Roth v. Nationstar Mortg., LLC (In Re Roth)
935 F.3d 1270
11th Cir.2019Background
- Debtor Arlene Roth filed Chapter 13 in 2010, listed a mortgage on non‑homestead property and proposed to surrender the property; plan was confirmed and she completed payments. Bankruptcy discharge entered June 27, 2014; creditor Nationstar was notified.
- Discharge order prohibited attempts to collect discharged debts but preserved the creditor’s right to enforce valid liens (e.g., by foreclosure); Nationstar did not foreclose, so voluntary payment could allow Roth to retain the property.
- Four months after discharge Nationstar began sending monthly statements showing an amount due, due date, payment instructions, and a detachable payment coupon; statements included a prominent disclaimer labeling them "informational" and payment as "voluntary."
- Roth’s counsel sent cease‑and‑desist letters; Roth brought a first FDCPA action and a first sanctions motion that settled. Nationstar later sent a November 18, 2015 “Informational Statement” with similar content and a broad disclaimer.
- Roth filed (1) a second FDCPA suit based on the Informational Statement and (2) a second motion for sanctions in bankruptcy court under 11 U.S.C. § 524. Bankruptcy court denied sanctions; district court affirmed. Roth appealed to this court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Nationstar's Informational Statement was an act to collect a discharged debt in violation of 11 U.S.C. § 524(a)(2) | Roth: Statement’s listing of amount due, due date, escrow warnings, payment methods, and coupon objectively pressured payment and thus violated § 524 | Nationstar: Statement was informational, prominently disclaimed collection intent, and payment was voluntary; lien enforcement rights remain | Court: Not a § 524 violation — objective effect was not to pressure repayment given clear, prominent disclaimer and the statutory allowance for voluntary payments |
| Whether sanctions under 11 U.S.C. § 105 were appropriate | Roth: If statement attempted collection, contempt sanctions should follow | Nationstar: Even if close, Taggart requires no fair ground of doubt standard; conduct was not plainly unlawful | Court: No sanctions — because no § 524 violation; even if close, Taggart’s rigorous "no fair ground of doubt" standard would preclude sanctions |
| Whether the bankruptcy court erred by deciding without an evidentiary hearing | Roth: Court’s remarks about her subjective belief show need for a hearing to resolve factual dispute | Nationstar: No hearing required; only the document’s objective effect matters and no party requested a hearing | Court: No error — objective test controls and there were no disputed factual issues requiring an evidentiary hearing |
| Whether FDCPA "least‑sophisticated consumer" standard should govern § 524 analysis | Roth: FDCPA and § 524 protect similar parties; adopt least‑sophisticated standard here | Nationstar: Different statutes, purposes, and standards; FDCPA test not applicable | Court: Declined to import the FDCPA standard into § 524 analysis; different purposes and Taggart caution against low threshold for contempt |
Key Cases Cited
- Taggart v. Lorenzen, 139 S. Ct. 1795 (U.S. 2019) (establishes "no fair ground of doubt" standard for civil contempt under § 105 enforcing § 524 discharge injunction)
- In re McLean, 794 F.3d 1313 (11th Cir. 2015) (uses "objective effect" test to determine whether creditor action pressures debtor to repay discharged debt)
- Midland Funding, LLC v. Johnson, 137 S. Ct. 1407 (U.S. 2017) (distinguishes purposes and structures of FDCPA and Bankruptcy Code)
- In re Ocean Warrior, Inc., 835 F.3d 1310 (11th Cir. 2016) (standard of review for bankruptcy appellate review)