United States Court of Appeals 

For the First Circuit 

No. 16-1228 

CATHY N. BATES, a/k/a Lynn Cathy Bates, a/k/a Cathy Lynn 

Nichols; and TIMOTHY J. BATES, 

Appellants, 

v. 

CITIMORTGAGE, INC., s/b/m to ABN AMRO Mortgage Group, Inc.; 

and FEDERAL HOME LOAN MORTGAGE CORPORATION, 

Appellees, 

VICTOR W. DAHAR, 

Trustee. 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW HAMPSHIRE 

[Hon. Steven J. McAuliffe, U.S. District Judge] 

Before 

Lynch, Thompson, and Barron, 

Circuit Judges. 

Terrie Harman, Kristina Cerniauskaite, and Harman Law 

Offices, on brief for Appellants. 

Gregory N. Blase, David D. Christensen, and K&L Gates LLP, on 

brief for Appellees. 

December 14, 2016 
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THOMPSON, Circuit Judge. Cathy N. Bates and Timothy J. 

Bates (our Appellants, whom we also call the Bateses) went bankrupt 

and Appellees foreclosed on their home. At the end of the tax year, 

they each received an IRS Form 1099-A in the mail alerting them 

that the foreclosure might have tax consequences. The Bateses sued 

our Appellees, claiming that the Forms were a coercive attempt to 

collect on the mortgage debt--a debt Appellees have no right to 

collect because it was discharged during the Bateses' Chapter 7 

proceedings. The bankruptcy court and the district court found the 

Forms were not objectively coercive attempts to collect a debt. We 

agree, and so we affirm. 

The Facts 

The Bateses took out a loan from Appellee CitiMortgage, 

Inc. s/b/m to ABN AMRO Mortgage Group, Inc. ("CitiMortgage") 

secured by a mortgage on their home in Newport, New Hampshire. The 

Bateses filed for Chapter 7 bankruptcy in 2008 and their mortgage 

debt was discharged in 2009. The Bateses entered into a Loan 

Modification Agreement with CitiMortgage after the discharge. 

Under that Agreement, the Bateses did not reaffirm personal 

liability for the mortgage, but they could avoid foreclosure and 

stay in their home as long as they continued to make payments to 

CitiMortgage. The Bateses eventually stopped making payments, 

CitiMortgage foreclosed, and the Bateses moved out in October 2011. 
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In January 2012, the Bateses each received an IRS Form 

1099-A ("1099-A Form" or "Form") in the mail. According to the 

instructions on the back of the Forms, "[c]ertain lenders who 

acquire an interest in property that was security for a loan . . 

. must provide you with this statement. You may have reportable 

income or loss because of such acquisition or abandonment." Both 

Forms listed the lender as "Freddie Mac" (also known as Federal 

Home Loan Mortgage Corporation, our other Appellee) "c/o 

CitiMortgage." And, as of the time of acquisition, the Forms listed 

the "balance of principal outstanding" as $194,624 and the fair 

market value of the property as $168,000. Box Five on the Forms 

was checked, indicating that "the borrower was personally liable 

for the repayment of the debt." The front of the Forms also says 

"This is important tax information and is being furnished to the 

Internal Revenue Service. If you are required to file a return, a 

negligence penalty or other sanction may be imposed on you if 

taxable income results from this transaction and the IRS determines 

that it has not been reported."

We pause here to note that a discharged debt can count 

as taxable income. 26 U.S.C. § 61(a)(12). But, as Appellees point 

out (and the Bateses do not dispute), debt discharged in bankruptcy 

proceedings (like the Bateses') and on a qualified principal 

residence (like the Bateses') does not. 26 U.S.C. § 108(a)(1)(A), 

(E). The Bateses' 1099-A Forms directed them to "Pub. 4681 for 
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information about foreclosures and abandonments." That publication 

explains: "Debt canceled in a title 11 bankruptcy case is not 

included in your income." I.R.S., Dep't of the Treasury, 

Publication 4681: Canceled Debts, Foreclosures, Repossessions, 

and Abandonments (for Individuals) 4 (2011), 

https://www.irs.gov/pub/irs-prior/p4681--2011.pdf. The Bateses do 

not claim that they owed any taxes as a result of the foreclosure 

or the Forms. 

But, the Bateses say the 1099-A Forms reported bad 

information. After their bankruptcy, the Bateses were no longer 

personally liable for the mortgage debt, so they say Freddie Mac 

should not have checked the box showing the opposite.1 Timothy 

Bates averred that he called Appellees about his Form and was told 

that the debt was not discharged because it was a secured debt. 

The Bateses' attorney later sent a letter to Freddie Mac pointing 

out that the Bateses' mortgage was discharged in bankruptcy and 

demanding the revocation of the 1099-A Forms. The Bateses say they 

were terrified they would owe additional income taxes unless they 

 1 The Bateses also claim that the fair market value of their 

home was the price Freddie Mac paid at the foreclosure sale, 

$205,237, so Freddie Mac should not have reported the fair market 

value as $168,000 on the 1099-A Forms. Appellees dispute the fair 

market value of the home. Whatever the home's value, the Bateses 

did not make this argument or present any evidence of this fact to 

the bankruptcy court, so the argument is waived. Crefisa Inc. v. 

Wash. Mut. Bank (In re Colonial Mortg. Bankers Corp.), 186 F.3d 

46, 49-50 (1st Cir. 1999). 
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resolved the matter with Freddie Mac or CitiMortgage. Freddie Mac 

did not revoke the Forms and claims they are accurate. 

One other important detail: the Bateses received a prerecorded phone call from CitiMortgage on June 11, 2013, requesting 

proof of insurance on their old home; insurance was required under 

the terms of their former mortgage agreement. The phone call upset 

Timothy Bates: "it seemed we would never be free from the debt to 

CitiMortgage." 

In May 2013, about one month before receiving the laststraw phone call from CitiMortgage, the Bateses filed a motion to 

reopen their bankruptcy proceedings, then sued CitiMortgage and 

Freddie Mac for attempting to collect on the discharged mortgage 

debt in violation of the discharge injunction provisions of 11 

U.S.C. § 524(a). Following cross-motions for summary judgment, the 

bankruptcy court granted the Bateses summary judgment on their 

claim that the 2013 phone call violated the discharge injunction, 

though it later found the Bateses did not prove any damages on 

this claim. The bankruptcy court granted summary judgment for our 

Appellees on all of the Bateses' other claims, including their 

claim that the 1099-A Forms violated the discharge injunction. The 

bankruptcy court found the Forms gave the Bateses "no objective 

basis" to believe Appellees were trying to collect the discharged 

mortgage debt. The Bateses appealed the bankruptcy court's rulings 

on damages and the 1099-A Forms. The district court affirmed both. 
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The Bateses now appeal the bankruptcy court's ruling on the 1099-

A Forms to us. 

Standard of Review 

Under Federal Rule of Bankruptcy Procedure 7056, as 

under Federal Rule of Civil Procedure 56, a motion for summary 

judgment "should be granted 'only when no genuine issue of material 

fact exists and the movant has successfully demonstrated an 

entitlement to judgment as a matter of law.'" Hannon v. ABCD 

Holdings, LLC (In re Hannon), 839 F.3d 63, 69 (1st Cir. 2016) 

(quoting Desmond v. Varrasso (In re Varasso), 37 F.3d 760, 763 

(1st Cir. 1994)). We review the bankruptcy court's summary judgment 

decision de novo and give no special deference to the district 

court's findings. Id. 

The Bateses' Claim 

The Bateses allege that the 1099-A Forms violated the 

discharge injunction provisions of 11 U.S.C. § 524(a), which 

prohibit acts to collect, recover, or offset debts discharged in 

bankruptcy proceedings. See Canning v. Beneficial Me., Inc. (In re 

Canning), 706 F.3d 64, 69 (1st Cir. 2013). To prove a discharge 

injunction violation, a debtor must establish that the creditor 

"(1) has notice of the debtor's discharge . . . ; (2) intends the 

actions which constituted the violation; and (3) acts in a way 

that improperly coerces or harasses the debtor." Best v. Nationstar 
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Mortgage LLC, 540 B.R. 1, 9 (B.A.P. 1st Cir. 2015) (quoting Lumb 

v. Cimenian (In re Lumb), 401 B.R. 1, 6 (B.A.P. 1st Cir. 2009)). 

The Bateses and our Appellees only dispute the third 

element--whether the 1099-A Forms were an improperly coercive or 

harassing attempt to collect on the discharged debt. The Bateses 

claim the Forms were coercive, especially because the Forms 

contained false information. They also claim the bankruptcy court 

erred by failing to consider whether the Forms were coercive under 

all the circumstances, including Freddie Mac's failure to correct 

the Forms and the phone call from CitiMortgage about the insurance 

policy on their old home. CitiMortgage and Freddie Mac, of course, 

disagree. So do we. We explain. 

We assess whether conduct is improperly coercive or 

harassing under an objective standard--the debtor's subjective 

feeling of coercion or harassment is not enough. In re Lumb, 401 

B.R. at 6; see Pratt v. Gen. Motors Acceptance Corp. (In re Pratt), 

462 F.3d 14, 19 (1st Cir. 2006). We have no "specific test" to 

determine whether a creditor's conduct meets this objective 

standard, but we consider the facts and circumstances of each case, 

including factors such as the "immediateness of any threatened 

action and the context in which a statement is made." Diamond v. 

Premier Capital, Inc. (In re Diamond), 346 F.3d 224, 227 (1st Cir. 

2003); see In re Pratt, 462 F.3d at 20. "[A] creditor violates the 

discharge injunction only if it acts to collect or enforce a 
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prepetition debt; bad acts that do not have a coercive effect on 

the debtor do not violate the discharge." In re Lumb, 401 B.R. at 

7. 

For example, a debt collector in Best, 540 B.R. at 10-

11, sent a series of letters stating information like the unpaid 

loan balance and that failure to pay could result in foreclosure; 

the letters included a disclaimer explaining that if the debt had 

been discharged in bankruptcy, then the letter was for 

informational purposes only. These letters did not violate the 

discharge injunction because "[s]tatements of an informational 

nature, even if they include a payoff amount, are not generally 

actionable if they do not demand payment," and these letters did 

not. Id. at 11. Likewise, references to potential foreclosure in 

letters to a debtor during bankruptcy proceedings were not coercive 

where the letters accurately reported that the debtor could face 

foreclosure after bankruptcy but threatened no "immediate action" 

against the debtors. Jamo v. Katahdin Fed. Credit Union (In re 

Jamo), 283 F.3d 392, 402 (1st Cir. 2002) (quoting Brown v. Penn. 

State Emps. Credit Union, 851 F.2d 81, 86 (3d Cir. 1988)). 

The bankruptcy court found, and we agree, that the 1099-

A Forms are not a collection attempt. The 1099-A Forms state that 

they provide "tax information" and that, because of the 

foreclosure, "[y]ou may have reportable income or loss." As in 

Jamo and Best, the Forms provide "information," but they do not 
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demand payment or threaten any action. As in Jamo and Best, the 

1099-A Forms state the outstanding principal balance as of the 

date of foreclosure, but they do not indicate that the Bateses owe 

any money to anyone--not taxes to the IRS, and not the discharged 

debt to Freddie Mac or CitiMortgage. And that Freddie Mac may have 

incorrectly checked the box showing that "the borrower was 

personally liable for repayment of the debt" does not change this 

analysis: nothing on the Forms indicates that the Bateses' 

potential "reportable income or loss" might be any different 

because of the checked box, and checking the box does not change 

the informational nature of the Forms or create a demand for 

payment. Because the discharge injunction prohibits acts "to 

collect, recover or offset" discharged debt, 11 U.S.C. § 524(a)(2), 

the fact that the 1099-A Forms do not attempt to collect any money 

from the Bateses would seem to decide the issue. 

Undeterred, the Bateses claim the bankruptcy court was 

wrong because the Forms put the Bateses "between a rock and a hard 

place": they had to pay the discharged debt or seek tax advice. 

This tight spot makes the Forms coercive, they say, just as a tight 

spot made a creditor's conduct coercive in In re Lumb, 401 B.R. at 

7. But the Bateses' situation does not compare. 

The In re Lumb creditor threatened to sue the debtor's 

wife to collect if the debtor did not pay up. Id. at 3. When the 

debt was discharged in bankruptcy, the creditor followed through 
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on the threat, and the couple incurred $50,000 in legal fees 

defending the meritless lawsuit. Id. at 5, 8. So, the debtor was 

in a jam: pay the discharged debt, or pay the legal fees and risk 

losing the lawsuit. Id. at 8-9. In re Lumb features all of the 

hallmarks of objectively coercive creditor collection actions, and 

then some: an illicit demand to pay a debt despite the automatic 

stay (and later, the discharge injunction); a threat of immediate 

action if the debtor did not comply; and follow-through on that 

threat. 

The Bateses have nothing in common with the debtor in In 

re Lumb. The Bateses were confronted with no demand for payment 

and the Forms threatened no action. Nor was any action taken by 

Freddie Mac illicit, as the parties agree that Freddie Mac was 

required to file the 1099-A Forms as a result of the foreclosure. 

So unlike in In re Lumb, where the consequence of paying to defend 

a bogus lawsuit was brought on by the creditor's misdeeds, here 

the consequence of potentially needing tax advice was triggered by 

the foreclosure itself. That some consequence may have followed 

from the Bateses' receipt of the 1099-A Forms does not make that 

consequence coercion.2 

 2 The Bateses also make two arguments here related to the fair 

market value of their property. First, they say they would have 

had no tax questions at all if the Forms were filled out correctly 

and "no deficiency or liability [was] displayed." They also argue 

that if they reported what they believed to be the true fair market 

value on their taxes, the discrepancy between their figure and the 
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Finally, the Bateses claim the bankruptcy court erred 

because it did not consider all of the circumstances surrounding 

the 1099-A Forms. Freddie Mac did not correct the Forms after 

Timothy Bates called about his Form and after the Bateses' attorney 

sent a letter demanding the Forms be revoked. They also claim the 

bankruptcy court should have included the May 2013 pre-recorded 

phone message in the coercion calculus. These arguments do not 

help the Bateses. 

As to the failure to correct the 1099-A Forms, the 

Bateses' argue their situation is like that of a debtor faced with 

a false credit report, and a creditor's refusal to correct a false 

credit report can show the creditor was trying to coerce the debtor 

into paying a debt, so that inference should apply here, too. It 

does not. Reporting false or outdated information to a credit 

agency in an attempt to coerce payment on a discharged debt can 

 

1099-A Forms could trigger an audit. As stated above, the Bateses' 

argument about the fair market value of their home is waived 

because it was not presented to the bankruptcy court, and so these 

derivative arguments are waived, too. In any case, the Bateses 

cite a Tax Topic to bolster their claim that a discrepancy between 

a tax return and a 1099-A Form can trigger an audit, but that same 

Tax Topic refers back to Publication 4681, which says debt 

cancelled in bankruptcy is not included in income. Indeed, the 

Bateses do not argue or present evidence that they had any tax 

liability, reported this event on their taxes, sought tax advice, 

or took any other action because of the Forms. See I.R.S., Tax 

Topic 432: Form 1099-A (Acquisition or Abandonment of Secured 

Property) and Form 1099-C (Cancellation of Debt), 

https://www.irs.gov/taxtopics/tc432.html (last updated Oct. 10, 

2016); Publication 4681, supra, at 4. 
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violate the discharge injunction. See In re Zine, 521 B.R. 31, 40 

(Bankr. D. Mass. 2014); Torres v. Chase Bank USA, N.A. (In re 

Torres), 367 B.R. 478, 486 (Bankr. S.D.N.Y. 2007) (collecting 

cases). The reason: negative credit reports have consequences--

like reducing creditworthiness, and with it the debtor's ability 

to get loans in the future--and so a false report might coerce a 

debtor into paying a discharged debt to avoid those consequences. 

In re Torres, 367 B.R. at 486. Evidence that a creditor refused to 

change a false or outdated report can give rise to an inference 

that the creditor intended to coerce the debtor into paying the 

discharged debt. Id. at 489-90. 

The Bateses' situation is not analogous. As we explained 

above, even if Freddie Mac incorrectly checked the box showing the 

Bateses were personally liable for the debt, filing the 1099-A 

Forms did not create tax liability for the Bateses or any other 

consequences beyond those that come with foreclosure. Because 

there were no consequences and no attempt to collect a debt, 

Freddie Mac's failure to retract the 1099-A Forms does not give 

rise to an inference of coercion. 

As to the pre-recorded message, the call was made by 

CitiMortgage around a year and a half after the Bateses received 

their 1099-A Forms. As the bankruptcy court noted, there is no 

other evidence in the record of communication between the Bateses 

and Freddie Mac or CitiMortgage about the discharged debt after 
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the foreclosure.3 The Bateses do not say why this phone call makes 

the Forms objectively coercive, and we see no reason to believe 

that it does. 

Conclusion

 We do not doubt that the 1099-A Forms caused the Bateses 

stress and concern. Indeed, when Timothy Bates called about the 

Forms, CitiMortgage just made things worse: its representative 

gave him wrong information and told him that the debt had not been 

discharged, instead of giving him correct information about his 

debt or helping him understand the 1099-A Forms. But the Bateses' 

subjective feeling of coercion is not enough to prove a violation 

 3 On the Bateses' motion for summary judgment, the bankruptcy 

court found CitiMortgage liable for violating the discharge 

injunction by making the insurance call. In his affidavit in 

support of that motion, Timothy Bates claimed that a CitiMortgage 

representative "insist[ed]" he was "still responsible under the 

mortgage to pay for property insurance" and "demand[ed] that [the 

Bateses] pay for insurance on the foreclosed homestead." At a later 

hearing to assess the damages caused by the call, it came out that 

Mr. Bates did not speak to a CitiMortgage representative. Instead, 

he heard a pre-recorded message explaining that insurance was 

required under the terms of the mortgage agreement, but 

CitiMortgage did not have the policy information on file, and 

requesting that the Bateses "[p]lease provide your insurance 

carrier and policy information to us." On review of the damages 

order, the district court noted: "notwithstanding the bankruptcy 

court's conclusion to the contrary, there is no evidence in this 

record even remotely suggesting that the call was intended to 

coerce plaintiffs into paying a discharged debt . . . Indeed, had 

defendants challenged the bankruptcy court's finding on appeal 

they may well have obtained a reversal." The Bateses did not appeal 

the district court's finding, so we need not wade into this bog. 

Whether or not the call violated the discharge injunction, under 

these circumstances it adds nothing to their 1099-A claim. 
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of the discharge injunction, and the Bateses have not presented 

evidence that the Forms were objectively coercive. In fact, the 

only evidence in the record shows they were not. And so, we affirm.