Source: http://wakeforestlawreview.com/tag/dismissal/
Timestamp: 2019-04-21 08:34:07+00:00

Document:
This afternoon, October 7, 2016, the Fourth Circuit issued a published opinion in the civil case McCray v. Federal Home Loan Mortgage Corp. The Fourth Circuit affirmed the district court’s decision to dismiss the Plaintiff’s Truth in Lending Act (“TILA”) claims regarding notice. However, the Fourth Circuit reversed and remanded the district court’s decision that two of the defendants, the White Firm and the “Substitute Trustees,” were not “debt collectors” under the Fair Debt Collection Practices Act (“FDCPA”).
In October 2005, Renee McCray took out a loan to refinance her house. The loan documents were sold to the Federal Home Loan Mortgage Corporation (“Freddie Mac”). Wells Fargo was retained to service the loan. After several years of payments, McCray disputed a billing statement in June 2011 and sent Wells Fargo several requests for information regarding the costs contained within the statement. Wells Fargo either failed to respond or did not respond adequately to McCray’s requests. Eventually, McCray stopped making payments after April 2012 and the loan went into default. Wells Fargo employed the White Firm to initiate the foreclosure.
The White Firm sent McCray a letter dated September 28, 2012, notifying McCray that the firm had been retained to begin the foreclosure proceedings on her home. The letter ended by stating, “This is an attempt to collect a debt. This is a communication from a debt collector. Any information obtained will be used for that purpose.” The White Firm also sent McCray another letter notifying her that the loan was “154 days past due” and that $4,282.91 was needed to cure the default. Members of the White Firm were placed as trustees on the deed of trust and filed a foreclosure action in February 2013, which is still pending. McCray filed suit in 2013, alleging violations of FDCPA and TILA. The district court dismissed four of McCray’s claims and granted summary judgment on the fifth. McCray raised three issues on appeal.
McCray first alleged that the the district court erred in concluding the White Firm and the Substitute Trustees were not “debt collectors” as defined within the FDCPA. McCray argued that the facts contained within the complaint regarding the firm’s letter were sufficient to show that the White Firm “regularly collect[ed] or attempt[ed] to collect debts” that were owed to another, consistent with the definition in 15 U.S.C. § 1692a(6). The White Firm responded that their actions did not qualify them as debt collectors as they never actually sought collection of money because, as the district court concluded, there was no “express demand for payment or specific information about [McCray’s] debt.” The White Firm also argued that their foreclosure action was “incidental to [their] fiduciary obligation,” placing them within an exception in § 1692a(6)(F)(i).
The Fourth Circuit reversed and remanded the district court’s dismissal, holding that McCray’s complaint sufficiently alleged that the White Firm were debt collectors and that their actions in initiating the foreclosure constituted debt collection activity for the purposes of the FDCPA. The Court rejected the White Firm’s argument for two reasons. First, the Court held that the FDCPA did not require an “express demand for payment.” Instead, activities “taken in connection with the collection of a debt or in an attempt to collect a debt” are actionable under the FDCPA. Second, the Court held that foreclosure is not merely “incidental,” but instead “central to the trustee’s fiduciary obligation under the deed of trust.” Thus, because McCray’s complaint alleged facts showing the White Firm was retained to collect the loan in default, and because the firm’s letter concluded that it was “an attempt to collect debt,” their actions fell within debt collection activity that is regulated by the FDCPA.
not later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer.
The district court found that McCray’s complaint failed to allege that Freddie Mac acquired the loan after Congress amended TILA to require notice. Additionally the district court found that McCray received notice of her claim in October 2011 because Wells Fargo sent her a letter notifying her that Freddie Mac was the “investor” on the loan. Because McCray filed suit in 2013 after receiving notice of the TILA claim in October 2011, the district court held, in the alternative, that her claim was barred by TILA’s one-year limitations period.
The Court affirmed the district court’s initial conclusion because McCray did not challenge the district court’s dismissal for failure to allege that her loan was sold after Congress amended TILA in 2009. The Court affirmed the district court’s alternative holding as well. McCray did challenge the district court’s alternative conclusion, alleging hat the district court erred by not allowing her the opportunity to amend her complaint. McCray pointed out that the October 2011 letter was not included in her complaint and instead was contained within the defendants’ motion to dismiss. Yet, McCray submitted an affidavit in her response where she stated she received a letter in December 2011 which repeated that “[t]he investor/noteholder for this loan is [Freddie Mac].” The Court found McCray’s claim was barred by the statute of limitations because McCray conceded notice that Freddie Mac was the owner of the loan in December 2011.
Lastly, McCray argued the district court wrongfully dismissed her claim that Wells Fargo violated § 1641(g) when it failed to give her notice that it had been assigned the deed of trust. The district court concluded that § 1641(g) was not applicable because Wells Fargo only received a “beneficial interest” to service the loan and “not legal title.” McCray claimed that a line in the deed of trust granted Wells Fargo an ownership interest and that failure to notify her of this interest was in violated of TILA.
The Fourth Circuit affirmed the district court, holding that the Wells Fargo did not obtain an ownership interest because the note was not sold to Wells Fargo. The Court found that simply because the note “can be sold” does not mean “the note was in fact sold to Wells Fargo.” The Court also highlighted that this claim contradicted McCray’s previous claim that Freddie Mac owned the note and failed to provide timely notice of ownership.
The Court ultimately reversed and remanded McCray’s FDCPA claim that the White Firm and the Substitute Trustees were acting as “debt collectors.” The Court was careful to note that this reversal was not to indicate whether or not the defendants actually violated the FDCPA. The Court affirmed the district court’s dismissal of McCray’s TILA claims.
Judge Johnston, District Judge for the Southern District of West Virginia, sitting by designation, only dissented on the portion of the decision to affirm dismissal of McCray’s TILA claim against Wells Fargo for failing to provide notice of its interest in the loan. Judge Johnston noted that McCray’s complaint was filed pro se, and as such, should have been construed liberally. Because of this, the complaint could be read to infer that McCray could not identify the actual owner of the mortgage loan. In essence, the TILA claim regarding notice was nothing more than a pro se litigant attempting to “cast a wide net” by alleging both Wells Fargo and Freddie Mac failed to provide her notice of which entity owned the loan. Judge Johnston found the majority opinion’s reading of a pro se complaint to be “unduly strict” at the pleading stage when discovery would surely reveal whether Wells Fargo did receive an ownership interest.
Today, in the civil case of United States ex rel. Prince v. Virginia Resources Authority, an unpublished per curiam opinion, the Fourth Circuit affirmed the decision of the District Court for Western District of Virginia dismissing the plaintiff’s qui tam action under the False Claims Act.
On appeal, the plaintiff contended that the District Court’s dismissal of his qui tam action and subsequent denial of the plaintiff’s motion to alter judgment were reversible error.
Mark Prince brought a qui tam action under the False Claims Act on behalf of the federal government against Virginia Resources Authority (VRA) and other defendants. A qui tam action allows a whistleblower to sue on behalf of the government to recover money, and if successful, the plaintiff recovers some of that money too. Prince contended that VRA and other defendants issued bonds that violated the Virginia Constitution and that VRA falsely claimed that these bonds were legally issued. VRA filed a motion to dismiss for failure to state a claim and lack of jurisdiction because a Virginia state court already decided the issue that the bonds were legally issued in previous case that Prince brought. The District Court decision said that issue was precluded and collateral estoppel was appropriate because the parties at the proceedings were the same, the issue was actually litigated in the prior case, the issue was essential to the prior judgment, and the prior case reached final judgment. Applying collateral estoppel, the District Court dismissed Prince’s claim against VRA. With respect to the other defendants, the District Court dismissed the claims against them because they were never actually served.
In response to the adverse court ruling, Prince filed a “Motion to Reconsider.” The District Court construed this motion as a Rule 59(e) motion to amend judgment because there is no basis in the Federal Rules of Civil Procedure for Prince’s “Motion to Reconsider.” Because Prince’s motion only argued that the judgment was wrong, it was improper for the District Court to grant it. Prince’s motion was more along the lines of what an appellate court should decide. The District Court also clarified in its second opinion that the United States was not precluded from litigating the matter in the future because they were not a party to the original action.
The Fourth Circuit’s role in this appeal was to find out whether the District Court made any reversible error.
The Fourth Circuit reviewed the record from the District Court and agreed with its reasoning for dismissing the case and not allowing the plaintiff to alter the judgment. Therefore, the Fourth Circuit found that there was no reversible error committed by the District Court.
The Fourth Circuit affirmed, holding that the District Court did not commit any reversible error.

References: v. 
 § 1692
 § 1692
 § 1641
 § 1641
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