# U ni te d S ta te s Co ur t of A pp ea ls For the Eig hth Circu it

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No. 1 6- 26 49

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Dale E. W he at le y ; St acy Frank li n

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff s - Ap pe ll an ts

v.

JP Mo rg an Ch as e Ban k, N.A.; U.S. Ban k, N.A.; Se le ct Po rtf ol io Serv ic in g, In c.

ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el le es

__ __ __ __ __ __ App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Weste rn Dis tri ct of M is so ur i - St . Jo se ph

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Su bm it te d: Marc h 7 , 20 17 Fi le d: Ju ne 20 , 20 17

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Befo re RILEY, Ch ie f Ju dg e, GRUENDER, Ci rcu it Ju dg e, an d GRITZNER, Dis tri ct 1 2 Ju dg e.

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RILEY, Chi ef J ud ge

.

The Hon or ab le W il li am Ja y Ri le y st ep pe d do wn as Ch ie f Ju dg e of th e Uni te d 1 St at es Co ur t of App eal s fo r th e Eig ht h Ci rcu it at th e cl os e of bu si ne ss on Mar ch 10
, 20 17 . He has be en su ccee de d b y th e Hon or ab le Lave ns ki R. Sm it h.

The Hon or ab le Ja m es E. Grit zn er, Uni te d St at es Dis tri ct Ju dg e fo r th e 2 So ut he rn Dis tri ct of I owa , si tt in g b y de si gn at io n.Dale W he at le y an d h i s e x- wife St acy Fra nk li n su ed se ve ral fin an ci al en ti ti es

fo r fo recl os in g on th e m or tg ag e lo an W he a t le y to ok ou t on Fran kl in ’s ho us e. The
di st ric t co ur t he ld th e fo recl os ur e was jus ti fie d an d gr an te d th e de fen da nt s su m m ary 3 ju d g m en t. W he at le y ap pe al s wit h res pe ct to hi s cl ai m s un de r th e Mi ss ou r i
Mer ch an di si ng Prac ti ces Act (MM PA), Mo

. Rev

. St at

. § 40 7.0 20

. Fran kl in ap pe al s

on he r c l a im s fo r to rti ou s in te rfer en ce wit h co nt ract

. W it h ap pe ll at e juri sd ic ti on

un de r 28 U.S.C. § 1 29 1, we af fir m th e jud gm en t.

I. BACKGRO UND
In 20 06
, Fran kl in wan te d to cas h ou t h e r e q u i t y a nd refi na nc e he r ho us e in
Co sb y , Mi ss ou ri, bu t he r cred it was no t go od en ou gh to qu al ify fo r a lo an

. W he at le y

ve rb al ly ag reed to he lp Fran kl in acco m pl is h m or e or le ss th e sa m e res ul t by t ak in g

ou t a m or tg ag e hi m se lf an d bu y in g th e ho us e f r o m h e r , on th e un de rs ta nd in g th at
Fran kl in wou ld be res po ns ib le fo r pa y in g of f th e lo an an d W he at le y wou ld de ed he r th e pr op ert y whe n sh e di d. In 20 09
, Fran kl in m is se d se ve ral pa y m en ts an d th e lo an

wen t i nt o d efau lt

. 4

Afte r fir st ag reei ng to a rep ay m en t pl an wit h th e lo an se rv ic er, EMC Mo rtg ag e Co rp or at io n, W he at le y ap pl ie d fo r a lo an m od ifi cat io n. EMC ul ti m at el y of fere d
W he at le y a m od ifi cat io n in May 20 10

. The m od ifi cat io n ag reem en t was co nd it io ne d

up on W he at le y affi rm in g th e tru th of se ve ral st at em en ts , in c l u di ng : “ I am

ex pe rie nc in g a fin an ci al ha rd sh ip
, an d as a res ul t, am ei th er in de fau lt un de r th e Loa n Doc um en ts or a de fau lt is im m in en t.” In an at ta ch ed affi da vi t, W he at le y cl ai m ed he

The Hon or ab l e R o b e r t E. Lars en , Uni te d St at es Mag is tra te Ju dg e fo r th e 3 W es te rn Dis tri ct of Mi ss ou ri, to who m th e cas e was refe rred fo r fin al di sp os it io n by

co ns en t o f th e p art ie s u nd er 2 8 U.S.C. § 63 6( c).

Thi s was act ua ll y th e se co nd de fau lt

. The fir st de fau lt
, ab o u t a y ear earl ie r, 4

was res ol ve d whe n W he at le y co nv in ced th e lo a n s e r v ic er to m od ify th e lo an by ha vi ng Fran kl in ’s st ep fat he r fal se ly clai m to be lea si ng th e h ou se

.
-2

-di d no t ha ve en ou gh cas h on ha nd to affo rd hi s m or tg ag e pa y m en ts on to p of hi s ba si c

li vi ng ex pe ns es

. W he at le y al so no te d he di d no t li ve in th e ho us e an d pai d ren t and

ut il it ie s el s e w h ere. And he rep eat ed ly ha d to ld EMC rep res en ta ti ve s th at Fran kl in

m ad e th e m or tg ag e p ay m en ts , no t h im

.

W he at le y si gn ed th e m od ifi cat io n ag r e e men t an d ret ur ne d it to EMC. EMC
al so si gn ed th e ag reem en t, bu t di d no t act ua ll y pu t th e m od ifi cat io n in to effe ct

. EMC
ha d m is cal c u l a te d W he at le y ’s u np ai d ba la nc e—d ou bl e-co un ti ng so m e in te res t th at ha d be en cap it al iz ed

—s o th e r e p a y m en t te rm s in th e ag reem en t di d no t m at ch th e (lo wer) am ou nt W he at le y act ua ll y owe d, whi ch cau se d EMC’s au to m at ed co m pu te r syste m to reject th e m od ifi cat io n. Thu s, th e ch an ge s to t h e l o a n were ne ve r
pr oc es se d, EMC’s reco rd s sh owe d th e lo an st il l be in g in de fau lt
, an d EMC co nt in ue d

se nd in g W he at le y no ti ces of de fau lt an d fo recl os ur e

. Wh e a tl ey sp ok e wit h EMC

rep res en ta ti ve s m an y

ti m es , bu t t he is su e was ne ve r res ol ve d.

St art in g i n 2 00 9, EMC ’s lo an -s erv ic in g po rtf ol io was a cq ui red by JPMo rg an Ch as e Ban k, N.A. (C ha se ), whi ch fu ll y as su m ed se rv ic in g W he at le y ’s l o a n in May
20 11

. Ch as e rep res en ta ti ve s tri ed to wor k wit h W he at le y to res ol ve th e ap pa ren t de fau lt
, bu t b y t h e n he ha d be co m e fru st rat ed wit h hi s un su cces sf ul de al in gs wit h
EMC an d st op pe d res po nd in g. Abo ut two y ears la te r, Ch as e b r o u g h t in Sel ect
Po rtf ol io S e r v ic in g, In c. (SPS ), a su b- se rv ic er, to ha nd le W he at le y ’s lo an

. SPS
br ie fly tri ed to wor k th e is s u e ou t wit h W he at le y , bu t he was st il l no t co op erat in g. The n, in Aug us t 20 13
, SPS he ld a fo recl os ur e sa le
, whe re U.S. Ban k, N.A., th e

su cces so r tru st ee fo r th e tru st th at own ed W he at le y ’s lo an (al on g wit h ot he rs ), bo ug ht
th e h ou se wit h a ful l-c red it bi d.

W he at le y an d Fra n k l i n s u e d Ch as e in Mi ss ou ri st at e co ur t. Afte r Ch as e

rem ov ed th e cas e, se e 28 U.S.C. § 14 41 (a) (rem ov al ); id

. § 13 32 (a)( 1) (d iv ers it y juri sd ic ti on ), W he at le y

an d F ran kl in am en de d t he ir p le ad in gs to ad d clai m s ag ai ns t U.S. Ban k an d SPS. The op erat iv e co m pl ai nt rai se d fo ur co un ts , al l by bo th pl ai nt iff s

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-ag ai ns t al l th ree de fen da nt s: w r o n g fu l fo recl os ur e, br each of co nt ract , to rti ou s

in te rfer en ce, an d de cep ti ve or un fai r pr act ic es in vi ol at io n of th e MM PA. The di st ric t

co ur t gr an te d su m

m ary jud gm en t fo r th e de fen da nt s on al l fo ur co un ts , bu t W he at le y

an d F ran kl in on ly app eal th e la st two , each sep arat el y tak in g o ne co un t.

II

. DISCUSS IO N
We rev ie w th e gr an t of su m m ary jud gm en t de no vo

. See, e.g ., D u p p s v

. Trav el ers In s. Co
., 80 F.3 d 31 2, 31 3 (8 th Ci r. 19 96 ). The in te rp ret at io n an d

ap pl ic at io n of st at e la w i s al so a le ga l is su e we de ci de de no vo

. See id

. Su m m ary jud gm en t is ap pr op ria te if “ th ere is no ge nu in e di sp ut e as to an y m at eri al fact an d th e

m ov an t is en ti tl ed to jud gm en t as a m at te r of la w.” Fed

. R. Ci v. P. 56 (a). The di st ric t

co ur t he ld th e de fen da nt s ha d th e rig ht to fo recl os e on th e ho us e, so W h e a t l e y ’s
MM PA cl ai m s fai le d as a m at te r of la w be cau se he co u l d no t pr ov e hi s lo ss was

cau se d by an y m is co nd uc t of th e de fen da nt s, as op po se d to hi s own “ no nc om pl ia nc e wit h th e lo an do cu m en ts .” The le ga li ty of th e fo recl os ur e was li ke wis e fat al to
Fran kl in ’s t o r t i o u s- in te rfer en ce cl ai m s, acco rd in g to th e di st ric t co ur t, be cau se it

m ean t Fr an kl in co ul d n ot est ab li sh th e “ ab se nc e o f jus ti fic at io n” th at is a ne ces sa ry el em en t o f s u c h a c la im
, se e, e.g ., Cm ty. Tit le Co

. v. Ro os ev el t Fed

. Sav

. & Loa n Ass ’n, 79 6 S.W .2d 36 9, 37 2 (Mo

. 19 90 ). W e ag ree as to bo th th e fo recl os ur e be in g jus ti fie d a nd th e co ns eq ue nc es of t ha t fa ct for th e p la in ti ffs ’ cl ai m s. 5

W e reject th e de fen da nt s’ su gg es ti on th at by no t ap pe al in g th e su m m ary 5 jud gm en t on th e wro ng fu l-f or ecl os ur e co un t, W he at le y an d Fran kl in ab an do ne d an y ch al le ng e to th e le ga li ty of th e fo recl os ur e. The ch oi ce to le t an ad ve rs e ru li ng st an d

on a pa rti cu la r cl ai m whi le ap pe al in g ot he rs do es no t co ns ti tu te a bi nd in g co nc es si on th at th e di st ric t co ur t was rig ht ab ou t ev ery (o r an y ) l e g a l is su e wrap pe d up in th e

un ap pe al ed ho ld in g. The re is no ru le th at W he at le y an d Fran kl i n n e ed ed to ap pe al

ev ery th e o r y o f l ia bi li ty t ha t m ig ht lo gi cal ly res t on a pa rti cu la r pr op os it io n— he re, th at th e fo recl os ur e was no t jus ti fie d— to be ab le to ad va nc e th at pr op os it io n on ap pe al

. Cas es ab ou t tre at in g a fai lu re to rai se an is su e as a waiv er or fo rfei tu re, se e, e.g ., Sid eb ot to m

v. Del o, 46 F.3 d 7 44 , 75 0 (8 th Cir . 19 95 ), are b es id e th e p oi nt , for th e si m pl e reas on th at W he at le y an d Fran kl in do arg ue (cl earl y an d at le ng th ) th at th e

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-The m od ifi cat io n ag reem en t ex pl ic it ly pr ov id ed it wou ld on ly “ am en d an d

su pp le m en t” th e ex is ti ng lo an do cu m en ts “ [ i ] f [ Whe at le y ’s] rep res en ta ti on s

. . .
co nt in ue [d ] to b e t r u e i n al l m at eri al res pe ct s.” (Em ph as is ad de d)

. By cl ear im pl ic at io n, if W he at le y ’s m at eri al rep res en ta ti on s were no t tru e, th e ag reem en t di d

no t “ am en d an d su pp l e ment ” an y th in g, th e ex is ti ng ve rs io n of th e lo an st ay ed in
de fau lt
, an d fo recl os ur e rem ai ne d an au th or iz ed rem ed y

. Tha t is wha t ha pp en ed he re.

In th e m od ifi cat io n ag reem en t, W he at le y affi rm ed : “ I am e x pe rie nc in g a fin an ci al ha rd sh ip
, an d as a res ul t, am

. . . in de fau lt un de r th e Loa n Doc um en ts .” At
it s co re, th at st at em en t was a rep res en ta ti on ab ou t th e reas on fo r th e de fau lt —t ha t it

was “ a res ul t” of a fin an ci al ha rd sh ip W he at le y was su ffer in g. And in th at ke y (an d

m at eri al ) res pe ct it was un tru e. Th e r e co rd
, in cl ud in g W he at le y ’s de po si ti on
t e s t i mon y , i s cl ear th at th e m is se d pa y m en ts an d de fau lt were cau se d by Fra nk li n’s
in ab il it y to pa y , no t Wheat le y ’s.

W he at le y pr ot es ts be cau se EMC kn ew it was Fran kl in who m ad e th e pa y m en ts

on th e ho us e. Irre le va nt

. Not hi ng W he at le y m ig ht h a v e to ld EMC ab ou t hi s

arra ng em en t wit h Fran kl in co ul d ha ve m ad e it tru e whe n he sa id th e de fau lt was th e

res ul t of hi s own fin an ci al co nd it io n, or ch an ge d hi s cl e a r st at em en t in to a
rep res en ta ti on ab ou t Fran kl in ’s fin an ci al co nd it io n. Nor do es it m ak e an y di ffer en ce whe th er, as W he at le y cl ai m s, he c o u l d n o t ha ve affo rd ed th e m or tg ag e hi m se lf,
be cau se th ere is no ev id en ce W he at le y wou ld ha ve m ad e th e pa y m en ts if he ha d th e

m on ey

. By al l in di cat io ns , whe th er th e de bt was pa id de pe nd ed en ti rel y on whe th er

6

fo recl os ur e was no t ju st ifi ed

.
Fo r th e fir st ti m e in hi s rep ly br i e f
, Wh eat le y fau lt s th e di st ric t co ur t fo r 6 read in g hi s al le ga ti on s ab ou t hi s own “ fin an ci al ha rd sh ip ” as ad dr es si ng whe th er he

c o u ld ha ve affo rd ed th e m on th ly m or tg ag e pa y m en ts

. Acco rd in g to W he at le y, h e act ua ll y m ean t he co ul d no t ha ve affo rd ed th e (m uc h la rg er ) lu m

p su m du e on th e de fau lt ed lo an

. W e fin d th at ex pl an at io n d ub io us an d t he po in t lik el y fo rfei te d, bu t in an y ev en t th e di st in ct io n is im m at eri al

. The re is no m or e ev id en ce W he at le y wou ld

-5

-Fran kl in pa id it

. Bec au se th e am ou nt s du e ap pa ren tl y wou ld ha ve go ne un pa id

reg ard le ss o f whe th er W he at le y co ul d affo rd th em , W he at le y ’s fin an ci al

co nd it io n— wha te ve r it was an d wha te ve r EMC kn ew ab ou t it —h ad no be ari ng on th e
tru th fu ln es s o f hi s re pr es en ta ti on ab ou t t he reas on for th e d efau lt

.

W he at le y an d Fran kl in m ak e no arg um en t th at , ev e n i f W he at le y li ed in th e

m od ifi cat io n ag reem en t, th e fo recl os ur e was st il l un la wfu l. Thu s we ne ed no t ad dr es s th e di st ric t co ur t’s ot he r reas on fo r up ho ld in g th e fo recl o s u r e

— th at W he at le y ’s

arra ng em en t wit h Fran kl in vi ol at ed th e du e on sa le pr o v i s i on of hi s Deed of Trus t.
Nor do we ne ed to co ns id er th e de fen da nt s ’ a r g u men t s th at th ere was no t en ou gh

ev id en ce of wha t ex act ly eac h of t h e m di d to in cu r li ab il it y on each co un t, be cau se W he at le y an d Fran kl in do no t su gg es t an y way th ei r MM PA or to rti ou s- in te rfer en ce cl ai m s co ul d s ur vi ve th e fo recl os ur e b ei ng leg al

.

II I. CONCLUSI ON
Su m m ary jud gm en t fo r th e d efen da nt s was pro pe r. Affir m ed

.

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ha ve pa id of

f th e lu m p su m if he ha d th e m on ey th an he wo ul d ha ve m ad e th e

m on th ly pay m en ts

.
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