Deutsche Bank Trust Co. Americas v. Garst
989 F. Supp. 2d 1194
N.D. Ala.2013Background
- In 2005 Garst obtained a $104,000 loan secured by a mortgage; he defaulted in 2009. The promissory note and mortgage were assignable.
- MERS assigned the mortgage to Deutsche on August 9, 2010; GMAC acted as servicer and handled Garst’s modification attempts in 2011.
- Garst submitted a completed modification package on September 9, 2011; he alleges he was told foreclosure would be postponed while it was reviewed.
- A foreclosure sale occurred September 12, 2011; Deutsche was the purchaser, sent a demand for possession, and Garst refused to vacate.
- Garst counterclaimed under the FDCPA and multiple Alabama state-law theories; Deutsche moved for summary judgment on ejectment and dismissal of counterclaims. GMAC later filed bankruptcy and is not an active defendant in this opinion.
Issues
| Issue | Plaintiff's Argument (Garst) | Defendant's Argument (Deutsche) | Held |
|---|---|---|---|
| Whether Deutsche is a “debt collector” under the FDCPA | Deutsche acquired a defaulted loan and the note, so it functions as a debt collector subject to FDCPA | Deutsche says enforcement of a security interest/foreclosure is not FDCPA debt collection; alternatively, assignee is creditor not a third‑party collector | Court: Deutsche is a debt collector: it acquired a defaulted debt and the note, so FDCPA applies |
| Whether Deutsche is vicariously liable for acts of servicer GMAC | Garst: Deutsche can be liable for collection conduct by its agent/servicer | Deutsche: FDCPA liability should not extend vicariously to principals that aren’t debt collectors | Court: Vicarious liability applies because Deutsche itself meets the FDCPA definition |
| Whether Garst produced evidence of FDCPA violations (esp. §1692e, §1692f) | Garst points to alleged misrepresentations/promises (no foreclosure while review pending), concealment of deadlines, and conduct that could show unfair means or lack of present right to possession | Deutsche says it followed foreclosure procedures, gave notice, and foreclosure was lawful — no FDCPA violation | Court: Summary judgment denied as to §1692e and §1692f claims; factual disputes (misleading promises; present right to possession) survive summary judgment |
| Whether state-law promissory‑fraud and related tort claims survive given Alabama Statute of Frauds | Garst relies on oral/written modification promises and seeks tort recovery (fraud, estoppel, others) | Deutsche: Statute of Frauds bars promissory‑fraud and related claims; many tort theories are improper for mortgage servicing disputes | Court: Promissory-fraud claim barred by Statute of Frauds; negligence/wantonness and several other state tort claims fail; but equitable estoppel as a defense to ejectment remains viable |
| Whether Deutsche is entitled to summary judgment on ejectment (right to possession) | Garst: estoppel and factual disputes about promises, servicing conduct, and validity of foreclosure preclude ejectment relief | Deutsche: produced foreclosure deed, demand for possession, and argues elements for ejectment are met | Court: Summary judgment denied on ejectment; genuine disputes about validity/equity of foreclosure and present right to possession remain for trial |
Key Cases Cited
- Corvello v. Wells Fargo Bank, N.A., 728 F.3d 878 (9th Cir. 2013) (discusses loan‑modification promises and equitable relief rescinding foreclosure)
- Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211 (11th Cir. 2012) (holding that an entity enforcing a security interest can also be a debt collector under the FDCPA)
- Pollice v. Nat’l Tax Funding, L.P., 225 F.3d 379 (3d Cir. 2000) (agency/vicarious‑liability rule for FDCPA: principals that meet FDCPA definition can be vicariously liable)
- Prickett v. BAC Home Loans, 946 F. Supp. 2d 1236 (N.D. Ala. 2013) (mortgagee/assignee is a debt collector when it acquires a defaulted loan; negligent mortgage‑servicing claims are disfavored)
- Berry v. Deutsche Bank Nat. Trust Co., 57 So.3d 142 (Ala. Civ. App. 2010) (genuine factual disputes about foreclosure validity preclude summary judgment in ejectment)
- Holman v. Childersburg Bancorporation, Inc., 852 So.2d 691 (Ala. 2002) (Statute of Frauds bars proof of certain alleged agreements to support tort claims that depend on the unenforceable agreement)
- Wilson v. Crocker, 267 Ala. 26 (Ala. 1957) (foreclosure after default is an equity matter; equity defenses can justify refusing ejectment)