Court Opinion

ID: 3064132
Source: CourtListenerOpinion
Date Created: 2015-10-14 21:20:48.871812+00
Date Added: 2024-06-11T12:24:03.081599
License: Public Domain

[DO NOT PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS

                      FOR THE ELEVENTH CIRCUIT
                        ________________________                 FILED
                                                        U.S. COURT OF APPEALS
                              No. 08-13476                ELEVENTH CIRCUIT
                          Non-Argument Calendar             JANUARY 21, 2009
                        ________________________           THOMAS K. KAHN
                                                                CLERK
                    D. C. Docket No. 06-03064-CV-CAP-1

ELLERY STEED,

                                                                     Plaintiff-
                                                            Counter-Defendant
                                                                    Appellant,

                                    versus

EVERHOME MORTGAGE COMPANY,

                                                                      Defendant-
                                                                Counter-Claimant
                                                                       Appellee.
                        ________________________

                 Appeal from the United States District Court
                    for the Northern District of Georgia
                      _________________________
                             (January 21, 2009)

Before BIRCH, MARCUS and PRYOR, Circuit Judges.

PER CURIAM:

     Ellery Steed, proceeding pro se, appeals from several district court orders

finally resolving Steed’s claims of Fair Housing Act (“FHA”) and Fair Credit
Reporting Act (“FCRA”) violations, fraud, negligence, and defamation, in favor of

EverHome Mortgage Company. Steed’s complaint alleged, inter alia, that after

purchasing his mortgage from Ohio Savings Bank (“OSB”), EverHome failed to

inform Steed of the sale or how to make payments, charged him late payments,

raised his hazard insurance premium, and ultimately sought to foreclose Steed’s

property, as part of a pattern and practice of discrimination by EverHome against

low-income, African-American homeowners. Steed appeals: (1) the dismissal of

his defamation claim against EverHome; (2) the grant of summary judgment

against him as to his FHA and FCRA claims; (3) the severity of the sanctions

imposed against EverHome for discovery abuses; and (4) the district court’s

interpretation of his security deed. After careful review, we affirm.

      We review de novo a dismissal under Rule 12(b)(6) for failure to state a

claim upon which relief can be granted. Marshall County Bd. of Educ. v. Marshall

County Gas Dist., 992 F.2d 1171, 1174 (11th Cir. 1993). When ruling on a Rule

12(b)(6) motion to dismiss, we construe the pleadings broadly and “the allegations

in the complaint are viewed in the light most favorable to the plaintiff.” Watts v.

Florida Int’l Univ., 495 F.3d 1289, 1295 (11th Cir. 2007).

      We review a “district court’s grant of summary judgment de novo, viewing

the record and drawing all inferences in favor of the non-moving party.” Fisher v.

                                          2
State Mut. Ins. Co., 290 F.3d 1256, 1259-60 (11th Cir. 2002). Summary judgment

is proper “if the pleadings, depositions, answers to interrogatories, and admissions

on file, together with the affidavits, if any, show that there is no genuine issue as to

any material fact and that the moving party is entitled to a judgment as a matter of

law.” Fed.R.Civ.P. 56(c) (2006). “There is no genuine issue for trial unless the

non-moving party establishes, through the record presented to the court, that it is

able to prove evidence sufficient for a jury to return a verdict in its favor.” Cohen

v. United American Bank of Cent. Fla., 83 F.3d 1347, 1349 (11th Cir. 1996).

      We review the imposition of a discovery sanction under Rule 37 “for an

abuse of discretion and a determination that the findings of the trial court are

supported by the record.” BankAtlantic v. Blythe Eastman Paine Webber, Inc., 12

F.3d 1045, 1048 (11th Cir. 1994) (quotations omitted).          We review sanctions

imposed pursuant to Rule 26(g) for abuse of discretion. Chudasama v. Mazda

Motor Corp., 123 F.3d 1353, 1372 (11th Cir. 1997).

                                           I.

      First, we reject Steed’s argument that the district court erroneously

dismissed his defamation claim by ignoring the actual basis of Steed’s claim -- that

EverHome reported Steed’s late mortgage payments to a credit reporting agency

(“CRA”). Under Georgia law, libel is a false and malicious defamation of another

                                           3
expressed in print or writing. O.C.G.A. § 51-5-1(a).1 Where a foreclosure notice

accurately states that a party has defaulted in the payment of indebtedness, there is

no libel even if the party was legally justified in not making payments. Jim Walter

Homes, Inc. v. Strickland, 363 S.E.2d 834, 836 (Ga. App. 1987).

       As applied here, EverHome did not commit libel when it posted the

foreclosure notice or when it reported the late payments to CRAs because Steed

has not alleged that EverHome made any false statement.                      The district court

therefore correctly dismissed Steed’s libel claim under Rule 12(b)(6).

                                                II.

       Next, we find no merit in Steed’s claim that the district court improperly

granted summary judgment against him on his FHA claim of “reverse redlining”

and improperly refused to consider his supplemental brief and exhibits providing

evidence to support his claim. The FHA provides that it shall be unlawful “for any

person or other entity whose business includes engaging in residential real

estate-related transactions to discriminate against any person in making available

such a transaction, or in the terms or conditions of such a transaction, because of

race. . . .” 42 U.S.C. § 3605(a). We use the burden-shifting framework set forth in

McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), and Texas Dep’t of

       1
        As the district court recognized, although Steed labeled his claim “slander/defamation,” his
claim appears to be a libel claim because it does not relate to any oral statements.

                                                 4
Cmty. Affairs v. Burdine, 450 U.S. 248 (1981), to evaluate claims based on

circumstantial evidence of discrimination under the FHA. Sec’y, U.S. Dep’t of

Hous. & Urban Dev. v. Blackwell, 908 F.2d 864, 870-71 (11th Cir. 1990).

      While no circuit court has addressed the elements of an FHA claim of

“reverse redlining,” we agree with the approach taken by the district court in

Hargraves v. Capital City Mortgage Corp., 140 F. Supp. 2d 7 (D.D.C. 2000), which

defined “reverse redlining” as “the practice of extending credit on unfair terms”

because of the plaintiff’s race and geographic area. Id. at 20 (quotations omitted).

Using this definition, the Hargraves court required the plaintiff to prove reverse

redlining by “show[ing] that the defendants’ lending practices and loan terms were

‘unfair’ and ‘predatory,’ and that the defendants either intentionally targeted on the

basis of race, or that there is a disparate impact on the basis of race.” Id. (emphasis

added). It also held that the plaintiff need not show that the defendant made loans

on preferable terms to non-African-Americans.         Id.   It further explained that

predatory lending practices include exorbitant interest rates, equity stripping,

acquiring property through default, repeated foreclosures, and loan servicing

procedures that involve excessive fees. Id. at 20-21. Finally, the court held that

whether the practices alleged occurred, and whether the practices were unfair and

predatory, is a jury question. Id. at 21.

                                            5
       Applying this analysis, the Hargraves court found that the plaintiffs there

had provided evidence of disparate impact by showing statistical and other

evidence that the defendant had “made a greater percentage of its loans in majority

black census tracts than other subprime lenders, and made an even more

disproportionately large number of loans in neighborhoods that are over 90 percent

black.” Id. While evidence of intent was not necessary to show discriminatory

impact, the plaintiffs also provided evidence, inter alia, that the defendant had: (1)

solicited   brokers    who    operated    predominately      in   the   black    community;

(2) distributed flyers and advertisements in black communities; and (3) placed their

offices in black communities. Id. Taken together, the court found a genuine dispute

of fact as to whether the defendant acted on the basis of race. Id. at 22.

       On the record here, however, Steed did not establish a prima facie case of

reverse redlining. Regardless of whether Steed showed predatory and unfair

lending practices, he provided no evidence of where EverHome advertised or that

EverHome made an unusual number of loans in majority black areas or targeted

those debtors for foreclosure in the way he alleged he was targeted. Id. at 20.

Because he failed to show disparate impact or targeting, the district court did not

err in granting summary judgment on his FHA claim. Id. at 21-22.2

       2
        Moreover, the supplemental evidence offered by Steed would not have supported his claim
even if the district court had considered it. The newspaper article Steed sought to introduce

                                              6
                                                  III.

       We also are unpersuaded that the district court erred in granting summary

judgment on Steed’s claim under the private damages section of the FCRA. The

“FCRA provides a private right of action against businesses that use consumer

reports but fail to comply” with its requirements. Safeco Ins. Co. of America v.

Burr, 127 S.Ct. 2201, 2206 (2007). Although § 1681s-2(a) of the FCRA prohibits

any person from furnishing information to a CRA that the person knows is

inaccurate, and it also requires a furnisher to provide written notice to a customer

whenever it first reports negative information to a CRA, the statute explicitly bars

private suits for violations of this section. 15 U.S.C. § 1681s-2(a)(1)(A),

(a)(7)(A)(i), (c)(1); 15 U.S.C. § 1681s(c)(1)(B) (allowing states to bring an action

for violations).

discussed general lending practices and provided no information as to whether EverHome targeted
borrowers on the basis of race or that its actions had a racially disparate impact. See Hargraves, 140
F. Supp. 2d at 20. Similarly, while the allegations against EverHome in the Mississippi complaint
Steed sought to introduce could provide some circumstantial evidence of targeting African-
Americans, it was hearsay because the existence of the complaint would not show targeting unless
its allegations were taken as true, and, therefore, the district court could not have considered it. See
Pritchard v. Southern Co. Servs., 92 F.3d 1130, 1135 (11th Cir. 1996) (“Pritchard cannot use
inadmissable hearsay to defeat summary judgment when that hearsay will not be reducible to
admissible form at trial”); see also Century ‘21’ Shows v. Owens, 400 F.2d 603, 610 (8th Cir. 1968)
(“any statements made [in a pleading against the non-pleader] are clearly hearsay and without
probative force”). In addition, Steed’s reliance on Rule 804(b)(6) -- providing a hearsay exception
where a party has procured the unavailability of the declarant as a witness -- is misplaced as the rule
does not apply because EverHome did not make the declarants connected to the complaint
unavailable. Fed. R. Evid. 804(b)(6).

                                                   7
       Construing his complaint and appeal broadly, Steed’s allegations -- that

EverHome: (1) falsely reported negative information about him to a CRA and (2)

did not provide him notice that it had reported negative information -- raise

violations of § 1681s-2a, which does not allow for private suits. Moreover, Steed

concedes on appeal that he never intended to raise a claim under § 1681s-2b, so he

has abandoned any such claim to the extent he raised it below.3 The district court

therefore did not err in granting summary judgment on Steed’s FCRA claim.

                                                 IV.

       Next, we are unconvinced by Steed’s claim that the district court abused its

discretion in imposing inadequate sanctions against EverHome for lying in its

discovery responses by merely (1) requiring EverHome to pay approximately $20

for the expenses Steed incurred as a result of the false response, and (2)

establishing as true the fact about which EverHome lied.                      Specifically, Steed

argues that default judgment against EverHome was the appropriate sanction for its

conduct because EverHome committed fraud against the court.

       Rule 37 allows a party to file a motion to compel discovery, and it considers

evasive or incomplete disclosures as a failure to disclose when ruling on a motion

       3
          “While we read briefs filed by pro se litigants liberally, issues not briefed on appeal by a
pro se litigant are deemed abandoned.” Timson v. Sampson, 518 F.3d 870, 874 (11th Cir.), cert.
denied, 129 S.Ct. 74 (2008).

                                                  8
to compel. Fed. R. Civ. P. 37(a)(4). A court may impose sanctions where a party

fails to provide answers, objections, or a written response to interrogatories or

requests for production.       Fed. R. Civ. P. 37(d)(1)(A)(ii). Sanctions may

include: (1) the payment of reasonable expenses caused by the failure; (2)

designating facts as established as the prevailing party claims; (3) prohibiting the

disobedient party from opposing designated claims or introducing designated

matters into evidence; (4) striking the pleadings in whole or in part; (5) staying the

proceeding until the order is obeyed; (6) dismissing the action or proceeding in

whole or in part; and (7) rendering a default judgment against the disobedient

party. Fed. R. Civ. P. 37(d)(3).

      “Dismissal with prejudice is the most severe Rule 37 sanction and is not

favored . . . [b]ut [it] may be appropriate when a [party’s] recalcitrance is due to

wilfulness, bad faith or fault.” Phipps v. Blakeney, 8 F.3d 788, 790 (11th Cir.

1993). “A court may impose lesser sanctions without a showing of willfulness or

bad faith on the part of the disobedient party.” BankAtlantic, 12 F.3d at 1049.

Default judgment for violation of Rule 37, however, is only appropriate where

there has been a violation of discovery orders, and it requires a court order or

motion to compel. United States v. Certain Real Property Located at Route 1,

Bryant, Ala., 126 F.3d 1314, 1317-18 (11th Cir. 1997) (“Real Property”).

                                          9
“Permissible purposes of a sanction include: (1) compensating the court and other

parties for the added expense caused by the abusive conduct; (2) compelling

discovery; (3)    deterring   others   from   engaging   in   similar   conduct; and

(4) penalizing the guilty party or attorney.” Carlucci v. Piper Aircraft Corp., Inc.,

775 F.2d 1440, 1453 (11th Cir. 1985).

      Rule 26(g) requires an attorney to sign every discovery response asserting,

inter alia, that the response is complete and correct and that any objection is

consistent with the federal rules and law, is “not interposed for any improper

purpose,” and is not unreasonable. Fed. R. Civ. P. 26(g)(1)(A), (B). The court, sua

sponte or on motion, must impose “an appropriate sanction” on the signer of an

improper certification, “the party on whose behalf the signer was acting, or both.”

Fed. R. Civ. P. 26(g)(3). The sanction may include an order to pay reasonable

expenses caused by the violation. Id. We have noted that boilerplate objections

may border on a frivolous response to discovery requests. See Chudasama, 123

F.3d at 1358.

      As an initial matter, while EverHome raised boilerplate objections to certain

discovery requests, the district court did not abuse its discretion in declining to

impose sanctions against EverHome on this ground. BankAtlantic, 12 F.3d at 1048.

Steed could have filed a motion to compel that would have enabled the district

                                         10
court to address the problems of which he complained. Instead, he waited and filed

a motion for sanctions, contributing to the problem.

      Sanctions for violation of Rule 37(d) and Rule 26(g), however, were

appropriate because EverHome’s discovery response regarding the timeliness of

Steed’s February payment was incorrect. While EverHome did not technically fail

to   respond,    the   district   court   properly   determined   that    EverHome’s

“misrepresentation” was the equivalent of a failure to respond and a violation of

Rule 37(d).     Fed. R. Civ. P. 37(d)(1)(A)(ii), 37(a)(4).   The district court then

imposed two sanctions under Rule 37, which was not an abuse of discretion since

the rule limits the type of sanctions allowed for a violation.      Fed. R. Civ. P.

37(d)(1-3). Indeed, because Steed had withdrawn his motion to compel and

EverHome had not violated a court discovery order, the district court could not

have granted a default judgment Steed requested. Route 1, 126 F.3d at 1317-18.

      We recognize that the district court could have imposed stronger sanctions

under Rule 26(g), which unlike Rule 37, only limits a district court’s authority by

requiring an “appropriate” sanction. Fed. R. Civ. P. 26(g)(3). Looking to Rule

26’s Committee Notes and cases involving Rule 37, discovery sanctions are

intended to penalize the offending party and deter others from engaging in similar

conduct. Advisory Comm. Note (1983) (discussing Rule 26(g));             Carlucci, 775

                                           11
F.2d at 1453 (discussing Rule 37). Nonetheless, the district court determined on

this record that more severe sanctions “to curb abuse of the judicial process” were

not warranted, and this is a determination that is well within the district court’s

discretion. See Chudasama, 123 F.3d at 1372 (“The decision of what sanction is

appropriate, however, is committed to the district court’s discretion.” (citing

Fed.R.Civ.P. 26(g) advisory committee’s note (1983 amend.) (“The nature of the

sanction is a matter of judicial discretion to be exercised in light of the particular

circumstances.”)). Thus, even though we may have chosen differently, we cannot

conclude that the district court abused its discretion in refusing to impose stronger

sanctions. See In re Rasbury, 24 F.3d 159, 168 (11th Cir. 1994) (“under the abuse

of discretion standard of review there will be occasions in which we affirm the

district court even though we would have gone the other way had it been our call”).

                                         V.

      Finally, we reject Steed’s argument that the district court erred in

interpreting the security deed. Regarding this issue, Steed claims that he attempted

to add to his complaint a separate Fair Debt Collection Practices Act (“FDCPA”)

claim that EverHome was unlawfully attempting to charge him legal fees and costs

based on an erroneous interpretation of language in his security deed, but that the

district court denied his motion to amend the complaint with this claim. Steed

                                          12
asserts that if we do not address the matter, issue preclusion would bar him from

raising it later if EverHome were to seek to recover attorneys’ fees from him.

      We have explained that:

      Collateral estoppel bars relitigation of a previously decided issue. . . .
      The following elements must be established before collateral estoppel
      applies: (1) the issue at stake must be identical to the one decided in
      the prior litigation; (2) the issue must have been actually litigated in
      the prior proceeding; (3) the prior determination of the issue must
      have been a critical and necessary part of the judgment in that earlier
      decision; and (4) the standard of proof in the prior action must have
      been at least as stringent as the standard of proof in the later case.

In re Southeast Banking Corp., 69 F.3d 1539, 1552 (11th Cir. 1995) (quotation and

citations omitted).

      Because the district court’s interpretation of the security deed was merely an

alternative basis for its denial of Steed’s motion to amend his complaint to add a

FDCPA claim, and because Steed does not challenge the first ground asserted by

the district court -- that he untimely filed the motion to amend without providing

good cause -- Steed has abandoned this argument. Timson, 518 F.3d at 874. But

in any event, collateral estoppel would not apply to any future litigation over the

interpretation of the security deed because Steed did not have a chance to fully

litigate its validity nor was the court’s ruling “critical and necessary part of the

judgment.”

      AFFIRMED.

                                         13