Richard Sibert v. Wells Fargo Bank, N.A.
2017 U.S. App. LEXIS 12739
| 4th Cir. | 2017Background
- In May 2008 Sibert, then on active duty in the Navy, purchased a Virginia Beach home financed by a deed-of-trust loan later acquired by Wells Fargo.
- Sibert was discharged from the Navy in July 2008 and defaulted; Wells Fargo began foreclosure steps in March 2009 while Sibert was a civilian.
- In April 2009 Sibert reenlisted in the Army; in May 2009 Wells Fargo completed a non-judicial foreclosure sale while Sibert was on active Army duty.
- Sibert signed a move-out agreement with an SCRA addendum that included an affirmative waiver of SCRA rights; later he and his wife filed Chapter 7 and received a discharge without listing an SCRA claim; the bankruptcy trustee later substituted as real party in interest.
- Sibert sued in 2014 alleging the foreclosure violated 50 U.S.C. § 3953 (SCRA) because the sale occurred during his later period of military service without a court order.
- The district court granted summary judgment to Wells Fargo, holding § 3953(a) covers only obligations that originated before any period of service (i.e., obligations incurred while already in service are excluded); the Fourth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an obligation "originated before the period of the servicemember's military service" applies to the servicemember's current period of service (separate, later enlistments) | Sibert: § 3953(a) refers to the relevant, singular period of service (the later Army service), so an obligation incurred before that period (May 2008) is protected | Wells Fargo: § 3953(a) excludes obligations that originated while the servicemember was already in any military service; obligations incurred during prior service are not protected | Held: Statute protects only obligations that originated before the servicemember entered military service; obligations incurred while in military service (here, during Navy service) are excluded and later reenlistment does not retroactively confer protection |
| Whether Congress intended multiple separate service periods to create retroactive protections for obligations incurred during prior service | Sibert: Plain text and protective purpose support treating each service period separately; SCRA must be liberally construed for servicemembers | Wells Fargo: Statutory text and historical context show Congress excluded obligations incurred during service because both parties knew the servicemember’s status and pay when the obligation was made | Held: Court reads the word "before" to exclude obligations incurred during any military service and affirms that Congress drew that line; historical enactments support this reading |
| Whether Sibert waived SCRA rights by signing the SCRA addendum to the move-out agreement | Sibert: (argued waiver may be invalid) | Wells Fargo: Addendum constituted an affirmative waiver of SCRA rights | Held: Court did not decide waiver because it resolved the case on statutory interpretation (no need to reach waiver) |
| Whether bankruptcy proceedings/judicial estoppel or discharge barred the claim / standing issues | Wells Fargo: Sibert failed to list the SCRA claim in bankruptcy and lacks standing after discharge; judicial estoppel may bar the claim | Sibert: Trustee substituted as real party in interest; bankruptcy issues resolved to allow suit to proceed | Held: Fourth Circuit previously denied dismissal for lack of standing; district court allowed trustee to substitute; appellate decision addressed only the statutory merits and affirmed on that basis |
Key Cases Cited
- In re Sunterra Corp., 361 F.3d 257 (4th Cir. 2004) (principle that plain statutory language governs unless narrow exceptions apply)
- United States v. Weaver, 659 F.3d 353 (4th Cir. 2011) (de novo review of statutory interpretation)
- Boone v. Lightner, 319 U.S. 561 (U.S. 1943) (SCRA predecessor to be liberally construed to protect servicemembers)
- Brewster v. Sun Trust Mortg., Inc., 742 F.3d 876 (9th Cir. 2014) (applying liberal-construction principle to SCRA)