Court Opinion

ID: 804651
Source: CourtListenerOpinion
Date Created: 2012-07-19 13:29:04+00
Date Added: 2024-06-11T18:00:13.101758
License: Public Domain

Case: 11-13574       Date Filed: 07/18/2012      Page: 1 of 11

                                                                      [DO NOT PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS

                            FOR THE ELEVENTH CIRCUIT
                             ________________________

                                    No. 11-13574
                              ________________________

                         D. C. Docket No. 9:10-cv-80735-WPD

ANGELA BIRSTER,
PAUL BIRSTER,

                                                                      Plaintiffs-Appellants,

                                            versus

AMERICAN HOME MORTGAGE SERVICING, INC.,
a Delaware Corporation,

                                                                       Defendant-Appellee.

                              ________________________

                      Appeal from the United States District Court
                          for the Southern District of Florida
                            _________________________
                                    (July 18, 2012)

Before MARCUS and BLACK, Circuit Judges, and HODGES,* District Judge.

PER CURIAM:

       *
         Honorable Wm. Terrell Hodges, United States District Judge for the Middle District of
Florida, sitting by designation.
              Case: 11-13574     Date Filed: 07/18/2012     Page: 2 of 11

      Angela and Paul Birster ceased making home mortgage payments on or

around June 1, 2008. The Birsters allege American Home Mortgage Servicing,

Inc. (AHMSI), who began servicing their loan on July 30, 2008, subsequently

engaged in a relentless assault of harassing phone calls and home inspections in an

attempt to collect the mortgage debt, in violation of the Fair Debt Collection

Practices Act (FDCPA), 15 U.S.C. § 1692, et seq. The district court granted

summary judgment to AHMSI after concluding the Birsters’ allegations related

solely to efforts by AHMSI to enforce a security interest, rather than to collect a

debt. And, although 15 U.S.C. § 1692f(6) of the FDCPA was available to the

Birsters, the district court concluded the Birsters failed to assert a claim for a

violation of that section. We conclude this case is controlled by Reese v. Ellis,

Painter, Ratterree & Adams, LLP, 678 F.3d 1211 (11th Cir. 2012), which was

issued after the district court’s entry of summary judgment. In light of Reese, we

reverse the judgment of the district court and remand for further proceedings

consistent with this opinion.

                                           I.

      The Birsters own a home in Jupiter, Florida. They refinanced the home on

April 19, 2006, through “Option One” to get money for hurricane repairs. The

Birsters subsequently entered into a loan modification agreement with Option One

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on two separate occasions, but ceased making mortgage payments on or around

June 1, 2008. The promissory note and mortgage provide that any missed payment

by the Birsters places the loan into a default status.

      On July 30, 2008, AHMSI began servicing the loan. Two months later, on

September 30, 2008, AHMSI sent the Birsters a letter stating that the promissory

note was “presently in default due to the non-payment of the [August 1, 2008,

payment] and the subsequent payments.” The letter advised the Birsters that

AHMSI would proceed with foreclosure unless the Birsters cured the default by

paying $7,761.14 within 30 days. AHMSI’s letter also contained the following

disclosure:

      THIS IS AN ATTEMPT TO COLLECT A DEBT AND ANY
      INFORMATION OBTAINED WILL BE USED FOR THAT
      PURPOSE. THIS DOES NOT IMPLY THAT [AHMSI] IS
      ATTEMPTING TO COLLECT MONEY FROM ANYONE WHOSE
      DEBT HAS BEEN DISCHARGED UNDER THE BANKRUPTCY
      LAWS OF THE UNITED STATES.

      On February 2, 2009, U.S. Bank, N.A., as the trustee for the lienholder,

initiated foreclosure proceedings against the Birsters. AHMSI was not a party to

the foreclosure. After being served with the complaint and summons in the

foreclosure proceeding, the Birsters retained an attorney to represent them.

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      The Birsters allege AHMSI began its relentless assault on them in 2008.

According to the Birsters, AHMSI called them multiple times on a daily basis to

collect the past due amounts. The Birsters allege that most of these calls occurred

after AHMSI knew that Angela suffered from an inoperable glioma (brain tumor)

that cannot be diagnosed as cancerous or non-cancerous. As early as April 16,

2009, the Birsters informed AHMSI that they were represented by an attorney, and

provided AHMSI with the attorney’s name and phone number. The Birsters

advised AHMSI to contact their attorney and to cease contacting them directly.

      AHMSI nevertheless continued its direct communications with the Birsters.

Angela repeatedly provided AHMSI with the name and contact information for her

attorney; regardless, AHMSI refused to stop directly contacting the Birsters.

During these calls, the Birsters claim AHMSI used offensive and abusive language

towards Angela, and made false representations that the Birsters’ home was

scheduled for a foreclosure sale. Angela alleges that after a particularly abusive

call on May 5, 2009, she collapsed in her front yard and was rushed to a nearby

hospital.

      Once the calls ceased, the Birsters claim AHMSI then began intimidating

and harassing them at their home. AHMSI sent agents to “inspect” the property,

despite knowing the Birsters resided there. Although AHMSI was initially

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inspecting the property on a monthly basis, AHMSI soon began visiting the

Birsters’ home every day or every other day. AHMSI’s home inspections even

occurred on Thanksgiving and Christmas days.

      The Birsters allege AHMSI’s actions caused Angela to suffer “a deep

depression and anxiety, resulting in her attempted suicide on August 17, 2009.”

On March 23, 2011, Angela was treated again for suicidal tendencies, resulting in

a five-day hospital stay. The Birsters moved to Arizona shortly thereafter,

although their adult children continued to live in and maintain the Florida home.

      On May 4, 2010, the Birsters filed a complaint in Florida circuit court.

AHMSI removed the case to federal court on June 21, 2010. The district court

granted in part, and denied in part, AHMSI’s motion for summary judgment on

July 7, 2011, and entered final judgment.

                                         II.

      “We review a grant of summary judgment de novo and apply the same legal

standards as the district court.” Citizens for Smart Growth v. Sec’y of Dep’t of

Transp., 669 F.3d 1203, 1210 (11th Cir. 2012).

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                                          III.

      Section 1692a of the FDCPA defines “debt collector” as the following:

      The term “debt collector” means any person who uses any
      instrumentality of interstate commerce or the mails in any business the
      principal purpose of which is the collection of any debts, or who
      regularly collects or attempts to collect, directly or indirectly, debts
      owed or due or asserted to be owed or due another. . . . For the purpose
      of section 1692f(6) of this title, such term also includes any person who
      uses any instrumentality of interstate commerce or the mails in any
      business the principal purpose of which is the enforcement of security
      interests. . . .

15 U.S.C. § 1692a(6). The substantive provisions of the FDCPA that follow

§ 1692a prohibit “debt collectors” from taking certain actions. Therefore, whether

an individual or entity is a “debt collector” is determinative of liability under the

FDCPA.

      The district court, relying on our unpublished opinion in Warren v.

Countrywide Home Loans, Inc., 342 F. App’x 458 (11th Cir. 2009), rejected the

Birsters’ contention that AHMSI’s actions were taken solely for the purpose of

collecting a debt. Even accepting the Birsters’ allegations as true, the district

court noted such allegations related to the foreclosure action. Thus, the district

court concluded the conduct alleged by the Birsters related to enforcement of a

security interest, rendering the FDCPA inapplicable with the exception of

§ 1692f(6). With regard to § 1692f(6), the district court concluded there was no

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information “that would indicate any basis for such a claim.” Because all that

remained after granting summary judgment to AHMSI on the FDCPA claim were

state law claims, the district court remanded the rest of the suit to Florida state

court.

         Following the district court’s grant of summary judgment, a panel of this

Court issued a published opinion in Reese v. Ellis, Painter, Ratterree & Adams,

LLP, 678 F.3d 1211 (11th Cir. 2012). Based on the reasoning of Reese, it is

apparent an entity that regularly attempts to collect debts can be a “debt collector”

beyond § 1692f(6) of the FDCPA, even when that entity is also enforcing a

security interest. In that case, the Reeses defaulted on a loan they had secured by

giving the lender a mortgage on their property. Slip. Op. at 2. A law firm

representing the lender sent the Reeses a letter and documents demanding payment

and threatening to foreclose on the property if the debt was not paid. Id. at 3. The

Reeses filed a lawsuit alleging the communication violated the FDCPA,

specifically § 1692e, which prohibits a “debt collector” from using “false,

deceptive, or misleading representation or means in connection with the collection

of any debt.” Id. at 5; 15 U.S.C. § 1692e. The district court dismissed the

complaint for failure to state a claim after finding the law firm was not a “debt

collector” under § 1692a(6), and the letter and documents did not amount to a debt

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collection activity, but instead were an attempt to enforce a client’s security

interest.

       This Court reversed and remanded to the district court after concluding that

“[t]he fact that the letter and documents relate to the enforcement of a security

interest does not prevent them from also relating to the collection of a debt within

the meaning of § 1692e.” Id. at 11. We began by noting that the FDCPA’s

definition of “debt” in § 1692a(5) clearly encompassed the Reeses’ payment

obligations under the promissory note at issue. Id. at 8-9. Relying on the language

in the letter demanding payment and referencing debt collection, we then reasoned

that the law firm’s attempt to collect the money owed on the promissory note was

“the collection of [a] debt” within the meaning of § 1692e. Id. at 9-10. Pertinent

to this appeal, we stated:

       Even if the . . . law firm intended the letter and documents to give the
       Reeses notice of the foreclosure, they also could have—and
       did—demand payment on the underlying debt. . . . A communication
       related to debt collection does not become unrelated to debt collection
       simply because it also relates to the enforcement of a security interest.
       A debt is still a “debt” even if it is secured.

Id. at 11-12.

       The Reese opinion notes the rule that the law firm asked us to adopt—the

same rule AHMSI is asking us to adopt here—“would exempt from the provisions

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of § 1692e any communication that attempts to enforce a security interest

regardless of whether it also attempts to collect the underlying debt.” Id. at 11.

We noted that proposed rule would create a big loophole in the FDCPA: “The

practical result would be that the [FDCPA] would apply only to efforts to collect

unsecured debts.” Id. at 12.

      Although Reese dealt with the applicability of § 1692e, the practical effect

of the case is to overrule the reasoning relied on by the district court, since Reese

allowed the enforcer of a security interest to be held liable under the FDCPA

beyond § 1692f(6). Reese provides that an entity can both enforce a security

interest and collect a debt, and constitutes binding precedent on this point. Id. at

11.

      Here, the Birsters’ allegations support a conclusion that AHMSI engaged in

debt collection activity, as AHMSI was both attempting to enforce a security

interest and collect a debt. The September 30, 2008, letter advised the Birsters

that AHMSI would foreclose on their home unless they cured the default by

paying $7,761.14 within 30 days. The letter also included a disclosure stating

“THIS IS AN ATTEMPT TO COLLECT A DEBT AND ANY INFORMATION

OBTAINED WILL BE USED FOR THAT PURPOSE.” Under the reasoning of

Reese, AHMSI may be liable under the FDCPA beyond § 1692f(6) even though it

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was also enforcing a security interest. Thus, we reverse the district court’s order

concluding otherwise, and remand to the district court for further proceedings in

light of Reese.

       We note that although Reese resolves the question of whether FDCPA

liability may exist for an enforcer of a security interest, and thus whether AHMSI

was engaging in a debt collection activity, the Birsters must still show that AHMSI

is a “debt collector” under § 1692a(6). The statutory text clearly states that, to

qualify as a “debt collector,” the “principal purpose” of “any business” must be

“the collection of any debts” or that the business must “regularly collect[] or

attempt[] to collect . . . debts.” 15 U.S.C. § 1692a(6). The record before us is

devoid of pertinent evidence supporting or disputing whether AHMSI is a “debt

collector” under this definition. Neither party has offered any evidence on this

issue, and AHMSI has not argued that it is an undisputed fact.1 It is impossible for

us to tell whether AHMSI falls within the general definition of “debt collector,”

and the district court will have to make this assessment on remand.2 Finally, we

       1
          Contrary to the Birsters’ assertions, AHMSI did not waive its right to argue that it is not
a “debt collector” in the September 30, 2008, letter.
       2
          AHMSI also argues it is not a debt collector because it became the loan servicer on July
30, 2008, and the Birsters were not placed in default status until September 30, 2008, the date of
the default letter. The Birsters counter that (1) the terms of “the promissory note and mortgage
provide that any missed payment by the B[irsters] places their loan into a default status,” and
“[t]he foreclosure complaint alleges that the B[irsters] defaulted on June 1, 2008 by failing to

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note that on remand, the district court should reassess whether the Birsters met

their pleading burden with regard to a § 1692f(6) violation.

       For the foregoing reasons, we REVERSE and REMAND for proceedings

consistent with this opinion.

make a payment when due.” The district court has not addressed this issue in the first instance,
and will have an opportunity to do so on remand.

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