Kline v. Mortgage Electronic Registration Systems, Inc.
704 F. App'x 451
6th Cir.2017Background
- In 2004 Eugene Kline took two mortgage loans (first and second) that were later assigned into mortgage-backed trusts; he defaulted twice and foreclosure actions followed.
- Foreclosure litigation involved multiple law firms/servicers (Reimer, Lerner, HomEq/Barclays, Wells Fargo, MERS, WMC). Kline cured the first default, later defaulted again, sold his home and paid off both loans in November 2007.
- Kline filed a putative class action in 2008 alleging improper fees charged at payoff and asserted FDCPA, TILA, OCSPA, unjust enrichment, and breach of contract claims; many claims/defendants were later narrowed.
- Defendants moved for summary judgment in 2015; Kline missed various deadlines (response to summary judgment, class-certification briefing) and sought additional discovery and to amend his complaint late. The district court granted summary judgment, struck class allegations, denied leave to amend, and denied Rule 60(b) relief; Kline appealed.
- On appeal the Sixth Circuit reviewed summary judgment de novo and reviewed the district court’s discovery-, class-strike, amendment-, and Rule 60(b)-rulings for abuse of discretion, and affirmed in all respects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FDCPA liability for attorneys’ fees and post-acceleration late fees (Reimer, Lerner) | Kline: Defendants collected attorneys’ fees and a $69.12 post-acceleration late fee that were not authorized by contract or law | Defendants: payoff quotes/explanations and refund checks show fees were not retained or were refunded; discovery admissions/time-bar procedural defenses | Held: Summary judgment for defendants. Kline failed to rebut evidence of refunds, failed to timely withdraw admissions, and inadequately developed strict-liability arguments on appeal. |
| Unjust enrichment (Reimer, Lerner, Barclays) | Kline: Defendants were unjustly enriched by retaining improper fees | Defendants: Accounting and refund records show no retained benefit; some charges were reversed or refunded | Held: Denied relief—no unjust enrichment because the record shows refunds or reallocation leaving defendants without unjust benefit. |
| Breach of contract (Wells Fargo, MERS) | Kline: Wells Fargo/MERS breached by charging improper attorneys’ fees, referral/servicing fees, and post-acceleration fees; alleges interest overcharge supports fee claim | Defendants: Payoff quotes, reimbursements, and post-payoff internal reallocations show no charge to Kline or compensable damages; Kline failed to assert a separate breach theory for alleged interest overcharge below | Held: Summary judgment for defendants; Kline abandoned or failed to timely present the breach theories and cannot show damages. |
| Procedural relief: Rule 60(b), motion to strike class allegations, leave to amend | Kline: New documents/misrepresentations justify Rule 60(b) relief, reopening discovery and class certification, and adding RICO/fraud claims | Defendants: Alleged issues were known or discoverable before judgment; Kline missed deadlines and delayed amendment; permitting relief would prejudice defendants | Held: Denial of Rule 60(b), affirm striking class allegations for failure to timely move for certification, and denial of leave to amend (undue delay/futility/prejudice). |
Key Cases Cited
- JGR, Inc. v. Thomasville Furniture Indus., Inc., 550 F.3d 529 (6th Cir. 2008) (notice of appeal should be construed liberally)
- Smith v. Barry, 502 U.S. 244 (U.S. 1992) (liberal construction of notice of appeal)
- United States v. Grenier, 513 F.3d 632 (6th Cir. 2008) (notice naming post-judgment order may extend to judgment if intent clear)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (movant bears initial burden on summary judgment)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (genuine dispute standard for summary judgment)
- Kistner v. Law Offices of Michael P. Margelefsky, LLC, 518 F.3d 433 (6th Cir. 2008) (FDCPA bona fide error defense explained)
- Stratton v. Portfolio Recovery Assocs., LLC, 770 F.3d 443 (6th Cir. 2014) (FDCPA strict liability principles)
- Petroff-Kline v. United States, 557 F.3d 285 (6th Cir. 2009) (withdrawal of admissions may be imputed from actions)
- Scottsdale Ins. Co. v. Flowers, 513 F.3d 546 (6th Cir. 2008) (issues raised first in reconsideration or replies may be waived)
- Wilborn v. Bank One Corp., 906 N.E.2d 396 (Ohio 2009) (Ohio law: contractual attorney-fee provision unenforceable when arising from foreclosure after default)