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Gritters v. Ocwen Loan Servicing, LLC

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

April 13, 2018



          Jorge L. Alonso Judge

         For the following reasons, Defendant Pierce & Associates, P.C.'s Motion for Summary Judgment [185] is denied, Plaintiff's Motion for Summary Judgment Against Defendant Pierce & Associates, P.C., [196] is granted, Defendant Ocwen Loan Servicing, LLC's Motion for Summary Judgment [188] is granted in part and denied in part, and Plaintiff's Motion for Summary Judgment Against Defendant Ocwen Loan Servicing, LLC, [200] is granted in part and denied in part.

         Before turning to the discussion, the Court notes at the outset the difficulties it encountered with the parties' presentations. First, complaint allegations are not proper support for asserted statements of fact, and to the extent any asserted fact was supported only in this way, it was not considered. Second, disputes of asserted facts supported only with arguments instead of citations to the record are also improper. Where a party failed to properly support its dispute, the asserted facts were deemed undisputed. Third, the parties' practice of citing lengthy exhibits without page or line references, and the parties' multiple mathematical errors and/or scrivener's errors unnecessarily complicated the Court's review of a significant factual record.


         Unless otherwise noted, the following facts are undisputed. In 2003, Donna Gritters took out a mortgage loan with The Federal Home Loan Mortgage Corporation (“Freddie Mac”) for her home. Ocwen Loan Servicing serviced the loan from August 2009 until May 2013. The loan was in default at the time Ocwen acquired the servicing rights, and in February 2010, Ocwen's counsel, Pierce & Associates, filed for foreclosure against Gritters. Pierce is a law firm in the business of collecting debts. Shortly thereafter, Freddie Mac approved Ocwen's request to consider a loan modification, after consideration of a breakdown of payoff funds including such items as loan principal and interest, and $500 in estimated foreclosure fees and $1, 322 in estimated foreclosure expenses.

         A loan modification agreement was entered into by the parties a few weeks later with an effective date of March 4, 2010. Following an initial payment by Gritters, and the entry of the agreement, her new principal balance was $62, 691.34, escrow balance was $927.85, and suspense account balance was $994.04. [Pl Resp. Ocwen SOF ¶26.] When Gritters called Ocwen on April 1, 2010, it confirmed receipt of the required initial payment. Ocwen also entered notes into its loan servicing system directing Pierce to put the foreclosure action on hold. The foreclosure action was not dismissed, however, until more than a year later, on May 6, 2011, In order to effectuate the loan modification, Ocwen made a series of credits and debits to Gritters' loan between April 6 and April 27, 2010 and the loan was brought contractually current on April 27, 2010. Ocwen sent several account statements to Gritters during this time, some with conflicting information. Among the various activities on the account that month, certain expenses incurred in filing the foreclosure action were charged to Gritters on April 6, and then credited back on April 27 “because the foreclosure costs were included in the new principal balance under the Loan Modification.” [Ocwen SOF ¶9; Pl Resp. Ocwen SOF ¶9.]

         On May 21, 2010, Ocwen assessed $700 for attorneys' fees related to the foreclosure, based on an invoice it received from Pierce in April. On May 27, 2010, Ocwen received a $625 payment from Gritters. It applied $624.26 to her June 2010 payment, and $.74 towards the foreclosure attorneys' fees charge. On June 14, 2010, Ocwen made an investor suspense adjustment to the loan, applying $624.96 of the $994.04 suspense account to Gritters' July 2010 payment obligation, and the remaining $369.78 to the foreclosure attorneys' fees charge. Ocwen similarly applied certain portions of Gritters' August, September, and October 2010 payments to the attorneys' fees charge. In December 2010, Ocwen received a $48 bill for an assignment fee in conjunction with the prior foreclosure action, which it assessed to Gritters in April 2011. Pierce testified that it understood the assignment charge was not to be passed on to the borrower, but also that it was Ocwen's decision whether to do so.

         Following the modification, Gritters was late in making several of her monthly payments and she missed certain payments. Gritters testified she had no knowledge of anything Ocwen did to cause her payments to be late. When she was late, Ocwen assessed late fees.

         In March 2011, Ocwen projected an escrow shortage for the coming year and advised Gritters that her escrow payments and correspondingly, her monthly installments would increase. From April 2010 through March 2011, $4, 250.07 was paid from Gritters' escrow account to taxes and insurance. Around April 2011, Gritters discovered that her house was still listed in foreclosure. Gritters stated in a declaration that she called Ocwen about it, and was told that her loan was current, and no foreclosure had been initiated.

         Gritters also had difficulty understanding Ocwen's accounting. Between April 2010 and April 2011, Ocwen sent Gritters statements she testified she did not understand, and at least during that first month, statements that were contradictory. Gritters testified that she was confused about the loan's status, and began to suffer from anxiety and panic attacks. According to Gritters, she felt like she was in a perpetual state of default, and she feared that she would lose her home. She communicated her confusion and sought information from Ocwen both through phone calls and letters.

         In the summer of 2011, Gritters reached out to the Office of the Illinois Attorney General to dispute Ocwen's handling of her account and to request assistance. Between 2011 and 2012, Gritters sent four such letters to the Illinois Attorney General's Office, which forwarded each to Ocwen. In September 2013, Gritters sent a fifth request for information to Ocwen. Although the parties dispute whether these five letters triggered response obligations under federal law and if so whether Ocwen responded adequately, it is undisputed that Ocwen responded to each.

         Meanwhile, in May 2013, servicing of Gritters' account was transferred from Ocwen to Nationstar. Gritters was notified of the transfer, and informed she had been assigned a single point of contact at Nationstar. At the time of the transfer, both Ocwen and Nationstar considered the loan to be in default. On August 1, 2013, Nationstar sent Gritters a letter attempting to collect a defaulted amount of $3, 345.59 by September 5, 2013. Plaintiff's attempts at partial payment were rejected by Nationstar.

         In August 2013, Gritters complained to the Office of the Illinois Attorney General about Nationstar and Ocwen. In September 2013, the Attorney General's Office forwarded her letter to Nationstar for response. When Nationstar responded, it reported that it had investigated the complaint and determined that no changes to the account were warranted. On September 6, 2013, Gritters against wrote to Nationstar requesting numerous categories of information. Gritters dubbed her letter a Qualified Written Request under the Real Estate Settlement Procedures Act. Nationstar timely responded, providing a copy of the Note and Security Instrument, the May 31, 2013 servicing transfer notice, a payoff statement good through September 30, 2013, and payment history on the account from May 21, 2013 through the date of the response.

         Around the same time, Nationstar retained Pierce as its foreclosure counsel. Pierce assigned the referral a new file number from the one associated with the 2010 Ocwen referral. On September 16, 2013, Pierce sent Gritters a “loss mitigation solicitation letter” on behalf of Nationstar, in which it invited her to provide Nationstar certain information to determine whether she was eligible for alternatives to foreclosure. Pierce next communicated with Gritters on October 25, 2013, when it informed her that it had been hired by Nationstar to commence foreclosure proceedings. Pierce's October 25 letter provided Gritters with the total amount of debt due on the mortgage and note, and identified Nationstar as the creditor. It also included debt validation language under § 1692 of the FDCPA. At the time, Nationstar was servicing the loan and Freddie Mac was the investor.

         On November 11, 2013, Gritters' counsel sent a “Fair Debt Collection Practices Dispute Letter” to Nationstar Mortgage c/o Pierce & Associates requesting that both Nationstar and Pierce verify the debt pursuant to 15 U.S.C. § 1692g. Both Pierce and Nationstar acknowledged receipt shortly thereafter, and promised a response. On November 26, 2013, Nationstar responded to Gritters' letter, again providing a copy of the Note and Security Instrument, the May 31, 2013 servicing transfer notice, a payoff statement good through September 30, 2013, and payment history on the account from May 21, 2013 through the date of the response. Pierce did not provide a separate response to Gritters' November 11, 2013 request, testifying instead that it had relied upon Nationstar's response.

         In January 2014, Pierce filed a foreclosure complaint against Gritters in the Circuit Court of Cook County. In March 2014, Pierce sent Gritters a “Notice of Initial Case Management Conference” in the foreclosure action. This action was filed in the interim, in February 2014.


         Summary Judgment Standard

         “The court shall 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). When deciding cross-motions for summary judgment, the Court must “construe the evidence and all reasonable inferences in favor of the party against whom the motion under consideration is made.” Premcor USA, Inc. v. Amer. Home Assurance Co., 400 F.3d 523, 526 (7th Cir. 2005). The court may not weigh evidence or determine the truth of the matters asserted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

         A “genuine” dispute is one that could change the outcome of the suit, and is supported by evidence sufficient to allow a reasonable jury to return a favorable verdict for the non-moving party. Spivey v. Adaptive Mktg. LLC, 622 F.3d 816, 822 (7th Cir. 2010). The court will enter summary judgment against a party who does not “come forward with evidence that would reasonably permit the finder of fact to find in [its] favor on a material question.” Modrowski v. Pigatto, 712 F.3d 1166, 1167 (7th Cir. 2013).

         Pierce's Summary Judgment Motion/ Gritters' Cross-Motion

         Pierce argues at the outset that Gritters fails to demonstrate a concrete particularized injury sufficient to establish Article III standing. Even if she could make such a showing, Pierce says, summary judgment would still be appropriate because: (1) Gritters knew of her right under § 1692g to request verification of her mortgage debt, and when she did request verification, it was provided by the loan servicer as well as by Pierce; (2) any failure to disclose the identity of the holder of her mortgage was immaterial since Gritters knew it; and (3) the foreclosure case notice that Pierce forwarded to Gritters did not violate the FDCPA's prohibition against contacting a represented debtor directly since the court permitted it and it was not a communication sent in connection with the collection of a debt.

         Gritters cross-moves for summary judgment against Pierce, arguing Pierce's FDCPA violations gave rise to cognizable injuries-in-fact without the need for further evidence of injury or actual damages in order to establish standing. According to Gritters, summary judgment in her favor is appropriate since there is no question of material fact that Pierce: (1) failed to send her a debt validation letter within the statutory time-frame following its initial communication with her; (2) failed to disclose the identity of the current creditor of her mortgage loan when it sent its untimely debt validation letter; (3) failed to verify her debt in response to her dispute; and (4) communicated with her directly despite knowing she was represented by counsel.


         In order to establish Article III standing, a plaintiff must establish that she “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S.Ct. at 1547 (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). “To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest' that is ‘concrete and particularized' and ‘actual or imminent, not conjectural or hypothetical.'” Id. at 1548 (quoting with alteration Lujan, 504 U.S. at 560). “A ‘concrete' injury must be ‘de facto'; that is, it must actually exist.” Id. at 1548. “‘Concrete'” is not, however, necessarily synonymous with ‘tangible.'” Id. at 1549. “Although tangible injuries are perhaps easier to recognize, . . . intangible injuries can nevertheless be concrete.” Id. In determining whether an intangible harm constitutes a sufficiently concrete injury, “both history and the judgment of Congress play important roles.” Id.

         In several pre-Spokeo FDCPA cases, the Seventh Circuit recognized standing to challenge unlawful debt collection demands even without proof of additional harm. See, e.g., Keele v. Wexler, 149 F.3d 589, 594 (7th Cir. 1998) (standing existed based “on the debt collector's misconduct, not whether the debt is valid or . . . whether the consumer has paid an invalid debt.”); Phillips v. Asset Acceptance Corp., 736 F.3d 1076, 1082-83 (7th Cir. 2013) (standing existed where debt collectors had filed allegedly unlawful suits against consumers, even though consumers had not been served). Spokeo does not disturb these holdings. See, e.g., Aguirre v. Absolute Resolutions Corp., No. 15 C 11111, 2017 WL 4280957, at *4 n. 3 (N.D. Ill. Sept. 27, 2017) (collecting cases finding Article III standing to sue for statutory damages under the FDCPA on clams of intangible injuries from allegedly predatory debt collection practices).

         Since the Supreme Court's decision in Spokeo, the Seventh Circuit has interpreted it to mean that a statutory violation alone gives rise to a concrete harm where the “violation present[s] an appreciable risk of harm to the underlying concrete interest that Congress sought to protect by enacting the statute” at issue. Groshek v. Time Warner Cable, Inc., 865 F.3d 884, 887 (7th Cir. 2017) (internal quotation marks omitted) (citing Meyers v. Nicolet Rest. of De Pere, LLC, 843 F.3d 724, 727 (7th Cir. 2016); Spokeo, 136 S.Ct. at 1549-50). In those cases, the plaintiff “need not allege any additional harm beyond the one Congress has identified.” Spokeo, 136 S.Ct. at 1549. Under these authorities, several district courts have found that a misrepresentation about a debt is a sufficient injury for standing because a primary purpose of the FDCPA is to protect consumers from receiving false and misleading information about one's debts. See, e.g., Marquez v. Weinstein, Pinson & Riley, P.S., No. 14 C 739, 2017 WL 4164170, at *4 (N.D. Ill. Sept. 20, 2017); Pierre v. Midland Credit Mgmt., Inc., No. 16 C 2895, 2017 WL 1427070, at *1, *4 (N.D. Ill. Apr. 21, 2017). Accordingly, because Gritters had a right to receive information under the FDCPA that she claims was not provided, she alleges a concrete harm sufficient to give rise to Article III standing.

         Section 1692g(a)

         Gritters argues summary judgment should be granted in her favor because Pierce failed to provide her with a debt validation letter within five days of its September 16, 2013 letter to her in connection with its efforts to collect the debt. Pierce admits that it is a debt collector, and that it did not send the debt validation letter until October 25, 2013, but says that judgment in its favor should nevertheless be granted because its September letter was not an “initial communication” triggering disclosure obligations under the FDCPA. Pierce bases this argument both on the claim that its September letter was simply informational, and on the fact that it had previously communicated with Gritters in 2010 when she had fallen behind on her mortgage. While Gritters does not dispute the 2010 communications, she says they are irrelevant since they were years earlier and on behalf of a different client.

         Within five days of its initial communication with a consumer, a debt collector must provide certain information to the consumer in what is known as a “debt validation letter.” 15 U.S.C. § 1692g(a). The notice must inform the debtor of the amount of the debt and the name of the creditor to whom the debt is owed, and state that the debt will be assumed valid if the ...

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