Earlton Farquharson v. Citibank, N.A.
664 F. App'x 793
| 11th Cir. | 2016Background
- Earlton and Beulah Farquharson (pro se) defaulted on a mortgage and sought a loan modification; Bank of America later sent a Trial Period Plan requiring three monthly payments to qualify.
- Plaintiffs made two payments; servicing transferred from Bank of America to Nationstar; the third payment was returned by Nationstar as insufficient.
- Citigroup (with counsel Ronald R. Wolfe & Associates) attempted foreclosure proceedings while the modification process was pending.
- Plaintiffs sued in federal court asserting an FDCPA claim and multiple state-law claims against Bank of America, Citigroup, Nationstar, and Wolfe.
- The district court entered a clerk’s default against Citigroup, later vacated; it dismissed the FDCPA claim (the only federal claim) for failure to state a claim and declined supplemental jurisdiction over state claims.
- Plaintiffs appealed; the Eleventh Circuit affirmed vacatur of default and dismissal of the Amended Complaint, and noted Plaintiffs waived the right to amend by appealing instead of amending.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the clerk’s entry of default against Citigroup should be set aside | Citigroup was in default and Plaintiffs moved for entry of default | Citigroup promptly retained counsel and moved to vacate once the lapse was discovered | Vacatur affirmed: no abuse of discretion—default was not willful, little prejudice, and Citigroup showed colorable defenses (good-cause standard) |
| Whether Citigroup and Wolfe are "debt collectors" under the FDCPA | They are debt collectors because they pursued foreclosure and sent collection-related documents | Plaintiffs failed to plead facts showing these entities’ principal purpose or regular practice of collecting debts for others | Dismissed as to Citigroup/Wolfe: conclusory labels insufficient; complaint lacked factual allegations to plausibly infer statutory "debt collector" status |
| Whether Bank of America’s loan-modification letter was a communication "in connection with the collection of any debt" under the FDCPA | The letter was misleading and promised foreclosure moratorium; labeled as from a debt collector, so it violates the FDCPA | The letter offered a modification option and did not demand payment or threaten collection/fees | Dismissed as to Bank of America: substance of the letter was not an attempt to collect a debt (no demand, no threat of fees or collection), so FDCPA does not apply |
| Whether Nationstar is liable under the FDCPA for returning the third payment / allegedly representing modification terms | Nationstar represented it would honor or continue Bank of America’s modification process | Exhibits (servicing transfer notice and returned-payment letter) do not show Nationstar made misrepresentations; Plaintiffs identify no particular Nationstar communication that violated FDCPA | Dismissed as to Nationstar: no factual allegation that Nationstar made false FDCPA-related representations; returning payment does not itself show FDCPA liability |
Key Cases Cited
- Garfield v. NDC Health Corp., 466 F.3d 1255 (11th Cir. 2006) (appeal before amendment waives right to later amend complaint)
- Schuurman v. Motor Vessel "Betty K V", 798 F.2d 442 (11th Cir. 1986) (same rule on waiver by premature appeal)
- Perez v. Wells Fargo N.A., 774 F.3d 1329 (11th Cir. 2014) (good-cause standard governs vacatur of clerk’s entry of default; prefer merits adjudication)
- Compania Interamericana Exp.-Imp., S.A. v. Compania Dominicana de Aviacion, 88 F.3d 948 (11th Cir. 1996) (factors for setting aside default: culpability, prejudice, meritorious defense)
- Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211 (11th Cir. 2012) (elements of FDCPA §1692e claim; definition of "debt collector")
- Caceres v. McCalla Raymer, LLC, 755 F.3d 1299 (11th Cir. 2014) (what makes a communication an attempt to collect a debt under FDCPA)
- Iqbal v. Ashcroft, 556 U.S. 662 (2009) (legal conclusions and conclusory recitals are insufficient to survive a motion to dismiss)
- Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567 (2004) (jurisdictional diversity judged at time of filing)
- Baggett v. First Nat’l Bank of Gainesville, 117 F.3d 1342 (11th Cir. 1997) (dismissal of state-law claims when federal claims are dismissed before trial is generally encouraged)
- Carnegie–Mellon Univ. v. Cohill, 484 U.S. 343 (1988) (considerations for remanding or dismissing pendent state-law claims)