Lodge v. Kondaur Capital Corp.

• Decision Date: 08 May 2014
• Docket Number: No. 13–10919.,13–10919.
• Citation: 750 F.3d 1263
• Parties: Kenneth LODGE, Delores Lodge, Plaintiffs–Appellants, v. KONDAUR CAPITAL CORPORATION, McCalla Raymer, LLC/McCalla Raymer, Esq., Defendants–Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

750 F.3d 1263

Kenneth LODGE, Delores Lodge, Plaintiffs–Appellants,

v.KONDAUR CAPITAL CORPORATION, McCalla Raymer, LLC/McCalla Raymer, Esq., Defendants–Appellees.

No. 13–10919.

United States Court of Appeals,Eleventh Circuit.

May 8, 2014.

Ralph Goldberg, Goldberg & Cuvillier, P.C., Tucker, GA, for Plaintiffs–Appellants.

Kent Edward Altom, Emilie Omer Denmark, Steven James Flynn, Jimmy Thomas Howell, Jr., Kimberly Anne Wright, McCalla Raymer, LLC, Roswell, GA, Meredith Barnes, Huddle House, Inc., Sandy Springs, GA, for Defendants–Appellees.

Appeal from the United States District Court for the Northern District of Georgia. D.C. Docket No. 1:10–cv–00736–WCO.

Before HULL and BLACK, Circuit Judges, and WALTER,^* District Judge.

HULL, Circuit Judge:

Plaintiffs-appellants Kenneth and Delores Lodge sued defendants-appellees McCalla Raymer, LLC (“McCalla”) and Kondaur Capital Corporation (“Kondaur”), claiming that they violated (1) the automatic stay in plaintiff Kenneth Lodge's bankruptcy, under 11 U.S.C. § 362, and (2) the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. The plaintiffs appeal the district court's grant of summary judgment in favor of the defendants. After careful review and with the benefit of oral argument, we affirm.

I. FACTUAL BACKGROUND

A. Lodges' Mortgage in 2000

In 2000, the Lodges obtained a $156,800 loan from First Franklin Financial Corporation (“First Franklin”). They signed a promissory note and executed a security deed giving First Franklin a mortgage on their property. The security deed gave First Franklin the right to foreclose on the property as a means of enforcing the Lodges' obligation to repay the loan.

B. Plaintiff Kenneth Lodge's Bankruptcy in 2005

Five years later, on September 15, 2005, plaintiff Kenneth Lodge filed a Chapter 13 bankruptcy petition. Pursuant to 11 U.S.C. § 362, the filing of the petition automatically stayed any act to collect the loan and to enforce any lien, such as First Franklin's mortgage. 11 U.S.C. § 362(a)(4), (6).

On December 18, 2008, defendant McCalla filed, on behalf of First Franklin's loan servicer, Home Loan Services, a motion for relief from the bankruptcy stay. In the motion, McCalla asserted that Kenneth Lodge had defaulted on the promissory note and requested that the stay be lifted so that First Franklin could exercise its rights under the security deed. The bankruptcy court never ruled on this motion.

Also on December 18, 2008, First Franklin assigned its interest in the promissory note and security deed to defendant Kondaur. Later on in 2009, defendant McCalla, on behalf of defendant Kondaur, filed an amendment to the December 18, 2008 motion for relief from the bankruptcy stay, changing the movant's name from Home Loan Services to Kondaur, the new owner of the security deed. The bankruptcy court never ruled on this amended motion either.

C. March 12, 2009 Notice of Sale

In January 2009, defendant Kondaur submitted a foreclosure referral regarding the Lodges' property to defendant McCalla. Then McCalla, on behalf of Kondaur, submitted a “Notice of Sale” for publication in the Rockdale Citizen, a local newspaper.

The Notice of Sale stated that Kondaur sought to foreclose on the Lodges' property to recover the amount owed under the promissory note. The foreclosure sale was to take place on the first Tuesday of April 2009, that is, April 7, 2009.

The Notice of Sale was published on March 12, 2009. That same day, McCalla requested that the local newspaper cancel the publication of the Notice of Sale. So, the March 12, 2009 Notice of Sale was published only once and only for one day total. The Lodges did not see the Notice of Sale at that time.

Rather, at some unspecified time after March 12, 2009, the Lodges received letters from law firms informing them that they were “about to be foreclosed.” The Lodges then discovered that the Notice of Sale had been published in the Rockdale Citizen. A few weeks later, on April 7, 2009, the date announced in the Notice of Sale, the Lodges realized that the foreclosure sale had been canceled, and it never occurred.¹

On January 28, 2010, Kenneth Lodge completed his Chapter 13 plan, and his debts, including the loan here, were discharged. Given the bankruptcy court never ruled on the initial motion or the amended motion for relief from the bankruptcy stay, the stay remained in effect throughout Kenneth Lodge's bankruptcy proceedings from 2005 to 2010.

II. PROCEDURAL BACKGROUND

A. Lodges' Lawsuit filed March 12, 2010

After Kenneth Lodge received his Chapter 13 discharge, the Lodges filed a two-count complaint against defendants McCalla and Kondaur. Count 1 claimed that McCalla and Kondaur violated the automatic bankruptcy stay by causing the local newspaper to publish the March 12, 2009 Notice of Sale. The Lodges sought damages under 11 U.S.C. § 362(k), which provides that an “individual injured by any willful violation of a stay provided [by § 362] shall recover actual damages....” 11 U.S.C. § 362(k).²

Count 2 claimed that the defendants' publication of the Notice of Sale also violated the FDCPA, 15 U.S.C. § 1692f(6)(A) and (C).³

The district court addressed the Lodges' two claims separately, at different stages of the lawsuit, as outlined below.

B. Summary Judgment Motions on Automatic Stay Claim (Count 1)

The Lodges moved for partial summary judgment on their automatic stay claim in Count 1. The defendants filed a summary judgment motion on that same claim. The defendants argued that the Lodges had not shown any injury caused by the defendants' violation of the stay and therefore could not recover “actual damages” under § 362(k).

The Lodges responded that the defendants' violation of the automatic stay was, standing alone, an injury for which the Lodges could recover “actual damages” under § 362(k). The Lodges also asserted that they could recover under § 362(k) for their emotional distress.

In their affidavits, the Lodges acknowledged that they did not see the March 12, 2009 Notice of Sale in the Rockdale Citizen and discovered it only when they received the law firms' letters. On April 7, 2009, the Lodges learned the foreclosure would not happen. Thus, the maximum duration of the Lodges' concern about the possibility of foreclosure was a period from sometime after March 12, 2009 until April 7, 2009.

In support of the Lodges' claim of emotional distress, plaintiff Delores Lodge attested that, before the Lodges discovered that the foreclosure sale would not occur, her husband, Kenneth Lodge, was “unbearable.” She could not talk to him. He did not want to listen to her. She was “stressed out,” so she visited her family doctor for stress and back pain and was prescribed medication. She could not sleep without medication, began to sleep more with medication, and avoided her husband and children.

Plaintiff Kenneth Lodge attested that the publication of the Notice of Sale made him “furious” and a “bear to be around.” He (1) was a car salesman and was “so stressed out” that he had difficulties selling cars, (2) was unable to sleep “[f]or the entire rest of the month,” (3) began having migraine headaches, and (4) had to be prescribed medication after his preexisting acid reflux worsened. His children and co-workers began to avoid him. He argued with his wife. He “began to worry what would happen to [him] next.”

In ruling on the parties' summary judgment motions, the district court observed that defendants McCalla and Kondaur conceded that they willfully violated the automatic stay. The district court determined, however, that the emotional distress injuries set forth in the Lodges' affidavits were too generalized and speculative to show an injury sufficient to support a recovery under § 362(k), and that the Lodges failed to show that any harm they suffered was a direct result of the defendants' actions as opposed to other factors. The district court therefore granted summary judgment in the defendants' favor on the automatic stay claim and denied the Lodges' motion for partial summary judgment.

C. Summary Judgment Motions on FDCPA Claim (Count 2)

On May 2, 2012, the Lodges moved for summary judgment on the FDCPA claim, asserting the defendants were “debt collectors.” Initially, the Lodges' only cited evidence was McCalla's motions for relief from the stay (filed in December 2006, July 2007, and December 2008) and an amendment to one of those motions (filed on August 2009), which McCalla filed as a law firm on behalf of Home Loan Services and, later, Kondaur.

On May 29, 2012, the defendants, in response, argued that the Lodges had not shown that they were “debt collectors” under the FDCPA.

In June 2012, the Lodges filed a reply, arguing that the defendants were debt collectors because their websites indicated that their businesses concerned borrowers in default. The Lodges' reply did not (1) attach screenshots of McCalla's or Kondaur's websites, (2) give the address of the websites, or (3) request the district court to take judicial notice of those websites.

Around the same time period, defendants McCalla and Kondaur filed their own motion for summary judgment, arguing that they had not violated the FDCPA.

In a Report and Recommendation (“R&R”), a magistrate judge recommended denying the Lodges' summary judgment motion and granting the defendants' summary judgment motion. The magistrate judge determined that the Lodges (1) failed to set forth any facts whatsoever in their response to the defendants' summary judgment motion; (2) failed to meet their burden of showing, in their response to the defendants' summary judgment motion, that the defendants were debt collectors, as defined under the FDCPA and required for FDCPA liability; and (3) by relying solely on McCalla's motions seeking relief from the stay in Kenneth Lodge's bankruptcy proceeding, failed to show that the defendants were debt collectors for the purposes of their own motions for summary judgment.

The magistrate judge...