Court Opinion

ID: 4109105
Source: CourtListenerOpinion
Date Created: 2016-12-20 21:01:26.771093+00
Date Added: 2024-06-11T14:28:27.354500
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                              No. 15-2158

THOMAS W. LOVEGROVE,

                Plaintiff – Appellant,

           v.

OCWEN HOME LOANS SERVICING, L.L.C.,

                Defendant – Appellee.

Appeal from the United States District Court for the Western
District of Virginia, at Roanoke. Michael F. Urbanski, District
Judge. (7:14-cv-00329-MFU-RSB)

Argued:   October 27, 2016               Decided:   December 20, 2016

Before SHEDD and    KEENAN,    Circuit   Judges,    and   DAVIS,   Senior
Circuit Judge.

Affirmed by unpublished opinion. Judge Shedd wrote the opinion,
in which Judge Keenan and Senior Judge Davis joined.

ARGUED: Gary M. Bowman, Roanoke, Virginia, for Appellant. Brett
Lawrence    Messinger,    DUANE   MORRIS     LLP,    Philadelphia,
Pennsylvania,   for   Appellee.    ON    BRIEF:   Christopher   M.
Corchiarino, GOODELL, DEVRIES, LEECH & DANN, LLP, Baltimore,
Maryland; Brian J. Slipakoff, DUANE MORRIS LLP, Philadelphia,
Pennsylvania, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
SHEDD, Circuit Judge:

        Thomas    Lovegrove      defaulted         on    his     mortgage       in    2009    and

received a Chapter 7 bankruptcy discharge of that debt in 2011.

Lovegrove       filed     this   action       alleging         that     Ocwen    Home       Loans

Servicing,       L.L.C.      (“Ocwen”)        violated           both    the         Fair    Debt

Collection Practices Act (FDCPA) and the Fair Credit Reporting

Act (FCRA) by attempting to collect his mortgage debt after it

had been discharged in bankruptcy and by falsely reporting to

consumer reporting agencies (“CRAs”) that the debt was still

owed.     Ocwen moved for summary judgment, and the district court

granted the motion.              The district court held that the FDCPA

claims fail because there was no attempt by Ocwen to collect a

debt,    that    the    FDCPA    claims       were      otherwise       precluded       by    the

Bankruptcy Code, and that Ocwen had no duty under the FCRA until

Lovegrove       properly    notified      a    CRA      of   a   dispute        with    Ocwen’s

reporting.       For the reasons stated below, we affirm.

                                              I.

     The following material facts are not in dispute.                                  In 2006,

Lovegrove        signed     a    promissory             note      in     the     amount        of

$1,239,000.00 in favor of Bank of America and secured by a deed

of trust on a home at Smith Mountain Lake in Moneta, Virginia.

Lovegrove defaulted on the loan in April 2009 but continues to

live at the property.            Lovegrove filed for Chapter 7 bankruptcy

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relief,    and   in     March    2011,     he    obtained    a   discharge     of   his

obligation to Bank of America under the promissory note.

     On    October       1,     2012,      Ocwen    became       the    servicer     of

Lovegrove’s mortgage. 1          On October 5, 2012, Ocwen sent a letter

to Lovegrove with an accounting of the debt, which had been

discharged but not paid.             The letter provides for a procedure to

dispute    the   validity       of   the   debt    and   contains      the   following

disclaimer, in bold italicized font:

     This communication is from a debt collector attempting
     to collect a debt; any information obtained will be
     used for that purpose.     However, if the debt is in
     active bankruptcy or has been discharged through
     bankruptcy, this communication is not intended as and
     does not constitute an attempt to collect a debt.

J.A. 45.     On the same day, Ocwen sent another letter detailing

“Alternatives      to     Foreclosure”          which    contains      an    identical

disclaimer but without the emboldened typeface.                         J.A. 151-52.

Ocwen then began sending monthly account statements.                         See J.A.

48-49.     Among      other     things,    the    monthly    statements      list   the

principal balance, the next payment due date, a payment coupon,

and the total amount due.               Under a section entitled “Important

Messages,” the account statements provide the following:

     If you are currently in bankruptcy or if you have
     filed for bankruptcy since obtaining this loan, please

     1   There is an ongoing dispute as to who actually owns the
note.    However, that dispute does not affect our analysis.

                                            3
       read the bankruptcy information provided on the back
       of this statement.

       Our records indicate that your loan is in foreclosure.
       Accordingly, this statement may be for informational
       purposes only. . . .

J.A. 48.       The “Important Bankruptcy Information” section on the

back of the statements reads:

       If you or your account are subject to pending
       bankruptcy or the obligation referenced in this
       statement has been discharged in bankruptcy, this
       statement is for informational purposes only and is
       not an attempt to collect a debt.   If you have any
       questions regarding this statement, or do not want
       Ocwen to send you monthly statements in the future,
       please contact us . . .

J.A. 49.        The only other communication Ocwen sent to Lovegrove

was an escrow account disclosure statement mailed in July 2014.

This       communication   contains     the   same    disclaimer   as   the   two

October 5, 2012 letters.            See J.A. 158-63.

       Additionally, from October 2012 through May 31, 2013, Ocwen

improperly reported to CRAs that Lovegrove still owed on the

discharged debt.          J.A. 257.     From November 2012 to April 2014,

Lovegrove wrote multiple letters to Ocwen requesting that Ocwen

“stop collection [and] reporting debt to the credit bureau’s

[sic].”       See J.A. 166.         In June 2014, Lovegrove wrote to the

three major CRAs 2 that Ocwen was misreporting a discharged debt.

       2The       three     major     CRAs    are    Equifax,   Experian,     and
TransUnion.

                                          4
J.A.     105.      On    July    21,    2014,     Ocwen      received     a     dispute

notification from Experian, and on that same day, Ocwen sent a

notice to “all consumer reporting agencies to which it reports

removing any reporting as to [] Lovegrove’s discharged mortgage

debt.”    J.A. 41-43.

                                        II.

       In June 2014, Lovegrove filed this action in the Western

District of Virginia alleging that Ocwen violated the FDCPA by

attempting to collect a debt that was discharged in bankruptcy

by   misrepresenting       the    consequences        of    non-payment       and   that

Ocwen violated the FCRA by misreporting the status of the debt.

Following discovery, the district court granted Ocwen’s motion

for summary judgment as to both claims.                    J.A. 262-91.       The court

held that Ocwen was not attempting to collect a debt within the

meaning    of   the     FDCPA    and   that     the    FDCPA    claims    were      also

precluded by the Bankruptcy Code.                 The court also determined

that Lovegrove could not maintain a cause of action under the

FCRA or the FDCPA related to Ocwen’s misreporting of the debt.

Lovegrove timely appealed.

                                        III.

       Lovegrove    appeals      the   district       court’s   grant     of    summary

judgment to Ocwen.        We review de novo. Lee Graham Shopping Ctr.,

LLC v. Estate of Kirsch, 777 F.3d 678, 681 (4th Cir. 2015).

Summary judgment is appropriate if “the movant shows that there

                                         5
is no genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.”                               Fed. R. Civ. P.

56(a).      Lovegrove        argues     that      the       district        court       erred   in

dismissing his FDCPA and FCRA claims.                       We address each in turn.

                                          A.

     The    FDCPA    was     enacted     to       curb      “abusive,        deceptive,         and

unfair     debt   collection       practices.”                 15    U.S.C.        §    1692(a).

Importantly,      it    only       applies         to       communications              sent     in

connection    with     the    collection          of    a    debt. 3    See       id.    §   1692e

(prohibiting false, deceptive, or misleading representations “in

connection    with     the    collection          of     any    debt”);           id.   §    1692f

(prohibiting      unfair      or   unconscionable              means        “to    collect      or

attempt to collect any debt”).

     Although       there     is   no     bright-line               rule,     “[d]etermining

whether a communication constitutes an attempt to collect a debt

is a ‘commonsense inquiry’ that evaluates the ‘nature of the

parties' relationship,’ the ‘[objective] purpose and context of

the communication [ ],’ and whether the communication includes a

demand for payment.”           In re Dubois, 834 F.3d 522, 527 (4th Cir.

2016) (citing Gburek v. Litton Loan Servicing LP, 614 F.3d 380,

     3 The parties do not dispute that Ocwen is a debt collector
and that Lovegrove is a consumer as defined by the FDCPA.

                                              6
385 (7th Cir. 2010)). 4               Applying this commonsense inquiry, we

hold that Ocwen’s communications do not constitute an attempt to

collect a debt.

     Here,    the    communications            were     for    informational        purposes

only, were non-threatening in nature, and contained clear and

unequivocal    disclaimers            to    establish       that     they    were    not   in

connection    with    the        collection        of   a     debt   under    Lovegrove’s

circumstances.       For instance, the two October 5, 2012 letters

and the July 5, 2014 letter state: “... [I]f the debt . . . has

been discharged through bankruptcy, this communication is not

intended as and does not constitute an attempt to collect a

debt.”   J.A.       45-46,       151-52,      158-63        (emphasis   in    originals).

Similarly,     the     monthly             statements        include    the     following

disclaimer:    “If    .      .    .    the     obligation          referenced       in   this

statement has been discharged in bankruptcy, this statement is

     4 In granting summary judgment, the district court applied
the least sophisticated consumer test in determining whether
Ocwen’s activities constituted an attempt to collect a debt.
However, the district court did not have the benefit of this
Court’s In re Dubois opinion when it reached its decision.     We
believe that the “commonsense inquiry” described in In re Dubois
is the proper standard in this case.    Nevertheless, even under
the least sophisticated consumer standard, Lovegrove’s FDCPA
claims would fail for the reasons stated by the district court.
We note there is an argument that sophisticated and high-dollar
loan arrangements should not be analyzed under the least
sophisticated   consumer   standard.     Perhaps,   sophisticated
consumers should not get the benefit of the lenient standard
when they are part of a complex relationship or situation that
may be confusing to less sophisticated individuals.

                                               7
for informational purposes only and is not an attempt to collect

a debt.”    J.A. 49.

      In a financial arrangement such as this, courts presume “a

basic level of understanding and willingness to read with care.”

United States v. Nat’l Fin. Servs., Inc., 98 F.3d 131, 136 (4th

Cir. 1996).    Thus, Lovegrove is deemed to have the knowledge of

these straightforward disclaimers.            Armed with that knowledge

and   the   understanding   that     his   debt   had    been   discharged    in

bankruptcy,    Lovegrove    should    have   known      that    Ocwen   was   not

attempting to collect a debt from him. 5

      As noted by the district court:

      This is not a case where a creditor harassed the
      debtor or tried to pressure the debtor into making
      payments through multiple phone calls or threats. Nor
      is this a case where the debtor signed a modification
      agreement or turned over the deed to the property and
      the creditor continued to demand payment.

      5Additionally, as explained by the district court, the
communications were not sent for the “animating purpose” of
obtaining payment and most do not contain a demand for payment.
J.A. 279-83; see In re Dubois, 834 F.3d at 527.        The only
communications that could possibly be viewed as a demand for
payment are the monthly account statements.    See J.A. 48-49.
Even though the monthly statements generally request payments,
we believe that the disclaimer is sufficient to provide notice
that, for customers in bankruptcy, Ocwen was providing an
updated account summary and not demanding payment.   See Goodin
v. Bank of Am., N.A., 114 F.Supp.3d 1197, 1206 (M.D. Fla. 2015)
(“A regular bank statement sent only for informational purposes
is . . . not an action in connection with the collection of a
debt.”).    Again, Lovegrove is presumed to have read the
statements with care.  See Nat’l Fin. Servs., Inc., 98 F.3d at
136.

                                      8
J.A. 282-83. Rather, this is a case where a debtor, who has been

discharged in bankruptcy but continues to live in a million-

dollar home, received documents that contain clear disclaimers

indicating that they are not an attempt to collect a debt. 6

     Accordingly, under a “commonsense inquiry,” Lovegrove has

failed     to   adduce   sufficient   evidence   that   the   communications

were sent in connection with the collection of a debt.             For this

reason, we affirm the grant of summary judgment on the FDCPA

claim. 7    Because we find that Ocwen’s communications are not an

attempt to collect a debt and the FDCPA is not implicated, it is

not necessary to determine whether the Bankruptcy Code precludes

the FDCPA under these facts.

     6  Foreclosure proceedings against Lovegrove are still
possible because foreclosure is an in rem action that survives a
bankruptcy discharge. Johnson v. Home State Bank, 501 U.S. 78,
83 (1991).      The FDCPA does not completely prohibit debt
collectors from communicating with or seeking payment from a
debtor   who   has  been   discharged   in   bankruptcy.    Such
communications, if they are in connection with the collection of
a debt, must simply comply with the FDCPA, for example, they
must not be false, deceptive, or misleading.
     7 Ocwen’s actions could be described as a sharp business
practice. Oral Argument at 26:35, Lovegrove v. Ocwen Home Loans
Servicing,    No.   15-2158   (4th    Cir.   Oct.    27,  2016),
http://www.ca4.uscourts.gov/oral-argument/listen-to-oral-
arguments.   Nevertheless, the specific facts and circumstances
of this case simply remove Ocwen’s communications from the realm
of debt collection activity.

                                       9
                                       B.

      We next address Lovegrove’s claim that Ocwen violated the

FCRA.    The   FCRA,   in   relevant        part,    prohibits      a   person       from

providing inaccurate information “relating to a consumer to any

consumer reporting agency if the person knows or has reasonable

cause to believe that the information is inaccurate.”                      15 U.S.C.

§ 1681s-2(a)(1)(A).       The Act also requires those who “regularly

and in the ordinary course of business furnish[] information to

one or more consumer reporting agencies” to correct and update

information    provided     to   CRAs       so      that   the     information         is

“complete   and   accurate.”     Id.    §    1681s-2(a)(2).             There    is    no

private right of action under § 1681s-2(a).                      Id. § 1681s-2(c),

(d); Saunders v. Branch Banking & Trust Co., 526 F.3d 142, 149

(4th Cir. 2008).

      A private right of action does exist under 15 U.S.C. §

1681s-2(b), which requires a “creditor who has been notified by

a [CRA] that a consumer has disputed information furnished by

that creditor” to investigate the dispute, “‘report the results

of the investigation to the consumer reporting agency,’” and, if

any   information   was     inaccurate,       report       the    results       of    the

investigation to the other CRAs.             Johnson v. MBNA Am. Bank, NA,

357 F.3d 426, 429-30 (4th Cir. 2004) (quoting 15 U.S.C. § 1681s-

2(b)).   The district court found that Ocwen complied with this

requirement.      J.A. 284-85.         We agree.           The undisputed facts

                                       10
support the conclusion that Ocwen complied with § 1681s-2(b)

when Ocwen immediately corrected the credit reporting error once

notified by a CRA of the dispute.                J.A. 41-43.

      Lovegrove also attempts to repackage his FCRA claims as

violations of the FDCPA.              We have reviewed these claims and

conclude that they fail for the reasons stated by the district

court.

      Accordingly,        we    conclude    that     Lovegrove    has    failed   to

present      sufficient        evidence    to    create   a    genuine   issue    of

material fact to establish this cause of action, under either

the   FCRA     or   the    FDCPA,     arising      out    of   Ocwen’s    incorrect

reporting.       For this reason, we affirm the grant of summary

judgment on the FCRA claim and any related FDCPA claim.

                                           IV.

      For the foregoing reasons, the judgment of the district

court is affirmed.

                                                                           AFFIRMED

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