Weber v. Specialized Loan Servicing, LLC

• Decision Date: 31 August 2022
• Docket Number: 5:20-CV-178-D
• Parties: WILLIAM WEBER, 212 EAST OAK ST., LLC, ERAGON, LLC, THE RED BARRON PROPERTIES, LLC, and THE REAL ESTATE INVESTMENT COMPANY, LLC, Plaintiffs, v. SPECIALIZED LOAN SERVICING, LLC, Defendant.
• Court: U.S. District Court — Eastern District of North Carolina

WILLIAM WEBER, 212 EAST OAK ST., LLC, ERAGON, LLC, THE RED BARRON PROPERTIES, LLC, and THE REAL ESTATE INVESTMENT COMPANY, LLC, Plaintiffs, v. SPECIALIZED LOAN SERVICING, LLC, Defendant.

No. 5:20-CV-178-D

United States District Court, E.D. North Carolina, Western Division

August 31, 2022

ORDER

JAMES C. DEVER III United States District Judge

On March 16, 2020, William Weber (individually “Weber”) and his named real estate investment company plaintiffs 212 East Oak St, LLC, Eragon, LLC, The Red Baron Properties, LLC, and The Real Estate Investment Company, LLC (collectively, “plaintiffs”), filed a complaint in Wake County Superior Court against Specialized Loan Servicing, LLC (“Specialized Loan” or “defendant”) alleging violations of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq, (“FCRA”), Telephone Consumer Protection Act, 47 U.S.C. §§ 227 et seq. (“TCPA”), North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. §§ 75-1 et seq. (“UDTPA”), and North Carolina Mortgage Debt Collection and Servicing Act, N.C. Gen. Stat §§ 45-90 et seq. (“MDCSA”) and alleging common law breach of contract [D.E. 1-1]. On April 28, 2020, defendant timely removed the action to this court based on federal diversity jurisdiction under 28 U.S.C § 1332 [D.E. 1 ]. On December 27,2021, after close of discovery, defendant moved for summary judgment on all claims [D.E. 55] and filed a memorandum, a statement of material facts, and exhibits in support [D.E. 56,61,62-68]. On February 11,2022, plaintiffs responded in opposition [D.E. 73] and filed a statement of material facts and exhibits in support [D.E. 83, 84-88]. On March 25, 2022, defendants replied [D.E. 91]. As explained below, the court denies defendant's motion for summary judgment as to the TCPA claim and breach of contract claim and grants defendant's motion for summary judgment on all other claims.

I.

Weber is a real estate property developer with several real estate investment companies in North Carolina, including, but not limited to, the other named plaintiffs. See Compl. [D.E. 1.1] ¶ 12; Stmt. Mat Facts (“SMF”) [D.E. 61] ¶ 1; Resp. Stmt. Mat. Facts (“Resp. SMF”) [D.E. 83] ¶ 1. Weber maintains his companies' finances and runs the companies' and his personal financial affairs through one Bank of America checking account. See [D.E. 66-5] 35; SMF at¶¶ 15-16; Resp. SMF at ¶¶ 15-16. . .

Between November 30 and December 4, 2018, Weber entered into cash-out refinancing agreements with lender, Recovco, of ten loans obtained in the names of Weber's named company plaintiffs in order to purchase additional investment properties. See Compl. at ¶¶ 19,21-23; SMF at ¶ 3; Resp. SMF at ¶ 3. As part of that agreement, Weber executed a Borrower Certification of Business Purpose Entity, which certified that the loans were for “commercial purposes and not consumer purposes, and that the loan proceeds are intended to be used and shall be used for commercial purposes only, not for personal, family or household purposes.” [D.E. 64-2]; see SMF at¶ 12; Resp. SMF at ¶ 12. Weber also listed his phone number on each loan application. See [D.E. 67-5] 2,7,12,17,22,27,31,36,41,45. Weber, as an individual, was not a named borrower on any of these loans, but was a guarantor. See SMF at ¶ 14; Resp. SMF at ¶ 14. To determine eligibility for these loans, Recovco used Weber's personal credit history. See SMF at ¶ 48; Resp. SMF at ¶ 48.

In early 2019, Weber used the loan proceeds to purchase two investment properties. See Compl. at ¶ 21; SMF at ¶ 17; Resp. SMF at ¶ 17.

Shortly after entering into the loan agreements, Recovco transferred the loans to Specialized Loan. See Compl. at ¶ 22; SMF at ¶ 18; Resp. SMF at ¶ 18. Asa result, Weber had to make timely and acceptable monthly payments to Specialized Loan. See Compl. at ¶ 23; SMF at ¶ 19; Resp. SMF at ¶ 19. Specialized Loan considered payments made after the fifteenth day of each month as late and past due. See Compl. at ¶ 25; SMF at ¶ 4; Resp. SMF at ¶ 4. Specialized Loan's monthly statements to Weber always included a coupon with payment submission instructions. According to Specialized Loan, the payor was to attach the coupon to the monthly payment with the check and account numbers written on the check, in the window envelope provided, when mailed to Specialized Loan. See [D.E. 65-1]; SMF at ¶ 19; Resp. SMF at ¶ 19.

From January to May 2019, Weber made payments to Specialized Loan for all ten of plaintiffs' loans through a certified lump-sum check. See Compl. at ¶ 27. Weber contends that each month he submitted a separate paper with account numbers in addition to his lump-sum check. Id. Specialized Loan never notified Weber that this payment method was proper or improper and continued to send payment submission instructions monthly. See SMF at ¶¶ 19-20,23-24; Resp. SMF at ¶¶ 19-20,23-24. Sometime between May 10 and May 15,2019, Weber submitted the ten loan payments in a lump sum check without account numbers or any other information about plaintiffs' accounts except his name, William Weber. See [D.E. 66-1]; SMF at ¶¶ 23-24; Resp. SMF at ¶¶ 23-24.

On May 16,2019, Weber contends that Specialized Loan rejected his payment and notified Weber via telephone that he failed to make payments for any accounts in May and that his payments were past due. See Compl. at ¶ 31. Between May and July 2019, Specialized Loan called Weber several times, without the assistance of an automatic telephone dialing system, and left prerecorded voice messages. See SMF at ¶ 49; Resp. SMF at ¶ 49.

Starting June 2019, Weber submitted payments through electronic billing but did not resubmit the May 2019 payment in what Specialized Loan considered the proper form. See Compl. at¶61; [D.E. 66-5]. After May 2019, Specialized Loan applied all payments through the electronic billing service for the prior month, thereby producing late fees. See Compl. at ¶ 82.

II.

Summary judgment is appropriate when, after reviewing the record as a whole, the court determines that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a); Scott v. Harris, 550 U.S. 372, 378, 380 (2007); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The party seeking summary judgment must initially demonstrate the absence of a genuine issue of material fact or the absence of evidence to support the nonmoving party's case. See Celotex Corp, v. Catrett, 477 U.S. 317,325 (1986). Once the moving party has met its burden, the nonmoving party may not rest on the allegations or denials in its pleading, see Anderson, 477 U.S. at 248-49, but “must come forward \ with specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis and quotation omitted). A trial court reviewing a motion for summary judgment should determine whether a genuine issue of material fact exists for trial. See Anderson, 477 U.S, at 249. In making this determination, the court must view the evidence and the inferences drawn therefrom in the light most favorable to the nonmoving party. See Harris, 550 U.S. at 378. A genuine issue of material fact exists if there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. See Anderson, 477 U.S. at249. “The mere existence of a scintilla of evidence in support of the [nonmoving party's] position [is] insufficient.. . .” Id. at 252; see Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985) (“The nonmoving party, however, cannot create a genuine issue of material fact through mere speculation or the building of one inference upon another.”). Only factual disputes that affect the outcome under substantive law properly preclude summary judgment. See Anderson, 477 U.S. at 248.

A.

Weber claims Specialized Loan failed to perform its duties as a furnisher of information under the FCRA and failed to comply with the FCRA. See Compl. at¶¶ 117-21. The FCRA applies to “consumers” and “consumer reports.” See 15 U.S.C. §§ 1681 et seq. Under the FCRA, a consumer is defined as “an individual.” Id. at § 1681a(c). Section 1681 uses a different term, “person,” to encompass individuals and companies, among other entities. See Id. at § 1681a(b). The FCRA defines a consumer report as communications from a consumer reporting agency bearing on a consumer's credit for a consumer purpose. See Id. at ¶ 1681a(d). Consulting an individual's credit report alone does not establish that it is a consumer report. See, e.g., Cavaliere v Burke, 50 F.3d 1033,1995 WL 136229, at *3-4 (5th Cir. 1995) (per curiam) (unpublished); Ippolito v. WNS, Inc., 864 F.2d 440 445,449-50 (7th Cir. 1988) abrogated on other grounds by Safeco lns, Co. of Amer, v. Burr, 551 U.S. 47 (2007); Houghton v. NJ. Mfrs. Ins. Co., 795 F.2d 1144,1149 (3d Cir.1986); Heathv. Credit Bureau of Sheridan Inc- 618 F.2d 693,395-96 (1Oth Cir. 1980). The FCRA's term, “consumer report,” means “information that is used or expected to be used or collected in connection with a business transaction involving one of the consumer purposes set out in the statute, that is, eligibility for personal credit or insurance, employment purposes, and licensing.” Ippolito, 864 F.2d at 451 (quotations omitted) (collecting cases); see also 15 U.S.C. § 168la(d); Hoke v. Retail Credit Corp., 521 F.2d 1079,1081 (4th Cir. 1975) (explaining that the Fourth Circuit interprets the FCRA in light of its “broad remedial purpose,” but that a consumer report must fit the consumer purpose defined in the statute). To be a consumer report, a credit report must concern personal eligibility for one of the statutory consumer purposes, not a commercial purpose. See, e.g., Boydstun v. U.S. Bank, 729 Fed.Appx....