Jeffrey Kuns v. Ocwen Loan Servicing
611 F. App'x 398
9th Cir.2015Background
- Kuns bought a home with a purchase-money mortgage; the lender conducted a nonjudicial foreclosure and sold the property. Under California anti-deficiency law, Kuns had no personal liability for any post-foreclosure deficiency.
- Ocwen, the loan servicer, reported the foreclosure deficiency amount to consumer credit reporting agencies without indicating Kuns’s lack of personal liability.
- Kuns later filed for bankruptcy; Ocwen then reported to CRAs that the deficiency had been discharged in bankruptcy.
- Kuns sued under California’s Consumer Credit Reporting Agencies Act (CCRAA), Cal. Civ. Code § 1785.25(a), alleging Ocwen reported information that was “incomplete or inaccurate” by omitting that he lacked personal liability.
- The district court dismissed the complaint with prejudice, finding Ocwen had no affirmative duty under the CCRAA to report the lack of personal liability. The Ninth Circuit reviews de novo.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether reporting a foreclosure deficiency without stating nonliability violates CCRAA § 1785.25(a) | Kuns: omission makes the report materially misleading and therefore "incomplete or inaccurate." | Ocwen: no statutory affirmative duty to disclose that a deficiency is not collectible from a debtor after nonjudicial foreclosure. | Court: Kuns stated a viable CCRAA claim; omission can render reporting materially misleading. |
| Whether anti-deficiency election/foreclosure affects reporting obligations | Kuns: Ocwen’s election of nonjudicial foreclosure changed collectibility; failure to disclose that fact is misleading. | Ocwen: reporting the amount was not false; no further information required. | Court: Court recognizes election of remedies (nonjudicial sale) makes anti-deficiency protection nonwaivable, supporting Kuns’s claim that omission can be misleading. |
| Whether post-bankruptcy reporting that the deficiency was discharged is actionable | Kuns: even after bankruptcy, reporting discharge could still be incomplete if underlying nonliability wasn’t noted. | Ocwen: reporting the bankruptcy discharge was accurate. | Court: Affirmed that Ocwen’s reporting of the bankruptcy discharge was accurate and not "incomplete or inaccurate" under the CCRAA. |
Key Cases Cited
- Schlegel v. Wells Fargo Bank, N.A., 720 F.3d 1204 (9th Cir.) (standard of de novo review and pleading construed in plaintiff's favor)
- Carvalho v. Equifax Info. Servs., 629 F.3d 876 (9th Cir.) (an item is "incomplete or inaccurate" if misleading so as to affect credit decisions)
- Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147 (9th Cir.) (interpretation of "incomplete or inaccurate" in credit reporting context)
- Wang v. Asset Acceptance, LLC, 681 F. Supp. 2d 1143 (N.D. Cal.) (contrast regarding statute-of-limitations defense vs. nonwaivable anti-deficiency protection)
- DeBerard Props. v. Lim, 976 P.2d 843 (Cal.) (California anti-deficiency protections are complete and nonwaivable)