Morgan v. Carrington Mortgage Services
17-7014
| 10th Cir. | Dec 12, 2017Background
- Morgan obtained a federally related mortgage in 2008; Bank of America began servicing in 2009 and foreclosed after repeated loss-mitigation disputes.
- State court granted summary judgment to Bank of America on October 4, 2013, and the property sold at sheriff’s sale September 18, 2014; appeals were pursued.
- Morgan alleges post-judgment events: Carrington became servicer (effective August 1, 2014), she submitted a loss-mitigation application on March 16, 2015, and HUD notified Bank of America of a disability discrimination complaint in April 2015.
- Federal complaint asserted (1) FHA discrimination/retaliation for failing to review the March 16, 2015 application, (2) RESPA violations for alleged failure to give timely transfer notice and for failing to review loss-mitigation applications, and (3) FDCPA violations based on a June 1, 2015 letter to occupants, participation in a June 25, 2015 confirmation hearing, and service of a June 29, 2015 writ.
- District court dismissed under Rule 12(b)(6) on preclusion grounds (claims decided or could have been decided in the foreclosure action). The Tenth Circuit affirmed dismissal but held most claims were not precluded because they arose after the state judgment; nevertheless, they failed to state plausible federal claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Preclusion (claim/counterclaim) | Morgan: federal claims arise from events after state answer and thus are not barred. | Defendants: claims duplicate issues litigated or that could have been raised in foreclosure. | Most claims not precluded because they post-date the state judgment; one RESPA theory (based on pre-answer 2012 application) is barred. |
| FHA causation | Morgan: failure to review March 16, 2015 application was discrimination/retaliation after HUD notice. | Defendants: foreclosure and sale had already concluded; no causal connection to disability/HUD complaint. | Dismissed — implausible causation given judgment, sale, and appeals already concluded before 2015 application/notice. |
| RESPA damages and duty to evaluate | Morgan: failure to give timely servicer transfer notice and failure to evaluate applications caused harm. | Defendants: no plausible actual damages alleged; servicer duty to evaluate applies only if application received more than 37 days before sale. | Dismissed — plaintiff pleaded only conclusory damages; the March 2015 application was after the sale so no duty to evaluate; one pre-answer 2012 claim is precluded. |
| FDCPA communications | Morgan: June 1 letter, June 25 hearing participation, and June 29 writ were improper communications about debt. | Defendants: communications did not convey debt-collection information (offers, writs, court appearances), so FDCPA inapplicable. | Dismissed — none of the alleged acts plausibly convey information about a debt as required for an FDCPA violation. |
Key Cases Cited
- Toone v. Wells Fargo Bank, N.A., 716 F.3d 516 (10th Cir.) (RESPA claims require pleading actual damages)
- Wilson v. Warren County, 830 F.3d 464 (7th Cir.) (FHA claims require plausible causal link between disability/protected activity and adverse action)
- Stone v. Department of Aviation, 453 F.3d 1271 (10th Cir.) (treatment of compulsory counterclaims and permissive after-acquired claims)
- Campbell v. City of Spencer, 777 F.3d 1073 (10th Cir.) (Oklahoma preclusion: claim barred if it would nullify or impair earlier judgment)
- Marx v. General Revenue Corp., 668 F.3d 1174 (10th Cir.) (definition of "communication" under FDCPA)
- Berneike v. CitiMortgage, Inc., 708 F.3d 1141 (10th Cir.) (conclusory damages allegations insufficient under Rule 12(b)(6))
- Lage v. Ocwen Loan Servicing LLC, 839 F.3d 1003 (11th Cir.) (servicer duty to evaluate loss-mitigation application applies only if received more than 37 days before foreclosure sale)