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Heyer v. Pierce and Associates, P.C.

United States District Court, N.D. Illinois, Eastern Division

January 9, 2017

JON K. HEYER, Plaintiff,
v.
PIERCE & ASSOCIATES, P.C., Defendant.

          MEMORANDUM OPINION AND ORDER

          SHEILA FINNEGAN United States Magistrate Judge.

         Plaintiff Jon K. Heyer defaulted on a home mortgage obligation, prompting the lender to retain Defendant Pierce & Associates, P.C. (“Pierce”), a law firm, to bring a foreclosure action. After obtaining a judgment, Pierce both filed with the foreclosure court and mailed to Plaintiff a “Notice of Sale Pursuant to Judgment of Foreclosure Under Illinois Mortgage Foreclosure Act.” In this lawsuit, Plaintiff alleges that the Notice was false and misleading in violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., because it: (1) threatened to sell his property at a time when that could not legally occur, and (2) failed to identify Pierce as a debt collector. The parties have consented to the jurisdiction of the United States Magistrate Judge pursuant to 28 U.S.C. § 636(c), and filed cross-motions for partial summary judgment as to liability on these claims. Based on the Court's review of the parties' briefs and their arguments presented during a hearing on October 11, 2016, both motions are granted in part and denied in part.

         BACKGROUND

         A. The Underlying Foreclosure Lawsuit

         Sometime prior to the events at issue in this case, Plaintiff bought property located in Mokena, Illinois to use as a personal residence (the “Property”). In connection with that purchase, Plaintiff incurred a mortgage obligation to Bank of America NA (“BANA”) and subsequently went into default. (Doc. 73-5 ¶¶ 5, 7, 8; Doc. 80 ¶¶ 5, 7, 8). On September 27, 2010, BAC Home Loans Servicing, LP (“BAC”), a BANA subsidiary, retained the law firm of Pierce & Associates to bring a foreclosure action against Plaintiff in the Circuit Court for the 12th Judicial District, Will County, Illinois. (Doc. 87-2 ¶ 1). Pierce filed a Complaint for Foreclosure on October 13, 2010 seeking possession of the Property as well as payment of a deficiency judgment, attorneys' fees and costs (the “Foreclosure Case”). (Doc. 80 ¶ 11; Doc. 87-2 ¶ 2).

         On November 15, 2011, the Circuit Court entered a judgment of foreclosure and sale against Plaintiff. It also granted Pierce's motion to substitute BANA for BAC as the plaintiff in that case. (Doc. 87-2 ¶ 3; Doc. 82, at 17). In February 2012, the Property was sold at a sheriff's sale. (Doc. 87-2 ¶ 4).

         B. The Trial Loan Modification

         Notwithstanding the sale, BANA began working with Plaintiff on a modification to his loan. (Id. ¶ 6). On March 15, 2012, BANA mailed a written offer approving Plaintiff to enter into a trial period for a Fannie Mae Loan Modification. The offer stated in relevant part:

After you make all trial period payments on time, and if you continue to meet all of the eligibility requirements of your modification program, your mortgage will be permanently modified . . .
If you accept this Trial Period Plan as required above, and make your new trial period payments timely we will not conduct a foreclosure sale.

(Doc. 80 ¶ 19; Doc. 74-5, at 3-4). Plaintiff accepted the offer and made the required trial period payments in April, May and June 2012. (Doc. 80 ¶¶ 20, 21, 30).

         On several occasions in June 2012, Plaintiff contacted Pierce to inquire about the status of his loan modification and confirm that he had been making the necessary payments. Pierce had “no record of a loan modification at all” and advised Plaintiff to speak with BANA directly. (Doc. 74-6, Ex. O, at 57-58, Pierce0056-57). By July 6, 2012, BANA still had not contacted Pierce regarding the loan modification, and an internal collection note entered that day stated:

client had said the FCL [foreclosure] was complete, so they [presumably BANA] seem unaware that they offered him a trial mod post sale. The borrower had sent us a scan of the mod reflecting this. I contacted [BANA] again. They need to give me an explanation as to why the borrower was offered a trial mod post sale and the status of his payments.

(Doc. 74-6, Ex. O, at 57, Pierce0056). Finally, on August 1, 2012, BANA instructed Pierce to prepare and file a motion to vacate the sheriff's sale of Plaintiff's property. (Id. at 55, Pierce0054). The circuit court granted the motion on August 21, 2012 and entered an order stating that the “Sale held February 22, 2012 is vacated due to loan modification review on the subject case.” (Doc. 87-2 ¶ 5). Contrary to the allegations in the complaint, the court did not dismiss the case or vacate the judgment of foreclosure at that time.

         C. Confusion Regarding Title on Plaintiff's Property

         A few months later, on January 4, 2013, Fannie Mae (the entity providing the financing for the Loan Modification) approved a permanent modification of Plaintiff's loan. (Doc. 80 ¶ 26).[1] The same day, Pierce entered the following in its collection notes:

I called the [BANA] single point of contact number, spoke to (Linda?) . . . and she said that yes [Fannie Mae] did approve the perm loan mod, but the bank . . . is the entity that executes the final permanent mod docs. She said that because there was a judgment entered, and because there was a lien against the property and borrower Jon, [BANA] would not accept the perm. loan mod. Therefore it was declined. She said once judgment is cleared and removed, and the lien is removed, then [BANA] would execute the perm. mod docs. I asked her if [BANA] would help the borrower with the removal/clearing of both, or if that would be something that we would do on our side, and she said that she would have to verify with someone in her department.

(Id. ¶ 62; Doc. 74-6, Ex. O, at 52, Pierce0051). In an email dated January 7, 2013, BANA reiterated that it had run a check to ensure that Plaintiff “had clear title. It appears that a judgment was found against the borrower. We subsequently denied the modification due to that judgment. Per our notes, it advised that in order for the perm mod can enter [sic] final approval, the judgment will need to be cleared.” (Doc. 74-6, Ex. O, at 51, Pierce0050).[2]

         Plaintiff disputed that there was any lien on his Property and called Pierce on March 7, 2013 to explain that he thought the judgment in question was against a totally different person, John C. Heyer. He also provided (1) a copy of a Title Policy issued by Chicago Title Insurance Company in April 2008 showing no judgment lien encumbering his Property, and (2) a copy of a Memorandum of Judgment that was entered against Robin Naser on April 7, 2005, in a case where John C. Heyer also appears in the caption as a named defendant. (Id. at 49, Pierce0048; Doc. 80 ¶¶ 40-42; Doc. 73-3, Ex. N, at 15-37). A collection note that day states that the Pierce representative would “reach out to [BANA] and let them know about this and share the documentation with them.” On March 11, 2013, Pierce spoke with BANA representative Amy Korte and explained “the situation with borrower Jon's permanent mod/lien against the property/wrong name on title search.” At Ms. Korte's request, Pierce faxed her the documentary evidence the same day. (Doc. 74-6, Ex. O, at 49, Pierce0048).

         In the meantime, Pierce moved forward with scheduling a sale, setting a date of April 17, 2013. But on March 14, 2013, BANA instructed Pierce to cancel the sale date and place the file on hold “due to loss mitigation.” (Id. at 45, 48, 49, Pierce0044, Pierce0047, Pierce0048; Doc. 87-2 ¶ 11). The next day, on March 15, 2013, a Pierce representative spoke with Plaintiff by telephone. According to the collection note, Plaintiff inquired as to whether the lender was aware that “the lien against him should not have been against him” but rather someone else. The collection note reads as follows:

Spoke with borrower Jon regarding the file being on hold. Told him his file is under loss mit[igation] review, and that is the reason why it is on hold. He asked if it was safe to assume that they are aware that the lien against him should not have been against him but against Jon C. Heyer. I told him that if they are reviewing his file for his loan mod[ification], it's safe to assume that this is the case.

(Doc. 80 ¶ 55; Doc. 74-6, Ex. O, at 48, Pierce0047). Plaintiff indicated that he would follow up with Robin Springer from BANA “whom he's working with.” (Doc. 74-6, Ex. O, at 48, Pierce0047).

         On March 18, 2013, BANA ended the hold on the Property and gave Pierce an “OK” to schedule a sale. (Id. at 45, 47, Pierce0044, Pierce0046). In an email dated March 20, 2013, Ms. Korte acknowledged that the April 17, 2013 sale date was back in place. She further wrote (apparently in relation to the judgment that had been discovered and needed to be cleared): “we would need a copy of the clear title stamped and validated from the county recorder's office. Fannie Mae will only allow that. Once we receive that, a permanent modification will be created and sent to the borrower.” (Id. at 47, Pierce0046). Two days later, on March 22, 2013, Pierce entered a “[s]ales scheduling hold . . . pending authorization to proceed.” (Id. at 45, Pierce0044).

         Plaintiff endeavored to obtain the documents needed to clear the lien against him, and shared this information with Pierce in a telephone call on March 22, 2013. In that call, Plaintiff reported that the county recorder's office told him “they do not validate and stamp title searches.” The collection note reflects the Pierce representative “told him that I really don't know what to tell him and that I've exercised everything that I could have done on my end to help him.” (Id. at 46, Pierce0045). During a second call shortly thereafter, the Pierce representative reiterated that “we wouldn't be able to do anything on our end any longer and that [Plaintiff] would have to work with his attorney and [BANA] directly regarding the title search and the perm mod.” (Id.).

         According to the collection notes, in April 2013, BANA gave Pierce another “OK” to proceed with the sale of Plaintiff's Property, and on May 8, 2013, Pierce set a sale date of August 29, 2013. (Id. at 45, Pierce0044). On May 17, 2013, Pierce entered a collection note stating that the file was “TO HOLD FOR FEMA.” (Id.). Another note entered on June 21, 2013 stated: “file on hold per [BANA] for FEMA hold; do not proceed to judgment without confirming that file is no longer on a FEMA hold.” (Id. at 44, Pierce0043).[3]

         D. The Notice of Sale

         On August 7, 2013, Pierce mailed Plaintiff (and then filed in the Foreclosure Case) a Notice of Sale Pursuant to Judgment of Foreclosure Under Illinois Mortgage Foreclosure Act (the “Notice of Sale”). (Doc. 80 ¶¶ 12, 16; Doc. 73-2, at 30-32). The Notice of Sale stated that “PUBLIC NOTICE IS HEREBY GIVEN” that the Property will be sold on August 29, 2013 “at public auction and sale to the highest bidder for cash.” The Notice referenced a “Judgment amount” of $253, 991.38, and also said that “IF YOU ARE THE MORTGAGOR (HOMEOWNER), YOU HAVE THE RIGHT TO REMAIN IN POSSESSION FOR 30 DAYS AFTER ENTRY OF AN ORDER OF POSSESSION, IN ACCORDANCE WITH SECTION 15-1701(C) OF THE ILLINOIS MORTGAGE FORECLOSURE ACT.” (Doc. 80 ¶¶ 13, 14, 16; Doc. 73-2, at 14-15). Upon receiving the Notice, Plaintiff spoke on the phone with an acquaintance who is a doctor because he was experiencing abdominal distress and pain, lack of concentration, nausea, shock and anxiety due to the prospect of losing his home. (Doc. 80 ¶¶ 17, 18).

         The Notice of Sale was file-stamped in the Foreclosure Case on August 9, 2013, and Pierce received another “OK” to proceed with the sale from BANA on August 14, 2013. The next day, on August 15, 2013, BANA contacted Pierce with the following message:

This communication shall serve as written certification prior to foreclosure sale that we have conducted a review of [Plaintiff's] account as required . . . and have determined that, pursuant to those requirements, there is no reason to delay the scheduled ...

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