Barber v. National Bank of Alaska
| Decision Date | 26 July 1991 |
| Docket Number | No. S-3736,S-3736 |
| Citation | 815 P.2d 857 |
| Parties | Michael J. BARBER, Appellant, v. NATIONAL BANK OF ALASKA and Diania Wallace, Appellees. |
| Court | Alaska Supreme Court |
David Rankine, Law Offices of William L. McNall, Anchorage, for appellant.
LeRoy E. DeVeaux, DeVeaux and Associates, Anchorage, for appellees.
Before RABINOWITZ, C.J., and BURKE, MATTHEWS, COMPTON and MOORE, JJ.
This case concerns events surrounding the National Bank of Alaska's (NBA) foreclosure of Michael Barber's duplex property. Barber appeals the superior court's grant of partial summary judgment and directed verdict. The superior court dismissed by summary judgment Barber's claims under the federal Fair Debt Collection Practices Act 1 and the Alaska Unfair Trade and Consumer Practices Act. 2 The superior court granted NBA's motion for a directed verdict on Barber's claims of general negligence, misrepresentation, breach of covenants of good faith and fair dealing, and punitive damages. NBA received $30,000 in attorney's fees which Barber also appeals.
We affirm summary judgment on the federal and state statutory claims. We affirm as well the directed verdict on the claim of breach of implied covenants of good faith and fair dealing. We reverse and remand for trial the negligence claim, one of the misrepresentation claims, and the related punitive damage claims. We also vacate the award of attorney's fees.
NBA, the servicing agent for Alaska Housing Finance Corporation (AHFC), the mortgagee, foreclosed Barber's Anchorage residential property in 1988. When NBA sought to have Barber removed from the property, he counterclaimed alleging statutory and common law violations and also brought claims against NBA employee, Diania Wallace. Barber's claims span the entire course of his dealings with NBA from his purchase of the property in 1982 to the foreclosure in 1988.
Barber originally financed the purchase of his property in 1982 through NBA which sold the mortgage to AHFC; however, NBA continued to service the mortgage. Barber purchased the house for $138,000 at a 13.75% interest rate. Within five months of closing, Barber lost his position as a petroleum engineer on the North Slope. From that time until the foreclosure in 1988, Barber experienced lengthy periods of unemployment. As a result, he was repeatedly late in his mortgage payments. Moreover, the value of the property declined as the Anchorage housing market plummeted in the mid- to late 1980s.
In 1986, Wallace, an NBA mortgage collection employee, was assigned to Barber's account. Wallace worked closely with Barber. She suggested various strategies to enable him to keep the property, including refinancing and adjusting the interest rate. None proved successful. Barber alleges that misrepresentation and breach of implied covenants of good faith and fair dealing occurred in the course of these efforts.
Barber ceased to make mortgage payments in June 1987. To avoid foreclosure, Wallace suggested that Barber apply for refinancing to the Home Owner's Assistance Program (HOAP) through the Mortgage Guarantee Insurance Corporation. 3 Barber applied on February 18, 1988. However, as Barber was no longer making mortgage payments, NBA continued the foreclosure proceedings concurrently. Barber was aware of the dual process, but Wallace assured him that the foreclosure would be postponed while his HOAP application was pending. Wallace and Barber had a number of telephone conversations between the time Barber applied to HOAP and April 25, 1988, the date NBA had set for foreclosure.
Pursuant to the agreement with Barber, Wallace took steps to postpone the April 25 foreclosure. Believing she had postponed the sale, Wallace went on vacation several days before April 25. Her replacement failed to stop the sale which proceeded as scheduled. Wallace returned from vacation on April 25. When she subsequently learned that the sale had taken place, she postponed recordation, so that the processing of Barber's HOAP application would continue. Ultimately, Barber's application and appeal for HOAP refinancing were denied.
Wallace did not tell Barber that the foreclosure had occurred. Rather, she told him that it had been postponed until a date in May. During subsequent conversations, Barber claims Wallace stated several successive postponement dates, the last of which was June 3, 1988. Barber did not learn that the foreclosure had occurred until June 2, 1988, when his counsel contacted NBA and was informed that the foreclosure sale had indeed occurred on April 25, 1988. Barber claims that NBA and Wallace's failure to postpone the foreclosure and Wallace's subsequent misstatements concerning the foreclosure, violated the Fair Debt Collection Practices Act, the Alaska Unfair Trade and Consumer Protection Act, were negligent, and constituted negligent or knowing misrepresentation.
"When reviewing a grant of summary judgment, this court must determine whether there was a genuine issue of material fact and whether the moving party was entitled to judgment on the law applicable to the established facts." Merdes v. Underwood, 742 P.2d 245, 248 (Alaska 1987).
Our standard of review for a directed verdict is to view the evidence in the light most favorable to the nonmoving party and affirm the motion only if fair-minded jurors could not reach different conclusions. City of Delta Junction v. Mack Trucks, Inc., 670 P.2d 1128, 1130 (Alaska 1983).
Barber appeals the grant of summary judgment on his Fair Debt Collection Practices Act 4 (the Federal Act) claim. Although the parties stipulated that NBA is not subject to the provisions of the Federal Act, Barber contends that it should be construed to include employees of mortgage servicers, such as Wallace. He argues that Wallace is a "debt collector" under section 1692a(6)(F) and, therefore, she must comply with its provisions.
The Federal Act was enacted to stop abusive practices in the collection of consumer debts such as threats of physical violence, use of profanity, and misrepresentation. S.Rep. No. 382, 95th Cong., 1st Sess. 3, reprinted in 1977 U.S.Code Cong. & Admin.News 1695, 1698. The Federal Act's definition of "debt collector" does not encompass collection of mortgage debt or mortgage service companies servicing debts which were not in default when service commenced. 5 The legislative history also states that "persons who service debts for others" are not debt collectors for purposes of the act. 1977 U.S.Code Cong. & Admin.News at 1701. Subsequent cases have found that mortgage service companies are not "debt collectors" under the Federal Act. See, e.g., Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir.1985).
Thus, the Federal Act was not directed at the type of debt (mortgage) nor the type of activity (debt service) at issue in this case. We therefore reject Barber's plea for a liberal construction of the statute and affirm the superior court's grant of summary judgment.
The Alaska Unfair Trade Practices and Consumer Protection Act 6 (the Alaska Act) is the state counterpart to the Federal Act. 7 Barber contends that the mortgage NBA sold him was a "good," or alternatively, that the mortgage and the subsequent servicing arrangements were a provision of "services." Therefore, he claims that the actions of Wallace and NBA were covered by the Alaska Act.
In support of his argument that mortgage loan servicing constitutes a "service" governed by the Alaska Act, Barber cites State of Alaska v. O'Neill Investigations, Inc., 609 P.2d 520 (Alaska 1980), which held that the Alaska Act applies to activities of independent debt collection agencies. However, the O'Neill decision defines an independent debt collector as "a person in a business the principal purpose of which is the collection of debts owed or due or asserted to be owed or due." 609 P.2d at 523 n. 1 (emphasis added). 8 As NBA's principal business is not debt collection, NBA is not an independent debt collector. Therefore, O'Neill does not support Barber's contention that the Alaska Act is applicable to his case.
Barber's loan also is not a "good" under the Alaska Act. In State v. First National Bank of Anchorage, 660 P.2d 406, 413 (Alaska 1982), we held that the sale of real property is not governed by the Alaska Act. We therefore conclude as a matter of law that the Alaska Act does not apply to Barber's mortgage. Accordingly, we affirm the trial court's grant of summary judgment on this issue.
Barber argues that NBA/Wallace were negligent in failing to postpone the mortgage sale. In support of this argument, he cites NBA/Wallace's representations that the foreclosure would be postponed during the period in which his HOAP application was pending. Barber states that he relied on the promised postponement and on Wallace's subsequent statement that the foreclosure had been postponed until June 3, 1988, and that he incurred damages in the form of increased federal tax liability when he failed to file for bankruptcy prior to the foreclosure. 9
NBA acknowledges that the failure to postpone the foreclosure was caused by its employee's mistake. Further, Barber's intention to file for bankruptcy prior to the foreclosure is evidenced by the fact that he met with counsel on June 2, 1988 and, believing that the foreclosure was to occur the following day, completed the necessary papers to commence bankruptcy proceedings.
We find that Barber has presented evidence sufficient to allow a fair-minded juror to conclude that he relied to his detriment on NBA/Wallace's promise to postpone foreclosure. We therefore reverse the directed verdict with respect to the negligence claim and remand this issue for retrial.
Barber alleges that NBA/Wallace made knowing or negligent...
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