Deutsche Bank Trust Co. v. Garst
| Decision Date | 11 September 2013 |
| Docket Number | Civil Action No. 2:11–cv–04027–WMA. |
| Citation | 989 F.Supp.2d 1194 |
| Parties | DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee for Rali 2005QS10, Plaintiff/Counterclaim Defendant, v. Ashley T. GARST, Defendant/Counterclaim Plaintiff, v. GMAC Mortgage, LLC, Counterclaim Defendant. |
| Court | U.S. District Court — Northern District of Alabama |
OPINION TEXT STARTS HERE
Colin T. Dean, Greggory M. Deitsch, Marcus Monte Maples, Shaun K., Ramey, Sirote & Permutt PC, Birmingham, AL, for Plaintiff/Counterclaim Defendant and Counterclaim Defendant.
John G. Watts, M. Stan Herring, Jr., Watts & Herring LLC, Birmingham, AL, for Defendant/Counterclaim Plaintiff.
This case follows upon a mortgage default and subsequent foreclosure. Plaintiff and counterclaim defendant Deutsche Bank Trust Company Americas, as trustee for RALI 2005QS10, (“Deutsche”) brought suit for ejectment against defendant and counterclaim plaintiff Ashley Garst (“Garst”) for possession of Garst's residence after a foreclosure sale at which Deutsche was the purchaser. Garst denies that Deutsche has a present right to possession and seeks damages against Deutsche under a variety of theories related to alleged improper collection procedures.1 Before the court is Deutsche's motion for summary judgment for ejectment and for dismissal of all of Garst's counterclaims (Doc. 22). The court concludes for the following reasons that Deutsche's motion must be granted in part and denied in part.
On May 16, 2005, Garst received a loan of $104,000.00 from Homecomings Financial Network, Inc. (“HFN”). Garst Dep., Pl.'s Ex. B, at 26–28. The loan was memorialized by a promissory note (“the Note”), Pl.'s Ex. 1, and secured by a mortgage (“the Mortgage”), Pl.'s Ex. 2. The Note was made payable to and delivered directly to the lender, HFN, Pl.'s Ex. 1, whereas the named Mortgagee was Mortgage Electronic Registration Systems, Inc. (“MERS”), as the nominee of HFN, Pl.'s Ex. 2. Both the Note and the Mortgage were by their terms fully assignable. See Pl.'s Ex. 1, 2.
In 2008, Garst began to struggle with his payments. Def.'s Facts ¶ 5; Pl.'s Facts ¶ 6. Despite efforts to modify the Mortgage, he defaulted on it in mid–2009, and has been in default since then. Def.'s Facts ¶ 6; Pl.'s Facts ¶ 8.
There is some dispute as to the path of ownership of the Mortgage, and it is made no clearer by the fact that most of the entities involved appear to own each other in some way or another. This court has frequently made clear its unhappiness with the “once mighty global secondary mortgage loan market.” Duke v. Nationstar Mortgage, L.L.C., 893 F.Supp.2d 1238, 1241 (N.D.Ala.2012). This unhappiness is shared by many courts, including the Ninth Circuit, which began an opinion as recently as August 8, 2013, with these words:
The U.S. Department of the Treasury, acting under the direction of Congress, launched the Home Affordable Modification Program (“HAMP”) in 2009 to help distressed homeowners with delinquent mortgages, but the program seems to have created more litigation than it has happy homeowners.
Corvello v. Wells Fargo Bank, NA, 728 F.3d 878, 880 (9th Cir.2013). The instant case will make this court no happier. This court is unfamiliar with RALI 2005QS10, apparently the cestui que trust for which, or for whom, Deutsche is acting as trustee. Curiosity will not cause the court to ask Deutsche to reveal the nature of RALI 2005QS10, which for aught appearing is a microdot in the sky or a device for packaging a divided ownership.
It is not disputed that on August 9, 2010, MERS, that wonderful mortgage industry invention, assigned the subject Mortgage to Deutsche. Pl.'s Ex. 3. This assignment included an “Agreement for Signing Authority” that divided or purported to divide the handling of the Mortgage among MERS, counterclaim defendant GMAC Mortgage, LLC (“GMAC”), and Sirote & Permutt, P.C., a law firm. Id. Presumably any one of these three could act as servicer. Who would decide which of the three would actually perform the duties of servicer is not found in the record, but it was GMAC that took upon itself the responsibility for servicing the Mortgage. It was GMAC with whom Garst worked, throughout 2011, in an attempt to reach a loan modification agreement to cure his default. Def.'s Facts ¶ 7; Pl.'s Facts ¶ 10. In June, 2011, GMAC rejected Garst's application for modification, Def.'s Fact ¶ 50, sent him a notice of acceleration, Pl.'s Facts ¶ 11, and scheduled a foreclosure sale for July, id. Nevertheless, modification forms continued to fly back and forth throughout the summer and into the fall of 2011, Def.'s Facts ¶¶ 52–55, and the foreclosure sale was rescheduled for September 12, 2011, Pl.'s Facts ¶¶ 13–14.
On August 29, 2011, GMAC notified Garst that, despite their voluminous correspondence, Garst's modification application was still deficient because it lacked required information and that there would be no further review of his application. Def.'s Facts ¶ 58; Pl.'s Facts ¶ 14. In contradiction to this seemingly final decision, correspondence continued, now by telephone, as the second foreclosure date approached. GMAC had a policy requiring all modification packages to be received at least seven days prior to a foreclosure sale. Pl.'s Facts ¶ 15. While this policy had been included in the earlier forms mailed to Garst, id., it was not mentioned during 11th hour telephone negotiations, Def.'s Facts ¶¶ 57–63. Deutsche did not hang up the telephone on Garst. Instead, it continued to listen.
On September 9, 2011, Garst finally completed his modification package with all essential information on the required forms. Def.'s Facts ¶ 67. By telephone, GMAC confirmed receipt of this amended application, and, according to Garst, assured him that his foreclosure would again be postponed while the completed application was being reviewed. Def.'s Facts ¶¶ 66–71.
Despite this conversation, the foreclosure sale took place on September 12, 2011. Pl.'s Facts ¶ 17. Deutsche purchased the property as the highest bidder. Id. ¶ 19. On September 13, the next day, Deutsche sent a Demand for Possession letter to Garst. Id. ¶ 20. On September 14, GMAC notified Garst in writing that his September 9 modification papers would not be reviewed because they had been received too close to the date of the foreclosure sale. Id. ¶ 22. Why GMAC did not simply say that there could be no review because the sale had already taken place is anybody's guess. There was no mention of the telephone assurance of September 9 that there would be no foreclosure while the finally completed application was being reviewed.
On September 19, 2011, after Garst refused to vacate the foreclosed property which was his home, Deutsche brought this action for ejectment in the Circuit Court of Jefferson County, Alabama. Garst answered with a denial of Deutsche's claim of a valid title, and counterclaimed on numerous federal and state law grounds related to the pre-foreclosure negotiations. Garst named GMAC as a second counterclaim defendant. GMAC and Deutsche thereafter removed the case to this court based on federal question jurisdiction over Garst's federal claims and supplemental jurisdiction over Garst's state law claims and Deutsche's ejectment claim.2
On May 14, 2012, GMAC filed for bankruptcy. Garst's claims against it were therefore automatically stayed, so that only Deutsche and Garst remain as parties for purposes of this opinion. Now, after significant discovery, Deutsche seeks summary judgment on its affirmative ejectment action and dismissal of all of Garst's claims.
For purposes of this opinion, the parties' many arguments are sorted into three categories: (1) Garst's federal claims under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq.; (2) Garst's state law claims; and (3) Deutsche's claim of ejectment.
The FDCPA is a federal statute designed to “eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). Garst alleges that Deutsche made false or misleading representations in violation of § 1692e, used unfair collection methods in violation of § 1692f, harassed and abused him in violation of § 1692d, and failed to provide him proper notice of collection under § 1692g.
Deutsche seeks summary judgment on either or both of two grounds: (1) the FDCPA does not apply because Deutsche is not a “debt collector” as defined in § 1692a, Pl.'s Mot. at 26, and/or (2) no violation is possible because the foreclosure occurred only after default and notice, id. at 27. The court takes these two arguments in turn.
The FDCPA's prohibitions apply only to “debt collectors.” See, e.g.,§§ 1692e–1692f. Under the statute, a debt collector is one who “regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” § 1692a(6). Deutsche argues that it does meet this definition for three reasons: first, because it was enforcing a security interest, not collecting a debt; second, because any debts being collected were not “due another,”; and third, because the FDCPA definition does not allow for vicarious liability, and therefore Deutsche cannot be held liable for the actions of GMAC, its agent.
Deutsche's argument that it was not collecting debt stems from Warren v. Countrywide Home Loans, Inc., 342 Fed.Appx. 458, 460 (11th Cir.2009), an unpublished opinion holding that “enforcement of a security interest through the foreclosure process is not debt collection for purposes of the [FDCPA].” See also Ausar–El ex rel. Small, Jr. v. BAC (Bank of...
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