TERRENCE MOORE and DIXIE MOORE, Plaintiffs-Appellants, v. WELLS FARGO BANK, N.A., Defendant-Appellee.
No. 18-1564
United States Court of Appeals For the Seventh Circuit
Argued September 14, 2018 — Decided November 7, 2018
Appeal from the United States District Court for the Western District of Wisconsin. No. 16-CV-656 — William M. Conley, Judge.
Before BAUER, HAMILTON, and SCUDDER, Circuit Judges.
Terrence Moore’s claims fail on their merits; Dixie Moore’s claims fail for lack of standing.
I. The Real Estate Settlement Procedures Act and Wisconsin Law
The facts of this case are better understood after a brief overview of the laws at issue. The Real Estate Settlement Procedures Act,
Section 2605(e) imposes duties on a loan servicer that receives a “qualified written request” for information from a borrower. Written correspondence triggers RESPA if it “includes, or otherwise enables the servicer to identify, the name and account of the borrower; and includes a statement of the reasons for the belief of the borrower ... that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.”
Section 2605(e)(2) requires the servicer to do one of the following three things no later than 30 business days after receiving a qualified written request from a borrower: (1) make appropriate corrections to the borrower’s account and provide written notice of the corrections to the borrower; (2)
after investigating the borrower’s account, provide a written explanation as to why the servicer believes the account does not need correction; or (3) after investigating the borrower’s account, provide the requested information or explain in writing why the information cannot be obtained. The servicer must also include with the response the contact information for an individual who can provide assistance. Id. In
Wisconsin law provides similar protection under
II. The Facts for Summary Judgment
The plaintiffs appeal the district court’s grant of summary judgment, so we review the decision de novo, considering all evidence in the light most favorable to plaintiffs as the non-moving parties. Carmody v. Bd. of Trustees of Univ. of Illinois, 893 F.3d 397, 401 (7th Cir. 2018). “While we must construe all
the facts and reasonable inferences in the light most favorable to the nonmoving party, our favor toward the nonmoving party does not extend to drawing inferences that are supported by only speculation or conjecture.” Monroe v. Indiana Dep‘t of Transportation, 871 F.3d 495, 503 (7th Cir. 2017) (citation and quotation marks omitted).
Under this standard, summary judgment is appropriate when no admissible evidence shows any dispute of material fact that could lead a jury to rule in the non-moving parties’ favor, entitling the moving party to judgment as a matter of law.
We begin with the undisputed facts of Mr. Moore’s default on his mortgage, his and the lender’s attempts to modify the mortgage, and the foreclosure on the mortgage in state court. We then turn to the qualified written request and response themselves.
A. Mortgage and Loan Modification Agreements
The Moores’ RESPA claims arose after years of struggles to keep up with mortgage payments. Terrence Moore purchased the home he shares with his wife, Dixie Moore, in 2006 with a 30-year adjustable mortgage owned at all relevant times by Deutsche Bank and serviced by Wells Fargo. The loan had a principal balance of $208,050 with an initial interest rate of 7.95% subject to change every six months beginning in 2008, with rates ranging anywhere from 5.625% to 13.95%. Mrs. Moore used an inheritance from her mother to help buy the house, but she was never named as a party to the title of the property, the mortgage, or the promissory note.
In late 2007, Mr. Moore began having difficulty paying his mortgage. As the servicer for the mortgage, Wells Fargo offered one forbearance plan in December 2007 and, as Mr. Moore’s difficulties continued, another in September 2008. During this time, Mr. Moore fell so far behind in his payments that Deutsche Bank filed a foreclosure action. Deutsche Bank voluntarily dismissed that first foreclosure action, though, after Wells Fargo agreed to a loan modification with Mr. Moore in 2009. Despite the loan modification and dismissed foreclosure, Mr. Moore again failed to make the necessary payments. Wells Fargo negotiated a second loan modification agreement in December 2010.
The terms of the 2011 modification set the principal balance as $272,481.95, extended the loan term to 40 years, and changed the loan from an adjustable rate mortgage to a “Step Rate” mortgage with interest set at 2.0% for the first five years, 2.5% in year six, 3.0% in year seven, and 4.0% for the remainder of the loan term.
B. Foreclosure and Bankruptcy Proceedings
Mr. Moore failed to comply with the terms of the 2011 modification.1 Deutsche Bank filed a second foreclosure action. The most critical event for our purposes came on November 13, 2012, when the state trial court entered a judgment
of foreclosure against Mr. Moore. He did not appeal the state court’s judgment of foreclosure.2
A sheriff’s sale was initially scheduled for June 4, 2013 but was rescheduled numerous times while the parties tried to find a solution that would allow the Moores to remain in their house. Those efforts included consideration of yet another modification and an attempt to mediate through the state court’s foreclosure mediation program. When these attempts proved unsuccessful, the sheriff’s sale was rescheduled for December 3, 2013.
One month before the rescheduled sale, Mr. Moore filed for Chapter 13 bankruptcy, resulting in an automatic stay of the sale. Negotiations continued. In June 2015, the parties entered into a third modified payment agreement that required Mr. Moore to pay Wells Fargo a lump sum of $9,000 by June 30, 2015. Mr. Moore again failed to do so, prompting Deutsche Bank to seek relief from the stay on December 7, 2015. The sheriff’s sale was rescheduled for March 22, 2016.
Mr. Moore responded by converting his Chapter 13 bankruptcy into a Chapter 7 bankruptcy. That triggered another automatic stay only twelve days before the scheduled sale. On July 13, 2016 the bankruptcy court entered a discharge for the
Chapter 7 bankruptcy, and the sheriff’s sale was rescheduled for October 11, 2016.
C. The RESPA “Qualified Written Request”
We now turn to the facts at the center of the Moores’ statutory claims in this appeal. On August 15, 2016, nearly four years after the foreclosure judgment was entered and two months before the scheduled sale, Mr. Moore sent a letter to Wells Fargo explaining the history of the loan and foreclosure from his point of view. Most relevant for RESPA, his letter also asked twenty-two wide-ranging questions about his account. His questions included the identities of whoever owned his mortgage, details about how payments were applied throughout the duration of the loan, the creation of his escrow account, a list of all charges and late fees, and “an identification of each and every modification, forbearance, forgiveness, reinstatement, or other debt-relief or mortgage-relief type program, whether in-house or government-mandated, for which I have ever been considered by any servicer or lender, including the dates on which such program or plan was considered.”
D. This Lawsuit
Facing the October 11, 2016 sheriff’s sale, the Moores decided to continue efforts in both state and federal courts to
remain in their foreclosed home. On September 28, two days before Wells Fargo’s deadline to respond under RESPA, the Moores filed a motion in state court titled “Defendant’s Counterclaims Maturing After Pleading” in an effort to reopen the 2012 foreclosure case. They sought “damages, costs and fees as are reasonable, and offset such damages against any amount owed to Deutsche Bank under the judgment of foreclosure before the sheriff’s sale.” They also requested an indefinite stay of the sheriff’s sale while they litigated these counterclaims. The state court did not stay the sheriff’s sale indefinitely, but the sale was delayed yet again while the state court heard the matter.
Also on September 28, the Moores filed this action in federal court, two days before Wells Fargo’s response was due. In both the state and federal court, the Moores alleged that Wells Fargo violated RESPA and
As Wells Fargo had promised, though, on September 30 a Wells Fargo representative called Mr. Moore and told him that the bank’s response would be mailed that day. The response was a three-page letter with 58 pages of attachments.
The response addressed most of Mr. Moore’s questions to some degree, but not all of them. For instance, the letter included information about the loan’s current status, details about the most recent modification review, and insurance premium information. The letter also discussed the bankruptcy stipulation agreement and included an account history going back nearly three years from the date of the request. However, the letter and attachments did not address several of Mr. Moore’s questions, such as the ones requesting every “modification, forbearance, forgiveness, reinstatement, or other debt-relief ... for which [he had] ever been considered.” Wells Fargo wrote that the questions it did not answer were “too broad” but invited Mr. Moore to provide further details about his requests so the bank could review them again. Nothing in the record suggests Mr. Moore followed up on that invitation.
On November 23, 2016, the state court held a hearing in the foreclosure suit. The court dismissed the Moores’ new counterclaims as untimely. The sheriff’s sale finally took place on November 29, 2016. In a further effort to remain in his foreclosed home, Mr. Moore filed for bankruptcy again on December 27, 2016. He admitted in his summary judgment affidavit in this case that the bankruptcy filing was a tactical move intended only to stall foreclosure. “I filed bankruptcy in 2016 to stop the sale of my house ... the only reason I filed a bankruptcy petition at all a second time is
to file for bankruptcy, since that was the only way to avoid losing my house.”3
In February 2018, the district court granted Wells Fargo’s motion for summary judgment. The court found that Mr. Moore had standing under both federal and state law (and assumed Mrs. Moore had standing under state law), but that the Moores had not provided any evidence that Wells Fargo had actually violated RESPA or the Wisconsin statute. The court went on to conclude that even if Wells Fargo had failed to answer each and every one of Mr. Moore’s questions completely, the Moores had failed to show how any failures had caused them any harm. In addressing the Moores’ appeal, we consider the plaintiffs’ standing before addressing the merits of the RESPA and state-law claims.
III. Standing
Standing is an element of subject-matter jurisdiction in a federal civil action, so we address that issue first. See Steel Co. v. Citizens for a Better Env‘t, 523 U.S. 83, 95 (1998). To have standing, Mr. and Mrs. Moore must each show that he or she has “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).
To meet this burden at the pleading stage, “the plaintiffs’ complaint must contain sufficient factual allegations of an injury resulting from the defendants’ conduct, accepted as true, to state a claim for relief that is plausible on its face.” Diedrich
v. Ocwen Loan Servicing, LLC, 839 F.3d 583, 588 (7th Cir. 2016), citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “The alleged injury must be concrete and not just a procedural violation divorced from any harm.” Diedrich, 839 F.3d at 588, citing Spokeo, 136 S. Ct. at 1548. We conclude that Dixie Moore does not have standing, but Terrence Moore does.
A. Standing of Mrs. Moore
Dixie Moore does not have standing to bring claims under RESPA or
Mrs. Moore contends that she has standing under Wisconsin law as a “person aggrieved” by Wells Fargo’s failure to respond fully to each of the questions in Mr. Moore’s qualified written request. On this question of state law, we do not believe the Wisconsin courts would interpret the statute to recognize such claims by someone who is not a party to the property title or the mortgage loan.
Under Wisconsin law, “[a] person who is aggrieved by an act which is committed by a mortgage banker, mortgage loan originator, or mortgage broker in violation of [§ 224.77] may recover ... in a private
aggrieved party under
Mrs. Moore’s assertion seems to stem primarily from the claim that she used her inheritance to help purchase the home she shares with Mr. Moore, and because of this “she will lose her house if the lender is allowed to sell it.” We assume the truth of these points, but she still is not an owner of the property or a party to the mortgage and promissory note at the center of the statutory claim. We do not believe the Wisconsin courts would interpret
B. Standing of Mr. Moore
Terrence Moore meets the requirements for standing under RESPA and the state statute. See Diedrich 839 F.3d at 590, citing Twombly, 550 U.S. at 556. He brought this action as the borrower on a mortgage loan serviced by the defendant. Unlike Mrs. Moore, there is no dispute of his status as a party in any aspect of this case. Next, he alleged he was injured in fact by having to fight the state court case without all the information he needed from Wells Fargo. He claimed this caused him to “worry that we would lose our house ... and I was substantially emotionally disturbed. I had trouble controlling my breathing and had headaches, and became extremely upset when I had to relay to my wife what had happened.” Finally, he claimed Wells Fargo caused this harm and asked the court to award damages. This is sufficient to meet the low bar of standing, regardless of the ultimate merits of his statutory claims.
IV. Mr. Moore’s Claims for Damages
The central issue in this appeal is whether a borrower can recover damages under
Therefore, she cannot show she was “aggrieved” by Wells Fargo’s actions for the purposes of
evidence that there is a material dispute
RESPA provides in relevant part: “Whoever fails to comply with any provision of this section shall be liable to the borrower for each such failure ... In the case of any action by an individual, an amount equal to the sum of ... any actual damages to the borrower as a result of the failure.”
We assume for purposes of argument that at least some aspect of Wells Fargo’s response was incomplete and might have violated
these injuries, but specifically, that [the servicer’s] failures to comply with RESPA section 2605(e)(2) caused their injury.“).
Here, Mr. Moore alleges his actual damages stem from out-of-pocket expenses and emotional distress. We analyze both and find no merit to either.
A. Out-of-Pocket Expenses
The only out-of-pocket expense Mr. Moore claims he incurred due to the alleged RESPA violations is the $900 he paid an attorney to review Wells Fargo’s response to the qualified written request.6 This theory would allow a borrower to create a RESPA claim that pulls itself up by its own bootstraps, creating the required damages by pursuing the inquiry itself, at least with the help of a lawyer. RESPA should not treat such attorney fees as sufficient to support a claim under
review the response could be a cost incurred as a result of an alleged violation.
Even if Mr. Moore’s attorney fees were directly attributable to Wells Fargo’s
Moore has failed to show that he suffered out-of-pocket expenses as a result of any alleged RESPA violation by Wells Fargo.
B. Damages for Emotional Distress
Mr. Moore also claims damages under RESPA for emotional distress. We have held that emotional distress can support a claim for damages under RESPA. Catalan, 629 F.3d at 696. To survive a motion for summary judgment on the issue, the plaintiff must offer evidence that the emotional distress he suffered was caused by the claimed RESPA violation. Diedrich, 839 F.3d at 593. In Diedrich, we noted that Catalan does not specify “what amount of evidence is sufficient to link an injury to a mortgage company’s failure to respond properly to a qualified request for information.” Id. We held in Diedrich that a statement merely alleging that the servicer injured the plaintiffs because of everything the plaintiffs had endured throughout the course of litigation was insufficient. Id.
In Catalan, we reversed summary judgment for the defendants partially on the ground that there was dispute of material fact as to the plaintiffs’ allegations of emotional distress damages resulting from the defendant’s egregious RESPA violations. 629 F.3d at 696. The plaintiffs in Catalan were actually making their mortgage payments. The RESPA violations were the source of their stress about the prospective loss of their
home. Id. Medical records reflected one of the plaintiffs was suffering from increased stress due to her “house situation,” and the plaintiffs “described their emotional turmoil in reasonable detail and explained what they believe to be the source of that turmoil.” Id. One plaintiff
Here, Mr. Moore alleges in his complaint that he suffered emotional distress because he had to fear “losing their home [without knowing] whether the lender has a right to [foreclose]” and had to worry that “their home will be sold improperly or illegally.” In his brief, Mr. Moore also states he had to “break the news to his wife that they were unsuccessful in state court and would have to file bankruptcy.” He further claimed in his affidavit in response to defendant’s motion for summary judgment that after the judge refused to reopen the state court case, he “began to worry that we would lose our house ... and I was substantially emotionally disturbed. I had trouble controlling my breathing and had headaches, and became extremely upset when I had to relay to my wife what had happened.” This is simply not enough to show damages caused by any RESPA violation.
To be clear, we recognize that the prospective and even imminent loss of a home can be highly stressful. The problem here is that Mr. Moore’s stress had essentially nothing to do
with any arguable RESPA violations. The obvious sources of his stress were the facts that he was not able to make timely payments toward his mortgage, that the lender had won a judgment of foreclosure, and that sale and eviction were imminent.
Mr. Moore directly links his headaches and breathing trouble to the state court’s decision not to reopen the 2012 foreclosure case. He argues that having all the information he requested from Wells Fargo would have given him a greater chance of success in state court and that appearing in the state court’s November 2016 hearing without this information caused him emotional distress. This theory is too attenuated; it relies too much on speculation about what a state court might have done under other, unknowable circumstances, to qualify as actual harm under RESPA. See Perron on behalf of Jackson v. J.P. Morgan Chase Bank, N.A., 845 F.3d 852, 858 (7th Cir. 2017) (alleged harm from RESPA violation must not be “too attenuated from the alleged violation.“). RESPA was not intended to give people who cannot pay their mortgages the means to engage in burdensome fishing expeditions in the hope of somehow passing the blame for their foreclosure onto the mortgage servicers in state court.
There is no need to prove the emotional distress was caused solely by the alleged RESPA violation. But nothing here suggests that the emotional distress Mr. Moore faced was caused by anything but the foreclosure, which occurred four years earlier. Likewise, having to tell his wife that they had to sell their house and file for bankruptcy are traceable back only to the 2012 judgment of foreclosure, not to any alleged RESPA violation in 2016. The district court correctly found that Mr.
Moore failed to provide evidence of actual injury sufficient to survive summary judgment on his RESPA claims.
V. Wisconsin Law Claims Under Section 224.77
Finally, the district court correctly granted summary judgment on the state-law claims under
“The Rooker-Feldman doctrine prevents lower federal courts from exercising jurisdiction over cases brought by state-court losers challenging state-court judgments rendered before the district court proceedings commenced.” Mains v. Citibank, N.A., 852 F.3d 669, 675 (7th Cir. 2017). Especially relevant here, Rooker-Feldman bars claims that could have been argued in state court. D.C. Court of Appeals v. Feldman, 460 U.S. 462, 482 n.16 (1983); Jakupovic v. Curran, 850 F.3d 898, 902 (7th Cir. 2017) (whether a claim that could have been brought in state court is barred under Rooker-Feldman “hinges on whether the federal claim alleges that the injury was caused by the state court judgment, or alternatively, whether the federal claim alleges an independent prior injury that the state court failed to remedy.“).
Mr. Moore’s never-say-die attitude is impressive, but there are limits, and Rooker-Feldman is one of them. Mains, 852 F.3d at 677 (Rooker-Feldman barred RESPA claim in federal court because the “claims could be sustained only by disregarding or effectively vacating the state [court’s] judgment of
foreclosure.“); see Shuput v. Lauer, 109 Wis. 2d 164, 325 N.W.2d 321, 326 (1982) (Wisconsin judgment of foreclosure is final for purposes of appeal before sheriff’s sale). Mr. Moore argues that the 2011 modification was unjust, the foreclosure was entered on flawed grounds, the foreclosure amount was incorrect, and the state court should have reopened his case. None of these arguments belong in federal court.
Mr. Moore insists he can bring these claims before us because he seeks damages rather than reconsideration of the state court decision, but that assertion denies the substance of what he actually seeks in federal court. To find in favor of Mr. Moore, we would be required to contradict directly the state court’s decisions by finding that Deutsche Bank was not entitled to the final judgment of foreclosure. This we simply cannot do.8
Even if Mr. Moore’s claims were not barred under Rooker-Feldman, Wisconsin law would preclude us from ruling in his favor. In A.B.C.G. Enterprises, Inc. v. First Bank Southeast, N.A., the Wisconsin Supreme Court held ABCG could not bring counterclaims alleging the mortgagee was really to blame for the conditions leading to its foreclosure after the judgment was already entered because “a favorable judgment for ABCG in this action would nullify the prior foreclosure.” 184 Wis. 2d 465, 515 N.W.2d 904, 909–910 (1994). Even though ABCG was asking for damages rather than the overruling of the foreclosure decision, the court explained
Mr. Moore’s assertion that his attorney fees constitute actual harm under
The judgment of the district court dismissing this action is AFFIRMED as to Terrence Moore on the merits and as to Dixie Moore for lack of standing.