Dowers v. Nationstar Mortg., LLC

• Decision Date: 31 March 2017
• Docket Number: No. 15-15178,15-15178
• Citation: 852 F.3d 964
• Parties: Dale DOWERS; Debra Dowers, Plaintiffs–Appellants, v. NATIONSTAR MORTGAGE, LLC; Wells Fargo Bank, NA; Wells Fargo Bank Minnesota, NA, Trustee Banc of America Alternative Loan trust series 2003–2007, Defendants–Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

852 F.3d 964

Dale DOWERS; Debra Dowers, Plaintiffs–Appellants,

v.NATIONSTAR MORTGAGE, LLC; Wells Fargo Bank, NA; Wells Fargo Bank Minnesota, NA, Trustee Banc of America Alternative Loan trust series 2003–2007, Defendants–Appellees.

No. 15-15178

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 15, 2016 San Francisco, California

Filed March 31, 2017

Mark C. Fields (argued), Law Offices of Mark C. Fields, Los Angeles, California, for Plaintiffs–Appellants.

Ariel Stern (argued) and Natalie L. Winslow, Akerman LLP, Las Vegas, Nevada, for Defendants–Appellees.

Before: Diarmuid F. O'Scannlain, Ronald M. Gould, and Milan D. Smith, Jr., Circuit Judges.

OPINION

GOULD, Circuit Judge:

Plaintiffs Dale and Debra Dowers filed this action against Defendants Nationstar Mortgage, LLC ("Nationstar"), Wells Fargo Bank, N.A. ("WFB"), and Wells Fargo Bank Minnesota, N.A. ("WFB Minnesota"), asserting claims relating to Defendants' servicing of Plaintiffs' home loan. Plaintiffs alleged violations of the Fair Debt Collection Practices Act ("FDCPA"), intentional infliction of emotional distress ("IIED"), and a violation of the Nevada Deceptive Trade Practices Act ("DTPA"). The district court dismissed Plaintiffs' complaint. With respect to the FDCPA claims, the district court found that Plaintiffs did not state a claim for relief because Defendants' alleged conduct was a non-judicial foreclosure attempt, not debt collection. We affirm the district court except for its dismissal of Count Four, which asserts a violation of 15 U.S.C. § 1692f(6). That provision—unlike the other three FDCPA provisions under which Plaintiffs allege violations—governs a "business the principal purpose of which is the enforcement of security interests." 15 U.S.C. § 1692a(6). Because Plaintiffs allege conduct related to the enforcement of a security interest, that claim should not have been dismissed on the ground that Defendants were not collecting a debt.

I

A

In May 2003, Plaintiffs refinanced a loan on their Las Vegas home by executing a Note and Deed of Trust with Bank of America, N.A. ("Bank of America").¹ In August 2003, Bank of America assigned the Note to WFB Minnesota. On January 28, 2010, ReconTrust Company, N.A. ("ReconTrust"), acting as Bank of America's agent, recorded a notice of default on Plaintiffs' loan. The next day, Bank of America assigned the Deed of Trust to WFB Minnesota, and WFB Minnesota substituted ReconTrust as the trustee under the Deed of Trust. On April 12, 2010, Plaintiffs filed a voluntary petition for protection under Chapter 7 of the Bankruptcy Code, and on July 21, 2010, they received a discharge under 11 U.S.C. § 727.

On September 23, 2013, Bank of America, acting "as attorney in fact" for WFB, substituted MTC Financial, Inc., doing business as Trustee Corps ("Trustee Corps"), as the trustee under the Deed of Trust. A week later, Trustee Corps recorded a notice of default on Plaintiffs' loan. On November 13, 2013, Nationstar sent Plaintiffs a letter stating that Bank of America had assigned to Nationstar the servicing rights to Plaintiffs' loan.

In light of the notice of default, a Nevada foreclosure mediator held a mediation between Plaintiffs and the lenders. During the mediation, the lenders could not produce the original loan documents. On February 13, 2014, the mediation office sent the parties a notice stating that, based on the mediator's recommendation, it would not issue a Certificate of Foreclosure.

On March 25, 2014, Nationstar sent Plaintiffs a letter stating, "You are in default under the terms of the conditions of the mortgage loan for failure to pay the required installments when due. Nationstar intends to enforce the provision of the Note and related security instrument[ ]." It also stated, "If you do not pay the full amount of the default, Nationstar may accelerate the entire sum of both principal and interest due and payable, and invoke any remedies provided for in the Note and security instrument, including but not limited to the foreclosure sale of the property." At the end of March 2014, a Nationstar representative called Plaintiffs and was "rude, bullying, and abusive." In light of these communications—and his belief that the outcome of the foreclosure mediation rendered Defendants incapable of foreclosing on Plaintiffs' home—Mark Fields, Plaintiffs' attorney, wrote Nationstar a letter on April 2, 2014. Fields asserted that Nationstar's threat to foreclose was unlawful and also requested that all communications from Nationstar be directed to Fields, rather than to Plaintiffs. Fields also demanded that Nationstar repudiate its threat to foreclose, confirm that the Note owner had possession of the original loan documents, and confirm that Nationstar would not initiate any foreclosure proceedings until it obtains a certificate of foreclosure from the foreclosure mediation program.

Between May and June of 2014, Nationstar called Plaintiffs three times and placed written notices on Plaintiffs' door, stating in bold capital letters: "important," "please call," "please be ready to give your account number," and "we are expecting your call today." On June 18, 2014, Nationstar sent a loan statement directly to Plaintiffs. Fields sent Nationstar and Trustee Corps an email on June 25, 2014, reasserting his previous demands and adding a demand that Trustee Corps rescind the notice of default it had recorded on January 29, 2010. Nationstar sent a letter to Fields stating that it intended to respond by July 23. On July 15, Fields emailed Nationstar and Trustee Corps objecting to the delayed response and again demanding that the notice of default be rescinded. Trustee Corps rescinded the notice of default on July 16.

On July 21, 2014, a Nationstar representative sent Fields a letter asserting that Nationstar did not receive notice of Fields's representation of Plaintiffs until July 3, 2013, and that the owner of the Note was WFB Minnesota. With respect to Fields's demand that Nationstar confirm WFB Minnesota's possession of the loan documents, the letter stated:

[T]here are some circumstances where the owner has given temporary possession of the loan note to the servicer. The owner does this in order to ensure that the servicer is able to perform the services and duties incident to the servicing of the mortgage loan, such as foreclosure actions, bankruptcy cases, and other legal proceedings.

Nationstar sent a letter directly to Plaintiffs on August 26, stating that Plaintiffs' home may be referred to foreclosure within fourteen days. On August 27, a Nationstar representative sent Fields a letter refusing to answer whether it "or the lender" could provide the documents Fields had requested because such information "does not pertain directly to the servicing of the loan, does not identify any current servicing errors, and/or is considered proprietary and confidential." Fields responded with two emails to a Nationstar representative on August 27, accusing Nationstar of falsely claiming to possess the Note and demanding that Nationstar prove that it or WFB Minnesota had possession of the Note. Two days later, Fields sent further emails to the same Nationstar representative as well as Nationstar's CEO and COO, repeating his prior demands. Nationstar responded to Fields on September 4, but did not respond to the demands.

As a result of these events, Plaintiffs alleged that they moved out of Las Vegas, have experienced severe emotional distress, and that Ms. Dowers "cries herself to sleep from the abuse, stress, uncertainty, and lies she has suffered."

B

Plaintiffs sued Defendants in Nevada state court, asserting six causes of action.

Counts One through Four assert violations of four different FDCPA provisions: 15 U.S.C. §§ 1692c(a)(2), 1692d, 1692e, and 1692f(6). Count Five asserts a claim of IIED, and Count Six asserts a violation of the DTPA. Defendants removed the case to federal court and successfully moved to dismiss the entire complaint under Federal Rule of Civil Procedure 12(b)(6). Plaintiffs timely appealed.

II

We have jurisdiction to review the district court's order dismissing Plaintiffs' complaint, 28 U.S.C. § 1291, which we review de novo , O'Brien v. Welty , 818 F.3d 920, 929 (9th Cir. 2016). To determine whether dismissal under Rule 12(b)(6) was appropriate, we accept as true Plaintiffs' nonconclusory factual allegations, construe all reasonable inference in favor of Plaintiffs, and ask whether the facts are sufficient to state a claim to relief that is plausible on its face. See Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

III

Defendants contend that Plaintiffs' FDCPA counts fail to state a claim for relief because Defendants did not engage in "debt collection" and were not acting as "debt collectors." We agree that the claims under 15 U.S.C. §§ 1692c(a)(2), 1692d, and 1692e fail for that reason. With respect to the Section 1692f(6) claim, however, we disagree. That provision governs Defendants' alleged conduct because it expressly applies to the enforcement of security interests such as a deed of trust.

A

The FDCPA defines a "debt collector" in relevant part as:

any person who ... [engages] 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 ... [engages] in any business the principal purpose of which is the enforcement of security interests.

15 U.S.C. § 1692a(6). A "debt" is "any obligation or alleged obligation of a consumer to pay money arising out of a transaction." 15 U.S.C. § 1692a(5). Each of the four FDCPA provisions under which Plaintiffs sue applies to only the conduct of a "debt collector." See id. § 1692c(a)(2) ("[A] debt collector may not communicate with a consumer in connection with the collection of any debt...