Bates v. CitiMortgage, Inc.
844 F.3d 300
| 1st Cir. | 2016Background
- The Bateses filed Chapter 7; their mortgage debt was discharged in 2009. They later entered a loan modification (no reaffirmation) but defaulted; CitiMortgage foreclosed and they moved out in 2011.
- In January 2012 each received IRS Form 1099-A reporting Freddie Mac (c/o CitiMortgage) as acquirer, showing principal outstanding, an FMV figure, and a checked box indicating borrower personal liability.
- The Bateses feared tax consequences; they and their counsel asked Freddie Mac to revoke/correct the Forms. Freddie Mac did not revoke and maintained the Forms were accurate. The Bateses do not claim they actually owed taxes.
- The Bateses sued, alleging the 1099-A Forms (and a later prerecorded CitiMortgage insurance call) violated the bankruptcy discharge injunction, § 524(a). Bankruptcy court granted summary judgment to creditors on the 1099-A claim; district court affirmed. Bateses appealed as to the 1099-A Forms.
- The legal question focused on whether the 1099-A Forms constituted an objectively coercive or harassing attempt to collect a debt discharged in bankruptcy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 1099-A Forms violated the § 524 discharge injunction by coercively attempting collection | Bates: Forms were coercive because they contained false information (checked liability box) and forced them to seek tax advice or pay the debt | Defendants: Forms are informational tax filings required after foreclosure, not demands for payment; no attempt to collect | Held: No violation — Forms were informational, did not demand payment or threaten action, and were not objectively coercive |
| Whether failure to correct the 1099-A supports an inference of intent to coerce | Bates: Refusal to retract parallels false credit-reporting cases and shows intent to coerce payment | Defendants: No adverse consequences from Forms beyond standard foreclosure results; no coercive effect shown | Held: No inference; absence of adverse consequences or collection attempt undermines coercion claim |
| Whether surrounding circumstances (pre-recorded insurance call) render the Forms coercive when viewed together | Bates: The insurance call plus Forms show continuing attempts to collect | Defendants: The call was informational/pre-recorded and occurred much later; no pattern of coercion | Held: Call does not make Forms coercive; timing and lack of additional evidence defeat combined-effect argument |
| Whether statutory tax-reporting requirements transform a required informational filing into actionable collection conduct | Bates: The 1099-A’s reporting can trigger audits and practical pressure to pay | Defendants: Tax law and IRS Pub. 4681 explain bankruptcy-cancelled debt is excluded; 1099-A merely informs taxpayers/IRS | Held: Reporting obligation does not equal a collection act under § 524; Forms remain informational |
Key Cases Cited
- Canning v. Beneficial Me., Inc., 706 F.3d 64 (1st Cir. 2013) (discusses scope of discharge injunction)
- Pratt v. General Motors Acceptance Corp., 462 F.3d 14 (1st Cir. 2006) (objective standard for coercion; factual-context inquiry)
- Diamond v. Premier Capital, Inc., 346 F.3d 224 (1st Cir. 2003) (consider immediateness and context when assessing coercion)
- Jamo v. Katahdin Fed. Credit Union, 283 F.3d 392 (1st Cir. 2002) (informational statements about foreclosure not coercive absent immediate threat)
- Best v. Nationstar Mortgage LLC, 540 B.R. 1 (B.A.P. 1st Cir.) (letters stating payoff amounts informational when not demanding payment)
- In re Lumb, 401 B.R. 1 (B.A.P. 1st Cir.) (threats and follow-through constituted coercive collection post-discharge)