Court Opinion

ID: 50624
Source: CourtListenerOpinion
Date Created: 2010-04-26 00:54:51+00
Date Added: 2024-06-11T17:18:53.166106
License: Public Domain

United States Court of Appeals
                                                              Fifth Circuit
                                                           F I L E D
                  UNITED STATES COURT OF APPEALS
                           FIFTH CIRCUIT                    June 28, 2007

                                                       Charles R. Fulbruge III
                                                               Clerk
                           No. 04-60526

                          CYNTHIA BROWN,

                           Plaintiff-Counter Defendant-Appellant,

                              versus

               JOHN C. MORRIS, III, Etc.; ET AL.,

                                                        Defendants,

             JOHN C. MORRIS, III, also known as Jay,
          Both in his individual and official capacity;
                     MORRIS AND ASSOCIATES,

                                             Defendants-Appellees,

                  ABN AMRO MORTGAGE GROUP INC.,

                             Defendant-Counter Claimant-Appellee.

          Appeal from the United States District Court
            for the Southern District of Mississippi
                       (1:00-CV-498-GuRo)

Before SMITH, BARKSDALE, and DENNIS, Circuit Judges.

PER CURIAM:*

     A jury found against Cynthia Brown on her claims against ABN

AMRO Mortgage Group, Inc., and John Morris and his law firm, Morris

& Associates (collectively, Morris), for, inter alia, violation of

     *
       Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.

(FDCPA).   Brown   primarily contests the denial of her post-verdict

motion for judgment as a matter of law (JMOL).    AFFIRMED.

                                  I.

     In 1993, Brown executed a promissory note and deed of trust to

finance her home in Gulfport, Mississippi.        The note was for

$72,350 (payable monthly, with a final payment due 1 January 2001);

it was eventually assigned to Atlantic Mortgage & Investment

Corporation (AMIC).   On 18 November 1999, ABN AMRO purchased all of

AMIC’s stock; the two corporations merged on 14 January 2000.   ABN

AMRO, as the surviving corporation, became the holder and servicer

of Brown’s note.

     Between 1998 and 2000, Brown was frequently late with her

monthly note payments; she made none after the payment due 1

February 2000.     Accordingly, in August 2000, ABN AMRO engaged

Morris to foreclose on Brown’s home.       Morris took steps toward

completing a non-judicial foreclosure, and a foreclosure sale was

scheduled for 27 October 2000.     Defendants, however, voluntarily

ceased foreclosure efforts on that date.

     Brown filed this action that October.     At trial in 2004 she

asserted, inter alia:      claims under the FDCPA and Real Estate

Settlement Procedures Act, 12 U.S.C. § 2601 et seq. (RESPA); and

state-law claims for, inter alia, negligence, breach of contract,

                                  2
and   intentional    infliction       of    emotional        distress.          ABN    AMRO

counterclaimed for the amount owed under the note.

      At the close of the evidence, the district court granted JMOL:

in favor of ABN AMRO and Morris on Brown’s intentional-infliction-

of-emotional-distress claim; and in favor of ABN AMRO on the FDCPA

claim, some of the RESPA claims, and its counterclaim, subject to

the jury’s finding the amount owed.

      Subsequently, for all remaining claims, including under the

FDCPA against Morris, the jury found for defendants and awarded ABN

AMRO approximately $97,000 on its counterclaim. Brown’s post-trial

motions   for   JMOL,      or    in   the       alternative,      a   new      trial    and

remittitur, were denied.

                                        II.

      Primarily at issue are the district court’s JMOL rulings.                          In

the light of these rulings’ not being erroneous, the denial of the

alternative motion for a new trial or remittitur is also upheld.

      Also at issue is whether the district court erred:                                 in

permitting   ABN    AMRO    to    pursue        its    counterclaim;     in     its    jury

instructions;      and     in    permitting           testimony   about       settlement

discussions.       To the extent Brown raises issues regarding her

negligent-infliction-of-emotional-distress                   claim,       we     do     not

consider them; Brown voluntarily dismissed that claim.                        Similarly,

we do not consider her inadequately-briefed contentions regarding

discovery rulings. Despite Brown’s pro se status, these claims are

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waived.   See FED. R. APP. P. 28(a)(9)(A); Grant v. Cuellar, 59 F.3d

523, 524 (5th Cir. 1995).

                                   A.

     Brown contests the district court’s close-of-the-evidence and

post-verdict JMOL rulings.    A JMOL ruling is reviewed de novo.

E.g., Huss v. Gayden, 465 F.3d 201, 205 (5th Cir. 2006).    JMOL is

proper when “a party has been fully heard on an issue during a jury

trial and the court finds that a reasonable jury would not have a

legally sufficient evidentiary basis to find for the party on that

issue”.   FED. R. CIV. P. 50(a)(1) (as amended effective 1 December

2006; stylistic changes only, see advisory committee’s note).

“[A]ll reasonable inferences [are made] in favor of the nonmoving

party”.   Huss, 465 F.3d at 205.

                                   1.

     For her FDCPA claims, Brown contests:        the close-of-the-

evidence JMOL for ABN AMRO; and the post-verdict JMOL-denial.

                                   a.

     In granting JMOL to ABN AMRO on Brown’s FDCPA claims at the

close of the evidence, the district court held:   ABN AMRO acquired

Brown’s mortgage by merger, rather than by transfer or assignment;

and, accordingly, it was not an FDCPA debt collector, pursuant to

15 U.S.C. § 1692a(6)(F)(iii) (exempting from the definition any

person conducting collection activities “concern[ing] a debt which

was not in default at the time it was obtained by such person”).

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Brown contends that exemption is inapplicable, maintaining ABN AMRO

“obtained” her mortgage while it was in default.

       Because the FDCPA does not define the term “obtained”, we may

look to the act’s legislative history in interpreting it.               See,

e.g., Goswami v. Am. Collections Enter., Inc., 377 F.3d 488, 492-93

(5th Cir.    2004).    “The    Senate   Report    accompanying   the   FDCPA

explained that the purpose of the act was ‘to protect consumers

from a host of unfair, harassing, and deceptive debt collection

practices without imposing unnecessary restrictions on ethical debt

collectors.’”    Peter v. GC Servs. L.P., 310 F.3d 344, 351-52 (5th

Cir. 2002) (quoting S. REP. NO. 95-382 (1977), at 1-2, reprinted in

1977    U.S.C.C.A.N.   1695,   1696).      That    report,   inter     alia:

“intend[ed] the term ‘debt collector[]’ ... to cover all third

persons who regularly collect debts for others”, S. REP. NO. 95-382,

at 3; and stated “[t]he primary persons intended to be covered are

independent debt collectors”, id.

       Along that line, our court has at least implicitly interpreted

“obtained” to be synonymous with “assigned”.         See Perry v. Stewart

Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985) (“The legislative

history of section 1692a(6) indicates conclusively that a debt

collector does not include the consumer’s creditors, a mortgage

servicing company, or an assignee of a debt, as long as the debt

was not in default at the time it was assigned.”).

                                    5
     ABN AMRO, a mortgage company, was not specifically assigned

Brown’s mortgage for debt-collection purposes.    Rather, ABN AMRO

acquired it through its merger with Brown’s previous mortgage

company. Accordingly, ABN AMRO did not “obtain” her mortgage while

it was in default.

                                  b.

     The jury found Morris was not a “debt collector” pursuant to

the FDCPA.   It defines a “debt collector” as “any person who uses

any instrumentality of interstate commerce or the mails in any

business the principal purpose of which is the collection of debts,

or who regularly collects or attempts to collect, directly or

indirectly, debts owed or due or asserted to be owed or due

another”.    15 U.S.C. § 1692a(6).     Whether a party “regularly”

attempts to collect debts is determined, of course, by the volume

or frequency of its debt-collection activities.     See Garrett v.

Derbes, 110 F.3d 317, 318 (5th Cir. 1997).

     Morris testified he is involved primarily in non-judicial

foreclosures.   Brown contends:   a non-judicial foreclosure is per

se FDCPA debt collection; and, accordingly, Morris is per se an

FDCPA debt collector.

     Brown’s contention, however, ignores § 1692a(6)’s distinction

between debt collection and enforcement of a security interest.

See § 1692a(6) (“[f]or the purpose of section 1692f(6) of this

title, [‘debt collector’] also includes any person who uses any

                                  6
instrumentality of interstate commerce or the mails in any business

the principal purpose of which is the enforcement of security

interests”); Kaltenbach v. Richards, 464 F.3d 524, 527 n.3 (5th

Cir. 2006) (acknowledging this distinction).       Consistent with this

distinction, our court has at least implicitly recognized that a

foreclosure is not per se FDCPA debt collection.         See Kaltenbach,

464 F.3d at 527 (where defendant initiated an executory-process

foreclosure on plaintiff’s home, our court stated the issue as

“whether [defendant] is subject to § 1692g if he satisfies the

general definition of a debt collector, even though he was merely

enforcing a security interest in his dealings with [plaintiff]”).

Accordingly, Morris is not per se an FDCPA debt collector.

                                   2.

     Brown challenges the JMOL rulings against her remaining RESPA,

negligence, and breach-of-contract claims. Regarding the close-of-

the-evidence JMOL for ABN AMRO on some of her RESPA claims, Brown

does not show the district court erred in concluding, pursuant to

24 C.F.R. § 3500.21(d)(1)(i), ABN AMRO was not required to provide

her with a post-merger notice of the transfer of servicing rights.

Further,   Brown   fails   to   point   to   adequate   record   evidence

establishing she was entitled to a verdict on her negligence,

breach-of-contract, and remaining RESPA claims.

                                    7
                                  B.

     Next, Brown maintains the district court erred in granting ABN

AMRO leave to amend to pursue its counterclaim because, inter alia,

the district court lacked jurisdiction over it.          Challenges to

subject-matter jurisdiction are reviewed de novo, e.g., Crockett v.

R.J. Reynolds Tobacco Co., 436 F.3d 529, 531 (5th Cir.), cert.

denied, 126 S. Ct. 2945 (2006); leave-to-amend rulings, for abuse

of discretion, e.g., Triad Elec. & Controls, Inc. v. Power Sys.

Eng’g, Inc., 117 F.3d 180, 192 (5th Cir. 1997).

     Needless to say, ABN AMRO’s counterclaim involves many of the

facts relevant to Brown’s other claims, including:       Brown’s rights

and obligations under the note; her failure to make payments; and

defendants’ efforts to obtain payment.        Accordingly, the district

court had supplemental jurisdiction over the counterclaim and did

not abuse its discretion in allowing it to be asserted.         See 28

U.S.C. § 1367; Plant v. Blazer Fin. Servs., Inc., 598 F.2d 1357,

1364 (5th Cir. 1979) (holding, in truth-in-lending case, a state

debt-collection counterclaim was compulsory because “the obvious

interrelationship of the claims and rights of the parties, coupled

with the common factual basis of the claims, demonstrates a logical

relationship between the claim and counterclaim”).

                                  C.

     Brown   next   challenges   the   jury   instructions.   Properly

challenged instructions are reviewed for abuse of discretion.

                                   8
E.g., Fiber Sys. Int’l, Inc. v. Roehrs, 470 F.3d 1150, 1158 (5th

Cir. 2006).    To establish error, the challenging party must first

show the instruction as a whole “creates substantial doubt as to

whether the jury was properly guided”.           Green v. Adm’rs of the

Tulane Educ. Fund, 284 F.3d 642, 659 (5th Cir. 2002).         Even if the

instruction was erroneous, we will not reverse if it “could not

have affected the outcome of the case”.           Id.   Further, a party

challenging the failure to include a requested instruction must

show it properly states the law.         E.g., Russell v. Plano Bank &

Trust, 130 F.3d 715, 719 (5th Cir. 1997).

     For the first time on appeal (mandating plain-error review),

Brown   asserts   error   in   the    jury’s    being   instructed   that,

“[o]rdinarily, the mere activity of foreclosing ... under a deed of

trust is not the collection of a debt within the meaning of the

[FDCPA] unless other actions are taken beyond those necessary to

foreclose under the deed of trust, and were taken in an effort to

collect a debt”. As discussed supra, a non-judicial foreclosure is

not per se FDCPA debt collection.              Brown fails to show this

instruction “creates substantial doubt as to whether the jury was

properly guided”.   Green, 284 F.3d at 659.       There was no reversible

plain error.    See Fiber Sys., 470 F.3d at 1158.

     Brown next maintains the district court erred in refusing her

requested FDCPA instructions.        As discussed supra, Brown has not

established that a reasonable jury could not have found that Morris

                                     9
was not an FDCPA debt collector.            Accordingly, Brown’s requested

instructions,      which    did     not     pertain   to   that    threshold

determination, “could not have affected the outcome of the case”.

Green, 284 F.3d at 659.

     Further, Brown contends the jury should have been instructed

that, under Mississippi law, Morris owed her a trustee’s heightened

duty of care as to all foreclosure-related matters.           Brown fails,

however, to provide relevant authority for such an instruction.

     Finally,      Brown   asserts    the    contributory-negligence    and

mitigation-of-damages       instructions       were   erroneous.       These

instructions, however, “could not have affected the outcome of the

case”, id., because the jury found no negligence, or FDCPA or RESPA

violations, by defendants.

                                      D.

     Brown contends the trial court improperly permitted Morris to

testify about settlement discussions, in violation of Federal Rule

of Evidence 408.     Evidentiary rulings are reviewed for an abuse of

discretion.     E.g., Hodges v. Mack Trucks, Inc., 474 F.3d 188, 198

(5th Cir. 2006); see FED. R. EVID. 103.          An erroneous evidentiary

ruling is reversible error only if it affected substantial rights

of the complaining party.         E.g., Hodges, 474 F.3d at 199; see FED.

R. EVID. 103(a).

     Morris’ testimony was:         “[T]o this day in every discussion I

have had with Ms. Brown she has insisted either through her

                                      10
attorneys or personally that she was not going to pay for this

house”. Brown fails to show its admission affected her substantial

rights.   The testimony does not refer to settlement discussions.

Further, the district court subsequently instructed the jury it was

not to consider Morris’ reference to statements made through

attorneys.

                               III.

     For the foregoing reasons, the judgment is

                                                      AFFIRMED.

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