Bank of America Hit with FDCPA Damages PLUS PUNITIVE Damages $100,000

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Hat tip to Ken McLeod

see Goodin v Bank of America NA

I think this case decision should be studied. While it is easy to be dismissive of emotional distress damages, this case clearly enunciates the basis for it. I think we tend to demote the claim because of the underlying bias that the borrower has been getting a “free ride.” This case states quite clearly that the ride was neither wanted nor free.Perhaps just as importantly, the Court finds that punitive damages are appropriate in order to get the attention of Bank of America — such that it will stop it’s malevolent behavior. It sets the bar at deterring the bank from this behavior and not just a “cost of doing business.”

For those who don’t think we have turned the corner, this case shows clearly that judges are not allowing themselves to be spoon-fed the diet of illusion, smoke and mirrors that has prevailed so long in the American court system. If these decisions were made 10 years ago we would not have had a foreclosure crisis.


KM Writes:

This is an interesting new FDCPA decision.  The judge found that BANA violated the FDCPA and awarded 50k/each to husband and wife for compensatory damages, based mainly on emotional distress as proved by the consumers’ testimony of anxiety, frustration, and sleeplessness.  Also, he awarded $100,000 in punitives under the FDCPA, even given a very stringent Florida statute, because BANA’s negligence was gross, by a clear and convincing standard, primarily because the debtors tried to fix the discrepancy numerous times, but the bank did not fix it, and initiated foreclosure.  The “Bank employees were inattentive, unconcerned and haphazard,” but more importantly, in taking no action to prevent errors from continuing, despite repeated notice, “the Bank employees’ conduct was so wanting in care that it constituted a conscious disregard and indifference to the Goodins’ rightsIt was as if the Goodins did not exist.”  And it was “only stopped by the filing of this federal lawsuit.”  Moreover, in creating a system where one Bank department did not communicate with another, where there were inadequate internal controls to ensure statements provided correct information, and where there was no way for Bank customers to get the attention of the Bank to correct the Bank’s errors, the Bank engaged in grossly negligent conduct. As such, it should be held liable for punitive damages for its employees’ gross negligence.”

Other interesting snippets:


As we know, BANA is a debt collector if “acquired the loan at issue while the loan was in default.”

Bank of America contends, however, that it is not a debt collector. A mortgage servicing company is a debt collector under the FDCPA if it acquired the loan at issue while the loan was in default. Williams v. Edelman, 408 F.Supp.2d 1261, 1266 (S.D.Fla.2005). Under the terms of their note, the Goodins were in default if they missed two or more consecutive payments. (Doc. 75 at 15). When Bank of America took over their loan, the Goodins had previously missed two or more consecutive payments and remained behind by more than two payments. (Trial Tr. vol. I at 30). Nevertheless, Bank of America argues that the Goodins were not in default because their bankruptcy plan cured any pre-existing default and the Goodins never defaulted on any payment due under the bankruptcy plan.7 (Doc. 101 at 6).

*5 While a bankruptcy plan may “provide for the curing or waiving of any default,” this does not mean, as Bank of America argues, that the entry of a bankruptcy plan itself cures a default. See11 U.S.C. § 1322(b)(3) (2014). Indeed, the bankruptcy statute also provides that the plan may “provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending on any unsecured claim or secured claim on which the last payment is due after the date on which the final payment under the plan is due ….“ § 1322(b)(5). This provision suggests what is common sense: that the curing of the default occurs upon the repayment of the back payments owed, not upon the mere institution of the bankruptcy plan. See In re Agustin, 451 B.R. 617, 619 (Bankr.S.D.Fla.2011) (“Using [§ ] 1322(b)(5), the Debtors are able to cure arrearages over a time period exceeding the life of the Chapter 13 Plan.”); see also In re Alexander, 06–30497–LMK, 2007 WL 2296741 (Bankr.N.D.Fla. Apr.25, 2007) (finding it reasonable to cure a default over the five-year life of the bankruptcy plan). Bank of America is a debt collector.

Goodin v. Bank of Am., N.A., No. 3:13-CV-102-J-32JRK, 2015 WL 3866872, at *4-5 (M.D. Fla. June 23, 2015)

Act “in connection with the collection of a debt” only must have “animating purpose” to induce payment:

To be “in connection with the collection of a debt,” a communication need not make an explicit demand for payment. Grden v. Leikin Ingber & Winters PC, 643 F.3d 169, 173 (6th Cir.2011). However, “an animating purpose of the communication must be to induce payment by the debtor.”Id.; see also McIvor v. Credit Control Servs., Inc., 773 F.3d 909, 914 (8th Cir.2014); cf. Caceres v. McCalla Raymer, LLC, 755 F.3d 1299, 1303 n. 2 (11th Cir.2014) (noting that an implicit demand for payment constituted an initial communication in connection with a debt). Where a communication is clearly informational and does not demand payment or discuss the specifics of an underlying debt, it does not violate the FDCPA. Parker v. Midland Credit Mgmt., Inc., 874 F.Supp.2d 1353, 1358 (M.D.Fla.2012).

*6 Some of the communications alleged to be FDCPA violations did not have the animating purpose of inducing the Goodins to pay a debt. Specifically, Bank of America’s October 8, 2010 notice that the Goodins may be charged fees while their loan is in default status (Pl.’s Ex. 5), the December 3, 2010 letter alerting the Goodins to the existence of a program to avoid foreclosure despite their “past due” home loan payment (Pl.’s Ex. 6),9 the refusal to accept an alleged partial payment (Pl.’s Ex. 17), and the notice that the Goodins’ loan had been referred to foreclosure (Pl.’s Ex. 27), did not ask for or encourage payment and were not intended to induce payment. Likewise, the Bank of America branch employee’s refusal to accept Mr. Goodin’s payment was not an act in connection with the collection of a debt.

A regular bank statement sent only for informational purposes is also not an action in connection with the collection of a debt. See Helman v. Udren Law Offices, P.C., No. 0:14–CV–60808, 2014 WL 7781199, at *6 (S.D.Fla. Dec.18, 2014). As such, the Goodins’ November 10, 2009 account statement, which did not have the purpose of inducing payment from the Goodins, was not an FDCPA violation. (See Pl.’s Ex. 4 at 5).

The letter Bank of America’s counsel sent to the Goodins on October 25, 2013 (Joint Ex. 11) was likewise not an FDCPA violation because it did not falsely represent the amount or status of the Goodins’ debt, did not threaten an action Bank of America could not or did not intend to take, and did not constitute the use of a false representation or deceptive means in an attempt to collect a debt.

Goodin v. Bank of Am., N.A., No. 3:13-CV-102-J-32JRK, 2015 WL 3866872, at *5-6 (M.D. Fla. June 23, 2015)

Foreclosure as debt collection activity, only if seeks deficiency judgment


The lone remaining alleged violation is Bank of America’s filing of a foreclosure complaint against the Goodins. (Pl.’s Ex. 28). Foreclosing on a home is the enforcement of a security interest, not debt collection. Warren v. Countrywide Home Loans, Inc., 342 F. App’x 458, 461 (11th Cir.2009). However, a deficiency action does constitute debt collection activity.Baggett v. Law Offices of Daniel C. Consuegra, P.L., No. 3:14–CV–1014–J–32PDB, 2015 WL 1707479, at *5 (M.D.Fla. Apr.15, 2015). Communication that attempts to enforce a security interest may also be an attempt to collect the underlying debt. Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1217–18 (11th Cir.2012).

When a foreclosure complaint seeks a deficiency judgment if applicable, it attempts to collect on the security interest and the note. Roban v. Marinosci Law Grp., No. 14–60296–CIV, 2014 WL 3738628 (S.D.Fla. July 29, 2014). As such, two cases have found that foreclosure complaints that ask for a deficiency judgment “if applicable” constitute debt collection activity under the FDCPA. See id.; Rotenberg v. MLG, P.A., No. 13–CV–22624–UU, 2013 WL 5664886, at *2 (S.D.Fla. Oct.17, 2013). Similarly, a foreclosure complaint constitutes debt collection activity where it requests “that the court retain jurisdiction to enter a deficiency decree, if necessary.”Freire v. Aldridge Connors, LLP, 994 F.Supp.2d 1284, 1288 (S.D.Fla.2014).

Goodin v. Bank of Am., N.A., No. 3:13-CV-102-J-32JRK, 2015 WL 3866872, at *7 (M.D. Fla. June 23, 2015)

What they knew and when they knew it

At least two people in the Bank, Duane Dumler and Leslie Hodkinson, knew long before Mr. Juarez’s error that the Bank needed to file a transfer of claim to obtain the missing funds. Either because of the Bank’s size, because its departments were compartmentalized and did not properly communicate with each other, or some other reason, this knowledge did not make its way to the foreclosure department or to the part of the Bank responsible for sending out the communications that violated the FDCPA. Then, after Mr. Juarez’s negligent audit, the Goodins’ attorney contacted Bank of America to fix the problem, but the Bank still proceeded to misrepresent the amount the Goodins owed and ultimately filed a foreclosure complaint, only dismissing the foreclosure action after the Goodins literally had to make a federal case out of it.

Goodin v. Bank of Am., N.A., No. 3:13-CV-102-J-32JRK, 2015 WL 3866872, at *9 (M.D. Fla. June 23, 2015)

Factual Evidence of Emotional Damages; No Doctor Testimony Necessary

Since Bank of America began servicing the Goodins’ loan, Mrs. Goodin has felt anxious every day, worrying about the status of her loan. (Id. at 239–40). At times, she has lost sleep because of her concern about the loan. (Id. at 240). However, she never went to a doctor for treatment, in part because she did not have insurance to do so and in part because she did not believe a doctor would make a difference. (Id. at 241).

Mr. Goodin likewise suffered anxiety and sleeplessness as a result of Bank of America’s improper servicing. (Trial Tr. vol. II at 105). Mr. Goodin was immensely frustrated by Bank of America’s lack of responsiveness to his attempts to fix the problems with his loan. (Id. at 74). He sent letters, talked to a Bank of America employee face-to-face, and tried everything that he could think of, but could not find a way to get Bank of America to file the transfer of claim or correct its servicing of the Goodins’ loan. (Id. at 74). While Mr. Goodin’s description of his life as “a pure living hell” is perhaps hyperbolic, it is clear that Bank of America’s letters and Mr. Goodin’s inability to correct the problem made him feel powerless and caused him considerable anger and distress. (See id. at 74, 86).

Most of the Goodins’ testimony dealt generally with emotional distress they suffered throughout the Bank’s servicing of their loan. However, Mrs. Goodin was especially concerned when the Goodins’ bankruptcy was discharged because Bank of America was not getting their payments and she knew that, absent payment, Bank of America would take legal action against them. (Id. at 18). The Goodins noted that they also suffered particular stress upon being served with the foreclosure complaint. (Id. at 79). The possibility of losing their home to foreclosure upset Mr. Goodin and left Mrs. Goodin worried and scared. (Id. at 79).

Bank of America was not the only cause of stress in the Goodins’ lives. Mrs. Goodin was under stress before they filed for bankruptcy because the Goodins were having trouble paying their bills. (Id. at 13). She also suffered the loss of her mother around 2011. (Id. at 69). In June 2013, the Goodins sued TRS Recovery Services, Bennett Law, PLLC, and Wal–Mart (Id. at 22), alleging that they were the victims of check fraud in September 2011 (Id. at 24). Because of the wrongful debt incurred by the fraud, TRS sent the Goodins collection letters from October 2011 through November 2012 and called frequently from October 2011 until July 2012. (Id. at 24–25). As a result, the Goodins lost sleep, felt anxious, and suffered other symptoms of emotional distress. (Id. at 26). However, the Goodins testified credibly that the stress, anxiety, and sleeplessness caused by the events underlying the TRS lawsuit pale in comparison to the emotional distress the Goodins suffered as a result of Bank of America’s actions. (Id. at 64, 106).

*11 While not accepting every aspect of their testimony, overall, the Court found the Goodins’ testimony regarding the emotional distress caused by the Bank’s FDCPA and FCCPA violations to be believable. The tumult of receiving repeated erroneous communications from the Bank, their inability to get anybody at the Bank to listen to them, their feelings of loss of control and the very real fear of losing their home combined to create a very stressful situation.

Goodin v. Bank of Am., N.A., No. 3:13-CV-102-J-32JRK, 2015 WL 3866872, at *10-11 (M.D. Fla. June 23, 2015)

  2. Statutory Damages

Under both the FDCPA and FCCPA, prevailing plaintiffs are entitled to statutory damages of up to $1,000. 15 U.S.C. § 1692k; Fla. Stat. § 559.77. In determining the appropriate amount, the Court must consider “the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional ….“ 15 U.S .C. § 1692k; see alsoFla. Stat. § 559.77(2). Upon consideration of the Bank’s repeated statutory violations and inability to correct the problems with the Goodins’ loans despite a plethora of chances to do so, the Court finds Mr. and Mrs. Goodin are each entitled to $1,000 under the FDCPA and $1,000 under the FCCPA.

  1. Actual Damages

The Goodins also each seek $500,000 in actual damages to compensate for their emotional distress. (Doc. 100–1 at 17). A plaintiff may recover actual damages for emotional distress under the FDCPA and FCCPA. Minnifield v. Johnson & Freedman, LLC, 448 F. App’x 914, 916 (11th Cir.2011) (finding that a plaintiff can recover for emotional distress under the FDCPA); Fini v. Dish Network L.L.C., 955 F.Supp.2d 1288, 1299 (M.D.Fla.2013) (finding the same under the FCCPA).

In determining what actual damages are appropriate in this case, the Court has only considered those damages caused by the Bank’s FDCPA and FCCPA violations, and not any distress caused by other aspects of the Bank’s improper servicing of the Goodins’ account. To recap, Bank of America violated the FDCPA when it (1) mailed ten statements from April 25, 2011 to March 29, 2012, indicating, amongst other misstatements, an overstated balance on the loan; (2) mailed statements in March and August 2011 misstating that the Goodins owed foreclosure fees; (3) sent the Goodins six letters between December 27, 2011 and March 16, 2012 requesting over $15,000 in payments and threatening to accelerate the debt or foreclose in the absence of payment; and (4) filed a foreclosure complaint on September 17, 2012. Any emotional distress the Goodins suffered as a result of the Bank’s violations therefore occurred between March 2011, the date of the first violation, and October 2013, when the Bank finally corrected its servicing errors.

“Emotional distress must have a severe impact on the sufferer to justify an award of actual damages.”Alecca v. AMG Managing Partners, LLC, No. 3:13–CV–163–J–39PDB, 2014 WL 2987702, at *2 (M.D.Fla. July 2, 2014). As such, a number of courts have declined to award damages for emotional distress where the plaintiff’s testimony was not supported by medical bills. See, e.g., Lane v. Accredited Collection Agency Inc., No. 6:13–CV–530–ORL–18, 2014 WL 1685677, at *8 (M.D.Fla. Apr.28, 2014) (adopting a report and recommendation recommending no actual damages despite testimony that the plaintiff suffered nervousness, anxiety, and sleeplessness); compare Marchman v. Credit Solutions Corp., No. 6:010–CV–226–ORL–31, 2011 WL 1560647, at *10 (M.D.Fla. Apr.5, 2011)report and recommendation adopted,No. 6:10–CV–226–ORL–31, 2011 WL 1557853 (M.D.Fla. Apr.25, 2011) (awarding no actual damages where the plaintiff testified that she spent nights awake with worry and was withdrawn and depressed but did not provide evidence she required medical or professional services) with Latimore v. Gateway Retrieval, LLC, No. 1:12–CV–00286–TWT, 2013 WL 791258, at *10–11 (N.D.Ga. Feb.1, 2013)report and recommendation adopted,No. 1:12–CV–286–TWT, 2013 WL 791308 (N.D.Ga. Mar.4, 2013) (awarding $10,000 in emotional distress damages where the plaintiff submitted medical bills to support her testimony). Indeed, both courts and juries have rejected claims for emotional distress in cases involving serious FDCPA violations. See Montgomery v. Florida First Fin. Grp., Inc., No. 6:06–CV–1639ORL31KR, 2008 WL 3540374, at *9 (M.D.Fla. Aug.12, 2008) (adopting a Report and Recommendation recommending no actual damages despite the defendant threatening six times, to plaintiff, plaintiff’s daughter, and plaintiff’s mother, that it would have plaintiff arrested, and despite plaintiff’s testimony she was scared and struggled to sleep for fear that she would be arrested); Jordan v. Collection Services, Inc., Case No. 97–600–CA–01, 2001 WL 959031 (Fla. 1st Cir. Ct. April 5, 2001) (jury awarded no damages despite defendant’s debt collection calls that threatened, amongst other consequences, that a hospital would refuse to admit plaintiffs’ ill child if they did not pay their debt).

*12 Still, other courts have awarded actual damages for emotional distress for FDCPA and FCCPA violations, albeit usually in relatively small amounts. For example, in Barker v. Tomlinson, No. 8:05–CV–1390–T–27EAJ, 2006 WL 1679645 (M.D.Fla. June 7, 2006), the plaintiff received $10,000 in actual damages where the defendant called her at work to demand payment for an illegitimate debt, threatened her with arrest if she did not pay, and faxed a request for an arrest warrant to her workplace. Barker, at *3. Similarly, where the plaintiff suffered three panic attacks after the defendant threatened that she could go to jail, threatened to send a deputy to her house, and told her daughter that her mom would be arrested, the court awarded $1,000 in actual damages.Rodriguez v. Florida First Fin. Grp., Inc., No. 606CV–1678–ORL–28DAB, 2009 WL 535980, at *6 (M.D.Fla. Mar.3, 2009).

There are two notable exceptions to the small damages awards usually given in FDCPA cases. In Mesa v. Insta–Service Air Conditioning Corp., Case No. 03–20421 CA 11, 2011 WL 5395524 (Fla. 11th Cir.Ct. Aug. 2, 2011), a jury awarded $150,000 in compensatory damages where an air conditioning company defrauded the plaintiff into buying a defective air conditioner and, unbeknownst to the plaintiff, took out a line of credit in his name. However, it is unclear what amount of those compensatory damages were based on emotional distress and what amount were economic damages. In Beasley v. Anderson, Randolf, Price LLC, Case No. 16–2007–CA–005308, 2010 WL 6708036 (Fla. 4th Cir. Ct. April 19, 2010), a jury awarded $75,000 for mental anguish, inconvenience, or loss of capacity for the enjoyment of life after the defendant repeatedly called the plaintiff’s cell phone to collect a debt, even after being told that it was a work phone number, after receiving a cease and desist letter, and after learning the plaintiff was represented by an attorney.

While not precisely on point, there are two FDCPA cases that represent somewhat similar facts to this case.13In Campbell v. Bradley Fin. Grp., No. CIV.A. 13–604–CG–N, 2014 WL 3350054 (S.D.Ala. July 9, 2014), the defendant repeatedly called the plaintiff, wrongfully alleging that she owed a debt, that she would be sued, and that her wages would be garnished if she did not pay. Campbell, at *4. The plaintiff tried to explain that she had already paid the debt but, because the defendant insisted, she paid the illegitimate debt. Id. Based on the plaintiff’s testimony of her fear of legal action being taken against her, the threatening nature of the phone calls, and the fact that the plaintiff paid the illegitimate debt, the court awarded $15,000 in emotional distress damages. Id.

Similarly, in Gibson v. Rosenthal, Stein, & Associates, LLC, No. 1:12–CV–2990–WSD, 2014 WL 2738611 (N.D.Ga. June 17, 2014), the defendant called the plaintiff and alleged that she owed a debt that she did not owe. Gibson, at *2. The defendant threatened to call the sheriff and have the plaintiff arrested if she did not make a payment. Id. Afraid of going to jail, the plaintiff paid the illegitimate debt using money she needed for living expenses, causing her to go without electricity for two weeks and without water. Id. The court therefore awarded her $15,000. Id.

*13 While these cases are useful as guidance, ultimately, the Court as fact-finder must determine the appropriate amount of damages based on the evidence in this case. Emotional distress damages are particularly difficult to quantify. For example, the Eleventh Circuit pattern jury instructions for emotional distress damages in employment actions contain this language: “You will determine what amount fairly compensates [him/her] for [his/her] claim. There is no exact standard to apply, but the award should be fair in light of the evidence.”Eleventh Circuit Pattern Jury Instructions (Civil) Adverse Employment Action Claims Instructions 4.1, 4.2, 4.3, 4.4, 4.5, 4.9 (2013 Edition).

The Goodins suffered prolonged (over two and a half years) stress, anxiety, and sleeplessness as a result of Bank of America’s misrepresentations regarding the amount of the debt the Goodins owed. This emotional distress reached its peak when the Bank repeatedly threatened the Goodins that, if they did not pay in excess of $15,000, the Goodins’ debt would be accelerated and the Goodins could face foreclosure. The Bank then filed the foreclosure action, and did not dismiss it until six months later (and only after the Goodins were forced to file this lawsuit). While the Goodins did not present evidence from an expert or doctor and in fact did not seek medical attention for their emotional distress, the Court found credible their testimony that they suffered real and severe emotional distress. See supra Part III. Mr. Goodin had worked all his life (Trial Tr. vol. II at 72), but the family was forced into bankruptcy by a poor business investment (Id. at 119). Nevertheless, the Goodins remained ready to continue paying on their mortgage, even while in bankruptcy, but for Bank of America’s gross negligence. While they had other causes of stress as well, their fear of losing their home and feeling of helplessness in the face of Bank of America’s indifference was far and away the primary cause of stress in their lives. Given the facts of this case and the duration of the Goodins’ emotional distress, the Court finds the Goodins are entitled to a larger award than in the mine-run FDCPA case (but nowhere near their request of $500,000 each). Accordingly, the Court, as fact-finder, finds that Mr. and Mrs. Goodin have proven entitlement to $50,000 each for their emotional distress.

  1. Punitive Damages

In addition to statutory and actual damages, the Goodins request ten million dollars in punitive damages under the FCCPA.14(Doc. 100–1 at 21). The Court may award punitive damages under the FCCPA. Fla. Stat. § 559.77. The Goodins argue that punitive damages are appropriate where the defendant acted with malicious intent, meaning that it did a wrongful act “to inflict injury or without a reasonable cause or excuse.”(Doc. 100–1 at 18) (quoting Story v. J.M. Fields, Inc., 343 So.2d 675, 677 (Fla.Dist.Ct.App.1977). Bank of America likewise cites this standard (Doc. 101 at 16), as have a number of courts that considered punitive damages under the FCCPA, see, e.g., Crespo v. Brachfeld Law Grp., No. 11–60569–CIV, 2011 WL 4527804, at *6 (S.D.Fla. Sept.28, 2011); but see Alecca, 2014 WL 2987702, at *1 (finding unpersuasive the plaintiff’s argument that behavior that had no excuse was equated with malicious intent).

*14 As Bank of America points out, however, Fla. Stat. § 768.72 was amended in 1999, subsequent to the decision in Story, to provide a new standard for punitive damages. Now, “[a] defendant may be held liable for punitive damages only if the trier of fact, based on clear and convincing evidence, finds that the defendant was personally guilty of intentional misconduct or gross negligence.”Fla. Stat. § 768.72(2). Punitive damages may be imposed on a corporation for conduct of an employee only if an employee was personally guilty of intentional misconduct or gross negligence and (1) the corporation actively and knowingly participated in that conduct; (2) the officers, directors, or managers of the corporation knowingly condoned, ratified, or consented to the conduct; or (3) the corporation engaged in conduct that constituted gross negligence and that contributed to the loss suffered by the claimant. § 768.72(3).“ ‘Intentional misconduct’ means that the defendant had actual knowledge of the wrongfulness of the conduct and the high probability that injury or damage to the claimant would result and, despite that knowledge, intentionally pursued that course of conduct, resulting in injury or damage.”§ 768.72(2)(a).“ ‘Gross negligence’ means that the defendant’s conduct was so reckless or wanting in care that it constituted a conscious disregard or indifference to the life, safety, or rights of persons exposed to such conduct.”§ 768.72(2)(b). Barring the application of certain exceptions not present here, any punitive damages award is limited to the greater of: “Three times the amount of compensatory damages awarded to each claimant entitled thereto” or $500,000. § 768.73(1).

Those cases that have applied the Story standard subsequent to the amendment to § 768.72 have not addressed § 768.72. See, e.g., Montgomery, 2008 WL 3540374, at *10. The Goodins contend that the punitive damages provisions of § 768.72 et seq. do not apply to this case because those provisions are in the “Torts” section of the Florida code rather than the “Consumer Collection Practices” section where the FCCPA is. However, the punitive damages section applies to “any action for damages, whether in tort or in contract.”Fla. Stat. § 768.71. Thus, the Eleventh Circuit has assumed that the punitive damages cap in Fla. Stat. § 768.73(1)(a) applies to FCCPA cases. McDaniel v. Fifth Third Bank, 568 F. App’x 729, 732 (11th Cir.2014). A number of other courts have also assumed that the procedural requirements in § 768.72 would apply to FCCPA actions if they did not conflict with the Federal Rules of Civil Procedure. See, e.g., Brook v. Suncoast Sch., FCU, No. 8:12–CV–01428–T–33, 2012 WL 6059199, at *5 (M.D.Fla. Dec.6, 2012).15 As such, the Court will apply the punitive damages standard dictated by the statute. Cf. City of St. Petersburg v. Total Containment, Inc., No. 06–20953–CIV, 2008 WL 5428179, at *25–26 (S.D.Fla. Oct.10, 2008)report and recommendation adopted in part, overruled in part sub nom. City of St. Petersburg v. Dayco Products, Inc., No. 06–20953, 2008 WL 5428172 (S.D.Fla. Dec.30, 2008) (applying § 768.72’s provisions instead of the common law standard laid out in White Const. Co. v. Dupont, 455 So.2d 1026, 1028–29 (Fla.1984)).

*15 As well documented in earlier sections of these findings, the Bank employees were inattentive, unconcerned, and haphazard in their repeated and prolonged mishandling of the Goodins’ loan. Then, the auditor whose very job it is to correct errors, was himself negligent in his review of the Goodins’ file. If that was the sum of Bank of America’s actions, it would be guilty of negligence many times over, but perhaps not gross negligence.

It is the Bank’s employees’ failure to respond to the Goodins’ many efforts to correct the Bank’s errors that sets this case apart. Bank of America received numerous communications from the Goodins and their attorney explaining the problems with the Bank’s servicing. (Joint Ex. 5 at 2; Joint Ex. 6 at 37, 39, 40; Pl.’s Ex. 23). Yet, beyond noting that the communications were received, the Bank employees did nothing to correct the servicing errors. With their home at stake, the Goodins might as well have been talking to a brick wall.

In taking no action to prevent the errors from continuing, even after being repeatedly notified of them, the Bank employees’ conduct was so wanting in care that it constituted a conscious disregard and indifference to the Goodins’ rights. It was as if the Goodins did not exist. Because the Bank’s employees disregarded the Goodins’ complaints, the servicing errors continued unabated, the Bank continued to send the Goodins false information about the amount of their debt, and then the Bank filed a misbegotten foreclosure action. The Bank employees’ continued gross negligence was only stopped by the filing of this federal lawsuit.

Moreover, in creating a system where one Bank department did not communicate with another, where there were inadequate internal controls to ensure statements provided correct information, and where there was no way for Bank customers to get the attention of the Bank to correct the Bank’s errors, the Bank engaged in grossly negligent conduct. As such, it should be held liable for punitive damages for its employees’ gross negligence.

In justifying their request for $10 million in punitive damages, the Goodins cite to only one case they believe to be similar, Toddie v. GMAC Mortgage LLC, No. 4:08–cv–00002, 2009 WL 3842352 (M.D.Ga. March 26, 2009), where the Court awarded $2,000,0001 in punitive damages and $570,000 in compensatory damages. (Doc. 100–1 at 19–20).Toddie, however, was a wrongful foreclosure and breach of contract case, not an FCCPA case, and involved much more egregious facts, as the defendant actually foreclosed on the plaintiff’s home.

Where courts have awarded punitive damages in FCCPA cases, the amounts have typically been small. See Rodriguez, 2009 WL 535980, at *6 (awarding $2,500 in punitive damages); Montgomery, 2008 WL 3540374, at *11 (awarding $1,000 in punitive damages); Barker, 2006 WL 1679645, at *3 (awarding $10,000 in punitive damages).16 However, this case presents a different situation, one of a very large corporation’s institutional gross negligence.

*16 The goal of punitive damages is to punish gross negligence and to deter such future misconduct. Thus, the award must be large enough to get Bank of America’s attention, otherwise these cases become an acceptable “cost of doing business.” Bank of America is a huge company with tremendous resources, a factor that the Court may and has considered in determining an appropriate award. See Myers v. Cent. Florida Investments, Inc., 592 F.3d 1201, 1216 (11th Cir.2010).17 Also, this is a serious FCCPA case, in which there were a large number of violations that occurred over a long period of time, and in which the Bank ignored the Goodins’ repeated attempts to fix its many errors. The Court, as fact-finder, finds that the Goodins have proven by clear and convincing evidence that a punitive damages award of $100,000 is appropriate.18

Goodin v. Bank of Am., N.A., No. 3:13-C

FDCPA Strikes Again: West Virginia Slams Wells Fargo

YARNEY v. OCWEN LOAN SERVICING, LLC, Dist. Court, WD Virginia 2013

SARAH C. YARNEY, Plaintiff,



No. 3:12-cv-00014. United States District Court, W.D. Virginia, Charlottesville Division.

March 8, 2013


NORMAN K. MOON, District Judge.

The Plaintiff Sarah C. Yarney (“Plaintiff”), pursuant to Fed. R. Civ. P. 56, seeks summary judgment as to liability on all claims asserted in her complaint. Plaintiff alleges that Defendants Wells Fargo Bank N.A., as Trustee for SABR 2008-1 Trust (“Wells Fargo”), and its loan servicer, Ocwen Loan Servicing, LCC (“Ocwen”), attempted to collect on her home mortgage loan after she had settled the debt with Wells Fargo.


A. Plaintiff’s FDCPA Claims as a Matter of Law

In summary, mortgage servicers are considered debt collectors under the FDCPA if they became servicers after the debt they service fell into default. At the time Ocwen became the servicer on Plaintiff’s home loan, the loan was already in default. Therefore, Ocwen is a debt collector seeking to collect an alleged debt for the purposes of FDCPA liability in this case.[4]

1. Defendants’ Liability under 15 U.S.C. § 1692e(2)(A)

Given the contents of the monthly bills and notices sent to Plaintiff directly, along with the continued calls she received from collection agents, I find that the least sophisticated consumer in Plaintiff’s position could believe that she still owed a debt. Thus, Plaintiff is entitled to summary judgment on her count that Ocwen violated § 1692e(2)(A) of the FDCPA.
2. Defendants’ Liability under 15 U.S.C. § 1692c(a)(2)

Because Plaintiff continued to directly receive bills, statements and phone calls from Ocwen representatives seeking to collect on an alleged debt obligation, despite notice that she was represented by counsel, Plaintiff is entitled to summary judgment that Ocwen violated section 1692c(a)(2).

B. Plaintiff’s Breach of Contract Claim as a Matter of Law

Plaintiff contends that Wells Fargo breached its agreement with Plaintiff, through the action of its agent, Ocwen ….
plaintiff contends, Wells Fargo failed to comply with its obligations, due to the actions of Ocwen, its servicer.
By attempting to collect payments from Plaintiff on behalf of Wells Fargo, Ocwen acted as Wells Fargo’s agent with respect to the original mortgage loan.[10] Further, the undisputed facts in this case demonstrate that Ocwen continued to behave in all respects towards Plaintiff as Wells Fargo’s agent after the March 18, 2011 settlement agreement.[11] While a party may delegate the performance of its duties under a contract, it retains the ultimate obligation to perform….
[11] While Defendants argued during the February 25, 2013 motion hearing that Wells Fargo shouldn’t be held liable for Ocwen’s conduct from now until eternity, Ocwen’s actions at the center of this case constituted collection efforts in connection with the same mortgage loan debt for which Ocwen had been assigned to service, and that Plaintiff and Wells Fargo had attempted to resolve under the March 18, 2011 settlement agreement. Thus, given the facts of this case, Ocwen continued to act as Wells Fargo’s agent with respect to Plaintiff following the settlement agreement.
Due to Ocwen’s subsequent attempts to collect mortgage loan payments from Plaintiff, Wells Fargo neither absolved Plaintiff of her possible deficiency nor properly accepted the deed in lieu of foreclosure.
. . .
“… and thus, due to the actions of its servicer, Plaintiff is entitled to summary judgment that Wells Fargo breached the March 18, 2011 contract agreement.

For the foregoing reasons, Plaintiff’s motion for partial summary judgment is granted. This case is scheduled for a jury trial on April 9, 2013, at 9:30 a.m. in Charlottesville, VA, at which time Plaintiff will have the opportunity to testify in regards to any damages she may be entitled to in this matter.[12] An appropriate order accompanies this memorandum opinion


BANK AMNESTY AGAIN: Leaving Consumers to Fend (Litigate) for Themselves

“To someone who lost his house to mortgage servicer incompetence or malfeasance, that’s not restitution. It’s an insult. “The capped pool of cash payments is wholly inadequate in light of the scale of the harm,” says Alys Cohen, staff attorney for the National Consumer Law Center.”   Adam Levin,

Editor’s Analysis: In case after case across the country it is readily apparent that there complete strangers making claims on mortgages, foreclosing, evicting and even collecting “Trial Payments” while they intend to do nothing other than Foreclose — because that is where the money is and because it is only through a foreclosure that they cap the losses and pass them onto investors despite having received large scale payments of insurance and other hedges.

The Banks have it their way despite the obvious unconscionable, illegal, immoral and unethical breach of trust between consumer and bank and between banks.

Whether it is the Chase WAMU deal, or the BOA countrywide deal, or the Indy-mac One West deal, the facts are in — we don’t need to theorize anymore — the banks are NOT the creditors, they cannot shows proof of loss, proof of payment or any financial transaction that would entitle them to enforce an invalid note or foreclose on an invalid, unperfected mortgage lien.

But the institutionalization of hypocrisy and deviant behavior on the part of the Banks has left us with “settlements” that settle nothing, leaving millions of homeowners who lost their homes to entities that received a windfall from the foreclosure process and the windfall from dual tracking “modification” reviews that were a pure sham designed only to get the homeowner in the deepest hole possible so that foreclosure would become inevitable.

At our members conference this Wednesday, we will talk about what is getting traction in the modification of mortgages and what is getting traction in the litigation of mortgage disputes.

The important thing to remember that is that the MONEY never came from ANY of the parties in the sham securitization chain starting with the originator. While there are exceptions — like World Savings — the truth defeats further claims regarding the Wachovia acquisition and then the Wells Fargo acquisition of Wachovia. Either the assignments were missing or they fabricated and forged.

If you ask yourself why they wouldn’t have had the assignments done all nice and proper which is the way the banking world works when BORROWERS must sign documents, you will feel uncomfortable with Wall Street explanations of volume causing the paperwork confusion. It was the exact same volume that produced millions of “originated” mortgages where the i’s were dotted and T’s were crossed —- that is, where the Borrower had to sign. The banks had no trouble then — it was only when the banks had to sign that there was a problem. Where the securitization participants had to sign was neither disclosed nor drafted nor executed.

The simple reason is that there was nothing to sign. There was no financial transaction where money exchanged hands which is why I am pounding on the point that the lawyers should be aiming at the money rather than the documentation. “For value received” means that value was paid or transferred. When you ask for the wire transfer receipt or cancelled check that shows payment and which would establish proof of loss, you are asking to see the transaction upon which the banks place all their reliance.

Their argument that they don’t need to show the actual transaction is a dodge to protect themselves from showing that the transactions in the bogus securitization scheme were all a sham. Your argument should be simple — they say they lost money and that the homeowners owes it. Let’s see the actual proof that they made the loan, lost the money and have not already been paid. The assignments are not accompanies by actual money exchanging hands which means that the assignment lacked consideration and was therefore an executory contract at best, pending payment.

Then you need to ask yourself why there was no consideration when you know that money was funded from somewhere for a loan to the “benefit” of your client (albeit based upon fraud in the execution and fraud in the inducement including appraisal fraud). YOU must tackle the basic issue in the mind of just about every judge — as long as the money was there at the “closing” of the loan, and the borrower signed the papers, and then defaulted on those promises, what difference does it make whether some OTHER papers were fabricated or even forged.

The fact remains, your client, in the eyes of the Judge, got the loan, agreed to the terms and then defaulted. In our world, when you default on a loan, judgment is entered, foreclosure is completed and eviction, if necessary proceeds. The banks have relied upon this perception for years which considerable success. The reason borrowers often lose in litigation is that they arguing about the wrong thing. As soon as they go after the documentation first they are going down a rabbit hole. It is a tacit admission that the loan was valid, the note is evidence of the loan and the mortgage secures the note. DENY and DISCOVER puts that front and center as an issue of fact in dispute.

By going after the money transactions and requiring proof of payment and proof of loss and asking for the accounting data that shows the loan receivable on the books of an entity, you are striking at the heart of the sham transaction.

If you ask me for a loan for $100 and I say “Sure, just sign this note,” and you go ahead and sign the note, what happens when I don’t give you the $100 loan. The answer, which has caused considerable confusion in the foreclosure defense world is that I can nonetheless sue you (on its face the note LOOKS like a negotiable instrument) , but I can’t win. Because if you deny that I ever completed the loan transaction by funding the loan to you, then I have to prove that I gave you the money. I can’t because I didn’t. My argument that you did receive a loan that day and therefore you owe me the money is a lie. You owe the money to whoever actually gave you the money.

At the closing of these loans originated by nominees with no power to touch the money and whose only source of income was fees, not interest on the loan, the borrower was fooled by the fact that the money showed up for the loan. It never occurred to the borrower to ask any questions since the paperwork, and all the disclosures required by law told him a story about the loan. The borrower could not possibly know that the story told by the documents, the documents he or she signed at closing were all a lie.

The Banks will take the position that everyone was authorized to make representations and act for everyone else — except when it comes to paying down the debts with money received from insurance and the proceeds of credit default swaps, federal bailouts etc. In THAT case the bank says it was not the agent of the investors and had no duty to either the investor or the borrower since the banks were the named insureds — made possible only because they purposefully put the name of a nominee on the note, a nominee on the mortgage (or even two nominees on the mortgage) so that the banks could open up a window of time during which they could claim ownership of the loans despite the fact that they had not funded one dime to originate or purchase any loan.

Thus if go for the money first and THEN show the the fabrication, forgery and perjury in documents, the case makes sense and can be presented to the court without giving one inch of admission that the loan, the note or mortgage were real, valid or enforceable. AND by sending a standard QWR and FDCPA letter, the banks have nowhere to hide. In litigation the motion becomes a petition to enforce the RESPA 6 inquiry and the FDCPA inquiry either through direct order or through discovery.

THEN you force the disclosure of the identity of the creditor who actually has a negative account balance on their books for the loan, directly or indirectly, and seek modification or settlement based upon the facts of the case. HAMP modification is impossible, settlement is impossible without first establishing who could submit a credit bid at auction or who could execute a valid satisfaction and release of the debt.

Latest Bank Amnesty Leaves Consumers Adrift

Fraud Is The Biggest Bubble In History

6th Circuit Court of Appeals Rules FDCPA Applies to Foreclosures



What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, Tennessee, Georgia, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

EDITOR’S ANALYSIS: The Fair Debt Collection Practices Act (FDCPA) 15 USC Sec 1692, has been treated as “off-limits” in mortgage foreclosure actions. The principal thrust of the action is to protect consumers from unfair practices and to prevent debtors from paying a “collector” and finding out they still owe the money because the “collector” was a sham operation. The opinion of many trial judges based upon some appellate decisions was that the FDCPA expressly excluded foreclosure actions.

In this Opinion, the 6th Circuit Court of Appeals, using common sense and basic rules of statutory construction, came to the opposite opinion and it would appear that the opinion will be followed in most states. As it is, anecdotal evidence from Connecticut and other states suggests that trial judges were questioning the legal theory that foreclosures were not about the collection of money.

“Chase and RACJ fraudulently concealed the fact that Fannie Mae owned the loan, and that the original note was not lost or destroyed and was being held by a custodian for Fannie Mae’s benefit. The complaint named plaintiff Lawrence Glazer as someone possibly having an interest in the Klie property, and RACJ served Glazer with process. Glazer answered and asserted defenses. He also notified RACJ that he disputed the debt and requested verification. RACJ refused to verify the amount of the debt or its true owner.”

DENY AND DISCOVER: It is the failure to verify the very thing that lies at the heart of foreclosure defense, nullification of instrument aimed at the mortgage and note, that makes this opinion so powerful. BY re fusing to verify the true owner or the amount of the debt, RACJ was attempting to get around normal due process — that the charges against the debtor be clearly stated and verified. Allowing violations of the FDCPA under the mistaken notion that foreclosure is not about the collection of money allows the collector to finesse the issue of who owns the loan and how much is due. This opens up discovery against the Master Servicer, Subservicer, investment banker, Trustee of the Trust and the trust itself to determine if the trust even exists.

“we hold that mortgage foreclosure is debt collection under the Act. Lawyers who meet the general definition of a “debt collector” must comply with the FDCPA when engaged in mortgage foreclosure. And a lawyer can satisfy that definition if his principal business purpose is mortgage foreclosure or if he “regularly” performs this function. In this case, the district court held that RACJ was not engaged in debt collection when it sought to foreclose on the Klie property. That decision was erroneous, and the judgment must be reversed.7”

CA Trial Court Upholds Claims for Improper Assignment, Accounting, Unfair Practices

Editor’s Note: In an extremely well-written and well reasoned decision Federal District Court Judge M. James Lorenz denied the Motion to dismiss of US Bank on an alleged WAMU securitization that for the first time recognizes that the securitization scheme could be a sham, with no basis in fact.

Although the Plaintiff chose not to make allegations regarding false origination of loan documents, which I think is important, the rest of the decision breaks the illusion created by the banks and servicers through the use of documents that look good but do not meet the standards of proof required in a foreclosure.

  1. I would suggest that lawyers look at the claim and allegations that the origination documents were false and were procured by fraud.
  2. Since no such allegation was made, the court naturally assumed the loan was validly portrayed in the loan documents and that the note was evidence of the loan transaction, presuming that SBMC actually loaned the money to the Plaintiff, which does not appear to be the case.
  3. This Judge actually read everything and obvious questions in his mind led him to conclude that there were irregularities in the assignment process that could lead to a verdict in favor of the Plaintiff for quiet title, accounting, unfair practices and other claims.
  4. The court recites the fact that the loan was sold to “currently unknown entity or entities.” This implicitly raises the question of whether the loan was in fact actually sold more than once, and if so, to whom, for how much, and raises the issues of whom Plaintiff was to direct her payments and whether the actual creditor was receiving the money that Plaintiff paid.  — a point hammered on, among others, at the Garfield Seminars coming up in Emeryville (San Francisco), 8/25 and Anaheim, 8/29-30. If you really want to understand what went on in the mortgage meltdown and the tactics and strategies that are getting traction in the courts, you are invited to attend. Anaheim has a 1/2 day seminar for homeowners. Call customer service 520-405-1688 to attend.
  5. For the first time, this Court uses the words (attempt to securitize” a loan as opposed to assuming it was done just based upon the paperwork and the presence of the the parties claiming rights through the assignments and securitization.
  6. AFTER the Notice of Sale was recorded, the Plaintiff sent a RESPA 6 Qualified Written request. The defendants used the time-honored defense that this was not a real QWR, but eh court disagreed, stating that the Plaintiff not only requested information but gave her reasons in some details for thinking that something might be wrong.
  7. Plaintiff did not specifically mention that the information requested should come from BOTH the subservicer claiming rights to service the loan and the Master Servicer claiming rights to administer the payments from all parties and the disbursements to those investor lenders that had contributed the money that was used to fund the loan. I would suggest that attorneys be aware of this distinction inasmuch as the subservicer only has a small snapshot of transactions solely between the borrower and the subservicer whereas the the information from the Master Servicer would require a complete set of records on all financial transactions and all documents relating to their claims regarding the loan.
  8. The court carefully applied the law on Motions to Dismiss instead of inserting the opinion of the Judge as to whether the Plaintiff would win stating that “material allegations, even if doubtful in fact, are assumed to be true,” which is another point we have been pounding on since 2007. The court went on to say that it was obligated to accept any claim that was “plausible on its face.”
  9. The primary claim of Plaintiffs was that the Defendants were “not her true creditors and as such have no legal, equitable, or pecuniary right in this debt obligation in the loan,’ which we presume to mean that the court was recognizing the distinction, for the first time, between the legal obligation to pay and the loan documents.
  10. Plaintiff contended that there was not a proper assignment to anyone because the assignment took place after the cutoff date in 2006 (assignment in 2010) and that the person executing the documents, was not a duly constituted authorized signor. The Judge’s decision weighed more heavily that allegation that the assignment was not properly made according to the “trust Document,” thus taking Defendants word for it that a trust was created and existing at the time of the assignment, but also saying in effect that they can’t pick up one end of the stick without picking up the other. The assignment, after the Notice of Default, violated the terms of the trust document thus removing the authority of the trustee or the trust to accept it, which as any reasonable person would know, they wouldn’t want to accept — having been sold on the idea that they were buying performing loans. More on this can be read in “whose Lien Is It Anyway?, which I just published and is available on
  11. The Court states without any caveats that the failure to assign the loan in the manner and timing set forth in the “trust document” (presumably the Pooling and Servicing Agreement) that the note and Deed of trust are not part of the trust and that therefore the trustee had no basis for asserting ownership, much less the right to enforce.
  12. THEN this Judge uses simple logic and applies existing law: if the assignment was void, then the notices of default, sale, substitution of trustee and any foreclosure would have been totally void.
  13. I would add that lawyers should consider the allegation that none of the transfers were supported by any financial transaction or other consideration because consideration passed at origination from the investors directly tot he borrower, due to the defendants ignoring the provisions of the prospectus and PSA shown to the investor-lender. In discovery what you want is the identity of each entity that ever showed this loan is a loan receivable on any regular business or record or set of accounting forms. It might surprise you that NOBODY has the loan posted as loan receivable and as such, the argument can be made that NOBODY can submit a CREDIT BID at auction even if the auction was otherwise a valid auction.
  14. Next, the Court disagrees with the Defendants that they are not debt collectors and upholds the Plaintiff’s claim for violation of FDCPA. Since she explicitly alleges that US bank is a debt collector, and started collection efforts on 2010, the allegation that the one-year statute of limitation should be applied was rejected by the court. Thus Plaintiff’s claims for violations under FDCPA were upheld.
  15. Plaintiff also added a count under California’s Unfair Competition Law (UCL) which prohibits any unlawful, unfair or fraudulent business act or practice. Section 17200 of Cal. Bus. & Prof. Code. The Court rejected defendants’ arguments that FDCPA did not apply since “Plaintiff alleges that Defendants violated the UCL by collecting payments that they lacked the right to collect, and engaging in unlawful business practices by violating the FDCPA and RESPA.” And under the rules regarding motions to dismiss, her allegations must be taken as absolutely true unless the allegations are clearly frivolous or speculative on their face.
  16. Plaintiff alleged that the Defendants had created a cloud upon her title affecting her in numerous ways including her credit score, ability to refinance etc. Defendants countered that the allegation regarding a cloud on title was speculative. The Judge said this is not speculation, it is fact if other allegations are true regarding the false recording of unauthorized documents based upon an illegal or void assignment.
  17. And lastly, but very importantly, the Court recognizes for the first time, the right of a homeowner to demand an accounting if they can establish facts in their allegations that raise questions regarding the status of the loan, whether she was paying the right people and whether the true creditors were being paid. “Plaintiff alleges facts that allows the Court to draw a reasonable inference that Defendants may be liable for various misconduct alleged. See Iqbal, 129 S. Ct. at 1949.

Here are some significant quotes from the case. Naranjo v SBMC TILA- Accounting -Unfair practices- QWR- m/dismiss —

Judge Lorenzo Decision in Naranjo vs. SBMC Mortgage et al 7-24-12

No allegations regarding false origination of loan documents:

SBMC sold her loan to a currently unknown entity or entities. (FAC ¶ 15.) Plaintiff alleges that these unknown entities and Defendants were involved in an attempt to securitize the loan into the WAMU Mortgage Pass-through Certificates WMALT Series 2006-AR4 Trust (“WAMU Trust”). (Id. ¶ 17.) However, these entities involved in the attempted securitization of the loan “failed to adhere to the requirements of the Trust Agreement

In August 2009, Plaintiff was hospitalized, resulting in unforeseen financial hardship. (FAC ¶ 25.) As a result, she defaulted on her loan. (See id. ¶ 26.)
On May 26, 2010, Defendants recorded an Assignment of Deed of Trust, which states that MERS assigned and transferred to U.S. Bank as trustee for the WAMU Trust under the DOT. (RJN Ex. B.) Colleen Irby executed the Assignment as Officer for MERS. (Id.) On the same day, Defendants also recorded a Substitution of Trustee, which states that the U.S. Bank as trustee, by JP Morgan, as attorney-in-fact substituted its rights under the DOT to the California Reconveyance Company (“CRC”). (RJN Ex. C.) Colleen Irby also executed the Substitution as Officer of “U.S. Bank, National Association as trustee for the WAMU Trust.” (Id.) And again, on the same day, CRC, as trustee, recorded a Notice of Default and Election to Sell. (RJN Ex. D.)
A Notice of Trustee’s sale was recorded, stating that the estimated unpaid balance on the note was $989,468.00 on July 1, 2011. (RJN Ex. E.)
On August 8, 2011, Plaintiff sent JPMorgan a Qualified Written Request (“QWR”) letter in an effort to verify and validate her debt. (FAC ¶ 35 & Ex. C.) In the letter, she requested that JPMorgan provide, among other things, a true and correct copy of the original note and a complete life of the loan transactional history. (Id.) Although JPMorgan acknowledged the QWR within five days of receipt, Plaintiff alleges that it “failed to provide a substantive response.” (Id. ¶ 35.) Specifically, even though the QWR contained the borrow’s name, loan number, and property address, Plaintiff alleges that “JPMorgan’s substantive response concerned the same borrower, but instead supplied information regarding an entirely different loan and property.” (Id.)

The court must dismiss a cause of action for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The court must accept all allegations of material fact as true and construe them in light most favorable to the nonmoving party. Cedars-Sanai Med. Ctr. v. Nat’l League of Postmasters of U.S., 497 F.3d 972, 975 (9th Cir. 2007). Material allegations, even if doubtful in fact, are assumed to be true. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, the court need not “necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations.” Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) (internal quotation marks omitted). In fact, the court does not need to accept any legal conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, ___, 129 S. Ct. 1937, 1949 (2009)

the allegations in the complaint “must be enough to raise a right to relief above the speculative level.” Id. Thus, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'” Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a `probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory or for insufficient facts under a cognizable theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984).

Plaintiff’s primary contention here is that Defendants “are not her true creditors and as such have no legal, equitable, or pecuniary right in this debt obligation” in the loan. (Pl.’s Opp’n 1:5-11.) She contends that her promissory note and DOT were never properly assigned to the WAMU Trust because the entities involved in the attempted transfer failed to adhere to the requirements set forth in the Trust Agreement and thus the note and DOT are not a part of the trust res. (FAC ¶¶ 17, 20.) Defendants moves to dismiss the FAC in its entirety with prejudice.

The vital allegation in this case is the assignment of the loan into the WAMU Trust was not completed by May 30, 2006 as required by the Trust Agreement. This allegation gives rise to a plausible inference that the subsequent assignment, substitution, and notice of default and election to sell may also be improper. Defendants wholly fail to address that issue. (See Defs.’ Mot. 3:16-6:2; Defs.’ Reply 2:13-4:4.) This reason alone is sufficient to deny Defendants’ motion with respect to this issue. [plus the fact that no financial transaction occurred]

Moving on, Defendants’ reliance on Gomes is misguided. In Gomes, the California Court of Appeal held that a plaintiff does not have a right to bring an action to determine a nominee’s authorization to proceed with a nonjudicial foreclosure on behalf of a noteholder. 192 Cal. App. 4th at 1155. The nominee in Gomes was MERS. Id. at 1151. Here, Plaintiff is not seeking such a determination. The role of the nominee is not central to this action as it was in Gomes. Rather, Plaintiff alleges that the transfer of rights to the WAMU Trust is improper, thus Defendants consequently lack the legal right to either collect on the debt or enforce the underlying security interest.

Plaintiff requests that the Court “make a finding and issue appropriate orders stating that none of the named Defendants . . . have any right or interest in Plaintiff’s Note, Deed of Trust, or the Property which authorizes them . . . to collect Plaintiff’s mortgage payments or enforce the terms of the Note or Deed of Trust in any manner whatsoever.” (FAC ¶ 50.) Defendant simplifies this as a request for “a determination of the ownership of [the] Note and Deed of Trust,” which they argue is “addressed in her other causes of action.” (Defs.’ Mot. 6:16-20.) The Court disagrees with Defendants. As discussed above and below, there is an actual controversy that is not superfluous. Therefore, the Court DENIES Defendants’ motion as to Plaintiff’s claim for declaratory relief.

Defendants argue that they are not “debt collectors” within the meaning of the FDCPA. (Defs.’ Mot. 9:13-15.) That argument is predicated on the presumption that all of the legal rights attached to the loan were properly assigned. Plaintiff responds that Defendants are debt collectors because U.S. Bank’s principal purpose is to collect debt and it also attempted to collect payments. (Pl.’s Opp’n 19:23-27.) She explicitly alleges in the FAC that U.S. Bank has attempted to collect her debt obligation and that U.S. Bank is a debt collector. Consequently, Plaintiff sufficiently alleges a claim under the FDCPA.
Defendants also argue that the FDCPA claim is time barred. (Defs.’ Mot. 7:18-27.) A FDCPA claim must be brought “within one year from the date on which the violation occurs.” 15 U.S.C. § 1692k(d). Defendants contend that the violation occurred when the allegedly false assignment occurred on May 26, 2010. (Defs.’ Mot. 7:22-27.) However, Plaintiff alleges that U.S. Bank violated the FDCPA when it attempted to enforce Plaintiff’s debt obligation and collect mortgage payments when it allegedly had no legal authority to do so. (FAC ¶ 72.) Defendants wholly overlook those allegations in the FAC. Thus, Defendants fail to show that Plaintiff’s FDCPA claim is time barred.
Accordingly, the Court DENIES Defendants’ motion as to Plaintiff’s FDCPA claim.
Defendants argue that Plaintiff’s letter does not constitute a QWR because it requests a list of unsupported demands rather than specific particular errors or omissions in the account along with an explanation from the borrower why she believes an error exists. (Defs.’ Mot. 10:4-13.) However, the letter explains that it “concerns sales and transfers of mortgage servicing rights; deceptive and fraudulent servicing practices to enhance balance sheets; deceptive, abusive, and fraudulent accounting tricks and practices that may have also negatively affected any credit rating, mortgage account and/or the debt or payments that [Plaintiff] may be obligated to.” (FAC Ex. C.) The letter goes on to put JPMorgan on notice of
potential abuses of J.P. Morgan Chase or previous servicing companies or previous servicing companies [that] could have deceptively, wrongfully, unlawfully, and/or illegally: Increased the amounts of monthly payments; Increased the principal balance Ms. Naranjo owes; Increased the escrow payments; Increased the amounts applied and attributed toward interest on this account; Decreased the proper amounts applied and attributed toward the principal on this account; and/or[] Assessed, charged and/or collected fees, expenses and miscellaneous charges Ms. Naranjo is not legally obligated to pay under this mortgage, note and/or deed of trust.
(Id.) Based on the substance of letter, the Court cannot find as a matter of law that the letter is not a QWR.
California’s Unfair Competition Law (“UCL”) prohibits “any unlawful, unfair or fraudulent business act or practice. . . .” Cal. Bus. & Prof. Code § 17200. This cause of action is generally derivative of some other illegal conduct or fraud committed by a defendant. Khoury v. Maly’s of Cal., Inc., 14 Cal. App. 4th 612, 619 (1993). Plaintiff alleges that Defendants violated the UCL by collecting payments that they lacked the right to collect, and engaging in unlawful business practices by violating the FDCPA and RESPA.

Defendants argue that Plaintiff’s allegation regarding a cloud on her title does not constitute an allegation of loss of money or property, and even if Plaintiff were to lose her property, she cannot show it was a result of Defendants’ actions. (Defs.’ Mot. 12:22-13:4.) The Court disagrees. As discussed above, Plaintiff alleges damages resulting from Defendants’ collection of payments that they purportedly did not have the legal right to collect. These injuries are monetary, but also may result in the loss of Plaintiff’s property. Furthermore, these injuries are causally connected to Defendants’ conduct. Thus, Plaintiff has standing to pursue a UCL claim against Defendants.

Plaintiff alleges that Defendants owe a fiduciary duty in their capacities as creditor and mortgage servicer. (FAC ¶ 125.) She pursues this claim on the grounds that Defendants collected payments from her that they had no right to do. Defendants argue that various documents recorded in the Official Records of San Diego County from May 2010 show that Plaintiff fails to allege facts sufficient to state a claim for accounting. (Defs.’ Mot. 16:1-3.) Defendants are mistaken. As discussed above, a fundamental issue in this action is whether Defendants’ rights were properly assigned in accordance with the Trust Agreement in 2006. Plaintiff alleges facts that allows the Court to draw a reasonable inference that Defendants may be liable for various misconduct alleged. See Iqbal, 129 S. Ct. at 1949.

Foreclosure Strategists: Special Guest: Michael Trailor Director AZ Dept. Housing

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Editor’s Comment:

Contact: Darrell Blomberg  602-686-7355

Meeting: Tuesday, June 12th, 2012, 7pm to 9pm

Special Guest:

Michael Trailor

Director, Arizona Department of Housing

Director Trailor will join us for this evening’s meeting.  We’ll be discussion principal reductions and servicer opposition to the corrections.  Additionally, we cover such topics as the current programs that are in process and any future programs the Department of Housing is working on.  Other topics will include exploring the difference in the state’s treatment of the Hardest Hit Funds and the Attorneys’ General Settlement Funds.

We meet every week!

Every Tuesday: 7:00pm to 9:00pm. Come early for dinner and socialization. (Food service is also available during meeting.)
Macayo’s Restaurant, 602-264-6141, 4001 N Central Ave, Phoenix, AZ 85012. (east side of Central Ave just south of Indian School Rd.)
COST: $10… and whatever you want to spend on yourself for dinner, helpings are generous so bring an appetite.
Please Bring a Guest!
(NOTE: There is a $2.49 charge for the Happy Hour Buffet unless you at least order a soft drink.)


I have set up a Facebook page. (I can’t believe it but it is necessary.) The page can be viewed at, look for and “friend” “Foreclosure Strategist.”

I’ll do my best to keep it updated with all of our events.

Please get the word out and send your friends and other homeowners the link.


I have set up a MeetUp page. The page can be viewed at Please get the word out and send your friends and other homeowners the link.

Home Defenders League

The Home Defender’s League supported the Lilly Washington event.  They are building a nationwide coalition to support underwater and distressed homeowners.  Here is a link to their website:

They have a feature story about Lilly Washington at this link:

May your opportunities be bountiful and your possibilities unlimited.

“Emissary of Observation”

Darrell Blomberg


Foreclosure Strategists: Phx. Meeting Tuesday!

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Contact: Darrell Blomberg  602-686-7355

Meeting: Tuesday, June 5th, 2012, 7pm to 9pm

John Hogan v Long Beach Mortgage Co.

We’ll be reviewing the Arizona Supreme Court decision for the John Hogan v Long Beach Mortgage Co. case.

Affidavits and FDCPA

Two areas gaining importance for homeowners are the effective use of Affidavits and courts’ renewed interest in the Fair Debt Collection Practices Act as it applies to trustees. (FDCPA)  We’ll take a look at these two topics.

Special Guest, Tuesday, June 12, 2012

Michael Trailor

Director, Arizona Department of Housing

Director Trailor will join us for this evening’s meeting.  We’ll be discussion principal reductions and servicer opposition to the corrections.  Additionally, we cover such topics as the current programs that are in process and any future programs the Department of Housing is working on.  Other topics will include exploring the difference in the state’s treatment of the Hardest Hit Funds and the Attorneys’ General Settlement Funds.

We meet every week!

Every Tuesday: 7:00pm to 9:00pm. Come early for dinner and socialization. (Food service is also available during meeting.)
Macayo’s Restaurant, 602-264-6141, 4001 N Central Ave, Phoenix, AZ 85012. (east side of Central Ave just south of Indian School Rd.)
COST: $10… and whatever you want to spend on yourself for dinner, helpings are generous so bring an appetite.
Please Bring a Guest!
(NOTE: There is a $2.49 charge for the Happy Hour Buffet unless you at least order a soft drink.)


I have set up a Facebook page. (I can’t believe it but it is necessary.) The page can be viewed at, look for and “friend” “Foreclosure Strategist.”

I’ll do my best to keep it updated with all of our events.

Please get the word out and send your friends and other homeowners the link.


I have set up a MeetUp page. The page can be viewed at Please get the word out and send your friends and other homeowners the link.

May your opportunities be bountiful and your possibilities unlimited.

“Emissary of Observation”

Darrell Blomberg



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