Hills, Ltd. v. Deacon, 49 Ohio St.3d 80, 83, 551 
N.E.2d 125 (1990) (landlord-tenant lease agreements are already well regulated 
by R.C. Chapter 5321); 7A, Part I, National Conference of Commissioners on 
Uniform State Laws, Uniform Laws Annotated, Business and Financial Laws, 
Uniform Consumer Sales Practices Act, Official Comment to Section 2(1), at 73 
(Master Ed.2002) (the sale of real estate is completely excluded from the CSPA 
“[o]n the assumption that land transactions frequently are, and should be, 
regulated by specialized legislation”).  The fact that mortgage-loan servicing is 
not so regulated is all the more reason to find that the CSPA applies. 
SUPREME COURT OF OHIO 
16 
 
{¶ 45} Given the foregoing history of protecting consumers when they are 
forced into the hands of third-party debt collectors, it is wholly appropriate to also 
protect residential-mortgage-loan borrowers when they are forced into the hands 
of mortgage-loan servicers.  I would therefore respond to the first certified 
question by holding that the servicing of a borrower’s residential mortgage loan 
constitutes a “consumer transaction” as defined in R.C. 1345.01(A). 
{¶ 46} The second certified question asks whether a mortgage-loan 
servicer constitutes a “supplier” in a consumer transaction, as defined in R.C. 
1345.01(C).  That statute defines a supplier as an entity that effects consumer 
transactions. Because I believe that the correct answer to the first certified 
question is yes, i.e., the transactions performed by a mortgage-loan servicer are 
consumer transactions, I would also answer the second question in the 
affirmative, i.e., a mortgage-loan servicer is a supplier in a consumer transaction. 
{¶ 47} The scope of the term “consumer transaction” is broad and its 
exceptions are very specific and limited.  HomEq’s services clearly do not fit 
within any of the exceptions articulated in R.C. 1345.01.  We owe it to the public 
to curb the activities of unregulated entities when it is the consumers, and only the 
consumers, who are left homeless and in dire financial straits as a result of the 
entities’ unscrupulous and/or negligent activities. To do otherwise shirks our duty 
pursuant to R.C. 1.11 to liberally construe the CSPA in favor of the consumer.  I 
must therefore dissent. 
____________________ 
Murray & Murray Co., L.P.A., John T. Murray, Leslie O. Murray, and 
Michael J. Stewart, for respondent. 
 
Porter, Wright, Morris & Arthur, L.L.P., James D. Curphey, Kathleen M. 
Trafford, and L. Bradfield Hughes; and Buckley Sandler, L.L.P., and Benjamin B. 
Klubes, for petitioner. 
 
January Term, 2013 
17 
 
 
Wells Law Office, Inc., and Amy L. Wells, urging that the certified 
questions be answered in the affirmative for amicus curiae Ohio Association for 
Justice. 
 
Michael DeWine, Attorney General, Alexandra T. Schimmer, Solicitor 
General, Michael J. Hendershot, Chief Deputy Solicitor, and Jeffrey R. Loeser, 
Assistant Attorney General, urging that the certified questions be answered in the 
affirmative for amicus curiae the Ohio Attorney General. 
Linda Cook, Lauren E. Dreshman, Tammy L. Greenwald, Aneel L. 
Chablani, and Andrew D. Neuhauser, urging that the certified questions be 
answered in the affirmative for amici curiae Ohio Legal Services Programs, 
Coalition on Homelessness and Housing in Ohio, Toledo Fair Housing Center, 
Miami Valley Fair Housing Center, and the National Consumer Law Center. 
_______________________