929 F. Supp. 2d 569
W.D. Va.2013Background
- Plaintiff Yarney settled with Wells Fargo by deed in lieu of foreclosure on March 18, 2011, with Wells Fargo agreeing to delete trade lines and dismiss claims with prejudice.
- Ocwen, as Wells Fargo’s loan servicer, continued to bill Yarney and attempt to collect on the loan after the settlement, despite notice of the agreement.
- Ocwen sent multiple monthly statements showing current and past due amounts and later issued unsolicited payoff quotes to plaintiff’s counsel.
- The settlement required Ocwen to delete mortgage-related trade lines as of the filing date of the state suit, but Ocwen reportedly continued to report the loan as delinquent for over a year.
- Plaintiff and her counsel repeatedly notified Wells Fargo and Ocwen to cease collection efforts, but collection communications persisted through early 2012, including phone calls.
- Ocwen’s actions also included reporting the account to credit bureaus as delinquent and attempting to collect after the settlement despite Wells Fargo’s duties as principal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FDCPA § 1692e(2)(A) violation by false debt claim | Yarney contends Ocwen falsely represented ongoing debt after settlement. | Ocwen argues no debt existed post-settlement and post-debt conduct is outside FDCPA scope. | Ocwen violated § 1692e(2)(A). |
| FDCPA § 1692c(a)(2) violation for contacting represented consumer | Ocwen contacted Yarney directly despite representation by counsel and knowledge of that representation. | Ocwen claims it complied with communications through counsel; incidental direct contact is permissible. | Ocwen violated § 1692c(a)(2). |
| Breach of contract under Virginia law | Wells Fargo breached the March 18, 2011 settlement by Ocwen’s continued collection actions and failure to delete trade lines. | Ocwen argues it fulfilled its limited trade-line deletion obligation and that Wells Fargo bore ultimate duty. | Wells Fargo breached the March 18, 2011 contract. |
Key Cases Cited
- Nat’l Fin. Servs., Inc. v. 98 F.3d 131, 98 F.3d 131 (4th Cir. 1996) (establishes least sophisticated consumer standard for FDCPA)
- Morgan v. Credit Adjustment Bd., Inc., 999 F.Supp. 803 (E.D.Va. 1998) (describes least sophisticated consumer standard)
- Vitullo v. Mancini, 684 F.Supp.2d 747 (E.D.Va. 2010) (debt-collection communication to non-debtor spouse violates FDCPA)
- Gorbaty v. Portfolio Recovery Assoc., LLC, 355 Fed.Appx. 580 (3d Cir. 2009) (post-debt notices not actionable if no debt collection activity)
- Miller v. Bank of America, 858 F.Supp.2d 1118 (S.D. Cal. 2012) (distinguishes post-debt collection actions from current collection efforts)