Daniels v. Select Portfolio Servicing, Inc.

• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)
• Citation: 34 F.4th 1260
• Docket Number: 19-10204
• Parties: Constance DANIELS, Plaintiff-Appellant, v. SELECT PORTFOLIO SERVICING, INC., Defendant-Appellee.
• Decision Date: 24 May 2022

34 F.4th 1260

Constance DANIELS, Plaintiff-Appellant,
v.
SELECT PORTFOLIO SERVICING, INC., Defendant-Appellee.

No. 19-10204

United States Court of Appeals, Eleventh Circuit.

Filed: May 24, 2022

Kaelyn Steinkraus Diamond, Michael A. Ziegler, Law Office of Michael A. Ziegler, PL, Clearwater, FL, for Plaintiff-Appellant.

Benjamin Bruce Brown, Joseph T. Kohn, Quarles & Brady, LLP, Naples, FL, for Defendant-Appellee.

Scott Lawrence Nelson, Public Citizen Litigation Group, Washington, DC, for Amici Curiae.

Before Jordan, Lagoa, and Brasher, Circuit Judges.

JORDAN, Circuit Judge:

Constance Daniels sued Select Portfolio Servicing under the Fair Debt Collections Practices Act, 15 U.S.C. §§ 1692 et seq., and the Florida Consumer Collection Practices Act, Fla. Stat. § 559.72, alleging that a series of monthly mortgage statements misstated a number of items, including the principal amount due. She claimed that, by sending her the incorrect mortgage statements, Select Portfolio violated the FDCPA's prohibitions on harassment or abuse, false or misleading representations, and unfair practices. See 15 U.S.C. §§ 1692d, 1692e(2)(A), 1692e(10), 1692f(1). She also claimed that the statements violated the FCCPA's prohibitions on harassment and on attempts to collect on debt that is not legitimate. See Fla. Stat. §§ 559.72(7), 559.72(9). The district court dismissed Ms. Daniels’ complaint with prejudice, agreeing with Select Portfolio that the mortgage statements in question were not communications in connection with the collection of a debt and therefore not covered by the FDCPA and the FCCPA.

The question presented in this appeal—one of first impression in our circuit—is whether monthly mortgage statements required by the Truth in Lending Act, 15 U.S.C. § 1638, and its regulations can constitute communications in connection with the collection of a debt under the FDCPA and the FCCPA. We hold that they may, at least when—as here—they contain debt-collection language that is not required by the TILA or its regulations and the context suggests that they are attempts to collect or induce payment on a debt. In such circumstances, coverage under the FDCPA and the FCCPA is plausible.

I

In reviewing the district court's Rule 12(b)(6) dismissal order, we accept as true the facts set out by Ms. Daniels in her complaint and its attached exhibits. See

34 F.4th 1264

Tellabs, Inc. v. Makor Issues & Rts., Ltd. , 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007). The complaint and the exhibits tell the following story.

In 2005, Ms. Daniels executed a promissory note with Countrywide Home Loans, secured by a mortgage on her home in Florida. In March of 2009, after falling behind on her payments, she entered into a mortgage modification agreement with Countrywide. She agreed to make interest-only monthly payments (plus escrow amounts) for 10 years, with the principal balance remaining at $189,911.00 for that period. The interest-only monthly payments for the first year were $813.12, but for each succeeding year during the 10-year period the interest rate (and the payments) would increase pursuant to a schedule in the modification agreement. After the 10-year period, the monthly payments would include both principal and interest, again pursuant to a schedule set forth in the agreement. See D.E. 23 at 3 & Ex. A.

For over a year, Ms. Daniels made her interest-only monthly payments on time. Then Countrywide sold, transferred, or assigned the mortgage to Wells Fargo Bank. In June of 2010, Wells Fargo refused to accept the interest-only payments from Ms. Daniels. Claiming that Ms. Daniels had defaulted on the note and mortgage, Wells Fargo filed a foreclosure action in state court. Select Portfolio was the mortgage servicer at this time. See id. at 3–4.

In December of 2015, the state court granted Ms. Daniels’ motion to enforce the earlier mortgage modification agreement, ordered Ms. Daniels to resume making payments according to the terms of the agreement, and sanctioned Wells Fargo for improperly bringing the foreclosure action. The sanctions included requiring Wells Fargo to waive interest on the mortgage debt for certain periods of time and to pay Ms. Daniels’ attorney's fees. See id. at 4–5 & Exs. B, C.

Because the dispute between Wells Fargo and Ms. Daniels had lasted for years, certain interest and escrow payments had either not been made or had not been accepted. The state court ruled in May of 2016 that these sums, totaling $60,808.83, would be added "to the end of" the loan modification agreement. See id. at 5–8 & Ex. C. At that time, Ms. Daniels’ interest-only monthly payments (not including escrow amounts) were $928.25 pursuant to the schedule set out in the modification agreement. See id. at 9.

Following the conclusion of the foreclosure action, Select Portfolio sent Ms. Daniels a number of monthly mortgage statements. Not all the statements were the same in terms of format, language, and amounts, so we summarize the November 2016 statement, which Ms. Daniels claims was the most problematic.

The November 2016 statement listed Select Portfolio's address and phone number, and had entries for "loan due date," "amount due," "transaction activity," "past payments breakdown," "past due payments," "total amount due," "interest-bearing principal," "deferred principal," "outstanding principal," and "late fee." It included a "delinquency notice" box, which listed overdue payments and the amount needed to bring the account current. And it had a "monthly payment coupon" at the bottom of the first page. The coupon listed the late fee that would be charged if the payment was not made by the due date, and it contained the following instructions: "Please detach bottom portion and return with your payment," and "Make checks payable to Select Portfolio Servicing." See id. at Ex. E.

The November 2016 statement also contained the following language:

• This is an attempt to collect a debt. All information obtained will be used for that purpose.

34 F.4th 1265

• You are late on your mortgage payments. Failure to bring your loan current may result in fees and foreclosure – the loss of your home.

• [Select Portfolio] has completed the first notice or filing required to start a foreclosure.

• Paying your mortgage on time is an important obligation, so please pay on or before the payment due date. Payments are not considered paid until received and posted to your account.

• [Select Portfolio] furnishes information to consumer reporting agencies. You are hereby notified that a negative credit report reflecting on your credit record may be submitted to a credit reporting agency if you fail to fulfill the terms of your Note and Mortgage.

Id. The statement did not indicate that it was being sent for informational purposes.¹

According to Ms. Daniels, the November 2016 statement significantly misstated the deferred principal balance, the outstanding principal balance, and the amount of the interest-only payment that was due. The statement, for example, listed the deferred principal as $83,259.92 (when the actual sum to be added to the end of the modification agreement was $60,808.83); listed the outstanding principal balance as $356,121.53 (when it should have been $250,714.83 [$189,911.00 + $60,803.83]); and listed the monthly payment due as $2,244.90 (when the actual figure was $982.25 based on the schedule in the loan modification agreement).

Ms. Daniels alleged that the "delinquency notice" box in the November 2016 statement also misrepresented that the loan was in arrears for 197 days based on six unpaid installments of $2,244.90 (when there was no delinquency at all). The "delinquency notice" box stated that the "total" due was $9,075.71 and provided the following instruction: "You must pay this amount to bring your loan current." The payment coupon attached to the statement also incorrectly listed the amount due as $9,075.71. See id. at 10–11, 12–13, 15–16, & Ex. E.

In October and December of 2017, Ms. Daniels’ counsel sent letters to Select Portfolio asserting that there was no deferred principal balance (because the $60,808.83 was to be added to the end of the loan modification agreement pursuant to the state court's order) and demanding a specific line-by-line accounting of the deferred balance amount. Select Portfolio did not respond to the letters.

In June of 2018, Ms. Daniels sued Select Portfolio under the FDCPA, 15 U.S.C. §§ 1692d, 1692e, 1692f, and the FCCPA, Fla. Stat. §§ 559.72(7), 559.72(9). She alleged that the erroneous monthly mortgage statements were harassing, false, and misleading, and that by sending them Select Portfolio engaged in unfair practices in connection with the collection of a debt in violation of the FDCPA and the FCCPA.²

34 F.4th 1266

As noted, the district court dismissed Ms. Daniels’ claims with prejudice. Agreeing with Select Portfolio, it ruled that the monthly mortgage statements complied with the TILA and its regulations, and so were not communications in connection with the collection of a debt under the FDCPA and the FCCPA. It also denied leave to amend because it concluded that any amendment by Ms. Daniels would be futile.

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