Levine v. Bayview Loan Servicing, LLC

• Decision Date: 01 April 2019
• Docket Number: A18-0789
• Parties: Hannah LEVINE, Appellant, v. BAYVIEW LOAN SERVICING, LLC, Respondent.
• Court: Minnesota Court of Appeals

926 N.W.2d 49

Hannah LEVINE, Appellant,

v.BAYVIEW LOAN SERVICING, LLC, Respondent.

A18-0789

Court of Appeals of Minnesota.

Filed April 1, 2019

Jonathan L. R. Drewes, Drewes Law, PLLC, Minneapolis, Minnesota (for appellant)

John G. Westrick, Savage Westrick, P.L.L.P., Bloomington, Minnesota (for respondent)

Considered and decided by Rodenberg, Presiding Judge; Reilly, Judge; and Bratvold, Judge.

RODENBERG, Judge

Appellant Hannah Levine appeals the district court’s sua sponte dismissal without prejudice of her FDCPA claim against respondent Bayview Loan Servicing LLC, arguing that, because the district court is a court of competent jurisdiction to decide FDCPA claims and because the FDCPA permits appellant to select her forum, the district court erred when it dismissed her complaint. We reverse and remand.

FACTS

The facts pertinent to this appeal are substantially undisputed. Appellant and J.T. owned a home that was encumbered by a home-mortgage loan serviced by CitiMortgage Inc. Appellant and J.T. filed for chapter 13 bankruptcy protection in January 2011 and proposed a chapter 13 workout plan that same day. The plan was confirmed by the United States Bankruptcy Court (bankruptcy court) in April 2011. The workout plan was completed by May 2016, at which time the bankruptcy court ordered, "[t]he debtors in the above case are discharged from all debts dischargeable under 11 U.S.C. § 1328(a)."

The chapter 13 plan confirmed by the bankruptcy court includes the following language:

5. CLAIMS NOT IN DEFAULT—Payments on the following claims are current and the debtor will pay the payments that come due after the date the petition was filed directly to the creditors.

The claims not in default included the CitiMortgage-serviced mortgage loan encumbering appellant’s homestead. After the chapter 13 plan was confirmed, the mortgage loan went into default. Respondent began servicing the loan around August 2016. Respondent reported negative credit information to TransUnion, Equifax, and Experian, including the home-mortgage debt, the balance of it, and the amounts claimed to be past due.

Appellant sued in Hennepin County District Court, alleging that respondent violated the FDCPA by reporting the debt as respondent did, and that respondent’s actions amounted to debt collection after the discharge in bankruptcy. Appellant moved the district court for partial summary judgment, arguing that appellant’s personal obligation to pay the loan serviced by respondent had been discharged by the United States Bankruptcy Court. The district court denied appellant’s motion for partial summary judgment and dismissed appellant’s claims without prejudice sua sponte because "the United States Bankruptcy Court is the most appropriate venue."

This appeal followed.

ISSUES

I. Is the district court a court of competent jurisdiction to decide FDCPA claims?

II. Did the district court properly dismiss appellant’s complaint?

ANALYSIS

I. The district court is a court of competent jurisdiction to decide FDCPA claims.

An action to enforce any liability under the FDCPA "may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction within one year from the date on which the violation occurs." 15 U.S.C. § 1692k(d) (2012) (emphasis added). "A plaintiff may sue a debt collector for FDCPA violations in federal or state court and recover actual damages, statutory damages, attorney fees, and costs." Randall v. Paul , 897 N.W.2d 842, 845 (Minn. App. 2017) ; see Peterson v. United Accounts, Inc. , 638 F.2d 1134, 1135-36 (8th Cir. 1981) (concluding that a state court is a court of competent jurisdiction under the FDCPA). State courts are competent to adjudicate claims arising under the laws of the United States unless Congress expressly provides otherwise. Tafflin v. Levitt , 493 U.S. 455, 458-59, 110 S.Ct. 792, 795, 107 L.Ed.2d 887 (1990).

The Minnesota district court is a "court of competent jurisdiction" to decide cases under the FDCPA.

II. The district court erroneously dismissed appellant’s complaint.

Appellant argues that the district court erred by dismissing her complaint sua sponte.

The district court’s reasoning for the sua sponte dismissal is not entirely clear. It said only that "[t]his matter is more appropriately before the United States Bankruptcy Court where there exists a tangible interest to enforce the order in question" and that the bankruptcy court could "better define this point of law."

Leaving aside for the moment that the district court did not have before it any motion to dismiss, and acted sua sponte, the district court seems not to have considered appellant’s choice to seek redress under the FDCPA instead of returning to bankruptcy court. See Engelby v. I.C. Sys., Inc. , No. 17-CV-0296, 2018 WL 1514246, at *3 (D. Minn. Mar. 27, 2018) (explaining that debtor could have sought relief either under the bankruptcy code for violation of automatic stay and sought contempt remedy, or could have sued under FDCPA for making false representation concerning the character, amount, or legal status of a debt). The federal circuits are split concerning whether an FDCPA claim for damages may be premised on a violation of a bankruptcy-court stay order. Compare In re Dubois , 834 F.3d 522, 527-28 (4th Cir. 2016), Simon v. FIA Card Servs., N.A. , 732 F.3d 259, 271 (3d Cir. 2013), and Randolph v. IMBS, Inc. , 368 F.3d 726, 730 (7th Cir. 2004) (concluding that the bankruptcy code does not preclude a debtor from filing suit under the FDCPA for the false representation of a debt after discharge in bankruptcy had occurred), with Simmons v. Roundup Funding, LLC , 622 F.3d 93, 95 (2d Cir. 2010), and Walls v. Wells Fargo Bank, N.A. , 276 F.3d 502, 510-11 (9th Cir. 2002) (holding that debtor’s remedy for alleged violations of discharge injunction is found under bankruptcy code, so debtor could not also pursue claim under FDCPA). But the district court’s sua sponte dismissal, implicitly adopting what appears to be the minority view concerning this issue, afforded appellant no opportunity to be heard on the question.

If appellant brought her claim to the bankruptcy court for violation of its order(s), she would need to demonstrate by clear and convincing evidence that respondent knowingly violated the discharge injunction, and was therefore in contempt of court. In re Legassick , 528 B.R. 777, 781 (Bankr. N.D. Iowa 2015) ;¹ see 11 U.S.C. § 524(a)(2) (2012) (providing that discharge of debt in bankruptcy proceeding operates as injunction against attempt to collect, recover, or offset any such debt as a personal liability of debtor); 11 U.S.C. § 362(k)(1) (2012) (providing damages to an individual injured by any "willful violation" of a bankruptcy-related stay); In re Emmons , 349 B.R. 780, 793 (Bankr. W.D. Mo. 2006) ("[W]illfull violations of the discharge injunction are punishable by contempt."). But appellant sued under the FDCPA, which contains a strict-liability provision authorizing an award of damages upon the plaintiff demonstrating that the defendant made a "false representation of ... the character, amount, or legal status of any debt." 15 U.S.C. § 1692e(2)(A) (2012) ; Randolph , 368 F.3d at 730 ("[ Section] 1692e(2)(A) creates a strict-liability rule. Debt collectors may not make false claims, period."). The district court’s sua sponte dismissal deprived appellant of her selected forum and of the availability of the strict-liability provision of the FDCPA.

There are several theories under which a district court may, when it has jurisdiction, dismiss a case without prejudice. None of those circumstances exist here.

A. Involuntary Dismissal under Minn. R. Civ. P. 41.02

A district court may dismiss a case on its own initiative under Minn. R. Civ. P. 41.02(a)"for failure to prosecute or to comply with these rules or any order of the court." The purpose of the rule is "to let the [district] court manage its docket and eliminate delays and obstructionist tactics by use of the sanction of dismissal." Lampert Lumber Co. v. Joyce , 405 N.W.2d 423, 425 (Minn. 1987).² Minn. R. Civ. P. 41.02(a) has no application here.

B. Forum Non Conveniens

Forum non conveniens is an equitable doctrine whereby a court may, in its discretion, "decline jurisdiction over transitory causes of action brought by nonresident citizens or noncitizens of this state when it fairly appears that it would be more equitable to have the case tried in another available court of competent jurisdiction."³ Hague v. Allstate Ins. Co. , 289 N.W.2d 43, 45 (Minn. 1978), aff’d , 449 U.S. 302, 101 S.Ct. 633, 66 L.Ed.2d 521 (1981) ; see Jack H. Friedenthal et al., Civil Procedure § 2.17, at 87 (5th ed. 2015) (stating that the doctrine of forum non conveniens allows a court to exercise its discretion to avoid the oppression or vexation that might result from automatically honoring a plaintiff’s forum choice, but a dismissal on such basis also requires that there be an alternative forum in which the suit can be prosecuted). "Dismissal on the basis of the doctrine of forum non conveniens may be appropriate where the exercise of personal jurisdiction imposes a hardship that does not rise to the level of a due-process violation." Behm v. John Nuveen & Co., Inc. , 555 N.W.2d 301, 308 (Minn. App. 1996) (quotation omitted). The remedy is an equitable one, and we review a district court’s determination for an abuse of discretion. Id.

Although not expressly relied on by the district court, the forum non conveniens doctrine comes closest to warranting a decision to decline jurisdiction in this circumstance. But the doctrine has no application here for at least four reasons.

First, dismissal of an action on grounds of forum non conveniens must be on conditions that protect a plaintiff’s Minnesota procedural rights, which includes statutes of limitations. Kennecott Holdings Corp. v. Liberty Mut. Ins. Co. , 578 N.W.2d 358, 361-62 (Minn. 1998) ; cf. ...