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Heinz v. Carrington Mortgage Services, LLC

United States District Court, D. Minnesota

November 19, 2019

David Heinz, Plaintiff,
v.
Carrington Mortgage Services, LLC Defendant.

          Jonathan L. R. Drewes, Drewes Law, PLLC, MN 55404, for Plaintiff.

          Daniel J. Sathre, Houser & Allison, APC, MN 55331, for Defendant.

          MEMORANDUM OPINION AND ORDER

          SUSAN RICHARD NELSON, UNITED STATES DISTRICT JUDGE.

         This case arises from a homeowner's action against a lender alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C § 1692 et seq. (“FDCPA”). As a result of certain of Defendant's communications and conduct, Plaintiff Andrew Heinz alleges he lost his home of nearly twenty years to foreclosure and suffered emotional distress. Defendant Carrington Mortgage Services, LLC (“Carrington”) now moves for summary judgment. Mr. Heinz opposes the motion.

         The Court is sympathetic to Mr. Heinz's plight. However, because there is no evidence that the challenged communications and conduct relate to the “collection of a debt”, the law forbids holding Carrington liable for these statements and actions under the FDCPA. For the reasons set forth below, Defendant's motion is granted and Mr. Heinz's complaint is dismissed with prejudice.

         I. BACKGROUND

         A. Factual Background

         1. History of the Loan, Note, and Mortgage

         The material facts surrounding the underlying loan, promissory note, and mortgage are not in dispute. Mr. Heinz is the former fee owner of property located in Dakota County, Minnesota (the “Property”). (Compl. [Doc. No. 1-1] (“Compl.”) ¶¶ 1-3; Ostermann Aff. [Doc. No. 22] (“Ostermann Aff.”) Ex. A.) While residing at the Property for nearly twenty years with his wife and daughter, Mr. Heinz also operated his home-based business Heartland Business Services, Inc. from the Property. (Heinz Aff. [Doc. No. 30] (“Heinz Aff.”) ¶¶ 1-2; Ostermann Aff. Ex. H at 48.)

         On March 25, 2008, Mr. Heinz borrowed $ 247, 344 dollars from lender Countrywide Bank, FSB (the “Loan”). (Ostermann Aff. Ex. A.) The Loan was evidenced by a promissory note, secured by a mortgage (the “Mortgage”). (Id.) The Mortgage, executed by Mr. Heinz and his wife, Sranya Heinz, identifies Countrywide Bank FSB as the lender, and Mortgage Electronic Registration Systems, Inc. (“MERS”) as the mortgagee, acting “solely as a nominee for [Countrywide Bank FSB's] and [Countrywide Bank FSB's] successors and assigns.” (Id., Ex. A.) The Mortgage expressly authorizes MERS to “foreclose and sell the Property.” (Id., Ex. A at 2.)

         On or about June 9, 2016, the note and Mortgage were assigned from MERS, as nominee, to Bank of America, N.A. (“BANA”). (Sathre Aff. [Doc. No. 23] (“Sathre Aff.”) Ex. A.) BANA serviced the Loan until a service transfer to Carrington effective July 11, 2017. (Ostermann Aff. Ex. K.)

         In 2010, Mr. Heinz allegedly fell behind on his mortgage payments. (See id., Ex. B.) Although Carrington alleges that Mr. Heinz could not make a single payment between February 2010 and March 2011, resulting in a delinquency of $22, 740.73 dollars (Def.'s Summ. J. Br. [Doc. No. 26] (“Def.'s Summ. J. Br.”) at 3), the record only suggests that a loan modification was granted in March 2011 curing Mr. Heinz's unidentified amount of default, and bringing him current on his payments. (Ostermann Aff. ¶ 11; Ex. B.) By the time Carrington took over servicing of Mr. Heinz's loan from BANA, however, it is undisputed the Loan was “in default” again. (Compl. ¶ 11; Heinz Aff. ¶ 8.)

         Although two loan modifications were granted to Mr. Heinz in 2011 and 2014, as described below, BANA ultimately recorded a notice of pendency and power of attorney to foreclose the Property. (Sathre Aff. Ex. B.) On June 16, 2017, Mr. Heinz was personally served with the Notice of Mortgage Foreclosure Sale, Notice of Homestead Designation, Help for Homeowners in Foreclosure Notice, Foreclosure: Advice Notice to Tenants Notice, and Notice of Redemption Rights sale notice (together, the “Sale Notice”). (Ostermann Aff. Ex. O; Compl. ¶ 21.) The Sale Notice informed Mr. Heinz that the foreclosure sale of the Property was initially scheduled for August 1, 2017. (Id.)

         The Property was eventually sold on November 14, 2017, approximately four months after Carrington took over servicing the Loan. As detailed further below, this foreclosure followed two loss mitigation applications Mr. Heinz submitted to Carrington.

         2. Mr. Heinz's Loan Modification Applications with Prior Servicer BANA

         Following Mr. Heinz's first default in 2010, it is undisputed that he applied for loss mitigation assistance with BANA to avoid foreclosure. (Ostermann Aff. Ex. B.) Mr. Heinz was granted a loan modification in 2011 which erased the default, brought Mr. Heinz current on his payments, and allowed him to remain on the Property. (Id.)

         In 2013, Mr. Heinz again defaulted and applied for loss mitigation assistance. (See Osterman Aff. Exs. C-D.) On September 19, 2013, BANA wrote a letter to Mr. Heinz notifying him that his request was denied for his failure to provide the required documents to complete the loan assistance application. (Ostermann Aff. Ex. D at 30-31.) Mr. Heinz was ultimately able to obtain a second loan modification that cured his default, and brought him current on his loan payments. (Ostermann Aff. Ex. C.)

         In 2016, Carrington alleges, without citing to the record, that Mr. Heinz again defaulted and applied for loss mitigation assistance. (Def.'s Summ. J. Br. at 4.) The record shows, however, that in September 2016, BANA initiated a foreclosure process against Mr. Heinz. (Sathre Aff. Ex. B.) On September 13, 2016, BANA recorded a notice of pendency and power of attorney to foreclose the Property. (Sathre Aff. Ex. B.) Pursuant to the Sale Notice, Mr. Heinz was informed that the foreclosure sale of the Property was initially scheduled for August 1, 2017.[1]

         On March 4, 2017, BANA wrote a letter to Mr. Heinz notifying him that his application was no longer being reviewed for his failure to provide the required documents to complete the loan assistance application. (Ostermann Aff. Ex. D at 29.) Two months later, on May 18, 2017, BANA sent another letter to Mr. Heinz notifying him that his application was still incomplete and no longer under review for his failure to submit the requested documents in support of his application. (Id. at 28.)

         3. Mr. Heinz's Loss Mitigation Applications with Carrington

         As of July 11, 2017, Carrington began servicing Mr. Heinz's loan. (Ostermann Aff. Ex. K.) Shortly after receiving notice of this transfer, Mr. Heinz spoke to Carrington by telephone. (Heinz Aff. ¶ 9.) During the call, Mr. Heinz alleges that Carrington demanded that Mr. Heinz “produce to them a loss mitigation package by midnight that same evening in order to prevent a foreclosure sale of [Mr. Heinz's] property.” (Heinz Aff. ¶ 10.) In response, Mr. Heinz alleges that he immediately sought assistance from the Minnesota Attorney General's Office “with the loss mitigation submissions and his dealings with Carrington.” (See Heinz Aff. ¶¶ 12-21.) When Mr. Heinz made any submissions to Carrington, he alleges that he “commonly sent copies of the submissions to the Minnesota Attorney General's Office.” (See Heinz Aff. ¶ 18.) It is undisputed that the Minnesota Attorney General's Office represented Mr. Heinz, and Mr. Heinz alleges that he relied on the Office, including William Gosiger from the Consumer Division of the Minnesota Attorney General's Office, to “relay. . . any communications and information they received from Carrington regarding [his] account.” (See Heinz Aff. ¶ 21; Def's Summ. J. Br. at 28.)

         To avoid foreclosure, it is undisputed that Mr. Heinz submitted his first loss mitigation application to Carrington on August 3, 2017. (Ostermann Aff. Ex. F; Compl. ¶ 21.) Five days later, on August 8, 2017, Carrington submitted a letter to Mr. Heinz acknowledging receipt of the application and requesting the following documentation by August 23, 2017 to remain eligible for loss mitigation assistance:

(1) Mr. Heinz's tax returns;
(2) IRS 4506-T Form fully executed by Mr. Heinz;
(3) a request for mortgage assistance (“RMA”) completed and executed by Mr. Heinz;
(4) proof of all household income;
(5) monthly living expense worksheet; and (6) a detailed hardship letter.

(Ostermann Aff. Ex. F.)

         Following phone calls between Carrington and Mr. Heinz about the missing documents above, Carrington received additional documents from Mr. Heinz to review, two days before its August 23 deadline. Carrington, however, determined that the application was incomplete because it was missing “([1]) complete income tax returns, [2] a complete RMA, [3] proof of all household income, and [4] a monthly living expense worksheet.” (Ostermann Aff. Ex. L at 77.)

         Carrington acknowledges receiving additional documents on August 29 and September 1, 2017 from Mr. Heinz, including, among other things, a “profit and loss statement for July 2017 through August 2017” and an application of automatic extension to file income tax returns for the years 2014 and 2016. (Id.) But, Carrington determined the ...


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