Hyde v. Franklin Am. Mortg. Co.
| Decision Date | 08 April 2020 |
| Docket Number | 4:18-CV-04113-KES |
| Citation | 453 F.Supp.3d 1293 |
| Parties | Brady HYDE, Plaintiff, v. FRANKLIN AMERICAN MORTGAGE COMPANY, Defendant. |
| Court | U.S. District Court — District of South Dakota |
Shawn M. Nichols, Cadwell Sanford Deibert & Garry, LLP, Sioux Falls, SD, for Plaintiff.
Benjamin J. Mann, Halliday, Watkins & Mann, P.C., Salt Lake City, UT, for Defendant.
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
Plaintiff, Brady Hyde, filed a complaint alleging that defendant, Franklin American Mortgage Company, violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681. Docket 1. The complaint also included pendent state-law claims for breach of covenant of good faith and fair dealing and deceptive trade practices. Id. Hyde alleges that Franklin, as a furnisher of information to credit reporting agencies, negligently violated the FCRA resulting in default, foreclosure proceedings, and credit score damage. Id. ¶¶ 26-48. Franklin moves for summary judgment. Docket 21. Hyde opposes the motion. Docket 23. For the following reasons, the court grants Franklin's motion for summary judgment.
The facts, viewed in the light most favorable to the non-moving party, are as follows:
Hyde is a residential contractor and land developer in Sioux Falls, South Dakota. Docket 1 ¶ 5; Docket 24 ¶ 12.1 In 2017, Hyde purchased apartment complexes through loan financing with Plains Commerce Bank. Docket 1 ¶ 7; Docket 21 ¶ 3; Docket 24 ¶ 3. Hyde intended to purchase the units for investment purposes and rent them to tenants. Docket 1 ¶ 8. During the time Plains Commerce Bank was the mortgage servicer, Hyde did not live at the rental properties and all bank communication was made to Hyde at his personal address. Id. ¶ 9.
On August 14, 2018, Hyde's three loans were assigned to Franklin. Docket 21 ¶ 4; Docket 24 ¶ 4. Upon notice that Hyde's mortgage had been assigned, Hyde enrolled in Franklin's Automatic Clearing House (ACH) payments through Franklin's website. Docket 1 ¶ 11. Hyde received an email from Franklin that he had successfully enrolled in ACH payments. Id. ; Docket 25-1. Hyde then deposited funds in the ACH checking account, believing that Franklin would automatically withdraw the monthly mortgage payments from the account each month. Docket 1 ¶ 12. Instead, Hyde alleges that funds were not automatically withdrawn through the ACH account and his loans defaulted. Id. ¶¶ 13, 16-18. Internal Franklin documents state that the following day, a letter was mailed to Hyde advising that Hyde's ACH account was not set up because the "name on account [did] not match so ACH is rejected." Docket 25-5 at 3. Hyde alleges that although all previous correspondence with Plains Commerce Bank was sent to his personal address, Franklin sent correspondence to the mortgaged properties’ addresses even though Hyde did not live there. Docket 1 ¶ 14. Because of this, Hyde was unaware that his ACH payments had not processed and that his loans were in default. Id. ¶ 16.
At the time Hyde closed on his mortgage with Plains Commerce Bank, a multi-family rider was executed amending Section 6 of the mortgage (Docket 21-1 at 6) that required Hyde as the borrower to live at the mortgaged properties. Docket 24 at 3; Docket 25-7 at 3. Section 7 of Hyde's mortgage note states: "[A]ny notice that must be given to me under this Note will be given by delivering it or by mailing it by first class mail to me at the Property Address above or at a different address if I give the Note Holder notice of my different address." Docket 21 ¶ 5; Docket 21-2 at 3. Hyde's "Property Address" was designated in the note as "509 W. Laquinta St & 508 W. Cascade St., Sioux Falls, SD 57108." Docket 21 ¶ 6; Docket 21-1 at 3. This "property address" was not Hyde's personal home address, but instead the address of the rental properties. Thus, Franklin was sending its loan-related communications to the address of Hyde's rental properties and not his personal address. Docket 1 ¶ 14.
Hyde disputes this paragraph of the note, arguing that "[a]t the time of closing, a multi-family rider was signed deleting any provision that the noteholder live at the property address." Docket 24 ¶ 5. At a deposition on September 13, 2019, Hyde responded to questions about which address loan notices would be sent:
Docket 21 ¶ 12; Docket 24 ¶ 12; Docket 21-4 at 15-17.
Hyde contacted Franklin by letter on August 1, 2018, for the first time, requesting that Franklin change the mailing address for notices to his personal address. Docket 21 ¶ 13; Docket 24 ¶ 13; Docket 21-5 at 2-3. On August 6, 2018, after Hyde's mailing address had been changed, Franklin sent a notice of default to Hyde's personal address. Docket 1 ¶ 16. Once Hyde learned that his loans were past due, Hyde made payment on two of the three loans. Id. ¶ 19. Hyde alleges that Franklin erred by not withdrawing payment from Hyde's ACH account and by sending notices to the wrong address. Id. ¶ 21. Because of these errors, Hyde alleges that Franklin "has reported derogatory information on Hyde's credit report which decreased his credit score," and that prior to Franklin's negligence, Hyde had excellent credit. Id. ¶¶ 21-22.
Although Franklin "has been made aware that the derogatory reporting [was] a result of Franklin's own errors," Hyde alleges that Franklin "continues to inaccurately report derogatory information on Hyde's credit report." Id. ¶ 23. Hyde is familiar with credit reporting agencies (CRAs) including agencies like "TransUnion, Equifax, and Experian," but did not file a complaint with any CRA about the alleged incorrect or "derogatory information" furnished by Franklin. Docket 21 ¶¶ 9, 14; Docket 21-4 at 20-21.2 Hyde did not allege in the complaint that he filed a report with a CRA about the incorrect or "derogatory" information furnished by Franklin or that Franklin was provided notice by a CRA of Hyde's disputes. Docket 21 ¶ 9; Docket 24 ¶ 9; see also Docket 1.
Summary judgment is appropriate if the movant "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The moving party can meet its burden by presenting evidence that there is no dispute of material fact or that the nonmoving party has not presented evidence to support an element of its case on which it bears the ultimate burden of proof. Celotex Corp. v. Catrett , 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party must inform the court of the basis for its motion and also identify the portions of the record that show there is no genuine issue in dispute. Hartnagel v. Norman , 953 F.2d 394, 395 (8th Cir. 1992) (citation omitted).
To avoid summary judgment, "[t]he nonmoving party may not ‘rest on mere allegations or denials, but must demonstrate on the record the existence of specific facts which create a genuine issue for trial.’ " Mosley v. City of Northwoods , 415 F.3d 908, 910 (8th Cir. 2005) (quoting Krenik v. Cty. of Le Sueur , 47 F.3d 953, 957 (8th Cir. 1995) ). Summary judgment is precluded if there is a genuine dispute of fact that could affect the outcome of the case. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When considering a summary judgment motion, the court views the facts and the inferences drawn from such facts " ‘in the light most favorable to the party opposing the motion.’ " Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting United States v. Diebold, Inc. , 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962) ). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson , 477 U.S. at 248, 106 S.Ct. 2505 (citing 10A Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 2725 at 93-95 (3d ed. 1983)). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Id. at 247-48, 106 S.Ct. 2505.
Franklin moves for summary judgment on counts I and II of Hyde's complaint,...
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