Rick Slorp v. Lerner, Sampson & Rothfuss
587 F. App'x 249
6th Cir.2014Background
- LSR, on Bank of America’s behalf, filed a separate foreclosure action against Rick Slorp and attached a Mortgage Assignment from MERS purporting to assign the mortgage to BAC Home Loans Servicing, L.P.; the state court granted judgment to Bank of America and later vacated that judgment after Slorp challenged the assignment.
- Slorp sued LSR, Shellie Hill, MERS, and Bank of America in federal court for FDCPA, CSPA, falsification, and civil conspiracy, alleging the foreclosure action was fraudulently pursued using a false assignment.
- Before the district court ruled, Slorp sought leave to amend to add a RICO claim; the district court dismissed the original complaint and denied leave to amend.
- The district court held Slorp lacked standing to challenge the assignment and that Slorp suffered no damages attributable to the allegedly fraudulent assignment, then rejected the merits of the remaining claims.
- On appeal, the Sixth Circuit held Slorp has Article III standing to pursue FDCPA, rejected Livonia Properties as a bar to Slorp’s standing, and addressed each statutory claim (FDCPA, CSPA, falsification, conspiracy) before deciding to remand for consideration of a RICO claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Slorp have Article III standing to pursue FDCPA claim? | Slorp has injury traceable to the fraudulent assignment and foreclosure action. | Standing requires being a party to the assignment and injury arises from his default. | Slorp has Article III standing; district court erred. |
| Does Livonia Properties bar Slorp’s standing to challenge the assignment? | Livonia allows a non-party homeowner to challenge assignment validity where title is at issue. | Livonia bars non-parties from challenging assignments. | Livonia does not bar Slorp; non-party may challenge invalid assignment as basis to show lack of title. |
| Is the FDCPA claim time-barred and may continuing-violation doctrine salvage it? | Continuing violation extends the period and later misrepresentations constitute a new violation. | FDCPA claims accrue at filing and continuing-violation doctrine does not apply here. | Continuing-violation doctrine does not rescue the FDCPA claim; time-bar controls. |
| Does the CSPA apply to the foreclosure action against LSR? | FDCPA violations may translate into CSPA violations and LSR should be liable. | Foreclosure filing is not a consumer transaction; CSPA does not apply to law firms in mortgage litigation. | CSPA does not apply; foreclosure is not a consumer transaction. |
| Should Slorp be allowed to amend to add a RICO claim? | RICO claim is viable with a proper injury and pattern of racketeering. | amendment would be futile due to lack of injury and no plausible RICO scheme. | District court erred; leave to amend should be granted and RICO claim considered on remand. |
Key Cases Cited
- Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1409 (2014) (standing elements; irreducible constitutional minimum)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing's injury-in-fact requirement)
- Raines v. Byrd, 521 U.S. 811 (1997) (personal stake in dispute; traceability)
- Hollingsworth v. Perry, 133 S. Ct. 2652 (2013) (standing in federal court is a federal-law question)
- Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007) (continuing effects do not create new violations; Ledbetter rule)
- Morgan v. Nat’l R.R. Passenger Corp., 536 U.S. 101 (2002) (discrete acts vs. continuing violations; hostile environment analogy)
- Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008) (continuing-violation doctrine limited in federal context)
- Boyle v. United States, 129 S. Ct. 2237 (2009) (enterprise structure requirements for RICO)
- Conlin v. Mortg. Elec. Registration Sys., 714 F.3d 355 (6th Cir. 2013) (standing to challenge assignment; third-party challenge permissible)
- Anderson v. Barclay’s Capital Real Estate, 989 N.E.2d 997 (Ohio 2013) (mortgage servicing not a consumer transaction under Ohio CSPA)
- Celebrezze v. United Research, Inc., 19 Ohio App.3d 49 (1984) (CSPA applicability to debt collection by a servicer)
- Holmes v. Securities Investor Protection Corp., 503 U.S. 258 (1992) (proximate cause in damages under RICO)
- Trollinger v. Tyson Foods, Inc., 370 F.3d 602 (6th Cir. 2004) (injury causation and recoverable damages under RICO)
- Jackson v. Sedgwick Claims Management Services, Inc., 731 F.3d 556 (6th Cir. 2013) (source of injury for recoverable RICO damages; property injuries)