Lovegrove v. Ocwen Loan Servicing, LLC
| Decision Date | 25 August 2015 |
| Docket Number | Civil Action No.: 7:14cv00329 |
| Court | U.S. District Court — Western District of Virginia |
| Parties | THOMAS W. LOVEGROVE Plaintiff, v. OCWEN LOAN SERVICING, LLC Defendant. |
MEMORANDUM OPINION
This case involves the interplay between the protections afforded the personal interests of individuals under the federal bankruptcy laws, federal credit reporting and debt collection statutes, and the ability of a secured creditor, acting through a loan servicing company, to protect its interests in real estate secured by a mortgage following default. Plaintiff Thomas Lovegrove ("Lovegrove") defaulted on his mortgage in 2009, received a Chapter 7 bankruptcy discharge of that debt in 2011, yet remains on the premises. In this lawsuit, Lovegrove claims that Ocwen Loan Servicing, LLC ("Ocwen") violated both the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681, by attempting to collect on his mortgage debt that was discharged in bankruptcy and falsely reporting to consumer reporting agencies ("CRAs") that the debt was still owed. Ocwen denies any statutory violations and asserts that, Lovegrove's personal bankruptcy notwithstanding, the deed of trust allows it to protect the secured creditor's interest in the real estate secured by the defaulted mortgage and that it acted lawfully to do so. This matter is before the court on Ocwen's Motion for Summary Judgment. ECF No. 49. Lovegrove filed an opposition brief, ECF No. 53, and the court heard oral argument on July 22, 2015. For the following reasons, Ocwen's motion is GRANTED.
In 2006, Lovegrove signed a promissory note in the amount of $1,239,000.00 in favor of Bank of America and secured by a deed of trust on a home at Smith Mountain Lake in Moneta, Virginia. Although Lovegrove defaulted on the loan in April 2009, ECF No. 51 at *1, it is undisputed that he continues to live at the property. In December 2010, Lovegrove filed for Chapter 7 bankruptcy relief, and in March 2011, he obtained a discharge of his obligation to Bank of America under the promissory note. Id. at *2. In May 2012, Bank of America began foreclosure proceedings on the property. ECF No. 56-1 at *4. Lovegrove filed for Chapter 13 bankruptcy protection which halted the foreclosure process. The Chapter 13 action was dismissed about two weeks later. ECF No. 51 at *2.
On October 1, 2012, Ocwen became the servicer of Lovegrove's mortgage for the Moneta property and mailed Lovegrove a letter informing him of Ocwen's role. Id.; ECF No. 51-2 at *2. The letter contained two disclaimers. The first disclaimer gave Lovegrove thirty days to dispute the validity of the debt secured by the Moneta property. The second disclaimer located at the bottom of the page in bold and italicized font states:
This communication is from a debt collector attempting to collect a debt; any information obtained will be used for that purpose. However, if the debt is in active bankruptcy or has been discharged through bankruptcy, this communication is not intended as and does not constitute an attempt to collect a debt.
ECF No. 50-2. Ocwen mailed another letter the same day discussing alternatives to foreclosure. ECF No. 53 at *26. Ocwen then began sending Lovegrove monthly account statements regarding the amount secured by the deed of trust for the Moneta property. ECF No. 51 at *2.
The monthly account statements contain various information. For example, the October 2012 statement lists the current principal balance as $1,207,066.87 and the next payment due date as4/01/2009. The October statement also identifies the total amount due, including current and past due principal, interest, and escrow, of $373,804.05 and gives a due date of 11/1/2012. Under a section titled "Important Messages," the account statement provides the following:
Id. at *3. Lovegrove does not allege that Ocwen made any other attempts to contact him either by phone or through any third parties.
Lovegrove wrote to Ocwen on November 16, 2012 and asked Ocwen to ECF No. 53 at *41. Lovegrove wrote similar letters to Ocwen on June 15, 2013 and April 3, 2014. ECF No. 50-6 at *9; ECF No. 53 at *40, *42. Ocwen continued to send Lovegrove monthly statements until at least June 2013. ECF No. 50-3 at *18. Ocwen also sent Lovegrove an escrow account disclosure statement in July 2014. ECF No. 53 at *32-38.
In April 2014, Lovegrove wrote to the three major CRAs: Equifax Credit Information Services, Inc. ("Equifax"), Experian, and Transunion, L.L.C. ("Transunion") and claimed ECF No. 50-8 at *2. The letter purports that a copy was sent to Ocwen. In June 2014, shortly before filing his Complaint in this case, Lovegrove wrote to Equifax, Experian, and Transunion again. This time, he wrote Id. at *5. In July 2014, Ocwen received a dispute notification from Experian, and, the same day, Ocwen sent a notice to "all consumer reporting agencies to which it reports removing any reporting as to Mr. Lovegrove's discharged mortgage debt." ECF No. 50-1 at *2-3.
Ocwen moves for summary judgment as to both the FDCPA claim and FCRA claim. Regarding the FDCPA claim, Ocwen argues that Lovegrove's complaint is really an attempt to create a private right of action to enforce the bankruptcy discharge injunction and, therefore, the FDCPA claim is preempted by the Bankruptcy Code. Further, even if Lovegrove can bring a FDCPA claim for the actions alleged in the complaint, none of Ocwen's communications were in connection with collection of a debt because they all carried clear disclaimers stating that if the debt had been discharged in bankruptcy the statements were for informational purposes only. As to the FCRA claim, Ocwen argues it cannot be liable for failing to correct Lovegrove's credit report until after it received notice from a CRA. Ocwen did not receive notice of a dispute from a CRA until June 2015 and corrected the information on Lovegrove's credit report within the statutory thirty-day period.
In opposition, Lovegrove claims Ocwen has waived any argument that the Bankruptcy Code preempts his claim under the FDCPA because it was not raised as an affirmative defense, and, regardless, Lovegrove can maintain a private action for Ocwen's alleged acts under the FDCPA because Ocwen is not a creditor but rather a debt collector. Further, Lovegrove argues there is an issue of fact as to whether the account statements and other documents sent to Lovegrove were an attempt to collect a debt. Lovegrove also maintains that the FDCPA provides a cause of action for Ocwen's alleged false reports to the CRAs. Finally, Lovegrove asserts that Ocwen violated the FCRA by reporting information to the CRAs Ocwen knew was diputed.
Ocwen replied that it was not required to expressly plead preemption because preemption does not apply to the interaction of two federal statutes, i.e., the Bankruptcy Code and the FDCPA. Ocwen also claims that Lovegrove has inappropriately attempted to add a claim by arguing that the FDCPA provides a cause of action for alleged false reporting to the CRAs.
After oral argument, the court ordered supplemental briefing regarding the interplay between the Bankruptcy Code, the FDCPA, and the parties. In his brief, Lovegrove continues to maintain that Ocwen is not a creditor under the Bankruptcy Code and not subject to the exceptions to the discharge injunction in 11 U.S.C. § 524(j). Ocwen replied that as the authorized agent of the holder of the note, Bank of America, Ocwen does fall under the § 524(j) exception, and, as to Lovegrove's credit reporting claim under the FDCPA, that claim is both precluded by the Bankruptcy Code and untimely.
Pursuant to Federal Rule of Civil Procedure 56(a), the court must "grant summary judgment 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); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Glynn v. EDO Corp., 710 F.3d 209, 213 (4th Cir. 2013). When making thisdetermination, the court should consider "the pleadings, depositions, answers to interrogatories, and admissions on file, together with . . . [any] affidavits" filed by the parties. Celot...
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